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                                  Exhibit 10.24

                          TAX INDEMNIFICATION AGREEMENT


         TAX INDEMNIFICATION AGREEMENT (the "Agreement"), dated as of November
17, 1997 between ED HADESMAN, an individual ("Hadesman"),EDWARD S. HADESMAN
TRUST DATED MAY 22, 1992, Edward S. Hadesman, Trustee; GRANDVILLE/NORTHWESTERN
MANAGEMENT CORPORATION, an Illinois corporation; CAROLYN B. HADESMAN TRUST DATED
MAY 21, 1992, Carolyn B. Hadesman, Trustee; LISA HADESMAN 1991 TRUST, Edward S.
Hadesman, Trustee; CYNTHIA HADESMAN 1991 TRUST, Edward S. Hadesman, Trustee;
TUCKER B. MAGID, an individual; FRANCES S. SHUBERT, an individual; GRANDVILLE
ROAD PROPERTY, INC., an Illinois corporation; and SKY HARBOR ASSOCIATES, an
Illinois limited partnership (Hadesman and the foregoing persons are "Hadesman
Indemnitees"), and PRIME GROUP REALTY, L.P., a Delaware limited partnership
("UpREIT").

                  WHEREAS, each Hadesman Indemnitee has an interest ("Hadesman
Partnership Interest") in one or more of those certain partnerships set forth on
Exhibit A hereto ("Hadesman Partnerships");

         WHEREAS, each Hadesman Indemnitee has entered into the that certain
Amended and Restated Agreement of Limited Partnership of Prime Group Realty,
L.P. (the "Partnership Agreement"), pursuant to which the Hadesman Partnerships
contributed certain real properties ("Hadesman Properties") or the Hadesman
Indemnitees contributed certain Hadesman Partnership Interests to the UpREIT,
all as set forth on Exhibit A hereto;

         NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                  Section 1. Definitions. For purposes of the Agreement,
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Partnership Agreement. Any term defined by
reference to an agreement, instrument or other document shall have the meaning
so assigned to it whether or not such document is in effect. Unless otherwise
indicated, references in the Agreement to articles, Sections, paragraphs,
clauses, appendices, schedules and exhibits are to the same contained in or
attached to this Agreement.

                  For purposes of this Tax Indemnification Agreement, the
following terms shall apply:

                  (a) The term "After-Tax Basis" shall mean, with respect to any
payment to be received hereunder, the amount of such payment supplemented by a
further amount so that, after deduction of the amount of all federal and
applicable state income taxes that are required to be paid by the recipient
thereof (assuming that the recipient is taxable at the highest marginal federal
and

<PAGE>

applicable state income tax rate then applicable to the recipient and taking
into account any tax benefits to be realized by such recipient from the receipt
of the indemnified amount) with respect to the receipt by it of such amounts,
the net amount received is equal to the payment required to be made.

                  (b) The term "Realistic Possibility of Success" shall mean
such circumstances that tax counsel may properly advise reporting such position
on a tax return in accordance with Section 10.34 of 31 C.F.R.
part 10, governing practice before the Internal Revenue Service.

                  (c) The term "Indemnity Term" shall mean the period beginning
as of the date of the Partnership Agreement and ending December 31, 2007.

                  (d) The term "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final after all allowable
appeals by either party to the action have been exhausted or the time for filing
such appeal has expired, or in any case where judicial review shall at the time
be unavailable because the proposed adjustment involves a decrease in net
operating loss carry forward or a business credit carry forward, a decision,
judgment, decree or other order of an administrative official or agency of
competent jurisdiction, which decision, judgment, decree or other order has
become final (i.e., where all administrative appeals have been exhausted by all
parties thereto), (ii) a closing agreement entered into under Section 7121 of
the Code, or any other final settlement agreement entered into in connection
with an administrative or judicial proceeding and with the consent of UpREIT or
as otherwise permitted in Section 6 or the Partnership Agreement, or (iii) the
expiration of the time for instituting a claim for refund, or if such a claim
was filed, the expiration of the time for instituting suit with respect thereto.

