Document:

SALE OF SHARES AGREEMENT
                                     between
                          CENTURY CASINOS INCORPORATED
               CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED
                                       and
                CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED

<TABLE>
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TABLE OF CONTENTS
<C>                <S>                                         <C>
                1    INTERPRETATION                                                                   1
                2    INTRODUCTION                                                                     6
                3    SUSPENSIVE CONDITIONS                                                            6
                4    SALE                                                                             8
                5    PURCHASE PRICE AND PAYMENT                                                       9
                6    RESTRICTIONS ON RESTRICTED CENTURY STOCK                                        11
                7    DELIVERY AND CLOSING                                                            13
                8    RISK AND BENEFIT                                                                13
                9    WARRANTIES                                                                      13
               10    ANNOUNCEMENT AND CO-OPERATION                                                   14
               11    BREACH                                                                          15
               12    ARBITRATION                                                                     15
               13    GOVERNING LAW AND JURISDICTION                                                  16
               14    DOMICILIUM AND NOTICES                                                          16
               15    GENERAL                                                                         17
               16    COSTS                                                                           18

                   ANNEXURES
                   ANNEXURE A-                                 RESOLUTION OF THE DIRECTORS OF PURCHASER
                   ANNEXURE B                                  RESOLUTION OF THE DIRECTORS OF SELLER
                   ANNEXURE C-                                 RESOLUTION OF THE MEMBERS OF SELLER
</TABLE>
<PAGE>
SALE  OF  SHARES  AGREEMENT

between

CENTURY  CASINOS  INCORPORATED

CALEDON  OVERBERG  INVESTMENTS  (PROPRIETARY)  LIMITED

and

CALEDON  CASINO  BID  COMPANY  (PROPRIETARY)  LIMITED

1     INTERPRETATION

      In  this agreement, clause headings are for convenience and shall not be
      used in its  interpretation  and,  unless  the  context  clearly
      indicates  a  contrary intention,  -

1.1     an  expression  which  denotes  -

1.1.1     any  gender  includes  the  other  genders;

1.1.2     a  natural  person  includes an artificial or juristic person and vice
          versa;

1.1.3     the  singular  includes  the  plural  and  vice  versa;

1.2     the following expressions shall bear the meanings assigned to them below
        and  cognate  expressions  bear  corresponding  meanings  -

1.2.1     "the  Act"  -  the  Companies  Act,  61  of  1973,  as  amended;

1.2.2     "the/this  agreement"  - the agreement as set out herein together with
          all  its  annexures,  as  amended  from  time  to  time;

                                        1
<PAGE>
1.2.3     "business  day"  -  any day other than a Saturday, Sunday or official
          public  holiday  in  the  Republic  of  South  Africa;

1.2.4     "claims"  -  R4 500 000 of the seller's claims on loan account against
          the  company  as  at  the  effective  date;

1.2.5     "the  closing  date" - the fifth business day after the last condition
          has  been  fulfilled  or  waived;

1.2.6     "company"  -  Caledon  Casino  Bid  Company  (Proprietary)  Limited,
          registration number 1996/10708/07, a private company with limited
          liability duly incorporated  in  accordance  with  the  laws  of
          the Republic of South Africa;

1.2.7     'conditions"  -  the  suspensive  conditions  set  out  in  3.1;

1.2.8     "documents  of  title"  -  collectively  -

1.2.8.1     share  certificates  in  respect  of  the  shares  together
            with  share  transfer  forms  in  respect  thereof  duly
            completed  and  signed  by  the  register  holder(s)  of  the
            shares  in  accordance  with  the  provisions  of  the  Act
            and  the  memorandum  and  articles  of  association  of  the
            company,  blank  as  to  transferee  and  dated  not  more
            than  three  days  prior  to  the  effective  date;

1.2.8.2     a  written  and  signed  cession  of  the  claims  in favour of
            the  purchaser  or  its  nominee;

1.2.8.3     a  certified  copy  of  a  resolution  of  the directors of the
            company,  passed  in  accordance  with  the  Act  and  the
            memorandum  and  articles  of  association  of  the
            company  approving  the  transfer  of  the  shares  into  the
            name  of  the  purchaser  or  its  nominee  and

                                        2
<PAGE>
            acknowledging  the  cession  of  the  claims  to
            the  purchaser  or  its  nominee;  and

1.2.8.4     a  certified  copy  of  a  resolution of the members of the company,
            passed in accordance with the Act and the memorandum and articles
            of association of  the  company  appointing  six  nominees of the
            purchaser as directors of the company;

1.2.9       "effective date" - notwithstanding the date on which this agreement
            is signed  by  the party signing last in time, the effective date
            shall be November 1,2000

1.2.10      "Empowerco"  -  Overberg  Empowerment  Company  Limited,
            registration  number  [97/00328/06],  a  public company  with
            limited  liability  duly  incorporated  in  the Republic of South
            Africa;

1.2.11      "parties"  -  the  purchaser,  the  seller  and  the  company;

