SEPARATION AGREEMENT

     This Separation  Agreement (the  "Agreement") is made and entered into this
24th day of August,  2000 (the "Effective  Date"),  by and between Prime Retail,
Inc., a Maryland corporation  ("Prime"),  Prime Retail, L.P., a Delaware limited
partnership  ("Prime  Retail"),  (Prime  Retail,  Inc. and Prime  Retail,  L.P.,
collectively  referred to as the  "Company") and William H.  Carpenter,  Jr., an
individual domiciled in the State of Maryland (the "Executive").

                                   Witnesseth

         WHEREAS,   primeretail.com   inc.,  an  indirect  subsidiary  of  Prime
("Eoutlets")  entered into an Executive  Employment  Agreement (the  "Employment
Agreement") with the Executive on October 6, 1999; and

         WHEREAS, Prime and Prime Retail executed the Employment Agreement as
guarantors; and

         WHEREAS, pursuant to the Agreement the Executive is employed by
Eoutlets as its President and Chief Executive Officer; and

         WHEREAS,  the  Executive  and Eoutlets are  severing  their  employment
relationship  on amicable and agreeable terms effective as of the Effective Date
(the "Separation Date"); and

         WHEREAS, the Executive and the Company desire to fully and finally
resolve all outstanding obligations;

         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 parties agree as follows:

1.  Separation  from  Employment.  The Executive  hereby elects to terminate his
employment  with the Company  (and all  affiliates  and  subsidiaries)  "without
cause" (as such term is defined in the Employment Agreement) effective as of the
Separation  Date.  The  Executive  is not  required  to resign from the Board of
Directors of Prime Retail,  Inc. and will be  compensated,  once this Separation
Agreement is signed, as an outside director.  Executive agrees further, however,
to resign from all other director positions and officer positions with any other
affiliated or related entity of Prime Retail,  Inc. The parties hereto waive any
advance notice of such  termination  that may be required under the terms of the
Employment Agreement.

         This  Separation  Agreement  confirms that the Employment  Agreement is
hereby terminated and is superseded by this Separation Agreement.

2.       Separation   Payments.   The  Executive  is  entitled  to  receive  the
following  payments  on  account  of  his  separation (collectively, the
"Separation Payments"):

         (a) Severance Distribution. The Company will pay to Executive an amount
equal to $1,600,000  (the  "Severance  Distribution"),  divided as follows:  The
Company  will   continue  to  pay   Executive  at  his  current  base  pay  rate
(approximately  $40,000 a month)  through  the earlier of (1) the closing of any
financing by or through  Lehman  Brothers;  or (2) September 30, 2000.  When the
first of these two events occurs, a calculation will be made as to the number of
months remaining between the date of the occurrence and July 31, 2001; then, the
total of the base pay payments (starting with the payment made on July 28, 2000)
will be subtracted  from the  $1,600,000  amount.  The remainder  amount will be
divided by the total months  remaining  until July 31, 2001,  and then  payments
will be made in equal monthly amounts thereafter until July 31, 2001.

         (b) Special  Distribution.  On the date of execution of this Agreement,
the Company will make a special distribution (the "Special Distribution") to the
Executive equal to the aggregate  balance of unpaid principal and interest as of
the date of such  distribution  with respect to that certain Secured  Promissory
Note of  Carpenter  Family LLC dated March 22, 1994 (the  "Note"),  which amount
totaled  $628,896.16 as of December 31, 1999.  The Executive  hereby agrees that
all then outstanding obligations under the Note should automatically  accelerate
upon the date of such  distribution  and that the Executive shall cause all such
obligations to be paid in full.

         All payments  made by the Company  pursuant to  subparagraph  (a) above
shall be treated as "guaranteed  payments"  within the meaning of Section 707(c)
of the Internal  Revenue  Code of 1986,  as amended  (the  "Code").  The Company
agrees that, except to the extent that it would be detrimentally  affected,  the
Company will  specifically  allocate,  in accordance  with Section 704(c) of the
Code, the corresponding deductions that are available to the Company as a result
of such  distributions  as  guaranteed  payments to the Executive to the maximum
extent to which the Executive can utilize the same on his individual  federal or
state income tax returns for any calendar year.

