EXHIBIT 10.3

GUARANTY

This GUARANTY ("Guaranty") is executed as of November 21, 2006, by PRIME GROUP
REALTY, L.P., a Delaware limited partnership (whether one or more collectively
referred to as "Guarantor"), for the benefit of CWCAPITAL LLC, a Massachusetts
limited liability company ("Lender").

W I T N E S S E T H:

WHEREAS, pursuant to that certain Promissory Note, dated of even date herewith,
executed by CONTINENTAL TOWERS ASSOCIATES III, LLC, a Delaware limited liability
company, and CONTINENTAL TOWERS, L.L.C., a Delaware limited liability company,
jointly and severally as tenants in common (collectively, the "Borrower" or
"TICS" or individually, a "TIC"), and payable to the order of Lender in the
original principal amount of $115,000,000.00 (together with all renewals,
modifications, increases and extensions thereof, the "Note"), Borrower has
become indebted, and may from time to time be further indebted, to Lender with
respect to a loan ("Loan") which is secured by the lien and security interest of
a Mortgage, Security Agreement and Fixture Financing Statement, of even date
herewith (the "Mortgage"), and further evidenced, secured or governed by other
instruments and documents executed in connection with the Loan, including an
Environmental and Hazardous Substance Indemnification Agreement (the
"Environmental and Hazardous Substance Indemnification Agreement") (the Note,
Mortgage, the Environmental and Hazardous Substance Indemnification Agreement,
and all other such documents and instruments executed in connection with the
Loan may be referred to as the "Loan Documents"); and

WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to
Borrower unless Guarantor unconditionally guarantees payment and performance to
Lender of the Guaranteed Obligations (as herein defined);

WHEREAS, PGRT Equity, L.L.C., a wholly owned subsidiary of Guarantor, and Lender
are parties to that certain Subordination and Standstill Agreement dated as of
the date hereof; and

WHEREAS, Guarantor as a parent of Second Lender will directly benefit from
Lender's making the Loan to Borrower.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower, and to
extend such additional credit as Lender may from time to time agree to extend
under the Loan Documents, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, the parties do
hereby agree as follows:

 

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ARTICLE I

 

NATURE AND SCOPE OF GUARANTY

1.1          Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the payment
and performance of the Guaranteed Obligations as and when the same shall be due
and payable, whether by lapse of time, by acceleration of maturity or otherwise.
Guarantor hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Obligations as a primary obligor.

1.2          Definition of Guaranteed Obligations. As used herein, the term
"Guaranteed Obligations" means the obligations or liabilities of Borrower to
Lender for any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:

(a)          all amounts for which Borrower is liable under Sections 2.04(b) and
(c) of the Note; and

(b)          the payment and performance of all of the obligations of Borrower
under the Environmental and Hazardous Substance Indemnification Agreement.

Notwithstanding anything to the contrary in any of the Loan Documents, Lender
shall not be deemed to have waived any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy
Code to file a claim for the full amount of the Debt secured by the Mortgage or
to require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Loan Documents.

1.3          Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to any Guaranteed Obligations arising or created after any
attempted revocation by Guarantor and after (if Guarantor is a natural person)
Guarantor's death (in which event this Guaranty shall be binding upon
Guarantor's estate and Guarantor's legal representatives and heirs). The fact
that at any time or from time to time the Guaranteed Obligations may be
increased or reduced shall not release or discharge the obligation of Guarantor
to Lender with respect to the Guaranteed Obligations. This Guaranty may be
enforced by Lender and any subsequent holder of the Note and shall not be
discharged by the assignment or negotiation of all or part of the Note.

1.4          Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender
hereunder, shall not be reduced, discharged or released because or by reason of
any existing or future offset, claim or defense of Borrower, or any other party,
against Lender or against payment of the Guaranteed Obligations, whether such
offset, claim or defense arises in connection with the Guaranteed Obligations
(or the transactions creating the Guaranteed Obligations) or otherwise.

