Document:

EX-10.2

 

EXHIBIT 10.2

	 	 	 
	 

	 	November 12, 2007
	 
	 	 
	To:

	 	Aéropostale, Inc.
	 

	 	112 West 34th Street
	 

	 	22nd Floor
	 

	 	New York, NY 10120
	 

	 	Attn: Michael J. Cunningham, Chief Financial Officer
	 

	 	Telephone: (973) 872-4178
	 
	 	 
	From

	 	Bank of America, N.A.
	 

	 	c/o Banc of America Securities LLC
	 

	 	9 West 57th Street, 40th Floor
	 

	 	New York, NY 10019
	 

	 	Attn: John Servidio
	 

	 	Telephone: 212-847-6527
	 

	 	Facsimile: 212-230-8610
	 
	 	 
	Re:

	 	Issuer Forward Repurchase Transaction
	 

	 	(Transaction Reference Number: NY-32486)

Ladies and Gentlemen:

     The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions
of the Transaction entered into between Bank of America, N.A. (“BofA”) and Aéropostale, Inc.
(“Counterparty”) on the Trade Date specified below (the “Transaction”). The terms of the
Transaction shall be set forth in this Confirmation and a Supplemental Terms Notice in the form of
Schedule A hereto (the “Supplemental Terms Notice”) that references this Confirmation. This
Confirmation and the Supplemental Terms Notice together shall constitute a “Confirmation” as
referred to in the ISDA Master Agreement specified below.

     1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2000
ISDA Definitions (including the Annex thereto) (the “2000 Definitions”) and the definitions and
provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together
with the 2000 Definitions, the “Definitions”), in each case as published by the International Swaps
and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2000
Definitions and the Equity Definitions, the Equity Definitions will govern.

     This Confirmation evidences a complete and binding agreement between BofA and Counterparty as
to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA
Form”) as if BofA and Counterparty had executed an agreement in such form (without any Schedule but
with the elections set forth in this Confirmation). The Transaction shall be the only Transaction
under the Agreement.

     All provisions contained in, or incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of any inconsistency between this
Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. The
Transaction is a Share Forward Transaction within the meaning set forth in the Equity Definitions.

     2. The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

	 	 	 	 	 
	 

	 	Trade Date:
	 	November 12, 2007
	 
	 	 	 	 
	 

	 	Seller:
	 	BofA

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	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Counterparty, par value USD 0.01 per share (Ticker Symbol: “ARO”)
	 
	 	 	 	 
	 

	 	Prepayment:
	 	Applicable
	 
	 	 	 	 
	 

	 	Prepayment Amount:
	 	USD $125,000,000
	 
	 	 	 	 
	 

	 	Prepayment Date:
	 	The first Exchange Business Day following the Trade Date
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges
	 
	 	 	 	 
	 

	 	Calculation Agent:
	 	Bank of America, N.A.

Valuation Terms:

	 	 	 	 	 
	 

	 	Initial Period Averaging Dates:
	 	
Each of the consecutive Exchange Business Days
commencing on, and including, the second Exchange Business Day immediately
following the Trade Date and ending on, and including, the Initial Period End Date
(or if such date is not an Exchange Business Day, the next following Exchange
Business Day).
	 
	 	 	 	 
	 

	 	Initial Period End Date:
	 	November 27, 2007; provided that BofA shall have the right, in
its absolute discretion, at any time to accelerate the Initial Period End Date to
any date that is on or after November 19, 2007 by delivery of a Supplemental Terms
Notice to Counterparty on the date of acceleration. On the Initial Period End
Date, BofA shall determine the Scheduled Final Averaging Date, the Scheduled
Earliest Acceleration Date, the Initial Price, the Minimum Shares and the Maximum
Shares in the manner set forth below, and shall deliver to Counterparty a
Supplemental Terms Notice substantially in the form of Schedule A to this
Confirmation.
	 
	 	 	 	 
	 

	 	Averaging Dates:
	 	Each of the consecutive Exchange Business Days commencing on, and
including, the Exchange Business Day immediately following the Initial Period End
Date and ending on and including the Final Averaging Date.
	 
	 	 	 	 
	 

	 	Final Averaging Date:
	 	January 30, 2008; provided that BofA shall have the
right, in its absolute discretion, at any time to accelerate the Final Averaging
Date to any date that is on or after the Scheduled Earliest Acceleration Date by
written notice to Counterparty no later than the date of acceleration.
	 
	 	 	 	 
	 

	 	Scheduled Earliest Acceleration Date:
	 	

The date set forth as such in the Supplemental Terms Notice, to be the
date 20 Exchange Business Days following the Initial Period End Date.
	 
	 	 	 	 
	 

	 	Valuation Date:
	 	The last Averaging Date.
	 
	 	 	 	 
	 

	 	Averaging Date Disruption:
	 	Modified Postponement, provided that notwithstanding
anything to the contrary in the Equity Definitions, if a Market Disruption Event
occurs on any Initial Period Averaging Date or any Averaging Date, the Calculation
Agent may, if appropriate in light of market conditions, regulatory considerations
or otherwise, take any or all of the following actions: (i) postpone the Initial
Period End Date or the Final Averaging Date, as the case may be, in accordance
with Modified Postponement or (ii) determine that such Initial Period

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	 	 	 	Averaging Date or Averaging Date is a Disrupted Day only
in part, in which case the Calculation Agent shall make
adjustments to the number of Shares for which such day
shall be an Initial Period Averaging Date or Averaging
Date and determine the Initial Price or Settlement
Price, as the case may be, based on an appropriately
weighted average instead of the arithmetic average
described under “Initial Price” or “Settlement Price,”
as the case may be, below. Such determination and
adjustments will be based on, among other factors, the
duration of any Market Disruption Event and the volume,
historical trading patterns and price of the Shares.
	 
	 	 	 	 
	 

	 	Market Disruption Events:
	 	The first sentence of Section 6.3(a) of the Equity
Definitions is hereby amended (A) by deleting the words “during the one hour
period that ends at the relevant Valuation Time” in the third and fourth lines
thereof, and (B) by replacing the words “or (iii) an Early Closure.” by “(iii) an
Early Closure, or (iv) a Regulatory Disruption.”
	 
	 	 	 	 
	 

	 	Regulatory Disruption:
	 	Any event that BofA, in its discretion, determines makes it
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 BofA, and
including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and
Regulation 14E under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Regulation M), for BofA to refrain from or decrease any
market activity in connection with the Transaction. BofA shall notify Counterparty
as soon as reasonably practicable that a Regulatory Disruption has occurred and
the Initial Period Averaging Dates or Averaging Dates affected by it.

Settlement Terms:

	 	 	 	 	 
	 

	 	Initial Share Delivery:
	 	On the Initial Share Delivery Date, BofA shall deliver to
Counterparty the Initial Shares.
	 
	 	 	 	 
	 

	 	Initial Share Delivery Date:
	 	The second Exchange Business Day following the Trade Date.
	 
