Document:

EXHIBIT 10.1

                            STOCK PURCHASE AGREEMENT

         This Stock  Purchase  Agreement (the  "Agreement")  is made and entered
into as of  October  31,  2013 by  Solar  United  Network,  Inc.,  a  California
corporation  ("SUN"),  which has a mailing  address at 1358 Blue Oaks Boulevard,
Suite  300,  Roseville,   California  95678,  Emil  Beitpolous,   an  individual
shareholder  holding  30% of the  outstanding  shares  of  SUN,  Abe  Emard,  an
individual  shareholder  holding 30% of the outstanding  shares of SUN,  Richard
Emard, an individual  shareholder  holding 20% of the outstanding shares of SUN,
and  Mikhail  Podnesbesnyy,   an  individual  shareholder  holding  20%  of  the
outstanding shares of SUN (collectively,  the "Sellers" or "SUN  Shareholders"),
and Solar3D,  Inc., a Delaware  corporation  (the  "Buyer" or  "Company"),  with
respect to the following facts:

                                 R E C I T A L S

         A.       Sellers own 100% of the total issued and  outstanding  capital
                  stock of SUN.

         B.       SUN is engaged in the business of the sale,  installation  and
                  maintenance of commercial and residential solar systems.

         C.       The Company desires to acquire from Sellers and Sellers desire
                  to  sell  to  the  Company   100%  of  the  total  issued  and
                  outstanding  stock  of SUN in  consideration  for  $2,794,500,
                  $1,044,500  of which is  payable  in cash at the  Closing,  as
                  defined in Section 4.1 of this  Agreement,  and  $1,750,000 of
                  which is payable in  installments  over a period of five years
                  after the Closing  pursuant to  convertible  promissory  notes
                  bearing simple interest the rate of 4% per annum.

         NOW,  THEREFORE,  for good and valuable  consideration  the receipt and
sufficiency of which are hereby  acknowledged  by the parties to this Agreement,
and in light of the  above  recitals  to this  Agreement,  the  parties  to this
Agreement hereby agree as follows:

1.       SALE AND PURCHASE.
         -----------------

         1.1 SALE AND PURCHASE OF STOCK. In consideration for the Purchase Price
(as defined in Section 1.2 of this  Agreement)  and the other  covenants  of the
Company in this  Agreement,  Sellers  agree to sell to the Buyer,  and the Buyer
agrees to purchase from Sellers,  on the Closing Date (as defined in Section 4.1
of this Agreement) all issued and outstanding shares of the common stock of SUN,
representing  100%  of the  total  issued  and  outstanding  capital  stock  and
ownership interest in SUN (the "SUN Stock").

         1.2 PURCHASE  PRICE.  As  consideration  for the sale by Sellers of the
shares of SUN Stock to the Company on the Closing Date,  the Company will pay to
Sellers  $2,794,500  (the "Purchase  Price"),  $1,044,500 of which is payable in
cash at the  Closing,  as defined in Section  4.1 of this  Agreement  (the "Cash
Payment"),  and $1,750,000 of which is payable in installments  over a period of
five years after the Closing Date, as defined in Section 4.1 of this  Agreement,
pursuant to convertible  promissory notes bearing simple interest the rate of 4%
per  annum  (the  "Note"  or  collectively,  the  "Notes")  in the  form  of the
promissory  notes  attached  to this  Agreement  as Exhibit A. The Notes will be
unsecured. The Cash Payment will be made to Sellers by wire transfer or cashiers

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or certified check made payable to the Sellers at the Closing.  Furthermore, net
working  capital will be evaluated  and adjusted as outlined in Section 5.7v. At
the  Closing,  the Buyer will  deliver an  executed  Note to each  Seller in the
appropriate original outstanding principal amount.

2.       COVENANT TO REMAIN EMPLOYEES OF SUN.
         -----------------------------------

         As an inducement to Buyer to enter into and to perform its  obligations
under this Agreement,  Sellers, with the exception of Richard Emard, covenant to
continue to be employees of SUN for a period of three (3) years from the Closing
Date  ("End of  Term"),  as  Closing  Date is  defined  in  Section  4.1 of this
Agreement, exclusively providing services only to SUN during such employment. In
the  event  that a  Seller  ("Terminating  Seller")  voluntarily  resigns  as an
employee  of SUN,  unless  the  Terminating  Seller  resigns or  terminates  his
employment with SUN due to death,  disability  rendering the Terminating  Seller
unable  to work,  or a  constructive  termination  of the  Terminating  Seller's
employment by the Buyer,  or is  involuntarily  terminated as an employee of SUN
for cause, in either case prior to the End of Term, then the Buyer will have the
sole right,  exercisable at any time within one year after such termination,  to
cause an immediate  conversion  of the  outstanding  balance of the  Terminating
Seller's  Note into shares of the Buyer's  common stock in  accordance  with the
terms and conditions of the Note; provided,  that all common stock issued to the
Terminating  Seller  pursuant to such a conversion will be subject to a two year
lock-up  whereby  the   Terminating   Seller  will  not  be  able  to  transfer,
hypothecate,  assign or sell any of those shares for two years after  receipt of
them. In any event,  all of the Sellers will,  with respect to the resale by any
of them of any of the shares of Buyer's  common stock issued to them at any time
pursuant to any  conversion of any portion of the  outstanding  balance of their
Notes, be subject to the restrictions, conditions and requirements applicable to
an  affiliate  of the Buyer  under Rule 144 of the  Securities  Act of 1933,  as
amended, even if the Sellers are no longer technical affiliates of the Buyer.

3.       OTHER COVENANTS.
         ---------------

         3.1 SUN AND BUYER BOARDS OF DIRECTORS.  At or prior to the Closing,  to
be  effective  on  the  Closing,   the  parties  will  execute  all   documents,
resolutions,  resignations,  appointments  and acceptances in order to cause the
SUN Board of Directors to consist of three  members at the Closing,  one of whom
will be James B.  Nelson  and a second of whom will be Mark J.  Richardson.  One
designee of SUN  reasonably  acceptable to Buyer,  initially Abe Emard,  will be
appointed  to the Buyer's  Board of  Directors.  Other  directors of SUN will be
invited to be observers at meetings of the Buyer's Board of Directors.

         3.2 EXTINGUISHMENT OF DEBT. At or prior to the Closing, to be effective
on the Closing, SUN will pay off all shareholder notes,  inter-company debt, and
other notes and liabilities, except those incurred in the ordinary course of its
business  as  described  in Section  7.1(d) of this  Agreement.  SUN and Sellers
covenant  that  only  liabilities  incurred  in the  ordinary  course  of  SUN's
business,  as described in Section  7.1(d)  herein,  will be  outstanding on the
Closing Date.

         3.3  COVENANT  NOT TO COMPETE.  As a material  inducement  for Buyer to
enter into this  Agreement,  the  Sellers  agree  that  during the term of their
employment or directorship or consultancy with SUN or the Company (collectively,
their  "Engagement"),  and for a period of three (3) years after the termination

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of their Engagement (the "Non-Competition Period"), they covenant and agree that
each of them shall not, directly or indirectly own, manage, operate, participate
in, produce, represent, distribute and/or otherwise act on behalf of any person,
firm,  corporation,  partnership  or  other  entity  which  involves  designing,
manufacturing,  distributing,  installing,  maintaining  or selling  solar power
software or hardware (the  "Competitive  Business")  anywhere  within the United
States,  its possessions and territories,  Canada or Mexico  (collectively,  the
"Territory"); or hire any employee or former employee of Buyer or SUN to perform
services in or involving the Competitive  Business,  unless the individual hired
shall have  departed  Buyer's or SUN's  employment  at least  twelve (12) months
prior to the hiring.  The  Non-Competition  Period  will,  however,  be one year
instead of three years with  respect to a  Terminating  Seller if that  Seller's
employment is involuntarily  terminated  (i.e., by the Company) without "cause."
For the purpose of this  Agreement,  "cause" means the Seller commits a material
breach of this Agreement or his Engagement agreement with the Company, or fraud,
willful  misconduct,  gross  negligence,  a felony  criminal act, bad faith or a
breach of his fiduciary  duty to the Company  during the term of his  Engagement
with the  Company.  The  Sellers  further  covenant  and agree  that  during the
Non-Competition Period, they will not directly or indirectly solicit or agree to
service for their benefit or the benefit of any  third-party,  any of Buyer's or
SUN's  customers.  Notwithstanding  the  foregoing,  nothing in this Section 3.3
shall  prohibit  them from owning,  managing,  operating,  participating  in the
operation of, or advising,  consulting  or being  employed by any entity that is
not involved in the  Competitive  Business.  Sellers  acknowledge and agree that
Buyer will  expend  substantial  time,  talent,  effort and money in  marketing,
promoting,  managing,  selling and otherwise exploiting the businesses Buyer and
SUN operate,  in part by virtue of Buyer's acquisition of the SUN Stock pursuant
to this Agreement,  that Sellers were all of the  shareholders of SUN, that they
are receiving a substantial benefit from the transaction  contemplated hereunder
and that the benefit  received by Buyer and them in agreeing to be bound by this
Section  3.3 are a  material  part  of the  consideration  for the  transactions
contemplated  by this  Agreement.  The parties  recognize  that this Section 3.3
contains  conditions,  covenants,  and  time  limitations  that  are  reasonably
required  for the  protection  of the  business  of SUN and  the  Buyer.  If any
limitation,  covenant  or  condition  shall be  deemed  to be  unreasonable  and
unenforceable  by a court or  arbitrator  of competent  jurisdiction,  then this
Section 3.3 shall thereupon be deemed to be amended to provide for  modification
of such  limitation,  covenant  and/or  condition to such extent as the court or
arbitrator  shall find to be reasonable and such  modification  shall not affect
the remainder of this Agreement. Sellers acknowledge that, in the event a Seller
breaches this Agreement,  money damages will not be adequate to compensate Buyer
for the loss occasioned by such breach.  Sellers therefore consent, in the event
of such a breach,  to the granting of injunctive  relief against  Sellers by any
court of competent jurisdiction.

         3.4 RIGHT OF FIRST  REFUSAL TO  REPURCHASE  SUN.  In the event that the
Buyer  proposes  to sell  all of the  SUN  Stock  or  cause  SUN to sell  all or
substantially  all  of  its  assets  in  the  future  in  one  or  a  series  of
predetermined  transactions in consideration  for only cash or notes and not for
any securities (the "SUN Sale Proposal"), with the intent of exiting the type of
business  in which SUN is then  engaged,  then each  Seller will have the right,
exerciseable in his sole discretion for a period of seven (7) days from the date
of receipt of written  notice  from the Buyer  containing  the price,  terms and
conditions  of the  SUN  Sale  Proposal  in  reasonable  detail  (the  "Proposal
Notice"),  to elect to purchase up to his pro rata share of the SUN Stock or SUN
assets proposed for sale, as the case may be, based on the relative  outstanding
balances of their Notes on the date of the first delivery of the Proposal Notice

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by the Buyer, on the terms and conditions  described in the Proposal Notice,  by
delivery  of a written  election  notice to the  Buyer.  If the  Sellers  in the
aggregate  elect to purchase less than 100% of the SUN Sale Proposal,  then each
of the electing Sellers will have the right for an additional five (5) days from
the date of  delivery  of written  notice of the  shortfall  by the Buyer to the
electing Sellers,  to elect on a pro rata basis, based on the relative amount of
their  first  election,  to  purchase  the  balance of the SUN Sale  Proposal by
delivery of a second written  election notice to the Buyer indicating the amount
of their second election. If the Sellers in the aggregate elect to purchase less
than 100% of the SUN Sale  Proposal  after the second  round,  then the right of
first refusal of all Sellers will immediately terminate with respect to that SUN
Sale Proposal.  If the Sellers make a valid election to purchase 100% of the SUN
Sale  Proposal,  they must close such purchase  within the closing  schedule set
forth in the  Proposal  Notice,  or within  sixty  (60) days of  receipt  of the
Proposal  Notice by any of the electing  Sellers  from the Buyer,  if no closing
schedule is  discloseable in the Proposal  Notice.  If the Sellers do not make a
valid  election  to  purchase  100% of the SUN Sale  Proposal  within  the above
referenced  seven (7) and five (5) day  periods,  then the Buyer may  proceed to
close the SUN Sale Proposal without further  obligation to the Sellers.  If more
than one Seller  participates in purchasing a SUN Sale Proposal,  then they will
do so joint and severally  unless  otherwise  agreed in writing by the Buyer and
the participating Sellers. Notwithstanding anything else herein to the contrary,
the Sellers'  right of first refusal under  Section 3.4 of this  Agreement  will
terminate entirely on the earlier of (a) the date by which all Notes are paid or
otherwise  satisfied in full either in cash, by conversion or otherwise,  or (b)
three (3) years from the Closing Date.

4.       CLOSING AND FURTHER ACTS.
         ------------------------

         4.1 TIME AND  PLACE OF  CLOSING.  Upon  satisfaction  or  waiver of the
conditions  set  forth  in  this  Agreement,  the  closing  of the  transactions
contemplated by this Agreement (the "Closing") will take place in Santa Barbara,
California at 11:00 a.m.  (local time) on the date that the parties may mutually
agree in writing,  but in no event later than  February  15, 2014 (the  "Closing
Date"), unless extended by mutual written agreement of the parties.

         4.2 ACTIONS AT CLOSING. At the Closing, the following actions will take
         place:

                  (a) Buyer will pay to Sellers the  Purchase  Price as provided
         in Section 1.2 of this  Agreement by delivery of (i) cash in the amount
         of the  Cash  Payment  which  will be  deposited  in a  single  account
         designated  by Sellers in writing  delivered  to the Buyer prior to the
         Closing,  and (ii) an executed  Note to each Seller in the  appropriate
         original outstanding principal amount.

                  (b) Sellers  will tender to the Company  certificates  and any
         other  documents  (including all  historical  records up to the Closing
         Date) evidencing the SUN Stock.

                  (c) SUN will deliver to Buyer copies of necessary  resolutions
         of the Board of Directors of SUN authorizing  the execution,  delivery,
         and performance of this Agreement and the other agreements contemplated
         by this Agreement,  which resolutions have been certified by an officer
         of SUN as being valid and in full force and effect.

                  (d) Buyer will deliver to SUN copies of corporate  resolutions
         of the Board of Directors of Buyer authorizing the execution,  delivery
         and performance of this Agreement and the other agreements contemplated

                                      -4-
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         by this Agreement,  which resolutions have been certified by an officer
         of Buyer as being valid and in full force and effect.

                  (e) SUN will deliver to the Buyer true and complete  copies of
         SUN's  Certificate of Incorporation  and a Certificate of Good Standing
         from the appropriate  official of SUN's  jurisdiction of incorporation,
         which certificates and certificates of good standing are dated not more
         than 30 days prior to the Closing Date.

                  (f)  SUN  will   deliver  to  the  Buyer  a  report  from  the
         appropriate  agency or agencies in the State of California  showing the
         existence or absence of all liens, financing statements,  mortgages and
         other  encumbrances  recorded against any assets of SUN, dated not more
         than  five  (5)  days  prior  to the  date of the  Closing  (the  "Lien
         Report").

                  (g)  Delivery  of  appropriate   resignations,   appointments,
         acceptances and  resolutions  relating to the SUN Board of Directors as
         contemplated in Section 3.1 of this Agreement.

                  (h) Delivery of any  additional  documents or instruments as a
         party may  reasonably  request or as may be  necessary  to evidence and
         effect the sale, assignment,  transfer and delivery of the SUN Stock to
         the Buyer.

         4.3 ACTIONS PRE-CLOSING. The Sellers and SUN will at all times prior to
and after the Closing  cooperate fully with the Buyer and the Buyer's  officers,
directors,  representatives,  accountants  and  lawyers  to enable  the Buyer to
conduct  thorough  due  diligence  of SUN and to enable SUN to prepare  and have
audited all financial  statements  deemed  necessary by the Buyer to comply with
all of its reporting  obligations  with the Securities and Exchange  Commission,
including  without  limitation the preparation and filing of its Reports on Form
8-K within four (4) business days after the Closing,  without audited  financial
statements,  and with audited financial  statements within seventy-one (71) days
after the Closing, subject to the provisions of Section 4.5 of this Agreement.

         4.4  ACTIONS  POST  CLOSING.  After the Closing the Buyer will have the
authority  to exercise  management  control and  oversight  of SUN,  and to have
originals and copies of all SUN books and records promptly  delivered to it. The
Sellers  and SUN will at all times after the  Closing  cooperate  fully with the
Buyer and the Buyer's  officers,  directors,  representatives,  accountants  and
lawyers to complete the preparation and audit of all financial statements of the
Buyer and SUN deemed  necessary or appropriate  by the Buyer,  and to enable the
Buyer to comply with all of its reporting  obligations  with the  Securities and
Exchange Commission.

         4.5 COSTS OF  FINANCIAL  AUDIT OF SUN. The Buyer will bear the costs of
the 2011 and 2012 audit of SUN  financial  statements,  except  that the Sellers
will  reimburse  the  Buyer  for the  total  cost of the  audit  (not to  exceed
$50,000),  as invoiced by the auditor, if any of the following events occur: (i)
the audit cannot be completed due to the lack of reasonable cooperation from the
Sellers or SUN's  personnel,  or (ii) the audited  financials and records of SUN
are in the opinion of the certified  auditors,  materially  different than those
presented to the Buyer prior to the date of this Agreement, or (iii) the Sellers
or SUN refuse to proceed  with the Closing  and the Buyer is ready,  willing and
able to proceed with the  Closing,  or the Sellers or SUN  otherwise  materially
breach this Agreement.  With the exception of possible audit fee  reimbursement,

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under no  circumstances  will  either the Buyer or the Sellers or SUN be due any
termination expenses in connection with this Agreement.

5.       REPRESENTATIONS AND WARRANTIES OF SUN, AND SELLERS.
         --------------------------------------------------

         SUN and Sellers  represent and warrant to Buyer as follows,  subject to
the delivery of written disclosure schedules by SUN and the Sellers to the Buyer
that  qualify  the  following  representations  and  warranties,  and  that  are
acknowledged by the Buyer in writing,  including but not limited to the document
binders attached to this Agreement as Exhibit B:

         5.1 POWER AND AUTHORITY;  BINDING NATURE OF AGREEMENT.  SUN and Sellers
have full power and authority to enter into this  Agreement and to perform their
obligations  hereunder.  The  execution,   delivery,  and  performance  of  this
Agreement by SUN have been duly authorized by all necessary  action on its part.
Assuming  that this  Agreement is a valid and binding  obligation of each of the
other parties hereto,  this Agreement is a valid and binding  obligation of SUN,
and Sellers.

         5.2 SUBSIDIARIES.  There is no corporation, general partnership limited
partnership,  joint venture, association,  trust or other entity or organization
that SUN directly or  indirectly  control or in which SUN directly or indirectly
owns any equity or other interest.

         5.3 GOOD STANDING.  SUN (i) is duly organized,  validly existing and in
good standing under the laws of the  jurisdiction  in which it is  incorporated,
(ii) has all necessary  power and authority to own its assets and to conduct its
business as it is  currently  being  conducted,  and (iii) is duly  qualified or
licensed to do business  and is in good  standing  in every  jurisdiction  (both
domestic and foreign) where such qualification or licensing is required.

         5.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. SUN has delivered to Buyer
complete and correct copies or provided Buyer with the right to inspect true and
complete  copies of all (i) the  articles  of  incorporation,  bylaws  and other
charter or organizational  documents of SUN,  including all amendments  thereto,
(ii) the stock  records of SUN,  and (iii) the minutes and other  records of the
meetings and other  proceedings of the shareholders and directors of SUN. SUN is
not in  violation  or breach of (i) any of the  provisions  of its  articles  of
incorporation,  bylaws or other charter or organizational documents, or (ii) any
resolution adopted by its shareholders or directors. There have been no meetings
or other  proceedings of the shareholders or directors of SUN that are not fully
reflected in the appropriate minute books or other written records of SUN.

         5.5  FINANCIAL  STATEMENTS.  SUN has  delivered to Buyer the  following
unaudited  financial  statements  and will  cooperate  with Buyer to prepare the
following audited financial statements relating to SUN prior to the Closing (the
"SUN  Financial  Statements"):  (i) the  unaudited  balance  sheets of SUN as of
December 31, 2012, 2011 and 2010 and the unaudited  balance sheet as of June 30,
2013,  (ii) the audited  balance sheets of SUN as of December 31, 2012 and 2011,
and the unaudited  balance  sheet as of September 30, 2013,  (iii) the unaudited
statements of income for the years ended  December 31, 2012,  2011 and 2010, the
unaudited  statements  of income for the six months  ended June 30, 2013 and the
unaudited  statements of retained earnings and  shareholders'  equity as of June
30, 2013, and (iv) the audited statements of income for the years ended December
31, 2012 and 2011, the audited statements of retained earnings and shareholders'
equity as of those year end dates,  and the  unaudited  statements  of  retained

                                      -6-
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earnings and  shareholders'  equity as of September  30, 2013.  Except as stated
therein or in the notes  thereto,  the SUN  Financial  Statements:  (a)  present
fairly the financial  position of SUN as of the respective dates thereof and the
results  of  operations  and  changes  in  financial  position  of SUN  for  the
respective  periods  covered  thereby;  and (b) have been prepared in accordance
with SUN's normal business  practices  applied on a consistent  basis throughout
the periods covered, and in the case of the audited financial  statements,  have
been  prepared in  accordance  with  generally  accepted  accounting  principles
consistently applied.

         5.6  CAPITALIZATION.  The  authorized  capital stock of SUN consists of
1,000 shares of common stock for SUN, par value $10.00 per share, of which 1,000
shares are issued and outstanding,  and no shares of preferred stock. All of the
outstanding  shares of the capital stock of SUN are validly  issued,  fully paid
and  nonassessable,  and have been issued in full compliance with all applicable
federal, state, local and foreign securities laws and other laws.

         5.7 ABSENCE OF CHANGES.  Except as otherwise  set forth on Schedule 5.7
hereto or otherwise  disclosed to and  acknowledged by Buyer in writing prior to
the Closing, since June 30, 2013:

                  (a)  There  has not been any  material  adverse  change in the
         business,  condition,  assets,  operations  or  prospects of SUN and no
         event has occurred or, to SUN's  knowledge,  is expected to occur after
         the Closing that might have a material  adverse effect on the business,
         condition, assets, operations or prospects of SUN.

                  (b) SUN has not (i)  declared,  set aside or paid any dividend
         or made any other  distribution  in  respect  of any  shares of capital
         stock,  nor (ii)  repurchased,  redeemed or  otherwise  reacquired  any
         shares of capital stock or other securities.

                  (c) SUN has not sold or otherwise issued any shares of capital
         stock or any other securities.

                  (d) SUN has not amended its articles of incorporation,  bylaws
         or other charter or  organizational  documents,  nor has it effected or
         been a  party  to any  merger,  recapitalization,  reclassification  of
         shares,  stock split,  reverse stock split,  reorganization  or similar
         transaction.

                  (e) SUN has not formed any subsidiary or contributed any funds
         or other assets to any subsidiary.

                  (f) SUN has not  purchased or  otherwise  acquired any assets,
         nor has it  leased  any  assets  from any other  person,  except in the
         ordinary course of business consistent with past practice.

                  (g) SUN has not  made  any  capital  expenditure  outside  the
         ordinary course of business or inconsistent  with past practice,  or in
         an amount  exceeding five thousand dollars ($5,000) singly or in excess
         of ten thousand  dollars  ($10,000) in the aggregate,  without  Buyer's
         consent.

                                      -7-
<PAGE>

                  (h) SUN has not sold or  otherwise  transferred  any assets to
         any other person,  except in the ordinary course of business consistent
         with past practice and at a price equal to the fair market value of the
         assets transferred.

                  (i) There has not been any loss,  damage or destruction to any
         of  the  properties  or  assets  of SUN  (whether  or  not  covered  by
         insurance).

                  (j) SUN has not written off as uncollectible  any indebtedness
         or  accounts  receivable,  except  for write offs that were made in the
         ordinary  course of business  consistent  with past  practice  and that
         involved  less  than  $5,000  singly  and  less  than  $10,000  in  the
         aggregate.

                  (k) SUN has not leased any assets to any other  person  except
         in the ordinary course of business consistent with past practice and at
         a rental rate equal to the fair rental value of the leased assets.

                  (l) SUN has not mortgaged,  pledged, hypothecated or otherwise
         encumbered  any  assets,  except in the  ordinary  course  of  business
         consistent with past practice.

