Document:

Exhibit
10.3

 

Execution
Version

 

AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT

 

AMENDMENT NO. 1 (this “Amendment”), dated as of May 3,
2010, to the Stock Purchase Agreement, dated as of March 31, 2010 (the “Agreement”),
by and between General Growth Properties, Inc., a Delaware corporation (“GGP”), and The Fairholme
Fund, a series of Fairholme Funds, Inc., a Maryland corporation (“The
Fairholme Fund”) and Fairholme Focused Income Fund, a series of Fairholme
Funds, Inc., a Maryland corporation, (each, together with its permitted
nominees and assigns, a “Purchaser”). 
All capitalized terms used in this Amendment which are not herein
defined shall have the same meanings ascribed to them in the Agreement (as
defined herein).

 

WHEREAS, Section 13.8 of the Agreement provides for
the amendment of the Agreement in accordance with the terms set forth therein.

 

WHEREAS, on May 3, 2010, the Company entered into an
amendment to the Pershing Agreement in the form attached hereto as Exhibit A
with the Pershing Purchasers;

 

WHEREAS,
on May 3, 2010, the Company entered into an amendment to the Brookfield Agreement in
the form attached hereto as Exhibit B with the Brookfield Investor;

 

WHEREAS, the parties hereto desire to amend the Agreement
as set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the premises, and of
the covenants and agreements set forth herein, the parties agree as follows:

 

1.     Amendment of Exhibit A.  Exhibit A to the Agreement is hereby
amended and restated in its entirety to read as set forth in Exhibit C to
this Amendment.

 

2.     Amendment of Exhibit B.  Exhibit B to the Agreement is hereby
amended and restated in its entirety to read as set forth in Exhibit D to
this Amendment.

 

3.     Amendment of Exhibit G.  Exhibit G to the Agreement is hereby amended
and restated in its entirety to read as set forth in Exhibit E to this
Amendment.

 

4.     Amendment of Schedule I.  Schedule I to the Agreement is hereby amended
and restated in its entirety to read as set forth in Exhibit F to this
Amendment.

 

5.     Amendment to Section 1.4.  Section 1.4 of the Agreement is hereby
amended and restated in its entirety to read as follows:

 

 

“Company
Election to Replace Certain Shares; Company Election to Reserve and Repurchase
Certain Shares.

 

(a) In
the event that the Company has sold, or has binding commitments to sell on or
prior to the Effective Date, Permitted Replacement Shares, the Company may
elect by written notice to each Purchaser to reduce the Total Purchase Amount
by all or any portion of the number of such Permitted Replacement Shares as the
Company may determine in its discretion; provided, that the Total
Purchase Amount shall not be less than 190,000,000.  No election by the Company under this Section 1.4(a) shall
be effective unless received by each Purchaser on or prior to the date of
notice of the time fixed for the hearing to approve the Confirmation Order
under Bankruptcy Rule 2002.  Any
election by the Company under this Section 1.4(a) shall be
binding and irrevocable.

 

(b) 
If the Plan as confirmed provides for the commencement on or about the
Effective Date of a broadly distributed public offering of Permitted
Replacement Shares on terms and conditions and with one or more underwriters
and a plan of distribution, the Company may elect by written notice to each
Purchaser on or prior to the date of notice of the time fixed for the hearing
to approve the Confirmation Order under Bankruptcy Rule 2002 to specify a
number of Shares to be purchased by the Purchasers at Closing as Shares to be
subject to repurchase after Closing pursuant to this Section 1.4(b) (the
“Reserved Shares”); provided, that the excess of (i) its GGP
Pro Rata Share of the Total Purchase Amount minus (ii) the Reserved Shares
shall not be less than its GGP Pro Rata Share of 190,000,000.  If the Company elects to designate any
Reserved Shares, the Company shall pay to each Purchaser in cash on the
Effective Date an amount equal to $0.25 per Reserved Share.  Upon payment of such amount, the Company
shall thereafter have the right to elect by written notice to each Purchaser (a
“Repurchase Notice”) on or prior to the 25th day after the Effective
Date (or, if not a Business Day, the next Business Day) to repurchase from each
Purchaser a number of Shares equal to such Purchaser’s GGP Pro Rata Share of
the greater of (x) the aggregate amount of Permitted Replacement Capital
Shares sold by the Company in such public offering and (y) the Reserved
Shares.  The purchase price for any
repurchased Shares shall be $10.00 per Share, payable in cash in immediately
available funds against delivery of the repurchased Reserved Shares on a
settlement date determined by the Company and each Purchaser and not later than
the date that is 30 days after the Effective Date. Any Repurchase Notice under
this Section 1.4(b) shall, when taken together with this
Agreement, constitute a binding offer and acceptance and be irrevocable.”

 

6.     Amendments to Section 2.1(a).  Section 2.1(a) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“On
or prior to the Effective Date, the Company shall incorporate GGO with issued
and outstanding capital stock consisting of at least the GGO Common Share
Amount of shares of common stock (the “GGO Common Stock”), designate an
employee of the Company familiar with the Identified Assets and reasonably
acceptable to the other Initial Investors to serve as a representative of GGO
(the “GGO Representative”) and shall contribute to GGO (directly or 

 

2

 

indirectly)
the assets (and/or equity interests related thereto) set forth in Exhibit E
hereto and have GGO assume directly or indirectly the associated liabilities
(the “Identified Assets”); provided, however, that to the
extent the Company is prohibited by Law from contributing one or more of the
Identified Assets to GGO or the contribution thereof would breach or give rise
to a default under any Contract, agreement or instrument that would, in the
good faith judgment of the Company in consultation with the GGO Representative,
impair in any material respect the value of the relevant Identified Asset or
give rise to additional liability (other than liability that would not, in the
aggregate, be material) on the part of GGO or the Company or a Subsidiary of
the Company, the Company shall (i) to the extent not prohibited by Law or
would not give rise to such a default, take such action or cause to be taken
such other actions in order to place GGO, insofar as reasonably possible, in
the same economic position as if such Identified Asset had been transferred as
contemplated hereby and so that, insofar as reasonably possible, substantially
all the benefits and burdens (including all obligations thereunder but
excluding any obligations that arise out of the transfer of the Identified
Asset to the extent included in Permitted Claims) relating to such Identified
Asset, including possession, use, risk of loss, potential for gain and control
of such Identified Asset, are to inure from and after the Closing to GGO (provided
that as soon as a consent for the contribution of an Identified Asset is
obtained or the contractual impediment is removed or no longer applies, the
applicable Identified Asset shall be promptly contributed to GGO), or (ii) to
the extent the actions contemplated by clause (i) are not possible without
resulting in a material and adverse effect on the Company and its Subsidiaries
(as reasonably determined by the Company in consultation with the GGO
Representative), contribute other assets, with the separate consent of each
Purchaser (which such Purchaser shall not unreasonably withhold, condition or
delay), having an economically equivalent value and related financial impact on
the Company (in each case, as reasonably agreed by each Purchaser and the
Company in consultation with the GGO Representative) to the Identified Asset
not so contributed.”

 

7.     Amendment to Section 2.1(e).  The first sentence of Section 2.1(e) of
the Agreement is hereby amended and restated in its entirety to read as
follows:

 

“With
respect to the Columbia Master Planned Community (the “CMPC”), it is the
intention of the parties that office and mall assets currently producing any
material amount of income at the CMPC (including any associated right of access
to parking spaces) will be retained by the Company and the remaining non-income
producing assets at the CMPC will be transferred to GGO (including rights to
develop and/or redevelop (as appropriate) the  remainder of the CMPC).”

 

8.     Amendments to Section 5.2.  Section 5.2 of the Agreement is hereby amended
and restated in its entirety to read as follows:

 

3

 

“Warrants,
New Warrants and GGO Warrants. 
Within one Business Day of the date of the entry of the Approval Order,
the Company and the warrant agent shall execute and deliver the warrant and
registration rights agreement in the form attached hereto as Exhibit G
(with only such changes thereto as may be reasonably requested by the warrant
agent and reasonably approved by each Purchaser) (the “Warrant Agreement”)
pursuant to which there will be issued to each Purchaser its GGP Pro Rata Share
of 42,857,143 warrants (the “Warrants”) each of which, when issued,
delivered and vested in accordance with the terms of the Warrant Agreement,
will entitle the holder to purchase one (1) share of Common Stock at an
initial price of $15.00 per share subject to adjustment as provided in the
Warrant Agreement.  The Warrant Agreement
shall provide that the Warrants shall vest in accordance with Section 2.2(b) and
Schedule A of the Warrant Agreement.  For
the avoidance of doubt, Warrants that have not vested may not be
exercised.  The Plan shall provide that
upon the Effective Date, the Warrants, regardless of whether or not vested,
shall be cancelled for no consideration. 
The Plan shall also provide that there shall be issued to each Purchaser
pro rata in accordance with the number of shares of New Common Stock or GGO
Common Stock, as the case may be, purchased, an aggregate of  (i) 42,857,143 fully vested warrants (the
“New Warrants”) each of which entitles the holder to purchase one (1) share
of New Common Stock at an initial purchase price of $10.50 per share subject to
adjustment as provided in the underlying warrant agreement and (ii) 20,000,000
fully vested warrants (the “GGO Warrants”) each of which entitles the
holder to purchase one (1) share of GGO Common Stock at a price of $5.00
per share subject to adjustment as provided in the underlying warrant
agreement, each in accordance with the terms set forth in a warrant and
registration rights agreement with terms substantially similar to the terms set
forth in the Warrant Agreement, except that the expiration date for each New
Warrant and GGO Warrant shall be the seventh year anniversary of the date on
which such warrants are issued.”

 

9.     Amendment to Section 5.9(a)(i).  The third sentence of Section 5.9(a)(i) of
the Agreement is hereby amended to replace “Section 5.9(b)” therein with “Section 5.9(a)(ii)”.

 

10.   Amendments to Section 5.14.  Section 5.14 of the Agreement is hereby
amended by adding at the end thereof the following new paragraph (e):

 

“(e) Newco (as defined in Exhibit B) will be
formed by the Operating Partnership solely for the purpose of engaging in the
transactions contemplated by this Agreement, including Exhibit B  and Capital Raising Activities permitted
pursuant to this Agreement.  Prior to the
Closing, Newco will not engage in any business activity, nor conduct its
operations, other than as contemplated by this Agreement (which, for greater
certainty, shall include Capital Raising Activities permitted pursuant to this
Agreement).”

 

4

 

11.   Amendments to Section 5.16(d).  Section 5.16(d) of
the Agreement is hereby amended and restated in its entirety to read as
follows:

 

“(d) 
It is the intention of the parties that any Reserve should not alter the
intended allocation of value between GGO and the Company as Claims are resolved
over time.  Accordingly, the Plan shall
provide that, if a GGO Promissory Note is required to be issued at Closing and
there is a Reserve Surplus Amount as of the end of any fiscal quarter prior to
the maturity of the GGO Promissory Note, then the principal amount of the GGO
Promissory Note shall be reduced, but not below zero, by (i) if and to the
extent that such Reserve Surplus Amount as of such date is less than or equal
to the Net Debt Surplus Amount, 80% of the Reserve Surplus Amount, and
otherwise (ii) 100% of an amount equal to the Reserve Surplus Amount;
provided, however, that because this calculation may be undertaken on a
periodic basis, for purposes of clauses (i) and (ii), no portion of the
Reserve Surplus Amount shall be utilized to reduce the amount of the GGO
Promissory Note if it has been previously utilized for such purpose.  In the event that any party requests an
equitable adjustment to this formula, the other parties shall consider the
request in good faith.”