         All payments  made by the Company  pursuant to  subparagraph  (b) above
shall be deemed a distribution pursuant to Section 731(a) of the Code and not as
a guaranteed payment pursuant to Section 707(c) of the Code.

         The provisions of this Section 2 shall  supersede any provisions in the
Executive Agreement which are contrary hereto.

         All payments or distributions not made when due in accordance with this
Section 2 shall  accrue  interest at a rate per annum equal to the prime or base
lending rate from time to time  announced  by  Mercantile - Safe Deposit & Trust
Company plus 2.5% (the "Interest Rate").

         In the event any payment or distribution  pursuant to this Section 2 is
not made within 30 days after it becomes due, then all remaining  obligations of
the Company under this Section 2 shall  immediately  become due and payable.  In
the  event  of any  such  acceleration,  all  costs of  collection  incurred  by
Executive (including attorneys' fees) shall be borne by the Company.

3.       Business  Expenses.  The Executive shall, in accordance with the
Company's  customary  policies and procedures,  be reimbursed for all business
expenses incurred through and including the Separation Date for which the
Executive submits  appropriate  invoices and similar records.

4.       Employee Benefits.  The Executive and his eligible dependents are
entitled to receive:


         (a) Company-provided health insurance benefits, of a type and nature no
less favorable to the Executive  than were in effect as of the Separation  Date,
for the 12-month period beginning on the Separation Date; and

         (b)  Company-provided  life  insurance  benefits under the Company's $5
million term life insurance policy on the life of the Executive for the 12-month
period beginning on the Separation Date.

         Notwithstanding  the foregoing,  the  Company-provided  health and life
insurance benefits will terminate prior to the expiration of the 12-month period
if the  Executive  becomes  covered by a  subsequent  employer's  health or life
insurance  program  which  provides  comparable  benefits to the  Executive  and
imposes no pre-existing  condition  exclusion with regard to his coverage or his
eligible  dependents'  coverage.  The Executive  agrees that he will immediately
notify  the  Company in writing of his  obtaining  subsequent  employment  which
provides health and welfare benefits during the 12-month period beginning on the
Separation  Date.  Following  the  12-month  period of  Company-provided  health
insurance  benefits  described in subparagraph  (a) above, the Executive will be
entitled to all rights  afforded to him under the federal  Consolidated  Omnibus
Budget Reconciliation Act of 1985 ("COBRA") to purchase continuation coverage of
such health insurance  benefits for himself and his eligible  dependents for the
maximum period  permitted by law. To the extent  required by applicable law, the
Executive  will be deemed to have  elected to exercise his rights under COBRA as
of the first day of such 12-month period.

         Notwithstanding   anything  to  the  contrary   contained  herein,  the
Executive  has the right to acquire the $5 million  term life  insurance  policy
obtained  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  cash  surrender  value of such  life  insurance  policy or
policies together with any unearned portion of any current year premium thereof,
both within 60 days of the effective date of such termination.

         (c) The Executive is entitled to receive all vested  benefits under the
Company's  401(k) plan.  No accrual of service  time will be possible  after the
Separation  Date for  purposes of the  Executive's  entitlement  to any employee
benefit,  including  a  pension,  401(k) or profit  sharing  benefit,  long-term
disability  benefit or  vacation  pay.  The  Executive  will be  eligible  for a
matching  contribution  under the Company's 401(k) plan, if the plan so permits,
for any elective  deferrals  made by the  Executive on or before the  Separation
Date. The Company shall, if the plan so permits, allow the Executive to withdraw
any vested amount in the Company's 401(k) plan.

5. Restricted  Stock Awards and Stock Options.  The Executive  acknowledges  and
agrees that he is not eligible to receive any awards made under Prime's 1999 and
2000  Long-Term  Incentive  Program (the "1999 LTIP and 2000 LTIP") and that all
rights and benefits of the Executive  under the 1999 and 2000 LTIP's shall cease
as of the date hereof.