                  (m) SUN has not entered  into any  contract,  or incurred  any
         debt,  liability  or  other  obligation  (whether  absolute,   accrued,
         contingent or  otherwise),  except for (i) contracts  that were entered
         into in the ordinary  course of business  consistent with past practice
         and that have  terms of less  than six  months  and do not  contemplate
         payments by or to SUN which will exceed, over the term of the contract,
         ten  thousand  dollars  ($10,000)  in the  aggregate,  and (ii) current
         liabilities incurred in the ordinary course of business consistent with
         the past practice.

                  (n) SUN has not made any loan or advance to any other  person,
         except for  advances  that have been made to  customers in the ordinary
         course of business  consistent  with past  practice  and that have been
         properly reflected as "accounts receivables."

                  (o) Other  than  annual  raises or  bonuses  paid or  provided
         consistent with past business practices, SUN has not paid any bonus to,
         or  increased  the  amount  of the  salary,  fringe  benefits  or other
         compensation or remuneration payable to, any of the directors, officers
         or employees of SUN.

                  (p) No contract or other  instrument  to which SUN is or was a
         party or by which SUN or any of its  assets  are or were bound has been
         amended  or  terminated,  except in the  ordinary  course  of  business
         consistent with past practice.

                  (q) SUN has not  discharged any lien or discharged or paid any
         indebtedness,   liability  or  other  obligation,  except  for  current
         liabilities  that (i) are reflected in the SUN Financial  Statements as
         of June 30,  2013 or have  been  incurred  since  June 30,  2013 in the
         ordinary  course of business  consistent  with past practice,  and (ii)
         have  been  discharged  or  paid in the  ordinary  course  of  business
         consistent with past practice.

                  (r) SUN has not  forgiven  any debt or  otherwise  released or
         waived any right or claim,  except in the  ordinary  course of business
         consistent with past practice.

                                      -8-
<PAGE>

                  (s) SUN has not  changed  its  methods  of  accounting  or its
         accounting practices in any respect.

                  (t) SUN has not  entered  into  any  transaction  outside  the
         ordinary course of business or inconsistent with past practice.

                  (u) SUN has not agreed or committed  (orally or in writing) to
         do any of the things  described  in  clauses  (b)  through  (t) of this
         Section 5.7.

                  (v) SUN and the Sellers  covenant  not to do any of the things
         described  above in clauses (b) through (u) of this  Section 5.7 at any
         time before or after the Closing  without  the  express  prior  written
         approval of the Buyer's Board of Directors; provided, however, that SUN
         and  the   Sellers  may  cause  a  one-time   distribution   (the  "Tax
         Distribution")  to be made by SUN to the Sellers  immediately  prior to
         the  Closing  equal  to 45% of the net  taxable  income  (i.e.  phantom
         income)  allocable  to the Sellers from SUN for the period from the end
         of the last  fiscal year for which a SUN tax return was filed until the
         Closing Date,  less prior  quarterly tax payments made,  subject to the
         requirement  that at the  Closing  SUN  has at  least  $200,000  of net
         working capital.  To the extent that the Tax  Distribution  would cause
         net working  capital to be less than $200,000,  SUN will reduce the Tax
         Distribution.  To the extent that net working  capital would be greater
         than $200,000 after the Tax Distribution, SUN may distribute the excess
         to the Sellers  prior to the Closing,  provided  that there is at least
         $100,000  of  cash  in  SUN at  the  Closing.  The  amount  of the  Tax
         Distribution is subject to reasonable  verification and approval by the
         Buyer before it is made.  For the purpose of  calculating  "net working
         capital" under Section 5.7 of this Agreement,  current liabilities will
         be subtracted  from current assets,  and customer  deposits will not be
         included in current assets.

         5.8 ABSENCE OF UNDISCLOSED  LIABILITIES.  SUN has no debt, liability or
other  obligation  of any  nature  (whether  due or to  become  due and  whether
absolute,  accrued,  contingent or otherwise)  that is not reflected or reserved
against  in the  SUN  Financial  Statements  as of June  30,  2013,  except  for
obligations  incurred  since June 30, 2013 in the  ordinary  and usual course of
business consistent with past practice.

         5.9      SUN ASSETS.

                  (a) The  execution  and  delivery  of this  Agreement  and the
         consummation of the transactions contemplated hereby will not result in
         a breach of the terms and  conditions of, or result in a loss of rights
         under,  or result in the  creation of any lien,  charge or  encumbrance
         upon, any of the assets of SUN.

                  (b) SUN has good and  marketable  title to all of its  assets,
         free and  clear of all  mortgages,  liens,  leases,  pledges,  charges,
         encumbrances,  equities or claims,  except as  expressly  disclosed  in
         writing by SUN to Buyer prior to the Closing Date.

                  (c) SUN's  assets are not subject to any  material  liability,
         absolute  or  contingent,  which has not been  disclosed  by SUN to and
         acknowledged  by Buyer in writing  prior to the Closing Date nor is SUN
         subject to any liability,  absolute or  contingent,  which has not been

                                      -9-
<PAGE>

         disclosed to and  acknowledged by Buyer in writing prior to the Closing
         Date.

                  (d)  SUN  has   provided  to  Buyer  in  writing  an  accurate
         description of all of the assets of SUN or used in the business of SUN.

                  (e)  SUN  has  provided  to  Buyer  in  writing  a list of all
         contracts, agreements, licenses, leases, arrangements,  commitments and
         other  undertakings  to  which  SUN is a party  or by  which  it or its
         property is bound.  Except as specified by SUN to and  acknowledged  by
         Buyer in writing  prior to the  Closing  Date,  all of such  contracts,
         agreements,  leases, licenses and commitments are valid, binding and in
         full force and effect.  As soon as  practicable  after the execution of
         this  Agreement by all parties,  SUN will provide  Buyer with copies of
         all such documents for Buyer's review.

         5.10  COMPLIANCE  WITH  LAWS;  LICENSES  AND  PERMITS.  SUN  is  not in
violation  of, nor has it failed to conduct its business in material  compliance
with, any applicable federal, state, local or foreign laws, regulations,  rules,
treaties,  rulings, orders,  directives or decrees. SUN has delivered to Buyer a
complete and accurate list and provided Buyer with the right to inspect true and
complete copies of all of the licenses,  permits,  authorizations and franchises
to which SUN is  subject  and all said  licenses,  permits,  authorizations  and
franchises  are valid and in full  force and  effect.  Said  licenses,  permits,
authorizations  and  franchises   constitute  all  of  the  licenses,   permits,
authorizations and franchises  reasonably necessary to permit SUN to conduct its
business  in the  manner in which it is now being  conducted,  and SUN is not in
violation or breach of any of the terms,  requirements  or  conditions of any of
said licenses, permits, authorizations or franchises.

         5.11  TAXES.  Except  as  disclosed  herein,  SUN  has  accurately  and
completely  filed with the  appropriate  United States state,  local and foreign
governmental  agencies all tax returns and reports required to be filed (subject
to permitted extensions applicable to such filings),  and has paid or accrued in
full all taxes, duties, charges,  withholding obligations and other governmental
liabilities as well as any interest, penalties,  assessments or deficiencies, if
any,  due to, or  claimed to be due by, any  governmental  authority  (including
taxes on properties, income, franchises, licenses, sales and payroll). (All such
items  are  collectively  referred  to  herein as  "Taxes").  The SUN  Financial
Statements  fully accrue or reserve all current and deferred taxes. SUN is not a
party to any pending action or proceeding,  nor is any such action or proceeding
threatened by any  governmental  authority  for the  assessment or collection of
Taxes.  No  liability  for taxes has been  incurred  other than in the  ordinary
course of  business.  There are no liens for Taxes except for liens for property
taxes not yet delinquent. SUN is not a party to any Tax sharing, Tax allocation,
Tax indemnity or statute of limitations extension or waiver agreement and in the
past year has not been included on any  consolidated  combined or unitary return
with any entity other than SUN. SUN has duly  withheld from each payment made to
each  person  from whom such  withholding  is  required by law the amount of all
Taxes or other sums  (including  but not limited to United States federal income
taxes,  any  applicable   state  or  municipal   income  tax,   disability  tax,
unemployment  insurance  contribution  and Federal  Insurance  Contribution  Act
taxes) required to be withheld therefore and has paid the same to the proper tax
authorities  prior to the due date thereof.  To the extent any Taxes withheld by
SUN have not been paid as of the Closing  Date  because  such Taxes were not yet
due, such Taxes will be paid to the proper tax  authorities  in a timely manner.
All Tax returns  filed by the SUN are accurate and comply with and were prepared

                                      -10-
<PAGE>

in accordance with applicable  statutes and regulations.  Sellers will cause SUN
to prepare  and file all Tax  returns  and pay all Taxes  required  prior to the
Closing.  Such Tax returns  will be subject to review and approval by the Buyer,
which approval will not be unreasonably withheld.

         5.12 ENVIRONMENTAL  COMPLIANCE MATTERS. To the best of the knowledge of
SUN, SUN has at all relevant times with respect to the Business been in material
compliance  with  all  environmental  laws,  and  has  received  no  potentially
responsible  party notices or similar notices from any governmental  agencies or
private  parties  concerning  releases or threatened  releases of any "hazardous
substance" as that term is defined under 42 U.S.C. 960(1) (14).

         5.13  COMPENSATION.  Since June 30, 2013, SUN has not paid or committed
to  pay  to or  for  the  benefit  of any  of  its  officers  or  directors  any
compensation  of any kind other than wages,  salaries  and benefits at times and
rates in effect on June 30, 2013,  except as provided in Section  5.7(v) of this
Agreement.  SUN does not have any bonus plan or obligations  with respect to any
bonus  plan.  SUN  has  provided  Buyer  with a full  and  complete  list of all
officers,  directors,  employees and  consultants  of SUN as of the date hereof,
specifying  their names and job  designations,  their  dates of hire,  the total
amount paid or payable as wages, salaries or other forms of direct compensation,
and the basis of such compensation, whether fixed or commission or a combination
thereof.

         5.14     NO DEFAULT.

                  (a) Each of the contracts,  agreements or other instruments of
         SUN and each of the standard Customer Agreements or contracts of SUN is
         a legal, binding and enforceable  obligation by or against SUN, subject
         to the effect of  applicable  bankruptcy,  insolvency,  reorganization,
         moratorium or other similar  federal or state laws affecting the rights
         of creditors and the effect or  availability  of rules of law governing
         specific  performance,  injunctive  relief or other equitable  remedies
         (regardless of whether any such remedy is considered in a proceeding at
         law or in equity).  No party with whom SUN has an agreement or contract
         is in  default  there  under or has  breached  any terms or  provisions
         thereof which is material to the conduct of SUN's business.

                  (b) SUN has performed,  or is now performing,  the obligations
         of, and SUN is not in  material  default  (or would by the late of time
         and/or the giving of notice be in material  default) in respect of, any
         contract,  agreement  or  commitment  binding  upon it or its assets or
         properties and material to the conduct of its business.  No third party
         has raised any claim, dispute or controversy with respect to any of the
         executed  contracts of SUN,  nor has SUN received  notice of warning of
         alleged nonperformance, delay in delivery or other noncompliance by SUN
         with respect to its obligations  under any of those contracts,  nor are
         there any facts which exist  indicating that any of those contracts may
         be totally or partially  terminated  or suspended by the other  parties
         thereto.

         5.15  PRODUCT   WARRANTIES.   Except  as  otherwise  disclosed  to  and
acknowledged by Buyer in the form of a written disclosure  schedule prior to the
Closing and for warranties  under  applicable  law, (a) there are no warranties,
express or implied,  written or oral,  with  respect to the products of SUN, (b)
there are no pending or threatened claims with respect to any such warranty, and
(c) SUN has no, and after the Closing Date, will have no, liability with respect

                                      -11-
<PAGE>

to any such warranty, whether known or unknown, absolute,  accrued,  contingent,
or otherwise and whether due or to become due, other than  customary  returns in
the  ordinary  course of  business  that are fully  reserved  against in the SUN
Financial Statements. In the event that warranty claims arise after the Closing,
the Sellers  shall have the right to settle  those claims  through SUN,  subject
only to a cost of labor and materials charge without any mark up.

          5.16    PROPRIETARY RIGHTS.
                  ------------------

                  (a) SUN has provided  Buyer in writing a complete and accurate
         list and  provided  Buyer with the right to inspect  true and  complete
         copies  of  all  software,   patents  and   applications  for  patents,
         trademarks,   trade  names,   service  marks,   and   copyrights,   and
         applications  therefore,  owned  or used by SUN or in  which it has any
         rights or  licenses,  except  for  software  used by SUN and  generally
         available  on the  commercial  market.  SUN has  provided  Buyer with a
         complete and accurate  description  of all agreements or provided Buyer
         with the right to inspect true and complete copies of all agreements of
         SUN with each officer, employee or consultant of SUN providing SUN with
         title and ownership to patents, patent applications,  trade secrets and
         inventions  developed  or used by SUN in its  business.  To the best of
         SUN's  knowledge,  all of such  agreements are valid,  enforceable  and
         legally binding,  subject to the effect or availability of rules of law
         governing  specific  performance,  injunctive relief or other equitable
         remedies  (regardless  of whether  any such remedy is  considered  in a
         proceeding at law or in equity).

                  (b) SUN owns or possesses  licenses or other rights to use all
         computer software,  software programs,  patents,  patent  applications,
         trademarks, trademark applications, trade secrets, service marks, trade
         names,  copyrights,  inventions,  drawings,  designs,  customer  lists,
         propriety know-how or information, or other rights with respect thereto
         (collectively  referred  to  as  "Proprietary  Rights"),  used  in  the
         business of SUN, and the same are  sufficient to conduct SUN's business
         as it has been and is now being conducted.

                  (c) To the best of SUN's  knowledge,  the operations of SUN do
         not conflict with or infringe, and no one has asserted to SUN that such
         operations  conflict with or infringe on any Proprietary  Rights owned,
         possessed  or used by any third party.  There are no claims,  disputes,
         actions, proceedings,  suits or appeal pending against SUN with respect
         to any  Proprietary  Rights,  and to the knowledge of the management of
         SUN none has been threatened  against SUN. To the best knowledge of the
         management  of SUN  there  are no facts or  alleged  fact  which  would
         reasonably  serve as a basis for any  claim  that SUN does not have the
         right to use, free of any rights or claims of others,  all  Proprietary
         Rights in the development,  manufacture, use, sale or other disposition
         of any or all products or services  presently being used,  furnished or
         sold in the  conduct of the  business  of SUN as it has been and is now
         being conducted.

                  (d) No  employee  of SUN is in  violation  of any  term of any
         employment contract,  proprietary information and inventions agreement,
         non-competition  agreement, or any other contract or agreement relating
         to the  relationship  of any such  employee  with  SUN or any  previous
         employer.

                                      -12-
<PAGE>

         5.17  INSURANCE.  SUN has  provided  Buyer with  complete  and accurate
copies of all policies of insurance and provided Buyer with the right to inspect
true and complete copies of all policies of insurance to which SUN is a party or
is a beneficiary  or named insured as of the Closing Date. SUN has in full force
and effect,  with all premiums  due thereon  paid the policies of insurance  set
forth  therein.  All the insurable  properties of SUN are insured in amounts and
coverage and against  risks and losses  which are  adequate and usually  insured
against  by  persons  holding  or  operating   similar   properties  in  similar
businesses.  There were no claims in excess of  $10,000  asserted  or  currently
outstanding  under any of the insurance  policies of SUN in respect of all motor
vehicle,  general liability,  errors and omissions,  workers  compensation,  and
medical  claims  during the calendar year ending on December 31, 2012 or the six
months ending June 30, 2013.

         5.18 LABOR  RELATIONS.  None of the employees of SUN are represented by
any  union or are  parties  to any  collective  bargaining  arrangement,  and no
attempts are being made to organize or unionize any of SUN's  employees.  Except
as disclosed in writing to Buyer prior to the  Closing,  there is not  presently
pending or existing,  and there is not  presently  threatened,  any material (a)
strike, slowdown, picketing, work stoppage or employee grievance process, or (b)
action, arbitration, audit, hearing, investigation, litigation, or suit (whether
civil,  criminal,   administrative,   investigative,  or  informal)  against  or
affecting  SUN  relating  to the  alleged  violation  of any  legal  requirement
pertaining to labor relations or employment  matters.  SUN is in compliance with
all applicable laws respecting  employment and employment  practices,  terms and
conditions of employment, wages and hours, occupational safety and health and is
not  engaged  in any  unfair  labor  practices.  SUN is in  compliance  with the
Immigration  Reform and Control Act of 1986.  SUN has no  employment  agreements
except with some of its  employees,  which shall be  disclosed  in the form of a
written  disclosure  schedule  delivered by the Sellers and SUN to the Buyer and
acknowledged by the Buyer in writing prior to the Closing.

         5.19 CORPORATION  STATUS. SUN is identified as an "S" corporation prior
to Closing.

         5.20 CONDITION OF PREMISES.  All real property leased by SUN is in good
condition and repair, ordinary wear and tear excepted.

         5.21 NO DISTRIBUTOR AGREEMENTS. Except as disclosed to and acknowledged
by Buyer in  writing  prior to the  Closing,  SUN is not a party to,  nor is the
property of SUN bound by, any distributors' or manufacturer's  representative or
agency agreement.

         5.22 CONFLICT OF INTEREST TRANSACTIONS. No past or present shareholder,
director,  officer or employee of SUN or any of their affiliates (i) is indebted
to, or has any financial,  business or contractual  relationship  or arrangement
with SUN, or (ii) has any direct or indirect interest in any property,  asset or
right which is owned or used by SUN or pertains to the  business of SUN with the
exception  of  outstanding   shareholder  loans  which  will  be  satisfied  and
discharged in fullprior to the Closing Date.

         5.23  LITIGATION.  There  is  no  action,  suit,  proceeding,  dispute,
litigation,  claim, complaint or investigation by or before any court, tribunal,
governmental  body,  governmental  agency or  arbitrator  pending or  threatened
against or with respect to SUN which (i) if adversely  determined  would have an
adverse effect on the business,  condition,  assets,  operations or prospects of
SUN, or (ii)  challenges or would  challenge  any of the actions  required to be

                                      -13-
<PAGE>

taken by SUN under this  Agreement.  To the best  knowledge  of  Sellers,  there
exists no basis for any such  action,  suit,  proceeding,  dispute,  litigation,
claim, complaint or investigation.

         5.24 NON-CONTRAVENTION.  Neither (a) the execution and delivery of this
Agreement,  nor (b) the  performance of this  Agreement  will: (i) contravene or
result in a violation of any of the provisions of the  organizational  documents
of SUN; (ii)  contravene or result in a violation of any  resolution  adopted by
the  shareholders or directors of SUN; (iii) result in a violation or breach of,
or give any person the right to declare (whether with or without notice or lapse
of time) a default under or to terminate,  any agreement or other  instrument to
which SUN is a party or by which SUN or any of its assets  are bound;  (iv) give
any person the right to  accelerate  the maturity of any  indebtedness  or other
obligation  of SUN;  (v) result in the loss of any license or other  contractual
right of SUN; (vi) result in the loss of, or in a violation of any of the terms,
provisions or conditions of, any governmental license, permit,  authorization or
franchise  of SUN;  (vii)  result in the  creation  or  imposition  of any lien,
charge, encumbrance or restriction on any of the assets of SUN; (viii) result in
the  reassessment or revaluation of any property of SUN by any taxing  authority
or other  governmental  authority;  (ix) result in the imposition of, or subject
SUN to any liability  for, any conveyance or transfer tax or any similar tax; or
(x)  result  in a  violation  of any  law,  rule,  regulation,  treaty,  ruling,
directive,  order,  arbitration award, judgment or decree to which SUN or any of
its assets or any limited liability interests are subject.

         5.25  APPROVALS.  SUN has  provided  Buyer with a complete and accurate
list of all  jurisdictions  in which SUN is authorized to do business along with
the documentation  evidencing such authorization.  No authorization,  consent or
approval of, or  registration  or filing  with,  any  governmental  authority is
required  to be  obtained  or  made by SUN in  connection  with  the  execution,
delivery or performance of this Agreement,  including the conveyance to Buyer of
the Business.

         5.26 BROKERS.  SUN has not agreed to pay any brokerage  fees,  finder's
fees or other fees or commissions with respect to the transactions  contemplated
by this Agreement, and, to SUN's knowledge, no person is entitled, or intends to
claim that it is entitled, to receive any such fees or commissions in connection
with such transaction: except that to the extent Generational Equity is owed any
fees for this  transaction,  the Buyer,  at the  Closing,  will pay such fees in
their entirety, not to exceed $205,500.

         5.27  SPECIAL  GOVERNMENT  LIABILITIES.  SUN has no existing or pending
liabilities, obligations or deferred payments due to any federal, state or local
government  agency or entity in connection with its business or with any program
sponsored  or  funded  in  whole  or in  part by any  federal,  state  or  local
government  agency or  entity,  nor is SUN or  Sellers  aware of any  threatened
action or claim or any  condition  that could support an action or claim against
SUN or the SUN Business  for any of said  liabilities,  obligations  or deferred
payments.

         5.28 SALES AND EBIDA. SUN's total sales for the year ended December 31,
2012 were in excess of  $3,800,000  and  EBITDA was in excess of  $450,000.  SUN
estimates  that its total sales for the year ended  December 31, 2013 will be in
excess of $7,500,000 and EBITDA will be in excess of $900,000.

         5.29 FULL  DISCLOSURE.  Neither this Agreement  (including the exhibits
hereto) nor any statement,  certificate or other document  delivered to Buyer by
or on behalf of SUN contains any untrue statement of a material fact or omits to

                                      -14-
<PAGE>

state a material fact necessary to make the representations and other statements
contained herein and therein not misleading.

         5.30  REPRESENTATIONS  TRUE ON CLOSING DATE.  The  representations  and
warranties  of SUN set forth in this  Agreement are true and correct on the date
hereof,  and  will be true  and  correct  on the  Closing  Date as  though  such
representations  and  warranties  were  made  as of the  Closing  Date.  Buyer's
knowledge  will not act as a waiver  of any  breach of the  representations  and
warranties contained herein by SUN or Seller.

         5.31 TAX ADVICE. SUN and Sellers hereby represent and warrant that they
have  sought  their  own  independent  tax  advice  regarding  the  transactions
contemplated  by this  Agreement  and neither SUN nor Sellers have relied on any
representation or statement made by Buyer, the Company, or their representatives
regarding the tax implications of such transactions.

         5.32 ACKNOWLEDGEMENT OF RISKS. The Sellers hereby represent and warrant
that they have  conducted a thorough  review of the Buyer's  public  reports and
financial  statements  filed by it with the Securities and Exchange  Commission,
and  have had an  opportunity  to ask  questions  of and to  receive  additional
information  from  representatives  of the Buyer.  The Sellers  acknowledge that
there are  substantial  risks  associated  with  owning the Note and the Buyer's
common  stock into which it is  convertible,  including  but not  limited to (i)
those risk factors specifically  disclosed to Sellers in writing by the Buyer, a
copy of which has been  delivered to the Sellers,  (ii) the Buyer may default on
the Note and the price of its common  stock may  decline,  (iii) the Note is not
assignable and the  transferability of the Buyer's common stock is restricted by
applicable  federal  and state  securities  laws as well as by the terms of this
Agreement  and the Note,  and may be impaired by a lack of trading  volume,  and
(iv) those  additional risks described in public reports filed by the Buyer with
the Securities and Exchange Commission.  Sellers represent and warrant that they
are  sophisticated,  knowledgeable and experienced in making investments of this
kind and are capable of evaluating the risks and merits of acquiring the Note.

6.       REPRESENTATIONS AND WARRANTIES OF BUYER.
         ---------------------------------------

         Buyer represents and warrants to SUN as follows:

         6.1 POWER AND AUTHORITY;  BINDING  NATURE OF AGREEMENT.  Buyer has full
power and authority to enter into this Agreement and to perform its  obligations
hereunder.  The execution,  delivery and  performance of this Agreement by Buyer
have been duly  authorized  by all necessary  action on its part.  Assuming that
this Agreement is a valid and binding obligation of the other party hereto, this
Agreement is a valid and binding obligation of Buyer.

         6.2  APPROVALS.  To Buyer's  knowledge,  no  authorization,  consent or
approval of, or registration or filing with, any  governmental  authority or any
other person is required to be obtained or made by Buyer in connection  with the
execution, delivery or performance of this Agreement.

