Exhibit
10.6


 




 





 


SURETY BOND INDEMNITY AGREEMENT


 


dated as of November 9,
2010


 


between


 


GENERAL GROWTH PROPERTIES, INC.


 


and


 


THE HOWARD HUGHES
CORPORATION


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  OBLIGATIONS
  WITH RESPECT TO SPINCO BONDS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Bond Payments; Indemnification

  	
   

  	
  2

  
	
  Section 2.02.

  	
  Taxes

  	
   

  	
  3

  
	
  Section 2.03.

  	
  Spinco Covenants

  	
   

  	
  3

  
	
  Section 2.04.

  	
  No Right to Set-Off

  	
   

  	
  3

  
	
  Section 2.05.

  	
  Notices

  	
   

  	
  3

  
	
  Section 2.06.

  	
  Indemnification Procedures

  	
   

  	
  3

  
	
  Section 2.07.

  	
  Dispute Resolution

  	
   

  	
  3

  
	
  Section 2.08.

  	
  Request for Discharge or Posting of Collateral
  under Indemnity Agreements

  	
   

  	
  4

  
	
  Section 2.09.

  	
  Return of Collateral

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  TERM
  AND TERMINATION

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Term and Termination

  	
   

  	
  4

  
	
  Section 3.02.

  	
  Effect of Termination

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  GENERAL
  PROVISIONS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Notices

  	
   

  	
  5

  
	
  Section 4.02.

  	
  Severability

  	
   

  	
  5

  
	
  Section 4.03.

  	
  Entire Agreement

  	
   

  	
  6

  
	
  Section 4.04.

  	
  No Third-Party Beneficiaries

  	
   

  	
  6

  
	
  Section 4.05.

  	
  Governing Law

  	
   

  	
  6

  
	
  Section 4.06.

  	
  Amendment

  	
   

  	
  6

  
	
  Section 4.07.

  	
  Rules of Construction

  	
   

  	
  6

  
	
  Section 4.08.

  	
  Counterparts

  	
   

  	
  6

  
	
  Section 4.09.

  	
  Assignability; Divestitures

  	
   

  	
  7

  
	
  Section 4.10.

  	
  Waiver of Jury Trial

  	
   

  	
  7

  
	
  Section 4.11.

  	
  Non-Recourse

  	
   

  	
  7

  



 


	
  EXHIBIT A

  	
  Spinco Bonds

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Indemnity Agreements

  	
   

  	
   

  



 


i

















 


SURETY BOND INDEMNITY AGREEMENT


 


This
Surety Bond Indemnity Agreement (this “Agreement”), dated as of November 9,
2010, is by and between General Growth Properties, Inc., a Delaware
corporation (“GGP”), and The Howard Hughes Corporation, a Delaware
corporation (for itself, and on behalf of each of its subsidiaries, “Spinco”).


 


RECITALS


 


WHEREAS,
GGP and Spinco entered into the Separation Agreement, dated as of the date
hereof (as amended, modified or supplemented from time to time in accordance
with its terms, the “Separation Agreement”);


 


WHEREAS,
certain members of the Spinco Group, as principal obligors, and the surety or
bonding companies party thereto (the “Sureties”) have issued those
certain surety bonds set forth on Exhibit A hereto (the “Spinco
Bonds”), which are outstanding on the date hereof;


 


WHEREAS,
GGP and certain of its Subsidiaries are parties to those certain indemnity
agreements set forth on Exhibit B hereto (the “Indemnity
Agreements”), pursuant to which GGP and its Subsidiaries party thereto are
obligated to make premium payments in respect of the Spinco Bonds and indemnify
the Sureties from and against all losses and liabilities they may incur or
suffer in respect of the Spinco Bonds; and


 


WHEREAS,
the Separation Agreement requires execution and delivery of this Agreement by
GGP and Spinco on or prior to the Plan Effective Date.


 


NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements
contained in this Agreement, the Parties hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.01.  Certain Defined Terms.  (a) Unless otherwise defined in this
Agreement, all capitalized terms used in this Agreement shall have the same
meaning as in the Separation Agreement.


