Exhibit 10.3


 


STANDSTILL AGREEMENT


 


This
Standstill Agreement (this “Agreement”) is dated as of November     , 2010 (the “Effective Date”),
by and between The Howard Hughes Corporation, a Delaware corporation (the “Company”),
and Pershing Square Capital Management, L.P., a Delaware limited partnership,
Pershing Square, L.P., a Delaware limited partnership, Pershing Square II,
L.P., a Delaware limited partnership, and PSRH, Inc., a Cayman Islands
corporation (collectively, “Investor”).


 


WHEREAS, Investor
has entered into that certain Amended and Restated Stock Purchase Agreement,
effective as of March 31, 2010 (the “Investment Agreement”), that
contemplates, among other things, the purchase by Investor of shares of Common
Stock subject to the terms and conditions contained therein;


 


WHEREAS,
the transactions contemplated by the Investment Agreement are intended to
assist General Growth Properties, Inc. (“GGP”) in its plans to
recapitalize and emerge from bankruptcy and is not intended to constitute a
change of control of GGP or the Company or otherwise give Investor the power to
control the business and affairs of GGP or the Company;


 


WHEREAS,
as a material condition to GGP’s and Investor’s obligations to consummate the
transactions contemplated by the Investment Agreement, the Company and Investor
have agreed to execute this Agreement; and


 


WHEREAS,
certain terms used in this Agreement are defined in Section 4.1.


 


NOW
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:


 


ARTICLE I


 


COMPANY
RELATED PRINCIPLES


 


SECTION 1.1                               Board of
Directors.  So long as
Investor and the Investor Parties, collectively, shall Beneficially Own more
than ten percent (10%) of the outstanding shares of Common Stock, none of Investor or the Investor Parties shall take any action that is
inconsistent with its support for the following corporate governance principles:


 


(a)                                 A majority of the members of
the Board shall be Independent Directors, where “Independent Director”
means a director who satisfies all standards for independence promulgated by
the New York Stock Exchange (or the applicable exchange where shares of Common
Stock are then listed);


 


(b)                                 the Board shall have a
nominating committee, a majority of which shall be Disinterested Directors;


 

















 


(c)                                  except as regards voting to
elect the Purchaser GGO Board Designees (as such term is defined in the
Investment Agreement), in connection with any stockholder meeting or consent
solicitation relating to the election of members of the Board, if Investor and
the Investor Parties, collectively, Beneficially Own a number of shares of
Common Stock greater than 10% of the shares of Common Stock outstanding as of
the applicable record date, then Investor shall, and shall cause the other
Investor Parties to, vote in such election of members of the Board all shares
of Common Stock that are Beneficially Owned by the Investor and the Investor
Parties in excess of such number of shares of Common Stock in proportion to the
Votes Cast;


 


(d)                                 the Board shall consist of nine (9) members and not be increased or
reduced, unless approved by seventy-five percent (75%)  of the Board;


 


(e)                                  any Change in Control (other than a transaction contemplated by Section 2.1(b)(ii))
in which a Large Stockholder or its controlled Affiliate is the acquiror or
part of the acquiror group or is proposed to be directly or indirectly combined
with the Company must be approved by a majority of the Disinterested Directors
as if it were a Company Transaction involving such Large Stockholder and by a
majority of the voting power of the stockholders (other than such Large
Stockholder or its controlled Affiliates); and


 


(f)                                   any Change in Control (other than a transaction contemplated by Section 2.2(b)(v))
in which any Large Stockholder or its controlled Affiliate receives per share
consideration in its capacity as a stockholder of the Company in excess of that
to be received by other stockholders, must be approved by a majority of the
Disinterested Directors as if it were a Company Transaction involving such
Large Stockholder and by a majority of the voting power of the stockholders
(other than such Large Stockholder or its controlled Affiliates).


 


The Company shall not waive any provisions similar to
Sections 1.1(c), (e) or (f) above for any Large Stockholder under any
other agreement unless the Company grants a similar waiver under this Agreement.


 


SECTION 1.2                               Voting.


 


(a)         Subject to Sections 1.1(c), (e) and
(f), in connection with any matter being voted on at a stockholder meeting or
in a consent solicitation that the Board has recommended that the stockholders
of the Company approve, Investor and the other Investor Parties may vote
the shares of Common Stock that they Beneficially Own against or in favor of
such matter, in their sole and absolute discretion.


