EXECUTIVE
                              EMPLOYMENT AGREEMENT

     This Employment  Agreement (the "Agreement") is made and entered into as of
this 6th day of October,  1999 by and among  primeoutlets.com  inc.,  a Maryland
corporation  ("Employer"),  Prime Retail,  L.P., a Delaware limited  partnership
("PRT LP"), Prime Retail,  Inc., a Maryland corporation and sole general partner
of PRT LP  ("PRT"  and  collectively  with  PRT LP,  "Prime"),  and  William  H.
Carpenter, Jr., an individual domiciled in the State of Maryland ("Executive").

                                   Witnesseth

     WHEREAS,  Employer  is engaged  primarily  in the design,  development  and
operation of an online  "virtual outlet center" for the sale of retail goods via
the Internet;

     WHEREAS, Employer is an affiliate of Prime;

     WHEREAS, prior to the Commencement Date (as defined herein),  Executive has
been employed by Prime;

     WHEREAS,  Employer  believes that it will benefit from the  application  of
Executive's  particular  and unique  skill,  experience,  and  background to the
management and operation of Employer;

     WHEREAS,  Prime believes that it will benefit from  Executive's  employment
with Employer based on its affiliation with Employer;

     WHEREAS, subject to the terms and conditions set forth herein the Executive
wishes to resign from his employment  with Prime and commit to serve Employer in
the position set forth herein on the terms herein provided.

     NOW, THEREFORE,  in consideration of the foregoing and the mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency  of which is  hereby  acknowledged  by each of the  parties  hereto,
Employer, Prime and Executive hereby agree as follows:

     1. Employment and Duties.  During the Employment Term hereof (as defined in
Section 2 hereof),  Employer agrees to retain Executive, and Executive agrees to
be  retained  by  Employer,  as the  President  and Chief  Executive  Officer of
Employer on the terms and conditions provided in this Agreement. Executive shall
serve as the  President and Chief  Executive  Officer of Employer and his duties
shall include  oversight and  responsibility  for Employer's  sales,  marketing,
operations,  finance and administrative functions. Executive shall report to the
Board of Directors of Employer  (the  "Employer  Board") which may, from time to
time, further define Executive's duties and responsibilities  hereunder or under
the Bylaws of Employer in a manner  consistent with the offices for which he has
been  retained  hereunder.  Executive  agrees to  devote  his best  efforts  and
substantially  all of  his  business  time,  attention,  energy,  and  skill  to
performing his duties to Employer under this Agreement. Executive shall serve as
a director of Employer  and as a member of the  Executive  Committee of Employer
until  Executive  is no longer  performing  services  for  Employer  under  this
Agreement.  During the Pre-Transaction Period (as defined in subsection 3(b)(2))
and for so long as Executive  is  performing  services  for Employer  under this
Agreement, PRT agrees to cause Executive to be nominated as a director of PRT.

     2. Employment Term. Unless earlier  terminated as provided herein, the term
of  this  Agreement  shall  be a  period  commencing  on the  date  hereof  (the
"Commencement  Date")  and  ending  on the third  anniversary  of such date (the
"Initial  Term").  If neither  Employer nor Executive  provide notice within one
hundred eighty (180) days prior to the termination of this Agreement,  then this
Agreement will be considered renewed for successive one (1) year periods (each a
"Renewal Term").  The Initial Term and any Renewal Term is hereinafter  referred
to as the "Employment Term."

     3. Compensation and Related Matters.

     (a) Base Compensation. 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  $425,000  ("Base  Compensation"),  payable  in
accordance  with the general  policies and procedures for payment of salaries to
its executive personnel maintained,  from time to time, by Employer (but no less
frequently than monthly),  subject to withholding for applicable federal, state,
and local taxes.  Beginning January 1, 2000,  Executive shall receive a five (5)
percent annual increase in Base Compensation.

     (b) Performance Bonus.

     (1) On or before March 31,  2000,  and in any event not later than the date
on which  performance  bonuses are paid to senior executive  officers of PRT for
calendar year 1999, Executive shall be entitled to receive a cash bonus equal to
the 0.83 times the amount of  performance  bonus for 1999 that  Executive  would
have been entitled to receive from PRT had  Executive  remained in the employ of
PRT through December 31, 1999.

     (2) Prior to the completion of a Strategic  Transaction  (as defined below)
but in no event  later than the date two (2) years  following  the  Commencement
Date (the "Pre-Transaction Period"), Executive shall have the right to receive a
cash bonus for each calendar year (or portion  thereof)  during such period,  in
such  amounts and on such terms and  conditions  as the Chairman of the Employer
Board, in its sole discretion, may determine.

     (3) After the Pre-Transaction  Period and as long as this Agreement has not
otherwise been  terminated as provided herein (the  "Post-Transaction  Period"),
the Employer  Board, in its sole and absolute  discretion,  may, but in no event
shall be obligated to,  authorize the payment of a cash bonus to Executive based
upon  achievement  of  such  corporate  and  individual  performance  goals  and
objectives as may be  established  or determined by the Employer Board from time
to time.  Without  limiting the foregoing,  Executive  shall also be entitled to
participate  in any  performance  or  incentive  bonus  program  established  by
Employer and otherwise made generally available to its executive officers.

