Exhibit
10.3


 


EMPLOYEE
MATTERS AGREEMENT


 


THIS EMPLOYEE MATTERS 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).


 


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


 


WHEREAS,
Spinco shall continue the employment of its employees and may offer employment
to certain employees of GGP as of January 1, 2011, and the Parties wish to
set forth the terms and conditions of employment of such employees, and


 


WHEREAS,
Spinco’s employees shall continue to participate in certain welfare benefit
plans sponsored by GGP until December 31, 2010.


 


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:


 


SECTION 1.                                Employment of
All Business Employees.


 


(a)      Defined
Terms.  Capitalized terms not
otherwise defined herein shall have the same meanings as in the Separation
Agreement.  “Transfer Date” means
the Plan Effective Date as to the Spinco Employees and Former Business
Employees and January 1, 2011 as to the other Business Employees (as such
terms are defined below).


 


(b)      Continuation
of Employment.  (i) The
Spinco Group shall continue to employ as of the Plan Effective Date all of its
employees (the “Spinco Employees”), and (ii) the Spinco Group may
cause one of its members to offer employment, as of January 1, 2011, to
any or all of the employees currently employed by GGP or any of its Affiliates
(other than any member of the Spinco Group) who are listed on Schedule A
or in a written list of such employees agreed to by GGP and Spinco (such
employees who accept such offer of employment, “Transferred Employees” and
together with the Spinco Employees the “Business Employees”).  No member of the
Spinco Group shall be obligated to employ any Business Employee or any other
employee employed by GGP or any of its Affiliates for any specific period of
time following the Plan Effective Date.


 


(c)      Terms
and Conditions of Employment.  For a period of one year following the Plan
Effective Date, the Business Employees shall be entitled to receive, while in
the employ of Spinco or any of its Affiliates: 
(i) base salary or wages and target cash incentive compensation
opportunities having a comparable, employer-provided aggregate value as those
provided to such employees immediately prior to the Plan Effective Date, (ii) employee
benefits having a 


 

















 


substantially
comparable employer-provided aggregate value as employee benefits provided
under the applicable employee benefit plans maintained by GGP and its
Affiliates for such employees in effect immediately prior to the Plan Effective
Date (“GGP Plans”), and (iii) severance benefits that are no less
favorable than the severance benefits provided by the GGP Group for such
employees in effect immediately prior to the Plan Effective Date; provided, however, the GGP Key Employee Incentive Plan shall
not be considered for comparability purposes; and provided, further, however, for
the period from the Plan Effective Date until December 31, 2010, the
General Growth 401(k) Savings Plan shall not be considered for
comparability purposes.  Nothing in this
Agreement shall require the Spinco Group to establish any specific type of
benefit plan (including, without limitation, any tax-qualified or non-qualified
defined benefit pension, retiree health or retiree welfare benefits).


 


(d)      Bonuses.  As of the Transfer Date, Spinco shall or
shall cause a member of the Spinco Group to assume and, subject to the
requirements or limitations of applicable Law, pay all obligations to each
Business Employee pursuant to any cash bonus or commission program if, and to
the extent that:  (i) such
obligations are payable to such Business Employees after the Transfer Date (for
purposes of determining what obligations are payable it shall be assumed that
the Business Employees were employed by the GGP Group through December 31,
2010) or (ii) an inter-company charge for such obligations exists as of
the Transfer Date.  Consistent with
Spinco’s obligation under the first sentence of this Section 1(d),
Spinco shall, or shall cause a member of the Spinco Group to, pay Business
Employees any amounts due under annual cash bonus or commission programs for
the year in which the Plan Effective Date occurs on the same basis as in effect
immediately prior to the Transfer Date.


