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                                                                    Exhibit 10.6

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 17th day of November, 1997 by and among Prime Group Realty Trust, a
Maryland real estate investment trust ("PGRT"), Prime Group Realty, L.P., a
Delaware limited partnership and the operating partnership for PGRT ("Prime")
(Prime and PGRT are hereinafter sometimes collectively referred to as
"Employer"), and W. Michael Karnes, an individual domiciled in the State of
Illinois ("Executive").

                               W I T N E S S E T H

         A. Employer is engaged primarily in the ownership, management, leasing,
marketing, acquisition, development and construction of office and industrial
real estate facilities throughout the United States.

         B. Employer believes that it would benefit from the application of
Executive's particular and unique skill, experience, and background to the
development of office properties and the management thereof.

         C. Executive wishes to commit to serve Employer in the position set
forth herein on the terms herein provided.

         D. The parties wish by this Agreement to set forth the terms and
conditions of the employment relationship between Employer and Executive.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein set forth, and for other good and valuable consideration,
Employer and Executive hereby agree as follows:

         1. Employment and Duties. During the Employment Term (as defined in
Section 2 hereof), Employer agrees to employ Executive, and Executive agrees to
be employed by Employer, as the Executive Vice President and Chief Financial
Officer of Employer on the terms and conditions provided in this Agreement.
Executive shall conduct, operate, manage and promote the business and business
concept of Employer. The Chief Executive Officer or the President of Employer
may from time to time further define and clarify Executive's duties and services
hereunder as Executive Vice President and Chief Financial Officer of Employer.
Executive agrees to devote Executive's best efforts and substantially all of
Executive's business time, attention, energy and skill to perform Executive's
duties as Executive Vice President and Chief Financial Officer of Employer.

         2. Term. The term of this Agreement shall commence on November 17, 1997
and expire on November 17, 2000 (the "Employment Term").



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         3. Compensation and Related Matters. (a) Base Salary. As compensation
for performing the services required by this Agreement during the Employment
Term, Employer shall pay to Executive an annual salary of no less than Two
Hundred Thousand Dollars ($200,000) ("Base Compensation"), payable in accordance
with the general policies and procedures for payment of salaries to its
executive personnel maintained, from time to time, by Employer (but no less
frequently than monthly), subject to withholding for applicable federal, state,
and local taxes. Increases in Base Compensation, if any, shall be determined by
the Compensation Committee (the "Committee") of the Board of Trustees of PGRT
(the "Board"), based on periodic reviews of Executive's performance conducted on
at least an annual basis. Executive's Base Compensation shall be increased to
Two Hundred Fifteen Thousand Dollars ($215,000) on July 1, 1998 and to Two
Hundred Twenty-Five Thousand Dollars ($225,000) on July 1, 1999.

                  (b) Bonus. In addition to Base Compensation, Executive shall
be entitled to payment of a cash bonus in the amount of $20,000 on January 15,
1998 and the Board and the Committee, in their sole and absolute discretion,
may, but in no event shall be obligated to, authorize the payment of additional
cash bonuses (a "Performance Bonus Distribution") to Executive based upon
achievement of such corporate and individual performance goals and objectives as
may be established or determined by the Board or the Committee from time to
time.

                  (c) Benefits. During the Employment Term and subject to the
limitations and alternative rights set forth in this Section 3(c), Executive and
Executive's eligible dependents shall have the right to participate in the
medical and dental benefit plan to be established by Employer (which may include
contributions by Executive) and in any other retirement, pension, insurance,
health or other benefit plan or program that has been or is hereafter adopted by
Employer (or in which Employer participates), as such plans and programs may be
amended or modified from time to time by Employer, according to the terms of
such plan or program with all the benefits, rights and privileges as are enjoyed
by any other executive officers of Employer. Employer expects to have in place a
life insurance program in which Executive will be entitled to participate. If
the participation of Executive would adversely affect the qualification of a
plan intended to be qualified under Section 401(a) of the Internal Revenue Code
as the same may be amended from time to time (the "Code"), Employer shall have
the right to exclude Executive from that plan in return for Executive's
participation in (i) a nonqualified deferred compensation plan or (ii) an
arrangement providing substantially comparable benefits under a plan that is
either a qualified or nonqualified under the Code at Employer's option.