6. Executive's  Ownership Interests in Related Entities.  On the date hereof and
in consideration for the payment of $1.00 in cash and the promises and covenants
of the Company contained herein,  the Executive agrees to execute and deliver to
the Company or its designee any and all certificates for shares of capital stock
(with  appropriate  stock powers attached and properly  signed) of the Company's
subsidiaries  and  affiliates  (other than Prime Retail,  Inc. and Prime Retail,
L.P.),  including,  but not  limited to,  primeoutlets.com  inc.  The  Executive
further  agrees to execute and deliver such other  documentation  as the Company
reasonably  requests to effect the assignment of the Subsidiary  Shares. For the
avoidance  of  doubt,  nothing  contained  in this  Section 6 shall be deemed to
require the Executive to transfer or convey any of his equity interests in Prime
Retail, Inc. or Prime Retail, L.P.

         Executive agrees also, in  consideration  with payment of $1.00 in cash
of the promises and covenants of the Company  contained  herein, to surrender to
Prime  Retail,  Inc. the  Executive's  options to purchase  Prime Retail  stock.
Exhibit A attached  hereto sets forth  certain  information  with respect to the
options  awarded to Executive  under Prime's stock option plans,  which shall be
included among the options surrendered by the Executive to Prime Retail, Inc.

7. Office and Equipment and Liz Hamilton. (a) The Executive will be permitted to
retain as his own property all computer and telephone  equipment,  copy machine,
fax machines, the phone numbers for such machines, and similar items and related
equipment  currently in his  possession.  All costs and expenses  related to the
ownership,  use or service of such items on and after the Separation  Date shall
be borne solely by the  Executive.  The parties  further agree that the value of
the equipment  retained by the Executive pursuant to this Section 7 shall be the
book value thereof as reflected in the  accounting  records of the Company as of
the month end immediately  preceding the Separation Date, and Carpenter shall be
charged the book value of such items.

         (b) Prime Retail,  L.P., upon execution of this  Separation  Agreement,
will employ Liz Hamilton as an employee of Prime Retail, L.P. through the period
ending six (6) months  from April 12,  2000 and will  provide  her with the same
base salary  payment and health and welfare  benefits as she had been  receiving
from  primeoutlets.com.  All vested  benefits for the benefit of Ms. Hamilton in
any of the Prime plans are to be paid out to her immediately  upon the execution
of this  Agreement.  During the term of such  employment Ms. Hamilton shall work
for, and at the direction of, Executive.

8.  Property  of the  Company.  All  originals  and  copies of  books,  records,
documents,  customer lists, sales materials, tapes, keys, credit cards and other
tangible property (excluding the computer,  fax and phone equipment described in
Section 7 above) of the Company within the  Executive's  possession or under his
control  will be  returned  to the  Company  on or before the  Separation  Date.
Notwithstanding  the foregoing,  the Executive also shall be permitted to retain
his original rolodex and all awards and similar mementos  received by him during
his tenure with the Company.

9.  Outplacement  Assistance.  For the 12-month period  following the Separation
Date,  the  Executive  will be  permitted to utilize the services of one or more
professional outplacement or outplacement assistance firms of his choice and the
Company will pay the reasonable  fees associated  therewith,  up to a maximum of
$20,000.

10. Legal Fees.  The Company shall promptly pay, or reimburse the Executive for,
the legal fees and expenses of David M. Fleishman, Esquire, and Venable, Baetjer
&  Howard,  counsel  to  the  Executive  in  connection  with  the  preparation,
negotiation,  execution  and  delivery  of this  Agreement,  up to a maximum  of
$22,500.

11. Coverage under Prime's Directors and Officers Liability  Insurance Policies.
For a period of three  years  beginning  on the  Separation  Date,  Prime  shall
provide,  or  cause  to be  provided,  to the  Executive,  at no  charge  to the
Executive,  directors and officers liability insurance protection  substantially
equivalent in kind and scope as that provided by Prime's  directors and officers
liability insurance policies as in effect from time to time.

