THIS DOCUMENT IS A COPY OF THE REGISTRATION STATEMENT FILED ON
JUNE 10, 1998 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HORIZON GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN 38-2559212
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
5000 HAKES DRIVE
NORTON SHORES, MICHIGAN 49441
(ADDRESS, OF PRINCIPAL EXECUTIVE OFFICES)
1997 STOCK OPTION PLAN
AND RESTRICTED STOCK AWARDS
(Full title of the plans)
JAMES S. WASSEL
PRESIDENT
HORIZON GROUP, INC.
5000 HAKES DRIVE
NORTON SHORES, MICHIGAN 49441
(616) 798-9100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
ERROL R. HALPERIN, ESQ.
HAL M. BROWN, ESQ.
RUDNICK & WOLFE
203 NORTH LASALLE STREET
SUITE 1800
CHICAGO, ILLINOIS 60601
(312) 368-4000
(312) 236-7516 (TELECOPIER)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
CLASS OF REGISTERED MAXIMUM MAXIMUM REGISTRATION
SECURITIES TO OFFERING AGGREGATE FEE
BE REGISTERED PRICE OFFERING
PER SHARE PRICE{*}
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE
$.01 PER SHARE........ 707,108 $ * $7,785,783 $25,953
</TABLE>
{*} PURSUANT TO RULE 457(C) AND 457(H), THE REGISTRATION FEE HAS BEEN
CALCULATED ON THE BASIS OF THE ACTUAL PRICE PER SHARE ($12.50, $10.25
$12.82 AND $10.91) AT WHICH THE OUTSTANDING OPTIONS MAY BE EXERCISED,
THE AVERAGE OF THE HIGH AND LOW SALES PRICES ON THE NEW YORK STOCK
EXCHANGE COMPOSITE TAPE (THE "NYSE") ON THE DATE OF GRANT ($15.8125 AND
$12.25) AND WITH REGARD TO THE REMAINING SHARES, ON THE BASIS OF $11.50
PER SHARE, THE AVERAGE OF THE HIGH AND LOW SALE PRICES OF THE COMMON
STOCK ON THE NYSE ON JUNE 3, 1998.
<PAGE>
PROSPECTUS
707,108 SHARES
HORIZON GROUP, INC.
COMMON STOCK
Horizon Group, Inc. (the "Company") is one of the largest owners,
operators and developers of outlet centers in the United States, based on
total gross leasable area. The Company is a self-administered and self-
managed real estate investment trust for federal income tax purposes.
All of the shares of common stock, par value $.01 per share ("Common
Stock"), offered hereby are being sold by the Selling Stockholders. See
"Selling Stockholders." The Company will not receive any proceeds from the
sale of the Common Stock. The Company's Common Stock is traded on the New
York Stock Exchange under the symbol "HGI."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
JUNE 10, 1998
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF
COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048; and Chicago Regional
Office, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of the Commission's Web site is:
http://www.sec.gov. Reports, proxy statements and other information
concerning the Company also may be inspected at the offices of the New York
Stock Exchange where the Company's Common Stock is listed.
The Company has filed with the Commission a Registration Statement on
Form S-8 (of which this Prospectus is a part) under the Securities Act of
1933, as amended (the "Securities Act") with respect to the securities
offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract
or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as
an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and schedules
hereto. For further information regarding the Company and the Common Stock
offered hereby, reference is hereby made to the Registration Statement and
to such exhibits and schedules, which can be inspected without charge at
the principal office of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C., 20549, and copies may be obtained therefrom
upon payment of the fees prescribed by the Commission.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy
(without exhibits) of any and all documents incorporated herein by
reference. Requests for such copies should be directed to the Secretary at
5000 Hakes Drive, Norton Shores, Michigan 49441, Telephone (616) 798-9100.
<PAGE>
SELLING STOCKHOLDERS
All of the shares of Common Stock subject to this Prospectus were
awarded to certain employees and officers of the Company (the "Selling
Stockholders") in order to provide such employees and officers with an
equity interest in the Company. The following table sets forth the names
of certain of the Selling Stockholders eligible to resell Common Stock of
the Company awarded to them and the maximum number of shares that may be
resold pursuant to this Prospectus.
