Document:

AGREEMENT FOR PURCHASE AND SALE

                                 BY AND BETWEEN

 FINGER LAKES OUTLET CENTER, L.L.C., THE PRIME OUTLETS AT MICHIGAN CITY LIMITED
                PARTNERSHIP, THE PRIME OUTLETS AT GILROY LIMITED
         PARTNERSHIP AND OUTLET VILLAGE OF KITTERY LIMITED PARTNERSHIP

                                       AS

                                     SELLER

                                       AND

                   F/C WATERLOO DEVELOPMENT LLC, F/C MICHIGAN
                CITY DEVELOPMENT LLC, F/C GILROY DEVELOPMENT LLC
            F/C KITTERY DEVELOPMENT LLC AND F/C MICHIGAN PARKING LLC

                                    AS BUYER

                                December 22, 2000

<PAGE>

                         AGREEMENT FOR PURCHASE AND SALE

     THIS AGREEMENT FOR PURCHASE AND SALE ("Agreement") is made and entered into
as of December  22, 2000  ("Closing  Date") by and between  Finger  Lakes Outlet
Center,  L.L.C.,  a  Delaware  limited  liability  company  (the  "Finger  Lakes
Seller"),  The Prime  Outlets at Michigan City Limited  Partnership,  a Delaware
limited partnership (the "Michigan City Seller #1"), The Prime Outlets at Gilroy
Limited  Partnership,  a Delaware limited  partnership (the "Gilroy Seller") and
Outlet Village of Kittery Limited  Partnership,  a Delaware limited  partnership
(the  "Kittery  Seller",  together  with the Finger Lakes  Seller,  the Michigan
Seller  and the  Gilroy  Seller  shall  collectively  be  referred  to herein as
"Seller") and F/C Waterloo Development LLC, a Delaware limited liability company
(the "Finger  Lakes  Buyer"),  F/C  Michigan  City  Development  LLC, a Delaware
limited  liability company (the "Michigan City Buyer"),  F/C Gilroy  Development
LLC, a Delaware  limited  liability  company (the "Gilroy  Buyer"),  F/C Kittery
Development LLC, a Delaware limited liability company (the "Kittery Buyer"), and
Michigan  City  Parking LLC, a Delaware  limited  liability  company  ("Michigan
Parking  Buyer")  together with the Finger Lakes Buyer,  the Michigan City Buyer
and the Gilroy Buyer shall collectively be referred to herein as "Buyer").

I.  DEFINITIONS

     Unless the context  otherwise  specifies or  requires,  for the purposes of
this  Agreement,  the following  terms shall have the meanings set forth in this
Article I:

1.1. Additional  Michigan City Land.  The term  "Additional  Michigan City Land"
     shall mean that certain portion of the real property described on Exhibit A
     owned by the Michigan Parking Seller.

1.2. Additional  Michigan City  Buildings.  The term  "Additional  Michigan City
     Buildings" shall mean,  collectively,  the buildings and  improvements,  if
     any, located on the Additional Michigan City Land.

1.3. Additional  Michigan  City  Property.  The term  "Additional  Michigan City
     Property" shall mean,  collectively,  the Additional Michigan City Land and
     the Additional Michigan City Buildings.

1.4. Buildings. The term "Buildings" shall mean, collectively, the buildings and
     improvements located on the Land. The term "Building" shall mean one of the
     Buildings.

1.5. Contracts.  The term  "Contracts"  shall mean,  collectively,  all of those
     agreements  and  contracts  relating to the  ownership,  management  and/or
     operation  of all or any part of the  Property,  excluding  Tenant  Leases.
     Buyer  shall  assume  only  those  Contracts  listed on  Exhibit H attached
     hereto,  such  Contracts  being  assumed being  hereinafter  referred to as
     "Contracts Being Assumed".

1.6. Deposits. The term "Deposits" shall mean, collectively, all tenant security
     deposits,  whether in the form of cash or letter of credit,  held by Seller
     pursuant to the Tenant  Leases,  which  Deposits  are set forth on the Rent
     Roll attached hereto as Exhibit B.

1.7. Environmental Agreements.  The term "Environmental  Agreements" shall mean,
     collectively,  all of those  agreements  relating to  environmental  issues
     affecting the Property which are set forth on Exhibit Q attached hereto.

1.8. Environmental  Insurance Policy. The term "Environmental  Insurance Policy"
     shall mean that certain  insurance policy relating to environmental  issues
     affecting the portion of the Property  owned by the Kittery Seller which is
     set forth on Exhibit O attached hereto.

1.9. Finger Lakes Pilot Agreement. The term "Finger Lakes Pilot Agreement" shall
     mean that certain Pilot  Agreement  dated as of June 28, 1994,  between the
     predecessor  in interest to the Finger  Lakes  Seller and the Finger  Lakes
     Ground Lessor, as amended and assigned from time to time.

1.10.Ground Leases.  The term "Ground Leases" shall mean (i) the ground lease of
     portions of the Land as more  particularly  described on Exhibit A, between
     the Finger  Lakes Seller as ground  lessee,  and those  parties  identified
     therein as ground  lessors (the "Finger Lakes Ground  Lessor") and (ii) the
     ground  lease of portions  of the Land as more  particularly  described  on
     Exhibit A, between the Kittery Seller as ground  lessee,  and those parties
     identified  therein as ground lessors (the "Kittery Ground Lessor") as such
     ground  leases  heretofore  may  have  been or  hereafter  may be  amended,
     restated or otherwise  modified.  The Finger  Lakes  Ground  Lessor and the
     Kittery  Ground  Lessor  shall  collectively  be referred to as the "Ground
     Lessors".

1.11.Gilroy Ground Lease.  The term "Gilroy  Ground Lease" shall mean the ground
     leases of portions of the Land as more particularly  described on Exhibit A
     (the  "Gilroy  Ground  Lease  Land")  between  the Gilroy  Seller as ground
     lessee, and those parties identified therein as ground lessors (the "Gilroy
     Ground  Lessor"),  as  such  ground  leases  heretofore  may  have  been or
     hereafter may be amended, restated or otherwise modified.

1.12.Hazardous  Materials.  The term "Hazardous Materials shall mean asbestos or
     asbestos-containing  materials; oils;  petroleum-derived  compounds, radon,
     urea  formaldehyde,  pesticides;  PCBs or any material which  constitutes a
     hazardous   or  toxic   substance   under   applicable   federal  or  state
     environmental laws.

1.13.Intangible   Property.   The  term   "Intangible   Property"   shall  mean,
     collectively,  all  property  owned  by  Seller  other  than  the  Personal
     Property, the Tenant Leases, the Buildings,  the Land, Seller's interest in
     the Contracts,  and the Name Rights,  which intangible  property is used in
     connection  with the  ownership,  management  and  operation  of the  Land,
     Buildings,  Personal  Property,  Tenant Leases and Seller's interest in the
     Contracts.  The term Intangible Property shall include, without limitation,
     all appraisals,  engineering,  soils,  curtain wall,  hazardous  materials,
     marketing  and other  reports and studies  relating  to the  Property,  all
     contract rights,  rights under insurance  policies (only to the extent that
     such rights  arise from acts,  events,  or  omissions  occurring  after the
     Closing Date and, except for the Environmental Insurance Policy, Seller may
     terminate all such insurance policies at Closing), contract claims (only to
     the extent that such claims arise from acts, events, or omissions occurring
     after the Closing Date), claims and actions at law or in equity (except for
     any claims relating to pre-closing  rents in a Tenant  bankruptcy),  escrow
     accounts   (subject  to  proration  as  hereinafter   provided),   deposits
     (including,  without limitation,  utility deposits, subject to proration as
     hereinafter provided), warranties, guarantees,  correspondence with present
     or prospective  tenants or suppliers,  advertising  materials and telephone
     exchange numbers  identified  therewith,  the plans and  specifications for
     each  Building  (to the extent in  Seller's  possession)  and copies of all
     architectural,   engineering   and   construction   proposals  in  Seller's
     possession for the  remodeling of the Property not yet performed.  All Name
     Rights  and  computer  software  are  to  be  expressly  deleted  from  the
     definitions of "Intangible  Property",  "Property" and "Personal Property".
     Notwithstanding  anything herein to the contrary,  Seller hereby  covenants
     and agrees that Buyer shall be permitted  to use Name Rights in  connection
     with all pylon signs  located at the Property,  at no cost to Buyer,  for a
     period not to exceed  ninety (90) days after the Closing Date in accordance
     with the terms of that certain License Agreement (the "License  Agreement")
     dated as of the date hereof  between Prime Retail,  L.P., as licensor,  and
     Purchaser, as licensee.

1.14.Land.  The term "Land" shall mean the real property  described in Exhibit A
     and Seller's interest as ground lessee in the Ground Leases,  together with
     any alleys,  strips or gores of land, if any,  adjoining such real property
     and abutting properties,  whether owned or claimed by deed,  limitations or
     otherwise, and whether or not located inside or outside such real property,
     together  with all  rights,  titles and  interests  of Seller in and to any
     easements,  rights of ingress or egress or other  interests in, on or under
     such real  property.  The term "Land" shall also  specifically  exclude the
     Additional Michigan City Land.

1.15.Laws. The term "Laws" shall mean all  applicable  laws,  ordinances,  rules
     and  regulations  of all  public  or  quasi-public  authorities  having  or
     claiming jurisdiction thereof.

1.16.Leasing   Commissions.   The  term   "Leasing   Commissions"   shall  mean,
     collectively,  all  brokerage  commissions  or  other  compensation  to any
     broker,  leasing agent, tenant representative or owner's agent which Seller
     is or may  become  obligated  to  pay in  connection  with  the  execution,
     renewal,  extension or expansion  of any Tenant  Lease.  Buyer shall assume
     only those Leasing Commissions set forth on Exhibit C attached hereto, such
     Leasing Commissions being assumed being hereinafter referred to as "Leasing
     Commissions Being Assumed."

1.17.Name  Rights.  The  term  "Name  Rights"  shall  mean,  collectively  Prime
     Outlets,  Prime and Outlet  Village,  together  with all rights to use such
     names,  and associated and accompanying  logos,  service marks, and similar
     design identification marks in connection with the Land and Buildings.

1.18.Personal Property.  The term "Personal  Property" shall mean,  collectively
     and without  limitation,  all of Seller's right,  title and interest in all
     personal  property  owned or held by  Seller,  and  located  on, or used in
     connection with, the ownership, operation, management or maintenance of the
     Land,  the  Buildings,  the  Intangible  Property,  the  Tenant  Leases and
     Seller's  interest in the Contracts,  including,  without  limitation,  all
     furniture,   furnishings,   fixtures,  appliances,   machinery,  inventory,
     supplies and equipment and other tangible  personal property located on the
     Property,  other than personal property owned by Tenants,  gift certificate
     printing machines and credit card processing machines related thereto,  the
     computer  located at the  Property  owned by the Finger  Lakes  Seller (the
     "Finger Lakes  Property")  dedicated to the gift certificate  program,  any
     time clocks not listed on Exhibit D, any office  equipment  in Prime Retail
     L.P.'s  regional office located at the portion of the Property and owned by
     the Gilroy Seller. A list of Personal  Property (other than Contracts,  the
     Tenant Leases and Intangible Property) is attached hereto as Exhibit D.

1.19.Property. The term "Property" shall mean,  collectively,  Seller's interest
     in all of the following:  the Land, the Buildings,  the Personal  Property,
     the Deposits, the Contracts Being Assumed, and the Intangible Property. The
     term  "Property"  shall  also be  deemed  to  refer to any  portion  of the
     foregoing described property.

1.20.Release.  The  term  "Release"  shall  mean  presence,  spilling,  leaking,
     pumping, pouring, emitting,  emptying,  discharging,  injecting,  escaping,
     leaching, dumping, or disposing.

1.21.Tenant  Leases.  The term "Tenant  Leases"  shall mean,  collectively,  all
     leases,  licenses,  occupancy agreements and rental agreements with respect
     to the  occupancy  or  use of any  portion  of  the  Property  by  tenants,
     licensees  or  occupants  of any  portion  of the  Property  (collectively,
     "Tenants"  and  individually,  a "Tenant"),  all of which are listed in the
     rent roll attached hereto as Exhibit B (the "Rent Roll").

1.22.Title Company.  The term "Title Company" shall mean Chicago Title Insurance
     Company in New York, New York 10017,  attention:  Robert Simins,  telephone
     no. 212/880-1203.

<PAGE>

II.    PURCHASE AND SALE OF THE PROPERTY

2.1. Purchase  and Sale.  Seller  agrees to sell the Property to Buyer and Buyer
     agrees to  purchase  the  Property,  upon all of the terms,  covenants  and
     conditions set forth in this Agreement.

2.2. Purchase   Price.   The   purchase   price  for  the   Property   shall  be
     $239,500,000.00  (the "Purchase  Price").  The Purchase  Price,  subject to
     adjustments  and  prorations  as set  forth  herein,  shall  be paid on the
     Closing  Date by the  assumption  by  Buyer of the  indebtedness  currently
     encumbering the Property  (excluding the Additional Michigan City Property)
     originally  from Nomura Asset Capital  Corporation  as lender (the "Assumed
     Debt  Lender")  in  the  original   maximum   indebtedness   obligation  of
     $180,000,000  (the "Assumed Debt"),  plus the payment,  by wire transfer of
     immediately available U.S. funds, in an amount equal to difference between:
     (a) the Purchase  Price and (b) the then  outstanding  Amortized  Amount as
     defined  and  determined  on the  date  of  Closing  pursuant  to the  Loan
     Agreement for the Assumed Debt (together with all other outstanding amounts
     then due and payable  under the documents and  instruments  evidencing  and
     securing  the Assumed Debt (such  documents  and  instruments,  as the same
     heretofore  may have been  amended,  restated or  otherwise  modified,  are
     hereinafter collectively referred to as the "Assumed Debt Documents"),  all
     of the  foregoing  being,  in addition,  subject to proration in accordance
     with Article V.

2.3. Bill of Sale. At the Closing,  Seller shall assign and transfer to Buyer as
     of the Closing Date, without any additional  consideration therefor, all of
     its right,  title and  interest,  if any, in and to the Personal  Property,
     pursuant to a bill of sale.

2.4. Assignment  and Assumption of Leases.  At the Closing,  Seller shall assign
     and  transfer  to Buyer and Buyer  shall  assume  as of the  Closing  Date,
     without any additional  consideration therefor, all of its right, title and
     interest  in  and to the  Tenant  Leases,  pursuant  to an  Assignment  and
     Assumption of Leases between Seller and Buyer.

2.5. Assignment of Warranties,  Permits and Intangible Property. At the Closing,
     Seller shall assign and transfer to Buyer as of the Closing  Date,  without
     any  additional  consideration  therefor,  all  of  its  right,  title  and
     interest,  if any, in and to: (i) all  warranties  and guaranties in effect
     with respect to the Property; (ii) all licenses and permits required of the
     owner of the Property to operate the  Property to the extent  transferable;
     and (iii) the Intangible Property, pursuant to an Assignment of Warranties,
     Permits and Intangible Property from Seller to Buyer.

