THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED
Exhibit 99.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated September 15, 2008, between XXXXXXX XXXXX & CO., INC., a
Delaware corporation (“Issuer”), and BANK OF AMERICA CORPORATION, a Delaware corporation
(“Grantee”).
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of Merger of even date
herewith (the “Merger Agreement”), which agreement has been executed by the parties hereto
in connection with this Stock Option Agreement (the “Agreement”); and
WHEREAS, as a condition to Grantee’s entering into the Merger Agreement and in consideration
therefor, Issuer has agreed to grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set
forth herein and in the Merger Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option (the
“Option”) to purchase, subject to the terms hereof, up to 304,421,097 fully paid and
nonassessable shares of Issuer’s Common Stock, par value $1.331/3 per share (“Common
Stock”), at a price of $17.05 per share (the “Option Price”); provided, however, that
in no event shall the number of shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer’s issued and outstanding shares of Common Stock without giving effect to any
shares subject to or issued pursuant to the Option. The number of shares of Common Stock that may
be received upon the exercise of the Option and the Option Price are subject to adjustment as
herein set forth.
(b) In the event that any additional shares of Common Stock are either (i) issued or otherwise
become outstanding after the date of this Agreement (other than pursuant to this Agreement) or (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding after the date of this
Agreement, the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving effect to any shares subject or
issued pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole or part, and from
time to time, if, but only if, both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have occurred prior to the occurrence of
an Exercise Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in
1
subsection (e) of this Section 2) within 180 days following such Subsequent Triggering Event.
Each of the following shall be an “Exercise Termination Event”: (i) the Effective Time (as defined
in the Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an Initial Triggering
Event except a termination by Grantee pursuant to Section 8.1(d) (unless the breach by Issuer
giving rise to such right of termination is non-volitional) or Section 8.1(e) of the Merger
Agreement; or (iii) the passage of 18 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) (unless the breach by Issuer giving rise to such right of termination is
non-volitional) or Section 8.1(e) of the Merger Agreement. The term “Holder” shall mean the holder
or holders of the Option.
(b) The term “Initial Triggering Event” shall mean any of the following events or
transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an “Issuer Subsidiary”), without
having received Grantee’s prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any person (the term
“person” for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), and the rules and regulations thereunder) other than Grantee or any of
its Subsidiaries (each a “Grantee Subsidiary”) or the Board of Directors of Issuer
shall have recommended that the stockholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Subsidiary of Grantee. For purposes of
this Agreement, “Acquisition Transaction” shall mean (w) a merger, consolidation or
share exchange, or any similar transaction, involving Issuer or any Significant Subsidiary
(as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the “SEC”)) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities representing 10% or more
of the voting power of Issuer, (provided that this clause (y) shall
not be triggered as a result of Temasek Capital (Private) Limited or
its subsidiaries acquiring beneficial ownership of 10% or more of the
outstanding shares of Common Stock solely as a result of their
holdings of Common Stock as of the date hereof taken together with
their acquisition of additional shares of Common Stock under their
existing agreement to purchase Common Stock entered into with Issuer
on July 28, 2008), or (z) any substantially similar transaction;
provided, however, that in no event shall any merger, consolidation,
purchase or similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement;
(ii) Any event set forth in Section 8.1(e) of the Merger Agreement shall have occurred;
(iii) Any person other than Grantee, any Grantee Subsidiary or any Issuer Subsidiary
acting in a fiduciary capacity in the ordinary course of its business shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 10% or more of the
outstanding shares of Common Stock (the term “beneficial ownership” for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder); provided that this clause (iii) shall
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not be triggered as a result of Temasek Capital (Private) Limited or its subsidiaries
acquiring beneficial ownership of 10% or more of the outstanding shares of Common Stock
solely as a result of their holdings of Common Stock as of the date hereof taken together
with their acquisition of additional shares of Common Stock under their existing agreement
to purchase Common Stock entered into with Issuer on July 28, 2008;
(iv) Any person other than Grantee or any Grantee Subsidiary shall have made a bona
fide proposal to Issuer or its stockholders that is public or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After the receipt by Issuer or its stockholders of any bona fide inquiry or
proposal (or the bona fide indication of any intention to propose) from a third party to
engage in an Acquisition Transaction, Issuer shall have breached any covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement and (y) shall not have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other than in connection
with a transaction to which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, or other federal or state bank
regulatory authority, which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(c) The term “Subsequent Triggering Event” shall mean either of the following events
or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in paragraph (i) of
subsection (b) of this Section 2, except that the percentage referred to in clause (y) shall
be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial
Triggering Event or Subsequent Triggering Event of which it has knowledge, it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(e) In the event the Holder is entitled to and wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the “Notice Date”)
specifying (i) the total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business days from the Notice
Date for the closing of such purchase (the “Closing Date”); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall as soon as reasonably practicable file the
required notice or application for approval and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run instead from the date on which
any required notification periods have expired or been terminated or such approvals
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have been obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the Holder shall pay to
Issuer the aggregate purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a bank account designated
by Issuer, provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately available funds as
provided in subsection (f) of this Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder shall deliver to Issuer
this Agreement and a letter agreeing that the Holder will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be endorsed with a
restrictive legend that shall read substantially as follows:
“The transfer of the shares represented by this certificate is subject to certain
provisions of an agreement between the registered holder hereof and Issuer and to
resale restrictions arising under the Securities Act of 1933, as amended. A copy of
such agreement is on file at the principal office of Issuer and will be provided to
the holder hereof without charge upon receipt by Issuer of a written request
therefor.”