 

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1.5          Payment By Guarantor. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, Guarantor shall, immediately upon demand by Lender,
and without presentment, protest, notice of protest, notice of non-payment,
notice of intention to accelerate the maturity, notice of acceleration of the
maturity, or any other notice whatsoever, pay in lawful money of the United
States of America, the amount due on the Guaranteed Obligations to Lender at
Lender's address as set forth herein. Such demand(s) may be made at any time
coincident with or after the time for payment of all or part of the Guaranteed
Obligations, and may be made from time to time with respect to the same or
different items of Guaranteed Obligations. Such demand shall be deemed made,
given and received in accordance with the notice provisions hereof.

1.6          No Duty To Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which Guarantor may have to require Lender),
in order to enforce the obligations of Guarantor hereunder, first to
(i) institute suit or exhaust its remedies against Borrower or others liable on
the Loan or the Guaranteed Obligations or any other person, (ii) enforce
Lender's rights against any collateral which shall ever have been given to
secure the Loan, (iii) enforce Lender's rights against any other guarantors of
the Guaranteed Obligations, (iv) join Borrower or any others liable on the
Guaranteed Obligations in any action seeking to enforce this Guaranty,
(v) exhaust any remedies available to Lender against any collateral which shall
ever have been given to secure the Loan, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.

1.7         Waivers. Guarantor agrees to the provisions of the Loan Documents,
and hereby waives notice of (i) any loans or advances made by Lender to
Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of
the Note, the Mortgage or of any other Loan Documents, (iv) the execution and
delivery by Borrower and Lender of any other loan or credit agreement or of
Borrower's execution and delivery of any promissory notes or other documents
arising under the Loan Documents or in connection with the Trust Property (as
defined in the Mortgage), (v) the occurrence of any breach by Borrower or an
Event of Default, (vi) Lender's transfer or disposition of the Guaranteed
Obligations, or any part thereof, (vii) sale or foreclosure (or posting or
advertising for sale or foreclosure) of any collateral for the Guaranteed
Obligations, (viii) protest, proof of non-payment or default by Borrower, or
(ix) any other action at any time taken or omitted by Lender, and, generally,
all demands and notices of every kind in connection with this Guaranty, the Loan
Documents, any documents or agreements evidencing, securing or relating to any
of the Guaranteed Obligations and the obligations hereby guaranteed.

1.8          Payment of Expenses. In the event that Guarantor should breach or
fail to timely perform any provisions of this Guaranty, Guarantor shall,
immediately upon demand by Lender, pay Lender all reasonable, out-of-pocket
costs and expenses (including court costs and reasonable attorneys' fees)
incurred by Lender in the enforcement hereof or the preservation of Lender's
rights hereunder. The covenant contained in this Section shall survive the
payment and performance of the Guaranteed Obligations.

 

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1.9          Effect of Bankruptcy. In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower and Guarantor that Guarantor's obligations hereunder shall not be
discharged except by Guarantor's performance of such obligations and then only
to the extent of such performance.

1.10       Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, Guarantor
hereby unconditionally and irrevocably waives, releases and abrogates until the
end of the Waiver Period (as hereunder defined), any and all rights it may now
or hereafter have under any agreement, at law or in equity (including, without
limitation, any law subrogating Guarantor to the rights of Lender), to assert
any claim against or seek contribution, indemnification or any other form of
reimbursement from Borrower or any other party liable for payment of any or all
of the Guaranteed Obligations for any payment made by Guarantor under or in
connection with this Guaranty or otherwise. As used herein, "Waiver Period"
shall mean ninety-one (91) days from the payment in full of the indebtedness
secured by the Mortgage and Borrower's failure within such ninety-one (91) day
period to be subject to a bankruptcy action or otherwise in violation of Section
55 of the Mortgage.

1.11       Borrower. The term "Borrower" as used herein shall include any new or
successor corporation, association, partnership (general or limited), joint
venture, trust or other individual or organization formed as a result of any
merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or
any interest in Borrower.

