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                                  EXHIBIT 10.56

                               COMMERCIAL MORTGAGE

AFTER RECORDING, RETURN TO:               PREPARED BY:
Beal Bank, S.S. B.                        Jenkens & Gilchrist
6000 Legacy Drive                         1445 Ross Avenue, Suite 3200
4 East                                    Dallas, Texas  75202-2799
Plano, Texas 75024                        Attn: Lawrence C. Adams, Esq.
Attn: William T. Saurenmann

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                                                 [Clerk's Recording Information]
THIS IS A FUTURE ADVANCE MORTGAGE UNDER ACT 348 OF THE MICHIGAN PUBLIC ACTS OF
1990, AS AMENDED.

     THIS COMMERCIAL MORTGAGE (herein this "Instrument") is made effective as of
July 10, 2002, by the Mortgagor, MONROE OUTLET CENTER, LLC, a Michigan limited
liability company, whose address is77 West Wacker Drive, Suite 4200, Chicago,
Illinois 60601 (herein "Borrower"), in favor of and for the benefit of
Mortgagee, BEAL BANK, S.S.B., a savings bank organized under the laws of the
State of Texas, whose address is 6000 Legacy Drive, 4 East, Plano, Texas 75024
(herein "Beal").

     Borrower, in consideration of the indebtedness herein recited, irrevocably
mortgages and warrants, grantsand conveys to Beal, WITH POWER OF SALE, all of
Borrower's estate, right, title and interest, now owned or hereafter acquired,
including any reversion or remainder interest, in the real property located in
Monroe County, Michigan, more particularly described on EXHIBIT A attached
hereto and incorporated herein, including all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements, rights,
appurtenances, tenements, hereditaments, rents, royalties, mineral, oil and gas
rights and profits, water, water rights, and water stock appurtenant to the
property (collectively, the "Premises");

     TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:

     (1)  all buildings, structures, improvements, parking areas, landscaping,
equipment, fixtures and articles of property now or hereafter erected on,
attached to, or used or adapted for use in the operation of the Premises;
including but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings,

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underpadding, elevators, escalators, partitions, mantels, built-in mirrors,
window shades, blinds, draperies, screens, storm sash, awnings, signs,
furnishings of public spaces, halls and lobbies, and shrubbery and plants, and
including also all interest of any owner of the Premises in any of such items
hereafter at any time acquired under conditional sale contract, chattel mortgage
or other title retaining or security instrument, all of which property mentioned
in this clause (a) shall be deemed part of the realty covered by this Instrument
and not severable wholly or in part without material injury to the freehold of
the Premises (all of the foregoing together with replacements and additions
thereto are referred to herein as "Improvements"); and

     (2)  all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of all or any
part of the Premises or the Improvements thereon by reason of any public or
private improvement, condemnation proceeding (including change of grade), sale
or transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the Improvements
for any reason whatsoever; and

     (3)  return premiums or other payments upon any insurance any time provided
for the benefit of or naming Beal, and refunds or rebates of taxes or
assessments on all or any part of the Premises; and

     (4)  all the right, title and interest of Borrower in, to and under all
written and oral leases and rental agreements (including extensions, renewals
and subleases; all of the foregoing shall be referred to collectively herein as
the "Leases") now or hereafter affecting all or any part of the Premises
including, without limitation, all rents, issues, profits and other revenues and
income therefrom and from the renting, leasing or bailment of all or any part of
the Improvements and equipment, all guaranties of tenants' performance under the
Leases, and all rights and claims of any kind that Borrower may have against any
tenant under the Leases or in connection with the termination or rejection of
the Leases in a bankruptcy or insolvency proceeding; and the leasehold estate in
the event this Instrument is on a leasehold; and

     (5)  plans, specifications, contracts and agreements relating to the design
or construction of all or any part of the Improvements; Borrower's rights under
any payment, performance, or other bond in connection with the design or
construction of all or any part of the Improvements; all landscaping and
construction materials, supplies, and equipment used or to be used or consumed
in connection with construction of the Improvements, whether stored on the
Premises or at some other location; and contracts, agreements, and purchase
orders with contractors, subcontractors, suppliers, and materialmen incidental
to the design or construction of all or any part of the Improvements; and

     (6)  all contracts, accounts, rights, claims or causes of action pertaining
to or affecting all or any part of the Premises or the Improvements, including,
without limitation, all options or contracts to acquire other property for use
in connection with operation or development of all or any part of the Premises
or the Improvements, management contracts, service or supply contracts,
deposits, bank accounts, general intangibles (including without limitation
trademarks, trade names and symbols), permits, licenses, franchises and
certificates, and all commitments or agreements, now or hereafter in existence,
intended by the obligor thereof to provide Borrower with proceeds to satisfy

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the loan evidenced hereby or improve all or any part of the Premises or the
Improvements, and the right to receive all proceeds due under such commitments
or agreements including refundable deposits and fees (the term "general
intangibles" as used in this paragraph shall have the meaning given such term in
the Uniform Commercial Code-Secured Transactions of the state where the Premises
is located); and

     (7)  all books, records, surveys, reports and other documents related to
all or any part of the Premises, the Improvements, the Leases, or other items of
collateral described herein; and

     (8)  all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.

     All of the foregoing described collateral is exclusive of any furniture,
furnishings or trade fixtures owned and supplied by tenants of the Premises. The
Premises, the Improvements, the Leases and all of the rest of the foregoing
property are herein referred to as the "Property."

     TO SECURE TO Beal (a) the repayment of the indebtedness evidenced by (i)
that certain Promissory Note I, in the stated principal amount of $3,000,000.00
and (ii) that certain Promissory Note II, in the stated principal amount of
$4,000,000.00, each dated of even date herewith, each executed by Borrower and
each payable to the order of Beal, with interest thereon as set forth therein,
and all renewals, extensions and modifications of either thereof (herein
individually, a "Note", and collectively, the "Notes"), and with a final
maturity date of July 10, 2005 (the "Maturity Date"); (b) the repayment of any
future advances, with interest thereon, made by Beal to Borrower pursuant to
SECTION 29 hereof (herein "Future Advances"); (c) the payment of all other sums,
with interest thereon, advanced in accordance herewith to protect the security
of this Instrument or to fulfill any of Borrower's obligations hereunder or
under the other Loan Documents (as defined below); (d) the performance of the
covenants and agreements of Borrower contained herein or in the other Loan
Documents; (e) the repayment of all sums now or hereafter owing to Beal by
Borrower pursuant to any instrument which recites that it is secured hereby; and
(f) the repayment of all other sums now or hereafter owing to Beal by Borrower
(the indebtedness described in clause (f) is collectively called the "Other
Loans"). The indebtedness and obligations described in clauses (a)-(f) above are
collectively referred to herein as the "Indebtedness." The Notes, this
Instrument, and all other documents evidencing, securing or guarantying the
Indebtedness, as the same may be modified or amended from time to time,
including, without limitation, that certain Commercial Mortgage, of even date
herewith, executed by Borrower for the benefit of Beal and encumbering certain
property located in Muskegon County, Michigan, that certain Collateral
Assignment of Sales Contracts, of even date herewith, executed by Borrower for
the benefit of Beal, that certain letter agreement concerning post closing
matters, of even date herewith, by and between Borrower and Beal, that certain
Assignment of Landlord's Interest in Leases (the "Lease Assignment"), of even
date herewith, executed by Borrower for the benefit of Beal, that certain
Guaranty Agreement, of even date herewith, executed by Horizon Group Properties,
Inc., Horizon Group Properties, L.P. and Prime Retail, L.P. for the benefit of
Beal, and that certain Collateral Assignment, of even date herewith, executed by
Horizon Group Properties, L.P. for the benefit of Beal, are referred to herein
as the "Loan Documents." The terms of the Notes secured hereby provide that the
interest rate or payment terms or balance due may be indexed, adjusted, renewed,
or renegotiated from time to time, and this

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Instrument shall continue to secure the Notes notwithstanding any such indexing,
adjustment, renewal or renegotiation.

     Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents and leases (or, if this Instrument
is on a leasehold, good, marketable and insurable title to, and the right to
convey and mortgage the leasehold estate and that the ground lease is in full
force and effect without modification except as noted above and without default
on the part of either lessor or lessee thereunder), and the right to convey and
mortgage the other Property, that the Property is unencumbered except for the
matters set forth on EXHIBIT B attached to and made a part of this Instrument
(the "Permitted Encumbrances"), and that Borrower will warrant and forever
defend unto Beal the title to the Property against all claims and demands,
subject only to the Permitted Encumbrances set forth in EXHIBIT B attached
hereto.

     Borrower represents, warrants, covenants and agrees for the benefit of Beal
as follows:

     1.   PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when
due the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this
Instrument.

     2.   FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. At Beal's sole option,
Borrower shall pay to Beal on or before the first day of each month, in addition
to each monthly payment on the Notes, one-twelfth (1/12) of the annual real
estate taxes, insurance premiums, assessments, water and sewer rates, ground
rents and other charges (herein "Impositions") payable with respect to the
Property (as estimated by Beal in its sole discretion), to be held by Beal in an
interest bearing account, for the payment of any Impositions.

     If the amount of such additional payments held by Beal ("Funds") at the
time of the annual accounting thereof shall exceed the amount deemed necessary
by Beal to provide for the payment of Impositions as they fall due, such excess
shall be at Borrower's option, either repaid to Borrower or credited to Borrower
on the next monthly installment or installments of Funds due. If at any time the
amount of the Funds held by Beal shall be less than the amount deemed necessary
by Beal to pay Impositions as they fall due, Borrower shall pay to Beal any
amount necessary to make up the deficiency within thirty (30) days after notice
from Beal to Borrower requesting payment thereof.

     Upon the occurrence of and during the continuance of any Event of Default,
Beal may apply, in any amount and in any order as Beal shall determine in Beal's
sole discretion, any Funds held by Beal at the time of application (a) to pay
Impositions which are now or will hereafter become due, or (b) as a credit
against sums secured by this Instrument. Upon payment in full of all sums
secured by this Instrument, Beal shall refund to Borrower any Funds held by
Beal.

     3.   APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
each complete installment payment received by Beal from Borrower under either
Note or this Instrument shall be applied by Beal first in payment of amounts
payable to Beal by Borrower under SECTION 2 hereof, then to interest payable on
the Notes, then to principal of the Notes (on a pro rata basis based

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on the respective principal balances of each Note compared to the aggregate
principal balance of both Notes), and then to interest and principal on any
Future Advances in such order as Beal, at Beal's sole discretion, shall
determine; provided, however, upon the occurrence and during the continuance of
any Event of Default, Beal may apply, in any amount and in any order as Beal
shall determine in Beal's sole discretion, any payments received by Beal under
either Note, this Instrument or any other Loan Document.

     4.   CHARGES, LIENS. Borrower shall pay all Impositions attributable to the
Property in the manner provided under SECTION 2 hereof or, if not paid in such
manner, by Borrower making payment, before same shall become delinquent or
subject to interest or other charge, directly to the payee thereof, or in such
other manner as Beal may designate in writing. If requested by Beal, Borrower
shall promptly furnish to Beal all notices of Impositions which become due, and
in the event Borrower shall make payment directly, Borrower shall promptly
furnish to Beal receipts evidencing such payments. Borrower shall promptly
discharge any lien which has, or may have, priority over or equality with, the
lien of this Instrument, and Borrower shall pay, when due, the claims of all
persons supplying labor or materials to or in connection with the Property.
Without Beal's prior written consent, which may be granted or withheld at the
sole discretion of Beal, Borrower shall not allow any lien other than this
Instrument to be perfected against any of the Property. If any lien other than
this Instrument is filed against any of the Property without Beal's prior
written consent and without the consent of Borrower, Borrower shall, within
thirty (30) days after receiving notice of the filing of such lien, cause such
lien to be released of record and deliver evidence of such release to Beal.

