**Exhibit 10.124**

 

**INDEMNIFICATION ANDFEE AGREEMENT**

**(UBS LOAN)**

 

THISINDEMNIFICATION AND FEE AGREEMENT (UBS LOAN) (this “Agreement”) is madeand entered into as of the 3rd day of September, 2003, between Horizon GroupProperties, Inc., a Maryland corporation (the “Company”), and Gary J.Skoien, an individual (“GJS”).

 

**WITNESSETH:**

 

WHEREAS, GJScurrently is the Chief Executive Officer of the Company; and

 

WHEREAS, onthe date hereof, 500 Hakes Drive LLC, a Delaware limited liability company andan affiliate of the Company (“Borrower”), obtained a loan (the “Loan”)from UBS Real Estate Investments Inc. (“Lender”), the repayment of whichis secured by, among other collateral and security, a mortgage on the officebuilding owned by Borrower and located at 500 Hakes Drive, Norton Shores,Michigan; and

 

WHEREAS, as acondition to making the Loan to Borrower, Lender has required GJS to executeand deliver to Lender (i) that certain Indemnity and Guaranty Agreement, datedas of the date hereof (the “Guaranty Agreement”), from GJS in favor ofLender, and (ii) that certain Hazardous Substances Indemnity Agreement, datedas of the date hereof (the “Hazardous Substances Indemnity Agreement”),from Borrower and GJS in favor of Lender (the Guaranty Agreement and theHazardous Substance Indemnity Agreement are sometimes referred to herein,together, as the “Indemnity Agreements” and, individually, as an “IndemnityAgreement”); and

 

WHEREAS, as acondition to executing and delivering to Lender the Indemnity Agreements, GJShas required that the Company execute and deliver to GJS this Agreement.

 

NOW,THEREFORE, in consideration of the GJS’s agreement to execute and deliver theIndemnity Agreements so that Borrower can obtain the Loan from Lender and forother good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereto hereby agrees as follows:

 

1.             In consideration for the agreementof GJS to execute and deliver to Lender the Indemnity Agreements, therebysubjecting GJS to the potential liabilities and obligations as set forth in theIndemnity Agreements, the Company shall pay to GJS an annual fee (the “Fee”)in the amount of Thirty Thousand and no/100 Dollars ($30,000.00), payable onthe date hereof and on each subsequent anniversary of the date hereof until theearlier of (a) the date on which the Loan is repaid in full or (b) the date onwhich the Lender accepts a replacement guarantor party for the IndemnityAgreements and releases GJS (along with GJS’s estate, heirs, executors andadministrators) from all future obligations under the IndemnityAgreements.  The Fee shall be deemedfully earned when paid.  The terminationor expiration of the Company’s obligation to pay the Fee shall not, in any way,affect any of the other obligations of the Company under this Agreement,including, but not limited to, the Company’s indemnification obligations.

 

2.             (a) The Company shall indemnify,defend and hold harmless GJS from and against any and all liabilities,obligations, damages, losses, costs and expenses (including, withoutlimitation, attorneys’ fees, judgments, fines, penalties and amounts paid insettlement), causes of action, suits, claims, demands and judgments of anynature or description whatsoever (collectively, “Losses”) which may atany time be imposed upon, suffered or incurred by or awarded against GJS under,by reason of or pursuant to any Indemnity Agreement and such indemnificationshall continue following repayment of the Loan and shall inure to the benefitof the GJS’s estate, heirs, executors and administrators.

 

(b)           If any action, suit, proceeding orclaim shall be brought against GJS based upon any of the matters for which GJSis indemnified hereunder, the Company shall promptly assume the defensethereof, including, without limitation, the employment of counsel reasonablyacceptable to GJS and the negotiation of any

 

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settlement of such action,suit, proceeding or claim.  To theextent GJS is not satisfied with the Company’s defense of any action, GJS shallhave the right, at the expense of the Company (which expense shall be includedin Losses), to employ separate counsel in any such action and to participate inthe defense thereof.  In the event theCompany shall fail to undertake to defend GJS against any claim, loss orliability for which GJS is indemnified hereunder, GJS may, at his sole optionand election, but at the Company’s expense, defend or settle such claim, lossor liability.  The liability of theCompany to GJS hereunder shall be conclusively established by such settlementprovided such settlement is made in good faith, the amount of such liability toinclude both the settlement consideration and the costs and expenses,including, without limitation attorneys’ fees and disbursements, incurred byGJS in effecting such settlement.  Insuch event, such settlement consideration, costs and expenses shall be includedin Losses, and the Company shall pay the same as hereinafter provided.  GJS’s good faith in any such settlementshall be conclusively established if the settlement is made on the advice ofindependent legal counsel for GJS.

