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                                                                    EXHIBIT 4.6

                              THE MILLS CORPORATION

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of April
27, 2001, is between The Mills Corporation, a Delaware corporation (the
"COMPANY"), and iStar Preferred Holdings LLC, a Delaware limited liability
company ("BUYER").

                                    RECITALS

      A. The Company and Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT").

      B. The Company has authorized the Series A Cumulative Convertible
Preferred Stock of the Company (the "SERIES A PREFERRED STOCK"), which shall be
convertible into shares of the Company's voting common stock, par value $0.01
per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Certificate of Designations,
Preferences and Rights of the Series A Preferred Stock, substantially in the
form attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATIONS").

      C. Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, initially 250,000 shares of Series A Preferred Stock (the "INITIAL
PREFERRED SHARES") and warrants exercisable in certain circumstances set forth
therein for shares of Common Stock (the Common Stock issuable thereunder, the
"INITIAL WARRANT SHARES" and such warrants, the "INITIAL WARRANTS"), with the
Initial Warrants to be substantially in the form attached hereto as EXHIBIT B.

      D. Subject to the terms and conditions set forth in this Agreement, Buyer
will be required to buy and the Company will be required to sell 500,000 shares
of Series A Preferred Stock (the "MANDATORY PREFERRED SHARES") (the Initial
Preferred Shares and the Mandatory Preferred Shares collectively are referred to
in this Agreement as the "PREFERRED SHARES") and warrants exercisable in certain
circumstances set forth therein for shares of shares of Common Stock (the Common
Stock issuable thereunder, the "MANDATORY WARRANT SHARES" and together with the
Initial Warrant Shares, the "WARRANT SHARES;" and such warrants the "MANDATORY
WARRANTS" and collectively with the Initial Warrants, the "WARRANTS"), with the
Mandatory Warrants to be substantially in the form attached hereto as EXHIBIT B.

      E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder.

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                                    AGREEMENT

      In consideration of the Recitals and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Buyer hereby agree as follows:

      1.    PURCHASE AND SALE OF PREFERRED SHARES.

            a. PURCHASE OF PREFERRED SHARES. Subject to the satisfaction of the
conditions set forth in Sections 9(a) and 10(a) below, the Company shall issue
and sell to Buyer and Buyer agrees to purchase from the Company the Initial
Preferred Shares and the Initial Warrants at a single closing (the "INITIAL
CLOSING"). Subject to the satisfaction of the conditions set forth in Sections
1(c), 9(b) and 10(b), the Company shall issue and sell to Buyer and Buyer agrees
to purchase from the Company all, and not less than all, of the Mandatory
Preferred Shares and the Mandatory Warrants at a single closing (the "MANDATORY
CLOSING"). (The Initial Closing and the Mandatory Closing collectively are
referred to in this Agreement as the "CLOSINGS"). The purchase price (the
"PURCHASE PRICE") of each Preferred Share at each of the Closings shall be
$96.00.

            b. THE INITIAL CLOSING DATE. The date and time of the Initial
Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. New York Time, within
three (3) Business Days following the date hereof, subject to the satisfaction
of the conditions to the Initial Closing set forth in Sections 9(a) and 10(a)
(or such later date as is mutually agreed to by the Company and Buyer). The
Initial Closing shall occur on the Initial Closing Date at the offices of Buyer,
1114 Avenue of the Americas, 27th Floor, New York, New York 10036. "BUSINESS
DAY" means any day other than Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required by law to remain
closed.

            c. THE MANDATORY CLOSING DATE. Subject to satisfaction of the
conditions to the Mandatory Closing set forth in Sections 9(b) and 10(b) and the
conditions set forth in this Section 1(c), the date and time of the Mandatory
Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. New York Time, on the
earlier of (i) the date set forth in the Mandatory Share Notice (as defined
below) (or such later date as is mutually agreed to by the Company and the
Buyer), and (ii) October 27, 2001 (the "FINAL CLOSING DATE"). The Company may
deliver written notice (the "MANDATORY SHARE NOTICE") to Buyer on a date which
is within five (5) months of the Initial Closing Date (the "MANDATORY SHARE
NOTICE DATE"). The Mandatory Share Notice shall set forth the date of the
Mandatory Closing Date which date shall be not less than 30 days after the
Mandatory Share Notice Date and in no event shall be later than October 27,
2001. Notwithstanding the foregoing, Buyer shall not be required to purchase the
Mandatory Preferred Shares unless each of the following conditions is satisfied:
(i) during the period beginning on the date of this Agreement and ending on and
including the Mandatory Closing Date, there shall not have occurred the
consummation of a Change of Control (as defined in Section 5) or a public
announcement of a pending Change of Control which has not been abandoned or
terminated; (ii) at all times during the period beginning on the date of this

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Agreement and ending on and including the Mandatory Closing Date, the Common
Stock shall have been listed on The New York Stock Exchange, Inc. ("NYSE") or
The American Stock Exchange, Inc. ("AMEX") or designated for quotation on the
Nasdaq National Market ("NASDAQ") and shall not have been suspended from trading
on such exchanges nor shall delisting or suspension by such exchanges have been
threatened either (A) in writing by such exchanges or (B) by falling below the
minimum listing maintenance requirements of such exchanges; and (iii) during the
period beginning on the Initial Closing Date and ending on and including the
Mandatory Closing Date, the Company shall have delivered Conversion Shares upon
conversion of the Preferred Shares on a timely basis as set forth in the
Certificate of Designations and otherwise shall have been in compliance with and
shall not have breached any provision of the Transaction Documents (as defined
below) and the Certificate of Designations. The Mandatory Closing shall occur on
the Mandatory Closing Date at the offices of Buyer, 1114 Avenue of the Americas,
27th Floor, New York, New York 10036.

            d. FORM OF PAYMENT. On each of the Closing Dates, (i) Buyer shall
pay the Purchase Price to the Company for the Preferred Shares to be issued and
sold to Buyer at such Closing, by wire transfer of immediately available funds
in accordance with the Company's written wire instructions, less any amount
withheld for expenses or fees pursuant to Sections 4(h) and 4(i), and (ii) the
Company shall deliver to Buyer stock certificates (in the denominations as Buyer
shall request) (the "PREFERRED STOCK CERTIFICATES") representing such number of
the Preferred Shares which Buyer is then purchasing hereunder, duly executed on
behalf of the Company and registered in the name of Buyer.

      2.    BUYER'S REPRESENTATIONS AND WARRANTIES.

            Buyer represents and warrants that:

            a. INVESTMENT PURPOSE. Buyer (i) is acquiring the Preferred Shares
and the Warrants, (ii) upon conversion of the Preferred Shares, will acquire the
Conversion Shares then issuable and (iii) upon exercise of the Warrants, will
acquire the Warrant Shares issuable upon exercise thereof (the Preferred Shares,
the Conversion Shares, the Warrants and the Warrant Shares collectively are
referred to herein as the "SECURITIES"), for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, Buyer does not
agree to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the 1933 Act.

            b. ACCREDITED INVESTOR STATUS. Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D.

            c. RELIANCE ON EXEMPTIONS. Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of Buyer to
acquire the Securities.

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            d. INFORMATION. Buyer and its advisors and representatives, if any,
have been afforded the opportunity to ask questions of the Company. (However,
neither such inquiries nor any other due diligence investigations conducted by
Buyer or its advisors and representatives, if any, shall modify, amend or affect
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below.) Buyer understands that its investment in the Securities
involves a high degree of risk. Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.

            e. NO GOVERNMENTAL REVIEW. Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

            f. LEGENDS. Buyer understands that the certificates or other
instruments representing the Preferred Shares and the Warrants and, as set forth
in the Registration Rights Agreement and in particular until such time as the
sale of the Conversion Shares and the Warrant Shares have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares, except
as set forth below, shall bear a restrictive legend in substantially the
following form:

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
      ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
      QUALIFICATION PURSUANT TO ANY APPLICABLE STATE SECURITIES LAWS OR (B) AN
      OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION AND
      QUALIFICATION ARE NOT REQUIRED UNDER SAID ACT OR LAWS OR (II) UNLESS SOLD
      PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
      OTHER LOAN, REPURCHASE FACILITY, OR OTHER FINANCING ARRANGEMENT SECURED BY
      THE SECURITIES.

Buyer agrees to comply with the restrictions set forth in the legend above and
to require any transferee to so agree as a condition of transfer. The legend set
forth above shall be removed and the Company shall issue a certificate without
such legend to the holder of the Securities upon which it is stamped, if (i)
such Securities are registered for resale under the 1933 Act, (ii) in connection
with a sale transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the 1933 Act, or (iii) such holder provides

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the Company with reasonable assurances that the Securities can be sold pursuant
to Rule 144(k) promulgated under the 1933 Act (or any successor thereto).

            Buyer understands that the certificates or other instruments
representing the Preferred Shares shall also bear a restrictive legend referring
to restrictions set forth in this Agreement and in the Company's Amended and
Restated Certificate of Incorporation, as amended, provided, however, if
restrictions described in a restrictive legend in the Company's Amended and
Restated Certificate of Incorporation, as amended, is inapplicable to the
Preferred Shares the certificates or other instruments representing the
Preferred Shares will also contain a notation to that effect.

            g. AUTHORIZATION; ENFORCEMENT; VALIDITY. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of Buyer and are valid and binding agreements of Buyer
enforceable against Buyer in accordance with their terms, subject as to
enforceability to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.

            h. STATE OF DECISION-MAKING. The Buyer's receipt of the Company's
offer to purchase the Securities, the Buyer's decision to purchase the
Securities, and the Buyer's purchase of the Securities will all be made in the
State of New York.

      3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

            Except as set forth on the Schedules attached hereto, the Company
represents and warrants to the Buyer that:

            a. ORGANIZATION AND QUALIFICATION. Each of the Company and the
Operating Partnership is a corporation or limited partnership, respectively,
duly organized and validly existing in good standing under the laws of the
jurisdiction in which it was incorporated or organized, and has the requisite
corporate or limited partnership power and authorization, respectively, to own
its properties and to carry on its business as now being conducted. Each of the
Company's Subsidiaries (as hereinafter defined) is a corporation, limited
partnership, limited liability company or business trust duly organized and
validly existing in good standing under the laws of the jurisdiction in which it
was incorporated or organized, and has the requisite corporate, limited
partnership, limited liability company or business trust power and authorization
to own its properties and to carry on its business as now being conducted except
where failure to be in good standing would not have a Material Adverse Effect.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation, limited partnership, limited liability company or business trust to
do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect (as
hereinafter defined). For purposes of this Agreement, an entity shall be
considered a "SUBSIDIARY" of any other entity that directly or indirectly owns
or controls securities or other ownership interests that (i) permits such other
entity to elect a majority of the Board of Directors (or members of any similar
governing body)

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of the first entity, (ii) permits such other entity to direct the business and
policies of such first entity or (iii) confers a majority of the economic
interest of such first entity on such other entity (for avoidance of doubt, the
Operating Partnership (as hereinafter defined) is a Subsidiary of the Company).
For purposes of this Agreement, each Joint Venture shall be considered a
Subsidiary of the Company. As used in this Agreement, "JOINT VENTURE" means any
partnership, limited liability company or other entity in which the Company,
either directly or indirectly, owns an equity interest. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, properties, assets, operations, results of operations, condition
(financial or otherwise), or prospects of the Company and its Subsidiaries taken
as a whole, or on the transactions contemplated hereby or on the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below) or the Certificate of Designations. The Company has
no Subsidiaries except as set forth on SCHEDULE 3(a)(i). Each Subsidiary of the
Company identified on SCHEDULE 3(a)(ii) hereinafter shall be referred to as a
"Significant Subsidiary". True and complete copies of the Charter Documents of
the Company and each Significant Subsidiary have been made available to Buyer or
Buyer's counsel. For purposes of this Agreement, "CHARTER DOCUMENTS" means (i)
with respect to a corporation, the articles or certificate of incorporation and
bylaws of such corporation, (ii) with respect to a limited partnership, the
certificate of limited partnership or similar state filing and partnership or
other similar agreement of such limited partnership and, (iii) with respect to a
limited liability company, the certificate of organization or other similar
state filing and operating or other similar agreement of such limited liability
company and (iv) with respect to any other entity, the organizational and other
documents of such entity comparable to the documents specified in (i) through
(iii). The Subsidiaries that are owned directly by the Company (and not through
the Operating Partnership) have de minimus business, revenue, income and assets.

            b. AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Ownership Limit Waiver (as defined in
Section 9), the Registration Rights Agreement, the Partnership Agreement
Amendment (as defined in Section 10), the Warrants and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company
and the adoption, execution and filing of the Certificate of Designations by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including, but not limited to, the issuance of the Preferred Shares and
the Warrants and the reservation for issuance and the issuance of the Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof, have
been duly authorized by the Company's Board of Directors (or a duly authorized
committee thereof) and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders. The Transaction Documents
have been duly executed and delivered by the Company. The Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The Certificate of Designations will have
been filed prior to the Initial Closing Date with the

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Secretary of State of the State of Delaware and will be in full force and
effect, enforceable against the Company in accordance with its terms and shall
not have been amended.

            c. CAPITALIZATION. (i) As of the date hereof, the authorized capital
stock of the Company consists of (i) 100,000,000 shares of Common Stock, of
which as of the date hereof, approximately 24,117,130 shares are issued and
outstanding, no more than 7,000,000 shares are reserved for issuance pursuant to
the Company's stock option and purchase plans and no more than 16,332,517 shares
are issuable and reserved for issuance pursuant to securities (other than the
Preferred Shares and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 50,000,000 shares of
non-voting common stock, par value $0.01 per share, of which as of the date
hereof, no shares are issued and outstanding and (iii) 20,000,000 shares of
preferred stock, of which as of the date hereof, no shares are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
SCHEDULE 3(c)(i) or in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, as filed with the SEC (the "FORM 10-K") and except as
relate to less than $5,000,000 in interests or securities or agreements, either
individually or in the aggregate: (A) no shares of capital stock or other equity
interests of the Company or any Significant Subsidiary are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (B) there are no outstanding debt securities that are
convertible into equity securities issued by the Company or any Significant
Subsidiary; (C) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock or other
equity interests of the Company or any Significant Subsidiary, or contracts,
commitments, understandings or arrangements by which the Company or any
Significant Subsidiary is or may become bound to issue additional shares of
capital stock or other equity interests of the Company or any Significant
Subsidiary, or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock or other equity interests of the
Company or any Significant Subsidiary to any party other than the Company or a
subsidiary of the Company whose financial results are consolidated with the
Company's in the Company's financial statements prepared in accordance with the
requirements of the 1934 Act and the regulations promulgated thereunder; (D)
there are no agreements or arrangements under which the Company or any
Significant Subsidiary is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights Agreement); (E)
there are no outstanding equity securities or instruments of the Company or any
Significant Subsidiary which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any Significant Subsidiary is or may become bound to redeem a
security of the Company or any Significant Subsidiary; (F) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities as described in this
Agreement; and (G) neither the Company nor any Significant Subsidiary has any
stock appreciation rights or "phantom stock" plans or agreements or any similar
plan or agreement. The Ownership Limit (as defined in the Company's Amended and
Restated Certificate of Incorporation, as amended) has been increased to 9.225%,
and has not been rescinded, revoked, amended or changed.

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      (ii) The Company is the sole general partner of The Mills Limited
Partnership, a Delaware limited partnership (the "OPERATING PARTNERSHIP").
Information that is accurate (except to the extent that any inaccuracy would not
have a Material Adverse Effect) regarding the capitalization and the Company's
direct and indirect ownership of the Operating Partnership and each Subsidiary
of the Company is diagrammed and described in SCHEDULE 3(c)(ii), provided,
however, that information regarding ownership in SCHEDULE 3(c)(ii) may reflect
residual ownership interests after the payment of preferences that are not
reflected in such schedule.

