Document:

Exhibit 10.4

 

EZENIA! INC.

 

2004 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Term of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Authorization of Grants

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Specific Terms of Awards

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Adjustment Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Settlement of Awards

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Reservation of Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Limitation of Rights in Stock; No Special
  Service Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Unfunded Status of Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Nonexclusivity of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Termination and Amendment of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Notices and Other Communications

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Governing
  Law

  	
   

  

 

 

EZENIA!
INC.

 

2004
EQUITY INCENTIVE PLAN

 

1.                                      Purpose

 

This
Plan is intended to encourage ownership of Stock by employees, consultants,
advisors and directors of the Company and its Affiliates and to provide
additional incentive for them to promote the success of the Company’s business
through the grant of Awards of or pertaining to shares of the Company’s
Stock.  The Plan is intended to be an
incentive stock option plan within the meaning of Section 422 of the Code,
but not all Awards are required to be Incentive Options.

 

2.                                      Definitions

 

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

 

2.1.                              Accelerate, Accelerated, and Acceleration,
means: (a) when used with respect to an Option, that as of the time of
reference the Option will become exercisable with respect to some or all of the
shares of Stock for which it was not then otherwise exercisable by its terms;
and (b) when used with respect to Restricted Stock, that the Risk of
Forfeiture otherwise applicable to the Stock shall expire with respect to some
or all of the shares of Restricted Stock then still otherwise subject to the
Risk of Forfeiture.

 

2.2.                              Acquisition means a merger or consolidation of
the Company into another person (i.e., in which merger or consolidation the
Company does not survive) or the sale, transfer, or other disposition of all or
substantially all of the Company’s assets to one or more other persons in a
single transaction or series of related transactions, unless securities
possessing more than 50% of the total combined voting power of the survivor’s
or acquiror’s outstanding securities (or the securities of any parent thereof)
are held by a person or persons who held securities possessing more than 50% of
the total combined voting power of the Company immediately prior to that
transaction.

 

2.3.                              Affiliate means any corporation, partnership,
limited liability company, business trust, or other entity controlling,
controlled by or under common control with the Company.

 

2.4.                              Award means any grant or sale pursuant to
the Plan of Options, Restricted Stock, or Stock Grants.

 

2.5.                              Award Agreement means an agreement
between the Company and the recipient of an Award, setting forth the terms and
conditions of the Award.

 

2.6.                              Board means the Company’s Board of
Directors.

 

 

2.7.                              Change of  Control means any
of the following transactions:

 

(a)                                  any Acquisition, or

 

(b)                                 any person or group of persons
(within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended and in effect from time to time), other than the
Company or an Affiliate, directly or indirectly acquires, including but not limited
to by means of merger or consolidation, beneficial ownership (determined
pursuant to Securities and Exchange Commission Rule 13d-3
promulgated under the said Exchange Act) of securities possessing more than 50%
of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s
stockholders that the Board does not recommend such stockholders to accept,
other than a person or group of persons who fall into the following categories (i) the
Company or an Affiliate, (ii) an employee benefit plan of the Company or
any of its Affiliates, (iii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Affiliates, or (iv) an underwriter temporarily holding securities pursuant
to an offering of such securities, or

 

(c)                                  over a period of 36 consecutive
months or less, there is a change in the composition of the Board such that a
majority of the Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for the election of
Board members, to be composed of individuals who either (A) have been
Board members continuously since the beginning of that period, or (B) have
been elected or nominated for election as Board members during such period by
at least a majority of the Board members described in the preceding clause (A) who
were still in office at the time that election or nomination was approved by
the Board, or

 

(d)                                 a majority of the Board votes in
favor of a decision that a Change in Control has occurred.

 

2.8.                              Code means the Internal Revenue Code of
1986, as amended from time to time, or any successor statute thereto, and any
regulations issued from time to time thereunder.

 

2.9.                              Committee means any committee of the Board
delegated the responsibility for the administration of the Plan, as provided in
Section 5 of the Plan.  For any
period during which no such committee is in existence “Committee” shall mean
the Board and all authority and responsibility assigned to the Committee under
the Plan shall be exercised, if at all, by the Board.

 

2.10.                        Company means Ezenia! Inc., a corporation organized under the laws of the State of
Delaware.

 

2.11.                        Grant Date means the date as of
which an Option is granted, as determined under Section 7.1(a).

 

2

 

2.12.                        Incentive Option means an Option which
by its terms is to be treated as an “incentive stock option” within the meaning
of Section 422 of the Code.

 

2.13.                        Market Value means the value of a
share of Stock on a particular date determined by such methods or procedures as
may be established by the Committee. 
Unless otherwise determined by the Committee, the Market Value of Stock
as of any date is the closing price for the Stock as reported on the OTC
Bulletin Board (or on any national securities exchange or quotation system on
which the Stock is then listed) for that date or, if no closing price is
reported for that date, the closing price on the next preceding date for which
a closing price was reported.

 

2.14.                        Nonstatutory Option means any Option that
is not an Incentive Option.

 

2.15.                        Option means an option to purchase shares
of Stock.

 

2.16.                        Optionee means a Participant to whom an
Option shall have been granted under the Plan.

 

2.17.                        Participant means any holder of an outstanding
Award under the Plan.

 

2.18.                        Plan means this 2004 Equity Incentive Plan of the Company, as amended from time to
time, and including any attachments or addenda hereto.

 

2.19.                        Restricted Stock means a grant or sale
of shares of Stock to a Participant subject to a Risk of Forfeiture.

 

2.20.                        Restriction Period means the period of time, established by the Committee in
connection with an Award of Restricted Stock, during which the shares of
Restricted Stock are subject to a Risk of Forfeiture described in the
applicable Award Agreement.

 

2.21.                        Risk of  Forfeiture means a
limitation on the right of the Participant to retain Restricted Stock,
including a right in the Company to reacquire shares of Restricted Stock at
less than their then Market Value, arising because of the occurrence or
non-occurrence of specified events or conditions.

 

2.22.                        Stock means common stock, par value $.01 per share, of the Company.

 

2.23.                        Stock Grant means the grant of
shares of Stock not subject to restrictions or other forfeiture conditions.

 

2.24.                        Stockholders’ Agreement means any
agreement by and among the holders of at least a majority of the outstanding
voting securities of the Company and setting forth, among other provisions,
restrictions upon the transfer of shares of Stock or on the exercise of rights
appurtenant thereto (including but not limited to voting rights).

 

2.25.                        Ten Percent  Owner means a
person who owns, or is deemed within the meaning of Section 422(b)(6) of
the Code to own, stock possessing more than 10% of the

 

3

 

total combined voting power of all classes of stock of the
Company (or any parent or subsidiary corporations of the Company, as defined in
Sections 424(e) and (f), respectively, of the Code).  Whether a person is a Ten Percent Owner shall
be determined with respect to an Option based on the facts existing immediately
prior to the Grant Date of the Option.

 

3.                                      Term of the Plan

 

Unless
the Plan shall have been earlier terminated by the Board, Awards may be granted
under this Plan at any time in the period commencing on the date of approval of
the Plan by the Board and ending immediately prior to the tenth anniversary of
the adoption of the Plan by the Board. 
Awards granted pursuant to the Plan within that period shall not expire
solely by reason of the termination of the Plan.  Awards of Incentive Options granted prior to
stockholder approval of the Plan are expressly conditioned upon such approval,
but in the event of the failure of the stockholders to approve the Plan shall
thereafter and for all purposes be deemed to constitute Nonstatutory Options.

 

4.                                      Stock
Subject to the Plan

 

At
no time shall the number of shares of Stock issued pursuant to or subject to
outstanding Awards granted under the Plan (including pursuant to Incentive
Options), nor the number of shares of Stock issued pursuant to Incentive
Options, exceed 7,500,000 shares
of Stock; subject, however, to the provisions of Section 8
of the Plan.  For purposes of applying
the foregoing limitation, (a) if any Option expires, terminates, or is
cancelled for any reason without having been exercised in full, or if any Award
of Restricted Stock is forfeited by the recipient, the shares not purchased by
the Optionee or which are forfeited by the recipient shall again be available
for Awards to be granted under the Plan and (b) if any Option is exercised
by delivering previously owned shares in payment of the exercise price therefor,
only the net number of shares, that is, the number of shares issued minus the
number received by the Company in payment of the exercise price, shall be
considered to have been issued pursuant to an Award granted under the Plan.  In addition, settlement of any Award shall
not count against the foregoing limitations except to the extent settled in the
form of Stock.  Shares of Stock issued
pursuant to the Plan may be either authorized but unissued shares or shares held
by the Company in its treasury.

 

5.                                      Administration

 

The
Plan shall be administered by the Committee; provided,
however, that at any time and on any one or more occasions the Board
may itself exercise any of the powers and responsibilities assigned the
Committee under the Plan and when so acting shall have the benefit of all of
the provisions of the Plan pertaining to the Committee’s exercise of its
authorities hereunder; and provided further, however,
that the Committee may delegate to an executive officer or officers the
authority to grant Awards hereunder to employees who are not officers, and to
consultants, in accordance with such guidelines as

 

4

 

the Committee shall set forth at any time or from time to
time.  Subject to the provisions of the
Plan, the Committee shall have complete authority, in its discretion, to make
or to select the manner of making all determinations with respect to each Award
to be granted by the Company under the Plan including the employee, consultant
or director to receive the Award and the form of Award.  In making such determinations, the Committee
may take into account the nature of the services rendered by the respective
employees, consultants, and directors, their present and potential
contributions to the success of the Company and its Affiliates, and such other
factors as the Committee in its discretion shall deem relevant.  Subject to the provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective Award Agreements (which need not be
identical), and to make all other determinations necessary or advisable for the
administration of the Plan.  The
Committee’s determinations made in good faith on matters referred to in the
Plan shall be final, binding and conclusive on all persons having or claiming
any interest under the Plan or an Award made pursuant hereto.

