SEPARATION AGREEMENT

     This Separation  Agreement (the  "Agreement") is made and entered into this
23rd day of February,  2000 (the "Effective Date"), by and between Prime Retail,
Inc., a Maryland  corporation  ("Prime")  and the sole general  partner of Prime
Retail, L.P., a Delaware limited partnership (the "Operating Partnership"),  the
Operating  Partnership  (Prime  and  the  Operating  Partnership  are  sometimes
hereinafter  together referred to as the "Company"),  and Abraham Rosenthal,  an
individual domiciled in the State of Maryland (the "Executive").

                                   Witnesseth

     WHEREAS,  Prime, the Operating Partnership and the Executive entered into a
Combined Service and Special  Distribution and Allocation Agreement on March 19,
1998, effective as of January 1, 1998 (the "Combined Agreement"); and

     WHEREAS,  pursuant to the Combined  Agreement  the Executive is employed by
the  Company as its Chief  Executive  Officer and the  Executive  is a member of
Prime's Board of Directors (the "Board"); and

     WHEREAS,  the  Executive  is also  employed as an officer,  or serving as a
director, of certain affiliates and subsidiaries of the Company;

     WHEREAS,  the  Executive and the Company  desire to sever their  employment
relationship  and  the  Executive's  Board  membership  (including   Executive's
positions  as an officer or  director  of any  affiliate  or  subsidiary  of the
Company)  on amicable  and  agreeable  terms  effective  February  23, 2000 (the
"Separation Date").

     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,  the
parties agree as follows:

     1. Separation from Employment. The Executive hereby elects to terminate his
employment with the Company (and all affiliates and subsidiaries)  without "Good
Reason" (as such term is defined in the Combined Agreement)  effective as of the
Separation Date. The Executive's  membership on Prime's Board, and any committee
thereof, and the boards of directors,  and committees thereof, of all affiliates
and subsidiaries of the Company upon which the Executive  currently serves, will
also terminate as of the  Separation  Date. The parties hereto waive any advance
notice of such  termination that may be required under the terms of the Combined
Agreement.

     The  parties  hereto  have  agreed on a joint  public  announcement  of the
Executive's  separation,  which  announcement  is attached  hereto as Exhibit A.
Because the  announcement  sets forth in detail the parties'  understandings  in
connection  with the  Executive's  separation,  the parties  hereby  agree that,
except  as  required  by  law,  no  further  announcements  or  disclosures  are
warranted.  Notwithstanding the foregoing, before any party makes any disclosure
about the Executive's  separation,  the party agrees to notify the other parties
hereto,  such notice to include a detailed  summary of the proposed  disclosure.
The parties further agree that the termination of their employment  relationship
is as a result of a joint amicable  decision and does not merit any  disparaging
remarks or comments of any party hereto,  and such remarks or comments  shall be
deemed a breach of this Agreement.

     2. Separation Payments.  The Executive is entitled to receive the following
payments on account of his separation (collectively, the "Separation Payments"):

     (a) Base Distributions. The Operating Partnership will pay to the Executive
all accrued but undistributed  amounts of the Base Distribution (as such term is
defined in the Combined  Agreement)  through March 1, 2000.  The payment will be
made on or prior to March 2, 2000,  but in any event  following  the  Revocation
Period set forth in Section 15 below;

     (b) Special  Distribution.  On or prior to March 1, 2000,  but in any event
following the Revocation Period,  the Operating  Partnership will make a special
distribution (the "Special  Distribution") to the Executive or to his designated
affiliates equal to the aggregate balance of unpaid principal and interest as of
the date of such  distribution  with respect to that certain Secured  Promissory
Note of  Rosenthal  Family LLC dated March 22, 1994 (as modified by that certain
Allonge dated January 1, 1996) (the "Note"), which amount totaled $628,927.85 as
of December 31, 1999.  The  Executive  hereby  agrees that all then  outstanding
obligations under the Note should automatically accelerate upon the date of such
distribution  and that the Executive shall cause all such obligations to be paid
in full; and

     (c) Severance Distribution. The Operating Partnership will pay to Executive
an amount equal to $1,750,000 (the "Severance Distribution"),  of which $600,000
shall be payable on the day following the Revocation Period set forth in Section
15 below. The balance shall be paid,  without  interest,  in eighteen (18) equal
monthly installments of $63,888.89 payable on the last day of each month (or, in
the event such day is not a business day on the next  succeeding  business  day)
commencing March 31, 2000.

