Exhibit 10.3

EXECUTION VERSION

AFFILIATION AGREEMENT

BY AND

BETWEEN

TOTAL GAS & POWER USA, SAS

AND

SUNPOWER CORPORATION

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TABLE OF CONTENTS

 

         Page   ARTICLE I DEFINITIONS      1   

ARTICLE II TERRA STANDSTILL AND CERTAIN TRANSFER OBLIGATIONS

     11   

2.1

  Terra Standstill Obligations      11   

2.2

  Exception to Certain Standstill Obligations      13   

2.3

  Terra’s Transfer of Control      15   

ARTICLE III TERRA RIGHTS TO MAINTAIN AND BOARD REPRESENTATION RIGHTS

     16   

3.1

  Terra’s Rights to Maintain      16   

3.2

  Terra’s Board Representation Rights      23   

3.3

  Board Committee Composition      26   

3.4

  Board and Committee Observers and Executive Sessions      26   

3.5

  Terra Director Recusal      27   

ARTICLE IV EVENTS REQUIRING SPECIFIC BOARD OR STOCKHOLDER APPROVAL

     27   

4.1

  Events Requiring Disinterested Board Approval      27   

4.2

  Event Requiring Supermajority Board Approval      28   

4.3

  Events Requiring Terra Stockholder Approval      28   

4.4

  Certain Amendments to the Rights Plan      30   

4.5

  Disinterested Director Action      30   

ARTICLE V ADDITIONAL COVENANTS OF THE COMPANY AND TERRA

     30   

5.1

  Amendment of Bylaws; Taking of Other Company Board Actions      30   

5.2

  Rights Plan Matters      30   

5.3

  Financial Information      31   

5.4

  Compliance with Securities Laws      32   

5.5

  Breach by Members of Terra Group      33   

ARTICLE VI MISCELLANEOUS

     33   

6.1

  Applicable Law; Jurisdiction; Etc.      33   

6.2

  Successors and Assigns      33   

6.3

  Entire Agreement; Amendment      34   

6.4

  Notices, Etc.      34   

6.5

  Delays or Omissions      36   

6.6

  Expenses      36   

6.7

  Specific Performance      36   

6.8

  Further Assurances      37   

6.9

  Counterparts      37   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

6.10

  Severability      37   

6.11

  Other Remedies      37   

6.12

  Attorneys’ Fees      37   

6.13

  Certain Interpretations      37   

6.14

  Term and Termination      38   

 

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AFFILIATION AGREEMENT

This Affiliation Agreement (hereinafter the “Agreement”) is made as of April 28,
2011, by and between Total Gas & Power USA, SAS, a société par actions
simplifiée organized under the laws of the Republic of France (“Terra”) and
SunPower Corporation, a Delaware corporation (the “Company”).

A. The Company and Terra have executed the Tender Offer Agreement and entered
into those certain Related Agreements (as defined in the Tender Offer
Agreement);

B. The Company and Terra desire, in connection with the consummation of the
several transactions contemplated by the Tender Offer Agreement and the Related
Agreements, to make certain covenants and agreements with one another pursuant
to this Agreement; and

C. It is a mutual condition to Terra’s and the Company’s willingness to enter
into the Tender Offer Agreement that Terra and the Company shall have entered
into this Agreement.

NOW THEREFORE, in consideration of the covenants and promises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement, the following terms shall have the meanings
specified with respect thereto below:

“13D Group” shall mean any group of Persons formed for the purpose of acquiring,
holding, voting, disposing of or beneficially owning Voting Stock, which group
of Persons would be required under Section 13(d) of the Exchange Act, and the
rules and regulations promulgated thereunder, to file a statement on Schedule
13D pursuant to Rule 13d-1(a) or a Schedule 13G pursuant to Rule 13d-1(c) with
the SEC as a “person” within the meaning of Section 13(d)(3) of the Exchange Act
if such group beneficially owned Voting Stock representing more than five
percent (5%) of any class of Voting Stock then outstanding.

“Affiliate” shall have the meaning set forth in Rule 12b-2 of the rules and
regulations promulgated under the Exchange Act.

“Agreement” shall have the meaning set forth in the Preamble.

“Applicable Right to Maintain Percentage” shall mean (including in the
Beneficial Ownership of the Terra Group all Voting Stock and Convertible
Securities for which the applicable Grace Period, if any, has not expired) as of
the time that is immediately prior to the applicable

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issuance of New Securities: (i) during any period prior to the Recapitalization,
the aggregate percentage of the Total Current Voting Power then in effect that
is Beneficially Owned by the Terra Group, and (ii) during any period following
the Recapitalization, the aggregate percentage of the Voting Stock that is
Beneficially Owned by the Terra Group.

“Applicable Standstill Limit” shall mean the applicable percentage of the lower
of (i) the then outstanding Voting Stock or (ii) the then outstanding Total
Current Voting Power of the Company then in effect, in each case for the time
periods set forth as follows: (x) from the Offer Closing until 11:59 p.m.
California time on the two (2) year anniversary of the Offer Closing:
sixty-three percent (63%); (y) from 12:00 a.m. California time on the day
following the two (2) year anniversary of the Offer Closing until 11:59 p.m.
California time on December 31, 2014: sixty-six and two-thirds percent
(66- 2/3%); and (z) at any time thereafter: seventy percent (70%).

“Asset Acquisition Value” shall mean the aggregate net present value of the
consideration paid or to be paid by the Company or a Company Controlled
Corporation to acquire or otherwise obtain ownership or exclusive use of a
business, property or assets of a Person or Persons.

“Asset Disposition Value” shall mean the aggregate net present value of the
consideration received or to be received by the Company or a Company Controlled
Corporation for property or assets being sold or otherwise disposed of in order
to provide a Person or Persons.

“beneficially owning” or “beneficial owned” shall have the meaning set forth in
Rule 13d-3 of the rules and regulations promulgated under the Exchange Act.

“Beneficially Own” or “Beneficial Ownership” shall have the meaning set forth in
Rule 13d-3 of the rules and regulations promulgated under the Exchange Act;
provided that, for purposes of this definition, any Convertible Securities which
have not yet been converted, exchanged or exercised to acquire Voting Stock of
the Company shall not be deemed to be Beneficially Owned or outstanding (whether
or not owned by members of the Terra Group).

“Board Reduction Event” shall have the meaning set forth in Section 3.2(c).

“Business Acquisition Transaction” shall have the meaning set forth in
Section 3.1(c)(i).

“Business Day” shall mean any day, other than Saturday, Sunday or any day which
is a legal holiday under the laws of the State of California or State of New
York or is a day on which banking institutions in the State of California or
State of New York are authorized or required by law or other governmental action
to close.

“Change in Control of the Company” shall mean any of the following: (i) a
merger, consolidation or other business combination or transaction to which the
Company is a party (but to which no member of the Terra Group is a party) if the
stockholders of the Company immediately prior to the effective date of such
merger, consolidation or other business combination or transaction have
aggregate beneficial ownership of voting securities representing less than fifty
percent (50%) of the Total Current Voting Power of the surviving corporation
following such merger, consolidation or

 

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other business combination or transaction; (ii) an acquisition by any Person or
13D Group (which is not and does not include any member of the Terra Group or
any Person or 13D Group which is permitted to file a statement on a Schedule 13G
pursuant to Rule 13d-1(c) with the SEC as a “person” within the meaning of
Section 13(d)(3) of the Exchange Act) of direct or indirect Beneficial Ownership
of fifty percent (50%) or more of the Total Current Voting Power of the Company
then in effect; (iii) a sale of all or substantially all the assets of the
Company to a third party (which is not and does not include any member of the
Terra Group); (iv) a liquidation or dissolution of the Company; or (v) during
any period of two consecutive years, individuals who at the beginning of such
two year period constituted members of the Company Board (together with any new
members of the Company Board whose appointment to office or whose nomination for
election by the stockholders of the Company was (A) approved by a vote of a
majority of the Company Board then still in office who were either members of
the Company Board at the beginning of such period or whose appointment or
nomination for election was previously so approved or (B) otherwise effected
pursuant to the terms of Article III) cease for any reason to constitute a
majority of the members of the Company Board then in office.

“Class A Common Stock” shall mean shares of Class A common stock, $0.001 par
value per share, of the Company.

“Class B Common Stock” shall mean shares of Class B common stock, $0.001 par
value per share, of the Company.

“Company” shall have the meaning set forth in the Preamble.

“Company Board” shall mean the Board of Directors of the Company.

“Company Common Stock” shall mean, collectively, shares of the Class A Common
Stock and shares of the Class B Common Stock, or any successor classes or
combination thereof.

“Company Controlled Corporation” shall mean a Subsidiary of the Company.

“Company Acquisition Issuance Notice” shall have the meaning set forth in
Section 3.1(c)(i).

“Company Consolidation Package” shall have the meaning set forth in Section 5.3.

“Company Equity Plan” shall mean any option or other equity benefit plan of the
Company.

“Company Financing Issuance Notice” shall have the meaning set forth in
Section 3.1(b)(ii).

“Company Other Issuance” shall have the meaning set forth in Section 3.1(d)(i).

“Company Other Issuance Notice” shall have the meaning set forth in
Section 3.1(d)(i).

 

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“Convertible Debentures” shall mean the convertible debentures disclosed in the
Company’s annual report on Form 10-K for the fiscal year ended January 2, 2011
that are outstanding on the date hereof.

“Convertible Securities” shall mean any securities of the Company which are or
by their terms will be convertible into, exchangeable for or otherwise
exercisable to acquire Voting Stock of the Company, including convertible
securities, warrants, rights or options to purchase Voting Stock of the Company
whether or not then in the money.

“Credit Support Agreement” shall mean that certain Credit Support Agreement, of
even date herewith, by and between Parent and the Company.

“DGCL” shall mean the Delaware General Corporation Law.

“Designated Independent Directors” shall mean those current members of the
Company Board set forth on Schedule A attached hereto.

“Disinterested Board Approval” shall mean the affirmative vote or written
consent of a majority of the Disinterested Directors, duly obtained in
accordance with the applicable provisions of the Company’s bylaws and applicable
law.

“Disinterested Director” shall mean any member of the Company Board who is
(i) an “independent director” within the meaning of Rule 5605(a)(2) of the
listing standards of the Nasdaq and (ii) not a Terra Director.

“Disinterested Stockholder” shall mean any stockholder of the Company who is
not: (a)(i) a member of the Terra Group or (ii) an executive officer or director
of the Company or a Company Controlled Corporation, and (b) with respect to any
Transferee Tender Offer or Transferee Merger, (i) such Transferee or an
Affiliate of such Transferee or (ii) a member of a 13D Group in which such
Transferee or an Affiliate of such Transferee is also a member.

“Direct Purchase Securities” shall have the meaning set forth in
Section 3.1(b)(iii).

“EBITDA” shall mean, for any period, the total of the following calculated for
Company and its Subsidiaries on a consolidated basis and without duplication,
with each component thereof determined in accordance with GAAP consistently
applied by the Company for such period (except as otherwise required by GAAP):
(a) consolidated net income; plus (b) any deduction for (or less any gain from)
income, franchise or other taxes included in determining such consolidated net
income; plus (c) interest expense deducted in determining such consolidated net
income; plus (d) amortization and depreciation expense deducted in determining
such consolidated net income; plus (e) any non-recurring charges and any
non-cash charges resulting from application of GAAP insofar as GAAP requires a
charge against earnings for the impairment of goodwill and other acquisition
related charges to the extent deducted in determining such consolidated net
income and not added back pursuant to another clause of this definition; plus
(f) any non-cash expenses that arose in connection with the grant of equity or
equity-based awards stock to officers, directors, employees

 

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and consultants of the Company and its Subsidiaries and were deducted in
determining such consolidated net income; plus (g) non-cash restructuring
charges; plus (h) non-cash charges related to negative mark-to-market valuation
adjustments as may be required by GAAP from time to time; plus (i) non-cash
charges arising from changes in GAAP occurring after the date hereof; less
(j)(x) non-cash adjustments related to positive mark-to-market valuation
adjustments as may be required by GAAP from time to time and (y) any
extraordinary gains; and less (k) other quarterly cash and non-cash adjustments
that are deemed by the Controller and Chief Financial Officer of the Company not
to be part of the normal course of business and not necessary to reflect the
regular, ongoing operations of the Company and its Subsidiaries. As used in this
definition, “non-cash charge” shall mean a charge in respect of which no cash is
paid during the applicable period (whether or not cash is paid with respect to
such charge in a subsequent period) and “non-cash item of income” shall mean an
item of income in respect of which no cash is received during the applicable
period (whether or not cash is received with respect to such item of income in a
subsequent period).

“Excess Directors” shall have the meaning set forth in Section 3.2(e).

“Excess Repurchase Notice” shall have the meaning set forth in
Section 2.2(b)(i).

“Excess Shares” shall have the meaning set forth in Section 2.2(a)(i).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Excluded Debt Incurrence” shall mean (i) in connection with refinancing or
replacing a Convertible Debenture, a new convertible debenture issued on no less
favorable terms than the Convertible Debenture being refinanced or replaced with
respect to ranking (senior/senior sub/subordinated), financial covenants,
operational covenants, and events of default, and whether issued prior to or
after the replacement of such Convertible Debenture, (ii) Non-Recourse Debt, and
(iii) Tenesol Debt.

“Exempt Excess Converted Shares” shall have the meaning set forth in
Section 2.2(a)(ii).

“Exempt Excess Shares” shall have the meaning set forth in Section 2.2(a)(iii).

“Fair Market Value” shall mean, with respect to the securities of any Person as
of any date of determination, the average of the closing sale prices of such
securities of such Person during the twenty (20) trading days immediately
preceding such date of determination on the principal U.S. or foreign securities
exchange on which such securities of such Person is listed or, if such
securities are not listed or primarily traded on any such exchange, the average
of the closing sale prices or, in the absence of a closing sale price, the
closing bid quotations, of such security during the twenty (20) trading day
period preceding such date of determination on any quotation system then in use;
provided that, all such closing sales prices or, in the absence of a closing
sale price, closing bid quotations, shall be appropriately adjusted to take into
account the effect of any dividends, stock splits, recapitalization, spin-offs
or similar transactions that affect such closing sale prices or bid quotations
during such twenty (20) trading day period.

 

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“Financing Transaction” shall have the meaning set forth in Section 3.1(b)(i).

“GAAP” shall mean generally accepted accounting principles in the United States
as consistently applied by the relevant Person, except as required by changes in
GAAP.

“Grace Period” shall mean with respect to any Voting Stock or Convertible
Securities that are subject to a Terra Maintenance Notice, the earlier of
(a) 11:59 p.m. California time on the nine (9) month anniversary of the delivery
of the applicable Terra Financing Issuance Notice, Company Acquisition Issuance
Notice or Company Other Issuance Notice, and (b) with respect to the number of
shares of Voting Stock or Convertible Securities that are reduced by the
delivery by Terra of a revised Terra Maintenance Notice stating a determination
to acquire a lesser number of, or no, shares of Voting Stock or Convertible
Securities, the date of delivery of such revised Terra Maintenance Notice
(provided that the Grace Period set forth in the foregoing clause (a) shall
continue to apply to the shares of Voting Stock and Convertible Securities that
continue to be subject to such revised Terra Maintenance Notice).

“Guarantees” shall mean Guaranty Agreements provided by Parent pursuant to the
Credit Support Agreement in favor of a bank that provides a letter of credit
facility to the Company.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

“Indebtedness” shall mean and include the aggregate amount of, without
duplication (i) all obligations for borrowed money, (ii) all obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations to pay the deferred purchase price of property or services (other
than accounts payable and accrued expenses incurred in the ordinary course of
business determined in accordance with GAAP), (iv) all obligations with respect
to capital leases, (v) all obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, (vi) all reimbursement and other payment obligations, contingent or
otherwise, in respect of letters of credit and similar surety instruments
(including construction performance bonds), and (vii) all guaranty obligations
with respect to the types of Indebtedness listed in clauses (i) through
(vi) above.

“LComm” shall mean the large commercial portion of the residential and
commercial business segment of the Company with projects of at least 1 megawatt
(DC or direct current) in peak capacity sold directly to a commercial end-user
and not via a dealer.

“LTM EBITDA” shall mean EBITDA for the four completed fiscal quarters of the
Company most recently preceding the date of determination. For each quarter as
to which a periodic report shall have been filed by the Company with the SEC,
the calculation of EBITDA shall be based on the financial results of the Company
set forth in such periodic report, and for each quarter as to which such a
periodic report shall not have been so filed, the calculation of EBITDA shall be
based on the Company’s good faith calculation of its financial results for such
quarter as reviewed with the Audit Committee of the Company Board.

 

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“Nasdaq” shall mean The Nasdaq Stock Market, LLC.

“New Securities” shall mean an issuance by the Company of Voting Stock or
Convertible Securities, excluding (i) any such issuance upon exercise,
conversion or exchange of any Convertible Security convertible into or
exercisable or exchangeable for Voting Stock outstanding at the Offer Closing,
(ii) securities issued pursuant to the exercise by Terra of its rights pursuant
to Section 3.1(b) and, to the extent the securities purchased by Terra upon
exercise of its rights pursuant to Section 3.1(b) are Convertible Securities,
any such issuance upon exercise, conversion or exchange of such Convertible
Securities, or (iii) Convertible Securities issued or granted pursuant to any
Company Equity Plan, as distinguished from the issuance of Voting Stock upon the
exercise, vesting or conversion of such Convertible Securities, which Voting
Stock shall be considered New Securities as of such issuance.

“Non-Recourse Debt” shall mean Indebtedness of the Company or any of its
Subsidiaries that relates solely to the acquisition, construction, improvement
and/or development of a UPP or LComm project, including Indebtedness assumed in
connection with the acquisition of any such project, and that is secured by no
assets of the Company or any of its Subsidiaries other than (a) such
Subsidiary’s project assets and/or (b) the equity interest of the Company or a
Subsidiary in such Subsidiary; provided, that the sole purpose of such
Subsidiary is such project.

“Offer Closing” shall have the meaning set forth in the Tender Offer Agreement.

“Outstanding Gross Debt” shall mean all outstanding Indebtedness of the Company
minus the sum of (i) Non-Recourse Debt, and (ii) Tenesol Debt.

“Ownership Notice” shall have the meaning set forth in Section 2.2(b).

“Parent” shall mean Total S.A., a société anonyme organized under the laws of
the Republic of France.

“Person” shall mean an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization.

“Purchase Price” shall have the meaning set forth in Section 3.1(b)(i).

“Recapitalization” shall mean the conversion of any or all of the Class B Common
Stock to Class A Common Stock or other transaction contemplated by Section 5.9
of the Tender Offer Agreement.

“Rights Plan” shall have the meaning set forth in Section 5.2(a).

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

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“Short Form Merger” shall mean a merger effected pursuant to Section 253 of the
DGCL.

“Standstill Period” shall mean the period beginning on the date hereof and
ending on the earlier to occur of: (i) a Change in Control of the Company;
(ii) the first time that the Terra Group beneficially owns less than fifteen
percent (15%) of the Total Current Voting Power of the Company then in effect;
(iii) during the Terra Stockholder Approval Period, (A) the Company or the
Company Board takes any action specified in Section 4.3(a) (but only if the
effect thereof is to defeat the purposes of the bylaw amendments described in
Section 5.1(a)), (b), (e), (g) or (h) without first obtaining Terra Stockholder
Approval (unless such action is approved by a majority of the Terra Directors or
the action specified in Section 4.3(a) (but only if the effect thereof is to
defeat the purposes of the bylaw amendments described in Section 5.1(a)), (b),
(e) or (h) is cured within five (5) Business Days after written notice of such
action is delivered by Terra to the Company, unless such action is of a type
that the consequence of taking such action cannot be cured, in which case no
notice or cure period shall be required), or (B) fails to take any of the
actions specified in Section 5.1 (and such failure is not cured within five
(5) Business Days after written notice of such failure is delivered by Terra to
the Company, unless such failure is of a type that the consequence of taking
such action cannot be cured, in which case no notice or cure period shall be
required); (iv) following the expiration of the Terra Stockholder Approval
Period, the commencement of a Third Party Tender Offer; provided, however, that
upon a Standstill Reinstatement Event, the commencement of such Third Party
Tender Offer shall be deemed not to have occurred, the Standstill Period shall
be deemed to be reinstated and any Excess Shares, Exempt Excess Shares and
Exempt Excess Converted Shares shall be subject to the provisions of
Section 2.2(a); and (v) the termination of this Agreement pursuant to its terms.

“Standstill Reinstatement Event” shall mean the occurrence of either of the
following during the Standstill Period: (i) withdrawal or termination of a Third
Party Tender Offer at any time during which a Terra Tender Offer is not then
pending or (ii) withdrawal, termination or material alteration of a Terra Tender
Offer following the initiation of a Third Party Tender Offer other than an
increase in price or an extension thereof.

“Subsidiary” of any Person shall mean (i) a corporation at least fifty percent
(50%) of the combined voting power of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one of more other
Subsidiaries of such Person or by such Person and one or more other Subsidiaries
thereof, (ii) a partnership of which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, is the general partner and has the power to
direct the policies, management and affairs of such partnership, (iii) a limited
liability company of which such Person or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the managing member, hold the right to appoint a majority of the
board of managers or, if member managed, have the power to direct the policies,
management and affairs of such company or (iv) any other Person (other than a
corporation, partnership or limited liability company) in which such Person, or
one or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, hold at least fifty percent
(50%) ownership and power to direct the policies, management and affairs
thereof.

 

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“Supermajority Board Approval” shall mean the affirmative vote or written
consent of two thirds (2/3) of the directors of the Company rounded down to the
nearest whole number, and including the affirmative vote or written consent of
at least one Disinterested Director, duly obtained in accordance with the
applicable provisions of the Company’s bylaws and applicable law.

“Tender Offer Agreement” shall mean that certain Tender Offer Agreement, of even
date herewith, by and between the parties hereto.

“Tenesol” shall mean Tenesol SA.

“Tenesol Debt” shall mean any financing which, in the reasonable judgment of a
majority of the Disinterested Directors, is related to funding the operating
requirements or liabilities of the Tenesol business and which is consummated
within one (1) year after the closing of the acquisition of Tenesol by the
Company.

“Terra” shall have the meaning set forth in the Preamble.

“Terra Acquisition Issuance Notice” shall have the meaning set forth in
Section 3.1(c)(ii).

“Terra Controlled Corporation” shall mean a Subsidiary of Parent, other than the
Company or any Company Controlled Corporation.

“Terra Director” shall mean a member of the Company Board who (a) is or has been
designated for such position by Terra in accordance with Section 3.2 or (b) is
an officer or employee of Parent or any Terra Controlled Corporation.

“Terra Financing Issuance Notice” shall have the meaning set forth in
Section 3.1(b)(iii).

“Terra Group” shall mean Parent, any Affiliate of Parent, any 13D Group of which
Parent or any of its Affiliates is a member, and any member(s) of any 13D Group
of which Parent or any of its Affiliates is a member; provided, however, that
none of the Company nor any Company Controlled Corporation nor any Disinterested
Director of the Company shall be deemed to be a member of the Terra Group.

“Terra Maintenance Notice” shall mean, collectively, a Terra Financing Issuance
Notice, Terra Acquisition Issuance Notice and Terra Other Issuances Notice.

“Terra Merger” shall mean a statutory merger under applicable law providing for
the acquisition by the Terra Group of one hundred percent (100%) of the Total
Current Voting Power of the Company then in effect, which is conditioned (which
condition may not be waived) on a majority of the shares of the Voting Stock
that is held by Disinterested Stockholders being voted in favor of such merger.

“Terra Other Issuances Notice” shall have the meaning set forth in
Section 3.1(d)(ii).

 

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“Terra Stockholder Approval” shall mean the affirmative vote or written consent
of Terra.

“Terra Stockholder Approval Period” shall have the meaning set forth in
Section 4.3.

“Terra Tender Offer” shall mean a bona fide public tender offer subject to the
provisions of Regulation 14D when first commenced within the meaning of
Rule 14d-2(a) of the rules and regulations under the Exchange Act, by any
combination of members of the Terra Group to purchase or exchange for cash or
other consideration Voting Stock and which consists of an offer to acquire one
hundred percent (100%) of the Total Current Voting Power of the Company then in
effect (other than shares of Voting Stock owned by the Terra Group) and is
conditioned (which conditions may not be waived) on (i) a majority of the shares
of the Voting Stock that is held by Disinterested Stockholders being tendered
and not withdrawn with respect to such offer and (ii) at least ninety percent
(90%) of the Total Current Voting Power of the Company then in effect being
owned by the Terra Group upon completion of the tender offer, and which is
accompanied by an irrevocable, unwaivable commitment by the offeror(s), subject
to such ninety percent (90%) condition being met, to promptly acquire in a
merger any shares of Voting Stock not purchased in such offer, to the extent any
shares are purchased in such offer, for the same amount and form of
consideration per share offered in such Terra Tender Offer, and the effectuation
of a Short Form Merger promptly thereafter.

“Third Party Tender Offer” shall mean a bona fide public tender offer subject to
the provisions of Regulation 14D when first commenced within the meaning of
Rule 14d-2(a) of the rules and regulations under the Exchange Act, by a person
or 13D Group (which is not made by and does not include any of the Company or
any member of the Terra Group) to purchase or exchange for cash or other
consideration any Voting Stock and which consists of an offer to acquire at
least fifty percent (50%) of the Total Current Voting Power of the Company then
in effect.

“Total Current Voting Power” shall mean, with respect to any corporation or
entity, the total number of votes which may be cast in the election of members
of the board of directors or similar governing body if all securities entitled
to vote in the election of such directors are present and voted.

“Total Outstanding Company Equity” shall mean the total number of shares of
Company capital stock outstanding on a fully diluted basis, assuming the
conversion, exchange or exercise of all outstanding securities, whether vested
or unvested, convertible, exchangeable or exercisable into or for shares of
Company capital stock.

“Transfer” shall mean the direct or indirect assignment, sale, transfer, pledge,
or granting of any option, right or warrant to purchase or otherwise dispose of,
any Voting Stock or Convertible Securities of the Company.

“Transferee” shall have the meaning set forth in Section 2.3.

“Transferee Merger” shall mean a statutory merger under applicable law providing
for the acquisition of one hundred percent (100%) of the Total Current Voting
Power of the Company then

 

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in effect by a Transferee that is conditioned (which condition may not be
waived) on shares of Voting Stock representing a majority of the shares of
Voting Stock held by Disinterested Stockholders being voted in favor of such
merger.

“Transferee Tender Offer” shall mean a bona fide public tender offer subject to
the provisions of Regulation 14D when first commenced within the meaning of Rule
14d-2(a) of the rules and regulations under the Exchange Act, by a Transferee to
purchase or exchange for cash or other consideration any Voting Stock and which
consists of an offer to acquire one hundred percent (100%) of the Total Current
Voting Power of the Company then in effect (other than shares of Voting Stock
owned by such Transferee), that is conditioned (which condition may not be
waived) on a majority of the shares of Voting Stock held by Disinterested
Stockholders being tendered and not withdrawn with respect to such offer, and
which is accompanied by an irrevocable, unwaivable commitment by the Transferee
to promptly acquire in a subsequent merger any shares not purchased in such
offer, to the extent any shares are purchased in such offer, for the same amount
and form of consideration per share offered in such tender offer.

