<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
-------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number: 1-12424
--------------------------------
HORIZON GROUP, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
MICHIGAN 38-2559212
-------------------------------- ----------------------------------
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
5000 HAKES DRIVE, NORTON SHORES, MI 49441
---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(616) 798-9100
--------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
NUMBER OF COMMON SHARES OUTSTANDING AT AUGUST 9, 1996, 21,023,533
----------
<PAGE> 2
HORIZON GROUP, INC. AND SUBSIDIARY
Index to Form 10-Q
June 30, 1996
Page No.
<TABLE>
<S> <C>
Part I. Financial Information:
Consolidated Condensed Statements of Income for the
three months and six months ended June 30, 1996 and 1995 ....... 3
Consolidated Condensed Balance Sheets as of
June 30, 1996 and December 31, 1995 ............................ 4
Consolidated Condensed Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 ........................ 5
Notes to Consolidated Condensed Financial Statements ............ 6-7
Management's Discussion and Analysis of Results of Operations
and Financial Condition ........................................ 8-11
Part II.
Other Information ............................................... 12-13
Signatures ...................................................... 14
</TABLE>
2
<PAGE> 3
HORIZON GROUP, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Income
For the three and six months ended June 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
(thousands, except per share data)
REVENUE:
Base rent $27,346 $10,091 $54,558 $19,520
Percentage rent 588 427 1,196 854
Expense recoveries 7,810 2,744 15,596 5,492
Other 1,471 590 2,869 1,225
------- ------- ------- -------
Total revenue 37,215 13,852 74,219 27,091
------- ------- ------- -------
EXPENSES:
Property operating 5,366 1,900 10,974 3,945
Real estate taxes 2,751 1,049 5,391 2,052
Interest 9,114 2,277 17,941 4,121
Depreciation and amortization 8,611 2,959 16,328 5,569
General and administrative 1,736 722 3,739 1,430
Land leases and other 146 293 275 571
------- ------- ------- -------
Total expenses 27,724 9,200 54,648 17,688
------- ------- ------- -------
Income before gain on sale of real estate 9,491 4,652 19,571 9,403
Gain on sale of real estate - 273 - 498
------- ------- ------- -------
Net income before minority interest 9,491 4,925 19,571 9,901
Minority interest (2,286) (839) (4,887) (1,681)
------- ------- ------- -------
NET INCOME $ 7,205 $ 4,086 $14,684 $ 8,220
======= ======= ======= =======
Net income per common share $ .37 $ .40 $ .76 $ .80
======= ======= ======= =======
Cash dividend per common share $ .53 $ .616 $ 1.035 $ 1.121
======= ======= ======= =======
Average common shares outstanding 19,432 10,236 19,277 10,236
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
HORIZON GROUP, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
as of June 30, 1996 and December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ----------
ASSETS (thousands)
<S> <C> <C>
Real estate at cost:
Land $ 134,905 $ 133,815
Buildings and improvements 980,872 926,145
Less accumulated depreciation (53,374) (37,839)
---------- ----------
Total real estate 1,062,403 1,022,121
Cash 3,563 6,567
Prepaid expenses 490 1,408
Due from related parties 1,053 1,020
Deferred charges and other assets 37,921 27,974
---------- ----------
Total assets $1,105,430 $1,059,090
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgages and other debt $ 561,865 $ 503,246
Accounts payable and accrued expenses 35,970 43,170
Dividends payable 13,572 12,950
Other liabilities 9,607 8,131
---------- ----------
Total liabilities 621,014 567,497
---------- ----------
MINORITY INTEREST 127,758 149,697
---------- ----------
SHAREHOLDERS' EQUITY:
Common shares 195 186
Additional paid-in capital 375,968 355,803
Distributions in excess of net income (19,505) (14,093)
---------- ----------
Total shareholders' equity 356,658 341,896
---------- ----------
Total liabilities and shareholders' equity $1,105,430 $1,059,090
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HORIZON GROUP, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
-------------------
1996 1995
-------- --------
(thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,684 $ 8,220
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Minority interest in net income 4,887 1,681
Depreciation and amortization 16,909 5,757
Gain on sale of real estate - (498)
Compensation related to stock bonus arrangements 51 49
Changes in assets and liabilities:
Prepaid expenses 918 (36)
Deferred charges and other assets (12,553) (5,530)
Accounts payable and accrued expenses (6,771) 1,154
Other liabilities 1,476 1,121
-------- --------
Net cash provided by operating activities 19,601 11,918
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and improvements (55,520) (54,104)
Proceeds from sale of real estate - 879
-------- --------
Net cash used in investing activities (55,520) (53,225)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends (19,125) (9,878)
Dividends and distributions - minority interest (6,889) (2,012)
Proceeds from borrowings 132,609 68,079
Principal payments on mortgages and other debt (73,680) (14,879)
-------- --------
Net cash provided by financing activities 32,915 41,310
-------- --------
Net increase (decrease) in cash (3,004) 3
CASH:
Beginning of period 6,567 4,172
-------- --------
End of period $ 3,563 $ 4,175
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
HORIZON GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
(unaudited)
(1) Financial Statement Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all information and footnotes necessary for a fair presentation
of financial position, results of operations and cash flows in conformity
with generally accepted accounting principles since it is assumed the user
of these statements is reading them in conjunction with the most recent
year-end audited financial statements. In the opinion of management, the
consolidated condensed financial statements contain all adjustments
necessary for a fair statement of financial results for the interim
periods. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements
reported herein. These reclassifications have not changed the 1995
results.
(2) Mortgages and other debt
On June 28, 1996, the Company entered into a $205 million revolving
credit facility agreement with a subsidiary of First Chicago NBD
Corporation and certain other banks (the "New Credit Facility"). The New
Credit Facility, which combines two prior revolving credit facilities,
expires in June 1999. At the Company's election, interest on the New
Credit Facility is charged at the rate of 1/4 of 1 percent over the prime
rate, or 2 percent over the London interbank offered rate ("LIBOR"). The
interest in excess of the prime rate or LIBOR rate is subject to reduction
in certain instances, including the rating of certain debt of the Company,
a reduction in the Company's debt to capitalized value and additional
equity investments in the Company. Borrowings under the New Credit
Facility are primarily used for acquisitions, property expansion and
development activities and are collateralized by certain properties owned
by the Company. On June 30, 1996, the combined commitment of the New Credit
Facility was not fully collateralized, resulting in a borrowing base of
approximately $184.5 million.
6
<PAGE> 7
HORIZON GROUP, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements (continued)
(unaudited)
(3) Subsequent Events
The Company received a commitment, dated July 1, 1996, from Heitman
Capital Management Corporation ("Heitman"), acting as an advisor for an
institutional advisory client, to form a new venture (the "Venture") for
the purposes of acquiring and owning the Company's Finger Lakes Outlet
Center (the "Property"). The commitment provides that Heitman will invest
a total of $42.5 million which will be distributed to the Company upon its
contribution of the Property and current expansion phases under development
to the Venture. The Company will develop these additional phases of the
Property pursuant to a development agreement with the Venture and will
manage and lease the Property. The commitment also provides that Heitman
has the right to convert its interest in the Venture into 1.95 million
shares of Common Stock. The commitment is subject to the execution of a
definitive venture agreement and the completion of final due diligence by
both parties. Norman Perlmutter, a director of the Company, is Chairman of
the Board and Chief Executive Office of Heitman Financial Limited of which
Heitman is a wholly-owned subsidiary.
On July 22, 1996, the Company received a $99.3 million mortgage
commitment from an institutional lender at a fixed interest rate of 9.06
percent. Proceeds from the $99.3 million mortgage will be used to repay
project specific debt outstanding under revolving credit facilities.
On July 23, 1996, the Company consummated the sale of 1.5 million shares
of Common Stock to Smith Barney Inc. ("Smith Barney") at a 5 percent
discount to the then fair market price of $20.00 per share for an aggregate
price of $28.5 million. The Company also granted to Smith Barney a 30-day
option to purchase up to 225,000 additional shares of Common Stock, on the
same basis, solely to cover over-allotments, if any.
7
<PAGE> 8
HORIZON GROUP, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Results of Operations
and Financial Condition
For the three months and six months ended June 30, 1996
(unaudited)
General Overview
Horizon Group, Inc. and Subsidiary (the "Company") has grown by developing new
outlet shopping centers, expanding existing outlet shopping centers, acquiring
outlet shopping centers and increasing rental revenue at its existing outlet
shopping centers. The operations of the Company are conducted through
Horizon/Glen Outlet Centers Limited Partnership (the "Operating Partnership").
On July 14, 1995, the Company expanded its operations by merging with
McArthur/Glen Realty Corp. ("McArthur/Glen"), an owner, operator and developer
of outlet shopping centers. The accompanying consolidated condensed financial
statements include the results of operations of McArthur/Glen from the date of
the merger. As of June 30, 1996, the Company owned 76.2 percent of the
Operating Partnership.
Results of Operations
Net income before minority interest in the current three- and six- month
periods increased $4.6 million and $9.7 million compared to the corresponding
prior year periods. The increases were primarily attributable to the merger
with McArthur/Glen and secondarily, the opening of three additional centers and
six expansions which collectively added 5.1 million square feet of gross
leaseable area ("GLA"). Depreciation and amortization in the three- and six-
month periods of 1996 increased $5.7 million and $10.8 million compared to the
prior year due to the increased GLA. Property operating and real estate tax
expenses increased $5.2 million and $10.4 million in the current three and six
months reflecting the growth in center GLA partially offset by operating
efficiencies and economies of scale. General and administrative expenses in
1996 increased $1.0 million and $2.3 million in the three and six months
compared to the prior year periods. As a result of operating efficiencies
achieved through managing a larger portfolio, general and administrative
expenses as a percentage of total revenues decreased in the current quarter to
4.7 percent compared to 5.2 percent in the prior year and declined in the
current six months to 5.0 percent from 5.3 percent in the prior year. The
general and administrative cost savings were partially offset by increased
reserves for doubtful accounts receivable.
8
<PAGE> 9
HORIZON GROUP, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months and six months ended June 30, 1996
(unaudited)
Consolidated revenues were as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
----------------------------------------------------------------------------------
Percentage Percentage
1996 1995 Increase 1996 1995 Increase
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Base rent $27,346 $10,091 171.0 % $54,558 $19,520 179.5 %
Percentage rent 588 427 37.7 % 1,196 854 40.0 %
Expense recoveries 7,810 2,744 184.6 % 15,596 5,492 184.0 %
Other 1,471 590 149.3 % 2,869 1,225 134.2 %
------- ------- ----- ------- ------- -----
$37,215 $13,852 168.7 % $74,219 $27,091 174.0 %
======= ======= ===== ======= ======= =====
</TABLE>
Base and percentage rents increased in the current comparable three- and six-
month periods principally due to increased GLA. Weighted average rent per
square foot of GLA as of June 30, 1996, was $14.39 compared to $12.89 as of
June 30, 1995. Increases in expense recoveries from tenants in the current
quarter and six months as compared to the prior year also resulted principally
from additional GLA.
Interest expense increased $6.8 million and $13.8 million in the current three-
and six- month comparable periods from higher debt levels.
Liquidity and Capital Resources
The Company received a $65.0 million mortgage in the first quarter of 1996 from
an institutional lender at a fixed interest rate of 8.574 percent. Proceeds
from the $65.0 million mortgage were used to reduce current debt maturities and
amounts outstanding under revolving credit facilities. The Company received a
$21.2 million and a $10.0 million mortgage commitment from two life insurance
companies. Both mortgages are scheduled to close before December 31, 1996.
On July 22, 1996, the Company received a $99.3 million mortgage commitment from
an institutional lender at a fixed interest rate of 9.06 percent. Proceeds
from the $99.3 million mortgage will be used to repay project specific debt
outstanding under revolving credit facilities.
On July 23, 1996, the Company sold 1.5 million shares of Common Stock for an
aggregate price of $28.5 million. Proceeds from the sale were used to reduce
amounts outstanding under revolving credit facilities.
9
<PAGE> 10
HORIZON GROUP, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months and six months ended June 30, 1996
(unaudited)
The Company received a commitment, dated July 1, 1996, from Heitman Capital
Management Corporation ("Heitman"), acting as an advisor for an institutional
advisory client, to form a new venture (the "Venture") for the purposes of
acquiring and owning the Company's Finger Lakes Outlet Center (the "Property").
The commitment provides that Heitman will invest a total of $42.5 million
which will be distributed to the Company upon its contribution of the Property
and current expansion phases under development to the Venture. See note 3 in
the accompanying consolidated condensed financial statements for further
information.
During the last two quarters of 1996, the Company plans to spend approximately
$59 million to continue expansion or development of its centers. The Company
plans to fund this expansion and development with existing cash balances, cash
flow from operations and additional borrowings.
The Company believes it will have access to the capital resources necessary to
expand and develop its business. The Company anticipates that existing cash
balances and cash flow from operations, together with cash from borrowings and
other sources, will be adequate to meet the capital and liquidity needs of the
Company. The Company expects to meet its short-term borrowing requirements
primarily through its existing revolving credit facilities and a construction
line of credit. The revolving credit facilities, which aggregate $225.0
million, were not fully collateralized resulting in a borrowing base limitation
of $204.5 million and had availability of $4.1 million at June 30, 1996. The
Company believes it has sufficient unencumbered assets to fully collateralized
these credit facilities and intends to do so by year-end. At June 30, 1996,
borrowings under the Company's $125.0 million construction line of credit were
$51.5 million. To meet its long-term liquidity requirements, the Company
intends to obtain funds through construction credit facilities, revolving
credit facilities, equity offerings, or long-term fixed-rate debt financing in
a manner consistent with its debt to total market capitalization policy.
The Company declared a $.505 and $.53 dividend per common share in the first
and second quarter of 1996, respectively. In order to qualify as a Real Estate
Investment Trust ("REIT") for federal income tax purposes, the Company is
required to pay dividends to its shareholders of at least 95% of its REIT
taxable income. The Company intends to pay those dividends from cash flow from
operations which is expected to increase due to future growth in rental
revenues at existing outlet shopping centers and cash flow from expansions,
acquisitions and new developments. Although the Company intends to make
distributions to its shareholders in accordance with the requirements of the
Internal Revenue Code of 1986, as amended, it also intends to retain such
amounts as it considers necessary from time to time for the acquisitions or
development of new properties as suitable opportunities arise and for the
expansion and renovation of its outlet shopping centers.
10
<PAGE> 11
HORIZON GROUP, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months and six months ended June 30, 1996
(unaudited)
Funds From Operations
The Company believes that Funds From Operations provides an indicator of the
financial performance of the Company and is influenced by both the operations
of the properties and the capital structure of the Company. Funds From
Operations is defined as net income (computed in accordance with generally
accepted accounting principles), excluding gains or losses from debt
restructuring, plus depreciation and amortization of real estate assets and
adjustments for other noncash items and unconsolidated partnerships and joint
ventures. The Company expects that Funds From Operations will be the most
significant factor considered by the Board of Directors in determining the
amount of cash distributions the Company will make to shareholders. Funds From
Operations does not represent cash flow from operations as defined by generally
accepted accounting principles and is not necessarily indicative of cash
available to fund all cash flow needs.
For the comparable three and six months ended June 30, 1996, Funds From
Operations before minority interest increased $10.1 million and $20.4 million
or 129.1 and 132.6 percent, respectively, compared to the prior year periods.
11
<PAGE> 12
HORIZON GROUP, INC. AND SUBSIDIARY
Part II - Other Information
Item 4. Submission of matters to a vote of security holders
---------------------------------------------------
The annual meeting of the shareholders of the Company was held on May
22, 1996. At such meeting, the shareholders of the Company elected
Douglas Crocker II, William P. Dickey and Martin Sherman as directors
of the Company (for: 17,049,312 shares; against: 0 shares; withheld:
83,221 shares). The following directors, Jeffrey A. Kerr, Edwin N.
Homer and Ronald L. Piasecki continued in their capacity after the
annual meeting until their terms expire. At the meeting the
shareholders approved the amendment to change the Company's name from
HGI Realty, Inc. to Horizon Group, Inc. (for: 17,006,782 shares;
against: 41,648 shares; withheld: 84,066 shares).
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) 3.1 Amendment to Amended and Restated Articles of Incorporation of
the Company
3.2 Amended and Restated Bylaws of the Company
4 Specimen Common Stock Certificate
10.1 Amended and Restated Employment Agreement by and among
HGI Realty, Inc., Horizon/Glen Outlet Centers Limited
Partnership and Jeffrey A. Kerr
10.2 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and George T. Haworth
10.3 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Gary E. Geisler
10.4 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Margaret M. Ernst
10.5 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Alan Glen
12
<PAGE> 13
HORIZON GROUP, INC. AND SUBSIDIARY
Part II - Other Information (continued)
Item 6. Exhibits and Reports on Form 8-K (continued)
--------------------------------
10.6 Consolidated, Amended and Restated Revolving Credit Agreement
among Horizon/Glen Outlet Centers Limited Partnership, Horizon
Group, Inc., The First National Bank of Chicago, Wells Fargo
Realty Advisors Funding, Incorporated and other banks.
27 Financial Data Schedule
b) None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HORIZON GROUP, INC.
Registrant
Date: August 13, 1996 By: /s/ Richard Phillips
--------------------------------------------
Richard Phillips, Vice President, Controller
and Chief Accounting Officer
14
<PAGE> 15
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 Amendment to Amended and Restated Articles of Incorporation of
the Company
3.2 Amended and Restated Bylaws of the Company
4 Specimen Common Stock Certificate
10.1 Amended and Restated Employment Agreement by and among HGI
Realty, Inc., Horizon/Glen Outlet Centers Limited Partnership
and Jeffrey A. Kerr
10.2 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and George T. Haworth
10.3 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Gary E. Geisler
10.4 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Margaret M. Ernst
10.5 Agreement by and among HGI Realty, Inc., Horizon/Glen Outlet
Centers Limited Partnership and Alan Glen
10.6 Consolidated, Amended and Restated Revolving Credit Agreement
among Horizon/Glen Outlet Centers Limited Partnership,
Horizon Group, Inc., The First National Bank of Chicago,
Wells Fargo Realty Advisors Funding, Incorporated and other
banks.
27 Financial Data Schedule
15
<PAGE> 1
EXHIBIT 3.1
CS-1000 Michigan Department of Consumer and Industry Services
Corporation, Securities and Land Development Bureau
6546 Mercantile Way
P.O. Box 30054
Lansing, Michigan 48909
Telephone: 1-900-555-0031
RECEIPT
Receipt: 030027
Date: 06/13/1996
Paid By: Check
Amount: $ 12.50
Received of: CSC NETWORKS
Purpose: AMENDMENT - HORIZON GROUP, INC.
DOCUMENT FILED BY ADMINISTRATOR 6/13/96
Receipt Issued by: Lola Rivera
<PAGE> 2
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
JUN 13 1996 ADJUSTED PURSUANT TO
TELEPHONE AUTHORIZATION
Trina, Internet FILED
Name Patty 965291/005 JUN 13 1996
CSC Networks
- -------------------------------------- Administrator
Address MI DEPT. OF CONSUMER
33 N. Lasalle St, Ste #1925 & INDUSTRY SERVICES
- -------------------------------------- Corporation & Securities Bureau
City State Zip Code
Chicago IL 60608 EFFECTIVE DATE: June 17, 1996 @ 12:01 am
- --------------------------------------
DOCUMENT WILL BE RETURNED TO THE NAME
AND ADDRESS YOU ENTER ABOVE
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162. Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is: HGI REALTY, INC.
259-976
2. The identification number assigned by the Bureau is:
3. The location of the registered office is:
1050 W. WESTERN AVE., MUSKEGON , Michigan 49441
- ------------------------------------------------- -----------------
(Street Address) (City) (ZIP Code)
4. Article i of the Articles of Incorporation is hereby amended to read as
follows:
The name of the corporation (the "Corporation") is HORIZON GROUP, INC.
The name change is to be effective as of 12:01 a.m. on monday June 17, 1996.
<PAGE> 3
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD
OF DIRECTORS OR TRUSTEES: OTHERWISE, COMPLETE SECTION (b). DO NOT
COMPLETE BOTH.
a. / / The foregoing amendment to the Articles of Incorporation was
duly adopted on the __________ day of _______________________,
19_____, in accordance with the provisions of the Act by the
unanimous consent of the incorporator(s) before the first
meeting of the Board of Directors or Trustees.
Signed this _______ day of ____________________, 19_______.
___________________________________ __________________________________
(Signature) (Signature)
___________________________________ __________________________________
(Type or Print Name) (Type or Print Name)
___________________________________ __________________________________
(Signature) (Signature)
___________________________________ __________________________________
(Type or Print Name) (Type or Print Name)
b. /X/ The foregoing amendment to the Articles of Incorporation was
duly adopted on the 22nd day of May, 1996. The amendment:
(check one of the following)
/X/ was duly adopted in accordance with Section 611(2) of
the Act by the vote of the shareholders if a profit
corporation, or by the vote of the shareholders or
members if a nonprofit corporation, or by the vote of
the directors if a nonprofit corporation organized on a
nonstock directorship basis. The necessary votes were
cast in favor of the amendment.
/ / was duly adopted by the written consent of all
directors pursuant to Section 525 of the Act and the
corporation is a nonprofit corporation organized on a
nonstock directorship basis.
/ / was duly adopted by the written consent of the
shareholders or members having not less than the minimum
number of votes required by statute in accordance with
Section 407(1) and (2) of the Act if a nonprofit
corporation, or Section 407(1) of the Act if a profit
corporation. Written notice to shareholders who have not
consented in writing has been given. (Note: Written
consent by less than all of the shareholders or members
is permitted only if such provision appears in the
Articles of Incorporation.)
/ / was duly adopted by the written consent of all the
shareholders or members entitled to vote in accordance
with section 407(3) of the Act if a nonprofit
corporation, or Section 407(2) of the Act if a profit
corporation.
Signed this 22nd day of May, 1996
By James S. O'Brien
---------------------------------------------
(Only Signature of President, Vice-President,
Chairperson, or Vice-Chairperson)
James S. O'Brien Vice President
------------------------------------------------
(Type or Print Name) (Type or Print Title)
<PAGE> 4
Name of person or organization Preparer's name and business
remitting fees: telephone number:
The Prentice-Hall Corporation System, Inc. Beverly A. Velkovrh
- ------------------------------------------ ----------------------------
( 312 ) 368-8947
- ------------------------------------------ ----------------------------
INFORMATION AND INSTRUCTIONS
1. The amendment cannot be filed until this form, or a comparable document, is
submitted.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address appearing in the box on the front as
evidence of filing.
Since this document will be maintained on optical disk media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to the provisions of sections 631 of
the Act for the purpose of amending the articles of incorporation of a
domestic profit corporation or nonprofit corporation. Do not use this form
for restated articles. A nonprofit corporation is one incorporated to carry
out any lawful purpose or purposes not involving pecuniary profit or gain
for its directors, officers, shareholders, or members. A nonprofit
corporation formed on a nonstock directorship basis, as authorized by
Section 302 of the Act, may or may not have members, but if it has members,
the members are not entitled to vote.
4. Item 2 - Enter the identification number previously assigned by the
Bureau. If this number is unknown, leave it blank.
5. Item 4 - The articles being amended must be set forth in its entirety.
However, if the article being amended is divided into separately
identifiable sections, only the sections being amended need be included.
6. This document is effective on the date endorsed "filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
7. If the amendment is adopted before the first meeting of the board of
directors, item 5(a) must be completed and signed in ink by a majority of
the incorporators if more than one listed in Article V of the Articles of
Incorporation if a profit corporation, and all the incorporators if a
nonprofit corporation. If the amendment is otherwise adopted, item 5(b) must
be completed and signed in ink by the president, vice-president,
chairperson, or vice-chairperson of the corporation.
8. FEES: Make remittance payable to the State of Michigan. Include corporation
name and identification number on check or money order.
NONREFUNDABLE FEE................................................... $10.00
TOTAL MINIMUM FEE................................................... $10.00
ADDITIONAL FEES DUE FOR INCREASED AUTHORIZED SHARES OF PROFIT
CORPORATIONS ARE:
each additional 20,000 authorized shares or portion thereof........$30.00
maximum fee for first 10,000,000 authorized shares..............$5,000.00
each additional 20,000 authorized shares or portion thereof
in excess of 10,000,000 shares...................................$30.00
maximum fee per filing for authorized shares in excess of
10,000,000 shares...........................................$200,000.00
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
HORIZON GROUP, INC.
(FORMERLY HGI REALTY, INC.)
I
OFFICES
1. EXECUTIVE OFFICE. The principal executive office of HGI REALTY,
INC. (the "Corporation") shall be located in Muskegon, Michigan or such other
location as may be specified by the Board of Directors. The books of account
and records of the Corporation shall be kept in such office.
2. OTHER OFFICES. The Corporation may have other offices, either
within or without the State of Michigan, at such place or places as the Board
of Directors may from time to time appoint.
II
MEETINGS OF SHAREHOLDERS
1. ANNUAL MEETINGS. Annual meetings of shareholders for the election
of directors and for such other business as may properly come before the
meeting, shall be held on the second Tuesday in May, unless otherwise specified
by resolution adopted by the Board of Directors, at a place, within or without
the State of Michigan, as the Board of Directors shall designate and set forth
in the notice of the meeting.
If the date of the annual meeting shall fall on a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the shareholders entitled to vote shall elect successors to the class
of directors whose term expires at such annual meeting and may transact such
other business as shall be stated in the notice of the meeting.
2. QUORUM. Unless a greater or lesser quorum is provided in the
Articles of Incorporation of the Corporation (the "Articles of Incorporation"),
in a By-law adopted by the shareholders or by law, the shares present in person
or by proxy entitled to cast a majority of the votes at a meeting shall
constitute a quorum at the meeting. When the holders of a class or series of
shares are entitled to vote separately on
<PAGE> 2
an item of business, this Section 2 applies in determining the presence of a
quorum of the class or series for transaction of the item of business. If such
quorum shall not be present or represented at any meeting of the shareholders,
the meeting may be adjourned by a vote of the shares present, from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. If a meeting is adjourned to another time or
place, it is not necessary, unless these By-laws otherwise provide, to give
notice of the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken and at
the adjourned meeting only business is transacted as might have been transacted
at the original meeting. If after the adjournment the Board of Directors fixes
a new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given to each shareholder of record on the new record date entitled to
vote at the meeting.
3. SPECIAL MEETINGS. Special meetings of the shareholders may be
called (a) by the Board of Directors, pursuant to a resolution adopted by a
majority of the members of the Board of Directors then in office, or (b) by the
Chairman of the Board of Directors (the "Chairman of the Board"), the President
or the Secretary upon the receipt by the Corporation of a written demand
therefor duly executed by shareholders of record hold of not less than
twenty-five percent (25%) of all of the outstanding shares of the Corporation
entitled to vote at such meeting, which demand shall specify the purpose or
purposes for such meeting. Special meetings may be held at any place, within
or without the State of Michigan, as determined by the Board of Directors. The
business which may be conducted at any such special meeting shall be confined
to the purpose or purposes stated in the notice thereof.
4. NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of the time, place and purposes of a meeting of shareholders, shall be
given not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, to each shareholder of record entitled
to vote at the meeting. No business (other than ministerial proceedings) other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the shareholders entitled to vote thereat.
5. SHAREHOLDER NOMINATIONS AND PROPOSALS.
(a) No proposal for a shareholder vote shall be submitted by a
shareholder (a "Shareholder Proposal") to the Corporation's shareholders unless
the shareholder submitting such proposal (the "Proponent") shall have filed a
written notice setting forth with particularity (i) the names and business
addresses of the Proponent and all Persons (as defined in Article 5 of the
Articles of Incorporation) acting in concert with the Proponent; (ii) the name
and address of the Proponent and the Persons identified in clause (i), as they
appear on the Corporation's books (if they so appear); (iii) the class and
number of shares of the Corporation beneficially owned by the Proponent and the
Persons identified in clause (i); (iv) a description of the Shareholder
Proposal containing all material information relating thereto; and (v) such
other information as the Board of Directors reasonably determines is necessary
or appropriate to enable the Board of Directors and shareholders of the
Corporation to consider the
2
<PAGE> 3
Shareholder Proposal. Upon receipt of the Shareholder Proposal and prior to
the shareholder meeting at which such Shareholder Proposal will be considered,
if the Board of Directors or a designated committee or the officer who will
preside at the shareholders meeting determines that the information provided in
a Shareholder Proposal does not satisfy the informational requirements of these
By-laws or is otherwise not in accordance with law, the Secretary of the
Corporation shall promptly notify such shareholder of the deficiency in the
notice. Such shareholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within the period of time,
not to exceed five days from the date such deficiency notice is given to the
shareholder, determined by the Board of Directors, such committee or such
officer. If the deficiency is not cured within such period, or if the Board of
Directors, such committee or such officer determines that the additional
information provided by the shareholder, together with the information
previously provided, does not satisfy the requirements of this Section 5, then
such proposal shall not be presented for action at the meeting in question.
(b) Only persons who are selected and recommended by the Board of
Directors, or who are nominated by shareholders in accordance with the
procedures set forth in this Section 5(b), shall be eligible for election, or
qualified to serve, as directors. Nominations of individuals for election to
the Board of Directors of the Corporation at any annual meeting or any special
meeting of shareholders at which directors are to be elected may be made by any
shareholder of the Corporation entitled to vote for the election of directors
at that meeting by compliance with the procedures set forth in this Section
5(b). Nominations by shareholders shall be made by written notice (a
"Nomination Notice"), which shall set forth (i) as to each individual
nominated, (A) the name, date of birth, business address and residence address
of such individual; (B) the business experience during the past five years of
such nominee, including his or her principal occupations and employment during
such period, the name and principal business of any corporation or other
organization in which such occupations and employment were carried on and such
other information as to the nature of his or her responsibilities and level of
professional competence as may be sufficient to permit assessment of his or her
prior business experience; (C) any directorships held by such nominee in any
company with a class of securities registered pursuant to section 12 of the
Securities Exchange Act of 1934, as amended, or subject to the requirements of
section 15(d) of such Act or any company registered as an investment company
under the Investment Company Act of 1940, as amended; and (D) whether, in the
last five years, such nominee has been convicted in a criminal proceeding or
has been subject to a judgment, order, finding or decree of any federal, state
or other governmental entity, concerning any violation of federal, state or
other law, or any proceeding in bankruptcy, which conviction, order, finding,
decree or proceeding may be material to an evaluation of the ability or
integrity of the nominee; and (ii) as to the Person submitting the Nomination
Notice and any Person acting in concert with such Person, (x) the name and
business address of such Persons, (y) the name and address of such Persons and
as they appear on the Corporation's books (if they so appear) and (z) the class
and number of shares of the Corporation which are beneficially owned by such
Persons. A written consent to serve as a director if elected, signed by the
nominee, shall be filed with any Nomination Notice. Except as otherwise
required by applicable law, a Nomination Notice made in accordance with the
procedures prescribed by these By-laws only permits the person submitting the
Nomination Notice to present the nominee at the applicable
3
<PAGE> 4
shareholders' meeting and does not entitle such nominee to be named as a
nominee in any solicitation of proxies on behalf of the Board of Directors. If
the presiding officer at any shareholders meeting determines that a nomination
was not made in accordance with the procedures prescribed by these By-laws, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
(c) Nomination Notices and Shareholder Proposals shall be delivered
to the Secretary at the principal executive office of the Corporation not less
than sixty and not more than ninety days prior to the date of the meeting of
shareholders if such Nomination Notice or Shareholder Proposal is to be
submitted at an annual shareholders meeting (provided, however, that if such
annual meeting is called to be held before the date specified in Section 1 of
this Article II, such Nomination Notice or Shareholder Proposal shall be so
delivered no later than the close of business on the tenth day following the
day on which notice of the date of the annual shareholders meeting was given).
Nomination Notices and Shareholder Proposals shall be delivered to the
Secretary at the principal executive office of the Corporation no later than
the close of business on the tenth day following the day on which notice of the
date of a special meeting of shareholders was given if the Nomination Notice or
Shareholder Proposal is to be submitted at a special shareholders meeting.
6. VOTING. Except as provided in the Michigan Business Corporation
Act ("MBCA") or the Articles of Incorporation, each outstanding share shall be
entitled to one vote, in person or by written proxy, on each matter submitted
to a vote; provided that a proxy is not valid after the expiration of three
years from its date unless otherwise provided in the proxy. Upon the demand of
any shareholder, the vote for directors and the vote upon any question before
the meeting shall be by ballot. If an action, other than the election of
directors, is to be taken by vote of the shareholders, it shall be authorized
by a majority of the votes cast by the holders of shares entitled to vote
thereon, unless a greater vote is required by the Articles of Incorporation or
the MBCA. Except as otherwise provided by the Articles of Incorporation,
directors shall be elected by a plurality of the votes cast at an election.
The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make and certify a complete list of the
shareholders entitled to vote at a shareholders' meeting or any adjournment
thereof. The list shall be (i) arranged alphabetically within each class and
series, with the address of, and the number of shares held by, each
shareholder; (ii) produced at the time and place of the meeting; (iii) subject
to inspection by any shareholder during the whole time of the meeting; and (iv)
prima facie evidence as to who are the shareholders entitled to examine the
list or to vote at the meeting.
7. CONDUCT OF SHAREHOLDERS' MEETINGS. The meetings of the
shareholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President, or if he is not present, by a Vice President
designated by the Board of Directors, or if none of such officers is present,
by a chairman to be elected at the meeting. The Secretary of the Corporation,
if present, shall act as secretary of such meetings or, if he is not present,
an Assistant Secretary designated by the Board of Directors shall so act; if
neither the Secretary nor an Assistant Secretary is present, then a secretary
4
<PAGE> 5
shall be appointed by the chairman of the meeting. The order of business shall
be as determined by the chairman of the meeting.
8. INSPECTORS OF ELECTION.
(a) The Board of Directors may, in advance of any meeting
of shareholders, appoint one or more inspectors to act at the meeting and make
a written report thereof. The Board of Directors may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate is able to act at a meeting of shareholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
(b) The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine challenges and
questions arising in connection with the right to vote, count and tabulate
votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting or a shareholder entitled to
vote thereat, the inspectors shall make and execute a written report to the
person presiding at the meeting of any of the facts found by them and matters
determined by them. The report is prima facie evidence of the facts stated and
of the vote as certified by the inspectors. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(c) The date and time of the opening and the closing of
the polls for each matter upon which the shareholders will vote at a meeting
shall be announced at the meeting. No ballot, proxies or votes, nor any
revocations thereof or changes thereto, shall be accepted by the inspectors
after the closing of the polls unless the Court of Chancery upon application by
a shareholder shall determine otherwise.
(d) In determining the validity and counting of proxies
and ballots, the inspectors shall be limited to an examination of the proxies,
any envelopes submitted with those proxies, ballots and the regular books and
records of the Corporation, except that the inspectors may consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the shareholder holds of record. If
the inspectors consider other reliable information for the limited purpose
permitted herein, the inspectors at the time they make their certification
pursuant to subsection (b) of this Section 8 shall specify the precise
information considered by them including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
5
<PAGE> 6
III
DIRECTORS
1. NUMBER OF DIRECTORS. The number of directors of the Corporation
which shall constitute the Board of Directors shall be nine (9). No amendment
to these By-laws decreasing the number of directors shall have the effect of
shortening the term of any incumbent director, and no amendment shall increase
the number of directors by fifty percent (50%) or more in any twelve-month
period without the unanimous approval of the members of the Board of Directors
then in office. Provided that at the 1998 annual meeting of shareholders and
thereafter, the number of directors of the Corporation which shall constitute
the Board of Directors shall be reduced to seven (7).
