Document:

Exhibit
10.2

 

AGREEMENT
TO TERMINATE THE QUANEX CORPORATION

1997
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 

 

This TERMINATION AGREEMENT by Quanex
Corporation, a Delaware corporation (the “Company”),

 

WITNESSETH:

 

WHEREAS, the Company maintains the Quanex
Corporation 1997 Non-Employee Director Stock Option Plan (the “Plan”) for the
benefit of its non-employee directors; and

 

WHEREAS, the Company has determined to
terminate the Plan effective December 5, 2002;

 

NOW, THEREFORE, effective as of December 5,
2002, the Plan is hereby terminated so that no further stock options shall be
granted under the Plan after December 5, 2002. 
The Plan shall remain in effect as to all stock options outstanding as
of December 5, 2002, until such options lapse or are exercised in accordance
with the terms of the Plan.

 

 

Approved by the Board of Directors: 
December 5, 2002Exhibit
10.3

 

AGREEMENT
TO FREEZE THE QUANEX CORPORATION

NON-EMPLOYEE
DIRECTOR RETIREMENT PLAN

 

 

This FREEZE AGREEMENT by Quanex Corporation, a
Delaware corporation (the “Company”),

 

WITNESSETH:

 

WHEREAS, the Company maintains the Quanex
Corporation Non-Employee Director Retirement Plan (the “Plan”) for the benefit
of its non-employee directors; and

 

WHEREAS, the Company has determined to
freeze the Plan effective December 5, 2002;

 

NOW, THEREFORE, as of December 5, 2002,
Section 3 of the Plan is hereby amended to provide as follows:

 

3.             Termination
of Payment.  The Company shall pay
the Retirement Amount annually for a period equal to the aggregate length of
time the director served on the Board of 
Directors up to December 5, 2002 (not including time served when a
full-time employee of the Company), such period to be rounded up to the next
full year; provided that the Company’s obligation shall earlier terminate (i)
upon the death of the director, (ii) upon the termination of this Plan as to
all then current and retired directors, in which case payment shall be made to
all eligible retired directors for the year in which the termination of this
Plan occurs and two additional years, or (iii) upon determination of the Board
of  Directors that the retired director
is serving as a director, officer or employee of a competitor of the Company
and the continuation of such relationship after 15 days written notice of such
determination to the retired director.

 

 

Approved by the Board of Directors: 
December 5, 2002Exhibit 10.91

 

PURCHASE
AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”) is entered
into effective as of May 31, 2003 by and among Horizon Group Properties,
Inc., a Maryland corporation (“Parent”); Daleville, Somerset, Tulare Finance
Company, Inc., a Delaware corporation (“Horizon GP”); Horizon Group Properties,
L.P., a Delaware limited partnership (“Horizon LP”); Pleasant Lake Apts. Corp.,
an Ohio corporation (“Pleasant Lake GP”); Pleasant Lake Apts. Limited
Partnership, an Ohio limited partnership (“Pleasant Lake LP”); Richard Bongorno
(“Bongorno”); Gary Skoien (“Skoien”); and David Zlatin (“Zlatin”) (Bongorno,
Skoien and Zlatin are hereinafter collectively, the “Other LPs”).  Parent, Horizon GP, Horizon LP, Pleasant
Lake GP Pleasant Lake LP and the Other LPs are herein referred to individually
as the “Party” and collectively as the “Parties.”

 

R E C I T A L S:

 

A.                                   Horizon
GP owns a one percent (1%) general partnership interest in Daleville, Somerset,
Tulare Outlet Centers, L.P., a Delaware limited partnership (the “Limited
Partnership”), (the “General Partnership Interest”).

 

B.                                     Horizon
LP owns a ninety-nine percent (99%) limited partnership interest in the Limited
Partnership (the “Limited Partnership Interest”).

 

C.                                     This
Agreement contemplates a transaction in which Pleasant Lake GP will purchase
and Horizon GP will sell the General Partnership Interest, and Pleasant Lake LP
and the Other LPs will purchase and Horizon LP will sell the Limited
Partnership Interest.

 

D.                                    The
Limited Partnership owns certain real property, including, without limitation,
the Indiana Factory Shops located in Daleville, Indiana and The Shops at
Georgian Place located in Somerset, Pennsylvania (collectively, the “Daleville
and Somerset Properties”),

 

E.                                      The
Limited Partnership recently sold the Tulare Outlet Center in Tulare,
California (the “Tulare Property”), to Tulare Outlet Center, L.P.

 

NOW,
THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows:

 

1.                                      PURCHASE AND SALE OF GENERAL PARTNERSHIP
INTEREST AND LIMITED PARTNERSHIP INTEREST.

 

1(a)                           Basic
Transaction.  On and subject to
the terms and conditions of this Agreement:

 

(i)                                     Pleasant Lake GP
agrees to purchase from Horizon GP the General Partnership Interest, and
Horizon GP agrees to sell to Pleasant Lake GP the General Partnership Interest;
and

 

 

(ii)                                  Pleasant Lake LP and
the Other LPs agree to purchase from Horizon LP the Limited Partnership
Interest, and Horizon LP agrees to sell to Pleasant Lake LP and the Other LPs
the Limited Partnership Interest.