     All payments made by the Operating  Partnership  pursuant to  subparagraphs
(a) and (c) above shall be treated as "guaranteed  payments"  within the meaning
of Section 707(c) of the Internal Revenue Code of 1986, as amended (the "Code").
The Company  agrees  that,  except to the extent that it would be  detrimentally
affected,  the Operating  Partnership will specifically  allocate, in accordance
with Section 704(c) of the Code, the corresponding deductions that are available
to the Operating  Partnership  as a result of such  distributions  as guaranteed
payments to the  Executive  to the  maximum  extent to which the  Executive  can
utilize the same on his  individual  federal or state income tax returns for any
calendar year.

     All payments made by the Operating Partnership pursuant to subparagraph (b)
above shall be deemed a distribution  pursuant to Section 731(a) of the Code and
not as a guaranteed payment pursuant to Section 707(c) of the Code.

     The  provisions  of this Section 2 shall  supercede  any  provisions in the
Operating Partnership's Partnership Agreement which are contrary hereto.

     All payments or  distributions  not made when due in  accordance  with this
Section 2 shall  accrue  interest at a rate per annum equal to the prime or base
lending rate from time to time  announced  by  Mercantile - Safe Deposit & Trust
Company plus 2.5% (the "Interest Rate").

     In the event any payment or distribution  pursuant to this Section 2 is not
made within 30 days after it becomes due, then all remaining  obligations of the
Company under this Section 2 shall  immediately  become due and payable.  In the
event of any such  acceleration,  all costs of collection  incurred by Executive
(including attorneys' fees) shall be borne by the Company.

     3. Business Expenses. The Executive shall, in accordance with the Company's
customary  policies and  procedures,  be  reimbursed  for all business  expenses
incurred  through and  including  the  Separation  Date for which the  Executive
submits appropriate invoices and similar records.

     4.  Employee  Benefits.  The  Executive  and his  eligible  dependents  are
entitled to receive:
     (a)  Company-provided  health insurance  benefits,  of a type and nature no
less favorable to the Executive  than were in effect as of the Separation  Date,
for the 18-month period beginning on the Separation Date; and

     (b) Company-provided life insurance benefits under the Company's $2 million
term life insurance  policy on the life of the Executive for the 18-month period
beginning on the Separation Date.

     Notwithstanding  the  foregoing,   the  Company-provided  health  and  life
insurance benefits will terminate prior to the expiration of the 18-month period
if the  Executive  becomes  covered by a  subsequent  employer's  health or life
insurance  program  which  provides  comparable  benefits to the  Executive  and
imposes no pre-existing  condition  exclusion with regard to his coverage or his
eligible  dependents'  coverage.  The Executive  agrees that he will immediately
notify  the  Company in writing of his  obtaining  subsequent  employment  which
provides health and welfare benefits during the 18-month period beginning on the
Separation  Date.  Following  the  18-month  period of  Company-provided  health
insurance  benefits  described in subparagraph  (a) above, the Executive will be
entitled to all rights  afforded to him under the federal  Consolidated  Omnibus
Budget Reconciliation Act of 1985 ("COBRA") to purchase continuation coverage of
such health insurance  benefits for himself and his eligible  dependents for the
maximum period  permitted by law. To the extent  required by applicable law, the
Executive  will be deemed to have  elected to exercise his rights under COBRA as
of the first day of such 18-month period.

     Notwithstanding  anything to the contrary  contained herein,  the Executive
has the right to acquire the $2 million term life insurance  policy  obtained by
the Company on the life of the Executive by (i) notifying the Company in writing
of his desire to so purchase  such life  insurance  policy or policies  and (ii)
tendering  to  the  Company  a  cashier's  check  in  an  amount  equal  to  the
interpolated  cash  surrender  value of such life  insurance  policy or policies
together  with any unearned  portion of any current year premium  thereof,  both
within 60 days of the effective date of such termination.

     (c) The  Executive  is entitled to receive  all vested  benefits  under the
Company's  401(k) plan.  No accrual of service  time will be possible  after the
Separation  Date for  purposes of the  Executive's  entitlement  to any employee
benefit,  including  a  pension,  401(k) or profit  sharing  benefit,  long-term
disability  benefit or  vacation  pay.  The  Executive  will be  eligible  for a
matching  contribution  under the Company's 401(k) plan, if the plan so permits,
for any elective  deferrals  made by the  Executive on or before the  Separation
Date. The Company shall, if the plan so permits, allow the Executive to withdraw
any vested amount in the Company's 401(k) plan.