2. CLASSIFICATION AND ELECTION OF DIRECTORS. The directors shall be
divided into three classes, designated Class I, Class II and Class III, with
each class to be as nearly equal in number as possible. Class I directors
shall initially serve until the 1996 annual meeting of shareholders; Class II
directors shall initially serve until the 1997 annual meeting of shareholders;
and Class III directors shall initially serve until the 1998 annual meeting of
shareholders. At each annual meeting of shareholders beginning with the 1996
annual meeting, successors to the Class I, Class II or Class III directors
whose terms expire at that annual meeting shall be elected for a term expiring
at the third succeeding annual meeting of shareholders after their election.
At all meetings of shareholders for the election of Class I, Class II or Class
III directors at which a quorum is present, the persons receiving the greatest
number of votes shall be the directors. Each Class I, Class II or Class III
director shall hold office until the annual meeting of shareholders at which
his term expires and his successor is elected and qualified or until his
earlier resignation or removal.
3. RESIGNATIONS. Any director, member of a committee or other officer
may resign at any time. Such resignation shall be made in writing, and shall
take effect at the time specified therein, and if no time be specified, at the
time of its receipt by the Chairman of the Board, President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
4. VACANCIES. Any vacancy on the Board of Directors that results for
any reason, including an increase in the number of directors, shall be filled
by the Board of Directors by the affirmative vote of a majority of the
directors then in office. Any person elected to fill such a vacancy (other
than a vacancy arising from an increase in the number of directors) shall hold
such office for the unexpired term and until his successor is elected and
qualified or until his earlier resignation or removal. Any person elected to
fill a vacancy arising from an increase in the number of directors shall hold
such office until the next annual meeting of shareholders, and his successor
shall be elected at such annual meeting for a term expiring in accordance with
these By-laws.
6
<PAGE> 7
5. REMOVAL. Any Class I, Class II or Class III director may be
removed only for cause and only by the vote of a majority of the voting power
of all shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class, at a
special meeting of the shareholders called for the purpose, and any vacancy
thus created shall be filled by a candidate nominated in accordance with
Section 3 of Article IV of these By-laws.
6. POWERS. The business and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors except as otherwise
provided in the MBCA or the Articles of Incorporation.
7. MEETINGS. The newly elected directors may, without notice, hold
their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
shareholders; or the time and place of such meeting may be fixed by consent in
writing of all the directors.
Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board, acting alone, or by the Chairman of the Board, the
President or the Secretary at the written request of a majority of the members
of the Board of Directors then in office who are not officers of the
Corporation, and shall be held at such place or places as may be determined by
resolution of the directors, or as shall be stated in the call of the meeting.
The Chairman of the Board shall preside at all meetings of the Board
of Directors, or if he is not present, the person designated by a majority of
the directors present shall preside.
Notice of the date, time and place of each special meeting shall be
mailed by regular mail to each director at his designated address at least six
days before the meeting, or sent by overnight courier to each director at his
designated address at least two days before the meeting (with delivery
scheduled to occur no later than the day before the meeting), or given orally
by telephone, telegraph, telecopy or other comparable means to each director at
his designated address at least twenty-four hours before the meeting, in the
case of a meeting to be held by means of a telephone conference, and at least
thirty-six hours before all other meetings. Any director may waive in writing
notice of any meeting, and the attendance of a director at any meeting shall
constitute a waiver of notice of such meeting. The notice of a special meeting
shall state any business to be transacted at the meeting which is outside the
ordinary course. Other routine business may be conducted at the special
meeting without such matter being stated in the notice.
Unless otherwise restricted by the Articles of Incorporation or these
By-laws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting
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<PAGE> 8
of the Board of Directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
8. QUORUM. A majority of the members of the Board of Directors then
in office shall constitute a quorum for the transaction of business. If at any
meeting of the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time until a
quorum is obtained, and no further notice thereof need be given to the
directors present at the adjourned meeting other than by announcement at the
meeting which shall be so adjourned; provided, however, that notice of such
reconvened meeting, stating the date, time and place of the reconvened meeting,
shall be given in accordance with the requirements of Section 7 of this Article
III to the directors not present at the adjourned meeting.
9. VOTE. Except as otherwise provided in the Articles of
Incorporation or other provisions of these By-laws, the vote of a majority of
the members of the Board of Directors then in office shall be the act of the
Board of Directors.
10. COMPENSATION. Directors shall receive such compensation for their
services as directors or as members of committees, as may be fixed by the Board
of Directors, including but not limited to a stated salary, fixed fee, or
hourly rate and expenses of attendance for attendance at each meeting or
engagement or activity on behalf of this Corporation. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity as an officer, agent or otherwise, and receiving compensation
therefor.
11. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if all members of the Board of Directors or of
such committee as the case may be, consent thereto in writing and the writing
or writings are filed with the minutes of proceedings of the Board of Directors
or committee.
12. APPROVAL OR RATIFICATION. Any contract, transaction or act of
the Corporation or of the Board of Directors or of any committee thereof or of
any officer of the Corporation which shall be approved or ratified by the
holders of a majority of the outstanding shares of the Corporation at any annual
meeting of shareholders or any special meeting of shareholders called for such
purpose shall be as valid and binding upon the Corporation and all of its
shareholders as if it had been approved or ratified by all the shareholders of
the Corporation.
8
<PAGE> 9
IV
COMMITTEES
1. STANDING COMMITTEES. There shall be a Compensation Committee and
an Audit Committee of the Board of Directors, and such other committees as
shall be designated by the Board of Directors. Each committee shall consist of
one or more directors of the Corporation.
A committee, and each member thereof, shall serve at the pleasure of
the Board.
Each standing committee may determine its own rules of procedure,
consistent with these By-laws. Meetings of any standing committee may be
called upon the direction of any member of such committee. Notice of the date,
time and place of each meeting shall be mailed by regular mail to each member
of such standing committee at his designated address at least six days before
the meeting, or sent by overnight courier to each such member at his designated
address at least two days before the meeting (with delivery scheduled to occur
no later than the day before the meeting), or given orally by telephone,
telegraph, telecopy or other comparable means to each such member at his
designated address at least twenty-four hours before the meeting. Notice of a
meeting of any standing committee may be waived in writing by any member of
such committee. Except as otherwise provided in these By-laws, at meetings of
each standing committee, the presence of a majority of the members of such
committee shall be necessary to constitute a quorum for the transaction of
business, and, if a quorum is present at any meeting, the action taken by a
majority of the members present shall be the act of the committee. Each
standing committee shall keep such records of its acts and proceedings as its
chairman shall deem appropriate, and shall report its activities to the Board
of Directors from time to time.
2. COMPENSATION COMMITTEE. The Compensation Committee shall consist
of such number of directors as from time to time shall be prescribed by the
Board of Directors. Each such director shall not be an officer or employee of
the Corporation or of any subsidiary or affiliated company of the Corporation,
and shall hold office until his successor is elected. The Compensation
Committee shall establish general guidelines regarding the compensation of the
officers and executives of the Corporation, determine the compensation of the
Chief Executive Officer, and the four most highly compensated executive
officers of the Corporation, other than the Chief Executive Officer, whose
individual total annual salary and bonus exceeds $100,000, have the authority
to grant options under the Corporation's stock option plans and perform such
other duties with respect to plans affecting officers' remuneration as shall be
delegated to the Compensation Committee from time to time.
9
<PAGE> 10
3. AUDIT COMMITTEE. The Audit Committee shall consist of such number
of directors as from time to time shall be prescribed by the Board of
Directors. Each such director shall not be an officer or employee of the
Corporation or of any subsidiary or affiliated company of the Corporation, and
shall hold office until his successor is elected. The duties of the Audit
Committee shall be to make recommendations concerning the engagement of
independent public accountants, review with the independent public accountants
the plans and results of the audit engagement, approve professional services
provided by the independent public accountants, review the independence of the
independent public accounts, consider the range of audit and non-audit fees and
review any recommendations made by the Company's auditors regarding the
Company's accounting methods and the adequacy of its system of internal
control.
V
OFFICERS
1. OFFICERS. The officers of the Corporation shall be a Chairman of
the Board, a President, a Treasurer, and a Secretary, all of whom shall be
elected by the Board of Directors and hold office until their successors are
elected and qualified. In addition, the Board of Directors may elect one or
more Vice Presidents (one or more of whom may be designated Senior Vice
President or Executive Vice President) and such Assistant Secretaries and
Assistant Treasurers as they may deem proper. None of the officers (other than
the Chairman of the Board and the President) need be directors. The officers
shall be elected at the first meeting of the Board of Directors after each
annual meeting, and vacancies in any office and newly created offices may be
filled by the Board of Directors at any time. More than two offices may be
held by the same person.
2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such
other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Board of Directors.
3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
shall preside at meetings of the shareholders of the Corporation and the Board
of Directors. The Chairman of the Board shall also perform such other duties
as may be assigned to him by the Board of Directors.
4. PRESIDENT. The President shall be the chief executive officer of
the Corporation and shall have general charge, control and supervision over the
affairs of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. In the absence of the Chairman of
the Board, the President shall preside at meetings of the shareholders. Except
as the Board of Directors shall authorize the execution thereof in some other
manner, the President shall be
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<PAGE> 11
authorized to execute bonds, mortgages and other contracts on behalf of the
Corporation, to cause the Corporation's seal to be affixed to any instrument
requiring such seal, and when so affixed such seal shall be attested by the
signatures of the Secretary or an Assistant Secretary.
5. VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the Board of Directors
or as delegated to him by the President. The Board of Directors may assign to
any Vice President general supervision and charge over any territorial or
functional division of the business and affairs of the Corporation.
6. TREASURER. The Treasurer shall have responsibility for the custody
and safe-keeping of the funds and securities of the Corporation and shall keep
full and accurate account of receipts and disbursements in books belonging to
the Corporation. He shall deposit all moneys and other valuables in the name
and to the credit of the Corporation in such depositaries as may be designated
by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors or the President, taking proper vouchers for
such disbursements. He shall render to the Chairman of the Board, the
President and the Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond for the faithful
discharge of his duties in such amount and with such surety as the Board of
Directors shall prescribe.
7. SECRETARY. The Secretary shall give, or cause to be given, notice
of all meetings of shareholders and directors and all other notices required by
law or by these By-Laws, and in case of his absence or refusal or neglect so to
do, any such notice may be given by any person thereunto directed by the Board
of Directors, or shareholders, upon whose requisition the meeting is called as
provided in these By-laws. He shall record all the proceedings of the meetings
of the Corporation and of the directors in a book to be kept for that purpose,
and shall perform such other duties as may be assigned to him by the Board of
Directors or the President. He shall have the custody of the seal of the
Corporation and shall affix the same to all instruments requiring it, when
authorized by the directors or the Chairman of the Board or the President, and
attest the same.
8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
11
<PAGE> 12
VI
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
1. INDEMNIFICATION PROVISIONS IN ARTICLES OF INCORPORATION. The
provisions of this Article VI are intended to supplement Article 8 of the
Articles of Incorporation pursuant to Section 8.2 of the Articles of
Incorporation. To the extent that this Article VI contains any provisions
inconsistent with said Article 8, the provisions of the Articles of
Incorporation shall govern. Terms defined in such Article 8 shall have the
same meaning in this Article VI.
2. UNDERTAKINGS FOR ADVANCES OF EXPENSES. Unless otherwise specified
in the MBCA, an advancement by the Corporation of expenses incurred by an
indemnitee pursuant to clause (iii) of the last sentence of Section 8.1 of the
Articles of Incorporation (hereinafter an "advancement of expenses") shall be
made only upon delivery to the Corporation of a written affirmation of
eligibility for such advancement as required by the MBCA and an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay
all amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under Article 8.1 of the Articles of Incorporation or otherwise. The
total amount of expenses advanced or indemnified from all sources combined
shall not exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses.
3. CLAIMS FOR INDEMNIFICATION. If a claim for indemnification under
Section 8.1 of the Articles of Incorporation is not paid in full by the
Corporation within sixty days after it has been received in writing by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In any suit
brought by the indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and in any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses only upon a final
adjudication that the indemnitee has not met the applicable standard of conduct
set forth in the MBCA (or any successor provision or provisions). Neither the
failure of the Corporation (including the Board of Directors, independent legal
counsel or its shareholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the MBCA (or any successor provision or provisions), nor
an
12
<PAGE> 13
actual determination by the Corporation (including the Board of Directors,
independent legal counsel, or its shareholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to have or
retain such advancement of expenses, under Article 8.1 of the Articles of
Incorporation or this Article VI or otherwise, shall be on the Corporation.
4. PREDECESSOR CORPORATIONS. The Corporation shall provide to
individuals who were directors, officers, employees or agents of McArthur/Glen
Realty Corp. and Horizon Outlet Centers, Inc. immediately prior to the
Effective Date, indemnification rights equivalent to the indemnification rights
applicable to such individuals immediately prior to the Effective Date for
actions or omissions of such individuals in their capacity as directors,
officers, employees or agents of McArthur/Glen Realty Corp. and Horizon Outlet
Center, Inc., as the case may be, occurring prior to the Effective Date.
5. INSURANCE. The Corporation may maintain insurance, at its expense,
to protect itself and any director, trustee, officer, employee or agent of the
Corporation or another enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the MBCA.
6. SEVERABILITY. In the event that any of the provisions of this
Article VI (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall
remain enforceable to the full extent permitted by law.
13
<PAGE> 14
VII
MISCELLANEOUS
1. CERTIFICATES REPRESENTING SHARES. Certificates representing shares
shall set forth thereon the statements prescribed in Section 332 and, where
applicable, by Sections 463, 472 and 805, of the MBCA and by any other
applicable provision of law, and shall be signed in the name of the Corporation
by the Chairman of the Board, the President or a Vice-President, and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, shall be issued to each shareholder certifying the number of shares
in the Corporation owned by such holder. Any or all of the signatures may be
facsimiles. If an officer who has signed or whose facsimile signature has been
placed upon a certificate ceases to be an officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer at the date of issue.
In the event that the shares or other securities of the Corporation
are listed on a national securities exchange, the Corporation may by resolution
of the Board of Directors eliminate certificates representing such shares or
securities and provide for such other methods of recording, noticing ownership,
and disclosure as may be provided by the rules of that national securities
exchange.
No certificate shall be issued for any share until such share is fully
paid.
2. LOST CERTIFICATES. A new certificate for shares may be issued in
the place of any certificate theretofore issued by the Corporation, alleged to
have been lost, stolen or destroyed, and the directors may, in their
discretion, require the owner of the lost, stolen or destroyed certificate to
give the Corporation an affidavit as to such person's ownership of the
certificate and of the facts which go to prove its loss, theft or destruction,
and/or a bond, in such sum as they may direct, sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate, or the issuance of
any such new certificate.
3. TRANSFER OF SHARES. Subject to compliance with any agreement or
provisions restricting the transferability of shares, transfers of shares of
stock shall be made on the books of the Corporation only by direction of the
person named in the certificate or such person's attorney, lawfully constituted
in writing, and only upon the surrender of the certificate therefor and a
written assignment of the shares evidenced thereby. Surrender of the
certificate shall be effected by the delivery of the shares to the person in
charge of the stock and transfer books and ledgers of the Corporation, or to
such other person as the directors may designate, by whom the certificate shall
be cancelled, and a new certificate shall thereupon be issued. A record shall
be made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.
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<PAGE> 15
4. RECORD OWNERSHIP. A record of the name and address of the holder
of each certificate, the number of shares represented thereby and the date of
issue thereof shall be made on the Corporation's books. The Corporation shall
be entitled to treat the holder of record of any share of stock as the holder
in fact thereof, and accordingly shall not be bound to recognize any equitable
or other claim to or interest in any share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
required by the laws of the State of Michigan.
5. RECORD DATE. In order that the Corporation may determine the
shareholders entitled to notice of and to vote at any meeting of shareholders
or any adjournment thereof, or to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any rights in respect
of any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not precede the date on which the resolution fixing the record date is
adopted by the Board of Directors. The record date shall not be more than
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting unless the Board of Directors fixes a
new record date pursuant to this Section for the adjourned meeting.
6. DIVIDENDS. Subject to the provisions of the Articles of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the Corporation.
7. SEAL. The corporate seal shall be circular in form and shall
contain the name of the Corporation, the year of its creation and the words
"CORPORATE SEAL." Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
8. FISCAL YEAR. The fiscal year of the Corporation shall be the
calendar year unless otherwise determined by resolution of the Board of
Directors.
9. CHECKS. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation, and other commercial instruments, shall be signed by such officer
or officers, agent or agents of the Corporation, and in such manner as shall be
determined from time to time by resolution of the Board of Directors.
10. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage
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<PAGE> 16
prepaid, addressed to the person entitled thereto at his address as it appears
on the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Shareholders not entitled to vote shall not
be entitled to receive notice of any meetings except as otherwise provided by
law.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation
of the Corporation or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
11. VOTING OF STOCK OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or such officers or employees or
agents as the Board of Directors or the President may direct. Any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may from time to time confer like powers upon
any other person or persons.
VIII
AMENDMENTS
These By-laws may be altered or repealed and By-laws may be made (a)
at any annual meeting of the shareholders or at any special meeting thereof if
notice of the proposed alteration or repeal or of the By-law or By-laws to be
made is contained in the notice of such special meeting, by the affirmative
vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of
the combined voting power of all of the shares of all classes of capital stock
of the Corporation then entitled to vote generally in the election of
directors, or (b) at any regular meeting of the Board of Directors, or at any
special meeting of the Board of Directors, if notice of the proposed alteration
or repeal, or of the By-law or By-laws to be made, is contained in the notice
of such meeting, by the affirmative vote of a majority of the members of the
Board of Directors then in office.
16
<PAGE> 1
EXHIBIT 4
<TABLE>
<CAPTION>
<S><C>
6-7-96 JB AL H 44400
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS PAR VALUE $0.01
OF THE STATE OF MICHIGAN [HORIZON GROUP INC., LOGO] SHARES
NUMBER
H THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE FOR RESTRICTIVE
IN THE CITY OF CHICAGO LEGEND AND CERTAIN DEFINITIONS
OR IN THE CITY OF NEW YORK
CUSIP 44041X 10 6
HORIZON GROUP, INC.
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Horizon Group, Inc., transferable on the books of the Corporation by the holder in person or
by attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its authorized officers.
Dated:
Countersigned and Registered: Chairman of the Board and President
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Transfer Agent and Registrar,
By HORIZON GROUP, INC.
CORPORATE
SEAL
1984
MICHIGAN
Authorized Signature Secretary
AMERICAN BANK NOTE COMPANY
</TABLE>
<PAGE> 2
HORIZON GROUP, INC.
The shares of the Common Stock represented by this certificate are subject
to restrictions on transfer for the purpose of the Corporation's maintenance of
its status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). No Person may (1) Beneficially Own shares of
Equity Stock in excess of 7.0% (or such greater percentage as may be determine
by the Board of Directors of the Corporation) of the value of the outstanding
Equity Stock of the Corporation unless such Person is an Existing Holder; or (2)
Transfer shares of Equity Stock if such Transfer would result in the Corporation
being "closely held" under Section 856(h) of the Code. Any Person who attempts
to Beneficially Own or Transfer shares of Equity Stock in violation of the above
limitations must immediately notify the Corporation. All capitalized terms in
this legend have the meanings defined in the Corporation's Amended and Restated
Articles of Incorporation, as the same may be further amended from time to time,
a copy of which, including the restrictions on ownership and transfer, will be
sent without charge to each shareholder who so requests. If the restrictions on
ownership and transfer are violated with respect to the shares of Equity Stock
represented hereby, the shares of Equity Stock represented hereby will
automatically be exchanged for shares of Excess Stock and will be held in trust
by the Corporation.
The Corporation will furnish to any shareholder, upon request and without
charge, a full statement (a) of the designation, relative rights, preferences
and limitations of the shares of each class authorized to be issued, so far as
the same have been prescribed, and (b) or the authority of the Board of
Directors to designate and prescribe the relative rights, preferences and
limitations of any series.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ___________ CUSTODIAN ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as tenants Act ____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, _____________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OR ASSIGNEE)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
___________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________
(Sign here) _______________________________________________
Notice: The signature to this assignment must
correspond with the name as written
upon the face of the certificate in
every particular, without alteration
or enlargement or any change whatever.
Signature(s) Guaranteed:
___________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17 Ad-15.
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made as of April 10, 1996, by and among HGI REALTY, INC. (the "Corporation"),
HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP (the "Operating Partnership")
(the Corporation and the Operating Partnership collectively referred to herein
as the "Company"), and JEFFREY A. KERR (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company has determined to employ the Employee as Chairman
of its Board of Directors, President and Chief Executive Officer; the Employee
wishes to accept such employment; and the Company and the Employee wish to
provide herein the terms of the Employee's employment;
WHEREAS, the Corporation is the general partner of the Operating
Partnership;
WHEREAS, the Company presently owns and operates manufacturer outlet
shopping centers throughout the United States;
WHEREAS, the Company owns or has options to acquire sites for and
currently plans to develop several new centers and expansions of existing and
new centers;
WHEREAS, the Company intends to pursue an aggressive development
strategy in order to take advantage of growth opportunities in the industry by
opening new manufacturer outlet centers in markets throughout the continent of
North America; and
WHEREAS, the economics of the manufacturer outlet center industry are
such that the establishment by the Employee of an outlet center would
significantly impede the Company from opening a center within the same
geographic region serviced by the Employee's center;
NOW, THEREFORE, IT IS AGREED THAT:
1. Agreement of Employment; Effective Date. The Company agrees to
employ the Employee, and the Employee agrees to serve the Company, as Chairman
of its Board of Directors, President and Chief Executive Officer, upon the
terms and conditions hereinafter set forth. Such employment shall become
effective on the date hereof (the "Effective Date").
2. Term. The employment of the Employee under this Agreement shall be
for a term ending on July 14, 1998; provided, however, that the Employee may
elect to extend such term to July 14, 1999 upon written notice to the Company
of such extension at least sixty (60) days prior to July 14, 1998.
<PAGE> 2
Such period of employment, as from time to time extended as provided for in
this Paragraph 2, is hereinafter referred to as the "Term."
3. Duties. During the Term, the Employee shall perform the duties of
Chairman of the Corporation's Board of Directors, President and Chief Executive
Officer, as set forth in the By-Laws of the Corporation as in effect from time
to time. The Company agrees that it will assign to the Employee only those
duties of the type, nature and dignity normally assigned to one of the two most
senior executive officers of business organizations of the size and nature of
the Company. The Board of Directors of the Corporation has elected the
Employee as Chairman of its Board of Directors, President and Chief Executive
Officer. The Employee agrees to devote substantially all of his business time
to the operation of the Company's business, provided that the Employee may
engage in other business activities that do not contravene the Employee's
covenants set forth in Paragraph 10 hereof and do not materially interfere with
the performance of the Employee's duties hereunder.
4. Compensation of Employee. For the services rendered by the
Employee to the Company under this Agreement, the Company shall compensate the
Employee as follows:
(a) Base Salary and Bonus. The Company shall pay the
Employee for his services an annual salary of $350,000 (the "Base
Salary"), payable in accordance with the payroll practices of the
Company applicable to all employees, plus such other amounts as may be
awarded to the Employee under any incentive, bonus, stock option or
other compensation plan adopted by the Corporation's Board of
Directors or the Operating Partnership, less Social Security taxes and
withholding taxes for which the Employee is obligated and less any
other taxes that may be lawfully levied by any governmental authority
which the Company may be required by law from time to time to
withhold. The Employee shall be eligible each year for such
additional compensation as may be awarded to him by the Compensation
Committee of the Board of Directors of the Corporation. The
Employee's Base Salary may be increased by the Corporation's Board of
Directors from time to time but may not be decreased without the
Employee's prior written consent.
(b) Employee Benefits. The Employee shall be entitled to
receive, on the same basis as other executive personnel of the
Company, group employee benefits such as sick leave, vacation,
holidays, group disability and health, life, and accident insurance
and similar indirect compensation which the Company may from time to
time extend to its executive personnel. In addition, the Employee
shall be eligible to participate in any compensation, profit-sharing,
bonus, stock option, participation or extra compensation plan,
pension, or other so-called "fringe" benefits which the Company may
from time to time provide for its executive personnel generally.
Without limiting the generality of the foregoing, the Employee shall
be offered any benefit that the Company provides to executive officers
of the Company generally.
(c) Automobile. The Employee shall be entitled, at no cost to the
Employee, to the continued use of the automobile presently furnished to him by
the Company and, upon the expiration of the lease
2
<PAGE> 3
thereof, to a comparable new automobile to be chosen by the Employee. The
Company shall bear all taxes, insurance, operating and maintenance expenses
with respect thereto.
5. Office. During the Term, the Company shall, at its expense,
maintain an office for the Employee, which office and workspace shall be the
Employee's office immediately prior to the Effective Date, or an office and
workspace of comparable quality at a location mutually acceptable to the
Employee and the Company.
6. Reimbursement. The Company shall reimburse the Employee for the
reasonable expenses incurred by him in connection with the performance of his
duties hereunder, including but not limited to, travel and entertainment
expenses, for which the Employee shall account to the Company in a manner
sufficient to conform to Internal Revenue Service requirements. Employee shall
furnish the Company with such records and receipts as are required to
substantiate such expenses in accordance with Company policy.
7. Death or Disability.
(a) If the Employee dies during the Term, the Employee's legal
representative shall be entitled to receive from the Company (i) such payment
as provided to the legal representatives of Company executives generally under
the Company's personnel policies in effect at the time of death; and (ii) all
other employee benefits that were earned by the Employee or had vested as of
the date of the Employee's death.
(b) If, during the Term, the Employee suffers an illness or
incapacity constituting the "permanent disability" of Employee, Employee shall
be entitled to receive (i) such disability benefits as are paid to executive
officers generally under the policies of the Company in effect at the time of
the termination of this Agreement; and (ii) and other employee benefits that
were earned by the Employee or had vested as of the date of the Employee's
death. For the purposes hereof, "permanent disability" shall mean any illness,
injury or infirmity which renders or is reasonably expected to render Employee
unable to perform his duties hereunder for a period of one hundred and eighty
(180) consecutive days or for periods aggregating two hundred and forty (240)
days within a three hundred and sixty (360) day period.
In the event the Company and Employee do not agree that Employee is
suffering from a permanent disability, then the Board of Directors and Employee
(or Employee's representative if Employee is unable to act) shall together
select a licensed physician who shall, within thirty (30) days from the date
upon which he or she is selected, make a conclusive determination as to whether
or not Employee is suffering from a permanent disability. In the event that
the parties are unable to agree upon the selection of a physician, Employee (or
Employee's representative if Employee is unable to act) and the Company shall
each separately select, within fifteen (15) days from the date such
disagreement arises, a licensed physician. Together, the physicians so
selected shall designate a third licensed
3
<PAGE> 4
physician who shall, within fifteen (15) days from the date of his selection,
make the conclusive determination as to whether or not Employee is suffering
from a permanent disability.
8. Termination.
(a) Termination for Cause. The Board of Directors of the Corporation
may terminate the employment of the Employee hereunder if the Employee during
the Term (i) commits an act of fraud with respect to the Company, (ii) is
convicted of any felony, (iii) continually fails to substantially perform his
duties under Paragraph 3 hereof (other than any such failure resulting from a
material breach of the obligations of the Company under Paragraph 3 hereof or
the disability of the Employee or any such failure occurring after any of the
events constituting "Good Reason" hereunder has occurred) for a period of
thirty (30) days after receipt by the Employee of a written demand for
substantial performance has been delivered by the Board of Directors of the
Corporation to the Employee, which written demand specifically identifies in
reasonable detail the manner in which the Company believes that the Employee
has not substantially performed his duties hereunder, or (iv) the material
breach by the Employee of any of his obligations under Paragraphs 10 or 11
hereof and the failure of the Employee to correct such breach within thirty
(30) days after the receipt by the Employee of a written notice from the Board
of Directors of the Corporation specifying in reasonable detail the nature of
such breach. Termination pursuant to this Paragraph 8(a) shall be herein
referred to as a "Termination for Cause." Notwithstanding the foregoing, a
Termination for Cause shall not be effective unless and until the Employee has
received reasonable notice setting forth the reasons for the Company's
intention to terminate him pursuant to this Paragraph 8(a), the Employee has
had an opportunity, together with his counsel, to be heard before the full
Board of Directors of the Corporation and to submit any materials or
information to the Board of Directors that he views appropriate, and the Board
of Directors has issued a finding that, in the good faith opinion of a majority
of the Board of Directors, the Employee's conduct has established a sufficient
basis for a Termination for Cause. Upon a Termination for Cause, the Company
shall have no further obligation to pay the Employee's Base Salary or to
provide any other employee benefits hereunder except for any Base Salary or
other benefits that have fully accrued and vested but not been paid as of the
effective date of such termination. Notwithstanding anything to the contrary
herein, during the Term, the Company shall have no right to terminate the
employment of the Employee hereunder except pursuant to this Section 8(a).
(b) Termination by Employee. The Employee may terminate his
employment hereunder by providing the Company with a written notice of
termination at least one hundred eighty (180) days prior to the effective date
of such termination in the case of a termination other than for Good Reason (as
defined below) or sixty (60) days prior to the effective date of such
termination in the case of a termination for Good Reason. If the Employee
terminates his employment under this Paragraph 8(b) other than for Good Reason,
the Company shall have no further obligation to pay the Employee's Base Salary
or to provide any other employee benefits hereunder except for any Base Salary
or other benefits that have fully accrued and vested but not been paid as of
the effective date of such termination. If the Employee terminates his
employment under this Paragraph 8(b) for Good Reason (a "Termination for Good
Reason"), the Company's sole obligations hereunder shall be to (i) pay the
Employee any Base
4
<PAGE> 5
Salary and other benefits that have fully accrued and vested but not been paid
as of the effective date of such termination, (ii) pay the Employee any
incentive payments provided by any compensation plan applicable to the Employee
for the then current calendar year and (iii) to make the severance payments
described in Paragraph 9 hereof.
As used herein, "Good Reason" shall mean the occurrence of any of the
following:
(i) the breach by the Company of any of its agreements set
forth in Paragraph 3 hereof; or
(ii) the failure of the Employee to be reelected as Chairman
of the Corporation's Board of Directors, President and Chief Executive Officer.
9. Severance Payments. Within thirty (30) days after the effective
date of a Termination for Good Reason pursuant to Paragraph 8(b) hereof, the
Company shall pay to the Employee a lump sum amount, without discount, of One
Million Dollars ($1,000,000).
10. Competition.
(a) In consideration of the Corporation's agreement to employ the
Employee as Chairman of its Board of Directors, President and Chief Executive
Officer, the Employee hereby agrees that during the Noncompete Period (as
defined below), without the prior written approval of the Company, the Employee
shall not, directly or indirectly, (i) enter into or in any manner take part in
any manufacturer outlet shopping center business, either individually or as an
officer, director, employee, agent, consultant, partner, investor (excluding
passive investments not aggregating more than five percent (5%) of any such
entity's total outstanding voting securities), principal or otherwise, in the
continent of North America other than through any partnerships owning phases of
manufacturer outlet shopping centers as to which, on the Effective Date, the
Operating Partnership is a limited but not general partner; (ii) solicit,
divert, take away or enter into any leases or the like with, or attempt to
solicit, divert, take away or enter into any leases or the like with, any party
or its Affiliates which during the term of Employee's employment hereunder
leases space at a factory outlet center owned by the Company or Affiliate of
the Company, or which leased space or which an Affiliate thereof leased space
at a factory outlet center within two (2) years immediately prior to the date
of the termination of Employee's employment hereunder, wherever located in the
continental United States; or (iii) solicit, attempt to solicit, advise, hire
for employment or engage, any person who is an employee or agent of the Company
or an Affiliate of the Company as of the date of the termination of Employee's
employment hereunder, or who was an employee or agent of the Company or any
Affiliate of the Company within six (6) months immediately prior to the date of
the termination of Employee's employment hereunder.
As used herein, "Noncompete Period" shall mean the period commencing
on the Effective Date and ending on the earlier of (i) the first anniversary of
the last day of the Term, (ii) the first anniversary of the effective date of a
Disability Termination, Termination for Cause or a termination pursuant to
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<PAGE> 6
Paragraph 8(b) hereof other than a Termination for Good Reason, or (iii) the
effective date of a Termination Without Cause, a Termination for Good Reason or
a Change in Control Termination (as defined below).
As used herein, "Affiliate" shall mean with respect to any referenced
Person, (i) any Person who directly or indirectly owns, controls or holds the
power to vote ten percent (10%) or more of the outstanding voting securities of
the Person in question; (ii) any Person ten percent (10%) or more of whose
outstanding securities are directly or indirectly owned, controlled by, or held
with power to vote by the Person in question; (iii) any Person directly or
indirectly controlling, controlled by, or under direct common control with the
Person in question; (iv) if the Person in question is a corporation, any
executive officer or director of such Person or of any corporation directly or
indirectly controlling such Person; and (v) if the Person in question is a
partnership, any general partner of the partnership or any limited partner
owning or controlling ten percent (10%) or more of either the capital or
profits interest in such partnership. As used herein, "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise. "Person" shall mean
any individual, partnership, corporation, trust or other entity.
(b) The Employee acknowledges that, as a key management employee, the
Employee will be involved, on a high level, in the development, implementation
and management of the Company's national business strategies and plans,
including those which involve the Company's finances, research, marketing,
planning, operations, industrial relations and property acquisitions. By
virtue of the Employee's unique and sensitive position and special background,
employment of the Employee by a competitor of the Company represents a serious
competitive danger to the Company, and the use of the Employee's talent and
knowledge and information about the Company's business strategies can and would
constitute a valuable competitive advantage over the Company.
(c) The Employee acknowledges that enforcement of the covenants set
forth in this Paragraph 10 and in Paragraph 11 hereof will not prevent him from
earning a living in the real estate industry.
(d) The Employee acknowledges that he has carefully read and
considered all of the terms of this Agreement, including particularly the terms
of this Paragraph 10 and of Paragraph 11 hereof, that the Company has made a
substantial investment in the Company's business and that the restrictions
provided in this Paragraph 10 and the following Paragraph 11 hereof are
reasonable and necessary for the Company's protection. The Employee further
acknowledges that damages at law will not be a measurable or adequate remedy
for breach of the covenants contained in this Paragraph 10 or in Paragraph 11
hereof and, accordingly the Employee consents to the entry by any court of
competent jurisdiction of any order enjoining him from violating any such
covenants. The parties hereto further agree that if, in any judicial
proceeding, a court should refuse to enforce any covenants set forth in this
Paragraph 10 or in Paragraph 11 hereof because of their term or geographical
scope, then such
6
<PAGE> 7
covenants shall be deemed to be modified to permit their enforcement to the
maximum extent permitted by law.
11. Confidentiality. The Employee acknowledges and agrees that the
Company competes in a highly competitive industry and in competitive markets
and that as Chairman of the Corporation's Board of Directors, President and
Chief Executive Officer, the Employee may have access to proprietary and
confidential information and trade secrets of the Company and its affiliates
and subsidiaries. The Employee agrees that he will not, without the written
consent of the Company, disclose or permit anyone under his control to disclose
to anyone not properly entitled to the information or use for his own benefit
or the benefit of anyone else other than the Company or any affiliate or
subsidiary of the Company, any such trade secrets or proprietary or
confidential information relating to the Company and related entities.
12. Change in Control.
(a) Defined. For purposes of this Agreement, a "Change in Control"
shall mean any of the following:
(i) any "person" (as such term is used in Section 3(a)(9) of
the Securities Exchange Act of 1934) (other than the Employee or any affiliate
of the Employee) is or becomes the Beneficial Owner (as defined in the Articles
of Incorporation of the Corporation), directly or indirectly, of securities of
the Corporation representing twenty-five percent (25%) or more of the combined
voting power of the then outstanding securities of the Corporation; provided,
however, a Change in Control shall not occur if such acquisition is approved by
the Board of Directors of the Corporation; or
(ii) the election as directors constituting a majority of the
Board of Directors of the Corporation of persons whose nomination for election
as director was not recommended by the Board of Directors.
