EXHIBIT 10.6

GUARANTY OF NON-RECOURSE AND

ENVIRONMENTAL INDEMNITY OBLIGATIONS

TO:

GENERAL ELECTRIC CAPITAL CORPORATION, AS COLLATERAL AGENT, AND TO THE PARTIES
THAT ARE, OR HEREAFTER BECOME, NOTE A LENDERS AND NOTE B LENDERS (AS DEFINED
BELOW)

THIS GUARANTY OF NON-RECOURSE AND ENVIRONMENTAL INDEMNITY OBLIGATIONS
("Guaranty"), dated as of March 18, 2008, is made by PRIME GROUP REALTY, L.P., a
Delaware limited partnership (the "Guarantor"), in favor of (i) GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation ("GECC"), as Collateral Agent for
the Note A Lenders and the Note B Lenders (in such capacity, "Collateral
Agent"), (ii) ING USA ANNUITY AND LIFE INSURANCE COMPANY, an Iowa corporation
("ING"), and any subsequent holders from time to time (together with ING,
collectively, the "Note A Lenders") of interests in that certain Promissory
Note A dated the date of this Guaranty made by 330 N. WABASH AVENUE, L.L.C., a
Delaware limited liability company (the "Borrower"), and payable to the order of
the ING in the original principal amount of $88,000,000 (such Promissory Note A,
together with all promissory notes delivered in substitution or exchange
thereof, in each case as the same may be from time to time consolidated, split,
amended, modified, extended, renewed, substituted and/or supplemented, shall be
collectively referred to in this Guaranty as "Note A"), the provisions of which
Note A are incorporated in this Guaranty by reference, and (iii) GECC and any
subsequent holders from time to time (together with GECC, collectively, the
"Note B Lenders") of interests in that certain Promissory Note B dated the date
of this Guaranty made by the Borrower and payable to the order of GECC in the
original principal amount of $100,000,000 (such Promissory Note B, together with
all promissory notes delivered in substitution or exchange thereof, in each case
as the same may be from time to time consolidated, split, amended, modified,
extended, renewed, substituted and/or supplemented, shall be collectively
referred to in this Guaranty as the "Note B"), the provisions of which Note B
are incorporated in this Guaranty by reference, and which Note B is executed
pursuant to that certain Loan Agreement (Loan B) dated as of the date of this
Guaranty among the Borrower, the Note B Lenders from time to time party thereto,
and Collateral Agent (such Loan Agreement, as it may from time to time be
supplemented, modified and amended, being referred to in this Guaranty as the
"Agreement"). The Note A Lenders and the Note B Lenders are hereinafter
sometimes collectively referred to as the "Lenders"). Capitalized terms used in
this Guaranty and not otherwise defined are used with the meanings set forth in
Note B.

Subject to the terms and conditions set forth in Note A, the Agreement, Note B
and the Mortgages (as hereinafter defined), the Note A Lenders have agreed to
make a loan to the Borrower in the aggregate principal amount of $88,000,000
(collectively, "Loan A") and the Note B Lenders have agreed to make loans to the
Borrower in the aggregate amount of up to $100,000,000 (collectively, "Loan B")
to provide financing for the Project (as defined in the

 

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Agreement). Loan A and Loan B (collectively, the "Loans") will be secured by
(i) that certain Mortgage, Assignment of Leases, Security Agreement and Fixture
Filing and (ii) that certain Leasehold Mortgage, Assignment of Leases, Security
Agreement and Fixture Filing (collectively, the "Mortgages"), each executed by
the Borrower in favor of Collateral Agent (on behalf of the Note A Lenders and
the Note B Lenders) with respect to the Project. As a condition of the
obligation of the Note A Lenders to make Loan A and the Note B Lenders to make
Loan B, the Guarantor is required to execute and deliver to Collateral Agent,
the Note A Lenders and the Note B Lenders this Guaranty.