1.12       Indemnity. Guarantor shall indemnify, defend and hold harmless Lender
and its successors and assigns from and against the following (which may be
referred to herein as "Indemnified Matters"): any and all liabilities,
obligations, claims, demands, damages, judgments, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements), imposed upon
or incurred by or asserted against Lender and/or its successors and assigns by
reason of a default by Guarantor in the performance of any of the Guaranteed
Obligations. The foregoing indemnity shall specifically not include any such
costs to the extent incurred as the direct result of Lender's gross negligence
or willful misconduct.

 

1.13

Indemnification Procedures.

(a)          If any action shall be brought against Lender based upon any of the
matters for which Lender is indemnified hereunder, Lender shall notify Guarantor
in writing thereof and Guarantor shall promptly assume the defense thereof,
including, without limitation, the employment of counsel acceptable to Lender;
provided, however, that any failure of Lender to notify Guarantor of such matter
shall not impair or reduce the obligations of Guarantor hereunder. Lender shall
have the right, at the expense of Guarantor (which expense shall be included in
the Indemnified Matters), to employ separate counsel in any such action and to
participate in the defense thereof. In the event

 

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Guarantor shall fail to discharge or undertake to defend Lender against any
claim, loss or liability for which Lender is indemnified hereunder, Lender may,
at its sole option and election, defend or settle such claim, loss or liability.
The liability of Guarantor to Lender hereunder shall be conclusively established
by such settlement, provided such settlement is made in good faith, the amount
of such liability to include both the settlement consideration and the actual,
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, incurred by Lender in effecting such
settlement. In such event, such settlement consideration, actual, out-of-pocket
costs and expenses shall be included in the Indemnified Matters and Guarantor
shall pay the same as hereinafter provided. Lender's good faith in any such
settlement shall be conclusively established if the settlement is made on the
advice of independent legal counsel for Lender.

(b)          Guarantor shall not, without the prior written consent of Lender:
(i) settle or compromise any action, suit, proceeding or claim or consent to the
entry of any judgment that does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Lender of a full and complete written
release of Lender (in form, scope and substance satisfactory to Lender in its
sole discretion) from all liability in respect of such action, suit, proceeding
or claim and a dismissal with prejudice of such action, suit, proceeding or
claim; or (ii) settle or compromise any action, suit, proceeding or claim in any
manner that may adversely affect Lender or obligate Lender to pay any sum or
perform any obligation as determined by Lender in its sole discretion.

(c)          All amounts owed by Guarantor to Lender that are Indemnified
Matters shall be immediately reimbursable to Lender when and as such payment
obligations are incurred by Lender and, in the event of any litigation, claim or
other proceeding, without any requirement of waiting for the ultimate outcome of
such litigation, claim or other proceeding, and Guarantor shall pay to Lender
any and all amounts owed by Guarantor to Lender that are Indemnified Matters
within ten (10) business days after written notice from Lender itemizing the
amounts thereof incurred to the date of such notice. In addition to any other
remedy available for the failure of Guarantor to periodically pay such amounts
owed by Guarantor to Lender that are Indemnified Matters, such amounts, if not
paid within said ten-day period, shall bear interest at the Default Interest
Rate (as defined in the Note).

ARTICLE II

 

EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING GUARANTOR'S OBLIGATIONS

Guarantor hereby consents and agrees to each of the following, and agrees that
Guarantor's obligations under this Guaranty shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
common law, equitable, statutory or other rights (including without limitation
rights to notice) which Guarantor might otherwise have as a result of or in
connection with any of the following:

 

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2.1          Modifications. Any renewal, extension, increase, modification,
alteration or rearrangement of all or any part of the Guaranteed Obligations,
the Note, the Mortgage, the other Loan Documents, or any other document,
instrument, contract or understanding between Borrower and Lender, or any other
parties, pertaining to the Guaranteed Obligations or any failure of Lender to
notify Guarantor of any such action.

2.2          Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or any Guarantor.

