<PAGE>

                                                                     Ex. 10.26



                                CREDIT AGREEMENT

                                      AMONG

                            PRIME GROUP REALTY, L.P.

                                       and

                            PRIME GROUP REALTY TRUST

                                       and

                                BANKBOSTON, N.A.

                                       and

                    PRUDENTIAL SECURITIES CREDIT CORPORATION


                                November 17, 1997

                                 Amended 12/15/97

<PAGE>

                               TABLE OF CONTENTS

Section 1   DEFINITIONS AND RULES OF INTERPRETATION........................   1
       Section 1.1   Definitions...........................................   1
       Section 1.2   Rules of Interpretation...............................  19

Section 2   REVOLVING CREDIT FACILITY......................................  20
       Section 2.1   Commitment to Lend; Limitation on Total Commitment....  20
       Section 2.2   Reduction of Commitment...............................  20
       Section 2.3   The Notes.............................................  20
       Section 2.4   Interest on Loans.....................................  21
       Section 2.5   Requests for Loans....................................  21
       Section 2.6   Conversion Options....................................  22
       Section 2.7   Funds for Loans.......................................  22
       Section 2.8.  IRB Indebtedness Account..............................  23
       Section 2.9.  Letters of Credit.....................................  24

Section 3   REPAYMENT OF THE LOANS.........................................  26
       Section 3.1   Maturity..............................................  26
       Section 3.2   Mandatory Repayments of Loan..........................  26
       Section 3.3   Optional Repayments of Loans..........................  27

Section 4   CERTAIN GENERAL PROVISIONS.....................................  28
       Section 4.1   Revolving Credit Facility Fees and Agent's Fee........  28
       Section 4.2   Commitment Fee........................................  28
       Section 4.3   Funds for Payments....................................  30
       Section 4.4   Computations..........................................  30
       Section 4.5   Additional Costs, Etc.................................  30
       Section 4.6   Capital Adequacy......................................  32
       Section 4.7   Certificate...........................................  32
       Section 4.8   Indemnity.............................................  32
       Section 4.9   Interest on Overdue Amounts...........................  32
       Section 4.10  Inability to Determine Eurodollar Rate................  33
       Section 4.11  Illegality............................................  33
       Section 4.12  Replacement of Lenders................................  33

Section 5   COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.................  34
       Section 5.1   Collateral Security...................................  34
       Section 5.2.  No Limitation on Recourse.............................  34

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       Section 5.3.  Additional Properties.................................  34
       Section 5.4.  Conditions to Approval of Additional Properties.......  35
       Section 5.5.  Release of Mortgaged Properties.......................  36

Section 6.  REPRESENTATIONS AND WARRANTIES.................................  36
       Section 6.1.  Authority; Etc........................................  37
       Section 6.2.  Governmental Approvals................................  38
       Section 6.3.  Title to Properties...................................  38
       Section 6.4.  Financial Statements..................................  38
       Section 6.5.  No Material Changes, Etc..............................  39
       Section 6.6.  Franchises, Patents, Copyrights, Etc..................  39
       Section 6.7.  Litigation............................................  39
       Section 6.8.  No Materially Adverse Contracts, Etc..................  40
       Section 6.9.  Compliance With Other Instruments, Laws, Etc..........  40
       Section 6.10. Tax Status............................................  40
       Section 6.11. Event of Default......................................  40
       Section 6.12. Investment Company Act................................  40
       Section 6.13. Absence of Financing Statements, Etc..................  41
       Section 6.14. Setoff, Etc...........................................  41
       Section 6.15. Certain Transactions..................................  41
       Section 6.16. Benefit Plans: Multiemployer Plans: Guaranteed Pension 
                        Plans..............................................  41
       Section 6.17. Regulations U and X...................................  41
       Section 6.18. Environmental Compliance..............................  41
       Section 6.19. Subsidiaries and Affiliates...........................  43
       Section 6.20. Major Leases..........................................  43
       Section 6.21. Loan Documents........................................  43
       Section 6.22. Mortgaged Properties..................................  43

Section 7.  AFFIRMATIVE COVENANTS OF THE BORROWER..........................  47
       Section 7.1.  Punctual Payment......................................  47
       Section 7.2.  Maintenance of Office.................................  47
       Section 7.3.  Records and Accounts..................................  47
       Section 7.4.  Financial Statements, Certificates and Information....  47
       Section 7.5.  Notices...............................................  49
       Section 7.6.  Existence; Maintenance of REIT Status; Maintenance of 
                        Properties.........................................  50
       Section 7.7.  Insurance.............................................  51
       Section 7.8.  Taxes.................................................  51
       Section 7.9.  Inspection of Properties and Books; Confidential 
                        Information........................................  52
       Section 7.10. Compliance with Laws, Contracts, Licenses, and 
                        Permits............................................  52
       Section 7.11. Use of Proceeds.......................................  52
       Section 7.12. Appraisals............................................  52
       Section 7.13. Leases; Lease Approvals...............................  53
       Section 7.14. Further Assurance.....................................  53
       Section 7.15. Environmental Indemnification.........................  53

<PAGE>

       Section 7.16. Response Actions......................................  54
       Section 7.17. Environmental Assessments.............................  54
       Section 7.18. Employee Benefit Plans................................  54
       Section 7.19. Required Interest Rate Contracts......................  55

Section 8.  CERTAIN NEGATIVE COVENANTS OF THE BORROWER.....................  55
       Section 8.1   Restrictions on Indebtedness..........................  56
       Section 8.2.  Restrictions on Liens, Etc............................  56
       Section 8.3.  Restrictions on Investments...........................  58
       Section 8.4.  Merger, Consolidation and Disposition of Properties...  58
       Section 8.5.  Sale and Leaseback....................................  59
       Section 8.6.  Compliance with Environmental Laws....................  59
       Section 8.7.  Distributions.........................................  59
       Section 8.8.  Leases................................................  60

Section 9.  FINANCIAL COVENANTS OF THE BORROWER............................  60
       Section 9.1.  Collateral Value......................................  60
       Section 9.2.  Minimum Debt Service Coverage.........................  60
       Section 9.3.  Total Liabilities to Total Adjusted Assets............  61
       Section 9.4.  Minimum Tangible Net Worth............................  61
       Section 9.5.  Total Operating Cash Flow to Interest Expense.........  61
       Section 9.6.  EBITDA to Fixed Charges...............................  61

Section 10. CONDITIONS TO EFFECTIVENESS....................................  61
       Section 10.1. Loan Documents........................................  61
       Section 10.2. Certified Copies of Organization Documents; Good 
                        Standing Certificates..............................  61
       Section 10.3. By-laws; Resolutions..................................  62
       Section 10.4. Incumbency Certificate; Authorized Signers............  62
       Section 10.5. Opinions of Counsel...................................  62
       Section 10.6. Payment of Fees.......................................  62
       Section 10.7. Validity of Liens.....................................  62
       Section 10.8. Survey................................................  63
       Section 10.9. Title Insurance; Title Exception Documents............  63
       Section 10.10. Leases...............................................  63
       Section 10.11. Estoppel and Attornment Agreements...................  63
       Section 10.12. Certificates of Insurance............................  63
       Section 10.13. Environmental Reports................................  63
       Section 10.14. Environmental Indemnity..............................  63
       Section 10.15. Appraisals...........................................  64
       Section 10.16. Inspecting Engineers' Reports........................  64
       Section 10.17. Initial Letters of Credit............................  64
       Section 10.18. UCC Lien Searches....................................  64
       Section 10.19. Formation Transactions Complete......................  64

<PAGE>

Section 11. CONDITIONS TO ALL BORROWINGS...................................  64
       Section 11.1. Representations True; No Event of Default; Compliance 
                        Certificate........................................  64
       Section 11.2. No Legal Impediment...................................  65
       Section 11.3. Governmental Regulation...............................  65
       Section 11.4. Proceedings and Documents.............................  65

Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC...........................  65
       Section 12.1. Events of Default and Acceleration....................  65
       Section 12.2. Termination of Commitments; Drawing of IRB Letters of 
                        Credit.............................................  68
       Section 12.3. Remedies..............................................  68
       Section 12.4. Distribution of Collateral Proceeds...................  69
       Section 12.5. Addition of Real Estate Assets to Cure Default........  69

Section 13. SETOFF.........................................................  70

Section 14. THE AGENT......................................................  71
       Section 14.1. Authorization.........................................  71
       Section 14.2. Employees and Agents..................................  71
       Section 14.3. No Liability..........................................  71
       Section 14.4. No Representations....................................  71
       Section 14.5. Payments..............................................  72
       Section 14.6. Holders of Notes......................................  73
       Section 14.7. Indemnity.............................................  73
       Section 14.8. Agent as Lender ......................................  73
       Section 14.9. Resignation...........................................  73
       Section 14.10. Notification of Defaults and Events of Default.......  74
       Section 14.11. Duties in the Case of Enforcement....................  74

Section 15. EXPENSES.......................................................  74

Section 16. INDEMNIFICATION................................................  75

Section 17. SURVIVAL OF COVENANTS, ETC.....................................  76

Section 18. ASSIGNMENT; PARTICIPATIONS; ETC................................  77
       Section 18.1. Conditions to ASection gnment by Lenders..............  77
       Section 18.2. Certain Representations and Warranties; Limitations; 
                        Covenants..........................................  77
       Section 18.3. Register..............................................  78
       Section 18.4. New Notes.............................................  78
       Section 18.5. Participations........................................  79
       Section 18.6. Pledge by Lender......................................  79
       Section 18.7. No Assignment by Borrower.............................  79
       Section 18.8. Disclosure............................................  80

<PAGE>

Section 19. NOTICES, ETC...................................................  80

Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.............  80

Section 21. HEADINGS.......................................................  81

Section 22. COUNTERPARTS...................................................  81

Section 23. ENTIRE AGREEMENT...............................................  81

Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.................  81

Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................  82

Section 26. SEVERABILITY...................................................  82

Section 27. ACKNOWLEDGMENTS................................................  82

Section 28. PARTNER LIABILITY..............................................  83


Exhibit A             Form of Note
Exhibit B             Form of Loan Request
Exhibit C             Form of Compliance Certificate
Exhibit D             Form of Letter of Credit Request
Exhibit E             Opinion Requirements
Exhibit F             Form of Assignment and Acceptance

Schedule 1            Lenders; Domestic and Eurodollar Lending Offices
Schedule 1.1          Mortgaged Properties
Schedule 1.2          Commitments and Commitment Percentages
Schedule 1.3          Related Companies, Guarantor Subsidiaries and Permitted 
                      Joint Ventures
Schedule 1.4          Initial Letters of Credit
Schedule 5.3(b)       Required Additional Properties
Schedule 6.3          Title to Properties
Schedule 6.7          Litigation
Schedule 6.18         Environmental Reports
Schedule 6.22(d)      Engineering Reports
Schedule 6.22(l)      Rent Rolls
Schedule 6.22(m)      Service Agreements
Schedule 6.22(n)      Other Material Agreements
Schedule 8.3(d)       Investments

<PAGE>

                               CREDIT AGREEMENT


     This CREDIT AGREEMENT is made as of the 17th day of November, 1997, by 
and among PRIME GROUP REALTY, L.P., a Delaware limited partnership (the 
"Borrower"), PRIME GROUP REALTY TRUST, a Maryland trust (the "Company") and 
BANKBOSTON, N.A., a national banking association ("BankBoston"), PRUDENTIAL 
SECURITIES CREDIT CORPORATION, a Delaware corporation ("Prudential"), the 
other lending institutions which are from time to time listed on Schedule 1, 
(collectively, with BankBoston and Prudential, the "Lenders") and BANKBOSTON, 
N.A., as agent for itself and such other lending institutions (the "Agent").

     WHEREAS, the Borrower has requested and BankBoston and Prudential have 
agreed to provide a revolving credit facility, and to attempt to syndicate 
such facility to other lending institutions, and Borrower has agreed to 
provide real 0property collateral and other collateral to BankBoston, 
Prudential and such other lending institutions, as set forth herein;

     NOW, THEREFORE, to accomplish these purposes, the Agent, the Borrower 
and the Lenders hereby agree as follows:

Section 1. DEFINITIONS AND RULES OF INTERPRETATION

     Section 1.1. Definitions. The following terms shall have the meanings 
set forth in this Section l or elsewhere in the provisions of this Agreement 
referred to below:

     Additional Properties. Real Estate Assets which hereafter become 
Mortgaged Properties pursuant to Section 5.3.

     Affiliated Lenders. Any commercial bank or other commercial lender which 
is (i) the parent corporation of any of the Lenders, (ii) a wholly-owned 
subsidiary of any of the Lenders or (iii) a wholly-owned subsidiary of the 
parent corporation of any of the Lenders.

     Agent. BankBoston, N.A. acting as agent for the Lenders or any successor 
agent.

     Agent's Head Office. The Agent's head office located at 100 Federal 
Street, Boston, Massachusetts 02110, or at such other location as the Agent 
may designate from time to time in writing to the Borrower.

     Agreement. This Credit Agreement, including the Schedules and Exhibits 
hereto.

     Applicable Margin. As of any date of determination:

     (i) 1.20%, if Total Liabilities are less than 30% of Total Adjusted 
Assets, or

<PAGE>

     (ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total 
Adjusted Assets but the condition set forth in clause (i) of this definition 
is not satisfied,

     (iii) 1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.

Any change in the Applicable Margin caused by a change in the ratio of Total 
Liabilities to Total Adjusted Assets shall become effective on the 46th day 
following the end of the fiscal quarter at which such ratio was computed as 
shown on a Compliance Certificate which reflects such change in said ratio 
above or below the 30% level or the 45% level.

     Appraisals. Appraisals of the value of the Mortgaged Properties 
determined on an "as is" market value basis, prepared in writing 
independently and impartially by qualified MAI appraisers selected and 
retained by the Agent and paid for by Borrower, the form and substance of 
such appraisals and final determination of market value of the Mortgaged 
Properties thereunder to be reviewed and subject to approval by the Lead 
Lenders based on their respective reviews of such appraisals pursuant to 
their internal appraisal review policies and procedures. All appraisals shall 
be prepared in accordance with the Uniform Standards of Professional 
Appraisal Practice, Supplemental Standards Applicable To Federally Related 
Transactions, as further described in Title XI of the "Financial Institutions 
Reform, Recovery and Enforcement Act of 1989" ("FIRREA"), and any additional 
standards and conditions required for appraisals prepared for the Lead 
Lenders.

     Appraised Value. The market value of each of the Mortgaged Properties, 
determined by the Lead Lenders based upon the most recent Appraisals obtained 
pursuant to Section 5.4(b), Section 7.12 or Section 10.14. In determining 
Appraised Value the Lead Lenders shall exclude any value associated with any 
unimproved land or unoccupied Buildings located on the applicable Mortgaged 
Property.

     Assignment and Acceptance. See Section 18.

     Assignments of Leases and Rents. The assignments of rents and leases 
from the Mortgagor to the Agent pursuant to which the Mortgagor shall grant 
and assign to the Agent as agent for the Lenders a security interest in and 
assignment of the Mortgagor's interest as lessor with respect to all Leases 
and rents thereunder of all or any part of the Mortgaged Properties as 
security for the Obligations.

     BankBoston. As defined in the preamble hereto.

     Borrowing Base Value. With respect to each Mortgaged Property, an amount 
equal to (i) two times the Net Operating Income for the most recently 
completed two fiscal quarters, minus the Reserve Amount for such Mortgaged 
Property, divided by (ii) a capitalization rate equal to 0.09 for the West 
Wacker Drive Property or 0.10 for any other Mortgaged Property.

                                        2
<PAGE>

     Base Rate. The higher of (a) the annual rate of interest announced from 
time to time by BankBoston at the Agent's Head Office as its "base rate", and 
(b) one half of one percent (1/2%) above the overnight federal funds 
effective rate as published by the Board of Governors of the Federal Reserve 
System, as in effect from time to time.

     Base Rate Loans. Those Loans bearing interest calculated by reference to 
the Base Rate.

     Borrower. As defined in the preamble hereto.

     Borrowing Date. The date on which any Loan is made or is to be made, and 
the date on which any Loan is converted or continued in accordance with 
Section 2.6.

     Buildings. The buildings, structures and other improvements now or 
hereafter located on the Mortgaged Properties.

     Building Service Equipment. All apparatus, fixtures and articles of 
personal property owned by the Mortgagor now or hereafter attached to or used 
or procured for use in connection with the operation or maintenance of any 
Building located on or included in the Mortgaged Properties, including, but 
without limiting the generality of the foregoing, all engines, furnaces, 
boilers, stokers, pumps, heaters, tanks, dynamos, motors, generators, 
switchboards, electrical equipment, heating, plumbing, lifting and 
ventilating apparatus, air-cooling and air-conditioning apparatus, gas and 
electric fixtures, elevators, escalators, fittings, and machinery and all 
other equipment of every kind and description, used or procured for use in 
the operation of the Buildings (except apparatus, fixtures or articles of 
personal property belonging to lessees or other occupants of such building or 
to persons other than the Mortgagor unless the same be abandoned by any such 
lessee or other occupant or person), together with any and all replacements 
thereof and additions thereto.

     Business Day. Any day on which banking institutions in Boston, 
Massachusetts and Chicago, Illinois are open for the transaction of banking 
business and, in the case of Eurodollar Rate Loans, also a day which is a 
Eurodollar Business Day.

     Capitalized Leases. Leases under which the Borrower is the lessee or 
obligor, the discounted future rental payment obligations under which are 
required to be capitalized on the balance sheet of the Borrower in accordance 
with generally accepted accounting principles.

     CERCLA. See Section 6.18.

     Closing Balance Sheet. The pro-forma consolidated balance sheet of the 
Company dated June 30, 1997 and reflecting the closing of the Formation 
Transactions contained in the Prospectus Financial Statements and the related 
notes thereto.

                                       3
<PAGE>

     Code. The Internal Revenue Code of 1986, as amended and in effect from 
time to time.

     Collateral. All of the properties of the Borrower or of any Guarantor 
that are or are intended to be subject to the security interests, liens and 
mortgages created by the Security Documents, including, without limitation, 
the Mortgaged Properties, the Leases, the Permits and the Service Agreements.

     Collateral Value. With respect to each Mortgaged Property an amount 
equal to the lesser of its Appraised Value or its Borrowing Base Value.

     Commitment. With respect to each Lender, the amount set forth from time 
to time on Schedule 1.2 hereto as the amount of such Lender 's commitment to 
make Loans to the Borrower.

     Commitment Percentage. With respect to each Lender , the percentage set 
forth from time to time on Schedule 1.2 hereto as such Lender 's percentage 
of the Total Commitment.

     Common Shares. All common shares of beneficial interest of the Company, 
including, without limitation, those offered pursuant to the Equity 
Prospectus.

     Common Units. Partnership interests representing the common equity in 
the Borrower which interests are not subject to any mandatory redemption or 
entitled to any distributions other than distributions based on the dividends 
paid on the Common Shares.

     Company. As defined in the preamble hereto.

     Conversion Request. A notice given by the Borrower to the Agent of its 
election to convert or continue a Loan in accordance with Section 2.6.

     Default. See Section 12.1.

     Delinquent Lender. See Section 14.5(c).

     Distribution. The declaration or payment of any dividend or distribution 
of cash or cash equivalents to the holders of any of the Equity Interests, or 
any distribution or payment to any officer, employee or director of the 
Borrower or the Company, other than reasonable employee compensation.

     Dollars or $. Dollars in lawful currency of the United States of America.

                                       4
<PAGE>

     Domestic Lending Office. Initially, the office of each Lender designated 
as such in Schedule 1 hereto; thereafter, such other office of such Lender, 
if any, located within the United States that will be making or maintaining 
Base Rate Loans.

     Drawing. The drawing of any Letter of Credit by the beneficiary thereof 
which is paid by the Agent pursuant thereto.

     Drawing Date. The date on which a draft under a Letter of Credit is paid 
by the Agent.

     EBITDA. The Borrower's earnings before interest, taxes, depreciation and 
amortization, as determined on a consolidated basis in accordance with 
Generally Accepted Accounting Principles, except that rental income shall be 
determined on a cash basis.

     Effective Date. The date upon which this Agreement shall become 
effective pursuant to Section 10.

     Eligible Assignee. Any of (a) a commercial bank organized under the laws 
of the United States, or any State thereof or the District of Columbia, and 
having total assets in excess of $1,000,000,000; (b) a savings and loan 
association or savings bank organized under the laws of the United States, or 
any State thereof or the District of Columbia, and having a net worth of at 
least $100,000,000, calculated in accordance with generally accepted 
accounting principles; (c) a commercial bank organized under the laws of any 
other country which is a member of the Organization for Economic Cooperation 
and Development (the "OECD"), and having total assets in excess of 
$1,000,000,000, provided that such bank is acting through a branch or agency 
located in the country in which it is organized or another country which is 
also a member of the OECD; and (d) the central bank of any country which is a 
member of the OECD. Notwithstanding anything to the contrary, the term 
Eligible Assignee shall exclude any Person controlling, controlled by or 
under common control with, the Borrower or the Company.

     Employee Benefit Plan. Any employee benefit plan within the meaning of 
Section 3 (3) of ERISA maintained or contributed to by the Borrower or any 
ERISA Affiliate, other than a Multiemployer Plan.

     Environmental Laws. See Section 6.18(a).

     Environmental Reports. Reports addressed to the Agent (or addressed to 
the Borrower with an acceptable reliance letter addressed to the Agent) 
prepared by environmental engineering firms reasonably acceptable to the Lead 
Lenders relating to environmental site assessments and other evaluations of 
environmental conditions which may have been conducted with respect to the 
Mortgaged Properties described in Schedule 6.18 hereto and conducted with 
respect to prospective Additional Properties pursuant to Section 5.3.

                                       5
<PAGE>

     Equity Interests. Collectively, all equity ownership interests in the 
Borrower or the Company including, without limitation, the Common Shares, the 
Preferred Shares, the Common Units and the Preferred Units.

     Equity Prospectus. The prospectus dated November 12, 1997 relating to 
12,380,000 Common Shares included in the Registration Statement (No. 
333-33547) of the Company on Form S-11 as filed with the Securities Exchange 
Commission on August 13, 1997, as amended, as the same has been or may be 
further amended or supplemented from time to time.

     ERISA. The Employee Retirement Income Security Act of 1974, as amended 
and in effect from time to time.

     ERISA Affiliate. Any Person which is treated as a single employer with 
the Borrower under Section 414 of the Code.

     ERISA Reportable Event. A reportable event with respect to a Guaranteed 
Pension Plan within the meaning of Section 4043 of ERISA and the regulations 
promulgated thereunder as to which the requirement of notice has not been 
waived.

     Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate 
Loan, the maximum rate (expressed as a decimal) at which any of the Lenders 
would be required to maintain reserves under Regulation D of the Board of 
Governors of the Federal Reserve System (or any successor or similar 
regulations relating to such reserve requirements) against "Eurocurrency 
Liabilities" (as that term is used in Regulation D) , if such liabilities 
were outstanding. The Eurocurrency Reserve Rate shall be adjusted 
automatically on and as of the effective date of any change in the 
Eurocurrency Reserve Rate and the Agent shall provide the Borrower with 
prompt written notice of any such change.

     Eurodollar Business Day. Any day on which commercial banks are open for 
international business (including dealings in Dollar deposits) in London or 
such other eurodollar interbank market as may be selected by the Agent in its 
sole discretion acting in good faith.

     Eurodollar Lending Office. Initially, the office of each Lender 
designated as such in Schedule 1 hereto; thereafter, such other office of 
such Lender, if any, that shall be making or maintaining Eurodollar Rate 
Loans.

     Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to the quotient (rounded upwards to the nearest
1/16 of one percent) of (a) the rate at which the Agent is offered Dollar
deposits two Eurodollar Business Days prior to the beginning of such Interest
Period in an interbank eurodollar market where the eurodollar and foreign
currency and exchange operations of the Agent are customarily conducted, for
delivery on the first day of such Interest Period, for the number of days
comprised therein and in an 

                                       6
<PAGE>


amount comparable to the amount of the Eurodollar Rate Loan to which such 
Interest Period applies, divided by (b) a number equal to 1.00 minus the 
Eurocurrency Reserve Rate.

     Eurodollar Rate Loans. Loans bearing interest calculated by reference to 
the Eurodollar Rate.

     Event of Default. See Section 12.1.

     Fixed Charges. With respect to any fiscal period of the Borrower, an 
amount determined on a consolidated basis equal to the sum of (i) Interest 
Expense, (ii) regularly scheduled installments of principal payable with 
respect to all Indebtedness of Borrower, (iii) Indebtedness which matured 
during such fiscal period and was not refinanced with replacement 
Indebtedness plus (iv) all Distributions paid during such period to the 
holders of any Preferred Shares or Preferred Units.

     Fixed Rate Prepayment Fee. See Section 3.3.

     Formation Transactions. The transactions described in the Equity 
Prospectus to be consummated on or before the Effective Date pursuant to 
which (i) the Common Shares will be sold pursuant to an initial public 
offering of such Common Shares and certain Preferred Shares, Common Units and 
Preferred Units will be sold or issued in exchange for the contribution of 
properties; (ii) the net proceeds thereof received by the Company will be 
contributed as capital to the Borrower; (iii) the Borrower will directly or 
indirectly acquire all assets reflected on the Closing Balance Sheet, and 
(iv) certain Indebtedness secured by Liens on the Mortgaged Properties or 
other Real Estate Assets will be repaid and such Liens discharged.

     Funds From Operations. With respect to any fiscal period of the 
Borrower, an amount equal to the Borrower's Funds From Operations determined 
in accordance with the definition approved by the National Association of 
Real Estate Investment Trusts, except that rental income shall be determined 
on a cash basis.

     Generally Accepted Accounting Principles. Principles that are (a) 
consistent with the principles promulgated or adopted by the Financial 
Accounting Standards Board and its predecessors, as in effect from time to 
time and (b) consistently applied with past financial statements of the 
Borrower adopting the same principles and with the Prospectus Financial 
Statements.

     Guaranteed Pension Plan. Any employee pension benefit plan within the 
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower 
or any ERISA Affiliate the benefits of which are guaranteed on termination in 
full or in part by the PBGC pursuant to Title IV of ERISA, other than a 
Multiemployer Plan.

                                       8
<PAGE>

     Guarantor. Each of the Guarantor Subsidiaries.

     Guarantor Subsidiaries. The partnerships, limited liability companies 
and corporations designated as Guarantor Subsidiaries on Schedule 1.3 hereto 
and any other partnerships, limited liability companies or corporations 
hereafter approved by the Requisite Lenders which are at least 99% owned by 
Borrower and which execute and deliver a Guaranty.

     Guaranty. The Unconditional Guaranty of Payment and Performance from 
each Guarantor to the Agent pursuant to which such Guarantor has guaranteed 
the Obligations.

     Hazardous Materials. See Section 6.18(b).

     Indebtedness. All obligations, contingent and otherwise, that in 
accordance with Generally Accepted Accounting Principles should be classified 
upon the obligor's balance sheet as liabilities, or to which reference should 
be made by footnotes thereto, including in any event the following whether or 
not so classified: (a) the Obligations, (b) all debt and similar monetary 
obligations for borrowed money, whether direct or indirect; (c) all 
liabilities secured by any mortgage, pledge, negative pledge, security 
interest, lien, negative lien, charge, or other encumbrance existing on 
property owned or acquired subject thereto, whether or not the liability 
secured thereby shall have been assumed; (d) all guarantees, endorsements and 
other contingent obligations whether direct or indirect in respect of 
indebtedness or obligations of others, including any obligation to supply 
funds to or in any manner to invest in, directly or indirectly, the debtor, 
to purchase indebtedness, or to assure the owner of indebtedness against 
loss, through a master lease transaction or an agreement to purchase goods, 
supplies, or services for the purpose of enabling the debtor to make payment 
of the indebtedness held by such owner or otherwise, and the obligations to 
reimburse the issuer in respect of any letters of credit; and (e) joint 
venture and partnership obligations, contingent or otherwise of the type set 
forth in (a) through (d) above. Indebtedness shall not be deemed to include 
obligations under a purchase and sale agreement or contribution agreement for 
the acquisition of assets by Borrower or the Related Companies unless entered 
into for the purpose of supporting the Indebtedness of the seller or 
contributor.

     Indemnity Agreement. The Indemnity Agreement regarding Hazardous 
Materials from the Borrower and the Company with respect to the Mortgaged 
Properties, and any similar agreements which may be executed with respect to 
Additional Properties.

     Initial Letters of Credit. The Letters of Credit described on Schedule 
1.4 hereto.

     Interest Expense. With respect to any fiscal period of the Borrower, an 
amount equal to the sum of the following with respect to all Indebtedness of 
the Borrower and the Related Companies: (i) total interest expense, accrued 
in accordance with Generally Accepted 

                                       8
<PAGE>

Accounting Principles plus (ii) all capitalized interest determined in 
accordance with Generally Accepted Accounting Principles, plus (iii) the 
amortization of deferred financing costs.

     Interest Payment Date. As to any Base Rate Loan or Eurodollar Rate Loan, 
the first day of each calendar month.

     Interest Period. With respect to each Loan, (a) initially, the period 
commencing on the Borrowing Date of such Loan and ending on the last day of 
one of the periods set forth below, as selected by the Borrower in a Loan 
Request (i) for any Base Rate Loan, the last day of the calendar month; and 
(ii) for any Eurodollar Rate Loan, 1, 2 or 3 months; and (b) thereafter, each 
period commencing on the last day of the next preceding Interest Period 
applicable to such Loan and ending on the last day of one of the periods set 
forth above, as selected by the Borrower in a Conversion Request; provided 
that all of the foregoing provisions relating to Interest Periods are subject 
to the following:

          (A) if any Interest Period with respect to a Eurodollar Rate Loan 
would otherwise end on a day that is not a Eurodollar Business Day, that 
Interest Period shall be extended to the next succeeding Eurodollar Business 
Day unless the result of such extension would be to carry such Interest 
Period into another calendar month, in which event such Interest Period shall 
end on the immediately preceding Eurodollar Business Day;

          (B) if any Interest Period with respect to a Base Rate Loan would 
end on a day that is not a Business Day, that Interest Period shall end on 
the next succeeding Business Day;

          (C) if the Borrower shall fail to give notice as provided in 
Section 2.6, the Borrower shall be deemed to have requested a conversion of 
the affected Eurodollar Rate Loan to a Base Rate Loan on the last day of the 
then current Interest Period with respect thereto;

          (D) any Interest Period relating to any Eurodollar Rate Loan that 
begins on the last Eurodollar Business Day of a calendar month (or on a day 
for which there is no numerically corresponding day in the calendar month at 
the end of such Interest Period) shall end on the last Eurodollar Business 
Day of a calendar month; and

          (E) the Borrower may not select any Interest Period relating to any 
Eurodollar Rate Loan that would extend beyond the Maturity Date.

     Interest Rate Contracts. Interest rate swaps, caps or similar agreements 
providing for interest rate protection.

     Investments. All expenditures made and all liabilities incurred 
(contingently or otherwise) for the acquisition of stock, partnership or 
membership interests or Indebtedness of, or for loans, advances, capital 
contributions or transfers of property to, or in respect of any 

                                       9
<PAGE>

guaranties (or other commitments as described under Indebtedness), or 
obligations of, any Person or for the acquisition of real property or other 
assets. In determining the aggregate amount of Investments outstanding at any 
particular time Investments shall be counted at their acquisition cost, 
including the value of any Equity Interests issued in exchange for the 
contribution of property, subject to the following: (a) the amount of any 
Investment represented by a guaranty shall be taken at not less than the 
principal amount of the obligations guaranteed and still outstanding; (b) 
there shall be included as an Investment all interest accrued with respect to 
Indebtedness constituting an Investment unless and until such interest is 
paid; (c) there shall be deducted in respect of each such Investment any 
amount received as a return of capital (but only by repurchase, redemption, 
retirement, repayment, liquidating dividend or liquidating distribution) ; 
(d) there shall not be deducted in respect of any Investment any amounts 
received as earnings on such Investment, whether as dividends, interest or 
otherwise, except that accrued interest included as provided in the foregoing 
clause (b) may be deducted when paid; and (e) there shall not be deducted 
from the aggregate amount of Investments any decrease in the value thereof.

     IRB Documents. The Indentures of Trust, Financing Agreements, Loan 
Agreements, Bonds, Notes and other documents relating to the IRB Indebtedness.

     IRB Indebtedness. The Indebtedness of certain of the Guarantor 
Subsidiaries with respect to fourteen (14) issues of industrial development 
bonds, the proceeds of which were used to acquire or develop certain of the 
Additional Properties listed on Schedule 5.3(b), excluding the Indebtedness 
of certain Guarantor Subsidiaries with respect to such Properties in 
Arlington Heights, Illinois for so long as the bonds relating thereto are 
held by the Borrower or a Related Company.

     IRB Indebtedness Account. A deposit account established by the Borrower 
with the Agent into which the Borrower will deposit funds as required by 
Section 2.8 and which the Agent will debit to reimburse the amount of 
Drawings paid under the IRB Letters of Credit.

     IRB Letters of Credit. The Letters of Credit issued with respect to the 
IRB Indebtedness for the benefit of the respective trustees named in the IRB 
Documents and the Letter of Credit expiring on or before April 15, 1998 for 
the benefit of Credit Suisse First Boston, which is the issuer of certain 
prior letters of credit relating to certain of the IRB Indebtedness.

     Lead Lenders. BankBoston and Prudential. If a Lead Lender shall enter 
into one or more assignments pursuant to Section 18 which have the effect of 
reducing the Commitment of such Lender to less than $20,000,000 (which number 
will be proportionately reduced in the event of any reduction in the Total 
Commitment pursuant to Section 2.2), then such Lender shall no longer be a 
Lead Lender. If by virtue of this immediately preceding sentence there are no 
longer any Lead Lenders, then all approvals, consents and other matters which 
require the action by the Lead Lenders hereunder shall thereafter require the 
specified action by the Requisite Lenders.

                                       10
<PAGE>

     Leases. Leases, licenses and agreements whether written or oral, 
relating to the use or occupation of space in or on the Buildings or on the 
Mortgaged Properties by persons other than Mortgagor, including but not 
limited to the leases listed on Schedule 6.22(1).

     Lenders. BankBoston, Prudential and the other lending institutions 
listed from time to time on Schedule 1 hereto and any other Person who 
becomes an assignee of any rights of a Lender pursuant to Section 18 or a 
Person who acquires all or substantially all of the stock or assets of a 
Lender .

     Letter of Credit. A letter of credit which is one of the Initial Letters 
of Credit or is hereafter issued by the Agent for the account of the Borrower 
pursuant to Section  2.9.

     Letter of Credit Request. See Section  2.9.

     Lien. Any lien, encumbrance, mortgage, deed of trust, pledge, 
restriction or other security interest. If title to any Real Estate Asset is 
held by a Subsidiary of Borrower then any pledge or assignment of Borrower's 
stock, partnership interest, limited liability company interest or other 
ownership interest in such Subsidiary shall be deemed to be a Lien on the 
Real Estate Assets owned by such Subsidiary.

     Loan Documents. This Agreement, the Notes, the Guaranties, the Security 
Documents, the Indemnity Agreement and any and all other agreements, 
documents and instruments now or hereafter evidencing, securing or otherwise 
relating to the Loans or the Letters of Credit.