	 	 	 	 
	 

	 	Initial Shares:
	 	3,000,000 Shares
	 
	 	 	 	 
	 

	 	Minimum Share Delivery:
	 	On the Minimum Share Delivery Date, BofA shall deliver to
Counterparty a number of Shares equal to (a) the Minimum Shares minus (b) the
number of Initial Shares; provided that, if such difference is less than zero, no
Shares shall be delivered on the Minimum Share Delivery Date.
	 
	 	 	 	 
	 

	 	Minimum Share Delivery Date:
	 	
The first Exchange Business Day following the Initial
Period End Date.
	 
	 	 	 	 
	 

	 	Minimum Shares:
	 	As set forth in the Supplemental Terms Notice, to be a number of Shares
equal to (a) the Prepayment Amount divided by (b) the product of 109.5% and the
Initial Price.
	 
	 	 	 	 
	 

	 	Maximum Shares:
	 	As set forth in the Supplemental Terms Notice, to be a number of Shares
equal to (a) the Prepayment Amount divided by (b) the product of 90.0% and the
Initial Price.
	 
	 	 	 	 
	 

	 	Initial Price:
	 	As set forth in the Supplemental Terms Notice, to be the arithmetic
average of the VWAP Prices for all Initial Period Averaging Dates.

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	 	Settlement Date:
	 	The date that falls one Settlement Cycle following the Valuation Date.
	 
	 	 	 	 
	 

	 	Settlement:
	 	On the Settlement Date, BofA shall deliver to Counterparty the Number of
Shares to be Delivered, if a positive number. If, as a result of Section 9 below,
the Number of Shares to be Delivered is a negative number, the Counterparty
Settlement Provisions in Annex A shall apply.
	 
	 	 	 	 
	 

	 	Number of Shares to be Delivered:
	 	

A number of Shares equal to (a) the Prepayment Amount
divided by (b) (i) the Settlement Price minus (ii) $0.0733; provided that, if such
number is greater than the Maximum Shares, the Number of Shares to be Delivered
shall equal the Maximum Shares; and provided further that, if such number is less
than the Minimum Shares, the Number of Shares to be Delivered shall equal the
Minimum Shares; and provided further that the Number of Shares to be Delivered as
so determined shall be reduced by the aggregate number of Shares delivered on the
Initial Share Delivery Date and the Minimum Share Delivery Date, but shall not be
reduced below zero unless the provisions of Section 9 below apply.
	 
	 	 	 	 
	 

	 	Settlement Price:
	 	The arithmetic average of the VWAP Prices for all Averaging Dates.
	 
	 	 	 	 
	 

	 	VWAP Price:
	 	For any Initial Period Averaging Date or Averaging Date, the Rule
10b-18 dollar volume weighted average price per Share for such day based on
transactions executed during such day, as reported on Bloomberg Page “ARO.N
<Equity> AQR SEC” (or any successor thereto) or, in the event such price is
not so reported on such day for any reason, as reasonably determined by the
Calculation Agent.
	 
	 	 	 	 
	 

	 	Excess Dividend Amount:
	 	For the avoidance of doubt, all references to the Excess
Dividend Amount in Section 9.2(a)(iii) of the Equity Definitions shall be deleted.
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	To the extent BofA is obligated to deliver Shares
hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that
the Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable securities
laws that exist as a result of the fact that Counterparty is the Issuer of the
Shares) and 9.12 of the Equity Definitions will be applicable, except that all
references in such provisions to “Physically-Settled” shall be read as references
to “Net Share Settled”. “Net Share Settled” means that BofA is obligated to
deliver Shares hereunder.

Dividends:

	 	 	 	 	 
	 

	 	Dividend:
	 	Any dividend or distribution on the Shares other than any dividend or
distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or
11.2(e)(ii)(B) of the Equity Definitions.

Share Adjustments:

	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	Calculation Agent Adjustment; provided that Dividends shall not
be Potential Adjustment Events.

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Extraordinary Events:

	 	 	 	 	 
	 

	 	Consequences of Merger Events:
	 
	 	 	 	 
	 

	 	(a) Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	(b) Share-for-Other:
	 	Cancellation and Payment
	 
	 	 	 	 
	 

	 	(c) Share-for-Combined:
	 	Cancellation and Payment
	 
	 	 	 	 
	 

	 	Tender Offer:
	 	Applicable
	 
	 	 	 	 
	 

	 	Consequences of Tender Offers:
	 
	 	 	 	 
	 

	 	(a) Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	(b) Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	(c) Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	Composition of Combined Consideration:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Consequences of Announcement Events:
	 	

Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the
Equity Definitions; provided that references to “Tender Offer” shall be replaced
by references to “Announcement Event” and references to “Tender Offer Date” shall
be replaced by references to “Announcement Date.” An Announcement Event shall be
an “Extraordinary Event” for purposes of the Equity Definitions, to which Article
12 of the Equity Definitions is applicable.
	 
	 	 	 	 
	 

	 	Announcement Event:
	 	The occurrence of an Announcement Date in respect of a potential
Acquisition Transaction (as defined in Section 9 below).
	 
	 	 	 	 
	 

	 	Announcement Date:
	 	The date of the first public announcement in relation to an
Acquisition Transaction, or any publicly announced change or amendment to the
announcement giving rise to an Announcement Date.
	 
	 	 	 	 
	 

	 	Provisions applicable to Merger
Events and Tender Offers:
	 	

The consequences set forth opposite “Consequences of Merger
Events” and “Consequences of Tender Offers” above shall apply regardless of
whether a particular Merger Event or Tender Offer relates to an Announcement Date
for which an adjustment has been made pursuant to Consequences of Announcement
Events, without duplication of any such adjustment.
	 
	 	 	 	 
	 

	 	Nationalization, Insolvency or

Delisting:
	 	

Cancellation and Payment (Calculation Agent Determination); provided that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Exchange is located in the United States
and the Shares are not immediately re-listed, re-traded or re-quoted on any of the
New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market or
the NASDAQ Global Select Market (or their respective successors); if the Shares
are immediately re-listed, re-traded or re-quoted on any such exchange or
quotation system, such exchange or quotation system shall thereafter be deemed to
be the Exchange.

