Document:

exv10w38

 

Exhibit 10.38

RED TRAIL ENERGY, LLC

CODE OF BUSINESS CONDUCT

ADOPTED ON MARCH 28, 2007

TABLE OF CONTENTS

	I.	 	General Principles
	 
	II.	 	Compliance
	 
	III.	 	Business Conduct

	 	A.	 	Confidential Information
	 
	 	B.	 	Conflicts of Interest
	 
	 	C.	 	Corporate Opportunities
	 
	 	D.	 	Gifts and Entertainment
	 
	 	E.	 	Compliance with Laws Generally
	 
	 	F.	 	Health and Safety
	 
	 	G.	 	Information and Technology Management
	 
	 	H.	 	Finance and Accounting

	IV.	 	Securities Trading and Non-Public Information
	 
	V.	 	Where to Find More Information
	 
	VI.	 	How to Report Violations
	 
	VII.	 	Responding to Improper Conduct
	 
	VIII.	 	Condition of Employment or Service
	 
	IX.	 	Waivers of the Code of Business Conduct
	 
	X.	 	Compliance Procedures

 

 

General Principles

     Red Trail Energy, LLC (“Red Trail” or the “Company”) is committed to conducting their business
activities as good corporate citizens with honesty and integrity and in compliance with all laws,
rules and regulations applicable to them. This commitment and standard of conduct governs our
relationships with customers, suppliers, members, competitors and with each other at every
organizational level.

     This Code of Business Conduct (the “Code”) is an expression of our core values and represents
a framework for decision-making. To this end, all of our employees, officers and governors are
responsible for understanding the Code and acting in accordance with it. This Code of Business
Conduct should be read in conjunction with the other policies and procedures that the Company has
established from time to time, including but not limited to its Insider Trading Policies (discussed
in more detail in Article IV of this Code), its Code of Ethics for Senior Financial Officers
(attached hereto as Exhibit A) and its Complaint Procedures for Accounting and Auditing Matters
(attached hereto as Exhibit B).

II. Compliance

     Compliance with this Code of Business Conduct is required of everyone who acts on behalf of
Red Trail, including our governors, officers, employees and agents. Anyone who violates our Code
will be acting outside the scope of his or her employment (or agency) and will be subject to
disciplinary action, up to and including termination of employment (or agency). The following
person[s] have been designated by the Board of Governors to oversee compliance with our Code and
its policies and procedures:

     Ethics Compliance Officer: Mick J. Miller

     Telephone Number: (701) 974-3308

     E-mail address: mick@redtrailenergy.com

     The Code of Business Conduct cannot and is not intended to cover every applicable law, rule or
regulation, or provide answers to all questions that may arise; for that, we must ultimately rely
on your good sense of what is right, including a sense of when it is proper to seek guidance from
others with respect to the appropriate course of conduct. Questions regarding any law, rule,
regulation, or principle discussed in this Code should be directed to your supervisor or to one of
the above-mentioned people.

     If at any time you have an ethical concern or become aware of any conduct on the part of any
Company employee, officer or governor that violates – or may violate – this Code, you should report
such concern or conduct to your supervisor or the Ethics Compliance Officer. You may also report
your concerns, as well as submit questions of applicability or interpretation, on a confidential or
anonymous basis by mailing The Audit Committee at Attn: Mike Appert, P.O. Box 11, 3682 Highway 8,
Richardton, North Dakota, 58652. See the section entitled “How To Report Violations” in Article VI
of this Code of Business Conduct for more details.

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III. Business Conduct

     A. Confidential Information

     One of the Company’s most valuable assets is its information. You should maintain the
confidentiality of information (whether or not it is considered proprietary) entrusted to you by
the Company. Examples of confidential information include trade secrets, new product or marketing
plans, customer lists, research and development ideas, manufacturing processes, or acquisition or
divestiture prospects. It might also include information from our customers or others given to the
Company pursuant to an agreement restricting its use or disclosure. You should take steps to
safeguard confidential information by keeping such information secure, limiting access to such
information to those employees who have a “need to know” in order to do their job, and avoiding
discussion of confidential information in public areas, for example, in elevators, on planes and on
mobile phones. You should not use confidential information for personal advantage. Confidential
information may be disclosed to others only when disclosure is authorized by the Company or legally
mandated. The obligation to preserve confidential information is ongoing, even after termination of
employment.

     B. Conflicts of Interest

     A conflict of interest occurs when an individual’s personal interest interferes in any way -
or even appears to interfere — with the interests of the Company as a whole. A conflict of
interest may arise when you take action or have interests that may make it difficult to perform
your Company work objectively and effectively. Conflicts of interest may also arise when an
employee, officer or governor, or members of his or her family, receives improper personal benefits
as a result of his or her position with the Company. Loans to, or guarantees of obligations of,
employees and their family members may also create conflicts of interest. Such conflicts of
interests can undermine our business judgment and our responsibility to the Company and threaten
the Company’s business and reputation. Potential and actual conflicts of interests should be
scrupulously avoided.

     Conflicts of interests may also arise because our Articles of Organization, Operating
Agreement and Member Control Agreement, as in effect from time to time (our “Charter Documents”),
permit our employees, governors and officers, and their affiliates, to have other business
interests or engage in other business ventures that compete with the business of the Company.
Nothing in this Code of Business Conduct is intended to supersede the provisions of our Charter
Documents relating to the management of the Company, including those provisions addressing
corporate opportunities and conflicts of interests.

     Conflicts of interest are prohibited as a matter of Company policy, except under guidelines
approved by the Board of Governors, or as otherwise may be permitted under this Code of Business
Conduct or our Charter Documents. Generally speaking, you should not provide service or assistance
to a competitor, customer or supplier. The best policy is to avoid any direct or indirect business
connection with our customers, suppliers or competitors, except on our behalf. You should be
especially careful if your duties as a Red Trail employee, officer or governor bring you into
contact with an entity that employs or is owned, in whole or in part, by a relative. Often, if a
business opportunity should belong to the Company, taking it for your

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personal gain is similar to misappropriating a corporate asset. If you have any questions,
contact the Ethics Compliance Officer.

     C. Corporate Opportunities

     Subject to the provisions of our Charter Documents, to the extent contemplated by applicable
law, (i) employees, officers and governors of Red Trail are restricted (without the consent of the
Board of Governors or an appropriate committee thereof) from taking for themselves personally
opportunities that are discovered through the use of Company property, information or their
position, using Company property, information or their position for personal gain, or competing
with the Company directly or indirectly and (ii) should advance the Company’s legitimate interests
when the opportunity to do so arises.

     D. Gifts and Entertainment

          1. Non-Government Customers, Suppliers, etc.

     Red Trail prohibits paying or giving any money or gifts, directly or indirectly, to any person
or entity who has a business relationship with Red Trail other than normal and approved promotional
items of nominal value. Receiving gifts can be construed as an attempt to improperly influence a
relationship or allow a relationship to be improperly influenced. Your judgment should tell you
when an offer of a gift is improper and should be refused in order to prevent embarrassment and
perhaps an unintentional violation of the law. Business entertainment is an ambiguous area.
Picking up the check (or letting someone else pay the tab) for a business lunch or dinner or a trip
to a sporting event or the theater is usually permissible if not excessive, but a clear business
purpose should be involved. If you have any questions and before taking any action that might
violate this policy, you should discuss the proposed action with the Ethics Compliance Officer.

          2. Government Customers, Suppliers, etc.

     Gifts to government officials and employees are especially sensitive areas. To the extent
that you have reason to deal with officials of or any employees of federal, state, municipal, or
public authorities in connection with contracts, concessions, licenses or other arrangements, it is
extremely important to avoid even the appearance of impropriety. Failure in this regard can result
in the loss of business, as well as damaging publicity for Red Trail and our employees. U.S.
federal regulations prohibit government employees from accepting gifts or entertainment in any form
from any contractor or vendor doing (or seeking to do) business with the government. Federal law
prohibits gifts to such persons given with intent to influence the individual in the performance of
an official act. Many state and other governmental bodies have similar statutes. In
acknowledgment of these regulations, it is the policy of Red Trail not to offer or give gifts,
gratuities, favors, entertainment or anything of monetary value to any government employee or to
his/her family members. Federal, state and local public agencies have developed detailed
guidelines that provide rules for when an agency’s employee may be given gifts, refreshments, etc.
If you deal with public officials on a regular basis, obtain a copy of their agency’s governing
ethics, guide or rules, if any. In addition, you should be sensitive to requests or comments by
government officials that may appear perfectly proper, but could be susceptible to a different

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interpretation by other government officials or the media. If you deal directly with
government officials you are responsible for being familiar and complying with the applicable
regulations of the government agencies with which you do business. Before taking any action that
might violate this policy, you should discuss the proposed action with the Ethics Compliance
Officer.

     E. Compliance with Laws Generally

     Red Trail and its governors, officers, employees and agents will abide by the letter and the
spirit of all applicable laws, rules and regulations, and will act in such a manner that the full
disclosure of all facts related to any activity will always reflect favorably upon the Company.

          1. Antitrust and Competition Laws

     Antitrust laws in the United States are designed to preserve and foster fair and honest
competition within the free enterprise system. To accomplish this goal, the language of these laws
is deliberately broad, prohibiting such activities as “unfair methods of competition” and
agreements “in restraint of trade.” Such language gives enforcement agencies the right to examine
many different business activities to judge their effect on competition. Red Trail requires all
employees to comply with the U.S. antitrust laws. The failure to do so can result in severe
penalties for both the individuals involved and Red Trail.

     There are two areas in which antitrust or competition violations most frequently occur –
relations with competitors and relations with customers and suppliers.

               a) Relations with Competitors

     The greatest danger for violations of the antitrust/competition laws rests in contacts with
competitors. It is illegal to have an understanding with a competitor, expressed or implied,
written or oral, which improperly restricts competition or interferes with the ability of the free
market system to function properly. A formal agreement with a competitor is not needed to prove a
violation of the antitrust laws. A general discussion followed by common action often is enough to
show that an agreement exists. In an investigation, every communication, written or oral, is
subject to extreme scrutiny.

     Communications with competitors should be avoided unless they concern a true customer-supplier
relationship, other legitimate business ventures (such as mergers and acquisitions) or permitted
trade association activities. You must not engage in any communications with competitors that
could result, or even appear to result, in price-fixing, allocation of customers or markets,
boycotts or production limits. Contact the Ethics Compliance Officer if you have questions. The
antitrust laws do recognize, however, your need to be aware of market conditions, and you may
discuss these with customers, suppliers, retailers, wholesalers and brokers, if they are not your
competitors.

               b) Relations with Customers and Suppliers

     Generally speaking, a company has an unrestricted right to choose its customers and suppliers.
However, a company may not improperly restrict a customer’s (including a distributor’s) freedom to
establish its own prices or terms of resale. With respect to suppliers, we

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must avoid any understanding that sets the minimum price of resale by Red Trail. You should
also avoid discussions with customers regarding Red Trail’s supplying other customers or the prices
charged to other customers.

     F. Health and Safety

     The Company strives to provide each employee with a safe and healthy work environment. Each
employee has responsibility for maintaining a safe and healthy workplace for all employees by
following safety and health rules and practices and reporting accidents, injuries and unsafe
equipment, practices or conditions.

     G. Information and Technology Management

          1. Protection of Proprietary Information and Intellectual Property

     In addition to protecting the confidential information of the Company (as discussed in Section
(A) above), all Red Trail employees must respect the proprietary information and intellectual
property of our customers, suppliers, partners and others. Employees are not to divulge the
proprietary information of their former employers. Red Trail employees should not disclose any
proprietary information of others unless the individual or firm owning the information properly
authorizes the release or disclosure of such information. Employees should also be careful not to
use published works of others, or patented processes or methods, or trademarks, without first
obtaining a license or written permission to do so. Consult your supervisor and the Ethics
Compliance Officer if you have any questions.

