<PAGE>

                               EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as 
of this ____ day of June, 1998 by and between Horizon Group Properties, Inc., 
a Maryland corporation ("Employer") and Richard A. Berman, an individual 
domiciled in the State of Illinois ("Executive").

                                     WITNESSETH

     WHEREAS, Employer is engaged primarily in the ownership, development, 
construction, acquisition, leasing, marketing and management of factory 
outlet centers throughout the United States.

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

     WHEREAS, Executive wishes to commit himself to serve Employer in the 
position set forth herein on the terms herein provided.

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

     1.   DUTIES.  During the Employment Term (as defined in Section 2), 
Employer agrees to employ Executive, and Executive agrees to be employed by 
Employer, as General Counsel of Employer on the terms and conditions provided 
in this Agreement.  Executive shall conduct, operate, manage and promote the 
business and business concept of Employer, and exercise such other powers and 
authority as are customarily inherent in a similar position in a comparable 
publicly-held entity or as provided by the By-laws of Employer ("By-laws").  
The Board of Directors of Employer (the "Board") may from time to time, in 
its sole discretion, further define and clarify Executive's duties and 
services hereunder or under the By-laws in a manner consistent with the 
offices for which he has been retained hereunder and the scope of work set 
forth herein.  Executive agrees to devote his best efforts and substantially 
all of his business time, attention, energy and skill to perform his duties 
under this Agreement.

     2.   TERM.  The initial term of this Agreement (the "Initial Term") 
shall commence on the closing date of the merger of Prime Retail, Inc. and 
Horizon Group, Inc. (the "Effective Date") and expire on the third 
anniversary of the Effective Date (the "Scheduled Termination Date"); 
provided, however, this Agreement shall automatically extend for one year 
terms following the Initial Term (each a "Renewal Term", together with the 
Initial Term, the "Employment Term"), unless either party shall give the 
other party, prior to 120 days before the end of the respective Renewal Term, 
written notice of its intention to terminate this Agreement.

                                       -1-
<PAGE>

     3.   COMPENSATION AND RELATED MATTERS.

     (a)  BASE SALARY.  During the Employment Term Employer agrees to pay to 
Executive an annual salary of no less than $145,000 ("Base Salary"), payable 
in accordance with the general policies and procedures for payment of 
salaries to any other executive personnel of Employer (but no less frequently 
than monthly), subject to withholding for applicable federal, state and local 
taxes. Executive's Base Salary shall be subject to periodic review by the 
Compensation Committee of the Board (the "Committee") based upon periodic 
review of Executive's performance conducted on at least an annual basis and 
may be periodically increased or decreased as a result thereof.

     (b)  PERFORMANCE BONUS.  In addition to Base Salary, Executive shall 
have the right to receive, and Employer agrees to pay to Executive, a 
performance bonus ("Performance Bonus") for each calendar year during the 
Employment Term, in such amounts as the Committee, in its sole discretion, 
may determine.  Any amount of Performance Bonus required to be paid to 
Executive for a calendar year during the Employment Term shall be paid by 
Employer to Executive during the pay period of Employer following 
finalization of the audit for such calendar year and final review and 
approval of the bonus calculation by the Committee, and, in all events, on or 
before April 15 of the year immediately following the end of the calendar 
year for which such Performance Bonus is attributable.

     (c)  BENEFITS.  During the Employment Term and subject to the 
limitations and affirmative rights set forth in this Section 3(c), Executive 
and his eligible dependents shall have the right to participate in any 
retirement, pension, life insurance, health, dental, vision and other medical 
insurance benefit plans or programs that have been or are hereafter adopted 
or maintained by Employer (or in which Employer participates) according to 
the terms of such plan or program with all of the benefits, rights and 
privileges as are enjoyed by any other senior executive officer of Employer.  
If  the participation of Executive would adversely affect the qualification 
of a plan intended to be qualified under the Internal Revenue Code of 1986, 
as amended (the "Code"), Employer shall have the right to exclude Executive 
from that plan in return for his participation in (x) a nonqualified deferred 
compensation plan or (y) an arrangement providing substantially comparable 
benefits under a plan that is either a qualified or nonqualified plan under 
the Code at Employer's option.

