Document:

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                                  EXHIBIT 10.64

                            CASH MANAGEMENT AGREEMENT

                           Dated: as of July __, 2002

                                      among

                           LAUGHLIN OUTLET CENTER LLC,
                          MEDFORD OUTLET CENTER LLC AND
                          WARRENTON OUTLET CENTER LLC,

                           collectively, as Borrowers

                                       and

                    UBS WARBURG REAL ESTATE INVESTMENTS INC.,

                                    as Lender

                                       and

                      WACHOVIA BANK, NATIONAL ASSOCIATION,

                                 as Deposit Bank

                                       and

                         HORIZON GROUP PROPERTIES, L.P.,

                                   as Manager]

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                            CASH MANAGEMENT AGREEMENT

     CASH MANAGEMENT AGREEMENT (this "AGREEMENT"), dated as of July __, 2002,
among LAUGHLIN OUTLET CENTER LLC, a Delaware limited liability company ("HORIZON
LAUGHLIN"), MEDFORD OUTLET CENTER LLC, a Delaware limited liability company
("HORIZON MEDFORD"), and WARRENTON OUTLET CENTER LLC, a Delaware limited
liability company ("HORIZON WARRENTON"; and Horizon Warrenton, together with
Horizon Laughlin and Horizon Medford, each a "BORROWER" and collectively,
"BORROWERS"), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association ("DEPOSIT BANK"), UBS WARBURG REAL ESTATE INVESTMENTS INC., a
Delaware corporation ("LENDER"), and HORIZON GROUP PROPERTIES, L.P., a Delaware
limited partnership ("MANAGER").

                              W I T N E S S E T H:

     WHEREAS, pursuant to a certain Loan Agreement (as the same may be amended,
modified or supplemented from time to time, the "LOAN AGREEMENT") dated the date
hereof by and among Borrowers and Lender, Lender has made a loan to (i) Horizon
Laughlin in the principal amount of up to $11,000,000.00 (the "LAUGHLIN LOAN")
(ii) Horizon Medford in the principal amount of up to $6,500,000.00 (the
"MEDFORD LOAN"), and (iii) Horizon Warrenton in the principal amount of up to
$4,500,000.00 (the "WARRENTON LOAN" and the Warrenton Loan, together with the
Laughlin Loan and the Medford Loan, collectively, the "LOAN");

     WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings set forth in the Loan Agreement;

     WHEREAS, pursuant to the applicable Mortgages and the Assignments of Leases
encumbering the Properties, each Borrower has granted to Lender, as security for
the portion of the Loan applicable to the Individual Property owned by such
Borrower, a security interest in all of such Borrower's right, title and
interest in and to the Gross Revenue, and has assigned and conveyed to Lender
all of such Borrower's right, title and interest in and to the Gross Revenue due
and to become due to such Borrower or to which such Borrower is now or may
hereafter become entitled;

     WHEREAS, each Borrower and Manager have entered into a certain Management
Agreement with respect to the Individual Property owned by such Borrower, dated
as of July __, 2002, pursuant to which Manager has agreed to manage the
Individual Property owned by such Borrower; and

     WHEREAS, pursuant to the Clearing Account Agreement applicable to each
Individual Property, the Clearing Account Bank shall receive and process all
Gross Revenue other than credit card receipts and, from and after the date
hereof, all amounts constituting available funds on deposit in the Clearing
Account from time to time shall be transferred by wire transfer or via the ACH
System (as hereinafter defined) to the Deposit Account to be held and disbursed
as set forth in the Loan Agreement;

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     NOW, THEREFORE, in consideration of the covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Loan Agreement. As used herein, the following terms shall have the
following definitions:

     "ACCOUNTS" shall mean, collectively, the Deposit Account, the Capital
Expenditure Account, the Debt Service Account, the Insurance Account, the Tax
Account, the Rollover Account, the Casualty and Condemnation Account, the
Mezzanine Payment Account and any and all other similar accounts (not including
the Borrower Operating Account) established under the Loan Agreement, this
Agreement or pursuant to the other Loan Documents.

     "ACH SYSTEM" shall mean the automated clearinghouse system.

     "AGREEMENT" shall mean this Cash Management Agreement dated as of July ___,
2002, among Borrowers, Manager, Deposit Bank and Lender, as amended,
supplemented or otherwise modified from time to time.

     "BORROWER OPERATING ACCOUNT" shall mean, with respect to the applicable
Borrower, the following accounts:

           Horizon Laughlin:    Bank: LaSalle Bank National Association
                                ABA#: 071-000-505
                                Account#: 5800427923
                                Account Name: Laughlin Outlet Center LLC
                                      Operating Account

           Horizon Medford:     Bank: LaSalle Bank National Association
                                ABA#: 071-000-505
                                Account#: 5800427907
                                Account Name: Medford Outlet Center LLC
                                      Operating Account

           Horizon Warrenton:   Bank: LaSalle Bank National Association
                                ABA#: 071-000-505
                                Account#: 5800427915
                                Account Name: Warrenton Outlet Center LLC
                                      Operating Account

     "CAPITAL EXPENDITURE ACCOUNT" as defined in SECTION 2.1(f).

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     "CASUALTY AND CONDEMNATION ACCOUNT" as defined in SECTION 2.1(h).

     "COLLATERAL" as defined in SECTION 4.1.

     "DEBT SERVICE ACCOUNT" as defined in SECTION 2.1(b).

     "DEPOSIT ACCOUNT" as defined in SECTION 2.1(a).

     "ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution, or
(ii) a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. Section
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

     "ELIGIBLE INSTITUTION" shall mean a depository institution insured by the
Federal Deposit Insurance Corporation the short term unsecured debt obligations
or commercial paper of which are rated at least A-1 by Standard & Poor's Ratings
Group, P-1 by Moody's Investors Service, Inc. and F-1+ by Fitch IBCA, Inc. in
the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of letters of credit or accounts in which funds are held for more
than thirty (30) days, the long term unsecured debt obligations of which are
rated at least "AA" by Fitch and S&P and "Aa2" by Moody's).

     "INSURANCE ACCOUNT" as defined in SECTION 2.1(d).

     "MEZZANINE PAYMENT ACCOUNT" as defined is SECTION 2.1(i).

     "MONTHLY PAYMENT DATE" shall mean the eleventh (11th) day of every calendar
month occurring during the term of the Loan.

     "OBLIGATIONS" as defined in SECTION 4.1.

     "PERMITTED INVESTMENTS" shall (i) prior to a Secondary Market Transaction,
mean any investment suitable for the investment of escrows and reserves
established under mortgage loans included in a Secondary Market Transaction in
which some or all of the Securities issued are rated "AAA" (or the equivalent
rating) by the Rating Agencies, as the standards therefor are established from
time to time, or such investments which are otherwise acceptable to Lender, and
(ii) from and after a Secondary Market Transaction, have the meaning given to
such term in the Pooling and Servicing Agreement (or equivalent document)
applicable to the Secondary Market Transaction.

     "ROLLOVER ACCOUNT" as defined in SECTION 2.1(e).

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     "TAX ACCOUNT" as defined in SECTION 2.1(c).

     "TENANT DIRECTION LETTER" as defined in Section 2.2(c).

     "UCC" as defined in SECTION 4.1(a)(iv).

                                    ARTICLE 2
                                  THE ACCOUNTS

     Section 2.1   ESTABLISHMENT OF ACCOUNTS. Borrowers acknowledge and confirm
that Borrowers have established the following Accounts with Deposit Bank:

            (a)    An account into which the Clearing Bank shall transfer by
wire transfer or via the ACH System all amounts constituting available funds on
deposit in the Clearing Account (the "DEPOSIT ACCOUNT");

            (b)    An account into which Servicer shall deposit from the Deposit
Account the amounts required for the payment of the Laughlin Monthly Debt
Service Payment Amount, the Medford Monthly Debt Service Payment Amount and the
Warrenton Monthly Debt Service Payment Amount (in such order and priority as
Lender shall determine in its sole discretion), together with any amounts due on
account of any interest accruing at the Default Rate and late payment charges,
if any (the "DEBT SERVICE ACCOUNT");

            (c)    An account into which Servicer shall deposit from the Deposit
Account the sums required to be deposited pursuant to Section 6.3 of the Loan
Agreement for the payment of Taxes (the "TAX ACCOUNT");

            (d)    An account into which Servicer shall deposit from the Deposit
Account the sums required to be deposited pursuant to Section 6.4 of the Loan
Agreement for the payment of Insurance Premiums (the "INSURANCE ACCOUNT");

            (e)    An account into which Servicer shall deposit from the Deposit
Account the sums required to be deposited pursuant to Section 6.6 of the Loan
Agreement for the payment of Approved Leasing Expenses (the "ROLLOVER ACCOUNT");

            (f)    An account into which Servicer shall deposit from the Deposit
Account the sums required to be deposited pursuant to Section 6.5 of the Loan
Agreement for the payment of Capital Expenditures (the "CAPITAL EXPENDITURE
ACCOUNT");

            (g)    [INTENTIONALLY DELETED];

            (h)    An account into which Servicer shall deposit from the Deposit
Account all Net Proceeds, if any (the "CASUALTY AND CONDEMNATION ACCOUNT");

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            (i)    An account into which Servicer shall deposit from the Deposit
Account funds sufficient to pay any other amounts then due and payable under the
Mezzanine Loan Documents (the "MEZZANINE PAYMENT ACCOUNT"); and

            (j)    Each Borrower Operating Account.

     At Lender's, Deposit Bank's or Servicer's election, any of the Accounts may
be established as subaccounts of the Deposit Account on a ledger-entry basis, in
which event the term "Account" shall refer to any such subaccount.

