GUARANTY OF COLLECTION
THIS GUARANTY OF COLLECTION is made as of August 30, 2010 (this “Agreement”) by Lightstone Value Plus REIT, L.P., a Delaware limited partnership (the “Guarantor”), to and for the benefit of JPMorgan Chase Bank, N.A., as Administrative Agent (the “Agent”), each of the Lenders (as such term is defined in the Credit Agreement (as defined below)), and any of their respective successors and assigns with respect to the obligations of Simon Property Group, L.P., a Delaware limited partnership (the “Borrower”), in respect of the Loans (as hereinafter defined), and is acknowledged by the Agent, as representative acting on behalf of the Lenders.
WHEREAS, the Guarantor indirectly owns a limited partnership interest in the Borrower;
WHEREAS, pursuant to the Credit Agreement dated December 8, 2009, by and among the Borrower, the Lenders party thereto and the Agent (the “Credit Agreement”) and the other Loan Documents (as defined in the Credit Agreement), the Lenders have agreed to provide to Borrower a revolving credit facility in an aggregate amount of $3,695,000,000 (the “Loans”);
WHEREAS, the Lenders have made certain Loans to the Borrower , a portion of which will be drawn down for the purpose described in Section 15.28 of the Credit Agreement (the “Section 15.28 Loan”) which draw down shall be accompanied by the delivery of one or more Guarantees as defined and described in said Section 15.28; and
WHEREAS, the Guarantor will directly benefit from the Section 15.28 Loan being made to the Borrower;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as follows:
1. Guaranty . Subject to the terms and conditions set forth in this Agreement, the Guarantor hereby irrevocably, unconditionally, absolutely and directly agrees to pay to the Agent (for the benefit of the Lenders) the principal amount of the Section 15.28 Loan (which, for the avoidance of doubt, shall include any Loans to Borrower in respect of amounts to be distributed or deposited pursuant to Sections 2.3(e)(i), 2.5, and 2.6(b) of the Contribution Agreement dated as of December 8, 2009, and amended on May 13, 2010, June 28, 2010, and the date hereof, by and among Borrower, Simon Property Group, Inc., a Delaware corporation, Marco Capital Acquisition LLC, a Delaware limited liability company, Prime Outlets Acquisition Company LLC, a Delaware limited liability company, and the Contributors party thereto (the “Contribution Agreement”)), together with interest thereon, in each case to the extent provided for in the Loan Documents, (the “Guaranteed Obligations”); provided, however, that the Guarantor shall have no obligation to make a payment hereunder with respect to any other costs, fees, expenses, penalties, charges or similar items payable by the Borrower and any other person or entity (a “Person”) that has guaranteed any payment under the Loan Documents other than the Guarantor (collectively, the “Borrower Parties”) in respect of the Section 15.28 Loan or under the Credit Agreement.
2. Guaranty of Collection and Not of Payment . Notwithstanding any other provision of this Agreement, this Agreement is a guaranty of collection and not of payment, and the Guarantor shall not be obligated to make any payment hereunder until each of the following is true: (a) Borrower shall have failed to make a payment due to the Lenders in respect of such Guaranteed Obligations and the Section 15.28 Loan shall have been accelerated, (b) the Lenders shall have exhausted all Lender Remedies (as defined below), and (c) the Lenders shall have failed to collect the full amount of the Guaranteed Obligations. The term “Lender Remedies” shall mean all rights and remedies at law and in equity that the Agent or the Lenders may have against any Borrower Party, any collateral deposited in the Letter of Credit Collateral Account (as such term is defined in the Credit Agreement) (the “LC Collateral”) or any other Person that has provided credit support in respect of the applicable Guaranteed Obligations, to collect, or obtain payment of, the Guaranteed Obligations, including, without limitation, foreclosure or similar proceedings, litigation and collection on all applicable insurance policies, and termination of all commitments to advance additional funds to the Borrower under the Loan Documents. For the avoidance of doubt, Lender Remedies shall not have been exhausted with respect to any LC Collateral unless and until the value thereof has been included in Section 3(a)(y)(ii).
3. Cap . Notwithstanding any other term or condition of this Agreement it is agreed that Guarantor’s maximum liability under this Agreement shall not exceed the sum of (a) the difference between (x) the sum of $138,010,000.00 plus any amounts to be received directly or indirectly by the Guarantor pursuant to Sections 2.3(e)(i) and 2.6(b) of the Contribution Agreement, minus (y) the sum of (i) any payments of principal made by or on behalf of Borrower or any other Borrower Party to the Lenders (or any one of them) in respect of the Section 15.28 Loan following an Event of Default under the Credit Agreement, plus (ii) any amount of cash proceeds collected or otherwise realized (including by way of set off) by or on behalf of any Lender, pursuant to, or in connection with, the Section 15.28 Loan, including, but not limited to, any cash proceeds collected or realized from the exercise of any Lender Remedies (but excluding any cash payments of principal (to the extent such payment is already included in clause (i) above), premium or interest (it being understood that the paid premium or interest shall not be deemed to be unpaid for purposes of clause (b) below) received from the Borrower and any amount received as a reimbursement of expenses, indemnification payment or fees), plus (iii) the amount of principal or accrued and unpaid interest or accrued and unpaid premium otherwise owing by the Borrower Parties which is affirmatively discharged, forgiven or otherwise compromised by the Agent or the Lenders, plus (b) any unpaid premium on, or unpaid interest accruing under the Loan Documents on, the amount described in clause (a)(x) above. For purposes of this Agreement, the Section 15.28 Loan will be deemed to be outstanding and not repaid until all other Loans under the Credit Agreement have been repaid and not reborrowed.
