Exhibit
10.4


 


EMPLOYEE LEASING AGREEMENT


 


THIS EMPLOYEE LEASING AGREEMENT (this “Agreement”)
is executed effective as of November 9, 2010, by and among General Growth
Management, Inc., a Delaware corporation (“GGMI”), GGP Limited
Partnership, a Delaware limited partnership (“GGPLP” and collectively
with GGMI, “GGP”), and The Howard Hughes Corporation, a Delaware
corporation (“Spinco” and together with GGMI and GGPLP the “Parties”).  Unless otherwise indicated, capitalized terms
have the meanings set forth in the Separation Agreement (as hereinafter
defined).


 


Statement of Background Information


 


WHEREAS, the Parties have entered into that certain
Separation Agreement (the “Separation Agreement”) dated as of November 9,
2010;


 


WHEREAS,
Spinco desires to temporarily lease substantially all of the employees of GGP
who are primarily engaged in Spinco’s business so that such employees have
uninterrupted benefits coverage through the end of 2010, and GGP is willing to
accommodate Spinco’s desire to temporarily lease such employees, in each case
in preparation for an orderly transfer of such employees to Spinco; and


 


WHEREAS,
the parties desire to set forth the terms and conditions pursuant to which this
employee leasing arrangement will operate.


 


NOW,
THEREFORE, in consideration of the promises and mutual covenants set forth in
the Separation Agreement and herein, and other good and valuable consideration,
and contingent upon the consummation of the transactions contemplated by the
Separation Agreement, the parties hereby agree as follows:


 


ARTICLE 1


 


DEFINITIONS


 


“Agreement”
has the meaning set forth in the preamble hereto.


 


“COBRA”
shall mean the continuation coverage requirements under Code Section 4980B
and Part 6 of Subtitle B, Title I of ERISA.


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended.


 


“Direct
Payroll Costs” shall mean, with respect to any Leased Employee or Former
Leased Employee, (i) the gross amount of all salaries and wages, including
severance pay (if applicable) and vacation or other paid time-off, (ii) the
gross amount of any bonus, commissions or other incentive compensation payable
in cash (other than any compensation or other amounts payable pursuant to the
GGP Key Employee Incentive Plan), (iii) employee benefit costs (in accordance
with the methodology set forth in Exhibit A), (iv) amounts
payable by an employer pursuant to federal, state or other workers’
compensation, unemployment insurance, other payments required by federal, state
or local law or regulations, including employer contributions 


 

















 


pursuant
to the Federal Insurance Contribution Act, and (v) costs incurred upon the
exercise of employee option awards outstanding as of the Plan Effective Date,
including the fair market value of any stock delivered upon the exercise of
such options.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.


 


“Former
Leased Employees” shall mean Leased Employees who, during or upon the
expiration of the Term cease to be employed by GGP or any of its Affiliates.


 


“GGP
Indemnified Parties” has the meaning set forth in Section 4.1.


 


“HIPAA”
shall mean the Health Insurance Portability and Accountability Act of 1996.


 


“Indirect
Payroll Costs” shall mean, with respect to any Leased Employee or Former
Leased Employee, all costs (other than Direct Payroll Costs) associated with
such employee’s compensation and benefits in accordance with the methodology
set forth in Exhibit A.


 


“Leased
Employees” has the meaning set forth in Section 2.1.


 


“Out-of-Pocket
Expenses” means, with respect to any Leased Employee or Former Leased
Employee, any reasonable actual out-of-pocket expenses that are incurred by GGP
arising from or relating to the employment or termination of employment of such
Leased Employee or Former Leased Employee (other than Direct Payroll Costs and
Indirect Payroll Costs), including, but not limited to, reasonable business
expenses properly incurred by Leased Employees or Former Leased Employees,
costs of cars, laptops and other equipment and services provided to Leased
Employee or Former Leased Employee, and bereavement gifts and other
out-of-pocket expenses incurred in the ordinary course of business consistent
with past practices as an employer, but excluding general corporate overhead
costs otherwise allocable to Leased Employees and Former Leased Employees or
the provisions of services by such Leased Employee or Former Leased Employee.


 


“Separation
Agreement” has the meaning set forth in the Statement of Background
Information herein.