<TABLE>
<CAPTION>
MAXIMUM SHARES
SELLING STOCKHOLDER TO BE SOLD
<S> <C>
Paul Camarato 35,000
Gary S. Duncan 2,108
Amy Essex 15,000
Stephen J. Moore 80,000
Norman Perlmutter 125,000
James Wassel 450,000
</TABLE>
PLAN OF DISTRIBUTION
The shares may be sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. Such
sales may be made on one or more exchanges or in the over-the-counter
market or otherwise at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions.
The shares may be sold by one or more of the following: (a) a block trade
in which the broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to
this prospectus; (c) an exchange distribution in accordance with the rules
of such exchange; and (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, brokers or
dealers engaged by the Selling Shareholders may arrange for other brokers
or dealers to participate. Brokers or dealers will receive commissions or
discounts from Selling Shareholders in amounts to be negotiated immediately
prior to the sale. Such brokers or dealers and any other participating
brokers or dealers may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission by the Company pursuant to the Securities Exchange Act of 1934,
as amended, are hereby incorporated by reference:
1. The Company's annual report on Form 10-K and Amendment No. 1 on
Form 10-K/A for the year ended December 31, 1997.
2. The Company's current report on Form 8-K dated February 1, 1998.
3. The Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1998.
4. The Company's current report on Form 8-K dated April 1, 1998.
5. Item 1 of the Company's registration statement on Form 8-A
registering its Common Stock under Section 12(b) of the
Securities Exchange Act of 1934.
6. The Company's definitive Proxy Statement relating to the
Company's Special Meeting of Shareholders dated May 14, 1998,
contained in the Registration Statement on Form S-4 of Sky
Merger Corp. (Registration No. 333-51285).
7. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934
subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities
then remaining unsold.
The Company will provide without charge to each optionee to whom a
copy of this Summary is delivered, on the written or oral request of any
such person, additional information concerning the Plan, a copy of any or
all of the documents incorporated herein by reference or any other document
required to be delivered to such person pursuant to Rule 428(b) of the Act.
Requests for such information should be directed to the Secretary, Horizon
Group, Inc., 5000 Hakes Drive, Norton Shores, Michigan 49441, (616) 728-
9100.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering shall be
deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein or contained in this Prospectus shall be deemed to be
supplemented, modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
supplements, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for the
Company by Rudnick & Wolfe, Chicago, Illinois.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3.INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission by the Company pursuant to the Securities Exchange Act of 1934,
as amended, are hereby incorporated by reference:
1. The Company's annual report on Form 10-K and Amendment No. 1 on
Form 10-K/A for the year ended December 31, 1997.
2. The Company's current report on Form 8-K dated February 1,
1998.
3. The Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1998.
4. The Company's current report on Form 8-K dated April 1, 1998.
5. Item 1 of the Company's registration statement on Form 8-A
registering its Common Stock under Section 12(b) of the
Securities Exchange Act of 1934.
6. The Company's definitive Proxy Statement relating to the
Company's Special Meeting of Shareholders dated May 14, 1998,
contained in the Registration on From S-4 of Sky Merger Corp.
(Registration No. 333-51285).
7. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934
subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all
securities then remaining unsold.
The Company will provide without charge to each optionee to whom a
copy of this Summary is delivered, on the written or oral request of any
such person, additional information concerning the Plan, a copy of any or
all of the documents incorporated herein by reference or any other document
required to be delivered to such person pursuant to Rule 428(b) of the Act.