 


(b)           The following capitalized
terms used in this Agreement shall have the meanings set forth below:


 


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


 


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


 


“Indemnity
Agreements” shall have the meaning set forth in the Recitals.


 


“Losses”
means all claims, liabilities, damages, awards, assessments, settlements,
penalties, fines, judgments, losses, costs (including reasonable legal fees and
reasonable consultants’ and experts’ fees and respective expenses), charges and
expenses.


 

















 


“Party”
means GGP and Spinco individually, and “Parties” means GGP and Spinco
collectively, and, in each case, their respective successors and permitted
assigns.


 


“Reduced
Availability” means an amount equal to the reduction in borrowing
availability under GGP’s then current senior credit facility to the extent such
reduction in availability relates to any or all of the Spinco Bonds.


 


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


 


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


 


“Spinco
Bond Financing Fee” means, as of the applicable date, the sum of
(A) (i) the average daily balance of the Reduced Availability during
the preceding calendar month with respect to each Spinco Bond that resulted in
Reduced Availability during such time, in the aggregate, multiplied by (ii) an
annual percentage rate of 2.0% plus (B) (i) the average daily
balance of the Spinco Bond Exposure during the preceding calendar month with
respect to each Spinco Bond that did not result in Reduced Availability during
such time, in the aggregate, multiplied by (ii) an annual
percentage rate of 1.0%.


 


“Spinco
Bonds” shall have the meaning set forth in the Recitals.


 


“Spinco
Bond Exposure” means an amount equal to the exposure of the GGP Group
related to a particular Spinco Bond, which amount is initially set forth in the
column titled “Bond Remaining Exposure” in the spreadsheet attached hereto as Exhibit A,
and which amount Spinco may, in good faith consultation with GGP, update from
time to time to reflect reductions in such exposure; provided, however,
that Spinco shall provide GGP with evidence supporting the amount of any such
reduction that is reasonably acceptable, in form and substance, to GGP; provided,
further, that the amount of any Spinco Bond Exposure shall be reduced by
the amount of any collateral posted hereafter by Spinco or any other member of
the Spinco Group pursuant to Section 2.08 or otherwise.


 


“Sureties”
shall have the meaning set forth in the Recitals.


 


ARTICLE II


 


OBLIGATIONS WITH RESPECT
TO SPINCO BONDS


 


Section 2.01.  Bond Payments; Indemnification.  Spinco shall, and shall cause its applicable
Subsidiaries that are the principal obligors under the Spinco Bonds to:


 


(a)           pay directly (if requested
by GGP), or promptly reimburse GGP for the payment hereafter of, all premiums,
including any renewal premiums, with respect to the Spinco Bonds as they become
due; provided, that, with respect to any Spinco Bond that is terminated,
the premium payable by Spinco shall be pro rated for the month of termination,
and no premium payments shall thereafter be due in respect of such Spinco Bond;


 


(b)           indemnify GGP and each other
member of the GGP Group from and against, and pay to GGP or the applicable
member of the GGP Group the amount of, any and all Losses arising out of or
related to the Spinco Bonds, whether pursuant to the Indemnity Agreements or 


 


2

















 


otherwise (except to the extent attributable to the
GGP Group’s gross negligence or willful misconduct with respect to
administering the applicable Surety relationship); and


 


(c)           pay to GGP or its designee
the Spinco Bond Financing Fee, monthly in arrears on or before the tenth day of
each month.


 


Section 2.02.  Taxes. 
Without limiting any provisions of this Agreement, Spinco shall pay any
sales, use and other similar taxes imposed on, or payable with respect to, any
amounts, including the Spinco Bond Financing Fee, payable by it pursuant to
this Agreement; provided, however, that Spinco shall not pay, or
be responsible for, any applicable income, franchise or gross receipts taxes
imposed on, or payable with respect to, any amounts, including the Spinco Bond
Financing Fee, payable by it pursuant to this Agreement.


