Document:

EX-4.1

 

Exhibit 4.1

	COMMON STOCK

	THIS
CERTIFICATE IS
TRANSFERABLE IN
SOUTH SAINT PAUL,
MN OR NEW YORK, NY

	No.FH 6078

	first horizon national corporation

CUSIP 320517 10 5

	INCORPORATED UNDER THE LAWS OF THE STATE OF TENNESSEE

	ellegible

	SECRETARY
PRESIDENT AND CHIEF EXECUTIVE OFFICER

	COUNTERSIGNED AND REGISTERED:
WELLS FARGO BANK, N.A.
TRANSFER AGENT
BYAND REGISTRAR

	AUTHORIZED SIGNATUREEX-10.1

 

EXHIBIT 10.1

May 1, 2008

Thomas K. Montag

Dear Tom:

We are pleased to offer you the position of Head of Global Sales and Trading, reporting to John A.
Thain, Chairman and CEO. In this capacity you will also be an Executive Vice President of Merrill
Lynch. We anticipate and you agree that you will commence employment on August 4, 2008 (“the Start
Date”).

The terms of our offer of employment are as follows:

1. COMPENSATION

a. Salary

Your starting salary will be at the annualized rate of $600,000.00 and will commence on the Start
Date.

b. Incentive Compensation

You will be eligible to participate in the Merrill Lynch Variable Incentive Compensation Program
(VICP). In general, VICP awards are granted annually at the sole discretion of management based
upon individual performance, company financial results, and other criteria. However, for
Performance Year 2008, you will receive a guaranteed VICP award of $39,400,000.00, provided you are
in the continuous employment of Merrill Lynch through the scheduled payment date in early 2009
(“your Guaranteed VICP Award”). Your Guaranteed VICP Award may consist of cash or cash and equity,
at the discretion of Merrill Lynch, but any portion of your Guaranteed VICP Award granted in equity
will be at a percentage of your total compensation generally equivalent to the treatment given to
similarly situated executives. Any equity portion of your Guaranteed VICP Award may consist of
Merrill Lynch Restricted Units or other equity instruments subject to the vesting and other
provisions of the applicable Merrill Lynch & Co., Inc. employee stock compensation plan (“the SCP”)
and grant documents. Except as otherwise specifically provided in the applicable SCP and grant
documents or in this letter, if your employment terminates for any reason or if you violate any of
the terms and conditions of the grant prior to the vesting and/or distribution to you of your
equity grant, your rights to the unvested and/or undistributed portion shall be terminated and such
grants will be canceled. All equity grants are subject to the approval of the Management
Development and Compensation Committee of the Merrill Lynch & Co., Inc. Board of Directors (“the
MDCC”).

Your performance will be reviewed periodically. Any future salary and other compensation,
including any future awards under the VICP, will be based on a

 

 

consideration of a number of factors, including, but not limited to, company financial results and
your individual performance, and shall be determined in Merrill Lynch’s sole discretion.

2. REPLACEMENT OF FORFEITED EQUITY

To make you whole for the value of equity awards granted by your former employer that you will lose
(including the time value of options you will exercise in advance of, or within thirty days of your
Start Date, the time value of options you exercised in anticipation of your Acceptance Date, and
the time value of options that are not exercisable as of the date of your written acceptance of
this offer (“the Acceptance Date”)) in connection with your employment with Merrill Lynch (the
“Forfeiture”) and subject to MDCC approval at its first regularly scheduled meeting following the
Start Date, with respect to the equity grants described in this paragraph, Merrill Lynch will make
cash payments and/or grants of equity to you, subject to our receiving reasonable written
confirmation of a Forfeiture, in an aggregate amount to which we will agree (“the Replacement
Value”). The Replacement Value will be divided in a manner to which we will agree into cash,
Restricted Units, and stock options components (“the Cash Component,” “the Restricted Unit
Component,” and “the Stock Option Component,” respectively).

	 	•	 	The Cash Component will be paid to you in cash within 30 days of the Start Date and
will include the time value of options you will exercise in advance of, or within thirty
days of your Start Date (including the time value of options you exercised in anticipation
of your Acceptance Date).
	 
	 	•	 	The Restricted Unit Component will be paid in the form of a grant of Merrill Lynch
Restricted Units (the “Replacement Restricted Units”). Restricted Units will vest
thirty-four percent six months from the start date, thirty-three percent on January 1,
2010 and thirty-three percent on January 1, 2011.
	 
