Document:

exv4w1

Exhibit 4.1

ALLEGHENY TECHNOLOGIES INCORPORATED

and

THE BANK OF NEW YORK MELLON,

as Trustee

THIRD SUPPLEMENTAL INDENTURE

DATED AS OF JANUARY 7, 2011

TO THE INDENTURE

DATED AS OF JUNE 1, 2009

$500,000,000 principal amount of 5.950% Senior Notes due 2021

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	     
	 	 	 	 	 	 
	ARTICLE I

	DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 1.01.
	 	Capitalized Terms	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 1.02.
	 	References	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 1.03.
	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II

	GENERAL TERMS AND CONDITIONS OF THE NOTES	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 2.01.
	 	Designation and Principal Amount	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 2.02.
	 	Maturity	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 2.03.
	 	Form and Payment	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 2.04.
	 	Interest	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE III

	ADDITIONAL COVENANTS	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 3.01.
	 	Limitation on Liens	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 3.02.
	 	Limitation on Sale and Leaseback Transactions	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 3.03.
	 	Limitation on Guarantees	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE IV

	REDEMPTION OF THE NOTES	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 4.01.
	 	Optional Redemption	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 4.02.
	 	Purchase of Notes Upon a Change of Control Repurchase Event	 	 	9	 
	 
	 	 	 	 	 	 
	SECTION 4.03.
	 	Mandatory Redemption	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE V

	EVENTS OF DEFAULT	 	 	12	 

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	 	 	 	 	Page	 
	ARTICLE VI

	MISCELLANEOUS	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.01.
	 	Ratification of Base Indenture	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.02.
	 	Trust Indenture Act Controls	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.03.
	 	Conflict with Indenture	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.04.
	 	Governing Law	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.05.
	 	Successors	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.06.
	 	Counterparts	 	 	13	 
	 
	 	 	 	 	 	 
	SECTION 6.07.
	 	Trustee Disclaimer	 	 	13	 

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THIRD SUPPLEMENTAL INDENTURE

     THIRD SUPPLEMENTAL INDENTURE, dated as of January 7, 2011 (the
“Supplemental Indenture”), to the Base Indenture (defined below)
between Allegheny Technologies Incorporated, a corporation duly organized
and existing under the laws of Delaware (herein called the
“Company”), and The Bank of New York Mellon, a New York banking
corporation, as Trustee under the Indenture (herein called the
“Trustee”).

RECITALS

          WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated
as of June 1, 2009 (the “Base Indenture”), providing for the issuance from time to time of
its Securities (as defined in the Base Indenture), to be issued in one or more series as therein
provided;

          WHEREAS, Sections 2.01, 3.01 and 9.01 of the Base Indenture provide that the Company, when
authorized by an Establishment Action (as defined in the Base Indenture), and the Trustee may,
without the consent of the Holders (as defined in the Base Indenture) of Securities, enter into one
or more supplemental indentures, in form satisfactory to the Trustee, to establish the form or
terms of Securities of any series permitted by the Base Indenture;

          WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the
establishment of a new series of its Securities to be known as its 5.950% Senior Notes due 2021
(the “Notes”), the form and substance of such Notes and the terms, provisions and
conditions thereof to be set forth as provided in the Base Indenture and this Supplemental
Indenture (together, the “Indenture”);

          WHEREAS, the Company has duly authorized the creation and issuance of such Notes under the
Base Indenture, and has duly authorized the execution and delivery of this Supplemental Indenture
to modify the Base Indenture and to provide certain additional provisions as hereinafter described;
and

          WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental
Indenture, and all requirements necessary to make this Supplemental Indenture a valid instrument in
accordance with its terms, and to make the Notes, when executed by the Company and authenticated
and delivered by the Trustee, the valid and legally binding obligations of the Company, and all
acts and things necessary have been done and performed to make this Supplemental Indenture
enforceable in accordance with its terms, and the execution and delivery of this Supplemental
Indenture has been duly authorized in all respects.

W I T N E S S E T H:

          NOW, THEREFORE, for and in consideration of the premises contained herein, each party agrees
for the benefit of each other party and for the equal and ratable benefit of the Holders of the
Notes, as follows:

 

 

ARTICLE I

DEFINITIONS

          SECTION 1.01. Capitalized Terms. Capitalized terms used but not defined in this
Supplemental Indenture shall have the meanings ascribed to them in the Base Indenture.

          SECTION 1.02. References. References in this Supplemental Indenture to article and
section numbers shall be deemed to be references to article and section numbers of this
Supplemental Indenture unless otherwise specified.

          SECTION 1.03. Definitions. For purposes of this Supplemental Indenture, the
following terms have the meanings ascribed to them as follows:

          “Attributable Debt” in respect of a Sale and Leaseback Transaction means, as of any
particular time, the present value (discounted at the rate of interest implicit in the terms of the
lease involved in such Sale and Leaseback Transaction, as determined by the Company in good faith)
of the obligation of the lessee thereunder for net rental payments (excluding, however, any amounts
required to be paid by the lessee, whether or not designated as rent or additional rent, on account
of maintenance and repairs, services, insurance, taxes, assessments, water rates or similar charges
and any amounts required to be paid by the lessee thereunder contingent upon monetary inflation or
the amount of sales, maintenance and repairs, insurance, taxes, assessments, water rates or similar
charges) during the remaining term of that lease (including any period for which that lease has
been extended or may, at the option of the lessor, be extended).

          “Base Indenture” has the meaning provided in the recitals.

          “Change of Control” has the meaning provided in Section 4.02.

          “Change of Control Repurchase Event” has the meaning provided in Section 4.02.

          “Comparable Treasury Issue” has the meaning provided in Section 4.01.

          “Comparable Treasury Price” has the meaning provided in Section 4.01.

          “Consolidated Net Tangible Assets” means the total of all the assets appearing on the
consolidated balance sheet of the Company and its Subsidiaries, less the following: (A) current
liabilities; (B) intangible assets such as goodwill, trademarks, trade names, patents and
unamortized debt discount and expense; and (C) appropriate adjustments on account of minority
interests of other Persons holding stock in any Subsidiary of the Company.

          “Debt” means indebtedness for money borrowed.

          “Depositary” has the meaning provided in Section 2.03.

          “Domestic Subsidiary” means a Subsidiary formed under the laws of, or conducting its
principal operations within, the United States or any State or territory thereof.

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          “Guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt
or other obligation of such other Person (whether arising by virtue of partnership arrangements, or
by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof, in whole or in part; provided that
the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course
of business. The term “Guarantee” used as a verb has a corresponding meaning.

          “Independent Investment Banker” has the meaning provided in Section 4.01.

          “Indenture” has the meaning provided in the recitals.

          “Interest Payment Date” has the meaning provided in Section 2.04.

          “Investment Grade” has the meaning provided in Section 4.02.

          “Lien” means any mortgage, pledge, lien, encumbrance, charge or security interest of
any kind, excluding certain liens relating to taxes, easements and similar liens arising in the
ordinary course of business.

          “Merger Agreement” means the Agreement and Plan of Merger among the Company, LPAD Co.,
PADL LLC and Ladish Co., Inc., dated as of November 16, 2010.

          “Moody’s” has the meaning provided in Section 4.02.

          “Notes” has the meaning provided in the recitals.

          “Primary Treasury Dealer” has the meaning provided in Section 4.01.

          “Principal Property” means any manufacturing plant or other similar facility owned by
the Company or any Domestic Subsidiary, the book value of the real property, plant and equipment of
which (as shown, without deduction of any depreciation reserves, on the books of the owner or
owners) is not less than two percent of Consolidated Net Tangible Assets except (A) any such plant
or facility which the Board of Directors determines is not of material importance to the total
business conducted, or assets owned, by the Company and its Domestic Subsidiaries as an entirety or
(B) any portion of any such plant or facility which the Board of Directors determines not to be of
material importance to the use or operation thereof.

          “Purchase Price” has the meaning provided in Section 4.02.

          “Rating Agency” has the meaning provided in Section 4.02.

          “Rating Category” has the meaning provided in Section 4.02.

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          “Rating Date” has the meaning provided in Section 4.02.

          “Ratings Event” has the meaning provided in Section 4.02.

          “Redemption Date” has the meaning provided in Section 4.02.

          “Reference Treasury Dealer” has the meaning provided in Section 4.01.

          “Reference Treasury Dealer Quotations” has the meaning provided in Section 4.01.

          “Regular Record Date” has the meaning provided in Section 2.04.

          “Remaining Life” has the meaning provided in Section 4.01.

          “S&P” has the meaning provided in Section 4.02.

          “Sale and Leaseback Transaction” means any arrangement with any Person providing for
the leasing to the Company or any Domestic Subsidiary of any Principal Property or portion thereof
(except for temporary leases for a term, including any renewal thereof, of not more than 36 months
and except for leases between the Company and a Subsidiary or between Subsidiaries), which
Principal Property (or portion thereof) has been or is to be sold or transferred by the Company or
such Domestic Subsidiary to such Person.

          “Special Mandatory Redemption Date” means the earlier to occur of (a) July 15, 2011 if
the acquisition of Ladish Co., Inc. by the Company pursuant to the Merger Agreement has not been
completed on or prior to June 30, 2011, or (b) the 30th day (or if such day is not a Business Day,
the first Business Day thereafter) following the termination of the Merger Agreement for any
reason.

          “Special Mandatory Redemption Price” means a price equal to 102% of the aggregate
principal amount of the Notes to be redeemed on the Special Mandatory Redemption Date.

          “Subsidiary” means with respect to any Person, any corporation, association or other
business entity of which more than 50% of the outstanding voting stock is owned, directly or
indirectly, by such Person and one or more Subsidiaries of such Person (or combination thereof).
Unless otherwise specified, “Subsidiary” means a Subsidiary of the Company.

          “Supplemental Indenture” has the meaning provided in the preamble.

          “Treasury Rate” has the meaning provided in Section 4.01.

          “Voting Stock” has the meaning provided in Section 4.02.

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ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE NOTES

          SECTION 2.01. Designation and Principal Amount. The Notes are hereby authorized and
are designated the 5.950% Senior Notes due 2021, initially limited in aggregate principal amount to
$500,000,000. The Notes issued on the date hereof pursuant to the terms of this Indenture shall be
in an aggregate principal amount of $500,000,000, which amount shall be set forth in the Company
Order for the authentication and delivery of the Notes pursuant to Section 3.03 of the Base
Indenture. In addition, the Company may issue, from time to time in accordance with the provisions
of this Indenture, additional Notes having the same terms and conditions as the Notes issued on the
date hereof in all respects (except for the payment of interest accruing prior to the issue date of
such additional Notes and, if such additional Notes are issued following the earliest to occur of
(i) June 30, 2011, (ii) the completion of the acquisition of Ladish Co., Inc. by the Company
pursuant to the Merger Agreement, or (iii) the termination of the Merger Agreement, except for the
mandatory redemption provision in Section 4.03), so that such additional Notes shall be
consolidated and form a single series with the Notes issued on the date hereof and shall be
governed by the terms of the Indenture.

          SECTION 2.02. Maturity. The principal amount of the Notes shall be due and payable
on January 15, 2021.

          SECTION 2.03. Form and Payment. The Notes shall be issued in substantially the form
set forth on Exhibit A hereto and shall have the terms set forth in such form and shall initially
be Global Securities for purposes of the Base Indenture. The Notes shall be issued in fully
registered book-entry form without coupons in denominations of $2,000 and integral multiples of
$1,000 in excess thereof.

          The Depositary in respect of the Notes represented by Global Securities shall be The
Depository Trust Company. The Global Securities representing the Notes shall be deposited with, or
on behalf of, the Depositary and shall be registered in the name of its nominee, Cede & Co. Except
as otherwise set forth in Section 3.05 of the Base Indenture, the Global Securities may be
transferred, in whole and not in part, only to another nominee of the Depositary or to a successor
of the Depositary or its nominee.

          The Trustee shall act as Paying Agent for the Notes. The Company may choose to pay interest
by mailing checks or making wire transfers. All money paid by the Company to any Paying Agent that
remains unclaimed at the end of two years after the amount is due to Holders shall be repaid to the
Company, subject to any applicable abandoned property laws. After such two-year period, Holders
may look only to the Company for payment and not to the Trustee, any other Paying Agent or anyone
else. The Company may also arrange for additional payment offices, and may cancel or change these
offices, including any use of the Trustee’s Corporate Trust Office. The Company may appoint and
change the Paying Agent without prior notice to the Holders.

          SECTION 2.04. Interest. Interest on the Notes shall accrue at the rate of 5.950% per
annum. Interest on the Notes shall accrue from January 7, 2011 or the most recent Interest

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Payment Date to which interest was paid or duly provided for. Interest on the Notes shall be
payable semiannually in arrears on January 15 and July 15, commencing on July 15, 2011 (each an
“Interest Payment Date”), to the Holders in whose names the Notes are registered at the
close of business on the January 1 and July 1, as the case may be, immediately preceding such
Interest Payment Date (each a “Regular Record Date”). Interest on the Notes shall be
computed on the basis of a 360-day year comprised of twelve 30-day months.

          SECTION 2.05. No Sinking Fund. The provisions of Article XII of the Base Indenture
shall not be applicable to the Notes.

ARTICLE III

ADDITIONAL COVENANTS

          In addition to the covenants set forth in Article X of the Base Indenture, the Company also
covenants and agrees for the benefit of Notes, but not Securities of any other series, as follows:

          SECTION 3.01. Limitation on Liens. The Company shall not, and will not permit any of
its Domestic Subsidiaries, directly or indirectly, to issue, assume or guarantee any Debt if that
Debt is secured by any Lien upon any Principal Property (or portion thereof) of the Company or of
any Domestic Subsidiary of the Company or any shares of stock or Debt of any of its Domestic
Subsidiaries, whether owned on June 1, 2009 or thereafter acquired, without effectively securing
the Notes equally and ratably with that Debt, so long as such Debt is so secured. The foregoing
restriction does not apply to:

     (i) Liens on any property acquired, constructed or improved by the Company or any
Domestic Subsidiary of the Company after June 1, 2009, which are created or assumed
contemporaneously with or within three years after its acquisition, or completion of
construction or improvement (or within six months thereafter pursuant to a firm commitment
for financing arrangements entered into within that three-year period) to secure or provide
for the payment of the Purchase Price or cost thereof, or Liens existing on any property at
the time of its acquisition;

     (ii) Liens existing on any property, shares of stock or indebtedness acquired from a
Person merged with or into the Company or a Domestic Subsidiary of the Company after June 1,
2009;

     (iii) with respect to any corporation that becomes a Domestic Subsidiary of the Company
after June 1, 2009, Liens on property of, or shares of stock or indebtedness issued by, any
such corporation existing at the time it becomes a Domestic Subsidiary and not incurred in
connection with or in anticipation of such corporation becoming a Domestic Subsidiary;

     (iv) Liens to secure Debt of a Domestic Subsidiary owed to the Company or Debt of one
of the Domestic Subsidiaries of the Company owed to another Domestic Subsidiary of the
Company;

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     (v) Liens in favor of governmental bodies to secure partial, progress, advance or other
payments pursuant to any contract or statute;

     (vi) any Lien existing on June 1, 2009; or

     (vii) Liens for the sole purpose of extending, renewing or replacing Debt, in whole or
in part, secured by any Lien referred to in the foregoing clauses (i) to (vi), inclusive;
provided, however, that the principal amount of Debt secured by that Lien
shall not exceed the principal amount of Debt so secured at the time of such extension,
renewal or replacement, and that such extension, renewal or replacement shall be limited to
the property that secured the Lien so extended, renewed or replaced (plus improvements on
such property).

          The limitation on Liens described in this Section 3.01 shall not apply to the issuance,
assumption or guarantee by the Company or any Domestic Subsidiary of the Company of Debt secured by
a Lien which would otherwise be subject to the foregoing restrictions up to an aggregate amount
which, together with all other Debt of the Company and of the Domestic Subsidiaries of the Company
secured by Liens (not including Liens permitted under the foregoing exceptions) and the
Attributable Debt with respect to Sale and Leaseback Transactions existing at that time (other than
Sale and Leaseback Transactions in which the property involved would have been permitted to be
subject to a Lien under clause (i) above), does not exceed 10% of Consolidated Net Tangible Assets.

          SECTION 3.02. Limitation on Sale and Leaseback Transactions. The Company and the
Domestic Subsidiaries of the Company are prohibited from entering into Sale and Leaseback
Transactions unless:

     (i) the Company or such Domestic Subsidiary of the Company would be entitled to incur
Debt secured by a Lien on the Principal Property to be leased without equally and ratably
securing the Notes, pursuant to clauses (i) - (vii) under Section 3.01 above; or the
Attributable Debt with respect thereto would be an amount permitted under the last paragraph
of Section 3.01 above; or

     (ii) the Company or such Domestic Subsidiary of the Company shall, within 180 days of
the effective date of any such arrangement, apply an amount equal to the proceeds from such
Sale and Leaseback Transaction to the payment or other retirement of Debt that ranks senior
to or equal with the Notes (other than, in either case, Debt owed by the Company or any
Subsidiary), or to the purchase of other Principal Property.

          SECTION 3.03. Limitation on Guarantees. The Company and the Domestic Subsidiaries of
the Company are prohibited from entering into any agreement pursuant to which any such Domestic
Subsidiary of the Company guarantees the payment of Debt incurred by the Company without providing
that the Notes be equally and ratably guaranteed by such Domestic Subsidiary of the Company.

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ARTICLE IV

REDEMPTION OF THE NOTES

          SECTION 4.01. Optional Redemption. The Company may redeem the Notes, at its option,
at any time in whole, or from time to time in part. If the Notes are redeemed prior to October 15,
2020, the redemption price for the Notes to be redeemed will equal the greater of:

     (i) 100% of the principal amount of the Notes to be redeemed; or

     (ii) the sum of the present values of the remaining scheduled payments of principal and
interest on the Notes to be redeemed, exclusive of interest accrued to the date of
redemption, discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the applicable Treasury Rate plus 40 basis
points,

     plus, in each case, accrued interest to the Redemption Date.

          If the Notes are redeemed on or after October 15, 2020, the redemption price for the Notes to
be redeemed will equal 100% of the principal amount of such Notes, plus accrued interest to the
Redemption Date.

          For purposes of determining the optional redemption price, the following definitions are
applicable:

          “Comparable Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining term (the
“Remaining Life”) of the Notes that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes.

          “Comparable Treasury Price” means, with respect to any Redemption Date, the average of
the Reference Treasury Dealer Quotations obtained by the Company for that Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations, or, if the Company
is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all
Reference Treasury Dealer Quotations obtained by the Company.

          “Independent Investment Banker” means J.P. Morgan Securities LLC, Citigroup Global
Markets Inc., Morgan Stanley & Co. Incorporated or Merrill Lynch, Pierce, Fenner & Smith
Incorporated and their respective successors, as selected by the Company or, if such firms are
unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the Company.

          “Reference Treasury Dealer” means J.P. Morgan Securities LLC, Citigroup Global Markets
Inc., Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
their respective successors (each, a “Primary Treasury Dealer”); provided,
however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the
Company shall substitute therefor another Primary Treasury Dealer.

8

 

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date for the Notes, the average, as determined by the Company, of the bid
and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its
principal amount, quoted in writing to the Trustee by the Reference Treasury Dealer at 3:30 p.m.,
New York City time, on the third business day preceding the Redemption Date.

          “Treasury Rate” means, with respect to any Redemption Date, (i) the yield, under the
heading which represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15(519)” or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant Maturities”, for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the Remaining Life, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounded to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does not contain such
yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption
Date. The Treasury Rate shall be calculated on the third Business Day preceding such Redemption
Date.

          SECTION 4.02. Purchase of Notes Upon a Change of Control Repurchase Event. If a
Change of Control Repurchase Event occurs, unless the Company has exercised its right to redeem the
Notes as described under Section 4.01 above, the Company will be required to make an offer to each
Holder of the Notes to repurchase all or any part (in a principal amount of $2,000 and in integral
multiples of $1,000 in excess thereof) of that Holder’s Notes at a repurchase price (the
“Purchase Price”) in cash equal to 101% of the aggregate principal amount of the Notes
repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including,
the date of repurchase. Within 30 days following any Change of Control Repurchase Event or, at the
Company’s option, prior to any Change of Control, but after the public announcement of the Change
of Control, the Company will mail a notice to each Holder, with a copy to the Trustee, describing
the transaction or transactions that constitute or may constitute the Change of Control Repurchase
Event and offering to repurchase the Notes on the payment date specified in the notice (the
“Repurchase Date”), which date will be no earlier than 30 days and no later than 60 days
from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation
of the Change of Control, state that the offer to purchase is conditioned on a Change of Control
Repurchase Event occurring on or prior to the payment date specified in the notice. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities
laws and regulations thereunder to the extent those laws and regulations are applicable in
connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event.
To the extent that the provisions of any securities laws or regulations conflict with the Change of
Control Repurchase Event provisions of the Notes, the Company will comply with the applicable
securities laws and regulations and will not be deemed

9

 

to have breached the Company’s obligations under the Change of Control Repurchase Event
provisions of the Notes by virtue of such conflict.

          On the Repurchase Date following a Change of Control Repurchase Event, the Company will, to
the extent lawful:

     (i) accept for payment all the Notes or portions of the Notes properly tendered
pursuant to the Company’s offer;

     (ii) deposit with the Paying Agent an amount equal to the aggregate Purchase Price in
respect of all the Notes or portions of the Notes properly tendered; and

     (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted,
together with an Officers’ Certificate stating the aggregate principal amount of Notes being
purchased by the Company.

          The Paying Agent will promptly deliver to each Holder of Notes properly tendered, the Purchase
Price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of any Notes surrendered.

          The Company will not be required to make an offer to repurchase the Notes upon a Change of
Control Repurchase Event if a third party makes such an offer in the manner, at the times and
otherwise in compliance with the requirements for an offer made by the Company and such third party
purchases all Notes properly tendered and not withdrawn under its offer.

          For purposes hereof, the following definitions are applicable:

          “Change of Control” means the occurrence of any one of the following:

     (i) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the
Exchange Act)) other than to the Company or one of its Subsidiaries;

     (ii) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person (including any “person” (as that term
is used in Section 13(d)(3) of the Exchange Act)) becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50%
of the outstanding Voting Stock of the Company, measured by voting power rather than number
of shares;

     (iii) the Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Company or such other Person
is converted into or exchanged for cash, securities or other property, other than any such
transaction where the shares of the Voting Stock of the Company

10

 

outstanding immediately prior to such transaction constitute, or are converted into or
exchanged for, a majority of the Voting Stock of the surviving Person immediately after
giving effect to such transaction;

     (iv) the first day on which the majority of the members of the Board of Directors cease
to be Continuing Directors; or

     (v) the adoption of a plan relating to the liquidation or dissolution of the Company.

          “Change of Control Repurchase Event” means the occurrence of both a Change of Control
and a Ratings Event.