     (d)  VACATION AND LEAVES OF ABSENCE.  Executive shall be entitled to 
four weeks of paid vacation leave during each 12 month period and paid 
holidays in accordance with Employer's established policies. Executive may 
accrue unused vacation time if not used in any calendar year or years, 
however, the maximum cumulative amount of vacation time that Executive may 
accrue and carry over to the next year is four weeks. In addition to the 
foregoing, Executive may be granted leaves of absence with or without pay for 
such other reasons as shall be mutually agreed upon by the Board and 
Executive.

     (e)  EXPENSES.  Executive shall be reimbursed, subject to Employer's 
receipt of invoices or similar records as Employer may reasonably request in 
accordance with its policy and procedures, 

                                       -2-
<PAGE>

for all reasonable and necessary expenses incurred by Executive in the 
performance of his duties hereunder.

     4.   TERMINATION AND TERMINATION BENEFITS.

     (a)  TERMINATION BY EMPLOYER.

          (i)  WITHOUT CAUSE.  Employer may terminate this Agreement and 
Executive's employment at any time for any reason or for no reason at all 
upon 30 days' prior written notice to Executive.  In connection with the 
termination of Executive's services pursuant to this Section 4(a)(i), 
Executive shall be entitled to receive (A) all accrued but unpaid amounts of 
the Base Salary through the effective date of termination, payable in 
accordance with the provisions of Section 3(a); (B) a pro rata portion of any 
Performance Bonus otherwise payable to Executive for the calendar year in 
which such termination occurs up to the effective date of such termination 
and, to the extent not previously paid, any Performance Bonus for any 
calendar years prior to the calendar year in which such termination occurs; 
(C) a termination distribution in an amount equal to the amount of the Base 
Salary then applicable (the "Normal Termination Distribution"), payable 
within 30 days of the effective date of termination; and (D) any vested 
benefits or amounts pursuant to Sections 3(c), 3(d), 3(e) and 3(f) through 
the effective date of termination, payable in accordance with the provisions 
of any such plan(s).  In addition, Executive and his eligible dependents 
shall be entitled to receive (x) the health insurance benefits specified in 
Section 3(c) for a period of 12 months following the effective date of 
termination (the "Company Continuation Period"), and following such time 
period, Executive shall be entitled to all rights afforded to him under the 
federal Consolidated Omnibus Budget Reconciliation Act ("COBRA") to purchase 
continuation coverage of such health insurance benefits for himself and his 
dependents for the maximum period permitted by law and (y) the life insurance 
benefits specified in Section 3(f) for a period of 12 months following the 
effective date of termination.  With respect to clause (x) of the preceding 
sentence, to the extent required by applicable law, Executive shall be deemed 
to have elected to exercise his rights under COBRA as of the first day of the 
Company Continuation Period. In the event that Executive is terminated 
without Cause pursuant to this Section 4(a)(i) and within 12 months from the 
effective date of such termination there is a Change in Control of Employer 
(as defined below), then Executive shall be entitled to receive the benefits 
set forth in Section 4(e) to the extent and in the amount that such benefits 
exceed the amounts paid or received by Executive pursuant to this Section 
4(a)(i).  For purposes of calculating Executive's pro rata portion of any 
Performance Bonus, if termination takes place prior to receipt by Executive 
of any Performance Bonus, the Performance Bonus a pro rata portion of which 
Executive shall be entitled to receive shall be deemed to be 50% of 
Executive's then annual Base Salary.