                  (d) Expenses. Executive shall be reimbursed, subject to
Employer's receipt of invoices or similar records as Employer may reasonably
request in accordance with its policies and procedures, as such policies and
procedures may be amended or modified from time to time by Employer, for all
reasonable and necessary expenses incurred by Executive in the performance of
Executive's duties hereunder, including expenses for business entertainment and
meals (whether in or out of town) and gas for business travel, but excluding
automobile insurance.

                  (e) Vacations. During the Employment Term, Executive shall be
entitled to vacation in accordance with Employer's practices, as such practices
may be amended or modified

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from time to time by Employer, provided that Executive shall be entitled to at
least three (3) weeks paid vacation in each full calendar year. Executive may
accrue unused vacation time if not used in any calendar year or years, however,
the maximum cumulative amount of vacation time that Executive may accrue and
carry over to the next year is two (2) weeks. Executive shall be entitled to a
payment for any vacation time which has accrued but has not been used as of the
date of the termination of Executive's employment with Employer, unless
Executive's employment is terminated pursuant to Section 5(a)(ii) hereof.

         4. Share Options and Grants. PGRT has established a share incentive
plan (the "Share Incentive Plan"). The Share Incentive Plan initially provides,
among other things, for the issuance from time to time to certain officers,
directors and other employees of PGRT and Employer, including Executive, of
share options. Pursuant to the Share Incentive Plan, on the date hereof, PGRT
shall grant to Executive 70,000 share options ("Options") that will have such
terms and conditions as are set forth in the Share Incentive Plan and the Share
Option Agreement to be entered into between PGRT and Executive. Such Options
granted to Executive shall vest immediately (i) upon the death or disability of
Executive or (ii) upon termination of this Agreement and Executive's employment
for any reason other than (A) a termination for cause or by Employer or (B) if
Executive terminates Executives employment for any reason other than pursuant to
Section 5(b)(i) hereof. In the case of a termination for cause or if Executive
terminates Executives employment for any reason other than pursuant to Section
5(b)(i) hereof, all unvested Options shall be forfeited by Executive, but
Executive shall have the right to exercise within the time period provided for
in the Stock Incentive Plan all Options vested prior to such termination. In
addition, on the date hereof, PGRT shall grant to Executive 10,000 shares of
beneficial interests of PGRT.

         5. Termination and Termination Benefits. (a) Termination by Employer.
(i) Without Cause. Employer may terminate this Agreement and Executive's
employment at any time for any reason or for no reason at all upon thirty (30)
days' prior written notice to Executive following notice of termination. In
connection with the termination of Executive's employment pursuant to this
Section 5(a)(i), Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof up to the effective date of such
termination, (B) be paid a pro rata portion of any bonus otherwise payable to
Executive for or with respect to the calendar year in which such termination
occurs in accordance with Section 3(b) hereof up to the effective date of such
termination and, to the extent not previously paid, Executive shall be entitled
to all bonuses payable to Executive in accordance with Section 3(b) hereof for
or with respect to any calendar years prior to the calendar year in which such
termination occurs, (C) be entitled to the benefits set forth in Sections 3(c),
3(d) and 3(e) hereof up to the effective date of such termination and (D)
receive the Termination Compensation specified in Section 5(d) hereof. For
purposes of calculating Executive's pro rata portion of any bonus pursuant to
clause (B) in the previous sentence, if the termination takes place prior to
receipt by Executive of any Performance Bonus Distribution, the Performance
Bonus Distribution, a pro rata (based on the number of days in the year) portion
of which Executive shall be entitled to receive, shall be deemed to be 50% of
Executive's then current annual Base Compensation. For purposes of this
Agreement, the "effective date of termination" shall mean the last day on which
Executive is employed with Employer which may be later than the date of the
delivery of any applicable notice of termination.