         (e) The term "Indemnity Debt Allocation Method" shall mean the
allocation of the Partnership's excess nonrecourse liabilities in any UpREIT
taxable year for purposes of Regulations Section 1.752-3(a)(3) based upon each
Partner's relative ownership of Common Units as of the beginning of such UpREIT
taxable year; provided, that nothing in this Agreement shall be interpreted as
prohibiting the UpREIT from actually using a different debt allocation than that
based upon the Indemnity Debt Allocation Method.

         Section 2. Tax Representations. Each Hadesman Indemnitee represents,
warrants and covenants as follows:


         (a) immediately prior to the relevant Adjustment Date, the Hadesman
Properties are subject to aggregate Nonrecourse Liabilities, allocable among the
Hadesman Properties, as shown on Exhibit B to be attached hereto;

         (b) each Nonrecourse Liability, described in Section 2(a) of this
Agreement, was incurred by the Hadesman Partnership, which owned the Hadesman
Properties to which such Nonrecourse

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Liability is allocated, either (i) more than two years prior to the date of that
certain Contribution Agreement, dated July 8, 1997, by and between The Prime
Group, Inc. and the parties set forth on Schedule 1 to such agreement (the
"Contribution Agreement"), or (ii) not in anticipation of the transfer of such
Hadesman Property to the UpREIT (within the meaning of Regulations Section
1.707-5(a)(6);

         (c) each Nonrecourse Liability, described in Section 2(a) of this
Agreement, has encumbered such Hadesman Properties throughout the period
beginning on the earlier of the date two years prior to the date of the
Contribution Agreement and the date such liability was incurred by the Hadesman
Partnership, and ending on the Adjustment Date in respect of such Hadesman
Properties;

         (d) each Nonrecourse Liability, described in Section 2(a) of this
Agreement, is nonrecourse for purposes of Regulations Section 1.752-1(a)(2);

         (e) immediately prior to the relevant Adjustment Date, the adjusted tax
basis in each Hadesman Partnership Interest is as shown on Exhibit B hereto, and
each Hadesman Partnership has an adjusted tax basis in each Hadesman Property as
shown on Exhibit B hereto;

         (f) immediately prior to the relevant Adjustment Date, each Hadesman
Indemnitee's share of Partnership Minimum Gain under Regulations Section
1.704-2(g)(1) is as shown on Exhibit B to be attached hereto;

         (g) immediately prior to the relevant Adjustment Date, each Hadesman
Indemnitee is allocated Nonrecourse Liabilities under Code Section 752 and the
Regulations as shown on Exhibit B to be attached hereto;

         (h) immediately prior to the relevant Adjustment Date, each Hadesman
Indemnitee has "passive losses" under Code Section 469(d) and the Regulations
from the activity in respect of the Hadesman Partnerships, as shown on Exhibit B
to be attached hereto;

         (i) immediately prior to the relevant Adjustment Date, each Hadesman
Indemnitee has an amount "at risk" under Code Section 465(a)(2) and the
Regulations from the activity in respect of the Hadesman Partnerships, and
"suspended losses" in respect of such activity under Code Section 465 and the
Regulations, as shown on Exhibit B to be attached hereto;

         (j) the gross fair market value of any Hadesman Property or Hadesman
Interest equals the initial Gross Asset Value of such Property credited to the
relevant Hadesman Indemnitee's Capital Account;

         (k) each Hadesman Indemnitee will report any payment received by it
under this Agreement as a payment made within Section 707(a) of the Code.


                                      -3-
<PAGE>


         (l) each Hadesman Indemnitee has and will have a taxable year that is
the calendar year; and

         (m) each Hadesman Property constitutes nonresidential real property
under Code Section 168.

