EXHIBIT 10.5
GUARANTY
This Guaranty made as of the ____ day of June, 1998, by PRIME RETAIL, L.P.
a Delaware limited partnership ("Guarantor"), to and for the benefit of NOMURA
ASSET CAPITAL CORPORATION, a Delaware corporation, and its successors and
assigns ("Lender").
RECITALS
A. THIRD HORIZON GROUP LIMITED PARTNERSHIP, a Delaware limited partnership,
NEBRASKA CROSSING FACTORY SHOPS, L.L.C., a Delaware limited liability company,
and INDIANA FACTORY SHOPS, L.L.C., a Delaware limited liability company
("Borrowers"), have requested that Lender make a loan to Borrowers in the amount
of $108,205,000.00 (the "Loan"). Lender has agreed to make such loan pursuant to
the terms of that certain Loan Agreement of even date among Borrowers and Lender
(the "Loan Agreement"). All capitalized terms used herein unless otherwise
defined shall have the meaning set forth in the Loan Agreement.
B. Borrowers have executed and delivered to Lender a note of even date in
the principal amount of $108,205,000.00 as evidence of their indebtedness to
Lender (the "Note"). To secure payment of the Note, Borrower has executed and
delivered to Lender the Mortgages and various other Loan Documents.
C. Guarantor will derive benefit from the Loan insofar as the Loan will
facilitate the spinoff from Guarantor of certain of the assets and liabilities
of the Borrowers and the related merger of Guarantor with Horizon/Xxxx Outlet
Centers, L.P. The execution and delivery of this Guaranty by Guarantor is a
condition precedent to Lender making the Loan.
AGREEMENTS
NOW, THEREFORE, Guarantor, in consideration of the matters described in the
foregoing Recitals, which Recitals are incorporated herein and made a part
hereof, and for other good and valuable consideration, hereby agree as follows:
1. Guarantor absolutely, unconditionally, and irrevocably guarantees to
Lender:
(a) the full and prompt payment of the principal of and interest on the
Note when due, whether at stated maturity, upon acceleration or otherwise, and
at all times thereafter, and the prompt payment of all fees and all other sums
which may now be or may hereafter become due and owing under the Note, the Loan
Agreement, the Mortgages, and the other Loan Documents; and
(b) the payment of all Enforcement Costs (as hereinafter defined in
Paragraph 7 hereof).
All debts, liabilities, and payment obligations described in
subparagraphs (a) and (b) of this Paragraph 1 are referred to herein as the
"Indebtedness."
Guarantor's liability hereunder for the amounts described in Section 1.a
shall not exceed Twelve Million Two Hundred Five Thousand Dollars
($12,205,000.00) (the "Guaranteed Amount"). The Guaranteed Amount shall be
reduced to Ten Million Dollars ($10,000,000.00) at such time as $2,205,000 of
the principal balance of the Loan, exclusive of any scheduled amortization
payments, has been repaid. Anything in this Guaranty to the contrary
notwithstanding, all payments made upon the indebtedness evidenced by the Note
or secured by the Loan Documents or upon any of the Indebtedness (except
payments from Guarantor's separate funds not derived from the Properties or any
other collateral for the Indebtedness (the "Collateral") made following demand
by Lender under this Guaranty), and the proceeds, rents and avails of the
Properties and the Collateral shall first be deemed applied upon the
unguaranteed portion of such indebtedness until such unguaranteed portion has
been fully paid before any payments upon such indebtedness or any of the
proceeds, rents or avails of the Properties or the Collateral shall be credited
upon the obligation of Guarantor, it being the intention and agreement of
Guarantor that, so long as any part of the unguaranteed portion of such
indebtedness remains unpaid, no payments on such indebtedness shall be
considered in whole or in part satisfaction of the obligations of Guarantor
hereunder if the funds for such payment represent the proceeds, rents or avails
of the Properties or any other Collateral. There shall be no limitation on the
liability of Guarantor for Enforcement Costs.