          2. Electronic Communications Policy

     All Company-provided equipment, software and communication systems, including without
limitation voice mail, e-mail, Internet, file folders and personal computer systems, are the
property of Red Trail and as such are provided to employees for business purposes only. The
review, transmission, retrieval or storage of offensive, obscene or other inappropriate material
via Red Trail computing and communications systems, including the Internet and electronic mail, is
strictly prohibited. The use of Company e-mail system to send offensive or inappropriate
statements, make solicitations or divulge confidential information is also prohibited. All
communications made via Red Trail property are considered records and property of the Company. Red
Trail reserves the right, in compliance with applicable laws, to monitor, access, copy, modify,
disclose or delete the contents of messages sent or received over its systems, including Internet
points of contact.

     H. Finance and Accounting

     Because we are a reporting company under the 1934 Securities and Exchange Act, as amended (the
“Exchange Act”), it is imperative that our disclosures to the public provide full, fair, accurate,
timely and understandable disclosure. To assist us in this endeavor, you must comply with the
following:

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          1. Accuracy of Company Records

     All Red Trail business transactions must be properly authorized and be completely and
accurately recorded on the Company’s books and records in accordance with generally accepted
accounting practice and established Red Trail financial policy. No false, artificial or misleading
entries in the books and records of Red Trail shall be made for any reason, and no employee shall
engage in any arrangement that results in such prohibited acts. The retention or proper disposal
of Company records shall be in accordance with established Red Trail financial policies and
applicable statutory and legal requirements.

          2. Authorization Systems

     Red Trail has established a financial approval system that defines and limits the authority of
employees to commit or obligate the Company with respect to any agreement or transaction that has
financial consequences. The Chief Financial Officer maintains and monitors compliance with the
system. You are required to understand your financial approval authority and to ensure that you do
not exceed your authority.

          3. Document Retention

     The Company seeks to comply fully with all laws and regulations relating to the retention and
preservation of records. You must comply with the Company’s policies regarding the retention and
preservation of records as set forth herein. Under no circumstances may Company records be
destroyed selectively or maintained outside Company premises or designated storage facilities. If
you know the existence of a subpoena or impending government investigation, you must immediately
contact your supervisor and/or the Ethics Compliance Officer. You must retain all records and
documents that may pertain to an investigation or may be responsive to a subpoena. Any questions
concerning the destruction or disposition of records or documents should be directed to your
supervisor and/or the Ethics Compliance Officer before the record or document is disposed of. You
must strictly adhere to the directions of your supervisor and/or the Ethics Compliance Officer in
handling such records or documents.

          4. Code of Ethics Relating to Financial Matters

     The honesty, integrity and sound judgment of the senior financial officers and the chief
executive officer of Red Trail (the “Senior Financial Officers”) are fundamental to the reputation
and success of the Company. Because the professional and ethical conduct of the Senior Financial
Officers is essential to the proper functioning and success of the Company, our Senior Financial
Officers, in addition to complying with all of the other provisions of this Code of Business
Conduct, must also comply with the Company’s Code of Ethics for Senior Financial Officers, a copy
of which is attached hereto as Exhibit A. While you may not be a Senior Financial Officer, we
expect all of our employees, officers and governors to adhere to the principles identified in the
Company’s Code of Ethics for Senior Financial Officers to the extent applicable to you.

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IV. Securities Trading, Non-Public Information and Fair Dealing

     Governors, officers and employees of the Company who have access to confidential material
information are not permitted to use or share that information for membership unit trading
purposes. All non-public information about the Company should be considered confidential
information. To use material non-public information for personal financial benefit or to “tip”
others who might make an investment decision on the basis of this information is not only unethical
but also illegal. In order to assist with compliance with laws against insider trading, the
Company has adopted specific policies governing officers, governors and employees trading in
securities of the Company – our “Insider Trading Policies.” Violations of, complaints or questions
or concerns relating to our Insider Trading Policies should be reported to the Ethics Compliance
Officer.

V. Where to Find More Information

     The Red Trail Code of Business Conduct is a summarized version of many policies and laws and
does not cover all situations. Any questions of applicability or interpretation should be
addressed to your supervisor or the Ethics Compliance Officer. You should also refer to other
policies of the Company in effect from time to time.

VI. How to Report Violations

     It is each employee’s personal responsibility to bring violations or suspected violations of
the Company’s Code of Business Conduct to the attention of their supervisor or the Ethics
Compliance Officer. To report conduct you suspect to be unethical or in violation of any Red Trail
Code of Business Conduct policy or the law, talk to your supervisor and/or the Ethics Compliance
Officer. You may also report a suspected violation anonymously by delivering a sealed,
confidential envelope containing a written or typed concern to the Ethics Compliance Officer. If
appropriate, you should also feel free to make the report to your supervisor. The Company
encourages you to report or question any conduct that may violate the Company’s ethical standards.
Therefore, you will not suffer any retribution in connection with any good faith reporting.

     However, if you are reporting a violation or suspected violation of an accounting matter,
please report the complaint in accordance with the procedures identified in the Company’s Complaint
Procedures for Accounting and Auditing Matters, a copy of which is attached hereto as Exhibit B.

VII. Responding to Improper Conduct

     If an employee violates this Code, he or she will be subject to disciplinary action.
Supervisors and managers of a disciplined employee may also be subject to disciplinary action for
their failure to oversee properly an employee’s conduct, or for retaliation against an employee who
reports a violation(s). The Company’s response to misconduct will depend upon a number of factors,
including whether the improper behavior involved illegal conduct. Disciplinary action may include,
but is not limited to, reprimands and warnings, probation, suspension, demotion, reassignment,
reduction in salary or immediate termination. Employees

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should be aware that certain actions and omissions prohibited by the Code might be crimes that
could lead to individual criminal prosecution and, upon conviction, to fines and imprisonment.

VIII. Condition of Employment or Service

     Compliance with this Code shall be a condition of employment and of continued employment with
the Company, and conduct not in accordance with this Code shall constitute grounds for disciplinary
action, up to and including termination of employment. This Code does not in any way constitute an
employment contract or an assurance of continued employment. Employees are employees at will.
This Code is for the sole and exclusive benefit of the Company and may not be used or relied upon
by any other party. The Company may modify or repeal the provisions of this Code or adopt a new
Code at any time it deems appropriate, with or without notice.

IX. Waivers of the Code of Business Conduct

     Any waiver of this Code for executive officers or directors may be made only by the Board of
Governors or, if permitted by applicable rules, a Board committee, and will be promptly disclosed
as required by law or applicable Nasdaq Stock Market Listing Standards.

X. Compliance Procedures

     We must all work to ensure prompt and consistent action against violations of this Code.
However, in some situations it is difficult to know if a violation has occurred. Because we cannot
anticipate every situation that will arise, it is important that we have a way to approach a new
question or problem. These are the steps to keep in mind:

	 	1.	 	Make sure you have all of the facts. In order to reach the
right solutions, we must be as fully informed as possible.
	 
	 	2.	 	Ask yourself: What specifically am I being asked to do? Does it
seem unethical or improper? This will enable you to focus on the specific
question you are faced with, and the alternatives you have. Use your judgment
and common sense; if something seems unethical or improper, it probably is.
	 
	 	3.	 	Clarify your responsibility and role. In most situations, there
is shared responsibility. Are your colleagues informed? It may help to get
others involved and discuss the problem.
	 
	 	4.	 	Discuss the problem with your supervisor. This is the basic
guidance for all situations. In many cases, your supervisor will be more
knowledgeable about the question, and will appreciate being brought into the
decision-making process. Remember that it is your supervisor’s responsibility
to help solve problems.
	 
	 	5.	 	Seek help from Company resources. In the rare case where it may
not be appropriate to discuss an issue with your supervisor, or if you do not
feel

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	 	 	 	comfortable approaching your supervisor with your question, discuss it with
someone more senior in the Company, such as the Company’s Ethics Compliance
Officer or the Chief Executive Officer.
	 
	 	6.	 	You may report ethical violations in confidence and without
fear of retaliation. If your situation requires that your identity be kept
secret, your anonymity will be protected. The Company does not permit
retaliation of any kind against employees for good faith reports of ethical
violations.
	 
	 	7.	 	Always ask first, act later. If you are unsure of what to do in
any situation, seek guidance before you act.

     This Code of Business Conduct has been adopted by the Board of Governors of Red Trail Energy,
LLC, effective March 28, 2007.

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EXHIBIT A

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

     At Red Trail Energy, LLC (“Red Trail” or the “Company”) the honesty, integrity and sound
judgment of Red Trail’s senior financial officers, which includes Red Trail’s chief executive
officer, chief financial officer or controller and other persons performing similar functions (the
“Senior Financial Officers”), is fundamental to the financial reporting process and the reputation
and success of Red Trail. Red Trail’s Senior Financial Officers hold an important and elevated
role in corporate governance in that they are uniquely capable and empowered to ensure that all
stakeholders’ interests are appropriately balanced, protected and preserved. Because of this
special role, each of the Senior Financial Officers agrees to be bound by this Code of Ethics for
Senior Financial Officers and each agrees that he or she will:

	 	1.	 	Act with honesty and integrity and ethically handle actual or
apparent conflicts of interest in personal and professional relationships
involving Red Trail or its business.
	 
	 	2.	 	Provide information that is accurate, complete, objective,
relevant, timely and understandable to ensure full, fair, accurate, timely and
understandable disclosure in reports and documents that Red Trail files with,
or submits to, government agencies, including the Securities and Exchange
Commission (the “SEC”) and in other public communications.
	 
	 	3.	 	Comply with applicable laws, rules and regulations of federal,
state, provincial and local governments, and other appropriate private and
public regulatory agencies, affecting Red Trail’s business and its conduct in
business matters.
	 
	 	4.	 	In all matters affecting Red Trail’s business and its conduct
in business matters, act in good faith, responsibly, with due care, competence
and diligence, without misrepresenting material facts or allowing his/her
independent judgment to be subordinated.
	 
	 	5.	 	Respect the confidentiality of information acquired in the
course of his/her work for Red Trail except when authorized or otherwise
legally obligated to disclose. Confidential information acquired in the course
of his/her work for Red Trail shall not be used for personal advantage.
	 
	 	6.	 	Proactively promote and be an example of ethical behavior as a
responsible partner among peers in Red Trail’s working environment.
	 
	 	7.	 	Achieve responsible use of and control over all Red Trail
assets and resources employed or entrusted to him/her.

     Each of the Senior Financial Officers are expected to adhere to this Code of Ethics for Senior
Financial Officers and Red Trail’s Code of Business Conduct at all times. Any violations of either
of these Codes shall be promptly reported in accordance with the procedures set forth in

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Red Trail’s Complaint Procedures for Accounting and Auditing Matters. If any Senior Financial
Officer is found to be in violation of this Code of Ethics for Senior Financial Officers, such
person will be subject to disciplinary action, which may include termination of employment. It is
against Red Trail policy to retaliate against any employee for good faith reporting of violations
of this Code of Ethics for Senior Financial Officers or Red Trail’s Code of Business Conduct.

     The Board of Governors (or, if permitted under applicable SEC and Nasdaq Stock Market Listing
Standards), and so appointed by the Board of Governors, the Audit Committee of the Board of
Governors) shall have the sole discretionary authority to approve any amendment to or waiver of
this Code of Ethics for Senior Financial Officers. Any such amendment to or waiver of this Code of
Ethics for Senior Financial Officers shall be publicly disclosed in the manner specified by SEC
rules.

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EXHIBIT B

COMPLAINT PROCEDURES FOR

ACCOUNTING AND AUDITING MATTERS

     Red Trail Energy, LLC (“Red Trail” or the “Company”) is committed to continuing compliance
with all applicable securities laws and regulations, accounting standards, accounting controls and
audit practices. In furtherance of this commitment, Red Trail wishes to assure you that you may
submit a good faith complaint regarding accounting or auditing matters to management without fear
of harassment, discrimination, dismissal or retaliation of any kind.