          “Continuing Director” means, as of any date of determination, any member of the Board
of Directors who (1) was a member of such Board of Directors on June 1, 2009 or (2) was nominated
for election or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of such nomination or
election.

          “Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent
under any successor Rating Categories of Moody’s), a rating of BBB- or better by S&P (or its
equivalent under any successor Rating Categories of S&P) and the equivalent Investment Grade credit
rating from any additional Rating Agency or Rating Agencies selected by the Company.

          “Moody’s” means Moody’s Investors Service Inc, and its successors.

          “Rating Agency” means (1) each of Moody’s and S&P and (2) if either of Moody’s or S&P
ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons
outside of the control of the Company, a “nationally recognized statistical rating organization”
within the meaning of Rule 15c3-l(e)(2)(vi)(F) under the Exchange Act, selected by the Company (as
certified by a resolution of the Board of Directors) as a replacement agency for Moody’s or S&P, or
both, as the case may be.

          “Rating Category” means (i) with respect to S&P, any of the following categories: BBB,
BB, B, CCC, CC, C and D (or equivalent successor categories); (ii) with respect to Moody’s, any of
the following categories: Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody’s used by another Rating Agency. In
determining whether the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody’s; or the equivalent gradations for
another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in
a rating from BB+ to BB, as well as from BB- to B+, will constitute a decrease of one gradation).

          “Rating Date” means the date that is 60 days prior to the earlier of (i) a Change of
Control or (ii) public notice of the occurrence of a Change of Control or of the intention by the
Company to effect a Change of Control.

11

 

          “Ratings Event” means the occurrence of the events described in (a) or (b) of this
definition on, or within 60 days after the earlier of, (i) the occurrence of a Change of Control or
(ii) public notice of the occurrence of a Change of Control or the intention by the Company to
effect a Change of Control (which period shall be extended so long as the rating of the Notes is
under publicly announced consideration for a possible downgrade by any of the Rating Agencies):
(a) if the Notes are rated by both Rating Agencies on the Rating Date as Investment Grade, the
rating of the Notes shall be reduced so that the Notes are rated below Investment Grade by both
Rating Agencies or (b) if the Notes are rated below Investment Grade by at least one Rating Agency,
the ratings of the Notes by both Rating Agencies shall be decreased by one or more gradations
(including gradations within Rating Categories, as well as between Rating Categories) and the Notes
are then rated below Investment Grade by both Rating Agencies.

          “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and its
successors.

          “Voting Stock” of any specified “person” (as that term is used in Section 13(d)(3) of
the Exchange Act) as of any date means the capital stock of such person that is at the time
entitled to vote generally in the election of the board of directors of such person.

          SECTION 4.03. Mandatory Redemption. In the event that, for any reason, (i) the
acquisition of Ladish Co., Inc. by the Company pursuant to the Merger Agreement is not completed on
or prior to June 30, 2011, or (ii) the Merger Agreement is terminated on or prior to June 30, 2011,
the Company shall redeem fifty percent (50%) of the aggregate principal amount of the outstanding
Notes on a pro rata basis on the Special Mandatory Redemption Date at the Special Mandatory
Redemption Price, plus accrued and unpaid interest from the date of initial issuance to, but
excluding, the Special Mandatory Redemption Date (subject to the right of Holders on the relevant
Regular Record Date to receive interest due on the relevant Interest Payment Date). Notice of a
redemption pursuant to this Section 4.03 will be mailed, with a copy to the Trustee, within five
Business Days after the occurrence of the event triggering redemption to each Holder at its
registered address. If funds sufficient to pay the Special Mandatory Redemption Price (including
any accrued and unpaid interest) of all Notes to be redeemed on the Special Mandatory Redemption
Date are deposited with the Paying Agent on or before such Special Mandatory Redemption Date, the
Notes will cease to bear interest on and after such Special Mandatory Redemption Date.

ARTICLE V

EVENTS OF DEFAULT

     In addition to the Events of Default set forth in Section 5.01 of the Base Indenture, the
Notes, but not Securities of any other series, shall also be subject to the following Events of
Default:

     (i) a failure by the Company to repurchase Notes tendered for repurchase following the
occurrence of a Change of Control Repurchase Event in conformity with Section 4.02 above;
and

12

 

     (ii) a failure by the Company or any of its Subsidiaries to pay any Debt, within any
applicable grace period after final maturity or the acceleration by the holders thereof, if
the total amount of such Debt unpaid or accelerated exceeds $50,000,000.

ARTICLE VI

MISCELLANEOUS

          SECTION 6.01. Ratification of Base Indenture. The Base Indenture, as supplemented by
this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental
Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and
therein provided.

          SECTION 6.02. Trust Indenture Act Controls. If any provision hereof limits,
qualifies or conflicts with the duties imposed by Section 310 through 317 of the Trust Indenture
Act, the imposed duties shall control.

          SECTION 6.03. Conflict with Indenture. To the extent not expressly amended or
modified by this Supplemental Indenture, the Base Indenture shall remain in full force and effect.
If any provision of this Supplemental Indenture relating to the Notes is inconsistent with any
provision of the Base Indenture, the provision of this Supplemental Indenture shall control.

          SECTION 6.04. Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          SECTION 6.05. Successors. All agreements of the Company in the Base Indenture, this
Supplemental Indenture and the Notes shall bind its successors.

          SECTION 6.06. Counterparts. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

          SECTION 6.07. Trustee Disclaimer. The Trustee makes no representation as to the
validity or adequacy of this Supplemental Indenture or the Notes other than the Trustee’s
Certificate of Authentication. The recitals and statements herein and in the Notes are deemed to
be those of the Company and not the Trustee. The Trustee shall not be accountable for the use by
the Company of the proceeds of the Notes.

[Signature Page Follows]

13

 

          IN WITNESS WHEREOF, the parties to this Supplemental Indenture have caused it to be duly
executed as of the day and year first above written.

	 	 	 	 	 
	 	ALLEGHENY TECHNOLOGIES INCORPORATED

 	 
	 	By:  	/s/ Jon D. Walton
 	 
	 	 	Name: Jon D. Walton 	 
	 	 	Title: Executive Vice President, Human Resources, Chief
Legal and Compliance Officer and Corporate Secretary 	 
	 

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON,

     as Trustee

 	 
	 	By:  	/s/ Raymond K. O’Neil
 	 
	 	 	Name: Raymond K. O’Neil 	 
	 	 	Title: Senior Associate 	 
	 

[Signature Page to the Third Supplemental Indenture]

 

 

EXHIBIT A

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO,
OR REGISTERED OR EXCHANGED FOR NOTES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE
DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION
OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL SECURITY SUBJECT TO
THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

Form of Global Security Representing the Notes

[FACE OF NOTE]

	 	 	 	 	 	 	 

	[•]% Note due [•]

	 	CUSIP [•]	 	 	 	 
	 
	 	 	 	 	 	 
	No.

	 	 	 	 	$	 

          ALLEGHENY TECHNOLOGIES INCORPORATED, a Delaware corporation (the “Company”, which term
includes any successor under the Indenture hereinafter referred to), for value received, promises
to pay to [the order of [•]][if global notes: CEDE & CO.], or its registered assigns, the principal
sum of [•] DOLLARS ($[•])[if global note: the amount set forth on the Schedule of Exchanges of
Interests in the Global Note attached hereto] on [•].

	 	 	 

	Interest Rate:

	 	[•]% per annum
	Interest Payment Dates:

	 	[•] 15 and [•] 15, commencing
	 

	 	[•] 15, 2011
	Regular Record Dates:

	 	[•] 1 and [•] 1

          Reference is hereby made to the further provisions of the Note set forth on the reverse
hereof, which will for all purposes have the same effect as if set forth at this place.

 

 

          IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by
its duly authorized officers.

	 	 	 	 	 	 	 	 	 	 	 

	Date:	 	 	 	 	 	ALLEGHENY TECHNOLOGIES INCORPORATED
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  By:
	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Attest:

	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	          This is one of the Securities of the series designated therein referred to in the within mentioned Indenture.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	THE BANK OF NEW YORK MELLON,

     as Trustee
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  By:
	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Authorized Signatory	 	 

 

 

[REVERSE SIDE OF NOTE]

ALLEGHENY TECHNOLOGIES INCORPORATED

[•]% Senior Note due [•]

	1.	 	Principal and Interest.

          The Company promises to pay the principal of this Note on [•].

          The Company promises to pay interest on the principal amount of this Note on each Interest
Payment Date, as set forth on the face of this Note, at the rate of [•]% per annum.

          Interest will be payable semiannually (to the Holders of record of the Notes at the close of
business on each Regular Record Date, as set forth on the face of this Note, immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing [•] 15, 2011.

          Interest on this Note will accrue from the most recent date to which interest has been paid on
this Note (or, if there is no existing default in the payment of interest and if this Note is
authenticated between a Regular Record Date and the next Interest Payment Date, from such Interest
Payment Date) or, if no interest has been paid, from [•]. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.

	2.	 	Indenture.

          This Global Security is one of a duly authorized issue of securities of the Company (herein
called the “Notes”) issued under the Indenture, dated as of [•] (the “Base Indenture”), between the
Company and The Bank of New York Mellon, as Trustee, as supplemented by the Third Supplemental
Indenture, dated as of January [•], 2011 (the “Supplemental Indenture”, and, together with the Base
Indenture, the “Indenture”), between the Company and The Bank of New York Mellon, as Trustee.
Capitalized terms used herein are used as defined in the Indenture unless otherwise indicated. The
terms of the Notes include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the
extent permitted by applicable law, in the event of any inconsistency between the terms of this
Note and the terms of the Indenture, the terms of the Indenture will control.

          The Notes are general unsecured obligations of the Company. The Indenture limits the original
aggregate principal amount of the Notes to $[•], but additional Notes may be issued pursuant to the
Indenture, and the originally issued Notes and all such additional Notes vote together for all
purposes as a single class.

	3.	 	Redemption and Repurchase; Discharge Prior to Redemption or Maturity.

          This Note is subject to redemption by the Company at any time, as further described in the
Indenture. This Note is also subject to mandatory redemption by the Company

 

 

in certain circumstances, as further described in the Indenture. There is no sinking fund
applicable to this Note.

          If the Company deposits with the Trustee money or U.S. Government Securities sufficient to pay
the then Outstanding principal of, premium, if any, and accrued interest on the Notes to redemption
or maturity, the Company may in certain circumstances be discharged from the Indenture and the
Notes or may be discharged from certain of its obligations under certain provisions of the
Indenture.

	4.	 	Registered Form; Denominations; Transfer; Exchange.

          The Notes are in registered form without coupons in denominations of $2,000 principal amount
and any multiple of $1,000 in excess thereof. A Holder may register the transfer or exchange of
Notes in accordance with the Indenture. The Company or Security Registrar may require a Holder to
furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. Pursuant to the Indenture, there are certain periods during
which the Company will not be required to issue, register the transfer of or exchange any Note or
certain portions of a Note.

	5.	 	Defaults and Remedies.

          If an Event of Default (other than certain bankruptcy defaults), as defined in the Indenture,
occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the
Notes then Outstanding may declare all the Notes to be due and payable. If certain bankruptcy
defaults with respect to the Company occur and are continuing, the Notes automatically become due
and payable. Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture
or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the
Notes then Outstanding may direct the Trustee in its exercise of remedies.

	6.	 	Amendment and Waiver.

          Subject to certain exceptions, the Indenture and the Notes may be amended, or default may be
waived, with the consent of the Holders of a majority in principal amount of the Outstanding Notes.
Without notice to or the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency.

	7.	 	Authentication.

          This Note is not valid until the Trustee signs the certificate of authentication on the other
side of this Note.

	8.	 	Abbreviations.

          Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=

 

 

joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and
U/G/M/A/ (= Uniform Gifts to Minors Act).

The Company will furnish a copy of the Indenture to any Holder upon written request and without
charge.

 

 

ASSIGNMENT FORM

To assign this Note, fill in the form below and have your signature guaranteed:

I or we assign and transfer this Note to:

 
(Print or type name, address and zip code and social security or tax ID number of assignee)

			
	and irrevocably appoint	 	
 

agent to transfer this Note on the books of the Company. The agent may substitute another to act
for him.

	 	 	 	 	 	 	 	 	 

	Dated:

	 	 
	 	 
	 	Signed:	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:

(Signature must be guaranteed by a participant in a recognized Signature Guarantee Medallion
Program or other signature guarantor program reasonably acceptable to the Trustee)

 

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY

The initial principal amount of this Global SECURITY is $[•]([•] DOLLARS). The following increases
or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 
	 	 	Amount of decrease	 	 	 	Principal Amount of	 	 
	 	 	in Principal Amount	 	Amount of increase in	 	this Global Security	 	 
	Date of	 	of this Global	 	Principal Amount of	 	following such decrease	 	Signature of authorized officer of Trustee
	Exchange	 	Security	 	this Global Security	 	or increase	 	or Notes Custodianexv10w1

Exhibit 10.1

EXECUTION VERSION

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

EQY-CSC LLC

Dated as of January 4, 2011

 

THE SHARES ISSUED PURSUANT TO THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR
“BLUE SKY” LAWS. SUCH SHARES ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS
AGREEMENT.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINED TERMS
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 ORGANIZATIONAL MATTERS
	 	 	18	 
	2.1 Formation
	 	 	18	 
	2.2 Name
	 	 	18	 
	2.3 Registered Office and Agent; Principal Office
	 	 	18	 
	2.4 Term
	 	 	18	 
	2.5 Application of the Act
	 	 	18	 
	2.6 UCC Article 8 Election
	 	 	18	 
	2.7 Certificates
	 	 	18	 
	2.8 Consent of the LIH Shareholders
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 3 PURPOSE
	 	 	19	 
	3.1 Purpose and Business
	 	 	19	 
	3.2 Powers
	 	 	19	 
	3.3 Representations and Warranties by the Shareholders
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 4 CAPITAL CONTRIBUTIONS
	 	 	20	 
	4.1 Capital Contributions of the Shareholders
	 	 	20	 
	4.2 Issuances of Additional Shares
	 	 	20	 
	4.3 No Interest; No Return
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 5 DISTRIBUTIONS
	 	 	21	 
	5.1 Distributions of Available Cash
	 	 	21	 
	5.2 Distributions Upon Liquidation
	 	 	21	 
	5.3 Distributions of Disposition Proceeds
	 	 	21	 
	5.4 No Right to Distributions in Kind
	 	 	21	 
	5.5 Right to Offset Distributions
	 	 	21	 
	5.6 Limitation on Certain Class A Distributions
	 	 	22	 
	5.7 Reduction of LIH Distributions for CapCo Excise Tax
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 6 ALLOCATIONS
	 	 	23	 
	6.1 Allocations for Capital Account Purposes
	 	 	23	 
	6.2 Additional Allocation Provision
	 	 	24	 
	6.3 Tax Allocations
	 	 	25	 
	6.4 Allocations Upon Occurrence of a Liquidating Event
	 	 	26	 
	6.5 Allocations Upon Adjustment of Gross Asset Value
	 	 	27	 
	6.6 Allocations With Respect to Disposition Proceeds
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS
	 	 	27	 
	7.1 Management
	 	 	27	 
	7.2 Certificate of Formation
	 	 	31	 
	7.3 Restrictions on the Board’s Authority
	 	 	31	 

i

 

	 	 	 	 	 
	 	 	Page	 
	7.4 Reimbursement of the Board
	 	 	33	 
	7.5 Transactions with Affiliates
	 	 	33	 
	7.6 Indemnification
	 	 	34	 
	7.7 Exculpation
	 	 	35	 
	7.8 Other Matters Concerning the Board
	 	 	36	 
	7.9 Title to Company Assets
	 	 	37	 
	7.10 Reliance by Third Parties
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 8 RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
	 	 	38	 
	8.1 Limitation of Liability
	 	 	38	 
	8.2 Management of Business
	 	 	38	 
	8.3 Return of Capital
	 	 	38	 
	8.4 Rights of Shareholders Relating to the Company
	 	 	38	 
	8.5 Redemption Right
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS
	 	 	40	 
	9.1 Records and Accounting
	 	 	40	 
	9.2 Company Year
	 	 	41	 
	 
	 	 	 	 
	ARTICLE 10 TAX MATTERS
	 	 	41	 
	10.1 Preparation of Tax Returns
	 	 	41	 
	10.2 Tax Elections
	 	 	41	 
	10.3 Tax Matters Shareholder
	 	 	41	 
	10.4 Withholding
	 	 	42	 
	10.5 Organizational Expenses
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 11 SHAREHOLDER TRANSFERS AND WITHDRAWALS
	 	 	43	 
	11.1 Transfer
	 	 	43	 
	11.2 Transfer of Equity One’s Interest
	 	 	44	 
	11.3 LIH Shareholders’ Rights to Transfer
	 	 	46	 
	11.4 Substituted Shareholders
	 	 	47	 
	11.5 Assignees
	 	 	47	 
	11.6 General Provisions
	 	 	48	 
	 
	 	 	 	 
	ARTICLE 12 ADMISSION OF SHAREHOLDERS
	 	 	49	 
	12.1 Admission of Additional Shareholders
	 	 	49	 
	12.2 Amendment of Agreement and Certificate
	 	 	49	 
	 
	 	 	 	 
	ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION
	 	 	50	 
	13.1 Dissolution
	 	 	50	 
	13.2 Winding Up
	 	 	50	 
	13.3 Rights of Shareholders
	 	 	52	 
	13.4 Notice of Dissolution
	 	 	52	 
	13.5 Cancellation of Certificate
	 	 	52	 
	13.6 Reasonable Time for Winding-Up
	 	 	52	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF SHAREHOLDERS; AMENDMENTS; MEETINGS
	 	 	52	 
	14.1 Procedures for Actions and Consents of Shareholders
	 	 	52	 
	14.2 Amendments
	 	 	52	 
	14.3 Meetings of the Shareholders
	 	 	53	 
	 
	 	 	 	 
	ARTICLE 15 GENERAL PROVISIONS
	 	 	54	 
	15.1 Addresses and Notice
	 	 	54	 
	15.2 Titles and Captions
	 	 	54	 
	15.3 Pronouns and Plurals
	 	 	54	 
	15.4 Further Action
	 	 	54	 
	15.5 Binding Effect
	 	 	54	 
	15.6 Waiver
	 	 	54	 
	15.7 Counterparts
	 	 	55	 
	15.8 Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial
	 	 	55	 
	15.9 Entire Agreement
	 	 	55	 
	15.10 Invalidity of Provisions
	 	 	55	 
	15.11 Limitations to Preserve REIT Status
	 	 	56	 
	15.12 No Partition
	 	 	56	 
	15.13 No Third-Party Rights Created Hereby
	 	 	57	 
	15.14 No Rights as Stockholders
	 	 	57	 
	15.15 Entity Conversion
	 	 	57	 
	 
	 	 	 	 
	ARTICLE 16 EQUITY ONE GUARANTEE
	 	 	57	 
	16.1 Guarantee
	 	 	57	 
	16.2 Certain Waivers
	 	 	58	 
	16.3 Guarantee Absolute
	 	 	58	 
	16.4 Additional Waivers
	 	 	58	 
	16.5 No Waiver of Rights by Shareholders
	 	 	59	 
	16.6 Representations and Warranties by Equity One
	 	 	59	 

iii

 

LIMITED LIABILITY COMPANY AGREEMENT

OF EQY-CSC LLC

     THIS LIMITED LIABILITY COMPANY AGREEMENT OF EQY-CSC LLC (the “Company”), (as it may
be amended, supplemented or restated from time to time, this “Agreement”) dated as of
January 4, 2011 (the “Effective Date”), is made and entered into by and among Equity One,
Inc., a Maryland corporation (“Equity One”), Liberty International Holdings Limited, a
private company limited by shares organized under the laws of England and Wales (“LIH”) and
the Persons whose names are listed on Exhibit A attached hereto, together with any other
Persons who become Shareholders in the Company as provided herein.

     WHEREAS, the Certificate of Formation of the Company was filed in the office of the Secretary
of State of the State of Delaware on December 27, 2010;

     WHEREAS, as of the Effective Date, Equity One and LIH have contributed (or caused their
respective subsidiaries to contribute) the EQY Participating Note and 100% of the outstanding
common stock, par value $1.00 per share, of C&C (US) No. 1, Inc., a Delaware corporation
(“CapCo” and such common stock, “CapCo Common Stock”), respectively, to the Company
pursuant to the terms of that certain Contribution Agreement, dated as of May 23, 2010, as amended
on November 8, 2010 (the “Contribution Agreement”), by and among LIH, Capital Shopping
Centers plc and Equity One;

     WHEREAS, in consideration for LIH’s contribution of CapCo Common Stock to the Company, the
Company issued Class A Shares to LIH as set forth on Exhibit A attached hereto; and

     WHEREAS, in consideration for Equity One’s contribution of the EQY Participating Note to the
Company, the Company issued Class A Shares and Class B Shares to Equity One as set forth on
Exhibit A attached hereto.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINED TERMS

     1.1 Definitions. The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement:

     “Act” means the Delaware Limited Liability Company Act, 6 Del. c. Sec. 18-101, et
seq., as it may be amended from time to time, and any successor to such statute.

     “Additional Shareholder” means a Person who is admitted to the Company as a
Shareholder pursuant to Section 4.2 and Section 12.1 hereof and who is shown as such on the books
and records of the Company.

 

 

     “Adjusted Capital Account” means, with respect to any Shareholder, the balance in such
Shareholder’s Capital Account as of the end of the relevant Company Year or other applicable
period, after giving effect to the following adjustments:

     (i) increase such Capital Account by any amounts that such Shareholder is obligated to
restore pursuant to this Agreement upon liquidation of such Shareholder’s Shares or that
such Person is deemed to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and

     (ii) decrease such Capital Account by the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of “Adjusted Capital Account” is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

     “Adjusted Cash Amount” means, with respect to any Tendered Shares, an amount of cash
equal to the excess, if any, of (i) the sum of (x) the Cash Amount applicable to such Tendered
Shares, and (y) the Cumulative Unpaid Class A Distribution, if any, with respect to such Tendered
Shares as of the Valuation Date for such Tendered Shares, over (ii) the aggregate amount of cash
distributions paid by the Company with respect to such Tendered Shares pursuant to Section 5.1(b).

     “Adjusted REIT Shares Amount” means, with respect to Tendered Shares, a number of REIT
Shares equal to the quotient obtained by dividing (i) the Adjusted Cash Amount applicable to such
Tendered Shares, by (ii) the Value of a REIT Share as of the Valuation Date; provided,
however, that if the Conversion Factor is different on the Valuation Date than on the
Specified Redemption Date, then the Adjusted REIT Shares Amount shall be multiplied by a fraction,
the numerator of which is the Conversion Factor on the Specified Redemption Date, the denominator
of which is the Conversion Factor on the Valuation Date.