	 	•	 	The Stock Option Component will be paid in the form of a grant of stock options to
purchase shares of Merrill Lynch common stock (“the Replacement Stock Options”). The
Replacement Stock Options will have an exercise price equal to the average of the high and
low prices of Merrill Lynch common stock on the New York Stock Exchange on the day the
grant is approved by the MDCC or, if such date is not a trading day, on the previous
trading day. Replacement Stock Options will become exercisable thirty-four percent six
months from the start date, thirty-three percent on January 1, 2010 and thirty-three
percent on January 1, 2011. Exercisable Replacement Stock Options shall remain
exercisable until the tenth anniversary of the Start Date.

Should the MDCC fail to approve any or all of the Replacement Restricted Units and/or Replacement
Stock Options, the value of the unapproved portion will be paid to you in cash no later than March
15, 2009.

 

 

3. EFFECT OF THE TERMINATION OF YOUR EMPLOYMENT ON YOUR GUARANTEED VICP AWARD, ANY FUTURE
EQUITY AWARDS AND THE REPLACEMENT VALUE

a. Qualifying Employment Termination

For purposes of this letter, either the termination of your employment by Merrill Lynch without
Cause or your resignation with Good Reason, each as defined below, shall be deemed a Qualifying
Employment Termination.

b. Your Guaranteed VICP Award and Any Future Equity Awards

	 	•	 	If a Qualifying Employment Termination occurs before you are paid the cash portion of
your Guaranteed VICP Award and before you are granted any equity portion of your
Guaranteed VICP Award by the MDCC, the entire Guaranteed VICP Award will be paid to you in
cash on or about the scheduled payment date in early 2009, but not later than March 15,
2009.
	 
	 	•	 	If a Qualifying Employment Termination occurs after you are paid the cash portion of
your Guaranteed VICP Award but before you are granted any equity portion of your
Guaranteed VICP Award by the MDCC, that portion of your Guaranteed VICP Award that Merrill
Lynch intended to award you in the form of an equity grant will be paid in cash on or
about the scheduled payment date in early 2009, but not later than March 15, 2009.
	 
	 	•	 	If a Qualifying Employment Termination occurs after you are paid the cash portion of
your Guaranteed VICP Award and after you are granted any equity portion of your Guaranteed
VICP Award and any subsequent equity awards, such grants will continue to vest, be
delivered to you, and become and remain exercisable, as the case may be, in accordance
with the schedule contained in the grant, but only on the condition that you comply with
the post-employment covenants and other provisions of the SCP, the grant documents, and
the covenant agreement attached hereto, except for those provisions requiring notice of
your resignation and restricting your employment by a competitor, which shall be waived.
	 
	 	•	 	(1) If your employment is terminated by Merrill Lynch for Cause or (2) if your resign
from Merrill Lynch for other than Good Reason before the Third Anniversary of the Start
Date without meeting the eligibility criteria for Career Retirement as described in the
SCP and grant documents, then any undistributed and or unexercised equity awards from the
equity portion of your Guaranteed VICP award and any subsequent equity awards will be
canceled and you shall have no further rights with respect thereto.

     c. Replacement of Forfeited Equity

	 	•	 	If a Qualifying Employment Termination occurs before you are paid the cash portion of
the Replacement Value and before you are granted the equity portion of

 

 

	 	 	 	the Replacement Value by the MDCC, the entire Replacement Value will be paid to you in cash
as soon as practical but not to exceed 6 months and in any event, on or before December 31
of the year following the year in which your Qualifying Employment Termination occurs.
	 
	 	•	 	If a Qualifying Employment Termination occurs after you are paid the cash portion of
the Replacement Value but before you are granted the equity portion of the Replacement
Value by the MDCC, that portion of the Replacement Value due in the form of equity grants
will be paid in cash as soon as practical but not to exceed 6 months and in any event, on
or before December 31 of the year following the year in which your Qualifying Employment
Termination occurs.
	 
	 	•	 	If a Qualifying Employment Termination occurs after you are paid the cash portion of
the Replacement Value and after you are granted the equity portion of the Replacement
Value by the MDCC, such grants will continue to vest, be delivered to you, and become and
remain exercisable, as the case may be, in accordance with the schedule contained in the
grant, but only on the condition that you comply with the post employment covenants and
other provisions of the SCP, the grant documents, and the covenant agreement attached
hereto, except for those provisions requiring notice of your resignation and restricting
your employment by a competitor, which shall be waived.
	 
	 	•	 	If your employment is terminated by you or by Merrill Lynch for any reason other than
by Merrill Lynch for Cause and such employment termination is not a Qualifying Employment
Termination, after you are paid the cash portion of the Replacement Value and after you
are granted the equity portion of the Replacement Value by the MDCC, such grants will
continue to vest, be delivered to you, and become and remain exercisable, as the case may
be, in accordance with the schedule contained in the grant, but only on the condition that
you comply with the post employment covenants and other provisions of the SCP, the grant
documents, and the covenant agreement attached hereto.
	 