     5. Restricted  Stock Awards and Stock Options.  The Executive  acknowledges
and agrees that he is not eligible to receive any awards made under Prime's 1999
Long-Term  Incentive  Program (the "1999 LTIP") and that all rights and benefits
of the Executive under the 1999 LTIP shall cease as of the date hereof.

     As of the Separation Date, all of the Executive's options awarded under the
Prime Retail,  Inc. 1998 Long-Term Stock Incentive Plan (the "Option Plan") will
become fully vested, to the extent that any portion of the options are unvested.
Exhibit B attached  hereto sets forth  certain  information  with respect to the
options awarded to Executive under Prime's option and incentive plans.

     6. Executive's  Ownership Interests in Related Entities. On the date hereof
and in  consideration  for the payment of $100.00 in cash and the  promises  and
covenants of the Company contained  herein,  the Executive agrees to execute and
deliver to the Company or its  designee any and all  certificates  for shares of
capital stock (with  appropriate  stock powers attached and properly  signed) of
the   Company's   subsidiaries   and   affiliates   (other  than  the  Operating
Partnership),  including, but not limited to, Prime Retail Services, Inc., Prime
Retail  E-Commerce,  Inc. and Prime  Retail  Furniture,  Inc.  (all of which are
Maryland  corporations) (the "Subsidiary Shares").  The Executive further agrees
to execute  and  deliver  such other  documentation  as the  Company  reasonably
requests to effect the assignment of the Subsidiary Shares. For the avoidance of
doubt,  nothing  contained  in this  Section 6 shall be deemed  to  require  the
Executive  to  transfer  or carry any of his  equity  interests  in Prime or the
Operating Partnership.

     7. Office and  Administrative and Technical  Assistance.  For the six-month
period  following the  Separation  Date,  the Company will, at its sole expense,
provide the  Executive  an office on the 15th floor of its  Baltimore,  Maryland
facility with such  secretarial  assistance as the  Executive  shall  reasonably
require. To the extent acceptable to the Executive and the Company,  such office
facilities  and  secretarial   assistance  may  also  be  provided  through  the
outplacement  firm  retained  by  Executive  pursuant  to  Section 9 below.  The
Executive  will be permitted to remove from the Company's  premises the computer
and related equipment  currently located in his office and the Executive will be
under no  obligation  to  return  such  equipment.  The  Executive  will also be
permitted  to retain the home fax machine,  the phone  number  dedicated to such
machine and the mobile phone furnished to him by the Company;  provided that all
costs and expenses related to the ownership, use or service of such items on and
after  the  Separation  Date  shall be borne  solely by the  Executive.  For the
six-month period  following the Separation Date, the Executive will receive,  at
no  charge  to the  Executive,  technical  assistance  from  the  Company's  MIS
Department regarding the installation and operation of his computer,  whether on
the Company's premises or elsewhere. The parties further agree that the value of
the equipment  retained by the Executive pursuant to this Section 7 shall be the
book value thereof as reflected in the  accounting  records of the Company as of
the month end immediately preceding the Separation Date.

     8. Property of the Company.  All  originals  and copies of books,  records,
documents,  customer lists, sales materials, tapes, keys, credit cards and other
tangible property (excluding the computer,  fax and phone equipment described in
Section 7 above) of the Company within the  Executive's  possession or under his
control  will be  returned  to the  Company  on or before the  Separation  Date.
Notwithstanding  the foregoing,  the Executive also shall be permitted to retain
his original rolodex and all awards and similar mementos  received by him during
his tenure with the Company.

     9.  Outplacement   Assistance.   For  the  12-month  period  following  the
Separation  Date,  the Executive  will be permitted to utilize the services of a
professional  outplacement  firm of his  choice  and the  Company  will  pay the
reasonable fees associated therewith,  up to a maximum of $20,000 (excluding any
charge  relating  to the  provision  of office and  secretarial  services of the
nature described in Section 7 above).

     10. Legal Fees.  The Company shall promptly pay, or reimburse the Executive
for, the legal fees and expenses of counsel to the Executive in connection  with
the preparation,  negotiation, execution and delivery of this Agreement, up to a
maximum of $5,000, plus expenses.

     11.  Coverage under Prime's  Directors' and Officers'  Liability  Insurance
Policies.  For a period of three years beginning on the Separation  Date,  Prime
shall provide,  or cause to be provided,  to the Executive,  at no charge to the
Executive, directors' and officers' liability insurance protection substantially
equivalent  in kind  and  scope  as that  provided  by  Prime's  directors'  and
officers' liability insurance policies as in effect from time to time.