“UPP” shall mean the utility and power plant business segment of the Company,
which includes power plant project development, construction and project sales,
turn-key engineering, procurement and construction services for power plant
construction, and power plant operations and maintenance services, but excludes
component sales.

“Voting Stock” shall mean shares of Company Common Stock and any other
securities of the Company having the power to vote in the election of members of
the Company Board.

ARTICLE II

TERRA STANDSTILL AND CERTAIN TRANSFER OBLIGATIONS

2.1 Terra Standstill Obligations.

(a) Subject to Section 2.2 and notwithstanding anything to the contrary
contained herein, during the Standstill Period, no member of the Terra Group
shall:

(i) effect or seek, offer or agree to effect, or announce any intention to
effect or cause or participate in or seek, offer or agree to effect or
participate in any transaction that would result in the Terra Group Beneficially
Owning Voting Stock in excess of the Applicable Standstill Limit;

(ii) take any action which would or would reasonably be expected to require the
Company to make a public announcement regarding the matters set forth in
(i) above;

(iii) request that the Company or the Disinterested Directors, or officers or
employees of the Company, directly or indirectly, amend or waive any of the
provisions of this Section 2.1; or

 

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(iv) enter into any discussions or arrangements with any third party with
respect to any of the foregoing;

provided that, notwithstanding the foregoing, nothing in this Agreement shall
prohibit any member of the Terra Group from:

(w) during the period beginning from the Offer Closing and continuing until
11:59 p.m. California time on the second anniversary of the Offer Closing, and
in response to a written invitation from the Disinterested Directors, either
(i) making and consummating a Terra Tender Offer that is approved and
recommended by the Disinterested Directors, or (ii) proposing and effecting a
Terra Merger that is approved and recommended by the Disinterested Directors;

(x) during the period beginning at 12:00 a.m. California time on the date
following the second anniversary of the Offer Closing and continuing until 11:59
p.m. California time on December 31, 2014, either (i) making and consummating a
Terra Tender Offer that is approved and recommended by the Disinterested
Directors or (ii) proposing and effecting a Terra Merger that is approved and
recommended by the Disinterested Directors;

(y) during the period beginning at 12:00 a.m. California time on January 1, 2015
and at any time thereafter, either (i) making and consummating a Terra Tender
Offer or (ii) proposing and effecting a Terra Merger; provided that, no such
Terra Tender Offer or Terra Merger shall be publicly proposed or effected unless
(A) at least one hundred and twenty (120) days prior to commencing such Terra
Tender Offer within the meaning of Rule 14d-2(a) of the rules and regulations
promulgated under the Exchange Act or soliciting stockholder approval of such
Terra Merger within the meaning of Rule 14a-2 of the rules and regulations under
the Exchange Act, (1) Terra has provided written notice to the Company that it
is prepared to commence negotiations with the Disinterested Directors regarding
such Terra Tender Offer or Terra Merger and will make its designees reasonably
available during normal business hours on reasonable advance notice to Terra
from the Disinterested Directors for the purpose of engaging in such
negotiations and (2) Terra has caused its designees to be so available for such
negotiations during such one hundred twenty (120)-day period (it being
understood that the Disinterested Directors shall have the authority to hire
independent legal and financial advisors for such purposes, the fees and
expenses of which will be borne by the Company), and (B) each member of the
Terra Group has not made any coercive or retributive threats to members of the
Company Board, the Disinterested Directors or stockholders of the Company in
connection with such Terra Tender Offer or Terra Merger; provided that prior to
asserting any breach by a member of the Terra Group of this Section 2.1(a)(y),
the Company shall have, within five (5) Business Days of the occurrence of such
breach, provided Terra with written notice of such breach and provided Terra
with five (5) Business Days from the date of such notice to cure such breach
(even if such cure period would extend beyond the one hundred and twenty
(120) day period contemplated by subclause (A) of this Section 2.1(a)(y)), which
breach, if cured within such five (5) Business Days, shall be deemed to have
never occurred; or

 

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(z) making any public disclosure regarding (w), (x) or (y) above that is
required by applicable law in connection with actions taken in compliance with
the terms of (w), (x) and (y) above.

(b) Terra shall notify the Company of, and publicly announce, the acquisition of
Beneficial Ownership of Voting Stock or Convertible Securities by a member of
the Terra Group within two (2) Business Days after becoming aware of such
acquisition by any other member of the Terra Group; provided that such notice
shall be deemed to have been made for purposes of this Section 2.1(b) by virtue
of the filing of a Form 4, Form 5 or Schedule 13D, or one or more amendments
thereto, within such two (2) Business Day period with the SEC that discloses
such acquisition.

(c) Without first obtaining Disinterested Board Approval, no member of the Terra
Group shall (i) make, participate in or encourage any “solicitation” (as such
term is used in the proxy rules of the SEC) of proxies with respect to any
Voting Stock relating to the election of directors of the Company; provided that
no member of the Terra Group shall be deemed to be a participant in any
“solicitation” merely by reason of the membership of the Terra Directors on the
Company Board pursuant to the terms of this Agreement, or (ii) deposit any
Voting Stock in a voting trust or, subject any Voting Stock to any arrangement
or agreement with any third party outside the Terra Group with respect to the
voting of such Voting Stock.

2.2 Exception to Certain Standstill Obligations.

(a) No member of the Terra Group shall be deemed to have violated the
obligations applicable to the Terra Group under Section 2.1(a):

(i) Subject to Sections 2.2(a)(ii) and 2.2(a)(iii), if the members of the Terra
Group Beneficially Own shares of Voting Stock constituting a percentage of the
Voting Stock then outstanding that is in excess of than the Applicable
Standstill Limit (any such shares, “Excess Shares”), inadvertently and without
knowledge that the transaction in which the Terra Group acquired Beneficial
Ownership of such Excess Shares would cause the Terra Group to Beneficially Own
Voting Stock constituting a percentage of the Voting Stock then outstanding that
is greater than the Applicable Standstill Limit (it being understood that the
Terra Group shall be deemed to have knowledge of the reports provided to Terra
by the Company pursuant to Section 3.1(e)(vi)), so long as (A) Terra provides
prompt written notice of the acquisition of such Excess Shares to the Company,
(B) the Terra Group disposes of such Excess Shares pursuant to and in accordance
with Section 2.2(b) and (C) the Terra Group causes such Excess Shares to be
voted in accordance with the provisions of Section 2.2(c);

(ii) To the extent that the members of the Terra Group Beneficially Owns shares
of Voting Stock resulting from the conversion into Voting Stock of Convertible
Securities that were acquired directly from the Company pursuant to Section 3.1
by a member of the Terra Group and such conversion causes the Terra Group to
Beneficially Own shares of Voting Stock constituting a percentage of the Voting
Stock then outstanding that is in excess of the Applicable

 

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Standstill Limit (such shares Beneficially Owned by the Terra Group that are
greater than the Applicable Standstill Limit, the “Exempt Excess Converted
Shares”), so long as (A) Terra provides prompt written notice of the acquisition
of such Exempt Excess Converted Shares to the Company, and (B) the Terra Group
causes such Exempt Excess Converted Shares to be voted in accordance with the
provisions of Section 2.2(c); and

(iii) To the extent that Excess Shares result solely from any increase in the
aggregate percentage of Beneficial Ownership of Voting Stock held by the Terra
Group that results from: (i) a recapitalization of the Company, a repurchase of
securities by the Company or other actions taken by the Company or any Company
Controlled Corporation (which recapitalization, repurchase or other actions
shall have received Disinterested Board Approval, if a majority of the members
of the Company Board are then Terra Directors) that have the effect of reducing
the number of shares of Voting Stock then outstanding; (ii) the issuance of
Voting Stock to Terra in connection with the acquisition by the Company of
Tenesol; or (iii) the rights specified in any “poison pill” share purchase
rights plan of the Company having separated from the Company Common Stock and a
member of the Terra Group having exercised such rights (such Excess Shares
resulting from the circumstances described in this Section 2.2(a)(iii), the
“Exempt Excess Shares”).

(b) In the event that Terra becomes aware that the members of the Terra Group
Beneficially Own Excess Shares (that are not Exempt Excess Shares or Exempt
Excess Converted Shares), Terra will provide prompt written notice to the
Company of the number of such Excess Shares (that are not Exempt Excess Shares
or Exempt Excess Converted Shares). In the event that the Company becomes aware
that members of the Terra Group Beneficially Own Excess Shares (that are not
Exempt Excess Shares or Exempt Excess Converted Shares), the Company will
promptly provide written notice to Terra. Following delivery of notice by Terra
to the Company or by the Company to Terra pursuant to the foregoing two
sentences (the “Ownership Notice”), Terra shall, and shall cause members of the
Terra Group to, as soon as reasonably practicable (but not in a manner that
would require a member of the Terra Group to (A) incur liability under
Section 16(b) of the Exchange Act or (B) Transfer to a Person other than the
Company during a period in which such member of the Terra Group is in possession
of material nonpublic information relating to the Company) either:

(i) sell all or any portion of the Excess Shares (other than Exempt Excess
Shares and Exempt Excess Converted Shares) to the Company, provided that it
receives from the Company an irrevocable election to purchase any portion of
such shares within sixty (60) days after the delivery of the Ownership Notice
(the “Excess Repurchase Notice”), at the Fair Market Value of the Company’s
Common Stock on the day prior to the date of the Ownership Notice; or

(ii) if no such Excess Repurchase Notice is received from the Company, or such
Excess Repurchase Notice does not apply to all of such Excess Shares, sell such
shares through open market sales, or privately negotiated sales to Disinterested
Stockholders, within thirty (30) days of the delivery of the Ownership Notice;

 

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in each case to cause the number of shares of Voting Stock Beneficially Owned by
the Terra Group to no longer exceed a percentage of the Voting Stock then
outstanding that is greater than the Applicable Standstill Limit (excluding, for
purposes of determining both the number of shares of Voting Stock Beneficially
Owned by the Terra Group and the number of shares of Voting Stock outstanding,
any Exempt Excess Shares or Exempt Excess Converted Shares).

(c) If, as of the record date for determining the stockholders of the Company
entitled to vote at any annual or special meeting of stockholders of the Company
(however noticed or called), the Terra Group holds any Excess Shares or Exempt
Excess Converted Shares (in either case that are not Exempt Excess Shares), then
at each such meeting the Terra Group will vote all such shares, or cause all
such shares to be voted, in a manner that is in direct proportion to the manner
in which Disinterested Stockholders vote (including, for this purpose, any
abstentions and “withhold” votes) on each matter, resolution, action or proposal
that is submitted to the stockholders of the Company. With respect to any
meeting of stockholders of the Company (however noticed or called), the number
of Excess Shares and Exempt Excess Converted Shares (in either case that are not
Exempt Excess Shares), if any, will be determined by the Company as promptly as
practicable following the record date established for determining the
stockholders of the Company entitled to vote at such meeting. From time to time
before the scheduled date for any such meeting at the request of any member of
the Terra Group, the Company shall inform the Terra Group of the voting
tabulations (including, for this purpose, all votes “for” or “against” and all
“abstentions” and “withhold” votes) for such meeting (it being understood and
agreed by the parties that the Company shall request the proxy solicitation firm
engaged by it, if any, in connection with such meeting to provide such
tabulations directly to the Terra Group from time to time as such tabulations
are provided to the Company) for the purpose of facilitating the Terra Group’s
agreement to vote the Excess Shares and Exempt Excess Converted Shares (in
either case that are not Exempt Excess Shares) in accordance with the
requirements of this Section 2.2(c); provided, however, that the failure of the
Company to obtain, or the Terra Group to receive, voting tabulations on a daily
basis pursuant to this Section 2.2(c) shall not relieve the Terra Group of its
obligation to vote any such shares as provided in this Section 2.2(c). For so
long as the Applicable Standstill Limit is applicable to the Terra Group, the
Terra Group shall not take any action (or omit to take any action), or enter
into any transaction, contract, agreement, arrangement, plan, commitment or
understanding with any Person or 13D Group, to vote, give instructions with
respect to or grant a proxy or proxies in any manner inconsistent with the
provisions of this Section 2.2(c).

2.3 Terra’s Transfer of Control.

(a) In the event that any member or members of the Terra Group seek to Transfer,
in any one transaction or series of transactions, either forty percent (40%) or
more of the Total Current Voting Power of the Company then in effect or forty
percent (40%) or more of the Voting Stock, in either case to a single Person or
13D Group that is not a Terra Controlled Corporation (a “Transferee”), such
Transfer shall be conditioned upon and shall not be effected unless such
Transferee either: (i) makes a Transferee Tender Offer or (ii) proposes a
Transferee Merger, in each case, at the same price per share of Voting Stock and
using the same form of consideration to be paid, by the Transferee(s) to such
member or members of the Terra Group; it being understood that

 

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the actual consummation of the Transferee Tender Offer or effectuation of such
Transferee Merger shall not be a condition to the consummation of such Transfer
by such member or members of the Terra Group to the Transferee if the sole
reason that such Transferee Tender Offer or Transferee Merger is not consummated
is a failure of the unwaivable condition relating to Disinterested Stockholder
approval or tender set forth therein, but that, absent the failure of such
unwaivable condition, the actual consummation or effectuation shall be a
condition to the consummation of such Transfer by such member or members of the
Terra Group to the Transferee. Any attempted Transfer by Terra or any member or
members of the Terra Group which is not in compliance with this Section 2.3(a)
shall be null and void.

(b) Any Transfer by Terra or a Terra Controlled Corporation to a Terra
Controlled Corporation shall be conditioned upon the Terra Controlled
Corporation that is a transferee in such Transfer becoming a party to this
Agreement and in so doing, agreeing with the Company to hold the shares of
Voting Stock or Convertible Securities received pursuant to such Transfer
subject to all of the provisions of this Agreement, and such Terra Controlled
Corporation agreeing to transfer, and Terra agreeing to cause such Terra
Controlled Corporation to transfer ownership of such shares of Voting Stock
and/or Convertible Securities to Terra or another Terra Controlled Corporation
that is controlled by Terra if it ceases to be a Terra Controlled Corporation.
Any attempted Transfer by Terra to a Terra Controlled Corporation which is not
in compliance with this Section 2.3(b) shall be null and void. Upon a Transfer
by Terra of all of the Voting Stock then owned by it to another Terra Controlled
Corporation, such other Terra Controlled Corporation shall acquire and be
entitled to exercise all of the rights and shall be subject to all of the
obligations, of Terra pursuant to this Agreement and Terra shall no longer be
entitled to exercise the rights ascribed to Terra in this Agreement.

(c) No transferee of shares of Voting Stock or Convertible Securities sold,
transferred or otherwise disposed of by Terra or a Terra Controlled Corporation
shall be bound (other than a Terra Controlled Corporation after a Transfer in
accordance with the provisions of Section 2.3(b) or a Transferee by the
provisions of Section 2.3(a)) by the terms of this Agreement, nor shall such
transferee be entitled, in any manner whatsoever, to any rights afforded Terra
under this Agreement (other than a Terra Controlled Corporation after a Transfer
in accordance with the provisions of Section 2.3(b)).

ARTICLE III

TERRA RIGHTS TO MAINTAIN AND BOARD REPRESENTATION RIGHTS

3.1 Terra’s Rights to Maintain.

(a) In General.

(i) Subject to Section 2.1, and in addition to any other rights set forth in
this Section 3.1, the Terra Group may directly or indirectly acquire, through
open market purchases, privately negotiated purchases from Disinterested
Stockholders or, subject to Section 4.1, purchases

 

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from the Company, securities of the Company that result in the Terra Group
Beneficially Owning securities of the Company that constitute no more than the
Applicable Standstill Limit.

(ii) The rights provided to the Terra Group under this Section 3.1 shall
terminate and be of no further force or effect at all times after (A) the first
time that Terra, together with the Terra Controlled Corporations, owns less than
forty percent (40%) of the Total Current Voting Power of the Company then in
effect (including if owning less than forty percent (40%) of the Total Current
Voting Power of the Company then in effect results from a recapitalization of
the Company, a repurchase of securities by the Company or other actions taken by
the Company or any Company Controlled Corporation and regardless of whether
there is a subsequent increase above forty percent (40%) in the aggregate
percentage of the Total Current Voting Power of the Company then in effect that
is held by the Terra Group), or (B) the first time that Terra, or any Terra
Controlled Corporation, Transfers any shares of Voting Stock or Convertible
Securities to a Person other than a Terra Controlled Corporation such that
Terra, together with the Terra Controlled Corporations, owns less than fifty
percent (50%) of the Total Current Voting Power of the Company then in effect
(including if owning less than fifty percent (50%) of the Total Current Voting
Power of the Company then in effect results from a recapitalization of the
Company, a repurchase of securities by the Company or other actions taken by the
Company or any Company Controlled Corporation and regardless of whether there is
a subsequent increase above fifty percent (50%) in the aggregate percentage of
the Total Current Voting Power of the Company then in effect and held by the
Terra Group), in each case of (A) and (B) above taking into account the Grace
Period provisions of Section 3.1(f).

(b) Financing Issuances.

(i) If the Company proposes to issue New Securities primarily for cash
consideration in a financing transaction (except in any transaction specifically
described in Section 3.1(c)) and the effect of consummating such transaction
would result in a reduction in the percentage interest of the Total Outstanding
Company Equity held by Terra and the Terra Controlled Corporations (a “Financing
Transaction”), Terra shall have the right to purchase for cash Terra’s
Applicable Right to Maintain Percentage, or any part thereof, of the aggregate
amount of such New Securities sold in such Financing Transaction at the same
price per New Security at which such New Securities are sold in such Financing
Transaction to the other ultimate investors (the “Purchase Price”), as further
described in this Section 3.1(b).

(ii) No less than seventeen (17) Business Days prior to the issuance and sale of
any New Securities in a Financing Transaction, the Company shall notify Terra of
the Company’s intention to make such issuance by written dated notice setting
forth: (v) the proposed date of the closing of the Financing Transaction,
(w) the number, type and material terms of New Securities to be sold in the
Financing Transaction, (x) the calculation of Terra’s estimated Applicable Right
to Maintain Percentage of the New Securities to be sold in the Financing
Transaction (on the basis of information filed by members of the Terra Group
with the SEC), (y) the closing price or in the absence of a closing price, the
closing bid price, of the Company Common Stock on the prior trading day on the
principal securities exchange on which the Company Common

 

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Stock is then trading and (z) the capitalization of the Company on an actual and
pro forma basis after giving effect to the issuance of New Securities (the
“Company Financing Issuance Notice”).

(iii) At least two (2) Business Days prior to the proposed date of the closing
of the Financing Transaction as set forth in the Company Financing Issuance
Notice, Terra shall notify the Company by written dated notice, stating (A) the
number of New Securities to be purchased by Terra in the Financing Transaction,
which shall not exceed Terra’s Applicable Right to Maintain Percentage, (the
“Direct Purchase Securities”) and/or (B) whether or not Terra has made a bona
fide determination to acquire Voting Stock or Convertible Securities in open
market purchases, or privately negotiated purchases from Disinterested
Stockholders, so as, together with any Direct Purchase Securities, to satisfy
any portion of Terra’s Applicable Right to Maintain Percentage within the
applicable Grace Period relating to the Company Financing Issuance Notice (the
“Terra Financing Issuance Notice”). If Terra fails to deliver a Terra Financing
Issuance Notice at least two (2) Business Days prior to the proposed date of the
closing of the Financing Transaction as set forth in the Company Financing
Issuance Notice, Terra shall be deemed to have elected not to acquire any Direct
Purchase Securities or to satisfy any portion of its Applicable Right to
Maintain Percentage with respect to such Financing Transaction; provided,
however, that if the actual closing of such Financing Transaction does not occur
within ten (10) Business Days following the proposed date of the closing set
forth in, and on the terms and conditions in all material respects as set forth
in, the Company Financing Issuance Notice, the Company shall be obligated to
deliver a revised Company Financing Issuance Notice and Terra shall have ten
(10) Business Days following the date of receipt of the revised Company
Financing Issuance Notice to provide a new Terra Financing Issuance Notice,
which revised Company Financing Issuance Notice and Terra Financing Issuance
Notice shall supersede and replace any prior delivered Company Financing
Issuance Notice and Terra Financing Issuance Notice, respectively, and shall
otherwise be subject to the terms and processes set forth in this
Section 3.1(b).

(iv) If the Company issues and sells the New Securities in a Financing
Transaction that was subject to a Company Financing Issuance Notice, then Terra
shall be obligated to purchase the number of Direct Purchase Securities, if any,
that are subject to the Terra Financing Issuance Notice delivered to the Company
pursuant to Section 3.1(b)(iii) for the per share Purchase Price; provided,
however, that if a preliminary “red herring” prospectus is filed in connection
with such Company Financing Transaction and (A) the Fair Market Value of the
Company’s Common Stock is, as of the close of the trading day on Nasdaq or other
principal securities exchange on which the Company Common Stock is then trading,
on the date three (3) trading days after such filing, fifteen percent
(15%) greater than (B) the closing price (or in the absence of a closing price,
the closing bid price) of the Company Common Stock on Nasdaq or such other
principal securities exchange on which the Company Common Stock is traded on the
day prior to the delivery of a Terra Financing Issuance Notice, Terra shall be
under no obligation to purchase the Direct Purchase Securities. The closing of
the Direct Purchase Securities, if any, shall take place contemporaneously with
such Financing Transaction, subject to the provisions of Section 3.1(e).

(v) If, pursuant to the terms of Section 3.1(b)(iv), Terra is no longer
obligated to purchase Direct Purchase Securities that were subject to a validly
delivered Terra

 

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Financing Issuance Notice, Terra shall have the right, within fifteen
(15) Business Days after the closing of the Financing Transaction, to deliver to
the Company an amended Terra Financing Issuance Notice stating whether or not
Terra has made a bona fide determination to acquire Voting Stock or Convertible
Securities in open market purchases, or privately negotiated purchases from
Disinterested Stockholders, so as, together with any New Securities subject to
the previously delivered Terra Financing Issuance Notice, to satisfy any portion
of Terra’s Applicable Right to Maintain Percentage within the applicable Grace
Period relating to the any then effective Terra Financing Issuance Notice. If
Terra fails to deliver an amended Terra Financing Issuance Notice within such
fifteen (15) Business Day Period, Terra shall be deemed to have elected not to
satisfy any portion of Terra’s Applicable Right to Maintain Percentage other
than with respect to Voting Stock or Convertible Securities, if any, that are
subject to any then effective Terra Financing Issuance Notice and that were not
Direct Purchase Securities.

(vi) If at any time Terra has determined to reduce the shares of Voting Stock or
Convertible Securities that are the subject of a then effective Terra Financing
Issuance Notice, Terra shall as promptly as practicable deliver to the Company
an amended Terra Financing Issuance Notice stating the lower number of shares of
Voting Stock or Convertible Securities for which Terra has made a bona fide
determination to acquire in open market purchases, or privately negotiated
purchases from Disinterested Stockholders, within the applicable Grace Period
relating to the then effective Company Financing Issuance Notice and only such
lower number of shares of Voting Stock or Convertible Securities, if any, shall
thereafter be deemed to be subject to the applicable Terra Financing Issuance
Notice.

(vii) Notwithstanding anything in this Section 3.1(b) to the contrary, in the
event the Company issues New Securities that are Convertible Securities in a
Financing Transaction:

(1) If Terra purchases Direct Purchase Securities constituting one hundred
percent (100%) of Terra’s Applicable Right to Maintain Percentage in such
Financing Transaction, the Company shall not be obligated to subsequently
deliver a Company Financing Issuance Notice relating to the issuance of New
Securities that are Voting Stock that are issued upon conversion or exercise of
the Convertible Securities that were purchased by the other purchasers in the
Financing Transaction; and

(2) If Terra purchases Direct Purchase Securities constituting less than one
hundred percent (100%) of Terra’s Applicable Right to Maintain Percentage in
such Financing Transaction, the Company shall only be obligated to subsequently
deliver a Company Financing Issuance Notice pursuant to Section 3.1(d) relating
to the issuance of New Securities that are Voting Stock that are issued upon
conversion of the Convertible Securities that were purchased by the other
purchasers in the Financing Transaction, and Terra shall have the right to
acquire, in open market purchases, or privately negotiated purchases from
Disinterested Stockholders, up to the number of shares of Voting Stock issuable
upon conversion of the number of Direct Purchase Securities constituting one
hundred percent (100%) of Terra’s Applicable Right to Maintain Percentage that
were not purchased by Terra. Within fifteen (15) Business Days after receipt by
Terra of such Company Financing Issuance Notice, Terra shall notify the Company
by written dated

 

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notice stating whether or not Terra has made a bona fide determination to
acquire Voting Stock in open market purchases, or privately negotiated purchases
from Disinterested Stockholders, so as to acquire within the applicable Grace
Period relating to the Company Financing Issuance Notice, all or any portion of
the shares of Voting Stock that are the subject to such Company Financing
Issuance Notice.

(c) Acquisition Issuances.

(i) No less than fifteen (15) Business Days after the issuance and sale of any
New Securities in consideration for a business or assets of a business (a
“Business Acquisition Transaction”), the Company shall notify Terra of the
Company’s issuance by written dated notice setting forth: (x) the number, type
and material terms of New Securities issued in such Business Acquisition
Transaction, (y) a description of the material elements of the consideration
therefor and (z) the capitalization of the Company after giving effect to the
issuance of such New Securities and the calculation of Terra’s estimated
Applicable Right to Maintain Percentage of such New Securities (on the basis of
information filed by members of the Terra Group with the SEC) (a “Company
Acquisition Issuance Notice”).

(ii) Within fifteen (15) Business Days after receipt by Terra of the Company
Acquisition Issuance Notice, Terra shall notify the Company by written dated
notice stating whether or not Terra has made a bona fide determination to
acquire Voting Stock or Convertible Securities in open market purchases, or
privately negotiated purchases from Disinterested Stockholders, so as to satisfy
any portion of Terra’s Applicable Right to Maintain Percentage within the
applicable Grace Period relating to the Company Acquisition Issuance Notice (the
“Terra Acquisition Issuance Notice”). If Terra fails to deliver a Terra
Acquisition Issuance Notice within fifteen (15) Business Days after the receipt
by Terra of the Company Acquisition Issuance Notice relating to such Business
Acquisition Transaction, Terra shall be deemed to have elected not to satisfy
any portion of its Applicable Right to Maintain Percentage with respect to such
Business Acquisition Transaction.

(iii) If at any time Terra has determined to reduce the shares of Voting Stock
or Convertible Securities that were the subject of a Terra Acquisition Issuance
Notice, Terra shall as promptly as practicable deliver to the Company an amended
Terra Acquisition Issuance Notice stating the lower number of shares of Voting
Stock or Convertible Securities for which Terra has made a bona fide
determination to acquire in open market purchases, or privately negotiated
purchases from Disinterested Stockholders, within the applicable Grace Period
relating to the Company Acquisition Issuance Notice and only such lower number
of shares of Voting Stock or Convertible Securities, if any, shall be deemed to
be subject to the Terra Acquisition Issuance Notice.

