exv10w1






Exhibit 10.1




EXECUTION VERSION




THE HOWARD HUGHES CORPORATION

WARRANT PURCHASE AGREEMENT



Purchaser: Andrew C. Richardson



Date of Purchase: February 25, 2011



Purchase Price: $2,000,000



Number of Shares Underlying Warrant: 178,971



Exercise Price Per Share: $54.50




     THE HOWARD HUGHES CORPORATION, a Delaware corporation (the “Corporation”), is pleased to give
you the opportunity to purchase a Warrant (the “Warrant”) to purchase shares of the Corporation’s
authorized common stock, par value $0.01 per share, subject to the terms and conditions set forth
in this Warrant Purchase Agreement (this “Agreement”). The purchase of the Warrant is specifically
conditioned upon the execution by you of this Agreement. The Date of Purchase of the Warrant, the
number of shares issuable upon exercise of the Warrant (the “Warrant Shares”), and the Exercise
Price per share are stated above. The Purchase Price shall be paid to the Corporation no later
than three Business Days following the Effective Date (as defined below) and if not so paid this
Agreement shall terminate without further action. This Agreement was entered into prior to your
election as Chief Financial Officer of the Corporation and is not governed by The Howard Hughes
Corporation 2010 Equity Incentive Plan.



     This Agreement sets forth the terms of the agreement between you and the Corporation with
respect to the Warrant. By accepting this Agreement, you agree to be bound by all of the terms
hereof.



     1. Definitions. As used in this Agreement, the following terms have the meanings set
forth below:



          (a) “Board of Directors” means the board of directors of the Corporation.



          (b) “Business Day” means any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of Delaware are authorized or obligated by law or executive order to
close.



          (c) “Cause” shall mean, as determined in good faith by a unanimous vote (excluding you if you
are a member of the Board of Directors) of the Board of Directors at a meeting of the Board of
Directors held for such purpose, and where you and your counsel had an opportunity (on at least 15
days prior notice) to be heard before the Board of Directors, your:




          (i) conviction, plea of guilty or no contest to any felony;



 









 






          (ii) gross negligence or willful misconduct in the performance of your duties;




          (iii) drug addiction or habitual intoxication;




          (iv) commission of fraud, embezzlement, misappropriation of funds, breach of fiduciary
duty, violation of law, or a material act of dishonesty against the Corporation, in each
case that the Board of Directors determines was willful;




          (v) material and continued breach of the Employment Agreement, after notice for
substantial performance is delivered by the Corporation in writing that identifies in
reasonable detail the manner in which the Corporation believes you are in breach of this
Employment Agreement;




          (vi) willful material breach of Corporation policy or code of conduct; or




          (vii) willful and continued failure to substantially perform your duties under the
Employment Agreement (other than such failure resulting from your incapacity due to physical
or mental illness);


unless, in each case, the event constituting Cause is curable and has been cured by you within 30
days of your receipt of notice from the Corporation that an event constituting Cause has occurred
and specifying the details of such event. If you cure an event during such period that would
otherwise constitute Cause, then the Corporation will have no right to terminate your employment
for Cause. For purposes of this provision, no act or omission on your part shall be considered
“willful” unless it is done or omitted not in good faith or without reasonable belief that the act
or omission was in the best interests of the Corporation. Any act or omission based upon a
resolution duly adopted by the Board of Directors or advice of counsel for the Corporation shall be
conclusively presumed to have been done or omitted in good faith and in the best interests of the
Corporation.




          (d) “Change in Control” means the occurrence of any of the following events:




          (i) A “change in the ownership of the Corporation” which shall occur on the date that
any one person, or more than one person acting as a group, excluding Pershing Square
Management, L.P. and its Affiliates (as defined under the Securities Act of 1933), acquires
ownership of stock in the Corporation that, together with stock held by such person or
group, constitutes more than 50% of the total fair market value or total voting power of the
stock of the Corporation; however, if any one person or more than one person acting as a
group, is considered to own more than 50% of the total fair market value or total voting
power of the stock of the Corporation, the acquisition of additional stock by the same
person or persons will not be considered a “change in the ownership of the Corporation” (or
to cause a “change in the effective control of the Corporation” within the meaning of
Section 1(d)(ii) below) and an increase of the effective percentage of stock owned by any
one person, or persons acting as a group, as a result of a transaction in which the
Corporation acquires its stock in exchange for property will be



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treated as an acquisition of stock for purposes of this paragraph; provided further,
however, that for purposes of this Section 1(d)(i), the following acquisitions shall not
constitute a Change in Control: (A) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any entity controlled by the
Corporation, or (B) any acquisition by investors (immediately prior to such acquisition) in
the Corporation for financing purposes, as determined by the Board of Directors in its sole
discretion. This Section 1(d)(i) applies only when there is a transfer of the stock of the
Corporation (or issuance of stock) and stock in the Corporation remains outstanding after
the transaction.




