Exhibit 10.79

 

PROMISSORY NOTE

 

 

Chicago, Illinois

$1,300,000.00

 

March 14, 2003

 

FOR VALUE RECEIVED, the undersigned entities (collectively, the “Borrower”)
HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of Horizon Group
Properties, Inc., a Maryland corporation (the “Lender”) the principal sum of One
Million Three Hundred Thousand Dollars ($1,300,000.00), together with all
accrued but unpaid interest thereon, on the Maturity Date.

The Borrower promises to pay interest to the Lender on the outstanding principal
amount hereof from the date hereof until such principal amount is paid in full.

1.             Defined Terms. As used in this Note:

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person.

 “Borrower” is defined in the introductory paragraph.

 “Business Day” means a calendar day other than a Saturday or Sunday or any
other day on which banks in Chicago, Illinois are required or authorized to
close.

“Company” has the meaning ascribed to such term on Exhibit 1 attached hereto.

 “Default Rate” is defined in Section 2(b).

 “Dollars” and the sign “$” each means lawful currency of the United States of
America.

“Event of Default” is defined in Section 5.

“Guarantors” means The Prime Group, Inc., an Illinois corporation, Prime Group
Limited Partnership, an Illinois limited partnership, Prime Group II, L.P., an
Illinois limited partnership, PGLP, Inc., an Illinois corporation and Prime
International, Inc., an Illinois corporation.

“Guaranty” means that certain Guaranty, dated as of the date hereof, issued by
Guarantors in favor of the Lender.

“Interest Rate” means five percent (5%) per annum.

 

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 “Lender” is defined in the introductory paragraph.

“Letter Agreement” means that certain Letter Agreement, dated as of the date
hereof, by Huntley Development Limited Partnership, an Illinois limited
partnership and Huntley Meadows Residential Venture, an Illinois partnership, in
favor of the Lender.

 “Loan” means the term loan made to the Borrower by the Lender which is
evidenced by this Note.

“Loan Documents” means, collectively, this Note, the Guaranty, the Pledge
Agreement, the Letter Agreement, the Option Agreement and other documents
entered into by the Borrower or any other Person to evidence or secure the
repayment of the Loan evidenced by this Note and all documents delivered or
required to be delivered by the Borrower pursuant thereto.

“Maturity Date” means May 15, 2004, being fourteen months after the date of this
Note.

“Note” means this Promissory Note, as it may be amended or modified and in
effect from time to time.

“Person” means any natural person, corporation, limited liability company, firm,
joint venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.

“Pledge Agreement” means that certain Pledge and Security Agreement, dated as of
the date hereof, between Borrower, as pledgors, and the Lender, as secured
party, pursuant to which Borrower pledges to the Lender the Pledged Collateral
to secure all obligations of the Borrower and Guarantors under the Loan
Documents.

“Pledged Collateral” shall have the meaning ascribed to such term in the Pledge
Agreement.

2.             Interest and Fees.

(a)                                  Interest Rate.  Except as otherwise
provided in clause (b) of this Section 2, the outstanding principal amount of
this Note shall, from the date hereof until such principal amount is paid in
full, bear interest at the Interest Rate.  Interest on this Note shall accrue
and be payable on the Maturity Date or, if earlier, on any date on which the
Loan is prepaid, whether by acceleration or otherwise.

(b)                                 Rates Applicable After Default.  During the
continuance of an Event of Default, the Lender may, at its option, by notice to
the Borrower, declare that any amount due and owing hereunder from the Borrower
and overdue in respect of the principal amount of the Loan evidenced by this
Note shall bear

 

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interest at a rate per annum equal to fifteen percent (15%) per annum (the
“Default Rate”). Interest accrued at the Default Rate on the principal amount of
this Note shall be payable on demand.

(c)                                  Interest Basis.  Interest shall be
calculated based on the actual days elapsed on the basis of a 365-day year. 
Interest payable with respect to this Note or any portion hereof which is paid
or prepaid shall be payable for the day the Loan is made but not for the day of
any payment on the amount paid if payment is received by the Lender prior to
3:00 p.m. (Chicago time) at the place of payment.

3.                                       Required Payments; Voluntary
Prepayment.

(a)                                  The principal balance of this Note shall be
payable by the Borrower on the Maturity Date.

(b)                                 In the event that (i) any of the Pledged
Collateral or any assets of Borrower, Prime/Retail Partners, LLC or any of their
respective subsidiaries are sold for cash or (ii) any distributions are made to
Borrower or any Guarantor by Prime/Retail Partners, LLC, then the net proceeds
generated by such sale (in the case of clause (i)) or such distributions (in the
case of clause (ii)) shall be paid by the Borrower to the Lender in payment of
amounts due under this Note.  Any such payment shall be applied first to the
payment of any costs or expenses payable hereunder by the Borrower to the
Lender, next to payment of accrued but unpaid interest hereunder, and then to
the outstanding principal amount of this Note.

