Document:

Exhibit
10.3

 

EMPLOYEE
MATTERS AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

SECTION 1.                                Employment of
All Business Employees.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.                                GGP Plans and
Liabilities.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 3.                                Reimbursement
of Costs.

 

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

 

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

 

(a)      The amount which Spinco is
required to pay under this Agreement will be reduced by any Insurance Proceeds
theretofore actually recovered in respect of the related Liability.  If a Party receives a payment (an “Indemnity
Payment”) required by this Agreement 

 

4

 

from
Spinco in respect of any Liability and subsequently receives Insurance
Proceeds, then such Party will pay to Spinco an amount equal to such Insurance
Proceeds but not exceeding the amount of the Indemnity Payment paid by Spinco
in respect of such Liability.

 

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

 

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

 

SECTION 5.                                Impermissibility;
Good Faith.

 

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

 

SECTION 6.                                Restrictive
Covenants Relating to Employees.

 

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

 

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

 

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

 

5

 

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

 

SECTION 7.                                Cooperation and
Assistance.

 

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

 

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

 

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

 

SECTION 8.     Employment
Files.

 

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

 

SECTION 9.     Employee Data
Protection.

 

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

 

6

 

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

 

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

 

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

 

SECTION 10.                          Miscellaneous.

 

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

 

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

 

7

 

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

 

(d)      Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under any Law or
as a matter of public policy, all other conditions and provisions of this
Agreement shall remain in full force and effect.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
to this Agreement shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement be consummated as originally contemplated to the greatest extent
possible.

 

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

 

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

 

(g)      Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different parties to each such agreement in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or portable document format
(PDF) shall be as effective as delivery of a manually executed counterpart of
any such Agreement.

 

8

 

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

 

	
   

  	
  GENERAL GROWTH MANAGEMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas H. Nolan, Jr.

  
	
   

  	
  Name: 

  	
  Thomas H. Nolan, Jr.

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GGP LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Thomas H.
  Nolan, Jr.

  
	
   

  	
  Name: 

  	
  Thomas H. Nolan, Jr.

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE HOWARD HUGHES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Arthur

  
	
   

  	
  Name: 

  	
  David Arthur

  
	
   

  	
  Title:

  	
  Interim Chief Executive Officer

  
				

 

9Exhibit
10.4

 

EMPLOYEE LEASING AGREEMENT

 

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

 

Statement of Background Information

 

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

 

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

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 2

 

RESPONSIBILITIES OF  GGP

 

Section 2.1             Provision of
Leased Employees.

 

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

 

2

 

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

 

Section 2.2             Term of
Agreement.

 

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

 

Section 2.3             Status of
Leased Employees.

 

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

 

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

 

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

 

3

 

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

 

Section 2.4             Standards of
Performance.

 

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

 

Section 2.5             Employee
Benefits Matters.

 

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

 

ARTICLE 3

 

RESPONSIBILITIES OF SPINCO

 

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

 

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

 

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

 

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

 

4

 

ARTICLE 4

 

OBLIGATIONS NET OF INSURANCE PROCEEDS AND OTHER AMOUNTS

 

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

 

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

 

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

 

ARTICLE 5

 

INDEMNIFICATION AND LIMITATION OF LIABILITY

 

Section 5.1             Indemnification
of GGP.

 

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

 

5

 

Section 5.2             Indemnification
of Spinco.

 

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

 

Section 5.3             Incorporation
of Separation Agreement.

 

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

 

ARTICLE 6

 

EMPLOYMENT TAX REPORTING

 

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

 

ARTICLE 7

 

SEVERANCE BENEFITS

 

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

 

ARTICLE 8

 

COBRA AND HIPAA; FLEX PLAN

 

Section 8.1             COBRA and HIPAA.

 

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

 

6

 

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

 

Section 8.2             Code Section 125
Benefits.

 

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

 

ARTICLE 9

 

RELATIONSHIP OF PARTIES

 

Section 9.1             Delivery of
Information; Cooperation Between the Parties.

 

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

 

Section 9.2             Confidentiality.

 

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

 

Section 9.3             Contractor
Relationship.

 

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

 

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

 

Section 9.4             Compliance with
Law.

 

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

 

7

 

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

 

Section 9.5             Liability
Insurance Coverages.

 

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

 

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

 

ARTICLE 10

 

MISCELLANEOUS

 

Section 10.1           Captions.

 

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

 

Section 10.2           Governing Law.

 

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

 

Section 10.3           Dispute
Resolution.

 

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

 

Section 10.4           Waiver of Jury
Trial.

 

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

 

8

 

Section 10.5           Counterparts.

 

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

 

Section 10.6           Notices.

 

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

 

Section 10.7           Assignment.

 

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

 

Section 10.8           Amendment.

 

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

 

Section 10.9           Expenses.

 

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

 

Section 10.10         Severability.

 

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

 

Section 10.11         No Third Party
Beneficiaries.

 

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

 

9

 

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

 

10

 

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

 

	
   

  	
  GENERAL GROWTH MANAGEMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas H. Nolan, Jr.

  
	
   

  	
  Name: 

  	
  Thomas H. Nolan, Jr.

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GGP LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas H. Nolan, Jr.

  
	
   

  	
  Name: 

  	
  Thomas H. Nolan, Jr.

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE HOWARD HUGHES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Arthur

  
	
   

  	
  Name: 

  	
  David Arthur

  
	
   

  	
  Title:

  	
  Interim Chief Executive Officer

  
				

 

11

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