     Loan Request. See Section 2.5.

     Loans. Loans made or to be made by the Lenders to the Borrower pursuant 
to Section 2.

     Major Lease. A Lease of (i) 100,000 square feet or more of the gross 
leasable area of a Building which is used primarily for industrial or 
warehouse purposes or (ii) 25,000 square feet or more of the gross leasable 
area of a Building which is used primarily for office purposes, and any 
guaranty of the tenant's obligations under any such Lease.

     Major Tenants. As to any Major Lease, those tenants that are parties to 
that Major Lease and any guarantors of those tenants' obligations thereunder.

     Material Adverse Effect. A material adverse effect on (i) any of the 
Mortgaged Properties, (ii) the business, results of operations or financial 
condition of the Borrower and the Related Companies taken as a whole, (iii) 
the ability of the Borrower, the Company or any Guarantor to perform its 
obligations under the Loan Documents, or (iv) the validity or enforceability 
of any of the Loan Documents or the remedies or material rights of the Agent 
or the Lenders thereunder. 

                                       11
<PAGE>

     Maturity Date. November 17, 2000, or such earlier date on which the 
Loans shall become due and payable pursuant to the terms hereof.

     Maximum Principal Amount. Maximum Principal Amount shall mean the least 
of the following: (i) the maximum Outstanding Principal Amount which may 
exist without causing a violation of Section 9.1; (ii) the maximum 
Outstanding Principal Amount which may exist without causing a violation of 
Section 9.2; and (iii) the Total Commitment.

     Mortgaged Properties. The (a) Real Estate Assets described on Schedule 
1.1 hereto and such other Real Estate Assets which may be subsequently 
conveyed to the Agent as Additional Properties to secure the Obligations in 
accordance with Section 5.3 hereof, excluding from the foregoing any Real 
Estate Assets which the Agent may release pursuant to Section 5.5 hereof, as 
such Real Estate Assets are more particularly described in the Security 
Deeds; (b) the Buildings and Building Service Equipment located thereon and 
(to the extent assignable) all Permits relating thereto; and (c) all other 
property incident to any of same described in any Security Document or other 
Loan Document.

     Mortgagor. With respect to each of the Mortgaged Properties, the owner 
thereof.

     Multiemployer Plan. Any multiemployer plan within the meaning of Section 
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA 
Affiliate.

     Net Offering Proceeds. All net cash proceeds received after the date 
hereof by the Borrower or the Company as a result of the sale of common, 
preferred or other classes of stock of the Company or the issuance of limited 
partnership interests in the Borrower after deducting customary costs and 
discounts of issuance paid by Company or Borrower in connection therewith.

     Net Operating Income. With respect to any fiscal period of the Borrower 
and with respect to any one or more of the Real Estate Assets, the total 
rental and other operating income from the operation of such Real Estate 
Assets after deducting all expenses and other proper charges incurred by the 
Borrower in connection with the operation of the Mortgaged Properties during 
such fiscal period, including, without limitation, real estate taxes, bad 
debt expenses and management fees (which fees shall not be lower than the 
market rate for management fees for similar properties in the same general 
location and such management fees shall be deducted when computing Net 
Operating Income without regard to the extent to which such management fees 
are passed through to the tenants), but before payment or provision for Fixed 
Charges, income taxes, and depreciation, amortization, and other non-cash 
expenses, all as determined in accordance with Generally Accepted Accounting 
Principles except that (a) rental income will be determined on a cash basis, 
provided, however, that each payment of prepaid rent shall be allocated to 
the period for which it applies, (b) adjustments will be made so that each 
fiscal 

                                       12
<PAGE>

quarter will include one quarter of annual real estate tax and insurance 
expenses, and (c) any non-recurring income or income not directly from the 
operation of such Real Estate Asset, such as interest income, shall be 
excluded.

     Notes. See Section 2.3.

     Obligations. All indebtedness, obligations and liabilities of the 
Borrower or any Guarantor to any of the Lenders and the Agent, individually 
or collectively, under this Agreement or any of the other Loan Documents or 
in respect of any of the Loans, the Letters of Credit or the Notes or other 
instruments at any time evidencing any thereof, whether existing on the date 
of this Agreement or arising or incurred hereafter, direct or indirect, joint 
or several, absolute or contingent, matured or unmatured, liquidated or 
unliquidated, secured or unsecured, arising by contract, operation of law of 
otherwise.

     Outstanding Principal Amount. The sum of (i) the aggregate amount of 
unpaid principal of the Loans as of any date of determination plus (ii) the 
aggregate face amount of each Letter of Credit issued under Section  2.9 
which has not expired or terminated prior to such date of determination, 
excluding from the face amount of any Letter of Credit the amount by which 
any Unreimbursed Drawing has reduced the availability thereunder until such 
availability is reinstated pursuant to the terms of such Letter of Credit.

     PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 
of ERISA and any successor entity or entities having similar responsibilities.

     Permits. All governmental permits, licenses, and approvals necessary for 
the lawful operation and maintenance of the Mortgaged Properties.

     Permitted Acquisition. The acquisition by Borrower or any Related 
Company of Real Estate Assets which are located in the continental United 
States and are leased or intended to be leased primarily for industrial or 
office purposes.

     Permitted Joint Ventures. Any entity in which Borrower has any direct or 
indirect ownership interest, except the Company and the Related Companies and 
except Prime Group Realty Services, Inc., including general partnerships, 
corporations, trusts and limited liability companies, which own or propose to 
develop industrial or office properties provided that neither Borrower or any 
Guarantor shall have any recourse liability for the Indebtedness of such 
entity. Permitted Joint Ventures existing on the date hereof are set forth in 
Schedule 1.3.

     Permitted Developments. The construction of any new buildings or the 
construction of additions expanding existing buildings or the rehabilitation 
of the existing buildings (other than normal refurbishing and tenant fit up 
work when one tenant leases space previously occupied by another tenant) 
relating to any Real Estate Assets of the Borrower or any of the Related 

                                       13
<PAGE>

Companies and each Permitted Development shall be counted for purposes of 
Section 8.3 from the time of commencement of the applicable construction work 
until the later of (i) the date that leases for at least 70% of the gross 
leasable area of such project have been executed or (ii) the date that a 
final certificate of occupancy has been issued with respect to such project, 
in the amount of the total projected cost of such project.

     Permitted Liens. Liens, security interests and other encumbrances 
permitted by Section 8.2.

     Person. Any individual, corporation, partnership, trust, unincorporated 
association, business, or other legal entity, and any government or any 
governmental agency or political subdivision thereof.

     Pledge Agreements. The Pledge and Security Agreements between each 
Guarantor Subsidiary which is a borrower under any IRB Documents and the 
Agent pursuant to which certain bonds purchased with the proceeds of Drawings 
under the IRB Letters of Credit would be pledged to the Agent until such 
bonds are remarketed or redeemed.

     Pledged Bonds. Bonds pledged to the Agent pursuant to any Pledge 
Agreement.

     Preferred Shares. All Preferred Shares of beneficial interest of the 
Company including, without limitation, the 2,000,000 shares of Series A 
Cumulative Convertible Preferred Shares as described in the Equity Prospectus.

     Preferred Units. All partnership interests in the Borrower other than 
the Common Units, including, without limitation, the Preferred Units 
described in the Equity Prospectus.

     Prepayment Date. See Section 3.3.

     Prime. The Prime Group, Inc., an Illinois corporation.

     Pro Forma Debt Service Charges for the Mortgaged Properties. For any 
fiscal quarter of the Borrower, an amount equal to three monthly principal 
and interest payments based on a twenty-five (25) year mortgage style 
amortization schedule, calculated on the Pro Forma Principal Amount and an 
interest rate equal to the greater of (i) the then current weighted average 
interest rate per annum on the Loans or (ii) the then current ten (10) year 
U.S. Treasury bill yield plus 1.75% per annum.

     Pro Forma Principal Amount. (a) With respect to Compliance Certificates 
delivered pursuant to Section 7.4(e), the maximum Outstanding Principal 
Amount at any time during the applicable fiscal quarter; (b) with respect to 
Compliance Certificates delivered pursuant to Section 2.5(a), 2.9(b) or 
Section 11.1, the Outstanding Principal Amount after giving effect to the 
requested Loan or the issuance of the requested Letter of Credit; (c) with 
respect to Compliance 

                                       14
<PAGE>

Certificates delivered pursuant to Section 5.5(a) or Section 8.4(b), the 
Outstanding Principal Amount after giving effect to any proposed sale or 
transfer including any payments on the Loans or cancellation of Letters of 
Credit to be made in connection therewith.

     Properties. All Real Estate Assets, Real Estate, and all other assets, 
including, without limitation, intangibles and personalty owned by the 
Borrower.

     Prospectus Financial Statements. The Financial Statements relating to 
the Company and relating to certain properties to be acquired by the Borrower 
or its Subsidiaries in connection with the Formation Transactions as set 
forth in the Equity Prospectus.

     Prudential. As defined in the preamble thereto.

     Real Estate. All real property at any time owned, leased (as lessee or 
sublessee) or operated by the Borrower, any Guarantor, or any of the Related 
Companies or any Permitted Joint Venture.

     Real Estate Assets. Those fixed and tangible properties consisting of 
land, buildings and/or other improvements owned by the Borrower, by any 
Guarantor, by any of the Related Companies or by any Permitted Joint Venture 
at the relevant time of reference thereto, including without limitation, the 
Mortgaged Properties, but excluding all leaseholds other than leaseholds 
under ground leases having an unexpired term of at least 30 years.

     Record. The grid attached to any Note, or the continuation of such grid, 
or any other similar record, including computer records, maintained by any 
Lender with respect to any Loan referred to in such Note.

     Recourse Indebtedness. All Indebtedness except Indebtedness with respect 
to which recourse for payment is contractually limited (except for customary 
exclusions) to specific assets encumbered by a lien securing such 
Indebtedness.

     Register. See Section 18.3.

     Related Companies. The entities listed and described on Schedule 1.3 
hereto, or thereafter, any entity whose financial statements are consolidated 
or combined with the Borrower's pursuant to Generally Accepted Accounting 
Principles, or any ERISA Affiliate.

     Release. See Section 6.18(c)(iii).

     Requisite Lenders. As of any date, the Lenders whose aggregate 
Commitments constitute at least sixty-six percent (66%) of the Total 
Commitment provided that the Agent must always be among the Requisite Lenders 
(except that after an Event of Default all actions by the

                                       15
<PAGE>

Requisite Lenders with respect to acceleration of the Loans and the 
enforcement of the Loan Documents as provided in Section 12 and in Section 
14.11 shall be made without regard to whether the Agent is among the 
Requisite Lenders) and provided that the Commitments of any Delinquent 
Lenders shall be disregarded when determining the Requisite Lenders.

     Reserve Amount. With respect to any Real Estate Assets or group of Real 
Estate Assets, a normalized annual reserve for capital expenditures, tenant 
improvements, replacement reserves and leasing costs at the rate of $0.25 per 
year per square foot of gross leasable area contained in all buildings on 
such Real Estate Assets. When the Reserve Amount is used in computing an 
amount with respect to a fiscal period which is shorter than a year, said 
amount shall be appropriately prorated.

     Responsible Officer. With respect to the Company, any one of its Chief 
Executive Officer, Chief Financial Officer, Treasurer or Executive Vice 
Presidents.

     Security Deeds. The mortgages and deeds of trust from the Mortgagor to 
the Agent pursuant to which the Mortgagor shall convey the Mortgaged 
Properties as security for the Obligations.

     Security Documents. The Security Deeds, the Assignments of Leases and 
Rents, the Pledge Agreements and the UCC-1 financing statements.

     Service Agreements. All service agreements between the Borrower and 
third parties, whether written or oral, relating to the operation, 
maintenance, security, finance or insurance of the Mortgaged Properties.

     Subsidiary. Any corporation, partnership, limited liability company, 
association, trust, or other business entity of which the designated parent 
or other controlling Person shall at any time own directly or indirectly 
through a Subsidiary or Subsidiaries at least a majority (by number of votes) 
of the outstanding Voting Interests.

     Surveys. Instrument surveys of the Mortgaged Properties dated or updated 
to a date not more than six (6) months prior to the date the applicable 
property becomes a Mortgaged Property hereunder, which shall show the 
location of all Buildings, easements and utility lines on the Mortgaged 
Properties, shall be sufficient to remove the survey exception from the Title 
Policy, shall show that all Buildings are within the lot lines of the 
Mortgaged Properties, shall not show any material encroachments by others, 
and shall show whether or not the Mortgaged Properties are located in any 
flood hazard district as established by the Federal Emergency Management 
Agency or any successor agency or are located in any flood plain, flood 
hazard or wetland protection district established under federal, state or 
local law and in addition shall meet the then applicable standards of the 
Agent.

                                       16
<PAGE>

     Tangible Net Worth. Total Assets minus Total Liabilities minus all 
intangibles determined in accordance with Generally Accepted Accounting 
Principles.

     Title Insurance Company. Chicago Title Insurance Company.

     Title Policy. For each Mortgaged Property an ALTA standard form title 
insurance policy issued by the Title Insurance Company (with such reinsurance 
or co-insurance as the Agent may require, any such reinsurance to be with 
direct access endorsements) insuring the priority of the Security Deed and 
Assignment of Leases and Rents and that the Mortgagor holds good and clear 
record marketable fee simple title to the Mortgaged Property, subject only to 
the encumbrances permitted by the Security Deed and which shall not contain 
exceptions for mechanics liens, persons in occupancy (other than Leases 
listed on Schedule 6.22(1)) or matters which would be shown by a survey 
(other than matters approved by the Agent in its reasonable discretion), 
shall not insure over any matter except to the extent that any such 
affirmative insurance is acceptable to the Agent in its sole discretion 
(after consultation with the Lead Lenders), and shall contain such 
endorsements and affirmative insurance as the Agent in its reasonable 
discretion may require, including but not limited to (a) comprehensive 
endorsement, (b) variable rate of interest endorsement, (c) usury 
endorsement, (d) revolving credit endorsement, (e) doing business 
endorsement, (f) ALTA form 3.1 zoning endorsement, with parking, (g) survey 
(same-as) endorsement (h) access endorsement, (i) tie-in endorsement, (j) 
first loss endorsement, and (k) tax parcel endorsement, to the extent that 
such endorsements are available in the state where the applicable Mortgaged 
Property is located.

     Total Adjusted Assets. The sum of (i) the assets classified as cash or 
cash equivalents on the consolidated balance sheet of Borrower prepared in 
accordance with Generally Accepted Accounting Principles as of the end of the 
most recent fiscal quarter (including any restricted cash other than tenant 
deposits), plus (ii) the product of (a) EBITDA for the most recent two fiscal 
quarters, times (b) two, divided by (c) 0.0975. To the extent necessary 
EBITDA used to compute Total Adjusted Assets will be computed on a pro forma 
basis as though the Formation Transactions had closed, and the Effective Date 
had been, as of the first day of the applicable period of two fiscal quarters.

     Total Assets. The aggregate book value of all assets of the Borrower and 
the Related Companies consolidated and determined in accordance with 
Generally Accepted Accounting Principles plus accumulated depreciation and 
amortization related to Real Estate Assets.

     Total Commitment. The sum of the Commitments of the Lenders, as in 
effect from time to time.

     Total Liabilities. The sum of the following (without duplication): (i) 
all liabilities of the Borrower and the Related Companies consolidated and 
determined in accordance with Generally Accepted Accounting Principles 
excluding accounts payable incurred in the ordinary course of

                                       17
<PAGE>

business, (ii) all Indebtedness of the Borrower and the Related Companies 
whether or not so classified, including, without limitation, all outstanding 
Loans under this Agreement, and (iii) the balance available for drawing under 
letters of credit issued for the account of the Borrower or any of the 
Related Companies.

     Total Operating Cash Flow. With respect to any fiscal period of the 
Borrower (i) EBITDA minus (ii) the Reserve Amount with respect to all Real 
Estate Assets owned by the Borrower or any of the Related Companies.

     Type. As to any Loan its nature as a Base Rate Loan or a Eurodollar Rate 
Loan.

     Unreimbursed Drawing. Any Drawing other than a Drawing which is 
reimbursed by the Agent debiting the IRB Indebtedness Account pursuant to 
Section 2.8. If any reimbursement from the IRB Indebtedness Account or any 
part thereof is rescinded or must otherwise be restored or returned by the 
Agent upon the insolvency, bankruptcy or reorganization of the Borrower or 
any Guarantor, the Drawing reimbursed thereby shall be deemed to be an 
Unreimbursed Drawing.

     Unused Amount. See Section 4.2

     Variable Rate Indebtedness. The Loans and all other Indebtedness of the 
Borrower which bears interest at a rate which is not fixed through the 
maturity of such Indebtedness.

     Voting Interests. Stock or similar ownership interests, of any class or 
classes (however designated), the holders of which are at the time entitled, 
as such holders, (a) to vote for the election of a majority of the directors 
(or persons performing similar functions) of the corporation, association, 
partnership, trust or other business entity involved, or (b) to control, 
manage or conduct the business of the corporation, partnership, association, 
trust or other business entity involved.

     West Wacker Drive Property. The Mortgaged Property located at 77 West 
Wacker Drive, Chicago, Illinois, as more particularly described in the 
Security Deed with respect thereto.

     Section 1.2. Rules of Interpretation.

          (a) A reference to any document or agreement shall include such 
document or agreement as amended, modified or supplemented from time to time 
in accordance with its terms and the terms of this Agreement.

          (b) The singular includes the plural and the plural includes the 
singular.

          (c) A reference to any law includes any amendment or modification 
to such law.

                                       18





<PAGE>

     (d) A reference to any Person includes its permitted successors and 
permitted assigns.

     (e) Accounting terms not otherwise defined herein have the meanings 
assigned to them by Generally Accepted Accounting Principles applied on a 
consistent basis by the accounting entity to which they refer and, except as 
otherwise expressly stated, all use of accounting terms with respect to the 
Borrower shall reflect the consolidated financial statements of Borrower and 
the Related Companies.

     (f) The words "include", "includes" and "including" are not limiting.

     (g) All terms not specifically defined herein or by Generally Accepted 
Accounting Principles, which terms are defined in the Uniform Commercial Code 
as in effect in Massachusetts, have the meanings assigned to them therein.

     (h) Reference to a particular "Section" refers to that section of this 
Agreement unless otherwise indicated.

     (i) The words "herein", "hereof", "hereunder" and words of like import 
shall refer to this Agreement as a whole and not to any particular section or 
subdivision of this Agreement.

     (j) The words "so long as any Loan or Note is outstanding" shall mean so 
long as such Loan or Note is not paid in full in cash.

Section 2. REVOLVING CREDIT FACILITY.

     Section 2.1. Commitment to Lend; Limitation on Total Commitment. Subject 
to the provisions of Section 2.5 and the other terms and conditions set forth 
in this Agreement, each of the Lenders severally agrees to lend to the 
Borrower and the Borrower may borrow, repay, and reborrow from time to time 
between the Effective Date and the Maturity Date upon notice by the Borrower 
to the Agent given and approved by the Agent in accordance with Section 2.5, 
such sums as are requested by the Borrower up to a maximum aggregate 
principal amount outstanding (after giving effect to all amounts requested) 
at any one time equal to such Lender's Commitment (minus such Lender's 
Commitment Percentage of the face amount of the Letters of Credit 
outstanding), provided that the Outstanding Principal Amount (after giving 
effect to all amounts requested) shall not at any time exceed the Maximum 
Principal Amount. The Loans shall be made pro rata in accordance with each 
Lender's Commitment Percentage and the Lenders shall at all times 
immediately adjust inter se any inconsistency between each Lender's 
outstanding principal amount and each Lender's Commitment. Each request for 
a Loan hereunder shall constitute a representation and warranty by the 
Borrower that the conditions set forth in Section 10 or Section 11 (whichever 
is applicable) have been satisfied on the date of such request and will be 
satisfied on the proposed Borrowing Date of the requested Loan, provided that 
the making of such

                                       19

<PAGE>

representation and warranty by Borrower shall not limit the right of any 
Lender not to lend upon a determination by the Requisite Lenders that such 
conditions have not been satisfied.

     Section 2.2. Reduction of Commitment. The Borrower shall have the right 
prior to the Maturity Date, upon at least ten (10) Business Days' prior 
written notice to the Agent, to reduce by $1,000,000 or an integral multiple 
of $100,000 in excess thereof, a portion of the Total Commitment which 
exceeds the Outstanding Principal Amount, provided that the Total Commitment 
shall not be reduced to less than the sum of $100,000,000 plus the aggregate 
face amount of Letters of Credit then outstanding rounded up to the nearest 
$1,000,000, whereupon the Commitments of the Lenders shall be reduced pro 
rata in accordance with their respective Commitment Percentages by the amount 
specified in such notice. Upon the effective date of any such reduction, the 
Borrower shall pay to the Agent for the respective accounts of the Lenders 
the full amount of any commitment fee then accrued on the amount of the 
reduction. No reduction of the Commitments may be reinstated.

     Section 2.3. The Notes. The Loans shall be evidenced by separate 
promissory notes of the Borrower in substantially the form of Exhibit A 
hereto (each a "Note"), and completed with appropriate insertions. A Note 
shall be payable to the order of each Lender in a principal amount equal to 
such Lender's Commitment. The Borrower irrevocably authorizes each Lender to 
make or cause to be made, at or about the time of the Borrowing Date of any 
Loan or at the time of receipt of any payment of principal on such Lender's 
Note, an appropriate notation on such Lender's Record reflecting the making 
of such Loan or (as the case may be) the receipt of such payment. The 
outstanding amount of the Loans set forth on such Lender's Record shall 
(absent manifest error) be prima facie evidence of the principal amount 
thereof owing and unpaid to such Lender, but the failure to record, or any 
error in so recording, any such amount on the Record shall not limit or 
otherwise affect the obligations of the Borrower hereunder or under any Note 
to make payments of principal of or interest on any Note when due.

     Section 2.4. Interest on Loans.

     (a) Each Base Rate Loan shall bear interest for the period commencing 
with the Borrowing Date thereof and ending on the last day of the Interest 
Period with respect thereto at the Base Rate.

     (b) Each Eurodollar Rate Loan shall bear interest for the period 
commencing with the Borrowing Date thereof and ending on the last day of the 
Interest Period with respect thereto at the rate equal to the Applicable 
Margin per annum above the Eurodollar Rate determined for such Interest 
Period.

     (c) The Borrower unconditionally promises to pay interest on each Loan 
in arrears on each Interest Payment Date with respect thereto.

                                       20 

<PAGE>

     (d) It is the intention of the parties hereto to conform strictly to the 
usury and similar laws relating to interest from time to time in force, and 
all agreements among Borrower, Guarantors, the Agent and the Lenders set 
forth in the Loan Documents are hereby expressly limited so that in no 
contingency or event whatsoever, whether by acceleration of maturity of Loans 
or otherwise, shall the amount paid or agreed to be paid as interest 
hereunder or under the other Loan Documents exceed the maximum rate or amount 
of interest permissible under applicable usury laws or such other laws (the 
"Maximum Interest Amount"). In the event, for any reason whatsoever, any 
payment by or act of Borrower or any Guarantor pursuant to the terms or 
pursuant to any requirements of any of the Loan Documents shall result in or 
require payment of interest which would exceed the Maximum Interest Amount, 
then ipso facto the obligation of Borrower or such Guarantor, as the case may 
be, to pay interest or fees or other amounts shall be reduced to the Maximum 
Interest Amount, so that in no event shall Borrower or any Guarantor be 
obligated to pay any interest, perform any act, or be bound by any 
requirement which would result in payment of interest in excess of a sum 
which is lawfully collectible, and all sums in excess of those lawfully 
collectible as interest shall, without further agreements or notice between 
or by any party to this Agreement or any other Loan Document, be deemed 
applied to pay the principal of the Loans immediately upon receipt of such 
moneys by Agent or any Lender, with the same force and effect as though 
Borrower or any Guarantor had specifically designated such sums to be applied 
to principal prepayment. The provisions of this Section 2.4(d) shall control 
every other provision of the Loan Documents.

     Section 2.5. Requests for Loans. The Borrower shall give to the Agent 
written notice in the form of Exhibit B hereto of each Loan requested 
hereunder (a "Loan Request") no less than (a) three (3) Business Days prior 
to the proposed Borrowing Date of any Base Rate Loan and (b) four (4) 
Eurodollar Business Days prior to the proposed Borrowing Date of any 
Eurodollar Rate Loan. Each such notice shall specify (i) the principal amount 
of the Loan requested, (ii) the proposed Borrowing Date of such Loan, (iii) 
the Interest Period for such Loan, (iv) the Type of such Loan, and (v) the 
purpose of such Loan, and shall be accompanied by a statement in the form of 
Exhibit C hereto signed by a Responsible Officer setting forth in reasonable 
detail computations evidencing compliance with the covenants contained in 
Section 9 hereof after giving effect to such requested Loan (a "Compliance 
Certificate"). Within one (1) Business Day after receipt of a Loan Request, 
the Agent shall provide to each of the Lenders by facsimile a copy of such 
Loan Request and accompanying Compliance Certificate and each Lender shall, 
within 24 hours thereafter, notify the Agent if it believes that any of the 
conditions contained in Section 11 of this Agreement has not been met or 
waived. If such a notice is given the Requisite Lenders shall promptly 
determine whether all of the conditions contained in Section 11 of this 
Agreement have been met or waived. If no such notice is given by any Lender 
or if following such notice the Requisite Lenders determine that the 
conditions contained in Section 11 have been met or waived, each of the 
Lenders shall be obligated to fund its Commitment Percentage of the requested 
Loans. Each such Loan Request shall be irrevocable and binding on the 
Borrower and the Borrower shall be obligated to accept the Loan requested 
from the Lenders on the proposed Borrowing Date. Each 

                                       21 

<PAGE>

Loan Request shall be in a minimum aggregate amount of $3,000,000 or an 
integral multiple of $1,000,000 in excess thereof.

     Section 2.6. Conversion Options.

     (a) The Borrower may elect from time to time to convert any outstanding 
Loan to a Loan of another Type, provided that (i) with respect to any such 
conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall 
give the Agent at least three (3) Business Days, prior written notice of such 
election; (ii) with respect to any such conversion of a Eurodollar Rate Loan 
into a Base Rate Loan, such conversion shall only be made on the last day of 
the Interest Period with respect thereto; (iii) subject to the further 
proviso at the end of this section and subject to Section 2.6(b) and Section 
2.6(d) hereof with respect to any such conversion of a Base Rate Loan to a 
Eurodollar Rate Loan, the Borrower shall give the Agent at least four (4) 
Eurodollar Business Days' prior written notice of such election and (iv) no 
Loan may be converted into a Eurodollar Rate Loan when any Default or Event 
of Default has occurred and is continuing. On the date on which such 
conversion is being made, each Lender shall take such action as is necessary 
to transfer its Commitment Percentage of such Loans to its Domestic Lending 
Office or its Eurodollar Lending Office, as the case may be. All or any part 
of outstanding Loans of any Type may be converted as provided herein, 
provided further that each Conversion Request relating to the conversion of a 
Base Rate Loan to a Eurodollar Rate Loan shall be for an amount equal to 
$3,000,000 or an integral multiple of $1,000,000 in excess thereof and shall 
be irrevocable by the Borrower.

     (b) Any Loans of any Type may be continued as such upon the expiration 
of an Interest Period with respect thereto by compliance by the Borrower with 
the notice provisions contained in Section 2.6 (a); provided that no 
Eurodollar Rate Loan may be continued as such when any Default or Event of 
Default has occurred and is continuing but shall be automatically converted 
to a Base Rate Loan on the last day of the first Interest Period relating 
thereto ending during the continuance of any Default or Event of Default of 
which the officers of the Agent active upon the Borrower's account have 
actual knowledge.

     (c) In the event that the Borrower does not notify the Agent of its 
election hereunder with respect to any Loan, such Loan shall be automatically 
converted to a Base Rate Loan at the end of the applicable Interest Period.

     (d) The Borrower may not request a Eurodollar Rate Loan pursuant to 
Section 2.5, elect to convert a Base Rate Loan to a Eurodollar Rate Loan 
pursuant to Section 2.5(a) or elect to continue a Eurodollar Rate Loan 
pursuant to Section 2.6(b) if, after giving effect thereto, there would be 
greater than eight (8) Eurodollar Rate Loans outstanding. Any Loan Request 
for a Eurodollar Rate Loan that would create greater than eight (8) 
Eurodollar Rate Loans outstanding shall be deemed to be a Loan Request for a 
Base Rate Loan.

                                       22

<PAGE>

     Section 2.7. Funds for Loans.

     (a) Subject to Section 2.5 and other provisions of this Agreement, not 
later than 11:00 a.m. (Boston time) on the proposed Borrowing Date of any 
Loans, each of the Lenders will make available to the Agent, at the Agent's 
Head office, in immediately available funds, the amount of such Lender's 
Commitment Percentage of the amount of the requested Loans. Upon receipt from 
each Lender of such amount, and upon receipt of the documents required by 
Sections 10 or 11 (whichever is applicable) and the satisfaction of the other 
conditions set forth therein, to the extent applicable, the Agent will make 
available to the Borrower the aggregate amount of such Loans made available 
to the Agent by the Lenders. The failure or refusal of any Lender to make 
available to the Agent at the aforesaid time and place on any Borrowing Date 
the amount of its Commitment Percentage of the requested Loans shall not 
relieve any other Lender from its several obligation hereunder to make 
available to the Agent the amount of such other Lender's Commitment 
Percentage of any requested Loans but shall not obligate any other Lender or 
Agent to fund more than its Commitment Percentage of the requested Loans or 
to increase its Commitment Percentage.

     (b) The Agent may, unless notified to the contrary by any Lender prior 
to a Borrowing Date, assume that such Lender has made available to the Agent 
on such Borrowing Date the amount of such Lender's Commitment Percentage of 
the Loans to be made on such Borrowing Date, and the Agent may (but it shall 
not be required to), in reliance upon such assumption, make available to the 
Borrower a corresponding amount. If any Lender makes available to the Agent 
such amount on a date after such Borrowing Date, such Lender shall pay to the 
Agent on demand an amount equal to the product of (i) the average computed 
for the period referred to in clause (iii) below, of the weighted average 
interest rate paid by the Agent for federal funds acquired by the Agent 
during each day included in such period, times (ii) the amount of such Lender 
's Commitment Percentage of such Loans, times (iii) a fraction, the numerator 
of which is the number of days or portion thereof that elapsed from and 
including such Borrowing Date to the date on which the amount of such Lender 
's Commitment Percentage of such Loans shall become immediately available to 
the Agent, and the denominator of which is 365.

     Section 2.8. IRB Indebtedness Account. On or before each date on which 
there is scheduled to be a Drawing under any IRB Letter of Credit pursuant to 
the IRB Documents, the Borrower will deposit in the IRB Indebtedness Account 
sufficient funds such that there will be available therein on the applicable 
Drawing Date the amount needed to reimburse the Agent for the amount of such 
Drawing. The Borrower hereby authorizes the Agent to debit the IRB 
Indebtedness Account on each Drawing Date as necessary to reimburse the Agent 
for each draft paid by the Agent pursuant to any IRB Letter of Credit. All 
payments made by the Agent pursuant to any drafts under the IRB Letters of 
Credit shall be made from funds of the Agent, but in no event shall any such 
payments be made with funds from the IRB Indebtedness Account or with any 

                                       23

<PAGE>

other funds obtained from the Borrower, any Guarantor or any issuer of bonds 
with respect to any IRB Indebtedness.

     Section 2.9. Letters of Credit.

     (a) A portion of the Commitments may be used by Borrower for the 
issuance of Letters of Credit by the Agent for the account of the Borrower 
subject to the terms and conditions set forth herein, provided that the 
aggregate face amount of all Letters of Credit shall not exceed $105,000,000 
during the period from the Effective Date until the earlier to occur of (i) 
the date that the Letter of Credit for the benefit of Credit Suisse First 
Boston is drawn on so as to reduce the amount available thereunder, or is 
amended or replaced so as to reduce the face amount thereof, by more than 
$15,000,000 or (ii) April 16, 1998, and thereafter shall not exceed 
$90,000,000. Each Letter of Credit shall be denominated in dollars and shall 
be a either a direct pay IRB Letter of Credit, a direct pay letter of credit 
supporting bond related Indebtedness similar to the IRB Letters of Credit or 
a standby letter of credit issued to support the obligations of Borrower in 
connection with Permitted Developments. Each Letter of Credit shall expire no 
later than five (5) Business Days prior to the Maturity Date. Although the 
Agent shall be the issuing bank of the Letter of Credit, each Lender hereby 
accepts for its own account and risk an undivided interest equal to its 
Commitment Percentage in the Agent's obligations represented by each Letter 
of Credit issued hereunder, and unconditionally and irrevocably agrees with 
the Agent that, upon any Unreimbursed Drawing, such Lender shall promptly pay 
to the Agent an amount equal to such Lender's Commitment Percentage of the 
amount of such Unreimbursed Drawing. Upon the issuance of each Letter of 
Credit hereunder, there shall be reserved from each Lender's Commitment an 
amount equal to such Lender's Commitment Percentage of the face amount of 
the Letter of Credit. Such reserved amounts shall remain in place and shall 
be unavailable for borrowing under Section 2.1 until the date that the Letter 
of Credit expires or is terminated.

     (b) If the Borrower shall desire the issuance of any Letters of Credit 
or the extension or renewal of any outstanding Letters of Credit, it shall 
give to the Agent a written notice in the form of Exhibit D hereto of each 
Letter of Credit requested hereunder (a "Letter of Credit Request") no less 
than ten (10) Business Days prior to the proposed issuance date of the 
requested Letter of Credit or prior to the expiration date of any Letter of 
Credit to be renewed or extended. Each Letter of Credit Request shall specify 
(i) the name and address of the beneficiary of the requested Letter of 
Credit, (ii) the face amount of the requested Letter of Credit, (iii) the 
proposed issuance date and expiration date of the requested Letter of Credit, 
(iv) the proposed form of the requested Letter of Credit, and (v) the 
permitted purpose for which the Letter of Credit will be used, and shall be 
accompanied by a Compliance Certificate in the form of Exhibit C hereto 
signed by a Responsible Officer setting forth in reasonable detail 
computations evidencing compliance with the covenants contained in Section 9 
hereof after including in the Outstanding Principal Amount the face amount of 
the requested Letter of Credit. The Agent may also require that the Borrower 
complete its standard letter of credit application form and 

                                       24

<PAGE>

submit the same and the standard application fee together with the Letter of 
Credit Request. The Letter of Credit Requests with respect to the Initial 
Letters of Credit are hereby approved. Within two (2) Business Days after 
receipt of any other Letter of Credit Request, the Agent shall provide to 
each of the Lenders by facsimile a copy of such Letter of Credit Request and 
accompanying Compliance Certificate and each Lender shall, within 24 hours 
thereafter, notify the Agent if it believes that any of the conditions 
contained in Section 11 of this Agreement has not been met or waived such 
that a Loan in an amount equal to the face amount of the requested Letter of 
Credit could be made on the proposed issuance date of such Letter of Credit. 
If such a notice is given the Requisite Lenders shall promptly determine 
whether all of the conditions contained in Section 11 of this Agreement have 
been met or waived. If no such notice is given by any Lender or if following 
such notice the Requisite Lenders determine that the conditions contained in 
Section 11 have been met or waived, and if the Agent determines, in its 
discretion, that it is willing to issue, extend or renew the requested Letter 
of Credit, and that it is satisfied with the proposed form thereof, the 
Letter of Credit shall be issued, extended or renewed by the Agent and each 
of the Lenders shall then be obligated to the Agent with respect to its 
Commitment Percentage of the Letter of Credit (as extended or renewed, if 
applicable) as provided above in Section 2.9(a).