(c)                                The Borrower may, at any time and from time
to time, pay, without penalty or premium, the entire outstanding principal
amount of this Note or any portion of the outstanding principal amount of this
Note.

4.             Method of Payment.  All payments of principal, interest and other
amounts owing hereunder shall be made, without set off, deduction or
counterclaim, in immediately available funds to the Lender at the Lender’s
address at 77 West Wacker Drive, Suite 4200, Chicago Illinois 60601, or at any
other office of the Lender specified in writing by the Lender to the Borrower,
by 3:00 p.m. (Chicago time) on the date when due. Whenever any payment to be
made hereunder shall be stated to be due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day, and, in the case
of a principal payment, such extension of time shall in such case be included in
computing interest with respect to such payment.

5.             Event of Default.  If any of the following events (each such
event, an “Event of Default”) shall occur and be continuing:

(a)           Any representation or warranty made, or any financial or other
information provided, by the Borrower, any Guarantor  or any Affiliate of
Borrower to the Lender in connection

 

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with this Note or any other Loan Document shall be untrue in any material
respect on the date as of which made;

(b)           The Borrower shall fail to pay any amount of principal on this
Note when due, or the Borrower shall fail to pay any amount of interest on, or
other amount due under, this Note when due;

(c)           The breach by the Borrower or any Guarantor (other than a breach
which constitutes an Event of Default under another clause of this Section 5) of
any of the terms or provisions of this Note or other Loan Document which is not
remedied within thirty (30) days after written notice from the Lender; provided,
that such 30-day period shall be extended by an additional 30 days if such
breach can be cured within such time and the Borrower or Guarantors, as the case
may be, are diligently proceeding to cure such breach;

(d)           The occurrence of a default by the Borrower or any Guarantor after
applicable notice and the expiration of all applicable cure periods under any
agreement for borrowed money (other than loans made or held by Vornado PS, LLC, 
Cadim Acquisitions, LLC, or any of their respective Affiliates) which allows the
acceleration of the payment of amounts owed by the Borrower under such agreement
in an amount in excess of $1,000,000 in the aggregate; provided, that a loan
made or held by Vornado PS, LLC, Cadim Acquisitions, LLC or any of their
respective Affiliates shall be held to be in default under this clause (d) upon
a final non-appealable judicial determination of default; or

(e)           The Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property, then the Lender may declare the principal amount and interest
and other amounts outstanding under this Note owing by the Borrower, to be
forthwith due and payable, whereupon such principal amount, all such interest
and all such other amounts shall become and be forthwith due and payable,
without presentment, demand, protest or notice of any kind by the Lender, all of
which are hereby expressly waived by the Borrower; provided, however, that if an
Event of Default described in clause (d) above occurs with respect to the
Borrower, the principal amount and interest and other amounts outstanding under
this Note shall immediately become due and payable without any election or
action on the part of the Lender.  The Borrower shall, as soon as possible, and
in any event within five (5) Business Days after becoming aware of the
occurrence of an Event of Default or an event which, with notice or lapse of
time or both, could constitute an Event of Default, deliver to the Lender a
statement setting forth details of such Event of Default.  In addition, Lender
may exercise any and all other rights and remedies available to Lender under any
of the other Loan Documents or otherwise available to Lender at law or in
equity.

(f)            Any of the representations or warranties set forth in Exhibit 1
attached hereto are untrue or inaccurate in any material respect as of the date
hereof or if, at any time after the date

 

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hereof, any of such representations or warranties would be untrue or inaccurate
in any material respect if such representation or warranty were to be made by
the Borrower on such date.

6.             Option Agreement.  As a condition to borrowing, The Prime Group,
Inc. (or the appropriate Affiliate or Affiliates of The Prime Group, Inc.)
agrees to enter into an agreement (the “Option Agreement”), substantially on the
terms set forth on Schedule A attached hereto, within thirty (30) days after the
date hereof.  The failure of The Prime Group, Inc. (or the appropriate Affiliate
or Affiliate of The Prime Group, Inc.) to enter into the Option Agreement within
thirty (30) days after the date hereof shall, at the option of Lender,
constitute a default hereunder, unless the failure is attributable to failure of
Lender to negotiate the Option Agreement in good faith.

7.             Set off.  Upon the occurrence and during the continuance of any
Event of Default, the Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other indebtedness and other
obligations at any time held or owing by the Lender to or for the credit or
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Note and the Loan Documents executed in
connection herewith, irrespective of whether or not the Lender shall have made
any demand under this Note and although such obligations may be unmatured.