     5.   INSURANCE. Borrower shall obtain and maintain the following types of
insurance upon and relating to the Property:

          (1)    "All Risk" property and fire insurance (with extended coverage
                 endorsement including malicious mischief and vandalism) in an
                 amount not less than the full replacement value of the Property
                 (with a deductible not to exceed $10,000), naming Beal under a
                 lender's loss payee endorsement (form 438BFU or equivalent) and
                 including agreed amount, inflation guard, replacement cost and
                 waiver of subrogation endorsements;

          (2)    Comprehensive general liability insurance in an amount not less
                 than $2,000,000.00 insuring against personal injury, death and
                 property damage and naming Beal as additional insured;

          (3)    Business interruption insurance covering loss of rental or
                 other income (including all expenses payable by tenants) for up
                 to twelve (12) months; and

          (4)    Such other types of insurance or endorsements to existing
                 insurance as may be required from time to time by Beal in the
                 exercise of its reasonable business judgment.

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     Upon each request of Beal, in the exercise of its reasonable business
judgment, Borrower shall increase the coverages under any of the insurance
policies required to be maintained hereunder or otherwise modify such policies
in accordance with Beal's request. All of the insurance policies required
hereunder shall be issued by corporate insurers licensed to do business in the
state in which the Property is located and rated A:X or better by A.M. Best
Company, and shall be in form acceptable to Beal. If and to the extent that the
Property is located within an area that has been or is hereafter designated or
identified as an area having special flood hazards by the Department of Housing
and Urban Development or such other official as shall from time to time be
authorized by federal or state law to make such designation pursuant to any
national or state program of flood insurance, Borrower shall carry flood
insurance with respect to the Property in amounts not less than the maximum
limit of coverage then available with respect to the Property or the amount of
the Indebtedness, whichever is less. Certificates of all insurance required to
be maintained hereunder shall be delivered to Beal, along with evidence of
payment in full of all premiums required thereunder, contemporaneously with
Borrower's execution of this Instrument. All such certificates shall be in form
acceptable to Beal and shall require the insurance company to give to Beal at
least thirty (30) days' prior written notice before canceling the policy for any
reason or materially amending it. Certificates evidencing all renewal and
substitute policies of insurance shall be delivered to Beal, along with evidence
of the payment in full of all premiums required thereunder, at least thirty (30)
days before termination of the policies being renewed or substituted. If any
loss shall occur at any time when Borrower shall be in default hereunder, Beal
shall be entitled to the benefit of all insurance policies held or maintained by
Borrower, to the same extent as if same had been made payable to Beal, and upon
foreclosure hereunder, Beal shall become the owner thereof. Beal shall have the
right, but not the obligation, to make premium payments, at Borrower's expense,
to prevent any cancellation, endorsement, alteration or reissuance of any policy
of insurance maintained by Borrower, and such payments shall be accepted by the
insurer to prevent same.

     If any act or occurrence of any kind or nature (including any casualty for
which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to Beal. All insurance proceeds paid or
payable in connection with any Loss shall be paid to Beal. If (i) no Event of
Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to Beal of its ability to pay all amounts becoming due
under the Notes during the pendency of any restoration or repairs to or
replacement of the Property, (iii) the available insurance proceeds are, in
Beal's judgment, sufficient to fully and completely restore, repair or replace
the Property and (iv) Borrower provides evidence satisfactory to Beal that no
more than an immaterial number of the tenants of the Property (as determined by
Beal in the exercise of its reasonable business judgment) will terminate their
lease agreements as a result of either the Loss or the repairs to or replacement
of the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss (and if Borrower elects to so use the proceeds,
they will be held by Beal and funded as work is completed upon satisfaction of
such conditions relating thereto as Beal shall require), or (b) subject to the
restrictions on prepayment set forth in the Notes, to the payment of the
Indebtedness in such order as Beal may elect. If an Event of Default has
occurred and is continuing hereunder at the time of such Loss, or if Beal
determines that Borrower will be unable to pay all amounts becoming due under
the Note during the pendency of any

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restoration or repairs to or replacement of the Property, or if the available
insurance proceeds are insufficient, in Beal's judgment, to fully and completely
restore, repair or replace the Property, or if Beal believes that a material
number of the tenants of the Property (as determined by Beal in the exercise of
its reasonable business judgment) will terminate their lease agreements as a
result of either the Loss or the repairs to or replacement of the Property, then
all of the insurance proceeds payable with respect to such Loss will be applied
to the payment of the Indebtedness, or if so instructed by Beal, Borrower will
promptly, at Borrower's sole cost and expense and regardless of whether
sufficient insurance proceeds shall be available, commence to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition,
character immediately prior to such Loss. Borrower shall diligently prosecute
any restoration, repairs or replacement of the Property undertaken by or on
behalf of Borrower pursuant to this SECTION 5. All such work shall be conducted
pursuant to written contracts approved by Beal in writing. Notwithstanding
anything contained herein to the contrary, in the event the insurance proceeds
received by Beal following any Loss are insufficient in Beal's judgment to fully
and completely restore, repair or replace the Property, and if Borrower has
complied with all of the other conditions described in this SECTION 5, Borrower
may elect to restore, repair or replace the Property if it first deposits with
Beal such additional sums as Beal determines are necessary in order to fully and
completely restore, repair or replace the Property. In the event any insurance
proceeds remain following the restoration, repair or replacement of the
Property, such proceeds shall be applied to the Indebtedness in such order as
Beal may elect.

     6.   PRESERVATION AND MAINTENANCE OF THE PROPERTY; LEASEHOLDS. Borrower (a)
shall not commit waste or permit impairment or deterioration of the Property,
(b) shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all or any part of the Property to the equivalent
of its original condition, or such other condition as Beal may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover, in whole or in part, the costs of
such restoration or repair, (d) shall keep the Property, including all
improvements, fixtures, equipment, machinery and appliances thereon, in good
repair and shall replace fixtures, equipment, machinery and appliances on the
Property when necessary to keep such items in good repair, and shall not
construct or modify any improvements of a material nature on any of the Property
without the prior written consent of Beal, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
Beal, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to Beal pursuant to a contract approved by Beal in writing,
unless such requirement shall be waived by Beal in writing, (g) shall generally
operate and maintain the Property in a manner to ensure maximum rentals, and (h)
shall give notice in writing to Beal of and, unless otherwise directed in
writing by Beal, appear in and defend any action or proceeding purporting to
affect the Property, the security of this Instrument or the rights or powers of
Beal hereunder. Neither Borrower nor any tenant or other person, without the
written approval of Beal, shall remove, demolish or alter any Improvement now
existing or hereafter erected on the Property or any fixture, equipment,
machinery or appliance in or on the Property except when incident to the
replacement of fixtures, equipment, machinery and appliances with items of like
kind.

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     Borrower represents, warrants and covenants that the Property is and shall
remain in compliance with the Americans with Disabilities Act of 1990, all
similar State of Michigan laws, all similar local codes and ordinances and all
of the regulations promulgated under or in regard to any thereof, as the same
may be amended from time to time.

     If this Instrument is on a leasehold, Borrower (i) shall comply with the
provisions of the ground lease, (ii) shall give immediate written notice to Beal
of any default by lessor under the ground lease or of any notice received by
Borrower from such lessor of any default by Borrower under the ground lease,
(iii) shall exercise any option to renew or extend the ground lease and give
written confirmation thereof to Beal within thirty (30) days after such option
becomes exercisable, (iv) shall give immediate written notice to Beal of the
commencement of any remedial proceedings under the ground lease by any party
thereto and, if required by Beal, shall permit Beal to control and act for
Borrower as Borrower's attorney-in-fact in any such remedial proceedings and (v)
shall within thirty (30) days after request by Beal obtain from the lessor under
the ground lease and deliver to Beal a lessor's estoppel certificate in form and
substance acceptable to Beal. Borrower hereby expressly transfers and assigns to
Beal the benefit of all covenants contained in the ground lease, whether or not
such covenants run with the land, but Beal shall have no liability with respect
to such covenants or any other covenants contained in the ground lease.

     Borrower shall neither surrender the leasehold estate or interests herein
conveyed nor terminate or cancel the ground lease creating said estate and
interests, and Borrower shall not, without the express written consent of Beal,
alter or amend said ground lease. There shall not be a merger of the ground
lease, or of the leasehold estate created thereby, with the fee estate covered
by the ground lease by reason of said leasehold estate or said fee estate, or
any part of either, coming into common ownership, unless Beal shall consent in
writing to such merger; if Borrower shall acquire such fee estate, then this
Instrument shall simultaneously and without further action be spread so as to
become a lien on such fee estate.

     Notwithstanding anything contained herein to the contrary, failure of
Borrower to pay any taxes, assessments or governmental charges levied or
assessed against the Property, or any part thereof, or any installment of any
such tax, assessment or charge, or any premium upon any such tax, assessment or
charge, or any premium upon any policy of insurance covering any part of the
Property, at the time or times such taxes, assessments, charges, installments
thereof or insurance premiums are due and payable, shall constitute waste, and
an Event of Default, and in accordance with the provisions of Act No. 236 of the
Public Acts of Michigan for 1961, as amended, shall entitle Beal to exercise the
remedies afforded by such Act. Payment by Beal for and on behalf of Borrower of
any such delinquent tax or insurance premium properly payable by Beal under the
terms of this Instrument, shall not cure the Event of Default herein described
nor shall it in any manner impair Beal's right to the appointment of a receiver
on account thereof. Upon the happening of any such acts of waste and on proper
application made therefor by Beal to a court of competent jurisdiction, Beal
shall forthwith be entitled to the appointment of a receiver of the Property and
of the earnings, income, issues and profits thereof, with such powers as the
court making such appointment shall confer; Borrower hereby irrevocably consents
to such appointment and waives notice of any application therefor.

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     7.   USE OF PROPERTY. Unless required by applicable law or unless Beal has
otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Borrower shall not, without Beal's prior written consent, which
may be granted or withheld at the sole discretion of Beal, (a) initiate or
acquiesce in a change in the zoning classification (including any variance under
any existing zoning ordinance applicable to any of the Property), (b) permit the
use of any of the Property to become a non-conforming use under applicable
zoning ordinances, (c) file any subdivision or parcel map affecting the
Property, (d) consent to or effect the annexation of any of the Property to any
city or other governmental unit or (e) amend, modify, consent to or file or
record any easement, covenants, conditions or restrictions pertaining to any of
the Property.

     8.   PROTECTION OF BEAL'S SECURITY. If Borrower fails to perform any of the
covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of Beal therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then Beal, at Beal's, option may make such appearances,
disburse such sums and take such action as Beal deems necessary, in its sole
discretion, to protect Beal's interest, including, but not limited to, (a)
disbursement of attorneys' fees, (b) entry upon the Property to make repairs,
(c) procurement of satisfactory insurance as provided in SECTION 5 hereof, (d)
exercise all rights and remedies available as the result of the occurrence of
any Event of Default, and/or (e) if this Instrument is on a leasehold, exercise
of any option to renew or extend the ground lease on behalf of Borrower and the
curing of any default of Borrower in the terms and conditions of the ground
lease.

     Any amounts disbursed by Beal pursuant to this SECTION 8, with interest
thereon, shall become additional Indebtedness of Borrower secured by this
Instrument. Unless Borrower and Beal agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the Default Rate set forth in the Notes. Borrower hereby
covenants and agrees that Beal shall be subrogated to the lien of any mortgage
or other lien discharged, in whole or in part, by the Indebtedness. Nothing
contained in this SECTION 8 shall require Beal to incur any expense or take any
action hereunder.

