Exhibit 10
MERRILL LYNCH & CO., INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
(as amended July 24, 2000)
TABLE OF CONTENTS
PAGE
ARTICLE I -GENERAL.......................................................1
Section 1.1 Purpose................................................1
Section 1.2 Definitions........................................... 1
(a) "Board of Directors" or "Board"................. 1
(b) "Code".......................................... 1
(c) "Company"....................................... 1
(d) "Committee"..................................... 1
(e) "Common Stock" ................................. 1
(f) "Disability".................................... 2
(g) "Fair Market Value" ............................ 2
(h) "Junior Preferred Stock"........................ 2
(i) "Other ML & Co. Security"....................... 2
(j) "Participant"................................... 2
(k) "Performance Period"............................ 2
(l) "Performance Share ............................ 3
(m) "Performance Unit" ............................ 3
(n) "Restricted Period"............................. 3
(o) "Restricted Share".............................. 3
(p) "Restricted Unit"............................... 3
(q) "Retirement".................................... 3
(r) "Rights"........................................ 3
(s) "Rights Agreement".............................. 3
(t) "Stock Appreciation Right" .................... 3
(u) "Stock Option".................................. 4
(v) "Vesting Period"................................ 4
Section 1.3 Administration........................................ 4
Section 1.4 Shares Subject to the Plan............................ 4
Section 1.5 Eligibility and Participation......................... 5
ARTICLE II - PROVISIONS APPLICABLE TO PERFORMANCE SHARES
AND PERFORMANCE UNITS....................................... 5
Section 2.1 Performance Periods and Restricted Periods............ 5
Section 2.2 Performance Objectives................................ 5
Section 2.3 Grants of Performance Shares and Performance Units.... 6
Section 2.4 Rights and Benefits During Performance Period......... 6
Section 2.5 Adjustment with respect to Performance Shares and
Performance Units................................................. 7
Section 2.6 Payment of Performance Shares and Performance Units... 7
(a) Performance Shares.............................. 7
(i)If a Restricted Period has been established.. 7
(ii)If a Restricted Period has not been
established..................................... 8
(b) Performance Units............................... 8
Section 2.7 Termination of Employment............................. 8
(a) Prior to the end of a Performance Period........ 8
(i) Death....................................... 8
(ii) Disability or Retirement.................. 8
(iii) Other Terminations........................ 9
(b) After the end of a Performance Period but
prior to the end of a Restricted Period............... 9
(i) Death, Disability, or Retirement.......... 9
(ii) Other Terminations........................ 9
Section 2.8 Deferral of Payment ..................................10
ARTICLE III - PROVISIONS APPLICABLE TO RESTRICTED SHARES
AND RESTRICTED UNITS........................................10
Section 3.1 Vesting Periods and Restricted Periods................10
Section 3.2 Grants of Restricted Shares and Restricted Units......10
Section 3.3 Rights and Restrictions Governing Restricted Shares...11
Section 3.4 Rights Governing Restricted Units.....................11
Section 3.5 Adjustment with respect to Restricted Shares and
Restricted Units......................................12
Section 3.6 Payment of Restricted Shares and Restricted Units.....12
(a) Restricted Shares...............................12
(b) Restricted Units................................12
(c) Payment of Taxes................................12
Section 3.7 Termination of Employment.............................13
(a) Prior to the end of a Vesting Period............13
(i) Death.....................................13
(ii) Disability or Retirement..................13
(iii) Other Terminations........................13
(b) After the end of a Vesting Period but prior
to the end of a Restricted Period...............13
(i) Death, Disability, or Retirement..........13
(ii) Other Terminations........................14
Section 3.8 Extension of Vesting; Deferral of Payment.............14
Section 3.9 Limitation on Transfer of Restricted Shares and
Restricted Units......................................14
ARTICLE IV - PROVISIONS APPLICABLE TO STOCK OPTIONS.....................15
Section 4.1 Grants of Stock Options...............................15
Section 4.2 Option Documentation..................................15
Section 4.3 Exercise Price........................................15
Section 4.4 Exercise of Stock Options.............................16
(a) Vesting and Exercisability......................16
(b) Option Period...................................16
(c) Exercise in the Event of Termination of
Employment......................................16
(i) Death.....................................16
(ii) Disability or Retirement..................16
(iii) Other Terminations........................16
(d) Limitations on Transferability...................17
Section 4.5 Payment of Purchase Price and Tax Liability Upon
Exercise; Delivery of Shares..........................18
(a) Payment of Purchase Price.......................18
(b) Payment of Taxes................................18
(c) Delivery of Shares..............................18
Section 4.6 Limitation on Shares of Common Stock Received upon
Exercise of Stock Options.............................18
ARTICLE V - PROVISIONS APPLICABLE TO STOCK APPRECIATION
RIGHTS......................................................19
Section 5.1 Grants of Stock Appreciation Rights...................19
Section 5.2 Stock Appreciation Rights Granted in Connection
with Incentive Stock Options..........................20
Section 5.3 Payment Upon Exercise of Stock Appreciation Rights....20
Section 5.4 Termination of Employment.............................20
(a) Death...........................................20
(b) Disability......................................20
(c) Retirement......................................21
(d) Other Terminations..............................21
ARTICLE VI - PROVISIONS APPLICABLE TO OTHER ML & CO.
SECURITIES.................................................21
Section 6.1 Grants of Other ML & Co. Securities...................21
Section 6.2 Terms and Conditions of Conversion or Exchange........22
ARTICLE VII - CHANGES IN CAPITALIZATION.................................22
ARTICLE VIII - PAYMENTS UPON TERMINATION OF EMPLOYMENT
AFTER A CHANGE IN CONTROL.................................23
Section 8.1 Value of Payments Upon Termination After a Change
in Control............................................23
(a) Performance Shares and Performance Units........23
(b) Restricted Shares and Restricted Units..........24
(c) Stock Options and Stock Appreciation Rights.....24
(d) Other ML & Co. Securities.......................25
Section 8.2 A Change in Control...................................25
Section 8.3 Effect of Agreement Resulting in Change in Control....26
Section 8.4 Termination for Cause.................................26
Section 8.5 Good Reason...........................................27
(a) Inconsistent Duties.............................27
(b) Reduced Salary or Bonus Opportunity.............27
(c) Relocation......................................27
(d) Compensation Plans..............................28
(e) Benefits and Perquisites........................28
(f) No Assumption by Successor......................28
Section 8.6 Effect on Plan Provisions.............................28
ARTICLE IX - MISCELLANEOUS..............................................29
Section 9.1 Designation of Beneficiary............................29
Section 9.2 Employment Rights.....................................29
Section 9.3 Nontransferability....................................29
Section 9.4 Withholding...........................................30
Section 9.5 Relationship to Other Benefits........................30
Section 9.6 No Trust or Fund Created..............................30
Section 9.7 Expenses..............................................30
Section 9.8 Indemnification.......................................30
Section 9.9 Tax Litigation........................................31
ARTICLE X - AMENDMENT AND TERMINATION...................................31
ARTICLE XI - INTERPRETATION.............................................31
Section 11.1 Governmental and Other Regulations..................31
Section 11.2 Governing Law.......................................31
ARTICLE XII - EFFECTIVE DATE AND STOCKHOLDER APPROVAL...................31
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MERRILL LYNCH & CO., INC.
LONG-TERM INCENTIVE COMPENSATION PLAN
ARTICLE I - GENERAL
Section 1.1 Purpose.
The purposes of the Long-Term Incentive Compensation Plan (the "Plan")
are: (a) to enhance the growth and profitability of Merrill Lynch & Co.,
Inc., a Delaware corporation ("ML & Co."), and its subsidiaries by providing
the incentive of long-term rewards to key employees who are capable of having
a significant impact on the performance of ML & Co. and its subsidiaries; (b)
to attract and retain employees of outstanding competence and ability; (c) to
encourage long-term stock ownership by employees; and (d) to further the
identity of interests of such employees with those of stockholders of ML & Co.
Section 1.2 Definitions.
For the purpose of the Plan, the following terms shall have the meanings
indicated:
(a) "Board of Directors" or "Board" shall mean the Board of Directors
of ML & Co.
(b) "Code" shall mean the Internal Revenue Code of l986, as amended,
including any successor law thereto.
(c) "Company" shall mean ML & Co. and any corporation, partnership,
or other organization of which ML & Co. owns or controls, directly or
indirectly, not less than 50% of the total combined voting power of all
classes of stock or other equity interests. For purposes of this Plan, the
terms "ML & Co." and "Company" shall include any successor thereto.
(d) "Committee" shall mean the Management Development and Compensation
Committee of the Board of Directors, or its functional successor or any other
Board committee that has been designated by the Board of Directors to administer
the Plan, or the Board of Directors. The Committee shall be constituted so that
at all relevant times it meets the then applicable requirements of Rule 16b-3
(or its successor) promulgated under the Securities Exchange Act of 1934, as
amended.
(e) "Common Stock" shall mean the Common Stock, par value $1.33 1/3 per
share, of ML & Co. and a "share of Common Stock" shall mean one share of Common
Stock together with, for so long as Rights are outstanding, one Right (whether
trading with the Common Stock or separately).
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(f) "Disability," unless otherwise provided herein, shall mean any
physical or mental condition that, in the opinion of the Head of Human
Resources of Merrill Lynch & Co., Inc. (or his or her functional successor),
renders an employee incapable of engaging in any employment or occupation for
which he is suited by reason of education or training.