          (ii) FOR CAUSE.  Employer may terminate this Agreement for Cause 
immediately upon written notice to Executive. In connection with the 
termination of Executive's services pursuant to this Section 4(a)(ii), 
Executive shall (A) be entitled to receive all accrued but unpaid amounts of 
the Base Salary through the effective date of termination, payable in 
accordance with the provisions of Section 3(a); (B) forfeit his entitlement 
to any bonuses or other payments otherwise payable to him in accordance with 
Section 3(b); and (C) be entitled to the vested benefits or amounts pursuant 

                                       -3-
<PAGE>

to Sections 3(c), 3(d), 3(e) and 3(f) through the effective date of 
termination, payable as otherwise provided in such sections; provided, 
however, that Executive and his eligible dependents shall be entitled to 
receive (x) the health insurance benefits specified in Section 3(c)(1) for a 
period of three months (the "Company Continuation Period") following the 
effective date of termination, and following such time period, Executive 
shall be entitled to all rights afforded to him under COBRA to purchase 
continuation coverage of such health insurance benefits for himself and his 
dependents for the maximum period permitted by law and (y) the life insurance 
benefits specified in Section 3(f) for a period of three months following the 
effective date of termination. With respect to clause (x) of the preceding 
sentence, to the extent required by applicable law, Executive shall be deemed 
to have elected to exercise his rights under COBRA as of the first day of the 
Company Continuation Period. 

          For purposes of this Agreement, "Cause" shall mean a finding by the 
Board (A) that Executive has materially harmed Employer through an act of 
dishonesty or material conflict of interest that relates to the performance 
of Executive's duties hereunder, (B) of Executive's conviction of a felony 
involving moral turpitude, fraud or embezzlement, (C) that Executive failed 
to perform in any material respect his duties under this Agreement (other 
than a failure due to disability) after written notice specifying the failure 
and a reasonable opportunity to cure (it being understood that if Executive's 
failure to perform is not of a type requiring a single action to fully cure, 
then Executive may commence the cure promptly after such written notice and 
thereafter diligently prosecute such cure to completion) or (D) of a material 
breach by Executive of any of his obligations hereunder and the failure of 
Executive to cure such breach within thirty (30) days after receipt by 
Executive of a written notice of Employer specifying in reasonable detail the 
nature of the breach.

          (iii)     DISABILITY.  If due to illness, physical or mental 
disability, or other incapacity, Executive shall fail during any four 
consecutive months to perform the duties required by this Agreement, Employer 
may terminate this Agreement upon 30 days' written notice to Executive.  In 
such event, Executive shall receive (A) all accrued but unpaid amounts of the 
Base Salary through the effective date of termination, payable in accordance 
with the provisions of Section 3(a); (B) a pro rata portion of any 
Performance Bonus otherwise payable to Executive for the calendar year in 
which such termination occurs up to the effective date of such termination 
and, to the extent not previously paid, any Performance Bonus for any 
calendar years prior to the calendar year in which such termination occurs; 
(C) the Normal Termination Distribution (defined in Section 4(a)(i)), payable 
within 30 days of the effective date of termination; and (D) any vested 
benefits or amounts pursuant to Sections 3(c), 3(d), 3(e) and 3(f) hereof 
through the effective date of termination, payable in accordance with the 
provisions of any such plan(s).  In addition, Executive and his eligible 
dependents shall be entitled to receive (x) the health insurance benefits 
specified in Section 3(c)(1) above for a period of 12 months (the "Company 
Continuation Period") following the effective date of termination and 
following such time period, Executive shall be entitled to all rights 
afforded to him under COBRA to purchase continuation coverage of such health 
insurance benefits for himself and his dependents for the maximum period 
permitted by law and (y) the life insurance benefits specified in Section 
3(f) for a period of 12 months following the date of termination. With 
respect to clause (x) of the preceding sentence, to the extent required by 
applicable law, Executive shall be deemed to have elected to exercise his 
rights under COBRA as of the first day of the Company 

                                       -4-
<PAGE>

Continuation Period.  This Section 4(a)(iii) shall not limit the entitlement 
of Executive, his estate or beneficiaries to any disability or other benefits 
available to Executive under any disability insurance or other benefits plan 
or policy that is maintained by Employer for Executive's benefit.  For 
purposes of calculating Executive's pro rata portion of any Performance 
Bonus, if termination takes place prior to receipt by Executive of any 
Performance Bonus, the Performance Bonus a pro rata portion of which 
Executive shall be entitled to receive shall be deemed to be 50% of 
Executive's then annual Base Salary.