     “Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling or controlled by or under common control with such Person. For the purposes of this
definition, “control” when used with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

     “Agreement” means this Limited Liability Company Agreement of EQY-CSC LLC, as now or
hereafter amended, restated, modified, supplemented or replaced.

     “Applicable Class B Rate” means (i) with respect to each Class B Share issued pursuant
to the Contribution Agreement, 1.5% per calendar quarter and (ii) with respect to each additional
Class B Share issued pursuant to Section 4.2, 1.25% per calendar quarter until the aggregate amount
of Capital Contributions made with respect to Class B Shares issued pursuant to Section 4.2 equals
$100 million, and thereafter 1% per calendar quarter.

2

 

     “Appraisal” means, with respect to any assets, the written opinion of an independent
third party experienced in the valuation of similar assets, selected by the Board in good faith.
Such opinion may be in the form of an opinion by such independent third party that the value for
such property or asset as set by the Board is fair, from a financial point of view, to the Company.

     “Articles of Incorporation” means the Articles of Incorporation of Equity One filed
with the Maryland State Department of Assessments and Taxation, as amended and/or restated from
time to time.

     “Assignee” means a Person to whom one or more Shares have been Transferred in a manner
permitted under this Agreement, but who has not become a Substituted Shareholder, and who has the
rights set forth in Section 11.4(c) hereof.

     “Available Cash” means, with respect to any period for which such calculation is made,
(a) the sum, without duplication, of: (i) taxable income (as determined for federal income tax
purposes), if any, of the Company; (ii) an amount equal to the Federal income tax depreciation,
amortization or other cost recovery deductions allowable with respect to the assets of the Company
for such year or other period and all other non-cash charges deducted in determining the taxable
income or loss of the Company for such period; (iii) the amount of any reduction in the reserves or
other cash or similar balances referred to in clause (b)(vi) below; and (iv) all other cash
received by the Company for such period that was not included in determining the taxable income or
loss for such period; (b) less the sum, without duplication, of: (i) the taxable loss (as
determined for federal income tax purposes), if any, of the Company; (ii) all regularly scheduled
principal debt payments made by the Company during such period (excluding balloon payments); (iii)
capital expenditures made by the Company during such period for maintenance, repairs and tenant
improvements but not for development or expansion; (iv) all other expenditures and payments of the
Company not deducted in determining taxable income or loss of the Company for such period
(excluding balloon payments on indebtedness and capital expenditures for development or expansion);
(v) any item of income or gain included in determining taxable income or loss of the Company for
such period that does not correspond to a cash amount actually received by the Company during such
period; and (vi) the amount of any reserves or other cash or similar balances (including, but not
limited to, working capital reserves, debt reserve funds, and capital improvements reserves)
established during such period (or if previously established, the amount of any increase therein),
which the Board determines in good faith to be necessary or appropriate for a legitimate business
purpose of the Company, and not for the purpose of depriving Shareholders of distributions of
Available Cash. Notwithstanding the foregoing, Available Cash shall not include (i) any cash
received or reductions in reserves, or take into account any disbursements made, or reserves
established, after dissolution and the commencement of the liquidation and winding up of the
Company, (ii) any Capital Contributions, whenever received, or (iii) any Disposition Proceeds
(whether received by the Company or distributed).

     “Board” shall have the meaning set forth in Section 7.1(a) hereof.

     “Board Member” shall have the meaning set forth in Section 7.1(a) hereof.

3

 

     “Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in The City of New York, New York are authorized by law to close.

     “CapCo” means C&C (US) No. 1, Inc., a Delaware corporation.

     “CapCo Common Stock” has the meaning set forth in the Recitals hereof.

     “CapCo Excise Tax” shall mean the lesser of (x) the aggregate amount of any excise
taxes actually paid by CapCo pursuant to Section 4981 of the Code (and any analogous provision of
state law) with respect to its 2011 taxable year and (y) $866,000.

     “Capital Account” means, with respect to any Shareholder, the capital account
maintained by the Board for such Shareholder on the Company’s books and records in accordance with
the following provisions:

     (i) To each Shareholder’s Capital Account, there shall be added such Shareholder’s
Capital Contributions, such Shareholder’s distributive share of Net Income pursuant to
Section 6.1 hereof and any items in the nature of income or gain that are specially
allocated pursuant to ARTICLE 6, and the principal amount of any Company liabilities assumed
by such Shareholder or that are secured by any property distributed to such Shareholder.

     (ii) From each Shareholder’s Capital Account, there shall be subtracted the amount of
cash and the Gross Asset Value of any property distributed to such Shareholder pursuant to
any provision of this Agreement, such Shareholder’s distributive share of Net Losses
pursuant to Section 6.1 hereof and any items in the nature of expenses or losses that are
specially allocated pursuant to ARTICLE 6, and the principal amount of any liabilities of
such Shareholder assumed by the Company or that are secured by any property contributed by
such Shareholder to the Company.

     (iii) In the event any Shares are Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Shareholder’s Capital Account of the
transferor to the extent that it relates to the Transferred Shares.

     (iv) In determining the principal amount of any liability for purposes of subsections
(i) and (ii) hereof, there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.

     (v) The provisions of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Regulations promulgated under Section 704 of the Code, and shall
be interpreted and applied in a manner consistent with such Regulations. If the Board shall
determine that it is prudent to modify the manner in which the Capital Accounts are
maintained in order to comply with such Regulations, the Board may make such modification
provided that such modification will not have any effect on the amounts distributable to any
Shareholder or the timing of any distribution to such Shareholder without such Person’s
Consent. The Board also shall (a) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Shareholders and the amount of Company
capital reflected on the

4

 

Company’s balance sheet, as computed for book purposes, in accordance with Regulations
Section 1.704-1(b)(2)(iv)(q) and (b) make any appropriate modifications in the event that
unanticipated events might otherwise cause this Agreement not to comply with Regulation
Section 1.704-1(b) or Section 1.704-2; provided, however, that such changes
shall not reduce amounts otherwise distributable to any Shareholder or affect the timing of
any distribution to the Shareholder. Notwithstanding the foregoing and notwithstanding
Regulations Section 1.704-1(b)(2)(iv)(d)(2), for purposes of this Agreement, the
contribution of the EQY Participating Note shall be treated as a Capital Contribution with a
Gross Asset Value equal to the original principal amount of the EQY Participating Note, and
payments of interest and principal on such note shall not be treated as Capital
Contributions.

Any references in this Agreement to the Regulations under Section 704(b) of the Code shall be
interpreted in a manner that is consistent with treating the EQY Participating Note as an asset of
the Company and not as an obligation to make capital contributions in the future, notwithstanding
Regulations Section 1.704-1(b)(2)(iv)(d)(2).

     “Capital Contribution” means, with respect to any Shareholder, the amount of money and
the initial Gross Asset Value of any Contributed Property, adjusted to the extent provided in the
definition of “Capital Account” above, that such Shareholder contributes to the Company pursuant to
Sections 4.1 or 4.2;

     “Cash Amount” means, with respect to any Tendered Shares, an amount of cash equal to
the product of (i) the Value of a REIT Share as of the Valuation Date for such Tendered Shares, and
(ii) the REIT Shares Amount applicable to such Tendered Shares as of such Valuation Date.

     “Certificate” means the Certificate of Formation of the Company filed in the office of
the Secretary of State of the State of Delaware, as amended from time to time in accordance with
the terms hereof and the Act.

     “Change-in-Control Transaction” means, with respect to Equity One, (i) any merger,
consolidation or other combination with another Person (other than in connection with a change in
Equity One’s state of incorporation or organizational form or any merger, consolidation or other
combination in which substantially all of the existing holders of REIT Shares continue to own the
common stock of the resulting corporation); (ii) a direct or indirect sale, exchange or other
transfer of all or substantially all of its assets or stock in one transaction or a series of
related transactions; (iii) any reclassification, recapitalization or change of its outstanding
equity interests (other than a change in par value, or from par value to no par value, or as a
result of a split, dividend or similar subdivision or any other reclassification, recapitalization
or change of its outstanding equity interests in which substantially all of the existing holders of
REIT Shares continue to own the common stock of the resulting corporation); (iv) the adoption of
any plan of liquidation or dissolution of Equity One; or (v) any conversion into another form of
entity, except pursuant to Section 15.15.

     “Class A Share” means a Common Share which is designated as a Class A Share and which
has the rights, preferences and privileges designated herein. The Board shall set forth the
holders of Class A Shares on Exhibit A, as the same may be amended from time to time.

5

 

     “Class B Share” means a Common Share which is designated as a Class B Share and which
has the rights, preferences and privileges designated herein. The Board shall set forth the
holders of Class B Shares on Exhibit A, as the same may be amended from time to time.

     “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time or any successor statute thereto, as interpreted by the applicable Regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.

     “Common Share” means a Share other than a Preferred Share and includes the Class A
Shares and the Class B Shares.

     “Company” means EQY-CSC LLC formed and continued under the Act and pursuant to this
Agreement, and any successor thereto.

     “Company Distribution Date” means a date established by the Board for the payment of
distributions pursuant to Section 5.1, which date shall be the same as the date established by
Equity One for the payment of dividends to holders of REIT Shares.

     “Company Minimum Gain” has the correlative meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Company Minimum Gain, as well as any net increase or decrease in
Company Minimum Gain, for a Company Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).

     “Company Record Date” means the record date established by the Board for the
determination of Shareholders entitled to receive distributions on any Company Distribution Date,
which record date shall be the same as the record date established by Equity One for the dividend
to the common stockholders of Equity One on such date or, if no such record date is established by
Equity One, the date of payment of such dividend.

     “Company Year” means the taxable year of the Company, which shall be the calendar year
unless a different year is required under the Code.

     “Competitor” means any Person that has a significant business in the direct or
indirect ownership, operation or management of shopping center properties. For purposes of this
definition “significant business” means a business from which more than 35% of a Person’s annual
revenue for the last fiscal year preceding the applicable date of determination is derived from the
ownership, operation or management of shopping center properties.

     “Consent” means the consent to, approval of, or vote in favor of a proposed action by
a Shareholder given in accordance with ARTICLE 14 hereof.

     “Consent of the LIH Shareholders” means the Consent of a Majority in Interest of the
LIH Shareholders, which Consent, except as otherwise provided in this Agreement, may be given or
withheld by each LIH Shareholder in its sole and absolute discretion.

6

 

     “Consent of the Shareholders” means the Consent of a Majority in Interest of the
Shareholders, which Consent, except as otherwise provided in this Agreement, may be given or
withheld by each LIH Shareholder in its sole and absolute discretion.

     “Contributed Property” means each Property or other asset, in such form as may be
permitted by the Act, but excluding cash, contributed or deemed contributed to the Company (or
deemed contributed by the Company to a “new” partnership pursuant to Code Section 708).

     “Contribution Agreement” has the meaning set forth in the Recitals hereof.

     “Controlled Affiliate” means, with respect to any specified Person, any Person that,
directly or indirectly through one or more intermediaries, controls such specified Person.

     “Conversion Factor” means 1.0; provided, that in the event that:

     (i) Equity One (a) declares or pays a dividend on its outstanding REIT Shares wholly or
partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares
wholly or partly in REIT Shares; (b) splits or subdivides its outstanding REIT Shares or (c)
effects a reverse stock split or otherwise combines its outstanding REIT Shares into a
smaller number of REIT Shares, the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which shall be the number of REIT Shares
issued and outstanding on the record date for such dividend, distribution, split,
subdivision, reverse split or combination (assuming for such purpose that such dividend,
distribution, split, subdivision, reverse split or combination has occurred as of such
time), and the denominator of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on the record date for such dividend,
distribution, split, subdivision, reverse split or combination;

     (ii) Equity One distributes any rights, options or warrants to all holders of its REIT
Shares to subscribe for or to purchase or to otherwise acquire REIT Shares (or other
securities or rights convertible into, exchangeable for or exercisable for REIT Shares) at a
price per share less than the Value of a REIT Share on the record date for such distribution
(each a “Distributed Right”), then the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction the numerator of which shall be the number
of REIT Shares issued and outstanding on the record date plus the maximum number of REIT
Shares purchasable under such Distributed Rights and the denominator of which shall be the
number of REIT Shares issued and outstanding on the record date plus a fraction (a) the
numerator of which is the minimum aggregate purchase price under such Distributed Rights of
the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the
denominator of which is the Value of a REIT Share as of the record date; provided,
however, that, if any such Distributed Rights expire or become no longer
exercisable, then the Conversion Factor shall be adjusted, effective retroactive to the date
of distribution of the Distributed Rights, to reflect a reduced maximum number of REIT
Shares or any change in the minimum aggregate purchase price for the purposes of the above
fraction; and

7

 

     (iii) Equity One shall, by dividend or otherwise, distribute to all holders of its REIT
Shares evidences of its indebtedness or assets (including securities, but excluding any
dividend or distribution referred to in subsection (i) above), which evidences of
indebtedness or assets relate to assets not received by Equity One or its Subsidiaries
pursuant to a pro rata distribution by the Company, then the Conversion Factor shall be
adjusted to equal the amount determined by multiplying the Conversion Factor in effect
immediately prior to the close of business on the date fixed for determination of
stockholders entitled to receive such distribution by a fraction the numerator of which
shall be such Value of a REIT Share on the date fixed for such determination and the
denominator of which shall be the Value of a REIT Share on the dates fixed for such
determination less the then fair market value (as reasonably determined by Equity One) of
the portion of the evidences of indebtedness or assets so distributed applicable to one REIT
Share.

     Any adjustment to the Conversion Factor shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event. Notwithstanding the
foregoing, the Conversion Factor shall not be adjusted in connection with an event described in
clauses (i) or (ii) above if, in connection with such event, the Company makes a distribution of
cash, Shares, REIT Shares and/or rights, options or warrants to acquire Shares and/or REIT Shares
with respect to all applicable Common Shares or effects a reverse split of, or otherwise combines,
the Common Shares, as applicable, that is comparable as a whole in all material respects with such
event. The Board shall provide notice to the LIH Shareholders in accordance with the notice
provisions set forth in Section 15.1 of this Agreement of any adjustment of the Conversion Factor,
which notice shall include an officer’s certificate from the Company describing the facts that
required the adjustment, the new Conversion Factor and a summary of the computation of the
Conversion Factor.

     “Cumulative Class A Return Per Share” means, with respect to each Class A Share
outstanding on a specified Company Record Date, an amount initially equal to zero, and increased
cumulatively (x) on each Company Record Date thereafter by an amount equal to the product of (i)
the cash dividend per REIT Share declared by Equity One for holders of REIT Shares on such Company
Record Date, and (ii) the Conversion Factor in effect on such Company Record Date, and (y) on each
Company Distribution Date thereafter, if the Cumulative Unpaid Class A Distribution is greater than
zero on such date (after taking into account any distributions paid on such date), by an amount
equal to the product of (1) the greater of (a) 1.5% and (b) the product of (i) the three month
LIBOR, plus 4%, multiplied by (ii) 25%, and (2) the Cumulative Unpaid Class A Distribution;
provided, however, that, for each Class A Share, the increase that shall occur in
accordance with the foregoing on the first Company Record Date that occurs on or after the date on
which such Class A Share was first issued shall be the amount determined in accordance with the
foregoing, multiplied by a fraction, the numerator of which shall be the number of days that such
Class A Share was outstanding up to and including such first Company Record Date, and the
denominator of which shall be the total number of days in the period from but excluding the
immediately preceding Company Record Date (or, if none, December 17, 2010) to and including such
first Company Record Date.

     “Cumulative Class B Return Per Share” means, with respect to each Class B Share
outstanding as of any calculation date, an amount initially equal to zero, and increased

8

 

cumulatively on each Company Record Date by an amount equal to the product of the Applicable
Class B Rate and the Cumulative Unpaid Class B Share Value of such Class B Share as of such date.

     “Cumulative Unpaid Class A Distribution” means, for any Class A Share as of any date,
an amount equal to the excess, if any, of (i) the Cumulative Class A Return Per Share over (ii) the
aggregate amount of all distributions previously made with respect to such Class A Share pursuant
to Section 5.1(a) or 5.3(a) hereof.

     “Cumulative Unpaid Class B Distribution” means, for any Class B Share as of any date,
an amount equal to the excess, if any, of (i) the Cumulative Class B Return Per Share, over (ii)
the aggregate amount of all distributions previously made with respect to such Class B Share
pursuant to Section 5.1(b) hereof.

     “Cumulative Unpaid Class B Share Value” means, with respect to each Class B Share
outstanding as of any calculation date, an amount equal to the excess, if any, of (i) the sum of
(a) the Capital Account balance associated with such Share upon its issuance and (b) the aggregate
amount of Net Income allocated with respect to such Share over (ii) the sum of (x) the aggregate
amount of all distributions previously made with respect to such Class B Share pursuant to Section
5.1(b) and (y) the aggregate amount Net Loss allocated with respect to such Share (but only to the
extent that the amount of Net Loss does not exceed the aggregate amount of Net Income allocated
with respect to such Share).

     “Debt” means, as to any Person, as of any date of determination: (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property or services; (ii)
all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations
under letters of credit, surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the
deferred purchase price of property or services secured by any lien on any property owned by such
Person, to the extent attributable to such Person’s interest in such property, even though such
Person has not assumed or become liable for the payment thereof; (iv) lease obligations of such
Person that, in accordance with generally accepted accounting principles, should be capitalized;
and (v) all guarantees of any of the foregoing.

     “Delaware Courts” has the meaning set forth in Section 15.8(b) hereof.

     “Depreciation” means, for each Company Year or other applicable period, an amount
equal to the Federal income tax depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if the Gross Asset
Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount that bears the same ratio to such
beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning adjusted tax basis;
provided, however, that if the Federal income tax depreciation, amortization or
other cost recovery deduction for such year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any reasonable method selected
by the Board.

9

 

     “Disposition Proceeds” means the net proceeds received by the Company upon the
disposition of any assets by the Company (other than a Terminating Capital Transaction), after
deducting all costs and expenses of the Company in connection with such disposition. For the
purposes of clarity, any proceeds received by the Company from a disposition of assets by CapCo
shall not constitute Disposition Proceeds.

     “Domestication Date” means February 3, 2015.

     “Economic Capital Account” means, with respect to any Shareholder, such Shareholder’s
Capital Account as of the date of determination, after crediting to such Capital Account any
amounts that the Shareholder is deemed obligated to restore under Treasury Regulations Section
1.704-2.

     “Effective Date” has the meaning set forth in the preamble to this Agreement.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Equityholders Agreement” means the Equityholders Agreement, dated as of May 23, 2010,
by and among Equity One, LIH, Gazit Globe, Ltd. and certain affiliates of Gazit Globe, Ltd.

     “Equity One” means Equity One, Inc., a Maryland corporation, or its successor.

     “Equity One Subsidiary Loan” means any loan from Equity One or any Affiliate of Equity
One to any Subsidiary of the Company.

     “EQY Board” means the board of directors of Equity One as it may be constituted from
time to time.

     “EQY Common Stock” means a share of common stock of Equity One, $0.01 par value per
share, but does not include the share of Class A Common Stock of Equity One, $0.01 par value per
share.

     “EQY Participating Note” means the participating promissory note issued by Equity One
in connection with the transactions contemplated by the Contribution Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.

     “Final Adjustment” has the meaning set forth in Section 10.3(b) hereof.

     “Final Settlement Date” means the date on which all closing adjustments under the
Contribution Agreement are final in accordance with the terms thereof.

     “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for
Federal income tax purposes, except as follows:

10

 

     (a) The initial Gross Asset Value of any asset contributed by a Shareholder to the Company
shall be the gross fair market value of such asset on the date of contribution, as determined by
the Board and agreed to by the contributing Person.

     (b) The Gross Asset Values of all Company assets immediately prior to the occurrence of any
event described in clauses (i) through (v) below shall be adjusted to equal their respective gross
fair market values, as determined by the Board using such reasonable method of valuation as it may
adopt, as of the following times:

     (i) the acquisition of an additional interest in the Company (other than in connection
with the execution of this Agreement or acquisitions pursuant to Section 4.2 hereof) by a
new or existing Shareholder in exchange for more than a de minimis Capital Contribution, if
the Board reasonably determines that such adjustment is necessary or appropriate to reflect
the relative economic interests of the Shareholders in the Company;

     (ii) the distribution by the Company to a Shareholder of more than a de minimis amount
of Company property as consideration for an interest in the Company if the Board reasonably
determines that such adjustment is necessary or appropriate to reflect the relative economic
interests of the Shareholders in the Company;

     (iii) the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);

     (iv) the grant of an interest in the Company (other than a de minimis interest) as
consideration for the provision of services to or for the benefit of the Company by an
existing Shareholder acting in a Shareholder capacity, or by a new Shareholder acting in a
Shareholder capacity or in anticipation of becoming a Shareholder of the Company, if the
Board reasonably determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the Shareholders in the Company; and

     (v) at such other times as the Board shall reasonably determine necessary or advisable
in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

     (c) The Gross Asset Value of any Company asset distributed to a Shareholder shall be the gross
fair market value of such asset on the date of distribution, as determined by the distributee and
the Board; provided, however, that if the distributee is Equity One or if the
distributee and the Board cannot agree on such a determination, such gross fair market value shall
be determined by Appraisal.

     (d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that
the Board reasonably determines that an adjustment pursuant to subsection (b) above is necessary or
appropriate in connection with a transaction that would otherwise result in an adjustment pursuant
to this subsection (d).

11

 

     (e) If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to
subsection (a), subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.

     “Guaranteed Obligations” has the meaning set forth in Section 16.1 hereof.

     “Holder” means either (a) a Shareholder or (b) an Assignee owning a Share.

     “Incapacity” or “Incapacitated” means: (i) as to any Shareholder who is an
individual, death, total physical disability or entry by a court of competent jurisdiction
adjudicating such Shareholder incompetent to manage his or her person or his or her estate; (ii) as
to any Shareholder that is a corporation or limited liability company, the filing of a certificate
of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as
to any Shareholder that is a partnership, the dissolution and commencement of winding up of the
partnership; (iv) as to any Shareholder that is an estate, the distribution by the fiduciary of the
estate’s entire interest in the Company; (v) as to any trustee of a trust that is a Shareholder,
the termination of the trust (but not the substitution of a new trustee); or (vi) as to any
Shareholder, the bankruptcy of such Shareholder. For purposes of this definition, bankruptcy of a
Shareholder shall be deemed to have occurred when (a) the Shareholder commences a voluntary
proceeding seeking liquidation, reorganization or other relief of or against such Shareholder under
any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Shareholder is
adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the
Shareholder, (c) the Shareholder executes and delivers a general assignment for the benefit of the
Shareholder’s creditors, (d) the Shareholder files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the Shareholder in any proceeding
of the nature described in clause (b) above, (e) the Shareholder seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator for the Shareholder or for all or any
substantial part of the Shareholder’s properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days after the
commencement thereof, (g) the appointment without the Shareholder’s consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety
(90) days after the expiration of any such stay.

