Document:

Employment Agreement

         THIS  EMPLOYMENT  AGREEMENT (the  "Agreement"),  effective as of May 3,
2000 (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 John Mastin, an individual domiciled
in the State of Maryland ("Executive").

                                   Witnesseth

         WHEREAS,   the  Company  is  engaged   primarily   in  the   ownership,
development,  construction,  acquisition,  leasing,  marketing and management of
factory outlet centers throughout North America, Puerto Rico and Western Europe;

         WHEREAS,  Executive is employed as Prime's  Executive  Vice President -
Leasing,  and in addition  thereto  Executive  holds  various  offices  with the
Company's affiliates and subsidiaries;

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

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

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

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

1. Duties.  During the Term hereof (as defined in Section 2 hereof), the Company
agrees to retain Executive,  and Executive agrees to be retained by the Company,
as the  Executive  Vice  President  - Leasing  of the  Company  on the terms and
conditions  provided in this  Agreement.  Executive shall serve as the Executive
Vice President - Leasing of the Company and Executive shall exercise such powers
and authority as are customarily  inherent in a similar position in a comparable
publicly-held  entity or as provided by the By-laws of Prime ("By-laws") and the
Agreement of Limited Partnership of the Operating  Partnership,  as amended (the
"Partnership Agreement").  Prime, in its capacity as sole general partner of the
Operating Partnership, may, from time to time, in its sole discretion, by action
of its Board of Directors (the "Board")  further define and clarify  Executive's
duties and services hereunder or under the By-laws or Partnership Agreement in a
manner consistent with the offices for which he has been retained  hereunder and
the scope of work set forth herein.  Executive agrees to devote his best efforts
and  substantially  all of his business time,  attention,  energy,  and skill to
performing his duties to the Company under this Agreement. Executive will report
directly and exclusively to the Company's  President and Chief Executive Officer
("CEO"),  and he  will  perform  all of  his  duties  in  accordance  with  such
reasonable directions,  requests,  rules and regulations as are specified by the
CEO in connection with his  employment.  Notwithstanding  the foregoing,  in the
event the Company retains an individual to serve as its Chief Operating Officer,
or a similar role, and that individual  reports directly to the CEO, the parties
acknowledge  that the Company may alter the reporting  relationship of Executive
so that he thereafter reports to such individual and the CEO. During the Term of
this  Agreement,  it shall not be a violation of this Agreement for Executive to
(i)  serve on  corporate,  industry-related,  civic,  or  charitable  boards  or
committees  or devote time to serving any such entities or  organizations,  (ii)
deliver  lectures,  fulfill  speaking  engagements,   or  teach  at  educational
institutions, or (iii) manage personal investments and finances and business and
legal affairs,  to the extent that such activities do not violate this Section 1
or Section 5 hereof.

2. Term. The term of this Agreement shall commence as of the Effective Date and,
unless earlier  terminated in accordance with the terms of this Agreement,  will
extend to the second  anniversary of such date ("the Original Term");  provided,
however, that if this Agreement is not affirmatively terminated by either party,
or extended or renewed for a specific  duration in writing by  agreement  of the
parties,  prior  to the last  day of the  Original  Term,  this  Agreement  will
continue on a month-to-month basis thereafter (the "Extended Term"). The parties
agree to  cooperate  and discuss in good faith their  intentions  with regard to
this Agreement's extension or renewal 12 months prior to the end of the Original
Term.  Notwithstanding  the foregoing,  the Company agrees to provide  Executive
with a minimum of six  months'  advance  written  notice (the  "Advanced  Notice
Period") of its intent to terminate this  Agreement  during the Original Term or
the  Extended  Term for any reason  other than Cause,  in which case the Company
shall comply with the notice  requirements  of Sections  4(a)(2) and (3) hereof,
and  Executive  agrees to provide the Company with a minimum of 60 days' advance
written  notice  (reduced  to 30 days,  if the term is not  extended  beyond the
Original  Term) of his intent to terminate  this  Agreement  during the Original
Term or the Extended  Term for any reason other than Good Reason,  in which case
Executive  shall  comply  with the notice  requirements  of  Section  4(b)(1)(E)
hereof.  For purposes of this Agreement,  the terms "Original  Term,"  "Extended
Term" and "Advanced  Notice Period" shall herein be collectively  referred to as
the "Term."

3.       Compensation and Related Matters.

(a) Base Salary.  During the Term of this Agreement,  the Operating  Partnership
agrees to pay to Executive a base salary in an  aggregate  amount of Two Hundred
Thousand  Dollars  ($200,000) per calendar year,  payable in accordance with the
general  policies and procedures for payment of salaries to any other  executive
personnel  of the  Company  but in all events  payable no less  frequently  than
monthly.  The then applicable  amount of yearly base salary payable to Executive
pursuant to the  provisions  of this Section 3(a) shall herein be referred to as
the  "Base  Salary."  The Base  Salary  payable  to  Executive  pursuant  to the
provisions  of this  Section  3(a) shall be subject  to  periodic  review by the
Compensation  Committee  of the Board of  Directors  of Prime (the  "Committee")
based upon periodic review of Executive's  performance  conducted on at least an
annual basis and may be periodically  increased as a result  thereof;  provided,
however, that the Base Salary payable to Executive pursuant to the provisions of
this Section 3(a) shall in no event be less than the aggregate  amount set forth
in the first sentence of this paragraph. In no event may Executive's Base Salary
be reduced during the Term without his express written consent.

