Exhibit 10.92


 





 


PARTNERSHIP INTERESTS PURCHASE AGREEMENT


 


among

THE PRIME GROUP, INC.

an Illinois corporation,

HUNTLEY DEVELOPMENT COMPANY

an Illinois corporation,

PRIME/HUNTLEY MEADOWS RESIDENTIAL, INC.

an Illinois corporation,

PGLP HOLDINGS, L.L.C.

a Delaware limited liability company,

HORIZON GROUP PROPERTIES, INC.

a Maryland corporation,

HORIZON HUNTLEY FINANCE LLC,

a Delaware limited liability company


 


and

HORIZON HUNTLEY LLC

a Delaware limited liability company


 












 


Dated as of June 13, 2003


 




 





 


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PARTNERSHIP
INTERESTS PURCHASE AGREEMENT


 


THIS PARTNERSHIP INTERESTS PURCHASE AGREEMENT (this “Agreement”)
is made as of June 13, 2003, by and among HORIZON HUNTLEY LLC, a Delaware
limited liability company (“HHL”), HORIZON HUNTLEY FINANCE LLC, a
Delaware limited liability company (“HHFL”; HHL and HHFL are sometimes
referred to herein, collectively, as “Purchasers”, and individually, as
a “Purchaser”), HORIZON GROUP PROPERTIES, INC., a Maryland corporation
(“HGPI”), and THE PRIME GROUP, INC., an Illinois corporation (“PGI”),
HUNTLEY DEVELOPMENT COMPANY, an Illinois corporation (“HDC”),
PRIME/HUNTLEY MEADOWS RESIDENTIAL, INC., an Illinois corporation (“P/HMRI”),
and PGLP HOLDINGS, L.L.C., a Delaware limited liability company (“PGLP
Holdings”; PGI, HDC, P/HMRI and PGLP Holdings are sometimes referred to
herein, collectively, as “Sellers”, and, individually, as a “Seller”).


 


WITNESSETH:


 


WHEREAS, PGI is the sole limited partner, with a ninety-nine percent
(99%) interest, in Huntley Development Limited Partnership, an Illinois limited
partnership (“HDLP”), and HDC is the sole general partner, with a one
percent (1%) interest, in HDLP; and


 


WHEREAS, each of P/HMRI and PGLP Holdings is a general partner, with a
fifty percent (50%) interest, in Huntley Meadows Residential Venture, an
Illinois partnership (“HMRV”; HDLP and HMRV are sometimes referred to
herein, together, as the “Partnerships” and individually, as a “Partnership”);
and


 


WHEREAS, the Partnerships hold the real estate (the “Real Property”)
and other assets (the “Other Assets”) identified or described on Exhibit
A attached hereto; and


 


WHEREAS, HDLP is the borrower under a loan (the “Beal Loan”)
described on Exhibit A attached hereto made to the Partnerships by Lender
(defined below), the repayment of which is secured by a mortgage on the Real
Property owned by HDLP; and


 


WHEREAS, Horizon Group Properties, Inc., a Maryland corporation, owns a
3.25% interest (the “Current Net Profits Interest”) in the Partnerships’
rights to Net Profits (as defined herein), pursuant to the terms of the Horizon
Net Profits Assignment (as defined herein); and


 


WHEREAS, Purchasers desire to purchase and acquire from Sellers, and
Sellers desire to sell, convey, assign and transfer to Purchasers, all of the
partnership interests in each Partnership held by Sellers, subject to the (i)
the Beal Net Profits Interest (as defined herein), (ii) the Skoien
Participation Interest (as defined herein), (iii) the Prime Participation
Interest (as defined herein), and (iv) the Current Net Profits Interest, upon
the terms and subject to the conditions set forth in this Agreement.


 


NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows.


 


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1.                                       DEFINITIONS.


 


1.1                                 Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:


 


“Agreement” shall mean this
Agreement, together with the Exhibits, in each case as amended, restated,
supplemented or otherwise modified from time to time.


 


“Applicable Law” shall mean
all applicable provisions of all (i) constitutions, treaties, statutes,
laws, rules, regulations, and ordinances of any Governmental Authority and
common law duties, (ii) Consents of any Governmental Authority and
(iii) orders, decisions, rulings, judgments, directives or decrees of any
Governmental Authority.


 


“Assignments” shall have the
meaning specified in Section 2.3(b).


 


“Beal Loan” shall have meaning
specified in the Recitals and shall be the loan further described on Exhibit
A attached hereto.


 


“Beal Loan Mortgage” shall
mean that certain Mortgage, Security Agreement, Assignment of Leases and Rents
and Fixture Filing, dated as of October 27, 1999, or similar instrument, as
amended from time to time, executed and delivered by HDLP in favor of Lender to
secure the repayment of the Beal Loan and other obligations under any other
Beal Mortgage Loan Document.


 


“Beal Mortgage Loan Documents”
shall mean the Beal Loan Mortgage and all other agreements and other documents
evidencing or securing repayment of the Beal Loan.


 


“Beal Net Profits Assignment”
means that certain Amended and Restated Agreement and Assignment of Net Profits
Interest, dated as of October 27, 1999, among the Partnerships and Lender, as
amended by that certain First Amendment to Amended and Restated Agreement and
Assignment of Net Profits Interest, dated as of January 30, 2002, among the
Partnerships and Lender (the “First Beal Assignment Amendment”).


 


“Beal Net Profits Interest”
means the interest held by Lender in Net Profits pursuant to the Beal Net
Profits Assignment and documents executed in connection therewith.


 


“Beal Net Profits Mortgage”
shall mean that certain Mortgage, Security Agreement and Assignment of Leases
and Rents, dated as of December 18, 1995, or similar instrument, as amended
from time to time, executed and delivered by HDLP in favor of Lender to secure
the obligations of HDLP under the Beal Net Profits Assignment.


 


“Business Day” shall mean any
day that is not a Saturday, a Sunday, or a day on which banking institutions in
the City of Chicago, Illinois, are authorized or required by law to close.


 


“Closing” shall have the
meaning specified in Section 2.3(a).


 


“Closing Date” shall have the
meaning specified in Section 2.3(a).


 


“Consent” shall mean any
consent, approval, authorization, waiver, permit, grant, franchise, license,
exemption or order of, or any registration, certificate, qualification or
declaration to any Person.


 


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“Extended Outside Closing Date”
shall have the meaning specified in Section 2.3(a).


 


“Governmental Authority” shall
mean any nation or government, and any state or political subdivision thereof,
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any court,
tribunal or arbitrator of competent jurisdiction, and any self-regulatory
organization.


 


“HDC” shall have the meaning
specified in the Preamble.


 


“HDLP” shall have the meaning
specified in the Recitals.


 


“HDLP P/S Agreement” means the
Agreement of Limited Partnership of HDLP, dated as of May 29, 1991, as amended
from time to time.


 


“HGPI” shall have the meaning
specified in the Preamble.


 


“HHFL” shall have the meaning
specified in the Preamble.


 


“HHL” shall have the meaning
specified in the Preamble.


 


“HMRV” shall have the meaning
specified in the Recitals.


 


“HMRV P/S Agreement” means the
Partnership Agreement of HMRV, dated as of March 7, 1990, as amended from time
to time.


 


“Horizon Loan” means that
certain loan in the original principal amount of One Million Three Hundred
Thousand and no/100 Dollars ($1,300,000.00) made by HGPI to the Horizon Loan
Borrowers, the repayment of which is evidenced by that certain Horizon Loan
Note.


 


“Horizon Loan Borrowers” means
Retail Partners, Inc., an Illinois corporation, and Retail Partners Limited
Partnership, an Illinois limited partnership. 
The Horizon Loan Borrowers are affiliates of, and under common control
with, Sellers.


 


“Horizon Loan Documents” means
the Horizon Loan Note, the Horizon Net Profits Assignment, the Horizon Pledge
Agreement, the Horizon Loan Guaranty and all other agreements and documents
evidencing or securing repayment of the Horizon Loan.


 


“Horizon Loan Guaranty” means
that certain Guaranty, dated as of March 14, 2003, issued by PGI, Prime Group
Limited Partnership, Prime Group II, L.P., PGLP, Inc. and Prime International,
Inc. in favor of HGPI.


 


“Horizon Loan Note” means that
certain Promissory Note, dated March 14, 2003, by Retail Partners, Inc., an
Illinois corporation, and Retail Partners Limited Partnership, an Illinois
limited partnership, payable to the order of HGPI.


 


“Horizon Net Profits Assignment”
means that certain letter agreement, dated March 14, 2003, from the
Partnerships and PGI to HGPI, as accepted and agreed to by HGPI, pursuant to
which the Partnerships assign to HGPI a certain percentage of the Partnerships’
interests in Net Profits.  The “Horizon
Net Profits Assignment” shall include the percentage of the Partnerships’
interests in Net


 


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Profits that were assigned to HGPI
prior to the date hereof and any additional percentage of the Partnerships’
interests in Net Profits that is assigned to HGPI from and after the date
hereof pursuant to the letter agreement referenced in the immediately preceding
sentence.


 


“Horizon Pledge Agreement”
means that certain Pledge and Security Agreement, dated as of March 14, 2003,
between the Horizon Loan Borrowers, as pledgors, and HGPI, as pledgee.


 


“Lender” shall mean Beal Bank,
S.S.B., a savings bank organized under the laws of the State of Texas.


 


“Lien” shall mean any lien
(statutory or other), pledge, mortgage, deed of trust, assignment, deposit
arrangement, priority, security interest, adverse claim, charge or encumbrance
or other preferential arrangement of any kind or nature whatsoever, any
agreement to give or refrain from giving any lien, pledge, mortgage, security
interest, charge or other encumbrance of any kind, any conditional sale or
other title retention agreement, any lease in the nature of any of the
foregoing and the filing or existence of any financing statement or other
similar form of notice under the laws of any jurisdiction or any security
agreement authorizing any Person to file such a financing statement, whether
arising by contract, operation of law, or otherwise.


 


“Mortgages” shall mean the
Beal Loan Mortgage, the Beal Net Profits Mortgage and the Series B TIF Bonds
Mortgage.


