<PAGE>

                                                                     Ex. 10.31



                                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

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                               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

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       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

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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
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     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

                                       51
<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;

                                       54
<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);

                                       55
<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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<PAGE>

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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<PAGE>

                  (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