exv10w1



 






Exhibit 10.1




August 5, 2005




RadioShack Corporation

300 RadioShack Circle

MS CF3-307

Fort Worth, TX 76102

Attn: Senior Vice President and Chief Financial Officer



               Re: Overnight Share Repurchase



Ladies and Gentlemen:




     SECTION 1 . Initial Shares; Seller’s Initial Hedge.



     (a) Bank of America, N.A. (the “Seller”) will sell to RadioShack Corporation, a Delaware
corporation (the “Company”), and the Company will purchase from the Seller for settlement on August
8, 2005 (the “Purchase Date”), 20,000,000 shares (the “Initial Shares”) of common stock, par value
$1.00 per share, of the Company (the “Common Stock”) at a purchase price (the “Purchase Price”)
equal to the number of the Initial Shares multiplied by $25.01. Such sale shall be effected in
accordance with the Seller’s customary procedures.



     (b) In connection with its purchase of the Initial Shares, and in addition to the payment of
the Purchase Price, the Company will pay on the Purchase Date a brokerage fee of $0.02 per Initial
Share to Banc of America Securities LLC (“BAS”), which is registered as a broker and a dealer under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).



     (c) Following the Purchase Date, the Seller shall establish the Seller’s initial hedge of the
price and market risk of the transactions contemplated hereby as a result of the Cap Price (which
the parties currently contemplate will consist of approximately 1,650,000 shares of Common Stock
established over approximately seven Trading Days) (the “Seller’s Initial Hedge”) (it being
understood that the Seller’s Initial Hedge shall not include the sale and purchase of the Initial
Shares pursuant to Section 1(a) above). Subject to Section 7(b) below, upon the completion of the
Seller’s Initial Hedge, the Seller shall determine the Cap Price, the Hedge Execution Price and the
Premium in the manner set forth below based on the Seller’s Initial Hedge, and shall deliver to the
Company a supplemental terms notice substantially in the form of Annex C hereto (the “Supplemental
Terms Notice”) within two Business Days following the completion of the Seller’s Initial Hedge.



     (d) In addition, in consideration of the terms contained in this Letter Agreement, the Company
hereby agrees to pay the Premium to the Seller on the Premium Payment Date specified in the
Supplemental Terms Notice, subject to Section 7(b) below.



     SECTION
2. Definitions.



     As used in this Letter Agreement, the following terms shall have the following meanings:



     “Announcement Date” means the date of first public announcement of any corporate event
involving the Company or the Common Stock that, in the reasonable determination of the Calculation
Agent, is, as of such date, or becomes at any date subsequent to such date but on or prior to the
last day of the Averaging Period, a Friendly Transaction, or the first date of public announcement
by the Company that the Company is engaged in discussions with another party concerning a potential
Friendly Transaction or is considering strategic alternatives that, if



 









 




consummated, would be or include a Friendly Transaction (as determined by the Calculation
Agent in its reasonable discretion).




     “Averaging Period” means the period of consecutive Trading Days commencing on the first
Trading Day immediately following the last day of the Hedging Period and ending on the Trading Day
on which the Completed Share Amount equals the number of Initial Shares.



     “BAS” has the meaning specified in Section 1(b).



     “Borrow Rebate Rate Shortfall” has the meaning specified in Section 7(c).



     “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions are authorized or required by law or regulation to close in
The City of New York.



     “Calculation Agent” means BAS.



     “Cap Fair Market Value” means the fair market value on the Measurement Date, as determined by
the Calculation Agent, of a call option, written by the Seller, with a settlement amount equal to
the excess, if any, of the product of 0.75 and the Repurchase Cost (calculated without regard to
the proviso to the definition thereof) over the product of 15,000,000 and the Cap Price, and a
settlement date equal to the date that the Calculation Agent, in its good faith reasonable
discretion, as of the Measurement Date, expects will be the last day of the Averaging Period.



     “Cap Price” means the price per share specified as such in the Supplemental Terms Notice,
which shall equal 120% of the Hedge Execution Price.



     “Common Stock” has the meaning specified in Section 1(a).



     “Company” has the meaning specified in Section 1(a).



     “Completed Share Amount” means, for any Trading Day, the sum of the Daily Share Amounts for
such Trading Day and each prior Trading Day in the Averaging Period.



     “Corporate Event” means a corporate event involving the Company or the Common Stock, including
without limitation a stock split, stock dividend, bankruptcy, insolvency, reorganization, rights
offering, recapitalization, spin-off or issuance of any securities convertible or exchangeable into
shares of Common Stock; provided that Corporate Event excludes cash dividends on the Common Stock
and any Merger Event or Tender Offer.



     “Daily Average Price” means (i) for any Trading Day in the Averaging Period or, if the
Settlement Amount is greater than zero, the Valuation Period, the Reported VWAP for such Trading
Day or (ii) if the Settlement Amount is less than zero, for any Trading Day in the Valuation
Period, the dollar volume weighted average price per share of Common Stock for that Trading Day
based on transactions executed by the Seller or its designated affiliate during that Trading Day in
connection with the settlement of this Letter Agreement.



     “Daily Rebate Amount” means, for any day, the product of the Outstanding Notional Amount on
such day and the Rebate Rate for such day.



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     “Daily Share Amount” means, for any Trading Day, a number as determined by the Seller in its
sole discretion, which number shall be not less than 175,000 and not greater than 260,000, subject
to Section 3(b).



     “Designee” has the meaning specified in Section 14.



     “Effectiveness Period” has the meaning specified in Section 12(a).



     “Exchange” means, at any time, the principal national securities exchange or automated
quotation system, if any, on which the Common Stock is listed or quoted at such time.



     “Exchange Act” has the meaning specified in Section 1(b).



     “Federal Funds Rate” means, for any day, the rate on such day for Federal Funds, as published
by Bloomberg and found by pressing the following letters “FEDSOPEN” followed by pressing the
<Index> key and pressing the following letters “HP” followed by pressing the <Go> key;
provided that if any such day is not a New York Banking Day, the Federal Funds Rate for such day
shall be the Federal Funds Rate for the immediately preceding New York Banking Day.



     “Friendly Transaction” means any Merger Event or Tender Offer that is approved, agreed to or
recommended by the Company or its then-existing board of directors, or negotiated by the Company or
any authorized representative of the Company, including without limitation (i) any transaction
involving the merger of the Company with or into any third party and (ii) any transaction in which
the Company or its board of directors has a legal obligation to make a recommendation to its
shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act
or otherwise) and recommends that its shareholders accept such transaction.



     “Hedge Execution Price” means the price per share specified as such in the Supplemental Terms
Notice, which shall be equal to the volume weighted average price per share at which the Seller
executes the Seller’s Initial Hedge, as determined by the Calculation Agent.



     “Hedging Period” means the period beginning on and including the date hereof and ending on and
including the date of completion of the Seller’s Initial Hedge (as determined by the Seller in good
faith).



     “Initial Shares” has the meaning specified in Section 1(a).



     “ISDA Definitions” means the 2002 ISDA Equity Derivatives Definitions, as published by the
International Swaps and Derivatives Association, Inc.



     “Make-Whole Payment Shares” has the meaning specified in Section 5(c).



     “Maximum Deliverable Number” means 60,000,000, subject to adjustment pursuant to Section 7(a).



     “Measurement Date” means the tenth Business Day prior to the Announcement Date.