2.6. Assignment and Assumption of Contracts. At the Closing, Seller shall assign
     and  transfer  to Buyer and Buyer  shall  assume  as of the  Closing  Date,
     without any additional  consideration therefor, all of its right, title and
     interest,  if any, in and to the Contracts Being Assumed,  if any, from and
     after the Closing Date,  pursuant to an Assignment and  Assumption  between
     Seller and Buyer.

2.7. Assignment of Environmental Agreements. At the Closing, Seller shall assign
     and  transfer  to Buyer as of the  Closing  Date,  without  any  additional
     consideration  therefor,  all of its right title and interest in and to the
     Environmental  Agreements,  pursuant  to  an  Assignment  of  Environmental
     Agreements  between  Seller  and  Buyer.  In  addition,  at or prior to the
     Closing  Date,  Seller shall  deliver  evidence to Buyer that Buyer will be
     named  as an  additional  insured  on the  Environmental  Insurance  Policy
     effective as of the Closing Date.

2.8. Purchase Price Allocation.  Seller and Buyer agree to allocate the Purchase
     Price for the  Property  among the assets  comprising  same as set forth on
     Exhibit E.

III.    Conditions

3.1. Agreement  to Treat  Information  Confidentially.  Buyer and Seller  hereby
     covenant  and agree that,  except as required  by law  (including,  without
     limitation,  any SEC  requirements),  they will not  disclose the terms and
     conditions of this Agreement  (including,  but not limited to, the Purchase
     Price) or any of the information  delivered by Buyer or Seller hereunder to
     any other person or entity without  obtaining the prior written  consent of
     the  other  party  hereto  to  such  disclosure  (such  consent  not  to be
     unreasonably  withheld).  Notwithstanding  the foregoing,  Seller and Buyer
     acknowledge and agree that certain  disclosures to (i) their counsel,  (ii)
     CapMark Services,  L.P. (in its capacity as Servicer under the Assumed Debt
     Documents),  (iii)  Sutherland  Asbill & Brennan  LLP (in its  capacity  as
     counsel to CapMark  Services,  L.P.),  (iv)  consultants and (v) certain of
     their  other  agents  as  will be  necessary  in  order  to  perform  their
     respective obligations under this Agreement.

3.2. Conditions.  Anything  to  the  contrary  herein  notwithstanding,  Buyer's
     obligation to purchase the Property shall be expressly conditioned upon the
     fulfillment of each of the following  conditions  precedent  (collectively,
     the "Buyer's Conditions Precedent") on or before the Closing Date:

(a)  Buyer  shall  have  received  surveys,  title  commitments,  and such other
     property  documents,   as  Buyer  shall  have  reasonably  required  to  be
     delivered;
(b)  Seller shall have delivered tenant estoppel certificates or
     reliance letters from such Tenants as Buyer shall have required;

(c)  Without  duplication of Section 3.2(b) hereof,  Seller shall have delivered
     estoppel   certificates  from  such  parties  to  reciprocal  easement  and
     operating agreements affecting any portion of the Property,  as Buyer shall
     have reasonably required;

(d)  Buyer shall have  received  such  written  approvals of the transfer of the
     Property  from such  governmental  authorities  as may be required for such
     transfer  and  continued  use and  operation  thereof  by Buyer  (including
     without  limitation,  the consent of the Industrial  Development  Agency of
     Seneca County);

(e)  Seller shall have delivered (i) if there is a third party property manager,
     a final lien  waiver  from the  property  manager  for each  portion of the
     Property  or  (ii)  if  there  is  no  third  party  property  manager,   a
     certification whereby Seller represents and warrants to Buyer that there is
     no third party property manager for each portion of the Property;

(f)  As of the Closing Date, Seller shall not have commenced (within the meaning
     of any Bankruptcy  Law) a voluntary  case, nor shall any  involuntary  case
     have been commenced against Seller,  nor shall Seller have consented to the
     appointment of a Custodian of it or for all or any substantial  part of its
     property, nor shall a court of competent jurisdiction have entered an order
     or decree under any  Bankruptcy Law that is for relief against Seller in an
     involuntary  case or which  appoints a  Custodian  of Seller for all or any
     substantial part of its property. The term "Bankruptcy Law" means Title 11,
     U.S.  Code, or any similar  federal or state law for the relief of debtors.
     The term "Custodian" means any receiver,  trustee, assignee,  liquidator or
     similar official under any Bankruptcy Law;

(g)  On the Closing  Date, no action or  proceeding  shall have been  instituted
     before any court or governmental authority by any governmental authority or
     third party that seeks to restrain or  prohibit,  or to obtain  substantial
     damages  in  respect  of, or which is  related  to or arises  out of,  this
     Agreement, the consummation of the transactions contemplated herein, or any
     obligations  of Seller  with  respect to the  Property  except as listed on
     Exhibit I hereto;

(h)  On the Closing  Date,  Seller's  title to the Land and  Buildings  shall be
     marketable,  good  of  record  and in  fact,  and  free  and  clear  of all
     mortgages,  liens,  encumbrances,  easements,  leases, conditions and other
     matters  affecting  title other than those  exceptions to title  reasonably
     acceptable to Buyer (the "Permitted Exceptions"), the Tenant Leases and the
     liens and  encumbrances  related to the Assumed Debt,  and Buyer shall have
     received  the  binding  commitment  of the Title  Company  to issue a title
     policy  reasonably  acceptable  to Buyer (the "Owner  Title  Policy") in at
     least the amount of the Purchase Price;

(i)  On  the  Closing  Date,  Seller  shall  not be in  violation  of any of its
     covenants  hereunder,  and  all of the  representations  set  forth  herein
     (including, without limitation, those set forth in Article IV hereof) shall
     be true and correct in all respects;

(j)  Buyer shall have received: (i) such consents and approvals from the Assumed
     Debt Lender as may be required by Buyer; (ii) an estoppel  certificate from
     the Assumed Debt Lender,  as may be required by Buyer; and (iii) such other
     documents  and  instruments  with respect to the  assumption of the Assumed
     Debt from Seller to Buyer as may be required by Buyer;

(k)  Buyer shall have received:  (i) such  assignment  documents with respect to
     the  Ground  Leases  as may be  reasonably  required  by  Buyer;  (ii) such
     consents and approvals from the Ground Lessors as may be required by Buyer;
     (iii) an estoppel  certificate from the Ground Lessors,  as may be required
     by Buyer and consistent with the terms of the Ground Leases;

(l)  Seller and Buyer shall have executed and delivered,  without condition, all
     documents and  instruments  with respect to that certain loan in the amount
     of approximately $90,000,000 (the "Prime Loan Documents") from Buyer (or an
     affiliate  thereof)  to Seller (or an  affiliate  thereof),  such loan (the
     "Prime Loan") shall have been consummated contemporaneously herewith;

(m)  On or before the Closing Date, Seller shall have acquired the Gilroy Ground
     Lessor's  fee  simple  interest  in the  property  commonly  known as Prime
     Outlets  at  Gilroy  (the  "Gilroy   Property")  on  terms  and  conditions
     satisfactory to Buyer;

(n)  Buyer shall have received  satisfactory evidence from Seller and the Gilroy
     Ground Lessor that: (i) the Gilroy Ground Lease has been  terminated,  (ii)
     the  outstanding  lawsuit filed by the Gilroy Ground Lessor  against Seller
     has been dismissed with  prejudice,  and (iii) the Gilroy Ground Lessor has
     executed a release, in form and substance  satisfactory to Buyer, releasing
     Buyer and Seller from any  liability in  connection  with the Gilroy Ground
     Lease; and

(o)  Buyer shall have received:  (i) such assignment  documents from Seller with
     respect to Environmental Agreements as may be reasonably required by Buyer;
     and (ii) evidence that an endorsement naming F/C Kittery Development LLC as
     an additional insured will be issued by the insurance company providing the
     Environmental  Insurance Policy which  endorsement shall be effective as of
     the Closing Date.

3.3. Seller's  Conditions.

Anything to the contrary herein notwithstanding, Seller's obligation to sell the
Property  shall be expressly  conditioned  upon the  fulfillment  of each of the
following   conditions   precedent   (collectively,   the  "Seller's  Conditions
Precedent") on or before the Closing Date:

(a) Buyer shall have  received  such  written  approvals  of the transfer of the
Property from such governmental authorities as may be required for such transfer
and continued used and operation thereof by Buyer (including without limitation,
the consent of the Industrial Development Agency of Seneca County);

(b)  Seller and its parent  entities shall have been released from all liability
     under the Assumed Debt Documents accruing from and after the Closing Date;

(c)  Seller shall have received such  consents,  approvals and releases from the
     Ground Lessors as may be reasonably required by Seller;

(d)  Seller and Buyer shall have executed and delivered without  condition,  all
     of the Prime Loan Documents;

(e)  On or before the Closing Date, Seller shall have acquired the Gilroy Ground
     Lessor's fee simple interest in the Gilroy Property; and

(f)  Seller shall have  received  satisfactory  evidence  from the Gilroy Ground
     Lessor  that:  (i) the Gilroy  Ground Lease has been  terminated,  (ii) the
     outstanding  lawsuit filed by the Gilroy Ground Lessor  against  Seller has
     been  dismissed  with  prejudice,  and (iii) the Gilroy  Ground  Lessor has
     executed a release, in form and substance satisfactory to Seller, releasing
     Buyer and Seller from any  liability in  connection  with the Gilroy Ground
     Lease.

IV.  COVENANTS, REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS

4.1. Seller's   Representations,   Warranties  and   Covenants.   Seller  hereby
     represents, warrants and covenants the following, as of the date hereof:

(a)  Seller  represents  and  warrants  that,  except as  indicated on Exhibit J
     hereto, it has kept, observed and performed all of the material obligations
     to be performed  on a timely  basis by Seller as landlord  under the Tenant
     Leases,  as ground lessee under the Ground Leases and,  except as otherwise
     set forth  herein,  under the Gilroy Ground  Lease,  as borrower  under the
     Assumed  Debt  Documents  and as owner  under the  Assumed  Contracts.  All
     individual  repair  or  maintenance  work  orders  for  individual  tenants
     required  under written  agreements  made by Seller with the tenants (other
     than  their  respective   Leases)  and  all  tenant  improvement  costs  in
     connection with the Leases,  which Buyer has agreed to assume are set forth
     in Exhibit F attached hereto (the "Assumed Tenant  Improvement  Costs") and
     Buyer shall receive a credit against the Purchase Price for such amounts.

(b)  Seller  represents and warrants that it has not entered into any written or
     oral service, management, maintenance or real estate commission contract or
     any  other  agreement  affecting  the  Property  that  has not  been  fully
     performed  and  paid  by  Seller  except  as  indicated  on  Exhibit  K, or
     terminated by Seller (without cost to Buyer) on or before the Closing Date,
     other than Contracts Being Assumed.

(c)  Seller covenants that for a period of two (2) years after the Closing Date,
     on Buyer's request and with reasonable notice, Seller shall make all of its
     records relating to the Property available to Buyer for inspection, copying
     and  audit by  Buyer's  outside  accountants,  provided  that  Buyer  shall
     reimburse  Seller for its reasonable  out of pocket  expenses in connection
     therewith.

(d)  Seller  represents and warrants that it has not sold,  assigned or conveyed
     any right,  title or interest  whatsoever in or to the Property (other than
     the Tenant Leases, Ground Leases and the Assumed Contracts),  and no liens,
     security interests, easements, encumbrances, charges (other than charges to
     be adjusted or paid at Closing) or title conditions affecting the Property,
     other  than the  Permitted  Exceptions  and  other  than  those  liens  and
     encumbrances relating to the Assumed Debt, exist with respect thereto.

(e)  Seller  represents  and warrants that it has not entered into,  terminated,
     altered,  amended or otherwise  modified,  supplemented  or granted consent
     under any of the Ground Leases,  except as otherwise  disclosed to Buyer in
     writing.

(f)  Seller  represents  and  warrants  that it has not entered  into,  altered,
     amended or otherwise modified, supplemented or granted consent under any of
     the Assumed  Debt  Documents,  except as  otherwise  disclosed  to Buyer in
     writing.

(g)  Due organization. Seller is duly organized and existing, has the full right
     and  authority  to enter  into  this  Agreement  and  consummate  the sale,
     transfer  and  assignment  contemplated  herein,  and the person or persons
     signatory to this Agreement and any document  executed  pursuant  hereto on
     behalf of Seller have full power and  authority to bind Seller.  No consent
     from any third party is  required  before the  Property  may be conveyed to
     Buyer  (other than the consent of the holder of the Assumed  Debt,  and the
     Ground Lessors under the Ground Leases).

(h)  Bankruptcy.  Seller has not commenced (within the meaning of any Bankruptcy
     Law) a  voluntary  case,  nor has there been  commenced  against  Seller an
     involuntary  case,  nor  has  Seller  consented  to  the  appointment  of a
     Custodian of it or for all or any substantial part of its property, nor has
     a court of  competent  jurisdiction  entered  an order or decree  under any
     Bankruptcy Law that is for relief against Seller in an involuntary  case or
     appointed  a  Custodian  of Seller for all or any  substantial  part of its
     property.

(i)  Watertight.  All  roofing  reports  prepared by Seller,  Seller's  property
     manager or maintenance staff or, to the extent in Seller's  possession,  by
     Seller's consultants, vendors or suppliers have been delivered to Buyer.

(j)  HVAC. All material written Tenant  complaints (which have not been cured or
     otherwise  satisfactorily  resolved  with such Tenant)  regarding  the HVAC
     system, including without limitation temperature regulation,  noise, fumes,
     odors or indoor air quality have been  disclosed  to Buyer.  Buyer has been
     given all preventive  maintenance  reports and  recommended  repair reports
     prepared  by  Seller or  Seller's  maintenance  staff  or,  if in  Seller's
     possession,  prepared  by  Seller's  consultants,   equipment  vendors,  or
     suppliers.

(k)  Utilities.  Seller  has not  received  written  notice  of any  pending  or
     threatened reduction or elimination of any utility service.

(l)  Tenant  Complaints.  All material written Tenant complaints (which have not
     been cured or otherwise satisfactorily resolved with such Tenant) regarding
     the Buildings known to Seller have been disclosed to Buyer.

(m)  No Insurance or Fire Code  Violations.  Seller has not received any written
     notices from any insurance company or board of fire  underwriters  alleging
     any defects or inadequacies in the Property or any part thereof.

(n)  Leasing Commissions.  All leasing commissions or referral fees attributable
     to the primary term of all Tenant Leases have been or will, by Closing,  be
     paid in full.  No  brokerage  or  similar  fee shall be due or  payable  on
     account of the exercise of, without limitation,  any renewal,  extension or
     expansion  options arising under any Tenant Leases,  except for the Leasing
     Commissions Being Assumed.

