Document:

Exhibit 10.86

 

GUARANTY OF
PAYMENT AND COMPLETION

 

THIS GUARANTY OF
PAYMENT AND COMPLETION (this “Guaranty”) is dated as
of April 24, 2003 and given by HORIZON GROUP PROPERTIES, INC., a Maryland
corporation (the “Guarantor”), to and for the benefit of AMSTER TRADING COMPANY CHARITABLE
REMAINDER UNITRUST DATED MARCH 10, 2003 (“Lender”).

 

R E C I T A L S:

 

A.            Pursuant to the terms and conditions
of a certain Construction and Term Loan Agreement, dated of even date herewith,
between HORIZON
GROUP PROPERTIES, L.P., a Delaware limited partnership (“Borrower”)
and Lender (as amended, modified, replaced or restated from time to time, the
“Loan Agreement”), Lender has agreed to make certain Loans (as defined below)
to Borrower.

 

B.            The loans to be made pursuant to the
Loan Agreement will consist of: (i) a term loan of Three Million One Hundred
Thousand Dollars ($3,100,000) (the “Term Loan”) and (ii) a construction loan of
up to Three Million One Hundred Thousand Dollars ($3,100,000) (the
“Construction Loan”)(the Construction Loan and the Term Loan are collectively
referred to herein as the “Loans”).

 

C.            As a condition precedent to Lender’s
extension of the Loans to Borrower and in consideration therefor, Lender has
required, among other things, the execution and delivery of: (i) this
Guaranty by Guarantor, (ii) that certain Promissory Note, dated of even
date herewith, from Borrower to Lender in the original principal amount of
Three Million One Hundred Thousand Dollars ($3,100,000)(as amended, modified,
replaced or restated from time to time, the “Note”), (iii) that certain
Construction Deed of Trust, Security Agreement and Fixture Filing Financing
Statement, dated of even date herewith, among Borrower, as trustor, First
American Title, as trustee, and Lender, as beneficiary, encumbering the real
property, improvements and personalty described therein (“Premises”) (as
amended, modified, replaced or restated from time to time, the “Deed of
Trust”), and (iv) various other Loan Documents (as defined in the Loan
Agreement).

 

D.            Guarantor: (i) is the general
partner of Borrower and has a financial interest in Borrower, (ii) understands
that Lender will not make the Loans to Borrower unless Guarantor executes and
delivers this Guaranty to Lender, and (iii) has agreed to execute and deliver
this Guaranty to Lender.

 

E.             All terms not
otherwise defined herein shall have the meaning set forth in the Loan
Agreement.

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, Guarantor hereby agrees as follows:

 

1.             Guaranty of Payment.  Guarantor hereby unconditionally and
irrevocably guaranties to Lender, the punctual payment and performance when
due, whether at stated maturity or by acceleration

 

1

 

or otherwise, of the
indebtedness and other obligations of Borrower to Lender evidenced by the Note
and any other amounts that may become owing by Borrower under the Loan
Documents (such indebtedness, obligations and other amounts are hereinafter
referred to as “Payment Obligations”). 
This Guaranty is a present and continuing guaranty of payment and not of
collectibility, and Lender shall not be required to prosecute collection,
enforcement or other remedies against Borrower or any other guarantor of the
Payment Obligations, or to enforce or resort to any collateral for the
repayment of the Payment Obligations or other rights or remedies pertaining
thereto, before calling on Guarantor for payment. If for any reason Borrower
shall fail or be unable to pay, punctually and fully, any of the Payment
Obligations, Guarantor shall pay such obligations to Lender in full immediately
upon Lender’s written demand.  One or
more successive actions may be brought against Guarantor, as often as Lender deems
advisable, until all of the Payment Obligations are paid and performed in
full.  The Payment Obligations, the
Construction Obligations (defined below) together with all other payment and
performance obligations of Guarantor hereunder are referred to herein as
“Borrower’s Obligations”.

 

2.             Performance Guaranty.

 

(a)           Guarantor
absolutely, unconditionally and irre­vocably undertakes and guarantees, for the
benefit of Lender and each and every present and future holder or holders of
the Note or assignee or assignees of the Loan Documents, that all construction
obligations of Borrower for completion of the Project (as defined in the Loan
Agreement) in accordance with the Plans and Specifications (as defined in the
Loan Agreement), all Leases (as defined in the Loan Agreement) and the Loan
Documents and other performance obligations of Borrower under the Loan
Documents (referred to herein as 
“Construction Obligations”) shall be completed by to the applicable
completion date specified in the Loan Agreement and in accordance with the
other terms and conditions contained in the Loan Agreement, free and clear of
any and all liens, charges, security interests and claims of any kind and
nature whatsoever, subject to the rights of Borrower to cure such liens, charges,
security interests and claims under the Deed of Trust.  Guarantor shall cause the Construction
Obligations to be performed, completed and paid for in the manner and at the
applicable times required to be so performed, completed and paid for by
Borrower under the Loan Agreement, to the extent that Borrower fails to do so
at any and all applicable times.

 

(b)           Upon
the occurrence of an Event of Default under any of the Loan Documents which
continues beyond any applicable grace or cure period, Guarantor agrees, on not
more than ten (10) days written demand by Lender (a “Demand Notice”) to either
(i) cure or cause Borrower to cure the Event of Default or (ii) commence
performance of the Construction Obligations and to diligently pursue
performance thereof to completion, as described below.  Guarantor shall indemnify, defend and hold
Lender harmless from and against any and all loss, damage, cost, expense,
injury or liability Lender may suffer or incur in connection with third party
claims brought as a result of Guarantor’s performance of the Construction
Obligations.  If Guarantor fails to
commence and pursue diligently the either the cure of the Event of Default or
performance of the Construction Obligations within ten (10) days after its
receipt of a Demand Notice, then, either before or after pursuing any other
remedy of Lender against Guarantor or Borrower and regardless of whether Lender
shall ever pursue any such

 

2

 

other remedy, Lender shall have the right to
complete the Construction Obligations, or call upon any other reputable parties
to complete the Construction Obligations, substantially in accordance with the
Plans and Specifications (as defined in the Loan Agreement) and shall have the
right to expend such sums as Lender in its discretion deems necessary in order
so to complete the Construction Obligations. 
During the course of any construction undertaken by Lender or by any
other party on behalf of Lender, Guarantor shall pay on demand any amounts due
to the Contractor (as defined in the Loan Agreement), Subcontractors (as
defined in the Loan Agreement) and other material suppliers and for permits and
licenses necessary to complete the Construction Obligations.  Lender at any time may require the Guarantor
to perform or supervise the performance of such work in lieu of Lender or any
party engaged by Lender.  Guarantor’s
obligations in connection with such work shall not be affected by any errors or
omissions of Borrower, the Contractor, the Architect (as defined in the Loan
Agreement), any Subcontractor, or any agent or employee of any of them in
design, supervision or performance of the work, it being understood that such
risk is assumed by Guarantor.  Neither the
completion of the Construction Obligations nor failure of said parties to
complete the Construction Obligations shall relieve Guarantor of any
liabilities hereunder.  Rather, such
liability shall be continuing, except as otherwise provided herein, and may be
enforced by Lender to the end that the Construction Obligations shall be
completed timely as contemplated by the Loan Agreement, the Leases, and the
Plans and Specifications, lien-free (subject to the rights of Borrower to
cure liens under the Deed of Trust), without loss, expense, injury or liability
of any kind to Lender.