     Any  amount  paid to  Executive  pursuant  to this  Section  3(b) is herein
referred to as a "Performance  Bonus". As used herein,  "Strategic  Transaction"
shall mean the earlier to occur of (i) the initial bona fide  underwritten  sale
to the public of common  stock or any other  capital  stock of Employer  that is
made pursuant to a registration  statement (other than a registration  statement
on Form S-8 or any other form relating to securities  issuable under an employee
benefit  plan of Employer)  that is declared  effective  by the  Securities  and
Exchange Commission ("IPO") or (ii) an Employer Change of Control.  For purposes
of this  Agreement,  an  "Employer  Change of  Control"  shall be deemed to have
occurred as of the first day that any one or more of the following conditions is
satisfied:

     (A) PRT or any  affiliate  thereof  shall cease to  "beneficially  own" (as
defined in Rule 13d-3 under the Exchange Act) securities representing a majority
of the  combined  voting  power of the then  outstanding  voting  securities  of
Employer entitled to vote generally in the election of directors; or

     (B) Employer shall have  consummated a sale or other  disposition of all or
substantially all of the assets of Employer.

     (c) Health Insurance and Other Benefits.

     (1) During the  Pre-Transaction  Period and subject to the  limitations and
affirmative  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 plans  established by Prime (which may include  contributions  by
Executive)  and in any other  retirement,  pension,  insurance,  health or other
benefit plan or program  that has been or is  hereafter  adopted by Prime (or in
which Prime participates), as such plans and programs may be amended or modified
from time to time by Prime,  according  to the terms of such  plans or  programs
with all the  benefits,  rights  and  privileges  as are  enjoyed  by  similarly
situated executive officers of Prime.

     (2) During the  Post-Transaction  Period and subject to the limitations and
affirmative  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 plans established by Employer (which may include contributions by
Executive)  and in any other  retirement,  pension,  insurance,  health or other
benefit plan or program that has been or is hereafter adopted by Employer (or in
which  Employer  participates),  as such  plans and  programs  may be amended or
modified  from time to time by Employer,  according to the terms of such plan or
program with all the benefits, rights and privileges as are enjoyed by any other
similarly  situated  executive  officers  of  Employer.  The  medical,   dental,
retirement or other benefit plans  contemplated by this Section 3(c)(2) shall be
no less favorable to Executive than the benefits  provided to Executive by Prime
immediately prior to the Commencement Date.

     (3) If the participation of Executive in any of the plans described in this
Section 3(c) 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"),  Prime or Employer,  as the case may be,
shall  have the  right  to  exclude  Executive  from  that  plan in  return  for
Executive's  participation in (A) a nonqualified  deferred  compensation plan or
(B) an arrangement providing substantially comparable benefits under a plan that
is either a qualified or nonqualified plan under the Code at the option of Prime
or Employer, as the case may be.

     (d)  Life  Insurance.  Employer  shall  provide  $5,000,000  of  term  life
insurance for the benefit of the Executive during the Employment Term.

     (e)  Strategic  Bonus.  Executive  shall  have the  right to  receive,  and
Employer  agrees  to pay  Executive,  a  bonus  (the  "Strategic  Bonus")  in an
aggregate  amount equal to the lesser of (i)  $2,000,000  or (ii) three  percent
(3%) of the aggregate Fair Market Value of Employer's capital stock,  payable in
one lump sum immediately  following the  consummation  of a Qualified  Strategic
Transaction.   Qualified   Strategic   Transaction   shall  mean  any  Strategic
Transaction if, immediately following such transaction,  the sum of (i) the Fair
Market Value of all of the issued and outstanding  capital stock of Employer and
(ii) the total  indebtedness  of  Employer  equals or exceeds  $50,000,000.  For
purposes of this  Agreement,  Fair Market  Value means (A) in the case of an IPO
the  initial  public  offering  price of  Employer's  capital  stock  and (B) in
connection with a Change of Control, the fair market value as determined in good
faith by a majority of the Board of Directors of PRT.

     (f) Restricted Stock Award.

     (1) On the Commencement  Date or no later than October 15, 1999,  Executive
shall receive an award of 1,000,000 shares of common stock,  $0.01 par value per
share,  of Employer  pursuant to the 1999  primeoutlets.com  inc Incentive Share
Program. Executive agrees that he will execute and file a form of election under
Section  83(b) of the Code in  respect  of the  receipt  of such  award.  [Note:
Restricted  stock award amounts assume that Employer will have 55 million shares
of common stock  outstanding on the Commencement  Date. Any change in the number
of  outstanding  shares will result in a pro rata  adjustment to the  individual
awards.  Shares will vest ratably over a three year period;  provided however if
this agreement is terminated  pursuant to Section 4(a)(1),  4(a)(4),  4(b)(1) or
4(c) all  shares  shall be fully  vested  as of  Executive's  effective  date of
termination.]

     (2) Employer warrants and represents to Executive that Exhibit A sets forth
the total  number of shares of  capital  stock and the par value  thereof  which
Employer is  authorized  to issue and the number of such shares which are issued
and outstanding as of the Commencement Date.

     (g) Options.

     (1) Prior to completing an IPO,  Employer  shall adopt a stock option plan.
Executive  shall  be  entitled  to  participate  in such  plan on  terms no less
favorable than are made available to any similarly situated executive officer in
an electronic-commerce company of comparable size and stage of development.

     (2) As long as this Agreement has not otherwise been terminated as provided
herein,  any and all options  granted to  Executive  under PRT's  various  stock
option plans shall continue to vest and to be otherwise  governed  according the
terms and conditions of the various plans under which the options were granted.