(b) Performance Bonus. In addition to the Base Salary,  Executive shall have the
right to receive,  and the Operating  Partnership agrees to pay to Executive,  a
performance  bonus for each calendar year during the Term of this Agreement,  in
such  amounts as the  Committee,  in its sole  discretion,  may  determine  (the
"Performance  Bonus").  If the Board,  either directly or through the Committee,
establishes  performance measures for senior officers (which term is intended to
include  Executive),  those  established  criteria  will be  used  to  determine
Executive's  entitlement to a Performance Bonus.  Notwithstanding the foregoing,
nothing in this  Agreement  obligates  the Board to establish  such  performance
measures, and the lack of established performance measures will not constitute a
breach of this  Agreement  in any  manner.  In lieu of  established  performance
measures,  the Board will determine Executive's  Performance Bonus solely in its
discretion.  The parties  hereto  acknowledge  that any  corporate or individual
performance  objectives  established  pursuant  to  this  Section  3(b)  will be
determined  prior  to,  or as soon as  possible  after,  the  beginning  of each
calendar year and that such objectives may objectively be met by Executive.  The
aggregate  Performance  Bonus for a calendar year payable in accordance with the
provisions  of this Section 3(b) is expected to be up to 100% of the Base Salary
for such calendar year.  Further,  Executive shall only be entitled to receive a
Performance  Bonus for a calendar year if Executive has been and continues to be
retained  by the  Company as an  executive  officer of the  Company for the full
calendar year or if (i) the Company  terminates  Executive's  employment without
Cause  (as  defined  below)  during  the Term,  (ii)  Executive  terminates  his
employment for Good Reason (as defined below) during the term, (iii) Executive's
employment  ends for any reason  within 24 months  following a Change of Control
during the Term, or (iv) the Term expires  during that calendar year. Any amount
of Performance Bonus required to be paid to Executive for a calendar year during
the Term of this Agreement shall be paid by the Company to Executive  during the
pay period of the Company following  finalization of the audit for such calendar
year and final review and approval of the bonus  calculation  by the  Committee,
and, in all events, on or before March 31 of the year immediately  following the
end of the calendar year for which such Performance Bonus is attributable.

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

(1)  During  the Term of this  Agreement  and  subject  to the  limitations  and
affirmative  rights set forth in this Section  3(c),  Executive and his eligible
dependents shall have the right to participate in any life, disability,  health,
dental,  vision  and  other  benefit  plans or  programs  that  have been or are
hereafter  adopted  or  maintained  by the  Company  (or in  which  the  Company
participates)  according  to the terms of such plan or  program  with all of the
benefits,  rights and  privileges  as are enjoyed by any other senior  executive
officer of the Company.  In addition,  Executive shall be covered by any and all
policies of directors and officers insurance coverage obtained by the Board from
time to time for its  senior  executive  officers,  the terms of which  shall be
established by the Board in its sole discretion.

(2)  During  the Term of this  Agreement  and  subject  to the  limitations  and
affirmative  rights set forth in this Section  3(c),  Executive and his eligible
dependents  shall have the right to participate in any retirement,  pension,  or
other similar  benefit plan or program that has been or is hereafter  adopted by
the  Company (or in which the Company  participates)  according  to the terms of
such plan or program with all the benefits, rights and privileges as are enjoyed
by any other senior executive officer of the Company.

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

                  (4) Notwithstanding anything to the contrary contained herein,
the Company  reserves the right to amend or terminate any plan described in this
Section 3(c) for any reason; provided,  however, that (i) no such amendment that
would reduce the benefits of Executive  will be adopted  unless it affects other
senior executive  officers  across-the-board,  and (ii) if any plan amendment or
termination  reduces the benefits of Executive,  the Company  agrees to adopt or
maintain  one or  more  replacement  plans  that  will  provide  Executive  with
reasonably  comparable  benefits  throughout  the  Term of this  Agreement.  (d)
Vacation and Leaves of Absence. Executive shall be entitled to four (4) weeks of
paid vacation leave during each twelve (12) month calendar period (considered to
be granted for each  half-year as of the first day of that  half-year)  and paid
holidays in accordance with the Company's  established  policies.  Executive may
accrue unused vacation time if not used in any calendar year or years,  however,
the maximum  cumulative  amount of vacation  time that  Executive may accrue and
carry  over to the  next  year is four  weeks.  In  addition  to the  foregoing,
Executive  may be granted  leaves of absence  with or without pay for such other
reasons as shall be mutually agreed upon by the Board and Executive.

(e) Expenses. Executive shall be reimbursed, subject to the Company's receipt of
invoices or similar records as the Company may reasonably  request in accordance
with its  policy and  procedures,  for all  reasonable  and  necessary  expenses
incurred by Executive in the performance of his duties  hereunder.  In addition,
the Company agrees to pay, or reimburse  Executive for, any legal fees and costs
he incurs in connection with the negotiation and execution of this Agreement, up
to a maximum of $10,000,  and for any reasonable  legal fees and costs he incurs
in connection  with the  negotiation  and execution of renewals,  extensions and
amendments of this Agreement.

(f) Life  Insurance.  The Company  shall provide  $2,000,000  of life  insurance
coverage for the benefit of Executive during the Term of this Agreement.