1.2.12     "pledge" - the written pledge of shares and claims by the seller to
           PSGIB  in  terms of which the seller pledged and ceded in security
           the shares to PSGIB  dated  [  13  April  2000];

1.2.13     "preferred  shareholders"  -  Empowerco  and  the  Trust;

1.2.14     "PSGIB"  -  PSG  Investment Bank Limited, registration number
           1998/817396/06,  a  public  company  with  limited  liability
           duly incorporated in the Republic  of  South  Africa;

1.2.15     "purchaser" - Century Casinos Incorporated, a company incorporated in
           the  State  of  [Delaware  ],  United States of America herein
           represented by Mr Peter  Hoetzinger  in  his capacity  as
           [President  and  Vice  Chairman  I of the purchaser, he being duly
           authorised  thereto,  by  virtue  of  a
                                        3
<PAGE>

           resolution  of the directors of the purchaser, a copy of which is
           annexed hereto markiid  A;

1.2.16       "purchase  price"  -  the  purchase  price  for  the shares and the
             claims  set  out  in  5.1;

1.2.17       "seller"  -  Caledon  Overberg  Investments (Proprietary)  Limited,
             registration  number  [96/06728/07                     1,  a
             private company  with  limited  liability duly incorporated
             according to the laws of the Republic of South Africa, herein
             represented by Mr [Leon Fortes] in his capacity as  a  director
             of the seller, he being duly authorised thereto, by virtue of a
             resolution  of  the  directors  of the seller' a copy of which
             is annexed hereto marked B, and a resolution of the members of
             the seller duly adopted in terms of section  228  of  the  Act,
             a  copy  of  which  is  annexed  hereto  marked  C;

1.2.18       "shareholders'      agreement"  -  a written      shareholders'
             agreement to be concluded between the preferred shareholders, the
             purchaser, the seller  and  the  company  contemporaneously  with
             this agreement regulating the affairs  of  the company and the
             relationship of the preferred shareholders, the seller  and  the
             purchaser  as  shareholders  of  the  company,

1.2.19       "shares" - ordinary par value shares of Rl each in the share
             capital of the company constituting 15 % of the entire issued
             ordinary share capital of the  company  on  the  effective date,
             being 600 ordinary par value shares of Rl each  in  the  share
             capital  of  the  company;

1.2.20       "signature date" - them date on which this agreement is signed by
             the party  signing  last  in  time;

1.2.21       "the Trust" - The Overberg Community Trust, master's reference
             number [  ]
                                        4
<PAGE>
1.2.22       US$ - United States Dollars, the lawful currency of the
             United States of  America;

1.3        any reference to any statute, regulation or other legislation shall
           be a reference  to  that statute, regulation or other legislation as
           at the signature date,  and  as  amended  or  substituted  from  time
           to  time;

1.4        if any provision in a definition is a substantive provision
           conferring a right  or  imposing  an obligation on any party then,
           notwithstanding that it is only  in  a  definition, effect shall be
           given to that provision as if it were a substantive  provision  in
           the  body  of  this  agreement;

1.5        where  any term is defined within a particular clause other than
           this 1, that  term  shall  bear the meaning ascribed to it in that
           clause wherever it is used  in  this  agreement;

1.6        where any number of days is to be calculated from a particular day,
           such number  shall  be  calculated as excluding such particular day
           and commencing on the next day.  If the last day of such number so
           calculated falls on a day which is  not  a  business day, the last
           day shall be deemed to be the next succeeding day  which  is  a
           business  day;

1.7        any  term  which refers to a South African legal concept or process
           (for example,  without  limiting  the aforegoing, winding-up or
           curatorship) shall be deemed  to include a reference to the
           equivalent or analogous concept or process in  any  other
           jurisdiction in which this agreement may apply or to the laws of
           which  a  party  may  be  or  become  subject;

1.8        the  use  of the word "including" followed by a specific example/s
           shall not be construed as limiting the meaning of the general wording
           preceding it and the  eiusdem  generis  rule  shall  not be applied
           in the interpretation of such general  wording  or  such  specific
           example/s.
                                        5
<PAGE>
2      INTRODUCTION

2.1        The  seller  is  the  owner  of the shares and the holder of the
           claims.

2.2        The purchaser wishes to acquire the shares and the claims and the
           seller is  willing to sell same to the purchaser on the terms and
           conditions set out in this  agreement.

3      SUSPENSIVE  CONDITIONS

3.1        This  agreement,  save  for  the  provisions  of 1, 3 and 12 to 15
           (both inclusive)  which  will  be  of  immediate  force  and
           effect, is subject to the suspensive  conditions  that,  by  no later
           than  30  January  2001  -

3.1.1        PSGIB  consents in writing to the to the sale of shares set out
             herein and  agrees  (either unconditionally or subject to the
             condition that the shares and the claims are again pledged to it
             in security)to release the shares and the claims  from  the pledge
             in order to allow same to be delivered to the purchaser
             in  terms  hereof;

3.1.2        the  seller  obtaining all necessary regulatory and other approvals
             to the  transaction  set  out herein including the written approval
             of the exchange control  authorities  of  the  Republic  of  South
             Africa;

3.1.3        the  Western  Cape  Gambling  Board  consents  in  writing  to
             the transactionset  out  herein  in  terms  of  applicable
             legislation to which the company  is  subject;

3.1.4        the  preferred  shareholders  consent  in  writing  to the sale
             of the shares  as  set  out  herein;  and
                                        6
<PAGE>
3.1.5        the  seller,  the  purchaser,  the preferred shareholders and the
             company  conclude  the  shareholders'  agreement  and  that  the
             shareholders  agreement  becomes  unconditional  as  a  result of
             the  timeous  fulfilment of all suspensive conditions to which it
             may  be  subject  (save  for  any  such  suspensive  condition
             requiring  to  this  agreement  becoming  unconditional).