Requests for such information should be directed to the Secretary, Horizon
Group, Inc., 5000 Hakes Drive, Norton Shores, Michigan 49441, (616) 728-
9100.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
An opinion with respect to the legality of shares of common stock
subject to stock options is being given by Rudnick & Wolfe, 203 North
LaSalle Street, Chicago, Illinois, 60601, counsel for the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Michigan Business Corporation Act, as amended (the "MBCA")
permits a Michigan corporation to include in its articles of incorporation
a provision eliminating or limiting the liability of its directors to the
corporation or its shareholders for money damages for a breach of the
director's fiduciary duty, except for (i) receipt of an improper personal
benefit; (ii) breach of the duty of loyalty to the corporation or its
shareholders; (iii) acts or omissions not taken in good faith or that
involve intentional misconduct or knowing violations of the law; (iv) act
or omission occurring prior to the date when the provision becomes
effective; (v) declaring a dividend or distribution, or granting a loan to
a shareholder, director or officer, in violation of the MBCA or the
corporation's articles of incorporation or bylaws. The Articles of
Incorporation of the Company include such a provision which eliminates such
liability to the fullest extent permitted by the MBCA.
The Articles of Incorporation of the Company authorize it to
indemnify its present and former officers and directors and to pay or
reimburse expenses in advance of the final disposition of the proceeding to
the maximum extent permitted from time to time by the laws of Michigan. It
further authorizes the Company's directors to indemnify any person with
whom the Company has dealings. The Bylaws of the Company obligate it to
indemnify and advance expenses to present and former directors and officers
to the maximum extent permitted by Michigan law.
Under the MBCA, a corporation has the power to indemnify its present
or former directors and officers, among others, against expenses, including
attorneys' fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
action or proceeding if: (i) the person acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation or its shareholders; and (ii) with respect to
any criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. In addition, the MBCA requires
the Company, as a condition to advancing expenses, to obtain (i) a written
affirmation by the person of his or her good faith belief that he or she
has met the standard of conduct necessary for indemnification by the
Company as authorized by its Bylaws and (ii) a written statement by or on
his or her behalf to repay the amount paid or reimbursed by the Company if
it shall ultimately be determined that the standard of conduct was not met;
and if a determination is made that the facts then known to those making
the determination would not preclude indemnification under the MBCA.
The Company has entered into indemnification agreements with each of
its directors and officers. Such agreements provide for indemnification
against expenses incurred in connection with, as well as judgments, fines,
and amounts paid in settlement resulting from, any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he or she is
or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise as long as such amounts have been actually and
reasonably incurred by the indemnitee.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Exemption from the registration provisions of the Securities Act of
1933 for all outstanding shares of Common Stock registered for resale by
Gary S. Duncan and 15,000 shares of Common Stock by James S. Wassel hereby
was claimed under 4(2) of the Securities Act and the rules and regulations
promulgated thereunder on the basis that such transactions did not involve
any public offering, the purchasers were sophisticated with access to the
kind of information registration would provide and that purchasers acquired
such securities without a view toward the distribution thereof. In
addition, exemption from the registration provisions of the Securities Act
was also claimed under Section 3(b) of the Securities Act and rules and
regulations promulgated thereunder on the basis that such securities were
sold pursuant to a written compensatory benefit plan or pursuant to a
written contract relating to compensation and not for capital raising
purposes under Rule 701 of the Securities Act.
ITEM 8. EXHIBITS.
4.1 Specimen Common Stock Certificate [Incorporated by reference to
Exhibit 4 to Registration Statement, SEC File No. 33-68420]
4.2 1997 Stock Option Plan [Incorporated by reference to Exhibit
10.31 to the Company's annual report on Form 10-K for fiscal
year ended December 31, 1997 (see File No. 1-12424)]
5 Opinion of Rudnick & Wolfe
23.1 Consent of Ernst & Young LLP (Chicago)
23.2 Acknowledgement of Ernst & Young LLP (Chicago)
23.3 Consent of Ernst & Young LLP (Baltimore)
23.4 Consent of Rudnick & Wolfe (contained in Exhibit 5 hereof)
24 Power of Attorney by the directors and certain officers of the
Company
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
i. To include any prospectus required by
section 10(a)(3) of the Securities Act of
1933;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
iii. To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to
Section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Norton Shores, State of Michigan,
on this 10th day of June, 1998.
HORIZON GROUP, INC.