 


(b)         Subject to Sections 1.1(c), (e) and
(f), in connection with any matter being voted on at a stockholder meeting or
in a consent solicitation  that the Board
has recommended that the stockholders of the Company not approve, Investor
and the other Investor Parties may vote the shares of Common Stock that they
Beneficially Own:


 


(i)                                     against such
matter; or


 


(ii)                                  in favor of
such matter; provided, however, that if Investor and the other
Investor Parties (taken as a whole) Beneficially Own shares of Common Stock
that 


 


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represent more than the Voting
Cap of the then-outstanding Common Stock, then, with respect to the shares that
account for the excess over the Voting Cap, Investor shall, and shall
cause the other Investor Parties to, vote in proportion to the Votes Cast.


 


SECTION 1.3                               Related Party
Transactions.


 


(a)                                 Without the approval of a
majority of the Disinterested Directors, Investor shall not, and shall not
permit any of the Investor Parties to, engage in any Company Transaction.  “Company  Transaction” means (i) any
transaction or series of related transactions, directly or indirectly, between
the Company or any Subsidiary of the Company, on the one hand, and any of the
Investor Parties, on the other hand, or (ii) with respect to the purchase
or sale of Common Stock by any of the Investor Parties, any waiver of any
limitation or restriction with respect to such purchase or sale in the Charter
or the Transaction Documents, including any exemption from the provisions of Article XV
of the Charter; provided, however, that none of the following shall
constitute a Company Transaction:


 


(i)                                     transactions
expressly contemplated in the Transaction Documents;


 


(ii)                                  customary
compensation arrangements (whether in the form of cash or equity awards),
expense reimbursement, director insurance coverage and/or indemnification
arrangements (and related advancement of expenses) in each case for Board
designees, or any use by such persons, for Company business purposes, of
aircraft, vehicles, property, equipment or other assets owned or customarily
provided to members of the Board by the Company or any of its Subsidiaries;


 


(iii)                               any transaction
or series of transactions if the same is in the Ordinary Course of Business and
does not involve payments by the Company in excess of $5,000,000 in the
aggregate for such transaction or series of transactions; and


 


(iv)                              any transaction
among the Company and/or its Subsidiaries and General Growth Properties, Inc.
and/or its Subsidiaries.


 


(b)                                 Following the Closing (as
such term is defined in the Investment Agreement), any decisions by the Company
regarding material amendments or modifications of the Plan (as such term is
defined in the Investment Agreement) or waivers of the Company’s material
rights under the Plan, shall require the approval of the majority of
Disinterested Directors to the extent such amendment, modification or waiver
relates to any Investor Party’s rights or obligations.


 


SECTION 1.4                          No Other Voting
Restrictions.  For the
avoidance of doubt, except as restricted herein or by applicable Law, Investor
and the other Investor Parties may
vote the Common Stock that they Beneficially Own
in their sole and absolute discretion.


 


SECTION 1.5                          Amendment of
the Charter.  The Company
hereby agrees that following the Closing Date, without the consent of Investor,
the Company shall not amend (or propose to amend) the provisions of the Charter
in a manner that would change the applicable threshold in the definition of
Substantial Holder in the Charter to a level other than 4.99%.


 


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ARTICLE II


 


INVESTOR
RELATED COVENANTS


 


SECTION 2.1                               Ownership
Limitations.


 


(a)                                 Except as provided in Section 2.1(b), Investor
agrees that it (together with the other Investor Parties) shall not acquire
Economic Ownership of shares of Common Stock that would result in the Investor
Parties in the aggregate Economically Owning a percentage of the
then-outstanding Common Stock on a Fully Diluted Basis that is greater than the
Ownership Cap.  For the avoidance of doubt,
no Person shall be in violation of this Section 2.1 as a result of (i) any
acquisition by the Company of any Common Stock; (ii) any change in the
percentage of the Investor Parties’ Economic Ownership of Common Stock that
results from a change in the aggregate number of shares of Common Stock
outstanding; or (iii) any change in the number of shares of Common Stock
Economically Owned by the Investor Parties as a result of any anti-dilution
adjustments to any Equity Securities (as defined in the Investment Agreement)
Economically Owned by any Investor Party.