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	 	Additional Disruption Events:
	 
	 	 	 	 
	 

	 	     Change in Law:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Hedging Disruption:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Increased Cost of Hedging:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Loss of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	          Maximum Stock Loan Rate:
	 	50 basis points
	 
	 	 	 	 
	 

	 	     Hedging Party:
	 	For all applicable Additional Disruption Events, BofA
	 
	 	 	 	 
	 

	 	     Determining Party:
	 	For all Extraordinary Events, BofA
	 
	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and Acknowledgments

Regarding Hedging Activities:
	 	

Applicable
	 
	 	 	 	 
	 

	 	Additional Acknowledgments:
	 	Applicable

3. Account Details:

	 	 	 	 	 
	 

	 	(a) Account for delivery of 
Shares
to Counterparty:
	 	

To be provided by Counterparty
	 
	 	 	 	 
	 

	 	(b) Account for payments to

Counterparty:
	 	

To be provided by Counterparty
	 
	 	 	 	 
	 

	 	(c) Account for payments to BofA:	 	 

Bank of America

New York, NY

SWIFT: BOFAUS65

Bank Routing: 026-009-593

Account Name: Bank of America

Account No. : 0012333-34172

4. Offices:

	 	 	 	 	 
	 	 	(a) The Office of Counterparty
for the Transaction is: Counterparty is not a Multibranch Party
	 
	 	 	 	 
	 	 	(b) The Office of BofA for the Transaction is:

Bank of America, N.A.

c/o Banc of America Securities LLC

9 West 57th Street, 40th Floor

New York, NY 10019

5. Notices: For purposes of this Confirmation:

	 	 	 	 	 
	 	 	(a) Address for notices or
communications to Counterparty:  

Aéropostale, Inc.

112 West 34th Street

22nd Floor

New York, NY 10120

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	 	 	(b) Address for notices or communications to BofA:

Bank of America, N.A.

c/o Banc of America Securities LLC

9 West 57th Street, 40th Floor

New York, NY 10019

Attn: John Servidio

Telephone: 212-847-6527

Facsimile: 212-230-8610

6. Additional Provisions Relating to Transactions in the Shares.

     (a) Counterparty acknowledges and agrees that the Minimum Shares delivered on the Initial
Share Delivery Date and the Minimum Share Delivery Date may be sold short to Counterparty.
Counterparty further acknowledges and agrees that BofA may, during (i) the period from the date
hereof to the Valuation Date or, if later, the Scheduled Earliest Acceleration Date without regard
to any adjustment thereof pursuant to “Special Provisions Relating to Transaction Announcements”
below, and (ii) the period from and including the first Settlement Valuation Date to and including
the last Settlement Valuation Date (together, the “Relevant Period”), purchase Shares in
connection with the Transaction, which Shares may be used to cover all or a portion of such short
sale or may be delivered to Counterparty. Such purchases will be conducted independently of
Counterparty. The timing of such purchases by BofA, the number of Shares purchased by BofA on any
day, the price paid per Share 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 BofA. It is the intent of the parties
that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act,
and the parties agree that this Confirmation shall be interpreted to comply with the requirements
of Rule 10b5-1(c), and Counterparty shall not take any action that results in the Transaction not
so complying with such requirements. Without limiting the generality of the preceding sentence,
Counterparty acknowledges and agrees that (A) Counterparty does not have, and shall not attempt to
exercise, any influence over how, when or whether BofA effects any purchases of Shares in
connection with the Transaction, (B) during the period beginning on (but excluding) the date of
this Confirmation and ending on (and including) the last day of the Relevant Period, neither
Counterparty nor its officers or employees shall, directly or indirectly, communicate any
information regarding Counterparty or the Shares to any employee of BofA or its Affiliates
responsible for trading the Shares in connection with the transactions contemplated hereby, (C)
Counterparty is entering into the Transaction 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) Counterparty will not alter or deviate from this
Confirmation or enter into or alter a corresponding hedging transaction with respect to the
Shares. The parties also acknowledge and agree that any amendment, modification, waiver or
termination of this Confirmation 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 Counterparty or any officer or director of Counterparty is aware of any
material nonpublic information regarding Counterparty or the Shares.

     (b) Counterparty agrees that neither Counterparty nor any of its Affiliates or agents shall
take any action that would cause Regulation M to be applicable to any purchases of Shares, or any
security for which the Shares are a reference security (as defined in Regulation M), by
Counterparty or any of its affiliated purchasers (as defined in Regulation M) during the Relevant
Period.

     (c) Counterparty shall, at least one day prior to the first day of the Relevant Period,
notify BofA of the total number of Shares 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 Counterparty or any of
its affiliated purchasers during each of the four calendar weeks preceding the first day of the
Relevant Period and during the calendar week in which the first day of the Relevant 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 A hereto.

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     (d) During the Relevant Period, Counterparty shall (i) notify BofA prior to the opening of
trading in the Shares on any day on which Counterparty makes, or expects to be made, any public
announcement (as defined in Rule 165(f) under the Securities Act of 1933, as amended (the
“Securities Act”) of any merger, acquisition, or similar transaction involving a recapitalization
relating to Counterparty (other than any such transaction in which the consideration consists
solely of cash and there is no valuation period), (ii) promptly notify BofA following any such
announcement that such announcement has been made, and (iii) promptly deliver to BofA following
the making of any such announcement a certificate indicating (A) Counterparty’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) Counterparty’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, Counterparty
shall promptly notify BofA of the earlier to occur of the completion of such transaction and the
completion of the vote by target shareholders. Counterparty acknowledges that any such public
announcement may result in a Regulatory Disruption and may cause the Relevant Period to be
suspended. Accordingly, Counterparty acknowledges that its actions in relation to any such
announcement or transaction must comply with the standards set forth in Section 6(a).

     (e) Without the prior written consent of BofA, Counterparty 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 (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 during the Relevant Period. During such
time, any purchases of Shares (or any security convertible into or exchangeable for Shares) by
Counterparty shall be made through BAS, which is an Affiliate of BofA, pursuant to a letter
substantially in the form of Appendix B hereto and subject to such conditions as BofA
shall impose, and shall be in compliance with Rule 10b-18 or otherwise in a manner that
Counterparty and BofA believe is in compliance with applicable requirements (including, without
limitation, Rule 10b-5, Regulation 13D-G and Regulation 14E under the Exchange Act).

7. Representations, Warranties and Agreements.

     (a) In addition to the representations, warranties and agreements in the Agreement and those
contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and
agrees with, BofA as follows:

     (i) (A) None of Counterparty and its officers and directors is aware of any material
nonpublic information regarding Counterparty or the Shares and (B) all reports and other
documents filed by Counterparty 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.

     (ii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that BofA is not making any representations or warranties with
respect to the treatment of the Transaction under FASB Statements 133, as amended, or 150,
EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities &
Equity Project.

     (iii) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

     (iv) Prior to the Trade Date, Counterparty shall deliver to BofA a resolution of
Counterparty’s board of directors authorizing the Transaction and such other certificate or
certificates as BofA shall reasonably request. Counterparty will publicly disclose, prior
to the opening of trading on the Exchange Business Day immediately following the Trade
Date, its intention to institute a program for the acquisition of Shares.

     (v) Counterparty is not entering into this Confirmation to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable for
Shares) or to raise or depress or otherwise

80

 

manipulate the price of the Shares (or any security convertible into or exchangeable for
Shares) or otherwise in violation of the Exchange Act, and will not engage in any other
securities or derivative transaction to such ends.

     (vi) Counterparty is not, and after giving effect to the transactions contemplated
hereby will not be, an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.