 

(c)           For purposes of this
Section 2, the Construction Obligations shall be deemed to be completed
upon receipt by Lender of (i) a certificate of completion from the
Contractor attesting to substantial completion of the Construction Obligations,
(ii) issuance of a final certificate of occupancy with respect to the
Project issued by the applicable governmental authority, to the extent the same
may be obtained prior to completion of tenant improvements on unleased space,
except if such space is subsequently leased, the performance guaranty contained
in this Section 2 shall apply to the work required to complete such tenant
improvement work in accordance with the applicable Lease or Leases, and
(iii) evidence that Borrower has requested estoppel certificates from such
tenants under leases at the Project as Lender may reasonably request,
evidencing acceptance of the tenants’ space in accordance with the terms of
their respective Leases and indicating that no defaults have occurred such
Leases.

 

3.             Representations and Warranties.  The following shall constitute
representations and warranties of Guarantor and Guarantor hereby acknowledges
that Lender intends to make the Loans in reliance thereon:

 

a.             Guarantor is duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has the full power and authority to enter into this Guaranty and
to perform all of its duties and obligations under this Guaranty.  This Guaranty, when executed, will be a
valid and legally binding obligation of Guarantor enforceable against Guarantor
in accordance with its terms in all material respects.

 

3

 

b.             To
the best of Guarantor’s knowledge, neither the execution and delivery of this
Guaranty nor compliance with the terms and provisions hereof will violate any
applicable law, rule, regulation, judgment, decree or order, or will conflict
with or result in any breach of any of the terms, covenants, conditions or
provisions of any indenture, mortgage, deed of trust, instrument, document,
agreement or contract of any kind that creates, represents, evidences or
provides for any lien, charge or encumbrance upon any of the property or assets
of Guarantor, or any other indenture, mortgage, deed of trust, instrument,
document, agreement or contract of any kind to which Guarantor is a party or to
which Guarantor or the property of Guarantor may be subject.

 

c.             There is not any
litigation, arbitration, governmental or administrative proceedings, actions,
examinations, claims or demands pending, or to Guarantor’s knowledge,
threatened that could adversely affect performance by Guarantor of his, her or
its obligations under this Guaranty.

 

d.             Neither this
Guaranty nor any statement or certification as to facts previously furnished or
required herein to be furnished to Lender by Guarantor, contains any material
inaccuracy or untruth in any representation, covenant or warranty or omits to
state a fact material to this Guaranty.

 

4.             Continuing Guaranty.  Guarantor agrees that performance of
Borrower’s Obligations by Guarantor shall be a primary obligation, shall not be
subject to any counterclaim, set-off, abatement, deferment or defense
based upon any claim that Guarantor may have against Lender, Borrower, any
other guarantor of Borrower’s Obligations or any other person or entity, and
shall remain in full force and effect without regard to, and shall not be
released, discharged or affected in any way by, any circumstance or condition
(whether or not Guarantor shall have any knowledge thereof), including without
limitation:

 

a.             any lack of
validity or enforceability of any of the Loan Documents, unless such lack of
validity or enforceability arises from Lender’s willful misconduct;

 

b.             any
termination, amendment, modification or other change in any of the Loan
Documents, including, without limitation, any modification of the interest
rate(s) described therein;

 

c.             any furnishing, exchange,
substitution or release of any collateral securing repayment of the Loans, or
any failure to perfect any lien in such collateral;

 

d.             any
failure, omission or delay on the part of Borrower, Guarantor, any other
guarantor of Borrower’s Obligations or Lender to conform or comply with any
term of any of the Loan Documents or any failure of Lender to give notice of
any Event of Default (as defined in the Loan Agreement);

 

e.             any
waiver, compromise, release, settlement or extension of time of payment or
performance or observance of any of the obligations or agreements contained in
any of the

 

 

4

 

Loan Documents;

 

f.              any
action or inaction by Lender under or in respect of any of the Loan Documents,
any failure, lack of diligence, omission or delay on the part of Lender to perfect,
enforce, assert or exercise any lien, security interest, right, power or remedy
conferred on it in any of the Loan Documents, or any other action or inaction
on the part of Lender unless the act or failure to act is found to be gross
negligence or willful misconduct on the part of Lender;

g.             any voluntary or involuntary
bankruptcy, insol­vency, reorganization arrangement, readjustment, assignment
for the benefit of creditors, composition, receivership, liquidation,
marshalling of assets and liabilities or similar events or proceedings with
respect to Borrower or any other guarantor of Borrower’s Obligations, as
applicable, or any of their respective property or creditors, or any action
taken by any trustee or receiver or by any court in any such proceeding;

 

h.             any merger or consolidation of
Borrower into or with any entity, or any sale, lease or transfer of any of the
assets of Borrower, Guarantor or any other guarantor of Borrower’s Obligations
to any other person or entity;

 

i.              any change in the ownership of
Borrower or any change in the relationship between Borrower, Guarantor or any
other guarantor of Borrower’s Obligations, or any termination of any such
relationship;

 

j.              any
release or discharge by operation of law of Borrower, Guarantor or any other
guarantor of Borrower’s Obligations from any obligation or agreement contained
in any of the Loan Documents; or

 

k.             any other occurrence, circumstance,
happening or event, whether similar or dissimilar to the foregoing and whether
foreseen or unforeseen, which otherwise might constitute a legal or equitable
defense or discharge of the liabilities of a guarantor or surety or which
otherwise might limit recourse against Borrower or Guarantor to the fullest
extent permitted by law.

