<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 1999
Registration No. 333-__________
================================================================================
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE MILLS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-1802283
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
1300 WILSON BOULEVARD
SUITE 400
ARLINGTON, VIRGINIA 22209
(Address of Principal Executive Offices, including zip code)
------------------------
THE MILLS CORPORATION
AMENDED AND RESTATED 1994 EXECUTIVE
EQUITY INCENTIVE PLAN
(Full title of the Plan)
------------------------
LAURENCE C. SIEGEL
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
1300 WILSON BOULEVARD
SUITE 400
ARLINGTON, VIRGINIA 22209
(703) 526-5000
(Name, address and telephone number, including area code, of agent for service)
With a copy to:
J. WARREN GORRELL, JR., ESQ.
ALAN L. DYE, ESQ.
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE (1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.01 per share 2,000,000 (2) $21.6875 $43,375,000 $12,058.25
- ---------------------------------------------------------------------------------------------------------------------
=====================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) and (h) under the Securities Act of 1933
solely for the purposes of calculating the amount of the registration fee,
based on the average of the high and low prices per share of common stock
of The Mills Corporation, par value $.01 per share, as reported on the New
York Stock Exchange on June 23, 1999.
(2) Does not include 2,500,000 shares of common stock of The Mills Corporation
previously registered on Registration Statement No. 333-35853 and to which
the prospectus relating to this Registration Statement also relates. A
registration fee of $20,689.89 was previously paid in connection with
2,500,000 shares of common stock (including shares of common stock not yet
issued) previously registered.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus relating
to this registration statement is a combined prospectus relating also to
Registration Statement No. 333-35853 previously filed by the registrant on Form
S-8.
================================================================================
- --------------------------------------------------------------------------------
<PAGE> 2
PART II
REGISTRATION OF ADDITIONAL SECURITIES
This Registration Statement of The Mills Corporation (the "Registrant")
incorporates by reference the contents of the Registrant's previous registration
statement on Form S-8 dated September 18, 1997 (No. 333-35853) covering
2,500,000 shares of the Registrant's common stock, par value $.01 per share (the
"Common Stock"), issuable upon the award of restricted stock and the exercise of
stock options granted under the Registrant's 1994 Executive Equity Incentive
Plan (the "Plan").
On February 26, 1998, the Board of Directors of the Registrant approved a
resolution amending the Plan (together with other amendments thereto
constituting the Registrant's Amended and Restated 1994 Executive Equity
Incentive Plan, the "Amended Plan") to increase the number of shares of Common
Stock issuable thereunder by 2,000,000 shares to an aggregate of 4,500,000
shares. On May 28, 1998, the Registrant's shareholders approved the Amended
Plan. This registration statement covers the additional 2,000,000 shares of
Common Stock issuable under the Amended Plan.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality
of the shares being registered
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on signature page)
99.1 Form of The Mills Corporation Amended and Restated 1994 Executive Equity Incentive Plan
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Arlington, Virginia, on this 25th day of June, 1999.
THE MILLS CORPORATION
By: /s/ Laurence C. Siegel
------------------------------------
Laurence C. Siegel
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of The Mills Corporation, do
hereby constitute and appoint Laurence C. Siegel and Peter B. McMillan, and each
and either of them, our true and lawful attorneys-in-fact and agents, to do any
and all acts and things in our names and our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
name in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said Registrant to
comply with the Securities Act and any rules, regulations and requirements of
the Securities and Exchange Commission, in connection with this Registration
Statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act,
including specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto; and we hereby ratify and confirm
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 25th day of June, 1999.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ Laurence C. Siegel Chairman of the Board, Chief Executive
- ---------------------------------- Officer and Director (principal executive
Laurence C. Siegel officer)
/s/ Peter B. McMillan President, Chief Operating Officer and
- ---------------------------------- Director
Peter B. McMillan
/s/ James F. Dausch Executive Vice-President - Development
- ---------------------------------- and Director
James F. Dausch
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
/s/ Kenneth R. Parent Executive Vice President - Finance and
- ---------------------------------- Chief Financial Officer (principal
Kenneth R. Parent financial officer and principal
accounting officer)
/s/ Dietrich von Boetticher Vice Chairman and Director
- ----------------------------------
Dietrich von Boetticher
/s/ John M. Ingram Vice Chairman and Director
- ----------------------------------
John M. Ingram
/s/ Charles R. Black, Jr. Director
- ----------------------------------
Charles R. Black, Jr.
/s/ James C. Braithwaite Director
- ----------------------------------
James C. Braithwaite
/s/ Joseph B. Gildenhorn Director
- ----------------------------------
Joseph B. Gildenhorn
/s/ Harry H. Nick Director
- ----------------------------------
Harry H. Nick
/s/ Franz von Perfall Director
- ----------------------------------
Franz von Perfall
/s/ Robert P. Pincus Director
- ----------------------------------
Robert P. Pincus
/s/ Cristina L. Rose Director
- ----------------------------------
Cristina L. Rose
</TABLE>
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality
of the shares being registered
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on signature page)
99.1 Form of The Mills Corporation Amended and Restated 1994 Executive Equity Incentive Plan
</TABLE>
<PAGE> 1
HOGAN & HARTSON, L.L.P
COLUMBIA SQUARE
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
(202) 637-5910
June 29, 1999
Board of Directors
The Mills Corporation
1300 Wilson Boulevard
Suite 400
Arlington, Virginia 22209
Ladies and Gentlemen:
We are acting as counsel to The Mills Corporation, a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-8 (the "Registration Statement"), filed with the Securities and Exchange
Commission, relating to an additional 2,000,000 shares of common stock, par
value $.01 per share (the "Shares") issuable under the Company's Amended and
Restated 1994 Executive Equity Incentive Plan (the "Plan"). This opinion letter
is furnished to at your request to enable you to fulfill the requirements of
Item 601(b)(5) of Regulation S-K, 17 C.F.R Section 229.601(b)(5), in connection
with the Registration Statement.
For purposes of this opinion, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Amended and Restated Certificate of Incorporation of
the Company, as amended (the "Charter"), as certified by
the Secretary of State of the State of Delaware on June
24, 1999, and as certified by the Secretary of the Company
on the date hereof as being complete, accurate and in
effect.
3. The Amended and Restated Bylaws of the Company, as
certified by the Secretary of the Company on the date
hereof as being complete, accurate and in effect.
<PAGE> 2
4. Resolutions of the Board of Directors of the Company
adopted on February 26, 1998, as certified by the
Secretary of the Company on the date hereof as being
complete, accurate and in effect, approving and adopting a
2,000,000 share increase in the number of shares reserved
for issuance under the Plan.
5. A certificate of the Secretary of the Company, dated the
date hereof, certifying that the proposal relating to the
adoption and approval of a 2,000,000 share increase in the
number of shares reserved for issuance under the Plan was
submitted to the Company's shareholders and approved at
the 1998 Annual Meeting of Shareholders of The Mills
Corporation held on May 28, 1998.
6. A copy of the Plan, as certified on the date hereof by the
Secretary of the Company as being complete, accurate and
in effect.
In our examination of the aforesaid documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
accuracy and completeness of all documents submitted to us, the authenticity of
all original documents and the conformity to authentic original documents of all
documents submitted to us as copies (including telecopies). We have also assumed
that the Shares will not be issued in violation of the ownership limit contained
in the Charter. This opinion letter is given, and all statements herein are
made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
General Corporation Law of the State of Delaware, as amended. We express no
opinion herein as to any other laws, statutes, ordinances, rules or regulations.