     9.   INSPECTION. Beal may from time to time make or cause to be made
entries upon the Property to inspect the interior and exterior thereof; however,
Beal will use reasonable efforts not to unreasonably interfere with the
activities of tenants of the Property.

     10.  FINANCIAL DATA.

          (1)    Borrower will furnish to Beal, and will cause each guarantor of
all or any part of the Indebtedness to furnish to Beal upon request, (i) within
ninety (90) days after the close of each calendar year, balance sheet and profit
and loss statements for the immediately preceding calendar year prepared in
accordance with generally accepted accounting principles and practices
consistently applied, certified as being true, correct and complete by the chief
financial officer or another senior officer (acceptable to Beal) of the subject
thereof and, if Beal so requires as to the financial statements of Horizon Group
Properties, Inc. and Prime Retail, L.P., accompanied by the annual audit report
of an independent certified public accountant reasonably acceptable to Beal,
(ii) within

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45 days following the end of each fiscal quarter of Borrower, quarterly
financial statements of Borrower and each guarantor of all or any part of the
Indebtedness, certified as true and correct by the subject thereof, (iii) within
20 days following the end of each month, operating statements for the
immediately preceding calendar month together with a complete rent roll and
other supporting data reflecting all material information with respect to the
operation of the Property and Improvements during the period covered thereby,
and (iv) all other financial information and reports that Beal may, from time to
time, reasonably request, including, if Beal so requires, income tax returns of
Borrower and any guarantor of the Indebtedness, and financial statements of any
tenant of all or any part of the Property designated by Beal.

     11.  CONDEMNATION. If the Property, or any part thereof, shall be condemned
for any reason, including, without limitation, fire or earthquake damage, or
otherwise taken for public or quasi-public use under the power of eminent
domain, or be transferred in lieu thereof, all damages or other amounts awarded
for the taking of, or injury to, the Property shall be paid to Beal, and Beal
shall have the right, in its sole and absolute discretion, to apply the amounts
so received against (a) the costs and expenses of Beal, including reasonable
attorneys' fees incurred in connection with collection of such amounts, and (b)
the balance against the Indebtedness; provided, however, that if (i) no Event of
Default shall have occurred and be continuing hereunder, (ii) Borrower provides
evidence satisfactory to Beal of its ability to pay all amounts becoming due
under the Notes during the pendency of any restoration or repairs to or
replacement of the Property, (iii) Beal determines, in its sole discretion, that
the proceeds of such award are sufficient to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such taking (or, if the proceeds of such award are
insufficient for such purpose, if Borrower provides additional sums to Beal's
satisfaction so that the aggregate of such sums and the proceeds of such award
will be sufficient for such purpose), and (iv) Borrower provides evidence
satisfactory to Beal that as a result of either the condemnation or taking or
the repairs to or replacement of the Property, no more than an immaterial number
of the tenants of the Property (as determined by Beal in the exercise of its
reasonable business judgment) will terminate their lease agreements, then the
proceeds of such award, together with additional sums provided by Borrower,
shall be placed in a separate account for the benefit of Beal and Borrower to be
used to restore, repair, replace and rebuild the Property as nearly as possible
to its value, condition and character immediately prior to such taking. All work
to be performed in connection therewith shall be pursuant to a written contract
therefor, which contract shall be subject to the prior approval of Beal. To the
extent that any funds remain after the Property has been so restored and
repaired, the same shall be applied against the Indebtedness in such order as
Beal may elect. To enforce its rights hereunder, Beal shall be entitled to
participate in and control any condemnation proceedings and to be represented
therein by counsel of its own choice, and Borrower will deliver, or cause to be
delivered to Beal such instruments as may be requested by Beal from time to time
to permit such participation. In the event Beal, as a result of any such
judgment, decree or award, believes that the payment or performance of any of
the Indebtedness is or shall be impaired, Beal may declare all of the
Indebtedness immediately due and payable.

     12.  BORROWER AND LIEN NOT RELEASED. From time to time, Beal may, at Beal's
option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on Beal's part and notwithstanding

                                       30
<Page>

Borrower's breach of any covenant or agreement of Borrower in this Instrument,
extend the time for payment of the Indebtedness or any part thereof, reduce the
payments thereon, release anyone liable on any of the Indebtedness, accept an
extension or modification or renewal note or notes therefor, modify the terms
and time of payment of the Indebtedness, release from the lien of this
Instrument any part of the Property, take or release other or additional
security, reconvey any part of the Property, consent to any map or plan of the
Property, consent to the granting of any easement, join in any extension or
subordination agreement, and agree in writing with Borrower to modify the rate
of interest or period of amortization of the Note or decrease the amount of the
monthly installments payable thereunder. Any actions taken by Beal pursuant to
the terms of this SECTION 12, except to the extent any of the following are
modified pursuant to any agreement executed by Beal, shall not affect the
obligation of Borrower or Borrower's successors or assigns to pay the sums
secured by this Instrument and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the Indebtedness, and shall not affect the lien or
priority of the lien hereof on the Property. Borrower shall pay Beal a service
charge, together with such title insurance premiums and attorneys' fees as may
be incurred at Beal's option, for any such action if taken at Borrower's
request.

     13.  FORBEARANCE BY BEAL NOT A WAIVER. Any forbearance by Beal in
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by Beal of payment of any sum secured by this Instrument
after the due date of such payment shall not be a waiver of Beal's right to
either require prompt payment when due of all other sums so secured or to
declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by Beal shall not be
a waiver of Beal's right to accelerate the maturity of the Indebtedness secured
by this Instrument, nor shall Beal's receipt of any awards, proceeds or damages
under SECTIONS 5 OR 11 hereof operate to cure or waive Borrower's default in
payment of sums secured by this Instrument.

     14.  UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
intended to be a security and a fixture filing agreement pursuant to the Uniform
Commercial Code for any and all of the items specified above as part of the
Property which, under applicable law, may be subject to a security interest
pursuant to the Uniform Commercial Code, and Borrower hereby grants and conveys
to Beal a first and prior security interest in all of the Property that
constitutes personalty, whether now owned or hereafter acquired. Borrower is the
debtor and Beal is the secured party. The respective addresses of Borrower and
of Beal are as provided on page 1 of this Instrument. Borrower hereby authorizes
Beal to file this Instrument, or a reproduction thereof, and any other financing
statements describing the Property which are deemed necessary by Beal, in the
real estate records and other appropriate indexes as determined by Beal, as a
financing statement for any of the items specified above as part of the
Property. Any reproduction of this Instrument or of any other security agreement
or financing statement shall be sufficient as a financing statement. In
addition, Borrower agrees to execute and deliver to Beal, upon Beal's request,
any additional financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Instrument in such form as Beal
may require to perfect a security interest with respect to the foregoing items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all costs
and expenses of any record

                                       31
<Page>

searches for financing statements Beal may require. Without the prior written
consent of Beal, Borrower shall not create or suffer to be created pursuant to
the Uniform Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon Borrower's breach of any covenant or
agreement of Borrower contained in this Instrument, including the covenants to
pay when due all sums secured by this Instrument, Beal shall have the remedies
of a secured party under the Uniform Commercial Code, and Beal also may invoke
the remedies provided in SECTION 26 of this Instrument as to such items. In
exercising any of said remedies, Beal may proceed against the items of real
property and any items of personal property specified above, separately or
together, and in any order whatsoever, without in any way affecting the
availability of Beal's remedies under the Uniform Commercial Code or of the
remedies provided in SECTION 26 of this Instrument. Within ten (10) days
following any request therefor by Beal, Borrower shall prepare and deliver to
Beal a written inventory specifically listing all of the personal property
covered by the security interest herein granted, which inventory shall be
certified by Borrower as being true, correct and complete.

     15.  LEASES OF THE PROPERTY. As used in this SECTION 15, the word "Lease"
shall include subleases if this Instrument is on a leasehold. Borrower shall
comply with and observe Borrower's obligations as landlord under all Leases of
the Property or any part thereof. All Leases now or hereafter entered into will
be in form and substance subject to the approval of Beal in accordance with the
Lease Assignment. All Leases of the Property shall specifically provide that
such Leases are subordinate to this Instrument; that the tenant attorns to Beal,
such attornment to be effective upon Beal's acquisition of title to the
Property; that the tenant agrees to execute such further evidences of attornment
as Beal may, from time to time, request; that the attornment of the tenant shall
not be terminated by foreclosure; and that Beal may, at Beal's option, accept or
reject such attornments. Borrower shall not, without Beal's written consent,
request or consent to the subordination of any Lease of all or any part of the
Property to any lien subordinate to this Instrument. If Borrower becomes aware
that any tenant proposes to do, or is doing, any act or thing which may give
rise to any right of set-off against rent, Borrower shall (a) take such steps as
shall be reasonably calculated to prevent the accrual of any right to a set-off
against rent, (b) immediately notify Beal thereof in writing and of the amount
of said set-offs, and (c) within ten (10) days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall effectively discharge such setoff and as shall assure that rents
thereafter due shall continue to be payable without set-off or deduction. Upon
Beal's receipt of notice of the occurrence of any default or violation by
Borrower of any of its obligations under the Leases, Beal shall have the
immediate right, but not the duty or obligation, without prior written notice to
Borrower or to any third party, to enter upon the Property and to take such
actions as Beal may deem necessary to cure any default or violation by Borrower
under the Leases. The costs incurred by Beal in taking any such actions pursuant
to this SECTION 15 shall become part of the Indebtedness, shall bear interest at
the Default Rate provided in the Notes, and shall be payable by Borrower to Beal
on demand. Beal shall have no liability to Borrower or to any third party for
any actions taken by Beal or not taken pursuant to this SECTION 15.

     16.  REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.

                                       32
<Page>

     17.  TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
ASSUMPTION. Beal may, at its option, declare all sums secured by this Instrument
to be immediately due and payable, and Beal may invoke any remedies permitted by
SECTION 26 of this Instrument, if title to any of the Property is changed
without the prior written consent of Beal, which consent shall be at Beal's sole
discretion. Any transfer of any interest in any of the Property or in the income
therefrom, by sale, lease (except for leases to tenants in the ordinary course
of managing income producing property which are consented to by Beal pursuant to
SECTION 15 of this Instrument or pursuant to that certain Assignment of
Landlord's Interest in Leases, of even date herewith, executed by Borrower for
the benefit of Beal and which constitutes a Loan Document), contract, mortgage,
deed of trust, further encumbrance or otherwise (including any such transfers as
security for additional financing of the Property), and any change in or
transfer, assignment, hypothecation or pledge of any of the ownership interests
in Borrower (including any change in or transfer, assignment, hypothecation or
pledge of any of the ownership interests of any legal entities which comprise or
control Borrower), shall be considered a change of title. Without limitation of
Beal's right, in Beal's sole discretion, to grant or refuse its consent to any
transfer or change of title as described herein, Beal shall have the right to
condition its consent to any proposed sale or transfer described in this SECTION
17 upon, among other things, Beal's approval of the transferee's
creditworthiness and management ability, and the transferee's execution, prior
to the sale or transfer, of a written assumption agreement containing such terms
as Beal may require, including, if required by Beal, the imposition of a
transfer fee of one percent (1%) of the then outstanding balance of the
Indebtedness. Consent by Beal to one transfer of the Property shall not
constitute consent to subsequent transfers or waiver of the provisions of this
SECTION 17. No transfer by Borrower shall relieve Borrower of liability for
payment of the Indebtedness.