     (h) 1999 Prime Retail  Long-Term Stock Incentive  Program.  As long as this
Agreement has not otherwise been terminated as provided herein,  Executive shall
continue to participate in Prime's 1999 Long-Term  Incentive  Program (the "1999
LTIP") and to receive the benefits contemplated thereby to the same extent as if
Executive  were employed by Prime through  December 31, 1999.  Prime shall amend
the 1999 LTIP to allow the continued participation by Executive in the 1999 LTIP
through the earlier of (i) the third anniversary of any Award Date, as such term
is defined in the 1999 LTIP or (ii)  Executive's  effective  date of termination
under this Agreement.

     (i) Vacation and Leaves of Absence. Executive shall be entitled to four (4)
weeks of paid vacation leave during each twelve (12) month  calendar  period and
paid holidays in accordance with Employer's established policies.  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 four  weeks.  In  addition  to the  foregoing,
Executive  may be granted  leaves of absence  with or without pay for such other
reasons as shall be mutually agreed upon by the Employer Board and Executive.

     (j) Expenses. Executive shall be reimbursed,  subject to Employer's receipt
of invoices or similar records as Employer may reasonably  request in accordance
with its  policy and  procedures,  for all  reasonable  and  necessary  expenses
incurred by the Executive in the performance of his duties hereunder.

     (k) Special Distribution. On or prior to January 30, 2000 and regardless of
whether or not this  Agreement  has been  terminated  for any reason,  Executive
shall receive from PRT LP a special distribution (the "Special Distribution") in
an amount  equal to the  aggregate  balance  of  unpaid  principal  and  accrued
interest as of such date with respect to that certain Secured Promissory Note of
Carpenter  Family  Associates  LLC dated  March 21,  1994 (as  modified  by that
certain Allonge dated January 1, 1996) (the "Note").  Executive hereby agrees to
use the proceeds of such Special  Distribution  to  immediately  pay in full all
outstanding obligations under the Note.

     (l)  Tickets.  During  the  Pre-Transaction  Period,  and  subject to PRT's
customary  policies  and  procedures  relating  to  business  entertainment  and
marketing  expenses,  Employer  shall  first  offer  Executive  the right to use
Employer's  four (4)  tickets  to each  Baltimore  Ravens  home  game.  Upon the
occurrence of a Qualified Strategic Transaction, PRT hereby agrees to contribute
to Employer PRT's four (4) season tickets to each Baltimore Ravens home game.

     4. Termination and Termination Benefits.

     (a) Termination by Employer.

     (1) Without Cause.  Employer may terminate  this Agreement and  Executive's
services  at any time for any  reason or for no reason at all upon  thirty  (30)
days' prior written notice to Executive.  In connection  with the termination of
Executive's   services   pursuant  to  this  Section  4(a)(1),   Executive  (and
Executive's  eligible  dependents  with respect to paragraphs (D) and (E) below)
shall be entitled to receive:

     (A) all accrued but unpaid  amounts of the Base Salary through the later of
(i) six (6) months  following the effective  date of termination or (ii) two (2)
years following the Commencement Date, payable in accordance with the provisions
of Section 3(a) above;

     (B)  payment  in an amount  equal to the  greater  of (i) (a) 2.0 times the
amount of any cash  bonus  received  by  Executive  from PRT for the year  ended
December 31, 1998 less (b) the amount of any Performance  Bonus theretofore paid
to Executive pursuant to Section 3(b) hereof for the year of termination or (ii)
 .5 times the amount of the most recent  Performance  Bonus paid to  Executive by
PRT or Employer in respect of any full  calendar  year, to be paid in a lump sum
amount within thirty (30) days of the effective date of termination;

     (C) any vested  benefits  or amounts  pursuant  to  Sections  3(c)  (Health
Insurance),  3(i)  (Vacation) and 3(j)  (Expenses)  hereof through the effective
date of termination, payable as otherwise provided in such Sections;

     (D) the health  insurance  benefits  specified  in Section 3(c) above for a
period  through the later of (i) six (6) months  following the effective date of
termination  and (ii) two years following the  Commencement  Date, and following
such time period,  the Executive shall be entitled to all rights afforded to him
under the federal  Consolidated  Omnibus Budget  Reconciliation Act ("COBRA") to
purchase continuation coverage of such health insurance benefits for himself and
his dependents for the maximum period permitted by law; and

     (E) the life  insurance  benefits  specified  in  Section  3(d) above for a
period  through the later of (i) six (6) months  following the effective date of
termination and (ii) two (2) years following the Commencement Date; and

     (F) in the event that  Executive is terminated  without  cause  pursuant to
this Section  4(a)(1) and within three  months from the  effective  date of such
termination  the Company  consummates a Qualified  Strategic  Transaction,  then
Executive  shall be entitled to receive the Strategic Bonus set forth in Section
4(e).

     With  respect to  Section  4(a)(1)(D)  above,  to the  extent  required  by
applicable law, Executive shall be deemed to have elected to exercise his rights
under COBRA as of the effective date of termination.