     (b)   TERMINATION BY EXECUTIVE.

          (i)  WITH GOOD REASON.  Executive may terminate this Agreement with 
Good Reason upon written notice to Employer.  In connection with the 
termination of this Agreement pursuant to this Section 4(b)(i), Executive 
shall be entitled to receive (A) all accrued but unpaid amounts of the Base 
Salary through the effective date of termination, payable in accordance with 
the provisions of Section 3(a); (B) a pro rata portion of any Performance 
Bonus otherwise payable to Executive for the calendar year in which such 
termination occurs up to the effective date of such termination and, to the 
extent not previously paid, any Performance Bonus for any calendar years 
prior to the calendar year in which such termination occurs; (C) any vested 
benefits or amounts pursuant to sections 3(c), 3(d), 3(e) and 3(f) hereof 
through the effective date of termination, payable as otherwise provided in 
such sections.  In addition, the Executive and his eligible dependents shall 
be entitled to receive (x) the health insurance benefits specified in Section 
3(c)(1) for a period of 12 months following the effective date of termination 
(the "Company Continuation Period") and following such time period, the 
Executive shall be entitled to all rights afforded to him under COBRA to 
purchase continuation coverage of such health insurance benefits for himself 
and his dependents for the maximum period permitted by law and (y) the life 
insurance benefits specified in Section 3(f) for a period of 12 months 
following the date of termination. With respect to clause (x) of the 
preceding sentence, to the extent required by applicable law, Executive shall 
be deemed to have elected to exercise his rights under COBRA as of the first 
day of the Company Continuation Period.  Further, in connection with the 
termination of Executive's services pursuant to this Section 4(b)(i), 
Executive shall be entitled to receive the Normal Termination Distribution 
(defined in Section 4(a)(i)), payable within 30 days of the effective date of 
termination.  For purposes of calculating Executive's pro rata portion of any 
Performance Bonus, if termination takes place prior to receipt by Executive 
of any Performance Bonus, the Performance Bonus a pro rata portion of which 
Executive shall be entitled to receive shall be deemed to be 50% of 
Executive's then annual Base Salary.

          (ii) WITHOUT GOOD REASON. Executive may terminate this Agreement at 
any time for any reason or for no reason at all upon 60 days' written notice 
to Employer, during which period Executive shall continue to perform his 
duties under this Agreement if Employer so elects.  In connection with the 
termination of Executive's services pursuant to this Section 4(b)(ii), 
Executive shall be entitled to receive (A) all accrued but unpaid amounts of 
the Base Salary through the effective date of termination, paid in accordance 
with the provisions of Section 3(a); and (B) the vested benefits and amounts 
set forth in Sections 3(c), 3(d), 3(e) and 3(f) through the effective date of 
termination, payable in accordance with the provisions of such sections.  In 
addition, the 

                                       -5-
<PAGE>

Executive and his eligible dependents shall be entitled to receive (x) the 
health insurance benefits specified in Section 3(c)(1) for a period of six 
months (the "Company Continuation Period") following the effective date of 
termination and following such time period, the Executive shall be entitled 
to all rights afforded to him under COBRA to purchase continuation coverage 
of such health insurance benefits for himself and his dependents for the 
maximum period permitted by law and (y) the life insurance benefits specified 
in Section 3(f) for a period of three months following the date of 
termination.  With respect to clause (x) of the preceding sentence, to the 
extent required by applicable law, Executive shall be deemed to have elected 
to exercise his rights under COBRA as of the first day of the Company 
Continuation Period.