(b) Termination of Employment After Change in Control. The Company
will pay to the Employee severance benefits, which shall be paid in a lump sum
without discount, in the amount of One Million Dollars ($1,000,000) in the
event that at any time within the one (1) year period which shall commence upon
a Change in Control the Employee's employment is terminated by the Company
(other than a Termination for Cause) or the Employee terminates his employment
(a "Change in Control Termination"). Such payment shall be made within thirty
(30) days of the effective date of such Change in Control Termination.
(c) Interpretation. A Change in Control Termination shall supersede
any other purported termination (other than a Termination for Cause).
(d) Upon the termination of Employee's employment hereunder, at the
sole option of the Company, Employee shall be deemed to have resigned from any
office of the Company which he may
7
<PAGE> 8
then hold and shall promptly deliver to the Company (without retaining any
copies thereof) all Company files and documents, forms, letterhead, business
cards, computer disks and any other written, magnetic or printed materials
relating to the business of the Company; provided, however, that Employee shall
not be required to resign as a director of the Company.
13. Waiver. A waiver by any party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such terms and conditions for the future, or of any subsequent breach
thereof.
14. Notices. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or, if mailed, on the third business day after it is
deposited in the United States mails, certified or registered mail, postage
prepaid and addressed as follows:
To the Employee: Jeffrey A. Kerr
5306 Lake Harbor Road
Muskegon, Michigan 49441
To the Company: HGI Realty, Inc.
5000 Hakes Drive
Norton Shores, MI 49441
Attention: Joseph Cattivera
Any party may change by notice the address to which notices to it are
to be addressed.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan without regard to the
principles of conflicts of laws thereof.
16. Amendment and Restatement of Prior Employment Agreement.
Effective as of the date hereof, this Agreement amends and restates in its
entirety, and therefore completely supersedes, the Employment Agreement dated
as of July 14, 1995, between the Corporation and the Employee.
17. Amendments, Etc. The Agreement may not be varied, altered,
modified, changed, or in any way amended except by an instrument in writing,
executed by the parties hereto or their legal representatives.
18. Headings and Captions. Headings and paragraph captions used in
this Agreement are intended for convenience of reference only and shall not
affect the interpretation of this Agreement.
19. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, which taken together shall be deemed to constitute one
original.
8
<PAGE> 9
20. Joint and Several Obligations. The obligations of the Company
and the Operating Partnership hereunder are joint and several, and the Employee
may enforce such obligations against either without any requirement to make
demand on the other.
21. Miscellaneous.
(a) The Employee shall not have any right to commute, encumber or
dispose of the right to receive payment hereunder or of the right to receive
any of the benefits provided for hereunder.
(b) In the event of the termination of the Employee's employment with
the Company for any reason other than the Employee's death, the party
terminating such employment shall give written notice to the other party within
the time limitations above provided, and such notice shall state the date on
which termination is to be effective, specify the provision of this Agreement
under which notice is given, and, if such termination is claimed to be for
disability or cause, the notice shall set forth the basis for such claim in
reasonable detail.
(c) The Company shall pay all reasonable expenses (including
attorneys' fees) incurred by the Employee in enforcing any provisions of this
Agreement or prosecuting a claim for breach thereof, provided, however, that
Employee is the prevailing party. The Employee shall pay all reasonable
expenses (including attorneys' fees) incurred by the Company in enforcing any
provisions of this Agreement or prosecuting a claim for breach thereof,
provided, however, that the Company is the prevailing party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HGI REALTY, INC.
By: /s/ Joseph Cattivera
-------------------------------
Name: Joseph Cattivera
----------------------------
Title: Executive Vice President
------------------------
HORIZON/GLEN OUTLET CENTERS
LIMITED PARTNERSHIP, By HGI
REALTY, INC., its General Partner
By: /s/ Joseph Cattivera
----------------------------
Name: Joseph Cattivera
-------------------------
Title: Executive Vice President
------------------------
9
<PAGE> 1
EXHIBIT 10.2
AGREEMENT
THIS AGREEMENT dated April 9, 1996 is by and among HGI REALTY, INC. (the
"Corporation"), HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP (the "Operating
Partnership") (the Corporation and the Operating Partnership being collectively
referred to herein as the "Company"), and GEORGE T. HAWORTH ("Haworth").
RECITALS
A. The Company and Haworth are parties to an Employment Agreement dated
as of July 14, 1995 (the "Employment Agreement").
B. The parties have agreed that it is in their mutual interests to
terminate the Employment Agreement on the terms and conditions hereinafter set
forth.
AGREEMENTS
In consideration of the premises and the mutual covenants hereinafter set
forth, the parties agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective on April 9,
1996 (the "Effective Date").
2. TERMINATION OF EMPLOYMENT. The Employment Agreement and Haworth's
employment with the Company are hereby terminated. Haworth hereby resigns as
an officer of the Company and from any positions he holds in any subsidiaries
or affiliates of the Company.
3. CONSULTING SERVICES.
(a) The Company hereby retains Haworth to provide consultative
services to the Company, and Haworth agrees to provide consultative services to
the Company, all on the terms and conditions hereafter set forth, for a one year
period commencing on the Effective Date and ending on the first anniversary of
the Effective Date (the "Consulting Period").
(b) During the first ninety days of the Consulting Period ("Initial
Period"), Haworth shall be available to provide consulting services to the
Company on an "as needed" basis. Haworth understands that the Company may
require him to provide consulting services during the Initial Period on a
full-time basis during normal business hours; provided that Haworth shall not
be required to perform any services hereunder during the vacation period set
forth in Exhibit "A" attached hereto.
<PAGE> 2
Haworth's consulting services during the Initial Period shall principally be
rendered in person at such places as Horizon shall reasonably request, but
Haworth shall also make himself available by telephone.
(c) After the Initial Period, Haworth shall be available to provide
consulting services to the Company in person and by telephone for the balance
of the Consulting Period ("Subsequent Period") as may be requested by the
Company, provided that such services are rendered at such times as are mutually
convenient to Haworth and the Company. It is the intent of the parties that
Haworth shall be available to the Company during the Subsequent Period in a
manner which does not interfere with his full-time employment elsewhere or with
reasonable vacation periods of which the Company received prior notice.
(d) Haworth shall render his consulting services hereunder to
executive officers of the Company and such other employees and agents of the
Company as the Company and Haworth mutually agree upon. Haworth shall only be
required to consult on matters of an executive nature. Consulting services
rendered in person shall occur at such site as the parties mutually agree upon
from time to time.
4. COMPENSATION. As compensation for the services to be rendered by
Haworth hereunder and in full and complete satisfaction of the obligations, if
any, of the Company under the Employment Agreement as a result of the
termination of Haworth's employment, the Company shall pay $62,500 to Haworth
in cash within thirty (30) days after the date hereof. As compensation for the
covenants of Haworth set forth in Sections 7 and 8 of this Agreement, the
Company shall pay $187,500 to Haworth in cash within thirty (30) days after the
date hereof. Such amounts shall be reduced by any social security and
withholding taxes which the Company is required by law to withhold.
5. HEALTH INSURANCE. The Company agrees to provide such health insurance
benefits to Haworth as are provided by the Company to other senior executives
whose employment is being terminated as a result of the Company's current
downsizing efforts.
6. REIMBURSEMENT OF EXPENSES. The Company shall promptly pay or
reimburse Haworth for all reasonable expenses incurred by him during the
Consulting Period in the performance of his responsibilities under this
Agreement.
7. COMPETITION.
(a) In consideration of the payment made by the Company to Haworth
pursuant to Paragraph 4 hereof, Haworth hereby agrees that during the
Consulting Period, without the prior written approval of the Company, Haworth
shall not, directly or indirectly,
(i) enter into or in any manner take part
in any manufacturer outlet shopping center business,
either individually or as an officer, director,
2
<PAGE> 3
employee, agent, consultant, partner, investor
(excluding passive investments not aggregating more
than five percent (5%) of any such entity's total
outstanding voting securities), principal or otherwise,
in the United States or Canada;
(ii) solicit, divert, take away or enter
into any leases or the like with, or attempt to solicit,
divert, take away or enter into any leases or the like
with, any entity or its Affiliates which during the term
of Haworth's employment with the Company leased space at
a factory outlet center owned by the Company or
Affiliate of the Company, wherever located in the
continental United States. Notwithstanding anything to
the contrary herein, nothing herein shall prohibit
Haworth from soliciting, attempting to solicit or
assisting in the solicitation of any entity which was a
tenant in any of the manufacturer outlet centers
developed, owned or operated by the Company in
connection with any other activity (including real
estate activity) that does not relate to manufacturer
outlet centers (defined, for this purpose, as shopping
centers primarily tenanted by manufacturers operating
outlet merchandise stores); or
(iii) solicit, attempt to solicit, advise,
hire for employment or engage, any person who is an
employee of the Company or an Affiliate of the Company
as of the Effective Date; provided that Haworth may
solicit, advise, hire for employment or engage without
the Company's consent any employee of the Company
terminated on or before April 10, 1996, and may solicit,
advise, hire for employment or engage with the Company's
consent any employee of the Company discharged after
April 10, 1996; provided that in no event shall such
employees be involved on Haworth's behalf in any of the
activities prohibited pursuant to clauses (i) and (ii)
of this Section 7(a).
As used herein, "Affiliate" means, when used with respect to an entity or
the Company, (i) any Person (as hereinafter defined) which directly or
indirectly controls, is controlled by or under common control with such entity
or the Company, (ii) any Person who directly or indirectly owns, controls or
holds the power to vote ten percent (10%) or more of the outstanding securities
of such entity or the Company. As used herein, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. As used herein, "Person" means any
individual, partnership, corporation, trust or other entity.
3
<PAGE> 4
(b) Haworth acknowledges that, as a key executive employee, Haworth has
been involved, and as a consultant, Haworth will be involved, on a high level,
in the development, implementation and management of the Company's national
business strategies and plans, including those which involve the Company's
finances, research, marketing, planning, operations, industrial relations and
property acquisitions. By virtue of Haworth's unique and sensitive position
and special background, employment of Haworth by a competitor of the Company
represents a serious competitive danger to the Company, and the use of
Haworth's talent and knowledge and information about the Company's business
strategies can and would constitute a valuable competitive advantage over the
Company.
(c) Haworth acknowledges that enforcement of the covenants set forth in
this Paragraph 7 and in Paragraph 8 hereof will not prevent him from earning a
living in the real estate industry.
(d) Haworth acknowledges that he has carefully read and considered all of
the terms of this Agreement, including particularly the terms of this Paragraph
7 and of Paragraph 8 hereof, that the Company has made a substantial investment
in the Company's business and that the restrictions provided in this Paragraph
7 and the following Paragraph 8 hereof are reasonable and necessary for the
Company's protection. Haworth further acknowledges that damages at law will
not be a measurable or adequate remedy for breach of the covenants contained in
this Paragraph 7 or in Paragraph 8 hereof and, accordingly Haworth consents to
the entry by any court of competent jurisdiction of any order enjoining him
from violating any such covenants without bond. The parties hereto further
agree that if, in any judicial proceeding, a court should refuse to enforce any
covenants set forth in this Paragraph 7 or in Paragraph 8 hereof because of
their term or geographical scope, then such covenants shall be deemed to be
modified to permit their enforcement to the maximum extent permitted by law.
8. CONFIDENTIALITY. Haworth acknowledges and agrees that the Company
competes in a highly competitive industry and in competitive markets and that
as a senior executive officer Haworth has had and as a consultant Haworth may
continue to have access to proprietary and confidential information and trade
secrets of the Company and its Affiliates and their respective predecessors.
Haworth agrees that he will not, without the written consent of the Company,
disclose or knowingly permit any entity under his control to disclose to anyone
not properly entitled to the information or use for his own benefit or the
benefit of anyone else other than the Company or any Affiliate of the Company,
any such trade secrets or proprietary or confidential information relating to
the Company and its Affiliates.
9. STOCK OPTION. The Company hereby notifies Haworth that, pursuant to
the stock options granted by the Company to Haworth under the Company's 1993
Stock Option Plan, the Company elects to continue such options in full force
and effect pursuant to their terms upon Haworth's becoming a consultant to the
Company.
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<PAGE> 5
10. INDEMNIFICATION. The Indemnification Agreement dated as of November
8, 1993 between the Corporation and Haworth shall remain in full force and
effect and shall also apply to Haworth in his capacity as the Company's
consultant hereunder with the same force and effect as if he were acting in
such capacity as an agent of the Corporation.
11. RELEASE. Haworth, for himself and his heirs and personal
representatives, hereby fully and forever unconditionally releases and
discharges the Company and its directors, officers, agents and employees from
all obligations and liabilities arising under the Employment Agreement, other
than its obligation to pay base salary for the current pay period ending on the
Effective Date.
12. WAIVER. A waiver by any party of any of the terms and conditions of
this Agreement in any instance shall not be deemed or construed to be a waiver
of such terms and conditions for the future, or of any subsequent breach
thereof.
13. NOTICES. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or, if mailed, on the third business day after it is
deposited in the United States mails, certified or registered mail, postage
prepaid and addressed as follows:
To Haworth: George T. Haworth
18067 North Fruitport Road
Spring Lake, Michigan 49456
To the Company: HGI Realty, Inc.
1050 West Western Avenue
Muskegon, Michigan 49441
Attention: Mr. Joseph Cattivera
Any party may change by notice the address to which notices to it are to
be addressed.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without regard to the
principles of conflicts of laws thereof.
15. AMENDMENTS, ETC. The Agreement may not be varied, altered, modified,
changed, or in any way amended except by an instrument in writing, executed by
the parties hereto or their legal representatives.
16. HEADINGS AND CAPTIONS. Headings and paragraph captions used in this
Agreement are intended for convenience of reference only and shall not affect
the interpretation of this Agreement.
5
<PAGE> 6
17. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, which taken together shall be deemed to constitute one
original.
18. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Company and
the Operating Partnership hereunder are joint and several, and Haworth may
enforce such obligations against either without any requirement to make demand
on the other.
19. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of Haworth and his heirs and personal representatives and the
Company and its successors and assigns. This Agreement is personal to Haworth
and may not be assigned by him.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HGI REALTY, INC.
By:Joseph Cattivera
--------------------------------
Title:Executive Vice President
----------------------------
HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By:
HGI REALTY, INC., its General
Partner
By: Joseph Cattivera
--------------------------------
Title: Executive Vice President
-----------------------------
/s/ George T. Haworth
-----------------------------------
GEORGE T. HAWORTH
6
<PAGE> 1
EXHIBIT 10.3
AGREEMENT
THIS AGREEMENT dated April 10, 1996 is by and among HGI REALTY, INC. (the
"Corporation"), HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP (the "Operating
Partnership") (the Corporation and the Operating Partnership being collectively
referred to herein as the "Company"), and GARY E. GEISLER ("Geisler").
RECITALS
A. The Company and Geisler are parties to an Employment Agreement dated as
of July 14, 1995 (the "Employment Agreement").
B. The parties desire to set forth their understanding regarding the
termination of the Employment Agreement on the terms and conditions hereinafter
set forth.
AGREEMENTS
In consideration of the premises and the mutual covenants hereinafter set
forth, the parties agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective on April 10,
1996 (the "Effective Date").
2. TERMINATION OF EMPLOYMENT. The Employment Agreement and Geisler's
employment with the Company are hereby terminated by the Company without Cause
pursuant to Section 7(b) of the Employment Agreement. Pursuant to Section
19(c) of the Employment Agreement, Geisler shall be deemed to have resigned
from any office of the Company or any of its affiliates he now holds.
3. SEVERANCE. In full and complete satisfaction of the obligations of the
Company under the Employment Agreement as a result of the termination of
Geisler's employment, the Company shall pay $275,712 to Geisler in cash within
thirty (30) days after the date hereof. Such amount shall be reduced by any
social security and withholding taxes which the Company is required by law to
withhold.
4. CONSULTING SERVICES.
(a) The Company hereby retains Geisler to provide consultative services to
the Company, and Geisler agrees to provide consultative services to the
Company, all on the terms and
<PAGE> 2
conditions hereafter set forth, for a one year period commencing on the
Effective Date and ending on the first anniversary of the Effective Date (the
"Consulting Period").
(b) Geisler shall be available to provide consulting services to the
Company in person and by telephone during the Consulting Period as may be
requested by the Company, provided that such services are rendered at such
times as are mutually convenient to Geisler and the Company. It is the intent
of the parties that Geisler shall be available to the Company during the
Consulting Period in a manner which does not involve Geisler in the day-to-day
management of the Company or interfere with reasonable vacation periods taken
by Geisler of which the Company received prior notice.
(c) Geisler shall render his consulting services hereunder to executive
officers of the Company and such other employees and agents of the Company as
the Company and Geisler mutually agree upon. Geisler shall only be required to
consult on matters of an executive nature. Consulting services rendered in
person shall occur at such site as the parties mutually agree upon from time to
time.
(d) The Company shall pay Geisler for his consulting services at the rate
of $125.00 per hour up to a maximum of $12,000.00 in any one 30-day period, it
being understood that although Geisler may be requested to provide consulting
services hereunder for more than 96 hours in any given period of thirty (30)
days, the Company shall not be required to pay him more than $12,000.00 for
consulting services rendered in any such thirty (30) day period; provided,
however, that if Geisler works more than 125 hours in any given thirty (30) day
period, the Company shall pay him at the hourly rate for the hours in excess of
125 hours.
5. REIMBURSEMENT OF EXPENSES. The Company shall promptly pay or reimburse
Geisler for all reasonable expenses incurred by him during the Consulting
Period in the performance of his responsibilities under this Agreement.
6. COMPETITION.
(a) In consideration of his being retained as a consultant to the Company,
Geisler hereby agrees that during the Consulting Period, without the prior
written approval of the Company, Geisler shall not, directly or indirectly,
(i) enter into or in any manner take part
in any manufacturer outlet shopping center business,
either individually or as an officer, director,
employee, agent, consultant, partner, investor
(excluding passive investments not aggregating more than
five percent (5%) of any such entity's total outstanding
voting securities), principal or otherwise, in the
United States or Canada;
2
<PAGE> 3
(ii) solicit, divert, take away or enter into any leases or
the like with, or attempt to solicit, divert, take away
or enter into any leases or the like with, any entity
or its Affiliates which during the term of Geisler's
employment with the Company leased space at a factory
outlet center owned by the Company or Affiliate of the
Company, wherever located in the continental United
States. Notwithstanding anything to the contrary
herein, nothing herein shall prohibit Geisler from
soliciting, attempting to solicit or assisting in the
solicitation of any entity which was a tenant in any of
the manufacturer outlet centers developed, owned or
operated by the Company in connection with any other
activity (including real estate activity) that does not
relate to manufacturer outlet centers (defined, for
this purpose, as shopping centers primarily tenanted by
manufacturers operating outlet merchandise stores); or
(iii) solicit, attempt to solicit, advise,
hire for employment or engage, any person who is an
employee of the Company or an Affiliate of the Company
as of the Effective Date, or who was an employee of the
Company or any Affiliate of the Company within six (6)
months immediately prior to the Effective Date.
As used herein, "Affiliate" means, when used with respect to an entity or
the Company, (i) any Person (as hereinafter defined) which directly or
indirectly controls, is controlled by or under common control with such entity
or the Company, (ii) any Person who directly or indirectly owns, controls or
holds the power to vote ten percent (10%) or more of the outstanding securities
of such entity or the Company. As used herein, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. As used herein, "Person" means any
individual, partnership, corporation, trust or other entity.
(b) Geisler acknowledges that, as a key executive employee, Geisler has
been involved, and as a consultant, Geisler will be involved, on a high level,
in the development, implementation and management of the Company's national
business strategies and plans, including those which involve the Company's
finances, research, marketing, planning, operations, industrial relations and
property acquisitions. By virtue of Geisler's unique and sensitive position
and special background, employment of Geisler by a competitor of the Company
represents a serious competitive danger to the Company, and the use of
Geisler's talent and knowledge and information about the Company's business
strategies can and would constitute a valuable competitive advantage over the
Company.
3
<PAGE> 4
(c) Geisler acknowledges that enforcement of the covenants set forth
in this Paragraph 6 and in Paragraph 7 hereof will not prevent him from earning
a living in the real estate industry.
(d) Geisler acknowledges that he has carefully read and considered all
of the terms of this Agreement, including particularly the terms of this
Paragraph 6 and of Paragraph 7 hereof, that the Company has made a substantial
investment in the Company's business and that the restrictions provided in this
Paragraph 6 and the following Paragraph 7 hereof are reasonable and necessary
for the Company's protection. Geisler further acknowledges that damages at law
will not be a measurable or adequate remedy for breach of the covenants
contained in this Paragraph 6 or in Paragraph 7 hereof and, accordingly Geisler
consents to the entry by any court of competent jurisdiction of any order
enjoining him from violating any such covenants without bond. The parties
hereto further agree that if, in any judicial proceeding, a court should refuse
to enforce any covenants set forth in this Paragraph 6 or in Paragraph 7 hereof
because of their term or geographical scope, then such covenants shall be deemed
to be modified to permit their enforcement to the maximum extent permitted by
law.
7. CONFIDENTIALITY. Geisler acknowledges and agrees that the Company
competes in a highly competitive industry and in competitive markets and that as
a senior executive officer Geisler has had and as a consultant Geisler may
continue to have access to proprietary and confidential information and trade
secrets of the Company and its Affiliates and their respective predecessors.
Geisler agrees that he will not, without the written consent of the Company,
disclose or knowingly permit any entity under his control to disclose to anyone
not properly entitled to the information or use for his own benefit or the
benefit of anyone else other than the Company or any Affiliate of the Company,
any such trade secrets or proprietary or confidential information relating to
the Company and its Affiliates.
8. STOCK OPTION. The Company hereby notifies Geisler that, pursuant to
the stock options granted by the Company to Geisler under the Company's 1993
Stock Option Plan, the Company elects to continue such options in full force and
effect pursuant to their terms upon Geisler's becoming a consultant to the
Company.
9. RELEASE. Geisler, for himself and his heirs and personal
representatives, hereby fully and forever unconditionally releases and
discharges the Company and its directors, officers, agents and employees from
all obligations and liabilities arising under the Employment Agreement, other
than its obligation to pay base salary for the current pay period ending on the
Effective Date and its obligation to pay the severance provided for in Section 3
of this Agreement.
10. INDEMNIFICATION. The Indemnification Agreement dated as of November 8,
1993 between the Corporation and Geisler shall remain in full force and effect
and shall also apply to Geisler in his capacity as the Company's consultant
hereunder with the same force and effect as if he were acting in such capacity
as an agent of the Corporation.
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<PAGE> 5
11. WAIVER. A waiver by any party of any of the terms and conditions of
this Agreement in any instance shall not be deemed or construed to be a waiver
of such terms and conditions for the future, or of any subsequent breach
thereof.
12. NOTICES. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or, if mailed, on the third business day after it is
deposited in the United States mails, certified or registered mail, postage
prepaid and addressed as follows:
To Geisler: Gary E. Geisler
1707 North Prospect, Suite 5A
Milwaukee, Wisconsin 53202
To the Company: HGI Realty, Inc.
1050 West Western Avenue
Muskegon, Michigan 49441
Attention: Mr. Joseph Cattivera
Any party may change by notice the address to which notices to it are to
be addressed.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without regard to the
principles of conflicts of laws thereof.
14. AMENDMENTS, ETC. The Agreement may not be varied, altered, modified,
changed, or in any way amended except by an instrument in writing, executed by
the parties hereto or their legal representatives.
15. HEADINGS AND CAPTIONS. Headings and paragraph captions used in this
Agreement are intended for convenience of reference only and shall not affect
the interpretation of this Agreement.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, which taken together shall be deemed to constitute one
original.
17. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Company and the
Operating Partnership hereunder are joint and several, and Geisler may enforce
such obligations against either without any requirement to make demand on the
other.
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<PAGE> 6
18. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of Geisler and his heirs and personal representatives and the Company
and its successors and assigns. This Agreement is personal to Geisler and may
not be assigned by him.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HGI REALTY, INC.
By: /s/ Joseph Cattivera
-----------------------------
Title:Executive Vice President
--------------------------
HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By: HGI REALTY, INC., its General
Partner
By:/s/ Joseph Cattivera
-----------------------------
Title: Executive Vice President
-------------------------
/s/ Gary E. Geisler
--------------------------------
GARY E. GEISLER
6
<PAGE> 1
EXHIBIT 10.4
AGREEMENT
THIS AGREEMENT dated April 10, 1996 is by and among HGI REALTY, INC. (the
"Corporation"), HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP (the "Operating
Partnership") (the Corporation and the Operating Partnership being collectively
referred to herein as the "Company"), and MARGARET ERNST ("Ernst").
RECITALS
A. The Company and Ernst are parties to an Employment Agreement dated as
of July 14, 1995 (the "Employment Agreement").
B. The parties desire to set forth their understanding regarding the
termination of the Employment Agreement on the terms and conditions hereinafter
set forth.
AGREEMENTS
In consideration of the premises and the mutual covenants hereinafter set
forth, the parties agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective on April 10,
1996 (the "Effective Date").
2. TERMINATION OF EMPLOYMENT. The Employment Agreement and Ernst's
employment with the Company are hereby terminated by the Company without Cause
pursuant to Section 7(b) of the Employment Agreement. Pursuant to Section
19(c) of the Employment Agreement, Ernst shall be deemed to have resigned from
any office of the Company she now holds. Ernst shall promptly deliver to the
Company (without retaining any copies thereof) all Company files and documents,
forms, letterhead, business cards, computer disks and any other written,
magnetic or printed materials relating to the business of the Company (other
than material distributed to shareholders generally); provided that Ernst shall
be permitted to retain copies of her rolodex and any personal files.
3. SEVERANCE. In full and complete satisfaction of the obligations, if
any, of the Company under the Employment Agreement as a result of the
termination of Ernst's employment, the Company shall pay $436,541.00 to Ernst
in cash within thirty (30) days after the date hereof. In addition, the
Company shall pay Ernst cash in the amount of $12,678.00 in payment of Ernst's
unpaid accrued vacation and personal days through the Effective Date, payable
on the Effective Date. Such amounts shall be reduced by any social security
and withholding taxes which the Company is required by law to withhold.
<PAGE> 2
4. RELEASE. Ernst, for herself and her heirs and personal representatives,
hereby fully and forever unconditionally releases and discharges the Company
and its directors, officers, agents and employees from all obligations and
liabilities arising out of Ernst's employment by the Company or its
termination, other than its obligation under this Agreement and its obligations
under the Indemnification Agreement dated July 14, 1995 between the Corporation
and Ernst. Such release is provided not because of any unlawful conduct or
wrongdoing by the Company in connection with Ernst's employment or its
termination, but because the Company desires the assurance that in exchange for
the payments described in this Agreement, it will not be put to the expense and
inconvenience of defending any claim, charge or lawsuit asserted by Ernst in
connection with her employment or its termination.
The Company, for itself and its successors and assigns, hereby fully and
forever unconditionally releases and discharges Ernst from all obligations and
liabilities arising out of her employment by the Company, other than her
obligations under this Agreement. Such release is provided not because of any
unlawful conduct or wrongdoing by Ernst but because Ernst desires the assurance
that in consideration for her release as provided in this paragraph, she will
not be put to the expense and inconvenience of defending any claim, charge or
lawsuit asserted by the Company in connection with her employment.
5. WAIVER. A waiver by any party of any of the terms and conditions of
this Agreement in any instance shall not be deemed or construed to be a waiver
of such terms and conditions for the future, or of any subsequent breach
thereof.
6. NOTICES. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or, if mailed, on the third business day after it is
deposited in the United States mails, certified or registered mail, postage
prepaid and addressed as follows:
To Ernst: Margaret M. Ernst
2941 28th Street, N.W.
Washington, D.C. 20008
To the Company: HGI Realty, Inc.
1050 West Western Avenue
Muskegon, Michigan 49441
Attention: Mr. Joseph Cattivera
Any party may change by notice the address to which notices to it are to
be addressed.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without regard to the
principles of conflicts of laws thereof.
2
<PAGE> 3
8. AMENDMENTS, ETC. The Agreement may not be varied, altered, modified,
changed, or in any way amended except by an instrument in writing, executed by
the parties hereto or their legal representatives.
9. HEADINGS AND CAPTIONS. Headings and paragraph captions used in this
Agreement are intended for convenience of reference only and shall not affect
the interpretation of this Agreement.
10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, which taken together shall be deemed to constitute one
original.
11. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Company and the
Operating Partnership hereunder are joint and several, and Ernst may enforce
such obligations against either without any requirement to make demand on the
other.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of Ernst and her heirs and personal representatives and the Company and
its successors and assigns. This Agreement is personal to Ernst and may not be
assigned by her.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HGI REALTY, INC.
By:/s/ Jeffrey A. Kerr
--------------------------------
Title:President
----------------------------
HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By: HGI REALTY, INC., its General
Partner
By:/s/ Jeffrey A. Kerr
--------------------------------
Title: President
----------------------------
/s/ Margaret M. Ernst
-----------------------------------
MARGARET M. ERNST
3
<PAGE> 1
EXHIBIT 10.5
AGREEMENT
THIS AGREEMENT dated April 10, 1996 is by and among HGI REALTY, INC. (the
"Corporation"), HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP (the "Operating
Partnership") (the Corporation and the Operating Partnership being collectively
referred to herein as the "Company"), and ALAN GLEN ("Glen").
RECITALS
A. The Company and Glen are parties to an Employment Agreement dated as
of July 14, 1995 (the "Employment Agreement").
B. The parties have agreed that it is in their mutual interests to
terminate the Employment Agreement on the terms and conditions hereinafter set
forth.
AGREEMENTS
In consideration of the premises and the mutual covenants hereinafter set
forth, the parties agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective on April 10,
1996 (the "Effective Date").
2. TERMINATION OF EMPLOYMENT. The Employment Agreement and Glen's
employment with the Company are hereby terminated. Glen hereby resigns as
Chairman of the Board of the Corporation and from any positions he holds in any
subsidiaries or affiliates of the Company and shall have no further duties as
such. Glen also hereby resigns from the Nominating Committee of the Board of
Directors of the Corporation.
3. CONTINUATION AS DIRECTOR. Glen shall continue to serve as a director
of the Corporation for the balance of the term for which he was elected. There
shall be no obligation to nominate Glen to succeed himself as a Class III
director of the Corporation at the expiration of the current term of his
directorship. Glen shall continue to be covered as a director of the
Corporation by the Indemnification Agreement dated July 14, 1995 between the
Corporation and Glen, and by the indemnification provisions of the
Corporation's Articles of Incorporation and By-laws and Section 4.18 of the
Agreement and Plan of Reorganization among the Corporation, Horizon Outlet
Centers Limited Partnership, McArthur/Glen Realty Corp., McG Outlet Centers
Limited Partnership and the Operating Partnership.
<PAGE> 2
4. INDEMNIFICATION. The Company hereby covenants and agrees to
indemnify, defend and hold harmless Glen, promptly upon demand at any time and
from time to time, to the fullest extent not prohibited by law, against any and
all losses, liabilities, claims, actions, damages and expenses, including
without limitation reasonable attorneys' fees and disbursements, arising out of
or in connection with the fact that Glen is or was a director, officer or
employee of the Company, its subsidiaries or affiliates or was serving at the
request of the Company (whether directly or through an entity controlled by
Glen) as a general partner of any partnership in which the Company had or has a
general or limited partnership interest. Such indemnification shall continue
as to Glen after he ceases to be such a director, officer, employee or general
partner, as the case may be, of the Company or any of its affiliates or
subsidiaries, and shall inure to the benefit of Glen's heirs, executors and
administrators. The right to indemnification conferred hereby shall, subject
to any requirements imposed by law, include the right to be paid by the Company
the expenses incurred in defending any such proceeding in advance of its final
disposition.
5. SEVERANCE. In full and complete satisfaction of the obligations of
the Company under the Employment Agreement as a result of the termination of
Glen's employment and in consideration for Glen's covenant not to compete set
forth in Section 13 of this Agreement, the Company shall pay $900,000 to Glen
as follows: $333,333 shall be paid within ten (10) days after the date hereof,
and the balance shall be payable in four semi-annual installments, together
with interest on the principal balance remaining from time to time unpaid at
the rate of 14.12% per annum, as follows:
<TABLE>
<CAPTION>
DUE DATE PRINCIPAL INTEREST TOTAL PAYMENT
- ---------------- --------- -------- -------------
<S> <C> <C> <C>
October 10, 1996 $141,666 $ 40,000 $181,666
April 10, 1997 141,666 30,000 171,666
October 10, 1997 141,666 20,000 161,666
April 10, 1998 141,669 10,000 151,669
-------- -------- --------
TOTAL $566,667 $100,000 $666,667
</TABLE>
All payments to Glen shall be reduced by any social security and withholding
taxes which the Company is required by law to withhold.
6. EMPLOYMENT OF OLIVIA WALSH.
(a) The Company shall continue to employ Olivia Walsh ("Walsh") until the
first to occur of (i) the date Glen is no longer a director of the Company,
(ii) the third anniversary of the Effective Date, or (iii) Walsh's death (the
"Walsh Employment Period"). During the Walsh Employment Period, Walsh shall be
available to perform services for Glen on an exclusive basis and shall be
permitted to travel to such locations as Glen shall require in order to perform
such services.
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<PAGE> 3
(b) During the Walsh Employment Period, the Company shall pay Walsh a
base salary at the same rate per annum as she is currently receiving from the
Company. Glen shall reimburse the Company for the costs to the Company of all
benefits to which Walsh is entitled as an employee of the Company, including,
without limiting the generality of the foregoing, the costs of including her in
the Company's group insurance programs and any contributions made on her behalf
under any employee benefit plans. Glen shall also pay directly for all travel
and related expenses incurred by Walsh in performing her duties. Glen shall
pay the amounts owed by him pursuant to this Section on a semi-annual basis on
April 10 and October 10 of each year; provided that until the severance
provided for in Section 5 has been paid, the Company shall deduct such amounts
from the severance payments to Glen.
(c) If Walsh's Employment Period ends prior to the third anniversary of
the Effective Date, the Company shall pay to Walsh as severance (or if the
Walsh Employment Period ends due to her death, to her estate as a death
benefit), an amount equal to the base salary which she would have received had
she continued to be employed by the Company until the third anniversary of the
Effective Date, payable in the same manner as such base salary would have been
payable to her had she continued to be employed by the Company. If the Walsh
Employment Period ends on the third anniversary of the Effective Date, the
Company shall have no obligation to pay any severance or death benefit to her.
(d) If the Walsh Employment Period ends for any reason other than
Walsh's death, the Company agrees to include Walsh in the Company's group health
insurance plan for the longest period, if any, such inclusion is permitted
under the Company's then existing health insurance plan (but not more than two
years from the end of the Walsh Employment Period); provided that the Company's
obligation to provide such coverage shall terminate on the date Walsh becomes
covered by another employer's group health insurance plan and any applicable
waiting periods for coverage for pre-existing conditions have lapsed. From and
after the time the Company is no longer required to include Walsh in its group
health insurance plan, the Company will provide group health insurance coverage
to Walsh for 18 months thereafter to the extent required under the Consolidated
Omnibus Reconciliation Act of 1985, as amended ("COBRA").
(e) Glen shall reimburse the Company for the costs to the Company of
including Walsh in the Company's group health insurance plan (including
coverage required by COBRA) pursuant to paragraph (c) on a semi-annual basis;
provided that until the severance provided for in Section 5 has been paid, the
Company shall deduct such amounts from the severance payments to Glen. Nothing
contained in this Agreement shall be deemed to prohibit the Company from
changing its group health insurance plan; provided that any such change shall
not affect Walsh more adversely than the employees of the Company.
