Exhibit 10.2


 


EMPLOYMENT
AGREEMENT


 


This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
the 2nd day of February, 2004 by and between THE MILLS CORPORATION, a Delaware
corporation (the “Company”), and MARK ETTENGER (“Executive”).


 


Recitals


 


R-1                              The
Company is engaged directly and indirectly in the business of developing,
constructing, leasing, financing and operating super regional value-oriented
retail and entertainment-based shopping centers, malls, strip centers and other
commercial properties.


 


R-2                              The
Company wishes to employ Executive, and Executive wishes to be employed by
Company, on the terms and conditions set forth in this Agreement.


 


Agreement


 


NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows:


 


1.                                      Employment; Employment
Period.


 


1.1                                 Employment.  The Company hereby employs Executive, and
Executive hereby accepts employment with the Company, all upon the terms and
conditions set forth in this Agreement.


 


1.2                                 Employment
Period.  The term of
Executive’s employment under this Agreement shall commence on February 2,
2004 (the “Effective Date”) and end on January 31, 2009 (the “Employment
Period”); provided that commencing on February 1, 2009, and on each
succeeding anniversary thereafter, the Employment Period shall automatically be
extended for one (1) year unless either party has given written notice of
non-renewal to the other party at least six (6) months prior to the then
scheduled expiration of the Employment Period, and each such extension shall
become part of (and incorporated into) the Employment Period for all purposes
of this Agreement; and provided, further, that Executive’s employment hereunder
may be terminated prior to the end of the Employment Period as provided in
Section 6 hereof.


 


2.                                      Duties.  During the Employment Period, Executive shall hold the position
of President of the Company.  In such
capacity, Executive shall be the sole, second highest-ranking executive officer
in the Company in terms of position, responsibilities and authority (excluding
Board members who are not employees of the Company), and shall report to the
Chief Executive Officer of the Company. 
Executive shall perform the duties and responsibilities normally
associated with the position of President and number two ranking executive in
corporations of the size and nature of the Company, and shall perform such
other duties and responsibilities as may reasonably be assigned during the
Employment Period by the Chief Executive Officer of the Company.


 

















 


3.                                      Performance of
Duties/Standard of Care.  During the Employment Period, Executive shall act at all times in
the best interests of the Company and diligently discharge his duties and
responsibilities to the Company under this Agreement.  Without limiting the generality of the foregoing, Executive shall
at all times strictly abide by the policies of the Company, including, without
limitation, The Mills Corporation Code of Business Conduct and Ethics as it may
be amended from time to time by the Company in its sole discretion (the “Code
of Conduct”).  Executive’s duties shall
be carried out at the Company’s headquarters in the Washington, D.C.
metropolitan area, and at offices to be established either in White Plains, New York or in New York City,
as mutually determined by the Chief Executive Officer of the Company and
Executive, and Executive shall travel to such other places as the interests,
needs, business or opportunity of the Company shall require; provided, however,
that during each one-year period within the Employment Period, commencing on
the Effective Date, Executive shall spend a majority of business weekdays
working from the Company’s headquarters in the Washington, D.C. metropolitan area.  For purposes of the preceding sentence,
travel on Company business (including time spent in New York City for meetings
at the request of or with the consent of the Chief Executive Officer) will be
treated as working from the Company’s headquarters, and vacation and sick days
shall be disregarded.  During the
Employment Period, Executive agrees to devote his full business time, attention
and energies to the Company’s business and not to engage in any other business
activity, whether or not such business activity is pursued for gain, profit, or
other economic or financial advantage, except that Executive may serve in
charitable or philanthropic capacities or positions and sit on the board of
directors of up to two companies that do not directly or indirectly compete
with the Company, so long as such activities comply with the Code of Conduct,
are not injurious to the Company and do not interfere with the performance of
Executive’s duties hereunder.  In
connection with the performance of his duties hereunder, Executive shall at all
times seek to exercise the highest degree of loyalty to the Company and shall
comply with the highest standards of conduct in the performance of such
duties.  Subject to compliance by Executive
with the Code of Conduct, this Section 3 shall not be construed to prevent
or prohibit Executive from managing his personal or family assets or
investments, including Angling Productions Inc. and any such investments which
are non-competing real estate investments, as long as such activities do not
interfere with the performance of Executive’s duties hereunder.


 


4.                                      Compensation
and Expenses.


 


4.1                               Base
Salary.  During the Employment
Period , the Company shall pay to Executive an annual base salary (the “Base
Salary”) in accordance with the Company’s normal payroll practice applicable to
senior executives.  Initially, the Base
Salary shall be calculated at the rate of $1,150,000 per year.  The Base Salary shall be reviewed at least
annually by the committee of the Board of Directors of the Company having
responsibility for executive compensation matters (the “Executive Compensation
Committee”), and may be increased (but shall not be decreased), in the sole
discretion of the Executive Compensation Committee.


 


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4.2                               Annual
Bonus Program.


 


(a)                                  During
each calendar year of the Employment Period, Executive will be eligible to
participate in the Company’s annual short-term performance incentive plan
applicable to senior executives, as such plan may exist from time to time (the
“PIP”).  Executive’s target annual bonus
award under the PIP for each calendar year of the Employment Period (the
“Target Annual Bonus”) will be $920,000. 
The amount of the actual annual bonus, if any, awarded to Executive
under the PIP with respect to any calendar year during the Employment Period
(each an “Annual Bonus Award”), shall be determined in accordance with the
terms of the PIP as administered by the Executive Compensation Committee.  All decisions regarding the criteria to be
used to determine awards under the PIP (which may consist of both corporate and
individual performance factors and metrics), the amount, if any, to be awarded
to Executive under the PIP with respect to any calendar year during the
Employment Period, and interpretations of the terms of the PIP shall be made
solely and exclusively by the Executive Compensation Committee in its
discretion; provided, however, that in determining Executive’s Annual Bonus
Award, if any, with respect to any calendar year during the Employment Period,
the corporate (as opposed to individual) performance factors and metrics that
are taken into account, and the percentage of the award that is based on
corporate and individual performance factors, shall be the same for Executive
as those applied to the Chief Executive
Officer of the Company.  The
Company reserves the right to change, alter, or terminate the PIP at any time
in its sole discretion; provided, that no such change, alteration or
termination shall adversely affect Executive’s rights under this Agreement, or
under any Annual Bonus Award made prior to the date of such change, alteration
or termination, without Executive’s prior written consent; and provided,
further, that if no PIP is in place with respect to any calendar
year during the Employment Period, then a substitute target annual
short-term performance-based incentive award shall be
established for Executive with respect to such calendar year, with a value
equal to $920,000, having terms conforming with this Section 4.2(a) and
otherwise having substantially similar vesting, performance and payment terms
to those applicable under the then most recent Annual Bonus Award made to
Executive.  If earned, such substitute
short-term performance incentive compensation award shall be payable in cash.


 


(b)                                 Each
Annual Bonus Award shall be paid to Executive in cash when the Company
customarily pays annual bonus awards to other senior executives under the PIP.