2. In the event of any default by Borrowers in making payment of the
Indebtedness, as aforesaid, Guarantor agrees, on demand by Lender or the holder
of the Note, to pay all the Indebtedness as is then, or as shall thereafter
become, due and owing under the terms of the Note, the Mortgages and the other
Loan Documents, and to pay any expenses reasonably incurred by Lender in
protecting, preserving, or defending its interest in the Properties or in
connection with the Loan or under any of the Loan Documents, including, without
limitation, all reasonable attorneys' fees and costs, regardless of (i) any
defense, right of set-off or claims which Borrowers may have against Lender or
the holder of the Note and (ii) any defense, right of set-off or claims which
Guarantor may have against Lender or the holder of the Note.
3. Guarantor does hereby waive (i) notice of acceptance of this Guaranty by
Lender and any and all notices and demands of every kind which may be required
to be given by any statute, rule or law, (ii) any defense, right of set-off or
other claim which Borrowers may have against Lender or the holder of the Note
(other than payment of the Indebtedness), and any right to assert any claims
that Guarantor may have against Lender as a defense, right of set-off or other
claim in any action or proceeding by Lender against Borrowers or Guarantor under
any of the Loan Documents, (iii) presentment for payment, demand for payment
(other than as provided for in Paragraph 2 above), notice of nonpayment or
dishonor, protest and notice of protest, diligence in collection and any and all
formalities which otherwise might be legally required to charge Guarantor with
liability, and (iv) any failure by Lender to inform Guarantor of any facts
Lender may now or hereafter know about Borrowers, the Properties, the Loan, or
the transactions contemplated by the Loan Documents, it being understood and
agreed that Lender has no duty so to inform and that Guarantor is fully
responsible for being and remaining informed by the Borrowers of all
circumstances bearing on the existence or creation, or the risk of nonpayment of
the Indebtedness. Credit may be granted or continued from time to time by Lender
to Borrowers without notice to or authorization from Guarantor, regardless of
the financial or other condition of the Borrowers at the time of any such grant
or continuation. Lender shall have no obligation to disclose or discuss with
Guarantor its assessment of the financial condition of Borrowers. Guarantor
acknowledges that no representations of any kind whatsoever have been made by
Lender to Guarantor. No modification or waiver of any of the provisions of this
Guaranty shall be binding upon Lender except as expressly set forth in a writing
duly signed and delivered on behalf of Lender. Guarantor further agree that any
exculpatory language contained in the Loan Agreement, the Note or the Mortgages
shall in no event apply to this Guaranty, and will not prevent Lender from
proceeding against Guarantor to enforce this Guaranty.
4. Guarantor further agrees that Guarantor's liability as guarantor shall
not be impaired or affected by any renewals or extensions which may be made from
time to time, with or without the knowledge or consent of Guarantor of the time
for payment of interest or principal under the Note or by any forbearance or
delay in collecting interest or principal under the Note, or by any waiver by
Lender under the Mortgages or any other Loan Documents, or by Lender's failure
or election not to pursue any other remedies it may have against Borrowers, or
by any change or modification in the Loan Agreement, the Note, the Mortgages or
any other Loan Documents, or by the acceptance by Lender of any additional
security or any increase, substitution or change therein, or by the release by
Lender of any security or any withdrawal thereof or decrease therein, or by the
application of payments received from any source to the payment of any
obligation other than the Indebtedness, even though Lender might lawfully have
elected to apply such payments to any part or all of the Indebtedness, it being
the intent hereof that Guarantor shall remain liable as principal for payment of
the Indebtedness until all indebtedness has been paid in full and the other
terms, covenants and conditions of the Loan Agreement, the Mortgages and the
other Loan Documents and this Guaranty have been performed, notwithstanding any
act or thing which might otherwise operate as a legal or equitable discharge of
a surety. Guarantor further understands and agrees that Lender may at any time
enter into agreements with Borrowers to amend and modify the Note, the Loan
Agreement, the Mortgages or the other Loan Documents, or any thereof, and may
waive or release any provision or provisions of the Note, the Loan Agreement,
the Mortgages and the other Loan Documents or any thereof, and, with reference
to such instruments, may make and enter into any such agreement or agreements as
Lender and Borrowers may deem proper and desirable, without in any manner
impairing or affecting this Guaranty or any of Lender's rights hereunder or any
of the Guarantor's obligations hereunder.