 

5.             Waivers.  Guarantor expressly and unconditionally
waives: (a) notice of any of the matters referred to in Section 4
above, (b) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights against
Guarantor, including, without limitation, any demand, presentment and protest,
proof of notice of non-payment under any of the Loan Documents and notice
of any Event of Default or any failure on the part of Borrower, Guarantor or
any other guarantor of Borrower’s Obligations to perform or comply with any
covenant, agreement, term or condition of any of the Loan Documents,
(c) any right to the enforcement, assertion or exercise against Borrower,
Guarantor or any other guarantor of Borrower’s Obligations of any right or
remedy conferred under any of the Loan Documents, (d) any requirement of
diligence on the part of any person or entity, (e) any requirement to
exhaust any remedies or to mitigate the damages resulting from any default
under any of the Loan Documents, and (f) any notice of any sale,

 

5

 

transfer or other disposition
of any right, title or interest of Lender under any of the Loan Documents.

 

6.             Subordination.  Guarantor agrees that any and all present
and future debts and obligations of Borrower to Guarantor hereby are
subordinated to the claims of Lender and hereby are assigned by Guarantor to
Lender as security for Borrower’s Obligations and Guarantor’s obligations under
this Guaranty.

 

7.               Subrogation Waiver.  Until Borrower’s Obligations are paid in
full and all periods under applicable bankruptcy law for the contest of any
payment by Guarantor or Borrower as a preferential or fraudulent payment have
expired, Guarantor knowingly, and with advice of counsel, waives, relinquishes,
releases and abandons all rights and claims to indemnification, contribution,
reimbursement, subrogation and payment which Guarantor may now or hereafter
have by and from Borrower and the successors and assigns of Borrower, for any
payments made by Guarantor to Lender, including, without limitation, any rights
which might allow Borrower, Borrower’s successors, a creditor of Borrower, or a
trustee in bankruptcy of Borrower to claim in bankruptcy or any other similar
proceedings that any payment made by Borrower or Borrower’s successors and
assigns to Lender was on behalf of or for the benefit of Guarantor and that
such payment is recoverable by Borrower, a creditor or trustee in bankruptcy of
Borrower as a preferential payment, fraudulent conveyance, payment of an
insider or any other classification of payment which may otherwise be
recoverable from Lender.

 

8.             Reinstatement.  The obligations of Guarantor pursuant to
this Guaranty shall continue to be effective or automatically be reinstated, as
the case may be, if at any time payment of any of Borrower’s Obligations or
Guarantor’s obligations under this Guaranty is rescinded or otherwise must be
restored or returned by Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Guarantor or Borrower or otherwise, all as
though such payment had not been made.

 

9.             Financial Statements.  Guarantor represents and warrants to Lender
that: (a) the financial statements of Guarantor contained in the Form 10-K
for the year ended December 31, 2002 are true, complete and correct in all
material respects, disclose all actual and contingent liabilities, and fairly
present the financial condition of Guarantor, and do not contain any untrue
statement of a material fact or omit to state a fact material to the financial
statements submitted or this Guaranty and (b) no material adverse change
has occurred in the financial statements from the dates thereof until the date
hereof.  Guarantor shall furnish to
Lender such additional financial information as Lender shall reasonably request
from time to time.  Notwithstanding the
foregoing sentence, Guarantor agrees to furnish, without the request of Lender,
no later than ninety (90) days after the end of each calendar year, Guarantor’s
annual financial statements for the prior calendar year.  Such annual financial statements shall be
certified by an officer of Guarantor as true, complete and correct and shall be
in a form substantially similar to the form of financial statements previously
submitted by Guarantor to Lender, unless otherwise approved in writing by
Lender or as required under generally accepted accounting principles.

 

10.           Transfers, Sales, Etc.  Guarantor shall not sell, lease, transfer,
convey or assign any of its assets without the consent of Lender, which consent
shall not be unreasonably withheld or

 

6

 

delayed, unless (a) if
Guarantor is an individual, such sale, lease, transfer, conveyance or
assignment is of a non-material asset of such Guarantor or (b) if
Guarantor is a corporation, partnership or other entity, such sale, lease,
transfer, conveyance or assignment will not have a material adverse effect on
the business or financial condition of Guarantor or its ability to perform its
obligations hereunder.

 

11.           Enforcement Costs.  If: (a) this Guaranty, is placed in the
hands of one or more attorneys for collection or is collected through any legal
proceeding; (b) one or more attorneys is retained to represent Lender in
any bankruptcy, reorganization, receivership or other proceedings affecting
creditors’ rights and involving a claim under this Guaranty, or (c) one or
more attorneys is retained to represent Lender in any other proceed­ings
whatsoever in connection with this Guaranty, 
then Guarantor shall pay to Lender upon demand all fees, costs and
expenses incurred by Lender in connection therewith, including, without
limitation, reasonable attorney’s fees, court costs and filing fees (all of
which are referred to herein as “Enforcement Costs”), in addition to all other
amounts due hereunder.

 

12.           Successors and Assigns; Joint and Several Liability.  This Guaranty shall inure to the benefit of
Lender and its successors and assigns. 
This Guaranty shall be binding on Guarantor and the heirs, legatees,
successors and assigns of Guarantor.  If
this Guaranty is executed by more than one person, it shall be the joint and
several undertaking of each of the undersigned.  Regardless of whether this Guaranty is executed by more than one
person, it is agreed that the under­signed’s liability hereunder is several and
independent of any other guarantees or other obligations at any time in effect
with respect to Borrower’s Obligations or any part thereof and that Guarantor’s
liability hereunder may be enforced regardless of the existence, validity,
enforcement or non-enforcement of any such other guarantees or other
obligations.

 

13.           No Waiver of Rights.  No delay or failure on the part of Lender to
exercise any right, power or privilege under this Guaranty or any of the other
Loan Documents shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege shall preclude any other or further
exercise thereof or the exercise of any other power or right, or be deemed to
establish a custom or course of dealing or performance between the parties
hereto.  The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.  No notice to or demand on
Guarantor in any case shall entitle Guarantor to any other or further notice or
demand in the same, similar or other circumstance.

 

14.           Modification.  The terms of this Guaranty may be waived, discharged, or
terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.  No amendment, modification, waiver or other
change of any of the terms of this Guaranty shall be effective without the
prior written consent of Lender.

 

15.           Joinder.  Any action to enforce this Guaranty may be brought against
Guarantor without any reimbursement or joinder of Borrower or any other
guarantor of Borrower’s Obligations in such action.

 

16.           Severability.  If any provision of this Guaranty is deemed to be invalid by
reason of the operation of law, or by reason of the interpretation placed
thereon by any administrative agency or any court, Guarantor and Lender shall
negotiate an equitable adjustment in the provisions of the

 

7

 

same in order to effect, to the
maximum extent permitted by law, the purpose of this Guaranty and the validity
and enforceability of the remaining provisions, or portions or applications
thereof, shall not be affected thereby and shall remain in full force and
effect.

 

17.           Applicable Law.  This Guaranty is governed as to validity,
interpretation, effect and in all other respects by laws and decisions of the
State of Illinois.