(g) "Fair Market Value" of shares of Common Stock on any given date(s)
shall be: (a) the mean of the high and low sales prices on the New York Stock
Exchange--Composite Tape of such shares on the date(s) in question, or, if the
shares of Common Stock shall not have been traded on any such date(s), the mean
of the high and low sales prices on the New York Stock Exchange--Composite Tape
on the first day prior thereto on which the shares of Common Stock were so
traded; or (b) if the shares of Common Stock are not traded on the New York
Stock Exchange, such other amount as may be determined by the Committee by any
fair and reasonable means.
"Fair Market Value" of any Other ML & Co. Security on any given
date(s) shall be: (a) the mean of the high and low sales prices of such Other ML
& Co. Security on the principal securities exchange on which such Security is
traded on the date(s) in question or, if such Other ML & Co. Security shall not
have been traded on any such exchange on such date(s), the mean of the high and
low sales prices on such exchange on the first day prior thereto on which such
Other ML & Co. Security was so traded; or (b) if the Other ML & Co. Security is
not publicly traded on a securities exchange, such other amount as may be
determined by the Committee by any fair and reasonable means.
(h) "Junior Preferred Stock" shall mean ML & Co.'s Series A Junior
Preferred Stock, par value $1.00 per share.
(i) "Other ML & Co. Security" shall mean a financial instrument
issued pursuant to Article VI.
(j) "Participant" shall mean any employee who has met the eligibility
requirements set forth in Section 1.5 hereof and to whom a grant has been made
and is outstanding under the Plan.
(k) "Performance Period" shall mean, in relation to Performance Shares or
Performance Units, any period, for which performance objectives have been
established, of not less than one nor more than ten consecutive ML & Co. fiscal
years, commencing with the first day of the fiscal year in which such
Performance Shares or Performance Units were granted.
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(l) "Performance Share" shall mean a right, granted to a Participant
pursuant to Article II, that will be paid out as a share of Common Stock.
(m) "Performance Unit" shall mean a right, granted to a Participant
pursuant to Article II, to receive an amount equal to the Fair Market Value of
one share of Common Stock in cash.
(n) "Restricted Period" shall mean, (i) in relation to shares of Common
Stock receivable in payment for Performance Shares, the period beginning at the
end of the applicable Performance Period during which restrictions on the
transferability of such shares of Common Stock are in effect; and (ii) in
relation to Restricted Shares or Restricted Units, the period beginning with the
first day of the month in which Restricted Shares or Restricted Units are
granted, during which restrictions on the transferability of such Restricted
Shares or Restricted Units are in effect, which shall not be of shorter duration
than the Vesting Period applicable to the same Restricted Shares or Restricted
Units.
(o) "Restricted Share" shall mean a share of Common Stock, granted to a
Participant pursuant to Article III, subject to the restrictions set forth in
Section 3.3 hereof.
(p) "Restricted Unit" shall mean the right, granted to a Participant
pursuant to Article III, as provided by the Committee at the time of grant to
receive either: (1) an amount in cash equal to the Fair Market Value of one
share of Common Stock, or (2) one share of Common Stock.
(q) "Retirement" shall mean the cessation of employment with the Company
(1) on or after (A) having completed at least five 5 years of service, and (B)
reaching any age that, when added to service with the Company (in each case,
expressed as completed years and completed months), equals at least 45; or (2)
as the result of becoming employed by an unconsolidated affiliate of the Company
(as specified by the Head of Human Resources); provided that, in each case,
termination of employment by the Company for Cause, as defined in Section 8.4 of
the Plan, shall not qualify as Retirement.
(r) "Rights" means the Rights to Purchase Units of Junior Preferred Stock
issued pursuant to the Rights Agreement.
(s) "Rights Agreement" means the Rights Agreement dated as of December 16,
1987 between ML & Co. and Manufacturers Hanover Trust Company, Rights Agent, as
amended from time to time.
(t) "Stock Appreciation Right" shall mean a right, granted to a
Participant pursuant to Article V, to receive, in cash or shares of Common
Stock, an amount equal to the increase in Fair Market Value, over a specified
period of time, of a specified number of shares of Common Stock.
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(u) "Stock Option" shall mean a right, granted to a Participant pursuant
to Article IV, to purchase, before a specified date and at a specified price, a
specified number of shares of Common Stock. Stock Options may be "Incentive
Stock Options," which meet the definition of such in Section 422A of the Code,
or "Nonqualified Stock Options," which do not meet such definition.
(v) "Vesting Period" shall mean, in relation to Restricted Shares,
Restricted Units, or Stock Options, any period of not less than six (6) months
beginning with the first day of the month in which the grant of the applicable
Restricted Shares, Restricted Units, or Stock Options is effective, during which
such Restricted Shares Restricted Units, or Stock Options may be forfeited if
the Participant terminates employment.
Section 1.3 Administration.
(a) The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to:
(i) subject to Section 1.5 hereof, select Participants after receiving the
recommendations of the management of the Company; (ii) determine the number of
Performance Shares, Performance Units, Restricted Shares, Restricted Units,
Stock Appreciation Rights, or Other ML & Co. Securities subject to each grant;
(iii) determine the number of shares of Common Stock subject to each Stock
Option grant; (iv) determine the time or times when grants are to be made or are
to be effective; (v) determine the terms and conditions subject to which grants
may be made; (vi) extend the term of any Stock Option; (vii) provide at the time
of grant that all or any portion of any Stock Option shall be canceled upon the
Participant's exercise of any Stock Appreciation Rights; (viii) prescribe the
form or forms of the instruments evidencing any grants made hereunder, provided
that such forms are consistent with the Plan; (ix) adopt, amend, and rescind
such rules and regulations as, in its opinion, may be advisable for the
administration of the Plan; (x) construe and interpret the Plan and all rules,
regulations, and instruments utilized thereunder; and (xi) make all
determinations deemed advisable or necessary for the administration of the Plan.
All determinations by the Committee shall be final and binding.
(b) The Committee shall act in accordance with the procedures established
for a Committee under ML & Co.'s Certificate of Incorporation and By-Laws or
under any resolution of the Board.
Section 1.4 Shares Subject to the Plan.
The total number of shares of Common Stock that may be distributed under
the Plan shall be 320,000,000 (whether granted as Restricted Shares or reserved
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for distribution upon grant of Restricted Units, Performance Shares, Stock
Options, Stock Appreciation Rights (to the extent they may be paid out in Common
Stock), or Other ML & Co. Securities), subject to adjustment as provided in
Article VII hereof. Shares of Common Stock distributed under the Plan may be
treasury shares or authorized but unissued shares. To the extent that awards of
Other ML & Co. Securities are convertible into Common Stock or are otherwise
equity securities (or convertible into equity securities) of ML & Co., they
shall be subject to the limitation expressed above on the number of shares of
Common Stock that can be awarded under the Plan. Any shares of Common Stock that
have been granted as Restricted Shares or that have been reserved for
distribution in payment for Restricted Units or Performance Shares but are later
forfeited or for any other reason are not payable under the Plan may again be
made the subject of grants under the Plan. If any Stock Option, Stock
Appreciation Right, or Other ML & Co. Security granted under the Plan expires or
terminates, or any Restricted Unit or Stock Appreciation Right is paid out in
cash, the underlying shares of Common Stock may again be made the subject of
grants under the Plan. Units payable in cash that are later forfeited or for any
reason are not payable under the Plan may again be the subject of grants under
the Plan.
Section 1.5 Eligibility and Participation.
Participation in the Plan shall be limited to officers (who may also be
members of the Board of Directors) and other salaried, key employees of the
Company or any affiliate of the Company designated by the Committee.
ARTICLE II - PROVISIONS APPLICABLE TO PERFORMANCE SHARES AND PERFORMANCE UNITS.
Section 2.1 Performance Periods and Restricted Periods.
The Committee shall establish Performance Periods applicable to
Performance Shares and Performance Units and may establish Restricted Periods
applicable to Performance Shares, at its discretion. Each such Performance
Period shall commence with the beginning of a fiscal year in which the
Performance Shares and Performance Units are granted and have a duration of not
less than one nor more than ten consecutive fiscal years. Each such Restricted
Period shall commence with the end of the Performance Period established for
such Performance Shares and shall end on such date as may be determined by the
Committee at the time of grant. There shall be no limitation on the number of
Performance Periods or Restricted Periods established by the Committee, and more
than one Performance Period may encompass the same fiscal year.
Section 2.2 Performance Objectives.
At any time before or during a Performance Period, the Committee shall
establish one or more performance objectives for such Performance Period,
provided that such performance objectives shall be established prior to the
grant of any Performance Shares or Performance Units with respect to such
Period. Performance objectives shall be based on one or more measures such as
return on stockholders' equity, earnings, or any other standard deemed relevant
by the Committee, measured internally or relative to other organizations and
before or after extraordinary items, as may be determined by the Committee;
provided, however, that any such measure shall include all accruals for grants
made under the Plan and for all other employee benefit plans of the Company. The
Committee may, in its discretion, establish performance objectives for the
Company as a whole or for only that part of the Company in which a given
Participant is involved, or a combination thereof. In establishing the
performance objective or objectives for a Performance Period, the Committee
shall determine both a minimum performance level, below which no Performance
Shares or Performance Units shall be payable, and a full performance level, at
or above which 100% of the Performance Shares or Performance Units shall be
payable. In addition, the Committee may, in its discretion, establish
intermediate levels at which given proportions of the Performance Shares or
Performance Units shall be payable. Such performance objectives shall not
thereafter be changed except as set forth in Sections 2.5 and 2.6 and Article
VII hereof.