5. This is an absolute, present and continuing guaranty of payment and not
of collection. Guarantor agrees that this Guaranty may be enforced by Lender
without the necessity at any time of resorting to or exhausting any other
security or collateral given in connection herewith or with the Note, the Loan
Agreement, the Mortgages or any of the other Loan Documents through foreclosure
proceedings under the Mortgages or otherwise, or resorting to any other
guaranties, and Guarantor hereby waives the right to require Lender to join
Borrowers in any action brought hereunder or to commence any action against or
obtain any judgment against Borrowers or to pursue any other remedy or
enforce any other right. Guarantor further agrees that nothing contained herein
or otherwise shall prevent Lender from pursuing concurrently or successively all
rights and remedies available to it at law and/or in equity or under the Note,
the Loan Agreement, the Mortgages or any other Loan Documents, and the exercise
of any of its rights or the completion of any of its remedies shall not
constitute a discharge of any of Guarantor's obligations hereunder, it being the
purpose and intent of the Guarantor that the obligations of Guarantor hereunder
shall be absolute, independent and unconditional under any and all circumstances
whatsoever. Neither Guarantor's obligations under this Guaranty nor any remedy
for the enforcement thereof shall be impaired, modified, changed or released in
any manner whatsoever by any impairment, modification, change, release or
limitation of the liability of Borrowers under the Loan Agreement, the Note, the
Mortgages or other Loan Documents or by reason of the bankruptcy of any
Borrowers or by reason of any creditor or bankruptcy proceeding instituted by or
against Borrowers. In the event of the foreclosure of the Mortgages and of a
deficiency, Guarantor hereby promises and agrees forthwith to pay the amount of
such deficiency notwithstanding the fact that recovery of said deficiency
against Borrowers would not be allowed by applicable law. This Guaranty shall
continue to be effective or be reinstated (as the case may be) if at any time
payment of all or any part of any sum payable pursuant to the Note, the
Mortgages or any other Loan Document is rescinded or otherwise required to be
returned by the payee upon the insolvency, bankruptcy, or reorganization of the
payor, all as though such payment to Lender had not been made, regardless of
whether Lender contested the order requiring the return of such payment. The
obligations of Guarantor pursuant to the preceding sentence shall survive any
termination, cancellation, or release of this Guaranty.
6. This Guaranty shall be assignable by Lender to any assignee of the Note.
7. If: (i) this Guaranty is placed in the hands of an attorney for
collection or is collected through any legal proceeding; (ii) an attorney is
retained to represent Lender in any bankruptcy, reorganization, receivership, or
other proceedings affecting creditors' rights and involving a claim under this
Guaranty; or (iii) an attorney is retained to represent Lender in any other
proceedings whatsoever in connection with this Guaranty, then Guarantor shall
pay to Lender upon demand all reasonable attorney's fees, costs and expenses,
including, without limitation, court costs, filing fees, recording costs,
expenses of foreclosure, title insurance premiums, survey costs, minutes of
foreclosure, and all other costs and expenses incurred in connection therewith
(all of which are referred to herein as "Enforcement Costs"), in addition to all
other amounts due hereunder.
8. The parties hereto intend and believe that each provision in this
Guaranty comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Guaranty is found by a court of law to be in
violation of any applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Guaranty to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Guaranty shall be construed as if such illegal,
invalid, unlawful,
void or unenforceable portion, provision or provisions were not contained
therein, and that the rights, obligations and interest of Lender or the holder
of the Note under the remainder of this Guaranty shall continue in full force
and effect.
