Document:

Exhibit 10.8 to RC2 Aug 2005 Form 10-Q

    Exhibit
      10.8

    
 

    EMPLOYMENT
      AGREEMENT

    

    

    THIS
      EMPLOYMENT AGREEMENT is made as of April 4, 2005, by and between RC2
      Corporation, a Delaware corporation (the "Company"), and Helena Lo (the
      "Employee"). Certain capitalized terms used herein are defined in
      section 10 below.

    

    RECITALS

    

    A.    The
      Company and the Employee desire to terminate any and all prior agreements,
      whether oral or written, between the parties and between the Employee and the
      Company relating to the Employee’s employment.

    

    B.    The
      Company desires to employ the Employee and the Employee is willing to make
      her
      services available to the Company on the terms and conditions set forth
      below.

    

    AGREEMENTS

    

    In
      consideration of the premises and the mutual agreements which follow, the
      parties agree as follows:

    

    1.    Employment.
      The
      Company hereby employs the Employee and the Employee hereby accepts employment
      with the Company on the terms and subject to the conditions set forth in this
      Agreement.

    

    2.    Term.
      The
      term of the Employee's employment hereunder shall commence on the date hereof
      and shall continue until terminated as provided in section 6 below.

    

    3.    Duties.
      The
      Employee shall serve as the Managing Director of RC2 Ltd. and will, under the
      direction of the Company's Chief Executive Officer and the Board of Directors,
      faithfully and to the best of her ability, perform the duties of such position.
      The Employee shall be one of the principal executive officers and Senior
      Management of the Company and shall, subject to the control of the Chief
      Executive Officer and the Company's Board of Directors, have the normal duties,
      responsibilities and authority associated with such position. The Employee
      shall
      also perform such additional duties and responsibilities which may from time
      to
      time be reasonably assigned or delegated by the Chief Executive Officer or
      Board
      of Directors of the Company. The Employee agrees to devote her entire business
      time, effort, skill and attention to the proper discharge of such duties while
      employed by the Company.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.    Compensation.
      Effective April 4, 2005, the Employee shall receive a base salary of $230,000
      per year, payable in regular and equal monthly installments (the "Base Salary").
      

    

    5.    Fringe
      Benefits.

    

    (a)    Vacation.
      The
      Employee shall be entitled to four weeks of paid vacation annually. The Employee
      and the Company shall mutually determine the time and intervals of such
      vacation.

    

    (b)    Medical,
      Health, Dental, Disability and Life Coverage.
      The
      Employee shall be eligible to participate in any medical, health, dental,
      disability and life insurance policy in effect for the Senior Management of
      the
      Company. 

    

    (c)    Incentive
      Bonus and Stock Ownership Plans.
      The
      Employee shall be entitled to participate in any incentive bonus plan, incentive
      stock option or other stock ownership plan or other incentive compensation
      plan
      developed generally for the Senior Management of the Company, on a basis
      consistent with her position and level of compensation with the Company. Without
      limiting the foregoing, Employee shall be entitled to participate on a basis
      consistent with past practice and her position and level of compensation with
      the Company in the annual Incentive Bonus Plan and Top Management Additional
      Bonus Plan, together with all successor or other bonus plans (collectively,
      the
      "Bonus Plans"). In addition, Employee shall be entitled to receive annual stock
      option grants as provided on Schedule 5(c) attached hereto. The options will
      be
      granted pursuant to a Non-Statutory Stock Option Grant Agreement substantially
      in the form of Exhibit A attached hereto.

    

    (d)    Automobile.
      The
      Company agrees to reimburse the Employee up to $600.00 per month, as such amount
      may be increased from time to time consistent with the Company's reimbursement
      policy for the Senior Management of the Company to cover Employee's expenses
      in
      connection with her leasing of an automobile. Additionally, the Company will
      pay
      for the gas used for business purposes. All maintenance and insurance expense
      for the automobile is the responsibility of the Employee.

    

    (e) Reimbursement
      for Reasonable Business Expenses.
      The
      Company shall pay or reimburse the Employee for reasonable expenses incurred
      by
      her in connection with the performance of her duties pursuant to this Agreement
      including, but not limited to, travel expenses, expenses in connection with
      seminars, professional conventions or similar professional functions and other
      reasonable business expenses.

    

    
      
        
        

      

      
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    (f)    Key
      Man Insurance.
      The
      parties agree that the Company has the option to purchase one or more key man
      life insurance policies upon the life of the Employee. The Company shall own
      and
      shall have the absolute right to name the beneficiary or beneficiaries of said
      policy. The Employee agrees to cooperate fully with the Company in securing
      said
      policy, including, but not limited to submitting himself to any physical
      examination which may be required at such reasonable times and places as Company
      shall specify.

    

    (g)    Life
      and Disability Insurance.
      During
      the Employment Period, the Company shall provide coverage of at least $2 million
      of life insurance and 75% of Base Salary of disability insurance. Such insurance
      policies to be owned by any one or more members of Employee’s immediate family
      or by a trust for the primary benefit of Employee’s immediate family. The owner
      of the policy shall have the power to designate the beneficiary and to assign
      any rights under the policy. The Company shall pay 100% of the premiums required
      under these policies; provided, however, that the Company shall not be obligated
      to pay greater than $20,000 for such premiums during any fiscal year. In the
      event that the premiums for such policies would exceed this limitation, the
      Company shall consult with the Employee to determine the allocation of such
      amount to the premiums for each type of policy to obtain such insurance as
      may
      be available for an aggregate of $20,000 per fiscal year.

    

    6.    Termination.

    

    (a)    Termination
      of the Employment Period.
      The
      Employment Period shall continue until the earlier of: (i) March 31, 2008 unless
      the parties mutually agree in writing to extend the term of this Agreement
      (such
      date hereof or such extended date being referred to herein as the "Expected
      Completion Date"), (ii) the Employee's death or Disability, (iii) the
      Employee resigns or (iv) the Board of Directors determines that termination
      of Employee's employment is in the best interests of the Company (the
      "Employment Period"). The last day of the Employment Period shall be referred
      to
      herein as the "Termination Date."

    

    (b)    Definitions.

    

    (i)    For
      purposes of this Agreement, "Disability" shall mean a physical or mental
      sickness or any injury which renders the Employee incapable of performing the
      services required of her as an employee of the Company and which does or may
      be
      expected to continue for more than six months during any 12-month period. In
      the
      event Employee shall be able to perform her usual and customary duties on behalf
      of the Company following a period of disability, and does so perform such duties
      or such other duties as are prescribed by the Board of Directors for a period
      of
      three continuous months, any subsequent period of disability shall be regarded
      as a new period of disability for purposes of this Agreement. The Company and
      the Employee shall determine the existence of a Disability and the date upon
      which it occurred. In the event of a dispute regarding whether or when a
      Disability occurred, the matter shall be referred to a medical doctor selected
      by the Company and the Employee. In the event of their failure to agree upon
      such a medical doctor, the Company and the Employee shall each select a medical
      doctor who together shall select a third medical doctor who shall make the
      determination. Such determination shall be conclusive and binding upon the
      parties hereto.

    

    
      
        
        

      

      
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    (ii)    For
      purposes of this Agreement, "Cause" shall be deemed to exist if the Employee
      shall have [a] violated the terms of section 7 or section 8 of
      this
      Agreement in any material respect; [b] committed a felony or a crime
      involving moral turpitude; [c] engaged in serious misconduct which is
      demonstrably and materially injurious to the Company and its Subsidiaries;
      [d] engaged in fraud or dishonesty with respect to the Company or any
      of
      its Subsidiaries or made a material misrepresentation to the stockholders or
      directors of the Company with respect to an item, transaction or amount in
      excess of $10,000; or [e] committed acts of negligence in the performance
      of her duties which are demonstrably and materially injurious to the Company.
      In
      all cases, termination for Cause shall be determined solely by the Board of
      Directors and require a two-thirds majority vote. 