          (ii) A “change in the effective control of the Corporation” which shall occur on the
date that either (A) any one person, or more than one person acting as a group, excluding
Pershing Square Management, L.P. and its Affiliates, acquires (or has acquired during the
twelve month period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Corporation possessing 35% or more of the total voting
power of the stock of the Corporation, except for (1) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Corporation or any entity
controlled by the Corporation, or (2) any acquisition by investors (immediately prior to
such acquisition) in the Corporation for financing purposes, as determined by the Board of
Directors in its sole discretion; or (B) a majority of the members of the Board of Directors
are replaced during any twelve-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Board of Directors prior to the date of the
appointment or election. For purposes of a “change in the effective control of the
Corporation,” if any one person, or more than one person acting as a group, is considered to
effectively control the Corporation within the meaning of this Section 1(d)(ii), the
acquisition of additional control of the Corporation by the same person or persons is not
considered a “change in the effective control of the Corporation,” or to cause a “change in
the ownership of the Corporation” within the meaning of Section 1(d)(i) above.




          (iii) The occurrence of any of the transactions contemplated by Section 1(d)(i) or
1(d)(ii) above (including any acquisition by Pershing Square Management, L.P. or its
Affiliates), in connection with which the stock of the Corporation ceases to be publicly
traded on a national securities exchange.




          (iv) A “change in the ownership of a substantial portion of the Corporation’s assets”
which shall occur on the date that any one person, or more than one person acting as a
group, excluding Pershing Square Management, L.P. and its Affiliates, acquires (or has
acquired during the twelve month period ending on the date of the most recent acquisition by
such person or persons) assets of the Corporation that have a total gross fair market value
equal to or more than 60% of the total gross fair market value of all the assets of the
Corporation immediately prior to such acquisition or acquisitions; provided that the
proceeds of such acquisition or acquisitions are distributed to the shareholders of the
Corporation in connection with such acquisition or acquisitions. For this purpose, gross
fair market value means the value of the assets of the Corporation, or the value of the
assets being disposed of, determined without regard to any liabilities associated with such
assets. Any transfer of assets to an entity that is controlled by the



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shareholders of the Corporation immediately after the transfer, as provided in guidance
issued pursuant to Section 409A of the Code, shall not constitute a Change in Control.



     For purposes of this Section 1(d), the provisions of Section 318(a) of the Code regarding the
constructive ownership of stock will apply to determine stock ownership; provided, that stock
underlying unvested options (including options exercisable for stock that is not substantially
vested) will not be treated as owned by the individual who holds the option. In addition, for
purposes of this Section 1(d), “Corporation” includes (A) the Corporation and (B) an entity that is
a stockholder owning more than 50% of the total fair market value and total voting power (a
“Majority Shareholder”) of the Corporation, or any entity in a chain of entities in which each
entity is a Majority Shareholder of another entity in the chain, ending in the Corporation



          (e) “Code” means the Internal Revenue Code of 1986, as amended.



          (f) “Common Stock” means the authorized common stock, par value $0.01 per share, as described
in the Corporation’s Certificate of Incorporation.



          (g) “Date of Purchase” means the date designated as such in the first paragraph of this
Agreement.



          (h) “Disability” means the good faith determination by the Board of Directors that you are
permanently disabled.



          (i) “Effective Date” has the same meaning as set forth in the Employment Agreement.



          (j) “Employment Agreement” means the employment agreement entered into between the Corporation
and Andrew C. Richardson on February 25, 2011.



          (k) “Exchange Act” means the Securities Exchange Act of 1934.



          (l) “Exercise Notice” means the written exercise notice in the form provided by the Board of
Directors.



          (m) “Exercise Price” means the exercise price per share designated as such in the first
paragraph of this Agreement.



          (n) “Expiration Date” means the seventh year anniversary of the Date of Purchase.