 

1(b)                           Purchase
Price.  The aggregate purchase
price for the General Partnership Interest and the Limited Partnership Interest
shall be One Million Nine Hundred and Eighty Thousand Dollars ($1,980,000) (the
“Purchase Price”), allocated as follows: 
Nineteen Thousand Eight Hundred Dollars ($19,800) for the General
Partnership Interest and One Million Nine Hundred Sixty Thousand Two Hundred
Dollars ($1,960,200) for the Limited Partnership Interest.  The purchase price consideration shall be
paid on the Closing Date as follows: 
Pleasant Lake GP shall wire or pay by check to Horizon GP Nineteen
Thousand Eight Hundred Dollars ($19,800); Pleasant Lake LP shall wire or pay by
check to Horizon LP One Million Seven Hundred Two Thousand Eight Hundred
Dollars ($1,702,800); Bongorno shall wire or pay by check to Horizon LP
Nineteen Thousand Eight Hundred Dollars ($19,800); Skoien shall wire or pay by
check to Horizon LP One Hundred Ninety-Eight Thousand Dollars ($198,000); and
Zlatin shall wire or pay by check to Horizon LP Thirty-Nine Thousand Six
Hundred Dollars ($39,600).

 

1(c)                           The
Closing.  The closing of the
transaction contemplated by this Agreement (the “Closing”) shall take place at
the offices of Schiff Hardin & Waite, 6600 Sears Tower, 233 South Wacker
Drive, Chicago, Illinois 60606, commencing at 10:00 a.m. on May 30, 2003
(the “Closing Date”).

 

1(d)                           Deliveries
at the Closing.  At the Closing:

 

(i)                                     Horizon GP will
deliver to Pleasant Lake an Assignment of General Partnership Interest;

 

(ii)                                  Horizon LP will
deliver to each of Pleasant Lake LP and the Other LPs an Assignment of Limited
Partnership Interest assigning to them that percentage of the Limited
Partnership Interest as is set forth in Exhibit A attached hereto and
made a part hereof; and

 

(iii)                               Pleasant Lake GP,
Pleasant Lake LP and the Other LPs, as applicable, will deliver to Horizon GP
and Horizon LP, as applicable, the Purchase Price in the manner described in
Section 1(b) above.

 

2.                                      REPRESENTATIONS AND WARRANTIES CONCERNING THE
TRANSACTION.

 

2(a)                           Representations
and Warranties of Parent. 
Parent represents and warrants to Pleasant Lake GP, Pleasant Lake LP and
the Other LPs that the statements contained in this Section 2(a) are true as of
the date of this Agreement.

 

(i)                                     Organization of
Parent.  Parent is a corporation
validly existing and in good standing under the laws of the State of Maryland,
and is qualified and in good standing as a foreign corporation in Indiana.

 

(ii)                                  Authorization of
Transaction.  Parent has full power
and authority to execute and deliver this Agreement and has all requisite power
and authority to perform its obligations hereunder; and has obtained all necessary
corporate consent and other approvals

 

2

 

to authorize Horizon GP to transfer the General Partnership Interest to
Pleasant Lake GP and to authorize Horizon LP to transfer the Limited
Partnership Interest to Pleasant Lake LP and the Other LPs, as applicable.

 

(iii)                               No Conflict.  The execution and delivery of
this Agreement by Parent, the execution and delivery of every other document
and instrument to be delivered at the Closing pursuant to this Agreement by or
on behalf of Parent and the consummation of the transactions contemplated by
this Agreement have been duly authorized and validly executed and delivered by
Parent, and will not (a) constitute or result in the breach of or default under
any oral or written agreement to which Parent is a party; (b) constitute or
result in a violation of any order, decree or injunction with respect to which
Parent is bound; (c) cause or entitle any party to have a right to accelerate
or declare a default under any oral or written agreement to which Parent is a
party; and/or (d) violate any provision of any municipal, state or federal law,
statutory or otherwise, to which Parent may be subject.

 

2(b)                           Representations
and Warranties of Horizon GP. 
Horizon GP represents and warrants to Pleasant Lake GP, Pleasant Lake LP
and the Other LPs that the statements contained in this Section 2(b) are true
as of the date of this Agreement.

 

(i)                                     Organization of
Parent.  Horizon GP is a corporation
validly existing and in good standing under the laws of the State of Delaware,
and is qualified and in good standing as a foreign corporation in Indiana,
Pennsylvania and California.

 

(ii)                                  Authorization of
Transaction.  Horizon GP has full
power and authority to execute and deliver this Agreement and has all requisite
power and authority to perform its obligations hereunder; and has obtained all
necessary corporate consent and other approvals to transfer the General
Partnership Interest to Pleasant Lake GP.

 

(iii)                               General Partnership
Interest.  Horizon GP holds of
record and owns beneficially the General Partnership Interest free and clear of
any liens, encumbrances and/or restrictions on transfer (other than
restrictions under the Securities Act of 1933, as amended and state securities
laws), taxes and purchase rights. 
Horizon GP is not a party to any option, warrant, purchase right or
other contract or commitment that could require Horizon GP to sell, transfer or
otherwise dispose of the General Partnership Interest (other than this Agreement).

 

(iv)                              No Conflict.  The execution and delivery of
this Agreement by Horizon GP, the execution and delivery of every other
document and instrument to be delivered at the Closing pursuant to this
Agreement by or on behalf of Horizon GP and the consummation of the
transactions contemplated by this Agreement have been duly authorized and
validly executed and delivered by Horizon GP, and will not (a) constitute or
result in the breach of or default under any written agreement to which Horizon
GP is a party; (b) constitute or result in a violation of any order, decree or
injunction with respect to which Horizon GP is bound; (c) cause or entitle any
party to have a right to accelerate or declare a default under any written
agreement to which Horizon GP is a party; and/or (d) violate any provision of
any municipal, state or federal law, statutory or otherwise, to which Horizon
GP may be subject.

 

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2(c)                           Representations
and Warranties of Horizon LP. 
Horizon LP represents and warrants to Pleasant Lake GP, Pleasant Lake LP
and the Other LPs that the statements contained in this Section 2(c) are true
as of the date of this Agreement.

