Document:

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                                                                    EXHIBIT 10.4

                   AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                   -----------------------------------------

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
and entered into this 1/st/ day of September, 2000 by and among Prime Group
Realty Trust, a Maryland real estate investment trust ("PGRT"), Prime Group
Realty, L.P., a Delaware limited partnership and the operating partnership for
PGRT ("Prime") (Prime and PGRT are hereinafter sometimes collectively referred
to as "Employer"), and Louis Conforti, an individual residing in the State of
Illinois ("Executive").

                              W I T N E S S E T H
                              -------------------

     A.   Employer and Executive are parties to that certain Employment
Agreement (the "Prior Agreement") dated as of May 6, 1998 pursuant to which
Executive became employed by Employer as Senior Vice President and Director of
Capital Markets.

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

     C.   Employer believes that it would benefit from the application of
Executive's particular and unique skill, experience, and background to the
management and operation of Employer.

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

     E.   The parties wish to amend and restate the Prior Agreement on the terms
and conditions hereinafter set forth.

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

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

     2.   Term. The term of this Agreement shall commence on the date hereof and
          ----
expire on June 1, 2001 (the "Initial Term"), provided, however, that this
Agreement shall automatically
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be renewed for successive one year terms following the Initial Term (each a
"Renewal Term" and together with the Initial Term, the "Employment Term"),
unless at least six (6) months prior to, in the case of a non-renewal by
Employer, or at least thirty (30) days prior to, in the case of a non-renewal by
Executive, the end of the Initial Term or any Renewal Term, as applicable,
either party shall give the other written notice of its intention to terminate
this Agreement.

     3.   Compensation and Related Matters. (a) Base Salary. As compensation for
          --------------------------------
performing the services required by this Agreement during the Employment Term,
Employer shall pay to Executive an annual salary of no less than the annual base
salary currently paid to Executive as of the date hereof ("Base Compensation"),
payable in accordance with the general policies and procedures for payment of
salaries to its executive personnel maintained, from time to time, by Employer
(but no less frequently than monthly), subject to withholding for applicable
federal, state, and local taxes. Increases in Base Compensation, if any, shall
be determined by the Compensation Committee (the "Committee") of the Board of
Trustees of PGRT (the "Board"), based on periodic reviews of Executive's
performance conducted on at least an annual basis.

          (b)  Bonus. In addition to Base Compensation, Employer, in Employer's
sole and absolute discretion, may, but in no event shall be obligated to,
authorize the payment of additional annual cash bonuses for each calendar year
of up to one hundred and fifty percent (150%) of Base Compensation (a
"Performance Bonus Distribution") payable in cash, common shares in PGRT and/or
options for PGRT shares to Executive based upon achievement of such corporate
and individual performance goals and objectives as may be established or
determined by Employer from time to time. Any Performance Bonus Distributions
shall be paid within sixty (60) days after the conclusion of the applicable
calendar year, provided that with respect to any Performance Bonus Distribution
for the 2001 calendar year, if this Agreement expires and is not renewed by
Employer and Executive, Executive shall be paid a pro-rata portion of any
Performance Bonus Distribution otherwise payable to Executive for or with
respect to such calendar year within sixty (60) days after the expiration of
this Agreement.

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

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

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

     4.   Share Options and Grants. PGRT has established a share incentive plan
          ------------------------
(the "Share Incentive Plan"). The Share Incentive Plan initially provides, among
other things, for the issuance from time to time to certain officers, directors
and other employees of PGRT and Employer, including Executive, of share options.
Pursuant to the Share Incentive Plan, on the date of the Prior Agreement, PGRT
granted to Executive 50,000 nonqualified stock options. On the date of the Prior
Agreement, PGRT also granted to Executive without further consideration 12,500
shares of beneficial interests of PGRT, which shares are restricted stock, are
not registered and are not subject to any registration rights obligating PGRT or
Prime to register such shares. Subsequent to the date of the Prior Agreement,
additional share options and restricted shares have been granted to Executive.

     5.   Termination and Termination Benefits. (a) Termination by Employer. (i)
          ------------------------------------
Without Cause. Employer may terminate this Agreement and Executive's employment
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at any time (other than for Cause, as that term is defined in Section 5(a)(ii)
hereof) upon thirty (30) days' prior written notice to Executive. In connection
with the termination of Executive's employment pursuant to this Section 5(a)(i),
(A) Employer shall pay to Executive Executive's Base Compensation in accordance
with Section 3(a) hereof up to the effective date of such termination, (B)
Employer shall pay to Executive a pro rata portion of any Performance Bonus
Distribution otherwise payable to Executive for or with respect to the calendar
year in which such termination occurs in accordance with Section 3(b) hereof up
to the effective date of such termination and, to the extent not previously
paid, Employer shall pay to Executive all Performance Bonus Distributions
payable to Executive in accordance with Section 3(b) hereof for or with respect
to any calendar years prior to the calendar year in which such termination
occurs, (C) Employer shall provide to Executive the benefits set forth in
Sections 3(c), 3(d) and 3(e) hereof up to the effective date of such termination
and (D) Employer shall pay to Executive the Termination Compensation specified
in Section 5(d) hereof. For purposes of calculating Executive's pro rata portion
of any Performance Bonus Distribution pursuant to clause (B) in the previous
sentence, if the termination takes place prior to receipt by Executive of any

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Performance Bonus Distribution, the Performance Bonus Distribution, a pro rata
(based on the number of days in the year) portion of which Executive shall be
entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation. For purposes of this Agreement, the "effective date of
termination" shall mean the last day on which Executive is employed with
Employer which may be later than the date of the delivery of any applicable
notice of termination.

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

               (iii) Disability. If due to illness, physical or mental
                     ----------
disability or other incapacity, Executive shall fail during any four (4)
consecutive months to perform the duties required by this Agreement, Employer
may, upon thirty (30) days' written notice to Executive, terminate this
Agreement and Executive's employment. In the event of any such termination, (A)
Employer shall pay to Executive Executive's Base Compensation in accordance with
Section 3(a) hereof up to the effective date of such termination, (B) Employer
shall pay to Executive a pro rata portion of any Performance Bonus Distribution
otherwise payable to Executive for or with respect to the calendar year in which
such termination occurs in accordance with Section 3(b) hereof up to the first
day of such four (4) month period and, to the extent not previously paid,
Executive shall be entitled to all Performance Bonus Distributions payable to
Executive in

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accordance with Section 3(b) hereof for or with respect to any calendar years
prior to the calendar year in which such termination occurs, (C) Employer shall
provide to Executive the benefits set forth in Sections 3(c) (or the after-tax
cash equivalent), 3(d) and 3(e) hereof up to the effective date of such
termination and (D) Employer shall pay to Executive the Termination Compensation
specified in Section 5(d) hereof, but only if and to the extent that Employer
actually obtained disability insurance coverage for Executive at commercially
reasonable rates in Employer's discretion which reimburses Employer for such
amounts. For purposes of calculating Executive's pro rata portion of any
Performance Bonus Distribution pursuant to clause (B) in the previous sentence,
if the termination takes place prior to receipt by Executive of any Performance
Bonus Distribution, the Performance Bonus Distribution, a pro rata portion of
which Executive shall be entitled to receive, shall be deemed to be 50% of
Executive's then current annual Base Compensation. This Section 5(a)(iii) shall
not limit the entitlement of Executive, Executive's estate or beneficiaries to
any disability or other benefits available to Executive under any disability
insurance or other benefits plan or policy which is maintained by Employer for
Executive's benefit (as opposed to Employer's benefit). For purposes of this
Agreement, the "date of disability" shall mean the first day of the consecutive
period during which Executive fails to perform the duties required by this
Agreement due to illness, physical or mental disability or other incapacity.