3.2        The  conditions have been inserted for the benefit of both the
           purchaser  and  the  seller  who  may,  collectively  but  not
           individually,  in writing  only  at  any time, waive compliance
           therewith or extend the date  by  which  they  or  any  of
           them  is  to  be  fulfilled.

3.3        Should  any  of  the conditions not be fulfilled or waived, as
           the  case may  be,  by the latest date permitted in terms of 3.2,
           then this agreement,  save  for  the  provisions of 1, 3 and 12
           to 15 (both inclusive)  which shall continue to bind the parties,
           shall never become effective  and  shall  be  of  no  force  or
           effect  and  -

3.3.1        to  the  extent  that this agreement may have been partially
             implemented,  the  parties  shall  be  restored to the status quo
             ante;  and

3.3.2        no  party shall have any claim against any other arising out
             of or  in  connection  with  this  agreement  except as
             contemplated in  this  clause  3.

3.4        The  parties  shall  use  their  respective best endeavours to
           procure  the timeous  fulfilment  of  the  conditions.

4     SALE

4.1        The  seller  sells and cedes to the purchaser, which purchases
           and accepts  from  the  seller, the shares and the claims  -

                                        7
<PAGE>
4.1.1        with  effect  from  the  effective  date;  and

4.1.2        as one indivisible transaction, on the terms and conditions set
             out in this  agreement.

4.2        To  the  extent required in law, the company consents to the sale
           of the claims,  being only a portion of the seller's claims on loan
           account against the company,  to  the  purchaser.

5     PURCHASE  PRICE  AND  PAYMENT

5.1       The purchase price payable by the purchaser to the seller for the
          shares and  the  claims  is  an  amount  of  US$l  800  000
          ("the  purchase  price")

5.2       The  Rand  equivalent  of  the  purchase price (determined at the
          ruling Rand:US$  exchange  rate  on  the  closing  date)  shall
          be  apportioned  -

5.2.1       as  to  the  claims,  the face value thereof as at the effective
            date, being  R4  500  000;  and

5.2.2       as  to  the  shares,  the  balance.

5.3       Notwithstanding  the  effective  date  or anything else contained
          herein
            interest  at  1  6%  pa  will  be  paid  by  the  company  to
            the seller on the face  value  of  the  claims  from October 11,
            2000  to  the  closing  date

5.4       The  purchase price shall be paid by the purchaser to the
          seller  as  in full on the closing date at the meeting referred
          to in 6.1 against compliance by the  seller with  its  obligations
          in  terms  of  6  .
                                        8
<PAGE>
5.5       The  purchase  price  shall  be  paid  in full by a certified funds
          transfer  or similar guaranteed payment into such South African
          blink account at an  authorised  dealer  as  the  seller  may
          notify  the  purchaser in writing.

6     DELIVERY  AND  CLOSING

6.1       At  10:00  on  the closing date, representatives of the
          purchaser  and the  seller  shall  meet  at the offices of
          [Fortes King ] situated at [64 Kloof Street  ],  Cape  Town.

6.2       At  the  meeting  referred  to  in  6.1, the seller shall deliver to
          the purchaser  the  documents  of  title, which delivery the purchaser
          shall accept.

6.3       The  seller furthermore agrees to sign all such documents and further
          do all  such  things  as  may be necessary to give effect to the
          provisions of this agreement  and  to  procure  the  transfer  of the
          shares and the claims to the
          purchaser.

7     RISK  AND  BENEFIT

7.1       All risk and benefit in and to the shares shall pass to the purchaser
          as from  the  effective  date.

7.2       Ownership  in  respect  of the shares shall pass to the purchaser on
          the effective  date.

7.3       The  shares  are  sold  cum  dividend.

8     WARRANTIES

      The  seller  hereby  warrants  to the purchaser, as material warranties
      and this agreement  is  accordingly  based  thereon,  that  -

                                        9
<PAGE>
8.1       it  is  and  will  be, as at the effective date, the sole registered
          and beneficial  owner of the shares and will be reflected in the
          register of members of  the  company  as  such;

8.2       it  is  and  will be, as at the effective date, the beneficial
          holder of the  claims,  save  for  the  Subordination  Agreement
          in  favour  of  PSGIB;

8.3       the shares will, when delivered to the purchaser, be free of any
          pledge, lien,  hypothec,  notarial  bond  or  encumbrance whatever
          and free of all other rights of retention or pre-emption, save for
          an undertaking that the shares will be  repledged  to  PSGIB;

8.4       upon  delivery of the documents of title by the seller to the
          purchaser, ownership  of  the  shares  will  pass  to  the
          purchaser;

8.5       it  has  the legal capacity, competence and authority to enter into
          this agreement  and  to consummate the transaction contemplated in
          this agreement and neither  the  entering  into  nor  the
          implementation  of  this  agreement will adversely  effect  the
          rights  of  any  third  party.