(d) Other Issuances.

(i) If the Company issues any New Security that is not the subject of a Company
Financing Issuance Notice or a Company Acquisition Issuance Notice (a “Company

 

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Other Issuance”), the Company shall provide Terra with written dated notice
within (A) fifteen (15) Business Days after the date of such issuance, if such
issuance is not pursuant to a Company Equity Plan and such issuance, together
with all other Company Other Issuances since the end of the preceding fiscal
quarter (other than issuances pursuant to a Company Equity Plan), aggregate to
more than one percent (1%) of the Total Outstanding Company Equity, (B) fifteen
(15) Business Days after the end of the fiscal quarter in which such issuance
occurs if such issuance is not pursuant to a Company Equity Plan and such
issuance, together with all other Company Other Issuances since the end of the
preceding fiscal quarter (other than issuances pursuant to a Company Equity
Plan), aggregate to one percent (1%) or less than the Total Outstanding Company
Equity and (C) within fifteen (15) Business Days after the end of the fiscal
quarter in which such issuance occurs if such issuance is pursuant to a Company
Equity Plan or results from the exercise or exchange of a Convertible Security
that was issued under a Company Equity Plan. The Company Other Issuances Notice
shall set forth: (x) the number, type and material terms of New Securities (such
number to be, with respect to New Securities issued pursuant to a Company Equity
Plan, net of any New Securities returned to a Company Equity Plan during the
applicable fiscal quarter), (y) the consideration paid to the Company therefor
and the capitalization of the Company after giving effect to the issuance of
such New Securities and (z) the calculation of Terra’s estimated Applicable
Right to Maintain Percentage of such New Securities (on the basis of information
filed by members of the Terra Group with the SEC) (in either case, a “Company
Other Issuances Notice”).

(ii) Within fifteen (15) Business Days after receipt by Terra of the Company
Other Issuances Notice, Terra shall notify the Company by written dated notice
stating whether or not Terra has made a bona fide determination to acquire
shares of Voting Stock or Convertible Securities in open market purchases, or
privately negotiated purchases from Disinterested Stockholders, so as to satisfy
any portion of Terra’s Applicable Right to Maintain Percentage within the
applicable Grace Period relating to the Company Other Issuances Notice (the
“Terra Other Issuances Notice”). If Terra fails to deliver a Terra Other
Issuances Notice within fifteen (15) Business Days after the receipt by Terra of
the Company Other Issuances Notice relating to such Company Other Issuance,
Terra shall be deemed to have elected not to satisfy any portion of its
Applicable Right to Maintain Percentage with respect to such Company Other
Issuance.

(iii) If at any time Terra has determined to reduce the shares of Voting Stock
or Convertible Securities that were the subject of a Terra Other Issuances
Notice, Terra shall as promptly as practicable deliver to the Company an amended
Terra Other Issuances Notice stating the lower number of shares of Voting Stock
or Convertible Securities for which Terra has made a bona fide determination to
acquire in open market purchases, or privately negotiated purchases from
Disinterested Stockholders, within the applicable Grace Period relating to the
Company Other Issuances Notice and only such lower number of shares of Voting
Stock or Convertible Securities, if any, shall be deemed to be subject to the
Terra Other Issuances Notice.

(e) Financing Right to Maintain Closing; Other Matters.

(i) Subject to subsection (iii) of this Section 3.1(e), the purchase and sale of
any New Securities pursuant to Section 3.1(b) shall take place at the offices of
the Company set

 

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forth in this Agreement at 10:00 a.m. on the later of the: (A) closing date
specified in Section 3.1(b)(iv) or (B) the third (3rd) Business Day following
the expiration or early termination of all waiting periods imposed on such
purchase and sale by the HSR Act or any similar required non-U.S. regulatory
scheme, or at such other time and place as the Company and Terra may agree. The
Company and Terra shall use their reasonable best efforts to comply with the HSR
Act or similar required non-U.S. regulatory scheme applicable to such purchase
and sale of shares of New Securities under Section 3.1. The issuance of such
shares shall be subject to compliance with the HSR Act or similar required
non-U.S. regulatory scheme applicable to such purchase and sale of shares of New
Securities under Section 3.1.

(ii) Subject to subsection (iii) of this Section 3.1(e), the Company and Terra
shall use their reasonable best efforts to comply with all federal and state
laws and regulations and Nasdaq and stock exchange listing requirements
applicable to any purchase and sale of shares of New Securities under
Section 3.1. The issuance of such shares shall be subject to compliance with
applicable laws and regulations and requirements of Nasdaq or any other
applicable stock exchange.

(iii) Except as otherwise specifically provided herein, upon receipt of the
applicable Terra Financing Issuance Notice by the Company, Terra and the Company
each shall be obligated, subject to the other terms and conditions of this
Agreement, to consummate the purchase and sale of Direct Purchase Securities
contemplated by Section 3.1(b), if any, and shall use their reasonable best
efforts to secure any approvals required in connection therewith; provided that,
notwithstanding anything to the contrary set forth in this Agreement, nothing in
this Section 3.1(e) or elsewhere in this Agreement shall be deemed to require
Terra or the Company or any Subsidiary thereof to litigate with any governmental
entity or agree to any divesture by itself or any of its Affiliates of shares of
capital stock or of any business, assets or property, or the imposition of any
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties and stock.

(iv) Notwithstanding anything in this Section 3.1 to the contrary, if a purchase
of New Securities that are the subject of a Financing Transaction by Terra is
not able to be consummated at the same time as the purchase and sale to other
purchasers of such New Securities as a result of a legal or regulatory delay,
such as a delay related to compliance with the HSR Act or any similar required
non-U.S. regulatory scheme or to compliance with applicable laws and regulations
and requirements of Nasdaq or any other applicable stock exchange, the
applicable Grace Period relating to such New Securities shall be extended for
the same period of time as such regulatory delay or until it is determined that
the acquisition by the Terra Group of such securities is no longer legally
permitted or feasible, and the Company shall be entitled to issue New Securities
to third parties in advance of the issuance of New Securities to Terra.

(v) Any shares of Voting Stock and Convertible Securities acquired by Terra
under this Article III, and all of Terra’s rights to maintain under Section 3.1,
shall be subject to all restrictions and obligations on the Terra Group set
forth elsewhere in this Agreement including Section 2.1.

 

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(vi) Following the end of each fiscal quarter, the Company shall (within the
deadlines for filing of the Company’s Form 10-Q or Form 10-K, as applicable)
provide to Terra the following information: (A) the number of shares of Voting
Stock or Convertible Securities that are outstanding as of the end of such
fiscal quarter; (B) the number of New Securities issued during such fiscal
quarter; (C) the grants and cancellations of Convertible Securities pursuant to
each Company Equity Plan during such fiscal quarter; and (D) the total number of
shares of Common Stock repurchased by the Company in such fiscal quarter.

(f) Grace Periods Under This Agreement. Notwithstanding anything in this
Agreement to the contrary, all shares of Voting Stock and Convertible Securities
that are subject to a then outstanding Terra Maintenance Notice delivered within
the applicable time period set forth in Section 3.1(b), Section 3.1(c) or
Section 3.1(d) and for which the Grace Period as to such shares of Voting Stock
or Convertible Securities has not yet expired shall be deemed to have at all
times been shares of Voting Stock or Convertible Securities owned by Terra for
all purposes of this Agreement.

3.2 Terra’s Board Representation Rights.

(a) Effective as of the Offer Closing and until the Board Reduction Event, the
size of the Company Board shall be fixed at eleven (11) directors. Effective as
of the Board Reduction Event and until Terra, together with the Terra Controlled
Corporations, owns (taking into account Section 3.1(f)) less than ten percent
(10%) of the Total Current Voting Power of the Company then in effect, the size
of the Company Board shall be fixed at nine (9) directors.

(b) Effective as of and after the Offer Closing, the Company Board shall consist
of (i) the Chief Executive Officer of the Company, who shall serve as Chairman
of the Company Board, (ii) subject to Section 3.2(c), the Designated Independent
Directors, (iii) subject to Section 3.2(c) and (d), the Terra Directors, and
(iv) such number of Disinterested Directors as to fill any vacancies on the
Company Board resulting from a reduction in the number of Terra Directors
pursuant to Section 3.2(d), in each case taking into account the provisions of
Section 3.1(f).

(c) On the first anniversary of the Offer Closing, (i) the Disinterested
Directors shall cause one (1) of the Designated Independent Directors selected
by a majority of the Disinterested Directors to resign from the Company Board,
(ii) upon the effectiveness of such resignation, Terra will promptly cause one
of the Terra Directors to resign from the Company Board and (iii) thereafter the
Company Board will take all action necessary to reduce the number of authorized
members of the Company Board to nine (9) directors (such actions, collectively,
the “Board Reduction Event”).

(d) Until Terra, together with the Terra Controlled Corporations, owns (taking
into account Section 3.1(f)) less than ten percent (10%) of the Total Current
Voting Power of the Company then in effect, the Company shall include in the
slate of nominees recommended by the Company Board to stockholders for election
to the Company Board at any special or annual meeting of stockholders of the
Company, commencing with the first meeting of stockholders following the Offer
Closing, and shall use its reasonable best efforts in all other respects, as
reasonably requested

 

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by Terra, to cause the election of that number of persons designated by Terra to
the Company Board as follows:

(i) until the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
fifty percent (50%) of the Total Current Voting Power of the Company then in
effect, Terra shall be entitled to designate (A) six (6) nominees to serve on
the Company Board until the Board Reduction Event; and (B) five (5) nominees to
serve on the Company Board thereafter;

(ii) upon the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
fifty percent (50%) but not less than forty percent (40%) of the Total Current
Voting Power of the Company then in effect, Terra shall be entitled to designate
(A) five (5) nominees to serve on the Company Board until the Board Reduction
Event; and (B) four (4) nominees to serve on the Company Board thereafter;

(iii) upon the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
forty percent (40%) but not less than thirty percent (30%) of the Total Current
Voting Power of the Company then in effect, Terra shall be entitled to designate
(A) four (4) nominees to serve on the Company Board until the Board Reduction
Event; and (B) three (3) nominees to serve on the Company Board thereafter;

(iv) upon the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
thirty percent (30%) but not less than twenty percent (20%) of the Total Current
Voting Power of the Company then in effect, Terra shall be entitled to designate
(A) three (3) nominees to serve on the Company Board until the Board Reduction
Event; and (B) two (2) nominees to serve on the Company Board thereafter; and

(v) upon the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
twenty percent (20%) but not less than ten percent (10%) of the Total Current
Voting Power of the Company then in effect, Terra shall be entitled to designate
(A) two (2) nominees to serve on the Company Board until the Board Reduction
Event; and (B) one (1) nominee to serve on the Company Board thereafter.

(e) In the event that the number of Terra Directors exceeds the number of
designees that Terra is entitled to designate pursuant to Section 3.2(d) (the
“Excess Directors”), Terra shall as promptly as practicable cause such number of
Excess Directors to resign from the Company Board and the Nominating and
Governance Committee of the Company Board shall as promptly as practicable
recommend to the Company Board a nominee that would qualify as a Disinterested
Director to fill the vacancy that is caused by such resignation. The Company
Board shall as promptly as practicable take all action (and Terra shall cause
all Terra Directors to as promptly as practicable take all action) necessary to
appoint the nominee identified by the Nominating and Governance Committee of the
Company Board to serve on the Company Board.

 

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(f) In the event that any Terra Director shall cease to serve as a director for
any reason (other than in connection with the resignation of one (1) Terra
Director upon the Board Reduction Event), the vacancy resulting thereby shall be
filled by a designee of Terra and the Company Board shall as promptly as
practicable take all actions necessary to appoint such designee of Terra and,
during any period in which such a vacancy remains open, provided that Terra has
designated a nominee to fill such vacancy, the Company Board shall not, without
Terra’s written consent, take any action with respect to an event requiring
Supermajority Board Approval, other than to elect Terra’s designee to fill such
vacancy.

(g) In the event that any Disinterested Director or the Chief Executive Officer
of the Company shall cease to serve as a director for any reason (other than in
connection with the resignation of one (1) Disinterested Director upon the Board
Reduction Event), the Nominating and Governance Committee of the Company Board
shall nominate a replacement director that meets the qualifications of a
Disinterested Director or is the Chief Executive Officer of the Company, as
applicable, and the Company Board shall as promptly as practicable take all
actions necessary to appoint such nominee and, during any period in which such a
vacancy remains open, provided that the Nominating and Governance Committee of
the Company has nominated a nominee to fill such vacancy, the Company Board
shall not take any action with respect to an event requiring Supermajority Board
Approval.

(h) Notwithstanding anything to the contrary contained herein, Terra shall not
at any time while Terra is entitled to nominate directors under this Section 3.2
be entitled to, and Terra agrees not to cast votes for, Terra Directors in
excess of the number of Terra Directors which Terra is entitled to designate
pursuant to Section 3.2(d).

(i) So long as Terra Directors serve as members of the Company Board, such Terra
Directors shall be allocated across the three classes that comprise the Company
Board staggered terms for reelection in as equal an allocation as is
practicable. The six (6) Terra Directors that serve on the Company Board
effective as of the Offer Closing shall be allocated across the three classes
that comprise the Company Board staggered terms for reelection such that,
subject to Section 3.2(d), the election of two (2) Terra Directors shall be
submitted to a vote of the Company’s stockholders in the first year following
the Offer Closing, the election of two (2) Terra Directors shall be submitted to
a vote of the Company’s stockholders in the second year following the Offer
Closing, and the election of two (2) Terra Directors shall be submitted to a
vote of the Company’s stockholders in the third year following the Offer
Closing.

(j) The Company shall elect, to the extent available and required in order for
the Company to fulfill its obligations under Section 3.2 and 3.3, to be treated
as a “controlled company” in accordance with Rule 5615(c) of the Nasdaq or other
similar rule of any applicable securities exchange on which the shares of
Company Common Stock are then traded.

(k) Until the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
ten percent (10%) of the Total Current Voting Power of the Company then in
effect, each director nominee, other than a

 

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Terra Director designated by Terra and other than the Chief Executive Officer,
shall meet the qualifications of a Disinterested Director and be selected by the
Nominating and Governance Committee of the Company Board. The Company Board
shall as promptly as practicable take all action necessary (and Terra shall
cause all Terra Directors to promptly take all action and shall vote as a
stockholder and shall cause any member of the Terra Group to vote as a
stockholder if necessary) to (i) appoint or elect any such nominee identified by
the Nominating and Governance Committee of the Company Board to serve on the
Company Board and (ii) implement a Board Reduction Event in accordance with
Section 3.2(c).

3.3 Board Committee Composition. Subject to the listing requirements of the
principal securities exchange on which the Company’s Common Stock is listed,
until the first time that Terra, together with the Terra Controlled
Corporations, owns (or is deemed pursuant to Section 3.1(f) to own) less than
thirty percent (30%) of the Total Current Voting Power of the Company then in
effect:

(a) the Audit Committee of the Company Board shall solely comprise three
(3) Disinterested Directors;

(b) the Compensation Committee of the Company Board shall solely comprise two
(2) Disinterested Directors and one (1) Terra Director;

(c) the Nominating and Governance Committee of the Company Board shall solely
comprise two (2) Disinterested Directors and one (1) Terra Director; and

(d) any other standing or ad hoc committee of the Company Board shall comprise a
majority of Disinterested Directors and shall include one Terra Director;

provided that, a Terra Director shall not be included in the membership of any
such committee the sole purpose of which is to consider any transaction for
which there exists an actual conflict of interest between any member of the
Terra Group, on the one hand, and the Company or its Affiliates, on the other
hand, in the reasonable judgment of the Disinterested Directors.

3.4 Board and Committee Observers and Executive Sessions. Until the first time
that Terra, together with the Terra Controlled Corporations, owns (or is deemed
pursuant to Section 3.1(f) to own) less than ten percent (10%) of the Total
Current Voting Power of the Company then in effect and to the extent Terra is
not entitled to membership of a Terra Director on any standing or ad hoc
committee of the Company Board now or hereafter existent pursuant to
Section 3.3, the Company Board and each standing or ad hoc committee of the
Company (other than any such committee, the sole purpose of which is to consider
any transaction for which there exists an actual conflict of interest between
any member of the Terra Group, on the one hand, and the Company or its
Affiliates, on the other hand, in the reasonable judgment of the Disinterested
Directors) will permit a representative of Terra to attend all meetings of the
Company Board or such committee in a non-voting, observer capacity. A majority
of the Disinterested Directors serving on the Company Board or any standing or
ad hoc committee of the Company Board shall be entitled to recuse any

 

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such observer from portions of any meeting of the Company Board or such
committee and the secretary of any such meeting shall be entitled to redact
portions of any materials delivered to the observer, in each case, to the extent
that a majority of such Disinterested Directors determine, in good faith that
(a) such recusal is reasonably necessary to preserve attorney-client privilege
with respect to any matter, or (b) there exists, with respect to any
deliberation or Board materials, an actual conflict of interest between any
member of the Terra Group, on the one hand, and the Company or its Affiliates,
on the other hand, in the reasonable judgment of a majority of such
Disinterested Directors. Any such observer shall be bound by confidentiality
obligations with respect to the Company and its business to the same extent as
are the members of the Company Board, and Terra shall be required to enter into
a reasonable and customary confidentiality agreement covering all persons who
may from time to time serve as an observer under this Section 3.4.

3.5 Terra Director Recusal. The parties hereby acknowledge and agree that each
Terra Director, in the exercise of his or her fiduciary duties as a member of
the Company Board shall, among other things, recuse himself or herself from any
board discussions or deliberations when required by applicable Delaware
corporate law.

ARTICLE IV

EVENTS REQUIRING SPECIFIC BOARD OR STOCKHOLDER APPROVAL

4.1 Events Requiring Disinterested Board Approval. At any time when Terra,
together with the Terra Controlled Corporations, owns (or is deemed pursuant to
Section 3.1(f) to own) at least thirty percent (30%) of the Total Current Voting
Power of the Company then in effect, no party hereto (including any Affiliate of
such party) shall effect, without first having obtained Disinterested Board
Approval with respect to such event:

(a) any amendment to the Company’s bylaws or certificate of incorporation;

(b) any transaction that, in the reasonable judgment of the Disinterested
Directors, involves an actual conflict of interest between any member of the
Terra Group, on the one hand, and the Company or its Affiliates, on the other
hand;

(c) the adoption of any “poison pill” share purchase rights plan or any
amendment of, termination of (other than by its terms), renewal of or failure to
renew the Rights Plan, or any implementation or amendment of, or redemption or
exchange of, rights issued pursuant to the Rights Plan;

(d) except as otherwise provided in Section 2.1(a) hereof, commencing a tender
offer or exchange offer by Terra or any member of the Terra Group to purchase or
exchange for cash or other consideration any Voting Stock or Convertible
Securities, or approving a merger of the Company or any Company Controlled
Corporation with a member of the Terra Group;

 

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(e) any voluntary dissolution or liquidation of the Company or a Company
Controlled Corporation;

(f) any voluntary filing of a petition for bankruptcy or receivership by the
Company or a Company Controlled Corporation, or the failure to oppose any other
person’s petition for bankruptcy or any other person’s action to appoint a
receiver of the Company or a Company Controlled Corporation;

(g) any delegation of all or a portion of the authority of the Company Board to
any committee of the Company Board;

(h) any amendment, modification or waiver (including a termination other than in
accordance with the various termination provisions contained herein) of any of
the provisions of this Agreement or any of the Related Agreements;

(i) any modification of (including a failure to maintain current levels of
coverage in any successor policy), or action with respect to, director’s and
officer’s insurance coverage; or

(j) any reduction in the compensation of Disinterested Directors.

Notwithstanding anything in this Section 4.1 to the contrary, Disinterested
Board Approval shall not be required for (i) a Terra Tender Offer or Terra
Merger or a Transferee Tender Offer or Transferee Merger that complies with
Sections 2.1 and 2.3, as applicable, or (ii) the renewal of the Rights Plan upon
its expiration substantially in its then current form.

4.2 Event Requiring Supermajority Board Approval. At any time when Terra,
together with the Terra Controlled Corporations, owns (or is deemed pursuant to
Section 3.1(f) to own) at least thirty percent (30%) of the Total Current Voting
Power of the Company then in effect, no party hereto (including any Affiliate of
such party) shall effect, without first having obtained Supermajority Board
Approval, approval or adoption of an Annual Operating Plan or budget of the
Company that reduces or has the effect of reducing the planned L/Cs (as defined
in the Credit Support Agreement) utilization in any given year by more than ten
percent (10%) below the applicable “Maximum L/C Amount” set forth in
Section 1(hh) of the Credit Support Agreement.

4.3 Events Requiring Terra Stockholder Approval. Until the first time that
Terra, together with the Terra Controlled Corporations, owns (taking into
account the provisions of Section 3.1(f)): (x) fifty percent (50%) or less of
the Total Current Voting Power of the Company then in effect or (y) forty
percent (40%) or less of the Total Current Voting Power of the Company then in
effect when at least $100 Million of Guarantees are outstanding (the “Terra
Stockholder Approval Period”), neither the Company (including any Company
Controlled Corporation) nor the Company Board shall effect, without first having
obtained Terra Stockholder Approval with respect to such event:

(a) any amendment to the Company’s bylaws;

 

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(b) any amendment to the Company’s certificate of incorporation;

(c) any transaction pursuant to which the Company or any Company Controlled
Corporation acquires or otherwise obtains the ownership or exclusive use of any
business, property or assets of a Person or Persons that is not the Company or a
Company Controlled Corporation (including by merger, amalgamation,
consolidation, tender offer, asset or stock purchase), if as of the date of the
consummation of such transaction the Asset Acquisition Value thereof exceeds the
lower of (A) fifteen percent (15%) of the Company’s then-consolidated total
assets as determined in accordance with GAAP or (B) fifteen percent (15%) of the
market capitalization of the Company as determined on the basis of the Fair
Market Value of the Company Common Stock immediately preceding such date of the
consummation of such transaction;

(d) any transaction pursuant to which a Person or Persons that is not the
Company or a Company Controlled Corporation obtains ownership or exclusive use
of any business, property or assets of the Company or a Company Controlled
Corporation (including any sale, lease, license, transfer or other disposition),
if as of the date of the consummation of such transaction the Asset Disposition
Value thereof exceeds the lower of (A) ten percent (10%) of the Company’s then
consolidated total assets as determined in accordance with GAAP or (B) ten
percent (10%) of the market capitalization of the Company determined on the
basis of the Fair Market Value of the Company Common Stock immediately preceding
the date of the consummation of such transaction;

(e) the adoption of any “poison pill” share purchase rights plan, other than the
Rights Plan, and any implementation or amendment of, or redemption or exchange
of, rights issued pursuant to the Rights Plan or any amendment of the Rights
Plan, that in any case has the effect of excluding from the definition of
“Acquiring Person” (or any similar term) therein any Person other than Terra,
any Terra Controlled Corporation, any Terra Group member, and any Transferee,
beneficially owning (as defined in the Rights Plan) ten percent (10%) or more of
the Total Current Voting Power of the Company then in effect, provided that
notwithstanding the foregoing, Terra Stockholder Approval shall not be required
for the renewal of the Rights Plan upon its expiration, substantially in its
then current form;

(f) the incurrence of additional Indebtedness in excess of the difference, if
any, of 3.5 times the Company’s LTM EBITDA less the Company’s then Outstanding
Gross Debt, provided that, no Terra Stockholder Approval shall be required
hereunder in respect of the incurrence of any Excluded Debt Incurrence;

(g) any voluntary dissolution or liquidation of the Company or a Company
Controlled Corporation; provided, however, that Terra Stockholder Approval shall
not be required where any such dissolution or liquidation of a Company
Controlled Corporation results in the automatic succession of the Company or any
Company Controlled Corporation to the dissolved or liquidated assets of such
Company Controlled Corporation; or

(h) any voluntary filing of a petition for bankruptcy or receivership by the
Company or a Company Controlled Corporation, or the failure to oppose any other
person’s petition

 

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for bankruptcy or any other person’s action to appoint a receiver of the Company
or a Company Controlled Corporation within the time periods established therefor
under applicable law.

4.4 Certain Amendments to the Rights Plan. Until the first time as the Terra
Group Beneficially Owns less than fifteen percent (15%) of the Total Current
Voting Power of the Company then in effect, neither the Company (including any
Company Controlled Corporation) nor the Company Board shall effect, without
first having obtained Terra Stockholder Approval with respect to such event, the
adoption of any “poison pill” share purchase rights plan, other than the Rights
Plan, and any implementation or amendment of, or redemption or exchange of,
rights issued pursuant to the Rights Plan or any amendment of the Rights Plan,
that has the effect of (a) including within the definition of “Acquiring Person”
(or any similar term) therein Terra, any Terra Controlled Corporation, or any
member of the Terra Group, unless such Persons shall have breached its
obligations under Sections 2.1 and 2.3 of this Agreement, as applicable (in
which case of breach, no Terra Stockholder Approval of any such action shall be
required), or (b) adversely affecting the interests of Terra, any Terra
Controlled Corporation, any Terra Group member, or any Transferee as a holder of
“rights” under such a “poison pill” share purchase rights plan, in each case
different from other holders of such “rights.”

4.5 Disinterested Director Action. If the Company Board amends the Rights Plan
without Disinterested Director Approval at a time when Disinterested Director
Approval is required for such amendment pursuant to Section 4.1(c), then the
Disinterested Directors shall be empowered and entitled to take all action
necessary to amend the Rights Plan to reverse such amendment and cure the breach
of Section 4.1(c).

ARTICLE V

ADDITIONAL COVENANTS OF THE COMPANY AND TERRA

5.1 Amendment of Bylaws; Taking of Other Company Board Actions. Not later than
the Offer Closing, the Company Board shall, effective at the Offer Closing, take
all action necessary to (a) amend the Company’s bylaws substantially as set
forth on Schedule B to permit Terra or any member of the Terra Group to call a
special meeting of stockholders of the Company to consider and vote upon a
proposal to effect a Terra Merger pursuant to Section 2.1(a) or a Transferee
Merger pursuant to Section 2.3(a), as applicable; (b) adopt the resolutions set
forth on Schedule C to exculpate Parent, Terra, any Terra Controlled Corporation
and the Terra Directors with respect to corporate opportunities to the fullest
extent permitted under applicable law; and (c) adopt the resolutions set forth
on Schedule D determining to waive the implications of Section 203 of the DGCL
to Parent, Terra, any Terra Controlled Corporation and any Transferee.

5.2 Rights Plan Matters.

(a) Not later than the Offer Closing, the Company Board shall, effective at and
after the Offer Closing, amend the Company’s “poison pill” share purchase rights
plan (as it may be amended or supplemented from time to time, the “Rights Plan”)
in the manner set forth on

 

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Schedule E1 to (i) exclude from the definition of “Acquiring Person” therein
Terra, any Terra Controlled Corporation and any Terra Group member so long as
such Persons have not breached their obligations under Sections 2.1 or 2.3 of
this Agreement; (ii) exclude from the definition of “Acquiring Person” therein a
Transferee who has not breached its obligations under Section 2.3 of this
Agreement, so long as such Transferee does not thereafter acquire Voting Stock
in excess of the amount of Voting Stock acquired from Terra pursuant to
Section 2.3(a) and Section 2.3(b) or in any Transferee Tender Offer or
Transferee Merger; and (iii) during the Terra Stockholder Approval Period,
include in the definition of “Acquiring Person” any Person (other than as
provided in the foregoing clauses (i) and (ii) of this Section 5.2(a))
beneficially owning (as defined in the Rights Plan) ten percent (10%) or more of
the Total Current Voting Power of the Company then in effect.