     (c) On or before the issuance date of any Letters of Credit having an 
expiration date of one year or less after its issuance date, the Borrower 
shall pay to the Agent for its own account an issuance fee equal to 
one-eighth percent (.125%) of the face amount of the Letter of Credit. The 
issuance fee for any Letter of Credit with a later expiration date will be 
determined by the Agent. On or before the date of any extension or renewal of 
a Letter of Credit, the Borrower shall pay to the Agent for its own account a 
renewal fee for each year of the extension renewal term equal to one-tenth 
percent (.10%) of the face amount of the applicable Letter of Credit. The 
Borrower shall pay to the Agent for the account of the Lenders a Letter of 
Credit fee equal to the then prevailing Applicable Margin per annum of the 
face amount of the Letter of Credit, which Letter of Credit fee shall be due 
and payable in advance on the issuance date of the Letter of Credit and on 
the first day of each calendar quarter for so long as such Letter of Credit 
remains outstanding, and shall be prorated for any partial quarter and paid 
for the actual number of days between the issuance date and the expiration 
date of such Letter of Credit. Promptly after its receipt thereof the Agent 
shall distribute such Letter of Credit fee to the Lenders pro-rata in 
accordance with their respective Commitment Percentages. Such fees shall be 
nonrefundable and shall not be further prorated in the event that the Letter 
of Credit terminates prior to its scheduled expiration date. The Borrower 
also agrees to reimburse the Agent for all reasonable fees (consistent with 
the fee schedule of the Agent's trade services division as then in effect), 
costs, expenses and disbursements of the Agent in issuing, effecting payment 
under, amending or otherwise administering any Letter of Credit.

     (d) Promptly after each Unreimbursed Drawing the Agent shall notify the 
Lenders and the Borrower of the amount thereof. The payment of each 
Unreimbursed Drawing shall constitute an advance of a Loan which shall bear 
interest as a Base Rate Loan from the Drawing Date. On the Drawing Date of 
each Unreimbursed Drawing, each Lender shall pay to the Agent

                                       25

<PAGE>

its Commitment Percentage of the amount of such Unreimbursed Drawing. If the 
Agent receives such payment from any Lender on a date after the Drawing Date, 
such Lender shall pay to the Agent on demand an amount computed in the same 
manner as the amount due to the Agent from a Lender which has made available 
funds for loans after the Borrowing Date thereof pursuant to Section 2.7(b). 
Each Lender's obligation to pay its Commitment Percentage of each 
Unreimbursed Drawing shall not be subject to the satisfaction of the 
conditions set forth in Section 11. Within three (3) Business Days after each 
Unreimbursed Drawing, the Borrower shall deliver to the Agent a written 
explanation of the facts and circumstances relating to such drawing and a 
Compliance Certificate and any other information requested by the Agent for 
the purpose of allowing the Lenders to determine whether the drawing or 
related events have resulted in a Default or Event of Default. The Agent 
shall promptly provide copies of such explanation and information to the 
Lenders.

     (e) The Borrower's obligations under this Section 2.9 shall be absolute 
and unconditional under any and all circumstances and irrespective of any 
set-off, counterclaim or defense to payment which the Borrower may have or 
have had against the Agent, any Lender or any beneficiary of a Letter of 
Credit. The Borrower also agrees that the Agent shall not be responsible for, 
and the Borrower's reimbursement obligations hereunder shall not be affected 
by, among other things, (i) the validity or genuineness of documents or of 
any endorsements thereon, even though such documents shall in fact prove to 
be invalid, fraudulent or forged, or (ii) any dispute between or among the 
Borrower and any beneficiary of any Letter of Credit or any other party to 
which such Letter of Credit may be transferred or (iii) any claims whatsoever 
of the Borrower against any beneficiary of such Letter of Credit or any such 
transferee. The Agent shall not be liable for any error, omission, 
interruption or delay in transmission, dispatch or delivery of any message or 
advice, however transmitted, in connection with any Letter of Credit, except 
for errors, omissions, interruptions or delays for which the Agent is liable 
under the Uniform Customs and Practices for Documentary Credits. The Borrower 
assumes all risks of the acts or omissions of any trustee, paying agent, 
tender agent or remarketing agent under the IRB Indebtedness and the Agent 
shall not be responsible for any use which may be made of the IRB Letters of 
Credit. The Borrower agrees that any action taken or omitted by the Agent 
under or in connection with any Letter of Credit or the related drafts or 
documents, if done in accordance with the standards of care specified in the 
Uniform Customs and Practices for Documentary Credits as the same may be 
amended from time to time, shall be binding on the Borrower and shall not 
result in any liability of the Agent to the Borrower or to any Guarantor.

     Section 3. REPAYMENT OF THE LOANS.

     Section 3.1. Maturity. The Borrower unconditionally promises to pay on 
the Maturity Date, and there shall become absolutely due and payable on the 
Maturity Date, all of the Loans outstanding on such date, together with any 
and all accrued and unpaid interest and charges thereon.

     Section 3.2. Mandatory Repayments of Loan. If at any time the sum of the 
Outstanding Principal Amount exceeds the Maximum Principal Amount, then the 
Borrower shall

                                       26 

<PAGE>

immediately pay the amount of such excess to the Agent for the respective 
accounts of the Lenders for application to the Loans.

     Section 3.3. Optional Repayments of Loans. The Borrower shall have the 
right, at its election, to repay the outstanding amount of the Loans, as a 
whole or in part, on any Business Day, without penalty or premium; provided 
that the full or partial prepayment of the outstanding amount of any 
Eurodollar Rate Loans made pursuant to this Section 3.3 may be made only on 
the last day of the Interest Period relating thereto, except as set forth 
below in this Section 3.3. The Borrower shall give the Agent no later than 
10:00 a.m., Boston time, at least three (3) Business Days' prior written 
notice of any prepayment pursuant to this Section 3.3 of any Base Rate Loans 
and four (4) Eurodollar Business Days, notice of any proposed repayment 
pursuant to this Section 3.3 of any Eurodollar Rate Loans, specifying the 
proposed date of payment of Loans and the principal amount to be paid. Each 
such partial prepayment of the Loans shall be in an integral multiple of 
$100,000 and shall be accompanied by the payment of all charges outstanding 
on all Loans and of accrued interest on the principal repaid to the date of 
payment and shall be applied, in the absence of instruction by the Borrower, 
first to the principal of Base Rate Loans and then to the principal of 
Eurodollar Rate Loans. Notwithstanding anything contained herein to the 
contrary, the Borrower may make a full or partial prepayment of a Eurodollar 
Rate Loan on a date other than the last day of the Interest Period relating 
thereto, if all optional prepayments (in whole or in part) on such Loans 
shall be accompanied by, and the Borrower hereby promises to pay, a 
prepayment fee in an amount determined by the Agent in the following manner:

     (i) Fixed Rate Prepayment Fee. Borrower acknowledges that prepayment or 
acceleration of a Eurodollar Loan during an Interest Period shall result in 
the Lenders incurring additional costs, expenses and/or liabilities and that 
it is impractical to ascertain the extent of such costs, expenses and/or 
liabilities. (For all purposes of this Section, any Loan not being made as a 
Eurodollar Rate Loan in accordance with the Loan Request therefor, as a 
result of Borrower's cancellation thereof, shall be treated as if such 
Eurodollar Rate Loan had been prepaid.) Therefore, on the date a Eurodollar 
Rate Loan is prepaid or the date all sums payable hereunder become due and 
payable, by acceleration or otherwise ("Prepayment Date"), Borrower will pay 
to Agent, for the account of each Lender, (in addition to all other sums 
then owing), an amount ("Fixed Rate Prepayment Fee") determined by the Agent 
to be the amount, if any, by which (i) the amount of interest which would 
have accrued on the prepaid Eurodollar Rate Loan for the remainder of the 
Interest Period at the rate applicable to such Eurodollar Rate Loan exceeds 
(ii) the amount of interest that would accrue for the same period on any 
readily marketable bond or other obligation of the United States of America 
designated by the Agent in its sole discretion at or about the time of such 
payment, such bond or other obligation of the United States of America to be 
in an amount equal (as nearly as may be) to the amount of principal so paid 
or not borrowed and to have a maturity comparable to the remainder of such 
Interest Period, and the interest to accrue thereon to take account of 
amortization of any discount from par or accretion of premium above par at 
which the same is selling at the time designation.

                                       27

<PAGE>

     (ii) Upon the written notice to Borrower from Agent, Borrower shall 
immediately pay to Agent, for the account of the Lenders, the Fixed Rate 
Prepayment Fee. Such written notice (which shall include calculations in 
reasonable detail) shall, in the absence of manifest error, be conclusive and 
binding on the parties hereto.

     (iii) Borrower understands, agrees and acknowledges the following: (i) 
no Lender has any obligation to purchase, sell and/or match funds in 
connection with the use of the Eurodollar Rate as a basis for calculating the 
rate of interest on a Eurodollar Rate Loan; (ii) the Eurodollar Rate is used 
merely as a reference in determining such rate; and (iii) Borrower has 
accepted the Eurodollar Rate as a reasonable and fair basis for calculating 
such rate and a Fixed Rate Prepayment Fee. Borrower further agrees to pay the 
Fixed Rate Prepayment Fee, if any, whether or not a Lender elects to 
purchase, sell and/or match funds.

     Section 4. CERTAIN GENERAL PROVISIONS.

     Section 4.1. Revolving Credit Facility Fees and Agent's Fee. The 
Borrower agrees to pay to the Lead Lenders and the Agent revolving credit 
facility fees and agency fees in the amounts specified in the Fee Agreement 
dated October 20, 1997 among the Lead Lenders, the Borrower, the Company and 
The Prime Group, Inc. The Lead Lenders shall be responsible for any facility 
fees which they may agree to pay to the other Lenders which become a party to 
this Agreement. If the Borrower obtains releases of one or more Mortgaged 
Properties pursuant to Section 5.5, and simultaneously or thereafter provides 
Additional Properties pursuant to Section 5.3 and Section 5.4 to replace the 
Collateral Value of the released property, the Borrower shall pay a 
substitution fee to the Agent for its own account in the amount of $2,500 per 
Additional Property.

     Section 4.2. Commitment Fee. The Borrower shall pay to the Agent for the 
accounts of the Lenders in accordance with their respective Commitment 
Percentages a commitment fee calculated at the rates set forth below per 
annum on the daily amount by which the Total Commitment (as it may have been 
reduced pursuant to Section 2.2) exceeds the Outstanding Principal Amount 
(the "Unused Amount"):

<TABLE><CAPTION>

Unused Amount                                     Fee Rate
-------------                                     --------
<S>                                            <C>

less than 1/3 of Total Commitment              15 basis points
at least 1/3 of Total Commitment
but less than 2/3 of Total Commitment          20 basis points
at least 2/3 of Total Commitment               25 basis points

</TABLE>

The commitment fee shall be payable on the basis of the applicable annual 
rate quarterly in arrears on the first day of each calendar quarter for the 
immediately preceding calendar quarter commencing on the first such date 
following the date hereof, with a final payment on the Maturity Date or any 
earlier date on which the Commitments shall terminate.

                                       28

<PAGE>

     Section 4.3. Funds for Payments.

     (a) All payments of principal, interest, closing fees, commitment fees 
and any other amounts due hereunder (other than as provided in Section 4.1, 
Section 4.5 and Section 4.6) or under any of the other Loan Documents, and 
all prepayments, shall be made to the Agent, for the respective accounts of 
the Lenders, at the Agent's Head Office, in each case in Dollars in 
immediately available funds.

     (b) All payments by the Borrower hereunder and under any of the other 
Loan Documents shall be made without setoff or counterclaim and free and 
clear of and without deduction for any taxes, levies, imposts, duties, 
charges, fees, deductions, withholdings, compulsory liens, restrictions or 
conditions of any nature now or hereafter imposed or levied by any 
jurisdiction or any political subdivision thereof or taxing or other 
authority therein unless the Borrower is compelled by law to make such 
deduction or withholding. If any such obligation is imposed upon the Borrower 
with respect to any amount payable by it hereunder or under any of the other 
Loan Documents, the Borrower shall pay to the Agent, for the account of the 
Lenders or (as the case may be) the Agent, on the date on which such amount 
is due and payable hereunder or under such other Loan Document, such 
additional amount in Dollars as shall be necessary to enable the Lenders or 
the Agent to receive the same net amount which the Lenders or the Agent would 
have received on such due date had no such obligation been imposed upon the 
Borrower. The Borrower will deliver promptly to the Agent certificates or 
other valid vouchers for all taxes or other charges deducted from or paid 
with respect to payments made by the Borrower hereunder or under such other 
Loan Document.

     Section 4.4. Computations. All computations of interest on the Loans and 
of other fees to the extent applicable shall be based on a 360-day year and 
paid for the actual number of days elapsed. Except as otherwise provided in 
the definition of the term "Interest Period" with respect to Eurodollar Rate 
Loans, whenever a payment hereunder or under any of the other Loan Documents 
becomes due on a day that is not a Business Day, the due date for such 
payment shall be extended to the next succeeding Business Day, and interest 
shall accrue during such extension. The outstanding amount of the Loans as 
reflected on the Records from time to time shall (absent manifest error) be 
considered correct and binding on the Borrower unless within thirty (30) 
Business Days after receipt by the Agent or any of the Lenders from Borrower 
of any notice by the Borrower of such outstanding amount, the Agent or such 
Lender shall notify the Borrower to the contrary.

     Section 4.5. Additional Costs, Etc. If any present or future applicable 
law which expression, as used herein, includes statutes, rules and 
regulations thereunder and interpretations thereof by any competent court or 
by any governmental or other regulatory body or official charged with the 
administration or the interpretation thereof and requests, directives, 
instructions and notices at any time or from time to time hereafter made upon 
or otherwise issued to any Lender or the

                                       29

<PAGE>

Agent by any central bank or other fiscal, monetary or other authority 
(whether or not having the force of law), shall:

     (a) subject any Lender or the Agent to any tax, levy, impost, duty, 
charge, fee, deduction or withholding of any nature with respect to this 
Agreement, the other Loan Documents, such Lender's Commitment or the Loans 
(other than taxes based upon or measured by the income or profits of such 
Lender or the Agent), or

     (b) materially change the basis of taxation (except for changes in taxes 
on income or profits) of payments to any Lender of the principal of or the 
interest on any Loans or any other amounts payable to any Lender under this 
Agreement or the other Loan Documents, or

     (c) impose or increase or render applicable (other than to the extent 
specifically provided for elsewhere in this Agreement) any special deposit, 
reserve, assessment, liquidity, capital adequacy or other similar 
requirements (whether or not having the force of law) against assets held by, 
or deposits in or for the account of, or loans by, or commitments of an 
office of any Lender, or

     (d) impose on any Lender any other conditions or requirements with 
respect to this Agreement, the other Loan Documents, the Loans, the 
Commitment, or any class of loans or commitments of which any of the Loans or 
the Commitment forms a part;

and the result of any of the foregoing is

     (i) to increase the cost to such Lender of making, funding, issuing, 
renewing, extending or maintaining any of the Loans or such Lender's 
Commitment, or

     (ii) to reduce the amount of principal, interest or other amount payable 
to such Lender or the Agent hereunder on account of the Commitments or any of 
the Loans, or

     (iii) to require such Lender or the Agent to make any payment or to 
forego any interest or other sum payable hereunder, the amount of which 
payment or foregone interest or other sum is calculated by reference to the 
gross amount of any sum receivable or deemed received by such Lender or the 
Agent from the Borrower hereunder,

then, and in each such case, the Borrower will, upon demand made by such 
Lender or (as the case may be) the Agent at any time and from time to time 
and as often as the occasion therefor may arise, pay to such Lender or the 
Agent, to the extent permitted by law, such additional amounts as will be 
sufficient to compensate such Lender or the Agent for such additional cost, 
reduction, payment or foregone interest or other sum.

                                       30

<PAGE>

     Section 4.6. Capital Adequacy. If any present or future law, 
governmental rule, regulation, policy, guideline or directive (whether or not 
having the force of law) or the interpretation thereof by a court or 
governmental authority with appropriate jurisdiction affects the amount of 
capital required or expected to be maintained by banks or bank holding 
companies and any Lender or the Agent determines that the amount of capital 
required to be maintained by it is increased by or based upon the existence 
of the Loans made or deemed to be made pursuant hereto, then such Lender or 
the Agent may notify the Borrower of such fact, and the Borrower shall pay to 
such Lender or the Agent from time to time on demand, as an additional fee 
payable hereunder, such amount as such Lender or the Agent shall determine in 
good faith and certify in a notice to the Borrower to be an amount that will 
adequately compensate such Lender or the Agent in light of these 
circumstances for its increased costs of maintaining such capital. Each 
Lender and the Agent shall allocate such cost increases among its customers 
in good faith and on an equitable basis.

     Section 4.7. Certificate. A certificate setting forth any additional 
amounts payable pursuant to Sections 4.5 or 4.6 and a brief explanation of 
such amounts which are due, submitted by any Lender or the Agent to the 
Borrower, shall be prima facie evidence that such amounts are due and owing.

     Section 4.8. Indemnity. In addition to the other provisions of this 
Agreement regarding any such matters, the Borrower agrees to indemnify each 
Lender and to hold each Lender harmless from and against any loss, cost or 
reasonable expense (including loss of anticipated profits) that such Lender 
may sustain or incur as a consequence of (a) a default by the Borrower in 
payment of the principal amount of or any interest on any Eurodollar Rate 
Loans as and when due and payable, including any such loss or expense caused 
by Borrower's breach or other default and arising from interest or fees 
payable by such Lender to lenders of funds obtained by it in order to 
maintain its Eurodollar Rate Loans, (b) a default by the Borrower in making a 
borrowing or conversion after the Borrower has given (or is deemed to have 
given) a Loan Request or a Conversion Request, and (c) the making of any 
payment of a Eurodollar Rate Loan or the making of any conversion of a 
Eurodollar Rate Loan to a Base Rate Loan on a day that is not the last day of 
the applicable Interest Period with respect thereto, including interest or 
fees payable by such Lender to lenders of funds obtained by it in order to 
maintain any such Eurodollar Rate Loan.

     Section 4.9. Interest on Overdue Amounts. Overdue principal and (to the 
extent permitted by applicable law) interest on the Loans and all other 
overdue amounts payable hereunder or under any of the other Loan Documents 
shall bear interest compounded monthly and payable on demand at a rate per 
annum equal to four percent (4%) above the Base Rate until such amount shall 
be paid in full (after as well as before judgment). In addition, the 
Borrower shall pay to the Agent a late charge equal to three percent (3%) of 
any amount of principal and/or interest and/or charges on the Loans which is 
not paid within ten (10) days of the date when due.

                                       31

<PAGE>

     Section 4.10. Inability to Determine Eurodollar Rate. In the event, 
prior to the commencement of any Interest Period relating to any Eurodollar 
Rate Loan, the Agent shall determine that adequate and reasonable methods do 
not exist for ascertaining the Eurodollar Rate that would otherwise determine 
the rate of interest to be applicable to any Eurodollar Rate Loan during any 
Interest Period, the Agent shall forthwith give notice of such determination 
(which shall be conclusive and binding on the Borrower) to the Borrower. In 
such event (a) any Loan Request with respect to Eurodollar Rate Loans shall 
be automatically withdrawn and shall be deemed a request for Base Rate Loans, 
(b) each Eurodollar Rate Loan will automatically, on the last day of the then 
current Interest Period thereof, become a Base Rate Loan, and (c) the 
obligations of the Lenders to make Eurodollar Rate Loans shall be suspended 
until the Agent determines that the circumstances giving rise to such 
suspension no longer exist, whereupon the Agent shall so notify the Borrower.

     Section 4.11. Illegality. Notwithstanding any other provisions herein, 
if any present or future law, regulation, treaty or directive or in the 
interpretation or application thereof shall make it unlawful for any Lender 
to make or maintain Eurodollar Rate Loans, such Lender shall forthwith give 
notice of such circumstances to the Borrower and thereupon (a) the Commitment 
of such Lender to make Eurodollar Rate Loans or convert Loans of another Type 
to Eurodollar Rate Loans shall forthwith be suspended and (b) the Eurodollar 
Rate Loans then outstanding shall be converted automatically to Base Rate 
Loans on the last day of each Interest Period applicable to such Eurodollar 
Rate Loans or within such earlier period as may be required by law. The 
Borrower hereby agrees promptly to pay to the Agent for the account of such 
Lender, upon demand, any additional amounts necessary to compensate such 
Lender for any reasonable costs incurred by such Lender in making any 
conversion in accordance with this Section 4.11, including any interest or 
fees payable by such Lender to lenders of funds obtained by it in order to 
make or maintain its Eurodollar Rate Loans hereunder.

     Section 4.12. Replacement of Lenders. If any of the Lenders shall make a 
notice or demand upon the Borrower pursuant to Section 4.5, Section 4.6, or 
Section 4.11 based on circumstances or laws which are not generally 
applicable to the Lenders organized under the laws of the United States or 
any State thereof, the Borrower shall have the right to replace such Lender 
with an Eligible Assignee selected by the Borrower and approved by the Agent. 
In such event the assignment shall take place on a date set by the Agent at 
which time the assigning Lender and the Eligible Assignee shall enter into an 
Assignment and Acceptance as contemplated by Section 18.1 (and clause (d) 
thereof shall not be applicable) and the assigning Lender shall receive from 
the Eligible Assignee or the Borrower a sum equal to the outstanding 
principal amount of the Loans owed to the assigning Lender together with 
accrued interest thereon plus the accrued commitment fee under Section 4.2 
allocated to the assigning Lender.

     Section 4.13. U.S. Tax Certificates. Each Lender that is organized under 
the laws of any jurisdiction other than the United States of America or any 
state or other political subdivision thereof shall deliver to the Agent for 
transmission to the Borrower, on the date it becomes a 

                                       32

<PAGE>

Lender, and at such other times as may be necessary in the determination of 
the Borrower or the Agent (each in the reasonable exercise of its 
discretion), such certificates, documents or other evidence, properly 
completed and duly executed by such Lender (including Internal Revenue 
Service Form 1001 or Form 4224 or any other certificate or statement of 
exemption required by Treasury Regulations Section 1.1441-4(a) or Section 
1.1441-6(c) or any successor thereto) to establish that such Lender is not 
subject to deduction or withholding of United States federal income tax under 
Section 1441 or 1442 of the Internal Revenue Code or otherwise (or under any 
comparable provisions of any successor statute) with respect to any payments 
to such Lender of principal, interest, fees or other amounts payable under 
any of the Loan Documents.

     Section 5. COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.

     Section 5.1. Collateral Security. The Obligations shall be secured by 
(i) a perfected first priority lien and security interest to be held by the 
Agent (subject only to Permitted Liens) in the Mortgaged Properties, pursuant 
to the terms of the Security Documents, (ii) a perfected first priority lien 
and security interest to be held by the Agent in the Leases and rents 
pursuant to the Assignments of Leases and Rents, (iii) a first priority 
pledge of any pledged bonds purchased with the proceeds of Drawings under any 
IRB Letter of Credit pursuant to the Pledge Agreements, and (iv) the 
Guaranties.

     Section 5.2. No Limitation on Recourse. Notwithstanding the foregoing 
Collateral, the Obligations are full recourse obligations of the Borrower 
(with recourse to its partners limited to the extent provided in Section 28) 
and, to the extent provided in the applicable Guaranty, of the Guarantors, 
and all of their respective Real Estate Assets and other properties shall be 
available for the indefeasible payment in full in cash and performance of the 
Obligations.

     Section 5.3. Additional Properties.

     (a) Additional Real Estate Assets owned by the Borrower or by a 
Guarantor Subsidiary may become Mortgaged Properties with the approval of the 
Lead Lenders provided that such Real Estate Assets satisfy the conditions set 
forth in Section 5.4. In the event that the Lead Lenders grant such approval 
and all of the conditions set forth in Section 5.4 are satisfied, the Agent 
shall notify the Borrower and within ten (10) days thereafter the Borrower 
and the Company shall execute and deliver an Indemnity Agreement and the 
Mortgagor shall execute and deliver to the Agent a Security Deed, an 
Assignment of Rents and Leases and UCC-1 Financing Statements, which Security 
Documents shall be in substantially the form of the Security Documents 
executed and delivered herewith with such changes as the Agent may deem 
desirable to address the laws of the State where the Additional Property is 
located or the factual circumstances of the Additional Property. Such 
Additional Properties shall be deemed to be Mortgaged Properties upon the 
recording and filing of such Security Documents and the Agent's receipt of 
satisfactory evidence thereof.

                                       33

<PAGE>

     (b) The Lead Lenders hereby approve the Real Estate Assets described on 
Schedule 5.3(b) which Borrower agrees to add as Mortgaged Properties 
hereunder on or before December 10, 1997. Upon satisfaction of the conditions 
set forth in Section 5.4, the Agent shall revise Schedule 1.1 to include such 
Additional Properties.

     (c) The Agent and the Lead Lenders shall use their best efforts to 
complete their review of the documents submitted with respect to each 
Additional Property and notify the Borrower as to whether the conditions in 
Section 5.4 are satisfied within ten (10) Business Days after receipt of the 
last of the items required pursuant to Section 5.4.

     Section 5.4. Conditions to Approval of Additional Properties. Prior to 
acceptance of any Real Estate Asset to become an Additional Property pursuant 
to Section 5.3, such property must satisfy the following conditions, which 
may be modified or waived only by the written agreement of the Requisite 
Lenders:

     (a) If the Additional Property is not owned by the Borrower or an 
existing Guarantor Subsidiary, but is owned by a Related Company which is at 
least 99% owned by Borrower, such Related Company must become a Guarantor 
Subsidiary by delivery to the Agent the following, all in form and substance 
satisfactory to the Agent: (i) a Guaranty in substantially the form of the 
Guaranty executed and delivered by the Guarantor Subsidiaries prior to the 
Effective Date and (ii) good standing certificates, general partner 
certificates, secretary certificates, opinions of counsel and such other 
documents as may be reasonably requested by the Agent.

     (b) An Appraisal of the Additional Property ordered by the Agent and 
paid for by the Borrower shall have been approved by the Lead Lenders.

     (c) The Agent shall have received all of the items relating to the 
Additional Property described in Section 10.8, Section 10.9, Section 10.10, 
Section 10.12, Section 10.13, Section 10.14, Section 10.16 and Section 10.18 
and such items shall have been approved by the Agent or the Lead Lenders as 
required by such Sections.

     (d) The Agent shall have received a Certificate executed on behalf of 
the Borrower containing the representations and warranties with respect to 
the Additional Property as are set forth in Section 6.18 and Section 6.22, to 
which there shall be attached a current rent roll for the Additional Property 
which shall be deemed to supplement and become a part of Schedule 6.22(l) 
hereto.

     (e) The Borrower shall have requested estoppel certificates in form 
reasonably satisfactory to the Agent from the tenants under all Leases of the 
Additional Property, shall have used its best efforts to obtain all such 
estoppel certificates and shall have received such estoppel certificates as 
the Lead Lenders may, in their discretion, require, and all estoppel 
certificates received shall be satisfactory to the Lead Lenders.

                                       34

<PAGE>

     (f) The Agent shall have received updated certificates and other items 
relating to the Borrower, the Company and the applicable Guarantor Subsidiary 
as described in Section 10.2, Section 10.3 and Section 10.4 and a favorable 
opinion addressed to the Lenders and the Agent, in form and substance 
satisfactory to the Lenders and the Agent as to the matters described on 
Exhibit E relating to the Loan Documents executed by Borrower and/or the 
Mortgagor with respect to the Additional Property and relating to the laws of 
the state where the Additional Property is located.

     Section 5.5. Release of Mortgaged Properties. The Borrower may request 
that the Agent release any Mortgaged Property from the lien of the Security 
Documents and the Agent shall approve any such request provided that there is 
then no continuing Default or Event of Default under this Agreement and the 
requested release will not result in any Default or Event of Default under 
this Agreement and the Borrower delivers to the Agent a pro-forma Compliance 
Certificate reasonably satisfactory to the Agent demonstrating that the 
requested release will not result in a violation of any of the covenants in 
Section 9. The Borrower may request releases of a portion of a Mortgaged 
Property consisting of undeveloped land to be developed by Borrower or sold 
provided that in addition to the requirements set forth above, the Borrower 
shall also submit such additional information as may be reasonably requested 
by the Agent including, without limitation, (i) an updated survey and 
endorsements to the Title Policy; (ii) an updated Appraisal of the remaining 
portion of the Mortgaged Property and (iii) evidence that the division of the 
Mortgaged Property pursuant to the requested release will not result in 
violation of any zoning ordinance or other applicable laws and ordinances. If 
the Borrower shall request the release of any Mortgaged Property which is 
adjacent to any other Mortgaged Property which is not to be simultaneously 
released, the Agent may require the establishment of appropriate easements 
and maintenance agreements satisfactory to the Agent relating to any shared 
utilities, drainage facilities, access drives or walks, parking areas or 
other shared facilities.

     Section 6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and 
warrants to the Agent and each of the Lenders as follows, and to the extent 
that the following representations and warranties relate to the Company, the 
Company represents and warrants to the Agent and each of the Lenders as 
follows:

                                       35
<PAGE>

     Section 6.1. Authority; Etc.

     (a) Organization; Good Standing. The Company (i) is a Maryland real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland, (ii) has all requisite power to own its
properties and conduct its business as now conducted and as presently
contemplated, and (iii) to the extent required by law is in good standing as a
foreign entity and is duly authorized to do business in the States in which the
Mortgaged Properties are located and in each other jurisdiction where such
qualification is necessary except where a failure to be so qualified in such
other jurisdiction would not have a Materially Adverse Effect. The Borrower is a
Delaware limited partnership, and each Guarantor Subsidiary is a limited
partnership or a limited liability company formed under the laws of Illinois,
Tennessee or Delaware, and each such entity is duly organized, validly existing
and in good standing under the laws of the State of its formation, has all
requisite power to own its properties and conduct its business as presently
contemplated and is duly authorized to do business in the States in which the
Mortgaged Properties owned by it are located and in each other jurisdiction
where such qualification is necessary.

     (b) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower is to become a
party and the transactions contemplated hereby and thereby (i) are within the
authority of the Borrower, (ii) have been duly authorized by all necessary
proceedings on the part of the Borrower and the Company, (iii) do not conflict
with or result in any breach or contravention of any provision of law, statute,
rule or regulation to which the Borrower or the Company is subject or any
judgment, order, writ, injunction, license or permit applicable to the Borrower
or the Company and (iv) do not conflict with any provision of the Borrower's
partnership agreement or Company's declaration of trust, charter documents or
bylaws, or any material agreement or other material instrument binding upon, the
Borrower or the Company or to which any of their properties are subject. The
execution, delivery and performance of the Guaranty and the other Loan Documents
to which any Guarantor is to become a party and the transactions contemplated
hereby and thereby (i) are within the authority of such Guarantor, (ii) have
been duly authorized by all necessary proceedings on the part of such Guarantor,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which such Guarantor is subject
or any judgment, order, writ, injunction, license or permit applicable to such
Guarantor and (iv) do not conflict with any provision of such Guarantor's
charter documents or bylaws, partnership agreement, limited liability company
agreement, declaration of trust, or any agreement or other instrument binding
upon such Guarantor or to which any of such Guarantor's properties are subject.

     (c) Enforceability. The execution and delivery of this Agreement and the
other Loan Documents to which the Borrower is or is to become a party will
result in valid and legally binding obligations of the Borrower enforceable
against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy,

                                       36
<PAGE>

insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought. The execution and delivery of this Agreement and the Indemnity
Agreement will result in valid and legally binding obligations of the Company
enforceable against it in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought. The execution and delivery of the Guaranty and the other Loan
Documents to which any Guarantor is or is to become a party will result in valid
and legally binding obligations of such Guarantor enforceable against such
Guarantor in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.

     Section 6.2. Governmental Approvals. The execution, delivery and 
performance by the Borrower and each Guarantor of this Agreement and the 
other Loan Documents to which the Borrower or such Guarantor is or is to 
become a party and the transactions contemplated hereby and thereby do not 
require the approval or consent of, or filing with, any governmental agency 
or authority other than those already obtained and the filing of the Security 
Documents in the appropriate records office with respect thereto.

     Section 6.3. Title to Properties.

     (a) Based on the Title Policies, the Borrower or one of the Guarantor
Subsidiaries holds good and clear record and marketable fee simple title to the
Mortgaged Properties, subject to no Liens or encumbrances except for the
Permitted Liens.

     (b) Except as indicated on Schedule 6.3 hereto, the Borrower or the Related
Companies own all of the properties reflected in the Closing Balance Sheet of
the Company, subject to no Liens except Permitted Liens.

     Section 6.4. Financial Statements. The following financial statements 
have been furnished to each of the Lenders.

     (a) The Prospectus Financial Statements. Such Prospectus Financial
Statements have been prepared in accordance with Generally Accepted Accounting
Principles and fairly present the financial condition of the Borrower and the
Company as at the close of business on 

                                       37
<PAGE>

the Effective Date and the results of operations for the applicable period.
There are no direct or contingent liabilities of the Borrower or the Company as
of such date involving material amounts, known to the officers of the Company
not disclosed in the Closing Balance Sheet of the Company contained in the
Prospectus Financial Statements and the related notes thereto. There are no
material differences between the Closing Balance Sheet and balance sheet of the
Borrower and its subsidiaries prepared on a consolidated basis in accordance
with Generally Accepted Accounting Principles prepared on the same basis and as
of the same date as the Closing Balance Sheet, other than the line item for the
minority interests in the Borrower.

     (b) With respect to each Mortgaged Property, a statement prepared by the
Borrower of the rental and other income of the Borrower from the operation of
such Mortgaged Property for each of the previous four (4) fiscal quarters, and
all operating and other costs and expenses incurred by the Borrower in
connection with such Mortgaged Property during such fiscal quarters, certified
by a Responsible Officer of the Company as fairly presenting the results of
operation with respect to such Mortgaged Property for such fiscal period.

     Section 6.5. No Material Changes, Etc. The Formation Transactions and 
all other events which are the basis for the assumptions used in preparation 
of the Closing Balance Sheet have happened or will happen on the Effective 
Date. Since the time of preparation of the Closing Balance Sheet, there has 
occurred no material adverse change in the financial condition or assets or 
business of the Borrower as shown on or reflected on the Closing Balance 
Sheet, nor has there been any material increase in the liabilities of the 
Borrower or the Company in excess of those shown thereon other than changes 
in the ordinary course of business that have not had any Material Adverse 
Effect either individually or in the aggregate.

