Document:

Exhibit
10.7

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”)
is made as of the      day of November, 2010 by and between
The Howard Hughes Corporation, a Delaware corporation (the “Company”),
and
                              
(the “Indemnitee”).

 

WHEREAS, directors, officers, and other persons in
service to corporations or business enterprises are being increasingly
subjected to expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only against the
Company or business enterprise itself;

 

WHEREAS, highly competent persons have become more
reluctant to serve corporations as directors, officers or in other capacities
unless they are provided with adequate protection through insurance or adequate
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation;

 

WHEREAS, the Board of Directors of the Company (the
“Board of Directors”) has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company’s stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the
future;

 

WHEREAS, it is reasonable, prudent and necessary
for the Company contractually to obligate itself to indemnify, and to advance
expenses on behalf of, such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified;

 

WHEREAS, although the Amended and Restated
Certificate of Incorporation of the Company (the “Certificate”) and the
Amended and Restated Bylaws of the Company (the “Bylaws”) require
indemnification of the officers and directors of the Company under the
circumstances specified therein, and Indemnitee may also be entitled to
indemnification pursuant to the General Corporation Law of the State of
Delaware (“DGCL”), the Certificate, the Bylaws and the DGCL expressly
provide that the indemnification provisions set forth therein are not
exclusive, and authorize the Company to enter into contracts between the
Company and members of the board of directors, officers and other persons with
respect to indemnification; and

 

WHEREAS, this Agreement is a supplement to and in
furtherance of the Certificate and the Bylaws and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder.

 

NOW, THEREFORE, in consideration of Indemnitee’s
agreement to serve or continue serving as a director or officer, or both, of
the Company after the date hereof, the parties hereto agree as follows:

 

1.             Definitions.  For purposes of this Agreement:

 

(a)           “Change in Control”
shall mean a change in control of the Company occurring after the date hereof
of a nature that would be required to be reported in response to 

 

 

Item 6(e) on Schedule 14A of Regulation 14A (or
in response to any similar item on any similar schedule or form) promulgated
under the Securities Exchange Act of 1934, as amended (the “Act”),
whether or not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, a Change in Control shall include: (i) the
acquisition (other than acquisition by or from the Company) after the date
hereof by any person, entity or “group,” within the meaning of Section 13(d)(3) or
14(d)(2) of the Act (excluding, for this purpose, the Company or its
subsidiaries, any employee benefit plan of the Company or its subsidiaries that
acquires beneficial ownership of voting securities of the Company, and any
qualified institutional investor that meets the requirements of Rule 13d-1(b)(1) promulgated
under the Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act), of 50% or more of either the then-outstanding
shares of common stock or the combined voting power of the Company’s
then-outstanding capital stock entitled to vote generally in the election of
directors; (ii) individuals who, as of the date hereof, constitute the
Board of Directors (the “Incumbent Board”) ceasing for any reason to
constitute at least a majority of the Board of Directors, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or (iii) approval by the stockholders of the Company of (A) a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50% of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged, consolidated or other
surviving corporation’s then-outstanding voting securities, (B) a
liquidation or dissolution of the Company, or (C) the sale of all or
substantially all of the assets of the Company.

 

(b)           “Corporate Status”
describes the status of a person who is or was a director, officer, employee,
agent or fiduciary of the Company or of any other corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other
enterprise that such person is or was serving in a similar capacity at the
written request of the Company.

 

(c)           “Disinterested Director”
means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification or advancement is sought by
Indemnitee.

 

(d)           “Enterprise” shall
mean the Company and any other corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other enterprise that
Indemnitee is or was serving at the written request of the Company as a
director, officer, employee, agent or fiduciary.

 

(e)           “Expenses” shall
include all reasonable attorneys’ fees, retainers, disbursements of counsel,
court costs, filing fees, transcript costs, fees and expenses of experts,
witness fees and expenses, travel expenses, duplicating and imaging costs,
printing and binding costs, telephone charges, facsimile transmission charges,
computer legal research costs, postage, 

 

2

 

delivery service fees and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating, or
being or preparing to be a witness in a Proceeding, as well as all other “expenses”
within the meaning of that term as used in Section 145 of the General
Corporation Law of the State of Delaware and all other disbursements or
expenses of types customarily and reasonably incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating, being
or preparing to be a witness in, or otherwise participating in, actions, suits,
or proceedings similar to or of the same type as the Proceeding with respect to
which such disbursements or expenses were incurred; but, notwithstanding
anything in the foregoing to the contrary, “Expenses” shall not include amounts
of judgments, penalties, or fines actually levied against the Indemnitee in
connection with any Proceeding.  Expenses
also shall include the foregoing incurred in connection with any appeal
resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent.

 

(f)            “Independent Counsel”
means a law firm, a member of a law firm or an independent practitioner that is
experienced in matters of corporation law and indemnification issues and
neither presently is, nor in the past five years has been, retained to
represent:  (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.

 

(g)           “Proceeding” includes
any threatened, pending or completed action, suit, arbitration, alternate
dispute resolution mechanism, investigation (including any internal
investigation), inquiry, administrative hearing or any other actual, threatened
or completed proceeding (including, with respect to any of the foregoing, in
relation to a waiver or renouncement pursuant to Delaware law of any interest
or expectancy of the Company in, or being offered to participate in, any business
opportunity or opportunities), whether brought by or in the right of the
Company or otherwise and whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or will be involved as a party or
otherwise, by reason of the fact that Indemnitee is or was an officer or
director of the Company, by reason of any action taken by Indemnitee or of any
inaction on such Indemnitee’s part while acting as an officer or director of
the Company, or by reason of the fact that such Indemnitee is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of another corporation, partnership, joint venture, trust or other Enterprise;
in each case whether or not he is acting or serving in any such capacity at the
time any liability or expense is incurred for which indemnification can be
provided under this Agreement; including one pending on or before the date of
this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 8
of this Agreement to enforce such Indemnitee’s rights under this Agreement.

 

(h)           References herein to “fines”
shall not include any excise tax assessed with respect to any employee benefit
plan.

 

3

 

(i)            References herein to a
director of another Enterprise or a director of an other Enterprise shall
include, in the case of any entity that is not managed by a board of directors,
such other position, such as manager or trustee or member of the governing body
of such entity, that entails responsibility for the management and direction of
such entity’s affairs, including, without limitation, the general partner of
any partnership (general or limited) and the manager or managing member of any
limited liability company.

 

(j)            (i) References herein
to serving at the request of the Company as a director, officer, employee,
agent, or fiduciary of another Enterprise shall include any service as a
director, officer, employee, or agent of the Company that imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan of the Company or any of its affiliates, other than solely as a
participant or beneficiary of such a plan; and (ii) if the Indemnitee has
acted in good faith and in a manner the Indemnitee reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan,
the Indemnitee shall be deemed to have acted in a manner not opposed to the
best interests of the Company for purposes of this Agreement.

 

2.             Indemnity of Indemnitee.  The Company hereby agrees to hold harmless
and indemnify Indemnitee to the fullest extent permitted by applicable law, as
such may be amended from time to time. 
In furtherance of the foregoing indemnification, and without limiting
the generality thereof:

 

(a)           Proceedings Other Than
Proceedings by or in the Right of the Company.  Except as provided in Section 10
hereof, Indemnitee shall be entitled to the rights of indemnification
provided in this Section 2(a) if, by reason of Indemnitee’s
Corporate Status, the Indemnitee is or was, or is or was threatened to be made,
a party to or is otherwise involved in any Proceeding other than a Proceeding
by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 2(a), Indemnitee
shall be indemnified against all Expenses, judgments, penalties, fines,
liabilities and amounts paid in settlement actually and reasonably incurred by
Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding or any
claim, issue or matter therein, but only if the Indemnitee acted in good faith
and in a manner the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any criminal Proceeding,
had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(b)           Proceedings by or in the
Right of the Company.  Except as
provided in Section 10 hereof, 
Indemnitee shall be entitled to the rights of indemnification provided
in this Section 2(b) if, by reason of Indemnitee’s Corporate
Status, the Indemnitee is or was, or is or was threatened to be made, a party
to or is or was otherwise involved in any Proceeding brought by or in the right
of the Company to procure a judgment in its favor.  Pursuant to this Section 2(b), Indemnitee
shall be indemnified against all Expenses actually and reasonably incurred by
the Indemnitee, or on the Indemnitee’s behalf, in connection with such
Proceeding or any claim, issue or matter therein, but only if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company; provided, however,
if applicable law so provides, no indemnification for such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which
the Indemnitee shall have been adjudged liable to the Company unless (and only
to the extent that) the Court of 

 

4

 

Chancery of the State of Delaware or the court in
which such Proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, the Indemnitee is fairly and reasonably entitled to indemnity for
such Expenses that the Court of Chancery or such other court shall deem proper.

 

(c)           Overriding Right to
Indemnification if Successful on the Merits.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is or was, by reason of Indemnitee’s
Corporate Status or otherwise, a party to and is or was successful, on the
merits or otherwise, in any Proceeding, he shall be indemnified to the maximum
extent permitted by applicable law, as such may be amended from time to time,
against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection therewith. 
If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee to the maximum extent permitted by applicable law, as such may be
amended from time to time, against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in connection with each
successfully resolved claim, issue or matter. 
For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

 

3.             Additional Indemnity.  In addition to, and without regard to any
limitations on, the indemnification provided for in Section 2 of
this Agreement, the Company shall and hereby does, to the fullest extent
permissible under applicable law, indemnify and hold harmless Indemnitee
against all Expenses, judgments, penalties, fines, liabilities and amounts paid
in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf if, by reason of Indemnitee’s Corporate Status, he is, or is threatened
to be made, a party to or participant in any Proceeding (including a Proceeding
by or in the right of the Company), including, without limitation, all
liability arising out of the negligence or active or passive wrongdoing of
Indemnitee.  The only limitation that
shall exist upon the Company’s obligations pursuant to this Agreement shall be
that the Company shall not be obligated to make any payment to Indemnitee that
is finally determined (under the procedures, and subject to the presumptions,
set forth in Section 7 and Section 8 hereof) to be
unlawful.

 

4.             Contribution.

 

(a)           To the fullest extent
permissible under applicable law, whether or not the indemnification provided
in Section 2 and Section 3 hereof is available, in
respect of any threatened, pending or completed action, suit or proceeding in
which the Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), the Company shall pay, in the first instance,
the entire amount of any judgment or settlement of such action, suit or
proceeding without requiring Indemnitee to contribute to such payment, and the
Company hereby waives and relinquishes any right of contribution it may have
against Indemnitee.  The Company shall
not enter into any settlement of any action, suit or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding) unless such settlement provides for a full and
final release of all claims asserted against Indemnitee.

 

5

 

(b)           To the fullest extent
permissible under applicable law, without diminishing or impairing the
obligations of the Company set forth in the preceding subparagraph, if, for any
reason, Indemnitee shall elect or be required to pay all or any portion of
any judgment or settlement in any threatened, pending or completed action, suit
or proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), the Company shall contribute
to the amount of Expenses, judgments, fines, liabilities and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee
in proportion to the relative benefits received by the Company and all
officers, directors or employees of the Company, other than Indemnitee, who are
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose; provided, however,
that the proportion determined on the basis of relative benefit may, to the
extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors or employees of the
Company, other than Indemnitee, who are jointly liable with Indemnitee (or
would be if joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, in connection with the events that resulted in
such Expenses, judgments, fines, liabilities or settlement amounts, as well as
any other equitable considerations which the law may require to be
considered.  The relative fault of the
Company and all officers, directors or employees of the Company, other than
Indemnitee, who are jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), on the one hand, and Indemnitee, on the other
hand, shall be determined by reference to, among other things, the degree to
which their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or secondary and the
degree to which their conduct is active or passive.

 

(c)           The Company hereby agrees to
fully indemnify and hold Indemnitee harmless from any claim of contribution
brought by officers, directors or employees of the Company, other than
Indemnitee, who may be jointly liable with Indemnitee.

 

(d)           To the fullest extent
permissible under applicable law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee for any reason whatsoever, the Company,
in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, liabilities, penalties, excise taxes,
amounts paid or to be paid in settlement and/or for Expenses, in connection
with any claim relating to an indemnifiable event under this Agreement, in such
proportion as the Board of Directors deems fair and reasonable in light of all
of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company (together with its directors,
officers, employees and agents) and Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and/or (ii) the
relative fault of the Company (and its directors, officers, employees and
agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

 

5.             Indemnification for Expenses
of a Witness.  Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is or was,
by reason of Indemnitee’s Corporate Status or otherwise, a witness, or is or
was made (or asked) to respond to discovery requests, in any Proceeding to
which Indemnitee is not a party, he shall be indemnified to the fullest extent
permissible under applicable law against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

 

6

 

6.             Advancement of Expenses.  Notwithstanding any other provision of this
Agreement, but subject to Section 9(e) hereof, the Company
shall advance all Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding by reason of Indemnitee’s Corporate Status or otherwise
within thirty (30) calendar days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding.  Such statement or statements
shall reasonably evidence the Expenses incurred by or on behalf of Indemnitee
and for which advancement is requested, and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall finally be determined (under the procedures, and
subject to the presumptions, set forth in Section 7 and Section 8
hereof) that Indemnitee is not entitled to be indemnified against such
Expenses.  Such undertaking shall be
sufficient for purposes of this Section 6 if it is substantially in
the form attached hereto as Exhibit A.  Any advances and undertakings to repay
pursuant to this Section 6 shall be unsecured and
interest-free.  The Indemnitee shall be entitled to advancement of
Expenses as provided in this Section 6 regardless of any
determination by or on behalf of the Company that the Indemnitee has not met
the standards of conduct set forth in Sections 2(a) and 2(b) hereof.

 

7.             Procedures and Presumptions
for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure
for Indemnitee rights of indemnity that are as favorable as may be permitted
under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the
following procedures and presumptions shall apply in the event of any question
as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)           Indemnitee shall give the
Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement.  To obtain indemnification
under this Agreement, the Indemnitee shall submit to the Company a written
request for indemnification, including therein or therewith, except to the
extent previously provided to the Company in connection with a request or
requests for advancement pursuant to Section 6 hereof, a statement
or statements reasonably evidencing all Expenses incurred or paid by or on
behalf of the Indemnitee and for which indemnification is requested, together
with such documentation and information as is reasonably available to
Indemnitee and as is reasonably necessary for the Company to determine whether
and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the Board of
Directors in writing that Indemnitee has requested indemnification.  Failure to provide any notice required hereby
shall not impair Indemnitee’s rights of indemnification and contribution under
this Agreement except to the extent that such failure to provide notice
actually and materially prejudices the rights of the Company to defend any
action or proceeding which is the basis of the claimed indemnification.

 

(b)           Upon written request by
Indemnitee for indemnification pursuant to the second sentence of Section 7(a) hereof,
a determination with respect to Indemnitee’s entitlement thereto shall be made
by the following person or persons, who shall be empowered to make such
determination: (i) if a Change in Control shall have occurred, by
Independent Counsel (unless Indemnitee shall request in writing that such
determination be made by the Board of Directors 

 

7

 

(or a committee thereof) in the manner provided for
in clause (ii) of this Section 7(b)) in a written opinion to
the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if
a Change of Control shall not have occurred, (A)(1) by Independent
Counsel, if Indemnitee shall request in writing that such determination be made
by Independent Counsel upon making Indemnitee’s request for indemnification
pursuant to the second sentence of Section 7(a), (2) by the
Board of Directors of the Company, by a majority vote of Disinterested
Directors even though less than a quorum, or (3) by a committee of
Disinterested Directors designated by majority vote of Disinterested Directors,
even though less than a quorum, or (B) if there are no such Disinterested
Directors or, even if there are such Disinterested Directors, if the Board of
Directors, by the majority vote of Disinterested Directors, so directs, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee.

 

(c)           If the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 7(b) hereof, the Independent Counsel shall be selected
by the Board of Directors and approved by Indemnitee.  Upon failure of the Board of Directors to so
select, or upon the failure of Indemnitee to so approve, such Independent
Counsel within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 7(a) hereof, the
Independent Counsel shall be selected by the Court of Chancery of the State of
Delaware or such other person or body as the Indemnitee and the Company may
agree in writing.  Such determination of
entitlement to indemnification shall be made not later than forty-five (45)
days after receipt by the Company of a written request for
indemnification.  If the person making
such determination shall determine that Indemnitee is entitled to indemnification
as to part (but not all) of the application for indemnification, such person
shall reasonably pro-rate such part of indemnification among such claims,
issues or matters.  If it is so
determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such
determination.  The Company shall pay any
and all reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with acting pursuant to Section 7(b) hereof,
and the Company shall pay all reasonable fees and expenses incident to the
procedures of this Section 7(c), regardless of the manner in which
such Independent Counsel was selected or appointed.

 

(d)           In connection with any
determination (including a determination by the Court of Chancery of the State
of Delaware (or other court of competent jurisdiction)) with respect to
entitlement to indemnification hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not entitled to indemnification and any
decision that Indemnitee is not entitled to indemnification must be supported
by clear and convincing evidence.  The
failure of the Company (including by its directors or Independent Counsel) to
have made a determination prior to the commencement of any action pursuant to
this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, or an actual
determination by the Company (including by its directors or Independent
Counsel) that Indemnitee has not met such applicable standard of conduct, shall
not be a defense to the action or create a presumption that Indemnitee has not
met the applicable standard of conduct.