(o)  Contracts.  Seller has  heretofore  delivered  to Buyer  true,  correct and
     complete copies of all of the Contracts (including all amendments thereto).
     Except  for  the  Contracts  Being  Assumed,  there  exist  no  management,
     maintenance,  operating,  service,  commission or other  similar  contracts
     affecting  the  Property  which will  survive the Closing and be binding on
     Buyer.  All such Contracts not  constituting  Contracts  Being Assumed have
     been canceled by Seller as of the Closing Date without penalty or liability
     to Buyer or will  remain the sole  responsibility  of Seller.  No  material
     default or breach  exists on the part of Seller or any  service  contractor
     under any Contract Being Assumed,  except as set forth on Exhibit L. Seller
     shall use commercially  reasonable  efforts to obtain any consents required
     from the  applicable  contract  parties with respect to the  assignment  to
     Buyer of each  Contract  Being  Assumed and if any such  consent  cannot be
     obtained and the applicable contracting party refuses to perform for Buyer,
     then Seller  shall  remain  liable for such  contract  and with  respect to
     Contracts  covering  motor  vehicles  shall be  entitled  to retain or have
     returned to Seller any motor vehicles covered by such Contract.

(p)  Unpaid  Bills.  All bills and  claims for water and sewer  service  and for
     labor  performed  or  materials  furnished  to or for  the  benefit  of the
     Property,  or  assessments  for street or other  improvements  or any other
     service or labor which could give rise to a lien for the period on or prior
     to the Closing Date have been paid in full on or prior to the Closing Date.
     There are no liens for unpaid water and sewer service  charges,  mechanics'
     or materialmen's liens,  brokers' liens, or assessments for street or other
     improvements  or for any other  service or labor which could give rise to a
     lien (whether or not  perfected)  on or affecting the Property,  except for
     the Permitted Exceptions and the liens relating to the Assumed Debt.

(q)  Compliance  with Other  Agreements.  Except as to those  matters  for which
     consents are to be sought pursuant to the provisions  hereof,  neither this
     Agreement nor anything  provided to be done hereunder,  including,  without
     limitation, the transfer,  assignment and sale of the Property violates any
     written or oral contract,  agreement or instrument  which affects Seller or
     the  Property or any part  thereof  and which will become  binding on Buyer
     after the Closing Date.

(r)  Property  Documents.  Seller has  delivered  all books,  records,  reports,
     correspondence, engineering or other studies or information known to Seller
     relevant to the  construction,  maintenance,  leasing or  operation  of the
     Property, to the extent same are in Seller's possession.

(s)  Statements Not  Misleading.  None of the  representations  or warranties in
     this Agreement, nor any schedule attached hereto nor, to Seller's knowledge
     any  document,  certificate  or other  information  prepared  by Seller and
     furnished  to Buyer  (excluding,  however,  information  prepared by Seller
     relating  to  tenant  leases  and rents and  financial  performance  of the
     Property, but included in this representation are the Leases themselves and
     the final  Rent Rolls  delivered  by Seller  attached  as Exhibit B and the
     operating  statements referred to in Section 4.1(u) below) pursuant to this
     Agreement  or in  connection  with the  transactions  contemplated  herein,
     contains,  any untrue  statement  of a material  fact or omits,  to state a
     material fact necessary to make the statements of facts  contained  therein
     not misleading.

(t)  Litigation.  There are no actions or proceedings pending in which Seller is
     a named party or are, to the best of Seller's knowledge, threatened against
     Seller  or the  Property  before  any  court or  administrative  agency  or
     arbitrator or mediator,  which do or will materially  adversely  affect the
     Property, except as disclosed on Exhibit G attached hereto.

(u)  Operating  Statements.  Seller has  delivered  to Buyer  true,  correct and
     complete  copies of those  operating  statements  dated  September 30, 2000
     relating to the Property required by Buyer.

(v)  Taxes.  Seller has paid or, at Closing  will pay, all of its ad valorem tax
     obligations  or  liabilities  pertaining to the Property which are then due
     and payable.  There are no state tax  liabilities of any kind applicable to
     Seller or the Property accrued, due and payable on or before Closing.

(w)  Use and Operation. To Seller's knowledge,  the present use and operation of
     the Property as retail shopping  centers is authorized by and in compliance
     with all applicable zoning and land-use  requirements and restrictions.  To
     Seller's  knowledge,  no portion of the  Property has been  constructed  on
     property formerly or currently used as a cemetery or, burial grounds.  True
     and complete  copies of all licenses,  permits and  certificates  issued in
     connection  with the use and  operation of the Property (to the extent same
     are in Seller's  possession)  are annexed  hereto as Exhibit M. To Seller's
     knowledge,  no default has occurred in the due  observance of any condition
     to any license,  permit or  certificate  relating to the  Property,  nor is
     there lacking any license,  permit or certificate needed in connection with
     the ownership or operation of the Property.  To Seller's  knowledge,  valid
     permanent  certificates of occupancy have been issued for the Buildings and
     remain in full force and effect.  To Seller's  knowledge  the parking lots,
     garages  and  decks  located  on the Land are in full  compliance  with all
     applicable Laws, except as disclosed in the engineering reports provided by
     Seller to Buyer.

(x)  Streets;  Eminent  Domain.  Except as set forth on  Exhibit  R,  Seller has
     received  no notice of any  existing,  proposed  or  contemplated  plans to
     widen, modify or realign any street or highway, or any existing or proposed
     or contemplated  eminent domain proceedings which would affect the Property
     in any way whatsoever,  or the present use, size,  alignment or location of
     any streets  adjacent to the Property,  or any planned public  improvements
     which may be constructed on the surface of or underneath the streets in the
     vicinity of the Buildings.

(y)  No  Violations.  Seller has received no notice from any  federal,  state or
     local  governmental  authority of any  violation or  investigation  into an
     alleged violation, of any Laws, affecting the Buildings or the Property (or
     any portion thereof).

(z)  No Other  Commitments.  Except as set forth on  Exhibit  R,  Seller has not
     made,  and to the  best of  Seller's  knowledge,  no one  else has made any
     commitments to or agreements with any federal,  state or local governmental
     authority or agency affecting the Property which have not been disclosed to
     Buyer in writing.

(aa) ADA Compliance.  Seller has delivered to Buyer all surveys  performed by or
     on behalf  of Seller to  determine  compliance  of the  Buildings  with the
     Americans With  Disabilities Act of 1990, as amended  ("ADA").  To Seller's
     knowledge no notices or complaints  involving any violation of the ADA have
     been filed and Seller is not aware of and has not  received nor been served
     with any  notice,  complaint  or service  involving  any ADA  complaint  or
     violation at the Buildings,  whether such complaint or violation is alleged
     or was filed against Seller or, to Seller's knowledge, against any Tenant.

(bb) Environmental. Seller has delivered to Buyer true and correct copies of all
     environmental  reports and environmental site assessments prepared by or on
     behalf  of  Seller  (or in  Seller's  possession)  in  connection  with the
     Property and copies of all  information  in its  possession  regarding  the
     adjoining  NIPSCO property at Michigan City.  Except as disclosed to Buyer,
     Seller has not received any written  complaint,  order,  citation or notice
     with regard to air emissions,  water  discharges,  noise emissions,  or the
     release or threatened release of any Hazardous  Materials,  or with respect
     to  any  other  environmental,  health  or  safety  matters  affecting  the
     Property,  or any part  thereof,  and except as disclosed to Buyer,  has no
     notice of any such air  emissions,  water  discharges,  noise  emissions or
     Hazardous Materials in, on, over, under or adjacent to the Property. Seller
     has not filed any notice under any federal or state law indicating  past or
     present  treatment,  storage or disposal of any  Hazardous  Material on the
     Property,  or into the indoor or outdoor  environment of the Property.  The
     foregoing  representations  and  warranties  do not cover the  presence  of
     Excluded Materials  (hereafter  defined) from whatever the source on, in or
     under  the  Property.   "Excluded   Materials"  shall  mean  (x)  Hazardous
     Materials,  other than asbestos containing materials,  which may be present
     in  lawful  amounts  and  stored  in  accordance  with  applicable  Laws as
     components of paints (excluding lead-based paints), glues, fuels, photocopy
     equipment supplies,  janitorial  supplies,  cleaning agents and solvents in
     quantities commonly stored,  found or maintained for similar uses in retail
     shopping  centers  similar  to the  Buildings,  and (y)  mastic  containing
     asbestos  and  asbestos  containing  materials  in floor  tile that are not
     friable.

(cc) Personal  Property.  The  Personal  Property is free and clear of liens and
     encumbrances other than the Permitted Exceptions and liens and encumbrances
     relating  to the  Assumed  Debt and those  equipment  leases and  equipment
     financing  security  interests  constituting part of the Assumed Contracts.
     There is no personal  property,  including  without  limitation  furniture,
     fixtures or supplies, owned by Seller and used by Seller on a substantially
     exclusive  basis in  connection  with the use and operation of the Property
     except for the Personal  Property and those items  expressly  excluded from
     the Property hereunder.  Seller covenants that any such additional personal
     property  discovered by Buyer or Seller after Closing shall be  transferred
     to Buyer at no  additional  cost  hereunder  free and  clear of all  liens,
     claims and encumbrances  other than the Permitted  Exceptions and liens and
     encumbrances  relating to the Assumed Debt and those  equipment  leases and
     equipment  financing  security  interests  constituting part of the Assumed
     Contracts.

(dd) Tenant  Leases.  All  existing  Tenant  Leases are listed in the Rent Roll.
     Seller has delivered,  prior to the date hereof, to Buyer true and complete
     copies of all Tenant Leases  including,  but not limited to all  amendments
     and notices of  commencement  and renewal  and all  correspondence  related
     thereto, with the exception of that certain lease with Motherhood Maternity
     at  the  Finger  Lakes  Property.  The  Rent  Roll  is  accurate  as to the
     information  set forth therein in all material  respects as of the date set
     forth therein.  Except as set forth in the Rent Roll and the Tenant Leases,
     Seller has not  entered  into any oral or written  Tenant  Leases,  nor has
     Seller given any person (other than the Tenants named in the Rent Roll) any
     right of possession  to the Property or any part thereof,  and there are no
     other  Tenant  Leases or rights of  possession.  Except as set forth in the
     Rent Roll and the Tenant  Leases,  Seller has not given any  concessions of
     any kind or character (including, without limitation, free or reduced rent,
     free or reduced parking, buy-out, finish out, moving, refurbishment, Tenant
     equity in the Property,  cash payments to Tenants,  lease  assumptions  and
     other concessions or allowances  granted to induce a Tenant to enter into a
     lease, or expand or renew a lease,  (collectively,  "Concessions"))  to any
     Tenant.  No rent  under  any  Tenant  Lease has been paid more than one (1)
     month in advance by any Tenant. No Tenant has made any claim against Seller
     for any security deposits or other deposits (which has not been satisfied),
     and,  except as set forth in Exhibit B, no Tenant has any defense or offset
     to rent accruing after the Closing Date. The Tenant Leases described in the
     Rent Roll are in full force and effect  (except as to Tenants in bankruptcy
     who may assume or reject such Tenant  Leases)  and,  except as set forth on
     the Rent Roll,  no breach exists in the payment of rents except as shown on
     the Rent Roll,  no other default or breach exists on the part of any Tenant
     thereunder  except as  disclosed to Buyer in writing or  identified  on the
     Rent Roll,  and except as set forth in Exhibit B,  Seller has not  received
     any  notice  of any  alleged  default  or  breach  on the  part  of  Seller
     thereunder. All Deposits (and a statement as to whether interest is payable
     thereon in accordance  with the terms of the  applicable  Tenant Lease) are
     listed in the Rent Roll.

(ee) Option Conflicts.  To the best of Seller's  knowledge,  no adverse economic
     effect from or conflicts  exist between rights of expansion,  extension and
     first refusal or opportunity held by Tenants, and all such rights have been
     subordinated to the rights of lenders and, to the extent necessary to avoid
     conflict, to superior rights of other Tenants.

(ff) No  Options.  No  commitment,  obligation  or  agreement  relating  to  the
     purchase,  sale or transfer of the Property,  including without  limitation
     any right of first  refusal,  purchase  option or redemption  right,  which
     would or could prevent Seller from  completing the transfer of the Property
     hereunder or which would bind Buyer  subsequent  to the Closing  Date,  has
     been  granted to any Tenant or any other  party  (other than  transfers  of
     leasehold estates under the Tenant Leases and equipment leases constituting
     part of the  Assumed  Contracts).  The right of first  refusal set forth in
     that certain lease dated as of August 16, 1983,  between the predecessor in
     interest to the Kittery Seller, as landlord, and Lenox China, as tenant, is
     no longer in force and effect.

(gg) No  Subleases.  Seller has no  knowledge of any  subleases  or  assignments
     executed on the part of any Tenant that have not been disclosed in the Rent
     Roll other than subleases or assignments  that did not result in the change
     of a trade name.

(hh) Underlying Title Documents.  To Seller's  knowledge,  there are no material
     violations  by any party  under any  restrictions,  easement  or  operating
     agreements,  or similar reciprocal easement or operating  agreements,  with
     respect to any portion of the Property, including, without limitation those
     agreements listed on Exhibit S attached hereto.

(ii) Assumed Debt  Documents.  Seller has delivered  true,  correct and complete
     copies of all of the Assumed  Debt  Documents  and there are no breaches or
     violations  under  any of such  documents  by  Seller  (or  the  applicable
     borrower  thereunder) or the Assumed Debt Lender,  or any conditions which,
     with notice or the passage of time could ripen into a default thereunder.

(jj) Ground Leases.  Seller has delivered  true,  correct and complete copies of
     all of the Ground Leases and there are no breaches or violations  under any
     of such documents by Seller (or the applicable ground lessee thereunder) or
     the Ground Lessor,  or any conditions  which, with notice or the passage of
     time could  ripen into a default  thereunder.  Seller has  delivered  true,
     correct and Complete copies of the Gilroy Ground Lease.