    

    (iii)    For
      purposes of this Agreement, "Good Reason" shall mean (1) the material
      diminution of the Employee's duties set forth in section 3 above or
      (2) the relocation of the offices at which the Employee is principally
      employed to a location which is more than 50 miles from the offices
      at
      which the Employee is principally employed as of the date hereof; provided,
      that
      travel necessary for the performance of the Employee's duties set forth in
      section 3 above shall not determine the location where the Employee
      is
      "principally employed."

    

    (c)    Termination
      for Disability or Death.
      In the
      event of termination for Disability, payments of the Employee's Base Salary
      shall be made to the Employee for a period of six months after the Termination
      Date in accordance with the normal payroll practices of the Company. In
      addition, for a period of three years after the Termination Date, the Company
      shall reimburse the Employee for amounts paid, if any, to continue medical,
      dental and health coverage pursuant to the provisions of the Consolidated
      Omnibus Budget Reconciliation Act, continue Employee's life insurance and
      disability coverage, to the extent limited by section 5(g) and to the extent
      permitted under applicable policies, and pay to the Employee a pro rata portion
      of any bonus payable for the year in which termination takes place (if any)
      based on the portion of the year occurring prior to the Termination Date. In
      the
      event of termination as a result of the death of Employee, Employee's designated
      beneficiary or her estate shall be entitled to receive the Base Salary accrued
      prior to the Termination Date together with the proceeds of any life insurance
      obtained pursuant to section 5(g), plus a lump sum payment when determinable
      equaling Employee's pro rata portion of any bonus payable under the Bonus Plans
      for the year in which termination takes place (if any) based on the portion
      of
      the year occurring prior to the Termination Date. 

    

    
      
        
        

      

      
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    (d)    Termination
      by the Company without Cause or by the Employee for Good Reason.
      If
      (i) the Employment Period is terminated by the Company for any reason
      other
      than for Cause, Disability or death, (ii) the Employment Period is
      terminated by the Company for what the Company believes is Cause or Disability,
      and it is ultimately determined that the Employment Period was terminated
      without Cause or Disability (iii) the Employee resigns for Good Reason,
      (iv) this Agreement is not renewed or otherwise extended by the Company after
      the Expected Completion Date, and the reason for such non-renewal or extension
      is not related to a termination for Cause, Disability or death of the Employee,
      the Employee shall be entitled to receive, as damages for such a termination,
      resignation or non-renewal, her Base Salary from the Termination Date to the
      second anniversary of the Termination Date to be paid in accordance with the
      normal payroll practices of the Company plus a lump sum payment equaling 100%
      of
      the average annual payments under the Bonus Plans over the preceding three
      years, provided, however, that if such a termination or resignation described
      in
      (i), (ii), (iii) or (iv) above occurs at any time after the occurrence of or
      in
      contemplation of a Change of Control, then Employee shall be entitled to receive
      a lump sum payment of her Base Salary from the Termination Date to the third
      anniversary of the Termination Date plus 200% of the average annual payments
      under the Bonus Plans over the preceding three years. If the Employee's
      employment is terminated in the manner described in this section 6(d),
      for
      a period of three years from the Termination Date, the Company shall reimburse
      the Employee for amounts paid, if any, to continue medical, dental and health
      coverage pursuant to the provisions of the Consolidated Omnibus Budget
      Reconciliation Act, continue Employee's life insurance and disability coverage
      to the extent limited by section 5(g) and to the extent permitted under the
      applicable policies, and pay to the Employee the fringe benefits pursuant to
      section 5 which have accrued prior to the Termination Date.

    

    (e)    Termination
      by the Company for Cause or by the Employee Without Good Reason.
      If the
      Employment Period is terminated by the Company with Cause or as a result of
      the
      Employee's resignation without Good Reason, the Employee shall not be entitled
      to receive her Base Salary or any fringe benefits or bonuses for periods after
      the Termination Date.

    

    (f)    Effect
      of Termination.
      The
      termination of the Employment Period pursuant to section 6(a) shall
      not
      affect the Employee's obligations as described in sections 7 and
      8.

    

    (g)    Acceleration
      of Option Vesting.
      Upon
      completion of a Change of Control, all options to purchase stock of the Company
      held by the Employee shall immediately vest and become exercisable by the
      Employee in accordance with their remaining terms. The Company agrees to take
      any and all actions necessary or appropriate to effectuate the acceleration
      of
      these options and to permit the Employee to exercise the options in accordance
      with their terms from and after this accelerated vesting date.

    

    
      
        
        

      

      
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    7.    Noncompetition
      and Nonsolicitation.
      The
      Employee acknowledges and agrees that the contacts and relationships of the
      Company and its Affiliates with its customers, suppliers, licensors and other
      business relations are, and have been, established and maintained at great
      expense and provide the Company and its Affiliates with a substantial
      competitive advantage in conducting their business. The Employee acknowledges
      and agrees that by virtue of the Employee's employment with the Company, the
      Employee will have unique and extensive exposure to and personal contact with
      the Company's customers and licensors, and that she will be able to establish
      a
      unique relationship with those Persons that will enable her, both during and
      after employment, to unfairly compete with the Company and its Affiliates.
      Furthermore, the parties agree that the terms and conditions of the following
      restrictive covenants are reasonable and necessary for the protection of the
      business, trade secrets and Confidential Information (as defined in
      section 8 below) of the Company and its Affiliates and to prevent great
      damage or loss to the Company and its Affiliates as a result of action taken
      by
      the Employee. The Employee acknowledges and agrees that the noncompete
      restrictions and nondisclosure of Confidential Information restrictions
      contained in this Agreement are reasonable and the consideration provided for
      herein is sufficient to fully and adequately compensate the Employee for
      agreeing to such restrictions. The Employee acknowledges that she could continue
      to actively pursue her career and earn sufficient compensation in the same
      or
      similar business without breaching any of the restrictions contained in this
      Agreement. 

    

    (a)    Noncompetition.
      The
      Employee hereby covenants and agrees that during the Employment Period and
      for
      two years thereafter (the "Noncompete Period"), except if employment is
      terminated by the Company or its successor after a Change in Control or this
      Agreement is not renewed or extended by the Company or its successor after
      the
      Expected Completion Date then the Noncompete Period shall be six months, she
      shall not, directly or indirectly, either individually or as an employee,
      principal, agent, partner, shareholder, owner, trustee, beneficiary,
      co-venturer, distributor, consultant, representative or in any other capacity,
      participate in, become associated with, provide assistance to, engage in or
      have
      a financial or other interest in any business, activity or enterprise which
      is
      competitive with the Company or any of its Affiliates or any successor or assign
      of the Company or any of its Affiliates. The ownership of less than a one
      percent interest in a corporation whose shares are traded in a recognized stock
      exchange or traded in the over-the-counter market, even though that corporation
      may be a competitor of the Company, shall not be deemed financial participation
      in a competitor. If the final judgment of a court of competent jurisdiction
      declares that any term or provision of this section is invalid or unenforceable,
      the parties agree that the court making the determination of invalidity or
      unenforceability shall have the power to reduce the scope, duration, or area
      of
      the term or provision, to delete specific words or phrases, or to replace any
      invalid or unenforceable term or provision with a term or provision that is
      valid and enforceable and that comes closest to expressing the intention of
      the
      invalid or unenforceable term or provision, and this Agreement shall be
      enforceable as so modified. The term "indirectly" as used in this section and
      section 8 below is intended to include any acts authorized or directed by or
      on
      behalf of the Employee or any Affiliate of the Employee.