	 	•	 	If your employment is terminated by you or by Merrill Lynch for any reason other than
by Merrill Lynch for Cause and such employment termination is not a Qualifying Employment
Termination, and such termination occurs before you have been both (a) paid the cash
portion of the Replacement Value and (b) granted the equity portion of the Replacement
Value by the MDCC, then the cash equivalents of such grants, will be paid to you according
the vesting and delivery schedule and/or the exercisability schedule, as the case may be,
that would have been contained in the grant had it been made, on the condition that you
comply with the post employment covenants and other provisions of the SCP, the grant
documents, and the covenant agreement attached hereto.
	 
	 	•	 	If your employment terminates by Merrill Lynch for Cause after you are paid the cash
portion of the Replacement Value and after you are granted the equity portion of the
Replacement Value by the MDCC, any undistributed and/or unexercised portion of the equity
portion of the Replacement Value will be canceled and you shall have no further rights
with respect thereto.

 

 

4. DEFINITION OF CAUSE

For all purposes of this letter (except for the terms of the payments and equity grants in
satisfaction of the Replacement Value, including without limitation the Replacement Restricted
Units and Replacement Stock Options), Cause shall mean: (i) any substantial violation of Merrill
Lynch’s rules, regulations, policies, practices and/or procedures; (ii) any substantial violation
of laws, rules or regulations of any governmental entity or regulatory or self-regulatory
organization, applicable to Merrill Lynch; (iii) criminal, illegal, dishonest, immoral, or
unethical conduct reasonably related to your employment; or (iv) a substantial breach of this
letter or any of the accompanying attachments; provided, however, that the definition of “Cause”
that applies to your VICP equity awards and any subsequent awards shall not include any action or
event not included in any definition of “Cause” generally applicable to similarly situated
executives of Merrill Lynch as in effect from time to time. With respect to (i) and (iv) above,
Cause shall exist only after you are given notice and an opportunity to correct your conduct,
unless such conduct or its consequences cannot be reasonably corrected.

For purposes of the terms of the payments and equity grants in satisfaction of the Replacement
Value, including without limitation the Replacement Restricted Units and Replacement Stock Options,
Cause shall mean: (i) your engagement in (A) willful misconduct resulting in material harm to
Merrill Lynch or (B) gross negligence in connection with the performance of your duties; or (ii)
your conviction of, or plea of nolo contendere to, a felony or any other crime involving fraud,
financial misconduct or misappropriation of Company assets, or that would disqualify you from
employment in the securities industry (other than a temporary disqualification).

5. DEFINITION OF GOOD REASON

For the purpose of this letter agreement, Good Reason shall mean: (i) a meaningful and detrimental
alteration in the nature your responsibilities or authority, but only after you have notified
Merrill Lynch in writing that you believe such an alteration has occurred and, within 30 days of
our receipt of such notice, we have not been able to resolve the matter to our mutual satisfaction;
(ii) your reporting to an executive other than the CEO of Merrill Lynch & Co., Inc. during the
three year period commencing on the Start Date; or (iii) a material reduction in your total annual
compensation (salary and VICP) that is not experienced generally by similarly situated employees of
Merrill Lynch.

6. TERMS RELATING TO YOUR VOLUNTARY RESIGNATION AFTER THE THIRD ANNIVERSARY OF YOUR START
DATE

Subject to MDCC approval, the grants under the SCP of the equity portion of your Guaranteed VICP
Award and any subsequent equity awards granted to you prior to your satisfying the service and age
requirements generally applicable to Career Retirement treatment shall provide that you will be
eligible for Career Retirement treatment with respect to such grants upon completing three years of
service, without any other

 

 

requirement relating to your age or service, but subject to all other requirements and conditions
normally associated with Career Retirement treatment imposed by the SCP, the grant documents, and
the Covenant Agreement attached hereto.

7. TERMS RELATING TO CHANGE IN CONTROL

If following a Change in Control a Qualifying Employment Termination occurs, any equity awards
granted to you (including, without limitation, any awards granted in satisfaction of Replacement
Value or your Guaranteed VICP Award or any subsequent awards) will immediately vest in full, be
delivered to you and become and remain exercisable for the full original term, as the case may be,
and shall not be subject to any forfeiture provisions or covenants; provided that, in the event
that Merrill Lynch is not a surviving company in the Change in Control transaction, your right to
receive securities will be converted, based on the terms of the change in control transaction, to
securities of the acquiring entity.

The preceding sentence shall apply to your equity awards, notwithstanding any provisions in the
applicable SCP or award agreement governing the treatment of equity awards in the event of a
termination of employment without Cause or for Good Reason following a Change in Control. For the
avoidance of doubt, Section 8.1 of the Merrill Lynch & Co., Inc. Long-Term Incentive Compensation
Plan, and any similar provision contained in the applicable SCP, shall not apply to equity awards
granted to you.

