MASTER MODIFICATION AGREEMENT


                  THIS MASTER MODIFICATION  AGREEMENT ("this Agreement") is made
as of the 22nd day of  December,  2000,  among  BUCKEYE  FACTORY  SHOPS  LIMITED
PARTNERSHIP,  a Delaware limited  partnership  ("Buckeye  Borrower"),  THE PRIME
OUTLETS AT CALHOUN LIMITED PARTNERSHIP, a Delaware limited partnership ("Calhoun
Borrower"),  CAROLINA  FACTORY SHOPS  LIMITED  PARTNERSHIP,  a Delaware  limited
partnership ("Carolina Borrower"),  LATHAM FACTORY STORES LIMITED PARTNERSHIP, a
Delaware  limited  partnership  ("Latham  Borrower"),  THE PRIME  OUTLETS AT LEE
LIMITED PARTNERSHIP, a Delaware limited partnership ("Lee Borrower"), and SHASTA
OUTLET CENTER  LIMITED  PARTNERSHIP,  a Delaware  limited  partnership  ("Shasta
Borrower;"  Buckeye  Borrower,  Calhoun  Borrower,   Carolina  Borrower,  Latham
Borrower,  Lee Borrower and Shasta Borrower are hereinafter  sometimes  referred
to,  jointly  and  severally,  as  "Borrowers"),  each of  Borrowers  having its
principal  office c/o Prime Retail,  L.P.,  100 East Pratt  Street,  19th Floor,
Baltimore,  Maryland 21202, PRIME RETAIL,  L.P., a Delaware limited  partnership
("Existing  Guarantor"),  having its principal  office at 100 East Pratt Street,
19th Floor,  Baltimore,  Maryland  21202,  and PRIME  RETAIL,  INC.,  a Maryland
corporation ("Special Guarantor"), having its principal office c/o Prime Retail,
L.P., 100 East Pratt Street,  19th Floor,  Baltimore,  Maryland 21202  (Existing
Guarantor and Special Guarantor are hereinafter  sometimes  referred to, jointly
and  severally,  as  "Guarantors"),  and NOMURA  ASSET  CAPITAL  CORPORATION,  a
Delaware corporation  ("Lender"),  having an office at 2 World Financial Center,
Building B, New York, New York 10281.

                              W I T N E S S E T H :

                  WHEREAS,  Lender  has  previously  made a loan (the  "Existing
Loan") in the principal sum of up to $112,000,000  to Borrowers,  which Existing
Loan is (i) made and advanced  pursuant to the "Existing Loan  Agreement,"  (ii)
evidenced by the "Existing Notes" and (iii) secured by, among other things,  the
"Existing Mortgages" (as such quoted terms are defined in the Master Schedule of
Existing Loan Documents (the "Master Schedule") attached hereto and incorporated
herein;  the Existing Loan, as the same is modified as contemplated  hereby, and
as the same may be further  modified or amended  from time to time,  hereinafter
referred to as the "Loan;" the Existing Loan Agreement,  as the same is modified
as contemplated  hereby, and as the same may be further modified or amended from
time to time,  hereinafter  referred to as the "Loan  Agreement;"  the  Existing
Notes, as the same are modified as contemplated  hereby,  and as the same may be
further  modified  or  amended  from  time to  time,  hereinafter  referred  to,
individually and collectively,  as the "Notes;" and the Existing  Mortgages,  as
the same are  modified as  contemplated  hereby,  and as the same may be further
modified or amended from time to time, hereinafter referred to, individually and
collectively, as the "Mortgages");

                  WHEREAS, each of Borrowers is the respective fee owner of each
of the  Properties,  other than in the case of the "Carolina  Property" (as such
quoted term is defined in the Master  Schedule),  as to which Carolina  Borrower
holds a leasehold interest;

                  WHEREAS,  each  of  the  Mortgages  encumbers,   respectively,
Borrowers' respective interests in the Properties,  as aforesaid,  together with
the improvements and other property more  particularly  described in each of the
Mortgages (individually and collectively, the "Mortgaged Properties");

                  WHEREAS,  pursuant to the "Existing  Guaranty" (as such quoted
term is defined in the Master Schedule),  Existing  Guarantor has guaranteed the
repayment of the Loan on the terms set forth therein (the Existing Guaranty,  as
the same is modified and reaffirmed,  as contemplated hereby,  together with the
Special Guaranty, as hereinafter defined, and as the any of the foregoing may be
further  modified  or  amended  from  time to  time,  hereinafter  referred  to,
individually and collectively, as the "Guaranty");

                  WHEREAS,  pursuant to that certain Special Limited Guaranty of
Payment dated the date hereof (the "Special Guaranty") from Special Guarantor to
Lender,  Special Guarantor has guaranteed the repayment of a portion of the Loan
on the terms, and under the circumstances, set forth therein;

                  WHEREAS,  Lender  had  assigned  all of its  right,  title and
interest  in and to the  Existing  Loan to Short  Term  Asset  Receivable  Trust
("START");

                  WHEREAS,  START had  reassigned  all of its  right,  title and
interest in and to the Existing Loan to Lender,  who is now the owner and holder
of the Existing  Loan and the existing  loan  documents  set forth on the Master
Schedule (individually and collectively, the "Existing Loan Documents");

                  WHEREAS,  the maturity date under the Existing Loan  Agreement
and the Existing Notes occurs on June 11, 2001;

                  WHEREAS,  Borrowers  have  requested  that Lender (i) grant an
extension of the maturity date, (ii) permit Existing  Guarantor (in its capacity
as managing  general  partner of each of  Borrowers)  to enter into the Fortress
Loan (as hereinafter  defined) and (iii) agree to certain other modifications to
the Existing  Loan and the Existing  Loan  Documents,  all as  hereinafter  more
particularly set forth; and

                  WHEREAS,  Lender is willing,  on the terms and  conditions set
forth herein,  to agree to  Borrowers'  requests,  as aforesaid,  subject to the
terms and provisions of this Agreement and subject to the satisfaction of all of
Lender's conditions thereto,  including,  without limitation, (i) the payment to
Lender, in immediately available funds,  contemporaneously with the execution of
this  Agreement,  of an  extension  fee (the  "Extension  Fee") in the amount of
$1,120,000,  (ii) the execution and delivery of the Special  Guaranty by Special
Guarantor to Lender,  (iii) the execution and delivery into escrow,  pursuant to
that certain  Transfer and Escrow Agreement dated the date hereof (the "Transfer
Agreement")  among  Borrowers,  Lender and Chicago Title Insurance  Company,  as
escrow agent ("Escrow Agent"), of the "Transfer  Documents" (as such quoted term
is defined in the Transfer Agreement), which Transfer Documents include, without
limitation, deeds (or an assignment of ground lease, in the case of the Carolina
Property),  with  covenants  against  grantor's  acts,  and all  other  transfer
documents required by Lender in connection therewith,  pursuant to which each of
Borrowers shall convey to Lender, its assignee(s), designee(s) or nominee(s), on
an uncontested  basis, upon the conditions,  and subject to the terms, set forth
in this Agreement,  Borrowers' respective interests in the Mortgaged Properties,
(iv) the reaffirmation by the Existing  Guarantor of the Existing  Guaranty,  as
hereinafter set forth, and (v) the repayment in full to Lender's affiliate,  The
Capital  Company of  America,  LLC, a Delaware  limited  liability  company,  in
immediately  available  funds,  contemporaneously  with  the  execution  of this
Agreement,  out of the proceeds of the Fortress Loan, of that certain  unsecured
revolving line of credit in the original principal amount of $40,000,000 made to
Existing  Guarantor,  including all  principal  outstanding  thereunder  and all
interest,  fees and other sums accrued thereon or in connection  therewith which
remain unpaid;