          (b)  Termination by Executive. (i) After Change of Control. Executive
                                             -----------------------
may terminate this Agreement upon thirty (30) days' written notice to Employer
following any "change of control" (as defined below) of Employer and (i) a
resulting "diminution event" (as defined below) or (ii) a resulting relocation
of Executive's office to a location more than twenty-five (25) miles from 77
West Wacker Drive, Chicago, Illinois, but in no event later than two years after
the change of control event. Executive shall continue to perform, at the
election of Employer, Executive's duties under this Agreement for an additional
thirty (30) days following notice of termination. In the event of such
termination, (A) Employer shall pay to Executive Executive's Base Compensation
up to the effective date of such termination, (B) Employer shall pay to
Executive a pro rata portion of any Performance Bonus Distribution otherwise
payable to Executive for or with respect to the calendar year in which such
termination occurs in accordance with Section 3(b) hereof up to the effective
date of such termination and, to the extent not previously paid, Executive shall
be entitled to all Performance Bonus Distributions payable to Executive in
accordance with Section 3(b) hereof for or with respect to any calendar years
prior to the calendar year in which such termination occurs, (C) Employer shall
provide to Executive the benefits set forth in Sections 3(c), 3(d) and 3(e)
hereof up to the effective date of such termination and (D) Employer shall pay
to Executive the Termination Compensation specified in Section 5(d) hereof. For
purposes of calculating Executive's pro rata portion of any Performance Bonus
Distribution pursuant to clause (B) in the previous sentence, if the termination
takes place prior to receipt by Executive of any Performance Bonus Distribution,
the Performance Bonus Distribution, a pro rata portion of which Executive shall
be entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation. For purposes of this Agreement, in the event Employer
defaults in its obligation under Section 9 hereof and, as a consequence thereof,
Executive's employment with Employer (or Employer's successor or assign)
terminates, such termination shall be deemed to be a termination under this
Section 5(b)(i).

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          For purposes of this Section 5(b)(i), (A) a "change of control" of
Employer shall be deemed to have occurred if: (1) any person (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including a "group" as defined in Section
13(d)(3) of the Exchange Act (but excluding The Prime Group, Inc. or any of its
affiliates or any group in which The Prime Group, Inc. or any of its affiliates
has a significant interest and excluding a trustee or other fiduciary holding
securities under an employee benefit plan of Employer), becomes the beneficial
owner of shares of beneficial interests or limited partnership interests, as
applicable, of Employer having at least fifty percent (50%) of the total number
of votes that may be cast for the election of trustees of Employer; (2) the
merger or other business combination of Employer, sale of all or substantially
all of Employer's assets or combination of the foregoing transactions (a
"Transaction"), other than a Transaction immediately following which the
shareholders of Employer immediately prior to the Transaction continue to have a
majority of the voting power in the resulting entity (excluding for this purpose
any shareholder, other than The Prime Group, Inc. and its affiliates, owning
directly or indirectly more than ten percent (10%) of the shares of the other
company involved in the Transaction); or (3) within any twenty-four (24) month
period beginning on or after the date hereof, the persons who were trustees of
Employer immediately before the beginning of such period (the "Incumbent
Directors") shall cease to constitute at least a majority of the Board or a
majority of the board of trustees of any successor to Employer, provided that,
any trustee who was not a trustee as of the date hereof shall be deemed to be an
Incumbent Director if such trustee was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds of the trustees
who then qualified as Incumbent Directors either actually or by prior operation
of this provision, unless such election, recommendation or approval was the
result of an actual or threatened election contest of the type contemplated by
Regulation 14a-11 promulgated under the Exchange Act or any successor provision;
and (B) a "diminution event" shall mean any material diminution in (1) the
duties and responsibilities of Executive (including any title below
Co-President) or (2) the compensation package for Executive.

          In the event that any payment, benefit or distribution by or on behalf
of Employer to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5(b)(i)) (the "Payments") is determined to be an "excess
parachute payment" pursuant to Code Section 280G or any successor or substitute
provision of the Code, with the effect that Executive is liable for the payment
of the excise tax described in Code Section 4999 or any successor or substitute
provision of the Code (the "Excise Tax"), then Employer shall pay to Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax on the
Gross-Up Payment, shall be equal to the Total Payments. All determinations
required to be made under this paragraph, and the assumptions to be utilized in
arriving at such determination, shall be made by the certified public accounting
firm used for auditing purposes by Employer immediately prior to Executive's
employment termination (the "Accounting Firm"), which shall provide detailed
supporting calculations both to Employer and Executive. Employer shall pay all
fees and expenses of the Accounting Firm. Any determination by the Accounting
Firm shall be binding upon Employer and Executive, except as provided in the
following sentence. As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Internal Revenue Service

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("IRS") or other agency will claim that a greater or lesser Excise Tax is due.
In the event that the Excise Tax is finally determined to be less than the
amount taken into account hereunder in calculating the Gross-Up Payment,
Executive shall repay to Employer, at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by Executive to
the extent that such repayment results in a reduction in Excise Tax and/or a
federal, state or local income or employment tax deduction). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
in calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), Employer shall make an additional Gross-Up Payment in respect of such
excess (plus any interest, penalties or additions payable by Executive with
respect to such excess) at the time that the amount of such excess is finally
determined. Executive and Employer shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the Total
Payments. Employer shall pay all fees and expenses of Executive relating to a
claim by the IRS or other agency.

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

               (iii) For Good Reason. Executive may terminate this Agreement for
                     ---------------
Good Reason upon thirty (30) days' written notice to Employer. In connection
with the termination of Executive's employment pursuant to this Section
5(b)(iii), (A) Employer shall pay to Executive Executive's Base Compensation in
accordance with Section 3(a) hereof up to the effective date of such
termination, (B) Employer shall pay to Executive a pro rata portion of any
Performance Bonus Distribution otherwise payable to Executive for or with
respect to the calendar year in which such termination occurs in accordance with
Section 3(b) hereof up to the effective date of such termination and, to the
extent not previously paid, Employer shall pay to Executive all Performance
Bonus Distributions payable to Executive in accordance with Section 3(b) hereof
for or with respect to any calendar years prior to the calendar year in which
such termination occurs, (C) Employer shall provide to Executive the benefits
set forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective date of
such termination and (D) Employer shall pay to Executive the Termination
Compensation specified in Section 5(d) hereof. For purposes of calculating
Executive's pro rata portion of any Performance Bonus Distribution pursuant to
clause (B) in the previous sentence, if the termination takes place prior to
receipt by Executive of any Performance Bonus Distribution, the Performance
Bonus Distribution, a pro rata (based on the number of days in the year) portion
of which Executive shall be entitled to receive, shall be

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deemed to be 50% of Executive's then current annual Base Compensation. For
purposes of this Section 5(b)(iii), "Good Reason" shall mean (1) any material
breach by Employer of the terms of this Agreement which is not cured within
thirty (30) days after receipt by Employer of a written notice from Executive
specifying in reasonable detail the nature of the breach, or (2) any relocation
of Executive's office to a location more than twenty-five (25) miles from 77
West Wacker Drive, Chicago, Illinois.