          (iii)     GOOD REASON.  For purposes of this Agreement, "Good 
Reason" shall mean (A) the material breach by Employer of any of its 
obligations hereunder (a bona fide dispute regarding the Performance Bonus 
shall not be a material breach by Employer) and the failure of Employer to 
cure such breach within 60 days after receipt by Employer of a written notice 
from Executive specifying in reasonable detail the nature of the breach, 
unless such breach requires a longer period to cure; (B) Executive's title or 
scope of responsibilities and duties are materially diminished, or the 
Company fails to provide Executive with adequate office facilities and 
support services to perform such responsibilities and duties, (C) the amounts 
payable to Executive as provided in this Agreement are materially reduced, or 
(D) the Company fails to continue in effect any cash or stock-based incentive 
or bonus plan, retirement plan, welfare benefit plan, or other benefit plan, 
program or arrangement, unless the aggregate value (as computed by an 
independent employee benefits consultant) of all such compensation, 
retirement and benefit plans, programs and arrangements provided to Executive 
is not materially less than their aggregate value as of the date of this 
Agreement (or as of the Change of Control, if greater).

     (c)  DEATH.  Notwithstanding any other provision of this Agreement, this 
Agreement shall terminate on the date of Executive's death. In this event, 
Executive's estate shall be entitled to receive all accrued but unpaid 
amounts of the Executive's Base Salary through the date of Executive's death, 
payable in accordance with the provisions of Section 3(a).  In addition, the 
Executive's eligible dependents shall be entitled to receive the health 
insurance benefits specified in Section 3(c)(1) above for a period of 12 
months (the "Company Continuation Period") following the effective date of 
termination and following such time period, such eligible decedents shall be 
entitled to all rights afforded to them under COBRA to purchase continuation 
coverage of such health insurance benefits for the maximum period permitted 
by law.  With respect to the preceding sentence, to the extent required by 
applicable law, the Executive's dependents shall be deemed to have elected to 
exercise their rights under COBRA as of the first day of the Company 
Continuation Period.  This Section 4(c) shall not limit the entitlement of 
Executive under any insurance or other benefits plan or policy that is 
maintained by Employer for Executive's benefit.

     (d)  TERMINATION FOLLOWING A CHANGE OF CONTROL.  If, within 24 months 
following a Change of Control, the Company terminates this Agreement and 
Executive's services other than for Cause or Executive terminates this 
Agreement with Good Reason, in either case by giving 30 days' prior written 
notice, Executive shall be entitled to receive the following benefits and 
payments:

                                       -6-
<PAGE>

          (i)  all accrued but unpaid amounts of the Base Salary through the
effective date of termination, payable in accordance with the provisions of
Section 3(a); 

          (ii) a pro rata portion of any Performance Bonus otherwise payable to
Executive for the calendar year in which such termination occurs up to the
effective date of such termination and, to the extent not previously paid, any
Performance Bonus for any calendar year prior to the calendar year in which such
termination occurs;

          (iii)     a termination distribution in an amount equal to the sum of
(A) Executive's then Base Salary and (B) Executive's last annualized Performance
Bonus (if the termination takes place prior to receipt by Executive of any
Performance Bonus, the Performance Bonus shall be deemed to be 50% of
Executive's then annual Base Salary), payable within 30 days of the effective
date of termination; and 

          (iv) any vested benefits or amounts pursuant to Sections 3(c), 3(d),
3(e) and 3(f) through the effective date of termination, payable in accordance
with the provisions of any such plan(s).  In addition, the Executive and his
eligible dependents shall be entitled to receive (x) the health insurance
benefits specified in Section 3(c)(1) for a period of 24 months following the
effective date of termination (the "Company Continuation Period"), and following
such time period, the Executive shall be entitled to all rights afforded to him
under COBRA to purchase continuation coverage of such health insurance benefits
for himself and his dependents for the maximum period permitted by law and (y)
the life insurance benefits specified in Section 3(f) for a period of 24 months
following the effective date of termination.  With respect to clause (x) of the
preceding sentence, to the extent required by applicable law, Executive shall be
deemed to have elected to exercise his rights under COBRA as of the first day of
the Company Continuation Period.