(g) Stock Options. (i) In consideration for Executive's employment hereunder, as
of May 11, 2000 (the "Date of Grant"),  Prime  granted  Executive an option (the
"Option") to purchase  100,000 shares of Prime's  common stock,  par value $0.01
per share (the  "Common  Stock").  The  purchase  price per share was $2.00 (the
"Exercise  Price").  The Option was granted  pursuant to the Prime Retail,  Inc.
1998 Long-Term Stock Incentive Plan (the "LTIP") and is subject to the terms and
conditions contained in the Stock Award Agreement entered into between Prime and
Executive,  which  terms  include:  (i) the Option will have a term of ten years
measured from the date of grant;  (ii) the greatest portion of the Option shares
allowable  under the LTIP will be issued as incentive  stock options;  (iii) the
Option shares will vest and become  exercisable as follows:  increments of 12.5%
of the total  number of shares  will  become  vested as of the first day of each
contract  quarter  following  the Date of Grant,  such that the shares  shall be
fully vested  before the second  anniversary  of the  Effective  Date,  assuming
Executive's  employment with Prime continues through such dates; (iv) the Option
will remain  exercisable  for 30 days  following  termination  of Executive  for
Cause,  and in the event of Executive's  termination of employment for any other
reason the Option will remain  exercisable for 90 days; and (v) upon Executive's
resignation for Good Reason or termination without Cause (each as herein defined
and without regard to whether a Change of Control has occurred)  during the Term
of this  Agreement,  the entire  Option,  in addition  to all other  outstanding
options awarded by Prime to Executive, will become fully vested and exercisable,
to the extent not previously  exercised.  Prime will take all steps necessary to
ensure  that all options  held by  Executive  survive any Change of Control.

4. Termination and Termination Benefits.

(a)      Termination by Prime.

(1)  Without  Cause.  Subject  to the notice  provisions  set forth in Section 2
hereof, the Company may terminate this Agreement and Executive's services at any
time for any reason,  and after any required  notice is provided to Executive he
shall  continue to perform his duties under this  Agreement  during the Advanced
Notice Period if the Company so elects.  In connection  with the  termination of
Executive's  services without Cause during the Term of this Agreement,  pursuant
to this Section  4(a)(1),  Executive (and Executive's  eligible  dependents with
respect to paragraph (D) below) shall be entitled to receive:

(A)      all accrued but unpaid amounts of the Base Salary and vacation  through
         the Advanced  Notice Period,  payable in accordance with the provisions
         of Sections 3(a) and 3(d) above;

(B)      if such  termination  occurs  during the Original  Term, a  termination
         payment in an amount equal to the product of (x) the number of full and
         partial years  remaining in the Original  Term,  and (y) the sum of (i)
         Executive's  then current Base Salary and (ii) 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 made to  Executive,  a bonus payment equal to 50% of his
         then current Base Salary (the sum of the amounts  determined  by adding
         clauses (i) and (ii) is in the aggregate hereinafter referred to as the
         "One-Year  Pay  Equivalent"),  and the  product of (x) and (y) shall be
         payable no later than  thirty (30) days  following  the last day of the
         Advanced Notice Period;

(C)      any vested  benefits or amounts  pursuant to Sections 3(c),  3(e), 3(f)
         and 3(g) hereof through the effective date of  termination,  payable in
         accordance with the provisions of any such plan(s); and

(D)      if  such   termination   occurs  during  the  Original  Term,  (i)  the
         Company-paid  health  insurance  benefits  specified in Section 3(c)(1)
         above for a period of twelve (12) months  following the effective  date
         of  termination  and (ii)  following  such period,  Executive  shall be
         entitled to all rights  afforded to him under the federal  Consolidated
         Omnibus Budget  Reconciliation  Act ("COBRA") to purchase  continuation
         coverage of health  insurance  benefits for himself and his  dependents
         for the maximum  period  permitted by law. If such  termination  occurs
         during the  Extended  Term,  Executive  will be  entitled to all rights
         afforded to him under COBRA to purchase continuation coverage of health
         insurance  benefits  for  himself  and his  dependents  for the maximum
         period permitted by law.

         In the event that  Executive is terminated  without  Cause  pursuant to
this  Section  4(a)(1) or resigns  for Good Reason and within 12 months from the
effective date of such termination or resignation there is a "Change in Control"
of the Company (as defined  below),  then Executive shall be entitled to receive
the  benefits  set forth in Section  4(d) hereof to the extent and in the amount
that such benefits exceed the amounts paid or received by Executive  pursuant to
this Section  4(a)(1).  (2) With Cause. The Company may terminate this Agreement
with "Cause"  immediately  upon written notice to Executive.  In connection with
the  termination  of  Executive's  services  pursuant to this  Section  4(a)(2),
Executive (and  Executive's  eligible  dependents  with respect to paragraph (C)
below) shall be entitled to:

(A)      receive all accrued but unpaid  amounts of the Base Salary and vacation
         through the effective date of  termination,  payable in accordance with
         the provisions of Sections 3(a) and 3(d) above;

(B)      receive the vested benefits or amounts pursuant to Sections 3(c), 3(e),
         3(f) and 3(g) hereof through the effective date of termination, payable
         as otherwise provided in such Sections; and

(C)      exercise   all  rights   afforded   to  him  under  COBRA  to  purchase
         continuation  coverage of health insurance benefits for himself and his
         dependents for the maximum period permitted by law.

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

(4) Disability.  If due to illness or physical or mental  disability,  Executive
shall fail to perform the material duties required by this Agreement  during any
four (4) consecutive  months during the Term of this Agreement,  the Company may
terminate this Agreement,  subject to the notice provisions set forth in Section
2 hereof.  In such event,  Executive (and Executive's  eligible  dependents with
respect to paragraph (D) below) shall receive:

(A)      all accrued but unpaid amounts of the Base Salary and vacation  through
         the  effective  date of  termination,  payable in  accordance  with the
         provisions of Sections 3(a) and 3(d) above;

(B)      if, and only if, the Company has  terminated  or  otherwise  materially
         reduced Executive's long-term disability coverage that was in effect on
         the Effective Date of this Agreement,  then Executive shall be entitled
         to receive 1.5 times the One-Year Pay Equivalent;

(C)      any vested  benefits or amounts  pursuant to Sections 3(c),  3(e), 3(f)
         and 3(g) hereof through the effective date of  termination,  payable in
         accordance with the provisions of any such plan(s); and

(D)      the benefits described in Section 4(a)(1)(D).