     Section 6.6. Franchises, Patents, Copyrights, Etc. The Borrower 
possesses all franchises, patents, copyrights, trademarks, trade names, 
licenses and permits, and rights in respect of the foregoing, adequate for 
the conduct of its business substantially as now conducted without known 
conflict with any rights of others, including all Permits except to the 
extent the Borrower's failure to possess the same does not have a Material 
Adverse Effect.

     Section 6.7. Litigation. Except as listed and described on Schedule 6.7 
hereto, there are no actions, suits, proceedings or investigations of any 
kind pending or, to Borrower's knowledge, threatened against the Borrower, 
the Company, any Guarantor or any of the Related Companies before any court, 
tribunal or administrative agency or board that, if adversely determined, are 
reasonably expected to, either in any case or in the aggregate, have a 
Material Adverse Effect or materially impair the right of the Borrower, the 
Company, any Guarantor or any of the Related Companies to carry on business 
substantially as now conducted by it, or which question the validity of this 
Agreement or any of the other Loan Documents, any action taken or to be taken 
pursuant hereto or thereto, or any Lien or security interest created or 
intended to be created pursuant hereto or thereto, or which will materially 
adversely affect the ability of the Borrower 

                                       38
<PAGE>


or any Guarantor to pay and perform the Obligations in the manner contemplated 
by this Agreement and the other Loan Documents.

     Section 6.8. No Materially Adverse Contracts, Etc. The Borrower is not 
subject to any charter, trust or other legal restriction, or any judgment, 
decree, order, rule or regulation that has or is expected in the future, in 
the judgment of the Company's officers, to have a Material Adverse Effect. 
The Borrower is not a party to any contract or agreement that has or is 
expected, in the judgment of the Company's officers, to have any Material 
Adverse Effect. The Company is not subject to any charter, trust or other 
legal restriction, or any judgment, decree, order, rule or regulation that 
has or is expected in the future, in the judgment of the Company's officers, 
to have a Material Adverse Effect. The Company is not a party to any contract 
or agreement that has or is expected, in the judgment of the Company's 
officers, to have any Material Adverse Effect.

     Section 6.9. Compliance With Other Instruments, Laws, Etc. Neither the 
Borrower nor the Company is in violation of any provision of the Borrower's 
partnership agreement, the partnership agreement of any of the Guarantor 
Subsidiaries or of the Company's declaration of trust, by-laws, or any 
agreement or instrument to which it may be subject or by which the Borrower 
or any of its properties may be bound or any decree, order, judgment, 
statute, license, rule or regulation, in any of the foregoing cases in a 
manner that could result in the imposition of substantial penalties or have a 
Material Adverse Effect.

     Section 6.10. Tax Status. Each of the Guarantor Subsidiaries (a) has 
made or filed all federal and state income and all other tax returns, reports 
and declarations required by any jurisdiction to which it is subject, and (b) 
has paid all taxes and other governmental assessments and charges shown or 
determined to be due on such returns, reports and declarations, except those 
being contested in good faith and by appropriate proceedings. There are no 
unpaid taxes in any material amount claimed to be due by the taxing authority 
of any jurisdiction, and the officers of the Company know of no basis for any 
such claim.

     Section 6.11. Event of Default. No Default or Event of Default has 
occurred and is continuing.

     Section 6.12. Investment Company Act. The Borrower is not an "investment 
company", or an "affiliated company" or a "principal underwriter" of an 
"investment company", as such terms are defined in the Investment Company Act 
of 1940.The Company is not an "investment company", or an "affiliated 
company" or a "principal underwriter" of an "investment company", as such 
terms are defined in the Investment Company Act of 1940.

     Section 6.13. Absence of Financing Statements, Etc. There is no 
financing statement, security agreement, chattel mortgage, real estate 
mortgage, equipment lease, financing lease, option, encumbrance or other 
document existing, filed or recorded with any filing records, registry, or 
other public office, that purports to cover, affect or give notice of any 
present or possible future 

                                       39
<PAGE>


Lien or encumbrance on, or security interest in, any Collateral, except those in
favor of the Agent or Permitted Liens.

     Section 6.14. Setoff, Etc. The Collateral and the Agent's rights with 
respect to the Collateral are not subject to any setoff, claims, withholdings 
or other defenses. Either the Borrower or a Guarantor is the owner of the 
Collateral free from any lien, security interest, encumbrance and any other 
claim or demand, except for the Permitted Liens.

     Section 6.15. Certain Transactions. Except as disclosed in the Equity 
Prospectus, none of the officers or employees of the Borrower, the Company or 
any Guarantor are presently a party to any transaction with the Borrower, the 
Company or any Guarantor (other than for services as employees, officers and 
trustees), including any contract, agreement or other arrangement providing 
for the furnishing of services to or by, providing for rental of real or 
personal property to or from, or otherwise requiring payments to or from any 
officer, trustee or such employee or, to the knowledge of the Borrower and 
the Company, any corporation, partnership, trust or other entity in which any 
officer, trustee or any such employee or natural Person related to such 
officer, trustee or employee or other Person in which such officer, trustee 
or employee has a direct or indirect beneficial interest has a substantial 
interest or is an officer or trustee.

     Section 6.16. Benefit Plans: Multiemployer Plans: Guaranteed Pension 
Plans. As of the date hereof as to any Employee Benefit Plan, Multiemployer 
Plan or Guaranteed Pension Plan, neither the Borrower nor any ERISA Affiliate 
maintains or contributes to any Employee Benefit Plan, Multiemployer Plan or 
Guaranteed Pension Plan. To the extent that Borrower, the Company or any 
ERISA Affiliate hereafter maintains or contributes to any Employee Benefit 
Plan or Guaranteed Pension Plan, it shall at all times do so in compliance 
with Section 7.18 hereof.

     Section 6.17. Regulations U and X. No portion of any Loan is to be used 
for the purpose of purchasing or carrying any "margin security" or "margin 
stock" as such terms are used in Regulations U and X of the Board of 
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

     Section 6.18. Environmental Compliance. The Borrower has delivered to 
the Agent the Environmental Reports with respect to the Mortgaged Properties 
which are listed on Schedule 6.18. Except as may be set forth in the 
Environmental Reports with respect to the Mortgaged Properties, or as 
described on Schedule 6.18 or in the Equity Prospectus with respect to the 
other Real Estate Assets, Borrower makes the following representations and 
warranties:

     (a) To the best of Borrower's knowledge, none of the Borrower, any
Guarantor, any of the Related Companies or any operator of the Real Estate or
any portion thereof, or any operations thereon is in violation, or alleged
material violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive 

                                       40
<PAGE>


Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment, including, without
limitation, the environmental statutes, regulations, orders and decrees of the
States in which any of the Real Estate may be located (hereinafter collectively
referred to as the "Environmental Laws"), which violation either involves the
Mortgaged Properties or would have a Material Adverse Effect.

     (b) None of the Borrower, Prime, the Guarantors or the Related Companies 
has received written notice from any third party including, without 
limitation any federal, state or local governmental authority with respect to 
any of the Mortgaged Properties, or with respect to any other Real Estate if 
the same would have a Material Adverse Effect, (i) that it has been 
identified by the United States Environmental Protection Agency ("EPA") as a 
potentially responsible party under CERCLA with respect to a site listed on 
the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that 
any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any hazardous 
substances as defined by 42 U.S.C. Section 9601(14), any pollutant or 
contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic substances, 
oil or hazardous materials or other chemicals or substances regulated by any 
Environmental Laws ("Hazardous Materials") which it has generated, 
transported or disposed of have been found at any site at which a federal, 
state or local agency or other third party has conducted or has ordered that 
the Borrower, any Guarantor or any of the Related Companies conduct a 
remedial investigation, removal or other response action pursuant to any 
Environmental Law; or (iii) that it is or shall be a named party to any 
claim, action, cause of action, complaint, or legal or administrative 
proceeding (in each case, contingent or otherwise) arising out of any third 
party's incurrence of costs, expenses, losses or damages of any kind 
whatsoever in connection with the release of Hazardous Materials.

     (c) (i) To the best of Borrower's knowledge no portion of the Real Estate
has been used for the handling, processing, storage or disposal of Hazardous
Materials except in material compliance with applicable Environmental Laws; and
no underground tank or other underground storage receptacle for Hazardous
Materials is located on any portion of the Real Estate except in material
compliance with applicable Environmental Laws; (ii) to the best of Borrower's
knowledge, in the course of any activities conducted by the Borrower, any
Guarantor, any of the Related Companies or the operators of any Real Estate, any
ground or space tenants on any Real Estate, no Hazardous Materials have been
generated or are being used on the Real Estate except in material compliance
with applicable Environmental Laws, which in the case of Real Estate other than
the Mortgaged Properties would have a Material Adverse Effect; (iii) there has
been no present, or to the best of Borrower's knowledge past, releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping (a "Release") or threatened Release of Hazardous
Materials on, upon, into or from the Mortgaged Properties or the other Real
Estate, which Release in the case of Real Estate other 

                                       41
<PAGE>


than the Mortgaged Properties would have a Material Adverse Effect and; (iv) 
to the best of Borrower's knowledge, there have been no Releases on, upon, 
from or into any real property in the vicinity of any of the Real Estate 
which, through soil or groundwater contamination, may have come to be located 
on, and which would have a Material Adverse Effect; and (v) notwithstanding 
that any representation contained herein may be limited to the knowledge of 
the Borrower, any such limitation shall not affect the covenants specified in 
Section 7.10 or elsewhere in this Agreement.

     Section 6.19. Subsidiaries and Affiliates. The Borrower has no 
Subsidiaries except for the Related Companies listed on Schedule 1.3 and does 
not have an ownership interest in any entity whose financial statements are 
not consolidated with the Borrower's except for the Permitted Joint Ventures 
listed on Schedule 1.3. The Company is not a partner in any partnership other 
than Borrower and certain of the Related Companies listed on Schedule 1.3 
which are limited partnerships in which the Company has a one tenth percent 
(0.1%) limited partnership interest, has no Investments in any Person other 
than the Borrower and such limited partnerships and is not a member of any 
limited liability company. The Company owns no material assets other than its 
partnership interest in Borrower and the limited partnership interests 
described in this Section 6.19.

     Section 6.20. Major Leases. The Borrower has delivered to the Agent 
complete copies of the Major Leases and of the other Leases requested by the 
Agent.

     Section 6.21. Loan Documents. All of the representations and warranties 
of the Borrower or any Guarantor made in the other Loan Documents or any 
document or instrument delivered or to be delivered to the Agent or the 
Lenders pursuant to or in connection with any of such Loan Documents are true 
and correct in all material respects.

     Section 6.22. Mortgaged Properties. In this Section 6.22 the phrase "to 
the Borrower's knowledge" shall mean the actual knowledge of the officers and 
employees of the Company or of Prime who have had significant responsibility 
for the operation, management and leasing of the applicable Mortgaged 
Property. The Borrower makes the following additional representations and 
warranties concerning the Mortgaged Properties:

     (a) Off-Site Utilities. All water, sewer, electric, gas, telephone and
other utilities are installed to the property lines of the Mortgaged Properties
and, except in the case of drainage facilities, are connected to the Buildings
located thereon and to the Borrower's knowledge are adequate to service the
Buildings in full compliance with applicable law; and to the Borrower's
knowledge the Buildings are properly and legally connected directly to public
water and sewer systems. No easements over land of others not yet obtained are
required for any such utilities, and no drainage of surface or other water
across land of others is required except as disclosed in the Surveys.

                                       42
<PAGE>

     (b) Surveys, Access; Etc. Since the date of the most recent Survey
delivered to the Agent with respect to each Mortgaged Property, there has been
no construction (except interior renovations and improvements) of additional
Buildings or additions to Buildings on such Mortgaged Property, and to the
Borrower's knowledge no takings by eminent domain affecting such Mortgaged
Property or other changes which may have caused such Survey to be no longer
accurate.

     (c) Independent Building. The Buildings on each Mortgaged Property (except
as described in documents referred in the Title Policy for the West Wacker Drive
Property with respect to walkways and other common areas shared by such property
with other buildings) are fully independent from any other real estate in all
respects including, without limitation, in respect of structural integrity,
heating, ventilating and air conditioning, plumbing, mechanical and other
operating and mechanical systems, and electrical, sanitation and water systems,
all of which are connected directly to off-site utilities located in public
streets or ways. Each Mortgaged Property consists of one or more lots which are
not assessed for purposes of real estate tax assessment and payment jointly with
any land which is not a part of such Mortgaged Property. The Buildings, all
Building Service Equipment and all paved or landscaped areas related to or used
in connection with the Buildings are located wholly within the perimeter lines
of the lot or lots on which the Mortgaged Properties are located except as
disclosed in the Surveys.

     (d) Condition of Building; No Asbestos. Except as set forth in the
engineering reports provided to the Agent and listed on Schedule 6.22(d), to the
Borrower's knowledge there are no material defects in the roof, foundation,
structural elements and masonry walls of the Buildings or their heating,
ventilating and air conditioning, electrical, sprinkler, plumbing or other
mechanical systems or their Building Service Equipment; the Buildings are fully
sprinkled; and no friable asbestos is located in or on the Buildings except as
may be disclosed in the Environmental Reports.

     (e) Building Compliance with Law; Permits. The Buildings as presently
constructed and used do not, to the Borrower's knowledge, violate any applicable
federal or state law or governmental regulation, or any local ordinance, order
or regulation, including but not limited to laws, regulations, or ordinances
relating to zoning, building use and occupancy, subdivision control, fire
protection, health and sanitation. To the Borrower's knowledge, all Permits
required for the operation and maintenance of the Mortgaged Properties,
including without limitation, building permits, curb-cut permits, water
connection permits, sewer extension or connection permits and other permits
relating to the use of utilities, and permits required under the Federal Clean
Air Act, as amended, the Federal Clean Water Act, as amended (including, without
limitation a so-called Section 404 Permit"), and by state law or regulations
consistent with the requirements of said Acts, have been validly issued by the
appropriate governmental Persons and are now in full force and effect.

                                       43
<PAGE>


     (f) No Required Real Property Consents, Permits, Etc. The Borrower has
received no notices of, nor has any knowledge of, any Permits, utility
installations and connections (including, without limitation, drainage
facilities, curb cuts and street openings), or private consents required for the
maintenance, operation, servicing and use of the Mortgaged Properties for their
current use which have not been granted, effected, or performed and completed
(as the case may be) or any fees or charges therefor which have not been fully
paid provided, however, that certain Permits may require periodic renewals.

     (g) Suits; Judgments. To the Borrower's knowledge, there are no outstanding
notices, suits, orders, decrees or judgments relating to zoning, building use
and occupancy, subdivision control, fire protection, health, sanitation, or
other violations affecting, against, or with respect to, the Mortgaged
Properties or any part thereof, other than suits, orders, decrees or judgments
against tenants or former tenants with respect to defaults by such tenants under
their Leases or evicting or otherwise obtaining possession of the premises
occupied by such tenants.

     (h) Insurance. None of the Guarantors, the Company or the Borrower has
received any written notices from any insurer or its agent requiring performance
of any material work with respect to the Mortgaged Properties or canceling or
threatening to cancel any policy of insurance.

     (i) Real Property Taxes; Special Assessments. Based on the Title Policies,
there are no unpaid or outstanding real estate or other taxes or assessments on
or against the Mortgaged Properties or any part thereof which are payable by
Borrower or tenants (except only real estate taxes and assessments not yet due
and payable). Except as disclosed on the Title Policies, and to the Borrower's
knowledge there are no betterment assessments or other special assessments
presently pending with respect to any portion of the Mortgaged Properties, and
Borrower has received no notice of any such special assessment being
contemplated.

     (j) Historic Status. To the Borrower's knowledge, the Buildings are not
historic structures or landmarks, and the Mortgaged Properties are not within
any historic district pursuant to any federal, state or local law or
governmental regulation.

     (k) Domain. To the Borrower's knowledge, there are no pending eminent
domain proceedings against the Mortgaged Properties or any part thereof, and no
such proceedings are presently threatened or contemplated by any taking
authority.

     (l) Leases. A rent roll with respect to all Leases of any portion of the
Mortgaged Properties (current as of the date set forth thereon) is accurate and
completely set forth in Schedule 6.22(1) as the same shall be supplemented each
fiscal quarter by a certificate signed by an authorized officer of Borrower. The
Leases reflected on such rent roll constitute the sole and complete agreements
and understandings relating to leasing or licensing of space in the Buildings or
otherwise at the Mortgaged Properties. The Borrower has delivered to the Agent a

                                       44
<PAGE>

true and complete copy of all Major Leases. There are no occupancies, rights,
privileges or licenses in or to the Buildings or any other part of the Mortgaged
Properties other than pursuant to the Leases reflected on the rent roll set
forth in Schedule 6. 22(1). Except as set forth in Schedule 6.22(1) the Leases
reflected on the Schedule 6.22(1) rent roll are in full force and effect, in
accordance with their respective terms, without any payment default or any other
material default thereunder, nor to the Borrower's knowledge, are there any
defenses, counterclaims, offsets, concessions or rebates available to any tenant
thereunder, and the Mortgagor has not given or made, or received, any notice of
default, or any material claim, which remains uncured or unsatisfied, with
respect to any of the Major Leases and, to the best of the Borrower's knowledge
there is no basis for any such claim or notice of default by any tenant. The
Schedule 6.22(1) rent roll accurately and completely sets forth all rents
payable by tenants, no tenant having paid more than one month's rent in advance.
All tenant improvements or work to be done, furnished or paid for by the
landlord, or credited or allowed to a tenant, for, or in connection with, the
Buildings pursuant to any Lease has been completed and paid for, or provided for
in a manner satisfactory to the Agent, or will be paid for by the Borrower in
the ordinary course of the Borrower's business. No leasing, brokerage or like
commissions, fees or payments are due from the Borrower in respect of the
Leases, or will be paid for by the Borrower in the ordinary course of the
Borrower's business. Except as set forth on the Schedule 6.22(1) rent roll, all
tenants under all Leases are in occupancy and operating the premises covered by
such Leases within the permitted uses under such Leases.

     (m) Service Agreements. Except as listed on Schedule 6.22 (m), there are no
Service Agreements relating to the operation and maintenance of the Mortgaged
Properties or any part thereof except Service Agreements which may be terminated
at the owner's option upon not more than 60 days advance notice. To the best of
Borrower's knowledge, no default notices have been given by any party to any
Service Agreement.

     (n) Other Material Real Property Agreements; No Options. Except as listed
on Schedule 6.22(n), there are no material agreements pertaining to the
Mortgaged Properties or the operation or maintenance thereof other than as
described in this Agreement (including the Schedules hereto) or otherwise
disclosed in writing to the Agent by the Borrower, and no person or entity has
any right or option to acquire any of the Mortgaged Properties or any portion
thereof or interest therein or lease any portion thereof or additional portion
thereof or provide services thereat.

     Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants 
and agrees as follows, and to the extent that the following covenants relate 
to the Company, the Company covenants and agrees as follows, so long as any 
Loan, Note or Letter of Credit is outstanding or the Lenders have any 
obligations to make Loans or issue Letters of Credit:

                                       45
<PAGE>

     Section 7.1. Punctual Payment. The Borrower will unconditionally duly 
and punctually pay the principal and interest on the Loans and all other 
amounts provided for in the Note, this Agreement, and the other Loan 
Documents all in accordance with the terms of the Note, this Agreement and 
the other Loan Documents.

     Section 7.2. Maintenance of Office. Each of the Borrower and the Company 
will maintain its chief executive office in Chicago, Illinois or at such 
other place in the United States Of America as the Borrower or the Company 
shall designate upon written notice to the Agent to be delivered within 
fifteen (15) days of such change, where notices, presentations and demands to 
or upon the Borrower or the Company in respect of the Loan Documents may be 
given or made.

     Section 7.3. Records and Accounts. Each of the Borrower and the Company 
will keep true and accurate records and books of account in which full, true 
and correct entries will be made in accordance with Generally Accepted 
Accounting Principles.

     Section 7.4. Financial Statements, Certificates and Information. The 
Borrower will deliver to each of the Lenders:

     (a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of the Borrower, the audited balance
sheet of the Borrower and of the Company at the end of such year, and the
related audited statement of income, statement of changes in shareholders,
equity and statement of Funds From Operations and taxable income for such year,
each setting forth in comparative form the figures for the previous fiscal year
and all such statements to be in reasonable detail, prepared in accordance with
Generally Accepted Accounting Principles on a consolidated basis including the
Borrower, the Company and the Related Companies, and accompanied by an auditor's
report prepared without qualification by Ernst & Young LLP or by another
independent certified public accountant reasonably acceptable to the Agent;

     (b) as soon as practicable, but in any event not later than forty-five (45)
days after the end of each fiscal quarter of the Borrower, copies of the
unaudited balance sheets of the Borrower as at the end of such quarter, and the
related unaudited statement of income, statement of changes in shareholders'
equity and statement of Funds From Operations and estimated taxable income for
the portion of the Borrower's fiscal year then elapsed, all in reasonable detail
and prepared in accordance with Generally Accepted Accounting Principles,
together with a certification by the principal financial or accounting officer
of the Company that the information contained in such financial statements
fairly presents the financial position of the Borrower and of the Company on the
date thereof (subject to year-end adjustments), provided, however, that such
information with respect to the quarter ended September 30, 1997 shall be
delivered by December 29, 1997;

                                       46
<PAGE>


     (c) as soon as practicable, but in any event not later than forty-five 
(45) days after the end of each of the fiscal quarters of the Borrower, 
copies of a statement of the Net Operating Income for such fiscal quarter for 
each Mortgaged Property, and a consolidating statement of the Net Operating 
Income for such fiscal quarter for all of the Mortgaged Properties, prepared 
on a basis consistent with the statements furnished pursuant to Section 6.4 
(b), and certified by a Responsible Officer of the Company;

     (d) as soon as practicable, but in any event no later than forty-five (45)
days after the end of each fiscal quarter of the Borrower, the Borrower will
provide the Agent with , a rent roll for each of the Mortgaged Properties, and a
consolidated rent roll for all of the Mortgaged Properties, each dated as of the
end of such fiscal quarter in form reasonably satisfactory to the Agent;

     (e) simultaneously with the delivery of the financial statements referred
to in subsections (a) and (b) above, a statement in the form of Exhibit C hereto
signed by a Responsible Officer of the Company and setting forth in reasonable
detail computations evidencing compliance with the covenants contained herein
and (if applicable) reconciliations to reflect changes in Generally Accepted
Accounting Principles since the Effective Date;

     (f) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of the Company, copies of the Form 10-K
statement filed with the Securities and Exchange Commission ("SEC") for such
fiscal year, and as soon as practicable, but in any event not later than
forty-five (45) days after the end of each fiscal quarter, copies of the Form
10-Q statement filed with the SEC for such fiscal quarter, provided that in
either case if the SEC has granted an extension for the filing of such
statements (or if a later filing is permitted by rule of the SEC with respect to
the fiscal quarter ended September 30. 1997), Borrower shall deliver such
statements to the Agent simultaneously with the filing thereof with the SEC;

     (g) promptly following the filing or mailing thereof, copies of all other
material of a financial nature filed with the SEC or sent to the shareholders of
the Company or to the limited partners of the Borrower and copies of all press
releases (except local press releases relating to specific properties) promptly
upon the issuance thereof;

     (h) from time to time such other financial data and information (including
accountants' management letters) as the Agent may reasonably request;

     Section 7.5. Notices.

     (a) Defaults. The Borrower will promptly notify the Agent in writing of the
occurrence of any Default or Event of Default. If any Person shall give any
notice or take any other action in respect of a claimed default (whether or not
constituting a Default or an Event of Default under this Agreement) under any
note, evidence of Indebtedness, indenture or other

                                       47
<PAGE>


obligation to which or with respect to which the Borrower, the Company, any
Guarantor or any of the Related Companies is a party or obligor, whether as
principal or surety, and if the principal amount thereof exceeds $1,000,000, and
such default would permit the holder of such note or obligation or other
evidence of Indebtedness to accelerate the maturity thereof, the Borrower shall
forthwith give written notice thereof to the Agent and each of the Lenders,
describing the notice or action and the nature of the claimed default.

     (b) Environmental Events. The Borrower will promptly notify the Agent in
writing of any of the following events: (i) upon Borrower's obtaining knowledge
of any violation of any Environmental Law regarding a Mortgaged Property or any
Real Estate or Borrower's operations which violation could have a Material
Adverse Effect; (ii) upon Borrower's obtaining knowledge of any potential or
known Release, or threat of Release, of any Hazardous Materials at, from, or
into a Mortgaged Property or any Real Estate which it reports in writing or is
reportable by it in writing to any governmental authority and which is material
in amount or nature or which could materially affect the value of such Mortgaged
Property or which could have a Material Adverse Effect; (iii) upon Borrower's
receipt of any notice of violation of any Environmental Laws or of any Release
or threatened Release of Hazardous Materials, including a notice or claim of
liability or potential responsibility from any third party (including without
limitation any federal, state or local governmental officials) and including
notice of any formal inquiry, proceeding, demand, investigation or other action
with regard to (A) Borrower's or any Person's operation of a Mortgaged Property
or any Real Estate if the same would have a Material Adverse Effect, (3)
contamination on, from or into a Mortgaged Property or any Real Estate if the
same would have a Material Adverse Effect, or (C) investigation or remediation
of off-site locations at which Borrower or any of its predecessors are alleged
to have directly or indirectly disposed of Hazardous Materials; or (iv) upon
Borrower's obtaining knowledge that any expense or loss has been incurred by
such governmental authority in connection with the assessment, containment,
removal or remediation of any Hazardous Materials with respect to which
Borrower, Guarantor or any of the Related Companies may be liable or for which a
lien may be imposed on a Mortgaged Property.

     (c) Notification of Liens or other Material Claims. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of any of
any Liens (except Permitted Liens) placed upon or attaching to any Mortgaged
Properties or of any other setoff, claims (including environmental claims),
withholdings or other defenses which could have a Material Adverse Effect.

     (d) Notice of Litigation and Judgments. The Borrower will give notice to
the Agent in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting any of the Mortgaged Properties or affecting the Borrower,
the Company, any Guarantor or any of the Related Companies or to which the
Borrower, the Company, any Guarantor or any of the Related Companies is or is to
become a party involving an uninsured claim (or as to which the insurer 

                                       48
<PAGE>

reserves rights) against the Borrower, the Company, any Guarantor or any of the
Related Companies that at the time of giving of notice could reasonably be
expected to have a Materially Adverse Effect, and stating the nature and status
of such litigation or proceedings. The Borrower will give notice to the Agent,
in writing, in form and detail satisfactory to the Agent, within ten (10) days
of any final judgment not covered by insurance against the Borrower, the
Company, any Guarantor or any of the Related Companies in an amount in excess of
$500,000.

     (e) Notice of Default under Major Leases. The Borrower will immediately
notify the Agent in writing of the occurrence of any failure of any of the Major
Tenants to materially comply with any of the material terms, covenants,
conditions or agreements under any of the Major Leases.

     (f) Notice of Equity Prospectus Amendment. The Company will promptly notify
the Lenders of any further amendment to the Equity Prospectus, which notice
shall include a copy of any such amendment.

     (g) Notice of Expected Receipt of Net Offering Proceeds. At least three (3)
Business Days prior to the date on which the Company or the Borrower expects to
receive Net Offering Proceeds, the Borrower or the Company, as applicable will
notify the Agent of the expected amount of Net Offering Proceeds and the
expected date of receipt thereof and shall immediately notify the Agent of any
changes in the information set forth in such notice.

     Section 7.6. Existence; Maintenance of REIT Status; Maintenance of 
Properties. The Company will do or cause to be done all things necessary to 
preserve and keep in full force and effect its existence as a Maryland trust 
and its status as a self administered real estate investment trust under the 
Code, the existence of Borrower as a Delaware limited partnership and the 
existence of each Guarantor Subsidiary. The Borrower will do or cause to be 
done all things necessary to preserve and keep in full force all of its 
rights and franchises which in the judgment of the Borrower may be necessary 
to properly and advantageously conduct the businesses being conducted by it, 
the Company or any of the Related Companies. The Borrower (a) will cause all 
of the properties used or useful in the conduct of the business of Borrower, 
the Company or any of the Related Companies to be maintained and kept in good 
condition, repair and working order, subject to ordinary wear and tear, and 
supplied with all necessary equipment, (b) will cause to be made all 
necessary repairs, renewals, replacements, betterments and improvements 
thereof, all as in the judgment of the Borrower may be necessary so that the 
business carried on in connection therewith may be properly and 
advantageously conducted at all times, and (c) will continue to engage 
primarily in the businesses now conducted by it and in related businesses.

     Section 7.7. Insurance. The Borrower will maintain insurance on the 
Mortgaged Properties as required by the Security Deeds. With respect to other 
properties and businesses of Borrower, the Guarantors and the Related 
Companies, the Borrower will maintain or cause to be maintained insurance 
with financially sound and reputable insurers against such casualties and 
contingencies 

                                       49
<PAGE>


in amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent in the judgment of the Company's officers.

     Section 7.8. Taxes. The Borrower will pay real estate taxes, other 
taxes, assessments and other governmental charges against the Mortgaged 
Properties before the same become delinquent, and will duly pay and 
discharge, or cause to be paid and discharged, before the same shall become 
overdue, all taxes, assessments and other governmental charges imposed upon 
it and its other properties, sales and activities, or any part thereof, or 
upon the income or profits therefrom, as well as all claims for labor, 
materials, or supplies that if unpaid might by law become a lien or charge 
upon any of its properties; provided that any such tax, assessment, charge, 
levy or claim with respect to properties other than the Mortgaged Properties 
need not be paid if the validity or amount thereof shall currently be 
contested in good faith by appropriate proceedings and if the Borrower shall 
have set aside on its books adequate reserves with respect thereto; and 
provided further that the Borrower will pay all such taxes, assessments, 
charges, levies or claims forthwith upon the commencement of proceedings to 
foreclose any lien that may have attached as security therefor. Promptly 
after payment of real estate taxes, other taxes, assessments and other 
governmental charges against the Mortgaged Properties, Borrower will provide 
evidence of such payments to the Agent, in the form of receipted tax bills or 
other form reasonably acceptable to the Agent. Notwithstanding anything 
contained herein to the contrary, with respect to the Mortgaged Properties, 
Borrower, after receipt of notice from the Agent (which notice may be given 
by the Agent at any time after the occurrence of an Event of Default) , shall 
deposit with Agent, on the first day of each month thereafter, a sum 
determined by Agent to be sufficient to provide, in the aggregate, a fund 
adequate to pay all real estate taxes, other taxes, assessments and other 
governmental charges against the Mortgaged Properties at least ten (10) days 
before the same becomes delinquent; and whenever the Agent determines sums 
accumulated under such escrow to be insufficient to meet the obligations for 
which such deposits were made, the Borrower shall pay, on the demand of the 
Agent, any amount required to cover the deficiency therein.

     Section 7.9. Inspection of Properties and Books; Confidential 
Information. The Borrower shall permit the Lenders, through the Agent or any 
of the Lenders' other designated representatives, to visit and inspect any of 
the Mortgaged Properties, to examine the books of account of the Borrower, 
the Company and the Related Companies (and to make copies thereof and 
extracts therefrom) and to discuss the affairs, finances and accounts of the 
Borrower with, and to be advised as to the same by, its officers, all at such 
reasonable times and intervals as the Agent or any Lender may reasonably 
request. Each Lender understands that in the course of its exercise of its 
rights set forth herein, the Lender may obtain information relating to 
Borrower or the Company or a Property which is of a confidential nature (the 
"Confidential Information"). Each Lender agrees that it will not, at any 
time, divulge, publish or disclose, or authorize or permit any other person 
to divulge, publish or disclose, to any Person, any of the Confidential 
Information, provided, however, that the Confidential Information may be 
disclosed by any Lender (a) to its officers, attorneys, and accountants, (b) 
to any regulator or other governmental 

                                       50
<PAGE>


agency with supervisory authority over the business of such Lender, (c) to any
other Person to the extent required by applicable law or regulation, and (d) to
the extent that such Confidential Information is otherwise publicly available
from sources other than such Lender.

     Section 7.10. Compliance with Laws, Contracts, Licenses, and Permits. 
The Borrower will comply in all material respects, the Company will comply in 
all material respects and the Borrower will cause each Guarantor and all 
Related Companies to comply in all material respects, with (a) all applicable 
laws and regulations now or hereafter in effect wherever its business is 
conducted, including all Environmental Laws, (b) the provisions of all 
applicable partnership agreements, charter documents and by-laws, (c) all 
agreements and instruments to which it is a party or by which it or any of 
its Real Estate Assets may be bound including the Leases, and (d) all 
applicable decrees, orders, and judgments.

     Section 7.11. Use of Proceeds. Subject to the provisions of Section 2.5 
hereof, the proceeds of the Loans shall be used by the Borrower for Permitted 
Acquisitions and Permitted Developments, for refinancing other Indebtedness, 
and for working capital and other purposes consistent with the covenants 
contained herein.

     Section 7.12. Appraisals. The Appraised Values of the Mortgaged 
Properties, including the Appraised Values of Additional Properties 
determined pursuant to Appraisals approved by the Requisite Lenders pursuant 
to Section 10.14 and Section 5.4(b), may increase or decrease only upon the 
approval by the Lead Lenders of a new or updated Appraisal of such Mortgaged 
Property. The Agent shall order a new or updated Appraisal of a Mortgaged 
Property (i) promptly following a written request from the Borrower, (ii) in 
the discretion of the Agent if the occupied percentage of the gross leasable 
area of the Buildings on such Mortgaged Property for two (2) consecutive 
fiscal quarters is more than 20 percentage points lower than the occupancy 
percentage shown on the rent roll for such Mortgaged Property attached as 
Schedule 6.22(l) hereto, (iii) if, in the Agent's opinion, there has been a 
substantial adverse change in market conditions; (iv) as may be required by 
regulatory requirements applicable to any Lender; and (v) following an Event 
of Default, if requested by any Lender. The Borrower shall provide to the 
Agent all available information needed to assist in the preparation of an 
Appraisal and shall pay to the Agent on demand all reasonable costs of all 
such Appraisals.

     Section 7.13. Leases; Lease Approvals. The Borrower will not include in 
any Leases any purchase option or right of first refusal to purchase any 
Mortgaged Property. The Borrower will at all times exercise or enforce its 
material rights under the Leases. During the continuance of an Event of 
Default, the Agent shall have the right, and the Borrower hereby authorizes 
the Agent, to communicate directly with any of the tenants or guarantors for 
any purpose contemplated by this Agreement or any of the Security Documents. 
Any proposed lease which would be a Major Lease shall be submitted to and 
approved by the Lead Lenders prior to execution, along with the most recent 
financial statements of such proposed tenant and any guarantor. The Borrower 
will not materially adversely amend, terminate, or accept a surrender of any 
Major Lease or release 

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<PAGE>


any Major Tenant or waive the material performance of a Major Lease by a Major
Tenant, in each case without prior approval of the Lead Lenders. The Lead
Lenders shall not unreasonably withhold their approval of any Major Lease or
amendment thereof. If the Lead Lenders fail to respond within five (5) Business
Days after receipt of any proposed Major Lease or amendment of a Major Lease,
the same shall be deemed to be approved.