12. Indemnification Matters. After the Separation Date, Prime shall, to the same
extent and on the same terms and conditions  provided for in Prime's articles of
incorporation and bylaws, in each case as of the date of this Agreement,  to the
extent consistent with applicable law, indemnify and hold harmless the Executive
against  all  costs  and  expenses  (including   reasonable   attorneys'  fees),
judgments,  fines, losses, claims,  damages,  liabilities and settlement amounts
paid in connection with any claim,  action,  suit,  proceeding or  investigation
(whether  arising  before  or  after  the  Separation   Date),   whether  civil,
administrative or  investigative,  arising out of or pertaining to any action or
omission in the  Executive's  capacity as an officer or  director,  in each case
occurring on or before the Separation Date; provided,  however, that there shall
be no  indemnification  for the Executive in relation to matters as to which the
Executive  is  adjudged  to have  been  guilty  of fraud or  intentional  act of
malfeasance,  in which event the Executive  shall  indemnify the Company for any
costs,  losses,   damages,   judgments,   liabilities  and  expenses  (including
reasonable  attorneys'  fees) which may be suffered by the Company in connection
therewith.

         The parties agree to  reasonably  cooperate in the future to the extent
that either party is needed by the other as a witness in any  litigation  and in
any transaction  matters  related to the Executive's  departure or other matters
arising out of the  operations of the Company prior to such  termination  taking
into account each party's  other  commitments.  The Company will  reimburse  the
Executive for any reasonable out-of-pocket expenses he incurs in connection with
his compliance with this provision.

         Expenses  incurred by the  Executive in  connection  with any claim for
indemnification shall be paid by the Company in advance upon the written request
of the  Executive.  At the  Company's  option  and at its sole  expense,  it may
provide  legal  counsel on behalf of the  Executive  in the defense of any claim
arising out of his  employment  with the Company;  provided,  however,  that the
Executive retains the right to participate in the defense of any such action.

13. Mutual Release and Waiver. The Executive,  on the Executive's behalf as well
as  on  behalf  of  the  Executive's  spouse,  agents,  representatives,  heirs,
executors,  administrators,  successors, assigns and anyone claiming through the
Executive,  hereby forever  irrevocably  releases,  relinquishes  and waives all
rights  that the  Executive  has had or now has against  Prime or the  Operating
Partnership  (including any past,  present and future  subsidiaries,  affiliated
entities, officers, directors, partners,  shareholders,  employee benefit plans,
trustees,  fiduciaries and agents), whether known or unknown, in any way related
to his employment by the Company,  or the termination  thereof,  with respect to
any and all actual or potential:

     (a) claims against the Company based on the common law, including,  but not
limited to, claims of personal injury, emotional and mental distress,  injury to
personal reputation,  defamation (including libel or slander), or termination or
denial of employment in contravention  of the common law or any federal,  state,
local or public policy, law or regulation;

     (b) claims against the Company based on any contract,express or implied;

     (c) claims  against  the Company  based upon  alleged  violation(s)  of any
statute,  regulation or ordinance,  whether federal,  state or local, based upon
any other federal, state or local policy,  including but not limited to, any and
all claims  under  Title VII of the Civil  Rights Act of 1964,  as  amended,  42
U.S.C. Section 2000 et seq., the Age Discrimination in Employment Act, 29 U.S.C.
Section 621 et seq.,  the Americans  With  Disabilities  Act, 42 U.S.C.  Section
12101 et seq., the Employee  Retirement Income Security Act of 1974, as amended,
29 U.S.C.  Section 1001 et seq., the Fair Labor Standards Act, 29 U.S.C. Section
201 et seq.,  the Family and Medical Leave Act, 29 U.S.C.  Section 2601 et seq.;
and all  other  federal,  state  or local  laws  touching  upon  the  employment
relationship; and

     (d) claims  against the Company based upon any theory of alleged  equitable
entitlement to relief.