 


“Net Cash Flow”
means, with respect to either Partnership, the excess, if any, as of such date,
of (a) the gross cash receipts of such Partnership from the Closing Date or the
Extended Closing Date, as applicable, from all sources whatsoever, including,
without limitation, the following:


 


(i)                                     all rents, revenues, income and proceeds
derived by such Partnership from its operations, including, without limitation,
distributions received by such Partnership from any Person in which such
Partnership has an interest; (ii) all proceeds and revenues received by such
Partnership on account of any sales of property of such Partnership or as a
refinancing of or payments of principal, interest, costs, fees, penalties or
otherwise on account of any borrowings or loans made by such Partnership or
financings or refinancings of any property of such Partnership or sale of any
of the Series C TIF Bonds or sale of any tax increment financing bonds
hereafter issued with respect to any of the Real Property; (iii) the amount of
any insurance proceeds and condemnation awards received by such Partnership;
(iv) any reduction in the cash amounts previously reserved by the Partnership
and described in subsection (b)(v) below, if Purchasers determine that
such amounts are no longer needed; (v) the return of cash collateral pledged
with respect to the Series B TIF Bonds or the Series C TIF Bonds; and (vi) the
proceeds of liquidation of such Partnership’s property,


 


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over (b) the sum of:


 


(i) all operating costs
and expenses of such Partnership and capital expenditures paid (without deduction,
however, for any capital expenditures, charges for depreciation or other
expenses not paid in cash or expenditures from reserves described in (v)
below); (ii) to the extent not included in any other clause of this subparagraph
(b), all costs and expenses expended or paid during such period in
connection with the sale or other disposition, or financing or refinancing, of
property of such Partnership or the recovery of insurance or condemnation
proceeds; (iii) to the extent not included in any other clause of this subparagraph
(b), all debt service, including principal and interest, paid on all
indebtedness of such Partnership, including any payments made or cash
collateral pledged pursuant to the terms of the Beal Loan, the Series B TIF
Bonds and the Series C TIF Bonds; (iv) all capital contributions, advances,
reimbursements or similar payments made to any Person in which such Partnership
has an interest; (v) any increases in mandatory reserves required by third
parties necessary for debt service or other purposes for such Partnership or
any Person in which such Partnership has an interest; and (vi) any payments
made pursuant to the terms of the Beal Net Profits Interest.


 


“Net Profits” shall have the
meaning specified in the Beal Net Profits Assignment.


 


“Notices” shall have the
meaning specified in Section 8.1.


 


“Obligations” shall have the
meaning specified in Section 8.12.


 


“Organizational Documents”
shall mean (a) with respect to any corporation, the certificate of
incorporation or articles of incorporation and by-laws of such corporation, (b)
with respect to any limited partnership, the certificate of limited partnership
and agreement of limited partnership of such limited partnership, (c) with
respect to any limited liability company, the certificate of formation or
certificate of organization and limited liability company agreement or
operating agreement of such limited liability company, and (d) with respect to
any general partnership, the partnership agreement of such general partnership.


 


“Other Assets” shall mean
those assets specified in Exhibit A attached hereto under the caption
“Other Assets.”


 


“Outside Closing Date” shall
have the meaning specified in Section 2.3(a).


 


“Permitted Exceptions” shall
mean (i) the Mortgages and all other covenants, agreements, encumbrances set
forth on Exhibit A or Exhibit B and other immaterial matters of
record relating in or affecting the Real Property or any portion thereof, (ii)
all Liens and other matters of title identified or reflected in the Title Commitment,
(iii) the Beal Net Profits Assignment and the Beal Net Profits Interest, (iv)
the Horizon Net Profits Assignment and the Current Net Profits Interest, and
(v) the Skoien Participation Interest.


 


“Person” shall mean any
individual, trustee, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, limited partnership and other entity or any Governmental Authority.


 


“PGI” shall have the meaning
specified in the Preamble.


 


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“PGI Employees” shall have the
meaning specified in Section 5.6(a).


 


“PGLP Holdings” shall have the
meaning specified in the Preamble.


 


“P/HMRI” shall have the
meaning specified in the Preamble.


 


“Prime Approved Contributions”
means any capital contributions made by Purchasers to the Partnerships that are
used to make or maintain improvements to the Real Property or the Other Assets
or for any other good faith business purpose directly related to or for the
benefit of the Real Property or the Other Assets.


 


“Prime Participation Interest”
means the interest in the Partnerships and the cash flow generated from the
portion of the Partnership retained by Sellers as more fully described in Section
2.5 of this Agreement.


 


“Purchase Price” shall have
the meaning specified in Section 2.2.


 


“Purchaser” or “Purchasers”
shall have the meaning set forth in the Preamble.


 


“Real Property” shall have the
meaning specified in the Recitals and generally described on Exhibit A
attached hereto.


 


“Seller” or “Sellers”
shall have the meaning set forth in the Preamble.


 


“Sellers’ Knowledge” shall
mean the actual knowledge without investigation of Messrs. Michael W. Reschke,
Mark K. Cynkar, Bohdan Hirniak and Philip Waters, but excluding Mr.  Gary J. Skoien.


 


“Seller Transaction Documents”
shall have the meaning specified in Section 3.1.


 


“Series B TIF Bonds” shall
mean those certain $14,000,000 Tax Increment Allocation Revenue Bonds (Huntley
Redevelopment Project), Series B-1995.


 


“Series B TIF Bonds Mortgage”
shall mean that certain Amended and Restated Mortgage and Security Agreement,
dated as of December 14, 1999, or similar instrument, as amended from time to
time, executed and delivered by HDLP in favor of First Trust National
Association (f/k/a U.S. Bank National Association), as Trustee for the holders
of the Series B TIF Bonds, to secure the payment of amounts due under the
Series B TIF Bonds.


 


“Series C TIF Bonds” shall
mean the $24,405,000 Tax Increment Allocation Revenue Bonds (Huntley
Redevelopment Project), Series C-1995 (the “Series C TIF Bonds”) issued
by the Village of Huntley, Illinois.


 


“Skoien Participation Interest”
means the participation interest in the cash flow generated from the
Partnerships held by Gary J. Skoien, as more fully described in that certain
letter agreement, dated as of June 11, 2003, among Gary J. Skoien, HDLP and
HMRV.


 


“Subject Partnership Interests”
shall have the meaning specified in the Section 2.1.


 


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“Tax” or “Taxes” shall
mean all federal, state, local, foreign and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, add on or alternative minimum, occupancy, withholding, payroll,
employment, social security, excise, severance, stamp, value added, occupation,
premium, property (including, without limitation, real property and any
assessments, special or otherwise), windfall profits, customs, duties or other
taxes of any kind whatever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto.


 


“Tax Returns” shall mean all
returns (including information returns), declarations, reports, statements and
other documents required by a Governmental Authority to be filed with respect
to a Tax.


 


“Transaction Documents” shall
mean this Agreement and all other agreements and instruments to be executed and
delivered by any one or more of the parties hereto in connection with the consummation
of the transactions contemplated hereby and thereby.


 


1.2                                 Headings; Construction
and Interpretation. The headings in this Agreement are for convenience of
reference only, do not constitute a part of this Agreement and are not to be
considered in construing or interpreting this Agreement.  All section, preamble, recital, exhibit,
schedule, disclosure schedule, annex, clause and party references are to this
Agreement unless otherwise stated.  No
party, nor its counsel, shall be deemed the drafter of this Agreement for
purposes of construing the provisions of this Agreement, and all provisions of
this Agreement shall be construed in accordance with their fair meaning, and
not strictly for or against any party.


 


2.                                       SALE
AND PURCHASE.


 


2.1                                 Sale
of the Subject Interests.  On the
Closing Date, and upon the terms and subject to the conditions set forth in
this Agreement, Sellers shall sell, transfer and assign to the Purchasers, and
Purchasers shall purchase and acquire from Sellers, all of the partnership interests
in each Partnership (the “Subject Partnership Interests”) for (i) the
aggregate purchase price of Nine Million Three Hundred Thousand Dollars
($9,300,000.00) (the “Purchase Price”) and (ii) the assumption by
Purchasers of the Permitted Exceptions and all of the liabilities and
obligations of the Partnerships described or listed in Exhibit A, Exhibit
B or Exhibit E attached hereto. 
The Purchasers acknowledge and agree that they are purchasing the
Subject Partnership Interests, and accordingly, are acquiring the equity
interests in, and, indirectly, assets of, the Partnerships, subject to all of
the Permitted Exceptions.  In addition,
Purchasers shall grant at the Closing the Prime Participation Interest, as more
fully described in Section 2.5 hereof. 
The Purchase Price shall be paid at the Closing by wire transfer of
immediately available funds to an account specified by Sellers not less than
one (1) Business Day prior to the Closing Date; provided, however,
a portion of the Purchase Price shall be paid by Purchasers to HGPI as a
partial repayment of the Horizon Loan such that, after the Closing, the
outstanding principal amount of the Horizon Loan shall be Five Hundred Thousand
Dollars ($500,000.00).


 


[2.2                             Reserved.]


 


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2.3                                 Closing.


 


(a)                                  Subject to Section 5.3, the
closing of the purchase and sale of the Subject Partnership Interests pursuant
to this Agreement (the “Closing”) shall take place on a date (the “Closing
Date”) and at a time mutually acceptable to Seller and Purchasers, but not
later than 12:00 p.m., Chicago time, on June 13, 2003 (the “Outside Closing
Date”), provided all of the conditions set forth in Section 6 hereof
shall have been satisfied or duly waived, or at such other time and date as the
parties hereto shall agree. 
Notwithstanding the foregoing, if the Closing does not occur prior to
the Outside Closing Date, the Outside Closing Date shall automatically be
extended to any date designated in a written notice by Sellers after the Outside
Closing Date, provided, such date shall not be later than July 15, 2003
nor earlier than forty-eight hours after Sellers provide such written notice
(the date to which the Outside Closing Date is extended is referred to as the “Extended
Outside Closing Date”); and provided, further, that Sellers
shall pay $2,400.00 to Purchasers for each day the Closing Date is extended
past June 13, 2003 or if the Closing occurs, the Purchase Price shall be
reduced by any such amount.  The Closing
shall take place at the offices of Sellers, or at such other place as the
parties hereto shall agree.  In the
event the Closing does not occur on or before the Outside Closing Date (or, if
applicable, the Extended Outside Closing Date) for any reason other than a
default by Sellers of their obligations under this Agreement, Sellers may
terminate this Agreement by the delivery to Purchasers of written notice of
termination, in which event this Agreement, and the rights and obligations of
the parties hereunder, shall immediately terminate and be of no further force
or effect.