                  This  Section  4(a)(4)  shall  not limit  the  entitlement  of
Executive,  his estate or  beneficiaries  to any  disability  or other  benefits
available to Executive under any disability  insurance or other benefits plan or
policy that is maintained by the Company for Executive's benefit.

(b)      Termination by Executive for Any Reason.

(1) Subject to the notice requirements set forth in Section 2 hereof,  Executive
may terminate this Agreement at any time with or without Good Reason (as defined
herein),  and after any  required  notice is provided  to the Company  Executive
shall  continue to perform his duties  under this  Agreement  during such notice
period if the Company so elects. If Executive terminates his employment for Good
Reason,  the Company shall pay him the compensation and other benefits  provided
above in Section  4(a)(1) as if it had terminated  his employment  without Cause
after providing the requisite notice pursuant to Section 2 hereof. In connection
with the  termination of this Agreement  pursuant to this Section  4(b)(1) other
than for Good  Reason,  Executive  (and  Executive's  eligible  dependents  with
respect to paragraph (D) below) shall be entitled to receive:

(A)      all accrued but unpaid amounts of the Base Salary and vacation  through
         the  effective  date of  termination,  payable in  accordance  with the
         provisions of Sections 3(a) and 3(d) above;

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

(C)      any vested  benefits or amounts  pursuant to Sections 3(c),  3(e), 3(f)
         and 3(g) hereof through the effective date of  termination,  payable as
         otherwise provided in such Sections; and

(D)      all  rights  afforded  to him  under  COBRA  to  purchase  continuation
         coverage of health  insurance  benefits for himself and his  dependents
         for the maximum period permitted by law.

(E)      "Good Reason"  Defined. For purposes of this  Agreement,  "Good Reason"
         shall mean (A) the material   breach  by  the  Company  of  any of  its
         obligations  hereunder (a bona fide dispute  regarding  the Performance
         Bonus shall not be a material breach by the Company) and the failure of
         the Company to cure such  breach  within  thirty (30)  days (reduced to
         ten (10) days for failure to pay  Base Salary) after receipt  by    the
         Company of a written  notice  from Executive  specifying in  reasonable
         detail the nature of the breach, unless such  breach  requires a longer
         period to cure,  then the  Company  shall  have the  right to cure such
         breach  within  such additional period  of  time  not to  exceed  sixty
         (60)  days;  (B)  Executive's  title  or  scope  of  responsibilities
         and duties are  materially  diminished  from the level provided in this
         Agreement,  or the Company fails  to  provide  Executive  with adequate
         office facilities and support services to perform such responsibilities
         and duties; or (C) the Company changes  Executive's  principal place of
         employment  to  a  location  more  than  25  miles from  the  Company's
         principal Baltimore City office as of the Effective  Date.  Executive's
         delay in providing   notice of his  termination  for Good Reason  shall
         not be  deemed to be a waiver of any such Good Reason  unless and until
         Executive  fails to provide  such  notice  within six months  after the
         occurrence of  the event  triggering  such  Good  Reason,  nor does the
         failure to resign for one Good Reason  prevent  any later  Good  Reason
         resignation for a similar or different reason.

(c) Death. Notwithstanding any other provision of this Agreement, this Agreement
shall  terminate on the date of Executive's  death.  In this event,  Executive's
estate  shall  be  entitled  to  receive  all  accrued  but  unpaid  amounts  of
Executive's  Base Salary and  vacation  through the date of  Executive's  death,
payable in accordance  with the  provisions of Sections 3(a) and 3(d) above.  In
addition,  Executive's  eligible  dependents  shall be  entitled  to receive the
benefits  specified in Section  4(a)(1)(D)  above,  to the extent  applicable to
dependents. This Section 4(c) shall not limit the entitlement of Executive under
any  insurance or other  benefits plan or policy that is maintained by Prime for
Executive's benefit.

(d)  Termination  Following a Change of Control.  If,  within  twenty-four  (24)
months  following a Change of Control,  the Company  terminates  this  Agreement
during  its  Original  Term other than for Cause or  Executive  terminates  this
Agreement during its Original Term with Good Reason, in either case,  subject to
the notice provisions of Section 2 hereof,  Executive (and Executive's  eligible
dependents with respect to paragraph (D) below) shall be entitled to receive the
following benefits and payments:

(1) all  accrued  but unpaid  amounts of Base  Salary and  vacation  through the
effective  date of  termination,  payable in accordance  with the  provisions of
Sections 3(a) and 3(d) above;

(2) a termination payment in an amount equal to the product of (x) the number of
full and partial years remaining in the Original Term (or, if greater,  2 years)
and (y) the One-Year Pay Equivalent, which amount shall be payable no later than
30 days following (i) the last day of the Advance Notice Period,  if termination
was at the election of Prime, or (ii) the last day of the notice period required
under Section 2 hereof, if termination was at the election of Executive;

(3) any vested benefits or amounts pursuant to Section 3(c), 3(e), 3(f) and 3(g)
hereof through the effective date of termination, payable in accordance with the
provisions of any such plan(s); and

(4) the health  insurance  benefits  described in Section  3(c)(1) above for the
maximum period  permitted  under COBRA at the Company's  sole expense,  together
with either (i) additional benefits equivalent to those in effect at the date of
termination,  such that Executive will receive Company-paid coverage for a total
of 24 months or (ii) if providing such benefits is not permitted by the tax laws
or applicable  benefit plans,  the after-tax  equivalent of the premiums paid by
the Company for such coverage.