         6.3 REPRESENTATIONS TRUE ON CLOSING DATE. To the Buyer's knowledge, the
representations and warranties of Buyer set forth in this Agreement are true and

                                      -15-
<PAGE>

correct on the date hereof,  and will be true and correct on the Closing Date as
though such representations and warranties were made as of the Closing Date.

         6.4 NON-DISTRIBUTIVE INTENT. The shares of SUN Stock being purchased by
the Company  pursuant to this  Agreement  are not being  acquired by the Company
with a view to the public distribution of them.

         6.5 NON CONTRAVENTION. To the Company's knowledge neither the execution
nor delivery of this  Agreement,  nor the  performance  of this  Agreement  will
contravene  or result in a material  violation of any of the  provisions  of any
other agreement or obligation of the Company.

7.       CONDITIONS TO CLOSING.

         7.1  CONDITIONS  PRECEDENT  TO  BUYER'S  OBLIGATION  TO CLOSE.  Buyer's
obligation  to close the stock  purchase as  contemplated  in this  Agreement is
conditioned upon the occurrence or waiver by Buyer of the following:

                  (a)  Sellers   shall  have   delivered   to  the  Company  all
         certificates  evidencing  the SUN  Stock and  ownership  of 100% of the
         capital stock of SUN.

                  (b) All representations and warranties of SUN and Sellers made
         in this Agreement or in any exhibit or schedule hereto delivered by SUN
         and Sellers  must be true and  correct as of the Closing  Date with the
         same force and effect as if made on and as of that date.

                  (c) SUN must have performed and complied with all  agreements,
         covenants and conditions  required by this Agreement to be performed or
         complied with by SUN prior to or at the Closing Date.

                  (d) SUN covenants to extinguish all loans and pay off all debt
         prior to the  Closing,  other  than  trade  payables  to third  parties
         incurred in the ordinary course of its business that arise from work in
         progress and that are not past due. Sellers  severally,  based on their
         pro rata ownership of SUN immediately  prior the Closing Date, agree to
         indemnify  and hold  harmless the Company and SUN from all claims which
         may be brought by the designated  creditors of SUN before and after the
         Closing,  including reasonable attorneys fees and costs and all claims,
         liabilities, losses, or damages which SUN may suffer as a result of any
         and all  claims,  demands,  costs,  attorneys  fees,  and/or  judgments
         against  them arising out of any  violation  of this  provision of this
         Agreement.  This  paragraph  shall cover the period  beginning upon the
         date of the  execution  of this  Agreement  and  continue  through  and
         including the last date upon which any statute of limitations effecting
         Buyer's  right(s) to pursue  damages of any kind against  Sellers shall
         have expired.  The  provisions of Section 9.3 of this  Agreement  shall
         govern the  procedure  for  indemnification  claims  under this Section
         7.1(d) of this Agreement.

                  (e)  Buyer  must  be   satisfied  in  its  sole  and  absolute
         discretion, with its due diligence of SUN and the Sellers.

                                      -16-
<PAGE>

         7.2  CONDITIONS  PRECEDENT TO SUN'S AND SELLERS'  OBLIGATION  TO CLOSE.
SUN's and Sellers'  obligation to close the stock  purchase as  contemplated  in
this  Agreement  is  conditioned  upon the  occurrence  or waiver by SUN and the
Sellers of the following:

                  (a) All  representations  and warranties of Buyer made in this
         Agreement or in any exhibit hereto  delivered by Buyer must be true and
         correct on and as of the Closing Date with the same force and effect as
         if made on and as of that date.

                  (b) Buyer must have performed and complied with all agreements
         and  conditions  required by this Agreement to be performed or complied
         with by Buyer prior to or at the Closing Date.

8.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
         ------------------------------------------

         All  representations  and warranties made by each of the parties hereto
will  survive the Closing  for three (3) years after the Closing  Date.  Sellers
will have  joint and  several  liability  under this  Agreement,  except for the
covenant  not to compete in Section  3.3 of this  Agreement  or where  otherwise
expressly and specifically provided in this Agreement.

9.       INDEMNIFICATION.
         ---------------

         9.1  INDEMNIFICATION  BY  SUN  AND  SELLERS.   SUN  and  Sellers  agree
severally,  based on their  pro rata  ownership  of SUN  immediately  prior  the
Closing Date and in an amount not to exceed the  respective  purchase price paid
to each Seller pursuant to Section 1.2 of this Agreement,  to indemnify,  defend
and hold harmless Buyer and its affiliates against any and all claims,  demands,
losses,  costs,  expenses,  obligations,   liabilities  and  damages,  including
interest,  penalties and reasonable attorney's fees and costs, incurred by Buyer
or any of its  affiliates  arising,  resulting  from, or relating to any and all
liabilities  of SUN  incurred  prior to the Closing  Date or relating to the SUN
Stock  prior the  Closing  Date,  any  misrepresentation  of a material  fact or
omission to disclose a material  fact made by SUN or Sellers in this  Agreement,
in any exhibits to this  Agreement or in any other  document  furnished or to be
furnished by SUN or Sellers under this  Agreement,  or any breach of, or failure
by  SUN  or  Sellers  to  perform,  any of  their  representations,  warranties,
covenants or  agreements in this  Agreement or in any exhibit or other  document
furnished or to be furnished by SUN or Sellers under this Agreement.

         9.2  INDEMNIFICATION  BY BUYER.  Buyer agrees to indemnify,  defend and
hold  harmless  SUN and Sellers  against any and all  claims,  demands,  losses,
costs,  expenses,  obligations,  liabilities  and damages,  including  interest,
penalties  and  reasonable  attorneys'  fees and  costs  incurred  by SUN or the
Sellers arising after the Closing Date, resulting from or relating to any breach
of, or  failure by Buyer to  perform,  any of its  representations,  warranties,
covenants or  agreements in this  Agreement or in any exhibit or other  document
furnished or to be furnished by Buyer under this Agreement.

         9.3      PROCEDURE FOR INDEMNIFICATION CLAIMS.

                  (a)  Whenever  any  parties  become  aware  that a  claim  (an
         "Underlying  Claim") has arisen entitling them to seek  indemnification
         under  Section 3.2,  7.1(d) or 9 of this  Agreement,  such parties (the
         "Indemnified  Parties") shall promptly send a notice  ("Notice") to the

                                      -17-
<PAGE>

         parties liable for such indemnification (the "Indemnifying Parties") of
         the  right  to  indemnification  (the  "Indemnity  Claim");   provided,
         however,  that the failure to so notify the  Indemnifying  Parties will
         relieve the  Indemnifying  Parties from liability  under this Agreement
         with  respect to such  Indemnity  Claim only if, and only to the extent
         that,  such failure to notify the  Indemnifying  Parties results in the
         forfeiture by the Indemnifying Parties of rights and defenses otherwise
         available to the  Indemnifying  Parties with respect to the  Underlying
         Claim.  Any Notice  pursuant to this Section  9.3(a) shall set forth in
         reasonable  detail,  to the extent then  available,  the basis for such
         Indemnity  Claim  and an  estimate  of the  amount of  damages  arising
         therefore.

                  (b) If an  Indemnity  Claim does NOT  result  from or arise in
         connection  with any Underlying  Claim or legal  proceedings by a third
         party,  the  Indemnifying  Parties will have thirty (30)  calendar days
         following  receipt  of the  Notice to issue a written  response  to the
         Indemnified Parties,  indicating the Indemnifying Parties' intention to
         either (i) contest  the  Indemnity  Claim or (ii) accept the  Indemnity
         Claim as valid.  The  Indemnifying  Parties'  failure to provide such a
         written  response within such thirty (30) day period shall be deemed to
         be an acceptance of the Indemnity  Claim as valid. In the event that an
         Indemnity Claim is accepted as valid, the  Indemnifying  Parties shall,
         within fifteen (15) Business Days thereafter,  pay the damages incurred
         by the Indemnified  Parties in respect of the Underlying  Claim in cash
         by wire  transfer  of  immediately  available  funds to the  account or
         accounts   specified  by  the  Indemnified   Parties.   To  the  extent
         appropriate,  payments  for  indemnifiable  damages  made  pursuant  to
         Section  7 of the  Agreement  will be  treated  as  adjustments  to the
         Purchase Price.

                  (c) In the event an Indemnity  Claim results from or arises in
         connection  with any Underlying  Claim or legal  proceedings by a third
         party, the  Indemnifying  Parties shall have fifteen (15) calendar days
         following  receipt  of the  Notice to send a Notice to the  Indemnified
         Parties of their  election to, at their sole cost and  expense,  assume
         the defense of any such Underlying Claim or legal proceeding;  provided
         that such  Notice of  election  shall  contain  a  confirmation  by the
         Indemnifying   Parties  of  their   obligation  to  hold  harmless  the
         Indemnified   Parties  with  respect  to  damages   arising  from  such
         Underlying  Claim. The failure by the Indemnifying  Parties to elect to
         assume the defense of any such  Underlying  Claim  within such  fifteen
         (15) day period  shall  entitle the  Indemnified  Parties to  undertake
         control of the defense of the Underlying Claim on behalf of and for the
         account  and risk of the  Indemnifying  Parties  in such  manner as the
         Indemnified  Parties may deem appropriate,  including,  but not limited
         to, settling the Underlying Claim. The parties  controlling the defense
         of the Underlying Claim shall not,  however,  settle or compromise such
         Underlying  Claim  without  the  prior  written  consent  of the  other
         parties,  which consent shall not be unreasonably  withheld or delayed.
         The  non-controlling  parties shall be entitled to  participate in (but
         not control) the defense of any such action, with their own counsel and
         at their own expense.

                  (d) The Indemnifying  Parties and the Indemnified Parties will
         cooperate  reasonably,  fully and in good faith with each other, at the
         sole expense of the  Indemnifying  Parties subject to the last sentence
         of Section 9.3(c) of this  Agreement,  in connection  with the defense,
         compromise or settlement of any  Underlying  Claim  including,  without
         limitation,  by making  available  to the other  parties all  pertinent
         information and witnesses within their reasonable control.

                                      -18-
<PAGE>

10.      INJUNCTIVE RELIEF.
         -----------------

         10.1  DAMAGES  INADEQUATE.  Each  party  acknowledges  that it would be
impossible  to  measure in money the  damages  to the other  party if there is a
failure to comply with any  covenants  and  provisions  of this  Agreement,  and
agrees that in the event of any breach of any covenant or  provision,  the other
party to this Agreement will not have an adequate remedy at law.

         10.2 INJUNCTIVE  RELIEF. It is therefore agreed that the other party to
this Agreement who is entitled to the benefit of the covenants and provisions of
this  Agreement  which have been  breached,  in addition to any other  rights or
remedies which they may have, will be entitled to immediate injunctive relief to
enforce  such  covenants  and  provisions,  and that in the event  that any such
action or  proceeding is brought in equity to enforce  them,  the  defaulting or
breaching party will not urge a defense that there is an adequate remedy at law.

11.      FURTHER ASSURANCES.
         ------------------

         Following the Closing,  Sellers shall furnish to Buyer such instruments
and other documents as Buyer may reasonably  request for the purpose of carrying
out or evidencing the transactions contemplated hereby.

12.      FEES AND EXPENSES.
         -----------------

         Each party hereto shall pay all fees, costs and expenses that it incurs
in connection  with the  negotiation  and  preparation  of this Agreement and in
carrying  out  the  transactions   contemplated   hereby   (including,   without
limitation, all fees and expenses of its counsel and accountant).

13.      WAIVERS.
         -------

         If any party at any time waives any rights hereunder resulting from any
breach by the  other  party of any of the  provisions  of this  Agreement,  such
waiver is not to be construed as a  continuing  waiver of other  breaches of the
same or other provisions of this Agreement.  Resort to any remedies  referred to
herein will not be  construed  as a waiver of any other  rights and  remedies to
which such party is entitled under this Agreement or otherwise.

14.      SUCCESSORS AND ASSIGNS.
         ----------------------

         Each covenant and  representation  of this  Agreement will inure to the
benefit  of  and  be  binding   upon  each  of  the  parties,   their   personal
representatives, assigns and other successors in interest.

15.      ENTIRE AND SOLE AGREEMENT.
         -------------------------

         This Agreement constitutes the entire agreement between the parties and
supersedes  all  other  agreements,  representations,   warranties,  statements,
promises and undertakings,  whether oral or written, with respect to the subject
matter of this  Agreement.  This  Agreement may be modified or amended only by a
written  agreement signed by the parties against whom the amendment is sought to

                                      -19-
<PAGE>

be enforced.  The parties  acknowledge  that as of the date of the  execution of
this Agreement,  that any and all other agreements either written or verbal will
be terminated and be of no further force or effect.

16.      GOVERNING LAW.
         -------------

         This  Agreement  will be  governed  by the laws of  California  without
giving  effect to  applicable  conflict of law  provisions.  With respect to any
litigation arising out of or relating to this Agreement,  each party agrees that
it will be filed in and heard by the state or federal  courts with  jurisdiction
to hear such suits located in Santa Barbara County, California.

17.      COUNTERPARTS.
         ------------

         This  Agreement  may  be  executed  simultaneously  in  any  number  of
counterparts,  each of which counterparts will be deemed to be an original,  and
such counterparts will constitute but one and the same instrument.

18.      ASSIGNMENT.
         ----------

         Except in the case of an affiliate of the Buyer, this Agreement may not
be assignable by any party without prior written consent of the other parties.

19.      REMEDIES.
         --------

         Except as otherwise expressly provided herein, none of the remedies set
forth in this  Agreement are intended to be exclusive,  and each party will have
all other  remedies now or hereafter  existing at law, in equity,  by statute or
otherwise. The election of any one or more remedies will not constitute a waiver
of the right to pursue other available remedies.

20.      SECTION HEADINGS.
         ----------------

         The section  headings in this  Agreement  are included for  convenience
only, are not a part of this Agreement and will not be used in construing it.

21.      SEVERABILITY.
         ------------

         In the event that any  provision or any part of this  Agreement is held
to  be  illegal,  invalid  or  unenforceable,  such  illegality,  invalidity  or
unenforceability  will not affect the  validity or  enforceability  of any other
provision or part of this Agreement.

22.      NOTICES.
         -------

         Each  notice or other  communication  hereunder  must be in writing and
will be deemed to have been duly  given on the  earlier of (i) the date on which
such  notice  or  other  communication  is  actually  received  by the  intended
recipient thereof,  or (ii) the date five (5) days after the date such notice or
other  communication is mailed by registered or certified mail (postage prepaid)

                                      -20-
<PAGE>

to the intended  recipient at the following address (or at such other address as
the intended  recipient  will have  specified  in a written  notice given to the
other parties hereto):

                  IF TO SUN AND SELLERS:

                  Solar United Network, Inc.
                  1358 Blue Oaks Boulevard, Suite 300
                  Roseville, California 95678
                  Attn: Emil Beitpolous, Chief Executive Officer

                  Telephone: (866) 600-6800
                  Facsimile:   (916) 057-1740

                  IF TO BUYER:

                  Solar3D, Inc.
                  6500 Hollister Avenue, Suite 130
                  Goleta, California 93117
                  Attention:  James Nelson, Chief Executive Officer

                  Telephone: (805) 690-9000
                  Facsimile: (805) 957-1740

23.      PUBLICITY.
         ---------

         Except  as  may be  required  in  order  for a  party  to  comply  with
applicable laws,  rules, or regulations or to enable a party to comply with this
Agreement,  or necessary for the Buyer to prepare and disseminate any private or
public placements of its securities or to communicate with its shareholders,  no
press  release,  notice to any third  party or other  publicity  concerning  the
transactions  contemplated by this Agreement will be issued,  given or otherwise
disseminated without the prior approval of each of the parties hereto; provided,
however, that such approval will not be unreasonably withheld.

                         [SIGNATURES ON FOLLOWING PAGE.]

                                      -21-
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.

SUN:                       Solar United Network Inc., a California Corporation

                           By: /s/ Emil Beitpolous
                               -------------------------------------------------
                                 Emil Beitpolous, Chief Executive Officer

SELLERS:
                           /s/ Emil Beitpolous
                           -----------------------------------------------------
                           Emil Beitpolous, Individually

                           /s/ Abe Emard
                           -----------------------------------------------------
                           Abe Emard, Individually

                           /s/ Richard Emard
                           -----------------------------------------------------
                           Richard Emard, Individually

                           /s/ Mikhail Podnesbesnyy
                           -----------------------------------------------------
                           Mikhail Podnesbesnyy, Individually

COMPANY/BUYER:             SOLAR3D, INC., a Delaware corporation

                           By: /s/ James B. Nelson
                              --------------------------------------------------
                                  James B. Nelson, Chief Executive Officer

                                      -22-
<PAGE>

                                    EXHIBIT A

                                PROMISSORY NOTES

<PAGE>
                           CONVERTIBLE PROMISSORY NOTE

$525,000                                                       January __, 2014

                            Santa Barbara, California

         FOR  VALUE  RECEIVED,   Solar3D,  Inc.,  a  Delaware  corporation  (the
"Borrower")  hereby  promises  to  pay to  the  order  of  Emil  Beitpolous,  an
individual,  (the "Lender"), at 1358 Blue Oaks Boulevard,  Suite 300, Roseville,
California 95678, the principal sum of Five Hundred Twenty-Five Thousand Dollars
U.S.  ($525,000) plus simple interest at the rate of 4% per annum  commencing to
accrue on the date  first  above  written,  payable  principal  and all  accrued
interest in accordance with the terms and conditions of this Note.

         1. PAYMENT ON NOTE.  Commencing on March 31, 2014,  the due date of the
first  payment  on this  Note,  and on the last day of each  quarter  thereafter
during the first year of this Note,  Borrower will make quarterly  interest only
payments to Lender for  interest  accrued on the Note during the prior  quarter,
after  which,  commencing  on March 31, 2015 and on the last day of each quarter
thereafter  until the quarter  ending on December 31, 2017,  Borrower  will make
quarterly payments of interest accrued on the Note during the prior quarter plus
$13,125 of principal to Lender, after which, commencing on March 31, 2018 and on
the last day of each quarter  thereafter,  Borrower will make quarterly payments
of  interest  accrued  on the Note  during  the prior  quarter  plus  $91,875 of
principal to Lender with the final  payment due and payable on December 31, 2018
(the  "Maturity  Date").  No later than fifteen (15) days after each payment due
date, Borrower will pay each payment to the Lender by depositing the appropriate
payment amount into an account  designated by the Lender in writing delivered to
the Borrower prior to the execution of this Note.

         2.  RIGHT OF  PREPAYMENT.  Borrower  has the right to prepay all or any
portion of this Note at any time  without  penalty  upon at least ten days prior
written  notice to Lender,  provided,  that Borrower  must apply any  prepayment
proposed for this Note among all four convertible promissory notes issued by the
Borrower pursuant to Section 1.2 of that certain Stock Purchase Agreement, dated
October  31, 2013 by and between  Solar  United  Networks,  Inc.,  a  California
corporation  ("SUN"),  the  Borrower,  as buyer,  and the four above  referenced
convertible   promissory   note  holders,   as  sellers  (the  "Stock   Purchase
Agreement"),  each on a pro rata basis in a ratio, the numerator of which is the
outstanding  balance of each of those  notes on the date of  delivery of written
notice  by the  Borrower  to the  Lender  of its  proposed  prepayment,  and the
denominator  of which is the total  aggregate  outstanding  balance  of all four
notes combined.  Such prepayments shall be applied first to interest and then to
principal.

         3.  CONVERSION.  Lender has the right,  at any time after the Effective
Date, to convert all or part of the outstanding  balance of the Note into shares
of fully paid and  non-assessable  common  stock of the  Borrower  (the  "Common
Stock").  The conversion price shall be $0.02 per share (the "Initial Conversion
Price") until March 30, 2015, and  thereafter the conversion  price shall be the
greater of (a) the Initial  Conversion  Price or (b) Fifty  Percent (50%) of the
average  closing  price of the Common Stock as reported by Bloomberg for the ten
(10)  consecutive  trading days  following the submission of a notice in writing
signed by the Lender of his intent to  convert.  The  Initial  Conversion  Price

                                      -1-
<PAGE>

shall be  subject  to  equitable  adjustments  for stock  splits,  combinations,
recapitalizations,  reclassifications,  and similar events of the Borrower. With
respect to the public resale of the Common Stock,  the Lender shall at all times
be subject to the  restrictions,  conditions and  requirements  applicable to an
affiliate of the  Borrower,  as described in Rule 144 of the  Securities  Act of
1933, as amended,  even if the Lender is no longer a technical  affiliate of the
Borrower.

         4. BORROWER RIGHT TO FORCE CONVERSION AND RIGHT OF OFFSET. In the event
of any material breach by the Lender of the Stock Purchase  Agreement,  Borrower
will have the right to offset the amount of damages  incurred by the Borrower as
a result of such breach against the amounts owed by it on this Note,  subject to
customary  dispute  resolution  available at law or in equity. In the event that
the Lender (a)  voluntarily  resigns as an employee of the Borrower,  unless the
Lender's  employment  with SUN is terminated by Lender due to death,  disability
rendering  the  Lender  unable to work,  or a  constructive  termination  of the
Lender's  employment by the Borrower,  or (b) is involuntarily  terminated as an
employee of the  Borrower  for "cause"  ("Terminating  Lender"),  in either case
prior to the "End of  Term"  as  defined  in  Section  2 of the  Stock  Purchase
Agreement,  then the Borrower will have the right, exercisable at any time for a
period of one year after such termination,  to cause an immediate  conversion of
up to the entire  outstanding  balance  of the  Terminating  Lender's  Note into
shares  of the  Borrower's  common  stock  in  accordance  with  the  terms  and
conditions  of  this  Note;  provided,  that  all  common  stock  issued  to the
Terminating  Lender  pursuant to such a conversion will be subject to a two year
lock-up  whereby  the   Terminating   Lender  will  not  be  able  to  transfer,
hypothecate,  assign or sell any of those shares for two years after  receipt of
them.  For the purpose of this Note,  "cause" has the meaning  ascribed to it in
Section 3.3 of the Stock Purchase Agreement. This Note is not secured.

         5. DEFAULT.  Any of the following shall constitute a default ("Event of
Default") by Borrower hereunder:

         (a) The  failure  of  Borrower  to make any  payment  of  principal  or
         interest  required  hereunder  within fifteen (15) days of the due date
         for such payment; or

         (b) The  failure  of  Borrower  to fully  perform  any  other  material
         covenants  and  agreements  under  this  Note and  continuance  of such
         failure for a period of forty-five  (45) days after  written  notice of
         the default by Lender to the Borrower.

         Upon the  occurrence  of (a) an Event of Default  under Section 5(a) of
this Note that is not cured  within forty five (45) days of the due date for the
defaulted payment,  (b) an Event of Default under Section 5(b) of this Note, (c)
a sale for cash or notes and no other securities of all or substantially  all of
the  assets of the  Borrower  or of SUN,  or (d) a sale for cash or notes and no
other  securities  of all or  substantially  all of the issued  and  outstanding
voting  capital stock of the Borrower or SUN resulting in a change of control of
the  Borrower  or SUN,  or (e) the  filing  of  bankruptcy  proceedings  for the
Borrower that is not dismissed within sixty (60) days of the filing, Lender may,
at his option,  declare  immediately due and payable the entire unpaid principal
sum of this Note together with all accrued and unpaid interest owing at the time

                                      -2-
<PAGE>

of such declaration pursuant to this Note. Furthermore,  in the Event of Default
under  Section  5(a) of this  Note,  Lender  will  have the right at any time to
convert the entire amount of the defaulted  payment into Borrower's Common Stock
at the Initial Conversion Price, if the conversion is voluntary but not if it is
forced under Section 4 of this Note.

         6. COSTS OF COLLECTIONS. Lender shall be entitled to collect reasonable
attorney's  fees and costs from  Borrower,  as well as other costs and  expenses
reasonably  incurred,  in curing any  default or  attempting  collection  of any
payment due on this Note.

         7. INSPECTION  RIGHTS.  The Lender,  individually or through his agent,
shall have the right, upon reasonable  notice and at his expense,  to review and
inspect  the books and  records of the  Borrower  at  Borrower's  office  during
reasonable business hours.

         8.  PAYMENT AND PLACE OF PAYMENT.  This Note shall be payable in lawful
money of the United States. All payments on this Note are to be made or given to
Lender at the address  provided to Borrower or to such other place as Lender may
from time to time direct by written notice to Borrower.