 

(e)           In making a determination
with respect to whether Indemnitee acted in good faith and in a manner that
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, the person or persons or entity making such determination shall 

 

8

 

presume that Indemnitee acted in good faith and in a
manner that Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company.  Anyone seeking
to overcome this presumption shall have the burden of proof and any decision
that Indemnitee is not entitled to indemnification must be supported by clear
and convincing evidence.  In addition,
and in no way limiting the provisions of this Section 7, Indemnitee
shall be deemed to have acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Enterprise, or with respect to any criminal action or proceeding to have had no
reasonable cause to believe Indemnitee’s conduct was unlawful, if Indemnitee’s
action is based on (i) the records or books of account of the Enterprise, (ii) information
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, (iii) the advice of legal counsel for the Enterprise or (iv) information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected with reasonable
care by the Enterprise; provided, however, that any failure by
Indemnitee to act on the advice of legal counsel for the Enterprise shall not,
in and of itself, constitute grounds for an adverse determination with respect
to whether Indemnitee acted in good faith and in a manner that Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company.  In addition, the knowledge
and/or actions, or failure to act, of any director, officer, agent or employee
of the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.

 

(f)            If the person, persons or
entity empowered or selected under this Section 7 to determine
whether Indemnitee is entitled to indemnification shall not have made a
determination within sixty (60) days after receipt by the Company of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such sixty (60) day
period may be extended for a reasonable time, not to exceed an additional
thirty (30) days, if the person, persons or entity making such determination
with respect to entitlement to indemnification in good faith requires such
additional time to obtain or evaluate documentation and/or information relating
thereto and so notifies the Indemnitee.

 

(g)           Indemnitee shall cooperate
with the person, persons or entity making such determination with respect to
Indemnitee’s entitlement to indemnification, including providing to such
person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination.  Any Independent Counsel
or member of the Board of Directors shall act reasonably and in good faith in
making a determination regarding the Indemnitee’s entitlement to
indemnification under this Agreement. 
Any costs or expenses (including attorneys’ fees and disbursements)
incurred by Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the
Company hereby agrees to indemnify and hold Indemnitee harmless therefrom.

 

9

 

(h)           The Company acknowledges
that a settlement or other disposition short of final judgment may be
successful if it permits a party to avoid expense, delay, distraction,
disruption and uncertainty.  In the event
that any Proceeding to which Indemnitee is or becomes a party is resolved in
any manner other than by adverse judgment against Indemnitee (including,
without limitation, settlement of such action, claim or proceeding with or
without payment of money or other consideration) it shall be presumed that
Indemnitee has been successful on the merits or otherwise in such
Proceeding.  Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion by
clear and convincing evidence.

 

(i)            The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification under this
Agreement or create a presumption that Indemnitee did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that Indemnitee’s conduct was
unlawful.

 

8.             Remedies of Indemnitee.

 

(a)           In the event that (i) a
determination is made pursuant to Section 7 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement
of Expenses is not timely made pursuant to Section 6 of this
Agreement, (iii) no determination of entitlement to indemnification is
made pursuant to Section 7(b) of this Agreement within ninety
(90) days after receipt by the Company of the request for indemnification, (iv) payment
of indemnification is not made pursuant to this Agreement within fifty-five
(55) days after receipt by the Company of a written request therefor or (v) payment
of indemnification is not made within ten (10) days after a determination
has been made that Indemnitee is entitled to indemnification or such
determination is deemed to have been made pursuant to Section 7 of
this Agreement, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Delaware, or in any other court of competent
jurisdiction, of Indemnitee’s entitlement to such indemnification and/or
advancement of Expenses.  The Company
shall not oppose Indemnitee’s right to seek any such adjudication.

 

(b)           In the event that a
determination shall have been made pursuant to Section 7(b) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 8 shall be conducted
in all respects as a de novo trial on the merits, and Indemnitee shall not be
prejudiced by reason of the adverse determination under Section 7(b).

 

(c)           If a determination shall
have been made pursuant to Section 7(b) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding commenced pursuant to this Section 8,
absent (i) a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee’s misstatement not materially
misleading in connection with the application for indemnification, or (ii) a
prohibition of such indemnification under applicable law.

 

10

 

(d)           In the event that (a) the
Indemnitee commences a proceeding seeking (1) to establish or enforce the
Indemnitee’s entitlement to indemnification or advancement pursuant to this
Agreement, (2) to otherwise enforce Indemnitee’s rights under or to
interpret the terms of this Agreement, (3) to recover damages for breach
of this Agreement, (4) to establish or enforce Indemnitee’s entitlement to
indemnification or advancement pursuant to the Certificate or the Bylaws, or (5) to
enforce or interpret the terms of any liability insurance policy maintained by
the Company (each such proceeding an “Indemnitee Enforcement Proceeding”),
or (b) the Company commences a proceeding against the Indemnitee seeking (1) to
recover, pursuant to an undertaking or otherwise, amounts previously advanced
to Indemnitee, (2) to enforce the Company’s rights under or to interpret
the terms of this Agreement, or (3) to recover damages for breach of this
Agreement (each such proceeding a “Company Enforcement Proceeding” and
together with each form of Indemnitee Enforcement Proceeding, an “Enforcement
Proceeding”), then the Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by or on behalf of such Indemnitee in
connection with such Enforcement Proceeding, provided, however,
if applicable law so provides, no indemnification against such Expenses shall
be made in respect of any claim, issue or matter in such Proceeding on which
Indemnitee does not prevail, unless (and only to the extent that) the Court of
Chancery of the State of Delaware or the court in which such Proceeding was
brought shall determine upon application that, despite the adjudication in
respect of such claim, issue or matter but in view of all the circumstances of
the case, the Indemnitee is fairly and reasonably entitled to indemnity for
such Expenses that the Court of Chancery or such other court shall deem
proper.  The Company also shall be
required to advance all Expenses actually and reasonably incurred by or on
behalf of the Indemnitee in connection with any Enforcement Proceeding in
advance of the final disposition of such Enforcement Proceeding within thirty
(30) days after the receipt by the Company of a written request for such
advance or advances from time to time, which request shall include or be
accompanied by a statement or statements reasonably evidencing the Expenses
incurred by or on behalf of the Indemnitee and for which advancement is
requested; provided, however, that any such advancement shall be
made only after the Company receives an undertaking by or on behalf of the
Indemnitee to repay any Expenses so advanced if it shall be finally determined
that Indemnitee is not entitled to be indemnified against such Expenses.

 

(e)           The Company shall be
precluded from asserting in any judicial proceeding commenced pursuant to this Section 8
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court that the Company is bound
by all the provisions of this Agreement.

 

(f)            Notwithstanding anything in
this Agreement to the contrary, no determination as to entitlement to
indemnification under this Agreement shall be required to be made prior to the
final disposition of the Proceeding.

 

9.             Non-Exclusivity; Survival of
Rights; Insurance; Subrogation.

 

(a)           The rights of
indemnification as provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may at any time be entitled under
applicable law, the Certificate, the Bylaws, any agreement, a vote of
stockholders, a resolution of directors or otherwise.  No amendment, alteration or repeal of this
Agreement or of any 

 

11

 

provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in Indemnitee’s Corporate Status or otherwise prior to such
amendment, alteration or repeal.  To the extent
that a change in the DGCL or applicable law, whether by statute or judicial
decision, permits greater indemnification or advancement than would be afforded
currently under the Certificate, the Bylaws and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits so afforded by such change. 
No right or remedy herein conferred is intended to be exclusive of any
other right or remedy, and every other right and remedy shall be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.  Notwithstanding
anything in this Agreement to the contrary, the indemnification and
contribution provided for in this Agreement will remain in full force and
effect regardless of any investigation made by or on behalf of Indemnitee or
any of Indemnitee’s agents.

 

(b)           To the extent that the
Company maintains an insurance policy or policies providing liability insurance
for directors, officers, employees, or agents or fiduciaries of the Company or
of any other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other Enterprise that such person
serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any director, officer, employee, agent or
fiduciary under such policy or policies. 
If, at the time of the receipt of a notice of a claim pursuant to the
terms hereof, the Company has director and officer liability or other
applicable insurance in effect, the Company shall give prompt notice of the
commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.

 

(c)           Subject to Section 9(f),
except as otherwise agreed between the Company, on the one hand, and Indemnitee
or another indemnitor of Indemnitee, on the other, in the event of any payment
to or on behalf of the Indemnitee under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers reasonably required and take all
action reasonably necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce such
rights.

 

(d)           Subject to Section 9(f),
except as otherwise agreed between the Company, on the one hand, and Indemnitee
or another indemnitor of Indemnitee, on the other, the Company shall not be
liable under this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any Company insurance policy, Company contract, Company
agreement or otherwise (except to the extent that Indemnitee is required (by
court order or otherwise) to return such payment or to surrender it to the
Company).

 

(e)           Subject to Section 9(f),
except as otherwise agreed between the Company, on the one hand, and Indemnitee
or another indemnitor of Indemnitee, on the other, the 

 

12

 

Company’s obligation to indemnify or advance
Expenses hereunder to Indemnitee who is or was serving at the request of the
Company as a director, officer, employee or agent of any other corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other Enterprise shall be reduced by any amount Indemnitee has actually
received as indemnification or advancement of expenses from such other
corporation, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise (except to the extent that Indemnitee
is required (by court order or otherwise) to return such payment or to
surrender it to the Company).

 

(f)            The Company hereby
acknowledges that Indemnitee is serving as a director or officer of the Company
at the request of the Company or its Board of Directors.  The Company hereby further acknowledges that
Indemnitee might have certain rights to indemnification, advancement of
Expenses and/or insurance coverage provided by one or more third parties other
than the Company and its insurers (collectively, the “Third Party
Indemnitors”).  The Company hereby
agrees that: (i) as between the Company and any Third Party Indemnitor,
the Company is the indemnitor of first resort (i.e., its obligations to
Indemnitee are primary and any obligation of any Third Party Indemnitor to
advance Expenses or to provide indemnification or insurance coverage for the
same Expenses or liabilities incurred by Indemnitee are secondary); (ii) it
shall be required to advance the full amount of Expenses incurred by or on
behalf of Indemnitee and shall be liable for the full amount of all judgments
or amounts paid in settlement to the extent legally permitted and as required
by the terms of this Agreement, the Certificate or the Bylaws (or any other
agreement between the Company and Indemnitee), without regard to any rights
Indemnitee may have against any Third Party Indemnitor; and (iii) it
hereby irrevocably and unconditionally waives, relinquishes and releases any
and all Third Party Indemnitors from any and all claims against the Third Party
Indemnitors (or any of them) for contribution, subrogation or any other
recovery of any kind in respect thereof. 
The Company further agrees that no advancement or payment by any Third
Party Indemnitor on behalf of Indemnitee with respect to any claim for which
Indemnitee has sought indemnification from the Company shall affect the
foregoing in any respect and the Third Party Indemnitors shall have a right of
contribution and/or be subrogated to the extent of such advancement or payment
to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the
Third Party Indemnitors are express third party beneficiaries of the terms of
this Section 9.

 

10.           Exception to Right of
Indemnification. 
Notwithstanding any provision in this Agreement, the Company shall not
be obligated under this Agreement to make any indemnity in connection with any
claim made against Indemnitee:

 

(a)           for which payment has
actually been made to or on behalf of Indemnitee under any insurance policy, or
other indemnity provision or otherwise, except with respect to any excess
beyond the amount so paid, and except as may otherwise be agreed between the
Company, on the one hand, and Indemnitee or another indemnitor of Indemnitee,
on the other;

 

(b)           for an accounting of profits
made from the purchase and sale (or sale and purchase) by Indemnitee of
securities of the Company within the meaning of Section 16(b) of the
Act, as amended, or similar provisions of state statutory law or common law; or

 

13

 

(c)           in connection with any
Proceeding (or any part of any Proceeding) initiated by Indemnitee, including
any Proceeding (or any part of any Proceeding) initiated by Indemnitee against
the Company or any of its direct or indirect subsidiaries or the directors,
officers, employees or other indemnitees of the Company or its direct or
indirect subsidiaries (other than any Proceeding initiated by Indemnitee
pursuant to Section 8(d), 
which shall be governed by the terms of such section), unless (i) the
Board of Directors of the Company authorized the Proceeding (or any part of any
Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.

 

11.           Successors.  This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives.

 

12.           Security.  To the extent requested by Indemnitee and
approved by the Board of Directors of the Company, the Company may at any time
and from time to time provide security to Indemnitee for the Company’s
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral.  Any such security,
once provided to Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.

 

13.           Enforcement.

 

(a)           The Company expressly confirms
and agrees that it has entered into this Agreement and assumes the obligations
imposed on it hereby in order to induce Indemnitee to serve or continue serving
as an officer or director of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as an officer or director
of the Company.

 

(b)           This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral,
written and implied, between the parties hereto with respect to the subject
matter hereof.

 

(c)           The Company represents that
this Agreement has been approved by the Company’s Board of Directors.

 

14.           Severability.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof.  Without limiting
the generality of the foregoing, this Agreement is intended to confer upon
Indemnitee indemnification rights to the fullest extent permitted by applicable
laws.  In the event any provision hereof
conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve
such conflict.

 

15.           Modification and Waiver.  No supplement, modification, termination or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto.  No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute 

 

14

 

a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

 

16.           Notice By Indemnitee.  Indemnitee agrees to promptly notify the
Company in writing upon being served with or otherwise receiving any summons,
citation, subpoena, complaint, indictment, information or other document
relating to any Proceeding or matter which may be subject to indemnification
covered hereunder.  The failure to so
notify the Company shall not relieve the Company of any obligation which it may
have to Indemnitee under this Agreement or otherwise unless and only to the
extent that such failure or delay materially prejudices the Company.

 

17.           Disclosure of Payments.  Except as expressly required by any law,
neither party shall publicly disclose any payments under this Agreement unless
prior approval of the other party is obtained.

 

18.           Notices.  Unless otherwise provided herein, any notice
required or permitted under this Agreement shall be deemed effective upon the
earlier of (a) actual receipt, or (b) (i) one (1) business
day after the date of delivery by confirmed facsimile transmission, (ii) one
(1) business day after the business day of deposit with a nationally
recognized overnight courier service for next day delivery, freight prepaid, or
(iii) three (3) business days after deposit with the United States
Post Office for delivery by registered or certified mail, postage prepaid.  Any such notice shall be in writing and shall
be addressed to the party to be notified at the address indicated for such
party indicated on the signature pages or exhibits hereto, as otherwise
set forth in this Section 18, or at such other address as such
party may designate by ten (10) days’ advance written notice to the other
parties.  All communications shall be
sent:

 

(a)           To Indemnitee at the address
set forth below Indemnitee’s signature hereto;

 

(b)           To the Company at its
principal executive office;

 

or to such other address as may have been furnished
to Indemnitee by the Company or to the Company by Indemnitee, as the case may
be.

 

19.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.  This Agreement may also be executed and
delivered by facsimile or electronic signature.

 

20.           Headings.  The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction thereof.

 

21.           Governing Law and Consent to
Jurisdiction.  This
Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. 
The Company and Indemnitee hereby irrevocably and unconditionally (i) agree
that any action or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court of the 

 

15

 

State of Delaware (the “Delaware Court”), and
not in any other state or federal court in the United States of America or any
court in any other country, (ii) consent to submit to the exclusive
jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) consent to
service of any summons and complaint and any other process that may be served
in any action, suit, or proceeding arising out of or relating to this Agreement
by mailing by certified or registered mail, with postage prepaid, copies of
such process to such party at its address for receiving notice pursuant to Section 18
hereof, (iv) waive any objection to the laying of venue of any such action
or proceeding in the Delaware Court, and (v) waive, and agree not to plead
or to make, any claim that any such action or proceeding brought in the
Delaware Court has been brought in an improper or inconvenient forum.  Nothing herein shall preclude service of
process by any other means permitted by applicable law.

 

22.           Assignment.  Neither party hereto may assign this
Agreement without the prior written consent of the other party; provided,
however, that the Company may assign this Agreement upon a Change in
Control.

 

23.           Construction.  The parties acknowledge that both parties
have contributed to the drafting of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.

 

[signature page follows]

 

16

 

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.

 

	
  INDEMNITEE:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  COMPANY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  The Howard Hughes
  Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Authorized Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

[Signature
Page to Holdings Indemnification Agreement]

 

 

Exhibit A

 

UNDERTAKING

 

Reference is hereby made to that certain
Indemnification Agreement, by and between The Howard Hughes Corporation, a
Delaware corporation (the “Company”), and the undersigned, dated as of November     ,
2010 (the “Indemnification Agreement”). 
All initially capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Indemnification Agreement.

 

Pursuant to the Indemnification Agreement, I,
                                                                        ,
agree to reimburse the Company for all Expenses paid to me or on my behalf by
the Company in connection with my involvement in [name or
description of proceeding or proceedings], in the event, and to the
extent, that it shall ultimately be determined (pursuant to the terms of the
Indemnification Agreement) that I am not entitled to be indemnified by the
Company for such Expenses.