     “Merger Event” has the meaning specified in the ISDA Definitions. For purposes of the ISDA
Definitions, the Shares are shares of Common Stock, the Issuer is the Company, the Merger Date
shall be deemed to be the Announcement Date and the final Valuation Date shall be deemed to be the
last day of the Averaging Period.



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     “New York Banking Day” means any day except for a Saturday, Sunday or a day on which the
Federal Reserve Bank of New York is closed.



     “Outstanding Notional Amount” means, on any day prior to the Purchase Date, zero (0), and on
any day on or following the Purchase Date, the Purchase Price minus the aggregate amount of
payments made by the Seller on or prior to such day for settlement of purchases executed by the
Seller or its designated affiliate during the Averaging Period pursuant to Section 3(a) (which
difference may be negative) (it being understood that any purchases made by the Seller in
connection with dynamic hedge adjustments of the Seller’s exposure to the transactions contemplated
hereby as a result of the Cap Price shall not be considered in making such calculation).



     “Payment Shares” means Registered Payment Shares, Restricted Payment Shares or Make-Whole
Payment Shares.



     “Premium” means the amount specified as such in the Supplemental Terms Notice, which shall be
an amount equal to the product of (i) 15,000,000 multiplied by (ii) the Hedge Execution Price
multiplied by (iii) 0.0104.



     “Premium Payment Date” means the date specified as such in the Supplemental Terms Notice,
which shall be the third Business Day following the completion of the Seller’s Initial Hedge.



     “Private Placement Agreement” has the meaning specified in Section 6(b)(iii).



     “Prospectus” has the meaning specified in Section 6(a)(i).



     “Purchase Date” has the meaning specified in Section 1(a).



     “Purchase Price” has the meaning specified in Section 1(a).



     “Rebate” means the sum of the Daily Rebate Amounts for each day from and including the
Purchase Date to but excluding the last day of the Averaging Period.



     “Rebate Rate” means, for any day, the Federal Funds Rate for such day (expressed as a daily
rate) minus 80 basis points; provided that if the Outstanding Notional Amount on such day is
negative, the Rebate Rate used to calculate the Daily Rebate Amount for such day shall be the
Federal Funds Rate (expressed as a daily rate).



     “Refund Shares” has the meaning specified in Section 5(a)(i)(A).



     “Registered Payment Shares” has the meaning specified in Section 5(a)(ii).



     “Registration Statement” has the meaning specified in Section 6(a)(i).



     “Regulation M” means Regulation M under the Exchange Act.



     “Remaining Scheduled Days” means the scheduled number of Trading Days remaining in the
Valuation Period as of the time of any suspension of the Valuation Period.



     “Remaining Share Amount” means, for any Trading Day, the number of Initial Shares minus the
Completed Share Amount for such Trading Day.



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     “Reported VWAP” means, for any Trading Day, the dollar volume weighted average price per share
of Common Stock for that Trading Day based on transactions executed during that Trading Day on the
Exchange, excluding (i) transactions that do not settle regular way, (ii) opening transactions
(regular way) reported in the consolidated system, (iii) transactions effected during the 10
minutes before the scheduled close of trading on the Exchange and 10 minutes before the scheduled
close of the primary trading session in the market where the transaction is effected and (iv)
transactions on such day that do not satisfy the requirements of Rule 10b-18(b)(3) under the
Exchange Act, as reported on Bloomberg Page “RSH.N <Equity> AQR SEC” (or any successor
thereto) or, in the event such price is not so reported on such Trading Day for any reason, as
reasonably determined by the Calculation Agent.



     “Repurchase Cost” means the sum of the products, for all Trading Days in the Averaging Period,
of (i) the Daily Share Amount for such Trading Day and (ii) the Daily Average Price for such
Trading Day; provided, that if such sum is greater than the product of the Cap Price and the number
of the Initial Shares, then the Repurchase Cost shall be the sum of (x) the Cap Price multiplied by
15,000,000 plus (y) the Repurchase Cost calculated without regard to this proviso multiplied by
0.25.



     “Requirements” has the meaning specified in Section 3(b).



     “Restricted Payment Shares” has the meaning specified in Section 5(a)(ii).



     “Restricted Share Amount” means the quotient of (i) the absolute value of the Settlement
Amount divided by (ii) the Restricted Share Value of a Restricted Payment Share.



     “Restricted Share Value” means, with respect to any Restricted Payment Shares or Make-Whole
Payment Shares, 97% of the value thereof per share to the Seller, determined by the Calculation
Agent by commercially reasonable means.



     “Rule 10b-18” means Rule 10b-18 under the Exchange Act.



     “Securities Act” means the Securities Act of 1933, as amended.



     “Seller” has the meaning specified in Section 1(a).



     “Seller’s Initial Hedge” has the meaning specified in Section 1(c).



     “Settlement Amount” means an amount equal to (i) the Purchase Price minus (ii) the Repurchase
Cost plus (iii) the Rebate, subject to adjustment as provided in Section 7(b).



     “Settlement Balance” has the meaning specified in Section 5(c).



     “Settlement Day” means any day that is not a Saturday, a Sunday or a day on which banking
institutions or trust companies in The City of New York are authorized or obligated by law or
executive order to close. A Settlement Day “corresponds” to a Trading Day if it is the day for
settlement of regular way transactions for equity securities entered into on the Exchange on that
Trading Day.



     “Share Amount” means, for any Trading Day, the quotient of (i) the product of (A) the
Valuation Fraction multiplied by (B) the absolute value of the Settlement Amount, divided by (ii)
100% of the Daily Average Price for that Trading Day, in the case of Refund Shares pursuant to
Section 5(a)(i)(A), or 97% of the Daily Average Price for that Trading Day, in the case of
Registered Payment Shares pursuant to Section 5(a)(ii)(A).



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     “Supplemental Terms Notice” has the meaning specified in Section 1(c).



     “Tender Offer” has the meaning specified in the ISDA Definitions. For purposes of the ISDA
Definitions, the Issuer is the Company.



     “Threshold Borrow Rebate Rate” means, for any day, the Federal Funds Rate for such day minus
20 basis points per annum.



     “Trading Day” means any day (i) other than a Saturday, a Sunday or a day on which the Exchange
is not open for business, (ii) during which trading of any securities of the Company on any
national securities exchange has not been suspended and (iii) during which there has not been, in
the Calculation Agent’s judgment, a material limitation in the trading of Common Stock.



     “Transfer Agreement” has the meaning specified in Section 6(a)(iv).



     “Valuation Fraction” means a fraction, the numerator of which is one and the denominator of
which is the number of Trading Days in the Valuation Period.