To induce the Note A Lenders to make Loan A and the Note B Lenders to make
Loan B and for other valuable consideration, the Guarantor agrees as follows:

1.         Guaranteed Obligations. The Guarantor absolutely and unconditionally
guarantees the punctual and complete payment and performance when due of all
indebtedness and obligations of Borrower under that certain Environmental
Indemnification Agreement #1 dated of even date herewith and that certain
Environmental Indemnification Agreement #2 dated of even date herewith, each
executed by Borrower (hereinafter, as they may be from time to time amended,
modified, extended, renewed, refinanced, substituted and/or supplemented,
collectively referred to as the "Environmental Indemnification Agreements"), and
all other indebtedness and obligations under the Loan Documents for which
Borrower has personal liability to Lender, as the same may be limited under
Section 26 of Note A or Section 26 of Note B; in each case as such indebtedness
and obligations may from time to time be supplemented, modified, amended,
renewed and extended, whether evidenced by new or additional instruments,
documents or agreements or otherwise (collectively, the "Guaranteed
Obligations"). Without limiting the foregoing, upon the occurrence of any of the
events described in Subsections 26(j) and 26(l) of Note A and Subsections 26(j)
and 26(l) of Note B, the limitation on the recourse of Lender against Borrower
shall be null and void and Lender shall have full recourse against Borrower for,
and the Guarantor shall jointly and severally guaranty the payment and
performance by Borrower of, Loan A, Loan B and all principal, interest and other
sums owing under Note A, Note B or any of the other Loan Documents (as defined
in the Agreement) (all such documents, collectively, the "Loan Documents"). Upon
the occurrence of any Event of Default, all Guaranteed Obligations shall, at the
option of Collateral Agent, immediately become due and payable by the Guarantor
without protest, presentment, notice of dishonor, demand or further notice of
any kind, all of which are expressly waived by the Guarantor, and irrespective
of whether any Guaranteed Obligations have then become due and payable by the
Borrower or any other Person (each of the Borrower and any such other Person
other than Guarantor being referred to in this Guaranty as an "other Borrower
Party").

2.         Nature of Guaranty. This Guaranty is a guaranty of payment and
performance and not of collection, is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future, including
(a) interest and other Guaranteed Obligations arising or accruing after
bankruptcy of any other Borrower Party or any sale or other disposition of any
security for this Guaranty or for the obligations of any other Borrower Party
(any such security being referred to in this Guaranty as the "Security"), and
(b) any Guaranteed Obligations that survive repayment of the Loans. This
Guaranty and any Security for this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment or performance of any
Guaranteed Obligations is rescinded or must otherwise be

 

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returned by Collateral Agent, the Note A Lenders, the Note B Lenders or any
other Person upon the bankruptcy, insolvency or reorganization of any other
Borrower Party or otherwise, all as though such payment or performance had not
occurred. The Guarantor shall have no authority to revoke this Guaranty, but if
any such revocation shall be deemed to have occurred by operation of law or
otherwise, the provisions of this Guaranty shall continue to apply
notwithstanding such revocation.

3.         Obligations Independent. The obligations of the Guarantor under this
Guaranty are independent of the obligations of any other Borrower Party under
the Loan Documents (such obligations of any other Borrower Party, including the
Borrower's obligations in respect of the Guaranteed Obligations, being referred
to in this Guaranty as the "Other Obligations") and any Security, and the
enforceability of any Security for this Guaranty is likewise independent of any
such Other Obligations and any other Security. Collateral Agent may bring action
against the Guarantor and otherwise enforce this Guaranty or any Security for
this Guaranty without bringing action against any other Borrower Party or
joining any other Borrower Party in any action against the Guarantor, and
otherwise independently of any other right, power or remedy (each, a "Remedy")
that may be available to Lender at any time with respect to any Other
Obligations or Security. The Guarantor waives any right to require Collateral
Agent or Lenders at any time to proceed against any other Borrower Party, apply
any Security or otherwise enforce, proceed against or exhaust any Other
Obligations or Security or pursue any other Remedy in Collateral Agent's or any
Lender's power.

4.         Action with Respect to Other Obligations or Security. The Guarantor
authorizes Collateral Agent and each Lender, without notice or demand and
without affecting its liability under or the enforceability of this Guaranty or
any Security for this Guaranty, from time to time to:

(a)       supplement, modify, amend, renew, extend, accept partial payments or
performance on or otherwise change the time, manner or place of payment or
performance or the interest rate or other terms or the amount of, or release,
reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer
or consent to the transfer of or enter into or give any other agreement,
approval, waiver or consent with respect to or in exchange for any Other
Obligations or Security or any of the Loan Documents (including release the
Fourteenth Floor (as defined in Note B) pursuant to Section 29 of Note A or
Section 29 of Note B);

 