     Section 7.14. Further Assurance. The Borrower will cooperate with the 
Agent and the Lenders and execute such further instruments and documents and 
perform such further acts as the Agent and the Lenders shall reasonably 
request to carry out to their satisfaction the transactions contemplated by 
this Agreement and the other Loan Documents and the granting and perfecting 
of all liens in the Collateral for the benefit of the Agent as agent for the 
Lenders.

     Section 7.15. Environmental Indemnification. Each of the Borrower and 
the Company, jointly and severally, covenants and agrees that it will 
indemnify and hold the Agent and each Lender harmless from and against any 
and all claims, expense, damage, loss or liability incurred by the Agent or 
any Lender (including all reasonable costs of legal representation incurred 
by the Agent or any Lender , but excluding, as applicable, for the Agent or a 
Lender any claim, expense, damage, loss or liability as a result of the gross 
negligence or willful misconduct of the Agent or such Lender ) relating to 
(a) any Release or threatened Release of Hazardous Materials on, upon, into 
or from any Mortgaged Property or any Real Estate; (b) any violation of any 
Environmental Laws with respect to conditions at any Mortgaged Property or 
the operations conducted thereon; or (c) the investigation or remediation of 
off-site locations at which the Borrower or its predecessors are alleged to 
have directly or indirectly disposed of Hazardous Materials. It is expressly 
acknowledged by the Borrower that this covenant of indemnification shall 
survive any foreclosure or any modification, release or discharge of any or 
all of the Security Documents or the payment of the Loans and shall inure to 
the benefit of the Agent and the Lenders, and their successors and assigns.

     Section 7.16. Response Actions. The Borrower covenants and agrees that 
if any Release or disposal of Hazardous Materials shall occur or shall have 
occurred on, upon, into or from any Mortgaged Property, or on, upon, into or 
from any other Real Estate if the same would have a Material Adverse Effect, 
the Borrower will cause the prompt containment and removal of such Hazardous 
Materials and remediation of such Mortgaged Property or Real Estate as 
necessary to comply in all material respects with all applicable 
Environmental Laws or to preserve the value of such Mortgaged Property.

     Section 7.17. Environmental Assessments. The Borrower shall diligently 
and continuously comply with all recommendations set forth in the 
Environmental Reports, including, without limitation, the completion of the 
remediation projects described therein. Upon written request, the Borrower 
shall provide the Agent with periodic reports with respect to the progress of 
said remediation projects. If the Agent in its good faith judgment, after 
discussion with the Borrower and the Lead Lenders, has reason to believe that 
the environmental condition of any  

                                       52

<PAGE>

Mortgaged Property has deteriorated, after reasonable notice by
the Agent, whether or not a Default or an Event of Default shall have occurred,
the Agent may, from time to time, for the purpose of assessing and ensuring the
value of such Mortgaged Property, obtain one or more environmental assessments
or audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved by the
Agent to evaluate or confirm (i) whether any Hazardous Materials are present in
the soil or water at such Mortgaged Property in such quantities as to require
remediation or clean-up to prevent or mitigate damage or threats to the public
health, safety or welfare or the environment and (ii) whether the use and
operation of such Mortgaged Property complies in all material respects with all
applicable Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Mortgaged Property including,
without limitation, any and all storage areas, storage tanks, drains, dry wells
and leaching areas, and the taking of soil samples, surface water samples and
ground water samples, as well as such other investigations or analyses as the
Agent deems appropriate. All such environmental assessments shall be at the sole
cost and expense of the Borrower; provided, however, the Agent may not require
environmental assessments at the Borrower's expense, with respect to any
Mortgaged Property, more frequently than annually except (i) during the
continuance of an Event of Default or (ii) upon the occurrence of a Release on,
upon, into or from any Mortgaged Property.

     Section 7.18. Employee Benefit Plans.

     (a) Representation. The Borrower and its ERISA Affiliates do not currently
maintain or contribute to any Employee Benefit Plan, Guaranteed Pension Plan or
Multiemployer Plan.

     (b) Notice. The Borrower will notify the Agent promptly following the
establishment of any Employee Benefit Plan or Guaranteed Pension Plan by the
Borrower or any ERISA Affiliate.

     (c) In General. Each Employee Benefit Plan maintained by the Borrower or
any ERISA Affiliate will be operated in compliance in all material respects with
the provisions of ERISA and, to the extent applicable, the Code, including but
not limited to the provisions thereunder respecting prohibited transactions.

     (d) Terminability of Welfare Plans. With respect to each Employee 
Benefit Plan maintained by the Borrower or an ERISA Affiliate which is an 
employee welfare benefit plan within the meaning of Section 3(1) or Section 
3(2)(B) of ERISA, the Borrower, or the ERISA Affiliate, as the case may be, 
has the right to terminate each such plan at any time (or at any time 
subsequent to the expiration of any applicable bargaining agreement) without 
liability other than liability to pay claims incurred prior to the date of 
termination.

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<PAGE>

                  (e) Multiemployer Plans. Without the consent of the Agent, 
the Borrower will not enter into, maintain or contribute to, any 
multiemployer Plan.

                  (f) Unfunded or Underfunded Liabilities. The Borrower will 
not, at any time, have accruing unfunded or underfunded liabilities with 
respect to any Employee Benefit Plan, Guaranteed Pension Plan or 
Multiemployer Plan, or permit any condition to exist under any Multiemployer 
Plan that would create a withdrawal liability.

         Section 7.19. Required Interest Rate Contracts. The Borrower shall 
maintain in effect the Interest Rate Contracts in form and substance 
reasonably satisfactory to the Lead Lenders with respect to that portion of 
the Variable Rate Indebtedness which exceeds, excluding the IRB Indebtedness, 
the principal amount of $125,000,000.

         Section 7.20. Equity Interests in the Company. The Company will 
comply in all material respects with all applicable rules and regulations of 
the Securities Exchange Commission and of relating to its publicly held 
Common Shares and Preferred Shares. The Company will continue to have its 
Common Shares listed on the New York Stock Exchange or on one of the other 
major stock exchanges in the United States, and will comply in all material 
respects with all applicable rules of the stock exchange where the Common 
Shares are so listed. Immediately upon the receipt of any Net Offering 
Proceeds, 100% thereof shall be contributed to the Borrower as an additional 
capital contribution with respect to the Company's general partnership 
interest in the Borrower.

         Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower 
covenants and agrees as follows, and to the extent that the following 
covenants relate to the Company, the Company covenants and agrees as follows, 
so long as any Loan, Note or Letter of Credit is outstanding or the Lenders 
have any obligation to make any Loans or issue any Letters of Credit:

         Section 8.1 Restrictions on Indebtedness. Except with the prior 
written consent of the Requisite Lenders, the Borrower will not, the Company 
will not, and the Borrower will not permit any Guarantor, any of the Related 
Companies or any Permitted Joint Venture to create, incur, assume, guarantee 
or become or remain liable, contingently or otherwise, or agree not to do any 
of same with respect to any Indebtedness other than:

                  (a)  Indebtedness to the Lenders arising under any of the 
Loan Documents;

                  (b) current liabilities of the Borrower incurred in the 
ordinary course of business but not incurred through (i) the borrowing of 
money, or (ii) the obtaining of credit except for credit on an open account 
basis customarily extended and in fact extended in connection with normal 
purchases of goods and services;

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<PAGE>

                  (c) Indebtedness in respect of taxes, assessments, 
governmental charges or levies and claims for labor, materials and supplies 
to the extent that payment therefor shall not at the time be required to be 
made in accordance with the provisions of Section 7.8;

                  (d) Indebtedness in respect of judgments or awards that 
have been in force for less than the applicable period for taking an appeal 
so long as execution is not levied thereunder or in respect of which the 
Borrower shall at the time in good faith be prosecuting an appeal or 
proceedings for review and in respect of which a stay of execution shall have 
been obtained pending such appeal or review;

                  (e) endorsements for collection, deposit or negotiation and 
warranties of products or services, in each case incurred in the ordinary 
course of business;

                  (f) Indebtedness of Borrower, the Company or the Related 
Companies to the extent the same does not create a violation of Section 9.3, 
Section 9.5 or Section 9.6 provided that the maximum principal amount of 
Recourse Indebtedness permitted under this paragraph shall not exceed 
$50,000,000 in the aggregate at any time outstanding.

         Section 8.2. Restrictions on Liens, Etc. The Borrower will not, and 
will not permit Guarantor, any of the Related Companies or any Permitted 
Joint Venture to, (a) create or incur or agree not to create or incur or 
suffer to be created or incurred or to exist any lien, encumbrance, mortgage, 
pledge, charge, restriction or other security interest of any kind upon any 
of the Mortgaged Property of any character whether now owned or hereafter 
acquired, or upon the rents, income or profits therefrom; (b) suffer to exist 
for a period of more than thirty (30) days after the same shall have been 
incurred any Indebtedness (not permitted by Section 8.1(c)) or claim or 
demand against it that if unpaid might by law or upon bankruptcy or 
insolvency, or otherwise, be given any priority whatsoever over the Security 
Documents; or (c) sell, assign, pledge or otherwise transfer any rents, 
issues, profits, accounts, contract rights or general intangibles relating to 
any of the Mortgaged Premises; provided that the Borrower may create or incur 
or suffer to be created or incurred or to exist:

                  (i) liens to secure taxes, assessments and other 
governmental charges in respect of obligations not overdue, the Indebtedness 
with respect to which is permitted by Section 8.1(c);

                  (ii) deposits or pledges made in connection with, or to 
secure payment of, workmen's compensation, unemployment insurance, old age 
pensions or other social security obligations;

                  (iii) liens in respect of judgments or awards, the 
Indebtedness with respect to which is permitted by Section 8.1(d);

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<PAGE>

                  (iv) liens of carriers, warehousemen, mechanics and 
materialmen, and other like liens on properties other than the Mortgaged 
Properties in existence less than 120 days from the date of creation thereof 
in respect of obligations not overdue, the Indebtedness with respect to which 
is permitted by Section 8.1(c);

                  (v) encumbrances consisting of easements, rights of way, 
covenants, restrictions on the use of real property and defects and 
irregularities in the title thereto; and other minor liens or encumbrances 
none of which in the opinion of the Borrower interferes materially with the 
use of the property affected in the ordinary conduct of the business of the 
Borrower, and which matters (x) do not individually or in the aggregate have 
a materially adverse effect on the value of the Mortgaged Property and (xx) 
do not make title to such property unmarketable by the conveyancing standards 
in effect where such property is located;

                  (vi) the Leases referenced on Schedule 6.22(l) and any 
other Leases permitted by this Agreement or otherwise approved by the Lead 
Lenders;

                  (vii) presently outstanding liens and other encumbrances on 
the Mortgaged Properties listed on Schedule B to the Title Policies; and

                  (viii) liens in favor of the Agent and/or any of the 
Lenders granted pursuant to the Security Documents.

                  (ix) financing statements disclosed by the searches 
described in Section 10.18, provided that to the extent that the Lead Lenders 
may agree that the Borrower will have a certain time period after the 
Effective Date to obtain and file releases or terminations of certain of such 
financing statements, the same shall be Permitted Liens only during such time 
period as the Lead Lenders may so agree.

         Section 8.3. Restrictions on Investments. The Borrower will not, and 
will not permit any Guarantor, any of the Related Companies or any Permitted 
Joint Venture to make or permit to exist or to remain outstanding any 
Investment except Investments in:

                  (a) marketable direct or guaranteed obligations of the 
United States of America that mature within one (1) year from the date of 
purchase by the Borrower;

                  (b) demand deposits, certificates of deposit, repurchase 
agreements, bankers acceptances and time deposits of United States banks 
having total assets in excess of $1,000,000,000;

                  (c) securities commonly known as "commercial paper" issued 
by a corporation organized and existing under the laws of the United States 
of America or any state thereof that at

                                       56
<PAGE>

the time of purchase have been rated and the ratings for which are not less 
than "P 1" if rated by Moody's Investors Services, Inc. , and not less than 
"A 1" if rated by Standard and Poor's;

                  (d) Investments existing or contemplated on the date hereof 
and listed on Schedule 8.3(d) hereto;

                  (e) Investments made in the ordinary course of the 
Borrower's business, in (i) any mortgages the acquisition of which is 
expressly approved by the Lead Lenders, (ii) mortgages and notes receivable 
having an aggregate principal amount, exclusive of any investments in 
mortgages which may have been so expressly approved by the Lead Lenders, of 
not more than $25,000,000, (iii) Permitted Joint Ventures (to the extent 
permitted by Section 8.4(a)), or (iv) Interest Rate Contracts;

                  (f)  Investments in Permitted Acquisitions;

                  (g) Investments in Permitted Developments which shall not 
exceed 20% of Total Adjusted Assets; provided that within said limit any 
single development project with a total cost in excess of $30,000,000 shall 
only be a Permitted Development after it has been approved by the Requisite 
Lenders;

                  (h) Investments in undeveloped land which shall not exceed 
10% of Total Adjusted Assets.

         Section 8.4. Merger, Consolidation and Disposition of Properties.

                  (a) The Borrower will not, and will not permit the Company, 
any of the Related Companies or any Permitted Joint Venture to (i) become a 
party to any merger or consolidation, or (ii) agree to or effect any property 
acquisition or stock acquisition (other than Permitted Acquisitions in 
compliance with the other terms of this Agreement) , or (iii) enter into any 
joint venture or invest in any Permitted Joint Venture unless prior to such 
transaction the Borrower has provided the Lead Lenders with a notice 
describing such transaction, the Borrower shall have obtained the prior 
consent of the Lead Lenders.

                  (b) Real Estate Assets may be sold or transferred except 
that to the extent the aggregate sales price of all such dispositions during 
any fiscal quarter shall exceed $10,000,000, prior to such sale or transfer, 
the Borrower shall provide a statement in the form of Exhibit C hereto signed 
by a Responsible Officer of the Company and setting forth in reasonable 
detail computations evidencing compliance with the financial covenants 
contained in Section 9 after giving effect to such proposed transfer and all 
liabilities, fixed or contingent, pursuant thereto.

         Section 8.5. Sale and Leaseback. The Borrower will not enter into 
any arrangement, directly or indirectly, whereby the Borrower shall sell or 
transfer any property owned by it in order then 

                                       57
<PAGE>

or thereafter to lease such property or lease other property that the 
Borrower intends to use for substantially the same purpose as the property 
being sold or transferred. The Borrower will not permit the Company, any of 
the Related Companies or any Permitted Joint Venture to enter into any such 
arrangement.

         Section 8.6. Compliance with Environmental Laws. The Borrower will 
not do, and will not permit the Company, any of the Related Companies or any 
Permitted Joint Venture to do, any of the following: (a) use any of the Real 
Estate or any portion thereof as a facility for the handling, processing, 
storage or disposal of Hazardous Materials except for Hazardous Materials 
used in the operation of the Real Estate and in material compliance with 
applicable law, (b) cause or permit to be located on any of the Real Estate 
any underground tank or other underground storage receptacle for Hazardous 
Materials except in material compliance with Environmental Laws, (c) generate 
any Hazardous Materials on any of the Real Estate except in material 
compliance with Environmental Laws, or (d) conduct any activity at any Real 
Estate or use any Real Estate in any manner so as to cause a Release 
requiring remediation, clean up or other response action under applicable 
Environmental Laws.

         Section 8.7. Distributions. Borrower shall not permit the total 
Distributions by it and the Company during any fiscal year to exceed 90% of 
Funds from Operations for such year and shall not permit there to be more 
than two consecutive fiscal quarters during which the total Distributions by 
Borrower and the Company during each fiscal quarter exceed 100% of Funds from 
Operations for such fiscal quarter except that such limitations may be 
exceeded to the extent necessary for the Company to maintain its REIT status 
provided that the Company provides the Agent with a letter from its 
accountants or attorneys setting forth the basis for computation of the 
amount of such necessary excess Distributions. No Distribution by the 
Borrower to the Company shall be made other than simultaneously with and in 
the same amount as the corresponding Distribution by the Company to the 
owners of the Common Shares and/or the Preferred Shares. During any period 
when Event of Default under Section 12.1(a) or Section 12.1(b) has occurred 
and is continuing total Distributions by the Borrower and the Company will 
not exceed the minimum amount necessary for the Company to maintain its REIT 
status.

         Section 8.8. Leases. The Borrower will not (i) enter into any Major 
Leases or (ii) materially amend, supplement or otherwise materially modify, 
or terminate or cancel, or accept the surrender of, or grant any material 
concessions to or waive the material performance of any of the Major Tenants 
under the Major Leases, in each case without the prior approval of the Lead 
Lenders as provided in Section 7.13.

         Section 8.9. Restrictions on the Company.  The Company will not:

                  (a) own any assets, or have any Investments, other than 
owning its general partnership interest in the Borrower and its limited 
partnership interests described in Section 6.19.

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<PAGE>

                  (b) engage in any business other than its activities as 
managing general partner of the Borrower.

                  (c) directly or indirectly convey, sell, transfer, assign, 
pledge or encumber any of its partnership interest in the Borrower.

                  (d) create, incur, assume, guarantee or become or remain 
liable, contingently or otherwise, any Indebtedness, and any recourse against 
the Company with respect to the Indebtedness of the Borrower shall be limited 
to the same or greater extent as recourse against the Company with respect to 
the Obligations as provided in Section 28.

         Section 9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower 
covenants and agrees as follows, so long as any Loan or Note is outstanding 
or any Lender has any obligation to make any Loan:

         Section 9.1. Collateral Value. The Borrower will not at any time 
permit the Outstanding Principal Amount to exceed sixty percent (60%) of the 
total of the Collateral Values of the Mortgaged Properties.

         Section 9.2. Minimum Debt Service Coverage. The Borrower will not at 
any time permit the Outstanding Principal Amount to exceed an amount such 
that: (a) the aggregate of the Net Operating Income for all of the Mortgaged 
Properties, divided by (b) Pro Forma Debt Service Charges for the Mortgaged 
Properties would be less than 1.5 for any fiscal quarter of Borrower. For 
purposes of the foregoing, any Real Estate Asset that became a Mortgaged 
Property during the applicable fiscal quarter shall be treated as though it 
were a Mortgaged Property for the entire quarter and any Real Estate Asset 
which is released by Agent during such fiscal quarter shall be excluded for 
the entire quarter.

         Section 9.3. Total Liabilities to Total Adjusted Assets. The 
Borrower will not at any time permit Total Liabilities at the end of any 
fiscal quarter to exceed fifty-five percent (55%) of Total Adjusted Assets.

         Section 9.4. Minimum Tangible Net Worth. The Borrower will not at 
any time permit the Tangible Net Worth of the Borrower to be less than 
$350,000,000 plus 75% of Net Offering Proceeds.

         Section 9.5. Total Operating Cash Flow to Interest Expense. The 
Borrower will not permit the ratio of its Total Operating Cash Flow to 
Interest Expense to be less than 2.0 to 1.0 for any fiscal quarter. For the 
fiscal quarter ending December 31, 1997, such covenant will be computed on a 
pro forma basis as though the Formation Transactions had closed, and the 
Effective Date had been, October 1, 1997.

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<PAGE>

         Section 9.6. EBITDA to Fixed Charges. The Borrower will not permit 
the ratio of its EBITDA to Fixed Charges to be less than 1.75 to 1.0 for any 
fiscal quarter. For the fiscal quarter ending December 31, 1997, such 
convenant will be computed on a pro forma basis as though the Formation 
Transactions had closed, and the Effective Date had been, October 1, 1997.

         Section 10. CONDITIONS TO EFFECTIVENESS. This Agreement shall become 
effective when each of the following conditions precedent have been satisfied:

         Section 10.1. Loan Documents. Each of the Loan Documents shall have 
been duly executed and delivered by the respective parties thereto, shall be 
in full force and effect and shall be in form and substance satisfactory to 
each of the Lenders. Each Lender shall have received a fully executed copy of 
each such document prior to or on the Effective Date.

         Section 10.2. Certified Copies of Organization Documents; Good 
Standing Certificates. The Agent shall have received (i) a Certificate of the 
Company to which there shall be attached complete copies of the Borrower's 
Limited Partnership Agreement and its Certificate of Limited Partnership, 
certified as of a recent date by the Secretary of State of Delaware, (ii) 
Certificates of Good Standing for the Borrower from the State of Delaware and 
each State in which a Mortgaged Property is located, (iii) a copy of the 
Company's Declaration of Trust certified by the Maryland Secretary of State, 
(iv) Certificates of Good Standing for the Company from the State of Maryland 
and each State in which a Mortgaged Property is located unless the Company's 
qualification is not required by the laws of such state, and (v) certificates 
of good standing and certified copies of partnership agreements and 
certificates of limited partnership with respect to each of the Guarantor 
Subsidiaries.

         Section 10.3. By-laws; Resolutions. All action on the part of the 
Borrower and each Guarantor necessary for the valid execution, delivery and 
performance by the Borrower and each Guarantor of this Agreement and the 
other Loan Documents to which it is or is to become a party shall have been 
duly and effectively taken, and evidence thereof satisfactory to the Agent 
shall have been provided to the Agent. The Agent shall have received from the 
Company true copies of its by-laws and the resolutions adopted by its Board 
of Directors authorizing the transactions described herein, each certified by 
its secretary to be true and complete and in effect on the Effective Date.

         Section 10.4. Incumbency Certificate; Authorized Signers. The Agent 
shall have received from the Company an incumbency certificate, dated as of 
the Effective Date, signed by a duly authorized officer of the Company and 
giving the name and bearing a specimen signature of each individual who shall 
be authorized: (a) to sign, in the name and on behalf of the Company (in its 
own capacity and as general partner on behalf of Borrower and on behalf of 
each Guarantor Subsidiary which is a partnership), each of the Loan Documents 
to which the Borrower or any Guarantor is or is to become a party; (b) to 
make Loan Requests and Conversion Requests; and (c) to give notices and to 
take other action on behalf of the Borrower under the Loan Documents.

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<PAGE>

         Section 10.5. Opinions of Counsel. Each of the Lenders and the Agent 
shall have received favorable opinions addressed to the Lenders and the Agent 
and dated as of the Effective Date, in form and substance satisfactory to the 
Lenders and the Agent from Borrower's counsel, as to: (a) the matters 
described on Exhibit E and (b) such other opinions with respect to the 
Formation Transactions as the Agent may reasonably require. Such opinion may 
rely on opinions from other law firms approved by the Agent as to matters of 
law applicable in the various states where the Mortgaged Properties are 
located.

         Section 10.6. Payment of Fees. The Borrower shall have paid to the 
Agent and/or the Lead Lenders the fees pursuant to Section 4.1 and Section 
2.9(a) and shall have paid all other expenses as provided in Section 15 
hereof then outstanding.

         Section 10.7. Validity of Liens. The Security Documents shall be 
effective to create in favor of the Agent legal, valid and enforceable first 
priority, perfected liens and security interests in the Collateral covered 
thereby, subject only to the Permitted Liens. All filings, recordings, 
deliveries of instruments and other actions or consents necessary or 
desirable in the reasonable opinion of the Agent to grant, perfect, protect 
and preserve such liens and security interests shall have been duly effected. 
The Agent shall have received evidence thereof in form and substance 
reasonably satisfactory to the Agent.

         Section 10.8. Survey. The Agent shall have received Surveys of the 
Mortgaged Properties, bearing dates reasonably acceptable to the Agent, and 
in form and substance reasonably acceptable to the Agent.

         Section 10.9. Title Insurance; Title Exception Documents. The Agent 
shall have received the Title Policies reasonably satisfactory to the Agent, 
together with proof of payment of all fees and premiums for such policies. 
The Agent shall have received true and accurate copies of all documents 
listed as exceptions under such policies.

         Section 10.10. Leases. The Agent shall have received true copies of 
those Leases which the Agent may request after its review of the applicable 
rent roll.

         Section 10.11. Estoppel and Attornment Agreements. The Agent shall 
have received estoppel certificates and attornment agreements in form 
reasonably satisfactory to the Lead Lenders from the three (3) Tenants who 
lease and occupy the largest amount gross leasable area of the West Wacker 
Drive Property and from any other Major Tenants specifically required by the 
Agent.

         Section 10.12. Certificates of Insurance. The Agent shall have 
received (a) a certificate of insurance as to the insurance maintained by 
Borrower on the Mortgaged Properties (including flood insurance if necessary) 
from the insurer or an independent insurance broker dated as of the Effective 
Date, identifying insurers, types of insurance, insurance limits, and policy 
terms; 

                                       61
<PAGE>

(b) certified copies of all policies evidencing such insurance (or 
certificates therefor signed by tile insurer or an agent authorized to bind 
the insurer); and (c) such further information and certificates from 
Borrower, its insurers and insurance brokers as the Agent may reasonably 
request.

         Section 10.13. Environmental Reports. The Agent shall have received 
an Environmental Report with respect to each of the Mortgaged Properties, 
dated as of a recent date, from environmental engineers reasonably acceptable 
to the Agent which Environmental Reports shall have been approved by the Lead 
Lenders.

         Section 10.14. Environmental Indemnity. The Agent shall have 
received an executed original of the environmental indemnity described in the 
Equity Prospectus from The Prime Group, Inc. for the benefit of certain of 
the Guarantor Subsidiaries with respect to environmental liabilities relating 
to certain of the Mortgaged Properties, together with an agreement from The 
Prime Group, Inc. that the Lenders shall be a beneficiary thereunder in the 
event of any foreclosure of the applicable Mortgaged Properties, which 
indemnity and agreement shall be in form and substance satisfactory to the 
Agent and the Lead Lenders.

         Section 10.15. Appraisals. The Agent and each of the Lenders shall 
have received Appraisals dated as of a recent date in form and substance 
satisfactory to the Agent and the Lead Lenders (including satisfaction as to 
determination of Appraised Value).

         Section 10.16. Inspecting Engineers' Reports. The Agent shall have 
received reports, addressed to Agent and the Lenders or accompanied by 
reliance letters in favor of the Agent and the Lenders, from third party 
inspecting engineers dated as of a date acceptable to the Agent as to the 
good structural condition of the Buildings located on the Mortgaged 
Properties, which reports shall be in form and substance satisfactory to the 
Agent.

         Section 10.17. Initial Letters of Credit. The Agent shall have 
received with respect to each of the Initial Letters of Credit (i) a Letter 
of Credit Request executed by Borrower, and (ii) copies of all legal opinions 
and certificates delivered in connection with such replacement of letters of 
credit pursuant to the applicable IRB Documents.

         Section 10.18. UCC Lien Searches. The Agent shall have received UCC 
lien searches of the applicable public records disclosing no conditional 
sales contracts, security agreements, chattel mortgages, leases of 
personalty, financing statements or other encumbrances which affect any of 
the Collateral other than those relating to any liens permitted hereby and by 
the Security Documents.

         Section 10.19. Formation Transactions Complete. The Lead Lenders 
shall have received evidence satisfactory to each of them that all of the 
Formation Transactions have been completed on the Effective Date and that the 
net proceeds of the sale of the common and preferred shares of 

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beneficial interest in the Company were not less than the amount described in 
the Equity Prospectus.

         Section 11. CONDITIONS TO ALL BORROWINGS. The obligations of the 
Lenders to make any Loan, whether on or after the Effective Date, shall also 
be subject to the satisfaction of the following conditions precedent:

         Section 11.1. Representations True; No Event of Default; Compliance 
Certificate. Each of the representations and warranties of the Borrower and 
the Company contained in this Agreement, the other Loan Documents or in any 
document or instrument delivered pursuant to or in connection with this 
Agreement shall be true in all material respects as of the date as of which 
they were made and shall also be true in all material respects at and as of 
the time of the making of such Loan, with the same effect as if made at and 
as of that time (except to the extent of changes resulting from transactions 
contemplated or permitted by this Agreement and the other Loan Documents and 
changes occurring in the ordinary course of business that singly or in the 
aggregate are not materially adverse, and except to the extent that such 
representations and warranties relate expressly to an earlier date); the 
Borrower shall have performed and complied with all terms and conditions 
herein required to be performed by it or prior to the Borrowing Date of such 
Loan; and no Default or Event of Default shall have occurred and be 
continuing on the date of any Loan Request or on the Borrowing Date of such 
Loan. Each of the Lenders shall have received a Compliance Certificate of the 
Borrower signed by a Responsible Officer to such effect, which certificate 
will include, without limitation, computations evidencing compliance with the 
covenants contained in Section 9 hereof after giving effect to such requested 
Loan.

         Section 11.2. No Legal Impediment. No change shall have occurred in 
any law or regulations thereunder or interpretations thereof that in the 
reasonable opinion of any Lender would make it illegal for such Lender to 
make such Loan.

         Section 11.3. Governmental Regulation. Each Lender shall have 
received such statements in substance and form reasonably satisfactory to 
such Lender as such Lender shall require for the purpose of compliance with 
any applicable regulations of the Comptroller of the Currency or the Board of 
Governors of the Federal Reserve System.

         Section 11.4. Proceedings and Documents. All proceedings in 
connection with the transactions contemplated by this Agreement, the other 
Loan Documents and all other documents incident thereto shall be reasonably 
satisfactory in substance and in form to the Agent, and the Lenders shall 
have received all information and such counterpart originals or certified or 
other copies of such documents as the Agent may reasonably request.

         Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.

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         Section 12.1. Events of Default and Acceleration. If any of the 
following events ("Events of Default" or, if the giving of notice or the 
lapse of time or both is required, then, prior to such notice or lapse of 
time, "Defaults") shall occur:

                  (a) the Borrower shall fail to pay any principal of the 
Loans when the same shall become due and payable;

                  (b) the Borrower shall fail to pay any interest on the 
Loans or any other sums due hereunder or under any of the other Loan 
Documents within five (5) days after the same shall become due and payable or 
the Borrower shall fail to deposit in the IRB Indebtedness Account sufficient 
funds as required by Section 2.8;

                  (c) the Borrower or the Company shall fail to comply with 
any of its covenants contained in Section 7.5, the first sentence of Section 
7.6, the first sentence of Section 7.7, Section 7.20, Section 8 or Section 9 
hereof;

                  (d) the Borrower, the Company or any Guarantor shall fail 
to perform any other term, covenant or agreement contained herein or in any 
of the other Loan Documents (other than those specified elsewhere in this 
Section 12) for thirty (30) days after written notice of such failure from 
Agent to the Borrower, provided, however that if the Borrower fails to give 
notice of any Default as required by Section 7.5(a), such thirty (30) day 
cure period shall be deemed to have started on the date such notice should 
have been given;

                  (e) any representation or warranty of the Borrower or the 
Company in this Agreement or any of the other Loan Documents or in any other 
document or instrument delivered pursuant to or in connection with this 
Agreement, shall prove to have been false in any material respect upon the 
date when made or deemed to have been made or repeated, and shall continue to 
be false on the date that the Agent or any Lender takes action based on the 
Default relating to such representation or warranty, provided, however, that 
with respect to the representations and warranties of the Borrower contained 
in Section 6.2, Section 6.3, Section 6.13, Section 6.18 and in paragraphs 
(a), (c), (d), (e) and (f) of Section 6.22, if the condition or event making 
the representation and warranty false is capable of being cured by the 
Borrower, no enforcement action has been commenced against the Borrower or 
the applicable Mortgaged Property on account of such condition or event nor 
is the applicable Mortgaged Property subject to risk of forfeiture due to 
such condition or event, and the Borrower promptly commences the cure thereof 
after the Borrower's first obtaining knowledge of such condition or event, 
the Borrower shall have a period of thirty (30) days after the date that the 
Borrower first obtained knowledge of such condition or event during which the 
Borrower may cure such condition or event (or, if such condition or event is 
not reasonably capable of being cured within such thirty (30) day period, 
such additional period of time as may be reasonably required in order to cure 
such condition or event but in any event such period shall not exceed six (6) 
months from the date that the Borrower first obtained knowledge of such 
condition or event), and no Event of Default shall exist hereunder during 
such thirty (30) day or additional period so long as the Borrower

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continuously and diligently pursues the cure of such condition or event and 
the other conditions to such cure period have not changed;

                  (f) the Borrower, the Company, any of the Related Companies 
or any Permitted Joint Venture shall fail to pay at maturity, or within any 
applicable period of grace, any Recourse Indebtedness, or shall fail to 
observe or perform any material term, covenant or agreement contained in any 
agreement by which it is bound, evidencing or securing Indebtedness for such 
period of time as would permit (assuming the giving of appropriate notice if 
required) the holder or holders thereof or of any obligations issued 
thereunder to accelerate the maturity thereof, and in any event, such failure 
shall continue for thirty (30) days, unless the aggregate amount of all such 
defaulted Recourse Indebtedness plus the amount of any unsatisfied judgments 
described in paragraph (i) of this Section 12.1 is less than $10,000,000.00;

                  (g) any of the Borrower, the Company or any Guarantor shall 
make an assignment for the benefit of creditors, or admit in writing its 
inability to pay or generally fail to pay its debts as they mature or become 
due, or shall petition or apply for the appointment of a trustee or other 
custodian, liquidator or receiver of any substantial part of its properties 
or shall commence any case or other proceeding under any bankruptcy, 
reorganization, arrangement, insolvency, readjustment of debt, dissolution or 
liquidation or similar law of any jurisdiction, now or hereafter in effect, 
or shall take any action to authorize or in furtherance of any of the 
foregoing, or if any such petition or application shall be filed or any such 
case or other proceeding shall be commenced against any such Person and such 
Person shall indicate its approval thereof, consent thereto or acquiescence 
therein or any of the events described in this paragraph shall occur with 
respect to any other Related Company or any Permitted Joint Venture and such 
event shall have a Material Adverse Effect;

                  (h) a decree or order is entered appointing any such 
trustee, custodian, liquidator or receiver or adjudicating the Borrower, the 
Company, or any Guarantor bankrupt or insolvent, or approving a petition in 
any such case or other proceeding, or a decree or order for relief is entered 
in respect of the Borrower, the Company, or any Guarantor in an involuntary 
case under federal bankruptcy laws as now or hereafter constituted or any of 
the events described in this paragraph shall occur with respect to any other 
Related Company or any Permitted Joint Venture and such event shall have a 
Material Adverse Effect;

                  (i) there shall remain in force, undischarged, unsatisfied 
and unstayed, for more than thirty days, whether or not consecutive, any 
uninsured final judgment against the Borrower that, with other outstanding 
uninsured final judgments, undischarged, against the Borrower, the Company or 
any of the Related Companies plus the amount of any defaulted Recourse 
Indebtedness under paragraph (f) of this Section 12.1, exceeds in the 
aggregate $10,000,000.00;

                  (j) if any of the Loan Documents or any material provision 
of any Loan Documents shall be unenforceable, cancelled, terminated, revoked 
or rescinded otherwise than in 

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accordance with the terms thereof or with the express prior written 
agreement, consent or approval of the Agent, or any action at law, suit or in 
equity or other legal proceeding to make unenforceable, cancel, revoke or 
rescind any of the Loan Documents shall be commenced by or on behalf of the 
Borrower, the Company or any Guarantor, or any court or any other 
governmental or regulatory authority or agency of competent jurisdiction 
shall make a determination that, or issue a judgment, order, decree or ruling 
to the effect that, any one or more of the Loan Documents is illegal, invalid 
or unenforceable in accordance with the terms thereof;

                  (k) the Borrower, the Company or any Guarantor shall be 
indicted for a federal crime, a punishment for which could include the 
forfeiture of any assets of the Borrower;

                  (l) any "Event of Default," as defined in any of the IRB 
Documents shall occur provided that if such Event of Default is caused by the 
issuer or other Person other than the Guarantor Subsidiary, the same shall 
constitute an Event of Default hereunder only if the maturity of the 
applicable IRB Indebtedness is accelerated based thereon;

                  (m)  any "Event of Default", as defined in any of the other 
Loan Documents shall occur;

then, and in any such event, so long as the same may be continuing, the Agent 
may, and upon the request of the Requisite Lenders shall, by notice in 
writing to the Borrower declare all amounts owing with respect to this 
Agreement, the Notes and the other Loan Documents to be, and they shall 
thereupon forthwith become, immediately due and payable without presentment, 
demand, protest or other notice of any kind, all of which are hereby 
expressly waived by the Borrower; provided that in the event of any Event of 
Default specified in Sections 12.1(g) or 12.1(h), all such amounts 
shall become immediately due and payable automatically and without any 
requirement of notice from the Agent or action by the Requisite Lenders.

