SECOND AMENDED AND RESTATED
                        GUARANTY AND INDEMNITY AGREEMENT


     THIS SECOND  AMENDED AND RESTATED  GUARANTY AND INDEMNITY  AGREEMENT  (this
"Agreement")  is  entered  into as of this  10th day of July,  2002 by and among
Horizon Group Properties,  Inc., a Maryland corporation  ("HGP"),  Horizon Group
Properties,  L.P. a Delaware limited partnership ("HGP LP"), Prime Retail, Inc.,
a Maryland  corporation  ("Prime  Retail"),  and Prime Retail,  L.P., a Delaware
limited partnership ("Prime LP").

                                    RECITALS:

     A. Certain  affiliates  of HGP and HGP LP borrowed  funds  pursuant to that
certain Loan  Agreement  dated as of June 15, 1998 among Indiana  Factory Shops,
L.L.C.  ("Indiana  LLC"),  Nebraska  Crossing Factory Shops,  L.L.C.  ("Nebraska
LLC"),  Third  Horizon Group Limited  Partnership  ("Third  Horizon") and Nomura
Asset Capital  Corporation,  as amended by that certain First  Amendment to Loan
Agreement dated as of June 1999 among Third Horizon,  Nebraska LLC,  Indiana LLC
and  LaSalle  Bank  National  Association  (the  "Trustee"),  as trustee for CDC
Depositor Trust ST-I (formerly known as Nomura Depositor Trust ST-I), Commercial
Mortgage  Pass-Through  Certificates,   Series  1998-ST-I  (the  predecessor  in
interest to CDC Mortgage  Capital  Inc.  and as further  amended by that certain
Second Amendment to Loan Agreement and Settlement Agreement dated as of July 30,
2001 among Third Horizon,  HGP, HGP LP and the Trustee  (collectively,  the "CDC
Loan Agreement").

     B.  Pursuant  to that  certain  Guaranty  dated  as of June  15,  1998  (as
reaffirmed by that certain  Reaffirmation of Guaranty dated as of July 30, 2001,
the "CDC Guaranty"),  Prime LP agreed to guarantee certain  obligations  arising
under the CDC Loan Agreement and related loan documents.

     C. Pursuant to that certain  Guaranty and Indemnity  Agreement  dated as of
June 15, 1998 (as amended and  restated  by that  certain  Amended and  Restated
Guaranty and Indemnity  Agreement  dated as of July 30, 2001,  the "Guaranty and
Indemnity  Agreement"),  HGP and HGP LP, among other things, agreed, jointly and
severally,  to indemnify Prime Retail, Prime LP and certain related parties from
losses  they may  incur as a result of the  execution  and  delivery  of the CDC
Guaranty by Prime LP.

     D.  Prime LP, as the  successor  to  Horizon/Glen  Outlet  Centers  Limited
Partnership  ("Horizon/Glen  LP"), is jointly and severally  liable with HGP for
any  and  all  obligations   arising  under  that  certain  promissory  note  by
Horizon/Glen  LP in favor of First of America Bank - Michigan,  N.A.  ("First of
America") dated December 28, 1995 in the original principal amount of $2,800,000
(as amended from time to time,  together with any other documents or instruments
executed and/or delivered in connection with or otherwise  related to such note,
collectively, the "First of America Loan Documents").

<PAGE>
     E. Beal Bank,  S.S.B., a savings bank organized under the laws of the State
of Texas  (the  "Lender"),  has  agreed to  refinance  a portion  of the  amount
outstanding under the CDC Loan Agreement by making a loan (the "Loan") to Monroe
Outlet Center L.L.C., a Delaware limited liability company (the "Borrower"),  in
the maximum  principal  amount of  $7,000,000.00,  evidenced by (i) that certain
Promissory  Note I ("Note I"), of even date  herewith,  in the stated  principal
amount of $3,000,000.00 and (ii) that certain Promissory Note II ("Note II"), of
even  date  herewith,   in  the  stated   principal   amount  of   $4,000,000.00
(collectively  the  "Notes"),  each secured by  instruments  including,  without
limitation,  two Mortgages,  Security  Agreements and  Assignments of Leases and
Rents (collectively, the "Mortgages"), executed by the Borrower. Such Mortgages,
Notes  and any  other  documents  executed  in  connection  with  the  Loan  are
collectively referred to herein as the "Loan Documents".

     F. One of the conditions to the Lender's agreement to make the Loan is that
Prime LP  guarantee  (the  "Beal  Guaranty")  to the  Lender the full and timely
payment of up to $4,000,000 of the duties and  obligations of the Borrower under
Note II,  the  Mortgage  which  encumbers  the real  property  located in Monroe
County,  Michigan  owned by Borrower and the other Loan  Documents to the extent
they relate to the real property  described  above,  whether or not the Borrower
has personal liability thereunder or therefor.

