CONTINUING UNCONDITIONAL GUARANTY
WHEREAS, PRIME GROUP VI, L.P., an Illinois limited partnership
("BORROWER") has entered into a Loan Agreement dated as of December 18, 1998,
(the "LOAN AGREEMENT") with LASALLE NATIONAL BANK, a national banking
association ("LENDER"), pursuant to which Lender has made or may, in its sole
discretion, from time to time hereafter, make loans and advances to or extend
other financial accommodations to Borrower;
WHEREAS, The Prime Group, Inc., an Illinois corporation
("GUARANTOR") is a limited partner of Borrower and is desirous of having
Lender extend and/or continue the extension of credit to Borrower, and Lender
has required that Guarantor execute and deliver this Guaranty to Lender as a
condition to the extension and continuation of credit by Lender; and
WHEREAS, the extension and/or continued extension of credit, as
aforesaid, by Lender is necessary and desirable to the conduct and operation
of the business of Borrower and will inure to the personal and financial
benefit of Guarantor;
1. NOW, THEREFORE, for value received and in consideration of the
Loans made or to be made by Lender to Borrower pursuant to the Loan
Agreement, the Guarantor hereby unconditionally guaranties (i) the full and
prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter, of all of the
indebtedness, liabilities and obligations of every kind and nature of
Borrower to Lender or any parent, affiliate or subsidiary of Lender (the term
"LENDER" as used hereinafter shall include such parents, affiliates and
subsidiaries under the Loan Agreement), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, joint or
several, now or hereafter existing, or due or to become due, and howsoever
owned, held or acquired by Lender, whether through discount, overdraft,
purchase, direct loan or as collateral or otherwise, under the Loan Agreement
and (ii) the prompt, full and faithful discharge by Borrower of each and
every term, condition, agreement, representation and warranty now or
hereafter made by Borrower to Lender under the Loan Agreement (all such
indebtedness, liabilities and obligations being hereinafter referred to as
the "BORROWER'S OBLIGATIONS"). Guarantor further agrees to pay all costs and
expenses, including, without limitation, all court costs and reasonable
attorneys' and paralegals' fees paid or incurred by Lender in endeavoring to
collect all or any part of Borrower's Obligations from, or in prosecuting any
action against, Guarantor or any other guarantor of all or any part of
Borrower's Obligations. All amounts payable by Guarantor under this Guaranty
shall be payable upon demand by Lender.
2. Notwithstanding any provision of this Guaranty to the contrary, it
is intended that this Guaranty, and any liens and security interests granted
by Guarantor to secure this Guaranty, not constitute a "Fraudulent
Conveyance" (as defined below). Consequently, Guarantor agrees that if the
Guaranty, or any liens or security interests securing this Guaranty, would,
but for the application of this sentence, constitute a Fraudulent Conveyance,
this Guaranty and each such lien and security interest shall be valid and
enforceable only to the maximum extent that would not cause this Guaranty or
such lien or security interest to constitute a Fraudulent Conveyance, and
this Guaranty
shall automatically be deemed to have been amended accordingly at all
relevant times. For purposes hereof, "FRAUDULENT CONVEYANCE" means a
fraudulent conveyance under Section 548 of the "Bankruptcy Code" (as
hereinafter defined) or a fraudulent conveyance or fraudulent transfer under
the provisions of any applicable fraudulent conveyance or fraudulent transfer
law or similar law of any state, nation or other governmental unit, as in
effect from time to time.
3. Guarantor hereby agrees that, except as hereinafter provided, its
obligations under this Guaranty shall be unconditional, irrespective of (i)
the validity or enforceability of Borrower's Obligations or any part thereof,
or of any promissory note or other document evidencing all or any part of
Borrower's Obligations, (ii) the absence of any attempt to collect Borrower's
Obligations from Borrower or any other guarantor or other action to enforce
the same, (iii) the waiver or consent by Lender with respect to any provision
of any instrument evidencing Borrower's Obligations, or any part thereof, or
any other agreement heretofore, now or hereafter executed by Borrower and
delivered to Lender, (iv) failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security
or collateral for Borrower's Obligations, (v) the institution of any
proceeding under Chapter 11 of Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended (the "BANKRUPTCY CODE"), or any similar
proceeding, by or against Borrower, or Lender's election in any such
proceeding of the application of Section 1111(b)(2) of the Bankruptcy Code,
(vi) any borrowing or grant of a security interest by Borrower as
debtor-in-possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion
of Lender's claim(s) for repayment of Borrower's Obligations, or (viii) any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor other than if the Borrower's Obligations
have been paid in full and discharged and the Loan Agreement is terminated.