(kk) Labor Issues.  No strikes or other  material labor disputes are pending or,
     to  Seller's  knowledge,  threatened  with  respect  to any  portion of the
     Property.  Seller  is not a  party  to,  or is  bound  by,  any  collective
     bargaining  agreement,  management  agreement,  consulting agreement or any
     employment  agreement.  There  is  no  organizing  activity  involving  the
     employees of Seller pending or, to Seller's knowledge,  threatened,  by any
     labor union or group of employees.  There are no representation proceedings
     pending or, to Seller's  knowledge,  threatened,  with the  National  Labor
     Relations Board, and no labor organization or group of employees has made a
     pending demand for recognition.  There are no complaints or charges against
     Seller pending, or to Seller's knowledge,  threatened to be filed, with any
     governmental   authority  or  arbitrator  based  on,  arising  out  of,  in
     connection with or otherwise  relating to, the employment or termination of
     employment by Seller of any  individual,  except as set forth on Exhibit P.
     All employees  working at the Property (or any portion  thereof) are listed
     on Exhibit N, which  includes for each  employee his or her (i) name,  (ii)
     job  description,  (iii)  salary  and (iv)  date of  employment.  Except as
     described  on  Exhibit  N, no  employee  at the  Property  (or any  portion
     thereof) is covered by a union contract,  collective  bargaining agreement,
     employment agreement, deferred compensation agreement or other agreement of
     any kind.  Exhibit N also sets  forth a  summary  description  of  Seller's
     existing employment policies and practices with respect to vacations,  sick
     days, personal days, bonuses,  raises,  promotions,  discharges,  overtime,
     work  responsibilities,  benefits,  retirement,  severance  pay  and  other
     relevant   matters.   Seller  shall  remain  liable  for  all  accrued  and
     outstanding  vacation time of such  employees to the Closing Date and shall
     pay same to the employee in question promptly after the Closing.

(ll) Insurance  Policies.  All  of  Seller's  insurance  policies  covering  the
     Property,   together  with  the  name,  title  and  phone  numbers  of  all
     appropriate  contacts,  are listed on Exhibit O attached hereto.  No notice
     has been received by Seller from the insurance  company which issued any of
     such  policies  stating that any of such  policies is not in full force and
     effect.

The  representations  and  warranties  set  forth in this Section 4.1: (i) shall
survive the consummation of the transactions contemplated hereby (the "Closing")
for a period of twelve  (12)  months as to the  status of facts as they exist on
the Closing Date, it being understood that Seller makes no  representations  and
warranties  which would apply to changes  occurring after the Closing;  (ii) are
material  and  being  relied  upon by Buyer  (and  Buyer  may  rely on  Seller's
representations and warranties, notwithstanding that Buyer has conducted its own
investigations  and  examinations);  and (iii) is true in all respects as of the
date hereof except as set forth in Exhibit G attached hereto.  The term "Seller"
as used in this  Section 4.1 shall  include the owners of the Property and shall
include  the  managers  (or acting  managers)  of the  Property  if the same are
different from the Seller.

4.2. Breaches of Seller's  Warranties.  If Buyer  discovers any of the foregoing
     representations  and warranties to be materially  incorrect  after Closing,
     Buyer shall have all of its rights and remedies at law or in equity.

4.3. Buyer's  Express  Warranties  and  Covenants.  Buyer hereby  represents and
     warrants to Seller that: (a) Buyer is duly  organized and validly  existing
     under the Laws of the state pursuant to which it was organized,  and Buyer,
     or its assignee taking title to the Property,  is duly  organized,  validly
     existing,  and duly  authorized  to do  business  in the  states  where the
     Property is located as of the Closing; and (b) Buyer has: (i) all requisite
     power and  authority  to (A) own its  property and operate its business and
     (B) enter into this Agreement and consummate the sale contemplated  herein;
     and (ii) by proper  action,  duly  authorized the execution and delivery of
     this Agreement and the consummation of the sale herein contemplated. All of
     Purchaser's  insurance  policies  covering the Property,  together with the
     name,  title and phone numbers of all appropriate  contacts,  are listed on
     Exhibit O. Buyer  covenants that after the Closing Date, no more frequently
     than once every two months and with reasonable notice, Buyer shall make all
     of its  records  relating to the  calculations  and  reconciliation  of the
     adjustments  under Section 5.3 available to Seller for inspection,  copying
     and audit by  Seller's  outside  accountants  provided  that  Seller  shall
     reimburse  Buyer for its  reasonable  out of pocket  expenses in connection
     therewith.  The rights granted  hereunder  shall  terminate with respect to
     those  items to be  adjusted  under  paragraphs  (a),  (c),  (f) and (h) of
     Section 5.3 on July 31, 2001 and with respect to the percentage rents to be
     adjusted under paragraph (b) of Section 5.3 on February 28, 2002.

4.4.   Indemnification and Environmental Matters.

(a)  Seller  agrees to indemnify  Buyer,  its partners,  members,  shareholders,
     officers, directors and employees (the "Indemnitees") from and against, and
     to defend and hold them harmless from and against,  any claim,  loss, cost,
     liability,  damage, expense, fees or fines (including reasonable attorneys'
     fees and costs),  or actions  with  respect  thereto,  only if the same are
     direct  (and not  consequential)  but  regardless  of whether  foreseeable,
     unforeseeable,  past, present or future (collectively,  "Claims"), asserted
     against,  incurred or suffered by Buyer in connection  with,  related to or
     arising from: (i) the acts,  events or omissions of Seller or anyone acting
     by or  through  Seller  occurring  prior  to the  Closing  Date;  (ii)  any
     litigation  instituted (or threatened in writing) prior to the Closing Date
     (including,  without limitation, those litigations referenced on Exhibit G,
     Exhibit I and Exhibit P other than the  Michigan  City title  action) as to
     which  this  Section  4.4  shall  apply;  (iii)  the  breach  of any of the
     covenants set forth herein;  (iv) the Tenant Leases and the  Contracts,  in
     connection with,  arising from or related to, acts,  events or omissions of
     Seller or anyone acting by or through Seller occurring prior to the Closing
     Date; (v) the Assumed Debt, in connection with, arising from or related to,
     acts,  events or omissions  occurring  prior to the Closing Date;  (vi) the
     Ground Leases and the Finger Lakes Pilot  Agreement,  in  connection  with,
     arising from or related to, acts,  events or omissions  occurring  prior to
     the  Closing  Date;   (vii)  the  untruth  or  inaccuracy  of  any  of  the
     representations  and warranties made by Seller in this Agreement (but as to
     this item (vii),  Seller's  obligations  under this  Section  4.4(a)  shall
     survive only for so long as the  representation or warranty  survives);  or
     (viii) the Gilroy  Ground  Lease,  in  connection  with or arising  from or
     related to acts, events or omissions  occurring before or after the Closing
     Date.  Notwithstanding  the foregoing,  nothing contained herein in Section
     4.4 (a) shall require Seller to indemnify any Indemnitee for Claims arising
     as a  result  of  the  gross  negligence  or  willful  misconduct  of  such
     Indemnitee.

(b)  Buyer agrees to indemnify  Seller,  its  partners,  members,  shareholders,
     officers,  directors  and  employees  against  and to defend  and hold them
     harmless from any Claim asserted against, incurred or suffered by Seller in
     connection  with,  related  to or  arising  from (i) the  acts,  events  or
     omissions  of Buyer or anyone  acting by or through  Buyer  occurring on or
     after the Closing Date and related to the Property (other than with respect
     to  Claims  for  which  Buyer is  indemnified  pursuant  to the  provisions
     hereof),  (ii) the breach of any  covenant  of Buyer set forth  herein,  or
     (iii) any liability or  obligation of Buyer first  accruing on or after the
     Closing  Date with  respect to the  ownership  or operation of the Property
     (and  which   would  not   otherwise   constitute   a  breach  of  Seller's
     representations  and warranties  hereunder) and from the Tenant Leases, the
     Assumed Debt,  the Assumed  Contracts and the Ground Leases arising from or
     related to acts,  events or omissions of Buyer occurring from and after the
     Closing Date.  Notwithstanding  the foregoing,  nothing contained herein in
     Section  4.4(b)  shall  require  Buyer to indemnify  any of the  previously
     referenced  parties for Claims arising as a result of the gross  negligence
     or willful misconduct of such party.

(c)  The  obligations  of Seller to pay any amounts which Seller is obligated to
     pay  pursuant  to  Section  4.4(a)  above  shall be the joint  and  several
     obligations of Seller,  Prime Retail, L.P. ("Prime") and Prime Retail, Inc.
     ("Prime Inc.", together with Prime shall collectively be referred to herein
     as the "Prime Guarantor") and Buyer may look to either or both of Seller or
     Prime Guarantor for the satisfaction of such payment obligations.

(d)  The  indemnifications  set forth in this Article IV and set forth elsewhere
     in this  Agreement  shall  survive  the  Closing,  subject  to any  express
     limitations on their survival.

(e)  Seller  will  obtain for Buyer  within 45 days after the  Closing  Date (a)
     environmental  insurance  for a  period  of five  (5)  years  covering  the
     Property  owned by the Kittery  Seller (the  "Kittery  Property")  on terms
     identical in all material respects to the  Environmental  Insurance Policy,
     and (b) environmental insurance covering the Property owned by the Michigan
     City Seller and the Additional Michigan City Property on terms set forth on
     Exhibit T attached  hereto and on such  additional  terms as are reasonably
     approved by Buyer and  customarily  available  for this type of  insurance;
     provided,  however,  if the insurance  company  providing the environmental
     insurance requires Seller to provide a Phase I Environmental Report for the
     Additional Michigan City Property,  Seller shall have an additional 45 days
     to obtain such  environmental  insurance for the  Additional  Michigan City
     Property and the Michigan  City  Property if it is part of the same policy.
     All premiums and costs to obtain the policies will be paid by Seller. Buyer
     will be  responsible  for all  deductibles.  Buyer will fully and  promptly
     cooperate  with Seller's  efforts  including  providing  all  environmental
     reports in Buyer's possession requested by the insurer.  Seller will not be
     required to provide any environmental indemnities.

4.5. Prime's  Representations,  Warranties  and  Covenants.  Prime Retail,  L.P.
     ("Prime") hereby represents, warrants and covenants the following as of the
     date hereof:

(a)  Prime  represents  and warrants that it has not entered into any written or
     oral service, management, maintenance or real estate commission contract or
     any other  agreement  affecting the Additional  Michigan City Property that
     has not been fully  performed  and paid by Prime,  or  terminated  by Prime
     (without cost to Buyer) on or before the Closing Date, other than Contracts
     Being Assumed.

(b)  Prime  represents  and warrants that it has not sold,  assigned or conveyed
     any right,  title or interest  whatsoever in or to the Additional  Michigan
     City Property,  and to Prime's  knowledge,  no liens,  security  interests,
     easements, encumbrances, charges (other than charges to be adjusted or paid
     at Closing) or title  conditions  affecting  the  Additional  Michigan City
     Property, other than the Permitted Exceptions, exist with respect thereto.

(c)  Due organization.  Prime is duly organized and existing, has the full right
     and  authority  to enter  into  this  Agreement  and  consummate  the sale,
     transfer  and  assignment  contemplated  herein,  and the person or persons
     signatory to this Agreement and any document  executed  pursuant  hereto on
     behalf of Prime have full power and  authority  to bind  Prime.  No consent
     from any third  party is  required  before  the  Additional  Michigan  City
     Property may be conveyed to Buyer.

(d)  Bankruptcy.  Seller has not commenced (within the meaning of any Bankruptcy
     Law) a  voluntary  case,  nor has there  been  commenced  against  Prime an
     involuntary case, nor has Prime consented to the appointment of a Custodian
     of it or for all or any substantial  part of its property,  nor has a court
     of competent  jurisdiction  entered an order or decree under any Bankruptcy
     Law that is for relief against Prime in an involuntary  case or appointed a
     Custodian of Prime for all or any substantial part of its property.

(e)  Leases  and  Leasing  Commissions.   There  are  no  leases  affecting  the
     Additional  Michigan City Property and there are no commissions or referral
     fees  attributable to the Additional  Michigan City Property other than the
     Contracts Being Assumed.

(f)  Contracts.  Seller  has  not  entered  into  any  contracts  affecting  the
     Additional Michigan City Property other than the Contracts Being Assumed.

(g)  Unpaid  Bills.  All bills and  claims for water and sewer  service  and for
     labor  performed  or  materials  furnished  to or for  the  benefit  of the
     Additional  Michigan  City  Property,  or  assessments  for street or other
     improvements  or any other service or labor which could give rise to a lien
     for the period on or prior to the Closing Date have been paid in full on or
     prior to the Closing  Date.  There are no liens for unpaid  water and sewer
     service  charges,  mechanics' or  materialmen's  liens,  brokers' liens, or
     assessments  for street or other  improvements  or for any other service or
     labor which  could give rise to a lien  (whether  or not  perfected)  on or
     affecting the Additional Michigan City Property.

(h)  Litigation.  There are no actions or  proceedings  pending  against  Seller
     which do or will materially  adversely affect the Additional  Michigan City
     Property.

(i)  Taxes.  Prime has paid or, at Closing  will pay,  all of its ad valorem tax
     obligations  or  liabilities  pertaining  to the  Additional  Michigan City
     Property which are then due and payable. There are no state tax liabilities
     of any  kind  applicable  to  Prime  that  could  constitute  a lien on the
     Additional  Michigan  City Property  accrued,  due and payable on or before
     Closing.

(j)  Use and Operation. To Seller's knowledge,  the present use and operation of
     the  Additional  Michigan City Property for parking is authorized by and in
     compliance  with  all  applicable  zoning  and land  use  requirements  and
     restrictions.  To Seller's knowledge, no portion of the Additional Michigan
     City Property has been  constructed on property  formerly or currently used
     as cemetery or burial grounds.

(k)  Streets;  Eminent  Domain.  Seller has received no notice of any  existing,
     proposed or  contemplated  plans to widen,  modify or realign any street or
     highway,  or any  existing  or  proposed  or  contemplated  eminent  domain
     proceedings which would affect the Additional Michigan City Property in any
     way  whatsoever,  or the present  use,  size,  alignment or location of any
     streets adjacent to the Additional  Michigan City Property,  or any planned
     public  improvements  which  may  be  constructed  on  the  surface  of  or
     underneath  the streets in the  vicinity of the  Additional  Michigan  City
     Property.

(l)  No  Violations.  Seller has received no notice from any  federal,  state or
     local  governmental  authority of any  violation or  investigation  into an
     alleged  violation,  of any Laws,  affecting the  Additional  Michigan City
     Property.

(m)  No Other  Commitments.  Except as set forth on  Exhibit  R,  Seller has not
     made, and to Seller's knowledge, no one else has made any commitments to or
     agreements  with any  federal,  state or local  governmental  authority  or
     agency affecting the Additional  Michigan City Property which have not been
     disclosed to Buyer in writing.

The  representations  and  warranties  set forth in this  Section 4.5: (i) shall
survive the consummation of the transactions contemplated hereby (the "Closing")
for a period of twelve  (12)  months as to the  status of facts as they exist on
the Closing Date, it being  understood that Prime makes no  representations  and
warranties  which would apply to changes  occurring after the Closing;  (ii) are
material  and  being  relied  upon by  Buyer  (and  Buyer  may  rely on  Prime's
representations and warranties, notwithstanding that Buyer has conducted its own
investigations  and  examinations);  and (iii) is true in all respects as of the
date hereof except as set forth in Exhibit G attached hereto.

4.6. Breaches of Prime's  Warranties.  If Buyer  discovers  any of the foregoing
     representations  and warranties to be materially  incorrect  after Closing,
     Buyer shall have all of its rights and remedies at law or in equity.