 


(e)      Employee
Agreements.  Subject to
the requirements or limitations of applicable Law, the Spinco Group shall
retain exclusive responsibility on and after the Transfer Date for all
employment, retention, termination, severance, supplemental retirement,
deferred compensation and other similar agreements between the Spinco Group and
any Business Employee or Former Business Employee (collectively, “Employee
Agreements”), including, without limitation, the agreements listed on Schedule
B.  Subject to the requirements or
limitations of applicable Law, as of the Plan Effective Date, Spinco shall, or
shall cause a member of the Spinco Group to, assume all obligations of the GGP
Group under all Employee Agreements pursuant to which any of the GGP Group has
any obligation, contingent or otherwise, to any Business Employee or Former
Business Employee.


 


(f)       Accrued
and Unused Vacation; FMLA.  Effective as of the Transfer Date, Spinco
shall, or shall cause a member of the Spinco Group to, assume or retain, as the
case may be, all obligations of the GGP Group for the accrued, unused vacation
of the Business Employees, and shall reimburse the GGP Group for any such
accrued and unused vacation required by Law to be paid (and actually paid) by
the GGP Group after the Transfer Date to any Business Employee or Former
Business Employee.  Former employees of
the Spinco Group and former employees of the GGP Group who were last employed
in the Spinco Business, as identifiable on GGP’s payroll and employment records
(including, without limitation, individuals listed on Schedule C), are
referred to herein as “Former Business Employees.”  With respect to all Business Employees who
commence a leave of absence prior to December 31, 2010, Spinco shall, or
shall cause a member of the Spinco Group to, provide the benefits mandated by
the Family and 


 


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Medical
Leave Act of 1993, as amended (the “FMLA”) with respect to such leave of
absence, without regard to whether Spinco or any member of the Spinco Group is
subject to the FMLA.


 


(g)      Credit
for Service.  Subject to
the requirements or limitations of applicable Law, Spinco shall, or shall cause
a member of the Spinco Group to, credit Business Employees for service earned
on and prior to the Transfer Date with the GGP Group, and, to the extent
recognized under corresponding GGP Plans, any of their respective predecessors,
in addition to service earned with the Spinco Group on or after the Transfer
Date:  (i) to the extent that
service is relevant for purposes of eligibility, vesting or the calculation of
vacation, sick days, severance, layoff and similar benefits (but not for
purposes of defined benefit pension benefit accruals or vesting of equity
compensation awards) under any retirement or other employee benefit plan,
program or arrangement of the Spinco Group for the benefit of the Business
Employees on or after the Plan Effective Date and (ii) for such additional
purposes as may be required by applicable Law; provided that nothing herein
shall result in a duplication of benefits.


 


(h)      Pre-existing
Conditions; Coordination. 
Subject to the requirements or limitations of applicable Law, Spinco
shall, and shall cause each member of the Spinco Group to, waive limitations on
benefits relating to any pre-existing conditions of the Business Employees and,
to the extent applicable, eligible spouses, dependents, beneficiaries, heirs,
successors and assigns of the Business Employees or Former Business Employees (“Beneficiaries”).


 


SECTION 2.                                GGP Plans and
Liabilities.


 


(a)      No
Assumption or Transfer of GGP Plans.  Except as otherwise specifically provided in
the Agreement, the Spinco Group shall not assume sponsorship of or any
administrative obligations under, or receive any right or interest in any
trusts relating to, any assets of or any insurance, administration or other
contracts pertaining to, or have any liability with respect to any of the GGP
Plans.


 


(b)      No
Assumption of GGP Liabilities.  Except as otherwise specifically provided
herein, in the Separation Agreement or in the Employee Leasing Agreement, the
Spinco Group shall not assume any liabilities or obligations of GGP or any
other member of the GGP Group under any of the GGP Plans or otherwise have any
liability with respect to any of the GGP Plans, with respect to any employee of
GGP (other than the Business Employees).


