GUARANTYOF PAYMENT

Exhibit 10.121

GUARANTY OF PAYMENT

THIS GUARANTY OF PAYMENT (this “Guaranty”) is dated as of November 3, 2003 and given by HORIZON GROUP PROPERTIES, INC., a Maryland corporation (the “Guarantor”), to and for the benefit of PLEASANT LAKE APTS. LIMITED PARTNERSHIP (“Lender”).

R E C I T A L S:

A.                                   Pursuant to the terms and conditions of a certain Promissory Note, 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 “Note”), Lender has agreed to make a Loan (as defined below) to Borrower.

B.                                     The loan to be made pursuant to the Note will consist of a term loan of Two Million Forty Thousand Dollars ($2,040,000) (the “Loan”).

C.                                     As a condition precedent to Lender’s extension of the Loan to Borrower and in consideration therefor, Lender has required, among other things, the execution and delivery of: (i) this Guaranty by Guarantor and (ii) that certain Promissory Note, dated of even date herewith, from Borrower to Lender in the original principal amount of Two Million Forty Thousand Dollars ($2,040,000) (as amended, modified, replaced or restated from time to time, the “Note”).

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

All terms not otherwise defined herein shall have the meaning set forth in the Note.

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 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 Note (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

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and performance obligations of Guarantor hereunder are referred to herein as “Borrower’s Obligations”.

2.                                      Performance Guaranty.  Upon the occurrence of an Event of Default under the Note 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 cure or cause Borrower to cure the Event of Default.

3.                                      Representations and Warranties.  The following shall constitute representations and warranties of Guarantor and Guarantor hereby acknowledges that Lender intends to make the Loan 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.

(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 the Note, unless such lack of validity or enforceability arises from Lender’s willful misconduct;

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(b)                                 any termination, amendment, modification or other change in any of the Note, 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 Loan, 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 the Note or any failure of Lender to give notice of any Event of Default (as defined in the Note);

(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 the Note;

(f)                                    any action or inaction by Lender under or in respect of the Note, 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 the Note, 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 the Note; 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 the

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Note 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 the Note, (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 the Note, (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 the Note, and (f) any notice of any sale, transfer or other disposition of any right, title or interest of Lender under the Note.

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

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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 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 the Note 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.

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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 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:

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

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ARISING OUT OF OR RELATED TO THIS GUARANTY WILL BE 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]

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

Certification

The undersigned, a Notary Public in and for the aforementioned State and County, affirms that, on this         day of November, 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.

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