    

    
      
        
        

      

      
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    (b)    Nonsolicitation.
      The
      Employee hereby covenants and agrees that during the Noncompete Period, she
      shall not, directly or indirectly, either individually or as an employee, agent,
      partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor,
      consultant or in any other capacity:

    

    (i)    canvass,
      solicit or accept from any Person who is a customer or licensor of the Company
      or any of its Affiliates (any such Person is hereinafter referred to
      individually as a "Customer," and collectively as the "Customers") any business
      which in competition with the business of the Company or any of its Affiliates
      or the successors or assigns of the Company or any of its Affiliates, including,
      without limitation, the canvassing, soliciting or accepting of business from
      any
      Person which is or was a Customer of the Company or any of its Affiliates within
      two years preceding the date of this Agreement, during the Employment
      Period or during the Noncompete Period;

    

    (ii)    advise,
      request, induce or attempt to induce any of the Customers, suppliers, or other
      business contacts of the Company or any of its Affiliates who currently have
      or
      have had business relationships with the Company or any of its Affiliates within
      two years preceding the date of this Agreement, during the Employment Period
      or
      during the Noncompete Period, to withdraw, curtail or cancel any of its business
      or relations with the Company or any of its Affiliates; and

    

    (iii)    hire
      or
      induce or attempt to induce any officer of the Company or any of its Affiliates
      to terminate his or her relationship or breach any agreement with the Company
      or
      any of its Affiliates unless such person has previously been terminated by
      the
      Company; or

    

    8.    Confidential
      Information.
      The
      Employee acknowledges and agrees that the customers, business connections,
      customer lists, procedures, operations, techniques, and other aspects of and
      information about the business of the Company and its Affiliates (the
      "Confidential Information") are established at great expense and protected
      as
      confidential information and provide the Company and its Affiliates with a
      substantial competitive advantage in conducting their business. The Employee
      further acknowledges and agrees that by virtue of her past employment with
      the
      Company, and by virtue of her employment with the Company, she has had access
      to
      and will have access to, and has been entrusted with and will be entrusted
      with,
      Confidential Information, and that the Company would suffer great loss and
      injury if the Employee would disclose this information or use in a manner not
      specifically authorized by the Company. Therefore, the Employee agrees that
      during the Employment Period and for five years thereafter, she will not,
      directly or indirectly, either individually or as an employee, agent, partner,
      shareholder, owner trustee, beneficiary, co-venturer distributor, consultant
      or
      in any other capacity, use or disclose or cause to be used or disclosed any
      Confidential Information, unless and to the extent that any such information
      

    
      
        
        

      

      
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    become
      generally known to and available for use by the public other than as a result
      of
      the Employee's acts or omissions. The Employee shall deliver to the Company
      at
      the termination of the Employment Period, or at any other time the Company
      may
      request, all memoranda, notes, plans, records, reports, computer tapes,
      printouts and software and other documents and data (and copies thereof)
      relating to the Confidential Information, Work Product (as defined below) or
      the
      business of the Company or any of its Affiliates which she may then possess
      or
      have under her control. The Employee acknowledges and agrees that all
      inventions, innovations, improvements, developments, methods, designs, analyses,
      drawings, reports and all similar or related information (whether or not
      patentable) which relate to the Company's or any of its Affiliate' actual or
      anticipated business research and development or existing or future products
      or
      services and which are conceived, developed or made by the Employee while
      employed by the Company and its Affiliates ("Work Product") belong to the
      Company or such Affiliate, as the case may be.

    

    9.    Common
      Law of Torts and Trade Secrets.
      The
      parties agree that nothing in this Agreement shall be construed to limit or
      negate the common law of torts or trade secrets where it provides the Company
      and its Affiliates with broader protection than that provided
      herein.

    

    10.    Definitions.

    

    "Affiliate"
      means,
      with respect to any Person, any other Person controlling, controlled by or
      under
      common control with such Person and any partner of a Person which is a
      partnership.

    

    “Change
      of Control”
      means:

    

    (a)    the
      acquisition by any individual, entity or group (within the meaning of
      Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
      as
      amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
      the
      meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
      more of
      either (i) the then outstanding shares of common stock of The Company
      (the
      "Outstanding Common Stock") or (ii) the combined voting power of the
      then
      outstanding voting securities of the Company entitled to vote generally in
      the
      election of directors (the "Outstanding Voting Securities"); provided, however,
      that the following acquisitions shall not constitute a Change of Control:
      (i) any acquisition directly from the Company, (ii) any acquisition
      by
      the Company, (iii) any acquisition by any employee benefit plan (or
      related
      trust) sponsored or maintained by the Company or any corporation controlled
      by
      the Company or (iv) any acquisition by any corporation pursuant to a
      transaction which complies with clauses (i), (ii) and (iii) of
      subsection (c) of this definition; or

    

    
      
        
        

      

      
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    (b)    individuals
      who, as of the date hereof, constitute the Board of Directors of the Company
      (the "Incumbent Board")
      cease
      for any reason to constitute at least a majority of the Board of Directors
      of
      the Company; provided, however, that any individual becoming a director
      subsequent to the date hereof whose election, or nomination for election by
      the
      Company's stockholders, was approved by a vote of at least a majority of the
      directors then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board, but excluding, for this
      purpose, any such individual whose initial assumption of office occurs as a
      result of an actual or threatened election contest with respect to the election
      or removal of directors or other actual or threatened solicitation of proxies
      or
      consents by or on behalf of a Person other than the Board of Directors of the
      Company; or

    

    (c)    approval
      by the stockholders of the Company of a reorganization, merger or consolidation
      (a "Business Combination"), in each case, unless, following such Business
      Combination, (i) all or substantially all of the individuals and entities
      who were the beneficial owners, respectively, of the Outstanding Common Stock
      and Outstanding Voting Securities immediately prior to such Business Combination
      beneficially own, directly or indirectly, more than 60% of, respectively, the
      then outstanding shares of common stock and the combined voting power of the
      then outstanding voting securities entitled to vote generally in the election
      of
      directors, as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company through one or more Subsidiaries) in
      substantially the same proportions as their ownership, immediately prior to
      such
      Business Combination of the Outstanding Common Stock and Outstanding Voting
      Securities, as the case may be, (ii) no Person (excluding any employee
      benefit plan (or related trust) of the Company or such corporation resulting
      from such Business Combination) beneficially owns, directly or indirectly,
      30%
      or more of, respectively, the then outstanding shares of common stock of the
      corporation resulting from such Business Combination or the combined voting
      power of the then outstanding voting securities of such corporation except
      to
      the extent that such ownership existed prior to the Business Combination and
      (iii) at least a majority of the members of the board of directors of
      the
      corporation resulting from such Business Combination were members of the
      Incumbent Board at the time of the execution of the initial agreement, or of
      the
      action of the Board of Directors of the Company, providing for such Business
      Combination; or

    

    (d)    approval
      by the stockholders of the Company of (i) a complete liquidation or
      dissolution of the Company or (ii) the sale or other disposition of
      all or
      substantially all of the assets of the Company, other than to a corporation,
      with respect to which following such sale or other disposition, [a] more
      than 60% of, respectively, the then outstanding shares of common stock of such
      corporation and the combined voting power of the then outstanding

    
      
        
        

      

      
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    voting
      securities of such corporation entitled to vote generally in the election of
      directors is then beneficially owned, directly or indirectly, by all or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Common Stock and Outstanding Voting
      Securities immediately prior to such sale or other disposition in substantially
      the same proportion as their ownership, immediately prior to such sale or other
      disposition, of the Outstanding Common Stock and Outstanding Voting Securities,
      as the case may be, [b] less than 30% of, respectively, the then
      outstanding shares of common stock of such corporation and the combined voting
      power of the then outstanding voting securities of such corporation entitled
      to
      vote generally in the election of directors is then beneficially owned, directly
      or indirectly, by any Person (excluding any employee benefit plan (or related
      trust) of the Company or such corporation), except to the extent that such
      Person owned 30% or more of the Outstanding Common Stock or Outstanding Voting
      Securities prior to the sale or disposition, and [c] at least a majority
      of
      the members of the board of directors of such corporation were members of the
      Incumbent Board at the time of the execution of the initial agreement, or of
      the
      action of the Board of Directors of the Company, providing for such sale or
      other disposition of assets of the Company or were elected, appointed or
      nominated by the Board of Directors of the Company.

