Document:

Exhibit 10.1

 

2004 Equity Incentive Plan

of
Macropore Biosurgery, Inc.

1.                                       Purpose
of this Plan

The purpose of this 2004 Equity Incentive Plan is to
enhance the long-term stockholder value of Macropore Biosurgery Inc. by
offering opportunities to eligible individuals to participate in the growth in
value of the equity of Macropore Biosurgery, Inc.

2.                                       Definitions
and Rules of Interpretation

2.1           Definitions.

This Plan uses the following defined terms:

(a)           “Administrator”  means
the Board or the Committee, or any officer or employee of the Company to whom
the Board or the Committee delegates authority to administer this Plan.

(b)           “Affiliate” means a
“parent” or “subsidiary” (as each is defined in Section 424 of the Code) of the
Company and any other entity that the Board or Committee designates as an
“Affiliate” for purposes of this Plan.

(c)           “Applicable Law”
means any and all laws of whatever jurisdiction, within or without the United
States, and the rules of any stock exchange or quotation system on which Shares
are listed or quoted, applicable to the taking or refraining from taking of any
action under this Plan, including the administration of this Plan and the
issuance or transfer of Awards or Award Shares.

(d)           “Award”
means a Stock Award (e.g. restricted stock unit award), SAR, Cash Award, or
Option granted in accordance with the terms of this Plan.

(e)           “Award Agreement” means
the document evidencing the grant of an Award.

(f)            “Award Shares” means
Shares covered by an outstanding Award or purchased under an Award.

(g)           “Awardee” means:
(i) a person to whom an Award has been granted, including a holder of a
Substitute Award, (ii) a person to whom an Award has been transferred in
accordance with all applicable requirements of Sections 6.5, and 16.

(h)           “Board” means the
Board of Directors of the Company.

(i)            “Cash Award”  means the right to receive cash as
described in Section 8.3.

 

 

(j)            “Change in Control”
means any transaction or event that the Board specifies as a Change in Control
under Section 10.4.

(k)           “Code” means the
Internal Revenue Code of 1986.

(l)            “Committee” means a
committee composed of Company Directors appointed in accordance with the
Company’s charter documents and Section 4.

(m)          “Company” means
Macropore Biosurgery, Inc., a Delaware corporation.

(n)           “Company Director”
means a member of the Board.

(o)           “Consultant” means an
individual who, or an employee of any entity that, provides bona fide services
to the Company or an Affiliate not in connection with the offer or sale of
securities in a capital-raising transaction, but who is not an Employee.

(p)           “Director” means a
member of the Board of Directors of the Company or an Affiliate.

(q)           “Divestiture” means
any transaction or event that the Board specifies as a Divestiture under
Section 10.5.

(r)            “Domestic Relations Order” means a “domestic relations order” as
defined in, and otherwise meeting the requirements of, Section 414(p) of
the Code, except that reference to a “plan” in that definition shall be to this
Plan.

(s)           “Effective Date” means the date as of which the Board
approves this Plan.

(t)            “Employee” means a
regular employee of the Company or an Affiliate, including an officer or
Director, who is treated as an employee in the personnel records of the Company
or an Affiliate, but not individuals who are classified by the Company or an
Affiliate as: (i) leased from or otherwise employed by a third party,
(ii) independent contractors, or (iii) intermittent or temporary
workers.  The Company’s or an
Affiliate’s classification of an individual as an “Employee” (or as not an
“Employee”) for purposes of this Plan shall not be altered retroactively even
if that classification is changed retroactively for another purpose as a result
of an audit, litigation or otherwise. 
An Awardee shall not cease to be an Employee due to transfers between
locations of the Company, or between the Company and an Affiliate, or to any
successor to the Company or an Affiliate that assumes the Awardee’s Options
under Section 10.  Neither service
as a Director nor receipt of a director’s fee shall be sufficient to make a
Director an “Employee.”

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

(v)           “Executive” means, if the Company has any class of any
equity security registered under Section 12 of the Exchange Act, an individual
who is subject to Section 16 of the Exchange Act or who is a “covered employee”
under Section 162(m) of the Code, in either case  because of the individual’s
relationship with the Company or an Affiliate. 
If the Company

 

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does not
have any class of any equity security registered under Section 12 of the
Exchange Act, “Executive” means any (i) Director, (ii) officer elected or
appointed by the Board, or (iii) beneficial owner of more than 10% of any
class of the Company’s equity securities.

(w)          “Expiration Date” means,
with respect to an Award, the date stated in the Award Agreement as the
expiration date of the Award or, if no such date is stated in the Award
Agreement, then the last day of the maximum exercise period for the Award,
disregarding the effect of an Awardee’s Termination or any other event that
would shorten that period.

(x)            “Fair Market Value” means
the value of Shares as determined under Section 17.2.

(y)           “Fundamental Transaction”
means any transaction or event described in Section 10.3.

(z)            “Grant Date” means
the date the Administrator approves the grant of an Award.  However, if the Administrator specifies that
an Award’s Grant Date is a future date or the date on which a condition is
satisfied, the Grant Date for such Award is that future date or the date that
the condition is satisfied.

(aa)         “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option under Section
422 of the Code.

(bb)         “Nonstatutory Option”
means any Option other than an Incentive Stock Option.

(cc)         “Non-Employee Director”
means any person who is a member of the Board but is not an Employee of the
Company or any Affiliate of the Company and has not been an Employee of the
Company or any Affiliate of the Company at any time during the preceding twelve
months. Service as a Director does not in itself constitute employment for
purposes of this definition.

(dd)          “Officer” means an
officer of the Company as defined in Rule 16a-1 adopted under the Exchange Act.

(ee)         “Option” means a
right to purchase Shares of the Company granted under this Plan.

(ff)           “Option Price” means
the price payable under an Option for Shares, not including any amount payable
in respect of withholding or other taxes.

(gg)         “Option Shares” means
Shares covered by an outstanding Option or purchased under an Option.

(hh)         “Plan” means this 2004 Equity Incentive Plan of
Macropore Biosurgery, Inc.

 

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(ii)            “Purchase Price”
means the price payable under a Stock Award for Shares, not including any
amount payable in respect of withholding or other taxes.

(jj)           “Rule 16b-3” means
Rule 16b-3 adopted under Section 16(b) of the Exchange Act.

(kk)         “SAR” or “Stock Appreciation Right” means
a right to receive cash based on a change in the Fair Market Value of a
specific number of Shares pursuant to an Award Agreement, as described in
Section 8.1.

(ll)           “Securities Act” means
the Securities Act of 1933.

(mm)       “Share” means a share
of the common stock of the Company or other securities substituted for the
common stock under Section 10.

(nn)         “Stock Award”  means
an offer by the Company to sell shares subject to certain restrictions pursuant
to the Award Agreement as described in Section 8.2 or, as determined by
the Committee, a notional account representing the right to be paid an amount
based on Shares.

(oo)         “Substitute Award” means
a Substitute Option, Substitute SAR or Substitute Stock Award granted in
accordance with the terms of this Plan.

(pp)         “Substitute Option” means
an Option granted in substitution for, or upon the conversion of, an option
granted by another entity to purchase equity securities in the granting entity.

(qq)         “Substitute SAR” means
a SAR granted in substitution for, or upon the conversion of, a stock
appreciation right granted by another entity with respect to equity securities
in the granting entity.

(rr)           “Substitute Stock Award” means
a Stock Award granted in substitution for, or upon the conversion of, a stock
award granted by another entity to purchase equity securities in the granting
entity.

(ss)         “Termination” means
that the Awardee has ceased to be, with or without any cause or reason, an
Employee, Director or Consultant. 
However, unless so determined by the Administrator, or otherwise
provided in this Plan, “Termination” shall not include a change in status from
an Employee, Consultant or Director to another such status.  An event that causes an Affiliate to cease
being an Affiliate shall be treated as the “Termination” of that Affiliate’s
Employees, Directors, and Consultants, except to the extent such persons are
independently an Employee, consultant or Director of the Company or of another
Affiliate.

2.2           Rules of
Interpretation.  Any
reference to a “Section,” without more, is to a Section of this Plan. Captions
and titles are used for convenience in this Plan and shall not, by themselves,
determine the meaning of this Plan. Except when otherwise indicated by the
context, the singular includes the plural and vice versa. Any reference to a
statute is also a

 

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reference to the applicable rules and regulations adopted under that
statute. Any reference to a statute, rule or regulation, or to a section of a
statute, rule or regulation, is a reference to that statute, rule, regulation,
or section as amended from time to time, both before and after the Effective
Date and including any successor provisions.

 

3.                                       Shares
Subject to this Plan; Term of this Plan

3.1           Number
of Award Shares. 
The Shares issuable
under this Plan shall be
authorized but unissued or reacquired Shares, including Shares repurchased by the Company on
the open market. The number of Shares
initially reserved for issuance over the term of this Plan shall be 3,000,000
increased by those Shares that are restored
pursuant to the decision of the Board or Committee pursuant to
Section 6.4(a) to deliver only such Shares as are necessary to award the
net Share appreciation.  The maximum
number of Shares shall be cumulatively increased on the first January 1 after
the Effective Date and each January 1 thereafter for 9 more years, by a number
of Shares equal to the lesser of (a) 2% of the number of Shares issued and
outstanding on the immediately preceding December 31, and (b) a number of
Shares set by the Board. Except as required by applicable law, Shares shall not
reduce the number of Shares reserved for issuance under this Plan until the
earlier of the date such Shares are vested pursuant to the terms of the
applicable Award or the actual date of delivery of the Shares to the Awardee.
Also, if an Award later terminates or expires without
having been exercised in full, the maximum number of shares that may be issued
under this Plan shall be increased by the number of Shares that were covered
by, but not purchased under, that Award. 
By contrast, the repurchase of Shares by the Company shall not increase
the maximum number of Shares that may be issued under this Plan.

3.2           Source of
Shares.  Award Shares may
be:  (a) Shares that have never
been issued, (b) Shares that have been issued but are no longer
outstanding, or (c) Shares that are outstanding and are acquired to
discharge the Company’s obligation to deliver Award Shares.

 

3.3           Term of this Plan

(a)           This
Plan shall be effective on, and Awards may be granted under this Plan on and
after the Effective Date.

(b)           Subject
to the provisions of Section 13, Awards may be granted under this Plan for
a period of ten years from the Effective Date.