8.             Amendments.  This Note may not be amended orally but only in
writing signed by the Borrower and the Lender.

9.             Preservation of Rights; Survival.  No delay or omission of the
Lender to exercise any right under this Note shall impair such right or be
construed to be a waiver of any Event of Default or an acquiescence therein. 
Any single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of this Note
whatsoever shall be valid unless in writing signed by the Lender and then only
to the extent in such writing specifically set forth.  All remedies contained in
the Loan Documents or available to Lender at law or in equity shall be
cumulative and all shall be available to the Lender until this Note has been
paid in full.  All representations and warranties of the Borrower contained in
this Note and any other Loan Document shall survive delivery of this Note and
the making of the Loan evidenced hereby.

10.           Headings; Entire Agreement.  Section headings in this Note are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Note.  This Note and the Loan Documents embody the entire
agreement and understanding between the Borrower and the Lender and supersede
all prior agreements and understandings between the Borrower and the Lender
relating to the subject matter thereof.

11.           Benefits of this Agreement.  This Note shall be binding upon the
Borrower and the Borrower’s successors and assigns and, subject to the following
sentence, shall not be construed so as to confer any right or benefit upon any
Person other than the Borrower and his or her personal representatives, heirs
and assigns.  This Note shall inure to the benefit of the Lender and its
successors and assigns, it being understood that the Lender may from time to
time assign, or grant

 

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participations in, its rights hereunder in whole or in part.  The Borrower shall
not have the right to assign its rights or obligations hereunder.

12.           Expenses; Indemnification.  The Borrower agrees to reimburse the
Lender for any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys’ fees and time charges and expenses of attorneys for the
Lender, which shall include, without limitation, $25,000 payable to Winston &
Strawn on the date hereof, subject to a reconciliation of fees and expenses
payable to Winston & Strawn) paid or incurred by the Lender in connection with
the preparation, administration, collection or enforcement of this Note or the
other Loan Documents.  The Borrower further agrees to indemnify the Lender, its
directors, officers and employees (collectively, the “indemnified parties”)
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (collectively, “indemnified obligations”) (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Lender is a party thereto) which any of them may pay or incur arising out of
or relating to this Note, the transactions contemplated hereby or the direct or
indirect application of the proceeds of the Loan evidenced hereby, except that
no indemnified party shall be indemnified for any indemnified obligations to the
extent that they arise from the gross negligence or willful misconduct of any of
the indemnified parties.  The obligations of the Borrower under this Section
shall survive the repayment of this Note.

13.           Severability of Provisions.  Any provision in this Note that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Note are declared to be severable.  If any
interest payment or other charge or fee payable by the Borrower under this Note
exceeds the maximum amount then permitted by applicable law, the Borrower shall
be obligated to pay, and the Lender shall be entitled to receive, only the
maximum amount permitted by applicable law.  If the Lender has collected
interest in excess of such maximum rate, the Borrower’s only remedy will be that
the Lender will apply such excess interest as a full or partial prepayment of
the unpaid balance of the principal amount to the extent of the unpaid principal
balance and refund any additional excess amount to the Borrower.

14.           CHOICE OF LAW.  THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS, OF THE STATE OF ILLINOIS.

15.           CONSENT TO JURISDICTION.  THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS NOTE, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE LENDER TO BRING PROCEEDINGS AGAINST

 

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THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION IN WHICH ANY COLLATERAL
SECURING REPAYMENT OF THE LOAN MAY BE LOCATED.  ANY JUDICIAL PROCEEDING BY THE
BORROWER AGAINST THE LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

16.           WAIVER OF JURY TRIAL.  THE BORROWER AND, BY ACCEPTANCE HEREOF, THE
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS NOTE.

              17.           Notices.  Any notice required or desired to be
served, given or delivered hereunder shall be in writing (including facsimile
transmission), and shall be deemed to have been validly served, given or
delivered upon the earlier of (a) personal delivery to the address set forth
below, (b) in the case of mailed notice, three (3) days after deposit in the
United States mails, with proper postage for certified mail, return receipt
requested, prepaid, or in the case of notice by Federal Express or other
reputable overnight courier service, one (1) day after delivery to such courier
service, and (c) in the case of facsimile transmission, upon transmission with
confirmation of receipt, addressed to the party to be notified as follows:

 

If to the Borrower:

 

Retail Partners, Inc.

 

 

Retail Partners Limited Partnership

 

 

77 West Wacker Drive

 

 

Suite 4200

 

 

Attn: Michael W. Reschke

 

 

Facsimile Number: (312) 917-1511

 

 

 

With copies to:

 

The Prime Group, Inc.