 


4.3                               Long-Term Incentive Plan.  Executive
will be eligible to participate in the Company’s long-term incentive plan
applicable to senior executives, as such plan may exist from time to time (the
“LTIP”).  Executive’s target annual
award under the LTIP with respect to each calendar year during the Employment
Period (each a “Target LTIP Award”) will be equal to Executive’s annualized
Base Salary for such calendar year.  All
awards to Executive under the LTIP shall vest and become non-forfeitable at the
end of the Performance Period (as defined in the LTIP) relating to such LTIP
Award or on the third anniversary of the first day of the Program (as defined
in the LTIP) to which the award relates, whichever is earlier, and shall be
subject to all other


 


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terms and conditions of the LTIP.  The amount of the actual LTIP Award, if any,
made to Executive with respect to any calendar year during the Employment
Period (each an “LTIP Award”) shall be determined in accordance with the terms
of the LTIP as administered by the Executive Compensation Committee.  All decisions regarding the criteria to be
used to determine LTIP Awards (which may consist of both corporate and
individual performance factors and metrics), the actual amount of the LTIP Award,
if any, with respect to any calendar year during the Employment Period, the
form of payment of such awards (which may be in cash, shares of Company Stock,
options to purchase Company Stock having an aggregate value equal to the amount
of the LTIP Award, or a combination thereof), and interpretations of the terms
of the LTIP shall be made solely and exclusively by the Executive Compensation
Committee in its discretion; provided, however, that in determining the amount
of Executive’s LTIP Award with respect to any given calendar year during the Employment
Period, the corporate (as opposed to individual) performance factors and
metrics that are taken into account, and the percentage of the award that is
based on corporate and individual performance factors shall be the same for
Executive as those applied to the LTIP award made to the Chief Executive Officer for the same
calendar year, and the form of payment of Executive’s LTIP Award, if any, with
respect to any given calendar year during the Employment Period shall be the
same as the form of payment of the LTIP Award made to the Chief Executive Officer for the same
calendar year.  The Company reserves the
right to change, alter or terminate the LTIP at any time in its
sole discretion; provided, that no such change, alteration or termination shall
adversely affect Executive’s rights under this Agreement or under any LTIP
Award made prior to the date of such change, alteration or termination; and
provided, further, that if no LTIP is in place with respect
to any calendar year during the Employment Period, then a substitute target
performance-based long-term incentive compensation award with a value equal to
$1,150,000 shall be established for Executive with respect to such calendar
year, with terms conforming to the provisions of this Section 4.3 and otherwise
having substantially similar vesting and performance terms to those applicable
under the then most recent LTIP Award made to Executive.  If earned, such substitute long-term
performance incentive compensation award shall be payable in cash.


 


4.4                               Inducement Grant.


 


(a)                                  As an inducement to Executive to enter
into this Agreement, the Company shall grant to Executive, not later than
June 1, 2004, unless otherwise agreed by the parties in writing, 110,000
restricted stock units (the “Inducement Grant”).  Each restricted stock unit (“RSU”) shall represent an unfunded and
unsecured promise of the Company to deliver to Executive, on the Settlement
Date, one share of common stock of the Company (“Company Stock”).  For purposes
of this Section 4.4, the “Settlement Date” for payment of each RSU
comprising the Inducement Grant shall be the applicable vesting date for such
RSU; provided, however, in the case of any RSUs as to which a timely deferral
election has been made by Executive pursuant to Section 4.6 hereof, the
term “Settlement Date” shall mean the later of the applicable vesting date for
such RSUs and the date on which shares of Company Stock issued upon


 


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settlement of such RSUs are required to be distributed
from the Trust provided for under Section 4.6 below.


 


(b)                                 In addition to any issuances of Company
Stock due upon settlement of any RSUs
comprising the Inducement Grant as provided above, on each date during
the period commencing on the date of grant of such RSUs and ending on the
Settlement Date of such RSUs upon which any dividends declared on Company Stock
are paid to stockholders of the Company, Executive shall be paid an amount in
cash (in the case of a cash dividend declared and paid by the Company) or
distributed a number of shares of Company Stock (in the case of a stock
dividend declared and paid by the Company), in each case equal to the aggregate
dividends that would have been paid on the Company Stock issuable upon
settlement of such RSUs if such RSUs had been settled in Company Stock
immediately prior to the date on which any such dividend was declared;
provided, however, that Executive may elect to defer the receipt of any such
cash payment by electing such deferral in a timely manner as provided in
Section 4.6 below.


 


(c)                                  Fifty
percent (50%) of the RSUs comprising the Inducement Grant (the “First RSU
Installment”) shall vest on January 1, 2005 if Executive is then employed
by the Company.  If Executive’s
employment with the Company terminates for any reason, and the “Effective Date
of Termination,” as hereafter defined, is on or prior to December 31,
2004, the First RSU Installment shall be forfeited by Executive.  The remaining 50% of the RSUs comprising the
Inducement Grant (the “Second RSU Installment”) shall vest upon the earlier of
(iv) January 1, 2006, if Executive is then employed by the Company and (v)
the termination of Executive’s employment for any reason other than termination
by the Company for Cause (as defined below) or termination by Executive without
Good Reason (as defined below).  In the
event Executive’s employment is terminated for Cause or Executive terminates
his employment without Good Reason prior to January 1, 2006, the Second
RSU Installment shall be forfeited by Executive.


 


(d)                                 If the
Inducement Grant is not made pursuant to a plan covered by a registration
statement declared effective by the Securities and Exchange Commission (“SEC”),
the Company agrees to file with the SEC, on or prior to the Effective Date, or
as soon as practicable thereafter to the extent the Company is not eligible to
do so on the Effective Date, a Form S-8 registration statement covering the
shares of Company Stock issuable upon settlement of the RSUs comprising the
Inducement Grant.


 


4.5                               Expense
Reimbursement Policy.  During the Employment Period, the Company
shall reimburse Executive for all ordinary and reasonable business expenses
paid by Executive in connection with the performance of his duties under this
Agreement in accordance with and subject to the Company’s expense reimbursement
policies then in effect for senior executives.


 


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4.6                               Grantor
Trust.  The Company shall establish a grantor (or “rabbi”) trust for the
benefit of Executive (the “Trust”) into which Executive may elect to have the
Company deposit, not later than the vesting date applicable to such
compensation, (a) all or any portion of any cash compensation paid to Executive
under the terms of this Agreement, including without limitation any Base
Salary, Annual Bonus Awards, LTIP Awards payable in cash or cash-settled equity
awards provided to Executive under the terms of this Agreement and/or (b) all
or any portion of the shares of Company Stock required to be distributed to Executive
upon settlement of any stock-settled equity awards provided to Executive under
the terms of this Agreement, in each case provided that Executive has made a
timely election to have the income attributable to any such compensation
deferred until a later date in accordance with applicable tax rules.  Any Company Stock required to be deposited
in the Trust shall be issued in the name of the trustee of the Trust and shall
be subject to all of the provisions of the agreement of Trust.  Upon the making of any deferral election,
Executive shall specify the payment schedule for distribution to him of
such cash or equity-based compensation that has been earned or vested in
accordance with the provisions of this Agreement and the Company shall promptly
deliver such payment schedule to the trustee under the Trust.  The Company agrees to cause the transfer
agent for the Company Stock to promptly transfer on the books and records of
the Company into Executive’s name all shares of Company Stock distributed to
Executive from the Trust.  The Trust
shall be established by the Company within thirty (30) days following receipt
of a written request from Executive, and shall contain terms substantially
similar to those set forth in Exhibit A attached hereto, except that the Company
may make any changes to the terms of the Trust reasonably necessary for its
proper administration, including but not limited to, changes to ensure the
appropriate tax consequences to Executive and the Company or changes required
by the Trustee, provided such changes do not affect the rights of Executive
thereunder in any materially adverse manner.


 


4.7                               Annual
Equity Compensation.


 


(a)                                  The Company shall grant to Executive with respect to
each calendar year during the Employment Period that number of RSUs (each an
“Annual Equity Compensation Award”) that is equal to $580,000 divided by the last
reported sales price of the Company Stock, as reported by the New York Stock
Exchange or such other national securities
exchange or automated quotation system on which the Company Stock is then
traded (the “Last Reported Sales Price”), on the date of grant.  The decision
as to whether the RSUs comprising any given Annual Equity Compensation Award
may be settled in cash or Company Stock shall be made by the Executive
Compensation Committee in its sole discretion and indicated in the grant
document relating to such grant.  For
purposes of this Section 4.7, (i) the “Settlement Date” for payment of
each RSU comprising any Annual Equity Compensation Award shall be the applicable
vesting date for such RSU; provided, however, in the case of any RSUs as to
which a timely deferral election has been made by Executive pursuant to
Section 4.6 hereof, the term “Settlement Date” shall mean the later of the
applicable vesting date for such RSUs and the date on which shares of Company
Stock issued upon settlement of such RSUs are required to be distributed from
the Trust, and (ii) with respect to any cash-settled RSUs


 


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comprising any Annual Equity
Compensation Award, the fair market value of a share of Company Stock shall be equal
to the Last Reported Sales Price of the Company Stock on the Settlement Date
for such RSUs.