4. If bankruptcy or reorganization proceedings at any time are
instituted by or against the Borrower under the Bankruptcy Code, and if in
the one year period ending on the date such proceedings are instituted, the
Borrower has granted a security interest or made a non-cash transfer in favor
of the Lender at a time when the aggregate value of the collateral securing
the Loan (as defined in the Loan Agreement) was less than the aggregate
amount of all the guaranteed indebtedness, and Guarantor: (a) is an "insider"
as defined in Section 101(28) of said Code, now existing or hereafter
amended; and (b) is an "insider-guarantor" under Section 547(b) of the Code,
now existing or hereafter amended, then in any such event, the Guarantor as
such "insider-guarantor" agrees not to seek recourse (by subrogation or
otherwise) against or in any manner become a creditor of the Borrower if
called upon to make payment to the Lender hereunder.
5. Guarantor hereby waives, to the extent permitted by applicable law
and except as otherwise provided herein or in the Loan Agreement, diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of Borrower, protest or notice with respect to
Borrower's Obligations and all demands whatsoever, and covenants that this
Guaranty will not be discharged, except by complete performance of the
obligations and liabilities contained herein. Upon any Event of Default by
Borrower as provided in any instrument or document evidencing all or any part
of Borrower's Obligations, including without limitation the Loan Agreement,
Lender may, at its sole election, proceed directly and at once, without
notice, against Guarantor to collect and recover the full amount or any
portion of Borrower's Obligations,
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without first proceeding against Borrower, or any other person, firm, or
corporation, or against any security or collateral for Borrower's Obligations.
6. Lender is hereby authorized, without notice or demand and without
affecting the liability of Guarantor hereunder, to at any time and from time
to time (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, Borrower's Obligations or otherwise
modify, amend or change the terms of any promissory note or other agreement,
document or instrument now or hereafter executed by Borrower and delivered to
Lender; (ii) accept partial payments on Borrower's Obligations; (iii) take
and hold security or collateral for the payment of Borrower's Obligations
guaranteed hereby, or for the payment of this Guaranty, or for the payment of
any other guaranties of Borrower's Obligations or other liabilities of
Borrower, and exchange, enforce, waive and release any such security or
collateral; (iv) apply such security or collateral and direct the order or
manner of sale thereof as in its sole discretion it may determine; and (v)
settle, release, compromise, collect or otherwise liquidate Borrower's
Obligations and any security or collateral therefor in any manner, without
affecting or impairing the obligations of Guarantor hereunder. Lender shall
have the exclusive right to determine the time and manner of application of
any payments or credits, whether received from Borrower or any other source,
and such determination shall be binding on Guarantor. All such payments and
credits may be applied, reversed and reapplied, in whole or in part, to any
of Borrower's Obligations as Lender shall determine in its sole discretion
without affecting the validity or enforceability of this Guaranty.
7. The Guarantor will at all times maintain on a consolidated and
combined basis the ratio of Operating Income to Debt Service at the end of
each month of not less than 2.0 to 1.0. For purposes of this paragraph:
"NET INCOME" means, with reference to any quarter, the net income (or
net deficit) of Guarantor on a consolidated and combined basis for such
quarter on a modified cash basis (i.e., cash receipts less cash disbursements
and accrued expenses), and without limiting the foregoing, after deduction
from gross income of all expenses and reserves, including reserves for all
taxes on or measured by income, but excluding any extraordinary profits and
also excluding any taxes on such profits.
"OPERATING INCOME" means, with reference to any quarter, Net Income for
such period plus all amounts deducted in arriving at such Net Income amount
in respect of (i) Debt Service for such quarter, (ii) federal, state and
local income taxes for such quarter, and (iii) non-cash items such as
depreciation and amortization of intangibles.
"DEBT SERVICE" means, with reference to any quarter, the sum of all
interest paid, accrued or capitalized and any required principal amortization
of the Guarantor on a combined and consolidated basis for such quarter
determined in accordance with GAAP.
On or before the 20th day after the end of each calendar quarter, Guarantor
shall provide Lender with a compliance certificate in a form reasonably
satisfactory to Lender stating whether Guarantor is in compliance with the
covenant set forth in this paragraph.