(b) Not later than the effective time of the Recapitalization and contingent
upon the consummation of the Recapitalization, the Company Board (acting through
a committee composed of Disinterested Directors) shall amend and restate the
Rights Plan in its entirety in the manner set forth on Schedule E2.

(c) Until the first time that the Terra Group beneficially owns less than
fifteen percent (15%) of the Total Current Voting Power of the Company then in
effect, the Company and the Company Board and Terra shall, and Terra shall cause
each member of the Terra Group to, take all action necessary to renew the Rights
Plan upon its expiration, substantially in its then current form.

5.3 Financial Information.

(a) The Company shall continue to appoint an accounting firm of international
reputation to perform independent audit services for the Company. The Company
shall, at the Company’s expense, prepare its financial reports in accordance
with GAAP. The Company shall provide routine reports to Terra as reasonably
requested by it in formats it may reasonably specify. Terra shall also request
the Company to prepare and provide within six days of the end of each fiscal
quarter financial statements prepared in accordance with International Financial
Reporting Standards as applied by Terra, and any other documents reasonably
required for consolidated accounting or to satisfy any mandatory disclosure
requirement (collectively, the “Company Consolidation Package”). The contents
and formats of those documents in the Company Consolidation Package shall be
determined in each case through consultation between the Company and Terra;
provided, however, that during the transition period prior to the end of the
second fiscal quarter of 2012, the timing for delivery of such Company
Consolidation Package shall be determined in good faith between the parties,
taking into account the Company’s ongoing transition to shorter close processes,
as well as the legally required financial reporting deadlines imposed on Terra
for its consolidated financial statements. Terra shall also request the Company
to prepare and provide within five days of the end of each month financial
statements and any other documents reasonably required for consolidated
accounting or to satisfy any mandatory disclosure requirement, and the contents
and formats of those documents shall be determined in each case through
consultation between the Company and Terra; provided, however, that during the
transition period prior to the end of the second fiscal quarter of 2012, the
timing for the delivery of such financial statements shall be

 

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determined in good faith between the parties, taking into account the Company’s
ongoing transition to shorter close processes, as well as the legally required
financial reporting deadlines imposed on Terra for its consolidated financial
statements. The Company shall no longer be required to deliver a Company
Consolidation Package after such time as Terra is no longer required pursuant to
International Financial Reporting Standards to consolidate the financial results
of the Company into its financial statements. Terra shall reimburse the Company
for any reasonable out-of-pocket expenses incurred in connection with altering
its information technology systems in order to comply with this Section 5.3(a).
Except as set forth in the preceding sentence, the Company shall bear the
expense of compliance with this Section 5.3(a).

(b) Subject to any restrictions imposed under applicable laws, at all times
during the Terra Stockholder Approval Period, the Company shall afford Terra and
its designees reasonable access during normal business hours, upon 72 hours
notice, to any assets, properties (including projects), contracts, books,
records and personnel of the Company and its Subsidiaries as Terra may
reasonably request in connection with its status as a stockholder of the
Company; provided, however, that the Company may restrict or otherwise prohibit
access to (i) any portion of any documents or information to the extent that
(x) any applicable law requires the Company or any of its Subsidiaries to
restrict or otherwise prohibit access to such portion of any documents or
information, or (y) access to such portion of such documents or information
would result in the waiver of any attorney-client privilege, work product
doctrine or other applicable privilege applicable to such portion of documents
or information, or (ii) any contracts, agreements or other documents of the
Company or any of its Subsidiaries would violate or cause a material default
under, or give a third party the right terminate or accelerate the rights under,
such contract, agreement or other document. In the event that the Company does
not provide access or information in reliance on the preceding sentence, it
shall use its reasonable best efforts to communicate the applicable information
to Terra in a way that would not violate the applicable law, contract,
agreement, document or obligation or to waive such a privilege. Any
investigation conducted pursuant to the access contemplated by this
Section 5.3(b) shall be conducted in a manner that does not unreasonably
interfere with the conduct of the business of the Company and its Subsidiaries
or create a risk of damage or destruction to any property or assets of the
Company or any of its Subsidiaries. Any access to the Company’s properties shall
be subject to the Company’s reasonable security measures and insurance
requirements and shall not include the right to perform invasive testing.
Notwithstanding the foregoing, the Company shall provide to Terra and its
designees such information as is required in order for Terra to determine the
Company’s ongoing compliance with Section 4.3(c), Section 4.3(d) and
Section 4.3(f). Terra shall execute and deliver a reasonable and customary
confidentiality agreement in connection with the delivery of any confidential
information by the Company or its Subsidiaries in connection with the granting
of the access contemplated by this Section 5.3(b).

5.4 Compliance with Securities Laws. Any Transfers effected pursuant to this
Agreement shall be made in compliance with applicable securities laws and shall,
upon reasonable request of the Company in connection with a private placement,
be made conditional upon delivery of an opinion of counsel reasonably acceptable
to the Company.

 

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5.5 Breach by Members of Terra Group. If Parent, any Terra Controlled
Corporation or any agent thereof takes an action that would constitute a breach
of this Agreement by Terra if Terra had taken such action, Terra shall be deemed
for purposes of this Agreement to have taken such action and to have so breached
this Agreement. Terra hereby agrees to use its best efforts to prevent any
member of the Terra Group from taking any action that would constitute a breach
of this Agreement, and if any such action is taken to cause such breach and the
consequence resulting therefrom to be cured as promptly as practicable.

ARTICLE VI

MISCELLANEOUS

6.1 Applicable Law; Jurisdiction; Etc.

(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.

(b) Each of the parties hereto irrevocably consents and submits itself and its
properties and assets to the exclusive jurisdiction and venue in any state court
within the State of Delaware (or, if a state court located within the State of
Delaware declines to accept jurisdiction over a particular matter, any court of
the United States located in the State of Delaware) in connection with any
matter based upon or arising out of this Agreement or the transactions
contemplated hereby, agrees that process may be served upon them in any manner
authorized by the laws of the State of Delaware for such Persons and waives and
covenants not to assert or plead any objection which such Person might otherwise
have to such jurisdiction, venue and process. Each party hereto hereby agrees
not to commence any legal proceedings relating to or arising out of this
Agreement or the transactions contemplated hereby in any jurisdiction or courts
other than as provided herein.

(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES 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 THIS AGREEMENT OR THE ACTIONS OF A
PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

6.2 Successors and Assigns. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and assigns.
Subject to Section 2.3(b) in connection with a Transfer by Terra or a Terra
Controlled Corporation to a Terra Controlled Corporation, which shall be
permitted in accordance with Section 2.3(b), this Agreement may not be assigned
by a party without the prior written consent of the other party except by
operation of law, in which case the assignee shall be subject to all of the
provisions of this Agreement.

 

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6.3 Entire Agreement; Amendment. This Agreement and the Related Agreements
constitute the full and entire understanding and agreement between the parties
with-regard to the subject hereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
modified, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought, including on behalf of the Company, without the
Disinterested Director Approval.

6.4 Notices, Etc. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly delivered and received hereunder
(i) four (4) Business Days after being sent by registered or certified mail,
return receipt requested, postage prepaid; (ii) one (1) Business Day after being
sent for next Business Day delivery, fees prepaid, via a reputable nationwide
overnight courier service; (iii) if sent by facsimile transmission before 5:00
p.m. in the time zone of the receiving party, when transmitted and receipt is
confirmed; (iv) if sent by facsimile transmission after 5:00 p.m. in the time
zone of the receiving party and receipt is confirmed, on the following Business
Day; and (v) if otherwise actually personally delivered by hand, when delivered,
in each case to the intended recipient, at the following addresses or facsimile
numbers (or at such other address or telecopy numbers for a party as shall be
specified by similar notice):

 

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  (a) If to Terra, to:

Total Gas & Power USA, SAS

2, place Jean Millier

La Défense 6

92400 Courbevoie

France

Attn: Arnaud Chaperon

cc: Stephen Douglas

Legal Director, Gas & Power

TOTAL S.A.

2 place Jean Millier, La Défense 6

92078 Paris La Défense Cedex

France

Telephone: +331 4744 6768

Facsimile: +331 4744 3807

With a copy (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304

Attn: David Segre

Attn: Richard Cameron Blake

Telephone: (650) 493-9300

Facsimile: (650) 493-6811

 

  (b) If to the Company, to:

SunPower Corporation

77 Rio Robles

San Jose, CA 95134

Attn: Dennis Arriola

Attn: Bruce Ledesma

Facsimile: (510) 540-0552

 

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With a copy (which shall not constitute notice) to:

Jones Day

1755 Embarcadero Road

Palo Alto, CA 94303

Attn: R. Todd Johnson

Attn: Steve Gillette

Telephone: (650) 739-3939

Facsimile: (650) 739-3900

and

Jones Day

3161 Michelson Drive, 8th Floor

Irvine, CA 92612

Attn: Jonn R. Beeson

Telephone: (949) 851-3939

Facsimile: (949) 553-7539

6.5 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to a party under this
Agreement, shall impair any such right, power or remedy nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.

6.6 Expenses. Except as otherwise specifically provided, the Company and Terra
shall bear their own expenses incurred with respect to this Agreement and the
transactions contemplated hereby.

6.7 Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached,
and that money damages or other legal remedies would not be an adequate remedy
for any such damages. It is accordingly agreed among the parties hereto that, in
addition to any other remedy to which they are entitled at law or in equity, in
the event of any breach or threatened breach by the Company, on the one hand, or
Terra, on the other hand, of any of their respective covenants or obligations
set forth in this Agreement, the Company, on the one hand, and Terra, on the
other hand, shall be entitled to an injunction or injunctions to prevent or
restrain breaches or threatened breaches of this Agreement or to enforce
compliance with, the covenants and obligations of the other under this
Agreement. The Company, on the one hand, and Terra, on the other hand hereby
agree not to raise any objections to the availability of the equitable remedy of
specific performance to prevent or restrain breaches or threatened breaches of
this Agreement by such party (or parties), and to specifically enforce the terms
and provisions of this Agreement to prevent breaches or threatened breaches of,
or to enforce compliance with, the

 

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covenants and obligations of such party (or parties) under this Agreement. The
parties hereto further agree that (x) by seeking the remedies provided for in
this Section 6.7, a party shall not in any respect waive its right to seek any
other form of relief that may be available to a party under this Agreement
(including monetary damages), and (y) nothing set forth in this Section 6.7
shall require any party hereto to institute any proceeding for (or limit any
party’s right to institute any proceeding for) specific performance under this
Section 6.7, nor shall the commencement of any legal proceeding pursuant to this
Section 6.7 or anything set forth in this Section 6.7 restrict or limit any
party’s right to pursue any other remedies for damages resulting from a breach
of this Agreement.

6.8 Further Assurances. The parties hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as any
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated hereby. Neither the Company nor Terra shall voluntarily undertake
any course of action inconsistent with satisfaction of the requirements
applicable to them set forth in this Agreement and each shall promptly do all
such acts and take all such measures as may be appropriate to enable them to
perform as early as practicable the obligations herein and therein required to
be performed by them.

6.9 Counterparts. This Agreement may be executed in one or more counterparts
(including by fax and .pdf), all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.

6.10 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such illegal,
void or unenforceable provision of this Agreement with a legal, valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such illegal, void or unenforceable provision.

6.11 Other Remedies. Any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.

6.12 Attorneys’ Fees. In any action at law or suit in equity in relation to this
Agreement, the prevailing party in such action or suit shall be entitled to
receive a reasonable sum for its attorneys’ fees and all other reasonable costs
and expenses incurred in such action or suit.

6.13 Certain Interpretations.

 

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(a) Unless otherwise indicated, all references herein to Articles, Sections,
Annexes, Exhibits or Schedules, shall be deemed to refer to Articles, Sections,
Annexes, Exhibits or Schedules of or to this Agreement, as applicable.

(b) Unless otherwise indicated, the words “include,” “includes” and “including,”
when used herein, shall be deemed in each case to be followed by the words
“without limitation.”

(c) As used in this Agreement, the word “extent” and the phrase “to the extent”
shall mean the degree to which a subject or other thing extends, and such word
or phrase shall not mean simply “if.”

(d) As used in this Agreement, the singular or plural number shall be deemed to
include the other whenever the context so requires.

(e) The table of contents and headings set forth in this Agreement are for
convenience of reference purposes only and shall not affect or be deemed to
affect in any way the meaning or interpretation of this Agreement or any term or
provision hereof.

(f) The parties hereto agree that they have been represented by counsel during
the negotiation and execution of this Agreement and, therefore, waive the
application of any law, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

(g) No parol evidence shall be introduced in the construction or interpretation
of this Agreement unless the ambiguity or uncertainty in issue is plainly
discernable from a reading of this Agreement without consideration of any
extrinsic evidence.

6.14 Term and Termination. (a) The terms of this Agreement shall commence and
become effective immediately prior to the Offer Closing, and prior to such time
this Agreement shall be of no force or effect. This Agreement shall terminate
and be of no further force or effect upon the earliest to occur of: (i) the
Tender Offer Agreement being terminated in accordance with its terms,
(ii) Terra, together with the Terra Controlled Corporations, owning (or being
deemed pursuant to Section 3.1(f) to own) less than ten percent (10%) of the
Total Current Voting Power of the Company then in effect, taking into account
the provisions of Section 3.1(f), or (iii) Terra, together with the Terra
Controlled Corporations, owning one hundred percent (100%) of the Total Current
Voting Power of the Company then in effect.

[Execution page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

“COMPANY”

 

SUNPOWER CORPORATION

By  

  /s/  Thomas H. Werner

  Name:   Thomas H. Werner   Title:   Chief Executive Officer “TERRA” TOTAL GAS
& POWER USA, SAS By  

  /s/  Arnaud Chaperon

Name: Arnaud Chaperon Title: President

[Signature Page to Affiliation Agreement]

--------------------------------------------------------------------------------

SCHEDULE A

DESIGNATED INDEPENDENT DIRECTORS

W. Steve Albrecht

Betsy S. Atkins

Uwe-Ernst Bufe

Thomas R. McDaniel

Pat Wood III

--------------------------------------------------------------------------------

SCHEDULE B

BY-LAWS

OF

SUNPOWER CORPORATION

(a Delaware corporation)

As Amended and Restated on [                 , 2011]

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

ARTICLE I Offices

     3   

1.1

 

Principal Office

     3   

1.2

 

Additional Offices

     3   

ARTICLE II Meeting of Stockholders

     3   

2.1

 

Place of Meeting

     3   

2.2

 

Annual Meeting

     3   

2.3

 

Special Meetings

     4   

2.4

 

Notice of Meetings

     4   

2.5

 

Business Matter of an Annual Meeting

     4   

2.6

 

Business Matter of a Special Meeting

     6   

2.7

 

Nomination of Directors

     6   

2.8

 

List of Stockholders

     8   

2.9

 

Organization and Conduct of Business

     8   

2.10

 

Quorum and Adjournments

     8   

2.11

 

Voting Rights

     8   

2.12

 

Majority Vote

     9   

2.13

 

Record Date for Stockholder Notice and Voting

     9   

2.14

 

Proxies

     9   

2.15

 

Inspectors of Election

     9   

2.16

 

No Action Without Meeting by Written Consent

     10   

ARTICLE III Directors

     10   

3.1

 

Number; Qualifications; Election

     10   

3.2

 

Resignation and Vacancies

     11   

3.3

 

Removal of Directors

     11   

3.4

 

Powers

     11   

3.5

 

Place of Meetings

     12   

3.6

 

Annual Meetings

     12   

3.7

 

Regular Meetings

     12   

3.8

 

Special Meetings

     12   

3.9

 

Quorum and Adjournments

     12   

3.10

 

Action Without Meeting

     12   

3.11

 

Telephone Meetings

     13   

3.12

 

Waiver of Notice

     13   

3.13

 

Fees and Compensation of Directors

     13   

ARTICLE IV Committees of Directors

     13   

4.1

 

Selection

     13   

4.2

 

Power

     13   

4.3

 

Committee Minutes

     14   

ARTICLE V Officers

     14   

5.1

 

Officers Designated

     14   

5.2

 

Appointment of Officers

     14   

5.3

 

Subordinate Officers

     14   

 

SUNPOWER CORPORATION

BY-LAWS

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5.4

 

Removal and Resignation of Officers

     14   

5.5

 

Vacancies in Offices

     15   

5.6

 

Compensation

     15   

5.7

 

The Chairman of the Board

     15   

5.8

 

The Chief Executive Officer

     15   

5.9

 

The President

     15   

5.10

 

The Vice President

     15   

5.11

 

The Secretary

     16   

5.12

 

The Assistant Secretary

     16   

5.13

 

The Chief Financial Officer

     16   

5.14

 

The Chief Technical Officer

     16   

5.15

 

Representation of Shares of Other Corporations

     17   

ARTICLE VI Indemnification of Directors, Officers, Employees and Other Agents

     17   

6.1

 

Indemnification of Directors And Officers

     17   

6.2

 

Indemnification of Others

     17   

6.3

 

Payment Of Expenses In Advance

     17   

6.4

 

Indemnity Not Exclusive

     18   

6.5

 

Insurance

     18   

6.6

 

Conflicts

     18   

6.7

 

Amendment

     18   

ARTICLE VII Stock Certificates

     19   

7.1

 

Certificates for Shares

     19   

7.2

 

Signatures on Certificates

     19   

7.3

 

Transfer of Stock

     19   

7.4

 

Registered Stockholders

     19   

7.5

 

Lost, Stolen or Destroyed Certificates

     19   

ARTICLE VIII Notices

     20   

8.1

 

Notice

     20   

8.2

 

Waiver

     20   

ARTICLE IX General Provisions

     20   

9.1

 

Dividends

     20   

9.2

 

Dividend Reserve

     20   

9.3

 

Checks

     20   

9.4

 

Corporate Seal

     21   

9.5

 

Execution of Corporate Contracts and Instruments

     21   

9.6

 

Books and Records

     21   

ARTICLE X Amendments

     21   

 

SUNPOWER CORPORATION

BY-LAWS

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BY-LAWS

OF

SUNPOWER CORPORATION

(a Delaware corporation)

ARTICLE I

OFFICES

1.1 Principal Office. The Board of Directors (the “Board”) shall fix the
location of the principal executive office of the Corporation at any place
within or outside the State of Delaware.

1.2 Additional Offices. The Board may at any time establish branch or
subordinate offices at any place or places.

ARTICLE II

MEETING OF STOCKHOLDERS

2.1 Place of Meeting. Meetings of stockholders may be held at such place, either
within or without Delaware, as determined by the Board. The Board may, in its
sole discretion, determine that the meeting shall not be held at any place, but
may instead be held solely by means of remote communication as authorized by
Delaware law. If authorized by the Board in its sole discretion, and subject to
such guidelines and procedures as the Board may adopt, stockholders and proxy
holders not physically present at a meeting of stockholders may, by means of
remote communication: (i) participate in a meeting of stockholders; and (ii) be
deemed present in person and vote at a meeting of stockholders whether such
meeting is to be held at a designated place or solely by means of remote
communication, provided that (A) the Corporation shall implement reasonable
measures to verify that each person deemed present and permitted to vote at the
meeting by means of remote communication is a stockholder or proxy holder,
(B) the Corporation shall implement reasonable measures to provide such
stockholders and proxy holders a reasonable opportunity to participate in the
meeting and to vote on matters submitted to the stockholders, including an
opportunity to read or hear the proceedings of the meeting substantially
concurrently with such proceedings, and (C) if any stockholder or proxy holder
votes or takes other action at the meeting by means of remote communication, a
record of such vote or other action shall be maintained by the Corporation.

2.2 Annual Meeting. Annual meetings of stockholders shall be held at such date
and time as shall be designated from time to time by the Board and stated in the
notice of the meeting. At such annual meetings, the stockholders shall elect
directors and transact such other business as may properly be brought before the
meetings pursuant to Sections 2.5 and 2.6.

 

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BY-LAWS

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2.3 Special Meetings. Special meetings of the stockholders may be called for any
purpose or purposes, unless otherwise prescribed by statute or by the Restated
Certificate of Incorporation of the Corporation (the “Restated Certificate of
Incorporation”), at the request of the Board, the Chairman of the Board, or the
Chief Executive Officer. The Secretary shall call a special meeting of
stockholders promptly following receipt by the Chief Executive Officer or the
Chief Financial Officer of written notice from any member of the Terra Group (as
such term is defined in the Affiliation Agreement by and between the Corporation
and Total Gas & Power USA, SAS (“Terra”), dated April 28, 2011 (the “Affiliation
Agreement”)) solely for the purpose of considering and voting on a proposal to
effect (i) a Terra Merger (as defined in the Affiliation Agreement), to be
effected pursuant to and in accordance with the terms of Section 2.1(a) of the
Affiliation Agreement, together with any stockholder approval as is required by
law in connection with such Terra Merger, or (ii) a Transferee Merger (as such
term is defined in the Affiliation Agreement) to be effected pursuant to and in
accordance with Section 2.3(a) of the Affiliation Agreement, together with any
stockholder approval as is required by law in connection with such Transferee
Merger. Other than as set forth in this Section 2.3, the ability of stockholders
to call a special meeting is specifically denied.

2.4 Notice of Meetings. Written notice of stockholders’ meetings, stating the
place, if any, date and time of the meeting, the means of remote communications,
if any, by which stockholders and proxy holders may be deemed to be present in
person and vote at such meeting, and the purpose or purposes for which the
meeting is called, shall be given to each stockholder entitled to vote at such
meeting not less than ten (10), nor more than sixty (60), days prior to the
meeting.

When a meeting is adjourned to another place, date or time, written notice need
not be given of the adjourned meeting if the place, if any, date and time
thereof and the means of remote communications, if any, by which stockholders
and proxy holders may be deemed to be present in person and vote at such
adjourned meeting are announced at the meeting at which the adjournment is
taken; provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed, or
if a new record date is fixed for the adjourned meeting, written notice of the
place, date and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.

2.5 Business Matter of an Annual Meeting. Only such business (other than
nominations for election to the Board, which must comply with the provisions of
Section 2.7) may be transacted at an annual meeting of stockholders as is
(a) specified in the notice (or any supplement thereto) given by or at the
direction of the Board (or any duly authorized committee thereof), (b) otherwise
properly brought before the annual meeting by or at the direction of the Board
(or any duly authorized committee thereof), or (c) otherwise properly brought
before the annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 2.5 and on the record date for the determination of stockholders
entitled to notice of and to vote at such annual meeting and (ii) who complies
with the notice procedures set forth in this Section 2.5.

 

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In addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, such stockholder must have
given timely notice thereof in proper written form to the Secretary of the
Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) days nor more than one hundred twenty (120) days prior to
the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within twenty five (25) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure (as defined below) of the date of the annual meeting was
made, whichever first occurs. In no event shall the public disclosure of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set
forth as to each matter such stockholder proposes to bring before the annual
meeting a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting and as to the stockholder giving the notice and any Stockholder
Associated Person (as defined below), (i) the name and record address of such
person, (ii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such person, (iii) the
nominee holder for, and number of, shares owned beneficially but not of record
by such person, (iv) whether and the extent to which any hedging or other
transaction or series of transactions has been entered into by or on behalf of,
or any other agreement, arrangement or understanding (including any derivative
or short positions, profit interests, options or borrowed or loaned shares) has
been made, the effect or intent of which is to mitigate loss to or manage risk
or benefit of share price changes for, or to increase or decrease the voting
power of, such person with respect to any share of stock of the Corporation,
(v) to the extent known by the stockholder giving the notice, the name and
address of any other stockholder supporting the proposal of business on the date
of such stockholder’s notice, (vi) a description of all arrangements or
understandings between or among such persons in connection with the proposal of
such business by such stockholder and any material interest in such business and
(vii) a representation that the stockholder giving the notice intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting. Any information required pursuant to this paragraph shall be
supplemented by the stockholder giving the notice not later than ten (10) days
after the record date for the meeting as of the record date.

No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Section 2.5 (including the provision of the information required
pursuant to the immediately preceding paragraph); provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 2.5 shall be deemed to preclude
discussion by any stockholder of any such business. If the chairman of an annual
meeting determines that business was not properly brought before the annual
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accordance with the foregoing procedures, the chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.

For purposes of Sections 2.5 and 2.7 hereof:

“public disclosure” shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

“Stockholder Associated Person” of any stockholder shall mean (i) any person
acting in concert, directly or indirectly, with such stockholder and (ii) any
person controlling, controlled by or under common control with such stockholder
or any Stockholder Associated Person.

2.6 Business Matter of a Special Meeting. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.

2.7 Nomination of Directors. Only persons who are nominated in accordance with
the following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Restated Certificate of
Incorporation with respect to the right of holders of preferred stock of the
Corporation to nominate and elect a specified number of directors in certain
circumstances. Nominations of persons for election to the Board may be made at
any annual meeting of stockholders, or at any special meeting of stockholders
called for the purpose of electing directors, (a) by or at the direction of the
Board (or any duly authorized committee thereof) or (b) directly by any
stockholder of the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this Section 2.7 and on the record date
for the determination of stockholders entitled to notice of and to vote at such
meeting and (ii) who complies with the notice procedures set forth in this
Section 2.7.

In addition to any other applicable requirements, for a nomination to be made by
a stockholder, such stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or be
mailed and received at the principal executive offices of the Corporation (a) in
the case of an annual meeting, not less than ninety (90) days nor more than one
hundred twenty (120) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within twenty five
(25) days before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure (as defined in Section 2.5)
of the date of the annual meeting was made, whichever first occurs; and (b) in
the case of a special meeting of stockholders called for the purpose of electing
directors, not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the special meeting was mailed
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disclosure of the date of the special meeting was made, whichever first occurs.
In no event shall the public disclosure of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder’s notice as described
above.

To be in proper written form, a stockholder’s notice to the Secretary must set
forth as to each person whom the stockholder proposes to nominate for election
as a director and as to the stockholder giving the notice and any Stockholder
Associated Person (as defined in Section 2.5) (i) the name, age, business
address, residence address and record address of such person, (ii) the principal
occupation or employment of such person, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially or of
record by such person, (iv) any information relating to such person that would
be required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations promulgated thereunder, (v) the
nominee holder for, and number of, shares owned beneficially but not of record
by such person, (vi) whether and the extent to which any hedging or other
transaction or series of transactions has been entered into by or on behalf of,
or any other agreement, arrangement or understanding (including any derivative
or short positions, profit interests, options or borrowed or loaned shares) has
been made, the effect or intent of which is to mitigate loss to or manage risk
or benefit of share price changes for, or to increase or decrease the voting
power of, such person with respect to any share of stock of the Corporation,
(vii) to the extent known by the stockholder giving the notice, the name and
address of any other stockholder supporting the nominee for election or
reelection as a director on the date of such stockholder’s notice, (viii) a
description of all arrangements or understandings between or among such persons
pursuant to which the nomination(s) are to be made by the stockholder and any
relationship between or among the stockholder giving notice and any Stockholder
Associated Person, on the one hand, and each proposed nominee, on the other
hand, and (ix) a representation that the stockholder intends to appear in person
or by proxy at the meeting to nominate the persons named in its notice. Any
information required pursuant to this paragraph shall be supplemented by the
stockholder giving the notice not later than ten (10) days after the record date
for the meeting as of the record date. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected. The Corporation may require any proposed nominee
to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as an
independent director of the Corporation or that could be material to a
reasonable stockholder’s understanding of the independence, or lack thereof, of
such nominee.