 


(b)                                 The Annual Equity Compensation Award with respect to
each calendar year during the Employment Period shall be made on or before
April 30 of the calendar year immediately following the calendar year to
which the Annual Equity Compensation Award relates.


 


(c)                                  The grant document relating to each Annual Equity
Compensation Award shall provide that the RSUs comprising such Annual Equity
Compensation Award shall be fully vested as of the date of the grant.  In addition to any cash
payments or issuances of Company Stock due upon settlement of any RSUs comprising any Annual Equity Compensation Award,
on each date during the period commencing on the date of grant of such RSUs and
ending on the Settlement Date of such RSUs upon which any dividends declared on
Company Stock are paid to stockholders of the Company, Executive shall be paid
an amount in cash (in the case of a cash dividend declared and paid by the
Company) or distributed a number of shares of Company Stock (in the case of a
stock dividend declared and paid by the Company), in each case equal to the
aggregate dividends that would have been paid on the Company Stock issuable
upon settlement of such RSUs if such RSUs had been settled in Company Stock
immediately prior to the date on which any such dividend was declared;
provided, however, that Executive may elect to defer the receipt of any such
cash payment by electing such deferral in a timely manner as provided in
Section 4.6 above.


 


(d)                                 In the event that Executive’s employment terminates
for any reason after December 31 of any year during the Employment Period,
and prior to the date of grant of the Annual Equity Compensation Award with
respect to such year, the Annual Equity Compensation Award with respect to such
year shall be treated as an accrued obligation of the Company and shall be paid
in accordance with Section 6.1 hereof.


 


(e)                                  If the Executive Compensation Committee determines
that the RSUs comprising any Annual Equity Compensation Award shall be settled
in Company Stock and such Annual Equity Compensation Award is not made pursuant
to a plan that is then covered by a registration statement declared effective
by the SEC, the Company agrees to file, as soon as practicable after the date
on which such award is made, to the extent it is then eligible to do so, a Form
S-8 registration statement covering the shares of Company Stock issuable upon
settlement of the RSUs comprising such award.


 


5.                                      Personnel Policies and
Benefits.


 


5.1                               Benefits
Generally.  During the Employment
Period, subject to Executive satisfying any underwriting criteria imposed on
the Company or Executive by the Company’s insurance carriers, Executive shall
be entitled to participate in all benefit


 


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programs, policies or plans adopted by the
Company and applicable to senior executives of the Company on the same basis as
the Chief Executive Officer of the
Company, as such programs, policies or plans may be interpreted,
adopted, revised or terminated from time to time by the Company in its sole
discretion; provided however that health care, dental and hospitalization
benefits for Executive shall include spouse and dependent care coverage and
shall provide for access to providers and hospitals in both the New York and
Washington, D.C. metropolitan areas (including Westchester County, New York and
either Maryland or Virginia, depending on whether Executive chooses to reside
in Maryland or Virginia).  Subject to
Executive satisfying any underwriting criteria described above, Executive shall
be eligible to participate in all such benefit programs, policies or plans
immediately on the Effective Date.  All
matters of eligibility for coverage or benefits under any such benefit
programs, policies or plans shall be determined in accordance with the
provisions of the applicable program, policy, plan or arrangement.  The Company reserves the right to change,
alter, interpret or terminate any such programs, policies or plans at any time
in its sole discretion.


 


5.2                               Additional
Benefits.  In addition to the
benefits provided pursuant to Section 5.1 above:


 


(a)                                  Subject
to Executive satisfying applicable underwriting criteria imposed by the
insurance carrier, the Company shall pay for life insurance coverage on the
Executive’s life with a minimum benefit of $3 million, provided the Company is
able to obtain a life insurance policy at reasonable rates, using commercially
reasonable efforts, that fully insures this minimum benefit to Executive;


 


(b)                                 The
Company shall pay to Executive on the Effective Date the sum of $250,000 in
cash to help defray the cost of relocation from the New York area to the
Washington, DC metropolitan area (the “Relocation Payment”); provided, however
that Executive shall promptly refund the Relocation Payment to the Company in
the event that Executive’s employment is terminated by the Company for Cause or
by Executive without Good Reason prior to the first anniversary of the
Effective Date; and


 


(c)                                  Executive
shall also be entitled to receive from the Company, during the Employment
Period, benefits or reimbursements in addition to those provided pursuant to
the Company programs, policies and plans described in Section 5.1 above,
for himself or his dependents, having a value of up to $40,000 per year
including, without limitation, co-pays and other non-covered medical or dental
benefits, hospitalization benefits, disability benefits, life insurance
benefits, club memberships or unreimbursed transportation expenses, or any
other benefits or perquisites reasonably selected by Executive and approved by
the Executive Compensation Committee.


 


5.3                               Personnel Policies.  Except as otherwise provided herein,
Executive’s employment shall be subject to the personnel policies that apply
generally to the Company’s senior executive officers as the same may be
interpreted, adopted, revised or terminated from time to time during the term
of this Agreement by the Company in its sole discretion.


 


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6.                                      Termination.


 


6.1                               Payment
of Accrued But Unpaid Amounts Upon Termination.  Notwithstanding any provision in this Agreement to the
contrary, in the event that Executive’s employment with the Company terminates
for any reason during the Employment Period, Executive or his beneficiaries or
estate (as provided in Section 10.2) shall be entitled to receive, in
addition to all other payments and benefits required to be made or provided
under the remaining provisions of this Article 6, within fourteen (14)
days after the Effective Date of Termination:


 


(a)                                  any
accrued but unpaid Base Salary for services rendered
by Executive to the Company prior to the Effective Date of Termination;


 


(b)                                 any
earned but unpaid Annual Bonus Awards for calendar years that have ended prior
to the year of termination;


 


(c)                                  reimbursement
of any accrued but unpaid expenses
required to be reimbursed under this Agreement that were incurred by Executive
prior to the Effective Date of Termination;


 


(d)                                 payment
for any accrued but unpaid vacation time
to the extent consistent with Company policy in effect at the time of
termination;


 


(e)                                  any
amounts deposited in the Trust on behalf of Executive
at Executive’s election;


 


(f)                                    earned
but unpaid Annual Equity Compensation Awards for any calendar year that has
ended prior to the Effective Date of Termination and with respect to which a
grant is required to have been made
pursuant to Section 4.7 hereof but has not been made on or before the
Effective Date of Termination; provided, however, that for Annual Bonus Award
and Annual Equity Compensation Award purposes, amounts will be treated as
earned if Executive is employed by the Company on the last day of the calendar
year to which such Annual Bonus Award or Annual Equity Compensation Award
relates;


 


(g)                                 any
earned but unpaid LTIP Awards; provided however
that an LTIP Award will in all events be treated as earned if Executive is
employed by the Company on the last day of the Performance Period relating to
such LTIP Award or on the third anniversary of the first day of the Program to
which the LTIP Award relates, whichever is earlier; and


 


(h)                                 if
Executive’s employment with the Company terminates for any reason and the
Effective Date of Termination is prior to January 1, 2005, a lump sum cash
payment equal to $3,200,000.


 


Except as specifically provided in this Agreement or under the terms of
any incentive compensation or benefit plan, program, policy or arrangement in
effect and applicable to


 


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Executive on the Effective Date of Termination, Executive shall have no
right to receive any other compensation, or to participate in any other plan,
arrangement or benefit of the Company after such termination and all other
obligations of the Company and rights of Executive under this Agreement shall
terminate effective as of the Effective Date of Termination.