4.                                       Administration

4.1           General

(a)           The Board shall have ultimate
responsibility for administering this Plan. 
The Board may delegate certain of its responsibilities to a Committee,
which shall consist of at least two members of the Board.  The Board or the Committee may further
delegate its responsibilities to any Employee of the Company or any
Affiliate.  Where this Plan specifies
that an action is to be taken or a determination made by the Board, only the
Board may take that action or make that determination.  Where this Plan specifies that an action is
to be taken or a

 

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determination
made by the Committee, only the Committee may take that action or make that
determination.  Where this Plan
references the “Administrator,” the action may be taken or determination made
by the Board, the Committee, or other Administrator.  However, only the Board or the Committee may approve grants of
Awards to Executives, and an Administrator other than the Board or the Committee
may grant Awards only within the guidelines established by the Board or
Committee.  Moreover, all actions and
determinations by any Administrator are subject to the provisions of this Plan.

(b)           So
long as the Company has registered and outstanding a class of equity securities
under Section 12 of the Exchange Act, the Committee shall consist of
Company Directors who are “Non-Employee Directors” as defined in
Rule 16b-3 and, after the expiration of any transition period permitted by
Treasury Regulations Section 1.162-27(h)(3), who are “outside directors”
as defined in Section 162(m) of the Code.

4.2           Authority of
the Board or the Committee.Subject to the other provisions of this
Plan, the Board or the Committee shall have the authority to:

(a)           grant
Awards, including Substitute Awards;

(b)           determine
the Fair Market Value of Shares;

(c)           determine
the Option Price and the Purchase Price of Awards;

(d)           select
the Awardees;

(e)           determine
the times Awards are granted;

(f)            determine
the number of Shares subject to each Award;

(g)           determine
the methods of payment that may be used to purchase Award Shares;

(h)           determine
the methods of payment that may be used to satisfy withholding tax obligations;

(i)            determine
the other terms of each Award, including but not limited to the time or times
at which Awards may be exercised, whether and under what conditions an Award is
assignable;

(j)            modify
or amend any Award;

(k)           authorize
any person to sign any Award Agreement or other document related to this Plan
on behalf of the Company;

(l)            determine the form of any Award
Agreement or other document related to this Plan, and whether that document,
including signatures, may be in electronic form;

 

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(m)          interpret
this Plan and any Award Agreement or document related to this Plan;

(n)           correct
any defect, remedy any omission, or reconcile any inconsistency in this Plan,
any Award Agreement or any other document related to this Plan;

(o)           adopt,
amend, and revoke rules and regulations under this Plan, including rules and regulations
relating to sub-plans and Plan addenda;

(p)           adopt,
amend, and revoke special rules and procedures which may be inconsistent with
the terms of this Plan, set forth (if the Administrator so chooses) in
sub-plans regarding (for example) the operation and administration of this Plan
and the terms of Awards, if and to the extent necessary or useful to
accommodate non-U.S. Applicable Laws and practices as they apply to Awards and
Award Shares held by, or granted or issued to, persons working or resident
outside of the United States or employed by Affiliates incorporated outside the
United States;

(q)           determine
whether a transaction or event should be treated as a Change in Control, a
Divestiture or neither;

(r)            determine
the effect of a Fundamental Transaction and, if the Board determines that a
transaction or event should be treated as a Change in Control or a Divestiture,
then the effect of that Change in Control or Divestiture; and

(s)           make
all other determinations the Administrator deems necessary or advisable for the
administration of this Plan.

4.3           Scope of
Discretion.  Subject to the
provisions of this Section 4.3, on all matters for which this Plan confers the
authority, right or power on the Board, the Committee, or other Administrator
to make decisions, that body may make those decisions in its sole and absolute
discretion. Those decisions will be final, binding and conclusive. In making
its decisions, the Board, Committee or other Administrator need not treat all
persons eligible to receive Awards, all Awardees, all Awards or all Award
Shares the same way. Notwithstanding anything herein to the contrary, and
except as provided in Section 13.3, the discretion of the Board, Committee
or other Administrator is subject to the specific provisions and specific
limitations of this Plan, as well as all rights conferred on specific Awardees
by Award Agreements and other agreements.

 

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5.             Persons
Eligible to Receive Awards. Awards
(including Substitute Awards) may be granted to, and only to, Employees,
Directors and Consultants, including to prospective Employees, Directors and
Consultants conditioned on the beginning of their service for the Company or an
Affiliate.

6.                                       Terms
and Conditions of Options

The following rules apply to all Options:

6.1           Price. Except
as specifically provided herein, no nonstatutory Option may have an Option
Price less than 85% of the Fair Market Value of the Shares on the Grant Date.
In no event will the Option Price of any Option be less than the par value of
the Shares issuable under the Option if that is required by Applicable Law.

 

6.2           Term.  No Option shall be exercisable after its
Expiration Date. No Option may have an Expiration Date that is more than ten
years after its Grant Date.

 

6.3           Vesting.  Options shall be exercisable:
(a) on the Grant Date, or (b) in accordance with a schedule related
to the Grant Date, the date the Optionee’s directorship, employment or
consultancy begins, or a different date specified in the Option Agreement. No
Option granted to an individual who is subject to the overtime pay provisions
of the Fair Labor Standards Act may be exercised before the expiration of six
months after the Grant Date.

 

6.4           Form and Method of Payment.

(a)           The
Board or Committee shall determine the acceptable form and method of payment
for exercising an Option.  So long as
variable accounting pursuant to “APB 25” does not apply and the Board or
Committee otherwise determines there is no material adverse accounting
consequence at the time of exercise, the Board or Committee may require the
delivery in Shares for the value of the net appreciation of the Shares at the
time of exercise over the exercise price. 
The difference between full number of Shares covered by the exercised
portion of the Award and the number of Shares actually delivered shall be
restored to the amount of Shares reserved for issuance under Section 3.1.

(b)           Acceptable
forms of payment for all Option Shares are cash, check or wire transfer,
denominated in U.S. dollars except as specified by the Administrator for
non-U.S. Employees or non-U.S. sub-plans.

(c)           In
addition, the Administrator may permit payment to be made by any of the
following methods:

(i)            other Shares, or
the designation of other Shares, which (A) are “mature” shares for
purposes of avoiding variable accounting treatment under generally accepted
accounting principles (generally mature shares are those that have been owned
by the Optionee for more than six months on the date of surrender), and (B)
have a Fair Market Value on the date of surrender equal to the Option Price of
the Shares as to which the Option is being exercised;

 

8

 

(ii)           provided that a public market exists
for the Shares, and subject to Applicable Law consideration received by the
Company under a procedure under which a licensed broker-dealer advances funds
on behalf of an Optionee or sells Option Shares on behalf of an Optionee (a “Cashless Exercise Procedure”);

(iii)          cancellation of any debt owed by the
Company or any Affiliate to the Optionee by the Company including without
limitation waiver of compensation due or accrued for services previously
rendered to the Company; and

(iv)          any combination of the methods of
payment permitted by any paragraph of this Section 6.4.

(d)           The
Administrator may also permit any other form or method of payment for Option
Shares permitted by Applicable Law.

6.5           Nonassignability
of Options.  Except as
determined by the Administrator, no Option shall be assignable or otherwise
transferable by the Optionee except by will or by the laws of descent and
distribution. However, Options may be transferred and exercised in accordance
with a Domestic Relations Order and may be exercised by a guardian or
conservator appointed to act for the Optionee.

 

6.6           Substitute
Options.  The Board may cause
the Company to grant Substitute Options in connection with the acquisition by
the Company or an Affiliate of equity securities of any entity (including by
merger, tender offer, or other similar transaction) or of all or a portion of
the assets of any entity. Any such substitution shall be effective on the
effective date of the acquisition. Unless and to the extent specified otherwise
by the Board, Substitute Options shall have the same terms and conditions as
the options they replace, except that (subject to the provisions of Section 10)
Substitute Options shall be Options to purchase Shares rather than equity
securities of the granting entity and shall have an Option Price determined by
the Board.

 

6.7           Repricings.  In furtherance of, and not in
limitation of, the provisions of Section 10, Options may be repriced, replaced
or regranted through cancellation or modification without stockholder approval.

 

7.                                       Incentive
Stock Options.

No Incentive Stock Options shall be granted under the
Plan.

8.                                       Stock
Appreciation Rights, Stock Awards and Cash Awards

8.1           Stock
Appreciation Rights.  The
following rules apply to SARs:

(a)           General.  SARs may be granted either alone, in
addition to, or in tandem with other Awards granted under this Plan. The
Administrator may grant SARs to eligible participants subject to terms and
conditions not inconsistent with this Plan and determined by the Administrator.
The specific terms and conditions applicable to the Awardee shall be provided
for in the Award Agreement. SARs shall be exercisable, in whole or in part, at
such times as the

 

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Administrator shall specify in the Award
Agreement.  The grant or vesting of a SAR
may be made contingent on the achievement of Objectively Determinable
Performance Conditions.

(b)           Exercise of SARs.  Upon the exercise of an SAR, in whole or in
part, an Awardee shall be entitled to a payment in an amount equal to the
excess of the Fair Market Value of a fixed number of Shares covered by the
exercised portion of the SAR on the date of exercise, over the Fair Market
Value of the Shares covered by the exercised portion of the SAR on the Grant
Date.  The amount due to the Awardee
upon the exercise of a SAR shall be paid in cash, Shares or a combination
thereof, over the period or periods specified in the Award Agreement.  An Award Agreement may place limits on the
amount that may be paid over any specified period or periods upon the exercise of
a SAR, on an aggregate basis or as to any Awardee.  A SAR shall be considered exercised when the Company receives
written notice of exercise in accordance with the terms of the Award Agreement
from the person entitled to exercise the SAR. 
If a SAR has been granted in tandem with an Option, upon the exercise of
the SAR, the number of shares that may be purchased pursuant to the Option
shall be reduced by the number of shares with respect to which the SAR is
exercised.

(c)           Nonassignability of SARs.  Except as determined by the Administrator,
no SAR shall be assignable or otherwise transferable by the Awardee except by
will or by the laws of descent and distribution.  Notwithstanding anything herein to the contrary, SARs may be
transferred and exercised in accordance with a Domestic Relations Order.

(d)           Substitute SARs.  The Board may cause the Company to grant
Substitute SARs in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. 
Any such substitution shall be effective on the effective date of the
acquisition.  Unless and to the extent
specified otherwise by the Board, Substitute SARs shall have the same terms and
conditions as the options they replace, except that (subject to the provisions
of Section 9) Substitute SARs shall be exercisable with respect to the
Fair Market Value of Shares rather than equity securities of the granting
entity and shall be on terms that, as determined by the Board in its sole and
absolute discretion, properly reflects the substitution.

(e)           Repricings. 
An SAR may be repriced, replaced or regranted, through cancellation or
modification without stockholder approval.