Based upon, subject to, and limited by the foregoing, we are of the
opinion that the Shares, when issued and delivered in the manner and on the
terms described in the Plan, will be validly issued, fully paid and
nonassessable.
This opinion letter has been prepared for your use in connection with
the Registration Statement and speaks as of the date hereof. We assume no
obligation to advise you of any changes in the foregoing subsequent to the
delivery of this opinion letter.
<PAGE> 3
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement. In giving this consent, we do not thereby admit
that we are an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-______) pertaining to The Mills Corporation Amended and Restated
1994 Executive Equity Incentive Plan of our report dated February 18, 1999, with
respect to the consolidated financial statements of The Mills Corporation
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1998 and of our report dated March 25, 1999, with respect to the
related financial statement schedule included therein, filed with the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Washington, D.C.
June 21, 1999
<PAGE> 1
EXHIBIT 99.1
THE MILLS CORPORATION
AMENDED AND RESTATED 1994 EXECUTIVE EQUITY INCENTIVE PLAN
The Mills Corporation Amended and Restated 1994 Executive Equity
Incentive Plan (the "Plan") amends and restates in its entirety The Mills
Corporation 1994 Executive Equity Incentive Plan, as amended, which became
effective upon the closing of The Mills Corporation's initial public offering on
April 21, 1994 (the "Effective Date").
1. DEFINITIONS.
In this Plan, except where the context otherwise indicates, the following
definitions apply:
1.1 "AGREEMENT" means a written agreement implementing a grant of an
Option or an award of Restricted Stock.
1.2 "BOARD" means the Board of Directors of the Company.
1.3 "CODE" means the Internal Revenue Code of 1986, as amended.
1.4 "COMMITTEE" means the committee of the Board meeting the standards
of Rule 16b-3(d)(1) under the Exchange Act, or any similar successor rule and
Treas. Reg. Section 1.162-27(e)(3) or any similar successor rule, appointed by
the Board to administer the Plan. Unless otherwise determined by the Board, the
Executive Compensation Committee of the Board shall be the Committee.
1.5 "COMMON STOCK" means the common stock, par value $.01 per share,
of the Company.
1.6 "COMPANY" means The Mills Corporation.
1.7 "CONVERSION MULTIPLE" shall have the meaning set forth in Article
II of the Limited Partnership Agreement.
1.8 "DATE OF EXERCISE" means the date on which the Company receives
notice of the exercise of an Option in accordance with the terms of SECTION 9
hereof.
1.9 "DATE OF GRANT" means the date on which an Option is granted or
Restricted Stock is awarded by the Committee (or such later date as specified in
advance by the Committee) or, in the case of a Nonstatutory Stock Option granted
to an Outside Director, the date on which such Nonstatutory Stock Option is
granted pursuant to and in accordance with the provisions of Section 11 hereof.
1.10 "OUTSIDE DIRECTOR" means any person who is a director of the
Company and who is not also an employee of either the Company, the Limited
Partnership or any of their affiliates.
1.11 "EMPLOYEE" means any REIT Employee or a Limited Partnership
Employee.
1.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
1.13 "FAIR MARKET VALUE" of a Share means:
(a) If on the applicable date the Common Stock is listed
for trading on a national or regional securities exchange or
authorized for quotation on the National Association of Securities
Dealers, Inc.'s Nasdaq National Market System ("NASDAQ/NMS"), the
closing price of the Common Stock on such exchange or NASDAQ/NMS,
as the case may be, on the applicable date, or
<PAGE> 2
if no sales of Common Stock shall have occurred on such exchange
or NASDAQ/NMS, as the case may be, on the applicable date, the
closing price of the Common Stock on the next preceding date on
which there were such sales;
(b) If on the applicable date the Common Stock is not
listed for trading on a national or regional securities exchange
or authorized for quotation on NASDAQ/NMS, the mean between the
closing bid price and the closing ask price of the Common Stock as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") with respect to the
applicable date or, if closing bid and ask prices for the Common
Stock shall not have been so reported with respect to the
applicable date, on the next preceding date with respect to which
such bid and ask prices were so reported; or
(c) If on the applicable date the Common Stock is not
listed for trading on a national or regional securities exchange
or is not authorized for quotation on NASDAQ/NMS or NASDAQ, the
Fair Market Value of a Share as determined by the Committee
pursuant to a reasonable method adopted in good faith for such
purpose.
Such Fair Market Value shall be subject to adjustment as provided in
SECTION 24 hereof.
1.14 "GRANTEE" means an Outside Director or an Employee to whom
Restricted Stock has been awarded pursuant to SUBSECTION 7.6 hereof.
1.15 "INCENTIVE STOCK OPTION" means on Option granted under the Plan
that qualifies as an incentive stock option under Section 422 of the Code and
that the Company designates as such in the Agreement granting the Option.
1.16 "LIMITED PARTNERSHIP" means The Mills Limited Partnership, a
Delaware limited partnership.
1.17 "LIMITED PARTNERSHIP AGREEMENT" means the Limited Partnership's
Amended and Restated Limited Partnership Agreement dated April 21, 1994.
1.18 "LIMITED PARTNERSHIP EMPLOYEE" means any person determined by the
Committee to be an employee of the Limited Partnership or any Limited
Partnership Subsidiary.
1.19 "LIMITED PARTNERSHIP SUBSIDIARY" means an entity at least 50% of
the total equity interests of which is owned by the Limited Partnership either
directly or through one or more Limited Partnership Subsidiaries.
1.20 "NONSTATUTORY STOCK OPTION" means an Option granted under the Plan
that is not an Incentive Stock Option.
1.21 "OPTION" means an option to purchase Shares granted under the Plan
in accordance with the terms of either SECTION 7 or SECTION 11 hereof.
1.22 "OPTIONEE" means an Outside Director or an Employee to whom an
Option has been granted.
1.23 "OPTION PERIOD" means the period during which an Option may be
exercised.
1.24 "OPTION PRICE" mean the price per Share at which an Option may be
exercised. The Option Price shall be determined by the Committee, except that,
in the case of Nonstatutory Stock Options covering up to a maximum of 985,000
Shares to be granted to certain Employees contemporaneously with the
consummation of the initial public offering of the Common Stock, and in the case
of Nonstatutory Stock Options granted to the Outside Directors pursuant to the
provisions of SECTION 11, in no event shall the Option Price in respect of
Options granted contemporaneously with the initial public offering be less than
the initial public offering price of a share of Common
-2-
<PAGE> 3
Stock, and in all other cases, the Option Price shall not be less that 100% of
the Fair Market Value per Share determined as of the Date of Grant.
1.25 "PERMANENT DISABILITY" means a mental or physical condition which,
in the opinion of the Committee, renders an Optionee or Grantee unable or
incompetent to carry out the job responsibilities which such Optionee or Grantee
held or tasks to which such Optionee or Grantee was assigned at the time the
disability was incurred and which is expected to be permanent or for an
indefinite period.
1.26 "PLAN" means The Mills Corporation Amended and Restated 1994
Executive Equity Incentive Plan, as the same may be amended, modified or
supplemented from time to time.
1.27 "RELOAD OPTION" means a new Option granted to an Optionee pursuant
to and in accordance with SUBSECTIONS 4.2(d)(v) and 9.2 hereof, upon the
surrender of Shares to pay the Option Price of a previously granted Option.