     “Valuation Period” means, in the case of settlement pursuant to Sections 5(a)(i)(A),
5(a)(ii)(A) or 5(a)(ii)(B), the period commencing (i) on the first Trading Day immediately
following the final day of the Averaging Period or (ii) in the case of Registered Payment Shares,
if the Seller determines that resale by it of such shares would constitute a distribution for
purposes of Regulation M, on the first Trading Day immediately following the applicable “restricted
period” (as defined under Regulation M), measuring such restricted period from the final day of the
Averaging Period; provided that this delay in commencement of the Valuation Period shall not apply
in the event that the Registered Payment Shares constitute “excepted securities” as defined in Rule
101(c) of Regulation M. The number of Trading Days in the Valuation Period shall be determined by
the Seller in its discretion and notified to the Company by the Seller prior to the commencement of
the Valuation Period. Without limiting the generality of Section 3(b), in the case of settlement
pursuant to Section 5(a)(i)(A), the number of Trading Days in the Valuation Period shall be a
number of Trading Days that the Seller reasonably expects, based on information provided to the
Seller by the Company and readily available market information, will result in Share Amounts for
each Trading Day during the Valuation Period that will be less than or equal to the maximum number
of shares of Common Stock that the Company could have purchased on such Trading Day in compliance
with the conditions set forth in Rule 10b-18. If the Valuation Period is suspended by the Seller
pursuant to Section 3(b), at the end of such suspension the Seller shall determine the number of
Trading Days remaining in the Valuation Period, which number shall not exceed the Remaining
Scheduled Days as of the time of such suspension. For the avoidance of doubt, if the Company
elects either to receive a cash payment pursuant to Section 5(a)(i)(B) or make a cash payment
pursuant to Section 5(a)(ii)(C), there will be no Valuation Period.



     SECTION
3. Seller Purchases.



     (a) The Initial Shares may be sold short to the Company. It is understood that during the
Averaging Period the Seller shall purchase shares of Common Stock in connection with this Letter
Agreement, which shares may be used to cover all or a portion of such short sale and, if the
Settlement Amount is greater than zero, during the Valuation Period the Seller will purchase shares
of Common Stock to fulfill its obligations to deliver Refund Shares to the Company pursuant to
Section 5(a)(i)(A). Such purchases will be conducted independently of the Company. The timing of
such purchases by the Seller, the number of shares purchased by the Seller on any day, the price
paid per share of Common Stock pursuant to such purchases and the manner in which such purchases
are made, including without limitation whether such purchases are made on any securities exchange
or privately, shall be within the absolute discretion of the Seller. The



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Seller shall effect such purchases of Common Stock (it being understood that for these
purposes such purchases shall not be deemed to include any purchases made by the Seller in
connection with dynamic hedge adjustments of the Seller’s exposure to the transactions contemplated
hereby as a result of any equity optionality contained in such transactions) in a manner that
would, if the Seller were the Company or an affiliated purchaser of the Company, be subject to the
safe harbor provided by Rule 10b-18(b) or otherwise in a manner that the Seller reasonably believes
is in compliance with applicable requirements. For this reason, the Company shall, at least one
day prior to the first day of the Averaging Period, notify the Seller of the total number of shares
of Common Stock purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block
exception contained in Rule 10b-18(b)(4) by or for the Company or any of its affiliated purchasers
during each of the four calendar weeks preceding the first day of the Averaging Period and during
the calendar week in which the first day of the Averaging Period occurs (“Rule 10b-18 purchase”,
“blocks” and “affiliated purchaser” each being used as defined in Rule 10b-18), which notice shall
be substantially in the form set forth as Appendix B hereto. It is the intent of the parties that
this transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act, and
the parties agree that (i) this Letter Agreement shall be interpreted to comply with the
requirements of Rule 10b5-1(c) and (ii) they shall take no action that results in this transaction
not so complying with such requirements. Without limiting the generality of the preceding
sentence, the Company acknowledges and agrees that (A) the Company does not have, and shall not
attempt to exercise, any influence over how, when or whether the Seller effects any purchases of
Common Stock in connection with this Letter Agreement, (B) from the date hereof until the end of
the Valuation Period, if any, neither the Company nor its executive officers or employees shall,
directly or indirectly, communicate any information regarding the Company or the Common Stock to
any employee of the Seller or its affiliates involved in trading the Common Stock in connection
with the transactions contemplated hereby (other than general communications and press releases not
directly targeted to such individuals), who currently include the individuals specified in Annex A
hereto (which Annex shall be updated from time to time by the Seller in writing), (C) the Company
is entering into this Letter Agreement in good faith and not as part of a plan or scheme to evade
compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated under
the Exchange Act and (D) the Company will not alter or deviate from this Letter Agreement or enter
into or alter a corresponding hedging transaction with respect to the Common Stock. The
Company also acknowledges and agrees that any amendment, modification, waiver or termination of
this Letter Agreement must be effected in accordance with the requirements for the amendment or
termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act. Without limiting the
generality of the foregoing, any such amendment, modification, waiver or termination shall be made
in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the
Exchange Act, and no such amendment, modification, waiver or termination shall be made at any time
at which the Company or any executive officer or director of the Company is aware of any material
nonpublic information regarding the Company or the Common Stock.




     (b) In the event that the Seller, in its discretion, determines that it is appropriate with
regard to any legal, regulatory or self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are imposed by law or have been
voluntarily adopted by the Seller, and including without limitation Rule 10b-18, Rule 10b-5,
Regulation 13D-G and Regulation 14E under the Exchange Act, “Requirements”), for the Seller to
refrain from purchasing Common Stock or to purchase fewer than the otherwise applicable minimum
Daily Share Amount of Common Stock on any Trading Day during the Averaging Period or, if the
Settlement Amount is greater than zero, the Valuation Period, then the Seller may, in its
discretion, elect that the minimum Daily Share Amount shall be reduced for such day to an amount
determined by the Seller in its discretion as appropriate with regard to any Requirements. The
Seller shall notify the Company upon the exercise of the Seller’s rights pursuant to this Section
3(b) and shall subsequently notify the Company on the day the Seller believes that the
circumstances giving rise to such exercise have changed.



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     (c) The Company shall not engage in any action that would cause Regulation M to be
applicable to any purchases of Common Stock by the Company or any of its affiliated purchasers (as
defined in Regulation M) during the Averaging Period and, if the Settlement Amount is greater than
zero and there is a Valuation Period, the Valuation Period. The parties acknowledge that under
Rule 102 of Regulation M, as in effect on the date hereof, the Company may make distributions (as
defined in Regulation M) of shares of Common Stock pursuant to a plan (as defined in Regulation M)
without breaching this covenant if such distribution complies with the requirements set forth in
paragraph (c) of Rule 102 of Regulation M.



     (d) The Company shall (i) notify the Seller prior to the opening of trading in the Common
Stock on any day on which the Company makes, or expects to be made, any public announcement (as
defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction
involving a recapitalization (other than any recapitalization transactions contemplated by or
related to this Letter Agreement that have been disclosed to the Seller, which transactions the
Company acknowledges and agrees would not require the Company to comply with the requirements of
Rule 10b-18(a)(13)(iv)(B) in order to purchase shares of Common Stock subject to the safe harbor
provided by Rule 10b-18 prior to the completion of such transactions) relating to the Company
(other than any such transaction in which the consideration consists solely of cash and there is no
valuation period), (ii) promptly notify the Seller following any such announcement that such
announcement has been made, and (iii) promptly deliver to the Seller following the making of any
such announcement a certificate indicating (A) the Company’s average daily Rule 10b-18 purchases
(as defined in Rule 10b-18) during the three full calendar months preceding the date of the
announcement of such transaction and (B) the Company’s block purchases (as defined in Rule 10b-18)
effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months
preceding the date of the announcement of such transaction. In addition, the Company shall
promptly notify the Seller of the earlier to occur of the completion of such transaction and the
completion of the vote by target shareholders. The Company acknowledges that any such public
announcement may cause the minimum Daily Share Amount on any Trading Day to be reduced pursuant to
Section 3(b). Accordingly, the Company acknowledges that its actions in relation to any such
announcement or transaction must comply with the standards set forth in Section 3(a).



