EXHIBIT 10.5
GUARANTY
This Guaranty made as of the 15th day of June, 1998, by HORIZON GROUP
PROPERTIES, INC. a Maryland corporation (the "REIT") and HORIZON GROUP
PROPERTIES, L.P. a Delaware limited partnership (the "Operating
Partnership"), jointly and severally (each a "Guarantor" and collectively,
"Guarantors"), 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 one or more notes
of even date in the aggregate principal amount of $108,205,000.00 as evidence
of their indebtedness to Lender (collectively, the "Note"). To secure
payment of the Note, Borrower has executed and delivered to Lender the
Mortgages and various other Loan Documents.
C. Each Guarantor owns an indirect interest in each Borrower.
Accordingly, Guarantors will derive financial benefit from the Loan. The
execution and delivery of this Guaranty by Guarantors is a condition
precedent to Lender making the Loan.
AGREEMENTS
NOW, THEREFORE, Guarantors, 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. Guarantors absolutely, unconditionally, and irrevocably guarantee to
Lender:
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(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." All
of the obligations, undertakings, representations, warranties, and liabilities
of each of the Guarantors shall be joint and several.
2. In the event of any default by Borrower in making payment of the
Indebtedness, as aforesaid, Guarantors agree, 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, Mortgages and 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 Borrower may have against Lender or the holder of the
Note and (ii) any defense, right of set-off or claims which Guarantors or either
of them may have against Lender or the holder of the Note.
3. Each 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 such 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 such 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 Guarantors with liability, and
(iv) any failure by Lender to inform Guarantors of any facts Lender may now
or hereafter know about Borrower, 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 each Guarantor is fully
responsible for being and remaining informed by the Borrower 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
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Borrower without notice to or authorization from Guarantors, regardless of
the financial or other condition of the Borrower at the time of any such
grant or continuation. Lender shall have no obligation to disclose or
discuss with Guarantors its assessment of the financial condition of
Borrower. Guarantors acknowledge that no representations of any kind
whatsoever have been made by Lender to Guarantors. 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. Guarantors further agree that any exculpatory language contained in
the Loan Agreement, Note or the Mortgages shall in no event apply to this
Guaranty, and will not prevent Lender from proceeding against Guarantors to
enforce this Guaranty.
4. Guarantors further agree that Guarantors' liability as guarantors
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
Guarantors 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 Borrower, or by any change or modification in
the Loan Agreement, Note, 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 Guarantors 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, Mortgages and 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. Guarantors further understand and agree that Lender may at any time
enter into agreements with Borrower to amend and modify the Note, Loan
Agreement, Mortgages or other Loan Documents, or any thereof, and may waive
or release any provision or provisions of the Note, Loan Agreement, Mortgages
and 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 Borrower 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 Guarantors' obligations hereunder.
5. This is an absolute, present and continuing guaranty of payment and not
of collection. Guarantors agree 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, Loan
Agreement, Mortgages or any of the other Loan Documents through foreclosure
proceedings under the Mortgages or
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otherwise, or resorting to any other guaranties, and Guarantors hereby waive
the right to require Lender to join Borrower in any action brought hereunder
or to commence any action against or obtain any judgment against Borrower or
to pursue any other remedy or enforce any other right. Guarantors further
agree 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, Loan Agreement, 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 Guarantors'
obligations hereunder, it being the purpose and intent of the Guarantors that
the obligations of such Guarantors hereunder shall be absolute, independent
and unconditional under any and all circumstances whatsoever. Neither
Guarantors' 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 Borrower under the Loan Agreement, Note,
Mortgages or other Loan Documents or by reason of Borrower's bankruptcy or by
reason of any creditor or bankruptcy proceeding instituted by or against
Borrower. In the event of the foreclosure of the Mortgages and of a
deficiency, each Guarantor hereby promises and agrees forthwith to pay the
amount of such deficiency notwithstanding the fact that recovery of said
deficiency against Borrower would not be allowed by applicable law. Without
in any manner limiting the foregoing, Lender may elect to enforce this
Guaranty against, and to recover all or any part of the Indebtedness from,
either one or both of the parties constituting the Guarantors hereunder,
either concurrently or sequentially, as Lender may elect in its sole
discretion, and in no event shall any determination by Lender to proceed at
any time against one of such parties be deemed to waive, limit, or otherwise
affect Lender's rights and remedies under this Guaranty, except to the extent
of the Indebtedness or portion thereof actually paid to Lender (subject to
the provisions of the next sentence). 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, 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
Guarantors 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 all or a
portion of Lender's rights under the Loan Documents.
7. If: (i) this Guaranty, the Note, or any Loan Document 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,
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receivership, or other proceedings affecting creditors' rights and involving
a claim under this Guaranty, the Note, or any Loan Document; (iii) an
attorney is retained to protect or enforce the lien of the Mortgages or any
of the other Loan Documents or to provide advice or other representation with
respect to the Properties or Loan Documents; or (iv) an attorney is retained
to represent Lender in any other proceedings whatsoever in connection with
this Guaranty, the Loan Agreement, the Note, the Mortgages, any of the Loan
Documents, or any property subject thereto, then Guarantors shall pay to
Lender upon demand all 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 Borrower to either Guarantor now or hereafter
existing is hereby subordinated to the Indebtedness. Guarantors agree that,
until the entire Indebtedness has been paid in full, Guarantors will not
seek, accept, or retain for Guarantors' own account, any payment from
Borrower on account of such subordinated debt. Any payments to Guarantors on
account of such subordinated debt shall be collected and received by
Guarantors in trust for Lender and shall be paid over to Lender on account of
the Indebtedness without impairing or releasing the obligations of Guarantors
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 Lender may from time to
time elect.