      (iii) All the shares of Common Stock held in escrow pursuant to the Escrow
Agreement, dated as of October 23, 1998, by and among the Operating Partnership,
Chelsea GCA Realty Partnership, LP and The First National Bank of Chicago will
be released to the Company upon payment by the Company of approximately $4.6
million.

            d. ISSUANCE OF SECURITIES. The Preferred Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be (i) validly
issued, fully paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issuance thereof and (iii) entitled to the rights
and preferences set forth in the Certificate of Designations. 6,851,866 shares
of Common Stock (subject to adjustment pursuant to the Company's covenant set
forth in Section 4(f) below) have been duly authorized and reserved for issuance
upon conversion of the Preferred Shares or upon exercise of the Warrants, as the
case may be. Upon conversion or exercise in accordance with the Certificate of
Designations or the Warrants, as the case may be, the Conversion Shares and the
Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Assuming the accuracy of the representations and warranties of Buyer contained
in Section 2 hereof, the issuance by the Company of the Securities is exempt
from registration under the 1933 Act.

            e. NO CONFLICTS. Except as disclosed in SCHEDULE 3(e)(i), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Certificate of
Designations and the consummation by the Company of the transactions
contemplated hereby and thereby (including, but not limited to, the reservation
for issuance and issuance of the Conversion Shares and the Warrant Shares) will
not (i) result in a violation of the Charter Documents of the Company or any
Significant Subsidiary; (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party and the termination, amendment, acceleration
or cancellation of which would reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect; (iii) result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the Principal Market (as hereinafter defined)) applicable to the Company or
any Significant Subsidiary or by which any property or asset of the Company or
any Significant Subsidiary is bound or affected. Except as disclosed in SCHEDULE
3(e)(ii), neither the Company nor any of its Subsidiaries is in violation of its
Charter Documents, except where any such violations and defaults could not
reasonably be expected to result, either individually or in

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the aggregate, in a Material Adverse Effect. Except as disclosed in SCHEDULE
3(e)(iii), neither the Company nor any of its Subsidiaries is in violation of
any term of or in default under any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, or by which any of
their property is bound, except where such violations and defaults could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity, except where such violations could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents or to perform its obligations under the Certificate of Designations,
in each case in accordance with the terms hereof or thereof. Except as disclosed
in SCHEDULE 3(e)(iv), all consents, authorizations, orders, waivers, filings and
registrations that the Company is required to obtain as described in the
preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements of the
Principal Market and has no actual knowledge of any facts which would reasonably
lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future.

            f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). A
complete list of the Company's SEC Documents is set forth on SCHEDULE 3(f). As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during
the periods involved ("GAAP") (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to Buyer or its advisors or
representatives, if any, that is not included in the SEC Documents, at the

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time such other information was provided, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading. The Company meets the requirements for use of Form
S-3 for registration of the resale of Registrable Securities (as defined in the
Registration Rights Agreement).

            g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3(g)
OR IN THE FORM 10-K, since December 31, 2000 there has been no material adverse
change and no material adverse development in the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole. Neither the
Company nor any Subsidiaries has taken any steps, nor do any of them currently
expect to take any steps, to seek protection pursuant to any bankruptcy law and
neither the Company nor any of its Subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy proceedings
or any knowledge of any fact which would reasonably lead a creditor to do so.

            h. ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3(h)(i),
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened in writing against or affecting the Company, the Common Stock or any
of the Subsidiaries, any of their respective properties, or any of the Company's
or the Subsidiaries' officers or directors in their capacities as such, except
such as involves less than $500,000, could not reasonably be expected to result
in a Material Adverse Effect or is fully covered by insurance (subject to
commercially reasonable deductibles or a commercially reasonable self-insurance
retention program). Except as set forth in SCHEDULE 3(h)(ii), to the knowledge
of the Company none of the directors or officers of the Company has been
involved in securities related litigation during the past five years.

            i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF PREFERRED SHARES.
The Company acknowledges and agrees that Buyer is acting solely in the capacity
of an arm's-length purchaser with respect to the Transaction Documents and the
Certificate of Designations and the transactions contemplated hereby and
thereby. The Company further acknowledges that Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the Certificate of Designations and the
transactions contemplated hereby and thereby and any advice given by Buyer or
any of its representatives or agents in connection with the Transaction
Documents and the Certificate of Designations and the transactions contemplated
hereby and thereby is merely incidental to Buyer's purchase of the Securities.
The Company further represents to Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

            j. [Intentionally omitted.]

            k. NO GENERAL SOLICITATION. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general

                                       10
<PAGE>

advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities.

            l. NO INTEGRATED OFFERING. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, but not limited to,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.

            m. DILUTIVE EFFECT. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Preferred Shares in
accordance with this Agreement and the Certificate of Designations and its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants, is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.

            n. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. None of the
Company's or its Subsidiaries' employees is a member of a union which relates to
such employee's relationship with the Company or any of its Subsidiaries,
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relations with their employees are good. Except as disclosed in SCHEDULE 3(n),
no executive officer (as defined in Rule 501(f) of the 1933 Act) has notified
the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company. No executive officer, to
the knowledge of the Company and its Subsidiaries, is, or is now expected to be,
in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.

            o. INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in SCHEDULE
3(o)(i), the Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights necessary at their respective stages of development
to conduct their respective businesses as now conducted, except where the
failure to own or possess such rights could not reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect.
Except as set forth on SCHEDULE 3(o)(ii), none of the Company's trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights,

                                       11
<PAGE>

copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets or other intellectual property rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement, except where such expiration or termination could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, trade secrets or other intellectual
property rights of others, or of any development of similar or identical trade
secrets or technical information by others and, except as set forth on SCHEDULE
3(o)(iii), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding its trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, trade secrets, or infringement of other intellectual
property rights; and the Company and its Subsidiaries are unaware of any facts
or circumstances which might give rise to any of the foregoing, except where any
of the foregoing could not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect. The Company and its
Subsidiaries have taken reasonable security measures to protect the value and,
in the case of intellectual property whose value depends on secrecy and
confidentiality, the secrecy and confidentiality of all of their intellectual
properties.

            p. ENVIRONMENTAL LAWS. Except as disclosed in SCHEDULE 3(p), to the
knowledge of the Company, the Company, its Subsidiaries and the properties they
own (i) are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances, wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them at their respective stages of development under
applicable Environmental Laws to conduct their respective businesses as
presently conducted and (iii) are in compliance with all terms and conditions of
any such permit, license or approval, except where, in each of the foregoing
cases (i)-(iii), the failure to so comply or receive such permits could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. True and complete copies of all environmental reports
with respect to the properties owned by the Company or any of the Subsidiaries,
which reports the Company or any of its Subsidiaries has in its possession or
control, have been provided to Buyer. Notwithstanding any other provision of
this Agreement, this Section 3(p) and Section 3(h) contain the Company's sole
and exclusive representations and warranties with respect to environmental
matters.

            q. INSURANCE. The Company and each Significant Subsidiary are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and each
Significant Subsidiary are engaged. Neither the Company nor any Significant
Subsidiary has been refused any insurance coverage sought or applied for and
neither the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.

                                       12
<PAGE>

            r. REGULATORY PERMITS. Except for those the absence of which could
not reasonably be expected to result, either individually or in the aggregate,
in a Materially Adverse Effect, the Company and each Significant Subsidiary
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary at their respective
stages of development to conduct their respective businesses as presently
conducted, and neither the Company nor any Significant Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

            s. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

            t. CERTAIN AGREEMENTS Neither the Company nor any of its
Subsidiaries is subject to any Charter Document, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that could
reasonably be expected to have a Material Adverse Effect that has not been
disclosed in writing to Buyer as such. Neither the Company nor any Significant
Subsidiary is a party to any contract or agreement that could reasonably be
expected to have a Material Adverse Effect that has not been disclosed in
writing to Buyer. Except as disclosed in SCHEDULE 3(t)(i) or in the Form 10-K,
neither the Company nor any of its Subsidiaries have indebtedness to third
parties, either individually or in the aggregate, in excess of $1.0 million.
True and complete copies of the agreements pursuant to which such indebtedness
has been incurred and the ancillary documents thereto have been delivered to or
made available to Buyer or its counsel. Except as set forth in SCHEDULE
3(t)(ii), there are currently no defaults in the payment of principal or
interest on any such indebtedness, no payments thereunder have been deferred or
extended beyond their stated maturity, and as of March 31, 2001, the Company was
not in default of any of its covenants or obligations contained in the Loan
Documents (as hereinafter defined). Except as described in SCHEDULE 3(t)(iii),
neither the Company nor any of its Subsidiaries is a party to, or bound by, any
agreement or arrangement which prohibits (absent a BONA FIDE default under such
agreement or arrangement) the distribution of cash by such entity to its equity
holders for the payment of a distribution or dividend on the Preferred Shares,
where such prohibition could reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the ability of the Company to make
required payments on the Preferred Shares.

            u. TAX STATUS. The Company and each of its Subsidiaries, (i) has
timely made or filed, after giving effect to any permitted extensions, all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has timely paid, after
giving effect to any permitted extensions, all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and for which the Company has made appropriate reserves for on its
books, and (iii) has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods

                                       13
<PAGE>

to which such returns, reports or declarations (referred to in clause (i) above)
apply and for all periods prior to the date hereof for which any return, report
or declaration has not been filed. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
Company knows of no basis for any such claim. Except as set forth on SCHEDULE
3(u), each of the Subsidiaries of the Company is a pass-through entity for
federal income tax purposes. The Company has been at all times commencing with
its taxable year ending December 31, 1994 a real estate investment trust within
the meaning of Section 856 of the Internal Revenue Code of 1986, as amended (the
Internal Revenue Code of 1986, as amended, is hereinafter referred to as the
"CODE") and the regulations promulgated (whether final or temporary) or proposed
under the Code (the "REGULATIONS").

            v. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
3(v) and in the SEC Documents filed at least ten days prior to the date hereof,
and other than the grant of stock options disclosed on SCHEDULE 3(c)(i), none of
the officers or directors of the Company or any of its Subsidiaries is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as officers and directors) that would reasonably be expected
to have a Material Adverse Effect, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer or director or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer or
director has a substantial interest or is an officer, director, trustee or
partner.

            w. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the state of its incorporation and any other state which is or could become
applicable to Buyer as a result of the transactions contemplated by this
Agreement, including, but not limited to, the Company's issuance of the
Securities and Buyer's ownership of the Securities (including the exercise of
any conversion or purchase rights under any such Securities).

            x. FOREIGN CORRUPT PRACTICES. To the Company's knowledge, neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company, (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.

For purposes of the representations and warranties set forth in this Section 3,
all information contained in the narrative of and in the financial statements
included in the Form 10-K and in the SEC Documents filed at least ten days prior
to the date hereof, excluding the exhibits thereto or incorporated by reference
therein, shall be deemed to have been scheduled or disclosed in writing to
Buyer, as applicable.

                                       14
<PAGE>

      4.    COVENANTS.

            a. BEST EFFORTS. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 9
and 10 of this Agreement.

            b. FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to Buyer promptly after such filing. The Company shall, on or before
each of the Closings, take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for sale to Buyer at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to Buyer on or prior to the
Closing Dates. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following each of the Closing
Dates.

            c. REPORTING STATUS. Until the earlier of (i) the date which is five
and one-half (5 1/2) years from the Mandatory Closing Date, (ii) such time as no
Conversion Shares or Warrant Shares are held by Investors or are issuable to
Investors upon the conversion of Preferred Shares or Warrants held by Investors
and (iii) one month after the date on which no Preferred Shares remain issued
and outstanding (the "REPORTING PERIOD"), the Company shall file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination. Notwithstanding the foregoing, upon a Change
of Control (and, if any holder(s) of Preferred Shares exercise a Put Option in
connection therewith, upon the payment in full of the Put Option Exercise Price
due by the Company to such holder(s)), the requirements of this Section 4(c)
shall terminate.

            d. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Preferred Shares as a capital contribution to the Operating Partnership
which will use the capital contribution to fund development activities and pay
the costs associated with the transactions contemplated by this Agreement and
for general corporate and partnership purposes.

            e. FINANCIAL AND OTHER INFORMATION. As long as any Preferred Shares
remain outstanding, the Company agrees to provide to Buyer and each Major Holder
who prior to the time any information is required to be provided agrees in
writing addressed to the Company and sent to the Company as set forth in Section
12(f) hereof to be bound by the restrictions set forth in the last two sentences
of this Section 4(e) as if such Major Holder were Buyer:

                  (i) AUDITED ANNUAL FINANCIAL STATEMENTS. Within ninety-five
      (95) days after the end of each fiscal year of the Company, a consolidated
      balance sheet of the Company and its subsidiaries, as of the end of such
      year, and the related consolidated statements of operations and cash flow
      for such fiscal year, prepared in accordance with the requirements of the
      1934 Act and the regulations promulgated thereunder.

                                       15
<PAGE>

                  (ii) UNAUDITED QUARTERLY FINANCIAL STATEMENTS. Within fifty
      (50) days after the end of each of the first three fiscal quarters of the
      Company, an unaudited consolidated balance sheet of the Company and its
      subsidiaries as of the end of such period, and the related unaudited
      consolidated statement of income for such period and for the current
      fiscal year to date and statement of cash flows for the current fiscal
      year to date, prepared in accordance with the requirements of the 1934 Act
      and the regulations promulgated thereunder.

                  (iii) SENIOR MANAGEMENT REPORTING PACKAGE AND JOINT VENTURE
      FINANCIAL STATEMENTS. Copies of each Senior Management Reporting Package
      made available or distributed to the senior management of the Company
      promptly upon the availability or preparation thereof and if the Senior
      Management Reporting Package shall, after the date hereof, cease to be
      prepared or if the information regarding the Joint Ventures contained
      therein is materially changed, then reports providing substantially
      similar information regarding the Joint Ventures, at times substantially
      similar to the preparation and distribution of the Senior Management
      Reporting Package. In any event, the Company shall promptly provide the
      audited balance sheet as of each such fiscal year (if such audit is
      prepared), and the related statement of operations and cashflows for such
      year for each Joint Venture. For purposes of this Section 4, "JOINT
      VENTURES" means those entities set forth on SCHEDULE (4)(e)(iv) attached
      hereto.

                  (iv) SIGNIFICANT CHANGES. Timely notification of significant
      changes, except where notification of such changes would, if provided to a
      Person not subject to a confidentiality agreement, require the Company to
      publicly disclose the information contained in such notification under
      Regulation FD under the 1934 Act, and REIT Status concerns, including, but
      not limited to, prompt notification upon the Company's chief financial
      officer, chief executive officer, president or tax director receiving any
      report, allegation or determination from any attorney or accountant
      engaged by the Company or any agent of the Internal Revenue Service or of
      any state department of revenue that, there may have been, has been, or
      reasonably likely will be a Failure by the Company to Maintain REIT Status
      or having actual knowledge of facts and legal principles that create a
      reasonable possibility that there may have been, has been or reasonably
      likely will be a Failure by the Company to Maintain REIT Status and upon
      the submission of any proposal for consideration by the Company's Board of
      Directors or stockholders for the termination of the Company's REIT
      Status.

Buyer agrees not to disclose or use for any improper purpose any confidential,
proprietary or non-public information disclosed in materials sent to Buyer
pursuant to the requirements of this Section 4(e) and Buyer agrees that it shall
not trade in the Company's securities so long as it is in possession of
material, non-public information. Buyer may disclose information referred to in
the preceding sentence to its Affiliates, lenders (including potential lenders)
and transferees (including potential transferees) of Preferred Shares and
Warrants only after providing the Company with the written agreement of such
Affiliate, lender or transferee that such Affiliate, lender or transferee will
not disclose or use for any improper purpose any confidential, proprietary or
non-public information disclosed in such information and shall not trade in the
Company's securities so long as it is in possession of material, non-public
information; PROVIDED,

                                       16
<PAGE>

HOWEVER, that information may be disclosed to a lender or potential lender in
the absence of such written agreement if there is included in any loan or credit
agreement between the Buyer and such lender confidentiality provisions
substantially similar to those set forth above regarding information provided to
such lender or the Buyer enters into a confidentiality agreement with such
lender or potential lender including confidentiality provisions substantially
similar to those set forth above regarding information provided to such lender.

            f. RESERVATION OF SHARES. The Company shall use its best efforts to
at all times have authorized, and reserved for the purpose of issuance, no less
than the aggregate maximum number of shares of Common Stock that may be issuable
upon conversion of all outstanding Preferred Shares and exercise of all
outstanding or issuable Warrants (without regard to any limitations on exercises
other than limitations on exercise to the extent that Preferred Shares are
outstanding).

            g. LISTING. The Company shall promptly use its best efforts to
secure the listing of all of the Registrable Securities (as defined in the
Registration Rights Agreement) upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents and the Certificate of Designations. The Company shall
maintain the Common Stock's authorization for quotation on Nasdaq or listed on
NYSE or AMEX (as applicable, the "PRINCIPAL MARKET"). Neither the Company nor
any of its Subsidiaries shall take any action which would be reasonably expected
to result in the delisting or suspension of the Common Stock from the Principal
Market. The Company shall promptly, and in any event within five (5) Business
Days, provide to each Major Holder copies of any notices it receives from the
Principal Market regarding the continued eligibility of the Common Stock for
listing on such automated quotation system or securities exchange. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(g).

            h. EXPENSES. At each of the Closings, the Company shall reimburse
Buyer for its reasonable expenses (including attorneys' fees and expenses) in
due diligence and negotiating and preparing the Transaction Documents and
consummating the transactions contemplated thereby, which amount shall be
withheld by Buyer from the Purchase Price to be paid by it at each Closing.
Buyer acknowledges receipt of $100,000 as an advance against such expenses (the
"EXPENSE ADVANCE"). The Expense Advance and any expense reimbursed to Buyer
hereunder, to the extent they are not loan processing costs, shall be treated
for federal income tax purposes as a reduction in the "issue price" for the
Preferred Shares, with the "issue price" of each Preferred Share being reduced
by an amount equal to the total expense reimbursed hereunder divided by the
total number of Preferred Shares outstanding following the Final Closing Date.

            i. Intentionally Omitted.

            j. FILING OF FORM 8-K. On or before the sixth (6th) Business Day
following the Initial Closing Date the Company shall file a Form 8-K with the
SEC describing the terms of

                                       17
<PAGE>

the transactions contemplated by the Transaction Documents in the form required
by the 1934 Act. On or before the sixth (6th) Business Day following the
Mandatory Closing Date, the Company shall file a Form 8-K with the SEC
describing the transaction consummated on such date.

            k. INSPECTION. As long as any Preferred Shares remain outstanding,
upon thirty (30) days' written notice to the Company, each Substantial Holder
and its agents and representatives shall have reasonable access to the Company's
and each of its Subsidiaries' properties (and the Company shall cause its
representatives to arrange and conduct such property visits), contracts, books
and records, and other documents and data of the Company and each such
Subsidiary, and each such holder and its agents and representatives may make
copies of all such contracts, books and records, and other existing documents
and data. Buyer hereby agrees, and each Substantial Holder, as a condition
precedent to being permitted to have such access, shall agree in writing
addressed to the Company, not to disclose or use for any improper purpose any
confidential, proprietary or non-public information it learns as a result of the
access provided pursuant to this Section 4(k) and each Substantial Holder agrees
that it shall not trade in the Company's securities so long as it is in
possession of material, non-public information. Buyer and each Substantial
Holder may disclose information referred to in the preceding sentence to their
respective Affiliates, lenders (including potential lenders) and transferees
(including potential transferees) of Preferred Shares and Warrants only after
providing the Company with the written agreement of such Affiliate, lender or
transferee that such Affiliate, lender or transferee will not disclose or use
for any improper purpose any confidential, proprietary or non-public information
disclosed in such information and shall not trade in the Company's securities so
long as it is in possession of material, non-public information; PROVIDED,
HOWEVER, that information may be disclosed to a lender or potential lender in
the absence of such written agreement if either there is in included in any loan
or credit agreement between the Buyer or Substantial Holder and such lender
confidentiality provisions substantially similar to those set forth above
regarding information provided to such lender or the Buyer or Substantial Holder
enters into a confidentiality agreement with such lender or potential lender
including confidentiality provisions substantially similar to those set forth
above regarding information provided to such lender.

            l. CAPITAL AND SURPLUS; SPECIAL RESERVES. The Company agrees that
the capital of the Company (as such term is used in Section 154 of the General
Corporation Law of Delaware) in respect of the Preferred Shares shall be equal
to the aggregate par value of such Preferred Shares and that it shall not
increase the capital of the Company with respect to any shares of the Company's
capital stock at any time on or after the date of this Agreement. The Company
also agrees that it shall not create any special reserves under Section 171 of
the General Corporation Law of the State of Delaware, as amended (the "DGCL"),
without the prior written consent of each Substantial Holder. So long as any
Preferred Shares remain outstanding, the Company shall not account for as
surplus or transfer to or otherwise allocate to the Company's surplus account
for purposes of the DGCL any of the capital represented by the Preferred Shares,
including, but not limited to, for the purpose of reducing any of its capital
stock as contemplated by Section 244 of the DGCL.