 


(b)                                 Notwithstanding Section 2.1(a),
any of the Investor Parties may acquire Economic Ownership of shares of Common
Stock that would result in the Investor Parties (taken as a whole) having
Economic Ownership of a percentage of the then-outstanding Common Stock on a
Fully Diluted Basis that is greater than the Ownership Cap under any of the
following circumstances:


 


(i)                                     acquisitions of
shares pursuant to any pro rata stock dividend or stock distribution effected
by the Company and approved by a majority of the Independent Directors; or


 


(ii)                                  if such
acquisition is pursuant to a tender offer or exchange offer, in each case that
includes an offer for all outstanding shares of Common Stock owned by the
Target Stockholders, or a merger, consolidation, binding share exchange or
similar transaction pursuant to an agreement with the Company, so long as in
each case (A) such offer, merger, consolidation, binding share exchange or
similar transaction is approved by a majority of the Disinterested Directors or
by a special committee comprised of Disinterested Directors (such tender offer
or exchange offer, an “Approved Offer”, and such merger, consolidation, binding
share exchange or similar transaction, an “Approved Merger”), and (B) in
any such Approved Offer, a majority of the Target Shares are tendered into such
Approved Offer and not withdrawn prior to the final expiration of such Approved
Offer, or in such Approved Merger, a majority of the Target Shares that are
voted (in person or by proxy) on the related transaction proposal are voted in
favor of such proposal.  As used in this Section 2.1(b)(ii):  “Target Shares” means the
then-outstanding shares of Common Stock not owned by the Investor Parties; and “Target
Stockholders” means the stockholders of the Company other than the Investor
Parties.


 


(c)                                  The limitation set forth in Section 2.1(a) may
only be waived by the Company if a majority of the Disinterested Directors
consent thereto.


 


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SECTION 2.2                               Transfer
Restrictions.


 


(a)                                 Subject to Section 2.2(b),
unless approved by a majority of the Independent Directors, Investor shall
not, and shall not permit any of the Investor Parties to, sell or otherwise
transfer or agree to transfer (each of the foregoing, a “Transfer”),
directly or indirectly, any shares of Common Stock that are held directly or
indirectly by Investor or any of the other Investor Parties if, immediately
after giving effect to such Transfer, the Person that acquires such Common
Stock (other than any underwriter acting in such capacity in an underwritten
public offering of such shares) would, together with its Affiliates, to the
actual knowledge (“Knowledge”) of the transferor Beneficially Own more
than ten percent (10%) of the then-outstanding Common Stock.  A transferor shall be deemed to have
Knowledge of any transferee’s Beneficial Ownership of Common Stock if the
transferor has actual knowledge of the identity of the transferee and such
Beneficial Ownership has been, at the time of the agreement to transfer,
publicly disclosed in accordance with Section 13 of the Exchange Act.


 


(b)                                 The limitations in Section 2.2(a) shall
not apply, and any Investor Party may Transfer freely:


 


(i)                                     to any Person
(including any Affiliate of Investor) if such Person has executed and delivered
to the Company a Transferee Agreement (as defined below);


 


(ii)                                  to one or more
underwriters or initial purchasers acting in their capacity as such in a manner
not intended to circumvent the restrictions contained in Section 2.2(a);


 


(iii)                               in a sale in
the public market, in accordance with Rule 144, including the volume and
manner of sale limitations set forth therein;


 


(iv)                              in any Merger
Transaction (other than a transaction contemplated by Section 2.2(b)(v) below)
or transaction contemplated by clause (iii) of the definition of Change of
Control (A) in which (in either case) no Investor Party is the acquiror or
part of the acquiring group or is proposed to be combined with the Company and (B) that
has been approved by the Board and a majority of the stockholders (it being
understood that this clause (iv) does not affect the agreement of the
parties under Sections 1.1(e) and (f));


 


(v)                                 in connection
with a tender or exchange offer that (A) is not solicited by any Investor
Party (unless such transaction was approved in accordance with Section 2.1(b)(ii))
and in which all holders of Common Stock are offered the opportunity to sell
shares of Common Stock and (B) complies with applicable securities laws,
including Rule 14d-10 promulgated under the Exchange Act; and


 


(vi)                              in connection
with any bona fide mortgage, encumbrance, pledge or hypothecation of capital
stock to a financial institution in connection with any bona fide loan.


 


(c)                                  No Transfer under Section 2.2(b)(i) shall
be valid unless and until a Transferee Agreement has been executed by the
Transferee and delivered to the Company. 
For the purpose of this Agreement a “Transferee Agreement” executed by a
Transferee means an 


 


5

















 


agreement
substantially in the form of this Agreement or in such other form as is
reasonably satisfactory to the Company except that:


 


(i)                                     notwithstanding
Section 1.1(c), in connection with any stockholder meeting or
consent solicitation relating to the election of members of the Board, such
Transferee may vote the shares of Common Stock that it Beneficially Owns in
favor of one director candidate in its sole and absolute discretion and
regarding any other director candidates in such election must vote in
proportion to Votes Cast;


 


(ii)                                  “Investor”
shall be defined to mean such Transferee;


