Document:

Exhibit
10.5

 

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION
AGREEMENT (the “Agreement”) is made as of the [·] day of [    ], 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.

 

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(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, 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, 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.

 

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

 

(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; 

 

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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 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 

 

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proceeding) unless such
settlement provides for a full and final release of all claims asserted against
Indemnitee.

 

(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 

 

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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.                                      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.

 

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(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 (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 

 

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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 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 

 

9

 

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.

 

(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 

 

10

 

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.

 

(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.

 

11

 

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 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 

 

12

 

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 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 

 

13

 

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

 

(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 

 

14

 

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 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:

 

The
Howard Hughes Corporation

13355
Noel Road, Suite 950

Dallas,
TX 75240

Attention:  General Counsel

Facsimile:  (214) 741-3021

 

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.

 

15

 

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 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
[·] (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 10.10

 

 

The Howard Hughes Corporation

2010 Equity Incentive Plan

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
  ESTABLISHMENT &
  PURPOSE

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Establishment

  	
  1

  
	
  1.2

  	
  Purpose
  of the Plan

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
  ADMINISTRATION

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Authority
  of the Committee

  	
  4

  
	
  3.2

  	
  Delegation

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
  ELIGIBILITY
  AND PARTICIPATION

  	
  4

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Eligibility

  	
  4

  
	
  4.2

  	
  Type
  of Awards

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
  SHARES
  SUBJECT TO THE PLAN AND MAXIMUM AWARDS

  	
  5

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  General

  	
  5

  
	
  5.2

  	
  Annual
  Award Limits

  	
  5

  
	
  5.3

  	
  Additional
  Shares

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
  STOCK
  OPTIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Grant
  of Options

  	
  5

  
	
  6.2

  	
  Terms
  of Option Grant

  	
  6

  
	
  6.3

  	
  Option
  Term

  	
  6

  
	
  6.4

  	
  Method
  of Exercise

  	
  6

  
	
  6.5

  	
  Limitations
  on Incentive Stock Options

  	
  6

  
	
  6.6

  	
  Performance
  Goals

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
  STOCK
  APPRECIATION RIGHTS

  	
  7

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Grant
  of Stock Appreciation Rights

  	
  7

  
	
  7.2

  	
  Terms
  of Stock Appreciation Right

  	
  7

  
	
  7.3

  	
  Tandem
  Stock Appreciation Rights and Options

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
  RESTRICTED
  STOCK

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Grant
  of Restricted Stock

  	
  7

  
	
  8.2

  	
  Terms
  of Restricted Stock Awards

  	
  7

  
	
  8.3

  	
  Voting
  and Dividend Rights

  	
  7

  
	
  8.4

  	
  Performance
  Goals

  	
  8

  
	
  8.5

  	
  Section 83(b) Election

  	
  8

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
  OTHER
  STOCK-BASED AWARDS

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
  PERFORMANCE-BASED
  COMPENSATION

  	
  8

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Grant
  of Performance-Based Compensation

  	
  8

  
	
  10.2

  	
  Performance
  Measures

  	
  8

  
	
  10.3

  	
  Establishment
  of Performance Goals for Covered Employees

  	
  9

  
	
  10.4

  	
  Adjustment
  of Performance-Based Compensation

  	
  9

  
	
  10.5

  	
  Certification
  of Performance

  	
  9

  
	
  10.6

  	
  Interpretation

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11.

  	
  COMPLIANCE
  WITH SECTION 409A OF THE CODE AND SECTION 457A OF THE CODE

  	
  9

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  General

  	
  9

  
	
  11.2

  	
  Payments
  to Specified Employees

  	
  9

  
	
  11.3

  	
  Separation
  from Service

  	
  10

  
	
  11.4

  	
  Section 457A

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12.

  	
  ADJUSTMENTS

  	
  10

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Adjustments
  in Authorized Shares

  	
  10

  
	
  12.2

  	
  Change
  of Control

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13.

  	
  DURATION,
  AMENDMENT, MODIFICATION, SUSPENSION AND TERMINATION

  	
  11

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Duration
  of the Plan

  	
  11

  
	
  13.2

  	
  Amendment,
  Modification, Suspension and Termination of Plan

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14.

  	
  GENERAL
  PROVISIONS

  	
  11

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  No
  Right to Service

  	
  11

  
	
  14.2

  	
  Settlement
  of Awards; Fractional Shares

  	
  11

  
	
  14.3

  	
  Tax
  Withholding

  	
  12

  
	
  14.4

  	
  No
  Guarantees Regarding Tax Treatment

  	
  12

  
	
  14.5

  	
  Non-Transferability
  of Awards

  	
  12

  
	
  14.6

  	
  Conditions
  and Restrictions on Shares

  	
  12

  
	
  14.7

  	
  Compliance
  with Law

  	
  12

  
	
  14.8

  	
  Rights
  as a Shareholder

  	
  13

  
	
  14.9

  	
  Severability

  	
  13

  
	
  14.10

  	
  Unfunded
  Plan

  	
  13

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  14.11

  	
  No
  Constraint on Corporate Action

  	
  13

  
	
  14.12

  	
  Successors

  	
  13

  
	
  14.13

  	
  Governing
  Law

  	
  13

  
	
  14.14

  	
  Data
  Protection

  	
  13

  
	
  14.15

  	
  Effective
  Date

  	
  14

  

 

iii

 

The Howard Hughes Corporation

Equity Incentive Plan

 

Article 1.               Establishment &
Purpose

 

1.1          Establishment.  The Howard Hughes Corporation, a Delaware
corporation  hereby establishes The
Howard Hughes Corporation 2010 Equity Incentive Plan (hereinafter referred to
as the “Plan”) as set forth in this document.