                                       18
<PAGE>

            m. ACCESS TO BOARD OF DIRECTORS/MANAGEMENT. As long as any Preferred
Shares remain outstanding, simultaneously with delivery to the relevant party,
the Company shall provide each Substantial Holder with copies of all materials
sent or distributed to members of the Company's Board of Directors or its audit,
executive, or compensation committee, including, but not limited to, board books
and draft minutes of meetings; PROVIDED, HOWEVER, that the Company shall not be
required to provide any Substantial Holder with materials that are subject to
any attorney-client privilege, and may omit such materials or redact portions of
materials sent to Substantial Holders in order to maintain the confidentiality
of such information (other than any materials or information that could affect,
or relates to, Buyer's status as a REIT). In addition, the Company agrees that,
upon reasonable notice, each Substantial Holder and its agents and its
representative shall be entitled to meet with the Company's management up to
four times in each twelve month period and at any time after a Regular Dividend
(as defined in the Certificate of Designations) payment is missed or an Event of
Noncompliance (as hereinafter defined) exists. Buyer hereby agrees, and each
Substantial Holder, as a condition precedent to the Company's obligation to
provide such materials or meetings, shall agree in writing addressed to the
Company, not to disclose or use for any improper purpose any confidential,
proprietary or non-public information disclosed in such materials and/or
meetings and agrees that it shall not trade in the Company's securities so long
as it is in possession of material, non-public information.

            n. FINANCIAL COVENANTS. The Company agrees to cause the financial
covenants to be complied with that are set forth in Sections 9.10, 9.11(b) and
9.12 (including such adjustments made over time pursuant to the terms of such
covenants as in effect on the date hereof) (other than paragraphs (c) and (h) of
Section 9.12), of that certain Credit Agreement, dated as of June 8, 2000 (the
"TERM LOAN AGREEMENT"), among the Operating Partnership, the Lenders (as defined
therein), Bayerische Hypo-Und Vereinsbank, AG and Commerzbank AG, as such
covenants are in effect on the date hereof (regardless of whether or not (i) any
of the Lenders waives compliance with such covenants, (ii) the Lenders agree to
any modification of such covenants or (iii) all obligations under the Term Loan
Agreement have been satisfied). Notwithstanding the foregoing, for purposes of
this Section, under Section 9.10 of the Term Loan Agreement, the percentage of
the Capitalization Value (as defined in the Term Loan Agreement) that the Total
Adjusted Outstanding Indebtedness (as defined in the Term Loan Agreement) shall
not exceed shall be 63%. Terms used in Sections 9.10, 9.11(b) and 9.12 of the
Term Loan Agreement that are defined in the Term Loan Agreement shall have the
meanings specified in the Term Loan Agreement as in effect as of the date
hereof.

            o. INSURANCE. The Company agrees to maintain, and cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers rated A-
or above by A.M. Best, insurance with respect to its assets and business and the
assets and business of its Subsidiaries against loss or damage of the kinds
customarily insured against by similarly situated entities of established
reputation engaged in the same or similar businesses, in adequate amounts, and
at the request of any Substantial Holder shall furnish such holder with evidence
of the same.

            p. OPERATIONS. The Company agrees to continue to operate
substantially in accordance with past practices using reasonable business
judgment in the conduct of its affairs including, but not limited to, such
matters as the preservation of its corporate existence, the payment of taxes and
other obligations, and compliance with law.

                                       19
<PAGE>

            q. DISTRIBUTIONS. Subject to the terms of the Operating Partnership
Agreement as in effect on the date hereof, any amendments to the Operating
Partnership Agreement after the date hereof that are made in accordance with the
terms of this Agreement and the other Transaction Documents and any restrictions
of applicable law, the Company agrees to cause the Operating Partnership to make
cash distributions to the Company to enable the Company to make distributions to
the holders of Preferred Shares as provided in this Agreement, the other
Transaction Documents and the Certificate of Designations.

            r. PRINCIPAL BUSINESS. The principal business of the Company and its
Subsidiaries taken as a whole shall continue to be the ownership, development
and operation of retail or entertainment shopping centers and businesses
incidental thereto (including the master leasing and operation of food courts
within retail or entertainment shopping centers operated by the Company or any
of its Subsidiaries), it being understood by and acceptable to Buyer that the
Company contemplates the construction of a hotel and an office complex as part
of Meadowland Mills and may undertake similar ancillary projects in connection
with other retail or entertainment mall developments of the Company or its
subsidiaries. The Company shall not, directly or indirectly, enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of interests as general partner or a limited partner and the
management of the business of the Operating Partnership and such activities as
are incidental thereto. The assets of the Company shall be limited to
partnership interests in the Operating Partnership; PROVIDED THAT the Company
shall be permitted to hold such bank accounts or similar instruments or accounts
in its name as it deems necessary to carry out its responsibilities and purposes
as general partner of the Operating Partnership under the Limited Partnership
Agreement of the Operating Partnership (PROVIDED THAT accounts held on behalf of
the Operating Partnership to permit the Company to carry out its
responsibilities under the Limited Partnership Agreement of the Operating
Partnership shall be considered to belong to the Operating Partnership and the
interest earned thereon shall be applied for the benefit of the Operating
Partnership); and provided further that, the Company shall be permitted to
acquire, directly or through a "qualified REIT subsidiary" or limited liability
company, up to a one percent interest in any partnership or limited liability
company at least ninety-nine percent of the equity of which is owned by the
Operating Partnership.

            s. NEGATIVE COVENANTS. Without the prior written approval of the
holder(s) of a majority of the Preferred Shares, which approval shall not be
unreasonably withheld, delayed or conditioned with respect to activities that in
the reasonable judgment of such holders would not have an adverse effect on the
holders of the Series A Preferred Shares, the Company shall not:

                  (i) MERGERS. Merge or consolidate with any Person or sell all
      or substantially all its assets, or permit the Operating Partnership to
      merge or consolidate with any entity or sell all or substantially all its
      assets, provided no such approval shall be necessary if such merger or
      consolidation shall not cause a Change of Control to occur (for the
      purpose of this Section 4(s)(i) only, substituting 75% for 50% in the
      definition thereof).

                                       20
<PAGE>

                  (ii) CHARTER AMENDMENTS. Make any amendment to the Certificate
      of Incorporation or By-Laws or the Charter Documents of the Company or the
      Operating Partnership (including to Exhibit 4 to the Partnership Agreement
      Amendment) in a manner that could adversely affect the powers, preferences
      or the rights of the Preferred Shares or the Series A Preferred
      Partnership Units (including any amendment, revision, revocation or other
      change to the Ownership Limit that reduces it below 9.2%) or make any
      amendment to the Certificate of Incorporation or By-Laws or the Charter
      Documents of any wholly-owned Subsidiary of the Company in a manner that
      could adversely affect the powers, preferences or the rights of the
      Preferred Shares, or make any material amendment to the Charter Documents
      of any other Subsidiary of the Company in a manner that could adversely
      affect the powers, preferences or the rights of the Preferred Shares.
      Without limiting the foregoing, the reduction of the Ownership Limit below
      9.2% or the imposition of any capital stock transfer restriction shall be
      deemed to have an adverse effect on the holders of the Series A Preferred
      Shares.

                  (iii) BANKRUPTCY. File for, or otherwise acquiesce in seeking,
      protection under any bankruptcy, insolvency or other similar common law,
      state, local or federal protection statute or regulation, or permit any of
      its Subsidiaries to file for, or otherwise acquiesce in seeking,
      protection under any bankruptcy, insolvency or other similar state, local
      or federal protection statute or regulation.

                  (iv) LOAN DOCUMENTS. Amend, or permit the amendment of, the
      terms of the Loan Documents (as hereinafter defined) in any material
      respect (including, but not limited to, amendments effected in connection
      with work-outs or restructurings of any of the foregoing) in any manner,
      or enter into any refinancing of any of the Loan Documents or any credit,
      loan or other agreement, which amendment, refinancing or credit, loan or
      other agreement would prohibit payment of dividends or any other payment
      due on the Preferred Shares or to a holder or holders of Preferred Shares
      or otherwise could reasonably be expected to materially adversely affect
      the powers, preferences or rights of the Preferred Shares. As used herein,
      "LOAN DOCUMENTS" means (i) the Term Loan Agreement and the other
      agreements and documents entered into in connection therewith), (ii) the
      Amended and Restated Revolving Credit Agreement, dated as of June 8, 2000,
      among the Operating Partnership, the Lenders (as defined therein),
      Bayerische Hypo-Und Vereinsbank, AG and Commerzbank AG and the agreements
      and documents entered into in connection therewith and (iii) the
      agreements set forth on SCHEDULE 4(s)(iv). For avoidance of doubt,
      amendments to the Loan Documents that only change commitment amounts of
      the lenders or interest rates on, or maturity dates of, the indebtedness
      thereunder do not require the consent of the holders of Preferred Shares
      under this subsection.

                  (v) ISSUANCES. Authorize, issue or enter into any agreement
      providing for the issuance (contingent or otherwise) of, or permit the
      Operating Partnership or any other Subsidiary of the Company to authorize,
      issue or enter into any agreement providing for the issuance of, any
      equity rights (such as profit participation) or equity securities (or any
      securities, commitments or agreements convertible into or exchangeable for
      equity rights or equity securities) with rights, including, but not
      limited

                                       21
<PAGE>

      to, rights with respect to dividends, liquidation preference or other
      repurchase rights, senior to or pari passu with the Preferred Shares,
      except for equity rights or equity securities proceeds from the sale of
      which are used within five (5) days of the receipt thereof to pay the Call
      Option Exercise Price for the Preferred Shares to the extent permitted by
      Section 6 hereof. For avoidance of doubt, a Subsidiary of the Company may
      issue preferred interests in such Subsidiary so long as such preferred
      interests are not convertible into or exchangeable for either (i)
      securities issued by the Company which are pari passu or senior to the
      Preferred Shares or (ii) interests in the Operating Partnership which are
      pari passu or senior to the Series A Preferred Partnership Units.

                  (vi) elect not to continue to, comply with all requirements
      necessary to be treated as a "real estate investment trust" within the
      meaning of the Code and the Regulations.

                  (vii) make any distribution on its capital stock to any
      stockholder of the Company other than in cash or with respect to a
      shareholder rights plan, except as set forth in SCHEDULE 4(s)(vii).

                  (viii) make any distribution on its capital stock of any kind
      (including cash) to any stockholder of the Company at any time that a Put
      Option (as hereinafter defined) or a Call Option (as hereinafter defined)
      has been exercised in whole or in part and the put price or call price, as
      applicable, has become due and has not been paid in full in cash by the
      Company.

                  (ix) withdraw as the general partner of the Operating
      Partnership or admit any other person or entity as a general partner of
      the Operating Partnership.

                  (x) take any action, or permit any Subsidiary or other
      Affiliate of the Company to take any action, which would result in (A)
      less than 75% of the assets of the Company qualifying as "real estate
      assets" under Section 856(c)(4)(A) of the Code or the Regulations
      promulgated thereunder, or more than 25% of its assets to consist of
      assets described in Section 856(c)(4)(B) of the Code or the Regulations
      promulgated thereunder, (B) less than 75% of the gross income of the
      Company qualifying as income described in Section 856(c)(3) of the Code
      and the Regulations promulgated thereunder and less than 95% of such gross
      income qualifying as income described in Section 856(c)(2) of the Code or
      the Regulations promulgated thereunder or any material amount of the
      Company's income to be income that the Company believes, acting in good
      faith, would be reasonably likely to constitute income from a "prohibited
      transaction" as defined in Section 857(b)(6)(B)(iii) of the Code and the
      Regulations promulgated thereunder, (C) any material amount of the
      Company's assets to be property described in Section 1221(a)(1) of the
      Code (other than "foreclosure property" as defined in Section 856(e) of
      the Code), or (D) the Company ceasing to be a REIT; provided, however,
      that if as a result of a change in the law after the date hereof a
      violation of a provision contained in (A), (B) or (C) above would not
      cause a Failure by the Company to Maintain REIT

                                       22
<PAGE>

      Status or a Material Adverse Effect, then the Company shall no longer be
      required to comply with such changed provision.

                  (xi) LIQUIDATE. Liquidate, dissolve or effect a
      recapitalization or reorganization of the Company or the Operating
      Partnership in any form of transaction.

                  (xii) RESTRICTED PROPERTY DEBT. Encumber all or any portion of
      the Restricted Properties (as defined in Section7) with indebtedness (not
      including accounts payable but including any indebtedness (whether or not
      secured) of the Subsidiaries which own, or own an equity interest in, any
      of the Restricted Properties) or permit any Subsidiary of the Company that
      owns any of the Restricted Properties, or owns an equity interest in any
      of the Restricted Properties, to guarantee in any manner the obligations
      of any Person, where the aggregate principal amount of such indebtedness
      plus the principal amount of the obligations so guaranteed does not exceed
      $828,000,000 (the "Restricted Property Debt") and any refinancing of such
      debt and guarantees in excess of the Restricted Property Debt is
      hereinafter referred to as a ("Restricted Property Refinancing"), and with
      respect to each Restricted Property individually, not in excess of such
      amount set forth in Schedule 4(s)(xii)(A). In addition, an aggregate
      amount not to exceed $40,000,000 of capitalized leases, equipment
      financing and similar debt may be incurred, with such debt incurred by any
      Subsidiaries relating to the Restricted Properties not to exceed one-third
      of the amount of such aggregate amount. The debt associated with
      FoodBrand, L.L.C. shall not be considered for the purposes of determining
      the foregoing debt levels. Notwithstanding the foregoing, Restricted
      Property Debt shall not include the obligations of the Company and its
      Subsidiaries arising out of that certain letter of credit issued by the
      Bank (as hereinafter defined) for the benefit of Sunrise Special Tax
      District #1 (or any replacements of such letter of credit).

                  t. COMPETITORS. Notwithstanding any provision to the contrary
      herein, (i) no holder of Preferred Shares who is a Competitor (as
      hereinafter defined) shall be entitled to receive any information from the
      Company that has not been publicly disclosed, (ii) the Company shall not
      be obligated to provide any such information to any Competitor, and (iii)
      no such Competitor shall be entitled to exercise any inspection rights
      provided for herein (including, without limitation, in the definition of
      "Failure by the Company to Maintain REIT Status" in Section 5(f)). For
      purposes of this Section, "COMPETITOR" shall mean any Person whose primary
      business activity is developing, owning or operating retail or
      entertainment shopping centers, provided, however, that "Competitor" does
      not include any insurance company, financial institution, pension,
      profit-sharing, employee benefit and retirement plan, individual
      retirement account, mutual fund and institutional investment fund whose
      investors consist primarily of institutions and high net worth
      individuals, in each case regardless of their investment in retail or
      entertainment shopping centers. In addition, in no circumstance shall the
      Buyer be included in the definition of "Competitor."

                  u. DEFINITIONS. For purposes of this Agreement:

                  "MAJOR HOLDER" shall mean a holder of at least one hundred
            thousand (100,000) shares of the Preferred Shares issued and
            outstanding.

                                       23
<PAGE>

                  "SUBSTANTIAL HOLDER" shall mean a holder of at least two
            hundred fifty thousand (250,000) shares of Preferred Shares issued
            and outstanding.

Unless otherwise specified herein, the provisions of this Section 4 shall
terminate at such time as none of the Preferred Shares remain outstanding.

      5.    PUT OPTION.

            (a) GRANT. The Company hereby grants to each holder of Preferred
Shares a right and option (each, a "PUT OPTION") to require the Company to
purchase, and the Company hereby agrees to purchase, all or any portion of the
Preferred Shares held by such holder, subject to the terms and conditions
described below.

            (b) EXERCISE. The Put Option may be exercised by any holder of
Preferred Shares at any time and from time to time (i) after a Change in Control
(as hereinafter defined), (ii) after the Failure by the Company to Maintain REIT
Status (as defined below) for any reason, (iii) after the fifth anniversary of
the Initial Closing Date or (iv) after the occurrence of those events of Event
of Noncompliance set forth in paragraphs (a), (b) (but only if the Event of
Noncompliance under paragraph (b) arises in connection with a breach of Sections
4(c), 4(g), 4(r), 4(s) (except 4(s)(xii)), hereunder or in connection with a
material breach of the material provisions of Sections 5, 6 or 7 hereunder), and
(e) of the definition thereof below (each, a "MATERIAL EVENT OF NONCOMPLIANCE").
The Company shall notify the holders of Preferred Shares (i) at least thirty
(30) days prior to the completion of, or, if later, promptly upon the Company's
learning of, any proposed or consummated Change of Control, (ii) immediately
upon the Company's obtaining knowledge of any Failure by the Company to Maintain
REIT Status and (iii) promptly after the Company's obtaining knowledge of the
occurrence of a Material Event of Noncompliance. Such notice shall include, as
applicable, a reasonably detailed description of the Change in Control,
including the identity of the other party or parties, the consideration received
and the closing date or a detailed description of the facts and/or events
resulting in the Failure by the Company to Maintain REIT Status or the Material
Event of Noncompliance, as the case may be. Upon notice to the Company (a "PUT
OPTION EXERCISE NOTICE"), each holder of Preferred Shares shall have the right
to require the Company to purchase all or any portion of its Preferred Shares
(i) thirty (30) days after receipt from the Company of notice of the
consummation of a Change of Control, (ii) as soon as practicable, but in any
event no less than twenty (20) days, after providing written notice to the
Company in the event of a Failure by the Company to Maintain REIT Status or a
Material Event of Noncompliance, and (iii) at any time after the fifth
anniversary of the issuance date upon ninety (90) days advance notice. Each Put
Option Exercise Notice, in order to be valid, must specify an account to which
funds may be wire transferred.

