HORIZON GROUP PROPERTIES INC
EXHIBIT 10.49
<DOCUMENT>
<TYPE>EX-10.49
<SEQUENCE>11
<FILENAME>a2056840zex-10_49.txt
<DESCRIPTION>EXHIBIT 10.49
<TEXT>
<Page>

                                  Exhibit 10.49

                              AMENDED AND RESTATED
                        GUARANTY AND INDEMNITY AGREEMENT

                  THIS AMENDED AND RESTATED GUARANTY AND INDEMNITY AGREEMENT
(this "AGREEMENT") is entered into as of this 31st day of July, 2001 by and
among Horizon Group Properties, Inc., a Maryland corporation ("HGP"), Horizon
Group Properties, L.P. a Delaware limited partnership ("HGP LP"), Prime Retail,
Inc., a Maryland corporation ("PRIME RETAIL"), and Prime Retail, L.P., a
Delaware limited partnership ("PRIME LP").

                                    RECITALS:

                  A.         Certain affiliates of HGP and HGP LP have borrowed
funds pursuant to that certain Loan Agreement dated as of June 15, 1998 among
Indiana Factory Shops, L.L.C. ("INDIANA LLC"), Nebraska Crossing Factory Shops,
L.L.C. ("NEBRASKA LLC"), Third Horizon Group Limited Partnership ("BORROWER")
and Nomura Asset Capital Corporation, as amended by that certain First Amendment
to Loan Agreement dated as of June ___, 1999 among Borrower, Nebraska LLC,
Indiana LLC and LaSalle Bank National Association, as trustee for CDC Depositor
Trust ST-I (formerly known as Nomura Depositor Trust ST-I), Commercial Mortgage
Pass-Through Certificates, Series 1998-ST-I (the predecessor in interest to CDC
Mortgage Capital Inc. (as so amended and as amended from time to time in
accordance with the terms thereof, the "LOAN AGREEMENT").

                  B.         Pursuant to that certain Guaranty dated as of June
15, 1998 (as amended from time to time in accordance with the terms thereof, the
"GUARANTY"), Prime LP has agreed, jointly and severally, to guarantee certain
obligations arising under the Loan Documents.

                  C.         Pursuant to that certain Guaranty and Indemnity
Agreement dated as of June 15, 1998 (as amended from time to time in accordance
with the terms thereof, the "GUARANTY AND INDEMNITY AGREEMENT"), HGP and HGP LP,
among other things, have agreed, jointly and severally, to indemnify Prime
Retail, Prime LP and certain related parties from losses they may incur as a
result of the execution and delivery of the Guaranty by Prime LP.

                  D.         Borrower, HGP, HGP LP and Lender desire to enter
into a Second Amendment to Loan Agreement and Settlement Agreement in the form
attached hereto as ANNEX A (the "AMENDMENT").

                  E.         As a condition to the effectiveness of the
Amendment, Lender is requiring Prime LP to reaffirm its obligations under the
Guaranty by executing a Reaffirmation of Guaranty to and for the benefit of
Lender (the "REAFFIRMATION OF GUARANTY").

                  F.         Prime LP, as the successor to Horizon/Glen Outlet
Centers Limited Partnership ("HORIZON/GLEN LP"), is jointly and severally liable
with HGP for any and all obligations arising under that certain promissory note
by Horizon/Glen LP in favor of First of America Bank - Michigan, N.A. ("FIRST OF
AMERICA") dated December 28, 1995 in the original



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principal amount of $2,800,000 (as amended from time to time, together with
any other documents or instruments executed and/or delivered in connection
with or otherwise related to such note, collectively, the "FIRST OF AMERICA
LOAN DOCUMENTS").

                  G.         In consideration of the agreement of Prime Retail
and Prime LP to provide the foregoing accommodations and for the accommodations
of HGP and HGP LP set forth elsewhere in this Agreement, Prime Retail, Prime LP,
HGP and HGP LP have agreed to amend and restate the Guaranty and Indemnity
Agreement in its entirety as set forth herein.