(b)

receive and hold additional Security or guaranties;

(c)       release any other Borrower Party from any personal liability with
respect to any Other Obligations and participate in any bankruptcy or
reorganization of any other Borrower Party in such manner as Collateral Agent or
such Lender may determine; and

(d)       accelerate, settle, compromise, compound, sue for, collect or
otherwise liquidate, enforce or deal with any Other Obligations or Security
(including judicial or nonjudicial sale or other disposition of any Security),
bid and purchase at any sale or other disposition of any Security and apply any
Security and any proceeds or other

 

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payments received by Collateral Agent or such Lender, in each case in such order
and manner as Collateral Agent or such Lender may determine.

5.         Waiver of Defenses. The Guarantor waives any defense to the
enforcement of this Guaranty or any Security for this Guaranty arising by reason
of:

(a)       any present or future federal, state or local laws, rules,
regulations, ordinances or codes (all such laws, rules, regulations, ordinances
or codes being hereinafter referred to collectively as "Laws"), or orders
affecting the terms of, or Collateral Agent's or any Lender's Remedies with
respect to, any Other Obligations or Security;

(b)       the absence or cessation of personal liability of any other Borrower
Party with respect to any Other Obligations;

(c)       the failure of any other Person to execute this Guaranty or any other
guaranty or agreement;

(d)       the failure of any other Borrower Party to properly execute any Loan
Document or otherwise comply with applicable legal formalities;

(e)       the unenforceability or invalidity of any Other Obligations or
Security or the lack of perfection or failure of priority or any other loss or
impairment of any Security;

(f)        any discharge or release of any other Borrower Party or any Other
Obligations or Security or any impairment or suspension of any Remedies of
Collateral Agent or any Lender, whether resulting from any act or omission of
Collateral Agent or any Lender or any other Person or by operation of law or
otherwise;

(g)       any bankruptcy, insolvency or reorganization of any other Borrower
Party or any disability or other defense of any other Borrower Party with
respect to any Other Obligations or Security;

(h)       any failure of Collateral Agent or any Lender to disclose to the
Guarantor any information relating to the financial condition, operations,
properties or prospects of, or any other matter relating to, any other Borrower
Party now or in the future known to Collateral Agent or any Lender (the
Guarantor waiving any duty on the part of Collateral Agent or any Lender to
disclose such information, including in response to any request by the Guarantor
to provide such information);

(i)        any failure of Collateral Agent or any Lender to monitor proper
application of loan funds or compliance with the Loan Documents, or to preserve,
insure or protect any Security or any subrogation, contribution or reimbursement
rights of the Guarantor;

(j)        any future extensions of credit to the Borrower or any other Borrower
Party;

 

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(k)       any failure, omission or delay in the exercise or enforcement by
Collateral Agent or any Lender of any Remedy against any other Borrower Party or
any Security;

(l)        any application of proceeds or payments received by Collateral Agent
or any Lender to obligations other than the Guaranteed Obligations; or

(m)      any other action by Collateral Agent or any Lender, whether authorized
by Section 4 of this Guaranty or otherwise, or any omission by Collateral Agent
or any Lender or other failure of Collateral Agent or any Lender to pursue, or
any delay in pursuing, any other Remedy in Collateral Agent's or any Lender's
power.

The Guarantor further waives: (i) any defense to the recovery by Collateral
Agent or any Lender against the Guarantor of any deficiency or otherwise to the
enforcement of this Guaranty or any Security for this Guaranty based upon the
Collateral Agent's or any Lender's election of any remedy against Guarantor or
any other Borrower Party; (ii) any defense or benefits that may be derived from
any anti-deficiency and one form of action defenses under applicable laws;
(iii) any right to a fair value hearing to determine the size of any deficiency
owing (for which the Guarantor would be liable hereunder) following a
foreclosure sale; (iv) all benefits of any statute of limitations affecting the
Guarantor's liability under or the enforcement of this Guaranty or any Other
Obligations or Security; (v) all setoffs and counterclaims; (vi) promptness,
diligence, presentment, demand for performance and protest; (vii) notice of
nonperformance, default, acceleration, protest or dishonor; (viii) except for
any notice otherwise required by applicable Laws that may not be effectively
waived by the Guarantor, notice of sale or other disposition of any Security;
(ix) notice of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Guaranteed Obligations, and all other notices of
any kind with respect to any Other Obligations, and (x) any duty of Collateral
Agent and/or Lenders to keep the Guarantor apprised of any matter or to answer
any inquiries or provide any information with respect to the Borrower, the
Project, the Security, or the Loans.