 

6.                                      Authorization
of Grants

 

6.1.                              Eligibility. 
The Committee may grant from time to time and at any time prior to the
termination of the Plan one or more Awards, either alone or in combination with
any other Awards, to any employee of or consultant or advisor to one or more of
the Company and its Affiliates or to any non-employee member of the Board or of
any board of directors (or similar governing authority) of any Affiliate.
However, only employees of the Company, and of any parent or subsidiary
corporations of the Company, as defined in Sections 424(e) and (f),
respectively, of the Code, shall be eligible for the grant of an Incentive
Option.  Further, in no event shall the
number of shares of Stock covered by Options or other Awards granted to any one
person in any one calendar year exceed 25% of the aggregate number of shares of
Stock subject to the Plan.

 

6.2.                              General Terms  of  Awards.  Each grant of an Award shall be subject to
all applicable terms and conditions of the Plan (including but not limited to
any specific terms and conditions applicable to that type of Award set out in
the following Section), and such other terms and conditions, not inconsistent
with the terms of the Plan, as the Committee may prescribe.  No prospective Participant shall have any rights
with respect to an Award, unless and until such Participant has executed an
agreement evidencing the Award, delivered a fully executed copy thereof to the
Company, and otherwise complied with the applicable terms and conditions of
such Award.

 

6.3.                              Effect of  Termination  of
Employment,  Etc. Unless the Committee shall provide otherwise
with respect to any Award, if the Participant’s employment or other association
with the Company and its Affiliates ends for any reason, including because of
the Participant’s employer ceasing to be an Affiliate, (a) any outstanding
Option of the Participant shall cease to be exercisable in any respect not
later than 90 days following that event and, for the period it remains
exercisable following that event, shall be exercisable only to the extent
exercisable at the date of that event, and (b) any other

 

5

 

outstanding Award of the Participant shall be forfeited or
otherwise subject to return to or repurchase by the Company on the terms
specified in the applicable Award Agreement. 
Military or sick leave or other bona fide leave shall not be deemed a
termination of employment or other association, provided
that it does not exceed the longer of ninety (90) days or the period during
which the absent Participant’s reemployment rights, if any, are guaranteed by
statute or by contract.

 

6.4.                              Non-Transferability of  Awards.  Except as otherwise provided in this Section 6.4,
Awards shall not be transferable, and no Award or interest therein may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.  All of a Participant’s rights in any Award
may be exercised during the life of the Participant only by the Participant or
the Participant’s legal representative. 
However, the Committee may, at or after the grant of an Award of a
Nonstatutory Option, or shares of Restricted Stock, provide that such Award may
be transferred by the recipient to a family member; provided,
however, that any such transfer is without payment of any
consideration whatsoever and that no transfer shall be valid unless first
approved by the Committee, acting in its sole discretion.  For this purpose, “family member” means any
child, stepchild, grandchild, parent, stepparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee’s household (other than a tenant
or employee), a trust in which the foregoing persons have more than fifty (50)
percent of the beneficial interests, a foundation in which the foregoing
persons (or the Participant) control the management of assets, and any other
entity in which these persons (or the Participant) own more than fifty (50)
percent of the voting interests.

 

7.                                      Specific
Terms of Awards

 

7.1.                              Options.

 

(a)                                  Date of  Grant.  The granting of an Option shall take place at
the time specified in the Award Agreement. 
Only if expressly so provided in the applicable Award Agreement shall
the Grant Date be the date on which the Award Agreement shall have been duly
executed and delivered by the Company and the Optionee.

 

(b)                                 Exercise Price.  The price at which shares of Stock may be
acquired under each Incentive Option shall be not less than 100% of the Market
Value of Stock on the Grant Date, or not less than 110% of the Market Value of
Stock on the Grant Date if the Optionee is a Ten Percent Owner.  The price at which shares may be acquired
under each Nonstatutory Option shall not be so limited solely by reason of this
Section.

 

(c)                                  Option Period.  No Incentive Option may be exercised on or
after the tenth anniversary of the Grant Date, or on or after the fifth
anniversary of the Grant Date if the Optionee is a Ten Percent Owner.  The Option period under each Nonstatutory
Option shall not be so limited solely by reason of this Section.

 

6

 

(d)                                 Exercisability. 
An Option may be immediately exercisable or become exercisable in such
installments, cumulative or non-cumulative, as the Committee may
determine.  In the case of an Option not
otherwise immediately exercisable in full, the Committee may Accelerate such
Option in whole or in part at any time; provided, however,
that in the case of an Incentive Option, any such Acceleration of the Option
would not cause the Option to fail to comply with the provisions of Section 422
of the Code or the Optionee consents to the Acceleration.

 

(e)                                  Method of  Exercise.  An Option may be exercised by the Optionee
giving written notice, in the manner provided in Section 16, specifying
the number of shares with respect to which the Option is then being
exercised.  The notice shall be
accompanied by payment in the form of cash or check payable to the order of the
Company in an amount equal to the exercise price of the shares to be purchased
or, unless prohibited by applicable law, the Optionee’s executed full recourse
promissory note at a market rate of interest in the principal amount equal to
the exercise price of the shares to be purchased and otherwise in such form as
the Committee shall have approved.

 

Receipt by the Company of such notice and payment in any
authorized or combination of authorized means shall constitute the exercise of
the Option.  Within thirty (30) days
thereafter but subject to the remaining provisions of the Plan, the Company
shall deliver or cause to be delivered to the Optionee or his agent a
certificate or certificates for the number of shares then being purchased.  Such shares shall be fully paid and
nonassessable.

 

(f)            Limit on  Incentive  Option  Characterization.  An Incentive Option shall be considered to be
an Incentive Option only to the extent that the number of shares of Stock for
which the Option first becomes exercisable in a calendar year do not have an
aggregate Market Value (as of the date of the grant of the Option) in excess of
the “current limit”.  The current limit
for any Optionee for any calendar year shall be $100,000 minus
the aggregate Market Value at the date of grant of the number of shares of
Stock available for purchase for the first time in the same year under each
other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee
under any other incentive stock option plan of the Company and its Affiliates,
after December 31, 1986.  Any shares
of Stock which would cause the foregoing limit to be violated shall be deemed
to have been granted under a separate Nonstatutory Option, otherwise identical
in its terms to those of the Incentive Option.

 

(g)                                 Notification of  Disposition.  Each person exercising any Incentive Option
granted under the Plan shall be deemed to have covenanted with the Company to
report to the Company any disposition of such shares prior to the expiration of
the holding periods specified by Section 422(a)(1) of the Code and,
if and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax
requirements, or any such withholding is required to secure 

 

7

 

for the Company an otherwise available tax deduction, to
remit to the Company an amount in cash sufficient to satisfy those
requirements.

 

7.2.                              Restricted Stock.

 

(a)                                  Purchase Price.  Shares of Restricted Stock shall be issued
under the Plan for such consideration, in cash, other property or services, or
any combination thereof, as is determined by the Committee.

 

(b)                                 Issuance of  Certificates.  Each Participant receiving a Restricted Stock
Award, subject to subsection (c) below, shall be issued a stock
certificate in respect of such shares of Restricted Stock.  Such certificate shall be registered in the
name of such Participant, and, if applicable, shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award
substantially in the following form:

 

The
transferability of this certificate and the shares represented by this
certificate are subject to the terms and conditions of Ezenia! Inc. 2004 Equity Incentive Plan and an Award
Agreement entered into by the registered owner and Ezenia! Inc.  Copies of such Plan and Agreement are on file
in the offices of the Company.

 

(c)                                  Escrow of  Shares.  The Committee may require that the stock
certificates evidencing shares of Restricted Stock be held in custody by a
designated escrow agent (which may but need not be the Company) until the
restrictions thereon shall have lapsed, and that the Participant deliver a
stock power, endorsed in blank, relating to the Stock covered by such Award.

 

(d)                                 Restrictions and  Restriction  Period.  During the Restriction Period applicable to
shares of Restricted Stock, such shares shall be subject to limitations on
transferability and a Risk of Forfeiture arising on the basis of such
conditions related to the performance of services, Company or Affiliate
performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement.  Any such
Risk of Forfeiture may be waived or terminated, or the Restriction Period
shortened, at any time by the Committee on such basis as it deems appropriate.

 

(e)                                  Rights Pending  Lapse  of
Risk  of  Forfeiture  or  Forfeiture  of  Award.  Except as otherwise provided in the Plan or
the applicable Award Agreement, at all times prior to lapse of any Risk of
Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company,
including the right to vote, and the right to receive any dividends with
respect to, the shares of Restricted Stock. 
The Committee, as determined at the time of Award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional Restricted Stock to the extent shares are
available under Section 4.

 

8

 

(f)                                    Lapse of  Restrictions.  If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for such
shares shall be delivered to the Participant promptly if not theretofore so
delivered.