          (o) “Fair Market Value” per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:




          (i) If the Common Stock is at the time traded on NYSE, then the Fair Market Value shall
be the closing selling price per share of Common Stock on the date in question, as the price
is reported by the National Association of Securities Dealers on NYSE. If there is no
closing selling price for the Common Stock on the date in question,



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then the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.




          (ii) If the Common Stock is at the time listed on any stock exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the date in
question on the stock exchange determined by the Board of Directors to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.




          (iii) If the Common Stock is at the time neither listed on any stock exchange nor
traded on NYSE, then the Fair Market Value shall be determined in good faith by the Board of
Directors after taking into account such factors as the Board of Directors shall deem
appropriate.



          (p) “Good Reason” shall mean the occurrence of any of the following events without your
written consent:




          (i) a material diminution in your base compensation;




          (ii) a material diminution in your authority, duties or responsibilities;




          (iii) you no longer report directly to the Chief Executive Officer or the Board of
Directors; or




          (iv) any other action or inaction that constitutes a material breach by the Corporation
of the Employment Agreement;


provided that, in each case, you must provide a notice of termination to the Corporation within 60
days of the initial occurrence of the event constituting Good Reason, and the Corporation shall
have the opportunity to cure such event within 30 days of receiving such notice. If the
Corporation cures an event during such period that would otherwise constitute Good Reason, then you
will have no right to terminate your employment for Good Reason. Following the occurrence of a
Change in Control, any claim by you that Good Reason exists shall be presumed to be correct unless
a court of competent jurisdiction determines that the Corporation has established by clear and
convincing evidence that Good Reason does not exist.




          (q) “Immediate Family” means your child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships.



          (r) “Non-Repurchasable Purchased Shares” means the Purchased Shares issuable upon exercise of
the Non-Repurchasable Warrant Shares.



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          (s) “Non-Repurchasable Warrant Shares” means 20% of the Warrant Shares or, if applicable, none
of the Warrant Shares in the case of the circumstances described in the last sentence of Section
4(f)(iii).



          (t) “NYSE” means The New York Stock Exchange.



          (u) “Repurchasable Purchased Shares” means the Purchased Shares issuable upon the exercise of
the Repurchasable Warrant Shares.



          (v) “Repurchasable Warrant Shares” means 80% of the Warrant Shares or, if applicable, 100% of
the Warrant Shares in the case of the circumstances described in the last sentence of Section
4(f)(iii).



     2. Vesting and Exercisability. This Warrant will be fully vested at the time of
purchase. Except as provided in Section 3, you may only exercise your Warrant after the sixth year
anniversary of the Date of Purchase (February 25, 2017) and before the Expiration Date. To the
extent it has not already been exercised, the Warrant shall terminate on the Expiration Date.



     3. Special Lifting of Restrictions and Change in Control. (a) Immediately prior to
the effective date of a Change in Control or upon the date of a termination of your employment by
the Company without Cause or by you for Good Reason, the Warrant shall be immediately exercisable
and transferable, notwithstanding the restrictions enumerated in Section 2.



          (b) Notwithstanding the provisions of Section 6, in the event of a termination of your
employment by reason of your death or Disability, you or your estate (as the case may be) may sell
the Warrant to a third party; provided, however, that all terms and restrictions applicable to the
Warrant prior to the sale shall continue to apply to the Warrant after the sale to a third party
purchaser.



          (c) In the event of a Change in Control, you shall elect that either:




          (i) this Warrant be assumed by the successor entity in connection with a Change in
Control, in which case this Warrant shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of securities which would have been
issuable to you upon the consummation of such Change in Control had the Warrant been
exercised immediately prior to such Change in Control, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the
same, or




          (ii) this Warrant terminate and cease to be outstanding, in which case the successor
entity shall pay to you upon the Change in Control an amount equal to the product of (A) the
per share consideration paid to the shareholders of the Corporation by the successor entity
in conjunction with the Change in Control, and (B) the number of Shares underlying the
unexercised portion of this Warrant on the date of the Change in Control, minus the
cumulative Exercise Price for those Warrant Shares.



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          (d) Subject to Section 5, this Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize, otherwise change its capital or business structure,
to merge, consolidate, dissolve, liquidate, or sell or transfer all or any part of its business or
assets, and in any such transaction involving only cash consideration you shall be deemed to have
elected to receive cash pursuant to Section 3(c)(ii) if so provided in the agreement providing for
such transaction.