V.   TITLE AND CLOSING

5.1. Title. Seller shall cause title to the Land and Buildings to be conveyed to
     Buyer  by one or  more  good  and  sufficient  special  warranty  deeds  or
     assignments,  subject only to the  Permitted  Exceptions  and the liens and
     encumbrances relating to the Assumed Debt.

5.2. Closing.

(a)  At the Closing,  Seller shall deliver or cause to be delivered to the Title
     Company the following  documents,  duly  executed  (and where  appropriate,
     acknowledged  in  accordance  with  Buyer's and  Seller's  written  closing
     instructions):

(i)  Deeds to the Property  and,  where  applicable,  assignments  of the Ground
     Leases;

(ii) The bill of sale;

(iii)The counterpart of the Assignment and Assumption of Leases,  with a current
     rent roll attached thereto;

(iv) The Assignment of Warranties, Permits and Intangible Property;

(v)  The counterpart of the Assignment and Assumption of Contracts;

(vi) A Non-Foreign Affidavit;

(vii)A counterpart of an agreement  (the  "Designation  Agreement")  designating
     the Title Company as the "Reporting Person" for the transaction pursuant to
     Section  6045(e)  of the  Federal  Code  and  the  regulations  promulgated
     thereunder;

(viii) Those Tenant  estoppels and reliance  letters  received from Tenants,  as
       required hereunder;

(ix) The estoppel  certificates from the parties to the reciprocal  easement and
     operating agreements, as required hereunder;

(x)  Copies of notices to each of the Tenants of the Property  advising  them of
     the sale of the Property to Buyer and the transfer of their  Deposits  (the
     "Tenant Notices");

(xi) Any  other  transfer  documents  reasonably  requested  by  Buyer  or Title
     Company,   including,   without  limitation,  any  necessary  environmental
     disclosure  documents  required under  applicable Law as a condition to the
     transfer;

(xii)Reasonable  evidence of the  capacity  and  authority  of Seller to execute
     this  Agreement  and the  documents  required to be executed and  delivered
     hereunder;

(xiii) One or more ALTA extended  coverage  Owner's  Policies of Title Insurance
     Form B issued by the Title Company (and by such  reinsurers and coinsurers,
     in amounts of secondary and tertiary liability,  as Buyer deems acceptable)
     in the  allocated  amount of the Purchase  Price and  otherwise in form and
     substance as may be required by Buyer;

(xiv)Executed  originals of the Tenant Leases,  original sets (or copies) of the
     plan and  specifications  with respect to the  Property,  originals (to the
     extent  available)  of the Assumed Debt  Documents,  and  originals (to the
     extent available) of the Intangible Property;

(xv) UCC-1  searches  of each owner of any portion of the  Property,  showing no
     liens  other than  Permitted  Exceptions  and liens  related to the Assumed
     Debt;

(xvi)  Certified copy of the rent roll for the Property;

(xvii) All keys and master key patterns in the  possession  or control of Seller
       to all locks located in the Property;

(xviii)The consents,  estoppel certificates and other documents and instruments
       required hereunder in connection with the assumption of the Assumed
       Debt;

(xix)The consents,  estoppel  certificates  and other  documents and instruments
     required  hereunder in connection with the assignment and assumption of the
     Ground Leases;

(xx) Such other  documents  or  instruments  as may be  reasonably  required  to
     consummate the transaction  contemplated hereby,  whether required by Buyer
     or the Title Company;

(xxi)Seller's  written  closing  instructions to the Title Company in accordance
     with the terms of this Agreement;

(xxii) Estoppel  Certificate of the Town of Junius Waste Water Disposal District
       #1;

(xxiii)Assignment and Assumption of the Finger Lakes Pilot Agreement;

(xxiv) Reasonable evidence that Buyer has been named as an additional insured on
       the Environmental Insurance Policy;

(xxv)such  other  documents  or  instruments  as may be  required  hereunder  in
     connection with the Gilroy Ground Lease;

(xxvi) the Assignment of Environmental Agreements; and

(xxvii) a Deed from Prime to the Additional Michigan City Property.

(b)  Buyer  shall  (i)  deliver  to  the  Title  Company's  escrow  account  for
     disbursement to pay off all indebtedness presently encumbering the Property
     (other than the Assumed  Debt and the Assumed  Contracts),  to pay Seller's
     closing  costs,  and the balance to be paid to Seller,  in accordance  with
     Buyer's and Seller's written closing  instructions,  immediately  available
     U.S.  funds in the amount of the  Purchase  Price  adjusted as set forth in
     this  Agreement  (the  "Seller's  Funds") and (ii)  deliver  the  following
     documents, duly executed (and, where appropriate, acknowledged):

(i)  A counterpart of the Assignment and Assumption of Leases;

(ii) A counterpart of the Assignment and Assumption of Contracts;

(iii) A counterpart of the Designation Agreement;

(iv) Any other  documents  required to  consummate or otherwise  effectuate  the
     transactions contemplated hereby;

(v)  Reasonable  evidence of Buyer's  capacity and  authority  for executing the
     documents required to be executed by Buyer herein; and

(vi) Buyer's written  closing  instructions in accordance with the terms of this
     Agreement.

(vii) A counterpart of the License Agreement;

(viii)A  counterpart  of the  Assignment  and  Assumption of Finger Lakes Pilot
      Agreement;

(ix) A counterpart of the Assignment of the Finger Lakes Ground Lease;

(x)  A counterpart of the Assignment of the Kittery Ground Lease; and

(xi) A counterpart of the Assignment of Environmental Agreements.

5.3. Prorations and Credits.

(a)  All rentals  (including  all CAM,  tax,  insurance and trash  charges,  but
     excluding all marketing and promotional charges and all percentage rentals)
     and all other  income  related to the  Property  shall be prorated  between
     Seller and Buyer  effective  as of 12:00  midnight  on the day prior to the
     Closing Date (the "Proration  Time") based in the case of December  rentals
     only, on rentals invoiced without regard to amounts actually collected. All
     rentals  received by Seller  prior to the Closing Date for months after the
     Closing Date shall be credited to Buyer at Closing.

(b)  Percentage rentals under each Tenant Lease shall be adjusted between Seller
     and Buyer based on the lease year or other applicable annual period used to
     compute  percentage  rent under the Tenant  Lease (the  "Lease  Year") with
     Seller being  entitled to a fraction of the total  percentage  rent paid by
     the Tenant for the Lease Year  determined by dividing the number of days in
     such Lease Year through the  Proration  Time by the total number of days in
     the Lease Year, with Buyer being entitled to the balance. For instance,  if
     the Proration  Time is midnight on December 21, 2000,  the Lease Year for a
     particular  tenant  expires on January 31, 2001,  and the total  percentage
     rent paid by the Tenant is  $10,000,  Seller  would be entitled to $8876.71
     (314/365 x $10,000).  The adjustment for percentage rentals shall not occur
     on the  Closing  Date,  but shall occur on a Tenant  Lease by Tenant  Lease
     basis promptly  after the percentage  rent is paid as set forth in the post
     closing procedure attached as Exhibit U.

(c)  Promotional  and  marketing  payments  by  Tenants,   and  promotional  and
     marketing expenses for calendar year 2000 shall not be adjusted at Closing.
     Seller shall be solely entitled to all such payments and solely responsible
     for all such expenses.  Instead,  on a Property by Property  basis,  Seller
     shall  credit  Buyer at Closing  with an amount  equal to the excess of the
     promotional  or  marketing  fund  payments   received  by  Buyer  over  the
     promotional or marketing fund expenses paid by Seller for the 2000 calendar
     year (including  carry-forwards).  Buyer  acknowledges  and agrees that the
     amounts credited to Buyer pursuant to this subsection 5.3 (c) shall be used
     for future  promotional  and  marketing  fund  expenses.  Seller  shall not
     receive a credit  if,  as to a  particular  Property,  the  promotional  or
     marketing   fund   expenses   for  the  2000   calendar   year   (including
     carry-forwards)  exceed the promotional or marketing fund charges  received
     for the 2000 calendar  year. The provisions of this paragraph (c) shall not
     apply to the Property owned by the Kittery Seller.

(d)  Rents  payable  under the Ground  Leases  shall be prorated as of Proration
     Time.  All  operating  expenses  (including  utility  charges and  Contract
     charges (but only to the extent same are in connection with Contracts Being
     Assumed),  but excluding all  marketing  and  promotional  expenses for the
     Property  owned by each of the Michigan City Seller,  the Gilroy Seller and
     the Finger Lakes Seller) relating to the Property shall be prorated between
     Seller,  and Buyer as of the Proration  Time.  Seller shall pay in full all
     invoices,  bills and other  obligations  relating to the  Property  for the
     period prior to the Closing Date, regardless of whether the invoices, bills
     and evidences of other  obligations  are received prior to, on or after the
     Closing Date. To the extent  practicable,  utility meters (other than those
     payable directly by Tenants to the public  utilities) shall be read no more
     than one  business  day prior to the Closing  Date.  Seller shall assign to
     Buyer all of Seller's  right,  title and  interest in all utility  security
     deposits and Seller shall receive a credit therefor.

(e)  All Deposits made by Tenants of the Property as security for rent, cleaning
     or any other purpose (whether  identified as refundable or  non-refundable)
     that have not been applied in accordance with the terms of the leases shall
     be paid to Buyer as of the Closing Date, together with, if applicable,  the
     amount of interest  then accrued at the interest  rate payable with respect
     thereto in accordance with the terms of the applicable Tenant Lease. If any
     Deposit is in the form of a letter of credit,  such letter of credit  shall
     be   transferred  by  Seller  to  Buyer  on  the  Closing  Date  if  it  is
     transferable, or if such letter of credit is not transferable, Seller shall
     cause the Tenant to deliver a replacement  letter of credit, or, at Buyer's
     option,  Seller and Buyer shall  execute and deliver on the Closing Date an
     appropriate  agreement  pursuant  to which the  benefits  of such letter of
     credit are made available to Buyer.

(f)  Except for December  rentals as provided above, no prorations shall be made
     for delinquent rentals under the Tenant Leases.  Buyer shall use reasonable
     efforts to collect or attempt to collect  such  rentals  for the benefit of
     Seller  but shall not be  required  to spend more than  nominal  sums or to
     declare a Tenant in default to do so. Buyer agrees, for a period of six (6)
     months  after the  Closing  Date,  to  include in its  billing to  Tenants,
     invoices  for these  delinquent  rents  prepared by Seller and  provided to
     Buyer, and agrees to refer Tenants having questions as to their invoices to
     a designated  contact  person of Seller.  Buyer shall not have the right to
     forgive the  delinquent  rentals.  Seller shall have no right to attempt to
     collect  delinquent  rents (except as  specifically  provided  above) on or
     after the  Closing  Date and shall not  bring (or  threaten  to bring)  any
     actions  against any Tenants with respect  thereto,  except that Seller may
     (i) file and prosecute claims for pre-closing  rents in a Tenant bankruptcy
     and (ii) bring any claim or  counter-claim  relating to pre-closing  events
     against a Tenant that files a legal action against Seller.

     Rents  (exclusive of percentage  rentals)  collected after the Closing Date
shall be  applied  first to  current  rents,  second to rents past due after the
Closing  Date,  and  third  to  rents  past  due  prior  to  the  Closing  Date.
Notwithstanding the forgoing,  as to December  delinquent rentals,  Seller shall
deliver  to Buyer at  Closing a list of such  delinquencies  and any  subsequent
rents  collected  after the Closing  Date and clearly  designated  as payment of
December rentals shall be applied first to December rentals.

(g)  Seller  shall  deliver to Buyer in cash at  Closing an amount  equal to all
     unpaid Leasing Commissions.

(h)  At Closing,  Seller  shall  deposit  with Buyer an amount equal to all 1999
     CAM,  tax,  trash  and  insurance   (collectively,   "Additional  Charges")
     reconciliations  due Tenants under Tenant Leases and not previously paid or
     credited  to Tenants.  The  Additional  Charges  shall be held in escrow by
     Buyer and disbursed in accordance with the provisions of Exhibit V attached
     hereto.  Buyer shall  retain such  credits in escrow and to the extent such
     credit is not claimed by a Tenant,  shall remit such amount back to Seller.
     Seller shall  prepare  reconciliations  for calendar  year 2000  Additional
     Charges paid by tenants under the Tenant Leases, and Buyer shall provide to
     Seller  information as to all such expenses of Buyer includible  therein in
     sufficient  time to allow  Seller  to  prepare  the  reconciliations.  Once
     approved,  Buyer shall  promptly  send  reconciliations  to the Tenants and
     invoice  all  tenants  for any  shortages  in  payments  of the  Additional
     Charges.  Promptly after approval thereof by Buyer,  Seller shall reimburse
     Buyer for any overpayments of Additional Charges attributable to the period
     of Seller's ownership under the Tenant Leases (such that, after taking into
     account the  prorations  elsewhere in this Section 5.3,  neither Seller nor
     Buyer shall have retained  Additional Charges in excess of what each spent.
     Similarly, Buyer shall reimburse Seller promptly after receipt of same from
     Tenants for any shortages  attributable to the period of Seller's ownership
     to the extent  Buyer  receives  reimbursement  from  Tenants  under  Tenant
     Leases.

(i)  All general and  special  real  property,  personal  property  and other ad
     valorem taxes and assessments  for the Property and all other  governmental
     taxes,  fees,  charges and  assessments  affecting the Property or any part
     thereof  (including  sewer  assessments and Pilot payments at Finger Lakes)
     shall be prorated as of the Proration Time, on the basis of the most recent
     reliable  information  available (which, in the case of real property taxes
     and  assessments,  shall  be  the  most  current  real  property  tax  bill
     available).  Buyer shall receive a credit in an amount equal to all of such
     taxes  which are either due and  payable  as of the  Closing  Date (and are
     unpaid) or are accrued  but are not yet due and  payable  and Seller  shall
     receive a credit in an amount  equal to all such  taxes  paid by Seller for
     periods after the Proration Time.

     All  special  taxes or  assessments  which are  levied or  assessed  by any
governmental  authority  on or before the Closing  Date shall be paid by Seller,
regardless of whether such  installments are due subsequent to the Closing Date.
Seller shall remain solely  responsible  for and shall promptly pay before their
due  dates  all  real  property  taxes  and  assessments   (including,   without
limitation,  supplemental  or escaped  assessments)  relating or attributable to
periods  prior to the Closing  Date,  regardless of when notice of such taxes or
assessments is received or who receives the notice.

(j)  Under the Assumed Debt  Documents,  escrows are  maintained  by the Assumed
     Debt  Lender  for (i) taxes  and  insurance,  (ii)  ground  lease  payments
     (including under the Gilroy Ground Lease) (iii) deferred  maintenance,  and
     (iv) capital  reserves.  At Closing,  Seller shall receive a credit for the
     amounts in the tax and insurance  escrow and the ground lease  escrow,  but
     shall not  receive a credit  for the  deferred  maintenance  escrow and the
     capital reserve escrow.

