Ex-10.49

                              Employment Agreement


     THIS EMPLOYMENT  AGREEMENT (the "Agreement") is made and entered into as of
July 24,  2000,  by and  between  Prime  Retail,  Inc.,  a Maryland  corporation
("Prime") and the sole general partner of Prime Retail, L.P., a Delaware limited
partnership (the "Operating Partnership"), the Operating Partnership, (Prime and
the Operating  Partnership are sometimes hereinafter together referred to as the
"Company"),  and  Glenn D.  Reschke,  an  individual  domiciled  in the State of
Maryland ("Executive").

                                   Witnesseth

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

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

     WHEREAS,  Executive  wishes to commit  himself to serve the  Company in the
positions set forth herein on the terms herein provided;

     WHEREAS,  the  parties  wish by this  Agreement  to amend  and  restate  in
entirety the terms and  conditions of the  relationship  between the Company and
Executive;

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

1. Duties.  During the Term hereof (as defined in Section 2 hereof), the Company
agrees to retain Executive,  and Executive agrees to be retained by the Company,
as the  Chief  Executive  Officer  and,  at the  determination  of the  Board of
Directors,  President  and/or Chairman of the Board, on the terms and conditions
provided in this  Agreement.  Executive  shall serve in such  positions  and his
duties  shall  include  oversight  and   responsibility  for  Employer's  sales,
marketing,  operations,  finance  and  administrative  functions.   Furthermore,
Executive  shall  exercise  such other powers and  authority as are  customarily
inherent  in a similar  positions  in a  comparable  publicly-held  entity or as
provided  by the  By-laws  of Prime  ("By-laws")  and the  Agreement  of Limited
Partnership  of  the  Operating   Partnership,   as  amended  (the  "Partnership
Agreement").  Prime,  in its capacity as sole general  partner of the  Operating
Partnership,  may, from time to time, in its sole  discretion,  by action of its
Board of Directors (the "Board") further define and clarify  Executive's  duties
and services hereunder or under the By-laws or Partnership Agreement 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
performing his duties to the Company under this Agreement.
<PAGE>
2.  Term.  Unless  earlier  terminated  in  accordance  with  the  terms of this
Agreement,  the term of this Agreement shall be a period  commending on the date
hereof  and  ending  on the  third  anniversary  of such  date.  On  such  third
anniversary  and each succeeding  anniversary,  the Term of this Agreement shall
automatically  be extended for an additional one year period  unless,  not later
than one hundred eighty (180) days prior to any such  anniversary,  either party
to this  Agreement  gives  notice to the other  that the Term of this  Agreement
shall not be extended or further extended beyond its then automatically extended
Term.

3.       Compensation and Related Matters.
         --------------------------------

     (a) Base  Salary.  For the period of the Term of this  Agreement  beginning
July  24,  2000,  and  extending   through  December  31,  2000,  the  Operating
Partnership  agrees to pay to Executive a base salary in an aggregate  amount of
Three Hundred Fifty Thousand  Dollars  ($350,000) per calendar year,  payable in
accordance  with the general  policies and procedures for payment of salaries to
any other  executive  personnel of the Company but in all events payable no less
frequently than monthly. During the remainder of the Term of this Agreement, the
Executive's annual base salary will be Four Hundred Thousand Dollars ($400,000).
The yearly base salary  payable to Executive  pursuant to the provisions of this
Section 3(a) shall be subject to periodic  review by the Executive  Committee of
the Board of Directors of Prime (the "Committee")  based upon periodic review of
the  Executive's  performance  conducted  on at least an annual basis and may be
periodically increased or decreased as a result thereof; provided, however, that
the yearly base salary  payable to the Executive  pursuant to the  provisions of
this Section 3(a) shall in no event be less than Three  Hundred  Fifty  Thousand
Dollars ($350,000).  The then applicable amount of yearly base salary payable to
the  Executive  pursuant to the  provisions of this Section 3(a) shall herein be
referred to as the "Base Salary."