No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.7
(including the provision of the information required pursuant to the immediately
preceding paragraph). If the chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
chairman shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.

 

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2.8 List of Stockholders. The officer in charge of the stock ledger of the
Corporation or the transfer agent shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting: (i) on a reasonably
accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting, or (ii) during
ordinary business hours, at the principal place of business of the Corporation.
In the event that the Corporation determines to make the list available on an
electronic network, the Corporation may take reasonable steps to ensure that
such information is available only to stockholders of the Corporation. If the
meeting is to be held at a place, then the list shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of remote communication, then the list shall also be open to the
examination of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting.

2.9 Organization and Conduct of Business. The Chairman of the Board or, in his
or her absence, the Chief Executive Officer of the Corporation or, in their
absence, such person as the Board may have designated or, in the absence of such
a person, such person as may be chosen by the holders of a majority of the
shares entitled to vote who are present, in person or by proxy, shall call to
order any meeting of the stockholders and act as chairman of the meeting. In the
absence of the Secretary of the Corporation, the Secretary of the meeting shall
be such person as the Chairman appoints.

The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seems to him or her in order.

2.10 Quorum and Adjournments. Except where otherwise provided by law or in the
Restated Certificate of Incorporation or these By-laws, the holders of a
majority of the stock issued and outstanding and entitled to vote, present in
person or represented in proxy, shall constitute a quorum at all meetings of the
stockholders. The stockholders entitled to vote at the meeting, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted which might have been transacted at the meeting as originally
noticed.

2.11 Voting Rights. Unless otherwise provided in the Restated Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder.

 

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2.12 Majority Vote. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the statutes or
of the Restated Certificate of Incorporation or of these By-laws, a different
vote is required, in which case such express provision shall govern and control
the decision of such question.

2.13 Record Date for Stockholder Notice and Voting.

(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which record date shall not be more than sixty or fewer than ten days before the
date of such meeting. If no record date is fixed by the Board, the record date
for determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.

(b) In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution, or allotment of any
rights, or the stockholders entitled to exercise any rights in respect of any
change, conversion, or exchange of capital stock, or for the purpose of any
other lawful action, except as may otherwise be provided in these Bylaws, the
Board may fix a record date. Such record date shall not precede the date upon
which the resolution fixing such record date is adopted, and shall not be more
than sixty days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be the close of
business on the day on which the Board adopts the resolution relating thereto.

2.14 Proxies. Every person entitled to vote for directors or on any other matter
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the Secretary
of the Corporation. A proxy shall be deemed signed if the stockholder’s name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission, electronic transmission or otherwise) by the stockholder or the
stockholder’s attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless
(a) revoked by the person executing it, before the vote pursuant to that proxy,
by a writing delivered to the Corporation stating that the proxy is revoked or
by a subsequent proxy executed by the maker of the proxy, or by that person’s
attendance and vote at the meeting; or (b) written notice of the death or
incapacity of the maker of that proxy is received by the Corporation before the
vote pursuant to that proxy is counted; provided, however, that no proxy shall
be valid after the expiration of eleven months from the date of the proxy,
unless otherwise provided in the proxy.

2.15 Inspectors of Election. Before any meeting of stockholders, the Board may
appoint any person other than nominees for office to act as inspectors of
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or its adjournment. If no inspectors of election are so appointed, the chairman
of the meeting may, and on the request of any stockholder or a stockholder’s
proxy shall, appoint inspectors of election at the meeting. The number of
inspectors shall be either one (1) or three (3). If inspectors are appointed at
a meeting on the request of one or more stockholders or proxies, the holders of
a majority of shares or their proxies present at the meeting shall determine
whether one (1) or three (3) inspectors are to be appointed. If any person
appointed as inspector fails to appear or fails or refuses to act, the chairman
of the meeting may, and upon the request of any stockholder or a stockholder’s
proxy shall, appoint a person to fill that vacancy or to act in place of such
inspector.

2.16 No Action Without Meeting by Written Consent. No action required or
permitted to be taken at any annual or special meeting of the stockholders of
the Corporation may be taken without a meeting and the power of the stockholders
to consent in writing, without a meeting, to the taking of any action is
specifically denied.

ARTICLE III

DIRECTORS

3.1 Number; Qualifications; Election. The Board shall consist of the number of
directors as shall be determined from time to time by resolution adopted by the
affirmative vote of the majority of the entire Board at any regular or special
meeting.

The Board shall be divided into three classes, designated Class I, Class II and
Class III, with each class to serve for a term of three (3) years and to be as
nearly equal in number as possible. Additional directorships resulting from an
increase in number of directors shall be apportioned among the classes as
determined by the decision of the affirmative vote of a majority of the entire
Board, subject to the requirement that the classes be as nearly equal in number
as possible.

The initial term of office of directors of Class I shall expire at the next
annual meeting of stockholders to be held in 2009, the initial term of office of
directors of Class II shall expire at the annual meeting of stockholders to be
held in 2010 and the initial term of office of directors of Class III shall
expire at the annual meeting of stockholders to be held in 2011, and in all
cases as to each director until his or her successor shall be elected and shall
qualify or until his or her earlier resignation, removal from office, death or
incapacity. Subject to the provisions of the Restated Certificate of
Incorporation, at each annual meeting of stockholders the number of directors
equal to the number of directors of the class whose term expires at the time of
such meeting (or, if less, the number of directors properly nominated and
qualified for election) shall be elected to hold office until the third
succeeding annual meeting of stockholders after their election. Directors need
not be stockholders. All elections of directors shall be by written ballot,
unless otherwise provided in the Restated Certificate of Incorporation; if
authorized by the Board, such requirement of a written ballot shall be satisfied
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transmission, provided that any such electronic transmission must either set
forth or be submitted with information from which it can be determined that the
electronic transmission was authorized by the stockholder or proxy holder.

3.2 Resignation and Vacancies. A vacancy or vacancies in the Board, however
occurring, shall be filled in the manner specified in the Restated Certificate
of Incorporation. If the Board accepts the resignation of a director tendered to
take effect at a future time, the Board shall have power to elect a successor to
take office when the resignation is to become effective. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute. In the event of a vacancy in the Board, the remaining
directors, except as otherwise provided by law, the Corporation’s Restated
Certificate of Incorporation or these By-laws, may exercise the powers of the
full Board until the vacancy is filled.

3.3 Removal of Directors. Any director or the entire Board may be removed from
office by stockholders in the manner specified in the Restated Certificate of
Incorporation.

3.4 Powers. Subject to the provisions of the Delaware General Corporation Law
and the Corporation’s Restated Certificate of Incorporation, the business of the
Corporation shall be managed by or under the direction of the Board which may
exercise all such powers of the Corporation and do all such lawful acts and
things which are not by statute or by the Restated Certificate of Incorporation
or by these By-laws directed or required to be exercised or done by the
stockholders.

Without prejudice to these general powers, the directors shall have the power
to:

(a) Select and remove all officers, agents, and employees of the Corporation;
prescribe any powers and duties for them that are consistent with law, with the
Restated Certificate of Incorporation, and with these By-laws and fix their
compensation;

(b) Confer upon any office the power to appoint, remove and suspend subordinate
officers, employees and agents;

(c) Change the principal executive office or the principal business office in
the State of California, or any other state, from one location to another; cause
the Corporation to be qualified to do business in any other state, territory,
dependency or country, and conduct business within or without the State of
California; and designate any place within or without the State of California
for the holding of any stockholders meeting, or meetings, including annual
meetings;

(d) Adopt, make, and use a corporate seal; prescribe the forms of certificates
of stock; and alter the form of the seal and certificates;

(e) Authorize the issuance of shares of stock of the Corporation on any lawful
terms;

 

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(f) Borrow money and incur indebtedness on behalf of the Corporation, and cause
to be executed and delivered for the Corporation’s purposes, in the corporate
name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecation and other evidences of debt and securities;

(g) Declare dividends from time to time in accordance with law;

(h) Adopt from time to time such stock option, stock purchase, bonus or other
compensation plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and

(i) Adopt from time to time policies not inconsistent with these By-laws for the
management of the Corporation’s business and affairs.

3.5 Place of Meetings. The Board may hold meetings, both regular and special,
either within or without the State of Delaware.

3.6 Annual Meetings. The annual meeting of the Board shall be held immediately
following the annual meeting of stockholders, and no notice of such meeting
shall be necessary to the Board, provided a quorum shall be present. The annual
meetings shall be for the purposes of organization, for an election of officers,
and for the transaction of other business.

3.7 Regular Meetings. Regular meetings of the Board may be held without notice
at such time and place as may be determined from time to time by the Board.

3.8 Special Meetings. Special meetings of the Board may be called by the
Chairman of the Board, the Chief Executive Officer or any two members of the
Board, upon one (1) day’s notice to each director.

3.9 Quorum and Adjournments. At all meetings of the Board, a majority of the
directors then in office shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board, except as may otherwise
be specifically provided by law or by the Restated Certificate of Incorporation.
If a quorum is not present at any meeting of the Board, the directors present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting at which the adjournment is taken, until a quorum
shall be present. A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any action
taken is approved of by at least a majority of the required quorum for that
meeting.

3.10 Action Without Meeting. Unless otherwise restricted by the Restated
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
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3.11 Telephone Meetings. Unless otherwise restricted by the Restated Certificate
of Incorporation or these By-laws, any member of the Board or of any committee
may participate in a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

3.12 Waiver of Notice. Notice of a meeting need not be given to any director who
signs a waiver of notice or provides a waiver by electronic transmission or a
consent to holding the meeting or an approval of the minutes thereof, whether
before or after the meeting, or who attends the meeting without protesting,
either prior thereto or at its commencement, the lack of notice to such
director. All such waivers, consents and approvals or any waiver by electronic
transmission shall be filed with the corporate records or made a part of the
minutes of the meeting.

3.13 Fees and Compensation of Directors. Unless otherwise restricted by the
Restated Certificate of Incorporation or these By-laws, the Board shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board, and may be paid a
fixed sum for attendance at each meeting of the Board or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor; provided,
that, no person who concurrently serves as a member of the Board and also serves
as an officer of the Corporation or as an officer of any “Parent” (as defined in
Article III, Section D.8.(c) of the Corporation’s Restated Certificate of
Incorporation) of the Corporation shall receive additional compensation from the
Corporation, other than the reimbursement of expenses, for service on the Board.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.

ARTICLE IV

COMMITTEES OF DIRECTORS

4.1 Selection. The Board may, by resolution passed by a majority of the entire
Board, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.

In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of any such absent or
disqualified member.

4.2 Power. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation, and may authorize
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be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Restated Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board as provided in section 151(a) of the General Corporation Law of
Delaware, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation’s property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of
dissolution, removing or indemnifying directors or amending the By-laws of the
Corporation; and, unless the resolution or the Restated Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock or to
adopt a certificate of ownership and merger. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board.

4.3 Committee Minutes. Each committee shall keep regular minutes of its meetings
and report the same to the Board when required.

ARTICLE V

OFFICERS

5.1 Officers Designated. The officers of the Corporation shall be chosen by the
Board and shall be a Chief Executive Officer, a President, a Secretary and a
Chief Financial Officer. The Board may also choose a Chairman of the Board,
Chief Operating Officer, one or more Vice Presidents and one or more assistant
Secretaries. Any number of offices may be held by the same person, unless the
Restated Certificate of Incorporation or these By-laws otherwise provide.

5.2 Appointment of Officers. The officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 5.3 or
5.5 hereof, shall be appointed by the Board, and each shall serve at the
pleasure of the Board, subject to the rights, if any, of an officer under any
contract of employment.

5.3 Subordinate Officers. The Board or any duly authorized committee may
appoint, and may empower the Chief Executive Officer to appoint, such other
officers and agents as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the By-laws or as the Board or duly authorized committee may
from time to time determine.

5.4 Removal and Resignation of Officers. Subject to the rights, if any, of an
officer under any contract of employment, any officer may be removed, either
with or without cause, by an affirmative vote of the majority of the Board or
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regular or special meeting of the Board or such committee, or, except in case of
an officer chosen by the Board or authorized committee, by any officer upon whom
such power of removal may be conferred by the Board or authorized committee.

Any officer may resign at any time by giving written notice to the Corporation.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice; and, unless otherwise specified in
that notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Corporation under any contract to which the officer is a party.

5.5 Vacancies in Offices. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these By-laws for regular appointment to that office.

5.6 Compensation. The salaries of all officers of the Corporation shall be fixed
from time to time by the Board, and no officer shall be prevented from receiving
a salary because he is also a director of the Corporation.

5.7 The Chairman of the Board. If the Board appoints a Chairman of the Board,
such Chairman shall, when present, preside at all meetings of the stockholders
and the Board. The Chairman shall perform such duties and possess such powers as
are customarily vested in the office of the Chairman of the Board or as may be
vested in the Chairman by the Board.

5.8 The Chief Executive Officer. Subject to such supervisory powers, if any, as
may be given by the Board to the Chairman of the Board, the Chief Executive
Officer shall preside at all meetings of the stockholders and in the absence of
the Chairman of the Board, or if there be none, at all meetings of the Board,
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board are carried into effect.
He or she shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board to some other officer or agent
of the Corporation.

5.9 The President. The President shall, in the event there be no Chief Executive
Officer or in the absence of the Chief Executive Officer or in the event of his
or her disability or refusal to act, perform the duties of the Chief Executive
Officer, and when so acting, shall have the powers of and subject to all the
restrictions upon the Chief Executive Officer. The President shall perform such
other duties and have such other powers as may from time to time be prescribed
for such person by the Board, the Chairman of the Board, the Chief Executive
Officer or these By-laws.

5.10 The Vice President. The Vice President (or in the event there be more than
one, the Vice Presidents in the order designated by the directors, or in the
absence of any designation, in the order of their election), shall, in the
absence of the President or in the event of his disability or refusal to act,
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the powers of and be subject to all the restrictions upon the President. The
Vice President(s) shall perform such other duties and have such other powers as
may from time to time be prescribed for them by the Board, the Chief Executive
Officer, the President, the Chairman of the Board or these By-laws.

5.11 The Secretary. The Secretary shall attend all meetings of the Board and the
stockholders and record all votes and the proceedings of the meetings in a book
to be kept for that purpose, and shall perform like duties for the standing
committees, when required. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and special meetings of the Board, and
shall perform such other duties as may from time to time be prescribed by the
Board, the Chairman of the Board, the Chief Executive Officer or the President,
under whose supervision he or she shall act. The Secretary shall have custody of
the seal of the Corporation, and the Secretary, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and, when so
affixed, the seal may be attested by his or her signature or by the signature of
such Assistant Secretary. The Board may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing thereof
by his or her signature. The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation’s transfer agent
or registrar, as determined by resolution of the Board, a share register, or a
duplicate share register, showing the names of all stockholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.

5.12 The Assistant Secretary. The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order designated by the Board (or in the
absence of any designation, in the order of their election) shall, in the
absence of the Secretary, or in the event of his or her inability or refusal to
act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as may from time to time be
prescribed by the Board.

5.13 The Chief Financial Officer. The Chief Financial Officer shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board. The Chief Financial Officer shall disburse the funds of the Corporation
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the Chief Executive Officer and the Board, at its regular
meetings, or when the Board so requires, an account of all his or her
transactions as Chief Financial Officer and of the financial condition of the
Corporation.

5.14 The Chief Technical Officer. The Chief Technical Officer shall be the
senior technical officer of the Corporation. He or she shall be responsible for
the creation and maintenance of appropriate records as to the design, technical
specifications, and performance criteria of the Corporation’s products. As
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the Chief Technical Officer shall be responsible for research, technical
development and manufacturing of existing and future products of the
Corporation.

5.15 Representation of Shares of Other Corporations. The Chairman of the Board,
the Chief Executive Officer, the President, the Chief Financial Officer or the
Secretary or Assistant Secretary of this Corporation, or any other person
authorized by the Board or the Chief Executive Officer, is authorized to vote,
represent and exercise on behalf of this Corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
the Corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS,

EMPLOYEES AND OTHER AGENTS

6.1 Indemnification of Directors And Officers. The Corporation shall, to the
maximum extent and in the manner permitted by the General Corporation Law of
Delaware, indemnify each of its directors and officers against expenses
(including attorneys’ fees), judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative, investigative or otherwise,
arising by reason of the fact that such person is or was an agent of the
Corporation. For purposes of this Section 6.1, a “director” or “officer” of the
Corporation includes any person (a) who is or was a director or officer of the
Corporation, (b) who, while serving as a director of officer of the Corporation,
is or was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
(c) who was a director or officer of a corporation which was a predecessor
corporation of the Corporation or of another enterprise at the request of such
predecessor corporation.

6.2 Indemnification of Others. The Corporation shall have the power, to the
maximum extent and in the manner permitted by the General Corporation Law of
Delaware, to indemnify each of its employees and agents (other than directors
and officers) against expenses (including attorneys’ fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the Corporation. For purposes of this Section 6.2, an “employee” or
“agent” of the Corporation (other than a director or officer) includes any
person (a) who is or was an employee or agent of the Corporation, (b) who is or
was serving at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (c) who
was an employee or agent of a corporation which was a predecessor corporation of
the Corporation or of another enterprise at the request of such predecessor
corporation.

6.3 Payment Of Expenses In Advance. Expenses incurred in defending any action or
proceeding for which indemnification is required pursuant to Section 6.1 hereof,
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which indemnification is permitted pursuant to Section 6.2 hereof, following
authorization thereof by the Board, shall be paid by the Corporation in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount, if it
shall ultimately be determined that the indemnified party is not entitled to be
indemnified as authorized in this Article 6.

6.4 Indemnity Not Exclusive. The indemnification provided by this Article 6
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office, to the
extent that such additional rights to indemnification are authorized in the
Restated Certificate of Incorporation.

6.5 Insurance. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.

6.6 Conflicts. No indemnification or advance shall be made under this Article 6,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:

(a) That it would be inconsistent with a provision of the Restated Certificate
of Incorporation, these By-laws, a resolution of the stockholders or an
agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or

(b) That it would be inconsistent with any condition expressly imposed by a
court in approving a settlement.

6.7 Amendment. The duties of the Corporation to indemnify and to advance
expenses to any Person as provided in the Restated Certificate of Incorporation
or these By-laws shall be in the nature of a contract between the Corporation
and each such Person, and neither any amendment nor repeal of the Restated
Certificate of Incorporation or these By-laws, nor the adoption of any provision
of these By-laws inconsistent with this Article VI, shall eliminate or reduce
the effect of this Article VI in respect of any matter occurring, or action or
proceeding accruing or arising or that, but for this Article VI, would accrue or
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ARTICLE VII

STOCK CERTIFICATES

7.1 Certificates for Shares. The shares of the Corporation shall be represented
by certificates or shall be uncertificated. Certificates shall be signed by, or
be in the name of the Corporation by, the Chairman of the Board, the Chief
Executive Officer or the President or a Vice President and by the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation.

Within a reasonable time after the issuance or transfer of uncertified stock,
the Corporation shall send to the registered owner thereof a written notice
containing the information required by the General Corporation Law of the State
of Delaware or a statement that the Corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative participating, optional or other special rights of each class of stock
or series thereof, and the qualifications, limitations or restrictions of such
preferences and/or rights.

7.2 Signatures on Certificates. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.

7.3 Transfer of Stock. Upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate of shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, to cancel the old certificate and record the transaction upon its
books. Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares, such uncertificated shares shall be canceled, and
issuance of new equivalent uncertificated shares or certificated shares shall be
made to the person entitled thereto, and the transaction shall be recorded upon
the books of the Corporation.

7.4 Registered Stockholders. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a percent registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

7.5 Lost, Stolen or Destroyed Certificates. The Board may direct that a new
certificate or certificates be issued to replace any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing the
issue of a new certificate or certificates, the Board may, in its discretion and
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condition precedent to the issuance thereof, require the owner of the lost,
stolen or destroyed certificate or certificates, or his or her legal
representative, to advertise the same in such manner as it shall require, and/or
to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

ARTICLE VIII

NOTICES

8.1 Notice. Whenever, under the provisions of the statutes or of the Restated
Certificate of Incorporation or of these By-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his or her address as it appears on the records of
the Corporation, with postage thereon prepaid, and such notice shall be deemed
to be given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram, telephone or electronic
transmission.

8.2 Waiver. Whenever any notice is required to be given under the provisions of
the statutes or of the Restated Certificate of Incorporation or of these
By-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

ARTICLE IX

GENERAL PROVISIONS

9.1 Dividends. Dividends upon the capital stock of the Corporation, subject to
any restrictions contained in the General Corporation Laws of Delaware or the
provisions of the Restated Certificate of Incorporation, if any, may be declared
by the Board at any regular or special meeting. Dividends may be paid in cash,
in property or in shares of the capital stock, subject to the provisions of the
Restated Certificate of Incorporation.

9.2 Dividend Reserve. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends, such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

9.3 Checks. All checks or demands for money and notes of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board may from time to time designate.

 

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9.4 Corporate Seal. The Board may provide a suitable seal, containing the name
of the Corporation, which seal shall be in charge of the Secretary. If and when
so directed by the Board or a committee thereof, duplicates of the seal may be
kept and used by the Treasurer or by an Assistant Secretary or Assistant
Treasurer.

9.5 Execution of Corporate Contracts and Instruments. The Board, except as
otherwise provided in these By-laws, may authorize any officer or officers, or
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Corporation; such authority may be general or
confined to specific instances. Unless so authorized or ratified by the Board or
within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the Corporation by any contract or engagement, or
to pledge its credit or to render it liable for any purpose or for any amount.

9.6 Books and Records. The Corporation shall keep at its principal executive
office or, if its principal executive office is not in the State of California,
at its principal business office in California the original or a copy of these
By-laws as amended to date, which By-laws shall be open to inspection by the
stockholders at all reasonable times during office hours. If the principal
executive office of the Corporation is outside the State of California and the
Corporation has no principal business office in such state, then the secretary
shall, upon the written request of any stockholder, furnish to that stockholder
a copy of these By-laws as amended to date.

ARTICLE X

AMENDMENTS

In addition to the right of the stockholders of the Corporation to make, alter,
amend, change, add to or repeal the By-laws of the Corporation, the Board is
expressly authorized to adopt, amend or repeal the By-laws of the Corporation by
vote of at least a majority of the members of the Board; provided, however, that
prior to the termination of the Affiliation Agreement, so long as [Terra],
together with the Terra Controlled Corporations (as defined in the Affiliation
Agreement) collectively owns (or is deemed pursuant to Section 3.1(f) of the
Affiliation Agreement to own) at least thirty percent (30%) of the Total Current
Voting Power (as defined in the Affiliation Agreement) of the Corporation, the
By-laws may not be amended without first having obtained Disinterested Board
Approval (as defined in the Affiliation Agreement); provided, further, that
prior to the termination of the Affiliation Agreement and during the Terra
Stockholder Approval Period (as defined in the Affiliation Agreement), the
By-laws may not be amended without first having obtained Terra Stockholder
Approval (as defined in the Affiliation Agreement).

 

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SCHEDULE C

CORPORATE OPPORTUNITIES

NOW, THEREFORE, BE IT RESOLVED, except as may be otherwise provided in a written
agreement between the Company and Total, Purchaser or any Terra Controlled
Corporation, upon the effectiveness of the Affiliation Agreement and the
election or appointment of Terra Directors (as such term is defined in the
Affiliation Agreement) to the Board (i) the Company hereby renounces any
interest or expectancy of the Company in, or in being offered an opportunity to
participate in, and shall not be deemed to have an interest or expectancy in any
business opportunity, transaction, or other matter in which Total, Purchaser any
Terra Controlled Corporation, or any of their respective officers, directors,
employees or agents engages or seeks to engage and (ii) neither Total, Purchaser
nor any Terra Controlled Corporation nor any officer, director, employee or
agent thereof shall be deemed to have acted in bad faith or in a manner
inconsistent with the best interests of the Company or its stockholders or to
have acted in a manner inconsistent with or opposed to any fiduciary duty to the
Company or its stockholders by reason of Total, Purchaser or any Terra
Controlled Subsidiary, or any officer, director, employee or agent thereof
exercising its right to engage in any business opportunity, transaction or other
matter, or to pursue (or fail to offer or communicate to the Company) any
business opportunity, transaction or other matter, in either case of the
foregoing (i) or (ii), except for business opportunities, transactions or other
matters that are specifically offered to one or more Terra Directors solely in
his, her or their capacity as directors of the Company.

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SCHEDULE D

DELAWARE GENERAL CORPORATION LAW 203 WAIVER

NOW, THEREFORE, BE IT RESOLVED, that the Board has determined and intends that
the transactions contemplated by the Tender Offer Agreement and the other
Transaction Documents, including the acquisition of Class A Common Stock and
Class B Common Stock by Purchaser pursuant to the Tender Offer Agreement, and
the transactions contemplated by the Affiliation Agreement, including the
acquisition of Class A Common Stock, Class B Common Stock or any Voting
Securities (as such term is defined in the Affiliation Agreement) or Convertible
Securities (as such term is defined in the Affiliation Agreement) by, Total,
Purchaser or any Terra Controlled Corporation (as such term is defined in the
Affiliation Agreement) or any Transferee (as such term is defined in the
Affiliation Agreement), is hereby authorized and approved by the Board, and that
this authorization and approval is intended to satisfy the requirements of
Section 203(a)(1) of the Delaware General Corporation Law (the “DGCL”) and, as a
result, renders the provisions of Section 203 of the DGCL inapplicable to any of
the transactions contemplated by the Tender Offer Agreement, the Affiliation
Agreement and any other Transaction Document, including any subsequent transfer
of shares of Class A Common Stock, Class B Common Stock or any Voting Securities
to any Transferee in accordance with the terms and conditions of the Affiliation
Agreement.

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SCHEDULE E1

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

Amendment No. 2, dated as of             , 2011 (this “Amendment”), to the
Rights Agreement, dated as of August 12, 2008, as amended on April             ,
2011 (the “Rights Agreement”), by and between SunPower Corporation (the
“Company”) and Computershare Trust Company, N.A., as rights agent (the “Rights
Agent”). Capitalized terms used without other definition in this Amendment are
used as defined in the Rights Agreement.

