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fixed assets while in operation. SSIOO’s and Specialty Stores’ financial statements also
reflected the financing and increases in financing that these subsidiaries owed their parent.
Conrad Frejlich also explained that although Harry Rosen had obtained the initial funding for the
SSI subsidiaries by way of a loan from the Royal Bank of Canada, the SSI subsidiaries were
guarantors of that loan and the assets of the SSI subsidiaries served as collateral.
With respect to the lease agreement between SSIOO and Old Orchard, Harry Rosen
explained that in late 1998, the vice president of Old Orchard met in Chicago with the chairman
of Specialty Stores to discuss the possibility of opening a Hugo Boss boutique at Old Orchard
mall. During lease negotiations, Old Orchard requested that Harry Rosen guaranty SSIOO’s
lease. However, Harry Rosen would not agree to be guarantor. Thereafter, Old Orchard’s vice
president requested financial information regarding Specialty Stores. On June 18, 1999, Conrad
Frejlich, the chief financial officer and secretary of Specialty Stores, sent the vice president a
letter, printed on Specialty Stores’ letterhead, confirming that Specialty Stores would have a net
worth of not less than $500,000 U.S. prior to the date of SSIOO’s possession of the premises at
the mall. Frejlich also enclosed a copy of Specialty Stores’ financial statements with the letter.
Thereafter, SSIOO and Old Orchard entered into the lease, and Specialty Stores executed
the guaranty. Harry Rosen was not a party to either the lease or the guaranty.
Harry Rosen also pointed out that SSIOO continued to pay its rent under the lease, which
was roughly $16,000 per month, until it ceased operation. The amount of the default judgment
entered by the federal district court was for rent to be paid over the remaining 7 years of the 10-
year lease. Harry Rosen attached the lease and guaranty to its motion. Thus, Harry Rosen