(b)      Performance Bonus.
         -----------------

     (1) In addition to the Base Salary,  the Executive  shall have the right to
receive,  and  the  Operating  Partnership  agrees  to pay to the  Executive,  a
performance  bonus for each calendar year during the Term of this Agreement,  in
such  amounts as the  Committee,  in its sole  discretion,  may  determine.  The
aggregate  Performance  Bonus for a calendar year payable in accordance with the
provisions of this Section 3(b) shall in no event exceed 100% of the Base Salary
for such calendar year. Further, the Executive shall only be entitled to receive
a Performance  Bonus for a calendar year if the Executive has been and continues
to be  retained by the  Company as an  Executive  Officer of the Company for the
full calendar year or if the Company terminates  Executive's  employment without
cause (as defined below) or Executive  terminates his employment for good reason
(as defined below).  Any amount of Performance Bonus to be paid to the Executive
for a  calendar  year  during  the Term of this  Agreement  shall be paid by the
Company  to the  Executive  during  the  pay  period  of the  Company  following
finalization  of the audit for such  calendar year and final review and approval
of the bonus by the Committee,  and, in all events, on or before March 31 of the
year  immediately  following  the  end of  the  calendar  year  for  which  such
Performance Bonus is attributable.
<PAGE>
     (2) In the event of a disagreement  with regard to the determination of the
Performance  Bonus  amount,  the Committee  shall be the final  arbiters of such
amount,  and their  determination  shall be final and binding on the Company and
the Executive.

(c)      Health Insurance and Other Benefits.
         -----------------------------------

     (1) During the Term of this  Agreement 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 health, dental, vision and
other  medical  insurance  benefit  plans  or  programs  that  have  been or are
hereafter  adopted  or  maintained  by the  Company  (or in  which  the  Company
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 the Company.

     (2) During the Term of this  Agreement 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,  or
other similar  benefit plan or program that has been or is hereafter  adopted by
the  Company (or in which the Company  participates)  according  to the terms of
such plan or program with all the benefits, rights and privileges as are enjoyed
by any other senior executive officer of the Company.

     (3) If the  participation of Executive under a plan described in subsection
(2) above would  adversely  affect the  qualification  of a plan  intended to be
qualified under the Internal  Revenue Code of 1986, as amended from time to time
(the "Code"),  the Company shall have the right to exclude  Executive  from that
plan  in  return  for  his   participation  in  (x)  a  non-qualified   deferred
compensation  plan  or (y) an  arrangement  providing  substantially  comparable
benefits under a plan that is either a qualified or non-qualified plan under the
Code at the Company's option.

     (d) Vacation and Leaves of Absence. Executive shall be entitled to four (4)
weeks of paid vacation leave during each twelve (12) month  calendar  period and
paid holidays in accordance with the Company'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 the  Company's
receipt of invoices or similar records as the Company may reasonably  request in
accordance  with its policy and  procedures,  for all  reasonable  and necessary
expenses incurred by the Executive in the performance of his duties hereunder.

     (f) Life  Insurance.  The Company  shall  provide  $4,000,000  of term life
insurance for the benefit of the Executive during the Term of this Agreement.
<PAGE>
4.       Termination and Termination Benefits.
         ------------------------------------

(a)      Termination by Prime.
         --------------------

     (1) Without Cause. The Company may terminate this Agreement and Executive's
services  at any time for any  reason or for no reason at all upon  thirty  (30)
days' prior written notice to Executive.  In connection  with the termination of
Executive's   services   pursuant  to  this  Section  4(a)(1),   Executive  (and
Executive's  eligible  dependents  with respect to paragraph (D) below) 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)
above;

     (B) a  termination  payment  in an  amount  equal to the sum of (x) one (1)
times the amount of the Base Salary then applicable,  plus (y) one (1) times the
average of the amounts  payable to the Executive  pursuant to the  provisions of
Section 3(b) hereof for the two (2) calendar  years  immediately  preceding  the
calendar year in which the effective  date of the  termination of this Agreement
occurs (the sum of the amounts determined by adding subsection (x) and (y) is in
the aggregate hereinafter referred to as the "Normal Termination Payment"),  and
the Normal  Termination  Payment shall be payable within thirty (30) days of the
effective date of termination;