     After  Closing,  Seller  shall  have the  right  to  prepare  requests  for
reimbursement  from the deferred  maintenance  escrow for those amounts shown as
having  been  completed  on Exhibit W hereto,  which  requests  Buyer  agrees to
promptly  forward to the Assumed Debt Lender.  Any sums  released by the Assumed
Debt Lender for such  requests  shall be promptly paid to Seller upon receipt by
Buyer.  After Buyer completes the remaining work required under the Assumed Debt
Documents to be performed in connection with the deferred maintenance escrow and
receives reimbursement for the costs it incurred in performing such work, if any
additional funds remain in the deferred  maintenance escrow, Buyer shall request
the  release of such  excess  funds from the  escrow  and when  received,  shall
promptly pay such excess funds to Seller.

     After  Closing,  Seller  shall  have the  right  to  prepare  requests  for
reimbursement of capital  expenses paid by Seller and not previously  reimbursed
from the capital reserve escrow,  which request Buyer agrees to promptly forward
to the Assumed  Debt  Lender.  Any sums  released by the Assumed Debt Lender for
such requests shall be promptly paid to Seller upon receipt by Buyer.

(k)  On or before March 31, 2000,  Seller shall prepare a final  reproration  of
     all amounts to be adjusted  under  paragraphs  (a),  (c), (d), (e), and (g)
     hereof and submit same to Buyer for approval.  Promptly  after  approval by
     Buyer,  Seller shall pay to Buyer or Buyer shall pay to Seller, as the case
     may be, any  amounts  required to be  readjusted  by such  reproration.  No
     further reproration shall be made for such items thereafter.

(l)  All gift  certificates  issued by Seller prior to Closing  shall remain the
     sole  responsibility  of  Seller,  and  Seller  agrees  to honor  such gift
     certificates  for so long as they  remain  effective.  Notwithstanding  any
     contrary  provisions of this Agreement,  Seller shall retain  ownership of,
     and shall remove from the Property, all current gift certificates,  and the
     printers,  credit card processors and Compaq computers dedicated to issuing
     gift certificates.

(m)  Seller  and  Buyer  shall  implement  the  provisions  of this  section  by
     following the post closing adjustment procedure identified in Exhibit U.

5.4. Closing  Costs.  Seller shall pay the cost of all transfer,  conveyance and
     recordation  taxes whatsoever  imposed by any  governmental  authority upon
     this  transaction,   all  title  insurance  premiums  (including,   without
     limitation,  all  applicable  endorsements)  for the Owner title policy and
     related  survey  costs,  recording  fees and Title  Company  fees for title
     examination  and escrow.  All other normal and  customary  costs of closing
     (including,  without limitation,  (i) engineering  inspections and reports,
     (ii) one-half of any expenses  incurred by Ernst & Young in connection with
     the preparation of audited financial  statements for the Property for 2000,
     as required under the Assumed Debt Documents,  and (iii) Buyer's attorneys'
     fees shall be borne by Seller.

5.5. Possession.  Right to possession of the Property shall transfer to Buyer on
     the Closing  Date.  Promptly  following  Closing,  Seller shall deliver the
     Tenant  Notices to all  Tenants,  and shall  notify all  parties  with whom
     Seller  has  Contracts  Being  Assumed  of the  transfer  of the  Property.
     Notwithstanding the forgoing, Prime Retail L.P. shall be entitled to retain
     possession of its existing  regional  management  office at Gilroy through,
     and only through, January 31, 2001.

5.6. Leasing Commissions.  At Closing,  Buyer shall assume the obligation to pay
     the Leasing  Commissions Being Assumed.  Any other  commission,  listing or
     referral  fees  existing  at Closing  and not paid or credited by Seller to
     Buyer at Closing shall be paid or discharged  by Seller;  such  obligations
     shall survive the Closing.

VI.  COMMISSIONS

6.1. Brokerage  Commissions  and Finder's  Fees.  Seller hereby  represents  and
     warrants  to Buyer  that it has not dealt  with any  broker,  finder or any
     other similar  person in connection  with the sale of the Property.  Seller
     hereby indemnifies the Indemnitees for any Claim related to a breach of the
     foregoing representation and warranty. Buyer hereby represents and warrants
     to  Seller  that it has not  dealt  with any  broker,  finder  or any other
     similar  person in  connection  with the  purchase of the  Property.  Buyer
     hereby  indemnifies  Seller  for  any  Claim  related  to a  breach  of the
     foregoing  representation and warranty.  Notwithstanding the foregoing, the
     parties  acknowledge that in connection with the Prime Loan and the sale of
     the  Property,  Seller is paying  the Loan Fee  pursuant  to the Prime Loan
     Documents.

VII. DEFAULT

7.1. Default; Remedies.

(a)  IF BUYER BREACHES A COVENANT OR  REPRESENTATION  OR WARRANTY OF BUYER'S SET
     FORTH HEREIN FOR ANY REASON OTHER THAN A DEFAULT BY SELLER, SELLER SHALL BE
     ENTITLED TO ALL OF ITS RIGHTS AND REMEDIES AT LAW OR IN EQUITY.

(b)  If Seller breaches a covenant or representation or warranty of Seller's set
     forth herein for any reason other than a default by Buyer; Buyer may pursue
     whatever  rights  and  remedies  it may have  against  Seller  at law or in
     equity.

(c)  The  obligations of Seller to pay any amounts which Seller may be obligated
     to pay  pursuant  to  this  Article  7  shall  be  the  joint  and  several
     obligations  of Seller and Prime  Guarantor and Buyer may look to either or
     both of Seller or Prime  Guarantor  for the  satisfaction  of such  payment
     obligations.   SELLER  AND  BUYER  ACKNOWLEDGE  THAT  THEY  HAVE  READ  AND
     UNDERSTAND  THE  PROVISIONS  OF  THIS  SECTION  7.1 AND BY  THEIR  INITIALS
     IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.

BUYER'S INITIALS ____                                    SELLER'S INITIALS ____

VIII.  MISCELLANEOUS

8.1. Notices.  Any  notices  required  to be given  hereunder  shall be given in
     writing and shall be served either  personally,  by national  overnight air
     courier  service,  or delivered by certified  or  registered  mail,  return
     receipt requested, postage prepaid, or by facsimile transmittal followed by
     certified mail or air express delivery, addressed to the following:

         To Seller:          c/o Prime Retail, L.P.
                             100 East Pratt Street, 18th Floor
                             Baltimore, Maryland  21202
                             Attn.:  Glenn D. Reschke
                             Facsimile:  410-234-1703

         With copy to:       c/o Prime Retail, L.P.
                             100 East Pratt Street, 18th Floor
                             Baltimore, Maryland  21202
                             Attn.:  R. Kelvin Antill
                             Facsimile:  410-234-1761

         To Buyer:           c/o Fortress Registered Investment Trust
                             1301 Avenue of the Americas - 42nd Floor
                             New York, New York 10019
                             Attn.:  Christopher Ritchie
                             Facsimile:  212-798-6060

         and:                c/o Chelsea GCA Realty, Inc.
                             103 Eisenhower Parkway
                             Roseland, New Jersey  07088
                             Attn.:  Denise Elmer, Esq.
                             Facsimile:     (973)228-7913

         With copies to:     Sidley & Austin
                             875 Third Avenue
                             New York, New York  10022
                             Attn.: George Petrow, Esq.
                             Facsimile:  (212) 906-2021

                             Stroock & Stroock & Lavan LLP
                             180 Maiden Lane
                             New York, New York
                             Attn.: Martin Neidell, Esq.
                             Facsimile:  (212) 806-6006

     Notices  shall be deemed  received at the earlier of actual  receipt  (with
electronic  confirmation  of  facsimile  receipt)  or three  (3)  business  days
following mailing.

8.2. Entire  Agreement.  This  Agreement,  together  with the  exhibits  hereto,
     contains  all  representations  and the entire  understanding  between  the
     parties  hereto  with  respect  to the  subject  matter  hereof.  Any prior
     correspondence,   memoranda  or  agreements  (other  than   Confidentiality
     Agreements   which  shall  survive  the  execution  and  delivery  of  this
     Agreement) are replaced in total by this Agreement and the exhibits hereto.
     The exhibits  attached hereto are incorporated into this Agreement in their
     entirety by this reference.

8.3. Time. Time is of the essence in the performance of the parties'  respective
     obligations herein contained.

8.4. Attorneys' Fees. In the event any dispute between the parties hereto should
     result in  litigation,  the  prevailing  party shall be reimbursed  for all
     reasonable costs,  including,  without  limitation,  reasonable  attorneys'
     fees.

8.5. No  Merger.   Subject  to  any  provision  hereof  limiting  survival,  the
     obligations,  representations,  warranties  and  the  remedies  for  breach
     thereof herein  contained  shall not merge with transfer of title but shall
     remain in effect until fulfilled.

8.6. Successors  and Assigns.  This  Agreement may not be assigned  prior to the
     Closing by either  party  without  the prior  written  consent of the other
     except that Buyer may assign its interest in this  Agreement to one or more
     assignees at Closing, provided that any such assignment shall not result in
     a material delay of the Closing.  Subject to the foregoing provision,  this
     Agreement  shall  inure to the  benefit of and be binding  upon the parties
     hereto and their  respective  successors and assigns.  Notwithstanding  the
     foregoing, Buyer may designate any entity (or entities) other than Buyer to
     take title to the Property  (or any portion  thereof);  provided,  however,
     that  such  designation  shall  not  release  Buyer  from  its  obligations
     hereunder.

8.7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED  UNDER AND
     IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

8.8. Further  Assurances.  Without in any manner  expanding  the scope of either
     parties'  obligations  hereunder,  whenever  and so often as  required by a
     party,  the other  party will  promptly  execute and deliver or cause to be
     executed and delivered all such other and further instruments, documents or
     assurances,  and promptly do or cause to be done all such other and further
     things as may be reasonably  necessary and reasonably  required in order to
     further  carry  out  the  purposes  and  intents  of this  Agreement.  8.9.
     Counterparts. This contract may be executed in one or more counterparts and
     all so  executed  shall  constitute  one  contract,  binding  on all of the
     parties hereto,  notwithstanding  that all of the parties are not signatory
     to the same counterpart.

8.10.Construction.  The parties acknowledge that each party and its counsel have
     reviewed  and  revised  this   Agreement   and  that  the  normal  rule  of
     construction to the effect that any ambiguities are to be resolved  against
     the  drafting  party shall not be employed  in the  interpretation  of this
     Agreement or any amendments or exhibits hereto.

8.11.Recording.  Neither this  Agreement  nor any  memorandum  thereof  shall be
     recorded.

8.12.Modification.  This  Agreement  shall  not be  altered,  amended,  changed,
     waived, terminated or otherwise modified in any respect or particular,  and
     no  consent  or  approval  required  pursuant  to this  Agreement  shall be
     effective,  unless the same shall be in writing  and signed by or on behalf
     of the party to be charged.

8.13.Waiver of Jury Trial.  SELLER AND BUYER  HEREBY  WAIVE TRIAL BY JURY IN ANY
     ACTION,  PROCEEDING OR COUNTERCLAIM  BROUGHT BY ANY PARTY AGAINST ANY OTHER
     ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.

8.14.Days.  Unless  business days are expressly  provided for, all references to
     "days" herein shall refer to consecutive calendar days. If the Closing Date
     or any other date or time period  provided for in this Agreement is or ends
     on a Saturday,  Sunday or federal,  or New York State legal  holiday,  then
     such date shall  automatically  be  extended to the next day which is not a
     Saturday, Sunday or any federal or New York State legal holiday.

8.15.No Waiver.  The  waiver by one party of the  performance  of any  covenant,
     condition or promise,  or of the time for  performing  any act,  under this
     Agreement  shall not invalidate this Agreement nor shall it be considered a
     waiver by such party of any other covenant, condition or promise, or of the
     time for  performing  any other act  required,  under this  Agreement.  The
     exercise of any remedy  provided in this Agreement shall not be a waiver of
     any remedy  provided by law, and the  provisions of this  Agreement for any
     remedy  shall not exclude  any other  remedies  unless  they are  expressly
     excluded.

<PAGE>

     IN WITNESS WHEREOF,  the parties have executed and delivered this Agreement
as of the Contract Date.

SELLER:

FINGER LAKES OUTLET CENTER, L.L.C.,
a Delaware limited liability company

By:  Prime Retail, L.P., a Delaware limited partnership, its managing member

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

By:   _____________________________
      Name:
      Title:

THE PRIME  OUTLETS AT MICHIGAN  CITY  LIMITED  PARTNERSHIP,  a Delaware  limited
partnership

By:  Prime Retail, L.P., a Delaware limited partnership, its general partner

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

By:   _____________________________
      Name:
      Title:

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

By: Prime Retail, L.P., a Delaware limited partnership, its general partner

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

By:  _____________________________
     Name:
     Title:

OUTLET VILLAGE OF KITTERY LIMITED PARTNERSHIP, a Delaware limited partnership

By: Prime Retail, L.P., a Delaware limited partnership, its general partner

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

By:   _____________________________
      Name:
      Title:

BUYER:

F/C WATERLOO DEVELOPMENT LLC, a Delaware limited liability company

By:  F/C PRT Holdings LLC, a Delaware limited liability company, its sole member

By:  F/C Acquisition  Holdings LLC, a Delaware limited  liability  company,  its
     sole member

By:  Chelsea GCA Realty Partnership, L.P., its managing member

By:  Chelsea GCA Realty, Inc., its general partner

By:  ___________________
     Name:

Title:F/C GILROY  DEVELOPMENT LLC, a Delaware limited liability company By: F/C
      Gilroy Holdings LLC, a Delaware limited liability company, its sole member

By: F/C Acquisition Holdings LLC, a Delaware limited liability company, its sole
member

By: Chelsea GCA Realty Partnership, L.P., its managing member

By: Chelsea GCA Realty, Inc., its general partner

By: ___________________
    Name:
    Title:

F/C KITTERY DEVELOPMENT LLC, a Delaware limited liability company

By:  F/C PRT Holdings LLC, a Delaware limited liability  company,  its sole
     member

By:  F/C Acquisition  Holdings LLC, a Delaware limited  liability  company,
     its sole member

By:  Chelsea GCA Realty Partnership, L.P., its managing member

By:  Chelsea GCA Realty, Inc., its general partner

By:  ___________________
     Name:
     Title:

F/C MICHIGAN CITY DEVELOPMENT LLC, a Delaware limited liability company

By: F/C PRT Holdings LLC, a Delaware limited liability company, its sole member

By: F/C Acquisition Holdings LLC, a Delaware limited liability company, its sole
    member

By: Chelsea GCA Realty Partnership, L.P., its managing member

By: Chelsea GCA Realty, Inc., its general partner

By: ___________________
    Name:
    Title:

For the purposes set forth in Article 4 and Article 7 hereof:

PRIME RETAIL, L.P. a Delaware limited partnership

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

Name:
Title:
By:  ______________________
     Name:
     Title:

PRIME RETAIL, INC. a Maryland corporation

By: _______________________
    Name:
    Title:<PAGE>
                                                                   EXHIBIT 10(i)

                            HEWLETT-PACKARD COMPANY
                      EXECUTIVE DEFERRED COMPENSATION PLAN
               (AMENDED AND RESTATED EFFECTIVE NOVEMBER 1, 2000)

SECTION 1. ESTABLISHMENT AND PURPOSE OF PLAN.