 

7.3.                              Stock Grants. Stock Grants shall
be awarded solely in recognition of significant contributions to the success of
the Company or its Affiliates, in lieu of compensation otherwise already due
and in such other limited circumstances as the Committee deems
appropriate.  Stock Grants shall be made
without forfeiture conditions of any kind.

 

7.4.                              Awards to  Participants  Outside
the  United  States. 
The Committee may modify the terms of any Award under the Plan granted
to a Participant who is, at the time of grant or during the term of the Award,
resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that the Award
shall conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section 7.4
in a manner that is inconsistent with the express terms of the Plan, so long as
such modifications will not contravene any applicable law or regulation.  The Committee may establish supplements to,
or amendments, restatements, or alternative versions of the Plan for the
purpose of granting and administrating any such modified Award.  No such modification, supplement, amendment,
restatement or alternative version may increase the share limit of Section 4.

 

8.                                      Adjustment Provisions

 

8.1.                              Adjustment for  Corporate  Actions.
All of the share numbers set forth in the Plan reflect the capital structure of
the Company as of December 31, 2004.  Subject
to Section 8.2, if subsequent to that date the outstanding shares of Stock
(or any other securities covered by the Plan by reason of the prior application
of this Section) are increased, decreased, or exchanged for a different number
or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to shares of
Stock, through merger, consolidation, sale of all or substantially all the
property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar distribution
with respect to such shares of Stock, an appropriate and proportionate
adjustment will be made in (i) the maximum numbers and kinds of shares
provided in Section 4, (ii) the numbers and kinds of shares or other
securities subject to the then outstanding Awards, (iii) the exercise
price for each share or other unit of any other securities subject to then
outstanding Options (without change in the aggregate purchase price as to which
such Options remain exercisable), and (iv) the repurchase price of each
share of Restricted Stock then subject to a Risk of Forfeiture in the form of a
Company repurchase right.

 

9

 

8.2.                              Change in  Control. Subject
to any provisions of then outstanding Awards granting greater rights to the
holders thereof, in the event of a Change in Control (including a Change of
Control which is an Acquisition), (a) any then outstanding Options shall
Accelerate in full, whether or not assumed by the acquiring entity or replaced
by comparable options to purchase shares of the capital stock of the successor
or acquiring entity or parent thereof, and to the extent not assumed or
replaced on the Acquisition shall then (or after a reasonable period following
the Acquisition, as determined by the Committee) terminate to the extent not
exercised and (b) any then Restricted Stock shall Accelerate in full,
whether or not the Company’s rights to reacquire such shares of Restricted
Stock on occurrence of the applicable Risk of Forfeiture with respect to those
shares are assigned to the acquiring entity. 
Each outstanding Option that is assumed in connection with an
Acquisition, or is otherwise to continue in effect subsequent to the
Acquisition, will be appropriately adjusted, immediately after the Acquisition,
as to the number and class of securities and the price at which it may be
exercised in accordance with Section 8.1.

 

8.3.                              Dissolution or  Liquidation.  Upon dissolution or liquidation of the Company,
other than as part of an Acquisition or similar transaction, each outstanding
Option shall terminate, but the Optionee shall have the right, immediately
prior to the dissolution or liquidation, to exercise the Option to the extent
exercisable on the date of dissolution or liquidation.

 

8.4.                              Adjustment of  Awards  Upon
the  Occurrence  of  Certain  Unusual  or  Nonrecurring
Events. In the event of any corporate action not specifically covered by
the preceding Sections, including but not limited to an extraordinary cash
distribution on Stock, a corporate separation or other reorganization or
liquidation, the Committee may make such adjustment of outstanding Awards and
their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances.  The
Committee may make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section) affecting
the Company or the financial statements of the Company or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan.

 

8.5.                              Related Matters.  Any adjustment in Awards made pursuant to
this Section 8 shall be determined and made, if at all, by the Committee
and shall include any correlative modification of terms, including of Option
exercise prices, rates of vesting or exercisability, Risks of Forfeiture and
applicable repurchase prices for Restricted Stock, which the Committee may deem
necessary or appropriate so as to ensure the rights of the Participants in
their respective Awards are not substantially diminished nor enlarged as a
result of the adjustment and corporate action other than as expressly
contemplated in this Section 8.  No
fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by an Award
shall cause such number to include a fraction of a share, such number of shares
shall be

 

10

 

adjusted to the nearest smaller whole number of shares.  No adjustment of an Option exercise price per
share pursuant to this Section 8 shall result in an exercise price which
is less than the par value of the Stock.

 

9.                                      Settlement of Awards

 

9.1.                              Violation of  Law.  Notwithstanding any other provision of the
Plan or the relevant Award Agreement, if, at any time, in the reasonable
opinion of the Company, the issuance of shares of Stock covered by an Award may
constitute a violation of law, then the Company may delay such issuance and the
delivery of a certificate for such shares until (i) approval shall have
been obtained from such governmental agencies, other than the Securities and
Exchange Commission, as may be required under any applicable law, rule, or
regulation and (ii) in the case where such issuance would constitute a
violation of a law administered by or a regulation of the Securities and
Exchange Commission, one of the following conditions shall have been satisfied:

 

(a)                                  the shares are at the time of the
issue of such shares effectively registered under the Securities Act of 1933;
or

 

(b)                                 the Company shall have determined,
on such basis as it deems appropriate (including an opinion of counsel in form
and substance satisfactory to the Company) that the sale, transfer, assignment,
pledge, encumbrance or other disposition of such shares or such beneficial
interest, as the case may be, does not require registration under the
Securities Act of 1933, as amended or any applicable state securities laws.

 

The
Company shall make all reasonable efforts to bring about the occurrence of said
events.

 

9.2.                              Corporate Restrictions  on  Rights
in  Stock. Any Stock to be issued pursuant to Awards granted under
the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the charter, certificate or articles, and
by-laws, of the Company.  Whenever Stock
is to be issued pursuant to an Award, if the Committee so directs at or after
grant, the Company shall be under no obligation to issue such shares until such
time, if ever, as the recipient of the Award (and any person who exercises any
Option, in whole or in part), shall have become a party to and bound by the
Stockholders’ Agreement, if any.  In the
event of any conflict between the provisions of this Plan and the provisions of
the Stockholders’ Agreement, the provisions of the Stockholders’ Agreement
shall control except as required to fulfill the intention that this Plan
constitute an incentive stock option plan within the meaning of Section 422
of the Code, but insofar as possible the provisions of the Plan and such
Agreement shall be construed so as to give full force and effect to all such
provisions.

 

9.3.                              Investment Representations.  The Company shall be under no obligation to
issue any shares covered by any Award unless the shares to be issued pursuant
to Awards granted under the Plan have been effectively registered under the
Securities Act of 1933, as amended, or the Participant shall have made such
written representations to the Company (upon which the Company believes it may
reasonably rely) as the Company

 

11

 

may deem necessary or appropriate for purposes of confirming
that the issuance of such shares will be exempt from the registration
requirements of that Act and any applicable state securities laws and otherwise
in compliance with all applicable laws, rules and regulations, including
but not limited to that the Participant is acquiring the shares for his or her
own account for the purpose of investment and not with a view to, or for sale
in connection with, the distribution of any such shares.

 

9.4.                              Registration. 
If the Company shall deem it necessary or desirable to register under
the Securities Act of 1933, as amended or other applicable statutes any shares
of Stock issued or to be issued pursuant to Awards granted under the Plan, or
to qualify any such shares of Stock for exemption from the Securities Act of
1933, as amended or other applicable statutes, then the Company shall take such
action at its own expense.  The Company
may require from each recipient of an Award, or each holder of shares of Stock
acquired pursuant to the Plan, such information in writing for use in any
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for that purpose and may require reasonable
indemnity to the Company and its officers and directors from that holder
against all losses, claims, damage and liabilities arising from use of the
information so furnished and caused by any untrue statement of any material
fact therein or caused by the omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.  In addition, the Company may require of any
such person that he or she agree that, without the prior written consent of the
Company or the managing underwriter in any public offering of shares of Stock,
he or she will not sell, make any short sale of, loan, grant any option for the
purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares
of Stock during the 180 day period commencing on the effective date of the
registration statement relating to the underwritten public offering of
securities. Without limiting the generality of the foregoing provisions of this
Section 9.4, if in connection with any underwritten public offering of
securities of the Company the managing underwriter of such offering requires
that the Company’s directors and officers enter into a lock-up agreement
containing provisions that are more restrictive than the provisions set forth
in the preceding sentence, then (a) each holder of shares of Stock
acquired pursuant to the Plan (regardless of whether such person has complied
or complies with the provisions of clause (b) below) shall be bound by,
and shall be deemed to have agreed to, the same lock-up terms as those to which
the Company’s directors and officers are required to adhere; and (b) at
the request of the Company or such managing underwriter, each such person shall
execute and deliver a lock-up agreement in form and substance equivalent to
that which is required to be executed by the Company’s directors and officers.