RECITALS

WHEREAS, the Company and Total Gas & Power USA, SAS, a société par actions
simplifiée organized under the laws of the Republic of France, have entered into
a Tender Offer Agreement, dated as of April 28, 2011 (as it may be amended or
supplemented from time to time, the “Tender Offer Agreement”), and an
Affiliation Agreement, dated as of April 28, 2011 (as it may be amended or
supplemented from time to time, the “Affiliation Agreement”);

WHEREAS, the Board of Directors of the Company has determined that it is in the
best interests of the Company and its stockholders to amend the Rights Agreement
as set forth in this Amendment;

WHEREAS, no Distribution Date has occurred and no Person is an Acquiring Person;

WHEREAS, pursuant to Section 27 of the Rights Agreement, prior to the time at
which the Rights cease to be redeemable pursuant to Section 23 of the Rights
Agreement, and subject to the penultimate sentence of Section 27 of the Rights
Agreement, the Company may in its sole and absolute discretion, and the Rights
Agent will if the Company so directs, supplement or amend any provision of the
Rights Agreement in any respect without the approval of any holders of Rights or
Common Shares; and

WHEREAS, pursuant to the terms of the Rights Agreement and in accordance with
Section 27 thereof, the Company has directed that the Rights Agreement be
amended as set forth in this Amendment, and hereby directs the Rights Agent to
execute this Amendment.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual agreements set
forth in the Rights Agreement and in this Amendment, the parties hereto hereby
amend the Rights Agreement as follows:

1. Section 1(a) of the Rights Agreement is hereby amended and restated in its
entirety as follows:

“(a) “Acquiring Person” means any Person (other than the Company, any Related
Person or any Restricted Person) who or which, together with all Affiliates and
Associates of such Person, is or becomes the Beneficial Owner of (i) during the
Terra Stockholder Approval Period (as defined in the Affiliation Agreement), 10%
or more of the Total Current Voting Power of the Company then in effect or
(ii) other than during the Terra Stockholder Approval Period, (A) 20% or more of
the then-outstanding

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Common Shares or (B) 20% or more of the then-outstanding Class B Common Shares;
provided, however, in each case that a Person will not be deemed to have become
an Acquiring Person solely as a result of a reduction in the number of Common
Shares or Class B Common Shares outstanding unless and until such time as
(A) such Person or any Affiliate or Associate of such Person thereafter becomes
the Beneficial Owner of additional Common Shares or Class B Common Shares
representing 1% or more of the then-outstanding Common Shares or Class B Common
Shares, as the case may be, other than as a result of a stock dividend, stock
split or similar transaction effected by the Company in which all holders of
Common Shares or Class B Common Shares, as the case may be, are treated equally,
or (B) any other Person who is the Beneficial Owner of Common Shares or Class B
Common Shares representing 1% or more of the then-outstanding Common Shares or
Class B Common Shares, as the case may be, thereafter becomes an Affiliate or
Associate of such Person. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person” as defined pursuant to the foregoing
provisions of this Section 1(a) has become such inadvertently, and such Person
divests as promptly as practicable or agrees in writing with the Company to
divest, a sufficient number of Common Shares or Class B Common Shares, as the
case may be, so that such Person would no longer be an “Acquiring Person” as
defined pursuant to the foregoing provisions of this Section 1(a), then such
Person shall not be deemed to be an “Acquiring Person” for any purposes of this
Agreement.”

2. Section 1 of the Rights Agreement is hereby amended by adding the following
new Sections 1(nn), 1(oo) and 1(pp) immediately following Section 1(mm):

“(nn) “Affiliation Agreement” means the Affiliation Agreement, dated as of
April     , 2011, as it may be amended or supplemented from time to time, by and
between Terra and the Company.

(oo) “Restricted Person” means, during the Standstill Period (as defined in the
Affiliation Agreement), (i) Terra, any Terra Controlled Corporation (as defined
in the Affiliation Agreement) and any member of the Terra Group (as defined in
the Affiliation Agreement), in each case only for so long as none of Terra, any
Terra Controlled Corporation or any member of the Terra Group has breached any
of its obligations set forth in Section 2.1 or Section 2.3 of the Affiliation
Agreement (subject to any applicable cure period under Section 2.1(a)(y) of the
Affiliation Agreement), or (ii) a Transferee (as defined in the Affiliation
Agreement) who has acquired Common Shares from any member of the Terra Group in
compliance with Sections 2.3(a) and 2.3(b) of the Affiliation Agreement, but
only for so long as (A) such Transferee has not breached any of its obligations
set forth in Section 2.3 of the Affiliation Agreement, (B) such Transferee or
any Affiliate or Associate of such Transferee does not thereafter become the
Beneficial Owner of any Common Shares in excess of the number of Common Shares
Beneficially Owned prior to such acquisition from Terra plus such Common Shares
that are acquired (1) from Terra pursuant to Sections 2.3(a) and 2.3(b) of the
Affiliation Agreement or (2) in any Transferee Tender Offer or Transferee Merger
(each as defined in the Affiliation Agreement), in each case other than as a
result of a stock dividend, stock split or similar transaction effected by the
Company in which all holders of

 

- 2 -

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Common Shares are treated equally, and (C) no other Person who is the Beneficial
Owner of Common Shares thereafter becomes an Affiliate or Associate of such
Transferee.

(pp) “Total Current Voting Power” means the total number of votes which may be
cast in the election of members of the Board of Directors of the Company if all
securities entitled to vote in the election of such directors are present and
voted.”

3. Exhibits C and D to the Rights Agreement are deemed to be amended in a manner
consistent with this Amendment.

4. This Amendment will be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes will be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.

5. The Rights Agreement will not otherwise be supplemented or amended by virtue
of this Amendment, and will remain in full force and effect.

6. This Amendment may be executed in any number of counterparts (including by
fax and .pdf) and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.

7. This Amendment will be effective as of, and immediately prior to, the Offer
Closing (as defined in the Tender Offer Agreement), and all references to the
Rights Agreement will, from and after such time, be deemed to be references to
the Rights Agreement as amended hereby. A signature to this Amendment
transmitted electronically will have the same authority, effect and
enforceability as an original signature.

8. The undersigned officer of the Company, being duly authorized on behalf of
the Company, hereby certifies to the Rights Agent in his or her capacity as an
officer on behalf of the Company that this Amendment is in compliance with the
terms of Section 27 of the Rights Agreement. The Company will notify the Rights
Agent promptly after this Amendment becomes effective to confirm such
effectiveness.

9. By its execution and delivery hereof, the Company directs the Rights Agent to
execute this Amendment.

 

- 3 -

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the effective time stated above.

 

SUNPOWER CORPORATION By:  

 

  Name:   Title: COMPUTERSHARE TRUST COMPANY, N.A. By:  

 

  Name:   Title:

 

[Signature Page to Amendment No. 2 to Rights Agreement]

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SCHEDULE E2

AMENDED AND RESTATED RIGHTS AGREEMENT

DATED AS OF [—], 2011

BY AND BETWEEN

SUNPOWER CORPORATION

AND

COMPUTERSHARE TRUST COMPANY, N.A.,

AS RIGHTS AGENT

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TABLE OF CONTENTS

 

         Page  

1.

 

Certain Definitions

     2   

2.

 

Appointment of Rights Agent

     7   

3.

 

Issue of Right Certificates

     7   

4.

 

Form of Right Certificates

     9   

5.

 

Countersignature and Registration

     9   

6.

 

Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates

     10   

7.

 

Exercise of Rights; Purchase Price; Expiration Date of Rights

     10   

8.

 

Cancellation and Destruction of Right Certificates

     11   

9.

 

Company Covenants Concerning Securities and Rights

     12   

10.

 

Record Date

     13   

11.

 

Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights

     14   

12.

 

Certificate of Adjusted Purchase Price or Number of Securities

     22   

13.

 

Consolidation, Merger or Sale or Transfer of Assets or Earning Power

     22   

14.

 

Fractional Rights and Fractional Securities

     24   

15.

 

Rights of Action

     26   

16.

 

Agreement of Rights Holders

     26   

17.

 

Right Certificate Holder Not Deemed a Stockholder

     27   

18.

 

Concerning the Rights Agent

     27   

19.

 

Merger or Consolidation or Change of Name of Rights Agent

     27   

20.

 

Duties of Rights Agent

     28   

21.

 

Change of Rights Agent

     30   

22.

 

Issuance of New Right Certificates

     31   

23.

 

Redemption

     31   

24.

 

Exchange

     32   

25.

 

Notice of Certain Events

     33   

26.

 

Notices

     34   

27.

 

Supplements and Amendments

     34   

28.

 

Successors; Certain Covenants

     35   

 

-i-

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TABLE OF CONTENTS

(continued)

 

         Page  

29.

 

Benefits of This Agreement

     35   

30.

 

Governing Law

     35   

31.

 

Severability

     35   

32.

 

Descriptive Headings, Etc

     35   

33.

 

Determinations and Actions by the Board

     36   

34.

 

Prior Agreement

     36   

35.

 

Counterparts

     36   

 

-ii-

--------------------------------------------------------------------------------

AMENDED AND RESTATED RIGHTS AGREEMENT

This Amended and Restated Rights Agreement, dated as of [—], 2011 (this
“Agreement”), is made and entered into by and between SunPower Corporation, a
Delaware corporation (the “Company”), and Computershare Trust Company, N.A., as
Rights Agent.

RECITALS

A. The Company and the Rights Agent are parties to a Rights Agreement, dated as
of August 12, 2008, as amended on April 28, 2011 and [—], 2011 (the “Original
Rights Agreement”).

B. On August 12, 2008, the Board of Directors of the Company authorized a Rights
Committee of the Board of Directors of the Company to declare a dividend
distribution of one Class A right (a “Class A Right”) for each share of Class A
common stock, par value $0.001 per share, of the Company (a “Class A Common
Share”) and one Class B right (a “Class B Right,” and together with the Class A
Rights, the “Original Rights”) for each share of Class B common stock, par value
$0.001 per share, of the Company (a “Class B Common Share”) outstanding as of
the Close of Business (as hereinafter defined) on September 29, 2008 (the
“Record Date”), each Original Right initially representing the right to purchase
one one-hundredth of a Preferred Share (as hereinafter defined), on the terms
and subject to the conditions herein set forth, and further authorized and
directed the issuance of one Class A Right (subject to adjustment as provided
herein) with respect to each Class A Common Share and one Class B Right with
respect to each Class B Common Share issued or delivered by the Company (whether
originally issued or delivered from the Company’s treasury) after the Record
Date but prior to the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined) or as provided in Section 22.

C. On [—], 2011, the stockholders of the Company approved a[n] [Amended and]
Restated Certificate of Incorporation of the Company (the “Restated Certificate
of Incorporation”), that, among other things, reclassified each outstanding
Class A Common Share and each outstanding Class B Common Share on a
share-for-share basis into a single class of Common Shares (as hereinafter
defined) (such reclassification, the “Reclassification”).

D. In connection with the Reclassification, the Board of Directors of the
Company determined that it is necessary, desirable and in the best interests of
the stockholders of the Company to amend and restate the Original Rights
Agreement as set forth herein and in connection therewith to amend and restate
the Original Rights.

E. As of the date of this Agreement, no Distribution Date has occurred and no
Person is an Acquiring Person.

F. Pursuant to Section 27 of the Original Agreement, prior to the time at which
the Rights cease to be redeemable pursuant to Section 23 of the Original
Agreement, and subject to the penultimate sentence of Section 27 of the Original
Agreement, the Company may in its sole

--------------------------------------------------------------------------------

and absolute discretion, and the Rights Agent will if the Company so directs,
supplement or amend any provision of the Original Agreement in any respect
without the approval of any holders of Rights or Common Shares.

G. Pursuant to the terms of the Original Agreement and in accordance with
Section 27 thereof, the Company has directed that the Original Agreement be
amended as set forth in this Agreement, and hereby directs the Rights Agent to
execute this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto hereby agree as follows:

1. Certain Definitions. For purposes of this Agreement, the following terms have
the meanings indicated:

(a) “Acquiring Person” means any Person (other than the Company, any Related
Person or any Restricted Person) who or which, together with all Affiliates and
Associates of such Person, is or becomes the Beneficial Owner of (i) during the
Terra Stockholder Approval Period (as defined in the Affiliation Agreement), 10%
or more of the Total Current Voting Power of the Company then in effect or
(ii) other than during the Terra Stockholder Approval Period, 20% or more of the
then-outstanding Common Shares; provided, however, in each case that a Person
will not be deemed to have become an Acquiring Person solely as a result of a
reduction in the number of Common Shares outstanding unless and until such time
as (A) such Person or any Affiliate or Associate of such Person thereafter
becomes the Beneficial Owner of additional Common Shares representing 1% or more
of the then-outstanding Common Shares, other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Shares are treated equally, or (B) any other Person who is
the Beneficial Owner of Common Shares representing 1% or more of the
then-outstanding Common Shares thereafter becomes an Affiliate or Associate of
such Person. Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
“Acquiring Person” as defined pursuant to the foregoing provisions of this
Section 1(a) has become such inadvertently, and such Person has divested,
divests as promptly as practicable or agrees in writing with the Company to
divest, a sufficient number of Common Shares so that such Person is not or would
no longer be an “Acquiring Person” as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be deemed to be an
“Acquiring Person” for any purposes of this Agreement.

(b) “Affiliate” and “Associate” will have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement, provided, however, that a
Person will not be deemed to be the Affiliate or Associate of another Person
solely because either or both Persons are or were Directors of the Company.

 

2

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(c) “Affiliation Agreement” means the Affiliation Agreement, dated as of
April 28, 2011, as it may be amended or supplemented from time to time, by and
between Terra and the Company.

(d) “Agreement” has the meaning set forth in the Preamble to this Agreement.

(e) A Person will be deemed the “Beneficial Owner” of, and to “Beneficially
Own,” any securities:

(i) which such Person or any of such Person’s Affiliates or Associates is deemed
to beneficially own, directly or indirectly, within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement;

(ii) the beneficial ownership of which such Person or any of such Person’s
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights, warrants,
options or other rights (in each case, other than upon exercise or exchange of
the Rights); provided, however, that a Person will not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or

(iii) which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has or shares the right to vote or dispose of, including
pursuant to any agreement, arrangement or understanding (whether or not in
writing); or

(iv) of which any other Person is the Beneficial Owner, if such Person or any of
such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) with such other Person (or any of such
other Person’s Affiliates or Associates) with respect to acquiring, holding,
voting or disposing of any securities of the Company; provided, however, that a
Person will not be deemed the Beneficial Owner of, or to Beneficially Own, any
security (A) if such Person has the right to vote such security pursuant to an
agreement, arrangement or understanding (whether or not in writing) which
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial ownership arises
solely as a result of such Person’s status as a “clearing agency,” as defined in
Section 3(a)(23) of the Exchange Act; provided further, however, that nothing in
this Section 1(c) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person’s participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the

 

3

--------------------------------------------------------------------------------

date of such acquisition, or such later date as the Directors of the Company may
determine in any specific case.

(f) “Business Day” means any day other than a Saturday, Sunday or a day on which
banking institutions in the Commonwealth of Massachusetts are authorized or
obligated by law or executive order to close.

(g) “Class A Common Share” has the meaning set forth in the Recitals to this
Agreement.

(h) “Class A Right” has the meaning set forth in the Recitals to this Agreement.

(i) “Class B Common Share” has the meaning set forth in the Recitals to this
Agreement.

(j) “Class B Right” has the meaning set forth in the Recitals to this Agreement.

(k) “Close of Business” on any given date means 5:00 p.m., New York City time,
on such date; provided, however, that if such date is not a Business Day, it
means 5:00 p.m., New York City time, on the next succeeding Business Day.

(l) “Common Shares” when used with reference to the Company means the shares of
[common stock, par value $0.001 per share], of the Company; provided, however,
that if the Company is the continuing or surviving corporation in a transaction
described in Section 13(a)(ii), “Common Shares” when used with reference to the
Company means shares of the capital stock or units of the equity interests with
the greatest aggregate voting power of the Company. “Common Shares” when used
with reference to any corporation or other legal entity other than the Company,
including an Issuer, means shares of the capital stock or units of the equity
interests with the greatest aggregate voting power of such corporation or other
legal entity.

(m) “Company” has the meaning set forth in the Preamble to this Agreement.

(n) “current market price” has the meaning set forth in Section 11(d)(ii).

(o) “Distribution Date” means the earlier of: (i) the Close of Business on the
tenth calendar day following the Share Acquisition Date (or, if the tenth
calendar day after the Share Acquisition Date occurs before the Record Date, the
Close of Business on the Record Date), or (ii) the Close of Business on the
tenth Business Day (or, unless the Distribution Date shall have previously
occurred, such later date as may be specified by the Board of Directors of the
Company) after the commencement of a tender or exchange offer by any Person
(other than the Company or any Related Person), if upon the consummation thereof
such Person would be or become an Acquiring Person.

(p) “equivalent common shares” has the meaning set forth in Section 11(a)(iii).

(q) “equivalent preferred shares” has the meaning set forth in
Section 11(a)(iii).

 

4

--------------------------------------------------------------------------------

(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(s) “Exchange Ratio” has the meaning set forth in Section 24(a).

(t) “Exercise Value” has the meaning set forth in Section 11(a)(iii).

(u) “Expiration Date” means the earliest of (i) the Close of Business on the
tenth anniversary of the Record Date, (ii) the time at which the Rights are
redeemed as provided in Section 23, and (iii) the time at which all exercisable
Rights are exchanged as provided in Section 24.

(v) “Flip-in Event” means any event described in clauses (A), (B) or (C) of
Section 11(a)(ii).

(w) “Flip-over Event” means any event described in clauses (i), (ii) or (iii) of
Section 13(a).

(x) “Issuer” has the meaning set forth in Section 13(b).

(y) “Nasdaq” means The Nasdaq Stock Market.

(z) “Original Rights” has the meaning set forth in the Recitals to this
Agreement.

(aa) “Original Rights Agreement” has the meaning set forth in the Recitals to
this Agreement.

(bb) “Person” means any individual, firm, corporation, limited liability company
or other legal entity, and includes any successor (by merger or otherwise) of
such entity.

(cc) “Preferred Shares” means shares of Series A Junior Participating Preferred
Stock, par value $0.001 per share, of the Company having substantially the
rights and preferences set forth in the Certificate of Designation of Series A
Junior Participating Preferred Stock, as amended, attached as Exhibit A.

(dd) “Purchase Price” means initially $450.00 per one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement.

(ee) “Reclassification” has the meaning set forth in the Recitals to this
Agreement.

(ff) “Record Date” has the meaning set forth in the Recitals to this Agreement.

(gg) “Redemption Price” means $0.001 per Right, subject to adjustment by
resolution of the Board of Directors of the Company to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date.

(hh) “Related Person” means (i) any Subsidiary of the Company or (ii) any
employee benefit or stock ownership plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan.

 

5

--------------------------------------------------------------------------------

(ii) “Restated Certificate of Incorporation” has the meaning set forth in the
Recitals to this Agreement.

(jj) “Restricted Person” means, during the Standstill Period (as defined in the
Affiliation Agreement), (i) Terra, any Terra Controlled Corporation (as defined
in the Affiliation Agreement) and any member of the Terra Group (as defined in
the Affiliation Agreement), in each case only for so long as none of Terra, any
Terra Controlled Corporation or any member of the Terra Group has breached any
of its obligations set forth in Section 2.1 or Section 2.3 of the Affiliation
Agreement (subject to any applicable cure period under Section 2.1(a)(y) of the
Affiliation Agreement), or (ii) a Transferee (as defined in the Affiliation
Agreement) who has acquired Common Shares from any member of the Terra Group in
compliance with Sections 2.3(a) and 2.3(b) of the Affiliation Agreement, but
only for so long as (A) such Transferee has not breached any of its obligations
set forth in Section 2.3 of the Affiliation Agreement, (B) such Transferee or
any Affiliate or Associate of such Transferee does not thereafter become the
Beneficial Owner of any Common Shares in excess of the number of Common Shares
Beneficially Owned prior to such acquisition from Terra plus such Common Shares
that are acquired (1) from Terra pursuant to Sections 2.3(a) and 2.3(b) of the
Affiliation Agreement or (2) in any Transferee Tender Offer or Transferee Merger
(each as defined in the Affiliation Agreement), in each case other than as a
result of a stock dividend, stock split or similar transaction effected by the
Company in which all holders of Common Shares are treated equally, and (C) no
other Person who is the Beneficial Owner of Common Shares thereafter becomes an
Affiliate or Associate of such Transferee.

(kk) “Right” means the Original Rights as amended and restated by this
Agreement.

(ll) “Right Certificates” means the certificates evidencing the Rights, in
substantially the form attached as Exhibit B.

(mm) “Rights Agent” means Computershare Trust Company, N.A., unless and until a
successor Rights Agent has become such pursuant to the terms of this Agreement,
and thereafter, “Rights Agent” means such successor Rights Agent.

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

(oo) “Share Acquisition Date” means the first date of public announcement by the
Company (by press release, filing made with the Securities and Exchange
Commission or otherwise) that an Acquiring Person has become such.

(pp) “Subsidiary” when used with reference to any Person means any corporation
or other legal entity of which a majority of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person; provided, however, that for purposes of Section 13(b), “Subsidiary” when
used with reference to any Person means any corporation or other legal entity of
which at least 20% of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person.

(qq) “Terra” means Total Gas & Power USA, SAS, a société par actions simplifiée
organized under the laws of the Republic of France.

 

6

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(rr) “Total Current Voting Power” means the total number of votes which may be
cast in the election of members of the Board of Directors of the Company if all
securities entitled to vote in the election of such directors are present and
voted.

(ss) “Trading Day” means any day on which the principal national securities
exchange or quotation system on which the Common Shares are listed or admitted
to trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange or
quotation system, a Business Day.

(tt) “Triggering Event” means any Flip-in Event or Flip-over Event.

(uu) “Trust” has the meaning set forth in Section 24(a).

(vv) “Trust Agreement” has the meaning set forth in Section 24(a).

2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company in accordance with the terms and conditions of this
Agreement, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the applicable requirements governing transfer
agents and registrars. The Company may from time to time act as Co-Rights Agent
or appoint such Co-Rights Agents as it may deem necessary or desirable upon 10
days’ prior notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such
Co-Rights Agent. Any actions which may be taken by the Rights Agent pursuant to
the terms of this Agreement may be taken by any such Co-Rights Agent. To the
extent that any Co-Rights Agent takes any action pursuant to this Agreement,
such Co-Rights Agent will be entitled to all of the rights and protections of,
and subject to all of the applicable duties and obligations imposed upon, the
Rights Agent pursuant to the terms of this Agreement.

3. Issue of Right Certificates. (a) Until the Distribution Date, (i) the Rights
will be evidenced by the certificates representing Common Shares registered in
the names of the record holders thereof, which certificates representing Common
Shares will also be deemed to be Right Certificates (or, if the Common Shares
are uncertificated, by the registration of the associated Common Shares on the
stock transfer books of the Company), (ii) the Rights will be transferable only
in connection with the transfer of the underlying Common Shares, and (iii) the
transfer of any Common Shares in respect of which Rights have been issued will
also constitute the transfer of the Rights associated with such Common Shares.
Commencing as promptly as practicable after the Record Date, the Company will
make available a copy of a Summary of Rights to Purchase Preferred Stock in
substantially the form attached as Exhibit C to any holder of Rights who may
request it from time to time prior to the Expiration Date.

(b) Rights will be issued by the Company in respect of all Common Shares (other
than Common Shares issued upon the exercise or exchange of any Right) issued or
delivered by the Company (whether originally issued or delivered from the
Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates evidencing such Common
Shares will have stamped on, impressed on, printed on, written on, or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is not inconsistent with the provisions of this
Agreement, or as may be

 

7

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required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
quotation system on which the Common Shares may from time to time be listed or
quoted, or to conform to usage:

This Certificate also evidences and entitles the holder hereof to certain Rights
as set forth in an Amended and Restated Rights Agreement between SunPower
Corporation and Computershare Trust Company, N.A., dated as of [—], 2011 (as it
may be amended or supplemented from time to time, the “Rights Agreement”), the
terms of which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of SunPower Corporation. The
Rights are not exercisable prior to the occurrence of certain events specified
in the Rights Agreement. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may be exchanged, may expire, may be
amended, or may be evidenced by separate certificates and no longer be evidenced
by this Certificate. SunPower Corporation will mail to the holder of this
Certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor. Under
certain circumstances as set forth in the Rights Agreement, Rights that are or
were beneficially owned by an Acquiring Person or any Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement) may
become null and void.

(c) Any Right Certificate issued pursuant to this Section 3 that represents
Rights beneficially owned by an Acquiring Person or any Associate or Affiliate
thereof and any Right Certificate issued at any time upon the transfer of any
Rights to an Acquiring Person or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage:

The Rights represented by this Right Certificate are or were beneficially owned
by a Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null and void in the
circumstances specified in Section 11(a)(ii) or Section 13 of the Rights
Agreement.

(d) As promptly as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company will send
or cause to be sent (and the Rights Agent will, if requested, send), by first
class, insured, postage prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate evidencing

 

8

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one Right for each Common Share so held, subject to adjustment as provided
herein. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.

(e) In the event that the Company purchases or otherwise acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares will be deemed canceled and retired so that
the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.

4. Form of Right Certificates. The Right Certificates (and the form of election
to purchase and the form of assignment to be printed on the reverse thereof)
will be substantially in the form attached as Exhibit B with such changes and
marks of identification or designation, and such legends, summaries or
endorsements printed thereon, as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or quotation system
on which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the provisions of Section 22, the Right Certificates, whenever
issued, on their face will entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share as are set forth therein at the
Purchase Price set forth therein, but the Purchase Price, the number and kind of
securities issuable upon exercise of each Right and the number of Rights
outstanding will be subject to adjustment as provided herein.

5. Countersignature and Registration. (a) The Right Certificates will be
executed on behalf of the Company by its Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and will have
affixed thereto the Company’s seal or a facsimile thereof which will be attested
by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates will be countersigned by the Rights
Agent, either manually or by facsimile signature, and will not be valid for any
purpose unless so countersigned. In case any officer of the Company who signed
any of the Right Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, is a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such person was not
such officer.

(b) Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at the principal office of the Rights Agent designated for such purpose
and at such other offices as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or any quotation system on which the Rights may
from time to time be listed or quoted, books for registration and transfer of
the Right Certificates issued hereunder. Such books will show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.

 

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6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the
provisions of Sections 7(d) and 14, at any time after the Close of Business on
the Distribution Date and prior to the Expiration Date, any Right Certificate or
Right Certificates representing exercisable Rights may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
or Right Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14, the
Company will prepare, execute and deliver to the Rights Agent, and the Rights
Agent will countersign and deliver, a Right Certificate or Right Certificates,
as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, if requested by the Company, reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will prepare, execute and deliver a new
Right Certificate of like tenor to the Rights Agent and the Rights Agent will
countersign and deliver such new Right Certificate to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date and prior to the Expiration Date, upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment in cash, in
lawful money of the United States of America by certified check or bank draft
payable to the order of the Company, equal to the sum of (i) the exercise price
for the total number of securities as to which such surrendered Rights are
exercised and (ii) an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with the provisions
of Section 9(d).