     12. Accounting and Tax Services. For the three-year period beginning on the
Separation  Date, the Company will pay any reasonable fees the Executive  incurs
for professional  accounting and tax services rendered to him in connection with
his interest in Prime Retail, L.P. to the extent that such fees are in excess of
$3,000,  which is the average of such fees incurred by the Executive  during the
1998 and 1999 calendar years.  Without limiting the foregoing,  the Company will
pay the  reasonable  fees the  Executive  incurs for legal,  accounting  and tax
services rendered to him in connection with a Change of Control, as such term is
defined in the Combined Agreement, up to a maximum of $15,000 per transaction.

     13. Indemnification Matters. After the Separation Date, Prime shall, to the
same  extent  and on the same  terms  and  conditions  provided  for in  Prime's
articles  of  incorporation  and  bylaws,  in each  case as of the  date of this
Agreement,  to the extent  consistent with  applicable  law,  indemnify and hold
harmless  the  Executive  against all costs and expenses  (including  reasonable
attorneys' fees),  judgments,  fines, losses, claims,  damages,  liabilities and
settlement amounts paid in connection with any claim, action,  suit,  proceeding
or investigation  (whether arising before or after the Separation Date), whether
civil,  administrative  or  investigative,  arising out of or  pertaining to any
action or omission in the  Executive's  capacity as an officer or  director,  in
each case occurring on or before the Separation Date;  provided,  however,  that
there shall be no indemnification for the Executive in relation to matters as to
which the Executive is adjudged to have been guilty of fraud or intentional  act
of malfeasance, in which event the Executive shall indemnify the Company for any
costs,  losses,   damages,   judgments,   liabilities  and  expenses  (including
reasonable  attorneys'  fees) which may be suffered by the Company in connection
therewith.

     The parties agree to reasonably  cooperate in the future to the extent that
either  party is needed by the other as a witness in any  litigation  and in any
transaction  matters  related  to the  Executive's  departure  or other  matters
arising out of the  operations of the Company prior to such  termination  taking
into account each party's  other  commitments.  The Company will  reimburse  the
Executive for any reasonable out-of-pocket expenses he incurs in connection with
his compliance with this provision.

     Expenses  incurred  by the  Executive  in  connection  with any  claim  for
indemnification shall be paid by the Company in advance upon the written request
of the  Executive.  At the  Company's  option  and at its sole  expense,  it may
provide  legal  counsel on behalf of the  Executive  in the defense of any claim
arising out of his  employment  with the Company;  provided,  however,  that the
Executive retains the right to participate in the defense of any such action.

     14. Mutual Release and Waiver. The Executive,  on the Executive's behalf as
well as on behalf of the Executive's  spouse,  agents,  representatives,  heirs,
executors,  administrators,  successors, assigns and anyone claiming through the
Executive,  hereby forever  irrevocably  releases,  relinquishes  and waives all
rights  that the  Executive  has had or now has against  Prime or the  Operating
Partnership  (including any past,  present and future  subsidiaries,  affiliated
entities, officers, directors, partners,  shareholders,  employee benefit plans,
trustees,  fiduciaries and agents), whether known or unknown, in any way related
to his employment by the Company,  or the termination  thereof,  with respect to
any and all actual or potential:

     (a) claims against the Company based on the common law, including,  but not
limited to, claims of personal injury, emotional and mental distress,  injury to
personal reputation,  defamation (including libel or slander), or termination or
denial of employment in contravention  of the common law or any federal,  state,
local or public policy, law or regulation;

     (b) claims against the Company based on any contract, express or implied;

     (c) claims  against  the Company  based upon  alleged  violation(s)  of any
statute,  regulation or ordinance,  whether federal,  state or local, based upon
any other federal, state or local policy,  including but not limited to, any and
all claims  under  Title VII of the Civil  Rights Act of 1964,  as  amended,  42
U.S.C. Section 2000 et seq., the Age Discrimination in Employment Act, 29 U.S.C.
Section 621 et seq.,  the Americans  With  Disabilities  Act, 42 U.S.C.  Section
12101 et seq., the Employee  Retirement Income Security Act of 1974, as amended,
29 U.S.C.  Section 1001 et seq., the Fair Labor Standards Act, 29 U.S.C. Section
201 et seq.,  the Family and Medical Leave Act, 29 U.S.C.  Section 2601 et seq.;
and all  other  federal,  state  or local  laws  touching  upon  the  employment
relationship; and

     (d) claims  against the Company based upon any theory of alleged  equitable
entitlement to relief.