     (2)  With  Cause.  Employer  may  terminate  this  Agreement  with  "cause"
immediately upon written notice to Executive. In connection with the termination
of  Executive's  services  pursuant  to this  Section  4(a)(2),  Executive  (and
Executive's  eligible  dependents  with respect to paragraphs (D) and (E) below)
shall:
     (A) be  entitled  to receive  all  accrued  but unpaid  amounts of the Base
Salary through the effective date of termination, payable in accordance with the
provisions of Section 3(a) above;

     (B) forfeit his  entitlement  to any  bonuses or other  payments  otherwise
payable to him in accordance with Section 3(b) hereof; and

     (C) be entitled to the vested benefits or amounts pursuant to Sections 3(c)
(Health Insurance),  3(d) (Life Insurance),  3(i) (Vacation) and 3(j) (Expenses)
hereof through the effective date of termination,  payable as otherwise provided
in such Sections;

     (D) be entitled  to receive  the health  insurance  benefits  specified  in
Section  3(c)(1)  above for three (3) months  following  the  effective  date of
termination,  and following such time period, the Executive shall be entitled to
all rights afforded to him under COBRA to purchase continuation coverage of such
health insurance  benefits for himself and his dependents for the maximum period
permitted by law; and

     (E) be entitled to receive the life insurance benefits specified in Section
3(d) above for three (3) months following the effective date of termination.

     With  respect to  Section  4(a)(2)(D)  above,  to the  extent  required  by
applicable law, Executive shall be deemed to have elected to exercise his rights
under COBRA as of the effective date of termination.

     (3) "Cause" Defined.  For purposes of this Agreement,  "cause" shall mean a
finding by the Employer Board:

     (A) that the Executive has  materially  harmed  Employer  through an act of
dishonesty or material  conflict of interest that relates to the  performance of
Executive's duties hereunder;

     (B) of Executive's conviction of a felony involving moral turpitude,  fraud
or embezzlement;

     (C) that Executive's  failure to perform in any material respect his duties
under this  Agreement  (other than a failure due to  disability)  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); or

     (D) of a material breach by Executive of any of his  obligations  hereunder
and the failure of Executive to cure such breach  within  thirty (30) days after
receipt  by  the  Executive  of a  written  notice  of  Employer  specifying  in
reasonable detail the nature of the breach.

     (4) Disability.  If due to illness, physical or mental disability, or other
incapacity,  Executive  shall  fail  to  perform  the  duties  required  by this
Agreement  during any four (4)  consecutive  months during the Employment  Term,
Employer may terminate  this  Agreement  upon thirty (30) days written notice to
Executive.  In such event,  Executive shall receive all of the benefits afforded
to Executive pursuant to Section 4(a)(1) above.

     (b) Termination by Executive.

     (1) With Good Reason.  Executive may terminate  this  Agreement  with "good
reason" upon written notice to Employer.  In connection  with the termination of
this Agreement pursuant to this Section 4(b)(1),  Executive shall be entitled to
receive all of the benefits  afforded to Executive  pursuant to Section  4(a)(1)
above.

     (2) Without Good Reason. Executive may terminate this Agreement at any time
for any reason or for no reason at all upon sixty (60) days'  written  notice to
Company,  during which  period  Executive  shall  continue to perform his duties
under this Agreement if Employer so elects.  In connection  with the termination
of  Executive's  services  pursuant  to this  Section  4(b)(2),  Executive  (and
Executive's  eligible  dependents  with respect to paragraphs (C) and (D) below)
shall:

     (A) be  entitled  to receive  all  accrued  but unpaid  amounts of the Base
Salary through the effective date of  termination,  paid in accordance  with the
provisions of Section 3(a) above;

     (B) forfeit his  entitlement  to any  bonuses or other  payments  otherwise
payable to him in accordance with Section 3(b) hereof;

     (C) be  entitled to receive  the vested  benefits  and amounts set forth in
Sections 3(c) (Health  Insurance),  3(d) (Life  Insurance),  3(i) (Vacation) and
3(j)  (Expenses)  hereof through the effective date of  termination,  payable in
accordance with the provisions of such Sections;

     (D) be entitled  to receive  the health  insurance  benefits  specified  in
Section  3(c)(1)  above  for six (6)  months  following  the  effective  date of
termination,  and following such time period, the Executive shall be entitled to
all rights afforded to him under COBRA to purchase continuation coverage of such
health insurance  benefits for himself and his dependents for the maximum period
permitted by law; and

     (E) be entitled to receive the life insurance benefits specified in Section
3(d) above for six (6) months following the date of termination.

     With respect to Section  4(b)(2)(C),  to the extent  required by applicable
law,  Executive  shall be deemed to have  elected to exercise  his rights  under
COBRA as of the effective date of termination.

     (3) Good Reason. For purposes of this Agreement, "good reason" shall mean:

     (A) the material breach by Employer of any of its obligations  hereunder (a
bona fide dispute regarding the Performance Bonus shall not be a material breach
by Employer)  and the failure of Employer to cure such breach within thirty (30)
days after receipt by Employer of a written notice from the Executive specifying
in  reasonable  detail the nature of the breach,  unless such breach  requires a
longer period to cure,  then  Employer  shall have the right to cure such breach
within such additional period of time not to exceed ninety (90) days;

     (B) the amounts payable to the Executive as existed and as provided in this
Agreement  immediately  prior to such event have been materially  reduced in any
way (other than by virtue of the termination of the Pre-Transaction Period);

     (C) Employer fails to continue in effect any cash or stock-based  incentive
or bonus plan,  retirement  plan,  welfare  benefit plan, or other benefit plan,
program  or  arrangement,   unless  the  aggregate  value  (as  computed  by  an
independent employee benefits  consultant) of all such compensation,  retirement
and benefit  plans,  programs  and  arrangements  provided to  Executive  is not
materially less than their aggregate value as of the date of this Agreement; or

     (D)  Executive's  title  or  scope  of  responsibilities   and  duties  are
diminished as they existed and as provided in this Agreement  immediately  prior
to such event,  or Employer  fails to provide  Executive  with  adequate  office
facilities and support services to perform such responsibilities and duties.