 

12.   Amendment to Section 6.4.  Section 6.4 of the Agreement is hereby
amended by inserting at the end thereof the following:

 

“The
Plan shall provide that in addition to the covenants provided in the
Non-Control Agreement, at the time of an underwritten offering of equity or
convertible securities by the Company on or prior to the 30th day after the
Effective Date, to the extent reasonably requested in connection with such
offering by UBS or any other managing underwriter selected by the Company, each
Purchaser and the other members of the Purchaser Group will covenant and agree
that it does not currently intend to, and will not, sell, transfer or dispose
of (each, a “Transfer”) any Shares for a period of time not to exceed
120 days from the date of completion of the offering without the consent of the
representatives of such underwriter; provided, however, that a Purchaser
or member of its Purchaser Group may Transfer its Shares in such amounts, and
at such times, as Fairholme, as such Purchaser’s or Purchaser Group members’
manager, determines after the Closing Date to be in such Purchaser’s or
Purchaser Group members’ best interests in light of its then current
circumstances and the laws and regulations applicable to it as a management
investment company registered under the Investment Company Act of 1940, as
amended, with a policy of qualifying as a “regulated investment company” as
defined in Subchapter M of the Internal Revenue Code of 1986, as amended.”

 

13.   Amendments to Article VI.  Article VI of the
Agreement is hereby amended by adding at the end thereof the following new
sections:

 

“SECTION 6.8.  [Intentionally
Omitted.]”

 

5

 

“SECTION 6.9.  
Additional Backstop.

 

(a)           If the Company requests the Initial Investors, in
writing, at any time prior to fifteen (15) days before the commencement of
solicitation of acceptances of the Plan, each Initial Investor agrees that it
shall, severally but not jointly and severally, provide or cause a designee to
provide its pro rata share of a backstop for new bonds, loans or preferred
stock (as determined by the Initial Investor) in an aggregate amount equal to
$1,500,000,000 less the Reinstated Amounts, at a market rate and market
commitment fees, and otherwise on terms and conditions to be mutually agreed
among the Initial Investors and the Company. 
The new bonds, loans or preferred stock would require no mandatory
interim cash principal payments prior to the third anniversary of issuance
(unless funded from committed junior indebtedness or junior preferred stock),
and would yield proceeds to the Company on the Closing Date net of OID of at
least $1,500,000,000 less the Reinstated Amounts.  Any Initial Investor may at any time
designate in writing one or more financial institutions with a corporate
investment grade credit rating (from S&P or Moody’s) to make a substantially
similar undertaking as that provided herein and, upon the receipt of such an
undertaking by the Company in form and substance reasonably satisfactory to the
Company, such Initial Investor shall be released from its obligations under its
applicable Investment Agreement.

 

(b)           For the purposes of Section 6.9(a), the “pro
rata share” or “pro rata basis” of each Initial Investor shall be determined in
accordance with the maximum number of shares of New Common Stock each Initial
Investor has committed to purchase at Closing pursuant to its Investment
Agreement as of the date hereof, but excluding any shares of New Common Stock
the Brookfield Investor or the Pershing Purchasers have committed to purchase
pursuant to Section 6.9 of the other Investment Agreements.”

 

14.   Amendment to Section 7.1(l).  The first sentence of Section 7.1(l) of
the Agreement is hereby amended and restated in its entirety to read as
follows:

 

“Registration
Rights.  The Company shall have filed
with the SEC and the SEC shall have declared effective, as of Closing, to the
extent permitted by applicable SEC rules, a shelf registration statement on Form S-1
or Form S-11, as applicable, covering the resale by each Purchaser and
member of the Purchaser Group of the Shares, any securities issued pursuant to Section 6.9(a) and
the New Common Stock issuable upon exercise of the New Warrants, containing a
plan of distribution reasonably satisfactory to each Purchaser.”

 

15.   Amendment to Section 7.1(n).  Section 7.1(n) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“Liquidity.  The Company shall have, on the Effective Date
and after giving effect to the use of proceeds from Capital Raising Activities
permitted under this Agreement and the issuance of the Shares, and the payment
and/or reserve for all allowed and disputed claims under the Plan, transaction
fees and other amounts required to be paid in cash or Shares 

 

6

 

under
the Plan as contemplated by the Plan Summary Term Sheet, an aggregate amount of
not less than $350,000,000 of Proportionally Consolidated Unrestricted Cash
(the “Liquidity Target”) plus, the net proceeds of the Additional
Financings and the aggregate principal amount of the Anticipated Debt Paydowns
(or such higher number as may be agreed to by each Purchaser and the Company).”

 

16.   Amendment to Section 7.1(p).  Section 7.1(p) of the Agreement is
hereby amended to replace “22,100,000,000” therein with “22,250,000,000”.

 

17.   Amendment to Section 7.1(q).  Section 7.1(q) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“Outstanding Common
Stock.  The
number of issued and outstanding shares of New Common Stock on a Fully Diluted
Basis (including the Shares) shall not exceed the Share Cap Number.  The “Share Cap Number” means
1,104,683,256 plus up to 65,000,000 shares of New Common Stock issued in
Liquidity Equity Issuances, plus 42,857,143 shares of New Common Stock issuable
upon the exercise of the New Warrants, plus the shares of New Common Stock
issuable upon the exercise of those certain warrants issued to the Brookfield
Consortium Members pursuant to the Brookfield Agreement and to the Pershing
Purchasers pursuant to the Pershing Agreement, plus the number of shares of
Common Stock issued as a result of the exercise of employee stock options to
purchase Common Stock outstanding on the date hereof, plus, in the event shares
of New Common Stock are issued pursuant to Section 6.9(b) of the
other Investment Agreements, the difference between (i) the number of
shares of New Common Stock issued to existing holders of
Common Stock, the Brookfield Investor and the Pershing Purchasers, in each
case, pursuant to Section 6.9(b) of the other Investment Agreements minus (ii) 50,000,000
shares of New Common Stock; provided, that if Indebtedness under the
Rouse Bonds or the Exchangeable Notes is reinstated under the Plan, or the
Company shall have incurred New Debt, or between the date of this Agreement and
the Closing Date the Company shall have sold for cash real property assets
outside of the ordinary course of business (“Asset Sales”), the Share
Cap Number shall be reduced by the quotient (rounded up to the nearest whole
number) obtained by dividing (x) the sum of Reinstated Amounts and the net
cash proceeds to the Company from Asset Sales in excess of $150,000,000 and the
issuance of New Debt by (y) the Per Share Purchase Price.”

 

18.   Amendment to Section 7.1(r)(vi).  Section 7.1(r)(vi) of the Agreement
is hereby amended and restated in its entirety to read as follows:

 

“(vi) none
of the Company or any of its Subsidiaries shall have issued, delivered,
granted, sold or disposed of any Equity Securities (other than (A) issuances
of shares of Common Stock issued pursuant to, and in accordance with, Section 7.1(u),
but subject to Section 7.1(q), (B) pursuant to the Equity
Exchange, (C) the issuance of shares pursuant to the exercise of employee
stock 

 

7

 

options
issued pursuant to the Company Option Plans, (D) as set forth on Section 7.1(u) of
the Company Disclosure Letter), or (E) the issuance of shares to existing
holders of Common Stock, the Brookfield Investor and the Pershing Purchasers,
in each case, pursuant to Section 6.9(b) of the other Investment
Agreements);”

 

19.   Amendment to Section 7.1(u).  Section 7.1(u) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“Issuance
or Sale of Common Stock.  Neither the
Company nor any of its Subsidiaries shall have issued or sold any shares of
Common Stock (or securities, warrants or options that are convertible into or
exchangeable or exercisable for, or linked to the performance of, Common Stock)
(other than (A) pursuant to the Equity Exchange, (B) the issuance of
shares pursuant to the exercise of employee stock options issued pursuant to
the Company Option Plans, (C) as set forth on Section 7.1(u) of
the Company Disclosure Letter or (D) the issuance of shares to existing
holders of Common Stock, the Brookfield Investor and the Pershing Purchasers,
in each case, pursuant to Section 6.9(b) of the other Investment
Agreements), unless (1) the purchase price (or, in the case of securities
that are convertible into or exchangeable or exercisable for, or linked to the
performance of, Common Stock, the conversion, exchange or exercise price) shall
not be less than $10.00 per share (net of all underwriting and other discounts,
fees and any other compensation), (2) following such issuance or sale, (x) no
Person (other than (i) an Initial Investor and their respective Affiliates
pursuant to the Investment Agreements and (ii) any institutional
underwriter or initial purchaser acting in an underwriter capacity in an
underwritten offering) shall, after giving effect to such issuance or sale,
beneficially own more than 10% of the Common Stock of the Company on a Fully
Diluted Basis, and (y) no four Persons (other than the Purchasers, members
of the Fairholme Purchaser Group, the members of the Pershing Purchaser Group,
the Brookfield Consortium Members or the Brookfield Investor) shall, after
giving effect to such issuance or sale, beneficially own more than thirty
percent (30%) of the Common Stock on a Fully Diluted Basis; provided,
that this clause (2) shall not be applicable to any conversion or exchange
of claims against the Debtors into New Common Stock pursuant to the Plan; provided,
further, that subclause (y) of this clause (2) shall not be
applicable with respect to any Person listed on Exhibit N and (3) each
Purchaser shall have been offered the right to purchase up to its GGP Pro Rata
Share of 15% of such shares of Common Stock (or securities, warrants or options
that are convertible into or exchangeable or exercisable for Common Stock) on
terms otherwise consistent with Section 5.9 (except the provisions
of such Section 5.9 with respect to issuances contemplated by this Section 7.1(u) shall
apply from the date of this Agreement) (provided that the right
described in this clause 

 

8

 

(3) shall
not be applicable to the issuance of shares or warrants contemplated by the
other Investment Agreements, or any conversion or exchange of debt or other
claims into equity in connection with the Plan).”

 

20.   Amendment to Section 7.1(w).  Section 7.1(w) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“GGO
Promissory Note.  The GGO Promissory
Note, if any, shall have been issued by GGO (or one of its Subsidiaries,
provided that the GGO Promissory Note is guaranteed by GGO) in favor of the
Operating Partnership.”

 

21.   Amendment to Section 8.1(m).  Section 8.1(m) of the Agreement is
hereby amended and restated in its entirety to read as follows:

 

“GGO
Promissory Note.  The GGO Promissory
Note, if any, shall have been issued by GGO (or one of its Subsidiaries,
provided that the GGO Promissory Note is guaranteed by GGO) in favor of the
Operating Partnership.”

 

22.   Amendment to Section 11.1(b)(iii).  Section 11.1(b)(iii) of the
Agreement is hereby amended and restated in its entirety to read as follows:

 

“if, from and after the issuance of the Warrants,
the Approval Order shall without the prior written consent of each Purchaser,
cease to be in full force and effect resulting in the cancellation of any
Warrants or a modification of any Warrants, in each case, other than pursuant
to their terms, that adversely affects any Purchaser;”

 

23.   Amendment to Section 11.1(b)(v).  Section 11.1(b)(v) of the Agreement
is hereby amended by inserting “, in each case, “ before “(A)”.