     Section 2.2   DEPOSITS INTO CLEARING ACCOUNT; TENANT DIRECTION LETTERS.
Each Borrower and Manager represent, warrant and covenant that:

            (a)    Each Borrower and Manager shall cause all Gross Revenue to be
deposited directly into the Clearing Account. If, notwithstanding the provisions
of this SECTION 2.2, any Borrower or Manager receives any Gross Revenue, then
(i) such amounts shall be deemed to be Collateral and shall be held in trust for
the benefit, and as the property, of Lender, (ii) such amounts shall not be
commingled with any other funds or property of any Borrower or Manager, and
(iii) such Borrower or Manager shall deposit such amounts in the Clearing
Account within three (3) Business Days of receipt.

            (b)    There are no other accounts maintained by any Borrower,
Manager or any other Person into which any Gross Revenue is deposited. So long
as the Notes shall be outstanding, neither any Borrower, Manager nor any other
Person shall open any other such account for the deposit of Gross Revenue.

            (c)    Each Borrower or Manager shall, within five (5) Business Days
after the date hereof, deliver a notice in the form of EXHIBIT A to each
existing Tenant at the Individual Property owned by such Borrower (the "TENANT
DIRECTION LETTER") directing them to remit their rent checks directly to the
Clearing Bank at the Clearing Account Address (as defined in the Clearing
Account Agreement), and shall also deliver such a notice to each future Tenant
at the Property. Without the prior written consent of Lender, neither any
Borrower nor Manager shall (i) terminate, amend, revoke or modify any Tenant
Direction Letter in any manner whatsoever, or (ii) direct or cause any Tenant to
pay any amount in any manner other than as provided in the related Tenant
Direction Letter.

            (d)    Commencing with the first billing statement delivered after
the date hereof and for each subsequent statement delivered, each Borrower and
Manager shall instruct all Persons that maintain open accounts with such
Borrower or Manager (on behalf of Borrower) or with whom such Borrower or
Manager (on behalf of Borrower) does business on an "accounts receivable" basis
with respect to the Individual Property owned by such Borrower to deliver all
payments due under such accounts to the Clearing Account. Neither any Borrower
nor Manager shall direct any such Person to make payments due under such
accounts in any other manner.

     Section 2.3   ACCOUNT NAME. The Accounts shall each be exclusively in the
name of Lender; PROVIDED, HOWEVER, that in the event Lender transfers or assigns
all or any portion of the Loan, Deposit Bank, at Lender's request, shall change
the name of each Account to the name of the

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transferee or assignee. In the event Lender retains a Servicer to service the
Loan, Deposit Bank, at Lender's request, shall comply with the instructions of
Servicer, as agent for Lender.

     Section 2.4   ELIGIBLE ACCOUNTS/CHARACTERIZATION OF ACCOUNTS. Each Account
shall be maintained as an Eligible Account. Each Account is and shall be treated
either as a "securities account", as such term is defined in Section 8-501(a) of
the UCC, or a "deposit account", as defined in Section 9-102(a)(29) of the UCC.
Deposit Bank acknowledges and agrees that it shall notify Lender which Accounts
are intended to be deposit accounts and which Accounts are intended to be
securities accounts. Deposit Bank hereby agrees that each item of property
(whether investment property, financial asset, securities, instrument, cash or
other property) credited to each Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the UCC. Subject to the terms of
this Agreement, Lender shall be treated as having the right to exercise the
rights with respect to any financial asset credited to each Account, but subject
to the terms of the Loan Agreement. All securities or other property underlying
any financial assets credited to each Account shall be registered in the name of
Lender, indorsed to Lender or in blank or credited to another securities account
maintained in the name of Lender and in no case will any financial asset
credited to any Account be registered in the name of any Borrower or Manager,
payable to the order of any Borrower or Manager or specially indorsed to any
Borrower or Manager.

     Section 2.5   PERMITTED INVESTMENTS. Sums on deposit in the Accounts shall
not be invested except in Permitted Investments. Lender shall have the right to
direct Deposit Bank to invest sums on deposit in the Accounts (except for the
Tax Account and the Insurance Account) in Permitted Investments; PROVIDED,
HOWEVER, in no event shall Deposit Bank make a Permitted Investment if the
maturity date of that Permitted Investment is later than the date on which the
invested sums are required for payment of an obligation for which the Account
was created. Each Borrower hereby irrevocably authorizes and directs Deposit
Bank to apply any income earned from Permitted Investments to the respective
Accounts which generated such income. The amount of actual losses sustained on a
liquidation of a Permitted Investment shall be deposited into the Deposit
Account by each Borrower no later than one (1) Business Day following such
liquidation. Each Borrower shall be responsible for payment of any federal,
state or local income or other tax applicable to income earned from Permitted
Investments. The Accounts relating to each Individual Property (except for the
Tax Account and the Insurance Account) shall be assigned the federal tax
identification number of the applicable Borrower, which numbers are 02-0628564
(Horizon Laughlin), 02-0628540 (Horizon Medford) and 02-0628543 (Horizon
Warrenton).

                                    ARTICLE 3
                       DEPOSITS/ALLOCATIONS/DISBURSEMENTS

     Section 3.1   DEPOSITS. Each Borrower shall make such initial and
additional deposits into the Accounts as and when required in accordance with
Article 6 of the Loan Agreement or any other applicable provisions of the Loan
Agreement.

     Section 3.2   ALLOCATIONS. Allocations from the Deposit Account into the
other Accounts shall be made as and when required in accordance with Section
6.10 of the Loan Agreement or any other applicable provisions of the Loan
Agreement.

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     Section 3.3   DISBURSEMENTS. Disbursements from the Accounts shall be made
as and when required in accordance with Article 6 of the Loan Agreement or any
other applicable provisions of the Loan Agreement.

     Section 3.4   SOLE DOMINION AND CONTROL. Each Borrower and Manager
acknowledge and agree that the Accounts are subject to the sole dominion,
control and discretion of Lender and its authorized agents or designees,
including Deposit Bank, but subject to the terms hereof and to the Loan
Agreement. Neither any Borrower nor Manager shall have the right of withdrawal
with respect to any Account except with the prior written consent of Lender.
Deposit Bank shall have the right and agrees to comply with instructions
originated by Lender with respect to the disposition of funds in the Accounts
without the further consent of any Borrower or Manager or any other Person.
Deposit Bank shall comply with all "entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) and instructions originated by Lender directing the
transfer or redemption of any financial asset relating to any Account without
further consent by any Borrower or any other Person.

                                    ARTICLE 4
                               PLEDGE OF ACCOUNTS

     Section 4.1   SECURITY FOR OBLIGATIONS.

            (a)    To secure the full and punctual payment and performance of
all obligations of each Borrower now or hereafter existing with respect to the
Loan, whether for principal, interest, fees, expenses or otherwise, and all
obligations of each Borrower now or hereafter existing under the Loan Agreement,
the Notes, the Mortgages, this Agreement and all other Loan Documents (all such
obligations, collectively, the "OBLIGATIONS"), each Borrower hereby grants to
Lender a first priority continuing security interest in and to the following
property of such Borrower, whether now owned or existing or hereafter acquired
or arising and regardless of where located (all of the same, collectively, the
"COLLATERAL"):

                   (i)     the Accounts and all cash, checks, drafts, letters of
     credit, certificates and instruments, if any, from time to time deposited
     or held in the Accounts, including, without limitation, all deposits or
     wire transfers made to the Accounts;

                   (ii)    any and all Permitted Investments;

                   (iii)   all interest, dividends, cash, instruments,
     investment property and other property from time to time received,
     receivable or otherwise payable in respect of, or in exchange for, any or
     all of the foregoing; and

                   (iv)    to the extent not covered by CLAUSES (i), (ii) or
     (iii) above, all "proceeds" (as defined under the Uniform Commercial Code
     as in effect in the State of New York (the "UCC")) of any or all of the
     foregoing.

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            (b)    Lender and Deposit Bank, as agent for Lender, shall have with
respect to the Collateral, in addition to the rights and remedies herein set
forth, all of the rights and remedies available to a secured party under the
UCC, as if such rights and remedies were fully set forth herein.

     Section 4.2   RIGHTS ON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, Lender shall promptly notify Deposit Bank of
such Event of Default and, without notice from Deposit Bank or Lender, (a) no
Borrower shall have any further right in respect of (including, without
limitation, the right to instruct Lender or Deposit Bank to transfer from) the
Accounts or any of the Collateral, (b) Lender may direct Deposit Bank to
liquidate and transfer any amounts then invested in Permitted Investments to the
Accounts or reinvest such amounts in other Permitted Investments as Lender may
reasonably determine is necessary to perfect or protect any security interest
granted or purported to be granted hereby or to enable Deposit Bank, as agent
for Lender, or Lender to exercise and enforce Lender's rights and remedies
hereunder with respect to any Collateral, and (c) Lender may apply any
Collateral to any Obligations in such order of priority as Lender may determine
in its sole and absolute discretion.

     Section 4.3   FINANCING STATEMENT; FURTHER ASSURANCES. Simultaneously
herewith, each Borrower shall deliver to Lender for filing a financing statement
or statements in connection with the Collateral in the form required by Lender
to properly perfect Lender's security interest therein. Each Borrower agrees
that at any time and from time to time, at the expense of Borrowers, each
Borrower will promptly execute and deliver all further reasonable instruments
and documents, and take all further action, that may be necessary or desirable,
or that Deposit Bank or Lender may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby
(including, without limitation, any security interest in and to any Permitted
Investments) or to enable Deposit Bank or Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.

     Section 4.4   TERMINATION OF AGREEMENT. This Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until payment and performance in full of the Obligations. Upon
payment and performance in full of the Obligations, this Agreement shall
terminate and Borrowers shall be entitled to the return, upon their request and
at their expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof, and Deposit Bank and/or Lender
shall execute such instruments and documents as may be reasonably requested by
Borrowers to evidence such termination and the release of the lien hereof.