It is understood and agreed that: (i) the reference to the resale restrictions of the
Securities Act of 1933, as amended (the “1933 Act”), in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if the Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii) are both satisfied.
In addition, such certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of exercise of the Option
provided for under subsection (e) of this Section 2 and the tender of the applicable purchase price
in immediately available funds, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay all expenses, and any and all United
States federal, state and local taxes and other charges that may be payable
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in connection with the preparation, issuance and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from preemptive rights,
sufficient authorized but unissued shares of Common Stock so that the Option may be exercised
without additional authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii) that it will not,
by charter amendment or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed hereunder by Issuer; (iii)
promptly to take all action as may from time to time be required (including (x) complying with all
premerger notification, reporting and waiting period requirements specified in 15 U.S.C. § 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding Company Act of
1956, as amended (the “BHCA”), or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the Federal Reserve Board or to any state or
other regulatory authority is necessary before the Option may be exercised, cooperating fully with
the Holder in preparing such applications or notices and providing such information to the Federal
Reserve Board or such other regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without expense, at the
option of the Holder, upon presentation and surrender of this Agreement at the principal office of
Issuer, for other Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are set forth herein,
in the aggregate the same number of shares of Common Stock purchasable hereunder. The terms
“Agreement” and “Option” as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted hereby) may be exchanged. Upon
receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock that are purchasable
upon exercise of the Option pursuant to Section 1 of this Agreement, the number of shares of Common
Stock purchasable upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares, distributions on
or in respect of the Common Stock that would be prohibited under the terms of the Merger Agreement,
or the like, the type and number of shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision
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shall be made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer’s obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to an Exercise
Termination Event, Issuer shall, at the request of Grantee delivered within 180 days of such
Subsequent Triggering Event (whether on its own behalf or on behalf of any subsequent holder of
this Option (or part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain current in order
to permit the sale or other disposition of this Option and any shares of Common Stock issued upon
total or partial exercise of this Option (“Option Shares”) in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective for such period not
in excess of 180 days from the day such registration statement first becomes effective or such
shorter time as may be reasonably necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering the inclusion of the Holder’s
Option or Option Shares would interfere with the successful marketing of the shares of Common Stock
offered by Issuer, the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; provided, however, that after any
such required reduction the number of Option Shares to be included in such offering for the account
of the Holder shall constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such reduction occurs,
then the Issuer shall file a registration statement for the balance as promptly as practicable and
no reduction shall thereafter occur. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall become a party to
any underwriting agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this Section 6 by reason of
the fact that there shall be more than one Grantee as a result of any assignment or division of
this Agreement.
7. (a) Immediately prior to, or after, the occurrence of a Repurchase Event (as defined
below), (i) following a request of the Holder, delivered prior to an Exercise Termination Event,
Issuer (or any successor thereto) shall repurchase the Option from the Holder immediately prior to
the Repurchase Event (or, as requested by the Holder, after the Repurchase Event) at a price (the
“Option Repurchase Price”) equal to the product of the number of shares
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for which this Option may then be exercised multiplied by the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price, and (ii) at the request of the
owner of Option Shares from time to time (the “Owner”), delivered prior to an Exercise
Termination Event and within 90 days of the occurrence of a Repurchase Event (or such later period
as provided in Section 10), Issuer shall repurchase such number of the Option Shares from the Owner
as the Owner shall designate at a price (the “Option Share Repurchase Price”) equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The term
“Market/Offer Price” shall mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or (iv) in the event of a sale of all or
a substantial portion of Issuer’s assets, the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the case may be, and
reasonably acceptable to the Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to require Issuer to
repurchase the Option and any Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder or the Owner, as the
case may be, elects to require Issuer to repurchase this Option and/or the Option Shares in
accordance with the provisions of this Section 7. Within the latter to occur of (x) five business
days after the surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is immediately prior to
the occurrence of a Repurchase Event, Issuer shall deliver or cause to be delivered to the Holder
the Option Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor or the
portion thereof, if any, that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or regulation from
repurchasing the Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from time to time, to the
Holder and/or the Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from delivering, within five
business days after the date on which Issuer is no longer so prohibited; provided,
however, that if Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required notices, in each case
as promptly as practicable in order to accomplish such repurchase), the Holder or Owner may
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revoke its notice of repurchase of the Option or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to the
Holder and/or the Owner, as appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement evidencing the right of the
Holder to purchase that number of shares of Common Stock obtained by multiplying the number of
shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time
of delivery of the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a “Repurchase Event” shall be deemed to have
occurred (i) upon the consummation of an Acquisition Transaction with respect to Issuer (and not
solely involving one or more subsidiaries of Issuer) (except that the percentage referred to in
clause (y) of the definition thereof shall be 50%) or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of Common Stock.