    

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

    

    “Senior
      Management”
      at any
      time means the senior executive officers of the Company which will include,
      without limitation, the Chief Executive Officer, President, Chief Operating
      Officer, Chief Financial Officer and such other officers of the Company as
      the
      Board of Directors shall determine from time to time. 

    

    "Subsidiary"
      means,
      with respect to any Person, any corporation, partnership, association or other
      business entity of which (i) if a corporation, a majority of the total
      voting power of shares of stock entitled (without regard to the occurrence
      of
      any contingency) to vote in the election of directors, managers or trustees
      thereof is at the time owned or controlled, directly or indirectly, by that
      Person or one or more of the other Subsidiaries of that Person or a combination
      thereof, or (ii) if a partnership, association or other business entity,
      a
      majority of the partnership or other similar ownership interest thereof is
      at
      the time owned or controlled, directly or indirectly, by any Person or one
      or
      more Subsidiaries of that Person or a combination thereof. For purposes hereof,
      a Person or Persons shall be deemed to have a majority ownership interest in
      a
      partnership, association or other business entity if such Person or Persons
      shall be allocated a majority of partnership, association or other business
      entity gains or losses or shall be or control any managing director or general
      partner of such partnership, association or other business entity.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    11.    Specific
      Performance.
      The
      Employee acknowledges and agrees that irreparable injury to the Company may
      result in the event the Employee breaches any covenant or agreement contained
      in
      sections 7 and 8 and that the remedy at law for the breach of any such
      covenant will be inadequate. Therefore, if the Employee engages in any act
      in
      violation of the provisions of sections 7 and 8, the Employee agrees
      that
      the Company shall be entitled, in addition to such other remedies and damages
      as
      may be available to it by law or under this Agreement, to injunctive relief
      to
      enforce the provisions of sections 7 and 8.

    

    12.    Waiver.
      The
      failure of either party to insist in any one or more instances, upon performance
      of the terms or conditions of this Agreement shall not be construed as a waiver
      or a relinquishment of any right granted hereunder or of the future performance
      of any such term, covenant or condition.

    

    13.    Notices.
      Any
      notice to be given hereunder shall be deemed sufficient if addressed in writing
      and delivered by registered or certified mail or delivered personally, in the
      case of the Company, to its principal business office, and in the case of the
      Employee, to her address appearing on the records of the Company, or to such
      other address as she may designate in writing to the Company.

    

    14. Severability.
      In the
      event that any provision shall be held to be invalid or unenforceable for any
      reason whatsoever, it is agreed such invalidity or unenforceability shall not
      affect any other provision of this Agreement and the remaining covenants,
      restrictions and provisions hereof shall remain in full force and effect and
      any
      court of competent jurisdiction may so modify the objectionable provision as
      to
      make it valid, reasonable and enforceable. Furthermore, the parties specifically
      acknowledge the above covenant not to compete and covenant not to disclose
      confidential information are separate and independent agreements.

    

    15.    Complete
      Agreement.
      Except
      as otherwise expressly set forth herein, this document embodies the complete
      agreement and understanding among the parties hereto with respect to the subject
      matter hereof and supersedes and preempts any prior understandings, agreements
      or representations by or among the parties, written or oral, which may have
      related to the subject matter hereof in any way. Without limiting the generality
      of the foregoing, this Agreement supersedes any agreement between the Company
      or
      RC2 Ltd. and the Employee (together with all amendments thereto, the “Prior
      Agreement”). The Prior Agreement is hereby terminated and shall cease to be of
      any further force or effect.

    

    16.    Amendment.
      This
      Agreement may only be amended by an agreement in writing signed by each of
      the
      parties hereto.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    17.    Governing
      Law.
      This
      Agreement shall be governed by and construed exclusively in accordance with
      the
      laws of the State of Illinois, regardless of choice of law
      requirements.

    

    18.    Benefit.
      This
      Agreement shall be binding upon and inure to the benefit of and shall be
      enforceable by and against the Company, its successors and assigns and the
      Employee, her heirs, beneficiaries and legal representatives. It is agreed
      that
      the rights and obligations of the Employee may not be delegated or
      assigned.

    

    [Remainder
      of page intentionally left blank. Signature page to follow.]

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed or caused this Employment Agreement
      to be executed as of the date first above written.

    

    RC2
      CORPORATION - COMPENSATION COMMITTEE

    

    /s/
      John S.
      Bakalar                         
            

    John
      S.
      Bakalar, Director and 

    Compensation
      Committee Chairman

    

    

    /s/
      John J.
      Vosicky                               

    John
      J.
      Vosicky, Director and 

    Compensation
      Committee Member

    

    

    /s/
      Daniel M.
      Wright                            
       

    Daniel
      M.
      Wright, Director and 

    Compensation
      Committee Member

    

    

    /s/
      Helena
      Lo                                         

    Helena
      Lo

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      5(c)

    

    INCENTIVE
      STOCK OPTIONS

    

    

    If
      Employee is employed by the Company on February 1 of any year (beginning with
      February 1, 2005) during the Employment Period, she shall receive options
      to acquire not less than 20,000 shares as determined by the Board of Directors
      of the Company. The grant of the options shall be made on the earlier of (1)
      the
      quarterly meeting of the Board of Directors held in February of the applicable
      year or (2) February 28 of the applicable year. Additionally, as of
      the
      date of each grant above, Employee shall also be granted options to purchase
      1,000 additional shares for every full percentage point that the three-year
      compounded annual EPS growth rate as of December 31 of the prior year exceeds
      25%. The total number of options granted in any fiscal year shall not exceed
      100,000. The options to be granted pursuant to this Employment Agreement shall
      be granted using a Non-Statutory Stock Option Grant Agreement substantially
      in
      the form of Exhibit A to the Employment Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    NON-STATUTORY
      STOCK OPTION GRANT AGREEMENT

    

    UNDER
      THE
      RC2 CORPORATION

    2005
      STOCK INCENTIVE PLAN

    

    

        THIS
      AGREEMENT, dated as _____________ (the date of grant), is between
      _______________ ("Employee") and RC2 CORPORATION, a Delaware corporation (the
      "Company").

    

    RECITALS

    

        A.    The
      Company adopted the RC2 Corporation 2005 Stock Incentive Plan (the "Plan"),
      which was approved by its Board of Directors (the "Board") and
      stockholders.

    

        B.    The
      Board
      has designated Employee as a participant in the Plan.

    

        C.    Pursuant
      to the Plan, Employee and the Company desire to enter into this Agreement
      setting forth the terms and conditions of the options granted to Employee under
      the Plan.

    

    AGREEMENTS

    

    The
      Employee and the Company agree as follows:

    

        1.    Grant
      of Stock Option.
      The
      Company grants to Employee the right and option (hereinafter referred to as
      the
      "Option") to purchase all or any part of up to ________ shares of the
      Company's Common Stock (the "Option Shares") on the terms and conditions set
      forth below and in the Plan.

    

        2.    Option
      Price.
      The
      purchase price of the Option Shares shall be $_____ per share.

    

        3.    Period
      of Exercise.
      Except
      as provided under the Plan, unless the Option is terminated, Employee may
      exercise this Option for up to, but not in excess of, the percent of shares
      of
      Common Stock subject to the Option during the periods specified
      below:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Percentage
                of Shares

            	 	 
	
              of
                Common Stock

            	 	
              On
                or After

            
	 	 	 
	
              20%

            	 	
              February __,
                2006

            
	
              40%

            	 	
              February __,
                2007

            
	
              60%

            	 	
              February __,
                2008

            
	
              80%

            	 	
              February __,
                2009

            
	
              100%

            	 	
              February __,
                2010

            

    

     

                  Employee's
      right to
      exercise the Option expires ten years from the date of grant (the "Option
      Period").

    

        4.    Definitions.
      Unless
      provided to the contrary in this Agreement, the definitions of the Plan and
      any
      Amendments to the Plan shall apply to this Agreement.