9      ANNOUNCEMENT  AND  CO-OPERATION

9.1       The  parties  undertake  to do all such things, perform all such
          actions and  take  all  such  steps  and  to  procure  the doing of
          all such things, the performance  of all such actions and the taking
          of all such steps as may be open to them and necessary for or
          incidental to the implementation or the maintenance of  the  terms,
          conditions  and/or  import  of  this  agreement.

9.2       Neither  party  shall  be  entitled  to make any announcement within
          the Republic  of  South Africa concerning this agreement or the
          transaction referred to  herein,  unless prior to making such
          announcement, it has obtained the prior written  consent  of  the
          other  party.  Notwithstanding  the  aforesaid,  the purchaser
          shall be entitled to make any announcement outside of the Republic of
          South  Africa
                                       10
<PAGE>
          concerning  this  agreement  or  the  transaction  referred  to
          herein  without obtaining  the  consent  of  the  seller.

10     BREACH

       Should  either  the  seller  on  the one hand or the purchaser on the
       other hand ("the  party  in  default") commit a breach of any term,
       condition, undertaking, warranty  or  representation  contained  in
       this  agreement  and  -

10.1     should  such  breach  be  incapable  of  being  remedied;  or

10.2     should such breach be capable of being remedied and should the party in
         default  fail  to remedy such breach within thirty days after receipt
         of written notice  to  that  effect  from  the  other  of  them, such
         other party shall be entitled, without prejudice and in addition to
         all of its  other  rights in terms hereof or at law, to cancel this
         agreement forthwith by  way  of  written  notice  to  such  effect
         to  all  the  other  parties.

11     ARBITRATION

11.1     Any disputes arising from or in connection with this agreement shall if
         so  required  by any party by giving written notice to that effect to
         the others be  finally  resolved in accordance with the rules of the
         Arbitration Foundation of  Southern  Africa  ("AFSA")  in  Cape  Town
         by  an arbitrator or arbitrators appointed  by AFSA.  There shall be
         a right of appeal as provided for in article 22  of  the  aforesaid
         rules.

11.2    Each  party  to  this  agreement  -

11.2.1    expressly consents to any arbitration in terms of the aforesaid rules
          being  conducted  as  a  matter  of  urgency;  and

11.2.2    irrevocably  authorises  any of the others to apply, on behalf of all
          parties  to  such  dispute,  in  writing,  to  the  secretariat  of
                                       11
<PAGE>

          AFSA  in  terms of article 23(l) of the aforesaid rules for any
          such arbitration to  be  conducted  on  an  urgent  basis.

12     GOVERNING  LAW  AND  JURISDICTION

12.1    This  agreement  shall  in  all  respects  (including its  existence,
        validity,  interpretation,  implementation,  termination  and
        enforcement)  be governed  by  the  law  of  the  Republic of South
        Africa which is applicable to agreements  executed  and  wholly
        performed within the Republic of South Africa.

12.2    Subject  to  12,  the  parties  hereby  consent  and  submit  to  the
        jurisdiction  of the High Court of the Republic of South Africa (Cape
        Provincial Division)  in  respect  of  any dispute or claim arising
        out of or in connection with  this  agreement.

13     DOMICILIUM  AND  NOTICES

13.1    The  parties choose domicilium citandi et executandi ("domicilium") for
        all purposes relating to this agreement, including the giving of any
        notice, the payment  of  any  sum,  the  serving  of  any  process,
        as  follows  -

13.1.1       the  seller       physical         64  Kloof  Street
                                                          Gardens
                                                             8001
                               facsimile            021-423  4407

13.1.2       the  purchaser                     1  Nerina  Street
             c/o  Caledon  Casino                         Caledon
                                                             7230
                               facsimile            028-214  1270

13.1.3       the  company      physical         1  Nerina  Street
                                                          Caledon
                                                             7230
                               facsimile          028-  214  1270
                                       12
<PAGE>
13.2    Any party shall be entitled from time to time, by giving written notice
        to  the  others,  to vary its physical domicilium to any other physical
        address (not  being  a  post  office box or poste restante) within the
        Republic of South Africa  and  to  vary  its  facsimile  domicilium to
        any other facsimile number.

13.3    Any  notice given or payment made by any party to another ("addressee")
        which is delivered. by hand between the hours of 09:00 and 17:00 on any
        business day to the addressee=s physical domicilium for the time being
        shall be deemed to have  been  received  by  the  addressee  at  the
        time  of  delivery.