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                  (ii) With Cause. Employer may terminate this Agreement with
cause immediately upon written notice to Executive. Employer may elect to
require Executive to continue to perform Executive's duties under this Agreement
for an additional thirty (30) days following notice of termination. In
connection with the termination of Executive's employment pursuant to this
Section 5(a)(ii), Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof up to the effective date of such
termination, and, to the extent not previously paid, Executive shall be entitled
to any bonuses payable to Executive in accordance with Section 3(b) hereof for
or with respect to any calendar years prior to the calendar year in which such
termination occurs and (B) be entitled to the benefits set forth in Sections
3(c), 3(d) and 3(e) hereof up to the effective date of such termination. For
purposes of this Section 5(a)(ii), "cause" shall mean (1) a finding by the Board
that Executive has materially harmed Employer, its business, assets or employees
through an act of dishonesty, material conflict of interest, gross misconduct or
willful malfeasance, (2) Executive's conviction of (or pleading nolo contendere
to) a felony, (3) Executive's failure to perform (which shall not include
inability to perform due to disability) in any material respects Executive's
material duties under this Agreement after written notice specifying the failure
and a reasonable opportunity to cure (it being understood that if Executive's
failure to perform is not of a type requiring a single action to fully cure,
then Executive may commence the cure promptly after such written notice and
thereafter diligently prosecute such cure to completion), (4) the breach by
Executive of any of Executive's material obligations hereunder (other than those
covered by clause (3) above) and the failure of Executive to cure such breach
within thirty (30) days after receipt by Executive of a written notice of
Employer specifying in reasonable detail the nature of the breach, or (5)
Executive's sanction (including restrictions, prohibitions and limitations
agreed to under a consent decree or agreed order) under, or conviction for
violation of, any federal or state securities law, rule or regulation (provided
that in the case of a sanction, such sanction materially impedes or impairs the
ability of Executive to perform Executive's duties and exercise Executive's
responsibilities hereunder in a satisfactory manner).

                  (iii) Disability. If due to illness, physical or mental
disability, or other incapacity, Executive shall fail during any four (4)
consecutive months to perform the duties required by this Agreement, Employer
may, upon thirty (30) days' written notice to Executive, either terminate this
Agreement or suspend Executive's right to any Base Compensation or Performance
Bonus Distributions without terminating this Agreement. In any such event,
Executive shall (A) be paid Executive's Base Compensation in accordance with
Section 3(a) hereof up to the effective date of such termination, (B) be paid a
pro rata portion of any bonus otherwise payable to Executive for or with respect
to the calendar year in which such termination occurs in accordance with Section
3(b) hereof up to the first day of such four (4) month period and, to the extent
not previously paid, Executive shall be entitled to all bonuses payable to
Executive in accordance with Section 3(b) hereof for or with respect to any
calendar years prior to the calendar year in which such termination occurs and
(C) be entitled to the benefits set forth in Sections 3(c) (or the after-tax
cash equivalent), 3(d) and 3(e) hereof up to the effective date of such
termination. For purposes of calculating Executive's pro rata portion of any
bonus pursuant to clause (B) in the previous sentence, if the termination takes
place prior to receipt by Executive of any Performance Bonus Distribution, the
Performance Bonus Distribution, a pro rata portion of which Executive shall be
entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation. In the event Employer elects to suspend

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Executive's right to Base Compensation and Performance Bonus Distributions, at
such time as Executive is able to resume the duties required under this
Agreement, Executive shall be entitled to receive Base Compensation and
Performance Bonus Distributions from the date Executive commences the
performance of such duties following the disability in accordance with the terms
and provisions of this Agreement. This Section 5(a)(iii) shall not limit the
entitlement of Executive, Executive's estate or beneficiaries to any disability
or other benefits available to Executive under any disability insurance or other
benefits plan or policy which is maintained by Employer for Executive's benefit.
For purposes of this Agreement, the "date of disability" shall mean the first
day of the consecutive period during which Executive fails to perform the duties
required by this Agreement due to illness, physical or mental disability or
other incapacity.