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

          (d)  Termination Compensation. In the event of a termination of this
Agreement pursuant to Section 5(a)(i) (by Employer without cause), 5(a)(iii)
(disability), 5(b)(i) (change of control), 5(b)(iii) (by Executive for good
reason) or 5(c) (death) hereof, Employer shall pay to Executive, within thirty
(30) days of termination, an amount in one lump sum ("Termination Compensation")
equal to:

               (i)   in the case of a termination pursuant to Section 5(a)(i)
     (by Employer without cause) except as specified in clause 5(d)(ii) below,
     5(a)(iii) (disability), 5(b)(iii) (by Executive for good reason) or 5(c)
     (death) hereof, the greater of (A) the sum of (1) the Executive's then
     current annual Base Compensation, plus (2) the average annual Performance
     Bonus Distribution paid or payable to Executive for or with respect to the
     full two calendar years immediately preceding the calendar year in which
     the date of termination occurs and (B) the sum of (1) the aggregate Base
     Compensation payable to Executive over the remainder of the Employment Term
     and (2) the aggregate Performance Bonus Distributions payable to Executive
     over the remainder of the Employment Term, based on the average annual
     Performance Bonus Distributions paid or payable to Executive for or with
     respect to the full two calendar years immediately preceding the calendar
     year in which the date of termination occurs, but in the case of

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     Sections 5(a)(iii) (disability) and 5(c) (death), subject to the
     availability of insurance coverage as provided in such Sections; or

               (ii)  in the case of a termination pursuant to Section 5(a)(i)
     (by Employer without cause) within two years after a change of control or
     Section 5(b)(i) (change of control) hereof, two times the sum of (A) the
     Executive's then current annual Base Compensation, plus (B) the average
     annual Performance Bonus Distribution paid or payable to Executive for or
     with respect to the two full calendar years immediately preceding the
     calendar year in which the date of termination occurs.

For purposes of calculating Executive's Termination Compensation pursuant to
this Section 5(d), the value of any Performance Bonus Distribution component of
the Termination Compensation calculation which is comprised of shares or share
options shall be determined based upon the cash equivalent amount for such share
and/or share options as approved by the Board or the  Committee, as applicable,
at the time of the grant, and for the purposes of Termination Compensation,
shall be paid entirely in cash.

          6.   Covenants of Executive.
               ----------------------

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

          (b)  Non-Competition. During the Employment Term and, in the event of
the termination of this Agreement pursuant to the provisions of Section 5(a)(ii)
(by Employer with cause) or 5(b)(ii) (by Executive without good reason) hereof,
for a period of two years thereafter, Executive shall not, directly or
indirectly, in any capacity whatsoever, either on Executive's own behalf or on
behalf of any other person or entity with whom Executive may be employed or
associated, own any interest in, participate or engage in the day-to-day
supervision, management, development, marketing or operation of any office or
industrial real estate facilities or such other business as Employer may be
engaged in during the Employment Term (the "Business") which is competitive with
any of Employer's facilities. For purposes hereof, a facility will be deemed
competitive with one of Employer's facilities if such facility is located within
ten (10) miles of a facility owned, operated or managed by Employer or within
ten (10) miles of a facility which Employer is developing or with respect to
which Employer has signed a letter of intent or term sheet or binding contract
for the acquisition, development or management thereof dated on or prior to the
date of such termination. Furthermore, for a period of two years after any
applicable Section 5 termination event, Executive shall not, directly or
indirectly, solicit, attempt to hire or hire any employee or client of Employer
or solicit or attempt to lease space to or lease space to any tenant of
Employer. Notwithstanding the foregoing, nothing herein shall prohibit Executive
from owning 5% or less of any securities of a competitor engaged in the same
Business if such securities are listed on a nationally recognized securities
exchange or traded over-the-counter on the National Association of Securities
Dealers Automated Quotation System or otherwise.

          (c)  Non-Disclosure. During the Employment Term and for a period of
two years after the expiration or termination of this Agreement for any reason,
Executive shall not disclose or use, except in the pursuit of the Business for
or on behalf of Employer, any Trade

                                      -9-
<PAGE>

Secret (as hereinafter defined) of Employer, whether such Trade Secret is in
Executive's memory or embodied in writing or other physical form. For purposes
of this Section 6(c), "Trade Secret" means any information which derives
independent economic value, actual or potential, with respect to Employer from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or use
and is the subject of efforts to maintain its secrecy that are reasonable under
the circumstances, including, but not limited to, trade secrets, customer lists,
sales records and other proprietary commercial information. Said term, however,
shall not include general "know-how" information acquired by Executive prior to
or during the course of Executive's service which could have been obtained by
him from public sources without the expenditure of significant time, effort and
expense which does not relate to Employer.

          (d)  Business Opportunities. During the Employment Term, Executive
agrees to bring to Employer any and all business opportunities which come to
Executive's attention for the acquisition, development, management, leasing or
marketing of real estate for industrial or office use. In the event that
Employer elects not to participate or take advantage of any such business
opportunity, Executive shall be free to pursue such business opportunity,
provided that such business opportunity does not cause any tenant to relocate
from a facility owned and/or operated by Employer, PGRT or any of their
respective subsidiaries and participation by Executive in such business
opportunity would not violate Executive's non-competition obligations set forth
in Section 6(b) hereof.

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

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

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

                                      -10-
<PAGE>

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

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

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

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

     (a)  if to Executive, to:

          Louis Conforti
          4432 North Winchester Avenue
          Apt. 2 North
          Chicago, IL 60640

          With a copy to:
          --------------

          Baer Marks & Upham LLP
          805 Third Avenue
          New York, New York 10022
          Attn: Donald S. Snider

     (b)  if to Employer, to:

          Prime Group Realty Trust
          Suite 3900

                                      -11-
<PAGE>

          77 West Wacker Drive
          Chicago, IL 60601
          Attn: Chief Executive Officer

          With a copy to:
          --------------

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

          and to:
          ------

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

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

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

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

     13.  Severability. Employer and Executive each expressly agree and contract
          ------------
that it is not the intention of either party to violate any public policy,
statutory or common law, and that if any covenant, sentence, paragraph, clause
or combination of the same of this Agreement (a "Contractual Provision") is in
violation of the law of any state where applicable, such Contractual Provision
shall be void in the jurisdictions where it is unlawful, and the remainder of
such Contractual Provision, if any, and the remainder of this Agreement shall
remain binding on the parties such that such Contractual Provision shall be
binding only to the extent that such Contractual Provision is lawful or may be
lawfully performed under then applicable laws. In the event that any part of any
Contractual Provision of this Agreement is determined by a court of competent
jurisdiction to be overly broad thereby making the Contractual Provision
unenforceable, the parties hereto agree, and it is their desire, that such court
shall substitute a judicially enforceable limitation in its place, and that the
Contractual Provision, as so modified, shall be binding upon the parties as if
originally set forth herein.