 


6.2                               Termination
Due to Death.  Executive’s
employment with the Company shall automatically terminate upon Executive’s
death.  From and after the date of
death, the Company shall have no further obligation to pay any Base Salary to
Executive.  In the event of such
termination:


 


(a)                                  the
entitlement of any beneficiary of Executive to benefits under any benefit plan,
program, policy or arrangement described in Section 5.1 or 5.2 shall be
determined in accordance with the provisions thereof;


 


(b)                                 the
Inducement Grant will fully vest if not already vested and the Inducement Grant
and any Annual Equity Compensation Awards made prior to the Effective Date of
Termination will, to the extent not already settled, be settled in accordance
with the terms of the grant documents covering such grants or awards and
consistent with the terms of this Agreement;


 


(c)                                  vesting
and all other rights with respect to stock options and any other equity-based
compensation awards not covered by Section 6.1 above will be determined in
accordance with the equity incentive plan under which the relevant grant was
made and any applicable grant documents; provided, however that Executive shall
be considered for such purpose to have been employed at the end of the calendar
year in which the termination occurred;


 


(d)                                 the
Company shall pay to Executive’s designated beneficiary or estate, within
ninety (90) days after the Effective Date of Termination, a lump sum cash
payment equal to (i) Executive’s Base Salary in effect as of the date of
Executive’s death plus (ii) Executive’s Target Annual Bonus for the year in
which the termination occurs; and


 


(e)                                  any
LTIP Awards that are not covered by Section 6.1 or Section 6.2(c)
above will be treated in accordance with the LTIP as then in effect.


 


6.3                               Termination
Due to Disability.


 


(a)                                  If
Executive becomes “Disabled” (as defined below) at any time during the
Employment Period, the Company shall have the right to terminate Executive’s
employment, which termination shall become effective upon a date not less than
thirty (30) calendar days following the date that written notice of such
termination is given to Executive.  The
Effective Date of Termination shall be specified in such written notice of
termination.  From and after the
Effective Date of Termination, the Company shall have no further obligation to
pay any Base Salary to Executive.  In
the event of such termination:


 


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(i)                                     the
entitlement of Executive to benefits under any benefit plan, program, policy or
arrangement described in Section 5.1 or 5.2 shall be determined in
accordance with the provisions thereof;


 


(ii)                                  the
Inducement Grant will fully vest if not already vested and the Inducement Grant
and any Annual Equity Compensation Awards made prior to the Effective Date of Termination
will, to the extent not already settled, be settled in accordance with the
terms of the grant documents covering such grants or awards and consistent with
the terms of this Agreement;


 


(iii)                               vesting
and all other rights with respect to stock options and any other equity-based
compensation awards not covered by Section 6.1 above will be determined in
accordance with the equity incentive plan under which the relevant grant was
made and any applicable grant documents; provided, however that Executive shall
be considered for such purpose to have been employed at the end of the calendar
year in which the termination occurred;


 


(iv)                              the
Company shall pay to Executive, within ninety (90) days after the Effective
Date of Termination, a lump sum cash payment equal to the sum of (i)
Executive’s Base Salary in effect as of the Effective Date of Termination plus
(ii) Executive’s Target Annual Bonus for the year in which the termination
occurs; and


 


(v)                                 any
LTIP Awards that are not covered by Section 6.1 or Section 6.2(a)(iii)
above will be treated in accordance with the LTIP as then in effect.


 


(b)                                 The
term “Disabled” or “Disability” shall mean that (i) Executive has been unable,
notwithstanding such reasonable accommodations as may be required by applicable
law, to engage in the essential functions of his position with the Company due
to a disability, as determined by the Executive Compensation Committee upon
receipt of and in reliance on independent competent medical advice, for more
than one hundred eighty (180) total calendar days during any period of twelve
(12) consecutive months, or (ii) the Executive Compensation Committee has
reasonably determined, upon receipt of and in reliance on independent competent
medical advice, that Executive is unlikely to be able, notwithstanding such
reasonable accommodations as may be required by applicable law, to engage in
the essential functions of his position with the Company due to a disability
for more than one hundred eighty (180) total calendar days during any period of
twelve (12) consecutive months.


 


6.4                               Voluntary
Termination by Executive.  Executive
may terminate his employment at any time during the Employment Period without
Good Reason (as defined in Section 6.7) by giving the Company written
notice of Executive’s intent to terminate not less than one hundred and twenty
(120) calendar days before the effective date of such termination; provided,
however, that the required notice period shall be reduced to sixty (60) days in
the event Executive’s voluntary termination is not for the


 


11

















 


purpose of taking alternative
employment.  Such written notice of
termination shall state the Effective Date of Termination, which shall not be
earlier than the last day of the applicable notice period set forth in the
preceding sentence.  From and after the
Effective Date of Termination, the Company shall have no further obligation to
pay any Base Salary to Executive.  In
the event of such termination:


 


(a)                                  the
entitlement of Executive to benefits under any benefit plan, program, policy or
arrangement described in Section 5.1 or 5.2 hereof shall be determined in
accordance with the provisions thereof;


 


(b)                                 all
unvested equity or equity-based compensation awards, including, without limitation,
any unvested portion of the Inducement Grant, shall be forfeited by Executive;
and


 


(c)                                  any
LTIP Awards that are not covered by Section 6.1 or Section 6.4(b)
above will be treated in accordance with the LTIP as then in effect.


 


6.5                               Termination
By The Company Without Cause. The Board of Directors of the Company may
terminate Executive’s employment at any time during the Employment Period for
reasons other than death, Disability or Cause upon written notice to Executive,
which notice shall specify the Effective Date of Termination.  From and after the Effective Date of
Termination, the Company shall have no further obligation to pay any Base
Salary to Executive.  In the event of
such termination, except as provided in Section 6.8 with respect to termination
in anticipation of or within twenty four (24) months after a Change in Control,
Executive shall be entitled to the payments and benefits described in the
following paragraph contingent upon executing and returning to the Company (and
not revoking) a release of claims in substantially the form attached hereto as
Exhibit B and within the time permitted by the Company (which permitted time
period shall not be less than twenty-one (21) days).


 


Within fifteen (15) days
following the Effective Date of such Termination (or if later, eight (8) days
after Executive provides an executed release of claims which he is obligated to
deliver as described above, and as long as such release of claims is not
revoked by Executive during the seven (7) day period following its execution by
Executive), the Company shall pay to Executive:  (a) a lump sum cash payment equal to (i) two (2) times the sum of
(A) $1,150,000, (B) Executive’s Target Annual Bonus for the year in which the
termination occurs, and (C) $580,000 and (ii) a pro rata cash payment of
Executive’s Target Annual Bonus for the year of termination based on service
from commencement of the applicable bonus year through the Effective Date of
Termination.  In addition, the Inducement Grant will fully vest if not already
vested and the Inducement Grant and any Annual Equity Compensation Awards made
prior to the Effective Date of Termination will, to the extent not already
settled, be settled in accordance with the terms of the grant documents
covering such grants or awards and consistent with the terms of this Agreement,
and vesting and all other rights with respect to stock options and other
equity-based compensation awards not covered by Section 6.1 above will be
determined in accordance with the equity incentive plan under which the
relevant grant was made


 


12

















 


and any applicable grant documents; provided,
however, that Executive shall be considered for such purpose to have been
employed at the end of the calendar year in which the termination
occurred.  Any LTIP Awards that are not
covered by Section 6.1 above or the preceding provisions of this
Section 6.5 will be treated in accordance with the LTIP as then in effect.  The entitlement of Executive to benefits
under any benefit plan, program, policy or arrangement described in
Section 5.1 or 5.2 hereof shall be determined in accordance with the
provisions thereof; provided, however, that, subject to the last sentence of
this Section 6.5, the Company shall provide, at its expense, continued
participation in any medical insurance and dental insurance plans in which
Executive or his dependents participated as of the Effective Date of
Termination for two (2) years following the Effective Date of Termination at
the same coverage level as in effect as of the Effective Date of Termination,
but subject to such modifications as shall be established for senior executives
of the Company.  As a condition to
receiving such continued coverage, Executive may be required to elect continuation
coverage under “COBRA” under the terms of the applicable plans, in which case
the Company shall reimburse Executive for the cost of such continued coverage
at the same coverage level as in effect as of the Effective Date of Termination
but subject to such modifications as shall be established for senior executives
of the Company.


 


6.6                               Termination
for Cause.


 


(a)                                  Subject to Section 6.6(d), the Board
of Directors of the Company may terminate Executive’s employment at any time
during the Employment Period for “Cause,” which termination shall be effective
immediately upon written notice to Executive.