                  (b) Termination by Executive. (i) After Change of Control.
Executive may terminate this Agreement upon thirty (30) days' written notice to
Employer following (x) any "change of control" of Employer and a resulting
"diminution event", each as defined below, but in no event later than two years
after the change of control event or (y) any relocation of Executive's office to
a location outside of the Chicago metropolitan area. Executive shall continue to
perform, at the election of Employer, Executive's duties under this Agreement
for an additional thirty (30) days following notice of termination. In such
event, Executive shall (A) be paid Executive's Base Compensation up to the
effective date of such termination, (B) be paid a pro rata portion of any bonus
otherwise payable to Executive for or with respect to the calendar year in which
such termination occurs in accordance with Section 3(b) hereof up to the
effective date of such termination and, to the extent not previously paid,
Executive shall be entitled to all bonuses payable to Executive in accordance
with Section 3(b) hereof for or with respect to any calendar years prior to the
calendar year in which such termination occurs, (C) be entitled to the benefits
set forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective date of
such termination and (D) receive the Termination Compensation specified in
Section 5(d) hereof. For purposes of calculating Executive's pro rata portion of
any bonus pursuant to clause (B) in the previous sentence, if the termination
takes place prior to receipt by Executive of any Performance Bonus Distribution,
the Performance Bonus Distribution, a pro rata portion of which Executive shall
be entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation. For purposes of this Agreement, in the event Employer
defaults in its obligation under Section 9 hereof and, as a consequence thereof,
Executive's employment with Employer (or Employer's successor or assign)
terminates, such termination shall be deemed to be a termination under this
Section 5(b)(i).

         For purposes of this Section 5(b)(i), (A) a "change of control" of
Employer shall be deemed to have occurred if: (1) any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including a "group" as defined in Section
13(d)(3) of the Exchange Act (but excluding The Prime Group, Inc. or any of its
affiliates or any group in which The Prime Group, Inc. or any of its affiliates
has a significant interest and excluding a trustee or other fiduciary holding
securities under an employee benefit plan of Employer), becomes the beneficial
owner of shares of beneficial interests or limited partnership interests, as
applicable, of Employer having at least fifty percent (50%) of the total number
of votes that may be cast for the election of directors of Employer; (2) the
merger or other business combination of Employer, sale of all or substantially
all of Employer's assets or combination of the foregoing transactions (a

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"Transaction"), other than a Transaction immediately following which the
shareholders of Employer immediately prior to the Transaction continue to have a
majority of the voting power in the resulting entity (excluding for this purpose
any shareholder, other than The Prime Group, Inc. and its affiliates, owning
directly or indirectly more than ten percent (10%) of the shares of the other
company involved in the Transaction); or (3) within any twenty-four (24) month
period beginning on or after the date hereof, the persons who were directors of
Employer immediately before the beginning of such period (the "Incumbent
Directors") shall cease to constitute at least a majority of the Board or a
majority of the board of directors of any successor to Employer, provided that,
any director who was not a director as of the date hereof shall be deemed to be
an Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually or by prior operation
of this provision, unless such election, recommendation or approval was the
result of an actual or threatened election contest of the type contemplated by
Regulation 14a-11 promulgated under the Exchange Act or any successor provision;
and (B) a "diminution event" shall mean any material diminution in (1) the
duties and responsibilities of Executive (other than a mere title change) or (2)
the compensation package for Executive.