8. MITIGATION

In no event shall you be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to you under any of the provisions of this letter agreement and,
such amounts shall not be reduced whether or not your obtain other employment, except where such
employment violates a condition of payment.

9. COVENANT AGREEMENT

On or prior to the Start Date, you agree to enter into Merrill Lynch’s standard covenant agreement
for executives, a copy of which is attached hereto.

10. INDEMNIFICATION

During and after your employment, Merrill Lynch shall indemnify and defend you with respect to
claims relating to your employment to the fullest extent permitted under applicable law and Merrill
Lynch’s Certificate of Incorporation.

11. IRC SECTION 409A COMPLIANCE

Notwithstanding anything herein to the contrary, if any payments of money or other benefits due to
you hereunder would cause the application of an accelerated or additional tax under Section 409A of
the Internal Revenue Code of 1986, as amended, such payment or other benefits shall be deferred if
deferral will make such payment or other

 

 

benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits
shall be restructured in a manner that does not cause such an accelerated or additional tax.

12. FEES

Merrill Lynch will reimburse you for your actual attorney and consultant fees incurred in the
finalization of this letter agreement, up to $25,000.00.

13. WORK AUTHORIZATION

You must also be able to satisfy the requirements of the Immigration Reform and Control Act of
1986, which requires documents to prove your identity and demonstrate that you are authorized to
work in the U.S., and to complete an Employment Eligibility Verification form (Form I-9).

A further condition of this offer and your employment with Merrill Lynch is that you have not been
convicted of a felony or certain misdemeanors which would disqualify you from employment with
Merrill Lynch under federal securities law and under the rules of the Financial Industry Regulatory
Authority. (These preconditions are referenced in the Merrill Lynch Statement of Employment
Conditions and the Merrill Lynch Policy on Statutory Disqualification.)

14. PRE-EMPLOYMENT PREPARATION

Prior to your start date with Merrill Lynch, you are required to complete pre-employment
screenings, which includes substance abuse screening and Form I-9 verification. The Employee
Service Center will assist you in scheduling these appointments. In addition, you must review
Merrill Lynch policies and guidelines and submit a series of forms that provide required personal
information. You will be receiving an email from our Employee Service Center instructing you on
how to proceed with this process. If you have any questions in the interim, or you do not receive
this email, please contact me.

You should also carefully review the attached Statement of Employment Conditions as this offer and
your employment with Merrill Lynch are subject to them. In the event of a conflict between the
Statement of Employment Conditions and this letter agreement, this letter agreement shall control.

Until this letter is filed with the SEC, you agree to keep this letter and its terms strictly
confidential and not to disclose them to any person or entity except your attorney, financial
advisor, and immediate family members, as long as such individuals agree that they are subject to
this confidentiality provision. Nothing in this letter shall prohibit or restrict you from
providing information pursuant to legal process.

This offer is contingent upon the approval of the MDCC. Once that approval is obtained, Merrill
Lynch represents and warrants that it is fully authorized and empowered to enter

 

 

into this Agreement and to perform its obligations thereunder. Any notice to you that is required
under, or which concerns this Agreement shall be sent to you at your most recent address on file,
and to your counsel:

Steven Eckhaus, Esq.

McCarter & English, LLP

245 Park Avenue

New York, NY 10167

seckhaus@mccarter.com

This Agreement may be executed in counterparts, including by fax or PDF, each of which shall be
deemed to be an original but all of which together shall constitute one and the same instrument.

In the event of a conflict between this letter and any other document, this letter shall control.

Tom, it goes without saying that we believe you can make a significant contribution to Merrill
Lynch, and we look forward to your joining us.

Sincerely,

/s/ Peter R. Stingi

Peter R. Stingi

SVP, Head of Human Resources

 

 

Acceptance of offer

My signature below confirms acceptance of the offer of employment and my understanding of the terms
and conditions associated with it. This signature also confirms that there are no oral promises
associated with this offer that are not reflected in this letter and I am not relying on any such
promises or understandings in accepting this offer. In signing this letter, I further acknowledge
that I have received, read, and agree to all pre-employment conditions and policies referred to in
this letter, specifically the enclosed Statement of Employment Conditions and Policy on Statutory
Disqualification.

	 	 	 	 	 	 	 	 	 
	Signed:

	 	/s/ Thomas K. Montag
 

	 	Date:
	 	May 2, 2008
 

	 	 

Enclosed:

	 	•	 	Statement of Employment Conditions
	 
	 	•	 	Policy on Statutory Disqualification
	 
	 	•	 	Covenant Agreement

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