                  NOW,  THEREFORE,  to induce Lender to so extend and modify the
Existing Loan and the Existing Loan  Documents,  and for other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Borrowers  and  Guarantors  hereby  covenant and agree with,  and  represent and
warrant to, Lender as follows:

1.  Definitions.  Any defined terms used in this Agreement,  if not specifically
defined in this Agreement, shall have the --------------------  meaning given to
such terms in the Existing Loan Agreement.

1.  Extension  of Maturity  Date.  The date "June 11,  2001" that appears in the
definition of "Stated  Maturity  Date" in the Existing Loan Agreement and in the
Existing  Notes is hereby deleted and replaced with the date "December 31, 2003"
and the Maturity  Date of the Note is hereby  extended to December 31, 2003;  in
connection  therewith,  the Existing Loan  Agreement,  the Existing  Notes,  the
Existing  Mortgages and the other Existing Loan Documents,  and the defined term
"Maturity  Date," to the extent  set forth  therein,  shall be, and are  hereby,
modified to reflect the foregoing.

1. Modification of Interest Rate and Default Rate; Principal Balance. Commencing
on the next Payment Date after the date hereof  (hereinafter,  the "Next Payment
Date"),  interest  on the  outstanding  principal  balance  of the  Loan and the
Existing Notes shall accrue,  prior to default,  at a fixed rate per annum equal
to thirteen (13.0%) percent, calculated for the actual number of days elapsed on
the basis of a 360-day year from and including the  commencement  date aforesaid
to,  but not  including,  the date of  repayment  of the  Loan;  such  interest,
calculated as aforesaid, shall continue to be payable in arrears on each Payment
Date; all references in the Existing Loan  Agreement,  the Existing  Notes,  the
Existing  Mortgages and the other Existing Loan Documents to, and all provisions
therein containing the defined term,  "LIBOR," to the extent that the same would
render such provisions inconsistent with the foregoing, shall be disregarded; in
connection with the foregoing,  the Existing Loan Agreement,  the Existing Notes
(including  the  respective  provisions of Section 3(A)  thereof),  the Existing
Mortgages and the other Existing Loan Documents,  and the defined term "Interest
Rate," to the extent set forth  therein,  shall be, and are hereby,  modified to
reflect the foregoing. Consistent with the foregoing modifications,  the defined
term "Default Rate," to the extent set forth in the Existing Loan Agreement, the
Existing  Notes,  the Existing  Mortgages and the other Existing Loan Documents,
shall be, and is hereby,  modified to mean, with respect to the Loan, a rate per
annum equal to the lesser of (a) the maximum rate  permitted by applicable  law,
or  (b)  eighteen   (18.0%)   percent.   Also   consistent  with  the  foregoing
modifications,  the defined term "Debt Service  Coverage Ratio" set forth in the
Existing Loan Agreement,  and to the extent set forth in the Existing Notes, the
Existing  Mortgages  and the other  Existing  Loan  Documents,  shall be, and is
hereby,  modified to delete the reference  therein  appearing in the fifth (5th)
line thereof to "a debt service  constant of 10.09" and to replace the same with
"an interest rate of thirteen (13.0%) percent per annum."

The  parties  hereto  acknowledge  that as of the date  hereof  the  outstanding
principal balance of the Loan is
$112,000,000.

4. Required  Amortization of Principal  Balance.  Commencing on the Payment Date
which  succeeds  the Next Payment  Date,  Lender  shall  require that  Borrowers
amortize,  on a monthly basis,  the outstanding  principal  balance of the Loan.
Accordingly,  Section  2.2.1(b) of the Existing Loan Agreement  shall be, and is
hereby, amended and restated in its entirety as follows:

                  On  January  11,  2001,   interest  only  on  the  outstanding
                  principal  balance of the Loan at the  Interest  Rate shall be
                  payable.  Commencing  on February  11,  2001,  and on each and
                  every Payment Date thereafter  (hereinafter,  an "Amortization
                  Payment  Date"),  through and  including  the  Maturity  Date,
                  Borrowers shall pay an amount (said amount,  the "Monthly Debt
                  Service Payment Amount"),  equal to the sum of (x) interest at
                  the Interest Rate on the outstanding  principal balance of the
                  Loan,  plus (y) the  "Monthly  Amortization  Amount"  (as such
                  quoted term is hereinafter defined),  provided,  however, that
                  such Monthly  Amortization  Amount shall be paid in accordance
                  with  the  payment  schedule   described  in  the  penultimate
                  sentence of this  Section  2.2.1(b).  The Monthly Debt Service
                  Payment  Amount  due on any  Payment  Date shall be applied by
                  Lender,  first,  to the payment of interest  accrued  from the
                  eleventh  (11th)  day of the  calendar  month  preceding  such
                  Payment  Date  through  the tenth  (10th) day of the  calendar
                  month in which such Payment Date occurs,  notwithstanding that
                  such Payment Date may have been  deferred to the next Business
                  Day because the eleventh  (11th) day of such calendar month is
                  not a  Business  Day,  second,  to any other sums then due and
                  payable  in  connection  with  the  Loan,  and  third,  to the
                  outstanding principal balance of the Loan, provided,  however,
                  that,  so long as any Event of Default  exists,  Lender  shall
                  apply the Monthly Debt Service Payment Amount to such items in
                  connection  with  the  Loan,  including,  without  limitation,
                  reduction  of  outstanding  principal  and  accrued and unpaid
                  interest  and  other  sums  thereon,  and in  such  order  and
                  proportion,  as Lender,  in its sole discretion,  shall elect.
                  For purposes hereof,  the term "Monthly  Amortization  Amount"
                  shall  mean  the   greater  of  (i)  $50,000   (the   "Minimum
                  Amortization Amount") and (ii) that sum which equals (A) prior
                  to the repayment of the Fortress Loan, 50% of the "Excess Cash
                  Flow" (as such  quoted  term is  hereinafter  defined)  or (B)
                  following  the  repayment  of the Fortress  Loan,  100% of the
                  Excess Cash Flow. For purposes  hereof,  the term "Excess Cash
                  Flow" shall mean,  as of any Payment  Date,  the excess of (A)
                  all Rents in  respect  of the  Properties  over the  preceding
                  calendar month,  as determined by Lender,  over (B) the sum of
                  all deposits,  payments and expenditures required or permitted
                  to be made with  respect to such  calendar  month  pursuant to
                  Section 2.2.3 of the Loan Agreement,  as modified  hereby,  as
                  reasonably  determined by Lender  (together  with any Approved
                  Operating  Expenses,  Approved  Capital  Expenses and Approved
                  Leasing  Expenses  which,  while not actually made during such
                  calendar month, are properly allocable to such calendar month,
                  to the extent reasonably approved by Lender), except that, for
                  purposes  of  calculating  Excess  Cash  Flow  hereunder,  the
                  deposit of the Monthly Debt Service Payment Amount required to
                  be made  pursuant  to Section  2.2.3(b)  shall not include the
                  Monthly Amortization Amount. Notwithstanding the foregoing, or
                  anything  else to the  contrary  contained  in any of the Loan
                  Documents,  including,  without  limitation,  Section 2.2.3 or
                  Section  2.6 of the Loan  Agreement,  so long as any  Event of
                  Default exists, all Rents may be used and applied by Lender to
                  such items in  connection  with the Loan,  including,  without
                  limitation, reduction of outstanding principal and accrued and
                  unpaid  interest  and other  sums  thereon,  in such order and
                  proportion, as Lender, in its sole discretion, shall elect. On
                  each Amortization  Payment Date, Borrowers shall pay a Monthly
                  Amortization  Amount  which is at least  equal to the  Minimum
                  Amortization  Amount due on such Payment Date and shall pay an
                  additional sum in respect of the Monthly  Amortization  Amount
                  which  would have been due in  respect  of the prior  calendar
                  month based on Borrowers'  good-faith  estimate of Excess Cash
                  Flow, if any, in such prior calendar month, provided, however,
                  that,  on or before the twentieth  (20th) of the  then-current
                  calendar   month,   Borrowers  shall  provide  Lender  with  a
                  calculation  of Excess  Cash  Flow in  respect  of such  prior
                  calendar month;  based thereon,  in the event that the Monthly
                  Amortization  Amount paid by Borrowers in respect of the prior
                  calendar month was (a)  insufficient,  Borrowers shall pay the
                  shortfall to Lender on the next  succeeding  Payment  Date, in
                  addition to any other sums which would be due on such  Payment
                  Date,  or (b) in excess of amounts that would  otherwise  have
                  been due,  Borrowers shall receive a credit in amount equal to
                  such  excess  against  any  sums  which  are  due on the  next
                  succeeding  Payment Date. In  connection  with the  foregoing,
                  Lender shall have received from Borrowers such  information as
                  Lender may require in order to calculate  the Excess Cash Flow
                  in respect of any month,  all in form acceptable to Lender and
                  at Borrowers'  sole cost and expense,  and  accompanied  by an
                  Officer's  Certificate  stating that all such  information  is
                  true, correct and complete.

     5. Future  Advances.  Lender shall have no further  funding  obligations in
respect of the Loan.  Accordingly,  Section 2.1.1 of the Existing Loan Agreement
shall be, and is hereby,  amended such that the "Facility  Termination  Date" is
deemed to have occurred on the date hereof,  anything to the contrary  contained
elsewhere in the Existing Loan Agreement,  including,  without  limitation,  the
definition  of  "Facility  Termination  Date" set forth in Section 1.1  thereof,
notwithstanding,   and  Lender  shall  have  no  further  obligation  under  any
circumstances to make any Advances to Borrowers.  Further,  Section 2.1.2 of the
Existing Loan  Agreement  shall be, and is hereby,  amended such that  Borrowers
shall no longer be entitled to reborrow Advances under the Loan Agreement.

     6. Release of Properties.  The release price and other conditions precedent
to Lender's  obligation to release any Property from the Lien of the Mortgage on
such  Property  shall be modified as  hereinafter  set forth and, in  connection
therewith,  Section  2.4.1(a) of the Existing Loan  Agreement,  shall be, and is
hereby, amended as follows:

     (a) subsection (i) thereof shall be, and is hereby, amended and restated in
its entirety as follows:

                  (i) Borrower shall have paid to Lender the "Release Price" (as
                  such quoted term is hereinafter defined). For purposes hereof,
                  the  term  "Release  Price"  shall  mean  the  greater  of the
                  following  amounts,  as determined by Lender:  (a) 125% of the
                  Allocated Amount for the Property proposed to be released,  as
                  set forth in the Schedule of Allocated Amounts attached hereto
                  and  incorporated  herein,  and (b) 100% of the "Net Proceeds"
                  (as such quoted term is hereinafter  defined) for the Property
                  proposed to be released.  For purposes  hereof,  the term "Net
                  Proceeds"  shall  mean  (a) in the  case of the  sale or other
                  transfer,  direct or indirect,  of the Property proposed to be
                  released,  provided  that  such  sale or  transfer  is for the
                  entirety  of the  Property,  the  greater  of (x) the  Release
                  Amount  for such  Property,  as set forth in the  Schedule  of
                  Release Amounts attached hereto and  incorporated  herein (the
                  "Release Amount Schedule"), and (y) 100% of the gross proceeds
                  of such  sale  or  transfer,  less  reasonable  and  customary
                  expenses  actually  incurred  by the  applicable  Borrower  in
                  connection with such sale or transfer, said expenses, however,
                  in no  event  to  exceed  four  (4%)  percent  of  said  gross
                  proceeds,  or (b) in the case of the  refinancing,  direct  or
                  indirect,  of the Property  proposed to be released,  provided
                  that such refinancing is for the entirety of the Property, the
                  greater of (x) the Release  Amount for such  Property,  as set
                  forth  in the  Release  Amount  Schedule,  and (y) 100% of the
                  gross  proceeds  of  such  refinancing,  less  reasonable  and
                  customary   expenses   actually  incurred  by  the  applicable
                  Borrower in connection with such  refinancing,  said expenses,
                  however,  in no event to exceed one (1%) percent of said gross
                  proceeds. In connection with the foregoing,  Lender shall have
                  received from Borrowers such information as Lender may require
                  in order to calculate the  appropriate  Release Price,  all in
                  form  acceptable  to Lender  and at  Borrowers'  sole cost and
                  expense,  and accompanied by an Officer's  Certificate stating
                  that all such information is true, correct and complete;

     (b) the following new clause (v) shall be, and is hereby,  added to Section
2.4.1(a) of the Existing Loan
Agreement:

                  (v)  Lender  shall  have  determined  that  the  Debt  Service
                  Coverage  Ratio in  respect  of the  Properties  remaining  as
                  collateral for the Loan following  such proposed  release,  if
                  measured  over the twelve  (12)-month  period  preceding  such
                  proposed  release,  is equal to or greater than 1.25:1.00 (the
                  "DSCR  Requirement"),  provided,  however,  that, in the event
                  that Lender  determines that the DSCR Requirement would not be
                  met in  connection  with such proposed  release,  Lender shall
                  permit  Borrowers to make an  additional  principal  reduction
                  payment (hereinafter  referred to as an "Additional  Principal
                  Payment") as a condition  to such release in an amount  which,
                  when  applied to reduce the  principal  amount of the Loan (in
                  addition to the application of the Release Price in connection
                  therewith),  would  cause the DSCR  Requirement  to be met, as
                  determined by Lender. Such Additional  Principal Payment shall
                  be paid to Lender,  in immediately  available funds,  together
                  with Borrowers' payment to Lender of the Release Price.