    

        5.    Option
      Designation.
      The
      option granted is a Non-Statutory Stock Option in accordance with
      Article VII of the Plan.

    

        6.    Change
      in Capital Structure.
      The
      Option rights and exercise price of such Option rights will be adjusted in
      the
      event of a stock dividend, stock split, reverse stock split, recapitalization,
      reorganization, merger, consolidation, acquisition or other change in the
      capital structure of the Company as determined by the Board of Directors in
      accordance with the Plan.

     

                    In
      the event of a
      Change in Control of the Company, as defined in the Plan, the Option will remain
      exercisable (subject to the expiration date of the Option) as provided in the
      Plan.

    

        7.    Nontransferability
      of Option.
      Options
      shall not be transferable other than by will or the laws of descent and
      distribution and shall be exercisable, during the Employee's lifetime, only
      by
      him.

    

        8.    Delivery
      by the Company.
      As soon
      as practicable after receipt of all items referred to in Article VII
      of the
      Plan and any payment required by Article VII of the Plan, the Company
      shall
      deliver to the Employee certificate(s) issued in Employee's name for the number
      of Option Shares purchased by exercise of the Option. If delivery is by mail,
      delivery of Option Shares shall be deemed effected when the stock transfer
      agent
      of the Company shall have deposited the certificates in the United States mail,
      addressed to the Employee.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

        9.    Addresses.
      All
      notices or statements required to be given to either party hereto shall be
      in
      writing and shall be personally delivered or sent, in the case of the Company,
      to its principal business office and, in the case of Employee, to her address
      as
      shown on the records of the Company or to such address as Employee designates
      in
      writing. Notice of any change of address shall be sent to the other party by
      registered or certified mail. It shall be conclusively presumed that any notice
      or statement properly addressed and mailed bearing the required postage stamps
      has been delivered to the party to which it is addressed.

    

        10.    Restrictions
      Imposed by Law.
      Notwithstanding any other provision of this Agreement, Employee agrees that
      he
      shall not exercise the Option and that the Company will not be obligated to
      deliver any shares of Common Stock or make any cash payment if counsel to the
      Company determines that such exercise, delivery or payment would violate any
      law
      or regulation of any governmental authority or any agreement between the Company
      and any national securities exchange upon which the Common Stock is listed.
      The
      Company shall in no event be obliged to take any affirmative action in order
      to
      cause the exercise of the Option or the resulting delivery of shares of Common
      Stock or other payment to comply with any law or regulation of any governmental
      authority.

    

        11.    Employment.
      Nothing
      in this Agreement or the Plan shall limit the right of the Company or any parent
      or Subsidiary to terminate the Employee's employment or otherwise impose any
      obligation to employ the Employee.

    

        12.    Governing
      Law.
      This
      Agreement shall be construed, administered and governed in all respects under
      and by the laws of the State of Delaware.

    

        13.    Provisions
      Consistent with Plan.
      This
      Agreement is intended to be construed to be consistent with, and is subject
      to,
      all applicable provisions of the Plan, which is incorporated herein by
      reference. In the event of a conflict between the provisions of this Agreement
      and the Plan, the provisions of the Plan and shall prevail.

    

    EMPLOYEE:

    

    ________________________________

    

    

    RC2
      CORPORATION

    

    BY______________________________

    

    
 

    
      3Exh 4.1 Supplemental Indenture No. 7

     

    Exhibit
      4.1

    
 

    EQUITY
      ONE, INC.

     

    

     

    ISSUER,

     

    THE

     

    GUARANTORS

     

    SET
      FORTH ON THE SIGNATURE PAGES ATTACHED HERETO

     

    AND

     

    SUNTRUST
      BANK, AS

     

    TRUSTEE

     

    —————————————————--

     

    SUPPLEMENTAL
      INDENTURE NO. 7 

     

    DATED
      AS OF May
      20, 2005

     

    —————————————————--

     

    GUARANTEE
      OF SENIOR DEBT SECURITIES

     

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    SUPPLEMENTAL
      INDENTURE NO. 7
      dated as
      of May 20, 2005(this “Supplemental
      Indenture”),
      among
Equity
      One, Inc.,
      a
      corporation duly organized and existing under the laws of the State of Maryland
      (the “Company”),
      each
      of the Guarantors
      set
      forth on the signature pages attached hereto (the “Guarantors”),
      and
SunTrust
      Bank (formerly
      known as SunTrust Bank, Atlanta), a
      Georgia
      banking corporation duly organized and existing under the laws of the State
      of
      Georgia, as Trustee (the “Trustee”).

     

    R
      E C I T A L S

     

    WHEREAS,
      the
      Company, as successor by merger to IRT Property Company, and the Trustee have
      heretofore entered into an Indenture dated as of November 9, 1995 (the
“Original
      Indenture”
      and as
      amended, supplemented or otherwise modified through the date hereof, the
“Indenture”),
      providing for the issuance from time to time of senior debt securities of the
      Company (“Securities”);

     

    WHEREAS,
      the
      Guarantors will provide the guaranty herein set forth (the “Guaranty”)
      of the
      Obligations (as defined herein);

     

    WHEREAS,
      Sections 901(6) and 901(9) of the Indenture permit the Company and the Trustee
      to enter into indentures supplemental thereto without the consent of any Holder
      of Securities to evidence the Guaranty of each Guarantor and to make any change
      to the Indenture, provided that such change does not adversely affect the
      interests of the Holders of Securities of any series or any related coupons
      in
      any material respect;

     

    WHEREAS,
      each
      Guarantor has determined that its execution, delivery and performance of this
      Supplemental Indenture directly benefits, and are within the purposes and best
      interests of, the Guarantor;

     

    WHEREAS,
      the
      Board of Directors of the Company has duly adopted resolutions authorizing
      the
      Company to execute and deliver this Supplemental Indenture and the Board of
      Directors (or equivalent governing body) of each Guarantor has duly adopted
      resolutions authorizing such Guarantor to execute and deliver this Supplemental
      Indenture; and

     

    WHEREAS,
      all
      other conditions and requirements necessary to make this Supplemental Indenture,
      when duly executed and delivered, a valid and binding agreement in accordance
      with its terms and for the purposes herein expressed, have been performed and
      fulfilled.

     

    NOW,
      THEREFORE, THIS INDENTURE WITNESSETH:

     

    For
      and
      in consideration of the premises and other good and valuable consideration,
      the
      receipt and sufficiency of which is hereby acknowledged, the Company and each
      Guarantor agrees as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      ONE

    DEFINITIONS

     

    SECTION
      1.1. Definitions.
      For all
      purposes of this Supplemental Indenture, except as otherwise expressly provided
      for or unless the context otherwise requires: 

     

    (a) capitalized
      terms used but not defined herein shall have the respective meanings assigned
      to
      them in the Indenture; 

     

    (b) all
      references herein to Articles and Sections refer to the corresponding Articles
      and Sections of this Supplemental Indenture; and 

     

    (c) as
      used
      herein the following terms have the following meanings:

     

    “Guaranteed
      Securities”
      means
      all Securities issued under the Indenture as of the date hereof.

     

    “Obligations”
      means
      (x) all payment and performance obligations of the Company (i) under the
      Indenture with respect to the Guaranteed Securities, (ii) under the Guaranteed
      Securities and (iii) as a result of the issuance of the Guaranteed Securities
      and (y) the obligation to pay an amount equal to the amount of any and all
      damages which the Trustee and the Holders, or any of them, may suffer by reason
      of a breach by either the Company or any other obligor of any obligation,
      covenant or undertaking under (i) the Indenture with respect to the Guaranteed
      Securities or (ii) the Guaranteed Securities.

     

    ARTICLE
      TWO

    GUARANTY

     

    SECTION
      2.1. Guaranty.
      Each
      Guarantor hereby unconditionally guarantees to the Trustee and the Holders
      full
      and prompt payment and performance when due, whether at maturity, by
      acceleration or otherwise, of all Obligations. Each Obligation shall rank pari
      passu with each other Obligation.