 

24.   Amendment to Section 11.1(b)(vii).  Section 11.1(b)(vii) of the
Agreement is hereby amended and restated in its entirety to read as follows:

 

“(vii) 
if the Company or any Subsidiary of the Company issues any shares of Common
Stock or New Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock or New Common Stock) at a purchase price (or in
the case of securities that are convertible into or exchangeable or exercisable
for, or linked to the performance of, Common Stock or New Common Stock, the
conversion, exchange, exercise or comparable price) of less than $10.00 per
share (net of all underwriting and other discounts, fees and any other
compensation and related expenses) of Common Stock or New Common Stock or
converts any claim against any of the Debtors into New Common Stock at a
conversion price less than $10.00 per share of Common Stock or New Common Stock
(in each case, other than pursuant to (A) the exercise, exchange or
conversion of Share Equivalents of the Company existing on the date 

 

9

 

of
this Agreement in accordance with the terms thereof as of the date of this
Agreement, (B) the Equity Exchange, (C) the issuance of shares upon
the exercise of employee stock options issued pursuant to the Company Option
Plans, (D) the issuance of shares as set forth on Section 7.1(u) of
the Company Disclosure Letter, or (E) the issuance of shares to existing
holders of Common Stock, the Brookfield Investor and the Pershing Purchasers,
in each case, pursuant to Section 6.9(b) of the other Investment
Agreements;”

 

25.   Amendment to Section 12.1.  Section 12.1 of the Agreement is hereby
amended as follows:

 

a.     The definition of “Competing
Transaction” is hereby amended and restated in its entirety to read as
follows:

 

““Competing Transaction”
means, other than the transactions contemplated by this Agreement or the Plan
Summary Term Sheet, or by the other Investment Agreements, any offer or
proposal relating to (i) a merger, consolidation, business combination,
share exchange, tender offer, reorganization, recapitalization, liquidation,
dissolution or similar transaction involving the Company or (ii) any
direct or indirect purchase or other acquisition by a “person” or “group” of “beneficial
ownership” (as used for purposes of Section 13(d) of the Exchange
Act) of, or a series of transactions to purchase or acquire, assets
representing 30% or more of the consolidated assets or revenues of the Company
and its Subsidiaries taken as a whole or 30% or more of the Common Stock of the
Company (or securities convertible into or exchangeable or exercisable for 30%
or more of the Common Stock of the Company) or (iii) any recapitalization
of the Company or the provision of financing to the Company that shall cause
any condition in Section 7.1 not to be satisfied, in each case,
other than the recapitalization and financing transactions contemplated by this
Agreement and the Plan Summary Term Sheet (or the financing provided by the
Initial Investors) or that will be effected together with the transactions
contemplated hereby.”

 

b.     The definition of “Essential
Assets” is hereby deleted in its entirety.

 

c.     The definition of “Excess
Surplus Amount” is hereby amended and restated in its entirety to read as
follows:

 

““Excess
Surplus Amount” means the sum of: (i) if, after giving effect to the
application of the Reserve Surplus Amount to reduce the principal amount of the
GGO Promissory Note pursuant to Section 5.16(d), any Reserve
Surplus Amount remains, (A) if and to the extent that such Reserve Surplus
Amount is less than or equal to the Net Debt Surplus Amount, 80% of such
remaining Reserve Surplus Amount, and otherwise (B) 100% of the remaining
Reserve Surplus Amount; and (ii) (A) if a 

 

10

 

GGO
Promissory Note is required to be issued at Closing, 80% of the aggregate
Offering Premium, if any, less the amount of any reduction in the principal
amount of the GGO Promissory Note pursuant to Section 5.16(e) hereof,
or (B) if the GGO Promissory Note is not required to be issued at Closing,
the sum of (x) 80% of the aggregate Offering Premium and (y) 80% of
the excess, if any, of the Net Debt Surplus Amount over the Hughes Amount.”

 

d.     The definition of “Excluded
Claims” is hereby amended and restated in its entirety to read as follows:

 

““Excluded
Claims” means:

 

(i) 
prepetition and postpetition Claims secured by cashiers’, landlords’, workers’,
mechanics’, carriers’, workmen’s, repairmen’s and materialmen’s liens and other
similar liens,

 

(ii) 
except with respect to Claims related to GGO or the assets or businesses
contributed thereto, prepetition and postpetition Claims for all ordinary
course trade payables for goods and services related to the operations of the
Company and its Subsidiaries (including, without limitation, ordinary course
obligations to tenants, anchors, vendors, customers, utility providers or
forward contract counterparties related to utility services, employee payroll,
commissions, bonuses and benefits (but excluding the Key Employee Incentive
Plan approved by the Bankruptcy Court pursuant to an order entered on October 15,
2009 at docket no. 3126), insurance premiums, insurance deductibles, self
insured amounts and other obligations that are accounted for, consistent with
past practice prior to the Petition Date, as trade payables); provided, however,
that Claims or expenses related to the administration and conduct of the
Bankruptcy Cases (such as professional fees and disbursements of financial,
legal and other advisers and consultants retained in connection with the
administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy
Cases and other expenses, fees and commissions related to the reorganization
and recapitalization of the Company pursuant to the Plan, including related to
the Investment Agreements, the issuance of the New Debt, Liquidity Equity
Issuances and any other equity issuances contemplated by this Agreement and the
Plan) shall not be Excluded Claims,

 

(iii) 
except with respect to Claims related to GGO or the assets or businesses
contributed thereto, Claims and liabilities arising from the litigation or
potential litigation matters set forth in that certain Interim Litigation
Report of the Company dated March 29, 2010

 

11

 

and
the Company’s litigation audit response to Deloitte & Touche dated February 25,
2010, both have been made available to each Purchaser prior to close of
business on March 29, 2010 and other Claims and liabilities arising from
ordinary course litigation or potential litigation that was not included in
such schedule solely because the amount of estimated or asserted liabilities or
Claims did not meet the threshold amount used for the preparation of such
schedule, in each case, to the extent that such Claims and liabilities have not
been paid and satisfied as of the Effective Date, are continuing following the
Effective Date, excluding the Hughes Heirs Obligations,

 

(iv) 
except with respect to Claims related to GGO or the assets or businesses
contributed thereto, all tenant, anchor and vendor Claims required to be cured
pursuant to section 365 of the Bankruptcy Code, in connection with the
assumption of an executory contract or unexpired lease under the Plan,

 

(v) 
any deficiency, guaranty or other similar Claims associated with the Special
Consideration Properties (as such term is defined in the plans of
reorganization for the applicable Confirmed Debtors),

 

(vi) 
the MPC Tax Reserve,

 

(vii) 
surety bond Claims relating to Claims of the type identified in clauses (i) through
(vi) of this definition,

 

(viii) GGO
Setup Costs (other than professional fees and disbursements of financial, legal
and other advisers and consultants retained in connection with the
administration and conduct of the Company’s and its Subsidiaries’ Bankruptcy
Cases), and

 

(ix) 
any liabilities assumed by GGO and paid on the Effective Date by GGO or to be
paid after the Effective Date by GGO (for avoidance of doubt, this includes any
Claims that, absent assumption of the liability by GGO, would be a Permitted
Claim).”

 

e.     The definition of “GGO
Promissory Note” is hereby amended and restated in its entirety to read as
follows:

 

““GGO Promissory Note” means an unsecured
promissory note payable by GGO (or one of its Subsidiaries, provided that the
GGO Promissory Note is guaranteed by GGO) in favor of the Operating Partnership
in the aggregate principal amount of the GGO Note Amount, as adjusted pursuant
to Section 5.16(d), Section 5.16(e) 

 

12

 

and
Section 5.16(g), (i) bearing interest at a rate equal to the
lower of (x) 7.5% per annum and (y) the weighted average effective
rate of interest payable (after giving effect to the payment of any
underwriting and all other discounts, fees and any other compensation) on each
series of New Debt issued in connection with the Plan and (ii) maturing on
the fifth anniversary of the Closing Date (or if such date is not a Business
Day, the next immediately following Business Day), and (iii) including
prohibitions on dividends and distributions, no financial covenants and such
other customary terms and conditions as reasonably agreed to by each Purchaser
and the Company.”

 

f.      The definition of “Permitted
Claims” is hereby amended and restated in its entirety to read as follows:

 

““Permitted Claims” means, as of the
Effective Date, other than Excluded Claims, (a) all Claims against the
Debtors covered by the Plan (the “Plan Debtors”) that are classified in
those certain classes of Claims described in Sections II B through E, G and P
in the Plan Summary Term Sheet (the “PMA Claims”), (b) all Claims
or other amounts required to be paid pursuant to the Plan to indenture trustees
or similar servicing or administrative agents, with respect to administrative
fees incurred by or reimbursement obligations owed to such indenture trustees
or similar servicing or administrative agents in their capacity as such under
the Corporate Level Debt documents, (c) any claims of a similar type as
the PMA Claims that are or have been asserted against affiliates of the Plan
Debtors that are or were debtors in the Bankruptcy Cases and for which a plan
of reorganization has already been consummated (the “Confirmed Debtors”),
and (d) surety bond Claims relating to the types of Claims identified in
clauses (a) through (c) of this definition.”

 

g.     The definition of “Permitted
Claims Amount” is hereby amended and restated in its entirety to read as
follows:

 

““Permitted
Claims Amount” means, as of the Effective Date, an amount equal to the sum
of, without duplication, (a) the aggregate amount of accrued and unpaid
Permitted Claims that have been allowed (by order of the Bankruptcy Court or
pursuant to the terms of the Plan) as of the Effective Date, plus (b) the
aggregate amount of the reserve to be established under the Plan with respect
to accrued and unpaid Permitted Claims that have not been allowed or disallowed
(in each case by order of the Bankruptcy Court or pursuant to the terms of the
Plan) as of the Effective Date, with such aggregate amount to be determined by
the Bankruptcy Court 

 

13

 

in
the Confirmation Order or such other order as may be entered by the Bankruptcy
Court on or prior to the Effective Date (the “Reserve”), plus (c) the
aggregate amount of the GGO Setup Costs (other than professional fees and
disbursements of financial, legal and other advisers and consultants retained
in connection with the administration and conduct of the Company’s and its
Subsidiaries’ Bankruptcy Cases) as of the Effective Date; provided, however,
that there shall be no duplication with any amounts otherwise included in
Closing Date Net Debt.”

 

h.     The definition of “Proportionally
Consolidated Debt” is hereby amended and restated in its entirety to read
as follows:

 

““Proportionally
Consolidated Debt” means consolidated Debt of the Company less (1) all
Debt of Subsidiaries of the Company that are not wholly-owned and other Persons
in which the Company, directly or indirectly, holds a minority interest, to the
extent such Debt is included in consolidated Debt, plus (2) the Company’s
share of Debt for each non-wholly owned Subsidiary of the Company and each
other Persons in which the Company, directly or indirectly, holds a minority
interest based on the company’s pro-rata economic interest in each such
Subsidiary or Person or, to the extent to which the Company is directly or
indirectly (through one or more Subsidiaries or Persons) liable for a percent
of such Debt that is greater than such pro-rata economic interest in such
Subsidiary or Person, such larger amount; provided, however, for purposes of
calculating Proportionally Consolidated Debt, the Debt of the Brazilian
Entities shall be deemed to be $110,437,781.”

 

i.      The definition of “Reserve
Surplus Amount” is hereby amended and restated in its entirety to read as
follows:

 

““Reserve
Surplus Amount” means, as of any date of determination, (x) the
Reserve minus (y) the aggregate amount paid with respect to Permitted
Claims through such date of determination to the extent such Permitted Claims
were included in the calculation of the Reserve minus (z) any amount
included in the Reserve with respect to Permitted Claims that the Company
Board, based on the exercise of its business judgment and information available
to the Company Board as of the date of determination, considers necessary to
maintain as a reserve against Permitted Claims yet to be paid.”