By: /S/ JAMES S. WASSEL
James S. Wassel
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Norman Perlmutter* Director and Chairman of the June 10, 1998
Board of Directors
James S. Wassel* Director, President and Chief June 10, 1998
Executive Officer (Principal
Executive Officer and Principal
Financial Officer)
Douglas Crocker II* Director June 10, 1998
William P. Dickey* Director June 10, 1998
Norman R. Higo* Director June 10, 1998
Ronald L. Piasecki* Director June 10, 1998
Robert P. Perlmutter* Director June 10, 1998
Martin Sherman* Director June 10, 1998
Richard Stewart* Assistant Controller (Principal June 10, 1998
Accounting Officer)
___________________
*By: /S/ JAMES S. WASSEL Individually and as June 10, 1998
James S. Wassel Attorney-in-Fact
<PAGE>
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933
_______________
H O R I Z O N G R O U P, I N C.
SUMMARY OF
1997 STOCK OPTION PLAN
AND
RESTRICTED STOCK AWARDS
THE DATE OF THIS SUMMARY IS JUNE 10, 1998.
<PAGE>
GENERAL INFORMATION
The 1997 Stock Option Plan (the "Plan") of Horizon Group, Inc. (the
"Company") and the restricted stock awards awarded by the Company were
designed to benefit the Company in attracting and retaining employees,
officers and directors of high caliber and capabilities through a
comprehensive compensation program.
DESCRIPTION OF THE PLAN
1997 STOCK OPTION PLAN
Pursuant to the Plan, the Company may from time to time on or before
February 28, 2007, grant to officers (whether or not directors) and key
employees (including consultants and advisors) of the Company and its
subsidiaries (including the Operating Partnership) options to purchase
shares of the Company's common stock, par value $.01 per share ("Common
Stock"). Options granted under the Plan may be either options which are
intended to be incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended ("Incentive Stock Options"),
or options which are not intended to be incentive stock options ("Non-
Statutory Options"). The aggregate number of shares of Common Stock which
may be sold to all optionees pursuant to the Plan shall not exceed nine
hundred and fifty thousand (950,000) shares. Except as specifically
provided for in the Plan, the selection of optionees and determination of
the form of option and the number of shares allocated to each optionee
shall be made by a committee of disinterested directors of the Company.
The purchase price per share to be specified in any option granted pursuant
to the Plan shall be not less than the fair market value of such stock on
the date such option is granted, and may be paid in cash, in shares of
Common Stock or in any combination thereof. The Board of Directors may
provide for the exercise of options under the Plan from time to time in
installments or otherwise, and may authorize the granting of such options
upon such other terms and conditions and for such periods up to ten years
from the date of grant as it may in its discretion determine; provided,
however, that any option granted under the Plan shall not be transferable
by the optionee other than by will or the laws of descent and distribution
and may be exercisable during such optionee's lifetime only by the optionee
or by such optionee's guardian or legal representative; and further
provided, however, that the aggregate fair market value (determined at the
time an option is granted) of shares with respect to which Incentive Stock
Options are exercisable for the first time by an optionee during any
calendar year (under all incentive stock option plans of the Company and
any subsidiary corporations of the Company) shall not exceed $100,000.
The Company may also from time to time grant to the holder of any
option issued under the Plan the right to elect to exercise stock
appreciation rights with respect to all or any portion of the shares
subject to such option in lieu of such option rights thereunder by
surrendering the option rights as to all or such portion of the shares as
to which option rights shall at such time be exercisable under such option,
and receiving, with respect to each share as to which option rights are so
surrendered, an amount in payment equal to the excess of the fair market
value of such share on the date of surrender over the purchase price
specified for such share in the option. Such payment may be made in cash,
in shares of Common Stock or in any combination thereof, subject, in the
case of cash, to the consent of the Company. The number of shares of
Common Stock to be issued and delivered by the Company upon the exercise of
stock appreciation rights under the Plan shall be determined by dividing
the amount of the payment to be made in the form of shares of Common Stock
by the fair market value of a share of Common Stock as of the date of
surrender, and the value of any fractional share shall be paid by the
Company in cash. No stock appreciation right shall, in any event, be
exercisable within six months of the date of its grant. For purposes of
determining the aggregate number of shares of Common Stock sold to all
optionees pursuant to the Plan, each share as to which option rights have
been surrendered upon the exercise of stock appreciation rights shall be
treated as if it were a share sold under the Plan.
