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EXHIBIT A3
November [ ], 2000
<<FirstName>><<LastName>>
<<Address1>>
<<City>>,<<State>><<PostalCode>>
Dear<<FirstName>>:
The Mills Corporation is offering to purchase all of our outstanding
options with an exercise price of $23.50 or more (the "options") that were
issued under the 1994 Amended and Restated Executive Equity Incentive Plan or
the 1999 Stock Option Plan (the "plans"). In exchange for the options, we will
issue optionholders "restricted stock" that will be subject to certain
restrictions until the shares vest. This offer is made pursuant to the terms and
conditions set forth in the accompanying offer to purchase and letter of
transmittal (the "offer"). WE ARE NOT OBLIGATED TO PURCHASE ANY OPTIONS IF
OPTIONHOLDERS AS A GROUP TENDER LESS THAN 700,000 OPTIONS. HOWEVER, WE MAY
CHOOSE TO PURCHASE LESS THAN 700,000 OPTIONS IF LESS THAN 700,000 ARE TENDERED.
You may tender all, a portion or none of your options. Your outstanding
options eligible for purchase in the offer are listed by grant date on Schedule
A, attached to the offer to purchase. The option values shown on Schedule A are
based on 50% of each option's value under the Binomial stock option valuation
formula. These values will be applied to all outstanding options tendered,
regardless of vesting status. If you tender all of your options and your options
are accepted for purchase, you will receive the number of shares of restricted
stock set forth in Schedule A. If your tender is for less than all of your
options and your options are accepted for purchase, you will receive a portion
of the total number of shares set forth in Schedule A equal to the value of the
number of option shares you tender.
The award of restricted stock will be subject to the terms of the plans
and a new restricted stock award agreement between you and us. If we accept your
options for purchase, we will forward the new restricted stock award agreement
to you promptly after expiration of the offer. The restricted stock you will
receive vests in three equal annual installments beginning April 1, 2001.
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There are no immediate tax consequences of receiving restricted stock in
exchange for your options, unless you make an election under Section 83(b) of
the Internal Revenue Code. A more detailed discussion of the tax consequences
occurring when the restricted stock vests, and of the Section 83(b) election, is
contained in Section 13 of the offer to purchase.
If you decide to tender your options pursuant to the offer, please
complete, sign and return the letter of transmittal, along with the option
agreement(s) evidencing your options, to:
The Mills Corporation
1300 Wilson Boulevard
Suite 400
Arlington, Virginia 22209
Attn: Michael Rodis
prior to the expiration of the offer.
PLEASE NOTE THAT YOUR PARTICIPATION IN THE OFFER IS COMPLETELY VOLUNTARY.
We neither require nor request that you tender your options in the offer.
Furthermore, we suggest that before you make your decision, you consult with
your own legal, financial and accounting advisers as to the consequences of
tendering your options in the offer.
If you have any questions concerning the offer, please contact Michael
Rodis, our Vice President of Human Resources, at (703) 526-5000.
Very truly yours,
---------------
Laurence C. Siegel
Chairman of the Board and Chief
Executive Officer
.