 


(iii)                               “Ownership Cap”
shall be defined to mean the lower of (x) forty percent (40%) and (y) the
sum of five percent (5%) and the percentage of the outstanding Common Stock on
a Fully Diluted Basis that the
Transferee Economically Owns as of the date of (and after giving effect to)
such Transfer;


 


(iv)                              “Voting Cap”
shall be defined to mean the lower of (x) thirty percent (30%) and (y) the
sum of five percent (5%) and the percentage of the outstanding Common Stock on
a Fully Diluted Basis that the
Transferee Beneficially Owns as of the date of (and after giving effect to)
such Transfer; and


 


(v)                                 any obligation
on the part of Investor hereunder to cause the Investor Parties to take any
action or refrain from taking any action shall only apply to the Investor
Parties controlled by the Transferee and the Transferee Agreement shall provide
that the Transferee shall use all reasonable efforts to cause Affiliates that
the Transferee does not control to take or refrain from taking the action that
it is otherwise required to cause under this Agreement.


 


SECTION 2.3                               Purchaser GGO
Board Designees.


 


(a)                                 Notwithstanding anything
contained herein to the contrary, the provisions in Article I
(collectively, the “Specified Provisions”) shall be suspended and shall
not apply in the event that the Purchaser GGO Board Designees
(as defined in the Investor Letter Agreement)  that Investor
is entitled to designate under the terms of Section 2 of the
Investor Letter Agreement are not elected at a stockholders’ meeting at which
the stockholders voted on the election of such Purchaser GGO Board Designees
(any such period, a “Suspension Period”); provided, however,
that this Section 2.3(a) shall apply only if Investor has
complied with its obligations under Section 2 of the
Investor Letter Agreement, including Investor’s timely designation of Purchaser
GGO Board Designees.  No Suspension
Period shall be deemed to occur during any reasonable period of time during
which a Purchaser GGO Board Designee is being replaced upon the death,
resignation, retirement, disqualification or removal from office of such
Purchaser GGO Board Designee.  Any
Suspension Period shall end upon the election of the Purchaser GGO Board
Designees that Investor is entitled to designate under the terms of Section 2 of the Investor Letter Agreement.  At all times other than during a Suspension
Period, the Specified Provisions shall apply in full force and effect.


 


(b)                                 Notwithstanding anything
contained herein or in the Investment Agreement, no Person that acquires Common
Stock from the Investor Parties or from any other 


 


6

















 


Person
shall have any rights of Investor under Section 2
of the Investor Letter Agreement with respect to the designation of members
of the Board.


 


ARTICLE III


 


TERMINATION


 


SECTION 3.1                               Termination of
Agreement.  This
Agreement may be terminated as follows (the date of such termination, the “Termination
Date”)


 


(a)                                 if Investor and the Company
mutually agree to terminate this Agreement, but only if the Disinterested
Directors have approved such termination;


 


(b)                                 upon five (5) days notice by Investor, at any time after (i) the
Other Stockholders Beneficially Own more than seventy
percent (70%) of the then-outstanding
Common Stock and (ii) the Investor Parties Beneficially Own less than fifteen percent (15%) of the
then-outstanding Common Stock on a Fully Diluted Basis;


 


(c)                                  without any further action
by the parties hereto, if Investor and the Investor Parties Beneficially Own
less than ten percent (10%) of the then-outstanding Common Stock on a Fully Diluted Basis;


 


(d)                                 without any other action by
the parties hereto, upon the consummation of a Change of Control not involving
Investor or any Investor Party as a purchaser of any direct or indirect
interest in the Company or any of its assets or properties; provided
that the Investor Parties shall not have violated this Agreement in connection
with any transaction under this clause; and


 


(e)                                  without any other action by
the parties hereto, upon the consummation of: (i) a sale of all or
substantially all of the assets the Company and its Subsidiaries (determined on
a consolidated basis), in one transaction or series of related transactions; or
(ii) the acquisition (by purchase, merger or otherwise) by any Person or
Group of Beneficial Ownership of voting securities of the Company entitling
such Person or Group to exercise ninety
percent (90%) or more of the total voting
power of all outstanding securities entitled to vote generally in elections of
directors of the Company; provided that the Investor Parties shall not
have violated this Agreement in connection with any transaction under the
preceding clauses (i) and (ii).


 


SECTION 3.2                               Procedure upon
Termination.  In the
event of termination pursuant to Section 3.1, this Agreement shall
terminate on the Termination Date without further action by Investor and the
Company.