 

1.2          Purpose
of the Plan.  The purpose
of this Plan is to attract, retain and motivate officers, employees, and
non-employee directors providing services to the Company, any of its
Subsidiaries, or Affiliates and to promote the success of the Company’s
business by providing the participants of the Plan with appropriate incentives.

 

Article 2.               Definitions

 

Whenever capitalized in the
Plan, the following terms shall have the meanings set forth below.

 

2.1          “Affiliate” means any
entity that the Company, either directly or indirectly, is in common control
with, is controlled by or controls, or any entity in which the Company has a
substantial equity interest, direct or indirect; provided, however, to the extent
that Awards must cover “service recipient stock” in order to comply with Section 409A
of the Code, “Affiliate” shall be limited to those entities which could qualify
as an “eligible issuer” under Section 409A of the Code.

 

2.2          “Annual
Award Limit” shall have the meaning set forth in Section 5.2.

 

2.3          “Award” means any
Option, Stock Appreciation Right, Restricted Stock, Other Stock-Based Award, or
Performance-Based Compensation Award that is granted under the Plan.

 

2.4          “Award
Agreement” means either (a) a written agreement entered
into by the Company and a Participant setting forth the terms and provisions
applicable to an Award granted under this Plan, or (b) a written statement
issued by the Company, a Subsidiary, or Affiliate to a Participant describing
the terms and conditions of the actual grant of such Award.

 

2.5          “Beneficial
Owner” or “Beneficial Ownership”
shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

 

2.6          “Board” means the Board
of Directors of the Company.

 

2.7          “Change
of Control” unless otherwise specified in the Award Agreement,
means the occurrence of any of the following events:

 

(a)           any consolidation,
amalgamation, or merger of the Company with or into any other Person, or any
other corporate reorganization, business combination, transaction or transfer
of securities of the Company by its stockholders, or a series of transactions
(including the acquisition of capital stock of the Company), whether or not the
Company is a party thereto, in which the stockholders of the Company
immediately prior to such consolidation, merger, reorganization, business
combination or transaction, collectively have Beneficial Ownership, directly or
indirectly, of capital stock representing directly, or indirectly through one
or more entities, less than fifty percent (50%) of the equity (measured by 

 

1

 

economic value or voting
power (by contract, share ownership or otherwise) of the Company or other
surviving entity immediately after such consolidation, merger, reorganization,
business combination or transaction;

 

(b)           the sale or disposition, in
one transaction or a series of related transactions, of all or substantially
all of the assets of the Company to any Person;

 

(c)           during any period of twelve
consecutive months commencing on or after the Effective Date, individuals who
as of the beginning of such period constituted the entire Board (together with
any new directors whose election by such Board or nomination for election by
the Company’s shareholders was approved by a vote of at least two-thirds of the
directors of the Company, then still in office, who were directors at the
beginning of the period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority thereof;
or

 

(d)           approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company.

 

2.8          “Code” means the U.S.
Internal Revenue Code of 1986, as amended from time to time.

 

2.9          “Committee” means the
Compensation Committee of the Board or any other committee designated by the
Board to administer this Plan.  To the
extent applicable, the Committee shall have at least two members, each of whom
shall be (i) a Non-Employee Director, (ii) an Outside Director, and (iii) an
“independent director” within the meaning of the listing requirements of any
exchange on which the Company is listed.

 

2.10        “Company” means The
Howard Hughes Corporation, a Delaware corporation, and any successor thereto.

 

2.11        “Covered Employee” means for any
Plan Year, a Participant designated by the Company as a potential “covered
employee” as such term is defined in Section 162(m) of the Code.

 

2.12        “Director” means a member
of the Board who is not an Employee.

 

2.13        “Effective Date” means the date
set forth in Section 14.15.

 

2.14        “Employee” means an
officer or other employee of the Company, a Subsidiary or Affiliate, including
a member of the Board who is an employee of the Company, a Subsidiary or
Affiliate.

 

2.15        “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

 

2.16        “Fair Market Value” means, as of
any date, the per Share value determined as follows, in accordance with
applicable provisions of Section 409A of the Code:

 

(a)           The
closing price of a Share on a recognized national exchange or any established
over-the-counter trading system on which dealings take place, or if no trades
were made on any such day, the immediately preceding day on which trades were
made; or

 

2

 

(b)           In the absence of an
established market for the Shares of the type described in (a) above, the
per Share Fair Market Value thereof shall be determined by the Committee in
good faith and in accordance with applicable provisions of Section 409A of
the Code.

 

2.17        “Incentive
Stock Option” means an Option intended to meet the requirements
of an incentive stock option as defined in Section 422 of the Code and
designated as an Incentive Stock Option.

 

2.18        “Joint
Plan of Reorganization”
means that certain Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code by the Company and certain of its Subsidiaries filed with the
United States Bankruptcy Court for the Southern District of New York on [·].

 

2.19        “Non-Employee Director” means a person
defined in Rule 16b-3(b)(3) promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor definition adopted
by the Securities and Exchange Commission.