 


(b)                                 At the Closing, Sellers and Purchasers
shall deliver to one another one or more Assignment of Partnership Interests
and Assumption (the “Assignments”), in a form reasonably acceptable to
Purchasers and Sellers, duly executed on behalf of the appropriate Seller or
Sellers and Purchaser or Purchasers, pursuant to which Sellers transfer or
assign to Purchasers, in the aggregate, the Subject Partnership Interests, and
Purchasers assume, and agree to pay, perform and discharge when due, the
Permitted Exceptions and the liabilities and obligations of the Partnerships
described or listed in Exhibit A, Exhibit B or Exhibit E
attached hereto.


 


2.4                                 Prorations.  There shall
be no prorations in connection with the transactions contemplated by this
Agreement.


 


2.5                                 Prime Participation Interest.


 


(a)                                  At the Closing,
Purchasers shall grant to Sellers, or shall cause the Partnerships to grant to
Sellers (or a person or persons or entity or entities designated by Sellers),
the Prime Participation Interest, which shall consist of a participation
interest in the Net Cash Flow distributed or deemed distributed to Purchasers
from either of the Partnerships equal to twenty-six percent (26.0%) of the cash
distributed or deemed distributed to Purchasers from either of the Partnerships
(excluding distributions (i) payable to Horizon pursuant to the terms of the
Current Net Profits Interest or (ii) payable to Gary J. Skoien pursuant to the
terms of the Skoien Participation Interest) in excess of the Purchase Price
plus all Prime Approved Contributions advanced by either Purchaser to either of
the Partnerships after the Closing Date, plus a return on each amount
calculated at forty percent (40.0%) per annum from the date such amount is
paid, contributed or incurred, as the case may be, compounded quarterly; provided,
however, that the aggregate amount that may be received pursuant to the
Prime Participation Interest shall not exceed Five Million Dollars
($5,000,000.00).  For purposes of this Section
2.5(a), amounts of Net Cash Flow resulting from a capital transaction
providing net proceeds in excess of $100,000 to the Partnerships shall be
deemed distributed on the Business Day following the receipt of such net
proceeds by the


 


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Partnerships.


 


(b)                                 Purchasers shall cause
the Partnerships to distribute to Sellers any amounts due to Sellers pursuant
to Section 2.5(a) on a semi-monthly basis.


 


(c)                                  Neither Purchaser
shall sell, assign, convey or otherwise transfer all or any portion of the Real
Property, the Series C TIF Bonds or other assets or interests of either
Partnership to any Person affiliated directly or indirectly with either
Partnership, either Purchaser or HGPI, unless Purchasers receive at the time of
such sale, assignment, conveyance or other transfer an amount in cash equal to
the fair market value of such property.


 


(d)                                 Purchasers shall not
cause or permit either Partnership to pay any fees or expenses (including any
management, consulting, service, advisory, brokerage or other fee) to any
Person affiliated directly or indirectly with either Partnership, either
Purchaser or HGPI, except for all costs of employees, including bonus,
commissions and benefits and other allocable costs and expenses, which shall be
charged to the Partnerships in a manner consistent with past practices.


 


(e)                                  If either Partnership
or Purchaser sells, transfers or otherwise disposes of any profit,
participation or other similar interest in the profits or cash flows of either
Partnership, then the proceeds of such sale, transfer or disposition shall be
deemed Net Cash Flow distributed to Purchasers for purposes of Section
2.5(a).


 


(f)                                    Purchasers shall
provide to Sellers by the 20th day following the end of each
calendar quarter (i) the same information to be provided to Beal Bank pursuant
to Section 1(j) of the Beal Net Profits Assignment (whether or not such
Assignment is in effect) and (ii) a description and quantification of all Prime
Approved Contributions made during the quarter then ended.  Sellers shall have the right to audit such
information at reasonable times and upon reasonable notice, at Sellers’ sole
expense.


 


3.                                       REPRESENTATIONS AND WARRANTIES OF SELLERS.


 


To induce Purchasers to enter into this Agreement, each Seller hereby,
jointly and severally, represents and warrants to Purchasers as follows:


 


3.1                                 Organization and
Qualification of Sellers.  Each
Seller is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority to enter into and perform
its obligations under this Agreement and under the Transaction Documents
required to be executed and delivered by such Seller pursuant to this Agreement
(the “Seller Transaction Documents”).


 


3.2                                 Organization and
Qualification of HDLP. HDLP is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Illinois,
has the requisite power and authority to own or use its properties and assets
that it currently owns and uses and to conduct its business as now conducted,
and is duly qualified or licensed to do business in each jurisdiction in which
the character of the properties or assets owned, used or operated by it or the
nature of its activities makes such qualification or licensing necessary.


 


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3.3                                 Organization and
Qualification of HMRV. HMRV is a partnership duly organized and validly
existing under the laws of the State of Illinois, has the requisite power and
authority to own or use its properties and assets that it currently owns and
uses and to conduct its business as now conducted, and is duly qualified or
licensed to do business in each jurisdiction in which the character of the
properties or assets owned, used or operated by it or the nature of its  activities 
makes such qualification or licensing necessary.


 


3.4                                 Authorization; Binding
Obligations. The execution, delivery and performance by each Seller of
its obligations under this Agreement and each of the other Seller Transaction
Documents, and the consummation by each Seller of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite action on such
Seller’s part.  The sale, transfer,
assignment and delivery of the Subject Partnership Interests as contemplated
hereunder at Closing have been duly authorized, or will be duly authorized
prior to the Closing, by each Seller.


 


3.5                                 Enforceability.  Each of the Seller Transaction Documents
constitutes, or when executed and delivered by each Seller will constitute, the
legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, subject to bankruptcy, insolvency and
other similar laws affecting the rights and remedies of creditors generally and
general principles of equity.


 


3.6                                 Non-Contravention.  Except
for any Consent of the Lender to the transactions contemplated hereby, as may
be required pursuant to the applicable terms of the Mortgage Loan Documents:


 


(a)                                  No Seller nor either Partnership is
required to give any notice to, or obtain any approval, Consent, ratification,
waiver or other authorization from, any Person or any Governmental Authority in
connection with the execution, delivery or performance of the Seller
Transaction Documents or the consummation of any of the transactions
contemplated hereby or thereby.


 


(b)                                 Neither the execution
and delivery of the Seller Transaction Documents nor the consummation or
performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly:


 


(i)                                     breach
or conflict with (A) any provision of the Organizational Documents of any
Seller or any Partnership, (B) any resolution adopted by the partners,
directors, shareholders, members or managers of any Seller or any Partnership
or (C) any agreement to which any Seller or either Partnership is a party or by
which it is bound;


 


(ii)                                  breach
or conflict with, or give any Governmental Authority or other Person the right
to challenge any of the transactions contemplated hereby or to exercise any
remedy or obtain any relief under, any Applicable Laws to which any Seller or
either Partnership may be subject; or


 


(iii)                               result
in the imposition of any Lien upon or with respect to any Seller, either
Partnership or the Subject Partnership Interests.


 


3.7                                 Financial Statements.  The financial statements of the Partnerships
attached hereto as Exhibit D (which are prepared as of December 31, 2002
and March 31, 2003), are true, correct and


 


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complete in all material respects and fairly present the financial
circumstances of the Partnerships as of such respective dates.


 


3.8                                 Validity of Subject
Partnership Interests. Each Seller is the sole record and beneficial
owner of the Subject Partnership Interests as described in the Recitals.  The Subject Partnership Interests have been
duly authorized and duly and validly issued by the applicable Partnership, are
fully paid and non-assessable, and are, and at the Closing shall be, free and
clear of any Liens created by, through or under any Seller, except the
Permitted Exceptions.


 


3.9                                 Beal Mortgage Loan Documents.


 


(a) The Beal Mortgage Loan Documents (excluding officer’s
certificates and other non-material documents) are listed on Exhibit B
attached hereto.  Each Beal Mortgage
Loan Document is in full force and effect and is valid and enforceable in
accordance with its terms, subject to bankruptcy, insolvency and other similar
laws affecting the rights and remedies of creditors generally and general
principles of equity.  To Sellers’
Knowledge, each Seller and each Partnership is in compliance in all material
respects with each Beal Mortgage Loan Document to which it is a party, and all
payments due and owing pursuant to the terms of the Beal Loan have been
paid.  To Sellers’ Knowledge, each other
Person that is a party to any Mortgage Loan Document is in compliance with all
material terms of such Beal Mortgage Loan Documents to which it is a party.


 


(b)                                 Sellers represent and warrant that the
Total Approved Contributions (as defined in the Beal Net Profits Assignment)
are not less than $11,400,000.00 as of the date of this Agreement.


 


3.10                           Employees. Neither Partnership
has any employees.


 


3.11                           Employee Benefit Plans.  Neither Partnership maintains, sponsors or
participates in, or is a party to, any pension, retirement, employee benefit,
profit sharing or similar trust, plan or agreement established pursuant to the
Employee Retirement Income Security Act of 1974, as amended, or any contract or
collective bargaining agreement with any labor union or other labor
organization.


 


3.12                           Litigation. To Sellers’
Knowledge, except as set forth on Exhibit C attached hereto, there are
no pending or threatened claims, actions, suits, labor disputes, grievances,
administrative or arbitration or other proceedings or investigations against
either Partnership or their respective assets or properties before or by any
Governmental Authority.


 


3.13                           Asset and Liabilities.


 


(a)                                  Neither Partnership owns any significant
assets other than the Real Property, the Other Assets and any other assets
identified on Exhibit A, and other assets related thereto.


 


(b)                                 To Sellers’ Knowledge, neither Partnership
has any liabilities or obligations, known or unknown, fixed or contingent, in
excess of $25,000 on an individual basis, other than (i) the liabilities or
obligations evidenced, set forth in or contemplated by the Mortgages, the Beal
Mortgage Loan Documents, the Beal Net Profits Assignment, the Beal Net Profits
Interest, the Horizon Net Profits Assignment, the Current Net Profits Interest
and the Skoien Participation


 


12

















 


Interest, (ii) the liabilities, obligations or commitments referred to
in this Agreement or otherwise specified on Exhibit A or Exhibit B,
and (iii) the liabilities and obligations reflected on Exhibit E.  To Sellers’ Knowledge, all of the agreements
set forth on Exhibit A are in full force and effect, and Sellers have
not received any written notice that any of such agreements is in default.  If any non-disclosed liability is covered by
any of Sellers’ insurance policies, Sellers shall cooperate with Purchasers in
order to ensure that the carrier of such insurance policy shall pay any amounts
for such liability.