     Notwithstanding the foregoing,  the Executive does not release Prime or the
Operating  Partnership  from any claims or causes of action against either party
arising  solely  out of  the  Executive's  ownership  of any  capital  stock  or
partnership interests of Prime or the Operating Partnership.

     The  Company,  on its behalf and on behalf of its  successors  and assigns,
hereby forever irrevocably releases, relinquishes and waives all rights that the
Company has had or now has against the Executive,  whether known or unknown,  in
any way related to his employment by the Company, or the termination thereof.

     The parties hereto  understand and agree that the releases set forth herein
do not in any affect the rights of either  party to take  whatever  steps may be
necessary to enforce the terms of this Agreement or to obtain appropriate relief
in the event of any breach of the terms of this Agreement.

     15. Opportunity to Employ Counsel.  The Executive warrants,  represents and
agrees  that he has had  sufficient  opportunity  to secure  the  services  of a
privately-retained  attorney of his free choice,  who is an  experienced  lawyer
familiar with the rights the Executive  waives herein;  that he understands  the
terms, obligations and rights he is releasing under this Agreement;  that he has
had sufficient time to consider this Agreement  before signing it; that he knows
and understands  the rights he is waiving and the terms and  consequences of his
signature  on  this   Agreement;   that  he  signs  this  Agreement   knowingly,
voluntarily, in good faith, with a genuine intent to waive the rights identified
herein;  and that he has not been  subjected  to any  duress,  coercion,  fraud,
overreaching,  exploitation  or  pressure  to sign it.  Further,  the  Executive
acknowledges  that he has had 21 days within  which to consult  with an attorney
prior to executing this Agreement. The Executive has been given 7 days following
the  execution  of this  Agreement  (the  "Revocation  Period")  to revoke  this
Agreement and he  understands  and  acknowledges  that the  Agreement  shall not
become final until the Revocation Period has expired.

     The parties hereto further agree that in executing this Agreement,  none of
the parties is relying or has relied upon any  representation  or statement made
by the another party with respect to the facts involved in this matter,  or with
regard to another  party's rights or asserted  rights.  Both the Company and the
Executive  assume the risk of any  mistake of fact in  connection  with the true
facts involved in the Executive's  employment  relationship with the Company and
the  termination of that employment  relationship  and with regard to any of the
facts which are now unknown to each party.

     16. Restrictive Covenants.
     (a) Non-Competition.  Until the first anniversary of the Separation Date or
such earlier date as the Company shall be in breach of any material term of this
Agreement  (the  "Restrictive  Period"),  the 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) by performing  services of the types
that the Executive performed during his employment with the Company on behalf of
the Group (as herein  defined) for himself,  or any  affiliate of himself or for
any competitor of the Group if such  competitor  engages in the Business  within
the United States,  Puerto Rico and Western Europe (the "Restrictive  Geographic
Area").  For  purposes  hereof,  "Group"  shall  mean  Prime  and the  Operating
Partnership and any of their respective subsidiaries or affiliates, and the term
"Business" means the holding of any interest in, or the development or operation
of, (i) any real property  within the retail  business that is within a ten (10)
mile radius of any property owned, operated or being developed by the Company as
of the  Separation  Date  or (ii)  any  real  property  within  the  Restrictive
Geographic  Area at least  25% of the  gross  leaseable  area of which is, or is
reasonably  expected  to  be,  occupied  by  tenants  of the  Company  as of the
Separation Date.  Notwithstanding  the foregoing,  nothing herein shall prohibit
the 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.

     (b)  Non-Solicitation  During the Restrictive  Period,  the 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  which as of the
Separation Date the Executive  knows is being actively  pursued by the Group, to
terminate  its  business  relationship  with  the  Group or not  proceed  with a
business relationship with the Group.

     (c)  Non-Disclosure of Trade Secrets.  During the Restrictive Period and in
the  Restrictive  Geographic  Area, the Executive  shall not disclose or use any
Trade Secret (as hereinafter defined) of the Group, whether such Trade Secret is
in the  Executive's  memory or embodied in writing or other  physical  form. For
purposes hereof,  "Trade Secret" means any information that derives  independent
economic value, actual or potential,  with respect to the Company 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 the  Executive
during  the  course  of his  employment  with the  Company,  or  outside  of his
employment  with the Company,  which could have been obtained by him from public
sources without the expenditure of significant time, effort, and expense.