(e) "Change of Control"  Defined.  For purposes of this Agreement,  a "Change of
Control"  shall be deemed to have  occurred  if (1) any  "person" or "group" (as
such terms are used for purposes of Sections  13(d) and 14(d) of the  Securities
Exchange Act of 1934, as amended, regardless of whether applicable),  other than
a trustee or other fiduciary  holding  securities under an employee benefit plan
of Prime or a corporation  owned directly or indirectly by the  stockholders  of
Prime in substantially the same proportions as their ownership of stock of Prime
becomes  the  "beneficial  owner" (as  defined  in Rule  13d-3  under said Act),
directly or indirectly,  of securities of Prime  representing 50% or more of the
total voting power represented by Prime's then outstanding  securities that vote
generally  in  the  election  of  directors   (referred  to  herein  as  "Voting
Securities"); (2) during any period of two consecutive years, individuals who at
the beginning of such period  constitute  the Board and any new directors  whose
election by the Board or  nomination  for election by Prime's  stockholders  was
approved by a vote of at least  two-thirds  (2/3) of the directors then still in
office  who  either  were  directors  at the  beginning  of the  period or whose
election or nomination  for election was  previously so approved,  cease for any
reason to constitute a majority of the Board; (3) the individuals who constitute
the Board  immediately  before a proxy  contest  cease to  constitute at least a
majority  of the Board  (excluding  any Board  seat that is vacant or  otherwise
unoccupied)   immediately   following  the  proxy  contest;   (4)  a  merger  or
consolidation  of Prime  with or into any other  entity,  other than a merger or
consolidation   (i)  that  would  result  in  the  Voting  Securities  of  Prime
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  Voting  Securities  of the
surviving  entity) at least 50% of the total  voting  power  represented  by the
Voting  Securities of Prime or such  surviving  entity  outstanding  immediately
after such merger or  consolidation  or (ii) where more than 50% of the Board of
Directors  of the  surviving  entity is  composed  of members  from the Board of
Directors  of Prime,  with terms ending at least 11 months after the date of the
merger or  consolidation;  or (5) the  stockholders  of Prime  approve a plan of
complete  liquidation  of Prime or an agreement for the sale or  disposition  by
Prime of (in one transaction or a series of  transactions)  all or substantially
all of Prime's assets, and such transaction is substantially completed. However,
in no event will a Change of Control be deemed to have occurred, with respect to
Executive,  if  Executive  is part of a purchasing  group that  consummates  the
Change  of  Control  transaction.  Executive  will be  deemed to be "part of the
purchasing  group" for  purposes of the  preceding  sentence if  Executive is an
equity  participant in the purchasing  company or group (except for: (i) passive
ownership of less than three percent of the stock of the purchasing  company; or
(ii) ownership of equity  participation in the purchasing company or group which
is otherwise not significant,  as determined prior to the Change of Control by a
majority of the non-employee continuing directors).

(f) The Company may make any payments due Executive  under Sections 3(g),  4(d),
and 6 before the  completion  of the Change of  Control,  if, in the  reasonable
opinion of the Chairman of the Board's Compensation  Committee (the "Chairman"),
all conditions for completion of the Change of Control are substantially  likely
to be met. At that time,  the Chairman may release the payments or authorize the
option  vesting,  subject to  Executive's  agreement  to  promptly  return  such
payments  and agree to  rescission  of the vesting if the Change of Control does
not then occur.

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

5.       Covenants of Executive.

(a) No Conflicts.  Executive  represents  and warrants that he is not personally
subject to any agreement,  order or decree that restricts his acceptance of this
Agreement and performance of his duties with the Company hereunder.

(b) Non-Disclosure. Executive shall not disclose or use, except for or on behalf
of the "Group"  (consisting  of Prime and the Operating  Partnership  and any of
their  direct and  indirect  subsidiaries),  any Trade  Secret  (as  hereinafter
defined) of the Group,  whether  such Trade Secret is in  Executive's  memory or
embodied in writing or other  physical  form. For purposes of this Section 5(b),
"Trade Secret" means any information  that derives  independent  economic value,
actual or potential,  with respect to the Company from not being generally known
to, and not being  readily  ascertainable  by proper means by, other persons who
can obtain  economic  value  from its  disclosure  or use and is the  subject of
efforts to maintain its secrecy  that are  reasonable  under the  circumstances,
including, but not limited to, trade secrets,  customer lists, sales records and
other proprietary commercial information.  Said term, however, shall not include
general  "know-how"  information  acquired by Executive during the course of his
service.  Executive  shall be subject to the  restrictions  of this Section 5(b)
indefinitely.

(c)  Non-Solicitation.  During  the  period  of the  later  of  (i)  Executive's
employment  under this  Agreement,  or (ii) throughout the Original Term of this
Agreement,  but only if  Executive  resigns  other  than for Good  Reason  or is
terminated by the Company with Cause, (the "Restrictive  Period") and within the
United States (the  "Restrictive  Geographic  Area"),  Executive shall not hire,
cause to be hired, or induce or attempt to induce any officer,  employee, agent,
consultant,  independent  contractor,  tenant  or  customer  of the  Company  to
discontinue  such  affiliation with the Company or to refrain from entering into
new business relationships with the Company.  Notwithstanding the foregoing,  if
any officer,  employee,  agent,  consultant,  independent contractor,  tenant or
customer of the Company is contacted by, or receives a general  communication or
solicitation directed to the general public from, an entity with which Executive
has become employed or otherwise affiliated,  the parties hereto agree that such
contact or  communication  shall not violate  this  provision  unless  Executive
directly  or  indirectly  initiated  it,  and the  parties  further  agree  that
establishing  commercial  relationships  with the  Company's  lenders  and other
sources of capital does not violate this provision. The time period during which
the  prohibitions  set forth above apply shall be extended by the length of time
during which it is judicially  determined  that  Executive has violated any such
prohibition in any respect.