     SECTION
4. Company Purchases.



     Without the prior written consent of the Seller, which consent shall not be unreasonably
withheld or delayed, the Company shall not, and shall cause its affiliates and affiliated
purchasers (each as defined in Rule 10b-18) not to, directly or indirectly (including, without
limitation, by means of a cash-settled or other derivative instrument) purchase, offer to purchase,
place any bid or limit order that would effect a purchase of, or commence any tender offer relating
to, any shares of Common Stock (or an equivalent interest, including a unit of beneficial interest
in a trust or limited partnership or a depository share) or any security convertible into or
exchangeable for shares of Common Stock during the period beginning on, and including, the Purchase
Date and ending on, and including, the date all payments or deliveries of shares pursuant to
Section 5 below have been made; provided that purchases of shares of Common Stock effected by or
for a plan of the Company by an agent independent of the issuer that satisfy the requirements of
Rule 10b-18(a)(13)(ii) (“plan” and “agent independent of the issuer” each being used as defined in
Rule 10b-18) shall not be subject to the requirements of this sentence. During such time, any
purchases of Common Stock (or any security convertible into or exchangeable for shares of Common
Stock) by the Company shall be made through BAS, which is an affiliate of the Seller, pursuant to a
letter substantially in the form of Appendix A hereto and subject to such conditions as the Seller
shall impose, and shall be in compliance with Rule 10b-18 or otherwise in a manner that the Company
and the Seller believe is in compliance with applicable requirements (including, without
limitation, Rule 10b-5, Regulation 13D-G and Regulation 14E under the Exchange Act).



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     SECTION
5. Purchase Price Adjustment and Settlement.



     (a) After the expiration of the Averaging Period,




     (i) if the Settlement Amount is greater than zero, as an adjustment to the Purchase
Price, the Company shall elect either for




     (A) the Seller to transfer to the Company, for no additional consideration,
a number of shares of Common Stock equal to the sum of the Share Amounts for
each of the Trading Days in the Valuation Period (the “Refund Shares”) in the
manner provided in Section 5(b), or




     (B) the Seller to make a cash payment to the Company in immediately
available funds in an amount equal to the Settlement Amount on the Settlement
Day corresponding to the last Trading Day of the Averaging Period, and




     (ii) if the Settlement Amount is less than zero, as an adjustment to the Purchase
Price, the Company shall elect to




     (A) transfer to the Seller, for no additional consideration, a number of shares of Common Stock, which will be registered for resale in the manner set
forth in Section 6(a), equal to the sum of the Share Amounts for each of the
Trading Days in the Valuation Period (the “Registered Payment Shares”) in the
manner provided in Section 5(b),




     (B) transfer to the Seller, for no additional consideration, a number of shares of Common Stock, which will not be registered for resale, equal to the
Restricted Share Amount (the “Restricted Payment Shares”) on the Settlement Day
corresponding to the last Trading Day of the Averaging Period in the manner
provided in Section 5(b), and any Make-Whole Payment Shares as provided in
Section 5(c), or




     (C) make a cash payment to the Seller in immediately available funds in an
amount equal to the absolute value of the Settlement Amount on the Settlement
Day corresponding to the last Trading Day of the Averaging Period.




The Company shall give written notice to the Seller not later than 10 Trading Days prior
to the then scheduled last Trading Day of the Averaging Period of the Company’s election,
if the Settlement Amount is greater than zero, for the Seller to deliver Refund Shares or
make a cash payment or, if the Settlement Amount is less than zero, for the Company to
deliver Registered Payment Shares, to deliver Restricted Payment Shares or to make a cash
payment. Once made, such election will be irrevocable. If the Company fails to make such
an election by the election deadline, the Company shall have been deemed to have elected
to receive or deliver, as the case may be, a cash payment. If the Company elects to
deliver Registered Payment Shares or Restricted Payment Shares pursuant to this Section
5(a)(ii), the Calculation Agent shall have the right to adjust the Settlement Amount to
compensate the Seller for its cost of funds at Federal Funds Rate during the Valuation
Period.



     (b) Delivery of Refund Shares, Registered Payment Shares or Restricted Payment Shares shall be
made as follows:



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     (i) if Refund Shares are to be transferred to the Company, the Seller shall deliver
the shares to the Company on the fourth Settlement Day following the last day of the
Valuation Period,




     (ii) if Registered Payment Shares are to be transferred to the Seller, on each
Settlement Day corresponding to each Trading Day in the Valuation Period, the Company
shall deliver to the Seller a number of Registered Payment Shares equal to the Share
Amount for such Trading Day, and if the Share Amount for any Trading Day during the
Valuation Period includes fractional shares, in lieu of delivering the fractional shares,
the Company or the Seller (as the case may be) shall deliver cash to the Seller or the
Company, as the case may be, in an amount based on the closing price of the Common Stock
on the Exchange on that Trading Day, and




     (iii) if Restricted Payment Shares are to be transferred to the Seller, on the
Settlement Day corresponding to the last Trading Day in the Averaging Period, the Company
shall deliver to the Seller a number of Restricted Payment Shares equal to the Restricted
Share Amount, and the Company shall deliver any additional Make-Whole Payment Shares as
provided in Section 5(c).



     (c) If Restricted Payment Shares are delivered in accordance with Section 5(b)(iii), on the
last Trading Day of the Averaging Period a balance (the “Settlement Balance”) shall be established
with an initial balance equal to the absolute value of the Settlement Amount. Following the
delivery of Restricted Payment Shares or any Make-Whole Payment Shares, Seller shall sell all such
Restricted Payment Shares or Make-Whole Payment Shares in a commercially reasonable manner. At the
end of each Trading Day upon which sales have been made, the Settlement Balance shall be reduced by
an amount equal to 97% of the aggregate proceeds received by Seller upon the sale of such
Restricted Payment Shares or Make-Whole Payment Shares. If, on any Trading Day, all Restricted
Payment Shares and Make-Whole Payment Shares have been sold and the Settlement Balance has not been
reduced to zero, the Company shall (i) deliver to Seller or as directed by Seller on the Settlement
Day corresponding to such Trading Day an additional number of Shares (the “Make-Whole Payment
Shares”) equal to (x) the Settlement Balance as of such Trading Day divided by (y) the Restricted
Share Value of the Make-Whole Payment Shares or (ii) promptly deliver to Seller cash in an amount
equal to the then remaining Settlement Balance. This provision shall be applied successively until
either the Settlement Balance is reduced to zero or the aggregate number of Restricted Payment
Shares and Make-Whole Payment Shares equals the Maximum Deliverable Number.



     SECTION
6. Payment Shares.