 

2.20        “Nonqualified Stock Option” means an
Option that is not an Incentive Stock Option.

 

2.21        “Other Stock-Based Award” means any
right granted under Article 9 of the Plan.

 

2.22        “Option” means any
stock option granted under Article 6 of the Plan.

 

2.23        “Option Price” means the
purchase price per Share subject to an Option, as determined pursuant to Section 6.2
of the Plan.

 

2.24        “Outside Director” means a member
of the Board who is an “outside director” within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder.

 

2.25        “Participant” means any
eligible person as set forth in Section 4.1 to whom an Award is granted.

 

2.26        “Performance-Based
Compensation” means compensation under an Award that is intended
to constitute “qualified performance-based compensation” within the meaning of
the regulations promulgated under Section 162(m) of Code or any
successor provision.

 

2.27        “Performance Measures” means measures
as described in Section 10.2 on which the performance goals are based in
order to qualify Awards as Performance-Based Compensation.

 

2.28        “Performance Period” means the
period of time during which the performance goals must be met in order to
determine the degree of payout and/or vesting with respect to an Award.

 

2.29        “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.

 

2.30        “Plan” means The
Howard Hughes Corporation 2010 Equity Incentive Plan.

 

2.31        “Plan Year” means the
applicable fiscal year of the Company.

 

2.32        “Restricted Stock” means any
Award granted under Article 8 of the Plan.

 

3

 

2.33        “Restriction Period” means the
period during which Restricted Stock awarded under Article 8 of the Plan
is subject to forfeiture.

 

2.34        “Service” means service
as an Employee or Director.

 

2.35        “Share” means a share
of common stock of the Company, par value $0.01 per share, or such other class
or kind of shares or other securities resulting from the application of Article 12
hereof.

 

2.36        “Stock Appreciation Right” means any
right granted under Article 7 of the Plan.

 

2.37        “Subsidiary” means any
corporation, partnership, limited liability company or other legal entity of
which the Company, directly or indirectly, owns stock or other equity interests
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock or other equity interests (as determined in a manner consistent
with Section 409A of the Code).

 

2.38        “Ten Percent Shareholder” means a person
who on any given date owns, either directly or indirectly (taking into account
the attribution rules contained in Section 424(d) of the Code),
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or a Subsidiary or Affiliate.

 

Article 3.               Administration

 

3.1          Authority of the Committee.  The Plan shall be administered by the
Committee, which shall have full power to interpret and administer the Plan and
Award Agreements and full authority to select the Employees and Directors to
whom Awards will be granted, and to determine the type and amount of Awards to
be granted to each such Employee or Director, and the terms and conditions of
Awards and Award Agreements.  Without limiting the generality of the foregoing,
the Committee may, in its sole discretion but subject to the limitations in Article 13,
clarify, construe or resolve any ambiguity in any provision of the Plan or any
Award Agreement, extend the term or period of exercisability of any Awards, or
waive any terms or conditions applicable to any Award.  Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or any of its Subsidiaries
or Affiliates or a company acquired by the Company or with which the Company
combines.  The Committee shall
have full and exclusive discretionary power to adopt rules, forms, instruments,
and guidelines for administering the Plan as the Committee deems necessary or
proper.  All actions taken and all
interpretations and determinations made by the Committee or by the Board (or
any other committee or sub-committee thereof), as applicable, shall be final
and binding upon the Participants, the Company, and all other interested
individuals.

 

3.2          Delegation.  The Committee may delegate to one or more of
its members or one or more executive officers of the Company such administrative
duties or powers as it may deem advisable; provided that
no delegation shall be permitted under the Plan that is prohibited by
applicable law.

 

Article 4.               Eligibility
and Participation

 

4.1          Eligibility.  Participants will consist of such Employees
and Directors as the Committee in its sole discretion determines and whom the
Committee may designate from time to time to receive Awards.  Designation of a Participant in any year
shall not require the Committee to designate such person to receive an Award in
any other year or, once designated, to receive the same type or amount of Award
as granted to the Participant in any other year.

 

4

 

4.2          Type of Awards.  Awards under the Plan may be granted in any
one or a combination of:  (a) Options,
(b) Stock Appreciation Rights, (c) Restricted Stock, (d) Other
Stock-Based Awards, and (e) Performance-Based Compensation Awards.  The Plan sets forth the types of performance
goals and sets forth procedural requirements to permit the Company to design
Awards that qualify as Performance-Based Compensation, as described in Article 10
hereof.  Awards granted under the Plan
shall be evidenced by Award Agreements (which need not be identical) that
provide additional terms and conditions associated with such Awards, as
determined by the Committee in its sole discretion; provided,
however, that in the event of any
conflict between the provisions of the Plan and any such Award Agreement, the
provisions of the Plan shall prevail.

 

Article 5.               Shares
Subject to the Plan and Maximum Awards

 

5.1          General.  Subject to adjustment as provided in Article 12
hereof, the maximum number of Shares available for issuance to Participants
pursuant to Awards under the Plan shall be equal to [eight percent (8%) of the
outstanding fully diluted Shares of the
Company as of the Effective Date (including shares issuable under the Joint
Plan of Reorganization)].  The
number of Shares available for granting Incentive Stock Options under the Plan
shall not exceed [eight percent (8%) of the outstanding fully diluted Shares of the Company as of the Effective Date (including shares
issuable under the Joint Plan of Reorganization)], subject to Article 12
hereof and the provisions of Sections 422 or 424 of the Code and any successor
provisions.  The Shares available for
issuance under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares.