(d)  Non-Competition.  In return for the  performance of the  management  duties
described in Section 1 hereof,  Executive agrees that (A) during the Restrictive
Period he will 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,  perform or solicit  services for any of the  following
entities:  The Mills Corporation;  Tanger Factory Outlet Centers,  Inc.; Chelsea
GCA Realty, Inc.; New Plan Excel Realty Trust, Inc.; and Charter Oak Partners.

(e) Return of  Documents.  Upon  termination  of his services  with the Company,
Executive  shall return all originals and copies of books,  records,  documents,
customer lists,  sales materials,  tapes,  keys, credit cards and other tangible
property of the Company  within  Executive's  possession  or under his  control.
Executive  shall  have the right to retain  copies of forms and other  documents
used by the Company, redacted to remove the specific references to the Company.

(f)  Equitable  Relief.  In the event of any breach by  Executive  of any of the
covenants contained in this Section 5, it is specifically  understood and agreed
that  Company  shall be  entitled,  in addition to any other  remedy that it may
have, to seek equitable relief by way of injunction, an accounting or otherwise.

(g)  Acknowledgment.  Executive  acknowledges  that  he  will  be  directly  and
materially   involved  as  a  senior  executive  in  all  important  policy  and
operational decisions of Company.  Executive further acknowledges that the scope
of the foregoing  restrictions has been  specifically  bargained between Company
and  Executive,  each being fully informed of all relevant  facts.  Accordingly,
Executive  acknowledges  that the foregoing  restrictions  of this Section 5 are
fair  and  reasonable,   are  necessary  to  protect  the  Company,   its  other
stockholders  and the public from the unfair  competition of Executive who, as a
result of his  performance  of services on behalf of the Company,  will have had
unlimited  access to the most  confidential  and  important  information  of the
Company, its business and future plans. Executive furthermore  acknowledges that
no unreasonable  harm or injury will be suffered by him from  enforcement of the
covenants  contained  herein  and  that he  will  be  able to earn a  reasonable
livelihood following termination of his services notwithstanding  enforcement of
the covenants contained herein.

(h) Indemnification.  The Company shall, to the maximum extent permitted by law,
and in addition to any such rights  granted to or available  to Executive  under
the Company's Articles and By-Laws,  or standing or other  resolutions,  defend,
indemnify and hold harmless  Executive  from and against any and all claims made
against Executive  concerning or relative to his service,  actions, or omissions
on behalf of the  Company  as an  employee,  officer,  director  or agent of the
Company.  The Company shall, upon Executive's  request,  promptly advance or pay
any amounts for costs,  charges,  or expenses  (including,  without  limitation,
legal fees and expenses incurred by counsel retained by Executive) in respect of
his right to indemnification  hereunder,  subject to a later determination as to
Executive's  ultimate  right  to  receive  such  payment.  Executive's  right to
indemnification  shall survive until the expiration of any applicable statute of
limitations, without regard to the earlier termination of Executive's employment
hereunder or of the Term.

6.       Golden Parachute Provision.

(a)  Gross  Up   Payments.   Anything  in  this   Agreement   to  the   contrary
notwithstanding, in the event that any payment by or on behalf of the Company to
or for the  benefit of  Executive  (whether  paid or payable or  distributed  or
distributable  pursuant  to the  terms  of  this  Agreement  or  otherwise,  but
determined  without  regard  to any  additional  payments  required  under  this
Section) (the  "Payments")  is determined  to be an "excess  parachute  payment"
pursuant to Code Section 280G or any  successor or  substitute  provision of the
Code, with the effect that Executive is liable for the payment of the excise tax
described in Code Section 4999 or any successor or  substitute  provision of the
Code,  or any  interest or penalties  are incurred by Executive  with respect to
such Payments  (such excise tax,  together with any such interest and penalties,
are hereinafter  collectively  referred to as the "Excise Tax"),  then Executive
shall  be  entitled  to  receive  an  additional   payment  from  the  Operating
Partnership  (the  "Gross-Up  Payment") in an amount such that after  payment by
Executive of all taxes  imposed upon the Gross-Up  Payment,  including,  without
limitation,  federal,  state,  local or other  income  taxes,  FICA  taxes,  and
additional  Excise Tax (and any interest and  penalties  imposed with respect to
such taxes),  Executive  retains a portion of the Gross-Up  Payment equal to the
Excise Tax imposed upon the Payments.

(b) Determination of Gross-Up. Subject to the provisions of paragraph (c) below,
all  determinations  required to be made under this Section 6, including whether
and when a Gross-Up  Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such  determination,  shall be
made by the public  accounting  firm that serves as the Company's  auditors (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the Company and Executive  within 15 business days of the receipt of notice from
the Company or Executive that there have been Payments,  or such earlier time as
is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the  individual,  entity or group effecting the Change
of Control,  Executive shall designate another nationally  recognized accounting
firm to make the determinations  required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder).  All fees and expenses of
the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment,
as  determined  pursuant  to this  Section  6,  shall be paid by the  Company to
Executive within five days after the receipt by the Company and Executive of the
Accounting  firm's  determination.  If the Accounting  Firm  determines  that no
Excise Tax is payable by Executive,  it shall furnish  Executive  with a written
opinion that failure to report the Excise Tax on Executive's  applicable federal
income tax return would not result in the  imposition of a negligence or similar
penalty.  Any  determination  by the  Accounting  Firm shall be binding upon the
Company and Executive, except as provided in paragraph (c) below.