13.4    Any  notice  given  by  any  party  to  another  which  is successfully
        transmitted  by  facsimile  to the addressee=s facsimile domicilium for
        the time being  shall  be deemed (unless the contrary is proved by the
        addressee) to have been  received  by  the  addressee on the day
        immediately succeeding the date of successful  transmission  thereof.

13.5    This  13 shall not operate so as to invalidate the giving or receipt of
        any  written  notice which is actually received by the addressee other
        than by a method  referred  to  in  this  13.

13.6    Any  notice  in  terms of or in connection with this agreement shall be
        valid  and effective only if in writing and if received or deemed to be
        received by  the  addressee.

14     GENERAL

14.1    This  agreement read with its appendices constitutes the sole record of
        the  agreement  between  the  parties  in  regard  to the subject
        matter hereof.

14.2    No  party  shall be bound by any representation, warranty, undertaking,
        promise  or  the  like  not  recorded  in  this  agreement.
                                       13
<PAGE>

14.3    No  addition to, variation or consensual cancellation of this agreement
        shall  be  of  any  force  or  effect unless done in writing and signed
        by or on behalf  of  all  the  parties.

14.4    Any  indulgence  which  any  party may show to any other in terms of or
        pursuant  to  the  provisions contained in this agreement shall not
        constitute a waiver  of  any  of  the  rights  of  the  party  which
        granted such indulgence.

15     COSTS

15.1    Each  party  shall bear and pay its own legal and other costs
        in  respect of  drafting,  preparing  and  implementing  this
        agreement.

15.2    All  stamp  duties payable in respect of the. transfer of the
        shares  to the purchaser terms of this agreement shall be borne
        and paid for by purchaser.

15.3    It  is  recorded  that  the purchaser will sell the shares to
        it's  subsidiary Century  Casinos  Africa  (Proprietary)
        Limited  ("CCA') and all stamp duties  payable in respect of
        the transfer of the shares from the purchaser  to  CCA
        shall  be  borne  and paid for by the seller.

Signed  at       Caledon                           on   4th  November 2000
                                        for Century  Casinos  Incorporated

                                                    /s/  Peter  Hoetzinger

                                        who  warrants  that  he  is  duly
                                        authorised  hereto
                                       14
                                       15
<PAGE>
Signed  at       Caledon                          on  4th  November   2000

                                          for Caledon Overberg Investments
                                                     (Proprietary) Limited

                                                   /s/  Leon Fortes

                                          who  warrants  that he  is  duly
                                          authorised  hereto

Signed  at       Caledon                           on  4th  November  2000

                                     for     Caledon  Casino  Bid  Company
                                                    (Proprietary)  Limited

                                                    /s/  Kevin King

                                         who  warrants  that  he  is  duly
                                         authorised  hereto

                                       16
<PAGE>THIS  WARRANT AND THE  SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED
UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  AND MAY NOT BE  TRANSFERRED  IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.

No. of Shares of Common Stock:  500,000                            Warrant No. 1

                                     WARRANT

                           To Purchase Common Stock of

                                                PRIME RETAIL, INC.

                                December 22, 2000

                  THIS IS TO  CERTIFY  THAT FRIT PRT  LENDING  LLC,  a  Delaware
limited liability Company, or registered assigns, is entitled, at any time prior
to the Expiration Date (as hereinafter  defined), to purchase from Prime Retail,
Inc., a Maryland corporation ("Company"), Five Hundred Thousand (500,000) shares
of Common Stock (as  hereinafter  defined and subject to  adjustment as provided
herein), in whole or in part, including fractional parts, at a purchase price of
$1.00 per share,  all on the terms and conditions and pursuant to the provisions
hereinafter set forth.

1.       DEFINITIONS

                  As  used  in  this  Warrant,  the  following  terms  have  the
respective meanings set forth below:

                  "Additional  Shares of Common  Stock" shall mean all shares of
Common Stock issued or issuable by Company after the date hereof, other than:

                  (i)   shares of Warrant Stock;

                  (ii) shares of Common  Stock  issued or  issuable  pursuant to
stock options,  restricted  stock awards or bonus stock awards granted under the
Company's  employee and  director  long term  incentive  plans from time to time
adopted in good faith by the Board of Directors of the Company,  but only to the
extent that the sum of (x) the aggregate number of shares of Common Stock issued
pursuant to such plans  (including  any such shares  issued upon the exercise of
options granted under such plans), whether issued on, prior of or after the date
hereof  and (y) the  aggregate  number of shares  of  Common  Stock  potentially
issuable pursuant to options or awards granted under such plans, whether granted
on, prior to or after the date hereof that have not yet been  exercised does not
exceed, at any time, 10% of issued and outstanding shares of Common Stock;

                  (iii)  shares of Common  Stock  issued  to  holders  of Common
Units of Prime  Retail,  L.P.  in exchange for such Common Units  pursuant to
the Fourth  Amended and Restated  Agreement of Limited  Partnership  of
Prime Retail L.P., as amended or modified from time to time; and

                  (iv) shares of Common Stock issued upon  conversion  of shares
of the Company's 8.5% Series B Cumulative  Participating  Convertible  Preferred
Stock, $0.01 par value per share issued and outstanding on the date hereof.