     “Indemnitee” means any Person made a party to a proceeding by reason of its status as
a (A) member of the Board, (B) Shareholder (C) officer of the Company and (D) such other Persons
(which may not include the Company but may include Affiliates of any Shareholder) as the Board may
designate from time to time (whether before or after the event giving rise to potential liability),
in its sole and absolute discretion.

     “Independent Appraiser” means a nationally-recognized independent third-party
appraiser with experience in valuation (who has not provided services or advice to Equity One, LIH
or any of their Affiliates for the twenty-four (24) month period prior to its appointment and

12

 

who agrees not to provide such services to Equity One, LIH or any of their Affiliates for
twenty-four (24) months following such appointment.

     “IRS” means the United States Internal Revenue Service.

     “LIH Shareholder” means any holder of Class A Shares that is LIH, Parent or any
Affiliate of Parent or LIH.

     “Liquidating Event” has the meaning set forth in Section 13.1(a) hereof.

     “Liquidator” has the meaning set forth in Section 13.2(a) hereof.

     “Majority in Interest of the LIH Shareholders” means LIH Shareholders holding in the
aggregate Class A Shares that are greater than fifty percent (50%) of the aggregate outstanding
Class A Shares of all LIH Shareholders.

     “Majority in Interest of the Shareholders” means Shareholders holding in the aggregate
Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interests of all Shareholders entitled to Consent to or withhold Consent from a proposed action.

     “Nationally Recognized Securities Exchange” means any of the New York Stock Exchange,
the NYSE Amex or the NASDAQ Global Select Market (or any successor to such exchanges).

     “Net Income” or “Net Loss” means, for each Company Year or other applicable
period, an amount equal to the Company’s taxable income or loss for such year or other period,
determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain,
loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the following adjustments:

     (a) Any income of the Company that is exempt from Federal income tax and not otherwise taken
into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or
“Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or
loss);

     (b) Any expenditure of the Company described in Code Section 705(a)(2)(B) or treated as a Code
Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of
“Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable
income (or loss);

     (c) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subsection
(b) or subsection (c) of the definition of “Gross Asset Value,” the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such asset for purposes of computing
Net Income or Net Loss;

     (d) Gain or loss resulting from any disposition of property with respect to which gain or loss
is recognized for Federal income tax purposes shall be computed by reference to the

13

 

Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its Gross Asset Value;

     (e) In lieu of the depreciation, amortization and other cost recovery deductions that would
otherwise be taken into account in computing such taxable income or loss, there shall be taken into
account Depreciation for such Company Year or other applicable period;

     (f) To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant
to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Shareholder’s interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

     (g) Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any
item that is specially allocated pursuant to ARTICLE 6 hereof shall not be taken into account in
computing Net Income or Net Loss. The amounts of the items of Company income, gain, loss or
deduction available to be specially allocated pursuant to ARTICLE 6 hereof shall be determined by
applying rules analogous to those set forth in this definition of “Net Income” or “Net Loss.”

     “New Shares” has the meaning set forth in Section 11.2(b) hereof.

     “Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Company Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(c).

     “Nonrecourse Liability” has the meaning set forth in Regulations Section
1.752-1(a)(2).

     “Notice of Redemption” means the Notice of Redemption in the form of Exhibit B
to this Agreement.

     “Parent” means Capital Shopping Centres Group PLC, a public company organized under
the laws of England and Wales.

     “Percentage Interest” means, as to each Shareholder, the percentage represented by a
fraction (expressed as a percentage), the numerator of which is the number of Common Shares then
held by such Shareholder, and the denominator of which is the total number of Common Shares then
held by the Shareholders.

     “Person” means an individual, corporation, partnership (whether general or limited),
limited liability company, trust, estate, unincorporated organization, association, custodian,
nominee or any other individual or entity in its own or any representative capacity.

     “Preferred Share” means a Share that has a preference or priority over the Common
Shares with respect to distributions or allocations. The rights, preferences and other privileges
of

14

 

any class or series of Preferred Shares shall be set forth in an amendment to this Agreement.
The ownership of Preferred Shares among the Shareholders shall be set forth on Exhibit A,
as it may be amended from time to time by the Board.

     “Privatization Transaction” means a Change-in-Control Transaction (other than a
Change-in-Control Transaction described in Section 11.2(b) as a result of which the REIT Shares are
not listed on a National Recognized Securities Exchange.

     “Properties” means any assets and property of the Company such as, but not limited to,
interests in real property and personal property, including, without limitation, fee interests,
interests in ground leases, easements and rights of way, interests in limited liability companies,
joint ventures or partnerships, interests in mortgages, and Debt instruments as the Company may
hold from time to time and “Property” means any one such asset or property.

     “Public Entity” means any Person with equity securities that are listed or traded on a
Nationally Recognized Securities Exchange.

     “Qualified Transferee” means an “Accredited Investor” as defined in Rule 501
promulgated under the Securities Act.

     “Redemption Right” has the meaning set forth in Section 8.5(a) hereof.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of
the Effective Date, by and between Equity One and LIH.

     “Regulations” means the income tax regulations under the Code, whether such
regulations are in proposed, temporary or final form, as such regulations may be amended from time
to time (including corresponding provisions of succeeding regulations).

     “REIT” means a real estate investment trust qualifying under Code Sections 856 — 859.

     “REIT Payment” has the meaning set forth in Section 15.11(a) hereof.

     “REIT Requirements” means the requirements for qualification and taxation as a REIT
under the Code and Regulations.

     “REIT Share” means a share of EQY Common Stock.

     “REIT Shares Amount” means, with respect to Tendered Shares, a number of REIT Shares
equal to the product of (i) the number of Tendered Shares multiplied by (ii) the Conversion Factor
as of the Valuation Date.

     “Related Party” means, with respect to any Person, any other Person whose ownership of
shares of Equity One’s capital stock would be attributed to the first such Person under Code
Section 544 (as modified by Code Section 856(h)(1)(B)).

     “SEC” means the Securities and Exchange Commission.

15

 

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     “Shareholder” means any Person who is admitted as a member of the Company for the
purposes of the Act. The Board shall amend Exhibit A from time to time to accurately
reflect all Shareholders and their ownership of Shares.

     “Shareholder Minimum Gain” means an amount, with respect to each Shareholder
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Shareholder
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations
Section 1.704-2(i)(3).

     “Shareholder Nonrecourse Debt” has the correlative meaning set forth in Regulations
Section 1.704-2(b)(4).

     “Shareholder Nonrecourse Deductions” has the correlative meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Shareholder Nonrecourse Deductions with
respect to a Shareholder Nonrecourse Debt for a Company Year shall be determined in accordance with
the rules of Regulations Section 1.704-2(i)(2).

     “Shares” means an ownership interest in the Company held by a Shareholder and includes
any and all benefits to which the holder of such a Share may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms and provisions of
this Agreement. The Shares represented by the Class A Shares and Class B Shares are, as of the
Effective Date, the only Shares.

     “Specified Redemption Date” means, with respect to any Tendered Shares, the earlier of
(i) the thirtieth (30th) day after the receipt by the Company of a Notice of Redemption,
or (ii) the date on which the Adjusted REIT Shares Amount is issued in exchange for such Tendered
Shares pursuant to Section 8.5(b); provided, however, that no Specified Redemption
Date shall occur until after the Final Settlement Date.

     “Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.

     “Substituted Shareholder” means a Person who is admitted as a Shareholder of the
Company pursuant to Section 11.4 hereof.

     “Tax Matters Agreement” means that certain Tax Matters Agreement, made as of the
Effective Date, by and among Equity One, Parent and LIH.

     “Tendered Shares” has the meaning set forth in Section 8.5(a) hereof.

     “Terminating Capital Transaction” means a sale or other disposition of all or
substantially all of the assets of the Company or a related series of transactions that, taken
together, result in the sale or other disposition of all or substantially all of the assets of the
Company, provided,

16

 

however, in no event shall any repayment of the EQY Participating Note constitute a
Terminating Capital Transaction.

     “Termination Date” has the meaning set forth in Section 8.5(f) hereof.

     “Transaction Documents” has the meaning set forth in Section 4.1(e) of the
Contribution Agreement.

     “Transfer” and “Transferred” and “Transferring” have the meanings set
forth in Section 11.1(a) hereof.

     “USRPI” has the meaning set forth in Section 897(c) and Section 897(g) of the Code.

     “Valuation Date” means, with respect to any Tendered Shares, the date of receipt by
the Company of a Notice of Redemption with respect to such Tendered Shares or, if such date is not
a Business Day, the first Business Day thereafter.

     “Value” means, with respect to a REIT Share on a particular date, (i) if the REIT
Shares are then listed or admitted to trading on any Nationally Recognized Securities Exchange, the
volume weighted average price (as defined under the Exchange Act) of a REIT Share for the 10
consecutive trading days ending on the trading day immediately prior to such date;
provided, however, that in calculating such average, if the Conversion Factor has
changed at any time after the commencement of such period and on or prior to the end of such
period, then the price on each trading day shall be divided by a fraction, the numerator of which
is the Conversion Factor in effect on the last day in such period, and the denominator of which is
the Conversion Factor in effect on such trading day, and (ii) if the REIT Shares are not then
listed or admitted to trading on any Nationally Recognized Securities Exchange, Value shall be
initially determined in good faith by the Board and shall be binding upon the parties hereto unless
LIH objects to such determination within ten (10) Business Days after delivery of notice of the
Value to LIH. If LIH objects within such ten (10) Business Day period and the parties cannot
mutually agree on the same, then within thirty (30) days following the particular valuation date,
the Board and LIH shall appoint an Independent Appraiser to determine the Value pursuant to a
valuation method made reasonably and in good faith by the Independent Appraiser, which valuation
method the parties hereto agree shall not take into account any liquidity discount, minority
discount or control premium. The fees and expenses associated with a determination by the
Independent Appraiser shall be borne equally by the Company and LIH; provided,
however, that if the Independent Appraiser’s determination is less than 95% of the Board’s
initial determination, the fees and expenses associated with the Independent Appraiser’s
determination shall be borne solely by LIH; provided, further, if the Independent
Appraiser’s determination is greater than 105% of the Board’s initial determination, the fees and
expenses associated with the Independent Appraiser’s determination shall be borne solely by the
Company. The Independent Appraiser’s determination of Value shall be conclusive and binding on all
parties and shall be enforceable in a court of law.

17

 

ARTICLE 2

ORGANIZATIONAL MATTERS

     2.1 Formation. The Company is a limited liability company heretofore formed and
continued pursuant to the provisions of the Act and upon the terms and subject to the conditions
set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Shareholders and the administration and termination of the Company shall be
governed by the Act. The Shares of each Shareholder shall be personal property for all purposes.

     2.2 Name. The name of the Company is EQY-CSC LLC. The Company’s business may be
conducted under any other name or names deemed advisable by the Board, including the name of
Equity One or any Affiliate thereof. The words “Company,” “L.L.C.,” “Ltd.” or similar words or
letters shall be included in the Company’s name where necessary for the purposes of complying with
the laws of any jurisdiction that so requires. The Board in its sole and absolute discretion may
change the name of the Company at any time and from time to time and shall notify the Shareholders
of such change in the next regular communication to the Shareholders.

     2.3 Registered Office and Agent; Principal Office. The address of the registered office
of the Company in the State of Delaware is located at Corporation Service Company, 2711
Centerville Road, Suite 400, City of Wilmington, Delaware 19808 and the registered agent for
service of process on the Company in the State of Delaware at such registered office is
Corporation Service Company, 2711 Centerville Road, Suite 400, City of Wilmington, Delaware 19808.
The principal office of the Company shall be c/o Equity One, Inc., 1600 N.E. Miami Gardens Drive,
North Miami Beach, Florida 33179 or such other place as the Board may from time to time designate
by notice to the Shareholders. The Company may maintain offices at such other place or places
within or outside the State of Delaware as the Board deems advisable. The registered agent and
registered office of the Company may be changed by the Board from time to time. The Board shall
promptly notify the Shareholders of any such change.

     2.4 Term. The term of the Company commenced on the Effective Date and shall continue
indefinitely unless the Company is dissolved sooner pursuant to the provisions of ARTICLE 13
hereof or as otherwise provided by law.

     2.5 Application of the Act. Except as expressly provided in this Agreement, the rights
and liabilities of the Shareholders shall be as provided in the Act. In the event of any
inconsistency between any terms and conditions contained in this Agreement and any non-mandatory
provisions of the Act, the terms of this Agreement shall govern.

     2.6 UCC Article 8 Election. All Shares shall be securities within the meaning of, and
governed by, (i) Article 8 of the Delaware Uniform Commercial Code and (ii) Article 8 of the
Uniform Commercial Code of any other applicable jurisdiction.

     2.7 Certificates. Shares in the Company shall be certificated.

     2.8 Consent of the LIH Shareholders. Notwithstanding anything to the contrary set forth
in the Agreement, but except with respect to Section 7.3(a)(ii), the Consent of the LIH
Shareholders shall no longer be required in any respect upon the earlier of (a) the Termination

18

 

Date or (b) the date on which the LIH Shareholders, in the aggregate, hold fewer than
1,135,784 Class A Shares.

ARTICLE 3

PURPOSE

     3.1 Purpose and Business. The principal business activity and purpose of the Company is
(i) to acquire, improve, develop, lease, maintain, own, operate, manage, mortgage, hold, sell,
exchange and otherwise deal in and with the assets of the Company; (ii) to enter into any
partnership, joint venture or similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing; and (iii) to do anything necessary or
incidental to the foregoing, and to otherwise conduct any business that may be lawfully conducted
by a limited liability company organized pursuant to the Act; provided, however,
that such business shall be limited to and conducted in such a manner as to permit Equity One and
CapCo to at all times be classified as REITs, unless Equity One or CapCo, as the case may be,
ceases to qualify as a REIT for reasons other than the conduct of the business of the Company.

     3.2 Powers.

          (a) The Company shall be empowered to do any and all acts and things necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of the Company.

          (b) Notwithstanding any other provision in this Agreement, the Board shall cause the Company
not to take, or to refrain from taking, any action that, in the judgment of Equity One, in its sole
and absolute discretion, (i) could adversely affect the ability of Equity One or CapCo to continue
to qualify as a REIT or (ii) could violate any law or regulation of any governmental body or agency
having jurisdiction over Equity One, its securities or the Company or unless, in any such case,
such action (or inaction) under clause (i) or clause (ii) above shall have been specifically
consented to by Equity One.

     3.3 Representations and Warranties by the Shareholders. Each Shareholder (including,
without limitation, each Substituted Shareholder as a condition to becoming a Substituted
Shareholder) represents, warrants and agrees that it has acquired and continues to hold its
interest in the Company for its own account for investment purposes only and not for the purpose
of, or with a view toward, the resale or distribution of all or any part thereof in violation of
applicable laws, and not with a view toward selling or otherwise distributing such interest or any
part thereof at any particular time or under any predetermined circumstances in violation of
applicable laws. Each Shareholder further represents and warrants that it is a sophisticated
investor, able and accustomed to handling sophisticated financial matters for itself, particularly
real estate investments, and that it has a sufficiently high net worth that it does not anticipate
a

19

 

need for the funds that it has invested in the Company in what it understands to be a highly
speculative and illiquid investment.

ARTICLE 4

CAPITAL CONTRIBUTIONS

     4.1 Capital Contributions of the Shareholders.

          (a) The Shareholders have on the Effective Date made Capital Contributions to the Company as
set forth on Exhibit A to this Agreement, as the same may be amended from time to time by
the Board to the extent necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Shares, or similar events having an
effect on a Shareholder’s ownership of Shares.

          (b) To the extent the Company acquires any property (or an indirect interest therein) by the
merger of any other Person into the Company, or with or into a Subsidiary of the Company in a
triangular merger, Persons who receive Shares in exchange for their interests in the Person merging
into the Company, or with or into a Subsidiary of the Company, shall become Shareholders and shall
be deemed to have made Capital Contributions as provided in the applicable merger agreement (or if
not so provided, as determined by the Board in its sole and absolute discretion) and as set forth
on Exhibit A, as amended to reflect such deemed Capital Contributions.

          (c) Except as provided by law or in Section 4.2 or 10.4 hereof, the Shareholders shall have no
obligation or, except with the prior written consent of the Board, right to make any additional
Capital Contributions or loans to the Company.

     4.2 Issuances of Additional Shares.

          (a) General. The Board is hereby authorized to cause the Company to issue additional
Class B Shares for any Company purpose, at any time or from time to time, to Equity One or any
Affiliate of Equity One for cash and to admit such Persons as Additional Shareholders. Upon the
issuance of any additional Class B Shares, the Board shall amend Exhibit A and the books
and records of the Company as appropriate to reflect such issuance and the Percentage Interests of
the Shareholders shall be adjusted to reflect the issuance of such additional Class B Shares. The
Company may not, without the Consent of the LIH Shareholders, issue any Shares other than Class B
Shares issued to Equity One or any Affiliate of Equity One for cash.

          (b) No Preemptive Rights. No Person, including, without limitation, any Shareholder
or Assignee, shall have any preemptive, preferential, participation or similar right or rights with
respect to (i) additional Capital Contributions or loans to the Company or (ii) sale of any Shares.

     4.3 No Interest; No Return. No Shareholder shall be entitled to interest on its Capital
Contribution or on such Shareholder’s Capital Account. Except as provided herein or by law, no
Shareholder shall have any right to demand or receive the return of its Capital Contribution from
the Company.

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ARTICLE 5

DISTRIBUTIONS

     5.1 Distributions of Available Cash.

          (a) On each Company Distribution Date, the Company shall distribute to the Persons who were
Holders of Class A Shares on the relevant Company Record Date, pro rata in proportion to their
Cumulative Unpaid Class A Distributions, an amount equal to the lesser of (i) the Available Cash
(if any) generated by the Company during the calendar quarter that ended, or (ii) the Cumulative
Unpaid Class A Distributions for all Class A Shares.

          (b) If the Board so determines, in its sole discretion, the Company may also declare, and
distribute on a Company Distribution Date, an additional amount up to the excess of (i) such
Available Cash, over the amounts distributable pursuant to Section 5.1(a), in each case, as
follows: (x) first, to the Holders of the Class B Shares on the relevant Company Record Date, pro
rata in proportion to their Cumulative Unpaid Class B Distributions until the Cumulative Unpaid
Class B Distributions of all Holders of Class B Shares is reduced to zero; and (y) thereafter,
16.667% to the Holders of Class A Shares, pro rata in proportion to their Class A Shares, and
83.333% to the Holders of Class B Shares, pro rata in proportion to their Class B Shares.

          (c) Notwithstanding Section 5.1(a) and (b), if a Company Distribution Date is not the last day
of a calendar quarter, distributions of Available Cash pursuant to this Section 5.1 shall be paid
immediately prior to such Company Distribution Date.

     5.2 Distributions Upon Liquidation. Net proceeds from a Terminating Capital Transaction,
and any other cash received or reductions in reserves made after commencement of the liquidation
of the Company, shall be distributed to the Shareholders in accordance with Section 13.2 hereof.

     5.3 Distributions of Disposition Proceeds. In the event of a disposition of any assets
(other than as part of a Terminating Capital Transaction), the Board shall cause the Company to
(x) reinvest the Disposition Proceeds therefrom to the extent the Board elects to do so and in the
amount determined by the Board to be appropriate, in its sole discretion, and (y) distribute the
balance of such Disposition Proceeds not so reinvested, as follows:

          (a) first, to the Holders of Class A Shares, pro rata in proportion to their Cumulative Unpaid
Class A Distributions until the Cumulative Unpaid Class A Distributions of all Holders of Class A
Shares is reduced to zero; and

          (b) thereafter, to the Holders of Class A Shares, pro rata in proportion to their Class A
Shares.

     5.4 No Right to Distributions in Kind. No Shareholder shall be entitled to demand
property other than cash in connection with any distributions by the Company.

     5.5 Right to Offset Distributions. Notwithstanding anything herein to the contrary, to
the extent it has been finally determined, in accordance with the Contribution Agreement or

21

 

the Tax Matters Agreement, that one or more holders of Shares are entitled to be indemnified
or reimbursed by one or more other holders of Shares, and the amount has become due and payable
under either such agreement, the Board shall have the right to offset such amount against amounts
due on account of distributions next becoming payable under this ARTICLE 5, by means of a
corresponding decrease in the distributions payable to the holders who are liable and a
corresponding increase in the distributions payable to the applicable holders who are entitled to
be paid.

     5.6 Limitation on Certain Class A Distributions. The aggregate distributions for any
Class A Share with respect to a Company Year that begins on or before the second anniversary of
the Effective Date may not exceed the amounts described in Treasury Regulations Sections
1.707-4(a)(3)(ii) and 1.707-4(b)(2).

     5.7 Reduction of LIH Distributions for CapCo Excise Tax.

          (a) Notwithstanding the foregoing provisions of this ARTICLE 5, the amount that (but for this
Section 5.7(a)) would otherwise be distributable in respect of Class A Shares held by the LIH
Shareholder(s) pursuant to Section 5.1(a) shall be reduced by the amount of the CapCo Excise Tax.
Such reduction shall take place in the taxable year in which the CapCo Excise Tax is actually paid
by CapCo. The amount of such reduction shall be treated as having been distributed to the LIH
Shareholder(s), pursuant to Section 5.1(a) at the time of such reduction for purposes of the
relevant provisions of this Agreement (other than those relating to the maintenance of Capital
Accounts and the allocation of Net Income, Net Loss or items of Net Income or Net Loss) and shall
increase the amount of Available Cash distributable to holders of Class B Shares.

          (b) If the amount distributable in respect of Class A Shares held by the LIH Shareholder(s) is
reduced under Section 5.7(a), CapCo shall, and Equity One shall cause CapCo to, deliver to the LIH
Shareholder(s) a copy of the tax return with respect to which the applicable CapCo Excise Tax is
payable. Such tax return shall be delivered to the LIH Shareholder(s) within five Business Days
after request therefor by the LIH Shareholder(s).

          (c) Notwithstanding the foregoing provisions of this ARTICLE 5, if CapCo receives any refund
of, or credit with respect to, any CapCo Excise Tax (an “Excise Tax Refund”), the amount
that (but for this Section 5.7(c)) would otherwise be distributable in respect of Class A Shares
held by the LIH Shareholder(s) shall be increased by the amount of the Excise Tax Refund.

          (d) CapCo shall, and Equity One shall cause CapCo to, use commercially reasonable efforts to
mitigate the amount of any CapCo Excise Tax imposed on CapCo in connection with any sale of any
property owned directly or indirectly by CapCo, including (without limitation) by structuring
prospective sales as like kind exchanges within the meaning of Section 1031 of the Code;
provided, however, that no provision of this Agreement or any other Transaction
Document shall require CapCo to (A) dispose of any asset in a like kind exchange if CapCo
determines in good faith that a fully taxable disposition would produce materially greater
after-tax proceeds to CapCo or (B) make the “required distribution” within the meaning of Section
4981 of the Code with respect to its 2011 taxable year if, during such year,

22

 

CapCo or one or more of its direct or indirect subsidiaries (other than a taxable REIT
subsidiary) engaged in a sale, exchange, or other disposition of any asset, including a sale or
exchange that will be reported as qualifying in its entirety for tax-deferred treatment. Equity
One agrees to confer with LIH before CapCo engages in an asset transfer that would be taxable in
whole or in part if such transaction would result in any CapCo Excise Tax. In any event, Equity One
agrees to notify LIH as promptly as practicable after determining that any CapCo Excise Tax will be
or has been incurred and the amount thereof and the facts pertaining thereto.