     (c) Death.  Notwithstanding  any other  provision of this  Agreement,  this
Agreement  shall  terminate  on the date of  Executive's  death.  In this event,
Executive's  estate  shall be entitled  to  receive:  (i) all accrued but unpaid
amounts of the  Executive's  Base Salary through the date of Executive's  death,
payable in accordance with the provisions of Section 3(a) above; (ii) any earned
but unpaid bonus(es)  otherwise payable to Executive in accordance with Sections
3(b) and 3(e);  and (iii) any vested  benefits  or amounts  pursuant to Sections
3(i)  (Vacation) and 3(j)  (Expenses).  In addition,  the  Executive's  eligible
dependents shall be entitled to receive the health insurance  benefits specified
in Section  3(c)(1)  above for a period  through the earlier to occur of (i) the
expiration  of the  Pre-IPO  Period or (ii) twelve  (12)  months  following  the
effective date of  termination,  and following  such time period,  such eligible
decedents  shall be  entitled  to all rights  afforded  to them  under  COBRA to
purchase continuation coverage of such health insurance benefits for the maximum
period permitted by law. With respect to the preceding  sentence,  to the extent
required by applicable law, the Executive's  dependents  shall be deemed to have
elected  to  exercise  their  rights  under  COBRA as of the  effective  date of
termination.  This  Section  4(d) shall not limit the  entitlement  of Executive
under any  insurance  or other  benefits  plan or policy that is  maintained  by
Employer for Executive's benefit.

     (d) Purchase of Life  Insurance.  Notwithstanding  anything to the contrary
contained  herein, in the event that the services of the Executive with Employer
terminate for any reason other than death, the Executive shall have the right to
acquire any life  insurance  policies  maintained by Employer on the life of the
Executive by (i) notifying Employer in writing of his desire to so purchase such
life  insurance  policy or policies and (ii) tendering to Employer a check in an
amount equal to the  interpolated  surrender  cash value of such life  insurance
policy or  policies  together  with any  unearned  portion of any  current  year
premium  thereof,  both  within  sixty (60) days of the  effective  date of such
termination.

     (e)  Termination  Following  a  PRT  Change  of  Control.  If,  during  the
Pre-Transaction  Period  and  following  a  PRT  Change  of  Control,   Employer
terminates  this  Agreement  and  Executive's  services  other than for cause or
Executive  terminates  this  Agreement  with  good  reason,  Executive  shall be
entitled to receive,  in addition to all of the  benefits  afforded to Executive
pursuant to Section  4(a)(1)  above,  a severance  payment in an amount equal to
$830,000  payable within thirty (30) days of the effective date of  termination.
For  purposes of this  Agreement,  PRT Change of Control  shall have the meaning
assigned to the term "Change of Control" in the Prior  Agreement  (as defined in
Section 7).

     (f)  Modification  of  Termination  Benefits.  This Section 4 shall only be
effective  during  the   Pre-Transaction   Period.   Upon  commencement  of  the
Post-Transaction  Period,  this  Section  4 shall be  amended  and  restated  by
Executive  and  Employer to contain  such  provisions  as the parties  agree are
customary  for  agreements  of  this  type  for  similarly  situated  companies;
provided,  however,  that in no event shall such  benefits be less  favorable to
Executive than those set forth in the Prior Agreement.

     5. Covenants of Executive.

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

     (b) Non-Competition. In return for the performance of the management duties
described in Section 3 hereof,  during the  Employment  Term and for a period of
one year thereafter in the event of the  termination of this Agreement  pursuant
to the provisions of Sections 4(a)(1),  4(a)(2), 4(b)(1), 4(b)(2) or 4(e) hereof
(the "Restrictive Period"),  Executive shall not, directly or indirectly, in any
capacity  whatsoever,  either on his own behalf or on behalf of any other person
or entity with whom he may be employed or associated,  compete with the Business
(as hereinafter  defined) in any of the following described manners: (i) perform
services  of the  types  that  Executive  performs  on  behalf  of the Group (as
hereinafter  defined)  for  himself,  or any  affiliate  of  himself  or for any
competitor of the Group if such  competitor  engages in the Business  within any
geographic area or territory wherein the Group is engaged in the Business at the
time of Executive's termination of services hereunder  ("Restrictive  Geographic
Area"); or (ii) solicit or accept any Business (or help any other person solicit
or accept  any  Business)  from any  person  or entity  that on the date of this
Agreement  is a  vendor,  customer  or  tenant  of the  Group  or at the time of
termination  of this  Agreement any vendor,  customer or tenant that is actively
being  pursued  by the  Group and that  Executive  knows is being  pursued.  For
purposes  hereof,  "Group"  shall mean Employer and any of its  subsidiaries  or
affiliates,  and the term  "Business"  means any  interest  in (A) any  internet
retail business that is within the primary  business of Employer,  as determined
from time to time,  by a majority  vote of the  Employer  Board and (B) any real
property within the retail business that is within the primary  business of PRT,
as  determined  from time to time by a majority  of Board of  Directors  of PRT.
Furthermore,  during the Restrictive  Period,  Executive shall not,  directly or
indirectly,  induce or attempt to persuade any  employee or customer,  vendor or
tenant of the Group or any such entity  being  actively  pursued by the Group to
terminate  its  business  relationship  with  the  Group or not  proceed  with a
business  relationship with the Group.  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 Restrictive  Period and in the Restrictive
Geographic  Area,  Executive shall not disclose or use, except in the pursuit of
the  Business for or on behalf of the Group,  any Trade  Secret (as  hereinafter
defined) of the Group,  whether  such Trade Secret is in  Executive's  memory or
embodied in writing or other  physical  form. For purposes of this Section 5(c),
"Trade Secret" means any information  that 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 during the course of his
service  which could have been obtained by him from public  sources  without the
expenditure  of  significant  time,  effort and expense  that does not relate to
Employer.