Without limiting the foregoing, or anything else contained in this Guaranty, the
Guarantor waives all rights and defenses that the Guarantor may have because the
Other Obligations are secured by real property. This means, among other things:

(A)      The Collateral Agent and the Lenders may collect from the Guarantor
without first foreclosing on any real or personal property collateral pledged by
the Borrower; and

(B)      If the Collateral Agent forecloses on any real property collateral
pledged by the Borrower: (1) the amount of the Guaranteed Obligations may be
reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price; and (2) the
Collateral Agent and the Lenders may collect from the Guarantor even if the
foreclosure on the real property collateral has destroyed any right the
Guarantor may have to collect from the Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses the
Guarantor may have because the Other Obligations are secured by real property.

 

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6.         Waiver of Subrogation. The Guarantor waives the Guarantor's rights of
subrogation and reimbursement and any rights or defenses the Guarantor may have
by reason of protection afforded to the Borrower with respect to the obligation
so guaranteed pursuant to any applicable antideficiency or other Laws limiting
or discharging the Borrower's indebtedness. The Guarantor shall not exercise,
and hereby waives, any rights of subrogation, contribution, indemnity or
reimbursement against any other Borrower Party, and waives any right to enforce
any Remedy which Collateral Agent or any Lender now has or may in the future
have against any other Borrower Party and any benefit of, and any right to
participate in, any Security or Other Obligations now or in the future held by
Collateral Agent or any Lender. If the Guarantor nevertheless receives payment
of any amount on account of any such subrogation, contribution, indemnity or
reimbursement rights or otherwise in respect of any payment or performance by
the Guarantor of any Guaranteed Obligations prior to payment and performance in
full of all Other Obligations, such amount shall be held in trust for the
benefit of the Lenders and immediately paid to Collateral Agent for application
to the Other Obligations in such order and manner as Collateral Agent may
determine.

7.         Representations of the Guarantor. The Guarantor represents and
warrants to Collateral Agent and each of the Lenders that:

 

(a)

this Guaranty is executed at the request of the Borrower;

(b)       the Guarantor has established adequate means of obtaining from any
other Borrower Parties on a continuing basis information pertaining to, and is
now and on a continuing basis will be completely familiar with, the financial
condition, operations, properties and prospects of such other Borrower Parties;

(c)       the Guarantor has received and approved copies of all of the other
Loan Documents;

(d)       no oral promises, assurances, representations or warranties have been
made by or on behalf of Collateral Agent or any Lender to induce the Guarantor
to execute and deliver this Guaranty; and

(e)       the Guarantor has reviewed the provisions of Section 27 of Note A and
Section 27 of Note B, and hereby makes, for itself, himself, or herself (as
applicable), in the place and stead of Borrower, all representations,
warranties, covenants and agreements contained in such provisions of Note A and
Note B.

8.         Indemnification by the Guarantor. Without limitation on any other
obligations of the Guarantor or Remedies of Collateral Agent or any Lender under
this Guaranty, the Guarantor shall indemnify, defend and save and hold harmless
Collateral Agent, the Note A Lenders and the Note B Lenders from and against,
and shall pay on demand, any and all losses, liabilities, damages, costs,
expenses and charges (including the reasonable fees and disbursements of
Collateral Agent's and any Lender's legal counsel and the reasonable charges of
Collateral Agent's and any Lender's internal legal counsel) suffered or incurred
by Collateral Agent or any Lender as a result of:

 

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(a)       any failure of any Guaranteed Obligations to be the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar Laws affecting the rights of creditors generally; or

(b)       any failure of the Borrower to pay and perform any Guaranteed
Obligations in accordance with the terms of such Guaranteed Obligations.

 

9.

Financial Information.

(a) Within forty-five (45) days after the end of each fiscal quarter, Guarantor
shall furnish, or cause to be furnished to Collateral Agent, as soon as
available, but in any event within forty-five (45) days after the close of each
of the first, second and third fiscal quarters of each fiscal year of Guarantor,
"unaudited" management prepared statements of income and cash flows for
Guarantor for such fiscal quarter and for the period from the beginning of such
fiscal year to the end of such fiscal quarter, and an "unaudited" balance sheet
of Guarantor as of the close of such fiscal quarter, all in reasonable detail.
Each report or statement shall be accompanied by a certificate executed by
Guarantor's chief financial officer or other senior financial officer certifying
as to Guarantor's tangible net worth (as defined below) and Guarantor's cash
liquidity balances (as defined below).