     To facilitate reporting of complaints, Red Trail’s Audit Committee has established these
procedures for (1) the receipt, retention and treatment of complaints regarding accounting,
internal accounting controls, or auditing matters (referred to in this document as “Accounting
Matters”) and (2) the confidential, anonymous submission by employees of concerns regarding
questionable Accounting Matters.

I. Scope of Matters Covered by These Procedures

     These procedures relate to complaints relating to any questionable Accounting Matters,
including, without limitation, the following:

	 	1.	 	fraud or deliberate error in the preparation, evaluation,
review or audit of any financial statement of Red Trail;
	 
	 	2.	 	fraud or deliberate error in the recording and maintaining of
financial records of Red Trail;
	 
	 	3.	 	deficiencies in or noncompliance with Red Trail’s internal
accounting controls;
	 
	 	4.	 	misrepresentation or false statement to or by a senior officer
or accountant regarding a matter contained in the financial records, financial
reports or audit reports of Red Trail;
	 
	 	5.	 	deviation from full and fair reporting of Red Trail’s financial
condition; or
	 
	 	6.	 	violations of Red Trail’s Code of Ethics for Senior Financial
Officers.

II. Receipt of Complaints

     Concerns regarding Accounting Matters may be reported as follows:

1. Regular mail to:

Audit Committee

Red Trail Energy, LLC

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P.O. Box 11

Richardton,
North Dakota, 58652

2. E-mail to:

auditcommitte@redtrailenergy.com

3. Telephone voicemail to:

1-701-974-3308, ext. 115

     We want to assure that all employees have a way to address any actual or possible violations
regarding Accounting Matters with the Audit Committee of our Board of Directors. That may be done
via phone message or e-mail as follows:

1. E-mail to:

auditcommitte@redtrailenergy.com

2. Telephone voicemail to:

1-701-974-3308,
ext. 115

     All employee complaints may be made on a confidential or anonymous basis. If an employee
provides a complaint on a confidential or anonymous basis, we encourage the submitter to provide
enough specifics and facts to allow Red Trail to fully review the complaint and act appropriately.
We also encourage the submitter to provide a way for us to follow up if more information is needed
and to allow acknowledgment of the complaint. We emphasize, however, that this is not required to
submit a complaint.

III. Treatment of Complaints

     Upon
receipt of a complaint, Mick Miller the Ethics Compliance Officer will (i)
determine whether the complaint actually pertains to Accounting Matters and (ii) when possible,
acknowledge receipt of the complaint to the sender. Complaints relating to Accounting Matters will
be reviewed under Audit Committee direction and oversight by the Ethics Compliance Officer or such
other persons as the Audit Committee determines to be appropriate. Prompt and appropriate
corrective action will be taken when and as warranted in the judgment of the Audit Committee.

     Red Trail will not discharge, demote, suspend, threaten, harass or in any manner discriminate
against any employee in the terms and conditions of employment based upon any lawful actions of
such employee with respect to good faith reporting of complaints regarding Accounting Matters or
otherwise as specified in Section 806 of the Sarbanes-Oxley Act of 2002.

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IV. Reporting and Retention of Complaints and Investigations

     The Ethics Compliance Officer will maintain a log of all complaints, tracking their receipt,
investigation and resolution and shall prepare a periodic summary report thereof for the Audit
Committee. Copies of complaints and such log will be maintained in accordance with Red Trail’s
then applicable document retention policy.

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CERTIFICATION

     I have read and understand the Company’s Code of Business Conduct (the “Code”). I understand
that the Company’s Ethics Compliance Officer is available to answer any questions I have regarding
the Code. I agree to comply with the Code in all respects during my employment or other
relationship with the Company. I understand that my failure to comply in all respects with the Code
is a basis for termination for cause of my employment or other relationship with the Company.

	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Signature:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

(Please Print)
	 	 

16EX-4.1 Purchase Agreement

 

Exhibit 4.1

Equity One, Inc.

$150,000,000

6.0% Senior Notes due 2017

PURCHASE AGREEMENT

April 11, 2007

J.P.
Morgan Securities Inc.

Deutsche Bank Securities Inc.

as Representatives of the several Initial Purchasers

c/o J.P. Morgan Securities Inc.

270 Park Avenue

New York, NY 10017

Ladies and Gentlemen:

     Equity One, Inc., a corporation organized under the laws of the State of Maryland (the
“Company”), and each of its subsidiaries named in the Final Offering Memorandum (as defined
below) as a Guarantor (each a “Guarantor” and collectively, the “Guarantors”),
proposes to sell to the several initial purchasers named in Schedule I hereto (the “Initial
Purchasers”), for whom the Initial Purchasers named as Representatives on Schedule I (the
“Representatives”) are acting as representatives, the principal amount of its debt
securities identified on Schedule I hereto (the “Securities”) to be issued under an
Indenture, dated as of September 9, 1998 (the “Base Indenture”), as supplemented by ten
Supplemental Indentures thereto and which is expected to be further amended and supplemented by
Supplemental Indenture No. 11 (the Base Indenture, including such eleven Supplemental Indentures,
being referred to hereafter collectively as the “Indenture”), between the Company, the
Guarantors named therein and U.S. Bank National Association (as successor to SunTrust Bank), as
trustee (the “Trustee”). The Securities will be unconditionally guaranteed as to the
payment of principal and interest (each, a “Guarantee” and, collectively, the
“Guarantees”) by the Guarantors. To the extent there are no additional Initial Purchasers
listed on Schedule I other than the Representatives, the term Representatives shall mean you, as
Initial Purchasers, and the terms Representatives and Initial Purchasers shall mean either singular
or plural as the context requires. The Securities will be sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the “Securities Act,” which
term, as used herein, includes the rules and regulations of the Commission promulgated thereunder)
in reliance on an exemption therefrom. The Securities will be issued only in book-entry form in
the name of Cede & Co., as nominee of The Depository Trust Company (the “Depositary”).

 

 

     The holders of the Securities will be entitled to the benefits of a registration rights
agreement, to be dated as of April 18, 2007 (the “Registration Rights Agreement”), among
the Company, the Guarantors and the Initial Purchasers, pursuant to which the Company will agree to
file with the Securities and Exchange Commission (the “Commission”), under the
circumstances set forth therein, (i) a registration statement under the Securities Act relating to
another series of debt securities of the Company with terms substantially identical to the
Securities (the “Exchange Notes”) to be offered in exchange for the Securities (the
“Exchange Offer”) and (ii) to the extent required by the Registration Rights Agreement, a
shelf registration statement pursuant to Rule 415 of the Securities Act relating to the resale by
certain holders of the Securities, and in each case, to use its reasonable best efforts to cause
such registration statements to be declared effective.

     The Company understands that the Initial Purchasers propose to make an offering of the
Securities on the terms and in the manner set forth herein and in the Pricing Disclosure Package
(as defined below) and agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (the “Subsequent
Purchasers”) at any time after the time this Agreement is executed and delivered by the parties
hereto. Pursuant to the terms of the Securities and the Indenture, investors who acquire
Securities shall be deemed to have agreed that Securities may only be resold or otherwise
transferred, after the time this Agreement is executed and delivered, if such Securities are
registered for resale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemption afforded by Rule 144A
under the Securities Act (“Rule 144A”)).

     The Company has prepared and delivered to each Initial Purchaser copies of a preliminary
offering memorandum, dated April 11, 2007 (the “Preliminary Offering Memorandum”), and has
prepared and will deliver to each Initial Purchaser copies of a Pricing Term Sheet, dated April 11,
2007 (the “Pricing Term Sheet”), describing the terms of the Securities in the form
attached hereto as Schedule III, and any other written communications listed on Schedule II, each
for use by such Initial Purchaser in connection with its solicitation of offers to purchase the
Securities. The Preliminary Offering Memorandum, the Pricing Term Sheet and any written
communications listed on Schedule II are herein collectively referred to as the “Pricing
Disclosure Package.” Promptly after the date hereof, the Company will prepare and deliver to
each Initial Purchaser a final offering memorandum dated the date hereof (the “Final Offering
Memorandum”).

     All references herein to the terms “Pricing Disclosure Package” and “Final Offering
Memorandum” shall be deemed to mean and include all information filed under the Securities Exchange
Act of 1934 (as amended, the “1934 Act,” which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder) prior to the Applicable Time (defined below)
and incorporated by reference in the Pricing Disclosure Package (including the Preliminary Offering
Memorandum) or the Final Offering Memorandum (as the case may be), and all references herein to the
terms “amend,” “amendment” or “supplement” with respect to the Final Offering Memorandum shall be
deemed to mean and include all information filed under the 1934 Act after the Applicable Time and
incorporated by reference in the Final Offering Memorandum.

-2-

 

     The Company hereby confirms its agreement with the Initial Purchasers as follows:

     SECTION 1. Representations and Warranties. The Company hereby represents, warrants and
covenants to each Initial Purchaser that, as of the date hereof and as of the Closing Date (as
defined below):

     (a) No Registration Required. Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 3 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers and to each
Subsequent Purchaser in the manner contemplated by this Agreement and the Final Offering Memorandum
to register the Securities under the Securities Act.

     (b) No Integration of Offerings or General Solicitation. None of the Company or any of its
affiliates (as such term is defined in Rule 501 under the Securities Act) (each, an
“Affiliate”), or any person acting on its or any of their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation or warranty) has, directly or
indirectly, solicited any offer to buy or offered to sell, or will, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the Securities in a manner
that would require the Securities to be registered under the Securities Act. None of the Company
or any of its Affiliates, or any person acting on its or any of their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation or warranty) has engaged or will
engage, in connection with the offering of the Securities, in (i) any form of general solicitation
or general advertising within the meaning of Rule 502 under the Securities Act, or (ii) any
directed selling efforts within the meaning of Regulation S, and all such persons will comply with
the offering restrictions requirement of Regulation S.

     (c) Eligibility for Resale under Rule 144A. The Securities are eligible for resale pursuant
to Rule 144A under the Securities Act and will not be, on the Closing Date, of the same class as
securities listed on a national securities exchange registered under Section 6 of the 1934 Act or
quoted in a U.S. automated interdealer quotation system and the Securities, on the Closing Date,
will otherwise satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act.

     (d) The Offering Memorandum. Neither the Preliminary Offering Memorandum, as of its date, the
Pricing Disclosure Package, as of the Applicable Time or as of the Closing Date, nor the Final
Offering Memorandum, as of its date or (as amended or supplemented in accordance with Section 4(a),
as applicable) as of the Closing Date, contains an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to statements in or omissions from the
Pricing Disclosure Package, the Final Offering Memorandum or any amendment or supplement thereto
made in reliance upon and in conformity with information furnished to the Company in writing by any
Initial Purchaser through the Representatives expressly for use in the Pricing Disclosure Package,
the Final Offering Memorandum or amendment or supplement thereto, as the case may be. The Pricing
Disclosure Package contains, and the Final Offering Memorandum will contain, in all material
respects all

-3-

 

the information that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4). The Company
(including its agents and representatives, other than the Initial Purchasers as such) has not
prepared, made, used, authorized, approved, referred to or distributed and will not prepare, make,
use, authorize, approve, refer to or distribute, prior to the later of the Closing Date and the
completion of the Initial Purchasers’ distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than (i) the Preliminary Offering
Memorandum, (ii) the Final Offering Memorandum, (iii) any written communications listed on Schedule
II, and (iv) the Pricing Term Sheet in the form of Schedule III. “Applicable Time” means
4:00 p.m. (Eastern Time) on April 11, 2007 or such other time as agreed by the Company and the
Representatives.

     (e) Incorporated Documents. The documents incorporated by reference in the Preliminary
Offering Memorandum and the Final Offering Memorandum at the time they were or hereafter are filed
with the Commission (collectively, the “Incorporated Documents”) complied and will comply
in all material respects with the requirements of the 1934 Act.

     (f) The Purchase Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and each Guarantor.