 

26.   Amendment to Section 13.10.  Section 13.10
of the Agreement is hereby amended by adding at the end thereof the following
new sentence:

 

14

 

“If a transaction results
in any adjustment to the exercise price for and number of Shares underlying the
Warrants pursuant to Article 5 of the Warrant Agreement, the exercise
price for and number of shares underlying each of the New Warrants and GGO
Warrants described in Section 5.2 of this Agreement shall be
adjusted for that transaction in the same manner.”

 

27.   No Further Amendment.  Except as expressly amended hereby, the
Agreement is in all respects ratified and confirmed and all the terms,
conditions, and provisions thereof shall remain in full force and effect. This
Amendment is limited precisely as written and shall not be deemed to be an
amendment to any other term or condition of the Agreement or any of the
documents referred to therein.

 

28.   Effect of Amendment.  This Amendment shall form a part of the
Agreement for all purposes, and each party thereto and hereto shall be bound
hereby. From and after the execution of this Amendment by the parties hereto,
any reference to the Agreement shall be deemed a reference to the Agreement as
amended hereby. This Amendment shall be deemed to be in full force and effect
from and after the execution of this Amendment by the parties hereto.

 

29.   Governing Law; Venue. THIS
AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF, AND VENUE IN, THE UNITED STATES BANKRUPTCY COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND BOTH PARTIES WAIVE ANY OBJECTION BASED ON
FORUM NON CONVENIENS.

 

30.   Counterparts. This
Amendment may be executed in any number of counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties; and delivered to the
other party (including via facsimile or other electronic transmission), it
being understood that each party need not sign the same counterpart.

 

31.   Construction.

 

a.     Unless otherwise
specifically defined herein, each term used herein shall have the meaning
assigned to such term in the Agreement.

 

b.     Each reference to “hereof,” “herein,”
“hereunder,” “hereby” and “this Agreement” shall, from and after the date
hereof, refer to the Agreement as amended by this Amendment.  Notwithstanding the foregoing, references to
the date of the Agreement, as amended hereby, shall in all instances continue
to refer to March 31, 2010, references to “the date hereof” and “the date
of this Agreement” shall continue to refer to March 31, 2010.

 

15

 

c.     The headings in this
Amendment are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Amendment.

 

32.   Bankruptcy Matters. For the
avoidance of doubt, all obligations of the Company and its Subsidiaries in this
Amendment are subject to and conditioned upon entry of the Approval Order or
the Confirmation Order as provided for in Section 13.12 of the Agreement.

 

[Signature Page Follows]

 

16

 

IN WITNESS WHEREOF, the undersigned have caused this
Amendment to be executed and delivered by each of them or their respective
officers thereunto duly authorized, all as of the date first written above.

 

 

	
   

  	
  GENERAL
  GROWTH PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Thomas H. Nolan Jr.

  
	
   

  	
   

  	
  Name:
  Thomas H. Nolan Jr.

  
	
   

  	
   

  	
  Title:
  President & COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FAIRHOLME
  FUNDS, INC.

  
	
   

  	
  On
  behalf of its series The Fairholme Fund

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Bruce R. Berkowitz

  
	
   

  	
   

  	
  Name:
  Bruce R. Berkowitz

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FAIRHOLME
  FUNDS, INC.

  
	
   

  	
  On
  behalf of its series Fairholme Focused Income Fund

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Bruce R. Berkowitz

  
	
   

  	
   

  	
  Name:
  Bruce R. Berkowitz

  
	
   

  	
   

  	
  Title: President

  

 

[SIGNATURE PAGE TO
AMENDMENT NO. 1]Exhibit 10.4

 

 

 

[FORM OF]

 

WARRANT AND REGISTRATION
RIGHTS AGREEMENT

 

BETWEEN

 

GENERAL GROWTH PROPERTIES,
INC.

 

AND

 

MELLON
INVESTOR SERVICES LLC,

 

as
WARRANT AGENT

 

 

Dated as of [    ],
2010

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  10

  
	
   

  	
  3.4

  	
  Method of Exercise; Settlement of Warrant

  	
   

  	
  10

  
	
   

  	
  3.5

  	
  Transferability of Warrants and Common Stock

  	
   

  	
  12

  
	
   

  	
  3.6

  	
  Compliance with Law

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REGISTRATION RIGHTS AND PROCEDURES AND LISTING

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Applicability; Registration

  	
   

  	
  15

  
	
   

  	
  4.2

  	
  Expenses of Registration

  	
   

  	
  19

  
	
   

  	
  4.3

  	
  Obligations of the Company

  	
   

  	
  19

  
	
   

  	
  4.4

  	
  Suspension of Sales

  	
   

  	
  22

  
	
   

  	
  4.5

  	
  Termination of Registration Rights

  	
   

  	
  22

  
	
   

  	
  4.6

  	
  Furnishing Information

  	
   

  	
  22

  
	
   

  	
  4.7

  	
  Indemnification

  	
   

  	
  23

  
	
   

  	
  4.8

  	
  Contribution

  	
   

  	
  24

  
	
   

  	
  4.9

  	
  Representations, Warranties and Indemnities to Survive

  	
   

  	
  25

  
	
   

  	
  4.10

  	
  Lock-Up Agreements

  	
   

  	
  25

  
	
   

  	
  4.11

  	
  Rule 144 Reporting

  	
   

  	
  25

  
	
   

  	
  4.12

  	
  Obtaining Exchange Listing

  	
   

  	
  26

  
	
   

  	
  4.13

  	
  The Warrant Agent

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  ADJUSTMENTS AND OTHER RIGHTS

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Stock Dividend; Subdivision or Combination of Common Stock

  	
   

  	
  26

  
	
   

  	
  5.2

  	
  Other Dividends and Distributions

  	
   

  	
  26

  
	
   

  	
  5.3

  	
  Rights Offerings

  	
   

  	
  27

  
	
   

  	
  5.4

  	
  Issuer Tender or Exchange Offers

  	
   

  	
  28

  
	
   

  	
  5.5

  	
  Reorganization, Reclassification, Consolidation, Merger or
  Sale

  	
   

  	
  28

  
	
   

  	
  5.6

  	
  Other Adjustments

  	
   

  	
  29

  
	
   

  	
  5.7

  	
  Notice of Adjustment

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  CHANGE OF CONTROL

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Redemption in Connection with a Change of Control Event

  	
   

  	
  30

  
	
   

  	
  6.2

  	
  Public Stock Merger

  	
   

  	
  30

  
	
   

  	
  6.3

  	
  Mixed Consideration Merger

  	
   

  	
  31

  

 

i

 

	
   

  	
  6.4

  	
  The Warrant Agent

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  WARRANT TRANSFER BOOKS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  WARRANT HOLDERS

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  No Voting Rights

  	
   

  	
  32

  
	
   

  	
  8.2

  	
  Right of Action

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  WARRANT AGENT

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Nature of Duties and Responsibilities Assumed

  	
   

  	
  33

  
	
   

  	
  9.2

  	
  Compensation and Reimbursement

  	
   

  	
  35

  
	
   

  	
  9.3

  	
  Warrant Agent May Hold Company Securities

  	
   

  	
  35

  
	
   

  	
  9.4

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  35

  
	
   

  	
  9.5

  	
  Damages

  	
   

  	
  36

  
	
   

  	
  9.6

  	
  Force Majeure

  	
   

  	
  36

  
	
   

  	
  9.7

  	
  Survival

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Representations and Warranties of
  the Company

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  COVENANTS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Reservation of Common Stock for Issuance on Exercise of
  Warrants

  	
   

  	
  37

  
	
   

  	
  11.2

  	
  Notice of Distributions

  	
   

  	
  37

  
	
   

  	
  11.3

  	
  Cancellation of Warrants

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  MISCELLANEOUS

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Money and Other Property Deposited with the Warrant Agent

  	
   

  	
  37

  
	
   

  	
  12.2

  	
  Payment of Taxes

  	
   

  	
  38

  
	
   

  	
  12.3

  	
  Surrender of Certificates

  	
   

  	
  38

  
	
   

  	
  12.4

  	
  Mutilated, Destroyed, Lost and Stolen Warrant Certificates

  	
   

  	
  38

  
	
   

  	
  12.5

  	
  Removal of Legends

  	
   

  	
  39

  
	
   

  	
  12.6

  	
  Notices

  	
   

  	
  39

  
	
   

  	
  12.7

  	
  Applicable Law; Jurisdiction

  	
   

  	
  41

  
	
   

  	
  12.8

  	
  Persons Benefiting

  	
   

  	
  41

  
	
   

  	
  12.9

  	
  Relationship to Investment Agreement and Stock Purchase
  Agreements

  	
   

  	
  41

  
	
   

  	
  12.10

  	
  Counterparts

  	
   

  	
  41

  
	
   

  	
  12.11

  	
  Amendments

  	
   

  	
  41

  
	
   

  	
  12.12

  	
  Headings

  	
   

  	
  42

  
	
   

  	
  12.13

  	
  Entire Agreement

  	
   

  	
  42

  
	
   

  	
  12.14

  	
  Specific Performance

  	
   

  	
  42

  

 

ii

 

List of
Exhibits

 

EXHIBIT
A — Form of Warrant Certificate

 

EXHIBIT
B — Form of Assignment

 

EXHIBIT
C — Option Pricing Assumptions / Methodology

 

SCHEDULE
A — Allocations of Warrants to Initial Investors and Vesting

 

SCHEDULE
B — Warrant Agent Compensation

 

iii

 

WARRANT AND REGISTRATION RIGHTS AGREEMENT

 

WARRANT AND REGISTRATION RIGHTS AGREEMENT, dated as of
[    ], 2010 (together with the Warrants, this “Agreement”),
by and between General Growth Properties, Inc., a Delaware corporation
(the “Company”), and Mellon Investment
Services LLC, a New
Jersey limited liability company (together with its
successors and assigns, the “Warrant Agent”).

 

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) 60,000,000 shares of its Common Stock,
subject to adjustment, in connection with that certain Cornerstone Investment
Agreement, dated as of March 31, 2010, by and between REP Investments LLC
and the Company (as amended from time to time, the “Investment Agreement”),
(b) 42,857,143 shares of its Common Stock, subject to adjustment, in
connection with that certain Stock Purchase Agreement, dated 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”) and (c) 17,142,857 shares of its Common
Stock, subject to adjustment, in connection with that certain Stock Purchase
Agreement, dated 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 each of the
Brookfield Purchaser (as defined herein), the Fairholme Purchasers and Pershing
Square Purchasers, a “Purchaser”) 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”) pursuant to each of which each Purchaser 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;

 

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.

 

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 Purchaser:  the Purchaser defined in the Investment
Agreement.

 

Business Day:  any day that is not a Saturday, Sunday, or a
day on which banks in the state of 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.

 

Cash Redemption Value:  the meaning set forth in Section 6.1.

 

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, 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 

 

2

 

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.

 

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.

 

Distribution:  the meaning set forth in Section 5.2.

 

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

 

Exercise Date:  the meaning set forth in Section 3.4.

 

Exercise Price:  the meaning set forth in Section 3.1.

 

Expiration Date:  the meaning set forth in Section 3.3.

 

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

 

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

 

3

 

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.

 

(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 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(a).

 

GGO Warrants: the meaning set forth in Section 11.3.

 

Holders:  from time to time, the holders of the
Warrants and, unless otherwise provided or indicated herein, the holders of the
Registrable Securities.

 

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 

 

4

 

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 (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.

 

Initiating Holder(s):  the meaning set forth in Section 4.1(b).