                                    ARTICLE 5
                  RIGHTS AND DUTIES OF LENDER AND DEPOSIT BANK

     Section 5.1   REASONABLE CARE. Beyond the exercise of reasonable care in
the custody thereof or as otherwise expressly provided herein, neither Deposit
Bank nor Lender shall have any duty as to any Collateral in its possession or
control as agent therefor or bailee thereof or any income thereon or the
preservation of rights against any Person or otherwise with respect thereto.
Deposit Bank and Lender each shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which Deposit Bank
or Lender accords its own property, it being understood that

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Lender shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in value thereof, by reason of the act or
omission of Deposit Bank or Lender, or their respective affiliates, agents,
employees or bailees, except to the extent that such loss or damage results from
Deposit Bank's or Lender's gross negligence or willful misconduct. Neither
Lender nor Deposit Bank shall have any liability for any loss resulting from the
investment of funds in Permitted Investments in accordance with the terms and
conditions of this Agreement.

     Section 5.2   INDEMNITY. Deposit Bank, in its capacity as agent hereunder,
shall be responsible for the performance only of such duties as are specifically
set forth herein, and no duty shall be implied from any provision hereof.
Deposit Bank shall not be under any obligation or duty to perform any act which
would involve it in any expense or liability, or to institute or defend any suit
in respect hereof, or to advance any of its own monies. Borrowers shall
indemnify and hold Deposit Bank and Lender, their respective employees and
officers harmless from and against any loss, cost or damage (including, without
limitation, reasonable attorneys' fees and disbursements) incurred by Deposit
Bank and/or Lender in connection with the transactions contemplated hereby,
except to the extent that such loss or damage results from Deposit Bank's or
Lender's gross negligence or willful misconduct.

     Section 5.3   RELIANCE. Deposit Bank shall be protected in acting upon any
written notice, resolution, request, consent, order, certificate, report,
opinion, bond or other paper, document or signature believed by it to be
genuine, and it may be assumed that any Person purporting to act on behalf of
any Person giving any of the foregoing in connection with the provisions hereof
has been duly authorized to do so. Deposit Bank may consult with counsel, and
the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder and in
good faith in accordance therewith. Deposit Bank shall not be liable for any act
or omission done or omitted to be done by Deposit Bank in reliance upon any
instruction, direction or certification received by Deposit Bank and without
gross negligence or willful misconduct.

     Section 5.4   RESIGNATION OF DEPOSIT BANK.

            (a)    Deposit Bank shall have the right to resign as Deposit Bank
hereunder upon thirty (30) days' prior written notice to Lender, and in the
event of such resignation, Lender shall appoint a successor Deposit Bank which
must be an Eligible Institution. No such resignation by Deposit Bank shall
become effective until a successor Deposit Bank shall have accepted such
appointment and executed an instrument by which it shall have assumed all of the
rights and obligations of Deposit Bank hereunder. If no such successor Deposit
Bank is appointed within sixty (60) days after receipt of the resigning Deposit
Bank's notice of resignation, the resigning Deposit Bank may petition a court
for the appointment of a successor Deposit Bank.

            (b)    In connection with any resignation by Deposit Bank, (i) the
resigning Deposit Bank shall, at the sole cost of Borrowers, (A) duly assign,
transfer and deliver to the successor Deposit Bank this Agreement and all cash
and Permitted Investments held by it hereunder, (B) execute and/or authorize
such reasonable documents and instruments as may be reasonably necessary to give
effect to such succession, and (C) take such other actions as may be reasonably
required by Lender or the successor Deposit Bank in connection with the
foregoing, and (ii) the successor

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Deposit Bank shall establish in its name, new cash collateral accounts (and, at
its discretion, subaccounts) to replace the existing Accounts, which shall
become the Accounts for purposes of this Agreement upon the succession of such
Deposit Bank.

            (c)    Lender at its sole discretion shall have the right, upon
thirty (30) days' notice to Deposit Bank, to substitute Deposit Bank with a
successor Deposit Bank that satisfies the requirements of an Eligible
Institution or to have one or more of the Accounts held by another Eligible
Institution, PROVIDED that such successor Deposit Bank shall perform the duties
of Deposit Bank pursuant to the terms of this Agreement.

     Section 5.5   LENDER APPOINTED ATTORNEY-IN-FACT. Each Borrower hereby
irrevocably constitutes and appoints Lender as such Borrower's true and lawful
attorney-in-fact, with full power of substitution, to execute, acknowledge and
deliver any instruments and to exercise and enforce every right, power, remedy,
option and privilege of such Borrower with respect to the Collateral, and to do
in the name, place and stead of such Borrower, all such acts, things and deeds
for and on behalf of and in the name of such Borrower, which such Borrower could
or might do or which Deposit Bank or Lender may deem reasonably necessary or
desirable to more fully vest in Lender the rights and remedies provided for
herein and to accomplish the purposes of this Agreement. Additionally, Manager
hereby irrevocably constitutes and appoints Lender as Manager's true and lawful
attorney-in-fact, with full power of substitution, to execute, acknowledge and
deliver any instruments and to exercise and enforce every right, power, remedy,
option and privilege of Manager with respect to the Collateral, and to do in the
name, place and stead of Manager, all such acts, things and deeds for and on
behalf of and in the name of Manager, which Manager could or might do or which
Deposit Bank or Lender may deem necessary or desirable to more fully vest in
Lender the rights and remedies provided for herein and to accomplish the
purposes of this Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest. The foregoing powers of attorney shall only be
exercised by Lender in the event that any Borrower or Manager fails to perform
any agreement herein contained and such failure shall continue for five (5)
Business Days after notice of such failure is given to such Borrower or Manager,
in which case Lender may perform or cause performance of any such agreement, and
any reasonable expenses of Lender and Deposit Bank in connection therewith shall
be paid by Borrowers.

     Section 5.6   ACKNOWLEDGMENT OF LIEN/OFFSET RIGHTS. Deposit Bank hereby
acknowledges and agrees that (a) the Accounts shall be held by Deposit Bank in
the name of Lender, (b) all funds held in the Accounts shall be held for the
benefit of Lender subject to the terms of this Agreement and the Loan Agreement,
(c) each Borrower has granted to Lender a first priority security interest in
the Collateral and all proceeds thereof, (d) Deposit Bank shall not disburse any
funds from the Accounts except as provided herein, and (e) Deposit Bank shall
invest and reinvest any balance of the Accounts in Permitted Investments.
Deposit Bank hereby waives any right of offset, banker's lien or similar rights
against, or any assignment of, or security interest or other interest in, the
Collateral.

                                    ARTICLE 6
                                    REMEDIES

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     Section 6.1   REMEDIES. At any time and from time to time following the
occurrence and during the continuance of an Event of Default, Lender or Deposit
Bank, as agent for Lender and only at Lender's direction, may do any (or any
combination of) the following, as determined in Lender's sole discretion:

            (a)    without notice to any Borrower or to any other Person, except
as required by law, charge, set-off and otherwise apply all or any part of the
Collateral against the Obligations or any part thereof;

            (b)    exercise any and all rights and remedies available to it
under this Agreement, and/or as a secured party under the UCC and/or under any
other applicable law; and

            (c)    demand, collect, take possession of, receive, settle,
compromise, adjust, sue for, foreclose or realize upon the Collateral (or any
portion thereof).

     Section 6.2   WAIVER. Each Borrower hereby expressly waives, to the fullest
extent permitted by law, presentment, demand, protest or any notice of any kind
in connection with this Agreement or the Collateral. Each Borrower acknowledges
and agrees that ten (10) days' prior written notice of the time and place of any
public sale of the Collateral or any other intended disposition thereof shall be
reasonable and sufficient notice to such Borrower within the meaning of the UCC.

                                    ARTICLE 7
                                  MISCELLANEOUS

     Section 7.1   TRANSFERS AND OTHER LIENS. Each Borrower agrees that it will
not (i) sell or otherwise dispose of any of the Collateral, or (ii) create or
permit to exist any Lien upon or with respect to all or any of the Collateral,
except for the Lien granted under this Agreement.

     Section 7.2   LENDER'S RIGHT TO PERFORM BORROWERS' OBLIGATIONS; NO
LIABILITY OF LENDER. If any Borrower or Manager fails to perform any of the
covenants or obligations contained herein, and such failure shall continue for a
period of five (5) Business Days after such Borrower's receipt of written notice
thereof from Lender, Lender may itself perform, or cause performance of, such
covenants or obligations, and the reasonable expenses of Lender incurred in
connection therewith shall be payable by Borrowers to Lender. Notwithstanding
Lender's right to perform certain obligations of any or all of the Borrowers or
Manager, it is acknowledged and agreed, to the extent permitted by law, that
Borrowers retain control of the Properties and operation thereof and
notwithstanding anything contained herein or Deposit Bank's or Lender's exercise
of any of its rights or remedies hereunder, under the Loan Documents or
otherwise at law or in equity, neither Deposit Bank nor Lender shall be deemed
to be a mortgagee-in-possession nor shall Lender be subject to any liability
with respect to the Properties or otherwise based upon any claim of lender
liability.

     Section 7.3   NO WAIVER. The rights and remedies provided in this Agreement
and the other Loan Documents are cumulative and may be exercised independently
or concurrently, and are not exclusive of any other right or remedy provided at
law or in equity. No failure to exercise or delay

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<Page>

by Deposit Bank or Lender in exercising any right or remedy hereunder or under
the other Loan Documents shall impair or prohibit the exercise of any such
rights or remedies in the future or be deemed to constitute a waiver or
limitation of any such right or remedy or acquiescence therein. Every right and
remedy granted to Deposit Bank and/or Lender hereunder or by law may be
exercised by Deposit Bank and/or Lender at any time and from time to time, and
as often as Deposit Bank and/or Lender may deem it expedient. Any and all of
Deposit Bank's and/or Lender's rights with respect to the lien and security
interest granted hereunder shall continue unimpaired, and Borrowers shall be and
remain obligated in accordance with the terms hereof, notwithstanding (a) any
proceeding of any Borrower under the Bankruptcy Code or any bankruptcy,
insolvency or reorganization laws or statutes of any state, (b) the release or
substitution of any Collateral at any time, or of any rights or interests
therein, (c) the release a substitution of any Person liable for all or any part
of the Obligations, or (d) any delay, extension of time, renewal, compromise or
other indulgence granted by Deposit Bank and/or Lender in the event of any
default with respect to the Collateral or otherwise hereunder. No delay or
extension of time by Deposit Bank and/or Lender in exercising any power of sale,
option or other right or remedy hereunder, and no notice or demand which may be
given to or made upon any Borrower and/or Manager by Deposit Bank and/or Lender,
shall constitute a waiver thereof, or limit, impair or prejudice Deposit Bank's
and/or Lender's right, without notice or demand, to take any action against any
or all of the Borrowers and/or Manager or to exercise any other power of sale,
option or other right or remedy.