9. Any indebtedness of Borrowers to Guarantor now or hereafter existing is
hereby subordinated to the Indebtedness. Guarantor agrees that, until the entire
Indebtedness has been paid in full, Guarantor will not seek, accept, or retain
for Guarantor's own account, any payment from Borrowers on account of such
subordinated debt. Any payments to Guarantor on account of such subordinated
debt shall be collected and received by Guarantor in trust for Lender and shall
be paid over to Lender on account of the Indebtedness without impairing or
releasing the obligations of Guarantor hereunder.
10. Any amounts received by Lender from any source on account of any
indebtedness may be applied by Lender toward the payment of such indebtedness,
and in such order of application, as is provided for payments made by Borrowers
under the Loan Agreement.
11. The Guarantor hereby submits to personal jurisdiction in the State of
Illinois for the enforcement of this Guaranty and waive any and all personal
rights to object to such jurisdiction for the purposes of litigation to enforce
this Guaranty. Guarantor hereby consents to the jurisdiction of either the state
of federal courts in the State of Illinois, in any action, suit, or proceeding
which Lender may at any time wish to file in connection with this Guaranty or
any related matter. Guarantor hereby agrees that an action, suit, or proceeding
to enforce this Guaranty may be brought in any state or federal court in the
State of Illinois and hereby waives any objection which Guarantor may have to
the laying of the venue of any such action, suit, or proceeding in any such
court; provided, however, that the provisions of this Paragraph shall not be
deemed to preclude Lender from filing any such action, suit, or proceeding in
any other appropriate forum.
12. All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, or (b) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, addressed as follows (or at such other address and person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender:
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
with a copy to:
Nomura Asset Capital Client Services LLC
000 Xxxx Xxx Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Legal Department
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
If to Guarantor:
Prime Retail, L.P.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
with copies to:
Prime Retail, L.P.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: C. Xxxx Xxxxxxxxx
and to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
A notice shall be deemed to have been given: in the case of hand delivery,
at the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day.
13. Promptly upon the filing thereof, Guarantor shall provide copies of all
registration statements and annual, quarterly, monthly or other reports and any
other public information which the Guarantor or any of its respective
subsidiaries file with the Securities and Exchange Commission and such other
information (including without limitation, financial statements and
non-financial information) as the Lender from time to time reasonably requests.
Together with the quarterly and annual reports required hereunder, Guarantor
shall provide a compliance certificate in form and substance satisfactory to
Lender signed by the Chief Financial Officer or Chief Accounting Officer of the
REIT, showing the calculations and computations necessary to determine
compliance with the covenants contained in Paragraph 14(b) hereof.
14. During the term of this Guaranty, unless the Lender should otherwise
consent in writing:
(a) The REIT shall at all times cause its common stock to be listed on a
nationally recognized stock exchange, and the REIT shall remain qualified as a
real estate investment trust under the Code.
(b) The REIT shall at all times either directly or indirectly hold 100% of
the general partnership interest in the Operating Partnership.
15. The occurrence of any one or more of the following events shall
constitute an event of default under this Guaranty and under each of the other
Loan Documents:
(a) The breach of any of the terms or provisions of Paragraph 14 of this
Guaranty.
(b) Any representation or warranty made by Guarantor to the Lender under or
in connection with this Guaranty, or any material certificate or information
delivered in connection with this Guaranty or any other Loan Document shall be
materially false on the date as of which made.
(c) The breach by Guarantor of any of the other terms and provisions of
this Guaranty which is not remedied within 15 days after written notice from the
Lender.
16. In order to induce Lender to make the Loan, Guarantor makes the
representations and warranties to Lender set forth in this Paragraph 16.
Guarantor acknowledges that but for the truth and accuracy of the matters
covered by the following representations and warranties, the Lender would not
have agreed to make the Loan.
A. The statements contained in the Recitals to this Guaranty regarding
Guarantor's relationship to Borrowers and to the Properties are true and
correct.
B. Guarantor has been duly organized and is validly existing and in good
standing with requisite power and authority to own its properties and to
transact the businesses in which it is now engaged. Guarantor is duly qualified
to do business and is in good standing in each jurisdiction where it is required
to be so qualified in connection with its properties, businesses and operations.
Guarantor possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own its properties and to
transact the businesses in which it is now engaged.
