EXECUTION VERSION
RETIREMENT
AGREEMENT
This Retirement Agreement (“
Agreement ”) dated as of September 29, 2006 is
made by and between Laurence C. Siegel (“ Executive
”) and The Mills Corporation (the “ Company
”) (collectively referred to as the “ Parties
”).
WHEREAS, Executive is an employee
and director of the Company and currently serves as the Chief
Executive Officer and the Chairman of the Board of Directors of the
Company (the “ Board ”);
WHEREAS, the Company and Executive
are parties to an Employment Agreement, dated as of April 1,
2004 (the “ Employment Agreement ”);
WHEREAS, the Company and Executive
are parties to an Indemnification Agreement, dated April 21,
1994 (the “ Indemnification Agreement
”);
WHEREAS, Executive desires to retire
as an employee of the Company to pursue work with Colony and Kan Am
on the Meadowlands Project (each as defined herein);
WHEREAS, pursuant to
Section 6.9 of the Employment Agreement, Executive and the
Company have determined that Executive shall retire as an employee
of the Company and resign his employment with the Company as of the
Effective Date (as defined in Section 21 below);
WHEREAS, as of the Effective Date,
Executive will become the Non-Executive Chairman of the Board,
subject to the provisions of Sections 1(c) and 1(d) herein, and
shall resign as an officer of any of the Company’s
subsidiaries or affiliated entities;
WHEREAS, the Company and Executive
desire to provide for consulting services, whereby the Company will
benefit from the services of Executive following his retirement as
Chief Executive Officer and an employee of the Company upon the
Effective Date; and
WHEREAS, the Company and Executive
desire to make provision for the payments, accelerated vesting of
restricted stock and benefits that Executive will be entitled to
receive from the Company in consideration for Executive’s
obligations and actions under this Agreement.
NOW THEREFORE, in consideration of
the promises and agreements contained herein and other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, and intending to be legally bound, the Parties
hereby agree as provided below. Capitalized terms used herein and
not otherwise defined shall have the meaning given to such terms in
the Employment Agreement.
1. Retirement from and
Resignation of Employment and Continued Service on the Board
.
(a) Executive hereby, effective as
of the Effective Date, retires and resigns as Chief Executive
Officer and an employee of the Company, subject to the provisions
hereof.
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Executive hereby, effective as of the Effective
Date, resigns from every position Executive holds as an officer or
director of any of the Company’s subsidiaries or affiliated
entities.
(b) Executive’s retirement and
resignation as Chief Executive Officer and as an employee of the
Company, effective as of the Effective Date, shall be pursuant to
Section 6.9 of the Employment Agreement, and, except as
specifically provided herein, the terms of this Agreement shall
supersede in all respects the terms of the Employment
Agreement.
(c) Subject to Section 1(d)
herein, as of the Effective Date, Executive shall retain his
position as a director of the Board, and his title as Chairman of
the Board shall become “Non-Executive Chairman of the Board
of Directors”, subject to the Company’s certificate of
incorporation, by-laws, and applicable law. From the Effective Date
to December 31, 2006, Executive shall not be eligible to
receive any fees or other compensation that the Company provides to
non-employee directors of the Board. On January 1, 2007 and
thereafter, while Executive serves as a non-employee director of
the Company, Executive shall be eligible to receive the same fees
and other compensation that the Company provides to non-employee
directors of the Board.
(d) To the extent that the Company
or any of its affiliates shall consummate the transaction with
Colony Capital Acquisition, LLC (“ Colony ”) and
Kan Am USA Management XXII Limited Partnership (“ Kan
Am ”) pursuant to which Colony would (i) arrange for
construction financing for the Meadowlands Xanadu development
project (the “ Meadowlands Project ”) and
(ii) make a significant equity infusion into the joint venture
for the Meadowlands Project that currently includes Kan Am and the
Company (the “ Meadowlands Transaction ”), then
upon consummation of the Meadowlands Transaction, Executive shall
resign from his position as Non-Executive Chairman of the Board
immediately on the date the Meadowlands Transaction is consummated,
and thereafter Executive shall remain a director of the Company
, subject to the Company’s certificate of
incorporation, by-laws, and applicable law.