     18.  NOTICE. Except for any notice required under applicable law to be
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Instrument or under either Note or
any other Loan Document shall be in writing, and shall be delivered personally,
by telegram, or sent by registered, certified, or Express United States mail,
postage prepaid, or by Federal Express or similar service requiring a receipt,
to the other party at the address stated above, or to such other party and at
such other address within the United States of America to which certified or
registered mail may be sent and delivered as any party may designate in writing
as provided herein. The date of receipt of such notice, election, demand or
request shall be the earliest of (a) the date of actual receipt, (b) three (3)
days after the date of mailing by registered or certified mail, (c) one (1)
business day after the date of mailing by Express Mail or the delivery (for
redelivery) to Federal Express or another similar service requiring a receipt,
or (d) the date of personal delivery (or refusal upon presentation for
delivery).

     19.  SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective heirs, successors and assigns of
Beal and Borrower, subject to the provisions of SECTION 17 hereof. If Borrower
is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In exercising
any rights hereunder or taking any actions provided for herein, Beal may act
through its employees, agents or independent

                                       33
<Page>

contractors as authorized by Beal. The captions and headings of the sections of
this Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.

     20.  Intentionally Deleted

     21.  WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by Beal or by any other party, Beal
shall have the right to determine the order in which any or all of the Property
shall be subjected to the remedies provided herein. Beal shall have the right to
determine the order in which any or all portions of the Indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Borrower, any party who consents to this Instrument
and any party who now or hereafter acquires a security interest in the Property
and who has actual or constructive notice hereof hereby waives any and all right
to require the marshalling of assets in connection with the exercise of any of
the remedies permitted by applicable law or provided herein.

     22.  HAZARDOUS WASTE. Borrower has furnished to Beal a ___________ dated
_____________, prepared by ___________________ (the "Report"). Except as
disclosed to Beal in the Report, Borrower has received no notification of any
kind suggesting that the Property or any adjacent property is or may be
contaminated with any hazardous waste or materials or is or may be required to
be cleaned up in accordance with any applicable law or regulation; and Borrower
further represents and warrants that, except as previously disclosed to Beal in
writing, to the best of its knowledge as of the date hereof, after due and
diligent inquiry, there are no hazardous waste or materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been used as a
landfill or a waste disposal site, or a manufacturing, handling, storage,
distribution or disposal facility for hazardous waste or materials. As used
herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that Beal at any time has a reasonable belief that the Property is not
free of all hazardous waste or materials or that Borrower has violated any
applicable environmental law with respect to the Property, then upon request by
Beal, Borrower shall obtain, as soon as possible (but in no event later than 15
days) following such request, and furnish to Beal, at Borrower's sole cost and
expense, an environmental audit and inspection of the Property from an expert
satisfactory to Beal. In the event that Borrower fails to so obtain such audit
or inspection, Beal or its agents may perform or obtain such audit or inspection
at Borrower's sole cost and expense. Beal may, but is not obligated to, enter
upon the Property and take such actions and incur such costs and expenses to
effect such compliance as it deems advisable to protect its interest in the
Property; and whether or not Borrower has actual knowledge of the existence of
hazardous waste or materials on the Property or any adjacent property as of the
date hereof, Borrower shall reimburse Beal as provided in SECTION 23 below for
the full amount of all costs and expenses incurred by Beal prior to Beal
acquiring title to the Property

                                       34
<Page>

through foreclosure or acceptance of a deed in lieu of foreclosure, in
connection with such compliance activities. Neither this provision nor any of
the other Loan Documents shall operate to put Beal in the position of an owner
of the Property prior to any acquisition of the Property by Beal. The rights
granted to Beal herein and in the other Loan Documents are granted solely for
the protection of Beal's lien and security interest covering the Property and do
not grant to Beal the right to control Borrower's actions, decisions or policies
regarding hazardous waste or materials.

     23.  ADVANCES, COSTS AND EXPENSES. Borrower shall pay, within ten (10) days
after written demand from Beal, all sums advanced by Beal and all costs and
expenses incurred by Beal in taking any actions pursuant to the Loan Documents,
including reasonable attorneys' fees and disbursements, reasonable accountants'
fees, appraisal and inspection fees, and the costs for title reports and
guaranties, and, if such amounts are not so paid to Beal within such ten (10)
day period, interest thereon at the Default Rate applicable under the Notes from
the date such costs were advanced or incurred. All such costs and expenses
incurred by Beal and advances made shall constitute advances under this
Instrument to protect the Property and shall be secured by and have the same
priority as the lien of this Instrument. If Borrower fails to pay any such
advances, costs and/or expenses and interest thereon, Beal may apply any
undisbursed Loan proceeds or make a protective advance even if there are no
undisbursed Loan proceeds to pay the same and, without foreclosing the lien of
this Instrument, may, at its option, commence an independent action against
Borrower for the recovery of the costs, expenses and/or advances, with interest,
together with costs of suit, costs of title reports and guaranty of title,
disbursements of counsel and reasonable attorneys' fees incurred therein or in
any appeal therefrom.

     24.  ASSIGNMENT OF LEASES AND RENTS. Pursuant to Act 210 of the Public Acts
of Michigan of 1953, as amended, Borrower, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, mortgage, convey, set over and deliver unto Beal, and does
hereby grant to Beal a security interest in, all right, title and interest of
Borrower in, to and under the Leases of the Property, whether now in existence
or hereafter entered into, and all guaranties, amendments, extensions and
renewals of said Leases and any of them, and all rents, income and profits which
may now or hereafter be or become due or owing under the Leases, and any of
them, or on account of the use of the Property.

     Borrower represents, warrants, covenants and agrees with Beal as follows:

     (1)  The sole ownership of the entire lessor's interest in the Leases is
          vested in Borrower, and Borrower has not, and shall not, perform any
          acts or execute any other instruments which might prevent Beal from
          fully exercising its rights with respect to the Leases under any of
          the terms, covenants and/or conditions of this Instrument.

     (2)  Except as specifically described in that certain Borrower's Affidavit,
          of even date herewith, executed by Borrower for the benefit of Beal
          (the "Affidavit"), the Leases are and shall be valid and enforceable
          in accordance with their terms and have not been and shall not be
          altered, modified, amended, terminated, canceled, renewed or
          surrendered, except as approved in writing by Beal. The terms and
          conditions of the

                                       35
<Page>

          Leases have not been (except as otherwise specifically described in
          the Affidavit), and shall not be, waived in any manner whatsoever,
          except as approved in writing by Beal.

     (3)  Borrower shall not materially alter the term or the amount of rent
          payable under any Lease without prior written notice to Beal and
          Beal's prior written consent, which consent shall not be unreasonably
          withheld.

     (4)  To the best of Borrower's knowledge, (except as otherwise specifically
          described in the Affidavit), there are no defaults now existing under
          any of the Leases and there exists no state of facts which, with the
          giving of notice or lapse of time or both, would constitute a default
          under any of the Leases.

     (5)  Borrower shall give prompt written notice to Beal of any notice
          received by Borrower claiming that a default has occurred under any of
          the Leases on the part of Borrower, together with a complete copy of
          any such notice.

     (6)  Each of the Leases shall remain in full force and effect irrespective
          of any merger of the interest of lessor and any lessee under any of
          the Leases.

     (7)  Borrower will not permit (except as currently permitted by any
          existing lease) any Lease to become subordinate to any lien other than
          the lien of this Instrument.

     (8)  Borrower shall not permit (except as currently permitted by any
          existing Lease) or consent to the assignment by any tenant of its
          rights under its Lease without the prior written consent of Beal.
          Without limitation of the foregoing, Borrower shall not permit (except
          as currently permitted by any existing lease) or consent to the filing
          of any encumbrance against the tenant's interest under any Lease
          including, without limitation, any leasehold mortgage.

     (i)  The only Leases currently in effect are those described on EXHIBIT "B"
          to the Affidavit.

     This assignment is absolute, is effective immediately, and is irrevocable
by Borrower so long as the Indebtedness remains outstanding. Notwithstanding the
foregoing, until a Notice is sent to Borrower in writing that an Event of
Default has occurred (which notice is hereafter called a "Notice"), Borrower may
receive, collect and enjoy the rents, income and profits accruing from the
Property.

     Upon the occurrence of an Event of Default hereunder, Beal may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits from the Property as they become due. Beal shall thereafter continue
to receive and collect all such rents, income and profits, as long as such Event
of Defaults shall exist, and during the pendency of any foreclosure proceedings.

                                       36
<Page>

     Borrower hereby irrevocably appoints Beal its true and lawful attorney with
power of substitution and with full power for Beal in its own name and capacity
or in the name and capacity of Borrower, from and after service of a Notice, to
demand, collect, receive and give complete acquittances for any and all rents,
income and profits accruing from the Property, either in its own name or in the
name of Borrower or otherwise, which Beal may deem necessary or desirable in
order to collect and enforce the payment of the rents, income and profits of and
from the Property. Lessees of the Property are hereby expressly authorized and
directed, following receipt of a Notice from Beal, to pay any and all amounts
due Borrower pursuant to the Leases to Beal or such nominee as Beal may
designate in a writing delivered to and received by such lessees, and the
lessees of the Property are expressly relieved of any and all duty, liability or
obligation to Borrower in respect of all payments so made.

     Upon the occurrence of any Event of Default, from and after service of a
Notice, Beal is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to enforce this SECTION 24 and
to collect the rents, income and profits assigned hereunder, including the right
of Beal or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Borrower
relating thereto, and Beal may exclude Borrower, its agents and servants, wholly
therefrom. Borrower hereby grants full power and authority to Beal to exercise
all rights, privileges and powers herein granted at any and all times after
service of a Notice, with full power to use and apply all of the rents and other
income herein assigned to the payment of the costs of managing and operating the
Property and of any indebtedness or liability of Borrower to Beal, including,
but not limited, to the payment of taxes, special assessments, insurance
premiums, damage claims, the costs of maintaining, repairing, rebuilding and
restoring the Improvements on the Property or of making the same rentable,
reasonable attorneys' fees incurred in connection with the enforcement of this
Instrument, and of principal and interest payments due from Borrower to Beal on
the Note and this Instrument, all in such order as Beal may determine. Beal
shall be under no obligation to exercise or prosecute any of the rights or
claims assigned to it hereunder or to perform or carry out any of the
obligations of the lessor under any of the Leases and does not assume any of the
liabilities in connection with or arising or growing out of the covenants and
agreements of Borrower in the Leases. It is further understood that the
assignment set forth in this SECTION 24 shall not operate to place
responsibility for the control, care, management or repair of the Property, or
parts thereof, upon Beal, nor shall it operate to make Beal liable for the
performance of any of the terms and conditions of any of the Leases, or for any
waste of the Property by any lessee under any of the Leases, or any other
person, or for any dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee or
stranger.