 


SECTION 3.3                               Effect of
Termination.  In the
event that this Agreement is validly terminated as provided in this Article III,
then each of the parties hereto shall be relieved of their duties and
obligations arising under this Agreement after the date of such termination and
such termination shall be without liability to the other party; provided,
however, that Article V shall survive any such termination
and shall be enforceable hereunder; provided further, however,
that


 


7

















 


nothing in this Section 3.3 shall
relieve any party hereto of any liability for a breach of a representation,
warranty or covenant in this Agreement prior to the Termination Date.


 


ARTICLE IV


 


DEFINITIONS


 


SECTION 4.1                               Defined Terms.  For purposes of this Agreement, the following
terms, when used in this Agreement with initial capital letters, shall have the
respective meanings set forth in this Agreement:


 


(a)                       “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 Agreement, “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.


 


(b)                       “Beneficial
Ownership” by a Person of any securities means “beneficial ownership” as
used for purposes of Rule 13d-3 adopted by the SEC under the Exchange Act;
provided, however, to the extent the term “Beneficial Ownership”
is used in connection with any obligation on the part of an Investor Party to
vote, or direct the vote, of shares of Common Stock, “Beneficial Ownership” by
a Person of any securities shall be deemed to refer solely to those securities
with respect to which such Person possesses the power to vote or direct the vote.  The term “Beneficially Own” shall have
a correlative meaning.


 


(c)                        “Board”
means the Board of Directors of the Company.


 


(d)                       “Business
Day” means any day other than (i) a Saturday, (ii) a Sunday, or (iii) any
day on which commercial banks in New York, New York are required or authorized
to close by law or executive order.


 


(e)                        “Change of
Control” means any transaction involving (i) a Merger Transaction, (ii) a
sale of all or substantially all of the assets the Company and its Subsidiaries
(determined on a consolidated basis), in one transaction or series of related
transactions, or (iii) the consolidation, merger, amalgamation,
reorganization (other than pursuant to the Plan contemplated by the Investment
Agreement) of the Company or a similar transaction in which the Company is
combined with another Person, 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 or Group who beneficially own the outstanding Common Stock of the
Company immediately before consummation of the transaction beneficially own
more than 50% (by voting power) of the outstanding voting stock of the combined
or surviving entity or new parent immediately thereafter.


 


8














 


(f)                         “Charter”
means the Amended and Restated Certificate of Incorporation of the Company
effective as of the date hereof.


 


(g)                        “Common
Stock”  means the common stock, par
value $0.01 per share, of the Company, as authorized by the Charter as of the
Effective Date, and any successor security as provided by Section 5.11.


 


(h)                       “Disinterested
Director” means (i) with respect to a Company
Transaction or potential Company
Transaction, a director who (A) is not Affiliated with, and was
not nominated by, any Investor Party that is a participant in such transaction
or potential transaction and (B) who has no personal financial interest in
the transaction (other than the same interest, if a stockholder of the Company,
as the other stockholders of the Company) and (ii) with respect to any
matter other than a Company Transaction, a
director who is not Affiliated with, and was not nominated by, any Investor
Party.


 


(i)                           “Economic
Ownership” by a Person of any securities includes ownership by any Person
who, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has (i) “beneficial ownership” as defined in Rule 13d-3
adopted by the SEC under the Exchange Act or (ii) economic interest in
such security as a result of any cash-settled total return swap transaction or
any other swap, other derivative or “synthetic” ownership arrangement (in which
case the number of securities with respect to which such Person has Economic
Ownership shall be determined by the Company in it reasonable judgment based on
such Person’s equivalent net long position); provided, however,
that for purposes of determining Economic Ownership, a Person shall be deemed
to be the Economic Owner of any securities which may be acquired by such Person
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise
(irrespective of whether the right to acquire such securities is exercisable
immediately or only after the giving of notice or the passage of time,
including the giving of notice or the passage of time in excess of sixty (60)
days, the satisfaction of any conditions, the occurrence of any event or any
combination of the foregoing), in each case, without duplication of any securities
included pursuant to sub-clauses (i) or (ii) above.  For purposes of this Agreement, a Person
shall be deemed to be the Economic Owner of any securities Economically Owned
by any Group of which such Person is or becomes a member.  The term “Economically Own” shall have
a correlative meaning.


 


(j)                          “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor federal statute, and the rules and regulations of the SEC
promulgated thereunder, all as the same may be amended and shall be in effect
from time to time.