                  (ii) Without Good Reason. Executive may terminate this
Agreement and Executive's employment at any time for any reason or for no reason
at all upon thirty (30) days' written notice to Employer, during which period
Executive shall continue to perform Executive's duties under this Agreement if
Employer so elects. In connection with the termination of Executive's employment
pursuant to this Section 5(b)(ii), Executive shall (A) be paid Executive's Base
Compensation in accordance with Section 3(a) hereof up to the effective date of
such termination, and, to the extent not previously paid, Executive shall be
entitled to all bonuses payable to Executive in accordance with Section 3(b)
hereof for or with respect to any calendar years prior to the calendar year in
which such termination occurs and (B) be entitled to the benefits set forth in
Sections 3(c), 3(d) and 3(e) hereof up to the effective date of such
termination.

                  (c) Death. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of Executive's death. In
such event, Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof up to the date of such death, (B) be paid a
pro rata portion of any bonus otherwise payable to Executive for or with respect
to the calendar year in which such death occurs in accordance with Section 3(b)
hereof up to the effective date of such death and, to the extent not previously
paid, Executive shall be entitled to all bonuses payable to Executive in
accordance with Section 3(b) hereof for or with respect to any calendar years
prior to the calendar year in which such death occurs and (C) be entitled to the
benefits set forth in Sections 3(c) (or the after-tax cash equivalent), 3(d) and
3(e) hereof up to the date of such death. This Section 5(c) shall not limit the
entitlement of Executive, Executive's estate or beneficiaries under any
insurance or other benefits plan or policy which is maintained by Employer for
Executive's benefit. For purposes of calculating Executive's pro rata portion of
any bonus pursuant to clause (B) in the previous sentence, if the termination
takes place prior to receipt by Executive of any Performance Bonus Distribution,
the Performance Bonus Distribution, a pro rata portion of which Executive shall
be entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation.

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         (d) Termination Compensation. In the event of a termination of this
Agreement pursuant to Section 5(a)(i) or 5(b)(i) hereof, Employer shall pay to
Executive, within thirty (30) days of termination, an amount in one lump sum
("Termination Compensation") equal to the greater of (i) one hundred percent
(100%) of Executive's then current annual Base Compensation and (ii) one hundred
percent (100%) of the remaining aggregate Base Compensation payable to Executive
over the remainder of the Employment Term.

                  6. Covenants of Executive.

                  (a) No Conflicts. Executive represents and warrants that
Executive is not personally subject to any agreement, order or decree which
restricts Executive's acceptance of this Agreement and the performance of
Executive's duties with Employer hereunder.

                  (b) Non-Competition. In return for the performance of the
management duties described in Section 1 hereof, during the Employment Term and,
in the event of the termination of this Agreement pursuant to the provisions of
Section 5(a)(ii) or 5(b)(ii) hereof, for a period of two years thereafter,
Executive shall not, directly or indirectly, in any capacity whatsoever, either
on Executive's own behalf or on behalf of any other person or entity with whom
Executive may be employed or associated, own any interest in, participate or
engage in the day-to-day supervision, management, development, marketing or
operation of any office or industrial real estate facilities or such other
business as Employer may be engaged in during the Employment Term (the
"Business") which is competitive with any of Employer's facilities. For purposes
hereof, a facility will be deemed competitive with one of Employer's facilities
if such facility is located within ten (10) miles of a facility owned, operated
or managed by Employer or within ten (10) miles of a facility which Employer is
developing or with respect to which Employer has signed a letter of intent or
term sheet or binding contract for the acquisition, development or management
thereof dated on or prior to the date of such termination. Furthermore, for a
period of two years after any applicable Section 5 termination event, Executive
shall not, directly or indirectly, solicit, attempt to hire or hire any employee
or client of Employer or solicit or attempt to lease space to or lease space to
any tenant of Employer. Notwithstanding the foregoing, nothing herein shall
prohibit Executive from owning 5% or less of any securities of a competitor
engaged in the same Business if such securities are listed on a nationally
recognized securities exchange or traded over-the-counter on the National
Association of Securities Dealers Automated Quotation System or otherwise.