     25.  DEFAULT. The following shall each constitute an event of default
("Event of Default"):

          (1)    Failure of Borrower to make any payment of principal, interest,
or any payment due under either Note when due, and such failure shall continue
upon the expiration of any cure or grace period, if any is applicable, set forth
in the Note in question; or

                                       37
<Page>

          (2)    Failure of Borrower within the time required by this Instrument
to make any payment for taxes, insurance or for reserves for such payments, or
any other payment necessary to prevent filing of or discharge of any lien, and
such failure shall continue upon the expiration of any cure or grace period, if
any is applicable, set forth in the Notes; or

          (3)    Failure by Borrower to observe or perform any of its
obligations under any of the Leases; or

          (4)    The Property or any part of or interest in the Property is
transferred in any manner whatsoever without the prior written consent of Beal,
which consent may be granted or withheld at the sole discretion of Beal; or

          (5)    If any lien or encumbrance is filed against any of the Property
without Beal's prior written consent if such lien or encumbrance is not bonded
around (in a manner satisfactory to Beal in its sole discretion) or removed and
released within fifteen (15) days following the filing thereof; or

          (6)    If any lease agreement covering all or any portion of the
Property is executed by Borrower without Beal's prior written consent, which
consent may be granted or withheld by Beal as provided in that certain
Assignment of Landlord's Interest on Leases, of even date herewith, executed by
Borrower for the benefit of Beal; or

          (7)    Filing by Borrower of a voluntary petition in bankruptcy or
filing by Borrower, any guarantor of all or any part of the Indebtedness or any
person or entity that provides any collateral for all or any part of the
Indebtedness (each such Guarantor and each such other person or entity so
providing collateral being referred to herein individually as an "Other Obligor"
and all thereof being referred to herein collectively as the "Other Obligors")
of any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, or
the seeking, consenting to, or acquiescing by Borrower or any Other Obligor in
the appointment of any trustee, receiver, custodian, conservator or liquidator
for Borrower or any Other Obligor, any part of the Property, or any of the
income or rents of the Property, or the making by Borrower or any Other Obligor
of any general assignment for the benefit of creditors, or the inability of or
failure by Borrower or any Other Obligor to pay its debts generally as they
become due, or the insolvency on a balance sheet basis or business failure of
Borrower or any Other Obligor, or the making or suffering of a preference within
the meaning of federal bankruptcy law, or the making of a fraudulent transfer
under applicable federal or state law, or concealment by Borrower or any Other
Obligor of any of its property in fraud of creditors, or the imposition of a
lien upon any of the property of Borrower which is not discharged in the manner
permitted by SECTION 4 of this Instrument, or the giving of notice by Borrower
or any Other Obligor to any governmental body of insolvency or suspension of
operations; or

          (8)    Filing of a petition against Borrower or any Other Obligor
seeking any reorganization, arrangement, composition, readjustment, liquidation,
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other

                                       38
<Page>

relief for debts, or the appointment of any trustee, receiver, custodian,
conservator or liquidator of Borrower or any Other Obligor, of any part of the
Property or of any of the income or rents of the Property, unless such petition
shall be dismissed within sixty (60) days after such filing, but in any event
prior to the entry of an order, judgment or decree approving such petition; or

          (9)    The institution of any proceeding for the dissolution or
termination of Borrower or any Other Obligor voluntarily, involuntarily, or by
operation of law; or

          (10)   A material adverse change occurs in the assets, liabilities or
net worth of Borrower or any Other Obligor from the assets, liabilities or net
worth of Borrower or any Other Obligor previously disclosed to Beal; or

          (11)   Any warranty, representation or statement furnished to Beal by
or on behalf of Borrower or any Other Obligor under either Note, this Instrument
or any of the other Loan Documents shall prove to have been false or misleading
in any material respect; or

          (12)   Failure of Borrower to observe or perform any other obligation
under this Instrument or any other Loan Document when such observance or
performance is due, and such failure shall continue for a period of ten (10)
days following the date written notice of such failure is given to the Borrower
by or on behalf of Beal.

     26.  RIGHTS AND REMEDIES ON DEFAULT.

     26.1 REMEDIES. Upon the occurrence of any Event of Default and at any time
thereafter, Beal may exercise any one or more of the following rights and
remedies:

          a.     Beal may declare the entire Indebtedness, including the then
unpaid principal balance on the Notes, the accrued but unpaid interest thereon,
court costs and attorney's fees hereunder immediately due and payable, without
notice, presentment, protest, demand or action of any nature whatsoever (each of
which hereby is expressly waived by Borrower), whereupon the same shall become
immediately due and payable. Additionally, Beal shall not be required to make
any further advances on either Note or any other Loan Document upon the
occurrence of an Event of Default or an event which, with the giving of notice
or passing of time, would constitute an Event of Default.

          b.     (i) Power is hereby granted to Beal, if an Event of Default has
occurred, to grant, bargain, sell, release and convey the Property at public
auction or vendue, and on such sale to execute and deliver to the purchasers,
his, her, its or their heirs, successors and assigns, good, ample and sufficient
deed or deeds of conveyance in law, pursuant to the statute in such case made
and provided (said statute being M.C.L.A. Section 600.3201, et seq., or any
successor or substitute statute), and to apply the proceeds of such sale in the
manner herein provided.

                 (ii)   Upon a foreclosure of the Property or any part thereof,
the proceeds of such sale shall be applied in the following order:

                                       39
<Page>

                        (A)    The payment of all costs of the suit or
                 foreclosure, including a reasonable attorney fee and the cost
                 of title searches and abstracts;

                        (B)    To the payment of all other expenses of Beal,
                 including all monies expended by Beal and all other amounts
                 payable by Borrower to Beal hereunder, with interest thereon;

                        (C)    To the payment of the principal and interest of
                 the Indebtedness secured hereby;

                        (D)    To the payment of the surplus, if any, to
                 Borrower or to whosoever shall be entitled thereto.

          c.     Power is hereby granted to Beal, if an Event of Default exists,
to grant, bargain, sell, release and convey the Property at public auction or
vendue, and on such sale to execute and deliver to the purchasers, his, her, its
or their heirs, successors and assigns, good ample and sufficient deed or deeds
of conveyance in law, pursuant to the statute in such case made and provided
(said statute being M.C.L.A. Section 600.3201, et seq., or any successor or
substitute statute), and to apply the proceeds of such sale in the manner
hereinafter provided.

          d.     Upon any foreclosure sale of the Property, the same may be sold
either as a whole or in parcels, as Beal may elect, and if in parcels, the same
may be divided as Beal may elect, and at the election of Beal may be offered
first in parcels and then as a whole, that offer producing the highest price for
the entire Property to prevail, any law, statutory or otherwise, to the contrary
notwithstanding, and Borrower hereby waives the right to require any such sale
to be made in parcels or the right to select such parcels.

          e.     Beal shall otherwise have the right to foreclose this
Instrument in accordance with applicable law.

          f.     If this Instrument is foreclosed, Beal will be entitled to a
judgment which will provide that if the foreclosure sale proceeds are
insufficient to satisfy the judgment, execution may issue for any amount by
which the unpaid balance of the obligations secured by this Instrument exceeds
the net sale proceeds payable to Beal.

          g.     With respect to all or any part of the Property that
constitutes personalty, Beal shall have all rights and remedies of secured party
under the Uniform Commercial Code.

          h.     Beal shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the rents and revenues from the Property and apply the proceeds, over and
above cost of the receivership, against the sums due under this Instrument, and
to exercise all of the rights with respect to the Property described in SECTION
24 above. The receiver may serve without bond if permitted by law. Beal's right
to the appointment of a receiver shall exist

                                       40
<Page>

whether or not the apparent value of the Property exceeds the sums due under
this Instrument by a substantial amount. Employment by Beal shall not disqualify
a person from serving as a receiver.

          i.     In the event Borrower remains in possession of the Property
after the Property is sold as provided above or Beal otherwise becomes entitled
to possession of the Property upon default of Borrower, Borrower shall become a
tenant at will of Beal or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Borrower's possession.

          j.     Beal shall have any other right or remedy provided in this
Instrument, the Note, or any other Loan Document or instrument delivered by
Borrower in connection therewith, or available at law, in equity or otherwise.

          k.     Beal shall have all the rights and remedies set forth in
SECTION 24.

          l.     To the fullest extent permitted by law, Borrower hereby
irrevocably and unconditionally waives and releases (i) all benefits that might
accrue to Borrower by any present or future laws exempting the Property from
attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment; (ii) all notices of any Event of Default (except
as may be specifically provided for under the terms hereof), presentment,
demand, notice of intent to accelerate, notice of acceleration and any other
notice of Beal's election to exercise or the actual exercise of any right,
remedy or recourse provided for under the Loan Documents; (iii) any right to
appraisal or marshalling of assets or a sale in inverse order of alienation;
(iv) the exemption of homestead; and (v) the administration of estates of
decedents, or other matter to defeat, reduce or affect the right of Beal under
the terms of this Instrument to sell the Property for the collection of the
Indebtedness secured hereby (without any prior or different resort for
collection) or the right of Beal, under the terms of this Instrument, to receive
the payment of the Indebtedness out of the proceeds of sale of the Property in
preference to every other person and claimant whatever (only reasonable expenses
of such sale being first deducted).

          m.     The purchaser at any sale hereunder may disaffirm any easement
granted, or rental, lease or other contract made in violation of any provisions
of this Instrument and may take immediate possession of the Property free from,
and despite the terms of, any such grant of easement, rental, lease or other
contract.

     26.2 SALE OF THE PROPERTY. In exercising its rights and remedies, Beal may,
at Beal's sole discretion, cause all or any part of the Property to be sold as a
whole or in parcels, and certain portions of the Property may be sold without
selling other portions. Beal may bid at any public sale on all or any portion of
the Property.

     26.3 NOTICE OF SALE. Beal shall give Borrower reasonable notice of the time
and place of any public sale of any personal property or of the time after which
any private sale or other intended disposition of the personal property is to be
made. Reasonable notice shall mean notice given in accordance with applicable
law, including notices given in the manner and at the times required for

                                       41
<Page>

notices in a nonjudicial foreclosure, and Borrower agrees that notice given not
less than ten (10) days prior to the sale in question is reasonable notice.

     26.4 WAIVER; ELECTION OF REMEDIES. A waiver by either party of a breach of
a provision of this Instrument shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any
other provision. Election by Beal to pursue any remedy shall not exclude pursuit
of any other remedy, and all remedies of Beal under this Instrument are
cumulative and not exclusive. An election to make expenditures or take action to
perform an obligation of Borrower shall not affect Beal's right to declare a
default and exercise its remedies under this Instrument.

     27.  SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
Instrument, Beal shall execute a satisfaction of this Instrument and shall
surrender this Instrument and all notes evidencing Indebtedness secured by this
Instrument to the person or persons legally entitled thereto. Such person or
persons shall pay Beal's costs incurred in connection with satisfaction of this
Instrument.

     28.  USE OF PROPERTY. The Property is not currently used for agricultural,
farming, timber or grazing purposes. Borrower warrants that this Instrument is
and will at all times constitute a commercial mortgage, as defined under
appropriate state law.

     29.  FUTURE ADVANCES. Upon request of Borrower, Beal, at Beal's option so
long as this Instrument secures Indebtedness held by Beal, may make Future
Advances to Borrower. Such Future Advances, with interest thereon, shall be
secured by this Instrument when evidenced by promissory notes stating that said
notes are secured hereby.

     30.  IMPOSITION OF TAX BY STATE.

          (1)    STATE TAXES COVERED. The following constitute state taxes to
which this SECTION 30 applies:

                 (1)    A specific tax upon mortgages or upon all or any part of
the indebtedness secured by a mortgage.

                 (2)    A specific tax on a grantor which the taxpayer is
authorized or required to deduct from payments on the indebtedness secured by a
mortgage.

                 (3)    A tax on a mortgage chargeable against the mortgagee or
the holder of the note secured.

                 (4)    A specific tax on all or any portion of the indebtedness
or on payments of principal and interest made by a mortgagor (but not including
any taxes imposed upon or measured by Beal's income or profits).

                                       42
<Page>

          (2)    REMEDIES. If any state tax to which this SECTION 30 applies is
enacted subsequent to the date of this Instrument, this shall have the same
effect as an Event of Default, and Beal may exercise any or all of the remedies
available to it unless the following conditions are satisfied:

                 (1)    Borrower may lawfully pay the tax or charge imposed by
state tax, and

                 (2)    Borrower pays the tax or charge within thirty (30) days
after notice from Beal that the tax law has been enacted.