 

 

77 West Wacker Drive

 

 

Suite 4200

 

 

Attn: Robert J. Rudnik, Esq.

 

 

Facsimile Number: (312) 917-8442

 

 

 

If to the Lender:

 

Horizon Group Properties, Inc.

 

 

77 West Wacker Drive

 

 

Suite 4200

 

 

Attention: Gary J. Skoien

 

 

Facsimile Number:  (312) 917-0911

 

 

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With a copy to:

 

Horizon Group Properties, L.P.

 

 

77 West Wacker Drive

 

 

Suite 4200

 

 

Attention: David Tinkham

 

 

Facsimile Number:  (312) 917-8440

 

 

or to such other address as any of the parties may hereafter designate for
itself by written notice to the other parties in the manner herein prescribed.

 

18.           Borrower’s Waiver.  Borrower and all endorsers, guarantors and
sureties of this Note and all other persons liable or to become liable on this
Note severally waive presentment for payment, demand, notice of demand and of
dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collection, and the bringing of suit against any other party, and
agree to all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.

19.           Non-Recourse to Individuals.  Notwithstanding any other provision
of this Note or any other Loan Document, recourse shall not be made to any of
the individual officers, directors, partners, shareholders, owners, agents or
representatives of any Borrower or any Guarantor who are natural persons (the
“Individuals”), except to the extent of their respective interests in
partnership property; provided, however, that this limitation of liability shall
not reduce the liability that any Individual may otherwise have with respect to
any liability, damage, loss, costs or expenses arising out of fraud or
intentional misrepresentation by such Individual.

 

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IN WITNESS WHEREOF, the undersigned have executed this Note as of the day and
year first above written.

 

 

BORROWER:

 

 

 

 

 

RETAIL PARTNERS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

RETAIL PARTNERS LIMITED PARTNERSHIP

 

By: 

 

THE PRIME GROUP, INC.,

 

 

 

General Partner

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

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Exhibit 1-A

Prime/Retail Partners, LLC (the “Company”) makes the following representations
and warranties concerning the Company’s conduct:

The Company is a limited liability company formed under the laws of the State of
Illinois and operated pursuant to the Amended and Restated Operating Agreement
of Prime/Retail Partners, LLC, dated as of August 4, 1998 and all amendments
thereto (as amended, the “Company Agreement”).  The Company has observed all
applicable legal formalities and procedures required by the Company Agreement,
the laws of the State of Illinois and the laws of any other state or
jurisdiction, to the extent it has done business outside the United States, in
which the Company has done business, as such formalities, procedures and law
relate to the separateness of the Company from any other person or entity.  The
Company has maintained its existence in good standing and/or in full force and
effect under the laws of the State of Illinois, as well as in any other state or
jurisdiction in which it is so required.  The Company has been qualified and
authorized to do business in each state in which the conduct of its business so
requires.

The Company has acted solely in accordance with and has complied with the
provisions of the Company Agreement as such provisions relate to separateness of
the Company from any other person or entity.

The business of the Company has been conducted by its manager(s) and officer(s)
(the “Managers and Officers”), or any authorized substitutes for such persons or
entities as permitted by the Company Agreement and all applicable state law. 
The Managers and Officers have duly authorized all of the actions heretofore
taken by the Company to the extent such actions are required to be authorized by
the Managers and the Officers.  The Managers and Officers, when acting in such
capacity, have acted in the best interests of the Company, consistent with their
fiduciary duties to the Company to the extent such duties are created by
applicable state law.  The business of Retail Partners, Inc. and Retail Partners
Limited Partnership or any of their respective affiliates (the “Members”) has
not been conducted by the Company.

The Company has maintained company and financial books and records separate from
those of the Members.

The financial statements of the Company have been prepared and maintained using
the same method of accounting used for the preparation of income tax returns or
in accordance with generally accepted accounting principles.  The Company’s
financial statements have not been prepared or maintained on a consolidated
basis with those of either of the Members. The Company has maintained financial
statements separate from the financial statements of either of the Members,
showing its assets and liabilities separate and apart from those of either of
the Members and accurately portraying the financial condition, assets and
liabilities of the Company.  No assets or liabilities of either of the Members
have been set forth on the financial statements of the Company.

The Company has conducted its business solely in its own name and in accordance
with the provisions of the Company Agreement and all amendments thereto.  The
Company has entered into its own contracts in its own name and has used its own
name for purposes of obtaining

 

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any required registrations, licenses and permits (whether governmental,
administrative or otherwise) necessary to the conduct of its own business. 
Without limiting the generality of the foregoing, all oral and written
communications, including, without limitation, letters contracts, statements and
applications, have been made solely in the name of the Company, if they relate
solely to the Company.