     Section 7.4   EXPENSES. The Collateral shall secure, and Borrowers shall
pay to Deposit Bank and Lender and/or Deposit Bank's and Lender's counsel on
demand, from time to time, all costs and expenses (including, but not limited
to, reasonable attorneys' fees and disbursements and transfer, recording and
filing fees, taxes and other charges) of, incurred in connection with, or
incidental to, the creation or perfection of any lien or security interest
granted or intended to be granted hereby, the custody, care, sale, transfer,
administration, collection of or realization on the Collateral, or in any way
relating to the enforcement, protection or preservation of the rights or
remedies of Deposit Bank and/or Lender under this Agreement, the Loan Agreement,
the Notes, the Mortgages or the other Loan Documents. Standard and customary
fees and charges associated with the Accounts shall be paid by Borrowers. Each
Borrower agrees that Deposit Bank shall be entitled to charge the Accounts for
such fees and expenses.

     Section 7.5   ENTIRE AGREEMENT. This Agreement constitutes the entire and
final agreement amongst the parties with respect to the subject matter hereof
and may not be changed, terminated or otherwise varied, except by a writing duly
executed by the parties.

     Section 7.6   NO WAIVER. No waiver of any term or condition of this
Agreement, whether by delay, omission or otherwise, shall be effective unless in
writing and signed by the party or parties sought to be charged, and then such
waiver shall be effective only in the specific instance and for the purpose for
which given.

     Section 7.7   SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their respective successors and
permitted assigns. Lender shall have the right to assign or transfer its rights
under this Agreement in connection with any assignment of the Loan and the Loan
Documents. Any assignee or transferee of Lender shall be entitled to all the

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benefits afforded to Lender under this Agreement. Neither any Borrower nor
Manager shall have the right to assign or transfer its rights or obligations
under this Agreement without the prior written consent of Lender, as provided in
the Loan Agreement, and any attempted assignment without such consent shall be
null and void.

     Section 7.8   NOTICES. All notices, demands, requests, consents, approvals
or other communications (any of the foregoing, a "Notice") required, permitted
or desired to be given hereunder shall be in writing and shall be sent by
telefax (with answer back acknowledged) or by registered or certified mail,
postage prepaid, return receipt requested, or delivered by hand or by reputable
overnight courier, addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter
specify in accordance with the provisions of this SECTION 7.8. Any such Notice
shall be deemed to have been received (a) three (3) days after the date such
Notice is mailed, (b) on the date of sending by telefax if sent during business
hours on a Business Day (otherwise on the next Business Day), (c) on the date of
delivery by hand if delivered during business hours on a Business Day (otherwise
on the next Business Day), and (d) on the next Business Day if sent by an
overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:        UBS WARBURG REAL ESTATE INVESTMENTS INC.
                     1285 Avenue of the Americas, 11th Floor
                     New York, New York 10019
                     Attn: Andrew Cohen
                     Fax No.: (212) 713-4631

With a copy to:      Brown Raysman Millstein Felder & Steiner LLP
                     900 Third Avenue
                     New York, New York  10022
                     Attn.: Scott A. Weinberg, Esq.
                     Fax No.: (212) 895-2900

And with a copy to:  Wachovia Bank, National Association
                     8739 Research Drive, URP4
                     Charlotte, North Carolina  28288-1075
                     Attn: David Tucker
                     Fax No.: (704) 593-7735

                     or any successor Servicer of the Loan

If to any Borrower:  c/o Horizon Group Properties, Inc.
                     77 West Wacker Drive, Suite 4200
                     Chicago, Illinois 60601
                     Attn: Mr. David Tinkham
                     Fax No.: (231) 798-5100

And with a copy to:  c/o Horizon Group Properties Inc.

                                       291
<Page>

                     5000 Hakes Drive
                     Muskegon, MI 49441
                     Attention: Ms. Terri Springstead
                     Fax No.: (231) 798 5100

And with a copy to:  Schiff Hardin & Waite
                     7300 Sears Tower
                     Chicago, Illinois 60606
                     Attn: David A. Grossberg, Esq.
                     Fax No.: (312) 258-5700

If to Manager:       c/o Horizon Group Properties, Inc.
                     77 West Wacker Drive, Suite 4200
                     Chicago, Illinois 60601
                     Attn: Mr. David Tinkham
                     Fax No.: (231) 798-5100

With a copy to:      c/o Horizon Group Properties Inc.
                     5000 Hakes Drive
                     Muskegon, MI 49441
                     Attention: Ms. Terri Springstead
                     Fax No.: (231) 798 5100

And with a copy to:  Schiff Hardin & Waite
                     7300 Sears Tower
                     Chicago, Illinois 60606
                     Attn: David A. Grossberg, Esq.
                     Fax No.: (312) 258-5700

If to Deposit Bank:  Wachovia Bank, National Association
                     8739 Research Drive URP-4
                     Charlotte, North Carolina 28288-1075
                     Attn: Ross Romano
                     Fax No.: 704-593-7735

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days' written notice of such change to the other parties in
accordance with the provisions of this SECTION 7.8. Notices shall be deemed to
have been given on the date set forth above, even if there is an inability to
actually deliver any Notice because of a changed address of which no Notice was
given or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer.

     Section 7.9   INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement,

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<Page>

such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement, unless such continued effectiveness of this Agreement, as modified,
would be contrary to the basic understandings and intentions of the parties as
expressed herein.

     Section 7.10  GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS. (a) THIS
AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWERS AND
MANAGER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE
NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE
HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
RELATED HERETO, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT
THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF
THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE
OTHER LOAN DOCUMENTS WITH RESPECT TO EACH INDIVIDUAL PROPERTY SHALL BE GOVERNED
BY, AND CONSTRUED ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT,
AS APPLICABLE, IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND
ALL OF THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER. TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH BORROWER AND MANAGER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND/OR THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.

     (b)    ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, DEPOSIT BANK,
BORROWERS OR MANAGER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY, AT
LENDER'S OPTION, BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW

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<Page>

AND EACH BORROWER AND MANAGER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH BORROWER AND MANAGER HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH
BORROWER AND MANAGER DO EACH HEREBY DESIGNATE AND APPOINT

                   SCHIFF HARDIN & WAITE
                   150 EAST 52ND STREET
                   SUITE 2700
                   NEW YORK, NY 10022
                   ATTENTION: DAVID GROSSBERG, ESQ.(CHICAGO OFFICE)

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO ANY OR ALL BORROWERS AND/OR MANAGER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON EACH BORROWER AND/OR MANAGER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE
STATE OF NEW YORK. EACH BORROWER AND MANAGER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS AND WHICH SUBSTITUTE
AGENT SHALL BE THE SAME AGENT FOR ALL BORROWERS AND MANAGER), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR,
PROVIDED THERE SHALL ALWAYS BE THE SAME AUTHORIZED AGENT FOR ALL BORROWERS AND
MANAGER. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWERS AND/OR MANAGER IN ANY OTHER JURISDICTION.

     Section 7.11  WAIVER OF TRIAL BY JURY. EACH BORROWER AND MANAGER HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
FOREVER WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST, WITH REGARD TO THIS AGREEMENT, THE NOTES,
THE MORTGAGES OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY

                                       294
<Page>

JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER AND MANAGER AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY EACH BORROWER AND MANAGER.

     Section 7.12  GENDER; NUMBER; GENERAL DEFINITIONS. Unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, (a) words used in this Agreement may be used interchangeably in the
singular or plural form, (b) any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, (c) the word "Borrower" shall
mean "each Borrower and any subsequent owner or owners of the Property or any
part thereof or interest therein", (d) the word "Lender" shall mean "Lender and
any subsequent holder of the Note or Notes", (e) the word "Note" or "Notes"
shall mean "the Note (or Notes) and any other evidence of indebtedness secured
by the Loan Agreement", (f) the word "Property" or "Properties" shall include
any portion of the Property (or Properties) and any interest therein, and (g)
the phrases "attorneys' fees", "legal fees" and "counsel fees" shall include any
and all attorneys', paralegal and law clerk fees and disbursements, including,
but not limited to, fees and disbursements at the pre-trial, trial and appellate
levels, incurred or paid by Lender in protecting its interest in the Properties,
the Collateral, the Leases and/or the Rents and/or in enforcing its rights
hereunder.

     Section 7.13  COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which, taken
together, shall constitute one and the same document.

     Section 7.14  TERMINOLOGY. Titles of Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this Agreement
and shall not constitute part of this Agreement for any other purpose, and all
references in this Agreement to Sections, Subsections, paragraphs, clauses or
subclauses shall refer to the corresponding Section, Subsection, paragraph,
clause or subclause of this Agreement, unless specific reference is made to the
articles, sections or other subdivisions of another document or instrument.

     Section 7.15  RECITALS. The Recitals set forth at the beginning of this
Agreement are hereby incorporated into and made a part of the substantive
provisions of this Agreement.

     Section 7.16  NO AMENDMENT. Nothing contained in this Agreement shall be
construed to amend, modify, alter, change or supersede the terms and provisions
of the Loan Agreement or any of the other Loan Documents. In the event of a
conflict between the terms hereof and the terms of the Loan Agreement, the terms
of the Loan Agreement shall govern and control.