 

(i)                                     Organization of
Horizon LP.  Horizon LP is a limited
partnership duly formed and validly existing under the laws of the State of
Delaware, and is qualified and in full force and effect as a foreign limited
partnership in Indiana and Pennsylvania.

 

(ii)                                  Authorization of
Transaction.  Horizon LP has full
power and authority to execute and deliver this Agreement and has all requisite
power and authority to perform its obligations hereunder; and has obtained all
necessary partnership consent and other approvals to transfer the Limited
Partnership Interest to Pleasant Lake LP and the Other LPs.

 

(iii)                               Limited Partnership
Interest.  Horizon LP holds of
record and owns beneficially the Limited Partnership Interest free and clear of
any restrictions on transfer (other than restrictions under the Securities Act
of 1933, as amended and state securities laws), taxes and purchase rights.  Horizon LP is not a party to any option,
warrant, purchase right or other contract or commitment that could require
Horizon LP to sell, transfer or otherwise dispose of the Limited Partnership
Interest (other than this Agreement).

 

(iv)                              No Conflict.  The execution and delivery of
this Agreement by Horizon LP, the execution and delivery of every other
document and instrument to be delivered at the Closing pursuant to this
Agreement by or on behalf of Horizon LP and the consummation of the
transactions contemplated by this Agreement have been duly authorized and
validly executed and delivered by Horizon LP, and will not (a) constitute or
result in the breach of or default under any written agreement to which Horizon
LP is a party; (b) constitute or result in a violation of any order, decree or
injunction with respect to which Horizon LP is bound; (c) cause or entitle any
party to have a right to accelerate or declare a default under any written
agreement to which Horizon LP is a party; and/or (d) violate any provision of
any municipal, state or federal law, statutory or otherwise, to which Horizon
LP may be subject.

 

2(d)                           Representations
and Warranties of Pleasant Lake GP. 
Pleasant Lake GP represents and warrants to Parent, Horizon GP and
Horizon LP that the statements contained in this Section 2(d) are true as of
the date of this Agreement.

 

(i)                                     Organization of
Pleasant Lake GP.  Pleasant Lake GP
is an Ohio corporation, validly existing and in good standing under the laws of
the State of Ohio.

 

(ii)                                  Authorization of
Transaction.  Pleasant Lake GP has
full power and authority to execute and deliver this Agreement and has all
requisite power and authority to perform its obligations hereunder.

 

(iii)                               Investment.  Pleasant Lake GP is not acquiring the
General Partnership Interest with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended.

 

2(e)                           Representations
and Warranties of Pleasant Lake LP. 
Pleasant Lake LP represents and warrants to Parent, Horizon GP Horizon
LP that the statements contained in this Section 2(e) are true as of the date
of this Agreement.

 

4

 

(i)                                     Organization of
Pleasant Lake LP.  Pleasant Lake LP
is an Ohio limited partnership, validly existing and in good standing under the
laws of the State of Ohio.

 

(ii)                                  Authorization of
Transaction.  Pleasant Lake LP has
full power and authority to execute and deliver this Agreement and has all requisite
power and authority to perform its obligations hereunder.

 

(iii)                               Investment.  Pleasant Lake LP is not acquiring the
Limited Partnership Interest with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended.

 

2(f)                             Representations
of Other LPs.  The Other LPs
represent and warrant to Parent, Horizon GP and Horizon LP that the statements
contained in this Section 2(f) are true as of the date of this Agreement.

 

(i)                                     Authorization
of Transaction.  The Other LPs have
full power and authority to execute and deliver this Agreement and to perform
the obligations hereunder.

 

(ii)                                  Investment.  The Other LPs are not acquiring the Limited
Partnership Interest with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended.

 

3.                                      REPRESENTATIONS
AND WARRANTIES REGARDING THE LIMITED PARTNERSHIP.

 

3(a)                           Title.  The
Limited Partnership owns, and has good and marketable title to, the Daleville
and Somerset Properties, free and clear of all liens, mortgages, pledges,
security interests, claims, encumbrances or charges of any kind whatsoever
except for those set forth on Schedule 3(a) attached hereto and made a part
hereof.

 

3(b)                           Compliance
with Laws.  Neither Parent, Horizon GP nor Horizon LP
have any knowledge of any non-compliance with applicable federal, state and
local statutes, laws, ordinances, orders, requirements, rules and regulations
that have not been cured (including, but not limited to, building, zoning and
environmental laws) relating to the Limited Partnership; and with respect to
the Americans With Disabilities Act, neither Parent, Horizon GP nor Horizon LP
have received any notice of non-compliance.

 

3(c)                           No
Violation.  No written notice of violation of any
applicable federal, state and local statutes, laws, ordinances, orders,
requirements, rules and regulations or of any covenant, condition, restriction
or easement affecting the Daleville and Somerset Properties or with respect to
the maintenance, use or occupancy of the Daleville and Somerset Properties has
been received by the Limited Partnership and remains outstanding from any
governmental authority having jurisdiction over the Daleville and Somerset
Properties or by any other person entitled to enforce the same.  Neither Parent, Horizon GP nor Horizon LP
have received notice that any covenants, conditions, restrictions or easements
affecting the use or title to the Daleville and Somerset Properties have not
been complied with.