 


(c)      Participation
in GGP Plans.  Except as
otherwise specifically provided in the Agreement:  (i) all Spinco Employees shall, as of
the Plan Effective Date, cease any active participation in and any benefit
accrual under the General Growth 401(k) Savings Plan and any other GGP
Plan which is a pension or retirement plan, (ii) all Spinco Employees
shall, from the Plan Effective Date through December 31, 2010, continue
participation in the GGP Plans which are welfare benefit plans and which are
listed on Schedule D hereto, on the same terms and conditions as in
effect prior to the Plan Effective Date, and will cease participation in such
plans thereafter and (iii) all Transferred Employees shall, as of the
Transfer Date, cease any active participation in and any benefit accrual under
all GGP Plans.  GGP and the GGP Group
shall take all necessary actions to effect such cessation of Business Employees
under the GGP Plans as of the respective cessation date.  Notwithstanding the first sentence of this Section 2(b),
Business Employees and Former Business Employees may continue after the
Transfer Date to 


 


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participate
in accordance with, and subject to their eligibility under, the terms of the
applicable GGP Plans as in effect from time to time as follows:


 


1)      as to claims incurred on or
prior to December 31, 2010 under the GGP Plans which provide health,
disability, worker’s compensation, life insurance or similar benefits;


 


2)      as to claims incurred on or
prior to March 31, 2011 under GGP’s flexible spending plans; and


 


3)      as to vested and accrued
benefits as of the Transfer Date under the General Growth 401(k) Savings
Plan and any other GGP Plan which is a pension or retirement plan.


 


(d)      Stock
Options.  As of the Plan Effective Date,
Spinco shall assume or issue a substitute award for all outstanding stock
options or other equity awards under the GGP Plans granted to Business
Employees and Former Business Employees.


 


(e)      COBRA.  As of January 1, 2011, Spinco shall, or
shall cause a member of the Spinco Group to, assume all obligations to provide
continuation health care coverage in accordance with Section 4980B of the
Code and Title I, Subtitle B, Part 6 of ERISA (“COBRA”) to all
Business Employees and Former Business Employees and their qualified
Beneficiaries who incur or incurred a qualifying event at any time, including
all obligations with respect to all health claims incurred on or after December 31,
2010.


 


(f)       Transfer
of Sponsorship of Victoria Ward Pension Plan.  Effective as of the Plan Effective Date,
sponsorship of the General Growth Pension Plan for Employees of Victoria Ward, Ltd.
shall be transferred from the GGP Group and assumed by Spinco or a member of
the Spinco Group.


 


SECTION 3.                                Reimbursement
of Costs.


 


Spinco
shall reimburse GGP for all amounts actually paid by any member of the GGP
Group after the Plan Effective Date (including allocations of actual estimated
annual expenses, consistent with past practice) (i) with respect to the
Business Employees and Former Business Employees, to the extent not paid
directly by Spinco (other than any compensation or other amounts payable
pursuant to the GGP Key Employee Incentive Plan), (ii) in connection with
the provision of coverage for Spinco Employees under the GGP Plans listed on Schedule
D hereto (including insurance premiums, claims and costs of administration)
and (iii) in connection with the provision of retiree medical, dental,
vision, life insurance and prescription drug coverage for “Victoria Ward
retirees,” to the extent not paid directly by Spinco.  Such amounts shall be paid in accordance with
the procedures set forth in Section 3.1(b) of the Employee
Lease Agreement.


 


SECTION 4.                                Obligations Net
of Insurance Proceeds and Other Amounts.


 


(a)      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 


 


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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.


 


(b)      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.


 


(c)      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.


 


SECTION 5.                                Impermissibility;
Good Faith.


 


In
the event that any provision hereof is not permissible under any Law or
practice, the parties agree that they shall in good faith take such actions as
are permissible under such Law or practice to carry out to the fullest extent
possible the purposes of such provision.


 


SECTION 6.                                Restrictive
Covenants Relating to Employees.


 


(a)      Non-Solicitation
by GGP.  GGP and members of the GGP
Group shall not, directly or indirectly, induce or attempt to induce any
Business Employee to leave the employ of the Spinco Group (or any member
thereof), or solicit, recruit, or attempt to solicit or recruit any Business
Employee.  The foregoing covenant in the
immediately preceding sentence shall apply for a period of two (2) years
following the Plan Effective Date.