         Notwithstanding the foregoing,  the Executive does not release Prime or
the Operating  Partnership  from any claims or causes of action  against  either
party arising  solely out of the  Executive's  ownership of any capital stock or
partnership   interests  of  Prime  or  the   Operating   Partnership,   or  for
indemnification as provided in Section 12 hereof.

         The Company, on its behalf and on behalf of its successors and assigns,
hereby forever irrevocably releases, relinquishes and waives all rights that the
Company has had or now has against the Executive,  whether known or unknown,  in
any way related to his employment by the Company, or the termination thereof.

         The parties  hereto  understand  and agree that the  releases set forth
herein do not in any way  affect  the  rights of either  party to take  whatever
steps may be  necessary  to  enforce  the terms of this  Agreement  or to obtain
appropriate relief in the event of any breach of the terms of this Agreement.

14. Opportunity to Employ Counsel. The Executive warrants, represents and agrees
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 the Executive  waives herein;  that he understands  the
terms, obligations and rights he is releasing under this Agreement;  that he has
had sufficient time to consider this Agreement  before signing it; that he knows
and understands  the rights he is waiving and the terms and  consequences of his
signature  on  this   Agreement;   that  he  signs  this  Agreement   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.  Further,  the  Executive
acknowledges  that he has had 21 days within  which to consult  with an attorney
prior to executing this Agreement. The Executive has been given 7 days following
the  execution  of this  Agreement  (the  "Revocation  Period")  to revoke  this
Agreement and he  understands  and  acknowledges  that the  Agreement  shall not
become final until the Revocation Period has expired.

         The parties hereto further agree that in executing this Agreement, none
of the parties is relying or has relied  upon any  representation  or  statement
made by the another party with respect to the facts involved in this matter,  or
with regard to another party's rights or asserted  rights.  Both the Company and
the Executive assume the risk of any mistake of fact in connection with the true
facts involved in the Executive's  employment  relationship with the Company and
the  termination of that employment  relationship  and with regard to any of the
facts which are now unknown to each party.

15.      Restrictive Covenants.
         ---------------------

         (a) Non-Competition. Until the first anniversary of the Separation Date
or such earlier date as the Company  shall be in breach of any material  term of
this Agreement (the "Restrictive  Period"), the 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,  provide
any services to or work for the following entities or any of their affiliates or
subsidiaries:  The Mills  Corporation;  Chelsea  GCA Realty,  Inc.;  Charter Oak
Partners;  Tanger Factory Outlet Centers, Inc.; New Plan Excel Realty Trust; and
Horizon Group Properties, Inc. Except for the foregoing restrictions,  Executive
is free to engage in any enterprise  that he chooses to engage in,  including an
internet outlet merchandise operation.

         (b) Non-Solicitation During the Restrictive Period, the Executive shall
not,  directly  or  indirectly,  induce or attempt to persuade  any  employee or
customer,  vendor  or  tenant  of the  Company  or any  of its  subsidiaries  or
affiliated  outlet  centers,  or any such entity which as of the Separation Date
the  Executive  knows is being  actively  pursued  by the  Company or any of its
subsidiaries   or  affiliated   outlet   centers,   to  terminate  its  business
relationship  with the Company or any of its  subsidiaries or affiliated  outlet
centers or not proceed with a business  relationship  with the Company or any of
its subsidiaries or affiliated outlet centers.

         (c) Non-Disclosure of Trade Secrets.  During the Restrictive Period the
Executive shall not disclose or use any Trade Secret (as hereinafter defined) of
the Company or any of its  subsidiaries or affiliated  outlet  centers,  whether
such Trade Secret is in the  Executive's  memory or embodied in writing or other
physical form. For purposes  hereof,  "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 the Executive  during the course of his employment with
the Company,  or outside of his  employment  with the Company,  which could have
been obtained by him from public sources  without the expenditure of significant
time, effort, and expense.