3
<PAGE> 4
7. HEALTH INSURANCE.
(a) The Company agrees to include Donald Glen in the Company's group
health insurance plan until the first to occur of (i) the second anniversary of
the Effective Date, and (ii) the date Donald Glen becomes covered by another
employer's group health insurance plan and any applicable waiting periods for
coverage for pre-existing conditions have lapsed. If the Company's obligations
to provide such group health insurance terminates pursuant to Section 6(a)(i),
the Company will provide group health insurance coverage to Donald Glen for 18
months thereafter to the extent required under COBRA.
(b) Glen shall reimburse the Company for the costs of including
Donald Glen in the Company's group health insurance plan on a semi-annual basis;
provided that until the severance provided for in Section 5 has been paid, the
Company shall deduct such amounts from the severance payments to Glen. Nothing
contained in this Agreement shall be deemed to prohibit the Company from
changing its group health insurance plan; provided that any such change shall
not affect Donald Glen more adversely than the employees of the Company.
8. BY-LAWS. Glen agrees to vote in favor of amended and restated By-laws
of the Corporation to (a) cause the By-laws to read as if the Transition Date
(as defined in the By-laws) had occurred and all provisions of the By-laws
which relate solely to the period prior to the Transition Date were removed,
(b) eliminate Section 3(c), which requires that Glen and Jeffrey Kerr be
nominated to succeed themselves as directors, (c) delete the definition of
Transition Date, and (d) delete the office of Co-Chairman and impose the duties
presently assigned to the Co-Chairman to the Chairman of the Board.
9. USE OF COMPANY PLANE. Glen may use the Company's airplane for travel
for himself and his family during periods the airplane is not required for
Company use; provided that Glen shall reimburse the Company within thirty (30)
days after receipt of the Company's invoice for expenses incurred by the
Company for trips taken by Glen and his family at the most favorable rate
charged by the Company to other directors and officers of the Company for
personal use of the Company's airplane.
10. SHARES OF AFFILIATED COMPANIES. As promptly as practicable after the
Effective Date, Glen shall assign and transfer to Jeffrey A. Kerr or his
designee the following shares of capital stock:
(a) 495 Class A common shares of HGI Perryville, Inc.;
(b) 495 Class A common shares of MG Third Party
Services Corp.;
(c) 49.5 Class A common shares of First HGI, Inc.;
and
(d) 47.5 Class A common shares of HGI Management
Corp.
4
<PAGE> 5
by delivering to him the certificates evidencing such shares, endorsed (or
accompanied by executed stock powers) to Mr. Kerr or his designee; provided,
that if any of such certificates have been lost, Glen may deliver affidavits of
loss and stock powers in lieu of the original certificates. Such transfers
shall be made without any consideration other than that set forth in this
Agreement.
11. RENTAL OF OFFICE SPACE. Glen may use the office space presently used
by him in the Company's offices at 8400 Westpark Drive, Suite 500, McLean,
Virginia (the "McLean Offices") until such time as the Company vacates the
McLean Offices. Glen shall pay the Company rent on the first day of each month
equal to that proportion of the total rent payable by the Company with respect
to that month (including base rent and pass-throughs) which the number of
square feet of Glen's office bears to the total square feet of the McLean
Offices. Either party may terminate such occupancy arrangement at any time on
30 days' prior written notice to the other party.
12. PERSONAL PROPERTY. The Company acknowledges that the Russell Chatham
paintings, certain lithographs, photographs, furniture and office equipment in
the McLean Offices are the property of Glen. The parties shall prepare a list
of such property at the McLean Offices owned by Glen promptly after the
Effective Date (the property so listed being referred to as the "Glen
Property"). Glen shall remove the Glen Property at his cost and expense at or
before such time as the lease of the McLean Offices expires or Glen ceases to
rent office space in the McLean Offices from the Company. Within thirty (30)
days after the Effective Date, Glen may purchase the office equipment and
computer used by Walsh from the Company at a price which is agreed upon by Glen
and the Company.
13. COMPETITION.
(a) In consideration of the payment made by the Company to Glen
pursuant to Paragraph 5 hereof, Glen hereby agrees that during the Noncompete
Period (as hereinafter defined), without the prior written approval of the
Company, Glen shall not, directly or indirectly,
(i) enter into or in any manner take part
in any manufacturer outlet shopping center business,
either individually or as an officer, director,
employee, agent, consultant, partner, investor
(excluding ownership of interests in the Company, Glen's
indirect interest in MG Medford Limited Partnership,
Glen's interest as a limited partner of MG Patchogue
Limited Partnership and passive investments aggregating
not more than five percent (5%) of any such entity's
total outstanding voting securities), principal or
otherwise, in the United States or Canada;
(ii) solicit, divert, take away or enter
into any leases or the like with, or attempt to solicit,
divert, take away or enter into any leases or the like
with, any entity or its Affiliates which during the term
of Glen's
5
<PAGE> 6
employment with the Company leased space at a factory
outlet center owned by the Company or Affiliate of the
Company, wherever located in the continental United
States. Notwithstanding anything to the contrary
herein, nothing herein shall prohibit Glen from
soliciting, attempting to solicit or assisting in the
solicitation of any entity which was a tenant in any of
the manufacturer outlet centers developed, owned or
operated by the Company in connection with any other
activity (including real estate activity) that does not
relate to the manufacturer outlet center business (a
manufacturer outlet center being defined, for this
purpose, as a shopping center primarily tenanted by
manufacturers operating outlet merchandise stores); or
(iii) solicit, attempt to solicit, advise,
hire for employment or engage, any person who is an
employee of the Company or an Affiliate of the Company
as of the Effective Date; provided that Glen may
solicit, advise, hire for employment or engage without
the Company's consent any one or more of Douglas
MacLatchy, Margaret Ernst, Olivia Walsh or any other
employee of the Company terminated on or prior to the
Effective Date, and may solicit, advise, hire for
employment or engage with the Company's consent any
employee of the Company discharged by the Company after
the Effective Date; provided that in no event shall
such employees be involved directly or indirectly on
Glen's behalf in any of the activities prohibited
pursuant to clauses (i) and (ii) of this Section 13(a).
As used herein, "Affiliate" means, when used with respect to an entity or
the Company, (i) any Person (as hereinafter defined) which directly or
indirectly controls, is controlled by or under common control with such entity
or the Company, (ii) any Person who directly or indirectly owns, controls or
holds the power to vote ten percent (10%) or more of the outstanding securities
of such entity or the Company. As used herein, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. As used herein, "Person" means any
individual, partnership, corporation, trust or other entity. As used herein,
"Noncompete Period" means the period commencing on the Effective Date and
ending on the later to occur of (i) the date Glen ceases to be a director of
the Corporation, or (ii) the second anniversary of the Effective Date.
(b) Glen acknowledges that, as a key executive employee, Glen has been
involved, and as a director, Glen will be involved, on a high level, in the
development, implementation and management of the Company's national business
strategies and plans, including those which involve the Company's finances,
research, marketing, planning, operations, industrial relations and property
acquisitions. By virtue of Glen's unique and sensitive position and special
background, employment of Glen by a competitor of the Company represents a
serious competitive danger to the Company, and the
6
<PAGE> 7
use of Glen's talent and knowledge and information about the Company's business
strategies can and would constitute a valuable competitive advantage over the
Company; provided, however, that nothing herein shall prohibit Glen from using
his special background and talent in connection with any other activity
(including real estate activity) that does not relate to the manufacturer
outlet center business.
(c) Glen acknowledges that enforcement of the covenants set forth in this
Paragraph 13 and in Paragraph 14 hereof will not prevent him from earning a
living in the real estate industry.
(d) Glen acknowledges that he has carefully read and considered all of
the terms of this Agreement, including particularly the terms of this Paragraph
13 and of Paragraph 14 hereof, that the Company has made a substantial
investment in the Company's business and that the restrictions provided in this
Paragraph 13 and the following Paragraph 14 hereof are reasonable and necessary
for the Company's protection. Glen further acknowledges that damages at law
will not be a measurable or adequate remedy for breach of the covenants
contained in this Paragraph 13 or in Paragraph 14 hereof and, accordingly Glen
consents to the entry by any court of competent jurisdiction of any order
enjoining him from violating any such covenants without bond. The parties
hereto further agree that if, in any judicial proceeding, a court should refuse
to enforce any covenants set forth in this Paragraph 13 or in Paragraph 14
hereof because of their term or geographical scope, then such covenants shall
be deemed to be modified to permit their enforcement to the maximum extent
permitted by law.
14. CONFIDENTIALITY. Glen acknowledges and agrees that the Company
competes in a highly competitive industry and in competitive markets and that
as a senior executive officer Glen has had and as a director Glen may continue
to have access to proprietary and confidential information and trade secrets of
the Company and its Affiliates and their respective predecessors. Glen agrees
that he will not, without the written consent of the Company, disclose or
knowingly permit any entity under his control to disclose to anyone not
properly entitled to the information or use for his own benefit or the benefit
of anyone else other than the Company or any Affiliate of the Company, any such
trade secrets or proprietary or confidential information relating to the
Company and its Affiliates.
15. RELEASE. Glen, for himself and his heirs and personal
representatives, hereby fully and forever unconditionally releases and
discharges the Company and its directors, officers, agents and employees from
all obligations and liabilities arising under the Employment Agreement, other
than its obligation to pay base salary for the current pay period ending on the
Effective Date and its obligations under this Agreement.
The Company, for itself and its successors and assigns, hereby fully and
forever unconditionally releases and discharges Glen from all obligations and
liabilities arising under the Employment Agreement, other than his obligations
under this Agreement.
16. OUTLOT AGREEMENT. The parties confirm that the Agreement dated as of
March 13, 1995 among Glen, the Corporation, Horizon Outlet Centers Limited
Partnership, McArthur/Glen Realty
7
<PAGE> 8
Corp. and McG Outlet Centers Limited Partnership, shall continue in full force
and effect pursuant to its terms.
17. MG MEDFORD. Glen Investors, Inc. ("GII") shall withdraw as general
partner of MG Medford Limited Partnership, a District of Columbia limited
partnership ("Medford"), as of December 20, 1997, and the Company hereby
consents to such withdrawal. Glen shall cause GII to withdraw as such general
partner at an earlier date if requested to do so by the Company. No
consideration shall be paid to GII for any such withdrawal other than the units
of the Operating Partnership presently reserved for issuance in exchange for
the surrender of GII's interest in Medford.
18. PATCHOGUE. Glen agrees to transfer to the Company at any time the
Company so requests his limited partnership interest in MG Patchogue Limited
Partnership solely in exchange for an indemnification by the Company from any
New York State capital gains taxes owed by Glen with respect to such interest.
19. AMENDMENT TO LOCK-UP LETTER. The Corporation and Glen entered into a
letter agreement dated July 14, 1995 (the "Lock-Up Letter") with respect to
periods during which Glen would not effect any offer, sale, contract to sell or
other disposal of any Shares and/or Units (as those terms are defined in the
Lock-Out Letter). The parties have agreed that 300,000 Shares owned
beneficially by Glen and any entity controlled by him shall not be subject to
the Lock-Out Letter. The parties accordingly hereby agree that Section 2 of
the Lock-Out Letter is hereby amended to change the "period" appearing at the
end of that Section to a "semi-colon" and to add after such semi-colon the
following:
"provided, however, the aforementioned restrictions shall
not apply to the first 300,000 Shares, in the aggregate,
sold by the undersigned and any entity controlled by him
after April 10, 1996."
20. REIMBURSEMENT OF ATTORNEYS' FEES. The Company shall reimburse Glen
for up to $10,000 of attorneys' fees incurred by him in connection with the
negotiation of this Agreement. Such reimbursement shall be paid within 30 days
after presentation to the Company of a bill for such attorneys' fees setting
forth in detail the services rendered.
21. WAIVER. A waiver by any party of any of the terms and conditions of
this Agreement in any instance shall not be deemed or construed to be a waiver
of such terms and conditions for the future, or of any subsequent breach
thereof.
22. NOTICES. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or, if mailed, on the third business day after it is
deposited in the United States mails, certified or registered mail, postage
prepaid and addressed as follows:
8
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To Glen: Alan Glen
988 Third Green
Incline Village, Nevada 89451
To the Company: HGI Realty, Inc.
5000 Hakes Drive
Muskegon, Michigan 49441
Attention: Mr. Jeffrey A. Kerr
Any party may change by notice the address to which notices to it are to
be addressed.
23. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia without regard to the
principles of conflicts of laws thereof.
24. AMENDMENTS, ETC. The Agreement may not be varied, altered, modified,
changed, or in any way amended except by an instrument in writing, executed by
the parties hereto or their legal representatives.
25. HEADINGS AND CAPTIONS. Headings and paragraph captions used in this
Agreement are intended for convenience of reference only and shall not affect
the interpretation of this Agreement.
26. PREVAILING PARTY. The Company shall pay all reasonable expenses
(including attorneys' fees) incurred by Glen in enforcing any provisions of
this Agreement or prosecuting a claim for breach thereof; provided, however,
that Glen is the prevailing party. Glen shall pay all reasonable expenses
(including attorneys' fees) incurred by the Company in enforcing any provisions
of this Agreement or prosecuting a claim for breach thereof; provided, however,
that the Company is the prevailing party.
27. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, which taken together shall be deemed to constitute one
original.
28. JOINT AND SEVERAL OBLIGATIONS. The obligations of the Company and
the Operating Partnership hereunder are joint and several, and Glen may enforce
such obligations against either without any requirement to make demand on the
other.
29. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of Glen and his heirs and personal representatives and the Company
and its successors and assigns. This Agreement is personal to Glen and may not
be assigned by him.
9
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30. FACSIMILE SIGNATURES. This Agreement may be signed and delivered by
facsimile machine. The parties agree that an agreement so transmitted shall
have the same force and effect as if an original executed document had been
delivered.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HGI REALTY, INC.
By:/s/ Jeffrey A. Kerr
----------------------------
Title: President
----------------------------
HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By: HGI REALTY, INC., its General Partner
By:/s/ Joseph Cattivera
----------------------------
Title: Executive Vice President
------------------------
/s/ Alan Glen
-------------------------------
ALAN GLEN
10
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EXHIBIT 10.6
CONSOLIDATED, AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
DATED AS OF JUNE 28, 1996
AMONG
HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP,
HORIZON GROUP, INC.,
THE FIRST NATIONAL BANK OF CHICAGO,
WELLS FARGO REALTY ADVISORS FUNDING, INCORPORATED,
AMSOUTH BANK OF ALABAMA,
COMERICA,
KEYBANK NATIONAL ASSOCIATION,
MELLON BANK, N.A.,
MICHIGAN NATIONAL BANK,
BHF-BANK AKTIENGESELLSCHAFT, NEW YORK BRANCH,
AND
THE FIRST NATIONAL BANK OF CHICAGO
AND
WELLS FARGO REALTY ADVISORS FUNDING INCORPORATED,
AS CO-AGENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Financial Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE II THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 The Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Responsibility for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.3 Evidence of Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.5 Required Principal Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.6 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.7 Selection of Rate Options and Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.8 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.9 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.10 Lending Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Non-Receipt of Funds by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.12 Tax and Insurance Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.13 Security Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.14 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.15 Guaranty by General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.16 New Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.17 Release of Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.1 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Changes in Capital Adequacy Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.3 Funding Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4 Lender Statements; Survival of Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1 Conditions Precedent to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2 Conditions Precedent to Addition of New Properties . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3 Conditions Updating Initial Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.4 Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.3 Power of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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5.5 Zoning and Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.6 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.7 Enforceability of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.8 Validity and Perfection of Security Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.9 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.11 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.12 Investment Company Act of 1940 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.13 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.14 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.15 No Material Adverse Financial Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.16 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.17 Factual Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.18 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.20 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.22 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.23 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.24 No Violation of Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.25 Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.26 No Trade Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.27 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.28 Land Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VI ADDITIONAL REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.2 Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.3 Power of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.5 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.6 Enforceability of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.7 Liens; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.9 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.10 Investment Company Act of 1940 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.12 No Material Adverse Financial Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.13 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.14 Factual Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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6.17 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.18 No Violation of Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.2 Financial Statements, Reports, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.3 Existence and Conduct of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.4 Control of Sale or Encumbrance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.5 Appraisals of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.8 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.10 Compliance with Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.11 Adequate Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.13 Maintenance of Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.2 Change of Ownership or Management of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.5 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.6 Maintenance of EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.7 Major Amendments and Major Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9 Leasing to Consolidated Tenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.10 Maintenance of EBITDA to Total Funded Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.11 Foreign Centers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.12 Floating Rate Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.13 Venture Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.14 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1 Nonpayment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.2 Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.3 Nonpayment of Interest and Other Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.4 Cross Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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9.5 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.6 Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.7 Covenants, Agreements and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.8 No Longer General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.9 Sale or Mortgage of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.10 Material Adverse Financial Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.11 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.12 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.13 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2 Preservation of Rights; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XI THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.3 General Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.4 No Responsibility for Loans, Recitals, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.5 Action on Instructions of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.6 Employment of Agents and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.7 Reliance on Documents; Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.8 Agent's Reimbursement and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.9 Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.10 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.11 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS;
PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.2.1 Permitted Participants; Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.2.2 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.2.3 Benefit of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.3 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.3.1 Permitted Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.3.2 Effect; Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.4 Dissemination of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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TABLE OF CONTENTS
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<TABLE>
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<S> <C> <C>
ARTICLE XIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.2 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
13.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.5 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.6 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.7 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.8 Nonliability of the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.9 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.10 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
13.13 Entire Agreement; Modification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
13.14 Dealings with the Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
13.15 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
13.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
13.17 Releases of Parcels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XIV NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
14.1 Giving Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
14.2 Change of Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE XV CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
15.1 Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
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EXHIBITS
- --------
A - Form of Note
B-1 - Form of Mortgage
B-2 - Form of Deed of Trust
C - Form of Assignment of Operating Agreements
D - Form of Security Agreement
E - Form of Environmental Indemnity
F - Form of Guaranty
G - Form of Assignment of Rents and Leases
H - Legal Opinion - Obligor
I - Legal Opinion - General Partner
J - Descriptions of Initial Properties
K - Form of Subordination, Non-Disturbance and Attornment
Agreement
SCHEDULES
- ---------
1 - Pricing Grid
5.10 - Litigation (Obligor)
5.20 - Environmental Compliance
5.27 - Subsidiaries (Obligor)
6.8 - Litigation (General Partner)
6.19 - Subsidiaries (General Partner)
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<PAGE> 8
CONSOLIDATED, AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS CONSOLIDATED, AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is
entered into this 28th day of June, 1996, by and among HORIZON/GLEN OUTLET
CENTERS LIMITED PARTNERSHIP, a Delaware limited partnership having its
principal place of business at 5000 Hakes Drive, Muskegon, Michigan 49441
("Obligor"), whose sole general partner is Horizon Group, Inc. (formerly known
as HGI Realty, Inc.), HORIZON GROUP, INC., a Michigan corporation whose
principal place of business is 5000 Hakes Drive, Muskegon, Michigan 49441
("General Partner"), THE FIRST NATIONAL BANK OF CHICAGO ("First Chicago"), a
national bank organized under the laws of the United States of America having
an office at One First National Plaza, Chicago, Illinois 60670, the lenders
identified on the signature pages to this Agreement, Wells Fargo Realty
Advisors Funding Incorporated, as Co-Agent ("Co-Agent") and First Chicago, as
Administrative Agent ("Agent") for the Lenders (as defined below).
RECITALS
A. Obligor is primarily engaged in the business of purchasing,
developing, owning and operating manufacturer's outlet shopping malls.
B. Obligor, General Partner, First Chicago and certain of the
Lenders are parties to a Revolving Credit Agreement dated November 29, 1993, as
amended by a First Amendment to Revolving Credit Agreement made and effective
as of December 1, 1994, a Second Amendment and Assumption Agreement dated as of
July 13, 1995 and a Third Amendment to Revolving Credit Agreement dated as of
May 31, 1996 (collectively, the "Horizon Agreement").
C. Obligor, General Partner, First Chicago, certain of the Lenders,
NationsBank, N.A. and Bank of Montreal are parties to an Amended and Restated
Revolving Credit Agreement dated as of June 30, 1994, as amended by a First
Amendment and Assumption Agreement dated as of July 13, 1995 and a Second
Amendment to Revolving Credit Agreement dated as of August 11, 1995
(collectively, the "McG Agreement").
D. The parties hereto now desire to consolidate, amend and restate
the Horizon Agreement and the McG Agreement in their entirety.
E. The Facility (as defined below) to be provided by the Lenders
under this Agreement shall be in the aggregate principal amount of up to Two
Hundred Five Million Dollars
<PAGE> 9
($205,000,000.00), all upon the terms and conditions hereafter specified.
F. The borrowings under such Facility shall be used solely for
working capital purposes of Obligor, including funding for acquisitions or
development of manufacturer's retail outlet shopping malls, and expansions,
repairs and capital improvements to existing or future manufacturer's retail
outlet shopping malls owned by Obligor and other general partnership purposes
of Obligor, including funding permitted distributions to General Partner and
dividends to the shareholders in General Partner.
G. General Partner has agreed to guaranty the obligations of
Obligor hereunder.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
I
DEFINITIONS AND ACCOUNTING TERMS
I.1 Definitions. As used in this Agreement, the following terms
have the meanings set forth below:
"Adjusted Corporate Base Rate" means a floating interest rate equal to
the Corporate Base Rate plus the then-applicable Base Rate Spread, changing
when and as the Corporate Base Rate or the Base Rate Spread changes.
"Adjusted Corporate Base Rate Advance" means an Advance bearing interest
at the Adjusted Corporate Base Rate.
"Adjusted LIBOR Rate" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the sum of the Base LIBOR Rate applicable to
such LIBOR Interest Period, adjusted for required reserves and assessments,
plus the then-applicable LIBOR Spread, changing when and as the LIBOR Spread
changes.
"Adjusted Tangible Net Worth" means (i) the "book" value (i.e., the
initial cost of an asset, plus any improvements to such asset, minus
depreciation) of a Person's tangible assets (as determined in accordance with
GAAP), plus (ii) accumulated depreciation on such tangible assets, minus (iii)
such Person's Total Liabilities.
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<PAGE> 10
"Administrative Agency Fee" means an annual fee payable by the Obligor
to the Agent pursuant to a separate agreement between them.
"Advance" means a loan to the Obligor hereunder by the Lenders pursuant
to Section 2.1(a) hereof, including the initial Advance and all subsequent
Advances, whether such Advances are from time to time Adjusted Corporate Base
Rate Advances or LIBOR Advances.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with any other Person.
A Person shall be deemed to control another Person if the controlling Person
owns ten percent (10%) or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means First Chicago, acting as agent for the Lenders in
connection with the transactions contemplated by this Agreement, and its
successors and assigns.
"Aggregate Commitment" means, as of any date, the sum of all of the
Lenders' then-current Commitments. The initial Aggregate Commitment, as of the
date of this Agreement equals Two Hundred Five Million Dollars ($205,000,000).
"Agreement" means this Consolidated, Amended and Restated Revolving
Credit Agreement, dated as of June __, 1996, and all amendments, modifications
and supplements hereto.
"Appraisal" means an appraisal in form and substance satisfactory to the
Super-Majority Lenders and prepared by an appraiser acceptable to the Agent in
accordance with the requirements established under FIRREA. At the request of
any Lender, the initial draft of any such appraisal shall be reasonably
modified and/or adjusted by the appraiser so that the final approved version of
such appraisal will contain and accurately analyze all of the factors and
assumptions which any Lender believes to be necessary in order to obtain a
complete and accurate valuation of the property described in such appraisal.
If the final version of such appraisal is not satisfactory to all Lenders, the
final value of the Property described in such appraisal shall be equal to the
sum of all of the Lenders' Weighted Average Amounts. Each Lender's "Weighted
Average Amount" shall be equal to the value submitted by the appraiser or the
alternative value, if any, proposed by such Lender as the
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<PAGE> 11
correct appraised value, as the case may be, multiplied by a fraction, the
numerator of which is such Lender's then-current Commitment and the denominator
of which is the then-current Aggregate Commitment. Each Lender shall have a
period of either (a) fifteen (15) Business Days, in the case of the drafts of
an Appraisal of a Property before it is first included in Collateral, or (b)
ten (10) Business Days in the case of drafts of an updated Appraisal of a
Property after it has been included in Collateral, from such Lender's receipt
of such draft and any additional information necessary to complete the
appraisal review to give Agent and Obligor written notice that it (i) in good
faith requests modifications and/or adjustments of the appraisal as described
above or (ii) proposes an adjustment to the final version of such appraisal as
described in the preceding sentences. The failure of a Lender to give such a
notice on a timely basis shall be deemed to be an approval by such Lender of
such draft of the appraisal. Notwithstanding the foregoing, no appraisal shall
be deemed to be acceptable if, on or before the earlier of (i) fifteen (15)
Business Days from its receipt of a draft of an appraisal for the initial
inclusion of a Property; or (ii) ten (10) Business Days from its receipt of a
draft of an updated appraisal of a Property already included in Collateral, any
Lender has advised the Agent in writing ("FIRREA Rejection Notice") that such
Lender has made a good faith determination that the acceptance by such Lender
of such appraisal for purposes of this Agreement is not consistent with the
standards for appraisals established by FIRREA or will constitute or give rise
to a violation of FIRREA by such Lender on account of such appraisal. In such
event, such Lender shall have the right to order a separate appraisal at such
Lender's sole cost and expense which separate appraisal may be used to
determine such Lender's Weighted Average Amount provided that the value
determined by such separate appraisal is determined and communicated to Agent
in writing on or before sixty (60) days after the date of the FIRREA Rejection
Notice.
In the event that any Lender disapproves (i) any appraisal required for
the initial inclusion of a Property in Collateral, then Obligor and the
Super-Majority Lenders can elect either to remove such Lender from the lending
group or to modify the appraisal to obtain such Lender's approval, or (ii) any
updated appraisal of a Property already included in Collateral, then such other
appraisal shall not constitute an "Appraisal" hereunder unless and until such
appraisal is approved by the Required Lenders.
"Appraised Value" means, with respect to any Property, the value of such
Property as set forth in the most recent Appraisal of such Property as
determined in accordance with the definition
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<PAGE> 12
of the term "Appraisal" above. The Appraised Value of a Property shall not
include the value of any non-income producing portion of such Property.
"Assignment of Operating Agreements and Contracts" means the assignment
or assignments of any operating or management agreements and contracts with
respect to each of the Properties, the form of which is attached hereto as
Exhibit C.
"Assignment of Rents and Leases" means the assignments of the rents and
leases for each of the Properties, the form of which is attached hereto as
Exhibit G.
"Base LIBOR Rate" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the rate determined by the Agent to be the rate
at which deposits in immediately available funds in U.S. dollars are offered by
the Agent to first-class banks in the London interbank eurodollar market at
approximately 11:00 a.m. London time two Business Days prior to the first day
of such LIBOR Interest Period, in the approximate amount of the relevant LIBOR
Advance and having a maturity approximately equal to such LIBOR Interest
Period.
"Base Rate Spread" means the per annum rate in effect from time to time
in accordance with the pricing grid attached hereto as Schedule 1 and made a
part hereof.
"Borrowing Base" shall have the meaning set forth in Section 2.1(b)
below.
"Budget" means (i) a detailed budget showing expected revenues and
expenses of the Properties for a given fiscal year of the Obligor, (ii) a brief
market update with respect to the market in which each Property competes and
(iii) a schedule for all renovation and tenant improvement work at the
Properties, together with all revisions to and updates of any of the foregoing,
all of which are approved in form and substance by the Agent in its reasonable
discretion.
"Business Day" means a day, other than Saturday, Sunday or holidays, on
which banks are open for business in Chicago, Illinois, San Francisco,
California and, for purposes solely of determining the Base LIBOR Rate, in
London, England.
"Capitalized Value" of the Properties means, as of any date, the
quotient of:
(a) the quotient of (i) the Net Operating Income
attributable to the Properties for the immediately preceding
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<PAGE> 13
full fiscal quarter of the Obligor for which Net Operating Income for
the Properties has been reported annualized by multiplying such amount
by 4, divided by (ii) one and one-half (1.5);
divided by:
(b) the annual constant yield to maturity of a loan which
is payable quarterly, and fully amortized over a 25 year amortization
schedule at a rate equal to the sum of
(i) two hundred fifty (250) basis points, and
(ii) the greater of (A) the then-current annual yield
on those ten (10) year obligations issued by the United States
Treasury most recently prior to such date and (B) six percent
(6%).
"Cash Collateral Agreement" means an agreement or agreements in form and
substance reasonably satisfactory to the Agent executed and delivered by the
Obligor pledging to the Agent for the benefit of the Lenders (i) the Security
Deposit Account and (ii) the Tax and Insurance Account.
"Code" means the Internal Revenue Code of 1986 as amended from time to
time, or any replacement or successor statute, and the regulations promulgated
thereunder from time to time.
"Collateral" means all of the now existing or hereafter acquired rights
of the Obligor in: (a) the Properties (including any New Collateral) and all
rents, leases, easements, options, personal property and other rights and
property related to the ownership or operation thereof; (b) the Security
Deposit Account; (c) the Tax and Insurance Account; and (d) all of the proceeds
of the foregoing.
"Commitment" means the obligation of each Lender, subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties herein, to make Advances not exceeding in the aggregate the amount
set forth opposite its signature below, or the amount stated in any subsequent
amendment hereto.
"Commitment Fee" means a fee payable quarterly in arrears by Obligor to
the Lenders with respect to such quarter accruing at a rate equal to (i)
three-eighths of one percent (0.375%) per annum on the available but unborrowed
portion of the Aggregate Commitment with respect to each day during such
quarter on which the available but unborrowed portion of the Aggregate
Commitment
-6-
<PAGE> 14
equals or exceeds fifty percent (50%) of the total Aggregate Commitment and
(ii) one-quarter of one percent (.25%) per annum on the available but
unborrowed portion of the Aggregate Commitment with respect to each day during
such quarter on which the available but unborrowed portion of the Aggregate
Commitment is less than fifty percent (50%) of the Aggregate Commitment.
"Consolidated Operating Partnership" means the Obligor, the General
Partner and any other subsidiary partnerships or entities of either of them
which are required under GAAP to be consolidated with the Obligor and the
General Partner for financial reporting purposes.
"Consolidated Tenants" means any tenant or tenants of any Property which
are in control of, controlled by or under common control with another tenant of
any Property.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with all or any of the entities in the
Consolidated Operating Partnership, are treated as a single employer under
Sections 414(b) or 414(c) of the Code.
"Controlled Venture" means a corporation, partnership, joint venture,
limited liability company or other entity (i) in which the Obligor or the
General Partner is the controlling shareholder, managing general partner,
managing venture partner or other controlling member or party and in such
capacity has the right and power, subject to standard restrictions, to encumber
or cause the sale of any property owned by such entity, (ii) in which Obligor
and the General Partner in the aggregate hold an ownership interest of more
than 50%, and (iii) which is consolidated with Obligor and General Partner for
tax and accounting purposes.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when
and as such corporate base rate changes.
"Debt-Type Preferred Stock" means, for any Person, any preferred stock
issued by such Person which is not typical preferred stock but instead is both
(i) redeemable by the holders thereof on any fixed date or upon the occurrence
of any event and (ii) as to payment of dividends or amounts on liquidation,
either guaranteed by any direct or indirect subsidiary of such Person or
secured by any property of such Person or any direct or indirect subsidiary of
such Person.
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<PAGE> 15
"Debt Service" means, for any period, and without duplication: (a)
Interest Expense for such period plus (b) the aggregate amount of scheduled
principal payments of Indebtedness (excluding optional prepayments and
principal payments due on maturity in respect of any Indebtedness) required to
be made during such period by the Obligor, the General Partner or any of their
consolidated Subsidiaries plus (c) a percentage of all such scheduled principal
payments required to be made during such period by any Investment Affiliate on
Indebtedness taken into account in calculating Interest Expense, equal to the
greater of (x) the percentage of the principal amount of such Indebtedness for
which the Obligor, the General Partner or any consolidated Subsidiary is liable
and (y) the percentage ownership interest in such Investment Affiliate held by
the Obligor, the General Partner and any consolidated Subsidiaries, in the
aggregate.
"Debt-Type Preferred Stock Expense" means, for any period for any
Person, the aggregate dividend payments due to the holders of Debt-Type
Preferred Stock of such Person, whether payable in cash or in kind, and whether
or not actually paid during such period.
"Default" means an event which, with notice or lapse of time or both,
would become an Event of Default.
"Default Rate" means (a) with respect to an Adjusted Corporate Base Rate
Advance, a rate equal to the Adjusted Corporate Base Rate plus three hundred
(300) basis points, or (b) with respect to any LIBOR Advance, a rate equal to
the applicable Adjusted LIBOR Rate plus three hundred (300) basis points.
"Defaulting Lender" is defined in Section 2.2 hereof.
"Dollars" and "$" mean United States Dollars.
"Draw Request" means a written request of the Obligor for an Advance,
specifying (i) the date of the Advance, which shall be a Business Day; (ii) the
aggregate principal amount of the proposed Advance, which amount in the case of
an Adjusted Corporate Base Rate Advance shall be at least One Hundred Thousand
Dollars ($100,000) and which amount in the case of a LIBOR Advance shall be at
least One Million Dollars ($1,000,000), provided that LIBOR Advances in excess
$1,000,000 shall be made only in multiples of $100,000 above such $1,000,000
minimum; (iii) the Rate Option or Rate Options selected for such Advance; and
(iv) in the case of a LIBOR Advance, the LIBOR Interest Period applicable
thereto.
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<PAGE> 16
"Draw Request Approval Date" means, with respect to any Draw Request,
the date on which the Agent approves the Draw Request Documents for such Draw
Request pursuant to Section 4.4 hereof.
"Draw Request Documents" shall include, without limitation, the
following:
(i) a Draw Request;
(ii) a certificate executed by an authorized officer of the
General Partner (1) reaffirming to the actual knowledge of such officer
the representations and warranties of Obligor and General Partner
contained in the Loan Documents (except to the extent otherwise
specifically set forth in such certificate), and (2) confirming that, to
Obligor's best knowledge after due inquiry, no Default exists (except to
the extent otherwise specifically set forth in such certificate). Any
disclosures made by Obligor in such certificate regarding Obligor's
inability to reaffirm a representation and warranty contained in the
Loan Documents or the existence of a Default shall be approved by Agent
(or by the Required Lenders, in the case of Obligor's inability to
reaffirm the representation contained in Section 5.22 hereof) in writing
as a condition to the Lenders making the Advance requested by such Draw
Request Documents;
(iii) for jurisdictions in which mechanic's liens for work done
on the Property may be entitled to a priority equal to or higher than
the priority of the Mortgage, either (1) a certificate executed by an
authorized officer of the General Partner confirming that no work
costing in excess of $50,000 ("Material Work") that would give rise to a
mechanic's lien claim in such jurisdiction has been performed since the
Effective Date, or (2) if such Material Work has been and/or is
currently being performed, then, as applicable (a) final lien waivers,
releases and sworn statements properly executed by each contractor
conducting such Material Work at the Properties, together with an
affidavit from such contractor addressed to Agent on behalf of the
Lenders confirming the names of the subcontractors involved and that
such Material Work has been fully paid for, and/or (b) a certificate
executed by an authorized officer of the General Partner describing the
Material Work which has been and/or currently is being performed since
the Effective Date and the amounts due or to become due to any
contractor conducting such Material Work;
(iv) a statement, in form and substance satisfactory to Agent,
setting forth a computation of the Borrowing Base
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<PAGE> 17
and the then-outstanding principal balance of the Facility, together
with a computation of the then available but unborrowed portion of the
then Aggregate Commitment; and
(v) such other information or documents as the Required
Lenders may reasonably request. Agent will furnish copies of any Draw
Request Documents to any Lender promptly following such Lender's request
therefor.