 

9.5.                              Placement of  Legends;  Stop
Orders;  etc.  Each share of
Stock to be issued pursuant to Awards granted under the Plan may bear a
reference to the investment representation made in accordance with Section 9.3
in addition to any other applicable restriction under the Plan, the terms of the
Award and if applicable under the Stockholders’ Agreement and to the fact that
no registration statement has been filed with the Securities and Exchange
Commission in respect to such shares of Stock. 
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject

 

12

 

to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of any stock exchange upon which the Stock is then listed, and any
applicable federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

9.6.                              Tax Withholding. Whenever shares
of Stock are issued or to be issued pursuant to Awards granted under the Plan,
the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy federal, state, local or other
withholding tax requirements if, when, and to the extent required by law
(whether so required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or
certificates for such shares.  The
obligations of the Company under the Plan shall be conditional on satisfaction
of all such withholding obligations and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the recipient of an Award.  However, in such cases Participants may
elect, subject to the approval of the Committee, acting in its sole discretion,
to satisfy an applicable withholding requirement, in whole or in part, by
having the Company withhold shares to satisfy their tax obligations.  Participants may only elect to have Shares
withheld having a Market Value on the date the tax is to be determined equal to
the minimum statutory total tax which could be imposed on the transaction.  All elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee deems appropriate.

 

10.                               Reservation of Stock

 

The
Company shall at all times during the term of the Plan and any outstanding
Awards granted hereunder reserve or otherwise keep available such number of
shares of Stock as will be sufficient to satisfy the requirements of the Plan
(if then in effect) and the Awards and shall pay all fees and expenses
necessarily incurred by the Company in connection therewith.

 

11.                               Limitation
of Rights in Stock; No Special Service Rights

 

A
Participant shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the shares of Stock subject to an Award, unless
and until a certificate shall have been issued therefor and delivered to the
Participant or his agent.  Any Stock to
be issued pursuant to Awards granted under the Plan shall be subject to all
restrictions upon the transfer thereof which may be now or hereafter imposed by
the Certificate of Incorporation and the By-laws of the Company.  Nothing contained in the Plan or in any Award
Agreement shall confer upon any recipient of an Award any right with respect to
the continuation of his or her employment or other association with the Company
(or any Affiliate), or interfere in any way with the right of the Company (or
any Affiliate), subject to the terms of any separate employment or consulting
agreement or provision of law or corporate articles or by-laws to the contrary,
at any time to terminate such employment or consulting agreement or to increase
or decrease, or

 

13

 

otherwise adjust, the other terms and conditions of the
recipient’s employment or other association with the Company and its
Affiliates.

 

12.                               Unfunded
Status of Plan

 

The
Plan is intended to constitute an “unfunded” plan for incentive compensation,
and the Plan is not intended to constitute a plan subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended.  With respect to any payments not yet made to
a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.  In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Stock or payments with respect to
Options hereunder, provided, however,
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.

 

13.                               Nonexclusivity
of the Plan

 

Neither
the adoption of the Plan by the Board nor the submission of the Plan to the
stockholders of the Company shall be construed as creating any limitations on
the power of the Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation, the granting of stock options and
restricted stock other than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

 

14.                               Termination
and Amendment of the Plan

 

The
Board may at any time terminate the Plan or make such modifications of the Plan
as it shall deem advisable.  Unless the
Board otherwise expressly provides, no amendment of the Plan shall affect the
terms of any Award outstanding on the date of such amendment.  In any case, no termination or amendment of
the Plan may, without the consent of any recipient of an Award granted
hereunder, adversely affect the rights of the recipient under such Award.

 

The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, provided that the Award as amended is consistent with the
terms of the Plan, but no such amendment shall impair the rights of the
recipient of such Award without his or her consent.

 

15.                               Notices and
Other Communications

 

Any
notice, demand, request or other communication hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in
person or duly sent by first class registered, certified or overnight mail,
postage prepaid, or telecopied with a confirmation copy by regular, certified
or overnight mail, addressed or telecopied, as the case may be, (i) if to
the recipient of an Award, at his or her residence address last filed with the
Company and (ii) if to the Company, at its principal place of business,
addressed to the attention of its Treasurer, or to such other address or
telecopier number,

 

14

 

as the case may be, as the addressee may have designated by
notice to the addressor.  All such
notices, requests, demands and other communications shall be deemed to have
been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of mailing, when received by the addressee; and
(iii) in the case of facsimile transmission, when confirmed by facsimile
machine report.

 

16.                               Governing Law

 

The
Plan and all Award Agreements and actions taken thereunder shall be governed,
interpreted and enforced in accordance with the laws of the State of Delaware, without regard to the
conflict of laws principles thereof.

 

15Exhibit 10.47

 

SERVICES AGREEMENT

 

This
Services Agreement (the “Agreement”) is made and entered into as of December 1,
2004 (the “Effective Date”) by and among Kan Am Grundbesitz GmbH, a German
company (“Kan Am Grundbesitz”), Kan Am Services Limited Partnership, a Delaware
limited partnership (“Kan Am Services,” and collectively with Kan Am
Grundbesitz, “Kan Am”), and The Mills Limited Partnership, a Delaware limited
partnership (“TMLP”).

 

RECITALS:

 

WHEREAS, certain affiliates of Kan Am have invested in
partnerships (the “JV Partnerships”) with TMLP or entities owned or controlled
by TMLP or its predecessors in interest (collectively, the “Mills Entities”),
which JV Partnerships owned and operated, directly or indirectly, “Mills type”
shopping centers and malls and related properties (such affiliates of Kan Am
are collectively referred to hereinafter as the “Kan Am Entities” and
individually as a “Kan Am Entity”);

 

WHEREAS, the Kan Am Entities directly or indirectly
contributed their interests in the JV Partnerships to TMLP in exchange for
units of limited partnership in TMLP (the “TMLP Units”);

 

WHEREAS, certain of such Kan Am Entities have recently
dissolved or distributed TMLP Units to their respective limited partners, most
of whom are foreign persons within the meaning of Section 7701(a)(1) and
(4) of the Internal Revenue Code of 1986, as amended (the “Code”) (the “Kan
Am Unitholders”);

 

WHEREAS, as of the date hereof, there are
approximately two thousand (2,000) Kan Am Unitholders and it is anticipated
that there will be additional Kan Am Unitholders, including as a result of the
dissolution of, or distribution of TMLP Units by, Kan Am Entities; and

 

WHEREAS, TMLP desires to have Kan Am, as agent,
provide the services described below to the Kan Am Unitholders for the account
of TMLP on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties hereto agree as follows:

 

1.                                      Appointment
and Delegation of Authority.  

 

TMLP hereby appoints and
employs Kan Am as TMLP’s agent to provide the Services (as defined below) for the term
of this Agreement, beginning as of the Effective Date.  Kan Am accepts said appointment and agrees to provide
such Services during the term of this Agreement in accordance with the terms
and conditions hereinafter set forth.

 

 

2.                                      Services
to be Provided by Kan Am.  

 

Subject to satisfaction by
TMLP of its obligations under Section 3, Kan Am shall provide the
following services during the term of this Agreement (collectively, the “Services”):

 

a.                                       Regular Cash Distributions and Federal
Withholding.

 

(i)                                     Kan Am shall deliver to the Kan Am Unitholders by check, wire
transfer or other methods as may be approved by TMLP, quarterly distributions,
net of amounts of federal, state and local withholding taxes withheld by TMLP,
payable by TMLP to the Kan Am Unitholders on the later to occur of (A) two
(2) Business Days after the Cash Payment Certificate referenced in Section 3(a) shall
have been delivered by TMLP to Kan Am and (B) delivery by TMLP to Kan Am
of immediately available funds in an amount sufficient to make such
distributions.

 

(ii)                                  Kan Am shall cooperate with and provide assistance to TMLP in
connection with TMLP’s efforts to estimate the amounts (in the aggregate and
with respect to each individual Kan Am Unitholder) required to be withheld from
each cash distribution pursuant to Sections 1445 and/or 1446 of the Code and
state and local taxes, provided, however, that TMLP’s
determination of the amounts to be withheld shall be final.

 

(iii)                               TMLP acknowledges that Kan Am, for its own account and solely at its
risk, may, from time to time, aggregate distributions made in respect of the
TMLP Units with other payments due and owing by the Kan Am Entities (the “Kan
Am Distributions”) to the Kan Am Unitholders, provided, however,
that at the time of such Kan Am Distributions (A) Kan Am provides each Kan
Am Unitholder with a reasonably detailed written breakdown of the components of
each aggregated payment and (B) Kan Am shall be deemed to have made a
representation to TMLP that, when Kan Am does so, it is acting for its own
account and not as an agent of TMLP and that TMLP shall have no liability
whatsoever with respect to the Kan Am Distributions.  Kan Am shall notify the Kan Am Unitholders
that it has and will continue to make aggregate distributions as described
above, and shall give the Kan Am Unitholders the right to require that Kan Am
make such distributions pursuant to separate checks.

 

(iv)                              Within thirty (30) days following a written request from TMLP,  Kan Am shall provide TMLP with reasonably
detailed backup information, including, without limitation, check registers and
copies of checks, with respect to the most recent cash distributions paid by Kan
Am to the Kan Am Unitholders, together with such other related information as
may be requested by TMLP.  Kan Am shall
maintain and reconcile accumulated uncashed checks and the amounts of those
checks that are attributable to TMLP’s cash distributions (if TMLP’s cash
distributions are aggregated with the Kan Am Distributions) and shall provide a
summary of uncashed checks to TMLP on a quarterly basis.  If any check remains outstanding and uncashed
on or after the 90th day following the date of its issuance, Kan Am
will use reasonable efforts to deliver a letter to the payee of such check
indicating that the check has not been cashed and that the check will expire on
the 180th day following its issuance, and requesting that the payee
deposit the check prior the expiration of the 180-day period.  If any check remains outstanding and uncashed
after the 180th day following the date of the applicable check, Kan
Am shall return

 

2

 

the sums in respect of such TMLP’s cash distributions
included in such uncashed check (less the full amount of any associated stop
payment fee actually incurred by Kan Am or one-half the amount of any
associated stop payment fee actually incurred by Kan Am in the event such check
includes Kan Am Distributions) to TMLP and once returned, Kan Am will not have
any further obligation to distribute such amount to the Kan Am Unitholder that
failed to cash the check. To the extent that any check issued in payment of
distributions is less than the associated stop payment fee, Kan Am shall
consult TMLP prior to issuing the stop payment order.  Notwithstanding the foregoing, if the payee
of any uncashed check subsequently requests payment of the distribution amount
represented by such check and TMLP satisfies its obligations under Section 3(a),
Kan Am shall perform its obligations anew under this Section 2.