         9. WAIVER.  Borrower,  for itself and its  successors,  transferors and
assigns,  waives presentment,  dishonor,  protest, notice of protest, demand for
payment and dishonor in nonpayment  of this Note,  bringing of suit or diligence
of taking any  action to  collect  any sums  owing  hereunder  or in  proceeding
against any of the rights and properties securing payment hereunder.

         10.  SEVERABILITY.  If any  provision  of this Note or the  application
thereof to any persons or entities or  circumstances  shall,  to any extent,  be
invalid  or  unenforceable,  the  remainder  of this  Note  shall  not be deemed
affected thereby and every provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.

         11. NO PARTNER. Lender shall not become or be deemed to be a partner or
joint  venturer with  Borrower by reason of any provision of this Note.  Nothing
herein shall  constitute  Borrower and Lender as partners or joint  venturers or
require  Lender to  participate  in or be  responsible  or liable for any costs,
liabilities, expenses or losses of Borrower.

         12. NO WAIVER.  The failure to  exercise  any rights  herein  shall not
constitute  a waiver of the right to exercise the same or any other right at any
subsequent time in respect of the same event or any other event.

         13. NONRECOURSE.  In the event that the Borrower defaults on this Note,
Lender shall look solely to the Borrower for  repayment and none of the members,
officers,  directors  or  affiliates  of the  Borrower  shall have any  personal
liability for payment hereunder.

         14.  ASSIGNABILITY.  The Lender may not assign  this Note  without  the
express prior written  approval of the Borrower,  which it may grant or withhold
in its sole and  absolute  discretion.  This  Note  shall  be  binding  upon the
Borrower and its successors and shall inure to the benefit of the Lender and his
successors and assigns, if any.

                                      -3-
<PAGE>

         15.  GOVERNING  LAW AND  VENUE.  This  Note  shall be  governed  by and
construed solely in accordance with the laws of the State of California  without
giving effect to  applicable  conflict of laws  provisions.  Borrower and Lender
agree that the sole jurisdiction and venue for any litigation arising out of the
Note involving  Borrower or Lender shall be in the appropriate  federal or state
court located in Santa Barbara County, California.

         16.  ENTIRE  AGREEMENT.  This  Note and the  Stock  Purchase  Agreement
contain the entire  understanding and agreement between the parties with respect
to the  subject  matter  herein and may not be altered or amended  except by the
written agreement of the parties.

         17.   COUNTERPARTS.   This  Note  may  be   executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.  Facsimile  executions of
this Note shall be deemed original.

                         [SIGNATURES ON FOLLOWING PAGE.]

                                      -4-
<PAGE>

         IN WITNESS  WHEREOF,  Borrower  and Lender have  executed  this Note on
October 31, 2013, to be effective as of the date first hereinabove written.

BORROWER:                       SOLAR3D, INC., a Delaware corporation

                                 By:
                                    --------------------------------------------
                                    James B. Nelson, Chief Executive Officer

LENDER:

                                 -----------------------------------------------
                                 Emil Beitpolous, Individually

                                      -5-
<PAGE>
                           CONVERTIBLE PROMISSORY NOTE

$525,000                                                       January __, 2014

                            Santa Barbara, California

         FOR  VALUE  RECEIVED,   Solar3D,  Inc.,  a  Delaware  corporation  (the
"Borrower")  hereby  promises to pay to the order of Abe Emard,  an  individual,
(the "Lender"),  at 1358 Blue Oaks Boulevard,  Suite 300, Roseville,  California
95678,  the  principal  sum of Five Hundred  Twenty-Five  Thousand  Dollars U.S.
($525,000) plus simple interest at the rate of 4% per annum commencing to accrue
on the date first above written,  payable  principal and all accrued interest in
accordance with the terms and conditions of this Note.

         1. PAYMENT ON NOTE.  Commencing on March 31, 2014,  the due date of the
first  payment  on this  Note,  and on the last day of each  quarter  thereafter
during the first year of this Note,  Borrower will make quarterly  interest only
payments to Lender for  interest  accrued on the Note during the prior  quarter,
after  which,  commencing  on March 31, 2015 and on the last day of each quarter
thereafter  until the quarter  ending on December 31, 2017,  Borrower  will make
quarterly payments of interest accrued on the Note during the prior quarter plus
$13,125 of principal to Lender, after which, commencing on March 31, 2018 and on
the last day of each quarter  thereafter,  Borrower will make quarterly payments
of  interest  accrued  on the Note  during  the prior  quarter  plus  $91,875 of
principal to Lender with the final  payment due and payable on December 31, 2018
(the  "Maturity  Date").  No later than fifteen (15) days after each payment due
date, Borrower will pay each payment to the Lender by depositing the appropriate
payment amount into an account  designated by the Lender in writing delivered to
the Borrower prior to the execution of this Note.

         2.  RIGHT OF  PREPAYMENT.  Borrower  has the right to prepay all or any
portion of this Note at any time  without  penalty  upon at least ten days prior
written  notice to Lender,  provided,  that Borrower  must apply any  prepayment
proposed for this Note among all four convertible promissory notes issued by the
Borrower pursuant to Section 1.2 of that certain Stock Purchase Agreement, dated
October  31, 2013 by and between  Solar  United  Networks,  Inc.,  a  California
corporation  ("SUN"),  the  Borrower,  as buyer,  and the four above  referenced
convertible   promissory   note  holders,   as  sellers  (the  "Stock   Purchase
Agreement"),  each on a pro rata basis in a ratio, the numerator of which is the
outstanding  balance of each of those  notes on the date of  delivery of written
notice  by the  Borrower  to the  Lender  of its  proposed  prepayment,  and the
denominator  of which is the total  aggregate  outstanding  balance  of all four
notes combined.  Such prepayments shall be applied first to interest and then to
principal.

         3.  CONVERSION.  Lender has the right,  at any time after the Effective
Date, to convert all or part of the outstanding  balance of the Note into shares
of fully paid and  non-assessable  common  stock of the  Borrower  (the  "Common
Stock").  The conversion price shall be $0.02 per share (the "Initial Conversion
Price") until March 30, 2015, and  thereafter the conversion  price shall be the
greater of (a) the Initial  Conversion  Price or (b) Fifty  Percent (50%) of the
average  closing  price of the Common Stock as reported by Bloomberg for the ten
(10)  consecutive  trading days  following the submission of a notice in writing
signed by the Lender of his intent to  convert.  The  Initial  Conversion  Price

                                      -1-
<PAGE>

shall be  subject  to  equitable  adjustments  for stock  splits,  combinations,
recapitalizations,  reclassifications,  and similar events of the Borrower. With
respect to the public resale of the Common Stock,  the Lender shall at all times
be subject to the  restrictions,  conditions and  requirements  applicable to an
affiliate of the  Borrower,  as described in Rule 144 of the  Securities  Act of
1933, as amended,  even if the Lender is no longer a technical  affiliate of the
Borrower.

         4. BORROWER RIGHT TO FORCE CONVERSION AND RIGHT OF OFFSET. In the event
of any material breach by the Lender of the Stock Purchase  Agreement,  Borrower
will have the right to offset the amount of damages  incurred by the Borrower as
a result of such breach against the amounts owed by it on this Note,  subject to
customary  dispute  resolution  available at law or in equity. In the event that
the Lender (a)  voluntarily  resigns as an employee of the Borrower,  unless the
Lender's  employment  with SUN is terminated by Lender due to death,  disability
rendering  the  Lender  unable to work,  or a  constructive  termination  of the
Lender's  employment by the Borrower,  or (b) is involuntarily  terminated as an
employee of the  Borrower  for "cause"  ("Terminating  Lender"),  in either case
prior to the "End of  Term"  as  defined  in  Section  2 of the  Stock  Purchase
Agreement,  then the Borrower will have the right, exercisable at any time for a
period of one year after such termination,  to cause an immediate  conversion of
up to the entire  outstanding  balance  of the  Terminating  Lender's  Note into
shares  of the  Borrower's  common  stock  in  accordance  with  the  terms  and
conditions  of  this  Note;  provided,  that  all  common  stock  issued  to the
Terminating  Lender  pursuant to such a conversion will be subject to a two year
lock-up  whereby  the   Terminating   Lender  will  not  be  able  to  transfer,
hypothecate,  assign or sell any of those shares for two years after  receipt of
them.  For the purpose of this Note,  "cause" has the meaning  ascribed to it in
Section 3.3 of the Stock Purchase Agreement. This Note is not secured.

         5. DEFAULT.  Any of the following shall constitute a default ("Event of
Default") by Borrower hereunder:

         (a) The  failure  of  Borrower  to make any  payment  of  principal  or
         interest  required  hereunder  within fifteen (15) days of the due date
         for such payment; or

         (b) The  failure  of  Borrower  to fully  perform  any  other  material
         covenants  and  agreements  under  this  Note and  continuance  of such
         failure  for a period of forty five (45) days after  written  notice of
         the default by Lender to the Borrower.

         Upon the  occurrence  of (a) an Event of Default  under Section 5(a) of
this Note that is not cured  within forty five (45) days of the due date for the
defaulted payment,  (b) an Event of Default under Section 5(b) of this Note, (c)
a sale for cash or notes and no other securities of all or substantially  all of
the  assets of the  Borrower  or of SUN,  or (d) a sale for cash or notes and no
other  securities  of all or  substantially  all of the issued  and  outstanding
voting  capital stock of the Borrower or SUN resulting in a change of control of
the  Borrower  or SUN,  or (e) the  filing  of  bankruptcy  proceedings  for the
Borrower that is not dismissed within sixty (60) days of the filing, Lender may,
at his option,  declare  immediately due and payable the entire unpaid principal
sum of this Note together with all accrued and unpaid interest owing at the time

                                      -2-
<PAGE>

of such declaration pursuant to this Note. Furthermore,  in the Event of Default
under  Section  5(a) of this  Note,  Lender  will  have the right at any time to
convert the entire amount of the defaulted  payment into Borrower's Common Stock
at the Initial Conversion Price, if the conversion is voluntary but not if it is
forced under Section 4 of this Note.

         6. COSTS OF COLLECTIONS. Lender shall be entitled to collect reasonable
attorney's  fees and costs from  Borrower,  as well as other costs and  expenses
reasonably  incurred,  in curing any  default or  attempting  collection  of any
payment due on this Note.

         7. INSPECTION  RIGHTS.  The Lender,  individually or through his agent,
shall have the right, upon reasonable  notice and at his expense,  to review and
inspect  the books and  records of the  Borrower  at  Borrower's  office  during
reasonable business hours.

         8.  PAYMENT AND PLACE OF PAYMENT.  This Note shall be payable in lawful
money of the United States. All payments on this Note are to be made or given to
Lender at the address  provided to Borrower or to such other place as Lender may
from time to time direct by written notice to Borrower.

         9. WAIVER.  Borrower,  for itself and its  successors,  transferors and
assigns,  waives presentment,  dishonor,  protest, notice of protest, demand for
payment and dishonor in nonpayment  of this Note,  bringing of suit or diligence
of taking any  action to  collect  any sums  owing  hereunder  or in  proceeding
against any of the rights and properties securing payment hereunder.

         10.  SEVERABILITY.  If any  provision  of this Note or the  application
thereof to any persons or entities or  circumstances  shall,  to any extent,  be
invalid  or  unenforceable,  the  remainder  of this  Note  shall  not be deemed
affected thereby and every provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.

         11. NO PARTNER. Lender shall not become or be deemed to be a partner or
joint  venturer with  Borrower by reason of any provision of this Note.  Nothing
herein shall  constitute  Borrower and Lender as partners or joint  venturers or
require  Lender to  participate  in or be  responsible  or liable for any costs,
liabilities, expenses or losses of Borrower.

         12. NO WAIVER.  The failure to  exercise  any rights  herein  shall not
constitute  a waiver of the right to exercise the same or any other right at any
subsequent time in respect of the same event or any other event.

         13. NONRECOURSE.  In the event that the Borrower defaults on this Note,
Lender shall look solely to the Borrower for  repayment and none of the members,
officers,  directors  or  affiliates  of the  Borrower  shall have any  personal
liability for payment hereunder.

         14.  ASSIGNABILITY.  The Lender may not assign  this Note  without  the
express prior written  approval of the Borrower,  which it may grant or withhold
in its sole and  absolute  discretion.  This  Note  shall  be  binding  upon the
Borrower and its successors and shall inure to the benefit of the Lender and his
successors and assigns, if any.

                                      -3-
<PAGE>

         15.  GOVERNING  LAW AND  VENUE.  This  Note  shall be  governed  by and
construed solely in accordance with the laws of the State of California  without
giving effect to  applicable  conflict of laws  provisions.  Borrower and Lender
agree that the sole jurisdiction and venue for any litigation arising out of the
Note involving  Borrower or Lender shall be in the appropriate  federal or state
court located in Santa Barbara County, California.

         16.  ENTIRE  AGREEMENT.  This  Note and the  Stock  Purchase  Agreement
contain the entire  understanding and agreement between the parties with respect
to the  subject  matter  herein and may not be altered or amended  except by the
written agreement of the parties.

         17.   COUNTERPARTS.   This  Note  may  be   executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.  Facsimile  executions of
this Note shall be deemed original.

                         [SIGNATURES ON FOLLOWING PAGE.]

                                      -4-
<PAGE>

         IN WITNESS  WHEREOF,  Borrower  and Lender have  executed  this Note on
October 31, 2013, to be effective as of the date first hereinabove written.

BORROWER:                   SOLAR3D, INC., a Delaware corporation

                             By:
                                ------------------------------------------------
                                James B. Nelson, Chief Executive Officer

LENDER:

                            ----------------------------------------------------
                            Abe Emard, Individually

                                      -5-
<PAGE>

                           CONVERTIBLE PROMISSORY NOTE

$350,000                                                       January __, 2014

                            Santa Barbara, California

         FOR  VALUE  RECEIVED,   Solar3D,  Inc.,  a  Delaware  corporation  (the
"Borrower")  hereby promises to pay to the order of Richard Emard, an individual
(the "Lender"),  at 1358 Blue Oaks Boulevard,  Suite 300, Roseville,  California
95678, the principal sum of Three Hundred Fifty Thousand Dollars U.S. ($350,000)
plus  simple  interest at the rate of 4% per annum  commencing  to accrue on the
date  first  above  written,  payable  principal  and all  accrued  interest  in
accordance with the terms and conditions of this Note.

         1. PAYMENT ON NOTE.  Commencing on March 31, 2014,  the due date of the
first  payment  on this  Note,  and on the last day of each  quarter  thereafter
during the first year of this Note,  Borrower will make quarterly  interest only
payments to Lender for  interest  accrued on the Note during the prior  quarter,
after  which,  commencing  on March 31, 2015 and on the last day of each quarter
thereafter  until the quarter  ending on December 31, 2017,  Borrower  will make
quarterly payments of interest accrued on the Note during the prior quarter plus
$8,750 of principal to Lender, after which,  commencing on March 31, 2018 and on
the last day of each quarter  thereafter,  Borrower will make quarterly payments
of  interest  accrued  on the Note  during  the prior  quarter  plus  $61,250 of
principal to Lender with the final  payment due and payable on December 31, 2018
(the  "Maturity  Date").  No later than fifteen (15) days after each payment due
date, Borrower will pay each payment to the Lender by depositing the appropriate
payment amount into an account  designated by the Lender in writing delivered to
the Borrower prior to the execution of this Note.

         2.  RIGHT OF  PREPAYMENT.  Borrower  has the right to prepay all or any
portion of this Note at any time  without  penalty  upon at least ten days prior
written  notice to Lender,  provided,  that Borrower  must apply any  prepayment
proposed for this Note among all four convertible promissory notes issued by the
Borrower pursuant to Section 1.2 of that certain Stock Purchase Agreement, dated
October  31, 2013 by and between  Solar  United  Networks,  Inc.,  a  California
corporation  ("SUN"),  the  Borrower,  as buyer,  and the four above  referenced
convertible   promissory   note  holders,   as  sellers  (the  "Stock   Purchase
Agreement"),  each on a pro rata basis in a ratio, the numerator of which is the
outstanding  balance of each of those  notes on the date of  delivery of written
notice  by the  Borrower  to the  Lender  of its  proposed  prepayment,  and the
denominator  of which is the total  aggregate  outstanding  balance  of all four
notes combined.  Such prepayments shall be applied first to interest and then to
principal.

         3.  CONVERSION.  Lender has the right,  at any time after the Effective
Date, to convert all or part of the outstanding  balance of the Note into shares
of fully paid and  non-assessable  common  stock of the  Borrower  (the  "Common
Stock").  The conversion price shall be $0.02 per share (the "Initial Conversion
Price") until March 30, 2015, and  thereafter the conversion  price shall be the
greater of (a) the Initial  Conversion  Price or (b) Fifty  Percent (50%) of the
average  closing  price of the Common Stock as reported by Bloomberg for the ten
(10)  consecutive  trading days  following the submission of a notice in writing

                                      -1-
<PAGE>

signed by the Lender of his intent to  convert.  The  Initial  Conversion  Price
shall be  subject  to  equitable  adjustments  for stock  splits,  combinations,
recapitalizations,  reclassifications,  and similar events of the Borrower. With
respect to the public resale of the Common Stock,  the Lender shall at all times
be subject to the  restrictions,  conditions and  requirements  applicable to an
affiliate of the  Borrower,  as described in Rule 144 of the  Securities  Act of
1933, as amended,  even if the Lender is no longer a technical  affiliate of the
Borrower.

         4. BORROWER RIGHT TO FORCE CONVERSION AND RIGHT OF OFFSET. In the event
of any material breach by the Lender of the Stock Purchase  Agreement,  Borrower
will have the right to offset the amount of damages  incurred by the Borrower as
a result of such breach against the amounts owed by it on this Note,  subject to
customary  dispute  resolution  available at law or in equity.  This Note is not
secured.

         5. DEFAULT.  Any of the following shall constitute a default ("Event of
Default") by Borrower hereunder:

         (a) The  failure  of  Borrower  to make any  payment  of  principal  or
         interest  required  hereunder  within fifteen (15) days of the due date
         for such payment; or

         (c) The  failure  of  Borrower  to fully  perform  any  other  material
         covenants  and  agreements  under  this  Note and  continuance  of such
         failure for a period of forty-five  (45) days after  written  notice of
         the default by Lender to the Borrower.

         Upon the  occurrence  of (a) an Event of Default  under Section 5(a) of
this Note that is not cured  within forty five (45) days of the due date for the
defaulted payment,  (b) an Event of Default under Section 5(b) of this Note, (c)
a sale for cash or notes and no other securities of all or substantially  all of
the  assets of the  Borrower  or of SUN,  or (d) a sale for cash or notes and no
other  securities  of all or  substantially  all of the issued  and  outstanding
voting  capital stock of the Borrower or SUN resulting in a change of control of
the  Borrower  or SUN,  or (e) the  filing  of  bankruptcy  proceedings  for the
Borrower that is not dismissed within sixty (60) days of the filing, Lender may,
at his option,  declare  immediately due and payable the entire unpaid principal
sum of this Note together with all accrued and unpaid interest owing at the time
of such declaration pursuant to this Note. Furthermore,  in the Event of Default
under  Section  5(a) of this  Note,  Lender  will  have the right at any time to
convert the entire amount of the defaulted  payment into Borrower's Common Stock
at the Initial Conversion Price, if the conversion is voluntary but not if it is
forced under Section 4 of this Note.

         6. COSTS OF COLLECTIONS. Lender shall be entitled to collect reasonable
attorney's  fees and costs from  Borrower,  as well as other costs and  expenses
reasonably  incurred,  in curing any  default or  attempting  collection  of any
payment due on this Note.

         7. INSPECTION  RIGHTS.  The Lender,  individually or through his agent,
shall have the right, upon reasonable  notice and at his expense,  to review and
inspect  the books and  records of the  Borrower  at  Borrower's  office  during
reasonable business hours.

                                      -2-
<PAGE>

         8.  PAYMENT AND PLACE OF PAYMENT.  This Note shall be payable in lawful
money of the United States. All payments on this Note are to be made or given to
Lender at the address  provided to Borrower or to such other place as Lender may
from time to time direct by written notice to Borrower.

         9. WAIVER.  Borrower,  for itself and its  successors,  transferors and
assigns,  waives presentment,  dishonor,  protest, notice of protest, demand for
payment and dishonor in nonpayment  of this Note,  bringing of suit or diligence
of taking any  action to  collect  any sums  owing  hereunder  or in  proceeding
against any of the rights and properties securing payment hereunder.

         10.  SEVERABILITY.  If any  provision  of this Note or the  application
thereof to any persons or entities or  circumstances  shall,  to any extent,  be
invalid  or  unenforceable,  the  remainder  of this  Note  shall  not be deemed
affected thereby and every provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.

         11. NO PARTNER. Lender shall not become or be deemed to be a partner or
joint  venturer with  Borrower by reason of any provision of this Note.  Nothing
herein shall  constitute  Borrower and Lender as partners or joint  venturers or
require  Lender to  participate  in or be  responsible  or liable for any costs,
liabilities, expenses or losses of Borrower.

         12. NO WAIVER.  The failure to  exercise  any rights  herein  shall not
constitute  a waiver of the right to exercise the same or any other right at any
subsequent time in respect of the same event or any other event.

         13. NONRECOURSE.  In the event that the Borrower defaults on this Note,
Lender shall look solely to the Borrower for  repayment and none of the members,
officers,  directors  or  affiliates  of the  Borrower  shall have any  personal
liability for payment hereunder.

         14.  ASSIGNABILITY.  The Lender may not assign  this Note  without  the
express prior written  approval of the Borrower,  which it may grant or withhold
in its sole and  absolute  discretion.  This  Note  shall  be  binding  upon the
Borrower and its successors and shall inure to the benefit of the Lender and his
successors and assigns, if any.

                                      -3-
<PAGE>

         15.  GOVERNING  LAW AND  VENUE.  This  Note  shall be  governed  by and
construed solely in accordance with the laws of the State of California  without
giving effect to  applicable  conflict of laws  provisions.  Borrower and Lender
agree that the sole jurisdiction and venue for any litigation arising out of the
Note involving  Borrower or Lender shall be in the appropriate  federal or state
court located in Santa Barbara County, California.

         16.  ENTIRE  AGREEMENT.  This  Note and the  Stock  Purchase  Agreement
contain the entire  understanding and agreement between the parties with respect
to the  subject  matter  herein and may not be altered or amended  except by the
written agreement of the parties.

         17.   COUNTERPARTS.   This  Note  may  be   executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.  Facsimile  executions of
this Note shall be deemed original.

                         [SIGNATURES ON FOLLOWING PAGE.]

                                      -4-
<PAGE>

         IN WITNESS  WHEREOF,  Borrower  and Lender have  executed  this Note on
___________, 2013, to be effective as of the date first hereinabove written.

BORROWER:                 SOLAR3D, INC., a Delaware corporation

                          By:
                              --------------------------------------------------
                              James B. Nelson, Chief Executive Officer

LENDER:

                           -----------------------------------------------------
                           Richard Emard, Individually

                                      -5-
<PAGE>

                           CONVERTIBLE PROMISSORY NOTE

$350,000                                                       January __, 2014

                            Santa Barbara, California

         FOR  VALUE  RECEIVED,   Solar3D,  Inc.,  a  Delaware  corporation  (the
"Borrower")  hereby  promises  to pay to the order of Mikhail  Podnesbesnyy,  an
individual,  (the "Lender"), at 1358 Blue Oaks Boulevard,  Suite 300, Roseville,
California 95678, the principal sum of Three Hundred Fifty Thousand Dollars U.S.
($350,000) plus simple interest at the rate of 4% per annum commencing to accrue
on the date first above written,  payable  principal and all accrued interest in
accordance with the terms and conditions of this Note.

         1. PAYMENT ON NOTE.  Commencing on March 31, 2014,  the due date of the
first  payment  on this  Note,  and on the last day of each  quarter  thereafter
during the first year of this Note,  Borrower will make quarterly  interest only
payments to Lender for  interest  accrued on the Note during the prior  quarter,
after  which,  commencing  on March 31, 2015 and on the last day of each quarter
thereafter  until the quarter  ending on December 31, 2017,  Borrower  will make
quarterly payments of interest accrued on the Note during the prior quarter plus
$8,750 of principal to Lender, after which,  commencing on March 31, 2018 and on
the last day of each quarter  thereafter,  Borrower will make quarterly payments
of  interest  accrued  on the Note  during  the prior  quarter  plus  $61,250 of
principal to Lender with the final  payment due and payable on December 31, 2018
(the  "Maturity  Date").  No later than fifteen (15) days after each payment due
date, Borrower will pay each payment to the Lender by depositing the appropriate
payment amount into an account  designated by the Lender in writing delivered to
the Borrower prior to the execution of this Note.