 

3(d)                           Environmental.  With respect to environmental matters:

 

5

 

(i)                                     To the knowledge
of Parent, Horizon GP and Horizon LP, no toxic, hazardous, explosive or
otherwise dangerous materials, substances, pollutants or wastes, as those terms
are used in the Clean Air Act; the Clean Water Act; Resource Conservation and
Recovery Act of 1976; the Hazardous Materials Transportation Act; the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”); the Emergency Planning and Community Right-to-Know Act; or in any
other federal, state or local law environmental law (collectively
“Environmental Laws”), petroleum products, polychlorinated biphenyls or
radioactive materials (all of the above being collectively referred to herein
as “Hazardous Materials”) have been or are stored, treated, disposed of,
managed, generated, manufactured, produced, released, emitted or discharged on,
in or under any real property owned by the Limited Partnership, including,
without limitation, the Daleville and Somerset Properties and the Tulare
Property, other than in compliance with applicable law or as disclosed in any
environmental report delivered to Pleasant GP, Pleasant Lake LP and the Other
LPs by Parent, Horizon GP and/or Horizon LP.

 

(ii)                                  To the knowledge of
Parent, Horizon GP and Horizon LP, the Limited Partnership is in compliance
with all Environmental Laws and has not obtained any environmental licenses,
permits, approvals, registrations and authorizations (federal, state and local)
material to the conduct of its business on the Daleville and Somerset
Properties and/or the Tulare Property and has no knowledge of any obligation to
obtain any of the same.

 

(iii)                               No governmental or
private action, suit or proceeding to enforce or impose liability under any
Environmental Law has been instigated or, to the knowledge of Parent, Horizon
GP and Horizon LP, threatened against the Limited Partnership and no lien
against the Limited Partnership has been created under the Environmental Laws.

 

(iv)                              To the knowledge of
Parent, Horizon GP and Horizon LP, there are no underground storage tanks on
the Daleville and Somerset Properties and/or the Tulare Property; and to the
best of Parent’s, Horizon GP’s and Horizon LP’s knowledge, except as set forth
on Schedule 3(d)(iv) attached hereto and made a part hereof, no underground
storage tanks have been removed from the Daleville and Somerset Properties
and/or the Tulare Property.

 

3(e)                           Public
Utilities.  To the knowledge of
Parent, Horizon GP and Horizon LP, all public utilities, including, but not
limited to, water, sanitary sewer, gas, electricity, telephone and storm sewer
and drainage facilities and other utilities required for the use and operation
of the real property owned by the Limited Partnership (a) are installed to the
property lines of the real property owned by the Limited Partnership; (b) are
connected pursuant to valid permits; and (c) either enter the real property
owned by the Limited Partnership through adjoining public streets, or if they
pass through adjoining private land, do so in accordance with valid public
easements or private easements that inure to the benefit of Seller and its
successors in title to the Daleville and Somerset Properties.  To Parent’s, Horizon GP’s and Horizon LP’s
knowledge, no fact or condition exists that would result in the termination or
impairment of access to the Daleville and Somerset Properties from adjoining
public or private streets or ways or that could result in discontinuation of
necessary sewer, water, electric, gas, telephone or other utility
services.  To the knowledge of Parent,
Horizon GP and Horizon LP, no notice has been issued to the Limited Partnership
that any of the sewage, sanitation or plumbing facilities servicing the
Daleville and Somerset Properties is not in compliance with governmental laws,
rules and regulations.

 

6

 

3(f)                             Permits/Consents.  To the knowledge of Parent, Horizon GP and
Horizon LP, all required building permits, occupancy permits or other required
approvals or consents of governmental authorities having jurisdiction have been
obtained with respect to the Daleville and Somerset Properties.

 

3(g)                          No
Litigation.  Except as provided
in Schedule 3(g) attached hereto and made a part hereof, there is no pending or
to Parent’s, Horizon GP’s and Horizon LP’s knowledge threatened litigation,
arbitration, administrative action or examination, claim or demand whatsoever
against the Limited Partnership. 
Parent, Horizon GP and Horizon LP shall indemnify and hold harmless
Pleasant Lake GP and Pleasant Lake LP from and against any claims, costs,
losses, expenses and liabilities in any manner relating directly or indirectly
to any matters referred to in Schedule 3(g). 
No attachments, execution proceedings, liens (other than the Limited
Partnership’s mortgage and real estate taxes and assessments), assignments or
insolvency proceedings are pending or to Parent’s, Horizon GP’s and Horizon
LP’s knowledge threatened against the Limited Partnership, the Daleville and
Somerset Properties and/or the Tulare Property.  Neither Partner, Horizon GP nor Horizon LP is contemplating the
institution of insolvency proceedings.

 

3(h)                          Insurance.  Except as set forth on Schedule 3(h)
attached hereto and made a part hereof, Parent, Horizon GP and Horizon LP have
not received and have no actual knowledge of any outstanding notice or request,
formal or informal, from any insurance company or board of fire underwriters
(a) identifying any defects in the Daleville and Somerset Properties that would
adversely affect the insurability of the Daleville and Somerset Properties; or
(b) requesting the performance of any work or alteration with respect to the
Daleville and Somerset Properties. 
Between the date of this Agreement and the Closing Date, Parent, Horizon
GP and Horizon LP shall cause the Limited Partnership to: (a) keep the
Daleville and Somerset Properties insured against fire and other hazards by
extended coverage endorsement to its policy of casualty insurance, in an amount
not less than the full replacement cost of the Daleville and Somerset
Properties, naming Pleasant Lake GP and Pleasant Lake LP as an additional
insured and providing Purchaser with a certificate of such insurance promptly
following the execution hereof; and (b) keep its existing comprehensive public
liability insurance in effect against claims for bodily injury, death and
damage incurring in, on or about the Daleville and Somerset Properties.

 

3(i)                             Eminent
Domain.  Parent, Horizon GP and
Horizon LP have no knowledge of any pending or threatened eminent domain,
condemnation or other governmental or quasi-governmental taking of any part or
all of the Daleville and Somerset Properties.