     (g) The Registration Rights Agreement. The Registration Rights Agreement has been duly
authorized and, on the Closing Date, will have been duly executed and delivered by, and will
constitute a valid and binding agreement of, the Company and each Guarantor, enforceable in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors’ rights and remedies generally, (ii) general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law)
and (iii) the discretion of the court before which any proceeding therefor may be brought (clauses
(i), (ii) and (iii) are collectively referred to as the “Enforceability Limitations”), and
except that enforceability of the indemnification provisions thereof may be limited by applicable
law and public policy.

     (h) Authorization of the Securities and the Exchange Notes. The Securities have been duly
authorized by the Company for issuance and sale pursuant to this Agreement and the Indenture. When
duly authenticated and delivered by the Trustee in accordance with the terms of the Indenture
(assuming the due authorization, execution and delivery of the Indenture by the Trustee), and
delivered to, and paid for by, the Initial Purchasers pursuant to this Agreement, the Securities
will be valid and legally binding obligations of the Company entitled to the benefit of the
Indenture and will be enforceable against the Company in accordance with their terms, subject to
the Enforceability Limitations. The Indenture (including each supplemental indenture, including
Supplemental Indenture No. 11) has been duly authorized, executed and delivered by the Company, and
assuming due authorization, execution and delivery thereof by the Trustee, will constitute a valid
and legally binding obligation of the Company, enforceable against the Company in accordance with
its terms, subject to the Enforceability Limitations. The Exchange Notes have been duly and
validly authorized for issuance by the Company, and when issued and authenticated in accordance
with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer, will
constitute valid and binding obligations of the Company,

-4-

 

enforceable against the Company in accordance with their terms, subject to the Enforceability
Limitations.

     (i) Authorization of Guarantees. Each Guarantee has been duly authorized, executed and
delivered by the applicable Guarantor and constitutes a valid and legally binding obligation of
such Guarantor enforceable in accordance with its terms, subject to the Enforceability Limitations.

     (j) No Other Contracts. There is no franchise, contract or other document of a character
required to be described in the Pricing Disclosure Package or the Final Offering Memorandum, or to
be filed as an exhibit thereto, which is not described or filed as required. The statements in the
Pricing Disclosure Package or the Final Offering Memorandum under the headings “Description of the
Notes and Guarantees,” “Certain Federal Income Tax Considerations” and “Risk Factors” insofar as
such statements summarize legal matters, agreements, documents or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements, documents or proceedings.

     (k) Real Estate Investment Trust. The Company has operated, for all periods from and after
January 1, 1995, and intends to continue to operate in such a manner as to qualify to be taxed as a
“real estate investment trust” under the Internal Revenue Code of 1986, as amended (the
“Code”), including the taxable year in which sales of the Securities are to occur.

     (l) No Consents. No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the transactions contemplated herein or
in the Indenture, except such as have been obtained under the Securities Act, the 1939 Act, real
estate syndication laws and such as may be required under the rules of the National Association of
Securities Dealers and the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities and the Guarantees by the Initial Purchasers in the manner
contemplated herein and in the Pricing Disclosure Package and the Final Offering Memorandum and the
Company and each Guarantor has full power and authority to authorize, issue and sell the Securities
and Guarantees to be offered by it as contemplated by this Agreement and the Indenture.

     (m) Authorization of the Indenture. The Indenture, on the date of filing thereof with the
Commission and on the Closing Date, conformed or will conform in all material respects with the
requirements of the Trust Indenture Act of 1939, as amended (the “1939 Act”), and the rules
and regulations of the Commission thereunder (the “1939 Act Regulations” and, together with
the 1939 Act, the “Trust Indenture Act”). A Statement of Eligibility on Form T-1
(“Form T-1”) relating to the Indenture has been qualified under the 1939 Act and no stop
order suspending the effectiveness of the Form T-1 is in effect and no proceedings for such purpose
are pending before or to the Company’s knowledge are threatened by the Commission.

     (n) Description of the Securities and the Indenture. The Securities, the Exchange Notes and
the Indenture conform in all material respects to the respective statements relating thereto
contained in the Pricing Disclosure Package and the Final Offering Memorandum.

-5-

 

     (o) No Material Adverse Effect. Since the respective dates as of which information is given
in the Pricing Disclosure Package and the Final Offering Memorandum, except as may otherwise be
stated therein or contemplated thereby, (A) there has been no material adverse effect on the
condition (financial or otherwise), prospects, earnings or business of the Company and its
subsidiaries or their properties, taken as a whole (a “Material Adverse Effect”), whether
or not arising from transactions in the ordinary course of business, (B) other than those arising
in the ordinary course of business, there have been no transactions or acquisitions entered into by
the Company or any of its subsidiaries that are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) except for regular quarterly dividends on the
Company’s common stock, there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.

     (p) Independent Accountants. The accountants who certified the financial statements and
supporting schedules included in the Final Offering Memorandum are independent public accountants
as required by the Securities Act.

     (q) Title to Properties. Except as disclosed in the Pricing Disclosure Package and the Final
Offering Memorandum, the Company and the Property Subsidiaries have good and marketable fee simple
title to or leasehold title in all real properties and all other properties and assets owned or
leased by them, in each case free from liens, encumbrances and defects that would have a Material
Adverse Effect; except as disclosed in the Pricing Disclosure Package and the Final Offering
Memorandum, no tenant under any lease to which the Company or any Property Subsidiary lease any
portion of its property is in default under such lease, except in any case where such default would
not have a Material Adverse Effect; each of the properties of any of the Company or the Property
Subsidiaries complies with all applicable codes and zoning laws and regulations except in any case
where such non-compliance would not have a Material Adverse Effect; and neither the Company nor any
of the Property Subsidiaries has knowledge of any pending or threatened condemnation, zoning change
or other proceeding or action that will in any manner affect the size of, use of, improvements on,
construction on, or access to the properties of any of the Company or the Property Subsidiaries
except in any case where such action or proceeding would not have a Material Adverse Effect.

     (r) No Transfer Taxes. There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the issuance by the Company and the
Guarantors or sale by the Company and the Guarantors of the Securities and the Guarantees.

     (s) Preparation of the Financial Statements. The financial statements included in the
Preliminary Offering Memorandum and Final Offering Memorandum, together with the related schedules
and notes, present fairly the financial position of the Company and its consolidated subsidiaries
at the dates indicated and the statement of operations, stockholders’ equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified. Such financial statements
have been prepared in conformity with generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods involved except as noted therein. The
supporting schedules, if any, present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial information

-6-

 

included in the Preliminary Offering Memorandum and Final Offering Memorandum present fairly
the information shown therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Final Offering Memorandum. All disclosures contained in the
Preliminary Offering Memorandum and Final Offering Memorandum regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the Commission) comply in all
material respects with Regulation G under the 1934 Act and Item 10 of Regulation S-K of the
Securities Act Regulations, to the extent applicable.

     (t) Incorporation and Good Standing of the Company and its Subsidiaries. The Company, each
subsidiary of the Company that is a “significant subsidiary” as such term is defined in Rule
1-02(w) of Regulation S-X promulgated under the 1933 Act (each, a “Significant Subsidiary”)
and each subsidiary of the Company that owns any real property (each, a “Property
Subsidiary”) has been duly incorporated or organized and is validly existing as a corporation,
limited partnership, general partnership or limited liability company in good standing under the
laws of the jurisdiction in which it is chartered or organized with full corporate, partnership or
limited liability company power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Pricing Disclosure Package and the
Final Offering Memorandum. Each of the Company, the Significant Subsidiaries and the Property
Subsidiaries is duly qualified to do business as a foreign corporation, limited partnership,
general partnership or limited liability company and is in good standing under the laws of each
jurisdiction which requires such qualification except in any case in which the failure to so
qualify or be in good standing would not have a Material Adverse Effect. All the outstanding
shares of capital stock, partnership interests, limited liability company interests or other
equivalent equity interests of each Significant Subsidiary and each Property Subsidiary have been
duly and validly authorized and issued and are fully paid and nonassessable. Except as otherwise
set forth in the Pricing Disclosure Package and the Final Offering Memorandum, all outstanding
shares of capital stock, partnership interests, limited liability company interests or other
equivalent equity interest of the Significant Subsidiaries and the Property Subsidiaries are owned
by the Company either directly or through wholly owned subsidiaries of the Company free and clear
of any perfected security interest or any other security interests, claims, liens or encumbrances.

     (u) Capitalization and Other Matters. The Company’s authorized equity capitalization is as
set forth in the Pricing Disclosure Package and the Final Offering Memorandum as of the date or
dates stated therein, and the Securities and the Guarantees will conform to the description thereof
contained in the Pricing Disclosure Package and the Final Offering Memorandum.

     (v) Non-Contravention of Existing Instruments. Neither the execution or delivery of this
Agreement or the Indenture, the issue and sale of the Securities and the Guarantees nor the
consummation of any other of the transactions herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i)
the charter or articles or certificate of formation, bylaws, partnership agreement, limited
liability company agreement or other organizational documents of the Company or any of its
subsidiaries, (ii) except as set forth in the Pricing Disclosure Package and the Final Offering

-7-

 

Memorandum, the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries is a party or bound or to which its or their property
is subject where such conflict, breach or violation would have a Material Adverse Effect, or (iii)
any statute, law, rule, regulation, judgment, order or decree applicable to the Company or any of
its subsidiaries of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or
any of its or their properties where such conflict, breach or violation would have a Material
Adverse Effect.

     (w) No Defaults. None of the Company, the Significant Subsidiaries or the Property
Subsidiaries is in violation or default of any provision of its charter or articles or certificate
of formation, bylaws, partnership agreement, limited liability company agreement or other
organizational documents. Neither the Company nor any of its subsidiaries is in violation or
default of (i) the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject, or (ii) any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable, except in the cases of clause (i) or (ii) for
such violations or defaults that have been disclosed in the Pricing Disclosure Package and the
Final Offering Memorandum or that would not have a Material Adverse Effect.

     (x) No Registration Rights. No holders of securities of the Company have rights to the
registration of such securities in connection with the transactions contemplated by the
Registration Rights Agreement except for those listed on Schedule 1(x), all of which have been
effectively waived or are inapplicable to the offering hereby, and those pursuant to the
Registration Rights Agreement, dated January 1, 1999, by and between William L. Mack, David Mack,
Earle Mack, Frederic Mack, and Robert A. Elkins, doing business as Frankline Development Co., and
the Company.

     (y) No Material Actions or Proceedings. Except as disclosed in the Pricing Disclosure Package
and the Final Offering Memorandum, there are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective properties, the ultimate
determination of which would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, or would reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations under the Indenture or this Agreement, or which
are otherwise material in the context of the sale of the Securities. No such actions, suits or
proceedings are, to the Company’s knowledge, threatened or contemplated

     (z) Intellectual Property Rights. Neither the Company nor any of its subsidiaries is required
to own or possess any trademarks, service marks, trade names or copyrights in order to conduct the
business now operated by it, other than those the failure to possess or own would not have a
Material Adverse Effect, whether or not arising from transactions in the ordinary course of
business.

-8-

 

     (aa) All Necessary Permits, etc. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the appropriate federal, state
or foreign regulatory authorities necessary to conduct their respective businesses as presently
conducted, except for such failures that singly or in the aggregate would not have a Material
Adverse Effect, and neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the Pricing Disclosure
Package and the Final Offering Memorandum (exclusive of any supplement thereto).

     (bb) Mortgages, Deeds of Trust. The mortgages and deeds of trust encumbering the properties
and assets described in the Pricing Disclosure Package and the Final Offering Memorandum (i) are
not convertible (in the absence of foreclosure) into an equity interest in the property or asset
described therein or in the Company or any of its subsidiaries, nor does the Company or any of its
subsidiaries hold a participating interest therein, (ii) except as set forth in the Pricing
Disclosure Package and the Final Offering Memorandum, are not cross-defaulted to any indebtedness
other than indebtedness of the Company or any of its subsidiaries and (iii) are not
cross-collateralized to any property not owned by the Company or any of its subsidiaries.