     (d) Return of Documents.  Upon  termination  of his 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 his control.

     (e) Equitable Relief. In the event of any breach by Executive of any of the
covenants contained in this Section 5, it is specifically  understood and agreed
that  Employer  shall be  entitled,  in addition to any other remedy that 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.

     (f)  Acknowledgment.  Executive  acknowledges  that he 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 this Section 5 are
fair and  reasonable,  are minimally  necessary to protect  Employer,  its other
stockholders  and the public from the unfair  competition of Executive who, as a
result of his  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 he  will  be  able to earn a  reasonable
livelihood following termination of his services notwithstanding  enforcement of
the covenants contained herein.

     6.  Gross  Up  Payments.   Anything  in  this  Agreement  to  the  contrary
notwithstanding, in the event that any payment 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
6) (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, or
any  interest or  penalties  are  incurred  by  Executive  with  respect to such
Payments (such excise tax,  together with any such interest and  penalties,  are
hereinafter  collectively referred to as the "Excise Tax"), then Executive shall
be entitled to receive an  additional  payment  (the  "Gross-Up  Payment") in an
amount  such that  after  payment by  Executive  of all taxes  imposed  upon the
Gross-Up Payment, including, without limitation,  federal, state, local or other
income  taxes,  FICA taxes,  and  additional  Excise Tax (and any  interest  and
penalties  imposed with respect to such taxes),  Executive  retains a portion of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     (a)  Determination of Gross-Up.  Subject to the provisions of paragraph (b)
below,  all  determinations  required to be made under this  Section,  including
whether and when a Gross-Up  Payment is required and the amount of such Gross-Up
Payment and the  assumptions  to be utilized in arriving at such  determination,
shall be made by the public  accounting firm that serves as Employer's  auditors
(the "Accounting Firm"),  which shall provide detailed  supporting  calculations
both to Employer and Executive  within 15 business days of the receipt of notice
from Employer or Executive that there have been  Payments,  or such earlier time
as is requested by Employer. In the event that the Accounting Firm is serving as
accountant or auditor for the  individual,  entity or group effecting the Change
of Control,  Executive shall designate another nationally  recognized accounting
firm to make the determinations  required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder).  All fees and expenses of
the Accounting Firm shall be borne solely by Employer.  Any Gross-Up Payment, as
determined  pursuant to this  Section,  shall be paid by  Employer to  Executive
within five days after the receipt by Employer and  Executive of the  Accounting
firm's  determination.  If the Accounting  Firm determines that no Excise Tax is
payable by Executive,  it shall furnish  Executive  with a written  opinion that
failure to report the Excise Tax on  Executive's  applicable  federal income tax
return would not result in the  imposition of a negligence  or similar  penalty.
Any  determination  by the  Accounting  Firm shall be binding upon  Employer and
Executive, except as provided in paragraph (b) below.

     (b) IRS  Claims.  As a result  of the  uncertainty  in the  application  of
Section  4999  of the  Code  at the  time of the  initial  determination  by the
Accounting Firm hereunder,  it is possible that the Internal  Revenue Service or
other  agency  will claim that a greater  Excise Tax is due,  and thus a greater
amount  of  Gross-Up  Payment  should  have  been  made by  Employer  than  that
determined  pursuant to paragraph  (a) above (an  "Underpayment").  In the event
that  Executive  is  required  to make a payment  of any such  Excise  Tax,  the
Accounting  Firm shall determine the amount of the additional  Gross-Up  Payment
due to the Executive based on the  Underpayment,  and such  additional  Gross-Up
Payment  shall  be  promptly  paid  by  Employer  to or for the  benefit  of the
Executive.  Executive  shall  notify  Employer  in  writing  of any claim by the
Internal Revenue Service or other agency that, if successful,  would require the
payment by Employer of the Gross-Up Payment or an Underpayment.

     7.  Prior  Agreement.  Except as set forth on  Schedule  1, this  Agreement
supersedes  and  is  in  lieu  of  any  and  all  other  employment  or  service
arrangements  between  Executive,  on the one hand,  and Employer,  Prime or its
predecessors  or  any  subsidiaries,  on  the  other  hand,  including,  without
limitation,   that  certain  Combined  Service  and  Special   Distribution  and
Allocation  Agreement dated as of March 19, 1998 (the "Prior Agreement") and any
and all such  employment  or  service  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  right  hereunder
provided that  substantially  all of the assets of Employer are also transferred
to the same party.