The Company has recognized at all times that it owns no interest in the property
of either of the Members and has not represented that it owns an interest in the
property of either of the Members.

All transactions, if any, between the Company and either of the Members have
been duly authorized and documented, and have been recorded accurately in the
appropriate books and records of the Company.  All such transactions have been
fair to each party, have constituted exchanges for fair consideration and for
fair and reasonably equivalent value, have been based on commercially reasonable
terms, and have been made in good faith, without any intent to hinder, delay, or
defraud creditors of either of the parties.

The Company’s capitalization has been adequate in light of its business and
purpose.  The Company has not engaged in a business for which the property of
such entity represents an inadequate amount of capital.

The Company has acted solely through its Managers and Officers or its duly
authorized agents or representatives in the conduct of its business, and has not
permitted either of the Members to act on its behalf, except as may be permitted
by the terms of the Company Agreement and by the laws of any state in which it
is conducting business and organized.

The Company has not commingled its assets or liabilities with those of either of
the Members.  The Company has kept its assets and liabilities separately
identifiable and distinguishable from the assets and liabilities of any other
entity.

The Company has not transferred any assets to either of the Members, nor has the
Company made any contributions, payments or distributions to either of the
Members, except as authorized by the Company Agreement and all applicable
federal and state law.  To the extent distributions or payments have been made
to either of the Members, such distributions and/or payments have been properly
authorized and documented in the books and records of the Company.  The Company
has not permitted either of the Members to transfer any of its assets or make
any contributions to the Company, except as authorized by the Company Agreement
and all amendments thereto.

The Company has not financed the operations of either of the Members, and the
Company has not permitted either of the Members to finance the operations of the
Company, except as authorized by the Company Agreement.  The Company has not
executed or assumed any document purporting to guarantee payment of any note or
purporting to guarantee the performance of any document executed or assumed by
either of the Members.  The Company has not held itself, its assets or its
creditworthiness out as being available for payment of either of the Members’
liabilities.  The Company has not made any representations to any creditors of
either of the Members to induce

 

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them to rely on the assets or the credit of the Company and to the Company’s
knowledge, no creditor is relying on the assets or the credit of the Company
with respect to liabilities of either of the Members.

The Company has not made any representations to any of its own creditors to
induce them to rely on the assets or the credit of either of the Members with
respect to liabilities of the Company, and to the Company’s knowledge, no
creditor is relying on the assets or the credit of either of the Members with
respect to liabilities of the Company.

To the extent the Company has accounts (bank, investment or otherwise) and
employees, as required, the Company has maintained its own accounts and
employees separately and apart from any accounts or employees of either of the
Members.  The Company has maintained a sufficient number of employees, as and if
required, in light of its business operations.

The Company has not represented that either of the Members owns an interest in
the property of the Company.  All property owned by the Company has been owned
in the name of the Company and all documents of title to any property have
reflected the ownership of the Company.

None of the Company’s liabilities have been paid from the funds of either of the
Members, and the Company has not paid liabilities of the Member from its funds.

The Company has not pledged any of its assets for the benefit of either of the
Members.

When the Company was formed, it satisfied all of the requirements of
organization of the state in which it was formed.

The Company has not acquired any of the obligations of either of the Members,
and the Company has not permitted either of the Members to acquire any
obligations of the Company or to buy or hold evidence of indebtedness issued by
the Company except as permitted under the Company Agreement.

The Company has not made loans to either of the Members, except to the extent
permitted by the Company Agreement.  To the extent loans have been made to
either of the Members, such loans have been properly authorized and documented
in the books and records of the Company.  The Company has not bought or held
evidence of indebtedness issued by either of the Members.

The Company has allocated fairly and reasonably any overhead expenses shared
with either of the Members, including paying for office space and activities
performed by any employee of the Company.

The Company has not acquired an interest in the ownership of either of the
Members.

The Company has had indices of separateness from any other person or entity such
as bank accounts, if any, and employees, as and if required.

 

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The Company has held itself out as a separate entity and has not identified
itself as a division of either of the Members as a division of the Company.  The
Company has corrected any known misunderstanding regarding its separate
identity.

The Company has not made or controlled decisions regarding the day-to-day
operations or business of either of the Members and has not acted on behalf of
either of the Members.  The Company has not voluntarily merged, consolidated or
convened into or with either of the Members.