                                      -12-
<PAGE>

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

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

                           [signature page follows]

                                      -13-
<PAGE>

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

                                        EMPLOYER:

                                        PRIME GROUP REALTY TRUST

                                        By: /s/ Richard S. Curto
                                            ------------------------------------
                                            Richard S. Curto, Chief Executive
                                            Officer

                                        PRIME GROUP REALTY, L.P.

                                        By: Prime Group Realty Trust,
                                            its General Partner

                                        By: /s/ Richard S. Curto
                                            ------------------------------------
                                            Richard S. Curto, Chief Executive
                                            Officer

                                        EXECUTIVE:

                                        /s/ Louis Conforti
                                        ----------------------------------------
                                        Louis Conforti<PAGE>

                                 Exhibit 10.5

                           CONSENT AND AGREEMENT OF
             PRIME GROUP REALTY TRUST AND PRIME GROUP REALTY, L.P.
             -----------------------------------------------------

          This CONSENT AND AGREEMENT (this "Consent and Agreement") is executed
and given this 26th day of September, 2000, by Prime Group Realty Trust, a
Maryland real estate investment trust ("REIT"), and Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), in favor of Vornado PS,
L.L.C., a Delaware limited liability company, in its capacity as Lender pursuant
to the Loan Agreement referred to below (the "Lender") and, as set forth below,
agreed to by the Lender and Primestone Investment Partners L.P., a Delaware
limited partnership (the "Borrower"). Unless otherwise defined herein,
capitalized terms used herein have the definitions set forth for such terms in
the Loan Agreement (as hereinafter defined).

                         W  I  T  N  E  S  S  E  T  H:
                         -----------------------------

          WHEREAS, the Borrower, Lender, the Members of the Guarantor Group
party thereto, and Michael W. Reschke are parties to that certain Loan Agreement
of even date herewith (as amended, supplemented or otherwise modified from time
to time, the "Loan Agreement") pursuant to which the Lender has agreed to
provide the Loan referred to therein;

          WHEREAS, the Borrower, the REIT, the Partnership , The Prime Group,
Inc., an Illinois corporation, and certain other investors named therein have
entered into the Registration Rights Agreement, dated as of November 17, 1997
(as the same may from time to time be amended, supplemented, restated or
modified, the "Registration Rights Agreement");

          WHEREAS, the Borrower is party to the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of November 17, 1997, as
amended (as so amended, the "Partnership Agreement"), among the REIT, The Nardi
Group, L.L.C., and the Limited Partners (as defined therein); and

          WHEREAS, as security for the Borrower's obligations under the Loan
Agreement, the Borrower has, pursuant to that certain Pledge and Security
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Security Agreement"), granted the Lender a perfected
security interest in, among other things, the Borrower's rights, title and
interest in the Pledged Units (as defined below), together with all common
shares issued by the REIT in exchange for the Pledged Units (the "Pledged
Shares"), the Registration Rights Agreement and the Partnership
<PAGE>

Agreement (each as amended, supplemented or otherwise modified from time to
time, the "Assigned Agreements");

          NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the REIT and the Partnership hereby consents and agrees as
follows:

          1.  (a) Each of the REIT and the Partnership hereby consents to (a)
the assignment by the Borrower of its rights, title and interest in and to the
Pledged Shares and the Assigned Agreements to the Lender pursuant to the
Security Agreement and (b) subject to the terms of the Assigned Agreements to
(i) the foreclosure upon, or exercise of any other rights or remedies the Lender
may have in respect of, the Pledged Collateral (as defined in the Security
Agreement), whether pursuant to the Security Agreement, at law, in equity, or
otherwise and (ii) subject to compliance with the terms of the REIT's Articles
of Amendment and Restatement, as amended (as so amended, the "Declaration of
Trust") and applicable law, the sale or other disposition by Lender of any or
all of the Pledged Shares. In furtherance of the foregoing, each of the REIT and
the Partnership hereby consents to the transfer to the Lender or any transferee
of the Lender of 7,944,893 partnership units of the Partnership (the "Prime OP
Units") that have been pledged to Lender pursuant to the Security Agreement
(together with all Prime OP Units or other securities distributed in respect of
such Prime OP Units and any Prime OP Units or other securities into which such
Prime OP Units may be converted or for which such Prime OP Units may be
exchanged, the "Pledged Units") resulting from (x) the exercise by Lender or any
transferee lender of its remedies under the Credit Documents, including by
foreclosure or transfer in lieu thereof or (y) the purchase of Pledged Units in
a foreclosure sale of the Prudential Loan or the purchase of Pledged Units from
Prudential (or a transferee or substitute lender of Prudential), and irrevocably
agrees in advance that (i) notwithstanding anything contained in the Partnership
Agreement to the contrary, any such transfer may occur on any business day
hereafter and (ii) notwithstanding anything contained in the Partnership
Agreement to the contrary, including, without limitation, Sections 11.3 and 11.4
of the Partnership Agreement but subject to the receipt by the REIT of the
documents specified in Sections 11.3(A), 11.4(B)(i) and 11.4(B)(ii) of the
Partnership Agreement, following any such transfer the REIT will cause the
Partnership (1) to admit the Lender as a Substituted Limited Partner (as such
term is defined in the Partnership Agreement) and (2) to admit a transferee of
the Lender or subsequent holder of the Pledged Shares as a Substitute Limited
Partner; provided that any such subsequent holder of the Pledged Shares is a
Qualified Transferee (as such term is defined in the Partnership Agreement) and
such transfer is not prohibited by Sections 11.3(C), 11.6(D), 11.6(E) or 11.6(F)
of the Partnership Agreement (it being understood and agreed that each of the
Lender, any transferee of the Lender and any subsequent holder of Pledged Units
shall have the unqualified right to assign its Pledged Units to an Assignee (as
such term is defined in the Partnership Agreement)).

                                      -2-
<PAGE>

          2.   Each of the REIT and the Partnership agrees that, until such time
as the Partnership receives written instruction from the Lender releasing the
obligation in this Section 2, if the consent of the Borrower is required as a
condition to any proposed modification to the Pledged Units or the Partnership
Agreement or any actions submitted to the vote of the Limited Partners (as
defined in the Partnership Agreement), each of the REIT and the Partnership will
deem the Borrower to have voted "against" the proposed modification or such
action unless it has received the prior written consent of Lender to such
modification or such action. In the event that the Lender does not respond to a
written request for such consent within five (5) business days after receipt by
the Lender of such request, the Lender shall be deemed not to have granted such
request.