 

b.                                      Schedule K-1.  Within fifteen (15) days after Kan Am
receives the federal and state Schedule K-1 referenced in Section 3(b),
Kan Am shall deliver the Schedule K-1 to each Kan Am Unitholder (or
such Kan Am Unitholder’s designated U.S. tax preparer) the Schedule K-1.

 

c.                                       Reports and Other Information.  If
requested by TMLP from time to time, Kan Am shall cause to be delivered to each
of the Kan Am Unitholders copies of the Annual Report to the Stockholders of
The Mills Corporation, the general partner of TMLP (“TMC”), Annual Reports on Form 10-K
of TMC or TMLP, Quarterly Reports on Form 10-Q of TMC or TMLP, or
such other reports or communications as may be prepared by either TMC or TMLP
within ten (10) Business Days after the same have been delivered by TMLP
to Kan Am.

 

d.                                      Other Federal Tax Filings.

 

(i)                                     In connection with any redemptions effected by
Kan Am Unitholders, Kan Am shall cooperate with and assist TMLP in connection
with the preparation of IRS Forms 8288 and 8288-A.

 

(ii)                                  To the extent timely provided by TMLP, Kan Am
shall forward to the Kan Am Unitholders, together with federal and state Schedule K-1’s,
copies of all IRS Forms 8804, 8805 and 8813 prepared by or on behalf of TMLP
with respect to each Kan Am Unitholder.

 

(iii)                               Within thirty (30) days after the end of each
Expiration Date, Kan Am shall provide TMLP with an updated list of those TMLP
Units that are held jointly for legal purposes. 
In each case, such updated list shall indicate how the ownership of the
jointly held TMLP Units are to be treated for tax purposes.

 

e.                                       Redemptions of TMLP Units.  Subject to Section 8(b) of this
Agreement, Kan Am shall cooperate with and provide assistance to TMLP in
connection with the redemption from time to time of TMLP Units held by the Kan
Am Unitholders for, at the option of TMC (in the event TMC has assumed the
redemption obligation on behalf of TMLP), shares of TMC’s common stock or cash
and shall, upon request of TMLP, forward to the Kan Am Unitholders such
documents as are reasonably necessary, appropriate or desirable in connection
with any such redemptions.  In
furtherance of the foregoing, Kan Am shall, among other things, (i) cause

 

3

 

all original redemption notices and requests and other
necessary documentation to be sent to its offices in Germany (the ”Office”),
(ii) cause the Office to process such redemption notices and requests, listing
the number of units held by each redeeming Kan Am Unitholder and the number of
units being so redeemed by such unitholder, (iii) assist TMLP in verifying
the identity of each Kan Am Unitholder requesting the redemption, (iv) assist
TMLP in determining amounts required to be withheld under Sections 1445 and/or
1446 of the Code with respect to each redemption, and (v) facilitate
payments, if any, by Kan Am Unitholders to TMLP in connection with any
redemption.  The original redemption
notices, supporting documentation and materials prepared by Kan Am pursuant to
the redemptions shall be delivered by Kan Am to TMLP promptly but in no event
later than the day on which the redemption period is set to expire (which,
unless otherwise modified in writing by TMC, shall be the 30th day following the filing of a Quarterly Report on Form 10-Q
or Annual Report on Form 10-K by TMC or by TMLP if TMLP files such
reports with the SEC, or if such 30 th day is not a
Business Day, the next Business Day following the expiration of such 30-day
period) (the “Expiration Date”).  If the
original redemption notices and the supporting documentation are not received
by TMLP by the Expiration Date, the redemptions shall not be deemed effective
for such redemption period.

 

f.                                         Transfers of TMLP Units.

 

(i)                                     General. 
Kan Am shall cooperate with and provide assistance to TMLP in connection
with any transfer of TMLP Units by Kan Am Unitholders in accordance with the
terms of the TMLP Partnership Agreement.

 

(ii)                                  Transfers Upon Death. 
At such time as Kan Am becomes aware of the death of a Kan Am
Unitholder, Kan Am shall request a copy of the death certificate of the
deceased Kan Am Unitholder and shall deliver a copy of such death certificate
to TMLP promptly following receipt.  Kan
Am shall use reasonable efforts thereafter to obtain a copy of the certificate
of inheritance following the settlement of the deceased unitholder’s estate,
and shall deliver a copy of such certificate to TMLP promptly following
receipt.  Once Kan Am has reviewed the
foregoing death certificate and certificate of inheritance, Kan Am shall send
to TMLP a certificate (the ”Transfer Certificate”) stating, among other
things, that (A) to its knowledge, it has received all necessary
documentation supporting the transfer submitted on behalf of the deceased
unitholder, (B) it has reviewed all such documentation, and (C) to
its knowledge, such proposed transfer is consistent with the local law.  Each of TMLP and Kan Am understands and acknowledges
that no transfers of TMLP Units
that result from the death of a Kan Am Unitholder will be recorded on TMLP’s
books and records until TMLP has received the Transfer Certificate from Kan
Am.  For federal income tax purposes,
TMLP shall not be obligated to treat the death as occurring any earlier than in
the year in which it was notified by Kan Am.

 

g.                                      General Matters.  In
addition, Kan Am shall provide the following Services:

 

(i)                                     Communicating with the Kan Am Unitholders for such purposes as TMLP
may reasonably determine including, without limitation, for obtaining the
consent of the Kan Am Unitholders as provided in the TMLP Partnership
Agreement;

 

4

 

(ii)                                  Researching and responding to all
written Kan Am Unitholder inquiries; and

 

(iii)                               Reconciling paid and outstanding
cash payments.

 

3.                                      Responsibilities
of TMLP.

 

In order to
facilitate the provision by Kan Am of the Services, TMLP shall have the
following obligations under this Agreement:

 

a.                                       Cash Distributions and Federal Withholding.  In connection with each
cash distribution to be made to the Kan Am Unitholders:

 

(i)                                     Not later than two (2) Business Days prior to the payment date
of such cash distribution, TMLP shall furnish to Kan Am a certificate (a “Cash
Payment Certificate”) setting forth:

 

(A)                              the date of the declaration of such cash distribution;

 

(B)                                the record date as of which Kan Am Unitholders are entitled to
payment;

 

(C)                                the payment date on which the cash distribution is to be paid;

 

(D)                               the aggregate amount of the cash distribution;

 

(E)                                 the gross amount per TMLP Unit of such cash distribution that the
Kan Am Unitholders are entitled to receive;

 

(F)                                 TMLP’s estimate of the aggregate amount required to be withheld from
the cash distributions due to the Kan Am Unitholders pursuant to Sections 1445
and/or 1446 of the Code; and

 

(G)                                the net amount (in the aggregate and per TMLP Unit) of such cash
distribution, after withholding, that the Kan Am Unitholders are entitled to
receive.

 

(ii)                                  On or prior to the payment date specified in the Cash Payment
Certificate, TMLP shall wire transfer to an account designated by Kan Am an
amount of cash sufficient for Kan Am to make the net payment specified in the
Cash Payment Certificate to the Kan Am Unitholders of record as of the
applicable record date for such payment date. 
Kan Am shall not be liable for any improper payment made in accordance
with the Cash Payment Certificate.

 

(iii)                               TMLP hereby authorizes Kan Am to stop payment of checks issued by
Kan Am in payment of distributions, but not presented for payment, when the
payees thereof allege either that they have not received the checks or that
such checks have been

 

5

 

mislaid, lost, stolen, destroyed or, through no fault
of theirs, are otherwise beyond their control and cannot be produced by them
for presentation and collection, and Kan Am shall issue and deliver duplicate
checks in replacement thereof (less the amount of any associated stop payment
fee actually incurred by Kan Am, if Kan Am determines in its reasonable
judgment that the payee should be responsible for such fee).  Any associated stop payment fee not paid by
the payee shall be borne by Kan Am and/or TMLP as determined by such parties in
light of the circumstances.  To the extent
that any check issued in payment of distributions is less than the associated
stop payment fee, Kan Am shall consult TMLP prior to issuing the stop payment
order.

 

(iv)                              With Kan Am’s assistance, TMLP shall estimate the aggregate amount
required to be withheld from the cash distributions due to the Kan Am
Unitholders pursuant to Sections 1445 and/or 1446 of the Code, and shall remit
such withholding amounts to the United States Treasury in accordance with
applicable law.