     4. Exercise of Warrant. (a) In order to exercise this Warrant with respect to all or
any part of the Warrant Shares for which this Warrant is exercisable, you (or any other person or
persons exercising the Warrant in accordance with the terms hereof) must take the following
actions:




          (i) Execute and deliver to the Corporation an Exercise Notice for the Warrant Shares
for which the Warrant is exercised (the “Purchased Shares”) which Exercise Notice (1) states
the number of Purchased Shares (which must be a whole number of shares) and (2) is signed or
otherwise given by you (or any other authorized person exercising the Warrant).




          (ii) Pay the aggregate Exercise Price for the Purchased Shares, at the time of delivery
of the Exercise Notice, (1) in cash or an equivalent means acceptable to the Corporation, or
(2) with shares of Common Stock owned by you (including shares received upon exercise of the
Warrant or restricted shares, if any, already held by you) and having a Fair Market Value at
least equal to the aggregate Exercise Price for the shares of Common Stock to which the
Warrant is being exercised, or (3) by any combination of clauses (1) and (2), or (4) by net
issue exercise, pursuant to which the Corporation will issue to you a number of shares of
Common Stock as to which the Warrant is exercised, less a number of shares with a Fair
Market Value as of the date of exercise equal to the Exercise Price. The number of shares
to settle the transaction shall be the gross number of shares (subject to the transaction,
e.g., 178,971 in the case of a full exercise), multiplied by the Exercise Price, and divided
by the SA (as defined below). If shares of Common Stock are used for payment of
all or any portion of the Exercise Price, then (for purposes of payment of the Exercise
Price) those shares of Common Stock shall be deemed to have a cash value equal to their
aggregate Fair Market Value determined as of the date of the delivery of the Exercise
Notice, giving effect to all purchases of Warrant Shares.




          (iii) Certify in a writing reasonably acceptable to the Corporation that you have
complied with the provisions of Section 6 hereof at all times since the Date of Purchase
and, if the Warrant is exercised in respect of fewer than the total Warrant Shares to which
this Warrant then relates, that you will continue to comply with such covenants in respect
of the Warrant Shares which remain subject to this Warrant.



          (b) Notwithstanding any other provision hereof, the number of shares of Common Stock that you
shall receive upon a full or partial exercise of the Warrant shall be adjusted upward or downward,
as the case may be, based upon the following formula:


QA = (SA  -  K) x Q / ST







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Where:





	•	 	QA is the adjusted number of shares of Common Stock to be
received, rounded to the nearest whole number.
	 
	•	 	SA is the average reported closing sales price for the
Common Stock over the 22 most recent days of trading on a stock
exchange, if so traded, ending on the last trading day prior to the
date of the Corporation’s receipt of a Notice of Exercise (the
“Exercise Date”). If the Warrant Shares are not traded on a national
securities exchange on the Exercise Date, then the value of such
Warrant Shares for the purposes of this Section 4(b) shall be deemed
to be the Fair Market Value.
	 
	•	 	K is the Exercise Price.
	 
	•	 	Q is the unadjusted number of shares of Common Stock.
	 
	•	 	ST is the Fair Market Value of the Warrant Shares on the
last trading day prior to the Exercise Date.




For purposes of clarity, if QA calculated as above results in a negative number, it
shall be set to zero.



For example, if you held a warrant to purchase 100 Warrant Shares with an exercise price of $5, the
Fair Market Value of the Warrant Shares on the Exercise Date was $10, and the average trading price
over the last 22 trading days was $11, then you would receive $600 worth of Common Stock or 60
shares of Common Stock; conversely, if the average trading price over the last 22 trading days was
$9, you would receive $400 worth of Common Stock or 40 shares of Common Stock.




          (c) As soon as practicable after the Exercise Date, the Corporation shall issue to or on
behalf of the Warrant holder (or any other person or persons exercising this Warrant in accordance
with the terms hereof) a certificate for the purchased Warrant Shares, with the appropriate legends
affixed thereto.



          (d) In no event may this Warrant be exercised for any fractional shares. Fractional shares
shall be satisfied in cash.



          (e) The Warrant shall not be deemed to have been exercised unless all of these requirements
are satisfied.