(b) Upon receipt of a Right Certificate representing exercisable Rights with the
form of election to purchase duly executed, accompanied by payment as described
above, the Rights Agent will promptly (i) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is the transfer
agent) certificates representing the number of one one-hundredths of a Preferred
Share to be purchased or, in the case of uncertificated shares or other
securities, requisition from any transfer agent therefor a notice setting forth
such number of

 

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shares or other securities to be purchased for which registration will be made
on the stock transfer books of the Company (and the Company hereby irrevocably
authorizes and directs its transfer agent to comply with all such requests), or,
if the Company elects to deposit Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (and the Company hereby irrevocably
authorizes and directs such depositary agent to comply with all such requests),
(ii) after receipt of such certificates (or notices or depositary receipts, as
the case may be), cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, (iii) when appropriate, requisition from the
Company or any transfer agent therefor (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of equivalent common
shares (or, in the case of uncertificated shares, a notice of the number of
equivalent common shares for which registration will be made on the stock
transfer books of the Company) to be issued in lieu of the issuance of Common
Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates or notices, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, (v) when appropriate, requisition from the Company the amount of cash to
be paid in lieu of the issuance of fractional shares in accordance with the
provisions of Section 14 or in lieu of the issuance of Common Shares in
accordance with the provisions of Section 11(a)(iii), (vi) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Right Certificate, and (vii) when appropriate, deliver any due bill or
other instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Right Certificate as provided by Section 11(l).

(c) In case the registered holder of any Right Certificate exercises less than
all the Rights evidenced thereby, the Company will prepare, execute and deliver
a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised and the Rights Agent will countersign and deliver such new Right
Certificate to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14.

(d) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate as
set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Right Certificate surrendered for such transfer, split up,
combination, exchange or exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company may reasonably request.

8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange will, if surrendered to the Company or to any of its stock transfer
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, will be canceled by it, and no Right
Certificates will be issued in lieu thereof except as expressly permitted by the
provisions of this Agreement. The Company will deliver to the Rights Agent for

 

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cancellation and retirement, and the Rights Agent will so cancel and retire, any
other Right Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent will deliver all canceled Right
Certificates to the Company, or will, at the written request of the Company,
destroy such canceled Right Certificates, and in such case will deliver a
certificate of destruction thereof to the Company.

9. Company Covenants Concerning Securities and Rights. The Company covenants and
agrees that:

(a) It will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its treasury, a number
of Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights in accordance with Section 7.

(b) So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange or quoted
on a quotation system, it will endeavor to cause, from and after such time as
the Rights become exercisable, all securities reserved for issuance upon the
exercise of Rights to be listed on such exchange or quoted on such system, upon
official notice of issuance upon such exercise.

(c) It will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered (or evidenced by registration on the
stock transfer books of the Company) upon exercise of Rights, at the time of
delivery of the certificates for (or registration of) such securities, will be
(subject to payment of the Purchase Price) duly authorized, validly issued,
fully paid and nonassessable securities.

(d) It will pay when due and payable any and all federal and state transfer
taxes and charges that may be payable in respect of the issuance or delivery of
the Right Certificates and of any certificates representing securities issued
upon the exercise of Rights (or, if such securities are uncertificated, the
registration of such securities on the stock transfer books of the Company);
provided, however, that the Company will not be required to pay any transfer tax
or charge which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts representing (or the registration of) securities issued
upon the exercise of Rights in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise, or to issue
or deliver any certificates, depositary receipts or notices representing
securities issued upon the exercise of any Rights until any such tax or charge
has been paid (any such tax or charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company’s reasonable satisfaction that no such tax is due.

(e) It will use its best efforts (i) to file on appropriate forms, as soon as
practicable following the later of the Share Acquisition Date and the
Distribution Date, registration statements under the Securities Act with respect
to the securities issuable upon exercise of the Rights, (ii) to cause such
registration statements to become effective as soon as practicable after such
filing, and (iii) to cause such registration statements to remain effective
(with prospectuses

 

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at all times meeting the requirements of the Securities Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities and (B) the Expiration Date. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the applicable state
securities or “blue sky” laws in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time after the date
set forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such registration
statements and to permit them to become effective. Upon any such suspension, the
Company will issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company
determines that registration statements should be filed under the Securities Act
or any state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as registration statements have been declared
effective and, upon any such suspension, the Company will issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding anything in this Agreement to the contrary,
the Rights will not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction has not been effected or the
exercise of the Rights is not permitted under applicable law.

(f) Notwithstanding anything in this Agreement to the contrary, after the later
of the Share Acquisition Date and the Distribution Date the Company will not
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.

(g) In the event that the Company is obligated to issue other securities of the
Company and/or pay cash pursuant to Section 11, 13, 14 or 24, it will make all
arrangements necessary so that such other securities and/or cash are available
for distribution by the Rights Agent, if and when appropriate.

10. Record Date. Each Person in whose name any certificate representing
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued (or in which such securities are registered upon the stock transfer
books of the Company) upon the exercise of Rights will for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate (or registration) will be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price and all applicable transfer taxes was made; provided, however,
that if the date of such surrender and payment is a date upon which the transfer
books of the Company for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) are closed, such Person will be deemed to have
become the record holder of such securities on, and such certificate (or
registration) will be dated, the next succeeding Business Day on which the
transfer books of the Company for the Preferred Shares (or Common Shares and/or
other securities, as the case may be) are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate will not be entitled
to any rights of a holder of any security for which the Rights are or may become
exercisable, including, without limitation, the right to vote, to receive
dividends

 

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or other distributions, or to exercise any preemptive rights, and will not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.

11. Adjustment of Purchase Price, Number and Kind of Securities or Number of
Rights. The Purchase Price, the number and kind of securities issuable upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

(a)(i) In the event that the Company at any time after the Record Date
(A)declares a dividend on the Preferred Shares payable in Preferred Shares,
(B)subdivides the outstanding Preferred Shares, (C)combines the outstanding
Preferred Shares into a smaller number of Preferred Shares, or (D)issues any
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification and/or the number and/or kind of
shares of capital stock issuable on such date upon exercise of a Right, will be
proportionately adjusted so that the holder of any Right exercised after such
time is entitled to receive upon payment of the Purchase Price then in effect
the aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the holder of
such Right would have owned upon such exercise (and, in the case of a
reclassification, would have retained after giving effect to such
reclassification) and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the
adjustment provided for in this Section 11(a)(i) will be in addition to, and
will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or
Section 13.

(ii) Subject to the provisions of Section 24, if:

(A) any Person becomes an Acquiring Person; or

(B) any Acquiring Person or any Affiliate or Associate of any Acquiring Person,
directly or indirectly, (1) merges into the Company or otherwise combines with
the Company and the Company is the continuing or surviving corporation of such
merger or combination (other than in a transaction subject to Section 13),
(2) merges or otherwise combines with any Subsidiary of the Company, (3) in one
or more transactions (otherwise than in connection with the exercise, exchange
or conversion of securities exercisable or exchangeable for or convertible into
shares of any class of capital stock of the Company or any of its Subsidiaries)
transfers cash, securities or any other property to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities
exercisable or exchangeable for or convertible into shares of any class of
capital

 

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stock of the Company or any of its Subsidiaries, or otherwise obtains from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its
Subsidiaries or securities exercisable or exchangeable for or convertible into
shares of any class of capital stock of the Company or any of its Subsidiaries
(otherwise than as part of a pro rata distribution to all holders of shares of
any class of capital stock of the Company, or any of its Subsidiaries),
(4) sells, purchases, leases, exchanges, mortgages, pledges, transfers or
otherwise disposes (in one or more transactions) to, from, with or of, as the
case may be, the Company or any of its Subsidiaries (otherwise than in a
transaction subject to Section 13), any property, including securities, on terms
and conditions less favorable to the Company than the Company would be able to
obtain in an arm’s-length transaction with an unaffiliated third party,
(5) receives any compensation from the Company or any of its Subsidiaries other
than compensation as a director or a regular full-time employee, in either case
at rates consistent with the Company’s (or its Subsidiaries’) past practices, or
(6) receives the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by the Company or
any of its Subsidiaries; or

(C) during such time as there is an Acquiring Person, there is any
reclassification of securities of the Company (including any reverse stock
split), or any recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries, or any other transaction or series
of transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person), other than a
transaction subject to Section 13, which has the effect, directly or indirectly,
of increasing by more than 1% the proportionate share of the outstanding shares
of any class of equity securities of the Company or any of its Subsidiaries, or
of securities exercisable or exchangeable for or convertible into equity
securities of the Company or any of its Subsidiaries, of which an Acquiring
Person, or any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner;

then, and in each such case, from and after the latest of the Distribution Date,
the Share Acquisition Date and the date of the occurrence of such Flip-in Event,
proper provision will be made so that each holder of a Right, except as provided
below, will thereafter have the right to receive, upon exercise thereof in
accordance with the terms of this Agreement at an exercise price per Right equal
to the product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event (or, if
any other Flip-in Event shall have previously occurred, the product of the
then-current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to the date
of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such
number of Common Shares as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other

 

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Flip-in Event shall have previously occurred, multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the date of the first
occurrence of a Flip-in Event), and dividing that product by (y) 50% of the
current per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of the occurrence of such Flip-in Event.
Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Flip-in Event, any Rights that are Beneficially Owned by
(A) any Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (B) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the occurrence of a Flip-in Event, or
(C) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the occurrence of a
Flip-in Event pursuant to either (1) a transfer from an Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Directors of the Company have determined is
part of a plan, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this Section 11(a)(ii), and subsequent transferees of
any of such Persons, will be void without any further action and any holder of
such Rights will thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement. The Company will use all
reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but will have no liability to any holder of Right Certificates or
any other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. Upon the occurrence of a Flip-in Event, no Right Certificate that
represents Rights that are or have become void pursuant to the provisions of
this Section 11(a)(ii) will thereafter be issued pursuant to Section 3 or
Section 6, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this Section 11(a)(ii) will be canceled. Upon the occurrence of a Flip-over
Event, any Rights that shall not have been previously exercised pursuant to this
Section 11(a)(ii) shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).

(iii) Upon the occurrence of a Flip-in Event, if there are not sufficient Common
Shares authorized but unissued or issued but not outstanding to permit the
issuance of all the Common Shares issuable in accordance with Section 11(a)(ii)
upon the exercise of a Right, the Board of Directors of the Company will use its
best efforts promptly to authorize and, subject to the provisions of
Section 9(e), make available for issuance additional Common Shares or other
equity securities of the Company having equivalent voting rights and an
equivalent value (as determined in good faith by the Board of Directors of the
Company) to the Common Shares (for purposes of this Section 11(a)(iii),
“equivalent common shares”). In the event that equivalent common shares are so
authorized, upon the exercise of a Right in accordance with the provisions of
Section 7, the registered holder will be entitled to receive (A) Common Shares
to the extent any are available, and (B) a number of equivalent common shares,
which the Board of Directors of the Company has determined in good faith to have
a value equivalent to the excess of (x) the aggregate current per share market
value on the date of the occurrence of the most recent Flip-in Event of all the
Common Shares issuable in accordance with

 

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Section 11(a)(ii) upon the exercise of a Right (the “Exercise Value”) over
(y) the aggregate current per share market value on the date of the occurrence
of the most recent Flip-in Event of any Common Shares available for issuance
upon the exercise of such Right; provided, however, that if at any time after 90
calendar days after the latest of the Share Acquisition Date, the Distribution
Date and the date of the occurrence of the most recent Flip-in Event, there are
not sufficient Common Shares and/or equivalent common shares available for
issuance upon the exercise of a Right, then the Company will be obligated to
deliver, upon the surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available), equivalent common
shares (to the extent available) and then cash (to the extent permitted by
applicable law and any agreements or instruments to which the Company is a party
in effect immediately prior to the Share Acquisition Date), which securities and
cash have an aggregate value equal to the excess of (1) the Exercise Value over
(2) the product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of the most recent Flip-in Event
(or, if any other Flip-in Event shall have previously occurred, the product of
the then-current Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right would have been exercisable immediately
prior to the date of the occurrence of such Flip-in Event if no other Flip-in
Event had previously occurred). To the extent that any legal or contractual
restrictions prevent the Company from paying the full amount of cash payable in
accordance with the foregoing sentence, the Company will pay to holders of the
Rights as to which such payments are being made all amounts which are not then
restricted on a pro rata basis and will continue to make payments on a pro rata
basis as promptly as funds become available until the full amount due to each
such Rights holder has been paid.

(b) In the event that the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), “equivalent preferred shares”)) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which is the number of Preferred Shares outstanding
on such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which is

 

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in a form other than cash, the value of such consideration will be as determined
in good faith by the Board of Directors of the Company, whose determination will
be described in a statement filed with the Rights Agent. Preferred Shares owned
by or held for the account of the Company will not be deemed outstanding for the
purpose of any such computation. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Purchase Price will be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

(c) In the event that the Company fixes a record date for the making of a
distribution to all holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend), assets, stock (other than a dividend
payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the current per share market price of the Preferred Shares
(as determined pursuant to Section 11(d)) on such record date or, if earlier,
the date on which Preferred Shares begin to trade on an ex-dividend or when
issued basis for such distribution, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent) of the portion of the
evidences of indebtedness, cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one Preferred Share, and
the denominator of which is such current per share market price of the Preferred
Shares; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock issuable upon exercise of one Right. Such adjustments
will be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price will again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.

(d)(i) For the purpose of any computation hereunder, the “current per share
market price” of Common Shares on any date will be deemed to be the average of
the daily closing prices per share of such Common Shares for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Shares is determined
during a period following the announcement by the Company of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the Rights) or ( B) any
subdivision, combination or reclassification of such Common Shares, and prior to
the expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price will be appropriately adjusted to take into account ex-dividend trading or
to reflect the current per share market price per Common Share equivalent. The
closing price for each day will be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
quotation system with respect to securities listed or admitted to trading on The
Nasdaq Stock Market or, if the Common Shares are not listed or admitted to
trading on The Nasdaq Stock Market, as reported in the principal

 

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consolidated quotation system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or admitted
to trading or, if the Common Shares are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by such market then in use, or, if on any such date the Common Shares
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company. If the Common
Shares are not publicly held or not so listed or traded, or are not the subject
of available bid and asked quotes, “current per share market price” will mean
the fair value per share as determined in good faith by the Board of Directors
of the Company, whose determination will be described in a statement filed with
the Rights Agent.

(ii) For the purpose of any computation hereunder, the “current per share market
price” of the Preferred Shares will be determined in the same manner as set
forth above for Common Shares in Section 11(d)(i), other than the last sentence
thereof. If the current per share market price of the Preferred Shares cannot be
determined in the manner provided above, the “current per share market price” of
the Preferred Shares will be conclusively deemed to be an amount equal to the
current per share market price of the Common Shares multiplied by one hundred
(as such number may be appropriately adjusted to reflect events such as stock
splits, stock dividends, recapitalizations or similar transactions relating to
the Common Shares occurring after the date of this Agreement). If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or traded,
or the subject of available bid and asked quotes, “current per share market
price” of the Preferred Shares will mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination will
be described in a statement filed with the Rights Agent. For all purposes of
this Agreement, the current per share market price of one one-hundredth of a
Preferred Share will be equal to the current per share market price of one
Preferred Share divided by one hundred.

(e) Except as set forth below, no adjustment in the Purchase Price will be
required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of a Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 will be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment and (ii) the Expiration Date.

(f) If as a result of an adjustment made pursuant to Section 11(a), the holder
of any Right thereafter exercised becomes entitled to receive any securities of
the Company other than Preferred Shares, thereafter the number and/or kind of
such other securities so receivable upon exercise of any Right (and/or the
Purchase Price in respect thereof) will be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares (and the Purchase Price in
respect thereof) contained in this

 

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Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Shares (and the Purchase Price in respect thereof) will apply on
like terms to any such other securities (and the Purchase Price in respect
thereof).

(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder will evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-hundredths of a Preferred Share
issuable from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.

(h) Unless the Company has exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price pursuant to Section 11(b) or
Section 11(c), each Right outstanding immediately prior to the making of such
adjustment will thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a Preferred Share
issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

(i) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the option of the
Company, will cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof if required by the Company, new
Right Certificates evidencing all the Rights to which such holders are entitled
after such adjustment. Right Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and will be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.

(j) Without respect to any adjustment or change in the Purchase Price and/or the
number and/or kind of securities issuable upon the exercise of the Rights, the
Right Certificates

 

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theretofore and thereafter issued may continue to express the Purchase Price and
the number and kind of securities which were expressed in the initial Right
Certificate issued hereunder.

(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares or such other securities, as the case may be, at such adjusted
Purchase Price.

(l) In any case in which this Section 11 otherwise requires that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of Preferred Shares or other securities of the Company, if any, issuable upon
such exercise over and above the number of Preferred Shares or other securities
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
delivers to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional Preferred Shares or other
securities upon the occurrence of the event requiring such adjustment.

(m) Notwithstanding anything in this Agreement to the contrary, the Company will
be entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that in
its good faith judgment the Board of Directors of the Company determines to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of Preferred Shares at less than the
current per share market price therefor, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
stockholders.

(n) Notwithstanding anything in this Agreement to the contrary, in the event
that the Company at any time after the Record Date prior to the Distribution
Date (i) pays a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivides the outstanding Common Shares, (iii) combines the
outstanding Common Shares into a smaller number of shares, or (iv) issues any
shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) will be made successively whenever such a dividend is paid
or such a subdivision, combination or reclassification is effected.

 

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12. Certificate of Adjusted Purchase Price or Number of Securities. Whenever an
adjustment is made as provided in Section 11 or Section 13, the Company will
promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Preferred Shares and the Common
Shares a copy of such certificate, and (c) if such adjustment is made after the
Distribution Date, mail a brief summary of such adjustment to each holder of a
Right Certificate in accordance with Section 26.

13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In
the event that:

(i) at any time after a Person has become an Acquiring Person, the Company
consolidates with, or merges with or into, any other Person and the Company is
not the continuing or surviving corporation of such consolidation or merger; or

(ii) at any time after a Person has become an Acquiring Person, any Person
consolidates with the Company, or merges with or into the Company, and the
Company is the continuing or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Common Shares is changed into or exchanged for stock or other securities
of any other Person or cash or any other property; or

(iii) at any time after a Person has become an Acquiring Person, the Company,
directly or indirectly, sells or otherwise transfers (or one or more of its
Subsidiaries sells or otherwise transfers), in one or more transactions, assets
or earning power (including, without limitation, securities creating any
obligation on the part of the Company and/or any of its Subsidiaries)
representing in the aggregate more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries;

then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is exercisable
immediately prior to the Share Acquisition Date and dividing that product by
(y) 50% of the current per share market price of the Common Shares of the Issuer
(determined pursuant to Section 11(d)), on the date of the occurrence of such
Flip-over Event; (B) the Issuer will thereafter be liable for, and will assume,
by virtue of the occurrence of such Flip-over Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term “Company” will
thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such
steps (including, without limitation, the reservation of a sufficient number of
its

 

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Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof
are thereafter applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.

(b) For purposes of this Section 13, “Issuer” means (i) in the case of any
Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is
the continuing, surviving, resulting or acquiring Person (including the Company
as the continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described
in Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
provided, however, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term “Issuer” means such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term “Issuer” means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having
outstanding equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares of
the Issuer will be deemed to be references to the Common Shares of the
corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision will be
made so that the Issuer creates or otherwise makes available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have been
entitled to receive if the Issuer had been a corporation or other legal entity
having outstanding equity securities; and (II) all other provisions of this
Agreement will apply to the issuer of such securities as if such securities were
Common Shares.

(c) The Company will not consummate any Flip-over Event if, (i) at the time of
or immediately after such Flip-over Event, there are or would be any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the stockholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such

 

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consummation the Company and the Issuer have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
subsections (a) and (b) of this Section 13 and further providing that as
promptly as practicable after the consummation of any Flip-over Event, the
Issuer will:

(A) prepare and file a registration statement under the Securities Act with
respect to the Rights and the securities issuable upon exercise of the Rights on
an appropriate form, and use its best efforts to cause such registration
statement to (1) become effective as soon as practicable after such filing and
(2) remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;

(B) take all such action as may be appropriate under, or to ensure compliance
with, the applicable state securities or “blue sky” laws in connection with the
exercisability of the Rights; and

(C) deliver to holders of the Rights historical financial statements for the
Issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.

(d) The provisions of this Section 13 will similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Flip-over
Event occurs at any time after the occurrence of a Flip-in Event, except for
Rights that have become void pursuant to Section 11(a)(ii), Rights that shall
not have been previously exercised will cease to be exercisable in the manner
provided in Section 11(a)(ii) and will thereafter be exercisable in the manner
provided in Section 13(a).

14. Fractional Rights and Fractional Securities. (a) The Company will not be
required to issue fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights, the Company will
pay as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights otherwise would be
issuable, an amount in cash equal to the same fraction of the current market
value of one Right. For the purposes of this Section 14(a), the current market
value of one Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any day is the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal quotation system with respect to securities listed or admitted to
trading on the Nasdaq Global Select Market or, if the Rights are not listed or
admitted to trading on the Nasdaq Global Select Market, as reported in the
principal quotation system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
such market then in use, or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If the Rights are not publicly held or
are not so listed or traded, or are not the subject of available

 

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bid and asked quotes, the current market value of one Right will mean the fair
value thereof as determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent.

(b) The Company will not be required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares or to register fractional Preferred Shares
on the stock transfer books of the Company (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement provides that the holders of such
depositary receipts have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; provided, however, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one hundred (as such number may be appropriately adjusted to reflect events such
as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
provided further, however, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.

(c) Following the occurrence of a Triggering Event, the Company will not be
required to issue fractions of Common Shares or other securities issuable upon
exercise or exchange of the Rights or to distribute certificates which evidence
any such fractional securities or to register any such fractional securities on
the stock transfer books of the Company. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security. For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; provided, however, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined

 

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in good faith by the Board of Directors of the Company, whose determination will
mean the fair value thereof as will be described in a statement filed with the
Rights Agent.

15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Section 18, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.

16. Agreement of Rights Holders. Every holder of a Right by accepting the same
consents and agrees with the Company and the Rights Agent and with every other
holder of a Right that:

(a) Prior to the Distribution Date, the Rights are transferable only in
connection with the transfer of the Common Shares;

(b) After the Distribution Date, the Right Certificates are transferable only on
the registry books of the Rights Agent if surrendered at the principal office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer, and with the appropriate forms and certificates
fully completed and executed;

(c) The Company and the Rights Agent may deem and treat the person in whose name
the Right Certificate (or, prior to the Distribution Date, the associated Common
Share) is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Share certificate, if any, made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent will be affected by any notice to the
contrary;

(d) Such holder expressly waives any right to receive any fractional Rights and
any fractional securities upon exercise or exchange of a Right, except as
otherwise provided in Section 14.

(e) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent will have any liability to any holder of a Right or
other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any

 

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statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company will use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.

17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of
any Right Certificate will be entitled to vote, receive dividends, or be deemed
for any purpose the holder of Preferred Shares or any other securities of the
Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor will anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of Directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions of this Agreement or
exchanged pursuant to the provisions of Section 24.

18. Concerning the Rights Agent. (a) The Company will pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
will also indemnify the Rights Agent for, and hold it harmless against, any
loss, liability, suit, action, proceeding or expense, incurred without gross
negligence, bad faith, or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly.

(b) The Rights Agent will be protected and will incur no liability for or in
respect of any action taken, suffered, or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate or other notice evidencing Preferred Shares or Common Shares or
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed, and, where necessary, verified or acknowledged, by
the proper Person or Persons.

19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. If at the time such successor Rights Agent
succeeds to the agency created by this Agreement any of

 

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the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and if at that time
any of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.

(b) If at any time the name of the Rights Agent changes and at such time any of
the Right Certificates have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and if at that time any of the Right Certificates
have not been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates will have the full force provided in the Right
Certificates and in this Agreement.

(c) Notwithstanding anything to the contrary contained herein, the Rights Agent
shall not be liable for any delays or failures in performance resulting from
acts beyond its reasonable control including, without limitation, acts of God,
terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power failures or
mechanical difficulties with information storage or retrieval systems, labor
difficulties, war, or civil unrest.

20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, will be bound:

(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Company), and the opinion of such counsel will be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

(b) Whenever in the performance of its duties under this Agreement the Rights
Agent deems it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the President,
any Vice President, the Secretary or the Treasurer of the Company and delivered
to the Rights Agent, and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.

(c) The Rights Agent will be liable hereunder only for its own gross negligence,
bad faith or willful misconduct.

(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its

 

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countersignature thereof) or be required to verify the same, but all such
statements and recitals are and will be deemed to have been made by the Company
only.

(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Right Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Company of any covenant contained
in this Agreement or in any Right Certificate; nor will it be responsible for
any adjustment required under the provisions of Sections 11 or 13 (including any
adjustment which results in Rights becoming void) or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of any
such adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of stock or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of stock or other securities will,
when issued, be duly authorized, validly issued, fully paid and nonassessable.

(f) The Company will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of this
Agreement.

(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any one of the
Chairman of the Board, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.

(h) The Rights Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein will preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.

(i) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent will not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof. The Rights Agent will not be under any duty or
responsibility to ensure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.

 

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(j) If, with respect to any Right Certificate surrendered to the Rights Agent
for exercise, transfer, split up, combination or exchange, either (i) the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, or (ii) any other actual or suspected
irregularity exists, the Rights Agent will not take any further action with
respect to such requested exercise, transfer, split up, combination or exchange
without first consulting with the Company, and will thereafter take further
action with respect thereto only in accordance with the Company’s written
instructions.

21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 calendar
days’ notice in writing mailed to the Company and to each transfer agent of the
Preferred Shares or the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first class mail. In the event the
transfer agency relationship in effect between the Company and the Rights Agent
terminates, the Rights Agent will be deemed to have resigned automatically and
be discharged from its duties under this Agreement as of the effective date of
such termination, and the Company shall be responsible for sending any required
notice. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 calendar days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who will, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, will be a corporation or other legal entity organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of New York), in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus, along with its Affiliates, of at least $50
million. After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent will deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company will file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares or the Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, will not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.

 

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22. Issuance of New Right Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the Company may, at its option,
issue new Right Certificates evidencing Rights in such form as may be approved
by the Board of Directors of the Company to reflect any adjustment or change in
the Purchase Price per share and the number or kind of securities issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Board of Directors of the Company,
issue Right Certificates representing an equivalent number of Rights as would
have been issued in respect of such Common Shares if they had been issued or
sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; provided, however, that (i) no
such Right Certificate will be issued if, and to the extent that, in its good
faith judgment the Board of Directors of the Company determines that the
issuance of such Right Certificate could have a material adverse tax consequence
to the Company or to the Person to whom or which such Right Certificate
otherwise would be issued and (ii) no such Right Certificate will be issued if,
and to the extent that, appropriate adjustment otherwise has been made in lieu
of the issuance thereof.