     (vii) On the Trade Date, the Prepayment Date, the Initial Share Delivery Date, the
Minimum Share Delivery Date and the Settlement Date (A) the assets of Counterparty at their
fair valuation exceed the liabilities of Counterparty, including contingent liabilities,
(B) the capital of Counterparty is adequate to conduct the business of Counterparty and (C)
Counterparty 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.

     (viii) Counterparty shall not declare any Dividend (as defined above) for which the
ex-dividend date occurs during the period from and including the Trade Date to and
including the Valuation Date, or, if applicable, the last Settlement Valuation Date. For
the avoidance of doubt, nothing in this Confirmation shall be construed as giving BofA a
right to participate in any Dividends.

     (b) If BofA purchases Shares in connection with the Transaction, BofA shall to do so in a
manner that would, if such purchases were made by Counterparty, be in accordance with the
conditions set forth in Rule 10b-18 under the Securities Exchange Act of 1934, as amended; provided
that it is understood that BofA may make purchases of Shares for its own account in connection with
the management of BofA’s risk in respect of the Transaction relating to the terms thereof regarding
the Maximum Shares, the Minimum Shares and Seller’s right to accelerate the Final Averaging Date,
and that these purchases by BofA for its own account would not be subject to the provisions of this
Section 7(b).

     (c) Each of BofA and Counterparty agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

     (d) Counterparty acknowledges that the offer and sale of the Transaction to it is intended to
be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof.
Accordingly, Counterparty represents and warrants to BofA that (i) it has the financial ability to
bear the economic risk of its investment in the Transaction and is able to bear a total loss of
its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as
promulgated under the Securities Act, (iii) it is entering into the Transaction for its own
account and without a view to the distribution or resale thereof, and (iv) the assignment,
transfer or other disposition of the Transaction has not been and will not be registered under the
Securities Act and is restricted under this Confirmation, the Securities Act and state securities
laws.

     (e) The parties hereto agree and acknowledge that BofA is a “financial institution,” “swap
participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and
101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto
further agree and acknowledge that (A) this Confirmation is (i) a “securities contract,” as such
term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and
delivery hereunder or in connection herewith is a “settlement payment” within the meaning of
Sections 362 and 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined
in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery
hereunder or in connection herewith is a “transfer” and a “payment or other transfer of property”
within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) BofA is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e),
546(g), 555, 560 and 561 of the Bankruptcy Code.

8. Agreements and Acknowledgements Regarding Hedging.

     Counterparty acknowledges and agrees that:

81

 

     (a) During the Relevant Period, BofA and its Affiliates may buy or sell Shares or other
securities or buy or sell options or futures contracts or enter into swaps or other derivative
securities in order to adjust its hedge position with respect to the Transaction;

     (b) BofA and its Affiliates also may be active in the market for Shares other than in
connection with hedging activities in relation to the Transaction;

     (c) BofA shall make its own determination as to whether, when or in what manner any hedging
or market activities in Counterparty’s securities shall be conducted and shall do so in a manner
that it deems appropriate to hedge its price and market risk with respect to the Settlement Price
and/or the VWAP Price; and

     (d) Any market activities of BofA and its Affiliates with respect to Shares may affect the
market price and volatility of Shares, as well as the Settlement Price and/or the VWAP Price, each
in a manner that may be adverse to Counterparty.

9. Special Provisions regarding Transaction Announcements.

     If a Transaction Announcement occurs on or prior to the Settlement Date, then the Number of
Shares to be Delivered shall be determined as if the second proviso were deleted from the
definition thereof (and, for the avoidance of doubt, in such event the Number of Shares to be
Delivered may be reduced below zero pursuant to the last proviso to such definition). If a
Transaction Announcement occurs after the Trade Date but prior to the Scheduled Earliest
Acceleration Date, the Scheduled Earliest Acceleration Date shall be adjusted to be the date of
such Transaction Announcement.

     “Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an
announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter
of intent or an understanding to enter into an Acquisition Transaction, (iii) the announcement of
an intention to solicit or enter into, or to explore strategic alternatives or other similar
undertaking that may include, an Acquisition Transaction, or (iv) any other announcement that in
the reasonable judgment of the Calculation Agent may result in an Acquisition Transaction. For the
avoidance of doubt, announcements as used in this definition of Transaction Announcement refer to
any public announcement whether made by the Issuer or a third party.

     “Acquisition Transaction” means (i) any Merger Event (and for purposes of this definition the
definition of Merger Event shall be read with the references therein to “100%” being replaced by
“15%” and to “50%” by “75%” and as if the clause beginning immediately following the definition of
Reverse Merger therein to the end of such definition were deleted) or Tender Offer, or any other
transaction involving the merger of Counterparty with or into any third party, (ii) the sale or
transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization,
reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease,
exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including
any capital stock or other ownership interests in subsidiaries) or other similar event by
Counterparty or any of its subsidiaries where the aggregate consideration transferable or
receivable by or to Counterparty or its subsidiaries exceeds 15% of the market capitalization of
Counterparty and (v) any transaction in which Counterparty 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).

     10. Other Provisions.

     (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If either party would owe the other party any amount pursuant to Sections 12.2, 12.3,
12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency, a
Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or
proceeds to be paid to holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii)
of the Agreement (except in the event of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party, that resulted
from an event or events within Counterparty’s control) (a “Payment Obligation”), Counterparty
shall have the right, in its sole discretion, to satisfy or to require BofA to satisfy, as the
case may be, any such Payment Obligation by the Share Termination Alternative (as defined below)
by giving irrevocable telephonic notice to BofA, confirmed in writing within one Scheduled Trading
Day,

82

 

between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the Merger Date, Tender
Offer Date, Announcement Date or Early Termination Date, as applicable (“Notice of Share
Termination”). Upon such Notice of Share Termination, the following provisions shall apply on the
Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement
Date or Early Termination Date, as applicable:

	 	 	 
	Share Termination Alternative:

	 	Applicable and means, if delivery
pursuant to the Share Termination
Alternative is owed by BofA, that BofA
shall deliver to Counterparty the Share
Termination Delivery Property on the date
on which the Payment Obligation would
otherwise be due pursuant to Section 12.7
or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as
applicable (the “Share Termination
Payment Date”), in satisfaction of the
Payment Obligation. If delivery pursuant
to the Share Termination Alternative is
owed by Counterparty, paragraphs 2
through 6 of Annex A shall apply as if
such delivery were a settlement of the
Transaction to which Net Share Settlement
(as defined in Annex A) applied, the Cash
Settlement Payment Date were the Early
Termination Date, the Forward Cash
Settlement Amount were zero (0) minus the
Payment Obligation owed by Counterparty,
and “Shares” as used in Annex A were
replaced by “Share Termination Delivery
Units.”
	 
	 	 
	Share Termination Delivery 

Property:

	 	

A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of a security therein with an
amount of cash equal to the value of such
fractional security based on the values
used to calculate the Share Termination
Unit Price.
	 