         2.  RIGHT OF  PREPAYMENT.  Borrower  has the right to prepay all or any
portion of this Note at any time  without  penalty  upon at least ten days prior
written  notice to Lender,  provided,  that Borrower  must apply any  prepayment
proposed for this Note among all four convertible promissory notes issued by the
Borrower pursuant to Section 1.2 of that certain Stock Purchase Agreement, dated
October  31, 2013 by and between  Solar  United  Networks,  Inc.,  a  California
corporation  ("SUN"),  the  Borrower,  as buyer,  and the four above  referenced
convertible   promissory   note  holders,   as  sellers  (the  "Stock   Purchase
Agreement"),  each on a pro rata basis in a ratio, the numerator of which is the
outstanding  balance of each of those  notes on the date of  delivery of written
notice  by the  Borrower  to the  Lender  of its  proposed  prepayment,  and the
denominator  of which is the total  aggregate  outstanding  balance  of all four
notes combined.  Such prepayments shall be applied first to interest and then to
principal.

         3.  CONVERSION.  Lender has the right,  at any time after the Effective
Date, to convert all or part of the outstanding  balance of the Note into shares
of fully paid and  non-assessable  common  stock of the  Borrower  (the  "Common
Stock").  The conversion price shall be $0.02 per share (the "Initial Conversion
Price") until March 30, 2015, and  thereafter the conversion  price shall be the
greater of (a) the Initial  Conversion  Price or (b) Fifty  Percent (50%) of the
average  closing  price of the Common Stock as reported by Bloomberg for the ten
(10)  consecutive  trading days  following the submission of a notice in writing
signed by the Lender of his intent to  convert.  The  Initial  Conversion  Price

                                      -1-
<PAGE>

recapitalizations,  reclassifications,  and similar events of the Borrower. With
respect to the public resale of the Common Stock,  the Lender shall at all times
be subject to the  restrictions,  conditions and  requirements  applicable to an
affiliate of the  Borrower,  as described in Rule 144 of the  Securities  Act of
1933, as amended,  even if the Lender is no longer a technical  affiliate of the
Borrower.

         4. BORROWER RIGHT TO FORCE CONVERSION AND RIGHT OF OFFSET. In the event
of any material breach by the Lender of the Stock Purchase  Agreement,  Borrower
will have the right to offset the amount of damages  incurred by the Borrower as
a result of such breach against the amounts owed by it on this Note,  subject to
customary  dispute  resolution  available at law or in equity. In the event that
the Lender (a)  voluntarily  resigns as an employee of the Borrower,  unless the
Lender's  employment  with SUN is terminated by Lender due to death,  disability
rendering  the  Lender  unable to work,  or a  constructive  termination  of the
Lender's  employment by the Borrower,  or (b) is involuntarily  terminated as an
employee of the  Borrower  for "cause"  ("Terminating  Lender"),  in either case
prior to the "End of  Term"  as  defined  in  Section  2 of the  Stock  Purchase
Agreement,  then the Borrower will have the right, exercisable at any time for a
period of one year after such termination,  to cause an immediate  conversion of
up to the entire  outstanding  balance  of the  Terminating  Lender's  Note into
shares  of the  Borrower's  common  stock  in  accordance  with  the  terms  and
conditions  of  this  Note;  provided,  that  all  common  stock  issued  to the
Terminating  Lender  pursuant to such a conversion will be subject to a two year
lock-up  whereby  the   Terminating   Lender  will  not  be  able  to  transfer,
hypothecate,  assign or sell any of those shares for two years after  receipt of
them.  For the purpose of this Note,  "cause" has the meaning  ascribed to it in
Section 3.3 of the Stock Purchase Agreement. This Note is not secured.

         5. DEFAULT.  Any of the following shall constitute a default ("Event of
Default") by Borrower hereunder:

         (a) The  failure  of  Borrower  to make any  payment  of  principal  or
         interest  required  hereunder  within fifteen (15) days of the due date
         for such payment; or

         (d) The  failure  of  Borrower  to fully  perform  any  other  material
         covenants  and  agreements  under  this  Note and  continuance  of such
         failure for a period of forty-five  (45) days after  written  notice of
         the default by Lender to the Borrower.

         Upon the  occurrence  of (a) an Event of Default  under Section 5(a) of
this Note that is not cured  within forty five (45) days of the due date for the
defaulted payment,  (b) an Event of Default under Section 5(b) of this Note, (c)
a sale for cash or notes and no other securities of all or substantially  all of
the  assets of the  Borrower  or of SUN,  or (d) a sale for cash or notes and no
other  securities  of all or  substantially  all of the issued  and  outstanding
voting  capital stock of the Borrower or SUN resulting in a change of control of
the  Borrower  or SUN,  or (e) the  filing  of  bankruptcy  proceedings  for the
Borrower that is not dismissed within sixty (60) days of the filing, Lender may,
at his option,  declare  immediately due and payable the entire unpaid principal
sum of this Note together with all accrued and unpaid interest owing at the time

                                      -2-
<PAGE>

of such declaration pursuant to this Note. Furthermore,  in the Event of Default
under  Section  5(a) of this  Note,  Lender  will  have the right at any time to
convert the entire amount of the defaulted  payment into Borrower's Common Stock
at the Initial Conversion Price, if the conversion is voluntary but not if it is
forced under Section 4 of this Note.

         6. COSTS OF COLLECTIONS. Lender shall be entitled to collect reasonable
attorney's  fees and costs from  Borrower,  as well as other costs and  expenses
reasonably  incurred,  in curing any  default or  attempting  collection  of any
payment due on this Note.

         7. INSPECTION  RIGHTS.  The Lender,  individually or through his agent,
shall have the right, upon reasonable  notice and at his expense,  to review and
inspect  the books and  records of the  Borrower  at  Borrower's  office  during
reasonable business hours.

         8.  PAYMENT AND PLACE OF PAYMENT.  This Note shall be payable in lawful
money of the United States. All payments on this Note are to be made or given to
Lender at the address  provided to Borrower or to such other place as Lender may
from time to time direct by written notice to Borrower.

         9. WAIVER.  Borrower,  for itself and its  successors,  transferors and
assigns,  waives presentment,  dishonor,  protest, notice of protest, demand for
payment and dishonor in nonpayment  of this Note,  bringing of suit or diligence
of taking any  action to  collect  any sums  owing  hereunder  or in  proceeding
against any of the rights and properties securing payment hereunder.

         10.  SEVERABILITY.  If any  provision  of this Note or the  application
thereof to any persons or entities or  circumstances  shall,  to any extent,  be
invalid  or  unenforceable,  the  remainder  of this  Note  shall  not be deemed
affected thereby and every provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.

         11. NO PARTNER. Lender shall not become or be deemed to be a partner or
joint  venturer with  Borrower by reason of any provision of this Note.  Nothing
herein shall  constitute  Borrower and Lender as partners or joint  venturers or
require  Lender to  participate  in or be  responsible  or liable for any costs,
liabilities, expenses or losses of Borrower.

         12. NO WAIVER.  The failure to  exercise  any rights  herein  shall not
constitute  a waiver of the right to exercise the same or any other right at any
subsequent time in respect of the same event or any other event.

         13. NONRECOURSE.  In the event that the Borrower defaults on this Note,
Lender shall look solely to the Borrower for  repayment and none of the members,
officers,  directors  or  affiliates  of the  Borrower  shall have any  personal
liability for payment hereunder.

         14.  ASSIGNABILITY.  The Lender may not assign  this Note  without  the
express prior written  approval of the Borrower,  which it may grant or withhold
in its sole and  absolute  discretion.  This  Note  shall  be  binding  upon the
Borrower and its successors and shall inure to the benefit of the Lender and his
successors and assigns, if any.

                                      -3-
<PAGE>

         15.  GOVERNING  LAW AND  VENUE.  This  Note  shall be  governed  by and
construed solely in accordance with the laws of the State of California  without
giving effect to  applicable  conflict of laws  provisions.  Borrower and Lender
agree that the sole jurisdiction and venue for any litigation arising out of the
Note involving  Borrower or Lender shall be in the appropriate  federal or state
court located in Santa Barbara County, California.

         16.  ENTIRE  AGREEMENT.  This  Note and the  Stock  Purchase  Agreement
contain the entire  understanding and agreement between the parties with respect
to the  subject  matter  herein and may not be altered or amended  except by the
written agreement of the parties.

         17.   COUNTERPARTS.   This  Note  may  be   executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.  Facsimile  executions of
this Note shall be deemed original.

                         [SIGNATURES ON FOLLOWING PAGE.]

                                      -4-
<PAGE>

         IN WITNESS  WHEREOF,  Borrower  and Lender have  executed  this Note on
October 31, 2013, to be effective as of the date first hereinabove written.

BORROWER:                   SOLAR3D, INC., a Delaware corporation

                             By:
                                ------------------------------------------------
                                James B. Nelson, Chief Executive Officer

LENDER:

                            ----------------------------------------------------
                            Mikhail Podnesbesnyy, Individually

                                      -5-
<PAGE>

                                    EXHIBIT B

                              DISCLOSURE SCHEDULESExhibit 10.1

 

AMENDED AND RESTATED

 

WARRANT AGREEMENT

 

 BETWEEN

 

 GENERAL GROWTH PROPERTIES, INC.

 

AND

 

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

 

as WARRANT AGENT

 

Effective as of October 28, 2013

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
2.
    	
ORIGINAL   ISSUE OF WARRANTS
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
2.1.
    	
Form of   Warrant Certificates
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.2.
    	
Execution   and Delivery of Warrant Certificates; Vesting
    	
9
    
	
 
    	
 
    	
 
    
	
3.
    	
EXERCISE   PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
3.1.
    	
Exercise   Price
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.2.
    	
Exercise   of Warrants
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.3.
    	
Expiration   of Warrants
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.4.
    	
Method   of Exercise; Settlement of Warrant
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.5.
    	
Transferability   of Warrants and Common Stock
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.6.
    	
Compliance   with Law
    	
13
    

 

i

 

	
4.
    	
REGISTRATION   RIGHTS
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1.
    	
Rule 144   Reporting
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.2.
    	
Obtaining   Exchange Listing
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.3.
    	
The   Warrant Agent
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
ADJUSTMENTS   AND OTHER RIGHTS
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1.
    	
Stock   Dividend; Subdivision or Combination of Common Stock
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.2.
    	
Other   Dividends and Distributions
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.3.
    	
Rights   Offerings
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.4.
    	
Issuer   Tender or Exchange Offers
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.5.
    	
Reorganization,   Reclassification, Consolidation, Merger or Sale
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.6.
    	
Other   Adjustments
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.7.
    	
Notice   of Adjustment
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
CHANGE   OF CONTROL
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1.
    	
Redemption   in Connection with a Change of Control Event
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.2.
    	
Public   Stock Merger
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.3.
    	
Mixed   Consideration Merger
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4.
    	
The   Warrant Agent
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
WARRANT   TRANSFER BOOKS
    	
21
    
	
 
    	
 
    	
 
    
	
8.
    	
WARRANT   HOLDERS
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1.
    	
No   Voting Rights
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2.
    	
Right   of Action
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
WARRANT   AGENT
    	
23
    
	
 
    	
 
    	
 
    
	
 
    	
9.1.
    	
Nature   of Duties and Responsibilities Assumed
    	
23
    

 

ii

 

	
 
    	
9.2.
    	
Compensation   and Reimbursement
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.3.
    	
Warrant   Agent May Hold Company Securities
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.4.
    	
Resignation   and Removal; Appointment of Successor
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.5.
    	
Damages
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.6.
    	
Force   Majeure
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.7.
    	
Survival
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
REPRESENTATIONS   AND WARRANTIES
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1.
    	
Representations   and Warranties of the Company
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
COVENANTS
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.1.
    	
Reservation   of Common Stock for Issuance on Exercise of Warrants
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.2.
    	
Notice   of Distributions
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
MISCELLANEOUS
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.1.
    	
Money   and Other Property Deposited with the Warrant Agent
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.2.
    	
Payment   of Taxes
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.3.
    	
Surrender   of Certificates
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.4.
    	
Mutilated,   Destroyed, Lost and Stolen Warrant Certificates
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.5.
    	
Removal   of Legends
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.6.
    	
Notices
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.7.
    	
Applicable   Law; Jurisdiction
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.8.
    	
Persons   Benefiting
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.9.
    	
Counterparts
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.10.
    	
Amendments
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.11.
    	
Headings
    	
31
    

 

iii

 

	
 
    	
12.12.
    	
Entire   Agreement
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.13.
    	
Specific   Performance
    	
31
    

 

iv

 

List of Exhibits

 

EXHIBIT A-1 — Form of Series A-1 Warrant Certificate

 

EXHIBIT A-2 — Form of Series A-2 Warrant Certificate

 

EXHIBIT B — Form of Assignment

 

EXHIBIT C — Option Pricing Assumptions / Methodology

 

SCHEDULE A — Allocations of Warrants to Initial Investors

 

SCHEDULE B — Warrant Agent Compensation

 

v

 

AMENDED AND RESTATED WARRANT AGREEMENT

 

AMENDED AND RESTATED WARRANT AGREEMENT, effective as of October 28, 2013 (together with the Warrants, this “Agreement”), by and between General Growth Properties, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, a Delaware limited liability company (together with its successors and assigns, the “Warrant Agent”).

 

On November 9, 2010, the Company and Mellon Investor Services LLC, a New Jersey limited liability company (“Mellon”), entered into the Warrant Agreement, as amended on March 28, 2013, which the Company and Warrant Agent, as successor to Mellon, now desire to amend and restate with this Agreement.  References to “the date hereof” shall mean November 9, 2010.

 

WITNESSETH:

 

WHEREAS, the Company is issuing and delivering warrant certificates (the “Warrant Certificates”) evidencing Warrants to purchase up to an aggregate of 120,000,000 shares of its Common Stock, subject to adjustment, including (a) Series A-1 Warrants to purchase 57,500,000 shares of its Common Stock, subject to adjustment, in connection with that certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31, 2010, by and between Brookfield Retail Holdings (formerly known as REP Investments LLC) and the Company (as amended from time to time, the “Investment Agreement”), (b) Series A-2 Warrants to purchase 41,071,429 shares of its Common Stock, subject to adjustment, in connection with that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between each of The Fairholme Fund and The Fairholme Focused Income Fund (each a “Fairholme Purchaser”, and collectively, the “Fairholme Purchasers”) and the Company (as amended from time to time, the “Fairholme Stock Purchase Agreement”), (c) Series A-2 Warrants to purchase 16,428,571 shares of its Common Stock in connection with that certain Amended and Restated Stock Purchase Agreement, effective as of March 31, 2010, by and between each of Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd. and Pershing Square International V, Ltd. (each, a “Pershing Square Purchaser”, collectively, the “Pershing Square Purchasers”) and the Company (as amended from time to time, the “Pershing Square Stock Purchase Agreement” and, together with the Fairholme Stock Purchase Agreement, the “Stock Purchase Agreements”) and (d) Series A-1 Warrants to purchase 5,000,000 shares of its Common Stock in connection with the Blackstone Purchase Agreements (as defined herein) and those certain designations, dated as of the date hereof, by and among the Company and each of Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), the Fairholme Purchasers and the Pershing Square Purchasers (the “Blackstone Designations”) pursuant to each of which each Purchaser (as defined herein) has agreed to make an equity investment in the Company upon the terms and subject to the conditions specified therein; and

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange, replacement and exercise of the Warrant Certificates and other matters as provided herein;

 

1

 

NOW, THEREFORE, in consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the record holders of the Warrants, the Company and the Warrant Agent each hereby agree as follows:

 

1.                                      DEFINITIONS.

 

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

 

Affiliate:  of any particular Person means any other Person controlling, controlled by or under common control with such particular Person.  For the purposes of this definition, (i) “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise and (ii) none of the Initial Investors or their Affiliates shall be deemed to “control” the Company or any of the Company’s controlled Affiliates prior to such Initial Investor or Affiliate, as applicable, acquiring or becoming part of the acquiring group for purposes of clauses (i) or (ii) or combining with the Company for purposes of clause (iii) of the definition of Change of Control Event.

 

Announcement Date:  the meaning set forth in Section 5.4.

 

Blackstone B Warrant:  means a Warrant (whether held by a Blackstone Investor or by any transferee or any other Person) that was initially issued to a Blackstone Investor pursuant to the Brookfield Purchase Agreement (and the corresponding Blackstone Designation) or its designees in accordance with the last sentence of Section 2.2(a).

 

Blackstone Designations:  the meaning set forth in the recitals hereto.

 

Blackstone F/P Warrant:  means a Warrant (whether held by a Blackstone Investor or by any transferee or any other Person) that was initially issued to a Blackstone Investor pursuant to either the Fairholme Purchase Agreement or the Pershing Purchase Agreement (and the corresponding Blackstone Designations) or its designees in accordance with the last sentence of Section 2.2(a).

 

Blackstone Investors:  means all members, collectively, of the Blackstone Purchaser Group.

 

Blackstone Purchase Agreements:  means, collectively, the Brookfield Purchase Agreement, the Fairholme Purchase Agreement and the Pershing Purchase Agreement.

 

Blackstone Purchaser:  means Blackstone Real Estate Partners VI L.P.

 

Blackstone Purchaser Group:  means the Blackstone Purchaser, Blackstone Real Estate Partners (AIV) VI L.P., Blackstone Real Estate Partners VI.F L.P., Blackstone Real Estate Partners VI.TE.1 L.P., Blackstone Real Estate Partners VI.TE.2 L.P., Blackstone Real Estate Holdings VI L.P. and Blackstone GGP Principal Transaction Partners L.P. and their respective investment managers and their respective “controlled Affiliates”.  For such purpose, one or more

 

2

 

investment funds under common investment management shall constitute “controlled Affiliates” of their investment manager.

 

Board:  the board of directors of the Company.

 

Brookfield Consortium Member:  as defined in the Investment Agreement.

 

Brookfield Investors:  means, collectively, the Brookfield Consortium Members.

 

Brookfield Purchase Agreement:  means that certain Purchase Agreement, dated as of August 2, 2010, by and between REP Investments LLC and the Blackstone Purchaser.

 

Brookfield Purchaser:  the Purchaser defined in the Investment Agreement.

 

Brookfield Warrant:  means a Warrant (whether held by Brookfield Purchaser or a Brookfield Consortium Member or by any transferee or any other Person) that was initially issued to Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, pursuant to the Investment Agreement or its designees in accordance with the last sentence of Section 2.2(a).

 

Business Day:  any day that is not a Saturday, Sunday, or a day on which banks in the states of New York or New Jersey are required or permitted to be closed.

 

Cash Consideration Ratio:  means, in connection with a Mixed Consideration Merger, a fraction, (i) the numerator of which shall be the aggregate Fair Market Value of cash and all other property (other than Public Stock) that holders of Common Stock will receive for each such share of Common Stock in connection with such Mixed Consideration Merger, and (ii) the denominator of which shall be the Fair Market Value of all of the consideration holders of Common Stock will receive for each such share of Common Stock in connection with such Mixed Consideration Merger; provided, that, if the holders of Common Stock have the opportunity to elect the consideration to be received in such Mixed Consideration Merger, the Cash Consideration Ratio shall be determined by reference to the weighted average of the types and amounts of consideration received in such transaction in respect of shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company.

 

Certificate of Incorporation:  the Company’s certificate of incorporation (or equivalent organizational document), as amended from time to time.

 

Change of Control Event:  an event or series of events, by which (i) any Person or group of Persons shall have acquired beneficial ownership (within the meaning of Rule 13d-3(a) promulgated by the SEC under the Exchange Act), directly or indirectly, of fifty percent (50%) or more (by voting power) of the outstanding shares of Voting Securities, (ii) all or substantially all of the consolidated assets of the Company are sold, leased (other than leases to tenants in the ordinary course of business), exchanged or transferred to any Person or group of Persons, (iii) the Company is consolidated, merged, amalgamated, reorganized or otherwise enters into a similar transaction in which it is combined with another Person (in each case, other than pursuant to the Plan), unless shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company remain unchanged or are exchanged for,

 

3

 

converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock and the Persons who beneficially own the outstanding Voting Securities of the Company immediately before consummation of the transaction beneficially own a majority (by voting power) of the outstanding Voting Securities of the combined or surviving entity or new parent immediately thereafter, (iv) the Company engages in a reclassification or similar transaction pursuant to which shares of Common Stock are converted into the right to receive anything other than Public Stock, or (v) the holders of capital stock of the Company have approved any plan or proposal for the liquidation or dissolution of the Company; provided that with respect to an election by any Holder pursuant to Section 6.1, no event or series of events shall constitute a Change of Control Event if (x) such event or series of events is not approved by a majority of the disinterested directors of the Company and (y) such Holder or any of its Affiliates is the acquiror or part of the acquiring group for purposes of clause (i) or (ii) above or is combined with the Company for purposes of clause (iii) above.  For purposes of this definition, a “group” means a group of Persons within the meaning of Rule 13d-5 under the Exchange Act.

 

Change of Control Exchange: means the exchange of Warrants for shares of Common Stock to a Holder (x) upon the election of such Holder in accordance with Section 6.1, (y) pursuant to Section 6.2(b) or (z) upon the election of the Company in accordance with Section 6.3(a)(i) or automatically pursuant to Section 6.3(b).

 

Closing Sale Price:  as of any date, the last reported per share sales price of a share of Common Stock or the applicable security on such date (or, if no last reported sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices on such date) as reported on the New York Stock Exchange, or if the Common Stock or such other security is not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which the Common Stock or such other security is then listed or quoted; provided, however, that in the absence of such listing or quotations, the Closing Sale Price shall be determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such Common Stock or securities are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.

 

Code:  the U.S. Internal Revenue Code of 1986, as amended.

 

Common Stock:  the common stock, par value $0.01, of the Company.

 

Company:  the meaning set forth in the preamble to this Agreement and its successors and assigns.

 

Conversion Value: the meaning set forth in Section 6.1(b).

 

Distribution:  the meaning set forth in Section 5.2.

 

Exchange Act:  the U.S. Securities Exchange Act of 1934, as amended.

 

4

 

Exercise Date:  the meaning set forth in Section 3.4.

 

Exercise Price:  means (i) for each Fairholme/Pershing Warrant, $10.50 per share, (ii) for each Brookfield Warrant, $10.75 per share, (iii) for each Blackstone F/P Warrant, $10.50 per share and (iv) for each Blackstone B Warrant, $10.75 per share, in each case subject to all adjustments made on or prior to the date of exercise thereof as herein provided.

 

Expiration Date:  the meaning set forth in Section 3.3.

 

Fairholme Investors:  all members, collectively, of the Fairholme Purchaser Group.

 

Fairholme/Pershing Warrant:  means a Warrant (whether held by a Fairholme Investor, Pershing Investor or by any transferee or any other Person) that was initially issued to a Fairholme Investor or Pershing Investor pursuant to one of the Stock Purchase Agreements or any of their designees in accordance with the last sentence of Section 2.2(a).

 

Fairholme Purchase Agreement:  means that certain Purchase Agreement, dated as of August 2, 2010, by and between the Fairholme Purchasers and the Blackstone Purchaser.

 

Fairholme Purchasers:  the meaning set forth in the recitals hereto.

 

Fairholme Purchaser Group:  the Purchaser Group defined in the Fairholme Stock Purchase Agreement.

 

Fairholme Stock Purchase Agreement:  the meaning set forth in the recitals hereto.

 

Fair Market Value:

 

(i)                                in the case of shares or securities, the average of the daily volume weighted average prices per share of such shares or securities for the ten consecutive trading days immediately preceding the day as of which Fair Market Value is being determined, as reported on the New York Stock Exchange, or if such shares or securities are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system on which such shares or securities are then listed or quoted; provided, however, if (x) such shares or securities are not listed or quoted on the New York Stock Exchange or any U.S. national or regional securities exchange or quotations system or (y) a transaction impacting such shares or securities makes it unjust or inequitable to value such shares or securities in the manner provided above as reasonably determined in good faith by the Board, then the Fair Market Value of such securities shall be the fair market value per share or unit of such shares or securities as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such shares or other securities are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.

 

(ii)                             in the case of cash, the amount thereof.