     (d) Notice of Subsequent Employment. For purposes of enforcing this Section
15, the Executive agrees that he will immediately  notify the Company in writing
of his subsequent employment during the Restrictive Period.

         (e)  Permitted  Activity.  Nothing  contained  in this Section 15 shall
limit or restrict  the  Executive  from  seeking or  discussing  an  employment,
consulting or other business  relationship  with any third party,  including any
party engaged in the Business;  it being  acknowledged  and agreed that prior to
entering into any such relationship that would violate the terms of this Section
15 Executive  must obtain the written  consent of the  Company.  Any request for
such a consent  shall be  furnished  in writing in  accordance  with  Section 21
hereof.

16.  Breach of  Agreement.  In the event of any actual or  threatened  breach of
Sections 1, 8, 13 or 15 of this Agreement, the Executive acknowledges and agrees
that the Company may seek to enforce the terms of this  Agreement  in a court of
law or  equity  and that the  remedy  at law or equity  for any  breach  will be
inadequate.  Therefore,  the Company shall be entitled, in addition to any other
remedy at law or equity, to injunctive relief.

17. No Admissions.  This Agreement  results from a mutual  decision and does not
constitute an admission by Executive,  Prime, the Operating Partnership,  or any
of the other released parties,  of any violation of any federal,  state or local
law,  regulation,  ordinance or statute or of any employment contract (including
the Combined Agreement), whether written or oral.

18. Amendment or Termination of Agreement.  This Agreement may be amended at any
time by written  agreement  between  Prime,  the Operating  Partnership  and the
Executive. This Agreement shall remain in full force and effect until terminated
upon mutual consent of the parties in writing.

19. Entire  Agreement.  This Agreement  constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes any and all
other  agreements,  either  oral or written,  between  the  parties  hereto with
respect to the subject matter hereof.

20. Successors and Assigns.  All provisions of this Agreement shall inure to the
benefit  of  and  be   enforceable  by  the   Executive's   personal  and  legal
representatives,  executors,  administrators,  successors,  heirs, distributees,
devisees and legatees and the  successors and assigns of Prime and the Operating
Partnership.  If the Executive should die while any amounts are still payable to
him  hereunder,  all such amounts shall be paid in accordance  with the terms of
this Agreement to the  Executive's  devisees,  legatees or other designee or, if
there be no such designee,  to the 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  the   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 will be a material breach of this Agreement.

21.  Notices.  Any notice required or permitted to be given under this Agreement
will 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 the Executive, to:

                  William H. Carpenter, Jr.
                  659 Rock Cove Lane
                  Severna Park, Maryland  21146

                  with a copy to:

                  David M. Fleishman, Esquire
                  Venable, Baetjer & Howard, LLP
                  1800 Mercantile Bank & Trust Building
                  2 Hopkins Plaza
                  Baltimore, Maryland 21201

         (b)      if to the Company:

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

                  with a copy to:

                  Glenn D. Reschke
                  President
                  Prime Retail, Inc.
                  100 East Pratt Street,    19th Floor
                  Baltimore, Maryland  21202

22.  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.

23.  Severability.  The  Company  and the  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.

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

25.  Counterparts.  The  parties  may  execute  this  Agreement  in one or  more
counterparts, all of which together shall constitute but one Agreement.

     [Remainder of Page Intentionally Left Blank; Signature Page to Follow]



<PAGE>



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


EXECUTIVE:                                         PRIME RETAIL, INC.

                                                   By:  /s/Glenn D. Reschke
                                                        -------------------
/s/ William H. Carpenter, Jr.                      Name:  Glenn D. Reschke
-----------------------------                             ----------------
    William H. Carpenter, Jr.
                                                   Title:  President and CEO
                                                           -----------------


                                                   PRIME RETAIL, L.P.

                                                   By:  Prime Retail, Inc.
                                                   Its: General Partner
                                                   By:  /s/Glenn D. Reschke
                                                        -------------------

                                                   Name:  Glenn D. Reschke
                                                          ----------------
                                                   Title:  President and CEO
                                                           -----------------