	 	 
	Share Termination Unit Price:

	 	The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to BofA at the time of notification
of the Payment Obligation.
	 
	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event
of Default or Delisting, one Share or, in
the case of an Insolvency,
Nationalization, Merger Event or Tender
Offer, a unit consisting of the number or
amount of each type of property received
by a holder of one Share (without
consideration of any requirement to pay
cash or other consideration in lieu of
fractional amounts of any securities) in
such Insolvency, Nationalization, Merger
Event or Tender Offer. If such
Insolvency, Nationalization, Merger Event
or Tender Offer involves a choice of
consideration to be received by holders,
such holder shall be deemed to have
elected to receive the maximum possible
amount of cash.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in
Section 9.11 of the Equity Definitions
shall be modified by excluding any
representations therein relating to
restrictions, obligations, limitations or
requirements under applicable securities
laws that exist as a result of the fact
that Counterparty is the Issuer of the
Shares) and 9.12 of the Equity
Definitions will be applicable, except
that all references in such provisions to
“Physically-Settled” shall be read as
references to “settled by Share
Termination Alternative” and all
references to “Shares” shall be read as
references to “Share Termination Delivery
Units”.

83

 

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

     (c) Indemnification. In the event that BofA 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 Confirmation, Counterparty
shall reimburse BofA 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 BofA or the Calculation Agent or such Affiliate harmless on an after-tax basis against any
losses, claims, damages or liabilities to which BofA or the Calculation Agent or such Affiliate may
become subject in connection with any such action, proceeding or investigation. If for any reason
the foregoing indemnification is unavailable to BofA or the Calculation Agent or such Affiliate or
insufficient to hold it harmless, then Counterparty shall contribute to the amount paid or payable
by BofA 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
Counterparty on the one hand and BofA or the Calculation Agent or such Affiliate on the other hand
in the matters contemplated by this Confirmation 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 Counterparty on the one hand and BofA or the Calculation Agent or
such Affiliate on the other hand in the matters contemplated by this Confirmation but also the
relative fault of Counterparty and BofA 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 Counterparty, on the one hand, and BofA or the Calculation Agent or
such Affiliate, on the other hand, shall be in the same proportion as the Prepayment Amount bears
to the customary broker commission for share repurchases multiplied by the Minimum Shares. The
reimbursement, indemnity and contribution obligations of Counterparty under this Section 10(c)
shall be in addition to any liability that Counterparty 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 BofA 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 Counterparty, BofA or the Calculation Agent, any such Affiliate and any such
person. Counterparty also agrees that neither BofA, the Calculation Agent nor any of such
Affiliates, partners, directors, officers, agents, employees or controlling persons shall have any
liability to Counterparty for or in connection with any matter referred to in this Confirmation
except to the extent that any losses, claims, damages, liabilities or expenses incurred by
Counterparty result from the gross negligence or bad faith of BofA or the Calculation Agent or a
breach by BofA or the Calculation Agent of any of its covenants or obligations hereunder. The
foregoing provisions shall survive any termination or completion of the Transaction.

     (d) Staggered Settlement. BofA may, by notice to Counterparty prior to the Settlement Date (a
“Nominal Settlement Date”), elect to deliver the Shares deliverable on such Nominal Settlement Date
on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal
Settlement Date as follows: (i) in such notice, BofA will specify to Counterparty the related
Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date) or
delivery times and how it will allocate the Shares it is required to deliver under “Physical
Settlement” among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number
of Shares that BofA will deliver to Counterparty hereunder on all such Staggered Settlement Dates
and delivery times will equal the number of Shares that BofA would otherwise be required to deliver
on such Nominal Settlement Date.

     (e) Transfer and Assignment. BofA may transfer or assign its rights and obligations hereunder
and under the Agreement, in whole or in part, to (i) any of its Affiliates, (ii) any entities
sponsored or organized by, or on behalf of or for the benefit of, BofA, or (iii) any third party,
in each case without the consent of Counterparty.

     (f) Amendments to Equity Definitions. The following amendments shall be made to the Equity
Definitions:

84

 

     (i) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause
(A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is
specified as the Method of Adjustment in the related Confirmation of a Share Option
Transaction or Share Forward Transaction, then following the announcement or occurrence of
any Potential Adjustment Event, the Calculation Agent will determine whether such Potential
Adjustment Event has a material effect on the theoretical value of the relevant Shares or
options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any
one or more of:’ and clause (B) thereof is hereby amended by inserting, after ‘the Forward
Price,’ ‘the Maximum Shares, the Minimum Shares,’ and the portion of such sentence
immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting
or concentrative” and the words “(provided that no adjustments will be made to account
solely for changes in volatility, expected dividends, stock loan rate or liquidity relative
to the relevant Shares)” and replacing such latter phrase with the words “(and, for the
avoidance of doubt, adjustments may be made to account solely for changes in volatility,
stock loan rate or liquidity relative to the relevant Shares)”;

     (ii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the
words “diluting or concentrative” and replacing them with “material”; and

     (iii) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting
from the fourth line thereof the word “or” after the word “official” and inserting a comma
therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting
the following words therefor “or (C) at BofA’s option, the occurrence of any of the events
specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to
that issuer”.

     (g) No Netting and Set-off. Notwithstanding any provision of the Agreement (including
without limitation Section 6(f) thereof) and this Confirmation or any other agreement between the
parties to the contrary, neither party shall net or set off its obligations under the Transaction
against its rights against the other party under any other transaction or instrument.

     (h) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax structure.

     (i) Designation by BofA. Notwithstanding any other provision in this Confirmation to the
contrary, BofA (the “Designator”) may designate any of its Affiliates (the “Designee”) to deliver
and otherwise perform its obligations to deliver any Shares or other securities in respect of the
Transaction, and the Designee may assume such obligations, if any. Such designation shall not
relieve the Designator of any of its obligations, if any, hereunder. Notwithstanding the previous
sentence, if the Designee shall have performed the obligations, if any, of the Designator
hereunder, then the Designator shall be discharged of its obligations, if any, to Counterparty to
the extent of such performance.

     (j) Termination Currency. The Termination Currency shall be USD, subject to Section 10(a).

     (k) Agreements regarding the Supplemental Terms Notice.

     (i) Counterparty accepts and agrees to be bound by the contractual terms and conditions
as set forth in the Supplemental Terms Notice for the Transaction. Upon receipt of the
Supplemental Terms Notice, Counterparty shall promptly execute and return the Supplemental
Terms Notice to BofA; provided that Counterparty’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 Counterparty to the same extent,
and with the same force and effect, as if Counterparty had executed a written version of the
Supplemental Terms Notice.

     (ii) Counterparty and BofA agree and acknowledge that (A) the transactions contemplated
by this Confirmation will be entered into in reliance on the fact that this Confirmation and
the Supplemental Terms Notice form a single agreement between Counterparty and BofA, and
BofA would not otherwise enter into such

85

 

transactions, (B) this Confirmation, as amended by the Supplemental Terms Notice, is
intended to be 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”); (C)
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 (D) this Confirmation 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 Confirmation,
as supplemented by the Supplemental Terms Notice.