          (f) Repurchase Right. (i) The Company will have the right (the “Repurchase Right”) to
repurchase some or all of the Repurchasable Warrant Shares (or in the event the Warrant has been
exercised, the Repurchasable Purchased Shares), in the amount set forth in clause (f)(iii) below,
upon termination of your employment for any reason (other than due to death or Disability) or upon
your failure to commence employment with the Company, for any reason, on or prior to the Effective
Date (any such event, a “Repurchase Event”). The Repurchase Right may be exercised by the Company
within 90 days following the date of such



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event (the “Repurchase Period”), and during the Repurchase Period, the Repurchasable Purchased
Shares may not be sold. The Repurchase Right may be exercised by the Company by giving the holder
written notice on or before the last day of the Repurchase Period of its intention to exercise the
Repurchase Right, and, together with such notice, tendering to the holder the amount determined by
multiplying the Repurchasable Warrant Shares (or if applicable, the Repurchasable Purchased Shares)
being repurchased by the lesser of (A) the per share Fair Market Value of the Common Stock or (B)
the per share purchase price of the Warrant Shares (determined by dividing the Purchase Price
(i.e., $2,000,000) by the aggregate number of Warrant Shares (i.e., 178,971)). Upon exercise of
the Repurchase Right, you (or your successor in interest) will deliver to the Company the stock
certificate or certificates representing the Repurchasable Warrant Shares (or if applicable, the
Repurchasable Purchased Shares) being repurchased, duly endorsed and free and clear of any and all
liens, charges, and encumbrances.




     (ii) If the Repurchasable Warrant Shares (or if applicable, the Repurchasable Purchased
Shares) are not purchased under the Repurchase Right, you and your successor in interest, if any,
will thereafter beneficially own any such shares in his or her possession subject to all of the
provisions of this Agreement, including the transferability restrictions.



     (iii) Other than as expressly set forth in the last sentence of this Section 4(f)(iii), the
Company’s Repurchase Right will be in respect of the following portions of the Repurchasable
Warrant Shares (or if applicable, the Repurchasable Purchased Shares): 100% if the Repurchase Event
occurs on or prior to the first anniversary of the Date of Purchase, 80% if the Repurchase Event
occurs following the first anniversary of the Date of Purchase but on or prior to the second
anniversary of the Date of Purchase, 60% if the Repurchase Event occurs following the second
anniversary of the Date of Purchase but on or prior to the third anniversary of the Date of
Purchase; 40% if the Repurchase Event occurs following the third anniversary of the Date of
Purchase but on or prior to the fourth anniversary of the Date of Purchase, and 20% if the
Repurchase Event occurs following the fourth anniversary of the Date of Purchase but prior to the
fifth anniversary of the Date of Purchase. The Repurchase Right will terminate on the fifth
anniversary of the Date of Purchase. For the avoidance of doubt, other than as set forth in the
last sentence of this Section 4(f)(iii), under no other circumstances whatsoever shall the
Non-Repurchasable Warrant Shares (and the corresponding Non-Repurchasable Purchased Shares) ever be
subject to this Repurchase Right and, upon the exercise of the Non-Repurchasable Warrant Shares,
the Non-Repurchasable Purchased Shares shall be beneficially owned by you and your
successor-in-interest, if any, and shall be subject to all of the provisions of this Agreement,
including the transferability restrictions. Notwithstanding anything set forth herein to the
contrary, all Warrant Shares shall be deemed to be Repurchasable Warrant Shares (or, if applicable,
Repurchasable Purchased Shares) hereunder and shall be subject to the Repurchase Right if: (A) your
employment with the Company is terminated by you without Good Reason or by the Company for Cause on
or prior to the second year anniversary of the Effective Date; or (B) you do not commence
employment with the Company on or prior to the Effective Date for any reason (including death and
Disability) other than the Company’s decision to terminate the Employment Agreement for a reason
other than those that would otherwise provide the Company the right to terminate your employment
for Cause (assuming that you were employed by the Company under the Employment Agreement).



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     5. Adjustment Provisions. The number of shares of Common Stock that may be acquired
under the Warrant, shall be subject to adjustment, from time to time, in accordance with the
following provisions:



          (a) If at any time or from time to time, the Corporation shall subdivide as a whole (by
reclassification, by a stock split, by the issuance of a distribution on stock payable in stock or
otherwise, including a dividend designated as such by the Board of Directors) the number of shares
of Common Stock then outstanding into a greater number of shares of Common Stock, then (a) the
number of shares of Common Stock that may be acquired under the Warrant shall be increased
proportionately and (b) the Exercise Price for each share of Common Stock subject to the Warrant
shall be reduced proportionately, without changing the aggregate purchase price as to which the
Warrant remains exercisable.