 

18.           Notice.  All notices, communications and waivers under this Guaranty shall
be in writing and shall be (i) delivered in person or (ii) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, or (iii) by overnight express carrier, addressed in each case
as follows:

 

	
  To Lender:

  	
   

  	
  Amster
  Trading Company Charitable

  
	
   

  	
   

  	
  Remainder
  Unitrust Dated March 10, 2003

  
	
   

  	
   

  	
  23811
  Chagrin Boulevard, Suite 200

  
	
   

  	
   

  	
  Cleveland,
  Ohio 44122

  
	
   

  	
   

  	
  Attn:  Howard M. Amster

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Ulmer &
  Berne LLP

  
	
   

  	
   

  	
  Penton Media
  Building

  
	
   

  	
   

  	
  1300 East
  Ninth Street, Suite 900

  
	
   

  	
   

  	
  Cleveland,
  Ohio 44114

  
	
   

  	
   

  	
  Attn: Robert
  A. Fein, Esq.

  
	
   

  	
   

  	
   

  
	
  to
  Guarantor:

  	
   

  	
  Horizon
  Group Properties, Inc.

  
	
   

  	
   

  	
  77 West
  Wacker Drive, Suite 4200

  
	
   

  	
   

  	
  Chicago,
  Illinois 60601

  
	
   

  	
   

  	
  Attn:  Gary J. Skoien

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Schiff
  Hardin & Waite

  
	
   

  	
   

  	
  6600 Sears
  Tower

  
	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
  Attn:  David A. Grossberg, Esq.

  

 

or to any other address as to any of the
parties hereto, as such party shall designate in a written notice to the other
party hereto.  All notices sent pursuant
to the terms of this Section 15 shall be deemed received (i) if
personally delivered, then on the date of delivery, (ii) if sent by
overnight, express carrier, then on the next federal banking day immediately
following the day sent, or (iii) if sent by registered or certified mail,
then on the earlier of the third federal banking day following the day sent or
when actually received.

 

19.           CONSENT TO JURISDICTION.  TO INDUCE LENDER TO ACCEPT THIS GUARANTY, GUARANTOR
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION,
ALL
ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS GUARANTY
WILL BE

 

8

 

LITIGATED IN COURTS HAVING SITUS IN CHICAGO,
ILLINOIS.  GUARANTOR HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHICAGO, ILLIONOIS,
WAIVES PERSONAL SERVICE OF PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL DIRECTED TO GUARANTOR AT THE ADDRESS STATED
HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

 

20.           WAIVER OF JURY TRIAL.  GUARANTOR AND LENDER (BY ACCEPTANCE HEREOF), HAVING
BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.  GUARANTOR AGREES THAT IT
WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR
SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

 

[SIGNATURE PAGE FOLLOWS]

 

9

 

Guarantor has executed this Guaranty as of the date first above
written.

 

	
   

  	
   

  	
  HORIZON GROUP PROPERITES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Tinkham 

  	
   

  
	
   

  	
   

  	
   

  	
  David Tinkham, 

  
	
   

  	
   

  	
   

  	
  Senior Vice President / CFO

  

 

Certification

 

	
  STATE OF

  	
  )

  
	
   

  	
  )  SS:

  
	
  COUNTY OF

  	
  )

  

 

The undersigned, a Notary Public in and for the aforementioned State
and County, affirms that, on this        day of
April, 2003, David Tinkham, in his capacity as Senior Vice President / CFO of
Horizon Group Properties, Inc., a Maryland corporation, appeared before me and
executed this Guaranty on behalf of said corporation.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary
  Public

  

 

10Exhibit 10.87

 

ENVIRONMENTAL
INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL
INDEMNITY AGREEMENT (this “Agreement”), dated
as of April 24, 2003 is entered into and delivered, jointly and severally, by HORIZON
GROUP PROPERTIES, L.P., a Delaware limited partnership (“Borrower”)
and HORIZON
GROUP PROPERTIES, INC., a Maryland corporation (“Guarantor”)
to and for the benefit of  AMSTER TRADING
COMPANY CHARITABLE REMAINDER UNITRUST DATED MARCH 10, 2003 (“Lender”).

 

R E C I T A L S:

 

A.    Pursuant to the terms and
conditions of a certain Construction and Term Loan Agreement, dated of even
date herewith, between Borrower and Lender (as amended, modified, replaced or
restated from time to time, the “Loan Agreement”), Lender has agreed to
make certain Loans (as defined below) to Borrower.

 

B.    The loans to be made
pursuant to the Loan Agreement will consist of: (i) a term loan of Three
Million One Hundred Thousand Dollars ($3,100,000) (the “Term Loan”) and
(ii) a construction loan of up to Three Million One Hundred Thousand Dollars
($3,100,000) (the “Construction Loan”) (the Construction Loan and the
Term Loan are collectively referred to herein as the “Loans”).

 

C.    As a condition precedent to
Lender’s extension of the Loans to Borrower and in consideration therefor,
Lender has required, among other things, the execution and delivery of:
(i) this Agreement by Borrower and Guarantor,  (ii) that certain Promissory Note, dated of even date
herewith, from Borrower to Lender in the original principal amount of Three
Million One Hundred Thousand Dollars ($3,100,000)(as amended, modified,
replaced or restated from time to time, the “Note”), (iii) that certain
Construction Deed of Trust, Security Agreement and Fixture Filing Financing
Statement, dated of even date herewith, among Borrower, as trustor, First
American Title, as trustee, and Lender, as beneficiary, encumbering the real
property, improvements and personalty described therein (“Property”) (as
amended, modified, replaced or restated from time to time, the “Deed of
Trust”), and (iv) various other Loan Documents (as defined in the Loan
Agreement).

 

D.    Guarantor: (i) is the
general partner of Borrower and has a financial interest in Borrower, (ii)
understands that Lender will not make the Loans to Borrower unless Guarantor
executes and delivers this Agreement to Lender, and (iii) has agreed to execute
and deliver this Agreement.

 

E.     Capitalized
terms used and not specifically defined herein shall bear the same meaning as
established in the Loan Agreement.

 

1

 

NOW, THEREFORE, to
induce Lender to extend the Loans to Borrower and in consideration of the
foregoing premises and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Indemnitors (as defined
below) hereby covenant and agree for the benefit of Lender and the other
Indemnified Parties (as defined below), as follows:

 

1.             Environmental Matters.

 

(a.)          Definitions.  For purposes of this Agreement the following
terms have the following meanings:

 

“Environmental
Laws” means any and all federal, state and local laws (whether
under common law, statute, rule, regulation or otherwise), requirements under
permits or other authorizations issued with respect thereto, and other orders,
decrees, judgments, directives or other requirements of any governmental
authority relating to or imposing liability or standards of conduct (including
disclosure or notification) concerning protection of human health or the
environment or Hazardous Substances or any activity involving Hazardous
Substances, all as previously and in the future to be amended.