 

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

 

Loss:  the meaning set forth in Section 4.7(a)(i).

 

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(b).

 

Net Share Settlement:  the settlement method 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 Net Share
Amount without any payment therefor.

 

New Warrants:  the meaning set forth in Section 11.3.

 

Organic Change:  the meaning set forth in Section 5.5.

 

Other Stockholders:  means Persons (other than Holders) who, by
virtue of agreements with the Company (other than this Agreement), are entitled
to include their securities in a registration.

 

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

 

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

 

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.

 

5

 

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.

 

Prospectus: the prospectus included in
any Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.

 

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 and (c) with respect
to Pershing Square Purchasers, the Pershing 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.

 

Purchaser:  the meaning set forth in the recitals hereto.

 

Qualifying Employee Stock:  means (i) rights and options issued in
the ordinary course of business under employee benefits plans and any
securities issued after the date hereof upon exercise of such rights and
options and (ii) restricted stock and restricted stock units issued after
the date hereof in the ordinary course of business under employee benefit plans
and securities issued after the date hereof in settlement of any such
restricted stock units.

 

Registrable Securities:  means all Warrants and shares of Common Stock
issuable under the Warrants to each Initial Investor (or their designee(s) in
accordance with the last sentence of Section 2.2(a)) or otherwise
held by each Initial Investor or their designee(s) as of the date hereof
and at any time during the term of this Agreement.  Registrable Securities shall continue to be
Registrable Securities (whether they continue to be held by each Initial
Investor or their designee(s) or are transferred or sold to other Persons
pursuant to this Agreement) until (i) they 

 

6

 

are sold pursuant to an
effective Registration Statement under the Securities Act, (ii) after such
securities have been sold pursuant to Rule 144 (or any similar provision
then in force, but not Rule 144A), (iii) they shall have otherwise
been transferred and new securities not subject to transfer restrictions under
any federal securities laws and not bearing any legend restricting further
transfer shall have been delivered by the Company, all applicable holding
periods shall have expired, and no other applicable and legally binding
restriction on transfer by the holder thereof shall exist, (iv) they are eligible for sale pursuant to Rule 144 under the
Securities Act without limitation thereunder on volume or manner of sale, or (v) when
such securities cease to be outstanding.

 

Registration Expenses:  mean all expenses incurred by the Company in
effecting any registration pursuant to this Agreement, including, without limitation,
all registration and filing fees, printing expenses, the reasonable fees and
disbursements of one counsel for all Holders (which counsel shall be selected
by a majority of the selling Holders), fees
and reasonable disbursements of counsel for the Company, Blue Sky fees and
expenses, and expenses of the Company’s independent accountants in connection
with any regular or special reviews or audits incident to or required by any
such registration, but shall not include Selling Expenses.

 

Registration Rights:  the rights of Holders set forth in Article 4
to have Registrable Securities registered under the Securities Act for sale
under one or more effective Registration Statements.

 

Registration Statement:  any registration statement filed by the Company
under the Securities Act pursuant to the Registration Rights, including the
related Prospectus, any amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such registration statement.

 

register, registered, and registration:  shall refer to, unless the context dictates
otherwise, a registration effected by preparing and (a) filing a
Registration Statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of effectiveness of
such Registration Statement or (b) filing a Prospectus and/or prospectus
supplement in respect of an appropriate effective Registration Statement.

 

Rule 144, Rule 405 and Rule 415:  mean, in each case, 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.

 

Scheduled Black-Out Period:  means the period from and including the last
day of a fiscal quarter of the Company to and including the earliest of (i) the
Business Day after the day on which the Company publicly releases its earnings information for such quarter or annual earnings information,
as applicable, and (ii) the day on which the executive officers and
directors of the Company are no longer prohibited by Company policies applicable
with respect to such quarterly earnings period from buying or selling equity
securities of the Company.

 

S-1 Registration Statement:  means a registration statement of the Company
on Form S-1 (or any comparable or successor form) filed with the SEC
registering any Registrable Securities.

 

7

 

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.

 

Selling Expenses:  mean all discounts, selling commissions and
stock transfer taxes applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders other than the
reasonable fees and expenses of one counsel for all of the Holders which shall
be paid for by the Company as provided in the definition of Registration
Expenses.

 

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.

 

Shelf Registration Statement:  means a “shelf” registration statement of the
Company that covers all the Registrable Securities (and may cover other
securities of the Company) on Form S-3 and under Rule 415 or, if the
Company is not then eligible to file on Form S-3, on Form S-1 under
the Securities Act, or any successor rule that may be adopted by the
Commission, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and any document incorporated by
reference therein.

 

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.

 

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.

 

Suspension Limit: the meaning set forth in Section 4.4.

 

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.

 

8

 

Warrants:  the warrants issued by the Company from time
to time pursuant to this Agreement.

 

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, 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
provided in Section 3.6(f) and 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.

 

(b)                                 The Warrants evidenced by
the Warrant Certificates delivered pursuant to Section 2.2(a) shall
vest in the amounts and at the times set forth on Schedule A; provided, that any Warrants
delivered to an Initial Investor (or their designee(s) in
accordance with the last sentence of Section 2.2(a)) that have not vested on or prior to the first date on which (x) the
Investment Agreement or Stock Purchase Agreement applicable with respect to
such Initial Investor has been terminated in accordance with its terms and (y) the
Warrant Agent has received written notice from the Company of such termination,
shall no longer be eligible for vesting and shall be deemed cancelled.

 

(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 

 

9

 

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 an
exercise price (the “Exercise Price”) of $15.00 per share, subject to
all adjustments made on or prior to the date of exercise thereof as herein
provided.

 

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 the Warrants issued to each Initial
Investor (or their designee(s) in accordance with the last sentence of Section 2.2(a))
shall not be exercisable in whole or in part until 61 days after the date on
which the Investment Agreement or Stock Purchase Agreement applicable to such
Initial Investor shall have been terminated in accordance with its terms.  For the avoidance of doubt, Warrants that
have not vested in accordance with Schedule A may not be exercised.

 

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
[                    ],
2017(1) (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) if 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
Warrant unless the Holder elects for Net Share Settlement to apply upon
exercise of such Warrant.  Such election
shall be made in the form on the reverse of or attached to the Warrant
Certificate for such Warrant.

 

(1)                                  Note to Draft: Insert the
date that is the seventh anniversary of the date of this Agreement.

 

10

 

(a)                                  If Full Physical Settlement
is applicable with respect to the exercise of a Warrant, then, for each 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 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 obtainable 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.

 

(c)                                  Upon surrender of a Warrant
Certificate in conformity with the foregoing provisions and receipt by the
Warrant Agent of the Exercise Price therefor or, in the event of Net Share
Settlement, upon the election by a Holder for Net Share Settlement, 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 receipt by the Warrant Agent
of the Exercise Price therefor or, in the event of Net Share Settlement, upon
the election by a Holder for Net Share Settlement, 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 

 

11

 

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
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 are Registrable Securities, no Warrant may be
exercised (and the Warrant Agent shall be under no obligation to process any
exercise), and no Registrable 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
Registrable Securities to a transferee that is an “accredited investor” or a “qualified
institutional buyer”, as such terms are defined in such Regulation and such
Rule, respectively, provided that each of the following conditions is
satisfied:

 

12

 

(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
Underlying Common Stock (in the case of an exercise) or Registrable Securities
(in the case of a Sale) for its own account and
that it is not acquiring such Underlying Common Stock or the Registrable
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 Registrable 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 the exercise of its Warrants
and/or purchase of the Underlying Common Stock, as applicable.

 

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

 

(d)                                 A Holder may exercise its
Warrants or Sell its Registrable
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 securities issued pursuant to the exercise of the
Warrants 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 

 

13

 

SUCH
ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS
OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT DATED AS OF
[    ], 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “COMPANY”),
AND MELLON INVESTOR SERVICES LLC, AS WARRANT AGENT. A COPY OF SUCH WARRANT AND
REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

(f)                                    subject to Section 12.5,
each certificate representing the Warrants shall bear the following legend:

 

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 AND REGISTRATION RIGHTS AGREEMENT DATED AS OF
[    ], 2010 BETWEEN GENERAL GROWTH PROPERTIES, INC.  (THE “COMPANY”) AND MELLON INVESTOR
SERVICES LLC, AS WARRANT AGENT. A COPY OF SUCH WARRANT AND REGISTRATION RIGHTS
AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

(g)                                 the provisions of Section 3.6
shall not apply to, and any Holder may
exercise its Warrants and Sell its Registrable 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 Registrable Securities are eligible for resale by
the Holder without volume limitations or other limitations under Rule 144

 

(h)                                 The Warrant Agent shall not
take any action under this Section unless and until it has received
appropriate instructions from the Company.

 

14

 

4.                                      REGISTRATION
RIGHTS AND PROCEDURES AND LISTING.

 

4.1                                 Applicability; Registration.(2)

 

(a)                                  Subject to the limitations
and conditions of this Section 4.1, upon the request of any Holder,
the Company shall use reasonable best efforts to cause a Shelf Registration
Statement to be declared or become effective covering all Registrable
Securities no later than the effective date of a plan of reorganization of the
Company (including without limitation the Plan), and use reasonable best
efforts to keep such Shelf Registration Statement continuously effective and in
compliance with the Securities Act and usable for resale of all Registrable
Securities for the period from the date of its initial effectiveness until such
time as there are no Registrable Securities remaining in accordance with such
plan of distribution as may be reasonably requested by Holders of Registrable
Securities from time to time.  The
underwriting provisions set forth in Section 4.1(e) hereof
shall apply to an underwritten public offering requested by a Holder using such
Shelf Registration Statement effected pursuant to this Section 4.1(a),
provided, that the limitations set forth in Section 4.1(e) shall
only apply with respect to such underwritten public offering and not more
generally to the Shelf Registration Statement.

 

(b)                                 Subject to the conditions of
this Section 4.1, if the Company shall receive from any Holder or
group of Holders (such Holder or group of
Holders, the “Initiating Holder(s)”), a written request that the
Company effect a registration  with respect to
Registrable Securities owned by such Initiating Holder(s) having an
estimated aggregate Fair Market Value of at least $75 million, the Company
shall:

 

(i)                                     use its
reasonable best efforts to file a
Registration Statement with the SEC in accordance with the request of the
Initiating Holder(s), including without limitation the
method of disposition specified therein and covering resales of the
Registrable Securities requested to be registered, as promptly as
reasonably practicable but no later than (x) in the case of a Registration
Statement other than an S-1 Registration Statement, within 30 days of receipt of the request or (y) in the case of an S-1
Registration Statement, within 60 days of
receipt of the request;

 

(ii)                                  use reasonable best efforts to cause such Registration Statement to be declared or become
effective as promptly as practicable, but in no event later than 60 days after the date of initial filing of a Registration Statement pursuant
to Section 4.1(b)(i); and

 

(iii)                               use reasonable best efforts to keep such Registration Statement continuously effective and
in compliance with the Securities Act and usable for resale of such Registrable
Securities for the period as requested in writing
by the Initiating Holder(s) or such longer period as may be requested in
writing by any Holder participating in such registration (which periods shall
be extended to the extent of any suspensions of sales pursuant to Sections
4.1(c) or 4.4);

 

(2)                                  Note to Draft:  Lower dollar thresholds in the registration
rights section to be applicable to GGO Warrants.