 

5

 

(iii)                          in the case of other property, the Fair Market Value of such property shall be the fair market value thereof as determined by an Independent Financial Expert appointed for such purpose, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming such property is to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors.

 

Full Physical Settlement:  the settlement method with respect to Series A-1 Warrants pursuant to which an exercising Holder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Full Physical Share Amount in exchange for payment by the Holder of the aggregate Exercise Price applicable to such Warrant.

 

Full Physical Share Amount:  the meaning set forth in Section 3.4.

 

Holders:  from time to time, the holders of the Warrants and, unless otherwise provided or indicated herein, the holders of the Warrant Securities, solely in their capacity as such.

 

Independent Financial Expert:  a nationally recognized financial advisory firm mutually agreed by the Company and the Majority Holders. If the Company and the Majority Holders are unable to agree on an Independent Financial Expert for a valuation contemplated herein, each of them shall choose promptly a separate Independent Financial Expert and these two Independent Financial Experts shall choose promptly a third Independent Financial Expert to conduct such valuation.

 

Initial Investor:  means, as applicable, (i) the Fairholme Purchasers, (ii) Pershing Square Capital Management, L.P. and the Pershing Square Purchasers, (iii) the Brookfield Purchaser; provided that, solely for the purposes of this definition, in the event the Brookfield Purchaser is not in existence, the Brookfield Purchaser shall be Brookfield Asset Management Inc. or an Affiliate designated by Brookfield Asset Management Inc and (iv) the Blackstone Purchaser.

 

Investment Agreement:  the meaning set forth in the recitals hereto.

 

Majority Holders:  means at any time Holders of a majority in number of the outstanding Warrants not held by the Company or any of the Company’s Affiliates.

 

Mixed Consideration Merger:  means an event described in clause (iii) of the definition of Change of Control Event pursuant to which all of the outstanding shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration a combination of (i) Public Stock and (ii) other securities, cash or other property.

 

Net Share Amount:  the meaning set forth in Section 3.4.

 

Net Share Settlement:  the settlement method for Series A-1 Warrants, if elected in accordance with Section 3.4, and for Series A-2 Warrants pursuant to which an exercising

 

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Holder shall be entitled to receive from the Company, for each Warrant exercised, a number of shares of Common Stock equal to the Net Share Amount without any payment therefor.

 

Organic Change:  the meaning set forth in Section 5.5.

 

Pershing Investors:  all members, collectively, of the Pershing Purchaser Group.

 

Pershing Square Purchasers:  the meaning set forth in the recitals hereto.

 

Pershing Purchase Agreement:  means that certain Purchase Agreement, dated as of August 2, 2010, by and between the Pershing Purchasers and the Blackstone Purchaser.

 

Pershing Purchaser Group:  the Purchaser Group defined in the Pershing Stock Purchase Agreement.

 

Pershing Square Stock Purchase Agreement:  the meaning set forth in the recitals hereto.

 

Pershing Square Warrant Vesting Date:  the meaning set forth in Section 2.2(b).

 

Person:  any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

Plan:  the plan of reorganization as contemplated by the Plan Term Sheet attached as Exhibit A to the Investment Agreement and Stock Purchase Agreements.

 

Preliminary Change of Control Event:  with respect to the Company, the first public announcement that describes the economic terms of a transaction that results in a Change of Control Event.

 

Premium Per Post-Tender Share:  the meaning set forth in Section 5.4.

 

Public Stock:  means common stock listed on a recognized U.S. national securities exchange with an aggregate market capitalization (held by non-Affiliates of the issuer) in excess of $1 billion in Fair Market Value.

 

Purchaser Group:  (a) means with respect to Brookfield Purchaser, the Brookfield Consortium Members, (b) with respect to Fairholme Purchasers, the Fairholme Purchaser Group, (c) with respect to Pershing Square Purchasers, the Pershing Purchaser Group and (d) with respect to the Blackstone Purchaser, the Blackstone Purchaser Group.

 

Public Stock Merger:  means an event described in clause (iii) of the definition of Change of Control Event pursuant to which all of the outstanding shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company are exchanged for, converted into or constitute solely (except to the extent of applicable appraisal rights or cash received in lieu of fractional shares) the right to receive as consideration Public Stock.

 

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Purchaser:  means each of the Blackstone Purchasers, the Brookfield Purchaser, the Fairholme Purchasers and the Pershing Square Purchasers.

 

Redemption Value: the meaning set forth in Section 6.1(b).

 

Registration Rights Agreements:  means those certain registration rights agreements, dated as of the date hereof, between the Company, and separately, each of (i) the Pershing Investors and Blackstone Real Estate Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited partnership, and Blackstone GGP Principal Transaction Partners L.P., a Delaware limited partnership, (ii) the Fairholme Investors and (iii) Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited liability company, Brookfield Retail Holdings II LLC, a Delaware limited liability company, Brookfield Retail Holdings III LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-A LLC, a Delaware limited liability company, Brookfield Retail Holdings IV-D LLC, a Delaware limited liability company, Brookfield Retail Holdings V LP, a Delaware limited partnership, and Brookfield US Retail Holdings LLC, a Delaware limited liability company.

 

Rule 144:  means such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

 

Sale:  the meaning set forth in Section 3.6(a) of this Agreement.

 

SEC:  the U.S. Securities and Exchange Commission.

 

Securities Act:  the U.S. Securities Act of 1933, as amended.

 

Securities Exchange Act:  the U.S. Securities Exchange Act of 1934, as amended.

 

Sell: the meaning set forth in Section 3.6(a) of this Agreement.

 

Series A-1 Warrants:  the Series A-1 Warrants issued by the Company from time to time pursuant to this Agreement.

 

Series A-2 Warrants:  the Series A-2 Warrants issued by the Company from time to time pursuant to this Agreement.

 

Settlement Date:  means, in respect of a Warrant that is exercised hereunder, a reasonable time, not to exceed three Business Days, immediately following the Exercise Date for such Warrant.

 

Stock Consideration Ratio:  means, in connection with a Mixed Consideration Merger, 1 — the Cash Consideration Ratio for such Mixed Consideration Merger.

 

Stock Dividend:  the meaning set forth in Section 5.1.

 

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Stock Purchase Agreements:  the meaning set forth in the recitals to this Agreement.

 

Supermajority Holders:  means at any time Holders of two-thirds or greater in number of the outstanding Warrants not held by the Company or any of the Company’s Affiliates.

 

Underlying Common Stock:  the shares of Common Stock issuable or issued upon the exercise of the Warrants.

 

Voting Securities:  means any securities of the Company, surviving entity or parent, as applicable, having power generally to vote in the election of directors of the Company, surviving entity or parent, as applicable.

 

Warrant Agent:  the meaning set forth in the preamble to this Agreement.

 

Warrant Certificates:  the meaning set forth in the recitals to this Agreement.

 

Warrant Registrar:  the meaning set forth in Article 7.

 

Warrant Securities:  the meaning set forth in Section 3.6(a).

 

Warrants:  the Series A-1 Warrants and the Series A-2 Warrants.

 

2.                                      ORIGINAL ISSUE OF WARRANTS.

 

2.1                               Form of Warrant Certificates. The Warrant Certificates shall be in registered form only and substantially in the form attached hereto as Exhibit A-1, with respect to Series A-1 Warrants, and Exhibit A-2, with respect to Series A-2 Warrants, with such appropriate instructions, omissions, substitutions and other variations as are required or permitted by this Agreement (but which do not affect the rights, duties or responsibilities of the Warrant Agent) shall be dated the date on which countersigned by the Warrant Agent and may have such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as required by the Certificate of Incorporation or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed.

 

2.2                               Execution and Delivery of Warrant Certificates; Vesting.

 

(a)                                 Simultaneously with the execution of this Agreement, Warrant Certificates evidencing such total number of Warrants to be delivered to each Initial Investor as set forth on Schedule A shall be executed by the Company and delivered to the Warrant Agent for countersignature, by manual or facsimile signature, and the Warrant Agent shall thereupon countersign and deliver such Warrant Certificates to each Initial Investor (or their designee(s) in accordance with the last sentence of this Section 2.2(a)).  The Warrant Certificates shall be executed on behalf of the Company by its President or a Vice President, either manually or by facsimile signature printed thereon.  Each Initial Investor, in its sole discretion, may designate that some or all of its Warrants and Warrant Certificates be issued in the name of, and delivered to, one or more of the members of its Purchaser Group.

 

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(b)                                 Solely with respect to the Warrants delivered pursuant to the Pershing Square Stock Purchase Agreement, such Warrants (i) shall not vest or be exercisable prior to the New Warrant Vesting Date (as defined in the Pershing Square Stock Purchase Agreement) (the “Pershing Square Warrant Vesting Date”) and (ii) shall expire and not vest if, after the date hereof but prior to the Pershing Square Warrant Vesting Date, all (but not less than all) of the outstanding shares of Common Stock shall have been acquired by any single Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act, and the rules and regulations promulgated thereunder) of Persons, other than the Company, any Initial Investor or any Affiliate of the Company or any Initial Investor, in a full cash tender offer or in a full cash merger transaction that, in each case, has been approved after the date hereof by the Board.

 

(c)                                  From time to time, the Warrant Agent shall countersign and deliver Warrant Certificates in required denominations to Persons entitled thereto in connection with any transfer or exchange permitted under this Agreement. The Warrant Agent is hereby irrevocably (but subject to Article 9) authorized to countersign and deliver Warrant Certificates as required by Section 2.2, Section 3.4, Article 7, and Section 12.4 or otherwise as provided herein. The Warrant Certificates shall be executed on behalf of the Company by its President or a Vice President, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be countersigned by the Warrant Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent, either manually or by facsimile signature printed thereon, and issued and delivered with the same force and effect as though such Person had not ceased to be such officer of the Company.

 

(d)                                 No Warrant Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose, and no Warrant evidenced thereby may be exercised, unless such Warrant Certificate has been countersigned by the manual or facsimile signature of the Warrant Agent.  Such signature by the Warrant Agent upon any Warrant Certificate executed by the Company shall be conclusive evidence that such Warrant Certificate has been duly issued under the terms of this Agreement.

 

3.                                      EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.

 

3.1                               Exercise Price.  Each Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions of this Agreement, to purchase, except as provided in Section 3.3 hereof, one share of Common Stock for each Warrant represented thereby, subject to all adjustments made on or prior to the date of exercise thereof, at the applicable Exercise Price.

 

3.2                               Exercise of Warrants.  The Warrants shall be exercisable in whole or in part from time to time on any Business Day beginning on the date hereof and ending on the Expiration Date, in the manner provided for herein; provided, that solely with respect to the exercise any time prior to the date that is 180 days prior to the Expiration Date of any Warrant held at the time of exercise by a Fairholme or Pershing Investor, such Fairholme or Pershing Investor must have

 

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delivered written notice of its intent to exercise such Warrant to the Company 90 days prior to the Exercise Date of such Warrant and no exercise of such Warrant shall be effective until such 90-day period has lapsed.

 

3.3                               Expiration of Warrants.  Any unexercised Warrants shall expire and the rights of the Holders of such Warrants to purchase Underlying Common Stock shall terminate at the close of business on November       , 2017 (the “Expiration Date”).

 

3.4                               Method of Exercise; Settlement of Warrant.  In order to exercise a Warrant, the Holder thereof must (i) surrender the Warrant Certificate evidencing such Warrant to the Warrant Agent, with the form on the reverse of or attached to the Warrant Certificate properly completed and duly executed (the date of the surrender of such Warrant Certificate, the “Exercise Date”), and (ii) with respect to Series A-1 Warrants for which Net Share Settlement is not elected, deliver in full the aggregate Exercise Price then in effect for the shares of Underlying Common Stock as to which a Warrant Certificate is submitted for exercise, not later than the Settlement Date as more fully set forth herein.  Full Physical Settlement shall apply to each Series A-1 Warrant unless the Holder elects for Net Share Settlement to apply upon exercise of such Warrant.  Only Net Share Settlement shall apply (and shall be automatically deemed to have been irrevocably elected) upon exercise of each Series A-2 Warrant.  The election of Net Share Settlement shall be made in the form on the reverse of or attached to the Warrant Certificate for each Series A-1 Warrant.

 

(a)                                 If Full Physical Settlement is applicable with respect to the exercise of a Warrant, then, for each Series A-1 Warrant exercised hereunder (i) prior to 11:00 a.m., New York City time, on the Settlement Date for such Warrant, the Holder shall pay the aggregate Exercise Price (determined as of such Exercise Date) for the number of shares of Common Stock obtainable upon exercise of such Warrant at such time by federal wire or other immediately available funds payable to the order of the Company to the account maintained by the Warrant Agent and notified to the Holder upon request of the Holder, and (ii) on the Settlement Date, following receipt by the Warrant Agent of such Exercise Price, the Company shall cause to be delivered to the Holder the number of shares of Common Stock obtainable upon exercise of each Series A-1 Warrant at such time (the “Full Physical Share Amount”), together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f).

 

(b)                                 If Net Share Settlement is applicable with respect to the exercise of a Warrant, then, for each Warrant exercised hereunder, on the Settlement Date for such Warrant, the Company shall cause to be delivered to the Holder a number of shares of Common Stock (which in no event will be less than zero) (the “Net Share Amount”) equal to (i) the number of shares of Common Stock issuable upon exercise of such Warrant at such time, multiplied by (ii) the Closing Sale Price on the relevant Exercise Date, minus the Exercise Price (determined as of such Exercise Date), divided by (iii) such Closing Sale Price, together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f).  The Warrant Agent shall not take any action under this Section unless and until the Company has provided it with written instructions containing the Net Share Amount.  The Warrant Agent shall have no duty or obligation to investigate or confirm whether the Company’s determination of the number of the Net Share Amount is accurate or correct.

 

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(c)                                  Upon surrender of a Warrant Certificate to the Warrant Agent in conformity with the foregoing provisions and, in the event of Full Physical Settlement of a Series A-1 Warrant, receipt by the Warrant Agent of the Exercise Price therefor, the Warrant Agent shall thereupon promptly notify the Company, and the Company shall instruct its transfer agent to transfer to the Holder of such Warrant Certificate appropriate evidence of ownership of any shares of Underlying Common Stock or other securities or property to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder, and shall deliver such evidence of ownership to the Person or Persons entitled to receive the same, together with cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f), provided that if the Holder shall direct that such securities be registered in a name other than that of the Holder, such direction shall be tendered in conjunction with a signature guarantee by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent, and any other reasonable evidence of authority that may be required by the Warrant Agent.  Upon surrender of a Warrant Certificate to the Warrant Agent in conformity with subsection (a) above and, in the event of Full Physical Settlement of a Series A-1 Warrant, receipt by the Warrant Agent of the Exercise Price therefor, a Holder shall be deemed to own and have all of the rights associated with any Underlying Common Stock or other securities or property to which such Holder is entitled pursuant to this Agreement upon the surrender of a Warrant Certificate in accordance with this Agreement.

 

(d)                                 The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with its performance under this Agreement shall be in the Warrant Agent’s name and that the Warrant Agent may receive investment earnings in connection with the investment at the Warrant Agent’s risk and for its benefit of funds held in those accounts from time to time.  The Warrant Agent shall remit any payments received in connection with the exercise of Warrants to the Company as soon as practicable and in any event within three Business Days by federal wire or other immediately available funds to an account selected by the Company and notified in writing to the Warrant Agent.

 

(e)                                  If fewer than all the Warrants represented by a Warrant Certificate are surrendered, such Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Warrant Agent by the Company. The Warrant Agent shall promptly countersign, by either manual or facsimile signature, the new Warrant Certificate, register it in such name or names as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

 

(f)                                   The Company shall not be required to issue any fraction of a share of Common Stock upon exercise of any Warrants; provided, that, if more than one Warrant shall be exercised hereunder at one time by the same Holder, the number of full shares of Common Stock which shall be issuable upon exercise thereof shall be computed on the basis of all Warrants so exercised, and shall include the aggregation of all fractional shares of Common Stock issuable upon exercise of such Warrants.  If after giving effect to the aggregation of all shares of Common Stock (and fractions thereof) issuable upon exercise of Warrants by the same Holder at one time as set forth in the previous sentence, any fraction of a share of Common Stock would, except for the provisions of this Section 3.4(f), be issuable on the exercise of any Warrant or

 

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Warrants, the Company shall pay the Holder cash in lieu of such fractional share valued at the Closing Sale Price on the Exercise Date.

 

3.5                               Transferability of Warrants and Common Stock.  Except as any Holder may otherwise agree in writing, any Warrants, all rights with respect thereto and any shares of Underlying Common Stock may be sold, transferred or disposed of, in whole or in part, without any requirement of obtaining the consent of the Company to so sell, transfer or dispose of, provided that any such sale, transfer or disposition shall be in accordance with the terms of this Agreement, including, without limitation, Article 7 hereof.

 

3.6                               Compliance with Law.  (a) To the extent the Warrants or Common Stock issued upon exercise of the Warrants are “Registrable Securities” under the Registration Rights Agreements (“Warrant Securities”), no Series A-1 Warrant may be exercised using Full Physical Settlement (and the Warrant Agent shall be under no obligation to process any such exercise) and no such Warrant Securities may be sold, transferred, hypothecated, pledged or otherwise disposed of (any such sale, transfer or other disposition, a “Sale”, and the action of making any such sale, transfer or other disposition, to “Sell”), except in compliance with applicable Federal and state securities and other applicable laws and this Section 3.6.

 

(b)                                 A Holder may exercise its Warrants if it is an “accredited investor” or a “qualified institutional buyer”, as defined in Regulation D and Rule 144A under the Securities Act, respectively, and a Holder may Sell its Warrant Securities to a transferee that is an “accredited investor” or a “qualified institutional buyer”, as such terms are defined in Regulation D and Rule 144A under the Securities Act, respectively, provided that each of the following conditions is satisfied:

 

(i)                                     such Holder or transferee, as the case may be, provides certification establishing to the reasonable satisfaction of the Company that it is an “accredited investor”;

 

(ii)                                  such Holder or transferee represents to the Company in writing that it is acquiring the applicable Warrant Securities for its own account and that it is not acquiring such Warrant Securities with a view to, or for offer or Sale in connection with, any distribution thereof (within the meaning of the Securities Act) that would be in violation of the securities laws of the United States or any applicable state thereof, but subject, nevertheless, to the disposition of its property being at all times within its control;

 

(iii)                               such Holder or transferee agrees to be bound by the provisions of this Section 3.6 with respect to any exercise of the Warrants and any Sale of the Warrant Securities; and

 

(iv)                              such Holder or transferee represents and warrants in writing to the Company that the Holder or transferee has sufficient knowledge and experience in investment transactions of this type to evaluate the merits and risks of its exercise or purchases, as applicable.

 

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(c)                                  A Holder may exercise its Warrants and may Sell its Warrant Securities in accordance with Regulation S under the Securities Act.

 

(d)                                 A Holder may exercise its Warrants and may Sell its Warrant Securities if:

 

(i)                                     such Holder gives written notice to the Company of its intention to exercise or effect such Sale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail;

 

(ii)                                  such notice includes a customary opinion from internal or external counsel to the Holder to the effect that, in either case, such proposed exercise or Sale may be effected without registration under the Securities Act or under applicable blue sky laws; and

 

(iii)                               such Holder or transferee complies with Sections 3.6(b)(ii), 3.6(b)(iii), and 3.6(b)(iv).

 

(e)                                  subject to Section 12.5, each certificate representing Warrant Securities shall bear the following legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER       , 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “COMPANY”), AND MELLON INVESTOR SERVICES LLC, AS WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

(f)                                   [Intentionally omitted.]

 

(g)                                  the provisions of Section 3.6 shall not apply to, and any Holder may exercise its Warrants or may Sell its Warrant Securities:

 

(i)                                     in a transaction that is registered under the Securities Act; and

 

(ii)                                  in a transaction pursuant to Rule 144 of the Exchange Act; and

 

(iii)                               in a transaction following receipt of a legal opinion of counsel to a Holder that the applicable Warrant Securities are eligible for resale by the Holder without volume limitations or other limitations under Rule 144; and

 

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(iv)                              with respect to an exercise of a Warrant, in an exercise using Net Share Settlement.

 

(h)                                 The Warrant Agent shall not take any action with respect to a Sale of Warrant Securities under this Section 3.6 unless and until it has received appropriate instructions from the Company and a certification of compliance with these provisions from the Company.

 

4.                                      REGISTRATION RIGHTS.

 

4.1                               Rule 144 Reporting.  With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Warrant Securities to the public without registration, the Company agrees, so long as it is subject to the periodic reporting requirements of the Securities Act, to use its reasonable best efforts to:

 

(a)                                 make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

 

(b)                                 file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and

 

(c)                                  so long as the Holders own any Warrant Securities, furnish to such Holders forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; and such other reports and documents as any Initial Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration.

 

4.2                               Obtaining Exchange Listing.  The Company will file a listing application for listing on the exchange on which the then outstanding Common Stock is listed with respect to the Underlying Common Stock as soon as practicable after the date hereof.  The Company shall use reasonable best efforts to list the Warrants, and maintain such listing, on such exchange or, if not possible, another U.S. national securities exchange, in connection with any proposed underwritten distribution of the Warrants that meets the applicable listing criteria.  A copy of any opinion of counsel accompanying a listing application by the Company with respect to the Underlying Common Stock or Warrants shall be furnished to the Warrant Agent, together with a letter to the effect that the Warrant Agent may rely on the statements made in such opinion.

 

4.3                               The Warrant Agent.  The Warrant Agent shall have no duties or obligations under the Registration Rights Agreements and shall have no duty to monitor or enforce the Company’s compliance with this Article 4 or the Registration Rights Agreements.

 

5.                                      ADJUSTMENTS AND OTHER RIGHTS.

 

5.1                               Stock Dividend; Subdivision or Combination of Common Stock.  If the Company at any time issues to holders of the Common Stock a dividend payable solely in, or other distribution solely of, Common Stock (a “Stock Dividend”), the Exercise Price in effect at the 

 

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close of business on the record date for such dividend or distribution shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding at the close of business on such record date divided by (y) the sum of such number of shares and the total number of shares constituting such dividend or other distribution.  If the Company at any time subdivides or combines (by stock split, reverse stock split, recapitalization or otherwise) the outstanding Common Stock into a greater or smaller number of shares, the Exercise Price in effect immediately prior to the time of effectiveness of such subdivision or combination shall be adjusted at such time of effectiveness to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding immediately prior to such time of effectiveness divided by (y) the number of shares of Common Stock outstanding at the time of effectiveness of and after giving effect to such subdivision or combination.  In any such event referred to in this Section 5.1, the number of shares of Common Stock issuable upon exercise of each Warrant as in effect immediately prior to the Exercise Price adjustment contemplated by the foregoing shall be adjusted immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to such Exercise Price adjustment divided by (y) the Exercise Price determined in accordance with such Exercise Price adjustment.

 

5.2                               Other Dividends and Distributions.  If at any time or from time to time prior to the exercise of any Warrant the Company shall fix a record date for the making of a dividend or other distribution (other than (i) as contemplated by Section 5.5, (ii) a Stock Dividend covered by Section 5.1 or (iii) a distribution of rights or warrants covered by Section 5.3), to the holders of its Common Stock (collectively, a “Distribution”) of:

 

(A)                               any evidences of its indebtedness, any shares of its capital stock or any other securities or property of any nature whatsoever (including cash); or

 

(B)                               any options, warrants or other rights to subscribe for or purchase any of the following: any evidences of its indebtedness, any shares of its capital stock or any other securities or property of any nature whatsoever;

 

then, in each such case, the Exercise Price in effect immediately prior to the close of business on such record date shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the Fair Market Value of the Common Stock on the last trading day immediately preceding the first date on which the Common Stock trades regular way on the principal national securities exchange on which the Common Stock is listed or admitted to trading without the right to receive such Distribution, minus the amount of cash and/or the Fair Market Value of the securities, evidences of indebtedness, assets, rights or warrants to be so distributed in respect of one share of Common Stock divided by (y) the Fair Market Value of the Common Stock on the last trading day immediately preceding the first date on which the Common Stock trades regular way on the principal national securities exchange on which the Common Stock is listed or admitted to trading without the right to receive such Distribution; such adjustment shall be made successively whenever such a record date is fixed. In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to the close of business on such record date shall be increased immediately thereafter to the amount determined by multiplying such number by the 

 

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quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence.  If the Distribution includes Common Stock as well as other items of the sort referred to in Section 5.2(A) or (B), then instead of adjusting for the entire Distribution under this Section 5.2 the Common Stock portion shall be treated as a Stock Dividend that triggers an adjustment to the Exercise Price and number of shares of Common Stock obtainable upon exercise of each Warrant under Section 5.1 and the other items in the Distribution shall trigger a further adjustment to such adjusted Exercise Price and number of shares under this Section 5.2.  In the event that such Distribution is not so made, the Exercise Price and the number of shares of Common Stock issuable upon exercise of each Warrant then in effect shall be readjusted, effective as of the date when the Board determines not to distribute such shares, evidences of indebtedness, assets, rights, cash or warrants, as the case may be, to the Exercise Price that would then be in effect and the number of Shares that would then be issuable upon exercise of this Warrant if such record date had not been fixed.