 


“Spinco
Indemnified Parties” has the meaning set forth in Section 4.2.


 


“Term”
has the meaning set forth in Section 2.2.


 


ARTICLE 2


 


RESPONSIBILITIES OF  GGP


 


Section 2.1             Provision of
Leased Employees.


 


Subject
to the terms and conditions hereof, GGP shall furnish to Spinco during the Term
the services of (i) all of the individuals who are employed by GGP or any
of its Affiliates exclusively in or in support of the Spinco business on the
Plan Effective Date and are set forth in 


 


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Schedule
A to the Employee Matters Agreement and (ii) such additional
employees of GGP or any of its Affiliates as may be set forth in a written list
mutually agreed by GGP and Spinco, with such deletions as may be requested by
Spinco or may occur in the ordinary course of business (e.g.,
by reason of an employee’s resignation, death or disability), and such
additions as may be mutually agreed by the Parties, to perform the functions
and services that were performed by the employees with respect to the business
of the Parties as of the Plan Effective Date (such employees, with such
additions and deletions, are collectively referred to hereinafter as “Leased
Employees”).  All Leased Employees
will perform their usual and customary functions, including at facilities owned
or leased by Spinco or one of its Affiliates, for a period not to exceed the
Term of this Agreement.


 


Section 2.2             Term of
Agreement.


 


The term of this Agreement with respect to each
Leased Employee shall commence as of 12:01 a.m. on the day following the
Plan Effective Date and shall continue in full force and effect with respect to
such Leased Employee until December 31, 2010, unless terminated earlier by
Spinco upon at least five business days’ prior written notice to GGP (the “Term”).


 


Section 2.3             Status of
Leased Employees.


 


(a)           Leased Employees providing
services to Spinco under this Agreement shall at all times during the Term
remain employees of GGP solely for purposes of payroll, employment taxes,
employee benefits, workers compensation and related obligations.  Spinco shall have the right to have GGP
remove any Leased Employee as a service provider to Spinco.  GGP shall have the ultimate authority to make
all termination decisions; provided, however, that GGP may only terminate a Leased
Employee (i) at the request of Spinco or (ii) as determined by GGP in
good faith.  GGP shall also have the
ultimate authority to make all hiring decisions, but GGP shall make all
reasonable efforts to accommodate Spinco’s needs and desires in operating its
business.


 


(b)           All Leased Employees shall
be subject to supervision and control solely by Spinco and its Affiliates, and
GGP shall not have any authority or responsibility to exercise any supervision
or control over Leased Employees.  In
particular, Spinco and its Affiliates shall have full and exclusive
responsibility to evaluate, train, supervise, promote, discipline and control
the Leased Employees, and to determine which Leased Employees shall be
designated to perform required tasks. 
Certain Leased Employees may hold supervisory positions and, in such
capacity (unless otherwise determined by Spinco), shall control and determine
the procedures to be followed by other Leased Employees regarding the time,
place and manner of performance of work for Spinco by the Leased Employees,
including determination of hours of work, rest periods, lunch periods and the
delegation and assignment of work; provided, however, that such Leased
Employees having supervisory responsibilities shall adhere to all of GGP’s policies,
practices and contractual obligations if any, concerning days of vacation, sick
time, leave and all other terms and conditions of employment unless otherwise
mutually agreed by the Parties.


 


(c)           Leased Employees shall not
be treated as agents or representatives of GGP or any of its Affiliates and
shall not have any authority or responsibility to enter into any contract or
otherwise take any action in the name or on behalf of GGP or any of its
Affiliates, except as 


 


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may
be specifically authorized in writing on or after the date hereof by GGP.  Likewise, Leased Employees shall not have any
authority or responsibility to enter into any contract in the name or on behalf
of Spinco and its Affiliates, except as may be specifically authorized in
writing by Spinco.


 


Section 2.4             Standards of
Performance.


 


In performing GGP’s obligations under this
Agreement, GGP agrees that it shall in good faith exercise the same standard of
care as it has used to perform such services for its own account and for its
other employees, except as mutually agreed in writing by GGP and Spinco.


 


Section 2.5             Employee
Benefits Matters.