            (c) PUT OPTION EXERCISE PRICE. For each Preferred Share purchased by
the Company pursuant to this Section 5, the price per share to be paid by the
Company for each Preferred Share which is the subject of the Put Option (the
"PUT OPTION EXERCISE PRICE") shall be an amount equal to:

                  (i) if a Change in Control occurs on or prior to the first
      anniversary of the Initial Closing, the greater of (A) $106 plus all
      accumulated and accrued but unpaid

                                       24
<PAGE>

      dividends through the date of repurchase by the Company and (B) the
      Standard Put Payment (as defined below);

                  (ii) if a Change in Control occurs after the first anniversary
      of the Initial Closing but on or prior to the second anniversary of the
      Initial Closing, the greater of (A) $104.50 plus all accumulated and
      accrued but unpaid dividends through the date of repurchase by the Company
      and (B) the Standard Put Payment;

                  (iii) if a Change in Control Transaction occurs after the
      second anniversary of the Initial Closing but on or prior to the third
      anniversary of the Initial Closing, the greater of (A) $103 plus all
      accumulated and accrued but unpaid dividends through the date of
      repurchase by the Company and (B) the Standard Put Payment;

                  (iv) if (A) a Change in Control occurs after the third
      anniversary of the Initial Closing, (B) there occurs a Failure by the
      Company to Maintain REIT Status that was not the result of a willful and
      intentional, and not inadvertent, act of the Company (provided such
      failure is not a breach of either Section 4(s)(vi) or (x) in either of
      which case subsection (v) below shall govern), or (C) at any time after
      the fifth anniversary of the Initial Closing, the Standard Put Payment;

                  (v) if a Material Event of Noncompliance has occurred, an
      amount equal to (i) the Standard Put Payment, computed as of the date the
      Material Event of Noncompliance has occurred, plus (ii) an amount that,
      assuming a purchase by the holder of a Preferred Share of a Preferred
      Share on the date of the occurrence of the Material Event of Noncompliance
      for a price equal to the Standard Put Payment and taking into account both
      the actual payment of the Standard Put Payment on the date of repurchase
      by the Company and all Regular Dividends paid subsequent to the date the
      Material Event of Noncompliance occurs, would result in an internal rate
      of return to such holder from the date of the occurrence of the Material
      Event of Noncompliance through the date of repurchase by the Company of
      17.62% per annum; or

                  (vi) In addition, if the event giving rise to the exercise of
      the Put Option is a Material Event of Noncompliance or a Failure by the
      Company to Maintain REIT Status, and in such case was the result of the
      willful and intentional, and not inadvertent, act of the Company, then the
      Put Option Exercise Price in such event shall be an amount equal to the
      Increased Put Payment (as defined below).

            (d) PUT OPTION PAYMENT. If a holder of Preferred Shares exercises a
Put Option by timely delivery of a Put Option Exercise Notice, the Company shall
deliver to such holder, by wire transfer of immediately available funds to an
account specified by such holder in the Put Option Exercise Notice, the amount
of the Put Option Exercise Price for each Preferred Share to be repurchased by
the Company on the date specified in the Put Option Exercise Notice, so long as
such date is consistent with the provisions of Section 5(b) (the "PUT OPTION
CLOSING DATE"). Upon delivery of the payment of the Put Option Exercise Price as
provided herein, such Preferred Shares shall no longer be deemed outstanding,
all rights whatsoever with respect to such Preferred Shares shall terminate and
the certificates, if any, evidencing the shares shall be delivered to the
Company for cancellation. In the event that the Put Option is not honored or the

                                       25
<PAGE>

Put Option Exercise Price is not paid in full on the Put Option Closing Date for
any reason and such default is not cured within 90 days (except in connection
with a Change of Control or the Failure of the Company to Maintain REIT Status,
in either of which cases no grace period shall apply), then the Put Option
Exercise Price for each Preferred Share which is the subject of the Put Option
shall be increased to the Increased Put Payment (if such amount is greater than
the Put Option Exercise Price otherwise payable).

            (e) REDEMPTION PREMIUM. Buyer and the Company agree that, because
the Buyer may require that the Company redeem the Preferred Shares at a
redemption price in excess of its issue price, the entire amount of the excess
may constitute an unreasonable redemption premium that will be treated as a
constructive distribution for United States federal income tax purposes. Buyer
generally would take this constructive distribution into account each year in
the same amount as original issue discount would be taken into account if the
preferred stock were treated as a debt security for United States federal income
tax purposes, and account for the distribution as a dividend to the extent so
required under Section 305 of the Code.

            (f)   DEFINITIONS.  For purposes of this Agreement:

            "CHANGE OF CONTROL" shall mean (i) the direct or indirect sale,
      lease, transfer, exchange, assignment or other disposition of all or
      substantially all of the assets of the Company or the Operating
      Partnership to any Person or group of Persons acting in concert as a
      partnership or other group within the meaning of Rule 13d-5 under the 1934
      Act (a "GROUP OF PERSONS"), (ii) the merger or consolidation of the
      Company with or into another entity with the effect that either (a) the
      Company is not the surviving entity (other than a merger consummated
      solely in connection with the reincorporation of the Company into the
      State of Maryland) or (b) the Company is the surviving entity but the
      stockholders of the Company prior to the merger hold less than 50% of the
      combined voting power of the outstanding securities of the Company after
      the merger which ordinarily (and apart from rights accruing under special
      circumstances) have the right to vote in the election for the board
      directors, (iii) the Company ceases to be the sole general partner of the
      Operating Partnership for any reason or the Company holds less than 50% of
      the economic interest of the Operating Partnership for any reason, (iv)
      the replacement of a majority of the Board of Directors of the Company
      (the "BOARD"), over a two-year period, from the directors who constituted
      the Board at the beginning of such period, and such replacement shall not
      have been approved by the Board (or their replacements approved by the
      Board) as constituted at the beginning of such period, or (v) a Person or
      Group of Persons shall, as a result of a tender or exchange offer, open
      market purchases, privately negotiated purchases or otherwise, have become
      the beneficial owner (within the meaning of Rule 13d-3 under the 1934 Act)
      of securities of the Company representing 25% or more of the combined
      voting power of the then outstanding securities of the Company ordinarily
      (and apart from rights accruing under special circumstances) having the
      right to vote in the election of directors. Notwithstanding the foregoing,
      a "Change of Control" shall not be deemed to have occurred solely as a
      result of the Kan Am Group (as hereinafter defined) (i) holding 50% or
      more of the economic interest of the Operating Partnership or (ii)
      becoming the beneficial owner of securities of the Company representing
      25% or more of the combined voting power of the then outstanding

                                       26
<PAGE>

      securities of the Company so long as (A) nominees of any member of the Kan
      Am Group comprise less than 50% of the Board and (B) in any event the Kan
      Am Group is the beneficial owners of securities representing less than 40%
      of the combined voting power of the outstanding Company securities. The
      "Kan Am Group" means Kan Am US, Inc. and any Person that directly or
      indirectly controls, is controlled by, or is under common control with Kan
      Am US, Inc. For purposes of this definition, "control" (including with
      correlative meanings, the terms "controlled by" and "under common control
      with"), as applied to any Person, means the possession, directly or
      indirectly, of the power to direct or cause the direction of the
      management and policies of the Person.

            An "EVENT OF NONCOMPLIANCE" shall be deemed to have occurred if:

                        (a) the Company has not paid in cash in full the amount
      of accumulated and accrued but unpaid dividends on the Preferred Shares
      for four consecutive Dividend Reference Dates (as defined in the
      Certificate of Designations);

                        (b) the Company materially breaches any covenants set
      forth herein or otherwise materially fails to comply with the material
      provisions of the Certificate of Designations, after written notice and a
      ninety (90) day opportunity to cure for non-willful breaches which are
      able to be cured;

                        (c) the Company defaults or any of its Subsidiaries
      defaults in the performance of any obligation or obligations if the effect
      of such default is to cause either (i) an amount having an individual
      principal amount in excess of $50,000,000, (ii) an aggregate principal
      amount in excess of $250,000,000 or (iii) any of the Restricted Property
      Debt to become due prior to its stated maturity (by acceleration or
      otherwise);

                        (d) an "Event of Default" (however characterized) under
      the Loan Documents or any other Material Agreement (as hereinafter
      defined) has occurred which could reasonably be expected to result in a
      Material Adverse Effect, after written notice and a 90 day opportunity to
      cure for non-willful breaches which are able to be cured ("MATERIAL
      AGREEMENT" means an agreement or arrangement to which the Company or any
      of its Subsidiaries is a party, or by which the Company, any of its
      Subsidiaries or any of their properties is bound, which is material to the
      Company and its Subsidiaries taken as a whole);

                        (e) (A) the Company, the Operating Partnership or any
      Significant Subsidiary that owns any of the Restricted Properties shall
      make an assignment for the benefit of creditors, or admit in writing its
      general inability to pay or generally fail to pay its debts as they mature
      or shall commence any case or other proceeding relating to any such entity
      under any bankruptcy, reorganization, insolvency, dissolution or
      liquidation or similar law, (B) any Significant Subsidiary that does not
      own any of the Restricted Properties shall make an assignment for the
      benefit of creditors, or admit in writing its general inability to pay or
      generally fail to pay its debts as they mature or shall commence any case
      or other proceeding relating to any such entity under any bankruptcy,
      reorganization, insolvency, dissolution or liquidation or similar law and
      such assignment, admission, failure or commencement could reasonably be
      expected to

                                       27
<PAGE>

have a Material Adverse Effect, or (C) a petition or application shall be filed
for the appointment of a trustee or other custodian, liquidator or receiver of
the Company, any Significant Subsidiary of the Company or any substantial part
of the assets of any such entity, or a case or other proceeding shall be
commenced against any such entity under any bankruptcy, reorganization,
insolvency, dissolution or liquidation or similar law which petition,
application or proceeding could reasonably be expected to have a Material
Adverse Effect, and any such entity shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition, application, case or
proceeding shall not have been dismissed within 75 days following the filing or
commencement thereof.

                  (f) any representation or warranty of the Company contained
      herein was untrue in any material respect when made.

                  A "FAILURE BY THE COMPANY TO MAINTAIN REIT STATUS" shall be
      deemed to have occurred upon (i) the issuance by the Internal Revenue
      Service of a Notice of Deficiency or its counterpart alleging that the
      Company no longer qualifies as a REIT; (ii) the issuance by any accounting
      firm or law firm engaged by the Company of a written opinion or other
      written conclusion that the Company has failed to comply with the
      requirements for REIT Status in any period, or that a substantial
      likelihood exists that the Company has failed to comply with the
      requirements for REIT Status in any period; (iii) the lapse of ninety (90)
      days after the Buyer and/or a Substantial Holder informs the Company in
      writing, based upon a reasonable investigation conducted by or on behalf
      of the Company, Buyer or a Substantial Holder and with an explanation for
      such conclusion, that a substantial likelihood exists that the Company has
      failed to comply with the requirements for REIT Status without receipt by
      the Buyer and/or the Substantial Holder, as applicable, of a written
      opinion of a nationally recognized accounting firm, based on the conduct
      of a due diligence exercise constituting review of the Company's books and
      records by such accounting firm (and not based on merely statistical
      sampling), that the Company has complied, and continues to comply with,
      the requirements for REIT Status; or (iv) the failure by the Company to
      permit Buyer or a Substantial Holder who is not a Competitor to
      investigate upon three (3) Business Days' notice whether the Company
      continues to comply with the requirements for REIT Status, after Buyer or
      such Substantial Holder has indicated a reasonable belief, based upon
      advice of such Buyer's or Substantial Holder's legal counsel or
      accountants, that an issue exists with respect to the Company's REIT
      Status, unless a Comfort Letter (as hereinafter defined) is delivered
      prior to the termination of such three (3) Business Day period. If a
      Comfort Letter is delivered after such three (3) Business Day period, any
      investigation commenced prior to such time shall cease. "Comfort Letter"
      shall mean a written opinion of a nationally recognized accounting firm
      addressed to the Buyer and the applicable Substantial Holder that, upon an
      appropriate due diligence investigation by such accounting firm, the facts
      and circumstances giving rise to the reasonable belief of the Buyer or
      such Substantial Holder do not threaten the REIT Status of the Company. An
      investigation by the Buyer or a Substantial Holder who is not a Competitor
      for this purpose shall include the Company allowing immediate access to
      its books and records and the books and records of its Subsidiaries
      (including all tax returns, reports and declarations and all
      communications from governmental authorities), and promptly affording the
      opportunity

                                       28
<PAGE>

      to interview in person officers, employees, and agents of the Company
      without such persons refusing to provide information based upon a claim of
      privilege or confidentiality or for use for any other reason.

                  "INCREASED PUT PAYMENT" means, with respect to any Preferred
      Share, (i) the amount necessary to generate the Base Internal Rate of
      Return (as defined in the Certificate of Designations but computed
      substituting 17.62% for 14.62% in such definition), plus (ii) the amount
      of all accumulated and accrued but unpaid dividends on such Preferred
      Share (other than Regular Dividends) computed as of the date of repurchase
      by the Company. Notwithstanding the foregoing or any other provision of
      this Agreement or the Certificate Designations to the contrary, the
      Increased Put Payment with respect to any outstanding Preferred Share
      computed as of a particular date shall be in the same amount as the
      Increased Put Payment with respect to each other outstanding Preferred
      Share computed as of such date. For avoidance of doubt, if the Increased
      Put Payment becomes payable pursuant to this Agreement and is not paid for
      any reason prior to any voluntary or involuntary liquidation, dissolution
      or winding up of the Company (a "Liquidation"), the excess of the amount
      of the Increased Put Payment over the amount payable under Section 1 of
      the Certificate of Designations in a Liquidation shall be paid with
      respect to the Preferred Shares in addition to the amount payable under
      such Section 1 prior to any payment or distribution on any Junior
      Securities (as defined in the Certificate of Designations). A sample
      calculation of the Base Internal Rate of Return is attached hereto as
      EXHIBIT H.

                  "PERSON" means an individual, a partnership, a corporation, a
      limited liability company, an association, a joint stock company, a trust,
      a joint venture, an unincorporated organization or a governmental entity
      or any department, agency or political subdivision thereof.

                  "REIT STATUS" means meeting the requirements of, and
      maintaining the election for being, a "real estate investment trust"
      within the meaning of the Code and the Regulations.

                  "STANDARD PUT PAYMENT" means, with respect to any Preferred
      Share, (i) the amount necessary to generate the Base Internal Rate of
      Return (as defined in the Certificate of Designations), plus (ii) the
      amount of all accumulated and accrued but unpaid dividends on such
      Preferred Share (other than Regular Dividends), each computed as of the
      date of repurchase by the Company. Notwithstanding the foregoing or any
      other provision of this Agreement or the Certificate Designations to the
      contrary, the Standard Put Payment with respect to any outstanding
      Preferred Share computed as of a particular date shall be in the same
      amount as the Standard Put Payment with respect to each other outstanding
      Preferred Share computed as of such date.

      6.    CALL OPTION.

            a. GRANT. Buyer hereby grants to the Company a right and option (a
"CALL OPTION") to require each holder of Preferred Shares to sell, and each
holder of Preferred Shares

                                       29
<PAGE>

hereby agrees to sell all, but not less than all, the Preferred Shares held by
such holder, subject to the terms and conditions described below.

            b. EXERCISE. The Call Option may be exercised by the Company at any
time after the first anniversary of the Initial Closing Date, provided, however,
in the event of a Kan Am Redemption (as hereinafter defined) prior to the first
anniversary of the Initial Closing Date, simultaneously with, and as a condition
to, the consummation of such Kan Am Redemption, the Company has the right and
obligation to exercise the Call Option. The Company shall notify the holders of
Preferred Shares at least forty-five (45) days prior to exercise of the Call
Option.

            b. CALL OPTION EXERCISE PRICE. Unless the Ownership Waiver Limit
Agreement provides otherwise, for each Preferred Share purchased by the Company
pursuant to this Section 6 the price per share for the Call Option (the "CALL
OPTION EXERCISE PRICE") is payable in cash and in an amount equal to: (i) if the
Call Option is being exercised prior to the first anniversary of the Initial
Closing Date in connection with a Kan Am Redemption, the greater of (A) $106
plus all accumulated and accrued but unpaid dividends through the date of
repurchase by the Company and (B) the Early Call Repurchase Price (as
hereinafter as herein defined, (ii) if the Call Option is being exercised on any
day after the first anniversary of the Initial Closing Date but prior to the
date which is thirty (30) months after the Mandatory Closing Date (the "EARLY
CALL PERIOD"), $100 plus the Yield Maintenance Premium (as defined below) (the
"EARLY CALL REPURCHASE PRICE") and (iii) if the Call Option is being exercised
on any day on or after 30 months from the Mandatory Closing Date, the Standard
Call Payment. A sample calculation of an exercise of a Call Option by the
Company at the end of the 16th month after Initial Closing is attached hereto as
EXHIBIT K.

            d. CALL OPTION PAYMENT. If the Company exercises a Call Option by
timely delivery of a Call Option Exercise Notice, the holders of Preferred
Shares shall deliver certificates, if any, evidencing the shares subject to such
notice against delivery by the Company of the Call Option Exercise Price for
each Preferred Share by wire transfer of immediately available funds to an
account specified by such holder not later than 45 days following the date on
which the Call Option Exercise Notice is given to the holders of Preferred
Shares (the "CALL OPTION CLOSING DATE"). Upon delivery of the payment of the
Call Option Exercise Price as provided herein, such Preferred Shares shall no
longer be deemed outstanding, and all rights whatsoever with respect to such
Preferred Shares (except the right of the holders of Preferred Shares to receive
the Call Option Exercise Price without interest) shall terminate. In the event
that the Call Option Exercise Price is not paid in full on the Call Option
Closing Date, or within three (3) days of such date if the Company made a good
faith effort to deliver the Call Option Exercise Price on such date, then the
Call Exercise Price shall be the Increased Call Payment. If one or more holders
of Preferred Shares do not specify an account for payment of the Call Option
Exercise Price, the Company shall deposit on the Call Option Closing Date the
Call Option Exercise Price for all of such holders' Preferred Shares with a bank
or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of such respective holders who did
not specify an account, with irrevocable instructions and authority to the bank
or trust corporation to pay the Call Option Exercise Price for such shares to
their respective holders on or after the Call Option Closing Date upon receipt
of such holders' certificates representing the Preferred Shares. As of the Call
Option Closing Date, the deposit

                                       30
<PAGE>

shall constitute full payment of the Preferred Shares to their holders, and from
and after the Call Option Closing Date such shares shall be deemed to be no
longer outstanding, and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no rights with respect thereto except the
rights to receive from the bank or trust corporation payment of the Call Option
Exercise Price of the shares, without interest, upon surrender of their
certificates therefor.

            e. DEFINITIONS. For purposes of this Agreement:

                  "INCREASED CALL PAYMENT" means, with respect to any Preferred
      Share, (i) the amount necessary to generate the Base Internal Rate of
      Return (as defined in the Certificate of Designations, but computed
      substituting 17.62% for 14.62% in such definition) plus (ii) the amount of
      all accumulated and accrued but unpaid dividends on such Preferred Shares
      (other than Regular Dividends), computed as of the date of repurchase by
      the Company. Notwithstanding the foregoing or any other provision of this
      Agreement or the Certificate Designations to the contrary, the Increased
      Call Payment with respect to any outstanding Preferred Share computed as
      of a particular date shall be in the same amount as the Increased Call
      Payment with respect to each other outstanding Preferred Share computed as
      of such date. For avoidance of doubt, if the Increased Call Payment
      becomes payable pursuant to this Agreement and is not paid for any reason
      prior to a Liquidation, the excess of the amount of the Increased Call
      Payment over the amount payable under Section 1 of the Certificate of
      Designations in a Liquidation shall be paid with respect to the Preferred
      Shares in addition to the amount payable under such Section 1 prior to any
      payment or distribution on any Junior Securities (as defined in the
      Certificate of Designations).