     (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 in accordance
with the provisions of any such plan(s);

     (D) the health insurance  benefits specified in Section 3(c)(1) above for a
period of twelve (12) months  following the effective date of  termination,  and
following  such time  period,  the  Executive  shall be  entitled  to all rights
afforded to him under the federal Consolidated Omnibus Budget Reconciliation Act
("COBRA") to purchase  continuation  coverage of such health insurance  benefits
for himself and his  dependents  for the maximum  period  permitted by law (with
respect  to this  paragraph  (D),  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 following the effective date of termination); and

     (E) the life  insurance  benefits  specified  in  Section  3(f) above for a
period of twelve (12) months following the effective date of termination.

     In the event that  Executive is terminated  without cause  pursuant to this
Section  4(a)(1)  and  within  twelve  months  from the  effective  date of such
termination  there is a "Change in Control"  of the Company (as defined  below),
then  Executive  shall be entitled to receive the  benefits set forth in Section
4(e)  hereof to the  extent  and in the  amount  that such  benefits  exceed the
amounts paid or received by Executive pursuant to this Section 4(a)(1).

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

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

     (C) receive the 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;

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

     (E) receive the life insurance benefits specified in Section 3(f) above for
a period of three (3) months following the effective date of termination.

     (3) "Cause" Defined.  For purposes of this Agreement,  "Cause" shall mean a
reasonable, good faith finding by a majority of the Board (A) that Executive has
harmed the Company through an act of dishonesty or material conflict of interest
that  relates  to  the  performance  of  Executive's  duties  hereunder,  (B) of
Executive's  conviction  of  a  felony  involving  moral  turpitude,   fraud  or
embezzlement,  (C) that  Executive's  willful failure to perform in any material
respect his duties under this Agreement (other than a failure due to disability)
that results in material harm to the Company,  after written  notice  specifying
the failure and a  reasonable  opportunity  of at least thirty (30) days 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 and willful  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 the
Company  specifying in reasonable  detail the nature of the breach.  The Company
intends that "Cause" must be based only on meaningful  and  significant  matters
and not on matters of minor importance. For purposes of this Section, an act, or
failure to act, on Executive's part shall be considered  "willful" only if done,
or omitted to be done,  by him not in good faith and without  reasonable  belief
that his action or omission was in the best interest of the Company.

     (4) Disability.  If due to illness, physical or mental disability, or other
incapacity,  Executive  shall  fail  to  perform  the  duties  required  by this
Agreement  during  any  four  (4)  consecutive  months  during  the Term of this
Agreement,  the  Company  may  terminate  this  Agreement  upon thirty (30) days
written notice to Executive.  In such event, Executive (and Executive's eligible
dependents with respect to paragraph (D) below) shall receive:
<PAGE>
     (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)
above;

     (B) a Normal Termination  Payment which shall be payable within thirty (30)
days of the effective date of termination;

     (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 in accordance
with the provisions of any such plan(s);

     (D) the health insurance  benefits specified in Section 3(c)(1) above for a
period of twelve (12) months  following the effective date of  termination,  and
following  such time  period,  the  Executive  shall be  entitled  to all rights
afforded  to him under COBRA to  purchase  continuation  coverage of such health
insurance  benefits  for  himself  and his  dependents  for the  maximum  period
permitted by law (with respect to this paragraph (D), 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 following the  effective  date of  termination);
and

     (E) the life  insurance  benefits  specified  in  Section  3(f) above for a
period of twelve (12) months following the date of termination.

     This Section  4(a)(iii)  shall not limit the  entitlement of the 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 the Company for Executive's benefit.