1.28 "REIT EMPLOYEE" means any person determined by the Committee to be
an employee of the Company or any REIT Subsidiary.
1.29 "REIT SUBSIDIARY" means a corporation at least 50% of the total
combined voting power of all classes of stock which is owned by the Company
either directly or through one or more REIT Subsidiaries.
1.30 "RESTRICTED STOCK" means Shares awarded pursuant to the provisions
of SUBSECTION 7.6 hereof.
1.31 "SHARE" means a share of Common Stock.
1.32 "UNIT" means a "Partnership Unit," as that term is defined in the
Limited Partnership Agreement.
2. PURPOSE.
The purpose of the Plan is to advance the interests of the Company, the
Limited Partnership and their affiliates by encouraging and facilitating the
acquisition of a larger personal financial interest in the Company by Outside
Directors and those Employees upon whose judgment and interest the Company, the
Limited Partnership and their affiliates are largely dependent for the
successful conduct of their operations, and making executive positions in the
Company, the Limited Partnership and their affiliates more attractive. It is
anticipated that the acquisition of such financial interest will stimulate the
efforts of such Employees and Outside Directors on behalf of the Company, the
Limited Partnership and their affiliates and strengthen their desire to continue
in the service of the Company, the Limited Partnership or their affiliates. It
is also anticipated that the opportunity to obtain such a financial interest
will prove attractive to promising executive talent and will assist the Company,
the Limited Partnership and their affiliates in attracting such persons.
3. SCOPE OF THE PLAN.
3.1 SHARES AVAILABLE. An aggregate of 4,500,000 Shares is hereby made
available and shall be reserved for issuance under the Plan with respect to the
exercise of Options and awards of Restricted Stock, provided that no more than
1,500,000 Shares may be issued pursuant to awards of Restricted Stock. Such
number of Shares shall be reduced by the aggregate number of Shares acquired
from time to time to be held as treasury Shares reserved for use under the Plan.
The aggregate number of Shares available under this Plan shall be subject to
adjustment upon the occurrence of any of the events and in a manner set forth in
SECTION 24 hereof.
3.2 SHARES SUBJECT TO TERMINATED OPTIONS OR FORFEITED RESTRICTED STOCK
AWARDS. If and to the extent an Option shall expire or terminate for any reason
without having been exercised in full, the Shares subject thereto which have not
become outstanding shall (unless the Plan shall have terminated) become
available under the Plan for other awards. Any Shares of Restricted Stock
forfeited by the Grantee will (unless the Plan shall have terminated) become
available under the Plan for other grants or awards.
-3-
<PAGE> 4
3.3 AUTHORITY TO PURCHASE SHARES. The Board, such committee of the
Board that the Board shall specifically authorize or direct on its behalf, or
the Committee shall have the authority to cause the Company to purchase from
time to time, in such amounts and at such prices as the Board, in its
discretion, shall deem advisable or appropriate, Shares to be held as treasury
Shares and reserved and used solely for or in connection with grants or awards
under the Plan, at the discretion of the Committee.
4. ADMINISTRATION.
4.1 THE COMMITTEE. The Plan shall be administered by the Committee.
Members of the Committee shall not participate in the Plan or receive grants or
awards of equity securities under any other plan of the Company or any of its
affiliates except as provided in SECTIONS 7.7 AND 11.
4.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full and
final authority, in its discretion, but subject to the express provisions of the
Plan, as follows:
(a) to grant Options and awards of Restricted Stock;
(b) subject to SECTIONS 7 and 11, to determine (a) the Option
Price of the Shares subject to each Option, (b) the Employees and
Outside Directors to whom, and the time or times at which, Options
shall be granted or Restricted Stock shall be awarded, and (c)
subject to SECTION 3, the number of Shares subject to an Option
and the number of Shares of Restricted Stock to be granted to each
Optionee and Grantee thereof, respectively;
(c) to determine all other terms and provisions of each
Agreement (which may, but need not be, identical), and with the
consent of the Optionee or Grantee, as the case may be, to modify
any Agreement (including, without limitation, the vesting of
Restricted Stock subject to such Agreement);
(d) without limiting the foregoing, to provide, in its
discretion, in any Agreement:
(i) for an agreement by the Optionee or Grantee, as the
case may be, to render services to the Company, a REIT
Subsidiary, the Limited Partnership or a Limited
Partnership Subsidiary upon such terms and conditions as
may be specified in the Agreement, provided that the
Committee shall not have the power to commit the Company, a
REIT Subsidiary, the Limited Partnership or a Limited
Partnership Subsidiary to employ or otherwise retain any
Optionee or Grantee;
(ii) for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the
exercise of an Option, and for other restrictions permitted
by SUBSECTION 7.6 hereof with respect to Restricted Stock
awarded to a Grantee;
(iii) for an agreement by the Optionee or Grantee, as the
case may be, to resell to the Company, under specified
conditions, Shares issued upon the exercise of an Option or
awarded as Restricted Stock;
(iv) for the payment of the Option Price upon the
exercise of an Option otherwise than in cash, including
without limitation by delivery of Shares (other than
Restricted Stock) valued at Fair Market Value on the Date
of Exercise of the Option in accordance with the terms of
SUBSECTION 9.1 hereof, or a combination of cash and Shares,
or for the payment in part of the Option Price with a
promissory note in accordance with the terms of SUBSECTION
9.3 hereof;
-4-
<PAGE> 5
(v) for the automatic issuance of a Reload Option
covering a number of Shares equal to the number of any
Shares used to pay the Option Price in accordance with the
terms of SUBSECTION 9.2 hereof;
(vi) for the right of the Optionee to surrender to the
Company an Option (or a portion thereof) that has become
exercisable and to receive upon such surrender, without any
payment to the Company, the Limited Partnership, a REIT
Subsidiary or a Limited Partnership Subsidiary (other than
required tax withholding amounts) that number of Shares
(equal to the highest whole number of Shares) having an
aggregate Fair Market Value as of the date of surrender
equal to that number of Shares subject to the Option (or
portion thereof) being surrendered multiplied by an amount
equal to the excess of (I) the Fair Market Value of a Share
on the date of surrender, over (II) the Option Price, plus
an amount of cash equal to the Fair Market Value of any
fractional Share to which the Optionee might be entitled.
Other than for purposes of SUBSECTION 6.2(b) hereof, any
such surrender shall be treated as the exercise of the
Option (or portion thereof).
(e) to construe and interpret the Plan and Agreements;
(f) to prescribe, amend and rescind rules and regulations
relating to the Plan, including, without limitation and subject to
SECTION 15 hereof, the rules with respect to the exercisability of
Options and the vesting of Restricted Stock;
(g) to require, whether or not provided for in the pertinent
Agreement, of any person exercising an Option or acquiring
Restricted Stock, at the time of such exercise or acquisition, the
making of any representations or agreements which the Committee
may deem necessary or advisable in order to comply with the
securities laws of the United States or of any state;
(h) to prescribe the method by which grants of Options and
awards of Restricted Stock shall be evidenced;
(i) to cancel, with the consent of the Optionee thereof,
outstanding Options and to grant new Options in substitution
therefor;
(j) to require withholding from or payment by an Optionee or
Grantee, as the case may be, of any federal, state, or other
governmental taxes;
(k) to prohibit the election described in SECTION 12 hereof;
(l) to make all other determinations deemed necessary or
advisable for the administration of the Plan; and
(m) to impose such additional conditions, restrictions and
limitations upon the exercise, vesting or retention of Options or
Restricted Stock as the Committee may, prior to or concurrently
with the grant or award thereof, deem appropriate, including, but
not limited to, limiting the percentage of Options which may from
time to time be exercised by an Optionee.