11. The Guarantors hereby submit to personal jurisdiction in the State of
Illinois
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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. Guarantors hereby consent 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. Guarantors hereby agree 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
Guarantors 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, (c) telecopier (with answer back acknowledged), 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
Telecopier: 212-667-1567
with a copy to:
Nomura Asset Capital Client Services LLC
000 Xxxx Xxx Xxxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Legal Department
Telecopier: 000-000-0000
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with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopier: 312-876-7934
If to Guarantors:
0000 Xxxxx Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Chairman and Chief Executive Officer
Telecopier: 000-000-0000
with copies to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: 000-000-0000
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 and telecopy, upon the first attempted delivery on a
Business Day.
13. Promptly upon the filing thereof, Guarantors shall provide copies
of all registration statements and annual, quarterly, monthly or other
reports and any other public information which the Guarantors or any of their
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,
Guarantors 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:
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(a) The REIT shall at all times cause its common stock to be listed on
NASDAQ, 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 of Guarantors 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 Guarantors 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, Guarantors make the
representations and warranties to Lender set forth in this Paragraph 16.
Guarantors acknowledge 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 Guarantors' relationship to the Borrower and to the Properties
are true and correct.
B. Each 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. Each
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. Each 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. Each Guarantor has taken all necessary action to authorize the
execution, delivery and performance of this Guaranty and the other Loan
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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 each
Guarantor which is a party thereto and constitute legal, valid and binding
obligations of each such Guarantor enforceable against such Guarantor in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
D. Any and all balance sheets, net worth statements, and other
financial data with respect to Guarantors which have heretofore been given
to Lender by Guarantors fairly and accurately present the financial
condition of Guarantors as of the respective dates thereof, and, since the
respective dates thereof, there has been no materially adverse change in
the financial condition of Guarantors.
E. The execution, delivery, and performance by Guarantors of this
Guaranty do not and will not contravene or conflict with (i) any existing
agreement between a Guarantor (or any affiliate of a 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 Guarantors, (iii) any organizational
document of a Guarantor or (iv) any contractual restriction binding on or
affecting a Guarantor or such 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 Guarantors,
threatened or affecting Guarantors, which is reasonably likely to
materially and adversely affect Guarantors' ability to fulfill Guarantors'
obligations under this Guaranty. There are no judgments or orders for the
payment of money rendered against Guarantors for an amount in excess of
$50,000 in any instance or $100,000 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. Guarantors are not in default under any agreements to which
Guarantors are a party, which defaults could materially adversely affect
Guarantors' ability to perform their obligations under this Guaranty.
G. All statements set forth in the Recitals are true and correct.
Guarantors hereby agree to indemnify and hold Lender free and harmless from and
against all loss, cost, damage, and expense, including attorney's fees and
costs, which
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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. Guarantors shall, within five business days after receipt thereof,
deliver to Lender copies of any notices of default served on Guarantors pursuant
to the terms of any other agreement to which a Guarantor is a party, which
defaults could materially affect Guarantors' obligations to perform their
obligations under this Guaranty.
18. GUARANTORS AND LENDER EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING FROM THE LENDING
RELATIONSHIP WHICH IS THE SUBJECT OF THIS GUARANTY AND AGREE THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
19. This Guaranty shall be binding upon the successors and assigns of
Guarantors, and shall inure to the benefit of Lender's successors and assigns.
20. Notwithstanding any provision herein or in any of the other Loan
Documents to the contrary, except as set forth in this Section, Lender shall not
enforce the liability and obligation of any Guarantor to perform and observe the
obligations contained in this or the other Loan Documents by an action or
proceeding wherein a money judgment shall be sought against any director,
officer, employee, partner, member or stockholder of any Guarantor, or of its
general partners unless such party is also a Guarantor.
21. This Guaranty shall be construed and enforced under the internal laws
of the State of Illinois.
22. This Guaranty may be executed in two or more counterparts all of which
shall together constitute a single original.
IN WITNESS WHEREOF, Guarantors have delivered this Guaranty as of the date
first written above.
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HORIZON GROUP PROPERTIES, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
HORIZON GROUP PROPERTIES, L.P.
By: Horizon Group Properties, Inc., its
general partner
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
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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 Xxxx X. Xxxxxx, 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 President and Chief
Executive Officer of Horizon Group Properties, Inc., on behalf of said
corporation and on behalf of Horizon Group Properties, L.P., for the uses and
purposes therein set forth.
GIVEN under my hand and Notarial Seal, this 15TH day of June, 1998.
______________________________________________
, Notary Public
_______________,_________________
My Commission Expires:__________
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