 

	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Typed Name

  	
   

  
	
   

  	
   

  	
  ss:

  	
   

  	
   

  
							

 

Before me                                             ,
on this day personally appeared                                       ,
known to me to be the person whose name is subscribed to the foregoing
instrument, and who, after being duly sworn, stated that the contents of said
instrument is to the best of his/her knowledge and belief true and correct and
who acknowledged that he/she executed the same for the purpose and
consideration therein expressed.

 

GIVEN under my hand and official seal at
                ,
this               
day of
                      ,
20    .

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

My commission expires:Exhibit
10.8

 

EXECUTION COPY

 

 

 

WARRANT AGREEMENT

 

BETWEEN

 

THE HOWARD HUGHES CORPORATION

 

AND

 

MELLON INVESTOR SERVICES LLC,

 

as WARRANT
AGENT

 

 

Dated as of November         , 2010

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS.

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  ORIGINAL ISSUE OF
  WARRANTS.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Form of Warrant Certificates

  	
   

  	
  8

  
	
   

  	
  2.2

  	
  Execution and Delivery of Warrant Certificates; Vesting.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  EXERCISE PRICE;
  EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Exercise Price

  	
   

  	
  9

  
	
   

  	
  3.2

  	
  Exercise of Warrants

  	
   

  	
  9

  
	
   

  	
  3.3

  	
  Expiration of Warrants

  	
   

  	
  10

  
	
   

  	
  3.4

  	
  Method of Exercise; Settlement of Warrant

  	
   

  	
  10

  
	
   

  	
  3.5

  	
  Transferability of Warrants and Common Stock

  	
   

  	
  12

  
	
   

  	
  3.6

  	
  Compliance with Law

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REGISTRATION
  RIGHTS.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Rule 144 Reporting

  	
   

  	
  14

  
	
   

  	
  4.2

  	
  Obtaining Exchange Listing

  	
   

  	
  14

  
	
   

  	
  4.3

  	
  The Warrant Agent

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  ADJUSTMENTS AND
  OTHER RIGHTS.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Stock Dividend; Subdivision or Combination of Common Stock

  	
   

  	
  14

  
	
   

  	
  5.2

  	
  Other Dividends and Distributions

  	
   

  	
  15

  
	
   

  	
  5.3

  	
  Rights Offerings

  	
   

  	
  16

  
	
   

  	
  5.4

  	
  Issuer Tender or Exchange Offers

  	
   

  	
  16

  
	
   

  	
  5.5

  	
  Reorganization, Reclassification, Consolidation, Merger or
  Sale

  	
   

  	
  17

  
	
   

  	
  5.6

  	
  Other Adjustments

  	
   

  	
  18

  
	
   

  	
  5.7

  	
  Notice of Adjustment

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  CHANGE OF
  CONTROL.

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Redemption in Connection with a Change of Control Event

  	
   

  	
  18

  
	
   

  	
  6.2

  	
  Public Stock Merger

  	
   

  	
  19

  
	
   

  	
  6.3

  	
  Mixed Consideration Merger

  	
   

  	
  19

  
	
   

  	
  6.4

  	
  The Warrant Agent

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  WARRANT TRANSFER
  BOOKS.

  	
   

  	
  20

  

 

i

 

	
  8.

  	
  WARRANT HOLDERS.

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  No Voting Rights

  	
   

  	
  21

  
	
   

  	
  8.2

  	
  Right of Action

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  WARRANT AGENT

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Nature of Duties and Responsibilities Assumed

  	
   

  	
  21

  
	
   

  	
  9.2

  	
  Compensation and Reimbursement

  	
   

  	
  23

  
	
   

  	
  9.3

  	
  Warrant Agent May Hold Company Securities

  	
   

  	
  24

  
	
   

  	
  9.4

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  24

  
	
   

  	
  9.5

  	
  Damages

  	
   

  	
  25

  
	
   

  	
  9.6

  	
  Force Majeure

  	
   

  	
  25

  
	
   

  	
  9.7

  	
  Survival

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS AND WARRANTIES.

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Representations and Warranties of
  the Company

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  COVENANTS.

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Reservation of Common Stock for Issuance on Exercise of
  Warrants

  	
   

  	
  25

  
	
   

  	
  11.2

  	
  Notice of Distributions

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  MISCELLANEOUS.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Money and Other Property Deposited with the Warrant Agent

  	
   

  	
  26

  
	
   

  	
  12.2

  	
  Payment of Taxes

  	
   

  	
  26

  
	
   

  	
  12.3

  	
  Surrender of Certificates

  	
   

  	
  26

  
	
   

  	
  12.4

  	
  Mutilated, Destroyed, Lost and Stolen Warrant Certificates

  	
   

  	
  27

  
	
   

  	
  12.5

  	
  Removal of Legends

  	
   

  	
  27

  
	
   

  	
  12.6

  	
  Notices

  	
   

  	
  28

  
	
   

  	
  12.7

  	
  Applicable Law; Jurisdiction

  	
   

  	
  29

  
	
   

  	
  12.8

  	
  Persons Benefiting

  	
   

  	
  29

  
	
   

  	
  12.9

  	
  Counterparts

  	
   

  	
  29

  
	
   

  	
  12.10

  	
  Amendments

  	
   

  	
  29

  
	
   

  	
  12.11

  	
  Headings

  	
   

  	
  30

  
	
   

  	
  12.12

  	
  Entire Agreement

  	
   

  	
  30

  
	
   

  	
  12.13

  	
  Specific Performance

  	
   

  	
  30

  

 

ii

 

List of
Exhibits

 

EXHIBIT A-1
— Form of Series A-1 Warrant Certificate

 

EXHIBIT A-2
— Form of Series A-2 Warrant Certificate

 

EXHIBIT B
— Form of Assignment

 

EXHIBIT C
— Option Pricing Assumptions / Methodology

 

SCHEDULE
A — Allocations of Warrants to Initial Investors

 

SCHEDULE
B — Warrant Agent Compensation

 

iii

 

WARRANT AGREEMENT

 

WARRANT AGREEMENT, dated as of November       ,
2010 (together with the Warrants, this “Agreement”), by and between The
Howard Hughes Corporation, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company (together with its successors
and assigns, the “Warrant Agent”).

 

WITNESSETH:

 

WHEREAS, the Company is issuing and delivering warrant
certificates (the “Warrant Certificates”) evidencing Warrants to
purchase up to an aggregate of 8,000,000 shares of its Common Stock, subject to
adjustment, including (a) Series A-1 Warrants to purchase 3,833,333
shares of its Common Stock, subject to adjustment, in connection with that
certain Amended and Restated Cornerstone Investment Agreement, effective as of March 31,
2010, by and between Brookfield Retail Holdings LLC (formerly known as REP
Investments LLC) and General Growth Properties, Inc. (“GGP”) (as
amended from time to time, the “Investment Agreement”), (b) Series A-2
Warrants to purchase 1,916,667 shares of its Common Stock, subject to
adjustment, in connection with that certain Amended and Restated Stock Purchase
Agreement, effective as of March 31, 2010, by and between each of The
Fairholme Fund and The Fairholme Focused Income Fund (each a “Fairholme
Purchaser”, and collectively, the “Fairholme Purchasers”) and GGP
(as amended from time to time, the “Fairholme Stock Purchase Agreement”),
(c) Series A-2 Warrants to purchase 1,916,667 shares of its Common
Stock in connection with that certain Amended and Restated Stock Purchase
Agreement, effective as of March 31, 2010, by and between each of Pershing
Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd.
and Pershing Square International V, Ltd. (each, a “Pershing Square
Purchaser”, collectively, the “Pershing Square Purchasers”) and GGP
(as amended from time to time, the “Pershing Square Stock Purchase Agreement”
and, together with the Fairholme Stock Purchase Agreement, the “Stock
Purchase Agreements”) and (d) Series A-1
Warrants to purchase 333,333 shares of its Common Stock in connection with the
Blackstone Purchase Agreements (as defined herein) and those certain
designations, dated as of the date hereof, by and among the Company and each of
Brookfield Retail Holdings LLC (formerly known as REP Investments LLC), the
Fairholme Purchasers and the Pershing Square Purchasers (the “Blackstone
Designations”) pursuant to each of which each Purchaser (as defined herein)
has agreed to make an equity investment in the Company upon the terms and
subject to the conditions specified therein; and

 

WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, transfer, exchange, replacement and exercise of
the Warrant Certificates and other matters as provided herein;

 

NOW, THEREFORE, in
consideration of the foregoing and for the purpose of defining the terms and
provisions of the Warrants and the respective rights and obligations thereunder
of the Company and the record holders of the Warrants, the Company and the
Warrant Agent each hereby agree as follows:

 

 

1.                                      DEFINITIONS.

 

As
used in this Agreement, the following terms shall have the following meanings:

 

Affiliate:  of any particular Person means any other
Person controlling, controlled by or under common control with such particular
Person.  For the purposes of this
definition, (i) “control” means the possession, directly or indirectly, of
the power to direct the management and policies of a Person whether through the
ownership of voting securities, contract or otherwise and (ii) none of the
Initial Investors or their Affiliates shall be deemed to “control” the Company
or any of the Company’s controlled Affiliates prior to such Initial Investor or
Affiliate, as applicable, acquiring or becoming part of the acquiring group for
purposes of clauses (i) or (ii) or combining with the Company for
purposes of clause (iii) of the definition of Change of Control Event.

 

Announcement
Date:  the meaning set forth in Section 5.4.

 

Blackstone
Designations:  the meaning
set forth in the recitals hereto.

 

Blackstone
Investors:  means all
members, collectively, of the Blackstone Purchaser Group.

 

Blackstone
Purchase Agreements:  means,
collectively, the Brookfield Purchase Agreement, the Fairholme Purchase
Agreement and the Pershing Purchase Agreement.

 

Blackstone
Purchaser:  means
Blackstone Real Estate Partners VI L.P.

 

Blackstone
Purchaser Group:  means the
Blackstone Purchaser, Blackstone Real Estate Partners (AIV) VI L.P., Blackstone
Real Estate Partners VI.F L.P., Blackstone Real Estate Partners VI.TE.1 L.P.,
Blackstone Real Estate Partners VI.TE.2 L.P., Blackstone Real Estate Holdings
VI L.P. and Blackstone GGP Principal Transaction Partners L.P. and their
respective investment managers and their respective “controlled Affiliates”.  For such purpose, one or more investment
funds under common investment management shall constitute “controlled
Affiliates” of their investment manager.

 

Board:  the board of directors of the Company.

 

Brookfield
Consortium Member:  as defined in the Investment Agreement.

 

Brookfield
Investors:  means,
collectively, the Brookfield Consortium Members.

 

Brookfield
Purchase Agreement:  means that
certain Purchase Agreement, dated as of August 2, 2010, by and between REP
Investments LLC and the Blackstone Purchaser.

 

Brookfield
Purchaser:  the
Purchaser defined in the Investment Agreement.

 

Business
Day:  any day that is not a
Saturday, Sunday, or a day on which banks in the states of New York or New
Jersey are required or permitted to be closed.

 

2

 

Cash
Consideration Ratio:  means, in
connection with a Mixed Consideration Merger, a fraction, (i) the
numerator of which shall be the aggregate Fair Market Value of cash and all
other property (other than Public Stock) that holders of Common Stock will
receive for each such share of Common Stock in
connection with such Mixed Consideration Merger, and (ii) the
denominator of which shall be the Fair Market Value of all of the consideration
holders of Common Stock will receive for each such share of Common Stock in
connection with such Mixed Consideration Merger; provided, that, if the
holders of Common Stock have the opportunity to elect the consideration to be
received in such Mixed Consideration Merger, the Cash Consideration Ratio shall
be determined by reference to the weighted average of the types and amounts of
consideration received in such transaction in respect of shares of Common Stock
held by holders who are not affiliated with the Company or any entity acquiring
the Company.

 

Cash
Redemption Value:  the meaning
set forth in Section 6.1.

 

Certificate
of Incorporation:  the Company’s
certificate of incorporation (or equivalent organizational document), as
amended from time to time.

 

Change
of Control Event:  an event or
series of events, by which (i) any Person or group of Persons shall have
acquired beneficial ownership (within the meaning of Rule 13d-3(a) promulgated
by the SEC under the Exchange Act), directly or indirectly, of fifty percent
(50%) or more (by voting power) of the outstanding shares of Voting Securities,
(ii) all or substantially all of the consolidated assets of the Company
are sold, leased (other than leases to tenants in the ordinary course of
business), exchanged or transferred to any Person or group of Persons, (iii) the
Company is consolidated, merged, amalgamated, reorganized or otherwise enters
into a similar transaction in which it is combined with another Person (in each
case, other than pursuant to the Plan), unless shares of Common Stock held by
holders who are not affiliated with the Company or any entity acquiring the
Company remain unchanged or are exchanged for, converted into or constitute
solely (except to the extent of applicable appraisal rights or cash received in
lieu of fractional shares) the right to receive as consideration Public Stock
and the Persons who beneficially own the outstanding Voting Securities of the
Company immediately before consummation of the transaction beneficially own a
majority (by voting power) of the outstanding Voting Securities of the combined
or surviving entity or new parent immediately thereafter, (iv) the Company
engages in a reclassification or similar transaction pursuant to which shares
of Common Stock are converted into the right to receive anything other than
Public Stock, or (v) the holders of capital stock of the Company have
approved any plan or proposal for the liquidation or dissolution of the
Company; provided that with respect to an election by any Holder
pursuant to Section 6.1, no event or series of events shall constitute a
Change of Control Event if (x) such event or series of events is not
approved by a majority of the disinterested directors of the Company and (y) such
Holder or any of its Affiliates is the acquiror or part of the acquiring group
for purposes of clause (i) or (ii) above or is combined with the
Company for purposes of clause (iii) above.  For purposes of this definition, a “group”
means a group of Persons within the meaning of Rule 13d-5 under the
Exchange Act.

 

Closing
Sale Price:  as of any
date, the last reported per share sales price of a share of Common Stock or the
applicable security on such date (or, if no last reported sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices on such date)
as reported on the New York Stock 

 

3

 

Exchange,
or if the Common Stock or such other security is not listed on the New York
Stock Exchange, as reported by the principal U.S. national or regional
securities exchange or quotation system on which the Common Stock or such other
security is then listed or quoted; provided, however, that in the
absence of such listing or quotations, the Closing Sale Price shall be
determined by an Independent Financial Expert appointed for such purpose, using
one or more valuation methods that the Independent Financial Expert in its best
professional judgment determines to be most appropriate, assuming such Common
Stock or securities are fully distributed and are to be sold in an arm’s-length
transaction and there was no compulsion on the part of any party to such sale
to buy or sell and taking into account all relevant factors.

 

Code:  the U.S. Internal Revenue Code of 1986, as
amended.

 

Common
Stock:  the common stock, par value
$0.01, of the Company.

 

Company:  the meaning set forth in the preamble to this
Agreement and its successors and assigns.

 

Distribution:  the meaning set forth in Section 5.2.

 

Exchange
Act:  the U.S. Securities Exchange
Act of 1934, as amended.

 

Exercise
Date:  the meaning set forth in Section 3.4.

 

Exercise
Price:  means $50.00 per share,
subject to all adjustments made on or prior to the date of exercise thereof as
herein provided.

 

Expiration
Date:  the meaning set forth in Section 3.3.

 

Fairholme
Investors:  all
members, collectively, of the Fairholme Purchaser Group.

 

Fairholme
Purchase Agreement:  means that
certain Purchase Agreement, dated as of August 2, 2010, by and between the
Fairholme Purchasers and the Blackstone Purchaser.

 

Fairholme
Purchasers:  the meaning
set forth in the recitals hereto.

 

Fairholme
Purchaser Group:  the
Purchaser Group defined in the Fairholme Stock Purchase Agreement.

 

Fairholme
Stock Purchase Agreement:  the
meaning set forth in the recitals hereto.

 

Fair
Market Value:

 

(i)            in the case of shares or
securities, the average of the daily volume weighted average prices per share
of such shares or securities for the ten consecutive trading days immediately
preceding the day as of which Fair Market Value is being determined, as
reported on the New York Stock Exchange, or if such shares or securities are
not listed on the New York Stock Exchange, as reported by the principal U.S.
national or regional securities exchange or quotation system on which such
shares or securities are then listed or quoted; provided, however,

 

4

 

if
(x) such shares or securities are not listed or quoted on the New York
Stock Exchange or any U.S. national or regional securities exchange or
quotations system or (y) a transaction impacting such shares or securities
makes it unjust or inequitable to value such shares or securities in the manner
provided above as reasonably determined in good faith by the Board, then the
Fair Market Value of such securities shall be the fair market value per share
or unit of such shares or securities as determined by an Independent Financial
Expert appointed for such purpose, using one or more valuation methods that the
Independent Financial Expert in its best professional judgment determines to be
most appropriate, assuming such shares or other securities are fully
distributed and are to be sold in an arm’s-length transaction and there was no
compulsion on the part of any party to such sale to buy or sell and taking into
account all relevant factors.

 

(ii)           in the case of
cash, the amount thereof.

 

(iii)          in the case of
other property, the Fair Market Value of such property shall be the fair market
value thereof as determined by an Independent Financial Expert appointed for
such purpose, using one or more valuation methods that the Independent
Financial Expert in its best professional judgment determines to be most appropriate,
assuming such property is to be sold in an arm’s-length transaction and there
was no compulsion on the part of any party to such sale to buy or sell and
taking into account all relevant factors.