"EBITDA" means operating income before extraordinary items, equity in
earnings of Investment Affiliates and minority interest in earnings, as
reported by the General Partner, the Obligor and their subsidiaries in
accordance with GAAP, plus Interest Expense, depreciation, amortization and
income tax (if any) expense plus a percentage of such adjusted operating income
of any Investment Affiliate equal to the percentage ownership interest in such
Investment Affiliate held by the General Partner, the Obligor and any
consolidated subsidiaries, in the aggregate (provided that (i) no item of
income shall be included more than once in such calculation even if it falls
within more than one of the foregoing categories and (ii) in calculating EBITDA
for any quarter, EBITDA attributable to any properties first acquired or opened
by the Obligor or the General Partner during such quarter shall be increased
for purposes of this definition to reflect the full amount of EBITDA that would
have been generated by such property if it had been owned or opened for the
full quarter).
"Effective Date" means the date of this Agreement.
"Environmental Indemnity" means the Consolidated, Amended and Restated
Environmental Indemnity dated as of the Effective Date executed by Obligor and
by the General Partner substantially in the form of Exhibit E hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder from time to time.
"Event of Default" means any event set forth in Article IX.
"Facility" means the revolving credit facility described in Section 2.1.
"FDICIA" means the Federal Deposit Insurance Corporation Improvement Act
of 1991, as the same may be amended from time to time, and the regulations
promulgated thereunder from time to time.
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"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10 a.m.
(Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.
"Final Silverthorne Requirements" means that Obligor has (a) delivered
evidence to the Lenders that Obligor owns fee title to the Additional Parking
Land, or (b) delivered evidence to the Lenders that the Ground Lease and the
Sub-Ground Lease have effectively been modified to eliminate any termination
rights of the City or the Town pursuant to Section 3 of the Ground Lease (as
incorporated into the Sub-Ground Lease by the terms of the Sub-Ground Lease),
or (c) complied with those requirements of this Agreement which will cause the
Lenders to release their lien on the Silverthorne Property in accordance with
the terms hereof (capitalized terms used in this definition but not separately
defined in this Article I are defined within the definition of "Silverthorne
Property" hereinbelow).
"Financing Statement" means Form UCC-1, Form UCC-2 and Form UCC-1A
financing statements, in form and content acceptable to Agent.
"FIRREA" means the Financial Institutions, Reform, Recovery and
Enforcement Act, as amended, and the regulations promulgated thereunder from
time to time.
"First Chicago" means The First National Bank of Chicago.
"Funded Percentage" means, with respect to any Lender at any time, a
percentage equal to a fraction of the numerator of which is the amount of the
Aggregate Commitment actually disbursed to Obligor by such Lender at such time,
and the denominator of which is the total amount of the Aggregate Commitment
disbursed to Obligor by all of the Lenders at such time.
"Funding Lender" is defined in Section 2.2.
"Funds From Operations" means, as of any date for any period, the amount
of "funds from operations" for such period as calculated in accordance with the
definition and guidelines
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promulgated by the National Association of Real Estate Investment Trusts in
effect as of the end of such period.
"GAAP" means generally accepted accounting principles, consistently
applied.
"General Partner" means Horizon Group, Inc. (formerly known as HGI
Realty, Inc.), a Michigan corporation and the sole general partner of Obligor.
"Gross Revenues" means total operating revenues (including, without
limitation, property rental and other income), calculated in accordance with
GAAP.
"Guaranties" means any agreement or agreements by which any Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes liable upon the obligation of any
other Person (including without limitation any reimbursement obligation related
to the issuance of a letter of credit for the account of such Person), or
agrees to maintain the net worth or working capital or other financial
condition of any other Person or otherwise assure any creditor of such other
Person against loss.
"Guaranty" means the Consolidated, Amended and Restated Guaranty dated
as of the Effective Date executed by the General Partner, guaranteeing the
Obligations, in the form attached hereto as Exhibit F.
"Hazardous Material" means any hazardous, toxic or dangerous waste,
substance or material subject to regulation under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and
federal, state or local so-called "Superfund" or "Superlien" laws, or any other
federal, state or local laws, ordinances, rules or regulations governing or
regulating hazardous materials, pollution, the environment or public health, as
now or at any time hereafter in effect.
"Implied Capitalization Value" means for any Person for any calendar
quarter, an amount equal to the sum of (i) (x) the EBITDA for such Person
during the then most recently ended calendar quarter (excluding any portion of
EBITDA for such quarter attributable to Preleased Centers Under Development)
annualized by multiplying such amount by 4 and then divided by (y) the sum of
(A) then most recent "Free and Clear Equity Cap Rate for National Community
Shopping Center Markets (Base Rate)", as published in the Korpacz Real Estate
Investor Survey (or if such designation or such survey are no longer published,
then such substitute designation and publication as may be selected by
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Agent in its reasonable discretion), and (B) 0.5% per annum (such 0.5% per
annum being referred to herein as the "Cap Rate Spread") plus (ii) the lower of
(A) twenty-five percent (25%) of the Book Value (as defined in the definition
of "Preleased Centers Under Development"), as of the end of such quarter, of
all Preleased Centers Under Development and (B) $37,500,000. In no event shall
the sum of (x) the "Free and Clear Equity Cap Rate for National Community
Shopping Center Markets (Base Rate)" (or any replacement designation) used to
calculate the Implied Capitalization Value, and (y) the Cap Rate Spread be less
than 9% or greater than 11%.
"Indebtedness" means for any Person, without duplication, the following
(including all indebtedness secured by a Lien on property owned by such Person,
whether or not such Person has assumed or become liable for the payment
thereof) (i) all obligations of such Person for or with respect to (including
without limitation all fees, costs or unpaid accrued interest) borrowed money
or for the deferred purchase price of property or services, (ii) all
obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to any property acquired by such
Person and all obligations created or arising under such agreement even though
the rights and remedies of the seller or lender thereunder are limited to
repossession or sale of such property in the event of default, (iii) all
obligations of such Person under leases which shall have been or should be
recorded as capitalized leases, (iv) all direct or indirect Guaranties or
endorsements of such Person (other than, in the case of instruments, for
deposit or collection or similar transactions in the ordinary course of
business), (v) all obligations (contingent or otherwise) by such person to
assure a creditor against loss including, without imitation, letters of
responsibility or comfort, arrangements to purchase or repurchase property or
obligations to pay for property, goods or services, whether or not delivered or
rendered, (vi) all obligations (contingent or otherwise) to maintain working
capital, equity capital or other financial condition or to lend or contribute
to or invest in, made by any such Person in respect of obligations of any other
Person, (vii) all obligations under any reimbursement agreement or similar
agreement made in favor of a bank or other entity issuing a letter of credit,
whether for the benefit of such Person, any of its Affiliates or any other
Person, and (viii) all obligations of such Person for extensions of credit to
or on behalf of such Person, whether or not representing obligations for
borrowed money.
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"Initial Properties" means the manufacturer's retail outlet shopping
malls owned and/or ground leased by Obligor and more specifically described on
Exhibit J attached hereto.
"Insolvency" means insolvency as defined in the United States Bankruptcy
Code, as amended. "Insolvent" when used with respect to a Person, shall refer
to a Person who satisfies the definition of Insolvency.
"Interest Expense" means all interest expense of the General Partner,
the Obligor and their subsidiaries determined in accordance with GAAP plus (i)
capitalized interest not covered by an interest reserve from a loan facility,
(ii) 100% of any accrued or paid interest incurred on any obligation for which
the Obligor or the General Partner is wholly or partially liable under
repayment guarantees, interest carry guarantees, or performance guarantees, or
other relevant liabilities, and (iii) a percentage of any accrued or paid
interest incurred on any Indebtedness of any Investment Affiliate, whether
recourse or non-recourse, equal to the percentage ownership interest in such
Investment Affiliate held by the General Partner, the Obligor and any
consolidated subsidiaries, in the aggregate, provided that no expense shall be
included more than once in such calculation even if it falls within more than
one of the foregoing categories.
"Investment Affiliate" means any Person in which the General Partner or
the Obligor, directly or indirectly, has an ownership interest, whose financial
results are not consolidated under GAAP with the financial results of the
General Partner or the Obligor on the consolidated financial statements of the
General Partner or the Obligor.
"Lenders" means, collectively, all entities executing this Agreement in
such capacity, or which subsequently execute and deliver any amendment hereto
in such capacity and each of their respective permitted successors and assigns;
provided, however, that for purposes of the provisions of this Agreement and
the provisions of the other Loan Documents (excluding the provisions of the
Environmental Indemnity and any other indemnity provisions contained in any
Loan Document) the term "Lenders" shall, at any given time, be deemed to refer
only to those entities which at such time have agreed in writing to have a
Commitment under this Agreement.
"Lending Installation" means any U.S. office of any Lender authorized to
make loans similar to the Advances described herein.
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"LIBOR Advance" means an Advance that bears interest at the Adjusted
LIBOR Rate.
"LIBOR Interest Period" means, with respect to a LIBOR Advance, a period
of one, two, three, or six months, as selected in advance by the Obligor but
only to the extent such periods in excess of three months are generally
available from the Lenders. Such LIBOR Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
LIBOR Interest Period shall end on the last Business Day of such next, second,
third or sixth succeeding month. If a LIBOR Interest Period would otherwise
end on a day which is not a Business Day, such LIBOR Interest Period shall end
on the next succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such LIBOR Interest
Period shall end on the immediately preceding Business Day.
"LIBOR Spread" means the per annum rate in effect from time to time in
accordance with the pricing grid attached as Schedule 1 and made a part hereof.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code on any property leased to any Person under a lease which is not in the
nature of a conditional sale or title retention agreement, or any subordination
agreement in favor of another Person).
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
Environmental Indemnity, the Security Documents and other agreements or
instruments creating or evidencing the Lenders' interest in any Collateral
provided to the Lenders by the Obligor or the General Partner and any other
instrument or agreement required hereunder or thereunder, as any of the
foregoing may be amended from time to time.
"Major Amendment" means any amendment to a Major Lease that changes the
identity of the tenant, adversely affects the rental rate or shortens the term
with respect to any leased space in excess of 7,500 square feet.
"Major Lease" means (i) any single lease of more than 7,500 square feet
of gross leasable area at a single Property or
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(ii) any of a group of leases to affiliated tenants at a single Property which
cover, in the aggregate, more than 10,000 square feet of gross leasable area.
"Margin Stock" has the meaning ascribed to it in Regulation U of the
Board of Governors of the Federal Reserve System.
"Material Adverse Financial Change" shall be deemed to have occurred if
the Agent, in its sole judgment, determines that an adverse financial change
has occurred which could prevent timely repayment of any Advance hereunder or
any timely payment or performance of any other Obligation.
"Maturity Date" means the earliest to occur of:
(a) the day immediately preceding the third anniversary of
the Effective Date; and
(b) the date on which the Lenders accelerate the
Obligations pursuant to Article X hereof;
provided, however, that the Maturity Date may be extended as provided in
Section 2.1(c) below.
"Merger Date" means July 14, 1995.
"Monetary Default" means a Default arising from Obligor's failure to pay
amounts due to the Agent or the Lenders under the Loan Documents.
"Mortgages" means the first mortgages or first deeds of trust, as
amended, executed by the Obligor as the owner of fee title (or a leasehold
estate, if the fee owner joins therein or as otherwise permitted by Section
2.1(b) hereof) with respect to the Properties, including all improvements
thereon and rights and easements appurtenant thereto, in connection with this
Facility, the form of which for New Collateral is attached hereto as Exhibits
B-1 and B-2.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which Obligor or any member of
the Controlled Group is a party to which more than one employer is obligated to
make contributions.
"Net Operating Income" means, with respect to any property for any
period, "property rental and other income" (as determined by GAAP) of the owner
or ground lessee, as applicable, of such property attributable to such property
accruing for such period
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minus the aggregate Operating Expenses for such period attributable to such
property.
"New Collateral" means manufacturer's retail outlet shopping malls
(other than the Initial Properties) and all leases thereof and other rights
related thereto owned (or ground leased, if the fee owner joins in the Mortgage
relating thereto) and designated by Obligor under Section 2.16 hereof and
approved by the Super-Majority Lenders, encumbered or to be encumbered by
Mortgages in favor of the Lenders and additional security documents in favor of
the Lenders substantially similar to the Security Documents on the Initial
Properties.
"Note" means a promissory note payable to the order of a Lender in the
amount of such Lender's maximum Commitment in the form attached hereto as
Exhibit A, together with any amendments or allonges thereto or restatements,
replacements or renewals thereof. The Notes made by Obligor in favor of the
various Lenders are sometimes collectively referred to herein as the "Notes".
"Obligations" means the Advances, all accrued and unpaid fees and all
other obligations of Obligor or General Partner to the Agent or the Lenders
arising under this Agreement or any of the other Loan Documents.
"Obligor" shall have the meaning set forth in the introductory paragraph
of this Agreement, along with its permitted successors and assigns.
"Occupancy Percentage" means, with respect to any Property as of any
date, that percentage of the gross leasable area of such Property which is
leased to and occupied by Obligor's tenants.
"Operating Expenses" means, for any property for any period, the amount
of all expenses (as determined in accordance with GAAP) incurred in connection
with and directly attributable to the ownership and operation of such property
for such period, including, without limitation, all management fees and amounts
accrued for the payment of real estate taxes and insurance premiums, but
excluding interest expense or other debt service charges and any non-cash
charges such as depreciation or amortization of financing or other costs.
"Partial Advance" is defined in Section 2.2 hereof.
"Participants" is defined in Section 12.2.1 hereof.
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Percentage" means, with respect to each Lender, the applicable
percentage of the then-current Aggregate Commitment represented by such
Lender's then-current Commitment, as adjusted for any changes from time to time
in such Commitment and the Aggregate Commitment, whether pursuant to Sections
2.1(c) or 2.1(d) or other provisions hereof, and subject to the terms of
Section 2.2.
"Permitted Exceptions" means those matters to which the interest of
Obligor in the Properties is permitted by the Lenders to be subject on the
Effective Date with respect to the Initial Properties, and on the date any New
Collateral is included in the Borrowing Base with respect to any such New
Collateral, and thereafter, such other title exceptions or objections with
respect to any Property, if any, as the Required Lenders or their counsel may
approve in advance in writing.
"Permitted Liens" means:
(a) Liens for current taxes, assessments or other
governmental charges which are not delinquent or remain payable without any
penalty, or the validity of which are being contested in good faith by
appropriate proceedings which have the effect of staying any enforcement for
non-payment thereof;
(b) Liens imposed by mandatory provisions of law such as
for materialmen, mechanics, warehousemen, workmen and repairmen arising in the
ordinary course of business and which have been bonded over and removed of
record or have otherwise been insured over by the title insurer for the
property subject to such liens;
(c) Liens imposed by mandatory provisions of law related to
workers' compensation, unemployment insurance, social security or other similar
legislation arising in the ordinary course of business and which are being
contested and/or removed in a continuous and businesslike manner;
(d) Judgment and other similar liens arising in connection
with court proceedings, provided that the execution or other enforcement of
such liens is effectively stayed and the claims secured thereby are vigorously
and continuously contested by appropriate proceedings;
(e) Easements, rights of way, restrictions and other
similar encumbrances which, in the aggregate, do not materially
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interfere with the occupation, use and enjoyment of the Properties; and
(f) Any other Liens approved in writing by the Super-Majority
Lenders.
"Person" means an individual, a corporation, a limited or general
partnership, a limited liability company, an association, a joint venture or
any other entity or organization, including a governmental or political
subdivision or an agent or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Obligor or any member of the Controlled Group may have
any liability.
"Preleased Centers Under Development" means, as of any date of
determination, any manufacturer's retail outlet shopping center, or expansion
of such an existing center, owned by Obligor (i) which is then treated as an
asset under development under GAAP, (ii) which is located in the United States
of America (iii) which has been preleased under binding leases to Obligor's
tenants to the extent of at least sixty percent (60%) of the projected gross
leasable area of such center and (iv) which has been designated by Obligor in a
written notice to Agent as a "Preleased Center Under Development" for purposes
of this Agreement, with the land and improvements included in such center being
valued at then-current book value, as determined in accordance with GAAP ("Book
Value"), provided however, (a) in no event shall any center or expansion area
of any existing center be included in such category of "Preleased Centers Under
Development" for more than two hundred seventy (270) days and (b) upon written
notice from Obligor to Agent delivered during such 270-day period, any center
or expansion area of any existing center which has previously been designated
as a "Preleased Center Under Development" shall be removed from such category.
Upon the earlier to occur of (x) the expiration of any above-described 270-day
period or (y) Agent's receipt of Obligor's written notice in accordance with
(b) above, any center or expansion area of any existing center which has been
designated a "Preleased Center Under Development" shall automatically lose such
designation (effective as of the next determination date) for the purpose of
determining Implied Capitalization Value.
"Preliminary Silverthorne Requirements" means Obligor's delivery to the
Lenders of written evidence, acceptable to the Lenders in their sole
discretion, that (a) Obligor has executed an agreement with the City and the
Town, pursuant to which
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Obligor will be entitled to purchase from the City, and the City will be
obligated to sell to Obligor, the fee interest in the Additional Parking Land
whereupon the Ground Lease and the Sub-Ground Lease will be terminated, or (b)
Obligor has executed an agreement with the City and the Town that the Ground
Lease (and the Sub-Ground Lease) will be amended in a manner which (i)
eliminates any rights of the City or the Town to terminate the Ground Lease or
Sub-Ground Lease pursuant to Section 3 of the Ground Lease (as incorporated
into the Sub-Ground Lease by the terms of the Sub-Ground Lease) prior to their
stated expiration dates and (ii) extends the lease term of the Ground Lease
(and the Sub-Ground Lease) so that the terms thereof expire not less than
twenty-five (25) years from the effective date of such amendment, or (c)
Obligor has obtained a written commitment from an institutional lender to make
a mortgage loan to Obligor which will be secured by a mortgage of the
Silverthorne Property and will provide financing proceeds to the Obligor at
least equal to the full amount of the Borrowing Base attributable to the
Silverthorne Property (using a 55% percentage in the Borrowing Base definition)
(capitalized terms used in this definition but not separately defined in this
Article I are defined within the definition of "Silverthorne Property"
hereinbelow).
"Properties" means, as of any date, all of those manufacturer's retail
outlet shopping centers and other real property approved by the Super-Majority
Lenders which are encumbered by Mortgages in favor of the Agent for the benefit
of the Lenders pursuant to the terms of this Agreement. All phases of a single
such center which are so encumbered shall constitute a single Property.
"Property" means one of the Properties, individually.
"Public Debt Rating -- Level One" shall have the meaning set forth in
Schedule 1 attached hereto.
"Public Debt Rating -- Level Two" shall have the meaning set forth in
Schedule 1 attached hereto.
"Purchasers" is defined in Section 12.3.1 hereof.
"Rate Option" means the Adjusted Corporate Base Rate or the Adjusted
LIBOR Rate. The Rate Option in effect on any date shall always be the Adjusted
Corporate Base Rate unless the Obligor has properly selected the Adjusted LIBOR
Rate pursuant to Section 2.7 hereof.
"Reduced Leverage Period" shall have the meaning set forth in Schedule 1
attached hereto.
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"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waivers in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means, as of any date, those Lenders holding, in the
aggregate, more than fifty percent (50%) of the then-current Aggregate
Commitment. In the event that any Lender is a Defaulting Lender hereunder,
then the "Required Lenders" shall mean those Lenders having an aggregate Funded
Percentage in excess of fifty percent (50%).
"Security Agreement" means the security agreement or agreements for each
of the Properties, the form of which for New Collateral is attached hereto as
Exhibit D.
"Security Deposit Account" means an interest-bearing account which may
be required by the Required Lenders to be established by Obligor with the Agent
and pledged to the Agent for the benefit of the Lenders to secure the Facility
pursuant to the Cash Collateral Agreement which account, if and when required,
shall be funded initially and maintained monthly in an amount equal to all
security deposits then being held and not returned or applied from all tenants
of the Properties.
"Security Documents" means:
(a) the Mortgages;
(b) the Assignment of Operating Agreements and Contracts;
(c) the Assignment of Rents and Leases;
(d) the Security Agreement;
(e) if required, the Cash Collateral Agreement;
(f) Financing Statements securing the first priority
security interest of the Lenders in all of Obligor's interest in the
fixtures on the Properties and all personal property necessary or useful
in the operation of the Properties;
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(g) The Subordination, Non-Disturbance and Attornment
Agreements; and
(h) all estoppels, consents, acknowledgements and other
documentation executed in connection with the creation and perfection of
the Lenders' security interest.
"Silverthorne Property" means one of the Initial Properties, the
Silverthorne Factory Stores, a manufacturer's outlet shopping center located in
Summit County, Colorado, a portion of which (the "Additional Parking Land") is
subleased pursuant to a sublease agreement (the "Sub-Ground Lease") between
Obligor and the Town of Silverthorne (the "Town"). Fee title to the Additional
Parking Land is owned by the City of Denver through its Board of Water
Commissioners (the "City") which, pursuant to a lease agreement with the Town
(the "Ground Lease"), has leased the Additional Parking Land to the Town.
"Single Employer Plan" means a Plan maintained by Obligor or any member
of the Controlled Group for employees of Obligor or any member of the
Controlled Group.
"Subordination, Non-Disturbance and Attornment Agreements" means those
subordination, non-disturbance and attornment agreements executed from time to
time between Agent on behalf of the Lenders and the tenants of the Properties
substantially in the form attached hereto as Exhibit K, with such modifications
as Agent may deem appropriate.
"Super-Majority Lenders" means, as of any date, those Lenders holding,
in the aggregate, more than sixty-six and 67/100 percent (66.67%) of the
then-current Aggregate Commitment. In the event that any Lender is a
Defaulting Lender hereunder, then the "Super-Majority Lenders" shall mean those
Lenders having an aggregate Funded Percentage in excess of sixty-six and 67/100
percent (66.67%).
"Supplemental Equity Closing Date" shall have the meaning set forth in
Schedule 1 attached hereto.
"Tax and Insurance Account" means an interest-bearing account required
by the Required Lenders to be established by Obligor with the Agent and pledged
to Agent for the benefit of the Lenders pursuant to the Cash Collateral
Agreement, which shall be funded in an initial amount and monthly amounts
satisfactory to the Required Lenders to be used as a reserve which may be used
by Obligor solely for the payment of real estate taxes and insurance premiums
on the Properties becoming due thereafter.
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"Total Funded Debt" means the aggregate of all of the outstanding
principal balances of all promissory and mortgage notes of any member of the
Consolidated Operating Partnership, including Controlled Ventures, as shown on
the consolidated balance sheet of the Consolidated Operating Partnership.
"Total Funded Debt" shall include, without limitation, (i) outstanding
Indebtedness issued pursuant to a securitization, (ii) the face amount of any
letters of credit for which Obligor or General Partner or any subsidiary is the
account party, (iii) the principal amount of any loan, to the extent repayment
of such loan is guaranteed by Obligor, General Partner or any subsidiary, (iv)
a percentage of any Indebtedness of any Investment Affiliate, whether recourse
or non-recourse, equal to the greater of (A) the percentage ownership interest
in such Investment -23- Affiliate held by the General Partner, the Obligor and
any consolidated subsidiaries, in the aggregate and (B) the portion of such
Indebtedness for which the General Partner, Obligor or any consolidated
subsidiary has undertaken personal liability (whether directly to the holder of
such Indebtedness or indirectly pursuant to a contribution agreement or other
arrangement with any other owner of such Investment Affiliate), in each case to
the extent that items (i), (ii), (iii) and (iv) are not shown on the
consolidated balance sheet of the Consolidated Operating Partnership, and (v)
if any Debt-Type Preferred Stock is then outstanding, the maximum aggregate
redemption price that would be payable to the holders thereof upon redemption.
"Total Liabilities" means, as to any Person for any period, the sum of
the total liabilities contained in such Person's financial statements for such
period (as determined in accordance with GAAP), plus (i) the total amount of
all contingent liabilities set forth in the notes and footnotes to such
financial statements and (ii) if any Debt-Type Preferred Stock is then
outstanding, the maximum aggregate redemption price that would be payable to
the holders thereof upon redemption.
"Total Venture Investment" means, as of any date, the amount of the
aggregate investment, whether characterized as equity or debt, then made or
committed to be made in the future by the Obligor or the General Partner in any
Investment Affiliate or any consolidated subsidiary of either the Obligor or
the General Partner, other than a wholly-owned financing subsidiary or other
subsidiary (i) which is wholly owned by the Obligor and/or the General Partner
or (ii) in which Obligor and/or the General Partner, or an Affiliate, officer
or director of Obligor and/or General Partner, either directly or indirectly,
have (a) an ownership interest of not less than ninety-five percent (95%),
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and (b) either (1) ownership of more than fifty percent (50%) of the voting
securities or voting membership interest of such subsidiary (or of the sole
general partner(s) of such subsidiary, if the subsidiary is a limited
partnership) or (2) possession of the power to direct or cause the direction of
the management or policies of such subsidiary, whether through ownership of
stock, by contract or otherwise.
"Unfunded Liabilities" means, (x) in the case of Single Employer Plans,
the amount (if any) by which the present value of all vested nonforfeitable
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plans, and (y) in the case of Multiemployer Plans, the withdrawal
liability that would be incurred by the Controlled Group if all members of the
Controlled Group completely withdrew from all Multiemployer Plans.
The foregoing definitions shall be equally applicable to both the
singular and the plural forms of the defined terms.
I.2 Financial Standards. All financial computations required of a
Person under this Agreement shall be made, and all financial information
required under this Agreement shall be prepared, in accordance with GAAP,
except that if any Person's financial statements or financial computations are
not audited, such Person's financial statements or financial computations shall
be prepared in accordance with the same sound accounting principles utilized in
connection with the financial information submitted to Lenders with respect to
the Obligor or the General Partner or the Properties in connection with this
Agreement and shall be certified by an authorized representative of such
Person.
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II
THE FACILITY
II.1 The Facility.
(a) Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Obligor and General
Partner contained herein, Lenders agree to make Advances through the Agent to
Obligor from time to time prior to the Maturity Date, provided that the making
of any such Advance will not cause the sum of all then outstanding Advances to
exceed the lesser of (i) the Aggregate Commitment, and (ii) the then-current
Borrowing Base. Each Lender shall fund its Percentage of each such Advance.
No Lender shall at any time be required to fund any amounts which when
aggregated with such Lender's share of all other Advances then outstanding
would exceed such Lender's then-current Commitment. This facility ("Facility")
is a revolving credit facility and, subject to the provisions of this
Agreement, Obligor may request Advances hereunder, repay such Advances and
reborrow Advances.
(b) The term "Borrowing Base" shall mean, as of any date,
the sum of (a) the lesser of (i) the then-current Capitalized Value of the
Properties (if determinable) and (ii) subject to adjustment as provided in the
following sentences of this Subsection 2.1(b), fifty-five percent (55%)
multiplied by the aggregate Appraised Values of the Properties then included in
the Collateral plus (b) one hundred percent (100%) of the sum of (i) the amount
of any pledged cash or cash equivalent then held by Agent for the benefit of
the Lenders (other than amounts held in the Security Deposit Account or Tax and
Insurance Account, if then established), and (ii) the then-current undrawn
portion of any unconditional letter of credit in a form acceptable to Agent
which has been delivered to Agent for the benefit of the Lenders. If the
weighted average Occupancy Percentage of all Properties in the Borrowing Base
at any time shall be less than eighty-five percent (85%), the percentage of the
Appraised Value of the Properties used in determining the Borrowing Base shall
be immediately reduced to forty-five percent (45%) for each Property having an
Occupancy Percentage of less than 85% for so long as such Occupancy Percentage
is less than 85%, but shall remain at fifty-five percent (55%) for each
Property having an Occupancy Percentage of 85% or more, subject to the
following sentence, and shall return to fifty-five percent (55%) for all
Properties at such time as the weighted average Occupancy Percentage of all
Properties in the Borrowing Base increases to 85% or more, subject to the
following sentence. If the Occupancy Percentage
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of any individual Property in the Borrowing Base at any time shall be less than
seventy-five percent (75%), the percentage of the Appraised Value of such
Property used in determining the Borrowing Base shall be reduced to forty-five
percent (45%) for so long as such Occupancy Percentage is less than 75%.
Notwithstanding anything to the contrary contained in this Section, the
"Borrowing Base" shall be calculated separately with respect to the
Silverthorne Property and shall mean, the lesser of (x) the then-current
Capitalized Value of the Silverthorne Property (if determinable) or (y) one of
the following percentages of the Appraised Value of the Silverthorne Property:
(1) from the Effective Date through October 31, 1996, forty-five percent (45%);
(2) from November 1, 1996 through December 31, 1996, thirty-five percent (35%);
(3) from January 1, 1997 through February 28, 1997, twenty-five percent (25%);
and (4) from and after March 1, 1997, zero percent, provided that such
percentages in clauses (1), (2) and (3) shall be increased to fifty-five
percent (55%) as of the date that the Preliminary Silverthorne Requirements are
satisfied. From and after the date on which the Preliminary Silverthorne
Requirements are satisfied, the amount of "Borrowing Base" attributable to the
Silverthorne Property shall be determined in accordance with the first sentence
of this Section 2.1(b); provided, however, that if the Final Silverthorne
Requirements are not satisfied by March 1, 1997, the Silverthorne Property
shall be given an Appraised Value of zero and shall not thereafter contribute
any amount to the Borrowing Base, unless the Lenders, in their sole and
absolute discretion, agree, in writing, to retain the Silverthorne Property as
part of the Collateral.
(c) The Facility created by this Agreement has a term of
three (3) years and matures on the day before the third anniversary of the
Effective Date. Notwithstanding the foregoing, at the sole discretion of all
the Lenders following receipt of a written request from Obligor to extend the
term of the Facility (which notice shall be given by Obligor not earlier than
the 105th day immediately preceding the then-current Maturity Date, nor later
than the 90th day immediately preceding such then-current Maturity Date) and
upon written notice from Agent to Obligor given not later than sixty (60) days
after Obligor's request (an "Extension Notice") in accordance with the above
time frame, the Lenders may extend this Facility for an additional one year
period and by subsequent Extension Notices given no later than sixty (60) days
after Obligor's request therefor the Lenders may further extend the Facility
for additional one year periods. If Obligor requests that the Lenders so
consider, in the Lenders' sole discretion, extending the term of the Facility,
and some, but not all, of the Lenders
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elect to so extend the term, then Agent shall so notify Obligor in writing of
those Lenders which are not willing to extend the term (the "Non-Extending
Lenders"), and Obligor shall have the option either (x) to elect in writing not
to extend the term of the Facility, or (y) to repay the Non-Extending Lenders
all amounts owed to such Lenders under the Facility as a condition to any such
extension, in which event Obligor also shall, on or before the then applicable
Maturity Date (i.e., before giving effect to the extension period at issue),
(i) reduce the amount of the Aggregate Commitment by the aggregate amount of
the Commitment(s) held by the Non-Extending Lenders, (ii) replace the
Non-Extending Lenders (and the amount of the Aggregate Commitment repaid to
such Non-Extending Lenders) with other Lenders satisfactory to Agent, or (iii)
do any combination of (i) and (ii) above (i.e., replace one or more
Non-Extending Lenders and reduce the Aggregate Commitment by the Commitment(s)
of those Non-Extending Lenders not replaced).
(d) If any Lender (a "Non-Approving Lender") shall
disapprove any appraisal of any New Collateral or any of the other documents
submitted to such Lender pursuant to Section 4.2 hereof (including, without
limitation, the environmental reports required pursuant to Section 4.2(m)
hereof) then either (i) Obligor can elect to take such steps as are necessary
to make such appraisal or document satisfactory to such Non-Approving Lender,
or (ii) at the written election of the Obligor and the Super-Majority Lenders
and upon the repayment by Obligor to such Non-Approving Lender of all amounts
owed to such Non-Approving Lender under the Facility, such Non-Approving Lender
shall cease to have the rights and obligations of a "Lender" hereunder, and the
Aggregate Commitment shall automatically be adjusted in order to account for
the removal of the Non-Approving Lender. Within ten (10) Business Days after a
Non-Approving Lender ceases to be a "Lender" hereunder, the remaining Lenders,
the Obligor and the General Partner shall execute an amendment to this
Agreement to evidence the removal of the Non-Approving Lender and the
reduction of the then current Aggregate Commitment by the amount of the
Commitment held by such Non-Approving Lender; provided that so long as no
Default then exists hereunder, Obligor shall have the right to replace any such
Non-Approving Lender which ceases to be a "Lender" hereunder (and the amount of
the Aggregate Commitment paid to such Non-Approving Lender) with another Lender
satisfactory to Agent. Notwithstanding anything contained herein to the
contrary, in no event shall the provisions of this Section 2.1(d) require any
Lender to fund to Obligor any amounts in excess of such Lender's Commitment.
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II.2 Responsibility for Advances.
(a) Advances shall be made available to Obligor by Agent in
accordance with Section 2.7 hereof. The obligation of each Lender to fund its
Percentage of each Advance shall be several and not joint.
(b) If the Obligor is entitled to receive an Advance
pursuant to this Agreement then, if so requested by Obligor, each Lender shall
fund its Percentage of such Advance notwithstanding the failure of any other
Lender to do likewise. If any Lender (a "Defaulting Lender") shall default in
its obligation to fund all or a portion of its Percentage of any Advance, then
simultaneously with the funding by each of the remaining Lenders (each, a
"Funding Lender") of their respective Percentages of such Advance (the
aggregate amount of the sums funded by the Funding Lenders is sometimes
referred to herein as a "Partial Advance") the respective Funded Percentages of
each Lender shall automatically be adjusted so that following such adjustment
each Lender's Funded Percentage shall correspond to the aggregate percentage of
all then outstanding Advances (including all Partial Advances and Additional
Advances (as defined below)) made by such Lender. Following any adjustment of
each Lender's Funded Percentage pursuant to the preceding sentence, such
Lender's Funded Percentage shall be readjusted only upon the first to occur of
(a) a Defaulting Lender subsequently funding the portion of the applicable
Advance which it initially failed to fund, or (b) the repayment in full
(including all interest thereon) to each Funding Lender of the portion of any
such Partial Advance funded by such Funding Lender.
(c) After a Defaulting Lender's failure to fund any portion
of its Percentage of any Advance, the Obligor may submit to Agent a written
request (an "Additional Advance Request") for an Advance (an "Additional
Advance") in an amount equal to the portion of the immediately preceding
Advance which the Defaulting Lender failed to fund, which Additional Advance
Request shall contain a certification by Obligor affirming the continued truth
and accuracy of the Draw Request Documents submitted in connection with the
applicable Advance. Upon Agent's receipt of an Additional Advance Request,
each Funding Lender shall fund, at the time and in the manner set forth in
Section 2.7(a) hereof, the percentage of such Additional Advance which is equal
to the ratio of its Commitment to the total Commitments of the Funding Lenders;
provided, however, that no Lender shall be required to fund any amounts which
when aggregated with such Lender's share of all other Advances then outstanding
would exceed such Lender's then-current Commitment. Following any such
Additional Advance,
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the Funded Percentages shall again automatically be adjusted so that following
such adjustment each Lender's Funded Percentage shall correspond to the
aggregate percentage of all then outstanding Advances (including all Partial
Advances and Additional Advances) made by such Lender. Following any
adjustment of each Lender's Funded Percentage pursuant to the preceding
sentence, such Lender's Funded Percentage shall be readjusted only upon the
repayment in full (including all interest thereon) to each Funding Lender of
the portion of any such Additional Advance funded by such Funding Lender.