(b)       Within ninety-one (91) days after the end of each fiscal year,
Guarantor shall furnish to Collateral Agent "unaudited" management prepared
annual financial statements, including a detailed operating statement stating
operating revenues, operating expenses and net cash flow for the fiscal year
just ended, along with a current (as of the end of such fiscal year) balance
sheet and a certificate executed by Guarantor's chief financial officer or other
senior financial officer certifying as to Guarantor's tangible net worth and
cash liquidity balances. Notwithstanding the foregoing or the next paragraph
hereof, after any Event of Default such annual financial statements shall be
audited and prepared in accordance with the generally acceptable accounting
principals consistently applied. Such financial statements shall be accompanied
by an opinion of an independent certified public accountant acceptable to
Collateral Agent, in its sole and absolute discretion, which opinion shall be
signed by such independent certified public accountant. The opinion of such
accountants shall be free of exceptions or qualifications not acceptable to
Collateral Agent, in its reasonable discretion, and in any event shall be free
of any exception or qualification which is of “going concern” or like nature or
which relates to a more limited scope of examination. Such opinion shall in any
event contain a written statement of such accountants substantially to the
effect that (i) such accountants examined the financial statements in accordance
with generally accepted auditing standards and accordingly made such tests of
accounting records and such other auditing procedures as such accountants
considered necessary under the circumstances and (ii) in the opinion of such
accountants such financial statements present fairly the financial position of
Guarantor as of the end of such fiscal year, and the results of Guarantor's
operations and cash flows for such fiscal year, in conformity with generally
accepted accounting principles applied on a basis consistent with that of the
preceding fiscal year.

All such financial statements and compliance certificates delivered to
Collateral Agent will be complete and correct and present fairly the financial
condition of the Guarantor as of the date

 

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thereof under generally accepted accounting principles consistently applied (or
such other method of preparation approved by Collateral Agent) and will disclose
all liabilities of the Guarantor that are required by the accounting method used
to be reflected or reserved against, whether liquidated or unliquidated, fixed
or contingent. The Guarantor hereby agrees that each time a financial statement
is submitted by Guarantor to Collateral Agent, the Guarantor shall be deemed to
have represented and warranted to Collateral Agent and each of the Lenders that
such financial statement complies with all of the above requirements and that
since the date of such submitted financial statement there has been no material
adverse change in the financial condition of the Guarantor.

Guarantor shall maintain at all times (a) a tangible net worth of not less
Fifteen Million and No/100 Dollars ($15,000,000.00) and (b) cash liquidity
balances of not less than Ten Million and No/100 Dollars ($10,000,000.00), as
evidenced by the statements, returns and certificates described in the preceding
paragraph.

For purposes of this Section 9, "tangible net worth" shall mean, as of any date
of determination, total assets, excluding intangible assets (including, without
limitation, accumulated depreciation, deferred rent and deferred costs), minus
total liabilities, determined on a consolidated basis and in accordance with
generally accepted accounting principles consistently applied, and "cash
liquidity balances" shall mean, as of any date of determination, lien-free cash
balances maintained in the conventional forms of demand deposits, money market
account deposits, monies held in cash reserves (excluding those held by
Collateral Agent or any Note B Lender or Note A Lender), and other cash
equivalents reasonably acceptable to Collateral Agent.

10.       Waivers and Amendments. No supplement to, modification or amendment
of, or waiver, consent or approval under, any provision of this Guaranty shall
be effective unless in writing and signed by Collateral Agent, and any waiver,
consent or approval shall be effective only in the specific instance and for the
specific purpose for which given.

11.       Remedies. Each of the Remedies provided in this Guaranty is cumulative
and not exclusive of, and shall not prejudice, any other Remedy provided in this
Guaranty or by applicable Laws or under any other Loan Document. Each Remedy may
be exercised from time to time as often as deemed necessary by Collateral Agent
or Note B Lenders, and in such order and manner as Collateral Agent and/or the
Lenders may determine. No failure or delay on the part of Collateral Agent
and/or any Lender in exercising any Remedy shall operate as a waiver of such
Remedy; nor shall any single or partial exercise of any Remedy preclude any
other or further exercise of such Remedy or of any other Remedy.