 

3(j)                             Public
Improvements.  Parent, Horizon
GP and Horizon LP have not received any notice that there are any public
improvements that have not been previously assessed, or any special, general or
other assessments pending or threatened against, the Daleville and Somerset
Properties; and there is no pending real estate tax complaint with respect to
the assessed value of the Daleville and Somerset Properties.

 

3(k)                         Contracts.  Other than the Tenant Leases (defined below)
and the AR Cap Mortgages (defined below), the Limited Partnership is not a
party to any other contracts or agreements except as set forth on Schedule 3(k)
attached hereto and made a part hereof (the “Contracts”).  Each of the Contracts is in full force and
effect, and there is no default by any party under any of the Contracts.  There are no facts and no event of default
has occurred that with the passage of time or giving of notice would constitute
a default under any of the Contracts.

 

7

 

3(l)                             Outstanding
Payables.  Except as set forth
on Schedule 3(l) attached hereto and made a part hereof, the Limited
Partnership has paid or will pay prior to the Closing Date in full all of its
bills and invoices of any kind arising from the ownership, operation,
management, repair, maintenance or leasing of the Daleville and Somerset
Properties and/or the Tulare Property; and there are no actual or to the
knowledge of Parent, Horizon GP and Horizon LP potential mechanic’s liens
relating to labor or material outstanding or available to any party in
connection with the ownership, operation, management, repair, maintenance or
leasing of the Daleville and Somerset Properties and/or the Tulare Property.

 

3(m)                       Personal
Property.  The personal property
of the Limited Partnership is accurately identified and listed in Schedule
3(m).

 

3(n)                          No
Transfer of Real Property. 
Between the date of this Agreement and the Closing Date, no part of the
real property owned by the Limited Partnership will be sold, encumbered or
transferred in favor of or to any party whatsoever.  There are no purchase contracts, options or any other agreements
of any kind, oral or written, by which any person or entity other than Limited
Partnership will have acquired or will have any basis to assert any right,
title or interest in, or right to possession, use, enjoyment or proceeds of,
any part or all of the Daleville and Somerset Properties, except as to rights
created under any leases of such properties.

 

3(o)                           No
Broker Fees.  There are no
commissions, fees or other charges that are owed or will be owed to any agent
or broker after the Closing Date with regard to any lease of any of the real
property owned by the Limited Partnership or the renewal, exercise of option,
extension or modification of any existing lease of the Daleville and Somerset
Properties to any tenant.

 

3(p)                           Leases.
 All of the leases between the
Limited Partnership and the current tenants of the Daleville and Somerset
Properties (the “Tenants”) are set forth in Schedule 3(p) (the “Tenant
Leases”).  Except as set forth on
Schedule 3(p), each of the Tenant Leases is in full force and effect, and there
is no default by any Tenant with respect to any rental payment due under any of
the Tenant Leases.  To the knowledge of
Parent, Horizon GP and Horizon LP, there is no default by the Limited
Partnership or any Tenant under any of the Tenant Leases which in the aggregate
would result in an annual loss of more than $250,000 of revenue to the Limited
Partnership if such Tenant Leases were terminated.

 

3(q)                           754
Election.  No election has been
made under Section 754 of the Internal Revenue Code of 1986, as amended, by or
on behalf of the Limited Partnership.

 

3(r)                           Financial
Statements.  Parent, Horizon GP
and Horizon LP previously delivered to Pleasant Lake GP, Pleasant Lake LP and
the Other LPs the Limited Partnership’s balance sheet and income statement as
of December 31, 2002 and for March 31, 2003 (collectively, the
“Financial Statements”).  The Financial
Statements have been prepared with [accrual] basis accounting principles and
present fairly the financial position of the Limited Partnership and the
results of operations for the periods indicated in the Financial Statements all
in accordance with generally accepted accounting principles.  The Financial Statements have been and will
be prepared from and are in accordance with the accounting records of the
Limited Partnership.  The books and
records from which the Financial Statements have been prepared properly and
accurately record the transactions and activities that they purport to record.

 

8

 

3(s)                           Tax
Returns.  Except as set forth on
Schedule 3(s), the Limited Partnership has filed or caused to be filed (on a
timely basis for all periods prior to the Closing) all federal, state, local
and foreign tax returns and reports required to be filed by it with respect to
the business or otherwise (the “Tax Returns”). 
The Limited Partnership will file on a timely basis all Tax Returns required
to be filed by the Limited Partnership for the First Taxable Year (defined
below).  The Limited Partnership has
delivered or made available to Pleasant Lake GP, Pleasant Lake LP and the Other
LPs copies of all such Tax Returns. 
Except as set forth on Schedule 3(s), the Limited Partnership has duly
paid or made adequate provision for the payment of all taxes that have or may
have become due as reflected in those Tax Returns or otherwise, or pursuant to
any assessment received by the Limited Partnership.  Except as set forth on Schedule 3(s), all taxes that the Limited
Partnership is or was required by law to withhold or collected have been duly
withheld or collected and, to the extent required, have been paid to the proper
governmental authority or other person. 
There are no encumbrances on any of the assets of the Limited
Partnership that arose in connection with any failure (or alleged failure) to
pay any tax, and the Limited Partnership has no knowledge of any basis for
assertion of any claims attributable to taxes which, if adversely determined,
would result in any such encumbrance, other than the real property taxes owed
on the real property located in Daleville, Indiana.

 

3(t)                             No
Other Liabilities.  Except as
set forth in Schedule 3(t), the Limited Partnership has no liabilities or obligations
of any nature (whether known or unknown and whether absolute, accrued,
contingent or otherwise) which are required to be disclosed in accordance with
generally accepted accounting principles (“GAAP”) except for liabilities or
obligations reflected or reserved against the Financial Statements and current
liabilities incurred in the ordinary course of business since the respective
dates thereof.   The AR Cap Mortgages
(defined below) have been paid in full as of and prior to the Closing.