(b)      Termination by Executive.
         ------------------------

     (1) With Good Reason.  Executive may terminate  this  Agreement  with "good
reason" upon written notice to the Company.  In connection  with the termination
of this Agreement  pursuant to this Section 4(b)(1),  Executive (and Executive's
eligible  dependents  with respect to paragraph  (E) below) 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)
above;

     (B) a termination payment in an amount equal to one (1) times the amount of
the Base  Salary,  payable  within  thirty  (30) days of the  effective  date of
termination;

     (C) any earned and unpaid bonus(es)  otherwise payable to him in accordance
with Sections 3(b);

     (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 as otherwise
provided in such Sections;
<PAGE>
     (E) the health  insurance  benefits  specified in Section 3(c)(1) above for
the  for a  period  of  twelve  (12)  months  following  the  effective  date of
termination,  and following such time period, the Executive shall be entitled to
all rights afforded to him under COBRA to purchase continuation coverage of such
health insurance  benefits for himself and his dependents for the maximum period
permitted by law (with respect to this paragraph (E), 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 following the  effective  date of  termination);
and

     (F) the life  insurance  benefits  specified  in  Section  3(f) above for a
period of twelve (12) months following the date of termination.

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

     (B) the vested benefits and amounts set forth in Sections 3(c),  3(d), 3(e)
and 3(f) hereof through the effective date of termination, payable in accordance
with the provisions of such Sections;

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

     (D) the life  insurance  benefits  specified  in  Section  3(f) above for a
period of three (3) months following the date of termination.

     (E) "Good Reason"  Defined.  For purposes of this Agreement,  "good reason"
shall mean (A) the  material  breach by the  Company  of any of its  obligations
hereunder (a bona fide dispute  regarding the  Performance  Bonus shall not be a
material  breach by the  Company)  and the  failure of the  Company to cure such
breach within thirty (30) days after receipt by the Company of a written  notice
from the Executive  specifying  in  reasonable  detail the nature of the breach,
unless such breach requires a longer period to cure, then the Company shall have
the right to cure  such  breach  within  such  additional  period of time not to
exceed ninety (90) days, (B) Executive's title or scope of responsibilities  and
duties  are  diminished  as they  existed  and as  provided  in  this  Agreement
immediately  prior to such event, or the Company fails to provide Executive with
adequate office facilities and support services to perform such responsibilities
and duties,  (C) the amounts payable to the Executive as existed and as provided
in this Agreement  immediately prior to such event have been materially  reduced
in any  way,  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).
<PAGE>
     (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)  above.  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 twelve
(12) months  following the effective date of termination and following such time
period, such eligible decedents shall be entitled to all rights afforded to them
under COBRA to purchase  continuation coverage of such health insurance benefits
for the maximum period permitted by law. With respect to the preceding sentence,
to the extent required by applicable law, the  Executive's  dependents  shall be
deemed to have elected to exercise  their rights under COBRA as of the first day
following the effective date of  termination.  This Section 4(c) shall not limit
the  entitlement  of Executive  under any  insurance or other  benefits  plan or
policy that is maintained by Prime for Executive's benefit.

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

     (e) Termination  Following a Change of Control. If, within twenty-four (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  thirty (30) days' prior  written
notice, Executive (and Executive's eligible dependents with respect to paragraph
(D) below) shall be entitled to receive the following benefits and payments:

     (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)
above;

     (B) a termination payment in an amount equal to $1,600,000,  payable within
thirty (30) days of the effective date of termination;

     (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 in accordance
with the provisions of any such plan(s);
<PAGE>
     (D) the health insurance  benefits specified in Section 3(c)(1) above for a
period of twenty-four  (24) months  following the effective date of termination,
and following  such time period,  the Executive  shall be entitled to all rights
afforded  to him under COBRA to  purchase  continuation  coverage of such health
insurance  benefits  for  himself  and his  dependents  for the  maximum  period
permitted by law (with respect to this paragraph (D), 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 following the  effective  date of  termination);
and

     (E) the life  insurance  benefits  specified  in  Section  3(f) above for a
period of twenty-four (24) months following the effective date of termination.

     (F) Executive  shall be fully vested in all amounts  accrued or accumulated
on behalf of Executive under any  non-qualified  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.