          (v)  Executive shall be fully vested in all amounts accrued or
accumulated on behalf of Executive under any nonqualified retirement plan
established or maintained by the Company, and the Company will promptly pay or
distribute all such amounts to Executive in accordance with the terms of such
plan as in effect on the date of this Agreement (or as of Executive's employment
termination, if more favorable to Executive).  If Executive is not fully vested
in his accounts or benefits under the Company's qualified retirement plan at his
employment termination pursuant to this Section, the Company will make a cash
payment to Executive, within 30 days of Executive's employment termination,
equal to the amount of such account or benefit that is forfeited.

          (vi) All stock awards or grants under the Horizon Group Properties,
Inc. 1998 Long-Term Stock Incentive Plan shall be fully vested and exercisable
as of Executive's employment termination.

     For purposes of this Agreement, a "Change of Control" shall be deemed to
have occurred if (1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee
or other fiduciary holding securities under an employee benefit plan of
Employer, a corporation owned directly or indirectly by the stockholders of
Employer 

                                       -7-
<PAGE>

in substantially the same proportions as their ownership of stock of 
Employer, Executive or Michael W. Reschke, or any of their respective 
affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under 
said Act), directly or indirectly, of securities of Employer representing 50% 
or more of the total voting power represented by Employer's then outstanding 
securities that vote generally in the election of directors (referred to 
herein as "Voting Securities"); (2) during any period of two consecutive 
years, individuals who at the beginning of such period constitute the Board 
and any new directors whose election by the Board or nomination for election 
by Employer's stockholders was approved by a vote of at least two-thirds of 
the directors then still in office who either were directors at the beginning 
of the period or whose election or nomination for election was previously so 
approved, cease for any reason to constitute a majority of the Board; (3) the 
stockholders of Employer approve a merger or consolidation of Employer with 
any other corporation, other than a merger or consolidation that would result 
in the Voting Securities of Employer outstanding immediately prior thereto 
continuing to represent (either by remaining outstanding or by being 
converted into Voting Securities of the surviving entity) at least 50% of the 
total voting power represented by the Voting Securities of Employer or such 
surviving entity outstanding immediately after such merger or consolidation; 
(4) the stockholders of Employer approve a plan of complete liquidation of 
Employer or an agreement for the sale or disposition by Employer of (in one 
transaction or a series of transactions) all or substantially all of 
Employer's assets. 

     5.   COVENANTS OF EXECUTIVE.

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

     (b)   NON-COMPETITION. In return for the performance of the duties 
described in Section 1, during the Employment Term and for a period of two 
years thereafter in the event of the termination of this Agreement pursuant 
to the provisions of Section 4(b)(ii) or one year thereafter in the event of 
termination of this Agreement pursuant to the provisions of Sections 4(a)(i), 
4(a)(ii), 4(a)(iii) or 4(b)(i), (the "Restrictive Period"), Executive shall 
not, directly or indirectly, in any capacity whatsoever, either on his own 
behalf or on behalf of any other person or entity with whom he may be 
employed or associated, own any interest in, participate or engage in the 
day-to-day supervision, management, development, marketing or operation of 
any factory outlet centers or such other business as Employer may be engaged 
in as of the date of the applicable Section 4 termination event (the 
"Business") which is competitive with any of Employer's centers.  For 
purposes hereof, a center will be deemed competitive with one of Employer's 
centers if such center is located within five miles of a center owned, 
operated or managed by Employer or within five miles of a center which 
Employer is developing or with respect to which Employer has signed a letter 
of intent or term sheet or binding contract for the acquisition, development 
or management thereof dated on or prior to the date of such termination.

          Furthermore, for a period of two years after any applicable Section 4
termination event, Executive shall not, directly or indirectly, solicit, attempt
to hire or hire any employee of Employer. Notwithstanding the foregoing, nothing
herein shall prohibit Executive from owning 5% 

                                       -8-
<PAGE>

or less of any securities of a competitor engaged in the same Business if 
such securities are listed on a nationally recognized securities exchange or 
traded over-the-counter on the National Association of Securities Dealers 
Automated Quotation System or otherwise.