(c) IRS Claims.  As a result of the  uncertainty  in the  application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Internal Revenue Service or other agency will
claim that a greater  Excise Tax is due,  and thus a greater  amount of Gross-Up
Payment  should have been made by the Company than that  determined  pursuant to
paragraph (a) above (an "Underpayment"). In the event that Executive is required
to make a payment of any such Excise Tax, the  Accounting  Firm shall  determine
the amount of the  additional  Gross-Up  Payment due to  Executive  based on the
Underpayment, and such additional Gross-Up Payment shall be promptly paid by the
Company to or for the benefit of Executive.  Executive  shall notify the Company
in writing of any claim by the Internal Revenue Service or other agency that, if
successful,  would require the payment by the Company of the Gross-Up Payment or
an Underpayment.

7. Transfer of Equity Interest to Employer Upon Termination of Employment. As of
the Date of Termination  and in  consideration  for the payment of $100.00 cash,
Executive  agrees to execute  and deliver to Prime or its  designee  any and all
certificates for shares of capital stock (with appropriate stock powers attached
and properly  signed) of Prime's  subsidiaries  and  affiliates  (other than the
Operating Partnership),  including,  but not limited to Prime Retail E-Commerce,
Inc., Prime Retail Stores, Inc., and Prime Retail Furniture,  Inc. (all of which
are Maryland  corporations) (the "Subsidiary Shares").  Executive further agrees
to execute and deliver such other  documentation as Prime reasonably requests to
effect the  assignment  of the  Subsidiary  Shares.  For the avoidance of doubt,
nothing  contained  in this  Section 7 will be deemed to  require  Executive  to
transfer  or  carry  any of his  equity  interests  in  Prime  or the  Operating
Partnership.

8. Prior  Agreement.  This  Agreement  supersedes  and is in lieu of any and all
other employment or service arrangements between Executive, on the one hand, and
Prime and/or the Operating  Partnership or its predecessors or any subsidiaries,
on the other hand,  and any and all such  employment or service  agreements  and
arrangements are hereby terminated and deemed of no further force or effect.

9.  Assignment.  Neither  this  Agreement  nor any rights or duties of Executive
hereunder shall be assignable by Executive and any such purported  assignment by
him shall be void.  Prime may assign all or any of its right hereunder  provided
that  substantially all of the assets of the Company are also transferred to the
same party; provided, however, that Prime and the Operating Partnership, jointly
and severally shall remain  primarily  liable to Executive to fulfill all of the
Company's  obligations  under this  Agreement  and that any such  assignee  also
agrees to be  primarily  liable to  Executive  jointly  and  severally  with the
Company to fulfill all of the  Company's  obligations  under this  Agreement  as
provided in Section 10 below.

10. Successors.  This Agreement shall inure to the benefit of and be enforceable
by Executive's personal and legal  representatives,  executors,  administrators,
successors,  heirs,  distributees,  devisees  and  legatees  and  the  Company's
successors  and  assigns.  If  Executive  should die while any amounts are still
payable to Executive  hereunder,  all such amounts,  unless  otherwise  provided
herein,  shall  be paid in  accordance  with  the  terms  of this  Agreement  to
Executive's devisee, legatee or other designee or, if there be no such designee,
to Executive's estate. The Company will require any successor or assign (whether
direct or indirect, by purchase,  merger,  consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, as the case may be,
by  agreement  in form  and  substance  reasonably  satisfactory  to  Executive,
expressly,  absolutely and  unconditionally  to assume and agree to perform this
Agreement  in the same manner and to the same  extent that the Company  would be
required to perform it if no such succession or assignment had taken place.  Any
failure of the Company to obtain such agreement  prior to the  effectiveness  of
any such succession or assignment shall be a material breach of this Agreement.

11.  Notices.  Any notice required or permitted to be given under this Agreement
shall be  sufficient  if in writing  and if  delivered  in person or sent by any
national  overnight  delivery  service  or by  certified  mail to the  following
addresses (or to any other address that any party may designate by notice to the
other parties hereto):

(a)      if to Executive, to:

                  John Mastin
                  2107 Janer Drive
                  Pasadena, Maryland 21122

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

                  John B. Watkins and R. Scott Kilgore
                  Wilmer, Cutler & Pickering
                  2445 M Street, NW
                  Washington, DC  20037

(b)      if to Prime or to the Operating Partnership, to:

                  Prime Retail, Inc.
                  Attn:  Board of Directors
                  100 East Pratt Street
                  19th Floor
                  Baltimore, Maryland 21202

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

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

12. Amendment.  This Agreement may not be changed, modified or amended except in
writing signed by all of the parties hereto.

13. Waiver of Breach.  The waiver by any of the parties  hereto of the breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any part.

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

15. Opportunity to Employ Counsel.  Executive  acknowledges receipt of a copy of
this  Agreement  prior to his execution of this  Agreement  with the Company and
also  acknowledges  that he has had ample time and opportunity to employ counsel
of his choice to provide  advice  concerning  the terms and  conditions  of this
Agreement.

16.  Legal Fees.  If any dispute or  disagreement  arising  hereunder or related
hereto shall result in legal action between the Company and Executive, Executive
shall be entitled,  within 30 days after incurring such fees and  disbursements,
to recover  from the Company any  reasonable  expenses for  attorney's  fees and
disbursements  incurred  by  him  in  connection  with  Executive's  good  faith
maintenance or defense of such action,  on an after-tax basis,  unless Executive
does not prevail in such action.

17. No Mitigation.  The Company waives,  releases and remises (x) any obligation
or duty under  applicable  law or  otherwise on the part of Executive to seek or
obtain other engagements or employment or to otherwise  mitigate any payments or
damages to which  Executive  may be  entitled to by reason of any  operation  or
termination of this Agreement; and (y) any right in or claim to any remuneration
or compensation  received by Executive pursuant to any engagements or employment
subsequent to the termination of this Agreement.

18.  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.