 

“Hazardous
Substance” means, but is not limited to, any substance,
chemical, material or waste (A) the presence of which causes a nuisance or
trespass of any kind; (B) which is regulated by any federal, state or local
governmental authority because of its toxic, flammable, corrosive, reactive,
carcinogenic, mutagenic, infectious, radioactive, or other hazardous property
or because of its effect on the environment, natural resources or human health
and safety, including, but not limited to, petroleum and petroleum products,
asbestos-containing materials, polychlorinated biphenyls, lead and lead-based
paint, radon, radioactive materials, flammables and explosives; or (C) which is
designated, classified, or regulated as being a hazardous or toxic substance,
material, pollutant, waste (or a similar such designation) under any federal,
state or local law, regulation or ordinance, including under any Environmental
Law such as the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. §9601 et  seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. §11001 et  seq.),
the Hazardous Substances Transportation Act (49 U.S.C. §1801 et  seq.),
or the Clean Air Act (42 U.S.C. §7401 et  seq.).

 

“Indemnified
Parties” means and includes Lender, its parent, subsidiaries,
and affiliated companies, assignees of any of Lender’s interest in the Loans or
the Loan Documents, any servicer or originator of the Loans, and the officers,
directors, employees, agents and contractors of any of the foregoing parties.

 

“Indemnitors”
means Borrower and Guarantor, jointly and severally.

 

“Loan
Documents” shall have the meaning set forth in the Loan
Agreement.

 

“Release”
means any release, deposit, discharge, emission, leaking, leaching, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.

 

2

 

“Reports”
means the environmental studies and reports identified on Exhibit A attached
hereto and made a part hereof.

 

(b)           Environmental
Representations and Warranties. 
Except as otherwise fully disclosed by Indemnitors to Indemnified
Parties in writing detailing any exceptions to the following environmental
representations and warranties or fully disclosed to Indemnified Parties in the
Reports, Indemnitors hereby represent and warrant to Indemnified Parties that,
to the best of their knowledge, as of the date hereof:

 

(i)            neither the Property nor any
operations of Borrower thereon or in connection therewith are in violation of
any Environmental Laws or any permit or other authorization issued pursuant
thereto;

 

(ii)           no Hazardous Substances are, or to
Indemnitors’ knowledge and belief, have been handled, generated, stored,
processed or otherwise managed on or at the Property except for those
substances used by Borrower or tenants under leases at the Property in the
ordinary course of their businesses and in compliance with all Environmental
Laws;

 

(iii)          there are not, to Indemnitors’
knowledge, any past or present Releases of Hazardous Substances in, on, under
or from the Property;

 

(iv)          the Property is not subject to any
private or governmental lien or judicial or administrative notice or action
relating to Hazardous Substances;

 

(v)           there are no existing or closed
underground storage tanks or other underground storage receptacles for
Hazardous Substances on the Property;

 

(vi)          Borrower has received no notice of,
and to Borrower’s knowledge, there exists no investigation, action, proceeding
or claim by any agency, authority or unit of government or by any third party
which could result in any liability, penalty, sanction or judgment under any
Environmental Laws with respect to any condition, use or operation of the
Property or any of Borrower’s operations, nor does Borrower know of any basis
for such a claim;

 

(vii)         to Indemnitors’ knowledge, there has
been no claim by any party that any use, operation or condition of the Property
or any of Borrower’s operations has caused any nuisance or any other liability
or adverse condition on any other property nor does Borrower know of any basis
for such a claim;

 

(viii)        there are no agreements, consent orders,
decrees, judgments, license or permit conditions or other orders or directives
of any federal, state or local court, governmental agency or authority or
agreements, whether settlement agreements or otherwise, with any third parties
relating to the ownership, use, operation, sale, transfer or conveyance of the
Property that require any change in the present condition of the Property or
any work, repairs, construction, containment, clean up,

 

3

 

investigations, studies,
removal or other remedial action or capital expenditures with respect to the
Property.

 

(c)           Environmental
Covenants.  Borrower
covenants and agrees that Borrower:  (i)
shall keep or cause the Property to be kept free from Hazardous Substances
(except those substances used by Borrower or tenants under leases at the
Property in the ordinary course of their businesses and in compliance with all
Environmental Laws); (ii) shall not install or use any underground storage
tanks, shall not itself engage in and shall expressly prohibit all tenants of
space in the Improvements from engaging in the use, generation, handling,
storage, production, processing or management of Hazardous Substances, except
in the ordinary course of their businesses and in compliance with all
Environmental Laws; (iii) shall not itself cause, shall take all action
reasonably necessary, and shall expressly prohibit the Release of Hazardous
Substances at, on, under, or from the Property; shall itself comply and shall
expressly require all tenants and any other persons who may come upon the
Property to comply with all Environmental Laws; (iv) shall keep the Property
free and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Borrower or any other
person or entity (“Environmental Liens”); (v) shall comply and take
actions reasonably necessary to cause all occupants of the Property to comply
with the recommendations of any qualified environmental engineer or other
expert that apply or pertain to the Property; and, (vi) without limiting the
generality of the foregoing, during the term of this Agreement, shall not use
any construction materials which contain asbestos nor install in the
Improvements on the Property or permit to be installed in the Improvements on
the Property, any materials which contain asbestos.

 

(d)           Notice and Access.  Indemnitors shall promptly notify
Indemnified Parties in writing if Indemnitors knows, knows or believes there is
or are (i) any Hazardous Substances, other than those used by Borrower or
tenants under leases at the Property in the ordinary course of their businesses
and in compliance with all Environmental Laws, present on the Property; (ii)
any Release of Hazardous Substances in, on, under, from or migrating towards
the Property; (iii) any non-compliance with Environmental Laws related in
any way to the Property; (iv) any actual or threatened Environmental Liens; (v)
any investigation or action or claim, whether threatened or pending, by any governmental
agency or third party pertaining to the Release of Hazardous Substances in, on,
under, from, or migrating towards the Property; and (vi) any installation of
wells, piping, or other equipment at the Property to investigate, remediate or
otherwise address any Release of Hazardous Substances at, on, in or in the
vicinity of the Property.  Indemnitors
shall promptly, at Indemnitors’s sole cost and expense, take all actions as are
required by Environmental Laws with respect to any Hazardous Substances or
other environmental condition at, on or under the Property or other affected
property, including all investigative, monitoring, removal, containment and
remedial actions in accordance with all applicable Environmental Laws,
including the payment, at no expense to Indemnified Parties, of all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Property in all instances as necessary to comply
with all applicable Environmental Laws (collectively, “Completion of the
Clean-up”).  In the event
Indemnitors fail to do so, Indemnified Parties may, but shall not be obligated
or have any duty to, cause the Completion of the Clean-up of the
Property.  Indemnitors hereby grant to
Indemnified Parties and their agents and employees access to the Property as
provided in Section 1(f) below, and a license to remove any items known
by Indemnified Parties to be Hazardous Substances and to do

 

4

 

all things Indemnified Parties
shall deem necessary to cause the Completion of the Clean-up of the
Property.