                  "KAN AM REDEMPTION" means the acquisition by the Company or
      the Operating Partnership of capital stock of the Company or Partnership
      Interests held by the Kan Am Group in an amount in excess of $175,000,000.

                  "STANDARD CALL PAYMENT" means, with respect to any Preferred
      Share, (i) the amount necessary to generate the Base Internal Rate of
      Return (as defined in the Certificate of Designations) plus (ii) the
      amount of all accumulated and accrued but unpaid dividends on such
      Preferred Share (other than Regular Dividends), each computed as of the
      date of repurchase by the Company. Notwithstanding the foregoing or any
      other provision of this Agreement or the Certificate Designations to the
      contrary, the Standard Call Payment with respect to any outstanding
      Preferred Share computed as of a particular date shall be in the same
      amount as the Standard Call Payment with respect to each other outstanding
      Preferred Share computed as of such date. Sample calculations of the
      Standard Call Payment in connection with the exercise by the Company of
      Call Options in the month that is thirty-nine (39) months and forty eight
      (48) months after the Initial Closing Date are attached hereto as EXHIBIT
      I.

                  "YIELD MAINTENANCE PREMIUM" means for each Preferred Share for
      which such premium must be determined, the positive excess, if any, as of
      the date of the repurchase of such Preferred Share by the Company of (a)
      the Yield Maintenance Cash Flows (calculated as described below) with
      respect to such Preferred Share discounted to

                                       31
<PAGE>

      the date of repurchase by the Company of such Preferred Share at a monthly
      discount rate equal to 1/12 multiplied by the sum of 2.00% plus the
      interpolated yield on the U.S. Treasury Bill with a term that most closely
      approximates the period of time from the date of repurchase of such
      Preferred Share by the Company through the end of the Early Call Period
      over (b) $100. The "YIELD MAINTENANCE CASH FLOWS" with respect to a
      Preferred Share is the monthly cash flows otherwise due to the holder of
      such Preferred Share for which the Yield Maintenance Premium is being
      calculated, including all Regular Dividends and the Standard Call Payment
      (other than amounts required by clause (ii) of the definition of Standard
      Call Payment) that would be payable to the holder of such Preferred Share
      on the assumption that all Regular Dividends are paid in full in cash on
      each Dividend Reference Date and that the Standard Call Payment was paid
      in cash in full on the first day after the end of the Early Call Period.
      Notwithstanding the foregoing or any other provision of this Agreement or
      the Certificate Designations to the contrary, the Yield Maintenance
      Premium with respect to any outstanding Preferred Share computed as of a
      particular date shall be in the same amount as the Yield Maintenance
      Premium with respect to each other outstanding Preferred Share computed as
      of such date. A sample calculation of the Yield Maintenance Payment is
      attached hereto as EXHIBIT J.

      7. SALE OF RESTRICTED PROPERTIES.

            a. Except in compliance with this Section 7, the Company will not
sell, or allow any of its Subsidiaries to sell, directly or indirectly, all or
any portion of any of the properties described on SCHEDULE 7 attached hereto
(each such property is referred to as a "RESTRICTED PROPERTY" and collectively
such properties are referred to as "RESTRICTED PROPERTIES") (whether the sale is
of a fee interest in a Restricted Property or an equity interest in a Restricted
Property). Prior to the sale of all or any portion of a Restricted Property or
the granting of consent by the holders of a majority of the Preferred Shares
pursuant to Section 4(s)(xii) to a Restricted Property Refinancing (such a sale
or a Restricted Property Refinancing is referred to herein as a "RESTRICTED
PROPERTY TRANSACTION"), the Company shall provide each holder of Preferred
Shares with a notice and certification as follows:

            (i) a copy of the proposed closing statement for the Restricted
      Property Transaction (and, promptly after the closing of a Restricted
      Property Transaction, the Company shall deliver to each holder of
      Preferred Shares, a copy of the final closing statement, purchase or
      financing contract, and title company disbursement statement relating to
      the Restricted Property Transaction certified as true, correct and
      complete by an authorized representative of the Company with knowledge of
      the Restricted Property Transaction.)

            (ii) a certification that no Event of Noncompliance shall have
      occurred and be continuing, and no Event of Noncompliance shall occur as a
      result of the consummation of the Restricted Property Transaction.

            b. The Company shall have the right to sell, or allow its
Subsidiaries to sell, directly or indirectly, all or any portion of the
Restricted Properties, and, subject to obtaining the

                                       32
<PAGE>

prior written consent of the holders of a majority of the Preferred Shares in
accordance with Section 4(s)(xii), the Company and its Subsidiaries shall have
the right to consummate a Restricted Property Refinancing, subject to the right
of each holder of Preferred Shares to require the Company to purchase a portion
(which may be as many as all) of such holder's Preferred Shares concurrently
with the closing of such Restricted Property Transaction with a portion of the
proceeds thereof. The closing of a Restricted Property Transaction shall be
conditioned upon provision for payment to each holder of Preferred Shares of the
amount owed pursuant to Section 7(c). If such payment or provision therefore
cannot be made for any reason, the proposed Restricted Property Transaction
shall not be consummated. If, in accordance with Section 7(c), not all the
Preferred Shares requested to be repurchased by the Company are to be
repurchased, repurchases of Preferred Shares shall be made ratably from each
holder based on the number of Preferred Shares held by each holder requesting a
repurchase; provided that no holder shall have repurchased from such holder more
shares than such holder has requested to have repurchased.

            c. In connection with the consummation of a Restricted Property
Transaction the Company shall be obligated to purchase up to that number of
Preferred Shares equal to (i) the applicable release price set forth in SCHEDULE
7 (the "RELEASE PRICE") for the Restricted Property which is the subject of the
Restricted Property Transaction divided by (ii) $100. If the Restricted Property
Transaction is consummated on any day prior to the date which is thirty (30)
months after the Mandatory Closing Date (the "EARLY SALE PERIOD"), the purchase
price for each share shall be the Early Sale Repurchase Price (as hereinafter
defined). If the Restricted Property Transaction is consummated on any day on or
after the date which is thirty (30) months after the Mandatory Closing Date, the
purchase price for each share shall be the Standard Sale Repurchase Price (as
hereinafter defined).

            d. For purposes of this Agreement:

                  "EARLY SALE REPURCHASE PRICE" means, with respect to any
      Preferred Share, (i) $100 plus (ii) the Yield Maintenance Premium plus any
      additional dividends (other than Regular Dividends (as defined in the
      Certificate of Designations)) accrued and unpaid on such Preferred Share.

                  "STANDARD SALE REPURCHASE PRICE" means, with respect to any
      Preferred Share, (i) the amount necessary to generate the Base Internal
      Rate of Return (as defined in the Certificate of Designations) plus (ii)
      the amount of all accumulated and accrued but unpaid dividends on such
      Preferred Share (other than Regular Dividends), each computed as of the
      date of repurchase by the Company. Notwithstanding the foregoing or any
      other provision of this Agreement or the Certificate Designations to the
      contrary, the Standard Sale Repurchase Price with respect to any
      outstanding Preferred Share computed as of a particular date shall be in
      the same amount as the Standard Sale Repurchase Price with respect to each
      other outstanding Preferred Share computed as of such date.

                  "YIELD MAINTENANCE PREMIUM" means for each Preferred Share for
      which such premium must be determined, the positive excess, if any, as of
      the date of repurchase of such Preferred Share by the Company, of (a) the
      Yield Maintenance Cash

                                       33
<PAGE>

      Flows (calculated as described below) with respect to such Preferred Share
      to the date of repurchase by the Company of such Preferred Share
      discounted at a monthly discount rate equal to 1/12 multiplied by the sum
      of 2.00% plus the interpolated yield on the U.S. Treasury Bill with a term
      that most closely approximates the period of time from the date of
      repurchase of such Preferred Share by the Company through the end of the
      Early Sale Period over (b) $100. The "YIELD MAINTENANCE CASH FLOWS" with
      respect to a Preferred Share is the monthly cash flows otherwise due to
      the holder of such Preferred Share for which the Yield Maintenance Premium
      is being calculated, including all Regular Dividends and the Standard Sale
      Repurchase Price (other than amounts required by clause (ii) of the
      definition of Standard Sale Repurchase Payment) that would be payable to
      the holder of such Preferred Share on the assumption that all Regular
      Dividends are paid in full in cash on each Dividend Reference Date and
      that the Standard Sale Repurchase Price was paid in cash in full on the
      first Business Day after the end of the Early Sale Period. Notwithstanding
      the foregoing or any other provision of this Agreement or the Certificate
      Designations to the contrary, the Yield Maintenance Premium with respect
      to any outstanding Preferred Share computed as of a particular date shall
      be in the same amount as the Yield Maintenance Premium with respect to
      each other outstanding Preferred Share computed as of such date.

      8. TRANSFER AGENT INSTRUCTIONS.

            The Company shall issue irrevocable instructions to its transfer
agent, and to any subsequent transfer agent, to issue certificates, registered
in the name of each holder of Preferred Shares or its respective nominee(s), for
the Conversion Shares and the Warrant Shares in such amounts as specified from
time to time by each holder of Preferred Shares to the Company upon conversion
of the Preferred Shares or exercise of the Warrants. Prior to registration of
the Conversion Shares and the Warrant Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g). If a
holder of Preferred Shares provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act,
and such holder of Preferred Shares represents to the Company that it has
satisfied any conditions on which such opinion of counsel is based, or a holder
of Preferred Shares provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144(k) (or any successor thereto), the
Company shall permit the transfer, and, in the case of the Conversion Shares and
the Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such holder
and without any restrictive legend. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the holders of
Preferred Shares by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 8 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 8, that the holders of Preferred Shares shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without the posting of any
bond or other security being required.

                                       34
<PAGE>

      9. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

            a. INITIAL CLOSING DATE. The obligation of the Company to issue and
sell the Initial Preferred Shares to Buyer at the Initial Closing is subject to
the satisfaction, at or before the Initial Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:

            (i) Buyer shall have executed each of the Transaction Documents to
      which it is a party and delivered the same to the Company.

            (ii) Buyer shall have delivered to the Company the Purchase Price
      (less the amounts withheld pursuant to Sections 4(h) and 4(i)) for the
      Initial Preferred Shares being purchased by Buyer at the Initial Closing
      by wire transfer of immediately available funds pursuant to the wire
      instructions provided by the Company.

            (iii) the Ownership Limit Waiver Agreement, including the
      certificate attached thereto, shall be been delivered to the Company
      executed by Buyer in the form attached hereto as EXHIBIT F (the "OWNERSHIP
      LIMIT WAIVER").

             (iv) the representations and warranties of Buyer, including those
      made pursuant to the Ownership Limit Waiver Agreement, shall be true and
      correct as of the date when made and as of the Initial Closing Date as
      though made at that time (except for representations and warranties that
      speak as of a specific date, which shall be true and correct as of such
      date), and Buyer shall have performed, satisfied and complied with the
      covenants, agreements and conditions required by the Transaction Documents
      to be performed, satisfied or complied with by Buyer at or prior to the
      Closing Date.

            b. MANDATORY CLOSING DATE. The obligation of the Company hereunder
to issue and sell the Mandatory Preferred Shares to Buyer at the Mandatory
Closing is subject to the satisfaction, at or before such Mandatory Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion:

            (i) Buyer shall have delivered to the Company the Purchase Price
      (less the amounts withheld pursuant to Sections 4(h) and 4(i)) for the
      Mandatory Preferred Shares being purchased by Buyer at the Mandatory
      Closing by wire transfer of immediately available funds pursuant to the
      wire instructions provided by the Company.

            (ii) the representations and warranties of Buyer, including those
      made pursuant to the Ownership Limit Waiver Agreement, shall be true and
      correct as of the date when made and as of the Mandatory Closing Date as
      though made at that time (except for representations and warranties that
      speak as of a specific date, which shall be true and correct as of such
      date), and Buyer shall have performed, satisfied and complied with the
      covenants, agreements and conditions required by the Transaction Documents
      to be performed, satisfied or complied with by Buyer at or prior to the
      Mandatory Closing Date.

                                       35
<PAGE>

      10.   CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.

            a. INITIAL CLOSING DATE. The obligation of Buyer hereunder to
purchase the Initial Preferred Shares from the Company at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for Buyer's sole
benefit and may be waived by Buyer at any time in its sole discretion:

            (i) the Company shall have executed each of the Transaction
      Documents and delivered the same to Buyer.

            (ii) the Certificate of Designations shall have been filed with the
      Secretary of State of the State of Delaware, and a copy thereof certified
      by such Secretary of State, or a facsimile of such a copy and
      certification, shall have been delivered to Buyer.

            (iii) the Common Stock (x) shall be designated for quotation or
      listed on the Principal Market and (y) shall not have been suspended by
      the SEC or the Principal Market from trading on the Principal Market nor
      shall suspension by the SEC or the Principal Market have been threatened
      either (A) in writing by the SEC or the Principal Market or (B) by falling
      below the minimum listing maintenance requirements of the Principal
      Market; and the Conversion Shares issuable upon conversion of the Initial
      Preferred Shares shall be listed upon the Principal Market.

            (iv) the representations and warranties of the Company shall be true
      and correct as of the date when made and as of the Initial Closing Date as
      though made at that time (except for representations and warranties that
      speak as of a specific date, which shall be true and correct as of such
      date) and the Company shall have performed, satisfied and complied with
      the covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by the Company at or
      prior to the Closing Date. Buyer shall have received a certificate,
      executed by a duly authorized officer of the Company, dated as of the
      Closing Date, to the foregoing effect and as to such other matters as may
      be reasonably requested by Buyer including, but not limited to, an update
      as of the Closing Date regarding the representation contained in Section
      3(c) above.

            (v) Buyer shall have received the opinion of Hogan & Hartson L.L.P.
      dated as of the Initial Closing Date, in form, scope and substance
      reasonably satisfactory to Buyer and in substantially the form of EXHIBIT
      D attached hereto.

            (vi) the Company shall have executed and delivered to Buyer the
      Initial Preferred Stock Certificates (in such denominations as Buyer shall
      request) for the Initial Preferred Shares being purchased by Buyer at the
      Initial Closing.

            (vii) the Board of Directors of the Company shall have adopted
      resolutions consistent with Section 3(b) above and in a form reasonably
      acceptable to Buyer (the "TRANSACTIONS RESOLUTIONS").

                                       36
<PAGE>

            (viii) as of the Initial Closing Date, the Company shall have
      reserved out of its authorized and unissued Common Stock, solely for the
      purpose of effecting the conversion of the Initial Preferred Shares and
      issuance of the Initial Warrant Shares, an agreed upon number of shares of
      Common Stock.

            (ix) the Company shall have delivered to Buyer a certified copy of
      the Certificate of Incorporation as certified by the Secretary of State of
      the State of Delaware, and a good standing certificate for the Company as
      certified by the Secretary of State of the State of Delaware, each as of a
      date within fifteen (15) days of the Initial Closing Date.

            (x) the Company shall have delivered to Buyer a secretary's
      certificate, dated as of the Initial Closing Date, as to (A) the
      Transaction Resolutions, (B) resolutions of the Company's Board of
      Directors increasing the Ownership Limit to 9.225% (the "OWNERSHIP LIMIT
      RESOLUTIONS"), (C) the Certificate of Incorporation, (D) the By-Laws, with
      (A), (B) and (C) each as in effect at the Initial Closing, (E) the Limited
      Partnership Agreement of the Operating Partnership and all amendments
      thereto and (F) the incumbency signatures of those officers of the Company
      executing this Agreement or any document or instrument contemplated
      hereby.

            (xi) the Company shall have made all filings required to be made
      prior to closing under all applicable federal and state securities laws
      necessary to consummate the issuance of the Securities pursuant to this
      Agreement in compliance with such laws.

            (xii) the Company shall have delivered to Buyer such other documents
      relating to the transactions contemplated by this Agreement as Buyer or
      its counsel may reasonably request.

            (xiii) a certificate shall have been delivered to Buyer executed by
      Bayerische Hypo-Und Vereinsbank AG (the "BANK") in which the Bank (i)
      consents to the transactions contemplated hereby and by the other
      Transaction Documents, (ii) indicates that no Event of Default under the
      Loan Documents will be triggered as a result of the consummation of the
      transactions contemplated hereby and by the other Transaction Documents
      and (iii) indicates that, to the knowledge of the Bank, no Event of
      Default has occurred under the Loan Documents.

            (xiv) an Ownership Limit Waiver Agreement shall be been delivered to
      Buyer executed by the Company in the form attached hereto as EXHIBIT F.

            (xv) an amendment to the Limited Partnership Agreement of the
      Operating Partnership in the form of EXHIBIT G (the "PARTNERSHIP AGREEMENT
      AMENDMENT") shall have been duly adopted.

                                       37
<PAGE>

            b. MANDATORY CLOSING DATE. The obligation of Buyer hereunder to
purchase the Mandatory Preferred Shares from the Company at the Mandatory
Closing is subject to the satisfaction, at or before the Mandatory Closing Date,
of each of the following conditions, provided that these conditions are for
Buyer's sole benefit and may be waived by Buyer at any time in its sole
discretion:

            (i) all dividends accumulated and accrued but unpaid on the Initial
      Preferred Shares through the close of business on the day preceding the
      Mandatory Closing Date shall be paid in full in cash on the Mandatory
      Closing Date prior to the issuance of the Mandatory Preferred Shares.