12.       Costs and Expenses. The Guarantor shall pay to Collateral Agent on
demand all costs, expenses and charges of Collateral Agent and the Lenders in
connection with the enforcement of, or the exercise of any Remedy or any other
action taken by Collateral Agent or any Lender under or in connection with, this
Guaranty or any Guaranteed Obligations, including the reasonable fees and
disbursements of Collateral Agent's or any Lender's legal counsel and other
out-of-pocket expenses, and the reasonable charges of Collateral Agent's or any
Lender's internal legal counsel.

 

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13.       Notices. All notices, demands, requests, and other communications
desired or required to be given hereunder (hereinafter individually referred to
as a "Notice" and collectively referred to as the "Notices") shall be in writing
and shall be given by: (a) hand delivery to the address for Notices;
(b) delivery by overnight courier service to the address for Notices; or
(c) sending the same by United States mail, postage prepaid, certified mail,
return receipt requested, addressed to the address for Notices. All Notices
shall be deemed given and effective upon the earliest to occur of: (i) the hand
delivery of such Notice to the address for Notices; (ii) one (1) Business Day
after the deposit of such Notice with an overnight courier service by the time
deadline for next day delivery addressed to the address for Notices; or
(iii) three (3) Business Days after depositing the Notice in the United States
mail as set forth in clause (c) above. All Notices shall be shall be mailed,
sent or delivered, addressed to the party for whom it is intended at its address
set forth below.

If to Guarantor:

Prime Group Realty Trust

77 West Wacker Drive

Suite 3900

Chicago, Illinois 60601

Attn.: Jeff Patterson

 

 

 

with copies to:

Prime Group Realty Trust

77 West Wacker Drive

Suite 3900

Chicago, Illinois 60601

Attn.: James F. Hoffman, Esq.

 

 

and

Jones Day

77 West Wacker Drive, 35th Floor

Chicago, Illinois 60601

Attn.: Stephen E. Hall, Esq.

 

 

If to Collateral Agent or the                Lenders:

General Electric Capital Corporation

c/o GE Real Estate

500 W. Monroe Street

Chicago, Illinois 60661

Attention:   Asset Management

 

and

 

General Electric Capital Corporation

c/o GE Real Estate – Legal

901 Main Avenue

Norwalk, Connecticut 06851

Attention: Paul Mundinger, Esq.

 

 

 

 

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with a copy to:

Reed Smith LLP

1650 Market Street, Suite 2500

Philadelphia, PA 19103

Attention: Stephen M. Lyons III, Esq.

 

Provided, that the "copy to" Notice to be given as set forth above is a courtesy
copy only; and a Notice given to such Person is not sufficient to effect giving
a Notice to the principal party, nor does a failure to give such a courtesy copy
of a Notice constitute a failure to give Notice to the principal party. Either
party may designate a change of address by written notice to the other by giving
at least ten (10) days prior written notice of such change of address.

14.       Binding Agreement. This Guaranty shall be binding on and inure to the
benefit of the Guarantor, Collateral Agent and each of the Lenders and their
respective successors and assigns, except that the Guarantor shall have no right
to assign any interest under this Guaranty without the prior written consent of
Collateral Agent. Each of the Lenders may from time to time assign its interest
under this Guaranty in whole or in part without notice to or the consent of the
Guarantor.

15.       Multiple Guarantors. If more than one Person signs this Guaranty as
Guarantor, (a) the term "Guarantor" shall mean each such Person, (b) the
obligations of each Guarantor shall be joint, several and independent, and
(c) this Guaranty shall be construed and enforced as though each Guarantor
executed a separate guaranty on the terms set forth in this Guaranty.

16.       Governing Law. This Guaranty shall be governed by, and construed and
enforced in accordance with, the Laws of Illinois.

17.       Construction. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and
each gender will including any other gender. The captions of the sections of
this Guaranty are for convenience only and do not define or limit any terms or
provisions. The word "include(s)" means "include(s), without limitation," and
the word "including" means "including, but not limited to." No listing of
specific instances, items or matters in any way limits the scope or generality
of any language of this Guaranty. Time is of the essence in the performance of
this Guaranty by Guarantor. This Guaranty may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.