                  "Appraised  Value"  shall  mean,  in  respect  of any share of
Common Stock on any date herein specified, the fair saleable value of such share
of Common  Stock  (determined  without  giving  effect to the discount for (i) a
minority  interest or (ii) any lack of  liquidity  of the Common Stock or to the
fact that Company may have no class of equity registered under the Exchange Act)
as of the last day of the most recent  fiscal  month to end within 60 days prior
to such date  specified,  based on the value of  Company,  as  determined  by an
investment  banking firm  selected in  accordance  with the terms of Section 15,
divided by the number of Fully Diluted Outstanding shares of Common Stock.

                  "Book  Value"  shall  mean,  in respect of any share of Common
Stock on any date herein specified, the consolidated book value of Company as of
the last day of any month immediately preceding such date, divided by the number
of Fully Diluted  Outstanding shares of Common Stock as determined in accordance
with GAAP  (assuming  the payment of the  exercise  prices for such shares) by a
"Big 5" firm of independent  certified public accountants (i.e., one of the five
largest  accounting  firms in the  U.S.)  selected  by  Company  and  reasonably
acceptable to the Majority Holders.

                  "Business  Day" shall  mean any day that is not a Saturday  or
Sunday or a day on which  banks are  required or  permitted  to be closed in the
State of New York.

                  "Commission" shall mean the Securities and Exchange Commission
or any other federal  agency then  administering  the  Securities  Act and other
federal securities laws.

                  "Common Stock" shall mean (except where the context  otherwise
indicates)  the Common Stock,  $.01 par value,  of Company as constituted on the
date hereof,  and any capital stock into which such Common Stock may  thereafter
be changed,  and shall also  include  (i) capital  stock of Company of any other
class (regardless of how denominated)  issued to the holders of shares of Common
Stock  upon any  reclassification  thereof  which is also  not  preferred  as to
dividends  or assets  over any other  class of stock of Company and which is not
subject  to  redemption  and (ii)  shares of common  stock of any  successor  or
acquiring  corporation (as defined in Section 4.8) received by or distributed to
the  holders of Common  Stock of Company in the  circumstances  contemplated  by
Section 4.8.

                  "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other  securities which are convertible into or exchangeable,
with or without  payment of additional  consideration  in cash or property,  for
Additional Shares of Common Stock,  either immediately or upon the occurrence of
a specified date or a specified event.

                  "Current  Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified,  the higher of (a) the Book Value per
share of Common  Stock at such date,  and (b) the  Appraised  Value per share of
Common Stock as at such date,  or if there shall then be a public market for the
Common Stock, the average of the daily market prices for 30 consecutive Business
Days  commencing 45 days before such date.  The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal stock
exchange or NASDAQ  Stock Market  ("NASDAQ")  on which such Common Stock is then
listed or admitted  to  trading,  (ii) if no sale takes place on such day on any
such exchange or NASDAQ,  the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange or NASDAQ, (iii) if
the Common Stock is not then listed or admitted to trading on any stock exchange
or NASDAQ, the average of the last reported closing bid and asked prices on such
day in the over-the-counter  market, as furnished by the National Association of
Securities Dealers Automatic  Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engaged in the business of
reporting  such  prices,  as  furnished by any similar firm then engaged in such
business,  or (v) if there is no such firm,  as  furnished  by any member of the
NASD  selected  mutually by the Majority  Holders and Company or, if they cannot
agree upon such  selection,  as selected by two such members of the NASD, one of
which  shall be  selected  by the  Majority  Holders  and one of which  shall be
selected by Company.

                  "Current  Warrant  Price" shall mean, in respect of a share of
Common Stock at any date herein specified,  the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise  Period"  shall  mean the period  during  which this
Warrant is exercisable pursuant to Section 2.1.

                  "Expiration Date" shall mean December 22, 2010.

                  "Fully  Diluted   Outstanding"  shall  mean,  when  used  with
reference to Common Stock,  at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock  issuable in respect of this Warrant  outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
shares  of  Common  Stock  outstanding  on  such  date  which  would  be  deemed
outstanding in accordance  with GAAP for purposes of  determining  book value or
net income per share.

                  "GAAP" shall mean generally accepted accounting  principles in
the United States of America as from time to time in effect.

                  "Holder"  shall mean the Person in whose name the  Warrant set
forth herein is registered on the books of Company maintained for such purpose.

                  "Loan  Agreement" shall mean the Loan Agreement as of December
22, 2000, by and between Fortress Registered  Investment Trust and Prime Retail,
L.P., a Delaware limited partnership.

                  "Majority   Holders"   shall  mean  the  holders  of  Warrants
exercisable  for in  excess of 50% of the  aggregate  number of shares of Common
Stock  then  purchasable  upon  exercise  of all  Warrants,  whether or not then
exercisable.

                  "NASD"  shall mean the  National  Association  of  Securities
Dealers,  Inc.,  or any  successor corporation thereto.

                  "Other Property" shall have the meaning set forth in
Section 4.8.