2. Press Release . The
Company consult with the Executive on the initial press release
associated with Executive’s retirement, and will consider, in
good faith, any comments that the Executive may have with respect
to such initial draft relating to the description of his retirement
and resignation contained therein.
3. Consideration . The
Company agrees to provide Executive with the following:
(a) Accrued Compensation .
Subject to the following sentence, the Company shall pay to the
Executive: (i) all of Executive’s accrued but unpaid
base salary, as such amount is provided pursuant to
Section 4.1 of the Employment Agreement, which is owed to
Executive through the Effective Date; (ii) all of
Executive’s accrued but unpaid amounts, as provided pursuant
to Section 5.2 of the Employment Agreement, which is owed to
Executive through the Effective Date; (iii) all of
Executive’s accrued but unpaid vacation time as of the
Effective Date; and (iv) all unpaid ordinary and reasonable
business expenses incurred by Executive in connection with the
Company’s business through the Effective Date, including, any
travel and lodging business expenses involving the Meadowlands
Transaction, in accordance with the Company’s policies in
effect as of the Effective Date for senior executives
(collectively, the “ Accrued Compensation ”).
The Company shall pay the Accrued Compensation to
Executive
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within fourteen (14) calendar days
following the date on which the Chief Financial Officer of the
Company determines the applicable amount of the Accrued
Compensation that is due and owing to Executive; provided, however,
that any such determination will be made on or prior to
October 31, 2006. For the avoidance of doubt, the Company
represents and the Executive agrees that the Executive has never,
through the Effective Date, elected to have the Company deposit any
compensation, including any portion of the Accrued Compensation,
into the “Trust”, as such term is defined in
Section 4.6 of the Employment Agreement.
(b) Continuation of Benefits
. Executive shall be eligible to elect to receive
“COBRA” continuation coverage, to the extent permitted
by Section 601 et seq . of the Employee Retirement
Income Security Act of 1974, as amended (the “ COBRA
Coverage ”), as of the date that Executive ceases to
receive coverage under the Company’s group medical and dental
insurance plans due to his retirement as an employee of the Company
and his resignation of employment with the Company as of the
Effective Date. Subject to Section 3(f), provided that
Executive, and if applicable, his spouse and dependents, elect to
receive COBRA Coverage, for a two (2) year period following
the Effective Date, the Company agrees to reimburse Executive for,
or to directly pay to the applicable medical and dental insurance
carrier, the cost of any premiums incurred by the Executive to
secure COBRA Coverage for himself, his spouse and his dependents
under the Company’s group medical and dental insurance plans
at the same coverage level applicable to employees of the Company
generally.
(c) Legal Fees Reimbursement
. The Company agrees to pay Executive’s legal fees and costs
(and related disbursements) incurred in connection with
Executive’s retirement from and resignation of his employment
and consulting arrangement with the Company in the amount of
$50,000, which shall be payable as a lump sum on the date that is
six months (6) and one day following the Effective Date, or
such earlier date as may be permitted by guidance under
Section 409A of the Internal Revenue Code of 1986, as amended,
(the “ Code ”).
(d) Severance Payment . The
Company agrees to pay Executive as severance pay and, except as
otherwise provided herein, in lieu of any further compensation for
periods subsequent to the Effective Date, a lump-sum cash amount
equal to $2,500,000 (the “ Severance Payment ”),
which shall be payable on the date that is six months and one day
following the Effective Date, or such earlier date as may be
permitted by guidance under Code Section 409A.
(e) Change in Control Payment
. In the event that, on or prior to December 31, 2007, a
Change in Control (as defined in Section 3(g) below) shall
have occurred, then, subject to Section 3(f), within five
(5) calendar days following such Change in Control, the
Company shall make a lump-sum cash payment to the Executive in an
amount equal to $10,500,000 (the “Change in Control
Payment” ).