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Section 2.3 Grants of Performance Shares and Performance Units.
The Committee may select employees to become Participants subject to the
provisions of Section 1.5 hereof and grant Performance Shares or Performance
Units to such Participants at any time prior to or during the first fiscal year
of a Performance Period. Grants shall be deemed to have been made as of the
beginning of the first fiscal year of the Performance Period. Before making
grants, the Committee must receive the recommendations of the management of the
Company, which will take into account such factors as level of responsibility,
current and past performance, and performance potential. Subject to the
provisions of Section 2.7 hereof, a grant of Performance Shares or Performance
Units shall be effective for the entire applicable Performance Period and may
not be revoked. Each grant to a Participant shall be evidenced by a written
instrument stating the number of Performance Shares or Performance Units
granted, the Performance Period, the performance objective or objectives, the
proportion of payments for performance between the minimum and full performance
levels, if any, the Restricted Periods and restrictions applicable to shares of
Common Stock receivable in payment for Performance Shares, and any other terms,
conditions, and rights with respect to such grant. At the time of any grant of
Performance Shares, there shall be reserved out of the number of shares of
Common Stock authorized for distribution under the Plan a number of shares equal
to the number of Performance Shares so granted.
Section 2.4 Rights and Benefits During Performance Period.
The Committee may provide that, during a Performance Period, a Participant
shall be paid cash amounts, with respect to each Performance Share or
Performance Unit held by such Participant, in the same manner, at the same time,
and in the same amount paid, as a dividend on a share of Common Stock.
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Section 2.5 Adjustment with respect to Performance Shares and
Performance Units.
Any other provision of the Plan to the contrary notwithstanding, the
Committee may at any time adjust performance objectives (up or down) and minimum
or full performance levels (and any intermediate levels and proportion of
payments related thereto), adjust the way performance objectives are measured,
or shorten any Performance Period or Restricted Period, if it determines that
conditions, including but not limited to, changes in the economy, changes in
competitive conditions, changes in laws or governmental regulations, changes in
generally accepted accounting principles, changes in the Company's accounting
policies, acquisitions or dispositions, or the occurrence of other unusual,
unforeseen, or extraordinary events, so warrant.
Section 2.6 Payment of Performance Shares and Performance Units.
Within 90 days after the end of any Performance Period, the Company shall
determine the extent to which performance objectives established by the
Committee pursuant to Section 2.2 hereof for such Performance Period have been
met during such Performance Period and the resultant extent to which Performance
Shares or Performance Units granted for such Performance Period are payable.
Payment for Performance Shares and Performance Units shall be as follows:
(a) Performance Shares:
(i) If a Restricted Period has been established in relation to
the Performance Shares:
(A) At the end of the applicable Performance Period, one or
more certificates representing the number of shares of Common Stock equal to the
number of Performance Shares payable shall be registered in the name of the
Participant but shall be held by the Company for the account of the employee.
Such shares will be nonforfeitable but restricted as to transferability during
the applicable Restricted Period. During the Restricted Period, the Participant
shall have all rights of a holder as to such shares of Common Stock, including
the right to receive dividends, to exercise Rights, and to vote such Common
Stock and any securities issued upon exercise of Rights, subject to the
following restrictions: (1) the Participant shall not be entitled to delivery of
certificates representing such shares of Common Stock and any other such
securities until the expiration of the Restricted Period; and (2) none of such
shares of Common Stock or Rights may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restricted Period. Any shares of
Common Stock or other securities or property received with respect to such
shares shall be subject to the same restrictions as such shares; provided,
however, that the Company shall not be required to register any fractional
shares of Common Stock payable to any Participant, but will pay the value of
such fractional shares, measured as set forth in Section 2.6(b) below, to the
Participant.
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(B) At the end of the applicable Restricted Period, all
restrictions applicable to the shares of Common Stock, and other securities or
property received with respect to such shares, held by the Company for the
accounts of recipients of Performance Shares granted in relation to such
Restricted Period shall lapse, and one or more stock certificates for such
shares of Common Stock and securities, free of the restrictions, shall be
delivered to the Participant, or such shares and securities shall be credited to
a brokerage account if the Participant so directs.
(ii) If a Restricted Period has not been established in relation to
the Performance Shares, at the end of the applicable Performance Period, one or
more stock certificates representing the number of shares of Common Stock equal
to the number of Performance Shares payable, free of restrictions, shall be
registered in the name of the Participant and delivered to the Participant, or
such shares shall be credited to a brokerage account if the Participant so
directs.
(b) Performance Units: At the end of the applicable Performance Period, a
Participant shall be paid a cash amount equal to the number of Performance Units
payable, times the mean of the Fair Market Value of Common Stock during the
second calendar month following the end of the Performance Period, unless some
other date or period is established by the Committee at the time of grant.
Section 2.7 Termination of Employment.
(a) Prior to the end of a Performance Period:
(i) Death: If a Participant ceases to be an employee of the Company
prior to the end of a Performance Period by reason of death, any outstanding
Performance Shares or Performance Units with respect to such Participant shall
become payable and be paid to such Participant's beneficiary or estate, as the
case may be, as soon as practicable in the manner set forth in Sections
2.6(a)(ii) and 2.6(b) hereof, respectively. In determining the extent to which
performance objectives established for such Performance Period have been met and
the resultant extent to which Performance Shares or Performance Units are
payable, the Performance Period shall be deemed to end as of the end of the
fiscal year in which the Participant's death occurred.
(ii) Disability or Retirement: The Disability or Retirement of a
Participant shall not constitute a termination of employment for purposes of
this Article II, and such Participant shall not forfeit any Performance Shares
or Performance Units held by him or her, provided that following Disability or
Retirement such Participant does not engage in or assist any business that the
Committee, in its sole discretion, determines to be in competition with business
engaged in by the Company during the remainder of the applicable Performance
Period. A Participant who does engage in or assist any business that the
Committee, in its sole discretion, determines to be in competition with business
engaged in by the Company shall be deemed to have terminated employment.
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(iii) Other Terminations: If a Participant ceases to be an employee
prior to the end of a Performance Period for any reason other than death, the
Participant shall immediately forfeit all Performance Shares and Performance
Units previously granted under the Plan and all right to receive any payment for
such Performance Shares and Performance Units. The Committee may, however,
direct payment in accordance with the provisions of Section 2.6 hereof for a
number of Performance Shares or Performance Units, as it may determine, granted
under the Plan to a Participant whose employment has so terminated (but not
exceeding the number of Performance Shares or Performance Units that could have
been payable had the Participant remained an employee) if it finds that the
circumstances in the particular case so warrant. For purposes of the preceding
sentence, the Performance Period over which performance objectives shall be
measured shall be deemed to end as of the end of the fiscal year in which
termination occurred.
(b) After the end of a Performance Period but prior to the end of a
Restricted Period:
(i) Death, Disability, or Retirement: If a Participant ceases to be
an employee of the Company by reason of death or in the case of the Disability
or Retirement of a Participant, the Restricted Period shall be deemed to have
ended and shares held by the Company shall be paid as soon as practicable in the
manner set forth in Section 2.6(a)(i)(B).
(ii) Other Terminations: Terminations of employment for any reason
other than death after the end of a Performance Period but prior to the end of a
Restricted Period shall not have any effect on the Restricted Period, unless the
Committee, in its sole discretion, finds that the circumstances so warrant and
determines that the Restricted Period shall end on an earlier date as determined
by the Committee and that shares held by the Company shall be paid as soon as
practicable following such earlier date in the manner set forth in Section
2.6(a)(i)(B).
(c) Except as otherwise provided in this Section 2.7, termination of
employment after the end of a Performance Period but before the payment of
Performance Shares or Performance Units relating to such Performance Period
shall not affect the amount, if any, to be paid pursuant to Section 2.6 hereof.
Approved leaves of absence of one year or less shall not be deemed to be
terminations of employment under this Section 2.7. Leaves of absence of more
than one year will be deemed to be terminations of employment under this Section
2.7, unless the Committee determines otherwise.
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Section 2.8 Deferral of Payment.
The Committee may, in its sole discretion, offer a Participant the right,
by execution of a written agreement, to defer the receipt of all or any portion
of the payment, if any, for Performance Shares or Performance Units. If such an
election to defer is made, the Common Stock receivable in payment for
Performance Shares shall be deferred as stock units equal in number to and
exchangeable, at the end of the deferral period, for the number of shares of
Common Stock that would have been paid to the Participant. Such stock units
shall represent only a contractual right and shall not give the Participant any
interest, right, or title to any Common Stock during the deferral period. The
cash receivable in payment for Performance Units or fractional shares receivable
for Performance Shares shall be deferred as cash units. Deferred stock units and
cash units may be credited annually with the appreciation factor contained in
the deferred compensation agreement, which may include dividend equivalents. All
other terms and conditions of deferred payments shall be as contained in the
written agreement.
ARTICLE III - PROVISIONS APPLICABLE TO RESTRICTED SHARES AND RESTRICTED UNITS.
Section 3.1 Vesting Periods and Restricted Periods.
The Committee shall establish one or more Vesting Periods applicable to
Restricted Shares and Restricted Units and one or more Restricted Periods
applicable to Restricted Shares and Restricted Units, at its discretion. Each
such Vesting Period shall have a duration of not less than six (6) months,
measured from the first day of the month in which the grant of the applicable
Restricted Shares or Restricted Units is effective. Each such Restricted Period
shall have a duration of six (6) or more consecutive months, measured from the
first day of the month in which the grant of the applicable Restricted Shares or
Restricted Unit is effective, but in no event shall any Restricted Period be of
shorter duration than the Vesting Period applicable to such Restricted Share or
Restricted Unit.