 

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Exhibit 1-B

Retail Partners Limited Partnership (the “Company”) makes the following
representations and warranties concerning the Company’s conduct:

The Company is a limited partnership formed under the laws of the State of
Illinois and operated pursuant to its partnership agreement and all amendments
thereto (as amended, the “Partnership Agreement”).  The Company has observed all
applicable legal formalities and procedures required by the Partnership
Agreement, the laws of the State of Illinois and the laws of any other state or
jurisdiction, to the extent it has done business outside the United States, in
which the Company has done business, as such formalities, procedures and law
relate to the separateness of the Company from any other person or entity.  The
Company has maintained its existence in good standing and/or in full force and
effect under the laws of the State of Illinois, as well as in any other state or
jurisdiction in which it is so required.  The Company has been qualified and
authorized to do business in each state in which the conduct of its business so
requires.

The Company has acted solely in accordance with and has complied with the
provisions of the Partnership Agreement as such provisions relate to
separateness of the Company from any other person or entity.

The business of the Company has been conducted by its Partner(s) and Officer(s)
(the “Partners and Officers”), or any authorized substitutes for such persons or
entities as permitted by the Partnership Agreement and all applicable state
law.  The Partners and Officers have duly authorized all of the actions
heretofore taken by the Company to the extent such actions are required to be
authorized by the Partners and the Officers.  The Partners and Officers, when
acting in such capacity, have acted in the best interests of the Company,
consistent with their fiduciary duties to the Company to the extent such duties
are created by applicable state law.  The business of its partners or any of
their respective affiliates (the “Partners”) has not been conducted by the
Company.

The Company has maintained company and financial books and records separate from
those of the Partners.

The financial statements of the Company have been prepared and maintained using
the same method of accounting used for the preparation of income tax returns or
in accordance with generally accepted accounting principles.  The Company’s
financial statements have not been prepared or maintained on a consolidated
basis with those of any of the Partners. The Company has maintained financial
statements separate from the financial statements of any of the Partners,
showing its assets and liabilities separate and apart from those of any of the
Partners and accurately portraying the financial condition, assets and
liabilities of the Company.  No assets or liabilities of any of the Partners
have been set forth on the financial statements of the Company.

The Company has conducted its business solely in its own name and in accordance
with the provisions of the Partnership Agreement and all amendments thereto. 
The Company has entered into its own contracts in its own name and has used its
own name for purposes of obtaining any required registrations, licenses and
permits (whether governmental, administrative or otherwise) necessary to the
conduct of its own business.  Without limiting the generality of the foregoing,
all

 

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oral and written communications, including, without limitation, letters
contracts, statements and applications, have been made solely in the name of the
Company, if they relate solely to the Company.

The Company has recognized at all times that it owns no interest in the property
of any of the Partners and has not represented that it owns an interest in the
property of any of the Partners.

All transactions, if any, between the Company and any of the Partners have been
duly authorized and documented, and have been recorded accurately in the
appropriate books and records of the Company.  All such transactions have been
fair to each party, have constituted exchanges for fair consideration and for
fair and reasonably equivalent value, have been based on commercially reasonable
terms, and have been made in good faith, without any intent to hinder, delay, or
defraud creditors of any of the parties.

The Company’s capitalization has been adequate in light of its business and
purpose.  The Company has not engaged in a business for which the property of
such entity represents an inadequate amount of capital.

The Company has acted solely through its Partners and Officers or its duly
authorized agents or representatives in the conduct of its business, and has not
permitted any of the Partners to act on its behalf, except as may be permitted
by the terms of the Partnership Agreement and by the laws of any state in which
it is conducting business and organized.

The Company has not commingled its assets or liabilities with those of any of
the Partners.  The Company has kept its assets and liabilities separately
identifiable and distinguishable from the assets and liabilities of any other
entity.

The Company has not transferred any assets to any of the Partners, nor has the
Company made any contributions, payments or distributions to any of the
Partners, except as authorized by the Partnership Agreement and all applicable
federal and state law.  To the extent distributions or payments have been made
to any of the Partners, such distributions and/or payments have been properly
authorized and documented in the books and records of the Company.  The Company
has not permitted any of the Partners to transfer any of its assets or make any
contributions to the Company, except as authorized by the Partnership Agreement
and all amendments thereto.

The Company has not financed the operations of any of the Partners, and the
Company has not permitted any of the Partners to finance the operations of the
Company, except as authorized by the Partnership Agreement.  The Company has not
executed or assumed any document purporting to guarantee payment of any note or
purporting to guarantee the performance of any document executed or assumed by
any of the Partners.  The Company has not held itself, its assets or its
creditworthiness out as being available for payment of any of its Partners’
liabilities.  The Company has not made any representations to any creditors of
any of the Partners to induce them to rely on the assets or the credit of the
Company and to the Company’s knowledge, no creditor is relying on the assets or
the credit of the Company with respect to liabilities of any of the Partners.