 


3.14                           Taxes.  Each
Partnership has filed all Tax Returns which are required to have been filed and
has paid all Taxes which have become due as shown on such Tax Returns or
pursuant to any assessments received with respect thereto.  The Tax Returns are true and correct in all
material respects.  Each Partnership has
timely paid or made provision and will timely pay or make provision for all
Taxes which have been or will be shown as due and payable on such Tax Returns,
and neither Partnership is delinquent in the payment of any Tax or in the
filing of any Tax Returns, and no deficiencies for any Tax have been claimed,
proposed or assessed against either Partnership.  Sellers have not received written notice that any of the Tax
Returns of either Partnership is under examination by any federal, state or
local governmental authority.


 


3.15                           Brokers.  No
broker or finder has been employed or retained by any Seller in connection with
the transactions contemplated hereby or, to Sellers’ Knowledge, is in any way
connected with the transactions contemplated hereby.


 


EXCEPT AS
SPECIFICALLY SET FORTH IN THIS SECTION 3, NONE OF THE SELLERS MAKES ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WITH REGARD TO THE
PARTNERSHIPS, THE SUBJECT PARTNERSHIP INTERESTS, THE REAL PROPERTY, THE SERIES
C TIF BONDS, OR THE FINANCIAL CONDITION OF THE PARTNERSHIPS.


 


4.                                       REPRESENTATIONS AND WARRANTIES OF HGPI AND PURCHASERS.


 


To induce Sellers to enter into this Agreement, HGPI and each Purchaser
hereby, jointly and severally, represents and warrants to Sellers as follows:


 


4.1                                 Authorization; Enforceability; No Violations.


 


(a)                                  HGPI is a corporation, and each Purchaser
is a limited liability company, duly organized, validly existing and in good
standing under the laws of the State of Delaware.  HGPI and each Purchaser has the requisite power and authority to
enter into and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party. 
The execution, delivery and performance by HGPI and each Purchaser of
this Agreement and the other Transaction Documents to which it is a party, and
the consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all requisite action on HGPI and each Purchaser’s part.


 


(b)                                 The execution and delivery by HGPI and
each Purchaser of, and performance by HGPI and each Purchaser of its
obligations under, this Agreement and the other Transaction Documents to which
it is a party and the consummation of the transactions contemplated hereby or
thereby do not and will not violate any provision of any of the Organizational
Documents of HGPI or either Purchaser, or of any resolution adopted by the
members or manager(s) of either Purchaser or 


 


13

















 


the board of directors of HGPI, or of any other agreement or instrument
to which HGPI or either Purchaser is a party or by which HGPI or either
Purchaser is bound, or to which any of HGPI’s or either Purchaser’s properties
or assets is subject, or of any Applicable Law in such a manner that would not
allow the transactions contemplated by this Agreement to be consummated.  HGPI and each Purchaser have duly executed
and delivered this Agreement and, at the Closing, will have duly executed and
delivered the other Transaction Documents to which it is a party. This
Agreement constitutes, and the other Transaction Documents to which HGPI and
each Purchaser is a party when executed and delivered by HGPI and such
Purchaser will constitute, the legal, valid and binding obligation of HGPI and
each Purchaser, enforceable against HGPI and each Purchaser in accordance with
their terms, subject to bankruptcy, insolvency and other similar laws affecting
the rights and remedies of creditors generally and general principles of
equity.


 


(c)                                  The
execution and delivery by HGPI and each Purchaser of, and the performance by
HGPI and each Purchaser of its obligations under, the Transaction Documents to
which it is a party and the consummation of the transactions contemplated
hereby or thereby, do not and will not breach or conflict with, or give any
Governmental Authority or other Person the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain any relief
under, any Applicable Law to which HGPI or either Purchaser may be subject.


 


4.2                                 Consents.  No Consent, authorization or order of, or
filing or registration with, any Person is required to be obtained or made by
HGPI or either Purchaser for the execution, delivery and performance by HGPI
and each Purchaser of this Agreement or any of the other Transaction Documents
to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby other than those that will have been made or
obtained on or prior to the Closing Date.


 


4.3                                 Investment
Intent.  Each Purchaser is acquiring the Subject Partnership
Interests for its own account and not with a view to its distribution within
the meaning of Section 2(11) of the Securities Act of 1933, as amended.  Each Purchaser is an “accredited investor”
as such term is defined in Rule 501(a) under such act.


 


4.4                                 Evaluation.  Each
Purchaser has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of the acquisition of the
Subject Partnership Interests, the Real Property and the Series C TIF Bonds
and, having been furnished with or given access to, and having reviewed or been
given an opportunity to review, all such information as it has considered
necessary, has concluded that it is able to bear these risks.  Except for the representations and
warranties set forth in this Agreement, neither Purchaser has relied on any
representations by any Seller, either Partnership or any of their respective
members, managers, partners, directors, shareholders, trustees, officers,
employees, agents, representatives, attorneys or affiliates in making the
decision to acquire the Subject Partnership Interests and, indirectly, the Real
Property and the Series C TIF Bonds. 
HGPI and each Purchaser acknowledges and agrees that, except as set
forth in this Agreement, Sellers make no representations or warranties, express
or implied, with respect to the assets, liabilities, business, operations,
condition (financial or otherwise) or prospects of either Partnership, the
Subject Partnership Interests, the Real Property or the Series C TIF Bonds, all
of which are accepted by Purchasers on an “as is, where is” basis.  In particular, and without limiting the
generality of the foregoing, SELLERS DO NOT MAKE, AND HEREBY EXPRESSLY
DISCLAIM, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE OF THE REAL PROPERTY OR OF ANY OTHER ASSET OF


 


14

















 


EITHER PARTNERSHIP.


 


4.5                                 Brokers.  No
broker or finder has been employed or retained by HGPI or either Purchaser in
connection with the transactions contemplated hereby, or, to HGPI’s or either
Purchaser’s knowledge, is in any way connected with the transactions
contemplated hereby.


 


5.                                       COOPERATION,
NOTICE AND OTHER COVENANTS.


 


5.1                                 Access
and Investigation.  Between the date
of this Agreement and the Closing Date, Sellers shall (a) afford Purchasers
full and free access to the properties, contracts, books and records, and other
documents and data, of each Partnership, (b) furnish Purchasers with
copies of all such contracts, books and records, and other existing documents
and data as Purchasers may reasonably request that are in the possession of any
Seller or either Partnership, and (c) furnish Purchasers with such additional
financial, operating, and other data and information as Purchasers may
reasonably request to the extent in the possession of any Seller or either
Partnership.  In that regard, Sellers
shall make available to Purchasers complete and accurate copies of the Beal
Mortgage Loan Documents, the Mortgages, any other documents in their possession
relating to the Real Property, the environmental and physical condition of the
Real Property and the Organizational Documents of the Partnerships.  Purchasers shall, jointly and severally,
indemnify, defend and hold harmless, Sellers and the Partnerships from and
against any and all costs, losses, claims, expenses, liabilities or obligations
resulting from physical injury, property damage, mechanics’ or materialmen’s
liens or otherwise caused directly or indirectly by Purchasers’ review and
inspection of the Real Property, the Other Assets or any of the above described
information.


 


5.2                                 Cooperation and
Commercially Reasonable Efforts.  Subject to the terms and
conditions of this Agreement, each Seller and Purchaser shall cooperate with
one another in timely giving all notices, making all filings and obtaining all
Consents of Lender and any other third parties, if any, necessary to consummate
the transactions contemplated hereby, and the parties hereto agree to execute
and deliver such other documents, certificates, agreements and other writings,
and to use commercially reasonable efforts to take, or cause to be taken, such
other actions and to do, or cause to be done, all things necessary or desirable
in order to satisfy the conditions set forth in Section 6 hereof and to
consummate the transactions contemplated hereby on or prior to the Outside
Closing Date (or, if applicable, the Extended Outside Closing Date) or as soon
thereafter as reasonably practicable.


 


5.3                                 Consent of Lender.  Without
limiting the generality of Section 5.2, each Seller and Purchaser
acknowledges that the Consent of the Lender to the transactions contemplated
hereby is required pursuant to the Beal Mortgage Loan Documents.  Each Seller and Purchaser shall execute and
deliver such documents, certificates, agreements and other writings, and use
commercially reasonable efforts to take, or cause to be taken, such actions,
and do, or cause to be done, all things necessary or desirable in order to
satisfy the conditions precedent to the granting of the consent of the
Lender.  In the event the Consent of
Lender is not received on or before July 15, 2003, or if Beal Bank requests, in
exchange for its consent to the transactions contemplated by this Agreement,
any substantial change in any of the Transaction Documents materially adverse
to either Partnership, either Purchaser or any Seller, Purchasers or Sellers
may terminate this Agreement by the delivery of written notice to the other, in
which event, this Agreement, and the rights and obligations of the parties
hereunder, shall immediately terminate, and this Agreement shall be of no
further force or


 


15

















 


effect.


 


5.4                                 Notice of Certain
Events.  Each Seller and Purchaser shall promptly notify the
other of:


 


(i)                                     any
notice or other communication from any Person, alleging that the Consent of
such Person is or may be required in connection with the consummation of any of
the transactions contemplated hereby or otherwise asserting any objection to
any of the transactions contemplated hereby;


 


(ii)                                  any
notice or other communication from any Governmental Authority in connection
with the consummation of the transactions contemplated hereby;


 


(iii)                               any
notice of any breach or inaccuracy of any of the representations and warranties
made in this Agreement by any of the parties hereto; or


 


(iv)                              any
actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or otherwise affecting any party
hereto that relate to the consummation of the transactions contemplated hereby.


 


5.5                                 Title Commitment
and Survey.


 


(a)                                  Concurrently with the
execution of this Agreement, Sellers shall provide Purchasers with a title
insurance policy commitment (“Title Commitment”) issued in June 2003
covering the Real Property.  Sellers
hereby represent and warrant that the Partnerships own fee simple title to the
Real Property, subject to Permitted Exceptions.


 


(b)                                 As promptly as
practicable after the date hereof, Sellers shall endeavor to deliver to
Purchasers a current survey of the Real Property (the “Survey”), provided,
however, that such survey shall not be required to be delivered to
Purchasers at or prior to the Closing if such survey has not been completed
prior to the Closing.  All costs of the
Title Commitment and the Survey shall be borne by Sellers.