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


                                   ARTICLE ONE

                                   DEFINITIONS

                  Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Loan Agreement.

                                   ARTICLE TWO

                         REPRESENTATIONS AND WARRANTIES

                  2.1        REPRESENTATIONS AND WARRANTIES OF HGP AND HGP LP.
In order to induce Prime Retail and Prime LP to enter into the Reaffirmation of
Guaranty and this Agreement, HGP and HGP LP jointly and severally represent and
warrant, as of the date hereof, that:

                           (a)        HGP is a Maryland corporation duly
                  organized, validly existing and in good standing under the
                  laws of the state of its organization. HGP LP is a Delaware
                  limited partnership duly organized, validly existing and in
                  good standing under the laws of the state of its organization.
                  Each of HGP and HGP LP is qualified to do business and is in
                  good standing under the laws of each jurisdiction in which the
                  nature of its business requires it to be so qualified, (ii)
                  has full power to own and lease its properties and to conduct
                  its business as now being conducted and as contemplated to be
                  conducted in the future, and (iii) has full power and
                  authority and legal right, has taken all necessary corporate
                  and partnership action, as applicable, and has obtained all
                  necessary consents and approvals required by applicable law to
                  permit it to execute, deliver and perform its obligations
                  under this Agreement. This Agreement has been duly and validly
                  authorized, executed and delivered by each of HGP and HGP LP,
                  and constitutes the legal, valid and binding obligations of
                  each of HGP and HGP LP, enforceable against each of HGP and
                  HGP LP in accordance with its terms, subject to applicable
                  bankruptcy, insolvency, reorganization, moratorium and similar
                  laws


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                  affecting creditors rights generally, and to general
                  principles of equity.

                           (b)        The execution, delivery and performance of
                  this Agreement by each of HGP and HGP LP do not (i) conflict
                  with or violate the Amended and Restated Articles of
                  Incorporation or other charter documents or By-laws, limited
                  partnership agreement or other organizational documents, as
                  the case may be, of HGP or HGP LP, (ii) contravene or conflict
                  with any law, statute, rule, or regulation applicable to HGP
                  or HGP LP, (iii) contravene or conflict with, result in any
                  breach of, or constitute a default under, any material
                  agreement or instrument binding on HGP or HGP LP, or to which
                  any of their respective properties or assets are subject, (iv)
                  result in or require the creation or imposition of any lien
                  whatsoever upon any of the properties or assets of HGP or HGP
                  LP (other than the liens arising pursuant to this Agreement or
                  any other documents or instruments required or contemplated by
                  this Agreement), or (v) require any approval of stockholders
                  or partners or any approval or consent of any Person under any
                  agreement or instrument binding on HGP or HGP LP or to which
                  any of their respective properties or assets are subject which
                  has not already been obtained.

                           (c)        To the best knowledge of HGP and HGP LP,
                  after execution and delivery of the Amendment by the parties
                  thereto, no Default or Event of Default has occurred and is
                  continuing.

                           (d)        There are no offsets or defenses available
                  to HGP or HGP LP to the payment of any amounts required under
                  the Loan Documents or otherwise to the enforcement by Lender
                  of the Loan Documents.

                           (e)        The  outstanding principal balance of the
                  Loan, after giving effect to Section 11 of Article 1 of the
                  Amendment, is approximately $34 million.


                                  ARTICLE THREE

                                  GUARANTY FEE

                  HGP and HGP LP, jointly and severally, agree to pay Prime LP
an annual fee of $150,000 which shall accrue from June 15, 2001 until the date
of the termination and unconditional release of any and all obligations under
the Guaranty and the Reaffirmation of Guaranty and be payable in equal quarterly
installments in arrears on each March 31, June 30, September 30 and December 31,
commencing September 30, 2001 (and on the date of termination and release).