8.2           Stock
Awards.  The following rules
apply to all Stock Awards:

 

(a)           General. 
The specific terms and conditions of a Stock Award applicable to the
Awardee shall be provided for in the Award Agreement. The Award Agreement shall
state the number of Shares that the Awardee shall be entitled to receive or
purchase, the terms and conditions on which the Shares shall vest, the price to
be paid, whether Shares are to be delivered at the time of grant or at some
deferred date specified in the Award Agreement (e.g. a restricted stock unit
award agreement), whether the Award is payable solely in Shares, cash or either
and, if applicable, the time within which the Awardee must accept such offer.
The offer shall be accepted by execution of the Award Agreement.  The Administrator may require that all
Shares subject to a right of repurchase or risk of forfeiture be held in escrow
until such repurchase right

 

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or risk
of forfeiture lapses.  The grant or
vesting of a Stock Award may be made contingent on the achievement of
Objectively Determinable Performance Conditions.

(b)           Right of Repurchase.  If so provided in the Award Agreement, Award
Shares acquired pursuant to a Stock Award may be subject to repurchase by the
Company or an Affiliate if not vested in accordance with the Award Agreement.

(c)           Form of Payment.  The Administrator shall determine the acceptable form and method
of payment for exercising a Stock Award. 
Acceptable forms of payment for all Award Shares are cash, check or wire
transfer, denominated in U.S. dollars except as specified by the Administrator
for non-U.S. sub-plans.  In addition,
the Administrator may permit payment to be made by any of the methods permitted
with respect to the exercise of Options pursuant to Section 6.4.

(d)           Nonassignability of Stock Awards.  Except as determined by the Administrator,
no Stock Award shall be assignable or otherwise transferable by the Awardee
except by will or by the laws of descent and distribution.  Notwithstanding anything to the contrary
herein, Stock Awards may be transferred and exercised in accordance with a
Domestic Relations Order.

(e)           Substitute Stock Award.  The Board may cause the Company to grant
Substitute Stock Awards in connection with the acquisition by the Company or an
Affiliate of equity securities of any entity (including by merger) or all or a
portion of the assets of any entity. 
Unless and to the extent specified otherwise by the Board, Substitute
Stock Awards shall have the same terms and conditions as the stock awards they
replace, except that (subject to the provisions of Section 10) Substitute
Stock Awards shall be Stock Awards to purchase Shares rather than equity
securities of the granting entity and shall have a Purchase Price that, as
determined by the Board in its sole and absolute discretion, properly reflects
the substitution.  Any such Substituted
Stock Award shall be effective on the effective date of the acquisition.

8.3           Cash Awards. The following rules apply to
all Cash Awards:

Cash Awards may be granted either alone, in addition
to, or in tandem with other Awards granted under this Plan. After the
Administrator determines that it will offer a Cash Award, it shall advise the
Awardee, by means of an Award Agreement, of the terms, conditions and
restrictions related to the Cash Award.

9.                                       Exercise
of Awards

9.1           In General.  An Award shall be exercisable in accordance
with this Plan and the Award Agreement under which it is granted.

 

9.2           Time of
Exercise.  Options and Stock
Awards shall be considered exercised when the Company receives:
(a) written notice of exercise from the person entitled to exercise the
Option or Stock Award, (b) full payment, or provision for payment, in a form
and method approved by the Administrator, for the Shares for which the Option
or Stock Award is being exercised, and (c) with respect to Stock Awards and
Nonstatutory Options, payment, or provision

 

11

 

for payment, in a form approved by the Administrator, of all applicable
withholding taxes due upon exercise. An Award may not be exercised for a
fraction of a Share. SARs shall be considered exercised when the Company
receives written notice of the exercise from the person entitled to exercise
the SAR.

 

9.3           Issuance of
Award Shares.  The Company
shall issue Award Shares in the name of the person properly exercising the
Award. If the Awardee is that person and so requests, the Award Shares shall be
issued in the name of the Awardee and the Awardee’s spouse. The Company shall
endeavor to issue Award Shares promptly after an Award is exercised or after
the Grant Date of a Stock Award, as applicable. Until Award Shares are actually
issued, as evidenced by the appropriate entry on the stock register of the
Company or its transfer agent, the Awardee will not have the rights of a
stockholder with respect to those Award Shares, even though the Awardee has
completed all the steps necessary to exercise the Award. No adjustment shall be
made for any dividend, distribution, or other right for which the record date
precedes the date the Award Shares are issued, except as provided in
Section 10.

 

9.4           Termination

 

(a)           In General.  Except as provided in an Award Agreement or
in writing by the Administrator, including in an Award Agreement, and as
otherwise provided in Sections 9.4(b), (c), (d) and (e) after an Awardee’s
Termination, the Awardee’s Awards shall be exercisable to the extent (but only
to the extent) they are vested on the date of that Termination and only during
the ninety (90) days after the Termination, but in no event after the
Expiration Date.  To the extent the
Awardee does not exercise an Award within the time specified for exercise, the
Award shall automatically terminate.

(b)           Leaves of Absence.  Unless otherwise provided in the Award
Agreement, no Award may be exercised more than three months after the beginning
of a leave of absence, other than a personal or medical leave approved by an
authorized representative of the Company with employment guaranteed upon
return.  Awards shall not continue to
vest during a leave of absence, unless otherwise determined by the
Administrator with respect to an approved personal or medical leave with
employment guaranteed upon return.

(c)           Death or Disability. 
Unless otherwise provided by the Administrator, if an Awardee’s Termination
is due to death or disability (as determined by the Administrator with respect
to all Awards), all Awards of that Awardee to the extent exercisable at the
date of that Termination may be exercised for one year after that Termination,
but in no event after the Expiration Date. 
In the case of Termination due to death, an Award may be exercised as
provided in Section 16.  In the
case of Termination due to disability, if a guardian or conservator has been
appointed to act for the Awardee and been granted this authority as part of
that appointment, that guardian or conservator may exercise the Award on behalf
of the Awardee.  Death or disability
occurring after an Awardee’s Termination shall not cause the Termination to be
treated as having occurred due to death or disability.  To the extent an Award is not so exercised
within the time specified for its exercise, the Award shall automatically
terminate.

 

12

 

(d)           Divestiture.  If an Awardee’s Termination is due to a
Divestiture, the Board may take any one or more of the actions described in
Section 10.3 or 10.4 with respect to the Awardee’s Awards.

(e)           Administrator Discretion.  Notwithstanding the provisions of Section
9.4 (a)-(e), the Plan Administrator shall have complete discretion, exercisable
either at the time an Award is granted or at any time while the Award remains
outstanding, to:

(i)            Extend the period of time for which
the Award is to remain exercisable, following the Awardee’s Termination, from
the limited exercise period otherwise in effect for that Award to such greater
period of time as the Administrator shall deem appropriate, but in no event
beyond the Expiration Date; and/or

(ii)           Permit the Award to be exercised,
during the applicable post-Termination exercise period, not only with respect
to the number of vested Shares for which such Award may be exercisable at the
time of the Awardee’s Termination but also with respect to one or more
additional installments in which the Awardee would have vested had the Awardee
not been subject to Termination.

(f)            Consulting or Employment
Relationship.  Nothing in
this Plan or in any Award Agreement, and no Award or the fact that Award Shares
remain subject to repurchase rights, shall: 
(A) interfere with or limit the right of the Company or any
Affiliate to terminate the employment or consultancy of any Awardee at any
time, whether with or without cause or reason, and with or without the payment
of severance or any other compensation or payment, or (B) interfere with the
application of any provision in any of the Company’s or any Affiliate’s charter
documents or Applicable Law relating to the election, appointment, term of
office, or removal of a Director.

10.                                 Certain
Transactions and Events

10.1         In
General.  Except as provided
in this Section 10, no change in the capital structure of the Company, merger,
sale or other disposition of assets or a subsidiary, change in control,
issuance by the Company of shares of any class of securities or securities
convertible into shares of any class of securities, exchange or conversion of
securities, or other transaction or event shall require or be the occasion for
any adjustments of the type described in this Section 10. Additional
provisions with respect to the foregoing transactions are set forth in
Section 13.3.

 

10.2         Changes in
Capital Structure.  In the
event of any stock split, reverse stock split, recapitalization, combination or
reclassification of stock, stock dividend, spin-off, or similar change to
the capital structure of the Company (not including a Fundamental Transaction
or Change in Control), the Board shall make whatever adjustments it concludes
are appropriate to: (a) the number and type of Awards that may be granted
under this Plan, (b) the number and type of Options that may be granted to
any individual under this Plan, (c) the terms of any SAR, (d) the
Purchase Price of any Stock Award, (e) the Option Price and number and
class of securities issuable under each outstanding Option, and (f) the
repurchase price of any securities substituted for Award Shares that are
subject to repurchase rights. The specific adjustments shall

 

13

 

be determined by the Board. Unless the Board specifies otherwise, any
securities issuable as a result of any such adjustment shall be rounded down to
the next lower whole security. The Board need not adopt the same rules for each
Award or each Awardee.

 

10.3         Fundamental
Transactions.  In the event
of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders
of the Company or their relative stock holdings and the Awards granted under
this Plan are assumed, converted or replaced by the successor corporation,
which assumption shall be binding on all Participants), (b) a merger in which
the Company is the surviving corporation but after which the stockholders of
the Company immediately prior to such merger (other than any stockholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (c) the sale of all or substantially all of the assets of the
Company, or (d) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction (each,
a “Fundamental
Transaction”), any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement shall be binding on all participants under this Plan.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to participants as was provided
to stockholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares held by the participants, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the participant. In the
event such successor corporation (if any) does not assume or substitute Awards,
as provided above, pursuant to a transaction described in this Subsection 10.3,
the vesting with respect to such Awards shall fully and immediately accelerate
or the repurchase rights of the Company shall fully and immediately terminate,
as the case may be, so that the Awards may be exercised or the repurchase
rights shall terminate before, or otherwise in connection with the closing or
completion of the Fundamental Transaction or event, but then terminate.
Notwithstanding anything in this Plan to the contrary, the Committee may, in
its sole discretion, provide that the vesting of any or all Award Shares
subject to vesting or right of repurchase shall accelerate or lapse, as the
case may be, upon a transaction described in this Section 10.3. If the
Committee exercises such discretion with respect to Options, such Options shall
become exercisable in full prior to the consummation of such event at such time
and on such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the Fundamental Transaction, they shall
terminate at such time as determined by the Committee. Subject to any greater
rights granted to participants under the foregoing provisions of this Section
10.3, in the event of the occurrence of any Fundamental Transaction, any
outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.