 

Full
Physical Settlement:  the
settlement method with respect to Series A-1 Warrants pursuant to which an
exercising Holder shall be entitled to receive from the Company, for each
Warrant exercised, a number of shares of Common Stock equal to the Full
Physical Share Amount in exchange for payment by the Holder of the aggregate
Exercise Price applicable to such Warrant.

 

Full
Physical Share Amount:  the
meaning set forth in Section 3.4.

 

Holders:  from time to time, the holders of the
Warrants and, unless otherwise provided or indicated herein, the holders of the
Warrant Securities, solely in their capacity as such.

 

Independent
Financial Expert:  a
nationally recognized financial advisory firm mutually agreed by the Company
and the Majority Holders. If the
Company and the Majority Holders are unable
to agree on an Independent Financial Expert for a valuation contemplated
herein, each of them shall choose promptly a separate Independent Financial
Expert and these two Independent Financial Experts shall choose promptly a
third Independent Financial Expert to conduct such valuation.

 

Initial
Investor:  means, as
applicable, (i) the Fairholme Purchasers, (ii) Pershing Square
Capital Management, L.P. and the Pershing Square Purchasers, (iii) the
Brookfield Purchaser; provided that, solely for the purposes of this
definition, in the event the Brookfield Purchaser is not in existence, the
Brookfield Purchaser shall be Brookfield Asset Management Inc. or an Affiliate
designated by Brookfield Asset Management Inc and (iv) the Blackstone
Purchaser.

 

Investment
Agreement:  the meaning
set forth in the recitals hereto.

 

Majority
Holders:  means at any time Holders of a
majority in number of the outstanding Warrants not held by the Company or any
of the Company’s Affiliates.

 

5

 

Mixed
Consideration Merger:  means an
event described in clause (iii) of the definition of Change of Control
Event pursuant to which all of the outstanding shares of Common Stock held by
holders who are not affiliated with the Company or any entity acquiring the
Company are exchanged for, converted into or constitute solely (except to the
extent of applicable appraisal rights or cash received in lieu of fractional
shares) the right to receive as consideration a combination of (i) Public
Stock and (ii) other securities, cash or other property.

 

Net
Share Amount:  the meaning
set forth in Section 3.4.

 

Net
Share Settlement:  the
settlement method for Series A-1 Warrants, if elected in accordance with Section 3.4,
and for Series A-2 Warrants pursuant to which an exercising Holder shall
be entitled to receive from the Company, for each Warrant exercised, a number
of shares of Common Stock equal to the Net Share Amount without any payment
therefor.

 

Organic
Change:  the meaning set forth in Section 5.5.

 

Pershing
Investors:  all
members, collectively, of the Pershing Purchaser Group.

 

Pershing
Square Purchasers:  the meaning
set forth in the recitals hereto.

 

Pershing
Purchase Agreement:  means that
certain Purchase Agreement, dated as of August 2, 2010, by and between the
Pershing Purchasers and the Blackstone Purchaser.

 

Pershing
Purchaser Group:  the
Purchaser Group defined in the Pershing Stock Purchase Agreement.

 

Pershing
Square Stock Purchase Agreement:  the meaning set forth in the recitals hereto.

 

Person:  any individual, corporation, partnership,
joint venture, association, joint stock company, limited
liability company, limited liability partnership, trust, unincorporated
organization or government or any agency or political subdivision thereof.

 

Plan:  the plan of reorganization as contemplated by
the Plan Term Sheet attached as Exhibit A to the Investment Agreement and
Stock Purchase Agreements.

 

Preliminary
Change of Control Event:  with
respect to the Company, the first public announcement that describes the economic terms of a transaction that results in
a Change of Control Event.

 

Premium
Per Post-Tender Share:  the
meaning set forth in Section 5.4.

 

Public
Stock:  means common stock listed on a
recognized U.S. national securities exchange with an aggregate market
capitalization (held by non-Affiliates of the issuer) in excess of $1 billion
in Fair Market Value.

 

Purchaser
Group:  (a) means with respect to
Brookfield Purchaser, the Brookfield Consortium Members, (b) with respect
to Fairholme Purchasers, the Fairholme Purchaser Group,

 

6

 

(c) with
respect to Pershing Square Purchasers, the Pershing Purchaser Group and (d) with
respect to the Blackstone Purchaser, the Blackstone Purchaser Group.

 

Public
Stock Merger:  means an
event described in clause (iii) of the definition of Change of Control
Event pursuant to which all of the outstanding shares of Common Stock held by
holders who are not affiliated with the Company or any entity acquiring the
Company are exchanged for, converted into or constitute solely (except to the
extent of applicable appraisal rights or cash received in lieu of fractional
shares) the right to receive as consideration Public Stock.

 

Purchaser:  means each of the Blackstone Purchaser, the
Brookfield Purchaser, the Fairholme Purchasers and the Pershing Square Purchasers.

 

Registration
Rights Agreements:   means those certain registration
rights agreements, dated as of the date hereof, between the Company, and
separately, each of (i) the Pershing Investors and Blackstone Real Estate
Partners VI L.P., a Delaware limited partnership, Blackstone Real Estate Partners (AIV) VI L.P., a Delaware limited
partnership, Blackstone Real Estate
Partners VI.F L.P., a Delaware limited partnership, Blackstone Real Estate Partners VI.TE.1 L.P., a Delaware limited
partnership, Blackstone Real Estate
Partners VI.TE.2 L.P., a Delaware limited partnership, Blackstone Real Estate Holdings VI L.P., a Delaware limited
partnership, and Blackstone GGP Principal
Transaction Partners L.P., a Delaware limited partnership, (ii) the Fairholme Investors and (iii) Brookfield
Retail Holdings LLC (formerly known as REP Investments LLC), a Delaware limited
liability company, Brookfield Retail Holdings II LLC, a Delaware limited
liability company, Brookfield Retail Holdings III LLC, a Delaware limited
liability company, Brookfield Retail Holdings IV-A LLC, a Delaware limited
liability company, Brookfield Retail Holdings IV-D LLC, a Delaware limited
liability company, Brookfield Retail Holdings V LP, a Delaware limited
partnership, and Brookfield US Retail Holdings LLC, a Delaware limited
liability company.

 

Rule 144:  means such rule promulgated under the
Securities Act (or any successor provision), as the same shall be amended from
time to time.

 

Sale:  the meaning set forth in Section 3.6(a) of
this Agreement.

 

SEC:  the U.S. Securities and Exchange Commission.

 

Securities
Act:  the U.S. Securities Act of
1933, as amended.

 

Securities
Exchange Act:  the U.S.
Securities Exchange Act of 1934, as amended.

 

Sell: the meaning
set forth in Section 3.6(a) of this Agreement.

 

Series A-1
Warrants:  the Series A-1
Warrants issued by the Company from time to time pursuant to this Agreement.

 

Series A-2
Warrants:  the Series A-2
Warrants issued by the Company from time to time pursuant to this Agreement.

 

7

 

Settlement
Date:  means, in respect of a Warrant
that is exercised hereunder, a reasonable time, not to exceed three Business
Days, immediately following the Exercise Date for such Warrant.

 

Stock
Consideration Ratio:  means, in
connection with a Mixed Consideration Merger, 1 — the Cash Consideration Ratio
for such Mixed Consideration Merger.

 

Stock
Dividend:  the meaning
set forth in Section 5.1.

 

Stock
Purchase Agreements:  the meaning set forth in the recitals to this
Agreement.

 

Supermajority Holders:  means at any time Holders of two-thirds or greater in number of the outstanding Warrants
not held by the Company or any of the Company’s Affiliates.

 

Underlying
Common Stock:  the shares
of Common Stock issuable or issued upon the exercise of the Warrants.

 

Voting
Securities:  means any
securities of the Company, surviving entity or parent, as applicable, having
power generally to vote in the election of directors of the Company, surviving
entity or parent, as applicable.

 

Warrant
Agent:  the meaning set forth in the
preamble to this Agreement.

 

Warrant
Certificates:  the meaning
set forth in the recitals to this Agreement.

 

Warrant Registrar:  the meaning set forth in Article 7.

 

Warrant Securities:   the meaning set forth in Section 3.6(a).

 

Warrants:  the Series A-1 Warrants and the Series A-2
Warrants.

 

2.                                      ORIGINAL ISSUE OF WARRANTS.

 

2.1           Form of Warrant Certificates.  The
Warrant Certificates shall be in registered form only and substantially in the
form attached hereto as Exhibit A-1, with respect to Series A-1
Warrants, and Exhibit A-2, with respect to Series A-2
Warrants, with such appropriate instructions, omissions, substitutions and other
variations as are required or permitted by this Agreement (but which do not
affect the rights, duties or responsibilities of the Warrant Agent) shall be dated the date on which countersigned
by the Warrant Agent and may have such legends and endorsements typed, stamped,
printed, lithographed or engraved thereon as required by the Certificate of
Incorporation or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed.

 

2.2           Execution and Delivery of Warrant
Certificates; Vesting.

 

(a)           Simultaneously with the execution of this
Agreement, Warrant Certificates evidencing such total
number of Warrants to be delivered to each Initial Investor
as set forth on 

 

8

 

Schedule A
shall be executed by the Company and delivered to the Warrant Agent for
countersignature, by manual or facsimile signature, and the Warrant Agent shall
thereupon countersign and deliver such Warrant Certificates to each Initial
Investor (or their designee(s) in accordance with the last sentence of
this Section 2.2(a)).  The
Warrant Certificates shall be executed on behalf of the Company by its
President or a Vice President, either manually or by facsimile signature
printed thereon.  Each Initial Investor,
in its sole discretion, may designate that some or all of its Warrants and
Warrant Certificates be issued in the name of, and delivered to, one or more of
the members of its Purchaser Group.

 

(b)           From time to time, the Warrant Agent shall countersign and deliver
Warrant Certificates in required denominations to Persons entitled thereto in
connection with any transfer or exchange permitted under this Agreement. The
Warrant Agent is hereby irrevocably (but subject to Article 9)
authorized to countersign and deliver Warrant Certificates as required by Section 2.2,
Section 3.4, Article 7, and Section 12.4 or
otherwise as provided herein. The Warrant Certificates shall be executed on
behalf of the Company by its President or a Vice President, either manually or
by facsimile signature printed thereon. The Warrant Certificates shall be
countersigned by the Warrant Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company whose signature shall have been placed upon any of the
Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent,
either manually or by facsimile signature printed thereon, and issued and
delivered with the same force and effect as though such Person had not ceased
to be such officer of the Company

 

(c)           No Warrant Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, and no Warrant evidenced
thereby may be exercised, unless such Warrant Certificate has been
countersigned by the manual or facsimile signature of the Warrant Agent.  Such signature by the Warrant Agent upon any
Warrant Certificate executed by the Company shall be conclusive evidence that
such Warrant Certificate has been duly issued under the terms of this
Agreement.

 

3.                                      EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.

 

3.1           Exercise Price.  Each
Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the
Holder thereof, subject to the provisions of this Agreement, to purchase,
except as provided in Section 3.3 hereof, one share of Common Stock
for each Warrant represented thereby, subject to all adjustments made on or
prior to the date of exercise thereof, at the applicable Exercise Price.

 

3.2           Exercise of Warrants.  The
Warrants shall be exercisable in whole or in part from time to time on any
Business Day beginning on the date hereof and ending on the Expiration Date, in the
manner provided for herein; provided, that solely with respect to the
exercise any time prior to the date that is 180 days prior to the Expiration
Date of any Warrant held at the time of exercise by a Fairholme Investor, such
Fairholme Investor must have delivered written notice of its intent to exercise
such Warrant to the Company 90 days prior to the Exercise Date of such Warrant
and no exercise of such Warrant shall be effective until such 90-day period has
lapsed.

 

9

 

3.3           Expiration of Warrants.  Any
unexercised Warrants shall expire and the rights of the Holders of such
Warrants to purchase Underlying Common Stock shall terminate at the close of
business on November       , 2017 (the “Expiration
Date”).

 

3.4           Method of Exercise; Settlement of Warrant.  In
order to exercise a Warrant, the Holder thereof must (i) surrender the
Warrant Certificate evidencing such Warrant to the Warrant Agent, with the form
on the reverse of or attached to the Warrant Certificate properly completed and
duly executed (the date of the surrender of such Warrant Certificate, the “Exercise
Date”), and (ii) with respect to Series A-1 Warrants for which
Net Share Settlement is not elected, deliver in full the aggregate Exercise
Price then in effect for the shares of Underlying Common Stock as to which a
Warrant Certificate is submitted for exercise, not later than the Settlement
Date as more fully set forth herein. 
Full Physical Settlement shall apply to each Series A-1 Warrant
unless the Holder elects for Net Share Settlement to apply upon exercise of
such Warrant.  Only Net Share Settlement
shall apply (and shall be automatically deemed to have been irrevocably
elected) upon exercise of each Series A-2 Warrant.  The
election of Net Share Settlement shall be made in the form on the reverse of or
attached to the Warrant Certificate for each Series A-1 Warrant.

 

(a)           If Full Physical Settlement is applicable with respect to the exercise of
a Warrant, then, for each Series A-1 Warrant exercised hereunder (i) prior
to 11:00 a.m., New York City time, on the Settlement Date for such
Warrant, the Holder shall pay the aggregate Exercise Price (determined as of
such Exercise Date) for the number of shares of Common Stock obtainable upon
exercise of such Warrant at such time by federal wire or other immediately
available funds payable to the order of the Company to the account maintained
by the Warrant Agent and notified to the Holder upon request of the Holder, and
(ii) on the Settlement Date, following receipt by the Warrant Agent of
such Exercise Price, the Company shall cause to be delivered to the Holder the
number of shares of Common Stock obtainable upon exercise of each Series A-1
Warrant at such time (the “Full Physical Share Amount”), together with
cash in respect of any fractional shares of Common Stock as provided in Section 3.4(f).

 

(b)           If Net Share Settlement is applicable with respect to the exercise of a
Warrant, then, for each Warrant exercised hereunder, on the Settlement Date for
such Warrant, the Company shall cause to be delivered to the Holder a number of
shares of Common Stock (which in no event will be less than zero) (the “Net
Share Amount”) equal to (i) the number of shares of Common Stock
issuable upon exercise of such Warrant at such time, multiplied by (ii) the
Closing Sale Price on the relevant Exercise Date, minus the Exercise Price
(determined as of such Exercise Date), divided by (iii) such Closing Sale
Price, together with cash in respect of any fractional shares of Common Stock
as provided in Section 3.4(f). 
The Warrant Agent shall not take any action under this Section unless
and until the Company has provided it with written instructions containing the
Net Share Amount.  The Warrant Agent
shall have no duty or obligation to investigate or confirm whether the Company’s
determination of the number of the Net Share Amount is accurate or correct.

 

(c)           Upon surrender of a Warrant Certificate to the Warrant Agent in
conformity with the foregoing provisions and, in the event of Full Physical
Settlement of a Series A-1 Warrant, receipt by the Warrant Agent of the
Exercise Price therefor, the Warrant Agent shall thereupon promptly notify the
Company, and the Company shall instruct its transfer agent 

 

10

 

to transfer to the Holder of such Warrant
Certificate appropriate evidence of ownership of any shares of Underlying
Common Stock or other securities or property to which the Holder is entitled,
registered or otherwise placed in, or payable to the order of, such name or
names as may be directed in writing by the Holder, and shall deliver such
evidence of ownership to the Person or Persons entitled to receive the same,
together with cash in respect of any fractional shares of Common Stock as
provided in Section 3.4(f), provided that if the Holder
shall direct that such securities be registered in a name other than that of
the Holder, such direction shall be tendered in conjunction with a signature
guarantee by a participant in a Medallion Signature Guarantee Program at a
guarantee level acceptable to the Company’s transfer agent, and any other
reasonable evidence of authority that may be required by the Warrant
Agent.  Upon surrender of a Warrant
Certificate to the Warrant Agent in conformity with subsection (a) above
and, in the event of Full Physical Settlement of a Series A-1 Warrant,
receipt by the Warrant Agent of the Exercise Price therefor, a Holder shall be
deemed to own and have all of the rights associated with any Underlying Common
Stock or other securities or property to which such Holder is entitled pursuant
to this Agreement upon the surrender of a Warrant Certificate in accordance with
this Agreement.

 

(d)           The Company acknowledges that the bank accounts maintained by the Warrant
Agent in connection with its performance under this Agreement shall be in the
Warrant Agent’s name and that the Warrant Agent may receive investment earnings
in connection with the investment at the Warrant Agent’s risk and for its
benefit of funds held in those accounts from time to time.  The Warrant Agent shall remit any payments
received in connection with the exercise of Warrants to the Company as soon as
practicable and in any event within three Business Days by federal wire or
other immediately available funds to an account selected by the Company and
notified in writing to the Warrant Agent.

 

(e)           If fewer than all the Warrants represented by a Warrant Certificate are
surrendered, such Warrant Certificate shall be surrendered and a new Warrant
Certificate of the same tenor and for the number of Warrants that were not
surrendered shall promptly be executed and delivered to the Warrant Agent by
the Company. The Warrant Agent shall promptly countersign, by either manual or
facsimile signature, the new Warrant Certificate, register it in such name or
names as may be directed in writing by the Holder and deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same.