     (G) All stock awards or grants under the Prime  Retail,  Inc.  [1998] Stock
Incentive  Plan  shall  be  fully  vested  any  exercisable  as  of  Executive's
employment termination.

     (H) "Change of Control" Defined. 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 Prime,  a corporation  owned directly or indirectly by
the stockholders of Prime  (immediately  prior to the initial public offering of
Prime) in  substantially  the same  proportions  as their  ownership of stock of
Prime  (immediately  prior to the initial public offering of Prime),  Executive,
Michael W. Reschke or Abraham  Rosenthal 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 Prime  representing 50% or more of the
total voting power represented by Prime'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 Prime's  stockholders  was
approved by a vote of at least  two-thirds  (2/3) 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 Prime
approve a merger or  consolidation  of Prime with any other  corporation,  other
than a merger or consolidation that (i) would result in the Voting Securities of
Prime 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 Prime or such  surviving  entity  outstanding  immediately
after such merger or consolidation or (ii) 50% or more of the Board of Directors
of the  surviving  entity is composed of members  from the Board of Directors of
Prime; (4) the  stockholders of Prime approve a plan of complete  liquidation of
Prime  or an  agreement  for  the  sale  or  disposition  by  Prime  of (in  one
transaction or a series of  transactions)  all or  substantially  all of Prime's
assets.
<PAGE>
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 the Company
hereunder.

     (b) Non-Competition. In return for the performance of the management duties
described in Section 1 hereof, during the Term of the Agreement and for a period
of two  years  thereafter  in the  event of the  termination  of this  Agreement
pursuant to the provisions of Sections 4(a)(1),  4(a)(2),  4(b)(1),  4(b)(2), or
4(e)  hereof  (the  "Restrictive  Period"),  Executive  shall not,  directly  or
indirectly, in any capacity whatsoever, either on his own behalf or on behalf of
any other person or entity with whom he may be employed or  associated,  compete
with the Business (as  hereinafter  defined) in any of the  following  described
manners:  (i) perform services of the types that Executive performs on behalf of
the Group (as hereinafter  defined) for himself,  or any affiliate of himself or
for any  competitor  of the Group if such  competitor  engages  in the  Business
within the United States and any other geographic area or territory  wherein the
Group is engaged  in the  Business  at the time of  Executive's  termination  of
services  hereunder  ("Restrictive  Geographic Area"); or (ii) solicit or accept
any Business (or help any other person  solicit or accept any Business) from any
person or entity  that on the date of this  Agreement  is a vendor,  customer or
tenant of the Group or at the time of  termination of this Agreement any vendor,
customer  or  tenant  that is  actively  being  pursued  by the  Group  and that
Executive knows is being pursued. For purposes hereof,  "Group" shall mean Prime
and the  Operating  Partnership  and any of  their  respective  subsidiaries  or
affiliates,  and the term  "Business"  means any  interest in any real  property
within the retail  business that is within the primary  business of the Company,
as determined from time to time, by a majority vote of the independent directors
of the Company. Furthermore, during the Restrictive Period, Executive shall not,
directly or indirectly,  induce or attempt to persuade any employee or customer,
vendor or tenant of the Group or any such entity being  actively  pursued by the
Group to terminate its business  relationship with the Group or not proceed with
a business relationship with the Group.  Notwithstanding the foregoing,  nothing
herein shall  prohibit  Executive  from owning 5% or less of any securities of a
competitor  engaged  in the same  Business  if such  securities  are listed on a
nationally  recognized  securities  exchange or traded  over-the-counter  on the
National  Association  of  Securities  Dealers  Automated  Quotation  System  or
otherwise. So long as the Executive is in compliance with the provisions of this
Section 6(b),  and in addition to the payments  required under any other Section
of this  Agreement,  the  Company  will pay the  Executive  an  amount  equal to
$66,666.66 per calendar month in arrears for a period of two (2) years beginning
with the first  calendar month after  termination of this Agreement  pursuant to
the provisions of Sections 4(a)(1), 4(b)(1), or 4(e) hereof. Upon written notice
at any time prior to thirty  (30) days before the  expiration  of the first year
after  termination,  the  Company  or the  Executive  may  elect  to  limit  the
Restrictive  Period  relating to a  termination  of this  Agreement  pursuant to
Sections 4(a)(1), 4(b)(1) or 4(e) to one year; whereupon, the $66,666.66 monthly
payments  shall  cease  at the end of said  first  year.  If this  Agreement  is
terminated  pursuant to the  provisions of Sections  4(a)(2) or 4(b)(2)  hereof,
then the  Executive  shall not be entitled  to receive  any  amounts  during the
Restrictive Period.
<PAGE>
     (c)  Non-Disclosure.  During the Restrictive  Period and in the Restrictive
Geographic  Area,  Executive shall not disclose or use, except in the pursuit of
the  Business for or on behalf of the Group,  any Trade  Secret (as  hereinafter
defined) of the Group,  whether  such Trade Secret is in  Executive's  memory or
embodied in writing or other  physical  form. For purposes of this Section 6(c),
"Trade Secret" means any information  that derives  independent  economic value,
actual or potential,  with respect to the Company from not being generally known
to, and not being  readily  ascertainable  by proper means by, other persons who
can obtain  economic  value  from its  disclosure  or use and is the  subject of
efforts to maintain its secrecy  that are  reasonable  under the  circumstances,
including, but not limited to, trade secrets,  customer lists, sales records and
other proprietary commercial information.  Said term, however, shall not include
general  "know-how"  information  acquired by 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 the
Company.