 

5.3                               Rights Offerings.  If at any time the Company shall distribute rights or warrants to all or substantially all holders of its Common Stock entitling them, for a period of not more than 45 days, to subscribe for or purchase shares of Common Stock at a price per share less than the Fair Market Value of the Common Stock on the last trading day preceding the date on which the Board declares such distribution of rights or warrants, the Exercise Price in effect immediately prior to the close of business on the record date for such distribution shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Fair Market Value divided by (y) the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock so offered for subscription or purchase.  In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to the close of business on such record date shall be increased immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence.  In case any rights or warrants referred to in this Section 5.3 in respect of which an adjustment shall have been made shall expire unexercised and any shares that would have been underlying such rights or warrants shall not have been allocated pursuant to any backstop commitment or any similar arrangement, the Exercise Price and the number of shares of Common Stock issuable upon exercise of each Warrant then in effect shall be readjusted at the time of such expiration to the Exercise Price that would then be in effect and the number of Shares that would then be issuable upon exercise of each Warrant if no adjustment had been made on account of such expired rights or warrants.

 

5.4                               Issuer Tender or Exchange Offers.  If the Company or any subsidiary of the Company shall consummate a tender or exchange offer for all or any portion of the Common Stock for a consideration per share with a Fair Market Value greater than the Fair Market Value of the Common Stock on the date such tender or exchange offer is first publicly announced (the “Announcement Date”), the Exercise Price in effect immediately prior to the expiration date for 

 

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such tender or exchange offer shall be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the quotient of (x) the Fair Market Value of the Common Stock on the Announcement Date minus the Premium Per Post-Tender Share divided by (y) the Fair Market Value of the Common Stock on the Announcement Date.  In such event, the number of shares of Common Stock issuable upon the exercise of each Warrant as in effect immediately prior to such expiration date shall be increased immediately thereafter to the amount determined by multiplying such number by the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated by the immediately preceding sentence divided by (y) the new Exercise Price determined in accordance with the immediately preceding sentence.  As used in this Section 5.4 with respect to any tender or exchange offer, “Premium Per Post-Tender Share” means the quotient of (x) the amount by which the aggregate Fair Market Value of the consideration paid in such tender or exchange offer exceeds the aggregate Fair Market Value on the Announcement Date of the shares of Common Stock purchased therein divided by (y) the number of shares of Common Stock outstanding at the close of business on the expiration date for such tender or exchange offer (after giving pro forma effect to the purchase of shares being purchased in the tender or exchange offer).

 

5.5                               Reorganization, Reclassification, Consolidation, Merger or Sale.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction, which in each case is effected in such a way that the shares of Common Stock are converted into the right to receive (either directly or upon subsequent liquidation) stock, securities, other equity interests or assets (including cash) with respect to or in exchange for shares of Common Stock is referred to herein as “Organic Change.”  Prior to the consummation of any Organic Change other than an Organic Change involving a Change of Control Exchange, the Company shall make appropriate provision to ensure that each of the Holders shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder’s Warrants, with the same rights afforded generally to holders of Common Stock in connection with such Organic Change, such stock, securities, other equity interests or assets, in each case as may be issued or payable in connection with the Organic Change with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon exercise of such Holder’s Warrants, for an aggregate Exercise Price per Warrant equal to the aggregate Exercise Price per Warrant as in effect immediately prior to such Organic Change.  Prior to the consummation of an Organic Change involving a Change of Control Exchange, the Company shall make appropriate provision to ensure that each of the Holders shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the Common Stock receivable in connection with a Change of Control Exchange, with the same rights afforded generally to holders of Common Stock in such Organic Change, such cash, stock, securities, other equity interests or assets, in each case as may be issued or payable in connection with such Organic Change with respect to or in exchange for such number of shares of Common Stock acquirable by such Holder in such Change of Control Exchange.  In any such case, the Company shall make appropriate provision to insure that all of the provisions of the Warrants shall thereafter be applicable to such stock, securities, other equity interests or assets.  The Company shall not effect any such consolidation, merger or sale of all or substantially all of the Company’s assets where the Warrants will be assumed by the successor entity, unless prior to the consummation thereof, the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes by written 

 

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instrument the obligation to deliver to each such Holder upon exercise of any Warrant, such stock, securities, equity interests or assets (including cash) as, in accordance with Article 5, such Holder may be entitled to acquire.  For the avoidance of doubt, the adjustments set forth in this Section 5.5 shall be applicable to any Warrants that remain outstanding pursuant to this Agreement in connection with a Public Stock Merger or Mixed Consideration Merger (including any adjustment applicable in connection with such Public Stock Merger or Mixed Consideration Merger).

 

5.6                               Other Adjustments.  The Board shall make appropriate adjustments to the amount of cash or number of shares of Common Stock, as the case may be, due upon exercise of the Warrants, as may be necessary or appropriate to effectuate the intent of this Article 5 and to avoid unjust or inequitable results as determined in its reasonable good faith judgment, in each case to account for any adjustment to the Exercise Price and the number of shares purchasable on exercise of Warrants for the relevant Warrant Certificate that becomes effective, or any event requiring an adjustment to the Exercise Price and the number of shares purchasable on exercise of Warrants for the relevant Warrant Certificate where the record date or effective date (in the case of a subdivision or combination of the Common Stock) of the event occurs, during the period beginning on, and including, the Exercise Date and ending on, and including, the related Settlement Date.

 

5.7                               Notice of Adjustment.  Whenever the number of shares of Common Stock issuable upon the exercise of each Warrant is adjusted, as herein provided, the Company shall cause the Warrant Agent promptly to mail by first class mail, postage prepaid, to each Holder notice of such adjustment or adjustments.  Additionally, within thirty days following the end of each of the Company’s fiscal years, the Company shall cause the Warrant Agent promptly to mail by first class mail, postage prepaid, to each Holder a certificate of a firm of independent public accountants selected by the Board (who may be the regular accountants employed by the Company) setting forth a summary of all adjustments made during such fiscal year, including the number of shares of Common Stock issuable upon the exercise of each Warrant after each such adjustment, setting forth a brief statement in reasonable detail of the facts requiring each such adjustment and setting forth the computation by which each such adjustment was made. The Warrant Agent shall be fully protected in relying on such certificate, and on any adjustment contained therein, and shall not be deemed to have any knowledge of such adjustment unless and until it shall have received such certificate, and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time, to any Holder desiring an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holders to determine whether any facts exist that may require any adjustment of the number of shares of Common Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value (or the kind or amount) of any shares of Common Stock or other stock or property which may be issuable on exercise of the Warrants, or to investigate or confirm whether the information contained in the above referenced certificate complies with the terms of this Agreement or any other document. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or security instruments or other securities or properties upon the exercise of any Warrant.

 

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6.                                      CHANGE OF CONTROL.

 

6.1                               Redemption in Connection with a Change of Control Event.  (a) Upon the occurrence of a Change of Control Event (other than a Public Stock Merger or Mixed Consideration Merger), at the election of each Holder in its sole discretion by written notice to the Company or the successor to the Company on or prior to the Exercise Date, such Holder may exchange its outstanding Warrants immediately prior to, and conditioned upon the consummation of, such Change of Control Event for a number of shares of Common Stock in accordance with this Section 6.1 “with the same equivalent value” as the Redemption Value (as defined below) and, to the extent so exchanged, the Warrants shall thereafter be extinguished. For purposes of this Section 6.1, the Exercise Date shall mean (x) if the Company entered into a definitive agreement with respect to a Change of Control Event and has provided to the Holders notice of the date on which the Change in Control Event will become effective at least twenty (20) Business Days prior to the effectiveness of such event, the tenth (10th) Business Day prior to such event and (y) otherwise, the fifth (5th) Business Day following the effectiveness of the Change of Control Event.

 

(b)                                 For purposes of determining the number of shares of Common Stock “with the same equivalent value” as the Redemption Value, the number of shares of Common Stock to be received for each Warrant by such Holder shall equal the Redemption Value per Warrant divided by the Conversion Value (as defined below) per share of Common Stock.  The “Redemption Value” for any Warrant shall equal the fair value of the Warrant as of the date of such Change of Control Event as determined by an Independent Financial Expert, by employing a valuation based on a computation of the option value of each Warrant using the calculation methods and making the assumptions set forth in Exhibit C. The “Conversion Value” of a share of Common Stock shall equal (i) upon the occurrence of a Change of Control Event pursuant to which each of the outstanding shares of Common Stock held by holders who are not affiliated with the Company or any entity acquiring the Company is exchanged for, converted into or constitutes solely the right to receive a fixed amount of cash as consideration, such cash price, or (ii) upon the occurrence of any other Change of Control Event, the Fair Market Value (calculated for the one trading day period immediately preceding the date of such Change of Control Event and not the ten consecutive trading days immediately preceding the date of such Change of Control Event contemplated by the definition of “Fair Market Value”) of a share of Common Stock as of the trading day immediately preceding the date of such Change of Control Event, Public Stock Merger or Mixed Consideration Merger, as applicable. If a Holder of Warrants does not elect to receive the Redemption Value for such Holder’s Warrants as provided by this Section 6.1, such Warrants will remain outstanding as adjusted pursuant to the provisions of Article 5 hereof.

 

6.2                               Public Stock Merger.  (a)  In connection with a Public Stock Merger, the Company may by written notice to the Holders not less than ten (10) Business Days prior to the effective date of such Public Stock Merger elect to have all the unexercised Warrants remain outstanding after the Public Stock Merger, in which case the Warrants will remain outstanding as adjusted pursuant to Section 5.5 and the other provisions of Article 5 hereof.

 

(b)                                 In the case of any Public Stock Merger with respect to which the Company does not make a timely election as contemplated by Section 6.2(a) above, the 

 

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Warrants shall be automatically exchanged for a number of shares of Common Stock with the “same equivalent value” as the Redemption Value immediately prior to, and conditioned upon, the effective time of such Public Stock Merger in such a manner that permits the Holder to exercise, with respect to such shares of Common Stock, all of the rights of a Holder of Common Stock as of immediately prior to the effective time of such Public Stock Merger and all rights of a Holder of Common Stock with respect to the consideration to be received in respect of such shares of Common Stock in such Public Stock Merger, and the Warrants shall thereafter be terminated and extinguished. The determinations of the Redemption Value and Conversion Value and the number of shares of Common Stock to be issued shall all be determined in accordance with Section 6.1(b).

 

6.3                               Mixed Consideration Merger.  (a)  In connection with a Mixed Consideration Merger, the Company may by written notice to the Holders not less than ten (10) Business Days prior to the effective date of such Mixed Consideration Merger elect the following treatment with respect to each outstanding Warrant: (i) the Warrant shall be exchanged for a number of shares of Common Stock with the “same equivalent value” as the Redemption Value (each as determined in accordance with Section 6.1(a)) immediately prior to, and conditioned upon, the effective time of such Mixed Consideration Merger in such a manner that permits the Holder to exercise, with respect to such shares of Common Stock, all of the rights of a Holder of Common Stock as of immediately prior to the effective time of such Mixed Consideration Merger and all rights of a Holder of Common Stock with respect to the consideration to be received in respect of such shares of Common Stock in such Mixed Consideration Merger, and such Warrant shall thereafter be terminated and extinguished, or (ii) the Warrant shall remain outstanding after the Mixed Consideration Merger, as further adjusted pursuant to Section 5.5 and the other provisions of Article 5 hereof.

 

(b)                                 In the case of any Mixed Consideration Merger with respect to which the Company does not make a timely election as contemplated by Section 6.3(a) above, the Warrants shall be automatically exchanged for shares of Common Stock with the “same equivalent value” as the Redemption Value immediately prior to, and conditioned upon, the effective time of such Mixed Consideration Merger in such a manner that permits the Holder to exercise, with respect to such shares of Common Stock, all of the rights of a Holder of Common Stock as of immediately prior to the effective time of such Mixed Consideration Merger and all rights of a Holder of Common Stock with respect to the consideration to be received in respect of such shares of Common Stock in such Mixed Consideration Merger, and the Warrants shall thereafter be terminated and extinguished. The determinations of the Redemption Value and Conversion Value and the number of shares of Common Stock to be issued shall all be determined in accordance with Section 6.1(b).

 

6.4                               The Warrant Agent.  The Warrant Agent shall have no duty or obligation to make any of the payments required under this Article 6 unless and until it has been provided with available cash.

 

7.                                      WARRANT TRANSFER BOOKS.

 

The Warrant Certificates shall be issued in registered form only. The Company shall cause to be kept at the office of the Warrant Agent designated for such purpose a register in 

 

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which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates as herein provided (the “Warrant Register”).

 

At the option of the Holder, Warrant Certificates may be exchanged at such office, and upon payment of the charges hereinafter provided.  Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign, by manual or facsimile signature, and deliver, the Warrant Certificates that the Holder making the exchange is entitled to receive.

 

All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange.

 

Every Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be accompanied by a written instrument of transfer in the form attached hereto as Exhibit B or otherwise satisfactory to the Warrant Agent, properly completed and duly executed by the Holder thereof or his attorney duly authorized in writing.  Until a Warrant Certificate is transferred in the Warrant Register, the Company and the Warrant Agent may treat the person in whose name the Warrant Certificate is registered as the absolute owner thereof and of the Warrants represented thereby for all purposes, notwithstanding any notice to the contrary.  Neither the Company nor the Warrant Agent will be liable or responsible for any registration or transfer of any Warrants that are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of Warrant Certificates. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.  The Warrant Agent shall have no duty under this Section or any Section of this Agreement requiring the payment of taxes and other governmental charges unless and until it is satisfied that all such taxes and/or governmental charges have been paid.  The Warrant Agent shall be deemed satisfied if it receives a certificate from the Company stating that all required taxes and governmental charges have been paid.

 

8.                                      WARRANT HOLDERS.

 

8.1                               No Voting Rights.  Prior to the exercise of Warrants and full payment of the Exercise Price thereof, or in the event of Net Share Settlement, prior to the election of a Holder for Net Share Settlement in accordance with the terms of this Agreement, no Holder of a Warrant Certificate, in respect of such Warrants, shall be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote, to consent, to exercise any preemptive right (except as otherwise agreed in writing by the Company, including the subscription rights set forth in the Investment Agreement and the Stock Purchase Agreements), to receive any notice of meetings of stockholders for the election of directors of the Company or any other matter or to receive any notice of any proceedings of the Company

 

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8.2                               Right of Action.  All rights of action in respect of this Agreement are vested in the Holders of the Warrants, and any Holder of Warrants, without the consent of the Warrant Agent or the Holder of any other Warrant, may, on such Holder’s own behalf and for such Holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise or exchange such Holder’s Warrants in the manner provided in this Agreement or any other obligation of the Company under this Agreement.

 

9.                                      WARRANT AGENT.

 

9.1                               Nature of Duties and Responsibilities Assumed.  The Company hereby appoints the Warrant Agent to act as agent of the Company as expressly set forth in this Agreement. The Warrant Agent hereby accepts such appointment as agent of the Company and agrees to perform that agency upon the express terms and conditions herein set forth (and no implied terms), by all of which the Company and the Holders, by their acceptance thereof, shall be bound. The Warrant Agent shall not by countersigning Warrant Certificates or by any other act hereunder be deemed to make any representations as to validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon) or of any securities or other property delivered upon exercise or tender of any Warrant, or as to the accuracy of the computation of the Exercise Price or the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant, the independence of any Independent Financial Expert or the correctness of the representations of the Company made in such certificates that the Warrant Agent receives. The Warrant Agent shall not have any duty to calculate or determine any adjustments with respect to the Exercise Price and the Warrant Agent shall have no duty or responsibility in determining the accuracy or correctness of such calculation. The Warrant Agent shall not (a) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted to be taken by it in good faith on the belief that any Warrant Certificate or any other documents or any signatures are genuine or properly authorized, (b) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates, or (c) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct (as each is determined by a final, non-appealable judgment of a court of competent jurisdiction). The Warrant Agent is hereby authorized to accept instructions with respect to the performance of its duties hereunder from the President, any Vice President or the Secretary of the Company and to apply to any such officer for instructions (which instructions will be promptly given in writing when requested) and the Warrant Agent shall not be liable and shall be indemnified and held harmless for any action taken or suffered to be taken by it in accordance with the instructions of any such officer, but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such or may require such further or additional evidence as it may deem reasonable.

 

The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, provided reasonable care has been exercised in the selection and in the continued employment of any such attorney, agent or employee.  The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of 

 

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the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or in connection with this Agreement.

 

The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement.  The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.

 

The Warrant Agent shall act solely as agent of the Company hereunder and does not assume any obligation or relationship of agency or trust with any of the owners or holders of the Warrants.  The Warrant Agent shall not be liable except for the failure to perform such duties as are specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and obligations shall be determined solely by the express provisions hereof. Notwithstanding anything in this Agreement to the contrary, Warrant Agent’s aggregate liability under this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the amounts paid hereunder by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses.

 

The Warrant Agent may consult with counsel satisfactory to it (which may be counsel to the Company).

 

Whenever in the performance of its duties under this Agreement the Warrant 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 may be deemed to be conclusively proved and established by a certificate signed by any authorized officer of the Company and delivered to the Warrant Agent; and such certificate will be full authorization to the Warrant Agent for any action taken, suffered or omitted by it under the provisions of this Agreement in reliance upon such certificate.  The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the authorized officers 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, suffered or omitted to be taken by it in good faith in accordance with instructions of any such officer.

 

The Warrant Agent will not be under any duty or responsibility to insure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of Warrant Certificates.

 

The Warrant Agent shall have no duties, responsibilities or obligations as the Warrant Agent except those which are expressly set forth herein, and in any modification or amendment hereof to which the Warrant Agent has consented in writing, and no duties, responsibilities or

 

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obligations shall be implied or inferred.  Without limiting the foregoing, unless otherwise expressly provided in this Agreement, the Warrant Agent shall not be subject to, nor be required to comply with, or determine if any person or entity has complied with, the Warrant Certificate or any other agreement between or among the parties hereto, even though reference thereto may be made in this Warrant Agreement, or to comply with any notice, instruction, direction, request or other communication, paper or document other than as expressly set forth in this Warrant Agreement.

 

In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company or any Holder or other person or entity for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the satisfaction of the Warrant Agent.

 

9.2                               Compensation and Reimbursement.  The Company agrees to pay to the Warrant Agent from time to time compensation for all services rendered by it hereunder in accordance with Schedule B hereto and as the Company and the Warrant Agent may agree from time to time, and to reimburse the Warrant Agent for reasonable expenses and disbursements actually incurred in connection with the preparation, delivery, negotiation, amendment, execution and administration of this Agreement (including the reasonable compensation and out of pocket expenses of its counsel), and further agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability, suit, action, proceeding, judgment, claim, settlement, cost or expense incurred without gross negligence, willful misconduct or bad faith on its part, (as each is determined by a final, non-appealable judgment of a court of competent jurisdiction), for any action taken, suffered or omitted to be taken by the Warrant Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, indirectly or directly.  The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action which it believes would expose it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

 

9.3                               Warrant Agent May Hold Company Securities.  The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its Affiliates or become pecuniarily interested in transactions in which the Company or its Affiliates may be interested, or contract with or lend money to the Company or its Affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

 

9.4                               Resignation and Removal; Appointment of Successor.  (a)  No resignation or removal of the Warrant Agent and no appointment of a successor warrant agent shall become effective until the acceptance of appointment by the successor warrant agent as provided herein. The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent’s own gross negligence, 

 

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willful misconduct or bad faith) after giving written notice to the Company at least thirty (30) days prior to the date such resignation will become effective. The Company shall, upon written request of Holders of a majority of the outstanding Warrants, remove the Warrant Agent upon written notice provided at least thirty (30) days prior to the date of such removal, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the Company’s expense, cause to be mailed at the Company’s expense (by first-class mail, postage prepaid) to each Holder of a Warrant at his last address as shown on the register of the Company maintained by the Warrant Agent a copy of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Person holding the greatest number of Warrants as of the date of such event shall appoint in writing a new warrant agent reasonably acceptable to the Company. If the Person holding the greatest number of Warrants as of the date of such event shall fail to make such appointment within a period of twenty (20) days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Company shall appoint a new warrant agent. Any new warrant agent, whether appointed by a Holder or by the Company, shall be a reputable bank, trust company or transfer agent doing business under the laws of the United States or any state thereof, in good standing and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new warrant agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such warrant agent prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority. After acceptance in writing of such appointment by the new warrant agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall give notice thereof to the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section 9.4(a), however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new warrant agent, as the case may be.

 

(b)                                 Any Person into which the Warrant Agent or any new warrant agent may be merged or any Person resulting from any consolidation to which the Warrant Agent or any Person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any Person to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent or any new warrant agent shall be a party, shall be a successor Warrant Agent under this Agreement without any further act, provided that such Person would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 9.4(a).  Any such successor Warrant Agent shall promptly cause notice of succession as Warrant Agent to be mailed (by first-class mail, postage prepaid) to each Holder of a Warrant at such Holder’s last address as shown on the register of the Company maintained by the Warrant Agent.

 

9.5                               Damages.  No party to this Agreement shall be liable to any other party for any consequential, indirect, punitive, special or incidental damages under any provision of this 

 

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Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

 

9.6                               Force Majeure.  In no event shall the Warrant Agent be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

 

9.7                               Survival.  The provisions of this Article 9 shall survive the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent.

 

10.                               REPRESENTATIONS AND WARRANTIES.

 

10.1                        Representations and Warranties of the Company.  The Company hereby represents and warrants that the representations and warranties of the Company set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 of the Investment Agreement and Stock Purchase Agreements and any other representations and warranties made by the Company in Article III of the Investment Agreement and Stock Purchase Agreements, in each case, to the extent relating to the authorization and issuance of the Warrants and the shares of Common Stock issuable upon exercise thereof, are true and accurate in all respects and not misleading in any respect.

 

11.                               COVENANTS.

 

11.1                        Reservation of Common Stock for Issuance on Exercise of Warrants.  The Company covenants that it will at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, solely for the purpose of issue upon exercise of Warrants as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder plus such number of shares of Common Stock as shall then be issuable upon the exercise of other outstanding warrants, options and rights (whether or not vested), the settlement of any forward sale, swap or other derivative contract, and the conversion of all outstanding convertible securities or other instruments convertible into Common Stock or rights to acquire Common Stock. The Company covenants that all shares of Common Stock which shall be issuable shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

 

11.2                        Notice of Distributions.  At any time when the Company declares any Distribution on its Common Stock, it shall give notice to the Holders of all the then outstanding Warrants of any such declaration not less than 15 days prior to the related record date for payment of the Distribution so declared.

 

12.                               MISCELLANEOUS.

 

12.1                        Money and Other Property Deposited with the Warrant Agent.  Any moneys, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Agreement shall be and are hereby assigned, transferred 

 

27

 

and set over to the Warrant Agent in trust for the purpose for which such moneys, securities or other property shall have been deposited; but such moneys, securities or other property need not be segregated from other funds, securities or other property except to the extent required by law. The Warrant Agent shall distribute any money deposited with it for payment and distribution to a Holder to an account designated by such Holder in such amount as is appropriate. Any money deposited with the Warrant Agent for payment and distribution to the Holders that remains unclaimed for two years after the date the money was deposited with the Warrant Agent shall be paid to the Company.  The Warrant Agent shall not be under any liability for interest on any monies at any time received by it pursuant to any of the provisions of this Agreement.

 

12.2                        Payment of Taxes.  The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Warrants, certificate for shares of Common Stock or other securities underlying the Warrants or payment of cash to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due.  The Company and each Initial Investor agree that neither the issuance nor exercise of the Warrants is governed by Section 83(a) of the Code or otherwise a compensatory transaction, and the Company agrees that it will not deduct any amount as compensation in connection with such issuance or exercise for federal income tax purpose.