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                                  ARTICLE FOUR

                        COVENANTS RELATING TO GUARANTEES

                  Each of HGP and HGP LP covenants and agrees with Prime Retail
and Prime LP that the covenants set forth in this Section 4 will terminate upon
the termination and unconditional release of any and all obligations of Prime
Retail and Prime LP under the Loan Documents and the First of America Loan
Documents and the payment and performance in full of the reimbursement
obligations of HGP and HGP LP under this Agreement; provided, that
notwithstanding anything to the contrary in the foregoing, the covenants set
forth in Sections 4.5 and 4.6 shall terminate unless and until there also has
been an unconditional release of any and all obligations of Prime Retail and
Prime LP Loan Documents and the payment and performance in full of all
obligations of HGP and HGP LP under this Agreement in respect thereto.

                  4.1        DELIVERIES UNDER LOAN DOCUMENTS. HGP will deliver
copies to Prime LP of any notices or other information delivered or received by
HGP or HGP LP under the Loan Documents and the First of America Loan Documents,
promptly following the delivery or receipt of such notices or information. HGP
and HGP LP will also provide to Prime Retail and Prime LP such other data and
information (financial and otherwise) as Prime Retail or Prime LP, from time to
time, may reasonably request bearing upon or related to the financial condition,
results of operations and credit worthiness of HGP and HGP LP.

                  4.2        AMENDMENTS. Neither HGP nor HGP LP will amend,
modify, grant, or permit the amendment, modification, termination or grant of,
or any waiver under (or consent to, or permit or suffer to occur any action or
omission which results in, or is equivalent to, an amendment, modification, or
grant of a waiver under) the Loan Documents or the First of American Loan
Documents without the prior written consent of Prime Retail, which consent shall
not be unreasonably withheld.

                  4.3        REFINANCINGS AND RELEASES. HGP and HGP LP hereby
agree to use commercially reasonable efforts to obtain the release of Prime
Retail and Prime LP from any and all obligations under the First of America Loan
Documents as promptly as practicable.

                  4.4        APPLICATION OF EXCESS PROCEEDS. HGP and HGP LP
hereby agree to apply or to cause their subsidiaries to apply any Excess
Proceeds to permanently reduce indebtedness (including pre-payments of principal
amortization) with respect to which Prime Retail or Prime LP is or may be liable
as a guarantor, co-obligor or otherwise. "Excess Proceeds" shall mean the
aggregate amount of net cash proceeds (after transaction costs and expenses)
received by HGP or any of its subsidiaries, including HGP LP, with respect to
(i) any financing, refinancing, sale, transfer or other disposition, including a
pledge, of the property currently held by Lakeshore Marketplace, LLC or (ii) the
issuance of any equity interest; provided, however, "Excess Proceeds" shall not
include any such proceeds applied to make mandatory payments in respect of any
indebtedness of HGP or HGP LP.

                  4.5        RESTRICTIONS ON DISTRIBUTIONS. Neither HGP nor HGP
LP will (i) declare or pay any cash dividends, (ii) make any cash distributions
to any partners, members or



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shareholders of any of HGP or HGP LP (other than distributions to HGP from
HGP LP to fund corporate administrative expenses incurred in the ordinary
course of business) or (iii) set aside any funds for any such purpose, other
than dividends or distributions in the minimum amount necessary under the
Code in order to maintain HGP's status as a real estate investment trust
under the Code.

                  4.6        PLEDGE AGREEMENT. Each of HGP and HGP LP
acknowledge that its obligations under this Agreement will be secured
pursuant to that certain Pledge Agreement being entered into
contemporaneously herewith by and among HGP LP and Third HGI, L.L.C. ("THIRD
HGI"), Prime Retail and Prime LP, pursuant to which HGP LP and Third HGI,
among other things, shall pledge to Prime Retail and Prime LP (i) a 99%
limited partnership interest in Borrower and (ii) a 1% general partnership
interest in Borrower (collectively, the "BORROWER INTERESTS"), which shall be
subordinate to the pledge of such interests to the Lender. Each of HGP and
HGP LP acknowledge that the Borrower Interests are not in certificated form
and that HGP and HGP LP will cause Borrower not to certificate its ownership
interests unless requested to do so by Lender.