 

15

 

provided, that (x) the number of demand registrations
that the Brookfield Investors shall be entitled to effect pursuant to this Section 4.1(b) shall
be no more than three such demand registrations in total and no more than one
such demand registration in any 12-month period, (y) the number of demand
registrations that The Fairholme Fund shall be entitled to effect pursuant to
this Section 4.1(b) shall be no more than three such demand
registrations in total and no more than one such demand registration in any
12-month period (The Fairholme Focused Income Fund will not be entitled to
exercise demand registration rights under this Section 4.1(b)), and
(z) the number of demand registrations that the Pershing Investors shall
be entitled to effect pursuant to this Section 4.1(b) shall be
no more than three such demand registrations in total and no more than one such
demand registration in any 12-month period; provided, further,
that the Company shall be permitted, with the consent of the Initiating Holder(s) not
to be unreasonably withheld, to file a post-effective amendment or prospectus
supplement to the Shelf Registration Statement filed pursuant to Section 4.1(a) in
lieu of an additional registration statement pursuant to Section 4.1(b) to
the extent the Company reasonably determines that the Registrable Securities of
the Initiating Holder(s) may be sold thereunder by such Initiating Holder(s) pursuant
to their intended plan of distribution (in which case such post-effective
amendment or demand registration statement shall not be counted against the
limited number of demand registrations). 
It shall not be unreasonable if, following the recommendation of an
underwriter, the Initiating Holder(s) do not consent to the Company filing
a post-effective amendment or prospectus supplement to the Shelf Registration
Statement filed pursuant to Section 4.1(a) in lieu of an
additional registration statement requested by the Initiating Holder(s).

 

(c)                                  Notwithstanding anything to
the contrary contained herein, the Company shall not be required to effect a
registration pursuant to this Section 4.1: (i) with respect to
securities that are not Registrable Securities; (ii) subject to Section 4.1(h),
during any Scheduled Black-Out Period; or (iii) if the Company has
notified the Holders that in the good faith judgment of the Company, it would
be materially detrimental to the Company or its security holders for such
registration to be effected at such time, in which event the Company shall have
the right to defer such registration for a period of not more than 60 days; provided that (A) such right to delay a registration
pursuant to clause (iii) shall be exercised by the Company only if the
Company has generally exercised (or is concurrently exercising) similar
black-out rights against holders of similar securities that have registration
rights, if any, and (B) any rights to delay registration pursuant to
clauses (ii) or (iii) shall be subject to the Suspension Limit
described in Section 4.4.

 

(d)                                 If the Company shall
determine to register any of its securities either (x) for its own
account, (y) for the account of the Holders listed in Section 4.1(b) pursuant
to the terms thereof, or (z) for the account of Other Stockholders (other
than (A) a registration relating solely to employee benefit plans, (B) a
registration relating solely to a Rule 145 transaction under the
Securities Act or (C) a registration on any registration form which does
not permit secondary sales or does not include substantially the same
information as would be required to be included in a Registration Statement),
the Company will, subject to the conditions set forth in this Section 4.1(d):

 

(i)                                     promptly give
to each of the Holders a written notice thereof (which shall include a list of
the jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and

 

16

 

(ii)                                  subject to Section 4.1(f) below
and any transfer restrictions any Holder may be a party to, include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made by the
Holders.  Such written request may
specify all or a part of the Holders’ Registrable Securities and shall be
received by the Company within ten (10) days after written notice from the
Company is given under Section 4.1(d)(i) above.

 

(e)                                  If any Initiating Holder(s) intends
to distribute Registrable Securities pursuant to Section 4.1(b) by
means of an underwriting, it shall so advise the Company.  In the case of such an underwritten offering,
the price, underwriting discount and other financial terms for the Registrable
Securities shall be determined by the Initiating Holder(s).  If Other Stockholders or Holders, to the
extent they have any registration rights under Section 4.1(d),
request inclusion of their securities or Registrable Securities, respectively,
in the underwriting, the Initiating Holder(s) shall offer to include such
securities or Registrable Securities of such Other Stockholders or Holders,
respectively, in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 4.1(e).  The Holders whose Registrable Securities are
to be included in such registration and the Company shall (together with all
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such underwriting by the
Initiating Holder(s) subject to approval by the Company not to be
unreasonably withheld (which underwriters may also include a non-bookrunning
co-manager selected by the Company subject to approval by the Initiating
Holder(s)); provided, however, that such underwriting agreement shall not
provide for indemnification or contribution obligations on the part of any
Holder greater than the obligations of the Holders under Sections 4.7(b) and
4.8.  Notwithstanding any other
provision of this Section 4.1(e), if the managing underwriter or
underwriters advises the Holders in writing that marketing factors require a
limitation on the number of securities to be underwritten, some or all of the
securities of the Company held by the Other Stockholders shall be excluded from
such registration to the extent so required by such limitation.  If, after the exclusion of such securities
held by the Other Stockholders, further reductions are still required due to
the marketing limitation, the number of Registrable Securities included in the
registration by each Holder (including the Initiating Holder(s)) shall be
reduced on a pro rata basis (based on the number of securities held by such
Holders), by such minimum number of securities as is necessary to comply with
such request.  No Registrable Securities
or any other securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration.  If any Holder or Other Stockholder who has
requested inclusion in such registration as provided above disapproves of the
terms of the underwriting, such Person may elect to withdraw therefrom by
providing written notice to the Company, the underwriter and the Initiating
Holder(s).  The securities so withdrawn
shall also be withdrawn from registration. 
If the underwriter has not limited the number of Registrable Securities
or other securities to be underwritten, the Company and executive officers and
directors of the Company (whether or not such Persons have registration rights
pursuant to Section 4.1(d) hereof) may include its or their
securities for its or their own account in such registration if the managing
underwriter or underwriters and the Company so agree and if the number of
Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be
limited.  The Company shall not be
obligated to undertake more than (i) one

 

17

 

underwritten offering requested by any of the
Brookfield Investors pursuant to Sections 4.1(b) and 4.1(e) in
any 12-month period, (ii) one underwritten offering requested by The
Fairholme Fund pursuant to Section 4.1(b) and 4.1(e) in
any 12-month period, and (iii) one underwritten offering requested by any
of the Pershing Investors pursuant to Section 4.1(b) and 4.1(e) in
any 12-month period.  The Holders
shall reasonably cooperate in connection with requests for underwritten
offerings pursuant to this Section 4.1(e) to cause the total
number of days that the Company shall be subject to lock-ups in connection with
any such underwritten offerings not to exceed 120 days in any 365-day period.

 

(f)                                    If the
registration of which the Company gives notice pursuant to Section 4.1(d) is
for a registered public offering involving an underwriting, the Company shall
so advise each of the Holders as a part of the written notice given pursuant to
Section 4.1(d) above. 
In such event, the right of each of the Holders to registration pursuant
to Section 4.1(d) shall be conditioned upon such Holders’
participation in such underwriting and the inclusion of such Holders’
Registrable Securities in the underwriting to the extent provided herein.  The Holders whose Registrable Securities are
to be included in such registration shall (together with the Company and the
Other Stockholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for underwriting by the Company (other
than a registration pursuant to Section 4.1(b) and notified by
the Company pursuant to Section 4.1(d)(y), in which case Section 4.1(e) shall
apply with respect to the selection of underwriters); provided, however, that
such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of any Holder greater than the obligations
of the Holders under Sections 4.7(b) and 4.8.  Notwithstanding any other provision of Section 4.1(d),
if any registration in respect of which any Holder is exercising its rights
under Section 4.1(d) involves an underwritten public offering
(other than a registration pursuant to Section 4.1(b), in which
case the provisions with respect to priority of inclusion in such registration
set forth in Section 4.1(e) shall apply) and the managing
underwriter or underwriters advises the Company that in its view marketing
factors require a limitation on the number of securities to be underwritten,
then there shall be included in such underwritten offering the number or dollar
amount of securities of the Company that in the opinion of the managing
underwriter or underwriters can be sold without adversely affecting such
offering, and such number of securities of the Company shall be allocated for
inclusion as follows: (1) first, all securities of the Company being sold
by the Company for its own account; (2) second, all Registrable Securities
requested to be included by the Holders and, solely with respect to an offering
of Warrants following the 180th day after the effectiveness of a
plan of reorganization of the Company, securities of the Company being sold by
any Person (other than a Holder) with similar piggyback registration rights,
pro rata, based on the number of securities beneficially owned by each such
Holder and Person; and (3) third, among any other holders of securities of
the Company requesting such registration, pro rata, based on the number of
securities beneficially owned by each such holder.  If any of the Holders or any officer,
director or Other Stockholder disapproves of the terms of any such
underwriting, he, she or it may elect to withdraw therefrom by providing
written notice to the Company and the underwriter.  Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.

 

(g)                                 In the event
any Holder requests or elects to participate in a registration pursuant to this
Section 4.1 in connection with a distribution of Registrable
Securities to its 

 

18

 

partners or members, the registration shall provide for the resale by
such partners or members, if requested by such Holder.

 

(h)                                 The Company agrees to use reasonable best efforts to promptly respond to
any request by any member of the Fairholme Purchaser Group to sell Registrable
Securities under a Registration Statement or Prospectus during what would
otherwise be a Scheduled Black-Out Period, provided that such consent can be given
in compliance with applicable securities laws. In addition the Company agrees
to use its reasonable best efforts to issue earnings releases as promptly as
practicable following the end of quarterly reporting periods and to otherwise
minimize the duration of Scheduled Black-Out Periods.

 

4.2                                 Expenses of Registration.  Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance hereunder shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder shall be borne
by the holders of the securities so registered pro rata on the basis of the
aggregate offering or sale price of the securities so registered.

 

4.3                                 Obligations of the Company.  In
connection with the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably practicable and in accordance with the requested methods of distribution thereof, subject to
the provisions of this Article 4:

 

(a)                                  Prepare and
file with the SEC a prospectus supplement with respect to a proposed offering
of Registrable Securities pursuant to an effective Registration Statement and,
subject to Sections 4.1(b), 4.1(c) and 4.4,
use reasonable best efforts to keep
such Registration Statement effective or such prospectus supplement current,
until the termination of the period contemplated in Section 4.5.

 

(b)                                 Prepare and
file with the SEC such amendments and supplements to the applicable
Registration Statement and the Prospectus or prospectus supplement used in
connection with such Registration Statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement for the period
set forth in paragraph (a) above.

 

(c)                                  Furnish to the
Holders and any underwriters such number of copies of the applicable
Registration Statement and each such amendment and supplement thereto
(including in each case all exhibits) and of a Prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned or to be distributed
by them.

 

(d)                                 Use its
reasonable best efforts to register and
qualify the securities covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders or any managing underwriter(s), to keep such
registration or qualification in effect for so long as such Registration
Statement remains in effect, and to take any other action which may be 

 

19

 

reasonably necessary to
enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such Holder; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.

 

(e)                                  Notify each
Holder of Registrable Securities at any time when a Prospectus relating thereto
is required to be delivered under the Securities Act or the happening of any
event as a result of which the applicable Prospectus, as then in effect, would
include an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.

 

(f)                                    Give written
notice to the Holders of Registrable Securities covered by a Registration
Statement:

 

(i)                                     when any
Registration Statement filed pursuant to Section 4.1 or any
amendment thereto has been filed with the SEC and when such Registration
Statement or any post-effective amendment thereto has become effective;

 

(ii)                                  of any request
by the SEC for amendments or supplements to any Registration Statement or the
Prospectus included therein or for additional information;

 

(iii)                               of the issuance
by the SEC of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose;

 

(iv)                              of the receipt
by the Company or its legal counsel of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and

 

(v)                                 of the
happening of any event that requires the Company to make changes in any
effective Registration Statement or the Prospectus in order to make the
statements therein not misleading (which notice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made).