            (ii) the Company shall have complied with and satisfied all of the
      requirements of Section 1(c).

            (iii) the Certificate of Designations shall be in full force and
      effect and shall not have been amended since the Initial Closing Date, and
      a copy thereof certified by the Secretary of State of the State of
      Delaware as of a date within fifteen (15) days of the Mandatory Closing
      Date shall have been delivered to Buyer.

            (iv) the Common Stock (x) shall be designated for quotation or
      listed on the Principal Market and (y) shall not have been suspended by
      the SEC or the Principal Market from trading on or delisted from the
      Principal Market nor shall delisting or suspension by such Principal
      Market have been threatened either (A) in writing by the SEC or the
      Principal Market or (B) by falling below the minimum listing maintenance
      requirements of the Principal Market; and all of the shares of Common
      Stock that may be issuable as Conversion Shares or Warrant Shares shall be
      listed upon the Principal Market.

            (v) the representations and warranties of the Company shall be true
      and correct as of the date when made and as of the Mandatory Closing Date
      as though made at that time (except for representations and warranties
      that speak as of a specific date, which shall be true and correct as of
      such date and except as such representations and warranties may no longer
      be true and correct as the result of events that do not constitute a
      Material Adverse Effect, individually or in the aggregate, and that do not
      breach any of the covenants of the Company contained herein) and the
      Company shall have performed, satisfied and complied with the covenants,
      agreements and conditions required by the Transaction Documents or the
      Certificate of Designations to be performed, satisfied or complied with by
      the Company at or prior to the Mandatory Closing Date. Buyer shall have
      received a certificate, executed by the Chief Executive Officer of the
      Company, dated as of the Mandatory Closing Date, to the foregoing effect
      and as to such other matters as may be reasonably requested by Buyer
      including, but not limited to, an update as of the Mandatory Closing Date
      regarding the representation contained in Section 3(c) above.

            (vi) Buyer shall have received the opinion of Hogan and Hartson
      L.L.P. dated as of the Mandatory Closing Date, in form, scope and
      substance reasonably satisfactory to Buyer and in substantially the form
      of EXHIBIT D attached hereto.

                                       38
<PAGE>

            (vii) the Company shall have executed and delivered to Buyer the
      Preferred Stock Certificates (in such denominations as Buyer shall
      request) for the Mandatory Preferred Shares being purchased by Buyer at
      the Mandatory Closing.

            (viii) the Transaction Resolutions and the Ownership Limit
      Resolutions shall be in full force and effect and shall not have been
      amended as of the Mandatory Closing Date.

            (ix) as of the Mandatory Closing Date, the Company shall have
      reserved out of its authorized and unissued Common Stock, solely for the
      purpose of effecting the conversion of the Preferred Shares or the
      issuance of the Warrant Shares, a number of shares of Common Stock equal
      to an agreed upon number of shares of Common Stock which would be issuable
      upon conversion in full of the then outstanding Preferred Shares.

            (x) the Company shall have delivered to Buyer a good standing
      certificate for the Company as certified by the Secretary of State of the
      State of Delaware dated no more than three (3) days before the Mandatory
      Closing Date.

            (xi) the Company shall have delivered to Buyer a secretary's
      certificate, dated as of the Mandatory Closing Date, certifying as to (A)
      the Transaction Resolutions, (B) the Ownership Limit Resolutions, (C) the
      Certificate of Incorporation, (C) the By-Laws, and (D) the Limited
      Partnership Agreement of the Operating Partnership and all amendments
      thereto, each as in effect at the Mandatory Closing.

            (xii) the Company shall have made all filings under all applicable
      federal and state securities laws necessary to consummate the issuance of
      the Securities pursuant to this Agreement in compliance with such laws.

            (xiii) the Company shall have delivered to Buyer such other
      documents relating to the transactions contemplated by this Agreement as
      Buyer or its counsel may reasonably request.

      11. INDEMNIFICATION. In consideration of Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless Buyer and each other holder of the
Securities and all of their stockholders, officers, partners, members,
directors, employees and direct or indirect investors and any of the foregoing
persons' agents or other representatives (including, but not limited to, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(ii) any breach of any covenant, agreement or

                                       39
<PAGE>

obligation of the Company contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (iii) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery or performance of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, or (iv) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 11 shall be the same as those set forth in
Sections 6(a) and (d) of the Registration Rights Agreement, including, but not
limited to, those procedures with respect to the settlement of claims and the
Company's rights to assume the defense of claims.

      12.   GOVERNING LAW; MISCELLANEOUS.

            a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

            b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

                                       40
<PAGE>

            c. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.

            d. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

            e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between Buyer, the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor Buyer makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be amended or
waived other than by an instrument in writing signed by the Company and the
holders of at least two-thirds (66 2/3%) of the outstanding Preferred Shares or,
if this Agreement is to be amended or waived prior to the issuance of any
Preferred Shares, an instrument in writing signed by the Company and Buyer. Any
such instrument shall be binding upon all parties hereto. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Preferred Shares or Warrants then outstanding. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents or the Certificate of
Designations unless the same consideration also is offered to all of the parties
to the Transaction Documents or holders of Preferred Shares, as the case may be.

            f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally or (ii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:

      If to the Company:

            The Mills Corporation
            1300 Wilson Boulevard
            Suite 400
            Arlington, VA 22209
            Attention:  Chief Executive Officer (one copy)
                        General Counsel (one copy)

                                       41
<PAGE>

      with a copy to:

            Hogan & Hartson L.L.P.
            555 Thirteenth Street, N.W.
            Washington, D.C. 20004
            Attention:  Alan L. Dye, Esq.

      If to Buyer:

            iStar Financial Inc.
            1114 Avenue of the Americas
            New York, New York  10036
            Attention:  President  (one copy)
                        Chief Financial Officer (one copy)

      with a copy to:

            iStar Financial Inc.
            1114 Avenue of the Americas
            New York, New York  10036
            Attention:  Chief Executive Officer  (one copy)
                        General Counsel (one copy)

            and

            Katten Muchin Zavis
            525 West Monroe, Suite 1600
            Chicago, Illinois 60661
            Attention:  Nina B. Matis, Esq.

or at such other address and/or to the attention of such other person as the
recipient party has specified by written notice given to the party sending such
notice five days prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other
communication or (B) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service or receipt from a
nationally recognized overnight delivery service in accordance with clause (i)
or (ii) above, respectively.

            g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any holders of Preferred Shares; provided, however, that (1) this
Agreement shall not inure to the benefit of any holder of Preferred Shares who
has not agreed in writing to be bound by its terms; (2) no Preferred Shares may
be transferred if, as a result thereof, the Company would be required to
register such shares pursuant to the 1934 Act; (3) no Preferred Shares may be
transferred to a transferee that is not an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act; and (4)
Buyer may not transfer or assign its obligations hereunder with respect to the
Mandatory Closing. The Company shall not assign this

                                       42
<PAGE>

Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least two-thirds (66-2/3%) of the Preferred Shares
then outstanding, including by merger or consolidation, except pursuant to a
Change of Control with respect to which the Company is in compliance with the
terms and conditions of the Transaction Documents and the Certificate of
Designations. The Company shall cooperate with Buyer and each holder of
Preferred Shares in pledging and/or transferring Preferred Shares and Warrants
so long as such transfers are in compliance with the terms and conditions of
this Agreement.

            h. SURVIVAL. Unless this Agreement is terminated under Section
12(k), the representations and warranties of the Company and the Buyer contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4 and 5,
and the indemnification provisions set forth in Section 11, shall survive the
Closings.

            i. PUBLICITY. The Company and Buyer shall have the right to approve
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although Buyer shall be consulted by
the Company in connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).

            j. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

            k. TERMINATION. In the event that the Initial Closing shall not have
occurred with respect to Buyer on or before five (5) Business Days from the date
hereof due to the Company's or Buyer's failure to satisfy the conditions set
forth in Sections 9(a) and 10(a) above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party; provided, however, that if this Agreement is terminated pursuant to this
Section 12(k), the Company shall remain obligated to reimburse Buyer for the
expenses described in Section 4(h) above.

            l. PLACEMENT AGENT. The Company acknowledges that it has engaged
Banc of America Securities LLC as placement agent in connection with the sale of
the Preferred Shares, which placement agent may have formally or informally
engaged other agents on its behalf. The Company shall be solely responsible for
the payment of any placement agent's fees or broker's commissions relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold Buyer harmless against, any liability, loss or expense (including, but not
limited to, attorneys' fees and out-of-pocket expenses) arising in connection
with any such claim.

                                       43
<PAGE>

            m. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

            n. REMEDIES. Buyer and each holder of the Securities shall have all
rights and remedies set forth in the Transaction Documents and the Certificate
of Designations and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.

            o. PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments pursuant to the Transaction Documents or the Certificate of
Designations or Buyer or other holder of Securities enforces or exercises their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, but not
limited to, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

                  [Remainder of page intentionally left blank.
                            Signature page follows.]

                                       44
<PAGE>

      IN WITNESS WHEREOF, the Company and Buyer have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

COMPANY:                              BUYER:

THE MILLS CORPORATION                 ISTAR PREFERRED HOLDINGS LLC

By: /S/ PETER B. MCMILLAN               By:   JAY SUGARMAN
   --------------------------------         ----------------------------
   Name: Peter B. McMillan                  Name: Jay Sugerman
   Title: President and Chief               Title: Chief Executive Officer
          Operating Officer

<PAGE>

                                    SCHEDULES

Schedule 3(a)(i)         Subsidiaries
Schedule 3(a)(ii)        Significant Subsidiaries
Schedule 3(c)(i)         Capitalization of the Company
Schedule 3(c)(ii)        Capitalization Diagram
Schedule 3(e)(i)-(iv)    Conflicts
Schedule 3(f)            SEC Documents
Schedule 3(g)            Material Changes
Schedule 3(h)(i)-(ii)    Litigation
Schedule 3(n)            Employee Relations
Schedule 3(o)(i)-(iii)   Intellectual Property
Schedule 3(p)            Environmental Laws
Schedule 3(t)(i)-(ii)    Indebtedness
Schedule 3(u)            Tax Status
Schedule 3(v)            Certain Transactions
Schedule 4(e)(iv)        Joint Ventures
Schedule 4(s)(iv)        Loan Documents
Schedule 4(s)(vii)       Distributions
Schedule 4(s)(xii)(A)    Restricted Property Debt
Schedule 4(s)(xii)(B)    Equipment Financing
Schedule 7               Restricted Properties

                                    EXHIBITS

Exhibit A         Form of Certificate of Designations
Exhibit B         Form of Warrant
Exhibit C         Form of Registration Rights Agreement
Exhibit D         Form of Company Counsel Opinion
Exhibit E         Reserved
Exhibit F         Ownership Limit Waiver Agreement
Exhibit G         Limited Partnership Agreement Amendment
Exhibit H         Examples of Calculations of Base Internal Rate of Return
Exhibit I         Examples of Calculations of Standard Call Payments
Exhibit J         Examples of Calculations of Yield Maintenance Premium
Exhibit K         Examples of Calculations of Call Option Exercise Price<Page>

                                                                    EXHIBIT 4.7

                                 AMENDMENT NO. 1
                            DATED AS OF MAY 11, 2001
                                     TO THE
                          SECURITIES PURCHASE AGREEMENT
                           DATED AS OF APRIL 27, 2001

      This Amendment No. 1 (this "Amendment"), dated as of May 11, 2001, is
between The Mills Corporation, a Delaware Company (the "Company"), The Mills
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership") and iStar Preferred Holdings LLC, a Delaware limited liability
company (the "Buyer").

                                    RECITALS

      A. The Company and the Buyer are parties to that certain Securities
Purchase Agreement dated as of April 27, 2001 (the "Securities Purchase
Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Securities Purchase Agreement.

      B. The Initial Closing has been consummated but the Mandatory Closing has
not yet occurred.

      C. In order to provide more assurance with respect to the protection of
the REIT Status of the Company and the value of the Buyer's investment in the
Company, the Company, the Operating Partnership and the Buyer desire to execute
and deliver amendments and modifications to certain of the documents executed in
connection with the Initial Closing which effectuate various changes to the
structure of the transaction contemplated by the Mandatory Closing but which
changes are being effected in such a manner so as not to affect the economics of
the transaction.

                                   AGREEMENTS

      In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

      SECTION 1. AMENDMENTS AND ADDITIONS TO THE TRANSACTION DOCUMENTS. In
connection with the consummation of the Mandatory Closing on the date hereof,
the Company, the Operating Partnership (as applicable) and the Buyer agree to
execute and, if applicable, deliver the following documents:

      (a) an Amended and Restated Ownership Limit Waiver Agreement in the form
attached hereto as Exhibit A (the "Amended and Restated Ownership Limit Waiver
Agreement").

      (b) a Second Amendment to the Limited Partnership Agreement of the
Operating
<Page>

Partnership (the "Second Partnership Agreement Amendment") providing for:

            (i) an Amended and Restated Exhibit 4 to the Limited Partnership
            Agreement of the Operating Partnership (Designation, Preferences and
            Rights of Series A Cumulative Convertible Preferred Partnership
            Units of The Mills Limited Partnership), in the form attached hereto
            as Exhibit B (which, among other things, re-designates the "Series A
            Cumulative Convertible Preferred Partnership Units" as "Series A-1
            Cumulative Convertible Preferred Partnership Units"); and

            (ii) an Exhibit 5 to the Limited Partnership Agreement of the
            Operating Partnership (Designation, Preferences and Rights of Series
            A-2 Cumulative Convertible Preferred Partnership Units of The Mills
            Limited Partnership), in the form attached hereto as Exhibit C.

      (c) an Amendment No. 1 to the Registration Rights Agreement in the form
attached hereto as Exhibit D.

      (d) the Amended and Restated Contingent Securities Purchase Warrant in the
form attached hereto as Exhibit E (the "Warrants").

      SECTION 2. AMENDMENTS TO SECTION 1 OF THE SECURITIES PURCHASE AGREEMENT.
The second sentence of Section 1(a) shall be amended to read in its entirety:

            "Subject to the satisfaction of the conditions set forth in Section
            1(c), 9(b) and 10(b), the Company shall issue and sell to Buyer and
            Buyer agrees to purchase from the Company all, and not less than
            all, of the Mandatory Preferred Shares unless the provisions of
            Section 13 hereof require that less than all the Mandatory Preferred
            Shares be issued to Buyer, in which event the Operating Partnership
            shall issue and sell to Buyer and Buyer shall purchase from the
            Operating Partnership that number of Series A-2 Preferred Units (as
            defined in the Limited Partnership Agreement, as amended, of the
            Operating Partnership) as determined pursuant to the provisions of
            Section 13 and the Company shall issue and sell to Buyer and Buyer
            shall purchase from the Company that number of Preferred Shares as
            determined pursuant to the provisions of Section 13."

      SECTION 3. AMENDMENTS TO SECTION 2 OF THE SECURITIES PURCHASE AGREEMENT.
The definition of the term "Securities" in Section 2(a) shall be amended to
include those Series A-2 Preferred Units, if any, purchased by Buyer at the
Mandatory Closing or issuable to Buyer upon exchange of Preferred Shares and the
Common Units (as hereinafter defined) issuable upon conversion of such Series
A-2 Preferred Units.

            Buyer understands that the certificates or other instruments
representing the Series A-2 Preferred Units and any Common Units (as defined in
the Limited Partnership Agreement of the Operating Partnership), if any, shall
bear a restrictive legend in substantially the following form:

                                       2
<Page>

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
            STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
            SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
            REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
            OF 1933, AS AMENDED, AND QUALIFICATION PURSUANT TO ANY APPLICABLE
            STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
            ACCEPTABLE FORM, THAT REGISTRATION AND QUALIFICATION ARE NOT
            REQUIRED UNDER SAID ACT OR LAWS OR (II) UNLESS SOLD PURSUANT TO RULE
            144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
            MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
            OTHER LOAN, REPURCHASE FACILITY, OR OTHER FINANCING ARRANGEMENT
            SECURED BY THE SECURITIES.

Buyer agrees to comply with the restrictions set forth in the legend above and
to require any transferee to so agree as a condition of transfer. The legend set
forth above shall be removed and the Company shall issue a certificate or other
instrument without such legend to the holder of the Securities upon which it is
stamped, if (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Operating
Partnership with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act, or (iii) such holder provides the
Operating Partnership with reasonable assurances that the Securities can be sold
pursuant to Rule 144(k) promulgated under the 1933 Act (or any successor
thereto).

      SECTION 4. AMENDMENTS TO SECTION 3 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 3(b). Section 3(b) shall be amended to read in its entirety:

            "The Company has the requisite corporate power and authority and the
            Operating Partnership has the requisite partnership power and
            authority, in each case and as applicable and to the extent it is a
            party thereto, to enter into and perform its respective obligations
            under the Securities Purchase Agreement, this Amendment, the Amended
            and Restated Ownership Limit Waiver Agreement, the Registration
            Rights Agreement and Amendment No. 1 thereto, the Partnership
            Agreement Amendment (as defined in Section 10 of the Securities
            Purchase Agreement), as amended by the Second Partnership Agreement
            Amendment, the Warrants and each of the other agreements entered
            into by the parties hereto in connection with the transactions
            contemplated by the Securities Purchase Agreement, as amended
            hereby, (collectively the "TRANSACTION DOCUMENTS"), and to issue the
            Securities in accordance with the terms hereof and thereof, as

                                       3
<Page>

            amended hereby. The execution and delivery of the Transaction
            Documents by the Company and the Operating Partnership, as
            applicable, the adoption, execution and filing of the Certificate of
            Designations by the Company, the adoption and execution of the
            Partnership Agreement Amendment, and the Second Partnership
            Agreement Amendment, and the consummation by the Company and the
            Operating Partnership of the transactions contemplated hereby and
            thereby, including, but not limited to, the issuance of the
            Preferred Shares, Series A-2 Preferred Units, if any, and Warrants
            and the reservation for issuance and the issuance of the Conversion
            Shares, Common Units and Warrant Shares issuable upon conversion or
            exercise thereof, have been duly authorized by the Company's Board
            of Directors (or a duly authorized committee thereof) in the case of
            the Company and by the Company as the General Partner of the
            Operating Partnership in the case of the Operating Partnership, and
            no further consent or authorization is required by the Company, its
            Board of Directors or its stockholders or the Operating Partnership.
            The Transaction Documents have been duly executed and delivered by
            the Company and the Operating Partnership, as applicable. The
            Transaction Documents constitute the valid and binding obligations
            of the Company enforceable against the Company and/or of the
            Operating Partnership enforceable against the Operating Partnership,
            as applicable, in accordance with their terms, except as such
            enforceability may be limited by applicable bankruptcy, insolvency,
            reorganization, moratorium, liquidation or similar laws relating to,
            or affecting generally, the enforcement of creditors' rights and
            remedies. The Certificate of Designations has been filed with the
            State of Delaware and is in full force and effect, enforceable
            against the Company in accordance with its terms and has not been
            amended, rescinded or revoked in any way. The Partnership Agreement
            Amendment and the Second Partnership Agreement Amendment will have
            been duly adopted by the General Partner of the Operating
            Partnership prior to the Mandatory Closing and will be in full force
            and effect as of the Mandatory Closing, enforceable against the
            Operating Partnership in accordance with their terms, and shall not
            have been further amended."