 

5.2          Annual
Award Limits.  The maximum number of Shares
with respect to Awards denominated in Shares (or the equivalent dollar value) that
may be granted to any Participant in any Plan Year shall be 500,000 Shares,
subject to adjustments made in accordance with Article 12 hereof (the “Annual
Award Limit”).

 

5.3          Additional Shares.  In the event that any outstanding Award
expires, is forfeited, cancelled or otherwise terminated without the issuance
of Shares or is otherwise settled for cash, the Shares subject to such Award,
to the extent of any such forfeiture, cancellation, expiration, termination or
settlement for cash, shall again be available for Awards.  If the Committee authorizes the assumption
under this Plan, in connection with any merger, consolidation, acquisition of
property or stock, or reorganization, of awards granted under another plan,
such assumption shall not (i) reduce the maximum number of Shares
available for issuance under this Plan or (ii) be subject to or counted
against a Participant’s Annual Award Limit.

 

Article 6.               Stock
Options

 

6.1          Grant of Options.  The Committee is hereby authorized to grant
Options to Participants.  Each Option
shall permit a Participant to purchase from the Company a stated number of
Shares at an Option Price established by the Committee, subject to the terms and
conditions described in this Article 6 and to such additional terms and
conditions, as established by the Committee, in its sole discretion, that are
consistent with the provisions of the Plan. 
Options shall be designated as either Incentive Stock Options or
Nonqualified Stock Options, provided that Options granted to Directors shall be
Nonqualified Stock Options.  An Option
granted as an Incentive Stock Option shall, to the extent it fails to qualify
as an Incentive Stock Option, be treated as a Nonqualified Stock Option.  Neither the Committee, the Company, any of
its Subsidiaries or Affiliates, nor any of their employees and representatives
shall be liable to any Participant or to any other Person if it is determined
that an Option intended to be an Incentive Stock Option does not qualify as an
Incentive Stock Option.  Each option
shall be evidenced by Award Agreements which shall state the number of Shares
covered by such Option.  Such agreements
shall conform to the requirements of the Plan, and may contain such other
provisions, as the Committee shall deem advisable.

 

5

 

6.2          Terms of Option Grant.  The Option Price shall be determined by the
Committee at the time of grant, but shall not be less than one-hundred percent
(100%) of the Fair Market Value of a Share on the date of grant.  In the case of any Incentive Stock Option
granted to a Ten Percent Shareholder, the Option Price shall not be less than
one-hundred-ten percent (110%) of the Fair Market Value of a Share on the date
of grant.

 

6.3          Option Term.  The term of each Option shall be determined
by the Committee at the time of grant and shall be stated in the Award
Agreement, but in no event shall such term be greater than ten (10) years
(or, in the case on an Incentive Stock Option granted to a Ten Percent
Shareholder, five (5) years).

 

6.4          Method of Exercise.  Except as otherwise provided in the Plan or
in an Award Agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable.  For purposes of this Article 6, the
exercise date of an Option shall be the later of the date a notice of exercise
is received by the Company and, if applicable, the date payment is received by
the Company pursuant to clauses (i), (ii), (iii) or (iv) of the
following sentence (including the applicable tax withholding pursuant to Section 14.3
of the Plan).  The aggregate Option Price
for the Shares as to which an Option is exercised shall be paid to the Company
in full at the time of exercise at the election of the Participant (i) in
cash or its equivalent (e.g., by cashier’s check), (ii) to the extent
permitted by the Committee, in Shares (whether or not previously owned by the
Participant) having a Fair Market Value equal to the aggregate Option Price for
the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and, to the extent
permitted by the Committee, partly in such Shares (as described in (ii) above)
or (iv) if there is a public market for the Shares at such time, subject
to such requirements as may be imposed by the Committee, through the delivery
of irrevocable instructions to a broker to sell Shares obtained upon the
exercise of the Option and to deliver promptly to the Company an amount out of
the proceeds of such sale equal to the aggregate Option Price for the Shares
being purchased.  The Committee may
prescribe any other method of payment that it determines to be consistent with
applicable law and the purpose of the Plan.

 

6.5          Limitations on Incentive Stock
Options.  Incentive
Stock Options may be granted only to employees of the Company or of a “parent
corporation” or “subsidiary corporation” (as such terms are defined in Section 424
of the Code) at the date of grant.  The
aggregate Fair Market Value (generally determined as of the time the Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year under
all plans of the Company and of any “parent corporation” or “subsidiary
corporation” shall not exceed one hundred thousand dollars ($100,000), or the
Option shall be treated as a Nonqualified Stock Option.  For purposes of the preceding sentence, Incentive
Stock Options will be taken into account generally in the order in which they
are granted.  Each provision of the Plan
and each Award Agreement relating to an Incentive Stock Option shall be
construed so that each Incentive Stock Option shall be an incentive stock
option as defined in Section 422 of the Code, and any provisions of the
Award Agreement thereof that cannot be so construed shall be disregarded.

 

6.6          Performance Goals.  The Committee may condition the grant of
Options or the vesting of Options upon the Participant’s achievement of one or
more performance goal(s) (including the Participant’s provision of
Services for a designated time period), as specified in the Award
Agreement.  If the Participant fails to
achieve the specified performance goal(s), the Committee shall not grant the
Option to such Participant or the Option shall not vest, as applicable.