(f) Except as otherwise may be
permitted by guidance under Code Section 409A, no Change in
Control Payment or other payments referenced herein, including any
benefits continuation payments made by the Company pursuant to
Section 3(b) (the “ Applicable Payments ”),
will be paid during the six-month period following the Effective
Date if the Board determines, in its good faith judgment, that
paying such amounts within the six-month period following the
Effective Date would cause the Executive to incur an additional tax
under Code Section 409A. To the extent the payment of any
portion of the Applicable Payments
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is delayed as a result of the previous sentence,
on the first day following the end of the six-month period, the
Company will pay the Executive a lump-sum cash payment in an amount
equal to that portion of the Applicable Payments which would have
otherwise been previously paid to the Executive under this
Agreement but for the delay set forth in this
Section 3(f).
(g) For the purposes of this
Agreement, a “ Change in Control ” of the
Company shall be deemed to have occurred as of the first day on
which any one of the following conditions shall have been
satisfied:
(i) the acquisition of beneficial
ownership, as such term is defined in the Securities Exchange Act
of 1934, as amended (the “ Exchange Act ”), in a
single transaction or series of related transactions (by tender
offer or otherwise), of more than fifty percent (50%) of the
voting securities of the Company by a single person or entity
(other than the Company) or “group” within the meaning
of Section 13(d)(3) of the Exchange Act, whether through the
acquisition of previously issued and outstanding voting securities,
or of voting securities that have not been previously issued, or
any combination thereof; or
(ii) there shall be consummated any
consolidation, merger, business combination or reorganization
involving the Company or the securities of the Company in which
holders of voting securities of the Company immediately prior to
such consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if the Company
does not survive such transaction, voting securities of the
corporation surviving such transaction) having less than fifty
percent (50%) of the total voting power in an election of
directors of the Company (or such other surviving
corporation);
(iii) there shall be consummated any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the
assets of the Company (on a consolidated basis) to a party which is
not a direct or indirect wholly-owned subsidiary of the Company,
including, without limitation, any sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company
(on a consolidated basis) that includes the assets of The Mills
Limited Partnership, a Delaware Limited Partnership (the “
Operating Partnership ”);
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(iv) (A) the individuals who
constituted the Company’s Board as of the Effective Date (the
“Incumbent Board” ) cease for any reason to
constitute at least a majority of the directors of the Company;
provided , however , that individuals whose election,
or whose nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds
(2/3) of the Incumbent Board shall be considered, for purposes
of this Agreement, members of the Incumbent Board; and
provided , further , that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened “election contest” (as described in
Rule 14a-11 promulgated under the Exchange Act) (an
“Election Contest” ) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person or entity other than the Company’s Board (a
“Proxy Contest” ), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
contest; and (B) the conditions giving rise to a Change in
Control pursuant to this clause (iv) shall also constitute a
Change in Control pursuant to any “change in control”
definition in any employment agreements, then in effect, between
the Company and the Chief Executive Officer of the Company and the
Company and the Chief Financial Officer of the Company;
or
(v) (A) the Company (or its
successor) no longer serves as the sole general partner of the
Operating Partnership other than as a result of (i) the merger
of the Operating Partnership with the Company or a subsidiary of
the Company, (ii) the redemption of all limited partnership
interests in the Operating Partnership by the Operating Partnership
or the purchase of all such limited partnership interests by the
Company, or (iii) the liquidation, dissolution or winding up
of the Operating Partnership; and (B) the conditions giving
rise to a Change in Control pursuant to this clause (iv) shall
also constitute a Change in Control pursuant to any “change
in control” definition in any employment agreements, then in
effect, between the Company and the Chief Executive Officer of the
Company and the Company and the Chief Financial Officer of the
Company.
Notwithstanding anything in this
Agreement to the contrary, a Change in Control shall be deemed not
to have occurred with respect to Executive if (A) any of the
foregoing transactions occurs with any employee benefit plan of the
Company, or with any trustee or fiduciary or committee of any
employee benefit plan of the Company, any affiliate of the Company,
any direct or indirect wholly-owned subsidiary of the Company or
any entity owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their
ownership of stock of the Company prior to the event that would
otherwise constitute a Change in Control, or (B) in the case
of a transaction or a series of related transactions described in
clause (iii) above, the primary use of proceeds is
to