23. Redemption. (a) Prior to the Expiration Date, the Board of Directors of the
Company may, at its option, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price at any time prior to the Close
of Business on the later of (i) the Distribution Date and (ii) Share Acquisition
Date. Any such redemption will be effective immediately upon the action of the
Board of Directors of the Company ordering the same, unless such action of the
Board of Directors of the Company expressly provides that such redemption will
be effective at a subsequent time or upon the occurrence or nonoccurrence of one
or more specified events (in which case such redemption will be effective in
accordance with the provisions of such action of the Board of Directors of the
Company).

(b) Immediately upon the effectiveness of the redemption of the Rights as
provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to give, or any defect
in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights will state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the Board
of Directors of the Company (based upon the fair market value of such other
consideration, determined by the

 

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Board of Directors of the Company in good faith) or any combination thereof. The
Company may, at its option, combine the payment of the Redemption Price with any
other payment being made concurrently to holders of Common Shares and, to the
extent that any such other payment is discretionary, may reduce the amount
thereof on account of the concurrent payment of the Redemption Price. If legal
or contractual restrictions prevent the Company from paying the Redemption Price
(in the form of consideration deemed appropriate by the Board of Directors of
the Company) at the time of redemption, the Company will pay the Redemption
Price, without interest, promptly after such time as the Company ceases to be so
prevented from paying the Redemption Price.

24. Exchange. (a) The Board of Directors of the Company may, at its option, at
any time after the later of the Share Acquisition Date and the Distribution
Date, exchange all or part of the then-outstanding and exercisable Rights (which
will not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”). Any such exchange will be
effective immediately upon the action of the Board of Directors of the Company
ordering the same, unless such action of the Board of Directors of the Company
expressly provides that such exchange will be effective at a subsequent time or
upon the occurrence or nonoccurrence of one or more specified events (in which
case such exchange will be effective in accordance with the provisions of such
action of the Board of Directors of the Company). Prior to effecting an exchange
pursuant to this Section 24, the Board of Directors of the Company may direct
the Company to enter into a Trust Agreement in such form and with such terms as
the Board of Directors of the Company shall approve (the “Trust Agreement”). If
the Board of Directors of the Company so directs, the Company shall enter into
the Trust Agreement and shall issue to the trust created by such agreement (the
“Trust”) all of the shares of Common Stock issuable pursuant to the exchange,
and all Persons entitled to receive shares pursuant to the exchange shall be
entitled to receive such shares (and any dividends or distributions made thereon
after the date on which such shares are deposited in the Trust) only from the
Trust and solely upon compliance with the relevant terms and provisions of the
Trust Agreement. Notwithstanding the foregoing, the Board of Directors of the
Company will not be empowered to effect such exchange at any time after any
Person (other than the Company or any Related Person), who or which, together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the then-outstanding Common Shares.

(b) Immediately upon the effectiveness of the exchange of any Rights as provided
in Section 24(a), and without any further action and without any notice, the
right to exercise such Rights will terminate and the only right with respect to
such Rights thereafter of the holder of such Rights will be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. Promptly after the effectiveness of the
exchange of any Rights as provided in Section 24(a), the Company will publicly
announce such exchange and, within 10 calendar days thereafter, will give notice
of such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent; provided, however, that
the failure to give, or any defect in, such notice will not affect the validity
of such exchange. Any notice that is mailed in the manner herein provided will
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange

 

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will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange will be effected pro rata based on
the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii)) held by each holder of Rights.

(c) In any exchange pursuant to this Section 24, the Company, at its option, may
substitute for any Common Share exchangeable for a Right (i) equivalent common
shares (as such term is used in Section 11(a)(iii)), (ii) cash, (iii) debt
securities of the Company, (iv) other assets, or (v) any combination of the
foregoing, in any event having an aggregate value, as determined in good faith
by the Board of Directors of the Company (whose determination will be described
in a statement filed with the Rights Agent), equal to the current market value
of one Common Share (determined pursuant to Section 11(d)), on the Trading Day
immediately preceding the date of the effectiveness of the exchange pursuant to
this Section 24.

25. Notice of Certain Events. (a) If, after the Distribution Date, the Company
proposes (i) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (other than a regular periodic cash dividend), (ii) to offer to the
holders of Preferred Shares rights, options or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or reclassification of the Common Shares then,
in each such case, the Company will give to each holder of a Right Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies the record date for the purposes of such stock
dividend, distribution or offering of rights, options or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice will be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10 calendar
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and, in the case of any such other action, at least
10 calendar days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever is the earlier.

(b) In case any Triggering Event occurs, then, in any such case, the Company
will as soon as practicable thereafter give to the Rights Agent and each holder
of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.

 

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(c) Notwithstanding anything in this Agreement to the contrary, prior to the
Distribution Date, a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of any Rights or of
any Common Shares for purposes of this Agreement.

26. Notices. (a) Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right Certificate to or on the
Company will be sufficiently given or made if sent by first class mail or
overnight delivery service, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:

SunPower Corporation

3939 North First Street

San Jose, California 95134

Attention: General Counsel

(b) Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent will be sufficiently given or
made if sent by first-class mail or overnight delivery service, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

Computershare Trust Company, N.A.

250 Royall Street

Canton, Massachusetts 02021

Attention: Client Services

(c) Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
the Distribution Date, to the holder of any Common Shares) will be sufficiently
given or made if sent by first class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.

27. Supplements and Amendments. Prior to the time at which the Rights cease to
be redeemable pursuant to Section 23, and subject to the penultimate sentence of
this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the penultimate sentence of
this Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided, however, that no
such supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), and no such supplement or amendment shall cause the
Rights again to become redeemable or cause this

 

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Agreement again to become supplementable or amendable otherwise than in
accordance with the provisions of this sentence. Without limiting the generality
or effect of the foregoing, this Agreement may be supplemented or amended to
provide for such voting powers for the Rights and such procedures for the
exercise thereof, if any, as the Board of Directors of the Company may determine
to be appropriate. Upon the delivery of a certificate from an officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent will execute such supplement
or amendment; provided, however, that the Rights Agent may refuse to execute any
amendment that adversely affects its rights, duties or obligations under this
Agreement. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment may be made which decreases the stated Redemption Price
to an amount less than $0.001 per Right. Notwithstanding anything in this
Agreement to the contrary, the limitations on the ability of the Board of
Directors of the Company to amend this Agreement set forth in this Section 27
shall not affect the power or ability of the Board of Directors of the Company
to take any other action that is consistent with its fiduciary duties under
Delaware law, including, without limitation, accelerating or extending the
Expiration Date or making any other amendment to this Agreement that is
permitted by this Section 27 or adopting a new stockholder rights plan with such
terms as the Board of Directors of the Company determines in its sole discretion
to be appropriate.

28. Successors; Certain Covenants. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.

29. Benefits of This Agreement. Nothing in this Agreement will be construed to
give to any Person other than the Company, the Rights Agent, and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement. This Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates
(or prior to the Distribution Date, the Common Shares).

30. Governing Law. This Agreement, each Right and each Right Certificate issued
hereunder will be deemed to be a contract made under the internal substantive
laws of the State of Delaware and for all purposes will be governed by and
construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.

31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
however, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.

32. Descriptive Headings, Etc. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and will not control or affect
the meaning or

 

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construction of any of the provisions hereof. Unless otherwise expressly
provided, references herein to Articles, Sections and Exhibits are to Articles,
Sections and Exhibits of or to this Agreement.

33. Determinations and Actions by the Board. For all purposes of this Agreement,
any calculation of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, will be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company will have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement (including,
without limitation, Section 27, this Section 33 and other provisions hereof
relating to its powers or authority hereunder) and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, any determination contemplated by Section 1(a)
or any determination as to whether particular Rights shall have become void).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, any omission with respect to any of the
foregoing) which are done or made by the Board of Directors of the Company in
good faith will (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties and (y) not subject the
Board of Directors of the Company to any liability to any Person, including,
without limitation, the Rights Agent and the holders of the Rights.

34. Prior Agreement. This Agreement amends and restates the Original Agreement,
which shall, without further action, be superseded as of the time this Agreement
becomes effective.

35. Counterparts. This Agreement may be executed in any number of counterparts
(including by fax and .pdf) and each of such counterparts will for all purposes
be deemed to be an original, and all such counterparts will together constitute
but one and the same instrument. A signature to this Agreement transmitted
electronically will have the same authority, effect and enforceability as an
original signature.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the effective time stated above.

 

SUNPOWER CORPORATION By:  

 

  Name:   Title: COMPUTERSHARE TRUST COMPANY, N.A. By:  

 

  Name:   Title:

 

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EXHIBIT A

[Note: This is the original Certificate of Designation, which will need to be
amended

when the Rights Agreement is amended and restated.]

CERTIFICATE OF DESIGNATION

of

SERIES A JUNIOR PARTICIPATING

PREFERRED STOCK

of

SUNPOWER CORPORATION

(Pursuant to Section 151 of the

General Corporation Law of the State of Delaware)

SunPower Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Company”), DOES HEREBY CERTIFY:

That, pursuant to authority vested in the Board of Directors of the Company by
its Restated Certificate of Incorporation, and pursuant to the provisions of
Section 151 of the General Corporation Law, the Board of Directors of the
Company has adopted the following resolution providing for the issuance of a
series of Preferred Stock:

RESOLVED, that pursuant to the authority expressly granted to and vested in the
Board of Directors of the Company (the “Board of Directors” or the “Board”) by
the Restated Certificate of Incorporation of the Company, a series of Preferred
Stock, par value $0.001 per share (the “Preferred Stock”), of the Company be,
and it hereby is, created, and that the designation and amount thereof and the
powers, designations, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:

I. Designation and Amount

The shares of such series will be designated as Series A Junior Participating
Preferred Stock (the “Series A Preferred”) and the number of shares constituting
the Series A Preferred is [2,175,000]. Such number of shares may be increased or
decreased by resolution of the Board; provided, however, that no decrease will
reduce the number of shares of Series A Preferred to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred.

 

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II. Dividends and Distributions

(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior to the Series A Preferred with respect to
dividends, the holders of shares of Series A Preferred, in preference to the
holders of Class A Common Stock, par value $0.001 per share (the “Class A Common
Stock”), and the holders of Common Stock, par value $0.001 per share (the
“Common Stock,” and together with the Class A Common Stock, the “Common Stock”)
of the Company, and of any other junior stock, will be entitled to receive,
when, as and if declared by the Board out of funds legally available for the
purpose, dividends payable in cash (except as otherwise provided below) on such
dates as are from time to time established for the payment of dividends on the
Common Stock (each such date being referred to herein as a “Dividend Payment
Date”), commencing on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred (the “First Dividend
Payment Date”), in an amount per share (rounded to the nearest cent) equal to
the greater of (i) $1.00 or (ii) subject to the provision for adjustment
hereinafter set forth, one hundred times the aggregate per share amount of all
cash dividends, and one hundred times the aggregate per share amount (payable in
kind) of all non-cash dividends, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the First
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred. In the event that the Company at any time
(i) declares a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock,
(iii) combines the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such case and regardless of whether any
shares of Series A Preferred are then issued or outstanding, the amount to which
holders of shares of Series A Preferred would otherwise be entitled immediately
prior to such event under clause (ii) of the preceding sentence will be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(b) The Company will declare a dividend on the Series A Preferred as provided in
the immediately preceding paragraph immediately after it declares a dividend on
the Common Stock (other than a dividend payable in shares of Common Stock). Each
such dividend on the Series A Preferred will be payable immediately prior to the
time at which the related dividend on the Common Stock is payable.

(c) Dividends will accrue on outstanding shares of Series A Preferred from the
Dividend Payment Date next preceding the date of issue of such shares, unless
(i) the date of issue of such shares is prior to the record date for the First
Dividend Payment Date, in which case dividends on such shares will accrue from
the date of the first issuance of a share of Series A Preferred or (ii) the date
of issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred entitled to receive a
dividend and before such Dividend Payment Date, in either of which events such
dividends will accrue from

 

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such Dividend Payment Date. Accrued but unpaid dividends will cumulate from the
applicable Dividend Payment Date but will not bear interest. Dividends paid on
the shares of Series A Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares will be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board may fix a record date for the determination of holders of shares of
Series A Preferred entitled to receive payment of a dividend or distribution
declared thereon, which record date will be not more than 60 calendar days prior
to the date fixed for the payment thereof.

III. Voting Rights

The holders of shares of Series A Preferred will have the following voting
rights:

(a) Subject to the provision for adjustment hereinafter set forth, each share of
Series A Preferred will entitle the holder thereof to one hundred votes on all
matters submitted to a vote of the stockholders of the Company. In the event the
Company at any time (i) declares a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares
of Common Stock, (iii) combines the outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series A Preferred are then issued or
outstanding, the number of votes per share to which holders of shares of Series
A Preferred would otherwise be entitled immediately prior to such event will be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(b) Except as otherwise provided herein, in any other Preferred Stock
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred and the holders of shares of
Common Stock and any other capital stock of the Company having general voting
rights will vote together as one class on all matters submitted to a vote of
stockholders of the Company.

(c) Except as set forth in the Restated Certificate of Incorporation or herein,
or as otherwise provided by law, holders of shares of Series A Preferred will
have no voting rights.

IV. Certain Restrictions

(a) Whenever dividends or other dividends or distributions payable on the Series
A Preferred are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred outstanding have been paid in full, the Company will not:

(i) Declare or pay dividends, or make any other distributions, on any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the shares of Series A Preferred;

 

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(ii) Declare or pay dividends, or make any other distributions, on any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the shares of Series A Preferred, except
dividends paid ratably on the shares of Series A Preferred and all such parity
stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;

(iii) Redeem, purchase or otherwise acquire for consideration shares of any
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the shares of Series A Preferred; provided, however, that the
Company may at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
shares of Series A Preferred; or

(iv) Redeem, purchase or otherwise acquire for consideration any shares of
Series A Preferred, or any shares of stock ranking on a parity with the shares
of Series A Preferred, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board) to all holders of such
shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, may determine in good faith will result in fair
and equitable treatment among the respective series or classes.

(b) The Company will not permit any majority-owned subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (a) of this Article IV,
purchase or otherwise acquire such shares at such time and in such manner.

V. Reacquired Shares

Any shares of Series A Preferred purchased or otherwise acquired by the Company
in any manner whatsoever will be retired and canceled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Restated Certificate of Incorporation of the
Company, or in any other Preferred Stock Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.

VI. Liquidation, Dissolution or Winding Up

Upon any liquidation, dissolution or winding up of the Company, no distribution
will be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the shares of
Series A Preferred unless, prior thereto, the holders of shares of Series A
Preferred have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment; provided, however, that the holders of shares of Series A
Preferred will be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to one hundred times
the aggregate amount to be distributed per share

 

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to holders of shares of Common Stock or (b) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the shares of Series A Preferred, except distributions made
ratably on the shares of Series A Preferred and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Company at any time (i) declares a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares
of Common Stock, (iii) combines the outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series A Preferred are then issued or
outstanding, the aggregate amount to which each holder of shares of Series A
Preferred would otherwise be entitled immediately prior to such event under the
proviso in clause (a) of the preceding sentence will be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

VII. Consolidation, Merger, Etc.

In the event that the Company enters into any consolidation, merger, combination
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then, in
each such case, each share of Series A Preferred will at the same time be
similarly exchanged for or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to one hundred times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Company at any time (a) declares a
dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (b) subdivides the outstanding shares of Common Stock, (c) combines the
outstanding shares of Common Stock in a smaller number of shares, or (d) issues
any shares of its capital stock in a reclassification of the outstanding shares
of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series A Preferred are then issued or outstanding, the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

VIII. Redemption

The shares of Series A Preferred are not redeemable.

 

A-5

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IX. Rank

The Series A Preferred rank, with respect to the payment of dividends and the
distribution of assets, pari passu with the Series B Junior Participating
Preferred Stock and junior to all other series of the Company’s Preferred Stock.

X. Amendment

Notwithstanding anything contained in the Restated Certificate of Incorporation
of the Company to the contrary and in addition to any other vote required by
applicable law, the Restated Certificate of Incorporation of the Company may not
be amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series A Preferred so as to affect them
adversely without the affirmative vote of the holders of at least 80% of the
outstanding shares of Series A Preferred, voting together as a single series.

IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the
Company by its [    ] and attested by its [    ] this      day of             
20    .

 

SUNPOWER CORPORATION By:  

 

  Name:   Title:

 

Attest:

 

Name: Title:

 

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EXHIBIT B

FORM OF RIGHT CERTIFICATE

 

Certificate No. R-            

                       Rights

NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT),
SUBJECT TO POSSIBLE EXTENSION AT THE OPTION OF THE COMPANY, OR EARLIER IF
REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE
AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS
THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID.

Right Certificate

SUNPOWER CORPORATION

This certifies that                                 , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and conditions of
the Amended and Restated Rights Agreement, dated as of [—], 2011 (as it may be
amended or supplemented from time to time, the “Rights Agreement”), between
SunPower Corporation, a Delaware corporation (the “Company”), and Computershare
Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m. (New York City time) on the Expiration Date
(as such term is defined in the Rights Agreement) at the principal office or
offices of the Rights Agent designated for such purpose, one one-hundredth of a
fully paid nonassessable share of Series A Junior Participating Preferred Stock,
par value $0.001 per share (the “Preferred Shares”), of the Company, at a
purchase price of $450.00 per one one-hundredth of a Preferred Share (the
“Purchase Price”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related Certificate duly executed. If
this Right Certificate is exercised in part, the holder will be entitled to
receive upon surrender hereof another Right Certificate(s) for the number of
whole Rights not exercised. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of the date of the Rights
Agreement, based on the Preferred Shares as constituted at such date.

As provided in the Rights Agreement, the Purchase Price and/or the number and/or
kind of securities issuable upon the exercise of the Rights evidenced by this
Right Certificate are subject to adjustment upon the occurrence of certain
events.

 

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This Right Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement can be obtained from the Company without charge upon written request
therefor. Terms used herein with initial capital letters and not defined herein
are used herein with the meanings ascribed thereto in the Rights Agreement.

Pursuant to the Rights Agreement, from and after the first occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the occurrence of a Flip-in
Event pursuant to either (a) a transfer from an Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(b) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has the purpose or effect of
avoiding certain provisions of the Rights Agreement, and subsequent transferees
of any of such Persons, will be void without any further action and any holder
of such Rights will thereafter have no rights whatsoever with respect to such
Rights under any provision of the Rights Agreement. From and after the
occurrence of a Flip-in Event, no Right Certificate will be issued that
represents Rights that are or have become void pursuant to the provisions of the
Rights Agreement, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of the
Rights Agreement will be canceled.

This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Right Certificate may be redeemed by the Company at its option at a redemption
price of $0.001 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.

The Company is not required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the option of the Company, be evidenced by depositary
receipts) or other securities issuable upon the exercise of any Right or Rights
evidenced hereby. In lieu of issuing such fractional Preferred

 

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Shares or other securities, the Company may make a cash payment, as provided in
the Rights Agreement.

No holder of this Right Certificate, as such, will be entitled to vote, receive
dividends, or be deemed for any purpose the holder of Preferred Shares or of any
other securities of the Company which may at any time be issuable upon the
exercise of the Right or Rights represented hereby, nor will anything contained
herein or in the Rights Agreement be construed to confer upon the holder hereof,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate have been exercised or exchanged in accordance with the provisions
of the Rights Agreement.

This Right Certificate will not be valid or obligatory for any purpose until it
has been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of                     ,                     .

 

ATTEST:     SUNPOWER CORPORATION

 

    By:  

 

      Name:       Title:

 

Countersigned: COMPUTERSHARE TRUST COMPANY, N.A. By:  

 

 

Authorized Signature

 

B-3

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Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate)

FOR VALUE RECEIVED,                                          
                                                                               
hereby sells, assigns and transfers unto

                                                                   
                                         
                                         
                                         
                                                                     

(Please print name and address of transferee)

                                                                   
                                         
                                         
                                         
                                                                     

this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint                                 
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.

 

Dated:                     ,                 

 

    Signature

 

Signature Guaranteed:  

 

 

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CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

(1) the Rights evidenced by this Right Certificate [    ] are [    ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);

(2) after due inquiry and to the best knowledge of the undersigned, it [    ]
did [    ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.

 

Dated:                     ,                 

 

    Signature

 

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FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise the Right Certificate)

To SunPower Corporation:

The undersigned hereby irrevocably elects to exercise                     
Rights represented by this Right Certificate to purchase the one one-hundredths
of a Preferred Share or other securities issuable upon the exercise of such
Rights and requests that certificates for such securities be issued in the name
of and delivered to:

Please insert social security

or other identifying number:

_________________________________________________________________

 

                                                                   
                                         
                                         
                                         
                                                                     

(Please print name and address of transferee)

                                                                   
                                         
                                         
                                         
                                                                     

If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:

Please insert social security

or other identifying number:

_________________________________________________________________

 

 

                                                                   
                                         
                                         
                                         
                                                                     

(Please print name and address of transferee)

                                                                   
                                         
                                         
                                         
                                                                     

 

Dated:                     ,                 

 

    Signature

 

Signature Guaranteed:  

 

 

B-6

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CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

(1) the Rights evidenced by this Right Certificate [    ] are [    ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);

(2) after due inquiry and to the best knowledge of the undersigned, it [    ]
did [    ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was, or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.

 

Dated:                     ,                 

 

    Signature

NOTICE

Signatures on the foregoing Form of Assignment and Form of Election to Purchase
and in the related Certificates must correspond to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.

Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved medallion signature program) pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended.

 

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EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

The Board of Directors of SunPower Corporation has adopted a rights plan
pursuant to which one preferred share purchase right has been issued in respect
of each of the Company’s outstanding common shares. The terms of the rights and
the rights plan are set forth in an Amended and Restated Rights Agreement, dated
as of [—], 2011, as it may be amended from time to time, by and between SunPower
and Computershare Trust Company, N.A., as rights agent.

Our Board adopted the rights plan to protect our stockholders from coercive
takeover practices or takeover bids that are inconsistent with their best
interests. In general terms, the rights plan imposes a significant penalty upon
any person or group (other than certain parties related to SunPower and certain
“restricted persons,” as defined in the rights plan) that acquires (1) during
the Terra Stockholder Approval Period (as defined in the rights plan), 10% or
more of our total voting power, or (2) other than during the Terra Stockholder
Approval Period, 20% or more of our outstanding common shares, in each case
without the prior approval of our Board. A person or group that acquires common
shares in excess of the applicable threshold is called an “acquiring person.”
Any rights held by an acquiring person are void and may not be exercised.

This summary of rights provides a general description of the rights plan.
Because it is only a summary, this description should be read together with the
entire rights plan, which we incorporate in this summary by reference. We have
filed the rights plan with the Securities and Exchange Commission as an exhibit
to a registration statement on Form 8-A. Upon written request, we will provide a
copy of the rights plan free of charge to any stockholder.

The Rights. One right was issued in respect of each of our outstanding common
shares on the record date for the issuance of the rights. If the rights become
exercisable, each right would allow its holder to purchase from us one
one-hundredth of a share of preferred stock for a purchase price of $450.00.
Each fractional preferred share would give the stockholder approximately the
same dividend, voting and liquidation rights as does one common share. Prior to
exercise, however, a right does not give its holder any dividend, voting or
liquidation rights.

Exercisability. The rights will not be exercisable until the earlier of:

 

•  

10 days after a public announcement by SunPower that a person or group has
become an acquiring person; and

 

•  

10 business days (or a later date determined by our Board) after a person or
group begins a tender or exchange offer that, if completed, would result in that
person or group becoming an acquiring person.

We refer to the date that the rights become exercisable as the “distribution
date.” Until the distribution date, our common share certificates will also
evidence the rights and will contain a notation to that effect. Any transfer of
common shares prior to the distribution date will constitute a transfer of the
associated rights. After the distribution date, the rights will separate

 

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from the common shares and be evidenced by right certificates, which we will
mail to all holders of rights that have not become void.

Flip-in Event. After the distribution date, if a person or group already is or
becomes an acquiring person, all holders rights, except the acquiring person,
may exercise their rights upon payment of the purchase price to purchase our
common shares (or other securities or assets as determined by the Board), with a
market value of two times the purchase price.

Flip-over Event. After the distribution date, if a flip-in event has already
occurred and SunPower is acquired in a merger or similar transaction, all
holders of rights except the acquiring person may exercise their rights upon
payment of the purchase price, to purchase shares of the acquiring corporation
with a market value of two times the purchase price of the rights.

Rights may be exercised to purchase our fractional preferred shares only after
the distribution date occurs and prior to the occurrence of a flip-in event as
described above. A distribution date resulting from the commencement of a tender
offer or exchange offer described in the second bullet point above could precede
the occurrence of a flip-in event, in which case the rights could be exercised
to purchase our fractional preferred shares. A distribution date resulting from
any occurrence described in the first bullet point above would necessarily
follow the occurrence of a flip-in event, in which case the rights could be
exercised to purchase our common shares or other securities as described above.

Expiration. The rights will expire on September 29, 2018, unless earlier
redeemed or exchanged.

Redemption. Our Board may redeem all (but not less than all) of the outstanding
rights for a redemption price of $0.001 per right at any time before the later
of the distribution date and the date of the first public announcement or
disclosure by SunPower that a person or group has become an acquiring person.
Once the rights are redeemed, the right to exercise rights will terminate, and
the only right of the holders of rights will be to receive the redemption price.
The redemption price will be adjusted if we declare a stock split or issue a
stock dividend on our common shares.

Exchange. After the later of the distribution date and the date of the first
public announcement by SunPower that a person or group has become an acquiring
person, but before an acquiring person owns 50% or more of our outstanding
common shares, our Board may exchange each right (other than rights that have
become void) for one common share or an equivalent security.

Anti-Dilution Provisions. Our Board may adjust the purchase price of the
preferred shares, the number of preferred shares issuable and the number of
outstanding rights to prevent dilution that may occur as a result of certain
events, including among others, a stock dividend, a stock split or a
reclassification of the preferred shares or our common shares. No adjustments to
the purchase price of less than 1% will be made.

Amendments. Before the time at which the rights cease to be redeemable, our
Board may amend or supplement the rights plan without the consent of the holders
of the rights, except that no amendment may decrease the redemption price below
$0.001 per right. At any time thereafter, our Board may amend or supplement the
rights plan only to cure an ambiguity, to alter time

 

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period provisions, to correct inconsistent provisions or to make any additional
changes to the rights plan, but only to the extent that those changes do not
impair or adversely affect the interests of the holders of rights as such and do
not result in the rights again becoming redeemable or cause the rights plan
again to become supplementable or amendable otherwise than in accordance with
the rights plan. The limitations on our Board’s ability to amend the rights plan
does not affect our Board’s power or ability to take any other action that is
consistent with its fiduciary duties, including, without limitation,
accelerating or extending the expiration date of the rights, making any
amendment to the rights plan that is permitted by the rights plan or adopting a
new rights plan with such terms as our Board determines in its sole discretion
to be appropriate.

Prior Capital Structure. Previously, our capital structure was composed of
Class A Common Stock and Class B Common Stock, but now our only outstanding
equity securities are the common shares. In connection with changes made to our
capital structure, we amended and restated our prior rights plan.

* * *

 

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