Section 3.2 Grants of Restricted Shares and Restricted Units.
The Committee may select employees to become Participants (subject to the
provisions of Section 1.5 hereof) and grant Restricted Shares or Restricted
Units to such Participants at any time. Before making grants, the Committee must
receive the recommendations of the management of the Company, which will take
into account such factors as level of responsibility, current and past
performance, and performance potential.
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Subject to the provisions of Section 3.7 hereof, a grant of Restricted
Shares or Restricted Units shall be effective for the entire applicable Vesting
and Restricted Periods and may not be revoked. Each grant to a Participant shall
be evidenced by a written instrument stating the number of Restricted Shares or
Restricted Units granted, the Vesting Period, the Restricted Period, the
restrictions applicable to such Restricted Shares or Restricted Units, the
nature and terms of payment of consideration, if any, and the consequences of
forfeiture that will apply to such Restricted Shares and Restricted Units, and
any other terms, conditions, and rights with respect to such grant.
Section 3.3 Rights and Restrictions Governing Restricted Shares.
At the time of grant of Restricted Shares, subject to the receipt by the
Company of any applicable consideration for such Restricted Shares, one or more
certificates representing the appropriate number of shares of Common Stock
granted to a Participant shall be registered either in his or her name or for
his or her benefit either individually or collectively with others, but shall be
held by the Company for the account of the Participant. The Participant shall
have all rights of a holder as to such shares of Common Stock, including the
right to receive dividends, to exercise Rights, and to vote such Common Stock
and any securities issued upon exercise of Rights, subject to the following
restrictions: (a) the Participant shall not be entitled to delivery of
certificates representing such shares of Common Stock and any other such
securities until the expiration of the Restricted Period; (b) except as provided
in Section 3.9, none of the Restricted Shares may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during the Restricted
Period; and (c) all of the Restricted Shares shall be forfeited and all rights
of the Participant to such Restricted Shares shall terminate without further
obligation on the part of the Company unless the Participant remains in the
continuous employment of the Company for the entire Vesting Period in relation
to which such Restricted Shares were granted, except as otherwise provided in by
Section 3.7 hereof. Any shares of Common Stock or other securities or property
received with respect to such shares shall be subject to the same restrictions
as such Restricted Shares.
Section 3.4 Rights Governing Restricted Units.
During the Vesting Period, or, if longer, the Restricted Period, for
Restricted Units, a Participant may be paid, with respect to each such
Restricted Unit, cash amounts in the same manner, at the same time, and in the
same amount paid, as a dividend on a share of Common Stock. Except as otherwise
provided in Section 3.7 hereof, the Restricted Units shall be forfeited and all
rights of the Participant to the Restricted Units shall terminate without
further obligation on the part of the Company unless the Participant remains in
the continuous employment of the Company for the entire Vesting Period.
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Section 3.5 Adjustment with respect to Restricted Shares and Restricted
Units.
Any other provision of the Plan to the contrary notwithstanding, the
Committee may at any time shorten any Vesting Period or Restricted Period, if it
determines that conditions, including but not limited to, changes in the
economy, changes in competitive conditions, changes in laws or governmental
regulations, changes in generally accepted accounting principles, changes in the
Company's accounting policies, acquisitions or dispositions, or the occurrence
of other unusual, unforeseen, or extraordinary events, so warrant.
Section 3.6 Payment of Restricted Shares and Restricted Units.
(a) Restricted Shares: At the end of the Restricted Period, all
restrictions contained in the grant of Restricted Shares and in the Plan shall
lapse, and the appropriate number of shares of Common Stock (net of shares
withheld by the Company at the end of the Vesting Period under Section 3.6(c))
shall be delivered to the Participant of his or her beneficiary or estate, as
the case may be, free of restrictions, in the form of stock certificates or
credited to a brokerage account as the Participant or his or her beneficiary or
estate, as the case may be, so directs.
(b) Restricted Units: At the end of the Vesting Period (or, if longer, the
Restricted Period), there shall be paid to the Participant, or his or her
beneficiary or estate, as the case may be either: (1) an amount in cash equal to
the Fair Market Value of one share of Common Stock on the last trading day of
the Vesting Period (or, if longer, the Restricted Period), or, (2) one share of
Common Stock for each Restricted Unit, net of shares withheld by the Company
pursuant to Section 3.6(c), free of restrictions. For Restricted Units paid in
Common Stock, the appropriate number of shares shall be delivered to the
Participant, or his or her beneficiary or estate, as the case may be, in the
form of stock certificates or credited to a brokerage account as the Participant
or his or her beneficiary or estate, as the case may be, so directs. At least
six months prior to the end of the applicable period, the Company may permit a
Participant to elect to extend the Restricted Period of a Restricted Unit for an
additional period determined by the Participant at the time of such election.
(c) Payment of Taxes: At the end of the Vesting Period for Restricted
Shares or the Restricted Period for Restricted Units payable in Common Stock,
the Company shall satisfy any minimum federal, state, local or social security
withholding requirements that occur as a result the vesting of Restricted Shares
or payment of Restricted Units in shares of Common Stock by deducting from the
number of whole shares of Common Stock otherwise deliverable, such number of
shares as shall have a Fair Market Value, on the applicable date, equal to the
minimum tax required to be withheld by the Company.
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Section 3.7 Termination of Employment.
(a) Prior to the end of a Vesting Period:
(i) Death: If a Participant ceases to be an employee of the Company
prior to the end of a Vesting Period by reason of death, all grants of
Restricted Shares and Restricted Units granted to such Participant are
immediately payable in accordance with their terms.
(ii) Disability or Retirement: The Disability or Retirement of a
Participant shall not constitute a termination of employment for purposes of
this Article III and such Participant shall not forfeit any Restricted Shares or
Restricted Units held by him or her, provided that, during the remainder of the
applicable Vesting Period, such Participant does not engage in or assist any
business that the Committee, in its sole discretion, determines to be in
competition with business engaged in by the Company. A Participant who does
engage in or assist any business that the Committee, in its sole discretion,
determines to be in competition with business engaged in by the Company shall be
deemed to have terminated employment.
(iii) Other Terminations: Except as otherwise provided herein, if a
Participant ceases to be an employee prior to the end of a Vesting Period for
any reason other than death, the Participant shall immediately forfeit all
Restricted Shares and Restricted Units previously granted, unless the Committee,
in its sole discretion, finds that the circumstances in the particular case so
warrant and allows a Participant whose employment has so terminated to retain
any or all of the Restricted Shares or Restricted Units granted to such
Participant. Notwithstanding the foregoing, with respect to any Participant
holding unvested Restricted Shares and/or Restricted Units (x) whose employment
is terminated because of a reduction in staff (coded under termination code
number 251 or such other code as may be equivalent to or substituted for
termination code number 251), and (y) who delivers to the Company and complies
with a release of claims he or she may have against the Company or any of its
subsidiaries, which will include a prohibition on solicitation of the Company's
employees and such other restrictions as the Company may impose (a "Release"),
then notwithstanding such termination, Restricted Shares and Restricted Units
granted to such Participant shall continue to vest during the Vesting Period and
be restricted during the Restricted Period for such grant; provided, however,
that in the event of the Employee's death during the relevant Vesting or
Restricted Periods the treatment of Restricted Shares and Restricted Units will
be determined in accordance with the provisions of Section 3.7(a)(i);
(b) After the end of a Vesting Period but prior to the end of a
Restricted Period:
(i) Death, Disability, or Retirement: If a Participant ceases
to be an employee of the Company by reason of death, or in the case of the
Disability or Retirement of a Participant, prior to the end of a Restricted
Period, all Restricted Shares and Restricted Units granted to such Participant
are immediately payable in the manner set forth in Section 3.6.
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(ii) Other Terminations: Terminations of employment for any
reason other than death after the end of a Vesting Period but prior to the end
of a Restricted Period shall not have any effect on the Restricted Period,
unless (A) the Restricted Period relates to Restricted Units that have been
further deferred in which case the Restricted Units shall be paid to the
Participant, or (B) the Committee, in its sole discretion, finds that the
circumstances so warrant and determines that the Restricted Period shall end on
an earlier date as determined by the Committee and, in each case, the applicable
Restricted Shares or Restricted Units shall be paid as soon as practicable in
the manner set forth in Section 3.6.
Approved leaves of absence of one year or less shall not be deemed to be
terminations of employment under this Section 3.7. Leaves of absence of more
than one year will be deemed to be terminations of employment under this Section
3.7, unless the Committee determines otherwise.
Section 3.8 Extension of Vesting or Restrictions; Deferral of Payment.
The Committee may, in its sole discretion, offer any Participant the
right, by execution of a written agreement with ML & Co. containing such terms
and conditions as the Committee shall in its sole discretion provide for, to
extend the Vesting or Restricted Period applicable to all or any portion of such
Participant's Restricted Shares or Restricted Units, to convert all or any
portion of such Participant's Restricted Shares into Restricted Units or to
defer the receipt of all or any portion of the payment, if any, for such
Participant's Restricted Units (including any Restricted Shares converted into
Restricted Units). In the event that any Vesting Period with respect to
Restricted Shares or Restricted Units is extended pursuant to this Section 3.8,
the Restricted Period with respect to such Restricted Shares or Restricted Units
shall be extended to the same date. The provisions of any written agreement with
a Participant pursuant to this Section 3.8 may provide for the payment or
crediting of interest, an appreciation factor or index or dividend equivalents,
as appropriate.