 

6

 

Article 7.               Stock
Appreciation Rights

 

7.1          Grant
of Stock Appreciation Rights.  The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants, including a grant of Stock
Appreciation Rights in tandem with any Option at the same time such Option is
granted (a “Tandem SAR”).  Stock
Appreciation Rights shall be evidenced by Award Agreements that shall conform
to the requirements of the Plan and may contain such other provisions, as the
Committee shall deem advisable.  Subject
to the terms of the Plan and any applicable Award Agreement, a Stock
Appreciation Right granted under the Plan shall confer on the holder thereof a
right to receive, upon exercise thereof, the excess of (a) the Fair Market
Value of a specified number of Shares on the date of exercise over (b) the
grant price of the right as specified by the Committee on the date of the
grant.  Such payment may be in the form
of cash, Shares, other property or any combination thereof, as the Committee
shall determine in its sole discretion.

 

7.2          Terms of Stock Appreciation
Right.  Subject to the terms of the
Plan and any applicable Award Agreement, the grant price (which shall not be
less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant), term, methods
of exercise, methods of settlement, and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee.  The Committee may impose such other
conditions or restrictions on the exercise of any Stock Appreciation Right as
it may deem appropriate.  No Stock
Appreciation Right shall have a term of more than ten (10) years from the
date of grant.

 

7.3          Tandem Stock Appreciation Rights
and Options.  A Tandem SAR
shall be exercisable only to the extent that the related Option is exercisable
and shall expire no later than the expiration of the related Option.  Upon the exercise of all or a portion of a
Tandem SAR, a Participant shall be required to forfeit the right to purchase an
equivalent portion of the related Option (and, when a Share is purchased under
the related Option, the Participant shall be required to forfeit an equivalent
portion of the Stock Appreciation Right).

 

Article 8.               Restricted
Stock

 

8.1          Grant of Restricted Stock.  An Award of Restricted Stock
is a grant by the Committee of a specified number of Shares to the Participant,
which Shares are subject to forfeiture upon the occurrence of specified events.  Restricted
Stock shall be evidenced by an Award Agreement, which shall conform to the
requirements of the Plan and may contain such other provisions, as the
Committee shall deem advisable.

 

8.2          Terms of Restricted Stock Awards.  Each Award Agreement evidencing a Restricted
Stock grant shall specify the period(s) of restriction, the number of
Shares of Restricted Stock subject to the Award, the performance, employment or
other conditions (including the termination of a Participant’s Service whether
due to death, disability or other reason) under which the Restricted Stock may
be forfeited to the Company and such other provisions as the Committee shall
determine.  At the end of the Restriction
Period, the restrictions imposed hereunder and under the Award Agreement shall
lapse with respect to the number of Shares of Restricted Stock as determined by
the Committee, and the legend shall be removed and such number of Shares
delivered to the Participant (or, where appropriate, the Participant’s legal
representative).

 

8.3          Voting and Dividend Rights.  Unless otherwise provided in an Award
Agreement, Participants shall have none of the rights of a stockholder of the
Company with respect to Restricted Stock until the end of the Restricted
Period; provided, that, Participants shall have the right to vote and receive
dividends on Restricted Stock during the Restriction Period.  Dividends shall be paid to Participants at
the same time that other shareholders of common stock of the Company receive
such dividends.

 

7

 

8.4          Performance Goals.  The Committee may condition the grant of
Restricted Stock or the expiration of the Restriction Period upon the
Participant’s achievement of one or more performance goal(s) (including
the Participant’s provision of Services for a designated time period), as
specified in the Award Agreement.  If the
Participant fails to achieve the specified performance goal(s), the Committee
shall not grant the Restricted Stock to such Participant or the Participant
shall forfeit the Award of Restricted Stock to the Company, as applicable.

 

8.5          Section 83(b) Election.  If a Participant makes an election pursuant
to Section 83(b) of the Code concerning Restricted Stock, the
Participant shall be required to file promptly a copy of such election with the
Company.

 

Article 9.               Other
Stock-Based Awards

 

The Committee, in its sole
discretion, may grant Awards of Shares and Awards that are valued, in whole or
in part, by reference to, or are otherwise based on the Fair Market Value of,
Shares (the “Other Stock-Based Awards”), including without limitation, restricted stock units and other phantom
awards.  Such Other Stock-Based
Awards shall be in such form, and dependent on such conditions, as the
Committee shall determine, including, without limitation, the right to receive
one or more Shares (or the equivalent cash value of such Shares) upon the
completion of a specified period of Service, the occurrence of an event and/or
the attainment of performance objectives. 
Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan. 
Subject to the provisions of the Plan, the Committee shall determine to
whom and when Other Stock-Based Awards will be made, the number of Shares to be
awarded under (or otherwise related to) such Other Stock-Based Awards, whether
such Other Stock-Based Awards shall be settled in cash, Shares or a combination
of cash and Shares, and all other terms and conditions of such Awards
(including, without limitation, the vesting provisions thereof and provisions
ensuring that all Shares so awarded and issued shall be fully paid and
non-assessable).