          (b) If at any time or from time to time, the Corporation shall consolidate as a whole (by
reclassification, reverse stock split, or otherwise) the number of shares of Common Stock then
outstanding into a lesser number of shares of Common Stock, then (a) the number of shares of Common
Stock that may be acquired under the Warrant shall be decreased proportionately, and (b) the
Exercise Price for each share of Common Stock subject to the Warrant shall be increased
proportionately, without changing the aggregate purchase price or value as to which the Warrant
remains exercisable.



          (c) Should any other change be made to the Common Stock by reason of any exchange of shares or
other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made to the class of securities subject to this
Warrant in such manner and to the extent deemed appropriate by the Board of Directors.



          (d) Whenever the number of shares of Common Stock subject to the Warrant is required to be
adjusted as provided in this Section 5, the Corporation shall, within 30 days following such
adjustment, prepare and give to you a written notice setting forth, in reasonable detail, the event
requiring adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the change in price and the number of shares of Common Stock, other securities,
cash or property purchasable subject to the Warrant after giving effect to the adjustment.



          (e) Adjustments under Section 5(a), (b) and (c) shall be made by the Board of Directors, and
its determination as to what adjustments shall be made and the extent thereof shall be final,
binding and conclusive. No fractional interest shall be issued on account of any such adjustments.



     6. Transferability. (a) This Warrant may be assigned in whole or in part during your
lifetime either as (i) a gift to one or more members of your Immediate Family or to a trust in
which you and/or one or more such family members hold more than 50% of the beneficial interest or
(ii) pursuant to a domestic relations order. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the Warrant pursuant to such assignment.
The terms applicable to the assigned portion shall be the same as those in effect for



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this Warrant immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Board of Directors may deem appropriate.




          (b) Except for assignments to a person or an entity expressly permitted pursuant to the first
sentence of Section 6(a) (a “Permitted Transferee”), the Warrant may not be assigned, transferred,
pledged, or otherwise hypothecated by you or any Permitted Transferee. Additionally, you or any
Permitted Transferee may not hedge or enter into any derivative or other transaction in respect of
the Warrant Shares (the intention of the parties being that you, together with any Permitted
Transferee, shall maintain a net long position in respect of the Warrant Shares). You shall (i)
cause any Permitted Transferee to comply with the covenants herein and (ii) upon the written
request of the Corporation certify as to your compliance with the covenants herein from time to
time.



          (c) Notwithstanding anything to the contrary herein, the covenants and limits on
transferability in this Section 6 shall terminate on the earliest of (x) the sixth year anniversary
of the Date of Purchase, (y) the termination of your employment by the Corporation without Cause or
by you for Good Reason, or (z) a Change in Control.



     7. Delivery of Certificates of Stock. After the exercise of the Warrant the
Corporation shall promptly issue and deliver a certificate representing the number of shares of
Common Stock as to which the Warrant has been exercised after the Corporation receives (a) the
Exercise Notice, (b) payment of the Exercise Price, and (c) any tax withholding as may be
requested. The value of the shares of Common Stock shall not bear any interest owing to the
passage of time.



     8. Rights as a Stockholder. You shall have no right as a stockholder with respect to
any shares covered by this Agreement unless and until a certificate representing those shares is
issued in your name.



     9. Rights Offerings. If at any time the Corporation shall distribute rights or
warrants to all or substantially all holders of its Common Stock entitling them, for a period of
not more than 45 days, to subscribe for or purchase shares of Common Stock at a price per share
less than the Fair Market Value of the Common Stock on the last trading day preceding the date on
which the Board of Directors declares such distribution of rights or warrants, the Exercise Price
in effect immediately prior to the close of business on the record date for such distribution shall
be reduced immediately thereafter to the price determined by multiplying such Exercise Price by the
quotient of (x) the number of shares of Common Stock outstanding at the close of business on such
record date plus the number of shares of Common Stock which the aggregate of the offering price of
the total number of shares of Common Stock so offered for subscription or purchase would purchase
at such Fair Market Value divided by (y) the number of shares of Common Stock outstanding at the
close of business on such record date plus the number of shares of Common Stock so offered for
subscription or purchase. In such event, the number of shares of Common Stock issuable upon the
exercise of the Warrant as in effect immediately prior to the close of business on such record date
shall be increased immediately thereafter to the amount determined by multiplying such number by
the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated
by the immediately preceding sentence divided by (y) the new Exercise Price determined in
accordance with the immediately preceding