 


(b)                                 For purposes of this Agreement and
notwithstanding any other provision of this Agreement, “Cause” shall mean any
of the following: (i) Executive commits an act of fraud or embezzlement with
respect to the Company or any of its affiliates; (ii) Executive is convicted
of, or enters a plea of guilty or nolo contendere to, any felony; (iii)
Executive is grossly negligent in carrying out his duties under this Agreement
and such gross negligence has a material adverse effect on the Company, or (iv)
Executive willfully fails to perform his duties under this Agreement (other
than as a result of incapacity due to physical or mental illness) after
delivery of a written demand for substantial performance is delivered by the
Board of Directors or a duly authorized committee thereof to Executive;
provided, however, that an act or failure to act shall be considered “willful”
only if done or omitted to be done not in good faith and without reasonable
belief that such act or omission was in the best interests of the Company.


 


(c)                                  From and after the Effective Date of
Termination, the Company shall have no further obligation to pay any Base
Salary to Executive.  In the event of
such termination:


 


(i)                                     the entitlement of Executive to benefits
under any benefit plan, program, policy or arrangement described in
Section 5.1 or 5.2 shall be determined in accordance with the provisions
thereof;


 


13

















 


(ii)                                  any unvested equity or equity-based
compensation awards, including, without limitation, any unvested portion of the
Inducement Grant, shall be forfeited by Executive; and


 


(ii)                                  any LTIP Awards that are not covered by
Section 6.1 or Section 6.6(c)(ii) above will be treated in accordance
with the LTIP as then in effect.


 


(d)                                 Any determination of Cause under this
Agreement shall be based on Executive’s efforts, not his quality of
performance, and shall be made by a resolution duly adopted by the affirmative
vote of at least two-thirds (2/3) of the members of the Board of Directors (not
including Executive if Executive is a member of the Board of Directors) at a
meeting of the Board of Directors called and held for that purpose; provided
that Executive shall have been given written notice of such meeting by
certified mail at least ten (10) business days prior to the meeting and shall
have been given the opportunity to be heard in person with counsel by the Board
of Directors before such resolution is passed. 
Any failure by the Company to follow the procedures set forth in this
Section 6.6(d) in connection with a termination of Executive’s employment
shall result in such termination being deemed to be a termination by the
Company without Cause under Section 6.5; provided, however, that neither
the provision of notice to Executive that a Board meeting will be held to
determine whether there is grounds for a “Cause” termination, nor the holding
of such meeting, shall be construed as a notice of termination pursuant to
Section 6.5 or Section 6.6(a).


 


6.7                               Termination
by Executive for Good Reason.


 


(a)                                  Executive
may terminate his employment hereunder at any time during the Employment Period
for “Good Reason” (as hereinafter defined) by providing the Company with
written notice of termination within ninety (90) days after Executive knows, or
should have known, that an event constituting “Good Reason” has occurred.  Such notice of termination shall state the
Effective Date of Termination, which effective date shall not be less than
thirty (30) days after the date of such notice, except in the case of any event
described in subparagraph 6.7(b)(ii) below, in which case such termination
shall be effective immediately upon the delivery of such notice.  If Executive terminates his employment under
this Section 6.7 for Good Reason (a “Termination for Good Reason”) and a
Change in Control (as defined in Section 7.1) has not occurred within the
twenty-four (24) month period preceding the Effective Date of Termination,
Executive shall receive the same payments and benefits Executive would be
entitled to receive under Section 6.5 following a termination of
employment by the Company without Cause, subject to providing a release of
claims as described therein.  If Executive
terminates his employment under this Section 6.7 for Good Reason and such
a Change in Control has occurred, Executive shall receive the payments and
benefits as are provided pursuant to Section 6.8.


 


(b)                                 “Good
Reason” shall mean the occurrence of any one or more of the following events
without the express written consent of Executive; provided,


 


14

















 


however, that any of the events described in subparagraph 6.7(b)(ii)
shall only constitute Good Reason if the Company shall have failed to correct
or remedy such event within thirty (30) days following receipt of written
notice from Executive describing in reasonable detail such event and demanding
correction or remedy:


 


(i)                                     The relocation of Executive’s principal
office to a location that is more than fifty (50) miles from the Company’s
current or future Washington, D.C. area headquarters;


 


(ii)                                  A reduction by the Company in, or a
failure by the Company to pay, any Base Salary required to be paid hereunder,
or a failure by the Company to pay or provide for any earned Annual Bonus, any
earned Annual Equity Compensation Award or any other material earned
compensation or benefits required to be paid or provided for under this
Agreement, in each case when due;


 


(iii)                               A change in Executive’s responsibilities
or titles or any other action that results in Executive no longer being the
sole second highest officer in the Company (excluding Board members who are not
employees of the Company) except in connection with or as a result of a
termination of Executive’s employment pursuant to any provision of this
Section 6;


 


(iv)                              the appointment by the Company of any
person to any position within the Company (excluding Board members who are not
full-time employees of the Company) or the giving to any person of any title
within the Company (excluding titles given to Board members who are not
full-time employees of the Company) that is equal to or greater than
Executive’s other than the current Chief Executive Officer or any future Chief
Executive Officer of the Company; or


 


(v)                                 The failure of the Company to obtain a
satisfactory agreement from any successor to the Company to assume and perform
the obligations of the Company hereunder, as contemplated by Section 10.1.


 


Executive shall also be entitled to voluntarily terminate his
employment with the Company for any reason by giving not less than five (5)
days’ advance written notice to the Company of his intention to terminate his
employment within the thirty (30)-day period commencing on the first
anniversary of a Change in Control of the Company (as defined in
Section 7.1 hereof) and any such termination shall be considered a
termination for Good Reason after a Change in Control for purposes of this
Agreement.  The continued employment of
Executive after an event constituting Good Reason shall not constitute consent
to, or a waiver of rights with respect to, any circumstance constituting Good
Reason, until the passage of ninety (90) days after Executive knew or should
have known that an event constituting “Good Reason” has occurred without
delivery by Executive of a written notice of termination for Good Reason, as
provided above.


 


15

















 


6.8                               Termination
After a Change in Control.  If the Company
terminates Executive’s employment for reasons other than death, Disability or
Cause or Executive timely terminates his employment for “Good Reason”, and such
termination occurs during the Employment Period and in anticipation of a Change
in Control or within twenty-four (24) months after a Change in Control, then,
from and after the Effective Date of Termination, the Company shall have no
further obligation to pay any Base Salary to Executive and, in lieu of any
severance amounts payable under Section 6.5 or 6.7, whichever would
otherwise apply, Executive shall be entitled to the payments and benefits
described in the following paragraph, contingent upon executing and returning
to the Company (and not revoking) a release of claims in substantially the form
attached hereto as Exhibit B within the time permitted by the Company (which
permitted time period shall not be less than twenty-one (21) days).