                  "Outstanding"  shall mean,  when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued  shares of Common  Stock,  except shares then owned or held by or for
the account of Company or any subsidiary  thereof,  and shall include all shares
issuable  in  respect  of  outstanding  scrip or any  certificates  representing
fractional interests in shares of Common Stock.

                  "Person"  shall  mean  any  individual,  sole  proprietorship,
partnership,  limited liability company,  joint venture,  trust,  unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or  government  (whether  federal,  state,  county,  city,  municipal  or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Transfer"  shall  mean  any  disposition  of any  Warrant  or
Warrant  Stock or of any interest in either  thereof,  which would  constitute a
sale thereof within the meaning of the Securities Act.

                  "Warrants" shall mean the Warrants  originally issued pursuant
to the Loan  Agreement  and all  warrants  issued  upon  transfer,  division  or
combination of, or in substitution  for, any thereof.  All Warrants shall at all
times be identical as to terms and conditions and date,  except as to the number
of shares of Common Stock for which they may be exercised.

                  "Warrant  Price"  shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1,  multiplied by (ii) the Current  Warrant Price as of the date of
such exercise.

                  "Warrant   Stock"  shall  mean  the  shares  of  Common  Stock
purchased by the holders of the Warrants upon the exercise thereof.

2.       EXERCISE OF WARRANT

2.1. Manner of Exercise. From and after the date hereof and until 5:00 P.M., New
York time, on the  Expiration  Date,  Holder may exercise  this Warrant,  on any
Business  Day,  for all or any part of the  number of  shares  of  Common  Stock
purchasable  hereunder.  Any  exercise of this  Warrant  shall be subject to the
ownership limitations set forth in the Company's articles of incorporation.

                  In order to exercise this Warrant, in whole or in part, Holder
shall deliver to Company at its principal office at 100 East Pratt Street,  19th
Floor,  Baltimore,  Maryland  21202,  or at the office or agency  designated  by
Company  pursuant  to Section 12, (i) a written  notice of Holder's  election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such  notice  shall  be  substantially  in the  form  of the  subscription  form
appearing  at the end of this  Warrant as Exhibit A, duly  executed by Holder or
its agent or  attorney.  Upon receipt  thereof,  Company  shall,  as promptly as
practicable,  and in any event within five Business Days thereafter,  execute or
cause  to be  executed  and  deliver  or  cause  to be  delivered  to  Holder  a
certificate or certificates  representing the aggregate number of full shares of
Common Stock  issuable  upon such  exercise,  together  with cash in lieu of any
fraction  of  a  share,  as  hereinafter  provided.  The  stock  certificate  or
certificates so delivered shall be, to the extent possible, in such denomination
or  denominations  as such  Holder  shall  request  in the  notice  and shall be
registered  in the name of  Holder.  This  Warrant  shall be deemed to have been
exercised  and such  certificate  or  certificates  shall be deemed to have been
issued,  and Holder or any other Person so  designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes,  as
of the date the  notice,  together  with  the cash or check or  checks  and this
Warrant,  is received by Company as described above and all taxes required to be
paid by Holder,  if any,  pursuant to Section 2.2 prior to the  issuance of such
shares  have been  paid.  If this  Warrant  shall have been  exercised  in part,
Company  shall,  at the time of  delivery  of the  certificate  or  certificates
representing  Warrant  Stock,  deliver to Holder a new  Warrant  evidencing  the
rights of Holder to purchase the  unpurchased  shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of Holder,  appropriate notation may be made on
this  Warrant and the same  returned to Holder.  Notwithstanding  any  provision
herein to the contrary,  Company shall not be required to register shares in the
name of any Person who  acquired  this  Warrant (or part  hereof) or any Warrant
Stock otherwise than in accordance with this Warrant.

                  Payment of the  Warrant  Price  shall be made at the option of
the Holder by (i) wire transfer of immediately  available funds to an account or
accounts  designated  by the Company,  (ii)  certified  or official  bank check,
and/or  (ii) by the  Holder's  surrender  to Company of that number of shares of
Warrant  Stock (or the right to  receive  such  number of  shares)  or shares of
Common Stock having an aggregate  Current  Market Price equal to or greater than
the Current Warrant Price for all shares then being purchased  (including  those
being  surrendered) (a "Cashless  Exercise"),  or (iv) any combination  thereof,
duly endorsed by or  accompanied  by  appropriate  instruments  of transfer duly
executed by Holder or by Holder's attorney duly authorized in writing.

                  In no event shall any Holder  which is a  Regulation  Y Holder
(as  hereinafter  defined) be entitled to exercise this Warrant if such exercise
would, taking into consideration all other shares of Common Stock of the Company
owned by such Regulation Y Holder, increase such Regulation Y Holder's ownership
to greater  than 4.9% of the  Company's  outstanding  voting  Common  Stock on a
fully-diluted basis, unless such exercise is:

                  (i)      for the  purpose of the sale of Warrant  Stock to the
                           public in an  offering  registered under the
                           Securities Act;

                  (ii)     for  the  purpose  of a  sale  in  connection  with a
                           private  placement or other  transaction  pursuant to
                           Rule 144 or rule 144A (or any  successor  provisions)
                           under the Securities Act or otherwise exempt from the
                           registration  requirements  of the  Scurities  Act in
                           which  no  single  purchaser   receives  an  interest
                           (treating any such Warrant as  exercised)  equivalent
                           to more  than  two  percent  (2%) of the  outstanding
                           Common Stock;

                  (iii)    for  the  purpose  of the  sale  of  Warrant  Stock
                           to a purchaser who is already a controlling
                           shareholder of the Company; or

                  (iv)     for the purpose of the sale of the underlying Common
                           Stock back to the Company.