 

Article 10.            Performance-Based
Compensation

 

10.1        Grant
of Performance-Based Compensation.  To the extent permitted by Section 162(m) of
the Code, the Committee is authorized to design any Award so that the amounts
or Shares payable or distributed pursuant to such Award are treated as “qualified
performance-based compensation” within the meaning of Section 162(m) of
the Code and related regulations.

 

10.2        Performance
Measures.  The vesting,
crediting and/or payment of Performance-Based Compensation shall be based on
the achievement of objective performance goals based on one or more of the
following Performance Measures:  (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per Share; (v) book value per Share; (vi) return
on shareholders’ equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability
of an identifiable business unit or product; (xi) maintenance or
improvement of profit margins; (xii) stock price; (xiii) market
share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working
capital; (xviii) return on assets; (xix) store openings or
refurbishment plans; (xx) staff training; and (xxi) corporate social
responsibility policy implementation.

 

Any Performance Measure may
be (i) used to measure the performance of the Company and/or any of its
Subsidiaries or Affiliates as a whole, any business unit thereof or any
combination thereof against any goal including past performance or (ii) compared
to the performance of a group of comparable companies, or a published or
special index, in each case that the Committee, in its sole discretion, deems
appropriate.  Subject to Section 162(m) of
the Code, the Committee
may adjust the 

 

8

 

performance goals (including to prorate goals and
payments for a partial Plan Year) in the event of the following
occurrences:  (a) non-recurring
events, including divestitures, spin-offs, or changes in accounting standards
or policies; (b) mergers and acquisitions; and (c) financing
transactions, including selling accounts receivable.

 

10.3        Establishment of Performance
Goals for Covered Employees.  No later than ninety (90) days after the
commencement of a Performance Period (but in no event after twenty-five percent
(25%) of such Performance Period has elapsed), the Committee shall establish in
writing:  (i) the performance goals
applicable to the Performance Period; (ii) the Performance Measures to be
used to measure the performance goals in terms of an objective formula or
standard; (iii) the formula
for computing the amount of compensation payable to the Participant if such
performance goals are obtained; and (iv) the Participants or class of
Participants to which such performance goals apply.  The outcome of such performance goals must be
substantially uncertain when the Committee establishes the goals.

 

10.4        Adjustment of Performance-Based
Compensation.  Awards that
are designed to qualify as Performance-Based Compensation may not be adjusted
upward.  The Committee shall retain the
discretion to adjust such Awards downward, either on a formula or discretionary
basis or any combination, as the Committee determines.

 

10.5        Certification of Performance.  Except for Awards that pay compensation
attributable solely to an increase in the value of Shares, no Award designed to
qualify as Performance-Based Compensation shall be vested, credited or paid, as
applicable, with respect to any Participant until the Committee certifies in
writing that the performance goals and any other material terms applicable to
such Performance Period have been satisfied.

 

10.6        Interpretation.  Each provision of the Plan and each Award
Agreement relating to Performance-Based Compensation shall be construed so that
each such Award shall be “qualified performance-based compensation” within the
meaning of Section 162(m) of the Code and related regulations, and
any provisions of the Award Agreement thereof that cannot be so construed shall
be disregarded.

 

Article 11.            Compliance
with Section 409A of the Code and Section 457A of the Code

 

11.1        General.  The Company intends that any Awards be structured
in compliance with, or to satisfy an exemption from, Section 409A of the
Code and all regulations, guidance, compliance programs and other
interpretative authority thereunder (“Section 409A”),
such that there are no adverse tax consequences, interest, or penalties as a
result of the Awards.  Notwithstanding
the Company’s intention, in the event any Award is subject to Section 409A,
the Committee may, in its sole discretion and without a Participant’s prior
consent, amend the Plan and/or Awards, adopt policies and procedures, or take
any other actions (including amendments, policies, procedures and actions with
retroactive effect) as are necessary or appropriate to (i) exempt the Plan
and/or any Award from the application of Section 409A, (ii) preserve
the intended tax treatment of any such Award, or (iii) comply with the
requirements of Section 409A, including without limitation any such
regulations guidance, compliance programs and other interpretative authority
that may be issued after the date of grant of an Award.

 

11.2        Payments
to Specified Employees. 
Notwithstanding any contrary provision in the Plan or Award Agreement,
any payment(s) of nonqualified deferred compensation (within the meaning
of Section 409A) that are otherwise required to be made under the Plan to
a “specified employee” (as defined under Section 409A) as a result of his
or her separation from service (other than a payment that is not subject to Section 409A)
shall be delayed for the first six (6) months following such separation
from service (or, if earlier, the date of death of the specified employee) and
shall instead be paid (in a manner 

 

9

 

set
forth in the Award Agreement) on the payment date that immediately follows the
end of such six-month period or as soon as administratively practicable within
90 days thereafter, but in no event later than the end of the applicable
taxable year.

 

11.3        Separation
from Service.  A
termination of employment shall not be deemed to have occurred for purposes of
any provision of the Plan or any Award Agreement providing for the payment of
any amounts or benefits that are considered nonqualified deferred compensation
under Section 409A upon or following a termination of employment, unless
such termination is also a “separation from service” within the meaning of Section 409A
and the payment thereof prior to a “separation from service” would violate Section 409A.  For purposes of any such provision of the
Plan or any Award Agreement relating to any such payments or benefits,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.”