C. Guarantor has taken all necessary action to authorize the execution,
delivery and performance of this Guaranty and the other Loan Documents to which
it is a party. This Guaranty and such other Loan Documents have been duly
executed and delivered by or on behalf of Guarantor.
D. Any and all balance sheets, net worth statements, and other financial
data with respect to Guarantor which have heretofore been given to Lender by
Guarantor fairly and accurately present the financial condition of Guarantor as
of the respective dates thereof, and, since the respective dates thereof, there
has been no materially adverse change in the financial condition of Guarantor.
E. The execution, delivery, and performance by Guarantor of this Guaranty
do not and will not contravene or conflict with (i) any existing agreement
between Guarantor (or any affiliate of Guarantor) and the Borrowers, (ii) any
law, order, rule, regulation, writ, injunction, or decree now in effect of any
government, governmental instrumentality or court having jurisdiction over
Guarantor, (iii) any organizational document of Guarantor or (iv) any
contractual restriction binding on or affecting Guarantor or Guarantor's
property or assets.
F. Except as disclosed in writing to Lender, there is no action,
proceeding, or investigation pending or, to the knowledge of Guarantor,
threatened or affecting Guarantor, which is reasonably likely to materially and
adversely affect Guarantor's ability to fulfill Guarantor's obligations under
this Guaranty. There are no judgments or orders for the payment of money
rendered against Guarantor for an amount in excess of $500,000 in any instance
or $1,000,000 in the aggregate, which have been undischarged for a period of ten
(10) or more consecutive days and the enforcement of which is not stayed by
reason of a pending appeal or otherwise. Guarantor is not in default under any
agreements to which Guarantor is a party, which defaults could materially
adversely affect Guarantor's ability to perform its obligations under this
Guaranty.
G. All statements set forth in the Recitals are true and correct.
Guarantor hereby agrees to indemnify and hold Lender free and harmless from
and against all loss, cost, damage, and expense, including attorney's fees and
costs, which Lender may sustain by reason of the inaccuracy or breach of any of
the foregoing representations and warranties as of the date the foregoing
representations and warranties are made and are deemed remade.
17. This Guaranty and the obligations of Guarantor hereunder shall
terminate if at any time Horizon Group Properties, Inc. or Horizon Group
Properties, L.P. completes an offering of at least $50,000,000 of public equity
or private equity from one or more investors approved by Lender (such approval
not to be unreasonably withheld ) and in connection therewith, partially prepays
the Loan by at least $50,000,000.
18. Guarantor shall, within five business days after receipt thereof,
deliver to Lender copies of any notices of default served on Guarantor pursuant
to the terms of any other agreement to which Guarantor is a party, which
defaults could materially affect Guarantor's obligations to perform their
obligations under this Guaranty.
19. This Guaranty shall be binding upon the successors and assigns of
Guarantor, and shall inure to the benefit of Lender's successors and assigns.
20. This Guaranty shall be construed and enforced under the internal laws
of the State of Illinois.
21. This Guaranty may be executed in two or more counterparts all of which
shall together constitute a single original.
[Remainder of page left blank]
IN WITNESS WHEREOF, Guarantor has delivered this Guaranty as of the date
first written above.
PRIME RETAIL, L.P.
By: Prime Retail, Inc., its general partner
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
PRIME RETAIL, INC. is signing below to
evidence its agreement to the covenants
contained in Paragraph 14
PRIME RETAIL, INC.
By:___________________________________
Name:________________________________
Title:________________________________
STATE OF ILLINOIS)
) SS.
COUNTY OF XXXX )
I, the undersigned, a Notary Public, in and for said County, in the State
aforesaid, DO HEREBY CERTIFY, that , personally known
to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
signed and delivered the said instrument as his own free and voluntary act as
____________ of Prime Retail, Inc., on behalf of said corporation and on behalf
of Prime Retail, L.P., for the uses and purposes therein set forth.
GIVEN under my hand and Notarial Seal, this day of June, 1998.
_______________________
, Notary Public
My Commission Expires:__________