          3.   Neither the REIT nor the Partnership shall, without the prior
written consent of the Lender, enter into any amendment, supplement, assignment,
transfer or other modification of the Registration Rights Agreement that affects
the Lender or any transferee of the Lender or any of the rights of a holder of
the Pledged Shares, enter into any consensual cancellation or termination of the
Registration Rights Agreement, or consent to the assignment or other transfer by
Borrower of any of its right, title and interest thereunder or under the
Partnership Agreement or the Registration Rights Agreement, or consent to any
such assignment by the Borrower.

          4.   Each of the REIT and the Partnership agrees, subject to
compliance by the Lender, any transferee lender or subsequent holder of the
Pledged Shares with the terms, provisions and restrictions of the Loan
Documents, that the Lender or such transferee lender or subsequent holder of the
Pledged Shares shall be entitled to require and enforce the performance of all
actions and things required to be paid or performed by the Borrower, the REIT or
the Partnership under the Assigned Agreements and the Lender, any transferee
lender or any subsequent holder of the Pledged Shares may proceed either in its
own name or otherwise and may protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, or proceed to take any other
action authorized or permitted under applicable law. Each and every remedy of
the Lender, any such transferee lender or any such subsequent holder of the
Pledged Shares shall, to the extent permitted by law, be cumulative and shall be
in addition to any other remedy now or hereafter existing pursuant to any
agreement, at law or in equity or by statute. Without limitation of the
foregoing, the REIT agrees that as promptly as possible after the date hereof,
the REIT will amend the prospectus constituting part of the shelf registration
statement filed pursuant to Article IV of the Registration Rights Agreement to
include the Lender, any transferee lender and/or any subsequent holder of the
Pledged Shares as a selling stockholder under such Registration Rights Agreement
and that the REIT will continue to include the Lender, any transferee lender
and/or any subsequent holder of the Pledged Shares as such a selling stockholder
under the Registration Rights Agreement for so long as the Registration Rights
Agreement shall be pledged to the Lender, transferee lender or subsequent holder
of the Pledged Shares or the

                                      -3-
<PAGE>

Lender, transferee lender or subsequent holder of the Pledged Shares may be
entitled to exercise rights under the Registration Rights Agreement.

          5.   (a) The REIT and the Partnership also confirm that if the Lender
or a transferee lender or subsequent holder of the Pledged Units becomes a
limited partner in the Partnership by virtue of being the holder of any of the
Pledged Units, the Lender, any such transferee lender or any such subsequent
holder of the Pledged Units will be entitled to exercise, and the Partnership
will be required to honor, the limited partner redemption rights set forth in
Section 8.6 of the Partnership Agreement and Exhibit C to the Partnership
Agreement with respect to any such Pledged Units commencing on the first date
the Lender or such subsequent holder becomes the holder of those Pledged Units.

          (b)  In the event that the Lender commences actions to foreclose on
the Borrower's interest in any or all of the Pledged Units, purchases the
Pledged Units in a foreclosure sale of the Prudential Loan or purchases the
Pledged Units from Prudential and the Lender gives written notice of such
commencement or purchase to the REIT within two (2) Business Days after such
commencement or purchase, then if the Lender gives a notice of election (the
"Notice of Election") under the Partnership Agreement to exchange all or any
portion of such Pledged Units (but in no event fewer than 25,000 Pledged Units,
as such number may be equitably adjusted to give effect to recapitalizations,
reverse stock splits, stock dividends, share combinations and similar events)
held by the Lender for common shares of the REIT or, at the option of the REIT,
cash, the REIT shall notify the Lender within five (5) business days after the
receipt by the REIT of such Notice of Election (including the receipt by the
REIT of the Pledged Units being exchanged as required by the Partnership
Agreement), of its determination whether the REIT desires to exchange such
Pledged Units for cash or common shares. In the event that the REIT does not
elect to exchange such Pledged Units for cash, then the REIT shall deliver the
relevant common shares to the Lender within three (3) business days after the
earlier of such notification or the expiration of such five (5) business day
period. In the event that the REIT elects to exchange such Pledged Units for
cash, then the REIT and the Partnership shall, within three (3) business days
after the date of such notification , cancel the Pledged Units which were
tendered and issue a promissory note of the REIT and the Partnership, as co-
makers, (the "Note") for the amount of the cash due to the Lender in exchange
for the redemption of such Pledged Units. The Note shall provide that interest
payments are due in an amount equal to any distributions which would have been
due had the Pledged Units not been cancelled until the cash was paid to the
Lender. Such interest shall only accrue and be payable to the extent, and on the
same dates, that distribution payments are actually made by the Partnership to
holders of limited partner common units of the Partnership (a "Dividend Payment
Date"). In addition, but without duplication of any such interest payments, the
REIT and the Partnership shall pay to the Lender, as additional interest, an
amount equal to the amount that would have been due to the Lender pursuant to
Section 5.5 of the Partnership

                                      -4-
<PAGE>

Agreement had the Pledged Units not been cancelled, such payments to be made to
the Lender on the Partnership Payment Date (as defined in the Partnership
Agreement) on which such payments would have been made to the Lender had the
Pledged Units not been cancelled. The Note shall have a maturity date which is
the date the cash payment would be due to the Lender were the exchange
undertaken in accordance with the terms of the Partnership Agreement, assuming
that the REIT took the entire thirty (30) days allowed under the Partnership
Agreement to determine whether to exchange such Pledged Units for cash or common
shares.

          (c)  The Lender agrees to provide the REIT with copies of any notice
to Borrower of the occurrence of an Event of Default under the Loan Agreement no
later than three (3) Business Days after the date on which the Lender delivers
such notice of an Event of Default to the Borrower; provided however that the
failure of the Lender to deliver a copy of such notice to the REIT shall not in
any way adversely affect or limit any of the Lender's rights under this Consent
and Agreement.

          6.   Notwithstanding anything contained in the Declaration of Trust to
the contrary, the REIT hereby represents, warrants and agrees that the
conditions set forth in Section 4.6 of the Declaration of Trust have been
satisfied and that the Ownership Limit (as defined in the Declaration of Trust)
has been waived with respect to the Lender (but not to any transferees of the
Lender) by the Board of Trustees of the REIT (the "Board") to the extent set
forth in this Section 6. Accordingly, the REIT agrees that the Ownership Limit
shall not apply to the extent, and only to the extent, necessary to allow the
exchange of the Pledged Units held by the Lender (but not by any transferee of
the Lender) for common shares of the REIT as provided in the Partnership
Agreement in the event the REIT does not elect to exchange such Pledged Units
for cash as provided in the Partnership Agreement; provided that the extent to
which the Ownership Limit shall not apply shall be reduced by each Equity Share
(as defined in the Declaration of Trust) owned by the Lender, whether
constructively or actually or directly or indirectly, other than Equity Shares
acquired by the Lender pursuant to (x) a foreclosure on, or a conveyance in lieu
of foreclosure on, the Pledged Shares, or (y) the purchase of Pledged Shares in
a foreclosure sale of the Prudential Loan or the purchase of Pledged Shares from
Prudential (or a transferee or substitute lender of Prudential) , and the
exchange of any Pledged Units for common shares of beneficial interest of the
REIT. Nothing contained herein shall be construed as a limitation on the ability
of the Lender to transfer the Loan.