 


(b)      Non-Hire
by GGP.  GGP and members of the GGP
Group shall not hire or employ any of the individuals listed on Schedule E
hereto during the one (1) year period immediately following the Plan
Effective Date.


 


(c)      Non-Solicitation
by Spinco.  Spinco and
members of the Spinco Group shall not, directly or indirectly, induce or
attempt to induce to leave the employ of the GGP Group any employee of the GGP
Group not identified on Schedule A or in a written list of such
employees agreed to by GGP and Spinco. 
The foregoing covenant shall apply for a period of one (1) year
following the Plan Effective Date and for any employee working on a transition
services agreement project, apply for a period of one (1) year from the
date of termination of his or her performance of transition services,
regardless of the length of time on the project.


 


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(d)      Exceptions.  Notwithstanding the limitations in this Section 6
applicable to employees of the GGP Group or the Spinco Group (collectively, the
“Restricted Employees”), such limitations will not prohibit the GGP
Group or the Spinco Group from:  (i) attempting
to hire or hiring any Restricted Employee after the termination of such
employee’s employment at any time after the Plan Effective Date by the GGP Group
or the Spinco Group, as the case may be, (ii) placing public
advertisements or conducting any other form of general solicitation that is not
specifically targeted towards the Restricted Employees, including the use of an
independent employment agency or search firm whose efforts are not specifically
directed at Restricted Employees, and hiring any Restricted Employee that
responds to such solicitation (other than those employees identified on Schedule
E) or (iii) soliciting and hiring specifically identified Restricted
Employees with the prior agreement of the other Party.


 


SECTION 7.                                Cooperation and
Assistance.


 


(a)      Mutual
Cooperation.  After the
Plan Effective Date, to the extent permitted by Law, each of Spinco and GGP
shall, and shall cause the Spinco Group and the GGP Group, respectively, to,
provide to the other Party such current information regarding the Business
Employees or Former Business Employees, and their Beneficiaries, on an ongoing
basis upon any reasonable request, as may be necessary to facilitate
determinations of eligibility for, and payments of benefits to, the Business
Employees and Former Business Employees and their Beneficiaries under the GGP
Plans.


 


(b)      Claims
Assistance.  To the
extent permitted by Law, each of Spinco and GGP shall, and shall cause the
Spinco Group and the GGP Group, respectively, to, permit their respective
employees to provide, at the other Party’s expense, such reasonable assistance
to the other Party as may be required in respect of claims (whether asserted or
threatened) against the GGP Group or the Spinco Group, respectively, other than
with respect to claims by the other Party, to the extent that (i) such
employee has particular knowledge of relevant facts or issues or (ii) such
employee’s assistance is reasonably necessary in respect of any such claim.


 


(c)      Consultation
with Employee Representative Bodies.  The parties hereto shall, and shall cause
their respective Affiliates to, mutually cooperate in undertaking all
reasonably necessary or legally required provision of information to, or
consultations, discussions or negotiations with, employee representative bodies
(including any unions) which represent employees affected by the transactions
contemplated by this Agreement.


 


SECTION 8.     Employment
Files.


 


As of the Transfer Date, to the extent permitted by HIPAA and other
applicable law, GGP shall, and shall cause the GGP Group to provide to Spinco
all employment files of the Business Employees and Former Business Employees;
provided, that, GGP and the GGP Group shall not transfer any performance
evaluations relating to the Transferred Employees.  GGP and the GGP Group may retain copies of
any employment files transferred to Spinco.


 


SECTION 9.     Employee Data
Protection.


 


(a)      “Personal Data”
includes:  (i) any information
relating to an identified or identifiable natural person who is an employee of
GGP or any of its Affiliates and that (A) is 


 


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obtained
by the Spinco Group from GGP or any of its Affiliates or representatives, (B) is
processed by the Spinco Group on behalf of the GGP Group, or (C) is
created by the Spinco Group based on (A) or (B) above, and (ii) any
information relating to an identified or identifiable natural person who is an
employee of Spinco or any of its Affiliates and that (A) is in the GGP
Group’s possession, custody or control as of the Plan Effective Date, (B) is
obtained by the GGP Group from Spinco or any of its Affiliates or
representatives, (C) is processed by the GGP Group on behalf of the Spinco
Group, or (D) is created by the GGP Group based on (A), (B), or (C) above.