2.3          Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution or
lack of power of Borrower, Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations; or any dissolution of
Borrower or Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the shareholders, partners or
members of Borrower or Guarantor; or any reorganization of Borrower or
Guarantor.

2.4          Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations, or any
document or agreement executed in connection with the Guaranteed Obligations,
for any reason whatsoever, including without limitation the fact that (i) the
Guaranteed Obligations, or any part thereof, exceeds the amount permitted by
law, (ii) the act of creating the Guaranteed Obligations or any part thereof is
ultra vires, (iii) the officers or representatives executing the Note, the
Mortgage or the other Loan Documents or otherwise creating the Guaranteed
Obligations acted in excess of their authority, (iv) the Guaranteed Obligations
violate applicable usury laws, (v) the Borrower has valid defenses, claims or
offsets (whether at law, in equity or by agreement) unrelated to the willful
misconduct or gross negligence of Lender or anyone acting by, through or under
Lender which render the Guaranteed Obligations wholly or partially uncollectible
from Borrower, (vi) the creation, performance or repayment of the Guaranteed
Obligations (or the execution, delivery and performance of any document or
instrument representing part of the Guaranteed Obligations or executed in
connection with the Guaranteed Obligations, or given to secure the repayment of
the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or
(vii) the Note, the Mortgage or any of the other Loan Documents have been forged
or otherwise are irregular or not genuine or authentic through no willful
misconduct or gross negligence of Lender or anyone acting by, through or under
Lender, it being agreed that Guarantor shall remain liable hereon regardless of
whether Borrower or any other person be found not liable on the Guaranteed
Obligations or any part thereof for any reason.

2.5          Release of Obligors. Any full or partial release of the liability
of Borrower on the Guaranteed Obligations, or any part thereof, or of any
co-guarantors, or any other person or entity now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Guaranteed Obligations, or any
part thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that other parties will be liable to pay or

 

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perform the Guaranteed Obligations, or that Lender will look to other parties to
pay or perform the Guaranteed Obligations.

2.6          Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Obligations.

2.7          Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.

2.8          Care and Diligence. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including but not limited to any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Obligations or (ii) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor, or (iii) to take
or prosecute any action in connection with any instrument or agreement
evidencing or securing all or any part of the Guaranteed Obligations.

2.9          Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Obligations, or any part thereof,
shall not be properly perfected or created, or shall prove to be unenforceable
or subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Obligations.

2.10       Merger. The reorganization, merger or consolidation of Borrower into
or with any other corporation or entity.

2.11       Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else.

2.12       Other Actions Taken or Omitted. Any other action taken or omitted to
be taken with respect to the Loan Documents, the Guaranteed Obligations, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the Guaranteed Obligations pursuant to the terms hereof, it is the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, which obligation shall be deemed satisfied only upon the full
and final payment and satisfaction of the Guaranteed Obligations.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and extend credit to Borrower,
Guarantor represents and warrants to Lender as follows:

3.1          Benefit. Guarantor is the parent of Second Lender, has received, or
will receive, direct or indirect benefit from the making of this Guaranty with
respect to the Guaranteed Obligations.

3.2          Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
the Borrower and is familiar with the value of any and all collateral intended
to be created as security for the payment of the Note or Guaranteed Obligations;
however, Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty.

3.3          No Representation By Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce
Guarantor to execute this Guaranty.