         Section 12.2. Termination of Commitments; Drawing of IRB Letters of 
Credit. If any one or more Events of Default specified in Section 12.1(g) or 
Section 12.1(h) shall occur, any unused portion of the Commitments hereunder 
shall forthwith terminate and the Lenders shall be relieved of all 
obligations to make Loans to the Borrower. If any other Event of Default 
shall have occurred and be continuing, any Lender may by notice to the 
Borrower terminate the unused portion of its Commitment hereunder, and upon 
such notice being given such unused portion of its Commitment hereunder shall 
terminate immediately and such Lender shall be relieved of all further 
obligations to make Loans, provided, however, such Lender shall not be 
relieved of its obligation to pay its Proportionate Share of Unreimbursed 
Drawings under Section 2.9. No termination of such Lender's Commitment 
hereunder shall relieve the Borrower of any of the Obligations or any of its 
existing obligations to such Lender arising under other agreements or 
instruments. At any time after any Commitments have been terminated pursuant 
hereto, the Agent may, in its sole discretion, give such notices as may be 
permitted under the terms of the IRB Letters of Credit or the related IRB 
Documents to cause the bonds relating to the IRB Indebtedness to be

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accelerated or to cause a mandatory tender thereof or to cause the IRB 
Letters of Credit to be drawn by the beneficiary thereof or to cause the 
applicable IRB Letters of Credit to expire if not drawn within the specified 
period after the giving of such notice.

         Section 12.3. Remedies. In case any one or more of the Events of 
Default shall have occurred, and whether or not the Requisite Lenders shall 
have accelerated the maturity of the Loans pursuant to Section 12.1, each 
Lender, if owed any amount with respect to the Loans, may, with the consent 
of the Requisite Lenders, direct the Agent to proceed to protect and enforce 
the rights and remedies of the Agent and the Lenders under this Agreement, 
the Notes, the IRB Documents or any of the other Loan Documents by suit in 
equity, action at law or other appropriate proceeding, whether for the 
specific performance of any covenant or agreement contained in this Agreement 
and the other Loan Documents or any instrument pursuant to which the 
Obligations are evidenced, including to the full extent permitted by 
applicable law the obtaining of the ex parte appointment of a receiver and, 
if any amount shall have become due, by declaration or otherwise, to proceed 
to enforce the payment thereof or any other legal or equitable right of such 
Lender. No remedy herein conferred upon any Lender or the Agent or the 
holder of any Note is intended to be exclusive of any other remedy and each 
and every remedy shall be cumulative and shall be in addition to every other 
remedy given hereunder or now or hereafter existing at law or in equity or by 
statute or any other provision of law.

         Section 12.4. Distribution of Collateral Proceeds. In the event 
that, following the occurrence or during the continuance of any Default or 
Event of Default, the Agent or any Lender as the case may be, receives any 
monies in connection with the enforcement of any of the Security Documents, 
or otherwise with respect to the realization upon any of the Collateral, such 
monies shall be distributed for application as follows:

                  (a) First, to the payment of, or (as the case may be) the 
reimbursement of the Agent for or in respect of all reasonable costs, 
expenses, disbursements and losses which shall have been incurred or 
sustained by the Agent in connection with the collection of such monies by 
the Agent, for the exercise, protection or enforcement by the Agent of all or 
any of the rights, remedies, powers and privileges of the Agent or the 
Lenders under this Agreement or any of the other Loan Documents or in respect 
of the Collateral or in support of any provision of adequate indemnity to the 
Agent against any taxes or liens which by law shall have, or may have, 
priority over the rights of the Agent to such monies;

                  (b) Second, to all other Obligations in such order or 
preference as the Requisite Lenders may determine; provided, however, that 
distribution in respect of such Obligations shall be made among the Lenders 
pro rata in accordance with each Lender's respective Commitment Percentage; 
and provided, further, that the Agent may in its discretion make proper 
allowance to take into account any Obligations not then due and payable;

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                  (c) Third, upon payment and satisfaction in full or other 
provisions for payment in full satisfactory to the Requisite Lenders and the 
Agent of all of the obligations, and to the payment of any obligations 
required to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial 
Code of the State of New York; and

                  (d) Fourth, the excess, if any, shall be returned to the 
Borrower or to such other Persons as are legally entitled thereto.

         Section 12.5. Addition of Real Estate Assets to Cure Default. As an 
alternative to the payment of cash to cure a Default under Section 9.1 or 
Section 9.2 hereof, the Borrower shall have the right to offer to provide 
additional Collateral to the Agent in the form of Additional Properties 
pursuant to Section 5.3 and Section 5.4, for the purpose of curing a Default 
under Section 9.1 or Section 9.2 hereof, if the Borrower designates such 
Collateral for addition within fifteen (15) days after the occurrence of such 
Default and the Borrower, the Company or the Mortgagor, as applicable, 
executes and delivers to the Agent a Security Deed, an Assignment of Leases 
and Rents, an Indemnity Agreement and UCC-1 Financing Statements relating to 
the Additional Property together with the Certificates and opinion described 
in Section 5.4(d) and Section 5.4(e) within thirty (30) days after the 
occurrence of such Default. The Agent and the Lenders shall accept and 
approve the addition of such Collateral as a cure for such Default if such 
Collateral shall cure the Default and satisfies the due diligence 
requirements of the Agent and the Requisite Lenders, including, without 
limitation, the conditions set forth in Section 5.4 and those requirements 
with respect to the Mortgaged Properties specified in Section 10 hereof, 
within ninety (90) days after the occurrence of the subject Default, and at 
the time that such due diligence requirements are so satisfied, no other 
Defaults or Events of Default are continuing. If any such additional 
Collateral is provided to the Agent in accordance with this Section 12.5, 
such additional Collateral shall, for all purposes hereof, be deemed to be a 
"Mortgaged Property." Until the Agent and Requisite Lenders have acknowledged 
in writing the cure of such Default (which written acknowledgment will be 
given promptly after such cure has been completed as herein provided), all 
consequences of such Default hereunder shall be effective (except as provided 
in Section 8.7) and the Agent may exercise all available remedies except that 
the maturity of the Loans shall not be accelerated based solely on the 
Default which Borrower is diligently attempting to cure hereunder, prior to 
the expiration of said ninety (90) day period.

         Section 13. SETOFF. Regardless of the adequacy of any Collateral, 
during the continuance of any Event of Default, any deposits (general or 
specific, time or demand, provisional or final, regardless of currency, 
maturity, or the branch of where such deposits are held) or other sums 
credited by or due from any of the Lenders to the Borrower and any securities 
or other property of the Borrower in the possession of such Lender may WITH 
THE PRIOR APPROVAL OF THE AGENT be applied to or set off against the payment 
of Obligations and any and all other liabilities, direct, or indirect, 
absolute or contingent, due or to become due, now existing or hereafter 
arising, of the Borrower to such Lender. Each of the Lenders agrees with each 
other Lender that (a) if an amount to be set off is to be applied to 
Indebtedness of the Borrower to such 

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Lender, other than Indebtedness evidenced by the Notes held by such Lender, 
such amount shall be applied ratably to such other Indebtedness and to the 
Indebtedness evidenced by all such Notes held by such Lender, and (b) if such 
Lender shall receive from the Borrower, whether by voluntary payment, 
exercise of the right of setoff, counterclaim, cross action, enforcement of 
the claim evidenced by the Notes held by such Lender by proceedings against 
the Borrower at law or in equity or by proof thereof in bankruptcy, 
reorganization, liquidation, receivership or similar proceedings, or 
otherwise, and shall retain and apply to the payment of the Note or Notes 
held by such Lender any amount in excess of its ratable portion of the 
payments received by all of the Lenders with respect to the Notes held by all 
of the Lenders, such Lender will make such disposition and arrangements with 
the other Lenders with respect to such excess, either by way of distribution, 
pro tanto assignment of claims, subrogation or otherwise as shall result in 
each Lender receiving in respect of the Notes held by it its proportionate 
payment as contemplated by this Agreement; provided that if all or any part 
of such excess payment is thereafter recovered from such Lender, such 
disposition and arrangements shall be rescinded and the amount restored to 
the extent of such recovery, but without interest. Notwithstanding the 
foregoing, no Lender shall exercise a right of setoff if such exercise would 
limit or prevent the exercise of any other remedy, right to Collateral or 
other recourse against the Borrower.

         Section 14. THE AGENT.

         Section 14.1. Authorization. The Agent is authorized to take such 
action on behalf of each of the Lenders and to exercise all such powers as 
are hereunder and under any of the other Loan Documents and any related 
documents delegated to the Agent, together with such powers as are reasonably 
incident thereto, provided that no duties or responsibilities not expressly 
assumed herein or therein shall be implied to have been assumed by the Agent. 
The relationship between the Agent and the Lenders is and shall be that of 
agent and principal only, and nothing contained in this Agreement or any of 
the other Loan Documents shall be construed to constitute the Agent as a 
trustee for any Lender.

         Section 14.2. Employees and Agents. The Agent may exercise its 
powers and execute its duties by or through employees or agents and shall be 
entitled to take, and to rely on, advice of counsel concerning all matters 
pertaining to its rights and duties under this Agreement and the other Loan 
Documents. The Agent may utilize the services of such Persons as the Agent in 
its sole discretion may reasonably determine, and all reasonable fees and 
expenses of any such Persons shall be paid by the Borrower.

         Section 14.3. No Liability. Neither the Agent nor any of its 
shareholders, directors, officers or employees nor any other Person assisting 
them in their duties nor any agent or employee thereof, shall be liable for 
any waiver, consent or approval given or any action taken, or omitted to be 
taken, in good faith by it or them hereunder or under any of the other Loan 
Documents, or in connection herewith or therewith, or be responsible for the 
consequences of any oversight or 

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error of judgment whatsoever, except that the Agent or such other Person, as 
the case may be, may be liable for losses due to its willful misconduct or 
gross negligence.

         Section 14.4. No Representations. The Agent shall not be responsible 
for the execution or validity or enforceability of this Agreement, the Notes, 
any of the other Loan Documents or any instrument at any time constituting, 
or intended to constitute, collateral security for the Notes, or for the 
value of any such collateral security or for the validity, enforceability or 
collectability of any such amounts owing with respect to the Notes, or for 
any recitals or statements, warranties or representations made herein or in 
any of the other Loan Documents or in any certificate or instrument hereafter 
furnished to it by or on behalf of the Borrower, or be bound to ascertain or 
inquire as to the performance or observance of any of the terms, conditions, 
covenants or agreements herein or in any instrument at any time constituting, 
or intended to constitute, collateral security for the Notes. The Agent shall 
not be bound to ascertain whether any notice, consent, waiver or request 
delivered to it by the Borrower or any holder of any of the Notes shall have 
been duly authorized or is true, accurate and complete. The Agent has not 
made nor does it now make any representations or warranties, express or 
implied, nor does it assume any liability to the Lenders, with respect to the 
credit worthiness or financial condition of the Borrower. Each Lender 
acknowledges that it has, independently and without reliance upon the Agent 
or any other Lender , and based upon such information and documents as it has 
deemed appropriate, made its own credit analysis and decision to enter into 
this Agreement. Each Lender has been independently represented by separate 
counsel regarding this Agreement.

         Section 14.5. Payments.

                  (a) A payment by the Borrower to the Agent hereunder or any 
of the other Loan Documents for the account of any Lender shall constitute a 
payment to such Lender subject to the pro rata rights to repayment based upon 
the Commitment Percentage of each Lender. The Agent agrees promptly to 
distribute to each Lender such Lender's pro rata share of payments received 
by the Agent for the account of the Lenders except as otherwise expressly 
provided herein or in any of the other Loan Documents.

                  (b) If in the opinion of the Agent the distribution of any 
amount received by it in such capacity hereunder, under the Notes or under 
any of the other Loan Documents might involve it in liability, it may refrain 
from making distribution until its right to make distribution shall have been 
adjudicated by a court of competent jurisdiction. If a court of competent 
jurisdiction shall adjudge that any amount received and distributed by the 
Agent is to be repaid, each Person to whom any such distribution shall have 
been made shall either repay to the Agent its proportionate share of the 
amount so adjudged to be repaid or shall pay over the same in such manner and 
to such Persons as shall be determined by such court.

                  (c) Notwithstanding anything to the contrary contained in 
this Agreement or any of the other Loan Documents, any Lender that fails (i) 
to make available to the Agent its pro rata 

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share of any Loan or of any Unreimbursed Drawing or (ii) to comply with the 
provisions of Section 12.4 or Section 13 with respect to making dispositions 
and arrangements with the other Lenders, where such Lender's share of any 
payment received, whether by setoff or otherwise, is in excess of its pro 
rata share of such payments due and payable to all of the Lenders, in each 
case as, when and to the full extent required by the provisions of this 
Agreement, or to adjust promptly such Lender's outstanding principal and its 
pro rata Commitment Percentage as provided in Section 2.1 hereof, shall be 
deemed delinquent (a "Delinquent Lender ") and shall be deemed a Delinquent 
Lender until such time as such delinquency is satisfied. A Delinquent Lender 
shall be deemed to have assigned any and all payments due to it from the 
Borrower, whether on account of outstanding Loans, interest, fees or 
otherwise, to the remaining nondelinquent Lenders for application to, and 
reduction of, their respective pro rata shares of all outstanding Loans. The 
Delinquent Lender hereby authorizes the Agent to distribute such payments to 
the nondelinquent Lenders in proportion to their respective pro rata shares 
of all outstanding Loans. A Delinquent Lender shall be deemed to have 
satisfied in full a delinquency when and if, as a result of application of 
the assigned payments to all outstanding Loans of the nondelinquent Lenders, 
the Lenders' respective pro rata shares of all outstanding Loans have 
returned to those in effect immediately prior to such delinquency and without 
giving effect to the nonpayment causing such delinquency.

         Section 14.6. Holders of Notes. The Agent may deem and treat the 
payee of any Note as the absolute owner or purchaser thereof for all purposes 
hereof until it shall have been furnished in writing with a different name by 
such payee or by a subsequent holder assignee or transferee.

         Section 14.7. Indemnity. The Lenders ratably agree hereby to 
indemnify and hold harmless the Agent from and against any and all claims, 
actions and suits (whether groundless or otherwise), losses, damages, costs, 
expenses (including any expenses for which the Agent has not been reimbursed 
by the Borrower as required by Section 15), and liabilities of every nature 
and character arising out of or related to this Agreement, the Notes, or any 
of the other Loan Documents or the transactions contemplated or evidenced 
hereby or thereby, or the Agent's actions taken hereunder or thereunder, 
except to the extent that any of the same shall be directly caused by the 
Agent's willful misconduct or gross negligence.

         Section 14.8. Agent as Lender. In its individual capacity, 
BankBoston shall have the same obligations and the same rights, powers and 
privileges in respect to its Commitment and the Loans made by it, and as the 
holder of any of the Notes as it would have were it not also the Agent. By 
issuing the Letters of Credit in its individual capacity BankBoston is bound 
to perform its duties and obligations under such Letters of Credit as 
provided therein. BankBoston's status as Agent hereunder shall not limit or 
restrict its ability to perform such duties and obligations.

         Section 14.9. Resignation. The Agent may resign at any time by 
giving sixty (60) days, prior written notice thereof to the Lenders and the 
Borrower. Upon any such resignation, the 

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Requisite Lenders shall have the right to appoint a successor Agent. Unless a 
Default or Event of Default shall have occurred and be continuing, 
appointment of such successor Agent shall be subject to the reasonable 
approval of the Borrower. If no successor Agent shall have been so appointed 
by the Requisite Lenders and shall have accepted such appointment within 
thirty (30) days after the giving of notice of resignation or removal, or the 
Borrower has disapproved or failed to approve a successor agent within such 
period, then the retiring Agent may, on behalf of the Lenders, appoint a 
successor Agent, which shall be a financial institution having a rating of 
not less than A2/P2 or its equivalent by Standard & Poor's Corporation. Upon 
the acceptance of any appointment as Agent hereunder by a successor Agent, 
such successor Agent shall thereupon succeed to and become vested with all 
the rights, powers, privileges and duties of the retiring Agent, and the 
retiring Agent shall be discharged from its duties and obligations as Agent 
hereunder. After any retiring Agent's resignation, the provisions of this 
Agreement and the other Loan Documents shall continue in effect for its 
benefit in respect of any actions taken or omitted to be taken by it while it 
was acting as Agent.

         Section 14.10. Notification of Defaults and Events of Default. Each 
Lender hereby agrees that, upon learning of the existence of a Default or an 
Event of Default, it shall promptly notify the Agent thereof. The Agent 
hereby agrees that upon receipt of any notice under this Section 14.10 it 
shall promptly notify the other Lenders of the existence of such Default or 
Event of Default.

         Section 14.11. Duties in the Case of Enforcement. In case one of 
more Events of Default have occurred and shall be continuing, and whether or 
not acceleration of the Obligations shall have occurred, the Agent shall, if 
(a) so requested by the Requisite Lenders and (b) the Lenders have provided 
to the Agent such additional indemnities and assurances against expenses and 
liabilities as the Agent may reasonably request, proceed to enforce the 
provisions of the Security Documents authorizing the sale or other 
disposition of all or any part of the Collateral and exercise all or any such 
other legal and equitable and other rights or remedies as it may have in 
respect of such Collateral. The Requisite Lenders may direct the Agent in 
writing as to the method and the extent of any such sale or other 
disposition, the Lenders hereby agreeing to indemnify and hold the Agent 
harmless from all liabilities incurred in respect of all actions taken or 
omitted in accordance with such directions, provided that the Agent need not 
comply with any such direction to the extent that the Agent reasonably 
believes the Agent's compliance with such direction to be unlawful or 
commercially unreasonable in any applicable jurisdiction. The Agent may take 
such steps as it reasonably determines for the taking of possession or title 
to any Collateral, including the formation of trusts or corporation with each 
Lender having a beneficial interest equal to its pro rata percentage of the 
outstanding Loans.

         Section 14.12. Mandatory Resignation of Agent. In the event that the 
Agent enters into one or more Assignments pursuant to Section 18 having the 
effect of reducing the Agent's Commitment to less than $25,000,000 (which 
number will be reduced in proportion to any reduction in the Total Commitment 
pursuant to Section 2.2) then the Agent shall promptly so notify the Borrower 
and the Lenders. Upon the written request of the Borrower or any Lender whose 
Commitment exceeds

                                       72
<PAGE>

that of the Agent, which written request is made within thirty (30) days 
after the Agent's notice that its Commitment is below such minimum level, the 
Agent shall be obligated to resign pursuant to Section 14.9.

         Section 15. EXPENSES. The Borrower agrees to pay (a) the reasonable 
costs of producing and reproducing this Agreement, the other Loan Documents 
and the other agreements and instruments mentioned herein, (b) any taxes 
(including any interest and penalties in respect thereto) payable by the 
Agent or any of the Lenders (other than taxes based upon the Agent's or any 
Lender's net income), including any recording, mortgage, documentary or 
intangibles taxes in connection with the Security Documents and other Loan 
Documents, or other taxes payable on or with respect to the transactions 
contemplated by this Agreement, including any such taxes payable by the Agent 
or any of the Lenders after the Effective Date (the Borrower hereby agreeing 
to indemnify the Lenders with respect thereto), (c) all title insurance 
premiums, appraisal fees, engineer's, inspector's and surveyor's fees, 
recording costs and the reasonable fees, expenses and disbursements of the 
Agent's counsel or any local counsel to the Agent incurred in connection with 
the preparation, administration or interpretation of the Loan Documents and 
other instruments mentioned herein, each closing hereunder, and amendments, 
modifications, approvals, consents or waivers hereto or hereunder, (d) the 
reasonable fees, costs, expenses and disbursements of the Agent incurred in 
connection with the preparation, administration or interpretation of the Loan 
Documents and other instruments mentioned herein including without 
limitation, the reasonable costs incurred by the Agent in connection with its 
inspection of the Mortgaged Properties, and the fees and disbursements of the 
Agent's counsel and the Borrower's legal counsel in preparing documentation, 
(e) the reasonable fees, costs, expenses and disbursements of the Agent 
incurred in connection with the syndication and/or participation of the 
Loans, (f) all reasonable out-of-pocket expenses (including reasonable 
attorneys' fees and costs, which attorneys may be employees of any Lender or 
the Agent and the fees and costs of appraisers, engineers, investment 
bankers, surveyors or other experts retained by the Agent or any Lender in 
connection with any such enforcement proceedings) incurred by any Lender or 
the Agent in connection with (i) the enforcement of or preservation of rights 
under any of the Loan Documents against the Borrower or the administration 
thereof after the occurrence of a Default or Event of Default (including, 
without limitation, expenses incurred in any restructuring and/or "workout" 
of the Loans), and (ii) any litigation, proceeding or dispute whether arising 
hereunder or otherwise, in any way related to the Agent's or the Lender's 
relationship with the Borrower, the Company, any Permitted Joint Venture or 
any of the Related Companies, (g) all reasonable fees, expenses and 
disbursements of the Agent incurred in connection with UCC searches, UCC 
filings or mortgage recordings, (h) all reasonable costs incurred by the 
Agent in the future in connection with its inspection of the Mortgaged 
Properties (which inspections shall occur not more frequently than annually 
prior to an Event of Default), and (i) the reasonable fees, costs, expenses 
and disbursements of the Agent incurred in connection with the granting of 
additional Collateral by the Borrower pursuant to Section 12.5 hereof, 
including, without limitation, the costs incurred by the Agent in connection 
with its inspection of such additional Collateral, and the fees and 
disbursements of the Agent's counsel. The covenants 

                                       73
<PAGE>

of this Section 15 shall survive payment or satisfaction of payment of 
amounts owing with respect to the Notes.

         Section 16. INDEMNIFICATION. Each of the Borrower and the Company, 
jointly and severally, agrees to indemnify and hold harmless the Agent and 
the Lenders and the shareholders, directors, agents, officers, subsidiaries, 
and affiliates of the Agent and the Lenders from and against any and all 
claims, actions or causes of action and suits whether groundless or 
otherwise, and from and against any and all Liabilities, losses, settlement 
payments, obligations, damages and expenses of every nature and character 
arising out of this Agreement or any of the other Loan Documents or the 
Formation Transactions or any other transactions contemplated hereby or which 
otherwise arise in connection with the financing including, without 
limitation unless directly caused by the gross negligence or willful 
misconduct of a Lender or the Agent (but such limitation on indemnification 
shall only apply to the Agent or Lender being grossly negligent or committing 
willful misconduct), (a) any actual or proposed use by the Borrower of the 
proceeds of any of the Loans or the Drawings of any Letters of Credit, (b) 
any actual or alleged infringement of any patent, copyright, trademark, 
service mark or similar right of the Borrower comprised in the Collateral, 
(c) the Borrower or any Guarantor entering into or performing this Agreement 
or any of the other Loan Documents or (d) any cost, claim liability, damage 
or expense in connection with any harm the Borrower may be found to have 
caused in the role of a broker, in each case including, without limitation, 
the reasonable fees and disbursements of counsel and allocated costs of 
internal counsel incurred in connection with any such investigation, 
litigation or other proceeding. In litigation, or the preparation therefor, 
the Lenders and the Agent shall each be entitled to select their own separate 
counsel to the extent that their representation by the same counsel would 
present such counsel with a conflict of interest, or would be inappropriate 
due to actual or potential differing interests or because there may be 
defenses available to certain of such persons that are different from or in 
addition to those available to the other persons to be represented by such 
counsel and, in addition to the foregoing indemnity, the Borrower agrees to 
pay promptly the reasonable fees and expenses of such counsel. In the event 
that Agent or any Lender is made a party to any litigation against the 
Company or the Borrower relating to or arising from the Formation 
Transactions, the Borrower or the Company may, or if requested by the Agent 
or the Requisite Lenders shall, assume primary responsibility for the defense 
thereof with counsel reasonably satisfactory to the Requisite Lenders, 
subject to the right of the Agent and the Lenders to separate counsel to the 
extent provided in the preceding sentence. If, and to the extent that the 
obligations of the Borrower or the Company under this Section 16 are 
unenforceable for any reason, the Borrower and the Company hereby agree to 
make the maximum contribution to the payment in satisfaction of such 
obligations which is permissible under applicable law. The provisions of this 
Section 16 shall survive the repayment of the Loans and the termination of 
the obligations of the Lenders hereunder and shall continue in full force and 
effect as to the Lenders so long as the possibility of any such claim, 
action, cause of action or suit exists.

                                       74
<PAGE>

         Section 17.     SURVIVAL OF COVENANTS, ETC.  All covenants, 
agreements, representations and warranties made herein, in the Notes, in any 
of the other Loan Documents or in any documents or other papers delivered by 
or on behalf of the Borrower or any Guarantor pursuant hereto shall be deemed 
to have been relied upon by the Lenders and the Agent, notwithstanding any 
investigation heretofore or hereafter made by it, and shall survive the 
making by the Lenders of the Loans, as herein contemplated, and shall 
continue in full force and effect so long as any amount due under this 
Agreement or the Notes or any of the other Loan Documents remains outstanding 
or the Lenders have any obligation to make any Loans. The indemnification 
obligations of the Borrower provided herein and the other Loan Documents 
shall survive the full repayment of amounts due and the termination of the 
obligations of the Lenders hereunder and thereunder to the extent provided 
herein and therein. All statements contained in any certificate or other 
paper delivered to the Agent or any Lender at any time by or on behalf of the 
Borrower pursuant hereto or in connection with the transactions contemplated 
hereby shall constitute representations and warranties by the Borrower 
hereunder.

         Section 18.     ASSIGNMENT; PARTICIPATIONS; ETC.

         Section 18.1. Conditions to Assignment by Lenders. Except as 
provided herein, each Lender may assign to one or more Eligible Assignees all 
or a portion of its interests, rights and obligations under this Agreement 
(including all or a portion of its Commitment Percentage and Commitment and 
the same portion of the Loans at the time owing to it, and the Notes held by 
it; provided that (a) the Agent shall have given its prior written consent to 
such assignment except that such consent shall not be needed with respect to 
an assignment from a Lender to one of its Affiliated Lenders or to another 
Lender, (b) each such assignment shall be of a constant, and not a varying, 
percentage of all the assigning Lender's rights and obligations under this 
Agreement, (c) each assignment shall be in an amount of not less than 
$10,000,000 that is a whole multiple of $1,000,000, (d) each Lender either 
shall assign all of its Commitment and cease to be a Lender hereunder or 
shall retain, free of any such assignment, an amount of its Commitment of not 
less than $10,000,000 and (e) the parties to such assignment shall execute 
and deliver to the Agent, for recording in the Register (as hereinafter 
defined), an Assignment and Acceptance, substantially in the form of Exhibit 
F hereto (an "Assignment and Acceptance'), together with any Notes subject 
to such assignment. Upon such execution, delivery, acceptance and recording, 
from and after the effective date specified in each Assignment and 
Acceptance, which effective date shall be at least five (5) Business Days 
after the execution thereof, (i) the assignee thereunder shall be a party 
hereto and, to the extent provided in such Assignment and Acceptance, have 
the rights and obligations of a Lender hereunder, and (ii) the assigning 
Lender shall, to the extent provided in such assignment and upon payment to 
the Agent of the registration fee referred to in Section 18.3, be released 
from its obligations under this Agreement.

         Section 18.2. Certain Representations and Warranties; Limitations; 
Covenants. By executing and delivering an Assignment and Acceptance, the 
parties to the assignment thereunder confirm to and agree with each other and 
the other parties hereto as follows: (a) other than the 

                                       75
<PAGE>


representation and warranty that it is the legal and beneficial owner of the 
interest being assigned thereby free and clear of any adverse claim, the 
assigning Lender makes no representation or warranty and assumes no 
responsibility with respect to any statements, warranties or representations 
made in or in connection with this Agreement or the execution, legality, 
validity, enforceability, genuineness, sufficiency or value of this 
Agreement, the other Loan Documents or any other instrument or document 
furnished pursuant hereto; (b) the assigning Lender makes no representation 
or warranty and assumes no responsibility with respect to the financial 
condition of the Borrower or any other Person primarily or secondarily liable 
in respect of any of the Obligations, or the performance or observance by the 
Borrower or any other Person primarily or secondarily liable in respect of 
any of the Obligations of any of their obligations under this Agreement or 
any of the other Loan Documents or any other instrument or document furnished 
pursuant hereto or thereto or the validity or enforceability or priority of 
any lien or any Collateral; (c) such assignee confirms that it has received a 
copy of this Agreement, together with copies of the most recent financial 
statements referred to in Section 6.4 and Section 7.4 and such other 
documents and information as it has deemed appropriate to make its own credit 
analysis and decision to enter into such Assignment and Acceptance; (d) such 
assignee will, independently and without reliance upon the assigning Lender, 
the Agent or any other Lender and based on such documents and information as 
it shall deem appropriate at the time, continue to make its own credit 
decisions and Collateral decisions in taking or not taking action under this 
Agreement, (e) such assignee represents and warrants that it is an Eligible 
Assignee; (f) such assignee appoints and authorizes the Agent to take such 
action as "Agent" on its behalf and to exercise such powers under this 
Agreement and the other Loan Documents as are delegated to the Agent by the 
terms hereof or thereof, together with such powers as are reasonably 
incidental thereto; (g) such assignee agrees that it will perform in 
accordance with their terms all of the obligations that by the terms of this 
Agreement are required to be performed by it as a Lender; and (h) such 
assignee represents and warrants that it is legally authorized to enter into 
such Assignment and Acceptance.

         Section 18.3. Register. The Agent shall maintain a copy of each 
Assignment and Acceptance delivered to it and a register or similar list (the 
"Register") for the recordation of the names and addresses of the Lenders and 
the Commitment Percentages of, and principal amount of the Loans owing to the 
Lenders from time to time. The entries in the Register shall be conclusive, 
in the absence of manifest error, and the Borrower, the Agent and the Lenders 
may treat each Person whose name is recorded in the Register as a Lender 
hereunder for all purposes of this Agreement. The Register shall be available 
for inspection by the Borrower and the Lenders at any reasonable time and 
from time to time upon reasonable prior notice. Upon each such recordation, 
the assigning Lender agrees to pay to the Agent a registration fee in the sum 
of $2,500.00. The Agent may amend Schedules 1 and 1.2 hereof to reflect the 
recording of any such assignments.

         Section 18.4. New Notes. Upon its receipt of an Assignment and 
Acceptance executed by the parties to such assignment, together with each 
Note subject to such assignment, the Agent shall 

                                       76
<PAGE>


(a) record the information contained therein in the Register, and (b) give 
prompt notice thereof to the Borrower and the Lenders (other than the 
assigning Lender ). Within five (5) Business Days after receipt of such 
notice, the Borrower, at its own expense, shall execute and deliver to the 
Agent, in exchange for each surrendered Note, a new Note to the order of such 
Eligible Assignee in an amount equal to the amount assumed by such Eligible 
Assignee pursuant to such Assignment and Acceptance and, if the assigning 
Lender has retained some portion of its Loans hereunder, a new Note to the 
order of the assigning Lender in an amount equal to the amount retained by it 
hereunder. Such new Notes shall provide that they are replacements for the 
surrendered Notes and that they do not constitute a novation, shall be in an 
aggregate principal amount equal to the aggregate principal amount of the 
surrendered Notes, shall be dated the effective date of such Assignment and 
Acceptance and shall otherwise be in substantially the form of the assigned 
Notes. Within five (5) days of issuance of any new Notes pursuant to this 
Section 18.4, the Borrower shall deliver an opinion of counsel, addressed to 
the Lenders and the Agent, relating to the due authorization, execution and 
delivery of such new Notes and the legality, validity and binding 
non-preferential effect thereof, and that the Obligations evidenced by the 
new Notes are secured by the Collateral with the same validity, 
enforceability and priority as if given on the Effective Date, in form and 
substance satisfactory to the Lenders. The surrendered Notes shall be 
cancelled and returned to the Borrower.

         Section 18.5. Participations. Each Lender may sell participations to 
one or more banks or other entities in a portion of such Lender's rights and 
obligations under this Agreement and the other Loan Documents not to exceed 
forty-nine percent (49%) of its Commitment Percentage; provided that (a) the 
Agent shall have given its prior written consent to such participation, 
except that any Lender may sell participations to its Affiliated Lenders 
without such consent, (b) each such participation shall be in an amount of 
not less than $10,000,000 that is a whole multiple of $1,000,000, (c) any 
such sale or participation shall not affect the rights and duties of the 
selling Lender hereunder to the Borrower and the Lender shall continue to 
exercise all approvals, disapprovals and other functions of a Lender, (d) 
the only rights granted to the participant pursuant to such participation 
arrangements with respect to waivers, amendments or modifications of the Loan 
Documents shall be the rights to approve the vote of the Lender as to 
waivers, amendments or modifications that would reduce the principal of or 
the interest rate on any Loans, extend the term or increase the amount of the 
Commitment of such Lender as it relates to such participant, reduce the 
amount of any fees to which such participant is entitled or extend any 
regularly scheduled payment date for principal or interest, provided that all 
approvals affecting a Loan or this Agreement under this clause (d) shall be 
by a fifty-one percent (51%) vote of such Lender's Commitment Percentage, 
and (e) no participant shall have the right to grant further participations 
or assign its rights, obligations or interests under such participation to 
other Persons without the prior written consent of the Agent. The Agent shall 
promptly advise the Borrower in writing of any such sale or participation.

         Section 18.6. Pledge by Lender. Any Lender may at any time pledge 
all or any portion of its interest and rights under this Agreement (including 
all or any portion of its Note) to any of the 

                                       77
<PAGE>

twelve Federal Reserve Lenders organized under Section 4 of the Federal 
Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof 
shall release the pledgor Lender from its obligations hereunder or under any 
of the other Loan Documents.

         Section 18.7. No Assignment by Borrower. The Borrower shall not 
assign or transfer any of its rights or obligations under any of the Loan 
Documents without the prior written consent of each of the Lenders.

         Section 18.8. Disclosure. The Borrower agrees that in addition to 
disclosures made in accordance with standard banking practices any Lender may 
disclose information obtained by such Lender pursuant to this Agreement to 
assignees or participants and potential assignees or participants hereunder. 
Such Lender shall obtain from each party to whom it discloses such 
information, the agreement by such party to comply with the Lenders' 
agreements with respect to Confidential Information set forth in Section 7.9.