                  Section 3. Indemnified Income Inclusions. If any Hadesman
Indemnitee shall be required to include in its gross income for federal or
applicable state income tax purposes, with respect to any of its taxable years
ending on or prior to the end of the Indemnity Term, any of the following:

         (a) UpREIT items of income and gain attributable to such Hadesman
Indemnitee's share of the net decrease in Partnership Minimum Gain from Hadesman
Interests or Hadesman Properties (to the extent not duplicative with subsection
(c));

         (b) Gain under Code Section 731 from a deemed distribution under Code
Section 752 from the retirement or refinancing of either the Nonrecourse
Liabilities shown on Exhibit B to be attached hereto, or the debt which
refinances or replaces such Nonrecourse Liabilities (to the extent not
duplicative with subsection (f));

         (c)      gain from the sale or disposition of Hadesman Properties;

         (d) income under Code Section 465(e) from a refinancing or retirement
of either the Nonrecourse Liabilities shown on Exhibit B to be attached hereto,
or the debt which refinances or replaces such Nonrecourse Liabilities (to the
extent not duplicative with subsection (f));

         (e) income under Code Section 704(c) in excess of that allocable to
such Hadesman Indemnitee under the "traditional method" of Regulations Section
1.704-3(b); or

         (f) solely in respect of Sky Harbor Associates, either (i) gain under
Code Section 731 from a deemed distribution under Code Section 752 that
constitutes a recapture of all or a portion of the negative Capital Accounts of
the Sky Harbor Associates partners, as determined as of the date hereof and set
forth on Exhibit B, or (ii) income under Code Section 465(e) that constitutes a
recapture of all or a portion of the aggregate amount described in Code Section
465(e)(2) for the Sky Harbor Associates partners, determined as of the date
hereof and as set forth on Exhibit B,

(such an inclusion being an "Income Inclusion"), UpREIT shall pay to such
Hadesman Indemnitee an indemnity with respect to the additional federal and
applicable state income tax liability from such Income Inclusion in the amount
determined in Section 4 hereof.


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                  Section 4.  Amount of Indemnification.

         (a) In the case of any Income Inclusion that is indemnifiable pursuant
to Section 3 of this Agreement, the relevant Hadesman Indemnitee shall give
UpREIT a written certificate setting forth in reasonable detail (i) the
computation of the amount of such Income Inclusion and (ii) the computation of
such amount or amounts that shall equal, on an After-Tax Basis, the actual net
increase in federal and applicable state income tax (including any interest,
penalties, fines, or other additions thereto) ("Inclusion Taxes") actually
payable by a Hadesman Indemnitee as a result of such Income Inclusion,
determined after (1) offsetting such Income Inclusion by the amount of such
Hadesman Indemnitee's "passive losses" under Code Section 469(d) and the
Regulations from the activity in respect of the Hadesman Partnerships, and (to
the extent not duplicative) "suspended losses" in respect of such activity under
Code Section 465 and the Regulations, each as shown on Exhibit B to be attached
hereto (to the extent such losses would be available under the Code and
Regulations and have not already been taken into account in offsetting other
Income Inclusions indemnifiable under this Agreement), and (2) taking into
account all deductions, credits, or other federal and applicable state income
tax benefits then realized and resulting from (a) such Income Inclusion, (b) the
incurrence of the tax liability indemnified under this Agreement, or (c) the
receipt of any indemnity payment made under this Agreement (computed in
accordance with Sections 3 and 6 of this Agreement).

         (b) Each Hadesman Indemnitee agrees to act in good faith to claim any
tax benefits (including filing claims for refunds and amended tax returns) and
take such other actions as may be reasonable to minimize the net amount of any
indemnity payment due from UpREIT hereunder and to maximize the amount of its
tax savings; provided, however, that such Hadesman Indemnitee shall not be
required to take any action which, in its good faith judgment, would have any
material adverse business consequences to it. If UpREIT shall disagree with such
computation and so requests in a written notice delivered to such Hadesman
Indemnitee within thirty (30) days following UpREIT's receipt of the
certificate, such amount shall be reviewed and determined by an independent
public accounting firm of national recognition selected by Hadesman and
reasonably acceptable to UpREIT. The costs of such verification shall be borne
by UpREIT unless such verification shall result in an adjustment in UpREIT's
favor by an amount of more than 5% of the Inclusion Taxes actually due, in which
case such costs shall be borne by such Hadesman Indemnitee. Each Hadesman
Indemnitee agrees to cooperate with such independent accounting firm and to
supply it with all information reasonably necessary to permit it to accomplish
such review and determination. Such information shall be for the confidential
use of such accountants and shall not be disclosed to UpREIT or any other
person. UpREIT and each Hadesman Indemnitee agree that the sole responsibility
of the independent public accounting firm shall be to verify the amount of a
payment pursuant to this Agreement and that matters of interpretation of this
Agreement are not within the scope of the independent accounting firm's
responsibilities.