 

11.4        Section 457A.  In the event any Award is subject to Section 457A
of the Code (“Section 457A”), the Committee may, in its sole
discretion and without a Participant’s prior consent, amend the Plan and/or
Awards, adopt policies and procedures, or take any other actions (including
amendments, policies, procedures and actions with retroactive effect) as are
necessary or appropriate to (i) exempt the Plan and/or any Award from the
application of Section 457A, (ii) preserve the intended tax treatment
of any such Award, or (iii) comply with the requirements of Section 457A,
including without limitation any such regulations, guidance, compliance
programs and other interpretative authority that may be issued after the date
of the grant.

 

Article 12.            Adjustments

 

12.1        Adjustments
in Authorized Shares.  In the
event of any corporate event or transaction involving the Company, a Subsidiary
and/or an Affiliate (including, but not limited to, a change in the Shares of
the Company or the capitalization of the Company) such as a merger,
consolidation, reorganization, recapitalization, separation, stock dividend,
stock split, reverse stock split, split up, spin-off, combination of Shares,
exchange of Shares, dividend in kind, amalgamation, or other like change in
capital structure (other than regular cash dividends to shareholders of the
Company), or any similar corporate event or transaction, the Committee, to
prevent dilution or enlargement of Participants’ rights under the Plan, shall
substitute or adjust, in its sole discretion, the number and kind of Shares or
other property that may be issued under the Plan or under particular forms of
Awards, the number and kind of Shares or other property subject to outstanding
Awards, the Option Price, grant price or purchase price applicable to
outstanding Awards, the Annual Award Limits, and/or other value determinations
applicable to the Plan or outstanding Awards.

 

12.2        Change
of Control.  Upon the
occurrence of a Change of Control after the Effective Date, unless otherwise
specifically prohibited under applicable laws or by the rules and
regulations of any governing governmental agencies or national securities
exchanges, or unless the Committee shall determine otherwise in the Award
Agreement, the Committee shall make one or more of the following adjustments to
the terms and conditions of outstanding Awards: 
(i) continuation or assumption of such outstanding Awards under the
Plan by the Company (if it is the surviving company or corporation) or by the
surviving company or corporation or its parent; (ii) substitution by the
surviving company or corporation or its parent of awards with substantially the
same terms for such outstanding Awards; (iii) accelerated exercisability,
vesting and/or lapse of restrictions under outstanding Awards immediately prior
to the occurrence of such event; (iv) upon written notice, provide that
any outstanding Awards must be exercised, to the extent then exercisable,
during a reasonable period of time immediately prior to the scheduled
consummation of the event, or such other period as determined by the Committee
(contingent upon the consummation of the event), and at the end of such period,
such Awards shall terminate to the extent not so exercised within the relevant
period; and (v) cancellation of all or any portion of outstanding 

 

10

 

Awards
for fair value (as determined in the sole discretion of the Committee and which
may be zero) which, in the case of Options and Stock Appreciation Rights or
similar Awards, if the Committee so determines, may equal the excess, if any,
of the value of the consideration to be paid in the Change of Control
transaction to holders of the same number of Shares subject to such Awards (or,
if no such consideration is paid, Fair Market Value of the Shares subject to
such outstanding Awards or portion thereof being canceled) over the aggregate
Option Price or grant price, as applicable, with respect to such Awards or
portion thereof being canceled (which may be zero).

 

Article 13.            Duration,
Amendment, Modification, Suspension and Termination

 

13.1        Duration of the Plan.  Unless sooner terminated as provided in Section 13.2,
the Plan shall terminate on the tenth (10th) anniversary of the Effective Date.

 

13.2        Amendment, Modification,
Suspension and Termination of Plan.  The Committee may amend, alter, suspend,
discontinue, or terminate (for purposes of this Section 13.2, an “Action”)
the Plan or any portion thereof or any Award (or Award Agreement) thereunder at
any time; provided that no such Action shall be
made, other than as permitted under Article 11 or 12, (i) without
shareholder approval (A) if such approval is necessary to comply with any
tax or regulatory requirement applicable to the Plan, (B) if such Action
increases the number of Shares available under the Plan (other than an increase
permitted under Article 5 absent shareholder approval), (C) if such
Action results in a material increase in benefits permitted under the Plan (but
excluding increases that are immaterial or that are minor and to benefit the
administration of the Plan, to take account of any changes in applicable law, or
to obtain or maintain favorable tax, exchange, or regulatory treatment for the
Company, a Subsidiary, and/or an Affiliate) or a change in eligibility
requirements under the Plan, or (D) for any Action that results in a
reduction of the Option Price or grant price per Share, as applicable, of any
outstanding Options or Stock Appreciation Rights or cancellation of any
outstanding Options or Stock Appreciation Rights in exchange for cash, or for
other Awards, such as other Options or Stock Appreciation Rights, with an
Option Price or grant price per Share, as applicable, that is less than such
price of the original Options or Stock Appreciation Rights, and (ii) without the written consent of the affected
Participant, if such Action would materially diminish the rights of any
Participant under any Award theretofore granted to such Participant under the
Plan; provided, further,
that the Committee may amend the Plan,
any Award or any Award Agreement without such consent of the Participant in
such manner as it deems necessary to comply with applicable laws, including
without limitation, the Dodd-Frank Wall Street Reform and Consumer
Protection Act.