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8. To secure the payment and performance of Guarantor's obligations
and liabilities contained herein, Guarantor grants to Lender a security
interest in all property of Guarantor delivered concurrently herewith, if
any, or which is now, or at any time hereafter in transit to, or in the
possession, custody or control of Lender, and all proceeds of all such
property. Guarantor agrees that Lender shall have the rights and remedies of
a secured party under the Uniform Commercial Code of Illinois, as now
existing or hereafter amended, with respect to all of the aforesaid property,
including without limitation thereof, the right to sell or otherwise dispose
of any or all of such property and apply the proceeds of such sale to the
payment of Borrower's Obligations. In addition, at any time after maturity
of Borrower's Obligations by reason of acceleration or otherwise, Lender may,
in its sole discretion, without notice to Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate
and apply toward the payment of Borrower's Obligations (i) any indebtedness
due or to become due from Lender to Guarantor, and (ii) any moneys, credits
or other property belonging to Guarantor, at any time held by or coming into
the possession of Lender whether for deposit or otherwise.
9. Guarantor hereby assumes responsibility for keeping itself informed
of the financial condition of Borrower, and any and all endorsers and/or
other guarantors of any instrument or document evidencing all or any part of
Borrower's Obligations and of all other circumstances bearing upon the risk
of nonpayment of Borrower's Obligations or any part thereof that diligent
inquiry would reveal and Guarantor hereby agrees that Lender shall have no
duty to advise Guarantor of information known to Lender regarding such
condition or any such circumstances or to undertake any investigation not a
part of its regular business routine. If Lender, in its sole discretion,
undertakes at any time or from time to time to provide any such information
to any Guarantor, Lender shall be under no obligation to update any such
information or to provide any such information to Guarantor on any subsequent
occasion.
10. The Guarantor hereby represents and warrants unto the Lender that:
(i) the Guarantor is a corporation validly organized and existing and in good
standing under the laws of the State of Illinois, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification
(unless the failure to so qualify would not be reasonably likely to
materially and adversely affect the Guarantor), and has full power and
authority to own its property and to conduct its business presently conducted
by it; (ii) the execution, delivery and performance by the Guarantor of this
Guaranty, are within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene the
Guarantor's articles of incorporation or by-laws or any contractual
restriction, law or governmental regulation or court decree or order binding
on or affecting the Guarantor (the effect of which contravention would be
reasonably likely to have a material adverse effect upon the Guarantor) or
result in, or require the creation or imposition of, any Lien on any of the
Guarantor's properties; (iii) this Guaranty constitutes a legal, valid and
binding obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally; (iv) the
consolidated balance sheets of the Guarantor and its subsidiaries as at
December 31, 1997 and the related statements of earnings of the Guarantor and
its subsidiaries, copies of which have been furnished to the Lender, have
been prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly the consolidated financial condition
of the
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Guarantor covered thereby as at the dates thereof and the results of their
operations for the periods then ended, and since December 31, 1997, there has
been no material adverse change in the financial condition, operations,
assets, business or properties of the Guarantor.
11. Guarantor consents and agrees that Lender shall be under no
obligation to xxxxxxxx any assets in favor of Guarantor or against or in
payment of any or all of Borrower's Obligations. Guarantor further agrees
that, to the extent that Borrower makes a payment or payments to Lender, or
Lender receives any proceeds of collateral, which payment or payments or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Borrower, its estate,
trustee, receiver or any other party, including, without limitation,
Guarantor, under any bankruptcy law, state or federal law, common law or
equitable theory, then to the extent of such payment or repayment, Borrower's
Obligations or the part thereof which has been paid, reduced or satisfied by
such amount, and Guarantor's obligations hereunder with respect to such
portion of Borrower's Obligations, shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or
satisfaction occurred.
12. Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of
Borrower's Obligations, or against any of Borrower's properties, whether
arising by reason of any payment by Guarantor to Lender pursuant to the
provisions hereof, or otherwise, shall be subordinate and subject in right of
payment to the prior payment, in full, of all of Borrower's Obligations;
provided, however, that this provision shall not apply to distributions made
or to be made by Borrower under Borrower's partnership agreement to Guarantor
prior to any Event of Default (as defined in the Loan Agreement) by Borrower
as provided in any instrument or document evidencing all or any part of
Borrower's Obligations, including, without limitation, the Loan Agreement.
