Exhibit 10.4
S
HORT
F
ORM
M
ERGER
O
PTION
A
GREEMENT
This AGREEMENT, dated as of
February 12, 2007 (this “ Option Agreement
”), among The Mills Corporation, a Delaware corporation (the
“ Company ”), SPG-FCM Ventures, LLC, a Delaware
limited liability company (“ Parent ”), and
SPG-FCM Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of Parent (“ Sub ”).
WHEREAS, concurrently with the
execution of this Option Agreement, the Company, The Mills Limited
Partnership, a Delaware limited partnership, Parent, Sub and
SPG-FCM Acquisition, L.P., a Delaware limited partnership, are
entering into an Agreement and Plan of Merger (as amended or
modified from time to time in accordance with its terms, the
“ Merger Agreement ”) providing for the making
of a tender offer (the “ Offer ”) to purchase
all of the issued and outstanding shares of the Company’s
Common Stock, par value $0.01 per share (the “ Shares
”), and, following the completion of the Offer, the merger
(the “ Merger ”) of Sub and the Company, in
which each Share not purchased pursuant to the Offer (other than
Shares owned by the Company, Parent or any of its wholly owned
subsidiaries and Shares as to which appraisal rights are asserted)
or not otherwise acquired by Parent will be converted into the per
share consideration paid pursuant to the Offer, in accordance with
the terms of the Merger Agreement; and
WHEREAS, the Company desires to
induce Parent and Sub to enter into the Merger Agreement and to
facilitate the prompt completion of the Merger following the
purchase of Shares pursuant to the Offer.
NOW, THEREFORE, the parties hereto
agree as follows:
1. Grant of Option . The
Company hereby irrevocably grants to Parent and Sub (or any
permitted assignee under Section 9 hereof) an option (the
“ Option ”) to purchase up to 43,114,769 newly
issued Shares, or such lesser
number of Shares as may be authorized but not
outstanding at the time of exercise of the Option (the “
Optioned Shares ”) (it being understood and agreed
that, for the avoidance of doubt, from and after the date hereof
and prior to the earlier of (i) the exercise of the Option and
(ii) the termination of the Merger Agreement in accordance
with its terms, the Company shall not, other than as contemplated
by or in compliance with the provisions of the Merger Agreement
(including the Company Disclosure Letter delivered in connection
therewith), issue any Shares that are not currently outstanding or
transfer any Shares which are issued but not outstanding) for a
consideration per share equal to the price per Share paid in the
Offer, payable at the time of exercise in the form of
(i) $0.01 in cash per Optioned Share and (ii) a
promissory note (a “ Note ”) of Parent in the
principal amount of the price per Share paid in the Offer less
$0.01, which Note shall (a) be due and payable 5 years
from the date of its issue, (b) bear interest, at the prime
rate in effect from time to time of Citibank N.A., payable annually
on each anniversary of the date of its issue, and (c) be
prepayable at any time without penalty at Parent’s
option.
2. Exercise of the Option .
The Option may be exercised by either Parent or Sub (or any
permitted assignee) at any time within six business days after the
later of (i) the first date of acceptance for payment by
Parent of Shares pursuant to the Offer in accordance with the terms
of the Merger Agreement and (ii) the expiration of any
subsequent offer periods under the Offer; provided that
Parent or Sub may only exercise the Option if, and for a number of
Shares so that, after the exercise of
- 2 -
the Option, Parent or Sub shall own at least 90%
of the outstanding Shares, after giving effect to the issuance of
the Optioned Shares and including any number of Shares held by
Parent immediately prior to the exercise of the Option. In the
event Parent, Sub or any permitted assignee wishes to exercise the
Option, Parent, Sub or any permitted assignee shall give written
notice (the “ Notice ”) to the Company
specifying the total number of Optioned Shares it will
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