At any time an optionee is required to pay to the optionee's employer
an amount required to be withheld under applicable income tax laws in
connection with the exercise of a Non-Statutory Option, the optionee may
satisfy this obligation in whole or in part by electing (the "Election") to
have the Company withhold shares of Common Stock having a value equal to
the amount required to be withheld. The value of the shares to be withheld
shall be based on the fair market value of such shares on the date that the
amount of tax to be withheld shall be determined ("Tax Date"). Each
Election must be made prior to the Tax Date. The Board may disapprove of
any Election or may suspend or terminate the right to make Elections. An
Election is irrevocable.
If the optionee is an officer or director of the Company within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
then the Election is subject to the following additional restrictions:
A. No Election shall be effective for a Tax Date which occurs within
six months of the grant of the option.
B. The Election must be made either six months prior to the Tax Date
or must be made during a period beginning on the third business day
following the date of release for publication of the Company's quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
In the event of a stock dividend, stock split, combination or other
reduction in the number of issued shares of Common Stock, the Board of
Directors may make such adjustments in the number of unpurchased shares
subject to the Plan, the number of shares subject to options outstanding in
the Plan, the exercise price specified in options outstanding under the
Plan, and the number of shares subject to stock appreciation rights
outstanding under the Plan as it may determine to be appropriate and
equitable. In the event of a merger, consolidation, reorganization or
dissolution of the Company, or the sale or exchange of substantially all of
the Company's assets, the rights under options and stock appreciation
rights outstanding under the Plan shall terminate, except to the extent and
subject to such adjustments as may be provided by the Board of Directors or
by the terms of the plan or agreement of merger, consolidation,
reorganization, dissolution or sale or exchange of such assets.
The Board of Directors may, in its discretion, prescribe such
provisions and interpretations as it shall deem necessary or desirable for
the implementation of the Plan. The Board of Directors of the Company may,
without shareholder consent, amend the Plan; provided, however, any
amendment that would (i) materially increase the benefits accruing to
participants thereunder, (ii) materially increase the number of shares
which may be issued thereunder, or (iii) materially modify the requirements
as to eligibility for participation thereunder, must be approved by a vote
of the shareholders of the Company.
RESTRICTED STOCK AWARDS
Pursuant to employment arrangements with certain of its employees, the
Company has issued, and may issue in the future to such employees, shares
of Common Stock.
RESALES
Persons who are not officers or directors of the Company ordinarily
may publicly resell shares acquired under the Plan or a restricted stock
award without registration under the Securities Act of 1933, as amended
(the "Act"), in reliance on Section 4(1) thereof. Officers or directors of
the Company may not publicly resell shares acquired under the Plan or a
restricted stock award without separate registration under the Act,
amendment to the registration statement which relates to the Shares offered
hereby, compliance with Rule 144 promulgated under the Act or reliance upon
another exemption under the Act.
An officer or director of the Company who purchases common stock
(other than an acquisition by exercise of an option granted under the Plan)
of the Company within six months before or after the sale of shares
(whether the shares sold were acquired by exercises of the options granted
under the Plan or otherwise) may be obligated under Section 16(b) of the
Securities Exchange Act of 1934, and the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder, to pay to the
Company all or a portion of the amount of the sales price received for the
shares sold in excess of the price paid for the shares purchased. Officers
and directors of the Company are advised to consult with their individual
counsel in this regard prior to the purchase or sale of any such shares.