                  4.7        RESTRICTIONS ON ENCUMBRANCES. EXCEPT ONLY FOR THE
LIENS AND SECURITY INTERESTS ARISING UNDER THE MORTGAGE AND RELATED DOCUMENTS
DATED THE DATE HEREOF WITH GREENWICH CAPITAL FINANCIAL PRODUCTS RELATED TO THE
LAKESHORE MARKETPLACE CENTER, WITHOUT THE WRITTEN CONSENT OF PRIME LP AND PRIME
RETAIL, WHICH PRIME LP AND PRIME RETAIL MAY WITHHOLD IN THEIR SOLE DISCRETION,
HGP LP SHALL NOT, AND HGP AND HGP LP SHALL CAUSE LAKESHORE MARKETPLACE FINANCE
COMPANY, INC. NOT TO, EXECUTE, CAUSE, ALLOW OR SUFFER ANY PLEDGE OR ENCUMBRANCE
OF THEIR LIMITED LIABILITY COMPANY INTERESTS IN LAKESHORE MARKETPLACE, LLC.

                                 ARTICLE FIVE

                              INTENTIONALLY OMITTED

                                   ARTICLE SIX

                             CONSENT OF PRIME RETAIL

                  6.1        CONSENT. Prime Retail hereby consents to HGP, HGP
LP and their affiliates entering into the Amendment in the form attached hereto
and the Mortgage and related documents dated the date hereof with Greenwich
Capital Financial Products related to the Lakeshore Marketplace center. In
addition, Prime Retail hereby acknowledges that prior to the date hereof HGP,
HGP LP and their affiliates entered into certain modifications, amendments,
sales and refinancings related to certain HGP properties subject to the Loan
Documents, all as generally described in the periodic reports filed by HGP with
the Securities and Exchange Commission.



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                                  ARTICLE SEVEN

                                    INDEMNITY

                  7.1        INDEMNITY. HGP and HGP LP jointly and severally
agree to indemnify, defend, protect and hold Prime Retail and Prime LP and each
of the their respective officers, directors and affiliates (collectively, the
"Indemnified Parties") harmless from and against, and to pay within ten (10)
days after demand, any and all claims, damages, losses, liabilities, judgments,
costs and expenses of any kind or nature whatsoever which the Indemnified
Parties may incur or suffer by reason of, in connection with, or by virtue of
any breach or violation of this Agreement by HGP or HGP LP or by reason of the
execution, delivery or performance of, this Agreement, the Guaranty, the
Reaffirmation of Guaranty or any other credit enhancement relating to the Loan
Documents or the First of America Loan Documents including, without limitation,
the reasonable fees and expenses of counsel for the Indemnified Parties with
respect thereto. Promptly after receipt by the Indemnified Parties of notice of
the commencement, or threatened commencement, of any action subject to the
indemnities contained in this Section, the Indemnified Parties shall promptly
notify HGP thereof, provided, however, that the failure of any Indemnified Party
so to notify HGP will not affect the obligation of HGP and HGP LP to indemnify
the Indemnified Parties with respect to such actions or any other action
pursuant to this Section except to the extent such obligation shall have been
incurred solely and as a direct consequence of such failure. The obligations of
HGP and HGP LP under this Section shall survive forever, regardless of the
termination of this Agreement or the payment in full of all of HGP and HGP LP's
obligations hereunder. To the extent that the undertaking to indemnify, defend,
protect and hold harmless set forth herein may be unenforceable as violative of
any law or public policy, HGP and HGP LP agree to pay the maximum portion which
is permitted to be paid under applicable law. Any amounts unpaid following
demand pursuant to this Section shall accrue interest at a rate of 12% per
annum.