     7. Cash Management. Irrespective of the non-existence on the date hereof of
any Cash Trap Event, commencing on the date hereof,  Borrowers shall deposit any
Rents received by Borrowers,  and shall instruct the Collection  Account Bank to
transfer  all  property  receipts  that are cleared on a daily basis to the Cash
Collateral  Account  Bank for  deposit,  into the Cash  Collateral  Account and,
commencing  on the  Next  Payment  Date  and  continuing  on each  Payment  Date
thereafter,  any Rents deposited into the Cash Collateral  Account (or otherwise
received by Borrowers) during the immediately  preceding calendar month shall be
applied as set forth in Section  2.2.3 of the Existing Loan  Agreement,  as said
Section is hereinafter  modified.  Consistent with the foregoing,  Section 2.2.3
and  Section  2.6 of the  Existing  Loan  Agreement  shall be,  and are  hereby,
modified to delete therefrom,  as a condition  precedent to the effectiveness of
the operation  thereof,  the occurrence  and existence of a Cash Trap Event.  In
addition,  said  Section  2.2.3  shall be, and is hereby,  further  modified  to
provide  that any sums  which  remain  after  application  as set  forth in said
Section 2.2.3 shall, so long as no Cash Trap Event exists and is continuing,  be
remitted to Borrowers  (hereinafter,  the  "Borrowers'  Remittance"),  provided,
however,  that,  during the existence of any Cash Trap Event, said sums shall be
remitted  to Lender and applied by Lender to such items in  connection  with the
Loan,  including,  without  limitation,  reduction of outstanding  principal and
accrued  and  unpaid  interest  and  other  sums  thereon,  in  such  order  and
proportion, as Lender, in its sole discretion,  shall elect. Notwithstanding the
foregoing,  on each  Payment  Date that  Borrowers  are  entitled to receive the
Borrowers'  Remittance  hereunder,  Borrowers  and the General  Partners  hereby
authorize  and direct  Lender and the Cash  Collateral  Account Bank directly to
transfer such Borrowers'  Remittance to an account, such account to be specified
by "Mezzanine Lender" (as such quoted term is hereinafter  defined) in a written
notice  delivered by Mezzanine  Lender to the Cash  Collateral  Account Bank and
Lender not less than two (2) Business Days prior to the applicable  Payment Date
(said transfer herein referred to as a "Mezzanine Loan Payment").  Borrowers and
the General  Partners  hereby  acknowledge  and agree that each  Mezzanine  Loan
Payment is intended to be, and shall be, an amount paid by  Borrowers  on behalf
of the General  Partners  out of the  proceeds of an equity  distribution  which
otherwise would be made directly to the General Partners in like amount.

                  Borrowers hereby represent, warrant and confirm to Lender that
(a) all tenants of all the Properties have been irrevocably directed to send all
Rents directly to the  Collection  Account Bank for deposit into the "A" Account
and (b) all such directions remain in full force and effect.

8.       Ongoing Reserves.
-------------------------

                  (a) The amount  required to be deposited by Borrowers  monthly
into the Capital  Reserve Fund shall be modified in respect of Capital  Expenses
and shall be increased to account for Approved  Leasing  Expenses.  Accordingly,
Section 7.4.1 of the Existing Loan  Agreement  shall be, and is hereby,  amended
and restated in its entirety as follows:

                  7.4.1 Capital Reserve Fund;  Leasing  Reserve Fund.  Borrowers
                  shall  pay to  Lender  on the  Next  Payment  Date and on each
                  Payment  Date  thereafter  an  amount  with  respect  to  each
                  Property equal to one-twelfth (1/12th) of the product obtained
                  by  multiplying  (i)  $0.35 by (ii) the  aggregate  amount  of
                  square feet of rentable  space in such Property  (said amounts
                  hereinafter  called the "Capital Reserve Fund").  In addition,
                  Borrowers  shall pay to Lender on the Next Payment Date and on
                  each  Payment Date  thereafter,  as a  sub-account  under (but
                  otherwise,  for purposes of this  Agreement and the Other Loan
                  Documents, to be considered part of) the Capital Reserve Fund,
                  an amount with respect to each Property  equal to  one-twelfth
                  (1/12th) of the product  obtained by multiplying  (i) $1.00 by
                  (ii) the aggregate  amount of square feet of rentable space in
                  such Property (said amounts required to be deposited  pursuant
                  to this  sentence  hereinafter  called  the  "Leasing  Reserve
                  Fund").  Notwithstanding  anything to the  contrary  contained
                  elsewhere in this  Agreement,  Borrowers'  failure to make the
                  payments on account of the Leasing  Reserve  Fund, as required
                  hereby,  shall  constitute  an Event  of  Default  under  this
                  Agreement.

                  (b) The  conditions  precedent set forth in Section 7.5 of the
Existing Loan Agreement for the  disbursement  of funds from the Capital Reserve
Fund and the Leasing  Reserve Fund in respect of Approved  Capital  Expenses and
Approved Leasing Expenses shall be, and are hereby,  modified to add thereto the
additional  requirement  that Borrowers shall have delivered to Lender copies of
invoices and contracts,  to be reasonably  approved by Lender, in respect of all
work for which such disbursement is requested.

     9.  Cross  Default;  Additional  Bankruptcy  Defaults.  The  Loan  shall be
cross-defaulted  with the  Fortress  Loan to the  extent  that  there  occurs an
acceleration (for any reason) of, the Fortress Loan. In addition, any bankruptcy
event  which  occurs  with  respect to any of  Guarantors  or any of the general
partners of any of  Borrowers  shall  constitute  an Event of Default  under the
Loan.  Accordingly,  the  following  respective  subclauses  (xiii) and (xiv) of
Section 8.1(a) of the Existing Loan Agreement shall be, and are hereby, added to
said Section:

                  (xiii)  notwithstanding any contrary  provisions  contained in
                  the  "Pledge  Consent  Agreement"  (as  such  quoted  term  is
                  hereinafter  defined),  if there shall occur an  acceleration,
                  for any reason whatsoever, of the Fortress Loan; or

                  (xiv) if any of the events specified in clauses (vi), (vii) or
                  (viii) of this section 8.1(a) shall happen with respect to any
                  of Guarantors  or any of the  respective  general  partners of
                  Borrowers.

10.      Accelerated Procedures.

                  (a)      [Intentionally deleted].

