MERRILL LYNCH & CO., INC.
DEFERRED STOCK UNIT PLAN FOR NON-EMPLOYEE DIRECTORS
Article I General
Section 1.1 Purposes.
The purposes of the Merrill Lynch & Co., Inc. Deferred Stock Unit Plan for Non-Employee Directors,
as amended (the Plan), are (a) to provide an incentive to highly qualified individuals to serve
as Directors of Merrill Lynch & Co., Inc. (ML & Co.), and (b) to further align the interests of
Non-Employee Directors with the shareholders of ML & Co.
Section 1.2 Definitions.
For purposes of the Plan, the following terms shall have the meanings indicated.
Account means a notional account recording a grant of Deferred Stock Units under the Plan. The
Company shall maintain a separate Account for each grant of Deferred Stock Units to a Participant.
Administrator means the Head of Human Resources of ML & Co., or his or her functional successor.
Affiliate means 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.
Annual Meeting means the Annual Meeting of Shareholders of ML & Co.
Board of Directors or Board means the Board of Directors of ML & Co.
Business Day means any day on which the New York Stock Exchange is open for business.
Change in Control means 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 Exchange
Act, whether or not ML & Co. 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 ML & Co.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
(b) during any period of two consecutive years (not including any period prior to the adoption 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.
Code means the U.S. Internal Revenue Code of 1986, as amended from time to time.
Common Stock means the Common Stock, par value $1.33 1/3 per share, of ML & Co. and a share of
Common Stock means one share of Common Stock together with, for so long as Rights are outstanding,
one Right (whether trading with the Common Stock or separately).
Company means ML & Co. and all of its Affiliates.
Continuing Director means, with respect to any Annual Meeting, a Director whose term of office
continues for another year.
Current Market Value per share of Common Stock, for any date, means the average of the Daily
Market Prices of a share of Common Stock for each Business Day for which such Daily Market Prices
are available during a period commencing on a date 21 consecutive Business Days prior to such date
and ending on the second Business Day prior to such date.
Daily Market Price of shares of Common Stock on any date means: (a) the mean of the high and low
sales prices reported on the New York Stock Exchange Composite Tape (or, if shares of Common
Stock are not traded on the New York Stock Exchange, the mean of the high and low sales prices
reported on any securities exchange or quotation service on which the shares of Common Stock are
listed or traded) of such shares on the date in question, or (b) if shares of Common Stock are not
then listed or admitted to trading on any securities exchange for which reported sales prices are
available, the mean of reported high bid and low asked prices on such date, as reported by a
reputable quotation service, or by The Wall Street Journal, Eastern Edition, or a newspaper of
general circulation in the Borough of Manhattan, City and State of New York.
Deferred Stock Unit means a unit representing ML & Co.s obligation to deliver one share of
Common Stock in accordance with the terms of the Plan.
Director means a member of the Board.
Disability means any medically determinable physical or mental condition that renders a Director
incapable of engaging in any substantial gainful activity and can be expected to result in death or
to last for a continuous period of at least 12 months.
End of Service Date means the date on which a Participant ceases to serve as a Director for any
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended.
Holding Period has the meaning specified in Section 2.2.
Junior Preferred Stock means ML & Co.s Series A Junior Preferred Stock, par value $1.00 per
Non-Employee Director means a member of the Board who is not employed by ML & Co. or any
Affiliate of ML & Co.
Participant means each Non-Employee Director to whom a grant of Deferred Stock Units is made
under the Plan.
Retirement means ceasing to serve as a Director of ML & Co. in accordance with ML & Cos
retirement policy for Non-Employee Directors.
Rights means the Rights to Purchase Units of Series A Junior Preferred Stock, par value $1.00 per
share, of ML & Co., issued pursuant to the Amended and Restated Rights Agreement between ML & Co.
and Wells Fargo Bank, N.A, Rights Agent, as amended from time to time.
Tender Offer means an offer to purchase all or a portion of the outstanding shares of Common
is subject to Section 14D of the Exchange Act, provided that such offer, if consummated, would
result in a Change in Control.
Section 1.3 Shares Subject to the Plan.