          7.   The REIT hereby represents, warrants and agrees that, (i) subject
to clauses (ii) and (iii) of this Section 7, notwithstanding Section 3-601(j) of
the Maryland General Corporation Law, the Lender will be an interested
stockholder of the REIT, (ii) pursuant to Section 3-603(c) of the MGCL, any
business combination between the REIT and the Lender (or any affiliate thereof)
resulting from the Lender's acquisition of the Pledged Units and the Lender's
acquisition of

                                      -5-
<PAGE>

common shares of the REIT or cash upon exchange of the Pledged Units as provided
in the Partnership Agreement has been irrevocably exempted from the provisions
of Section 3-602 of the MGCL, and (iii) pursuant to Section 3-603(c) of the
MGCL, any business combination between the REIT and the Lender (or any affiliate
thereof) has been irrevocably exempted from the provisions of Section 3-602 of
the MGCL, provided that any such business combination (other than any business
combination described in clause (ii)) is first approved by the Board of Trustees
of the REIT, including the approval of a majority of the members of the Board of
Trustees of the REIT who are not affiliates or associates (as each such term is
defined in Section 3-601 of the MGCL) of the Lender (or any affiliate thereof),
and the REIT hereby agrees that, to such extent, Section 3-602 of the MGCL shall
not apply to any business combination between the Lender and the REIT. The REIT
hereby irrevocably agrees that it will not adopt a shareholder rights plan or
other agreement or instrument similar to a shareholder rights plan or a "poison
pill" unless such takeover defenses shall not apply to the acquisition or
ownership by the Lender of any or all of the Pledged Units or any common shares
of the REIT received by the Lender upon the exchange of any or all of the
Pledged Units (together with any units of the Partnership or shares of the REIT
issued in respect of such Pledged Units or shares of the REIT and any other
securities into which such Pledged Units or shares of the REIT may be exchanged
or converted (collectively, the "Exempt Securities")); provided, however, that
the foregoing shall not bind the REIT with respect to (i) any other common or
preferred shares of the REIT, (ii) any other common or preferred units of the
Partnership, or (iii) other securities of the REIT or the Partnership
(collectively, the "Company's Securities"), previously acquired or subsequently
acquired by the Lender. Without limitation of the foregoing, the REIT agrees
that this provision shall be broadly interpreted to exempt the ownership by the
Lender from the operation of any such shareholder rights plan or similar
agreement or instrument with respect to the Exempt Securities.

          8.   Election of Vornado Nominee.  The REIT hereby agrees that:

               (i) on or before the date that is six (6) months after the date
     hereof (the "First Determination Date"), the Board shall make a
     determination in the Board's business judgement whether or not the Board
     anticipates that the REIT will be the subject of (i) a sale of the REIT or
     substantially all of its assets, (ii) a merger or other business
     combination involving the REIT or (iii) any other similar strategic
     transaction (any such transaction described in the foregoing clauses (i)
     through (iii), a "Strategic Transaction") within six (6) months after the
     First Determination Date. In the event that the Board anticipates in the
     Board's business judgement that the REIT will not be the subject of a
     Strategic Transaction within six (6) months after the First Determination
     Date, then the Board shall, if requested by the Lender, elect Michael
     Fascitelli, the President of Vornado Realty Trust (or such other person
     named by Vornado Realty Trust and reasonably approved by the Board) to the
     Board (the "Vornado Nominee");

                                      -6-
<PAGE>

               (ii) in the event that the Vornado Nominee is not named to the
          Board by the First Determination Date, then on or before the date that
          is nine (9) months after the date hereof(the "Second Determination
          Date"), the Board shall make a determination in the Board's business
          judgement whether or not the Board anticipates that the REIT will be
          the subject of Strategic Transaction within three (3) months after the
          Second Determination Date. In the event that the Board anticipates in
          the Board's business judgement that the REIT will not be the subject
          of a Strategic Transaction within three (3) months after the Second
          Determination Date, then the Board shall, if so requested by the
          Lender, elect the Vornado Nominee to the Board;

               (iii) In the event that the Vornado Nominee is not elected to the
          Board by the Second Determination Date, and a Strategic Transaction is
          not completed on or before the date that is the first anniversary of
          the date hereof, then the Board shall, if so requested by the Lender,
          elect the Vornado Nominee to the Board.

          Notwithstanding the foregoing, as a condition to the Vornado Nominee
          being elected to the Board, the Vornado Nominee shall deliver a letter
          to the REIT providing that the Vornado Nominee resigns from the Board
          in the event that (a) the loan is repaid without the Lender or its
          affiliates obtaining ownership of at least 500,000 (as such number
          shall be equitably adjusted to give effect to recapitalizations,
          reverse share splits, stock dividends, share combinations and similar
          events) Pledged Shares or (b) the Lender and its affiliates hold, as a
          result of sales to unaffiliated third parties, fewer than 500,000 (as
          such number shall be equitably adjusted to give effect to
          recapitalizations, reverse share splits, stock dividends, share
          combinations and similar events) Pledged Shares.

          9.   (a) Each of the REIT and the Partnership further acknowledges and
agrees that the Lender may assign its rights under the Loan Agreement and the
Security Agreement to a transferee Lender and may transfer the Pledged Shares
and that, in the event of any such assignment or transfer, this Consent and
Agreement (other than the provisions of Section 5(b), Section 6 and Section 7
(except as provided in Section 9(b) below)) hereof shall be for the benefit of
any such lenders and any transferee to whom Lender may sell the Pledged Shares,
and such rights of Lender hereunder or referred to herein may be exercised by
any such other lenders and any such transferees.