         (c) To the extent an Income Inclusion is indemnifiable pursuant to
Section 3(c) of this Agreement, UpREIT will pay each Hadesman Indemnitee as its
indemnity obligation under this

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Agreement a percentage of the amount described in Section 4(a) based upon the
period in which the relevant taxable sale or disposition of Hadesman Properties
occurs, as follows:


<TABLE>
<CAPTION>


                      Period Ending       Percentage of Amount Calculated
                      -------------                in Section 4(a)
                                                   ---------------

<S>                                                     <C>
                    December 31, 1998                   100%

                    December 31, 1999                   90%


                    December 31, 2000                   80%

                    December 31, 2001                   70%

                    December 31, 2002                   60%

                    December 31, 2003                   50%

                    December 31, 2004                   40%

                    December 31, 2005                   30%

                    December 31, 2006                   20%

                    December 31, 2007                   10%

</TABLE>

         (d) To the extent that a Hadesman Indemnitee recognizes an amount in
respect of an Income Inclusion that is indemnifiable pursuant to Section 3(a),
3(b), 3(d), 3(e) or 3(f) of this Agreement for any UpREIT taxable year ending
within the Indemnity Term, UpREIT will pay such Hadesman Indemnitee as its
indemnity obligation under this Agreement 100% of the amount described in
Section 4(a).

         (e) Any payment due to a Hadesman Indemnitee pursuant to this Section 4
shall be paid upon the earlier of the date that (1) the additional federal
income tax in respect of such Income Inclusion is due from the Hadesman
Indemnitee, or (2) the Hadesman Indemnitee has filed a return that reflects or
would reflect such additional federal income tax; provided, however, that (A)
obligations of such Hadesman Indemnitee and UpREIT will first be set off against
each other, and (B) no payment shall be due earlier than completion of the
computation of such indemnity amount as described in Section 4(a).

                  Section 5. Exclusions.


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         (a) Notwithstanding the foregoing, UpREIT shall not have any liability
for indemnification under this Agreement for any Inclusion Taxes to the extent
such Inclusion Taxes are payable by such Hadesman Indemnitee as a result of one
or more of the following:

                  (i) Any Hadesman Indemnitee recognizing gain in respect of the
Capital Contribution of its Hadesman Partnership Interests or Hadesman
Properties under Code section 707(a)(2) (including notwithstanding the agreed
treatment of such Capital Contribution as described in Section 3.05 of the
Contribution Agreement), assuming that each Nonrecourse Liability described in
Section 2(a) of this Agreement is a "qualified liability" within the meaning of
Regulations Section 1.707-5(a)(6), except as a result of a sale or disposition
of such Hadesman Property or an indemnity payment under this Agreement;

                  (ii) Any Hadesman Indemnitee's receipt of cash in respect of
the Capital Contribution of its Hadesman Partnership Interests or Hadesman
Properties (including notwithstanding the agreed treatment of such cash as
described in Section 3.04 of the Contribution Agreement);

                  (iii) Any Hadesman Indemnitee's Interest in the UpREIT not
being respected as a partnership interest to the extent, and as provided in, the
Partnership Agreement;

                  (iv) The allocations of income, gain, loss, deduction and
credit set forth in the Partnership Agreement not being respected under Sections
704(b) and 704(c) of the Code, except as a result of the exercise of discretion
by the General Partner of the UpREIT in respect of (A) an adjustment to the
"Gross Asset Values" of UpREIT assets, as described in clause (b) of the
definition thereof, or (B) the allocation of Nonrecourse Deductions under the
proviso within Section 6.6.A of the Partnership Agreement;