 

(g)                                 Use its
reasonable best efforts to prevent the
issuance or obtain the withdrawal of any order suspending the effectiveness of
any Registration Statement referred to in Section 4.3(f)(iii) at
the earliest practicable time.

 

(h)                                 Upon the
occurrence of any event contemplated by Section 4.3(f)(v), as soon
as is reasonably practicable prepare a post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or file any
other required document so that, as thereafter delivered to the Holders and any
underwriters, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under

 

20

 

which they were made, not
misleading. If the Company notifies the Holders in accordance with Section 4.3(f)(v) to
suspend the use of the Prospectus until the requisite changes to the Prospectus
have been made, then the Holders and any underwriters shall suspend use of such
Prospectus and use their commercially reasonable efforts to return to the
Company all copies of such Prospectus (at the Company’s expense) other than
permanently filed copies then in such Holder’s or underwriter’s possession.

 

(i)            Use its
reasonable best efforts to procure the
cooperation of the Company’s transfer agent in settling any offering or sale of
Registrable Securities, including with respect to the transfer of physical
security instruments into book-entry form in accordance with any procedures
reasonably requested by the Holders or any managing underwriter(s).

 

(j)            Use its
reasonable best efforts to take such actions
as are under its control to become or remain a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) (and not become an
ineligible issuer (as defined in Rule 405 under the Securities Act))
during the period when such Registration Statement remains in effect.

 

(k)           With respect to
underwritten public offerings permitted by this Agreement, enter into an
underwriting agreement in form, scope and substance as is customarily entered
into for similar underwritten secondary offerings of equity securities and take
all such other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith as customary for
any similar underwritten secondary offering, (i) make such representations
and warranties to the Holders that are selling stockholders and the managing
underwriter(s), if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case,
in form, substance and scope as are customarily made by the issuer in similar
secondary underwritten offerings of equity securities, and confirm the same if
and when requested, (ii) use its reasonable best
efforts to furnish underwriters opinions of counsel to the Company,
addressed to the managing underwriter(s), if any, covering the matters
customarily covered in the opinions requested in similar secondary underwritten
offerings of equity securities, (iii) use its reasonable best efforts to obtain “cold comfort” letters from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any business acquired by the Company for which
financial statements and financial data are included in the Registration
Statement) who have certified the financial statements included in such
Registration Statement, addressed to each of the managing underwriter(s), if
any, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters in connection with similar
secondary underwritten offerings of equity securities, (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures customary in similar secondary underwritten offerings
of equity securities by similar companies, and (v) deliver such documents
and certificates as may be reasonably requested by the Holders of a majority of
the Registrable Securities being sold in connection therewith, their counsel
and the managing 

 

21

 

underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.

 

(l)            Make available
for inspection by a representative of Holders that are selling at least five
percent (5%) of the Registrable Securities issued on the date hereof, the
managing underwriter(s), if any, and any attorneys or accountants retained by
such Holders or managing underwriter(s), at the offices where normally kept,
during reasonable business hours, financial and other records and pertinent
corporate documents of the Company, and cause the officers, directors and
employees of the Company to supply all information in each case reasonably
requested by any such representative, managing underwriter(s), attorney or
accountant in connection with such Registration Statement; provided that this
clause (l) shall only be applicable to a representative of such Holders
that are selling stockholders and any attorneys or accountants retained by such
Holders if such Holder is named in the applicable prospectus supplement as a
Person who may be deemed to be an underwriter with respect to an offering and sale of Registrable Securities.

 

4.4          Suspension of
Sales.  Notwithstanding anything to
the contrary contained herein (but subject to the Suspension Limit described
below), (i) subject to Section 4.1(h), during any Scheduled
Black-Out Period or (ii) upon receipt of written notice from the Company
that a Registration Statement or Prospectus contains or may contain an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that circumstances exist that make inadvisable use of such Registration
Statement or Prospectus, the Holder of Registrable Securities shall forthwith
discontinue the marketing of or disposition of Registrable Securities until
termination of such Scheduled Black-Out Period, until the Holder has received
copies of a supplemented or amended Prospectus, or until such Holder is advised
in writing by the Company that the use of the Prospectus may be resumed, and,
if so directed by the Company, such Holder shall deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. The total number of days that
any such suspensions and any deferrals or delays in registration pursuant to Section 4.1(c) in
the aggregate may be in effect in any 180 day period shall not exceed 60 days
(the “Suspension Limit”).

 

4.5          Termination of
Registration Rights.  A Holder’s
Registration Rights as to any securities held by such Holder (and its
affiliates, partners, members and former members) shall not be available unless
such securities are Registrable Securities.

 

4.6          Furnishing
Information.  It shall be
a condition precedent to the obligations of the Company to take any action pursuant
to Section 4.3 that the selling Holders and the underwriters, if
any, shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registered offering of their
Registrable Securities.

 

22

 

4.7          Indemnification.  (a)  In connection with each
registration pursuant to Article 4, the Company agrees to indemnify
and hold harmless (1) each selling Holder and each of its officers,
directors, limited or general partners and members, (2) each member,
limited or general partner of each such member, limited or general partner, (3) each
of their respective Affiliates, officers, directors, shareholders, employees,
advisors and agents, (4) each underwriter or agent participating in such
offering, and (5) each Person, if any, who controls any selling Holder or
any such underwriter or agent within the meaning of Section 15 of the Securities
Act as follows:

 

(i)            against any and all loss,
liability, claim, damage and expense (“Loss”) whatsoever, as incurred,
arising out of an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of an
untrue statement of a material fact included in any preliminary prospectus or
the Prospectus  or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and

 

(ii)           against any and all Loss
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided, however, that,
with respect to any selling Holder or any underwriter or agent, this indemnity
does not apply to any Loss to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such selling
Holder or underwriter or agent, respectively, expressly for use in the
Registration Statement, or any preliminary prospectus or the Prospectus.

 

(b)           Each selling
Holder agrees severally, and not jointly, to indemnify and hold harmless the
Company, its directors, each of its officers who signed a Registration
Statement, each underwriter or agent participating in such offering and the other
selling Holders, and each Person, if any, who controls the Company, any such
underwriter or agent and any other selling Holder within the meaning of Section 15
of the Securities Act, against any and all Losses described in the indemnity
contained in Section 4.7(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement, or any preliminary prospectus or the Prospectus
in reliance upon and in conformity with written information furnished to the
Company by such selling Holder expressly for use in the Registration Statement,
or any preliminary prospectus or the Prospectus.

 

(c)           The obligations
of the Company under Section 4.7(a) and of the selling Holders
under Section 4.7(b) to indemnify any underwriter or agent who
participates in an offering (or any Person, if any, controlling such
underwriter or agent within the meaning of Section 15 of the Securities
Act) shall be conditioned upon the underwriting or agency agreement with such
underwriter or agent containing an agreement by such underwriter or agent to
indemnify and hold harmless (1) each selling Holder and each of its
officers, directors, limited or general partners and members, (2) each
member, limited or general partner of each such 

 

23

 

member, limited or general
partner, (3) each of their respective Affiliates, officers, directors,
shareholders, employees, advisors and agents, (4) the Company, its
directors, and each of its officers who signed a Registration Statement, and (5) each
Person, if any, who controls the Company or any such selling Holder within the
meaning of Section 15 of the Securities Act, against any and all Losses
described in the indemnity contained in Section 4.7(a), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement, or any
preliminary prospectus or the Prospectus in reliance upon and in conformity with
written information furnished to the Company by such underwriter or agent
expressly for use in the Registration Statement or any preliminary prospectus
or the Prospectus.

 

(d)           Each
indemnified party shall give prompt notice to each indemnifying party of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve the
indemnifying party from any liability it may have under this Agreement, except
to the extent that the indemnifying party is prejudiced thereby. If it so
elects, after receipt of such notice, an indemnifying party, jointly with any
other indemnifying parties receiving such notice, may assume the defense of
such action with counsel chosen by it, provided that the indemnified
party shall be entitled to participate in (but not control) the defense of such
action with counsel chosen by it, the reasonable fees and expenses of which
shall be paid by the indemnifying party if there would be a conflict if one counsel
were to represent both the indemnified and the indemnifying party, and by the
indemnified party in all other circumstances. In no event shall the
indemnifying party or parties be liable for a settlement of an action with
respect to which they have assumed the defense if such settlement is effected
without the written consent of the indemnifying party (not to be unreasonably
withheld or delayed), or for the fees and expenses of more than one counsel for
(i) the Company, its officer, directors and controlling Persons as a group, (ii) the
selling Holders and their controlling Persons as a group and (iii) the
underwriters or agents and their controlling Persons as a group, in each case,
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.

 

4.8          Contribution.  If the indemnification provided for in this Article 4
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Loss, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such aggregate
Losses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the
other in connection with the statements or omissions (or alleged statements or
omissions) which resulted in such Losses, as well as any other relevant
equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue (or alleged
untrue) statement of a material fact or the omission (or alleged omission) to
state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission;
provided, however, that the obligations of each of the Holders hereunder shall
be several and not joint and shall be limited to an amount equal to the net
proceeds such Holder receives in such registration and, provided, further, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section 

 

24

 

11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.  For purposes
of this Section 4.8, each Person, if any, who controls an
underwriter or agent within the meaning of Section 15 of the Securities
Act shall have the same rights to contribution as such underwriter or agent and
each director of the Company, each officer of the Company who signed a
Registration Statement, and each Person, if any, who controls the Company or a
selling Holder within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company or such selling
Holder, as the case may be.

 

4.9          Representations,
Warranties and Indemnities to Survive.  The indemnity and contribution agreements
contained in this Article 4 and the representations and warranties of
the Company referred to in Section 4.3(k) shall remain
operative and in full force and effect regardless of (i) any termination
of any underwriting or agency agreement, (ii) any investigation made by or
on behalf of the selling Holders, the Company or any underwriter or agent or
controlling Person or (iii) the consummation of the sale or successive
resales of the Registrable Securities.

 

4.10        Lock-Up
Agreements.  The Company
agrees that, if requested by the managing underwriter in any underwritten
public offering permitted by this Agreement, it will not, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock (subject to customary exceptions), other than any
such sale or distribution of Common Stock upon exercise of the Company’s
Warrants, in the case of an underwritten offering for a period of 60 days from
the effective date of the Registration Statement pertaining to such Common
Stock; provided, however, that any such lock-up agreement shall not prohibit
the Company from directly or indirectly (i) selling, offering to sell, granting
any option for the sale of, or otherwise disposing of any Qualifying Employee
Stock (or otherwise maintaining its employee benefits plans in the ordinary
course of business) or (ii) issuing Common Stock or securities convertible
into or exchangeable for Common Stock upon exercise or conversion of any
warrant (including any other Warrant), option, right or convertible or
exchangeable security issued in connection with the plan of
reorganization.  The total number of days
that any such lock-up agreement may be in effect in any 365-day period shall
not exceed 120 days.  The lock-up
agreements set forth in this Section 4.10 shall be subject to customary
exceptions that may be contained in an underwriting agreement if any such
registration involves a similar underwritten offering.

 

4.11        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 Registrable 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

 

25

 

(c)           so long as the
Holders own any Registrable 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.

 

4.12        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.