     (iii) Counterparty and BofA further agree and acknowledge that this Confirmation, 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.

     (l) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND BOFA HEREBY IRREVOCABLY WAIVES (ON ITS
OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BOFA OR ITS
AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

     (m) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL
MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

86

 

     Please confirm your agreement to be bound by the terms stated herein by executing the copy of
this Confirmation enclosed for that purpose and returning it to us by mail or facsimile
transmission to the address for Notices indicated above.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Yours sincerely,	 	 
	 	 	(v)	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 
 

	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

	 	 	 	 	 
	Confirmed as of the date first above written:	 	 
	 
	 	 	 	 
	AÉROPOSTALE, INC.	 	 
	 
	 	 	 	 
	By:

	 	 
 

	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

87

 

     (A) SCHEDULE A

SUPPLEMENTAL TERMS NOTICE

	 	 	 
	To:

	 	Aéropostale, Inc.
	 

	 	112 West 34th Street
	 

	 	22nd Floor
	 

	 	New York, NY 10120
	 
	 	 
	From:

	 	Bank of America, N.A.
	 
	 	 
	Subject:

	 	Issuer Forward Repurchase Transaction
	 
	 	 
	Ref. No:

	 	NY-32486
	 
	 	 
	Date:

	 	[___], 2007

Ladies and Gentlemen:

     The purpose of this Supplemental Terms Notice is to notify you of certain terms of the
Transaction dated November 12, 2007 between Bank of America, N.A. (“BofA”) and Aéropostale, Inc.
(“Counterparty”).

     The definitions and provisions contained in the Confirmation dated as of November 12, 2007
between BofA and Counterparty (the “Confirmation”) are incorporated into this Supplemental Terms
Notice. In the event of any inconsistency between those definitions and provisions and this
Supplemental Terms Notice, this Supplemental Terms Notice will govern.

1. The terms of the Transaction to which this Supplemental Terms Notice relates are as follows:

	 	 	 	 	 
	 

	 	Initial Period End Date:
	 	[___]
	 
	 	 	 	 
	 

	 	Scheduled Earliest

Acceleration Date:
	 	[___] [the date 20 Exchange Business Days following the
Initial Period End Date]
	 
	 	 	 	 
	 

	 	Initial Price:
	 	USD[___] per Share [the arithmetic average of the VWAP Prices for all
Initial Period Averaging Dates]
	 
	 	 	 	 
	 

	 	Minimum Shares:
	 	[___] [a number of Shares equal to (a) the Prepayment Amount
divided by (b) the product of 109.5% and the Initial Price]
	 
	 	 	 	 
	 

	 	Maximum Shares:
	 	[___] [a number of Shares equal to (a) the Prepayment Amount
divided by (b) the product of 90.0% and the Initial Price]

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Yours sincerely,	 	 
	 	 	(w)	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 
 

	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

	 	 	 	 	 
	Receipt Acknowledged:	 	 
	 
	 	 	 	 
	AÉROPOSTALE, INC.	 	 
	 
	 	 	 	 
	By:

	 	 
 

	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

 

 

APPENDIX A

[Counterparty Letterhead]

Bank of America, N.A.

c/o Banc of America Securities LLC

9 W. 57th Street

New York, New York 10019

Attn: John Servidio

Re: Issuer Forward Repurchase Transaction

Ladies and Gentlemen:

     In connection with our entry into a confirmation between you and us dated as of November 12,
2007 (the “Confirmation”), 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 Relevant Period (as defined in the
Confirmation) and the week during which the first day of the Relevant 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,	 	 
	 
	 	 	 	 	 	 
	 	 	AÉROPOSTALE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

(A) APPENDIX B

[Date]

[Counterparty]

[Address]

Re: Issuer Forward Repurchase Transaction

Ladies and Gentlemen:

     Reference is made to the Issuer Forward Repurchase Transaction documented by a Confirmation
between you and Bank of America, N.A. dated as of November 12, 2007 (the “Confirmation”).
Capitalized terms used without definition in this letter have the definitions assigned to them in
the Confirmation.

     In Section 6(e) of the Confirmation, BofA has agreed that you may purchase Shares during the
Relevant 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 you and BAS believe is in
compliance with applicable requirements;

     (ii) each purchase order you place with BAS will be an all or nothing order to purchase
a minimum of 10,000 Shares;

     (iii) you will pay to BAS a $0.025 per share commission for each Share purchased; and

     (iv) you agree that, in purchasing Shares, BAS may purchase Shares for the account of
BofA, which is an Affiliate of BAS, other than any single block of 10,000 or more Shares,
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 Shares
(including orders placed by BofA or BAS) may reduce the number of Shares available for
purchase and may therefore impact your ability to obtain execution of any such all or
nothing orders.

 

 

     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 BofA’s ability to execute
appropriate trading transactions in relation to BofA’s obligations under the Confirmation 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,	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

	 	 	 	 	 
	Acknowledged and agreed to as of
the date first above written,	 	 
	 
	 	 	 	 
	AÉROPOSTALE, INC.	 	 
	 
	 	 	 	 
	By:

	 	 
 

	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 

 

 

ANNEX A

COUNTERPARTY SETTLEMENT PROVISIONS

     1. The following Counterparty Settlement Provisions shall apply to the extent indicated under
the Confirmation:

	 	 	 	 	 
	 

	 	Settlement Currency:
	 	If Cash Settlement applies, USD
	 
	 	 	 	 
	 

	 	Settlement Method Election:
	 	Applicable; provided that (i) Section 7.1 of the Equity Definitions
is hereby amended by deleting the word “Physical” in the sixth line thereof and
replacing it with the words “Net Share” and (ii) the Electing Party may make a
settlement method election only if the Electing Party represents and warrants to BofA in
writing on the date it notifies BofA of its election that, as of such date, (A) none of
Counterparty and its officers and directors is aware of any material nonpublic information
regarding Counterparty or the Shares and (B) all reports and other documents filed by
Counterparty 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.
	 
	 	 	 	 
	 

	 	Electing Party:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Settlement Method
Election Date:
	 	
The date 10 Exchange Business Days prior to the Valuation Date; provided that if
BofA accelerates the Final Averaging Date pursuant to the proviso to the definition of
Final Averaging Date, the Settlement Method Election Date shall be the Exchange Business
Day immediately following the Valuation Date.
	 
	 	 	 	 
	 

	 	Default Settlement Method:
	 	Cash Settlement
	 
	 	 	 	 
	 

	 	Forward Cash Settlement
Amount:
	 	
The Number of Shares to be Delivered multiplied by the Settlement Valuation Price.
	 