                  (v) The UpREIT not being the owner of the Hadesman Properties
for federal income tax purposes as of the relevant Adjustment Date;

                  (vi) Immediately after the relevant Adjustment Date, any
Hadesman Indemnitee's share of Partnership Minimum Gain under Regulations
Section 1.704-2(g)(1) not being as shown on Exhibit B to be attached hereto;

                  (vii) Immediately after the relevant Adjustment Date, any
Hadesman Indemnitee's amount at risk under Code Section 465 from the activity in
respect of the UpREIT not being as shown on Exhibit B to be attached hereto;

                  (viii) (1) any change in, or amendment to, the Code or any
other federal tax statute, which is effective on or after the relevant
Adjustment Date, (2) any final or temporary regulation, which is enacted or
adopted after the relevant Adjustment Date, or (3) any court decision issued
after the relevant Adjustment Date;

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<PAGE>

                  (ix) The status of any Hadesman Indemnitee or any Hadesman
Partnership for federal income tax purposes;

                  (x) A determination that any Hadesman Indemnitee did not enter
the transactions contemplated by the Partnership Agreement for profit or with a
sufficient business purpose;

                  (xi) A voluntary or involuntary sale, assignment, transfer or
other disposition by any Hadesman Indemnitee of any interest in the UpREIT or
any part thereof;

                  (xii) The failure of any Hadesman Indemnitee to claim or to
follow the proper procedure in claiming in a timely manner any UpREIT item
allocated to such Hadesman Indemnitee by the Partnership;

                  (xiii) The failure of any Hadesman Indemnitee to take timely
action or follow the proper procedures in reporting his distributive share from
the UpREIT or contesting a claim made by the Internal Revenue Service in
accordance with the Partnership Agreement;

                  (xiv) The gross negligence or the willful misconduct of any
Hadesman Indemnitee or any affiliate thereof;

                  (xv) Any breach by any Hadesman Indemnitee of any of its
representations, warranties or covenants in Sections 7.1.A., 8.2, 10.5, 11.3.A.,
11.6.A., D or E., of the Partnership Agreement, Sections 2 or 6 of this
Agreement, or Sections 2.01(b), 11.01, or 12.01 of the Contribution Agreement;

                  (xvi) Any guarantee by any Hadesman Indemnitee or a person
related to any Hadesman Indemnitee of any Nonrecourse Liability encumbering a
Hadesman Property or Hadesman Interest or any other debt of the UpREIT or its
affiliates;

                  (xvii) Any Hadesman Indemnitee recognizing taxable income
under Code Section 704(c), except to the extent such income results from either
a sale or other disposition of a Hadesman Property or income under Code Section
704(c) in excess of that allocable to such Hadesman Indemnitee under the
"traditional method" of Regulations Section 1.704-3(b); or

                  (xviii) Any recapture under Code Section 1245 or 1250 of
depreciation attributable to Hadesman Properties that was allocated to any
Hadesman Indemnitee after the relevant Adjustment Date.

         (b) Further, notwithstanding anything to the contrary within this
Agreement, after taking into account any amounts thereof excluded under Section
5(a), the cumulative Income

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<PAGE>


Inclusions for all Hadesman Indemnitees in respect of Section 3(a), 3(b), 3(c)
and 3(f) that will be indemnifiable by the UpREIT shall not exceed the
following:

                  (i) For any Income Inclusion under Section 3(b), the aggregate
negative Capital Accounts of all Hadesman Indemnitees as set forth on Exhibit B;

                  (ii) For any Income Inclusion under Section 3(a), the
aggregate Minimum Gain of all Hadesman Indemnitees as set forth on Exhibit B;

                  (iii) For any Income Inclusion under Section 3(c), the excess
of the aggregate Gross Asset Value of the Hadesman Properties and Hadesman
Interests contributed to the UpREIT on the relevant Adjustment Dates, over the
aggregate initial adjusted tax bases of such Hadesman Properties and Hadesman
Interests on such relevant Adjustment Dates; and

                  (iv) For any Income Inclusion under Section 3(f), the
aggregate negative Capital Accounts of Sky Harbor Associates partners, as set
forth on Exhibit B.