8. [Intentionally Omitted]
9. [Intentionally Omitted]
10. The 90-day or 180-day periods for exercise of certain rights under Sections 2, 6, 7 and 13
shall be extended: (i) to the extent necessary to obtain all regulatory approvals for the exercise
of such rights and for the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and reserve and to permit it
to issue, and at all times from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance pursuant hereto, will
be duly authorized, validly issued, fully paid, nonassessable, and will be delivered free and clear
of all claims, liens, encumbrance and security interests and not subject to any preemptive rights.
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(c) The Board of Directors of Issuer has unanimously approved this Agreement and the
transactions contemplated hereby (including by reserving shares for issuance of shares of Common
Stock on exercise of the Option) and taken any other action as required to render inapplicable to
such agreement and transactions Section 203 of the Delaware General Corporation Law and, to the
knowledge of Issuer, any similar Takeover Statutes.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter into this Agreement and,
subject to any approvals or consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary corporate action on the
part of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other securities acquired by
Grantee upon exercise of the Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or obligations under this
Agreement or the Option created hereunder to any other person, without the express written consent
of the other party, except that in the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder within 180 days following such
Subsequent Triggering Event (or such later period as provided in Section 10); provided,
however, that until the date 15 days following the date on which the Federal Reserve Board
approves an application by Grantee under the BHCA to acquire the shares of Common Stock subject to
the Option, Grantee may not assign its rights under the Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one party acquires the right to purchase
in excess of 2% of the voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee’s behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all filings with, and to
obtain consents of, all third parties and governmental authorities necessary to the consummation of
the transactions contemplated by this Agreement, including without limitation making application to
list the shares of Common Stock issuable hereunder on the New York Stock Exchange upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for approval to acquire
the shares issuable hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable hereunder until such time,
if ever, as it deems appropriate to do so.
15. [Intentionally Omitted]
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16. (a) Notwithstanding any other provision of this Agreement, in no event shall the Grantee’s
Total Profit (as hereinafter defined) exceed $2 billion and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either (i) reduce the number of shares of Common
Stock subject to this Option, (ii) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (iii) pay cash to Issuer, or (iv) any combination thereof, so that Grantee’s
actually realized Total Profit shall not exceed $2 billion after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement, this Option may not be exercised
for a number of shares as would result in a Notional Total Profit (as defined below) of more than
$2 billion.
(c) As used herein, the term “Total Profit” shall mean the aggregate amount (before
taxes) of the following: (i) the amount received by Grantee pursuant to Issuer’s repurchase of the
Option (or any portion thereof) pursuant to Section 7, (ii) (x) the amount received by Grantee
pursuant to Issuer’s repurchase of Option Shares pursuant to Section 7, less (y) the Grantee’s
purchase price for such Option Shares, (iii) (x) the net cash amounts received by Grantee pursuant
to the sale of Option Shares (or any other securities into which such Option Shares are converted
or exchanged) to any unaffiliated party, less (y) the Grantee’s purchase price of such Option
Shares, (iv) any amounts received by Grantee on the transfer of the Option (or any portion thereof)
to any unaffiliated party, and (v) any amount equivalent to the foregoing with respect to the
Substitute Option.
(d) As used herein, the term “Notional Total Profit” with respect to any number of
shares as to which Grantee may propose to exercise this Option shall be the Total Profit determined
as of the date of such proposed exercise assuming that this Option were exercised on such date for
such number of shares and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing market price for the
Common Stock as of the close of business on the preceding trading day (less customary brokerage
commissions).
17. The parties hereto acknowledge that damages would be an inadequate remedy for a breach of
this Agreement by either party hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other equitable relief.
18. If any term, provision, covenant or restriction contained in this Agreement is held by a
court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or
invalidated. If for any reason such court or regulatory agency determines that the Holder is not
permitted to acquire, or Issuer is not permitted to repurchase pursuant to Section 7, the full
number of shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
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19. All notices, requests, claims, demands and other communications hereunder shall be deemed
to have been duly given when delivered in person, by cable, telegram, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested) at the respective
addresses of the parties set forth in the Merger Agreement.
20. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, regardless of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof (except to the extent that mandatory provisions of federal or state law
apply).
21. This Agreement may be executed in two counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
22. Except as otherwise expressly provided herein, each of the parties hereto shall bear and
pay all costs and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
23. Except as otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect thereof, written or
oral. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other than the parties
hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided herein.
24. Capitalized terms used in this Agreement and not defined herein shall have the meanings
assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf
by its officers thereunto duly authorized, all as of the date first above written.
| XXXXXXX XXXXX & CO., INC. (Issuer) |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
| BANK OF AMERICA CORPORATION (Grantee) |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxx X. Xxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
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