 


Throughout the Term, unless otherwise specified in
this Agreement, GGP shall maintain, or continue participation in, for the
benefit of all Leased Employees and, if applicable, Former Leased Employees,
all employee benefit programs that GGP generally makes available to its
employees as of the Plan Effective Date, including, but not limited to, qualified
retirement plans, welfare plans, fringe benefit plans and workers’ compensation
benefits.


 


ARTICLE 3


 


RESPONSIBILITIES OF SPINCO


 


Section 3.1             Reimbursement
of Payroll Costs; Out-of Pocket Expenses.


 


(a)           Spinco shall pay GGP for all Direct Payroll Costs, Indirect
Payroll Costs and Out-of-Pocket Expenses attributable to all Leased Employees
and Former Leased Employees.


 


(b)           During the Term and thereafter to the extent
applicable, GGP shall supply Spinco with an invoice of all Direct Payroll Costs, Indirect
Payroll Costs and Out-of-Pocket Expenses as soon as practicable following the
end of each pay period.  Payment shall be
made by Spinco of these amounts invoiced via wire transfer of immediately
available funds into a bank account designated by GGP within 15 days following
the date the invoice.  To the extent any
Direct Payroll Costs or Out-of-Pocket Expenses are not included within GGP’s
payroll system and therefore not included in the invoices generated each pay
period, GGP shall supply Spinco with an invoice of such Direct Payroll Costs or
Out-of-Pocket Expenses as soon as practicable following payment by the GGP
Group, but in no event later than fifteen (15) business days following the end
of each month in which payment was made by the GGP Group.


 


(c)           GGP shall have no obligation
to continue to employ any Leased Employee who is removed by Spinco, is not
offered employment with Spinco concurrent with the expiration of the Term or
does not accept employment with Spinco and, if GGP terminates any such Leased
Employee, Spinco Shall be responsible for, and shall pay, any and all costs and
expenses (including, without limitation, all severance benefits or costs)
attributable to such terminated Leased Employee.  During the 90 day period following the
termination of employment of a Leased Employee, GGP shall not re-employ such
Leased Employee if such Leased Employee receives severance benefits.


 


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ARTICLE 4


 


OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER AMOUNTS


 


Section 4.1             The amount
which Spinco is required to pay under this Agreement will be reduced by any
Insurance Proceeds theretofore actually recovered in respect of the related
Liability.  If a Party receives a payment
(an “Indemnity Payment”) required by this Agreement from Spinco in respect of
any Liability and subsequently receives Insurance Proceeds, then such Party
will pay to Spinco an amount equal to such Insurance Proceeds but not exceeding
the amount of the Indemnity Payment paid by Spinco in respect of such
Liability.


 


Section 4.2             An insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto.  GGP shall use its commercially reasonable
efforts to seek to collect or recover any third-party Insurance Proceeds (other
than Insurance Proceeds under an arrangement where future premiums are adjusted
to reflect prior claims in excess of prior premiums) to which GGP is entitled
in connection with any Liability for which GGP seeks indemnification pursuant
to this Agreement; provided, that GGP’s inability to collect or recover any
such Insurance Proceeds shall not limit Spinco’s obligations hereunder.


 


Section 4.3             Any Indemnity
Payment under this Agreement shall be increased to take into account any
inclusion in income of GGP arising from the receipt of such Indemnity Payment
and shall be decreased to take into account any reduction in income of GGP
arising from such indemnified Liability. 
For purposes hereof, any inclusion or reduction shall be determined (i) using
the highest marginal rates in effect at the time of the determination and
applicable to a corporate resident of Chicago, Illinois and (ii) assuming
that GGP, including any entity that qualifies as a real estate investment
trust, will be liable for Taxes at such rate and has no Tax Attributes at the
time of the determination.


 


ARTICLE 5


 


INDEMNIFICATION AND LIMITATION OF LIABILITY


 


Section 5.1             Indemnification
of GGP.


 


Spinco
agrees to protect, indemnify, and hold harmless GGP and its affiliates, and
their respective officers, directors, employees (including Leased Employees to
the extent entitled to indemnification by GGP), and agents (“GGP Indemnified
Parties”), from and against and in respect of any damages which result
from, arise out of or relate to this Agreement and the employment or
termination of employment of Leased Employees and Former Leased Employees,
except to the extent arising from or relating to the willful misconduct or
gross negligence of any GGP Indemnified Parties (other than Leased
Employees).  For clarification and
without limiting the generality of the foregoing, GGP shall not be responsible
for any act or omission of any Leased Employee, and any such act or omission
shall not constitute willful misconduct or gross negligence of GGP.