     (d) Return of Documents. Upon termination of his services with the Company,
Executive  shall return all originals and copies of books,  records,  documents,
customer lists,  sales materials,  tapes,  keys, credit cards and other tangible
property of the Company 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 6, 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 6 are fair and
reasonable,   are  minimally  necessary  to  protect  the  Company,   its  other
stockholders  and the public from the unfair  competition of Executive who, as a
result of his  performance  of services on behalf of the Company,  will have had
unlimited  access to the most  confidential  and  important  information  of the
Company, its business and future plans. Executive furthermore  acknowledges that
no unreasonable  harm or injury will be suffered by him from  enforcement of the
covenants  contained  herein  and  that he  will  be  able to earn a  reasonable
livelihood following termination of his services notwithstanding  enforcement of
the covenants contained herein.

     (g) Indemnification. Subject to the provisions of this Agreement, Executive
shall  indemnify the Company for any and all  consequential  damages,  costs and
expenses (including legal fees) resulting from any of his acts or omissions that
constitute  bad faith,  willful or  intentional  conduct  that cause harm to the
Company's business or reputation. Executive also shall indemnify the Company for
any and all consequential damages, costs and expenses resulting from his acts of
omission  constituting reckless disregard of his duties to the Company 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.
<PAGE>
6.  Gross  Up   Payments.   Anything   in  this   Agreement   to  the   contrary
notwithstanding, in the event that any payment by or on behalf of the Company 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 paragraph (b)
below,  all  determinations  required to be made under this  Section,  including
whether and when a Gross-Up  Payment is required and the amount of such Gross-Up
Payment and the  assumptions  to be utilized in arriving at such  determination,
shall  be made by the  public  accounting  firm  that  serves  as the  Company's
auditors  (the  "Accounting  Firm"),  which shall  provide  detailed  supporting
calculations  both to the Company and  Executive  within 15 business days of the
receipt of notice from the Company or Executive  that there have been  Payments,
or such  earlier  time as is  requested  by the  Company.  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 the Company.  Any Gross-Up  Payment,  as  determined  pursuant to this
Section,  shall be paid by the Company to  Executive  within five days after the
receipt by the Company 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 the  Company  and  Executive,  except as
provided in paragraph (b) below.