	 	 	 	 
	 

	 	Settlement Valuation Price:
	 	The arithmetic average of the VWAP Prices for all Settlement
Valuation Dates, subject to Averaging Date Disruption, determined as if each Settlement
Valuation Date were an Averaging Date (with Averaging Date Disruption applying as if the
last Settlement Valuation Date were the Final Averaging Date and the Settlement Valuation
Price were the Settlement Price).
	 
	 	 	 	 
	 

	 	Settlement Valuation Dates:
	 	A number of Scheduled Trading Days selected by BofA in its
reasonable discretion, beginning on the Scheduled Trading Day immediately following the
Final Averaging Date.
	 
	 	 	 	 
	 

	 	Cash Settlement:
	 	If Cash Settlement is applicable, then Counterparty shall pay to BofA the
absolute value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date.
	 
	 	 	 	 
	 

	 	Cash Settlement
Payment Date:
	 	
The date one Settlement Cycle following the last Settlement Valuation Date.

 

 

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Net Share Settlement
Procedures:
	 	
If Net Share Settlement is applicable, Net Share Settlement shall be made in
accordance with paragraphs 2 through 5 below.

     2. Net Share Settlement shall be made (i) by delivery on the Cash Settlement Payment Date
(such date, the “Net Share Settlement Date”) of a number of Shares, which will not be registered
for resale (the “Restricted Payment Shares”), with an aggregate Restricted Share Value equal to the
absolute value of the Forward Cash Settlement Amount and (ii) by delivery of the Make-whole Payment
Shares as described in paragraph 4 below. “Restricted Share Value” means, on any day, the Relevant
Price for the Shares on such day (determined as if such day were a Valuation Date), reduced by an
amount equal to the difference in fair values on such day between Shares that may be sold freely
without registration (“Free Shares”) and Shares that may only be sold pursuant to an effective
registration statement or an exemption from the registration requirements of the Securities Act
(“Restricted Shares”), with the fair value of the Free Shares on such day being such Relevant Price
and the fair value of Restricted Shares on such day being the Calculation Agent’s commercially
reasonable estimate of the proceeds per Restricted Share that would be received by a seller of
Restricted Shares in a customary private placement of Restricted Shares on such day.

     3. If Counterparty delivers Restricted Payment Shares pursuant to paragraph 2 above, and
Make-whole Payment Shares pursuant to paragraph 4 below:

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

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

          (c) as of the date of delivery, Counterparty shall enter into an agreement (a “Private
Placement Agreement”) with BofA (or any affiliate of BofA designated by BofA) in connection with
the private placement of such shares by Counterparty to BofA (or any such affiliate) and the
private resale of such shares by BofA (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 BofA, 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 connection
with the liability of, BofA and its affiliates, and shall provide for the payment by Counterparty
of all fees and expenses in connection with such resale, including all fees and expenses of counsel
for BofA, and shall contain representations, warranties and agreements of Counterparty reasonably
necessary or advisable to establish and maintain the availability of an exemption from the
registration requirements of the Securities Act for such resales.

          (d) Counterparty 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 Counterparty to BofA or (ii) an exemption
from the registration requirements of the Securities Act reasonably acceptable to BofA for resales
of Restricted Payment Shares and Make-Whole Payment Shares by the BofA (or an affiliate of BofA).

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

     4. If Restricted Payment Shares are delivered in accordance with paragraph 3 above, on the
last Settlement Valuation Date, a balance (the “Settlement Balance”) shall be established with an
initial balance equal to the absolute value of the Forward Cash Settlement Amount. Following the
delivery of Restricted Payment Shares or any Make-Whole Payment Shares, BofA shall sell all such
Restricted Payment Shares or Make-Whole Payment

 

 

Shares in a commercially reasonable manner. At the end of each Exchange Business Day upon
which sales have been made, the Settlement Balance shall be reduced by an amount, as determined by
the Calculation Agent, equal to (i) the Restricted Share Value on such Exchange Business Day and
(ii) the number of Restricted Payment Shares or Make-Whole Payment Shares sold on such Exchange
Business Day. If, on any Exchange Business Day, all Restricted Payment Shares and Make-Whole
Payment Shares have been sold and the Settlement Balance has not been reduced to zero, Counterparty
shall (i) deliver to BofA or as directed by BofA one Settlement Cycle following such Exchange
Business Day an additional number of Shares (the “Make-Whole Payment Shares” and, together with the
Restricted Payment Shares, the “Payment Shares”) equal to (x) the Settlement Balance as of such
Exchange Business Day divided by (y) the Restricted Share Value of the Make-Whole Payment Shares as
of such Exchange Business Day or (ii) promptly deliver to BofA 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. If on any Exchange Business Day,
Restricted Payment Shares and Make-Whole Payment Shares remain unsold and the Settlement Balance
has been reduced to zero, BofA shall promptly return such unsold Restricted Payment Shares or
Make-Whole Payment Shares.

     5. Notwithstanding the foregoing, in no event shall Counterparty be required to deliver more
than the Maximum Deliverable Number of Shares as Payment Shares hereunder. “Maximum Deliverable
Number” means 20,000,000 Shares. Counterparty represents and warrants to BofA (which
representation and warranty shall be deemed to be repeated on each day from the date hereof to the
last Settlement Valuation Date or, if Counterparty has elected to deliver any Payment Shares
hereunder, to the date on which resale of such Payment Shares is completed) that the Maximum
Deliverable Number is equal to or less than the number of authorized but unissued Shares of
Counterparty that are not reserved for future issuance in connection with transactions in such
Shares (other than the transactions under this Confirmation) on the date of the determination of
the Maximum Deliverable Number (such Shares, the “Available Shares”). In the event Counterparty
shall not have delivered the full number of Shares otherwise deliverable as a result of this
paragraph 5 (the resulting deficit, the “Deficit Shares”), Counterparty shall be continually
obligated to deliver, from time to time until the full number of Deficit Shares have been delivered
pursuant to this paragraph, Shares when, and to the extent that, (i) Shares are repurchased,
acquired or otherwise received by Counterparty or any of its subsidiaries after the date hereof
(whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and
unissued Shares reserved for issuance in respect of other transactions prior to such date which
prior to the relevant date become no longer so reserved or (iii) Counterparty additionally
authorizes any unissued Shares that are not reserved for other transactions. Counterparty shall
immediately notify BofA of the occurrence of any of the foregoing events (including the number of
Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered)
and promptly deliver such Shares thereafter. For the avoidance of doubt, in no event shall
Counterparty be required to make any payment in respect of any Deficit Shares.Exhibit 10.1

 

Exhibit 10.1

FORM OF

INDEMNIFICATION AGREEMENT

          AGREEMENT, effective as of November 8, 2007, between Fremont General Corporation, a Nevada
corporation (the “Company”), and                      (the “Indemnitee”).