 

3(u)                          Partnership
Agreement.  The copies of
Agreement of Limited Partnership of the Limited Partnership dated as of
July 9, 1999, together with the First Amendment to Agreement of Limited
Partnership of the Limited Partnership dated as of May 29, 2003
(collectively, the “Partnership Agreement”), previously provided to Pleasant
Lake GP, Pleasant Lake LP and the Other LPs, are true and correct copies of
such documents, and the Partnership Agreement has not been amended or modified
in any manner whatsoever.

 

3(v)                            Employees.  The Limited Partnership does not currently
have, and has not for the last twelve months had, any employees.

 

3(w)                         Options
to Purchase.  The Limited
Partnership has not granted any option, warrant, purchase right or other
contract or commitment to anyone that would require the Limited Partnership to
sell to such party any general or limited partnership interests in the Limited
Partnership.

 

3(x)                           Disclosure.  No representation or warranty of Parent,
Horizon GP or Horizon LP in this Agreement omits to state a material fact
necessary to make the statements herein, in light of the circumstances in which
they were made, not misleading.

 

4.                                      INDEMNIFICATION.

 

4(a)                           Indemnification
by Parent, Horizon GP and Horizon LP.  Parent, Horizon GP and Horizon LP, jointly and severally, shall
defend, indemnify and hold harmless the Limited

 

9

 

Partnership, Pleasant Lake GP,
Pleasant Lake LP and the Other LPs and their respective heirs, successors and
assigns (collectively “Pleasant Lake Indemnified Parties”) from, against and in
respect of, and shall pay to the applicable Pleasant Lake Indemnified Party the
following damages, losses, deficiencies, assessments, charges, taxes, fines,
penalties, costs and/or expenses (including reasonable attorneys’ fees)
(collectively, “Losses”):

 

(i)                                     Any and all Losses
with respect to the Limited Partnership’s failure to pay its debts, including
without limitation, federal, state or local taxes, or the operation of the
Business prior to the Closing (other than Losses with respect to those
liabilities set forth in the Financial Statements which have not been paid and
were not otherwise due before the Closing 
and those liabilities described on Schedules 3(l) and 3(t)).

 

(ii)                                  Any and all Losses
arising from any misrepresentation, omission or breach of any warranty,
representation, covenant, agreement or obligation on the part of Parent,
Horizon GP and Horizon LP under this Agreement or any exhibit, schedule,
certificate, instrument or other document furnished to Buyer in connection with
this Agreement.

 

(iii)                               Any and all Losses
arising from any and all (a) Environmental Claims, Environmental Clean-Up
Liability, Environmental Compliance Costs and/or the effect of any
Environmental Laws with respect to the Daleville and Somerset Properties and/or
the Tulare Property with respect to the condition of such properties prior to
Closing; and (b) any claims for personal injury or property damage as a result
of the foregoing, to the extent the same relates to any occurrence existing at
any time prior to the Closing Date.

 

(iv)                              Any and all Losses
arising from any claims by any third party arising from the conduct of the
Business prior to the Closing.

 

(v)                                 Any and all Losses
arising from or in connection with the mortgage loans from Wells Fargo Bank
Minnesota, N.A., as Trustee (“Wells Fargo”), to the Limited Partnership on the
Daleville and Somerset Properties, and the Tulare Property, including, without
limitation, with respect to any document, instrument, certificate or agreement
entered into by Parent, Horizon GP or Horizon LP and Wells Fargo in connection
with such mortgage loans.

 

(vi)                              Any and all Losses
arising from actions, suits, proceedings, demands, assessments, penalties,
fines, judgments, costs and legal and other expenses incident to any of the
foregoing.

 

As used in subparagraph (iii) above, the following
terms shall have the following meanings: 
“Environmental Claims” shall mean any claim for personal injury or
property damage under any Environmental Law; “Environmental Clean-Up Liability”
shall mean any cost or expense incurred to respond to, remove, remediate,
clean-up or abate any Hazardous Substances (defined below) located on, in,
under, above or about the property as required by administrative or judicial
action; “Environmental Compliance Cost” shall mean any cost or expense
necessary to enable the property to comply with all applicable Environmental
Laws; “Environmental Law” shall mean any federal, state or local law or
regulation for the protection of human health or the environment or natural
resources at any time in effect; and “Hazardous Substance” shall mean any
hazardous or toxic

 

10

 

substance, pollutant, material or waste which is or
becomes identified, listed or regulated as such by or pursuant to any federal,
state or local Environmental Law.

 

The Parties shall promptly notify each other of the
existence of any threatened or possible claim to which the foregoing
indemnifications could apply and shall give such other party a reasonable
opportunity to pay or defend the same at its own expense and with counsel of
its own selection; provided, however, that Parent, Horizon GP and Horizon LP
shall at all times also have the right to participate fully in the defense at
their own expense.  In the event that
Parent, Horizon GP and Horizon LP do not promptly assume the defense or
otherwise handle any such matter in accordance with all applicable laws, rules
and regulations, Pleasant Lake GP and/or Pleasant Lake LP may do so at Parent,
Horizon GP and Horizon LP’s expense. The foregoing obligations to indemnify set
forth in Sections 3(g) and 4(a)  shall
survive the Closing.