4.3 FINALITY OF COMMITTEE DETERMINATIONS: LIABILITY OF MEMBERS. The
determination of the Committee on all matters relating to the Plan or any
Agreement shall be conclusive and final. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan, any Agreement or any grant thereunder.
4.4 PERIODIC COMMITTEE REVIEW AND MEETINGS WITH MANAGEMENT. The
Committee shall from time to time review the implementation and results of the
Plan to determine the extent to which the Plan's purpose is being accomplished.
In addition, the Committee shall periodically meet with senior management of the
Company and the
-5-
<PAGE> 6
Limited Partnership to review their suggestions regarding grants and awards
under the Plan, including the individuals who are proposed to receive grants or
awards and the amount and terms of such grants or awards; provided, that all
such grants and awards shall be determined solely by the Committee in its
discretion.
4.5 INDEMNIFICATION OF THE COMMITTEE. In addition to such other rights
of indemnification as they may have as directors of the Company or as members of
the Committee, the members of the Committee shall be indemnified by the Limited
Partnership or, if related to a grant or award to an Outside Director or REIT
Employee, by the Company, against the reasonable expenses, including attorneys'
fees, actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option or Restricted Stock
granted or awarded hereunder, and against all amounts reasonably paid by them in
a settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, if such members acted in good faith and in a manner
which they believed to be in, and not opposed to, the best interests of the
Limited Partnership or, with respect to an Outside Director or REIT Employee,
the Company.
5. ELIGIBILITY.
Options and Restricted Stock may be granted or awarded, as the case may
be, only to Outside Directors and Employees, except that Limited Partnership
Employees are not eligible to receive Incentive Stock Options and Outside
Directors and other members of the Committee are not eligible to receive Options
or Restricted Stock other than pursuant to SECTIONS 7.7 AND 11. Subject to the
provisions of SECTION 3 and 28 hereof, an Employee or Outside Director who has
been granted an Option or awarded Restricted Stock may be granted additional
Options or awarded additional Restricted Stock; provided, however, that grants
of Restricted Stock and Nonstatutory Stock Options to Outside Directors are
subject to the limitations set forth in SECTIONS 7.7 AND 11, respectively. In
selecting the individuals to whom Options or Restricted Stock shall be granted
or awarded, as the case may be, as well as in determining the number of Shares
subject to each Option or Restricted Stock to be granted or awarded, the
Committee shall take into consideration such factors as it deems relevant in
connection with promoting the purposes of the Plan.
6. GENERAL OBLIGATIONS OF THE COMPANY AND THE LIMITED PARTNERSHIP.
6.1 ISSUANCE OF SHARES AND FRACTIONAL SHARE PAYMENTS. All Shares
issued under the Plan pursuant to the exercise of an Option or an award of
Restricted Stock shall be issued by the Company. All cash paid under the Plan
with respect to a fractional Share upon the surrender of an Option in accordance
with SUBSECTION 4.2(d)(IV) and 9.2 hereof shall be paid by the Company.
6.2 OPTIONS EXERCISED.
(a) ISSUANCE OF UNITS AND CAPITAL ACCOUNT ADJUSTMENTS. Upon the
exercise of an Option, the Limited Partnership shall issue to the
Company a number of Units equal to (i) the number of Shares issued
to the Optionee, divided by (ii) the Conversion Multiple. The
Company's Limited Partnership capital account in the Limited
Partnership shall be credited with an amount equal to the Fair
Market Value of the number of Shares issued upon the exercise of
an Option.
(b) CASH CONTRIBUTIONS BY THE COMPANY. Upon the exercise of an
Option (not including any deemed exercise upon the surrender of an
Option in accordance with SUBSECTION 4.2(d)(vi) hereof), the
Company shall contribute to the Limited Partnership an amount of
cash equal to the aggregate Option Price paid by the Optionee for
the Shares issued upon exercise, regardless of whether the
Optionee pays the Option Price in cash, Shares or a combination
thereof; provided, that to the extent the Option Price is paid
with a promissory note of the Optionee in accordance with the
provisions of SUBSECTION 9.3 hereof, the amount of cash
contributed to the Limited Partnership pursuant to this SUBSECTION
6.2(b) shall be contributed to the Limited Partnership only upon
receipt by the Company of any installment and interest due under
such promissory note and shall be limited to the amount of such
installment and interest and provided that, if the Optionee pays
with Shares, the Company shall have the right to cancel the Shares
received in which event Units held by the Company in an amount
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equal to the Shares canceled multiplied by the Conversion Multiple
shall be canceled by the Limited Partnership. The Company's
contribution of cash to the Limited Partnership pursuant to the
preceding sentence shall not be treated as a contribution to
capital and the Company's capital account in the Limited
Partnership shall not be credited with the amount of cash so
contributed.
(c) FRACTIONAL SHARE CASH REIMBURSEMENTS BY THE LIMITED
PARTNERSHIP AND TREATMENT THEREOF. The Limited Partnership shall
reimburse the Company for any cash paid with respect to a
fractional Share upon the surrender of an Option in accordance
with SUBSECTION 4.2(d)(vi) hereof. Such reimbursement shall be
treated as the reimbursement of an expense incurred by the Company
on behalf of the Limited Partnership, shall not be treated as a
distribution by the Limited Partnership to the Company and shall
not reduce the Company's Limited Partnership capital account.
6.3 RESTRICTED STOCK AWARDS. Upon the award of shares of Restricted
Stock, the Limited Partnership shall issue to the Company a number of restricted
Units, equal to (i) the number of shares of Restricted Stock awarded to the
Grantee, divided by (ii) the Conversion Multiple, that are subject to the same
restrictions as those applicable to the shares of Restricted Stock. Upon the
lapse of restrictions applicable to the shares of Restricted Stock, the
restrictions applicable to the corresponding restricted Units referred to in
this SUBSECTION 6.3 also shall lapse. The Company's capital account in the
Limited Partnership shall be adjusted, as appropriate, to reflect the issuance
of shares of Restricted Stock, and such capital account also shall be adjusted,
as appropriate, in the event that the shares of Restricted Stock are forfeited
or the restrictions thereon lapse.
7. CONDITIONS TO GRANTS AND AWARDS.
7.1 GENERAL. Subject to the provisions of SECTIONS 5 and 11 hereof,
the Committee is hereby authorized to grant Nonstatutory Stock Options to
Outside Directors and Employees and Incentive Stock Options to REIT Employees.
All Agreements granting Options shall contain a statement that the Option is
intended to be either (a) a Nonstatutory Stock Option, or (b) an Incentive Stock
Option, and all Options designated as Incentive Stock Options shall be, in
addition to other provisions of this Plan, subject to the terms and conditions
of SUBSECTION 7.4 below. Subject to the provisions of SECTIONS 3 and 28 hereof,
an individual who has been granted an Option or Restricted Stock may, if such
individual is otherwise eligible, be granted additional Options or awarded
additional Restricted Stock if the Committee shall so determine. Subject to the
other provisions of this Plan, the Committee may grant Options or award
Restricted Stock with terms and conditions which differ among the Optionees or
Grantees thereof, respectively.