          WHEREAS, Indemnitee is a director and/or officer of the Company;

          WHEREAS, the By-laws of the Company require the Company to indemnify and advance expenses to
its directors and officers to the full extent permitted by law and the Indemnitee has agreed to
serve as a director and/or officer of the Company in part in reliance on such By-laws;

          WHEREAS, in recognition of Indemnitee’s reliance on the aforesaid By-laws, and in part to
provide Indemnitee with specific contractual assurance that the protection promised by such By-laws
will be available to Indemnitee (regardless of, among other things, any amendment to or revocation
of such By-laws), the Company wishes to provide in this Agreement for the indemnification of and
the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained,
for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability
insurance policies and fiduciary liability policies;

          NOW, THEREFORE, in consideration of the premises and of Indemnitee’s service to the Company
directly or, at its request, another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:

	1.	 	Certain Definitions:

	 	(a)	 	Claim: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether instituted by the Company or any
other party, that Indemnitee in good faith believes might lead to the institution of
any such action, suit or proceeding, whether civil, criminal, administrative,
investigative or other.
	 
	 	(b)	 	Expenses: include attorneys’ fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be a
witness in or participate in, any Claim relating to any Indemnifiable Event.
	 
	 	(c)	 	Indemnifiable Event: any event or occurrence related to the fact
that

1

 

	 	 	 	Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any Subsidiary thereof, including, without limitation, Fremont
Investment & Loan, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any such capacity.

	 	(d)	 	Independent Legal Counsel: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3, who shall not have otherwise
performed services for the Company or Indemnitee within the last five years (other
than with respect to matters concerning the rights of Indemnitee under this Agreement,
or of other indemnitees under similar indemnity agreements).

	2.	 	Basic Indemnification Arrangement.

	 	(a)	 	Subject to the limitations of 12 C.F. R. 359, in the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is threatened to be made
a party to or witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law as soon as practicable but in any event no later than
thirty days after written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses, judgments, fines, penalties or amounts paid in settlement)
of such Claim. If so requested by Indemnitee, the Company shall advance (within two
business days of such request) any and all Expenses to Indemnitee (an “Expense
Advance”).
	 
	 	(b)	 	Notwithstanding the foregoing, (i) the obligations of the Company under
Section 2(a) shall be subject to the condition that Independent Legal Counsel shall
not have determined, in a written opinion, that Indemnitee would not be permitted to
be indemnified under applicable law, and (ii) the obligation of the Company to make an
Expense Advance pursuant to Section 2(a) shall be subject to the condition that, if,
when and to the extent that Independent Legal Counsel determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law, any determination made

2

 

	 	 	 	by Independent Legal Counsel that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). If there has been no determination by
Independent Legal Counsel or if Independent Legal Counsel determines that
Indemnitee substantively would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the right to commence litigation
in any court in the States of California or Nevada having subject matter
jurisdiction thereof and in which venue is proper seeking an initial determination
by the court or challenging any such determination by Independent Legal Counsel or
any aspect thereof, including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such proceeding. Any
determination by Independent Legal Counsel otherwise shall be conclusive and
binding on the Company and Indemnitee.

	 	(c)	 	Notwithstanding anything in this Agreement to the contrary, Indemnitee shall
not be entitled to indemnification pursuant to this Agreement in connection with any
Claim initiated by Indemnitee unless the Board of Directors has authorized or
consented to the initiation of such Claim.

	3.	 	Independent Legal Counsel. With respect to all matters hereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or
any other agreement or Company By-law now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal advice only from Independent Legal Counsel
selected by Indemnitee and approved by the Company. Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to
pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify
fully such counsel against any and all expenses (including attorneys’ fees), claims,
liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
	 
	4.	 	Indemnification for Additional Expenses. Subject to the limitations of 12 C.F.R.
359, the Company shall indemnify Indemnitee against any and all expenses (including attorneys’
fees) and, if requested by Indemnitee, shall (within two business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any
action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the
Company under this Agreement or any other agreement or

3

 

	 	 	Company By-law now or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors’ and officers’ liability insurance policies
maintained by the Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery, as the
case may be.

	5.	 	Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise
in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal without prejudice, Indemnitee
shall be indemnified against all Expenses incurred in connection therewith.
	 
	6.	 	Burden of Proof. In connection with any determination by Independent Legal Counsel
or otherwise as to whether Indemnitee is entitled to be indemnified hereunder the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
	 
	7.	 	No Presumptions. For purposes of this Agreement, the termination of any action, suit
or proceeding, by judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not permitted by
applicable law. In addition, neither the failure of Independent Legal Counsel to have made a
determination as to whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by Independent Legal Counsel that Indemnitee
has not met such standard of conduct or did not have such belief, prior to the commencement of
legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be
indemnified under applicable law shall be a defense to Indemnitee’s claim or create a
presumption that Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
	 
	8.	 	Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to
any other rights Indemnitee may have under the Company’s By-laws or the Nevada General
Corporation Law or otherwise. To the extent that a change in the Nevada General Corporation
Law (whether by statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under the Company’s By-laws and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the

4

 

	 	 	greater benefits so afforded by such change.

	9.	 	Liability Insurance. To the extent the Company maintains an insurance policy or
policies providing directors’ and officers’ liability insurance and fiduciary liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available for any Company director or
officer. The Company shall cause the persons serving as its directors and officers to be
covered for a period of six years from the date hereof by the directors’ and officers’
liability insurance and fiduciary liability insurance policies currently maintained by the
Company (provided that the Company may substitute therefore policies of at least the same
coverage and amounts containing terms and conditions which are not less advantageous than such
policy); provided, however, that in no event shall the Company be required to
expend on an annual basis more than 250% of the current amount expended by the Company (the
“Insurance Amount”) to maintain or procure insurance coverage; provided further, that
if the Company is unable to maintain or obtain the insurance called for by this Section 9, the
Company shall use best efforts to obtain as much comparable insurance as is available for the
Insurance Amount.
	 
	10.	 	Period of Limitations. No legal action shall be brought and no cause of action shall
be asserted by or in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs,
executors or personal or legal representatives after the expiration of two years from the date
of accrual of such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal action within
such two-year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action such shorter period shall
govern.
	 
	11.	 	Amendments, Etc. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
	 
	12.	 	Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively
to bring suit to enforce such rights.
	 
	13.	 	No Duplication of Payments. The Company shall not be liable under this Agreement to
make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment

5

 

	 	 	(under any insurance policy, By-law or otherwise) of the amounts otherwise indemnifiable
hereunder.

	14.	 	Binding Effect, Etc. This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company, spouses, heirs,
executors and personal and legal representatives. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as an officer or director of the Company
or of any other enterprise at the Company’s request.
	 
	15.	 	Severability. The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable in any respect, and the validity and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any way impaired
and shall remain enforceable to the fullest extent permitted by law.
	 
	16.	 	Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada applicable to contracts made and to be
performed in such state without giving effect to the principles of conflicts of laws.

[Signature Page Follows]

6

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 8th day of November,
2007.

	 	 	 	 	 	 	 
	 	 	FREMONT GENERAL	 	 
	 	 	CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

                                        Indemnitee
	 	 

[Signature Page to Indemnification Agreement]

7

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