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sentence. In case any rights or warrants referred to in this Section 9 in respect of which an
adjustment shall have been made shall expire unexercised and any shares that would have been
underlying such rights or warrants shall not have been allocated pursuant to any backstop
commitment or any similar arrangement, the Exercise Price and the number of shares of Common Stock
issuable upon exercise of the Warrant then in effect shall be readjusted at the time of such
expiration to the Exercise Price that would then be in effect and the number of Shares that would
then be issuable upon exercise of the Warrant if no adjustment had been made on account of such
expired rights or warrants.




     10. Tender or Exchange Offers. If the Corporation or any subsidiary of the
Corporation shall consummate a tender or exchange offer for all or any portion of the Common Stock
for a consideration per share with a Fair Market Value greater than the Fair Market Value of the
Common Stock on the date such tender or exchange offer is first publicly announced (the
“Announcement Date”), the Exercise Price in effect immediately prior to the expiration date for
such tender or exchange offer shall be reduced immediately thereafter to the price determined by
multiplying such Exercise Price by the quotient of (x) the Fair Market Value of the Common Stock on
the Announcement Date minus the Premium Per Post-Tender Share divided by (y) the Fair Market Value
of the Common Stock on the Announcement Date. In such event, the number of shares of Common Stock
issuable upon the exercise of the Warrant as in effect immediately prior to such expiration date
shall be increased immediately thereafter to the amount determined by multiplying such number by
the quotient of (x) the Exercise Price in effect immediately prior to the adjustment contemplated
by the immediately preceding sentence divided by (y) the new Exercise Price determined in
accordance with the immediately preceding sentence. As used in this Section 10 with respect to any
tender or exchange offer, “Premium Per Post-Tender Share” means the quotient of (x) the amount by
which the aggregate Fair Market Value of the consideration paid in such tender or exchange offer
exceeds the aggregate Fair Market Value on the Announcement Date of the shares of Common Stock
purchased therein divided by (y) the number of shares of Common Stock outstanding at the close of
business on the expiration date for such tender or exchange offer (after giving pro forma effect to
the purchase of shares being purchased in the tender or exchange offer).



     11. Furnish Information. You shall furnish to the Corporation all information
requested by the Corporation to enable it to comply with any reporting or other requirement imposed
upon the Corporation by or under any applicable statute or regulation.



     12. Registration and Listing of Warrant Shares. The Corporation shall file a
registration statement with the Securities and Exchange Commission to register the sale of Warrant
Shares as soon as reasonably practicable. The Corporation will file a listing application for
listing on NYSE with respect to the Warrant Shares as soon as practicable after the date hereof.



     13. Obligation to Exercise. The purchase of the Warrant through this Agreement shall
impose no obligation upon you to exercise the same or any part thereof.



     14. Remedies. You shall be entitled to recover from the Corporation reasonable fees
incurred in connection with the enforcement of the terms and provisions of this Agreement, whether
by an action to enforce specific performance or for damages for its breach or otherwise.



12









 





     15. Right of the Corporation and Subsidiaries to Terminate Employment. Nothing
contained in this Agreement shall confer upon you the right to continue in the employ of the
Corporation or any subsidiary, or interfere in any way with the rights of the Corporation or any
subsidiary to terminate your employment at any time.



     16. Exchange Act Compliance. The Board of Directors shall take all steps necessary to
ensure that the purchase and exercise of the Warrant are exempt from Section 16(b) of the Exchange
Act.



     17. No Guarantee of Interests. The Board of Directors and the Corporation do not
guarantee the Common Stock of the Corporation from loss or depreciation.



     18. Corporation Action. Any action required of the Corporation shall be by resolution
of its Board of Directors or by a person or committee authorized to act by resolution of the Board
of Directors.



     19. Severability. If any provision of this Agreement is for any reason held to be
illegal, invalid, or to violate any law or listing requirement applicable to the Corporation, the
illegality, invalidity, or violation shall not affect the remaining provisions hereof, but such
provision shall be fully severable and this Agreement shall be construed and enforced as if the
illegal or invalid provision had never been included herein and you and the Corporation shall amend
this Agreement, preserving, to the maximum extent reasonably possible, the intended economic
effects of this Agreement as executed by the parties hereto.