7.2 OPTION PERIOD AND EXERCISABILITY. Subject to the terms of SECTION
11 hereof, the Option Period shall be determined by the Committee and
specifically set forth in the Agreement; provided, however, that the Option
Period shall not be for a period of more than ten years from the Date of Grant,
and shall be subject to earlier termination as herein provided. The terms and
conditions with respect to exercisability shall be determined by the Committee.
To the extent not set forth in the Plan, the terms and conditions of each grant
shall be set forth in an Agreement.
7.3 GRANTS OF OPTIONS AND OPTION PRICE. Before the grant of any
Option, the Committee shall determine the Option Price of the Shares subject to
such Option; provided that, except as provided in SUBSECTION 7.4 below, with
respect to Incentive Stock Options, the Option Price shall not be less that 100%
of the Fair Market Value of the Common Stock on the Date of Grant.
7.4 GRANTS OF INCENTIVE STOCK OPTIONS. Any Option designated as an
Incentive Stock Option may be granted only to a REIT Employee and shall:
(a) have an Option Price of (i) not less than 100% of the Fair
Market Value of a Share on the Date of Grant, or (ii) in the case
of a REIT Employee who owns stock (including stock treated as
owned under Section 424(d) of the Code) possessing more than 10%
of the total combined voting power of all classes of stock of the
Company or any of its 50%-or-more owned subsidiaries (a "10%
Owner"), not less than 110% of the Fair Market Value of a Share on
the Date of Grant;
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<PAGE> 8
(b) have an Option Period of not more than ten years (five
years, in the case of a 10% Owner) from the Date of Grant, and
shall be subject to earlier termination as herein provided;
(c) notwithstanding the provisions relating to termination of
employment set forth in SECTION 15 hereof, not to be exercisable
more than three months (or one year, in the case of an Optionee
who is disabled within the meaning of Section 22(e)(3) of the
Code) after termination of employment;
(d) not have an aggregate Fair Market Value (determined for
each Incentive Stock Option at the time it is granted) of Shares
with respect to which Incentive Stock Options are exercisable for
the first time by such Optionee during any calendar year (under
this Plan and any other employee stock option plan of the
Optionee's employer or any parent or 50%-or-more owned subsidiary
thereof), determined in accordance with the provisions of Section
422 of the Code, which exceeds $100,000 (the "$100,000 Limit");
(e) if the aggregate Fair Market Value of Shares (determined on
the Date of Grant) with respect to all Incentive Stock Options
previously granted under this Plan and Other Plans ("Prior
Grants") and any Incentive Stock Options under such grant (the
"Current Grant") which are exercisable for the first time during
any calendar year would exceed the $100,000 Limit, be exercisable
as follows:
(i) the portion of the Current Grant exercisable for the
first time by the Optionee during any calendar year which
would be, when added to any portions of any Prior Grants
exercisable for the first time by the Optionee during any
such calendar year with respect to Shares which would have
an aggregate Fair Market Value (determined at the time of
each such grant) in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Optionee in the first
subsequent calendar year or years in which it could be
exercisable for the first time by the Optionee when added
to all Prior Grants without exceeding the $100,000 Limit;
(ii) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
provisions of the immediately preceding sentence during any
calendar year commencing with the calendar year in which it
is first exercisable through and including the last
calendar year in which it may by its terms be exercised,
such portion of the Current Grant shall not be an Incentive
Stock Option, but shall be exercisable as a separate Option
at such date or dates as are provided in the Current Grant;
(iii) be granted within ten years from the earlier of the
date the Plan is adopted or the date the Plan is approved
by stockholders of the Company; and
(iv) require the Optionee to notify the Committee of any
disposition of any Shares issued pursuant to the exercise
of the Incentive Stock Option under the circumstances
described in Section 421(b) of the Code (relating to
certain disqualifying dispositions), within ten days of
such disposition.
7.5 CODE SECTION 162(m) COMPLIANCE FOR OPTION GRANTS. The maximum
number of Shares subject to Options which may be awarded to any Optionee in any
one calendar year shall not exceed 500,000 Shares. In all events, determinations
under the preceding sentence shall be made in a manner which is consistent with
Code Section 162 and the regulations promulgated thereunder.
7.6 AWARDS OF RESTRICTED STOCK. Subject to SUBSECTION 7.7 below, the
Committee is hereby authorized to award shares of Restricted Stock to Outside
Directors and Employees in accordance with the following provisions:
(a) GENERAL NATURE OF RESTRICTIONS. Restricted Stock awards
under the Plan shall consist of Shares that are restricted against
transfer, subject to forfeiture and subject to such other terms
and
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<PAGE> 9
conditions intended to further the purposes of the Plan as may be
determined by the Committee in accordance with the terms of the
Plan.
(b) TERMS OF AWARD AGREEMENTS. Restricted Stock awards shall be
evidenced by Agreements containing provisions setting forth the
terms and conditions governing such awards. Subject to Subsection
7.7 below, each such Agreement shall contain the following:
(i) prohibitions against the sale, assignment, transfer,
exchange, pledge, hypothecation or other encumbrance of (A)
the Shares awarded as Restricted Stock under the Plan, (B)
the right to vote the Shares, or (C) the right to receive
dividends thereon in each such case during the restriction
period applicable to the Shares; provided, however, that
the Grantee shall, unless otherwise provided in the
applicable Agreement, have all the other rights of a
stockholder including, but not limited to, the right to
receive dividends and the right to vote the Shares;
(ii) at least one term, condition or restriction
constituting a "substantial risk of forfeiture" as defined
in Section 83(c) of the Code;
(iii) such other terms, conditions and restrictions as the
Committee in its discretion may specify (including, without
limitation, provisions creating additional substantial
risks of forfeiture);
(iv) a requirement that each certificate representing
shares of Restricted Stock shall be deposited with the
Company, or its designee, and shall bear the following
legend:
"This certificate and the shares of stock
represented hereby are subject to the terms and
conditions (including the risks of forfeiture and
restrictions against transfer) contained in The
Mills Corporation Amended and Restated 1994
Executive Equity Incentive Plan, as the same may be
amended from time to time (the "Plan") and a written
agreement (the "Agreement") entered into between the
registered owner and The Mills Corporation. Release
from such terms and conditions shall be made only in
accordance with the provisions of the Plan and the
Agreement, a copy of each of which is on file in the
office of the Secretary of The Mills Corporation."
(v) the applicable period or periods of any terms,
conditions or restrictions applicable to the Restricted
Stock; provided, however, that the Committee in its
discretion may accelerate the expiration of the applicable
restriction period with respect to any part or all of the
Shares awarded to a Grantee; and
(vi) the terms and conditions upon which any restrictions
upon Shares of Restricted Stock awarded under the Plan
shall lapse and new certificates free of the foregoing
legend shall be issued to the Grantee or his or her legal
representative.
(c) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Notwithstanding
the provisions of SUBSECTION 15.1 hereof, the Committee may
include in an Agreement relating to an award of Restricted Stock a
requirement that in the event of a Grantee's termination of
employment for any reason prior to the lapse of restrictions, all
Shares of Restricted Stock shall be forfeited by the Grantee to
the Company without payment of any consideration by the Company,
and neither the Grantee nor any successors, heirs, assigns or
personal representatives of the Grantee shall thereafter have any
further rights or interest in the Shares or certificates.