 

10.4         Changes of
Control.  The Board may also,
but need not, specify that other transactions or events constitute a “Change in
Control”. The Board may do that either before or after the
transaction or event occurs. Examples of transactions or events that the Board
may treat as Changes of Control are: (a) any person or entity, including a
“group” as contemplated by Section 13(d)(3) of the Exchange Act, acquires
securities holding 30% or more of the total combined voting power or value of
the Company, or (b) as a result of or in

 

14

 

connection with a contested election of Company Directors, the persons
who were Company Directors immediately before the election cease to constitute
a majority of the Board. In connection with a Change in Control,
notwithstanding any other provision of this Plan, the Board may, but need not,
take any one or more of the actions described in Section 10.3. In addition, the
Board may extend the date for the exercise of Awards (but not beyond their
original Expiration Date). The Board need not adopt the same rules for each
Award or each Awardee. Notwithstanding anything in this Plan to the contrary,
in the event of an involuntary Termination of services for any reason other
than death, disability or Cause, within 18 months following the consummation of
a Fundamental Transaction or Change in Control, any Awards, assumed or
substituted in a Fundamental Transaction or Change in Control, which are
subject to vesting conditions and/or the right of repurchase in favor of the
Company or a successor entity, shall accelerate fully so that such Award Shares
are immediately exercisable upon Termination or, if subject to the right of
repurchase in favor of the Company, such repurchase rights shall lapse as of
the date of Termination. Such Awards shall be exercisable for a period of three
(3) months following termination.

 

10.5         Divestiture.  If the Company or an Affiliate
sells or otherwise transfers equity securities of an Affiliate to a person or
entity other than the Company or an Affiliate, or leases, exchanges or
transfers all or any portion of its assets to such a person or entity, then the
Board may specify that such transaction or event constitutes a “Divestiture”.
In connection with a Divestiture, notwithstanding any other provision of this
Plan, the Board may, but need not, take one or more of the actions described in
Section 10.3 or 10.4 with respect to Awards of Award Shares held by, for
example, Employees, Directors or Consultants for whom that transaction or event
results in a Termination. The Board need not adopt the same rules for each
Award or Awardee.

 

10.6         Dissolution.  If the Company adopts a plan of
dissolution, the Board may cause Awards to be fully vested and exercisable (but
not after their Expiration Date) before the dissolution is completed but
contingent on its completion and may cause the Company’s repurchase rights on
Award Shares to lapse upon completion of the dissolution. The Board need not
adopt the same rules for each Award or each Awardee. Notwithstanding anything
herein to the contrary, in the event of a dissolution of the Company, to the
extent not exercised before the earlier of the completion of the dissolution or
their Expiration Date, Awards shall terminate immediately prior to the
dissolution.

 

10.7         Cut-Back to
Preserve Benefits.  If the
Administrator determines that the net after-tax amount to be realized by any
Awardee, taking into account any accelerated vesting, termination of repurchase
rights, or cash payments to that Awardee in connection with any transaction or
event set forth in this Section 10 would be greater if one or more of
those steps were not taken or payments were not made with respect to that
Awardee’s Awards or Award Shares, then, at the election of the Awardee, to such
extent, one or more of those steps shall not be taken and payments shall not be
made.

 

15

 

11.                                 Withholding
and Tax Reporting

11.1         Tax Withholding Alternatives

(a)           General.  Whenever Award Shares are issued or become
free of restrictions, the Company may require the Awardee to remit to the
Company an amount sufficient to satisfy any applicable tax withholding
requirement, whether the related tax is imposed on the Awardee or the
Company.  The Company shall have no
obligation to deliver Award Shares or release Award Shares from an escrow or
permit a transfer of Award Shares until the Awardee has satisfied those tax
withholding obligations.  Whenever
payment in satisfaction of Awards is made in cash, the payment will be reduced
by an amount sufficient to satisfy all tax withholding requirements.

(b)            Method of
Payment.  The
Awardee shall pay any required withholding using the forms of consideration
described in Section 6.4(b), except that, in the discretion of the
Administrator, the Company may also permit the Awardee to use any of the forms
of payment described in Section 6.4(c). 
The Administrator, in its sole discretion, may also permit Award Shares
to be withheld to pay required withholding. 
If the Administrator permits Award Shares to be withheld, the Fair
Market Value of the Award Shares withheld, as determined as of the date of
withholding, shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

12.                                 Compliance
with Law

The grant of Awards and the issuance and subsequent
transfer of Award Shares shall be subject to compliance with all Applicable
Law, including all applicable securities laws. 
Awards may not be exercised, and Award Shares may not be transferred, in
violation of Applicable Law.  Thus, for
example, Awards may not be exercised unless: 
(a) a registration statement under the Securities Act is then in
effect with respect to the related Award Shares, or (b) in the opinion of
legal counsel to the Company, those Award Shares may be issued in accordance
with an applicable exemption from the registration requirements of the
Securities Act and any other applicable securities laws.  The failure or inability of the Company to
obtain from any regulatory body the authority considered by the Company’s legal
counsel to be necessary or useful for the lawful issuance of any Award Shares
or their subsequent transfer shall relieve the Company of any liability for
failing to issue those Award Shares or permitting their transfer.  As a condition to the exercise of any Award
or the transfer of any Award Shares, the Company may require the Awardee to
satisfy any requirements or qualifications that may be necessary or appropriate
to comply with or evidence compliance with any Applicable Law.

13.                                 Amendment
or Termination of this Plan or Outstanding Awards

13.1         Amendment
and Termination.  The Board
may at any time amend, suspend, or terminate this Plan.

 

13.2         Stockholder
Approval.  The Board may
require that the Company’s stockholders approve any amendments to the Plan if
the Board determines such approval is required or helpful under Applicable Law.

 

16

 

13.3         Effect.  No amendment, suspension, or
termination of this Plan, and no modification of any Award even in the absence
of an amendment, suspension, or termination of this Plan, shall impair any
existing contractual rights of any Awardee unless the affected Awardee consents
to the amendment, suspension, termination, or modification. Notwithstanding
anything herein to the contrary, no such consent shall be required if the Board
determines, in its sole and absolute discretion, that the amendment,
suspension, termination, or modification: (a) is required or advisable in order
for the Company, this Plan or the Award to satisfy Applicable Law, to meet the
requirements of any accounting standard or to avoid any adverse accounting
treatment, or (b) in connection with any transaction or event described in
Section 10, is in the best interests of the Company or its stockholders. The Board
may, but need not, take the tax or accounting consequences to affected Awardees
into consideration in acting under the preceding sentence. Those decisions
shall be final, binding and conclusive. Termination of this Plan shall not
affect the Administrator’s ability to exercise the powers granted to it under
this Plan with respect to Awards granted before the termination of Award Shares
issued under such Awards even if those Award Shares are issued after the
termination.

 

14.                                 Reserved
Rights

14.1         Nonexclusivity
of this Plan.  This Plan
shall not limit the power of the Company or any Affiliate to adopt other
incentive arrangements including, for example, the grant or issuance of stock
options, stock, or other equity-based rights under other plans.

 

14.2         Unfunded
Plan.  This Plan shall be
unfunded. Although bookkeeping accounts may be established with respect to
Awardees, any such accounts will be used merely as a convenience. The Company
shall not be required to segregate any assets on account of this Plan, the
grant of Awards, or the issuance of Award Shares. The Company and the
Administrator shall not be deemed to be a trustee of stock or cash to be
awarded under this Plan. Any obligations of the Company to any Awardee shall be
based solely upon contracts entered into under this Plan, such as Award
Agreements. No such obligations shall be deemed to be secured by any pledge or
other encumbrance on any assets of the Company. Neither the Company nor the
Administrator shall be required to give any security or bond for the
performance of any such obligations.

 

15.           Special Arrangements
Regarding Award Shares

15.1         Escrow of
Stock Certificates.

To enforce any restrictions on Award Shares, the Administrator may
require their holder to deposit the certificates representing Award Shares,
with stock powers or other transfer instruments approved by the Administrator
endorsed in blank, with the Company or an agent of the Company to hold in
escrow until the restrictions have lapsed or terminated. The Administrator may
also cause a legend or legends referencing the restrictions to be placed on the
certificates.

 

15.2         Repurchase Rights

(a)           General.  If
a Stock Award is subject to vesting conditions, the Company shall have the
right, during the seven months after the Awardee’s Termination, to repurchase
any or all of the Award Shares that were unvested as of the date of that
Termination.  The repurchase price shall
be determined by the Administrator in accordance with this Section 15.2 which
shall

 

17

 

be either (i) the
Purchase Price for the Award Shares (minus the amount of any cash dividends
paid or payable with respect to the Award Shares for which the record date
precedes the repurchase) or (ii) the lower of (A) the Purchase Price
for the Shares or (B) the Fair Market Value of those Award Shares as of
the date of the Termination.  The
repurchase price shall be paid in cash. 
The Company may assign this right of repurchase.

 

(b)           Procedure.  The Company or its assignee may choose to
give the Awardee a written notice of exercise of its repurchase rights under
this Section 15.2.  However, the
Company’s failure to give such a notice shall not affect its rights to
repurchase Award Shares.  The Company
must, however, tender the repurchase price during the period specified in this
Section 15.2 for exercising its repurchase rights in order to exercise such
rights.

16.                                 Beneficiaries

An Awardee may file a written designation of one or
more beneficiaries who are to receive the Awardee’s rights under the Awardee’s
Awards after the Awardee’s death.  An
Awardee may change such a designation at any time by written notice.  If an Awardee designates a beneficiary, the
beneficiary may exercise the Awardee’s Awards after the Awardee’s death.  If an Awardee dies when the Awardee has no
living beneficiary designated under this Plan, the Company shall allow the
executor or administrator of the Awardee’s estate to exercise the Award or, if
there is none, the person entitled to exercise the Option under the Awardee’s
will or the laws of descent and distribution. 
In any case, no Award may be exercised after its Expiration Date.

17.                                 Miscellaneous

17.1         Governing
Law.  This Plan, the Award
Agreements and all other agreements entered into under this Plan, and all actions
taken under this Plan or in connection with Awards or Award Shares, shall be
governed by the laws of the State of Delaware.

 

17.2         Determination
of Value.  Fair Market Value
shall be determined as follows:

 

(a)           Listed Stock.  If the Shares are traded on any established
stock exchange or quoted on a national market system, Fair Market Value shall
be the closing sales price for the Shares as quoted on that stock exchange or
system for the date the value is to be determined (the “Value Date”) as reported in The
Wall
Street Journal or a similar publication.  If no sales are reported as having occurred on the Value Date,
Fair Market Value shall be that closing sales price for the last preceding
trading day on which sales of Shares are reported as having occurred.  If no sales are reported as having occurred
during the five trading days before the Value Date, Fair Market Value shall be
the closing bid for Shares on the Value Date. 
If Shares are listed on multiple exchanges or systems, Fair Market Value
shall be based on sales or bid prices on the primary exchange or system on
which Shares are traded or quoted.