     (c)  NONDISCLOSURE.  During the Restrictive Period and in the 
Restrictive Geographic Area, Executive shall not disclose or use, except in 
the pursuit of the Business for or on behalf of the Group, any Trade Secret 
(as hereinafter defined) of the Group, whether such Trade Secret is in 
Executive's memory or embodied in writing or other physical form.  For 
purposes of this Section 5(c), "Trade Secret" means any information that 
derives independent economic value, actual or potential, with respect to 
Employer from not being generally known to, and not being readily 
ascertainable by proper means by, other persons who can obtain economic value 
from its disclosure or use and is the subject of efforts to maintain its 
secrecy that are reasonable under the circumstances, including, but not 
limited to, trade secrets, customer lists, sales records and other 
proprietary commercial information.  Said term, however, shall not include 
general "know-how" information acquired by Executive during the course of his 
service which could have been obtained by him from public sources without the 
expenditure of significant time, effort and expense that does not relate to 
Employer.

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

     (e)  EQUITABLE RELIEF.  In the event of any breach by Executive of any 
of the covenants contained in this Section 5, it is specifically understood 
and agreed that Company shall be entitled, in addition to any other remedy 
that it may have, to equitable relief by way of injunction, an accounting or 
otherwise and to notify any employer or prospective employer of Executive as 
to the terms and conditions hereof.

     (f)  ACKNOWLEDGMENT.  Executive acknowledges that he will be directly 
and materially involved as a senior executive in all important policy and 
operational decisions of Company. Executive further acknowledges that the 
scope of the foregoing restrictions has been specifically bargained between 
Company and Executive, each being fully informed of all relevant facts.  
Accordingly, Executive acknowledges that the foregoing restrictions of 
Section 5 are fair and reasonable, are minimally necessary to protect 
Employer, its other stockholders and the public from the unfair competition 
of Executive who, as a result of his performance of services on behalf of 
Employer, will have had unlimited access to the most confidential and 
important information of Employer, its business and future plans. Executive 
further acknowledges that no unreasonable harm or injury will be suffered by 
him from enforcement of the covenants contained herein and that he will be 
able to earn a reasonable livelihood following termination of his services 
notwithstanding enforcement of the covenants contained herein.

     (g)  INDEMNIFICATION.  Subject to the provisions of this Agreement, 
Executive shall indemnify Employer for any and all consequential damages, 
costs and expenses (including legal 

                                       -9-
<PAGE>

fees) resulting from any of his acts or omissions that constitute bad faith, 
willful or intentional conduct that cause harm to Employer's business or 
reputation. Executive also shall indemnify Employer for any and all 
consequential damages, costs and expenses resulting from his acts of omission 
constituting reckless disregard of his duties to Employer following notice 
thereof by either Prime or the Operating Partnership after either becomes 
aware of such conduct and Executive's failure to so cure within 30 days.

     6.   GROSS UP PAYMENTS.  Anything in this Agreement to the contrary 
notwithstanding, in the event that any payment by or on behalf of Employer to 
or for the benefit of Executive (whether paid or payable or distributed or 
distributable pursuant to the terms of this Agreement or otherwise, but 
determined without regard to any additional payments required under this 
section) (the "Payments") is determined to be an "excess parachute payment" 
pursuant to Code Section 280G or any successor or substitute provision of the 
Code, with the effect that Executive is liable for the payment of the excise 
tax described in Code Section 4999 or any successor or substitute provision 
of the Code, or any interest or penalties are incurred by Executive with 
respect to such Payments (such excise tax, together with any such interest 
and penalties, are hereinafter collectively referred to as the "Excise Tax"), 
then Executive shall be entitled to receive an additional payment (the 
"Gross-Up Payment") in an amount such that after payment by Executive of all 
taxes imposed upon the Gross-Up Payment, including, without limitation, 
federal, state, local or other income taxes, FICA taxes, and additional 
Excise Tax (and any interest and penalties imposed with respect to such 
taxes), Executive retains a portion of the Gross-Up Payment equal to the 
Excise Tax imposed upon the Payments.