     

    SECTION
      2.2. Obligations
      Several.
      Regardless of whether any proposed Guarantor or any other Person or Persons
      is,
      are or shall become in any other way responsible to the Trustee and the Holders,
      or any of them, for or in respect of the Obligations or any part thereof, and
      regardless of whether or not any Person or Persons now or hereafter responsible
      to the Trustee and the Holders, or any of them, for the Obligations or any
      part
      thereof, whether under the Guaranty or otherwise, shall cease to be so liable,
      each Guarantor hereby declares and agrees that the Guaranty provided thereby
      is
      and shall continue to be a several obligation (as well as a joint one), shall
      be
      a continuing guaranty and shall be operative and binding on such Guarantor.
      Each
      Guarantor hereby agrees that it will not exercise any rights which it may
      acquire by way of subrogation under the Guaranty, by any payment made hereunder
      or otherwise, unless and until all of the Obligations shall have been paid
      in
      full. If any amount shall be paid to any Guarantor on account of such
      subrogation rights at any time when all of the Obligations shall not have been
      paid in full, such amount shall be held in trust for the benefit of the Trustee
      and the Holders and shall forthwith be paid to the Trustee to be credited and
      applied upon the Obligations, whether matured or unmatured, in accordance with
      the terms of the Indenture, but subject to the provisions of Section
2.7
      hereof.

     

    SECTION
      2.3. Guaranty
      Final.
      Upon
      the execution and delivery of this Supplemental Indenture by the parties hereto,
      this Supplemental Indenture shall be deemed to be finally executed and delivered
      by the parties hereto and shall not be subject to or affected by any promise
      or
      condition affecting or limiting any Guarantor’s liability, and no statement,
      representation, agreement or promise on the part of the Trustee, the Holders,
      the Company, or any of them, or any officer, employee or agent thereof, unless
      contained herein forms any part of this Supplemental Indenture or has induced
      the making hereof or shall be deemed in any way to affect any Guarantor’s
      liability hereunder. The Guarantors’ obligations hereunder shall remain in full
      force and effect until all Obligations shall have been paid in
      full.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      2.4. Dealings
      With the Company.
      The
      Company, the Trustee and the Holders, or any of them, may, from time to time,
      without exonerating or releasing any Guarantor in any way under the Guaranty,
      (i) take such further or other security or securities for the Obligations or
      any
      part thereof as the Trustee and the Holders, or any of them, may deem proper,
      consistent with the Indenture, or (ii) release, discharge, abandon or otherwise
      deal with or fail to deal with any Guarantor of the Obligations or any security
      or securities therefor or any part thereof now or hereafter held by the Trustee
      and the Holders, or any of them, as the Trustee and the Holders, or any of
      them,
      may deem proper, consistent with the Indenture, or (iii) consistent with the
      Indenture, amend, modify, extend, accelerate or waive in any manner any of
      the
      provisions, terms, or conditions of the Indenture and the Guaranteed Securities,
      all as the Company, the Trustee and the Holders, or any of them, may consider
      expedient or appropriate in their sole discretion. Without limiting the
      generality of the foregoing, or of Section 2.5
      hereof,
      it is understood that the Company, the Trustee and the Holders, or any of them,
      may, without exonerating or releasing any Guarantor, give up, or modify or
      abstain from perfecting or taking advantage of any security for the Obligations
      and accept or make any compositions or arrangements, and realize upon any
      security for the Obligations when, and in such manner, as the Trustee and the
      Holders, or any of them, may deem expedient, consistent with the Indenture,
      all
      without notice to any Guarantor.

     

    SECTION
      2.5. Guaranty
      Unconditional.
      Each
      Guarantor acknowledges and agrees that no change in the nature or terms of
      the
      Obligations, the Indenture or the Guaranteed Securities, or other agreements,
      instruments or contracts evidencing, related to or attendant with the
      Obligations (including any novation), nor any determination of lack of
      enforceability thereof, shall discharge all or any part of the liabilities
      and
      obligations of such Guarantor pursuant to the Guaranty; it being the purpose
      and
      intent of the Guarantors, the Company, the Trustee and the Holders that the
      covenants, agreements and all liabilities and obligations of the Guarantors
      hereunder are absolute, unconditional and irrevocable under any and all
      circumstances. Without limiting the generality of the foregoing, each Guarantor
      agrees that until each and every one of the covenants and agreements of this
      Supplemental Indenture is fully performed, such Guarantor’s undertakings
      hereunder shall not be released, in whole or in part, by any action or thing
      which might, but for this Section 2.5,
      be
      deemed a legal or equitable discharge of a surety or guarantor, or by reason
      of
      any waiver or omission of the Company, the Trustee and the Holders, or any
      of
      them, or their failure to proceed promptly or otherwise, or by reason of any
      action taken or omitted by the Company, the Trustee and the Holders, or any
      of
      them, whether or not such action or failure to act varies or increases the
      risk
      of, or affects the rights or remedies of, such Guarantor or by reason of any
      further dealings among the Company, the Trustee and the Holders, or any of
      them,
      or any other guarantor or surety, and each Guarantor hereby expressly waives
      and
      surrenders any defense to its liability hereunder, or any right of counterclaim
      or offset of any nature or description which it may have or which may exist
      based upon, and shall be deemed to have consented to, any of the foregoing
      acts,
      omissions, things, agreements or waivers.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      2.6. Bankruptcy.
      Each
      Guarantor agrees that upon the bankruptcy or winding up or other distribution
      of
      assets of the Company or any Subsidiary of the Company (other than such
      Guarantor) or of any other Guarantor or surety or guarantor for the Obligations,
      the rights of the Trustee and the Holders, or any of them, against such
      Guarantor shall not be affected or impaired by the omission of the Trustee
      or
      the Holders, or any of them, to prove its or their claim, as appropriate, or
      to
      prove its or their full claim, as appropriate, and the Trustee and the Holders
      may prove such claims as they see fit and may refrain from proving any claim
      and
      in their respective discretion they may value as they see fit or refrain from
      valuing any security held by the Trustee and the Holders, or any of them,
      without in any way releasing, reducing or otherwise affecting the liability
      to
      the Trustee and the Holders of such Guarantor. If acceleration of the time
      for
      payment of any amount payable by the Company under the Indenture or the
      Guaranteed Securities of any series is stayed upon the insolvency, bankruptcy
      or
      reorganization of the Company, all such amounts otherwise subject to
      acceleration under the terms of the Indenture or the Guaranteed Securities
      of
      that series shall nonetheless be payable by each Guarantor hereunder forthwith
      on demand by the Trustee made at the written request of the Holders of not
      less
      than 25% in principal amount of the outstanding Guaranteed Securities of that
      series. If at any time any payment of the principal of or interest on any
      Guaranteed Security or any other amount payable by the Company under the
      Indenture is rescinded or must be otherwise restored or returned upon the
      insolvency, bankruptcy or reorganization of the Company, any other Guarantor
      or
      otherwise, the Guarantors’ obligations hereunder with respect to such payment
      shall be reinstated as though such payment had been due but not made at such
      time.