 


Within fifteen (15) days following the Effective Date of Termination
(or if later, eight (8) days after Executive provides an executed release of
claims as described above, as long as such release of claims is not revoked by
Executive during the seven (7) day period following its execution by
Executive), the Company shall pay to Executive:  (a) a lump sum cash payment equal to (i) two (2) times the sum of
(A) $1,150,000, (B) Executive’s Target Annual Bonus for the year in which the
termination occurs, and (C) $580,000 and (ii) a pro rata cash payment of
Executive’s Target Annual Bonus for the year of termination based on service
from commencement of the applicable bonus year through the date of termination;
provided, however, that if the Effective Date of Termination occurs on or after
February 2, 2005 but prior to February 2, 2007, the Company shall pay
to Executive, in lieu of the payment provided for in subsection (a)(i)
above, a lump sum cash payment equal to two and one-half (2-1/2) times the sum
of (A) $1,150,000, (B) Executive’s Target Annual Bonus for the year in which
termination occurs and (C) $580,000; and provided further that if the Effective
Date of Termination occurs on or after February 2, 2007, the Company shall
pay to Executive, in lieu of the payments provided for in
subsection (a)(i) above and the preceding proviso, a lump sum cash payment
equal to three (3) times the sum of (A) $1,150,000, (B) Executive’s Target
Annual Bonus for the year in which termination occurs, and (C) $580,000.  In addition, the Inducement Grant will fully vest if not already
vested and the Inducement Grant and any Annual Equity Compensation Awards made
prior to the Effective Date of Termination will, to the extent not already
settled, be settled in accordance with the terms of the grant documents
covering such grants or awards and consistent with the terms of this Agreement,
and vesting of stock options and other equity-based compensation awards not
covered by Section 6.1 above will be treated in accordance with the equity
incentive plan under which the relevant grant was made and any applicable grant
agreements; provided, however, that Executive shall be considered for such
purpose to have been employed at the end of the calendar year in which the
termination occurred.  Any LTIP Awards
that are not covered by Section 6.1 above or the preceding provisions of
this Section 6.8 will be treated in accordance with the LTIP as then in
effect.  The entitlement of Executive to
benefits under any benefit plan, program, policy or arrangement described in
Section 5.1 or 5.2 shall be determined in accordance with the provisions
thereof; provided, however, that, subject to the last sentence of
Section 6.5, the Company shall provide, at its expense, continued
participation in any medical insurance


 


16

















 


and dental insurance plans in which Executive or his dependents
participated as of the Effective Date of Termination for two (2) years
following the Effective Date of Termination, as described in Section 6.5.


 


6.9                               Effective
Date of Termination.  For purposes
of this Agreement, the Effective Date of Termination shall mean: in the event
of Executive’s (i) death, his date of death; (ii) Disability, the date
specified in the written notice of termination provided for in
Section 6.3(a); (iii) termination of employment without Cause, the date
specified in the Company’s notice of termination provided for in
Section 6.5; (iv) termination of employment for Cause, the date on which
written notice of termination is delivered to Executive as provided in
Section 6.6(a); (v) termination of employment for Good Reason, the date
specified by Executive in his written notice of termination as provided for in
Section 6.7(a); and (vi) voluntary termination by Executive pursuant to
Section 6.4, the date specified by Executive in his written notice of termination
provided for in Section 6.4.


 


6.10                        Termination
by Mutual Consent; Expiration of Term.  If
at any time during the Employment Period the parties by mutual consent decide
to terminate Executive’s employment or this Agreement on a basis other than
that set forth in this Agreement, they shall do so only by separate written
agreement setting forth the terms and conditions of such termination.


 


6.11                        Cooperation
with Employer After Termination of Employment. 
Following termination of Executive’s employment for any reason,
Executive shall fully cooperate with the Company in all matters relating to any
litigation in which the Company is or becomes involved, and in the winding up
of his pending work on behalf of the Company including, but not limited to, the
orderly transfer of any such pending work to other employees of the Company as
may be designated by the Company.  The
Company agrees to reimburse Executive for any reasonable out-of-pocket expenses
he incurs in performing any work on behalf of the Company following the
termination of his employment.


 


7.                                      Change
in Control.


 


7.1                               Definition
of “Change in Control.”  A “Change
in Control” of the Company shall be deemed to have occurred as of the first day
on which any one or more of the following conditions shall have been satisfied:


 


(a)                                  The acquisition
of beneficial ownership, as such term is defined in the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) in a single transaction or series of
related transactions (by tender offer or otherwise), of more than fifty percent
(50%) of the voting securities of the Company by a single person or entity
(other than the Company) or “group” within the meaning of Section 13(d)(3)
of the Exchange Act, whether through the acquisition of previously issued and
outstanding voting securities or of voting securities that have not been
previously issued, or any combination thereof; or


 


17

















 


(b)                                 There shall be
consummated any consolidation, merger, 
business combination or reorganization involving the Company or the
securities of the Company, in which holders of voting securities of the Company
immediately prior to such consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the Company does not
survive such transaction, voting securities of the corporation surviving such
transaction) having less than fifty percent (50%) of the total voting power in
an election of directors of the Company (or such other surviving corporation);
or


 


(c)                                  The individuals who
constituted the Company’s Board of Directors as of the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the directors of the Company; provided, however, that: (i) individuals whose
election, or whose nomination for election by the Company’s shareholders, was
approved by a vote of at least two-thirds (2/3) of the Incumbent Board shall be
considered, for purposes of this Agreement, members of the Incumbent Board; and
provided, further, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened “election contest” (as described in Rule 14a-11
promulgated under the Exchange Act) (an “Election Contest”) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person or
entity other than the Company’s Board of Directors (a “Proxy Contest”)
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or


 


(d)                                 There shall be
consummated any sale, lease, exchange, or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company (on a consolidated basis) to a party which is not a direct or
indirect wholly-owned subsidiary of the Company, including, without limitation,
any sale, lease, exchange or other transfer of all or substantially all of the
assets of the Company (on a consolidated basis) that includes the assets of The
Mills Limited Partnership, a Delaware limited partnership (the “Operating
Partnership”); or


 


(e)                                  The Company (or its
successor) no longer serves as the sole general partner of the Operating
Partnership other than as a result of (i) the merger of the Operating
Partnership with the Company or a subsidiary of the Company, (ii) the
redemption of all limited partnership interests in the Operating Partnership by
the Operating Partnership or the purchase of all such limited partnership
interests by the Company, or (iii) the liquidation, dissolution or winding up
of the Operating Partnership.


 


Notwithstanding
anything in this Agreement to the contrary, a Change in Control shall be deemed
not to have occurred with respect to Executive (a) if Executive is involved as
an officer, director, employee, agent, finder, consultant, partner, investor,
creditor or principal, or in any other individual or representative capacity
whatsoever, with an entity that acquires an interest in the Company in a
transaction that otherwise would constitute a Change in Control, and, pursuant
to a written or unwritten agreement or understanding with such entity entered
into prior to or in connection with such transaction (a “Change in Control
Agreement”), Executive receives or has the right to receive a material economic


 


18

















 


benefit as a
result of or in connection with such transaction (other than compensation
granted or awarded to Executive by the Company in the ordinary course of
business consistent with past practice pursuant to this Agreement or solely as
a result of his then-current ownership interest in the Company), or (b) any of
the foregoing transactions occurs with any employee benefit plan of the Company
or with any trustee or fiduciary or committee of any employee benefit plan of
the Company, any affiliate of the Company, any direct or indirect wholly-owned
subsidiary of the Company, or any entity owned, directly or indirectly by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company prior to the event that would otherwise
constitute a Change in Control.  For
purposes of this Section 7.1, a “material economic benefit” shall mean any
compensation, payment, beneficial ownership interest in the Company or another
entity that is party to any of the foregoing transactions or other economic
benefit (other than compensation granted or awarded to Executive by the Company
in the ordinary course of business consistent with past practice pursuant to
this Agreement or solely as a result of his then-current ownership interest in
the Company) that has a value equal to or greater than forty percent (40%) of
Executive’s Base Salary in effect as of the effective date of the Change in
Control; provided, however, that if this Agreement is terminated as a result of
or in connection with such transaction, the amount of compensation paid or
payable pursuant to this Agreement shall be deducted from any compensation paid
or payable pursuant to a Change in Control Agreement in calculating whether
Executive receives or has the right to receive a material economic benefit as a
result of or in connection with such transaction.


 


7.2.                            Certain
Most Favored Nation Provisions.  Notwithstanding
any other provision of this Agreement, the Executive’ entitlement to
Section 280G gross up payments in the event of a Change in Control shall
in no event be less favorable to Executive than those provided to the Company’s
Chief Executive Officer.