 

(f)            The Company shall not be required to issue any fraction of a share of
Common Stock upon exercise of any Warrants; provided, that, if more than
one Warrant shall be exercised hereunder at one time by the same Holder, the number
of full shares of Common Stock which shall be issuable upon exercise thereof
shall be computed on the basis of all Warrants so exercised, and shall include
the aggregation of all fractional shares of Common Stock issuable upon exercise
of such Warrants.  If after giving effect
to the aggregation of all shares of Common Stock (and fractions thereof)
issuable upon exercise of Warrants by the same Holder at one time as set forth
in the previous sentence, any fraction of a share of Common Stock would, except
for the provisions of this Section 3.4(f), be issuable on the
exercise of any Warrant or Warrants, the Company shall pay the Holder cash in
lieu of such fractional share valued at the Closing Sale Price on the Exercise
Date.

 

11

 

3.5           Transferability of Warrants and Common Stock.  Except as any Holder
may otherwise agree in writing, any Warrants, all rights with respect thereto and
any shares of Underlying Common Stock may be sold, transferred or disposed of,
in whole or in part, without any requirement of obtaining the consent of the
Company to so sell, transfer or dispose of, provided that any such sale,
transfer or disposition shall be in accordance with the terms of this
Agreement, including, without limitation, Article 7 hereof.

 

3.6           Compliance with Law.  (a) To the extent the
Warrants or Common Stock issued upon exercise of the Warrants are “Registrable
Securities” under the Registration Rights Agreements (“Warrant Securities”), no Series A-1 Warrant may be exercised
using Full Physical Settlement (and the Warrant Agent shall be under no
obligation to process any such exercise) and no such Warrant Securities may be sold, transferred, hypothecated, pledged or
otherwise disposed of (any such sale, transfer or other disposition, a “Sale”, and the action of making any such sale, transfer
or other disposition, to “Sell”), except in compliance with applicable
Federal and state securities and other applicable laws and this Section 3.6.

 

(b)           A Holder may exercise its Warrants if it is an “accredited investor” or a
“qualified institutional buyer”, as defined in Regulation D and Rule 144A
under the Securities Act, respectively, and a Holder may Sell
its Warrant Securities to a transferee that is an “accredited investor” or a “qualified
institutional buyer”, as such terms are defined in Regulation D and Rule 144A
under the Securities Act, respectively, provided that each of the
following conditions is satisfied:

 

(i)            such Holder or transferee, as the case may be, provides certification
establishing to the reasonable satisfaction of the Company that it is an “accredited
investor”;

 

(ii)           such Holder or transferee represents to the Company in writing that it is
acquiring the applicable Warrant Securities for its own account and
that it is not acquiring such Warrant
Securities with a view to, or for offer or Sale in connection
with, any distribution thereof (within the meaning of the Securities Act) that
would be in violation of the securities laws of the United States or any
applicable state thereof, but subject, nevertheless, to the disposition of its
property being at all times within its control;

 

(iii)          such Holder or transferee agrees to be bound by the provisions of this Section 3.6
with respect to any exercise of the Warrants and any Sale
of the Warrant Securities; and

 

(iv)          such Holder or transferee represents and warrants in writing to the
Company that the Holder or transferee has sufficient knowledge and experience
in investment transactions of this type to evaluate the merits and risks of its
exercise or purchases, as applicable.

 

(c)           A Holder may exercise its Warrants and may Sell its Warrant
Securities in accordance with Regulation S under the Securities Act.

 

(d)           A Holder may exercise its Warrants and may Sell its Warrant
Securities if:

 

12

 

(i)            such Holder gives written notice to the Company of its intention to
exercise or effect such Sale, which notice shall describe the manner and circumstances of the
proposed transaction in reasonable detail;

 

(ii)           such notice includes a customary opinion from internal or external
counsel to the Holder to the effect that, in either case, such proposed
exercise or Sale may be effected without registration under the Securities Act or
under applicable blue sky laws; and

 

(iii)          such Holder or transferee complies with Sections 3.6(b)(ii), 3.6(b)(iii),
and 3.6(b)(iv).

 

(e)           subject to Section 12.5, each certificate representing
Warrant Securities shall bear the following legend:

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY
IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AGREEMENT DATED AS
OF NOVEMBER       , 2010 BETWEEN THE HOWARD
HUGHES CORPORATION (THE “COMPANY”), AND MELLON INVESTOR SERVICES LLC, AS
WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF
THE COMPANY.

 

(f)            [Intentionally omitted.]

 

(g)           the provisions of Section 3.6 shall not apply to, and any Holder may exercise its Warrants or may
Sell its Warrant Securities:

 

(i)            in a transaction that is registered under the Securities Act; and

 

(ii)           in a transaction pursuant
to Rule 144 of the Exchange Act; and

 

(iii)          in a transaction following receipt of a legal
opinion of counsel to a Holder that the applicable Warrant Securities are
eligible for resale by the Holder without volume limitations or other
limitations under Rule 144; and

 

(iv)          with respect to an exercise of a Warrant, in an
exercise using Net Share Settlement.

 

13

 

(h)           The Warrant Agent shall not take any action with respect to a Sale of Warrant
Securities under this Section 3.6 unless and until it has received
appropriate instructions from the Company and a certification of compliance
with these provisions from the Company.

 

4.                                      REGISTRATION RIGHTS.

 

4.1           Rule 144 Reporting.  With
a view to making available to the Holders the benefits of certain rules and
regulations of the SEC which may permit the sale of the Warrant Securities to
the public without registration, the Company agrees, so long as it is subject
to the periodic reporting requirements of the Securities Act, to use its
reasonable best efforts to:

 

(a)           make and keep public information available, as those terms are understood
and defined in Rule 144(c)(1) or any similar or analogous rule promulgated
under the Securities Act, at all times after the effective date of this
Agreement;

 

(b)           file with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act; and

 

(c)           so long as the Holders own any Warrant Securities, furnish to such
Holders forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 under the
Securities Act, and of the Exchange Act; and such other reports and documents
as any Initial Investor or Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing it to sell any such securities
without registration.

 

4.2           Obtaining Exchange Listing.  The
Company will file a listing application for listing on the exchange on which
the then outstanding Common Stock is listed with respect to the Underlying
Common Stock as soon as practicable after the date hereof.  The Company shall use reasonable best efforts
to list the Warrants, and maintain such listing, on such exchange or, if not
possible, another U.S. national securities exchange, in connection with any
proposed underwritten distribution of the Warrants that meets the applicable
listing criteria.  A copy of any opinion
of counsel accompanying a listing application by the Company with respect to
the Underlying Common Stock or Warrants shall be furnished to the Warrant
Agent, together with a letter to the effect that the Warrant Agent may rely on
the statements made in such opinion.

 

4.3           The Warrant Agent.  The Warrant Agent shall have no duties or
obligations under the Registration Rights Agreements and shall have no
duty to monitor or enforce the Company’s compliance with this Article 4
or the Registration Rights Agreements.

 

5.                                      ADJUSTMENTS AND OTHER RIGHTS.

 

5.1           Stock Dividend; Subdivision or Combination of
Common Stock.  If the Company at any time issues to holders
of the Common Stock a dividend payable solely in, or other distribution solely
of, Common Stock (a “Stock Dividend”), the Exercise Price in effect at
the close of business on the record date for such dividend or 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 divided by (y) the
sum of such number of shares and the total number of shares 

 

14

 

constituting such
dividend or other distribution.  If the
Company at any time subdivides or combines (by stock split, reverse stock
split, recapitalization or otherwise) the outstanding Common Stock into a
greater or smaller number of shares, the Exercise Price in effect immediately
prior to the time of effectiveness of such subdivision or combination shall be
adjusted at such time of effectiveness to the price determined by multiplying
such Exercise Price by the quotient of (x) the number of shares of Common
Stock outstanding immediately prior to such time of effectiveness divided by (y) the
number of shares of Common Stock outstanding at the time of effectiveness of
and after giving effect to such subdivision or combination.  In any such event referred to in this Section 5.1,
the number of shares of Common Stock issuable upon exercise of each Warrant as
in effect immediately prior to the Exercise Price adjustment contemplated by
the foregoing shall be adjusted immediately thereafter to the amount determined
by multiplying such number by the quotient of (x) the Exercise Price in
effect immediately prior to such Exercise Price adjustment divided by (y) the
Exercise Price determined in accordance with such Exercise Price adjustment.

 

5.2           Other Dividends and Distributions.  If at
any time or from time to time prior to the exercise of any Warrant the Company
shall fix a record date for the making of a dividend or other distribution
(other than (i) as contemplated by Section 5.5, (ii) a
Stock Dividend covered by Section 5.1 or (iii) a distribution
of rights or warrants covered by Section 5.3), to the holders of
its Common Stock (collectively, a “Distribution”) of:

 

(A)          any evidences of its indebtedness, any shares of its capital stock or any
other securities or property of any nature whatsoever (including cash); or

 

(B)           any options, warrants or other rights to subscribe for or purchase any of
the following: any evidences of its indebtedness, any shares of its capital
stock or any other securities or property of any nature whatsoever;

 

then,
in each such case, the Exercise Price in effect immediately prior to the close
of business on such record date  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 last trading day immediately preceding the first date on which the Common
Stock trades regular way on the principal national securities exchange on which
the Common Stock is listed or admitted to trading without the right to receive
such Distribution, minus the amount of cash and/or the Fair Market Value of the
securities, evidences of indebtedness, assets, rights or warrants to be so
distributed in respect of one share of Common Stock divided by (y) the
Fair Market Value of the Common Stock on the last trading day immediately
preceding the first date on which the Common Stock trades regular way on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading without the right to receive such Distribution; such
adjustment shall be made successively whenever such a record date is fixed. In
such event, the number of shares of Common Stock issuable upon the exercise of
each 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 sentence.  If the Distribution includes Common Stock as
well as other items of the sort referred to in Section 5.2(A) or
(B), then instead of 

 

15

 

adjusting
for the entire Distribution under this Section 5.2 the Common Stock
portion shall be treated as a Stock Dividend that triggers an adjustment to the
Exercise Price and number of shares of Common Stock obtainable upon exercise of each Warrant
under Section 5.1 and the other items in the Distribution shall trigger a
further adjustment to such adjusted Exercise Price and number of shares under
this Section 5.2.  In the event that such
Distribution is not so made, the Exercise Price and the number of shares of
Common Stock issuable upon exercise of each Warrant then in effect shall be
readjusted, effective as of the date when the Board determines not to
distribute such shares, evidences of indebtedness, assets, rights, cash or
warrants, as the case may be, to the Exercise Price that would then be in
effect and the number of Shares that would then be issuable upon exercise of
this Warrant if such record date had not been fixed.

 

5.3           Rights Offerings.  If at
any time the Company 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 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 each 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 sentence.  In case any rights or warrants referred to in
this Section 5.3 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 each 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 each Warrant if no
adjustment had been made on account of such expired rights or warrants.

 

5.4           Issuer Tender or Exchange Offers.  If
the Company or any subsidiary of the Company 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

 

16

 

of shares of Common Stock
issuable upon the exercise of each 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 5.4 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).

 

5.5           Reorganization, Reclassification,
Consolidation, Merger or Sale.  Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets or other transaction, which
in each case is effected in such a way that the shares of Common Stock are converted
into the right to receive (either directly or upon subsequent liquidation)
stock, securities, other equity interests or assets (including cash) with
respect to or in exchange for shares of Common Stock is referred to herein as “Organic
Change.”  Prior to the consummation
of any Organic Change, the Company shall make appropriate provision to ensure
that each of the Holders shall thereafter have the right to acquire and
receive, in lieu of or in addition to (as the case may be) the Common Stock
immediately theretofore acquirable and receivable upon the exercise of such
Holder’s Warrants, (x) in the case of a Mixed Consideration Merger, the
Public Stock issued in such Mixed Consideration Merger and (y) in the case
of any other Organic Change, such stock, securities, other equity interests or
assets, in each case as may be issued or payable in connection with the Organic
Change with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of such Holder’s
Warrants, for an aggregate Exercise Price per Warrant equal to (i) in the
case of a Mixed Consideration Merger, the aggregate Exercise Price per Warrant
as in effect immediately prior to such Mixed Consideration Merger times the
Stock Consideration Ratio and (ii) in the case of any other Organic
Change, the aggregate Exercise Price per Warrant as in effect immediately prior
to such Organic Change.  In any such
case, the Company shall make appropriate provision to insure that all of the
provisions of the Warrants shall thereafter be applicable to such stock,
securities, other equity interests or assets. 
The Company shall not effect any such consolidation, merger or sale of
all or substantially all of the Company’s assets where the Warrants will be
assumed by the successor entity, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument the
obligation to deliver to each such Holder upon exercise of any Warrant, such
stock, securities, equity interests or assets (including cash) as, in
accordance with Article 5, such Holder may be entitled to
acquire.  This Section 5.5
shall not apply to any Warrants or Common Stock redeemed or sold in connection
with any Organic Change pursuant to Section 6.1, Section 6.2(b),
Section 6.3(a)(i) and Section 6.3(b), provided
that, for the avoidance of doubt, the adjustments set forth in this Section 5.5
shall be applicable to any Warrants that remain outstanding pursuant to this
Agreement in connection with a Public Stock Merger or Mixed Consideration
Merger (including any adjustment applicable in connection with such Public
Stock Merger or Mixed Consideration Merger).

 

17

 

5.6           Other Adjustments.  The
Board shall make appropriate adjustments to the amount of cash or number of
shares of Common Stock, as the case may be, due upon exercise of the Warrants,
as may be necessary or appropriate to effectuate the intent of this Article 5
and to avoid unjust or inequitable results as determined in its reasonable good
faith judgment, in each case to account for any adjustment to the Exercise
Price and the number of shares purchasable on exercise of Warrants for the
relevant Warrant Certificate that becomes effective, or any event requiring an
adjustment to the Exercise Price and the number of shares purchasable on
exercise of Warrants for the relevant Warrant Certificate where the record date
or effective date (in the case of a subdivision or combination of the Common
Stock) of the event occurs, during the period beginning on, and including, the
Exercise Date and ending on, and including, the related Settlement Date.

 

5.7           Notice of Adjustment. 
Whenever the number of shares of Common Stock issuable upon the exercise
of each Warrant is adjusted, as herein provided, the Company shall cause the
Warrant Agent promptly to mail by first class mail, postage prepaid, to each
Holder notice of such adjustment or adjustments and shall promptly deliver to
the Warrant Agent a certificate of a firm of independent public accountants
selected by the Board (who may be the regular accountants employed by the
Company) setting forth the number of shares of Common Stock issuable upon the
exercise of each Warrant after such adjustment, setting forth a brief statement in reasonable detail of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. The Warrant
Agent shall be fully protected in relying on such certificate, and on any
adjustment contained therein, and shall not be deemed to have any knowledge of such
adjustment unless and until it shall have received such certificate, and shall
be under no duty or responsibility with respect to any such certificate, except
to exhibit the same from time to time, to any Holder desiring an inspection
thereof during reasonable business hours. The Warrant Agent shall not at any
time be under any duty or responsibility to any Holders to determine whether
any facts exist that may require any adjustment of the number of shares of
Common Stock or other stock or property issuable on exercise of the Warrants,
or with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed in making such adjustment or the validity
or value (or the kind or amount) of any shares of Common Stock or other stock
or property which may be issuable on exercise of the Warrants, or to
investigate or confirm whether the information contained in the above
referenced certificate complies with the terms of this Agreement or any other
document. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or security instruments or other securities or properties upon the
exercise of any Warrant.

 

6.                                      CHANGE OF CONTROL.

 

6.1           Redemption in Connection with a Change of
Control Event.  Upon the occurrence of a Change of Control
Event (other than a Public Stock Merger or Mixed Consideration Merger), at the
election of each Holder in its sole discretion by written notice to the Company
or the successor to the Company on or prior to the Exercise Date, the Company
shall pay to such Holder of outstanding Warrants as of the date of such Change
of Control Event, an amount in immediately available funds equal to the Cash
Redemption Value for such Warrants, not later than the date which is ten (10) Business
Days after such Change of Control Event and the Warrants shall thereafter be
extinguished. For purposes of this Section 6.1, the Exercise Date 

 

18

 

shall mean (a) if
the Company entered into a definitive agreement with respect to a Change of
Control Event and has provided to the Holders notice of the date on which the
Change in Control Event will become effective at least twenty (20) Business
Days prior to the effectiveness of such event, the tenth (10th) Business Day
prior to such event and (b) otherwise, the fifth (5th) Business Day
following the effectiveness of the Change of Control Event.  The “Cash Redemption Value” for any
Warrant will equal the fair value of the Warrant as of the date of such Change
of Control Event as determined by an Independent Financial Expert, by employing
a valuation based on a computation of the option value of each Warrant using the calculation
methods and making the assumptions set forth in Exhibit C.  The
Cash Redemption Value of the Warrants shall be due and payable within ten (10) Business
Days after the date of the applicable Change of Control Event.  If a
Holder of Warrants does not elect to receive the Cash Redemption Value for such
Holder’s Warrants as provided by this Section 6.1, such Warrants
will remain outstanding as adjusted pursuant to the provisions of Article 5
hereof.