 

(v)                                 Within fifteen (15) days or a reasonable time after TMLP files its
annual tax returns with the United States Internal Revenue Service (“IRS”)
(including any returns required to be filed with respect to withholding
amounts), TMLP shall deliver to Kan Am a certificate containing a schedule that
reconciles the aggregate amount withheld from the Kan Am Unitholders and
remitted to the United States Treasury during the applicable tax year
(the ”Quarterly Payments”) with the actual amounts due and owing for such
tax year as set forth in TMLP’s tax returns (the “Withholding Obligation”).   To the extent that the Withholding
Obligation exceeds the Quarterly Payments, TMLP shall be solely liable for
making any additional payments to the United States Treasury as may be
necessary to cause the full Withholding Obligation to be paid, provided, that,
TMLP shall be entitled to recoup such amounts from the appropriate Kan Am
Unitholder by withholding such additional amount from his or her future
distributions or upon redemption.  To the
extent that the Quarterly Payments exceed the Withholding Obligation, TMLP
shall send such excess amounts to Kan Am and Kan Am shall cause the Kan Am
Unitholders to receive their respective shares of such refunds.

 

b.                                      Schedule K-1.  Within
one hundred fifty (150) days or a reasonable time following the end of each
calendar year, TMLP shall cause to be delivered to Kan Am with respect to each
Kan Am Unitholder all data and information included as part of such Kan Am
Unitholder’s Schedule K-1 with respect to such calendar year.  Such information shall be delivered in
electronic form, shall be embedded in a Microsoft Excel spreadsheet in a format
reasonably acceptable to Kan Am and shall aggregate such information with
respect to each Kan Am Unitholder Group. 
For the purposes of this Agreement, “Kan Am Unitholder Group” shall
mean, with respect to each Kan Am Entity, the group of Kan Am Unitholders
(and  their successors and assigns) that
received TMLP Units pursuant to one or more distributions of the TMLP Units
owned by such Kan Am Entity.

 

c.                                       Other Information.  From time to time, TMLP shall cause to be
delivered to Kan Am such information and materials that TMLP desires to be
distributed to the Kan Am Unitholders and Kan Am shall cooperate to deliver or
cause to be delivered such materials to the Kan Am Unitholders promptly after
receipt from TMLP.  If TMLP requests
pursuant to this Section or Section 2(g)(i) that Kan Am deliver
additional communications from TMLP to the

 

6

 

Kan Am Unitholders, TMLP shall deliver sufficient
copies of all such communications to Kan Am in accordance with instructions
provided to TMLP by Kan Am.  TMLP shall be solely
responsible for the contents of all financial reports delivered to Kan Am for
distribution to the Kan Am Unitholders relating to TMLP.

 

d.                                      Other Federal Tax Filings.

 

(i)                                     Within one hundred fifty (150) days or a reasonable time after the
end of each calendar year, TMLP shall prepare and deliver to Kan Am all
required IRS Forms 8804, 8805 and 8813 with respect to the Kan Am
Unitholders.  TMLP shall cause the same
to be filed with the IRS, and shall cause copies of the same to be delivered to
Kan Am.

 

(ii)                                  In connection with any redemptions effected by
the Kan Am Unitholders, TMLP shall cause to be filed timely with the IRS all
returns and other filings required by law to be filed by TMLP pursuant to Section 1445
of the Code, including without limitation IRS Form 8288 and IRS Form 8288-A.  TMLP shall cause copies of all such filings
to be delivered to Kan Am within fifteen (15) days after such filings have been
made with the IRS.

 

e.                                       Delivery of Documents and Monies.  All documents, data and monies required to be
delivered by TMLP to Kan Am under this Agreement shall be delivered in accordance
with the instructions attached hereto as Exhibit A, provided, that,
Kan Am shall have the right upon notice to TMLP to modify such instructions at
any time and from time to time.

 

4.                                      Standards
for Performance; Agents.

 

a.                                       Standard of Care.  Kan
Am shall at all times act in good faith and agrees to use all commercially
reasonable efforts within reasonable time limits to ensure that all services
performed under this Agreement are accurate and are performed in a manner that
is consistent with the standards of professional providers of similar services
in the United States, but shall have no liability for its failure or inability
to do so except as a result of its own or its employees’ gross negligence, bad
faith, willful misconduct or similar acts or omissions of acts.  The Services may be
performed solely by Kan Am Services, solely by Kan Am Grundbesitz or
collaboratively by Kan Am Services and Kan Am Grundbesitz, and each of Kan Am
Services and Kan Am Grundbesitz may delegate its rights and obligations to the
other without the consent of or prior notice to TMLP, provided that Kan Am
shall provide TMLP with timely notice of such delegation for purposes of
determining to which of the Kan Am Entities TMLP is required to provide
payments and notices pursuant to this Agreement.

 

b.                                      Agents and Attorneys-In-Fact.  Kan Am may employ agents or attorneys-in-fact
with the prior written authorization of TMLP to assist it in performing the
Services.  Upon the request of TMLP, Kan
Am shall provide TMLP with evidence of the financial viability of any such
agents or attorney’s-in-fact.

 

7

 

5.                                      Compensation.

 

a.                                       Fees.

 

(i)                                     Commencing January 1, 2004, Kan Am shall be entitled to receive
for its Services hereunder a quarterly fee (the “Fee”) in accordance with the
following schedule:

 

	
  Quarterly Fee

  	
   

  	
  Number of Kan Am Unitholders**

  of Record as of the first day of the calendar quarter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  25,000

  	
   

  	
  more than 2,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  22,500

  	
   

  	
  1,800 to 2,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  20,000

  	
   

  	
  1,600 to 1,799

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  17,500

  	
   

  	
  1,400 to 1,599

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  15,000

  	
   

  	
  fewer than 1,400

  	
   

  

 

**For purposes of determining the amount of
the Fee under this Section 5, joint unitholders shall be counted as a
single unitholder

 

The Fee shall be
paid within thirty (30) days after the end of each calendar quarter, except
that the Fee for the first, second and third quarters of 2004 shall be payable
within forty (45) days after the date of this Agreement.

 

(ii)                                  TMLP and Kan Am acknowledge and agree that Kan Am has provided
Services during 2003 for which it has not been compensated.  In full satisfaction of a payment for such
Services rendered, TMLP shall pay to Kan Am, within forty (45) days after the
date of this Agreement, the sum of $100,000, plus out-of-pocket expenses
incurred by Kan Am in connection with performing its obligations hereunder in
an amount mutually agreed by TMLP and Kan Am.

 

b.                                      Number and Identity of Kan Am Unitholders.

 

(i)                                     Kan Am has heretofore delivered to TMLP a
current list of the names and taxpayer identification numbers (where known) of
the Kan Am Unitholders as of the date of this Agreement.  Kan Am shall deliver to TMLP an updated list
of Kan Am Unitholders within thirty (30) days after each Expiration Date.  Kan Am and TMLP shall exchange information
and documentation regarding the number and identity of Kan Am Unitholders to
the extent necessary to maintain an accurate list of such Kan Am
Unitholders.  So long as each of Kan Am
Services and Kan Am Grundbesitz is an acceptance agent for the IRS, it shall, to
the extent reasonably necessary, assist Kan Am Unitholders in applying for
taxpayer identification numbers.

 

8

 

(ii)                                  Subject to the provisions of Section 8,
this Agreement shall be deemed terminated with respect to a Kan Am Unitholder
for purposes of determining the number of Kan Am Unitholders as to which the
Quarterly Fee is payable, and as to which the Services are to be provided
hereunder, as of the date on which (A) all of the TMLP Units held by such
Kan Am Unitholder have been redeemed or transferred and (B) a United
States federal tax return has been filed with respect to the year in which such
redemption or transfer occurred.

 

c.                                       Certain Expenses.  Kan Am
shall be entitled to reimbursement from TMLP for the reasonable out-of-pocket
costs incurred by Kan Am in connection with the performance by Kan Am of the
Services rendered hereunder, including without limitation, costs of maintaining
bank accounts and retaining agents or attorneys-in-fact as permitted under Section 4(b).  Such expenses shall be reimbursed by TMLP
within thirty (30) days of receipt by TMLP of an invoice detailing such costs
incurred; provided, however, that Kan Am shall not be entitled to
invoice TMLP more than once each calendar quarter.

 

d.                                      Kan Am acknowledges and agrees that it shall
not charge the Kan Am Unitholders any fees or seek or receive any reimbursement
from the Kan Am Unitholders for any of the Services provided or related to this
Agreement.

 

6.                                      Status
of the Parties.  It is expressly
understood and agreed that Kan Am shall act as an independent contractor and
agent of TMLP in the performance of this Agreement.  No provision hereof shall be deemed or
construed to create a partnership or a joint venture between Kan Am and TMLP.

 

7.                                      Term
and Termination of this Agreement.

 

a.                                       Term.  The initial term (“Initial Term”)
of this Agreement shall commence with the Effective Date and, unless sooner
terminated as herein provided, shall continue for a period of two (2) years,
and shall automatically renew for one (1) year successive periods (each, a
“Renewal Term”) following the expiration of the Initial Term and each Renewal
Term.  Either party shall have the right
to terminate this Agreement effective on the last day of the Initial Term or
any Renewal Term by written notice to the other party not less than ninety (90)
days prior to the expiration of the Initial Term or such Renewal Term, as
applicable.

 

b.                                      Termination by TMLP.  This
Agreement may be terminated for cause by TMLP in the event of breach by Kan Am
of its obligation under this Agreement, which breach is not cured within thirty
days after notice by TMLP.