      (b) SECTION 3(c)(ii). The following sentence shall be added to Section
3(c)(ii) as the last sentence thereof:

            "Other than the Series A-1 Preferred Units of the Operating
            Partnership held by the General Partner in connection with the
            issuance by the Company of the Initial Preferred Shares, there are
            no Preferred Units of the Operating Partnership issued or
            outstanding as of immediately prior to the Mandatory Closing."

      (c) SECTION 3(d). The following shall be added to the end of Section 3(d):

            The Series A-2 Preferred Units are duly authorized and, upon
            issuance in

                                       4
<Page>

            accordance with the terms hereunder, shall be validly issued, fully
            paid and nonassessable, free from all taxes, liens and charges with
            respect to the issuance thereof and entitled to the rights and
            preferences set forth in Exhibit 5 to the Second Partnership
            Agreement Amendment. 3,589,835 Common Units have been duly
            authorized for issuance upon conversion of the Series A-2 Preferred
            Units, and upon such conversion the Common Units will be validly
            issued and free from all taxes, liens and charges with respect to
            the issue thereof, and the holders shall be entitled to all rights
            accorded a holder of Common Units by the Operating Partnership.
            Assuming the accuracy of the representations and warranties of Buyer
            contained in Section 2 hereof, the issuance of Series A-2 Preferred
            Units, if required by the provisions of Section 13 hereof, will be
            exempt from registration under the 1933 Act.

      (d) SECTION 3(e). Section 3(e) shall be amended to read in its entirety:

            NO CONFLICTS. Except as disclosed in SCHEDULE 3(e)(i), the
            execution, delivery and performance of the Transaction Documents by
            the Company and the Operating Partnership, as applicable, the
            performance by the Company of its obligations under the Certificate
            of Designations, the performance by the Operating Partnership of its
            obligations under the Partnership Agreement Amendment and the Second
            Partnership Agreement Amendment, and the consummation by the Company
            and the Operating Partnership of the transactions contemplated
            hereby and thereby (including, but not limited to, the reservation
            for issuance and issuance of the Conversion Shares, the Warrant
            Shares and, if applicable, the Series A-2 Preferred Units and Common
            Units) will not (i) result in a violation of the Charter Documents
            of the Company, the Operating Partnership or any Significant
            Subsidiary; (ii) conflict with, or constitute a default (or an event
            which with notice or lapse of time or both would become a default)
            under, or give to others any rights of termination, amendment,
            acceleration or cancellation of, any agreement, indenture or
            instrument to which the Company, the Operating Partnership or any of
            the Company's other Subsidiaries is a party and the termination,
            amendment, acceleration or cancellation of which would reasonably be
            expected to result, either individually or in the aggregate, in a
            Material Adverse Effect; (iii) result in a violation of any law,
            rule, regulation, order, judgment or decree (including federal and
            state securities laws and regulations and the rules and regulations
            of the Principal Market (as hereinafter defined)) applicable to the
            Company, the Operating Partnership or any Significant Subsidiary or
            by which any property or asset of the Company, the Operating
            Partnership or any Significant Subsidiary is bound or affected.
            Except as disclosed in SCHEDULE 3(e)(ii), none of the Company, the
            Operating Partnership or any of the Company's other Subsidiaries is
            in violation of its respective Charter Documents, except where any
            such violations and defaults could not reasonably be expected to
            result, either individually or in the aggregate, in a Material
            Adverse Effect. Except as disclosed in

                                       5
<Page>

            SCHEDULE 3(e)(iii), none of the Company, the Operating Partnership
            or any of the Company's other Subsidiaries is in violation of any
            term of or in default under any contract, agreement, mortgage,
            indebtedness, indenture, instrument, judgment, decree or order or
            any statute, rule or regulation applicable to the Company, the
            Operating Partnership or the Company's other Subsidiaries,
            respectively, or by which any of their respective property is bound,
            except where such violations and defaults could not reasonably be
            expected to result, either individually or in the aggregate, in a
            Material Adverse Effect. The business of the Company and its
            Subsidiaries is not being conducted, and shall not be conducted, in
            violation of any law, ordinance or regulation of any governmental
            entity, except where such violations could not reasonably be
            expected to result, either individually or in the aggregate, in a
            Material Adverse Effect. Except as specifically contemplated by this
            Agreement and as required under the 1933 Act and applicable state
            securities laws, neither the Company nor the Operating Partnership
            is required to obtain any consent, authorization or order of, or
            make any filing or registration with, any court or governmental
            agency or any regulatory or self-regulatory agency in order for it
            to execute, deliver or perform any of its obligations under or
            contemplated by the Transaction Documents or, in the case of the
            Company, to perform its obligations under the Certificate of
            Designations or, in the case of the Operating Partnership, to
            perform its obligations under the Partnership Agreement Amendment or
            the Second Partnership Agreement Amendment, including pursuant to
            Exhibit 5 thereto, in each case in accordance with the terms hereof
            or thereof. Except as disclosed in SCHEDULE 3(e)(iv), all consents,
            authorizations, orders, waivers, filings and registrations that the
            Company or the Operating Partnership is required to obtain as
            described in the preceding sentence have been obtained or effected
            on or prior to the date hereof. The Company is not in violation of
            the listing requirements of the Principal Market and has no actual
            knowledge of any facts which would reasonably lead to delisting or
            suspension of the Common Stock by the Principal Market in the
            foreseeable future.

      SECTION 5. AMENDMENTS TO SECTION 4 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 4(c). Section 4(c) shall be amended to read in its entirety:

            "REPORTING STATUS. Until the earlier of (i) the date which is five
            and one-half (5 1/2) years from the Mandatory Closing Date, (ii)
            such time as no Conversion Shares or Warrant Shares are held by
            Investors (as defined in the Registration Rights Agreement) or are
            issuable to Investors upon the conversion of Preferred Shares,
            redemption of Common Units of the Operating Partnership or exercise
            of Warrants held by Investors and (iii) one month after the date on
            which no Preferred Shares or Series A-2 Preferred Units remain
            issued and outstanding (the "REPORTING PERIOD"), the Company shall
            file all reports required to be filed with the SEC

                                       6
<Page>

            pursuant to the 1934 Act, and the Company shall not terminate its
            status as an issuer required to file reports under the 1934 Act even
            if the 1934 Act or the rules and regulations thereunder would
            otherwise permit such termination. Notwithstanding the foregoing,
            upon a Change of Control (and, if any holder(s) of Preferred Shares
            or Series A-2 Preferred Units exercise a Put Option in connection
            therewith, upon the payment in full of the Put Option Exercise Price
            due by the Company or the Operating Partnership to such holder(s)),
            the requirements of this Section 4(c) shall terminate."

      (b) "AS LONG AS ANY PREFERRED SHARES REMAIN OUTSTANDING." In each instance
where the phrase "as long as any Preferred Shares remain outstanding" or similar
words or phrases appear, such phrase shall be amended and interpreted to mean
"as long as any Preferred Shares or Series A-2 Preferred Units remain
outstanding."

      (c) SECTIONS 4(e) AND 4(k). The final sentence of Sections 4(e) and 4(k)
shall be amended so that the phrase "and shall not trade in the Company's
securities so long as it is in possession of material, non-public information"
shall be amended to read in its entirety:

            "and acknowledges and agrees that securities laws prohibit it from
            trading in the Company's securities on the basis of material,
            non-public information in its possession"

      (d) SECTION 4(f). Section 4(f) shall be amended to read in its entirety:

                  "The Company and the Operating Partnership shall use their
                  best efforts to at all times have authorized, and reserved for
                  the purpose of issuance, no less than the aggregate maximum
                  number of shares of Common Stock or Common Units, as
                  applicable, that may be issuable upon conversion of all
                  outstanding Preferred Shares or Series A-2 Preferred Units,
                  redemption of all Common Units issued upon conversion of
                  Series A-2 Preferred Units, and exercise of all outstanding or
                  issuable Warrants (without regard to any limitations on
                  exercises other than limitations on exercise to the extent
                  that Preferred Shares or Series A-2 Preferred Units are
                  outstanding)."

      (e) SECTION 4(j). Section 4(j) shall be amended to read in its entirety:

            "On or before the sixth (6th) Business Day following the Mandatory
            Closing Date, the Company shall file a Form 8-K with the SEC
            describing the terms of the transactions contemplated by the
            Transaction Documents and the transactions consummated on the
            Initial Closing Date and the Mandatory Closing Date. "

      (f) SECTION 4(s). The preamble of Section 4(s) shall be amended to read in
its entirety:

            "Without the prior written approval of the holder(s) of a majority
            of the

                                       7
<Page>

            issued and outstanding Preferred Shares and Series A-2 Preferred
            Units, considered together as a single class with each Preferred
            Share having one vote and each Series A-2 Preferred Unit having one
            vote, which approval shall not be unreasonably withheld, delayed or
            conditioned with respect to activities that in the reasonable
            judgment of such holder(s) would not have an adverse effect on the
            holder(s) of the Preferred Shares or Series A-2 Preferred Units, the
            Company shall not:"

      (g) SECTION 4(s)(ii). Section 4(s)(ii) shall be amended to read in its
entirety:

            "CHARTER AMENDMENTS. Make any amendment to the Certificate of
            Incorporation or By-Laws or the Charter Documents of the Company or
            the Operating Partnership (including to Exhibit 4 or 5 to the
            Partnership Agreement) in a manner that could adversely affect the
            powers, preferences or the rights of the Preferred Shares, Series
            A-1 Preferred Units (as defined in the Partnership Agreement) or
            Series A-2 Preferred Units (including any amendment, revision,
            revocation or other change to the Ownership Limit that reduces it
            below 9.225%) or make any amendment to the Certificate of
            Incorporation or By-Laws or the Charter Documents of any
            wholly-owned Subsidiary of the Company in a manner that could
            adversely affect the powers, preferences or the rights of the
            Preferred Shares, Series A-1 Preferred Units or Series A-2 Preferred
            Units or make any material amendment to the Charter Documents of any
            other Subsidiary of the Company in a manner that could adversely
            affect the powers, preferences or the rights of the Preferred
            Shares, Series A-1 Preferred Units or Series A-2 Preferred Units.
            Without limiting the foregoing, the reduction of the Ownership Limit
            below 9.225% or the imposition of any capital stock transfer
            restriction shall be deemed to have an adverse effect on the holders
            of the Preferred Shares."

      (h) SECTION 4(s)(iv). Section 4(s)(iv) shall be amended so that each
reference to "Preferred Shares" shall be amended to state "Preferred Shares,
Series A-1 Preferred Units or Series A-2 Preferred Units"

      (i) SECTION 4(s)(v)). Section 4(s)(v) shall be amended so that the word
"distribution" shall be added after the word "dividend" and the phrase "or
Series A-2 Preferred Units" shall be added after the phrase "Preferred Shares"
and Subsection (ii) of Section 4(s)(v) shall be amended to state in its entirety
"interests in the Operating Partnership which are pari passu or senior to the
Series A-1 Preferred Units or Series A-2 Preferred Units."

      (j) SUBSECTION (i) OF SECTION 4(t). Subsection (i) of Section 4(t) shall
be amended to state in its entirety "no holder of Preferred Shares or Series A-2
Preferred Units who is a Competitor (as hereinafter defined) shall be entitled
to receive any information from the Company that has not been publicly
disclosed,".

                                       8
<Page>

      (k) SECTION 4(u). Section 4(u) shall be amended to read in its entirety:

            ""MAJOR HOLDER" shall mean a holder of at least one hundred thousand
            (100,000) Preferred Shares and/or Series A-2 Preferred Units in the
            aggregate."

            ""SUBSTANTIAL HOLDER" shall mean a holder of at least two hundred
            fifty thousand (250,000) Preferred Shares and/or Series A-2
            Preferred Units in the aggregate."

      (l) FINAL SENTENCE. The final sentence of Section 4 shall read in its
entirety:

            "Unless otherwise specified herein, the provisions of this Section 4
            shall terminate at such time as no Preferred Shares or Series A-2
            Preferred Units remain outstanding."

      SECTION 6. AMENDMENTS TO SECTION 5 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 5(b). The second sentence of Section 5(b) shall be amended so
that the Company shall notify the holders of Preferred Shares and the holders of
Series A-2 Preferred Units of the matters and at the times specified therein.

      (b) DEFINITION OF EVENT OF NONCOMPLIANCE. Subsection (a) of the definition
of "event of Noncompliance" shall be amended to read in its entirety:

            "(a) the Company has not paid in cash in full the amount of
            accumulated and accrued but unpaid dividends on the Preferred Shares
            for four consecutive Dividend Reference Dates (as defined in the
            Certificate of Designations) or the Operating Partnership has not
            paid in cash in full the amount of accumulated and accrued but
            unpaid distributions on the Series A-2 Preferred Units for four
            consecutive Distribution Reference Dates (as defined in the
            Partnership Agreement Amendment, as amended by the Second
            Partnership Agreement Amendment)"

      SECTION 7. AMENDMENTS TO SECTION 6 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 6(b). The last sentence of Section 6(b) shall be amended so
that the Company shall notify the holders of Preferred Shares and the holders of
Series A-2 Preferred Units of the matters and at the times specified therein.

      (b) SECTION 6(c). Section 6(c) shall be amended so that the phrase "Unless
the Ownership Limit Waiver Agreement provides otherwise," shall be deleted.

      SECTION 8. AMENDMENTS TO SECTION 7 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 7(a). Section 7(a) shall be amended so that the Company shall
provide the holders of Preferred Shares and the holders of Series A-2 Preferred
Units with notice of the

                                       9
<Page>

matters and at the times specified therein.

      (b) SUBSECTION (i) OF SECTION 7(a). Subsection (i) of Section 7(a) shall
be amended so that the Company shall deliver to each holder of Preferred Shares
and each holder of Series A-2 Preferred Units such information and documents at
the times as provided for therein.

      (c) SECTION 7(b). Section 7(b) shall be amended to read in its entirety:

            "The Company shall have the right to sell, or allow its Subsidiaries
            to sell, directly or indirectly, all or any portion of the
            Restricted Properties, and, subject to obtaining the prior written
            consent of the holder(s) of a majority of the issued and outstanding
            Preferred Shares and Series A-2 Preferred Units, considered together
            as a separate class with each Preferred Share having one vote and
            each Series A-2 Preferred Unit having one vote as provided for in
            Section 4(s), the Company and its Subsidiaries shall have the right
            to consummate a Restricted Property Refinancing, subject to the
            right of each holder of Preferred Shares to require the Company, and
            the right of each holder of Series A-2 Preferred Units to require
            the Operating Partnership, to purchase a portion (which may be as
            many as all) of such holder's Preferred Shares or Series A-2
            Preferred Units, as applicable, concurrently with the closing of
            such Restricted Property Transaction with a portion of the proceeds
            thereof. The aggregate amount of Preferred Shares plus Series A-2
            Preferred Units that the Company and the Operating Partnership,
            respectively, shall be obligated to purchase in connection with a
            Restricted Property Transaction shall be the amount determined
            pursuant to Section 7(c). The closing of a Restricted Property
            Transaction shall be conditioned upon provision for payment to each
            holder of Preferred Shares and/or Series A-2 Preferred Units of the
            amount owed pursuant to Section 7(c). If such payment or provision
            therefore cannot be made for any reason, the proposed Restricted
            Property Transaction shall not be consummated. If, in accordance
            with Section 7(c), not all the Preferred Shares and Series A-2
            Preferred Units requested to be repurchased by the Company and the
            Operating Partnership, as applicable, in connection with a
            Restricted Property Transaction are to be repurchased, repurchases
            of Preferred Shares and Series A-2 Preferred Units shall be made
            ratably from each holder based on the number of Preferred Shares
            and/or Series A-2 Preferred Units, as applicable, held by each
            holder requesting a repurchase; provided that no holder shall have
            repurchased from such holder more shares than such holder has
            requested to have repurchased."

      (d) SECTION 7(c). The first sentence of Section 7(c) shall be amended to
read in its entirety:

            "In connection with the consummation of a Restricted Property
            Transaction, the aggregate amount Preferred Shares plus Series A-2
            Preferred Units that the Company and Operating Partnership,
            respectively,

                                       10
<Page>

            shall be obligated to purchase shall be equal to (i) the applicable
            release price set forth in SCHEDULE 7 (the "RELEASE PRICE") for the
            Restricted Property which is the subject of the Restricted Property
            Transaction divided by (ii) $100."

      SECTION 9. AMENDMENTS TO SECTIONS 9 AND 10 OF THE SECURITIES PURCHASE
AGREEMENT.

      (a) SECTIONS 9(b) AND 10(b). Sections 9(b) and 10(b) shall be amended so
that the Company's obligation to issue and sell to the Buyer and the Buyer's
obligation to purchase from the Company the Mandatory Preferred Shares, and, if
applicable, the Operating Partnership's obligation to issue and sell to Buyer
and the Buyer's obligation to purchase from the Operating Parnership Series A-2
Preferred Units as determined pursuant to the provisions of Section 13, shall be
subject to the provisions otherwise set forth in Section 9(b) and 10(b)
respectively.