     

    SECTION
      2.7. Application
      of Payments.
      The
      Trustee hereby acknowledges and agrees, and each Holder shall be deemed to
      hereby acknowledge and agree, that to the extent any of the Existing Senior
      Obligations (as defined below) is then in default, any funds, payments, claims
      or distributions (the “Guaranty
      Proceeds”)
      actually received hereunder shall be made available for distribution equally
      and
      ratably (based on the principal amounts then outstanding) among (a) the holders
      of the Obligations and (b) the holders of the Existing Senior Obligations.
      For
      purposes hereof, “Existing
      Senior Obligations”
      shall
      mean Debt for borrowed money owed or guaranteed in connection with any unsecured
      and non-subordinated Debt for borrowed money of the Company or the Guarantor
      (aa) issued in offerings registered under the Securities Act of 1933, as amended
      or in placements exempt from registration pursuant to Rule 144A or Regulation
      S
      thereunder, or (bb) otherwise incurred, which is, in either case, outstanding
      on
      the date hereof or incurred hereafter in accordance with the Indenture
      (including, without limitation, the Debt of the Company incurred in connection
      with the Credit Agreement dated as of February 7, 2003, as amended or
      supplemented from time to time, among the Company, Wells Fargo Bank, National
      Association, as Administrative Agent under the Credit Agreement, and the lenders
      named therein, and certain other lenders party thereto from time to time).
      This
      Section 2.7
      shall
      not apply to any payments, funds, claims or distributions received by the
      Trustee or any Holder directly or indirectly from the Company or any other
      Person other than from the Guarantors hereunder. Each Guarantor acknowledges
      and
      agrees with the Trustee and each Holder as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) to
      the
      extent any Guaranty Proceeds are distributed to the holders of the Existing
      Senior Obligations, the Obligations shall not be deemed reduced by any such
      distribution (other than a distribution made in respect of the Guaranteed
      Securities), and the Guarantors will continue to make payments pursuant to
      the
      Guaranty until such time as the Obligations have been paid in full after taking
      into effect any distributions of Guaranty Proceeds to the holders of Existing
      Senior Obligations;

     

    (b) nothing
      contained herein shall be deemed to limit, modify or alter the rights of the
      Trustee and the Holders or be deemed to subordinate the Obligations to the
      Existing Senior Obligations, nor give to any holder of Existing Senior
      Obligations any rights of subrogation;

     

    (c) nothing
      contained herein shall be deemed for the benefit of any holders of Existing
      Senior Obligations nor shall anything be construed to impose on the Trustee
      or
      any Holder any fiduciary duties, obligations or responsibilities to the holders
      of the Existing Senior Obligations; and

     

    (d) the
      Guaranty is for the sole benefit of the Trustee and the Holders and their
      respective successors and assigns, and any amounts received by the Trustee
      and
      the Holders, or any of them, from whatever source and applied toward the payment
      of the Obligations shall be applied in such order of application as is set
      forth
      in the Indenture, if any.

     

    SECTION
      2.8. Waivers
      by Guarantors.
      Each
      Guarantor hereby expressly waives: (a) notice of acceptance of the
      Guaranty, (b)  notice of the existence or creation of all or any of
      the
      Obligations, (c) presentment, demand, notice of dishonor, protest, and
      all
      other notices whatsoever, (d) all diligence in collection or protection
      of
      or realization upon the Obligations or any part thereof, any obligation
      hereunder, or any security for any of the foregoing and (e) all rights
      of
      subrogation, indemnification, contribution and reimbursement against the
      Company, all rights to enforce any remedy the Trustee and the Holders, or any
      of
      them, may have against the Company, and any benefit of, or right to participate
      in, any collateral or security now or hereinafter held by the Trustee and the
      Holders, or any of them, in respect of the Obligations, even upon payment in
      full of the Obligations. Any money received by any Guarantor in violation of
      this Section 2.8
      shall be
      held in trust by such Guarantor for the benefit of the Trustee and the Holders.
      If a claim is ever made upon the Trustee and the Holders, or any of them, for
      the repayment or recovery of any amount or amounts received by any of them
      in
      payment of any of the Obligations and the Trustee or the Holders repays all
      or
      part of such amount by reason of (a) any judgment, decree, or order of any
      court
      or administrative body having jurisdiction over the Trustee or the Holders
      or
      any of its or their property, or (b) any good faith settlement or compromise
      of
      any such claim effected by the Trustee or the Holders with any such claimant,
      including the Company, then in such event each Guarantor agrees that any such
      judgment, decree, order, settlement, or compromise shall be binding upon such
      Guarantor, notwithstanding any revocation hereof or the cancellation of any
      promissory note or other instrument evidencing any of the Obligations, and
      such
      Guarantor shall be and remain obligated to the Trustee and the Holders hereunder
      for the amount so repaid or recovered to the same extent as if such amount
      had
      never originally been received thereby.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      2.9. Remedies
      Cumulative.
      No
      delay by the Trustee and the Holders, or any of them, in the exercise of any
      right or remedy shall operate as a waiver thereof, and no single or partial
      exercise by the Trustee and the Holders, or any of them, of any right or remedy
      shall preclude other or further exercise thereof or the exercise of any other
      right or remedy. No action by the Trustee and the Holders, or any of them,
      permitted hereunder shall in any way impair or affect the Guaranty. For the
      purpose of the Guaranty, the Obligations shall include, without limitation,
      all
      Obligations of the Company to the Trustee and the Holders, notwithstanding
      any
      right or power of any third party, individually or in the name of the Company
      or
      any other Person, to assert any claim or defense as to the invalidity or
      unenforceability of any such Obligation, and no such claim or defense shall
      impair or affect the obligations of any Guarantor hereunder.

     

    SECTION
      2.10. Miscellaneous.
      The
      Guaranty is a guaranty of payment and not of collection. In the event of a
      demand upon any Guarantor under the Guaranty, such Guarantor shall be held
      and
      bound to the Trustee and the Holders directly as debtor in respect of the
      payment of the amounts hereby guaranteed. All reasonable costs and expenses,
      including attorneys’ fees and expenses, incurred by the Trustee and the Holders,
      or any of them, in obtaining performance of or collecting payments due under
      the
      Guaranty shall be deemed part of the Obligations guaranteed hereby. The
      provisions of the Guaranty are for the benefit of the Trustee and the Holders
      and may not be relied upon or enforced by any other Person and, as to
      enforcement, may only be enforced in accordance with this Supplemental Indenture
      and the Indenture.

     

    SECTION
      2.11. Benefit
      to Guarantor.
      Each
      Guarantor expressly represents and acknowledges that the issuance and sale
      of
      the Guaranteed Securities under the Indenture has been, and will be, of direct
      interest, benefit and advantage to such Guarantor.

     

    SECTION
      2.12. Solvency.
      Each
      Guarantor expressly represents and warrants that as of the date hereof and
      after
      giving effect to the transactions contemplated by the Indenture (a) the capital
      of such Guarantor will not be unreasonably small to conduct its business;
      (b) such Guarantor will not have incurred debts, or have intended to
      incur
      debts, beyond its ability to pay such debts as they mature; and (c) the present
      fair salable value of the assets of such Guarantor is greater than the amount
      that will be required to pay its probable liabilities (including debts) as
      they
      become absolute and matured. For purposes of this Section 2.12,
      “debt”
      means
      any liability on a claim, and “claim”
      means
      (x) the right to payment, whether or not such right is reduced to judgment,
      liquidated, unliquidated, fixed, contingent, matured, unmatured, undisputed,
      legal, equitable, secured or unsecured, or (y) the right to an equitable remedy
      for breach of performance if such breach gives rise to a right to payment,
      whether or not such right to an equitable remedy is reduced to judgment, fixed,
      contingent, matured, unmatured, undisputed, secured or
      unsecured.

     

    SECTION
      2.13. Additional
      Guarantors; Release of Guarantors.
      Any
      Subsidiary of the Company or any other entity may become a party to this
      Guaranty by executing and delivering a Supplemental Indenture providing for
      a
      guaranty of the Obligations under the terms of this Article Two, provided that
      such Supplemental Indenture conforms to the requirements of Article Nine of
      the
      Indenture. Under certain circumstances, a Guarantor may be released by the
      Trustee of its obligations under this Guaranty. Each other Guarantor consents
      and agrees to any such releases and agrees that no such release shall affect
      its
      obligations hereunder, except as to the Guarantor so released.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      2.14. Contribution
      Agreement.
      To the
      extent that any Guarantor shall, under the Guaranty, make a payment (a
“Guarantor
      Payment”)
      of a
      portion of the Obligations, then, without limiting its rights of subrogation
      against the Company, such Guarantor shall be entitled to contribution and
      indemnification from, and be reimbursed by, each of the other Guarantors and
      the
      Company (each of the foregoing referred to herein individually as a
“Contributing
      Party”
      and
      collectively as the “Contributing
      Parties”)
      in an
      amount, for each such Contributing Party, equal to a fraction of such Guarantor
      Payment, the numerator of which fraction is such Contributing Party’s Allocable
      Amount (as defined below) and the denominator of which is the sum of the
      Allocable Amounts of all of the Contributing Parties.