(b)           Stock Quoted by Securities Dealer.  If Shares are regularly quoted by a
recognized securities dealer but selling prices are not reported on any established
stock exchange or quoted on a national market system, Fair Market Value shall
be the mean between the high bid and low asked prices on the Value Date.  If no prices are quoted for the Value Date,
Fair Market

 

18

 

Value
shall be the mean between the high bid and low asked prices on the last
preceding trading day on which any bid and asked prices were quoted.

(c)           No Established Market.  If Shares are not traded on any established
stock exchange or quoted on a national market system and are not quoted by a
recognized securities dealer, the Administrator (following guidelines
established by the Board or Committee) will determine Fair Market Value in good
faith.  The Administrator will consider
the following factors, and any others it considers significant, in determining
Fair Market Value: (i) the price at which other securities of the Company
have been issued to purchasers other than Employees, Directors, or Consultants,
(ii) the Company’s stockholder’s equity, prospective earning power,
dividend-paying capacity, and non-operating assets, if any, and (iii) any
other relevant factors, including the economic outlook for the Company and the
Company’s industry, the Company’s position in that industry, the Company’s
goodwill and other intellectual property, and the values of securities of other
businesses in the same industry.

17.3         Reservation
of Shares.  During the term
of this Plan, the Company shall at all times reserve and keep available such
number of Shares as are still issuable under this Plan.

 

17.4         Electronic
Communications.  Any Award
Agreement, notice of exercise of an Award, or other document required or
permitted by this Plan may be delivered in writing or, to the extent determined
by the Administrator, electronically. Signatures may also be electronic if
permitted by the Administrator.

 

17.5         Notices.  Unless the Administrator
specifies otherwise, any notice to the Company under any Option Agreement or
with respect to any Awards or Award Shares shall be in writing (or, if so
authorized by Section 17.4, communicated electronically), shall be
addressed to the Secretary of the Company, and shall only be effective when
received by the Secretary of the Company.

 

19Exhibit
4.2

 

REGISTRATION
RIGHTS AGREEMENT

 

BETWEEN

 

THE MILLS
CORPORATION

 

AS ISSUER,

 

AND

 

MORGAN STANLEY
& CO., INCORPORATED AND GOLDMAN, SACHS & CO.,

 

AS INITIAL
PURCHASERS

 

DATED AS OF AUGUST
23, 2004

 

 

REGISTRATION RIGHTS AGREEMENT dated as of August 23,
2004 by and between The Mills Corporation, a Delaware corporation (the
“COMPANY”), and Morgan Stanley & Co., Incorporated and Goldman, Sachs &
Co., as the initial purchasers (the “INITIAL PURCHASERS”) under the Purchase
Agreement dated August 17, 2004 (the “PURCHASE AGREEMENT”), by and between the
Company and the Initial Purchasers. In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.  The execution of this Agreement is a
condition to the closing under the Purchase Agreement.

 

The Company agrees with the Initial Purchasers,
(i) for their benefit as Initial Purchasers and (ii) for the benefit
of the beneficial owners (including each Initial Purchaser) from time to time
of the Series F Preferred Stock (as defined herein) and the beneficial owners
from time to time of the Underlying Common Shares (as defined herein) issued
upon conversion of the Series F Preferred Stock (each of the foregoing a
“HOLDER” and together the “HOLDERS”), as follows:

 

SECTION 1.           Definitions.  Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

 

“AFFILIATE” means with respect to any specified
person, an “affiliate,” as defined in Rule 144, of such person.

 

“AMENDMENT EFFECTIVENESS DEADLINE DATE” has the
meaning set forth in Section 2(d) hereof.

 

“BUSINESS DAY” means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking institutions in The City
of New York are authorized or obligated by law or executive order to close.

 

“CERTIFICATE OF DESIGNATIONS” means the Certificate of
Designations to the Company’s Certificate of Incorporation, dated as of August
23, 2004, setting forth the preferences and rights, qualifications, limitations
and restrictions of the Series F Preferred Stock.

 

“COMMON SHARES” means the shares of the Company’s
common stock, par value $0.01 per share, of the Company, and any and all
securities of any kind whatsoever of the Company which are received in exchange
for Common Shares or into which the Common Shares are converted, including the
Underlying Common Shares.

 

“CONVERSION PRICE” has the meaning assigned such term
in the Certificate of Designations.

 

“DAMAGES ACCRUAL PERIOD” has the meaning set forth in
Section 2(e) hereof.

 

“DAMAGES PAYMENT DATE” means each February 1, May 1,
August 1 and November 1.

 

“DEFERRAL NOTICE” has the meaning set forth in
Section 3(i) hereof.

 

“DEFERRAL PERIOD” has the meaning set forth in
Section 3(i) hereof.

 

“DIVIDEND PAYMENT DATE” has the meaning assigned to
such term in the Certificate of Designations.

 

“EFFECTIVENESS DEADLINE DATE” has the meaning set
forth in Section 2(a) hereof.

 

 

“EFFECTIVENESS PERIOD” means the period commencing on
the first date the Shelf Registration Statement is declared effective and
ending on the date that all Registrable Securities have ceased to be Registrable
Securities.

 

“EXCHANGE ACT” means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.

 

“FILING DEADLINE DATE” has the meaning set forth in
Section 2(a) hereof.

 

“HOLDER” has the meaning set forth in the second
paragraph of this Agreement.

 

“INDEMNIFIED PARTY” has the meaning set forth in
Section 6(c) hereof.

 

“INDEMNIFYING PARTY” has the meaning set forth in
Section 6(c) hereof.

 

“INITIAL PURCHASERS” has the meaning set forth in the
preamble to this Agreement.

 

“ISSUE DATE” means the first date of original issuance
of the Series F Preferred Stock.

 

“LIQUIDATED DAMAGES AMOUNT” has the meaning set forth
in Section 2(e) hereof.

 

“LOSSES” has the meaning set forth in
Section 6(a) hereof.

 

“MATERIAL EVENT” has the meaning set forth in
Section 3(i) hereof.

 

“NOTICE AND QUESTIONNAIRE” means a written notice
delivered to the Company containing substantially the information called for by
the Selling Securityholder Notice and Questionnaire attached as Annex A to the
Offering Memorandum of the Company dated August 17, 2004 relating to the Series
F Preferred Stock.

 

“NOTICE HOLDER” means, on any date, any Holder that
has delivered a completed and signed Notice and Questionnaire to the Company on
or prior to such date.

 

“OFFERING MEMORANDUM” means the Offering Memorandum
relating to the Series F Preferred Stock dated August 17, 2004.

 

“PURCHASE AGREEMENT” has the meaning set forth in the
preamble hereof.

 

“PROSPECTUS” means the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any amendment or
prospectus supplement, including post-effective amendments, and all materials
incorporated by reference or explicitly deemed to be incorporated by reference
in such Prospectus.

 

“RECORD DATE” has the meaning assigned to the term
“Dividend Record Date” in the Certificate of Designations.

 

“RECORD HOLDER” means (i) with respect to any
Damages Payment Date relating to any Series F Preferred Stock as to which any
such Liquidated Damages Amount has accrued, the holder of record of such share
of Series F Preferred Stock on the Record Date with respect to the Dividend
Payment Date on which such Damages Payment Date shall occur, and (ii) with
respect to any Damages Payment 

 

2

 

Date relating to the
Underlying Common Shares as to which any such Liquidated Damages Amount has
accrued, the registered holder of such Underlying Common Shares on the Record
Date immediately preceding the relevant Damages Payment Date.

 

“REGISTRABLE SECURITIES” means the shares of Series F
Preferred Stock until any such Series F Preferred Stock has been converted into
the Underlying Common Shares and, at all times subsequent to any such
conversion, the Underlying Common Shares and any securities into or for which
such Underlying Common Shares have been converted or exchanged, and any
security issued with respect thereto upon any stock dividend, split or similar
event until, in the case of any such security, (A) the earliest of
(i) its effective registration under the Securities Act and resale in
accordance with the Registration Statement covering it, (ii) expiration of
the holding period that would be applicable thereto under
Rule 144(k) to a sale by a non-Affiliate of the Company or (iii) its
sale to the public pursuant to Rule 144 (or any similar provision then in
force, but not Rule 144A), and (B) as a result of the event or
circumstance described in any of the foregoing clauses (A)(i) through
(iii), the legend with respect to transfer restrictions required by the
Certificate of Designations is removed or removable in accordance with the
terms of the Certificate of Designations or such legend, as the case may be.

 

“REGISTRATION DEFAULT” has the meaning set forth in
Section 2(e) hereof.

 

“REGISTRATION STATEMENT” means any registration
statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all materials incorporated by reference or explicitly deemed
to be incorporated by reference in such registration statement.

 

“RULE 144” means Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.

 

“RULE 144A” means Rule 144A under the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.

 

“SEC” means the Securities and Exchange Commission.

 

“SECURITIES ACT” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC thereunder.

 

“SERIES F PREFERRED STOCK” means the shares of the
Company’s 6.75% Series F Convertible Cumulative Redeemable Preferred Stock, par
value $0.01 per share, having the rights, powers and preferences set forth in
the Certificate of Designations and purchased pursuant to the Purchase
Agreement, including such shares of Series F Preferred Stock purchased by the Initial
Purchasers upon exercise of their option to purchase additional shares of
Series F Preferred Stock.

 

“SHELF REGISTRATION STATEMENT” has the meaning set
forth in Section 2(a) hereof.

 

“SPECIAL COUNSEL” means a nationally recognized law
firm experienced in securities law matters designated by the Company, at the
request of and with the written consent of the Initial Purchasers (which shall
not be unreasonably withheld), the reasonable fees and expenses of which will
be paid by the Company pursuant to Section 5 hereof, or one such other
successor counsel as shall be specified by the Holders of a majority of the
Registrable Securities.  For purposes of
determining Holders of a majority of the Registrable Securities in this
definition, Holders of Securities shall be deemed to be 

 

3

 

the Holders of the number
of shares of Underlying Common Stock into which such Securities are or would be
convertible as of the date the consent is requested.

 

“TRANSFER AGENT” means EquiServe Trust Company, N.A.,
the Transfer Agent for the Series F Preferred Stock or any successor Transfer
Agent pursuant to the terms of the Certificate of Designations.

 

“UNDERLYING COMMON SHARES” means the Common Shares
into which the Series F Preferred Stock are convertible or that is issued upon
any such conversion.