 

c.                                       Termination by Kan Am.  This
Agreement may be terminated for cause by Kan Am in the event:

 

(i)                                     that
Kan Am fails to receive payment of any amount due to Kan Am hereunder, and such
failure continues for a period of ten (10) days after Kan Am’s written
notice thereof to TMLP; and

 

9

 

(ii)                                  of
breach by TMLP of its obligation under this Agreement, which breach is not
cured within thirty days after notice by Kan Am.

 

d.                                      Survival.  No termination of this
Agreement shall affect any obligation owing by any party hereto which accrued
prior to the effective date of such termination.  The provisions and terms of Sections 8, 9 and
13 shall survive the expiration or termination of this Agreement.

 

8.                                      Confidentiality.

 

a.                                       Covenant.  Kan
Am agrees that it will not, at any time during the term of this Agreement or
after its termination, reveal, divulge, or make known to any person, firm,
corporation or other business organization, any customers’ lists, trade
secrets, cost figures and projections, profit figures and projections, or any
other secret or confidential information whatsoever, used or gained by Kan Am
during performance under this Agreement except
(i) as may be required by law, regulation, judicial or administrative
process, or (ii) to the extent such information (A) shall have
otherwise become publicly available (including, without limitation, any
information filed with any governmental agency and available to the public)
other than as the result of a disclosure by Kan Am or any of its personnel in
breach hereof, (B) becomes available to Kan Am on a nonconfidential basis
from a source other than TMLP which Kan Am reasonably believes is not
prohibited from disclosing such information to Kan Am by obligation to TMLP, (C) is
known by Kan Am prior to its receipt from TMLP without any obligation of
confidentiality with respect thereto, or (D) is developed by Kan Am
independently of any disclosures made by TMLP to Kan Am of such information.  Kan Am further covenants and
agrees to retain all such knowledge and information acquired during and after
the term of this Agreement respecting such lists, trade secrets, or any secret
or confidential information whatsoever in trust for the sole benefit of Kan Am
and its successors and assigns.

 

b.                                      Limitation of Redemption of Certain Kan Am
Persons.  Kan Am and TMLP acknowledge that, in
connection with the Services to be provided by Kan Am pursuant to this
Agreement, certain officers or affiliates of Kan Am as set forth on Exhibit B,
who are also Kan Am Unitholders (referred to hereinafter as the “Kan Am Persons”),
may acquire certain knowledge about TMLP or transactions involving TMLP that
may not be generally known to the public. 
Such information may include, without limitation, knowledge of pending
redemptions by the Kan Am Unitholders. 
Each Kan Am Person agrees that any redemption notices submitted by such
Kan Am Person with respect to a particular redemption period shall become
effective on the later of (i) the applicable Expiration Date or (ii) the
day on which the last batch of redemption notices from the Kan Am Unitholders
are submitted to TMLP for the applicable redemption period (such date is
referred to hereinafter as the “Kan Am Person Permitted Redemption Date”), provided, however, that in the event that the Kan Am Person Permitted Redemption Date
would be after the commencement of TMC’s quarterly and annual earnings call “blackout
period” applicable to its officers and directors (the “Earnings Call Blackout
Period”), the Kan Am Person Permitted Redemption Date shall be the third
business day prior to the applicable Earnings Call Blackout Period.  Nothing in this section or this
Agreement shall be construed as a waiver or exception of the Earnings Call
Blackout Period by TMC with respect to the Kan Am Persons.

 

10

 

9.                                      Indemnification.

 

a.                                       TMLP shall indemnify and hold harmless
Kan Am and its directors, trustees, officers, employees, members, managers,
partners, agents or representatives (the “Kan Am Indemnitees”) from and against
any and all claims, demands, liabilities, losses, costs or expenses (including
reasonable attorneys’ fees and expenses), judgment, award, amount paid in
settlement, fine, penalty and liability of any and every kind incurred by or
asserted against any of the Kan Am Indemnitees, by reason of (i) the
contractual arrangement with Kan Am hereunder, (ii) the performance by Kan
Am of the Services, (iii) the breach by TMLP of its obligations under the
terms of this Agreement, (iv) the noncompliance by TMLP with applicable
laws, and (v) the occurrence or existence of any event or circumstances
which resulted or is alleged in any suit, action or proceeding (whether
threatened, initiated or completed) by reason of any of the foregoing; provided, however, that TMLP shall have no obligation to indemnify
the Kan Am Indemnitees under this Section 9(a) against such loss,
cost or expense that results from, arises out of or is in any way connected
with any negligence, bad faith, willful misconduct or similar acts, omissions,
by or on the part of any of the Kan Am Indemnitees, its agents, employees or
representatives.

 

b.                                      Kan Am Services and Kan Am Grundbesitz
jointly and severally shall indemnify and hold harmless TMLP and its
affiliates, and their directors, trustees, officers, employees, members,
managers, partners, agents or representatives (the “TMLP Indemnitees”) from and
against any and all claims, demands, liabilities, losses, costs or expenses
(including reasonable attorneys’ fees and expenses), judgment, award, amount
paid in settlement, fine, penalty and liability of any and every kind incurred
by or asserted against any of the TMLP Indemnitees that results from, arises
out of or is in any way connected with any negligence, bad faith, willful
misconduct or similar acts, omissions, by or on the part of any of the Kan Am
Indemnitees, its agents, employees or representatives in providing the Services
pursuant to this Agreement.

 

c.                                       Limitation on Kan Am’s Obligations and
Liability.  Anything contained herein or elsewhere to the
contrary notwithstanding, Kan Am shall have no obligation to perform its
obligations hereunder, no liability for failure to do so, and shall not be in
default hereunder (i) if TMLP fails to provide all required funds as
specified in this Agreement for such purposes, (ii) if TMLP fails to
timely provide Kan Am with all documents, instruments, information and other
materials that are reasonably required for Kan Am to perform the Services
hereunder as specified in this Agreement, (iii) if TMLP fails to comply
with applicable law, or (iv) Kan Am is prevented from performing, or is
delayed in performing, its obligations due to a material default by TMLP in
performing its obligations under this Agreement.

 

10.                               Representations,
Warranties and Covenants of TMLP.   TMLP hereby represents and warrants to and
covenants with Kan Am that:

 

a.                                       Organization, Standing and Authority.   TMLP (i) is
a limited partnership formed, validly existing and in good standing under the
laws of the State of Delaware; and (ii) has the partnership power to
execute and deliver this Agreement, and has taken all necessary action to
authorize the execution and delivery of this Agreement and the transactions

 

11

 

contemplated hereby, and this Agreement
constitutes a valid and binding obligation of TMLP, enforceable against TMLP in
accordance with its terms.

 

b.                                      Authority.  The execution, delivery and
performance of this Agreement does not (i) violate any provision of TMLP’s
Partnership Agreement, (ii) violate any provision of, or result in the
acceleration of any obligation under, any material mortgage, deed of trust,
note, lien, lease, franchise, license, permit, contract, agreement, instrument,
order, arbitration award, judgment, injunction or decree, or result in the
termination of any material license, franchise, lease or permit to which TMLP
is a party or by which it is bound other than such violation, acceleration or
termination which will not have a material adverse effect on the financial
condition and results of operations of TMLP and its subsidiaries taken as a
whole; or (iii) except as may be required under applicable securities
laws, require any filing with, notice to or permits, consent or approval of any
U.S. governmental or regulatory body.

 

11.                               Representations,
Warranties and Covenants of Kan Am.  Each
of Kan Am Services and Kan Am Grundbesitz hereby represents and warrants to and
covenants with TMLP that:

 

a.                                       Organization, Standing and Authority.  Each
of Kan Am Services and Kan Am Grundbesitz (i) is an entity organized or formed, validly existing and in good
standing under the laws of the jurisdiction pursuant to which it was organized
or formed, (ii) has the power to execute and deliver this Agreement, and
has taken all necessary action to authorize the execution and delivery of this
Agreement and the transactions contemplated hereby, and this Agreement
constitutes a valid and binding agreement of each of Kan Am Services and Kan Am Grundbesitz,
enforceable against Kan Am Services and Kan Am
Grundbesitz in accordance with its
terms.

 

b.                                      Authority.  The execution, delivery and
performance of this Agreement does not (i) violate any provision of the
organizational documents of Kan Am Services or Kan Am Grundbesitz, (ii) violate
any provision of, or result in the acceleration of any obligation under, any
material mortgage, deed of trust, note, lien, lease, franchise, license,
permit, contract, agreement, instrument, order, arbitration award, judgment,
injunction or decree, or result in the termination of any material license,
franchise, lease or permit to which Kan Am Services or Kan Am Grundbesitz is a
party or by which any of them is bound other than such violation, acceleration
or termination which will not have a material adverse effect on the financial
condition and results of operations of either Kan Am Services or Kan Am
Grundbesitz, as the case may be; or (iii) except as may be required under
applicable securities laws, require any filing with, notice to or permits,
consent or approval of any U.S. or German governmental or regulatory body.

 

12

 

12.                               Conditions
Beyond Control of Parties. 
Neither party shall be held liable for failure to comply with any of the
terms of this Agreement when such failure has been caused solely by fire, labor
dispute, strike, war, insurrection, government restrictions, force majeure, or
act of God beyond the control and without fault on the part of the party
involved, provided such party uses due diligence to remedy such failure to
comply.

 

13.                               Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to principles of conflicts of laws.  Each of the parties hereto agrees to submit
to the exclusive jurisdiction of the courts of the State of Delaware with respect
to any dispute arising hereunder.