 


5.6                                 PGI Employees.  On the Closing Date, HGPI shall offer to
hire Messrs. Bohdan Hirniak and Philip Waters (together, the “PGI Employees”)
as employees of HGPI having responsibilities similar to their respective
current responsibilities with PGI with an annual base compensation not less
than the respective annual base compensation currently paid to such employees
by PGI. HGPI shall also provide the PGI Employees with such health, welfare and
other employee benefit plans, programs and policies that are provided to
similarly situated employees of HGPI, subject to any waiting period
requirements not to exceed 60 days with respect to participation and coverage
requirements applicable to the PGI Employees, and PGI shall be responsible for
and shall pay all amounts under such health, welfare and other employee benefit
plans for such waiting period not to exceed 60 days.


 


5.7                                 Development.  For so long as the Prime Participation
Interest is outstanding, Purchasers shall not, and shall cause the Partnerships
not to, build structures on the Real Property for sale or rental.


 


5.8                                 Prime
Freeman Road, L.L.C..  HDLP and
Prime Freeman Road, L.L.C. (“PFR”) have


 


16

















 


entered into an Agreement for Sale of Real Estate dated June 11, 2003,
with the Kirk Corporation for the sale of a portion of the Real Property (the
“HDLP/Kirk Parcel”) and certain real estate owned by PFR (the “PFR
Parcel”).  HDLP and PFR shall share the
proceeds, net of all customary closing costs and expenses, of such sale based
on the relative acreage of (a) the portion of the HDLP/Kirk Parcel that is
zoned for residential use to (b) the PFR Parcel.  Payments of any release prices to lenders who hold mortgages that
encumber either parcel shall be paid from the net proceeds otherwise payable to
the owner of the parcel being released. 
For example, if the residentially zoned portion of the HDLP/Kirk Parcel
is 146.2 acres and the PFR parcel is 7.8 acres, HDLP’s share will be 94.94% and
PFR’s share will be 5.06%.  If the net
proceeds are $18,000,000 and PFR’s mortgage is $850,000, PFR’s share will be
$910,800 of which $850,000 will be used to obtain the release, leaving $60,800
of proceeds.  HDLP’s share would be
$17,089,200 from which the balance of the Beal Loan would be repaid.


 


6.                                       CONDITIONS PRECEDENT TO CLOSING.


 


6.1                                 Conditions to Sellers’
Obligations. The obligations of Sellers hereunder required to be
performed on the Closing Date shall be subject to the satisfaction or at
Sellers’ election, waiver, at or prior to the Closing, of the following
conditions:


 


(a)                                  The representations and warranties of
HGPI and Purchasers contained in this Agreement shall have been true and
correct when made and shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.


 


(b)                                 Purchasers shall have performed and
complied in all material respects with all covenants contained in this
Agreement to be performed and complied with by Purchasers at or prior to the
Closing.


 


(c)                                  The Consent of the Lender to the
transactions contemplated hereby shall have been obtained, and any and all
conditions that must be satisfied under the Beal Mortgage Loan Documents for
transfer and assignment of the Subject Partnership Interests as contemplated
hereby shall have been satisfied.


 


(d)                                 Purchasers shall have, at Purchasers’
option, delivered to Sellers either (i) evidence of either the release of
Sellers and all affiliates of Sellers (other than the Partnerships), effective
as of the Closing Date, from all guaranties and other obligations under,
pursuant to and with respect to the Beal Mortgage Loan Documents and the Beal
Net Profits Assignment, or (ii) an unconditional indemnification agreement in a
form reasonably acceptable to Sellers pursuant to which Purchasers agree to
jointly and severally indemnify Sellers and all affiliates of Sellers from and
against all losses suffered or incurred by reason of such guaranties or other
obligations, including reasonable attorney fees and expenses, with such
indemnification obligations to be guaranteed by HGPI on the same terms as the
guarantee provided for in Section 8.12 below.


 


(e)                                  All governmental and regulatory approvals
and clearances and all third-party Consents necessary for the consummation by
Purchasers of the transactions contemplated hereby and by the other Transaction
Documents shall have been obtained and shall be in full force and effect.


 


17

















 


(f)                                    Sellers shall have received payment of
the Purchase Price.


 


(g)                                 Sellers
shall have received the Assignments, duly executed on behalf of Purchasers.


 


(h)                                 Sellers
shall have received an opinion from Winston & Strawn, counsel to the
Purchasers, in the form attached as Exhibit F.


 


(i)                                     Sellers
shall have received an agreement, duly executed by Philip Waters and
satisfactory to Sellers, terminating Mr. Waters’ employment agreements with PGI
and releasing the Sellers from any claims.


 


(j)                                     Sellers
shall have received such other certificates, instruments and documents in
furtherance of the transactions contemplated by this Agreement as any Seller
may reasonably request, which documents may include amendments to the Horizon
Loan Documents.


 


6.2                                 Conditions to
Purchasers’ Obligations.  The
obligations of Purchasers hereunder required to be performed at the Closing
shall be subject to the satisfaction or, at Purchasers’ election, waiver, at or
prior to the Closing, of the following conditions:


 


(a)                                  The representations and warranties of Sellers
contained in this Agreement shall have been true and correct when made and
shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as though made on and as of the Closing
Date.


 


(b)                                 Sellers shall have performed and complied
in all material respects with all covenants contained in this Agreement to be
performed and complied with by them at or prior to the Closing Date.


 


(c)                                  The
Consent of the Lender on terms satisfactory to Purchasers to the transactions
contemplated hereby shall have been obtained and shall be still in full force
and effect on the Closing Date, and any amendments of the Beal Mortgage Loan
Documents shall have been executed.


 


(d)                                 There
shall not exist any Lien on the Subject Partnership Interests or on any assets
owned by either Partnership other than the Permitted Exceptions and those
disclosed in this Agreement or set forth in the Title Commitment.


 


(e)                                  Sellers
shall have delivered to the Purchasers the following:  (i) a copy of each Partnership’s Organizational Documents, as
amended through the Closing Date, and (ii) a certificate as to the good
standing or active status of HDLP from the Secretary of State of the State of
Illinois.


 


(f)                                    Purchasers
shall have received delivery of the Assignments, duly executed on behalf of
Sellers.


 


(g)                                 There
shall have been no amendments to the HDLP Organizational Documents or the HMRV
Organizational Documents since the date of this Agreement.


 


18

















 


(h)                                 No
Seller shall have made any sale of any portion of the Real Property from the
date of this Agreement without the prior written consent of Purchasers.


 


(i)                                     No
Seller shall have made, or permitted or suffered to be made, or  suffered
any changes in zoning from the date of this Agreement, without the prior
written consent of Purchasers.


 


(j)                                     Neither
Partnership shall have incurred, or suffered the Real Property to have incurred
any additional mortgage indebtedness (other than interest accruing under the Mortgages)
in addition to any amount outstanding as of the date of this Agreement.


 


(k)                                  There
shall have been no material changes in the financial condition of either
Partnership from the information set forth in Exhibit D except to the
extent updated in Exhibit E.


 


(l)                                     Purchasers shall have received the Title
Commitment set forth in Section 5.5.


 


(m)                               Purchasers shall have received an opinion
from Schiff, Hardin & Waite, counsel to Sellers, in the form attached
hereto as Exhibit G.


 


(n)                                 Purchasers
shall have received an opinion from Robert J. Rudnik, counsel to the Sellers,
in a form satisfactory to Purchasers.


 


(o)                                 Purchasers
shall have received such other certificates, instruments and documents in
furtherance of the transactions contemplated by this Agreement as Purchasers
may reasonably request.


 


7.                                       REMEDIES.


 


7.1                                 Purchasers’
Remedies.  Except in the
circumstances described in Section 7.3, in which case the sole and
exclusive remedy of Purchasers is the default fee and the legal fees and
expenses set forth in Section 7.3, if (a) any Seller shall fail to
comply in any material respect with any of its obligations to be performed
hereunder, and/or (b) any Seller breaches, in any material respect, any of such
Seller’s representations or warranties contained in this Agreement, and neither
Purchaser is otherwise in default or has failed to comply, in any material
respect, with any of its obligations, Purchasers may, by written notice to
Sellers, as Purchasers’ sole and exclusive remedy under this Agreement, at law
and in equity, elect to either (i) terminate this Agreement by written notice
to Sellers or (ii) if the Purchase Price has been paid and the Transaction
Documents have been executed and delivered, pursue any other remedies available
to Purchaser at law or in equity.


 


7.2                                 Sellers’
Remedies.  If (a) either Purchaser
shall fail to comply in any material respect with any of its obligations to be
performed hereunder and/or (b) either Purchaser breaches, in any material
respect, any of such Purchaser’s representations or warranties contained in
this Agreement and Sellers are not otherwise in default and have not failed to
comply, in any material respect, with any of their obligations, Sellers may (i)
terminate this Agreement by written notice to Purchasers, and/or (ii) pursue
any other remedies available to Sellers at law or in equity.


 


7.3                                 Default
Fee.  In the event (a) Purchasers
are ready, willing and able to close on the


 


19

















 


purchase by Purchasers of the Subject Partnership Interests upon the
terms and conditions set forth in this Agreement on or prior to the Outside
Closing Date (or, if applicable, the Extended Outside Closing Date), and (b)
all of the conditions to Sellers’ obligations to sell the Subject Partnership
Interests upon the terms and conditions set forth in this Agreement on or prior
to the Outside Closing Date (or, if applicable, the Extended Outside Closing
Date) are satisfied, and (c) one or more of the Sellers fail to sell, transfer,
convey and assign some or all of the Subject Partnership Interests to
Purchasers on or prior to the Outside Closing Date (or, if applicable, the
Extended Outside Closing Date), and (d) Purchasers terminate this Agreement,
Sellers shall promptly pay Purchasers a default fee in the aggregate amount of
Five Hundred Thousand Dollars ($500,000), and shall promptly reimburse
Purchasers for all properly documented legal fees and expenses reasonably
incurred by Purchasers or Howard M. Amster in connection with the transactions contemplated
by this Agreement, including the loan and equity transaction between affiliates
of Mr. Amster and affiliates of Purchaser.


 


7.4                                 Recovery
of Litigation Costs.  If any action,
suit or legal proceeding is sought, taken, instituted or brought by any party
to this Agreement to enforce its rights under this Agreement, all costs,
expenses and fees, including, without limitation, court costs and reasonable
attorneys’ fees, of the prevailing party in such action, suit or proceeding
shall be borne by the losing party.