 

6.2           Public Stock Merger.  (a) 
In connection with a Public Stock Merger, the Company may by written notice to
the Holders not less than ten (10) Business Days prior to the effective
date of such Public Stock Merger elect to have all the unexercised Warrants
remain outstanding after the Public Stock Merger, in which case the Warrants
will remain outstanding as adjusted pursuant to Section 5.5 and the
other provisions of Article 5 hereof.

 

(b)           In the case of any Public Stock Merger with respect to which the Company
does not make a timely election as contemplated by Section 6.2(a) above,
the Company shall pay within five (5) Business Days after the effective
date of such Public Stock Merger, to the Warrant Agent on behalf of each Holder
of outstanding Warrants as of the effective date of such Public Stock Merger,
an amount in cash in immediately available funds equal to the Cash Redemption
Value for such Warrants determined in accordance with Section 6.1
and the Warrants shall be terminated and extinguished.

 

6.3           Mixed
Consideration Merger.  (a)  In connection with a Mixed
Consideration Merger, the Company may by written notice to the Holders not less
than ten (10) Business Days prior to the effective date of such Mixed
Consideration Merger elect the following treatment with respect to each
outstanding Warrant: (i) pay to the Holder of such Warrant as of the date
of such Mixed Consideration Merger the product of the Cash Consideration Ratio
multiplied by the Cash Redemption Value for such Warrant, which amount shall be
paid in immediately available funds, not later than the date which is ten (10) Business
Days after such Mixed Consideration Merger and (ii) the Warrant shall
remain outstanding after the Mixed Consideration Merger, as further adjusted
pursuant to Section 5.5 and the other provisions of Article 5.  The portion of the Cash Redemption Value of
the Warrants payable pursuant to clause (i) of this Section 6.3(a) shall
be due and payable not later than the tenth (10th) Business Day after the date
of the Mixed Consideration Merger.

 

(b)           In the case of any Mixed Consideration Merger with respect to which the
Company does not make a timely election as contemplated by Section 6.3(a) above,
the Company shall pay, within ten (10) Business Days after the effective
date of such Mixed Consideration Merger, to the Warrant Agent on behalf of each
Holder of outstanding Warrants as of the effective date of such Mixed
Consideration Merger, an amount in cash in immediately 

 

19

 

available funds equal to the Cash Redemption Value
for such Warrants determined in accordance with Section 6.1 and the
Warrants shall be terminated and extinguished.

 

6.4           The Warrant Agent.  The
Warrant Agent shall have no duty or obligation to make any of the payments
required under this Article 6 unless and until it has been provided
with available cash.

 

7.                                      WARRANT TRANSFER BOOKS.

 

The
Warrant Certificates shall be issued in registered form only. The Company shall
cause to be kept at the office of the Warrant Agent designated for such purpose
a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein
provided  (the “Warrant Register”).

 

At
the option of the Holder, Warrant Certificates may be exchanged at such office,
and upon payment of the charges hereinafter provided.  Whenever any Warrant Certificates are so
surrendered for exchange, the Company shall execute, and the Warrant Agent
shall countersign, by manual or facsimile signature, and deliver, the Warrant
Certificates that the Holder making the exchange is entitled to receive.

 

All
Warrant Certificates issued upon any registration of transfer or exchange of
Warrant Certificates shall be the valid obligations of the Company, evidencing
the same obligations, and entitled to the same benefits under this Agreement,
as the Warrant Certificates surrendered for such registration of transfer or
exchange.

 

Every
Warrant Certificate surrendered for registration of transfer or exchange shall
(if so required by the Company or the Warrant Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in the form attached hereto as Exhibit B
or otherwise satisfactory to the Warrant Agent, properly completed and duly executed
by the Holder thereof or his attorney duly authorized in writing.  Until a Warrant Certificate
is transferred in the Warrant Register, the Company and the Warrant Agent may
treat the person in whose name the Warrant Certificate is registered as the
absolute owner thereof and of the Warrants represented thereby for all
purposes, notwithstanding any notice to the contrary.  Neither the Company nor the Warrant Agent
will be liable or responsible for any registration or transfer of any Warrants
that are registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary.

 

No
service charge shall be made to a Holder for any registration of transfer or
exchange of Warrant Certificates. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
Certificates.  The Warrant Agent shall
have no duty under this Section or any Section of this Agreement
requiring the payment of taxes and other governmental charges unless and until
it is satisfied that all such taxes and/or governmental charges have been
paid.  The Warrant Agent shall be deemed
satisfied if it receives a certificate from the Company stating that all required
taxes and governmental charges have been paid.

 

20

 

8.                                      WARRANT HOLDERS.

 

8.1           No Voting Rights.  Prior
to the exercise of Warrants and full payment of the Exercise Price thereof, or
in the event of Net Share Settlement, prior to the election of a Holder for Net
Share Settlement in accordance with the terms of this Agreement, no Holder of a
Warrant Certificate, in respect of such Warrants, shall be entitled to any
rights of a stockholder of the Company, including, without limitation, the
right to vote, to consent, to exercise any preemptive right (except as otherwise
agreed in writing by the Company, including the subscription rights set forth
in the Investment Agreement and the Stock Purchase Agreements), to receive any notice of meetings of
stockholders for the election of directors of the Company or any other matter
or to receive any notice of any proceedings of the Company.

 

8.2           Right of Action.  All rights
of action in respect of this Agreement are vested in the Holders of the
Warrants, and any Holder of Warrants, without the consent of the Warrant Agent
or the Holder of any other Warrant, may, on such Holder’s own behalf and for
such Holder’s own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company suitable to enforce, or otherwise in
respect of, such Holder’s right to exercise or exchange such Holder’s Warrants
in the manner provided in this Agreement or any other obligation of the Company
under this Agreement.

 

9.                                      WARRANT AGENT

 

9.1           Nature of Duties and Responsibilities Assumed.  The
Company hereby appoints the Warrant Agent to act as agent of the Company as expressly set forth in this Agreement. The Warrant Agent
hereby accepts such appointment as agent of the Company and agrees to perform
that agency upon the express terms and conditions herein set forth (and no implied
terms), by all of which
the Company and the Holders, by their acceptance thereof, shall be bound. The
Warrant Agent shall not by countersigning Warrant Certificates or by any other
act hereunder be deemed to make any representations as to validity or
authorization of the Warrants or the Warrant Certificates (except as to its
countersignature thereon) or of any securities or other property delivered upon
exercise or tender of any Warrant, or as to the accuracy of the computation of
the Exercise Price or the number or kind or amount of stock or other securities
or other property deliverable upon exercise of any Warrant, the independence of
any Independent Financial Expert or the correctness of the representations of
the Company made in such certificates that the Warrant Agent receives. The
Warrant Agent shall not have any duty to calculate or determine any adjustments
with respect to the Exercise Price and the Warrant Agent shall have no duty or
responsibility in determining the accuracy or correctness of such calculation.
The Warrant Agent shall not (a) be liable for any recital or statement of
fact contained herein or in the Warrant Certificates or for any action taken,
suffered or omitted to be taken by it in good faith on the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (b) be responsible for any failure on the part of the Company
to comply with any of its covenants and obligations contained in this Agreement
or in the Warrant Certificates, or (c) be liable for any act or omission
in connection with this Agreement except for its own gross negligence or willful misconduct  (as each is
determined by a final, non-appealable judgment of a court of competent
jurisdiction). The Warrant Agent is hereby authorized to accept instructions with respect
to the performance of its duties hereunder from the President, any Vice
President or the Secretary of the Company and to apply to any such officer for
instructions 

 

21

 

(which instructions will
be promptly given in writing when requested) and the Warrant Agent shall not be
liable and shall be indemnified and held harmless for any action taken or
suffered to be taken by it in accordance with the instructions of any such
officer, but in its discretion the Warrant Agent may in lieu thereof accept
other evidence of such or may require such further or additional evidence as it
may deem reasonable.

 

The
Warrant Agent may execute and exercise any of the rights and powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys, agents or employees, provided reasonable care has been exercised in
the selection and in the continued employment of any such attorney, agent or
employee.  The Warrant Agent shall not be
under any obligation or duty to institute, appear in or defend any action, suit
or legal proceeding in respect hereof, unless first indemnified to its
satisfaction, but this provision shall not affect the power of the Warrant
Agent to take such action as the Warrant Agent may consider proper, whether
with or without such indemnity. The Warrant Agent shall promptly notify the
Company in writing of any claim made or action, suit or proceeding instituted
against it arising out of or in connection with this Agreement.

 

The
Company will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent
in order to enable it to carry out or perform its duties under this Agreement.  The Warrant Agent shall be
protected and shall incur no liability for or in respect of any action taken or
thing suffered by it in reliance upon any notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the proper
parties.

 

The
Warrant Agent shall act solely as agent of the Company hereunder and does not
assume any obligation or relationship of agency or trust with any of the owners
or holders of the Warrants.  The Warrant
Agent shall not be liable except for the failure to perform such duties as are
specifically set forth herein, and no implied covenants or obligations shall be
read into this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express provisions hereof.
Notwithstanding anything in this Agreement to the contrary, Warrant Agent’s
aggregate liability under this Agreement with respect to, arising from, or
arising in connection with this Agreement, or from all services provided or
omitted to be provided under this Agreement, whether in contract, or in tort,
or otherwise, is limited to, and shall not exceed, the amounts paid hereunder
by the Company to Warrant Agent as fees and charges, but not including
reimbursable expenses.

 

The
Warrant Agent may consult with counsel satisfactory to it (which may be counsel
to the Company).

 

Whenever
in the performance of its duties under this Agreement the Warrant Agent deems
it necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter may be deemed to be conclusively proved and established by a certificate
signed by any authorized officer of the Company and delivered to the Warrant
Agent; and such certificate will be full authorization to the Warrant Agent for
any action taken, suffered or omitted by it under the provisions of this
Agreement in reliance upon such certificate. 
The Warrant Agent is hereby authorized and 

 

22

 

directed
to accept instructions with respect to the performance of its duties hereunder
from any one of the authorized officers of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it will
not be liable for any action taken, suffered or omitted to be taken by it in
good faith in accordance with instructions of any such officer.

 

The
Warrant Agent will not be under any duty or responsibility to insure compliance
with any applicable federal or state securities laws in connection with the
issuance, transfer or exchange of Warrant Certificates.

 

The
Warrant Agent shall have no duties, responsibilities or obligations as the
Warrant Agent except those which are expressly set forth herein, and in any
modification or amendment hereof to which the Warrant Agent has consented in
writing, and no duties, responsibilities or obligations shall be implied or
inferred.  Without limiting the
foregoing, unless otherwise expressly provided in this Agreement, the Warrant
Agent shall not be subject to, nor be required to comply with, or determine if
any person or entity has complied with, the Warrant Certificate or any other
agreement between or among the parties hereto, even though reference thereto
may be made in this Warrant Agreement, or to comply with any notice,
instruction, direction, request or other communication, paper or document other
than as expressly set forth in this Warrant Agreement.

 

In
the event the Warrant Agent believes any ambiguity or uncertainty exists
hereunder or in any notice, instruction, direction, request or other
communication, paper or document received by the Warrant Agent hereunder, the Warrant
Agent, may, in its sole discretion, refrain from taking any action, and shall
be fully protected and shall not be liable in any way to the Company or any
Holder or other person or entity for refraining from taking such action, unless
the Warrant Agent receives written instructions signed by the Company which
eliminates such ambiguity or uncertainty to the satisfaction of the Warrant
Agent.

 

9.2           Compensation and Reimbursement.  The
Company agrees to pay to the Warrant Agent from time to time compensation for
all services rendered by it hereunder in accordance with Schedule B
hereto and as the Company and the Warrant Agent may agree from time to time,
and to reimburse the Warrant Agent for reasonable expenses and disbursements
actually incurred in connection with the preparation, delivery,
negotiation, amendment, execution and administration of this Agreement
(including the reasonable compensation and out of pocket expenses of its counsel), and further agrees
to indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability, suit, action, proceeding, judgment, claim, settlement, cost or
expense incurred without gross negligence, willful misconduct or bad faith on
its part, (as each is determined by a final, non-appealable judgment of a court
of competent jurisdiction), for any action taken, suffered or omitted to be
taken by the Warrant Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder, indirectly or directly.  The Warrant Agent shall not be obligated to
expend or risk its own funds or to take any action which it believes would
expose it to expense or liability or to a risk of incurring expense or
liability, unless it has been furnished with assurances of repayment or
indemnity satisfactory to it.

 

23

 

9.3           Warrant Agent May Hold Company Securities.  The
Warrant Agent and any stockholder, director, officer or employee of the Warrant
Agent may buy, sell or deal in any of the Warrants or other securities of the
Company or its Affiliates or become pecuniarily interested in transactions in
which the Company or its Affiliates may be interested, or contract with or lend
money to the Company or its Affiliates or otherwise act as fully and freely as
though it were not the Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.

 

9.4           Resignation and Removal; Appointment of
Successor.  (a)  No resignation or removal of the
Warrant Agent and no appointment of a successor warrant agent shall become
effective until the acceptance of appointment by the successor warrant agent as
provided herein. The Warrant Agent may resign its duties and be discharged from
all further duties and liability hereunder (except liability arising as a
result of the Warrant Agent’s own gross negligence, willful misconduct or bad faith)
after giving written notice to the Company at least thirty (30) days prior to
the date such resignation will become effective. The Company shall, upon
written request of Holders of a majority of the outstanding Warrants, remove
the Warrant Agent upon written notice provided at least thirty (30) days prior
to the date of such removal, and the Warrant Agent shall thereupon in like
manner be discharged from all further duties and liabilities hereunder, except
as aforesaid. The Warrant Agent shall, at the Company’s expense, cause to be
mailed at the Company’s expense (by first-class mail, postage prepaid) to each
Holder of a Warrant at his last address as shown on the register of the Company
maintained by the Warrant Agent a copy of said notice of resignation or notice
of removal, as the case may be. Upon such resignation or removal, the Person
holding the greatest number of Warrants as of the date of such event shall
appoint in writing a new warrant agent reasonably acceptable to the Company. If
the Person holding the greatest number of Warrants as of the date of such event
shall fail to make such appointment within a period of twenty (20) days after
it has been notified in writing of such resignation by the resigning Warrant
Agent or after such removal, then the Company shall appoint a new warrant
agent. Any new warrant agent, whether appointed by a Holder or by the Company,
shall be a reputable bank, trust company or transfer agent doing business under
the laws of the United States or any state thereof, in good standing and having
a combined capital and surplus of not less than $50,000,000. The combined
capital and surplus of any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of
its condition published by such warrant agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a Federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new warrant agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning or removed Warrant Agent.
Not later than the effective date of any such appointment, the Company shall
give notice thereof to the resigning or removed Warrant Agent. Failure to give
any notice provided for in this Section 9.4(a), however, or any
defect therein, shall not affect the legality or validity of the resignation of
the Warrant Agent or the appointment of a new warrant agent, as the case may
be.

 

24

 

(b)           Any Person into which the Warrant Agent or any new warrant agent may be merged or
any Person resulting from any consolidation to which the Warrant Agent or any
Person resulting from any merger, conversion or consolidation to which the
Warrant Agent shall be a party or any Person to which the Warrant Agent shall
sell or otherwise transfer all or substantially all the assets and business of the
Warrant Agent or any new warrant agent
shall be a party, shall be a successor Warrant Agent under this Agreement
without any further act, provided that such Person
would be eligible for appointment as successor to the Warrant Agent under the
provisions of Section 9.4(a). 
Any such successor Warrant Agent shall promptly cause notice of
succession as Warrant Agent to be mailed (by first-class mail, postage prepaid)
to each Holder of a Warrant at such Holder’s last address as shown on the
register of the Company maintained by the Warrant Agent.

 

9.5           Damages.  No
party to this Agreement shall be liable to any other party for any
consequential, indirect, punitive, special or incidental damages under any provision
of this Agreement or for any consequential, indirect, punitive, special or incidental damages arising out of
any act or failure to act hereunder even if that party has been advised of or
has foreseen the possibility of such damages.

 

9.6           Force Majeure.  In no event shall the Warrant Agent be
responsible or liable for any failure or delay in the performance of its
obligations under this Agreement arising out of or caused by, directly or
indirectly, forces beyond its reasonable control, including without limitation
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software or hardware) services.

 

9.7           Survival.  The provisions of this Article 9
shall survive the termination of this Warrant Agreement and the resignation or
removal of the Warrant Agent

 

10.                               REPRESENTATIONS AND WARRANTIES.

 

10.1         Representations and Warranties of the Company.  The
Company hereby represents and warrants that the representations and
warranties of the Company set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6
of the Investment Agreement and Stock Purchase Agreements and any other
representations and warranties made by the Company in Article III of the
Investment Agreement and Stock Purchase Agreements, in each case, to the extent
relating to the authorization and issuance of the Warrants and the shares of
Common Stock issuable upon exercise thereof, are true and accurate in all
respects and not misleading in any respect.