                                      -7-
<PAGE>

          (b)  In the event that the Lender or a transferee of the Lender that
has elected to be, or that is directly or indirectly owned by an entity that has
elected to be, taxed as a real estate investment trust reasonably determines in
good faith that the foreclosure by the Lender or such transferee upon, or
ownership by the Lender or such transferee of, all or any portion of the Pledged
Shares, could adversely affect the status of the Lender, such transferee or such
other entity that directly or indirectly owns the Lender or such transferee that
has elected to be taxed as a real estate investment as such a real estate
investment trust (the "REIT Compliance Issues"), then the Lender or such
transferee shall have the right to transfer the Loan, the Prudential Loan (to
the extent that it has acquired the Prudential Loan) and/or the Pledged Shares
to an Institutional Investor (as defined below) identified by the Lender or such
transferee and approved by the REIT in the REIT's reasonable discretion, which
approval will not be unreasonably withheld. In the event the REIT fails to
approve or disapprove of such Institutional Investor within five (5) business
days after its receipt of a written request for such transfer that specifies
that the failure to respond within five (5) business days shall be deemed to be
an approval, such transfer and such Institutional Investor shall be deemed to be
approved. The Lender or such transferee shall promptly provide the REIT with
such information as the REIT may reasonably request with respect to the REIT
Compliance Issues and the Institutional Investor to whom the Lender or such
transferee desires to transfer the Loan, the Prudential Loan and/or the Pledged
Shares in order to enable the REIT to respond to the Lender's or such
transferee's request within the foregoing five (5) business day period. In the
event that the REIT consents or is deemed to have consented to such transfer,
such Institutional Investor (i) shall not be obligated to sell any common units
of the Partnership and shares of the REIT that it acquired prior to the date of
such transfer (provided such units and shares were not purchased with the
knowledge that such Institutional Investor may be purchasing the Pledged Shares;
the "Previously Owned Securities"), and (ii) shall succeed to the Lender's or
such transferee's benefits and obligations under the Assigned Agreements, this
Consent and Agreement (including, without limitation, Section 5(b) and Section 7
(and shall have the right to receive the waiver of Ownership Limit no less
favorable to such transferee than the waiver of the Ownership Limit in Section 6
hereof)) for the Pledged Shares and the Previously Owned Securities, subject to
such restrictions to the foregoing clauses (i) and (ii) as the REIT may
reasonably impose to protect its status as a real estate investment trust. In
addition, the REIT hereby agrees that the Lender may, subject to the provisions
of the penultimate paragraph of the Section 9(b) but otherwise without the
consent of the REIT, transfer the Loan, the Prudential Loan and/or the Pledged
Shares to an affiliate (as such term is defined in Rule 405 under the Securities
Act of 1933, as amended) (an "Affiliate") of the Lender. The REIT agrees that in
the event of a transfer of the Loan, the Prudential Loan and/or the Pledged
Shares to an Institutional Investor or to an Affiliate of the Lender pursuant to
this Section 9(b), a waiver of the Ownership Limit no less favorable to such
Institutional Investor or to such Affiliate of the Lender than the waiver of the
Ownership Limit contained in Section 6 hereof will apply to such Institutional
Investor or to such Affiliate of the Lender.

                                      -8-
<PAGE>

          The term "Institutional Investor" shall mean an institutional investor
with assets in excess of $250,000,000.00, including but not necessarily limited
to a bank, investment bank, mutual fund, mortgage REIT, pension fund, private
investment fund, multi-investor fund or other similar institution or fund, but
shall specifically exclude all office or industrial real estate investment
trusts and other direct competitors of the REIT or Partnership. It shall be
understood that without limiting the meaning of the word "reasonable", it shall
be reasonable for the REIT to refuse to consent to any such transfer to a
particular Institutional Investor if (i) such transfer could adversely affect
the REIT's status as a real estate investment trust, (ii) such Institutional
Investor fails to deliver to the REIT an executed Excepted Holder Certificate in
form and substance substantially identical to the Excepted Holder Certificate of
the Lender attached hereto as EXHIBIT A (with such changes as the REIT may
reasonably request to deal with changes in real estate investment trust tax law
qualification or compliance requirements), or such other form of Excepted Holder
Certificate as may be agreed to by the REIT in its sole discretion, (iii) the
REIT's legal counsel does not issue an opinion to the REIT that the transfer to
such Institutional Investor will not adversely affect the REIT's status as a
real estate investment trust (and the REIT will use its best efforts to obtain
such an opinion from its legal counsel as promptly as practicable), or (iv) such
Institutional Investor has previously commenced or threatened to make a hostile
tender offer for the REIT's shares or a proxy fight to replace all or some of
the then current trustees of the REIT or filed a report on Schedule 13D under
the Securities Exchange Act of 1934, as amended, stating an intention to
consummate a transaction specified in Item 4 of such Schedule in a manner that
is hostile to the Board of the REIT.

          Notwithstanding the foregoing, it shall be a condition to the transfer
of the Loan, the Prudential Loan and/or the Pledged Shares to an Institutional
Investor approved or deemed to have been approved pursuant to this Section 9 or
to an Affiliate of the Lender that such transferee deliver an Excepted Holder
Certificate described in clause (ii) of the foregoing paragraph and that the
REIT's legal counsel issues an opinion to the REIT that the transfer to such
Institutional Investor or such Affiliate of the Lender, as applicable, will not
adversely affect the REIT's status as a real estate investment trust (and the
REIT will use its best efforts to obtain such an opinion from its counsel as
promptly as practicable).

          The rights under this Section 9(b) may not be exercised by a
transferee of the Lender unless such transferee is either (a) is an Affiliate of
the Lender or (b) has elected to be, or is directly or indirectly owned by an
entity that has elected to be, taxed as a real estate investment trust.

          10.  Securities Account. The REIT acknowledges, on its own behalf and
in its capacity as the Managing General Partner of the Partnership, and the
Partnership acknowledges that, pursuant to the terms of the Loan Agreement and
the other Credit Documents, the Borrower has established a "Securities Account"
(as defined in the Loan Agreement) opened by Prudential Securities

                                      -9-
<PAGE>

Incorporated in the name of Borrower bearing account number 084 953016, and
that, until further notice from Prudential and the Lender, all distributions and
dividends in respect of the Pledged Shares are to be paid by the REIT and the
Partnership directly into such Securities Account.

          11.  The Resolutions. Attached hereto as EXHIBIT B is a copy of
resolutions of the Board which were adopted by the Board on September 7, 2000
and September 23, 2000 (the "Resolutions"). The Resolutions have not been
amended, modified or rescinded and remain in full force and effect as of the
date hereof. In the event such Resolutions are amended, modified or rescinded in
any manner which adversely affects the Lender without the prior written consent
of the Lender, a default shall be deemed to have occurred under this Consent and
Agreement.

          12.  Amendment of Section 2.12 of Bylaws. The REIT hereby agrees that
the provisions of the last grammatical paragraph of Section 2.12 of the REITs's
Amended and Restated Bylaws shall not be rescinded, modified or amended in any
manner which would adversely affect Lender or any transferee lender or
subsequent holder of the Pledged Shares.

          13.  REIT Opinion. The REIT agrees that from time to time, upon the
reasonable request of the Lender, it will use its best efforts to cause Winston
& Strawn, counsel to the REIT (or other counsel reasonably acceptable to the
Lender), to render to the Lender an opinion, in form and substance satisfactory
to the Lender, with respect to the status of the REIT as a real estate
investment trust for purposes of the Code. The Lender agrees to reimburse the
REIT for its reasonable legal fees incurred in connection with the rendering of
more than four such legal opinions in any calendar year (it being understood and
agreed that the REIT will bear the expenses incurred in connection with
rendering of the first four of such legal opinions in each calendar year). The
foregoing does not constitute a covenant by the REIT to remain a real estate
investment trust.