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<PAGE> 10
(d) RESTRICTED STOCK - DIVIDEND EQUIVALENTS. The Committee may
establish terms and conditions under which the Grantee of a
Restricted Stock award shall be entitled to receive a credit
equivalent to any dividend payable with respect to the number of
Shares which, as of the record date for such dividend, had been
stated in the award but not satisfied by delivery to him of
Shares. Any such dividend equivalents shall be paid to the Grantee
at such time or times during the period when the Shares are being
held by the Company pursuant to the terms of the Restricted Stock
award, or at the time the Shares to which the dividend equivalents
apply are delivered to the Grantee, as the Committee shall
determine. Any arrangement for payment of dividend equivalents
shall be terminated if, under the terms and conditions established
by the Committee, the right to receive Shares of Restricted Stock
being held pursuant to the terms of the Restricted Stock award
shall lapse.
(e) CODE SECTION 162(m) COMPLIANCE FOR RESTRICTED STOCK. This
SUBSECTION 7.6(e) applies only to those salaried Employees who, in
the judgment of the Committee, may be Covered Employees, under
Code Section 162(m)(3). With respect to the grant of Restricted
Stock, the Committee may establish performance goals applicable to
Restricted Stock granted to Grantees in such manner as shall
permit the Grant to qualify as "performance-based compensation" as
described in Section 162(m)(4)(C) of the Code. It is specifically
provided that the material terms of such performance goals for
Grantees shall, until changed by the Committee, with the approval
of the shareholders, be as follows: (i) the business criterion on
which performance goals shall be based shall be
- the attainment of such levels of either earnings per share
from continuing operations or shareholder return as may be
specified by the Committee; or
- the attainment of certain revenue or pre-tax income levels,
as established by the Committee; and
(ii) the maximum number of shares of Restricted Stock which may be
granted to any Grantee in any one calendar year shall not exceed
200,000 shares. In all events, determinations under the preceding
sentence shall be made in a manner which is consistent with Code
Section 162 and the regulations promulgated thereunder.
7.7 AWARDS OF RESTRICTED STOCK TO OUTSIDE DIRECTORS. Each Outside
Director shall be eligible to receive an award of Restricted Stock pursuant to
SUBSECTION 7.6, but only in accordance with the provisions of this SECTION 7.7.
(a) NUMBER OF SHARES. Each person who is an Outside Director as
of October 1, 1998, shall be granted shares of Restricted Stock
having a Fair Market Value, as of September 30, 1998, of $4,000
(such number of shares to be rounded to the nearest whole share).
On June 1 of each year thereafter (or, if the Company's annual
meeting of shareholders for such year has not been held by June 1,
on the day following the date of such annual meeting of
shareholders), each Outside Director shall be granted a number of
shares of Restricted Stock having an aggregate Fair Market Value
of $6,000.
(b) VESTING Restricted Stock granted pursuant to this
SUBSECTION 7.7 shall vest in three equal annual installments
beginning on the first anniversary of the date such shares of
Restricted Stock are granted and shall vest only if the Outside
Director is serving as an Outside Director on the applicable
vesting date. Any shares of Restricted Stock that have not vested
on or before the date of an Outside Director's termination of
service as an Outside Director shall be forfeited as of such date.
Notwithstanding the foregoing, any unvested shares of Restricted
Stock that have not otherwise been forfeited shall vest
immediately upon (a) a Change of Control, (b) the death of such
Outside Director, (c) the resignation of such Outside Director by
reason of permanent and total disability, (d) the expiration of
such Outside Director's term as a director, if the Board did not
nominate such Outside Director for re-election to the Board upon
such expiration, and the Board's failure to do so was for reasons
other than (i) such Outside Director's misconduct or failure to
properly discharge his or her
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<PAGE> 11
duties as a director or (ii) such Outside Director's request that
he or she not be nominated for re-election to the Board.
(c) RIGHTS OF OWNERSHIP. A holder of Restricted Stock granted
pursuant to this SUBSECTION 7.7 shall have the right to receive
dividends on such Shares, when and as dividends are declared on
the Common Stock, and shall have the right to vote such Shares on
all matters on which holders of Common Stock shall be entitled to
vote.
8. NON-TRANSFERABILITY.
Unless otherwise provided in the applicable Agreement, each Option
granted and Restricted Stock awarded hereunder shall not be assignable or
transferable other than by will or the laws of descent and distribution and
Options may be exercised, during the Optionee's lifetime, only by the Optionee.
9. EXERCISE OF OPTIONS.
9.1 MANNER OF EXERCISE AND PAYMENT. Subject to the provisions hereof
and the provisions of the Agreement under which it was granted, each Option
shall be exercised by delivery to the Company's treasurer of written notice of
intent to purchase a specific number of Shares subject to the Option. The Option
Price of any Shares as to which an Option is exercised shall be paid in full at
the time of the exercise, unless and to the extent that the Committee agreed in
the Agreement in which the Option was granted to accept a promissory note as
provided in SUBSECTION 9.2 below. Payment may, at the election of the Optionee,
be made in (i) cash, (ii) Shares valued at its Fair Market Value on the date of
exercise, (iii) surrender of an exercisable Option covering Shares with an
aggregate Fair Market Value as the date of exercise in excess of the Option
Price of such Option equal to the Option Price of the Options sought to be
exercised, (iv) through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount in cash equal to the Option Price, or
(v) any combination of the foregoing. In certain circumstances, payment may also
be made in accordance with SUBSECTION 9.3 below.
9.2 RELOAD OPTION. Pursuant to SUBSECTION 4.2(d)(v) hereof, the
Committee may, in its sole discretion, award Reload Options in an amount equal
to the number of Shares delivered in payment of the Option Price in connection
with the exercise of an Option. To the extent required by applicable law, the
number of Reload Options available to each Optionee shall be set forth in each
award. The Option Price for any Reload Option shall be the Fair Market Value of
a Share on the date that Shares are surrendered in payment of the Option Price.
Other terms of the Reload Option shall be the same as the terms contained in the
Agreement relating to the Option being exercised, provided that if a Reload
Option is granted in connection with the use of Shares to pay the exercise price
of an Incentive Stock Option, the Reload Option shall be a Nonstatutory Stock
Option.
9.3 DEFERRED PAYMENT OF OPTION PRICE. To the extent permitted by
applicable law, the Committee may agree in the Agreement in which an Option is
granted to accept as partial payment for the Shares a promissory note of the
Optionee evidencing his or her obligation to make further cash payment therefor;
provided, however, that in no event may the Committee accept a promissory note
for an amount in excess of the difference between the aggregate Option Price and
the par value of the Shares. Promissory notes made pursuant to this SUBSECTION
9.3 shall be payable as determined by the Committee, shall be secured by a
pledge of the Shares in respect of the purchase of which the promissory note is
being delivered and shall bear interest at a rate fixed by the Committee (which
rate shall not be lower than a reasonable commercial rate).
10. ACCELERATED EXERCISE.
Notwithstanding any other provisions of the Plan, all unexercised Options
and non-vested Restricted Stock awards may be exercised or disposed of
commencing on the date of a Change of Control, as defined in SECTION 16 hereof;
provided, however, that the Company may cancel all such Options and Restricted
Stock under the Plan as of the date of a Change of Control by giving notice to
each Optionee or Grantee thereof, as the case may be, of its intention to do so
and by permitting the purchase during the thirty-day period next preceding such
effective date of all of the Shares subject to such outstanding Options or by
payment for outstanding Restricted Stock during such thirty-day period.