Section 3.9 Limitations on Transfer of Restricted Shares and Restricted
Units.
Restricted Shares and Restricted Units are not transferable by a
Participant except by will or the laws of descent and distribution or bequest;
provided, however, that the Committee shall have the authority, in its
discretion, to grant (or to authorize) that Restricted Shares and Restricted
Units may be transferred by the Participant during his or her lifetime to any
member of his or her immediate family or to a trust, limited liability
corporation, family limited partnership or other equivalent vehicle, established
for the exclusive benefit of one or more members of his or her immediate family.
A transfer of Restricted Shares or Restricted units will not be permitted unless
the Company has received evidence, to its satisfaction, that such transfer does
not trigger income or social security taxes or withholding requirements. A
transfer of Restricted Shares or Restricted Units may only be effected by the
Company at the written request of a Participant and shall become effective only
when recorded in the Company's record of outstanding Restricted Shares or
Restricted Units. In the event Restricted Shares or Restricted Units are
transferred, such Restricted Shares or Restricted Units may not be subsequently
transferred by the transferee except by will or the laws of descent and
distribution. In the event Restricted Shares or Restricted Units are
transferred, such Restricted Shares or Restricted Units shall continue to be
governed by and subject to the terms and limitations of the Plan and the
relevant grant and remain subject to forfeiture in the event the Participant
terminates his or her employment during the Vesting Period as if no transfer had
taken place. As used in this Section, "immediate family" shall mean, with
respect to any person, any child, stepchild or grandchild, and shall include
relationships arising from legal adoption.
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ARTICLE IV - PROVISIONS APPLICABLE TO STOCK OPTIONS.
Section 4.1 Grants of Stock Options.
The Committee may select employees to become Participants (subject to
Section 1.5 hereof) and grant Stock Options to such Participants at any time;
provided, however, that Incentive Stock Options shall be granted within 10 years
of the earlier of the date the Plan is adopted by the Board or approved by the
stockholders. Before making grants, the Committee must receive the
recommendations of the management of the Company, which will take into account
such factors as level of responsibility, current and past performance, and
performance potential. Subject to the provisions of the Plan, the Committee
shall also determine the number of shares of Common Stock to be covered by each
Stock Option. The Committee shall have the authority, in its discretion, to
grant "Incentive Stock Options" or "Nonqualified Stock Options," or to grant
both types of Stock Options. Furthermore, the Committee may grant a Stock
Appreciation Right in connection with a Stock Option, as provided in Article V.
Section 4.2 Option Documentation.
Each Stock Option granted under the Plan shall be evidenced by written
documentation containing such terms and conditions as the Committee may deem
appropriate and are not inconsistent with the provisions of the Plan.
Section 4.3 Exercise Price.
The Committee shall establish the exercise price at the time any Stock
Option is granted at such amount as the Committee shall determine, except that
such exercise price shall not be less than 50% of the Fair Market Value of the
underlying shares of Common Stock on the day a Stock Option is granted and that,
with respect to an Incentive Stock Option, such exercise price shall not be less
than 100% of the Fair Market Value of the underlying shares of Common Stock on
the day such Incentive Stock Option is granted. The exercise price will be
subject to adjustment in accordance with the provisions of Article VII of the
Plan.
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Section 4.4 Exercise of Stock Options.
(a) Vesting and Exercisability: Stock Options shall become
exercisable at such times and in such installments as the Committee may provide
at the time of grant. The Committee may also set a Vesting Period for grants of
Stock Options. The Committee may also, in its sole discretion, accelerate the
time at which a Stock Option or installment may vest or become exercisable. A
Stock Option may be exercised at any time from the time first set by the
Committee until the close of business on the expiration date of the Stock
Option.
(b) Option Period: For each Stock Option granted, the Committee
shall specify the period during which the Stock Option may be exercised,
provided that no Stock Option shall be exercisable after the expiration of 10
years from the date of grant of such Stock Option.
(c) Exercise in the Event of Termination of Employment:
--------------------------------------------------
(i) Death: If a Participant ceases to be an employee of the Company by
reason of death prior to: (A) the end of a Vesting Period, (B) the exercise of
or (C) or the expiration of Stock Options granted to him or her that remain
outstanding on the date of death, such Stock Options may be exercised to the
full extent not yet exercised, regardless of whether or not then vested or fully
exercisable under the terms of the grant or under the terms of Section 4.4(a)
hereof, by his or her estate, beneficiaries or transferees, as the case may be,
at any time and from time to time, but in no event after the expiration date of
such Stock Option.
(ii) Disability or Retirement: The Disability or Retirement of a
Participant shall not constitute a termination of employment for purposes of
this Article IV, provided that following Disability or Retirement such
Participant does not engage in or assist any business that the Committee, in its
sole discretion, determines to be in competition with business engaged in by the
Company. A Participant who does engage in or assist any business that the
Committee, in its sole discretion, determines to be competition with business
engaged in by the Company shall be deemed to have terminated employment. In the
case of Incentive Stock Options, Disability shall be as defined in Code Section
22(e)(3).
(iii) Other Terminations: Except as provided herein, if a Participant
ceases to be an employee for any reason other than death prior to: (a) the end
of the Vesting Period, (b) the exercise of, or (c) the expiration of a Stock
Option, then all outstanding Stock Options granted to such Participant, whether
in his or her name or in the name of another person as a result of a transfer in
accordance with Section 4.4(d), shall expire and be forfeited on a date 30 days
following the date of such termination of employment. Notwithstanding the
foregoing, with respect to any Participant who holds unvested, unexercised
non-qualified Stock Options (x) whose employment is terminated because of a
reduction in staff (coded under termination code number 251 or such other code
as may be equivalent to or substituted for termination code number 251), and (y)
who delivers to the Company and complies with a release of claims he or she may
have against the Company or any of its subsidiaries, which will include a
prohibition on solicitation of the Company's employees and such other
restrictions as the Company may impose (a "Release"), then, notwithstanding such
termination, all unvested, unexercised Stock Options shall continue to be and
become exercisable in accordance with their terms until a date that is 30 days
after the latest date on which any Stock Options granted to such employee have
become fully exercisable, but in no event later than the original expiration
date of such Stock Option, (the "Exercise End Date"), and may be exercised at
any time and from time to time during such period; provided however, that in the
event of the Employee's death, during such period, the exercisability of Stock
Options will be determined in accordance with the provisions of Section
4.4(c)(i);
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In addition, if the Committee, in its sole discretion, finds that the
circumstances in the particular case so warrant, it may determine that the
Participant, his or her transferee pursuant to Section 4.4(d), or such
transferee's estate or beneficiaries, may exercise any such outstanding Stock
Option (to the extent that any such outstanding Stock Option could have been
exercised at the date of such termination of employment) at any time and from
time to time within up to five (5) years after such termination of employment,
but in no event after the expiration date of such Stock Option (the "Extended
Period").
Approved leaves of absence of one year or less shall not be deemed to be
terminations of employment under this Section 4.4(c)(iii). Leaves of absence of
more than one year shall be deemed to be terminations of employment under this
Section 4.4(c)(iii), unless the Committee determines otherwise.
(d) Limitations on Transferability: Stock Options are not transferable by
a Participant except by will or the laws of descent and distribution or bequest
and are exercisable during his or her lifetime only by him or her; provided,
however, that the Committee shall have the authority, in its discretion, to
grant (or to authorize by amendment of an existing grant) Stock Options that may
be transferred by the Participant during his or her lifetime to any member of
his or her immediate family or to a trust, limited liability corporation, family
limited partnership or other equivalent vehicle, established for the exclusive
benefit of one or more members of his or her immediate family. A transfer of a
Stock Option pursuant to this subparagraph may only be effected by the Company
at the written request of a Participant and shall become effective only when
recorded in the Company's record of outstanding Stock Options. In the event a
Stock Option is transferred as contemplated in this subparagraph, such Stock
Option may not be subsequently transferred by the transferee except by will or
the laws of descent and distribution. In the event a Stock Option is transferred
as contemplated in this subparagraph, such Stock Option shall continue to be
governed by and subject to the terms and limitations of the Plan and the
relevant grant, and the transferee shall be entitled to the same rights as the
Participant under Articles VII, VIII and X hereof, as if no transfer had taken
place. As used in this subparagraph, "immediate family" shall mean, with respect
to any person, any child, stepchild or grandchild, and shall include
relationships arising from legal adoption.
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Section 4.5 Payment of Purchase Price and Tax Liability Upon Exercise;
Delivery of Shares.
(a) Payment of Purchase Price: The purchase price of the shares as to
which a Stock Option is exercised shall be paid to the Company at the time of
exercise (i) in cash, (ii) by delivering freely transferable shares of Common
Stock already owned by the person exercising the Stock Option having a total
real-time market price, at the time and on the date of exercise, equal to the
purchase price, (iii) a combination of cash and shares of Common Stock equal in
value to the exercise price, or (iv) by such other means as the Committee, in
its sole discretion, may determine.
(b) Payment of Taxes: Upon exercise, a Participant may elect to satisfy
any federal, state, local, or social security taxes required by law to be
withheld that arise as a result of the exercise of a Stock Option by directing
the Company to withhold from the shares of Common Stock otherwise deliverable
upon the exercise of such Stock Option, such number of shares as shall have a
total real-time market price, at the time and on the date of exercise, at least
equal to the amount of tax to be withheld.