 


8.                                       MISCELLANEOUS.


 


8.1                                 Notices. All notices,
demands, requests, Consents, or other communications (collectively, “Notices”)
required or permitted to be given hereunder or which are given with respect to
this Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice.  Notice shall be deemed given on
the date of service or transmission if personally served or transmitted by
telegram, telex or facsimile (with confirmation of successful transmission
obtained); provided, that if such service or transmission is not on a
Business Day or is after normal business hours, then such notice shall be
deemed given on the next Business Day. 
Notice otherwise sent as provided herein shall be deemed given on the
next Business Day following timely delivery of such notice to a reputable air
courier service.


 


To any Seller:


 


The Prime Group, Inc.

77 West Wacker Drive

Suite 4200

Chicago, Illinois 60601

Attention:  Michael W. Reschke

Facsimile:  (312) 917-1511


 


20

















 


with a copy to:

The Prime Group, Inc.

77 West Wacker Drive

Suite 4200

Chicago, Illinois 60601

Attention:  Robert J. Rudnik

Facsimile:  (312) 917-8442


 


To Purchasers:

Horizon Huntley LLC

Horizon Huntley Finance LLC

77 West Wacker Drive

Suite 4200

Chicago, Illinois 60601

Attention:  Gary J. Skoien

Facsimile:  312-917-0911


 


with a copy to:

Horizon Group Properties, Inc.

77 West Wacker Drive

Suite 4200

Chicago, Illinois 60601

Attention:  David R. Tinkham

Facsimile:  312-917-8440


 


To HGPI:

Horizon Group Properties, Inc.

77 West Wacker Drive

Suite 4200

Chicago, Illinois 60601

Attention:  David R. Tinkham

Facsimile:  312-917-8440


 


8.2                                 Governing Law. This Agreement shall
be governed by, interpreted under, and construed in accordance with the
internal laws of the State of Illinois applicable to agreements made and to be
performed within the State of Illinois, without giving effect to any
choice-of-law provisions thereof that would compel the application of the
substantive laws of any other jurisdiction. 
Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts located in Cook County, Illinois, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.


 


8.3                                 Entire Agreement. This Agreement and
the other Transaction Documents (including all agreements entered into pursuant
hereto and all certificates and instruments delivered pursuant hereto and thereto)
constitute the entire agreement of the parties with respect to the subject
matter


 


21

















 


hereof and supersede all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties, whether oral or written.


 


8.4                                 Modifications and
Amendments. No amendment, modification or termination of this
Agreement shall be binding upon any party unless executed in writing by the
parties hereto intending to be bound thereby.


 


8.5                                 Waivers and Extensions. Any party to this
Agreement may waive any right, breach or default which such party has the right
to waive, provided that such waiver will not be effective against the
waiving party unless it is in writing, is signed by such party, and
specifically refers to this Agreement. 
Waivers may be made in advance or after the right waived has arisen or
the breach or default waived has occurred. 
Any waiver may be conditional. 
No waiver of any breach of any agreement or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof nor of
any other agreement or provision herein contained.  No waiver or extension of time for performance of any obligations
or acts shall be deemed a waiver or extension of the time for performance of
any other obligations or acts.


 


8.6                                 Titles and Headings.  Titles and headings of sections of this
Agreement are for convenience only and shall not affect the construction of any
provision of this Agreement.


 


8.7                                 Exhibits and Schedules.  Each of the exhibits and schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by reference.


 


8.8                                 Assignment; No Third
Party Beneficiaries. This Agreement and the rights, duties and obligations of
any Seller or Purchaser hereunder may not be assigned or delegated without the
prior written consent of the other party. 
This Agreement and the provisions hereof shall be binding upon and shall
inure to the benefit of each of the parties and their respective successors and
permitted assigns.  This Agreement is
not intended to confer any rights or benefits on any Persons that are not party
hereto.


 


8.9                                 Counterparts. This Agreement may
be executed by facsimile and in multiple counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the same instrument.


 


8.10                           Financial Statements.  Sellers shall provide such reasonable
cooperation as may be requested by Purchasers (including making available to
Purchasers any applicable books and records of the Partnerships) in assisting
Purchasers in the preparation by Purchasers or HGPI’s independent public
accountants of audited financial statements for the Partnerships in order for
HGPI to comply with any reporting requirements it may have with any
Governmental Authority, including, without limitation, the Securities and
Exchange Commission.  Purchasers shall
be responsible and shall pay for only the first $20,000 of expenses incurred in
fulfillment of the covenant set forth in the previous sentence.  Sellers shall also, if requested by HGPI’s
independent public accountants, cause the president or the managing general
partner of the administrative member of such Sellers, as the case may be, to
issue to such independent public accountants, after being given a reasonable
opportunity to review and comment on such audited financial statements, a
customary representation letter regarding such audited financial statements
with respect to fiscal periods ended on or prior to the Closing Date.


 


22

















 


8.11                           Tax Returns and Tax
Refunds.  Sellers shall file Tax
Returns with respect to each Partnership for all periods prior to Closing
(including any portion of a tax year) and shall pay all Taxes which are due
pursuant to such Tax Returns or pursuant to any assessments received with
respect thereto.  Purchasers shall file
Tax Returns with respect to each Partnership for all periods from and after the
Closing (including any portion of a tax year) and shall pay all Taxes which are
due pursuant to such Tax Returns or pursuant to any assessments received with
respect thereto.


 


8.12                           Guarantee.  HGPI hereby unconditionally and irrevocably
guarantees to Sellers, without offset or deduction, (a) the prompt and full
discharge when due by Purchasers and, with respect to Section 2.5, the
Partnerships, of all of the Purchasers’ and the Partnerships’ payment
obligations under this Agreement and the Prime Participation Interest in
accordance with the terms hereof and thereof, the guarantee under this Section
8.12(a) constituting hereby a guarantee of payment and not of collection,
and (b) the punctual and faithful performance by HGPI of each and every duty,
agreement, covenant and other obligation of Purchasers and, with respect to Section
2.5, the Partnerships, under and in accordance with the terms of this
Agreement and the Prime Participation Interest.  HGPI also hereby agrees that, if either Purchaser or Partnership
fails to perform and discharge promptly all such obligations and liabilities in
accordance with such terms, HGPI will, forthwith, upon demand, perform and
discharge the same.  The obligations of
the Purchasers and the Partnerships hereby guaranteed are hereinafter called
the “Obligations”.  The
unconditional obligation of HGPI hereunder will not be affected, impaired or
released by any extension, waiver or amendment.  Without limiting the generality of the foregoing, HGPI
specifically agrees that it shall not be necessary or required, and that it
shall not be entitled to require, that Sellers file suit or proceed to obtain
or assert a claim for personal judgment against either Purchaser or Partnership
for the Obligations or make any effort at collection of the Obligations from either
Purchaser or Partnership or foreclose against or seek to realize upon any
security now or hereafter existing for the Obligations or file suit or proceed
to obtain or assert a claim for personal judgment against any other party
liable for the Obligations or make any effort at collection of the Obligations
from any such other party or exercise or assert any other right or remedy to
which any of them is or may be entitled in connection with the Obligations or
any security or other guarantee therefor or assert or file any claim against
the assets of either Purchaser or Partnership or other person liable for the
Obligations, or any part thereof, before or as a condition of enforcing the
liability of  HGPI under this Section
8.12 or requiring payment of said Obligations by HGPI hereunder or under
the Prime Participation Interest, or at any time thereafter.


 


8.13                           Survival.  The representations and warranties made in
this Agreement or in any certificate or agreement delivered in connection
herewith shall terminate on December 31, 2004; provided, however,
that any claims of a breach of any such surviving representation or warranty
made in good faith prior to December 31, 2004 shall survive such date to the
extent of the facts alleged in such claim.


 


8.14                           Knowledge.  The parties acknowledge and agree that if
(a) Mr. Gary J. Skoien has actual knowledge (regardless of whether or not
Bohdan Hirniak or Philip Waters have actual knowledge) of any breach or
inaccuracy by Sellers of, or of any facts or circumstances the existence or
omission of which would constitute a breach or inaccuracy of, any
representation or warranty of Sellers contained in this Agreement, and (b)
neither Mr. Michael W. Reschke nor Mr. Mark Cynkar has actual knowledge of such
breach or inaccuracy, or of such facts or circumstances the existence or


 


23

















 


omission of which would constitute a breach or inaccuracy of, such
representation or warranty, then Purchasers shall be deemed to have waived such
breach or inaccuracy and neither Purchaser nor any of its successors, assigns
or affiliates shall be entitled to sue for damages or to assert any failure of
a condition or assert any other right or remedy for any losses arising from any
matters relating to such breach, inaccuracy, fact or circumstance,
notwithstanding anything to the contrary contained herein or in any certificate
or agreement delivered pursuant hereto.


 


8.15                           Buy-Sell
Procedures.


 


(a)                                  For
a period of six (6) months (the “Exercise Period”) following the fifth
(5th) anniversary of the Closing Date, either Sellers or Purchasers
(such electing party, the “Exercising Party”) may elect to present a
notice to the other party (the “Recipient Party”) that the Exercising
Party chooses to proceed under this Section 8.15.  Concurrently with such notice, the Exercising Party shall deliver
to the Recipient Party an offer (the “Offer”) setting forth a dollar
purchase price attributable to one hundred percent (100%) of the assets
(without regard to the Partnerships’ liabilities) of the Partnerships (the “Partnerships
Value”) and agreeing to sell or purchase (as elected or deemed elected by
the Recipient Party pursuant to clause (b) below) either the Purchasers’
interest in the Partnerships or the Prime Participation Interest, as
applicable, at a price determined with reference to such Partnerships Value as
described below.