 

SECTION 2.           Shelf Registration.  (a) The Company shall prepare and file
or cause to be prepared and filed with the SEC as soon as practicable but in
any event, by the date (the “FILING DEADLINE DATE”) one hundred twenty (120)
days after the Issue Date, a Registration Statement for an offering to be made
on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act registering the resale from time to time by Holders thereof of all of the
Registrable Securities (a “SHELF REGISTRATION STATEMENT”).  The Shelf Registration Statement shall be on
Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by such Holders in accordance with the
methods of distribution elected by the Holders and set forth in the Shelf
Registration Statement.  The Company
shall use its reasonable best efforts to cause a Shelf Registration Statement
to be declared effective under the Securities Act as promptly as is practicable
but in any event by the date (the “EFFECTIVENESS DEADLINE DATE”) that is one
hundred eighty (180) days after the Issue Date, and, to keep a Shelf
Registration Statement continuously effective under the Securities Act until
the expiration of the Effectiveness Period. 
At the time the initial Shelf Registration Statement is declared
effective, each Holder that became a Notice Holder on or prior to the date ten
(10) Business Days prior to such time of effectiveness shall be named as a selling
securityholder in the Shelf Registration Statement and the related Prospectus
in such a manner as to permit such Holder to deliver such Prospectus to
purchasers of Registrable Securities in accordance with applicable law.  None of the Company’s security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company’s securities in a Shelf Registration Statement.

 

(b)           If a Shelf Registration Statement
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because all Registrable Securities registered thereunder
shall have been resold pursuant thereto or shall have otherwise ceased to be
Registrable Securities), the Company shall use its reasonable best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within thirty (30) days of such cessation of
effectiveness amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration Statement covering all of the
securities that as of the date of such filing are Registrable Securities If a
new Shelf Registration Statement is filed, the Company shall use its
commercially reasonable best efforts to cause the new Shelf Registration
Statement to become effective as promptly as is practicable after such filing
and to keep such new Shelf Registration Statement continuously effective until
the end of the Effectiveness Period.

 

(c)           The Company shall supplement and
amend the Prospectus and amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or file a new Shelf
Registration Statement, if required by the Securities Act or as necessary to
name a Notice Holder as a selling securityholder pursuant to Section (d)
below.

 

(d)           Each Holder agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with this
Section 2(d) and Section 3(i). Each Holder wishing to sell
Registrable Securities pursuant to a Shelf 

 

4

 

Registration Statement
and related Prospectus agrees to deliver a Notice and Questionnaire to the
Company at least three (3) Business Days prior to any intended distribution of
Registrable Securities under the Shelf Registration Statement. From and after
the date the initial Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the date a Notice and
Questionnaire is delivered, and in any event upon the later of (x) ten
(10) Business Days after such date or (y) ten (10) Business Days after the
expiration of any Deferral Period in effect when the Notice and Questionnaire
is delivered or put into effect within ten (10) Business Days of such delivery
date:

 

(i)            if required by applicable law, file
with the SEC a post-effective amendment to the Shelf Registration Statement or
prepare and, if required by applicable law, file a supplement to the related
Prospectus or a supplement or amendment to any document incorporated therein by
reference or file a new Shelf Registration Statement or any other required
document so that the Holder delivering such Notice and Questionnaire is named
as a selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to a Shelf
Registration Statement, or file a new Shelf Registration Statement, use its
commercially reasonable best efforts to cause such post-effective amendment or
new Shelf Registration Statement to be declared effective under the Securities
Act as promptly as is practicable, but in any event by the date (the “AMENDMENT
EFFECTIVENESS DEADLINE DATE”) that is forty-five (45) days after the date such
post-effective amendment is required by this clause to be filed;

 

(ii)           provide such Holder copies of any
documents filed pursuant to Section 2(d)(i); and

 

(iii)          notify such Holder as promptly as
practicable after the effectiveness under the Securities Act of any
post-effective amendment or new Shelf Registration Statement filed pursuant to
Section 2(d)(i);

 

provided
that if such Notice and Questionnaire is delivered during a Deferral Period,
the Company shall so inform the Holder delivering such Notice and Questionnaire
and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with
Section 3(i). Notwithstanding anything contained herein to the contrary,
(i) the Company shall be under no obligation to name any Holder that is
not a Notice Holder as a selling securityholder in any Shelf Registration
Statement or related Prospectus and (ii) the Amendment Effectiveness Deadline
Date shall be extended by up to ten (10) Business Days from the expiration of a
Deferral Period (and the Company shall incur no obligation to pay Liquidated
Damages during such extension) if such Deferral Period shall be in effect on
the Amendment Effectiveness Deadline Date.

 

(e)           The parties hereto agree that the
Holders of Registrable Securities will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if

 

(i)            a Shelf Registration Statement has not
been filed on or prior to the Filing Deadline Date,

 

(ii)           a Shelf Registration Statement has
not been declared effective under the Securities Act on or prior to the
Effectiveness Deadline Date,

 

(iii)          the Company has failed to perform its
obligations set forth in Section 2(d) within the time period required
therein,

 

5

 

(iv)          any new Shelf Registration Statement
or a post-effective amendment to a Shelf Registration Statement filed pursuant
to Section 2(d)(i) has not become effective under the Securities Act
on or prior to the Amendment Effectiveness Deadline Date,

 

(v)           the aggregate duration of Deferral
Periods in any period exceeds the number of days permitted in respect of such
period pursuant to Section 3(i) hereof, or

 

(vi)          the number of Deferral Periods in any
period exceeds the number permitted in respect of such period pursuant to
Section 3(i) hereof.

 

Each event
described in any of the foregoing clauses (i) through (vi) is individually
referred to herein as a “REGISTRATION DEFAULT.” For purposes of this Agreement,
each Registration Default set forth above shall begin on the dates set forth in
the table set forth below and shall continue until the ending dates set forth
in the table below:

 

	
  Type of Registration

  Default by Clause

  	
   

  	
  Beginning Date

  	
   

  	
  Ending Date

  
	
  (i)

  	
   

  	
  Filing Deadline
  Date

  	
   

  	
  The date a Shelf
  Registration Statement is filed

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Effectiveness
  Deadline Date

  	
   

  	
  the date a Shelf
  Registration Statement becomes effective under the Securities Act

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  the date by
  which the Company is required to perform its obligations under
  Section 2(d)

  	
   

  	
  the date the
  Company performs its obligations set forth in Section 2(d)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  the Amendment
  Effectiveness Deadline Date

  	
   

  	
  the date a new
  Shelf Registration Statement or the applicable post-effective amendment to a
  Shelf Registration Statement becomes effective under the Securities Act

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  the date on
  which the aggregate duration of Deferral Periods in any period exceeds the
  number of days permitted by Section 3(i)

  	
   

  	
  termination of
  the Deferral Period that caused the limit on the aggregate duration of
  Deferral Periods to be exceeded

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  the date of
  commencement of a Deferral Period that causes the number of Deferral Periods
  to exceed the number permitted by Section 3(i)

  	
   

  	
  termination of
  the Deferral Period that caused the number of Deferral Periods to exceed the
  number permitted by Section 3(i)

  

 

Subject to the first sentence of the next paragraph,
commencing on (and including) any date on which a Registration Default has
begun and ending on (but excluding) the next date on which there are no
Registration Defaults that have occurred and are continuing (a “DAMAGES ACCRUAL
PERIOD”), the Company shall pay, as liquidated damages and not as a penalty, to
Record Holders of Registrable Securities an amount (the “LIQUIDATED DAMAGES
AMOUNT”) accruing, (i) for and in respect of each of the first ninety (90)
days in the Damages Accrual Period, (x) in respect of any share of Series
F Preferred Stock then outstanding, at the rate per annum equal to 0.25% of the
aggregate liquidation preference of the Series F Preferred Stock, and
(y) in respect of each share of Underlying Common Shares then outstanding,
at a rate per annum equal to 0.25% of the Conversion Price in effect on such
date, and (ii) for and in respect of each day after the first ninety (90)
days (eg. commencing on the 91st day) in the Damages Accrual Period,
(x) in respect of any share of Series F Preferred Stock then outstanding,
at the rate per annum equal to 0.50% of the aggregate liquidation preference of
the Series F Preferred Stock, and (y) in respect of each share of
Underlying Common Shares then outstanding, at a rate per annum equal to 0.50%
of the Conversion Price in effect on such date. 
The rate of accrual of the Liquidated Damages 

 

6

 

Amount with respect to
any Damages Accrual Period shall not exceed the rate provided for in this
paragraph notwithstanding the occurrence of multiple concurrent Registration
Defaults.

 

In the case of any Damages Accrual Period that is in
effect solely as a result of a Registration Default of the type described in
clause (iii) or (iv) of the first paragraph of this Section 2(e), any
Liquidated Damages Amount shall be paid only to the Holders (as set forth in
the succeeding paragraph) that have delivered Notices and Questionnaires that
caused the Company to incur the obligations set forth in
Section 2(d) the non-performance of which is the basis of such Registration
Default.

 

In calculating the Liquidated Damages Amount on shares
of Underlying Common Stock on any date on which no Series F Preferred Stock is
outstanding, the Conversion Price and the Liquidated Damages Amount shall be
calculated as if the Series F Preferred Stock were still outstanding.
Notwithstanding the foregoing, no Liquidated Damages Amount shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period.

 

The Liquidated Damages Amount shall accrue from the
first day of the applicable Damages Accrual Period, and shall be payable in
cash on each Damages Payment Date during the Damages Accrual Period (and on the
Damages Payment Date next succeeding the end of the Damages Accrual Period if
the Damages Accrual Period does not end on a Damages Payment Date) to the
Record Holders of the Registrable Securities entitled thereto; provided that any Liquidated Damages Amount accrued with
respect to any Series F Preferred Stock or portion thereof redeemed by the
Company on a redemption date, purchased by the Company on a repurchase date or
converted into Underlying Common Stock on a conversion date prior to the
Damages Payment Date, shall, in any such event, be paid instead to the Holder
who submitted such Series F Preferred Stock or portion thereof for redemption,
purchase or conversion on the applicable redemption date, repurchase date or
conversion date, as the case may be, on such date (or promptly following the
conversion date, in the case of conversion), unless the redemption date or the
repurchase date, as the case may be, falls after the Record Date or and on or
prior to the corresponding Damages Payment Date; and provided
further that, in the case of a Registration Default of the type
described in clause (iii) or (iv) of the first paragraph of this
Section 2(e), such Liquidated Damages Amount shall be paid only to the
Holders entitled thereto pursuant to such first paragraph by check mailed to
the address set forth in the Notice and Questionnaire delivered by such Holder
or as otherwise agreed to by the Company and such Holder.  The Transfer Agent shall be entitled, on
behalf of registered holders of Series F Preferred Stock or Underlying Common
Stock, to seek any available remedy for the enforcement of this Agreement,
including for the payment of such Liquidated Damages Amount.   Notwithstanding the foregoing, the parties
agree that the sole damages payable for a violation of the terms of this
Agreement shall be the Liquidated Damages Amount. Nothing shall preclude any
Holder from pursuing or obtaining specific performance or other equitable
relief with respect to this Agreement.