(c) Notwithstanding anything contained herein to the
contrary, in no event shall any Defaulting Lender be entitled to receive any
repayment of its Percentage of any Advances (or any interest earned thereon)
until such time as the Funding Lenders have received repayment in full of the
amount of any Partial Advance or Additional Advance funded by the Funding
Lenders, together with all interest thereon. Nothing contained in this Section
2.2(d) is intended to prevent Obligor from exercising any rights it may have at
law or in equity against a Defaulting Lender.
II.3 Evidence of Credit Extensions. The Advances of each Lender
outstanding at any time shall be evidenced by the Notes. Each Lender shall
receive a Note executed by the Obligor in favor of such Lender in a maximum
principal amount equal to such Lender's Commitment. Each Lender shall record
Advances and principal payments thereof on the schedule attached to its Note
or, at its option, in its records, and each Lender's record thereof shall be
conclusive absent manifest error. Notwithstanding the foregoing, the failure
to make, or an error in making, a notation with respect to any Advance shall
not limit or otherwise affect the obligations of Obligor hereunder or under the
Notes to pay the amount actually owed by Obligor to Lenders.
II.4 Fees.
(a) On the Effective Date Obligor shall pay to each Lender
an upfront fee equal to three-quarters of one percent (0.75%) of such Lender's
Commitment.
(b) If Obligor requests any one-year extension of the
Maturity Date and such extension is granted by the Lenders as provided in
Section 2.1(c), Obligor shall pay to each of the Lenders (other than the
Non-Extending Lenders), within two (2) Business Days after Obligor's receipt of
such Lenders' approval of such extension, an extension fee equal to one-quarter
of one percent (0.25%) of the amount of such Lender's Commitment to be in
effect at the commencement of such one-year extension.
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(c) Within ten (10) days after the last day of each
calendar quarter, the Obligor shall pay the Commitment Fee due to Lenders with
respect to such quarter, which shall be allocated among the Lenders in
accordance with their respective daily Percentages of the available but
unborrowed portion of the Aggregate Commitment on each day during such quarter.
Concurrently with the invoice to Obligor setting forth the Commitment Fee
payable for such quarter, Agent shall furnish Obligor with a statement showing
the method of computation of such Commitment Fee and that amount owed to each
respective Lender.
(d) Obligor shall pay all collateral addition fees and
release fees due to the Lenders and the Agent in accordance with Sections 2.16
and 2.17 in connection with any New Collateral or release of a Property, as the
case may be.
(e) All fees payable by Obligor pursuant to Subsections
(a), (b), (c) and (d) of this Section shall be paid to the Agent at the times
indicated above and the Agent shall allocate such fees among the Lenders and
the Agent as provided herein.
(f) The Obligor shall pay to Agent the Administrative
Agency Fee as it becomes due pursuant to the separate written agreement between
Obligor and Agent governing the same.
II.5 Required Principal Repayments. Any Advances outstanding in
excess of the then-current Borrowing Base shall be due and payable on the
ninetieth (90th) day after Agent has given to Obligor written demand for
repayment or elimination of such excess, specifying the amount of such excess
and the date for compliance, but such payment shall be due only to the extent
that on or before such ninetieth (90th) day Obligor has not either provided New
Collateral to increase the Borrowing Base or repaid a sufficient amount of the
then-outstanding Advances, or taken a combination of such actions, so that the
outstanding Advances on such 90th day are no longer in excess of the
then-current Borrowing Base. Nothing herein shall permit the Obligor at any
time to request or receive Advances (i) while such excess exists or (ii) at any
time if such Advances would cause the aggregate outstanding Advances to exceed
the then-current Borrowing Base.
The remaining outstanding principal balance of the Facility, plus all
accrued and unpaid interest thereon and other amounts owed by Obligor under the
Loan Documents, shall be due and payable on the Maturity Date.
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Obligor may prepay all or any portion of the amounts evidenced by the
Loan Documents at any time during the term of the Facility without any
prepayment penalty or charge other than the amounts which may become due to the
Lenders pursuant to Section 3.3 hereof in connection with the prepayment of
LIBOR Advances.
II.6 Interest.
(a) The outstanding principal balance under the Notes shall
bear interest from time to time at a rate per annum equal to:
(i) the Adjusted Corporate Base Rate; or
(ii) at the election of Obligor with respect to all or
portions of the Obligations and subject to Section 2.7 hereof,
the Adjusted LIBOR Rate.
(b) All interest shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest accrued on each Adjusted
Corporate Base Rate Advance shall be payable in arrears (i) on the first day of
each calendar month, commencing with the first such date to occur after the
date hereof, (ii) on any date on which the Adjusted Corporate Base Rate Advance
is prepaid or repaid, whether due to acceleration or otherwise, and (iii) on
the Maturity Date. Interest accrued on that portion of the outstanding
principal amount of any Adjusted Corporate Base Rate Advance converted into a
LIBOR Advance on a day other than the first day of a calendar month shall be
payable in arrears on the date of conversion. Interest accrued on each LIBOR
Advance shall be payable in arrears (i) on the first day of each calendar
month, (ii) on any date on which the LIBOR Advance is prepaid, whether by
acceleration or otherwise, and (iii) on the Maturity Date. Interest shall not
be payable on the amount paid for the date of payment if payment is received by
Agent prior to noon (Chicago time). If any payment of principal or interest
under the Notes shall become due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and, in the case of a
payment of principal, such extension of time shall be included in computing
interest due in connection with such payment.
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II.7 Selection of Rate Options and Interest Periods.
(a) Obligor may from time to time select the Rate Option
and, in the case of each LIBOR Advance, the commencement date (which shall be a
Business Day) and the length of the LIBOR Interest Period applicable to each
such LIBOR Advance. The borrowing date for each Advance shall be no earlier
than (i) two (2) Business Days after the Draw Request Approval Date in the case
of an Adjusted Corporate Base Rate Advance, and (ii) three (3) Business Days
after the Draw Request Approval Date in the case of a LIBOR Advance. Not later
than 3:00 p.m. (Chicago time) on each proposed borrowing date, and provided
that each Lender has received notice of the Draw Request approved by Agent
before 3:00 p.m. (Chicago time) on the Draw Request Approval Date, then each
Lender shall make available its Percentage of the Advance requested in funds
immediately available in Chicago, Illinois to Agent. Agent will make the funds
so received from Lenders available to Obligor by transfer to Obligor's account
at Agent.
(b) Agent shall, as soon as practicable after receipt of a
Draw Request, determine the Adjusted LIBOR Rate applicable to the requested
LIBOR Advance and inform Obligor and Lenders of the same. Each determination
of the Adjusted LIBOR Rate by Agent shall be conclusive and binding upon
Obligor in the absence of manifest error.
(c) If Obligor shall prepay a LIBOR Advance other than on
the last day of the LIBOR Interest Period applicable thereto, Obligor shall be
responsible to pay all amounts due to Lenders as required by Section 3.3
hereof.
(d) As of the end of each LIBOR Interest Period selected
for a LIBOR Advance, the interest rate on the LIBOR Advance will become the
Adjusted Corporate Base Rate, unless Obligor has once again selected a LIBOR
Interest Period in accordance with the timing and procedures set forth in
Section 2.7(a).
(e) The right of Obligor to select the Adjusted LIBOR Rate
for an Advance pursuant to this Agreement is subject to the availability to
Lenders of a similar option. If Agent determines that (i) deposits of U.S.
dollars in an amount approximately equal to the LIBOR Advance for which the
Obligor wishes to select the Adjusted LIBOR Rate and/or for periods
approximately equal to the LIBOR Interest Period selected by Obligor are not
generally available at such time in the London interbank eurodollar market, or
(ii) the rate at which the deposits described in subsection (i) herein are
being offered will not adequately and
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fairly reflect the costs to Agent of maintaining an Adjusted LIBOR Rate on an
Advance or of funding the same in such market for such LIBOR Interest Period,
or (iii) reasonable means do not exist for determining an Adjusted LIBOR Rate,
or (iv) the Adjusted LIBOR Rate would be in excess of the maximum interest rate
which Obligor may by law pay, then in any of such events, Agent shall so notify
Obligor and such Advance shall bear interest at the Adjusted Corporate Base
Rate.
(f) Obligor hereby agrees to reimburse Lenders for any
taxes and other increased costs incurred by Lenders in connection with funding
each LIBOR Advance and obtaining the deposits described in Section 2.7(e).
(g) In no event may Obligor elect a LIBOR Interest Period
which would extend beyond the Maturity Date. Unless the Lenders agree thereto,
in no event may Obligor have more than five (5) different LIBOR Interest
Periods for LIBOR Advances outstanding at any one time.
(h) Conversion and Continuation.
(i) Obligor may elect from time to time, subject to the
other provisions of this Section 2.7, to convert all or any part of an
Advance into any other type of Advance; provided that any conversion of
any LIBOR Rate Advance shall be made on, and only on, the last day of the
LIBOR Interest Period applicable thereto.
(ii) Adjusted Corporate Base Rate Advances shall continue as
Adjusted Corporate Rate Advances unless and until such Adjusted
Corporate Base Rate Advances are converted into LIBOR Rate Advances.
LIBOR Rate Advances shall continue until the end of the then applicable
LIBOR Interest Period therefor, at which time each such Advance shall be
automatically converted into a Adjusted Corporate Base Rate Advance
unless the Obligor shall have given the Agent a Conversion/Continuation
Notice in accordance with Section 2.7(h)(iv) requesting that, at the end
of such LIBOR Interest Period, such Advance either continue as an
Advance of such type for the same or another LIBOR Interest Period.
(iii) Notwithstanding anything to the contrary contained in
Sections 2.7(h)(i) or (h)(ii), no Advance may be converted into a LIBOR
Rate Advance or continued as a LIBOR Rate Advance (except with the
consent of the Required Lenders) when any Monetary Default or Event of
Default has occurred and is continuing.
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(iv) The Obligor shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a LIBOR Rate Advance not later than 11:00 a.m. (Chicago
time) on the Business Day immediately preceding the date of the
requested conversion, in the case of a conversion into a Adjusted
Corporate Base Rate Advance, or 11:00 a.m. (Chicago time) at least three
(3) Business Days prior to the date of the requested conversion or
continuation, in the case of a conversion into or continuation of a
LIBOR Rate Advance, specifying: (1) the requested date (which shall be
a Business Day) of such conversion or continuation; (2) the amount and
type of the Advance to be converted or continued; and (3) the amount and
type(s) of Advance(s) into which such Advance is to be converted or
continued and, in the case of a conversion into or continuation of a
LIBOR Rate Advance, the duration of the LIBOR Interest Period applicable
thereto.
II.8 Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to Agent at Agent's address specified herein, or at any other
Lending Installation of Agent specified in writing by Agent to Obligor, by noon
(local time) on the date when due and shall be applied ratably by Agent among
Lenders. Each payment delivered to Agent by Obligor prior to 12:00 noon
(Chicago time) on any Business Day for the account of any Lender shall be
delivered by Agent to such Lender on the same Business Day as Agent's receipt
of such payment in the same type of funds that Agent received at its address
specified herein or at any Lending Installation specified in a notice received
by Agent from such Lender. In the event that Agent does not pay to any Lender
any such payment delivered to Agent for the account of such Lender on the same
Business Day following Agent's receipt of such payment from Obligor, then (i)
to the extent that any such payment (or portion thereof) constitutes interest
paid by Obligor on the Facility, Agent shall pay such Lender interest on such
payment at the Federal Funds Effective Rate in effect from time to time during
the period from the date such payment was to be made by Agent to such Lender
until the date such payment is actually made to such Lender, and (ii) to the
extent that any such payment (or portion thereof) constitutes a repayment of
all or a portion of the then outstanding principal balance of the Facility and
Agent fails to make such payment to such Lender as provided herein, Agent shall
pay such Lender interest on such payment (or portion thereof) for the period
from date when such payment was to be made by Agent to such Lender until the
date such payment is made to such Lender at a rate per annum equal to then
applicable interest rate on the amount so repaid by Obligor. Agent is hereby
authorized to charge the account of Obligor
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maintained with First Chicago for each payment of principal, interest and fees
as it becomes due hereunder.
II.9 Default. Notwithstanding the foregoing, during the continuance
of a Monetary Default or Event of Default, Obligor shall not have the right to
request a LIBOR Advance, select a new LIBOR Interest Period for an existing
LIBOR Advance or convert any Adjusted Corporate Base Rate Advance to a LIBOR
Advance. During the continuance of an Event of Default, at the election of the
Super-Majority Lenders, by notice to Obligor, outstanding Advances shall bear
interest at the applicable Default Rates for the period beginning when the
Default which gave rise to the Event of Default first occurred and ending when
such Event of Default is cured or the Obligations are paid in full.
II.10 Lending Installations. Each Lender may book its Advances at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and Obligor, designate a Lending Installation through which
Advances will be made by it and for whose account payments are to be made.
II.11 Non-Receipt of Funds by Agent. Unless Obligor or a Lender, as
the case may be, notifies Agent prior to the date on which it is scheduled to
make payment to Agent of (i) in the case of a Lender, the proceeds of an
Advance, or (ii) in the case of Obligor, a payment of principal, interest or
fees to the Agent for the account of the Lenders, that it does not intend to
make such payment, Agent may assume that such payment has been made. Agent
may, but shall not be obligated to, make the amount of such payment available
to the intended recipient in reliance upon such assumption. If such Lender or
Obligor, as the case may be, has not in fact made such payment to Agent, the
recipient of such payment shall, on demand by Agent, repay to Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by Agent
until the date Agent recovers such amount at a rate per annum equal to (i) in
the case of payment by a Lender, the "Federal Funds Effective Rate" (as
determined by Agent) for such day or (ii) in the case of payment by Obligor,
the interest rate applicable to the relevant Advance.
II.12 Tax and Insurance Account. At any time following a material
adverse change in circumstances or conditions with respect to the Obligor or
any Property during the term of this
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Facility, the Required Lenders may require Obligor to establish the Tax and
Insurance Account.
II.13 Security Deposit Account. At any time following a material
adverse change in circumstances or conditions with respect to the Obligor or
any Property during the term of this Facility, the Required Lenders may require
Obligor to establish the Security Deposit Account.
II.14 Grant of Security Interest. The Obligor hereby grants to the
Lenders a security interest in the Collateral to secure payment of the
Obligations.
II.15 Guaranty by General Partner. As a condition to the Advances to
be made hereunder, General Partner hereby agrees to execute and deliver prior
to the Effective Date the Guaranty substantially in the form of Exhibit F
hereto.
II.16 New Collateral. From time to time during the term of this
Facility following Obligor's written request and compliance with the provisions
of this Section 2.16, Obligor may furnish the Lenders with New Collateral,
whether in addition to or substitution for, any then-current Collateral, in
order to increase the Borrowing Base and permit Obligor to utilize more of the
Aggregate Commitment and shall deliver such agreements or other documentation
necessary or desirable in the reasonable judgment of the Super-Majority Lenders
to evidence and secure the interest of the Lenders in the New Collateral. The
Lenders shall agree to the acceptance of New Collateral only upon the
satisfaction of the following conditions:
(i) If such New Collateral is a Property, (A) such
Property must be a manufacturer's retail outlet shopping center
located in the United States of America, (B) the fee simple
interest in such Property must be wholly owned by the Obligor,
or, if Obligor holds only a leasehold interest in the Property,
the owner of the fee simple interest joins in the Mortgage on
such Property for purposes of subordinating such fee interest to
the lien of such Mortgage, (C) such Property must be
satisfactory in all respects to the Super-Majority Lenders and
their counsel in their sole discretion, (D) after giving effect
to such addition, not more than twenty-five percent (25%) of the
aggregate Appraised Values will be represented by a single
Property, and (E) after giving effect to such addition, no more
than forty percent (40%) of the aggregate Appraised Values will
be represented by any group of Properties located in the same
state;
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(ii) Neither a Monetary Default nor an Event of
Default by Obligor shall exist under this Agreement or the other
Loan Documents;
(iii) Obligor shall (1) satisfy each of the
conditions precedent contained in Section 4.2 hereof (including,
without limitation, the execution and delivery by Obligor to
Lenders of all necessary Security Documents) with respect to
such Property and each state in which such Property is located,
(2) deliver to the Agent copies of the then current financial
statements for Obligor and the Properties prepared in accordance
with the provisions of Section 7.2 hereof and (3) deliver to the
Agent a written certificate executed by the Chief Financial
Officer of the Obligor certifying the Capitalized Value of the
Properties that will be in effect immediately after such
addition;
(iv) Obligor shall pay a collateral addition fee of
(i) $1,000 per Property to each Lender and $3,000 per Property
to Agent, each of which fees shall be payable on the date that
the related Property is added to the Borrowing Base as New
Collateral; and
(v) in addition to paying such collateral addition
fees, Obligor shall reimburse each Lender for such Lender's
reasonable out-of-pocket costs and expenses (including
attorneys' fees and expenses) in evaluating each additional
Property included in New Collateral, provided that the amount of
such reimbursement for each such Lender (other than Agent) shall
not exceed $1,000 per Lender per Property (other than Agent);
provided further, that the foregoing $1,000 limitation on
reimbursement shall not apply to Obligor's obligation to
reimburse Agent for Agent's reasonable out-of-pocket costs and
expenses (including attorneys' fees and expenses) in evaluating
each additional Property included in New Collateral.
2.17 Release of Properties. Obligor may from time to time make
written request to the Agent for the approval of the Required Lenders of the
release of one or more Properties from the lien of the applicable Security
Documents, provided that at the time of such request (i) no Event of Default
then exists hereunder or under any other Loan Document, and (ii) Obligor shall
have submitted to Agent a certificate of the type described in clause (3) of
Section 2.16(iii). The approval of the Required Lenders shall not be
unreasonably withheld and the approval of a
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Lender shall be deemed given if such Lender does not object in writing to the
Agent to any such release within ten (10) Business Days after Obligor's
delivery of a written release request to Agent. The Agent, upon actual or
deemed approval from the Required Lenders, shall execute and deliver on behalf
of the Lenders such documents as are necessary to effect such release when the
following conditions are fulfilled:
(i) after giving effect to the release of such
Property or Properties from the Collateral (A) not more than
twenty-five percent (25%) of the aggregate Appraised Values will
be represented by a single Property and (B) not more than forty
percent (40%) of the aggregate Appraised Values will be
represented by any group of Properties located in the same
state;
(ii) the aggregate Appraised Values of the Collateral
remaining following the proposed release of the Property or
Properties will equal or exceed the amount needed to cause the
outstanding Advances to be less than or equal to the then
current Borrowing Base (after giving effect to such release by
deducting the most recent Appraised Values of the Properties
being released from the aggregate value of the Collateral used
to determine the Borrowing Base and after giving effect to any
repayment of outstanding Advances to meet such Borrowing Base
test);
(iii) Obligor shall pay or reimburse Agent for all
reasonable legal fees and expenses incurred by Agent in
connection with such release; and
(iv) with respect to each approved release, Obligor
shall pay a collateral release fee of Two Thousand Dollars
($2,000) per Property to Agent and Five Hundred Dollars ($500)
per Property to each other Lender or its assignee.
III
CHANGE IN CIRCUMSTANCES
III.1 Yield Protection. If the adoption of or change in any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith,
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(i) subjects any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on or from
payments due from Obligor (excluding state and federal taxation
of the overall net income of any Lender or applicable Lending
Installation), or changes the basis of such taxation of payments
to any Lender in respect of its Advances or other amounts due it
hereunder, or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any applicable
Lending Installation (other than reserves and assessments taken
into account in determining the interest rate applicable to
LIBOR Advances), or
(iii) imposes any other condition, and
the result is to increase the cost of any Lender or any applicable Lending
Installation of making, funding or maintaining loans or reduces any amount
receivable by any Lender or any applicable Lending Installation in connection
with loans, or requires any Lender or any applicable Lending Installation to
make any payment calculated by reference to the amount of loans held or
interest received by it, by an amount deemed material by such Lender, then,
within fifteen (15) days of demand by such Lender, Obligor shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Advances and its Commitment.
III.2 Changes in Capital Adequacy Regulations. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporate entity controlling such
Lender is increased as a result of a Change (as defined below), then, within
fifteen (15) days of demand by such Lender, Obligor shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable
to this Agreement, its Advances or its obligation to make Advances hereunder
(after taking into account such Lender's policies as to capital adequacy).
"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines (as defined below) or (ii) any adoption of or
change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having
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the force of law) after the date of this Agreement which affects the amount of
capital required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International
Convergence of Capital Measurements and Capital Standards", including
transition rules, and any amendments to such regulations adopted prior to the
date of this Agreement.
III.3 Funding Indemnification. If any payment of a LIBOR Advance
occurs on a date which is not the last day of the applicable LIBOR Interest
Period, whether because of acceleration, prepayment or otherwise, or a LIBOR
Advance is not made on the date specified by Obligor for any reason other than
default by the Lenders, Obligor will indemnify each Lender for any loss or cost
incurred by such Lender resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the LIBOR Advance.
III.4 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its LIBOR Advances to reduce any liability of
Obligor to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a LIBOR Advance, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written statement
of such Lender as to the amount due, if any, under Sections 3.1, 3.2 or 3.3
hereof. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on Obligor in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Advance shall be calculated as though each Lender funded its LIBOR Advance
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the LIBOR Rate applicable to such
Advance, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on
demand after receipt by Obligor of the written statement. The obligations of
Obligor under Sections 3.1, 3.2 and 3.3 hereof shall survive payment of the
Obligations and termination of this Agreement.
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IV
CONDITIONS PRECEDENT
IV.1 Conditions Precedent to Closing. The obligation of each Lender
to fund its Percentage of the first Advance is subject to the condition
precedent that on the Effective Date, the following shall have been delivered
to the Agent (with an original of this Agreement and the documents referenced
in Subsection 4.1(f), (h) and (i), for each Lender) in form and substance
reasonably satisfactory to the Required Lenders, the Agent and the Agent's
counsel:
(a) Certificates of Limited Partnership/Incorporation. A
copy of the Certificate of Limited Partnership for Obligor and a copy of the
articles of incorporation of General Partner, each certified by the appropriate
Secretary of State and by the Secretary or Assistant Secretary of such entity
(or a certificate as of the Effective Date from the Obligor that no changes in
such item have occurred from the copies previously delivered to the Agent).
(b) Agreements of Limited Partnership/Bylaws. A copy of
the Agreement of Limited Partnership for Obligor and a copy of the bylaws of
the General Partner, including all amendments thereto, each certified by the
Secretary or an Assistant Secretary of such entity as being in full force and
effect on the Effective Date (or a certificate as of the Effective Date from
the Obligor that no changes in such item have occurred from the copies
previously delivered to the Agent).
(c) Good Standing Certificates. A certified copy of a
certificate from the Secretaries of State of Delaware and Michigan, dated as of
the most recent practicable date, showing the good standing or partnership
qualification (if issued) of Obligor and General Partner, respectively.
(d) Foreign Qualification Certificates. A certified copy
of a certificate from the Secretary of State or equivalent state official of
each of the states in which a Property is located, dated as of the most recent
practicable date, showing the qualification to transact business in such state
as a foreign limited partnership or foreign corporation, as the case may be,
for Obligor and General Partner.
(e) Resolutions. A copy of a resolution or resolutions of
the partners of Obligor and adopted by the Board of Directors of the General
Partner, certified by the Secretary or an
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Assistant Secretary of the General Partner as being in full force and effect on
the Effective Date, authorizing the Advances which may be made hereunder and
the execution, delivery and performance by the General Partner of the Loan
Documents to be executed and delivered by it hereunder on behalf of itself and
Obligor.
(f) Incumbency Certificate. A certificate, signed by the
Secretary or an Assistant Secretary of the General Partner and dated the
Effective Date, as to the incumbency, and containing the specimen signature or
signatures, of the Persons authorized to execute and deliver the Loan Documents
to be executed and delivered by it and Obligor hereunder.
(g) Loan Documents. Originals of the Loan Documents (in
such quantities as the Lenders may reasonably request), duly executed by
authorized officers of the appropriate entity.
(h) Opinion of Obligor's Counsel. Written opinions, each
dated the Effective Date, from Rudnick & Wolfe, counsel to the Obligor, or from
other outside counsel employed by Obligor, in each instance substantially in
the form attached hereto as Exhibit H.
(i) Opinion of Counsel to General Partner. A written
opinion, dated the Effective Date, from Rudnick & Wolfe, counsel to the General
Partner, or from other outside counsel employed by Obligor, substantially in
the form attached hereto as Exhibit I; provided, however, that if appropriate
such opinion may be included within the opinion of Obligor's counsel.
(j) Other Evidence as Lenders May Require. Such other
evidence as Lenders may reasonably request to establish the consummation of the
transactions contemplated hereby, the taking of all necessary actions in any
proceedings in connection herewith and compliance with the conditions set forth
in this Agreement.
IV.2 Conditions Precedent to Addition of New Properties. The
following conditions must be satisfied (or waived by the Super-Majority Lenders
in their sole discretion) with respect to each Property to be added as New
Collateral after the Effective Date. All references herein to the "Addition
Date" with respect to a Property shall mean the date on which all such
conditions have been satisfied or waived and the Appraised Value of such
Property is first included in calculating the Borrowing Base.
(a) Financing Statements. Financing Statements, duly
executed by Obligor, as reasonably requested by Agent covering all personal
property relating to such Property.
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(b) ALTA Loan Policies. An ALTA loan policy of title
insurance for each of the added Properties, each in an amount to be reasonably
determined by Agent, dated as of the applicable Addition Date and issued by
Chicago Title Insurance Company or another title insurance company satisfactory
to the Agent insuring the Lenders' first mortgage lien with respect to the
applicable Property, showing only Permitted Exceptions and containing all
endorsements required by the Agent or Agent's counsel (including, without
limitation, a so-called "comprehensive" endorsement or, if applicable, an
endorsement deleting the "standard exceptions" from such title policies, a
"tie-in" endorsement, where available, a revolving credit endorsement, where
available, a zoning endorsement [unless other evidence of zoning compliance
satisfactory to the Required Lenders has been provided]), together with:
(i) copies of all documents referred to therein; and
(ii) if required, satisfactory reinsurance agreements
relating thereto.
(c) ALTA Surveys. Surveys of such Properties prepared in
accordance with the "Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys (1992)" and which are dated not earlier than thirty (30) days
prior to the Addition Date and certified to the Agent for the benefit of the
Lenders, which surveys shall either certify that no part of the surveyed
Property is within an area identified as having special flood hazards or
identify the boundaries of such area.
(d) Property Agreements. Copies of all management,
leasing, material maintenance and operating agreements (including, without
limitation, all reciprocal easement agreements) for such Properties in full
force and effect as of the Addition Date. For the purposes of this paragraph,
"material" shall mean any contract which involves individually or in the
aggregate amounts greater than $50,000 annually and/or has a term (including
any renewals and extensions) which expires three years after the date hereof.
(e) Manager's Subordination. Copies of all agreements duly
executed by the property managers, if any, of such Properties whereby such
property managers agree to subordinate any present or future liens they may
have against such Properties in favor of Lenders' interest in such Properties.
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(f) Rent Rolls. Copies of current rent rolls for each of
such Properties, dated as of the Addition Date and certified as complete, true
and correct by the Secretary or Assistant Secretary of the General Partner.
(g) Occupancy Leases. Copies of all of the leases demising
portions of such Properties executed prior to the Addition Date, certified as
being complete, true and correct by the Secretary or Assistant Secretary of the
General Partner.
(h) Abstracts of Occupancy Leases. To the extent in
Obligor's possession, abstracts or summaries, in form and content reasonably
satisfactory to the Agent, of all occupancy leases at such Properties executed
prior to the Addition Date (it being understood that Obligor is making no
representations or warranties regarding the content thereof).
(i) Tenant Estoppel Letters. For each such Property,
estoppel letters, dated within thirty (30) days of the Addition Date, in form
and content reasonably satisfactory to the Required Lenders, executed by
tenants of such Property who, collectively, occupy at least sixty-five percent
(65%) of the aggregate gross leasable area of such Property.
(j) Subordination, Non-Disturbance and Attornment
Agreements. For each such Property, Subordination, Non-Disturbance and
Attornment Agreements executed by the Obligor and by tenants of such Property
who collectively occupy at least sixty-five percent (65%) of the aggregate gross
leasable area of such Property.
(k) Insurance. Original or certified copies of insurance
policies or binders therefor, with accompanying receipts showing prepayment of
all premiums for one full year after the Addition Date, evidencing that Obligor
carries insurance on such Properties which satisfies the requirements contained
in the document entitled "Lender's Insurance Requirements," dated November 3,
1993 (File # P-109), including, without limitation:
(i) Property and casualty insurance (including
coverage for flood and other water damage for any Properties
located within a 100-year flood plain) in the amount of the
replacement cost of the improvements at the Properties;
(ii) Loss of rental income insurance in the amount
not less than one year's Gross Revenues from all of the
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Properties (after giving effect to the addition of such new
Properties); and
(iii) Comprehensive general liability insurance in
the amount of $20,000,000 per occurrence.
All insurance must be carried by companies with a Best Insurance
Reports (1992) Policyholder's and Financial Size Rating of "A-VII" or better.
All insurance required under this Agreement shall have endorsed thereon the
standard Deed of Trust or Mortgage clause in favor of Agent as agent for the
Lenders and shall include the Lenders as loss payees. All insurance required
under this Agreement shall contain provisions stating that (i) the insurance
policy is non-cancelable without at least thirty (30) days' notice to the
Agent, and (ii) no claims shall be paid without at least ten (10) days' notice
to the Agent.
(l) Searches. UCC financing statement, judgment, and tax
lien searches with respect to the Obligor with respect to such Properties.
(m) Reports. The following reports:
(i) A Phase I environmental survey or audit for each
of such Properties dated within one hundred eighty (180) days of
the date such Property is first included in Collateral prepared
by a qualified environmental consultant satisfactory to the
Super-Majority Lenders.
(ii) An engineering building inspection report for
each of the Properties, dated within ninety (90) days of the
date such Property is first included in Collateral prepared by a
qualified, licensed engineer/architect satisfactory to the
Super-Majority Lenders.
In each case any such report shall be deemed approved by a Lender if such
Lender fails to object to such report in writing to the Agent within ten (10)
Business Days after the date such Lender received such report.
(n) Financial and Operating Statements. Actual operating
statement for each such Property for the most recent one (1) year period ending
on the last day of the most recent fiscal quarter of Obligor for which results
are available prior to the applicable Addition Date.
(o) Budget. A supplement to the Budget for the next fiscal
year with respect to such Property.
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(p) Appraisals. An Appraisal for each of such Properties
dated not earlier than one hundred twenty (120) days prior to the Addition
Date. Agent, not Obligor, shall order each of such Appraisals.
(q) Personal Property Inventory. A detailed personal
property inventory for each of such Properties.
IV.3 Conditions Updating Initial Properties. The obligation of each
Lender to fund its Percentage of the first Advance is subject to the condition
precedent that, on or before the Effective Date, the following items regarding
the Initial Properties shall have been delivered to each such Lender in form
and substance reasonably satisfactory to the Super-Majority Lenders, the Agent
and the Agent's counsel. Each of the Lenders acknowledges that each of the
following conditions has been satisfied or waived, to its satisfaction, with
respect to the Initial Properties as of the date of this Agreement.
(a) Original Items. To the extent requested by any
Lenders, copies of all items described in Section 4.2 in the form submitted by
the Obligor with respect to any of the Initial Properties when such Initial
Property was included in the collateral pool for the Horizon Agreement or McG
Agreement, as the case may be.
(b) Title Policy Endorsements. A "date down" endorsement
to each of the ALTA loan policies of title insurance for each of the Properties
extending the effective date of each such policy to the date of the recording
of the amendment to the Mortgage on such Property executed and delivered to
evidence this Agreement, showing only Permitted Exceptions, together with
copies of all documents referred to therein not previously delivered to the
Agent and, where such Property is not covered by a "tie-in" endorsement and the
Appraised Value of such Property has increased, increasing the amount of the
underlying policy to reflect such increase so that the amount of such title
insurance is not less than sixty-five percent (65%) of such Appraised Value.
(c) Survey Matters. Updated surveys or affidavits of
Obligor, certifying that no changes have occurred in the improvements on the
Properties since the survey delivered when such Property was first added as
Collateral under the Horizon Agreement or the McG Agreement, as the case may
be, in each case where required by the title insurance company.
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(d) Rent Rolls. Updated rent rolls for each of such
Properties as of May 31, 1996, certified as complete, true and correct by the
Secretary or Assistant Secretary of the General Partner.
(e) Occupancy Leases. Copies of all leases demising
portions of such Properties shown on the updated rent rolls and not previously
delivered to the Agent and to the Lenders, if requested, certified as being
complete, true and correct by the Secretary or Assistant Secretary of the
General Partner.
(f) Tenant Estoppel Letters. For each Property, estoppel
letters dated within sixty (60) days of the Effective Date, in form and content
reasonably satisfactory to the Required Lenders, executed by sufficient tenants
of such Property, so that such estoppel letters, when aggregated with all
estoppel letters previously provided to the Agent for tenants who remain in
occupancy at such Property, cover the occupants of at least sixty-five percent
(65%) of the aggregate gross leasable area of such Property.
(g) Subordination, Non-Disturbance and Attornment
Agreements. For each such Property, subordination, non-disturbance and
attornment agreements dated within sixty (60) days of the Effective Date, in
form and content reasonably satisfactory to the Required Lenders, executed by
sufficient tenants of such Property, so that such agreements when aggregated
with all such agreements previously provided to the Agent for tenants who
remain in occupancy at such Property, cover the occupants of at least
sixty-five percent (65%) of the aggregate gross leasable area of such Property.
(h) Reports. To the extent required by the Agent, updates
of any of the environmental surveys or audits and engineering building
inspection reports on such Properties.
(i) Operating Statements. Actual operating statements for
each of such Properties for the one year period ending March 31, 1996 certified
by an authorized representative of Obligor as complete and correct.
(j) Appraisal Updates. An updated Appraisal for each of
such Properties dated not earlier than one hundred twenty (120) days prior to
the Effective Date.
IV.4 Conditions Precedent to All Advances. Advances shall be made
from time to time as requested by Obligor, and the obligation of each Lender to
make any Advance is subject to the following terms and conditions:
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(a) prior to each such Advance, (i) neither a Monetary
Default nor an Event of Default by Obligor shall exist under this Agreement or
the other Loan Documents, and (ii) all reports and statements then due under
Section 7.2 hereof (including covenant compliance statements) on or prior to
such date shall have been delivered;
(b) if and only if expressly requested by the Required
Lenders with respect to any Advance, for all jurisdictions ("Required Update
Jurisdictions") where the form of revolving credit endorsement attached to the
title policy or policies for Properties in such jurisdictions does not
affirmatively insure that all Advances hereunder will have the same priority
under the lien of the Security Documents as the initial Advance made hereunder
(that is, such endorsement provides in effect that such Advance shall be
subordinate to any mechanics liens or similar claims arising prior to the date
of such Advance), (i) not later than ten (10) days after the end of each
calendar quarter during the Facility term, Obligor shall furnish Agent with
title searches for all Properties located in such jurisdictions showing that no
unpermitted title exceptions (i.e., excluding Permitted Exceptions and
Permitted Liens) have arisen (unless Obligor is contesting such exceptions as
provided for in the Mortgages), and (ii) for any Advance which individually or
when aggregated with all other then outstanding Advances made subsequent to the
then most recent Current Date(s) (as defined below) equals or exceeds
$30,000,000, the Agent shall have received and approved a fully paid-for
endorsement (individually, a "Date Down Endorsement" ) to the title insurance
policy or policies for such Required Update Jurisdictions covering such Advance
and showing that no unpermitted title exceptions have arisen (unless Obligor is
contesting such exceptions as provided for in the Mortgages). As used herein,
the term "Current Date" shall mean (i) with respect to the initial Advance
hereunder, the respective dates of the title policies for those Properties
located in the Required Update Jurisdictions, and (ii) with respect to all
other Advances, the date of the then most recent Date Down Endorsements for
such Required Update Jurisdictions;
(c) the Agent shall have received and approved the Draw
Request Documents and shall have provided a copy of the Draw Request Documents
to the Lenders on or before the first Business Day after the Draw Request
Approval Date;
(d) if applicable and if the Agent so requests, the Agent
shall have received and approved copies of all permits and governmental
approvals necessary for any renovation or tenant
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improvement work at the Properties to be funded from such Advance;
(e) if applicable and if the Agent so requests, the Agent
shall have received and approved copies of all leases, lease amendments and
other material contracts or agreements relating to the use or uses of the
Advance;
(f) If there has been a casualty or condemnation at any
Property and Agent has elected or was required to reimburse Obligor out of the
insurance proceeds or condemnation award, as applicable, pursuant to the terms
and conditions of the Mortgages, the undisbursed balance of such insurance
proceeds or condemnation awards, as applicable, together with the then-current
available but undisbursed portion of the Aggregate Commitment under the
Facility shall be sufficient to pay for the cost of completion of the work free
and clear of liens and if such proceeds are insufficient, Obligor shall have
deposited the amount of such deficiency with Agent prior to the disbursement of
the Advance.