 


(b)                                 Upon
receipt of an Offer pursuant to the preceding subparagraph (a) the Recipient
Party shall then be obligated either (i) to purchase the interest of the
Exercising Party in the Partnerships for cash or (ii) to sell to the Exercising
Party the interest of the Recipient Party in the Partnerships for cash, in
either case at a purchase price based upon the Partnerships Value established
under subparagraph (a) and calculated in accordance with the second to last
sentence of subparagraph (c) of this Section 8.15 (the “Buy/Sell Purchase
Price”).  The Recipient Party shall
give written notice of its election under the preceding clause (i) or (ii) to the
Exercising Party within sixty (60) days after receipt of the Offer.  If the Recipient Party fails to give such
notice of its election within sixty (60) days after receipt of the Offer, it
shall be deemed on such 60th day to have given notice of its election
to sell its interests, and the Exercising Party shall be obligated to purchase
the interest of the Recipient Party in accordance with this Section 8.15.  Within ten (10) days after receipt of notice
from the Recipient Party elects to sell (or seventy (70) days after delivery of
the Offer to the Recipient Party if it fails to give notice of its election
within sixty days after receipt of the Offer), the Exercising Party shall
deposit with an escrow agent mutually acceptable to both parties, twenty percent
(20%) of the Buy/Sell Purchase Price in the form of cash  or a letter of credit issued by a reputable
financial institution.  If the Recipient
Party elects to purchase, within ten (10) days after providing notice of its
election to purchase, it shall deposit with an escrow agent mutually acceptable
to both parties twenty percent (20%) of the Buy/Sell Purchase Price, in the
form of cash or a letter of credit issued by a reputable financial institution.


 


(c)                                  The
closing of a purchase pursuant to this Section 8.15 shall be held at the
principal office of the Partnerships on or before one hundred eighty (180) days
after the giving (or deemed giving) of the written notice of the Recipient
Party’s election under clause (i) or (ii) of the preceding subparagraph (b).  At such closing, the selling party shall
assign to the purchasing party, by such instruments of transfer as may
reasonably be requested by the purchasing party, the interest in the
Partnerships to be sold free and clear of all claims liens, security interests
and encumbrances and, at the request of the purchasing party, in order to
properly set forth the record title to the assets


 


24

















 


of the Partnerships, shall convey and transfer to the purchasing party,
with covenants of special warranty as to the selling party’s interest in the
Partnerships, an undivided percentage interest in the assets of the
Partnerships in the same percentage as the selling party’s percentage interest
and execute all other documents that may be necessary to effectuate the
purposes of this Section 8.15 and effectuate a smooth and efficient
continuation of the affairs of the Partnerships.  At the closing, the purchasing party shall pay the Buy/Sell
Purchase Price for such interest in the Partnerships in cash or by cashier’s or
certified check issued by a bank reasonably acceptable to the selling
party.  The purchase price to be paid by
the purchasing party shall be equal to the sum, if any, which the selling party
would receive if the assets of the Partnerships were sold for the Partnerships
Value on the day prior to the date of the delivery of the Offer, the
Partnerships dissolved and the proceeds of such hypothetical sale distributed
to the Purchasers (if Sellers are the purchasing party) or to Sellers pursuant
to the Prime Participation Interest (if Purchasers are the purchasing party) in
accordance with this Agreement and the priorities set forth in the partnership
agreement of each such Partnership.  If
Sellers are the purchasing party under this Section 8.15, then at the closing,
all principal and accrued interest owing by the partnership to the Purchasers
and their Affiliates as a result of loans made to the Partnerships shall be
paid in full, and the Purchasers and all of their Affiliates shall be released
from all guarantees granted and obligations assumed by the Purchasers or any of
their respective Affiliates in connection with such Purchaser’s interests in
the Partnerships or in connection with the activities of the Partnerships or in
lieu of the release, shall receive indemnification for any amounts owed by such
party pursuant to such guarantees or obligations; such indemnification shall be
provided by a party with sufficient financial wherewithal reasonably
satisfactory to the indemnified party.


 


(d)                                 If
either of the Exercising Party or Recipient Party is obligated pursuant to
subparagraph (b) of this Section 8.15 to purchase the interest of the other in
the Partnerships (including, if applicable, the Prime Participation Interest)
and thereafter does not close the purchase of such interest pursuant hereto,
then such party shall be deemed to be in default pursuant hereto and the other
party, as its exclusive remedy in law and equity in respect of such default,
shall be entitled to the Escrow Account as liquidated damages.


 


 


[SIGNATURE PAGE FOLLOWS]


 


25

















 


IN WITNESS WHEREOF, the parties have caused this Partnership Interests
Purchase Agreement to be executed and delivered by their duly authorized
representatives as of the date first written above.


 


 


	
  SELLERS:

  	
  THE PRIME GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HUNTLEY DEVELOPMENT COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRIME/HUNTLEY MEADOWS RESIDENTIAL,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PGLP HOLDINGS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


26

















 


	
  PURCHASERS:

  	
  HORIZON HUNTLEY LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HORIZON HUNTLEY FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  HGPI:

  	
  HORIZON GROUP PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


27

















 


EXHIBIT
A

HUNTLEY
DEVELOPMENT LIMITED PARTNERSHIP

HUNTLEY
MEADOWS RESIDENTIAL VENTURE

HUNTLEY,
ILLINOIS


 


	
  INFORMATION

  
	
  Partnerships:

  	
   

  	
  Huntley Development Limited Partnership, an Illinois limited
  partnership (“HDLP”), and Huntley Meadows Residential Venture, an
  Illinois partnership (“HMRV”)

  
	
   

  	
   

  	
   

  
	
  Real Estate:

  	
   

  	
  Approximately 654.9 acres of land located in Huntley, Illinois, of
  which approximately 627.6 acres are owned by HDLP and approximately 27.3
  acres are owned by HMRV

  
	
   

  	
   

  	
   

  
	
  Mortgage Loan:

  	
   

  	
  Loan, evidenced by that certain Amended, Restated and Increased
  Promissory Note, dated January 30, 2002, in the principal amount of
  $11,712,177.00, issued by HDLP payable to the order of Beal Bank, S.S.B., a
  savings bank organized under the laws of the state of Texas (“Beal Bank”),
  the repayment of which is secured by, among other things, (a) that certain
  Mortgage, Security Agreement and Assignment of Leases and Rents, dated as of
  October 27, 1999, as amended by (i) that certain First Amendment to Mortgage,
  Security Agreement and Assignment of Leases and Rents and Related Documents,
  dated as of December 29, 1999, (ii) that certain Second Modification and
  Extension Agreement, dated as of October 31, 2002, and (iii) that certain
  Third Modification and Extension Agreement, dated as of January 30, 2002, and
  (b) that certain Guaranty Agreement, dated as of October 27, 1999, issued by The
  Prime Group, Inc. in favor of Beal Bank.

  
	
   

  	
   

  	
   

  
	
  Net Profits Interest:

  	
   

  	
  Rights of Beal Bank under that certain Amended and Restated Agreement
  and Assignment of Net Profits Interest, dated as of October 27, 1999, among
  HDLP, HMRV and Beal Bank, as amended by that certain First Amendment to
  Amended and Restated Agreement and Assignment of Net Profits Interest, dated
  as of January 30, 2002, among HDLP, HMRV and Beal Bank (as amended, the “Net
  Profits Agreement”).  The
  performance by HDLP and HMRV of their obligations under the Net Profits
  Agreement are secured by, among other things, those certain separate
  Guaranties, each dated as of December 18, 1995, issued by Michael W. Reschke,
  Prime Group Limited Partnership, The Prime Group, Inc., Prime Group II, L.P.
  and Prime Group III, L.P. in favor of Beal Bank.

  
	
   

  	
   

  	
   

  
	
  Series B TIF Bonds:

  	
   

  	
  The payment of the indebtedness evidenced by the $14,000,000 Tax
  Increment Allocation Revenue Bonds (Huntley Redevelopment Project), Series
  B-1995, issued by the Village of Huntley, Illinois (the “Series B TIF
  Bonds”), is secured by a mortgage on approximately 

  



 


28

















 


	
   

  	
   

  	
  84.2 acres of the Real Property owned by HDLP (the “Series B TIF
  Bonds Mortgaged Land”) as set forth in that certain Amended and Restated
  Mortgage and Security Agreement, dated as of December 14, 1999, issued by
  HDLP in favor of First Trust National Association (f/k/a U.S. Bank National
  Association), as Trustee for the holders of the Series B TIF Bonds (the “Series
  B Trustee”), for the benefit of the holders of the Series B TIF
  Bonds.  The rights of the Series B
  Trustee and Beal Bank with respect to Series B TIF Bond Mortgaged Land are
  set forth in that certain Amended and Restated Intercreditor Agreement, dated
  as of December 14, 1999, among HDLP, Beal Bank and the Series B Trustee.

  
	
   

  	
   

  	
   

  
	
  Other Assets:

  	
   

  	
  HDLP owns those certain $24,405,000 Tax Increment Allocation Revenue
  Bonds (Huntley Redevelopment Project), Series C-1995, issued by the Village
  of Huntley, Illinois.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The triangle property owned by HDLP and/or HMRV located at the corner
  of Maine Street and Route 47 in Huntley, Illinois.

   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The cash held in the escrow account in connection with the Series B
  TIF Bonds and maintained by the Series B Trustee, to the extent refunded or
  released to the Partnerships.

  
	
   

  	
   

  	
   

  
	
  Other Material Recorded Documents:

  	
   

  	
  Annexation Agreement with the Village of Huntley recorded July 10,
  1996 as Document 96K049804, as amended by document numbers 97K 98K09529,
  98K009530, 98K09535 and 98K09536.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annexation Agreement recorded June 19, 1997 as document number
  97K039792, as amended by document numbers 97K0472035 and 97K076150.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Redevelopment Agreement recorded March 10, 1994 as document number
  94K021705.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reciprocal Easement Agreement recorded June 27, 1995 as document
  number 95K34789.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Covenants, Conditions, Restrictions and Easements for
  the Primepointe Business Park recorded December 7, 2000 as document number
  2000K098308, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Covenants, Conditions, Restrictions and Easements for
  the Huntley Business Park recorded August 2, 1996 as document number
  96K055481, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Covenants, Conditions, Restrictions and Easements for 

  



 


29

















 


	
   

  	
   

  	
  the Huntley Village Green recorded June 24, 1998 as document number
  98K055846, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Covenants, Conditions, Restrictions and Easements for
  the Huntley Corporate Park recorded July 17, 1996 as document number
  96K051417, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Covenants, Conditions, Restrictions and Easements for
  the Huntley Automall recorded September 14, 1998 as document number
  98K083298, as amended.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tri-Party Sewer Improvement Agreement dated as of December 1, 1997 by
  and between the Village of Huntley, Del Webb Communities Inc., HDLP and HMRV.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grant of Wetlands Mitigation Easement dated as of December 1, 1997
  and recorded as document number 97K086253, by and between Del Webb
  Communities, Inc., HDLP, HMRV and American National Bank and Trust Company of
  Chicago, not personally but solely as trustee under a Trust Agreement dated
  March 1, 1999 and known as Trust Number 110482-04.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Two Declarations of Restrictive Covenants granted by HDLP, the first
  of which is dated November 21, 2000 and recorded as document number
  2000K098693, and the second of which is dated November 21, 2000 and recorded
  as document number 2000K098690 (regarding wetlands).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Landscape and Utility Easement dated as of May 1, 1998 and recorded
  on July 20, 1998 as document number 98K064235, by and between HDLP and Del
  Webb Communities of Illinois, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Declaration of Restrictions and Grants of Easements between HDLP and
  Jewel Food Stores, Inc. dated September 17, 2001.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Memorandum of Site Development Agreement between HDLP and Jewel Food
  Stores, Inc. dated September 17, 2001.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreement for Sale of Real Estate dated June 11, 2003, among HDLP,
  Prime Freeman Road, L.L.C. (“PFR”) and the Kirk Corporation for the sale of a
  portion of the Real Property and certain real estate owned by PFR.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Series A TIF Bonds

  
	
   

  	
   

  	
   

  
	
  Pending Sale Agreement:

  	
   

  	
  One of the Partnerships and Prime Freeman Road, L.L.C. has entered

  



 


30

















 


	
   

  	
   

  	
  into an agreement with a third party to sell a 254 acre tract of land
  located on North Jim Dhamer Drive in Huntley, Illinois which is primarily
  owned by the Partnership.  If the sale
  closes, the net proceeds from the sale will be allocated on a per square foot
  basis, but disregarding any land zoned as open space.