FEDERAL INCOME TAX CONSEQUENCES
CONSEQUENCES TO THE OPTIONEE UNDER THE PLAN
Under present law, upon the grant and exercise of an Incentive Stock
Option, an optionee will not recognize taxable income for federal income
tax purposes (except as set forth below). However, the amount by which the
fair market value of the stock at the time of exercise exceeds the option
price will be treated as an adjustment to taxable income for alternative
minimum tax purposes. If the optionee does not dispose of the stock so
acquired until more than one year after the transfer of the stock to him,
and until more than two years after the option was granted, gain or loss
recognized on the subsequent disposition of the stock will be treated as
long term capital gain or loss. Such gain or loss is computed as the
difference between the exercise price and the sale price. If the stock is
disposed of prior to those times, the optionee will recognize compensation
taxable as ordinary income in an amount equal to the lesser of (i) the
excess of the fair market value of the stock on the date of exercise over
the option price, or (ii) the amount of gain recognized if the disposition
is a taxable sale or exchange. The balance of gain recognized, if any,
will constitute capital gain income. If an Incentive Stock Option is
exercised and payment is made by means of previously held stock, there is
no gain or loss recognized to the optionee unless the previously held stock
was acquired pursuant to an Incentive Stock Option and has not been held
for the minimum statutory holding period that is required in order to
receive the preferential tax treatment accorded Incentive Stock Options.
In such case, the transfer will be deemed a disposition of such previously
held stock and the optionee will recognize income in the manner described
above.
Under present law, upon the granting of a Non-Statutory Option, an
optionee does not recognize taxable income for federal income tax purposes
unless the option, at the time of its grant, has a readily ascertainable
fair market value. Generally, an option will be treated as having a
readily ascertainable fair market value only if the option is actively
trade on an established market. Since any options to be issued pursuant to
the Plan will not be actively traded on an established market, no taxable
income should be recognized for federal income tax purposes by an optionee
upon the granting of such options. However, upon the exercise of an
untraded Non-Statutory Option, the optionee will recognize compensation
taxable as ordinary income in an amount equal to the excess of the fair
market value of the stock acquired, determined at the time of exercise,
over the option price. Upon receipt of payment from the exercise of stock
appreciation rights by an optionee, the optionee will recognize
compensation taxable as ordinary income in an amount equal to the sum of
any cash payment and the fair market value of any stock received determined
at the time of such payment.
Special rules govern recognition of income by optionees subject to
Section 16(b) of the Securities Exchange Act of 1934.
If a Non-Statutory Stock Option is exercised and payment is made by
means of previously held stock, or such stock and cash, there is no gain or
loss recognized to the optionee on the previously held stock. The number
of shares equal to the number delivered as payment of the option exercise
price will have a tax basis equal to that of the shares originally
exchanged and the holding period will include the holding period for the
shares originally exchanged. The remaining number of newly acquired shares
will have a tax basis equal to the amount of any cash paid by the optionee
plus, the compensation realized by the optionee for federal income tax
purposes, and the holding period for such shares commences on the date the
option is exercised.
Net capital gains may in some situations enjoy more favorable tax
treatment than ordinary income because they are taxed at a maximum rate of
28%, while ordinary income is taxed at a maximum rate of 39.6%.
Additionally, the distinction between capital gains and ordinary income may
be significant to an individual depending on his particular tax situation.
The adjustment to taxable income for alternative minimum tax purposes that
may arise from exercise of an Incentive Stock Option may be significant to
an optionee. The optionee may be entitled to a credit against his regular
tax liability in subsequent years for the amount of alternative minimum tax
liability incurred in the year of exercise attributable to such adjustment.
Moreover, solely for the purposes of determining alternative minimum tax
liability, the basis of the stock will be increased by the amount of such
adjustment.
CONSEQUENCES TO THE COMPANY OF THE PLAN
To the extent an individual optionee qualifies for capital gain
treatment, neither the Company nor its subsidiaries will be entitled to a
deduction for federal income tax purposes in connection with the grant or
exercise of the option. In other cases, the Company or its subsidiaries
will generally receive a federal income tax deduction in the same amount as
the amount which is taxable to the employee as compensation.
For financial accounting purposes under generally accepted accounting
principles presently in effect, the grant or exercise of a stock option
(which does not include stock appreciation rights) does not result in a
charge to the Company's net income. A stock option which includes stock
appreciation rights, in general, results in a charge to income based on the
amount payable under the right less the applicable tax benefit.
None of the Plans are qualified under Section 401(a) of the Internal
Revenue Code of 1986 (the "Code") as amended, nor subject to any provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
CONSEQUENCES TO RECIPIENTS OF RESTRICTED STOCK AWARDS.