 

4(b)                           Indemnification
by Pleasant Lake GP and Pleasant Lake LP.  Subject to the limitations set forth in Section 12.4, Buyer shall
indemnify and hold harmless Parent, Horizon GP and Horizon LP from, against and
in respect of the following Losses:

 

(i)                                     any and all Losses
with respect to Parent, Horizon GP and Horizon LP’s operation of the Business
subsequent to the Closing;

 

(ii)                                  any and all Losses
arising from any misrepresentation, omission or breach of any warranty,
representation, covenant, agreement or obligation on the part of Parent,
Horizon GP and Horizon LP under this Agreement or any exhibit, schedule,
certificate, instrument or other document furnished to Parent, Horizon GP and
Horizon LP in connection with this Agreement; 
and

 

(iii)                               any and all Losses
arising from actions, suits, proceedings, demands, assessments, penalties, fines,
judgments, costs and legal and other expenses incident to any of the foregoing.

 

The Parties shall promptly notify each other of the
existence of any threatened or possible claim to which the foregoing
indemnifications could apply and shall give such other party a reasonable
opportunity to defend the same at its own expense and with counsel of its own
selection; provided, however, that Parent, Horizon GP and Horizon LP shall at
all times also have the right to participate fully in the defense at its own
expense. The foregoing obligations to indemnify shall survive the Closing.

 

5.                                      CONDITIONS
TO CLOSING.

 

Pleasant Lake GP’s, Pleasant Lake LP’s and the Other
LP’s obligations to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction at the Closing of all of the following
conditions, any one or more of which may be waived by Pleasant Lake GP,
Pleasant Lake LP and the Other LPs, as applicable, in their discretion and in
writing.

 

5(a)                           Accuracy
of Representations and Warranties. 
The representations and warranties of Parent, Horizon GP and Horizon LP
contained in this Agreement shall be true and correct on the Closing Date in
all material respects as though they were made on the Closing Date.

 

11

 

5(b)                           Covenants.  Parent, Horizon GP and Horizon LP shall not
be in breach of and shall not have breached and failure to cure any covenant
contained in this Agreement to be performed by Parent, Horizon GP and/or
Horizon LP, as applicable, on or before the Closing Date.

 

5(c)                           Tax
Returns.  Parent, Horizon GP and
Horizon LP shall have delivered the federal tax returns of the Limited
Partnership for the calendar year ended December 31, 2002 to Pleasant Lake
GP, Pleasant Lake LP and the Other LPs.

 

5(d)                           Financial
Statements.  Parent, Horizon GP
and Horizon LP shall have delivered the Financial Statements to Pleasant Lake
GP, Pleasant Lake LP and the Other LPs.

 

5(e)                           Mortgages.  Parent, Horizon GP and/or Horizon LP shall
have delivered the [Promissory Notes in the original principal amounts of
$2,650,000, and $10,875,000, in favor of Wells Fargo relating to mortgages in
favor of Wells Fargo on the Daleville and Somerset Properties, marked canceled
and paid in full as well as the canceled mortgages (the “AR Cap Mortgages”)] to
Pleasant Lake GP, Pleasant Lake LP and the Other LPs.  The Parties acknowledge that the Partnership Agreement shall have
been amended to permit the transfer of the General Partnership Interest and the
Limited Partnership Interest hereunder.

 

5(f)                             Title
Endorsement.  Pleasant Lake GP,
Pleasant Lake LP and the Other LPs shall have received an endorsement to the
title policy issued to the Limited Partnership with respect to the Daleville
and Somerset Properties insuring title to such properties in the Limited
Partnership.

 

5(g)                          Surveys.  Pleasant Lake GP, Pleasant Lake LP and the
Other LPs shall have received a copy of the most recent surveys of the
Daleville and Somerset Properties.

 

5(h)                          Legal
Opinion.  Pleasant Lake GP, Pleasant
Lake LP and the Other LPs shall have received from Parent’s, Horizon GP’s and
Horizon LP’s counsel a legal opinion addressed to Pleasant Lake GP, Pleasant
Lake LP and the Other LPs in the form attached hereto as Exhibit B.

 

6.                                      TAXABLE
YEAR.

 

In determining each applicable Party’s distributive
share of the Limited Partnership’s income, gain, loss, deduction or credit for
2003, the Parties shall cause the Limited Partnership to treat the Limited
Partnership’s 2003 taxable year as if it consisted of two taxable years, the
first beginning on January 1, 2003 and ending on May
    , 2003 (the Parties intend that this be the date of the
day before the Closing Date) (the “First Taxable Year”), and the second
beginning on May     , 2003 and ending on December 31,
2003 (the “Second Taxable Year”).  The
Parties expressly acknowledge and agree that none of Pleasant Lake GP, Pleasant
Lake LP nor the Other LPs shall be allocated any item of income, gain, loss,
deduction or credit for the First Taxable Year, including, without limitation,
any cancellation of indebtedness income realized by the Limited Partnership as
a result of the cancellation of certain mortgages on the Daleville and Somerset
Properties, and that neither Horizon GP nor Horizon LP shall be allocated any
item of income, gain, loss, deduction or credit for the Second Taxable
Year.  Horizon GP and Horizon LP further
acknowledge and agree that when Pleasant Lake GP, Pleasant Lake LP and the
Other LPs cause the Limited Partnership’s tax returns to be prepared and K-1s
to be issued, they will be prepared by the Limited Partnership in accordance
with this Agreement regardless of any conflict with the Limited Partnership’s
Limited Partnership Agreement.

 

12

 

7.                                      RELEASE.

 

Parent, Horizon GP and Horizon LP, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, do
hereby forever release, remise and discharge the Limited Partnership and its
successors and assigns from any and all claims, claims for relief, demands,
actions and causes of action of any kind or description whatsoever, known or
unknown, whether arising out of contract, tort, statute, treaty or otherwise,
in law or in equity, which any of Parent, Horizon GP and Horizon LP now has or
has had against the Limited Partnership from the beginning of the world to the
date of this Agreement, arising from, connected with, or in any way growing out
of, directly or indirectly, any transactions between the Limited Partnership
and Parent, Horizon GP and Horizon LP prior to the date of this Agreement and
all the effects, consequences, losses, damages, negotiations and dealings
relating thereto.