 


Section 2.03.  Spinco Covenants.  Spinco shall, and shall cause its
Subsidiaries that are the principal obligors under the Spinco Bonds to:


 


(a)           use commercially reasonable
efforts to replace, as promptly as practicable following the date of this
Agreement, each of the Spinco Bonds with a new surety bond, letter of credit or
similar instrument (or otherwise discharge or terminate such Spinco Bond in a
manner) that does not involve any recourse to any member of the GGP Group; provided,
however, that, no later than twenty-four (24) months following the Plan
Effective Date, Spinco shall replace, or cause the replacement of, each of the
Spinco Bonds with a new surety bond, letter of credit or similar instrument (or
otherwise discharge or terminate such Spinco Bond in a manner) that does not
involve any recourse to any member of the GGP Group;


 


(b)           use commercially reasonable
efforts to cause the face amount of each outstanding Spinco Bond to be reduced
from time to time during the term of this Agreement to reflect the
then-remaining exposure under such Spinco Bond; and


 


(c)           perform all work in
accordance with the obligations underlying the Spinco Bonds.


 


Section 2.04.  No Right to Set-Off.  Spinco shall pay in full all amounts required
pursuant to Section 2.01 hereof and shall not set off, counterclaim
or otherwise withhold any amount owed to any member of the GGP Group under this
Agreement on account of any obligation owed by members of the GGP Group to
members of the Spinco Group that have not been finally adjudicated, settled or
otherwise agreed upon by the Parties in writing.


 


Section 2.05.  Notices.  Each party agrees to promptly provide to the
other party a copy of all written notices or other written correspondence
received by such party or any member of such party’s Group with respect to any
Spinco Bond or any Indemnity Agreement related to any Spinco Bond.


 


Section 2.06.  Indemnification Procedures.  The provisions of Article V of the
Separation Agreement shall govern claims for indemnification under this
Agreement.


 


Section 2.07.  Dispute Resolution.  The provisions of Article VIII of the
Separation Agreement shall govern resolution of any dispute, controversy or
claim arising out of this Agreement.


 


3

















 


Section 2.08.  Request for Discharge or Posting of
Collateral under Indemnity Agreements. 
In the event that a Surety under any Indemnity Agreement shall take any
steps to require, in accordance with the terms of such Indemnity Agreement,
that GGP (or a GGP affiliate that is bound by such Indemnity Agreement) post
any collateral, in whatever form such collateral is required, GGP shall notify
Spinco of such requirement, and Spinco shall promptly provide, or cause to be
provided, the required collateral to such Surety in accordance with the terms
of such Indemnity Agreement, or otherwise make provision acceptable to the
Surety in accordance with the terms of such Indemnity Agreement, and Spinco
shall promptly reimburse GGP for any amounts incurred or paid by GGP and its
affiliates in connection with Spinco’s non-compliance with such requirement to
post collateral.  Similarly, if any
Surety shall require, in accordance with the terms of the applicable Indemnity
Agreement, that GGP (or a GGP affiliate that is bound by such Indemnity
Agreement) procure the discharge of the Surety from any Spinco Bond, GGP shall,
or shall cause a GGP affiliate to, procure the discharge of such Surety from
such Spinco Bond in the manner required by the applicable Indemnity Agreement,
and Spinco shall promptly reimburse GGP for any amounts incurred or paid by GGP
and its affiliates in connection with the procurement of such discharge.  For the purposes of clarity, this Section 2.08
is not intended to and shall not be construed to expand the express obligations
of GGP (or any affiliate thereof) under any Spinco Bond, and in no event shall
this Section 2.08 be interpreted to require GGP or an affiliate
thereof, or Spinco or an affiliate thereof, to provide any collateral to, or
secure any discharge of, a Surety except in accordance with, and pursuant to
the terms of, the applicable Spinco Bond, the related Indemnity Agreement or
this Agreement, as applicable.