     9.  Successors.  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 and
Employer's successors and assigns. 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.  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;  provided,
however,  that Employer and Prime shall remain  primarily liable to Executive to
fulfill each of their respective  obligations  under this Agreement and that any
such  assignee  also  agrees to be  primarily  liable to  Executive  jointly and
severally  with  Employer on the one hand and Prime on the other hand to fulfill
all of Employer's and Prime's  obligations under this Agreement.  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.

     10.  Notices.  Any notice  required  or  permitted  to be given  under this
Agreement  shall be  sufficient if in writing and if delivered in person or sent
by any national overnight delivery service or by certified mail to the following
addresses (or to any other address that any party may designate by notice to the
other parties hereto):

     (a) if to Executive, to:

                  William H. Carpenter, Jr.
                  659 Rock Cove Lane
                  Severna Park, Maryland  21146

                  with a copy to:

                  David M. Fleishman, Esq.
                  Venable, Baetjer and Howard, L.L.P.
                  1800 Mercantile Bank & Trust Bldg.
                  Two Hopkins Plaza
                  Baltimore, Maryland  21201

         (b)      if to Employer, to:

                  Primeoutlets.com
                  100 East Pratt Street
                  19th Floor
                  Baltimore, Maryland 21202
                  General Counsel

                  with a copy to:

                  Winston & Strawn
                  35 West Wacker Drive
                  Chicago, Illinois 60601
                  Attention:  Wayne D. Boberg

         (c)      if to Prime, to:

                  Prime Retail, Inc.
                  100 East Pratt Street
                  19th Floor
                  Baltimore, Maryland 21202
                  General Counsel

                  with a copy to:

                  Winston & Strawn
                  35 West Wacker Drive
                  Chicago, Illinois 60601
                  Attention:  Steve J. Gavin

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

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

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

     14. Opportunity to Employ Counsel. Executive acknowledges receipt of a copy
of this  Agreement  prior to his execution of this  Agreement  with Employer and
also  acknowledges  that he has had ample time and opportunity to employ counsel
of his choice to provide  advice  concerning  the terms and  conditions  of this
Agreement.

     15.  Legal  Fees.  If  Employer  or Prime  materially  breach  any of their
respective  obligations  to Executive  under this  Agreement  and the  Executive
brings any action,  claim,  demand, suit or proceeding against Employer or Prime
to enforce his rights under this  Agreement,  Employer or Prime, as the case may
be,  agrees that it will pay all  reasonable  legal fees and related legal costs
(collectively "Legal Fees") incurred by Executive no later than thirty (30) days
following a judgment by a court of competent jurisdiction that Employer or Prime
materially  breached its  obligations  to the  Executive  under this  Agreement;
provided,  however,  that if it is determined by a final judgment or other final
adjudication by a court of competent jurisdiction that Employer or Prime did not
materially  breach any of its  obligations  to Executive  under this  Agreement,
Executive will pay to Employer or Prime,  as the case may be, within thirty (30)
days from such final judgment or adjudication the aggregate amount of legal fees
and  expenses  incurred by Company or Prime with  respect to such action and the
amount of any Legal Fees that were  previously  paid to Executive by Employer or
Prime  pursuant to this Section 15.  Without  limiting the  foregoing,  Employer
hereby  agrees to reimburse  Executive  for (a) his  reasonable  legal  expenses
incurred in connection with this Agreement subject to a maximum reimbursement of
$20,000 and (b) his reasonable  legal,  accounting and tax expenses  incurred in
connection with Executive's  direct or indirect  ownership of PRT securities and
in  connection  with any PRT Change of Control or  Employer  Change of  Control,
subject to a maximum annual reimbursement of $10,000.

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

     17. Notice of Future  Employment.  Executive  agrees that during the twelve
(12) consecutive months immediately following the termination of this Agreement,
Executive  will within  fourteen  (14) days of each  instance of new  employment
notify  Employer in writing of the identity of his new  employer,  the job title
associated  with such  employment and a description of the nature of Executive's
duties in connection with such employment.

     18. Resignation and Release.

     (a) Termination of Employment at Prime.  Executive's  employment with Prime
will  terminate  and  Executive  shall resign from Prime's  Executive  Committee
effective on the  Commencement  Date (as defined  herein).  Notwithstanding  the
previous  sentence,  Executive  shall  continue  to serve as a director  of PRT.
Furthermore,  Executive  acknowledges  and agrees that upon  termination of this
Agreement for any reason,  Executive shall have no right or expectation to renew
or recommence employment with Prime in any capacity.

     (b) Release of Claims.

     (1) Executive, with the intention of binding himself, his heirs, executors,
administrators  and  assigns,  does hereby  release and forever  discharge  (the
"Release")  Prime and all of its related  companies and  affiliated  enterprises
(other   than   Employer),   administrators,    agents,   officers,   directors,
shareholders,  successors,  assigns and attorneys (and each of their  respective
counsel  and  other  agents,  their  respective  legal  representatives,   their
respective  successors  and  assigns,  their  respect  past,  present and future
officers,  directors  and  shareholders,  and their  past,  present  and  future
employees) of and from all manner of actions,  cause or causes of action, suits,
debts, agreements,  promises, charges, claims and demands, whatsoever, in law or
in equity,  that Executive now has or may have, both known and unknown,  arising
out of his employment  with Prime and his termination  from Prime.  Such Release
includes, but is not limited to, any claims arising under Title VII of the Civil
Rights Act of 1964, as amended;  the Age  Discrimination  in Employment  Act, as
amended by the Older Workers Benefit  Protection Act of 1990; the Americans with
Disabilities  Act; or any claim for  discrimination  or  harassment of any kind,
breach  of  contract  or  public  policy,  wrongful  or  retaliatory  discharge,
defamation  and/or  any other  claim to any form of  compensation  or  benefits,
including  attorney fees,  and which arise prior to the date of this  agreement.
Such  Release  does not  include  any claims or causes of action  against  Prime
arising  solely out of  Executive's  ownership  of any capital  stock or limited
partnership interests in PRT or PRT LP.