 


(b)      SpinCo shall, and shall
cause the Spinco Group to, and GGP shall, and shall cause the GGP Group to,
comply with all applicable Laws regarding the maintenance, use, sharing or
processing of the other Party’s Personal Data, including, but not limited
to:  (i) compliance with any
applicable requirements to provide notice to, or obtain consent from, the data
subject for processing of the data after the Plan Effective Date, and (ii) taking
any other steps necessary to ensure compliance with data protection Laws,
including but not limited to, the execution of any separate agreements with the
other Party to facilitate the lawful processing of certain Personal Data (such
agreements to be executed before or after the Plan Effective Date, as
necessary).


 


(c)      Spinco shall, and shall
cause the Spinco Group to, and GGP shall, and shall cause the GGP Group to,
share and otherwise process the other Party’s Personal Data only on a
need-to-know basis, only as legally permitted and to the extent necessary to
perform its obligations under the Separation Agreement and the exhibits thereto
(the “Transaction Agreements”) or to process benefits under applicable
employee benefit plans.  Each of Spinco
and GGP agrees that it shall not otherwise disclose any of the other Party’s
Personal Data to third parties without the express written approval of the
other Party unless required by applicable Law. 
Each of Spinco and GGP shall use reasonable, technical and
organizational measures to ensure the security and confidentiality of the other
Party’s Personal Data in order to prevent, among other things, accidental,
unauthorized or unlawful destruction, modification, disclosure, access or
loss.  Each of Spinco and GGP shall
promptly inform the other Party of any breach of this security and
confidentiality undertaking, unless prohibited from doing so by Law or at the
request of a Governmental Authority.


 


SECTION 10.                          Miscellaneous.


 


(a)      No
Third-Party Beneficiaries.  All
provisions contained in this Agreement are included for the sole benefit of the
respective parties to this Agreement and shall not create any right in any
other Person, including, without limitation, any Business Employees, Former
Business Employees, any Beneficiary or any participant in any GGP Plan.  Nothing in this Agreement shall amend any GGP
Plan.


 


(b)      No
Rights to Continued Employment or Change in At-Will Status.  Consistent with Section 1(b) above,
neither Spinco nor any member of the Spinco Group shall be obligated to employ
any employee of GGP or any of its Affiliates or the Spinco Group, or continue
to employ any Business Employee for any specific period of time, subject to
applicable Law and the Employee Agreements.


 


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(c)      No
Limitation on Ability to Amend Plans.  Except as expressly set forth in this
Agreement, nothing in this Agreement or in the Transaction Agreements shall
require any member of the Spinco Group, or any of Spinco’s Affiliates, to
continue or amend any particular benefit plan after the consummation of the
transactions contemplated in this Agreement, and any such plan may be amended
or terminated in accordance with its terms and applicable Law.


 


(d)      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 remain in full force and effect.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
to this Agreement 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.


 


(e)      Assignment.  This Agreement shall not be assigned by
either party without the prior written consent of the other party.  Notwithstanding the foregoing, either party
may assign (i) any or all of its rights and obligations under this
Agreement to any of its Subsidiaries and (ii) any or all of its rights and
obligations under this Agreement in connection with a sale or disposition of
any assets or entities or lines of business; provided, however,
that, in each case, no such assignment shall (i) release the assigning
party from any liability or obligation under this Agreement or (ii) change
any of the steps in the Spinoff Plan or the Plan.


 


(f)       Amendment.  No provision of this Agreement may be amended
or modified except by a written instrument signed by all the parties to this
Agreement.  No waiver by any party of any
provision of this Agreement shall be effective unless explicitly set forth in
writing and executed by the party so waiving. 
The waiver by any party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other subsequent breach..


 


(g)      Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different parties to each such agreement 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.  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
any such 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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