     

    As
      of any
      date of determination, the “Allocable
      Amount”
      of each
      Contributing Party shall be equal to the maximum amount of liability which
      could
      be asserted against such Contributing Party hereunder with respect to the
      applicable Guarantor Payment without (i) rendering such Contributing Party
      “insolvent” within the meaning of Section 101(31) of the Federal Bankruptcy Code
      (the “Bankruptcy
      Code”)
      or
      Section 2 of either the Uniform Fraudulent Transfer Act (the “UFTA”)
      or the
      Uniform Fraudulent Conveyance Act (the “UFCA”),
      (ii)
      leaving such Contributing Party with unreasonably small capital, within the
      meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
      Section 5 of the UFCA, or (iii) leaving such Contributing Party unable to pay
      its debts as they become due within the meaning of Section 548 of the Bankruptcy
      Code or Section 4 of the UFTA or Section 6 of the UFCA or in any case, any
      successor to the Bankruptcy Code or any such section thereof or any successor
      to
      the UFTA or the UFCA or any such sections thereof.

     

    This
      Section 2.14
      is
      intended only to define the relative rights of the Contributing Parties, and
      nothing set forth in this Agreement is intended to or shall impair the
      obligations of the Guarantors, jointly and severally, to pay any amounts, as
      and
      when the same shall become due and payable in accordance with the terms of
      the
      Guaranty. 

     

    The
      parties hereto acknowledge that the rights of contribution and indemnification
      hereunder shall constitute assets in favor of each Guarantor to which such
      contribution and indemnification is owing.

     

    This
      Section 2.14
      shall
      continue in full force and effect and may not be terminated or otherwise revoked
      by any Contributing Party until all of the Guaranteed Obligations shall have
      been indefeasibly paid in full (in lawful money of the United States of America)
      and discharged and the Indenture and Guaranteed Securities shall have been
      terminated. 

     

    SECTION
      2.15. NO
      NOVATION.
      THE
      PARTIES DO NOT INTEND THIS SUPPLEMENTAL INDENTURE, NOR THE TRANSACTIONS
      CONTEMPLATED HEREBY, TO BE, AND THIS SUPPLEMENTAL INDENTURE AND THE TRANSACTIONS
      CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OR WAIVER OF ANY
      OF
      THE OBLIGATIONS OWING BY ANY GUARANTOR OF ANY OBLIGATIONS UNDER OR IN CONNECTION
      WITH ANY GUARANTY IN EXISTENCE AS OF THE DATE OF THIS SUPPLEMENTAL
      INDENTURE.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      THREE

    MISCELLANEOUS
      PROVISIONS

     

    SECTION
      3.1. Ratification
      of Indenture.
      Except
      as expressly modified or amended hereby, the Indenture continues in full force
      and effect and is in all respects confirmed and preserved.

     

    SECTION
      3.2. Governing
      Law.
      This
      Supplemental Indenture shall be governed by and construed in accordance with
      the
      laws of the State of Georgia. This Supplemental Indenture is subject to the
      provisions of the Trust Indenture Act of 1939, as amended and shall, to the
      extent applicable, be governed by such provisions.

     

    SECTION
      3.3. Counterparts.
      This
      Supplemental Indenture may be executed in any number of counterparts, each
      of
      which so executed shall be deemed to be an original, but all such counterparts
      shall together constitute but one and the same instrument.

     

    SECTION
      3.4. Notices.
      Any
      notice required or permitted hereunder or under the Indenture to be given or
      made to the Company or a Guarantor shall be given or made in writing and mailed,
      first class postage prepaid, (i) to the Company or (ii) to such Guarantor care
      of the Company, at the address of the Company set forth below its signature
      hereon, or at any other address previously furnished in writing to the Trustee
      and the Company by such Guarantor, with a copy to the Company given or made
      in
      accordance with Section 105 of the Indenture.

     

    SECTION
      3.5. Successors
      and Assigns.
      This
      Supplemental Indenture shall be binding upon the Company and each Guarantor,
      and
      their respective successors and assigns and inure to the benefit of the
      respective successors and assigns of the Trustee and the
      Holders.

     

    SECTION
      3.6. Time
      of the Essence.
      Time is
      of the essence with regard to the Company’s and the Guarantors’ performance of
      their respective obligations hereunder.

     

    SECTION
      3.7. Rights
      of Holders Limited.
      Notwithstanding anything herein to the contrary, the rights of Holders with
      respect to this Supplemental Indenture and the Guaranty shall be limited in
      the
      manner and to the extent the rights of Holders are limited under the Indenture
      with respect to the Indenture and the Securities. 

     

    SECTION
      3.8. Rights
      and Duties of Trustee.
      The
      rights and duties of the Trustee shall be determined by the express provisions
      of the Original Indenture and, except as expressly set forth in this
      Supplemental Indenture, nothing in this Supplemental Indenture shall in any
      way
      modify or otherwise affect the Trustee’s rights and duties thereunder. The
      Trustee makes no representation or warranty as to the validity of this
      Supplemental Indenture and, except insofar as relates to the validity hereof
      with respect to the Trustee specifically, the Trustee shall not be liable in
      connection therewith. The Trustee makes no representation or warranty, express
      or implied, as to the accuracy or completeness of any information contained
      in
      any offering or disclosure document related to the sale of the Securities,
      except for such information that specifically pertains to the Trustee itself,
      or
      any information incorporated therein by reference.

     

    SECTION
      3.9. Amendment
      and Waiver.
      This
      Supplemental Indenture shall not be amended unless such amendment (i) complies
      with the terms of the Indenture, (ii) is in writing and (iii) is executed by
      each of the parties hereto. No alteration or waiver of this Supplemental
      Indenture or of any of its terms, provisions or conditions shall be binding
      upon
      the parties against whom enforcement is sought unless made in writing and signed
      by an authorized officer of such party or its general partner, as
      applicable.

     

    SECTION
      3.10. Conflicts.
      In the
      event of any conflict between the terms of this Supplemental Indenture and
      the
      terms of the Indenture, the terms of this Supplemental Indenture shall
      control.

     

     

    [Signatures
      on Next Page]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

        IN
      WITNESS
      WHEREOF,
      the
      parties hereto have caused this Supplemental Indenture to be duly executed
      by
      their respective officers hereunto duly authorized, all as of the day and year
      first written above.

     

    EQUITY
      ONE, INC., Issuer

     

    By:
      /s/ Chaim Katzman                

    Name:
      Chaim Katzman

    Title:
      President

     

    Address:

    1600
      N.E.
      Miami Gardens Drive

    Miami,
      Florida 33179

    Attention:
      Chief Financial Officer

     

    GUARANTORS
      

     

    Equity
      One (Cambridge Project) LLC

    Equity
      One (Quincy Project) LLC

    Equity
      One (West Roxbury) LLC

    Equity
      One (Homestead Land) Inc.

    Equity
      One (Middle Beach) Inc.

     

    By: 
      /s/ Chaim Katzman                    

     
      Chaim Katzman

     
      President

     

    Equity
      (Texas) One Westgate Phase III LP

     

    By:
      Equity (Texas Holdings) One GP LLC, its general partner

     

     

    By:
       /s/ Chaim Katzman                    

     
      Chaim Katzman

     
      President

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Equity
      (Texas) One Desoto LP

     

    By:
      Equity (Texas Holdings) One GP LLC, its general partner

     

     

    By: 
      /s/ Chaim Katzman                    

         
 
      Chaim Katzman

     
      President

     

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SUNTRUST
      BANK, as Trustee

     

    By:
      

    Name:
      

    Title:

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