                         [NO FURTHER TEXT ON THIS PAGE]

                                       295
<Page>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                       LAUGHLIN OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       MEDFORD OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       WARRENTON OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       MANAGER:

                                       HORIZON GROUP PROPERTIES, L.P.,
                                       a Delaware limited partnership

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

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<Page>

                                       LENDER:

                                       UBS WARBURG REAL ESTATE
                                       INVESTMENTS INC., a Delaware corporation

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

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<Page>

                                       DEPOSIT BANK:

                                       WACHOVIA BANK, NATIONAL ASSOCIATION

                                       By:
                                           -------------------------------------
                                           Name: David C. Tucker
                                           Title:

                                       298
<Page>

                                    EXHIBIT A

                         FORM OF TENANT DIRECTION LETTER

                              [BORROWER LETTERHEAD]

                                      ____________, 200_

CERTIFIED MAIL
RETURN RECEIPT REQUESTED

[Name and Address of Tenant]

      Re:  LEASE OF SPACE AT [ADDRESS OF PROPERTY] (THE "BUILDING")

      Ladies and Gentlemen:

The undersigned is the owner of the Building and the landlord under your lease
of space in the Building (your "LEASE").

By this letter, you are hereby directed (1) to make all checks, in payment of
rent and other sums due to the landlord under your lease, payable to the order
of "[NAME OF CLEARING ACCOUNT], AS MORTGAGOR, FOR THE BENEFIT OF UBS WARBURG
REAL ESTATE INVESTMENTS INC., AS MORTGAGEE, ACCOUNT NO. [_________]", and (2) to
deliver such checks or otherwise make such payments as follows:

      By Wire:

      [Wire Instructions of Clearing Bank]

      or

      By Mail:

      [CLEARING ACCOUNT ADDRESS]

                                       299
<Page>

     The foregoing direction is irrevocable, except with the written consent of
our mortgagee, UBS Warburg Real Estate Investments Inc. (or its successors or
assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than UBS Warburg Real Estate Investments
Inc. (or its successors or assigns)). Thank you for your cooperation.

                                       Very truly yours,

                                       [BORROWER]

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       300<Page>

                                  EXHIBIT 10.65

                        ENVIRONMENTAL INDEMNITY AGREEMENT

     THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "AGREEMENT") is made as of the
___ day of July, 2002 by LAUGHLIN OUTLET CENTER LLC, a Delaware limited
liability company ("HORIZON LAUGHLIN"), MEDFORD OUTLET CENTER LLC, a Delaware
limited liability company ("HORIZON MEDFORD"), and WARRENTON OUTLET CENTER LLC,
a Delaware limited liability company ("HORIZON WARRENTON"; and Horizon
Warrenton, together with Horizon Laughlin and Horizon Medford, each a "BORROWER"
and collectively, "BORROWERS"), and HORIZON GROUP PROPERTIES, INC., a Maryland
corporation, and HORIZON GROUP PROPERTIES, L.P., a Delaware limited partnership,
each having an office at 77 West Wacker Drive, Suite 4200, Chicago, Illinois
60601 (each, a "NON-BORROWER INDEMNITOR" and, collectively, the "NON-BORROWER
INDEMNITORS"; and together with Borrowers, each an "INDEMNITOR" and
collectively, "INDEMNITORS"), in favor of UBS WARBURG REAL ESTATE INVESTMENTS
INC., having an office at 1285 Avenue of the Americas, 11th Floor, New York, New
York 10019 ("INDEMNITEE") and the other Indemnified Parties (defined below).

                                    RECITALS

     A.     Pursuant to a certain Loan Agreement (as the same may be amended,
modified or supplemented from time to time, the "LOAN AGREEMENT") dated the date
hereof by and among Borrowers and Indemnitee, Indemnitee has made a loan to (i)
Horizon Laughlin in the principal amount of up to $11,000,000.00 (the "LAUGHLIN
LOAN") (ii) Horizon Medford in the principal amount of up to $6,500,000.00 (the
"MEDFORD LOAN"), and (iii) Horizon Warrenton in the principal amount of up to
$4,500,000.00 (the "WARRENTON LOAN" and the Warrenton Loan, together with the
Laughlin Loan and the Medford Loan, collectively, the "LOAN");

     B.     Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Loan Agreement;

     C.     Each Borrower has executed and delivered to Indemnitee a First
Mortgage and a Second Mortgage in favor of Indemnitee encumbering the Individual
Property owned by such Indemnitee as security for the portion of the Loan
related to such Individual Property.

     D.     Each Indemnitor acknowledges receipt and approval of copies of the
Loan Documents.

     E.     Each Non-Borrower Indemnitor acknowledges that it owns, either
directly or indirectly, a beneficial interest in each Borrower and, as a result
of such beneficial interest, will receive substantial economic and other
benefits from Indemnitee making the Loan to Borrowers.

     F.     Indemnitee is unwilling to make the Loan unless Indemnitors agree to
provide the indemnification, representations, warranties, covenants and other
matters described in this Agreement for the benefit of the Indemnified Parties.

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<Page>

     G.     Indemnitors are entering into this Agreement to induce Indemnitee to
make the Loan.

                                    AGREEMENT

     NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitors hereby represent, warrant, covenant and agree for the benefit of the
Indemnified Parties as follows:

     1.     ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Except as otherwise
disclosed by that/those report (s) listed on SCHEDULE I attached hereto and made
a part hereof in respect of each Individual Property delivered to Indemnitee
(referred to below as the "Environmental Report(s)"), a copy of which has been
provided to Indemnitee, (a) there are no Hazardous Substances (defined below) or
underground storage tanks in, on or under any Individual Property, except those
that are both (i) in compliance with all Environmental Laws (defined below) and
with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in
writing pursuant to the Environmental Report(s); (b) there are no past, present
or, to Indemnitor's best knowledge, threatened Releases (defined below) of
Hazardous Substances in, on, under or from any Individual Property which have
not been fully remediated in accordance with Environmental Laws; (c) to
Indemnitor's best knowledge, there is no threat of any Release of Hazardous
Substances migrating to any Individual Property; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with any Individual Property which has not been fully remediated
in accordance with Environmental Laws; (e) none of Indemnitors know of, or have
received, any written or oral notice or other communication from any Person
(including, but not limited to, any Governmental Authority) relating to
Hazardous Substances or Remediation (defined below) thereof, of possible
liability of any Person pursuant to any Environmental Laws, other environmental
conditions in connection with any Individual Property, or any actual or, to
Indemnitor's best knowledge, potential administrative or judicial proceedings in
connection with any of the foregoing; and (f) Indemnitors have truthfully and
fully provided to Indemnitee, in writing, any and all information relating to
conditions in, on, under or from each Individual Property that is known to any
Indemnitor and that is contained in the files and records of any Indemnitor,
including, but not limited, to any reports relating to Hazardous Substances in,
on, under or from any Individual Property and/or to the environmental condition
of any Individual Property.

     2.     ENVIRONMENTAL COVENANTS. Indemnitors covenant and agree that: (a)
all uses and operations on or of each Individual Property, whether by any of the
Indemnitors or any other Person, shall be in compliance with all Environmental
Laws and permits issued pursuant thereto; (b) there shall be no Releases of
Hazardous Substances in, on, under or from any Individual Property; (c) there
shall be no Hazardous Substances in, on or under any Individual Property, except
those that are both (i) in compliance with all Environmental Laws and with
permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in
writing; (d) Indemnitors shall keep each Individual Property free and clear of
all liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of any of the Indemnitors or any other Person
(the "ENVIRONMENTAL LIENS"); (e) Indemnitors shall, at their sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
PARAGRAPH 3 of this Agreement, including, but not limited to, providing all
relevant

                                       302
<Page>

information and making knowledgeable Persons available for interviews;
(f) Indemnitors shall, at their sole cost and expense, perform any appropriate
environmental site assessment or other appropriate investigation of
environmental conditions in connection with any Individual Property, pursuant to
any reasonable written request of Indemnitee which request shall state the basis
for Indemnitee's belief that there has been a Release of Hazardous Substances or
violation of any Environmental Law (including, but not limited to, sampling,
testing and analysis of soil, water, air, building materials and other materials
and substances whether solid, liquid or gas), and share with Indemnitee the
reports and other results thereof, and Indemnitee and the other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Indemnitors shall, at their sole cost and expense, comply with all reasonable
written requests of Indemnitee to (i) effectuate Remediation of any condition
(including, but not limited to, a Release of a Hazardous Substance) in, on,
under or from any Individual Property to the extent required by any
Environmental Law or any directive from any Governmental Authority; (ii) comply
with any Environmental Law; (iii) comply with any directive from any
Governmental Authority; and/or (iv) take any other reasonable action necessary
or appropriate for protection of human health or the environment; (h) none of
the Indemnitors shall do or allow any tenant or other user of any Individual
Property to do any act that materially increases the dangers to human health or
the environment, poses an unreasonable risk of harm to any Person (whether on or
off such Individual Property), impairs or may impair the value of such
Individual Property, is contrary to any requirement of any insurer, constitutes
a public or private nuisance, constitutes waste or violates any covenant,
condition, agreement or easement applicable to such Individual Property; and (i)
Indemnitors shall immediately notify Indemnitee in writing of (A) any presence
or Release or threatened Release of Hazardous Substances in, on, under, from or,
to Indemnitor's best knowledge, migrating towards any Individual Property; (B)
any non-compliance with any Environmental Laws related in any way to any
Individual Property; (C) any actual or, to Indemnitor's best knowledge,
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to any Individual Property; and/or (E) any
written or oral notice or other communication of which any Indemnitor becomes
aware from any source whatsoever (including, but not limited to, any
Governmental Authority) relating in any way to Hazardous Substances or
Remediation thereof, possible liability of any Person pursuant to any
Environmental Law, other environmental conditions in connection with any
Individual Property or any actual or potential administrative or judicial
proceedings in connection with anything referred to in this Agreement.