     (cc) Tax Law Compliance. The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof, except in any case in
which the failure to so file would not have a Material Adverse Effect and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as would not have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Pricing Disclosure Package and the Final Offering Memorandum
(exclusive of any supplement thereto).

     (dd) Not an “Investment Company”. The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as described in the Pricing
Disclosure Package and the Final Offering Memorandum, will not be an “investment company” as
defined in the Investment Company Act of 1940, as amended.

     (ee) Insurance. Each of the Company, the Significant Subsidiaries and the Property
Subsidiaries and each of their respective properties are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which they are engaged. All policies of insurance and fidelity or
surety bonds insuring the Company, the Significant Subsidiaries and the Property Subsidiaries or
their respective properties, businesses, assets, employees, officers and directors are in full
force and effect, except for the failure to insure or lapses in policies which would not have a
Material Adverse Effect.

     (ff) Title Insurance. Title insurance in favor of the Company and the Property Subsidiaries
is maintained with respect to each shopping center property owned by any such entity in an amount
at least equal to (a) the cost of acquisition of such property or (b) the cost of

-9-

 

construction of such property (measured at the time of such construction), except, in each
case, where the failure to maintain such title insurance would not have a Material Adverse Effect.

     (gg) No Price Stabilization or Manipulation. The Company has not taken, directly or
indirectly, any action designed to or that would constitute or that might reasonably be expected to
cause or result in, under the 1934 Act or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities.

     (hh) Company’s Accounting System. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

     (ii) Disclosure Controls and Procedures. The Company has established and maintains “internal
control over financial reporting” and “disclosure controls and procedures,” in each case as
required by Rule 13a-15 under the 1934 Act. To the knowledge of the Company, the Company’s
internal control over financial reporting and disclosure controls and procedures are effective at a
reasonable assurance level to perform the functions for which they were designed and established.
Based on the most recent evaluation of the Company’s internal control over financial reporting, all
significant deficiencies and material weaknesses in the design or operation of the internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial data required to be disclosed by the Company in its
1934 Act reports within the time periods specified in the 1934 Act, and any fraud, whether or not
material, that involves management or other employees who have a significant role in such internal
control over financial reporting, have been reported to the Company’s auditors and the audit
committee of the board of directors.

     (jj) Compliance with Environmental Laws. The Company and its Property Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment and Hazardous Materials (as
defined herein), including, but not limited to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of Hazardous Materials (collectively, “Environmental
Laws”), (ii) have received and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses and
(iii) have not received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of Hazardous Materials, except where such non-compliance
with Environmental Laws, failure to receive required permits, licenses or other approvals, or
liability would not, individually or in the aggregate, have a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business, except as set forth in or
contemplated in the Pricing Disclosure Package and the Final Offering Memorandum (exclusive of any
supplement thereto). Except as set forth in the Pricing Disclosure Package and the Final Offering
Memorandum, neither the Company nor any of the Property Subsidiaries has been named as a
“potentially responsible party” under any Environmental Laws, including, but

-10-

 

not limited to the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.

     (kk) Periodic Review of Costs of Environmental Compliance. In the ordinary course of its
business, the Company periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its Property Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and liabilities would not, singly or in
the aggregate, have a Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the Pricing Disclosure
Package and the Final Offering Memorandum (exclusive of any supplement thereto).

     (ll) Compliance with Labor Laws. No labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent that might have a Material
Adverse Effect.

     (mm) Related Party Transactions. The Company (i) does not have any material lending or other
relationship with any banking or lending affiliate of an Initial Purchaser except as set forth on
Schedule I and (ii) does not intend to use any of the proceeds from the sale of the Securities
hereunder to repay any outstanding debt owed to any such affiliate except as set forth in the
Pricing Disclosure Package and the Final Offering Memorandum.

     The Company acknowledges that the Initial Purchasers and, for purposes of the opinions to be
delivered pursuant to Section 5 hereof, counsel for the Company and counsel for the Initial
Purchasers, will rely upon the accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.

     SECTION 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, the principal amount of Securities and Guarantees set forth opposite such Initial
Purchaser’s name in Schedule I hereto at a purchase price of 99.249% of such principal amount.

     SECTION 3. Delivery and Payment.

     (a) The Closing Date; Delivery and Payment. Delivery of and payment for the Securities and
the Guarantees shall be made at 10:00 a.m. (Eastern time), New York City time, on April 18, 2007,
or at such time on such later date as the Representatives shall designate, which date and time may
be postponed by agreement between the Representatives and the Company (such date being herein
called the “Closing Date” and such time of delivery and payment for the Securities being
herein called the “Closing Time”). Delivery of the Securities and Guarantees shall be made
to the Representatives for the respective accounts of the several Initial Purchasers against
payment by the several Initial Purchasers through the Representatives of the purchase price thereof
to or upon the order of the Company by wire transfer payable in

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same-day funds. The Securities shall be in such denominations and registered in the name of
Cede & Co., as nominee of the Depositary, and shall be made available for inspection on the
business day preceding the Closing Date at a location in New York City, as the Representatives may
designate. Time shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Initial Purchasers

     (b) Initial Purchasers as Qualified Institutional Buyers. Each Initial Purchaser severally
and not jointly represents and warrants to, and agrees with, the Company that:

     (i) it is a “qualified institutional buyer” within the meaning of Rule 144A (a
“Qualified Institutional Buyer”); and

     (ii) it has not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities as part of their initial offering except:

     (A) within the United States to persons whom it reasonably believes
to be Qualified Institutional Buyers in transactions pursuant to Rule 144A
and in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of the Securities is aware
that such sale is being made in reliance on Rule 144A; or

     (B) in accordance with the restrictions set forth in Schedule IV hereto.

     SECTION 4. Additional Covenants. The Company further covenants and agrees with each Initial
Purchaser as follows:

     (a) Preparation of Final Offering Memorandum; Initial Purchasers’ Review of Proposed
Amendments and Supplements. As promptly as practicable following the Applicable Time and in any
event not later than the second business day following the date hereof, the Company will prepare
and deliver to the Initial Purchasers the Final Offering Memorandum, which shall consist of the
Preliminary Offering Memorandum as modified only by the information contained in the Pricing Term
Sheet and any other immaterial changes agreed to in good faith by the Company and the
Representatives. The Company will not amend or supplement the Preliminary Offering Memorandum or
the Pricing Term Sheet unless the Initial Purchasers shall previously have been furnished a copy of
the proposed amendment or supplement at least two business days prior to the proposed use or
filing, and shall not have objected to such amendment or supplement. The Company will not amend or
supplement the Final Offering Memorandum unless the Initial Purchasers shall previously have been
furnished a copy of the proposed amendment or supplement at least two business days prior to the
proposed use or filing, and shall not have objected to such amendment or supplement.

     (b) Amendments and Supplements to the Final Offering Memorandum and Other Securities Act
Matters. If, prior to the later of (x) the Closing Date and (y) the completion of the placement of
the Securities by the Initial Purchasers with the Subsequent Purchasers, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Final Offering
Memorandum, as then amended or supplemented, in order to make the statements therein, in the light
of the circumstances when the Final Offering Memorandum is delivered to a

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Subsequent Purchaser, not misleading, or if in the judgment of the Initial Purchasers or
counsel for the Initial Purchasers it is otherwise necessary to amend or supplement the Final
Offering Memorandum to comply with law, the Company agrees to promptly prepare (subject to Section
4(a) hereof), file with the Commission (if necessary) and furnish at its own expense to the Initial
Purchasers, amendments or supplements to the Final Offering Memorandum so that the statements in
the Final Offering Memorandum as so amended or supplemented will not, in the light of the
circumstances on the Closing Date and at the time of sale of Securities, be misleading or so that
the Final Offering Memorandum, as amended or supplemented, will comply with all applicable law.

     The Company hereby expressly acknowledges that the indemnification and contribution provisions
of Sections 7 and 8 hereof are specifically applicable and relate to each offering memorandum,
amendment or supplement referred to in this Section 4.

     (c) Copies of the Offering Memorandum. The Company agrees to furnish the Initial Purchasers,
without charge, as many copies of the Pricing Disclosure Package and the Final Offering Memorandum
and any amendments and supplements thereto as they shall have reasonably requested.

     (d) Additional Written Communications. The Company represents and agrees that, unless it
obtains the prior consent of the Representatives, it has not made and will not make any written
communication in connection with the offering and sale of the Securities; provided however that the
prior written consent of the Representatives shall be deemed to have been given in respect of the
Pricing Term Sheet attached as Schedule III.

     (e) Blue Sky Compliance. The Company shall cooperate with the Initial Purchasers and counsel
for the Initial Purchasers to qualify or register (or to obtain exemptions from qualifying or
registering) all or any part of the Securities for offer and sale under the securities laws of the
several states of the United States, the provinces of Canada or any other jurisdictions designated
by the Initial Purchasers, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution of the Securities.
The Company shall not be required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign corporation. The Company will
advise the Initial Purchasers promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event
of the issuance of any order suspending such qualification, registration or exemption, the Company
shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.

     (f) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Securities
sold by it in the manner described under the caption “Use of Proceeds” in the Pricing Disclosure
Package and the Final Offering Memorandum.

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     (g) The Depositary. The Company will cooperate with the Initial Purchasers and use its best
efforts to permit the Securities to be eligible for clearance and settlement through the facilities
of the Depositary.

     (h) Additional Issuer Information. Prior to the completion of the placement of the Securities
by the Initial Purchasers with the Subsequent Purchasers, the Company shall file, on a timely
basis, with the Commission all reports and documents required to be filed under Section 13 or 15 of
the 1934 Act. Additionally, at any time when the Company is not subject to Section 13 or 15 of the
1934 Act, for the benefit of holders and beneficial owners from time to time of the Securities, the
Company shall furnish, at its expense, upon request, to holders and beneficial owners of Securities
and prospective purchasers of Securities information (“Additional Issuer Information”)
satisfying the requirements of Rule 144A(d).

     (i) Agreement Not To Offer or Sell Additional Securities. During the period between the date
hereof and the Closing Date, the Company will not, without the prior written consent of both the
Representatives (which consent may be withheld at the discretion of the Representatives), directly
or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an
open “put equivalent position” within the meaning of Rule 16a-1 under the 1934 Act, or otherwise
dispose of or transfer, or announce the offering of, or file any registration statement under the
Securities Act in respect of, any debt securities of the Company or securities exchangeable for or
convertible into debt securities of the Company (other than as contemplated by this Agreement and
the Registration Rights Agreement).

     (j) Future Reports to the Initial Purchasers. At any time when the Company is subject to
Section 13 or 15 of the 1934 Act and any Securities or Exchange Notes remain outstanding, the
Company will upon request furnish to the Representatives: (i) as soon as practicable after the end
of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of income, partners’ capital and cash
flows for the year then ended and the opinion thereon of the Company’s independent public
accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
report filed by the Company with the Commission, the NASD, Inc. (“NASD”) or any securities
exchange; and (iii) as soon as available, copies of any report or communication of the Company
mailed generally to holders of its debt securities (including the holders of the Securities), if,
in each case, such documents are not filed with the Commission within the time periods specified by
the Commission’s rules and regulations under Section 13 or 15 of the 1934 Act.

     (k) No Integration. The Company agrees that it will not and will cause its Affiliates not to
make any offer or sale of securities of the Company of any class if, as a result of the doctrine of
“integration” referred to in Rule 502 under the Securities Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or
(iii) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof or by Rule 144A.

-14-

 

     (l) No Restricted Resales. During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities
Act) to resell any of the Securities which constitute “restricted securities” under Rule 144 that
have been reacquired by any of them.

     (m) Legended Securities. Each certificate for a Security will bear the legend contained in
“Transfer Restrictions” in the Final Offering Memorandum for the time period and upon the other
terms stated in the Final Offering Memorandum.