  
	
   

  	
   

  	
   

  
	
  Other Outstanding Rights Or Obligations Related To Completed Land
  Sales:

   

  	
   

  	
   

  
	
   

  	
   

  	
  1)                                      Village of
  Huntley Well #7 site – Requirement exists to allow for uninterrupted access
  to well site from Route 47, Freeman Rd., or Oak Creek parkway.  Access must be suitable for truck traffic.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2)                                      Commonwealth
  Edison Substation site – a) Requirement exists to allow for uninterrupted
  access to substation site.  b) Right
  of first refusal exists to repurchase site when it is no longer needed by
  ComEd if PGI is still contiguous owner. Repurchase price to be at market.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3)                                      Huntley Factory
  Shops – Right exists to purchase an approx. 1.3 acre strip contiguous to
  Automall.  Easement right exists for
  the location, construction and maintenance of a community monument sign at
  southeast corner of Shops site.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4)                                      Duo-Fast/ITW –
  Zoning restriction to “O” Corporate Office on approximately 39.3 acres
  surrounding ITW.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5)                                      Weber Stephen –
  a) Obligation to build Second Access Road from subject site to Freeman
  Road.  Construction has started, and
  approximately $100,000 of work remains to be done.  b) Oak Creek Parkway cannot be extended to the east by Weber
  Stephen without PGI’s approval.  c)
  Right of first refusal to repurchase any unimproved land on or before
  1/14/09.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6)                                      Solarcrete –
  None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7)                                      Elgin Financial
  Services – a) Restriction on doing another freestanding bank deal along Rt.
  47 frontage until 6/24/08.  b) EFS has
  access and cross easement rights to driveway and parking lot in Village
  Green.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8)                                      Mobil/Culvers
  (Drendel) – a) PGI has easement at northwest corner of site for a community
  sign, b) site has access and cross easement rights to driveway and parking
  lot in Village Green.

  



 


31

















 


	
   

  	
   

  	
  9)                                      Lakehead
  Pipeline Co. – PGI is allowed three crossings by rights-of-way of pipeline
  strip.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10)                                Peck Ford – None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11)                                Sherman/Friendship –
  a) PGI sold Sherman 17,250 gpd of treatment capacity at the West Treatment
  Plant, b) right of first refusal to repurchase unimproved property on or
  before June 13, 2010, c) prohibition on transfer of property to any party
  other than seller on or before June 13, 2005 and d) medical facility use
  restriction on other property owned by HDLP expiring no later than February
  25, 2005, as more particularly described in Memorandum of Restrictive
  Covenants Agreement dated February 25, 1999 and recorded as document number
  1999K023362.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12)                                Brookdale – PGI has
  sold Brookdale 28,375 gpd of treatment capacity at the West Treatment Plant.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13)                                Prime/Freeman Rd.
  L.L.C. – None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  14)                                Eagle Inn/Niko’s –
  None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15)                                Prime Automotive –
  None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  16)                                Inglese Box Co. –
  None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  17)                                Rohrer Properties – Approximately
  $530,000 of infrastructure improvements are to be completed during the third
  and fourth quarters of 2003.  That
  amount is in an escrow account set up for that purpose.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  18)                                Del Webb –a)
  $161,323.50 is owed Del Webb for their installation of a sanitary sewer which
  was the obligation of PGI.  This
  amount is to be reimbursed to Del Webb when PGI makes a connection into that
  sewer.  No time schedule is required and
  the amount does not inflate over time. 
  b) $1,350,789.55 is due Del Webb on March 29, 2004 as the Treatment
  Plant Cost Differential Payment for the 2000,000gpd capacity that was
  constructed at the West Plant on PGI’s behalf.  PGI may forego this payment and forfeit its right to some
  115,000gpd of this treatment capacity. 
  c) If and when PGI elects to improve Henning Rd., from Prime Point
  Court to Jim Dhamer Drive, Del Webb is obligated to pay 50% of the
  improvement costs, d) PGI has an easement over approximately 60 acres of Del
  Webb land on which PGI is doing wetland mitigation to be able to fill
  wetlands on PGI property.  This
  mitigation site is approximately one half used.

  



 


32

















 


	
   

  	
   

  	
  19)                                Kirk/Wing Point –
  None

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  20)                                Jewel/Osco – a) PGI
  is to erect a sign at the corner of Rt 47/Oak Creek Pkwy.  For the benefit of Jewel.  The sign will cost approximately
  $51,000.  That amount is in an escrow
  account for that purpose. b) PGI is to construct the center entrance into
  Village Green off Rt. 47 upon completion of Phase II development of Village
  Green.  c) PGI responsible for
  southern access drive for Jewel unit center entrance is constructed. d)
  Jewel/Osco has cross easement rights across all entrance drives. e) retail
  restrictions are imposed upon applicable parcels in the shopping center.  Restrictions are specifically described in
  the Declaration of Restrictions and Grant of Easements Agreement dated
  September 21, 2001 and recorded as document number 475171.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HMRV holds a non-expiring option to purchase 20-28 acres in Phase III
  (south portion of Village Green), said acreage not being subject to any of
  the Jewel/Osco restrictions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  21)                                Right of First Offer
  granted to Prime Group Realty Trust.

  
	
   

  	
   

  	
   

  
	
  Huntley Office Existing Contracts And Obligations:

  	
   

  	
  Telephone

  ComEd

  NICOR

  Orkin/exterminator

  Landscape maintenance

  Alarm system

  Copier lease

  Marengo Disposal

  Postage Meter

  Various periodicals

  Engagement of Schiff Hardin & Waite, expert witnesses and local 

  counsel

  



 


33

















 


EXHIBIT
B

LIST
OF BEAL MORTGAGE LOAN DOCUMENTS


 


	
  1.

  	
   

  	
  Mortgage, Security Agreement, Assignment of Leases and Rents and
  Fixture Filing, dated as of October 27, 1999, executed and delivered by
  Huntley Development Limited Partnership (“HDLP”) in favor of Beal Bank,
  S.S.B. (“Beal”)

  
	
  2.

  	
   

  	
  First Amendment to Mortgage, Security Agreement, Assignment of Leases
  and Rents and  Related Documents,
  dated December 29, 1999, by and among HDLP, PGI and Beal

  
	
  3.

  	
   

  	
  Letter Agreement between HDLP and Beal, dated January 30, 2002, re:
  loan in the  maximum amount of
  $11,712,177.00 from Beal to HDLP

  
	
  4.

  	
   

  	
  Amended, Restated and Increased Promissory Note in the principal
  amount of  $11,712,177, issued by HDLP
  payable to the order of Beal, dated January 30, 2002

  
	
  5.

  	
   

  	
  Second Modification and Extension Agreement by and among HDLP, The
  Prime Group  (“PGI”) and Beal, dated
  as of October 31, 2000,

  
	
  6.

  	
   

  	
  Third Modification and Extension Agreement among HDLP, PGI and Beal,
  as executed  on behalf of HDLP and
  PGI, dated January 30, 2002

  
	
  7.

  	
   

  	
  Guaranty Agreement, dated as of October 27, 1999, issued by PGI in
  favor of Beal

  
	
  8.

  	
   

  	
  Amended and Restated Agreement and Assignment of Net Profits
  Interest, dated October  27, 1999,
  between HDLP, Huntley Meadows Residential Venture (“HMRV”) and Beal

  
	
  9.

  	
   

  	
  First Amendment to Amended and Restated Agreement and Assignment of
  Net Profits  Interest among HDLP, HMRV
  and Beal, as Executed on behalf of HDLP and HMRV,  and confirmed by Michael W. Reschke and on behalf of PGI, Prime
  Group Limited Partnership, Prime Group II, L.P. and Prime Group III, L.P.,
  dated January 30, 2002

  
	
  10.

  	
   

  	
  Amended and Restated Intercreditor Agreement, dated as of December
  14, 1999, among  HDLP, Beal and U.S.
  Bank Trust National Association, as trustee

  



 


34

















 


EXHIBIT
C

LITIGATION


 


1.                                       Huntley
Development Limited Partnership, an Illinois limited partnership, American
National Bank and Trust Company of Chicago, as Trustee under Trust Agreement
dated March 1, 1990 and known as Trust No. 110482-04, and Huntley Meadows
Residential Venture, an Illinois join venture v. Huntley Investments, L.L.C.,
an Illinois limited liability company, Harris Bank of Woodstock, successor to
the State Bank of Woodstock, as Trustee under Trust No. 4365, Floyd F. Drendel,
as Trustee of the Floyd F. Drendel Trust No. 1, Margaret E. Drendel, as Trustee
of the Margaret E. Drendel Trust No. 1, and Village of Huntley, an Illinois
municipal corporation, Case No. 99 MR-92


 


35

















 


EXHIBIT
D

FINANCIAL
STATEMENTS OF EACH PARTNERSHIP


 


See attached.


 


36

















 


EXHIBIT
E


 


See payables outstanding listed in Attachment 1


 


37