         (c) Finally, notwithstanding anything to the contrary within this
Agreement, after taking into account any amounts thereof excluded under Sections
5(a) and 5(b), UpREIT shall not be liable for indemnification under this
Agreement in respect of an Income Inclusion under Section 3(a) or (b), to the
extent of that such Income Inclusion arises from a Final Determination that the
amount of debt of UpREIT allocable to such Hadesman Indemnitee for purposes of
Section 752 of the Code and Regulations Section 1.752-3(a)(3) is less than the
amount of debt such Hadesman Indemnitee would be allocated if the UpREIT used
the Indemnity Debt Allocation Method for purposes of Section 752 of the Code and
Regulations Section 1.752-3(a)(3); provided, however, that UpREIT actually
allocates to such Hadesman Indemnity, on the UpREIT's applicable federal and
state income tax returns, debt at least equal to the amount of debt such
Hadesman Indemnitee would be allocated if the UpREIT used the Indemnity Debt
Allocation Method for purposes of Section 752 of the Code and Regulations
Section 1.752-3(a)(3).

                  Section 6.  Contests.

                  (a) Nothing in this Agreement shall be construed to prevent
UpREIT from contesting, as the Tax Matters Partner in accordance with the
Partnership Agreement as part of the unified audit of the Partnership, any claim
involving a UpREIT item that, if successful, would result in an Income Inclusion
(a "Partnership Level Issue").

                  (b) If UpREIT contests a Partnership Level Issue that, if
successful, would result in an Income Inclusion, UpREIT's liability for
indemnification under Section 4 hereof shall, at UpREIT's election, be deferred
until thirty (30) days after a Final Determination of such Hadesman Indemnitee's
federal income tax liability in respect of an Income Inclusion.


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<PAGE>


                  (c) If any audit or proceeding involving an indemnifiable
adjustment is being conducted in a proceeding involving such Hadesman
Indemnitee, which cannot be transferred to the UpREIT as a partnership item (a
"Hadesman Level Issue"), such Hadesman Indemnitee hereby agrees (i) promptly to
notify UpREIT in writing of such adjustment (and the failure of such Hadesman
Indemnitee to so notify UpREIT shall preclude any indemnity hereunder to the
extent UpREIT's right to effect its contest rights hereunder has been precluded
by such failure), and (ii) upon UpREIT's delivery to Hadesman of a written
opinion of nationally recognized tax counsel reasonably acceptable to such
Hadesman Indemnitee ("Tax Counsel") to the effect that there is a Realistic
Possibility of Success upon contest, such Hadesman Indemnitee will contest that
adjustment by filing a protest and administrative appeal and prosecuting the
same in good faith; provided, however, that such Hadesman Indemnitee will not be
obligated to pursue an administrative appeal if such Hadesman Indemnitee instead
pursues relief in Tax Court or a court having refund jurisdiction.

                  (d) If, within 30 days following the failure of such
administrative proceedings with respect to a Hadesman Level Issue, UpREIT
delivers to Hadesman Indemnitee written opinion of Tax Counsel to the effect
that there is a Realistic Possibility of Success if the proposed adjustment is
presented to a court for resolution, then such Hadesman Indemnitee will contest
the proposed adjustment in good faith in the Tax Court or by paying the tax (and
any applicable interest and penalties) and suing for refund in the Court of
Federal Claims or appropriate Federal District Court. If, within 30 days
following a final adverse decision of such court with respect to such Hadesman
Level Issue, UpREIT delivers to such Hadesman Indemnitee a written opinion of
Tax Counsel to the effect that it is more likely than not that such decision
would be reversed on appeal, then such Hadesman Indemnitee will appeal such
decision to the appropriate Federal Court of Appeals. With respect to any of the
above-described proceedings, such Hadesman Indemnitee will keep UpREIT and its
counsel informed as to the progress of such proceedings, give UpREIT and its
counsel the opportunity to review and comment in advance on all written
submissions and filings relevant to indemnifiable issues (after making
appropriate redactions to preserve the confidentiality of the such Hadesman
Indemnitee return as to other issues), and consider in good faith any
suggestions made by UpREIT or its counsel.