 


8.                                      Certain
Employment and Post-Employment Obligations.


 


8.1                               Non-competition
and Non-solicitation.  Unless
Executive obtains the prior written approval of the Company, Executive shall
not, at any time during the Employment Period and for a period of twenty-four
(24) months following the termination of Executive’s employment with the
Company for any reason, whether voluntary or involuntary, or whether due to the
expiration, non-renewal or termination of this Agreement, directly or
indirectly:


 


(a)                                  engage either individually
or as an officer, director, employee, agent, consultant, partner, investor
(excluding passive investments in voting securities of a publicly traded entity
aggregating less than five percent (5%) of any such entity’s total outstanding
voting securities), creditor, principal or otherwise, in the predevelopment,
development, redevelopment, operation, management or leasing of any type of
retail or entertainment-based shopping centers, malls, strip centers or other
commercial properties, the provision of related services or in any other
businesses then carried on by the Company in any way that would compete with
the business activities then carried on by the


 


19

















 


Company anywhere in the world; provided, however, that ownership of the
interests referred to in Exhibit D hereto shall not be deemed to violate this
Section 8.1(a)(i), and provided, further, that retail or
entertainment-based shopping centers, malls, strip centers or other commercial
properties with an aggregate square footage of less than 250,000 square feet
shall be deemed not to compete with the business activities of the Company for
purposes of this Section 8.1(a)(i);


 


(b)                                 cause, solicit, entice or induce any employee of the Company or any
employee of any affiliate of the Company to leave the employ of the Company or
such affiliate, to interfere in any manner with the business of the Company or
any such affiliate or to accept employment with, or compensation from,
Executive or any person, entity or business with which Executive is associated
or affiliated or by whom Executive is employed; or


 


(c)                                  use any Proprietary Property
(as defined below) of the Company or any of its affiliates or any other
information obtained from the Company or any of its affiliates for any purpose
other than in connection with the performance of Executive’s duties for the
Company under this Agreement.


 


8.2          Confidentiality Covenants.  Executive
acknowledges that in the course of his employment with the Company, the Company
has provided and will provide Executive with, and Executive has had and will
have access to, material, non-public information and other materials and
information that constitute trade secrets or other intellectual property or
proprietary material of the Company (“Proprietary Property”).  Such Proprietary Property includes, but is
not limited to, information (regardless of the form or medium in which such
information is stored or contained) not generally known in the retail shopping
center industry regarding the operations, market, structure, processes,
techniques, marketing plans, strategies, forecasts, new products or services,
systems, financial information, budgets, projections, plans, drawings,
specifications, licenses, prices, costs, or employees of the Company and/or its
clients, tenants, prospective clients or prospective tenants or the identity
of, or  the Company’s relationship with,
its clients, tenants, prospective clients or prospective tenants and all other
information and materials developed by Executive or other employees of the
Company in connection with their activities for or on behalf of the Company
and/or developed through the use of the Company’s resources, including
trademarks, copyrights and other intellectual property.  Such Proprietary Property shall be the sole
and exclusive property of the Company. 
Executive shall have no right, title or interest in and to the
Proprietary Property.   Executive
covenants and agrees that, during the Employment Period and for a period of
thirty-six (36) months thereafter, Executive shall not, directly or indirectly,
communicate, disclose or divulge to, or use for the benefit of Executive or any
other person (other than the Company), or to the disadvantage of the Company,
the Proprietary Property or any information in any way relating to the
Proprietary Property, without the prior written consent of the Company.  Executive further covenants and agrees that
he shall not, at any time, including any time after expiration of the 36-month
period following termination of his employment, directly or indirectly,
communicate, disclose or divulge to, or use for the benefit of Executive or any
other person (other than


 


20

















 


the Company), or to the disadvantage of the Company, any Proprietary
Property that then constitutes material, non-public information without the
prior written consent of the Company. 
Notwithstanding anything herein to the contrary, (i) any disclosure of
Proprietary Property made by Executive pursuant to valid legal process
(including, but not limited to, a subpoena or court order) shall not be
considered a violation of this Section 8.2 so long as Executive has
promptly notified the Company of his receipt of such process and provided the
Company with an opportunity to contest the validity of the process; and (ii)
the term “Proprietary Property” shall not include any information that becomes
public by any means other than a breach by Executive of this Agreement or is
rightfully disclosed to Executive by a third party without restriction and not
in violation of any duty of confidentiality owed to the Company.


 


8.3                               Covenants
Concerning Return of Company Property.  Upon
demand by the Company and/or upon termination of Executive’s employment with
the Company for any reason, whether voluntary or involuntary or whether due to
the expiration, non-renewal or termination of this Agreement, Executive shall
promptly deliver to the Company all Proprietary Property and all other property
and materials, belonging to the Company, including, without limitation, all
lists of and information pertaining to the Company’s clients, tenants,
prospective clients or prospective tenants, but excluding materials distributed
to employees of the Company generally and relating to Executive’s rights and obligations
as an employee of the Company.


 


8.4                               Certain
Acknowledgments.  Executive
acknowledges and agrees that:


 


(a)                                  As a key management
person, Executive is involved, on a high level, in the development,
implementation and management of the Company’s development strategies and
plans.  By virtue of Executive’s unique
and sensitive position and special background, employment of Executive by a
competitor of the Company at any time while the covenants set forth in Section 8.1
are in effect represents a serious competitive danger to the Company, and the
use of Executive’s talent and knowledge and information about the Company’s
business strategies can and would constitute a valuable competitive advantage
over the Company;


 


(b)                                 Enforcement of the
covenants set forth in this Section 8 will not prevent Executive from
earning a living in the real estate industry;


 


(c)                                  The Company has made
a substantial investment in Executive and the Company’s business;


 


(d)                                 The restrictions
provided in this Section 8 are reasonable, proper and necessary for the
Company’s protection; and


 


(e)                                  This Agreement is not
intended to restrict Executive from performing work in a role that does not
compete with the then-current business of the Company.


 


21

















 


8.5                               Enforcement
and Remedies.


 


(a)                                  If a court of
competent jurisdiction finds Section 8, or any of its restrictions, to be
ambiguous, unenforceable and/or invalid, Executive and the Company agree that
such court shall (i) in the case of ambiguity, read Section 8 as a whole
and interpret the restriction(s) at issue to be enforceable and valid to the
maximum extent allowed by law for the protection of the Company’s business
interests; and (ii) in the case of unenforceability or invalidity, eliminate
such enforceable or invalid provisions from this Agreement to the extent
necessary to permit the remaining provisions to be enforced to the maximum
extent permitted for the protection of the Company’s business interests.


 


(b)                                 Executive
acknowledges that it may be impossible to assess the monetary damages incurred
by his violation of this Section 8, or any of its terms, and that any
threatened or actual violation or breach of this Section 8, or any of its
terms, will constitute immediate and irreparable injury to the Company.  Executive expressly agrees that in addition
to any and all other damages and remedies available to the Company as a result
of Executive’s breach of Section 8, the Company shall be entitled to an
injunction restraining Executive from violating or breaching Section 8 or
any of its terms.


 


8.6                               Mutual Non-Disparagement.  Executive shall not, at any time during or after the Employment
Period, make or publish any derogatory, unfavorable, negative, disparaging,
false, damaging or deleterious written or oral statements or remarks
(including, without limitation, the repetition or distribution of derogatory
rumors, allegations or negative or unfavorable reports or comments) regarding
the Company or any of its affiliates or any members of their respective
managements or the business affairs or performance of the Company or any of its
affiliates or any of their respective managements.  The Company shall not at any time during or after the Employment
Period make or publish any derogatory, unfavorable, negative, disparaging,
false, damaging or deleterious written or oral statements or remarks regarding
Executive or his performance to anyone who is not an officer, director or
employee of the Company or any of its affiliates.  For purposes of this Section 8.6, a statement or remark
shall be deemed to have been made by the Company only if it is made or
authorized by a member of the Board of Directors or executive management of the
Company.  Nothing in this Section 8.6
shall be construed to limit any person’s ability to give truthful testimony
pursuant to valid legal process, including but not limited to, a subpoena or
court order.


 


8.7                               Publication of this Agreement to
Subsequent Employers or Business Associates. 
Executive agrees that, if Executive is offered employment or the
opportunity to enter into any business venture as an owner, partner, consultant
or in any other capacity in the businesses or industries covered by
Section 8 of this Agreement while the restrictions described in
Section 8 of this Agreement are in effect, Executive will inform the
offeror of the existence of Section 8 of this Agreement and provide the
offeror with a copy thereof.  Executive
authorizes the Company to provide a copy of relevant provisions of this
Agreement to any of the persons or entities described herein and to make such
persons aware of Executive’s obligations under this Section 8.