     The Representatives, on behalf of the several Initial Purchasers, may together, in their sole
discretion, waive in writing the performance by the Company of any one or more of the covenants set
forth in this Section 4 or extend the time for their performance.

     SECTION 5. Conditions of the Obligations of the Initial Purchasers. The obligations of the
several Initial Purchasers to purchase the Securities and the Guarantees shall be subject to the
accuracy of the representations and warranties on the part of the Company and the Guarantors
contained herein as of the Execution Time and as of the Closing Date and to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company and the Guarantors of their obligations hereunder and to the following
additional conditions:

     (a) Opinion of Counsel for the Company. The Company shall have requested and caused Greenberg
Traurig, P.A. and Venable LLP, each counsel for the Company and the Guarantors, to have furnished
to the Representatives the opinions, dated the Closing Date and addressed to the Representatives
and reasonably satisfactory in form and substance to counsel for the Initial Purchasers, to the
effect that.

     (i) each of the Company, the Significant Subsidiaries and the Property
Subsidiaries is validly existing as a corporation, limited partnership or limited
liability company in good standing under the laws of the jurisdiction in which it is
chartered or formed, with full corporate, partnership or limited liability company
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Pricing Disclosure Package
and the Final Offering Memorandum, and is duly qualified to do business as a foreign
corporation, partnership or limited liability company and is in good standing under
the laws of each jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business and where the failure to be
so qualified would, individually or in the aggregate, have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Pricing Disclosure Package and the
Final Offering Memorandum; notwithstanding the foregoing, the Company is duly
qualified to do business as a foreign corporation and is in good standing under the
laws of Florida, Georgia and Texas;

     (ii) all the outstanding shares of capital stock, partnership interests,
limited liability company interests or other equivalent equity interest of each
Significant Subsidiary and Property Subsidiary have been duly authorized and validly

-15-

 

issued and are fully paid and nonassessable, as applicable, and except as described
in the Pricing Disclosure Package and the Final Offering Memorandum,
all outstanding shares of capital stock, partnership interests, limited liability company interests
or other equivalent equity interest of the Significant Subsidiaries and the Property
Subsidiaries are owned by the Company either directly or through wholly owned
subsidiaries;

     (iii) the Company’s authorized equity capitalization is as set forth in the
Pricing Disclosure Package and the Final Offering Memorandum and the Securities and
the Guarantees will conform to the descriptions thereof contained in the Pricing
Disclosure Package and the Final Offering Memorandum;

     (iv) the Securities have been duly and validly authorized, and, when issued and
delivered by the Trustee in accordance with the terms of the Indenture (assuming the
due authorization, execution and delivery of the Indenture by the Trustee), and
delivered to, and paid for by, the Initial Purchasers pursuant to this Agreement,
such Securities will constitute valid and legally binding obligations of the Company
entitled to the benefits provided for in the Indenture and will be enforceable
against the Company in accordance with their terms, subject to the Enforceability
Limitations;

     (v) the Exchange Notes have been duly and validly authorized for issuance by
the Company, and when issued and authenticated in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange Offer, will constitute
valid and binding obligations of the Company, as issuer, and each of the Guarantors,
as a guarantor, enforceable against the Company and each of the Guarantors in
accordance with their terms, subject to the Enforceability Limitations, and will be
entitled to the benefits of the Indenture.

     (vi) each Guarantee has been duly authorized, executed and delivered by the
applicable Guarantor and constitutes a valid and legally binding obligation of such
Guarantor enforceable in accordance with its terms, subject to the Enforceability
Limitations;

     (vii) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its subsidiaries or its or
their property of a character required to be disclosed in the Pricing Disclosure
Package or Final Offering Memorandum which is not adequately disclosed in the
Pricing Disclosure Package and the Final Offering Memorandum, and there is no
franchise, contract or other document of a character required to be described in the
Pricing Disclosure Package or Final Offering Memorandum, or to be filed as an
exhibit thereto, which is not described or filed as required;

     (viii) the statements included or incorporated by reference in the Pricing
Disclosure Package and the Final Offering Memorandum under the captions

-16-

 

“Certain Federal Income Tax Considerations”, “Description of Notes and Guarantees”,
“Exchange Offer; Registration Rights”, “Transfer Restrictions” and “Risk Factors”
insofar as such statements summarize legal matters, agreements, documents or
proceedings discussed therein, are accurate in all material respects;

     (ix) the documents incorporated by reference into the Pricing Disclosure
Package or Final Offering Memorandum, as of their respective effective or filing
dates, other than the financial statements and other financial information contained
or incorporated by reference therein, as to which counsel need express no opinion,
complied as to form in all material respects with the requirements of the 1934 Act
and the 1934 Act Regulations;

     (x) The Securities, the Indenture, and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in the
Pricing Disclosure Package and the Final Offering Memorandum.

     (xi) this Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors;

     (xii) the Indenture has been duly and validly authorized, executed and
delivered by the Company and each of the Guarantors, as applicable, and assuming due
authorization, execution and delivery thereof by the Trustee, will constitute a
valid and legally binding agreement of the Company and such Guarantors enforceable
against the Company and such Guarantors in accordance with its terms, subject to the
Enforceability Limitations;

     (xiii) the Registration Rights Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Guarantors, as applicable, and
constitutes a valid and legally binding agreement of the Company and such Guarantors
enforceable against the Company and such Guarantors in accordance with its terms,
subject to the Enforceability Limitations and except that enforceability of the
indemnification provisions thereof may be limited by applicable law and public
policy;

     (xiv) the Company is not and, after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the Final
Offering Memorandum, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended;

     (xv) commencing with the Company’s taxable year beginning January 1, 1995, the
Company has been organized in conformity with the requirements of the Code for
qualification as a “real estate investment trust” for United States federal income
tax purposes and its method of operation will enable it to continue to satisfy the
requirements for qualification and taxation as a “real estate investment trust”
under the Code;

-17-

 

     (xvi) no consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the performance by the
Company and the Guarantors of the transactions contemplated herein, except such as
have been obtained under the Act or the 1939 Act, real estate syndication laws and
such as may be required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities and the Guarantees by the
Initial Purchasers in the manner contemplated in this Agreement and in the Final
Offering Memorandum and such other approvals (specified in such opinion) as have
been obtained; provided, however, that no opinion shall be required with respect to
real estate syndication or blue sky laws;

     (xvii) except as set forth in the Pricing Disclosure Package and the Final
Offering Memorandum, neither the issue and sale of the Securities by the Company and
the Guarantees by the Guarantors, the execution and delivery of this Agreement and
the Indenture by the Company and the Guarantors, the consummation by the Company and
the Guarantors of any other of the transactions herein or therein contemplated nor
the fulfillment of the terms hereof or thereof will conflict with, result in a
breach or violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, (a) the
charter or by-laws of the Company or any of its subsidiaries, (b) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or instrument known to such
counsel to which the Company or any of its subsidiaries is a party or bound or to
which its or their property is subject, where such conflict, breach or violation
would constitute a Material Adverse Effect, or (c) any statute, law, rule,
regulation, or any judgment, order or decree known to such counsel applicable to the
Company or any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction over
the Company or its Subsidiaries or any of its or their properties, where such
conflict, breach or violation would constitute a Material Adverse Effect; and

     (xviii) to such counsel’s knowledge, no holders of securities of the Company
have rights to the registration of such securities under the registration statement
to be filed pursuant to the Registration Rights Agreement except for those which
have been effectively waived and those pursuant to the Registration Rights
Agreement, dated January 1, 1999, by and between William L. Mack, David Mack, Earle
Mack, Frederic Mack, and Robert A. Elkins, doing business as Frankline Development
Co., and the Company.

     (xix) Assuming the accuracy of the representations, warranties and agreements
of the Company, the Guarantors and the Initial Purchasers contained in this
Agreement, it is not necessary, in connection with the issuance and sale of the
Securities to the Initial Purchasers and the offer, resale and delivery of the
Securities by the Initial Purchasers in the manner contemplated by this Agreement,
the Pricing Disclosure Package and the Final Offering Memorandum, to register

-18-

 

the Securities under the Securities Act or to qualify the Indenture under the 1939
Act.

     In addition, such counsel shall state that nothing has come to its attention that would lead
it to believe that the Pricing Disclosure Package, at the Applicable Time, contained an untrue
statement of a material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of circumstances under which they were made, not misleading; or
that the Final Offering Memorandum or any amendment or supplement thereto at the time the Final
Offering Memorandum was issued, at the time any such amended or supplemented Final Offering
Memorandum was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading
(except in each case for financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which counsel need make no
statement).

     In rendering such opinions, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the States of Maryland, Florida, Texas, Georgia,
Massachusetts and Delaware or the federal laws of the United States, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel of good standing whom they believe
to be reliable and who are satisfactory to counsel for the Initial Purchasers and (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible officers of the Company and
public officials. References to the Final Offering Memorandum in this paragraph (a) include any
supplements thereto at the Closing Time.

     (b) The Representatives shall have received from DLA Piper US LLP, counsel for the Initial
Purchasers, such opinion or opinions, dated the Closing Date and addressed to the Representatives,
with respect to the issuance and sale of the Securities, the Pricing Disclosure Package, the Final
Offering Memorandum (together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such matters.

     (c) The Company and each Guarantor shall have furnished to the Representatives a certificate
of the Company, signed by its Chairman of the Board or the President and its principal financial or
accounting officer, dated the Closing Date to the effect that the signers of such certificates have
carefully examined the Pricing Disclosure Package, the Final Offering Memorandum (and any
supplements thereto) and this Agreement and that:

     (i) the representations and warranties of the Company and each Guarantor in
this Agreement are true and correct on and as of the Closing Time with the same
effect as if made at the Closing Time and the Company and each Guarantor has
complied with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Time; and

-19-

 

     (ii) since the date of the most recent financial statements included or
incorporated by reference in the Final Offering Memorandum (exclusive of any
supplement thereto) and since the respective dates as of which information is given
in the Pricing Disclosure Package, there has been no Material Adverse Effect,
whether or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Pricing Disclosure Package and the Final
Offering Memorandum (exclusive of any supplement thereto).

     (d) Registration Rights Agreement. The Company shall have entered into the Registration
Rights Agreement and the Initial Purchasers shall have received executed counterparts thereof.

     (e) Accountants’ Comfort Letters. The Company shall have requested and caused Ernst & Young
LLP to have furnished to the Representatives, at the Execution Time and at the Closing Date,
letters, dated respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are independent accountants
within the meaning of the 1933 Act, the 1933 Regulations, the 1934 Act and the 1934 Act Regulations
stating in effect that:

     (i) in their opinion the audited financial statements and financial statement
schedules of the Company included or incorporated by reference in the Pricing
Disclosure Package and the Final Offering Memorandum and reported on by them comply
as to form in all material respects with the applicable accounting requirements of
the 1933 Act, the 1934 Act, the 1933 Act Regulations and the 1934 Act Regulations;

     (ii) on the basis of carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards) which would
not necessarily reveal matters of significance with respect to the comments set
forth in such letter, a reading of the minutes of the meetings of the stockholders,
directors and each of the compensation committee, executive committee and audit and
review committee of the Company and the Subsidiaries and inquiries of certain
officials of the Company who have responsibility for financial and accounting
matters of the Company and its Subsidiaries as to transactions and events subsequent
to December 31, 2006, nothing came to their attention which caused them to believe
that:

     (1) there were any changes, at a specified date not more than five
days prior to the date of the letter, in the long-term debt of the Company
and its Subsidiaries or capital stock of the Company or decreases in the net
assets or stockholders’ equity of the Company as compared with the amounts
shown on the December 31, 2006 consolidated balance sheet included or
incorporated by reference in the Pricing Disclosure Package and the Final
Offering Memorandum, or for the period from January 1, 2007 to such
specified date there were any decreases, as compared with the

-20-

 

corresponding period in the preceding quarter or the corresponding period in the
prior year in net revenues or income before income taxes or in total or per
share amounts of net income of the Company and its Subsidiaries, except in
all instances for changes or decreases set forth in such letter, in which
case the letter shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed necessary by
the Representatives;

     (2) the information included or incorporated by reference in the
Pricing Disclosure Package and the Final Offering Memorandum in response to
Regulation S-K, Item 301 (Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive Compensation) and Item 503(d)
(Ratio of Earnings to Fixed Charges) is not in conformity with the
disclosure requirements of Regulation S-K applicable at the time such
information was filed with the Commission;

     (iii) they have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company and its
Subsidiaries) set forth or incorporated by reference in the Pricing Disclosure
Package and the Offering Memorandum agrees with the accounting records of the
Company and its Subsidiaries, excluding any questions of legal interpretation; and

     (iv) on the basis of a reading of the unaudited pro forma financial statements
included or incorporated by reference in the Pricing Disclosure Package and the
Final Offering Memorandum (the “pro forma financial statements”), carrying out
certain specified procedures, inquiries of certain officials of the Company who have
responsibility for financial and accounting matters, and proving the arithmetic
accuracy of the application of the pro forma adjustments to the historical amounts
in the pro forma financial statements, nothing came to their attention which caused
them to believe that the pro forma financial statements do not comply as to form in
all material respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of such statements. References to the
Final Offering Memorandum in this paragraph (e) include any supplement thereto at
the date of the letter.