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<PAGE> 12
11. GRANT OF STOCK OPTIONS TO OUTSIDE DIRECTORS.
Each Outside Director shall be eligible to be granted Nonstatutory Stock
Options and all such grants shall only be made under and in accordance with the
provisions of this SECTION 11.
11.1 GRANT TO OUTSIDE DIRECTORS. Each person who becomes an Outside
Director during 1994 shall be granted, on the date such person first becomes an
Outside Director, a Nonstatutory Stock Option to purchase 1,000 Shares at an
Option Price equal to the initial public offering price of a share of Common
Stock in connection with the initial public offering of the Common Stock.
Thereafter, each Outside Director shall be granted on each date such person
first becomes an Outside Director or is re-elected as an Outside Director, which
shall be the Date of Grant, a Nonstatutory Stock Option to purchase 1,000 Shares
at an Option Price equal to the Fair Market Value of such shares on the Date of
Grant. Each Nonstatutory Stock Option shall provide that it may be exercised no
later than ten years following the Date of Grant and that the Nonstatutory Stock
Option shall become exercisable with respect to the 500 Shares beginning on the
third anniversary of the Date of Grant and 500 Shares beginning on the fourth
anniversary of the Date of Grant, provided that the Optionee remains a director
of the Company on such third and fourth anniversaries of the Date of Grant.
11.2 INSUFFICIENT SHARES AVAILABLE. If on any date on which
Nonstatutory Stock Options are to be granted pursuant to SUBSECTION 11.1 above
there is an insufficient number of Shares available pursuant to SECTION 3 hereof
for such grant, the number of Shares subject to each Option granted pursuant to
SUBSECTION 11.1 on such date shall equal the number of Shares that otherwise
would be subject to such Nonstatutory Stock Options but for such limitation
multiplied by a fraction, the numerator of which shall be the total number of
Shares then available pursuant to SECTION 3 for the grant of Nonstatutory Stock
Options, and the denominator of which shall be the aggregate number of Shares
that otherwise would be granted pursuant to SUBSECTION 11.1, such product to be
rounded down to the nearest whole number.
11.3 CHANGE OF CONTROL. Notwithstanding the provisions of SUBSECTION
11.1, a Nonstatutory Stock Option granted pursuant to SUBSECTION 11.1 may be
exercised in full upon a Change of Control.
12. NOTIFICATION UNDER SECTION 83(b).
Provided that the Committee has not prohibited such Optionee or Grantee,
as the case may be, from making the following election, if an Optionee or
Grantee shall, in connection with the exercise of any Option or the award of
Restricted Stock, respectively, make the election permitted under Section 83(b)
of the Code (i.e., an election to include in such Optionee's or Grantee's gross
income in the year of transfer the amounts specified in Section 83(b) of the
Code), such Optionee or Grantee shall notify the Committee of such election
within ten days of filing notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
13. WITHHOLDING TAXES.
The Company shall be entitled to require as a condition of delivery of
Shares hereunder that the Optionee or Grantee, as the case may be, remit an
amount sufficient to satisfy all federal, state, and other governmental
withholding tax requirements related thereto.
14. ELECTIVE SHARE WITHHOLDING.
14.1 An Optionee or Grantee may, subject to Committee approval, elect
the withholding ("Share Withholding") by the Company of a portion of the Shares
otherwise deliverable to such Optionee or Grantee upon his or her exercise of an
Option or vesting of a Restricted Stock award having a Fair Market Value equal
to either (a) the amount necessary to satisfy such Optionee's or Grantee's
required federal, state, or other governmental withholding tax liability with
respect thereto, or (b) a greater amount, not to exceed the estimated total
amount of such Optionee's or Grantee's tax liability with respect thereto.
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14.2 SHARE WITHHOLDING IS SUBJECT TO COMMITTEE APPROVAL. Share
Withholding is subject to Committee approval and each Share Withholding election
by an Optionee or Grantee shall also be subject to the following restrictions:
(a) the election must be made prior to the date on which the
amount of tax to be withheld is determined; and
(b) the election shall be irrevocable.
15. TERMINATION OF EMPLOYMENT.
15.1 FORFEITURE. Subject to the provisions of SUBSECTION 7.4 hereof
with respect to Incentive Stock Options and the provisions of SUBSECTION 7.6(c)
hereof with respect to Restricted Stock, unless otherwise provided in an
applicable Agreement, an unexercised Option or non-vested Restricted Stock award
shall terminate and/or be forfeited upon the date on which the Optionee or
Grantee thereof, as the case may be, is no longer an Employee ("Termination of
Employment"), except that:
(a) DEATH. If the Optionee's or Grantee's Termination of
Employment is by reason of his or her death, unexercised Options
to the extent exercisable on the date of the Optionee's death, may
be exercised, in whole or in part, at any time within one (1) year
after the date of the death by the Optionee's personal
representative or by the person whom the Options are transferred
by will or the applicable laws of descent and distribution and
non-vested Restricted Stock awards shall become vested on the date
of the Grantee's death.
(b) RETIREMENT. If the Optionee's or Grantee's employment is
terminated as a result of retirement under the provisions of a
retirement plan of the Company or any of its affiliates applicable
to the Optionee or Grantee (or on or after age 60 if no retirement
plan of the Company or any of its affiliates are applicable to the
Optionee or Grantee), any unexercised Option to the extent
exercisable at the date of such Termination of Employment, may be
exercised, in whole or in part, at any time within 90 days after
the date of such Termination of Employment, and non-vested
Restricted Stock awards shall become vested; provided that, if the
Optionee dies after such Termination of Employment and before the
expiration of such 90-day period, unexercised Options held by such
deceased Optionee may be exercised by his or her personal
representative or by the person to whom the Option is transferred
by will or the applicable laws of descent and distribution within
one year after the Optionee's Termination of Employment.
(c) PERMANENT DISABILITY. If the Optionee's or Grantee'
employment is terminated as a result of his or her Permanent
Disability, any unexercised Option, to the extent exercisable at
the date of such Termination of Employment, may be exercised, in
whole or in part, at any time within one year after the date of
such Termination of Employment, and non-vested Restricted Stock
awards shall become vested; provided that, if an Optionee dies
after such Termination of Employment and before the expiration of
such one year period, the unexercised Options may be exercised by
the deceased Optionee's personal representative or by the person
to whom the unexercised Options are transferred by will or the
applicable laws of descent and distribution within one year after
the Optionee's Termination of Employment, or, if later, within 180
days after the Optionee's death.
(d) OTHER REASONS FOR TERMINATION. If the Optionee or Grantee
has a Termination of Employment for any reason other than by
death, retirement or Permanent Disability, any unexercised Option
to the extent exercisable on the date of such Termination of
Employment, may be exercised, in whole or in part, at any time
within 90 days from the date of such Termination of Employment.
15.2 OPTION TERM. Any of the provisions herein to the contrary
notwithstanding, no Option shall be exercisable beyond the term specified in the
related Agreement thereof.
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16. CHANGE OF CONTROL.
16.1 DEFINITION OF "CHANGE OF CONTROL." The term "Change of Control"
means any of the following events and, if more than one of the following events
shall occur, each such event shall constitute a separate Change of Control.
(a) ACQUISITION OF STOCK. The acquisition, by a person or group
of persons acting in concert, of a beneficial ownership interest in the
Company, resulting in the total beneficial ownership of such persons or
group of persons equaling or exceeding 20% of the outstanding common
stock of the Company. The Change of Control shall be deemed to occur on
the date the beneficial ownership of the acquiring person or group of
persons first equals or exceeds 20% of the outstanding common stock of
the Company.