 

(e)           Indemnification.  Indemnitors covenant and agree, at
Indemnitors’ sole cost and expense, to indemnify, defend (at trial and
appellate levels, and with attorneys, consultants and experts reasonably
acceptable to Indemnified Parties), and hold Indemnified Parties harmless from
and against any and all liens, damages (including, without limitation,
consequential damages), losses, liabilities, obligations, settlement payments,
penalties, claims, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including reasonable
attorneys’, consultants’ and experts’ fees and disbursements actually incurred
in investigating, defending, settling or prosecuting any claim, litigation or
proceeding) which may at any time be imposed upon, incurred by or asserted
against Indemnified Parties or the Property (except to the extent they arise
out of the gross negligence or willful misconduct of an Indemnified Party), and
arising directly or indirectly from or out of (except to the extent they arise
out of the gross negligence or willful misconduct of an Indemnified Party):

 

(i)            he
past, present or future presence, Release or threat of Release of any Hazardous
Substances on, in, under or affecting all or any portion of the Property or any
surrounding areas, regardless of whether or not caused by or within the control
of any Indemnitor;

 

(ii)           the
past, present or future violation of any Environmental Laws, relating to or
affecting the Property or Borrower’s operations, whether or not caused by or
within the control of Indemnitor;

 

(iii)          the
failure by Indemnitors to comply fully with the terms and conditions of this Section
1;

 

(iv)          any
misrepresentation or inaccuracy in or the breach of any representation or
warranty contained in this Section 1; or

 

(v)           the
enforcement of this Section 1, including any liabilities that arise as a
result of the actions taken or caused to be taken by Indemnified Parties under
this Section 1, the cost of assessment, containment and/or removal of
any and all Hazardous Substances from all or any portion of the Property or any
surrounding areas, the cost of any actions taken in response to the presence,
Release or threat of Release of any Hazardous Substances on, in, under or
affecting any portion of the Property or any surrounding areas to prevent or
minimize such Release or threat of Release so that it does not migrate or
otherwise cause or threaten danger to present or future public health, safety,
welfare or the  environment, and costs
incurred to comply with the Environmental Laws in connection with all or any
portion of the Property or any surrounding areas.  Indemnified Parties’ rights under this Section 1 shall survive
payment in full of Borrower’s obligations under the Loan Documents and shall be
in addition to all other rights of Indemnified Parties under the Deed of Trust,
the Loan Agreement, the Note and the other Loan Documents, but shall terminate
upon the expiration of the applicable statute of limitations.  The foregoing notwithstanding, 

 

5

 

Indemnitors’ obligations under this Section
1 with regard to any Post Transfer Indemnification Responsibilities (as hereinafter
defined) shall be limited to such obligations directly or indirectly arising
out of or resulting from any Hazardous Substances that were present or released
in, on, or around any part of the Property, or in the soil, groundwater or soil
vapor on or under the Property at any time before or while Borrower held title
to or was in possession or control of the Property (“Indemnitors’ Continuing
Responsibility”); provided, however, that any Post Transfer Indemnification
Responsibilities incurred or suffered by Indemnified Parties shall be presumed,
unless shown by a preponderance of the evidence to the contrary, to be
Indemnitors’ Continuing Responsibility. 
“Post Transfer Indemnification Responsibilities” shall mean any
obligations hereunder to indemnify, defend, and hold Indemnified Parties
harmless arising after Indemnified Parties cease to hold a security interest in
the Property or acquire title to the Property as a result of foreclosure, deed
in lieu of foreclosure, or other transfer of the Property.

 

(f)            Site
Visits, Observation and Testing.  Indemnified Parties and their agents and representatives shall
have the right at any reasonable time to enter and visit the Property for the
purposes of observing the Property, taking and removing soil or groundwater
samples, and conducting tests on any part of the Property.  Indemnified Parties have no duty, however,
to visit or observe the Property or to conduct tests, and no site visit,
observation or testing by any Indemnified Party shall impose any liability on
any Indemnified Party.  In no event
shall any site visit, observation or testing by any Indemnified Party be a
representation that Hazardous Substances are or are not present in, on or under
the Property, or that there has been or shall be compliance with any law,
regulation or ordinance pertaining to Hazardous Substances or any other
applicable governmental law. Neither Borrower nor any other party is entitled
to rely on any site visit, observation or testing by any Indemnified Party.  Indemnified Parties owe no duty of care to
protect Indemnitors or any other party against, or to inform Indemnitors or any
other party of, any Hazardous Substances or any other adverse condition
affecting the Property.  Indemnified
Parties may in their discretion disclose to Indemnitors or any other party any
report or findings made as a result of, or in connection with, any site visit,
observation or testing by Indemnified Parties. 
Indemnitors understand and agree that Indemnified Parties make no
representation or warranty to Indemnitors or any other party regarding the
truth, accuracy or completeness of any such report or findings that may be
disclosed.  Indemnitors also understand
that, depending on the results of any site visit, observation or testing by any
Indemnified Party which are disclosed to Indemnitors, Indemnitors may have a
legal obligation to notify one or more environmental agencies of the results
and that such reporting requirements are site-specific and are to be
evaluated by Indemnitors without advice or assistance from Indemnified
Parties.  Any Indemnified Party shall
give Borrower reasonable notice before entering the Property. Such Indemnified
Party shall make reasonable efforts to avoid interfering with Borrower’s and
any tenant’s use of the Property in exercising any rights provided in this Section
1.

 

6

 

2.             Reinstatement of Obligations.  If at any time all or any part of any payment made by Borrower or
received by Indemnified Parties from Borrower under or with respect to this
Agreement is or must be rescinded or returned for any reason whatsoever
(including the insolvency, bankruptcy or reorganization of any Indemnitor under
any Debtor Relief Law (as defined below)), then the obligations of Indemnitors
hereunder shall, to the extent of the payment rescinded or returned, be deemed
to have continued in existence, notwithstanding such previous payment made by
Indemnitors, or receipt of payment by an Indemnified Party, and the obligations
of Indemnitors hereunder shall continue to be effective or be reinstated, as
the case may be, as to such payment, all as though such previous payment by
Indemnitors had never been made.