     G.  Concurrent  with the  making of the Loan,  the  balance  of the  amount
outstanding under the CDC Loan Agreement will be refinanced or otherwise retired
and the CDC Guaranty will be terminated and of no further force and effect.

     H. In  consideration  of the agreement of Prime LP to provide the foregoing
accommodations,  Prime  Retail,  Prime LP, HGP and HGP LP have agreed to further
amend and restate the  Guaranty and  Indemnity  Agreement in its entirety as set
forth herein.

     NOW,  THEREFORE,  in  consideration of the foregoing and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:


                                   ARTICLE ONE


                                   DEFINITIONS

     Capitalized  terms used  herein and not  otherwise  defined  shall have the
meanings assigned to such terms in the Loan Documents.


                                   ARTICLE TWO


                         REPRESENTATIONS AND WARRANTIES

     2.1  Representations  and  Warranties of HGP and HGP LP. In order to induce
Prime LP to enter  into the Beal  Guaranty  and this  Agreement,  HGP and HGP LP
jointly and severally represent and warrant, as of the date hereof, that:

<PAGE>
(a)  HGP is a Maryland corporation duly organized,  validly existing and in good
     standing  under  the  laws of the  state of its  organization.  HGP LP is a
     Delaware limited  partnership duly organized,  validly existing and in good
     standing under the laws of the state of its  organization.  Each of HGP and
     HGP LP is qualified to do business and is in good  standing  under the laws
     of each  jurisdiction in which the nature of its business requires it to be
     so qualified,  (ii) has full power to own and lease its  properties  and to
     conduct  its  business as now being  conducted  and as  contemplated  to be
     conducted in the future,  and (iii) has full power and  authority and legal
     right,  has  taken all  necessary  corporate  and  partnership  action,  as
     applicable,  and has obtained all necessary consents and approvals required
     by  applicable  law to  permit  it to  execute,  deliver  and  perform  its
     obligations under this Agreement.  This Agreement has been duly and validly
     authorized,  executed  and  delivered  by  each  of HGP  and  HGP  LP,  and
     constitutes the legal, valid and binding obligations of each of HGP and HGP
     LP,  enforceable  against  each of HGP and HGP LP in  accordance  with  its
     terms,  subject  to  applicable  bankruptcy,  insolvency,   reorganization,
     moratorium and similar laws affecting  creditors rights  generally,  and to
     general principles of equity.

(b)  The  execution,  delivery and  performance of this Agreement by each of HGP
     and HGP LP do not (i)  conflict  with or violate the  Amended and  Restated
     Articles of  Incorporation or other charter  documents or By-laws,  limited
     partnership  agreement or other organizational  documents,  as the case may
     be, of HGP or HGP LP, (ii)  contravene or conflict  with any law,  statute,
     rule,  or  regulation  applicable  to HGP or HGP LP,  (iii)  contravene  or
     conflict with,  result in any breach of, or constitute a default under, any
     material  agreement or instrument binding on HGP or HGP LP, or to which any
     of their  respective  properties  or assets are subject,  (iv) result in or
     require the creation or imposition of any lien  whatsoever  upon any of the
     properties  or  assets  of HGP or HGP LP  (other  than  the  liens  arising
     pursuant to this Agreement or any other  documents or instruments  required
     or  contemplated  by  this  Agreement),  or (v)  require  any  approval  of
     stockholders or partners or any approval or consent of any Person under any
     agreement or  instrument  binding on HGP or HGP LP or to which any of their
     respective  properties  or assets are subject  which has not  already  been
     obtained.

(c)  To the best  knowledge of HGP and HGP LP, after  execution  and delivery of
     the Loan Documents by the parties thereto, no Event of Default has occurred
     and is continuing.

(d)  There are no offsets or defenses  available to HGP or HGP LP to the payment
     of any  amounts  required  under the Loan  Documents  or  otherwise  to the
     enforcement by the Lender of the Loan Documents.

(e)  The  outstanding  principal  balance of the Loan,  after  giving  effect to
     funding of such Loan, will be approximately $7 million.