    The Hewlett-Packard Company Executive Deferred Compensation Plan was adopted
and established effective January 1, 1994, and has been amended from time to
time. The Plan provides deferred compensation for a select group of management
or highly compensated employees as established in Title I of ERISA. Effective
November 1, 2000, the Plan is hereby amended and restated.

    The Plan is intended to be an unfunded and unsecured deferred compensation
arrangement between the Participant and the Company, in which the Participant
agrees to give up a portion of the Participant's current compensation in
exchange for the Company's unfunded and unsecured promise to make a deferred
payment at a future date, as specified in Section 6. The Company retains the
right, as provided in Section 14, to amend or terminate the Plan at any time.
Certain capitalized words used in the text of the Plan are defined in
Section 21 in alphabetical order.

SECTION 2. PARTICIPATION IN THE PLAN.

    All Eligible Employees are eligible to defer Base Pay or Bonuses under the
Plan

SECTION 3. TIMING AND AMOUNTS OF DEFERRED COMPENSATION.

    Eligible Employees shall make elections to participate in the Plan, as
follows:

        3.1  BASE PAY DEFERRALS.

           3.1.1  TIMING OF BASE PAY DEFERRAL.  With respect to a deferral of
       Base Pay, an election to participate must be made prior to December 16 of
       the calendar year preceding the calendar year with respect to which an
       election to defer Base Pay is made, in accordance with any procedures
       established by the Committee.

           3.1.2  AMOUNT OF BASE PAY DEFERRAL.  Once an election is made by an
       Eligible Employee, an annual whole dollar amount will be deferred from
       Base Pay, taken equally over the twenty-four (24) pay periods falling
       within the calendar year to which the election pertains. The minimum
       amount of Base Pay which may be deferred is $6,000 per calendar year. The
       maximum amount of Base Pay which may be deferred each calendar year is
       equal to the amount of Base Pay exceeding the amount defined in Code
       section 401(a)(17), as adjusted by the Secretary of the Treasury under
       Code section 415(d), in effect on January 1 of the calendar year to which
       the deferral election pertains.

        3.2  BONUS DEFERRALS.

           3.2.1  TIMING OF BONUS DEFERRAL.  Participants must make an election
       to defer an H1 Bonus and/or H2 Bonus before December 16 of the calendar
       year ending within the fiscal year to which the H1 and H2 Bonuses
       pertain, in accordance with any procedures established by the Committee.
       Notwithstanding the foregoing, an election to defer an H2 Bonus may be
       amended or revoked at any time prior to the commencement of the
       Performance Period to which the H2 Bonus relates, in accordance with any
       procedures established by the Committee.

           3.2.2  AMOUNT OF BONUS DEFERRAL.  An Eligible Employee may defer any
       portion, up to 95%, of any H1 or H2 Bonus to which he or she may become
       entitled, so long as the deferral

                                       1
<PAGE>
       amount is expressed in terms of a whole percentage point. Once an
       election is made by an Eligible Employee to defer a portion of a Bonus,
       the appropriate amount will be withheld from the Bonus when the amount of
       the Bonus has been certified by the Committee (with respect to a Bonus
       under the PFR Plans), but not before the Bonus would otherwise have been
       paid to the Participant in cash under the plan from which the Bonus is
       payable.

        3.3  EFFECT OF TAXES ON MAXIMUM DEFERRALS.  Notwithstanding any
    provision herein to the contrary, and to the extent consistent with the
    terms of the PFR Plans, the Company may withhold Taxes from any cash payment
    made under such plans, owing as a result of any deferral or payment
    hereunder, as the Company deems appropriate in its sole discretion. If, with
    respect to the pay period within which a deferral, payment or Bonus is made
    under this Plan or other plans from which a Bonus is payable, the
    Participant receives insufficient actual cash compensation to cover such
    Taxes, then the Company may withhold any remaining Taxes owing from the
    Participant's subsequent cash compensation received, until such Tax
    obligation is satisfied, or otherwise make appropriate arrangements with the
    Participant for satisfaction of such obligation.

        3.4  COMMITTEE DISCRETION.  Notwithstanding anything in this Section 3
    to the contrary, the Committee shall have the discretion to modify the
    availability and timing of a valid deferral election under this Section 3,
    in any manner it deems appropriate; provided, however, that any alteration
    with respect to a Covered Officer must be consistent with the requirements
    for deductibility of compensation under section 162(m) of the Code.

SECTION 4. DEFERRAL ACCOUNTS.

        4.1  IN GENERAL.  Amounts deferred pursuant to Section 3 shall be
    credited to a Deferral Account in the name of the Participant. Deferred
    Amounts arising from deferrals of Base Pay shall be credited to a Deferral
    Account at least quarterly. Deferrals resulting from amounts credited to a
    Participant's Deferral Account from the deferral of Bonuses shall be
    credited to a Deferral Account as soon as practicable after the Committee or
    its delegate--as appropriate under, and in accordance with, the terms of the
    plan from which the Bonus is payable--has certified the amount of a Bonus,
    but not before the Bonus would otherwise have been paid to the Participant
    in cash. The Participant's rights in the Deferral Account shall be no
    greater than the rights of any other unsecured general creditor of the
    Company. Deferred Amounts and Earnings thereon invested hereunder shall for
    all purposes be part of the general funds of the Company. Any payout to a
    Participant of amounts credited to a Participant's Deferral Account are not
    due, nor are such amounts ascertainable, until the Payout Commencement Date.

        4.2  HEWLETT-PACKARD COMPANY OFFICERS EARLY RETIREMENT PLAN
    DEFERRALS.  A Deferral Account may be created or credited pursuant to the
    termination of the Hewlett-Packard Company Officers Early Retirement (OER)
    Plan, as restated effective October 31, 1999. Except as otherwise provided
    in this Section 4.2, an OER Deferral shall be forfeited in full, if the
    Termination Date of a Rollover Participant for whom the OER Deferral was
    created or credited, occurs prior to April 1, 2001. Notwithstanding the
    foregoing, the OER Deferral of a Rollover Participant shall not be forfeited
    due to his or her Termination Date occurring prior to April 1, 2001, if the
    Rollover Participant has attained the age of 58 on or before March 31, 1999.

SECTION 5. EARNINGS ON THE DEFERRAL ACCOUNT.

        5.1  CREDITING IN GENERAL.  Amounts in a Participant's Deferral Account
    will be credited at least quarterly with Earnings until such amounts are
    paid out to the Participant under this Plan as set forth in Section 6. All
    Earnings attributable to the Deferral Account shall be added to the
    liability of and retained therein by the Company. Any such addition to the
    liability shall be

                                       2
<PAGE>
    appropriately reflected on the books and records of the Company and
    identified as an addition to the total sum owing the Participant. The
    Deferral Account of a Rollover Participant shall be credited with Earnings
    at the same time and accounted for in the same manner as the Deferral
    Account of a Participant (regardless of the Rollover Participant's
    eligibility to participate in the Plan), pro-rated to reflect the date on
    which the deferral account from a Rollover Plan is transferred into the
    Plan.

        5.2  HYPOTHETICAL INVESTMENT CHOICE.  Except as otherwise provided in
    this Section 5.2, and subject to provisions of Section 4.1, the Committee
    may, in its discretion, offer Participants a choice among various
    hypothetical investments on which their Deferral Accounts may be credited.
    Such a choice is nominal in nature, and grants Participants no real or
    beneficial interest in any specific fund or property. Provision of a choice
    among hypothetical investment options grants the Participant no ability to
    affect the actual aggregate investments the Company may or may not make to
    cover its obligations under the Plan. Any adjustments the Company may make
    in its actual investments for the Plan may only be instigated by the
    Company, and may or may not bear a resemblance to the Participants'
    hypothetical investment choices on an account-by-account basis. The timing,
    allowance and frequency of hypothetical investment choices, and a
    Participant's ability to change how his or her Deferral Account is credited,
    is within the sole discretion of the Committee.

        5.3  OER DEFERRAL FUND.  The balanced Fund, referenced in
    Section 21.13.3, with respect to which OER Deferrals are credited, is a
    frozen fund. Participants will not have, among the hypothetical investment
    choices, the right to request that additional Deferral Account balances be
    credited in accordance with the deemed return on investment of this Fund.
    However, Participants may choose to have any or all of the balance of a
    Deferral Account being credited in accordance with the deemed return on
    investment of this Fund, credited instead using any of the hypothetical
    investment choices referenced in Section 5.2.

SECTION 6. PAYOUT TO THE PARTICIPANTS.

        6.1  TERMINATION AFTER RETIREMENT DATE.  If a Participant's Termination
    Date is on or after his or her Retirement Date and the Participant's
    Deferral Account balance is no less than $15,000 on the Retirement Date, an
    election as to the form and commencement of benefit may be made in
    accordance with this Section 6.1. An election under this section is only
    valid if made before the date which is at least twelve (12) months prior to
    the Participant's Termination Date, and on or before the last day of the
    calendar year preceding the Termination Year.

               6.1.1  FORM OF PAYOUT.  A Participant making a valid election
           under this Section 6.1 may elect to receive either (a) a single lump
           sum payout by January 15 of the year following the Termination Year,
           or (b) a payout in annual installments over a five (5) to fifteen
           (15) year period beginning with the January 15 following the
           Termination Year.

               6.1.2  COMMENCEMENT OF PAYOUT.  A Participant making a valid
           election under this Section 6.1 may elect to further defer the Payout
           Commencement Date, under either the single lump sum or the annual
           installment election addressed in Section 6.1.1, by an additional one
           (1), two (2) or three (3) years beginning after the January 15
           following the Termination Year.

               6.1.3  EARNINGS ON DEFERRAL ACCOUNTS.  Whatever the form of
           payout under Section 6, and whatever the timing of the Payout
           Commencement Date, the Deferral Account of a Participant shall
           continue to be credited with Earnings until all amounts in such an
           account are paid out to the Participant.

                                       3
<PAGE>
        6.2  DEFAULT FORM AND COMMENCEMENT OF PAYOUT.  If a Participant's
    Termination Date is on or after his or her Retirement Date, a valid election
    under Section 6.1 is not made, and the Participant's Deferral Account
    balance is no less than $15,000 on the Retirement Date, then the Participant
    shall receive his or her payout in annual installments over the fifteen
    (15) year period beginning with the January 15 following the Termination
    Year. If, however, such Deferral Account balance is less than $15,000 on the
    Retirement Date, then the Participant shall receive a single lump sum payout
    as soon as practicable after the Retirement Date.

        6.3  DEATH OF PARTICIPANT.  If a Participant dies and an election was
    made under Section 6.1, the Beneficiary shall be paid according to the
    election even though the election was not made twelve (12) months or more
    prior to the Participant's death. If the Participant dies and no valid
    election was made, and the Participant's Deferral Account balance is no less
    than $15,000 on the date of death, then the Beneficiary will receive the
    payout in annual installments over the fifteen (15) year period beginning
    with the January 15 in the calendar year following the year of the
    Participant's death. If, however, such Deferral Account balance is less than
    $15,000 on the date of death, then the Beneficiary shall receive a single
    lump sum payout as soon as practicable after the date of death.

        6.4  TERMINATION PRIOR TO RETIREMENT DATE.  If the Participant's
    Termination Date precedes his or her Retirement Date, then the Participant
    will receive a single lump sum payout as soon as practicable after the
    Termination Date.

        6.5  COMMITTEE DISCRETION.  Notwithstanding anything in this Section 6
    to the contrary, the Committee shall have the discretion to modify the
    availability and timing of a valid election under Section 6.1, and the
    timing, form and amount (e.g., payouts affected by a forfeiture under
    Section 4.2) of any payout, in any manner it deems appropriate; provided,
    however, that any alteration with respect to a Covered Officer must be
    consistent with the requirements for deductibility of compensation under
    section 162(m) of the Code.

SECTION 7. HARDSHIP PROVISION

        7.1  UNFORESEEABLE EMERGENCIES.  Neither the Participant nor his or her
    Beneficiary is eligible to withdraw amounts credited to a Deferral Account
    prior to the time specified in Section 6.   However, such credited amounts
    may be subject to early withdrawal if an unforeseeable emergency occurs that
    is caused by an event beyond the Participant's or Beneficiary's control and
    would result in severe financial hardship to the individual if early
    withdrawal is not permitted. A severe financial hardship exists only when
    all other reasonably available financial resources have been exhausted. The
    Committee shall have sole discretion to determine whether to approve any
    hardship withdrawal, which amount will be limited to the amount necessary to
    meet the emergency.   The Committee's decision will be final and binding on
    all interested parties.

        7.2  WAITING PERIOD.  If the Committee approves a hardship withdrawal,
    the Participant (1) may not defer Base Pay, as specified in Section 3, for
    the remainder of the calendar year within which the withdrawal is received,
    or for the next succeeding calendar year, and (2) may not defer Bonuses, as
    specified in Section 3, for the remainder of the fiscal year in which the
    hardship withdrawal is received, or for the next succeeding fiscal year.

SECTION 8. OTHER ACCESS TO DEFERRAL ACCOUNTS.

        8.1  UNANTICIPATED NEEDS.  Neither the Participant nor his or her
    Beneficiary is eligible to withdraw amounts credited to a Deferral Account
    prior to the time specified in Section 6. However, such credited amounts may
    be subject to early withdrawal if an unanticipated need for funds occurs,
    other than a need specified in Section 7; provided that the Participant
    permanently

                                       4
<PAGE>
    forfeits ten (10) percent of the amount to be withdrawn. Additionally,
    withdrawals based on an unanticipated need for funds may be made no more
    than once each calendar year and the amount to be withdrawn must be at least
    $12,000.

        8.2  WAITING PERIOD.  If the Participant withdraws amounts credited to a
    Deferral Account under this section, he or she (1) may not defer Base Pay,
    as specified in Section 3, for the remainder of the calendar year within
    which the withdrawal is received, or for the next succeeding calendar year,
    and (2) may not defer Bonuses, as specified in Section 3, for the remainder
    of the fiscal year in which the hardship withdrawal is received, or for the
    next succeeding fiscal year.

SECTION 9. DESIGNATION OF BENEFICIARY

    The Participant shall, by written notice to the Company, (1) at the time of
the first election designate a Beneficiary hereunder, and (2) shall have the
right thereafter to change any Beneficiary previously designated by the
Participant. In the case of a Participant's death, payment due under this Plan
shall be made to the designated Beneficiary or, in the absence of such
designation, by will or the laws of descent and distribution in the state of
residence of the Participant.