(c) Delivery of Shares: Upon receipt by the Company of the purchase price,
stock certificate(s) for the shares of Common Stock as to which a Stock Option
is exercised (net of any shares withheld pursuant to Section 4.5(b) above) shall
be delivered to the person in whose name the Stock Option is outstanding or such
person's estate or beneficiaries, as the case may be, or such shares shall be
credited to a brokerage account or otherwise delivered, in such manner as such
person or such person's estate or beneficiaries, as the case may be, may direct.
Section 4.6 Limitations on Shares of Common Stock Received upon
Exercise of Stock Options.
The aggregate Fair Market Value (determined at the time an Incentive Stock
Option is granted) of the shares of Common Stock with respect to which an
Incentive Stock Option is exercisable for the first time by a Participant during
any calendar year (under all plans of the Company) shall not exceed $100,000 or
such other limit as may be established from time to time under the Code.
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The maximum aggregate number of shares of Common Stock underlying stock
options to be granted in any one fiscal year to any individual executive
officer, as such term is defined in the regulations promulgated under Section
162(m) of the Internal Revenue Code, shall be 1,000,000 (one million), which
number shall be adjusted automatically to give effect to mergers,
consolidations, reorganizations, stock dividends, stock splits or combinations,
reclassifications, recapitalizations, or distributions to holders of Common
Stock (other than cash dividends) including, without limitation, a merger or
other reorganization event in which the Common Stock ceases to exist.
ARTICLE V - PROVISIONS APPLICABLE TO STOCK APPRECIATION RIGHTS.
Section 5.1 Grants of Stock Appreciation Rights.
The Committee may select employees to become Participants (subject to the
provisions of Section 1.5 hereof) and grant Stock Appreciation Rights to such
Participants at any time. Before making grants, the Committee must receive the
recommendations of the management of the Company, which will take into account
such factors as level of responsibility, current and past performance, and
performance potential. The Committee shall have the authority to grant Stock
Appreciation Rights in connection with a Stock Option or independently. The
Committee may grant Stock Appreciation Rights in connection with a Stock Option,
either at the time of grant or by amendment, in which case each such right shall
be subject to the same terms and conditions as the related Stock Option and
shall be exercisable only at such times and to such extent as the related Stock
Option is exercisable. A Stock Appreciation Right granted in connection with a
Stock Option shall entitle the holder to surrender to the Company the related
Stock Option unexercised, or any portion thereof, and receive from the Company
in exchange therefor an amount equal to the excess of the Fair Market Value of
one share of the Common Stock on the day preceding the surrender of such Stock
Option over the Stock Option exercise price times the number of shares
underlying the Stock Option, or portion thereof, that is surrendered. A Stock
Appreciation Right granted independently of a Stock Option shall entitle the
holder to receive upon exercise an amount equal to the excess of the Fair Market
Value of one share of Common Stock on the day preceding the exercise of the
Stock Appreciation Right over the Fair Market Value of one share of Common Stock
on the date such Stock Appreciation Right was granted, or such other price
determined by the Committee at the time of grant, which shall in no event be
less than 50% of the Fair Market Value of one share of Common Stock on the date
such Stock Appreciation Right was granted. Stock Appreciation Rights are not
transferable by a Participant except by will or the laws of descent and
distribution and are exercisable during his or her lifetime only by him or her.
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Section 5.2 Stock Appreciation Rights Granted in Connection with
Incentive Stock Options.
(a) Stock Appreciation Rights granted in connection with Incentive Stock
Options must expire no later than the last date the underlying Incentive Stock
Option can be exercised.
(b) Such Stock Appreciation Rights may be granted for no more than 100% of
the difference between the exercise price of the underlying Incentive Stock
Option and the Fair Market Value of the Common Stock subject to the underlying
Incentive Stock Option at the time the Stock Appreciation Right is exercised.
(c) Such Stock Appreciation Rights are transferable only to the extent and
at the same time and under the same conditions as the underlying Incentive Stock
Options.
(d) Such Stock Appreciation Rights may be exercised only when the
underlying Incentive Stock Options may be exercised.
(e) Such Stock Appreciation Rights may be exercised only when the Fair
Market Value of the shares of Common Stock subject to the Incentive Stock
Options exceeds the exercise price of the Incentive Stock Options.
Section 5.3 Payment Upon Exercise of Stock Appreciation Rights.
The Company's obligation to any Participant exercising a Stock
Appreciation Right may be paid in cash or shares of Common Stock, or partly in
cash and partly in shares, at the sole discretion of the Committee.
Section 5.4 Termination of Employment.
(a) Death: If a Participant ceases to be an employee of the Company prior
to the exercise or expiration of a Stock Appreciation Right outstanding in his
or her name on the date of death, such Stock Appreciation Right may be exercised
to the full extent not yet exercised, regardless of whether or not then fully
exercisable under the terms of the grant, by his or her estate or beneficiaries,
as the case may be, at any time and from time to time within l2 months after the
date of death but in no event after the expiration date of such Stock
Appreciation Right.
(b) Disability: The Disability of a Participant shall not constitute a
termination of employment for purposes of this Article IV, provided that
following the Disability such Participant does not engage in or assist any
business that the Committee, in its sole discretion, determines to be in
competition with business engaged in by the Company. A Participant who does
engage in or assist any business that the Committee, in its sole discretion,
determines to be in competition with business engaged in by the Company shall be
deemed to have terminated employment.
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(c) Retirement: The Retirement of a Participant shall not constitute a
termination of employment for purposes of this Article IV, provided that
following Retirement such Participant does not engage in or assist any business
that the Committee, in its sole discretion, determines to be in competition with
business engaged in by the Company, and such Participant may exercise any Stock
Appreciation Right outstanding in his or her name at any time and from time to
time within 5 years after the date his or her Retirement commenced but in no
event after the expiration date of such Stock Appreciation Right. A Participant
who does engage in or assist any business that the Committee, in its sole
discretion, determines to be in competition with business engaged in by the
Company shall be deemed to have terminated employment.
(d) Other Terminations: If a Participant ceases to be an employee prior to
the exercise or expiration of a Stock Appreciation Right for any reason other
than death, all outstanding Stock Appreciation Rights granted to such
Participant shall expire on the date of such termination of employment, unless
the Committee, in its sole discretion, determines that he may exercise any such
outstanding Stock Appreciation Right (to the extent that he was entitled to do
so at the date of such termination of such employment) at any time and from time
to time within up to 5 years after such termination of employment but in no
event after the expiration date of such Stock Appreciation Right.
ARTICLE VI - PROVISIONS APPLICABLE TO OTHER ML & CO. SECURITIES.
Section 6.1 Grants of Other ML & Co. Securities.
Subject to the provisions of the Plan and any necessary action by the
Board of Directors, the Committee may select employees to become Participants
(subject to the provisions of Section 1.5 hereof) and grant to Participants
Other ML & Co. Securities or the right or option to purchase Other ML & Co.
Securities on such terms and conditions as the Committee shall determine,
including, without limitation, the period such rights or options may be
exercised, the nature and terms of payment of consideration for such Other ML &
Co. Securities, whether such Other ML & Co. Securities shall be subject to any
or all of the provisions of Article III of the Plan applicable to Restricted
Shares and/or Restricted Units, the consequences of termination of employment,
and the terms and conditions, if any, upon which such Other ML & Co. Securities
may or must be repurchased by the Company. Before making grants, the Committee
must receive the recommendations of the management of the Company, which will
take into account such factors as level of responsibility, current and past
performance, and performance potential. Each such Other ML & Co. Security shall
be issued at a price that will not exceed the Fair Market Value thereof on the
date the corresponding right or option is granted. Other ML & Co. Securities may
bear interest or pay dividends from such date and at a rate or rates or pursuant
to a formula or formulas fixed by the Committee or any necessary action of the
Board. Any applicable conversion or exchange rate with respect to Other ML & Co.
Securities shall be fixed by, or pursuant to a formula determined by, the
Committee or any necessary action of the Board at each date of grant and may be
predicated upon the attainment of financial or other performance goals.
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Section 6.2 Terms and Conditions of Conversion or Exchange.
Each Other ML & Co. Security may be convertible or exchangeable on such
date and within such period of time as the Committee, or the Board if
necessary, determines at the time of grant. Other ML & Co. Securities may be
convertible into or exchangeable for (i) shares of Preferred Stock of ML &
Co. or (ii) other securities of ML & Co. or any present or future subsidiary
of ML & Co., whether or not convertible into shares of Common Stock, as the
Committee, or the Board if necessary, determines at the time of grant (or at
any time prior to the conversion or exchange date).
ARTICLE VII - CHANGES IN CAPITALIZATION.
Any other provision of the Plan to the contrary notwithstanding, if any
change shall occur in or affect shares of Common Stock or Performance Units,
Restricted Units, Stock Options, Stock Appreciation Rights, or Other ML & Co.
Securities on account of a merger, consolidation, reorganization, stock
dividend, stock split or combination, reclassification, recapitalization, or
distribution to holders of shares of Common Stock (other than cash dividends)
including, without limitation, a merger or other reorganization event in which
the shares of Common Stock cease to exist, , then, without any action by the
Committee, appropriate adjustments shall be made (1) the maximum number of
shares of Common Stock available for distribution under the Plan; (2) the number
of shares subject to or reserved for issuance and payable under outstanding
Performance Share, Restricted Unit, Restricted Share, and Stock Option grants.