ARTICLE 6

ALLOCATIONS

     6.1 Allocations for Capital Account Purposes. Except as provided in Section 6.4, the
Company’s Net Income and Net Loss shall be allocated among the Shareholders in each Company Year
(or portion thereof) as provided herein below:

          (a) Net Income. After making allocations pursuant to Section 6.2 and Section 6.6, as
applicable, any remaining Net Income shall be allocated in the following manner and order of
priority:

               (i) First, to the Holders of Class A Shares, pro rata in proportion to, and to the extent
that, the amount of cumulative Net Loss previously allocated to such Holders exceeds the cumulative
amount of Net Income previously allocated to such Holders pursuant to this Section 6.1(a)(i);

               (ii) Second, to the Holders of Class B Shares, pro rata in proportion to, and to the extent
that, the amount of cumulative Net Loss previously allocated to such Holders exceeds the cumulative
amount of Net Income previously allocated to such Holders pursuant to this Section 6.1(a)(ii);

               (iii) Third, to the Holders of Class A Shares in an amount that will cause such allocation,
together with the amount of all previous allocations of Net Income pursuant to this Section
6.1(a)(iii), to be in proportion to, and to the extent of, cumulative distributions received by
such Holders pursuant to Sections 5.1 and 5.3(a) with respect to their Class A Shares for the
current and all prior taxable years;

               (iv) Fourth, to the Holders of Class B Shares in an amount that will cause such allocation,
together with the amount of all previous allocations of Net Income pursuant to this Section
6.1(a)(iv), to be in proportion to, and to the extent of, cumulative distributions received by such
Holders pursuant to Section 5.1 with respect to their Class B Shares for the current and all prior
taxable years; and

               (v) Fifth, with respect to all other Net Income, 16.667% to the holders of Class A Shares and
83.333% to the Holders of Class B Shares.

          (b) Net Loss. After making allocations pursuant to Section 6.2 and Section 6.6, as
applicable, any remaining Net Loss shall be allocated in the following manner and order of
priority, subject, however, to the limitation set forth in the first sentence of Section 6.2(d):

23

 

               (i) First, to the Holders of Class B Shares, pro rata in proportion to the positive balance,
if any, of their Economic Capital Accounts with respect to their Class B Shares, until such
Economic Capital Accounts are reduced to zero; and

               (ii) Thereafter, to the Holders of Class A Shares, pro rata in proportion to their Class A
Shares until such Economic Capital Accounts are reduced to zero.

     6.2 Additional Allocation Provision. Prior to making allocations pursuant to Section
6.1, the following regulatory allocations shall be made if and to the extent applicable, as
determined by the Board:

          (a) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section
1.704-2(f), notwithstanding the provisions of Section 6.1 hereof, or any other provision of this
ARTICLE 6, if there is a net decrease in Company Minimum Gain during any Company Year, each
Shareholder shall be specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Shareholder’s share of the net decrease in
Company Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts required to be
allocated to each Shareholder pursuant thereto. The items to be allocated shall be determined in
accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.2(a) is
intended to qualify as a “minimum gain chargeback” within the meaning of Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.

          (b) Shareholder Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(i)(4) or in Section 6.2(a) hereof, if there is a net decrease in Shareholder
Minimum Gain attributable to a Shareholder Nonrecourse Debt during any Company Year, each
Shareholder who has a share of the Shareholder Minimum Gain attributable to such Shareholder
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Company income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Shareholder’s share of the net decrease in Shareholder Minimum
Gain attributable to such Shareholder Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Shareholder pursuant thereto. The items
to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.2(b) is intended to qualify as a “chargeback of partner nonrecourse
debt minimum gain” within the meaning of Regulations Section 1.704-2(i) and shall be interpreted
consistently therewith.

          (c) Nonrecourse Deductions and Shareholder Nonrecourse Deductions. Any Nonrecourse
Deductions for any Company Year shall be specially allocated to the Holders of Class A Shares pro
rata in accordance with their Class A Shares. Any Shareholder Nonrecourse Deductions for any
Company Year shall be specially allocated to the Shareholder(s) who bears the economic risk of loss
with respect to the Shareholder Nonrecourse Debt to which such Shareholder Nonrecourse Deductions
are attributable, in accordance with Regulations Section 1.704-2(i).

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          (d) Limitation on Losses; Qualified Income Offset. Net Loss (or items thereof) shall
not be allocated to any Shareholder to the extent such allocation would cause or increase a deficit
balance in such Shareholder’s Adjusted Capital Account. If any Shareholder unexpectedly receives
an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Company income and gain shall be specially allocated, in accordance with
Regulations Section 1.704-1(b)(2)(ii)(d), to such Shareholder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, any deficit in the Adjusted Capital Account
of such Shareholder as quickly as possible, provided that an allocation pursuant to this Section
6.2(d) shall be made if and only to the extent that such Shareholder would have an Adjusted Capital
Account deficit after all other allocations provided in this ARTICLE 6 have been tentatively made
as if this Section 6.2(d) were not in the Agreement. It is intended that this Section 6.2(d)
qualify and be construed as a “qualified income offset” within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

          (e) Section 754 Adjustment. To the extent that an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of
a distribution to a Shareholder in complete liquidation of its interest in the Company, the amount
of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain
or loss shall be specially allocated to the Shareholders in accordance with their interests in the
Company in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Shareholder(s) to whom such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

          (f) Allocation of Excess Nonrecourse Liabilities. For purposes of determining a
Shareholder’s proportional share of the “excess nonrecourse liabilities” of the Company within the
meaning of Regulations Section 1.752-3(a)(3), each Shareholder’s respective interest in Company
profits shall be equal to such Shareholder’s proportionate ownership of Class B Shares.

     6.3 Tax Allocations.

          (a) General. Except as otherwise provided in this Section 6.3, for income tax
purposes under the Code and the Regulations, each Company item of income, gain, loss and deduction
(collectively, “Tax Items”) shall be allocated among the Shareholders in the same manner as
its correlative item of “book” income, gain, loss or deduction is allocated pursuant to the
foregoing provisions of this ARTICLE 6.

          (b) Section 704(c) Allocations. Notwithstanding Section 6.3(a) hereof, Tax Items with
respect to Property that is contributed to the Company with a Gross Asset Value that varies from
its basis in the hands of the contributing Shareholder immediately preceding the date of
contribution shall be allocated among the Shareholders for income tax purposes pursuant to
Regulations promulgated under Code Section 704(c) so as to take into account such variation. The
Company shall account for such variation under any method approved under Code

25

 

Section 704(c) and the applicable Regulations as chosen by the Board. In the event that the Gross
Asset Value of any Company asset is adjusted pursuant to subsection (b) of the definition of “Gross
Asset Value” (provided in Section 1.1 hereof), subsequent allocations of Tax Items with respect to
such asset shall take account of the variation, if any, between the adjusted basis of such asset
and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable
Regulations and using the method chosen by the Board. Allocations pursuant to this Section 6.3(b)
are solely for purposes of Federal, state and local income taxes and shall not affect, or in any
way be taken into account in computing, any Shareholder’s Capital Account or share of Net Income,
Net Loss, or any other items or distributions pursuant to any provision of this Agreement.

     6.4 Allocations Upon Occurrence of a Liquidating Event. If a Liquidating Event occurs in
a Company taxable year, Net Income or Net Loss (or, if necessary, separate items of income, gain,
loss and deduction) for such taxable year and any prior taxable years (to the extent permitted by
Section 761(c) of the Code) shall be allocated among the Shareholders in such amounts as will
cause, to the greatest extent possible, the distributions to the Shareholders pursuant to Section
13.2(a)(iv) to be made in accordance with the following priority:

          (a) first, to the Holders of Class A Shares that have Redemption Rights pursuant to Section
8.5 in an amount equal to the Adjusted Cash Amount that would apply with respect to the Class A
Shares held by such Holders if such Shares were Tendered Shares as of the date of the Liquidation
Event; provided, that if a Notice of Redemption has not been delivered on or before the
Termination Date, the Adjusted Cash Amount for purposes of this clause shall be limited to the
Capital Account balance associated with such Class A Shares upon issuance; and

          (b) second, to the Holders of Class A Shares that do not have Redemption Rights pursuant to
Section 8.5 in an amount equal to the Capital Account balance associated with such Class A Shares
upon issuance; and

          (c) third, to the Holders of the Class B Shares, in the amount of and pro rata in proportion
to their Cumulative Unpaid Class B Distributions, the Cumulative Unpaid Class B Distributions of
all Holders of Class B Shares; and

          (d) fourth, to the Holders of Class B Shares, in the amount of and pro rata in proportion to
their Cumulative Unpaid Class B Share Values, the Cumulative Unpaid Class B Share Values of all
Holders of Class B Shares; and

          (e) thereafter, 16.667% to the Holders of Class A Shares, pro rata in proportion to their
Class A Shares, and 83.333% to the Holders of Class B Shares, pro rata in proportion to their Class
B Shares.

Notwithstanding the foregoing provisions of this Section 6.4, in connection with any Liquidating
Event following a Privatization Transaction, the Board shall be permitted to make such allocations
as may be reasonably necessary or appropriate to correspond to the amounts distributable to the
Shareholders following such Privatization Transaction, it being understood that the Capital Account
balance of the LIH Shareholder, to the extent possible, shall be equal to

26

 

the consideration to which such LIH Shareholder is entitled following such Privatization
Transaction.

     6.5 Allocations Upon Adjustment of Gross Asset Value. If the Gross Asset Values of the
Company’s assets are adjusted in accordance with subparagraph (b) of the definition of Gross Asset
Value, after all other items of income or loss are allocated pursuant to Section 6.1, 6.2 and 6.3,
such adjustments shall be allocated in accordance with Section 6.4.

     6.6 Allocations With Respect to Disposition Proceeds. Gain attributable to a disposition
giving rise to a distribution of Disposition Proceeds under Section 5.3(b) shall be allocated to
the Holders of Class A Shares, pro rata in proportion to the Class A Shares, to the extent of the
lesser of the amount of such gain or the amount of such distribution. Losses attributable to
dispositions shall be allocated to the Holders of Class A Shares, pro rata in proportion to the
Class A Shares, to the extent of the cumulative gain previously allocated pursuant to this Section
6.6.

ARTICLE 7

MANAGEMENT AND OPERATIONS OF BUSINESS

     7.1 Management.

          (a) The business and affairs of the Company shall be managed under the direction of a board of
managers (the “Board”), who shall be the managers of the Company. The Board shall consist
of three (3) individuals (each, a “Board Member”) elected by the holders of a majority of
the Class A Shares of the Company. Each Board Member shall be a “manager” within the meaning of
the Act. The Board may at any time increase the size of the Board. The names of the individuals
who shall serve as the initial Board Members are set forth on Exhibit C. Any vacancy on
the Board (including a vacancy caused by an increase in the size of the Board) shall be filled by
the holders of a majority of the Class A Shares. Any Board Member may be removed at any time, with
or without cause, by the holders of a majority of the Class A Shares. The Company may select
natural persons to be designated as officers of the Company with such titles as “president,” “vice
president,” “secretary,” or “treasurer” or titles the Board in its sole discretion may determine.

          (b) Any action required to be taken by the Board, or any action which may be taken by the
Board, may be taken without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by not less than a majority of the Board Members.

          (c) Except as otherwise expressly provided in this Agreement all management powers over the
business and affairs of the Company are and shall be exclusively vested in the Board, and no
Shareholder shall have any right to participate in or exercise control or management power over the
business and affairs of the Company. In addition to the powers now or hereafter granted a manager
of a limited liability company under applicable law or that are granted to the Board under any
other provision of this Agreement, the Board, subject to the other provisions hereof including,
without limitation, Section 3.1, Section 3.2, and Section 7.3, shall have full power and authority
to do all things deemed necessary or desirable by it to conduct the

27

 

business of the Company, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without limitation:

               (i) the making of any expenditures, the lending or borrowing of money or selling of assets
(including, without limitation, making prepayments on loans), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or
other lien or encumbrance on the Company’s assets) and the incurring of any obligations that the
Board deems necessary for the conduct of the activities of the Company;

               (ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of the
Company;

               (iii) subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other
disposition of any, all or substantially all of the assets (including the goodwill) of the Company
(including, but not limited to, the exercise or grant of any conversion, option, privilege or
subscription right or any other right available in connection with any assets at any time held by
the Company) or the merger, consolidation, reorganization or other combination of the Company with
or into another entity;

               (iv) the mortgage, pledge, encumbrance or hypothecation of any assets of the Company, the
assignment of any assets of the Company in trust for creditors or on the promise of the assignee to
pay the debts of the Company, the use of the assets of the Company (including, without limitation,
cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that the
Board sees fit, including, without limitation, the financing of the operations and activities of
the Company or any of the Company’s Subsidiaries, the lending of funds to other Persons (including,
without limitation, Equity One and/or the Company’s Subsidiaries) and the repayment of obligations
of the Company, its Subsidiaries and any other Person in which the Company has an equity
investment, and the making of capital contributions to and equity investments in the Company’s
Subsidiaries;

               (v) the management, operation, leasing, landscaping, repair, alteration, demolition,
replacement or improvement of any real property or improvements owned by the Company or its
Subsidiaries;

               (vi) the holding, managing, investing and reinvesting cash and other assets of the Company
or any of its Subsidiaries and the collection and receipt of revenues, rents and income of the
Company or any of its Subsidiaries;

               (vii) the collection and receipt of revenues and income of the Company or any of its
Subsidiaries;

               (viii) the negotiation, execution and performance of any contracts, including leases
(including ground leases), easements, management agreements, rights of way and other
property-related agreements, conveyances or other instruments that the Board considers useful or
necessary to the conduct of the Company’s operations or the implementation

28

 

of the Board’s powers under this Agreement, including contracting with contractors,
developers, consultants, governmental authorities, accountants, legal counsel, other professional
advisors and other agents and the payment of their expenses and compensation, as applicable, out of
the Company’s assets;

               (ix) the distribution of Company cash or other Company assets in accordance with this
Agreement;

               (x) the selection and dismissal of employees of the Company (if any) and agents, outside
attorneys, accountants, consultants and contractors of the Company and the determination of their
compensation and other terms of employment or hiring;

               (xi) the maintenance of such insurance (including, without limitation, directors and
officers insurance) for the benefit of the Company, any of its Subsidiaries and/or the Shareholders
(including, without limitation, Equity One) as the Board deems necessary or appropriate;

               (xii) the formation of, or acquisition of an interest in, and the contribution of property
to, any further limited or general partnerships, limited liability companies, joint ventures or
other relationships that it deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to, any Subsidiary and any other Person in which
Equity One has an equity investment from time to time);

               (xiii) the control of any matters affecting the rights and obligations of the Company or
any of its Subsidiaries, including the settlement, compromise, submission to arbitration or any
other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or
damages, due or owing to or from the Company or any of its Subsidiaries, the commencement or
defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of
dispute resolution, and the representation of the Company in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of
legal expense, and the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;

               (xiv) the undertaking of any action in connection with the Company’s direct or indirect
investment in any Subsidiary or any other Person (including, without limitation, the contribution
or loan of funds by the Company to such Persons);

               (xv) the determination of the fair market value of any Company property distributed in
kind using such reasonable method of valuation as the Board may adopt; provided,
however, that such methods are otherwise consistent with the requirements of this
Agreement;

               (xvi) the enforcement of any rights against any Shareholder pursuant to representations,
warranties, covenants and indemnities relating to such Shareholder’s contribution of property or
assets to the Company;

29

 

               (xvii) the exercise, directly or indirectly, through any attorney-in-fact acting under a
general or limited power of attorney, of any right, including the right to vote, appurtenant to any
asset or investment held by the Company;

               (xviii) the exercise of any of the powers of the Board enumerated in this Agreement on
behalf of or in connection with any Subsidiary of the Company or any other Person in which the
Company has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

               (xix) the exercise of any of the powers of the Board enumerated in this Agreement on
behalf of any Person in which the Company does not have an interest, pursuant to contractual or
other arrangements with such Person;

               (xx) the making, execution and delivery of any and all deeds, leases, notes, deeds to
secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments
or agreements in writing necessary or appropriate in the judgment of the Board for the
accomplishment of any of the powers of the Board enumerated in this Agreement;

               (xxi) the issuance of additional Shares in connection with Capital Contributions by
Additional Shareholders and additional Capital Contributions by Shareholders, including, without
limitation, Equity One, pursuant to ARTICLE 4 hereof;

               (xxii) the distribution of cash to acquire Class A Shares in connection with a redemption
under Section 8.5 hereof;

               (xxiii) an election to dissolve the Company pursuant to Section 13.1 hereof; and

               (xxiv) to exercise all other ancillary rights or duties on behalf of the Company and/or
any of its Subsidiaries as necessary to implement any of the powers contained herein and to
exercise any and all other and additional rights and powers in respect of the assets of the Company
that an owner thereof could lawfully exercise.

          (d) Each of the Shareholders agrees that, except as provided in Section 7.3 hereof, the
Board is authorized to execute, deliver and perform the above-mentioned agreements and transactions
on behalf of the Company without any further act, approval or vote of the Shareholders or any other
Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation.
The execution, delivery or performance by the Board or the Company of any agreement authorized or
permitted under this Agreement shall not constitute a breach by the Board of any duty that the
Board may owe the Company or the Shareholders or any other Persons under this Agreement or of any
duty stated or implied by law or equity so long as such execution, delivery or performance has been
undertaken by the Board in good faith.

          (e) At all times from and after the date hereof, the Board may cause the Company to obtain
and maintain (i) casualty, liability and other insurance on the Properties of the Company and (ii)
liability insurance for the Indemnitees hereunder.

30

 

          (f) At all times from and after the date hereof, the Board may cause the Company to
establish and maintain working capital and other reserves in such amounts as the Board, in its sole
and absolute discretion, deems appropriate and reasonable from time to time.

          (g) In exercising its authority under this Agreement, the Board may, but shall be under no
obligation to take into account the tax consequences to any Shareholder of any action taken by it.
Except as set forth in the Tax Matters Agreement, the Company shall not have liability to a
Shareholder under any circumstances as a result of an income tax liability incurred by such
Shareholder as a result of an action (or inaction) by the Board pursuant to its authority under
this Agreement and in accordance with the terms hereof.

     7.2 Certificate of Formation. To the extent that such action is determined by the Board to be
reasonable and necessary or appropriate, the Board shall file amendments to and restatements of the
Certificate and do all the things to maintain the Company as a limited liability company (or an
entity in which the Shareholders have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or any other jurisdiction, in which the Company may
elect to do business or own property. The Board shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any Shareholder. The Board
shall use all reasonable efforts to cause to be filed such other certificates or documents as may
be reasonable and necessary or appropriate for the formation, continuation, qualification and
operation of a limited liability company (or an entity in which the Shareholders have limited
liability to the extent provided by applicable law) in the State of Delaware and any other state,
or the District of Columbia or other jurisdiction, in which the Company may elect to do business or
own property.

     7.3 Restrictions on the Board’s Authority.

          (a) The Board may not take any action in contravention of an express prohibition or
limitation of this Agreement, or fail to take any action expressly required under this Agreement,
without the Consent of the LIH Shareholders, and may not:

               (i) take any action that would make it impossible to carry on the ordinary business of the
Company, except as otherwise provided in this Agreement; or

               (ii) perform any act that would subject a Shareholder to liability except as provided
herein or under the Act.

          (b) The Board shall not, without the prior Consent of the LIH Shareholders, undertake or
permit any officer, employee, agent or other representative to undertake, on behalf of the Company,
any of the following actions or enter into any transaction that would have the effect of such
transactions:

               (i) make a general assignment for the benefit of creditors or appoint or acquiesce in the
appointment of a custodian, receiver or trustee for all or any part of the assets of the Company;

               (ii) institute any proceeding for bankruptcy on behalf of the Company;

31

 

               (iii) take any action to liquidate or dissolve the Company prior to the Termination Date;

               (iv) except as provided in Sections 4.2, 11.4 and 12.1 hereof, admit into the Company any
Shareholder;

               (v) permit the Company to incur any Debt or grant any lien, mortgage or encumbrance
affecting its assets; provided, however that in no event shall any Subsidiary be
prohibited from incurring any Debt or granting any lien, mortgage or encumbrance affecting the
assets of such Subsidiary;

               (vi) borrow money from Equity One or an Affiliate of Equity One; provided,
however in no event shall any Subsidiary of the Company be prohibited from borrowing money
from Equity One or any of its Affiliates pursuant to an Equity One Subsidiary Loan;

               (vii) permit the prepayment of the EQY Participating Note, except as permitted under the
EQY Participating Note; provided, however, that the Consent of the LIH Shareholders
shall not be required to permit the prepayment of the EQY Participating Note at any time after the
tenth (10th) Business Day after the Company’s receipt of a Notice of Redemption that has
not been withdrawn pursuant to Section 8.5(i);

               (viii) permit the modification of the EQY Participating Note in violation of Section
7.5(c); or

               (ix) agree to any Determined Property Value (as defined in the EQY Participating Note);
provided, however, that the Consent of the LIH Shareholders shall not be required
in connection with a Determined Property Value that is determined by an Appraiser (as defined in
the EQY Participating Note)) pursuant to the EQY Participating Note.

          (c) Notwithstanding Section 7.3(b) and 14.2 hereof, the Board shall have the power,
without the Consent of the Shareholders, to amend this Agreement as may be required to facilitate
or implement any of the following purposes:

               (i) to reflect the transfer of Shares or the admission, substitution or withdrawal of
Shareholders or the termination of the Company in accordance with this Agreement, and to amend
Exhibit A in connection with such transfer, admission, substitution or withdrawal;

               (ii) to reflect a change that is of an inconsequential nature or does not adversely affect
the Shareholders in any respect, or to cure any ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent with law or with the
provisions of this Agreement;

               (iii) to satisfy any requirements, conditions or guidelines contained in any order,
directive, opinion, ruling or regulation of a federal or state agency or contained in federal or
state law; and

32

 

               (iv) to reflect such changes as are reasonably necessary for Equity One to maintain its
status as a REIT, including changes which may be necessitated due to a change in applicable law (or
an authoritative interpretation thereof or a ruling of the IRS, or to satisfy the REIT
Requirements).

The Board will promptly notify the LIH Shareholders when any action is taken under this Section
7.3(c).