      (b) SECTION 10(b). Section 10(b) shall be further amended by adding a new
Section 10(b)(xiv) to read in its entirety as follows:

            "a certificate shall have been delivered to Buyer executed by the
            Bank in the form attached hereto as Exhibit F."

      SECTION 10. AMENDMENTS TO SECTION 12 OF THE SECURITIES PURCHASE AGREEMENT.

      (a) SECTION 12(e). Section 12(e) shall be amended so that the Agreement
may not be amended or waived "other than by an instrument in writing signed by
the Company, the Operating Partnership and the holder(s) of at least two-thirds
(66-2/3%) of the issued and outstanding Preferred Shares and Series A-2
Preferred Units, considered together as a separate class with each Preferred
Share having one vote and each Series A-2 Preferred Unit having one vote and
that no such amendment shall be effective unless it applies to all holders of
Preferred Shares, Series A-2 Preferred Units and Warrants then outstanding.

      (b) SECTION 12(f). Section 12(f) shall be amended to provide that notices
to the Operating Partnership shall be delivered to the Company, as General
Partner of the Operating Partnership, in the same manner and to the same address
as notices to the Company shall be delivered.

      (c) SECTION 12(g). Section 12(g) shall be amended so that each reference
in the first and third sentences of Section 12(g) to "Preferred Shares" shall be
a reference to "Preferred Shares or Series A-2 Preferred Units" and that the
Company shall be required to obtain the prior written consent of the holder(s)
of at least two-thirds (66-2/3%) of the issued and outstanding Preferred Shares
and Series A-2 Preferred Units, considered together as a separate class with
each Preferred Share having one vote and each Series A-2 Preferred Unit having
one vote before it may assign the Agreement or any rights or obligations
hereunder.

      SECTION 11. ADDITION OF SECTION 13 TO THE SECURITIES PURCHASE AGREEMENT. A
new Section 13 is added to the Securities Purchase Agreement to read in its
entirety as follows:

                                       11
<Page>

      "13. PROVISIONS REGARDING EXCHANGES FOR OPERATING PARTNERSHIP UNITS.

            a. If as of the Mandatory Closing the Buyer cannot make the
representations of the Buyer called for by the Amended and Restated Ownership
Limit Waiver Agreement or if the Company advises the Buyer in writing that,
after reasonable due diligence conducted in cooperation with the Buyer, the
Company has concluded in good faith that the Tax Conditions (as hereinafter
defined) would not be satisfied, then a portion of the investment to be made by
the Buyer on the Mandatory Closing (the "MANDATORY CLOSING INVESTMENT") shall be
made in Series A-2 Preferred Units (as defined in the Limited Partnership
Agreement of the Operating Partnership, as amended (the "PARTNERSHIP
AGREEMENT")) of the Operating Partnership. Subject to the provisions of the
following sentence, that portion of the Mandatory Closing Investment to be made
in such Series A-2 Preferred Units shall be an amount sufficient to reduce the
Buyer's ownership of the capital stock of the Company to less than 9.9% of the
value of the capital stock of the Company (taking into account any attribution
of the Company's capital stock to the Buyer arising from the Buyer's 10% or
greater shareholders, as determined under Section 318(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), as modified by Section 856(d) of the
Code), such value to be computed utilizing the average closing price of the
Company's Common Stock on the New York Stock Exchange for the ten trading days
ending on the trading day immediately preceding the Mandatory Closing Date and
assuming that the value of the Preferred Shares is equal to the Series A
Conversion Value (as defined in the Certificate of Designations) of such
Preferred Shares. If the Buyer cannot make the representation called for in
Section (a) of the Certificate of Representations and Covenants for Ownership
Limit Waiver attached as Exhibit B to the Amended and Restated Ownership Limit
Waiver Agreement, then the provisions of the immediately preceding sentence
shall apply except that 9.225% shall be substituted for 9.9%. If a portion of
the Mandatory Preferred Investment is to be made in such Series A-2 Preferred
Units, then for each Preferred Share that would otherwise be purchased at the
Mandatory Closing but for the provisions of this Section 13(a), the Buyer shall
purchase in lieu thereof that number of Series A-2 Preferred Units equal to the
quotient of one divided by the Conversion Multiple (as defined in the
Partnership Agreement) (the Company represents and warrants to the Buyer that as
of the date hereof the Conversion Multiple is one). The purchase price of each
Series A-2 Preferred Unit purchased at the Mandatory Closing shall be $96.

            b. If any proposed pledgee or subsequent transferee of Preferred
Shares or Common Shares cannot make the representations called for by the
Amended and Restated Ownership Limit Waiver Agreement or if the Company advises
such pledgee or subsequent transferee in writing that, after reasonable due
diligence conducted in cooperation with such pledgee or subsequent transferee,
the Company has concluded in good faith that the Tax Conditions would not be
satisfied, then, simultaneously with the effectiveness of the pledge or
transfer, a portion of the Preferred Shares to be pledged or transferred to such
pledgee or subsequent transferee shall be contributed to the Operating
Partnership in exchange for Series A-2 Preferred Units in order to reduce such
pledgee's or subsequent transferee's ownership of the capital stock of the
Company to less than 9.9% of the value of the capital stock of the Company
(taking into account any attribution of the Company's capital stock to the
pledgee or subsequent transferee arising from the pledgee's or subsequent
transferee's 10% or greater shareholders, as determined under Section 318(a) of
the Code, as modified by Section 856(d) of the Code), such

                                       12
<Page>

value to be computed utilizing the average closing price of the Company's Common
Stock on the New York Stock Exchange for the ten trading days ending on the
trading day immediately preceding the date of the pledge or transfer and
assuming that the value of the Preferred Shares is equal to the Series A
Conversion Value of such Preferred Shares as of such date. If the Buyer cannot
make the representation called for in Section (a) of the Certificate of
Representations and Covenants for Ownership Limit Waiver attached as Exhibit B
to the Amended and Restated Ownership Limit Waiver Agreement, then the
provisions of the immediately preceding sentence shall apply except that 9.225%
shall be substituted for 9.9%. In any contribution and exchange to be made
pursuant to this Section 13(b), the requisite contribution and exchange shall be
made first of Common Shares being pledged or transferred and then of Preferred
Shares being pledged or transferred. Common Shares shall be exchanged for Common
Units (as defined in the Partnership Agreement) as hereinafter provided and
Preferred Shares shall be exchanged for Series A-2 Preferred Units as
hereinafter provided. For each Common Share that would otherwise be pledged or
transferred, the pledgee or transferee shall receive in lieu thereof that number
of Common Units equal to the quotient of one divided by the Conversion Multiple
then in effect. For each Preferred Share that would otherwise be pledged or
transferred, the pledgee or transferee shall receive in lieu thereof that number
of Series A-2 Preferred Units equal to the quotient of one divided by the
Conversion Multiple then in effect.

            c. If at any time there would have been, but for the application of
the remedies set forth herein, a violation of one or more of the Tax Conditions,
then without any action on the part of either the holders of the Preferred
Shares or the Common Shares or the Company or the Operating Partnership, a
number of Preferred Shares or Common Shares, as applicable, shall automatically
be contributed to the Operating Partnership in exchange for Series A-2 Preferred
Units or Common Units, as applicable, in an amount sufficient to prevent the
violation of the Tax Conditions from occurring and effective as of the close of
business on the business day prior to the first day on which the Tax Conditions
would not have been satisfied but for such contribution and exchange. In any
contribution to be made pursuant to this Section 13(c), the requisite
contribution shall be made first of Common Shares prior to any contribution of
Preferred Shares. If the exchange involves Series A Preferred Shares, the
exchange shall be effected through a contribution of the Series A Preferred
Shares to the Operating Partnership in exchange for Series A-2 Preferred Units
(with the result that the Operating Partnership would become an owner of Series
A Preferred Shares). The Operating Partnership and the Company shall then
convert such Series A Preferred Shares into Common Stock and the Operating
Partnership shall retain such Common Stock at least until the holder of the
Series A-2 Preferred Units issued in exchange for the contribution of such
Series A Preferred Shares has disposed of those Series A-2 Preferred Units. In
any event, the exchange of the Series A Preferred Shares for Series A-2
Preferred Units, and any redemption proceeds, conversion, distributions or other
payments made thereafter on the Series A Preferred Shares contributed to the
Operating Partnership or on any Common Stock into which they were converted by
the Partnership, shall not be included in any calculations relating to dividends
or other payments due to holders of Series A Preferred Shares other than the
Operating Partnership. For each Common Share to be exchanged, such holder shall
receive that number of Common Units equal to the quotient of one divided by the
Conversion Multiple then in effect. For each Preferred Share to be exchanged,
the holder shall receive in lieu thereof that number of Series A-2 Preferred
Units equal to the quotient of one divided by the Conversion Multiple then in
effect. Such exchange shall be

                                       13
<Page>

effective as of the close of business on the business day prior to the first day
on which the Tax Conditions would not have been satisfied but for such exchange.

      d. Each holder of Preferred Shares shall have the right to exchange all or
any portion of the Preferred Shares for Series A-2 Preferred Units for any
reason at any time and from time to time. Any exchange described herein would be
effected in the manner described in the following paragraph (e).

      e. In no event and under no circumstances (other than in the event of
fraud with respect to the Certificate (as defined in the Amended and Restated
Ownership Limit Waiver Agreement) or the breach of the representation with
respect to direct ownership of tenants under Section 2.5 of the Amended and
Restated Ownership Limit Waiver Agreement, in each case as determined by a
final, non-appealable judgment of a court of competent jurisdiction) shall any
of the Series A Preferred Shares, the Series A-2 Preferred Units or securities
issued or issuable upon conversion or exchange thereof become "Excess Stock" as
defined in the Charter while held by the Buyer or a Subsequent Holder to which
the Ownership Limit Waiver in the Amended and Restated Ownership Limit Waiver
Agreement applies. If any of the conditions to the effectiveness of the
Ownership Limit Waiver is violated by any Person, there shall be an automatic
exchange, with an effective date as of the day prior to the event giving rise to
such violation, of Series A Preferred Shares for Series A-2 Preferred Units (or
Common Shares into Common Units, as applicable) in an amount sufficient to keep
the Ownership Limit Waiver in effect. The exchange shall occur by operation of
law without the requirement for any action on the part of any party. If the
exchange involves Series A Preferred Shares, the exchange shall be effected
through a contribution of the Series A Preferred Shares to the Operating
Partnership in exchange for Series A-2 Preferred Units (with the result that the
Operating Partnership would become an owner of Series A Preferred Shares). The
Operating Partnership and the Company shall then convert such Series A Preferred
Shares into Common Stock and the Operating Partnership shall retain such Common
Stock at least until the holder of the Series A-2 Preferred Units issued in
exchange for the contribution of such Series A Preferred Shares has disposed of
those Series A-2 Preferred Units. In any event, the exchange of the Series A
Preferred Shares for Series A-2 Preferred Units, and any redemption proceeds,
conversion, distributions or other payments made thereafter on the Series A
Preferred Shares contributed to the Operating Partnership or on any Common Stock
into which it is converted by the Partnership, shall not be included in any
calculations relating to dividends or other payments due to holders of Series A
Preferred Shares other than the Operating Partnership. In any contribution to be
made pursuant to this Section 13(e), the requisite contribution shall be made
first of Common Shares prior to the contribution of Preferred Shares. For each
Common Share to be exchanged, such holder shall receive that number of Common
Units equal to the quotient of one divided by the Conversion Multiple then in
effect. For each Preferred Share to be exchanged, the holder shall receive in
lieu thereof that number of Series A-2 Preferred Units equal to the quotient of
(i) the Series A Conversion Value then in effect divided by the Series A
Conversion Price then in effect divided by (ii) the Conversion Multiple then in
effect. Such exchange shall be effective as of the close of business on the
business day prior to the first day on which the Tax Conditions would not have
been satisfied but for such exchange.

            f. Intentionally omitted.

                                       14
<Page>

            g. The Company and the Operating Partnership shall promptly take all
action or actions necessary to keep the Conversion Multiple at one and to insure
that each Series A Preferred Share has the same economic value, rights and
interest as the Series A-2 Preferred Units, and neither the Company nor the
Operating Partnership shall take any action that would change the Conversion
Multiple to something other than 1.

            h. As used herein, the term "Tax Conditions" shall mean the
following:

            1.    The Acquisition (as defined in the Charter) and Beneficial
                  Ownership (as defined in the Charter) of Preferred Shares
                  and/or Common Shares by the Buyer or any Subsequent Holder (as
                  defined in the Ownership Limit Waiver Agreement) permitted by
                  reason of the Ownership Limit Waiver (as defined in the
                  Ownership Limit Waiver Agreement) shall not and is not
                  reasonably expected to cause the Company to be considered to
                  own for purposes of Section 856(d)(2)(B), applying the
                  applicable constructive ownership rules, an interest in any
                  one or more tenants of the Company and its subsidiaries that
                  is described in Section 856(d)(2)(B) of the Code and from
                  which the Company derives, in the aggregate, more than 0.5% of
                  its gross income for any calendar year.

            2.    The Acquisition and Beneficial Ownership of Preferred Shares
                  and/or Common Shares by Buyer or any Subsequent Holder
                  permitted by reason of the Ownership Limit Waiver shall not
                  and is not reasonably expected to cause the Company to fail to
                  qualify as a "domestically-controlled REIT" within the meaning
                  of Section 897(h)(2) of the Code.

            3.    The Acquisition and Beneficial Ownership of Preferred Shares
                  and/or Common Shares permitted by reason of the Ownership
                  Limit Waiver shall not and will not cause any individual
                  (within the meaning of Section 542(a)(2) of the Code,
                  determined taking into account Section 856(h)(3)(A) of the
                  Code) to be considered to have Beneficial Ownership of
                  Company's stock that violates the Ownership Limit, as
                  increased by the Board pursuant to Section 12.9 of the
                  Charter).

      SECTION 12. ADDITION OF SECTION 14 TO THE SECURITIES PURCHASE AGREEMENT. A
new Section 14 is added to the Securities Purchase Agreement to read in its
entirety as follows:

      "14. PROVISIONS REGARDING INTERNAL RATE OF RETURN CALCULATIONS AND PAYMENT
OF PURCHASE PRICE OF MANDATORY PREFERRED SHARES.

      (a) For purposes of accounting for and calculating payments made, or to be
made, by the Company on the Preferred Shares and by the Operating Partnership on
the Series A-2 Preferred Units that involve a determination of an Internal Rate
of Return (as defined in the Certificate of Designations), the provisions of
this Section 14 shall apply. For any such determination, it shall be assumed
that there are twelve (12) periods in each year, which shall be

                                       15
<Page>

each calendar month of each such year, and that each such period shall end on
the last day of each such calendar month. In the event a payment by the Company
or the Operating Partnership to which this Section 14 applies is received by the
Buyer on or before the fifth (5th) Business Day of a period, such payment shall
be deemed to have been received by the Buyer on the last day of the previous
period. In the event a payment by the Company or the Operating Partnership to
which this Section 14 applies is received by the Buyer after the fifth (5th)
Business Day but before the last day of such period, such payment shall be
deemed to have been received by the Buyer on the last day of the previous
period, provided that in addition to any amount due to the Buyer in connection
with such payment as of the end of the previous period, Buyer shall be entitled
to also be paid an amount equal to the applicable Internal Rate of Return on the
Stated Liquidation Value (as defined in the Certificate of Designations) for the
number of days such payment is made after the end of the previous period.

      (b) The payment of the Purchase Price for the Preferred Shares and/or
Series A-2 Preferred Units purchased by the Buyer at the Initial Closing and the
Mandatory Closing shall be deemed to have been paid on April 30, 2001 and May
31, 2001, respectively. For purposes of the first assumption contained in the
definition of "Internal Rate of Return" in the Certificate of Designations, the
Mandatory Closing shall be deemed to have occurred on May 31, 2001. At the
Mandatory Closing, the Buyer shall be credited with having paid to the Company
as part of the Purchase Price an aggregate amount equal to an annual rate of
4.12% (i.e., the difference between the 14.62% Internal Rate of Return and the
10.50% Regular Dividend Rate to be paid during the first anniversary of the
initial issuance of the Preferred Shares) multiplied by the Purchase Price
otherwise to be paid by the Buyer at the Mandatory Closing for the number of
days between the day of the Mandatory Closing and the end of the period during
which the Mandatory Closing occurs, and the actual amount to be paid by the
Buyer to the Company at the Mandatory Closing shall be the Purchase Price less
such credit, provided that for purposes of all computations of or involving
Internal Rate of Return under the Certificate of Designations, this Agreement
and the other Transaction Documents, Buyer shall be treated as having paid the
full Purchase Price.

      (b) The preceding paragraphs (a) and (b) shall be deemed a part of the
sample calculations attached as exhibits to this Agreement."

      SECTION 13. REFERENCE TO AND EFFECT ON THE SECURITIES PURCHASE AGREEMENT.
Except as amended hereby, the Securities Purchase Agreement remains in full
force and effect and is hereby ratified and confirmed.

      SECTION 14. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
two counterparts, each of which when so executed and delivered shall be deemed
to be an original and both of which taken together shall constitute one and the
same instrument.

      SECTION 15. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

      SECTION 16. EFFECTIVENESS. This Amendment will become effective after a

                                       16
<Page>

counterpart to this Amendment have been executed by the Company, the Operating
Partnership and the Buyer and the documents described in Section 1 hereof have
been executed by the Company, the Operating Partnership and the Buyer.

                  [Remainder of page intentionally left blank.
                            Signature page follows.]

                                       17
<Page>

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Securities Purchase Agreement as of the date first above written.

                                    THE MILLS CORPORATION

                                    By: /s/ Peter B. McMillan
                                        ----------------------------------------
                                    Name: Peter B. McMillan
                                          --------------------------------------
                                    Title: President and Chief Operating Officer
                                           -------------------------------------

                                    THE MILLS LIMITED PARTNERSHIP

                                    By: THE MILLS CORPORATION
                                    Its: General Partner

                                    By: /s/ Peter B. McMillan
                                        ----------------------------------------
                                    Name: Peter B. McMillan
                                          --------------------------------------
                                    Title: President and Chief Operating Officer
                                           -------------------------------------

                                    ISTAR PREFERRED HOLDINGS LLC

                                    By: /s/ Jay Sugarman
                                        ----------------------------------------
                                    Name: Jay Sugarman
                                          --------------------------------------
                                    Title: Chief Executive Officer
                                           -------------------------------------

                                       18

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