     (f) No Material Adverse Change. Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Pricing Disclosure Package and the Final
Offering Memorandum (exclusive of any supplement thereto), there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph (e)(ii)(1) of
this Section 5 or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or

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contemplated in the Pricing Disclosure Package and the Final Offering Memorandum (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of the Securities and
the Guarantees as contemplated by the Final Offering Memorandum (exclusive of any supplement
thereto).

     (g) Officer’s Certificate. The Chief Financial Officer of the Company shall have
furnished to the Representatives, at the Execution Time and at the Closing Date, letters,
dated respectively as of the Execution Time and as of the Closing Date, in the form
previously provided by the Representatives, that he or his staff have performed specified
procedures as a result of which the Chief Financial Officer determined that certain
information of an accounting, financial or statistical nature set forth or incorporated by
reference in the Pricing Disclosure Package and the Final Offering Memorandum is true and
correct and agrees with the accounting records of the Company and its Subsidiaries.
References to the Final Offering Memorandum in this paragraph (g) include any supplement
thereto at the date of the letter.

     (h) Additional Documents. Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and documents as the
Representatives may reasonably request.

     (i) The Depositary. The Securities shall be eligible for clearance and settlement
through the Depositary.

     (j) No Downgrades. Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading in the rating
accorded the Securities or any other debt securities of the Company by any Rating Agency nor
shall any notice have been given to the Company of (i) any intended or potential downgrading
by any Rating Agency in such securities or (ii) any review or possible change by any Rating
Agency that does not indicate a stable, positive or improving rating accorded such
securities.

     If any of the conditions specified in this Section 5 shall not have been fulfilled in all
material respects when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and counsel for the Initial
Purchasers, this Agreement and all obligations of the Initial Purchasers hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or facsimile confirmed in writing.

     The documents required to be delivered by this Section 5 shall be delivered at the office of
DLA Piper US LLP, counsel for the Initial Purchasers, at 4141 Parklake Avenue, Suite 300, Raleigh,
North Carolina 27612, at the Closing Time.

-22-

 

     SECTION 6. Payment of Expenses.

     (a) If the sale of the Securities and the Guarantees provided for herein is not consummated
because any condition to the obligations of the Initial Purchasers set forth in Section 5 hereof is
not satisfied, because of any termination pursuant to Section 9 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the Initial Purchasers, the Company
will reimburse the Initial Purchasers severally through the Representatives on demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have
been incurred by them in connection with the proposed purchase and sale of the Securities.

     (b) The Company agrees to pay the following costs and expenses and all other costs and
expenses incident to the performance by it of its obligations hereunder:

     (i) the preparation, printing or reproduction and distribution of the Pricing
Disclosure Package and Final Offering Memorandum (including financial statements and
exhibits thereto), and each amendment or supplement to any of them;

     (ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Pricing Disclosure Package and the Final Offering Memorandum and all amendments or
supplements to any of them as may be reasonably requested for use in connection with
the offering and sale of the Securities;

     (iii) the authorization, preparation, printing, authentication, issuance and
delivery of the Securities and the Guarantees, including any taxes in connection
with the issuance and sale of the Securities and the Guarantees;

     (iv) the printing (or reproduction) and delivery of this Agreement, the
Registration Rights Agreement and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Securities and the
Guarantees;;

     (v) the registration or qualification and determination of eligibility for
investment of the Securities and the Guarantees for offer and sale under the laws of
any jurisdiction as provided in Section 4(e) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Initial Purchasers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification);

     (vii) all expenses and fees (including reasonable fees and expenses of counsel)
incurred in connection with the approval of the Securities for book-entry transfer
by the Depositary;

-23-

 

     (viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective purchasers
of the Securities and the Guarantees;

     (ix) the fees and expenses of the Company’s accountants and the fees and
expenses of counsel (including local and special counsel) for the Company;

     (x) the fees charged by the Rating Agencies for the rating of the Securities
and the Guarantees at the request of the Company; and

     (xi) the costs and expenses of the Trustee (including fees and expenses of
Trustee’s counsel) under the Indenture, the Securities and the Exchange Notes.

     SECTION 7. Indemnification and Contribution.

     (a) The Company and each Guarantor, jointly and severally, agrees to indemnify and hold
harmless each Initial Purchaser, the directors, officers, employees and agents of each Initial
Purchaser and each person who controls any Initial Purchaser within the meaning of either the 1933
Act or the 1934 Act against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the 1933Act, the 1934 Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Final Offering Memorandum
(or in any amendment thereof), or in the Pricing Disclosure Package, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information furnished to the Company
by or on behalf of any Initial Purchaser through the Representatives specifically for inclusion in
the Final Offering Memorandum (or in any amendment thereof), or the Pricing Disclosure Package, or
in any amendment thereof or supplement thereto. This indemnity agreement will be in addition to
any liability which the Company and the Guarantors may otherwise have.

     (b) Each Initial Purchaser severally and not jointly agrees to indemnify and hold harmless the
Company and each Guarantor, each of its directors, and each person who controls the Company or any
Guarantor within the meaning of either the 1933 Act or the 1934 Act, to the same extent as the
foregoing indemnity from the Company and the Guarantors to each Initial Purchaser, but only with
reference to written information relating to such Initial Purchaser furnished to the Company and
the Guarantors by or on behalf of such Initial Purchaser through the Representatives specifically
for inclusion in the documents referred to in the foregoing

-24-

 

indemnity. This indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have.

     (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 7, notify such indemnifying party (and in
cases where any Guarantor is an indemnifying party, the Company) in writing of the commencement
thereof; but the failure so to notify any indemnifying party (i) will not relieve it from liability
under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by such indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve such indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in paragraph (a) or (b)
above. Each indemnifying party shall be entitled to appoint counsel of an indemnifying party’s
choice at the expense of such indemnifying party to represent the indemnified party in any action
for which indemnification is sought (in which case each indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding an indemnifying party’s election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and each indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by such
indemnifying party to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such action include both
the indemnified party and such indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the indemnifying party, (iii) such
indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the institution of such
action or (iv) such indemnifying party (or in the case where a Guarantor is an indemnifying party,
the Company) shall authorize the indemnified party to employ separate counsel at the expense of
each indemnifying party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding, and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.

     (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company,
each Guarantor and the Initial Purchasers severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively “Losses”) to which the
Company, the Guarantors and one or more of the Initial Purchasers may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company and the

-25-

 

Guarantors on the one hand and by the Initial Purchasers on the other from the offering of the
Securities; provided, however, that in no case shall any Initial Purchaser (except as may be
provided in any agreement among Initial Purchasers relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, each Guarantor and the
Initial Purchasers severally shall contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company and the Guarantors on the
one hand and of the Initial Purchasers on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable considerations. Benefits
received by the Company and the Guarantors shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by them. Relative fault shall be determined
by reference to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
provided by the Company and the Guarantors on the one hand or the Initial Purchasers on the other,
the intent of the parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an Initial Purchaser
within the meaning of either the 1933 Act or the 1934 Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company and any Guarantor within the meaning of either the 1933
Act or the 1934 Act, and each director of the Company and each Guarantor shall have the same rights
to contribution as the Company, subject in each case to the applicable terms and conditions of this
paragraph (d).

     SECTION 8. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail
to purchase and pay for any of the Securities and Guarantees agreed to be purchased by such Initial
Purchaser or Initial Purchasers hereunder and such failure to purchase shall constitute a default
in the performance of its or their obligations under this Agreement, the remaining Initial
Purchasers shall be obligated severally to take up and pay for (in the respective proportions which
the amount of Securities and Guarantees set forth opposite their names in Schedule I hereto bears
to the aggregate amount of Securities and Guarantees set forth opposite the names of all the
remaining Initial Purchasers) the Securities and Guarantees which the defaulting Initial Purchaser
or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities and Guarantees which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities and
Guarantees set forth in Schedule I hereto, the remaining Initial Purchasers shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the Securities and
Guarantees, and if such nondefaulting Initial Purchasers do not purchase all the Securities and
Guarantees, this Agreement will terminate without liability to any nondefaulting Initial Purchaser
or the Company. In the event of a default by any Initial Purchaser as set forth in

-26-

 

this Section 8, the Closing Date shall be postponed for such period, not exceeding five
Business Days, as the Representatives shall determine in order that the required changes in the
Pricing Disclosure Package and the Final Offering Memorandum or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company and any nondefaulting Initial Purchaser
for damages occasioned by its default hereunder.

     SECTION 9. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to delivery of and payment
for the Securities, if at any time prior to such time (i) trading in the Company’s Common Stock
shall have been suspended by the Commission or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange shall have been suspended or limited or minimum prices
shall have been established on such Exchange, (ii) a banking moratorium shall have been declared
either by federal or New York State authorities, (iii) there shall have occurred any major
disruption of settlements of securities or clearance services in the United States, or (iv) there
shall have occurred any outbreak or escalation of hostilities, declaration by the United States of
a national emergency or war, or other calamity or crisis the effect of which on financial markets
is such as to make it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering, sale or delivery of the Securities and the Guarantees as contemplated by
the Pricing Disclosure Package and the Final Offering Memorandum (exclusive of any supplement
thereto).

     SECTION 10. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company and each Guarantor or
their officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on behalf of any
Initial Purchaser, the Company, any Guarantor or any of the officers, directors, employees, agents
or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment
for the Securities and the Guarantees. The provisions of Sections 6 and 7 hereof shall survive the
termination or cancellation of this Agreement.

     SECTION 11. No Fiduciary Relationship. EACH OF THE COMPANY AND THE GUARANTORS ACKNOWLEDGES
THAT (i) IT IS CONTRACTING WITH THE INITIAL PURCHASERS ON AN ARM’S-LENGTH BASIS TO PROVIDE THE
SERVICES DESCRIBED HEREIN, (ii) THE INITIAL PURCHASERS ARE NOT ACTING AS ITS AGENTS OR ADVISORS OR
IN A FIDUCIARY CAPACITY WITH RESPECT TO IT, AND (iii) THE INITIAL PURCHASERS ARE NOT ASSUMING ANY
DUTIES OR OBLIGATIONS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. FURTHER, IT IS NOT
THE INTENTION OF THE PARTIES TO CREATE A FIDUCIARY RELATIONSHIP BETWEEN THEM.