     (a) The Company may only deliver Registered Payment Shares pursuant to Section 5(a)(ii)
subject to satisfaction of the following conditions:




     (i) a registration statement covering public resale of the Registered Payment Shares
by the Seller (the “Registration Statement”) shall have been filed with, and declared
effective by, the Securities and Exchange Commission under the Securities Act on or prior
to the last Trading Day of the Averaging Period, and no stop order shall be in effect with
respect to the Registration Statement; a printed prospectus relating to the Registered
Payment Shares (including any prospectus supplement thereto, the “Prospectus”) shall have
been delivered to the Seller, in such quantities as the Seller shall reasonably have
requested, on or prior to the last Trading Day of the Averaging Period;



10









 






     (ii) the form and content of the Registration Statement and the Prospectus
(including, without limitation, any sections describing the plan of distribution) shall be
satisfactory to the Seller;




     (iii) the Seller and its agents, including BAS, shall have been afforded a reasonable
opportunity to conduct a due diligence investigation with respect to the Company customary
in scope for underwritten offerings of equity securities and the results of such
investigation are satisfactory to the Seller, in its discretion; and




     (iv) as of the last Trading Day of the Averaging Period, an agreement (the “Transfer
Agreement”) shall have been entered into with the Seller in connection with the public
resale of the Registered Payment Shares by the Seller substantially similar to
underwriting agreements customary for underwritten offerings of equity securities, in form
and substance satisfactory to the Seller, which Transfer Agreement shall include, without
limitation, provisions substantially similar to those contained in such underwriting
agreements relating to the indemnification of, and contribution in connection with the
liability of, the Seller and its affiliates.


If the Settlement Amount is less than zero and the Company has elected to deliver Registered
Payment Shares and any of the above conditions is not satisfied as of the last Trading Day of the
Averaging Period, the Company shall, in lieu of delivery of Registered Payment Shares, make a cash
payment to the Seller in immediately available funds in an amount equal to the absolute value of
the Settlement Amount on the second Settlement Day following the end of the Averaging Period and
shall reimburse the Seller for all reasonable out-of-pocket expenses it incurs in connection with
due diligence and otherwise in connection with the anticipated delivery of the Registered Payment
Shares, including, without limitation, the reasonable fees and expenses of outside counsel to the
Seller incurred in connection thereof.




     (b) The Company may only deliver Restricted Payment Shares pursuant to Section 5(a)(ii) and
Make-Whole Payment Shares pursuant to Section 5(c) subject to satisfaction of the following
conditions:




     (i) all Restricted Payment Shares and Make-Whole Payment Shares shall be delivered to
the Seller (or any affiliate of the Seller designated by the Seller) pursuant to the
exemption from the registration requirements of the Securities Act provided by Section
4(2) thereof;




     (ii) BAS, the Seller and any potential purchaser of any such shares from the Seller
(or any affiliate of the Seller designated by the Seller) identified by BAS or the Seller
shall have been afforded a commercially reasonable opportunity to conduct a due diligence
investigation with respect to the Company customary in scope for private placements of
equity securities (including, without limitation, the right to have made available to them
for inspection all relevant financial and other records, pertinent corporate documents and
other information reasonably requested by them); and




     (iii) an agreement (a “Private Placement Agreement”) shall have been entered into
between the Company and the Seller (or any affiliate of the Seller designated by the
Seller) in connection with the private placement of such shares by the Company to the
Seller (or any such affiliate) and the private resale of such shares by the Seller (or any
such affiliate), substantially similar to private placement purchase agreements customary
for private placements of equity securities, in form and substance commercially reasonably
satisfactory to the Seller, which Private Placement Agreement shall include, without
limitation, provisions substantially similar to those contained in such private placement
purchase agreements relating to the indemnification of, and contribution in



11









 






connection with the liability of, the Seller and its affiliates, and shall provide
for the payment by the Company of all fees and expenses in connection with such resale,
including all fees and expenses of counsel for the Seller, and shall contain
representations, warranties and agreements of the Company reasonably necessary or
advisable to establish and maintain the availability of an exemption from the registration
requirements of the Securities Act for such resales.


If the Settlement Amount is less than zero and the Company has elected to deliver Restricted
Payment Shares and any of the above conditions is not satisfied as of the last Trading Day of the
Averaging Period and on each date when any Make-Whole Payment Shares are to be delivered, the
Company shall, in lieu of delivery of the Restricted Payment Shares or such Make-Whole Payment
Shares, as the case may be, make a cash payment to the Seller in immediately available funds in an
amount equal to the absolute value of the Settlement Amount or the then remaining Settlement
Balance, as the case may be, in either case on the second Settlement Day following the date when
such delivery would have otherwise been required and shall reimburse the Seller for all reasonable
out-of-pocket expenses it incurs in connection with the anticipated delivery of the Restricted
Payment Shares or the Make-Whole Payment Shares, including, without limitation, the reasonable fees
and expenses of outside counsel to the Seller incurred in connection thereof.




     (c) If the Company elects to deliver Restricted Payment Shares pursuant to Section 5(a)(ii)(B)
above, the Company shall not take or cause to be taken any action that would make unavailable
either (i) the exemption set forth in Section 4(2) of the Securities Act for the sale of any
Restricted Payment Shares or Make-Whole Payment Shares by the Company to the Seller or (ii) an
exemption from the registration requirements of the Securities Act reasonably acceptable to the
Seller for resales of Restricted Payment Shares and Make-Whole Payment Shares by the Seller.



     (d) If the Settlement Amount is less than zero and the Company elects to deliver Registered
Payment Shares pursuant to Section 5(a)(ii)(A) or Restricted Payment Shares pursuant to Section
5(a)(ii)(B), then, if necessary, the Company shall use its best efforts to cause the number of
authorized but unissued shares of Common Stock to be increased to an amount sufficient to permit
the Company to fulfill its obligations under Section 5 above.



     (e) The Company expressly agrees and acknowledges that the public disclosure of all material
information relating to the Company is within the Company’s control.



     (f) Notwithstanding the provisions of Section 5(a) above, if the Company has elected to
deliver any Payment Shares hereunder, the Company shall not be required to deliver more than the
Maximum Deliverable Number of shares of Common Stock as Payment Shares hereunder.



     SECTION
7. Adjustment of Terms.



     (a) In the event of any Corporate Event or the announcement by the Company of any such
Corporate Event, then the terms of the transaction (including, without limitation, the number of
Trading Days in the Averaging Period, any Daily Average Price, any Daily Share Amount, the Cap
Price and the Settlement Amount) described herein shall be subject to adjustment by the Calculation
Agent as in the exercise of its good faith judgment it deems appropriate under the circumstances
(including, without limitation, adjustments to account for changes in the price or volatility of
the Common Stock following the announcement of any such corporate event). In the event of a Merger
Event, the Calculation Agent shall make appropriate adjustments to any such terms of the
transaction to account for such Merger Event (which, for the avoidance of doubt, will not include
adjustments to account for changes in the price or volatility of the Common Stock relating to such
Merger Event).



12









 





     (b) In the event that the Seller determines, in its reasonable discretion, that, after its
exercise of commercially reasonable efforts, it is unable or it is impracticable to establish,
re-establish, substitute or maintain a borrowing of shares of Common Stock in respect of the
transactions contemplated by this Letter Agreement then, in each case, the terms of the transaction
other than the Cap Price (including, without limitation, the number of Trading Days in the
Averaging Period, any Daily Average Price, any Daily Share Amount and the Settlement Amount)
described herein shall be subject to adjustment by the Calculation Agent as in the exercise of its
good faith judgment it deems appropriate under the circumstances (which, for the avoidance of
doubt, will not include adjustments to account for changes in the price or volatility of the Common
Stock relating to such event).