 

All of the Company’s obligations set forth in this Section 2(e) that
are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k))
or, in the case of the Liquidated Damages Amount payable on any shares of
Series F Preferred Stock, until such shares cease to be outstanding.

 

The parties hereto agree that the Liquidated Damages
Amount provided for in this Section 2(e) constitutes a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of the failure of a Shelf Registration Statement to be
filed or declared effective or available for effecting resales of Registrable
Securities in accordance with the provisions hereof.

 

7

 

SECTION 3.           Registration Procedures.  In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:

 

(a)           Prepare and file with the SEC a Shelf
Registration Statement or Shelf Registration Statements on any appropriate form
under the Securities Act available for the sale of the Registrable Securities
by the Holders thereof in accordance with the intended method or methods of
distribution thereof, and use its reasonable best efforts to cause each such
Shelf Registration Statement to become effective and remain effective as
provided herein; provided that before filing any
Shelf Registration Statement or Prospectus or any amendments or supplements
thereto with the SEC, furnish to the Initial Purchasers and the Special
Counsel, if any, copies of all such documents proposed to be filed and use its
commercially reasonable best efforts to reflect in each such document when so
filed with the SEC such comments as the Initial Purchasers or the Special
Counsel, if any, reasonably shall propose within five (5) Business Days of the
delivery of such copies to the Initial Purchasers and the Special Counsel.

 

(b)           Prepare and file with the SEC such
amendments and post-effective amendments to each Shelf Registration Statement
as may be necessary to keep such Shelf Registration Statement continuously
effective during the Effectiveness Period; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and use its commercially reasonable best efforts to
comply with the provisions of the Securities Act applicable to it with respect
to the disposition of all securities covered by such Shelf Registration
Statement during the Effectiveness Period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Shelf
Registration Statement as so amended or such Prospectus as so supplemented.

 

(c)           As promptly as practicable give
notice to the Notice Holders, the Initial Purchasers and the Special Counsel,
if any, (i) when any Prospectus, prospectus supplement, Shelf Registration
Statement or post-effective amendment to a Shelf Registration Statement has
been filed with the SEC and, with respect to a Shelf Registration Statement or
any post-effective amendment, when the same has been declared effective,
(ii) of any request, following the effectiveness of the initial Shelf
Registration Statement under the Securities Act, by the SEC or any other
federal or state governmental authority for amendments or supplements to any Shelf
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of any
Shelf Registration Statement or the initiation or threatening of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose,
(v) of the occurrence of a Material Event and (vi) of the determination by
the Company that a post-effective amendment to a Shelf Registration Statement
will be filed with the SEC, which notice may, at the discretion of the Company
(or as required pursuant to Section 3(i)), state that it constitutes a
Deferral Notice, in which event the provisions of Section 3(i) shall
apply.

 

(d)           Use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of a Shelf
Registration Statement or the lifting of any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction in which they have been qualified for sale, in either case
at the earliest possible moment, and provide prompt notice to each Notice
Holder and the Initial Purchasers of the withdrawal of any such order.

 

(e)           If reasonably requested by any
Initial Purchaser or Notice Holder, as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment to a Shelf Registration
Statement such information as the Initial Purchasers and the Special Counsel,
if any, or such Notice Holder shall on the basis of an opinion of
nationally-recognized counsel experienced in such matters, 

 

8

 

determine to be required
to be included therein by applicable law and make any required filings of such
prospectus supplement or post-effective amendment.

 

(f)            As promptly as practicable furnish
to each Notice Holder, the Special Counsel and the Initial Purchasers, upon
request and without charge, at least one (1) conformed copy of the Shelf
Registration Statement and any amendment thereto, including exhibits and all
documents incorporated or deemed to be incorporated therein by reference.

 

(g)           During the Effectiveness Period,
deliver to each Notice Holder, the Special Counsel, if any, and the Initial
Purchasers, in connection with any sale of Registrable Securities pursuant to a
Shelf Registration Statement, without charge, as many copies of the Prospectus
or Prospectuses relating to such Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as such Notice
Holder may reasonably request; to provide a “reasonable number” of copies
thereof to the New York Stock Exchange as contemplated by Rule 153 under
the Securities Act; and the Company hereby consents (except during such periods
that a Deferral Notice is outstanding and has not been revoked) to the use of
such Prospectus or each amendment or supplement thereto by each Notice Holder
in connection with any offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto in the manner set
forth therein.

 

(h)           Prior to any public offering of the
Registrable Securities pursuant to a Shelf Registration Statement, use its
commercially reasonable best efforts to register or qualify or cooperate with
the Notice Holders and the Special Counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Notice Holder reasonably
requests in writing (which request may be included in the Notice and
Questionnaire); prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its commercially reasonable
best efforts to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period in connection with such
Notice Holder’s offer and sale of Registrable Securities pursuant to such
registration or qualification (or exemption therefrom) and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of such Registrable Securities in the manner set forth in
the relevant Shelf Registration Statement and the related Prospectus; provided that the Company will not be required to
(i) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Agreement or (ii) take any action that would subject it to general service
of process in suits or to taxation in any such jurisdiction where it is not
then so subject.

 

(i)            Upon (A) the issuance by the
SEC of a stop order suspending the effectiveness of a Shelf Registration
Statement or the initiation of proceedings with respect to a Shelf Registration
Statement under Section 8(d) or 8(e) of the Securities Act,
(B) the occurrence of any event or the existence of any fact (a “MATERIAL
EVENT”) as a result of which a Shelf Registration Statement shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, or any Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or
existence of any pending corporate development that, in the reasonable
discretion of the Company, makes it appropriate to suspend the availability of
a Shelf Registration Statement and the related Prospectus for a discrete period
of time:

 

(i)            in the case of clause (B) above, as
promptly as practicable prepare and file a post-effective amendment to such
Shelf Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required 

 

9

 

document that would be
incorporated by reference into such Shelf Registration Statement and Prospectus
so that such Shelf Registration Statement does not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and such
Prospectus does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Shelf Registration Statement,  use its commercially reasonable best efforts
to cause it to be declared effective as promptly as is practicable, and

 

(ii)           give notice to the Notice Holders,
and the Special Counsel, if any, that the availability of the Shelf Registration
Statement is suspended (a “DEFERRAL NOTICE”) and, upon receipt of any Deferral
Notice, each Notice Holder agrees not to sell any Registrable Securities
pursuant to the Registration Statement until such Notice Holder’s receipt of
copies of the supplemented or amended Prospectus provided for in clause
(i) above, or until it is advised in writing by the Company that the
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus.

 

The Company will use its commercially reasonable best
efforts to ensure that the use of the Prospectus may be resumed (x) in the
case of clause (A) above, as promptly as is practicable, (y) in the
case of clause (B) above, as soon as, in the sole judgment of the Company,
public disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as practicable thereafter and (z) in the case
of clause (C) above, as soon as in the reasonable discretion of the
Company, such suspension is no longer appropriate.  The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of a Shelf
Registration Statement or any Prospectus, without incurring or accruing any
obligation to pay liquidated damages pursuant to Section 2(e), no more
than one (1) time in any three month period or three (3) times in any
twelve month period, and any such period during which the availability of the
Registration Statement and any Prospectus is suspended (the “DEFERRAL PERIOD”)
shall, without incurring any obligation to pay liquidated damages pursuant to
Section 2(e), not exceed 30 days; provided that
the aggregate duration of any Deferral Periods shall not exceed 30 days in any
three month period or 90 days in any twelve (12) month period.

 

(j)            If requested in writing in
connection with a disposition of Registrable Securities pursuant to a Shelf
Registration Statement and upon three (3) Business Days’ prior notice, make
reasonably available for inspection during normal business hours by a
representative for the Notice Holders of such Registrable Securities, any
broker-dealers, attorneys and accountants retained by such Notice Holders, and
any attorneys or other agents retained by a broker-dealer engaged by such
Notice Holders, all relevant financial and other records and pertinent
corporate documents and properties of the Company and its subsidiaries, and
cause the appropriate officers, directors and employees of the Company and its
subsidiaries to make reasonably available for inspection during normal business
hours on reasonable notice all relevant information reasonably requested by
such representative for the Notice Holders, or any such broker-dealers,
attorneys or accountants in connection with such disposition, in each case as
is customary for similar “due diligence” examinations; provided
that such persons shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information shall be
kept confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any 

 

10

 

disclosure requirements
pursuant to federal securities laws in connection with the filing of any Shelf
Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by any
such person or (iv) such information becomes available to any such person
from a source other than the Company and such source is not bound by a confidentiality
agreement, and provided  further
that the foregoing inspection and information gathering shall, to the greatest
extent possible, be coordinated on behalf of all the Notice Holders and the
other parties entitled thereto by Special Counsel.

 

(k)           Comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) for a 12-month period
commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Shelf Registration Statement, which
statements shall be made available no later than 45 days after the end of the
12-month period or 90 days if the 12-month period coincides with a fiscal year
of the Company.

 

(l)            Cooperate with each Notice Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities (except as otherwise provided in the Certificate of
Designations) sold or to be sold pursuant to a Shelf Registration Statement,
which certificates shall not bear any legends restricting transfer under
federal securities laws, and cause such Registrable Securities to be in such
denominations as are permitted by the Certificate of Designations and
registered in such names as such Notice Holder may request in writing at least
three (3) Business Days prior to any sale of such Registrable Securities.

 

(m)          Provide a CUSIP number for all
Registrable Securities covered by each Shelf Registration Statement not later
than the effective date of such Shelf Registration Statement and provide the
Transfer Agent and the transfer agent for the Common Shares with printed
certificates for the Registrable Securities that are in a form eligible for
deposit with The Depository Trust Company.

 

(n)           Cooperate and assist in any filings
required to be made with the National Association of Securities Dealers, Inc.
or the New York Stock Exchange, Inc.

 

(o)           Upon (i) the filing of the
initial Shelf Registration Statement and (ii) the effectiveness of the
initial Shelf Registration Statement, announce the same, in each case by
release to Reuters Economic Services and Bloomberg Business News or other
reasonable means of distribution.

 

SECTION 4.           Holder’s Obligations.  Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder shall be entitled to sell any of such
Registrable Securities pursuant to a Shelf Registration Statement or to receive
a Prospectus relating thereto, unless such Holder has furnished the Company
with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be
included in such Notice and Questionnaire) and the information set forth in the
next sentence. Each Notice Holder agrees promptly to furnish to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading and
any other information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by such Holder that the information relating to
such Holder and its plan of distribution is as set forth in the Prospectus
delivered by such Holder in connection with such disposition, that such
Prospectus does not as of the time of such sale contain any untrue statement of
a material fact relating to or provided by such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale omit
to state any material 

 

11

 

fact relating to or
provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.