 


(k)                       “Fair Market
Value” means, with respect to each share of Public Stock,  the average of the daily volume weighted
average prices per share of such Public Stock 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 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 are then listed or 


 


9

















 


quoted; provided, however,
that in the absence of such listing or quotations, the Fair Market Value of
such shares shall be the fair market value per share 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
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.


 


(l)                           “Fully
Diluted Basis” means all outstanding shares of the Common Stock assuming
the exercise of all outstanding Share Equivalents, without regard to any
restrictions or conditions with respect to the exercisability of such Share
Equivalents.


 


(m)                   “Governmental Entity”
means any (i) nation, region, state, province, county, city, town,
village, district or other jurisdiction, (ii) federal, state, local,
municipal, foreign or other government, (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, court or tribunal, or other entity), (iv) multinational
organization or body or (v) body entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature or any other self-regulatory organizations.


 


(n)                       “Group”
has the meaning assigned to it in Section 13(d)(3) of the Exchange
Act and Rule 13d-5 thereunder.


 


(o)                       “Independent
Financial Expert” means a nationally recognized financial advisory firm
approved by a majority of the Disinterested Directors.


 


(p)                       “Investor
Investment Advisor” means any independently operated business unit of any
Affiliate of Investor that holds shares of Common Stock (i) in trust for
the benefit of persons other than any Investor Party, (ii) in mutual
funds, open- or closed-end investment funds or other pooled investment vehicles
sponsored, managed or advised or subadvised by such Investor Investment
Advisor, (iii) as agent and not principal, or (iv) in any other case
where such Investor Investment Advisor is disaggregated from Investor for the
purposes of Section 13(d) of the Exchange Act; provided, however,
that  (A) in each case, such shares of Common Stock were acquired
in the ordinary course of business of the Investor Investment Advisor’s
respective investment management or securities business and not with the intent
or purpose on the part of Investor or the Investor Parties of influencing
control of the Company or avoiding the provisions of this Agreement and (B) where
appropriate, “Chinese walls” or other informational barriers and other
procedures have been established.  For
avoidance of doubt, for purposes of this Agreement shares of Common Stock held
by an Investor Investment Advisor shall not be deemed to be Beneficially Owned
by Investor or the Investor Parties.


 


(q)                       “Investor Letter Agreement” means that certain letter agreement,
dated as of the date hereof, between the Company and Investor, with respect to,
among other things, the Purchaser GGO Board Designees (as defined therein).


 


10

















 


(r)                          “Investor
Parties” means Investor and its Affiliates; provided, however,
that none of the Company, any Subsidiary of the Company or any Investor
Investment Advisor shall be deemed to be an Investor Party.


 


(s)                         “Large Stockholder” means a Person that is the Beneficial Owner of
more than ten percent (10%) of the outstanding shares of Common Stock on a
Fully Diluted Basis.


 


(t)                          “Law”
means any statutes, laws (including common law), rules, ordinances,
regulations, codes, orders, judgments, decisions, injunctions, writs, decrees,
applicable to the Company, Common Stock or Investor Parties.


 


(u)                       “Merger
Transaction” means any transaction involving the acquisition (by purchase,
merger or otherwise) by any Person or Group of Beneficial Ownership of voting
securities of the Company entitling such Person or Group to exercise a majority
of the total voting power of all outstanding securities entitled to vote
generally in elections of directors of the Company.


 


(v)                       “Ordinary
Course of Business” means the ordinary and usual course of day-to-day
operations of the business of the Company consistent with past practice.


 


(w)                     “Other Stockholder”
means, as of the date of the action in question, any Person not Affiliated with
Brookfield Asset Management, Inc., Fairholme Capital Management LLC,
Pershing Capital Management L.P., any of transferee who is a party to a
Transferee Agreement or any of their respective Affiliates.


 


(x)                       “Ownership
Cap” means forty percent (40%).


 


(y)                       “Person”
means an individual, a group (including a “group” under Section 13(d) of
the Exchange Act), a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a Governmental Entity or any department, agency
or political subdivision thereof.


 


(z)                        “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.


 


(aa)                “Rule 144” means
Rule 144 promulgated by the SEC under the Securities Act, or any successor
rule or regulation hereafter adopted by the SEC, as the same may be
amended and shall be in effect from time to time.


 


(bb)                “SEC” means the
Securities and Exchange Commission or any other federal agency then
administering the Exchange Act, the Securities Act and other federal securities
laws.


 


11

















 


(cc)                  “Securities Act”
means the Securities Act of 1933, as amended, or any successor federal statute,
and the rules and regulations of the SEC promulgated thereunder, all as
the same may be amended and shall be in effect from time to time.