     3.     INDEMNIFIED RIGHTS/COOPERATION AND ACCESS. In the event the
Indemnified Parties have reason to believe that there has been a Release of
Hazardous Substances on, or any Remediation is required in connection with any
condition on, any Individual Property that does not, in the reasonable
discretion of the Indemnified Parties, (a) endanger any tenants or other
occupants of such Individual Property or their guests or the general public, or
(b) materially and adversely affect the value of such Individual Property, upon
reasonable notice from the Indemnitee, Indemnitors shall, at Indemnitors' sole
cost and expense, promptly cause an engineer or consultant satisfactory to the
Indemnified Parties to conduct any appropriate environmental assessment or audit
(the scope of which shall be determined in the sole and absolute discretion of
the Indemnified Parties) and take any appropriate samples of soil, groundwater
or other water, air or building materials or any other invasive testing
requested by Indemnitee and promptly deliver to Indemnitee the results of any
such assessment, audit, sampling or other testing; PROVIDED, HOWEVER, if such
results are not delivered to

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Indemnitee within a reasonable period or if the Indemnified Parties have reason
to believe that there has been a Release of Hazardous Substances on, or any
Remediation is required in connection with any condition on, such Individual
Property that, in the sole judgment of the Indemnified Parties, endangers any
tenant or other occupant of such Individual Property or their guests or the
general public or may materially and adversely affect the value of such
Individual Property, upon reasonable notice to Indemnitors (which may be given
verbally), the Indemnified Parties and any other Person designated by the
Indemnified Parties, including, but not limited to, any receiver, any
representative of any Governmental Authority and/or any environmental
consultant, shall have the right, but not the obligation, to enter upon such
Individual Property at all reasonable times to upon reasonable prior notice,
except in an emergency as determined in the Indemnified Parties' sole
discretion, assess any and all aspects of the environmental condition of such
Individual Property and its use, including, but not limited to, conducting any
environmental assessment or audit (the scope of which shall be determined in the
sole and absolute discretion of the Indemnified Parties) and taking samples of
soil, groundwater or other water, air or building materials and reasonably
conducting other invasive testing. Indemnitors shall cooperate with and provide
the Indemnified Parties and any such Person designated by the Indemnified
Parties with access to such Individual Property.

     4.     INDEMNIFICATION. Indemnitors covenant and agree, at their sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses (defined below) imposed upon, or
incurred by, or asserted against, any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances in, on, above or under
any Individual Property; (b) any past, present or threatened Release of
Hazardous Substances in, on, above, under or from any Individual Property; (c)
any activity by any of the Indemnitors, any Person affiliated with any of the
Indemnitors and/or any tenant or other user of any Individual Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from any Individual Property of any
Hazardous Substances at any time located in, under, on or above such Individual
Property; (d) any activity by any of the Indemnitors, any Person affiliated with
any of the Indemnitors and/or any tenant or other user of any Individual
Property in connection with any actual or proposed Remediation of any Hazardous
Substances at any time located in, under, on or above such Individual Property,
whether or not such Remediation is voluntary or pursuant to court or
administrative order, including, but not limited to, any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violation of any Environmental Law (or of any permit issued pursuant to any
Environmental Law) in connection with any Individual Property or operations
thereon, including, but not limited to, any failure by any of the Indemnitors,
any Person affiliated with any of the Indemnitors and/or any tenant or other
user of such Individual Property to comply with any order of any Governmental
Authority in connection with any Environmental Laws; (f) the imposition,
recording or filing or the threatened imposition, recording or filing of any
Environmental Lien encumbering any Individual Property; (g) any administrative
processes or proceedings or judicial proceedings in any way connected with any
matter addressed in this Agreement; (h) any past, present or threatened injury
to, destruction of or loss of natural resources in any way connected with any
Individual Property, including, but not limited to, costs to investigate and
assess such injury, destruction or loss; (i) any acts of any of the Indemnitors,
any Person affiliated with any of the

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Indemnitors and/or any tenant or other user of any Individual Property in
arranging for the disposal or treatment, or arranging with a transporter for
transport for the disposal or treatment, of Hazardous Substances at any facility
or incineration vessel containing such or similar Hazardous Substances; (j) any
acts of any of the Indemnitors, any Person affiliated with any of the
Indemnitors and/or any tenant or other user of any Individual Property in
accepting any Hazardous Substances for transport to disposal or treatment
facilities, incineration vessels or sites from which there is a Release or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for Remediation; (k) any personal injury, wrongful death or property or
other damage arising under any statutory or common law or tort law theory,
including, but not limited to, damages assessed for private or public nuisance
or for the conducting of an abnormally dangerous activity on or near any
Individual Property; and (l) any misrepresentation or inaccuracy in any
environmental related representation or warranty or material breach or failure
to perform any of the environmental related covenants or other environmental
related obligations pursuant to this Agreement, the Loan Agreement or any or all
of the Mortgages.

     5.     DUTY TO DEFEND AND ATTORNEYS' AND OTHER FEES AND EXPENSES. Upon
written request by any Indemnified Party, Indemnitors shall defend such
Indemnified Party(ies) against any claim for which indemnification is required
hereunder (if requested by any Indemnified Party, in the name of the Indemnified
Party), by attorneys and other professionals reasonably approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of any claim or
proceeding, providing that no compromise or settlement shall be entered without
Indemnitors' consent, which consent shall not be unreasonably withheld. Upon
demand, Indemnitors shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of the
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.

     6.     DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings: The term "ENVIRONMENTAL LAWS" means any present and
future federal, state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law, relating to protection of human health or
the environment, relating to Hazardous Substances and/or relating to liability
for or costs of other actual or threatened danger to human health or the
environment. The term "Environmental Laws" includes, but is not limited to, the
following statutes, as amended, any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Substances Transportation Act;
the Resource Conservation and Recovery Act (including, but not limited to,
Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the
Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the
River and Harbors Appropriation Act. The term "Environmental Laws" also
includes, but is not limited to, any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common
law,

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conditioning transfer of property upon a negative declaration or other approval
of a Governmental Authority of the environmental condition of any Individual
Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of a property to any Governmental
Authority or other Person, whether or not in connection with any transfer of
title to or interest in such Individual Property; imposing conditions or
requirements in connection with environmental permits or other authorization for
lawful environmental activity; relating to nuisance, trespass or other causes of
action related to any environmental activity on any Individual Property; and
relating to wrongful death, personal injury or property or other damage in
connection with any environmental condition or use of any environmental activity
on any Individual Property.

     The term "HAZARDOUS SUBSTANCES" includes, but is not limited to, any and
all substances (whether solid, liquid or gas) defined, listed or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that have a negative
impact on human health or the environment, including, but not limited to,
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar properties for the purposes of cleaning or
other maintenance or operations and otherwise in compliance with all
Environmental Laws.

     The term "INDEMNIFIED PARTIES" includes Indemnitee, any Person who is or
will have been involved in the origination of the Loan, any Person who is or
will have been involved with the servicing of the Loan, any Person in whose name
the encumbrances created by the Mortgages is or will have been recorded, Persons
who may hold or acquire or will have held a full or partial interest in the Loan
(including, but not limited to, Investors (as hereinafter defined) and/or
prospective Investors, as well as custodians, trustees and other fiduciaries who
hold or have held a full or partial interest in the Loan for the benefit of
third parties), as well as the respective directors, officers, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including, but not limited to, any other Person
who holds or acquires or will have held a participation or other full or partial
interest in the Loan or any Individual Property, whether during the term of the
Loan or as a part of, or following a foreclosure of, the Loan and including, but
not limited to, any successors by merger, consolidation or acquisition of all or
a substantial portion of Indemnitee's assets and business).

     The term "LEGAL ACTION" means any claim, suit or proceeding, whether
administrative or judicial in nature.

     The term "LOSSES" includes any losses, damages, costs, fees, expenses,
claims, suits, judgments, awards, liabilities (including, but not limited to,
strict liabilities), obligations, debts, diminutions in value, fines, penalties,
charges, costs of Remediation (whether or not performed voluntarily), amounts
paid in settlement, foreseeable and unforeseeable consequential damages,
litigation costs, reasonable fees of attorneys, engineers and environmental
consultants and investigation costs (including, but not limited to, costs for
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances, whether solid, liquid or gas), of

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whatever kind or nature, and whether or not incurred in connection with any
judicial or administrative proceedings, actions, claims, suits, judgments or
awards.

     The term "RELEASE" with respect to any Hazardous Substance includes, but is
not limited to, any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Substances.

     The term "REMEDIATION" includes, but is not limited to, any response,
remedial, removal, or corrective action in compliance with Environmental Laws or
any directive of any Governmental Authority; any activity to clean up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance in
compliance with Environmental Laws or any directive of any Governmental
Authority; any actions to prevent, cure or mitigate any Release of any Hazardous
Substance; any action to comply with any Environmental Laws or with any permits
issued pursuant thereto; any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing or laboratory or other analysis or
evaluation relating to any Hazardous Substances or to anything referred to
herein.