13. Subject to the terms of the Loan Agreement, Lender may, without
notice to anyone, sell or assign Borrower's Obligations or any part thereof,
or grant participations therein, and in any such event each and every
immediate or remote assignee or holder of, or participant in, all or any of
Borrower's Obligations shall have the right to enforce this Guaranty, by suit
or otherwise for the benefit of such assignee, holder, or participant, as
fully as if herein by name specifically given such right, but Lender shall
have an unimpaired right, prior and superior to that of any such assignee,
holder or participant, to enforce this Guaranty for the benefit of Lender, as
to any part of Borrower's Obligations retained by Lender.
14. This Guaranty shall be binding upon Guarantor and upon the
successors (including without limitation, any receiver, trustee or debtor in
possession of or for Guarantor) of Guarantor and shall inure to the benefit
of Lender and its successors and assigns. If there is more than one
signatory hereto, all references to Guarantor herein shall include each and
every Guarantor and each and every obligation of Guarantor hereunder shall be
the joint and several obligation of each Guarantor. Each Guarantor that is a
corporation or a partnership hereby represents and warrants that it has all
necessary corporate or partnership authority, as the case may be, to execute
and deliver this Guaranty and to perform its obligations hereunder.
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15. This Guaranty shall continue in full force and effect, and Lender
shall be entitled to make loans and advances and extend financial
accommodations to Borrower under the Loan Agreement on the faith hereof until
such time as Lender has, in writing, notified Guarantor that all of
Borrower's Obligations have been paid in full and discharged and the Loan
Agreement has been terminated or until Lender has actually received written
notice from any Guarantor of the discontinuance of this Guaranty as to that
Guarantor, or written notice of the death, incompetency or dissolution of any
Guarantor. In case of any discontinuance by, or death, incompetency or
dissolution of, any Guarantor (collectively, a "TERMINATION EVENT"), this
Guaranty and the obligations of such Guarantor and his or its heirs, legal
representatives, successors or assigns, as the case may be, shall remain in
full force and effect with respect to all of Borrower's Obligations incurred
prior to the receipt by Lender of written notice of the Termination Event.
The occurrence of a Termination Event with respect to one Guarantor shall not
affect or impair the obligations of any other Guarantor hereunder.
16. Anything in this Guaranty to the contrary notwithstanding, it is
expressly agreed that neither the Lender, nor its successors or assigns,
shall have any recourse of any kind whatsoever for or with regard to any
indebtedness, liability or obligation under this Guaranty whether or not so
provided herein, against any of the following persons personally or against
any of the separate property or estate of any of the following persons (as
distinguished from the property of the Guarantor) and the Lender, and each of
its successors and assigns waives and does hereby waive any such personal
liability: any present or future director or shareholder or employee of the
Guarantor, any present or future partner in any partnership which is or
becomes a shareholder of the Guarantor, any person or entity that, directly
or indirectly, through one or more partnerships, is a partner in any
partnership which is or becomes a shareholder of the Guarantor, or any
shareholder, officer, director, employee, trustee, beneficiary, member or
agent of any corporation or other entity which is or becomes a shareholder of
the Guarantor. The foregoing shall not impair the ability of the Lender to
enforce the terms of this Guaranty against the Guarantor.
17. Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such
prohibition or i-nvalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
18. All notices to be sent under this Guaranty shall be sent by any
method of delivery described in the Loan Agreement, and to the Lender at the
addresses described in the Loan Agreement, and to Guarantor at the following
addresses:
To Guarantor: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000 (Suite 4200 from and after February 1, 1999)
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000)000-0000
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With a copies to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000)000-0000
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000)000-0000
or to such other addresses as Guarantor or Lender shall designate in a written
notice to the other.
19. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS
OF THE STATE OF ILLINOIS.
20. Guarantor irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN
COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. GUARANTOR
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. GUARANTOR HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST GUARANTOR BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
SERVICE OF LEGAL PROCESS MAY BE MADE ON THE GUARANTOR BY ANY METHOD OF
DELIVERY, AND TO THE ADDRESSES, FOR SENDING NOTICES HEREUNDER, AS DESCRIBED
IN PARAGRAPH 17 ABOVE.
21. GUARANTOR AND LENDER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
GUARANTY.
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IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the above-mentioned date.
THE PRIME GROUP, INC., an Illinois
corporation
By: /s/ XXXXXX X. XXXXXX
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Its: EXECUTIVE VICE PRESIDENT
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