 


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Section 5.2             Indemnification
of Spinco.


 


GGP
agrees to protect, indemnify and hold harmless Spinco and its affiliates, and
their respective officers, directors, employees, and agents (“Spinco
Indemnified Parties”), from and against and in respect of any damages which
result from, arise out of or relate to this Agreement and the employment or
termination of employment of Leased Employees and Former Leased Employees to
the extent resulting from or attributable to willful misconduct or gross
negligence of GGP (excluding Leased Employees).


 


Section 5.3             Incorporation
of Separation Agreement.


 


The
indemnification provisions in this Article 4 shall be subject to the same
procedures as set forth in Section 5.5, Section 5.6, Section 5.7,
Section 5.8 and Section 5.9 of the Separation
Agreement.


 


ARTICLE 6


 


EMPLOYMENT TAX REPORTING


 


Consistent with the Leased Employees and Former Leased
Employees being or having been employees of GGP, GGP shall respond to all
questions and inquiries from Spinco, state and federal agencies, and other
persons regarding payroll and employment data and history relating to the
Leased Employees and Former Leased Employees for periods of employment with
GGP.


 


ARTICLE 7


 


SEVERANCE BENEFITS


 


GGP shall notify Spinco in advance of any contemplated
termination of employment of any Leased Employee prior to the termination of
his or her employment if Spinco would be liable under the terms of this
Agreement for any severance benefits or costs payable to, or on account of, the
terminated Leased Employee.  Each Leased
Employee shall be eligible for severance benefits, in the event of a termination
of his or her employment during or at the end of the Term, in accordance with
the provisions of GGP’s severance policy.


 


ARTICLE 8


 


COBRA AND HIPAA; FLEX PLAN


 


Section 8.1             COBRA and HIPAA.


 


(a)           GGP shall be solely
responsible for the COBRA administration of GGP’s group health plans in respect
of Leased Employees and Former Leased Employees (and their qualified
beneficiaries), including providing the appropriate COBRA notices and making
available any coverage required under COBRA in respect of such individuals for
any qualifying event (as defined in COBRA) that occurs before they transfer to
employment with Spinco and its Affiliates.


 


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(b)           GGP shall provide a timely
certificate of creditable coverage (within the meaning of HIPAA) to each Leased
Employee (and his or her covered dependents) who transfers to employment with
Spinco and its Affiliates for any HIPAA triggering event which occurs during
such employee’s employment with GGP.


 


Section 8.2             Code Section 125
Benefits.


 


During
the Term, the Leased Employees shall continue to participate in the flexible
benefits plans sponsored by GGP, including any health care or dependent care
spending account plans.


 


ARTICLE 9


 


RELATIONSHIP OF PARTIES


 


Section 9.1             Delivery of
Information; Cooperation Between the Parties.


 


Spinco and GGP shall provide each other with all
such information and materials reasonably necessary to effect GGP’s and Spinco’s
prompt and complete performance of their duties and obligations under this
Agreement.  The parties agree that they
shall cooperate with each other and shall act in such a manner as to promote
the prompt and efficient completion of the obligations hereunder.


 


Section 9.2             Confidentiality.


 


All materials delivered by Spinco to GGP or GGP to
Spinco pursuant to this Agreement shall be treated as confidential information
unless required to be disclosed pursuant to law or an order of a court of
competent jurisdiction.  The terms of
this Section 7.2 shall survive termination of this Agreement.  In addition to the foregoing, the
confidentiality provision contained in the Separation Agreement shall apply to
this Agreement and be enforceable in accordance with the terms of the
Separation Agreement.


 


Section 9.3             Contractor
Relationship.


 


(a)           The Parties stipulate and
agree that GGP and each Leased Employee is an independent contractor with
respect to its, his or her duties to Spinco for all payroll, benefit and
workers compensation purposes.


