EXHIBIT XI
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. (S)(S)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
(S)(S)101(28) of said Code, now existing or hereafter amended; and (b) is an
"insider-guarantor" under (S)(S)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
2
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, 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.
3
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.
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
4
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 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
5
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.
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
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
6
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
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.
7
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.
[Balance of page intentionally left blank; signature page follows.]
8
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
-------------------------------------------
Its: Executive Vice President
-----------------------------------