 

(c)           The Company shall not, without theprior written consent of GJS, settle or compromise any action, suit, proceedingor claim in any matter that may adversely affect GJS or obligate GJS to pay anysum or perform any obligation as determined by GJS in its sole discretion.

 

(d)           All Losses shall be immediatelyreimbursable to GJS when and as incurred and, in the event of any litigation,claim or other proceeding, without any requirement of waiting for the ultimateoutcome of such litigation, claim or other proceeding, and the Company shallpay to GJS any and all Losses within ten (10) days after written notice fromGJS itemizing the amounts thereof incurred to the date of such notice.  In addition to any other remedy availablefor the failure of the Company to periodically pay such Losses, such Losses, ifnot paid within such ten-day period, shall bear interest at the rate of twelvepercent (12%) per annum, compounded monthly, until paid in full.

 

(e)           The right to indemnificationconferred by this Agreement shall include the right of GJS to be paid by theCompany the expenses incurred in defending any actual or threatened action, suitor proceeding in advance of its final disposition.

 

3.             In the event the employment of GJSby the Company is terminated for any reason or GJS no longer serves as theChief Executive Officer of the Company, the Company shall use its best effortsto cause Lender to release GJS from all obligations under the IndemnityAgreements.  The Company’s best effortsshall include, but shall not be limited to, (a) requiring any person (the “NewCEO”) hired (or promoted) by the Company as successor to GJS (regardless ofwhether the New CEO is given the title of Chief Executive Officer) to executeand deliver to Lender any agreements or documents, such as agreements similarto the Indemnity Agreements, as may be required by Lender as to condition toreleasing GJS from all obligations under the Indemnity Agreements, (b)requiring the New CEO to have a net worth not less than the amount required byLender as a condition to releasing GJS from all obligations under the IndemnityAgreements, and (c) taking all other actions and executing all other documentsrequested or required by Lender as a condition to releasing GJS from allobligations under the Indemnity Agreements. In the event the New CEO is not hired (or promoted) on or before theeffective date on which the employment of GJS by the Company is terminated orGJS no longer serves as the Chief Executive Officer of the Company and GJS hasnot been released by the Lender, then the Fee due GJS shall be increased to$82,500 per year (if GJS’ employment with the Company is terminated by theCompany) or $52,500 per year (if GJS no longer serves as CEO for other reasons)(pro rated for the number of days remaining in the year) and the increasedamount due GJS for the year in which such event occurs shall be paidimmediately by the Company.  The Companyshall maintain key man life insurance on GJS in the amount not less than$3,000,000 during the term of this Agreement for which a Fee is due.  The Company, as beneficiary of the lifeinsurance, shall either (i) use the proceeds to pay in full the Loan or (ii)for so long as the Loan is not paid in full, set aside such proceeds in aseparate account to be used to (a) pay any amounts due the estate of GJS underthis Agreement, or (b) pay in full the Loan. The Company and GJS shall work together in good faith to obtain such keyman life insurance policy as soon as practicable following the date of thisAgreement.

 

4.             This Agreement contains the entireagreement between the parties respecting the matters herein set forth andsupersedes all prior agreements, whether written or oral, between the partiesrespecting such matters.  Any amendmentsor modifications hereto, in order to be effective, shall be in writing andexecuted by the parties hereto.

 

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A determination that anyprovision of this Agreement is unenforceable or invalid shall not affect theenforceability or validity of any other provision, and any determination thatthe application of any provision of this Agreement to any person orcircumstance is illegal or unenforceable shall not affect the enforceability orvalidity of such provision as it may apply to any other persons orcircumstances.

 

5.             This Agreement shall be governed byand construed in accordance with the laws of the State of Illinois.

 

6.             This Agreement shall bind theCompany and its successors and assigns of the Company and shall inure to thebenefit of GJS and the estate, heirs, executors, administrators, successors andassigns of GJS.  The Company may assignthis Agreement to a purchaser of all the assets and liabilities of the Companyprovided such purchaser assumes all of the Company’s obligations under thisAgreement, however, the Company shall not assign any of its rights orobligations under this Agreement to any other third party without the priorwritten consent of GJS, which consent may be withheld by GJS in GJS’s solediscretion.

 

7.             In the event it is necessary forGJS to retain the services of an attorney or any other consultants in order toenforce this Agreement, or any portion thereof, the Company agrees to pay toGJS any and all costs and expenses, including, without limitation, attorney’sfees, incurred by GJS as a result thereof and such costs, fees and expensesshall be included in the definition of Losses herein.

 

IN WITNESSWHEREOF, the Company and GJS have executed this Agreement in duplicate as ofthe day and year first above written.

 

 
|   | HORIZON  GROUP PROPERTIES, INC. |   |
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|   | By:                             |   |   |
|   | Name:                           |   |   |
|   | Title:                          |   |   |
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