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
STOCK
OPTION AGREEMENT, dated September 15, 2008, between MERRILL LYNCH
& CO., INC., a Delaware corporation (“ Issuer
”), and BANK OF AMERICA
CORPORATION, a Delaware corporation (“ Grantee
”).
WITNESSETH :
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 $1.33
1/3 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
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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 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;
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(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 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%.
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(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 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
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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 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