     (2)  Prime,  with the  intention  of  binding  itself,  all of its  related
companies and  affiliated  enterprises  (other than  Employer) and each of their
respective  successors  and  assigns,  hereby  releases  Executive  from any all
claims,  causes of  action,  rights of action,  demands  or suits,  at law or in
equity or  otherwise,  that Prime now has or may have,  both known and  unknown,
arising out of his employment with Prime and his termination from Prime.

     (3) Prime and  Executive  understand  and agree that the releases set forth
herein do not in any way  affect  the  rights of either  party to take  whatever
steps may be  necessary  to enforce  the terms of this  Agreement  or any of the
agreements set forth on Schedule 1 or to obtain  appropriate relief in the event
of any breach of the terms of this  Agreement or any of the agreements set forth
on Schedule 1.

     19. Limited Guaranty by Prime. Prime hereby unconditionally  guarantees the
payments and benefits to which the  Executive  and his eligible  dependents  are
entitled to pursuant to Sections 3(a),  3(b)(1) and (2),  3(c)(1),  3(d),  3(h),
3(k), 3(1), 4, 6 and 15; provided, however, that this Section 19 shall terminate
and cease to be of any  force or effect  upon the  completion  of any  Strategic
Transaction.

     20. Binding Effect. This Agreement shall be binding and legally enforceable
against the parties hereto and their respective heirs, personal representatives,
successors and assigns, as the case may be.

[signature page follows]

<PAGE>


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


COMPANY:                                           EXECUTIVE:

PRIMEOUTLETS.COM                                   WILLIAM H. CARPENTER, JR.

By:      /s/ C. Alan Schroeder                    /s/ William H. Carpenter, Jr.
         ------------------------                 -----------------------------
Name:    C. Alan Schroeder
Title:   Executive Vice President,
         General Counsel and
         Secretary




PRIME RETAIL, INC.                                PRIME RETAIL, L.P.

By:      /s/ C. Alan Schroeder                  By:      Prime Retail, Inc.
Name:    C. Alan Schroeder                      Its:     General Partner
         ------------------------
Title:   Executive Vice President,
         General Counsel and                    By:    /s/ C. Alan Schroeder
         Secretary                                     ---------------------
                                                Name:  C. Alan Schroeder
                                                Title: Executive Vice President,
                                                       General Counsel and
                                                       Secretary

<PAGE>

                                   SCHEDULE 1
                             Compensation Agreements
                         between Employer and Executive



     Indemnification   Agreement   dated  March  22,  1994  between  William  H.
Carpenter, Jr. and Prime Retail, Inc., as the parties may have amended after the
date  thereof.   [Agreement  will  have  to  be  amended  based  on  Executive's
termination of employment from PRT LP]

     Indemnification  and  Options  Agreement  between  the Prime  Group,  Inc.,
William H. Carpenter,  Jr. and the Carpenter Family Associates LLC dated January
1, 1996.





     Secured  Promissory  Note made by the Carpenter  Family  Associates LLC, as
Borrower, payable to Prime Retail, L.P, as Lender, dated March 22, 1994.

     Pledge and Security  Agreement  between Carpenter Family Associates LLC and
Prime Retail, L.P dated March 22, 1994.

     Guaranty between William H. Carpenter, Jr., as Guarantor, and Prime Retail,
L.P. dated March 22, 1994.

     Allonge dated January 1, 1996 between  Prime  Retail,  L.P.,  the Carpenter
Family Associates LLC and William H. Carpenter, Jr.

     Reaffirmation  of Pledge and  Guaranty  between  Prime  Retail,  L.P.,  the
Carpenter Family  Associates LLC and William H. Carpenter,  Jr. dated January 1,
1996.

     Special  Distribution and Allocation  Agreement between Prime Retail,  L.P.
and the  Carpenter  Family  Associates  LLC dated  January 1, 1996.  [Relates to
special distributions to have been distributed on or prior to March 31, 1999]

     1999 Special  Distribution and Allocation  Agreement  between Prime Retail,
Inc., Prime Retail,  L.P. and the Carpenter Family  Associates LLC dated March ,
1999. [Relates to special  distributions to have been distributed on or prior to
March  31,  2000.  If  executed,  agreement  will  have to be  amended  based on
Executive's termination of employment from PRT LP]



<PAGE>

                                    Exhibit A


                                    EXHIBIT A
                           Capitalization of Employer


 -------------------------- --------------------- ------------------------------
 Class                        Authorized Shares    Issued and Outstanding Shares
 -------------------------- --------------------- ------------------------------
 -------------------------- --------------------- ------------------------------
 Preferred Stock, par value        5,000,000
 $0.01 per share
 ------------------------- ---------------------- ------------------------------
 ------------------------- ---------------------- ------------------------------
 Common Stock, par value          100,000,000                1,000
 $0.01 per share
 ------------------------- ---------------------- ------------------------------