                  (c) Non-Disclosure. During the Employment Term and for a
period of two years after the expiration or termination of this Agreement for
any reason, Executive shall not disclose or use, except in the pursuit of the
Business for or on behalf of Employer, any Trade Secret (as hereinafter defined)
of Employer, whether such Trade Secret is in Executive's memory or embodied in
writing or other physical form. For purposes of this Section 6(c), "Trade
Secret" means any information which derives independent economic value, actual
or potential, with respect to Employer from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use and is the subject of efforts to
maintain its secrecy that are reasonable under the circumstances, including, but
not limited to, trade

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secrets, customer lists, sales records and other proprietary commercial
information. Said term, however, shall not include general "know-how"
information acquired by Executive prior to or during the course of Executive's
service which could have been obtained by him from public sources without the
expenditure of significant time, effort and expense which does not relate to
Employer.

                  (d) Business Opportunities. During the Employment Term,
Executive agrees to bring to Employer any and all business opportunities which
come to Executive's attention for the acquisition, development, management,
leasing or marketing of real estate for industrial or office use. In the event
that Employer elects not to participate or take advantage of any such business
opportunity, upon termination of Executive's employment with Employer for any
reason, Executive shall be free to pursue such business opportunity, provided
that such business opportunity does not cause any tenant to relocate from a
facility owned and/or operated by Employer, PGRT or any of their respective
subsidiaries.

                  (e) Return of Documents. Upon termination of Executive's
services with Employer, Executive shall return all originals and copies of
books, records, documents, customer lists, sales materials, tapes, keys, credit
cards and other tangible property of Employer within Executive's possession or
under Executive's control.

                  (f) Equitable Relief. In the event of any breach by Executive
of any of the covenants contained in this Section 6, it is specifically
understood and agreed that Employer shall be entitled, in addition to any other
remedy which it may have, to equitable relief by way of injunction, an
accounting or otherwise and to notify any employer or prospective employer of
Executive as to the terms and conditions hereof.

                  (g) Acknowledgment. Executive acknowledges that Executive will
be directly and materially involved as a senior executive in all important
policy and operational decisions of Employer. Executive further acknowledges
that the scope of the foregoing restrictions has been specifically bargained
between Employer and Executive, each being fully informed of all relevant facts.
Accordingly, Executive acknowledges that the foregoing restrictions of Section 6
are fair and reasonable, are minimally necessary to protect Employer, its other
partners and the public from the unfair competition of Executive who, as a
result of Executive's performance of services on behalf of Employer, will have
had unlimited access to the most confidential and important information of
Employer, its business and future plans. Executive furthermore acknowledges that
no unreasonable harm or injury will be suffered by him from enforcement of the
covenants contained herein and that Executive will be able to earn a reasonable
livelihood following termination of Executive's services notwithstanding
enforcement of the covenants contained herein.

        7. Prior Agreements. This Agreement, together with the Stock Incentive
Plan, supersedes and is in lieu of any and all other employment arrangements
between Executive and Employer or its predecessor or any subsidiary and any and
all such employment agreements and arrangements are hereby terminated and deemed
of no further force or effect.

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         8. Assignment. Neither this Agreement nor any rights or duties of
Executive hereunder shall be assignable by Executive and any such purported
assignment by him shall be void. Employer may assign all or any of its rights
hereunder provided that substantially all of the assets of Employer are also
transferred to the same party.

         9. Successor to Employer. Employer will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all the business and/or assets of Employer, as the case may
be, by agreement in form and substance reasonably satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession or assignment had taken place. Any
failure of Employer to obtain such agreement prior to the effectiveness of any
such succession or assignment shall be a material breach of this Agreement
giving Executive the right to terminate this Agreement, in which case Executive
shall be entitled to receive the compensation specified in Section 5(b)(i)
hereof. This Agreement shall inure to the benefit of and be enforceable by
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amounts are still payable to Executive hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee or other designee or, if there be
no such designee, to Executive's estate.