     (c) In the event that the Seller determines, in its reasonable discretion, that it is unable
to borrow Common Stock at a rebate rate greater than or equal to the Threshold Borrow Rebate Rate,
then, for each day that such inability exists, the Rebate Rate for such day shall be decreased by
the excess of the Threshold Borrow Rebate Rate over the actual per annum rebate rate at which the
Seller is able to borrow Common Stock on such day (such excess, the “Borrow Rebate Rate
Shortfall”); provided that if the Outstanding Notional Amount on such day is negative, the Rebate
Rate for such day shall instead be increased by the Borrow Rebate Rate Shortfall.



     (d) In the event that the Calculation Agent determines that an Announcement Date has occurred,
then, in addition to adjustments effected pursuant to Section 7(a), (b) or (c), if any, (i) the
definition of Repurchase Cost shall be amended by deleting the proviso thereto, effective as of the
Announcement Date, and (ii) if the Announcement Date occurs during the Averaging Period, the
Settlement Amount shall be increased by an amount equal to the forward value on the last day of the
Averaging Period of the Cap Fair Market Value, as determined by the Calculation Agent. In
addition, in the event that the Calculation Agent determines prior to the date the Supplemental
Terms Notice is executed that the Announcement Date for a Friendly Transaction has occurred, then
the parties shall not be obligated to execute the Supplemental Terms Notice and the Company shall
not be obligated to pay the Premium to the Seller.



     (e) Notwithstanding the authority provided to the Calculation Agent in subsections (a), (b),
(c) and (d) of this Section 7, in the event of a corporate event (such as certain reorganizations,
mergers, or other similar events) in which all holders of Common Stock may receive consideration
other than the common equity securities of the continuing or surviving entity, the adjustments
referred to in such subsections shall permit the Company to satisfy its settlement obligations
hereunder by delivering the consideration received by holders of Common Stock upon such corporate
event, in such proportions as in the exercise of its good faith judgment the Calculation Agent
deems appropriate under the circumstances.



     SECTION
8. Governing Law.



     THIS LETTER AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE CHOICE OF LAW RULES THEREOF.



     SECTION
9. Assignment and Transfer.



     The rights and duties under this Letter Agreement may not be assigned or transferred by the
Company or the Seller without the prior written consent of the other party; provided that the
Seller may assign any of its rights or duties hereunder to any of its affiliates without the prior
written consent of the Company.



13









 





     SECTION 10. No Condition of Confidentiality.



     The Seller and the Company hereby acknowledge and agree that the Seller has authorized the
Company to disclose this Letter Agreement and the transactions contemplated hereby to any and all
persons, and there are no express or implied agreements, arrangements or understandings to the
contrary, and the Seller hereby waives any and all claims to any proprietary rights with respect to
this Letter Agreement and the transactions contemplated hereby, and authorizes the Company to use
any information that the Company receives or has received with respect to this Letter Agreement and
the transactions contemplated hereby in any manner.



     SECTION
11. Calculations.



     The Calculation Agent shall make all calculations in respect of this Letter Agreement.



     SECTION
12. Representations, Warranties and Agreements of the Company.



     The Company represents and warrants to, and agrees with, the Seller as follows:



     (a) The Company shall cause the Registration Statement, if any, to remain effective under the
Securities Act for a period (the “Effectiveness Period”) of 30 days immediately following the date
any Registered Payment Shares are delivered to the Seller pursuant to Section 5(a)(ii).



     (b) The Company acknowledges and agrees that it is not relying, and has not relied, upon the
Seller or any affiliate of the Seller with respect to the legal, accounting, tax or other
implications of this Letter Agreement and that it has conducted its own analyses of the legal,
accounting, tax and other implications hereof. The Company further acknowledges and agrees that
neither the Seller nor any affiliate of the Seller has acted as its advisor in any capacity in
connection with this Letter Agreement or the transactions contemplated hereby. The Company is
entering into this Letter Agreement with a full understanding of all of the terms and risks hereof
(economic and otherwise), has adequate expertise in financial matters to evaluate those terms and
risks and is capable of assuming (financially and otherwise) those risks.



     (c) The Company has all corporate power and authority to enter into this Letter Agreement and
to consummate the transactions contemplated hereby. This Letter Agreement has been duly authorized
and validly executed and delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general
equitable principles.



     (d) If Payment Shares are delivered pursuant to Section 5(a)(ii), such Payment Shares, when
delivered, shall have been duly authorized and shall be duly and validly issued, fully paid and
nonassessable and free of preemptive or similar rights, and such delivery shall pass title thereto
free and clear of any liens or encumbrances.



     (e) The Company is not entering into this Letter Agreement to facilitate a distribution of the
Common Stock (or any security convertible into or exchangeable for Common Stock) or in connection
with a future issuance of securities.



     (f) The Company is not entering into this Letter Agreement to create actual or apparent
trading activity in the Common Stock (or any security convertible into or exchangeable for Common
Stock) or to raise or depress or otherwise manipulate the price of the Common Stock (or any
security convertible into or exchangeable for Common Stock).



14









 





     (g) The execution and delivery by the Company of, and the compliance by the Company with all
of the provisions of, this Letter Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan agreement or any other
agreement or instrument to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws or other constitutive documents of the
Company or any statute or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their respective
properties, except for such conflicts, breaches, defaults or violations that would not have a
material adverse effect on the ability of the Company to perform its obligations under this Letter
Agreement.



     (h) On the Purchase Date and on each day to and including the final day of the Valuation
Period (i) the assets of the Company at their fair valuation exceed the liabilities of the Company,
including any contingent liabilities known to the Company as of the date hereof, (ii) the capital
of the Company is adequate to conduct the business of the Company and (iii) the Company has the
ability to pay its debts and obligations as such debts mature and does not intend to, or does not
believe that it will, incur debt beyond its ability to pay as such debts mature.



     (i) No consent, approval, authorization, order, registration, qualification or filing of or
with any court or governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties is required for the execution and delivery by
the Company of, and the compliance by the Company with all the terms of, this Letter Agreement or
the consummation by the Company of the transactions contemplated hereby.



     (j) The Company has made, and shall use its best efforts during the Averaging Period and the
Valuation Period (if any) to make, all filings required to be made by it with the Securities and
Exchange Commission, any securities exchange or any other regulatory body with respect to the
transactions contemplated hereby.



     (k) As of the date hereof and as of the date, if any, that the Company elects to transfer any
Payment Shares to the Seller or for the Seller to transfer any Refund Shares to the Company, (i)
none of the Company and its executive officers and directors is aware of any material nonpublic
information regarding the Company or the Common Stock and (ii) all reports and other documents
filed by the Company with the Securities and Exchange Commission pursuant to the Exchange Act when
considered as a whole (with the more recent such reports and documents deemed to amend inconsistent
statements contained in any earlier such reports and documents), do not contain any untrue
statement of a material fact or any omission of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in which they were
made, not misleading.