     20. Notices. Whenever any notice is required or permitted hereunder, such notice must
be in writing and personally delivered or sent by electronic facsimile transmission. Any such
notice required or permitted to be delivered hereunder shall be deemed to be delivered on the next
Business Day after which it is personally delivered or transmitted by electronic facsimile to the
person who is to receive it at the address which such person has theretofore specified by written
notice delivered in accordance herewith.



     The Corporation and you agree that any notices shall be given to the Corporation or to you at
the following addresses; provided that the Corporation or you may change, at any time and from time
to time, by written notice to the other, the address which it or he had previously specified for
receiving notices.



	 	 	 	 	 

	 

	 	Corporation:
	 	The Howard Hughes Corporation

One Galleria Tower

13355 Noel Road, Suite 950

Dallas, Texas 75240

Attn: Office of the General Counsel
	 
	 	 	 	 
	 

	 	with a copy
simultaneously by like means to:
	 	William A. Ackman, Chairman of the Board

888 Seventh Avenue, 42nd Floor

New York, NY 10019
	 
	 	 	 	 
	 

	 	Holder:
	 	At your current address as shown in the

Corporation’s records.






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	 	with a copy
simultaneously by like
means to:
	 	Zukerman Gore Brandeis & Crossman, LLP

875 Third Avenue

New York, NY 10022

Attn: Clifford A. Brandeis, Esq.






     21. Waiver of Notice. Any person entitled to notice hereunder may waive such notice.



     22. Successors. This Agreement shall be binding upon you, your legal representatives,
heirs, legatees and distributees, and upon the Corporation, its successors and assigns.



     23. Headings. The titles and headings of Sections are included for convenience of
reference only and are not to be considered in construction of the provisions hereof.



     24. Governing Law. All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of the State of Delaware except to the
extent Delaware law is preempted by federal law.



     25. Word Usage. Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Agreement dictates, the plural shall be read as the
singular and the singular as the plural.



[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]








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     IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly
authorized officer as of the Date of Purchase first above written.



	 	 	 	 	 
	 	THE HOWARD HUGHES CORPORATION

 	 
	 	By:  	/s/ Grant Herlitz	 
	 	 	Grant Herlitz 	 
	 	 	President 	 
	 



	 	 	 	 	 
	 	ACKNOWLEDGED AND AGREED:

 	 
	 	/s/ Andrew C. Richardson	 
	 	Andrew C. Richardson 	 
	 	 	 	 



 









 






	 	 	 	 	 



APPENDIX A




SECTION 83(b) ELECTION


This statement is made under Section 83(b) of the Internal Revenue Code of 1986, as amended,
pursuant to Treasury Regulations

 Section 1.83-2.





	1.	 	The taxpayer who purchased the property is:
	 
	 	 	Name: Andrew C. Richardson
	 
	 	 	Address: ______________________
	 
	 	 	                ______________________
	 
	 	 	Social Security No.: _____________
	 
	2.	 	The property with respect to which the election is made is a warrant (the “Warrant”) to
purchase 178,971 shares of the common stock, par value $0.01 per share, (the “Shares”) of The
Howard Hughes Corporation (the “Corporation”).
	 
	3.	 	The property was purchased on __________, 2011 (the “Date of Purchase”).
	 
	4.	 	The taxable year for which the election is made is the calendar year 2011.
	 
	5.	 	Pursuant to the terms of the Warrant Purchase Agreement (the “Agreement”) the Warrant will be
fully vested and nonforfeitable on Date of Purchase.
	 
	6.	 	The fair market value of such property at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never lapse) is $2,000,000.
	 
	7.	 	The amount paid for such property is $2,000,000.
	 
	8.	 	A copy of this statement was furnished to the Corporation, from whom the taxpayer purchased
such property.
	 
	9.	 	This statement is executed on ________ __, _____.
	 





	 	 	 

	 

	 	 
	Signature of Spouse (if any)

	 	Signature of Taxpayer






This election must be filed with the Internal Revenue Service Center with which the taxpayer
files his or her federal income tax returns and must be filed within 30 days after the Date of
Purchase. This filing should be made by registered or certified mail, return receipt requested.
The taxpayer must retain two copies of the completed form for filing with his or her federal and
state tax returns for the current tax year and an additional copy for his or her records.







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