                  (b)   Borrowers   shall,   and  do  hereby,   absolutely   and
unconditionally agree, on the terms and conditions hereinafter set forth, to the
peaceful and  non-contested  transfer of Borrowers'  respective fee or leasehold
interests,  as  the  case  may  be,  to the  Properties  and  all of  Borrowers'
respective other right, title and interest in and to the Mortgaged Properties to
Lender,  its assignee(s),  designee(s) or nominee(s),  to be effected by, at the
election  of  Lender,   (i)  a   non-contested   foreclosure  of  the  Mortgages
(hereinafter,  a "Friendly  Foreclosure"),  in which case, Borrowers shall fully
cooperate  with  Lender  and shall  deliver  such  documentation  in  connection
therewith as Lender shall require, or (ii) delivery, in lieu of foreclosure,  of
the  Transfer  Documents,  in  either  case on the  earlier  to occur of (a) the
Maturity  Date, and (b) the date Lender shall declare the Loan to be immediately
due and payable as the result of the  occurrence of an Event of Default  arising
out of  Borrowers'  failure to make any  scheduled  payment of  interest  and/or
principal on the Loan. In connection  therewith,  each of Borrowers has executed
and delivered the Transfer  Documents to Escrow  Agent.  The Transfer  Documents
shall be held by Escrow  Agent and shall not be  released  to Lender  unless and
until the following conditions (the "Transfer  Conditions") have occurred: (i) a
demand for payment in full of the Loan (hereinafter, a "Payment Demand") is made
upon Borrowers in connection with either (x) the occurrence of the Maturity Date
of the Loan or (y) Lender's  declaration of the Loan to be  immediately  due and
payable as the result of the  occurrence  of an Event of Default  arising out of
Borrowers' failure to make any scheduled payment of interest and/or principal on
the Loan and (ii)  Borrowers  have failed to make such  payment and such failure
has  continued  for  three  (3)  days.  Upon  the  occurrence  of  the  Transfer
Conditions, Lender shall be, and is hereby, authorized, at Lender's election, in
its sole  discretion,  either to (a)  initiate  a  Friendly  Foreclosure  of the
Mortgages, as aforesaid, or (b) authorize and direct Escrow Agent to release the
Transfer  Documents to Lender for recordation  and/or filing, at Borrowers' sole
cost and expense,  in the  appropriate  jurisdictions.  In  connection  with the
exercise by Lender of any of its rights or remedies under this Section 10(b) and
the transfer of the Properties pursuant either to a Friendly  Foreclosure or the
Transfer  Documents,  Lender  agrees that it shall  comply  with the  procedures
outlined  on the  Schedule  of  Terms  of Sale  Procedures  annexed  hereto  and
incorporated  herein.  Upon the release of the Transfer  Documents in respect of
any Mortgaged Property and the actual transfer of such Mortgaged Property either
pursuant to such  Transfer  Documents  or  pursuant  to a Friendly  Foreclosure,
Borrowers  shall  receive a credit  against the "Total  Payoff  Amount" (as such
quoted term is defined in the  aforesaid  Schedule of Terms of Sale  Procedures)
equal to the "Agreed Value" (as such quoted term is hereinafter defined) of such
Mortgaged Property;  for purposes of this Section 10(b), the term "Agreed Value"
shall mean the "fair  market  value" of the  Mortgaged  Property in question (as
such quoted term is defined in EXHIBIT A attached hereto), as of the date of the
Payment  Demand,  as determined by the mutual  agreement of Lender and Borrowers
within 20 days of Lender's  delivery of the Payment Demand (the last day of said
time period  herein  referred to as the  "Appraisal  Trigger  Date"),  provided,
however,  that, in the event that Lender and Borrowers are unable,  on or before
the Appraisal Trigger Date, to agree upon the fair market value of the Mortgaged
Property in  question,  then such fair market value shall be  determined  in the
manner set forth on, EXHIBIT A attached hereto.

                  The rights,  powers and  remedies of Lender under this Section
10 shall be cumulative  with, and not exclusive of, any other,  right,  power or
remedy which Lender may have against Borrowers, Guarantors, or any other obligor
in respect of the Loan,  whether pursuant to the Loan Agreement,  the Mortgages,
the Guaranty, or any of the other Loan Documents,  existing at law or in equity,
or otherwise, including, without limitation, the remedy of foreclosure, judicial
or non-judicial,  under the Mortgages,  all of which rights, powers and remedies
may be pursued singly, concurrently or otherwise, at such time and in such order
as Lender may determine in Lender's sole discretion. In addition, without in any
way limiting the generality of the foregoing,  nothing contained in this Section
10 shall (x) restrict Lender from commencing,  at Lender's election,  any action
which Lender would otherwise be entitled to commence  against  Guarantors  under
the Guaranty  concurrently with Lender's exercise of remedies under this Section
10, including, without limitation, irrespective of whether the Fair Market Value
of any of the Mortgaged  Properties has been established for purposes hereof, or
(y) obligate  Lender to abide by the procedures and limitations set forth herein
based on the Fair Market Value of the Mortgaged  Properties  in connection  with
the  exercise  by Lender of any of its rights or  remedies,  including,  without
limitation,  foreclosure of the Mortgaged Properties, outside of those set forth
in this Section 10(b).

     11. Property  Management.  Unless  otherwise  consented to by Lender in its
sole and absolute  discretion,  each of the Properties shall at all times during
the term of the Loan be leased,  managed and marketed by the Existing Guarantor.
Without Lender's prior written consent, no fees shall be payable to the Existing
Guarantor  in  connection  with such  leasing,  managing  and  marketing  of the
Properties. The Existing Guarantor shall operate or cause to be operated each of
the  Properties  in a first class manner and  otherwise in  accordance  with the
standard of operation of other factory outlet centers  similarly  situated.  The
Borrowers  acknowledge  and agree  (i) that the  Existing  Guarantor's  right to
manage  the  Properties  shall be  construed  as on the  basis  of a  Management
Agreement  with a thirty (30) day term and providing for automatic  renewal on a
month-to-month  basis,  renewable  by each  Borrower,  and (ii)  that  each such
renewal  shall be subject to the  approval  of Lender;  provided,  however,  the
Lender shall be deemed to have  approved such renewal so long as (x) no Event of
Default has occurred and is continuing and (y) on each DSCR  Determination  Date
the Debt Service  Coverage Ratio for the Properties for the calendar  quarter in
question is not less than  1.00:1.00.  Should any Event of Default  occur or the
Debt Service  Coverage Ratio  aforesaid be less than 1.00:1.00,  Lender,  in its
sole discretion,  may require  Borrowers to terminate the Management  Agreements
that are deemed to be in place and enter  into new  Management  Agreements  with
managers,  and on terms  and  conditions,  acceptable  to Lender in its sole and
absolute  discretion.  Each of such  managers  shall  enter into and  deliver to
Lender a subordination of management  agreement on Lender's form with respect to
each Management Agreement required to be delivered pursuant to this paragraph.

     12. No Subordinate  Debt other than Fortress  Debt;  Other Debt of Existing
Guarantor; Modification of Existing Guaranty.