     (a)  DETERMINATION OF GROSS-UP.  Subject to the provisions of Section 
6(b), all determinations required to be made under this Section, including 
whether and when a Gross-Up Payment is required and the amount of such 
Gross-Up Payment and the assumptions to be utilized in arriving at such 
determination, shall be made by the public accounting firm that serves as 
Employer's auditors (the "Accounting Firm"), which shall provide detailed 
supporting calculations both to Employer and Executive within 15 business 
days of the receipt of notice from Employer or Executive that there have been 
Payments, or such earlier time as is requested by Employer.  In the event 
that the Accounting Firm is serving as accountant or auditor for the 
individual, entity or group effecting the Change of Control, Executive shall 
designate another nationally recognized accounting firm to make the 
determinations required hereunder (which accounting firm shall then be 
referred to as the Accounting Firm hereunder).  All fees and expenses of the 
Accounting Firm shall be borne solely by Employer.  Any Gross-Up Payment, as 
determined pursuant to this Section, shall be paid by Employer to Executive 
within five days after the receipt by Employer and Executive of the 
Accounting firm's determination.  If the Accounting Firm determines that no 
Excise Tax is payable by Executive, it shall furnish Executive with a written 
opinion that failure to report the Excise Tax on Executive's applicable 
federal income tax return would not result in the imposition of a negligence 
or similar penalty. Any determination by the Accounting Firm shall be binding 
upon Employer and Executive, except as provided in Section 6(b).

     (b)  IRS CLAIMS.  As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that 

                                       -10-
<PAGE>

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

     7.   PRIOR AGREEMENT.  This Agreement supersedes and is in lieu of any 
and all other employment arrangements between Executive and Employer, and any 
and all such employment or service agreements and arrangements are hereby 
terminated and deemed of no further force or effect.

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

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

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

     (a)  if to Executive, to:

          Richard A. Berman
          Horizon Group Properties, Inc.
          5000 Hakes Drive
          Norton Shores, Michigan 49441

                                       -11-
<PAGE>

     (b)  if to Employer, to:

          Board of Directors
          Horizon Group Properties, Inc. 
          5000 Hakes Drive 
          Norton Shores, Michigan 49441

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

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

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

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

     15.  LEGAL FEES.  If Employer materially breaches any of its obligations 
to Executive under this Agreement and Executive brings any action, claim, 
demand, suit or proceeding against Employer to enforce his rights under this 
Agreement, Employer agrees that it will pay all reasonable legal fees and 
related legal costs (collectively "Legal Fees") incurred by Executive no 
later than 30 days following a judgment by a court of competent jurisdiction 
that Employer materially breached its obligations to Executive under this 
Agreement; provided, however, that if it is determined by a final judgment or 
other final adjudication by a court of competent jurisdiction that Employer 
did not materially breach any of its obligations to Executive under this 
Agreement, Executive will pay to Company within 30 days from such final 
judgment or adjudication the aggregate amount of legal fees and expenses 
incurred by Company with respect to such action and the amount of any Legal 
Fees that were previously paid to Executive by Employer pursuant to this 
Section 15.  Employer acknowledges the indemnification obligations of Prime 
to Executive and the other officers of Prime as set forth in its By-laws, as 
they may be amended from time to time.

                                       -12-
<PAGE>

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

     17.  NOTICE OF FUTURE EMPLOYMENT.  Executive agrees that during the 24 
consecutive months immediately following the termination of this Agreement, 
Executive will within 14 days of each instance of new employment notify 
Employer in writing of the identity of his new employer and the job title 
associated with such employment.

                                       -13-
<PAGE>

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

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

                                   EMPLOYER:

EXECUTIVE:                         HORIZON GROUP PROPERTIES, INC.


 /s/ Richard A. Berman
-----------------------------      By: /s/ Gary J. Skoien
Richard A. Berman                     ------------------------------------
                                   Title: President
                                         ---------------------------------


                                       -14-