18.       Enforceability. Guarantor hereby acknowledges that: (a) the
obligations undertaken by Guarantor in this Guaranty are complex in nature, and
(b) numerous possible defenses to the enforceability of these obligations may
presently exist and/or may arise hereafter, and (c) as part of the Note A
Lenders' consideration for making Loan A and the Note B Lenders' consideration
for making Loan B, the Lenders have specifically bargained for the waiver and
relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the
opportunity to seek and receive legal advice from skilled legal counsel in the
area of financial transactions of the type contemplated herein. Given all of the
above, Guarantor does hereby represent and confirm to Collateral Agent and each
of the Lenders that Guarantor is fully informed regarding, and that Guarantor
does thoroughly understand: (i) the nature of all such possible defenses, and

 

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(ii) the circumstances under which such defenses may arise, and (iii) the
benefits which such defenses might confer upon Guarantor, and (iv) the legal
consequences to Guarantor of waiving such defenses. Guarantor acknowledges that
Guarantor makes this Guaranty with the intent that this Guaranty and all of the
informed waivers herein shall each and all be fully enforceable by Collateral
Agent and each of the Lenders, and that Collateral Agent and each of the Lenders
are induced to enter into the Agreement and the Note A Lenders are induced to
make Loan A and the Note B Lenders are induced to make Loan B in material
reliance upon the presumed full enforceability thereof.

19.       Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF
COLLATERAL AGENT, THE LENDERS AND THE GUARANTOR WAIVE TRIAL BY JURY IN ANY
ACTION OR OTHER PROCEEDING (INCLUDING COUNTERCLAIMS), WHETHER AT LAW OR EQUITY,
BROUGHT BY COLLATERAL AGENT AND/OR ANY LENDER OR THE GUARANTOR AGAINST THE OTHER
ON MATTERS ARISING OUT OF OR IN ANY WAY RELATED TO OR CONNECTED WITH THIS
GUARANTY, THE OTHER LOAN DOCUMENTS, THE LOANS OR ANY TRANSACTION CONTEMPLATED
BY, OR THE RELATIONSHIP BETWEEN COLLATERAL AGENT, THE LENDERS AND THE GUARANTOR
OR ANY OTHER BORROWER PARTY OR ANY ACTION OR INACTION BY ANY PARTY UNDER, ANY OF
THE LOAN DOCUMENTS.

20.       Obligations Remaining Outstanding After Payments and Liquidation of
Collateral Shall Be That Guaranteed Hereby. Guarantor agrees that any
indebtedness or obligations which remain owing under the Loan Documents after
any application of payments received from Borrower and any application to the
Loans of proceeds received from the foreclosure of the Mortgages (or after any
application of the credit bid of the Collateral Agent at the foreclosure sale)
and other liquidation of the collateral for the Loans, shall be deemed to be
part of the Guaranteed Obligations guaranteed hereby (subject to the limitation
on the nature of the Guaranteed Obligations as set forth in Section 1 hereof);
and the Guarantor may not claim or contend so long as any such indebtedness or
obligations guaranteed hereby remain outstanding that any payments received by
Collateral Agent or any of the Lenders from Borrower or otherwise, or proceeds
received by Collateral Agent or any of the Lenders on the liquidation of the
collateral for the Loans, shall have reduced or discharged the Guarantor's
liability or obligations hereunder. Nothing contained in this Section shall be
deemed to (a) limit or otherwise impair any of the waivers or agreements of
Guarantor contained in the preceding sections of this Guaranty, (b) require
Collateral Agent or any Lender to proceed against Borrower or any collateral for
the Loans before proceeding against Guarantor (any such requirement having been
specifically waived), or (c) limit or otherwise impair any rights Collateral
Agent or any of the Lenders would have in the absence of this Section.

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ATTEST:

/s/ Paul G. Del Vecchio
Paul G. Del Vecchio
Executive Vice President -
Capital Markets

"GUARANTOR":

 

PRIME GROUP REALTY, L.P.,
a Delaware limited partnership

By:       PRIME GROUP REALTY TRUST,
               a Maryland real estate investment trust
               its sole general partner

               By:/s/ Jeffrey A. Patterson
               Jeffrey A. Patterson
               President and
               Chief Executive Officer

 

 

 

 

 

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