                  (a)  Lender  has   agreed  to  permit   the   Fortress   Loan.
Accordingly,  the second (2nd)  sentence of Section  6.1(i) of the Existing Loan
Agreement shall be, and is hereby, modified to permit the pledge of interests as
security for the Fortress  Loan, as such pledge is  hereinafter  described.  The
term  "Fortress  Loan"  shall  mean a  mezzanine  loan to be  made  by  Fortress
Investment Group LLC, or an affiliate  thereof,  and Greenwich Capital Financial
Products,  Inc., or an affiliate thereof (collectively,  "Mezzanine Lender"), to
Existing  Guarantor,  which  mezzanine  loan shall be in the original  principal
amount of  $90,000,000,  shall have a stated maturity date of December 31, 2003,
and  shall be at an  interest  rate,  and  otherwise  on terms  and  conditions,
acceptable to Lender in all  respects,  as the same may be modified from time to
time without Lender's consent,  to the extent permitted under the Pledge Consent
Agreement.  The Mezzanine Loan may be secured by a pledge by Existing  Guarantor
of its respective partnership interests, as managing general partner, in each of
Borrowers, but otherwise shall not be secured by any of the Mortgaged Properties
or  Borrowers'  respective  interests  therein;  as a condition  to such pledge,
Mezzanine  Lender and Lender shall have entered into a pledge consent  agreement
on terms and conditions acceptable to Lender in its sole and absolute discretion
(the "Pledge  Consent  Agreement"),  which terms and  conditions  shall include,
inter  alia,  Mezzanine  Lender's  agreement  that it will not  foreshorten  the
aforesaid  maturity date of the Mezzanine  Loan without  Lender's  prior written
consent.

                  (b) In addition,  each of the Existing Loan  Agreement and the
Existing  Guaranty  shall  be,  and is  hereby,  modified  to add the  following
negative covenant with respect to Existing Guarantor:

                  Other than the  Fortress  Loan  (including  as the same may be
                  increased  or  supplemented  from  time  to  time),   Existing
                  Guarantor  shall not incur or permit  (a) any new debt  (other
                  than  first-mortgage  lien debt),  that (x) does not repay, in
                  full,   a  like   amount  of   existing   debt   (other   than
                  first-mortgage  lien  debt) or repay,  dollar-for-dollar,  the
                  Loan,  or (y) has a maturity  on or before the  Maturity  Date
                  under the Existing Loan Agreement,  as modified hereby, or (b)
                  any new  guaranties  or other  obligations  in the nature of a
                  guaranty  with  respect  to any  other  debt  that  (i) do not
                  replace,  in full, a like amount of existing guaranties of, or
                  other similar liabilities with respect to, other debt, or (ii)
                  mature on or before the Maturity  Date under the Existing Loan
                  Agreement, as modified hereby.

                  (c) The  Existing  Guaranty  shall be, and is hereby,  further
modified by deleting from Section 14(a)  thereof the  requirement  that the REIT
shall   at  all   times   cause   its   common   stock   to  be   listed   on  a
nationally-recognized  stock exchange,  provided, however, that, the substantive
financial and other reporting  requirements  imposed on Existing Guarantor under
the Existing  Guaranty which derive from such listing shall remain unaffected by
the foregoing modification; that is to say, Existing Guarantor shall continue at
all times to comply with such reporting requirements, on a substantive basis, as
if the REIT at all times remained a public company.

     13.  Defeasance.  Notwithstanding  anything to the contrary in the Existing
Loan Agreement or any of the other Existing Loan Documents,  Borrower shall have
no rights either to (x)  substitute  any of the Properties as collateral for the
Loan or (y) defease the Loan. In connection  with the foregoing,  Sections 2.4.3
through 2.4.5,  inclusive, of the Existing Loan Agreement shall be of no further
force or effect.

     14. Exit Fee.  Section 2.7(b) of the Existing Loan Agreement  shall be, and
is hereby, amended and restated in its entirety as follows:

                  (b) Borrowers shall pay to Lender an exit fee (the "Exit Fee")
                  in the  event  that the Loan is  repaid,  in whole or in part,
                  other than with proceeds of permanent  financing obtained from
                  Lender.  The  Exit Fee  shall be equal to 1% of the  principal
                  amount of the Loan so repaid,  not  including  that portion of
                  the  principal  amount of the Loan so repaid with the proceeds
                  of permanent financing obtained from Lender.

     15. Notices to Lender and Mezzanine Lender.  The provisions of Section 10.6
of the Existing Loan Agreement shall be, and are hereby, modified as follows:

     (a) The  address  for  Lender  set forth  therein  shall be, and is hereby,
changed to the following:

                           Nomura Asset Capital Corporation
                           Two World Financial Center
                           Building B, 18th Floor
                           New York, New York  10281
                           Attention:  General Counsel

                  with a copy to (in  addition to the other copy  addresses  for
Lender set forth in the Existing Loan Agreement):

                           Paul, Hastings, Janofsky & Walker LLP
                           75 E. 55th Street
                           New York, New York  10022
                           Attention:  Steven Koch, Esq.

                  (b) Copies of any notices  delivered  to Borrowers or Existing
Guarantor shall also be delivered to Mezzanine  Lender at the following  address
and in the manner required by Section 10.6 of the Existing Loan Agreement:

                           FRIT PRT Lending LLC
                           c/o Fortress Registered Investment Trust
                           1301 Avenue of the Americas, 42nd Floor
                           New York, New York  10019
                           Attention:  William E. Doniger

                  with a copy to:

                           Greenwich Capital Financial Products, Inc.
                           311 S. Wacker Drive, Suite 325
                           Chicago, Illinois  60603
                           Attention:  David Murdoch and John Burke

                  and:

                           Greenwich Capital Financial Products, Inc.
                           600 Steamboat Road
                           Greenwich, Connecticut  06830

     16.  Additional  Modification of Mortgage  encumbering the Latham Property.
The  Mortgage   encumbering  the  Latham   Property,   which  Mortgage  is  more
particularly described in the Master Schedule, shall be, and is hereby, modified
to add the following provision thereto:

                  Upon the  occurrence of an Event of Default,  Mortgagee  shall
                  have the right and power to sell the  Mortgaged  Property in a
                  non-judicial proceeding pursuant to applicable law.

     17. Costs and Expenses.  Borrowers shall pay all recording and filing fees,
transfer  taxes,  title  insurance  premiums,  escrow  and other  title  company
charges,  reasonable attorneys' fees (including the reasonable fees and expenses
of local  counsels  for Lender) and all other  out-of-pocket  costs and expenses
incurred by Lender in connection with this Agreement and the modification of the
Loan.

     18. References. All references in the Existing Loan Documents or any of the
Loan  Documents  executed in connection  with this Agreement to the "Loan" or to
any of the "Loan  Documents,"  shall be deemed to refer to the Existing  Loan or
the applicable Existing Loan Document, as the case may be, as modified,  amended
and supplemented  pursuant to the provisions of this Agreement,  and as the same
may from time to time be  further  amended,  modified,  extended,  supplemented,
renewed, replaced or restated.