The total number of shares of Common Stock that shall be reserved for delivery in payment of
Deferred Stock Units under the Plan shall be 500,000, subject to automatic adjustment for changes
in capitalization of ML & Co. as provided in Section 3.1 hereof. Shares of Common Stock distributed
under the Plan may be authorized but unissued shares or shares that shall have been or may be
acquired by ML & Co. in the open market, in private transactions or otherwise. The number of shares
reserved for delivery in payment of Deferred Stock Units shall be increased by the number of shares
remaining available under the Plan on the date that the Board of Directors determination to permit
no further awards under such plan shall become effective.
Article II Deferred Stock Units; Optional Deferral of Payment
Section 2.1 Deferred Stock Unit Grants.
(a) Regular Grants. Each Non-Employee Director shall, without any further action by the Board of
Directors, receive as of the date of every Annual Meeting for which he or she is a Continuing
Director, the number of Deferred Stock Units obtained by dividing $185,000 by the Daily Market
Price per share of Common Stock on such date and rounding the result upwards to the nearest whole
Deferred Stock Unit. If sufficient shares of Common Stock do not remain available under Section 1.3
for each eligible Non-Employee Director to receive the full number of Deferred Stock Units
calculated pursuant to the preceding sentence, then the number of Deferred Stock Units granted to
each eligible Non-Employee Director will be proportionately reduced so that the Section 1.3 limit
is not exceeded.
(b) Prorated Mid-Year Regular Grants. A Non-Employee Director who joins the Board after the date
of an Annual Meeting, shall, without any further action by the Board of Directors, receive a
prorated regular grant. The value of such grant shall be computed by multiplying $185,000 by a
fraction the numerator of which shall be the number of full or partial calendar months (beginning
with the month that follows the month in which the most recent Annual Meeting occurred) that remain
until the Corporations Annual Meeting and the denominator of which shall be 12; if the date of the
next Annual Meeting has not been fixed at the time a Non-Employee Director joins the Board, it
shall be assumed to be the first anniversary of the most recent Annual Meeting. The number of
Deferred Stock Units to be granted shall be determined by dividing the dollar value obtained from
the calculation in the previous sentence by the Daily Market Price per share of Common Stock on the
date of his or her appointment to the Board. If sufficient shares of Common Stock do not remain
available under Section 1.3 for the Non-Employee Director to receive the full number of Deferred
Stock Units calculated pursuant to the preceding two sentences, then the number of Deferred Stock
Units granted to the Non-Employee Director will be reduced so that the Section 1.3 limit is not
Section 2.2 Payment of Awards Upon Expiration of the Holding Period.
Unless deferred at the option of the Participant in accordance with Section 2.3(a) hereof, Deferred
Stock Units will become payable upon the expiration of the holding period applicable thereto (the
Holding Period), which shall expire on the earlier of: (i) the date of the fifth Annual Meeting
following the date the Deferred Stock Units were granted, and (ii) a Participants End of Service
Date. Deferred Stock Units will be paid in shares of Common Stock as soon as practicable following
the end of the applicable Holding Period. One share of Common Stock will be delivered for each
Deferred Stock Unit to be paid, after rounding any fractional unit upwards to the nearest whole
Section 2.3 Optional Deferral of Payment.
(a) Optional Deferral of Payment. A Participant shall have the option to defer the payment of all
or a portion of any Deferred Stock Unit grant upon the expiration of the relevant Holding Period in
with this Section 2.3 by submitting to the Administrator or his or her designee such forms as the
Administrator shall prescribe by no later than the last day of the calendar year before the year in
which will occur the Annual Meeting in connection with which such Deferred Stock Units will be
granted; provided, however, that with respect to Deferred Stock Units granted
pursuant to Section 2.1(b), such election may be made within 30 days of the Participants initial
appointment or election to the Board. In addition, the Administrator may permit further deferrals
of the receipt of Deferred Stock Units for a period that shall not be shorter than five years from
the date of the expiration of the Holding Period for such Deferred Stock Units in accordance with
regulations promulgated under the American Jobs Creation Act of 2004.