<PAGE>
                                  ARTICLE THREE


                                  GUARANTY FEE

     HGP and HGP LP, jointly and severally,  agree to pay Prime LP an annual fee
of  $60,000  which  shall  accrue  from  June  30,  2002  until  the date of the
termination and unconditional  release of any and all obligations under the Beal
Guaranty and be payable in equal quarterly installments in arrears on each March
31, June 30, September 30 and December 31,  commencing June 30, 2002 (and on the
date of termination  and release).  At such time as Prime LP is no longer liable
as a guarantor  with  respect to any debt  obligations  of HGP, HGP LP or any of
their  affiliates,  Prime LP will pay to HGP LP an amount equal to the lesser of
(i)  $60,000 or (b) the amount  that HGP  and/or HGP LP had  previously  paid to
Prime LP pursuant to this Article Three since June 30, 2002.


                                  ARTICLE FOUR


                        COVENANTS RELATING TO GUARANTEES

     Each of HGP and HGP LP covenants  and agrees with Prime Retail and Prime LP
that  the  covenants  set  forth  in this  Section  4 will  terminate  upon  the
termination and unconditional release of any and all obligations of Prime Retail
and Prime LP under the Loan  Documents  and the First of America Loan  Documents
and the payment and performance in full of the reimbursement  obligations of HGP
and HGP LP under this Agreement;  provided, that notwithstanding anything to the
contrary in the foregoing, the covenants set forth in Sections 4.5 and 4.6 shall
not terminate unless and until there also has been an  unconditional  release of
any and all  obligations  of Prime Retail and Prime LP under the Loan  Documents
and the First of America Loan Documents and the payment and  performance in full
of all obligations of HGP and HGP LP under this Agreement in respect thereto.

     4.1  Deliveries  under Loan  Documents.  HGP will  deliver  copies to Prime
Retail and Prime LP of any notices or other information delivered or received by
HGP or HGP LP under the Loan Documents and the First of America Loan  Documents,
promptly  following the delivery or receipt of such notices or information.  HGP
and HGP LP will also  provide  to Prime  Retail and Prime LP such other data and
information  (financial and otherwise) as Prime Retail or Prime LP, from time to
time, may reasonably request bearing upon or related to the financial condition,
results of operations and credit worthiness of HGP and HGP LP.

     4.2 Amendments. Neither HGP nor HGP LP will amend, modify, grant, or permit
the  amendment,  modification,  termination or grant of, or any waiver under (or
consent  to, or permit or suffer to occur any action or omission  which  results
in, or is equivalent to, an amendment, modification, or grant of a waiver under)
the Loan  Documents or the First of American  Loan  Documents  without the prior
written  consent  of Prime  Retail  and Prime  LP,  which  consent  shall not be
unreasonably withheld.

<PAGE>
     4.3  Refinancings  and  Releases.  HGP  and  HGP  LP  hereby  agree  to use
commercially  reasonable efforts to obtain the release of Prime Retail and Prime
LP from any and all  obligations  under the First of America  Loan  Documents as
promptly as practicable.

     4.4 Application of Excess Proceeds. HGP and HGP LP hereby agree to apply or
to cause their subsidiaries to apply any Excess Proceeds first to the payment of
any  outstanding  obligations  under  Note II (for so long as Prime  LP  remains
liable as a guarantor in respect of such debt) and second to permanently  reduce
any  other   indebtedness   (including   permitted   pre-payments  of  principal
amortization) with respect to which Prime Retail or Prime LP is or may be liable
as a  guarantor,  co-obligor  or  otherwise.  "Excess  Proceeds"  shall mean the
aggregate  amount of net cash proceeds  (after  transaction  costs and expenses)
received by HGP or any of its  subsidiaries,  including  HGP LP, with respect to
(i) any financing, refinancing, sale, transfer or other disposition, including a
pledge,  of the property  currently held by any of Lakeshore  Marketplace,  LLC,
Medford Outlet Center LLC, Laughlin Outlet Center LLC or Warrenton Outlet Center
LLC or (ii) the  issuance of any equity  interest;  provided,  however,  "Excess
Proceeds" shall not include any such proceeds applied to make mandatory payments
in respect of any indebtedness of HGP or HGP LP.

     4.5 Restrictions on Distributions.  Neither HGP nor HGP LP will (i) declare
or pay any cash  dividends,  (ii) make any cash  distributions  to any partners,
members or shareholders of any of HGP or HGP LP (other than distributions to HGP
from HGP LP to fund corporate  administrative  expenses incurred in the ordinary
course of  business)  or (iii) set aside any funds for any such  purpose,  other
than  dividends  or  distributions  in the minimum  amount  necessary  under the
Internal  Revenue Code of 1986 (the "Code") in order to maintain HGP's status as
a real estate investment trust under the Code.

     4.6 Pledge  Agreement.  Each of Prime Retail and Prime LP  acknowledge  and
agree that certain Pledge Agreement,  dated as of July 31, 2001, made by HGP and
HGP LP in favor of Prime Retail and Prime LP, pursuant to which HGP LP and Third
HGI, L.L.C., among other things,  pledged to Prime Retail and Prime LP (i) a 99%
limited partnership  interest in Third Horizon and (ii) a 1% general partnership
interest in Third  Horizon,  shall be deemed  terminated and of no further force
and effect upon the  execution  and  delivery of this  Agreement  and the Pledge
Agreement.

     4.7  Restrictions  on  Encumbrances.  Except  only  for (i) the  liens  and
security  interests  arising under the Mortgage and related documents dated July
30, 2001 with  Greenwich  Capital  Financial  Products  related to the Lakeshore
Marketplace  center and (ii) the liens and security  interests arising under the
mortgages  and related  documents  dated of even date  herewith with UBS Warburg
Real Estate  Investments  Inc. and each of Medford  Outlet Center LLC,  Laughlin
Outlet Center LLC and Warrenton  Outlet Center LLC,  without the written consent
of Prime LP and Prime  Retail,  which Prime LP and Prime  Retail may withhold in
their sole discretion,  HGP LP shall not, and HGP and HGP LP shall cause each of
Lakeshore  Marketplace  Finance Company,  Inc.,  Medford Holdings LLC,  Laughlin
Holdings LLC and Warrenton Holdings LLC not to, execute,  cause, allow or suffer
any pledge or encumbrance of their limited liability company interests in any of
Lakeshore  Marketplace,  LLC, Medford Outlet Center LLC,  Laughlin Outlet Center
LLC or Warrenton Outlet Center LLC.

<PAGE>
     4.8  Notices  Regarding  Events of  Default.  HGP and HGP LP will  promptly
notify Prime Retail and Prime LP of any event or circumstance that is reasonably
likely to result in an Event of Default under the Loan Documents or the First of
America Loan Documents.


                                  ARTICLE FIVE

                              INTENTIONALLY OMITTED

                                   ARTICLE SIX


                             CONSENT OF PRIME RETAIL

     6.1  Consent.  Prime  Retail  hereby  consents  to  HGP,  HGP LP and  their
affiliates entering into the Loan Documents.


                                  ARTICLE SEVEN


                                    INDEMNITY

     7.1  Indemnity.  HGP and HGP LP jointly and  severally  agree to indemnify,
defend,  protect  and hold  Prime  Retail  and  Prime  LP and each of the  their
respective officers,  directors and affiliates  (collectively,  the "Indemnified
Parties")  harmless  from and  against,  and to pay  within  ten (10) days after
demand, any and all claims, damages, losses,  liabilities,  judgments, costs and
expenses  of any kind or nature  whatsoever  which the  Indemnified  Parties may
incur or suffer by reason of, in connection  with, or by virtue of any breach or
violation  of this  Agreement  by HGP or HGP LP or by reason  of the  execution,
delivery or  performance  of,  this  Agreement,  the Beal  Guaranty or any other
credit  enhancement  relating to the Loan Documents or the First of America Loan
Documents  including,  without  limitation,  the reasonable fees and expenses of
counsel for the Indemnified Parties with respect thereto. Promptly after receipt
by the  Indemnified  Parties  of  notice  of  the  commencement,  or  threatened
commencement,  of any  action  subject  to the  indemnities  contained  in  this
Section,  the Indemnified  Parties shall promptly notify HGP thereof,  provided,
however,  that the  failure of any  Indemnified  Party so to notify HGP will not
affect the  obligation  of HGP and HGP LP to indemnify the  Indemnified  Parties
with respect to such actions or any other action pursuant to this Section except
to the extent such  obligation  shall have been incurred  solely and as a direct
consequence  of such  failure.  The  obligations  of HGP and HGP LP  under  this
Section shall survive  forever,  regardless of the termination of this Agreement
or the payment in full of all of HGP and HGP LP's obligations hereunder.  To the
extent that the undertaking to indemnify,  defend, protect and hold harmless set
forth herein may be unenforceable as violative of any law or public policy,  HGP
and HGP LP agree to pay the maximum  portion which is permitted to be paid under
applicable  law. Any amounts unpaid  following  demand  pursuant to this Section
shall accrue interest at a rate of 12% per annum.

<PAGE>
                                  ARTICLE EIGHT


                                  MISCELLANEOUS

     8.1 Modification of this Agreement. No amendment, modification or waiver of
any provision of this Agreement  shall be effective  unless the same shall be in
writing and signed by Prime Retail, Prime LP, HGP and HGP LP. Any such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.