     SECTION 12. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to the
Representatives at the address set forth on Schedule I and confirmed to the Representatives at the
address set forth on Schedule I; or, if sent to the Company or any Guarantor, will be mailed,
delivered or telefaxed to Equity One, Inc., 1600 N.E. Miami Gardens Drive, North Miami Beach, FL
33179, (fax no. (305) 947-1734) and confirmed to it at Equity One, Inc., 1600 N.E. Miami

-27-

 

Gardens Drive, North Miami Beach, FL 33179, attention: Gregory R. Andrews, Executive Vice
President and Chief Financial Officer.

     SECTION 13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors, employees, agents and
controlling persons referred to in Section 7 hereof, and no other person will have any right or
obligation hereunder.

     SECTION 14. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York.

     SECTION 15. Counterparts. This Agreement may be signed in counterparts, each of which shall
constitute an original and all of which together shall constitute one and the same agreement.

     SECTION 16. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof

     SECTION 17. Definitions. The terms which follow, when used in this Agreement, shall have the
meanings indicated.

     “Agreement” shall mean this Purchase Agreement between the Company, the
Guarantors and the Initial Purchasers dated April 11, 2007.

     “Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized or
obligated by law to close in New York City or in the City of Atlanta.

     “Execution Time” shall mean the date and time that this Agreement is executed
and delivered by the parties hereto.

     “Rating Agencies” shall mean Moody’s Investors Service, Inc. and Standard & Poor’s
Rating Services.

-28-

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return
to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a
binding agreement among the Company, the Guarantors and the several Initial Purchasers.

	 	 	 	 	 
	 	Very truly yours, 

Equity One, Inc.

 	 
	 	By:  	/s/ Gregory R. Andrews
 	 
	 	 	Gregory R. Andrews 	 
	 	 	Executive Vice President and
Chief Financial Officer 	 
	 

GUARANTORS:

Cashmere Developments, Inc.

Centrefund (US), LLC

Centrefund Realty (U.S.) Corporation

Equity One (Commonwealth) Inc.

Equity One (Delta) Inc.

Equity One (Florida Portfolio) Inc.

Equity One (Louisiana Portfolio) LLC

Equity One (North Port) Inc.

Equity One (Northeast Portfolio) Inc.

Equity One (Point Royale) Inc.

Equity One (Sky Lake) Inc.

Equity One (Southeast Portfolio) Inc.

Equity One (Summerlin) Inc.

Equity One (Sunlake) Inc.

Equity One (Walden Woods) Inc.

Equity One Acquisition Corp.

Equity One Realty & Management FL, Inc.

Equity One Realty & Management NE, Inc.

Equity One Realty & Management SE, Inc.

Equity One Realty & Management Texas, Inc.

EQY (Southwest Portfolio) Inc.

Gazit (Meridian) Inc.

IRT Alabama, Inc.

IRT Capital Corporation II

IRT Management Company

Louisiana Holding Corp.

Prosperity Shopping Center Corp.

Shoppes at Jonathan’s Landing, Inc.

Southeast U.S. Holdings Inc.

The Meadows Shopping Center, LLC

The Shoppes of Eastwood, LLC

	 	 	 	 	 
	 	 	 
	 	By:  	 /s/ Gregory R. Andrews 	 
	 	 	Gregory R. Andrews 	 
	 	 	Executive Vice President and CFO

IRT Partners, L.P. 	 

-29-

 

	 	 	 	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	Equity One, Inc., its general partner 	 
	 
	 	 	 
	 	By:  	/s/ Gregory R. Andrews 	 
	 	 	Gregory R. Andrews 	 
	 	 	Executive Vice President and
Chief Financial Officer 	 

-30-

 

	 	 	 	 	 

     The foregoing Agreement is hereby confirmed and accepted as of the date first above written.

J.P. Morgan Securities Inc.

	 	 	 
	By:
	 	/s/ Robert Bottamedi

	 	 	 

	Name:
	 	Robert Bottamedi

	 	 	 

	Title:
	 	Vice President

	 	 	 

Deutsche Bank Securities Inc.

	 	 	 
	By:
	 	/s/ Jared Birnbaum

	 	 	 

	Name:
	 	Jared Birnbaum

	 	 	 

	Title:
	 	Director

	 	 	 

	 	 	 

	By:
	 	/s/ Ben Smilchensky

	 	 	 

	Name:
	 	Ben Smilchensky

	 	 	 

	Title:
	 	Managing Director

	 	 	 

     For themselves and the other several Initial Purchasers named in Schedule I.

-31-

 

SCHEDULE I

	 	 	 	 	 
	 	 	Aggregate Principal	 
	 	 	Amount of	 
	 	 	Securities to be	 
	Initial Purchasers	 	Purchased	 
	J.P. Morgan Securities Inc.
	 	$	45,000,000	 
	Deutsche Bank Securities Inc.
	 	$	45,000,000	 
	Banc of America Securities LLC
	 	$	6,000,000	 
	BB&T Capital Markets, a division of Scott & Strongfellow, Inc.
	 	$	6,000,000	 
	Citigroup Global Markets Inc.
	 	$	6,000,000	 
	Credit Suisse Securities (USA) LLC
	 	$	6,000,000	 
	Morgan Keegan & Company, Inc.
	 	$	6,000,000	 
	Morgan Stanley & Co. Incorporated
	 	$	6,000,000	 
	PNC Capital Markets LLC
	 	$	6,000,000	 
	SunTrust Capital Markets, Inc.
	 	$	6,000,000	 
	Wachovia Capital Markets, LLC
	 	$	6,000,000	 
	Wells Fargo Securities, LLC
	 	$	6,000,000	 
	Total
	 	$	150,000,000	 

 

 

SCHEDULE 1(x)

LIST OF REGISTRATION RIGHTS AGREEMENTS

	1.	 	Registration Rights Agreement dated October 28, 2002 among Equity One, Inc., Silver
Maple (2001), Inc., M.G.N. (USA), Inc. and A-H Investments US, L.P.

	2.	 	Amended and Restated Employment Agreement effective as of January 1, 2002, between
Equity One, Inc. and Chaim Katzman.

	3.	 	Amended and Restated Employment Agreement effective as of January 1, 2002, between
Equity One, Inc. and Doron Valero.

	4.	 	Stock Exchange Agreement dated May 18, 2001 among Equity One, Inc., First Capital
Realty, Inc. (formerly Centrefund Realty Corporation) and First Capital America Holding
Corp, as amended by the consent dated July 26, 2001 to the Assignment and Assumption
Agreement dated July 26, 2001 among First Capital, First Capital Holding, Ficus, Inc. and
Silver Maple (2001), Inc.

	5.	 	Subscription Agreement dated October 4, 2000 between Equity One, Inc. and Alony Hetz
Properties & Investments, Ltd.

	6.	 	Registration Rights Agreement dated January 1, 1996 among Equity One, Inc., Chaim
Katzman, Gazit Holdings, Inc., Dan Overseas Limited, M.G.N. Oil & Gas Resources, Ltd., Eli
Macaby, Doron Valero and David Voolkan.

	7.	 	Settlement Agreement dated March 6, 1998 among Gazit, Inc., Danbar Resources Ltd. And
Dan Overseas.

	8.	 	Investment Contract dated May 21, 1996 between Gazit-Globe (1982) Ltd., Dan Overseas,
Gazit (1995), Inc., Equity One, Inc. and M.G.N. (USA), Inc.

     9. Registration Rights Agreement dated December 1998 by and between Mack Affiliates and Robert A.
Elkins, doing business as Frankline Development Co., L.L.C., and Equity One, Inc.

 

 

SCHEDULE II

Written Communications

None, other than Pricing Term Sheet listed on Schedule III

 

 

EQUITY ONE, INC.

$150,000,000

6.00% NOTES DUE SEPTEMBER 15, 2017

PRICING TERM SHEET

Dated: April 11, 2007

	 	 	 
	Issuer:
	 	Equity One, Inc.

	Security description:
	 	6.00% Senior Notes due 2017

	Distribution:
	 	144A with Registration Rights

	Size:
	 	$150,000,000

	Gross proceeds:
	 	$149,848,500

	Maturity:
	 	September 15, 2017

	Coupon:
	 	6.00%

	Price:
	 	99.899% of face amount

	Yield to maturity:
	 	6.014%

	Spread to Benchmark Treasury:
	 	1.28%

	Benchmark Treasury:
	 	4.625% due February 15, 2017

	Benchmark Treasury Price and Yield:     	 	99-4+ / 4.734%

	Interest Payment Dates:
	 	March 15 and September 15, commencing

	 	 	September 15, 2007

	Optional redemption:
	 	Make-whole call @ T+20bps

	Trade date:
	 	April 11, 2007

	Settlement:
	 	T+5; April 18, 2007

	Denominations/Multiple:
	 	2,000 x 1,000

	Ratings:
	 	Baa3(+)/BBB-(+)

	Bookrunners:
	 	Deutsche Bank Securities Inc.

	 	 	J.P. Morgan Securities Inc.

	 	 	 

	Co-Managers:
	 	Banc of America Securities LLC

	 	 	BB&T Capital Markets

	 	 	Citigroup Global Markets, Inc.

	 	 	Credit Suisse Securities (USA) LLC

	 	 	Morgan Keegan & Company, Inc.

	 	 	Morgan Stanley & Co. Incorporated

	 	 	PNC Capital Markets LLC.

	 	 	SunTrust Capital Markets, Inc.

	 	 	Wachovia Capital Markets, LLC

	 	 	Wells Fargo Securities, LLC

These securities have not been registered under the Securities Act of 1933, as amended, and
may only be sold to qualified institutional buyers pursuant to Rule 144A or pursuant to another
applicable exemption from registration.

 

 

The information in this term sheet supplements the Company’s preliminary Offering Memorandum, dated
April 11, 2007 (the “Preliminary Offering Memorandum”) and supersedes the information in the
Preliminary Offering Memorandum to the extent inconsistent with the information in the Preliminary
Offering Memorandum. This term sheet is qualified in its entirety by reference to the Preliminary
Offering Memorandum. Terms used herein but not defined herein shall have the respective meanings
as set forth in the Preliminary Offering Memorandum.

 

 

SCHEDULE IV

Restrictions on Offers and Sales Outside the United States

     In connection with offers and sales of Securities outside the United States:

     (a) Each Initial Purchaser acknowledges that the Securities have not been registered
under the Securities Act and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons except pursuant to an exemption from, or
in transactions not subject to, the registration requirements of the Securities Act.

     (b) Each Initial Purchaser, severally and not jointly, represents, warrants and
agrees that:

     (i) Such Initial Purchaser has offered and sold the Securities, and will
offer and sell the Securities, (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the offering of
the Securities and the Closing Date, only in accordance with Regulation S under
the Securities Act (“Regulation S”) or Rule 144A or any other available exemption
from registration under the Securities Act.

     (ii) None of such Initial Purchaser or any of its affiliates or any other
person acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and all such persons have complied
and will comply with the offering restrictions requirement of Regulation S.

     (iii) At or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, such Initial Purchaser will have sent to each
distributor, dealer or other person receiving a selling concession, fee or other
remuneration that purchase Securities from it during the distribution compliance
period a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering of the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act.
Terms used above have the meanings given to them by Regulation S.”

     (iv) Such Initial Purchaser has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of

 

 

the Securities, except with its affiliates or with the prior written consent of
the Company.

Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in this
Agreement have the meanings given to them by Regulation S.

     (c) Each Initial Purchaser, severally and not jointly, represents, warrants and
agrees that:

     (i) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
Section 21 of the United Kingdom Financial Services and Markets Act
2000 (the “FSMA”)) received by it in connection with the issue or
sale of any Securities in circumstances in which Section 21(1) of
the FSMA does not apply to the Company or the Guarantors; and

     (ii) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the Securities in, from or otherwise involving the
United Kingdom.

     (d) Each Initial Purchaser acknowledges that no action has been or will be taken by
the Company that would permit a public offering of the Securities, or possession or
distribution of any of the Pricing Disclosure Package or the Final Offering Memorandum,
or any other offering or publicity material relating to the Securities, in any country or
jurisdiction where action for that purpose is required.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]