 


Section 2.09.          Return of Collateral.  Any collateral posted prior to the date
hereof by any member of the GGP Group or by any member of the Spinco Group, and
any collateral posted on or after the date hereof by any member of the GGP
Group, in each case in connection with the Spinco Bonds, shall, upon release,
be returned to GGP (or its designees) and shall belong to GGP (or such
designee) as its sole and separate property. 
Any collateral posted on or after the date hereof by any member of the
Spinco Group in connection with the Spinco Bonds shall, upon release, be
returned to Spinco (or its designees) and shall belong to Spinco (or such
designee) as its sole and separate property.


 


ARTICLE III


 


TERM AND TERMINATION


 


Section 3.01.  Term and Termination.  This Agreement shall commence immediately
upon the Plan Effective Date and shall terminate as to each Spinco Bond listed
on Exhibit A upon the earlier to occur of: (i) the earliest
date on which such Spinco Bond has been discharged, replaced or otherwise
terminated, as demonstrated to GGP’s reasonable satisfaction by competent legal
evidence; and (ii) the mutual written agreement of the Parties to
terminate this Agreement in its entirety.


 


Section 3.02.  Effect of Termination.  Upon termination of this Agreement, Spinco
shall have no obligation to pay any fees or charges set forth in Section 2.01;
provided, that Spinco shall remain obligated to GGP for the Spinco Bond
Financing Fees and any other charges set forth in Section 2.01 owed
and payable on or prior to the effective date of termination.  Upon a termination of this Agreement, Section 2.01(b) (including
liability in respect of any indemnifiable Losses under this Agreement arising
or occurring on or prior to the date of termination), Article IV
and liability for all due and unpaid Spinco Bond Financing Fees and any other
charges set forth in Section 2.01 shall continue to survive
indefinitely.


 


4

















 


ARTICLE IV


 


GENERAL PROVISIONS


 


Section 4.01.  Notices.  All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, by facsimile or
electronic transmission with receipt confirmed (followed by delivery of an
original via overnight courier service) or by registered or certified mail
(postage prepaid, return receipt requested) to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 4.01):


 


(i)            if to GGP:


 


General
Growth Properties, Inc. 

110 N. Wacker Drive


Chicago, IL
60606


Attention:        General Counsel


Facsimile:        (312) 960-5485


 


(ii)           if to Spinco:


 


The
Howard Hughes Corporation

13355 Noel Road

Suite 950


Dallas,
TX 75240


Attention:        Grant Herlitz


Facsimile:        (214) 741-3021


 


(iii)          in each case, with a copy
to:


 


Weil,
Gotshal & Manges LLP

767 Fifth Avenue


New
York, NY 10153 

Attention:        Gary Holtzer and Marcia
Goldstein


Facsimile:        (212) 310-8007


 


Section 4.02.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under any Law or
as a matter of public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement
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
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement be
consummated as originally contemplated to the greatest extent possible.


 


5

















 


Section 4.03.  Entire Agreement.  Except as otherwise expressly provided in
this Agreement, this Agreement, the Separation Agreement and the other
Transaction Documents constitute the entire agreement of the Parties with
respect to the subject matter of this Agreement and supersede all prior agreements
and undertakings, both written and oral, between or on behalf of the Parties
with respect to the subject matter of this Agreement.


 


Section 4.04.  No Third-Party Beneficiaries.  This Agreement is for the sole benefit of GGP
and the members of the GGP Group and Spinco and the members of the Spinco Group
and their respective successors and permitted assigns and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any legal or equitable right, benefit or remedy of any nature
whatsoever.


 


Section 4.05.  Governing Law.  This Agreement (and any claims or disputes
arising out of or related to this Agreement or to the transactions contemplated
by this Agreement or to the inducement of any Party to enter into this
Agreement or the transactions contemplated by this Agreement, whether for
breach of contract, tortious conduct or otherwise and whether predicated on
common law, statute or otherwise) shall in all respects be governed by, and
construed in accordance with, the Laws of the State of New York, including all
matters of construction, validity and performance, in each case without
reference to any conflict of Law rules that might lead to the application
of the Laws of any other jurisdiction.