SECTION 10. CHANGE IN CONTROL

        10.1  DISCRETION TO ACCELERATE.  In the event of a proposed change in
    control of the Company, as defined below, the Committee shall have complete
    authority and discretion, but no obligation, to accelerate payments of both
    terminated and active Participants.

        10.2  PROPOSED CHANGE IN CONTROL.  A "proposed change in control" shall
    mean (1) a tender offer by any person or entity, other than the Company or a
    Company subsidiary, to acquire securities representing 40 percent or more of
    the voting power of the Company or (2) the submission to the Company's
    shareholders for approval of a transaction involving the sale of all or
    substantially all of the assets of the Company or a merger of the Company
    with or into another corporation.

        10.3  REQUEST FOR NEGOTIATION.  The Committee may also ask the Board of
    Directors to negotiate, as part of any agreement involving the sale or
    merger of the Company, or a sale of substantially all of the Company's
    assets or a similar transaction, terms providing for protection of
    Participants and their interests in the Plan.

SECTION 11. LIMITATION ON ASSIGNMENTS

    Benefits under this Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishments by creditors of the Participant or the Participant's Beneficiary
and any attempt to do so shall be void.

SECTION 12. ADMINISTRATION

        12.1  ADMINISTRATION BY COMMITTEE.  The Plan shall be administered by
    the Committee. No member of the Committee shall become a Participant of the
    Plan. The Committee shall have the sole authority to interpret the Plan, to
    establish and revise rules and regulations relating to the Plan and to make
    any other determinations that it believes necessary or advisable for the
    administration of the Plan. Decisions and determination by the Committee
    shall be final and binding upon all parties, including shareholders,
    Participants, Beneficiaries and other employees. The Committee may delegate
    its administrative responsibilities as it deems appropriate.

                                       5
<PAGE>
        12.2  BOOKS AND RECORDS.  Books and records maintained for the purpose
    of the Plan shall be maintained by the officers and employees of the Company
    at its expense and subject to supervision and control of the Committee.

SECTION 13. NO FUNDING OBLIGATION

    The Company is under no obligation to transfer amounts credited to the
Participant's Deferral Account to any trust or escrow account, and the Company
is under no obligation to secure any amount credited to a Participant's Deferral
Account by any specific assets of the Company or any other asset in which the
Company has an interest. This Plan shall not be construed to require the Company
to fund any of the benefits provided hereunder nor to establish a trust for such
purpose. The Company may make such arrangements as it desires to provide for the
payment of benefits, including, but not limited to, the establishment of a rabbi
trust or such other equivalent arrangements as the Company may decide. No such
arrangement shall cause the Plan to be a funded plan within the meaning of Title
I of ERISA, nor shall any such arrangement change the nature of the obligation
of the Company nor the rights of the Participants under the Plan as provided in
this document. Neither the Participant nor his or her estate shall have any
rights against the Company with respect to any portion of the Deferral Account
except as a general unsecured creditor. No Participant has an interest in his or
her Deferral Account until the Participant actually receives the deferred
payment.

SECTION 14. AMENDMENT AND TERMINATION OF THE PLAN.

    The Company, by action of the Committee, in its sole discretion may suspend
or terminate the Plan or revise or amend it in any respect whatsoever; provided,
however, that amounts already allocated to the Deferral Accounts will continue
to be owed to the Participants or Beneficiaries and will continue to accrue
Earnings and continue to be a liability of the Company. Any amendment or
termination of the Plan will not affect the entitlement of any Participant or
the Beneficiary of a Participant who terminates employment before the amendment
or termination. All benefits to which any Participant or Beneficiary may be
entitled shall be determined under the Plan as in effect at the time the
Participant terminates employment and shall not be affected by any subsequent
change in the provisions of the Plan; provided, that the Company reserves the
right to change the basis of return on investment of the Deferral Account with
respect to any Participant or Beneficiary. Participants or Beneficiaries will be
given notice prior to the discontinuance of the Plan or reduction of any
benefits provided by the Plan.

SECTION 15. TAX WITHHOLDING.

    If the Company concludes that Tax is owing with respect to any deferral of
income or payment hereunder, the Company shall withhold such amounts from any
payments due the Participant, or otherwise make appropriate arrangements with
the Participant or his or her Beneficiary for satisfaction of such obligation.

SECTION 16. CHOICE OF LAW.

    This Plan, and all rights under this Plan, shall be interpreted and
construed in accordance with ERISA and, to the extent not preempted, the law of
the State of Delaware, unless otherwise stated in the Plan.

SECTION 17. NOTICE.

    Any written notice to the Company required by any of the provisions of this
Plan shall be addressed to the chief personnel officer of the Company or his or
her delegate and shall become effective when it is received.

                                       6
<PAGE>
SECTION 18. NO EMPLOYMENT RIGHTS.

    Nothing in the Plan, nor any action of the Company pursuant to the Plan,
shall be deemed to give any person any right to remain in the employ of the
Company or affect the right of the Company to terminate a person's employment at
any time, with or without cause.

SECTION 19. ROLLOVERS FROM OTHER PLANS.

        19.1  DISCRETION TO ACCEPT.  The Committee shall have complete authority
    and discretion, but no obligation, to allow the Plan to create Deferral
    Accounts for Rollover Participants and credit such accounts with amounts to
    reflect the Rollover Participant's deferral account in a Rollover Plan. The
    amounts credited to such Deferral Accounts are fully subject to the
    provisions of this Plan. Reference in the Plan to such a crediting as a
    "rollover" or "transfer" of assets from a Rollover Plan is nominal in
    nature, and confers no additional rights upon a Rollover Participant other
    than those specifically set forth in the Plan.

        19.2  STATUS OF ROLLOVER PARTICIPANTS.  A Rollover Participant and his
    or her Beneficiary are fully subject to the provisions of this Plan, except
    as otherwise expressly set forth herein. A Rollover Participant who is not
    already a Participant in the Plan and is not otherwise eligible to
    participate in the Plan at the time of rollover, shall not be entitled to
    make any additional deferrals under the Plan unless and until he or she has
    becomes an Eligible Employee under the terms of the Plan.

        19.3  PAYMENT TO ROLLOVER PARTICIPANTS.  If at the time of rollover or
    transfer, payments from a Rollover Participant's account in a Rollover Plan
    have already commenced from a Rollover Plan, he or she shall continue to
    receive such payments in accordance with the form and timing of payment
    provisions of such plan. If a Rollover Participant is not yet eligible to
    receive payments from the Rollover Plan at the time of the rollover or
    transfer, he or she is bound by the payout provisions of this Plan.

SECTION 20. CODE SECTION 162(m).

    With respect to Covered Employees, this Plan is designed to satisfy the
special requirements for performance-based compensation set forth in
Section 162(m)(4)(C) of the Code, and the Plan shall be so construed.
Furthermore, if a provision of the Plan as it relates to a Covered Officer
causes a deferral or payment to fail to satisfy these special requirements, the
Plan shall be deemed amended to satisfy the requirements to the extent permitted
by law and subject to Committee approval.

SECTION 21. DEFINITIONS.

        21.1  BASE PAY means the annual base rate of cash compensation for
    employees on the U.S. payroll of the Company, excluding commissions,
    overtime pay, bonuses or Bonuses, shift differential, payments under the
    Hewlett-Packard Company Employee Benefits Organization Income Protection
    Plan and the Hewlett-Packard Company Supplemental Income Protection Plan, or
    any other additional compensation.

        21.2   BENEFICIARY means the person or persons designated by a
    Participant under Section 9 to receive any amounts payable under the Plan in
    the event of the Participant's death.

        21.3   BONUS refers to an H1 Bonus and/or H2 Bonus.

        21.4   CODE means the Internal Revenue Code of 1986, as amended from
    time to time.

        21.5   COMMITTEE means the Compensation Committee of the Board of
    Directors of the Company, as constituted in accordance with the provisions
    of the PFR Plan, or its delegate.

                                       7
<PAGE>
        21.6   COMPANY means Hewlett-Packard Company, a Delaware corporation,
    and any business entity within the Hewlett-Packard Company consolidated
    group.

        21.7   COMPANY PERFORMANCE BONUS PLAN AND CPB PLAN refer to the
    Company's Company Performance Bonus Plan, effective November 1, 2000, as
    amended from time to time.

        21.8   COVERED OFFICER shall have the same meaning as set forth in the
    PFR Plan.

        21.9   DEFERRAL ACCOUNT means the account balance of a Participant in
    the Plan created from Deferred Amounts or from a credit to a Participant's
    account from a Rollover Plan, and the Earnings thereon prior to payout to
    the Participant.

        21.10  DEFERRED AMOUNT means the amount the Participant elects to have
    deferred from Base Pay and/or a Bonus, pursuant to Section 3.

        21.11  EARNINGS refers to the deemed return on investment (or charge on
    investment loss) allocated to the Participant's Deferral Account, based on
    the return of the Fund.

        21.12  ELIGIBLE EMPLOYEE means an individual who is an active (i.e., not
    on paid or unpaid leave) employee on the U.S. payroll of the Company on the
    first day of October preceding the fiscal and calendar years within which
    deferrals are to be made, who has Base Pay at such time equal to or in
    excess of the sum of (1) the amount defined in Code section 401(a)(17), as
    adjusted by the Secretary of the Treasury under Code section 415(d), plus
    (2) $6,000.

        21.13  ERISA means the Employee Retirement Income Security Act of 1974,
    as amended from time to time.

        21.14  FUND means-

           21.14.1 With respect to Earnings credited to deferrals of Base Pay or
       Bonuses, those funds representing the investment returns of the
       hypothetical investment choices designated by the Committee from time to
       time, in accordance with the provisions of Section 5;

           21.14.2 With respect to Earnings credited to the Deferral Account of
       a Covered Officer, the term Fund shall specifically refer to the Vanguard
       Institutional Index Fund, or such other fund as permitted in accordance
       with Section 5; and

           21.14.3 With respect to an OER Deferral, the term Fund shall
       specifically refer to a fund the investments of which are comprised of a
       mix of debt and equity, as chosen in the sole discretion of the
       Committee, and as subject to the forfeiture provisions of Section 4.2.

        21.15  H1 BONUS means a Bonus arising from the Performance Period
    described by the first half of the Company's fiscal year (November 1 through
    April 30), as defined in the PFR Plans and the CPB Plan. The term "H1 Bonus"
    also relates to any other bonus payable to a Participant on the same cycle
    as the PFR Plans and CPB Plan--i.e., with a Performance Period defined by
    the first half of the Company's fiscal year (November 1 through April 30).

        21.16  H2 BONUS means a Bonus arising from the Performance Period
    described by the second half of the Company's fiscal year (May 1 through
    October 31), as defined in the PFR Plans and the CPB Plan. The term "H2
    Bonus" also relates to any other bonus payable to a Participant on the same
    cycle as the PFR Plans and CPB Plan--i.e., with a Performance Period defined
    by the second half of the Company's fiscal year (May 1 through October 31).

        21.17  OER DEFERRAL means that portion of a Participant's Deferral
    Account comprised of amounts deferred and credited to the account arising
    from the termination of the Hewlett Packard Company Officers Early
    Retirement Plan, as restated effective October 31, 1999, including any
    earnings thereon.

                                       8
<PAGE>
        21.18  PARTICIPANT, unless preceded by "PFR" in which case the term
    indicates a participant in a PFR Plan, means any individual who has benefits
    in a Deferral Account under the Plan or who is receiving or entitled to
    receive benefits under the Plan. The term Participant also refers to a
    Rollover Participant, except where expressly provided otherwise.

        21.19  PAY-FOR-RESULTS PLAN(S) OR "PFR" PLAN(S) refers to both the
    Hewlett-Packard Company Executive Pay-for-Results Plan, amended and restated
    effective November 1, 2000, as amended from time to time (also referred to
    the "Executive PFR Plan"), and the Hewlett-Packard Company Pay-for-Results
    Short-Term Bonus Plan, effective November 1, 2000, as amended from time to
    time.

        21.20  PAYOUT COMMENCEMENT DATE means the date on which the payout to a
    Participant of amounts credited to his or her Deferral Account first
    commence.

        21.21  PERFORMANCE MEASURE shall have the same meaning as set forth in
    the PFR Plans.

        21.22  PERFORMANCE PERIOD shall have the same meaning as set forth in
    the PFR Plans.

        21.23  PLAN means, unless preceded by (i) "PFR" in which case the term
    refers to the PFR Plans, (ii) "CPB" or "Company Performance Bonus" in which
    case the term refers to the CPB Plan, or (iii) "Rollover" in which case the
    term refers to a Rollover Plan, the Hewlett-Packard Company Executive
    Deferred Compensation Plan, as adopted effective January 1, 1994, as amended
    and restated from time to time.

        21.24  RETIREMENT DATE means the date on which a Participant has
    completed at least 15 years of service, as defined in the Retirement Plan,
    and has attained age 55. For this purpose, the Committee may, in its
    discretion, permit the years of service of a Rollover Participant to include
    the years of service with the employer for which a Rollover Participant
    worked immediately preceding employment with the Company.

        21.25  RETIREMENT PLAN means the Hewlett-Packard Company Retirement
    Plan, as amended from time to time.

        21.26  ROLLOVER PARTICIPANT means an individual with a Deferral Account
    in the Plan transferred from a Rollover Plan in accordance with the
    provisions of Section 19. The term Rollover Participant may also refer to an
    individual who has previously been a Participant in the Plan, or an existing
    Participant at the time of transfer.

        21.27  ROLLOVER PLAN means either-

           21.27.1 The nonqualified deferred compensation plan of a business
       entity acquired by the Company through acquisition of a majority of the
       voting interest in, or substantially all of the assets of, such entity;
       or,

           21.27.2 Any plan or program of the Company, or any employing business
       entity within the Hewlett-Packard Company consolidated group, including
       but not limited to the Hewlett-Packard Company Officers Early Retirement
       Plan, pursuant to the termination of which a Deferral Account is created
       or added to for a Participant or Rollover Participant.

           21.28 Tax or (Taxes) means any federal, state, local, or any other
       governmental income tax, employment or payroll tax, excise tax, or any
       other tax or assessment owing with respect to amounts deferred, any
       Earnings thereon, and any payments made to Participants under the Plan.

           21.29 Termination Date means the date on which the Participant ceases
       to be an employee of the Company.

                                       9
<PAGE>
           21.30 Termination Year means the calendar year within which a
       Participant's Termination Date falls.

SECTION 22. EXECUTION

    IN WITNESS WHEREOF, the Company has caused this Plan to be duly amended and
restated by the undersigned this 16th day of November, 2000, effective
November 1, 2000.

Hewlett-Packard Company
By: /s/ PHILIP M. CONDIT
Philip M. Condit
Chair, Compensation Committee

                                       10

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