In addition, if in the opinion of the Committee, after consultation with the
Company's independent public accountants, changes in the Company's accounting
policies, acquisitions, divestitures, distributions, or other unusual or
extraordinary items have disproportionately and materially affected the value of
shares of Common Stock or Performance Units, Restricted Units, Stock Options,
Stock Appreciation Rights, or Other ML & Co. Securities the performance
objectives for the Performance Periods not yet completed, including the minimum,
intermediate, and full performance levels and portion of payments related
thereto; and any other terms or provisions of any outstanding grants of
Performance Shares, Performance Units, Restricted Shares, Restricted Units,
Stock Options, Stock Appreciation Rights, or Other ML & Co. Securities, in order
to preserve the full benefits of such grants for the Participants, taking into
account inflation, interest rates, and any other factors that the Committee, in
its sole discretion, considers relevant. In the event of a change in the
presently authorized shares of Common Stock that is limited to a change in the
designation thereof or a change of authorized shares with par value into the
same number of shares with a different par value or into the same number of
shares without par value, the shares resulting from any such change shall be
deemed to be shares of Common Stock within the meaning of the Plan. In the event
of any other change affecting the shares of Common Stock, Performance Units,
Restricted Units, Stock Options, Stock Appreciation Rights, or Other ML & Co.
Securities, such adjustment shall be made as may be deemed equitable by the
Committee to give proper effect to such event.
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ARTICLE VIII - PAYMENTS UPON TERMINATION OF EMPLOYMENT AFTER A CHANGE IN
CONTROL.
Section 8.1 Value of Payments Upon Termination After a Change in
Control.
Any other provision of the Plan to the contrary notwithstanding and
notwithstanding any election to the contrary previously made by the Participant,
in the event a Change in Control shall occur and thereafter the Company shall
terminate the Participant's employment without Cause or the Participant shall
terminate his or her employment with the Company for Good Reason, the
Participant shall be paid the value of his or her Performance Shares,
Performance Units, Restricted Shares, Restricted Units, Stock Options, Stock
Appreciation Rights, and Other ML & Co. Securities in a lump sum in cash,
promptly after termination of his or her employment but, without limiting the
foregoing, in no event later than 30 days thereafter. Payments shall be
calculated as set forth below:
(a) Performance Shares and Performance Units.
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Any payment for Performance Shares and Performance Units pursuant to this
Section 8.1(a) shall be calculated by applying performance objectives for any
outstanding Performance Shares and Performance Units as if the applicable
Performance Period and any applicable Restricted Period had ended on the first
day of the month in which the Participant's employment is terminated. The amount
of any payment to a Participant pursuant to this Section 8.1(a) shall be reduced
by the amount of any payment previously made to the Participant with respect to
the Performance Shares and Performance Units, exclusive of ordinary dividend
payments, resulting by operation of law from the Change in Control, including,
without limitation, payments resulting from a merger pursuant to state law. The
value of the Performance Shares and Performance Units payable pursuant to this
Section 8.1(a) shall be the amount equal to the number of Performance Shares and
Performance Units payable in accordance with the preceding sentence multiplied
by the Fair Market Value of a share of Common Stock on the day the Participant's
employment is terminated or, if higher, the highest Fair Market Value of a share
of the Common Stock on any day during the 90-day period ending on the date of
the Change in Control (the "Pre-CIC Value").
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(b) Restricted Shares and Restricted Units.
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Any payment under this Section 8.1(b) shall be calculated as if all the
relevant Vesting and Restricted Periods had been fully completed immediately
prior to the date on which the Participant's employment is terminated. The
amount of any payment to a Participant pursuant to this Section 8.1(b) shall be
reduced by the amount of any payment previously made to the Participant with
respect to the Restricted Shares and Restricted Units, exclusive of ordinary
dividend payments, resulting by operation of law from the Change in Control,
including, without limitation, payments resulting from a merger pursuant to
state law. The value of the Participant's Restricted Shares and Restricted Units
payable pursuant to this Section 8.1(b) shall be the amount equal to the number
of the Restricted Shares and Restricted Units outstanding in a Participant's
name multiplied by the Fair Market Value of a share of Common Stock on the day
the Participant's employment is terminated or, if higher, the Pre-CIC Value.
(c) Stock Options and Stock Appreciation Rights.
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Any payment for Stock Options and Stock Appreciation Rights pursuant to
this Section 8.1(c) shall be calculated as if all such Stock Options and Stock
Appreciation Rights, regardless of whether or not then fully exercisable under
the terms of the grant, became exercisable immediately prior to the date on
which the Participant's employment is terminated. The amount of any payment to a
Participant pursuant to this Section 8.1(c) shall be reduced by the amount of
any payment previously made to a Participant with respect to the Stock Options
and Stock Appreciation Rights, exclusive of any ordinary dividend payments,
resulting by operation of law from the Change in Control, including, without
limitation, payments resulting from a merger pursuant to state law. The value of
the Participant's Stock Options and Stock Appreciation Rights payable pursuant
to this Section 8.1(c) shall be
(i) in the case of a Stock Option, for each underlying share
of Common Stock, the excess of the Fair Market Value of a share of
Common Stock on the day the Participant's employment is terminated,
or, if higher, the Pre-CIC Value, over the per share exercise price
for such Stock Option;
(ii) in the case of a Stock Appreciation Right granted in
tandem with a Stock Option, the Fair Market Value of a share of
Common Stock on the day the Participant's employment is terminated,
or, if higher, the Pre-CIC Value, over the Stock Option exercise
price; and
(iii) in the case of a Stock Appreciation Right granted
independently of a Stock Option, the Fair Market Value of a share of
Common Stock on the day the Participant's employment is terminated,
or, if higher, the Pre-CIC Value, over the Fair Market Value of one
share of Common Stock on the date such Stock Appreciation Right was
granted, or such other price determined by the Committee at the time
of grant.
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(d) Other ML & Co. Securities.
Any payment for Other ML & Co. Securities under this Section 8.1(d) shall
be calculated as if any relevant Vesting or Restricted Periods or other
applicable conditions dependent on the passage of time and relating to the
exercisability of any right or option to purchase Other ML & Co. Securities, or
relating to the full and unconditional ownership of such Other ML & Co.
Securities themselves, had been met on the first day of the month in which the
Participant's employment is terminated. The amount of any payment to a
Participant pursuant to this Section 8.1(d) shall be reduced by the amount of
any payment previously made to the Participant with respect to the Other ML &
Co. Securities, exclusive of ordinary dividend payments, resulting by operation
of law from the Change in Control, including, without limitation, payments
resulting from a merger pursuant to state law. The value of the Participant's
Other ML & Co. Securities payable pursuant to this Section 8.1(d) shall be
(i) in the case of an option or right to purchase such Other
ML & Co. Security, for each underlying Other ML & Co. Security, the
excess of the Fair Market Value of such Other ML & Co. Security on
the day the Participant's employment is terminated, or, if higher,
the Pre-CIC Value, over the exercise price of such option or right;
and
(ii) in the case of the Other ML & Co. Security itself (where
there is no outstanding option or right relating to such Other ML &
Co. Security), the Fair Market Value of the Other ML & Co. Security
on the day the Participant's employment is terminated, or, if
higher, the Pre-CIC Value.
Section 8.2 A Change in Control.
A "Change in Control" shall mean a change in control of ML & Co. of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided, however, that, without
limitation, a Change in Control shall be deemed to have occurred if:
(a) any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity, or any syndicate or group deemed to
be a person under Section 14(d)(2) of the Exchange Act, other than the Company's
employee stock ownership plan, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of ML & Co. representing 30% or more of
the combined voting power of ML & Co.'s then outstanding securities entitled to
vote in the election of directors of ML & Co.;
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(b) during any period of two consecutive years (not including any period
prior to the Effective Date of this Plan) individuals who at the beginning of
such period constituted the Board of Directors and any new directors, whose
election by the Board of Directors or nomination for election by the
stockholders of ML & Co. was approved by a vote of at least three quarters of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof; or
(c) all or substantially all of the assets of ML & Co. are liquidated
or distributed.
Section 8.3 Effect of Agreement Resulting in Change in Control.
If ML & Co. executes an agreement, the consummation of which would result
in the occurrence of a Change in Control as described in Section 8.2, then, with
respect to a termination of employment without Cause or for Good Reason
occurring after the execution of such agreement (and, if such agreement expires
or is terminated prior to consummation, prior to such expiration or termination
of such agreement), a Change in Control shall be deemed to have occurred as of
the date of the execution of such agreement.
Section 8.4 Termination for Cause.
Termination of the Participant's employment by the Company for "Cause"
shall mean termination upon:
(a) the willful and continued failure by the Participant substantially to
perform his or her duties with the Company (other than any such failure
resulting from the Participant's incapacity due to physical or mental illness or
from the Participant's Retirement or any such actual or anticipated failure
resulting from termination by the Participant for Good Reason) after a written
demand for substantial performance is delivered to him or her by the Board of
Directors, which demand specifically identifies the manner in which the Board of
Directors believes that he has not substantially performed his or her duties; or
(b) the willful engaging by the Participant in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise.
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No act or failure to act by the Participant shall be deemed "willful"
unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his or her action or omission was in the best
interest of the Company.
Notwithstanding the foregoing, the Participant shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him or her a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board of Directors at a
meeting of the Board called and held for such purpose (after reasonable notice
to the Participant and an opportunity for him or her, together with counsel, to
be heard before the Board of Directors), finding that, in the good faith opinion
of the Board of Directors, the Participant was guilty of conduct set forth above
in clause (a) or (b) of the first sentence of this Section 8.4 and specifying
the particulars thereof in detail.