     7.     UNIMPAIRED LIABILITY. The liability of Indemnitors under this
Agreement shall in no way be limited or impaired by, and each Indemnitor hereby
consents to and agrees to be bound by, any amendment or modification of the
provisions of any or all of the Notes, the Loan Agreement, any or all of the
Mortgages or any other Loan Document to or with Indemnitee by any or all of the
Borrowers or any Person who succeeds any or all of the Borrowers or any Person
as owner of any Individual Property. In addition, the liability of Indemnitors
under this Agreement shall in no way be limited or impaired by (i) any
extensions of time for performance required by any or all the Notes, the Loan
Agreement, the Mortgages or any of the other Loan Documents, (ii) any sale or
transfer of all or part of any Individual Property, or any sale or other
assignment by any Non-Borrower Indemnitor of its direct or indirect ownership
interest(s) in any or all of the Borrowers, (iii) except as provided herein, any
exculpatory provision in any or all of the Notes, the Loan Agreement, any or all
of the Mortgages or any of the other Loan Documents limiting Indemnitee's
recourse to the Properties or to any other security for the Notes, or limiting
Indemnitee's rights to a deficiency judgment against any of the Indemnitors,
(iv) the accuracy or inaccuracy in any material respect of the representations
and warranties made by any or all of the Borrowers under any or all of the
Notes, the Loan Agreement, any or all of the Mortgages or any of the other Loan
Documents or herein, (v) the release of any of the Indemnitors (including, if
applicable, any or all of the Borrowers) or any other Person from performance or
observance of any of the agreements, covenants, terms or conditions contained in
any of the other Loan Documents, by operation of law, Indemnitee's voluntary
act, or otherwise, (vi) the release or substitution in whole or in part of any
security for any or all of the Notes, or (vii) Indemnitee's failure to record
any or all of the Mortgages or file any UCC financing statements (or
Indemnitee's improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any security interest or lien given as
security for any or all of the Notes; and, in any such case, whether with or
without notice to any of the Indemnitors and with or without consideration.

     8.     ENFORCEMENT. The Indemnified Parties may enforce the obligations of
Indemnitors without first resorting to or exhausting any security or collateral
or without first having recourse to

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any or all the Notes, the Loan Agreement, any or all of the Mortgages or any
other Loan Documents or any Individual Property, through foreclosure proceedings
or otherwise, PROVIDED, HOWEVER, that nothing herein shall inhibit or prevent
Indemnitee from suing on any or all of the Notes, foreclosing or exercising any
power of sale under the Mortgage or exercising any other rights and remedies
thereunder. This Agreement is not collateral or security for the Obligations of
Borrowers pursuant to the Loan Agreement, unless Indemnitee expressly elects in
writing to make this Agreement additional collateral or security for such
Obligations of Borrowers pursuant to the Loan Agreement, which Indemnitee is
entitled to do in its sole and absolute discretion. It is not necessary for an
Event of Default to have occurred pursuant to and as defined in the Mortgages or
the Loan Agreement for Indemnified Parties to exercise their rights pursuant to
this Agreement. Notwithstanding any provision of the Loan Agreement to the
contrary, the obligations of each Indemnitor pursuant to this Agreement are
exceptions to any non-recourse or exculpation provision of the Loan Agreement;
and each Indemnitor expressly acknowledges and agrees that it is fully and
personally liable for such obligations, and such liability is not limited to the
original or amortized principal balance of the Loan or the value of the
Properties.

     9.     SURVIVAL. The obligations and liabilities of Indemnitors under this
Agreement shall fully survive indefinitely, notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale or delivery of a deed in lieu of foreclosure of any or all of the
Mortgages.

     10.    INTEREST. Any amounts payable to any Indemnified Parties under this
Agreement shall become immediately due and payable on demand and, if not paid
within ten (10) days of such demand therefor, shall bear interest at the Default
Rate.

     11.    WAIVERS.

            (a)    Each Indemnitor hereby waives and relinquishes (i) any right
or claim of right to cause a marshaling of any Indemnitor's assets or to cause
Indemnitee or any other Indemnified Party to proceed against any of the security
for the Loan before proceeding under this Agreement against any Indemnitor; (ii)
all rights and remedies accorded by applicable law to indemnitors or guarantors
generally, including any rights of subrogation which any Indemnitor may have,
PROVIDED that the indemnity provided for hereunder shall neither be contingent
upon the existence of any such rights of subrogation nor subject to any claims
or defenses whatsoever which may be asserted in connection with the enforcement
or attempted enforcement of such subrogation rights, including, without
limitation, any claim that such subrogation rights were abrogated by any acts of
Indemnitee or any other Indemnified Party; (iii) the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against or by Indemnitee or any other Indemnified Party;
(iv) notice of acceptance hereof and of any action taken or omitted in reliance
hereon; (v) presentment for payment, demand of payment, protest or notice of
nonpayment or failure to perform or observe, or other proof, or notice or
demand; and (vi) all homestead exemption rights against the obligations
hereunder and the benefits of any statutes of limitations or repose.
Notwithstanding anything to the contrary contained herein, each Indemnitor
hereby agrees to postpone the exercise of any rights of subrogation with respect
to any collateral securing the Obligations until the Obligations shall have been
paid in full.

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<Page>

            (b)    EACH INDEMNITOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND FOREVER WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH
REGARD TO THIS AGREEMENT, ANY OR ALL OF THE NOTES, ANY OR ALL OF THE MORTGAGES
OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY EACH INDEMNITOR AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. THE INDEMNIFIED PARTIES ARE HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY EACH INDEMNITOR.

     12.    SUBROGATION. Each Indemnitor hereby agrees that it shall take any
and all reasonable actions, including the institution of legal action against
third parties, necessary or appropriate to obtain reimbursement, payment or
compensation from such Persons responsible for the presence of any Hazardous
Substances at, in, on, under or near any Individual Property or otherwise
obligated by law to bear the cost. The Indemnified Parties shall be and hereby
are subrogated to all of each Indemnitor's rights now or hereafter in such
claims.

     13.    INDEMNITORS' REPRESENTATIONS AND WARRANTIES. Each Indemnitor
represents and warrants that:

            (a)    it has the full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; the execution, delivery
and performance of this Agreement by such Indemnitor has been duly and validly
authorized; and all requisite action has been taken by such Indemnitor to make
this Agreement valid and binding upon such Indemnitor, enforceable in accordance
with its terms;

            (b)    its execution of, and compliance with, this Agreement is in
the ordinary course of business of such Indemnitor and will not result in the
breach of any term or provision of the charter, by-laws, partnership, operating
or trust agreement or other governing instrument of such Indemnitor or result in
the breach of any term or provision of, or conflict with or constitute a default
under, or result in the acceleration of any obligation under, any agreement,
indenture or loan or credit agreement or other instrument to which such
Indemnitor or any Individual Property is subject, or result in the violation of
any law, rule, regulation, order, judgment or decree to which such Indemnitor or
any Individual Property is subject;

            (c)    to the best of such Indemnitor's knowledge, there is no
action, suit, proceeding or investigation pending or threatened against it
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of such Indemnitor, or in any material impairment of the
right or ability of such Indemnitor to carry on its business substantially as
now conducted, or in any material liability on the part of such

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Indemnitor, or which would draw into question the validity of this Agreement or
of any action taken or to be taken in connection with the obligations of such
Indemnitor contemplated herein, or which would be likely to impair materially
the ability of such Indemnitor to perform under the terms of this Agreement;

            (d)    it does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement;

            (e)    to the best of such Indemnitor's knowledge, no approval,
authorization, order, license or consent of, or registration or filing with, any
Governmental Authority or other Person, and no approval, authorization or
consent of any other Person, is required in connection with this Agreement; and

            (f)    this Agreement constitutes a valid, legal and binding
obligation of such Indemnitor, enforceable against it in accordance with the
terms hereof.

     14.    NO WAIVER. No delay by any Indemnified Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
such privilege, power or right.

     15.    NOTICE OF LEGAL ACTIONS. Each party hereto shall, within five (5)
Business Days of receipt thereof, give written notice to the other parties
hereto of (i) any notice, advice or other communication from any Governmental
Authority or any source whatsoever with respect to Hazardous Substances on, from
or affecting any Individual Property, and (ii) any legal action brought against
such party or related to any Individual Property, with respect to which
Indemnitors may have liability under this Agreement. Such notice shall comply
with the provisions of SECTION 19 hereof.

     16.    EXAMINATION OF BOOKS AND RECORDS. The Indemnified Parties and their
accountants and other representatives shall, at reasonable times and upon
reasonable written notice, have the right to examine the records, books and
management and other papers of each Indemnitor which reflect upon its financial
condition, at the Properties or at the office regularly maintained by such
Indemnitor where the books and records are located. The Indemnified Parties and
their accountants and other representatives shall have the right to make copies
and extracts from the foregoing records and other papers. In addition, at
reasonable times and upon reasonable written notice, the Indemnified Parties and
their accountants and other representatives shall have the right to examine and
audit the books and records of each Indemnitor pertaining to the income,
expenses and operation of the Properties during reasonable business hours at the
office of such Indemnitor where the books and records are located.

     17.    TRANSFER OF LOAN.

            (a)    Indemnitee may, at any time, sell, transfer or assign any or
all of the Notes, the Loan Agreement, any or all of the Mortgages, this
Agreement and the other Loan Documents, and any or all servicing rights with
respect thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "SECURITIES"). Indemnitee may
forward to each purchaser,

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transferee, assignee, servicer, participant or investor in such Securities or
any credit rating agency rating such Securities (each of the foregoing entities
hereinafter referred to as an "INVESTOR") and each prospective Investor all
documents and information which Indemnitee now has or may hereafter acquire
relating to each Indemnitor and any Individual Property, whether furnished by
any Indemnitor or otherwise, as Indemnitee determines necessary or desirable.
Each Indemnitor agrees to cooperate with Indemnitee in connection with any
transfer made or any Securities created pursuant to this Section, including,
without limitation, the delivery of an estoppel certificate required in
accordance with the Loan Agreement and such other reasonable documents as may be
reasonably requested by Indemnitee. Each Indemnitor shall also furnish, and each
Indemnitor hereby consents to Indemnitee furnishing, to such Investors or such
prospective Investors, any and all information concerning the financial
condition of such Indemnitor and any and all information concerning any
Individual Property and the Leases as may be requested by Indemnitee, any
Investor or any prospective Investor in connection with any sale, transfer or
participation interest.

            (b)    Upon any transfer or proposed transfer contemplated above and
by Section 9.1 of the Loan Agreement, at Indemnitee's request, each Indemnitor
shall provide an estoppel certificate to any Investor or any prospective
Investor in such form, substance and detail as Indemnitee, such Investor or such
prospective Investor may reasonably require.