 

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The Company has not made any representations to any of its own creditors to
induce them to rely on the assets or the credit of any of the Partners with
respect to liabilities of the Company, and to the Company’s knowledge, no
creditor is relying on the assets or the credit of any of the Partners with
respect to liabilities of the Company.

To the extent the Company has accounts (bank, investment or otherwise) and
employees, as required, the Company has maintained its own accounts and
employees separately and apart from any accounts or employees of any of the
Partners.  The Company has maintained a sufficient number of employees, as and
if required, in light of its business operations.

The Company has not represented that any of the Partners owns an interest in the
property of the Company.  All property owned by the Company has been owned in
the name of the Company and all documents of title to any property have
reflected the ownership of the Company.

None of the Company’s liabilities have been paid from the funds of any of the
Partners, and the Company has not paid liabilities of the Partners from its
funds.

The Company has not pledged any of its assets for the benefit of any of the
Partners.

When the Company was formed, it satisfied all of the requirements of
organization of the state in which it was formed.

The Company has not acquired any of the obligations of any of the Partners, and
the Company has not permitted any of the Partners to acquire any obligations of
the Company or to buy or hold evidence of indebtedness issued by the Company
except as permitted under the Partnership Agreement.

The Company has not made loans to any of the Partners, except to the extent
permitted by the Partnership Agreement.  To the extent loans have been made to
any of the Partners, such loans have been properly authorized and documented in
the books and records of the Company.  The Company has not bought or held
evidence of indebtedness issued by any of the Partners.

The Company has allocated fairly and reasonably any overhead expenses shared
with any of the Partners, including paying for office space and activities
performed by any employee of the Company.

The Company has not acquired an interest in the ownership of any of the
Partners.

The Company has had indices of separateness from any other person or entity such
as bank accounts, if any, and employees, as and if required.

The Company has held itself out as a separate entity and has not identified
itself as a division of any of the Partners.  The Company has corrected any
known misunderstanding regarding its separate identity.

 

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The Company has not made or controlled decisions regarding the day-to-day
operations or business of any of the Partners and has not acted on behalf of any
of the Partners.  The Company has not voluntarily merged, consolidated or
convened into or with any of the Partners.

 

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Exhibit 1-C

Retail Partners, Inc. (the “Company”) makes the following representations and
warranties concerning the Company’s conduct:

The Company is a corporation formed under the laws of the State of Illinois and
operated pursuant to its organizational documents and all amendments thereto (as
amended, the “Articles”).  The Company has observed all applicable legal
formalities and procedures required by the Articles, the laws of the State of
Illinois and the laws of any other state or jurisdiction, to the extent it has
done business outside the United States, in which the Company has done business,
as such formalities, procedures and law relate to the separateness of the
Company from any other person or entity.  The Company has maintained its
existence in good standing and/or in full force and effect under the laws of the
State of Illinois, as well as in any other state or jurisdiction in which it is
so required.  The Company has been qualified and authorized to do business in
each state in which the conduct of its business so requires.

The Company has acted solely in accordance with and has complied with the
provisions of the Articles as such provisions relate to separateness of the
Company from any other person or entity.

The business of the Company has been conducted by its directors and officers
(the “Directors and Officers”), or any authorized substitutes for such persons
or entities as permitted by the Articles and all applicable state law.  The
Directors and Officers have duly authorized all of the actions heretofore taken
by the Company to the extent such actions are required to be authorized by the
Directors and the Officers.  The Directors and Officers, when acting in such
capacity, have acted in the best interests of the Company, consistent with their
fiduciary duties to the Company to the extent such duties are created by
applicable state law.  The business of its equity holders or any of their
respective affiliates (the “Equityholders”) has not been conducted by the
Company.

The Company has maintained company and financial books and records separate from
those of the Equityholders.

The financial statements of the Company have been prepared and maintained using
the same method of accounting used for the preparation of income tax returns or
in accordance with generally accepted accounting principles.  The Company’s
financial statements have not been prepared or maintained on a consolidated
basis with those of any of the Equityholders. The Company has maintained
financial statements separate from the financial statements of any of the
Equityholders, showing its assets and liabilities separate and apart from those
of any of the Equityholders and accurately portraying the financial condition,
assets and liabilities of the Company.  No assets or liabilities of any of the
Equityholders have been set forth on the financial statements of the Company.

The Company has conducted its business solely in its own name and in accordance
with the provisions of the Articles and all amendments thereto.  The Company has
entered into its own contracts in its own name and has used its own name for
purposes of obtaining any required registrations, licenses and permits (whether
governmental, administrative or otherwise) necessary to

 

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the conduct of its own business.  Without limiting the generality of the
foregoing, all oral and written communications, including, without limitation,
letters contracts, statements and applications, have been made solely in the
name of the Company, if they relate solely to the Company.