 

3.             Waivers.  To the
extent permitted by law, each Indemnitor, for itself and its successors, hereby
waives and agrees, with respect to its obligations under this Agreement, not to
assert or take advantage of:

 

(a)           Any right to require Indemnified
Parties to proceed against any other person or to proceed against or exhaust
any security held by Indemnified Parties at any time or to pursue any other
remedy in Indemnified Parties’ power or under any other agreement before
proceeding against Borrower  hereunder;

 

(b)           Any defense that may arise by reason
of the incapacity, lack of authority, death or disability of any other person
or persons or the failure of Indemnified Parties to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceedings) of
any other person or person;

 

(c)           Demand, presentment for payment, notice
of nonpayment, protest, notice of protest and all other notices of any kind, or
the lack of any thereof, including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on
the part of the Indemnified Parties, any endorser or creditor of either
Indemnitor or any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by Indemnified
Parties;

 

(d)           Any right or claim of right to cause
a marshalling of the assets of Indemnitors;

 

(e)           Intentionally Deleted;

 

(f)            Any duty on the part of Indemnified
Parties to disclose to Indemnitors any facts Indemnified Parties may now or
hereafter know about the Property, regardless of whether Indemnified Parties
has reason to believe that any such facts materially increase the risk beyond
that which Indemnitors intends to assume or has reason to believe that such
facts are unknown to Indemnitors or has a reasonable opportunity to communicate
such facts to Indemnitors, it being understood and agreed that Indemnitors is
fully responsible for being and keeping informed of the condition of the
Property and of any and all circumstances bearing on the risk that liability
may be incurred hereunder;

 

7

 

(g)           Any lack of notice of disposition or
of manner of disposition of any collateral for the Loans;

 

(h)           Any invalidity, irregularity or unenforceability,
in whole or in part, of any one or more of the Loan Documents;

 

(i)            Any deficiencies in the collateral
for the Loans or any deficiency in the ability of Indemnified Parties to
collect or to obtain performance from any person or entities now or hereafter
liable for the payment and performance of any obligation hereby guaranteed;

 

(j)            Any assertion or claim that the
automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or
involuntary bankruptcy proceeding of Indemnitors) or any other stay provided
under any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which
may be or become applicable, shall operate or be interpreted to stay,
interdict, condition, reduce or inhibit the ability of Indemnified Parties to
enforce any of its rights, whether now or hereafter required, which Indemnified
Parties may have against Indemnitors or the collateral for the Loans; and

 

(k)           Any modifications of the Loan Documents
or any obligation of Indemnitors relating to the Loans by operation of law or
by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978,
as amended or recodified (“Bankruptcy Code”), or under any other present
or future state or federal law regarding bankruptcy, reorganization or other
relief to debtors (collectively, “Debtor Relief Law”), or otherwise.

 

4.             General Provisions.

 

(a)           Full
Recourse.  All of the
terms and provisions of this Agreement are full recourse obligations of
Indemnitors and not restricted by any limitation on personal liability.

 

(b)           Secured
Obligations.  Indemnitors
hereby acknowledge that the obligations of Indemnitors under this Agreement are
secured by the lien of the Deed of Trust and the security interests and other
collateral described in the Deed of Trust and the other Loan Documents.

 

(c)           Survival.  This Agreement shall be deemed to be
continuing in nature and shall remain in full force and effect and shall
survive the payment of the indebtedness evidenced and secured  by the Loan Documents and the exercise of
any remedy by Indemnified Parties under the Deed of Trust or any of the other
Loan Documents, including any foreclosure or deed in lieu thereof, even if, as
a part of such remedy, the Loans are paid or satisfied in full, but shall
terminate upon the expiration of the applicable statute of limitations period.

 

8

 

(d)           No
Recourse Against Indemnified Parties.  Indemnitors shall not have any right of recourse against
Indemnified Parties by reason of any action Indemnified Parties may take or
omit to take under the provisions of this Agreement or under the provisions of
any of the Loan Documents unless the act or failure to act is found to be gross
negligence or willful misconduct on the part of such Indemnified Party.

 

(e)           Reservation
of Rights.  Nothing
contained in this Agreement shall prevent or in any way diminish or interfere
with any rights or remedies, including the right to contribution, which Indemnified
Parties may have against Indemnitors or any other party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (codified at
Title 42 U.S.C. §9601 et  seq.), as it may be amended from time to
time, or any other applicable federal, state or local laws, all such rights
being hereby expressly reserved.

 

(f)            Rights
Cumulative; Payments. 
Indemnified Parties’s rights under this Agreement shall be in addition
to all rights of Indemnified Parties under the Loan Agreement, Note, the Deed
of Trust and the other Loan Documents. 
Further, payments made by Indemnitors under this Agreement shall not
reduce in any respect Indemnitors’ obligations and liabilities under the Loan
Agreement, Note, the Deed of Trust and the other Loan Documents.

 

(g)           No
Limitation on Liability. 
Each Indemnitor hereby consents and agrees that Indemnified Parties may
at any time and from time to time without further consent from Indemnitors do
any of the following events, except as otherwise provided in this Agreement,
and the liability of Indemnitors under this Agreement shall be unconditional
and absolute and shall in no way be impaired or limited by any of the following
events, whether occurring with or without notice to Indemnitors or with or
without consideration: (i) any extensions of time for performance required by
any of the Loan Documents or extension or renewal of the Note; (ii) any sale,
assignment or foreclosure of the Note, the Deed of Trust or any of the other
Loan Documents or any sale or transfer of the Property; (iii) any change in the
composition of any Indemnitor; (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitors herein or in any of the Loan
Documents; (v) the release of any Indemnitor or of any other person or entity
from performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law or
otherwise; (vi) the release or substitution in whole or in part of any security
for the Loans; (vii) Lender’s failure to record the Deed of Trust or to file
any financing statement (or Lender’s improper recording or filing thereof) or
to otherwise perfect, protect, secure or insure any lien or security interest
given as security for the Loans; (viii) the modification of the terms of any
one or more of the Loan Documents; or (ix) the taking or failure to take any
action of any type whatsoever.  Unless
the act or failure to act is found to be gross negligence or willful misconduct
on the part of such Indemnified Party, no such action which Indemnified Parties
shall take or fail to take in connection with the Loan Documents or any
collateral for the Loans, nor any course of dealing with Indemnitors or any
other person, shall limit, impair or release Indemnitor’s obligations
hereunder, affect this Agreement in any way or afford Borrower any recourse
against Indemnified Parties.  Nothing
contained in this Paragraph shall be construed to require Indemnified Parties
to take or refrain from taking any action referred to herein.