     18.    TAXES. Each Indemnitor has filed all federal, state, county,
municipal and city income and other tax returns required to have been filed by
it and has paid all taxes and related liabilities which have become due pursuant
to such returns or pursuant to any assessments received by it. No Indemnitor has
any knowledge of any basis for any additional assessment in respect of any such
taxes and related liabilities for prior years.

     19.    NOTICES. All notices, demands, requests, consents, approvals or
other communications (any of the foregoing, a "NOTICE") required, permitted or
desired to be given hereunder shall be in writing and shall be sent by telefax
(with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or by reputable
overnight courier, addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter
specify in accordance with the provisions of this SECTION 19. Any Notice shall
be deemed to have been received: (a) three (3) days after the date such Notice
is mailed, (b) on the date of sending by telefax if sent during business hours
on a Business Day (otherwise on the next Business Day), (c) on the date of
delivery by hand if delivered during business hours on a Business Day (otherwise
on the next Business Day), and (d) on the next Business Day if sent by an
overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:        UBS Warburg Real Estate Investments Inc.
                     1285 Avenue of the Americas
                     11th Floor
                     New York, New York 10019
                     Attention: Andrew B. Cohen
                     Fax No. (212) 713-4631

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<Page>

with a copy to:      Brown Raysman Millstein Felder & Steiner LLP
                     900 Third Avenue
                     New York, New York 10022
                     Attention: Jeffrey B. Steiner, Esq.
                     Fax No. (212) 895-2900

and with a copy to:  Wachovia Bank, National Association
                     8739 Research Drive, URP4
                     Charlotte, North Carolina  28288-1075
                     Attn: David Tucker
                     Fax No.: (704) 593-7735]
                     or any successor Servicer of the Loan

If to Borrower:      c/o Horizon Group Properties, Inc.
                     77 West Wacker Drive, Suite 4200
                     Chicago, Illinois 60601
                     Attn: Mr. David Tinkham
                     Fax No.: (312) 917-8440

With a copy to:      c/o Horizon Group Properties Inc.
                     5000 Hakes Drive
                     Muskegon, MI 49441
                     Attention: Ms. Terri Springstead
                     Fax No.: (231) 798-5100

And with a copy to:  Schiff Hardin & Waite
                     7300 Sears Tower
                     Chicago, Illinois 60606
                     Attn: David A. Grossberg, Esq.
                     Fax No.: (312) 258-5700

If to Non-Borrower
Indemnitor:          c/o Horizon Group Properties, Inc.
                     77 West Wacker Drive, Suite 4200
                     Chicago, Illinois 60601
                     Attn: Mr. David Tinkham
                     Fax No.: (312) 917-8440

With a copy to:      c/o Horizon Group Properties Inc.
                     5000 Hakes Drive
                     Muskegon, MI 49441
                     Attention: Ms. Terri Springstead
                     Fax No.: (231) 798-5100

And with a copy to:  Schiff Hardin & Waite

                                       312
<Page>

                     7300 Sears Tower
                     Chicago, Illinois 60606
                     Attn: David A. Grossberg, Esq.
                     Fax No.: (312) 258-5700

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days' written notice of such change to the other parties in
accordance with the provisions of this SECTION 19. Notices shall be deemed to
have been given on the date set forth above, even if there is an inability to
actually deliver any Notice because of a changed address of which no Notice was
given or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer.

     20.    DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed in
any number of duplicate originals and each duplicate original shall be deemed to
be an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

     21.    NO ORAL CHANGE. This Agreement, and any provisions hereof, may not
be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of any Indemnitor or any Indemnified
Party, but only by an agreement in writing signed by the party or parties
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

     22.    HEADINGS, ETC. The headings and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.

     23.    NUMBER AND GENDER/SUCCESSORS AND ASSIGNS. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons referred to may
require. Without limiting the effect of specific references in any provision of
this Agreement, the term "Indemnitor" shall be deemed to refer to each and every
Person constituting an Indemnitor from time to time, as the sense of a
particular provision may require, and to include the heirs, executors,
administrators, legal representatives, successors and permitted assigns of each
Indemnitor, all of whom shall be bound by the provisions of this Agreement. Each
reference herein to Indemnitee shall be deemed to include its successors and
assigns. This Agreement shall inure to the benefit of the Indemnified Parties
and their respective successors, permitted assigns, heirs and legal
representatives forever. The Indemnified Parties shall have the right to assign
or transfer their rights under this Agreement in connection with any assignment
of the Loan and the Loan Documents. Any assignee or transferee of Indemnitee
(and the other Indemnified Parties) shall be entitled to all the benefits
afforded to Indemnitee (and the other Indemnified Parties) under this Agreement.
No Indemnitor shall have the right to assign or transfer its rights or
obligations under this Agreement without the prior written consent of
Indemnitee, as

                                       313
<Page>

provided in the Loan Agreement, and any attempted assignment without such
consent shall be null and void.

     24.    RELEASE OF LIABILITY. Any one or more parties liable upon or in
respect of this Agreement may be released without affecting the liability of any
party not so released.

     25.    RIGHTS CUMULATIVE. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which Indemnitee has
under any or all of the Notes, any or all of the Mortgages, the Loan Agreement
or the other Loan Documents or would otherwise have at law or in equity.

     26.    INAPPLICABLE PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement, unless such continued effectiveness of this
Agreement, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

     27.    GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS.

     (a)    THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
EACH INDEMNITOR AND ACCEPTED BY INDEMNITEE IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTES WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION RELATED HERETO, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE LOAN
DOCUMENTS WITH RESPECT TO ANY INDIVIDUAL PROPERTY SHALL BE GOVERNED BY, AND
CONSTRUED ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT IN WHICH
SUCH INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, COMMONWEALTH OR DISTRICT, THE LAW OF
THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY
OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER AND
THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH

                                       314
<Page>

INDEMNITOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND/OR THE OTHER
LOAN DOCUMENTS, AND THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

     (b)    ANY LEGAL  SUIT,  ACTION OR  PROCEEDING  AGAINST  INDEMNITEE  OR ANY
INDEMNITOR ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY, AT INDEMNITEE'S
OPTION, BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND EACH INDEMNITOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH INDEMNITOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH
INDEMNITOR DOES HEREBY DESIGNATE AND APPOINT:

                   SCHIFF HARDIN & WAITE
                   150 EAST 52ND STREET
                   SUITE 2700
                   NEW YORK, NY 10022
                   ATTENTION: DAVID GROSSBERG, ESQ.(CHICAGO OFFICE)

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO SUCH INDEMNITOR IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH INDEMNITOR IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH INDEMNITOR (I)
SHALL GIVE PROMPT NOTICE TO INDEMNITEE OF ANY CHANGED ADDRESS OF ITS AUTHORIZED
AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS AND WHICH SUBSTITUTE AGENT SHALL AT ALL TIMES BE THE SAME
AGENT AS AUTHORIZED BY BORROWER UNDER THE LOAN AGREEMENT), PROVIDED THERE SHALL
ALWAYS BE THE SAME AUTHORIZED AGENT FOR ALL INDEMNITORS AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR PROVIDED THERE
SHALL ALWAYS BE THE SAME AUTHORIZED AGENT FOR ALL INDEMNITORS.

                                       315
<Page>

NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE INDEMNIFIED PARTIES TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST INDEMNITORS IN ANY OTHER JURISDICTION.

     28.    MISCELLANEOUS.

     (a)    Wherever pursuant to this Agreement (i) Indemnitee (or any other
Indemnified Party) exercises any right given to it to approve or disapprove any
matter, (ii) any arrangement or term is to be satisfactory to Indemnitee (or any
other Indemnified Party), or (iii) any other decision or determination is to be
made by Indemnitee (or any other Indemnified Party), the decision of Indemnitee
(or such other Indemnified Party) to approve or disapprove such matter, all
decisions that arrangements or terms are satisfactory or not satisfactory to
Indemnitee (or such other Indemnified Party) and all other decisions and
determinations made by Indemnitee (or such other Indemnified Party), shall be in
the sole and absolute discretion of Indemnitee (or such other Indemnified Party)
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.

     (b)    Wherever pursuant to this Agreement it is provided that any
Indemnitor pay any costs and expenses, such costs and expenses shall include,
but not be limited to, reasonable legal fees and disbursements of Indemnitee and
the other Indemnified Parties, whether incurred by retained outside law firms,
or as reimbursements for the expenses of in-house legal staff, or otherwise.

     29.    JOINT AND SEVERAL LIABILITY. The obligations and liabilities of the
Indemnitors hereunder are joint and several.

     30.    RECITALS. The recitals hereof are a part hereof, form a basis for
this Agreement and shall be considered PRIMA FACIE evidence of the facts and
documents referred to therein.

                                       316
<Page>

     IN WITNESS WHEREOF, this Agreement has been executed by Indemnitors and is
effective as of the day and year first above written.

                                       LAUGHLIN OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       MEDFORD OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       WARRENTON OUTLET CENTER LLC,
                                       a Delaware limited liability company

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       HORIZON GROUP PROPERTIES, INC.,
                                       a Maryland corporation

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       HORIZON GROUP PROPERTIES, L.P.,
                                       a Delaware limited partnership

                                       By:  Horizon Group Properties, Inc., a
                                             Maryland corporation, its General
                                             Partner

                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

                                       317
<Page>

                                   SCHEDULE I

                              ENVIRONMENTAL REPORTS

Laughlin Property:  Phase I Environmental Site Assessment prepared by Aaron &
                    Wright Technical Services Inc. and dated April 18, 2002

Medford Property:   Phase I Environmental Site Assessment prepared by Aaron &
                    Wright Technical Services Inc. and dated April 19, 2002

Warrenton Property: Phase I Environmental Site Assessment prepared by Aaron &
                    Wright Technical Services Inc. and dated April 19, 2002

                                       318

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