3.4          Guarantor's Financial Condition. As of the date hereof, and after
giving effect to this Guaranty and the contingent obligation evidenced hereby,
Guarantor is, and will be, solvent, and has and will have assets which, fairly
valued, exceed its obligations, liabilities (including contingent liabilities)
and debts, and has and will have property and assets sufficient to satisfy and
repay its obligations and liabilities. Notwithstanding the foregoing, Guarantor
shall at all times while the Amended and Restated Tax Indemnity Agreement
between Guarantor and Richard A. Heise dated January 10, 2006, as amended by the
First Amendment to Amended and Restated Tax Indemnity Agreement dated as of even
date hereof, is in effect and the obligations of Guarantor therein remain
outstanding, maintain a minimum net worth of no less than $50,000,000.00 (as
reasonably determined by Lender) (the "Minimum Net Worth"). Guarantor shall
furnish to Lender, on or before forty-five (45) days after the end of each
calendar quarter and on or before ninety (90) days after the end of each
calendar year, quarterly or annual, as applicable, current financial statements
detailing the assets and liabilities of Guarantor. All such financial statements
shall be (i) accompanied by a certificate executed by the general partner of
Guarantor stating that such statements represent fairly the financial condition
of Guarantor and (ii) audited by a "Big Five" accounting firm or other
independent certified public accountant acceptable to Lender or, in the event
the financial statements of Prime Group Realty Trust ("Trust"), a Maryland
Trust, the general partner of Guarantor, include the requisite financial
information of Guarantor, the financial statements of Trust shall be so audited
and provided to Lender in lieu of audited financial statements of Guarantor.
Lender acknowledges that the accounting firm of Grant Thornton LLP is an
accounting firm acceptable to Lender. Lender's determination of Guarantor's net
worth shall include as an add back for accumulated depreciation on consolidated
and unconsolidated properties and joint ventures and properties held for sale.
Notwithstanding anything herein to the contrary, in the event Guarantor fails at
any time to maintain the Minimum Net Worth, such failure shall not constitute an
Event of

 

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Default under this Guaranty or the Loan Documents. Any such failure shall,
however, result in a Cash Restriction Condition (as defined in the Cash
Management Agreement constituting a part of the Loan Documents), subject to the
terms of the Cash Management Agreement constituting a part of the Loan
Documents.

3.5          Legality. The execution, delivery and performance by Guarantor of
this Guaranty and the consummation of the transactions contemplated hereunder do
not, and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Guarantor is subject or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, mortgage, charge, lien, or any
contract, agreement or other instrument to which Guarantor is a party or which
may be applicable to Guarantor. This Guaranty is a legal and binding obligation
of Guarantor and is enforceable in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights.

3.6          Survival. All representations and warranties made by Guarantor
herein shall survive the execution hereof.

ARTICLE IV

 

SUBORDINATION OF CERTAIN INDEBTEDNESS

4.1          Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower (arising as a result of
subrogation or otherwise) as a result of Guarantor's payment of all or a portion
of the Guaranteed Obligations. Upon the occurrence and during the continuance of
an Event of Default, prior to the repayment of the Loan, Guarantor shall not
receive or collect, directly or indirectly, from Borrower or any other party any
amount upon the Guarantor Claims.

4.2          Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application upon
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and

 

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such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.

4.3          Payments Held in Trust. In the event that, notwithstanding anything
to the contrary in this Guaranty, Guarantor should receive any funds, payment,
claim or distribution which is prohibited by this Guaranty, Guarantor agrees to
hold in trust for Lender an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions so
received except to pay them promptly to Lender, and Guarantor covenants promptly
to pay the same to Lender.

4.4          Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Guaranteed
Obligations, regardless of whether such encumbrances in favor of Guarantor or
Lender presently exist or are hereafter created or attach. Without the prior
written consent of Lender, Guarantor shall not (i) exercise or enforce any
creditor's right it may have against Borrower, or (ii) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interests, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.

ARTICLE V

 

MISCELLANEOUS

5.1         Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided by law. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

5.2          Notices. All notices given hereunder shall be in writing and shall
be either hand delivered or mailed, by registered U.S. mail, Return Receipt
Requested, first class postage prepaid, to the parties at their respective
addresses below or at such other address for any party as such party may
designate by notice to the other parties hereto:

 

GUARANTY - Page 10

 

 

To Lender:

CWCapital LLC

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

 

Attention:

Legal Division

 

Telecopier:

(781) 707-9397

 

Re:

Continental Towers,

Rolling Meadows, Illinois

CWCapital LLC

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

 