4. Notice . As a condition to the enforcement of this Agreement, the Guarantor shall have received written notice of any failure by Borrower to pay any Guaranteed Obligations to the Lenders. Except for the notice required under the preceding sentence, the Guarantor hereby waives notice of acceptance of this Agreement, demand of payment, presentment of this or any instrument, notice of dishonor, protest and notice of protest, or other action taken in reliance hereon and all other demands and notices of any description in connection with this Agreement. Subject to the last sentence of Section 2, the Guarantor further waives and forgoes all defenses which may be available by virtue of any valuation, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets, and all suretyship defenses generally.
5. Absolute Obligation . Subject to the provisions of Sections 1, 2, 3 and 4, the obligations of the Guarantor hereunder shall be absolute and unconditional and shall not be subject to any reduction, limitation, impairment or termination for any reason, including, without limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any setoff, counterclaim, deduction, diminution, abatement, suspension, reduction, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations. Without limiting the generality of the foregoing, subject to the provisions of Sections 1, 2, 3 and 4, the obligations of the Guarantor hereunder shall not be released, discharged, impaired or otherwise affected by any circumstance or condition whatsoever (whether or not the Borrower, any other Borrower Party, the Guarantor, the Agent or any Lender has knowledge thereof) which may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a release or discharge of the Guarantor as a matter of law or equity (other than the indefeasible payment in full of all of the Guaranteed Obligations), including, without limitation:
(a) any amendment, modification, addition, deletion or supplement to or other change to any of the terms of the Loan Documents, or any assignment or transfer of any thereof, or any furnishing, acceptance, surrender, substitution, modification or release of any security for, or guaranty of, the Guaranteed Obligations;
(b) any failure, omission or delay on the part of the Borrower or any other Borrower Party to comply with any term of any of the Loan Documents;
(c) any waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements contained in the Loan Documents or any of them or any delay on the part of the Agent or the Lenders to enforce, assert or exercise any right, power or remedy conferred on the Agent or the Lenders in the Loan Documents;
(d) any extension of the time for payment of the principal of or premium (if any) or interest on any of the Guaranteed Obligations, or of the time for performance of any other obligations, covenants or agreements under or arising out of the Loan Documents or any of them, or the extension or the renewal thereof;
(e) to the extent permitted by applicable law, any voluntary or involuntary bankruptcy, insolvency, reorganization, moratorium, arrangement, adjustment, readjustment, composition, assignment for the benefit of creditors, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Borrower, any other Borrower Party or the Guarantor or any other Person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding (including, without limitation, any automatic stay incident to any such proceeding);
(f) any limitation, invalidity, irregularity or unenforceability, in whole or in part, limiting the liability or obligation of the Borrower or any other Borrower Party or any security therefor or guarantee thereof or the Agent’s or the Lenders’ recourse to any such security or limiting the Agent’s or the Lenders’ right to a deficiency judgment against the Borrower, any other Borrower Party, the Guarantor or any other Person; and
(g) any other act, omission, occurrence, circumstance, happening or event whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance which might otherwise constitute a legal or equitable defense, release or discharge (including the release or discharge of the liabilities of a guarantor or surety or which might otherwise limit recourse against the Borrower, any other Borrower Party, the Guarantor or any other Person, whether or not the Borrower, any other Borrower Party, the Guarantor, the Agent or any Lender shall have notice or knowledge of the foregoing).
6. Subrogation . To the extent that the Guarantor shall have made any payments under this Agreement, the Guarantor shall be subrogated to, and shall acquire, all rights of the Lenders against the Borrower Parties and the LC Collateral with respect to such payments, including without limitation, (a) all rights of subrogation, reimbursement, exoneration, contribution or indemnification, and (b) all rights to participate in any claim or remedy of any Lender or any trustee on behalf of any Lender against any Borrower Party or the LC Collateral, in each case, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower Parties, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right; provided, however, that the Guarantor shall not exercise any right of subrogation, contribution, indemnity or reimbursement or any other rights it may have now or hereafter have, and any and all rights of recourse to any Borrower Party or any of its assets with respect to any payment it makes under this Agreement until (x) all of the Obligations (as defined in the Credit Agreement) (other than contingent indemnification obligations not yet asserted by the Person entitled thereto) shall have been indefeasibly paid, performed or discharged in full in cash, and (y) no Person has any further right to obtain any loans, advances or other extensions of credit under any of the Loan Documents. If any amount is paid to the Guarantor in violation of the foregoing limitation, then such amount shall be held in trust for the benefit of the Lenders and shall forthwith be paid to the Agent (for the benefit of the Le