     19. No Offsets,  Defenses,  Etc. Borrowers acknowledge and agree that as of
the date hereof there are no offsets,  defenses or  counterclaims  of any nature
whatsoever with respect (i) to the Existing Loan Documents, as modified, amended
and  supplemented  pursuant to the provisions of this Agreement,  or (ii) to the
payment  of  the  indebtedness  evidenced  and  secured  by  the  Existing  Loan
Documents,  as  modified,  amended  and  supplemented  pursuant to the terms and
provisions of this Agreement.

     20. Full Force and Effect. Borrowers agree that all of the terms, covenants
and  conditions of the Existing Loan  Documents,  except as expressly  modified,
amended and supplemented pursuant to the provisions of this Agreement, remain in
full force and effect. In the event of any inconsistencies between the terms and
provisions of the Existing Loan  Documents and the terms and  provisions of this
Agreement,  the terms and provisions of this Agreement shall govern and control.
Borrowers hereby confirm that (i) the covenants,  representations and warranties
in the Existing Loan  Agreement,  the Existing  Mortgages and the other Existing
Loan  Documents are hereby  reconfirmed as of the date hereof and (ii) as of the
date hereof  there has not been any change in  circumstances  which would render
the representations and warranties contained in the Existing Loan Agreement, the
Existing Mortgages or the other Existing Loan Documents  incorrect or false in a
manner which would have a materially  adverse effect on the ability of Borrowers
to meet their  respective  obligations  under the Existing  Loan  Documents  (as
amended, modified and supplemented pursuant to this Agreement).

     21.  Entire  Agreement.   Borrowers  acknowledge  that  the  Existing  Loan
Documents,  as modified,  amended and supplemented pursuant to the provisions of
this Agreement,  set forth the entire agreement and  understanding of Lender and
Borrowers,  and Borrowers absolutely,  unconditionally and irrevocably waive any
and all  right to  assert  any  defense  (other  than  defenses  of  payment  or
performance),  setoff,  counterclaim  or  crossclaim  (other than a mandatory or
compulsory  counterclaim)  against  Lender with respect to (i) the Existing Loan
Documents,  as modified,  amended and supplemented pursuant to the provisions of
this  Agreement,  or (ii) the  respective  obligations  of  Borrowers  under the
Existing Loan Documents,  as modified,  amended and supplemented pursuant to the
provisions of this Agreement,  or (iii) the respective  obligations of any other
person or party relating to the Existing Loan  Documents,  as modified,  amended
and  supplemented  pursuant to the  provisions  of this  Agreement,  or (iv) the
respective  obligations of Borrowers  hereunder or otherwise with respect to the
Existing  Loan in any action or  proceeding  brought  by Lender to  collect  the
indebtedness evidenced and secured by the Existing Loan Documents,  as modified,
amended and supplemented pursuant to this Agreement,  or any portion thereof, or
to enforce,  foreclose and realize upon the liens and security interests created
by the Existing Loan Documents,  as modified,  amended and supplemented pursuant
to the provisions of this Agreement.  Borrowers and Lender agree that no oral or
other  agreements,  understandings,  representations  or  warranties  exist with
respect to the Existing Loan Documents,  as modified,  amended and  supplemented
pursuant to the provisions of this Agreement,  or with respect to the respective
obligations  of  Borrowers  under the  Existing  Loan  Documents,  except  those
specifically set forth in the Existing Loan Documents, as modified,  amended and
supplemented pursuant to the provisions of this Agreement.

     22. Lift of Stay.  In  consideration  of the recitals and mutual  covenants
contained herein, and for other good and valuable  consideration  (including the
agreement  of  Lender to extend  the  Maturity  Date  under  the  Existing  Loan
Agreement and the Existing  Notes pursuant to this  Agreement),  the receipt and
sufficiency of which are hereby  acknowledged,  in the event Borrowers or any of
their  respective  general  partners shall (i) file with any bankruptcy court of
competent  jurisdiction  or be the subject of any petition under Title 11 of the
United  States  Code,  as  amended,  (ii) be the subject of any order for relief
issued under such Title 11 of the United States Code, as amended,  (iii) file or
be  the  subject  of  any  petition  seeking  any  reorganization,  arrangement,
composition, readjustment,  liquidation, dissolution or similar relief under any
present or future federal or state act or law relating to bankruptcy, insolvency
or other relief for debtors,  (iv) have sought or consented to or  acquiesced in
the  appointment  of any trustee,  receiver or liquidator  for itself or for any
substantial portion of its assets, (v) be the subject of any order,  judgment or
decree entered by any court of competent jurisdiction approving a petition filed
against   such   party  for  any   reorganization,   arrangement,   composition,
readjustment,  liquidation,  dissolution  or similar relief under any present or
future federal or state act or law relating to bankruptcy,  insolvency or relief
for  debtors,  and as a result  thereof  Lender's  ability to complete a sale at
foreclosure or other  conveyance of the Properties or to exercise or enforce any
of Lender's  other rights or remedies  under the Existing  Loan  Agreement,  the
Existing Notes, the Existing  Mortgages,  the Existing  Guaranty,  or any of the
other  Existing  Loan  Documents  (all as  modified,  amended  and  supplemented
pursuant to this Agreement), or under this Agreement or the Special Guaranty, at
law or in equity, is interfered with, impeded or otherwise impaired because of a
stay of such sale, conveyance,  exercise or enforcement in such proceeding, then
in any such event Borrowers  agrees that any such action described in clause (i)
through (v) above shall have been filed in bad faith and in  abrogation  of this
Agreement and should be deemed by the applicable  bankruptcy  court to have been
so filed,  and Lender shall thereupon be  automatically  entitled to relief from
any automatic  stay imposed by Section 362 of Title 11 of the United States Code
(or any successor or similar statute),  as amended, or otherwise,  on or against
the  exercise  of the  rights  and  remedies  otherwise  available  to Lender as
provided in the  Existing  Loan  Agreement,  the  Existing  Notes,  the Existing
Mortgages,  the Existing  Guaranty,  or any of the other Existing Loan Documents
(all as modified, amended and supplemented pursuant to this Agreement), or under
this Agreement or the Special Guaranty,  or as otherwise provided by law and, in
the event of the  occurrence  of any of the  events  described  in  clauses  (i)
through  (v)  above,  neither  Borrowers  nor any of  their  respective  general
partners will take any action to impede,  restrain or restrict  Lender's  rights
and remedies  under this  Agreement or otherwise,  whether under Sections 105 or
362 of Title 11 of the United States Code (or any successor or similar statute),
as amended or otherwise.  In addition,  Borrowers  waive the right to extend the
one hundred  twenty  (120) day period  under which the debtor has the  exclusive
right to file a plan of reorganization in any case involving Borrowers as debtor
under Title 11 of the United States Code, as amended.

