Execution Copy


                               SECOND AMENDMENT TO
                              EMPLOYMENT AGREEMENT

     The  EMPLOYMENT  AGREEMENT (the  "Agreement"),  entered into as of July 24,
2000, by and between Prime Retail, Inc., a Maryland corporation  ("Prime"),  and
the sole general partner of Prime Retail,  L.P., a Delaware limited  partnership
(the  "Operating  Partnership"),  and Glenn D.  Reschke  (the  "Executive"),  as
amended by the first  Amendment  thereto,  effective  June 6,  2002,  is further
amended by this Second  Amendment,  effective  August 12, 2002 in the  following
respects:

        1.      Section 2, "Term," of the Agreement is hereby deleted in its
entirety and replaced with the following:

                2.      Term.   Unless earlier terminated in accordance with the
                terms  of this Agreement,  the term of this Agreement shall be a
                period  commencing  on  June 6, 2002 and ending on  December 31,
                2005.  On  December 31, 2005, and each succeeding anniversary of
                such date,  the Term of this Agreement  shall  automatically  be
                extended  for  an  additional one year period unless,  not later
                than one  hundred  eighty (180) days prior to December 31, 2005,
                or any  anniversary of such date, either party to this Agreement
                gives  notice to the other that the Term of this Agreement shall
                not   be   extended   or   further   extended  beyond  its  then
                automatically extended Term.

        2.      Subpart (B) of Section 4(a)(1) is hereby deleted in its entirety
and replaced with the following:

                (B)     a  termination  payment in an amount equal to the sum of
                (x) one (1) times the amount of the Base Salary then applicable,
                plus  (y)  one  (1)  times the average of the amounts payable to
                the  Executive   pursuant  to  the  provisions  of  Section 3(b)
                hereof  (which  section excludes awards received pursuant to the
                Prime Retail, Inc.  2002  Long-Term  Incentive Plan) for the two
                (2) calendar  years  immediately  preceding the calendar year in
                which the effective date of the termination  of  this  Agreement
                occurs (the sum of the amounts determined by  adding  subsection
                (x) and (y) is in the aggregate  hereinafter  referred to as the
                "Normal  Termination  Payment"),   and  the  Normal  Termination
                Payment  shall  be  payable  within  thirty  (30)  days  of  the
                effective date of termination;

        3.      The  following  subpart (G) is hereby added to Sections 4(a)(1),
4(a)(2), and 4(a)(4) of the Agreement:

                (G)     all vested  but  undistributed  awards  under  the Prime
                Retail, Inc. 2002 Long-Term Incentive Plan, payable to Executive
                in accordance with the provisions of that plan.

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        4.      The following subpart (H) is hereby  added to Section 4(b)(1) of
the Agreement:

                (H)     all  vested  but  undistributed  awards  under the Prime
                Retail, Inc. 2002 Long-Term Incentive Plan, payable to Executive
                in accordance with the provisions of that plan.

        5.      The following subpart (G) is hereby added to  Section 4(b)(2) of
the Agreement:

                (G)     all  vested  but  undistributed  awards  under the Prime
                Retail, Inc. 2002 Long-Term Incentive Plan, payable to Executive
                in accordance with the provisions of that plan.

        6.      The following sentence is hereby added at the end of Section
4(c), "Death":

                In addition, the Executive's estate shall be entitled to receive
                all vested but undistributed awards under the Prime Retail, Inc.
                2002  Long-Term  Incentive  Plan,   payable  to  the  estate  in
                accordance with the provisions of that plan.

        7.      Subpart (B) of Section 4(e),  "Termination Following a Change of
Control," is hereby deleted in its entirety and replaced with the following:

                (B)     a termination payment in an amount equal to  $1,600,000,
                payable  within  thirty  (30)  days  of  the  effective  date of
                termination;  provided,  however, that if Executive has received
                a  milestone  bonus  under the Prime Retail, Inc. 2002 Long-Term
                Incentive  Plan  the  vesting  of which was accelerated pursuant
                to  Section  5.3(a)(iv)  thereof but the amount of which was not
                reduced  pursuant  to  the  last sentence of Section 5.4 thereof
                (the  "Change  of Control Accelerated Award"),  the  termination
                payment  described  in  this subpart (B) shall be reduced by the
                amount  that  such  Change  of  Control  Accelerated Award would
                have  been  reduced pursuant to the last sentence of Section 5.4
                of  the  Prime  Retail,  Inc.  2002 Long-Term Incentive Plan had
                the  termination  payment  been due and owing under this Section
                4(e) at  the  time  the  Change of Control Accelerated Award was
                distributed to Executive;

        8.      Subpart (B) of Section 4(e)(I) is hereby deleted in its entirety
and replaced with the following:

                (B)     a  termination  payment  in an amount equal to two times
                the  sum of (x) Executive's  then  current Base Salary and (y) a
                bonus  payment  equal  to  100% of the average annual bonus paid
                to  Executive  for  the  two most recent calendar years in which
                he received a bonus,  or if no such  bonus payments were paid to
                Executive,  a bonus payment  equal to fifty percent (50%) of his
                then current Base Salary;  provided,  however, that if Executive
                has  received  a  milestone  bonus  under the Prime Retail, Inc.
                2002  Long-Term   Incentive   Plan  the  vesting  of  which  was
                accelerated  pursuant  to  Section  5.3(a)(iv)  thereof  but the
                amount  of which was  not reduced  pursuant to the last sentence
                of  Section 5.4  thereof  (the  "Change  of  Control Accelerated
                Award"),  the  termination payment described in this subpart (B)
                shall be  reduced  by  the  amount  that  such Change of Control
                Accelerated  Award  would have been reduced pursuant to the last
                sentence   of  Section  5.4  of  the  Prime  Retail,  Inc.  2002
                Long-Term  Incentive  Plan  had the termination payment been due
                and  owing under this  Section 4(e)(I) at the time the Change of
                Control Accelerated Award was distributed to Executive;

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        9.      This Amendment may be executed in one or more counterparts which
taken together shall constitute one and the same instrument.


EXECUTIVE:

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


PRIME RETAIL, INC., a Maryland            PRIME RETAIL, L.P., a Delaware limited
corporation                               partnership



By:    /s/ Robert A. Brvenik              By:     Prime Retail, Inc.
       ---------------------
Name:  ROBERT A. BRVENIK                  Its:    Sole General Partner
Title: PRESIDENT                          By:     /s/ Robert A. Brvenik
                                                  ----------------------
                                          Name:   ROBERT A. BRVENIK
                                          Title:  PRESIDENT