During each year a recipient is issued restricted shares of Common
Stock by the Company, he or she will recognize compensation taxable as
ordinary income in an amount equal to fair market value of such shares as
of the date of their grant.
CONSEQUENCES TO THE COMPANY UNDER THE EMPLOYMENT AGREEMENT.
During each year the Company issues restricted stock, it will be
entitled to a federal income tax deduction in the same amount as the amount
which is taxable to the recipient as compensation.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Securities and Exchange
Commission by the Company pursuant to the Securities Exchange Act of 1934,
as amended, are hereby incorporated by reference:
1. The Company's annual report on Form 10-K and Amendment No. 1 on
Form 10-K/A for the year ended December 31, 1997.
2. The Company's current report on Form 8-K dated February 1, 1998.
3. The Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1998.
4. The Company's current report on Form 8-K dated April 1, 1998.
5. Item 1 of the Company's registration statement on Form 8-A
registering its Common Stock under Section 12(b) of the
Securities Exchange Act of 1934.
6. The Company's definitive Proxy Statement relating to the
Company's Special Meeting of Shareholders dated May 14, 1998,
contained in the Registration Statement on Form S-4 of Sky Merger
Corp. (Registration No. 333-51285).
7. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934
subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities
then remaining unsold.
The Company will provide without charge to each optionee to whom a
copy of this Summary is delivered, on the written or oral request of any
such person, additional information concerning the Plan, a copy of any or
all of the documents incorporated herein by reference or any other document
required to be delivered to such person pursuant to Rule 428(b) of the Act.
Requests for such information should be directed to the Secretary, Horizon
Group, Inc., 5000 Hakes Drive, Norton Shores, Michigan 49441, (616) 728-
9100.
</TABLE>
<PAGE>
EXHIBIT 5
June 10, 1998 312/368-4012
The Board of Directors
Horizon Group, Inc.
5000 Hakes Drive
Norton Shores, Michigan 49441
Dear Sirs:
We have examined the registration statement on Form S-8 filed with the
Securities and Exchange Commission on or about June 10, 1998 (the
"Registration Statement") for registration under the Securities Act of 1933,
as amended, of 17,108 shares of common stock of Horizon Group, Inc. (the
"Company"), par value $0.01 per share ("Common Stock") issued pursuant to
certain restricted stock arrangements entered into between the Company and
certain of its employees, 655,000 shares of Common Stock reserved for
issuance by the Company pursuant to the Company's 1997 Stock Option Plan and
35,000 shares of Common Stock reserved for issuance by the Company pursuant
to an employment agreement entered into between the Company and James S.
Wassel. We have examined pertinent corporate documents and records of the
Company, including its Articles of Incorporation and its Bylaws, and we are
familiar with the corporate proceedings had and contemplated in connection
with the issuance of shares by the Company. We have also made such other
examinations as we have deemed necessary or appropriate as a basis for the
opinion hereinafter expressed.
On the basis of the foregoing, we are of the opinion that the 17,108
shares of Common Stock issued pursuant to certain restricted stock
agreements entered into between the Company and certain of its employees
have been duly authorized, legally issued, fully paid and non-assessable.
We are also of the opinion that the 655,000 shares of Common Stock reserved
for issuance pursuant to the 1997 Stock Option Plan and the 35,000 shares of
Common Stock reserved for issuance by the Company pursuant to an employment
agreement entered into between the Company and James S. Wassel have been
duly authorized, and, when issued and sold upon the terms and conditions set
forth in such plan and in the options granted and to be granted thereunder,
such shares shall be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to our firm in the registration
statement under the captions "Legal Matters" and "Interests of Named Experts
and Counsel."