Attention:

Servicing Division

 

Telecopier:

(781) 707-9498

or any other servicer of the Loan

 

Re:

Continental Towers,

Rolling Meadows, Illinois

 

To Guarantor:

Prime Group Realty, L.P.

c/o Prime Group Realty Trust

77 West Wacker Drive, Suite 3900

Chicago, Illinois 60601

 

Attention:

Jeffrey Patterson

 

Telecopier:

(312) 917-1684

Prime Group Realty, L.P.

c/o Prime Group Realty Trust

77 West Wacker Drive, Suite 3900

Chicago, Illinois 60601

 

Attention:

James Hoffman

 

Telecopier:

(312) 917-1684

 

with copies to:

Winston & Strawn LLP

Attention: Christine Graff

35 W. Wacker Drive

Chicago, Illinois 60601-9703

 

5.3          Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State in which the real property encumbered by
the Mortgage is located and the applicable laws of the United States of America.

5.4          Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Guaranty, such provision shall be fully severable and this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and

 

GUARANTY - Page 11

 

the remaining provisions of this Guaranty shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

5.5          Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.

5.6          Parties Bound; Assignment; Joint and Several. This Guaranty shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives; provided, however,
that Guarantor may not, without the prior written consent of Lender, assign any
of its rights, powers, duties or obligations hereunder. If Guarantor consists of
more than one person or party, the obligations and liabilities of each such
person or party shall be joint and several.

5.7          Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Guaranty.

5.8          Recitals. The recital and introductory paragraphs hereof are a part
hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.

5.9          Counterparts. To facilitate execution, this Guaranty may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Guaranty to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.

5.10       Rights and Remedies. If Guarantor becomes liable for any indebtedness
owing by Borrower to Lender, by endorsement or otherwise, other 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 Guarantor. 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 remedy.

5.11       Other Defined Terms. Any capitalized term utilized herein shall have
the meaning as specified in the Mortgage, unless such term is otherwise
specifically defined herein.

5.12       Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO

 

GUARANTY - Page 12

 

GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS
INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS
OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO
COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY
ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN
GUARANTOR AND LENDER.

5.13       Waiver of Right To Trial By Jury. GUARANTOR HEREBY AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE MORTGAGE, OR THE
OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS GUARANTY IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.

5.14       Sale of Notes and Securitization. Guarantor acknowledges that Lender
and its successors and assigns shall have the right to do any and all of the
following: (i) sell the Security Instrument, the Note and other Loan Documents
to one or more investors as a whole loan, (ii) participate the Loan secured by
the Security Instrument to one or more investors, (iii) deposit the Security
Instrument, the Note and other Loan Documents with a trust, which trust may sell
certificates to investors evidencing an ownership interest in the trust assets,
(iv) otherwise sell the Loan or interest therein to investors, or (v) cause the
Note, the Security Instrument and the other Loan Documents to be split into two
or more notes, parts or interests, in whatever proportion Lender deems
appropriate, which may be in the form of pari passu interests, senior and junior
interests, or other interests, and thereafter to sell, assign, participate,
syndicate or securitize all or any part of either or both of such severed or
split obligations and documents (the transactions referred to in clauses (i)
through (v) are hereinafter each referred to as "Secondary Market Transaction"
or "Securitization", and any securities secured by or evidencing ownership
interests in the Note and the Security Instrument or otherwise issued in
connection with a Secondary Market Transaction may be referred to as
"Securities").