         Section 19. NOTICES, ETC. Except as otherwise expressly provided in 
this Agreement, all notices and other communications made or required to be 
given pursuant to this Agreement or the Notes shall be in writing and shall 
be delivered in hand, mailed by United States registered or certified first 
class mail, postage prepaid, sent by overnight courier, or sent by telegraph, 
telecopy, telefax or telex and confirmed by delivery via courier or postal 
service, addressed as follows:

                  (a) if to the Borrower, at 77 West Wacker Drive, Suite 
3900, Chicago, IL 60601, Attention: Chief Financial Officer or at such other 
address for notice as the Borrower shall last have furnished in writing to 
the Agent; and

                  (b) if to the Agent, at 100 Federal Street, Boston, 
Massachusetts 02110, Attention: Real Estate Department, and to 115 Perimeter 
Center Place, N.E., Suite 500, Atlanta, Georgia 30346, Attn: Lori Y. Litow, 
Vice President, or such other address for notice as the Agent shall last have 
furnished in writing to the Borrower.

                  (c) if to any Lender, at such Lender's address set forth 
on Schedule 1, hereto, or such other address for notice as such Lender shall 
have last furnished in writing to the Person giving the notice.

         Any such notice or demand shall be deemed to have been duly given or 
made and to have become effective (i) if delivered by hand, overnight courier 
or facsimile to a responsible officer of the party to which it is directed, 
at the time of the receipt thereof by such officer or the sending of such 
facsimile and (ii) if sent by registered or certified first-class mail, 
postage prepaid, on the third Business Day following the mailing thereof.

                                       78
<PAGE>

         Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS 
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE 
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF 
NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND 
GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO 
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT BY IT FOR THE 
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE 
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR THE STATE OF 
NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND BORROWER CONSENTS TO THE 
NONEXCLUSIVE JURISDICTION OF SUCH COURT FOR ANY SUIT BY AGENT OR ANY LENDER 
AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY 
MAIL AT THE ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY 
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR 
ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. IN 
ADDITION TO THE COURTS OF MASSACHUSETTS AND NEW YORK OR ANY FEDERAL COURT 
SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR ENFORCEMENT 
ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL EXISTS AND THE BORROWER CONSENTS 
TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN 
ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED 
IN Section 19.

         Section 21. HEADINGS. The captions in this Agreement are for 
convenience of reference only and shall not define or limit the provisions 
hereof.

         Section 22. COUNTERPARTS. This Agreement and any amendment hereof 
may be executed in several counterparts and by each party on a separate 
counterpart, each of which when so executed and delivered shall be an 
original, and all of which together shall constitute one instrument. In 
proving this Agreement it shall not be necessary to produce or account for 
more than one such counterpart signed by the party against whom enforcement 
is sought.

         Section 23. ENTIRE AGREEMENT. The Loan Documents and any other 
documents executed in connection herewith or therewith express the entire 
understanding of the parties with respect to the transactions contemplated 
hereby. Neither this Agreement nor any term hereof may be changed, waived, 
discharged or terminated, except as provided in Section 25.

         Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE 
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION 
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE 
NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER 
OR THEREUNDER OR THE PERFORMANCE

                                       79
<PAGE>

OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY 
LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN 
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, 
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION 
TO, ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT 
OR ATTORNEY OF THE AGENT OR ANY LENDER HAD REPRESENTED, EXPRESSLY OR 
OTHERWISE, THAT THE AGENT OR SUCH LENDER WOULD NOT, IN THE EVENT OF 
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT 
THE AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND 
THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, 
THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

         Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or 
approval required or permitted by this Agreement may be given, and any term 
of this Agreement or of any other instrument related hereto or mentioned 
herein may be amended, and the performance or observance by the Borrower of 
any terms of this Agreement or such other instrument or the continuance of 
any Default or Event of Default may be waived (either generally or in a 
particular instance and either retroactively or prospectively) with, but only 
with, the written consent of the Requisite Lenders, and, in the case of 
amendments, with the written consent of the Borrower other than amendments to 
schedules made in the ordinary course as contemplated by this Agreement. 
Notwithstanding the foregoing, (i) the rate of interest on and the term or 
amount of the Notes, (ii) the amount of the Commitments of the Lenders, (iii) 
the amount of any fee payable to a Lender hereunder, (iv) any provision 
herein or in any of the Loan Documents which expressly requires consent of 
all the Lenders, (v) the funding provisions of Section 2.4 and Section 2.5 
hereof, and (vi) the rights, duties and obligations of the Agent specified in 
Section 14 hereof, may not be amended without the written consent of each 
Lender affected thereby, nor may the Agent release any obligor from its 
liability with respect to the Obligations, without first obtaining the 
written consent of all the Lenders. No waiver shall extend to or affect any 
obligation not expressly waived or impair any right consequent thereon. No 
course of dealing or delay or omission on the part of the Agent or any Lender 
in exercising any right shall operate as a waiver thereof or otherwise be 
prejudicial thereto. No notice to or demand upon the Borrower shall entitle 
the Borrower to other or further notice or demand in similar or other 
circumstances.

         Section 26. SEVERABILITY. The provisions of this Agreement are 
severable, and if any one clause or provision hereof shall be held invalid or 
unenforceable in whole or in part in any jurisdiction, then such invalidity 
or unenforceability shall affect only such clause or provision, or part 
thereof, in such jurisdiction, and shall not in any manner affect such clause 
or provision in any other jurisdiction, or any other clause or provision of 
this Agreement in any jurisdiction.

                                       80
<PAGE>

         Section 27. ACKNOWLEDGMENTS. The Borrower hereby acknowledges that: 
(i) neither the Agent nor any Lender has any fiduciary relationship with, or 
fiduciary duty to, the Borrower arising out of or in connection with this 
Agreement or any of the other Loan Documents; (ii) the relationship in 
connection herewith between the Agent and the Lenders, on the one hand, and 
the Borrower, on the other hand, is solely that of debtor and creditor and 
(iii) no joint venture or partnership among any of the parties hereto is 
created hereby or by the other Loan Documents, or otherwise exists by virtue 
of the Facility or the Loans.

         Section 28. PARTNER LIABILITY.

         Section 28.1. Limited Recourse to Company. Notwithstanding anything 
expressed or implied to the contrary contained herein, the Company shall not 
be liable hereunder or under any Guaranty or under any legal or equitable 
proceeding or by virtue of any statute, regulation or other applicable law 
for (i) any payment of principal or interest on, or any other amounts due 
under, any of the Loans, or (ii) any reimbursement obligation with respect to 
a Drawing under a Letter of Credit, or (iii) to repay any other indebtedness 
of Borrower or any Guarantor, provided, however, that nothing herein shall be 
construed to prevent the Agent or any Lender from recovering from the 
Company, or limit the Agent's or any Lender's recourse against the Company 
for any losses, damages or costs (including, without limitation, reasonable 
legal expenses), incurred by the Agent or any Lender in connection with the 
Company's breach of the Company's own covenants and agreements herein or in 
the Indemnity Agreement, or in connection with the Company's fraud, 
misappropriation of funds (whether due to the Company's failure to contribute 
Net Offering Proceeds to the Borrower, as required by Section 7.20, or its 
receipt of Distributions from the Borrower in violation of Section  8.7, or 
otherwise) or any misrepresentation made by or on behalf of the Company 
hereunder or in connection with the transactions contemplated hereby.

         Section 28.2. Limited Recourse to Partners of Borrower other than 
the Company. With respect to all partners of the Borrower other than the 
Company, no personal deficiency judgment or any other judgment shall be 
asserted or enforced against any such partner for payment of any amount 
hereunder or for observance or performance of any of the obligations of the 
Borrower contained herein, except as expressly set forth in this agreement or 
any other agreement or instrument or document as an obligation of such 
partner in connection herewith, and provided that the foregoing shall not 
affect the liability which any of such other partners may have for any fraud, 
misappropriation of funds or intentional misrepresentation made hereunder by 
or on behalf of the Borrower or in connection with the transactions 
contemplated hereby.

                                       81
<PAGE>

         IN WITNESS WHEREOF, the undersigned have duly executed this 
Agreement as a sealed instrument as of the date first set forth above.

<TABLE>
<CAPTION>

<S>                                                 <C>   
WITNESS:                                             BANKBOSTON, N.A.

----------------------------------------             By:    
                                                        ----------------------------------------
                                                        Lori Y. Litow
                                                        Its:  Vice Presiden
                                                           ----------------------------------------

                                                     PRUDENTIAL SECURITIES CREDIT
                                                     CORPORATION

                                                     By: /s/ George D. Morgan
----------------------------------------                ----------------------------------------
                                                        George D. Morgan
                                                        Its:   Vice President
                                                               ----------------------------------------

                                                     PRIME GROUP REALTY TRUST

----------------------------------------             By:
                                                        ----------------------------------------

                                                        ----------------------------------------

                                                        Its:
                                                              ----------------------------------------

                                                     PRIME GROUP REALTY, L.P. 

                                                     By: PRIME GROUP REALTY TRUST,
                                                         its general partner

----------------------------------------             By:
                                                        ----------------------------------------

                                                        ----------------------------------------

                                                        Its:
                                                              ----------------------------------------
</TABLE>

<PAGE>

         IN WITNESS WHEREOF, the undersigned have duly executed this 
Agreement as a sealed instrument as of the date first set forth above.

<TABLE>
<CAPTION>

<S>                                                 <C>   
WITNESS:                                             BANKBOSTON, N.A.

/s/Nancy Johns
----------------------------------------             By: /s/ Lori Y. Litow
                                                        ----------------------------------------
                                                        Lori Y. Litow
                                                        Its:  Vice President

                                                     PRUDENTIAL SECURITIES CREDIT
                                                     CORPORATION

                                                     By:    
----------------------------------------                ----------------------------------------
                                                            
                                                        ----------------------------------------

                                                        Its:   
                                                               ----------------------------------------

                                                     PRIME GROUP REALTY TRUST
/s/Illegible
----------------------------------------             By: /s/ W. Michael Karnes
                                                        ----------------------------------------
                                                        W. Michael Karnes 

                                                        Its:   Executive VP

                                                     PRIME GROUP REALTY, L.P. 

                                                     By: PRIME GROUP REALTY TRUST,
                                                         its general partner
/s/Illegible
----------------------------------------             By: /s/ W. Michael Karnes 
                                                        ----------------------------------------
                                                        W. Michael Karnes 

                                                        Its:   Executive VP

</TABLE>

<PAGE>

                                    Exhibit A

                                   FORM OF NOTE

No. ___                                                                   [Date]
[Amount]

         FOR VALUE RECEIVED, the undersigned, Prime Group Realty, L.P., a 
Delaware limited partnership (the "Borrower"), promises to pay to the order 
of [Name of Lender] (hereinafter, together with its successors in title and 
assigns, called the "Lender") at the head office of BankBoston, N.A., as 
Agent (the "Agent") at 100 Federal Street, Boston, Massachusetts 02110, the 
principal sum of [Amount in Words][Amount in Numbers] or, if less, the 
aggregate unpaid principal amount of all Loans made by the Lender to the 
Borrower pursuant to the Credit Agreement dated as of November 17, 1997 among 
the Lender, the Borrower, Prime Group Realty Trust, the other lending 
institutions named therein and the Agent, as amended from time to time (the 
"Credit Agreement"). Capitalized terms used herein and not otherwise defined 
herein shall have the meanings assigned to them in the Credit Agreement. 
Unless otherwise provided herein, the rules of interpretation set forth in 
Section 1.2 of the Credit Agreement shall be applicable to this Note.

         The Borrower also promises to pay (a) principal from time to time at 
the times provided in the Credit Agreement and (b) interest from the date 
hereof on the principal amount from time to time unpaid at the rates and 
times set forth in the Credit Agreement and in all cases in accordance with 
the terms of the Credit Agreement. Late charges and other charges and default 
rate interest shall be paid by Borrower in accordance with the terms of the 
Credit Agreement. The entire outstanding principal amount of this Note, 
together with all accrued but unpaid interest thereon, shall be due and 
payable in full on the Maturity Date. The Lender may endorse the record 
relating to this Note with appropriate notations evidencing advances and 
payments of principal hereunder as contemplated by the Credit Agreement.

         This Note is issued pursuant to, is entitled to the benefits of, and 
is subject to the provisions of the Credit Agreement. The principal of this 
Note is subject to prepayment in whole or in part in the manner and to the 
extent specified in the Credit Agreement. This Note is secured by the 
Security Documents. However, the principal of this Note, the interest accrued 
on this Note and all other Obligations of the Borrower are full recourse 
obligations of the Borrower, and all of its Real Estate Assets, the 
Collateral and its other properties shall be available for the payment and 
performance of this Note, the interest accrued on this Note, and all of such 
other Obligations. The liability of the partners of the Borrower hereunder is 
limited as set forth in Section 28 of the Credit Agreement.

         In case an Event of Default shall occur and be continuing, the 
entire unpaid principal amount of this Note and all of the unpaid interest 
accrued thereon may become or be declared due and payable in the manner and 
with the effect provided in the Credit Agreement.

         The Borrower and all endorsers hereby waive presentment, demand, 
protest and notice of any kind in connection with the delivery, acceptance, 
performance and enforcement of this Note, and also hereby assent to 
extensions of time of payment or forbearance or other indulgences without 
notice.

         THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL BE 
GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH THE LAWS OF THE 
STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF 
LAW).

         IN WITNESS WHEREOF, the Borrower has caused this Note to be duly 
executed in its name as an instrument under seal on the date first above 
written.

WITNESS:                                   PRIME GROUP REALTY, L.P.
                                           By: Prime Group Realty Trust,
                                           its managing general partner

                                          By:
-----------------------------------          -----------------------------------


<PAGE>

                                    Exhibit B

                                  LOAN REQUEST

                            Prime Group Realty, L.P.
                        77 West Wacker Drive, Suite 3900
                                Chicago, IL 60601

                                                                         [Date]

BankBoston, N.A., as Agent
100 Federal Street
Boston, MA 02110

Ladies and Gentlemen:

         Re:  Loan Request under Credit Agreement
                  dated as of November 17, 1997

         Pursuant to Section 2.5 of the Credit Agreement dated as of November 
17, 1997, among you, certain other Lenders and us (the "Credit Agreement"), 
we hereby request that you make a Loan as follows:

           (i)  Principal amount requested: $
                                             -----------
          (ii)  Proposed Borrowing Date:
                                        ----------------
         (iii)  Interest Period:
                               -------------------------
          (iv)  Type:
                     -----------------------------------

           (v)  Purpose of Loan:  
                                    -----------------------------------

         This Loan Request is submitted pursuant to, and shall be governed 
by, and subject to satisfaction of, the terms, conditions and provisions set 
forth in Section 2.5 of the Credit Agreement.

 
                                       
<PAGE>

         The undersigned hereby further certifies to you that it is in 
compliance with the covenants specified in Section 9 of the Credit Agreement, 
and will remain in compliance with such covenants after the making of the 
requested Loan, as evidenced by a Compliance Certificate in the form of 
Exhibit C to the Credit Agreement of even date herewith delivered to you 
simultaneously with this Loan Request.

         We also understand that if you grant this request this request 
obligates us to accept the requested Loan on such date. All terms defined in 
the Credit Agreement and used herein without definition shall have the 
meanings set forth in Section 1.1 of the Credit Agreement.

         The undersigned hereby certifies to you, in accordance with the 
provisions of Section 11.1 of the Credit Agreement, that the representations 
and warranties contained in the Credit Agreement and in each document and 
instrument delivered pursuant to or in connection therewith were true as of 
the date as of which they were made, are also true at and as of the date 
hereof, and will also be true at and as of the proposed Borrowing Date of the 
Loan requested hereby, in each case except as otherwise permitted pursuant to 
the provisions of Section 11.1 of the Credit Agreement, and no Default or 
Event of Default has occurred and is continuing.

                                             Very truly yours,



                                             Prime Group Realty, L.P.
                                             By: Prime Group Realty Trust,
                                                 Its managing general partner

                                             By:
                                                -------------------------------

                                                -------------------------------
                                                Its:
                                                     --------------------------

                                       
<PAGE>

                                    Exhibit C

                            Prime Group Realty, L.P.
                        77 West Wacker Drive, Suite 3900
                                Chicago, IL 60601

                          Compliance Certificate under
                 Credit Agreement dated as of November 17, 1997

         The undersigned, a Responsible Officer of Prime Group Realty Trust, 
general partner of Prime Group Realty, L.P. (the "Borrower"), hereby 
certifies on behalf of the Borrower as of the date hereof the following:

         1. No Defaults. I have read a copy of the Credit Agreement dated as 
of November 17, 1997 (the "Credit Agreement") among the Borrower, BankBoston, 
N.A., the other lending institutions party thereto, and BankBoston, N.A., as 
Agent. Terms used herein and not otherwise defined herein shall have the 
meanings set forth in Section 1.1 of the Credit Agreement. No Default is 
continuing in the performance or observance of any of the covenants, terms or 
provisions of the Credit Agreement or any of the other Loan Documents. 
Without limiting the foregoing, the Borrower has not taken any actions which 
are prohibited by the negative covenants set forth in Section 8 of the Credit 
Agreement. Attached hereto as Appendix I are all relevant calculations needed 
to determine whether the Borrower is in compliance with Section 9 and Section 
8.3(g) of the Credit Agreement as of the end of the most recently completed 
fiscal quarter (except that in the case of Compliance Certificates delivered 
pursuant to Section 2.5(a), Section 2.9(b) Section 11.1, Section 5.5(a) or 
Section 8.4(b), the calculations determining compliance with Section 9.1, 
Section 9.2 and Section 9.3 are based on a Pro Forma Principal Amount (after 
giving effect to the proposed transaction) and is in compliance with Section 
8.7 of the Credit Agreement for the most recently completed fiscal year.

         2. No Material Changes, Etc. Except as disclosed on Appendix II 
hereto, since the [date of most recent financial statements furnished to the
Agent and the Lenders], there have occurred no materially adverse changes in
the financial condition or business of the Borrower as shown on or reflected 
in the balance sheet of the Borrower as at such date other than (a) changes 
in the ordinary course of business that have not had any materially adverse 
effect either individually or in the aggregate on the business or financial 
condition of the Borrower and (b) changes resulting from the making of the 
Loans and the transactions contemplated by the Credit Agreement.

         3. No Materially Adverse Contracts, Etc. Neither the Borrower nor 
the Company is subject to any charter, corporate, trust, partnership or other 
legal restriction, or any judgment, decree, order, rule or regulation that 
has or is expected, in the reasonable judgment of the Company's officers, in 
the future to have a Materially Adverse Effect. Neither the Borrower nor the 
Company is a party to any contract or agreement that has or is expected, in 
the reasonable judgment of the Company's officers, to have a Materially 
Adverse Effect.

<PAGE>

                                             Prime Group Realty, L.P.
                                             By: Prime Group Realty Trust,
                                             Its managing general partner

                                             By:
                                                -------------------------------

                                                -------------------------------
                                                Its:
                                                     --------------------------

Date:

<PAGE>

                                                                      Appendix I

                         FINANCIAL COVENANT CALCULATIONS

Note:  Unless otherwise indicated all calculations are as of 
       or for the fiscal quarter ending on such date (the "Fiscal Quarter").

<TABLE>
<CAPTION>

<S>                                                                               <C>  
1. Appraisal Value [Section 9.1]

   (a)      Pro Forma Principal Amount                                              $_____________

   (b)      Collateral Value of Mortgaged                                           $_____________
            Properties (see attached Schedule
            of Collateral Values)

   CALCULATIONS:    (a)/(b) = ____% which is less than 60%

2. Minimum Debt Service Coverage [Section 9.2]

   (a)      Net Operating Income for all of the Mortgaged Properties:               $_____________

   (b)      Pro Forma Debt Service Charges for Mortgaged Properties based
            on three monthly payments of mortgage style amortization of
            the Pro Forma Principal Amount of $_______________ amortized
            over 25 years at _______% per annum, being the greater of the
            current average interest rate on the Loans or 1.75% above the 
            current ten year U.S. Treasury bill yield:                              $_____________



   CALCULATIONS:    (a)/(b) = _________ which is not less than 1.5


</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<S>                                                                              <C>  
3. Total Liabilities to Total Adjusted Assets [Section 9.3]

   (a)      Total Liabilities:                                                     $_____________
   (b)      Cash and cash equivalents:                                             $_____________
   (c)      EBITDA last quarter:                                                   $_____________
   (d)      EBITDA previous quarter:                                               $_____________
   (e)      Annualized EBITDA [(c) + (d) times 2]:                                 $_____________
   (f)      Line (e) divided by 0.0975:                                            $_____________
   (g)      Total Adjusted Assets [(b) + (f)]:                                     $_____________

   CALCULATIONS:    (a)/(g)  =         which is less than 55%
                              ---------

4. Minimum Tangible Net Worth [Section 9.4]

   (a)      Total Assets (GAAP assets plus depreciation
            on Real Estate Assets)                                                 $_____________
   (b)      Total Liabilities (same as line 3(a))                                  $_____________
   (c)      Intangibles                                                            $_____________
   (d)      Tangible Net Worth [(a)-(b)-(c)]                                       $_____________
   (e)      Net Offering Proceeds                                                  $_____________
   (f)      $350,000,000 plus .75 times (e)                                        $_____________

   COVENANT: Line (d) should exceed line (f)

5. Total Operating Cash Flow to Interest Expense [Section 9.5]

   (a)      EBITDA (same as line 3(c))                                             $_____________
   (b)      Gross leasable area of all Real Estate Assets                           ______________
   (c)      Reserve Amount ((c) times $0.25 divided by 4)                          $_____________
   (d)      Total Operating Cash Flow [(a) - (c)]                                  $_____________
   (e)      Interest Expense (includes capitalized interest)                       $_____________

   CALCULATIONS: (d)/(e) = _____ which is not less than 2.0

6. EBITDA to Fixed Charges [Section 9.6]

   (a)      EBITDA (same as line 3(c))                                             $_____________
   (b)      Interest Expense (same as line 5(e))                                   $_____________
   (c)      Principal installments and current maturities                          $_____________
            not refinanced
   (d)      Preferred dividends and distributions                                  $_____________
   (e)      Fixed Charges (sum of lines (b), (c), and (d))                         $_____________

   CALCULATIONS: (a)/(e) = ____________which is not less than 1.75
</TABLE>

                                       
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                               <C>     
8. Investments in Permitted Developments [Section 8.3(g)]
   Attached hereto is a Schedule of all Permitted Developments
   in process as of ________________

   (a)      Investments in Permitted Developments                                  $_____________
   (b)      Total Adjusted Assets (same as line 3(g))                              $_____________
   (c)      20% of Total Adjusted Assets                                           $_____________

   COVENANT:

   Line (a) should not exceed line (c)

9. Distributions [Section 8.7]

   (a)      Total Distributions during most recently ended                         $_____________
            fiscal year
   (b)      Funds From Operations for said fiscal year                             $_____________
   (c)      Total Distributions during most recently ended                         $_____________
            fiscal quarter
   (d)      Funds from Operations for fiscal quarter referenced                    $_____________
            in (c)
   (e)      Total Distributions during the fiscal quarter preceding                $_____________
            the fiscal quarter referenced in (c)

   (f)      Funds from Operations during fiscal quarter referenced                 $_____________
            in (e)
   (g)      Total Distributions during the fiscal quarter preceding                $_____________
            the fiscal quarter referenced in (e)

   (h)      Funds from Operations during fiscal quarter referenced                 $_____________
            in (g)

   CALCULATIONS:              (a)/(b) = _____% which is less than 90%
                              (c)/(d) = _____%
                              (e)/(f) = _____%
                              (g)/(h) = _____%
</TABLE>

         At least one of the three percentages immediately above is less than 
100%

<PAGE>

                          SCHEDULE OF COLLATERAL VALUES

<TABLE>
<CAPTION>
                                                                             
                                                                             Borrowing
Mortgaged           NOI              NOI              Reserve       Cap         Base        Appraised      
Collateral
Property           Last Q         Previous Q          Amount        Rate        Value         Value          Value
 --------          ------         ----------          ------        ----        -----         -----          -----
<S>     <C>   






Totals:
</TABLE>
                                       
<PAGE>



                                   SCHEDULE OF
                             PERMITTED DEVELOPMENTS

<TABLE>
<CAPTION>

                                                                                 Scheduled
Project Location     Size (sq. ft.)     Total Project Cost     Start Date      Completion Date
----------------     --------------     ------------------     ----------      ---------------
<S>     <C>    

</TABLE>


<PAGE>

                                                                     APPENDIX II

                                MATERIAL CHANGES

<PAGE>

                                    Exhibit D

                            LETTER OF CREDIT REQUEST

                            Prime Group Realty, L.P.
                        77 West Wacker Drive, Suite 3900
                                Chicago, IL 60601

                                            [Date]

BankBoston, N.A., as Agent
100 Federal Street
Boston, MA 02110

Ladies and Gentlemen:

         Re:      Letter of Credit Request under Credit
                  Agreement dated as of November 17, 1997

         Pursuant to Section 2.9 of the Credit Agreement dated as of November 
17, 1997, among you, Prime Group Realty Trust, certain other Lenders and us 
(the "Credit Agreement"), we hereby request that you issue 
[extend or renew, if applicable] a Letter of Credit as follows:

           (i)             Name and address of beneficiary:

           (ii)            Face amount: $

          (iii)            Proposed Issuance Date:

                           Proposed Expiration Date:

          (iv)             Other terms and conditions as set forth in the
                           proposed form of Letter of Credit attached hereto.

           (v)             Purpose of Letter of Credit:

<PAGE>

         This Letter of Credit Request is submitted pursuant to, and shall be
governed by, and subject to satisfaction of, the terms, conditions and
provisions set forth in Section 2.9 of the Credit Agreement.

         The undersigned hereby further certifies to you that it is in 
compliance with the covenants specified in Section 9 of the Credit Agreement, 
and will remain in compliance with such covenants after the Outstanding 
Principal Amount is adjusted to include the face amount of the requested 
Letter of Credit, as evidenced by a Compliance Certificate in the form of 
Exhibit C to the Credit Agreement of even date herewith delivered to you 
simultaneously with this Letter of Credit Request.

         We also understand that if you grant this request this request 
obligates us to accept the requested Letter of Credit 
[or extension or renewal thereof] and pay the issuance fee 
[or the renewal fee] and Letter of Credit fee as required by Section 2.9(c). 
All terms defined in the Credit Agreement and used herein without definition 
shall have the meanings set forth in Section 1.1 of the Credit Agreement.

         The undersigned hereby certifies to you, in accordance with the
provisions of Section 11.1 of the Credit Agreement, that the representations and
warranties contained in the Credit Agreement and in each document and instrument
delivered pursuant to or in connection therewith were true as of the date as of
which they were made, are also true at and as of the date hereof, and will also
be true at and as of the proposed issuance date of the Letter of Credit
requested hereby, in each case except as otherwise permitted pursuant to the
provisions of Section 11.1 of the Credit Agreement, and no Default or Event of
Default has occurred and is continuing.

                                        Very truly yours,

                                        Prime Group Realty, L.P.
                                        By: Prime Group Realty Trust,
                                            Its general partner

                                        By:
                                           -------------------------------
                                           -------------------------------
                                           Its:
                                               -------------------------------

<PAGE>

                                    EXHIBIT F

                                     FORM OF
                            ASSIGNMENT AND ACCEPTANCE

                                            Dated

         Reference is made to the Credit Agreement, dated as of November 17,
1997 (as amended and in effect from time to time, the "Agreement"), among Prime
Group Realty, L.P., a Delaware limited partnership (the "Borrower"), BankBoston,
N.A., the other Lenders and BankBoston, N.A. as agent (the "Agent") for itself
and the other Lenders. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Agreement.

                                                            (the "Assignor") and
------------------------------------------------------------
                                          (the "Assignee") agree as follows:
-------------------------------------------

         1. The Assignor hereby sells and assigns to the Assignee, and the 
Assignee hereby purchases and assumes from the Assignor, a   % interest in 
and to all the Assignor's rights and obligations under the Agreement as of 
the Effective Date (as hereinafter defined).

         2. The Assignor (i) represents that as of the date hereof, its
Commitment (without giving effect to assignments thereof which have not yet
become effective) is $__________ and its Commitment Percentage with respect
thereto is   %, and the outstanding balance of its Loans (unreduced by any
assignments thereof which have not yet become effective) is $__________; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, the other Loan Documents or any other
instrument or document furnished pursuant thereto on the status or value of any
Collateral, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or any other person which may be primarily or secondarily
liable in respect of any of the Obligations or any of their obligations under
the Agreement or the other Loan Documents or any other instrument or document
delivered or executed pursuant thereto; and (v) attaches the Note delivered to
it under the Agreement and requests that the Borrower exchange such Note for new
Notes payable to each of the Assignor and the Assignee as follows:

<PAGE>

Notes Payable to                           Amount
the Order of:                             of Note
-----------------                         -------
[Name of Assignor]                        [($     )]

[Name of Assignee]                        [($     )]

         3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Agreement, together with copies of the most recent
financial statements delivered pursuant to Sections 6.4 and 7.4 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Assignor, any
other Lender or the Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
and review and analysis of the granting and perfecting of any purported liens
and the status and value of any Collateral in taking or not taking action under
the Agreement; (iv) confirms that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers as are reasonably incidental thereto pursuant to the terms of the
Agreement and the other Loan Documents; and (vi) agrees that it will perform all
the obligations which by the terms of the Agreement are required to be performed
by it as a Lender in accordance with the terms of the Agreement.

         4. The effective date for this Assignment and Acceptance shall be    
        (the "Effective Date"). Following the execution of this Assignment 
and Acceptance, it will be delivered to the Agent for acceptance and 
recording in the Register by the Agent. This Assignment and Acceptance may be 
executed in several counterparts and by each party on a separate counterpart, 
each of which when so executed and delivered shall be an original, and all of 
which together shall constitute one instrument. In proving this Assignment 
and Acceptance it shall not be necessary to produce or account for more than 
one such counterpart signed by the party against whom enforcement is sought.

         5. Upon such acceptance and recording, from and after the Effective
Date, (i) the Assignee shall be a party to the Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder, and (ii) the Assignor shall, with respect to that portion of
its interest under the Agreement assigned hereunder relinquish its rights and be
released from its obligations under the Agreement.

         6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.

                                       
<PAGE>

         7. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.

         IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.

                                  [NAME OF ASSIGNOR]

                                  By:
                                     -------------------------------
                                  Title:
                                       -----------------------------

                                  [NAME OF ASSIGNEE]

                                  By:
                                    -------------------------------
                                  Title:
                                       ----------------------------


<PAGE>

SCHEDULE 1

Lenders; Domestic and Eurodollar Lending Offices

BankBoston, N.A.
100 Federal Street
Boston, MA  02110
(Domestic and Eurodollar)

Prudential Securities Credit Corporation
One New York Plaza
New York, New York 10292
(Domestic and Eurodollar)


<PAGE>



SCHEDULE 1.1

Mortgaged Properties


1.   Donnelley Building, 77 West Wacker Drive, Chicago, IL


<PAGE>



SCHEDULE 1.2

Commitments
<TABLE>
<CAPTION>

                                                                   Commitment
Lender                                            Commitment       Percentage
------                                            ----------       ----------
<S>                                             <C>               <C>
BankBoston, N.A                                 $112,500,000       50%

Prudential Securities Credit Corporation        $112,500,000       50%

         Total                                  $225,000,000       100%

</TABLE>


<PAGE>

SCHEDULE 1.3

Guarantor Subsidiaries, Related Companies and Permitted Joint Ventures

Guarantor Subsidiaries
----------------------

77 West Wacker Limited Partnership
Enterprise Center I, L.P.
Enterprise Center II, L.P.
Enterprise Center III, L.P.
Enterprise Center IV, L.P.
Enterprise Center V, L.P.
Enterprise Center VI, L.P.
Enterprise Center VII, L.P.
Enterprise Center VIII, L.P.
Enterprise Center IX, L.P.
Enterprise Center X, L.P.
Arlington Heights I, L.P.
Arlington Heights II, L.P.
Arlington Heights III, L.P.
East Chicago Enterprise Center Limited Partnership
Hammond Enterprise Center Limited Partnership
Nashville Office Building I, Ltd.
Old Kingston Properties, Ltd.
Professional Plaza, Ltd.
Centre Square II, Ltd.
Triad Parking Company, Ltd.

Related Companies
-----------------

Prime Group Realty Trust
Prime Group Realty, L.P.
1990 Algonquin Road, L.L.C.
2010 Algonquin Road, L.L.C.
555 Huehl Road, L.L.C.
1669 Wodfiled Road, L.L.C.
475 Superior Avenue, L.L.C. Enterprise Drive, L.L.C.
Enterprise Drive, L.L.C.
280 Shuman Blvd., L.L.C.
77 West Wacker Limited Partnership
Enterprise Center I, L.P.
Enterprise Center II, L.P.
Enterprise Center III, L.P.
Enterprise Center IV, L.P.
Enterprise Center V, L.P.
Enterprise Center VI, L.P.

<PAGE>

SCHEDULE 1.3 (continued)

Enterprise Center VII, L.P.
Enterprise Center VIII, L.P.
Enterprise Center IX, L.P.
Enterprise Center X, L.P.
Arlington Heights I, L.P.
Arlington Heights II, L.P.
Arlington Heights III, L.P.
East Chicago Enterprise Center Limited Partnership
Hammond Enterprise Center Limited Partnership
Nashville Office Building I, Ltd.
Old Kingston Properties, Ltd.
Professional Plaza, Ltd.
Centre Square II, Ltd.
Triad Parking Company, Ltd.
77 Fitness Center Limited Partnership
Libertyville Tech Way, L.L.C.
3818 Grandville, L.L.C.
306 Era Drive, L.L.C.
1301 Ridgeview Drive, L.L.C.
515 Heuhl Road, L.L.C.
455 Academy Drive, L.L.C.
801 Technology Way, L.L.C.
Prime Columbus Industrial, L.L.C.
Kemper/Prime Industrial Partner
1051 N. Kirk Road, L.L.C.
4211 Madison Street, L.L.C.
200 E. Fullerton L.L.C.
350 Randy Road, L.L.C.
4300 Madison Street, L.L.C.
370 Carol Lane, L.L.C.
388 Carol Lane, L.L.C.
941 Weigel Drive, L.L.C.
342 Carol Lane, L.L.C.
343 Carol Lane, L.L.C.
371 N. Gary Avenue,  L.L.C.
350 N. Mannheim Road, L.L.C.
1600 167th Street, L.L.C.
1301 E. Tower Road, L.L.C.
4343 Commerce Court, L.L.C.
11039 Gage Avenue, L.L.C.
11045 Gage Avenue, L.L.C.
1401 S. Jefferson, L.L.C.
4100 Madison Street, L.L.C.
4160 Madison Street, L.L.C.
550 Kehoe Blvd., L.L.C.

<PAGE>

SCHEDULE 1.3 (continued)


Permitted Joint Ventures

None.