(b) CHANGE IN BOARD COMPOSITION. A change, within any period of
twenty-four months or less, in the composition of the Board such that at
the end of such period a majority of the directors who are then serving
were not serving at the beginning of such period, unless at the end of
such period a majority of the directors in office were nominated upon the
recommendation of a majority of the Board at the beginning of such
period. The Change of Control shall be deemed to occur on the date of the
last director necessary to result in a Change of Control takes office or
resigns from office, as applicable.
(c) MERGER, CONSOLIDATION OR OTHER REORGANIZATION. The merger,
consolidation or other reorganization having substantially the same
effect, or the sale of all or substantially all the consolidated assets
of the Company. Such Change of Control shall be deemed to occur on the
date which the transaction is approved by the Company's stockholders.
16.2 EFFECT OF OPTIONEE'S OR GRANTEE'S PARTICIPATION IN CHANGE OF
CONTROL. Notwithstanding the foregoing provisions of this SECTION 16, a Change
of Control shall be deemed not to have occurred with respect to any Optionee or
Grantee, if such Optionee or Grantee is, by written agreement, a participant on
his or her own behalf in a transaction in which the persons (or their
affiliates) with whom such Optionee or Grantee has the written agreement acquire
the Company and, pursuant to the written agreement the Optionee or Grantee has
an equity interest in the resulting entity.
16.3 NOTICE OF CHANGE OF CONTROL. The Company shall notify all
Optionees and Grantees of the occurrence of a Change of Control promptly after
its occurrence, but any failure of the Company to notify shall not deprive the
Optionees or Grantees of any rights accruing hereunder by virtue of a Change of
Control.
17. SUBSTITUTED OPTIONS.
If the Committee cancels, with the consent of an Optionee, any Option
granted under the Plan, and a new Option is substituted therefor, then the
Committee may, in its discretion, provide that the Date of Grant of the canceled
Option shall be the date used to determine the earliest date or dates for
exercising the new substituted Option under SUBSECTION 7.2 hereof so that the
Optionee may exercise or dispose of the substituted Option at the same time as
if the Optionee had held the substituted Option since the Date of Grant of the
canceled Option.
18. SECURITIES LAW MATTERS.
18.1 INVESTMENT INTENT REPRESENTATION; RESTRICTIVE LEGEND. Where an
investment intent representation or restrictive legend is deemed necessary to
comply with the Securities Act of 1933, as amended, the Committee may require a
written representation to that effect by the Optionee or Grantee, or may require
that such legend be affixed to certificates for Shares at the time the Option is
exercised.
18.2 COMPANY'S RIGHT TO POSTPONE EXERCISE. If based upon the opinion of
the counsel to the Company, the Committee determines that the exercise of any
Options would violate any applicable provisions of (i) state or federal
securities law, or (ii) the listing requirements of any securities exchange
registered under the Exchange Act on which are listed any of the Company's
equity securities, then the Committee may postpone any such exercise; provided,
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however, that the Company shall use its best efforts to cause such exercise to
comply with all such provisions at the earliest practicable date; and provided
further, that the Committee's authority under this SUBSECTION 18.2 shall expire
from and after the date of any Change of Control.
18.3 RULE 16b-3 COMPLIANCE. With respect to officers, directors and 10%
stockholders of the Company subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board and the Committee.
19. FUNDING.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets are to be used for payment of, benefits under the Plan.
20. NO EMPLOYMENT RIGHTS.
Neither the establishment of the Plan, nor the granting of any rights
under the Plan shall be construed to (a) give any Optionee or Grantee the right
to remain employed by the Company, the Limited Partnership or any of their
affiliates or to any benefits not specifically provided by the Plan, or (b) in
any manner modify the right of the Company, the Limited Partnership or any of
their affiliates to modify, amend, or terminate any of its employee benefit
plans.
21. STOCKHOLDER RIGHTS.
An Optionee or Grantee shall not, by reason of any right granted
hereunder, have any right as a stockholder of the Company with respect to the
Shares which may be deliverable upon exercise of such Option or vesting of
Restricted Stock until such Shares have been delivered to him or her.
22. NATURE OF PAYMENTS.
Any and all grants or deliveries of Shares hereunder shall constitute
special incentive payments to the Optionee or Grantee and shall not be taken
into account in computing the amount of salary or compensation of the Optionee
or Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company, the Limited Partnership
or any of their affiliates, or (b) any agreement between the Company, the
Limited Partnership or any of their affiliates, on the one hand, and the
Optionee or Grantee, on the other hand, except as such plan or agreement shall
otherwise expressly provide.
23. NON-UNIFORM DETERMINATIONS.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive grants and awards under the Plan
(whether or not such persons are similarly situated). Without limiting the
generality of the foregoing, the Committee shall entitled, among other things,
to make non-uniform and selective determinations, to enter into non-uniform and
selective Option agreements and Restricted Stock agreements as to (a) the
persons to receive awards under the Plan, (b) the terms and provisions of awards
under the Plan, and (c) the treatment, under SECTION 15 hereof, of leaves of
absence.
24. ADJUSTMENTS.
Any Option or Restricted Stock Agreement entered into hereunder may
contain such provisions as the Committee shall determine for equitable
adjustment of (a) the number of Shares covered thereby, (b) the Option Price, or
(c) otherwise, to reflect a stock dividend, stock split, reverse stock split,
Share combination, recapitalization, merger, consolidation, asset spin-off,
reorganization, or similar event, of or by the Company. In any such event,
regardless of
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whether specified in an Agreement, the aggregate number of Shares available
under the Plan shall be appropriately adjusted to equitably reflect such event.
25. AMENDMENT OF THE PLAN.
25.1 BOARD'S AUTHORITY TO MODIFY. The Board may make such modifications
of the Plan as it shall deem advisable; provided, however, no modifications
shall be made which would impair the rights of any Optionee or Grantee
theretofore granted or awarded without his or her consent; and provided further,
the Board may not, without further approval of the stockholders of the Company,
except as provided in SECTION 24 above, either:
(a) materially increase the number of Shares reserved for
issuance under the Plan;
(b) materially increase the benefits accruing to participants
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) extend the date of termination of the Plan.
25.2 DEFINITION OF MATERIAL. For purposes of this SECTION 25, the term
"material" shall be construed in accordance with the Commission's interpretive
views, as modified from time to time, regarding stockholder approval for
amendments to employee benefit plans intended to comply with Rule 16b-3 under
Section 16 of the Exchange Act.
26. TERMINATION OF THE PLAN. The Plan shall terminate on the tenth
anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect any
rights then outstanding under the Plan.
27. CONTROLLING LAW. The Plan shall be governed, construed and administered
in accordance with the laws of the State of Delaware, except its laws with
respect to choice of law, and the intention of the Company that Incentive Stock
Options granted under the Plan qualify as such under Section 422 of the Code.
28. MAINTAINING REIT STATUS. Subject to SECTIONS 3 and 11 hereof, there is no
limit on the number of Shares that may be subject to awards or grants to any one
Outside Director or Employee under the Plan, except that the Committee shall not
take any action or make any grants or awards hereunder that could cause the
Company to fail to qualify as a real estate investment trust for federal income
tax purposes.
29. ACTION BY THE COMPANY. Any action required by the Company under the Plan
shall be by resolution of the Board.
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