 


(dd)                “Share Equivalent”
means any stock, warrants, rights, calls, options or other securities
exchangeable or exercisable for, or convertible into, shares of Common Stock.


 


(ee)                  “Subsidiary” means,
with respect to a Person, any corporation, limited liability company,
partnership, trust or other entity of which such Person owns (either alone,
directly, or indirectly through, or together with, one or more of its
Subsidiaries) 50% or more of the equity interests the holder of which is
generally entitled to vote for the election of the board of directors or
governing body of such corporation, limited liability company, partnership,
trust or other entity.


 


(ff)                    “Transaction Documents”
means, individually or collectively, the Investment Agreement or the Warrant.


 


(gg)                  “Transferee” means
any proposed transferee of securities pursuant to Sections 2.2(b)(i) or
2.2(b)(vi).


 


(hh)                “Votes Cast” means the aggregate number of shares of Common Stock
that are properly voted for or against any action to be taken by stockholders,
excluding any shares if the holder of such shares is contractually
required to vote in proportion of the total number of votes cast pursuant to this Agreement or any Transferee Agreement executed hereunder.


 


(ii)                        “Voting Cap”
means 30%.


 


(jj)                      “Warrant
Agreement” means that certain Warrant Agreement, dated as of the date
hereof, by and between the Company and Mellon Investor Services LLC.


 


(kk)                “Warrants” means the
GGO Warrants (as defined in the Investment Agreement).


 


ARTICLE V


 


MISCELLANEOUS


 


SECTION 5.1                               Notices. All notices
and other communications in connection with this Agreement shall be in writing
and shall be considered given if given in the manner, and be deemed given at
times, as follows:  (a) on the date
delivered, if personally delivered; (b) on the day of transmission if sent
via facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
or (c) on the next Business Day after being sent by recognized overnight
mail service specifying next business day delivery, in each case with delivery
charges pre-paid and addressed to the following addresses:


 


12

















 


	
  If to Investor, to:

  	
   

  
	
   

  	
   

  
	
   

  	
  Pershing Square Capital
  Management, L.P.

  	
   

  
	
   

  	
  888 Seventh Avenue, 42nd
  Floor

  	
   

  
	
   

  	
  New York, New York 10019

  	
   

  
	
   

  	
  Attention:

  	
  William A. Ackman

  	
   

  
	
   

  	
   

  	
  Roy J. Katzovicz

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 286-1133

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sullivan &
  Cromwell LLP

  	
   

  
	
   

  	
  125 Broad Street

  	
   

  
	
   

  	
  New York, New York 10004

  	
   

  
	
   

  	
  Attention:

  	
  Andrew G. Dietderich, Esq.

  	
   

  
	
   

  	
   

  	
  Alan J. Sinsheimer, Esq.

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 558-3588

  	
   

  
	
   

  	
   

  
	
  If
  to Company, to:

  	
   

  
	
   

  	
   

  
	
   

  	
  The Howard Hughes Corporation

  	
   

  
	
   

  	
  13355 Noel Road, Suite 950

  	
   

  
	
   

  	
  Dallas, TX 75240

  	
   

  
	
   

  	
  Attention: General Counsel

  	
   

  
	
   

  	
  Facsimile: (214) 741-3021

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies (which
  shall not constitute notice) to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Weil,
  Gotshal & Manges LLP

  	
   

  
	
   

  	
  767 Fifth Avenue

  	
   

  
	
   

  	
  New York, NY 10153

  	
   

  
	
   

  	
  Attention:

  	
  Frederick S. Green, Esq.

  	
   

  
	
   

  	
   

  	
  Malcolm E. Landau, Esq.

  	
   

  
	
   

  	
  Facsimile:

  	
  (212) 310-8007

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jones
  Day

  	
   

  
	
   

  	
  2727
  N. Harwood St.

  	
   

  
	
   

  	
  Dallas,
  Texas 75201

  	
   

  
	
   

  	
  Attention:

  	
  James
  E. O’Bannon

  	
   

  
	
   

  	
  Facsimile:

  	
  (214)
  969-5100

  	
   

  



 


SECTION 5.2                               Assignment; No
Third Party Beneficiaries. 
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned by any party without the prior written
consent of the other party.  This
Agreement (including the documents and instruments referred to in this
Agreement) is not intended to and does not 


 


13

















 


confer upon any person other than the parties hereto
any rights or remedies under this Agreement.


 


SECTION 5.3                               Prior
Negotiations; Entire Agreement.  This Agreement (including the exhibits hereto
and the documents and instruments referred to in this Agreement) constitutes
the entire agreement of the parties hereto and supersedes all prior agreements,
arrangements or understandings, whether written or oral, between the parties
hereto with respect to the subject matter of this Agreement.