(b) Irrevocability of Deferral Election. Except as provided in Sections 2.3(c) or Section 2.5, an
election to defer the payment of all or a portion of a Participants Deferred Stock Units made
pursuant to Section 2.3(a) shall be irrevocable once submitted to the Administrator or his or her
(c) Rescission of Deferral Election Caused by an Adverse Tax Determination. Notwithstanding the
provisions of Section 2.3(a), a deferral election may be rescinded at any time if: (i) a final
determination is made by a court or other governmental body of competent jurisdiction that the
election was ineffective to defer income for purposes of U.S. Federal, state, local or foreign
income taxation and the time for appeal from this determination has expired, and (ii) the
Administrator, in his or her sole discretion, decides, upon the Participants request and upon
evidence of the occurrence of the events described in clause (i) hereof that he or she finds
persuasive, to rescind the election. As provided herein, upon such rescission, the relevant
Deferred Stock Units will be paid to the Participant as soon as practicable.
Section 2.4 Payment of Units Optionally Deferred.
(a) Regular Payment Elections. ML & Co. will pay Deferred Stock Units granted to a Participant who
has made an optional deferral election pursuant to Section 2.3(a) as elected by the Participant at
the time of his or her optional deferral election, either in a single payment to be made, or in the
number of annual installment payments (not to exceed 15) chosen by the Participant to commence, (i)
in the month following the month of the Participants End of Service Date or death, (ii) in any
month and year selected by the Participant that occurs after the scheduled expiration of the
Holding Period (i.e., without taking into account the possibility of death, Disability or an End of
Service Date occurring before the expiration of the Holding Period), or (iii) in any month in the
calendar year following the Participants End of Service Date. The amount of each annual
installment payment, if applicable, shall be determined by multiplying the number of Deferred Stock
Units credited to the Participants Account as of the last day of the month immediately preceding
the month in which the payment is to be made by a fraction, the numerator of which is one and the
denominator of which is the number of remaining installment payments (including the installment
payment to be made) and rounding the result to the nearest whole Deferred Stock Unit or cent, as
the case may be.
(b) Form of Payment. Deferred Stock Units payable pursuant to this Section 2.4 will be paid in
shares of Common Stock.
(c) Death Prior to Payment. If the Participant dies prior to payment of any or all Deferred Stock
Units optionally deferred, then the unpaid Deferred Stock Units will be paid to the Participants
beneficiary in accordance with the Participants election of either installment payments, or a
single payment, provided, however, that, in the event that the Participants
beneficiary is the Participants estate or is otherwise not a natural person, then (i) if the
Participant has elected a regular payment election pursuant to Section 2.4(a), the applicable
portion of the Deferred Stock Units will be paid in a single payment to such beneficiary, and (ii)
if the Participant has elected installment payments, the applicable portion of the Deferred Stock
Units will continue to be paid as installment payments, but only to a single person consisting of
the Administrator or executor of the Participants estate or another person lawfully designated by
the Administrator or executor (and in the event no such person is designated within a reasonable
time, payment will be made in a lump sum).
(d) Hardship Distributions. ML & Co. may pay to the Participant, on such terms and conditions as
the Administrator may establish, such part or all of the Participants Deferred Stock Units, as the
may, in his or her sole discretion based upon substantial evidence submitted by the Participant,
determine necessary to alleviate severe financial hardship to the Participant caused by an
unanticipated emergency. Such payment will be made only at the Participants written request and
with the express approval of the Administrator and will be made on the date selected by the
Administrator in his or her sole discretion. The balance of the Account, if any, will continue to
be governed by the terms of this Plan. Payment pursuant to this Section 2.4(d) may be made only
upon a showing of severe financial hardship resulting from an illness or accident of the
Participant, the Participants spouse or a dependent (as defined in Section 152(a) of the Code) of
the Participant, loss of the Participants property due to casualty or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the control of the
Participant. The amount paid pursuant to this Section 2.4(d) shall not exceed the amount necessary
to satisfy such unanticipated emergency plus amount necessary to pay taxes reasonably anticipated
as a result of the distribution, after taking into account the extent to which the severe financial
hardship to the Participant is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation
of such assets would not itself cause severe financial hardship).
Section 2.5 Beneficiary.
(a) Designation of Beneficiary. The Participant may designate, in writing delivered to the
Administrator or his or her designee before the Participants death, a beneficiary (which may be a
charity or other entity) to receive payments under the Plan in the event of the Participants
death. The Participant may also designate a contingent beneficiary to receive payments under the
Plan if the primary beneficiary does not survive the Participant. The Participant may designate
more than one person as the Participants beneficiary or contingent beneficiary, in which case (i)
no contingent beneficiary would receive any payment unless all of the primary beneficiaries
predeceased the Participant, and (ii) the surviving beneficiaries in any class shall share in any
payments in proportion to the percentages of interest assigned to them by the Participant.