          (d) Notwithstanding Section 7.3(b), 7.3(c) and Section 14.2 hereof, the Board shall not
(i) amend Section 4.2(a), 7.3, 7.5, 7.8(c), 8.5, 10.3(b), 11.2 or 11.3, or ARTICLE 5, 7, 13 or 16,
or any defined term used in such Sections or Articles in a manner that affects the meaning or
operation of such Sections or Articles, or (ii) otherwise amend this Agreement in a way that
imposes or increases any liability of the LIH Shareholders.

     7.4 Reimbursement of the Board.

          (a) Except as provided in Section 7.4(b), the Board and the officers of the Company shall
not be compensated for their respective services to the Company.

          (b) The Board and the officers of the Company shall be reimbursed on a monthly basis, or
such other basis as the Board may determine in its sole and absolute discretion, for all
out-of-pocket expenses incurred by the Board and the officers of the Company with respect to the
operation of the Company’s business or for the benefit of the Company. Such reimbursement shall be
in addition to any reimbursement made as a result of indemnification pursuant to Section 7.6.

     7.5 Transactions with Affiliates.

          (a) Except as expressly permitted by this Agreement, neither the Company nor any of its
Subsidiaries shall sell, transfer or convey any property to, purchase any property from, make any
loan to or investment in, incur Debt owed to, or issue securities to Equity One or any of its
Affiliates (other than the Company or any of its Subsidiaries), directly or indirectly, or enter
into any other transaction with Equity One or any of its Affiliates (other than the Company or any
of its Subsidiaries) except pursuant to transactions that are on terms and conditions that are fair
and reasonable for the Company and its Subsidiaries and no less favorable to the Company and its
Subsidiaries than would be obtained in an arm’s length transaction with a third party;
provided, however, that any loan from the Company or any Subsidiary to Equity One
shall be permitted under this Agreement if the interest rate is equal to or greater than the
interest rate payable on Equity One’s revolving credit facility, as in effect from time to time.

          (b) Equity One and its Affiliates may perform services for the Company and/or tenants of
the Company’s or it’s Subsidiaries’ properties and shall be entitled to receive compensation for
such service that is comparable to the compensation that could be obtained in an arms length
transaction. Notwithstanding the foregoing, this Section 7.5(b) shall not impose any restrictions
on any term (including the amount of compensation) of any agreement between the Company and any of
its Subsidiaries or any agreement among Subsidiaries of the Company.

33

 

          (c) Notwithstanding any other provision of this Agreement, the Board shall cause the
Company to enforce the rights of the Company under the EQY Participating Note. If, within seven
(7) Business Days after the occurrence of a payment default under the EQY Participating Note (after
giving effect to any cure periods thereunder), the Board has failed to cause the Company to enforce
the payment obligations of Equity One to the Company under the EQY Participating Note, then any LIH
Shareholder shall have the right upon prior notice to the Company to enforce the payment
obligations of Equity One to the Company under the EQY Participating Note. Notwithstanding
anything to the contrary contained in this Agreement, without the Consent of the LIH Shareholders,
the Board shall not, and shall cause the Company not to, modify, alter, or amend any provision of
the EQY Participating Note, or waive any breach of any provision of the EQY Participating Note.

     7.6 Indemnification.

          (a) To the fullest extent permitted by Delaware law, the Company shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all claims, demands,
subpoenas, requests for information, formal or informal investigations, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to the Company or its
business, affairs, properties or operations, or obligations of the Company for which the Indemnitee
is or is alleged to be liable, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise. The Board is hereby authorized and empowered, on behalf of the
Company, to enter into one or more indemnity agreements consistent with the provisions of this
Section 7.6(a) in favor of any Indemnitees. Any indemnification pursuant to this Section 7.6(a)
shall be made only out of the assets of the Company, and no Shareholder (including Equity One or
any of its Affiliates) shall have any obligation to contribute to the capital of the Company, or
otherwise provide funds, to enable the Company to fund its obligations under this Section 7.6(a).
No Indemnitee shall be entitled to indemnification pursuant to this Section 7.6 with respect to any
action, suit or proceeding that relates to a claim by or dispute between or among the Shareholders
or any Affiliates of the Shareholders.

          (b) Reasonable expenses incurred by an Indemnitee who is a party to a proceeding shall be
paid or reimbursed by the Company from time to time as expenses are incurred, which the parties
acknowledge may be in advance of the final disposition of the proceeding upon receipt by the
Company of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that
the standard of conduct necessary for indemnification by the Company as authorized in Section
7.6(a) has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the
amount if it shall ultimately be determined that the standard of conduct has not been met.

          (c) The indemnification provided by this Section 7.6 shall be in addition to any other
rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to
any vote of the Shareholders, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee unless otherwise

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provided in a written agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.

          (d) The Company may, but shall not be obligated to, purchase and maintain insurance, on
behalf of any of the Indemnitees and such other Persons as the Board shall determine, against any
liability that may be asserted against or expenses that may be incurred by such Person in
connection with the Company’s activities, regardless of whether the Company would have the power to
indemnify such Person against such liability under the provisions of this Agreement.

          (e) In no event may an Indemnitee subject any of the Holders to personal liability by
reason of the indemnification provisions set forth in this Agreement.

          (f) An Indemnitee shall not be denied indemnification in whole or in part under this
Section 7.6 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

          (g) The provisions of this Section 7.6 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create any rights for the
benefit of any other Persons. Any amendment, modification or repeal of this Section 7.6 or any
provision hereof shall be prospective only and shall not in any way affect the limitations on the
Company’s liability to any Indemnitee under this Section 7.6 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.

     7.7 Exculpation.

          (a) Notwithstanding anything to the contrary set forth in this Agreement, or any
obligation or duty at law or in equity, no Board Member or any officer of the Company shall be
liable or accountable in monetary damages or otherwise to the Company, any Shareholders or any
Assignees for any act or omission (in relation to the Company, its property or the conduct of its
business or affairs, or this Agreement) taken or omitted by such Person unless the act or omission
involved fraud or willful misconduct by such Person or constituted a violation of the Delaware
implied contractual covenant of good faith and fair dealing on the part of such Person.

          (b) Notwithstanding anything to the contrary in this Agreement, no Board Member shall have
any fiduciary duties to the Company or any Shareholder, or any liability to the Company or any
Shareholder based on any claim of a breach of fiduciary duty; provided, however,
that each Board Member shall have the duty to act in accordance with the Delaware implied
contractual covenant of good faith and fair dealing. The provisions of this Agreement, to the
extent that they restrict or eliminate the duties (including fiduciary duties) and liabilities of
Board Members otherwise existing at law or in equity, are agreed by the Shareholders to replace
such other duties and liabilities of the Board Members.

          (c) The Board may exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or through

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employees or agents of the Company. The Board shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the Board in good faith.

          (d) Any amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on any Indemnitee’s
liability to the Company and the Shareholders under this Section 7.7 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.

          (e) Whenever in this Agreement the Board is permitted or required to make a decision (i)
in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, the
Board shall be entitled to consider only such interests and factors as it desires and shall have no
duty or obligation to give any consideration to any particular interest or factors affecting the
Company or the Shareholders or any of them, or (ii) in its “good faith” or under another expressed
standard, the Board shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement or any other agreement contemplated herein or by
relevant provisions of law or in equity or otherwise. The Board’s “sole discretion” and
“discretion” under this Agreement shall be exercised in good faith.

     7.8 Other Matters Concerning the Board.

          (a) The Board may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order,
bond, debenture or other paper or document believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties.

          (b) The Board may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers, architects, engineers, environmental consultants and other
consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon
the opinion of such Persons as to matters that the Board reasonably believe to be within such
Person’s professional or expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such opinion.

          (c) Notwithstanding any other provision of this Agreement, the Board may take any action
(including amending this Agreement), or refrain from acting, in the good faith belief that such
action or omission is necessary in order for Equity One to continue to qualify as a REIT or to
permit Equity One’s counsel to render a customary “will” level REIT qualification opinion for
Equity One, provided that the Board delivers to LIH a certificate specifying what actions (or
failures to act), it intends to take (or fail to take) in reliance upon this Section 7.8(c);
provided, however, that without the Consent of the LIH Shareholders, the Board
shall not take any action otherwise expressly prohibited under this Agreement, or fail to take any
action otherwise expressly required under this Agreement, unless the Board has received a written
opinion from a nationally recognized law firm, and provided a copy to LIH, to the effect that such
action or failure to act is necessary for Equity One to continue to qualify as a REIT or to permit
Equity One’s counsel to render a customary “will” level REIT qualification opinion for Equity One;
provided, further, that in such event, the Company and Equity One shall jointly and

36

 

severally indemnify the LIH Shareholders, on a fully grossed-up, after-tax basis, for all
damages suffered by the LIH Shareholders as a result of the action or failure to act specified in
the certificate delivered to LIH, including direct, consequential, special, incidental and indirect
damages such as diminution of value and lost revenues, profits and income. In such event, the
damages suffered by the LIH Shareholders shall be calculated in a manner intended to give the LIH
Shareholders the maximum “benefit of the bargain,” with an appropriate multiplier being applied to
any loss or prospective loss of revenue, profit, income or distributions. The LIH Shareholders
shall have no obligation to mitigate any such damages.

          (d) Equity One, its Affiliates and any officer, director, member, partner, employee,
agent, trustee or stockholder of Equity One or its Affiliates shall be entitled to and may have
business interests and engage in business activities in addition to those relating to the Company,
including, without limitation, business interests and activities that are in direct competition
with the Company or that are enhanced by the activities of the Company. Neither the Company nor
any of the Shareholders or any of their respective Affiliates shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any business ventures of
Equity One or its Affiliates, and none of Equity One or its Affiliates shall have any obligation
pursuant to this Agreement or the limited liability company relationship created hereby to offer
any interest in any such business ventures to the Company, any Shareholder or any Affiliate of any
of the foregoing, even if such opportunity is of a character which, if presented to the Company,
any Shareholder or any Affiliate of any of the foregoing could be taken by such Person.

     7.9 Title to Company Assets. Title to Company assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no
Shareholder, individually or collectively with other Shareholders or Persons, shall have any
ownership interest in such Company assets or any portion thereof. Title to any or all of the
Company assets may be held in the name of the Company or one or more nominees, as the Board may
determine. All Company assets shall be recorded as the property of the Company in its books and
records, irrespective of the name in which legal title to such Company assets is held.

     7.10 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Company shall be entitled to assume that the Board has full power and
authority, without the consent or approval of any other Shareholder, or Person, to encumber, sell
or otherwise use in any manner any and all assets of the Company and to enter into any contracts on
behalf of the Company, and take any and all actions on behalf of the Company, and such Person shall
be entitled to deal with the Board as if it were the Company’s sole party in interest, both legally
and beneficially. Each Shareholder hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action of the Board in
connection with any such dealing. In no event shall any Person dealing with the Board or its
representatives be obligated to ascertain that the terms of this Agreement have been complied with
or to inquire into the necessity or expediency of any act or action of the Board or its
representatives. Each and every certificate, document or other instrument executed on behalf of
the Company by the Board or its representatives shall be conclusive evidence in favor of any and
every Person relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this

37

 

Agreement was in full force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on behalf of the Company
and (iii) such certificate, document or instrument was duly executed and delivered in accordance
with the terms and provisions of this Agreement and is binding upon the Company.

ARTICLE 8

RIGHTS AND OBLIGATIONS OF SHAREHOLDERS

     8.1 Limitation of Liability. No Shareholder shall have any liability under this Agreement
except as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof)
or under the Act.

     8.2 Management of Business. No Shareholder or Assignee shall take part in the operations,
management or control (within the meaning of the Act) of the Company’s business, transact any
business in the Company’s name or have the power to sign documents for or otherwise bind the
Company.

     8.3 Return of Capital. Except to the extent of distributions made pursuant to this Agreement
or upon termination of the Company as provided herein, no Shareholder shall be entitled to the
withdrawal or return of its Capital Contribution. Except to the extent provided in this Agreement
(including ARTICLE 5, ARTICLE 6 and ARTICLE 13), no Shareholder or Assignee shall have priority
over any other Shareholder or Assignee either as to the return of Capital Contributions or as to
profits, losses or distributions.

     8.4 Rights of Shareholders Relating to the Company.

          (a) In addition to the other rights provided by this Agreement or by the Act, each
Shareholder shall have the right, for a business purpose reasonably related to such Shareholder’s
interest as a Shareholder in the Company, upon written demand with a statement of the purpose of
such demand and at such Shareholder’s own expense (including such copying and administrative
charges as the Board may establish from time to time):

               (i) to obtain a copy of the Company’s federal, state and local income tax returns for each
Company Year;

               (ii) to obtain a current list of the name and last known business, residence or mailing
address of each Shareholder; and

               (iii) to obtain a copy of this Agreement and the Certificate and all amendments thereto,
together with executed copies of all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed.

     8.5 Redemption Right.

          (a) Except as provided in Section 8.5(e), at any time and from time to time after the
Final Settlement Date and until the Termination Date, any LIH Shareholder shall have the right
(the “Redemption Right”) (subject to the terms and conditions set forth herein) to require
the Company to redeem all or a portion of the Class A Shares held by the LIH

38

 

Shareholder (such Class A Shares being hereafter referred to as “Tendered Shares”) in
exchange for the Adjusted Cash Amount applicable to such Tendered Shares. The LIH Shareholder
shall have no right, with respect to any Class A Shares so redeemed, to receive any distributions
from the Company with a Company Record Date on or after the Specified Redemption Date. Any
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Company.
The Adjusted Cash Amount shall be payable in accordance with the LIH Shareholder’s instructions
set forth in the Notice of Redemption on or prior to the Specified Redemption Date.

          (b) Notwithstanding the provisions of Section 8.5(a) above, if an LIH Shareholder has
delivered to the Company a Notice of Redemption, then Equity One may, in its sole and absolute
discretion, elect to assume and satisfy the Company’s obligation to satisfy the Redemption Right
with respect to some or all of the Tendered Shares and acquire such Tendered Shares from the LIH
Shareholder in exchange for the Adjusted REIT Shares Amount applicable to such Tendered Shares
and, if Equity One so elects, the LIH Shareholder shall sell, as of the Specified Redemption Date,
such Tendered Shares to Equity One in exchange for the Adjusted REIT Shares Amount applicable to
such Tendered Shares as of the Specified Redemption Date. In such event, the LIH Shareholder
shall have no right to cause the Company to redeem such Tendered Shares. Equity One shall give
the LIH Shareholder written notice of its election on or before the close of business on the fifth
(5th) Business Day after the Company’s receipt of the Notice of Redemption. The REIT
Shares, if applicable, shall be delivered as duly authorized, validly issued, fully paid and
nonassessable REIT Shares and free of any pledge, lien, encumbrance or restriction, other than
those provided in the Articles of Incorporation, and the delivery of the REIT Shares shall be made
without charge to the LIH Shareholders for any stamp or other similar tax in respect of such
Shares. Notwithstanding any delay in such delivery, the LIH Shareholder shall be deemed the owner
of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date. In addition, the REIT Shares for which
the Class A Shares might be exchanged shall bear the legends contemplated by Section 8.2 of the
Equityholders Agreement and such other legends as required by the Articles of Incorporation.

          (c) In the event that (i) the Company redeems any Tendered Shares for cash as provided in
Section 8.5(a), then the Company shall be required to pay to the LIH Shareholder on the Specified
Redemption Date in addition to the Adjusted Cash Amount as provided in Section 8.5(a), an amount
in cash equal to (a) the annualized cash dividend paid on REIT Shares for the preceding year,
multiplied by (b) the Adjusted REIT Shares Amount with respect to such Tendered Shares, multiplied
by (c) a fraction, the numerator of which number is the number of days between the Specified
Redemption Date and the immediately preceding Company Record Date and the denominator of which is
three hundred sixty five (365).

          (d) As of the Effective Date, Equity One has granted to LIH a waiver of restrictions on
ownership and transfer set forth in the Articles of Incorporation in the form attached hereto as
Exhibit D.

          (e) Notwithstanding anything herein to the contrary, with respect to any redemption or
exchange for REIT Shares pursuant to this Section 8.5, the LIH Shareholder exercising its
Redemption Right shall continue to own all Tendered Shares, and be treated as a

39

 

Shareholder with respect to such Tendered Shares for all purposes of this Agreement, until
the Specified Redemption Date. For purposes of clarity, no LIH Shareholder shall have any rights
as a stockholder of Equity One with respect to the Class A Shares held by the LIH Shareholder.

          (f) The Redemption Right set forth in this Section 8.5 shall terminate on the tenth
(10th) anniversary of the Effective Date (the “Termination Date”).

          (g) The Redemption Right set forth in this Section 8.5 is personal to LIH Shareholders
and may not be transferred or assigned to any Person who is not an LIH Shareholder.

          (h) Any LIH Shareholder may elect to give a Notice of Redemption that is conditional on
closing of a Qualified Offering under the Registration Rights Agreement, in which case, if Equity
One elects to exercise its rights under 8.5(b) to acquire the Tendered Shares, the sale will be
conditional upon and occur immediately prior to the closing of the Qualified Offering.

          (i) If an LIH Shareholder exercises the Redemption Right and Equity One does not elect to
acquire all of the Tendered Shares pursuant to Section 8.5(b), then the LIH Shareholder may, at
any time within ten (10) Business Days after the Company’s receipt of the Notice of Redemption,
withdraw its exercise of the Redemption Right (and the related Notice of Redemption) by giving
written notice of such withdrawal to the Company, and the Company shall not effect the redemption
of the Tendered Shares.

ARTICLE 9

BOOKS, RECORDS, ACCOUNTING AND REPORTS

     9.1 Records and Accounting.

          (a) The Board shall keep or cause to be kept at the principal office of the Company those
records and documents required to be maintained by the Act and other books and records deemed by
the Board to be appropriate with respect to the Company’s business. Any records maintained by or
on behalf of the Company in the regular course of its business may be kept on any information
storage device, provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time.

          (b) The books of the Company shall be maintained, for financial and tax reporting
purposes, on an accrual basis in accordance with generally accepted accounting principles, or on
such other basis as the Board determines to be necessary or appropriate. To the extent permitted
by sound accounting practices and principles, the Company and the Board may operate with
integrated or consolidated accounting records, operations and principles.

          (c) The books and records of the Company shall be available for reasonable inspection by
any Shareholder during normal business hours and upon reasonable prior notice to the Board.

40

 

     9.2 Company Year. The Company Year of the Company shall be the taxable year of the Company,
which shall be the calendar year except as otherwise may be required under the Code.

ARTICLE 10

TAX MATTERS

     10.1 Preparation of Tax Returns. The Board shall arrange for the preparation and timely filing
of all returns with respect to Company income, gains, deductions, losses and other items required
of the Company for Federal and state income tax purposes. The Shareholders shall promptly provide
the Board with such information as may be reasonably requested by the Board from time to time in
connection with its preparation of such returns.

     10.2 Tax Elections. Except as otherwise provided herein, the Board shall be entitled to
determine whether to make any available election pursuant to the Code, including, but not limited
to, the election under Code Section 754 and the election of methods to use for tax allocations
under Section 6.3(b); provided, however, that the Consent of the LIH Shareholders
must be obtained with respect to any such election that would have an adverse effect on the LIH
Shareholders, other than the election under Section 754.

     10.3 Tax Matters Shareholder.

          (a) Equity One shall be the “tax matters shareholder” of the Company for Federal income
tax purposes. The tax matters shareholder shall be the person referred to in Section 6231 of the
Code. The tax matters shareholder shall receive no compensation for its services. All
third-party costs and expenses incurred by the tax matters shareholder in performing its duties as
such (including legal and accounting fees and expenses) shall be borne by the Company. Nothing
herein shall be construed to restrict the Company from engaging an accounting firm to assist the
tax matters shareholder in discharging its duties hereunder. At the request of any Shareholder,
the Board agrees to inform such Shareholder regarding the preparation and filing of any returns
and with respect to any subsequent audit or litigation relating to such returns.

          (b) The tax matters shareholder may not, without the prior Consent of the LIH
Shareholders, which may not be unreasonably withheld or delayed:

               (i) enter into any settlement with the IRS with respect to any administrative or judicial
proceedings for the adjustment of Company items required to be taken into account by a Shareholder
for income tax purposes (such administrative proceedings being referred to as a “tax audit” and
such judicial proceedings being referred to as “judicial review”), and in the settlement agreement
the tax matters shareholder may expressly state that such agreement shall bind all Shareholders,
except that such settlement agreement shall not bind any Shareholder (i) who (within the time
prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the
tax matters shareholder shall not have the authority to enter into a settlement agreement on behalf
of such Shareholder (as the case may be) or (ii) who is a “notice partner” (as defined in Code
Section 6231) or a member of a “notice group” (as defined in Code Section 6223(b)(2));

41

 

               (ii) in the event that a notice of a final administrative adjustment at the Company level
of any item required to be taken into account by a Shareholder for tax purposes (a “Final
Adjustment”) is mailed to the tax matters shareholder, seek judicial review of such Final
Adjustment, including the filing of a petition for readjustment with the United States Tax Court or
the United States Claims Court, or the filing of a complaint for refund with the District Court of
the United States for the district in which the Company’s principal place of business is located;

               (iii) intervene in any action brought by any other Shareholder for judicial review of a
Final Adjustment;

               (iv) file a request for an administrative adjustment with the IRS at any time and, if any
part of such request is not allowed by the IRS, to file an appropriate pleading (petition or
complaint) for judicial review with respect to such request;

               (v) enter into an agreement with the IRS to extend the period for assessing any tax that
is attributable to any item required to be taken into account by a Shareholder for tax purposes, or
an item affected by such item; and

               (vi) take any other action on behalf of the Shareholders or any of them in connection with
any tax audit or judicial review proceeding to the extent permitted by applicable law or
regulations.

          (c) The taking of any action and the incurring of any expense by the tax matters
shareholder in connection with any such proceeding, except to the extent required by law, is a
matter in the sole and absolute discretion of the tax matters shareholder and the provisions
relating to indemnification of the Board set forth in Section 7.6 hereof shall be fully applicable
to the tax matters shareholder in its capacity as such.