Agent shall notify Obligor in writing within five (5) Business Days
after receipt of the Draw Request Documents of its approval or disapproval of
any Draw Request, and if Agent disapproves of any Draw Request, such notice to
Obligor shall set forth Agent's reasons for such disapproval. Agent shall
provide a copy of the Draw Request Documents to the Lenders promptly after
receipt and no later than one Business Day after the Draw Request Approval
Date.
V
REPRESENTATIONS AND WARRANTIES
Obligor hereby represents and warrants that:
V.1 Existence. Obligor is a limited partnership duly organized and
existing under the laws of the State of Delaware, with its principal place of
business in Michigan, is duly qualified as a foreign limited partnership and
properly licensed (if required) and in good standing in each jurisdiction where
the failure to qualify or be licensed (if required) would have a material
adverse effect on the business or properties of Obligor.
V.2 Corporate Powers. The execution, delivery and performance of
the Loan Documents required to be delivered by Obligor hereunder are within the
corporate powers of the General Partner, have been duly authorized by all
requisite corporate
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action, and are not in conflict with the terms of any organizational
instruments of Obligor or of General Partner, or any instrument or agreement to
which Obligor or General Partner is a party or by which Obligor or General
Partner or any of their assets is bound or affected.
V.3 Power of Officers. The officers of General Partner executing
the Loan Documents required to be delivered by the Obligor hereunder have been
duly elected or appointed and were fully authorized to execute the same at the
time each such agreement, certificate or instrument was executed.
V.4 Government and Other Approvals. No approval, consent, exemption
or other action by, or notice to or filing with, any governmental authority is
necessary (i) in connection with the execution or delivery of the Loan
Documents, or (ii) except as may be required from time to time following the
Effective Date, for the ongoing ownership and operation of the Obligor's
business or the performance by Obligor of its Obligations under the Loan
Documents.
V.5 Zoning and Use. There are no pending, or to Obligor's knowledge
threatened, actions, suits or proceedings to revoke, attack, invalidate,
rescind or modify the zoning of any of the Properties or any part thereof, or
any building or other permits heretofore issued with respect thereto, or
asserting that such zoning or permits do not permit the continued use of the
Properties as contemplated by this Agreement. The use of the Properties does
not violate in any respect (i) any laws of any kind whatsoever (including
zoning laws), or (ii) any building permits or other approvals, restrictions of
record, or any agreement affecting the Properties or any part thereof. Neither
the zoning of, nor any other right to use, the Properties is to any extent
dependent upon or related to any real property other than the Properties except
as disclosed pursuant to the Permitted Exceptions.
V.6 Compliance With Laws. There is no judgment, decree or order or
any law, rule or regulation of any court or governmental authority binding on
the Obligor or on the General Partner which would be contravened by the
execution, delivery or performance of the Loan Documents required hereunder.
V.7 Enforceability of Agreement. This Agreement is the legal, valid
and binding agreement of the Obligor, and the Notes when executed and delivered
will be the legal, valid and binding obligations of the Obligor, enforceable
against the Obligor in accordance with their respective terms, and the Loan
Documents required hereunder, when executed and delivered, will be
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similarly legal, valid, binding and enforceable except that (i) such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws affecting the rights of creditors generally or by general
principles of equity, and (ii) certain provisions of the Loan Documents may be
rendered unenforceable or limited by applicable laws and judicial decisions,
but such laws and judicial decisions do not render the Loan Documents invalid
as a whole, and there exist in the Loan Documents or pursuant to applicable law
legally adequate remedies for the realization of the principal benefits and
security intended to be provided by the Loan Documents.
V.8 Validity and Perfection of Security Documents. Obligor, after
due inquiry, knows of no facts or circumstances which would prevent the
Mortgages and the Financing Statements, when duly recorded or filed in the
appropriate public records, from creating in Lenders valid and perfected first
liens (subject to any Permitted Liens) upon the property purportedly subject
thereto without the requirement of any further action to perfect such liens.
V.9 Title to Property. To the best of Obligor's knowledge after due
inquiry, the Obligor has good and marketable fee simple title to the Properties
(or a leasehold estate in certain Properties which satisfy the conditions for
acceptance of such Properties into the Collateral as set forth herein) free and
clear of Liens except for the Permitted Liens. The execution, delivery or
performance of the Loan Documents required to be delivered by the Obligor
hereunder will not result in the creation of any Lien on the Properties other
than in favor of the Lenders. No consent to the transactions contemplated
hereunder is required from any ground lessor or mortgagee or beneficiary under
a deed of trust or any other party except as has been delivered to the Lenders.
V.10 Litigation. There are no suits, arbitrations, claims, disputes
or other proceedings (including, without limitation, any civil, criminal,
administrative or environmental proceedings), pending or, to the best of
Obligor's knowledge, threatened against or affecting the Obligor or any of the
Properties, the adverse determination of which individually or in the aggregate
would cause a Material Adverse Financial Change or materially impair the
Obligor's ability to perform its obligations hereunder or under any instrument
or agreement required hereunder, except as disclosed on Schedule 5.10 hereto,
or otherwise disclosed to Lenders in accordance with the terms hereof.
V.11 Events of Default. No Default or Event of Default has occurred
and is continuing or would result from the incurring of
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obligations by the Obligor under any of the Loan Documents or under any other
document to which Obligor is a party.
V.12 Investment Company Act of 1940. The Obligor is not, and will by
such acts as may be necessary continue not to be, an investment company within
the meaning of the Investment Company Act of 1940.
V.13 Public Utility Holding Company Act. The Obligor is not a
"holding company" or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," or of a "subsidiary company" of a "holding
company," within the definitions of the Public Utility Holding Company Act of
1935, as amended.
V.14 Regulation U. The proceeds of the Advances will not be used,
directly or indirectly, to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
V.15 No Material Adverse Financial Change. There has been no change
in the condition of the Obligor since the date of the Obligor's financial
and/or operating statements most recently submitted to the Lenders that could
reasonably be expected to constitute a Material Adverse Financial Change.
V.16 Financial Information. All financial statements furnished to
the Lenders by the Obligor and all other financial information and data
furnished by the Obligor to the Lenders are complete and correct as of the date
thereof, and such financial statements have been prepared in accordance with
GAAP and fairly present the consolidated financial condition and results of
operations of the Obligor as of such date. The Obligor has no contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate, except as disclosed in such statements,
information and data.
V.17 Factual Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Obligor to the Lenders for
purposes of or in connection with this Agreement and the other Loan Documents
and the transactions contemplated therein (except for the lease abstracts
relating to certain leases at the Properties, copies of which were furnished by
Obligor to the Lenders solely for the Lenders' convenience and with respect to
which Obligor makes no representations) is, and all other such factual
information hereafter furnished by or on behalf of the Obligor to the Lenders
will be, true and accurate (taken as a whole) on the date as of which such
information is
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dated or certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time.
V.18 ERISA. The Unfunded Liabilities of all Single Employer Plans do
not exceed in the aggregate One Million Dollars ($1,000,000). Neither the
Obligor nor any other member of the Controlled Group has incurred, or is
reasonably expected to incur, any withdrawal liability to Multiemployer Plans
in excess of One Million Dollars ($1,000,000) in the aggregate. Each Plan
complies in all material respects with all applicable requirements of law and
regulations, no Reportable Event has occurred with respect to any Plan, neither
the Obligor nor any other member of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to terminate any
Plan.
V.19 Taxes. All required tax returns have been filed by the Obligor
with the appropriate authorities except to the extent that extensions of time
to file have been requested, granted and have not expired or except to the
extent such taxes are being contested in good faith and for which adequate
reserves, in accordance with GAAP, are being maintained.
V.20 Environmental Compliance. Except as set forth on Schedule 5.20
hereto, the Obligor has not, nor, to the actual knowledge of the Obligor, has
any other Person, ever caused or permitted any Hazardous Material to be
generated, used, transported, placed, held, located or disposed of on, under,
at or about any of the Properties except in material compliance with all
applicable federal, state, foreign and local laws, rules, regulations and
orders, nor has any of the Properties ever been used (either by the Obligor or,
to the best knowledge of the Obligor, by any other Person) as a dump site or
storage (whether permanent or temporary) site for any Hazardous Material and no
governmental or regulatory authorities have filed any actions or issued any
orders against the Obligor with respect to Hazardous Material. The Obligor has
not installed any friable asbestos or any substance containing asbestos deemed
hazardous by federal or any state governmental or regulatory authorities in any
of the Properties. The representations contained in this Section 5.20 shall
survive in perpetuity (or for such period as may be permitted by law),
notwithstanding the payment in full of the Notes and the performance of all
other obligations under the Loan Documents.
V.21 Insurance. Obligor has obtained the insurance for each Property
of the type which Obligor is required to furnish to Lenders under Section
4.2(k) hereof for additional Properties.
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V.22 Leases. Obligor and its agents have not entered into any lease
or leases or other arrangements for occupancy of space within the Properties
other than the leases described on the rent rolls delivered to the Lenders when
such Properties were added to Collateral, as updated quarterly pursuant to
Section 7.2(a)(i)(A). Such leases are in full force and effect. Neither
Obligor nor, except as disclosed in writing by Obligor to and reasonably
approved by Agent, any Major Tenant thereunder, has defaulted in the
performance of their respective obligations under such leases; provided,
however, that the approval of the Required Lenders shall be necessary (as a
condition precedent to funding any Advance) where at the time of Obligor's
submission of the Draw Request Documents for such Advance such documents
disclose the existence of lease defaults by Major Tenants then occupying
individually or in the aggregate more than (x) 20% of the gross leasable area
of any Property, or (y) 5% of the gross leasable area of all of the Properties.
V.23 No Brokers. Obligor has dealt with no brokers in connection
with this Facility, and no brokerage fees or commissions are payable by or to
any person in connection with this Agreement or the Advances. Lenders shall
not be responsible for the payment of any fees or commissions to any broker and
Obligor shall indemnify, defend and hold Lenders harmless from and against any
claims, liabilities, obligations, damages, costs and expenses (including
reasonable attorneys' fees and disbursements) made against or incurred by
Lenders as a result of claims made or actions instituted by any broker or
person claiming by, through or under Obligor in connection with the Facility.
V.24 No Violation of Usury Laws. No aspect of any of the
transactions contemplated herein violate or will violate any usury laws or laws
regarding the validity of agreements to pay interest in effect on the date
hereof.
V.25 Not a Foreign Person. Obligor is not a "foreign person" within
the meaning of Section 1445 or 7701 of the Internal Revenue Code.
V.26 No Trade Name. Obligor has not and Obligor does not do business
under any name other than its actual name set forth herein and the various
names of the Properties. The principal place of business of Obligor is as
stated in the recitals hereto.
V.27 Subsidiaries. Except as listed on Schedule 5.27 hereto, there
are no subsidiaries of the Obligor which would qualify as an Affiliate of
Obligor.
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V.28 Land Trusts. Obligor owns one hundred percent (100%) of the
beneficial interest in, and power of direction over, each of the land trusts,
if any, which own fee title to any of the Properties.
Obligor agrees that all of its representations and warranties set forth
in Article V of this Agreement and elsewhere in this Agreement will be true on
the Effective Date, and will be true (except with respect to the
representations contained in Section 5.26 and Section 5.27 hereof and the
matters which have been disclosed in writing to and approved by the Agent or
the Required Lenders, as applicable) upon each request for disbursement of an
Advance. Each request for disbursement hereunder shall constitute a
reaffirmation of such representations and warranties as deemed modified in
accordance with the disclosures made and approved, as aforesaid, as of the date
of such request and disbursement.
VI
ADDITIONAL REPRESENTATIONS AND WARRANTIES
The General Partner hereby represents and warrants that:
VI.1 Existence. The General Partner is a corporation duly organized
and validly existing under the laws of the State of Michigan, with its
principal place of business in the State of Michigan, is duly qualified as a
foreign corporation and properly licensed (if required) and in good standing in
each jurisdiction where the failure to qualify or be licensed (if required)
would constitute a Material Adverse Financial Change of the General Partner or
have a material adverse effect on the business or properties of the General
Partner.
VI.2 Corporate Powers. The execution, delivery and performance of
the Loan Documents required to be delivered by the General Partner hereunder
are within the corporate powers of the General Partner, have been duly
authorized by all requisite corporate action, and are not in conflict with the
terms of any organizational instruments of the General Partner, or any
instrument or agreement to which the General Partner is a party or by which
General Partner or any of its assets is bound or affected.
VI.3 Power of Officers. The officers of the General Partner
executing the Loan Documents required to be delivered by the General Partner
hereunder have been duly elected or appointed and
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were fully authorized to execute the same at the time each such agreement,
certificate or instrument was executed.
VI.4 Government and Other Approvals. No approval, consent, exemption
or other action by, or notice to or filing with, any governmental authority is
necessary in connection with (i) the execution or delivery of the Loan
Documents, or (ii) except as may be required from time to time following the
Effective Date for the ongoing ownership and operation of the Obligor's
business, the performance by Obligor of its Obligations under the Loan
Documents.
VI.5 Compliance With Laws. There is no judgment, decree or order or
any law, rule or regulation of any court or governmental authority binding on
the General Partner which would be contravened by the execution, delivery or
performance of the Loan Documents required hereunder.
VI.6 Enforceability of Agreement. This Agreement is the legal, valid
and binding agreement of the General Partner, enforceable against the General
Partner in accordance with its respective terms, and the Loan Documents
required hereunder, when executed and delivered, will be similarly legal,
valid, binding and enforceable except that (i) such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally or by general principles of equity,
and (ii) certain provisions of the Loan Documents may be rendered unenforceable
or limited by applicable laws and judicial decisions, but such laws and
judicial decisions do not render the Loan Documents invalid as a whole, and
there exist in the Loan Documents or pursuant to applicable law legally
adequate remedies for the realization of the principal benefits and security
intended to be provided by the Loan Documents.
VI.7 Liens; Consents. The execution, delivery or performance of the
Loan Documents required to be delivered by the General Partner hereunder will
not result in the creation of any Lien on the Properties other than in favor of
the Lenders. No consent to the transactions hereunder is required from any
ground lessor or mortgagee or beneficiary under a deed of trust or any other
party except as has been delivered to the Lenders.
VI.8 Litigation. There are no suits, arbitrations, claims, disputes
or other proceedings (including, without limitation, any civil, criminal,
administrative or environmental proceedings), pending or, to the best of
General Partner's knowledge, threatened against or affecting the General
Partner or any of the Properties, the adverse determination of which
individually or in
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the aggregate would cause a Material Adverse Financial Change or materially
impair the General Partner's ability to perform its obligations hereunder or
under any instrument or agreement required hereunder, except as disclosed on
Schedule 6.8 hereto, or otherwise disclosed to Lenders in accordance with the
terms hereof.
VI.9 Events of Default. No Default or Event of Default has occurred
and is continuing or would result from the incurring of obligations by the
General Partner under any of the Loan Documents or under any other document to
which General Partner is a party.
VI.10 Investment Company Act of 1940. The General Partner is not, and
will by such acts as may be necessary continue not to be, an investment company
within the meaning of the Investment Company Act of 1940.
VI.11 Public Utility Holding Company Act. The General Partner is not
a "holding company" or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," or of a "subsidiary company" of a "holding
company," within the definitions of the Public Utility Holding Company Act of
1935, as amended.
VI.12 No Material Adverse Financial Change. There has been no change
in the condition of the General Partner since the last date on which the
General Partner's financial and/or operating statements were submitted to the
Lenders that could reasonably be expected to constitute a Material Adverse
Financial Change.
VI.13 Financial Information. All financial statements furnished to
the Lenders by the General Partner and all other financial information and data
furnished by the General Partner to the Lenders are complete and correct as of
the date thereof, and such financial statements have been prepared in
accordance with GAAP and fairly present the consolidated financial condition
and results of operations of the General Partner as of such date. The General
Partner has no contingent obligations, liabilities for taxes or other
outstanding financial obligations which are material in the aggregate, except
as disclosed in such statements, information and data.
VI.14 Factual Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the General Partner to the
Lenders for purposes of or in connection with this Agreement and the other Loan
Documents and the transactions contemplated therein is, and all other such
factual
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information hereafter furnished by or on behalf of the General Partner to the
Lenders will be, true and accurate (taken as a whole) on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time.
VI.15 ERISA. The Unfunded Liabilities of all Single Employer Plans do
not exceed in the aggregate One Million Dollars ($1,000,000). Neither the
General Partner nor any other member of the Controlled Group has incurred, or
is reasonably expected to incur, any withdrawal liability to Multiemployer
Plans in excess of One Million Dollars ($1,000,000) in the aggregate. Each
Plan complies in all material respects with all applicable requirements of law
and regulations, no Reportable Event has occurred with respect to any Plan,
neither the General Partner nor any other member of the Controlled Group has
withdrawn from any Plan or initiated steps to do so, and no steps have been
taken to terminate any Plan.
VI.16 Taxes. All required tax returns have been filed by the General
Partner with the appropriate authorities except to the extent that extensions
of time to file have been requested, granted and have not expired or except to
the extent such taxes are being contested in good faith and for which adequate
reserves, in accordance with GAAP, are being maintained.
VI.17 No Brokers. General Partner has dealt with no brokers in
connection with this Facility, and no brokerage fees or commissions are payable
by or to any person in connection with this Agreement or the Advances. Lender
shall not be responsible for the payment of any fees or commissions to any
broker and General Partner shall indemnify, defend and hold Lender harmless
from and against any claims, liabilities, obligations, damages, costs and
expenses (including reasonable attorneys' fees and disbursements) made against
or incurred by Lender as a result of claims made or actions instituted by any
broker or person claiming by, through or under the General Partner in
connection with the Facility.
VI.18 No Violation of Usury Laws. No aspect of any of the
transactions contemplated herein violate or will violate any usury laws or laws
regarding the validity of agreements to pay interest in effect on the date
hereof.
VI.19 Subsidiaries. Except as listed on Schedule 6.19 hereto, there
are no subsidiaries of the General Partner which would qualify as an Affiliate
of General Partner.
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General Partner agrees that all of its representations and warranties
set forth in Article VI of this Agreement and elsewhere in this Agreement will
be true on the Effective Date, and will be true (except with respect to the
representation contained in Section 6.19 hereof and the matters which have been
disclosed in writing to and approved by the Agent) upon each request for
disbursement of an Advance. Each request for disbursement hereunder shall
constitute a reaffirmation of such representations and warranties as deemed
modified in accordance with the disclosures made and approved, as aforesaid, as
of the date of such request and disbursement.
VII
AFFIRMATIVE COVENANTS
The Obligor (and the General Partner, if expressly included in Sections
contained in this Article) covenant and agree that so long as the Aggregate
Commitment shall remain available and until the full and final payment of all
Obligations they will:
VII.1 Notices. Promptly give written notice to each Lender of:
(a) all litigation or arbitration proceedings affecting the
Obligor, the General Partner or any Collateral where the amount claimed is
$1,000,000 or more;
(b) any Default or Event of Default, specifying the nature
and the period of existence thereof and what action has been taken or been
proposed to be taken with respect thereto;
(c) all claims filed against any property owned by the
Obligor or the General Partner which, if adversely determined, could have a
material adverse effect on any Property or the ability of the Obligor or the
General Partner to meet any of their obligations under the Loan Documents;
(d) the occurrence of any other event which could
reasonably be expected to cause a Material Adverse Financial Change;
(e) any change in the equity ownership of any Collateral;
(f) any "reportable event" (as such term is defined in
Section 4043(b) of ERISA) or any "prohibited transaction" (as such term is
defined in Section 4975 of the Code) in connection
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with any Plan or any trust created thereunder, which may, singly or in the
aggregate materially impair the ability of the Obligor or the General Partner
to repay any of its obligations under the Loan Documents, describing the nature
of each such event and the action, if any, the Obligor or the General Partner,
as the case may be, proposes to take with respect thereto;
(g) any material default under any ground lease, operating
agreement, deed of trust or mortgage relating to any Property, or any breach or
default under any material agreement relating to any Property; and
(h) any notice from any federal, state, local or foreign
authority regarding any Hazardous Material, asbestos, or other environmental
condition, proceeding, order, claim or violation affecting any of the
Properties.
VII.2 Financial Statements, Reports, Etc. Deliver to Agent, for the
Obligor, the General Partner, and/or the Properties, as the case may be, unless
otherwise specified:
(a) Reports.
(i) Not later than 60 days after the end of each
fiscal quarter:
(A) a copy of the rent roll for the
Properties as of the end of such quarter, certified as
being true, correct and complete by an authorized
representative of Obligor;
(B) quarterly operating statements
(including a balance sheet, statement of profit and
loss and statement of cash flows) for each of Obligor
and General Partner for such fiscal quarter and for the
calendar year to date, prepared on an accrual basis and
certified as complete and correct by an authorized
representative of Obligor and General Partner;
(C) A statement from an authorized
representative of Obligor and General Partner stating
that after reviewing the books, records and affairs of
Obligor and General Partner as of the end of such
fiscal quarter, Obligor and General Partner are in
compliance with all of the covenants contained herein,
and that there is no Default or Event of Default, to
the best of such officer's knowledge, under any of the
Loan Documents,
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together with such documentation as any Lender may
reasonably require to verify and support the
calculation of the Total Funded Debt and Implied
Capitalization Value;
(D) A consolidating operating statement
certified by an authorized representative of Obligor
showing a detailed breakdown of Gross Revenues and
Operating Expenses for the preceding quarter for each
of the Obligor's properties (including capital
expenditures and not limited to the Properties
constituting Collateral) and reflecting corporate
overhead not allocable to any specific properties; and
(E) A statement certified by an authorized
representative of Obligor listing any tenants at the
Properties known by Obligor to be either 60 days or
more delinquent in rental payments or in bankruptcy as
of the end of such quarter;
(ii) Promptly upon completion, but in any event not
later than 60 days after the end of each fiscal year, a copy of
the budget for operation and management of the Properties for
the succeeding fiscal year, which budget shall be satisfactory
to Agent, in its reasonable discretion;
(iii) Not later than 90 days after the end of each
fiscal year, a consolidated balance sheet, a consolidated
statement of profit and loss and consolidated statement of cash
flows, as of the end of such fiscal year, for each of Obligor,
the General Partner and the Consolidated Operating Partnership,
each audited and certified by independent accountants reasonably
satisfactory to the Agent as being complete and correct and
fairly presenting the financial condition and results of
operations as of the end of such year and for that fiscal year
for such entities, together with an annual version of the
quarterly consolidating statement as described in clause (i)(D)
above;
(iv) Promptly after filing, copies of all financial
information filed with the Securities Exchange Commission
regarding General Partner or Obligor; and
(v) Promptly after receipt of annual sales reports
from tenants at the Properties, a report showing the
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aggregate sales results for such Property (along with the
aggregate sales results for each type of business at such
Property, but without any individual tenant-by-tenant breakdown,
except that a tenant-by-tenant breakdown shall be required if
the Occupancy Percentage of such Property as of the date of such
report is less than 75%) in comparison to the aggregate sales
results for the prior year for such Property then included in
the Borrowing Base.
(b) Real Estate Taxes. Not later than sixty (60) days
after the due date of each installment of real estate taxes with respect to any
Property, evidence satisfactory to the Agent of the payment in full of such
installment (including copies of the applicable tax bills and the cancelled
checks evidencing payment therefor); provided, however, that Obligor need not
provide Agent with such evidence of payment of the real estate taxes for any
Property for which Obligor is contesting such taxes in compliance with the
provisions of the applicable Mortgage for such Property;
(c) Revised Project Budgets. Copies of any revisions to
any Budget submitted pursuant to Section 7.2(a)(ii) above, which revisions
shall be subject to the reasonable approval of Agent; and
(d) Other Documents. Such other statements or reports as
any Lender may reasonably request in form and detail satisfactory to such
Lender.
(e) Transmittal to Lenders. The Agent shall forward copies
of all items delivered to it under this Section 7.2 to the Lenders promptly
after receipt thereof.
VII.3 Existence and Conduct of Operations. Except as permitted
herein, maintain and preserve its existence and all rights, privileges and
franchises now enjoyed and necessary for the operation of its business,
including remaining in good standing in each jurisdiction in which business is
currently operated. The Obligor and the General Partner shall carry on and
conduct their respective businesses in substantially the same manner and in
substantially the same fields of enterprise as presently conducted.
VII.4 Control of Sale or Encumbrance. Obligor shall not restrict its
rights to sell or encumber any properties (including any Properties) owned by
Obligor, General Partner or any Controlled Venture, other than (i) any due on
sale provisions or restrictions on further encumbrances or junior financing
imposed by any holder of a first mortgage on any such property, or
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(ii) any rights of first offer or rights of first refusal in favor of any
constituent entity in any Controlled Venture, or (iii) any limited partner's
approval rights over certain actions to the extent created or required by any
applicable partnership or similar organizational statute or other law, or (iv)
as shall be required by applicable law (including, without limitation, any
applicable law in order for General Partner to remain in compliance with the
provisions of Section 7.13 hereof).
VII.5 Appraisals of Properties. Reimburse the Agent for all costs and
expenses incurred in connection with Agent's obtaining Appraisals for such of
the Properties as requested from time to time by the Required Lenders, in their
sole discretion, provided that (i) so long as such Property has an Occupancy
Percentage of 85% or more, not more than one updated appraisal per Property can
be required in any twelve month period and (ii) in no event shall more than two
appraisals be required in any twelve month period.
VII.6 Maintenance of Properties. Maintain, preserve, protect and keep
the Properties in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements, normal wear and tear
excepted.
VII.7 Insurance. Provide a certificate of insurance from all
insurance carriers who maintain policies with respect to the Properties and
copies of the cancelled checks evidencing payment of the premiums for such
policies within thirty (30) days after the end of each fiscal year (if not
previously provided), evidencing that the insurance of the type required to be
furnished to Lenders pursuant to Section 4.2(k) hereof is in full force and
effect. Obligor shall timely pay, or cause to be paid, all premiums on all
insurance policies required under this Agreement from time to time. Obligor
shall promptly notify its insurance carrier or agent therefor (with a copy of
such notification being provided simultaneously to Lenders) if there is any
occurrence which, under the terms of any insurance policy then in effect with
respect to the Properties, requires such notification.
VII.8 Payment of Obligations. Pay all taxes, assessments,
governmental charges and other obligations when due, except such as may be
contested in good faith or as to which a bona fide dispute may exist, and for
which adequate reserves have been provided in accordance with sound accounting
principles used by Obligor on the date hereof.
VII.9 Compliance with Laws. Comply in all material respects with all
applicable laws, rules, regulations, orders and
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directions of any governmental authority having jurisdiction over it or its
business or relating to the Properties and diligently exercise its rights as
landlord under all leases of space at any of the Obligor's Properties to
enforce the obligations of the tenants thereunder to comply in all material
respects with all applicable laws, rules, regulations, orders and directions of
any governmental authority having jurisdiction over the applicable property of
the Obligor.
VII.10 Compliance with Budget. Do all things commercially reasonable
to comply with the then applicable Budget, including limiting expenditures and
distributions as set forth herein and therein.
VII.11 Adequate Books. Maintain adequate books, accounts and records
in order to provide financial statements in accordance with GAAP and, if
requested by Lenders, permit employees or representatives of Lenders at any
reasonable time and upon reasonable notice to inspect and audit the properties
of Obligor and of the Consolidated Operating Partnership, and to examine or
audit the inventory, books, accounts and records of each of them and make
copies and memoranda thereof.
VII.12 ERISA. Comply in all material respects with all requirements of
ERISA applicable to it with respect to each Plan.
VII.13 Maintenance of Status. General Partner shall at all times (i)
remain a corporation listed and in good standing on the New York Stock
Exchange, and (ii) maintain its status as a real estate investment trust in
compliance with all applicable provisions of the Code.
VIII
NEGATIVE COVENANTS
The Obligor and the General Partner covenant and agree that, so long as
the Aggregate Commitment shall remain available and until full and final
payment of all Obligations, without the prior written consent of the
Super-Majority Lenders (or of all the Lenders with respect to Section 8.5),
they will not:
VIII.1 Change in Business. Cause or allow the Obligor to (A) engage in
any business activities or operations other than (i) the ownership and
operation of the Properties or (ii) other business functions and transactions
related to the financing, ownership, acquisition, development and/or management
of shopping centers, or (B) expand the Properties (except as permitted by and
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in compliance with the terms of the Mortgages), or (C) otherwise materially
change the nature of the use of the Properties.
VIII.2 Change of Ownership or Management of Properties. Cause or allow
(A) the General Partner to cease to be the sole general partner of Obligor, (B)
the Obligor to cease to be the sole owner (or ground lessee, if permitted
hereunder) of the Properties, or (C) a change in the management of the
Properties (except that any Affiliate of Obligor or the General Partner shall
be permitted to manage any of the Properties).
VIII.3 Minimum Net Worth. The Adjusted Tangible Net Worth of the
Consolidated Operating Partnership (as measured on the last day of the most
recent full fiscal quarter for which results have been reported) must not at
any time during the Facility term be less than the sum of (A) $500,000,000 plus
(B) 100% of the aggregate net proceeds realized by the Obligor or the General
Partner after the Effective Date from any public or private sales of common or
preferred stock (other than Debt-Type Preferred Stock).
VIII.4 Use of Proceeds.
(a) Apply or permit to be applied any proceeds of any
Advance directly or indirectly, to the funding of any hostile attempt to take
control of any publicly held corporation.
(b) Use any of the proceeds of the Advances to purchase or
carry any Margin Stock.
VIII.5 Leverage Ratio. Permit the Total Funded Debt of the
Consolidated Operating Partnership, at any time during the Facility term, to
exceed fifty-five percent (55%) of its Implied Capitalization Value (as
measured on the last day of its most recent full fiscal quarter).
VIII.6 Maintenance of EBITDA. Permit the Consolidated Operating
Partnership to maintain a ratio of EBITDA to the sum of (i) Debt Service plus
(ii) Debt-Type Preferred Stock Expense of less than 2 to 1 (as of the end of
each fiscal quarter, based on annualizing the results for such fiscal quarter).
VIII.7 Major Amendments and Major Leases. Execute a Major Lease, make
a Major Amendment to a Major Lease, or terminate any Major Lease at the
Properties without (i) providing ten (10) business days prior written notice to
the Agent and, (ii) if such action is deemed by the Agent and the
Super-Majority Lenders to have any material, adverse economic effect on the
value of any Property and if and only if Agent so notifies Obligor in writing
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within such 10 business day period, agreeing on such reductions to the
Borrowing Base as the Agent and the Super-Majority Lenders deem appropriate in
their reasonable judgment to reflect any temporary or permanent diminutions in
value of any Property as a result thereof.
VIII.8 Liens. Create, assume or suffer to exist any Lien (including
the Lien of an attachment, judgment or execution) on the Properties or on any
Collateral, whether now owned or hereafter acquired, except Permitted Liens.
VIII.9 Leasing to Consolidated Tenants. Enter into any leases at the
Properties which would result in any Consolidated Tenants having leases with
the entities comprising the Consolidated Operating Partnership, which leases,
in the aggregate, exceed ten percent (10%) of the total gross leasable area of
all properties owned by the entities comprising the Consolidated Operating
Partnership; provided that Obligor shall not be deemed to have breached the
covenant contained in this Section by reason of the occurrence of a merger
between or consolidation of two or more tenants, or the acquisition of one
tenant by another tenant.
VIII.10 Maintenance of EBITDA to Total Funded Debt. Permit the ratio of
EBITDA to Total Funded Debt for the Consolidated Operating Partnership as of
the end of a fiscal quarter (based on annualizing EBITDA for such fiscal
quarter), to be less than .15 to 1.0.
VIII.11 Foreign Centers. Permit more than ten percent (10%) of the
EBITDA of the Consolidated Operating Partnership, measured as of the end of
each fiscal quarter, to be attributable to manufacturer's outlet shopping
centers not located within the United States of America.
VIII.12 Floating Rate Debt. If at any time the Consolidated Operating
Partnership has Indebtedness that bears interest at a floating rate and such
Indebtedness exceeds 50% of the Total Funded Debt of the Consolidated Operating
Partnership, permit such excess not to be covered by interest rate caps or
other interest rate protection products satisfactory to the Agent and the
Required Lenders.
VIII.13 Venture Investments. Permit (i) the Total Venture Investments,
at any time during the Facility term, to exceed $75,000,000 or (ii) those Total
Venture Investments, in the aggregate, which represent investments in
Investment Affiliates or consolidated subsidiaries which own any real property
located outside the United States of America to exceed $10,000,000.
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VIII.14 Distributions. Permit distributions to any of the partners in
Obligor or shareholders in General Partner on account of any fiscal year, on an
aggregate basis, which exceed ninety-five percent (95%) of Obligor's or General
Partner's (as the case may be) Funds From Operations for the applicable fiscal
year, provided that Obligor and General Partner nevertheless may distribute
amounts in excess of the foregoing limitations, if necessary to allow General
Partner to maintain its tax status as a REIT.
IX
DEFAULTS
The occurrence of any one or more of the following events shall
constitute an Event of Default:
IX.1 Nonpayment of Principal. The Obligor fails to pay any principal
portion of the Obligations when due, whether under Section 2.5 hereof, on the
Maturity Date or otherwise.
IX.2 Negative Covenants. The Obligor, General Partner and/or
Consolidated Operating Partnership, as the case may be, is not in compliance
with any one or more of the covenants contained in Article VIII hereof.
IX.3 Nonpayment of Interest and Other Obligations. The Obligor fails
to pay any interest or other portion of the Obligations involving the payment
of money, other than payments of principal, or Obligor violates any other
covenant contained herein involving the payment of money, and such failure
continues for a period of five (5) days after notice from Agent.
IX.4 Cross Default. Any monetary default occurs (after giving effect
to any applicable cure period) under any other Indebtedness of Obligor, the
General Partner or any of their Affiliates, singly or in the aggregate, in
excess of $5,000,000, other than (i) Indebtedness arising from the purchase of
personal property or the provision of services, the amount of which is being
contested by Obligor or (ii) Indebtedness which is "non-recourse" i.e., which
is not recoverable by the creditor thereof from the general assets of the
Obligor, the General Partner or any of their Affiliates but is limited to the
proceeds of certain real estate, improvements and related personal property.
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IX.5 Loan Documents. Any Loan Document is not in full force and
effect or a default has occurred and is continuing thereunder after giving
effect to any cure or grace period in any such document.