<PAGE>


SCHEDULE 1.4

Initial Letters of Credit

<TABLE>
<CAPTION>

Beneficiary                    IRB Project                           Face Amount
-----------                    -----------                           -----------
<S>                            <C>                                   <C>       
NBD Bank, N. A                 Enterprise Center I, L.P.             $2,939,726

NBD Bank, N. A                 Enterprise Center II, L.P.            $5,068,493

NBD Bank, N. A                 Enterprise Center III, L.P.           $4,561,644

NBD Bank, N. A                 Enterprise Center IV, L.P.            $2,635,616

NBD Bank, N. A                 Enterprise Center V, L.P.             $5,068,493

NBD Bank, N. A                 Enterprise Center VI, L.P.            $4,967,123

Cole Taylor Bank               Enterprise Center VII, L.P.           $7,298,630

Cole Taylor Bank               Enterprise Center VIII, L.P.          $7,095,890

Cole Taylor Bank               Enterprise Center IX, L.P.            $4,815,068

Cole Taylor Bank               Enterprise Center X, L.P.             $4,358,904

First Tennessee Bank N.A       Nashville Office Building I, Ltd.     $4,915,069

First Tennessee Bank N.A       Old Kingston Properties, Ltd.         $3,583,905

First Tennessee Bank N.A       Professional Plaza, Ltd.              $9,215,754

First Tennessee Bank N.A       Centre Square II, Ltd.                $9,215,754

Credit Suisse First Boston     Tennessee Projects.                   $27,261,554.88

TOTAL    $26,930,482

</TABLE>

<PAGE>



SCHEDULE 5.3 (b)

Required Additional Properties


1.   Hilton Parking Garage, Knoxville, TN

2.   Chicago Enterprise Ctr., Chicago, IL

3.   Arlington Hts. Enterprise Ctr., 425 E. Algonquin Rd., Arlington Heights, IL

4.   East Chicago Enterprise Ctr., East Chicago, IN

5.   Hammond Enterprise Ctr., Hammond, IN

6.   SunTrust Bank Bldg., 201 4th Ave., N., Nashville, TN

7.   The Weston, 4823 Kingston Pike, Knoxville, TN

8.   Centre Square I, 620 Market St., Knoxville, TN

9.   Centre Square II, 625 Gay St., Knoxville, TN


<PAGE>



SCHEDULE 6.3

Title to Properties


R. Dan Culp holds a 0.1% limited partnership interest in Professional Plaza,
Ltd.


<PAGE>



SCHEDULE 6.7

Litigation

                  (a) Karen McIntosh v. The Prime Group, Inc., Pepper 
         Construction Company, 77 West Wacker Limited Partnership, and all 
         unknown owners of 77 West Wacker, Case No. 94 M2 1646, filed on June 
         9, 1994, in the Circuit Court of Cook County, Illinois, Municipal 
         Department - Second District. Plaintiff, an employee of a tenant in 
         the 77 West Wacker Drive Building (the "77 Project"), alleges that 
         she was struck by a board providing protection to the wood paneling 
         in the elevator cab in the 77 Project and, as a result thereof, 
         sustained injuries. Pepper Construction Company ("Pepper") 
         constructed the protective barrier in the elevator cab. The 
         plaintiff alleges that The Prime Group, Inc. ("PGI") and 77 West 
         Wacker Limited Partnership (the "77 Partnership") were negligent in 
         failing to maintain, inspect and repair the elevator cab in a 
         reasonable manner and, that her injuries were proximately caused by 
         such negligence. This matter has been forwarded to the 77 
         Partnership's insurance carrier. The 77 Partnership's insurance 
         carrier has tendered the defense of this action to the insurance 
         carrier for Pepper, which has accepted the tender. It is expected 
         that any and all damages awarded to the plaintiff against the 77 
         Partnership or PGI will be fully covered by insurance.

                  (b) Michael Spiezio v. Schal Associates, Inc., Pepper 
         Construction, The Prime Group, Inc. and Carrera Marble & Mosaics, 
         Case No. 92L15284, filed on December 15, 1992, in the Circuit Court 
         of Cook County, Illinois, County Department, Law Division. Plaintiff 
         alleges that he was an employee of Carrera Marble & Mosaics 
         ("Carrera"), which performed work and/or supplied materials for or 
         in connection with the construction of the 77 Project. The plaintiff 
         alleges that, while working on the 77 Project, the plaintiff 
         sustained injuries, and is seeking damages therefor. The defense of 
         this case is being handled by Carrera's insurance carrier. It is 
         expected that any and all damages awarded to the plaintiff against 
         the 77 Partnership or PGI will be fully covered by insurance.

                  (c) Giuseppe Fricano v. Schal Associate, Inc. and 77 West 
         Wacker Limited Partnership, Case No. 92L14542, filed in the Circuit 
         Court, Cook County, Illinois on November 20, 1992. The plaintiff in 
         this action, alleges that he was an employee of GMI Corporation 
         ("GMI"), a subcontractor retained by Schal to perform work in 
         connection with the construction of the 77 Project, and that he was 
         injured while performing work on the 77 Project. The 77 Partnership 
         has tendered defense of this lawsuit to the 77 Partnership's 
         insurance carrier, which, in turn, tendered defense of the action to 
         Massachusetts Bay Insurance Company ("MBIC"), the insurance carrier 
         of GMI, which has accepted the defense of this lawsuit. The defense 
         of this action is being handled by attorneys retained by MBIC. It is 
         expected that any and all damages awarded to the plaintiff against 
         the 77 Partnership will be fully covered by insurance.

                  (d) Charles O. Dowler v. Schal Associates, Inc., The Prime 
         Group, Inc., Prime Group Realty, Inc. and 77 West Wacker Limited 
         Partnership, Case No. 93L07708, filed on June 25, 1993, in the 
         Circuit Court of Cook County, Illinois, County Department, Law 
         Division. Plaintiff in this action alleges that he was employed by 
         PDM Structural Group

<PAGE>

         ("PDM"), a subcontractor retained by Schal to perform work in 
         connection with the construction of the 77 Project, and that, on or 
         about July 2, 1991, the plaintiff was injured while working on the 
         77 Project. The defense of PGI, Prime Group Realty, Inc. and the 77 
         Partnership in this action was tendered to the insurance carrier for 
         Schal, which, in turn, tendered the defense on behalf of Schal, PGI, 
         Prime Group Realty, Inc. and the 77 Partnership to the insurance 
         carrier for PDM. The insurance carrier for PDM has accepted tender 
         of the defense on behalf of all defendants of this action. The 
         defense of this action is being handled by attorneys retained by 
         PDM's insurance carrier. It is expected that any and all damages 
         awarded to the plaintiff against the 77 Partnership, PGI or Prime 
         Group Realty, Inc. will be fully covered by insurance.

                   (e) Robert Ochoa v. 77 West Wacker Limited Partnership, 
         American National Bank as Trustee under Trust Agreement No. 
         110025-08, The Prime Group, Inc., R.R. Donnelley Building, Schal 
         Construction Company, Pepper Construction, LaSalle Construction, 
         Robert Irsay Company and TOR Construction, Case No. 93L010010, filed 
         on August 17, 1993, in the Circuit Court of Cook County, Illinois, 
         County Department, Law Division. The plaintiff alleges that he was 
         an employee of Great Lakes Plumbing Heating Company ("Great Lakes"), 
         a subcontractor of Schal, and that, on or about May 2, 1992, 
         plaintiff fell off scaffolding while performing work in connection 
         with the construction of the 77 Project and, as a result thereof, 
         sustained injuries. The 77 Partnership has tendered defense of this 
         action on behalf of the 77 Partnership to the 77 Partnership's 
         insurance carrier, which, in turn, tendered defense of this action 
         to the insurance carrier for Schal. The insurance carrier for Schal, 
         in turn, tendered defense of this action to the insurance carrier 
         for Great Lakes, which has accepted such tender. The defense of this 
         action was being handled by attorneys retained by the insurance 
         carrier for Great Lakes. It is expected that any and all damages 
         awarded to the plaintiff against the 77 Partnership will be fully 
         covered by insurance.

                  (f) Michael Schumacher v. Schal Associates, Inc. and The 
         Prime Group, Inc., Case No. 94L08011, filed on June 29, 1994, in the 
         Circuit Court of Cook County, Illinois, County Department, Law 
         Division. The plaintiff alleges that he was an employee of Riggio 
         Caulking, Inc., a subcontractor of Schal, and that he was injured on 
         September 16, 1992 while performing work on or with respect to the 
         77 Project. This matter has been forwarded to the 77 Partnership's 
         insurance carrier, which tendered defense of this action to Schal's 
         insurance carrier. The defense of this action is being handled by 
         attorneys retained by Schal's insurance carrier. The 77 Partnership 
         expects that any and all damages awarded to the plaintiff against 
         the 77 Partnership will be fully covered by insurance.

                  (g) Terrance Sullivan v. The Prime Group, Inc., Schal 
         Associates, Inc. n/k/a Schal Bovis, Inc., 77 West Wacker Limited 
         Partnership, Pitt-Des Moines, Inc. and Tribco Construction Co., Case 
         No. 94L09311, filed on July 27, 1994, in the Circuit Court of Cook 
         County, Illinois, County Department, Law Division. The plaintiff, 
         alleges that he was an employee of Gateway Steel which, in turn, was 
         a subcontractor of Schal, and that, on August 18, 1990, the 
         plaintiff was injured while performing work in connection with the 
         construction of the 77 Project. This matter has been forwarded to 
         the 77 Partnership's insurance carrier, which tendered defense of 
         this action to Schal's insurance carrier. 

<PAGE>

         Schal's insurance carrier subsequently tendered this action to the 
         insurance carrier for Tribco Construction Co. ("Tribco"). The 
         defense of this action is being handled by attorneys retained by 
         Tribco's insurance carrier. It is expected that any and all damages 
         awarded to the plaintiff against the 77 Partnership will be fully 
         covered by insurance.

                  (h) Terrance Sullivan v. The Prime Group, Inc., Schal 
         Associates, Inc. and n/k/a Schal Bovis, Inc., and PDM Structural 
         Group, a division of Pitt-Des Moines, Inc., Case No. 95L00481, filed 
         on January 11, 1995 in the Circuit Court of Cook County, Illinois, 
         County Department, Law Division. The plaintiff alleges that he was 
         an employee of Gateway Erectors, which, in turn, was a subcontractor 
         of Schal, and that, on or about, May 30, 1991, while working at the 
         77 Project, the plaintiff was injured when the plaintiff was 
         required to lift a metal re-enforcing bar at the 77 Project. Defense 
         of this action on behalf of all defendants is being handled by 
         attorneys retained by the insurance carrier for a subcontractor of 
         Schal. It is expected that any and all damages awarded to plaintiff 
         against the 77 Partnership will be fully covered by insurance. This 
         case is in the discovery stage.

                   (i) Roger P. Ward d/b/a Roger Ward & Company v. Bank of 
         Montreal, Kemper Investors Life Insurance Company, 77 West Wacker 
         Limited Partnership, The Prime Group, Inc., The John Buck Company 
         and Keck, Mahin & Cate, Case No. 96CH02007284, filed on July 11, 
         1996, in the Circuit Court of Cook County, Illinois, County 
         Department, Chancery Division. The plaintiff in this action alleges 
         that he provided real estate brokerage services in connection with a 
         sublease between Keck, Mahin & Cate, as sublandlord, and Michael, 
         Best & Friedrich, as subtenant, for space in the 77 Project. 
         Plaintiff claims he is entitled to a commission payment of 
         $117,530.00 for such services, plus interest, fees and costs. The 
         plaintiff seeks foreclosure and other available relief. Motions to 
         Dismiss this action, filed by the defendants, have been granted. The 
         defendants are seeking to recover attorneys' fees and costs. The 
         plaintiff has indicated that he intends to appeal the granting of 
         the Motions to Dismiss. The 77 Partnership and PGI are represented 
         in this matter by Kenneth P. Purcell, Esq. of Winston & Strawn.

                  (j) McQuay Services v. The Prime Group, Inc., Case No. 
         97M1-158877, filed on October 29, 1997, in the Circuit Court of Cook 
         County, Illinois, Municipal Department, First District, Contract. 
         The plaintiff in this action seeks $10,353.01, plus interest, which 
         plaintiff alleges is due for a piece of equipment supplied by 
         plaintiff for the 77 Project. PGI and 77 Partnership claim that the 
         equipment was defective and, therefore, no amount is owed to 
         plaintiff. PGI and 77 Partnership intend to defend this action.

                  (k) Illiana Steel, Inc. Illiana Steel, Inc. ("Illiana"), a 
         tenant in the building owned by Enterprise Center IV, L.P. 
         ("EC4LP"), has not paid all amounts which EC4LP has determined is 
         owed under its lease. Illiana has disputed the calculation of 
         additional rent under the lease and, as a result, has not paid all 
         of the amounts invoiced by EC4LP. In addition, a dispute exists 
         between Illiana and EC4LP over whether EC4LP is responsible for 
         tuckpointing brick on the exterior of the leased premises or for the 
         repairs of certain cranes in the leased premises. The parties 
         currently are negotiating a

<PAGE>

         settlement of the matter.

                  (l) David Van Lul, Kathleen Van Lul and Sean Holloway v. 
         The Prime Group, Inc., Cause No 450049702CT00144, filed on February 
         19, 1997, in the Superior Court of Lake County, Indiana, Civil 
         Division, Room Four. In August, 1995, a trailer on the property 
         owned by EC1LP was blown over by wind, injuring David Van Lul's left 
         arm, wrist and back, injuring Sean Holloway's spine and extremities 
         and causing damage to the car owned by Mr. Holloway. The plaintiffs 
         allege that Prime was negligent and that such negligence caused the 
         incident. The defense in this action is being handled by EC1LP's 
         insurance carrier. It is expected that any damages awarded against 
         PGI in this action will be fully covered by insurance.

                  (m) John Garcia and Norma Garcia v. Brian Moore, The Prime 
         Group, Inc. and Deeann B. Auto Sales, Inc., Cause No. 45D019605CT 
         447, filed on May 6, 1996, in the Lake County Superior Court, Room 
         1, Hammond, Indiana. The plaintiffs in this action allege that, on 
         or about May 16, 1994, John Garcia was involved in an automobile 
         accident with a vehicle driven by Brian Moore, who, at the time, was 
         employed by PGI and worked through PGI's office in Hammond, Indiana. 
         PGI has tendered the defense of this action to its insurance 
         carrier. It is expected that all damages awarded to plaintiffs 
         against PGI in this action will be fully covered by insurance.

                  (n) Carol Riepe, Special Administratrix of the estate of 
         Frank J. Riepe, deceased v. Sterling Steel Services, Ltd., Sterling 
         Steel, Inc., The Prime Group, Inc. and Whiting Corporation, Case No. 
         96L02402, filed on March 1, 1996, in the Circuit Court of Cook 
         County, Illinois County Department, Law Division. The plaintiff in 
         this action seeks damages allegedly suffered by the plaintiff by 
         reason of the death of Frank J. Riepe. Mr. Riepe was an employee of 
         Whiting Corporation ("Whiting"). Whiting was retained by Enterprise 
         Center X, L.P. ("EC10LP") to perform certain work in the space 
         leased by Sterling. While working in the space leased by Sterling, 
         Mr. Riepe fell off scaffolding and died. It is expected that any 
         damages awarded in this action to plaintiff against PGI or EC10LP 
         will be fully covered by insurance. The defense of this action on 
         behalf of PGI and EC10LP is being handled by attorneys retained by 
         EC10LP's insurance carrier.

                   (o) Wojciech Chryczyk and Boguska Chryczyk v. The Prime 
         Group, Inc., Arlington Heights I, L.P., Arlington Heights II, L.P., 
         Arlington Heights III, L.P., International Components Corporation, 
         Lech Construction Company and Belcore Electric Construction Co., 
         Case No. 96-L-009297, filed on August 13, 1996, in the Circuit Court 
         of Cook County, Illinois, County Department, Law Division. This 
         action was brought by the plaintiffs to recover damages suffered on 
         account of an incident which occurred on or about April 28, 1995, in 
         the facility owned by Arlington Heights I, L.P. ("AH1LP"), Arlington 
         Height II, L.P. ("AH2LP") and Arlington Heights III, L.P. ("AH3LP"; 
         collectively the "AH Partnerships"). On or about such date, Wojciech 
         Chryczyk, an electrician working in the facility owned by the AH 
         Partnerships, was severely burned as a result of an electrical 
         explosion which occurred from an electrical panel in the facility. 
         Mr. Chryczyk sustained burns over more than sixty percent of his 
         body and, thus far, has incurred more than $780,000.00 in medical 
         expenses. Mr. Chryczyk was employed by

<PAGE>

         Sigma Electric Company, a subcontractor of Lech Construction 
         Company, which was retained by International Components Corporation 
         ("ICC"), a tenant in the facility, to perform certain tenant 
         build-out work for ICC. This action is in the discovery stage. PGI 
         and the AH Partnerships are represented in this action by attorneys 
         retained by the insurance carrier for PGI and the AH Partnerships. 
         It is expected that any damages awarded to plaintiffs against Prime 
         and the AH Partnership will by fully covered by insurance.

<PAGE>



SCHEDULE 6.18

Environmental Reports

Phase I Environmental Assessment of Carlson Environmental, Inc. dated August 
20, 1997 with respect to 77 West Wacker Drive, Chicago, Illinois

Letter from Carlson Environmental, Inc. dated November 11, 1997 to Jennifer 
Nijman of Winston & Strawn and Juliette Browne of Verrill & Dana concerning 
potential off-site issues with respect to 77 West Wacker Drive, Chicago, 
Illinois

<PAGE>



SCHEDULE 6.22(d)

Engineering Reports

Engineer Evaluation of 77 West Wacker Drive
Chicago, Illinois dated November 10, 1997 by
Wiss, Janney, Elstner Associates, Inc.
120 N. LaSalle Street, Suite 2000
Chicago, Illinois  60602


<PAGE>



SCHEDULE 6.22(l)

Rent Rolls
<PAGE>

                        FIRST AMENDMENT TO CREDIT AGREEMENT
                                          
     This First Amendment to Credit Agreement is made as of the 15th day of
December, 1997 (the "First Amendment Effective Date"), by and among PRIME GROUP
REALTY, L.P., a Delaware limited partnership (the "Borrower"), PRIME GROUP
REALTY TRUST, a Maryland trust (the "Company") and BANKBOSTON, N.A. a national
banking association ("BankBoston"), PRUDENTIAL SECURITIES CREDIT CORPORATION, a
Delaware corporation ("Prudential"), the other lending institutions which are
from time to time listed on Schedule 1, (collectively, with BankBoston and
Prudential, the "Lenders") and BANKBOSTON, N.A., as agent for itself and such
other lending institutions (the "Agent").

     WHEREAS, the parties hereto are parties to the certain Credit Agreement
dated as of November 17, 1997 (the "Existing Agreement"); and

     WHEREAS, the parties have agreed to amend the Existing Agreement to provide
for an increase in the Total Commitment from $225,000,000 to $235,000,000 and in
certain other respects.

     NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended as follows:

     1.   INCREASE IN TOTAL COMMITMENT.  BankBoston hereby increases its
Commitment to the amount shown on the revised Schedule 1.2 attached hereto.  The
Borrower shall execute and deliver to BankBoston a Note (the "Additional Note")
in an amount equal to the difference between BankBoston's Commitment as shown on
said revised Schedule 1.2 and the Note dated November 17, 1997 delivered to
BankBoston at the time it became a party to the Credit Agreement.  The second
sentence of Section 2.3 is amended to read as follows:  "One or more Notes shall
be payable to the order of each Lender and the aggregate principal amount of the
Notes held by each Lender shall be equal to such Lender's Commitment."

     2.   DEFINITIONS: Section 1.1 of the Existing Agreement is amended to
provide that the following terms shall have the following meanings and, to the
extent that any of the following terms are already defined in the Existing
Agreement, such definitions shall be deemed to be amended and restated by the
following definitions:

     Additional Properties.  Real Estate Assets which hereafter become Mortgaged
Properties or Assigned Mortgage Properties pursuant to Section 5.3.

     Applicable Margin.  As of any date of determination:

     (i)  1.20%, if Total Liabilities are less than 30% of Total Adjusted
Assets, or

                                          1
<PAGE>

     (ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total
Adjusted Assets but the condition set forth in CLAUSE (i) of this definition is
not satisfied,

     (iii)     1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.

Any change in the Applicable Margin caused by a change in ratio of Total
Liabilities to Total Adjusted Assets shall become effective on the 46th day
following the end of the fiscal quarter at which such ratio was computed as
shown on a Compliance Certificate which reflects such change in said ratio above
or below the 30% level or the 45% level.  Notwithstanding anything to the
contrary in this definition for so long as the Continental Towers Property is an
Assigned Mortgaged Property, the Applicable Margin will be increased to 1.75%
during the period from December 15, 1997 through February 14, 1998 and will be
thereafter further increased to 2.00%.

     Appraised Value.  The market value of each of the Mortgaged Properties,
determined by the Requisite Lenders based upon the most recent Appraisals
obtained pursuant to Section 5.4(b), Section 7.12 or Section 10.14.  In
determining Appraised Value the Requisite Lenders shall exclude any value
associated with any unimproved land or unoccupied Buildings located on the
applicable Mortgaged Property.

     Assigned Mortgaged Properties.  The Real Estate Assets designated as such
on Schedule 1.1, the Buildings thereon and all other property described in the
Security Deeds relating thereto and any other Real Estate Assets, Buildings
thereon and other property described in the Security Deeds assigned to the Agent
pursuant to Section 5.3(c).

     Assigned Notes.  The Promissory Notes secured by the Security Deeds on the
Assigned Mortgaged Properties acquired by the Borrower and assigned to the
Agent.

     Assigned Note Assignments.  The Assignments of Liens and Documents from
Borrower to the Agent pursuant to which the Assigned Notes and all related loan
documents and Security Documents are assigned to the Agent.

     Borrowing Base Value.  With respect to each Mortgaged Property, an amount
equal to (i) two times the Net Operating Income for the most recently completed
two fiscal quarters, minus the Reserve Amount for such Mortgaged Property,
divided by (ii) a capitalization rate equal to 0.09 for the West Wacker Drive
Property or 0.10 for any other Mortgaged Property, provided however that with
respect to each Assigned Mortgaged Property, the Net Operating Income for
purposes of this definition shall be the lesser of its Net Operating Income
computed pursuant to the definition thereof or the actual amount of interest
paid (but not prepaid) on the applicable Assigned Note during such period.

     Collateral Value.  With respect to each Mortgaged Property an amount equal
to the lesser of is Appraised Value or its Borrowing Base Value, provided that
the Collateral Value of an Assigned Mortgaged Property shall not exceed the
lesser of (i) the Borrower's net acquisition cost for the Assigned Note and
related documents or (ii) the 

                                          2

<PAGE>

outstanding principal amount of the applicable Assigned Note and provided that
effective on March 15, 1998 the Collateral Value of the Continental Towers
Property shall become zero.

     Continental Towers Property.  The Assigned Mortgaged Property known as
Continental Towers located at or near Golf Road, Rolling Meadows, Illinois.

     Mortgaged Properties.  The (a) Real Estate Assets described on Schedule 1.1
hereto and such other Real Estate Assets which may be subsequently conveyed to
the Agent as Additional Properties to secure the Obligations in accordance with
Section 5.3 hereof, excluding from the foregoing any Real Estate Assets which
the Agent may release pursuant to Section 5.5 hereof, as such Real Estate Assets
are more particularly described in the Security Deeds; (b) the Buildings and
Building Service Equipment located thereon and (to the extent assignable) all
Permits relating thereto; and (c) all other property incident to any of same
described in any Security Document or other Loan Document.  The term Mortgaged
Properties also includes the Assigned Mortgaged Properties.

     Real Estate Assets.  Those fixed and tangible properties consisting of
land, buildings and/or other improvements owned by the Borrower, by any
Guarantor, by any of the Related Companies or by any Permitted Joint Venture at
the relevant time of reference thereto, including without limitation, the
Mortgaged Properties, but excluding all leaseholds other than leaseholds under
ground leases having an unexpired term of at least 30 years.  The term Real
Estate Assets also includes the properties subject to the Security Deeds
relating to the Assigned Mortgaged Properties.

     Security Deeds.  The mortgages and deeds of trust from the Mortgagor to the
Agent pursuant to which the Mortgagor shall convey the Mortgaged Properties as
security for the Obligations and the mortgages which secure the Assigned Notes
and which are assigned to the Agent pursuant to the Assigned Note Assignments.

     Security Documents.  The Security Deeds, the Assignments of Leases and
Rents, the Pledge Agreements and the UCC-1 financing statements, the Assigned
Note Assignments and all documents securing the Assigned Notes assigned thereby.

     Total Adjusted Assets.  The sum of (i) the assets classified as cash or
cash equivalents on the consolidated balance sheet of Borrower prepared in
accordance with Generally Accepted Accounting Principles as of the end of the
most recent fiscal quarter (including any restricted cash other than tenant
deposits), plus (ii) the product of (a) EBITDA for the most recent two fiscal
quarters, times (b) two, divided by (c) 0.0975.  EBITDA used to compute Total
Adjusted Assets will be computed on a pro forma basis as though the assets
reflected on the consolidated balance sheet of Borrower prepared in accordance
with Generally Accepted Accounting Principles as of the end of the most recent
fiscal quarter had been owned since the first day of the applicable period of
two fiscal quarters and as though all assets disposed of prior to the date of
such balance sheet had been disposed of prior to the first day of the applicable
period of two fiscal quarters

                                          3
<PAGE>

     3.   AMENDMENT TO SECTION 5.3. Section 5.3 is hereby amended and restated
to read as follows:

     Section 5.3.   Additional Properties.

          (a)  A Real Estate Asset owned by the Borrower or by a Guarantor may
become an additional Mortgaged Property if (i) the Requisite Lenders, in their
sole discretion, approve such Real Estate as being eligible to become a
Mortgaged Property and (ii) all of the conditions set forth in Section 5.4 are
satisfied with respect to such Real Estate Asset.  Borrower shall provide the
Agent with a notice of each proposed Additional Property describing such
property, its estimated value and its estimated net operating income together
with a current rent roll and the most current operating statements available
with respect thereto.  If the Agent determines that additional information is
needed to sufficiently describe such property, it may request a supplemental
notice from the Borrower containing such additional information.  When such
notice is satisfactory to the Agent, it shall send a copy to each Lender and any
Lender which fails to notify the Agent of its objection within five (5) Business
Days after its receipt of such notice shall be deemed to have granted its
approval of the eligibility of such Real Estate Asset to become an Additional
Property.  In the event that the Requisite Lenders grant such approval and all
of the conditions set forth in Section 5.4 are satisfied, the Agent shall notify
the Borrower and within ten (10) days thereafter the Borrower and the Company
shall execute and deliver an Indemnity Agreement and the Mortgagor shall execute
and deliver to the Agent a Security Deed, an Assignment of Rents and Leases and
UCC-1 financing statements, which Security Documents shall be in substantially
the form of the Security Documents executed and delivered herewith with such
changes as the Agent may deem desirable to address the laws of the State where
the Additional Property is located or the factual circumstances of the
Additional Property.  Such Additional Properties shall be deemed to be Mortgaged
Properties upon the recording and filing of such Security Documents and the
Agent's receipt of satisfactory evidence thereof.

          (b) After the Continental Towers Property has been released as an
Assigned Mortgaged Property pursuant to Section 5.5, another Real Estate Asset
may become an Assigned Mortgaged Property if (i) the Requisite Lenders, in their
sole discretion, approve such Real Estate Asset as being eligible to become an
Assigned Mortgaged Property, (ii) the Requisite Lenders, in their sole
discretion, approve the terms and conditions of the proposed Assigned Note and
related documents and (iii) all conditions set forth in Section 5.4 are
satisfied with respect to such Real Estate Asset.  If the Requisite Lenders
grant such approvals, then upon satisfaction of the conditions set forth in
Section 5.4 and execution and delivery of the Assigned Note Assignment, the
original of the Assigned Note endorsed to the Agent and all other documents
required by the Agent in connection therewith, the Agent shall revise Schedule
1.1 to include such Additional Property as an Assigned Mortgaged Property.  At
any time there shall be no more than one Assigned Mortgaged Property hereunder.

                                          4
<PAGE>

          (c)  The Agent and the Lead Lenders shall use their best efforts to
complete their review of the documents submitted with respect to each Additional
Property and notify the Borrower as to whether the conditions in Section 5.4 are
satisfied with ten (10) Business Days after receipt of the last of the items
required pursuant to Section 5.4.

     4.   AMENDMENT TO SECTION 5.5. Section 5.5 is hereby amended and restated
to read as follows:

     Section 5.5.  Release of Mortgaged Properties.  The Borrower may request
that the Agent release any Mortgaged Property from the lien of the Security
Documents and the Agent shall grant such requested release provided that (i) the
requested release is consented to by the Requisite Lenders and (ii) there is
then no continuing Default or Event of Default under this Agreement and the
requested release will not result in any Default or Event of Default under this
Agreement and the Borrower delivers to the Agent a pro-forma Compliance
Certificate reasonably satisfactory to the Agent demonstrating that the
requested release will not result in a violation of any of the covenants in
Section 9.  Each Lender agrees to respond to any such request for Requisite
Lender consent within five (5) business days and agrees to not unreasonably
withhold its consent.  The Borrower may request releases of a portion of a
Mortgaged Property consisting of undeveloped land to be developed by Borrower or
sold provided that in addition to the requirements set forth above, the Borrower
shall also submit such additional information as may be reasonably requested by
the Agent including, without limitation, (i) an updated survey and endorsements
to the Title Policy; (ii) an updated Appraisal of the remaining portion of the
Mortgaged Property and (iii) evidence that the division of the Mortgaged
Property pursuant to the requested release will not result in violation of any
zoning ordinance or other applicable laws and ordinances.  If the Borrower shall
request the release of any Mortgaged Property which is adjacent to any other
Mortgaged Property which is not to be simultaneously released, the Agent may
require the establishment of appropriate easements and maintenance agreements
satisfactory to the Agent relating to any shared utilities, drainage facilities,
access drives or walks, parking areas or other shared facilities.

     5.   AMENDMENT TO SECTION 8.3 (E).  Section 8.3 (e) is hereby amended and
restated to read as follows:

          (e)  Investments made in the ordinary course of the Borrower's
business, in (i) any mortgages the acquisition of which is expressly approved by
the Requisite Lenders, (ii) mortgages and notes receivable having an aggregate
principal amount, exclusive of any investments in mortgages which may have been
so expressly approved by the Requisite Lenders of not more than $25,000,000,
(iii) Permitted Joint Ventures (to the extent permitted by Section 8.4(a)), or
(iv) Interest Rate Contracts;

     6.   AMENDMENT TO SECTION 9.1. Section 9.1 is hereby amended and restated
to read as follows:

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<PAGE>

     Section 9.1.   Collateral Value.  The Borrower will not at any time permit
the Outstanding Principal Amount to exceed the sum of (i) sixty percent (60%) of
the total of the Collateral Values of the Mortgaged Properties other than the
Assigned Mortgaged Properties plus (ii) fifty percent (50%) of the total of the
Collateral Values of the Assigned Mortgaged Properties.

     7.   UPDATED SCHEDULES TO CREDIT AGREEMENT.  The following Schedules to the
Credit Agreement are hereby updated, supplemented or replaced as follows:

          (a)  Schedule 1.1 is replaced by Schedule 1.1 attached hereto.

          (b)  Schedule 1.2 is replaced by Schedule 1.2 attached hereto.

          (c)  Schedule 1.3 is replaced by Schedule 1.3 attached hereto.

          (d)  Schedule 1.4 is replaced by Schedule 1.4 attached hereto.
     
          (e)  Schedule 5.3(b) is hereby deleted.

          (f)  Schedule 6.18 is replaced by Schedule 6.18 attached hereto.

          (g)  Schedule 6.22(d) is replaced by Schedule 6.22(d) attached hereto.

          (h)  Schedule 6.22(l) is supplemented by adding thereto the rent rolls
               each of the Additional Properties which have been added to
               Schedule 1.1 since the Effective Date of the Existing Agreement.

     8.   APPROVAL OF INVESTMENTS IN MORTGAGES.  Pursuant to Section 8.3(e)(ii)
of the Credit Agreement the Requisite Lenders hereby approve the Borrower's
Investments in the notes receivable and mortgages relating to the Continental
Towers Property and relating to the property at 180 North LaSalle Street,
Chicago, Illinois.

     9.   REPRESENTATIONS AND WARRANTIES.  The Borrower and the Company
represent and warrant that each of the representations and warranties contained
in Section 6 is true, correct and complete in all material respects as of the
date hereof to the same extent as though made on such date and that no Default
or Event of Default has occurred and is continuing on the date hereof.  The term
Mortgaged Properties as used in said representations and warranties includes the
Properties listed on Schedule 1.1 attached hereto.

     10.  EFFECTIVENESS OF LOAN DOCUMENTS.  On the First Amendment Effective
Date each Guaranty and each Security Deed shall be amended to reflect the
increase of the Total Commitment and the execution and delivery of the
Additional Notes.  All references in the Existing Agreement to said Loan
Documents shall mean and be in reference to said Loan Documents as so amended. 
The Borrower hereby confirms that each of the Security 

                                          6
<PAGE>

Documents shall continue to secure the payment and performance of all of the
Obligations under the Existing Agreement as amended hereby and the Borrower's
obligations under the Security Documents shall continue to be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment.  Every reference contained in the Loan
Documents to the Credit Agreement shall mean and be a reference to the Existing
Agreement as amended hereby and as the Credit Agreement may be further amended. 
Every reference contained in the Loan Documents to the Notes shall be deemed to
include the Additional Notes.  Except as specifically amended by this Amendment,
the Existing Agreement and each of the Loan Documents shall remain in full force
and effect and are hereby ratified and confirmed.

     11.  MISCELLANEOUS.  This Amendment shall be governed by, interpreted and
construed in accordance with all of the same provisions applicable under the
Existing Agreement including, without limitation, all definitions set forth in
Section 1.1, the rules of interpretation set forth in Section 1.2, the
provisions relating to governing law set forth in Section 20, the provisions
relating to counterparts in Section 22 and the provision relating to
severability in Section 26.

                                          7
<PAGE>

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.

WITNESS:                                BANKBOSTON, N.A.


                                        By:  /s/ Lori Y. Litow
------------------------------             -------------------------------
                                             LORI Y. LITOW
                                             Its:VICE PRESIDENT

                                        PRUDENTIAL SECURITIES CREDIT
                                        CORPORATION

/s/  Fred Robustelli                    By:  /s/ George D. Morgan
------------------------------             -------------------------------
                                             GEORGE D. MORGAN, III
                                             Its:VICE PRESIDENT

                                        PRIME GROUP REALTY TRUST

                                        By:  /s/  W. Michael Karnes
------------------------------             -------------------------------
                                             W. MICHAEL KARNES
                                             Its:EXECUTIVE VICE PRESIDENT

                                        PRIME GROUP REALTY, L.P.
                                        By:  PRIME GROUP REALTY TRUST,
                                                its managing general partner

                                        By:  /s/  W. Michael Karnes
------------------------------             -------------------------------
                                             W. MICHAEL KARNES
                                             Its:EXECUTIVE VICE PRESIDENT

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