     31.  ATTORNEYS' FEES. In the event suit or action is instituted to enforce
or interpret any of the terms of this Instrument (including, without limitation,
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
and after trial and on appeal whether or not taxable as costs, or in any
bankruptcy proceeding including, without limitation, attorneys' fees, witness
fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, title insurance, trustee fees, and other attorneys'
fees, incurred by Beal that are necessary at any time in Beal's opinion for the
protection of its interest or enforcement of its rights shall become a part of
the Indebtedness payable on demand and shall bear interest from the date of
expenditure until repaid at the interest rate as provided in the Note. The term
"attorneys' fees" as used in the Loan Documents shall be deemed to mean such
fees as are reasonable and are actually incurred.

     32.  GOVERNING LAW; SEVERABILITY. This Instrument shall be governed by the
law of the State of Michigan applicable to contracts made and to be performed
therein (excluding choice-of-law principles). In the event that any provision or
clause of this Instrument, the Notes or any other Loan Documents conflicts with
applicable law, such conflict shall not affect other provisions of this
Instrument or the Notes or any other Loan Document which can be given effect
without the conflicting provision, and to this end the provisions of this
Instrument, the Notes and the other Loan Documents are declared to be severable.

     33.  TIME OF ESSENCE. Time is of the essence to this Instrument.

     34.  CHANGES IN WRITING. This Instrument and any of its terms may only be
changed, waived, discharged or terminated by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. Any agreement subsequently made by Borrower or Beal
relating to this Instrument shall be superior to the rights of the holder of any
intervening lien or encumbrance.

     35.  NO OFFSET. Borrower's obligation to make payments and perform all
obligations, covenants and warranties under this Instrument and under the Notes
shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Borrower or any
guarantor may have or claim against Beal or any entity participating in making
the loan secured

                                       43
<Page>

hereby. The foregoing provisions of this SECTION 36, however, do not constitute
a waiver of any claim or demand which Borrower or any Guarantor may have in
damages or otherwise against Beal or any other person, or preclude Borrower from
maintaining a separate action thereon; provided, however, that Borrower waives
any right it may have at law or in equity to consolidate such separate action
with any action or proceeding brought by Beal.

     36.  AUTHORIZATION TO INSERT. Borrower authorizes Beal or its agent to
insert in the spaces provided herein the amount of the Notes, the mortgagee's
loan policy number, the title company issuing such policy, the total amounts of
the obligations secured, and the last payment due dates, if any, if the
foregoing information is not typed in on this Instrument.

     37.  POWER OF SALE. WARNING. THIS INSTRUMENT CONTAINS A POWER OF SALE, AND,
UPON DEFAULT, MAY BE FORECLOSED BY ADVERTISEMENT. IN FORECLOSURE BY
ADVERTISEMENT, NO HEARING IS INVOLVED AND THE ONLY NOTICE REQUIRED IS TO PUBLISH
NOTICE IN A LOCAL NEWSPAPER AND TO POST A COPY OF THE NOTICE ON THE PROPERTY.

     38.  WAIVER. IF THIS INSTRUMENT IS FORECLOSED BY ADVERTISEMENT, BORROWER
HEREBY VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY WAIVES ALL RIGHTS, UNDER THE
CONSTITUTION AND LAWS OF THE STATE OF MICHIGAN AND CONSTITUTION AND LAWS OF THE
UNITED STATES, TO ALL NOTICE AND A HEARING IN CONNECTION WITH THE ABOVE
MENTIONED FORECLOSURE BY ADVERTISEMENT, EXCEPT AS SET FORTH IN THE MICHIGAN
STATUTE PROVIDING FOR FORECLOSURE BY ADVERTISEMENT.

     39.  PARTIAL RELEASES. Beal has no obligation to release from the lien and
terms of this Instrument or of any other Loan Document all or any portion of the
Property prior to the full and complete payment and performance of all of the
Indebtedness. If sales of portions of the Property are made with the written
consent of Beal (which consent may be granted or withheld at the sole discretion
of Beal), and if the proceeds from such sales may not be paid to Beal as a
prepayment on the loan evidenced by the Notes due to the restrictions on
prepayment set forth in the Notes, the Borrower will be obligated to use the
proceeds from such sales (to the extent in excess of the amount that may be
prepaid on the Notes) to acquire certificates of deposit or other financial
instruments acceptable to Beal, issued by banks or other financial institutions
acceptable to Beal and on terms acceptable to Beal (the "Pledged Investments"),
which will be pledged to and subjected to a first priority, and the only,
security interest in favor of Beal as substitute collateral for the Indebtedness
pursuant to documents as required by Beal. If the total amount of Pledged
Investments equals the sum of (i) the unpaid principal balance of, plus the
amount of accrued and unpaid interest on, the Indebtedness as of the date Beal's
liens and security interests on the portion of the Property sold are released,
plus (ii) an amount equal to the amount of interest that will accrue on the
Indebtedness for the period from the date of the release of Beal's liens and
security interests in regard to the portion of the Property sold until either
(a) the maturity date of the Indebtedness as specified above or (b) if Borrower
requests that the maturity date of the Indebtedness be modified to be a date on
or after the date the Indebtedness may be prepaid and if the Indebtedness
Documents are modified to so establish such an early maturity date, then such
early maturity date, plus (iii) the amount of interest that will

                                       44
<Page>

accrue on the Indebtedness at the Default Rate applicable thereto as set forth
in the Notes for a period of six (6) months following the maturity date of the
Indebtedness, plus (iv) an additional sum (taking into account interest that
will accrue on the Pledged Investments and which will be paid to Beal as
provided below) not in excess of $100,000.00 as Beal may require to cover costs
and expenses Beal might incur if the Indebtedness was not paid at maturity, Beal
shall release this Instrument and all remaining collateral securing the
Indebtedness. The documents by which the Pledged Investments are pledged to Beal
will authorize Beal on the first business day of each month to withdraw from the
Pledged Investments (first from the interest accrued thereon, with any balance
due to come from the principal balance of such Pledged Investments) an amount
equal to the interest then due on the Indebtedness for the preceding month and
to pay such sum to Beal, and then on the maturity date of the Indebtedness
(whether such maturity date is the then stated maturity date or any accelerated
maturity date) to withdraw from the Pledge Investments an amount equal to the
entire unpaid principal balance of the Indebtedness, plus all accrued and unpaid
interest thereon and all other amounts due to Beal in regard to the
Indebtedness, and to pay the same to Beal in full satisfaction of the
Indebtedness. After repayment of all amounts owing in regard to the Indebtedness
to Beal, the balance, if any, then remaining in such Pledged Investments shall
be returned to the Borrower. After the second (2nd) anniversary of the date
hereof, Borrower may apply any Pledged Investments to repay the principal
balance of the Indebtedness.

     39.  PUBLICITY. Borrower hereby grants to Beal the right to publicize its
making of the loan evidenced by the Notes in such manner as Beal deems
appropriate. Such publicity may include disclosure of the amount of such loan,
the nature of the Improvements and such other information relating to Beal or
such loan as Beal deems appropriate. In addition, Borrower hereby grants to Beal
the right to install and maintain signs on the Property providing notice that
the loan has been made by Beal. Such signs must not violate applicable legal
requirements but will otherwise be as required by Beal.

     40.  WAIVER OF JURY TRIAL. BORROWER HEREBY KNOWINGLY AND VOLUNTARILY WAIVES
ANY AND ALL RIGHTS THAT BORROWER MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE
UNITED STATES OF AMERICA OR THE LAWS OF THE STATE OF MICHIGAN TO A TRIAL BY JURY
OF ANY AND ALL ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING
RELATING TO THIS INSTRUMENT, THE LOAN DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED
THEREBY OR RELATED THERETO INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ANY AND
ALL DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR
PROCEEDING.

                      [SIGNATURE AND NOTARY PAGES FOLLOWS]

                                       45
<Page>

          IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE
          READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO
          OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS INSTRUMENT MAY BE
          LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS INSTRUMENT ONLY BY
          ANOTHER WRITTEN AGREEMENT.

     IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused the
same to be executed by its representatives thereunto duly authorized.

                               BORROWER:

                               MONROE OUTLET CENTER, LLC, a
                                   Michigan limited liability company

                               By: HORIZON GROUP PROPERTIES, L.P., a
                               Delaware limited partnership, its manager

                                  By: Horizon Group Properties, Inc., a
                                  Maryland corporation, its general partner

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                               ACKNOWLEDGMENT

THE STATE OF _________     SECTION

                           SECTION

COUNTY OF ____________     SECTION

     This instrument was acknowledged before me on this the _____ day of July,
2002, by ____________________________, as ______________________ of Horizon
Group Properties, Inc., as General Partner of Horizon Group Properties, L.P., as
Manager of MONROE OUTLET CENTER, LLC, a Michigan limited liability company, on
behalf of said limited liability company.

                                    --------------------------------------------
                                    Notary Public in and for
                                    the State of __________
                                    Printed Name:_______________________________

My Commission Expires:

_____________________

DRAFTED BY AND WHEN RECORDED RETURN TO:
LAWRENCE C. ADAMS, ESQ.
JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION
1445 ROSS AVENUE, SUITE 3200
DALLAS, TEXAS 75202

                                       46
<Page>

                                    EXHIBIT A

                             DESCRIPTION OF PROPERTY

                                       47
<Page>

                                    EXHIBIT B

                             PERMITTED ENCUMBRANCES

                                       48<Page>

                                  EXHIBIT 10.57

                               GUARANTY AGREEMENT

     THIS GUARANTY AGREEMENT ("Guaranty") is made as of the 10th day of July,
2002, by the undersigned (hereinafter referred to individually as "Guarantor"
and collectively as "Guarantors"), in favor of BEAL BANK, S.S.B., a savings bank
organized under the laws of the State of Texas ("Lender").

                              W I T N E S S E T H:

     A.   Lender has agreed to make a loan (the "Loan") to MONROE OUTLET
CENTER,LLC, a Michigan limited liability company ("Borrower"), in the maximum
principal amount of $7,000,000.00, evidenced by (i) that certain Promissory Note
I ("Note I"), of even date herewith, in the stated principal amount of
$3,000,000.00 and (ii) that certain Promissory Note II ("Note II"), of even date
herewith, in the stated principal amount of $4,000,000.00 (collectively the
"Notes"), each secured by instruments including, without limitation, two
Commercial Mortgages (collectively, the "Mortgages"), executed by Borrower,
which Notes and Mortgages are being executed and delivered by Borrower to Lender
contemporaneously herewith.

     B.   One of the conditions to Lender's agreement to make the Loan is that
Guarantors guarantee to Lender the full and timely payment of the Loan and the
performance and payment of all debts, duties and obligations of Borrower under
the Notes, the Mortgages, and the other documents executed in connection with
the Loan (collectively, the "Loan Documents"), whether or not Borrower has
personal liability thereunder or therefor.