                                  ARTICLE EIGHT

                                  MISCELLANEOUS

                  8.1        MODIFICATION OF THIS AGREEMENT. No amendment,
modification or waiver of any provision of this Agreement shall be effective
unless the same shall be in writing and signed by Prime Retail, Prime LP, HGP
and HGP LP. Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.

                  8.2        WAIVER OF RIGHTS BY PRIME RETAIL AND PRIME LP. No
course of dealing or failure or delay on the part of Prime Retail or Prime LP in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right or privilege. The rights of
Prime Retail and Prime LP under this Agreement are cumulative and not exclusive
of any rights or remedies which Prime Retail or Prime LP would otherwise have,
including, without limitation, any rights of subrogation.


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                  8.3        SEVERABILITY. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

                  8.4      GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICT OF LAWS THEREOF.

                  8.5      NOTICES

                  All notices or other communications required or permitted
hereunder shall be (i) in writing and shall be deemed to be given (A) when
received, if delivered in person, (B) three Business days after deposit in a
receptacle of the United States mail as registered or certified mail, postage
prepaid, (C) the Business Day after notice on which the party to whom such
notice is addressed refuses delivery by mail or by private courier service and
(ii) addressed as follows:

                  If to HGP or HGP LP       Horizon Group Properties, Inc.
                                            5000 Hakes Drive
                                            Norton Shores, MI 49411
                                            Attn:  President

                  with a copy to:           Winston & Strawn
                                            35 W. Wacker Drive
                                            Chicago, IL 60601
                                            Attn:  Wayne D. Boberg

                  If to Prime Retail or     Prime Retail, Inc.
                  Prime LP                  100 East Pratt Street
                                            19th Floor
                                            Baltimore, MD 21202
                                            Attn:  C. Alan Schroeder

                  with a copy to:           Winston & Strawn
                                            35 W. Wacker Drive
                                            Chicago, IL 60601
                                            Attn:  Steven J. Gavin

                  8.6        WAIVER OF OFFSET AND COUNTERCLAIM. HGP and HGP LP
hereby waive any and all rights of offset or counterclaim which HGP and HGP LP
may otherwise have against Prime Retail and Prime LP in connection with the
enforcement of their rights hereunder.



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                  8.7        JOINT AND SEVERAL LIABILITY. The obligations of HGP
and HGP LP hereunder shall be joint and several. Neither Prime Retail nor Prime
LP shall not obligated to exercise any right or take any action against either
HGP or HGP LP prior to the enforcement of its rights against the other.

                  8.8        ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in Maryland this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself (without making such submission exclusive) to the
personal jurisdiction of any federal court located in Maryland in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court.

                  8.9        ENTIRE AGREEMENT. This Agreement (including the
exhibits attached hereto) contains the entire agreement among the parties hereto
with respect to the transactions contemplated hereunder, and supercedes all
negotiations, representations, warranties, commitments, offers, contracts and
writings prior to the date hereof including without limitation the original
Guaranty and Indemnity Agreement.

                            [signature page follows]



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                  IN WITNESS WHEREOF the parties hereto have executed this
instrument as of the date and year first above written.

                                    HORIZON GROUP PROPERTIES, INC.

                                    By:      _____________________________

                                    Its:     _____________________________

                                    HORIZON GROUP PROPERTIES, L.P.

                                    By:  HORIZON GROUP PROPERTIES, INC.

                                    By:      ___________________________

                                    Its:     ___________________________

                                    PRIME RETAIL, INC.

                                    By:      _____________________________

                                    Its:     _____________________________

                                    PRIME RETAIL, L.P.

                                    By:  PRIME RETAIL, INC.

                                    By:      ____________________________

                                    Its:     ____________________________


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