(b) Change in Beneficiary. The Participant may change his or her beneficiary or contingent
beneficiary (without the consent of any prior beneficiary) in a writing delivered to the
Administrator or his or her designee before the Participants death. Unless the Participant states
otherwise in writing, any change in beneficiary or contingent beneficiary will automatically revoke
such prior designations of the Participants beneficiary or of the Participants contingent
beneficiary, as the case may be, under this Plan only; and any designations under other deferral
agreements or plans of the Company will remain unaffected.
(c) Default Beneficiary. In the event a Participant does not designate a beneficiary, or no
designated beneficiary survives the Participant, the Participants beneficiary shall be the
Participants surviving spouse, if the Participant is married at the time of his or her death and
not subject to a court-approved agreement or court decree of separation, or otherwise the person or
persons designated to receive benefits on account of the Participants death under the
pre-retirement death benefit for Non-Employee Directors, unless the rights to such benefit have
been assigned, in which case any amounts payable to the Participants beneficiary under the Plan
will be paid to the Participants estate.
(d) If the Beneficiary Dies During Payment. If a beneficiary who is receiving or is entitled to
receive payments hereunder dies after the Participant but before all the payments have been made,
the Participants unpaid Deferred Stock Units will be paid as soon as practicable in a single
payment to such beneficiarys estate and not to any contingent beneficiary the Participant may have
designated; provided, however, that if the beneficiary was receiving installment
payments, the applicable portion of the Deferred Stock Units will continue to be paid as
installment payments but only to a single person consisting of the Administrator or executor of the
beneficiarys estate or another person lawfully designated by the Administrator or executor (and in
the event no such person is designated within a reasonable time, payment will be made in a lump
Section 2.6 Domestic Relations Orders.
Notwithstanding the Participants elections hereunder, ML & Co. will pay to, or to the Participant
for the benefit of, the Participants spouse or former spouse the portion of the Participants
Deferred Stock Units specified in a valid court order entered in a domestic relations proceeding
involving the Participants
divorce or legal separation. Any such payment will be made net of any amounts the Company may be
required to withhold under applicable federal, state or local law.
Section 2.7 Withholding of Taxes.
ML & Co. will deduct from any payment to be made or deferred hereunder any U.S. Federal, state or
local or foreign income or employment taxes required by law to be withheld or require the
Participant or the Participants beneficiary to pay any amount, or the balance of any amount,
required to be withheld.
Article III Adjustment of Accounts
Section 3.1 Adjustment of Accounts.
(a) Dividend Equivalents. Whenever a cash dividend is paid on a share of Common Stock, a
Participants Deferred Stock Units will be adjusted by adding to Deferred Stock Units, as
applicable, the number of Deferred Stock Units determined by multiplying the per share amount of
the cash dividend by the number of Deferred Stock Units credited to the Participants Account on
the record date for the cash dividend, dividing the result by the price per share of Common Stock
used for purposes of the reinvestment of such cash dividend in the Merrill Lynch & Co., Inc.
Dividend Reinvestment Program currently administered by Business Information Services (or their
functional successor), or if at any time there is no Dividend Reinvestment Program, the Daily
Market Price of a share of Common Stock on the date the cash dividend is paid, and rounding the
result to the nearest 1/100th of a Deferred Stock Unit as the case may be (with .005 being rounded
(b) 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 the Rights or Junior Preferred
Stock) 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 appropriate adjustments shall be
made, without any action by the Board of Directors, to the Deferred Stock Units as shall be
necessary to maintain the proportionate interest of the Participants and to preserve, without
increasing, the value of the Deferred Stock Units. 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.
Article IV Status of Accounts
Section 4.1 No Trust or Fund Created; General Creditor Status.
