RELEASE AGREEMENT

     This Release Agreement ("Agreement") is made and entered into this 22nd day
of January,  2001 (the "Effective  Date"), 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 Michael W. Reschke, an
individual domiciled in the State of Illinois (the "Executive").

     On April 5, 2000, the Executive  relinquished  his  responsibilities  as an
executive  officer of the  Company  and became a  non-executive  Chairman of the
Board of Directors of Prime. In connection therewith,  the Executive now desires
to enter into this Agreement in consideration for the benefits set forth herein.

     1.     Consideration.  In consideration for  executing  this Agreement  and
within six (6)  business  days  following  the  Revocation  Period  described in
Paragraph 3 hereof (which shall be January 30, 2001 if this  Agreement is signed
January 22, 2001),  the  Executive  shall  receive  from  the Company the sum of
$389,811.80 (the "Consideration").

     2.     Covenant  Not  to  Sue/Release  and  Waiver.   In  exchange  for the
Consideration,  the  Executive,  on behalf of himself  and his heirs,  legatees,
personal  representatives and assigns, hereby waives,  releases,  discharges and
covenants not to bring any actions, claims, charges,  liabilities,  obligations,
fees, or suits of any kind against the Company or its subsidiaries or affiliates
(including directors, officers, shareholders,  employee benefit plans, trustees,
fiduciaries  and agents),  which he has, has had or may have through the date of
this Agreement,  whether known or unknown,  related solely to any claims arising
out of or relating to his employment with the Company, or his executive position
as Chairman of the Board, or his separation from such employment, including, but
not limited to, all claims under Title VII of the Civil  Rights Act of 1964,  as
amended,  42 U.S.C.  ss.ss.  2000e et seq.; the Age Discrimination in Employment
Act of 1967, 29 U.S.C.  ss.ss.  621 et seq.;  the Fair Labor  Standards  Act, 29
U.S.C.  ss.ss.  201 et seq.;  the Americans  with  Disabilities  Act of 1990, 42
U.S.C. ss.ss. 12101 et seq.; the Family and Medical Leave Act of 1993, 29 U.S.C.
ss.ss.  2601 et seq.; the Employee  Retirement  Income  Security Act of 1974, 29
U.S.C.  ss.ss.  1001 et seq.;  and any  other  federal,  state,  county or local
statute, ordinance,  regulation or order, and all claims under the common law in
tort, contract or otherwise. This release expressly includes all claims relating
to his employment with the Company, or his executive position as Chairman of the
Board,  that  could  have  been  raised  in  state  or  federal  court or with a
municipal,   county,   state  or  federal  agency  or  entity  of  any  kind  or
jurisdiction.  This release also includes all claims for attorneys' fees and any
other remedy that could have been sought in connection  with any of the released
claims.

     Excluded  from this  release  are any claims  that cannot be waived by law,
including but not limited to the right to file a charge with, or  participate in
an investigation  conducted by, certain  government  agencies.  The Executive is
waiving,  however,  the right to any monetary  recovery  relating  solely to his
employment  with the Company should any agency  (including,  but not limited to,
the Equal Employment Opportunity Commission) pursue any claims on his behalf.

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                                   Page - (2)

     3.     Opportunity to Employ Counsel.  Among  the  claims being released by
the  Executive  in  Paragraph  2 are  claims  under  the Age  Discrimination  in
Employment Act of 1967, as amended ("ADEA"),  29 U.S.C. ss. 621 et seq. Pursuant
to and in compliance with the Older Workers Benefit Protection Act ("OWBPA"), 29
U.S.C. ss. 626(f)(1)(H),  the Executive acknowledges that: he has had sufficient
opportunity to secure the services of a privately-retained  attorney of his free
choice,  who is an  experienced  lawyer  familiar with the rights waived herein;
that he understands the terms,  obligations and rights being released under this
Agreement;  that he has had sufficient  time to consider this  Agreement  before
signing it; that he knows and  understands the rights being waived and the terms
and  consequences  of his signature on this  Agreement;  that this Agreement has
been signed  knowingly,  voluntarily,  in good faith,  with a genuine  intent to
waive the rights  identified  herein;  and that he has not been subjected to any
duress, coercion, fraud,  overreaching,  exploitation or pressure to sign it. In
addition,  the  Executive  acknowledges  that he has had 21 days within which to
consult with an attorney  prior to executing  this  Agreement,  that he has been
given 7 days following his execution of the Agreement (the "Revocation  Period")
to revoke this  Agreement,  and that this  Agreement will not become final until
the Revocation Period has expired. Lastly, the Executive acknowledges that he is
not otherwise entitled to the Consideration.

     The Executive may revoke the Agreement during the Revocation Period only by
delivering a written notice of revocation to: Prime Retail, Inc., 100 East Pratt
Street, 19th Floor,  Baltimore,  Maryland 21202,  Attention:  C. Alan Schroeder,
Esq.,  General  Counsel.  Such notice must be received by the Company within the
Revocation Period.

     4.     Indemnification.  The  Company shall indemnify and hold harmless the
Executive to the same extent and on the same terms and  conditions  provided for
in the Company's  articles of incorporation  and bylaws in existence on the date
hereof, and to the full extent such  indemnification is required or permitted to
be extended to directors,  officers,  employees and/or agents by Section 2418 of
the  Corporations  and  Associations  Article,  Annotated  Code of Maryland.  In
addition,  the Company shall ensure that the Executive is included as an insured
under any and all Directors and Officers Liability Insurance  policies,  whether
in effect now or in the future,  applicable  to the  Company,  Prime  and/or the
Operating Partnership.

     5.     No Waiver.  No  failure or  delay by the Executive or the Company in
enforcing or exercising  any right or remedy  hereunder will operate as a waiver
hereof.  No  modification,  amendment or waiver of this Agreement nor consent to
any  departure  by the  Executive  or the  Company  from  any  of the  terms  or
conditions  hereof,  will be  effective  unless  in  writing  and  signed by the
Executive or an  authorized  officer of the Company,  as  appropriate.  Any such
waiver or consent  will be effective  only in the specific  instance and for the
purpose for which it was given.

     6.     Successors and Assigns.  All provisions of this Agreement will inure
to the  benefit of and be  enforceable  by the  Executive's  personal  and legal
representatives,  executors,  administrators  and heirs,  and the successors and
assigns of the Company.

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                                   Page - (3)

     7.     Governing Law.  This Agreement will be  governed by,  and construed,
interpreted  and enforced in accordance  with the laws of the State of Maryland,
exclusive of the conflicts of laws provisions.

                                                              PRIME RETAIL, INC.


/s/ Michael W. Reschke              By:    /s/ Glenn D. Reschke
----------------------                     --------------------
MICHAEL W. RESCHKE                  Name:  GLENN D. RESCHKE
                                    Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER



                                    PRIME RETAIL, L.P.

                                    By:  Prime Retail, Inc., its general partner


                                    By:    /s/ Glenn D. Reschke
                                           --------------------
                                    Name:  GLENN D. RESCHKE
                                    Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER