GUARANTY AGREEMENT


     THIS GUARANTY  AGREEMENT  ("Guaranty")  is made as of the 10th day of July,
2002, by the  undersigned  (hereinafter  referred to individually as "Guarantor"
and collectively as "Guarantors"), in favor of BEAL BANK, S.S.B., a savings bank
organized under the laws of the State of Texas ("Lender").


                              W I T N E S S E T H:


     A.  Lender  has  agreed  to  make a loan  (the  "Loan")  to  MONROE  OUTLET
CENTER,LLC,  a Michigan limited liability company  ("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
Commercial  Mortgages  (collectively,  the  "Mortgages"),  executed by Borrower,
which Notes and Mortgages are being executed and delivered by Borrower to Lender
contemporaneously herewith.

     B. One of the  conditions  to Lender's  agreement  to make the Loan is that
Guarantors  guarantee to Lender the full and timely  payment of the Loan and the
performance  and payment of all debts,  duties and obligations of Borrower under
the Notes,  the Mortgages,  and the other documents  executed in connection with
the Loan  (collectively,  the "Loan  Documents"),  whether or not  Borrower  has
personal liability thereunder or therefor.

     NOW,  THEREFORE,  as a  material  inducement  to Lender to make the Loan to
Borrower,  and for  further  good and  valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged and confessed,  each Guarantor does
hereby,  unconditionally,  irrevocably  and  absolutely,  jointly and severally,
warrant and represent to and covenant and agree with Lender as follows:

     1. Guaranty of Obligation.

(a)  Each Guarantor  unconditionally,  irrevocably and  absolutely,  jointly and
     severally,  guarantees to Lender (i) that all obligations and  indebtedness
     evidenced  by or provided in the Notes,  the  Mortgages  and the other Loan
     Documents  will be promptly paid when due and in accordance  with the terms
     and  provisions  thereof  (and as they may be amended,  extended or renewed
     from time to time),  and (ii) the prompt and full payment,  performance and
     observance, when due, of all other indebtedness,  liabilities,  obligations
     and duties of every kind and  character  of Borrower to Lender  relating in
     any way to the Loan,  whether  absolute  or  contingent,  joint or several,
     secured or unsecured,  due or not due, contractual or tortious,  liquidated
     or  unliquidated,  arising  by  operation  of law or  otherwise,  direct or

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     indirect,  relating in any way to the Loan, and including,  but not limited
     to, any debt,  obligation or liability of Borrower to Lender as a member of
     any partnership, syndicate, association or other group, or whether incurred
     by  Borrower  as  principal,  surety,  endorser,   accommodation  party  or
     otherwise;  including,  without  limitation,  interest  on all of the above
     amounts as agreed  upon  between  Borrower  and  Lender,  or if there is no
     agreement, at the highest lawful rate, and any and all renewals, extensions
     and rearrangements of all or any part of the indebtedness,  obligations and
     liabilities  hereinabove described.  Notwithstanding  anything contained in
     this Guaranty to the contrary, (i) the liability of Prime Retail, L.P. as a
     Guarantor,  is  limited  tothe  maximum  amount of (x)  $4,000,000.00  (the
     "Guaranty Amount"),  (y) is with regard only to the payment and performance
     of the  obligations  of the  Borrower in regard to Note II and the Mortgage
     which encumbers the real property located in Monroe County,  Michigan which
     is described on Exhibit "A" attached hereto and the other Loan Documents to
     the extent  they  relate to the real  property  described  on  Exhibit  "A"
     attached hereto and (z) shall arise only upon the occurrence of an Event of
     Default  under  Note II which  shall be solely  the  result  of  Borrower's
     failure to pay any installment of principal  and/or interest due under Note
     II as and when the same becomes due and such failure shall continue  beyond
     the  expiration of any cure or grace period,  if any is  applicable,  under
     Note II,  (ii) the  Guaranty  Amount  shall be reduced by the amount of any
     principal  payments made upon any of the  indebtedness  evidenced by Note I
     derived  from the  Property  (as defined in the  Mortgage  entered  into in
     connection  with Note II), (iii) once the principal  balance of the Loan is
     reduced to $5,000,000.00, Prime Retail, L.P. will have no further liability
     as a Guarantor. The foregoing limitation of liability applies only to Prime
     Retail, L.P. and no other Guarantors,  whether now or hereafter owned by or
     merged into the Prime Retail,  L.P. Following written request from Borrower
     to Lender given  subsequent to the date Prime  Retail,  L.P. has no further
     liability hereunder,  Lender will so confirm in writing.  This agreement of
     Lender is solely for the benefit of Prime Retail, L.P.

(b)  All indebtedness,  duties,  obligations and liabilities  described above or
     otherwise  covered by this Guaranty,  or intended so to be, are hereinafter
     sometimes collectively referred to as the "Guaranteed Indebtedness".

     2. Continuing Guaranty. This is a continuing guaranty and shall continue to
apply  without  regard to the form or amount of  Guaranteed  Indebtedness  which
Borrower may create,  renew, extend or alter in whole or in part, without notice
to  Guarantors.  The  circumstance  that at any  time or from  time to time  the
Guaranteed  Indebtedness  may be paid or  performed in full shall not affect the
obligation of Guarantors with respect to Guaranteed  Indebtedness of Borrower to
Lender incurred or arising thereafter.

     3. Liability for Other Indebtedness.  If any Guarantor is or becomes liable
for any  indebtedness  owing by Borrower to Lender by  endorsement  or otherwise
than under this Guaranty,  such liability shall not be in any manner impaired or
affected  hereby,  and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantors.  The exercise

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by Lender of any right or remedy hereunder or under any other instrument,  or at
law or in equity,  shall not preclude the  concurrent or subsequent  exercise of
any other right or remedy.  Without in any way diminishing the generality of the
foregoing,  it is specifically understood and agreed that this Guaranty is given
by each  Guarantor  as an  additional  guaranty to any and all other  guaranties
heretofore  or hereafter  executed and  delivered to Lender by any  Guarantor in
favor of Lender  relating to  indebtedness  of  Borrower to Lender,  and nothing
herein  shall  ever be  deemed  to  replace  or be in lieu of any  other of such
previous or subsequent guaranties.

     4. No Release From Obligations. The obligations,  covenants, agreements and
duties of Guarantors  under this  Guaranty  shall not be released or impaired in
any manner whatsoever,  without the written consent of Lender, on account of any
or all of the following:  (a) any assignment,  endorsement or transfer, in whole
or in part, of the Guaranteed  Indebtedness,  although made without notice to or
the consent of any  Guarantor;  (b) any waiver by Lender of the  performance  or
observance  by Borrower or any  Guarantor of any of the  agreements,  covenants,
terms or conditions contained in any document evidencing,  governing or securing
the  Guaranteed  Indebtedness;  (c) any  extension  of the time for  payment  or
performance  of all or any  portion  of the  Guaranteed  Indebtedness;  (d)  the
renewal,   rearrangement,   modification  or  amendment   (whether  material  or
otherwise)  of any duty,  agreement or  obligation  of Borrower set forth in any
document evidencing,  governing or securing any of the Guaranteed  Indebtedness;
(e) the voluntary or involuntary  liquidation,  sale or other disposition of all
or  substantially  all of the  assets  of  Borrower  or any  Guarantor;  (f) any
receivership,   insolvency,   bankruptcy,   reorganization   or  other   similar
proceedings or lack of corporate power,  affecting  Borrower or any Guarantor or
any of the assets of Borrower or any  Guarantor;  (g) any  release,  withdrawal,
surrender,  exchange,  substitution,  subordination  or loss of any  security or
other guaranty at any time existing in connection with all or any portion of the
Guaranteed Indebtedness,  or the acceptance of additional or substitute property
as  security  therefor;  (h) the release or  discharge  of Borrower or any other
obligor from the observance or performance of any agreement,  covenant,  term or
condition contained in any document evidencing, governing or securing any of the
Guaranteed Indebtedness; (i) any action which Lender may take or omit to take by
virtue of any document  evidencing,  governing or securing any of the Guaranteed
Indebtedness or through any course of dealing with Borrower; (j) the addition of
a new  guarantor  or  guarantors;  (k) the  operation of law or any other cause,
whether similar or dissimilar to the foregoing; (l) any adjustment,  indulgence,
forbearance  or compromise  that may be granted or given by Lender to any party;
(m) the failure by Lender to file or enforce a claim against the estate  (either
in  administration,  bankruptcy  or other  proceeding)  of Borrower or any other
person or entity;  (n) if the  recovery  from  Borrower  or any other  person or
entity (including,  without  limitation,  any other Guarantor) becomes barred by
any statute of limitations or is otherwise prevented; (o) any defenses, set-offs
or  counterclaims  which may be  available  to Borrower  or any other  person or
entity (including, without limitation, any other Guarantor); (p) any impairment,
modification,  change, release or limitation of liability of, or stay of actions
of lien enforcement proceedings against,  Borrower, any Guarantor,  the property
of Borrower or any  Guarantor,  or the estate in  bankruptcy  of Borrower or any
Guarantor resulting from the operation of any present or future provision of the
Bankruptcy  Code or any other  similar  federal  or state  statute,  or from the

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decision of any court; or (q) any neglect,  delay, omission,  failure or refusal
of Lender to take or  prosecute  any  action  for the  collection  of any of the
Guaranteed  Indebtedness  or to  foreclose  or take or  prosecute  any action in
connection  with  any  lien,  security  interest  or  other  right  of  security
(including  perfection thereof),  existing or to exist in connection with, or as
security for, any of the Guaranteed Indebtedness,  it being the intention hereof
that  each  Guarantor  shall  remain  liable  as  principal  on  the  Guaranteed
Indebtedness,  notwithstanding  any act,  omission or thing which might, but for
the provisions  hereof,  otherwise operate as a legal or equitable  discharge of
such  Guarantor.  Guarantors  hereby  expressly  waive all rights of  Guarantors
arising under Section 34.02 of the Texas  Business and Commerce Code, as amended
(regarding  the right to require  Lender to sue Borrower on an accrued  right of
action  following  written notice to Lender),  Section 17.001 of the Texas Civil
Practice and Remedies  Code,  as amended  (allowing  suit against any  Guarantor
without suit against  Borrower,  but  precluding  entry of judgment  against any
Guarantor before entry of judgment against  Borrower),  and Rule 31 of the Texas
Rules of Civil Procedure,  as amended  (requiring Lender to join Borrower in any
suit against any Guarantor  unless judgment has been previously  entered against
Borrower).

     5.  Payment and  Performance  of  Obligations.  If an Event of Default,  as
defined in the Mortgage, occurs, Guarantors shall, without notice or demand, and
without any notice having been given to  Guarantors of the  acceptance by Lender
of this  Guaranty and without any notice  having been given to Guarantors of the
creating or incurring of such indebtedness,  pay the Guaranteed Indebtedness due
thereon to Lender, at its office in Plano,  Texas, or at such other place as may
be designated in writing by Lender, and it shall not be necessary for Lender, in
order to enforce such payment by Guarantors, first, to institute suit or exhaust
its remedies against Borrower or others liable on such Guaranteed  Indebtedness,
or to enforce its rights  against any security  which shall ever have been given
to secure such Guaranteed Indebtedness.

     6.  Waiver  of  Notice.  Notice to  Guarantors  of the  acceptance  of this
Guaranty  and  of  the  making,   renewing  or  assignment  of  the   Guaranteed
Indebtedness  and  each  item  thereof,  are  hereby  expressly  waived  by each
Guarantor.

     7. Payments by Borrower.  Each payment on the Guaranteed Indebtedness shall
be deemed to have been made by Borrower  unless express  written notice is given
to Lender at the time of such payment that such payment is made by  Guarantor(s)
as specified in such notice.

     8. Releases and Waivers. If all or any part of the Guaranteed  Indebtedness
at any time is  secured,  Guarantors  agree that Lender may at any time and from
time to time,  at its  discretion  and with or without  valuable  consideration,
allow  substitution  or withdrawal  of collateral or other  security and release
collateral or other security without impairing or diminishing the obligations of
Guarantors  hereunder.  Guarantors  further  agree that if Borrower  executes in
favor of  Lender  any  collateral  agreement,  deed of  trust or other  security
instrument, including, without limitation, the Mortgages, the exercise by Lender
of any right or remedy thereby conferred on Lender shall be wholly discretionary
with Lender, subject,  however, to all applicable notice and opportunity to cure
provisions set forth in the Loan Documents,  and that the exercise or failure to

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exercise  any such  right or  remedy  shall in no way  impair  or  diminish  the
obligations of Guarantors hereunder.  Guarantors further agree that Lender shall
not be liable for its failure to use  diligence in the  collection of any of the
Guaranteed  Indebtedness  or in preserving the liability of any person liable on
the  Guaranteed  Indebtedness,  and  Guarantors  hereby  waive  presentment  for
payment,   notice  of  nonpayment,   protest  and  notice  thereof,   notice  of
acceleration,  and diligence in bringing  suits against any person liable on the
Guaranteed Indebtedness, or any part thereof.

     9. No Release of  Guarantors.  If the Guaranteed  Indebtedness  at any time
exceeds the amount  permitted by law, or Borrower is not liable  because the act
of creating  the  Guaranteed  Indebtedness  is ultra  vires,  or the officers or
persons creating the Guaranteed Indebtedness acted in excess of their authority,
or  for  any  other  reason,  and  for  any  of  these  reasons  the  Guaranteed
Indebtedness  which Guarantors agree to pay cannot be enforced against Borrower,
such fact shall in no manner affect any  Guarantor's  liability  hereunder,  but
each Guarantor shall be liable under this Guaranty notwithstanding that Borrower
is not liable for the  Guaranteed  Indebtedness,  to the same extent  Guarantors
would  have been  liable if the  Guaranteed  Indebtedness  had been  enforceable
against Borrower.

     10. Optional Acceleration. In the event of the dissolution or insolvency of
Borrower,  or the  inability of Borrower to pay its debts as they mature,  or an
assignment by Borrower for the benefit of creditors,  or the  institution of any
proceedings by or against  Borrower under the federal  bankruptcy  laws alleging
that Borrower is insolvent or unable to pay its debts as they mature,  or if any
of the foregoing  events occur with respect to any Guarantor,  and if such event
shall  constitute  an Event of Default,  as defined in the  Mortgage,  and shall
occur at a time when any of the Guaranteed  Indebtedness may not then be due and
payable, such Guaranteed Indebtedness,  at the option of Lender, shall thereupon
be deemed to be immediately due and payable in full, and any Guarantor shall pay
to Lender  forthwith  the full amount  which would be payable  hereunder  if all
Guaranteed Indebtedness were then due and payable.

     11. Successors and Assigns. This Guaranty is for the benefit of Lender, its
successors  and assigns,  and in the event of an  assignment  by Lender,  or its
successors or assigns, of the Guaranteed Indebtedness,  or any part thereof, the
rights and benefits  hereunder,  to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness.

     12. Modifications and Waivers; Cumulative Rights. No modification, consent,
amendment  or waiver of any  provision  of this  Guaranty,  nor  consent  to any
departure by any Guarantor  therefrom,  shall be effective unless the same shall
be in writing and signed by an authorized  officer of Lender,  and then shall be
effective only in the specific  instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall,  of itself,  entitle any
Guarantor  to any  other  or  further  notice  or  demand  in  similar  or other
circumstances.  No delay or omission by Lender in exercising  any power or right
hereunder  shall  impair  any such  right or power or be  construed  as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further  exercise  thereof,  or the exercise of
any other right or power hereunder.  All rights and remedies of Lender hereunder

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are cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any other contract or document,  and
the exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies. In this Guaranty,
whenever the context so requires,  the singular number includes the plural,  and
conversely.

     13.  Compliance with Laws. No provision  herein or in any promissory  note,
instrument  or any other loan  document  executed by  Borrower or any  Guarantor
evidencing,  governing or securing the Guaranteed Indebtedness shall require the
payment or permit the collection of interest in excess of the maximum  permitted
by law. If any excess  interest in such respect is provided for herein or in any
such promissory note, instrument,  or any other Loan Document, the provisions of
this paragraph  shall govern,  and neither  Borrower nor any Guarantor  shall be
obligated to pay the amount of such  interest to the extent that it is in excess
of the amount  permitted  by law.  The  intention  of the  parties is to conform
strictly to the usury laws now in force, and all promissory  notes,  instruments
and other loan  documents  executed  by Borrower or  Guarantors  evidencing  the
Guaranteed  Indebtedness  shall be held  subject to  reduction  of the  interest
charged  to the  amount  allowed  under  said  usury  laws  as now or  hereafter
construed by the courts having jurisdiction.

     14. Benefit to Guarantors.  Each Guarantor  acknowledges  and warrants that
such  Guarantor has derived or expects to derive  financial and other  advantage
and benefit,  directly or indirectly,  from the Guaranteed Indebtedness and each
and every advance thereof and from each and every renewal, extension, release of
collateral or other relinquishment of legal rights made or granted or to be made
or granted by Lender to Borrower.

     15. Attorney's Fees and Collection Costs. If any Guarantor should breach or
fail to perform  any  provision  of this  Guaranty,  Guarantors  agree to pay to
Lender all reasonable  costs and expenses  (including court costs and reasonable
attorneys' fees to the extent  enforceable under the laws of the State of Texas)
incurred by Lender in the enforcement hereof.

     16.  Guarantor's  Warranties.  Each  Guarantor  hereby  severally,  but not
jointly,  warrants and  represents  unto Lender the following  except that Prime
Retail,  L.P. makes no representations or warranties with respect to clauses (b)
and (d) of this Section 16 and Horizon Group Properties,  Inc. and Horizon Group
Properties,  Ltd. make no  representations  or warranties with respect to clause
(e) of this Section 16:


(a)  Each  Guarantor  has received or will receive,  direct or indirect  benefit
     from the making of this Guaranty;

(b)  Each and every  warranty  and  representation  made by Borrower in the Loan
     Documents is true and correct;

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(c)  This  Guaranty  constitutes a legal,  valid and binding  obligation of each
     Guarantor,  and is fully  enforceable  against each Guarantor in accordance
     with its terms;

(d)  Any and all balance sheets,  net worth  statements and other financial data
     that have heretofore been given to Lender with respect to Guarantors (other
     than Prime Retail,  L.P.) fairly  present the  financial  condition of such
     Guarantors as of the date(s) thereof and, since the date(s) thereof,  there
     has been no material, adverse change in the financial condition of any such
     Guarantor;

(e)  The  financial  statements  contained in the Annual Report on Form 10-K for
     the year ended December 31, 2001, as amended,  and the Quarterly  Report on
     Form 10-Q for the  quarter  ended  March 31,  2002  (together,  the "34 Act
     Reports") filed by Prime Retail, Inc., a Maryland corporation,  pursuant to
     the Securities  Exchange Act of 1934, as amended,  are true and complete in
     all material respects;

(f)  Except as may be set out on  Exhibit  "B"  attached  hereto and made a part
     hereof for all purposes  and, with respect only to the  representation  and
     warranty made by Prime Retail, L.P. pursuant to this Section 16 (f), except
     as disclosed in the 34 Act Reports or except as would,  individually  or in
     the  aggregate,  not have a  material  adverse  effect on the  business  or
     results  of  operations  of Prime  Retail,  L.P.,  (i)  there  are no legal
     proceedings,  claims or demands pending against, or to the knowledge of any
     Guarantor,  threatened  against,  any Guarantor or any Guarantor's  assets,
     (ii) no  Guarantor  is in  breach  or  default  of any  legal  requirement,
     contract  or  commitment,   and  (iii)  no  event  (including  specifically
     Guarantors'  execution and delivery of this  Guaranty) has occurred  which,
     with the  lapse of time or  action by a third  party,  could  result in any
     Guarantor's  breach or default  under any legal  requirement,  contract  or
     commitment; and

(g)  Each Guarantor hereby agrees to furnish to Lender from time to time, and as
     required  by  the  Mortgages,   promptly  upon  request  therefor,  current
     financial  reports and  statements  setting out in  complete  and  accurate
     detail each  Guarantor's  financial  condition at the time of such request,
     containing such information as Lender may reasonably request,  and prepared
     in accordance with generally accepted  accounting  principles  consistently
     applied  or in other form  acceptable  to Lender,  in the  exercise  of its
     reasonable discretion.


     17.  Subordination  and No  Subrogation.  If,  for any  reason  whatsoever,
Borrower now or hereafter  becomes indebted to any Guarantor,  such indebtedness
and all interest thereon, shall, at all times, be subordinate in all respects to
the Loan, the other Guaranteed Indebtedness and each of the Loan Documents,  and
no Guarantor  shall be entitled to enforce or receive  payment thereof until the
Guaranteed  Indebtedness  has been  fully  paid and  satisfied.  Notwithstanding
anything to the contrary  contained in this Guaranty or any payments made by any
Guarantor  hereunder,  no Guarantor  shall have any right of  subrogation  in or
under the Loan  Documents or to  participate  in any way therein,  or any right,
title or interest in and to any  mortgaged  property or any  collateral  for the
Guaranteed Indebtedness,  all such rights of subrogation and participation being
hereby expressly waived and released, until the Guaranteed Indebtedness has been
fully paid and satisfied.

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     18. Law Governing and Jurisdiction.  This Guaranty shall be governed by and
construed in accordance  with the laws of the State of Texas and is  performable
in Collin County, Texas.

     19.  Severability.  If any  provision of this  Guaranty or the  application
thereof to any person or circumstance  shall,  for any reason and to any extent,
be invalid or  unenforceable,  neither the  remainder  of this  Guaranty nor the
application  of such  provision  to any other  person or  circumstance  shall be
affected  thereby,  but rather the same shall be enforced to the greatest extent
permitted by law.

     20. Counterparts.  This Guaranty may be executed in multiple  counterparts,
each of which shall be an original,  but all of which shall  constitute  but one
instrument.

     21. Paragraph  Headings.  The paragraph  headings inserted in this Guaranty
have been included for convenience  only and are not intended,  and shall not be
construed,  to  limit  or  define  in any way  the  substance  of any  paragraph
contained herein.

     22.  Compounding and Settlement.  Each Guarantor agrees that Lender, in its
discretion,  may (i) bring suit against Guarantors and any other obligor for any
of the Loan  jointly  and  severally  or against  any one or more of them,  (ii)
compound or settle with any one or more of the  Guarantors and any other obligor
for any of the Loan for such  consideration  as the Lender may deem proper,  and
(iii) release one or more of the Guarantors and any other obligor for any of the
Loan  from  liability  hereunder  or  otherwise  in  regard  to  the  Guaranteed
Indebtedness,  and that no such  action  shall  impair  the  rights of Lender to
collect  the  Guaranteed  Indebtedness  (or the  unpaid  balance  thereof)  from
Guarantors  and any other  obligor for any of the Loan,  or any of them,  not so
sued, settled with or released.

     23. Consent to Jurisdiction. Each Guarantor hereby irrevocably submits, for
such  Guarantor  and in  respect of such  Guarantor's  property,  generally  and
unconditionally, at the election of Lender, to the jurisdiction of the courts of
the State of Texas or of the  United  States of  America  for the State of Texas
over any suit, action or proceeding arising out of or relating to this Guaranty.
Each Guarantor  irrevocably  waives, to the fullest extent permitted by law, any
objection  which such  Guarantor may now or hereafter  have to the laying of the
venue of any such suit, action or proceeding brought in any such court that such
suit has been brought in an inconvenient forum. Each Guarantor agrees that final
judgement in any such suit, action or proceeding brought in any such court shall
be conclusive  and binding upon such Guarantor and may be enforced in the courts
of Texas by a suit upon such judgment,  a certified or exemplified copy of which
shall be conclusive  evidence of the fact and of the amount of such  Guarantor's
indebtedness,  provided that service of process is effected upon such  Guarantor
in one of the manners specified herein or as otherwise permitted by law.

     24.  Service of Process.  Each  Guarantor  hereby  irrevocably  consents to
process being served in any suit, action or proceeding  hereunder (a) by serving
a copy  thereof  upon  Borrower  and/or the  Secretary  of State of the State of
Texas, as such Guarantor's  agents for service of process (provided a copy shall
be mailed by registered  or certified  mail,  postage  prepaid,  return  receipt

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requested,  to such Guarantor at its address  specified  below,  or to any other
address which such Guarantor shall have designated by written notice to Lender),
or (b) if such service is  impossible or  impracticable  in the sole judgment of
the party serving such  process,  by the mailing of a copy thereof by registered
or certified mail, postage prepaid,  return receipt requested, to such Guarantor
at its address set forth below or to any other  address  within the  continental
United  States to which  certified  or  registered  mail may be sent  which such
Guarantor  shall have  designated by written  notice to Lender.  Each  Guarantor
irrevocably  waives, to the fullest extent permitted by law, all claims of error
by reason of any such  service and agrees that such  service (i) shall be deemed
in every respect  effective  service of process upon such  Guarantor in any such
suit,  action or proceeding,  and (ii) shall, to the fullest extent permitted by
law, be taken and held to be valid  personal  service upon personal  delivery to
such  Guarantor.  Nothing in this  section  shall affect the rights of Lender to
serve  process  in any manner  permitted  by law or limit the right of Lender to
bring proceedings against Guarantors in the competent courts of any jurisdiction
or jurisdictions.


         EXECUTED AND DELIVERED on the date first above recited.


                                            GUARANTORS:

ADDRESS FOR NOTICE:                         HORIZON GROUP PROPERTIES, INC.

77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601                     By: /s/ David Tinkham
                                            Name: David Tinkham
                                            Title: CFO



ADDRESS FOR NOTICE:                         HORIZON GROUP PROPERTIES, L.P.
                                            By:  Horizon Group Properties, Inc.,
                                                 General Partner
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601                     By: /s/ David Tinkham
                                            Name: David Tinkham
                                            Title: CFO

<PAGE>
ADDRESS FOR NOTICE:                         PRIME RETAIL, L.P.
                                            By: Prime Retail, Inc., its sole
                                                General Partner
100 E. Pratt Street
19th Floor
Baltimore, Maryland 21202

                                            By: /s/ Glenn D. Reschke
                                            Name: Glenn D. Reschke
                                            Title: President, Chief Executive
                                                   Officer


<PAGE>
                                 ACKNOWLEDGMENT

STATE OF Illinois

COUNTY OF Cook

This instrument was  acknowledged  before me on this the 11th day of July, 2002,
by David K.  Tinkham,  as CFO of  HORIZON  GROUP  PROPERTIES,  INC.,  a Maryland
corporation, on behalf of such corporation.


                                            /s/ Sherry L. Sickles
                                            Notary Public in and for the State
                                            of Illinois


My Commission Expires:  September 14, 2002



                                 ACKNOWLEDGMENT


STATE OF Illinois

COUNTY OF Cook

This instrument was  acknowledged  before me on this the 11th day of July, 2002,
by David K.  Tinkham,  as CFO of  Horizon  Group  Properties,  Inc.,  as General
Partner of HORIZON GROUP PROPERTIES,  LTD., a Delaware limited  partnership,  on
behalf of such limited partnership.



                                            /s/ Sherry L. Sickles
                                            Notary Public in and for the State
                                            of Illinois


My Commission Expires:  September 14, 2002

<PAGE>







                                 ACKNOWLEDGMENT


STATE OF MARYLAND

CITY OF BALTIMORE

This instrument was  acknowledged  before me on this the 11th day of July, 2002,
by Glenn D.  Reschke,  as  President  and CEO of Prime  Retail,  Inc.,  the sole
General Partner of PRIME RETAIL, L.P., a Delaware limited partnership, on behalf
of such limited partnership.



                                            /s/ Gail Steptoe
                                            Notary Public in and for the State
                                            of Maryland

<PAGE>






<PAGE>

                                   EXHIBIT "A"

                                   Litigation




<PAGE>
                                   EXHIBIT "B"

                        Monroe County, Michigan Property