                  (e) Such Hadesman Indemnitee shall present any settlement
offer provided to such Hadesman Indemnitee pursuant to a Hadesman Level Issue to
UpREIT. If UpREIT recommends acceptance of a settlement offer of a Hadesman
Level Issue or if the Tax Matters Partner recommends acceptance of a settlement
offer in respect of a Partnership Level Issue, but such Hadesman Indemnitee
declines to accept such offer in writing within 30 days (if such Hadesman
Indemnitee does not respond within 30 days, such lack of response shall be
treated as acceptance of UpREIT's or the Tax Matters Partner's recommendation,
respectively), (1) the obligation of UpREIT to make indemnity payments as the
result of any such contest or proceedings shall not thereafter exceed the
obligation that it would have had if such contest had been settled or proceeding
terminated on the basis recommended by UpREIT or the Tax Matters

                                      -10-
<PAGE>

Partner, as applicable, and (2) in the case of a Hadesman Level Issue, UpREIT
shall have no further liability for costs or other expenses in respect of such
contest.

                  (f) Notwithstanding the foregoing, such Hadesman Indemnitee
will have no obligation to contest any action with respect to a Hadesman Level
Issue (i) unless such items could give rise to a federal income tax liability
(disregarding other items in the assessment and considering effects in future
years) in excess of $25,000, (ii) without UpREIT paying when due, reasonable
third-party costs and out-of-pocket expenses including reasonable legal, witness
and accounting fees and other expenses and, in the case of proceedings before
the Court of Federal Claims or Federal District Court, the amount of tax (and
any applicable interest and penalties) for which refund is claimed, and (iii) to
the extent such Hadesman Indemnitee waives in writing UpREIT's obligation to
indemnify such Hadesman Indemnitee for such items, in which case all third-party
costs and out-of-pocket expenses described in clause (ii) thereafter incurred
and all taxes would be paid by such Hadesman Indemnitee.

                  (g) such Hadesman Indemnitee shall not settle any such
Hadesman Level Issue without UpREIT's consent; provided that such Hadesman
Indemnitee shall not be required to contest any proposed adjustment and may
settle any such proposed adjustment if such Hadesman Indemnitee shall waive its
right to indemnity under this Agreement with respect to such adjustment and any
Income Inclusion that results from such adjustment and, in the case of
proceedings before the Court of Federal Claims or Federal District Court, shall
pay to UpREIT the amount of tax (and any applicable interest and penalties)
previously paid or advanced by UpREIT with respect to such adjustment or the
contest of such adjustment under Section 6(f), plus interest at the rate under
Code Section 6621(a)(2) computed from the time such amounts were paid or
advanced by UpREIT.

                  (h) Within thirty (30) days after a Final Determination of the
liability of such Hadesman Indemnitee in respect of a Hadesman Level Issue,
UpREIT and each Hadesman Indemnitee agree to pay each other, as applicable, the
net amount of (i) the payment owed by the UpREIT to such Hadesman Indemnitee of
any indemnification hereunder, not theretofore paid resulting from the outcome
of such contest, and (ii) in the case of proceedings before the Court of Federal
Claims or Federal District Court, the repayment owed by such Hadesman Indemnitee
to UpREIT of the amount of tax (and any applicable interest and penalties)
previously paid or advanced by UpREIT with respect to such adjustment or the
contest of such adjustment under Section 6(f), together with any interest
received by or credited to such Hadesman Indemnitee that is attributable to such
advance.

                  Section 7. State Tax. For purposes of this Agreement, each
Hadesman Indemnitee will be treated as having an Income Inclusion, realizing any
deductions, credits or other income tax benefits, having the same tax savings
and having the same tax attributes and status for applicable state income tax
purposes at the same time, in the same amount and in the same manner, as such
Hadesman Indemnitee does for federal income tax purposes.

                                      -11-
<PAGE>

         Section 8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.

                  Section 9. Notices. All notices, demands, declarations,
consents, directions, approvals, instructions, requests and other communications
required or permitted by the terms hereof shall be given in the manner described
in Section 14.1 of the Partnership Agreement.