     (d) Notice of Subsequent Employment. For purposes of enforcing this Section
16, the Executive agrees that he will immediately  notify the Company in writing
of his subsequent employment during the Restrictive Period.

     (e) Permitted Activity. Nothing contained in this Section 16 shall limit or
restrict the Executive from seeking or discussing an  employment,  consulting or
other business relationship with any third party, including any party engaged in
the Business;  it being  acknowledged and agreed that prior to entering into any
such relationship that would violate the terms of this Section 16 Executive must
obtain the written consent of the Company.  Any request for such a consent shall
be furnished in writing in accordance with Section 22 hereof.

     17. Breach of Agreement. In the event of any actual or threatened breach of
Sections 1, 8, 14 or 16 of this Agreement, the Executive acknowledges and agrees
that the Company may seek to enforce the terms of this  Agreement  in a court of
law or  equity  and that the  remedy  at law or equity  for any  breach  will be
inadequate.  Therefore,  the Company shall be entitled, in addition to any other
remedy at law or equity, to injunctive relief.

     18. No Admissions.  This Agreement  results from a mutual decision and does
not constitute an admission by Executive,  Prime, the Operating Partnership,  or
any of the other  released  parties,  of any violation of any federal,  state or
local  law,  regulation,  ordinance  or statute  or of any  employment  contract
(including the Combined Agreement), whether written or oral.

     19. Amendment or Termination of Agreement. This Agreement may be amended at
any time by written agreement  between Prime, the Operating  Partnership and the
Executive. This Agreement shall remain in full force and effect until terminated
upon mutual consent of the parties in writing.

     20. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between the parties with respect to the subject matter hereof and supersedes any
and all other  agreements,  either oral or written,  between the parties  hereto
with respect to the subject
matter hereof.

     21. Successors and Assigns. All provisions of this Agreement shall inure to
the  benefit  of and  be  enforceable  by the  Executive's  personal  and  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees and the  successors and assigns of Prime and the Operating
Partnership.  If the Executive should die while any amounts are still payable to
him  hereunder,  all such amounts shall be paid in accordance  with the terms of
this Agreement to the  Executive's  devisees,  legatees or other designee or, if
there be no such designee,  to the Executive's  estate. The Company 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 the Company,  as the case may be, by  agreement in form and  substance
reasonably   satisfactory   to  the   Executive,   expressly,   absolutely   and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent  that the  Company  would be required to perform it if no
such  succession  or assignment  had taken place.  Any failure of the Company to
obtain such  agreement  prior to the  effectiveness  of any such  succession  or
assignment will be a material breach of this Agreement.

     22.  Notices.  Any notice  required  or  permitted  to be given  under this
Agreement will 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):



<PAGE>

     (a) if to the Executive, to:

                  Abraham Rosenthal
                  3111 Blendon Road
                  Owings Mills, Maryland  21117

     (b) if to Prime or the Operating Partnership:

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

                  with a copy to:

                  Mr. Michael W. Reschke
                  Chairman of the Board of Prime Retail, Inc.
                  c/o The Prime Group, Inc.
                  77 West Wacker Drive, Suite 3900
                  Chicago, Illinois  60601

     23.  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.

     24.  Severability.  The Company and the 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.

     25. No  Waiver.  No failure or delay by the  Company  or the  Executive  in
enforcing or exercising any right or remedy  hereunder shall operate as a waiver
hereof.  No  modification,  amendment or waiver of this Agreement nor consent to
any  departure by the  Executive  from any of the terms or  conditions  thereof,
shall be  effective  unless in writing  and signed by an  authorized  officer of
Prime.  Any such  waiver or  consent  shall be  effective  only in the  specific
instance and for the purpose for which given.

     26.  Counterparts.  The parties may execute  this  Agreement in one or more
counterparts, all of which together shall constitute but one Agreement.

     [Remainder of Page Intentionally Left Blank; Signature Page to Follow]



<PAGE>


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


EXECUTIVE:                                        PRIME RETAIL, INC.

                                                  By:  /s/ C. Alan Schroder
                                                       -------------------------
/s/Abraham Rosenthal                            Name:  C. Alan Schroeder
-----------------------
  Abraham Rosenthal                            Title:  Executive Vice President,
                                                       General Counsel and
                                                       Secretary



                                                  PRIME RETAIL, L.P.

                                                  By:  Prime Retail, Inc.
                                                 Its:  General Partner

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