     (l) In the event that the Seller or the Calculation Agent or any of their affiliates becomes
involved in any capacity in any action, proceeding or investigation brought by or against any
person in connection with any matter referred to in this Letter Agreement, the Company shall
reimburse the Seller or the Calculation Agent or such affiliate for its reasonable legal and other
out-of-pocket expenses (including the cost of any investigation and preparation) incurred in
connection therewith within 30 days of receipt of notice of such expenses, and shall indemnify and
hold the Seller or the Calculation Agent or such affiliate harmless against any losses, claims,
damages or liabilities to which the Seller or the Calculation Agent or such affiliate may become
subject in connection with any such action, proceeding or investigation, except to the extent that
any losses, claims, damages, liabilities or expenses incurred by the Seller or the Calculation
Agent or such affiliate results from the gross negligence, bad faith or willful misconduct of the
Seller or



15









 




the Calculation Agent or a breach by the Seller or the Calculation Agent of any of its
covenants or obligations hereunder. If for any reason the foregoing indemnification is unavailable
to the Seller or the Calculation Agent or such affiliate or insufficient to hold it harmless, then
the Company shall contribute to the amount paid or payable by the Seller or the Calculation Agent
or such affiliate as a result of such losses, claims, damages or liabilities (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Seller or the Calculation Agent or such affiliate on the other hand in the matters contemplated by
this Letter Agreement or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and the Seller or the Calculation Agent or such affiliate
on the other hand in the matters contemplated by this Letter Agreement but also the relative fault
of the Company and the Seller or the Calculation Agent or such affiliate with respect to such
losses, claims, damages or liabilities and any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Seller or the Calculation Agent
or such affiliate, on the other hand, shall be in the same proportion as the Purchase Price bears
to the brokerage fee referred to in Section 1(b). The reimbursement, indemnity and contribution
obligations of the Company under this Section 12(l) shall be in addition to any liability that the
Company may otherwise have, shall extend upon the same terms and conditions to the partners,
directors, officers, agents, employees and controlling persons (if any), as the case may be, of the
Seller or the Calculation Agent and their affiliates and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the Company, the Seller
or the Calculation Agent, any such affiliate and any such person. The Company also agrees that
neither the Seller, the Calculation Agent nor any of such affiliates, partners, directors,
officers, agents, employees or controlling persons shall have any liability to the Company for or
in connection with any matter referred to in this Letter Agreement except to the extent that any
losses, claims, damages, liabilities or expenses incurred by the Company result from the gross
negligence, bad faith or willful misconduct of the Seller or the Calculation Agent or a breach by
the Seller or the Calculation Agent of any of its covenants or obligations hereunder. The
foregoing provisions shall survive any termination or completion of this Letter Agreement.




     (m) For the avoidance of doubt, the parties agree that the commissions incorporated in the
definitions of Share Amount and Restricted Share Value and in Section 5(c) above are commercially
reasonable fees for BAS’s activities in connection with Settlement under Section 5.



     (n) On each date during the Averaging Period on which the Company pays an ordinary cash
dividend to holders of Common Stock, the Company shall pay to the Seller, by wire transfer of
immediately available U.S. dollars, an amount equal to the product of (i) $0.25 and (ii) the
Remaining Share Amount for the third Trading Day immediately preceding the record date for such
ordinary cash dividend.



     (o) The Company will not (i) alter the amount per share or frequency of its ordinary cash
dividend on the Common Stock or (ii) declare any dividend other than an ordinary cash dividend on
the Common Stock, in either case that affects any dividend for which the ex-dividend date occurs
from and including the date of this Letter Agreement through and including the last day of the
Averaging Period.



     (p) The parties hereto agree and acknowledge that the Seller is a “financial institution”
within the meaning of Section 101(22) of Title 11 of the United States Code (the “Bankruptcy
Code”). The parties hereto further agree and acknowledge that this Letter Agreement is either (i)
a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, in which
case each payment and delivery pursuant to Section 5 is a “settlement payment,” as such term is
defined in Section 741(8) of the Bankruptcy Code, and that the Seller is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 546(e) and 555 of the Bankruptcy
Code, or (ii) a “swap agreement,” as such term is defined in Section 101(53B)



16









 




of the Bankruptcy Code, in which case each party is a “swap participant,” as such term is
defined in Section 101(53C) of the Bankruptcy Code, and that the Seller is entitled to the
protections afforded by, among other sections, Section 362(b)(17), 546(g) and 560 of the Bankruptcy
Code.




     (q) The Company accepts and agrees to be bound by the contractual terms and conditions as set
forth in the Supplemental Terms Notice. Upon receipt by the Company of the Supplemental Terms
Notice, the Company shall promptly execute and return such Supplemental Terms Notice to the Seller;
provided that the Company’s failure to so execute and return the Supplemental Terms Notice shall
not affect the binding nature of the Supplemental Terms Notice, and the terms set forth therein
shall be binding on the Company to the same extent, and with the same force and effect, as if the
Company had executed a written version of the Supplemental Terms Notice.



     (r) The Company and the Seller agree and acknowledge that (i) the transactions contemplated by
this Letter Agreement will be entered into in reliance on the fact that this Letter Agreement and
the Supplemental Terms Notice form a single agreement between the Company and the Seller, and the
Seller would not otherwise enter into such transactions, (ii) this Letter Agreement, as
supplemented by the Supplemental Terms Notice, is a “qualified financial contract”, as such term is
defined in Section 5-701(b)(2) of the General Obligations Law of New York (the “General Obligations
Law”); (iii) the Supplemental Terms Notice, regardless of whether the Supplemental Terms Notice is
transmitted electronically or otherwise, constitutes a “confirmation in writing sufficient to
indicate that a contract has been made between the parties” hereto, as set forth in Section
5-701(b)(3)(b) of the General Obligations Law; and (iv) this Letter Agreement constitutes a prior
“written contract”, as set forth in Section 5-701(b)(1)(b) of the General Obligations Law, and each
party hereto intends and agrees to be bound by this Letter Agreement, as supplemented by the
Supplemental Terms Notice.



     (s) The Company and the Seller further agree and acknowledge that this Letter Agreement, as
supplemented by the Supplemental Terms Notice, constitutes a contract “for the sale or purchase of
a security”, as set forth in Section 8-113 of the Uniform Commercial Code of New York.



     SECTION
13. Notices.



     Unless otherwise specified, notices under this contract may be made by telephone, to be
confirmed in writing to the address below. Changes to the notice information below must be made in
writing.



	 	 	 	 	 
	 

	 	(a)
	 	If to the Company:
	 
	 	 	 	 
	 

	 	 	 	RadioShack Corporation
	 

	 	 	 	300 RadioShack Circle
	 

	 	 	 	MS CF3-307
	 

	 	 	 	Fort Worth, TX 76102
	 

	 	 	 	Attn: Senior Vice President and Chief Financial Officer
	 

	 	 	 	Telephone: (817) 425-2223
	 

	 	 	 	Facsimile: (817) 415-3073
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	RadioShack Corporation
	 

	 	 	 	300 RadioShack Circle
	 

	 	 	 	MS CF4-101
	 

	 	 	 	Fort Worth, TX 76102






17









 






	 	 	 	 	 
	 

	 	 	 	Attn: Vice President – Law, Corporate Secretary and Acting General Counsel
	 

	 	 	 	Telephone: (817) 425-2181
	 

	 	 	 	Facsimile: (817) 415-6593
	 
	 	 	 	 
	 

	 	(b)
	 	If to the Seller:
	 
	 	 	 	 
	 

	 	 	 	Bank of America, N.A.
	 

	 	 	 	Equity Derivatives Group
	 

	 	 	 	c/o Banc of America Securities LLC
	 

	 	 	 	9 W. 57th Street
	 

	 	 	 	New York, NY 10019
	 

	 	 	 	Attn: Christopher Hutmaker
	 

	 	 	 	Telephone: (212) 583-8173
	 

	 	 	 	Facsimile: (212) 583-8457






     SECTION
14. Designation of Affiliate for Transactions in Common Stock.