     (b) IRS  Claims.  As a result  of the  uncertainty  in the  application  of
Section  4999  of the  Code  at the  time of the  initial  determination  by the
Accounting Firm hereunder,  it is possible that the Internal  Revenue Service or
other  agency  will claim that a greater  Excise Tax is due,  and thus a greater
amount of  Gross-Up  Payment  should  have been  made by the  Company  than that
determined  pursuant to paragraph  (a) above (an  "Underpayment").  In the event
that  Executive  is  required  to make a payment  of any such  Excise  Tax,  the
Accounting  Firm shall determine the amount of the additional  Gross-Up  Payment
due to the Executive based on the  Underpayment,  and such  additional  Gross-Up
Payment  shall be  promptly  paid by the  Company  to or for the  benefit of the
Executive.  Executive  shall  notify the  Company in writing of any claim by the
Internal Revenue Service or other agency that, if successful,  would require the
payment by the Company of the Gross-Up Payment or an Underpayment.
<PAGE>
7. Prior  Agreement.  This  Agreement  supersedes  and is in lieu of any and all
other employment or service arrangements between Executive, on the one hand, and
Prime and/or the Operating  Partnership or its predecessors or any subsidiaries,
on the other hand,  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.  Prime may assign all or any of its right hereunder  provided
that  substantially all of the assets of the Company are also transferred to the
same party; provided, however, that Prime and the Operating Partnership, jointly
and severally shall remain  primarily  liable to Executive to fulfill all of the
Company's  obligations  under this  Agreement  and that any such  assignee  also
agrees to be  primarily  liable to  Executive  jointly  and  severally  with the
Company to fulfil all of the  Company's  obligations  under  this  Agreement  as
provided in Section 9 below.

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  the  Company'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. The Company will require any successor or assign (whether
direct or indirect, by purchase,  merger,  consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, as the case may be,
by  agreement  in form  and  substance  reasonably  satisfactory  to  Executive,
expressly,  absolutely and  unconditionally  to assume and agree to perform this
Agreement  in the same manner and to the same  extent that the Company  would be
required to perform it if no such succession or assignment had taken place.  Any
failure of the Company to obtain such agreement  prior to the  effectiveness  of
any such succession or assignment 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:

                  Glenn D. Reschke
                  731 Swan Cove Road
                  Pasadena, Maryland  21122

                  with a copy to (which will not constitute notice):

                  Richard E. Levine
                  Miles & Stockbridge P.C.
                  10 Light Street
                  Baltimore, MD  21202
<PAGE>
     (b) if to Prime or to the Operating Partnership, to:

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

                  with a copy to:

                  Steven J. Gavin
                  Winston & Strawn
                  35 West Wacker Drive
                  Chicago, Illinois 60601

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

14. Opportunity to Employ Counsel.  Executive  acknowledges receipt of a copy of
this  Agreement  prior to his execution of this  Agreement  with the Company 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 the Company  materially  breaches any of its  obligations  to
Executive  under this  Agreement  and the  Executive  brings any action,  claim,
demand,  suit or proceeding against the Company to enforce his rights under this
Agreement,  the Company  agrees that it will pay all  reasonable  legal fees and
related legal costs  (collectively  "Legal Fees") incurred by Executive no later
than thirty (30) days following a judgment by a court of competent  jurisdiction
that the Company materially breached its obligations to the Executive under this
Agreement;  provided,  however,  that if it is determined by a final judgment or
other final  adjudication by a court of competent  jurisdiction that the Company
did not  materially  breach  any of its  obligations  to  Executive  under  this
Agreement, Executive will pay to Company within thirty (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 the Company  pursuant to this Section

15. The Company  acknowledges  the  indemnification  obligations of Prime to the
Executive and the other  officers of Prime as set forth in its By-laws,  as they
may be amended from time to time.
<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 twenty-four
(24) consecutive months immediately following the termination of this Agreement,
Executive  will within  fourteen  (14) days of each  instance of new  employment
notify  Prime in writing of the  identity of his new  employer and the job title
associated with such employment.

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

EXECUTIVE:

/s/ Glenn D. Reschke
----------------------------------
Glenn D. Reschke

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

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