 

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

 

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 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 

 

26

 

other distribution (other
than as contemplated by Section 5.5), other than a Stock Dividend covered
by Section 5.1 or 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 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 

 

27

 

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 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 

 

28

 

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, 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, (x) in the case of a Mixed Consideration Merger, the
Public Stock issued in such Mixed Consideration Merger and (y) in the case of
any other 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 (i) in the
case of a Mixed Consideration Merger, the aggregate Exercise Price per Warrant
as in effect immediately prior to such Mixed Consideration Merger times the
Stock Consideration Ratio and (ii) in the case of any other Organic
Change, the aggregate Exercise Price per Warrant as in effect immediately prior
to such Organic Change.  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 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.  This Section 5.5
shall not apply to any Warrants or Common Stock redeemed or sold in connection
with any Organic Change pursuant to Section 6.1, Section 6.2(b),
Section 6.3(a)(i) and Section 6.3(b), provided that, 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 and shall deliver to the Warrant Agent a
certificate of a 

 

29

 

firm of independent public
accountants selected by the Board (who may be the regular accountants employed
by the Company) setting forth the number of shares of Common Stock issuable
upon the exercise of each Warrant after such adjustment, setting forth a brief
statement in reasonable detail of the facts
requiring such adjustment and setting forth the computation by which 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.

 

6.             CHANGE OF
CONTROL.

 

6.1          Redemption in
Connection with a Change of Control Event.  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, the Company
shall pay to such Holder of outstanding Warrants as of the date of such Change
of Control Event, an amount in immediately available funds equal to the Cash
Redemption Value for such Warrants, not later than the date which is ten (10) Business
Days after such Change of Control Event and the Warrants shall thereafter be
extinguished. For purposes of this Section 6.1, the Exercise Date
shall mean (a) 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 (b) otherwise, the fifth (5th)
Business Day following the effectiveness of the Change of Control Event.  The “Cash Redemption Value” for any
Warrant will 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 Cash Redemption Value of the Warrants
shall be due and payable within ten (10) Business Days after the date of
the applicable Change of Control Event.  If a Holder of Warrants does not elect to
receive the Cash 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

 

30

 

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
Company shall pay within five (5) Business Days after the effective date
of such Public Stock Merger, to the Warrant Agent on behalf of each Holder of
outstanding Warrants as of the effective date of such Public Stock Merger, an
amount in cash in immediately available funds equal to the Cash Redemption
Value for such Warrants determined in accordance with Section 6.1
and the Warrants shall be terminated and extinguished.

 

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) pay to the Holder of such Warrant as of the date
of such Mixed Consideration Merger the product of the Cash Consideration Ratio
multiplied by the Cash Redemption Value for such Warrant, which amount shall be
paid in immediately available funds, not later than the date which is ten (10) Business
Days after such Mixed Consideration Merger and (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.  The portion of the Cash Redemption Value of
the Warrants payable pursuant to clause (i) of this Section 6.3(a) shall
be due and payable not later than the tenth (10th) Business Day after the date
of the Mixed Consideration Merger.

 

(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
Company shall pay, within ten (10) Business Days after the effective date
of such Mixed Consideration Merger, to the Warrant Agent on behalf of each
Holder of outstanding Warrants as of the effective date of such Mixed
Consideration Merger, an amount in cash in immediately available funds equal to
the Cash Redemption Value for such Warrants determined in accordance with Section 6.1
and the Warrants shall be terminated and extinguished.

 

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
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 

 

31

 

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.

 

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), 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.

 

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.

 

32

 

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 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 

 

33

 

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. 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 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.

 

34

 

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, 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 

 

35

 

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 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 

 

36

 

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 Agreement and any other representations and
warranties made by the Company in Article III of the Investment Agreement and
Stock Purchase Agreements to the extent relating to the Warrants, 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.

 

11.3        Cancellation of Warrants.  Upon the effectiveness of the Plan and in
accordance with the Investment Agreement and/or Stock Purchase Agreements, as
applicable, the Warrants, regardless of whether or not vested, shall be
cancelled for no consideration and all rights under this Agreement and the
Warrants shall thereupon terminate.

 

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 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 

 

37

 

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. The Company and each Initial Investor agree that for federal
income tax purposes, the Warrants have been granted as an option premium in
exchange for each Initial Investor agreeing, at the option of the Company, to
make the equity investment described in the Investment Agreement or Stock
Purchase Agreements, as applicable.

 

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.

 

38

 

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 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, 3.6(e) and
3.6(f) (A) while a registration statement (solely for the
purposes of this and the immediately following paragraph, such term to include
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 other limitations 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, 3.6(e) and or 3.6(f) 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:

 

If
to the Company, to:

 

39

 

General
Growth Properties, Inc.

110
N. Wacker Drive

Chicago
IL 60606

Attention:
Ronald L. Gern, Esq.

Fax:  312-960-5485

 

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

  
	
   

  	
   

  
	
  Weil, Gotshal &
  Manges LLP

  
	
  767 Fifth Avenue

  
	
  New York, NY 10153

  
	
  Attention:

  	
  Marcia L. Goldstein, Esq.

  
	
   

  	
  Frederick S. Green, Esq.

  
	
   

  	
  Gary T. Holtzer, Esq.

  
	
   

  	
  Malcolm E. Landau, Esq.

  
	
  Facsimile: (212) 310-8007

  
	
   

  	
   

  
	
  If to the Warrant Agent,
  to:

  
	
   

  	
   

  
	
  Mellon Investor Services
  LLC

  
	
  200 W. Monroe Street,
  Suite 1590

  
	
  Chicago, IL 60606

  
	
  Attention: Relationship
  Manager

  
	
  Facsimile: (312) 325-7610

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Mellon Investor Services
  LLC

  
	
  Newport Office Center VII

  
	
  480 Washington Blvd.

  
	
  Jersey City, NJ 07310

  
	
  Attention: General Counsel

  
	
  Facsimile: 201-680-4610

  

 

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.

 

40

 

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 the Company 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 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        Relationship to Investment
Agreement and Stock Purchase Agreements.  The Warrants issued hereunder have been fully
paid upon issuance and shall remain issued, outstanding and binding on the
parties in accordance with the terms hereof notwithstanding any failure of the
transactions contemplated by the Investment Agreement or Stock Purchase
Agreements, as applicable, to be
consummated, any default by any party to the Investment Agreement or Stock
Purchase Agreements, as applicable, or the
invalidity or unenforceability thereof. 
Notwithstanding the preceding sentence, if a failure by any Purchaser to
pay all amounts payable by such Purchaser under Article I and Article II
of the Investment Agreement or a Stock Purchase Agreements, as applicable, causes the termination of the Investment Agreement or
a Stock Purchase Agreement, as applicable, by the Company pursuant to Section 11.1(c)(iii)
therein, each Holder that is a member of the Purchaser Group of such Purchaser
agrees that as liquidated damages for such failure and without prejudice to the
rights and remedies of the Company under the Investment Agreement or Stock
Purchase Agreements, as applicable, any
Warrants held by such Holder shall be deemed cancelled, null and void and of no
further effect.  For the avoidance of doubt, the immediately preceding sentence applies only
to a Holder that is a member of a Purchaser Group where the applicable
Purchaser fails to pay all amounts payable by such Purchaser under Article I
and Article II of the Investment Agreement or a Stock Purchase Agreement,
as applicable, causing the termination of the Investment Agreement or a Stock
Purchase Agreement, as applicable, by the Company pursuant to Section 11.1(c)(iii) thereof,
and not to any permitted transferee of such member or any other Person.

 

12.10      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.

 

12.11      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 

 

41

 

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.

 

12.12      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.

 

12.13      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.

 

12.14      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]

 

42

 

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:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MELLON INVESTOR SERVICES LLC,

  
	
   

  	
  as Warrant Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

43

 

EXHIBIT A

 

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 AND
REGISTRATION RIGHTS AGREEMENT DATED AS OF [    ], 2010
BETWEEN GENERAL GROWTH PROPERTIES, INC. (THE “COMPANY”) AND
                                                ,
WARRANT AGENT. A COPY OF SUCH WARRANT AND REGISTRATION RIGHTS AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE COMPANY.

 

WARRANTS TO PURCHASE COMMON STOCK

OF GENERAL GROWTH PROPERTIES, INC.

 

	
  No.

  	
   

  	
   

  	
  Certificate for
                                    
  Warrants

  

 

This certifies that [HOLDER]
, or registered assigns, is the registered holder of the number of Warrants set
forth above. Each Warrant entitles the holder thereof (a “Holder”),
subject to the provisions contained herein and in the Warrant and Registration
Rights 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 $15 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 and Registration Rights
Agreement, dated as of [    ], 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
[              ],
2017(3) (the “Expiration Date”).

 

(3)           Note to Draft:  Insert the date that is the seventh
anniversary of the date of the Agreement.

 

 

As provided in the Warrant
Agreement and subject to the terms and conditions therein set forth, the
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 Warrant are
subject to adjustment as provided in the Warrant Agreement.

 

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

 

In order to exercise a
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 share(s) of Underlying Common Stock as to which the 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 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 in each case 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.

 

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 

 

2

 

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:
[                                                ].

 

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

 

	
  Dated:
                ,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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 WARRANT CERTIFICATE

 

EXERCISE SUBSCRIPTION
FORM

 

(To be executed only
upon exercise of Warrant)

 

	
  To: 

  	
   

  	
   

  

 

The undersigned irrevocably
exercises
                                            
of the 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 Warrant represented by the
Warrant Certificate and herewith (i) elects for Net Share Settlement of
such 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 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 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)

  	
   

  	
  Number of

  Warrants

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

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.

 

2

 

 

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 Cash 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 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.

  
	
   

  	
   

  
	
  Settlement Date:

  	
  The scheduled date of payment of
  the Cash Redemption Value.

  
	
   

  	
   

  
	
  Volatility:

  	
  For calculation of Cash Redemption
  Value in connection with a Change of Control Event with respect to (A) the
  Warrants or the New Warrants, 20% or (B) the GGO Warrants, the lesser of
  (1) 30% or (2) the volatility of General Growth Opportunities, Inc.
  as determined by an Independent Financial Expert engaged to make the
  calculation, who shall be instructed to assume for purposes of the
  determination of volatility referred to in this clause (B)(2) that the
  Change of Control Event had not occurred; provided, however, that if the
  Warrants, New Warrants or GGO Warrants are adjusted as a result of a Change
  of Control Event, volatility for purposes of calculating Cash 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.

 

 

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

 

Example
of a Hypothetical Warrant:(4)

 

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

 

 

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

 

 

SCHEDULE A

 

ALLOCATIONS OF
WARRANTS TO INITIAL INVESTORS AND VESTING

 

	
   

  	
   

  	
   

  	
   

  	
  Vesting
  Schedule

  (Number of Warrants that vest on applicable date)

  	
   

  
	
  Initial Investor

  	
   

  	
  Total Number
  of Warrants 

  to be Delivered to Initial

  Investor (on date of

  Warrant Agreement)

  	
   

  	
  Date of
  Warrant

  Agreement

  	
   

  	
  July 12,
  2010

  	
   

  	
  Each day from
  and

  including July 13, 2010

  through and including

  December 31, 2010

  	
   

  
	
  Brookfield Purchaser

  	
   

  	
  60,000,000

  	
   

  	
  24,000,000

  	
   

  	
  12,000,152

  	
   

  	
  139,534

  	
   

  
	
  Fairholme Purchasers

  	
   

  	
  42,857,143

  	
   

  	
  17,142,857

  	
   

  	
  8,571,562

  	
   

  	
  99,667

  	
   

  
	
  Pershing Square Purchasers

  	
   

  	
  17,142,857

  	
   

  	
  6,857,143

  	
   

  	
  3,428,590

  	
   

  	
  39,867

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]