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EFiled: Oct 28 2008 2:24PM EDT Transaction ID 22164273 Case No. 4066-VCN

COURT OF CHANCERY OF THE STATE OF DELAWARE
JOHN W. NOBLE VICE CHANCELLOR 417 SOUTH STATE STREET DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179

October 28, 2008

Brian D. Long, Esquire Rigrodsky & Long, P.A. 919 North Market Street, Suite 980 Wilmington, DE 19801

Paul J. Lockwood, Esquire Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square Wilmington, DE 19801 J. Travis Laster, Esquire Abrams & Laster LLP 20 Montchanin Road, Suite 200 Wilmington, DE 19807

Brian C. Ralston, Esquire Potter Anderson & Corroon LLP 1313 North Market Street P.O. Box 951 Wilmington, DE 19899-0951 Re:

County of York Employees Retirement Plan v. Merrill Lynch & Co., Inc., et al. C.A. No. 4066-VCN Date Submitted: October 17, 2008

Dear Counsel: Plaintiff County of York Employees Retirement Plan (the "Plaintiff") has brought this putative class action to challenge the proposed merger (the "Merger") of Defendant Merrill Lynch & Co., Inc. ("Merrill") with Defendant Bank of America Corporation ("BAC"). The Plaintiff has moved for expedited discovery

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in anticipation of pursuing a preliminary injunction. The Defendants1 have moved to stay or dismiss this action in favor of an action pending in the United States District Court for the Southern District of New York.2 I. BACKGROUND3 Merrill and BAC announced their merger agreement on Monday, September 15, 2008. During the preceding week, apparently as the result of

deteriorating market conditions and the credit crisis, including concerns about subprime mortgage-related assets, the price of Merrill's stock had fallen by 36%. At the same time, there was also speculation that Lehman Brothers would (and it subsequently did) collapse; there were fears that other prominent financial institutions would come under great stress. The Merger is a stock-for-stock

The directors of Merrill are also defendants. That action is styled as In re Merrill Lynch & Co., Inc. Securities, Derivative and ERSA Litigation, Master File No. 07cv9633 (the "Federal Derivative Action"). In addition, at least four complaints alleging breaches of fiduciary duty relating to the Merrill-BAC proposed merger have been filed in the Supreme Court of the State of New York. See Miller v. Merrill Lynch & Co., Inc., et al., Index No. 08/602669 (Sup. Ct. N.Y. County Sept. 15, 2008); Diamond v. Thain, et al., Index No. 08/650341 (Sup. Ct. N.Y. County Sept. 15, 2008); Pfeiffer v. Thain, et al., Index No. 08/650342 (Sup. Ct. N.Y. County Sept. 15, 2008); Ulisse v. Merrill Lynch & Co, Inc., et al., Index No. 08/602810 (Sup. Ct. N.Y. County Sept. 29, 2008). Merrill has also moved to stay these other actions. 3 The background to the pending motions is drawn primarily from the Verified Amended Class Action Complaint (the "Complaint") filed in this Court and the S-4, or preliminary proxy statement, (Affidavit of Jenness E. Parker ("Parker Aff."), Ex. 10).
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transaction pursuant to which Merrill's stockholders would receive 0.8595 shares of BAC stock for each of their shares. The closing price for Merrill's stock on the last trading day before announcement of the Merger was $17.05 per share. At the same time, each share of Merrill, when measured by the conversion rate into BAC shares, would have been valued at $29 per share. The equivalent market value of those shares, with the subsequent and continuing deterioration in the financial markets, has fallen. In substance, if the transaction is consummated, the Merrill shareholders will end up with roughly 25% of the combined company. Regulatory approvals and stockholder vote of both companies remain necessary. A

preliminary proxy was filed with the Securities and Exchange Commission on October 1, 2008; an amended preliminary proxy was filed October 22, 2008. No stockholder meeting has yet been scheduled. The Plaintiff asserts that the merger agreement was reached because directors of Merrill failed to satisfy their fiduciary duties. In addition, the Plaintiff challenges the adequacy of the disclosures set forth in the preliminary proxy. As for its substantive challenge to the Merger, the Plaintiff alleges that the directors hastily negotiated and agreed to the merger agreement over a weekend without adequately informing themselves as to the true value of Merrill or of the feasibility

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of securing an alternative transaction.4 The Plaintiff accuses the directors of failing to conduct proper due diligence, including the failure to perform a pre-agreement market check. Self-dealing claims are also asserted. In particular, the Plaintiff alleges that Defendant John A. Thain, Chairman of Merrill's Board of Directors, has already negotiated a lucrative post-merger position with BAC and points out that the directors will receive change-of-control payments and accelerated longterm benefits. In addition, the Plaintiff challenges the fairness of the consideration; it attacks various terms of the merger agreement, including a provision requiring the directors of Merrill to submit the proposed merger to a shareholder vote even if a superior offer emerges and/or the directors withdraw their support, a so-called "force-the-vote" provision; it criticizes the grant to BAC of an option to purchase 19.9% of Merrill's outstanding shares at a price of $17.09 in the event the Merger is not approved by the shareholders, although the savings that BAC can achieve through this provision is limited to $2 billion, or roughly 4% of the transaction's value.

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Compl.

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Delaware Law