 


(b)           Unless otherwise agreed by
the Parties, neither Spinco nor GGP shall represent to any party that any
Leased Employee is an employee of Spinco, or that such Leased Employee’s
relationship to Spinco is other than that of an independent contractor for
purposes described in Section 7.3(a).


 


Section 9.4             Compliance with
Law.


 


GGP and its employees (other than Leased Employees),
and any contractors, subcontractors and other agents engaged by GGP, shall
comply with all applicable laws in 


 


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connection
with the employment or termination of employment of the Leased Employees and
Former Leased Employees.


 


Section 9.5             Liability
Insurance Coverages.


 


(a)           GGP shall obtain and keep in force at all times
during the term of this Agreement liability insurance coverage relating to the
acts, omissions or employment of all Leased Employees and Former Leased
Employees, including general liability and workers compensation, as though the
Leased Employees and Former Leased Employees had remained assigned to a
facility operated by GGP.


 


(b)           Spinco shall obtain all necessary property and
casualty and other liability coverage with respect to the premises at which the
Leased Employees perform services, and with respect to any acts, omissions or
the use of Leased Employees as is prudent under the circumstances.


 


ARTICLE 10


 


MISCELLANEOUS


 


Section 10.1           Captions.


 


The headings of the several Articles and Sections of
this Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.


 


Section 10.2           Governing Law.


 


This Agreement is made pursuant to and shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to any conflict of law rules which might result in the
application of the laws of another jurisdiction.


 


Section 10.3           Dispute
Resolution.


 


In the event a dispute arises among the parties
relating to this Agreement, the parties agree to resolve such dispute pursuant
to the procedures set forth in Article VII of the Separation
Agreement, and the procedures of Article VII of the Separation
Agreement is hereby incorporated into this Agreement in its entirety.


 


Section 10.4           Waiver of Jury
Trial.


 


Each of the parties hereto hereby waives the right
to a trial by jury in any proceeding or litigation brought against any other
party with respect to this Agreement or the transactions contemplated
herein.  Each Party represents that this
waiver is made knowingly and voluntarily after consultation with and upon advice
of counsel and is a material part of this Agreement.


 


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Section 10.5           Counterparts.


 


This Agreement may be executed in one or more
counterparts, each of which will be considered one and the same agreement.


 


Section 10.6           Notices.


 


Any notice or communication under this Agreement
shall be made in a manner consistent with Section 8.5 of the
Separation Agreement.


 


Section 10.7           Assignment.


 


This Agreement shall inure to the benefit of and be
binding on the successors, assigns and legal representatives of each of the
Parties; provided that no Party shall assign this Agreement without the
written consent of each of the other Parties and any attempted assignment
without said consent shall be null, void and without any effect ab initio; and provided, further, that no such
assignment by either Party shall release the assignor from its obligations
hereunder.


 


Section 10.8           Amendment.


 


This Agreement may not be amended, modified or any
provision waived, except by an instrument in writing signed by the Party or an
executive officer of a corporate Party against whom enforcement of the
amendment, modification or waiver is sought. 
A waiver by a Party of the performance of any covenant, agreement,
obligation, condition, representation or warranty will not be construed as a
waiver of any other covenant, agreement, obligation, condition, representation
or warranty.  A waiver by any Party of
the performance of any act will not constitute a waive of the performance of
any other act or an identical act required to be performed at a later time.


 


Section 10.9           Expenses.


 


Except as otherwise provided in this Agreement, each
Party shall pay its own expenses and costs of attorneys, accountants and
consultants.


 


Section 10.10         Severability.


 


Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction.  To the extent permitted by law, the parties
waive any provision of law which renders any such provision prohibited or
unenforceable in any respect.


 


Section 10.11         No Third Party
Beneficiaries.


 


The terms and provisions of this Agreement are
intended solely for the benefit of the GGP and the Spinco and their respective
successors and permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person or entity.  


 


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No
Leased Employee, beneficiary or dependent of a Leased Employee or other person
shall be regarded for any purpose as a third party beneficiary of this
Agreement.


 


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IN
WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
signed as of the date first above written.


 


	
   

  	
  GENERAL GROWTH MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas H. Nolan, Jr.

  
	
   

  	
  Name: 

  	
  Thomas H. Nolan, Jr.

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GGP LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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

  
				



 


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