 

12.3                        Surrender of Certificates.  Any Warrant Certificate surrendered for exercise or purchase shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly cancelled by the Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall destroy such cancelled Warrant Certificates.

 

12.4                        Mutilated, Destroyed, Lost and Stolen Warrant Certificates.  If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) the Company and the Warrant Agent receive evidence to their satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is delivered to the Company and the Warrant Agent such appropriate affidavit of loss, applicable processing fee and a corporate bond of indemnity as may be required by them and satisfactory to them to save each of them harmless, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver, in exchange for any such mutilated Warrant Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.

 

Upon the issuance of any new Warrant Certificate under this Section 12.4, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses (including the reasonable fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith.

 

28

 

Every new Warrant Certificate executed and delivered pursuant to this Section 12.4 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates of like tenor properly completed and duly executed and delivered hereunder.

 

The provisions of this Section 12.4 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed lost or stolen Warrant Certificates.

 

12.5                        Removal of Legends.  Certificates evidencing the Warrants and shares of Common Stock issued upon exercise of the Warrants shall not be required to contain any legend referenced in Sections 2.1 or 3.6(e) (A) while a registration statement covering the resale of the Warrants or the shares of Common Stock is effective under the Securities Act, or (B) following any sale of any such Warrants or shares of Common Stock pursuant to Rule 144, or (C) following receipt of a legal opinion of counsel to Holder that the remaining Warrants or shares of Common Stock held by Holder are eligible for resale without volume limitations or limitations on manner of sale under Rule 144.  In addition, the Company and the Warrant Agent will agree to the removal of all legends with respect to Warrants or shares of Common Stock deposited with DTC from time to time in anticipation of sale in accordance with the volume limitations and other limitations under Rule 144, subject to the Company’s approval of appropriate procedures, such approval not to be unreasonably withheld, conditioned or delayed.

 

Following the time at which any such legend is no longer required (as provided above) for certain Warrants or shares of Common Stock, the Company shall promptly, following the delivery by Holder to the Warrant Agent of a legended certificate representing such Warrants or shares of Common Stock, as applicable, deliver or cause to be delivered to the Holder a certificate representing such Warrants or shares of Common Stock that is free from such legend.  In the event any of the legends referenced in Sections 2.1 or 3.6(e) are removed from any of the Warrants or shares of Common Stock, and thereafter the effectiveness of a registration statement covering such Warrants or shares of Common Stock is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities Laws, then the Company may require that such legends, as applicable, be placed on any such applicable Warrants or shares of Common Stock that cannot then be sold pursuant to an effective registration statement or under Rule 144 and Holder shall cooperate in the replacement of such legend.  Such legend shall thereafter be removed when such Warrants or shares of Common Stock may again be sold pursuant to an effective registration statement or under Rule 144.

 

12.6                        Notices.  (a)  Any notice, demand or delivery authorized by this Agreement shall be sufficiently given or made when mailed if sent by first-class mail, postage prepaid, addressed to any Holder of a Warrant at such Holder’s address shown on the register of the Company maintained by the Warrant Agent and to the Company or the Warrant Agent as follows:

 

29

 

If to the Company, to:

 

General Growth Properties, Inc.

110 N. Wacker Drive

Chicago, IL 60606
 Attention: Marvin J. Levine

Facsimile: (312) 960-5058

 

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

 

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attention: Robert W. Downes

Facsimile: (212) 558-3588

 

If to the Warrant Agent, to:

 

American Stock Transfer & Trust Company, LLC

16633 N. Dallas Parkway, Suite 600

Addison, TX 75001

Attention: Barbara J. Robbins

 

or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.

 

(b)                                 Any notice required to be given by the Company to the Holders pursuant to this Agreement, shall be made by mailing by registered mail, return receipt requested, to the Holders at their respective addresses shown on the register of the Company maintained by the Warrant Agent. The Company hereby irrevocably authorizes the Warrant Agent, in the name and at the expense of the Company, to mail any such notice upon receipt thereof from the Company. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given when mailed, whether or not the Holder receives the notice.

 

12.7                        Applicable Law; Jurisdiction.  This Agreement and each Warrant issued hereunder and all rights arising hereunder shall be governed by the internal laws of the State of New York.  In connection with any action, suit or proceeding arising out of or relating to this Agreement or the Warrants, the parties hereto and each Holder irrevocably submit to (i) the exclusive jurisdiction of the United States Bankruptcy Court for the Southern District of New York until the chapter 11 cases of General Growth Properties, Inc. and its Affiliates are closed, and (ii) the nonexclusive jurisdiction of any federal or state court located within the County of New York, State of New York.

 

12.8                        Persons Benefiting.  This Agreement shall be binding upon and inure to the benefit of the Company and the Warrant Agent, and their respective successors, assigns, beneficiaries, executors and administrators, and the Holders from time to time of the Warrants.  The Holders of the Warrants are express third party beneficiaries of this Agreement and each 

 

30

 

such Holder of Warrants is hereby conferred the benefits, rights and remedies under or by reason of the provisions of this Agreement as if a signatory hereto.  Nothing in this Agreement is intended or shall be construed to confer upon any Person, other than the Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or claim under or by reason of this Agreement or any part hereof.

 

12.9                        Counterparts.  This Agreement may be executed in any number of counterparts, each or which shall be deemed an original, but all of which together constitute one and the same instrument.

 

12.10                 Amendments.  (a)  The Company and the Warrant Agent may from time to time supplement or amend this Agreement without the approval of any Holder in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary or desirable and, in each case, which shall not adversely affect the interests of any Holder.

 

(b)                                 In addition to the foregoing, with the consent of the Supermajority Holders, the Company and the Warrant Agent may modify this Agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Warrant Agreement or modifying in any manner the rights of the Holders hereunder; provided, however, that no modification effecting the terms upon which the Warrants are exercisable, redeemable or transferable, or reduction in the percentage required for consent to modification of this Agreement, may be made without the consent of each Holder affected thereby.

 

12.11                 Headings.  The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

 

12.12                 Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. In the event of any conflict, discrepancy, or ambiguity between the terms and conditions contained in this Agreement and any schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.

 

12.13                 Specific Performance.  The parties shall be entitled to specific performance of the terms of this Agreement.  Each of the parties hereto hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

 

[signature page follows]

 

31

 

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

 

	
 
    	
GENERAL GROWTH PROPERTIES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marvin J. Levine
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Marvin   J. Levine
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Executive   Vice President and Chief Legal Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
American Stock Transfer & Trust Company, LLC,
    
	
 
    	
as Warrant Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Barbara J. Robbins
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Barbara   J. Robbins
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Sr.   Vice President
    

 

[SIGNATURE PAGE TO GGP WARRANT AGREEMENT]

 

32

 

EXHIBIT A-1

 

FORM OF FACE OF WARRANT CERTIFICATE

 

THESE WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER 9, 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “COMPANY”) AND MELLON INVESTOR SERVICES LLC, WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

WARRANTS TO PURCHASE COMMON STOCK
 OF GENERAL GROWTH PROPERTIES, INC.

 

	
No.
    	
Certificate   for 
    	
Series A-1 
   Warrants
    

 

This certifies that [HOLDER], or registered assigns, is the registered holder of the number of Series A-1 Warrants set forth above. Each Series A-1 Warrant entitles the holder thereof (a “Holder”), subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from GENERAL GROWTH PROPERTIES, INC. (the “Company”) a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”), equal to [INSERT $10.75 FOR BROOKFIELD WARRANTS AND BLACKSTONE B WARRANTS][INSERT $10.50 FOR BLACKSTONE F/P WARRANTS] divided by the Exercise Price (as defined in the Warrant Agreement referred to below), for a price per share of Common Stock equal to the Exercise Price.

 

This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of November 9, 2010 (the “Warrant Agreement”), between the Company and Mellon Investor Services LLC, a New Jersey limited liability company, as warrant agent (the “Warrant Agent”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Warrant Agent and the Holders of the Warrants.

 

This Warrant Certificate shall terminate and be void as of the close of business on November 9, 2017 (the “Expiration Date”).

 

33

 

As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Series A-1 Warrants shall be exercisable from time to time on any Business Day and ending on the Expiration Date.

 

The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Series A-1 Warrant are subject to adjustment as provided in the Warrant Agreement.

 

All shares of Common Stock issuable by the Company upon the exercise of Series A-1 Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

 

In order to exercise a Series A-1 Warrant, the registered holder hereof must surrender this Warrant Certificate at the corporate trust office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, together with any required payment in full of the Exercise Price (unless the Holder shall have elected Net Share Settlement, as such term is defined in the Warrant Agreement) then in effect for the shares(s) of Underlying Common Stock as to which the Series A-1 Warrant(s) represented by this Warrant Certificate are submitted for exercise, all subject to the terms and conditions hereof and of the Warrant Agreement.

 

The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Series A-1 Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Series A-1 Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Series A-1 Warrants, certificate for shares of Common Stock or other securities underlying the Series A-1 Warrants or payment of cash in each case to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Series A-1 Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due.

 

This Warrant Certificate and all rights hereunder are transferable by the registered holder hereof, subject to the terms of the Warrant Agreement, in whole or in part, on the register of the Company, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose in the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such holder a new Warrant Certificate or Certificates with respect to any portion not so transferred.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of the Warrant Certificates, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

34

 

Subject to compliance with any restrictions on transfer under applicable law and this Warrant Agreement, each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that this Warrant Certificate when duly endorsed in blank shall be deemed negotiable and that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by the Company, the Warrant Agent and all other Persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes.

 

This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement.

 

All terms used in this Warrant Certificate that are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.

 

Copies of the Warrant Agreement are on file at the office of the Company and the Warrant Agent and may be obtained by writing to the Company or the Warrant Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe Street, Suite 1590, Chicago, IL 60606.

 

This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent.

 

Dated: November 9, 2010

 

	
 
    	
GENERAL   GROWTH PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name   and Title:
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name   and Title:
    

 

	
Countersigned:
    	
 
    
	
 
    	
 
    
	
Mellon Investor Services LLC, as Warrant Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Authorized Officer
    	
 
    

 

35

 

EXHIBIT A

 

FORM OF REVERSE OF SERIES A-1 WARRANT CERTIFICATE

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:

 

The undersigned irrevocably exercises                                              of the Series A-1 Warrants for the purchase of one share (subject to adjustment in accordance with the Warrant Agreement) of common stock, par value $0.01, of General Growth Properties, Inc. for each Series A-1 Warrant represented by the Warrant Certificate and herewith (i) elects for Net Share Settlement of such Series A-1 Warrants by marking X in the space that follows         , or (ii) makes payment of $                               (such payment being by means permitted by the Warrant Agreement and the within Warrant Certificate), in each case at the Exercise Price and on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, and herewith surrenders this Warrant Certificate and all right, title and interest therein to                                                  and directs that the shares of Common Stock deliverable upon the exercise of such Series A-1 Warrants be registered in the name and delivered at the address specified below.

 

	
Date
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
*
    
	
 
    	
(Signature   of Owner)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Street   Address)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(City)
    	
(State) (Zip Code)
    
	
 
    	
 
    
	
 
    	
Signature   Guaranteed by:
    
	
 
    	
 
    
	
 
    	
 
    
						

 

*                                         The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

1

 

Securities to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

Any unexercised Series A-1 Warrants evidenced by the within Warrant Certificate to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

2

 

EXHIBIT A-2

 

FORM OF FACE OF WARRANT CERTIFICATE

 

THESE WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER 9, 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “COMPANY”) AND MELLON INVESTOR SERVICES LLC, WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

WARRANTS TO PURCHASE COMMON STOCK
 OF GENERAL GROWTH PROPERTIES, INC.

 

	
No.
    	
 
    	
Certificate for
    	
Series A-2 

Warrants
    

 

This certifies that [HOLDER], or registered assigns, is the registered holder of the number of Series A-2 Warrants set forth above. Each Series A-2 Warrant entitles the holder thereof (a “Holder”), subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from GENERAL GROWTH PROPERTIES, INC. (the “Company”) by means of Net Share Settlement (as defined in the Warrant Agreement defined below) a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”), equal to $10.50 divided by the Exercise Price (as defined in the Warrant Agreement referred to below), for a price per share of Common Stock equal to the Exercise Price.

 

This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of November 9, 2010 (the “Warrant Agreement”), between the Company and Mellon Investor Services LLC, a New Jersey limited liability company, as warrant agent (the “Warrant Agent”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Warrant Agent and the Holders of the Warrants.

 

This Warrant Certificate shall terminate and be void as of the close of business on November 9, 2017 (the “Expiration Date”).

 

1

 

As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Series A-2 Warrants shall be exercisable from time to time on any Business Day and ending on the Expiration Date.

 

The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Series A-2 Warrant are subject to adjustment as provided in the Warrant Agreement.

 

All shares of Common Stock issuable by the Company upon the exercise of Series A-2 Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

 

In order to exercise a Series A-2 Warrant, the registered holder hereof must surrender this Warrant Certificate at the corporate trust office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, all subject to the terms and conditions hereof and of the Warrant Agreement.

 

The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Series A-2 Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Series A-2 Warrants with respect thereto. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any Series A-2 Warrants, certificate for shares of Common Stock or other securities underlying the Series A-2 Warrants or payment of cash in each case to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Series A-2 Warrant, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any security or to pay any cash until such tax or charge has been paid or it has been established to the Warrant Agent’s and the Company’s satisfaction that no such tax or other charge is due.

 

This Warrant Certificate and all rights hereunder are transferable by the registered holder hereof, subject to the terms of the Warrant Agreement, in whole or in part, on the register of the Company, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose in the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such holder a new Warrant Certificate or Certificates with respect to any portion not so transferred.

 

No service charge shall be made to a Holder for any registration of transfer or exchange of the Warrant Certificates, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Subject to compliance with any restrictions on transfer under applicable law and this Warrant Agreement, each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that this Warrant Certificate when duly endorsed in blank shall be 

 

2

 

deemed negotiable and that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by the Company, the Warrant Agent and all other Persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes.

 

This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement.

 

All terms used in this Warrant Certificate that are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.

 

Copies of the Warrant Agreement are on file at the office of the Company and the Warrant Agent and may be obtained by writing to the Company or the Warrant Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe Street, Suite 1590, Chicago, IL 60606.

 

This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent.

 

Dated: November 9, 2010

 

	
 
    	
GENERAL   GROWTH PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name   and Title:
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name   and Title:
    
	
 
    	
 
    
	
Countersigned:
    	
 
    
	
 
    	
 
    
	
Mellon   Investor Services LLC, as Warrant Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Authorized   Officer
    	
 
    
					

 

3

 

EXHIBIT A

 

FORM OF REVERSE OF SERIES A-2 WARRANT CERTIFICATE

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:

 

The undersigned irrevocably exercises                                              of the Series A-2 Warrants for the purchase of one share (subject to adjustment in accordance with the Warrant Agreement) of common stock, par value $0.01, of General Growth Properties, Inc. for each Series A-2 Warrant represented by the Warrant Certificate by means of Net Share Settlement of such Series A-2 Warrants, at the Exercise Price and on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, and herewith surrenders this Warrant Certificate and all right, title and interest therein to                                                  and directs that the shares of Common Stock deliverable upon the exercise of such Series A-2 Warrants be registered in the name and delivered at the address specified below.

 

	
Date
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
*
    
	
 
    	
(Signature   of Owner)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Street   Address)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(City)
    	
(State) (Zip Code)
    
	
 
    	
 
    
	
 
    	
Signature   Guaranteed by:
    
	
 
    	
 
    
	
 
    	
 
    
						

 

*                                         The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

1

 

Securities to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

Any unexercised Series A-2 Warrants evidenced by the within Warrant Certificate to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

2

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED the undersigned registered holder of the within Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by the within Warrant Certificate not being assigned hereby) all of the right of the undersigned under the within Warrant Certificate, with respect to the number of Warrants set forth below:

 

	
Names of Assignees
    	
 
    	
Address
    	
 
    	
Social Security or
   other Identifying
   Number of
   Assignee(s)
    	
 
    	
Series and
   Number of
   Warrants
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

and does hereby irrevocably constitute and appoint                              the undersigned’s attorney to make such transfer on the books of                          maintained for that purpose, with full power of substitution in the premises.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
*
    
	
 
    	
(Signature   of Owner)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Street   Address)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(City)
    	
(State) (Zip Code)
    
	
 
    	
 
    
	
 
    	
Signature   Guaranteed by:
    
	
 
    	
 
    
	
 
    	
 
    
						

 

*                                         The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a participant in a Medallion Signature Guarantee Program at a guarantee level acceptable to the Company’s transfer agent.

 

1

 

EXHIBIT C

 

Option Pricing Assumptions / Methodology

 

For the purpose of this Exhibit C:

 

“Acquiror” means (A) the third party that has entered into definitive document for a transaction, or (B) the offeror in the event of a tender or exchange offer.

 

“Reference Date” means the date of consummation of a Change of Control Event.

 

The Redemption Value of the Warrants shall be determined using the Black-Scholes Model as applied to third party options (i.e., options issued by a third party that is not affiliated with the issuer of the underlying stock). For purposes of the model, the following terms shall have the respective meanings set forth below:

 

	
Underlying Security Price:
    	
 
    	
·
    	
In   the event of a merger or other acquisition,
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(A)
    	
that   is an “all cash” deal, the cash per share of Common Stock to be paid to the   Company’s stockholders in the transaction;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(B)
    	
that   is an “all Public Stock” deal,
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(1) that   is a “fixed exchange ratio” transaction, a “fixed value” transaction where as   a result of a cap, floor, collar or similar mechanism the number of   Acquiror’s shares to be paid per share of Common Stock to the Company’s   stockholders in the transaction is greater or less than it would otherwise   have been or a transaction that is not otherwise described in this clause   (B)(1) or clause (B)(2) below, the product of (i) the Fair   Market Value of the Acquiror’s common stock on the day preceding the date of   the Preliminary Change of Control Event and (ii) the number of   Acquiror’s shares per share of Common Stock to be paid to the Company’s stockholders   in the transaction (provided that the Independent Financial Expert   shall make appropriate adjustments to the Fair Market Value of the Acquiror’s   common stock referred to above as may be necessary or appropriate to   effectuate the intent of this Exhibit C and to avoid unjust or   inequitable results as determined in its reasonable good faith judgment, in   each case to account for any event impacting the Acquiror’s common stock that   is analogous to any of the events described in Article V of this   Agreement if the record date, ex date or effective date of that event occurs   during or after the 10 
    

 

2

 

	
 
    	
 
    	
 
    	
 
    	
trading   day period over which such Fair Market Value is measured) and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(2) that   is a “fixed value” transaction not covered by clause (B)(1) above, the   value per share of Common Stock to be paid to the Company’s stockholders in   the transaction;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(C)
    	
that   is a transaction contemplating various forms of consideration for each share   of Common Stock,
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(1) the   cash portion, if any, shall be valued as described in clause (A) above,
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(2) the   Public Stock portion shall be valued as described in clause (B) above   and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(3) any   other forms of consideration shall be valued by the Independent Financial   Expert valuing the Warrants, using one or more valuation methods that the   Independent Financial Expert in its best professional judgment determines to   be most appropriate, assuming such consideration (if securities) is fully   distributed and is to be sold in an arm’s-length transaction and there was no   compulsion on the part of any party to such sale to buy or sell and taking   into account all relevant factors and without applying any discounts to such   consideration.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
·
    	
In   the event of all other Change of Control Event events, the Fair Market Value   per share of the Common Stock on the last trading day preceding the date of   the Change of Control Event.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Exercise Price:
    	
 
    	
The   Exercise Price as adjusted and then in effect for the Warrant.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dividend Rate:
    	
 
    	
0   (which reflects the fact that the antidilution adjustment provisions cover   all dividends).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
The   annual yield as of the Reference Date (expressed on a semi-annual basis in   the manner in which U.S. treasury notes are ordinarily quoted) of the U.S.   treasury note maturing approximately at the Expiration Date as selected by   the Independent Financial Expert.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Put or Call:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Time to Expiration:
    	
 
    	
The   number of days from the Expiration Date (as defined in Section 3.3) to   the Reference Date divided by 365.
    

 

3

 

	
Settlement Date: 
    	
 
    	
The   scheduled date of consummation of the Change of Control Event.
    
	
 
    	
 
    	
 
    
	
Volatility:
    	
 
    	
For   calculation of Redemption Value in connection with a Change of Control Event   with respect to the Warrants, 20%; provided, however, that if   the Warrants are adjusted as a result of a Change of Control Event,   volatility for purposes of calculating Redemption Value in connection with   succeeding Change of Control Events with respect to such warrants (or their   successors) shall be as determined by an Independent Financial Expert engaged   to make the calculation, who shall be instructed to assume for purposes of   the calculation that such succeeding Change of Control Event had not   occurred.
    

 

Such valuation of the Warrant shall not be discounted in any way.

 

For illustrative purposes only, an example Black-Scholes model calculation with respect to a hypothetical warrant appears on the following page.

 

4

 

Illustrative Example

 

Inputs:

 

S = Underlying Security Price

 

X = Exercise Price

 

PV(X) = Present value of the Exercise Price, discounted at a rate of R = X * (e^-(R * T))

 

V = Volatility

 

R = continuously compounded risk free rate = 2 * [ ln (1 + Interest Rate / 2)]

 

T = Time to Expiration

 

W = warrant value per underlying share

 

Z = number of shares underlying warrants

 

Value = total warrant value

 

Formulaic inputs:

 

D1 = [ ln [ S / X] + (R + (V^2 / 2)) * T)] ÷ (V * √T)

 

D2 = [ ln [ S / X] + (R - (V^2 / 2)) * T)] ÷ (V * √T)

 

Black-Scholes Formula

 

W = [N(D1) * S] — [N(D2) * PV(X)]

 

Where “N” is the cumulative normal probability function

 

Value = W * Z

 

(1)   Note: Amounts calculated herein may not foot due to rounding error. For precise calculations, decimal points should not be rounded.

 

5

 

Example of a Hypothetical Warrant:(1)

 

Inputs:

 

Interest Rate = 4.00%

 

S = $50.00

 

X = $60.00

 

PV(X) = $55.43

 

V = 25%

 

R = 3.96%

 

T = 2

 

Z = 100

 

Formulaic inputs:

 

D1           = [ ln [ S / X] + (R + (V^2 / 2)) * T)] ÷ (V * √T)

 

= (-0.1149)

 

D2           = [ ln [ S / X] + (R - (V^2 / 2)) * T)] ÷ (V * √T)

 

= (-0.4684)

 

Black-Scholes Formula

 

W            = [N(D1) * S] — [N(D2) * PV(E)]

 

= $4.99

 

Total Warrant Value

 

Value     = W * Z

 

= $499

 

6

 

SCHEDULE A

 

ALLOCATIONS OF WARRANTS TO INITIAL INVESTORS

 

	
Initial Investor
    	
 
    	
Total Number and Series of Warrants to be
   Delivered to Initial Investor (on date of Warrant
   Agreement)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Blackstone Purchaser
    	
 
    	
5,000,000   Series A-1 Warrants
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Brookfield Purchaser
    	
 
    	
57,500,000   Series A-1 Warrants
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Fairholme Purchasers
    	
 
    	
41,071,429   Series A-2 Warrants
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Pershing Square Purchasers
    	
 
    	
16,428,571   Series A-2 Warrants
    	
 
    

 

SCHEDULE B

 

WARRANT AGENT COMPENSATION

 

	
Service Description
    	
 
    	
Fees
    	
 
    
	
Warrant Agent
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Initial Setup (one-time charge)
    	
 
    	
$
    	
2,500.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Annual Administration
    	
 
    	
$
    	
3,500.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Warrant Conversion Agent
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Set Up and Administrative Fee
    	
 
    	
$
    	
5,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Processing Accounts, each
    	
 
    	
$
    	
50.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Conversions requiring additional handling (window   items, deficient items, correspondence items, legal items, items not   providing a taxpayer identification number, Transfer Requests, etc),   additional each
    	
 
    	
$
    	
15.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Requisitioning Funds, each requisition
    	
 
    	
$
    	
25.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Expiration
    	
 
    	
$
    	
1,000.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Special Services
    	
 
    	
Additional
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Out of Pocket Expenses Including Postage,   Printing, Stationery, Overtime, Transportation,   Microfilming, Imprinting, Mailing, etc.
    	
 
    	
Additional
    	
 
    

 

1

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