     The Seller may designate any of its affiliates (the “Designee”) to deliver or take delivery,
as the case may be, and otherwise perform its obligations to deliver or take delivery of, as the
case may be, any shares of Common Stock in respect of the transactions contemplated by this Letter
Agreement, and the Designee may assume such obligations and the obligations of the Seller under
this Letter Agreement with respect to such shares of Common Stock. Such designation shall not
relieve the Seller of any of its obligations hereunder. Notwithstanding the previous sentence, if
the Designee shall have performed the obligations of the Seller hereunder, then the Seller shall be
discharged of its obligations to the Company to the extent of such performance. In addition, the
parties acknowledge and agree that every time that the Seller is described in this Letter Agreement
as buying, selling or otherwise transacting with third parties in the Common Stock, such buying,
selling or transacting may be conducted by the Seller or one or more of its affiliates.



     SECTION
15. Equity Rights.



     The Seller acknowledges and agrees that this Letter Agreement is not intended to convey to it
rights with respect to this transaction that are senior to the claims of common stockholders in the
event of the Company’s bankruptcy. For the avoidance of doubt, the parties agree that the
preceding sentence shall not apply at any time other than during the Company’s bankruptcy to any
claim arising as a result of a breach by the Company of any of its obligations under this Letter
Agreement. For the avoidance of doubt, the parties acknowledge that this Letter Agreement is not
secured by any collateral that would otherwise secure the obligations of the Company herein under
or pursuant to any other agreement.



     SECTION
16. Supplemental Terms Notice.



     The Seller represents and warrants to, and agrees with, the Company that the information
contained in any Supplemental Terms Notice shall be determined by the Seller in good faith and
calculated in accordance with the terms set forth in this Letter Agreement.



18









 





     Please confirm your agreement to the foregoing by signing and returning to us the enclosed
duplicate of this Letter Agreement.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Eric P. Hambleton
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: Eric P. Hambleton
	 

	 	 	 	 	 	 	 	Title: Authorized Signatory
	Acknowledged and agreed to as of
the date first above written,	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RADIOSHACK CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Martin O. Moad	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name: Martin O. Moad	 	 	 	 	 	 
	 

	 	Title: Vice President – Treasurer	 	 	 	 	 	 






19









 





ANNEX A




Chris Hutmaker



Chip Gibbs



Jake Mendelsohn



Steve Hunsberger



Dmitry Genkin



Soo-Il Lee



Sean Groenewald



Yury Mulman



Annex A-1




 









 








APPENDIX A




                               [Date]




RadioShack Corporation

300 RadioShack Circle

MS CF3-307

Fort Worth, TX 76102

Attn: Senior Vice President and Chief Financial Officer



          Re: Overnight Share Repurchase




Ladies and Gentlemen:




     Reference is made to the Overnight Share Repurchase Letter Agreement between you and Bank of
America, N.A. dated as of August 5, 2005 (the “Agreement”). Capitalized terms used without
definition in this letter have the definitions assigned to them in the Agreement.



     In accordance with Section 4 of the Agreement, the Seller agrees that Company may purchase
shares of Common Stock during the Averaging Period subject to the following procedures:




     (i) all such purchases will be made by Banc of America Securities LLC (“BAS”) in
accordance with Rule 10b-18(b) or otherwise in a manner that Company and BAS believe is in
compliance with applicable requirements;




     (ii) each purchase order Company places with BAS will be an all or nothing order to
purchase a minimum of 10,000 shares;




     (iii) Company will pay to BAS a $0.02 per share commission for each share of Common
Stock purchased; and




     (iv) Company agrees that, in purchasing shares of Common Stock, BAS may purchase
shares of Common Stock for the account of the Seller, which is an affiliate of BAS, other
than any single block of 10,000 or more shares of Common Stock, without your prior
consent; you acknowledge that, because any orders you place pursuant to the above
procedures will be all or nothing orders, other orders to purchase Common Stock (including
orders placed by the Seller or BAS) may reduce the number of shares of Common Stock
available for purchase and may therefore impact your ability to obtain execution of any
such all or nothing orders.



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     We may terminate this letter agreement upon the effectiveness of any change in applicable law
or regulation that would cause the procedures set forth herein to impede our ability to execute
appropriate trading transactions in relation to our obligations under the Agreement (including,
without limitation, Section 3(a) of the Agreement) in a manner consistent with applicable law and
regulation.



     Please indicate your agreement to, and acknowledgment of, the above by signing and returning
to us a copy of this letter.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BANC OF AMERICA SECURITIES LLC
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 

	 	 	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 	 	 
	Acknowledged and agreed to as of
the date first above written,	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RADIOSHACK CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 






A-2









 





APPENDIX B




[Company Letterhead]




Bank of America, N.A.

c/o Banc of America Securities LLC

9 W. 57th Street

New York, New York 10019

Attn: Christopher Hutmaker



               Re: Overnight Share Repurchase




Ladies and Gentlemen:




     In connection with our entry into an Overnight Share Repurchase Letter Agreement dated as of
August 5, 2005 (the “Agreement”), we hereby represent that set forth below is the total number of
shares of our common stock purchased by or for us or any of our affiliated purchasers in Rule
10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule
10b-18(b)(4) (all defined in Rule 10b-18 under the Securities Exchange Act of 1934, as amended)
during the four full calendar weeks immediately preceding the first day of the Averaging Period (as
defined in the Agreement) and the week during which the first day of the Averaging Period occurs:



	 	 	 	 	 	 	 
	 	 	Monday’s	 	Friday’s	 	Share
	 	 	Date	 	Date	 	Number
	Week 4:
	 	 	 	 	 	 
	Week 3:
	 	 	 	 	 	 
	Week 2:
	 	 	 	 	 	 
	Week 1:
	 	 	 	 	 	 
	Current Week:
	 	 	 	 	 	 






     We understand that you will use this information in calculating trading volume for purposes of
Rule 10b-18.



	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	RADIOSHACK CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






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APPENDIX C




[Form of Supplemental Terms Notice]




Bank of America, N.A.

9 West 57th Street

New York, New York 10019




[date]




RadioShack Corporation

300 RadioShack Circle

MS CF3-307

Fort Worth, TX 76102

Attn: Senior Vice President and Chief Financial Officer



Supplemental Terms Notice – Overnight Share Repurchase




Ladies and Gentlemen:




     Reference is made to the Overnight Share Repurchase Letter Agreement dated as of August 5,
2005 (the “Agreement”) between RadioShack Corporation, a Delaware corporation (the “Company”) and
Bank of America, N.A. (the “Seller”). Capitalized terms used in this Supplemental Terms Notice
and not otherwise defined shall have the meanings assigned to them in the Agreement.



     Please be advised that the Calculation Agent has determined the following terms relating to
the Agreement upon the completion of the Seller’s Initial Hedge:



	 	 	 	 	 
	 

	 	Cap Price:
	 	U.S. $[                    ] per share
	 
	 

	 	Hedge Execution Price:
	 	U.S. $[                    ] per share
	 
	 

	 	Premium:
	 	U.S. $[                    ]
	 
	 

	 	Premium Payment Date:
	 	[                                        ]
	 
	 	 	 	 





	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	BANC OF AMERICA SECURITIES LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






	 	 	 	 	 
	Receipt acknowledged,	 	 
	 
	 	 	 	 
	RADIOSHACK CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 







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