     8.2 Waiver of Rights by Prime  Retail and Prime LP. No course of dealing or
failure  or  delay on the part of Prime  Retail  or Prime LP in  exercising  any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
a single or partial  exercise  thereof preclude any other or further exercise or
the  exercise of any other right or  privilege.  The rights of Prime  Retail and
Prime LP under this  Agreement are cumulative and not exclusive of any rights or
remedies which Prime Retail or Prime LP would otherwise have, including, without
limitation, any rights of subrogation.

     8.3  Severability.  In case any one or more of the provisions  contained in
this Agreement should be invalid,  illegal or unenforceable in any respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired  thereby.  The parties shall
endeavor  in  good  faith  negotiations  to  replace  the  invalid,  illegal  or
unenforceable  provisions  with valid  provisions  the economic  effect of which
comes as close as  possible  to that of the  invalid,  illegal or  unenforceable
provisions.

     8.4 Governing  Law. THIS  AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND,  REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

     8.5 Notices

     All notices or other  communications  required or permitted hereunder shall
be (i) in  writing  and  shall be  deemed  to be given  (A)  when  received,  if
delivered in person,  (B) three  business  days after deposit in a receptacle of
the United States mail as registered or certified mail, postage prepaid, (C) the
business  day after  notice on which the party to whom such notice is  addressed
refuses  delivery by mail or by private  courier  service and (ii)  addressed as
follows:

                  If to HGP or HGP LP             Horizon Group Properties, Inc.
                                                  5000 Hakes Drive
                                                  Norton Shores, MI 49411
                                                  Attn:  President

                  with a copy to:                 Schiff, Hardin & Waite
                                                  6600 Sears Tower
                                                  Chicago, IL 60606-6473
                                                  Attn:  David Grossberg, Esq.
<PAGE>
                  If to Prime Retail or           Prime Retail, Inc.
                  Prime LP                        100 East Pratt Street
                                                  19th Floor
                                                  Baltimore, MD 21202
                                                  Attn:  R. Kelvin Antill

                  with a copy to:                 Winston & Strawn
                                                  35 W. Wacker Drive
                                                  Chicago, IL 60601
                                                  Attn:  Steven J. Gavin

     8.6 Waiver of Offset and Counterclaim.  HGP and HGP LP hereby waive any and
all rights of offset or  counterclaim  which HGP and HGP LP may  otherwise  have
against Prime Retail and Prime LP in connection  with the  enforcement  of their
rights hereunder.

     8.7  Joint  and  Several  Liability.  The  obligations  of HGP  and  HGP LP
hereunder  shall be joint and several.  Neither  Prime Retail nor Prime LP shall
not obligated to exercise any right or take any action against either HGP or HGP
LP prior to the enforcement of its rights against the other.

     8.8 Enforcement.  The parties agree that irreparable  damage would occur in
the event that any of the  provisions  of this  Agreement  were not performed in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and  provisions  of this  Agreement  in any federal  court  located in
Maryland  this being in addition to any other  remedy to which they are entitled
at law or in equity.  In  addition,  each of the parties  hereto (a) consents to
submit  itself  (without  making  such  submission  exclusive)  to the  personal
jurisdiction  of any federal  court located in Maryland in the event any dispute
arises out of this  Agreement or any of the  transactions  contemplated  by this
Agreement  and (b)  agrees  that it will  not  attempt  to deny or  defeat  such
personal jurisdiction by motion or other request for leave from any such court.

     8.9 Entire  Agreement.  This  Agreement  (including  the exhibits  attached
hereto)  contains the entire  agreement among the parties hereto with respect to
the  transactions  contemplated  hereunder,  and  supercedes  all  negotiations,
representations,  warranties,  commitments, offers, contracts and writings prior
to the date hereof  including  without  limitation  the  original  Guaranty  and
Indemnity  Agreement  and  the  amended  and  restated  Guaranty  and  Indemnity
Agreement.

                            [signature page follows]

<PAGE>
     IN WITNESS  WHEREOF the parties hereto have executed this  instrument as of
the date and year first above written.

                                     HORIZON GROUP PROPERTIES, INC.

                                     By:      /s/ ______________

                                     Its:     President



                                     HORIZON GROUP PROPERTIES, L.P.

                                     By:  HORIZON GROUP PROPERTIES, INC.

                                     By:      /s/ ______________

                                     Its:     President



                                     PRIME RETAIL, INC.

                                     By:      /s/ Glenn D. Reschke

                                     Its:     President, Chief Executive Officer



                                     PRIME RETAIL, L.P.

                                     By:  PRIME RETAIL, INC.

                                     By:      /s/ Glenn D. Reschke

                                     Its:     President, Chief Executive Officer