 

SECTION 5.           Registration Expenses.  The Company shall bear all fees and expenses
incurred in connection with the performance by the Company of its obligations
under Sections 2 and 3 of this Agreement whether or not any Shelf Registration
Statement is declared effective. Such fees and expenses shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. or New York
Stock Exchange Inc. and (y) of compliance with federal and state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of the Special Counsel in connection with Blue Sky qualifications
of the Registrable Securities under the laws of such jurisdictions as Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company),
(iii) duplication expenses relating to copies of any Shelf Registration
Statement or Prospectus delivered to any Holders hereunder,
(iv) reasonable fees and disbursements of counsel for the Company,
(v) reasonable fees and disbursements of the Transfer Agent and of the
registrar and transfer agent for the Common Shares, (vi) Securities Act
liability insurance obtained by the Company in its sole discretion, and (vii) reasonable
fees and disbursements of Special Counsel (provided that the Company shall not
be liable for the fees and expenses of more than one separate firm for all
parties participating in any transaction hereunder).  In addition, the Company shall pay the
internal expenses of the Company (including, without limitation, all salaries
and expenses of officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing by the Company of the Registrable Securities on any securities
exchange on which similar securities of the Company are then listed and the
fees and expenses of any person, including special experts, retained by the
Company. Notwithstanding the provisions of this Section 5, each seller of
Registrable Securities shall pay selling expenses and all registration expenses
to the extent required by applicable law.

 

SECTION 6.           Indemnification.

 

(a)           Indemnification by the
Company.  The Company agrees
to indemnify and hold harmless each Notice Holder and each person, if any, who
controls any Notice Holder (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act), and each affiliate of
any Notice Holder within the meaning of Rule 405 under the Securities Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim)
(collectively, “LOSSES”) caused by any untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration Statement or
any amendment thereof, any preliminary prospectus or any Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such Losses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Holders furnished to the Company in writing by or
on behalf of a Holder or any underwriter (in the case of an underwritten
offering) expressly for use therein; provided that
if any Losses arise out of or are based upon an untrue statement, alleged
untrue statement, omission or alleged omission contained in any preliminary
prospectus that did not appear in the final prospectus, the Company shall not
have any liability with respect thereto to any Holder if any Holder delivered a
copy of the preliminary prospectus to the person alleging such Losses and
failed to deliver a copy of the final prospectus, as amended or 

 

12

 

supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to that person.

 

(b)           Indemnification by Holders.
 Each Holder agrees severally and not
jointly to indemnify and hold harmless the Company, the directors of the
Company, the officers of the Company who sign any Shelf Registration Statement,
and each person, if any, who controls the Company (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act),
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act (in the case of an underwritten offering), and
any other Holder, from and against all Losses caused by any untrue statement or
alleged untrue statement of a material fact contained in any Shelf Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Holder furnished to the Company in writing by
or on behalf of such Holder expressly for use in such Shelf Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto. In no event shall the liability of any Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such
Holder upon the sale of the Registrable Securities pursuant to the Shelf
Registration Statement giving rise to such indemnification obligation.

 

(c)           Conduct of Indemnification
Proceedings.  In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 6(a) or 6(b) hereof, such person (the “INDEMNIFIED
PARTY”) shall promptly notify the person against whom such indemnity may be
sought (the “INDEMNIFYING PARTY”) in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Holders and all
persons, if any, who control any Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the fees and expenses of more than one separate firm (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Shelf Registration Statement and each person, if any, who controls the Company
within the meaning of either such Section, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Holders and such control persons of any Holders, such firm shall be
designated in writing by the Holders of a majority (with Holders of Series F
Preferred Stock deemed to be the Holders, for purposes of determining such
majority, of the number of shares of Underlying Common Shares into which such
Series F Preferred Stock are or would be convertible as of the date on which such
designation is made) of the Registrable Securities covered by the Shelf
Registration Statement held by Holders that are indemnified parties pursuant to
Section 6(a).  In the case of any
such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the
Company.  The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by 

 

13

 

reason of such settlement
or judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.

 

(d)           Contribution.  To the extent that the indemnification
provided for in Section 6(a) or 6(b) is unavailable to an indemnified
party or insufficient in respect of any Losses referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such Losses (i) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on the
other hand from the offering of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions
that resulted in such Losses, as well as any other relevant equitable
considerations.  The relative benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the initial placement pursuant to the Purchase Agreement (after deducting
expenses) of the Registrable Securities to which such Losses relate.  The relative benefits received by any Holder
shall be deemed to be equal to the value of receiving registration rights under
this Agreement for the Registrable Securities. 
The relative fault of the Holders on the one hand and the Company on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by or
on behalf of the Holders or by the Company, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The Holders’
respective obligations to contribute pursuant to this paragraph are several in
proportion to the respective number of Registrable Securities they have sold
pursuant to a Registration Statement, and not joint.

 

The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. 
The amount paid or payable by an indemnified party as a result of the
Losses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding this
Section 6(d), an indemnifying party that is a selling Holder shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.  The 

 

14

 

remedies provided for in
this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.

 

(e)           The indemnity, contribution and
expense reimbursement obligations of the parties hereunder shall be in addition
to any liability any indemnified party may otherwise have at law or in equity,
hereunder, under the Purchase Agreement or otherwise.

 

(f)            The indemnity and contribution
provisions contained in this Section 6 shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Holder, any person
controlling any Holder, or any affiliate of any Holder or by or on behalf of
the Company, or the Company’s officers or directors or any person controlling
the Company and (iii) the sale of any Registrable Securities by any
Holder.

 

SECTION 7.           Information Requirements.  The Company covenants that, if at any time
before the end of the Effectiveness Period the Company is not subject to the
reporting requirements of the Exchange Act, it will cooperate with any Holder
and take such further reasonable action as any Holder may reasonably request in
writing (including, without limitation, making such reasonable representations
as any such Holder may reasonably request), all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 and Rule 144A and customarily taken in
connection with sales pursuant to such exemptions. Upon the written request of
any Holder, the Company shall deliver to such Holder a written statement as to
whether it has complied with such filing requirements, unless such a statement
has been included in the Company’s most recent report filed pursuant to
Section 13 or Section 15(d) of Exchange Act. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the
Company to register any of its securities (other than the Common Shares) under
any section of the Exchange Act.

 

SECTION 8.           Miscellaneous.

 

(a)           No Conflicting Agreements.  The Company is not, as of the date hereof, a
party to, nor shall it, on or after the date of this Agreement, enter into, any
agreement with respect to its securities that conflicts with the rights granted
to the Holders in this Agreement.  The
Company represents and warrants that the rights granted to the Holders
hereunder do not in any way conflict with the rights granted to the holders of the
Company’s securities under any other agreements.

 

(b)           Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of a
majority of the then outstanding Underlying Common Shares constituting
Registrable Securities (with Holders of Series F Preferred Stock deemed to be
the Holders, for purposes of this Section, of the number of outstanding shares
of Underlying Common Shares into which such Series F Preferred Stock is or
would be convertible as of the date on which such consent is requested).
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Shelf
Registration Statement and that does not directly or indirectly affect the rights
of other Holders may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders pursuant to such Shelf
Registration Statement; provided, that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding
sentence.  Notwithstanding the foregoing
sentence, this Agreement may be amended by written agreement signed by the
Company and the Initial Purchasers, without the consent of the Holders of
Registrable Securities, to cure any ambiguity or to correct or supplement any
provision contained herein 

 

15

 

that may be defective or
inconsistent with any other provision contained herein, or to make such other
provisions in regard to matters or questions arising under this Agreement that
shall not adversely affect the interests of the Holders of Registrable
Securities.  Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating
such amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

 

(c)           Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery, by
telecopier, by courier guaranteeing overnight delivery or by first-class mail,
return receipt requested, and shall be deemed given (i) when made, if made
by hand delivery, (ii) upon confirmation, if made by telecopier,
(iii) one (1) Business Day after being deposited with such courier, if
made by overnight courier or (iv) on the date indicated on the notice of
receipt, if made by first-class mail, to the parties as follows:

 

(i)            if to a Holder, at the
most current address given by such Holder to the Company in a Notice and
Questionnaire or any amendment thereto;

 

(ii)           if to the Company, to:

 

The Mills
Corporation

1300 Wilson Boulevard, Suite 400

Arlington,
Virginia 22209

Attention:  General Counsel

 

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

 

Hogan &
Hartson LLP

555 Thirteenth Street, NW

Washington, DC 20004

Attention:  Alan J. Dye, Esq.

 

(iii)          if to the Initial
Purchasers, to:

 

Morgan Stanley
& Co., Incorporated

1585 Broadway

New York, New York
10036

Attention: Equity
Capital Markets

Telecopy No.:
(212) 761-0538

 

And

 

Goldman, Sachs
& Co.

85 Broad Street

New York, New
York  10004

Attention: Equity
Capital Markets

 

or to such other
address as such person may have furnished to the other persons identified in
this Section 8(c) in writing in accordance herewith.

 

16

 

(d)           Approval of Holders.  Whenever the consent or approval of Holders
of a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial
Purchasers or subsequent Holders if such subsequent Holders are deemed to be
such affiliates solely by reason of their holdings of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

 

(e)           Successors and Assigns.  Any person who purchases any Registrable
Securities from any Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of such Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities, provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Certificate of Designations.  If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such person shall be entitled to receive the benefits hereof.

 

(f)            Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.

 

(g)           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(h)           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(i)            Severability.  If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their commercially reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction, it being
intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.

 

(j)            Entire Agreement.  This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities.  Except as provided in the Purchase Agreement,
there are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein, with respect to the registration rights
granted by the Company with respect to the Registrable Securities. This
Agreement supersedes all prior agreements and undertakings among the parties
with respect to such registration rights. No party hereto shall have any
rights, duties or obligations other than those specifically set forth in this
Agreement. In no event will such methods of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.

 

(k)           Termination.  This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Section 4, 5 or 6 

 

17

 

hereof and the
obligations to make payments of and provide for the Liquidated Damages Amount
under Section 2(e) hereof to the extent such damages cumulate prior
to the end of the Effectiveness Period, each of which shall remain in effect in
accordance with its terms.

 

18

 

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

 

	
   

  	
  THE MILLS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas E. Frost

  	
   

  
	
   

  	
   

  	
  Name: Thomas E. Frost

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Confirmed and
  accepted as of

  	
   

  
	
  the date first
  above written:

  	
   

  
	
   

  	
   

  
	
  MORGAN STANLEY
  & CO., INCORPORATED

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ John O.
  Tyree

  	
   

  	
   

  
	
   

  	
  Name: John O.
  Tyree

  	
   

  
	
   

  	
  Title: Executive
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Goldman,
  Sachs & Co.

  	
   

  	
   

  
	
  Goldman, Sachs
  & Co.

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