                  Section 10. Successors and Assigns. The terms of this Tax
Indemnification Agreement may not be assigned by any Hadesman Indemnitee
(including, without limitation, by descent or will), without the written consent
of UpREIT.

                  Section 11. Miscellaneous. This Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one Agreement. Any provision of this Agreement which is
prohibited and unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Neither this Agreement
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification is sought.

                  Section 12. Anticipated Hadesman Indemnitee Debt Allocation
Methodology. UpREIT acknowledges and agrees with each Hadesman Indemnitee that
the aggregate nonrecourse indebtedness of UpREIT that is apportioned to the
Hadesman Indemnities collectively under this Agreement and the Partnership
Agreement pursuant to Code Section 752 and Regulations Sections 1.702-3(a)(2)
and (a)(3) shall be apportioned among the various Hadesman Indemnitees using a
method substantially similar to that within the debt allocation model set forth
on Exhibit C hereto.

                  Section 13. Term. The term of this Agreement shall be from the
date hereof until such time as the applicable statute of limitations under the
Code bars any claim by the Internal Revenue Service against a Hadesman
Indemnitee for Inclusion Taxes otherwise indemnifiable under this Agreement.

                  Section 14. Exhibits. Each of the Hadesman Indemnitees agrees
to reasonably cooperate to supply all information required to be set forth in
Exhibit A and Exhibit B referred to herein as promptly as possible, but in no
event later than December 31, 1997.

                  Section 15. Application of Definitions to Section 3(f). If
there is an indemnified income inclusion under Section 3(f), the definition of
the term "Hadesman Indemnitee" shall be

                                      -12-
<PAGE>

expanded to include the partners of Sky
Harbor Associates wherever necessary to fulfill the purposes of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                      -13-
<PAGE>

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

                                             PRIME GROUP REALTY, L.P.

                                             By: PRIME GROUP REALTY TRUST
                                             Its: Managing General Partner

                                             By:/s/ Jeffrey A. Patterson
                                             ---------------------------
                                             Name: Jeffrey A. Patterson
                                             Title: Executive Vice President



                                             EDWARD S. HADESMAN
                                             TRUST DATED MAY 22, 1992


                                             By: /s/ Edward S. Hadesman
                                             --------------------------
                                             Name: Edward S. Hadesman
                                             Title: Trustee


                                             GRANDVILLE/NORTHWESTERN
                                             MANAGEMENT CORPORATION,
                                             an Illinois corporation


                                             By:/s/ Edward S. Hadesman
                                             -------------------------
                                             Name: Edward S. Hadesman
                                             Title: President


                                             CAROLYN B. HADESMAN
                                             TRUST DATED MAY 21, 1992


                                             By:/s/ Carolyn B. Hadesman
                                             --------------------------
                                             Name: Carolyn B. Hadesman
                                             Title: Trustee



                                      -14-
<PAGE>


                                             LISA HADESMAN 1991 TRUST


                                             By: /s/ Edward S. Hadesman
                                             --------------------------
                                             Name: Edward S. Hadesman
                                             Title: Trustee


                                             CYNTHIA HADESMAN 1991 TRUST


                                             By: /s/ Edward S. Hadesman
                                             --------------------------
                                             Name: Edward S. Hadesman
                                             Title: Trustee


                                             TUCKER B. MAGID


                                             /s/ Tucker B. Magid
                                             -------------------


                                             FRANCES S. SHUBERT


                                             /s/ Frances S. Shubert
                                             ----------------------


                                             GRANDVILLE ROAD PROPERTY, INC.,
                                             an Illinois corporation


                                             By:/s/ Edward S. Hadesman
                                             -------------------------
                                             Name: Edward S. Hadesman
                                             Title: President


                                      -15-
<PAGE>


                                             SKY HARBOR ASSOCIATES,
                                             an Illinois limited partnership


                                             By: /s/ Edward S. Hadesman
                                             --------------------------
                                             Name: Edward S. Hadesman
                                             Title: Managing General Partner



                                      -16-