The Company has recognized at all times that it owns no interest in the property
of any of the Equityholders and has not represented that it owns an interest in
the property of any of the Equityholders.

All transactions, if any, between the Company and any of the Equityholders have
been duly authorized and documented, and have been recorded accurately in the
appropriate books and records of the Company.  All such transactions have been
fair to each party, have constituted exchanges for fair consideration and for
fair and reasonably equivalent value, have been based on commercially reasonable
terms, and have been made in good faith, without any intent to hinder, delay, or
defraud creditors of any of the parties.

The Company’s capitalization has been adequate in light of its business and
purpose.  The Company has not engaged in a business for which the property of
such entity represents an inadequate amount of capital.

The Company has acted solely through its Directors and Officers or its duly
authorized agents or representatives in the conduct of its business, and has not
permitted any of the Equityholders to act on its behalf, except as may be
permitted by the terms of the Articles and by the laws of any state in which it
is conducting business and organized.

The Company has not commingled its assets or liabilities with those of any of
the Equityholders.  The Company has kept its assets and liabilities separately
identifiable and distinguishable from the assets and liabilities of any other
entity.

The Company has not transferred any assets to any of the Equityholders, nor has
the Company made any contributions, payments or distributions to any of the
Equityholders, except as authorized by the Articles and all applicable federal
and state law.  To the extent distributions or payments have been made to any of
the Equityholders, such distributions and/or payments have been properly
authorized and documented in the books and records of the Company.  The Company
has not permitted any of the Equityholders to transfer any of its assets or make
any contributions to the Company, except as authorized by the Articles and all
amendments thereto.

The Company has not financed the operations of any of the Equityholders, and the
Company has not permitted any of the Equityholders to finance the operations of
the Company, except as authorized by the Articles.  The Company has not executed
or assumed any document purporting to guarantee payment of any note or
purporting to guarantee the performance of any document executed or assumed by
any of the Equityholders.  The Company has not held itself, its assets or its
creditworthiness out as being available for payment of any of the Equityholders
‘ liabilities.  The Company has not made any representations to any creditors of
any of the Equityholders to induce them to rely on the assets or the credit of
the Company and to the Company’s knowledge, no creditor is relying on the assets
or the credit of the Company with respect to liabilities of any of the
Equityholders.

 

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The Company has not made any representations to any of its own creditors to
induce them to rely on the assets or the credit of any of the Equityholders with
respect to liabilities of the Company, and to the Company’s knowledge, no
creditor is relying on the assets or the credit of any of the Equityholders with
respect to liabilities of the Company.

To the extent the Company has accounts (bank, investment or otherwise) and
employees, as required, the Company has maintained its own accounts and
employees separately and apart from any accounts or employees of any of the
Equityholders.  The Company has maintained a sufficient number of employees, as
and if required, in light of its business operations.

The Company has not represented that any of the Equityholders owns an interest
in the property of the Company.  All property owned by the Company has been
owned in the name of the Company and all documents of title to any property have
reflected the ownership of the Company.

None of the Company’s liabilities have been paid from the funds of any of the
Equityholders, and the Company has not paid liabilities of the Equityholder from
its funds.

The Company has not pledged any of its assets for the benefit of any of the
Equityholders.

When the Company was formed, it satisfied all of the requirements of
organization of the state in which it was formed.

The Company has not acquired any of the obligations of any of the Equityholders,
and the Company has not permitted any of the Equityholders to acquire any
obligations of the Company or to buy or hold evidence of indebtedness issued by
the Company except as permitted under the Articles.

The Company has not made loans to any of the Equityholders, except to the extent
permitted by the Articles.  To the extent loans have been made to any of the
Equityholders, such loans have been properly authorized and documented in the
books and records of the Company.  The Company has not bought or held evidence
of indebtedness issued by any of the Equityholders.

The Company has allocated fairly and reasonably any overhead expenses shared
with any of the Equityholders, including paying for office space and activities
performed by any employee of the Company.

The Company has not acquired an interest in the ownership of any of the
Equityholders.

The Company has had indices of separateness from any other person or entity such
as bank accounts, if any, and employees, as and if required.

 

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The Company has held itself out as a separate entity and has not identified
itself as a division of any of the Equityholders as a division of the Company. 
The Company has corrected any known misunderstanding regarding its separate
identity.

The Company has not made or controlled decisions regarding the day-to-day
operations or business of any of the Equityholders and has not acted on behalf
of any of the Equityholders .  The Company has not voluntarily merged,
consolidated or convened into or with any of the Equityholders.

 

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