 

(h)           Entire
Agreement; Amendment; Severability.  This Agreement contains the entire

 

9

 

agreement between the parties
respecting the matters herein set forth and supersedes (except as to the Deed
of Trusts) all prior agreements, whether written or oral, between the parties
respecting such matters.  Any amendments
or modifications hereto, in order to be effective, shall be in writing and
executed by the parties hereto.  If any
provision or obligation under this Agreement or any of the other Loan Documents
shall be determined by a court of competent jurisdiction to be invalid, illegal
or unenforceable, that provision shall be deemed severed from the Loan
Documents and the validity, legality and enforceability of the remaining
provisions or obligations shall remain in full force as though the invalid,
illegal or unenforceable provision had never been a part of the Loan Documents.

 

(i)            Governing
Law; Binding Effect. 
This Agreement shall be governed by and construed in accordance with the
laws of the State in which the Property is located, except to the extent that
the applicability of any of such laws may now or hereafter be preempted by
Federal law, in which case such Federal law shall so govern and be
controlling.  The terms, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
the heirs, successors and assigns of the parties.  Indemnified Parties and
any successor may, at any time after providing written notice to Indemnitors,
sell, transfer, or assign its interest under the Loan Agreement, the Note, the
Deed of Trust, the other Loan Documents, any or all servicing rights with
respect thereto, and this Agreement or grant participations.  The representations, warranties,
obligations, covenants, and indemnity obligations of Indemnitors under this
Agreement shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.

 

(j)            Notice.  All notices or other communications required
or permitted to be given pursuant hereto shall be given in the manner specified
in the Loan Agreement directed to the parties at their respective addresses as
provided therein.

 

(k)           No
Waiver: Time of Essence; Interpretation; Counting of Days.  The failure of any party hereto to enforce
any right or remedy hereunder, or to promptly enforce any such right or remedy,
shall not constitute a waiver thereof nor give rise to any estoppel against
such party nor excuse any of the parties hereto from their respective
obligations hereunder.  Any waiver of
such right or remedy must be in writing and signed by the party to be bound.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words “Indemnified Parties” and “Indemnitors” shall include
their respective successors, assigns, heirs, executors and
administrators.  The word “include(s)” means “include(s), without
limitation,” and the word “including” means “including, but not limited to.”  This Agreement is subject to enforcement at
law or in equity, including actions for damages or specific performance.  Time is of the essence of each and every
term and condition of this Agreement. 
The term “days” when used herein shall mean calendar days.  If any time period ends on a Saturday,
Sunday or holiday officially recognized by the state within which the Property
is located, the period shall be deemed to end on the next succeeding business
day.  The term “business day” as used
herein shall mean a weekday, Monday through Friday, except a legal holiday or a
day on which banking institutions in Chicago, Illinois, are authorized by law
to be closed.

 

(l)            Headings.  The headings of the sections and paragraphs
of this Agreement are for convenience of reference only and shall not be
construed in interpreting the provisions hereof.

 

10

 

(m)          Attorneys’
Fees.  Indemnitors agree
to pay all of Indemnified Parties’ costs and expenses, including reasonable
attorneys’ fees, which may be incurred in enforcing or protecting Indemnified
Parties’ rights or interests.  From the
time(s) incurred until paid in full to Indemnified Parties, all such sums shall
bear interest at the Default Rate.

 

(n)           Successive
Actions.  A separate right
of action hereunder shall arise each time Indemnified Parties acquires
knowledge of any matter indemnified by Indemnitors under this Agreement.  Separate and successive actions may be
brought hereunder to enforce any of the provisions hereof at any time and from
time to time.  No action hereunder shall
preclude any subsequent action, and Indemnitors hereby waive and covenant not
to assert any defense in the nature of splitting of causes of action or merger
of judgments.

 

(o)           Joint
and Several Liability.  The
obligations and liabilities of Borrower and Guarantor under this Agreement are
JOINT AND SEVERAL.  Borrower and
Guarantor agree that Lender may pursue its rights and remedies against either
Borrower or Guarantor, or both, in any order as Lender deems appropriate.

 

(p)           Reliance.  Indemnified Parties would not make the Loans
to Borrower without this Agreement. 
Accordingly, Indemnitors intentionally and unconditionally enter into
the covenants and agreements herein and understands that, in reliance upon and
in consideration of such covenants and agreements, the Loans shall be made and,
as part and parcel thereof, specific monetary and other obligations have been,
are being and shall be entered into which would not be made or entered into but
for such reliance.

 

(q)           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which shall be taken to be one and the same instrument,
for the same effect as if all parties hereto had signed the same signature
page.

 

(r)            WAIVER
OF TRIAL BY JURY. 
INDEMNITORS AND LENDER (BY ACCEPTANCE OF THIS AGREEMENT), HAVING BEEN
REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a)
UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (b) ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.  INDEMNITORS AGREE THAT THEY WILL
NOT ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

 

(s)           Waiver
of Bankruptcy Stay. 
Indemnitors covenant and agree that upon the commencement of a voluntary
or involuntary bankruptcy proceeding by or against any Indemnitor, such
Indemnitor shall not seek a supplemental stay or otherwise pursuant to 11
U.S.C. § 105 or any

 

11

 

other provision of the
Bankruptcy Code or any other Debtor Relief Law, to stay, interdict, condition,
reduce or inhibit the ability of Indemnified Parties to enforce any rights of Indemnified
Parties against such Indemnitor by virtue of this Agreement or otherwise.

 

(t)            Expiration
of this Environmental Indemnity.  Notwithstanding any other provision to the contrary contained in
this Agreement, Indemnitors’ obligations under this Agreement shall only
survive and continue for a period of ten (10) years from the date that the
Loans have been repaid in full.

 

[SIGNATURE PAGE
FOLLOWS]

 

12

 

Indemnitors have executed and
delivered this Environmental Indemnity Agreement as of the day and year first
above written.

 

	
   

  	
  Borrower:

  	
   

  
	
   

  	
   

  	
  HORIZON GROUP PROPERTIES, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Horizon Group Properties, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Tinkham

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  David Tinkham,

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice President / CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Guarantor:

  	
   

  
	
   

  	
   

  	
  HORIZON GROUP PROPERTIES, INC.

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David Tinkham

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  David Tinkham, Senior Vice President / CFO

  	
   

  
									

 

13

 

EXHIBIT A

 

REPORTS

 

Phase 1 Environmental Site Assessment
of Horizon Outlet Center Prepared by EMG as Project Number 36305 and Dated May
2, 1998

 

14

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