          14.  Agreement of Lender Regarding Ownership of the REIT Securities.
Lender hereby represents, warrants and covenants for the benefit of the REIT
that neither it nor any of its Affiliates currently owns or will directly or
indirectly acquire any of the REIT's or the Partnership's equity securities,
without the prior approval of the REIT, other than the Pledged Units (and common
shares of the REIT upon the exchange of the Pledged Units in accordance with
their terms), and the benefits to Lender contained in this Agreement shall be
null and void at the option of the REIT and the resolutions adopted by the Board
with respect to the matters covered hereby shall be revocable and subject to
modification by the Board in the event the foregoing representation, warranty
and covenant is breached; provided, however, that the foregoing representation,
warranty and covenant shall not be breached as the result of the indirect
acquisition by Lender or its Affiliates of an immaterial amount of the REIT's

                                     -10-
<PAGE>

or the Partnership's securities if the Lender or such Affiliate of the Lender,
as applicable, causes the disposition of such securities within a reasonable
time after the consummation of such indirect acquisition or by the ownership or
acquisition by trustees or officers of the Lender or any of its Affiliates of an
immaterial amount of equity securities of the REIT or the Partnership for their
own personal account.

          15.  Certain Rights and Remedies. Notwithstanding anything contained
in this Agreement to the contrary, in the event that the Lender or a transferee
of the Lender acquires any Pledged Shares pursuant to Section 17(j) of the Loan
Agreement, any rights, privileges obligations, representations, warranties and
covenants that had been offered and imposed by the REIT and constituted part of
the Offered Terms (as defined in the Loan Agreement) shall inure to the benefit
of the Lender or such transferee of the Lender and such Lender or such
transferee of the Lender shall be entitled to exercise such rights and
privileges and shall be bound by such obligations as if the REIT had directly
offered such rights, privileges and obligations to the Lender or such transferee
of the Lender.

          16.  (a)  No Waiver; Amendments.  No failure on the part of the Lender
to exercise, no delay in exercising, and no course of dealing with respect to,
any right or remedy hereunder will operate as a waiver thereof, nor will any
single or partial exercise of any right or remedy hereunder preclude any other
further exercise of any other right or remedy. This Consent and Agreement may
not be amended, supplemented or modified except by written agreement of the
REIT, the Partnership and the Lender.

          (b)  Survival of Certain Covenants. Notwithstanding any provision of
this Consent and Agreement to the contrary, the obligations of the REIT and the
Partnership under this Consent and Agreement shall survive until payment in full
of all amounts owing under the Loan Agreement and the promissory note delivered
pursuant to the Loan Agreement unless the Lender, a transferee lender or a
subsequent holder of the Pledged Shares has acquired any or all of the Pledged
Shares pursuant to (x) a foreclosure on, or a transfer in lieu of a foreclosure
on, the Pledged Shares or (y) the purchase in a foreclosure sale on the
Prudential Loan or the purchase from Prudential or a transferee or substitute
lender of Prudential, in which case this Consent and Agreement shall survive for
so long as the Lender, any transferee of the Lender or any subsequent holder of
Pledged Shares shall hold the Loan or any Pledged Shares.

          (c)  Publicity. Except as otherwise required by applicable law or the
rules or regulations of any securities exchange on which the securities of such
party or any Affiliate of such party are listed or traded, each of the parties
hereto agrees that it and its Affiliates shall not issue or cause the

                                     -11-
<PAGE>

publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party hereto, and each of the parties hereto agrees that in any event, it will
give the other party reasonable opportunity to review and comment upon any such
release or announcement prior to publication of the same.

          (d)  Notices. All notices and other communications required under the
terms and provisions hereof shall be in writing and shall be addressed (1) if to
the REIT or the Partnership, addressed to it at Prime Group Realty Trust, 77
West Wacker Drive, Suite 3900, Chicago, Illinois 60601, Attn: Michael W.
Reschke, Telecopy No.: (312) 917-1511, with copies to Prime Group Realty Trust,
77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601; Attention: James F.
Hoffman, Telecopy No.: (312) 917-1684, and to Winston & Strawn, 35 West Wacker
Drive, Chicago, Illinois 60601, Attn: Wayne D. Boberg, Esq., Telecopy No.: (312)
558-5700 or (2) if to the Lender, c/o Vornado Realty Trust, 888 Seventh Avenue,
New York, New York 10019, Attention: President, Joseph Macnow and Mark Epstein,
Telecopy No.: (212) 894-7996; and to Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004, Attention: Gary Israel, Esq., Telecopy No.: (312) 558-3588
or at such other place as any party may hereafter designate to the other party
hereto in writing. Any notice under this Consent and Agreement to the REIT, the
Partnership or the Lender shall be in writing and sent (A) by telecopy, or (B)
by registered or certified mail with return receipt requested (postage paid), or
(C) by a recognized overnight delivery service with charges prepaid. Any notice
under this Consent and Agreement to the REIT, the Partnership or the Lender
shall be deemed given only when actually received or when delivery is refused,
and any such notice to any person other than the REIT, the Partnership or the
Lender shall be deemed to have been given when deposited in the mails, postage
prepaid, certified or registered United States mail.

          (e)  Successors and Assigns. This Consent and Agreement shall be
binding upon and inure to the benefit of the REIT, the Partnership and the
Lender and their respective permitted successors and assigns.

          (f)  Governing Law. This Consent and Agreement will be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to conflicts of laws provisions thereof.

                                     -12-
<PAGE>

          (g)  Business Day. "Business day" means, for purposes of this Consent
Agreement, any day other than a Saturday, Sunday, or other day on which
commercial banks in The City of New York or Chicago, Illinois are obligated or
permitted to be closed.

                                     -13-
<PAGE>

          IN WITNESS WHEREOF, the undersigned, REIT has executed this Consent
and Agreement as of the date set forth in the first paragraph of this Consent
and Agreement.

                                    PRIME GROUP REALTY L.P.

                                    By:  PRIME GROUP REALTY TRUST,
                                         Its General Partner

                                    By:  [s] Jeffrey A. Patterson
                                         ----------------------------
                                         Name: Jeffrey A. Patterson
                                         Title: Co-President

                                     -14-
<PAGE>

          IN WITNESS WHEREOF, the undersigned, the Lender has executed this
Consent and Agreement as of the date set forth in the first paragraph of this
Consent and Agreement.

                                    PRIME GROUP REALTY, L.P

                                    By:  Prime Group Realty Trust,
                                         its general partner

                                    By:  [s] Jeffrey A. Patterson
                                         ----------------------------
                                         Name: Jeffrey A. Patterson
                                         Title: Co-President

                                    VORNADO PS, L.L.C.

                                    By:  VORNADO REALTY, L.P.,
                                         its sole member

                                    By:  VORNADO REALTY TRUST,
                                         its General Partner

                                    By:  [s] Irwin Goldberg
                                         ----------------------------
                                         Name: Irwin Goldberg
                                         Title: Vice President and Chief
                                                Financial Officer
Acknowledged and Agreed:
PRIMESTONE INVESTMENT PARTNERS L.P.,

By:  PG/Primestone, L.L.C.,
     Its General Partner

     By:  The Prime Group, Inc.,
          Its Administrative Member

          By: [s] Mark K. Cynkar
              ---------------------------
              Name: Mark K. Cynkar
              Title: Chief Financial Officer

                                     -15-

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