         10. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if personally delivered, sent by
courier or by certified mail, postage or delivery charges prepaid, to the
following addresses:

         (a)      if to Executive, to:

                  W. Michael Karnes
                  C/O Prime Group Realty Trust
                  77 W. Wacker Dr.
                  Suite 3900
                  Chicago, IL. 60601


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         (b)      if to Employer, to:
                  Prime Group Realty Trust
                  Suite 3900
                  77 West Wacker Drive
                  Chicago, IL 60601
                  Attn: Chief Executive Officer

                  With a copy to:

                  Prime Group Realty Trust
                  Suite 3900
                  77 West Wacker Drive
                  Chicago, IL 60601
                  Attn: General Counsel

                  and to:

                  Winston & Strawn
                  35 West Wacker Drive
                  Chicago, IL  60601
                  Attn:  Wayne D. Boberg

Any notice, claim, demand, request or other communication given as provided in
this Section 10, if delivered personally, shall be effective upon delivery; and
if given by courier, shall be effective one (1) business day after deposit with
the courier if next day delivery is guaranteed; and if given by certified mail,
shall be effective three (3) business days after deposit in the mail. Either
party may change the address at which it is to be given notice by giving written
notice to the other party as provided in this Section 10.

         11. Amendment. This Agreement may not be changed, modified or amended
except in writing signed by both parties hereto.

         12. Waiver of Breach. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

         13. Severability. Employer and Executive each expressly agree and
contract that it is not the intention of either party to violate any public
policy, statutory or common law, and that if any covenant, sentence, paragraph,
clause or combination of the same of this Agreement (a "Contractual Provision")
is in violation of the law of any state where applicable, such Contractual
Provision shall be void in the jurisdictions where it is unlawful, and the
remainder of such Contractual Provision, if any, and the remainder of this
Agreement shall remain binding on the parties such that such Contractual
Provision shall be binding only to the extent that such Contractual Provision is
lawful or may be lawfully performed under then applicable laws. In the event
that any part of any Contractual

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Provision of this Agreement is determined by a court of competent jurisdiction
to be overly broad thereby making the Contractual Provision unenforceable, the
parties hereto agree, and it is their desire, that such court shall substitute a
judicially enforceable limitation in its place, and that the Contractual
Provision, as so modified, shall be binding upon the parties as if originally
set forth herein.

         14. Indemnification by Executive. Executive shall indemnify Employer
for any and all damages, costs and expenses resulting from any material harm to
Employer, its business, assets or employees through an act of dishonesty,
material conflict of interest, gross misconduct or willful malfeasance by
Executive. Executive also shall indemnify Employer for any and all damages,
costs and expenses resulting from Executive's acts of omission constituting
reckless disregard of Executive's duties to Employer following notice thereof by
Employer after it becomes aware of such conduct and Executive's failure to so
cure within thirty (30) days.

         15. Governing Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with the laws of the State of Illinois,
exclusive of the conflict of laws provisions of the State of Illinois.

                            [signature page follows]

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<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                              EMPLOYER:

                                              PRIME GROUP REALTY TRUST

                                              By: /s/ Richard S. Curto
                                                  ------------------------------
                                              Title: President
                                                   -----------------------------


                                              PRIME GROUP REALTY, L.P.

                                              By:    Prime Group Realty Trust,
                                                     its General Partner

                                                     By: /s/ Richard S. Curto
                                                        ------------------------
                                                     Title: President
                                                           ---------------------

                                              EXECUTIVE:

                                              /s/ W. Michael Karnes
                                              ----------------------------------
                                              W. Michael Karnes

Document Number:  237155.8
March 28, 1998

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