Nothing contained herein and no action taken pursuant hereto will be construed to create a trust or
separate fund of any kind or a fiduciary relationship between ML & Co. and any Participant, the
Participants beneficiary or estate, or any other person. Title to and beneficial ownership of any
funds represented by the Deferred Stock Units and any Accounts to which they are credited will at
all times remain in ML & Co.; such funds will continue for all purposes to be a part of the general
funds of ML & Co. and may be used for any corporate purpose. No person will, by virtue of the
provisions of this Plan, have any interest whatsoever in any specific assets of the Company. TO THE
EXTENT THAT ANY PERSON ACQUIRES A RIGHT TO RECEIVE PAYMENTS FROM ML & CO. UNDER THIS PLAN, SUCH
RIGHT WILL BE NO GREATER THAN THE RIGHT OF ANY UNSECURED GENERAL CREDITOR OF ML & CO.
Section 4.2 Non-Assignability.
Except as provided in Section 2.6, a Participants right or the right of any other person to his or
her Deferred Stock Units or to any Account to which they are credited or any other benefits
hereunder cannot be assigned, alienated, sold, garnished, transferred, pledged, or encumbered
except by a written designation
of beneficiary under this Plan, by written will, or by the laws of descent and distribution.
Article V Change in Control
Section 5.1 Payment upon Change in Control.
(a) Timing of Payment. Notwithstanding any other provision of this Plan, in the event that (i) ML
& Co. receives a Tender Offer Statement on Schedule 14D-1 under the Exchange Act relating to a
Tender Offer, or (ii) a Change in Control shall occur, the Participants Deferred Stock Units will
be paid to the Participant in a lump-sum promptly after the receipt of such Tender Offer Statement
or the occurrence of such Change in Control, and in any event, not later than 30 days thereafter.
(b) Manner of Payment. Payment of Deferred Stock Units pursuant to Section 5.1(a) shall be made in
cash. The amount of the cash payment shall be determined by multiplying the number of Deferred
Stock Units in the Participants Account by the Daily Market Price per share of Common Stock on the
date of the event specified in Section 5.1(a)(i) or (ii), as the case may be, or, if higher, the
highest Daily Market Price per share of Common Stock on any day during the 90-day period ending on
Article VI Administration of the Plan
Section 6.1 Powers of the Administrator.
The Administrator has full power and authority to interpret, construe, and administer this Plan.
The Administrators interpretations and construction hereof, and actions hereunder, including any
determinations regarding the amount or recipient of any payments, will be binding and conclusive on
all persons for all purposes. The Administrator will not be liable to any person for any action
taken or omitted in connection with the interpretation and administration of this Plan unless
attributable to his or her willful misconduct or lack of good faith. The Administrator may
designate persons to carry out the specified responsibilities of the Administrator and shall not be
liable for any act or omission of a person as designated.
Section 6.2 Payments on Behalf of an Incompetent.
If the Administrator finds that any person who is presently entitled to any payment hereunder is a
minor or is unable to care for his or her affairs because of disability or incompetency, payment of
Deferred Stock Units may be made to anyone found by the Administrator to be the committee or other
authorized representative of such person, or to be otherwise entitled to such payment, in the
manner and under the conditions that the Administrator determines. Such payment will be a complete
discharge of the liabilities of ML & Co. hereunder with respect to the amounts so paid.
Section 6.3 Corporate Books and Records Controlling.
The books and records of the Company will be controlling in the event a question arises hereunder
concerning Deferred Stock Units or Accounts, deferral elections, beneficiary designations, or any
Article VII Miscellaneous Provisions
Section 7.1 Litigation.
The Company shall have the right to contest, at its expense, any ruling or decision, administrative
or judicial, on an issue that is related to the Plan and that the Administrator believes to be
important to Participants, and to conduct any such contest or any litigation arising therefrom to a
Section 7.2 Headings Are Not Controlling.
The headings contained in this Plan are for convenience only and will not control or affect the
meaning or construction of any of the terms or provisions of this Plan.
Section 7.3 Governing Law.
To the extent not preempted by applicable U.S. Federal law, this Plan will be construed in
accordance with and governed by the laws of the State of New York as to all matters, including, but
not limited to, matters of validity, construction, and performance.
Section 7.4 Amendment and Termination.
The Board of Directors may amend or terminate this Plan at any time, provided, that no
amendment or termination may be made that would adversely affect the right of a Participant to his
or her Deferred Stock Units as of the date of such amendment or termination.
Article VIII Effective Date
The Plan shall become effective upon its adoption by the Board of Directors, subject to its
approval by the shareholders of ML & Co.