IX.6 Representation or Warranty. If (i) any representation or
warranty set forth in Articles V or VI of this Agreement or in any statement,
report or certificate made by the Obligor or the General Partner to the Lenders
or the Agent on or prior to the date hereof is not true and correct as of the
date hereof in any material respect or (ii) any reaffirmation of a
representation or warranty set forth in Articles V or VI of this Agreement or
in any statement, report or certificate made after the date hereof by the
Obligor or the General Partner to the Lenders or the Agent which is made as
part of the Draw Request Documents is not true and correct to the actual
knowledge of the maker thereof when made in any material respect.
IX.7 Covenants, Agreements and Other Conditions. The Obligor or the
General Partner fails to perform or observe any non-monetary covenants,
agreements and conditions (other than in Section 2.5 or in Article VIII)
contained in this Agreement or any of the other Loan Documents in accordance
with the terms hereof or thereof, not specifically referred to herein, and, if
and only if no specific cure period has been expressly provided for herein or
in such other Loan Document, such Default continues unremedied for a period of
thirty (30) days after written notice from Agent, provided, however, that if
such Default is susceptible of cure but cannot by the use of reasonable efforts
be cured within such thirty (30) day period, such Default shall not constitute
an Event of Default under this Section 9.7 so long as (i) the Obligor or the
General Partner, as the case may be, has commenced a cure within such
thirty-day period, (ii) thereafter, Obligor or General Partner, as the case may
be, is proceeding to cure such default continuously and diligently and in a
manner reasonably satisfactory to Lenders, and (iii) such default is cured not
later than sixty (60) days after the expiration of such thirty (30) day period.
IX.8 No Longer General Partner. The General Partner shall no longer
be the sole general partner of Obligor.
IX.9 Sale or Mortgage of Properties. Any transfer, assignment or
sale of any of the Properties or any portion thereof occurs or any further
mortgage or other voluntary lien to secure Indebtedness is placed against any
of the Properties or any portion thereof (other than the granting of utility
easements, the creation of tenancies pursuant to leases or other occupancy
agreements which contain no option to purchase executed
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in the ordinary course of Obligor's business, sales of Properties after a
permitted release pursuant to Section 2.17 hereof, the granting or creation of
Permitted Liens, and transfers required pursuant to condemnation and/or eminent
domain proceedings) without the prior written consent of the Lenders.
IX.10 Material Adverse Financial Change. The Obligor or General
Partner has suffered a Material Adverse Financial Change or is Insolvent.
IX.11 Bankruptcy.
(a) Voluntary. The Obligor or the General Partner generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due, or files any petition or action for relief as to itself under any
bankruptcy, reorganization, insolvency or moratorium law, or any other similar
law or laws for the relief of, or relating to, debtors, or applies for or
consents to a receiver, trustee or custodian for it or a substantial portion of
its property, or makes a general assignment for the benefit of creditors.
(b) Involuntary. An involuntary petition is filed under
any federal or state bankruptcy or similar statute, whether now or hereafter
existing, against the Obligor or the General Partner, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
appointed to take possession, custody or control of the Properties of any of
them unless such petition or appointment is set aside or withdrawn or ceases to
be in effect within sixty (60) days from the date of such filing or
appointment.
IX.12 Legal Proceedings. The Obligor or General Partner is enjoined,
restrained or in any way prevented by any court order or judgment or if a
notice of lien, levy, or assessment is filed of record with respect to all or
any part of the Properties by any governmental department, office or agency,
which could materially adversely affect the performance of the obligations of
such parties hereunder or under the Loan Documents, as the case may be, or if
any proceeding is filed or commenced seeking to enjoin, restrain or in any way
prevent the foregoing parties from conducting all or a substantial part of
their respective business affairs and failure to vacate, stay, dismiss, set
aside or remedy the same within sixty (60) days after the occurrence thereof.
IX.13 Judgments. Any final and non-appealable judgments are entered
against Obligor, General Partner or any of their Affiliates, singly or in the
aggregate, which are in excess of
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$5,000,000, and which remain unsatisfied or unstayed for more than ninety (90)
days.
X
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
X.1 Acceleration.
If any Event of Default described in Section 9.11 hereof occurs,
the obligation of the Lenders to make Advances hereunder shall automatically
terminate and the Obligations shall immediately become due and payable. If any
other Event of Default described in Article IX hereof occurs, (i) the approval
of all of the Lenders shall be required as a condition to the funding of any
Advances after the date of such Event of Default, and (ii) at the election of
the Super-Majority Lenders the obligation of the Lenders to make Advances shall
be terminated and the Obligations may be declared to be due and payable.
X.2 Preservation of Rights; Amendments. No delay or omission of the
Lenders in exercising any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence therein,
and the making of an Advance notwithstanding the existence of a Default or the
inability of the Obligor to satisfy the conditions precedent to such Advance
shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders and then only to the extent in
such writing specifically set forth. All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be available to
the Lenders until the Obligations have been paid in full.
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XI
THE AGENT
XI.1 Appointment. First Chicago is hereby appointed Agent hereunder
and under each other Loan Document, and each of the Lenders authorizes the
Agent to act as the agent of such Lender. The Agent agrees to act as such upon
the express conditions contained in this Article XI. The Agent shall not have
a fiduciary relationship in respect of any Lender by reason of this Agreement.
Notwithstanding its designation hereunder, the Co-Agent shall not share in any
of the duties, rights, responsibilities or liabilities of the Agent hereunder.
XI.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, other than the duty to
act in good faith, or any obligation to the Lenders to take any action
thereunder except any action specifically provided by the Loan Documents to be
taken by the Agent.
XI.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Obligor, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith, except
for its or their own gross negligence or willful misconduct or except as may be
otherwise expressly stated in this Agreement.
XI.4 No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document; (iii) the satisfaction of
any condition specified in Article IV except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith.
XI.5 Action on Instructions of Lenders. The Agent will notify the
Lenders promptly after it has actual knowledge of the existence of any Default
and shall notify Obligor and General Partner of the existence of any such
Default promptly after being so directed in writing by the Required Lenders.
The Agent shall
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in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, the Super-Majority Lenders or all
of the Lenders, as this Agreement may require, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the
Lenders (including the Agent if also a Lender) pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
XI.6 Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, independent contractors and attorneys-in-fact and shall not
be answerable to the Lenders, except as to money or securities received by it
or its authorized agents and except as to the gross negligence or wilful
misconduct of Agent's employees (but not third parties agents, independent
contractors or attorneys-in-fact selected by Agent), for the default or
misconduct of any such agents, independent contractors or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document; provided that Agent shall
not be entitled to pro rata reimbursement from the other Lenders for the costs
of obtaining such advice from counsel if such advice was obtained in connection
with any allegation by a Lender that Agent has breached its obligation under
the Loan Documents, and subsequently it is adjudicated in a court of competent
jurisdiction that Agent in fact did breach its obligations under the Loan
Document.
XI.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
XI.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably (i) for any amounts not reimbursed by
the Obligor for which the Agent is entitled, solely in its capacity as Agent,
to reimbursement by the Obligor under the Loan Documents, (ii) for any other
expenses incurred by the Agent on behalf of the Lenders, in connection
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with the preparation, execution, delivery, administration and enforcement of
the Loan Documents, if not paid by Obligor, and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent solely in its capacity as
Agent in any way relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby, or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent.
XI.9 Rights as a Lender. With respect to the Commitment, Advances
made by it and the Note issued to it, the Agent shall have the same rights and
powers hereunder and under any other Loan Document as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent and the Lenders may each accept deposits
from, lend money to, and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Obligor or any of its Subsidiaries in which the
Obligor or such Subsidiary is not restricted hereby from engaging with any
other Person.
XI.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Obligor and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents.
XI.11 Successor Agent. Each Lender agrees that First Chicago shall
serve as Agent at all times during the term of this Facility, except that (i)
First Chicago may at any time in its sole discretion resign as Agent by giving
written notice thereof to the Lenders and the Obligor, and (ii) First Chicago
may be removed as Agent at any time with cause by written notice received by
the Agent from the Super-Majority Lenders (other than First Chicago). Upon any
such resignation or removal, the Lenders (including First Chicago) shall have
the right to
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appoint, on behalf of the Obligor and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within thirty days after the retiring Agent's giving
notice of resignation, then the retiring Agent may appoint, on behalf of the
Obligor and the Lenders, a successor Agent. Such successor Agent shall be a
commercial bank having capital and retained earnings of at least $150,000,000
(or a wholly-owned direct or indirect subsidiary of either such a commercial
bank or a parent of such a commercial bank). Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article XI shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Loan Documents.
XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
XII.1 Successors and Assigns.
The terms and provisions of the Loan Documents shall be binding
upon and inure to the benefit of Obligor and the Lenders and their respective
successors and assigns, except that the Obligor shall not have the right to
assign its rights or obligations under the Loan Documents without the consent
of all the Lenders and any assignment by any Lender must be made in compliance
with Section 12.3. The Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
Section 12.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
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XII.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities ("Participants")
participating interests in any Advance owing to such Lender, any Note
held by such Lender, any Commitment of such Lender or any other interest
of such Lender under the Loan Documents provided that, so long as an
Event of Default does not exist at the time of the sale of the proposed
participation, the Agent (and any successor Agent) shall at all times
keep at least Fifteen Million Dollars ($15,000,000) of its Commitment
for its own account, unless and until such Agent (or successor Agent)
shall have resigned or been replaced for cause. In the event of any
such sale by a Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain unchanged,
such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all
amounts payable by Obligor under this Agreement shall be determined as
if such Lender had not sold such participating interests, and Obligor
and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the
Loan Documents.
12.2.2 Voting Rights. With respect to the terms of any
participation or other agreements between a Lender and its Participants,
each Lender shall retain the sole right to approve, without the consent
of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification
or waiver which forgives principal, interest or fees or reduces the
interest rate or fees payable hereunder, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest on, the
Obligations, releases Collateral beyond any releases expressly provided
for herein or extends the Maturity Date.
12.2.3 Benefit of Setoff. The Obligor agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 13.15 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of
setoff provided in Section 13.15 with respect to the
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amount of participating interests sold to each Participant. The Lenders
agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in Section 13.15, agrees to
share with each Lender, any amount received pursuant to the exercise of
its right of setoff, such amounts to be shared in accordance with
Section 13.15 as if each Participant were a Lender.
XII.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, with the prior
written consent of Agent (which consent shall not be unreasonably
withheld or delayed), in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more banks
or other entities (collectively, "Purchasers") all or any part of its
rights and obligations under the Loan Documents, except that no consent
of Agent shall ever be required for (i) any assignment to a Person
directly or indirectly controlling, controlled by or under direct or
indirect common control with the assigning Lender or (ii) the pledge or
assignment by a Lender of such Lender's Note and other rights under the
Loan Documents to any Federal Reserve Bank in accordance with applicable
law. With respect to any assignments made pursuant to this Section:
(a) any such assignment of a Lender's Advances or Commitments shall be
in a minimum aggregate principal amount of Five Million Dollars
($5,000,000), (b) each Lender (other than Agent) shall retain a minimum
Commitment of at least Five Million Dollars ($5,000,000) of such
Lender's original commitment; and (c) at all times prior to its
resignation or removal for cause, Agent (and any successor Agent) shall
retain a minimum Commitment of at least Fifteen Million Dollars
($15,000,000). Notwithstanding anything contained in this Agreement to
the contrary, each Lender shall be entitled to freely assign all or any
portion of its respective Commitment without the Agent's consent or any
restrictions on the amount of any such assignment or the amount retained
by such Lender, if at the time of such proposed assignment an Event of
Default exists hereunder. A processing fee of $3,000 per assignee shall
be paid to the Agent by the assignor or assignee as a condition to each
such assignment to reimburse Agent for its involvement in such
assignment.
12.3.2 Effect; Effective Date. Upon delivery to the Agent of a
notice of assignment executed by the assigning Lender and the Purchaser,
such assignment shall become effective on the effective date specified
in such notice of assignment. The notice of assignment shall contain a
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representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and the Loan
under the applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, such Purchaser shall for
all purposes be a Lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as
if it were an original party hereto, and no further consent or action by
Obligor, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Commitment and
Advances assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and Obligor shall make appropriate
arrangements so that replacement Notes are issued to such transferor
Lender and new Notes or, as appropriate, replacement Notes, are issued
to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
XII.4 Dissemination of Information. Obligor authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of Obligor and General Partner.
XII.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with all applicable provisions of the Code with respect to
withholding and other tax matters.
XIII
GENERAL PROVISIONS
XIII.1 Survival of Representations. All representations and warranties
contained in this Agreement shall survive delivery of the Notes and the making
of the Advances herein contemplated.
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XIII.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Obligor in violation of any limitation or prohibition provided by any
applicable statute or regulation.
XIII.3 Taxes. Any recording and other taxes (excluding income taxes)
or other similar assessments or charges payable or ruled payable by any
governmental authority incurred in connection with the consummation of the
transactions contemplated by this Agreement shall be paid by the Obligor,
together with interest and penalties, if any.
XIII.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
XIII.5 No Third Party Beneficiaries. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
XIII.6 Expenses; Indemnification. Obligor will pay (a) all
out-of-pocket costs and expenses incurred by the Agent (including the
reasonable fees, out-of-pocket expenses and other reasonable expenses of
counsel, which counsel may be employees of Agent) in connection with the
preparation, execution and delivery of this Agreement, the other Loan Documents
and any other agreements or documents referred to herein or therein and any
amendments thereto, (b) all out-of-pocket costs and expenses incurred by the
Agent and the Lenders (including the reasonable fees, out-of-pocket expenses
and other reasonable expenses of counsel to the Agent and the Lenders, which
counsel may be employees of Agent or the Lenders) in connection with the
enforcement and protection of the rights of the Lenders under this Agreement,
any of the other Loan Documents or any other agreement or document referred to
herein or therein, (c) all costs of obtaining all Appraisals, environmental
reports, engineering reports and all other documents or reports required to be
furnished to the Agent or the other Lenders pursuant to Article IV hereof, and
(d) all reasonable and customary costs and expenses of periodic audits by the
Agent's personnel of the Obligor's books and records provided that prior to an
Event of Default, Obligor shall be required to pay for only one such audit
during any year. The Obligor further agrees to indemnify the Lenders, their
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and reasonable expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not a
Lender is
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a party thereto) which any of them may pay or incur arising out of or relating
to this Agreement, the other Loan Documents, the transactions contemplated
hereby or the direct or indirect application or proposed application of the
proceeds of any Advance hereunder; provided, however, that Obligor shall not be
obligated to reimburse any Lender for expenses incurred in connection with any
litigation or other dispute occurring solely between two or more Lenders which
arises prior to the occurrence of a Default by Obligor under any of the Loan
Documents. The obligations of the Obligor under this Section shall survive the
termination of this Agreement.
XIII.7 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
XIII.8 Nonliability of the Lenders. The relationship between the
Obligor and the Lenders shall be solely that of borrower and lender. The
Lenders shall not have any fiduciary responsibilities to the Obligor. The
Lenders undertake no responsibility to the Obligor to review or inform the
Obligor of any matter in connection with any phase of the Obligor's business or
operations.
XIII.9 Choice of Law. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
XIII.10 Consent to Jurisdiction. THE Obligor HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE Obligor HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDERS TO BRING PROCEEDINGS
AGAINST THE Obligor IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY THE Obligor AGAINST THE LENDERS OR ANY AFFILIATE OF THE LENDERS
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
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ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
XIII.11 Waiver of Jury Trial. THE Obligor, THE GENERAL PARTNER AND THE
LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
XIII.12 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Obligor and the
Lenders and their respective successors and assigns, except that the Obligor
shall not have the right to assign its rights or obligations under the Loan
Documents. Any assignee or transferee of the Notes agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of the Notes, shall
be conclusive and binding on any subsequent holder, transferee or assignee of
such Notes or of any note or notes issued in exchange therefor.
XIII.13 Entire Agreement; Modification of Agreement. The Loan
Documents embody the entire agreement among the Obligor, General Partner,
Agent, and Lenders and supersede all prior conversations, agreements,
understandings, commitments and term sheets among any or all of such parties
with respect to the subject matter hereof. Any provisions of this Agreement or
any other Loan Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Obligor, and Agent if
the rights or duties of Agent are affected thereby, and
(a) all Lenders if such amendment or waiver
(i) reduces or forgives any principal of any unpaid
Advance or any interest thereon or any fees due hereunder; or
(ii) postpones the date fixed for any payment of
principal of or interest on any Obligation or any fees payable
to the Lenders hereunder; or
(iii) changes the amount of any Lender's Commitment
or the Aggregate Commitment (other than pursuant to an
assignment permitted under Section 12.3) or the unpaid principal
amount of any of the Notes; or
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(iv) would amend or waive the method of calculating
the Borrowing Base; or
(v) extends the Maturity Date; or
(vi) releases any Collateral beyond any releases
expressly provided for herein; or
(vii) releases or reduces the liability of the
General Partner pursuant to the Guaranty or the Environmental
Indemnity; or
(viii) changes the definitions of Percentage,
Required Lenders or Super-Majority Lenders or modifies any
requirement for consent by all of the Lenders; or
(ix) would amend or waive the provisions of Section
2.5 or Section 8.5 hereof;
(b) the Super-Majority Lenders in the case of any amendment
or waiver of the provisions of Sections 7.4 or 7.13 or of Article VIII hereof;
or
(c) the Required Lenders in the case of all other waivers
or amendments.
XIII.14 Dealings with the Obligor. The Lenders and their Affiliates
may accept deposits from, extend credit to and generally engage in any kind of
banking, trust or other business with the Obligor or the General Partner or any
of their Affiliates regardless of the capacity of the Lenders hereunder.
XIII.15 Set-Off.
(a) If an Event of Default shall have occurred, each Lender
shall have the right, at any time and from time to time without notice to the
Obligor, any such notice being hereby expressly waived, to set-off and to
appropriate or apply any and all deposits of money or property or any other
indebtedness at any time held or owing by such Lender to or for the credit or
the account of the Obligor against and on account of all outstanding
Obligations and all Obligations which from time to time may become due
hereunder and all other obligations and liabilities of the Obligor under this
Agreement, irrespective of whether or not such Lender shall have made any
demand hereunder and whether or not said obligations and liabilities shall have
matured.
(b) Each Lender agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive
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payment of a proportion of the aggregate amount of principal, interest or fees
due with respect to any Note held by it which is greater than the proportion
received by any other Lender in respect of the aggregate amount of principal,
interest or Fees due with respect to any Note held by such other Lender, the
Lender receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Lenders and such other
adjustments shall be made, as may be required so that all such payments of
principal, interest or Fees with respect to the Notes held by the Lenders shall
be shared by the Lenders pro rata according to their respective Commitments.
XIII.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by
the Obligor and each of the Lenders.
XIII.17 Releases of Parcels. Upon Obligor's written request from time
to time Lenders shall release from the lien of the Mortgages that portion or
those portions of the Properties which are non-revenue producing parcels, all
upon the satisfaction of the following conditions:
(a) No Default or Event of Default shall exist under this
Agreement at the time of such release;
(b) Obligor shall furnish Agent with a survey clearly
depicting the boundaries of the particular parcel or parcels for which a
release is being requested, together with a legal description of such parcel or
parcels;
(c) Obligor will promptly pay Agent's reasonable
out-of-pocket costs (including attorneys' fees and expenses) in connection with
the review of the surveys and legal descriptions for such parcel(s) and the
preparation of all necessary release documents;
(d) Obligor shall furnish Agent with evidence and
documentation satisfactory to Agent (including, without limitation,
declarations of covenants, conditions and restrictions and/or reciprocal
easement or other operating agreements (collectively, "REA"), if necessary)
that following the release and any subsequent sale, other disposition and/or
development of such parcel(s) (i) the Property of which such parcel is a part
shall have legal access to all utility lines and utility and other easements
necessary for the operation of such Property, (ii) pedestrian and vehicular
access to and/or from
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such Property shall not have been adversely legally affected or impaired (as
compared to the access existing on the date of this Agreement), (iii) the
number and size of the parking spaces for such Property shall satisfy the
requirements of applicable law and any applicable REA, and (iv) such Property
shall not have been adversely affected and shall remain in material compliance
with all zoning, building, construction, and other laws, orders or regulations,
the terms of the REA, the terms of all leases and the terms of other recorded
or unrecorded documents regarding the use or operation of all or any portion of
such Property;
(e) Obligor shall furnish Agent with evidence satisfactory
to Agent that, within 18 months following the release of such parcel(s), such
parcel(s) will be assessed and taxed separately from the remainder of such
Property; and
(f) Obligor shall furnish Agent with evidence and
documentation satisfactory to Agent (which may include an REA, if necessary)
that (i) the proposed use(s) of the parcel(s) are compatible with the then
current use of such Property and do not violate any use restrictions or
non-compete provisions included in any of the leases, and, (ii) all
improvements constructed on such parcel(s) (including, without limitation, all
signs) are architecturally compatible (including, but not limited to, design,
shape, color and materials) with the improvements on the Property.
XIV
NOTICES
XIV.1 Giving Notice. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes). Notice may be given
as follows:
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To the Obligor:
Horizon/Glen Outlet Centers Limited Partnership
c/o Horizon Group, Inc.
5000 Hakes Drive
Muskegon, Michigan 49441
Attention: Mr. Joseph Cattivera
Telecopy: (616) 798-9101
To General Partner:
Horizon Group, Inc.
5000 Hakes Drive
Muskegon, Michigan 49441
Attention: Mr. Joseph Cattivera
Telecopy: (616) 798-9101
Each of the above with a copy to:
Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601
Attention: Errol Halperin, Esq.
Telecopy: (312) 236-7516
To the Lenders:
c/o The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: Real Estate Finance Department
Telecopy: (312) 732-1117
With a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Patrick G. Moran, Esq.
Telecopy: (312) 876-7934
Copies of all notices to the Lenders also shall be sent to:
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Michigan National Bank
77 Monroe Center
Grand Rapids, Michigan 49503
Attention: Commercial Lending 02-53
Telecopy: (616) 451-7708
KeyBank National Association
127 Public Square
Mail Code: 01-127-0603
Cleveland, Ohio 44114
Attention: Mr. Alex Kurrelmeier
Telecopy: (216) 689-4997
Comerica
One Detroit Center
500 Woodward Avenue
Seventh Floor
Detroit, Michigan 48226
Attention: Mr. David J. Campbell
Telecopy: (312) 222-9295
BHF-Bank Aktiengesellschaft,
New York Branch
590 Madison Avenue
New York, New York 10022
Attention: Ms. Catherine Hickey
Telecopy: (212) 756-5910 or 5536
Wells Fargo Realty Advisors Funding
Incorporation
c/o Wells Fargo Real Estate Group, Inc.
2020 K Street, N.W., Suite 420
Washington, D.C. 20006
Attention: Manager, Loan Administration Department
Telecopy: (202) 296-6036
with a copy to:
Wells Fargo Bank
Real Estate Group
420 Montgomery Street
San Francisco, California 94111
Attention: Senior Credit Officer
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with a copy to:
Bingham, Dana & Gould
1200 Nineteenth Street, N.W.
Suite 400
Washington, D.C. 20036
Attention: Barry P. Rosenthal, Esq.
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Attention: Terri Wyda
Telecopy: (412) 234-8657
AmSouth Bank of Alabama
Commercial Real Estate Lending
1900 Fifth Avenue, North
Birmingham, Alabama 35203
Attention: R. Scott Pulliam
Telecopy: (205) 326-4075
To the Agent:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: Real Estate Finance Department
Telecopy: (312) 732-1117
With a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Patrick G. Moran, Esq.
Telecopy: (312) 876-7934
XIV.2 Change of Address. Each party may change the address for
service of notice upon it by a notice in writing to the other parties hereto.
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XV
CONSOLIDATION
XV.1 Effect. This Agreement consolidates, amends and restates the
Horizon Agreement and the McG Agreement in their entirety.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
OBLIGOR: HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By: HORIZON GROUP, INC., its
General Partner
By:____________________________
Title:_________________________
GENERAL PARTNER: HORIZON GROUP, INC.
By:_________________________________
Title:______________________________
LENDERS: THE FIRST NATIONAL BANK OF CHICAGO
By:_________________________________
Title: Vice President
Commitment: $45,000,000
Percentage: 21.9512195%
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WELLS FARGO REALTY ADVISORS FUNDING,
INCORPORATED, a Colorado corporation
By: Wells Fargo Real Estate Group,
Inc., a California corporation,
its Agent
By:____________________________
Title: Vice President
By:____________________________
Title: Assistant Secretary
Commitment: $35,000,000
Percentage: 17.0731707%
AMSOUTH BANK OF ALABAMA
By:_________________________________
Title: _____________________________
Commitment: $25,000,000
Percentage: 12.1951219%
COMERICA
By:_________________________________
Title: Vice President
Commitment: $25,000,000
Percentage: 12.1951219%
KEYBANK NATIONAL ASSOCIATION
By:_________________________________
Title: _____________________________
Commitment: $20,000,000
Percentage: 9.7560975%
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MELLON BANK, N.A.
By:_________________________________
Title: _____________________________
Commitment: $20,000,000
Percentage: 9.7560975%
MICHIGAN NATIONAL BANK
By:_________________________________
Title:______________________________
Commitment: $20,000,000
Percentage: 9.7560975%
BHF-BANK AKTIENGESELLSCHAFT, NEW
YORK BRANCH
By:_________________________________
Title: _____________________________
By:_________________________________
Title: _____________________________
Commitment: $15,000,000
Percentage: 7.3170731%
AGENT: THE FIRST NATIONAL BANK OF CHICAGO
By:_________________________________
Title: Vice President
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CO-AGENT: WELLS FARGO REALTY ADVISORS FUNDING,
INCORPORATED, a Colorado corporation
By: Wells Fargo Real Estate Group,
Inc., a California corporation,
its Agent
By:____________________________
Title: Vice President
By:____________________________
Title: Assistant Secretary
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EXHIBIT A
FORM OF NOTE
[AMENDED AND RESTATED] PROMISSORY NOTE
$_______________ June __, 1996
On or before the Maturity Date, as defined in that certain Consolidated,
Amended and Restated Revolving Credit Agreement of even date herewith (the
"Agreement") between HORIZON/GLEN OUTLET CENTERS LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Borrower"), HORIZON GROUP, INC., a Michigan
corporation, THE FIRST NATIONAL BANK OF CHICAGO, a national bank organized
under the laws of the United States of America in its capacity as agent
("Agent"), and various other lenders, including _________________________
("Lender"), the Borrower promises to pay to the order of Lender, or its
successors and assigns, the principal sum of ______________________________
DOLLARS ($__________.00) or the aggregate unpaid principal amount of all
Advances made by Agent on behalf of Lender to the Borrower pursuant to Section
2.1 of the Agreement, in immediately available funds at the office of the Agent
in Chicago, Illinois, together with interest on the unpaid principal amount
hereof outstanding from time to time at the rates and on the dates set forth in
the Agreement. The Borrower shall make principal payments at the times and in
the amounts from time to time required under the Agreement and shall pay any
and all principal amounts outstanding under this Promissory Note in full on the
Maturity Date in accordance with the terms of the Agreement.
Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Advance and the date and amount of each principal
payment hereunder.
This Note is issued pursuant to, and is entitled to the security
provided under and benefits of, the Agreement and the other Loan Documents, to
which Agreement and Loan Documents, as they may be amended from time to time,
reference is hereby made for, inter alia, a statement of the terms and
conditions under which this Note may be prepaid or the Maturity Date
accelerated. Capitalized terms used herein and not otherwise defined herein
are used with the meanings attributed to them in the Agreement.
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[This Note amends and restates in its entirety the Note dated
_______________ in the maximum principal sum of $_______________ executed by
the Borrower in favor of the Lender.]
If there is an Event of Default or Default under the Agreement or any
other Loan Document and Agent exercises the remedies provided under the
Agreement and/or any of the Loan Documents for the Lenders, then in addition to
all amounts recoverable by the Agent and the Lenders under such documents,
Agent and the Lenders shall be entitled to receive reasonable attorneys fees
and expenses incurred by Agent and the Lenders in connection with the exercise
of such remedies.
Borrower and all endorsers severally waive presentment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of this Note,
and any and all lack of diligence or delays in collection or enforcement of
this Note, and expressly agree that this Note, or any payment hereunder, may be
extended from time to time, and expressly consent to the release of any party
liable for the obligation secured by this Note, the release of any of the
security for this Note, the acceptance of any other security therefor, or any
other indulgence or forbearance whatsoever, all without notice to any party and
without affecting the liability of the Borrower and any endorsers hereof.
This Note shall be governed and construed under the internal laws of the
State of Illinois.
BORROWER AND LENDER, BY ITS ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHT UNDER THIS PROMISSORY NOTE OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO
OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS
PROMISSORY NOTE AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY.
HORIZON/GLEN OUTLET CENTERS LIMITED
PARTNERSHIP
By: HORIZON GROUP, INC., its
General Partner
By:____________________________
Title:_________________________
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<PAGE> 100
PAYMENTS OF PRINCIPAL
Unpaid
Principal Notation
Date Balance Made by
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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EXHIBIT B-1
FORM OF MORTGAGE
-94-
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EXHIBIT B-2
FORM OF DEED OF TRUST
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EXHIBIT C
FORM OF ASSIGNMENT OF OPERATING AGREEMENTS
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EXHIBIT D
FORM OF SECURITY AGREEMENT
-97-
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EXHIBIT E
FORM OF ENVIRONMENTAL INDEMNITY
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EXHIBIT F
FORM OF GUARANTY
-99-
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EXHIBIT G
FORM OF ASSIGNMENT OF RENTS AND LEASES
-100-
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EXHIBIT H
LEGAL OPINION - OBLIGOR
-101-
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EXHIBIT I
LEGAL OPINION - GENERAL PARTNER
INCLUDED IN EXHIBIT H
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EXHIBIT J
DESCRIPTIONS OF INITIAL PROPERTIES
APPRAISED VALUE
1. Outlet at Gilroy $45,219,512
Gilroy, CA
2. Lighthouse Place Outlet Center $56,731,707
Michigan City, IN
3. Manufacturer's Market Place $17,492,683
Monroe Charter Township, MI
4. Horizon Outlet Center, Port Huron $8,229,268
Kimball Township, MI
5. Manufacturer's Marketplace $9,695,732
Traverse City, MI
6. Calhoun Outlet Center $12,582,927
Calhoun, GA
7. Chespeake Village - Phase III, IV & V $10,443,415
Queenstown, MD
8. Southwest Outlet Center - Phase I & II $23,329,268
Hillsboro, Hill County, TX
9. Lake Elsinore - Phase I & II $42,778,049
Lake Elsinore, CA
10. Pismo Beach Outlet Center Phase I $20,124,390
Pismo Beach, CA
11. Warrenton Outlet Center - Phase I $14,021,951
Warrenton, MO
12. Silverthorne Factory Stores $28,865,854
Silverthorne, CO
13. Village Shops at Birch Run $15,510,000
Birch Run, MI
14. New Mexico Outlet Center $14,358,537
Algodones, NM
15. Finger Lakes Outlet Center - Phase I $22,900,000
Waterloo, NY
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EXHIBIT K
FORM OF SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
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<PAGE> 112
SCHEDULE 1
PRICING GRID
<TABLE>
<CAPTION>
After During
Supplemental Reduced Public Debt Rating Public Debt Rating
Equity Closing Leverage -- Level One -- Level Two
Applicable Spread Initial Date Period (at or above BBB- (at or above BBB
and Baa3) and Baa2)
<S> <C> <C> <C> <C> <C>
Base Rate Spread 0.25% -0- -0- -0- -0-
LIBOR Spread 2.00% 1.875% 1.75% 1.625% 1.50%
</TABLE>
If more than one category applies at any given time, the category having
the lowest spread shall apply. The categories are defined as follows:
"Public Debt Rating -- Level One" means any date on which the public
debt of either General Partner or Obligor has received ratings of "BBB-" or
better from Standard & Poor's Rating Group ("S&P") and "Baa3" or better from
Moody's Investors Service, Inc. ("Moody's"), provided that, if either S&P or
Moody's does not rate such debt, the Obligor may replace one, but not both, of
such ratings with an equivalent or better rating received from another rating
agency, which agency and rating level are acceptable to all of the Lenders.
"Public Debt Rating -- Level Two" means any date, on which the public
debt of either the General Partner or Obligor has received ratings of "BBB" or
better from S&P and "Baa2" or better from Moody's, provided that, if either S&P
or Moody's does not rate such debt, the Obligor may replace one, but not both,
of such ratings with an equivalent or better rating received from another
rating agency, which agency and rating level are acceptable to all of the
Lenders.
"Reduced Leverage Period" means any period (i) beginning on the date on
which quarterly financial statements are delivered to the Agent evidencing that
the Consolidated Operating Partnership has Total Funded Debt which is
thirty-five percent (35%) or less of its Implied Capitalization Value (as
measured on the last day of its most recent full fiscal quarter) and (ii)
ending on the date on which quarterly financial statements are delivered to the
Agent evidencing that the Consolidated Operating Partnership has Total Funded
Debt which exceeds thirty-five percent (35%) of its Implied Capitalization
Value (as measured on the last day of its most recent full fiscal quarter).
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"Supplemental Equity Closing Date" means the date, if any, on which
Obligor has received, in the aggregate since the Effective Date, additional
equity investments of not less than $100,000,000 in the aggregate through (i)
contributions of net proceeds by the General Partner to Obligor from additional
public or private equity offerings of the common or preferred stock of General
Partner or (ii) contributions of additional manufacturer's retail outlet
shopping centers in exchange for partnership units in Obligor (such centers to
be valued at their then-current market value net of any mortgage debt).
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SCHEDULE 5.10
LITIGATION (Obligor)
NONE
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SCHEDULE 5.20
ENVIRONMENTAL COMPLIANCE
NONE
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SCHEDULE 5.27
SUBSIDIARIES (Obligor)
Corporate Entities
1. First HGI, Inc., a Delaware corporation
2. HGI Perryville, Inc., a Maryland corporation
3. MG Third Party Services Corp., a Delaware corporation
4. HGI Management Corp., a Michigan corporation
Partnership Entities
5. Horizon/Glen Outlet Centers Limited Partnership, a Delaware limited
partnership
6. First Horizon Group Limited Partnership, a Delaware limited partnership
7. H/G Perryville Limited Partnership, a Maryland limited partnership
8. MG Long Island Limited Partnership, a Virginia limited partnership
9. MG Patchogue Limited Partnership, a D.C. limited partnership
10. MG Patchoque II Limited Partnership, a Virginia limited partnership
11. MG Medford Limited Partnership, a D.C. limited partnership
12. HGL Outlet Associates, a Delaware general partnership
_________________________
* Excludes subsidiaries which, in the aggregate, do not have material
assets or liabilities.
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SCHEDULE 6.8
LITIGATION (GENERAL PARTNER)
NONE
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SCHEDULE 6.19
SUBSIDIARIES (GENERAL PARTNER)
Corporate Entities
1. First HGI, Inc., a Delaware corporation
2. HGI Perryville, Inc., a Maryland corporation
3. MG Third Party Services Corp., a Delaware corporation
4. HGI Management Corp., a Michigan corporation
Partnership Entities
5. Horizon/Glen Outlet Centers Limited Partnership, a Delaware limited
partnership
6. First Horizon Group Limited Partnership, a Delaware limited partnership
7. H/G Perryville Limited Partnership, a Maryland limited partnership
8. MG Long Island Limited Partnership, a Virginia limited partnership
9. MG Patchogue Limited Partnership, a D.C. limited partnership
10. MG Patchoque II Limited Partnership, a Virginia limited partnership
11. MG Medford Limited Partnership, a D.C. limited partnership
12. HGL Outlet Associates, a Delaware general partnership
_________________________
* Excludes subsidiaries which, in the aggregate, do not have material
assets or liabilities.
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<TABLE> <S> <C>
<ARTICLE> 5
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