 

Article 14.            General
Provisions

 

14.1        No Right to Service.  The granting of an Award under the Plan shall
impose no obligation on the Company, any Subsidiary or any Affiliate to
continue the Service of a Participant and shall not lessen or affect any right
that the Company, any Subsidiary or any Affiliate may have to terminate the
Service of such Participant.  No Participant
or other Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards.  The terms and
conditions of Awards and the Committee’s determinations and interpretations
with respect thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated).

 

14.2        Settlement of Awards; Fractional
Shares.  Each Award Agreement shall
establish the form in which the Award shall be settled.  The Committee shall determine whether cash,
Awards, other securities or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be rounded, forfeited or otherwise eliminated.

 

11

 

14.3        Tax Withholding.  The Company shall have the power and the
right to deduct or withhold automatically from any amount deliverable under the
Award or otherwise, or require a Participant to remit to the Company, the
minimum statutory amount to satisfy federal, state, and local taxes, domestic
or foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan. 
With respect to required withholding, Participants may elect (subject to
the Company’s automatic withholding right set out above), subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or
in part, by having the Company withhold Shares having a Fair Market Value on
the date the tax is to be determined equal to the minimum statutory total tax
that could be imposed on the transaction.

 

14.4        No Guarantees Regarding Tax Treatment.  Participants (or their beneficiaries) shall
be responsible for all taxes with respect to any Awards under the Plan.  The Committee and the Company make no
guarantees to any Person regarding the tax treatment of Awards or payments made
under the Plan.  Neither the Committee
nor the Company has any obligation to take any action to prevent the assessment
of any tax on any Person with respect to any Award under Section 409A of
the Code or Section 457A of the Code or otherwise and none of the Company,
any of its Subsidiaries or Affiliates, or any of their employees or representatives
shall have any liability to a Participant with respect thereto.

 

14.5        Non-Transferability of Awards.  Unless otherwise determined by the Committee,
an Award shall not be transferable or assignable by the Participant except in
the event of his death (subject to the applicable laws of descent and
distribution) and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.  No
transfer shall be permitted for value or consideration.  An award exercisable after the death of a
Participant may be exercised by the heirs, legatees, personal representatives
or distributees of the Participant.  Any
permitted transfer of the Awards to heirs, legatees, personal representatives
or distributees of the Participant shall not be effective to bind the Company
unless the Committee shall have been furnished with written notice thereof and
a copy of such evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the transferee or transferees of
the terms and conditions hereof.

 

14.6        Conditions
and Restrictions on Shares.  The Committee may impose such other
conditions or restrictions on any Shares received in connection with an Award
as it may deem advisable or desirable. 
These restrictions may include, but shall not be limited to, a
requirement that the Participant hold the Shares received for a specified
period of time or a requirement that a Participant represent and warrant in
writing that the Participant is acquiring the Shares for investment and without
any present intention to sell or distribute such Shares.  The certificates for Shares may include any
legend which the Committee deems appropriate to reflect any conditions and
restrictions applicable to such Shares.

 

14.7        Compliance
with Law.  The granting
of Awards and the issuance of Shares under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies, or any stock exchanges on which the Shares are admitted
to trading or listed, as may be required. 
The Company shall have no obligation to issue or deliver evidence of
title for Shares issued under the Plan prior to:

 

(a)           Obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable;
and

 

(b)           Completion of any
registration or other qualification of the Shares under any applicable
national, state or foreign law or ruling of any governmental body that the
Company determines to be necessary or advisable.

 

12

 

The restrictions contained
in this Section 14.7 shall be in addition to any conditions or
restrictions that the Committee may impose pursuant to Section 14.6.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company, its Subsidiaries and
Affiliates, and all of their employees and representatives of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

 

14.8        Rights as a Shareholder.  Except as otherwise provided herein or in the
applicable Award Agreement, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by any Award until the Participant
becomes the record holder of such Shares.

 

14.9        Severability.  If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person, or Award, and the remainder of the
Plan and any such Award shall remain in full force and effect.

 

14.10      Unfunded Plan.  Participants shall have no right, title, or
interest whatsoever in or to any investments that the Company or any of its
Subsidiaries or Affiliates may make to aid it in meeting its obligations under
the Plan.  Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any Participant, beneficiary, legal representative, or any other Person.  To the extent that any Person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure payment
of such amounts.  The Plan is not subject
to the U.S. Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

14.11      No Constraint on Corporate
Action.  Nothing in the Plan shall be
construed to (i) limit, impair, or otherwise affect the Company’s right or
power to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets, or (ii) limit
the right or power of the Company to take any action which such entity deems to
be necessary or appropriate.

 

14.12      Successors.  All obligations of the Company under the Plan
with respect to Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.

 

14.13      Governing Law.  The Plan and each Award Agreement shall be
governed by the laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.

 

14.14      Data Protection.  By participating in the Plan, the Participant
consents to the collection, processing, transmission and storage by the Company
in any form whatsoever, of any data of a professional or personal nature which
is necessary for the purposes of introducing and administering the Plan.  The Company may share such information with
any Subsidiary or Affiliate, the trustee of any employee benefit trust, its
registrars, trustees, brokers, other third party administrator or any Person
who 

 

13

 

obtains control of the Company or acquires the
Company, undertaking or part-undertaking which employs the Participant,
wherever situated.

 

14.15      Effective Date.  The Plan shall be effective as of the date on
which distributions to holders of claims and equity interests commences
pursuant to the Joint Plan of Reorganization (the “Effective Date”).

 

*              *              *

 

14

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