 

11.                               COVENANTS.

 

11.1         Reservation of Common Stock for Issuance on
Exercise of Warrants.  The Company covenants that it will at all
times reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issue upon exercise of
Warrants as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of all Warrants issuable hereunder plus such
number of shares of Common Stock as shall then be issuable upon the exercise of
other outstanding warrants, options and rights (whether or not vested), the
settlement of any forward sale, swap or other derivative 

 

25

 

contract, and the
conversion of all outstanding convertible securities or other instruments
convertible into Common Stock or rights to acquire Common Stock. The Company
covenants that all shares of Common Stock which shall be issuable shall, upon
such issue, be duly and validly issued and fully paid and non-assessable.

 

11.2         Notice of Distributions.  At
any time when the Company declares any Distribution on its Common Stock, it
shall give notice to the Holders of all the then outstanding Warrants of any
such declaration not less than 15 days prior to the related record date for
payment of the Distribution so declared.

 

12.                               MISCELLANEOUS.

 

12.1         Money and Other Property Deposited with the
Warrant Agent.  Any moneys, securities or other property
which at any time shall be deposited by the Company or on its behalf with the
Warrant Agent pursuant to this Agreement shall be and are hereby assigned,
transferred and set over to the Warrant Agent in trust for the purpose for
which such moneys, securities or other property shall have been deposited; but
such moneys, securities or other property need not be segregated from other
funds, securities or other property except to the extent required by law. The
Warrant Agent shall distribute any money deposited with it for payment and
distribution to a Holder to an account designated by such Holder in such amount
as is appropriate. Any money deposited with the Warrant Agent for payment and
distribution to the Holders that remains unclaimed for two years after the date
the money was deposited with the Warrant Agent shall be paid to the Company.  The Warrant Agent shall not
be under any liability for interest on any monies at any time received by it
pursuant to any of the provisions of this Agreement.

 

12.2         Payment
of Taxes.  The Company shall pay all transfer, stamp and
other similar taxes that may be imposed in respect of the issuance or delivery
of the Warrants or in respect of the issuance or delivery by the Company of any
securities upon exercise of the Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any Warrants, certificate
for shares of Common Stock or other securities underlying the Warrants or
payment of cash to any Person other than the Holder of a Warrant Certificate
surrendered upon the exercise or purchase of a Warrant, and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required to
issue any security or to pay any cash until such tax or charge has been paid or
it has been established to the Warrant Agent’s and the Company’s satisfaction
that no such tax or other charge is due.  The Company and each Initial Investor agree that
neither the issuance nor exercise of the Warrants is governed by Section 83(a) of
the Code or otherwise a compensatory transaction, and the Company agrees that
it will not deduct any amount as compensation in connection with such issuance
or exercise for federal income tax purpose.

 

12.3         Surrender of Certificates.  Any
Warrant Certificate surrendered for exercise or purchase shall, if surrendered
to the Company, be delivered to the Warrant Agent, and all Warrant Certificates
surrendered or so delivered to the Warrant Agent shall be promptly cancelled by
the Warrant Agent and shall not be reissued by the Company. The Warrant Agent
shall destroy such cancelled Warrant Certificates.

 

26

 

12.4         Mutilated, Destroyed, Lost and Stolen Warrant
Certificates.  If (a) any mutilated Warrant Certificate
is surrendered to the Warrant Agent or (b) the Company and the Warrant
Agent receive evidence to their satisfaction of the destruction, loss or theft
of any Warrant Certificate, and there is delivered to the Company and the
Warrant Agent such appropriate affidavit of loss, applicable processing fee and
a corporate bond of indemnity as may be required by them and satisfactory to
them to save each of them
harmless, then, in the absence of notice to the Company or the Warrant Agent
that such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute and upon its written request the Warrant Agent shall
countersign and deliver, in exchange for any such mutilated Warrant Certificate
or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new
Warrant Certificate of like tenor and for a like aggregate number of Warrants.

 

Upon
the issuance of any new Warrant Certificate under this Section 12.4,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and other
expenses (including the reasonable fees and expenses of the Warrant Agent and
of counsel to the Company) in connection therewith.

 

Every
new Warrant Certificate executed and delivered pursuant to this Section 12.4
in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute
an original contractual obligation of the Company, whether or not the
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates of like tenor
properly completed and duly executed and delivered hereunder.

 

The
provisions of this Section 12.4 are exclusive and shall preclude
(to the extent lawful) all other rights or remedies with respect to the
replacement of mutilated, destroyed lost or stolen Warrant Certificates.

 

12.5         Removal of Legends. 
Certificates evidencing the Warrants and shares of Common Stock issued
upon exercise of the Warrants shall not be required to contain any legend
referenced in Sections 2.1 or 3.6(e) (A) while a registration
statement covering the resale of the Warrants or the shares of Common Stock is
effective under the Securities Act, or (B) following any sale of any such
Warrants or shares of Common Stock pursuant to Rule 144, or (C) following
receipt of a legal opinion of counsel to Holder that the remaining Warrants or
shares of Common Stock held by Holder are eligible for resale without volume
limitations or limitations on manner of sale under Rule 144.  In addition, the Company and the Warrant
Agent will agree to the removal of all legends with respect to Warrants or
shares of Common Stock deposited with DTC from time to time in anticipation of
sale in accordance with the volume limitations and other limitations under Rule 144,
subject to the Company’s approval of appropriate procedures, such approval not
to be unreasonably withheld, conditioned or delayed.

 

Following
the time at which any such legend is no longer required (as provided above) for
certain Warrants or shares of Common Stock, the Company shall promptly,
following the delivery by Holder to the Warrant Agent of a legended certificate
representing such Warrants or shares of Common Stock, as applicable, deliver or
cause to be delivered to the Holder a certificate representing such Warrants or
shares of Common Stock that is free from such legend.  In the event any of the legends referenced in
Sections 2.1 or 3.6(e) are removed from any of the

 

27

 

Warrants
or shares of Common Stock, and thereafter the effectiveness of a registration
statement covering such Warrants or shares of Common Stock is suspended or the
Company determines that a supplement or amendment thereto is required by
applicable securities Laws, then the Company may require that such legends, as
applicable, be placed on any such applicable Warrants or shares of Common Stock
that cannot then be sold pursuant to an effective registration statement or
under Rule 144 and Holder shall cooperate in the replacement of such
legend.  Such legend shall thereafter be
removed when such Warrants or shares of Common Stock may again be sold pursuant
to an effective registration statement or under Rule 144.

 

12.6         Notices.  (a) 
Any notice, demand or delivery authorized by this Agreement shall be
sufficiently given or made when mailed if sent by first-class mail, postage
prepaid, addressed to any Holder of a Warrant at such Holder’s address shown on
the register of the Company maintained by the Warrant Agent and to the Company
or the Warrant Agent as follows:

 

If
to the Company, to:

 

The
Howard Hughes Corporation

13355
Noel Road, Suite 950

Dallas,
TX 75240

Attention:        General
Counsel

Facsimile: (214) 741-3021

 

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

 

Jones
Day

2727 N. Harwood St.

Dallas, Texas 75201

Attention:        James E. O’Bannon

Facsimile:
(214) 969-5100

 

If to the Warrant Agent, to:

 

Mellon Investor Services LLC

200 W. Monroe Street, Suite 1590

Chicago, IL 60606

Attention: Relationship Manager

Facsimile: (312) 325-7610

 

with a copy to:

 

Mellon Investor Services LLC

Newport Office Center VII

480 Washington Blvd.

Jersey City, NJ 07310

Attention: 
General Counsel

Facsimile: 201-680-4610

 

28

 

or
such other address as shall have been furnished to the party giving or making
such notice, demand or delivery.

 

(b)           Any notice required to be given by the Company to the Holders pursuant to
this Agreement, shall be made by mailing by registered mail, return receipt
requested, to the Holders at their respective addresses shown on the register
of the Company maintained by the Warrant Agent. The Company hereby irrevocably
authorizes the Warrant Agent, in the name and at the expense of the Company, to
mail any such notice upon receipt thereof from the Company. Any notice that is
mailed in the manner herein provided shall be conclusively presumed to have
been duly given when mailed, whether or not the Holder receives the notice.

 

12.7         Applicable Law; Jurisdiction.  This
Agreement and each Warrant issued hereunder and all rights arising hereunder
shall be governed by the internal laws of the State of New York.  In connection with any action, suit or
proceeding arising out of or relating to this Agreement or the Warrants, the parties
hereto and each Holder irrevocably submit to (i) the exclusive
jurisdiction of the United States Bankruptcy Court for the Southern District of
New York until the chapter 11 cases of General Growth Properties, Inc. and
its Affiliates are closed, and (ii) the nonexclusive jurisdiction of any
federal or state court located within the County of New York, State of New
York.

 

12.8         Persons Benefiting.  This
Agreement shall be binding upon and inure to the benefit of the Company and the
Warrant Agent, and their respective successors, assigns, beneficiaries,
executors and administrators, and the Holders from time to time of the
Warrants.  The Holders of the Warrants are
express third party beneficiaries of this Agreement and each such Holder of
Warrants is hereby conferred the benefits, rights and remedies under or by
reason of the provisions of this Agreement as if a signatory hereto.  Nothing in this Agreement is intended or shall be
construed to confer upon any Person, other than the Company, the Warrant Agent
and the Holders of the Warrants, any right, remedy or claim under or by reason
of this Agreement or any part hereof.

 

12.9         Counterparts.  This
Agreement may be executed in any number of counterparts, each or which shall be
deemed an original, but all of which together constitute one and the same
instrument.

 

12.10       Amendments.  (a) 
The Company and the Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any Holder in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
other provisions with regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable and, in each
case, which shall not adversely affect the interests of any Holder.

 

(b)           In addition to the foregoing, with the consent of the Supermajority
Holders, the Company and the Warrant Agent may modify this Agreement for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Warrant Agreement or modifying in any manner the
rights of the Holders hereunder; provided, however, that no
modification effecting the terms upon which the Warrants are exercisable, 

 

29

 

redeemable or transferable, or reduction in the
percentage required for consent to modification of this Agreement, may be made
without the consent of each Holder affected thereby.

 

12.11       Headings.  The
descriptive headings of the several Articles and Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.

 

12.12       Entire Agreement.  This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof. In the event of any conflict, discrepancy, or
ambiguity between the terms and conditions contained in this Agreement and any
schedules or attachments hereto, the terms and conditions contained in this
Agreement shall take precedence.

 

12.13       Specific Performance. 
The parties shall
be entitled to specific performance of the terms of this Agreement.  Each of the parties hereto hereby waives (i) any
defenses in any action for specific performance, including the defense that a
remedy at law would be adequate and (ii) any requirement under any Law to
post a bond or other security as a prerequisite to obtaining equitable relief.

 

[signature page follows]

 

30

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed, as of the day and year first above
written.

 

 

	
   

  	
  THE
  HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Rael Diamond

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Rael
  Diamond

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Interim
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC,

  
	
   

  	
  as
  Warrant Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas Blatchford

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas
  Blatchford

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

[SIGNATURE
PAGE TO THHC WARRANT AGREEMENT]

 

 

EXHIBIT A-1

 

FORM OF FACE OF WARRANT CERTIFICATE

 

THESE
WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE
OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH
ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS
OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER
        , 2010 BETWEEN THE HOWARD
HUGHES CORPORATION (THE “COMPANY”) AND MELLON INVESTOR SERVICES LLC,
WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT IS AVAILABLE AT THE OFFICES OF
THE COMPANY.

 

WARRANTS TO PURCHASE COMMON STOCK

OF THE HOWARD HUGHES CORPORATION

 

	
  No.
                                    

  	
  Certificate
  for
                                    
  Series A-1 Warrants

  

 

This
certifies that [HOLDER], or registered assigns, is the registered holder
of the number of Series A-1 Warrants set forth above. Each Series A-1
Warrant entitles the holder thereof (a “Holder”), subject to the
provisions contained herein and in the Warrant Agreement referred to below, to
purchase from THE HOWARD HUGHES CORPORATION (the “Company”) a number of shares of the Company’s common stock, par value $0.01 (“Common
Stock”), equal to $50.00  divided by the Exercise
Price (as defined in the Warrant Agreement referred to below), for a price per
share of Common Stock equal to the Exercise Price.

 

This
Warrant Certificate is issued under and in accordance with the Warrant
Agreement, dated as of November         ,
2010 (the “Warrant Agreement”), between the Company and Mellon Investor
Services LLC, a New Jersey limited liability company, as warrant agent (the “Warrant
Agent”, which term includes any successor Warrant Agent under the Warrant
Agreement), and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Warrant Agent and the Holders of the Warrants.

 

This
Warrant Certificate shall terminate and be void as of the close of business on November         ,
2017 (the “Expiration Date”).

 

As
provided in the Warrant Agreement and subject to the terms and conditions
therein set forth, the Series A-1 Warrants shall be exercisable from time
to time on any Business Day and ending on the Expiration Date.

 

 

The
Exercise Price and the number of shares of Common Stock issuable upon the
exercise of each Series A-1 Warrant are subject to adjustment as provided
in the Warrant Agreement.

 

All
shares of Common Stock issuable by the Company upon the exercise of Series A-1
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.

 

In
order to exercise a Series A-1 Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the Warrant
Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein specified,
together with any required payment in full of the Exercise Price (unless the
Holder shall have elected Net Share Settlement, as such term is defined in the
Warrant Agreement) then in effect for the shares(s) of Underlying Common
Stock as to which the Series A-1 Warrant(s) represented by this
Warrant Certificate are submitted for exercise, all subject to the terms and
conditions hereof and of the Warrant Agreement.

 

The
Company shall pay all transfer, stamp and other similar taxes that may be
imposed in respect of the issuance or delivery of the Series A-1 Warrants
or in respect of the issuance or delivery by the Company of any securities upon
exercise of the Series A-1 Warrants with respect thereto. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any Series A-1
Warrants, certificate for shares of Common Stock or other securities underlying
the Series A-1 Warrants or payment of cash in each case to any Person
other than the Holder of a Warrant Certificate surrendered upon the exercise or
purchase of a Series A-1 Warrant, and in case of such transfer or payment,
the Warrant Agent and the Company shall not be required to issue any security
or to pay any cash until such tax or charge has been paid or it has been
established to the Warrant Agent’s and the Company’s satisfaction that no such
tax or other charge is due.

 

This
Warrant Certificate and all rights hereunder are transferable by the registered
holder hereof, subject to the terms of the Warrant Agreement, in whole or in
part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent maintained
for such purpose in the City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Warrant Agent duly executed by, the Holder hereof or his attorney duly
authorized in writing, with signature guaranteed as specified in the attached Form of
Assignment. Upon any partial transfer, the Company will issue and deliver to
such holder a new Warrant Certificate or Certificates with respect to any
portion not so transferred.

 

No
service charge shall be made to a Holder for any registration of transfer or
exchange of the Warrant Certificates, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

 

Subject
to compliance with any restrictions on transfer under applicable law and this
Warrant Agreement, each taker and holder of this Warrant Certificate by taking
or holding the same, consents and agrees that this Warrant Certificate when
duly endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the holder hereof may be treated by
the Company, the Warrant Agent and all other Persons dealing 

 

2

 

with
this Warrant Certificate as the absolute owner hereof for any purpose and as
the Person entitled to exercise the rights represented hereby, or to the
transfer hereof on the register of the Company maintained by the Warrant Agent,
any notice to the contrary notwithstanding, but until such transfer on such
register, the Company and the Warrant Agent may treat the registered Holder
hereof as the owner for all purposes.

 

This
Warrant Certificate and the Warrant Agreement are subject to amendment as
provided in the Warrant Agreement.

 

All
terms used in this Warrant Certificate that are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

 

Copies
of the Warrant Agreement are on file at the office of the Company and the
Warrant Agent and may be obtained by writing to the Company or the Warrant
Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe
Street, Suite 1590, Chicago, IL 60606.

 

This
Warrant Certificate shall not be valid for any purpose until it shall have been
countersigned by the Warrant Agent.

 

	
  Dated:
  November         , 2010

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name
  and Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name
  and Title:

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
  Mellon
  Investor Services LLC, as Warrant Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  
					

 

3

 

EXHIBIT A

 

FORM OF REVERSE OF SERIES A-1 WARRANT CERTIFICATE

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:                                             

 

The
undersigned irrevocably exercises
                                            
of the Series A-1 Warrants for the purchase of one share (subject to
adjustment in accordance with the Warrant Agreement) of common stock, par value
$0.01, of The Howard Hughes Corporation for each Series A-1 Warrant
represented by the Warrant Certificate and herewith (i) elects for Net
Share Settlement of such Series A-1 Warrants by marking X in the space
that follows         , or (ii) makes
payment of
$                              
(such payment being by means permitted by the Warrant Agreement and the within
Warrant Certificate), in each case at the Exercise Price and on the terms and
conditions specified in the within Warrant Certificate and the Warrant
Agreement therein referred to, and herewith surrenders this Warrant Certificate
and all right, title and interest therein to
                                                
and directs that the shares of Common Stock deliverable upon the exercise of such
Series A-1 Warrants be registered in the name and delivered at the address
specified below.

 

	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  *

  
	
   

  	
   

  	
  (Signature
  of Owner)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City)

  	
  (State)
  (Zip Code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guaranteed by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

*                                         The signature
must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any
change whatever, and must be guaranteed by a participant in a Medallion
Signature Guarantee Program at a guarantee level acceptable to the Company’s
transfer agent.