Very truly yours,
RUDNICK & WOLFE
By:/S/ HAL M. BROWN
Hal M. Brown, a Partner
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1997 Stock Option Plan and Restricted Stock
Awards of Horizon Group, Inc for the registration of 707,108 shares of its
common stock of our report dated March 13, 1998 (except for the second
paragraph of Note 3 and the fourth and fifth paragraphs of Note 4, as to
which the date is April 1, 1998), with respect to the consolidated
financial statements and schedule of Horizon Group, Inc., included in its
Annual Report (Form 10-K/A) for the year ended December 31, 1997, and to
the reference to our firm under the caption "Experts" and the use of our
report dated April 3, 1998 with respect to the combined financial
statements and schedule of Horizon Group Properties, Inc., included in the
Registration Statement (Form S-4 No. 333-51285) of Sky Merger Corp. and the
related Joint Proxy Statement/Prospectus/Information Statement, filed with
the Securities and Exchange Commission.
Chicago, Illinois
June 3, 1998
/s/ Ernst & Young LLP
<PAGE>
EXHIBIT 23.2
ACKNOWLEDGMENT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Horizon Group, Inc.
We are aware of the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1997 Stock Option Plan and
Restricted Stock Awards of Horizon Group, Inc. for the registration of
707,108 shares of its common stock of our report dated May 7, 1998,
relating to the unaudited consolidated condensed interim financial
statements of Horizon Group, Inc. that are included in its Form 10-Q for
the three-month period ended March 31, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the aforementioned registration statement prepared or certified by
accountants within the meaning of Section 7 or 11 of the Securities Act of
1933.
Chicago, Illinois
June 3, 1998
/s/ Ernst & Young LLP
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1997 Stock Option Plan and Restricted Stock
Awards of Horizon Group, Inc. of our reports (a) dated January 23, 1998,
with respect to the statements of revenue and certain expenses of Prime
Transferred Properties included in the Registration Statement (Form S-4 No.
333-51285) of Sky Merger Corp. and related Joint Proxy
Statement/Prospectus/Information Statement, and (b) dated January 23, 1998
(except for Note 15, as to which the date is February 1, 1998), with
respect to the consolidated financial statements and schedule of Prime
Retail, Inc., included in its Annual Report (Form 10-K), both for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
Baltimore, Maryland
June 8, 1998
/s/ Ernst & Young LLP
<PAGE>
EXHIBIT 24
1997 STOCK OPTION PLAN AND
RESTRICTED STOCK AWARDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer, or both, of HORIZON GROUP, INC., a Michigan corporation
(the "Company"), does hereby constitute and appoint NORMAN PERLMUTTER and JAMES
S. WASSEL, with full power to each of them to act alone, as the true and lawful
attorneys and agents of the undersigned, with full power of substitution and
resubstitution to each of said attorneys to execute, file or deliver any and
all instruments and to do all acts and things which said attorneys and agents,
or any of them, deem advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any requirements or regulations of the
Securities and Exchange Commission in respect thereof, in connection with the
Company's filing with respect to the registration under said Securities Act of
shares of common stock subject to the Company's 1997 Stock Option Plan and
restricted stock awards, including specifically, but without limitation of the
general authority hereby granted, the power and authority to sign his name as a
director or officer or both, of the Company, as indicated below opposite his
signature, to the registration statement, and any amendment, post-effective
amendment, supplement or papers supplemental thereto, to be filed with respect
to said shares of common stock; and each of the undersigned does hereby fully
ratify and confirm all that said attorneys and agents, or any of them, or the
substitute of any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 31st day of March, 1998.
/S/ NORMAN PERLMUTTER Director and Chairman of the Board of
Norman Perlmutter Directors
/S/ JAMES S. WASSEL Director, President and Chief Executive
James S. Wassel Officer
(Principal Executive Officer and Principal
Financial Officer)
/S/ DOUGLAS CROCKER II Director
Douglas Crocker II
/S/ WILLIAM P. DICKEY Director
William P. Dickey
/S/ NORMAN R. HIGO Director
Norman R. Higo
/S/ RONALD L. PIASECKI Director
Ronald L. Piasecki
/S/ ROBERT D. PERLMUTTER Director
Robert D. Perlmutter
/S/ MARTIN SHERMAN Director
Martin Sherman
/S/ RICHARD D. STEWART Assistant Controller (Principal Accounting
Richard D. Stewart Officer)