     NOW, THEREFORE, as a material inducement to Lender to make the Loan to
Borrower, and for further good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, each Guarantor does
hereby, unconditionally, irrevocably and absolutely, jointly and severally,
warrant and represent to and covenant and agree with Lender as follows:

     1.   GUARANTY OF OBLIGATION.

          (a)    Each Guarantor unconditionally, irrevocably and absolutely,
     jointly and severally, guarantees to Lender (i) that all obligations and
     indebtedness evidenced by or provided in the Notes, the Mortgages and the
     other Loan Documents will be promptly paid when due and in accordance with
     the terms and provisions thereof (and as they may be amended, extended or
     renewed from time to time), and (ii) the prompt and full payment,
     performance and observance, when due, of all other indebtedness,
     liabilities, obligations and duties of every kind and character of Borrower
     to Lender relating in any way to the Loan, whether absolute or contingent,
     joint or several, secured or unsecured, due or not due,

                                       49
<Page>

     contractual or tortious, liquidated or unliquidated, arising by operation
     of law or otherwise, direct or indirect, relating in any way to the Loan,
     and including, but not limited to, any debt, obligation or liability of
     Borrower to Lender as a member of any partnership, syndicate, association
     or other group, or whether incurred by Borrower as principal, surety,
     endorser, accommodation party or otherwise; including, without limitation,
     interest on all of the above amounts as agreed upon between Borrower and
     Lender, or if there is no agreement, at the highest lawful rate, and any
     and all renewals, extensions and rearrangements of all or any part of the
     indebtedness, obligations and liabilities hereinabove described.
     Notwithstanding anything contained in this Guaranty to the contrary, (i)
     the liability of Prime Retail, L.P. as a Guarantor, is limited tothe
     maximum amount of (x) $4,000,000.00 (the "Guaranty Amount"), (y) is with
     regard only to the payment and performance of the obligations of the
     Borrower in regard to Note II and the Mortgage which encumbers the real
     property located in Monroe County, Michigan which is described on EXHIBIT
     "A" attached hereto and the other Loan Documents to the extent they relate
     to the real property described on EXHIBIT "A" attached hereto and (z) shall
     arise only upon the occurrence of an Event of Default under Note II which
     shall be solely the result of Borrower's failure to pay any installment of
     principal and/or interest due under Note II as and when the same becomes
     due and such failure shall continue beyond the expiration of any cure or
     grace period, if any is applicable, under Note II, (ii) the Guaranty Amount
     shall be reduced by the amount of any principal payments made upon any of
     the indebtedness evidenced by Note I derived from the Property (as defined
     in the Mortgage entered into in connection with Note II), (iii) once the
     principal balance of the Loan is reduced to $5,000,000.00, Prime Retail,
     L.P. will have no further liability as a Guarantor. The foregoing
     limitation of liability applies only to Prime Retail, L.P. and no other
     Guarantors, whether now or hereafter owned by or merged into the Prime
     Retail, L.P. Following written request from Borrower to Lender given
     subsequent to the date Prime Retail, L.P. has no further liability
     hereunder, Lender will so confirm in writing. This agreement of Lender is
     solely for the benefit of Prime Retail, L.P.

          (b)    All indebtedness, duties, obligations and liabilities described
     above or otherwise covered by this Guaranty, or intended so to be, are
     hereinafter sometimes collectively referred to as the "Guaranteed
     Indebtedness".

     2.   CONTINUING GUARANTY. This is a continuing guaranty and shall continue
to apply without regard to the form or amount of Guaranteed Indebtedness which
Borrower may create, renew, extend or alter in whole or in part, without notice
to Guarantors. The circumstance that at any time or from time to time the
Guaranteed Indebtedness may be paid or performed in full shall not affect the
obligation of Guarantors with respect to Guaranteed Indebtedness of Borrower to
Lender incurred or arising thereafter.

     3.   LIABILITY FOR OTHER INDEBTEDNESS. If any Guarantor is or becomes
liable for any indebtedness owing by Borrower to Lender by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby, and the rights of Lender hereunder shall be
cumulative of any and all other rights that Lender may ever have against
Guarantors. The exercise by Lender of any right or remedy hereunder or under any
other instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or

                                       50
<Page>

remedy. Without in any way diminishing the generality of the foregoing, it is
specifically understood and agreed that this Guaranty is given by each Guarantor
as an additional guaranty to any and all other guaranties heretofore or
hereafter executed and delivered to Lender by any Guarantor in favor of Lender
relating to indebtedness of Borrower to Lender, and nothing herein shall ever be
deemed to replace or be in lieu of any other of such previous or subsequent
guaranties.

     4.   NO RELEASE FROM OBLIGATIONS. The obligations, covenants, agreements
and duties of Guarantors under this Guaranty shall not be released or impaired
in any manner whatsoever, without the written consent of Lender, on account of
any or all of the following: (a) any assignment, endorsement or transfer, in
whole or in part, of the Guaranteed Indebtedness, although made without notice
to or the consent of any Guarantor; (b) any waiver by Lender of the performance
or observance by Borrower or any Guarantor of any of the agreements, covenants,
terms or conditions contained in any document evidencing, governing or securing
the Guaranteed Indebtedness; (c) any extension of the time for payment or
performance of all or any portion of the Guaranteed Indebtedness; (d) the
renewal, rearrangement, modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of Borrower set forth in any
document evidencing, governing or securing any of the Guaranteed Indebtedness;
(e) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of Borrower or any Guarantor; (f) any
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings or lack of corporate power, affecting Borrower or any Guarantor or
any of the assets of Borrower or any Guarantor; (g) any release, withdrawal,
surrender, exchange, substitution, subordination or loss of any security or
other guaranty at any time existing in connection with all or any portion of the
Guaranteed Indebtedness, or the acceptance of additional or substitute property
as security therefor; (h) the release or discharge of Borrower or any other
obligor from the observance or performance of any agreement, covenant, term or
condition contained in any document evidencing, governing or securing any of the
Guaranteed Indebtedness; (i) any action which Lender may take or omit to take by
virtue of any document evidencing, governing or securing any of the Guaranteed
Indebtedness or through any course of dealing with Borrower; (j) the addition of
a new guarantor or guarantors; (k) the operation of law or any other cause,
whether similar or dissimilar to the foregoing; (l) any adjustment, indulgence,
forbearance or compromise that may be granted or given by Lender to any party;
(m) the failure by Lender to file or enforce a claim against the estate (either
in administration, bankruptcy or other proceeding) of Borrower or any other
person or entity; (n) if the recovery from Borrower or any other person or
entity (including, without limitation, any other Guarantor) becomes barred by
any statute of limitations or is otherwise prevented; (o) any defenses, set-offs
or counterclaims which may be available to Borrower or any other person or
entity (including, without limitation, any other Guarantor); (p) any impairment,
modification, change, release or limitation of liability of, or stay of actions
of lien enforcement proceedings against, Borrower, any Guarantor, the property
of Borrower or any Guarantor, or the estate in bankruptcy of Borrower or any
Guarantor resulting from the operation of any present or future provision of the
Bankruptcy Code or any other similar federal or state statute, or from the
decision of any court; or (q) any neglect, delay, omission, failure or refusal
of Lender to take or prosecute any action for the collection of any of the
Guaranteed Indebtedness or to foreclose or take or prosecute any action in
connection with any lien, security interest or other right of security
(including perfection thereof), existing or to exist in connection with, or as
security for, any of the Guaranteed Indebtedness, it being the intention hereof
that each Guarantor shall remain liable as principal on the Guaranteed
Indebtedness, notwithstanding any act,

                                       51
<Page>

omission or thing which might, but for the provisions hereof, otherwise operate
as a legal or equitable discharge of such Guarantor. Guarantors hereby expressly
waive all rights of Guarantors arising under Section 34.02 of the TEXAS BUSINESS
AND COMMERCE CODE, as amended (regarding the right to require Lender to sue
Borrower on an accrued right of action following written notice to Lender),
Section 17.001 of the TEXAS CIVIL PRACTICE AND REMEDIES CODE, as amended
(allowing suit against any Guarantor without suit against Borrower, but
precluding entry of judgment against any Guarantor before entry of judgment
against Borrower), and RULE 31 of the TEXAS RULES OF CIVIL PROCEDURE, as amended
(requiring Lender to join Borrower in any suit against any Guarantor unless
judgment has been previously entered against Borrower).

     5.   PAYMENT AND PERFORMANCE OF OBLIGATIONS. If an Event of Default, as
defined in the Mortgage, occurs, Guarantors shall, without notice or demand, and
without any notice having been given to Guarantors of the acceptance by Lender
of this Guaranty and without any notice having been given to Guarantors of the
creating or incurring of such indebtedness, pay the Guaranteed Indebtedness due
thereon to Lender, at its office in Plano, Texas, or at such other place as may
be designated in writing by Lender, and it shall not be necessary for Lender, in
order to enforce such payment by Guarantors, first, to institute suit or exhaust
its remedies against Borrower or others liable on such Guaranteed Indebtedness,
or to enforce its rights against any security which shall ever have been given
to secure such Guaranteed Indebtedness.

     6.   WAIVER OF NOTICE. Notice to Guarantors of the acceptance of this
Guaranty and of the making, renewing or assignment of the Guaranteed
Indebtedness and each item thereof, are hereby expressly waived by each
Guarantor.

     7.   PAYMENTS BY BORROWER. Each payment on the Guaranteed Indebtedness
shall be deemed to have been made by Borrower unless express written notice is
given to Lender at the time of such payment that such payment is made by
Guarantor(s) as specified in such notice.

     8.   RELEASES AND WAIVERS. If all or any part of the Guaranteed
Indebtedness at any time is secured, Guarantors agree that Lender may at any
time and from time to time, at its discretion and with or without valuable
consideration, allow substitution or withdrawal of collateral or other security
and release collateral or other security without impairing or diminishing the
obligations of Guarantors hereunder. Guarantors further agree that if Borrower
executes in favor of Lender any collateral agreement, deed of trust or other
security instrument, including, without limitation, the Mortgages, the exercise
by Lender of any right or remedy thereby conferred on Lender shall be wholly
discretionary with Lender, subject, however, to all applicable notice and
opportunity to cure provisions set forth in the Loan Documents, and that the
exercise or failure to exercise any such right or remedy shall in no way impair
or diminish the obligations of Guarantors hereunder. Guarantors further agree
that Lender shall not be liable for its failure to use diligence in the
collection of any of the Guaranteed Indebtedness or in preserving the liability
of any person liable on the Guaranteed Indebtedness, and Guarantors hereby waive
presentment for payment, notice of nonpayment, protest and notice thereof,
notice of acceleration, and diligence in bringing suits against any person
liable on the Guaranteed Indebtedness, or any part thereof.

     9.   NO RELEASE OF GUARANTORS. If the Guaranteed Indebtedness at any time
exceeds the

                                       52
<Page>

amount permitted by law, or Borrower is not liable because the act of creating
the Guaranteed Indebtedness is ultra vires, or the officers or persons creating
the Guaranteed Indebtedness acted in excess of their authority, or for any other
reason, and for any of these reasons the Guaranteed Indebtedness which
Guarantors agree to pay cannot be enforced against Borrower, such fact shall in
no manner affect any Guarantor's liability hereunder, but each Guarantor shall
be liable under this Guaranty notwithstanding that Borrower is not liable for
the Guaranteed Indebtedness, to the same extent Guarantors would have been
liable if the Guaranteed Indebtedness had been enforceable against Borrower.

     10.  OPTIONAL ACCELERATION. In the event of the dissolution or insolvency
of Borrower, or the inability of Borrower to pay its debts as they mature, or an
assignment by Borrower for the benefit of creditors, or the institution of any
proceedings by or against Borrower under the federal bankruptcy laws alleging
that Borrower is insolvent or unable to pay its debts as they mature, or if any
of the foregoing events occur with respect to any Guarantor, and if such event
shall constitute an Event of Default, as defined in the Mortgage, and shall
occur at a time when any of the Guaranteed Indebtedness may not then be due and
payable, such Guaranteed Indebtedness, at the option of Lender, shall thereupon
be deemed to be immediately due and payable in full, and any Guarantor shall pay
to Lender forthwith the full amount which would be payable hereunder if all
Guaranteed Indebtedness were then due and payable.

     11.  SUCCESSORS AND ASSIGNS. This Guaranty is for the benefit of Lender,
its successors and assigns, and in the event of an assignment by Lender, or its
successors or assigns, of the Guaranteed Indebtedness, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness.