 

 

Securities
to be issued to:

 

 

Please
insert social security or identifying number:

 

 

Name:

 

 

Street
Address:

 

 

City,
State and Zip Code:

 

 

Any
unexercised Series A-1 Warrants evidenced by the within Warrant
Certificate to be issued to:

 

 

Please
insert social security or identifying number:

 

 

Name:

 

 

Street
Address:

 

 

City,
State and Zip Code:

 

2

 

EXHIBIT A-2

 

FORM OF FACE OF WARRANT CERTIFICATE

 

THESE
WARRANTS AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS AND SUCH SECURITIES MAY BE
OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH
ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS
OF THE WARRANT AGREEMENT DATED AS OF NOVEMBER         , 2010 BETWEEN THE HOWARD HUGHES CORPORATION (THE “COMPANY”) AND
MELLON INVESTOR SERVICES LLC, WARRANT AGENT. A COPY OF SUCH WARRANT AGREEMENT
IS AVAILABLE AT THE OFFICES OF THE COMPANY.

 

WARRANTS TO PURCHASE COMMON STOCK

OF THE HOWARD HUGHES CORPORATION

 

	
  No.
                                    

  	
  Certificate
  for

  	
  Series A-2 Warrants

  

 

This
certifies that [HOLDER], or registered assigns, is the registered holder
of the number of Series A-2 Warrants set forth above. Each Series A-2
Warrant entitles the holder thereof (a “Holder”), subject to the
provisions contained herein and in the Warrant Agreement referred to below, to
purchase from THE HOWARD HUGHES CORPORATION (the “Company”) by means of
Net Share Settlement (as defined in the Warrant Agreement defined below) a number of shares of the Company’s common stock, par value $0.01 (“Common
Stock”), equal to $50.00  divided by the Exercise
Price (as defined in the Warrant Agreement referred to below), for a price per
share of Common Stock equal to the Exercise Price.

 

This
Warrant Certificate is issued under and in accordance with the Warrant
Agreement, dated as of November         ,
2010 (the “Warrant Agreement”), between the Company and Mellon Investor
Services LLC, a New Jersey limited liability company, as warrant agent (the “Warrant
Agent”, which term includes any successor Warrant Agent under the Warrant
Agreement), and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Warrant Agent and the Holders of the Warrants.

 

This
Warrant Certificate shall terminate and be void as of the close of business on November         ,
2017 (the “Expiration Date”).

 

As
provided in the Warrant Agreement and subject to the terms and conditions
therein set forth, the Series A-2 Warrants shall be exercisable from time
to time on any Business Day and ending on the Expiration Date.

 

3

 

The
Exercise Price and the number of shares of Common Stock issuable upon the
exercise of each Series A-2 Warrant are subject to adjustment as provided
in the Warrant Agreement.

 

All
shares of Common Stock issuable by the Company upon the exercise of Series A-2
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.

 

In
order to exercise a Series A-2 Warrant, the registered holder hereof must
surrender this Warrant Certificate at the corporate trust office of the Warrant
Agent, with the Exercise Subscription Form on the reverse hereof duly
executed by the Holder hereof, with signature guaranteed as therein specified,
all subject to the terms and conditions hereof and of the Warrant Agreement.

 

The
Company shall pay all transfer, stamp and other similar taxes that may be
imposed in respect of the issuance or delivery of the Series A-2 Warrants
or in respect of the issuance or delivery by the Company of any securities upon
exercise of the Series A-2 Warrants with respect thereto. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any Series A-2 Warrants,
certificate for shares of Common Stock or other securities underlying the Series A-2
Warrants or payment of cash in each case to any Person other than the Holder of
a Warrant Certificate surrendered upon the exercise or purchase of a Series A-2
Warrant, and in case of such transfer or payment, the Warrant Agent and the
Company shall not be required to issue any security or to pay any cash until
such tax or charge has been paid or it has been established to the Warrant
Agent’s and the Company’s satisfaction that no such tax or other charge is due.

 

This
Warrant Certificate and all rights hereunder are transferable by the registered
holder hereof, subject to the terms of the Warrant Agreement, in whole or in
part, on the register of the Company, upon surrender of this Warrant
Certificate for registration of transfer at the office of the Warrant Agent
maintained for such purpose in the City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed by, the Holder hereof or his
attorney duly authorized in writing, with signature guaranteed as specified in
the attached Form of Assignment. Upon any partial transfer, the Company
will issue and deliver to such holder a new Warrant Certificate or Certificates
with respect to any portion not so transferred.

 

No
service charge shall be made to a Holder for any registration of transfer or
exchange of the Warrant Certificates, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

 

Subject
to compliance with any restrictions on transfer under applicable law and this
Warrant Agreement, each taker and holder of this Warrant Certificate by taking
or holding the same, consents and agrees that this Warrant Certificate when
duly endorsed in blank shall be deemed negotiable and that when this Warrant
Certificate shall have been so endorsed, the holder hereof may be treated by
the Company, the Warrant Agent and all other Persons dealing with this Warrant
Certificate as the absolute owner hereof for any purpose and as the Person
entitled to exercise the rights represented hereby, or to the transfer hereof
on the register of the Company maintained by the Warrant Agent, any notice to
the contrary notwithstanding, but until 

 

4

 

such
transfer on such register, the Company and the Warrant Agent may treat the
registered Holder hereof as the owner for all purposes.

 

This
Warrant Certificate and the Warrant Agreement are subject to amendment as
provided in the Warrant Agreement.

 

All
terms used in this Warrant Certificate that are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

 

Copies
of the Warrant Agreement are on file at the office of the Company and the
Warrant Agent and may be obtained by writing to the Company or the Warrant
Agent at the following address: Mellon Investor Services LLC, 200 W. Monroe
Street, Suite 1590, Chicago, IL 60606.

 

This
Warrant Certificate shall not be valid for any purpose until it shall have been
countersigned by the Warrant Agent.

 

	
  Dated:
  November         , 2010

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Countersigned:

  	
   

  
	
   

  	
   

  
	
  Mellon
  Investor Services LLC, as Warrant Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  	
   

  

 

5

 

EXHIBIT A

 

FORM OF REVERSE OF SERIES A-2 WARRANT CERTIFICATE

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:                                             

 

The
undersigned irrevocably exercises
                                            
of the Series A-2 Warrants for the purchase of one share (subject to
adjustment in accordance with the Warrant Agreement) of common stock, par value
$0.01, of The Howard Hughes Corporation for each Series A-2 Warrant
represented by the Warrant Certificate by means of Net Share Settlement of such
Series A-2 Warrants, at the Exercise Price and on the terms and conditions
specified in the within Warrant Certificate and the Warrant Agreement therein
referred to, and herewith surrenders this Warrant Certificate and all right,
title and interest therein to
                                                
and directs that the shares of Common Stock deliverable upon the exercise of
such Series A-2 Warrants be registered in the name and delivered at the
address specified below.

 

	
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  *

  
	
   

  	
   

  	
  (Signature
  of Owner)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City)

  	
  (State) (Zip Code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guaranteed by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

*                                         The signature
must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any
change whatever, and must be guaranteed by a participant in a Medallion
Signature Guarantee Program at a guarantee level acceptable to the Company’s
transfer agent.

 

1

 

Securities
to be issued to:

 

 

Please
insert social security or identifying number:

 

 

Name:

 

 

Street
Address:

 

 

City,
State and Zip Code:

 

 

Any
unexercised Series A-2 Warrants evidenced by the within Warrant
Certificate to be issued to:

 

 

Please
insert social security or identifying number:

 

 

Name:

 

 

Street
Address:

 

 

City,
State and Zip Code:

 

2

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED the undersigned registered
holder of the within Warrant Certificate hereby sells, assigns, and transfers
unto the Assignee(s) named below (including the undersigned with respect
to any Warrants constituting a part of the Warrants evidenced by the within
Warrant Certificate not being assigned hereby) all of the right of the
undersigned under the within Warrant Certificate, with respect to the number of
Warrants set forth below:

 

	
  Names of Assignees

  	
   

  	
  Address

  	
   

  	
  Social Security or

  other Identifying

  Number of

  Assignee(s)

  	
   

  	
  Series and

  Number of

  Warrants

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

and
does hereby irrevocably constitute and appoint
                            
the undersigned’s attorney to make such transfer on the books of
                        
maintained for that purpose, with full power of substitution in the premises.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  *

  
	
   

  	
   

  	
  (Signature
  of Owner)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Street
  Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City)

  	
  (State) (Zip Code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature
  Guaranteed by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

*                                         The signature
must correspond with the name as written upon the face of the within Warrant
Certificate in every particular, without alteration or enlargement or any
change whatever, and must be guaranteed by a participant in a Medallion
Signature Guarantee Program at a guarantee level acceptable to the Company’s
transfer agent.

 

2

 

EXHIBIT C

 

Option Pricing Assumptions / Methodology

 

For
the purpose of this Exhibit C:

 

“Acquiror” means (A) the third party that has entered
into definitive document for a transaction, or (B) the offeror in the
event of a tender or exchange offer.

 

“Reference Date” means the date of consummation of a Change
of Control Event.

 

The Cash Redemption Value of the Warrants shall be
determined using the Black-Scholes Model as applied to third party options (i.e., options issued by a third party that is not affiliated
with the issuer of the underlying stock). 
For purposes of the model, the following terms shall have the
respective meanings set forth below:

 

	
  Underlying Security Price:

  	
   

  	
  ·      In the event of a merger or other acquisition,

   

  (A)   that is an “all cash” deal, the cash per share of
  Common Stock to be paid to the Company’s stockholders in the transaction;

   

  (B)   that is an “all Public Stock” deal,

   

  (1) that is a “fixed exchange ratio” transaction, a “fixed
  value” transaction where as a result of a cap, floor, collar or similar
  mechanism the number of Acquiror’s shares to be paid per share of Common
  Stock to the Company’s stockholders in the transaction is greater or less
  than it would otherwise have been or a transaction that is not otherwise
  described in this clause (B)(1) or clause (B)(2) below, the product
  of (i) the Fair Market Value of the Acquiror’s common stock on the day
  preceding the date of the Preliminary Change of Control Event and (ii) the
  number of Acquiror’s shares per share of Common Stock to be paid to the
  Company’s stockholders in the transaction (provided that the
  Independent Financial Expert shall make appropriate adjustments to the Fair
  Market Value of the Acquiror’s common stock referred to above as may be
  necessary or appropriate to effectuate the intent of this Exhibit C and
  to avoid unjust or inequitable results as determined in its reasonable good
  faith judgment, in each case to account for any event impacting the
  Acquiror’s common stock that is analogous to any of the events described in
  Article V of this Agreement if the record date, ex date or effective
  date of that event occurs during or after the 10 trading

  

 

 

	
   

  	
   

  	
  day
  period over which such Fair Market Value is measured) and

   

  (2) that
  is a “fixed value” transaction not covered by clause (B)(1) above, the
  value per share of Common Stock to be paid to the Company’s stockholders in
  the transaction;

   

  (C)   that is a transaction contemplating various forms
  of consideration for each share of Common Stock,

   

  (1) the cash portion, if any, shall be valued as described in
  clause (A) above,

   

  (2) the Public Stock portion shall be valued as described in
  clause (B) above and

   

  (3) any other forms of consideration shall be valued by the
  Independent Financial Expert valuing the Warrants, using one or more
  valuation methods that the Independent Financial Expert in its best
  professional judgment determines to be most appropriate, assuming such
  consideration (if securities) is fully distributed and is to be sold in an
  arm’s-length transaction and there was no compulsion on the part of any party
  to such sale to buy or sell and taking into account all relevant factors and without
  applying any discounts to such consideration.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·      In the event of all other Change of Control Event
  events, the Fair Market Value per share of the Common Stock on the last
  trading day preceding the date of the Change of Control Event.

  
	
   

  	
   

  	
   

  
	
  Exercise Price:

  	
   

  	
  The
  Exercise Price as adjusted and then in effect for the Warrant.

  
	
   

  	
   

  	
   

  
	
  Dividend Rate:

  	
   

  	
  0
  (which reflects the fact that the antidilution adjustment provisions cover
  all dividends).

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  The
  annual yield as of the Reference Date (expressed on a semi-annual basis in
  the manner in which U.S. treasury notes are ordinarily quoted) of the U.S.
  treasury note maturing approximately at the Expiration Date as selected by
  the Independent Financial Expert.

  
	
   

  	
   

  	
   

  
	
  Put or Call:

  	
   

  	
  Call

  

 

 

	
  Time to Expiration

  	
   

  	
  The number of days from the Expiration Date (as defined
  in Section 3.3) to the Reference Date divided by 365.

  
	
   

  	
   

  	
   

  
	
  Settlement Date:

  	
   

  	
  The
  scheduled date of payment of the Cash Redemption Value.

  
	
   

  	
   

  	
   

  
	
  Volatility:

  	
   

  	
  For
  calculation of Cash Redemption Value in connection with a Change of Control
  Event with respect to the Warrants, the lesser of (A) 30% or (B) the
  volatility of the Company as determined by an Independent Financial Expert
  engaged to make the calculation, who shall be instructed to assume for
  purposes of the determination of volatility referred to in this clause (B) that
  the Change of Control Event had not occurred; provided, however,
  that if the Warrants are adjusted as a result of a Change of Control Event,
  volatility for purposes of calculating Cash Redemption Value in connection
  with succeeding Change of Control Events with respect to such warrants (or
  their successors) shall be as determined by an Independent Financial Expert
  engaged to make the calculation, who shall be instructed to assume for
  purposes of the calculation that such succeeding Change of Control Event had
  not occurred.

  

 

Such
valuation of the Warrant shall not be discounted in any way.

 

For
illustrative purposes only, an example Black-Scholes model calculation with
respect to a hypothetical warrant appears on the following page.

 

 

Illustrative
Example

 

Inputs:

 

S = Underlying
Security Price

 

X = Exercise
Price

 

PV(X) = Present value
of the Exercise Price, discounted at a rate of R = X * (e^-(R * T))

 

V = Volatility

 

R = continuously
compounded risk free rate = 2 * [ ln (1 + Interest Rate / 2) ]

 

T = Time to
Expiration

 

W = warrant
value per underlying share

 

Z = number of
shares underlying warrants

 

Value = total warrant
value

 

Formulaic
inputs:

 

D1 = [
ln [ S / X ] + (R + (V^2 / 2)) * T)] ÷ (V * ÖT)

 

D2 = [
ln [ S / X ] + (R - (V^2 / 2)) * T)] ÷ (V * ÖT)

 

Black-Scholes
Formula

 

W = [N(D1) * S] –
[N(D2) * PV(X)]

 

Where
“N” is the cumulative normal probability function

 

Value = W * Z

 

 

Example
of a Hypothetical Warrant:(1)

 

(1)          Note:  Amounts calculated herein may not foot due to
rounding error.  For precise
calculations, decimal points should not be rounded.

 

 

Inputs:

 

Interest
Rate = 4.00%

 

S = $50.00

 

X = $60.00

 

PV(X) = $55.43

 

V = 25%

 

R =
3.96%

 

T = 2

 

Z = 100

 

Formulaic inputs:

 

D1                                = [ ln [ S / X ] + (R + (V^2 / 2)) * T)] ÷ (V * ÖT)

 

= (-0.1149)

 

D2                                = [ ln [ S / X ] + (R - (V^2 / 2)) * T)] ÷ (V * ÖT)

 

=
(-0.4684)

 

Black-Scholes Formula

 

W                                   = [N(D1) * S] –
[N(D2) * PV(E)]

 

=
$4.99

 

Total Warrant Value

 

Value                = W * Z

 

= $499

 

 

SCHEDULE A

 

ALLOCATIONS OF WARRANTS TO INITIAL INVESTORS

 

	
  Initial Investor

  	
   

  	
  Total Number and Series of Warrants to be

  Delivered to Initial Investor (on date of Warrant

  Agreement)

  
	
  Blackstone
  Purchaser

  	
   

  	
  333,333
  Series A-1 Warrants

  
	
  Brookfield
  Purchaser

  	
   

  	
  3,833,333
  Series A-1 Warrants

  
	
  Fairholme
  Purchasers

  	
   

  	
  1,916,667
  Series A-2 Warrants

  
	
  Pershing
  Square Purchasers

  	
   

  	
  1,916,667
  Series A-2 Warrants

  

 

 

SCHEDULE B

 

WARRANT AGENT COMPENSATION

 

	
  Service Description

  	
   

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Warrant Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initial Setup (one-time charge)

  	
   

  	
  $

  	
  2,500.00 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual Administration

  	
   

  	
  $

  	
  3,500.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Warrant Conversion Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Set Up and Administrative Fee

  	
   

  	
  $

  	
  5,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Processing Accounts, each

  	
   

  	
  $

  	
  50.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Conversions requiring additional handling

  	
   

  	
  $

  	
  15.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (window items, deficient items, correspondence
  items, legal items, items not providing a taxpayer identification number,
  Transfer Requests, etc), additional each

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Requisitioning Funds, each requisition

  	
   

  	
  $

  	
  25.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Expiration

  	
   

  	
  $

  	
  1,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Special Services

  	
   

  	
  Additional

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Out of Pocket Expenses

  	
   

  	
  Additional

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Including Postage, Printing, Stationery, Overtime,
  Transportation, Microfilming, Imprinting, Mailing, etc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]