19.  Binding  Effect.  This Agreement  shall be binding and legally  enforceable
against the parties hereto and their respective heirs, personal representatives,
successors and assigns, as the case may be.

                            (signature page follows)

<PAGE>

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

EXECUTIVE:

/s/ John S. Mastin
-----------------------------------
         John Mastin

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

By:      /s/ Glenn D. Reschke                       By:     Prime Retail, Inc.
         ----------------------------               Its:    Sole General Partner
Name:    Glenn D. Reschke
         ---------------------------                By:    /s/ Glenn D. Reschke
Title:   President & CEO                                   --------------------
         ---------------------------                Name:  Glenn D. Reschke
                                                           ----------------
                                                    Title: President & CEO
                                                           ----------------

<PAGE>

                                    Exhibit A
                               Dispute Resolution

Mediation                  If either  party has a dispute or claim  relating  to
                           this  Agreement or their  relationship  and except as
                           set forth in  Alternatives,  the  parties  must first
                           seek to mediate the same before an impartial mediator
                           the  parties  mutually  designate,  at the  Company's
                           expense  (other  than  their  respective   attorneys'
                           fees).  Subject  to  the  mediator's  schedule,   the
                           mediation must occur within 45 days of either party's
                           written   demand.    However,   in   an   appropriate
                           circumstance,  a party may seek  emergency  equitable
                           relief  from  a  court  of   competent   jurisdiction
                           notwithstanding this obligation to mediate.

Binding                    If the mediation reaches no  solution or the  parties
Arbitration                agree to forego mediation, the parties will  promptly
                           submit their disputes  to binding  arbitration before
                           one or more arbitrators (collectively or  singly, the
                           "Arbitrator")  the parties  agree to select (or whom,
                           absent agreement,  a court of competent  jurisdiction
                           selects).  The arbitration must follow applicable law
                           related  to   arbitration   proceedings   and,  where
                           appropriate,  the  Employment  Dispute  Rules  of the
                           American Arbitration Association.

Arbitration                All  statutes  of  limitations  and  substantive laws
Principles                 applicable to  a court proceeding  will apply to this
                           proceeding. The  Arbitrator  will  have  the power to
                           grant  relief  in  equity as well as at law, to issue
                           subpoenas  duces tecum,  to  question  witnesses,  to
                           consider   affidavits  (provided  there  is  a   fair
                           opportunity  to  rebut the  affidavits),  to  require
                           briefs  and   written   summaries  of   the  material
                           evidence,  and to  relax  the rules  of evidence  and
                           procedure,  provided  that  the Arbitrator  must  not
                           admit  evidence  it does not consider  reliable.  The
                           parties agree (and the Arbitrator  must  agree)  that
                           all  proceedings  and  decisions  of  the  Arbitrator
                           will be  maintained  in  confidence,  to  the  extent
                           legally  permissible,  and not be  made public by any
                           party or the Arbitrator without the prior written
                           consent of all  parties to the arbitration, except as
                           the law may otherwise require.

Discovery;                 The parties have selected arbitration to expedite the
Evidence;                  resolution of disputes and  to  reduce  the costs and
Presumptions               burdens associated with litigation. The parties agree
                           that the Arbitrator should take these  concerns  into
                           account   when   determining   whether  to  authorize
                           discovery  and, if  so,  the  scope  of   permissible
                           discovery   and   other   hearing   and   pre-hearing
                           procedures.  The  Arbitrator  may  permit  reasonable
                           discovery rights in preparation for the  arbitration,
                           provided  that  it  should  accelerate the scheduling
                           of and  responses  to such  discovery  so  as  not to
                           unreasonably  delay the  arbitration.  Exhibits  must
                           be marked  and left with the  Arbitrator until it has
                           rendered a decision.  Either party may elect,  at its
                           expense,  to record the  proceedings  by audiotape or
                           stenographic   recorder  (but  not  by   video).  The
                           Arbitrator  may conclude  that the  applicable law of
                           any foreign  jurisdiction  would be identical to that
                           of  Maryland on  the  pertinent  issue(s),  absent  a
                           party's   providing  the   Arbitrator  with  relevant
                           authorities (and copying the opposing party) at least
                           five business days before the arbitration hearing.

Nature of Award            The   Arbitrator  must   render  its  award,  to  the
                           extent feasible, within 30  days after  the close of
                           the hearing.  The award  must set forth the  material
                           findings  of fact and legal  conclusions   supporting
                           the award.  The parties agree  that it will be final,
                           binding,  and  enforceable  by any court of competent
                           jurisdiction.  Where   necessary  or  appropriate  to
                           effectuate   relief,    the   Arbitrator   may  issue
                           equitable  orders  as  part of or  ancillary  to  the
                           award. The Arbitrator  may award reasonable attorneys
                           fees to  the  prevailing  party to the extent a court
                           could have made such an award.

Appeal                     The parties may appeal the award based on the grounds
                           allowed by statute,  as well  as upon the ground that
                           the award misapplies the  law to the facts,  provided
                           that such appeal is filed within the applicable  time
                           court may  consider  the  ruling, evidence  submitted
                           during  the arbitration,  briefs,  and  arguments but
                           must not try the case de novo.  The parties will bear
                           the costs and fees  associated  with  the  appeal  in
                           accordance  with  the  arbitration  award  or, in the
                           event of a successful appeal, in  accordance with the
                           court's final judgment.

Alternatives               This Dispute Resolution provision does not preclude a
                           party from seeking  equitable relief from a court (i)
                           to prevent  imminent  or  irreparable  injury or (ii)
                           pending  arbitration,  to preserve the last peaceable
                           status  quo,  nor does it preclude  the parties  from
                           agreeing  to a less  expensive  and  faster  means of
                           dispute resolution.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
                                                           -----------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]