     12.  MODIFICATIONS AND WAIVERS; CUMULATIVE RIGHTS. No modification,
consent, amendment or waiver of any provision of this Guaranty, nor consent to
any departure by any Guarantor therefrom, shall be effective unless the same
shall be in writing and signed by an authorized officer of Lender, and then
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Guarantor in any case shall, of itself,
entitle any Guarantor to any other or further notice or demand in similar or
other circumstances. No delay or omission by Lender in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further exercise thereof, or the exercise of
any other right or power hereunder. All rights and remedies of Lender hereunder
are cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any other contract or document, and
the exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies. In this Guaranty,
whenever the context so requires, the singular number includes the plural, and
conversely.

     13.  COMPLIANCE WITH LAWS. No provision herein or in any promissory note,
instrument or any other loan document executed by Borrower or any Guarantor
evidencing, governing or securing the Guaranteed Indebtedness shall require the
payment or permit the collection of interest in excess of the maximum permitted
by law. If any excess interest in such respect is provided for herein or in any
such promissory note, instrument, or any other Loan Document, the provisions of

                                       53
<Page>

this paragraph shall govern, and neither Borrower nor any Guarantor shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the amount permitted by law. The intention of the parties is to conform
strictly to the usury laws now in force, and all promissory notes, instruments
and other loan documents executed by Borrower or Guarantors evidencing the
Guaranteed Indebtedness shall be held subject to reduction of the interest
charged to the amount allowed under said usury laws as now or hereafter
construed by the courts having jurisdiction.

     14.  BENEFIT TO GUARANTORS. Each Guarantor acknowledges and warrants that
such Guarantor has derived or expects to derive financial and other advantage
and benefit, directly or indirectly, from the Guaranteed Indebtedness and each
and every advance thereof and from each and every renewal, extension, release of
collateral or other relinquishment of legal rights made or granted or to be made
or granted by Lender to Borrower.

     15.  ATTORNEY'S FEES AND COLLECTION COSTS. If any Guarantor should breach
or fail to perform any provision of this Guaranty, Guarantors agree to pay to
Lender all reasonable costs and expenses (including court costs and reasonable
attorneys' fees to the extent enforceable under the laws of the State of Texas)
incurred by Lender in the enforcement hereof.

     16.  GUARANTOR'S WARRANTIES. Each Guarantor hereby severally, but not
jointly, warrants and represents unto Lender the following except that Prime
Retail, L.P. makes no representations or warranties with respect to clauses (b)
and (d) of this Section 16 and Horizon Group Properties, Inc. and Horizon Group
Properties, Ltd. make no representations or warranties with respect to clause
(e) of this Section 16:

          (a)    Each Guarantor has received or will receive, direct or indirect
     benefit from the making of this Guaranty;

          (b)    Each and every warranty and representation made by Borrower in
     the Loan Documents is true and correct;

          (c)    This Guaranty constitutes a legal, valid and binding obligation
     of each Guarantor, and is fully enforceable against each Guarantor in
     accordance with its terms;

          (d)    Any and all balance sheets, net worth statements and other
     financial data that have heretofore been given to Lender with respect to
     Guarantors (other than Prime Retail, L.P.) fairly present the financial
     condition of such Guarantors as of the date(s) thereof and, since the
     date(s) thereof, there has been no material, adverse change in the
     financial condition of any such Guarantor;

          (e)    The financial statements contained in the Annual Report on Form
     10-K for the year ended December 31, 2001, as amended, and the Quarterly
     Report on Form 10-Q for the quarter ended March 31, 2002 (together, the "34
     Act Reports") filed by Prime Retail, Inc., a Maryland corporation, pursuant
     to the Securities Exchange Act of 1934, as amended, are true and complete
     in all material respects;

                                       54
<Page>

          (f)    Except as may be set out on EXHIBIT "B" attached hereto and
     made a part hereof for all purposes and, with respect only to the
     representation and warranty made by Prime Retail, L.P. pursuant to this
     Section 16 (f), except as disclosed in the 34 Act Reports or except as
     would, individually or in the aggregate, not have a material adverse effect
     on the business or results of operations of Prime Retail, L.P., (i) there
     are no legal proceedings, claims or demands pending against, or to the
     knowledge of any Guarantor, threatened against, any Guarantor or any
     Guarantor's assets, (ii) no Guarantor is in breach or default of any legal
     requirement, contract or commitment, and (iii) no event (including
     specifically Guarantors' execution and delivery of this Guaranty) has
     occurred which, with the lapse of time or action by a third party, could
     result in any Guarantor's breach or default under any legal requirement,
     contract or commitment; and

          (g)    Each Guarantor hereby agrees to furnish to Lender from time to
     time, and as required by the Mortgages, promptly upon request therefor,
     current financial reports and statements setting out in complete and
     accurate detail each Guarantor's financial condition at the time of such
     request, containing such information as Lender may reasonably request, and
     prepared in accordance with generally accepted accounting principles
     consistently applied or in other form acceptable to Lender, in the exercise
     of its reasonable discretion.

     17.  SUBORDINATION AND NO SUBROGATION. If, for any reason whatsoever,
Borrower now or hereafter becomes indebted to any Guarantor, such indebtedness
and all interest thereon, shall, at all times, be subordinate in all respects to
the Loan, the other Guaranteed Indebtedness and each of the Loan Documents, and
no Guarantor shall be entitled to enforce or receive payment thereof until the
Guaranteed Indebtedness has been fully paid and satisfied. Notwithstanding
anything to the contrary contained in this Guaranty or any payments made by any
Guarantor hereunder, no Guarantor shall have any right of subrogation in or
under the Loan Documents or to participate in any way therein, or any right,
title or interest in and to any mortgaged property or any collateral for the
Guaranteed Indebtedness, all such rights of subrogation and participation being
hereby expressly waived and released, until the Guaranteed Indebtedness has been
fully paid and satisfied.

     18.  LAW GOVERNING AND JURISDICTION. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Texas and is performable
in Collin County, Texas.

     19.  SEVERABILITY. If any provision of this Guaranty or the application
thereof to any person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, neither the remainder of this Guaranty nor the
application of such provision to any other person or circumstance shall be
affected thereby, but rather the same shall be enforced to the greatest extent
permitted by law.

     20.  COUNTERPARTS. This Guaranty may be executed in multiple counterparts,
each of which shall be an original, but all of which shall constitute but one
instrument.

     21.  PARAGRAPH HEADINGS. The paragraph headings inserted in this Guaranty
have been included for convenience only and are not intended, and shall not be
construed, to limit or define in

                                       55
<Page>

any way the substance of any paragraph contained herein.

     22.  COMPOUNDING AND SETTLEMENT. Each Guarantor agrees that Lender, in its
discretion, may (i) bring suit against Guarantors and any other obligor for any
of the Loan jointly and severally or against any one or more of them, (ii)
compound or settle with any one or more of the Guarantors and any other obligor
for any of the Loan for such consideration as the Lender may deem proper, and
(iii) release one or more of the Guarantors and any other obligor for any of the
Loan from liability hereunder or otherwise in regard to the Guaranteed
Indebtedness, and that no such action shall impair the rights of Lender to
collect the Guaranteed Indebtedness (or the unpaid balance thereof) from
Guarantors and any other obligor for any of the Loan, or any of them, not so
sued, settled with or released.

     23.  CONSENT TO JURISDICTION. Each Guarantor hereby irrevocably submits,
for such Guarantor and in respect of such Guarantor's property, generally and
unconditionally, at the election of Lender, to the jurisdiction of the courts of
the State of Texas or of the United States of America for the State of Texas
over any suit, action or proceeding arising out of or relating to this Guaranty.
Each Guarantor irrevocably waives, to the fullest extent permitted by law, any
objection which such Guarantor may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court that such
suit has been brought in an inconvenient forum. Each Guarantor agrees that final
judgement in any such suit, action or proceeding brought in any such court shall
be conclusive and binding upon such Guarantor and may be enforced in the courts
of Texas by a suit upon such judgment, a certified or exemplified copy of which
shall be conclusive evidence of the fact and of the amount of such Guarantor's
indebtedness, provided that service of process is effected upon such Guarantor
in one of the manners specified herein or as otherwise permitted by law.

     24.  SERVICE OF PROCESS. Each Guarantor hereby irrevocably consents to
process being served in any suit, action or proceeding hereunder (a) by serving
a copy thereof upon Borrower and/or the Secretary of State of the State of
Texas, as such Guarantor's agents for service of process (provided a copy shall
be mailed by registered or certified mail, postage prepaid, return receipt
requested, to such Guarantor at its address specified below, or to any other
address which such Guarantor shall have designated by written notice to Lender),
or (b) if such service is impossible or impracticable in the sole judgment of
the party serving such process, by the mailing of a copy thereof by registered
or certified mail, postage prepaid, return receipt requested, to such Guarantor
at its address set forth below or to any other address within the continental
United States to which certified or registered mail may be sent which such
Guarantor shall have designated by written notice to Lender. Each Guarantor
irrevocably waives, to the fullest extent permitted by law, all claims of error
by reason of any such service and agrees that such service (i) shall be deemed
in every respect effective service of process upon such Guarantor in any such
suit, action or proceeding, and (ii) shall, to the fullest extent permitted by
law, be taken and held to be valid personal service upon personal delivery to
such Guarantor. Nothing in this section shall affect the rights of Lender to
serve process in any manner permitted by law or limit the right of Lender to
bring proceedings against Guarantors in the competent courts of any jurisdiction
or jurisdictions.

                                       56
<Page>

     EXECUTED AND DELIVERED on the date first above recited.

                                        GUARANTORS:

ADDRESS FOR NOTICE:                     HORIZON GROUP PROPERTIES, INC.

77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601                 By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

ADDRESS FOR NOTICE:                     HORIZON GROUP PROPERTIES, L.P.
                                        By:  Horizon Group Properties, Inc.,
                                             General Partner

77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601                 By:
                                           ---------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                       57
<Page>

ADDRESS FOR NOTICE:                     PRIME RETAIL, L.P.

100 E. Pratt Street
19th Floor
Baltimore, Maryland 21202

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                       58
<Page>

                                 ACKNOWLEDGMENT

STATE OF ____________ SECTION

                      SECTION

COUNTY OF ______      SECTION

This instrument was acknowledged before me on this the ___ day of July, 2002, by
_______________, as _______________ of HORIZON GROUP PROPERTIES, INC., a
Maryland corporation, on behalf of such corporation.

                           -------------------------------------------
                           Notary Public in and for the State of _____

My Commission Expires:____________

                                 ACKNOWLEDGMENT

STATE OF _____________ SECTION

                       SECTION

COUNTY OF ______       SECTION

This instrument was acknowledged before me on this the ___ day of July, 2002, by
_______________, as _______________ of Horizon Group Properties, Inc., as
General Partner of HORIZON GROUP PROPERTIES, LTD., a Delaware limited
partnership, on behalf of such limited partnership.

                           -------------------------------------------
                           Notary Public in and for the State of _____

                                       59
<Page>

                                 ACKNOWLEDGMENT

STATE OF ____________ SECTION

                      SECTION

COUNTY OF ______      SECTION

This instrument was acknowledged before me on this the ___ day of July, 2002, by
_______________, as _______________ of PRIME RETAIL, L.P., a Delaware limited
partnership, on behalf of such limited partnership.

                           -------------------------------------------
                           Notary Public in and for the State of _____

                                       60
<Page>

                                   EXHIBIT "A"

                                   LITIGATION

                                       61
<Page>

                                   EXHIBIT "B"

                        Monroe County, Michigan Property

                                       62

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