 

14.                               Notices.  Notices, statements and other communications
to be given under the terms of this Agreement shall be in writing and delivered
by facsimile (confirmed by transmission receipt), by hand, including overnight
delivery services, or sent by certified or registered mail, postage prepaid,
return receipt requested:

 

	
  To Kan Am Grundbesitz:

  	
   

  	
  Kan Am Grundbesitz GmbH

  Widenmayerstrasse 6

  80538 Munich

  Germany

  Attention: Karlheinz Fichtel

  Facsimile: 011-49-89-21010118.

  Email: KHF@kanam.de

  
	
   

  	
   

  	
   

  
	
  To Kan Am
  Services:

  	
   

  	
  Kan Am Services
  Limited Partnership

  The Forum - Suite 825

  3290 Northside Parkway

  Atlanta, Georgia 30327

  
	
   

  	
   

  	
  Attention:

  	
  T. Kent Hammond

  
	
   

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
  Facsimile:

  	
  404-239-0624

  
	
   

  	
   

  	
  Email:

  	
  tkhammond@kanamusa.com

  
	
   

  	
   

  	
   

  	
   

  
	
  To TMLP:

  	
   

  	
  The Mills
  Corporation

  1300 Wilson Boulevard

  Suite 400

  Arlington, Virginia 22209

  
	
   

  	
   

  	
  Attention:

  	
  Thomas E. Frost, Esq.

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and Secretary

  
	
   

  	
   

  	
  Facsimile:

  	
  703-526-5333

  
	
   

  	
   

  	
  Email:

  	
  tom.frost@themills.com

  

 

13

 

or at such other address as is from time to
time designated by the party receiving the notice.  Any such notice which is properly mailed, as
described above, shall be deemed to have been served as of three Business Days
after said posting.

 

15.                               Definitions

 

Whenever used in this
Agreement, the following words and phrases shall have the following meanings:

 

a.                                       “Business Day” shall be deemed to be each day
on which banks are open for business in Delaware.

 

b.                                      “Cash Payment Certificate” shall have the
meaning given to it in Section 3(a)(i).

 

c.                                       “Certificate” shall mean any notice,
instruction, or other instrument in writing, authorized or required by this
Agreement to be given to Kan Am by TMLP, which is signed by any Officer.

 

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

 

e.                                       “Earnings Call Blackout Period” shall have the meaning given to it in Section 8(b).

 

f.                                         “Effective Date” shall have the meaning given to it in the Preamble.

 

g.                                      “Expiration Date” shall
have the meaning given to it in Section 2(e).

 

h.                                      “Initial Term” shall have the meaning given to it in Section 7(a).

 

i.                                          “IRS” shall mean the Internal Revenue Service.

 

j.                                          “JV Partnerships” shall have the meaning given to it in the
Recitals.

 

k.                                       “Kan Am” shall have the meaning given to it in the Preambles.

 

l.                                          “Kan Am Distributions” shall have the meaning given to it in Section 2(a)(iii).

 

m.                                    “Kan Am Entity” or “Kan Am Entities” shall have the meaning given to
it in the Recitals.

 

14

 

n.                                      “Kan Am Group” shall mean, with respect to each Kan Am Entity that
has dissolved, the group of Kan Am Unitholders (and their successors and
assigns) that received TMLP Units in exchange for their interests in such Kan
Am Entity.

 

o.                                      “Kan Am Grundbesitz” shall
have the meaning given to it in the Preambles.

 

p.                                      “Kan Am Indemnitees” shall have the meaning given to it in Section 9(a).

 

q.                                      “Kan Am Persons” shall have the meaning given to it in Section 8(b).

 

r.                                         “Kan Am Persons Permitted Redemption Date” shall have the meaning given to it in Section 8(b).

 

s.                                       “Kan Am Services” shall have the meaning given to it in the
Preambles.

 

t.                                         “Kan Am Unitholders” shall
have the meaning given to it in the Recitals.

 

u.                                      “Mills Entities” shall have the meaning given to it in the Recitals.

 

v.                                      “Office” shall have the meaning given to it in Section 2(e).

 

w.                                    “Officer” shall mean any of the following officers of TMC:  the Chief Executive Officer, President, any
Vice President, the Secretary, the Chief Financial Officer, the Chief
Accounting Officer, any Assistant Treasurer, and any Assistant Secretary duly
authorized by the Board of Directors of TMC to execute any Certificate,
instruction, notice or other instrument on behalf of TMLP and named in a Certificate.

 

x.                                        “Quarterly Payments” shall have the meaning given to it in Section 3(a)(iv).

 

y.                                      “Renewal Term” shall have the meaning given to it in Section 7(a).

 

z.                                        “Services” shall the
meaning given to it in Section 2(a).

 

aa.                                 “TMC” shall mean The Mills Corporation, a
Delaware corporation.

 

15

 

bb.                               “TMLP” shall have the
meaning given to it in the Preambles.

 

cc.                                 “TMLP Indemnitees” shall have the meaning given to it in Section 9(b).

 

dd.                               “TMLP Partnership Agreement” shall mean the
Agreement of Limited Partnership of TMLP, dated April 21, 1994, as
amended.

 

ee.                                 “TMLP Units” shall mean the units of limited
partnership of TMLP.

 

ff.                                     “Transfer Certificate” shall have the meaning
given to it in Section 2(f)(ii).

 

gg.                               “Withholding Obligation” shall have the meaning given to it in Section 3(a)(iv).

 

16.                               Miscellaneous.

 

a.                                       Counterparts.  This Agreement has been executed in a number
of identical counterparts, and each such counterpart shall be deemed to be an
original instrument, but in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.

 

b.                                      Execution by Facsimile.  The execution and delivery of this Agreement
by facsimile signature shall be sufficient for all purposes and shall be
binding upon any party who so executes.

 

c.                                       Successors and Assigns.  This Agreement shall extend to and shall be
binding upon the parties hereto and their respective successors and
assigns.  This Agreement shall not be
assignable by either party without the prior written consent of the other
party, provided, that, either Kan Am Services and/or Kan Am Grundbesitz shall
have the right to assign its rights and/or obligations hereunder to any entity
controlled by, in control of, or under common control with, Kan Am Services or
Kan Am Grundbesitz, as the case may be.

 

d.                                      Collection of Funds.  Kan Am shall not be responsible for any
money, whether or not represented by any check, draft or other instrument for
the payment of money, received by it on behalf of TMLP until Kan Am actually
receives and collects such funds.

 

e.                                       Invalid Provisions.  The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provision were
omitted.

 

f.                                         Headings.  The captions contained in this
Agreement are inserted solely for convenience of reference and shall not affect
the meaning or interpretation of this Agreement.

 

16

 

g.                                      Entire Agreement and Amendment.  This
Agreement sets forth the entire Agreement between the parties hereto and
supersedes all prior written and oral understandings.  Any change, amendment or modification of this
Agreement must be in writing and signed by all the parties hereto.

 

[signature pages follow]

 

17

 

IN WITNESS
WHEREOF, TMLP and Kan Am have caused this Agreement to be executed by their
duly authorized officers and their corporate seals to be hereunto affixed as of
the date first above written.

 

 

	
   

  	
  THE
  MILLS LIMITED PARTNERSHIP

  
	
   

  	
  By: The Mills
  Corporation, its general partner

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ MJ Morrow

  
	
   

  	
  Name: Mary Jane Morrow

  
	
   

  	
  Title: Executive Vice President and Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KAN AM GRUNDBESITZ GmbH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Karlheinz Fichtl

  
	
   

  	
  Name: Karlheinz Fichtl

  
	
   

  	
  Title: Geschaetsfuehrer

  
	
   

  	
   

  
	
   

  	
  KAN AM
  SERVICES LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ T. Kent
  Hammond

  
	
   

  	
  Name: T. Kent Hammond

  
	
   

  	
  Title: Vice President

  

 

18

 

Solely with
respect to the obligations set forth in Section 8(b):

 

	
   

  	
  /s/ Dietrich Von
  Boetticher

  
	
   

  	
  Dietrich von Boetticher

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Franz von
  Perfal

  
	
   

  	
  Franz von Perfall

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ James
  Braithwaite

  
	
   

  	
  James C.
  Braithwaite

  

 

19

 

EXHIBIT A

 

DELIVERY INSTRUCTIONS

 

The
following items required to be delivered by TMLP in accordance with the
Agreement shall be delivered as directed below:

 

1.               Schedule K-1
data and information:

 

Kan Am Services

The Forum – Suite 825

3290 Northside Parkway

Atlanta, GA  30327

Attention:  T. Kent Hammond

Facsimile:     404-239-0624

Email:                 tkhammond@kanamusa.com

 

2.               Distributions
and other payments:

 

Wire instructions for Hypo Bank New York:

 

Deutsche Bank, Munich

SWIFT code DEUTDEMM

Account #  2413979

For the account of Kan Am Grundbesitz GmbH

 

3.               Periodic
Financial Reports:

 

Kan Am Grundbesitz GmbH

Widenmayerstrasse 6

80538 Munich

Germany

Attention:  Karlheinz
Fichtel

Facsimile: 011-49-89-21010118

Email: 
KHF@kanam.de

 

20

 

EXHIBIT B

 

LIST OF KAN AM PERSONS

 

1.                                       Dietrich
von Boetticher

 

2.                                       Franz
von Perfall

 

3.                                       James
C. Braithwaite

 

21

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