 


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9.                                      Indemnification
and Director’s and Officer’s Liability Insurance.  On or prior to the date of this Agreement, the Company and
Executive shall enter into an Indemnification Agreement substantially in the
form of Exhibit C attached hereto, and the Company shall designate Executive as
a named insured under and provide coverage to Executive under the Company’s
director’s and officer’s liability insurance coverage with respect to services
rendered during the Employment Period in the same amount as provided to other
senior executives of the Company.


 


10.                               Assignment.


 


10.1                        Assignment
by the Company.  This Agreement may,
and shall be, assigned or transferred to, and shall be binding upon and shall
inure to the benefit of, any successor of the Company, and any such successor
shall be deemed substituted for all purposes for the “Company” under the terms
of this Agreement (other than for the purpose of determining whether a Change
in Control has occurred under Section 7.1).  Notwithstanding such assignment, the Company (if it survives)
shall remain, with such successor, jointly and severally liable for all its
obligations hereunder.  Except as herein
provided, this Agreement may not otherwise be assigned by the Company.


 


10.2                        Assignment
by Executive.  The services to be
provided by Executive to the Company pursuant to this Agreement are personal to
Executive, and Executive’s duties may not be assigned by Executive; provided,
however, that this Agreement shall inure to the benefit of and shall be
enforceable by Executive’s personal or legal representatives, executors and
administrators, heirs, distributees, devisees and legatees.  Unless otherwise required by law, if
Executive dies while any amounts payable to Executive hereunder remain
outstanding, all such amounts shall be paid in accordance with the terms of
this Agreement to the beneficiary designated by Executive in writing to the
Company prior to his death or, if Executive has not designated a beneficiary or
the designated beneficiary does not survive Executive, to Executive’s estate.


 


11.                               General
Provisions.


 


11.1                        Notice.  Any notice required or permitted
hereunder shall be made in writing either (a) by actual delivery of the notice
into the hands of the party thereunder entitled, (b) by the mailing of the
notice in the United States first class mail, certified or registered mail,
return receipt requested, all postage prepaid or (c) by nationally recognized
overnight delivery service, in each case addressed to the party to whom the
notice is to be given at the party’s respective address set forth below, or
such other address as the parties may from time to time designate by written
notice as herein provided.


 


	
  To the Company:

  	
   

  	
  The Mills Corporation

  
	
   

  	
   

  	
  1300 Wilson Boulevard, Suite 400

  
	
   

  	
   

  	
  Arlington, Virginia 22209

  
	
   

  	
   

  	
  Attn:  Chief Executive Officer

  



 


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  with a copy to:

  	
   

  	
  The Mills Corporation

  
	
   

  	
   

  	
  1300 Wilson Boulevard, Suite 400

  
	
   

  	
   

  	
  Arlington, Virginia 22209

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Karen A. Dewis, Esquire

  
	
   

  	
   

  	
  McDermott, Will & Emery

  
	
   

  	
   

  	
  600 13th St., N.W.

  
	
   

  	
   

  	
  Washington, D.C. 20005

  
	
   

  	
   

  	
   

  
	
  To Executive:

  	
   

  	
  Mark Ettenger

  
	
   

  	
   

  	
  1317 Flagler Drive

  
	
   

  	
   

  	
  Mamaroneck, NY  10543

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Stephen T. Lindo, Esquire

  
	
   

  	
   

  	
  Willkie Farr & Gallagher LLP

  
	
   

  	
   

  	
  787 Seventh Avenue

  
	
   

  	
   

  	
  New York, NY 10019

  



 


The notice shall be deemed to be received in
case (a) on the date of its actual receipt by the party entitled thereto, in
case (b) on the third business day following the date of its mailing, and in
case (c) on the next business day following the date of its delivery to such
nationally recognized overnight delivery service.


 


11.2                        Amendment
and Waiver.  No amendment or
modification of this Agreement shall be valid or binding upon (a) the Company
unless made in writing and signed by a duly authorized officer of the Company
or (b) Executive unless made in writing and signed by him.


 


11.3                        Non-Waiver
of Breach.  No failure by either
party to declare a default due to any breach of any obligation under this
Agreement by the other, nor failure by either party to act quickly with regard
thereto, shall be considered to be a waiver of any such obligation, or of any
future breach.


 


11.4                        Severability.  Subject to Section 8.5(a), if any
provision or portion of this Agreement, with the exception of Sections 1, 2 and
4, shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.


 


11.5                        Tax
Withholding.  The Company may
withhold from any payments to Executive under this Agreement all federal,
state, city, or other taxes as may be required pursuant to any law or
governmental regulation or ruling.


 


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11.6                        Governing
Law.  To the extent not preempted by
Federal law, the validity and effect of this Agreement and the rights and
obligations of the parties hereto shall be construed and determined in
accordance with the internal substantive laws of the State of Delaware without
regard to the conflict of laws or choice of law principles thereof.


 


11.7                        Effect
on Prior Agreement.  The Employment
Term Sheet executed by the Company on December 16, 2003 and countersigned
by the Executive on January 20,
2004 (the “Term Sheet”) is hereby deemed terminated and of no further force or
effect as of the date of execution of this Agreement without any consequence to
the Executive or the Company of any kind, and the Term Sheet shall be
considered superceded and replaced for all purposes by this Agreement.


 


11.8                        Entire
Agreement.  This Agreement contains
all of the terms agreed upon by the Company and Executive with respect to the
subject matter hereof and supersedes all prior agreements, arrangements,
understandings and communications between the parties dealing with such subject
matter hereof, whether oral or written. 
To the extent this Agreement conflicts with any terms, conditions or
agreements set forth in any Company plan, policy or manual, the terms of this
Agreement shall govern.


 


11.9                        Headings.  Numbers and titles to paragraphs and
sections hereof are for information purposes only and, where inconsistent with
the text, are to be disregarded.


 


11.10                 Counterparts.  This agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which when taken together, shall be and constitute one and the same instrument.


 


11.11                 Survival
Beyond Termination.  Notwithstanding
anything in this Agreement to the contrary, the restrictions and obligations
imposed on the parties that are to be carried out after any termination of
Executive’s employment shall survive termination of Executive’s employment,
whether voluntary or involuntary, or whether due to the expiration, non renewal
or termination of this Agreement, and be binding regardless of the reason for
termination of employment.  Executive
covenants that if Executive should ever seek to avoid his obligations under
Section 6.11, Section 8 or Section 11.5 because Executive
contends that such restrictions are unenforceable as written for any reason,
Executive shall provide notice to the Company in accordance with the provisions
of Section 11.1 of this Agreement setting forth in detail the reasons that
Executive believes such restrictions to be unenforceable.


 


11.12                 Knowing
and Voluntary Execution.  Executive
has carefully read and considered all of the terms of this Agreement, including
Section 8 and the restrictions contained in it.  Executive has freely, willing and knowingly entered into this
Agreement with the intent to be bound by it.


 


11.13                 Prevailing
Parties.  In the event that either
the Company or Executive is successful in whole or in part in any legal or
equitable action against the


 


25

















 


other party under this Agreement (either as determined by a court of
competent jurisdiction pursuant to a final, non-appealable order or as agreed
to by the parties pursuant to a duly executed settlement agreement), the
prevailing party in any such dispute shall be entitled to receive a
reimbursement of his or its reasonable attorneys’ fees and related costs
associated with resolving such dispute.


 


IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on this 10th day of May, 2004, and to be
effective as of the Effective Date.


 


 


	
  The Company:

  	
  THE MILLS
  CORPORATION

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laurence C. Siegel

  	
   

  
	
   

  	
   

  	
  Laurence C. Siegel

  	
   

  
	
   

  	
   

  	
  Its Chairman and Chief

  	
   

  
	
   

  	
   

  	
  Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Executive:

  	
  MARK ETTENGER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark Ettenger

  	
   

  



 


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