Section 8.5 Good Reason.
"Good Reason" shall mean the Participant's termination of his or her
employment with the Company if, without the Participant's written consent, any
of the following circumstances shall occur:
(a) Inconsistent Duties. A meaningful and detrimental alteration in
--------------------
the Participant's position or in the nature or status of his or her
responsibilities (including those as a director of ML & Co., if any) from
those in effect immediately prior to the Change in Control;
(b) Reduced Salary or Bonus Opportunity. A reduction by the Company in the
Participant's annual base salary as in effect immediately prior to the Change in
Control; a failure by the Company to increase the Participant's salary at a rate
commensurate with that of other key executives of the Company; or a reduction in
the Participant's annual cash bonus below the greater of (i) the annual cash
bonus that he received, or to which he was entitled, immediately prior to the
Change in Control, or (ii) the average annual cash bonus paid to the Participant
by the Company for the three years preceding the year in which the Change in
Control occurs;
(c) Relocation. The relocation of the office of the Company where the
Participant is employed at the time of the Change in Control (the "CIC
Location") to a location that in his or her good faith assessment is an area not
generally considered conducive to maintaining the executive offices of a company
such as ML & Co. because of hazardous or undesirable conditions including
without limitation a high crime rate or inadequate facilities, or to a location
that is more than twenty-five (25) miles away from the CIC Location or the
Company's requiring the Participant to be based more than twenty-five (25) miles
away from the CIC Location (except for required travel on the Company's business
to an extent substantially consistent with his or her customary business travel
obligations in the ordinary course of business prior to the Change in Control);
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(d) Compensation Plans. The failure by the Company to continue in effect
any compensation plan in which the Participant participates, including but not
limited to this Plan, the Company's retirement program, Employee Stock Purchase
Plan, 1978 Incentive Equity Purchase Plan, Equity Capital Accumulation Plan,
Canadian Capital Accumulation Plan, Management Capital Accumulation Plan,
limited partnership offerings, cash incentive compensation or any other plans
adopted prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan in connection with the Change in Control, or the failure by
the Company to continue the Participant's participation therein on at least as
favorable a basis, both in terms of the amount of benefits provided and the
level of his or her participation relative to other Participants, as existed
immediately prior to the Change in Control;
(e) Benefits and Perquisites. The failure of the Company to continue to
provide the Participant with benefits at least as favorable as those enjoyed by
the Participant under any of the Company's retirement, life insurance, medical,
health and accident, disability, deferred compensation or savings plans in which
the Participant was participating immediately prior to the Change in Control;
the taking of any action by the Company that would directly or indirectly
materially reduce any of such benefits or deprive the Participant of any
material fringe benefit enjoyed by him or her immediately prior to the Change in
Control, including, without limitation, the use of a car, secretary, office
space, telephones, expense reimbursement, and club dues; or the failure by the
Company to provide the Participant with the number of paid vacation days to
which the Participant is entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in effect
immediately prior to the Change in Control;
(f) No Assumption by Successor. The failure of ML & Co. to obtain a
satisfactory agreement from any successor to assume and agree to perform a
Participant's employment agreement as contemplated thereunder or, if the
business of the Company for which his or her services are principally performed
is sold at any time after a Change in Control, the purchaser of such business
shall fail to agree to provide the Participant with the same or a comparable
position, duties, compensation, and benefits as provided to him or her by the
Company immediately prior to the Change in Control.
Section 8.6 Effect on Plan Provisions.
In the event of a Change in Control, no changes in the Plan, or in any
documents evidencing grants of Performance Shares, Performance Units, Restricted
Shares, Restricted Units, Stock Options, Stock Appreciation Rights, or Other ML
& Co. Securities and no adjustments, determinations or other exercises of
discretion by the Committee or the Board of Directors, that were made subsequent
to the Change in Control and that would have the effect of diminishing a
Participant's rights or his or her payments under the Plan or this Article shall
be effective, including, but not limited to, any changes, determinations or
other exercises of discretion made to or pursuant to the Plan. Once a
Participant has received a payment pursuant to this Article VIII, shares of
Common Stock that were reserved for issuance in connection with any Performance
Shares, Restricted Shares, Stock Options, or Other ML & Co. Securities for which
payment is made shall no longer be reserved and shares of Common Stock that are
Restricted Shares or that are restricted and held by the Company pursuant to
Section 2.6(a)(i), for which payment has been made, shall no longer be
registered in the name of the Participant and shall again be available for
grants under the Plan. If the Participant's employment is terminated without
Cause or for Good Reason after a Change in Control, any election to defer
payment for Performance Shares or Performance Units pursuant to Section 2.8
hereof or Restricted Shares or Restricted Units pursuant to Section 3.8 hereof
shall be null and void.
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ARTICLE IX - MISCELLANEOUS.
Section 9.1 Designation of Beneficiary.
A Participant, or the transferee of a Restricted Share, Restricted
Unit or Stock Option pursuant to Sections 3.9 or 4.4(d), may designate, in a
writing delivered to ML & Co. before his or her death, a person or persons or
entity or entities to receive, in the event of his or her death, any rights to
which he would be entitled under the Plan. A Participant or Restricted Share,
Restricted Unit or Stock Option transferee, may also designate an alternate
beneficiary to receive payments if the primary beneficiary does not survive the
Participant or transferee. A Participant or transferee may designate more than
one person or entity as his or her beneficiary or alternate beneficiary, in
which case such beneficiaries would receive payments as joint tenants with a
right of survivorship. A beneficiary designation made under the Plan will apply
to future grants unless be changed or revoked by a Participant or transferee by
filing a written or electronic notification of such change or revocation with
the Company. If a Participant or Stock Option transferee fails to designate a
beneficiary, then his or her estate shall be deemed to be his or her
beneficiary.
Section 9.2 Employment Rights.
Neither the Plan nor any action taken hereunder shall be construed
as giving any employee of the Company the right to become a Participant, and a
grant under the Plan shall not be construed as giving any Participant any right
to be retained in the employ of the Company.
Section 9.3 Nontransferability.
Except as provided in Sections 3.9 and 4.4(d), a Participant's
rights under the Plan, including the right to any amounts or shares payable,
may not be assigned, pledged, or otherwise transferred except, in the event of
a Participant's death, to his or her designated beneficiary or, in the absence
of such a designation, by will or the laws of descent and distribution.
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Section 9.4 Withholding.
The Company shall have the right, before any payment is made or a
certificate for any shares is delivered or any shares are credited to any
brokerage account, to deduct or withhold from any payment under the Plan any
federal, state, local, social security or other taxes, including transfer taxes,
required by law to be withheld or to require the Participant or his or her
beneficiary or estate, as the case may be, to pay any amount, or the balance of
any amount, required to be withheld.
Section 9.5 Relationship to Other Benefits.
No payment under the Plan shall be taken into account in determining any
benefits under any retirement, group insurance, or other employee benefit plan
of the Company. The Plan shall not preclude the stockholders of ML & Co., the
Board of Directors or any committee thereof, or the Company from authorizing or
approving other employee benefit plans or forms of incentive compensation, nor
shall it limit or prevent the continued operation of other incentive
compensation plans or other employee benefit plans of the Company or the
participation in any such plans by Participants in the Plan.
Section 9.6 No Trust or Fund Created.
Neither the Plan nor any grant made hereunder shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company and a Participant or any other person. To the extent that
any person acquires a right to receive payments from the Company pursuant to a
grant under the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.
Section 9.7 Expenses.
The expenses of administering the Plan shall be borne by the Company.
Section 9.8 Indemnification.
Service on the Committee shall constitute service as a member of the Board
of Directors so that members of the Committee shall be entitled to
indemnification and reimbursement as directors of ML & Co. pursuant to its
Certificate of Incorporation, By-Laws, or resolutions of its Board of Directors
or stockholders.
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Section 9.9 Tax Litigation.
The Company shall have the right to contest, at its expense, any tax
ruling or decision, administrative or judicial, on any issue that is related to
the Plan and that the Company believes to be important to Participants in the
Plan and to conduct any such contest or any litigation arising therefrom to a
final decision.
ARTICLE X - AMENDMENT AND TERMINATION.
The Board of Directors or the Committee (but no other committee of the
Board of Directors) may modify, amend or terminate the Plan at any time, except
that, to the extent then required by applicable law, rule or regulation,
approval of the holders of a majority of shares of Common Stock represented in
person or by proxy at a meeting of the stockholders will be required to increase
the maximum number of shares of Common Stock available for distribution under
the Plan (other than increases due to an adjustment in accordance with the
Plan). No modification, amendment or termination of the Plan shall have a
material adverse effect on the rights of a Participant under a grant previously
made to him or her without the consent of such Participant.
ARTICLE XI - INTERPRETATION.
Section 11.1 Governmental and Other Regulations.
The Plan and any grant hereunder shall be subject to all applicable
federal, state or local laws, rules, and regulations and to such approvals by
any regulatory or governmental agency that may, in the opinion of the counsel
for the Company, be required.
Section 11.2 Governing Law.
The Plan shall be construed and its provisions enforced and administered
in accordance with the laws of the State of New York applicable to contracts
entered into and performed entirely in such State.
ARTICLE XII - EFFECTIVE DATE AND STOCKHOLDER APPROVAL.
The Plan shall not be effective unless or until approved by a majority of
the votes cast at a duly held stockholders' meeting at which a quorum
representing a majority of all outstanding voting stock is, either in person or
by proxy present and voting on the Plan.
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