 

GUARANTY - Page 13

 

Guarantor shall cooperate with Lender in effecting any such Secondary Market
Transaction and shall cooperate to implement all requirements imposed by any
Rating Agency involved in any Secondary Market Transaction. Without limitation,
at the request of Lender Guarantor shall:

 

(a)          (i)          provide such financial and other information with
respect to the Security Property, the Guarantor and (ii) make such
representations and warranties as of the closing date of the Secondary Market
Transaction with respect to the Guarantor as are customarily provided in
securitization transactions and as may be reasonably requested by the holder of
the Note or the Rating Agencies and consistent with the facts covered by such
representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents (collectively, the
"Provided Information"), together, if customary, with appropriate verification
and/or consents of the Provided Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to the Lender and the
Rating Agencies;

(b)          execute such amendments to the Loan Documents as may be requested
by the holder of the Note or the Rating Agencies or otherwise to effect the
Secondary Market Transaction. Guarantor shall not be required to modify any
documents evidencing or securing the Loan so as to modify (A) the interest rate
payable under the Note, (B) the stated maturity of the Note, (C) the
amortization of principal of the Note, (D) the non-recourse provisions of the
Loan or (E) any other material economic term of the Loan. However, in the case
of split notes, the interest rate and principal amortization may be changed,
provided that for the combined obligations taken as an aggregate, the over-all
interest rate and amortization of principal shall remain the same; and

(c)          to the extent not already required to be provided by Guarantor
under this Agreement, Guarantor shall use reasonable efforts to satisfy the
market standards to which the holder of the Note customarily adheres or which
may be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transaction.

All reasonable third party costs and expenses incurred by Lender in connection
with Guarantor’s complying with requests made under Section 5.14 (i) and (iv)
shall be paid by the Guarantor. All reasonable actual third party costs and
expenses incurred by Lender or Guarantor in connection with Guarantor's
complying with the requests made under Section 5.14(v) shall be paid by the
Lender

In the event that the provisions of the Security Instrument or any Loan
Documents require the receipt of written confirmation from each Rating Agency
with respect to the ratings on the Certificates, or, in accordance with the
terms of the transaction documents relating to a Secondary Market Transaction,
such a rating confirmation is required in order for the consent of the Lender to
be given, the Guarantor shall pay all of the costs and expenses of the Lender,
Servicer and each Rating Agency in connection therewith, and, if applicable,
shall pay any fees imposed by any Rating Agency as a condition to the delivery
of such confirmation.

 

GUARANTY - Page 14

 

 

5.15

Securitization.

(a)          Borrower understands that certain of the Provided Information may
be included in disclosure documents in connection with the Secondary Market
Transaction, including, without limitation, a prospectus, prospectus supplement
or private placement memorandum (each, a "Disclosure Document") and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Secondary Market Transaction. In
the event that the Disclosure Document is required to be revised prior to the
sale of all Securities, the Borrower will cooperate with the holder of the Note
in updating the Disclosure Document by providing all current information
necessary to keep the Disclosure Document accurate and complete in all material
respects.

5.16       Reinstatement in Certain Circumstances. If at any time any payment of
the principal of or interest under the Note or any other amount payable by the
Borrower under the Loan Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, Guarantor's obligations hereunder with respect to such payment shall
be reinstated as though such payment has been due but not made at such time.

[Remainder of this page is intentionally left blank.]

 

GUARANTY - Page 15

 

EXECUTED as of the day and year first above written.

 

GUARANTOR:

 

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

By:   PRIME GROUP REALTY TRUST,
a Maryland trust,
its General Partner

By:/s/ Paul G. Del Vecchio  

Name: Paul G. Del Vecchio

Title:   Senior Vice President - Capital Markets

Attachment

 

Notarial Jurat

 

GUARANTY – Signature Page

 

STATE OF ILLINOIS

§

 

§

COUNTY OF COOK

§

This instrument was ACKNOWLEDGED before me on November 21, 2006, by PAUL G. DEL
VECCHIO, as Senior Vice President - Capital Markets of PRIME GROUP REALTY TRUST,
a Maryland trust, as General Partner of PRIME GROUP REALTY, L.P., a Delaware
limited partnership, on behalf of said limited partnership.

[S E A L]

/s/ Melita Strickland

 

Notary Public, State of Illinois

My Commission Expires:

 

 

 

5-4-2009

Melita Strickland

 

Printed Name of Notary Public

 

 

 

 

 

GUARANTY – Acknowledgment Page