 


Section 4.06.  Amendment.  No provision of this Agreement may be
amended, supplemented or modified except by a written instrument making
specific reference to this Agreement, signed by all the Parties.


 


Section 4.07.  Rules of Construction.  Interpretation of this Agreement shall be
governed by the following rules of construction:  (a) words in the singular shall be held
to include the plural and vice versa, and words of one gender shall be held to
include the other gender as the context requires; (b) references to the
terms Article, Section and paragraph are references to the Articles,
Sections and paragraphs of this Agreement unless otherwise specified; (c) references
to “$” shall mean U.S. dollars; (d) the word “including” and words of
similar import when used in this Agreement shall mean “including without
limitation,” unless otherwise specified; (e) the word “or” shall not be
exclusive; (f) references to “written” or “in writing” include in
electronic form; (g) provisions shall apply, when appropriate, to
successive events and transactions; (h) the headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement; (i) GGP and Spinco have each
participated in the negotiation and drafting of this Agreement and if an
ambiguity or question of interpretation should arise, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or burdening either Party by virtue of the authorship
of any of the provisions in this Agreement or any interim drafts of this
Agreement; (j) a reference to any Person includes such Person’s successors
and permitted assigns; (k) any reference to “days” means calendar days
unless business days are expressly specified; and (l) when calculating the
period of time before which, within which or following which any act is to be
done or step taken pursuant to this Agreement, the date that is the reference
date in calculating such period shall be excluded, if the last day of such
period is not a business day, the period shall end on the next succeeding
business day.


 


Section 4.08.  Counterparts.  This Agreement may be executed in one or more
counterparts, and by each Party in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. 



 


6

















 


Delivery of an executed counterpart of a signature page to
this Agreement by facsimile or portable document format (PDF) shall be as
effective as delivery of a manually executed counterpart of this Agreement.


 


Section 4.09.  Assignability;
Divestitures.  This Agreement
shall not be assigned by operation of Law or otherwise without the prior
written consent of GGP and Spinco, except that:


 


(a)           each Party may assign all of
its rights and obligations under this Agreement to any of its Subsidiaries; provided, that no such assignment shall release GGP or Spinco, as the case
may be, from any liability or obligation under this Agreement; and


 


(b)           in connection with the
divestiture of any Subsidiary or business of Spinco to an acquiror, Spinco (or
its applicable selling Subsidiary) shall, as a condition precedent to closing
such transaction, cause such acquiror to replace all Spinco Bonds issued on
behalf of such Subsidiary or business with a new surety bond, letter of credit
or similar instrument (or otherwise discharge or terminate such Spinco Bond in
a manner) that does not involve any recourse to any member of the GGP Group,
and Spinco shall provide evidence in form and substance reasonably satisfactory
to GGP of such replacement, discharge or termination; provided, that any and all costs and expenses incurred in connection
therewith shall be borne solely by Spinco.


 


Section 4.10.  Waiver of Jury Trial.  EACH PARTY TO THIS AGREEMENT WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. 
EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER; AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY TO THIS
AGREEMENT HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
TRANSACTION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 4.10.


 


Section 4.11.  Non-Recourse.  Other than the GGP Group and the Spinco
Group, no past, present or future director, officer, employee, incorporator,
member, partner, stockholder, Affiliate, agent, attorney or representative of
either GGP or Spinco or their respective Subsidiaries shall have any liability
for any obligations or liabilities of GGP or Spinco, respectively, under this
Agreement or for any claims based on, in respect of, or by reason of, the
transactions contemplated by this Agreement.


 


[The
remainder of this page is intentionally left blank.]


 


7

















 


IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the
date first written above by their respective duly authorized officers.


 


 


	
   

  	
  GENERAL
  GROWTH PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas H. Nolan, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Thomas
  H. Nolan, Jr.

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Arthur

  
	
   

  	
   

  	
  Name:

  	
  David
  Arthur

  
	
   

  	
   

  	
  Title:

  	
  Interim
  Chief Executive Officer