     23.  Confirmation of Existing  Guarantor;  Modification of the Defined Term
"Guarantor".  Existing  Guarantor  hereby  joins in this  Agreement  in order to
induce Lender to extend and modify the Existing Loan, and hereby:

                           (a)  acknowledges  the  continuing  validity  of  the
                  Existing   Guaranty,   as  modified  hereby,  and  represents,
                  warrants and confirms the  non-existence as of the date hereof
                  of  any  offsets,   defenses  or   counterclaims  to  Existing
                  Guarantor's  obligations   thereunder,   and  waives  Existing
                  Guarantor's  right to assert against Lender any defense (other
                  than   defenses   of  payment   and   performance),   set-off,
                  counterclaim   or  crossclaim   (other  than  a  mandatory  or
                  compulsory  counterclaim) of any nature  whatsoever  hereafter
                  arising in any litigation  relating to the Existing  Guaranty,
                  or Borrowers'  respective  obligations under the Existing Loan
                  Agreement,  the Existing Notes, the Existing Mortgages, or any
                  of the other Existing Loan Documents (all as modified, amended
                  and  supplemented  pursuant to this  Agreement),  or otherwise
                  with respect to the Loan;

                           (b) reacknowledges and reaffirms all of the terms and
                  obligations  contained in the Existing  Guaranty to the extent
                  not  expressly  modified  herein,  which shall  remain in full
                  force and  effect and  acknowledges,  agrees,  represents  and
                  warrants that,  except as set forth in the Existing  Guaranty,
                  as   modified   herein,   no   oral   or   other   agreements,
                  understandings,   representations  or  warranties  exist  with
                  respect  to the  Existing  Guaranty  or  with  respect  to the
                  obligations of Existing Guarantor thereunder.

                  Consistent   with   the   transactions    and    modifications
contemplated  by this Agreement,  the defined term  "Guarantor" set forth in the
Existing Loan Agreement,  and to the extent set forth in the Existing Notes, the
Existing  Mortgages  and the other  Existing  Loan  Documents,  shall be, and is
hereby,  modified to include and refer to Special  Guarantor,  individually  and
collectively with Existing Guarantor.

     24.  Modifications.   This  Agreement  may  not  be  modified,  amended  or
terminated, except by an agreement in writing signed by the parties hereto.

     25. Successors and Assigns.  This Agreement shall be binding upon and inure
to the  benefit  of the  parties  hereto  and their  respective  successors  and
assigns.

     26.  Counterparts.  (a)  This  Agreement  may be  executed  in one or  more
counterparts  by some or all of the parties hereto,  each of which  counterparts
shall  be an  original  and all of  which  together  shall  constitute  a single
agreement.  The failure of any party listed below to execute this Agreement,  or
any  counterpart  hereof,  shall not  relieve the other  signatories  from their
obligations  hereunder  as long as each party  hereto has  executed at least one
counterpart of this Agreement.

                  (b) This Agreement may be executed and delivered by facsimile,
and each party  shall be bound by this  Agreement  to the same extent as if such
party had  delivered an original  executed  copy hereof to the other party,  and
agrees that a facsimile  copy of this Agreement  shall be competent,  admissible
evidence in any action,  trial,  arbitration or mediation of any dispute arising
under or relating to this Agreement.  Notwithstanding  the foregoing,  any party
that executes this Agreement by facsimile shall ensure that an original executed
copy hereof is delivered promptly to the other party.

     27. Authority.  Each of Borrowers and Guarantors represents that it has the
full  power and  authority  and the legal  right to  execute  and  deliver  this
Agreement and that this Agreement constitutes its valid, binding and enforceable
obligation  (except  as  such   enforceability  may  be  limited  by  applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or  similar  laws  and by
general equitable  principles,  whether  enforcement is sought by proceedings in
equity or at law).

     28.  Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Illinois,  without regard to principles
of conflict of law.

     29.  Paragraph  Headings.  The  headings,  titles and  captions  of various
paragraphs of this  Agreement are for  convenience of reference only and are not
to be construed as defining or limiting,  in any way, the scope or intent of the
provisions hereof.

     30.  Invalid  Provisions.  If any provision of this Agreement is held to be
illegal,  invalid or unenforceable  under present or future laws, such provision
shall be fully  severable and this Agreement  shall be construed and enforced as
if such illegal,  invalid or unenforceable  provision had never comprised a part
of this Agreement,  and the remaining  provisions of this Agreement shall remain
in full force and effect and shall not be  affected by the  illegal,  invalid or
unenforceable  provision or by its severance  from this  Agreement,  unless such
continued effectiveness of this Agreement, as modified, would be contrary to the
basic understandings and intentions of the parties as expressed herein.

     31. Waiver of Right to Trial by Jury.  THE PARTIES  HERETO HEREBY AGREE NOT
TO ELECT A TRIAL BY JURY OF ANY ISSUE  TRIABLE  OF RIGHT BY JURY,  AND WAIVE ANY
RIGHT TO TRIAL BY JURY  FULLY TO THE  EXTENT  THAT ANY SUCH  RIGHT  SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO ANY OF THE EXISTING LOAN DOCUMENTS,  AS MODIFIED,
AMENDED AND SUPPLEMENTED PURSUANT TO THIS AGREEMENT,  OR THIS AGREEMENT,  OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN  KNOWINGLY  AND  VOLUNTARILY  BY THE  PARTIES
HERETO,  AND IS INTENDED TO ENCOMPASS  INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD  OTHERWISE  ACCRUE.  THE  PARTIES
HERETO ARE HEREBY  AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

                        [END OF PAGE; SIGNATURES FOLLOW.]


<PAGE>


                  IN WITNESS WHEREOF, each of Borrowers,  each of Guarantors and
Lender  have duly  executed  this  Agreement  as of the day and year first above
written.

                         BORROWERS:

                         BUCKEYE FACTORY SHOPS LIMITED PARTNERSHIP,
                          a Delaware limited partnership

                         By: Prime Retail, L.P., a Delaware limited partnership,
                              its Managing General Partner

                         By: Prime Retail, Inc., a Maryland corporation,
                              its general partner

                                               By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

                         THE PRIME OUTLETS AT CALHOUN LIMITED PARTNERSHIP,
                          a Delaware limited partnership

                         By: Prime Retail, L.P., a Delaware limited partnership,
                              its Managing General Partner

                         By: Prime Retail, Inc., a Maryland corporation,
                              its general partner

                                               By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President


<PAGE>


CAROLINA FACTORY SHOPS LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                              By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President



LATHAM FACTORY STORES LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President


THE PRIME OUTLETS AT LEE LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

<PAGE>


SHASTA OUTLET CENTER LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership,
     its Managing General Partner

By: Prime Retail, Inc., a Maryland corporation,
     its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

GUARANTORS:

PRIME RETAIL, L.P., a Delaware limited partnership

By: Prime Retail, Inc., a Maryland corporation, its general partner

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

PRIME RETAIL, INC., a Maryland corporation

                                            By:  /s/ C. Alan Schroeder
                                                 ------------------------
                                               Name:  C. Alan Schroeder
                                               Title: Executive Vice President

<PAGE>


                               LENDER:

                               NOMURA ASSET CAPITAL CORPORATION,
                                a Delaware corporation


                                            By:  /s/ Stuart Simon
                                                 ----------------
                                               Name:  Stuart Simon
                                               Title: Managing Director