 


SECTION 5.4                               Governing Law;
Venue.  THIS AGREEMENT, AND ALL CLAIMS
OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON,
ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR
PERFORMANCE OF THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF DELAWARE. 
BOTH PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF, AND VENUE
IN, DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.


 


SECTION 5.5                               Counterparts.  This Agreement 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 hereto, 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.


 


SECTION 5.6                               Expenses.  Except as otherwise provided in this
Agreement, Investor and the Company shall each bear its own expenses
incurred in connection with the negotiation and execution of this Agreement and
each other agreement, document and instrument contemplated by this Agreement
and the consummation of the transactions contemplated hereby and thereby.


 


SECTION 5.7                               Waivers and
Amendments.  Subject to Section 5.2,
this Agreement may be amended, modified, superseded, cancelled, renewed or
extended, and the terms and conditions of this Agreement may be waived, only by
a written instrument signed by Investor and the Company (with the approval of a
majority of the Disinterested Directors) or, in the case of a waiver, by the
party waiving compliance, and subject, to the extent required, to the approval
of the Bankruptcy Court.  No delay on the
part of any party in exercising any right, power or privilege pursuant to this
Agreement shall operate as a waiver thereof, nor shall any waiver on the part
of any party of any right, power or privilege pursuant to this Agreement, nor
shall any single or partial exercise of any right, power or privilege pursuant
to this Agreement, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege pursuant to this
Agreement.  The rights and remedies
provided pursuant to this Agreement are cumulative and are not exclusive of any
rights or remedies which any party otherwise may have at law or in equity.


 


14

















 


SECTION 5.8                               Construction.


 


(a)                       The headings in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.


 


(b)                       Unless the
context otherwise requires, as used in this Agreement:  (i) “or” shall mean “and/or”; (ii) “including”
and its variants mean “including, without limitation” and its variants; (iii) words
defined in the singular have the parallel meaning in the plural and vice versa;
(iv) references to “written” or “in writing” include in visual electronic
form; (v) words of one gender shall be construed to apply to each gender;
and (vi) the terms “Article” and “Section” refer to the specified Article or
Section of this Agreement.


 


SECTION 5.9                               Severability.  If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
hereto as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.


 


SECTION 5.10                        Equitable
Relief.  It is hereby acknowledged that
irreparable harm would occur in the event that any of the provisions of this
Agreement were not performed fully by the parties hereto in accordance with the
terms specified herein, and that monetary damages are an inadequate remedy for
breach of this Agreement because of the difficulty of ascertaining and
quantifying the amount of damage that will be suffered by the parties hereto
relying hereon in the event that the undertakings and provisions contained in
this Agreement were breached or violated. 
Accordingly, each party hereto hereby agrees that each other party
hereto shall be entitled to an injunction or injunctions to restrain, enjoin
and prevent breaches of the undertakings and provisions hereof and to enforce
specifically the undertakings and provisions hereof in any court of the United
States or any state having jurisdiction over the matter; it being understood
that such remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.


 


SECTION 5.11                        Successor
Securities.  The
provisions of this Agreement pertaining to shares of Common Stock shall apply
to all shares of Common Stock Beneficially Owned by any Investor Party and any
voting equity securities of the Company, regardless of class, series,
designation or par value, that are issued as a dividend on or in any other
distribution in respect of, or as a result of a reclassification (including a
change in par value) in respect of, shares of Common Stock or other shares of
the Company which, as provided by this section, are considered as shares of
Common Stock for purposes of this Agreement and shall also apply to any voting
equity security issued by any company that succeeds, by merger, consolidation,
a share exchange, a reorganization of the Company or any similar transaction,
to all or substantially all the business of the Company, or to the ownership
thereof, if such security was issued in exchange for or otherwise as
consideration for or in respect of shares of Common Stock 


 


15

















 


(or other shares considered as shares of Common
Stock, as provided by this definition) in connection with such succession
transaction.


 


SECTION 5.12                        Voting
Procedures.  If, in
connection with any stockholder meeting or consent solicitation, Investor
or the Investor Parties are required under the terms of this Agreement to vote
in proportion to the Votes Cast, then the parties shall cooperate to determine
appropriate procedures and mechanics to facilitate such proportionate voting.


 


** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**


 


16

















 


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


 


 


	
   

  	
  THE HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [INSERT
  NAMES OF INVESTORS]

  



 


[Signature
Page to Standstill Agreement]