 

8.                                      MISCELLANEOUS.

 

8(a)                           No
Third-Party Beneficiaries.  This
Agreement shall not confer any rights or remedies upon any person other than
the Parties and their respective successors and permitted assigns.

 

8(b)                           Entire
Agreement.  This Agreement
(including the documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, to the extent they
have related in any way to the subject matter hereof.

 

8(c)                           Succession
and Assignment.  This Agreement
shall be binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns.  No Party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other Parties hereto.

 

8(d)                           Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

 

8(e)                           Headings.
 The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

8(f)                             Notices.  All notices, requests, demands, claims and
other communications hereunder will be in writing.  Any notice, request, demand, claim or other communication
hereunder shall be deemed duly given if (and then two (2) business days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:

 

If to Parent or Horizon GP or Horizon LP:

 

	
  Horizon Group
  Properties, Inc.

  77 West Wacker Drive, Suite 4200

  Chicago, IL  60601

  
	
  Attention:

  	
  Gary Skoien

  
	
  Phone:

  	
  312-917-4227

  
	
  Facsimile:

  	
  312-917-0911

  

 

13

 

with a copy, which shall not
constitute notice, to:

 

	
  Schiff Hardin &
  Waite

  6600 Sears Tower

  Chicago, IL  60606

  
	
  Attention:

  	
  David A. Grossberg

  
	
  Phone:

  	
  312-258-5764

  
	
  Facsimile:

  	
  312-258-5600

  

 

If to Pleasant Lake GP or
Pleasant Lake LP:

 

	
  Pleasant Lakes Apts.
  Corp.

  Pleasant Lakes Apt. Limited Partnership

  c/o Ramat Securities

  23811 Chagrin Boulevard, #200

  Beachwood, OH  44122

  
	
  Attention:

  	
  Howard Amster

  
	
  Phone:

  	
  216-595-1047

  
	
  Facsimile:

  	
  216-595-0989

  

 

with a copy, which shall not
constitute notice, to:

 

	
  Ulmer & Berne LLP

  Penton Media Building, Suite 900

  1300 East Ninth Street

  Cleveland, Ohio  44115-1583

  
	
  Attention:

  	
  Robert Fein

  
	
  Phone:

  	
  216-621-8400

  
	
  Facsimile:

  	
  216-621-7488

  

 

If to Bongorno:

 

	
  Richard Bongorno

  2785 Belgrave Road

  Pepper Pike, Ohio  44124

  

 

If to Skoien:

 

	
  Gary Skoien

  511 N. Fairway Drive

  Inverness, Illinois  60067

  

 

14

 

If to Zlatin:

 

	
  David Zlatin

  
	
  2562 Biscayne Boulevard

  
	
  Beachwood, Ohio  44122

  

 

Any Party may send any notice, request, demand, claim
or other communication hereunder to the intended recipient at the address set
forth above using any other mean including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient.  Any Party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice
in the manner herein set forth.

 

8(g)                          Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.

 

8(h)                          Amendments
and Waivers.  No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. 
No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be valid
unless in writing and delivered to the other Parties hereto and no such waiver
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.

 

8(i)                             Severability.
 Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.

 

8(j)                             Expenses.  Each Party will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.

 

8(k)                         Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this
Agreement.  Any reference to any
federal, state, local or foreign statute of law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
requires otherwise.  The word
“including” shall mean “including, without limitation.”

 

8(l)                             Further
Assurances.  The Parties each
covenant and agree to execute and deliver, or cause others to do so, all such
powers of attorney, consents, certificates, affidavits, agreements, instruments
and other documents, and to do or cause to be done all such other acts and
things as may be necessary to carry out the provisions of this Agreement, or as
another party reasonably requests

 

15

 

to effectuate the provisions of
this Agreement.  The Parties agree to
cooperate with each other to ensure the consummation of the transactions
contemplated by this Agreement.

 

[Signature Page Follows]

 

16

 

IN
WITNESS WHEREOF, the Parties hereto have executed this
Purchase Agreement on the date first above written.

 

	
   

  	
  HORIZON GROUP PROPERTIES, INC.,

  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  DALEVILLE,
  SOMERSET, TULARE

  FINANCE COMPANY, INC., a Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  HORIZON GROUP PROPERTIES, L.P.,

  a Delaware limited partnership,

  
	
   

  	
  By:

  	
  Horizon Group Properties, Inc.,

  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  PLEASANT
  LAKE APTS. CORP., an Ohio

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  PLEASANT
  LAKE APTS. LIMITED

  PARTNERSHIP, an Ohio limited partnership

  
	
   

  	
  By:

  	
  Pleasant Lake Apts. Corp., Its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

17

 

	
   

  	
   

  
	
   

  	
  RICHARD BONGORNO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GARY SKOIEN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DAVID ZLATIN

  

 

18

 

Exhibit A

 

	
  Limited Partner

  	
   

  	
  Distribution
  of Limited Partnership Interest

  Percentage

  	
   

  
	
  Pleasant Lake

  	
   

  	
  86

  	
  %

  
	
  Richard Bongorno

  	
   

  	
  1

  	
  %

  
	
  Gary Skoien

  	
   

  	
  10

  	
  %

  
	
  David Zlatin

  	
   

  	
  2

  	
  %

  
	
  TOTAL

  	
   

  	
  99

  	
  %

  

 

19

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