     10.4 Withholding. Notwithstanding any other provision of this Agreement, but subject to
Sections 3.1 and 3.2 of the Tax Matters Agreement, the Board is authorized to take any action that
it determines to be necessary or appropriate to cause the Company to comply with any withholding
requirements applicable to a current or former Shareholder in such Person’s capacity as a
Shareholder and established under the Code or any other U.S. federal, state or local law or foreign
law including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. Any
amount paid on behalf of or with respect to a Shareholder shall constitute a loan by the Company to
such Shareholder, which loan shall be repaid by such Shareholder within fifteen (15) days after
notice from the Board that such payment must be made unless (i) the Company withholds such payment
from a distribution which would otherwise be made to the Shareholder, (ii) the Board determines, in
its sole and absolute discretion, that such payment may be satisfied out of the available funds of
the Company which would, but for such payment, be distributed to the Shareholder or (iii) treatment
as a loan would jeopardize Equity One’s status as a REIT or otherwise be prohibited by law,
including, without limitation, Section 402 of the Sarbanes-Oxley Act of 2002 (in which case such
Shareholder shall pay such amount to the Company on or before the date the Company pays such amount
on behalf of such Shareholder). Any amounts withheld pursuant to the foregoing clauses (i), (ii)
or (iii) shall be treated as having been distributed to such Shareholder (unless, in the case of
amounts governed by clause (iii), the Shareholder timely

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pays the amount to be withheld to the Company). In the event that a Shareholder fails to pay any
amounts owed to the Company pursuant to this Section 10.4 when due, Equity One may, in its sole and
absolute discretion, elect to make the payment to the Company on behalf of such defaulting
Shareholder, and in such event shall be deemed to have loaned such amount to such defaulting
Shareholder and shall succeed to all rights and remedies of the Company as against such defaulting
Shareholder. Without limitation, in such event Equity One shall have the right to receive
distributions that would otherwise be distributable to such defaulting Shareholder until such time
as such loan, together with all interest thereon, has been paid in full, and any such distributions
so received by Equity One shall be treated as having been distributed to the defaulting Shareholder
and immediately paid by the defaulting Shareholder to Equity One in repayment of such loan. Any
amounts payable by a Shareholder hereunder shall bear interest at the lesser of (1) the base rate
on corporate loans at large United States money center commercial banks, as published from time to
time in The Wall Street Journal, plus four (4) percentage points, or (2) the maximum lawful
rate of interest on such obligation, such interest to accrue from the date such amount is due
(i.e., fifteen (15) days after demand) until such amount is paid in full. Equity One may
assign its interest in any such loan to an Affiliate. In the event that proceeds to the Company
are reduced on account of taxes withheld at the source or the Company incurs a tax liability and
such taxes (or a portion thereof) are imposed on or with respect to one or more, but not all, of
the Shareholders in the Company or if the rate of tax varies depending on the attributes of
specific Shareholders or to whom the corresponding income is allocated, the amount of the reduction
in the Company’s net proceeds shall be borne by and apportioned among the relevant Shareholders and
treated as if it were paid by the Company as a withholding obligation with respect to such
Shareholders in accordance with such apportionment. Notwithstanding any other provision of this
Agreement, any loan deemed made to a Shareholder shall be payable solely out of amounts that would
otherwise be distributed to such Shareholder. In no event may the Company, another Shareholder or
any other Person foreclose on any Shares held by a Shareholder to whom such a loan is deemed to
have been made.

     10.5 Organizational Expenses. The Board may cause the Company to elect to deduct expenses, if
any, incurred by it in organizing the Company ratably over a 180-month period as provided in
Section 709 of the Code.

ARTICLE 11

SHAREHOLDER TRANSFERS AND WITHDRAWALS

     11.1 Transfer.

          (a) The term “Transfer,” when used in this ARTICLE 11 with respect to Shares,
shall be deemed to refer to a transaction by which a Shareholder purports to assign, directly or
indirectly, all or any part of its Shares to another Person, and includes any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance, hypothecation,
mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary,
involuntary or by operation of law or otherwise; provided, however, that when the
term is used in ARTICLE 11 hereof, “Transfer” does not include any redemption of any Class A Shares
by the Company or any acquisition of Shares by Equity One pursuant to Section 8.5. The terms
“Transferred” and “Transferring” have correlative meanings.

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          (b) No Shares shall be Transferred, in whole or in part, except in accordance with the
terms and conditions set forth in this ARTICLE 11. Any Transfer or purported Transfer of Shares
not made in accordance with this ARTICLE 11 shall be null and void ab initio unless consented to in
writing by the Board.

     11.2 Transfer of Equity One’s Interest.

          (a) Prior to the Domestication Date, Equity One shall not transfer any of its Shares,
except (i) to a wholly-owned Subsidiary of Equity One, (ii) with the Consent of the LIH
Shareholders, (iii) in a Change-in-Control Transaction that satisfies the requirements of Sections
11.2(b) and (d), or (iv) in a Privatization Transaction that satisfies the requirements of Section
11.2(c).

          (b) Upon the consummation of a Change-in-Control Transaction in which all REIT Shares are
converted into, or exchanged for any combination of (i) common equity securities of a U.S.
corporation or a Maryland real estate investment trust (or other similar real estate investment
trust organized under the laws of any other state of the United States) that has elected to be
taxed as a REIT or a U.S. corporation (the “Successor Entity”) that are listed on a
Nationally Recognized Securities Exchange (“New Shares”) (irrespective of cash paid in lieu
of any fractional shares), and (ii) cash or other securities, then (x) every reference in this
Agreement to “REIT Shares” shall subsequently be deemed to be a reference to such New Shares, and
the Conversion Factor shall be adjusted by multiplying the Conversion Factor in effect immediately
prior to the consummation of such transaction by a number (which may be a fraction) equal to the
exchange ratio pursuant to which each REIT Share (or fraction thereof) is converted into a New
Share issued upon conversion, exchange or otherwise in such Change-in-Control Transaction, and (y)
upon any subsequent exercise of the Redemption Right by an LIH Shareholder, in addition to
receiving the Adjusted Cash Amount from the Company, or the Adjusted REIT Shares Amount from the
Successor Entity, with respect to the Tendered Shares, such LIH Shareholder shall be entitled to
receive from the Company or the Successor Entity, respectively, an additional cash payment equal to
the product of (1) the number of Tendered Shares and the cash consideration per REIT Share received
by holders of REIT Shares in the Change-in-Control Transaction increased at a rate per annum equal
to the annual dividend yield applicable to EQY Common Stock immediately prior to such
Change-in-Control Transaction, from the date of such Change-in-Control Transaction through the
Specified Redemption Date. If, pursuant to the terms of such Change-in-Control Transaction,
holders of REIT Shares have the right to make an election with respect to the consideration to be
received (as between New Shares and any other consideration), then the Company and the Successor
Entity shall give each of the LIH Shareholders an opportunity to make a corresponding election (at
the time of such Change-in-Control Transaction) with respect to the form of consideration to be
received by such Shareholder upon a subsequent exercise of the Redemption Right. In the event of
any such election by an LIH Shareholder, the adjustment to the Conversion Factor pursuant to clause
(x) above, and the cash payment specified in clause (y) above shall be calculated based on such
election.

          (c) Upon the consummation of a Privatization Transaction, each outstanding Class A Share
shall be immediately redeemed by the Company (which, for the avoidance of doubt, shall not require
the Consent of, or the taking of any action by, the Holders of such Class A Shares) for cash in an
amount equal to the excess of: (i) the sum of (x) the product of (1) the

44

 

value of the highest consideration per REIT Share paid in such Privatization Transaction, and
(2) the Conversion Factor in effect as of the date of the consummation of such Privatization
Transaction, and (y) the Cumulative Unpaid Class A Distribution, if any, with respect to such Share
as of the date of consummation of such Privatization Transaction, over (ii) the aggregate amount of
cash distributions paid by the Company with respect to such Class A Share pursuant to Sections
5.1(b), 5.2 or 5.3(b). Such mandatory redemption shall be without prejudice to the rights of the
LIH Shareholders under the Tax Matters Agreement.

          (d) Prior to the consummation of any Change-in-Control Transaction referred to in Section
11.2(b):

               (i) the Company shall establish, to the reasonable satisfaction of the LIH Shareholders,
the creditworthiness of the Successor Entity in relation to the rights of LIH Shareholders under
this Agreement, including by way of establishing an escrow account or trust fund with sufficient
cash or liquid assets to assure all payments upon any future exercise of the Redemption Rights;

               (ii) pursuant to a written agreement reasonably satisfactory to the LIH Shareholders, the
Successor Entity shall assume and agree to perform all of Equity One’s obligations under this
Agreement, the Contribution Agreement, the Tax Matters Agreement, the Registration Rights Agreement
and the Equityholders Agreement (with references in such agreements to Equity One deemed to be
references to the Successor Entity after the Change-in-Control Transaction); and

               (iii) if the Successor Entity is a REIT, the Successor Entity shall provide the LIH
Shareholders with (x) an opinion of a nationally recognized counsel reasonably acceptable to LIH to
the effect that the Change-in-Control Transaction will not prevent CapCo from becoming a
domestically controlled qualified investment entity, as defined below, on the fifth anniversary of
the Effective Date, and (y) evidence reasonably satisfactory to LIH that the Successor Entity has
provisions in its charter or other governing documents that will prevent foreign persons, within
the meaning of Section 897(h)(4)(B) of the Code, from owning, directly or indirectly, 50% or more
of the stock of CapCo. For purposes of the foregoing, the phrases “owned directly or indirectly by
foreign persons” and “domestically controlled qualified investment entity” shall have the meaning
used for purposes of applying Section 897(h)(4) of the Code, except that (i) in the case of a REIT,
if any class of stock of such REIT is regularly traded on an established securities market within
the United States, persons that are not named as a reporting person or otherwise in a Schedule 13D
or 13G made under the Exchange Act with the Commission with respect to such REIT shall be treated
as U.S. persons unless the issuer of such stock has actual knowledge or should have had knowledge
to the contrary, provided that, for purposes of determining whether the issuer should have had
knowledge to the contrary, the issuer shall be under no independent duty, implied or otherwise, to
make any inquiry with respect to its direct or indirect stockholders, and (ii) any shares held
directly or indirectly by an entity classified as a domestic corporation (other than a REIT) for
U.S. federal income tax purposes shall be treated as held by a U.S. person.

          (e) The provisions of this Section 11.2 shall apply to successive transactions.

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          (f) Equity One shall give LIH notice of any Change-in-Control Transaction or Privatization
Transaction at least forty (40) days prior to its consummation. The provision of such notice shall
not be deemed to require a Consent on the part of LIH or any other LIH Shareholder to such
transaction that does not otherwise require Consent under this Agreement. LIH agrees, as a
condition to the receipt of the notice pursuant hereto, to keep confidential the information set
forth therein until such time as Equity One has made public disclosure thereof and to use such
information solely for purposes of determining whether to exercise the Redemption Right.

          (g) The rights of the LIH Shareholders set forth in this Section 11.2 shall terminate as
of the Termination Date.

     11.3 LIH Shareholders’ Rights to Transfer.

          (a) Subject to the provisions of this Section 11.3 and Section 11.2, an LIH Shareholder
may Transfer all or any portion of its Shares, or any of such Shareholder’s economic rights as a
Shareholder (i) with the consent of the Board, at its sole discretion, (ii) to any wholly-owned
Subsidiary of Parent or LIH, provided, that no Competitor owns any portion of such
Affiliate (excluding ownership of any interest in Parent or other Public Entity), (iii) in
accordance with the Equityholders Agreement, or (iv) a Transfer by operation of law resulting from
the merger, consolidation or other combination of Parent with another Person, or any change in
ownership of Parent or any other Public Entity.

          (b) It is expressly understood and agreed that a Shareholder may not Transfer all or a
portion of any Shares pursuant to Section 11.3(a) unless such Transfer meets each of the following
conditions:

               (i) Such Transfer is made only to a Qualified Transferee.

               (ii) The transferee assumes by operation of law or express agreement all of the
obligations of the transferor Shareholder under this Agreement with respect to such transferred
Shares and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Shareholder are assumed by a successor corporation by
operation of law) shall relieve the transferor Shareholder of its obligations under this Agreement
without the approval of the Board, in its sole and absolute discretion. Notwithstanding the
foregoing, any transferee of any Transferred Shares shall be subject to any and all ownership
limitations contained in the Articles of Incorporation. Any transferee, whether or not admitted as
a Substituted Shareholder, shall take subject to the obligations of the transferor hereunder.
Unless admitted as a Substituted Shareholder and subject to the limitation on rights to a
transferee contained in this Agreement, no transferee, whether by voluntary Transfer, by operation
of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as
provided in Section 11.6.

          (c) If a Shareholder is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Shareholder’s estate shall have all of the
rights of a Shareholder, but not more rights than those enjoyed by other Shareholders, for the
purpose of settling or managing the estate and such power as the Incapacitated Shareholder

46

 

possessed to Transfer all or any part of his or its Shares. The Incapacity of a Shareholder,
in and of itself, shall not dissolve or terminate the Company.

          (d) Any Transfer of Class A Shares by the LIH Shareholder only may be made if the LIH
Shareholder has complied in all respects with Article 3 (Right of First Offer) and Article 4 (Right
of First Refusal) of the Equityholders Agreement.

     11.4 Substituted Shareholders.

          (a) No Shareholder shall have the right to substitute a transferee as a Shareholder in its
place, except for an LIH Shareholder or a Person to whom an LIH Shareholder Transfers Shares
pursuant to Section 11.3. A transferee of the interest of a Shareholder that is an LIH Shareholder
shall be admitted as a Substituted Shareholder without the consent of the Board, and any other
Person may be admitted as a Substituted Shareholder only in compliance with Section 11.2(a) and
with the consent of the Board, which consent may be given or withheld by the Board in its sole and
absolute discretion. The failure or refusal by the Board to permit a transferee (other than an LIH
Shareholder) of any such interests to become a Substituted Shareholder shall not give rise to any
cause of action against the Company or the Board. Subject to the foregoing, an Assignee shall not
be admitted as a Substituted Shareholder until and unless it furnishes to the Board (i) evidence of
acceptance, in form and substance satisfactory to the Board, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement
executed by such Assignee and (iii) such other documents and instruments as may be required or
advisable, in the sole and absolute discretion of the Board, to effect such Assignee’s admission as
a Substituted Shareholder.

          (b) Concurrently with, and as evidence of, the admission of a Substituted Shareholder, the
Board shall amend Exhibit A and the books and records of the Company to reflect the name,
address and number of Shares of such Substituted Shareholder and to eliminate or adjust, if
necessary, the name, address and number of Shares of the predecessor of such Substituted
Shareholder.

          (c) A transferee who has been admitted as a Substituted Shareholder in accordance with
this ARTICLE 11 shall have all the rights and powers (but shall not be entitled to the Redemption
Right set forth in Section 8.5 unless the transferee is an LIH Shareholder) and be subject to all
the restrictions and liabilities of a Shareholder under this Agreement.

     11.5 Assignees. If the Board, in its sole and absolute discretion, does not consent to the
admission of any transferee (other than an LIH Shareholder or a Person to whom an LIH Shareholder
Transfers Shares pursuant to Section 11.3) under Section 11.4 hereof as a Substituted Shareholder,
as described in Section 11.4 hereof, such transferee shall be considered an Assignee for purposes
of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited
liability company interest under the Act, including the right to receive distributions from the
Company and the share of Net Income, Net Losses and other items of income, gain, loss, deduction
and credit of the Company attributable to the Shares assigned to such transferee and the rights to
Transfer the Shares provided in this ARTICLE 11, but shall not be deemed to be a holder of Shares
for any other purpose under this Agreement, shall not be entitled to effect a Consent or vote with
respect to such Shares on any matter presented to the

47

 

Shareholders for approval (such right to Consent or vote, to the extent provided in this Agreement
or under the Act, fully remaining with the transferor Shareholder) and shall not be entitled to the
Redemption Right set forth in Section 8.5). In the event that any such transferee desires to make
a further assignment of any such Shares, such transferee shall be subject to all the provisions of
this ARTICLE 11 to the same extent and in the same manner as any Shareholder desiring to make an
assignment of Shares.

     11.6 General Provisions.

          (a) No Shareholder may withdraw from the Company other than as a result of a permitted
Transfer of all of such Shareholder’s Shares in accordance with this ARTICLE 11, with respect to
which the transferee becomes a Substituted Shareholder and/or pursuant to any Share Designation.

          (b) Any Shareholder who shall Transfer all of its Shares in a Transfer (i) permitted
pursuant to this ARTICLE 11 where such transferee was admitted as a Substituted Shareholder, or
(ii) pursuant to any Share Designation, shall cease to be a Shareholder.

          (c) If any Share is Transferred in compliance with the provisions of this ARTICLE 11 on
any day other than the first day of a Company Year, then Net Income, Net Losses, each item thereof
and all other items of income, gain, loss, deduction and credit attributable to such Share for such
Company Year shall be allocated to the transferor Shareholder or the transferee Shareholder by
taking into account their varying interests during the Company Year in accordance with Code Section
706(d), using the “interim closing of the books” method or another permissible method selected by
the Board. All distributions of Available Cash attributable to such Share with respect to which
the Company Record Date is before the date of such Transfer or assignment shall be made to the
transferor Shareholder and all distributions of Available Cash thereafter attributable to such
Share shall be made to the transferee Shareholder.

          (d) In addition to any other restrictions on Transfer herein contained, in no event may
any Transfer of Shares by any Shareholder (including any acquisition of Shares by Equity One or any
other acquisition of Shares by the Company) be made: (i) to any person or entity who lacks the
legal right, power or capacity to own a Shares; (ii) in violation of applicable law; (iii) in the
event that such Transfer would cause Equity One to cease to comply with the REIT Requirements; (iv)
if such Transfer would, in the opinion of legal counsel to the Company, cause the Company to cease
to be classified as a partnership for Federal income tax purposes (except as a result of the
acquisition by Equity One of all Common Shares held by all Shareholders); (v) if such Transfer
would cause the Company to become, with respect to any employee benefit plan subject to Title I of
ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified person” (as
defined in Code Section 4975(c)); (vi) if such Transfer would, in the opinion of legal counsel to
the Company, cause any portion of the assets of the Company to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101; (vii) if such Transfer
requires the registration of such Shares pursuant to any applicable Federal or state securities
laws; (x) if such Transfer causes the Company to become a “publicly traded partnership,” as such
term is defined in Code Section 469(k)(2) or Code 7704(b); (viii) if such Transfer causes the
Company to become a reporting company under the Exchange Act; or (ix) if such Transfer subjects the
Company to

48

 

regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each
as amended. The Board shall take all action necessary to avoid the Company from being classified
as a “publicly traded partnership” under Code Section 7704. Notwithstanding any other provision of
this Agreement, nothing in Section 11.1 or 11.6 shall restrict or limit the ability of the LIH
Shareholders to exercise the Redemption Right or LIH’s rights under Section 11.2, nor shall any
provision of ARTICLE 11 limit the obligations of the Company or Equity One under ARTICLE 8 or
Section 11.2.

ARTICLE 12

ADMISSION OF SHAREHOLDERS

     12.1 Admission of Additional Shareholders.

          (a) A Person (other than an existing Shareholder) who makes a Capital Contribution to the
Company in exchange for Shares and in accordance with this Agreement shall be admitted to the
Company as an Additional Shareholder only in compliance with Section 4.2 and upon furnishing to the
Board (i) evidence of acceptance, in form and substance satisfactory to the Board, of all of the
terms and conditions of this Agreement, (ii) a counterpart signature page to this Agreement
executed by such Person and (iii) such other documents or instruments as may be required in the
sole and absolute discretion of the Board in order to effect such Person’s admission as an
Additional Shareholder. Concurrently with, and as evidence of, the admission of an Additional
Shareholder, the Board shall amend Exhibit A and the books and records of the Company to
reflect the name, address and number of Shares of such Additional Shareholder.

          (b) Notwithstanding anything to the contrary in this Section 12.1, no Person shall be
admitted as an Additional Shareholder without the consent of the Board, which consent may be given
or withheld in the Board’s sole and absolute discretion. The admission of any Person as an
Additional Shareholder shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Company, following the consent of the Board to such
admission and the satisfaction of all the conditions set forth in Section 12.1(a).

          (c) If any Additional Shareholder is admitted to the Company on any day other than the
first day of a Company Year, then Net Income, Net Losses, each item thereof and all other items of
income, gain, loss, deduction and credit allocable among Holders for such Company Year shall be
allocated among such Additional Shareholder and all other Holders by taking into account their
varying interests during the Company Year in accordance with Code Section 706(d), using the
“interim closing of the books” method or another permissible method selected by the Board. All
distributions of Available Cash with respect to which the Company Record Date is before the date of
such admission shall be made solely to Shareholders and Assignees other than the Additional
Shareholder, and all distributions of Available Cash thereafter shall be made to all the
Shareholders and Assignees including such Additional Shareholder.

     12.2 Amendment of Agreement and Certificate. For the admission to the Company of any
Shareholder, the Board shall take all steps necessary and appropriate under the Act to amend the
records of the Company and, if necessary, to prepare as soon as practical an

49

 

amendment of this Agreement (including an amendment of Exhibit A) and, if required by law,
shall prepare and file an amendment to the Certificate and may for this purpose exercise the power
of attorney granted pursuant to Section 2.4 hereof.

ARTICLE 13

DISSOLUTION, LIQUIDATION AND TERMINATION

     13.1 Dissolution.

          (a) The Company shall dissolve, and its affairs shall be wound up, upon the first to occur
of any of the following (each a “Liquidating Event”):

               (i) an election to dissolve the Company made by the Board in its sole and absolute
discretion;

               (ii) entry of a decree of judicial dissolution of the Company pursuant to the provisions
of the Act;

               (iii) any sale or other disposition of all or substantially all of the assets of the
Company or a related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Company; or

               (iv) the date on which Equity One owns all of the outstanding Shares.

     13.2 Winding Up.

          (a) Upon the occurrence of a Liquidating Event, the Company shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the
claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder
shall take any action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Company’s business and affairs. The Board or a Person selected by the Board (the
Board or such other Person, as applicable, being referred to as the “Liquidator”) shall be
responsible for overseeing the winding up and dissolution of the Company and shall take full
account of the Company’s liabilities and property, and the Company property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which
may, to the extent determined by the Board, include shares of stock in Equity One) shall be applied
and distributed in the following order:

               (i) First, to the satisfaction of all of the Company’s debts and liabilities to creditors
other than Equity One, its Affiliates and the Holders (whether by payment or the making of
reasonable provision for payment thereof);

               (ii) Second, to the satisfaction of all of the Company’s debts and liabilities to the
Holders other than Equity One and its Affiliates (whether by payment or the making of reasonable
provision for payment thereof);

               (iii) Third, to the satisfaction of all of the Company’s debts and liabilities to Equity
One and its Affiliates (whether by payment or the making of reasonable

50

 

provision for payment thereof), including, but not limited to, amounts due as reimbursements
under Section 7.3(d) hereof;

               (iv) Fourth, to the Shareholders in accordance with and in proportion to their positive
Capital Account balances, after giving effect to all contributions, distributions and allocations
for all periods.

          (b) The Liquidator shall not receive any additional compensation for any services
performed pursuant to this ARTICLE 13 if the Liquidator is the Board or an Affiliate of Equity One.

          (c) Notwithstanding the provisions of Section 13.2 hereof that require liquidation of the
assets of the Company, but subject to the order of priorities set forth therein, if prior to or
upon dissolution of the Company, the Liquidator determines that an immediate sale of part or all of
the Company’s assets would be impractical or would cause undue loss to the Holders, the Liquidator
may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Company (including to those Holders as
creditors) and/or distribute to the Holders, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2 hereof, undivided interests in such Company assets
as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made
only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Holders, and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The Liquidator shall determine
the fair market value of any property distributed in kind using such reasonable method of valuation
as it may adopt.

          (d) If any Shareholder has a deficit balance in its Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years, including the year
during which such liquidation occurs), such Shareholder shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and such deficit shall not
be considered a debt owed to the Company or to any other Person for any purpose whatsoever.

          (e) In the sole and absolute discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the Holders pursuant to this ARTICLE 13 may be:

               (i) distributed to a trust established for the benefit of the Shareholders for the purpose
of liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or
unforeseen liabilities or obligations of the Company arising out of or in connection with the
Company and/or Company activities. The assets of any such trust shall be distributed to the
Shareholders, from time to time, in the reasonable discretion of the Liquidator, in the same
proportions and amounts as would otherwise have been distributed to the Shareholders pursuant to
this Agreement; or

51

 

               (ii) withheld or escrowed to provide a reasonable reserve for Company liabilities
(contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed
to the Company, provided that such withheld or escrowed amounts shall be distributed in the manner
and order of priority set forth in Section 13.2(a) hereof as soon as practicable.

     13.3 Rights of Shareholders. Except as otherwise provided in this Agreement, (a) each
Shareholders shall look solely to the assets of the Company for the return of its Capital
Contribution, (b) no Shareholder shall have the right or power to demand or receive property other
than cash from the Company and (c) no Shareholder shall have priority over any other Shareholder as
to the return of its Capital Contributions, distributions or allocations.

     13.4 Notice of Dissolution. In the event that a Liquidating Event occurs or an event occurs
that would, but for an election or objection by one or more Shareholders pursuant to Section 13.1
hereof, result in a dissolution of the Company, the Board shall, within thirty (30) days
thereafter, provide written notice thereof to each Shareholder and, in the Board’s sole and
absolute discretion or as required by the Act, to all other parties with whom the Company regularly
conducts business (as determined in the sole and absolute discretion of the Board), and the Board
may, or, if required by the Act, shall, publish notice thereof in a newspaper of general
circulation in each place in which the Company regularly conducts business (as determined in the
sole and absolute discretion of the Board).

     13.5 Cancellation of Certificate. Upon the completion of the liquidation of the Company cash
and property as provided in Section 13.2 hereof, the Company shall be terminated, a certificate of
cancellation shall be filed with the State of Delaware, all qualifications of the Company as a
foreign limited liability company or association in jurisdictions other than the State of Delaware
shall be cancelled, and such other actions as may be necessary to terminate the Company shall be
taken.

     13.6 Reasonable Time for Winding-Up. A reasonable time shall be allowed for the orderly
winding-up of the business and affairs of the Company and the liquidation of its assets pursuant to
Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between and among the Shareholders during
the period of liquidation.

ARTICLE 14

PROCEDURES FOR ACTIONS AND CONSENTS

OF SHAREHOLDERS; AMENDMENTS; MEETINGS

     14.1 Procedures for Actions and Consents of Shareholders. The actions requiring consent or
approval of Shareholders pursuant to this Agreement, including Section 7.3 hereof, or otherwise
pursuant to applicable law, are subject to the procedures set forth in this ARTICLE 14.

     14.2 Amendments. Amendments to this Agreement may be proposed solely by the Board. Following
such proposal, the Board shall submit any proposed amendment to the Shareholders. The Board shall
seek the written Consent of the Shareholders on the proposed amendment without a meeting or, in
lieu thereof, at its sole discretion, shall call a meeting to

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vote thereon and to transact any other business that the Board may deem appropriate. For purposes
of obtaining a written Consent, the Board may require a response within a reasonable specified
time, but not less than fifteen (15) calendar days, and may provide that failure to respond in such
time period shall constitute a vote or Consent which is consistent with the Board’s recommendation
with respect to such proposal. Except as provided in Section 7.3 and the remainder of this Section
14.2, a proposed amendment shall be adopted and be effective as an amendment hereto if it is
approved by the Board and the Consent of the Shareholders.

     14.3 Meetings of the Shareholders.

          (a) Meetings of the Shareholders may be called only by the Board. The call shall state
the nature of the business to be transacted. Notice of any such meeting shall be given to all
Shareholders entitled to act at the meeting not less than seven (7) days nor more than sixty (60)
days prior to the date of such meeting. A Shareholder may waive the failure to received timely
notice of a meeting before, at, or after any meeting. Shareholders may vote in person or by proxy
at such meeting. Whenever the vote, or consent or approval of Shareholders is permitted or
required under this Agreement, such vote, consent or approval may be given at a meeting of
Shareholders or may be given in accordance with the procedure prescribed in Section 14.3(b) hereof.
Whenever the vote, consent or approval is required or permitted under this Agreement, except as
otherwise expressly provided in this Agreement, the Consent of a Majority in Interest of the
Shareholders shall control.

          (b) Any action required or permitted to be taken at a meeting of the Shareholders may be
taken without a meeting if a written consent setting forth the action so taken is signed by at
least the same percentage of Shares as would be required to approve such matter at a meeting of the
Shareholders. Such consent may be in one instrument or in several instruments, and shall have the
same force and effect as a vote of the Shareholders at a meeting. Such consent shall be filed with
the Board. An action so taken shall be deemed to have been taken at a meeting held on the
effective date so certified.

          (c) Each Shareholder entitled to act at the meeting may authorize any Person or Persons to
act for it by proxy on all matters in which a Shareholder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed
by the Shareholder or its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a
proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Shareholder
executing it, such revocation to be effective upon the Company’s receipt of written notice of such
revocation from the Shareholder executing such proxy.

          (d) Each meeting of Shareholders shall be conducted by the Board or such other Person as
the Board may appoint pursuant to such rules for the conduct of the meeting as the Board or such
other Person deems appropriate in its sole and absolute discretion.

          (e) On matters on which Shareholders are entitled to vote, each Shareholder shall have a
vote equal to the number of Shares held.

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ARTICLE 15

GENERAL PROVISIONS

     15.1 Addresses and Notice. Any notice, demand, request or report required or permitted to be
given or made to a Shareholder or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United States mail or by
other means of written communication (including by telecopy, facsimile, or commercial courier
service) to the Shareholder, or Assignee at the address set forth in Exhibit A or such
other address of which the Shareholder shall notify the Board in writing.

     15.2 Titles and Captions. All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way define, limit,
extend or describe the scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.

     15.3 Pronouns and Plurals. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.

     15.4 Further Action. The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

     15.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal representatives and
permitted assigns.

     15.6 Waiver.

          (a) No failure by any party to insist upon the strict performance of any covenant, duty,
agreement or condition of this Agreement or to exercise any right or remedy consequent upon a
breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

          (b) The restrictions, conditions and other limitations on the rights and benefits of the
Shareholders contained in this Agreement, and the duties, covenants and other requirements of
performance or notice by the Shareholders, are for the benefit of the Company and, except for an
obligation to pay money to the Company, may be waived or relinquished by the Board, in its sole and
absolute discretion, on behalf of the Company in one or more instances from time to time and at any
time; provided, however, that any such waiver or relinquishment may not be made if
it would have the effect of (i) creating liability for any other Shareholder, (ii) causing the
Company to cease to qualify as a limited liability company, (iii) reducing the amount of cash
otherwise distributable to the Shareholders, (iv) resulting in the classification of the Company as
an association or publicly traded partnership taxable as a corporation or (v) violating the
Securities Act, the Exchange Act or any state “blue sky” or other securities laws.

54

 

     15.7 Counterparts. This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that all such parties
are not signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.

     15.8 Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial.

          (a) This Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of law. In the event
of a conflict between any provision of this Agreement and any non-mandatory provision of the Act,
the provisions of this Agreement shall control and take precedence.

          (b) Each Shareholder hereby (i) submits to the non-exclusive jurisdiction of any state or
federal court sitting in the State of Delaware (collectively, the “Delaware Courts”), with
respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the
extent such courts would have subject matter jurisdiction with respect to such dispute, (ii)
irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of any of the Delaware
Courts, that its property is exempt or immune from attachment or execution, that the action is
brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that
notice or the service of process in any action, suit or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby shall be properly served or delivered if
delivered to such Shareholder at such Shareholder’s last known address as set forth in the
Company’s books and records, and (iv) irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or related to this Agreement or the transactions contemplated
hereby.

     15.9 Entire Agreement. This Agreement, when taken with the other Transaction Documents,
contains all of the understandings and agreements between and among the Shareholders with respect
to the subject matter of this Agreement and the rights, interests and obligations of the
Shareholders with respect to the Company. Notwithstanding the immediately preceding sentence, the
Shareholders hereby acknowledge and agree that the Board, without the approval of any Shareholder,
may enter into side letters or similar written agreements with Shareholders that are not Affiliates
of Equity One, executed contemporaneously with the admission of such Shareholder to the Company,
affecting the terms hereof, as negotiated with such Shareholder and which the Board in its sole
discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms,
conditions or provisions contained in such side letters or similar written agreements with a
Shareholder shall govern with respect to such Shareholder notwithstanding the provisions of this
Agreement.

     15.10 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.

55

 

     15.11 Limitations to Preserve REIT Status.

          (a) Notwithstanding anything else in this Agreement, to the extent that the amount paid,
credited or reimbursed by the Company to Equity One or its officers, directors, employees or
agents, whether as a reimbursement, fee, expense or indemnity (a “REIT Payment”), would
constitute gross income to Equity One for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the amount of such REIT
Payments, as selected by Equity One in its discretion from among items of potential, reimbursement,
fees, expenses and indemnities, shall be reduced for any Company Year so that the REIT Payments, as
so reduced, for or with respect to Equity One shall not exceed the lesser of:

               (i) an amount equal to the excess, if any, of (a) four and nine-tenths percent (4.9%) of
Equity One’s total gross income (but excluding the amount of any REIT Payments) for the Company
Year that is described in subsections (A) through (H) of Code Section 856(c)(2) over (b) the amount
of gross income (within the meaning of Code Section 856(c)(2)) derived by Equity One from sources
other than those described in subsections (A) through (H) of Code Section 856(c)(2) (but not
including the amount of any REIT Payments); or

               (ii) an amount equal to the excess, if any, of (a) twenty-four percent (24%) of Equity
One’s total gross income (but excluding the amount of any REIT Payments) for the Company Year that
is described in subsections (A) through (I) of Code Section 856(c)(3) over (b) the amount of gross
income (within the meaning of Code Section 856(c)(3)) derived by Equity One from sources other than
those described in subsections (A) through (I) of Code Section 856(c)(3) (but not including the
amount of any REIT Payments); provided, however, that REIT Payments in excess of
the amounts set forth in clauses (i) and (ii) above may be made if Equity One, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess amounts shall not
adversely affect Equity One’s ability to qualify as a REIT. To the extent that REIT Payments may
not be made in a Company Year as a consequence of the limitations set forth in this Section 15.11,
such REIT Payments shall carry over and shall be treated as arising in the following Company Year
if such carry over does not adversely affect Equity One’s ability to qualify as a REIT. The
purpose of the limitations contained in this Section 15.11 is to prevent Equity One from failing to
qualify as a REIT under the Code by reason of Equity One’s share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly from the Company,
and this Section 15.11 shall be interpreted and applied to effectuate such purpose.

     15.12 No Partition. No Shareholder nor any successor-in-interest to a Shareholder shall have the
right while this Agreement remains in effect to have any property of the Company partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such property of the
Company partitioned, and each Shareholder, on behalf of itself and its successors and assigns
hereby waives any such right. It is the intention of the Shareholders that the rights of the
parties hereto and their successors-in-interest to Company property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Shareholders and their
respective successors-in-interest shall be subject to the limitations and restrictions as set forth
in this Agreement.

56

 

     15.13 No Third-Party Rights Created Hereby. The provisions of this Agreement are solely for the
purpose of defining the interests of the Holders, inter se; and no other person, firm or entity
(i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto)
shall have any right, power, title or interest by way of subrogation or otherwise, in and to the
rights, powers, title and provisions of this Agreement. No creditor or other third party having
dealings with the Company (other than as expressly set forth herein with respect to Indemnitees)
shall have the right to enforce the right or obligation of any Shareholder to make Capital
Contributions or loans to the Company or to pursue any other right or remedy hereunder or at law or
in equity. None of the rights or obligations of the Shareholders herein set forth to make Capital
Contributions or loans to the Company shall be deemed an asset of the Company for any purpose by
any creditor or other third party, nor may any such rights or obligations be sold, Transferred or
assigned by the Company or pledged or encumbered by the Company to secure any debt or other
obligation of the Company or any of the Shareholders.

     15.14 No Rights as Stockholders. Nothing contained in this Agreement shall be construed as
conferring upon the Holders of Shares any rights whatsoever as stockholders of Equity One,
including without limitation any right to receive dividends or other distributions made to
stockholders of Equity One or to vote or to consent or receive notice as stockholders in respect of
any meeting of stockholders for the election of directors of Equity One or any other matter.

     15.15 Entity Conversion. As soon as reasonably practicable upon the request of LIH, the Board
shall cause the Company to convert into a Delaware limited partnership (the “New Entity”),
provided, that, Equity One determines, acting in good faith, that such conversion
does not have an adverse effect on Equity One, the Company or any Subsidiary of the Company. The
New Entity shall be classified as a partnership for purposes of the Code, and the partnership
agreement of the New Entity shall be substantially similar to this Agreement and in a form
reasonably acceptable to Equity One; provided, that Equity One shall be entitled to
designate any of its Controlled Affiliates as the general partner of the New Entity. In connection
with the conversion of the Company into the New Entity, the Company shall provide LIH with any
information reasonably requested concerning the operations of, and income earned by, the Company to
the extent such information is necessary to the tax consequences of such conversion to LIH. LIH
shall pay all reasonable costs and expenses (including without limitation reasonable attorney’s
fees and expenses, any costs or expenses incurred to obtain any necessary third party consent to
such a conversion, any transfer taxes, and the costs of any property tax revaluation triggered by
such conversion) incurred by Equity One, the Company or any Subsidiary of the Company in connection
with such conversion.

ARTICLE 16

EQUITY ONE GUARANTEE

     16.1 Guarantee. Equity One hereby irrevocably and unconditionally guarantees, as primary
obligor and not merely as surety, the performance of all obligations of the Company or the Board
under this Agreement, including without limitation the due and punctual payment by the Company in
full of any amounts payable by the Company to any Shareholder pursuant to this Agreement (the
“Guaranteed Obligations”); provided, however, that the maximum amount
payable by Equity One in respect of any failure by the Company to pay the Specified

57

 

Redemption Amount pursuant to Section 8.5(a) or the cash amount specified in Section 8.5(c)
shall not exceed the net equity value of the Company as of date of receipt of the applicable Notice
of Redemption. For the avoidance of doubt, Equity One’s guarantee hereunder shall not require it
to make any Capital Contributions to the Company in order to provide the Company with funds to make
distributions if Available Cash for any period is not sufficient to enable the Company to
distribute to Holders of Class A Shares the aggregate amount of Cumulative Unpaid Class A
Distributions with respect to all Class A Shares. Furthermore, nothing in this ARTICLE 16 shall be
construed to (i) impose a higher standard on the Board or the Company relating to the establishment
or increase of any reserves or other cash or similar balances (including, but not limited to,
working capital reserves, debt reserve funds, and capital improvements reserves) than the standard
set forth in the definition of Available Cash, or (ii) restrict the Board’s discretion to make or
not make distributions under Section 5.1(b) or to reinvest, rather than distribute, Disposition
Proceeds under Section 5.3.

     16.2 Certain Waivers. To the fullest extent permitted by applicable law, Equity One waives
presentment to, demand of payment from and protest to each Shareholder, and also waives notice of
acceptance of the guarantee pursuant to this ARTICLE 16 and notice of protest for non-payment. To
the fullest extent permitted by applicable law, the obligations of Equity One hereunder shall not
be affected by the failure of any Shareholder to assert any claim or demand or to exercise or
enforce any right or remedy against the Company or the Board under the provisions of this Agreement
or otherwise.

     16.3 Guarantee Absolute. Equity One agrees that the guarantee pursuant to this ARTICLE 16
constitutes an absolute, unconditional, present and continuing guarantee of payment and not of
collection, and waives any right to require that any resort be had by any Shareholder (a) against
the Company or the Board or any other Person for the Guaranteed Obligations or (b) against any
other right or remedy available to any Shareholder by contract, applicable law or otherwise. It is
the intent of the guarantee pursuant to this ARTICLE 16 that each Shareholder shall have resort to
Equity One without asserting or resorting to any remedy against the Company or the Board or any
other Person and without demand to it, as though Equity One was primarily liable for any Guaranteed
Obligations.

     16.4 Additional Waivers. Without limiting the foregoing, Equity One hereby waives and
relinquishes all rights and remedies now or hereafter accorded by applicable law to sureties and/or
guarantors or any other accommodation parties, under any statutory provision, common law or any
other provision of law, custom or practice, and agrees not to assert or take advantage of any such
rights or remedies, including, without limitation: (a) any right to require any Shareholder to
proceed against the Company or the Board or any other Person or to proceed against or exhaust any
security held by any Shareholder at any time or to pursue any other remedy in such Shareholder’s
power before proceeding against Equity One; (b) any defense based upon any lack of authority of the
officers, directors, partners or agents acting or purporting to act on behalf of the Company or the
Board or any other Person, or any defect in the formation of the Company or the Board or any other
Person; (c) any defense that may arise by reason of the Incapacity, lack of authority, insolvency,
bankruptcy, death or disability of the Company, any Board Member or any other guarantor or other
Person or the failure of any Shareholder to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of the Company, any Board Member or any other
guarantor or other Person; (d) notice of the existence,

58

 

creation or incurring of any new or additional indebtedness or obligation of the Company under this
Agreement or of any action or non-action on the part of the Company or the Board under this
Agreement or in connection with any Guaranteed Obligation; (e) any defense based upon an election
of remedies by any Shareholder which destroys or otherwise impairs any subrogation rights of Equity
One or any right of Equity One to proceed against the Company or the Board or any other Person for
reimbursement, or both; (f) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other respects more burdensome
than that of the principal; (g) any duty on the part of any Shareholder to disclose to Equity One
any facts any Shareholder may now or hereafter know about the Company or the Board, regardless of
whether any Shareholder has reason to believe that any such fact materially increases the risk
beyond that which Equity One intends to assume or has reason to believe that any such fact is
unknown to Equity One or has a reasonable opportunity to communicate such fact to Equity One, it
being understood and agreed that Equity One is fully responsible for being and keeping informed of
the financial condition of the Company and of all circumstances bearing on the risk of non payment
or non-performance of any Guaranteed Obligation; (h) any defense arising because of any
Shareholder’s election, in any bankruptcy or insolvency proceeding; (i) any defense based upon the
validity or enforceability of this Agreement; (j) any defense or rights arising under any
appraisal, valuation, stay, extension, marshaling of assets, redemption or similar law or
requirement, which may delay, prevent or otherwise affect the performance by Equity One of any of
the Guaranteed Obligations; (k) diligence, presentment and demand; (l) any requirement to mitigate
any damages resulting from any default under this Agreement; and (m) any defense based on any
borrowing or grant of a security interest under Section 364 of the federal Bankruptcy Code.

     16.5 No Waiver of Rights by Shareholders. This ARTICLE 16 and any right of any Shareholder
hereunder may be waived, in whole or in part, and Equity One may be released from its obligations
hereunder, only with the Consent of the LIH Shareholders.

     16.6 Representations and Warranties by Equity One. Equity One represents and warrants to
each Shareholder as of the Effective Date that the value of the consideration received, and to be
received, by Equity One in connection with the transactions contemplated under this Agreement is
worth at least as much as the liabilities and obligations of Equity One under this ARTICLE 16, and
that such liabilities and obligations are expected to benefit Equity One either directly or
indirectly.

[Remainder of Page Left Blank Intentionally]

59

 

     IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

	 	 	 	 	 
	 	SHAREHOLDERS:

LIBERTY INTERNATIONAL HOLDINGS LIMITED

 	 
	 	By:  	/s/
David Fischel 	 
	 	 	Name: David Fischel	 
	 	 	Its: Director	 
	 
	 	EQUITY ONE, INC.

 	 
	 	By:  	/s/
Arthur L. Gallagher 	 
	 	 	Name: Arthur L. Gallagher	 
	 	 	Its: EVP, GC & Sec.	 

60

 

	 	 	 	 	 

Exhibit A

SHAREHOLDERS AND SHARES

	 	 	 
	Name and Address of Shareholders	 	Shares (Type and Amount)
	Liberty International Holdings Limited
	 	11,357,837 Class A Shares
	c/o Capital Shopping Centres Group plc

40 Broadway 

London SW1H OBT

Attn: Company Secretary 

Fax: 020-7960-1424
	 	 
	 
	 	 
	Equity One, Inc.

	 	25,543,212 Class A Shares
	1600 N.E. Miami Gardens Drive
	 	15,023,893.20 Class B Shares
	North Miami Beach, Florida 33179

Attn: General Counsel 

Fax: (305) 957-1734
	 	 
	 
	 	 
	TOTAL:
	 	36,901,049 Class A Shares
	 
	 	15,023,893.20 Class B Shares

61

 

Exhibit B

Notice of Redemption

     Any capitalized term used and not otherwise defined herein shall have the meaning ascribed to
it in the Limited Liability Company Agreement of EQY-CSC LLC, dated as of January 4, 2011, as
amended from time to time (the “Agreement”).

     The undersigned LIH Shareholder hereby irrevocably (i) tenders for redemption __________ Class
A Shares in accordance with the terms of the Agreement and the Redemption Right referred to
therein; (ii) surrenders such Class A Shares and all right, title and interest therein; and (iii)
directs that the Adjusted Cash Amount or Adjusted REIT Shares Amount deliverable upon exercise of
the Redemption Right be delivered to the Person at the address specified below. The undersigned
hereby, represents, warrants, and certifies that the undersigned (a) has marketable and
unencumbered title to such Class A Shares, free and clear of the rights or interests of any other
Person; (b) has the full right, power, and authority to redeem and surrender such Class A Shares as
provided herein; and (c) has obtained the consent or approval of all persons or entities, if any,
having the right to consent or approve such redemption and surrender.

Dated: _________________________

Name of Shareholder: ____________________________________________________

                                             
                                                            Please Print

	 	 	 	 	 	 	 

	 
	 	 	 
	 	 	(Signature of Shareholder)
	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	(Street Address)
	 
	 
	 	 	 	 	 	 
	 	 	 
	 

	 	(City)
	 	(State)
	 	(Zip Code)
	 
	 	 	 	 	 	 
	Deliver Adjusted
Cash Amount or
Adjusted REIT Shares
to the Person at the
address specified
below:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Name
	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Address
	 	 	 	 	 	 

62

 

Exhibit C

Initial Board Members

Thomas Caputo

Arthur Gallagher

Jeffrey Olson

63

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