A  "Regulation  Y Holder"  shall be  defined as Holder  which is a bank  holding
company  within the meaning of the Bank Holding  Company Act of 1956, as amended
(the "BHCA"), or a subsidiary thereof subject to Regulation Y under the BHCA. In
the  event of any  change in the  rules  and  regulations  under the BHCA or any
similar  law,  the  effect  of which is to  permit  the  Regulation  Y Holder to
transfer this Warrant or the Warrant  Stock in any other  manner,  the foregoing
restriction shall be deemed modified to permit a transfer of this Warrant or the
Warrant Stock in such other manner.

2.2.  Payment of Taxes. All shares of Common Stock issuable upon the exercise of
this Warrant  pursuant to the terms hereof shall be validly  issued,  fully paid
and  nonassessable  and without any  preemptive  rights.  Company  shall pay all
expenses in connection with, and all taxes and other  governmental  charges that
may be imposed with respect to, the issue or delivery  thereof,  unless such tax
or charge is  imposed  by law upon  Holder,  in which case such taxes or charges
shall be paid by Holder and shall be credited against the exercise price.

2.3.  Fractional  Shares.  Company  shall not be required to issue a  fractional
share of Common  Stock upon  exercise of any  Warrant.  As to any  fraction of a
share  which the  Holder of one or more  Warrants,  the rights  under  which are
exercised in the same transaction,  would otherwise be entitled to purchase upon
such  exercise,  Company  shall pay a cash  adjustment  in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price per
share of Common Stock on the date of exercise,  if there is a public  market for
the Common Stock, or the Fair Market Value thereof as determined by the Board of
Directors of Company.

2.4.  Continued  Validity.  A holder of shares of Common  Stock  issued upon the
exercise of this  Warrant,  in whole or in part,  shall  continue to be entitled
with  respect to such shares to all rights to which it would have been  entitled
as Holder under this Warrant. Company will, at the time of each exercise of this
Warrant,  in whole or in part,  upon the  request of the holder of the shares of
Common Stock issued upon such exercise hereof,  acknowledge in writing,  in form
reasonably  satisfactory to such holder, its continuing  obligation to afford to
such holder all such rights;  provided,  however, that if such holder shall fail
to make  any  such  request,  such  failure  shall  not  affect  the  continuing
obligation of Company to afford to such holder all such rights.

3.       TRANSFER, DIVISION AND COMBINATION

3.1. Transfer. Transfer of this Warrant and all rights hereunder, in whole or in
part,  shall be  registered  on the books of Company to be  maintained  for such
purpose,  upon  surrender  of this  Warrant at the  principal  office of Company
referred  to in  Section  2.1 or the  office or  agency  designated  by  Company
pursuant to Section  12,  together  with a written  assignment  of this  Warrant
substantially  in the form of Exhibit B hereto  duly  executed  by Holder or its
agent or attorney. Upon such surrender and, if required,  such payment,  Company
shall  execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denomination specified in such instrument of assignment,
and shall  issue to the  assignor a new Warrant  evidencing  the portion of this
Warrant  not so  assigned,  and this  Warrant  shall  promptly be  cancelled.  A
Warrant,  may be  exercised by a new Holder for the purchase of shares of Common
Stock without having a new Warrant issued.

3.2.  Division and  Combination.  This  Warrant may be divided or combined  with
other  Warrants upon  presentation  hereof at the aforesaid  office or agency of
Company,  together with a written notice  specifying the names and denominations
in which  new  Warrants  are to be  issued,  signed  by  Holder  or its agent or
attorney.  Subject to compliance  with Section 3.1 and with Section 9, as to any
transfer  which may be involved in such division or  combination,  Company shall
execute and  deliver a new  Warrant or  Warrants in exchange  for the Warrant or
Warrants to be divided or combined in accordance with such notice.

3.3.     Expenses.  Company shall  prepare, issue and deliver at its own expense
(other than transfer  taxes) the new Warrant or Warrants under this Section 3.

3.4.     Maintenance of Books.  Company agrees to  maintain,  at its  aforesaid
office or agency,  books for the registration and the registration of transfer
of the Warrants.

4.       ADJUSTMENTS

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant,  shall be subject to adjustment  from time to time as set forth in
this Section 4.  Company  shall give each Holder  notice of any event  described
below which  requires an  adjustment  pursuant to this  Section 4 at the time of
such event.

4.1.     Stock Dividends, Subdivisions and Combinations.  If, at any time,
Company shall:

(a)  take a record  of the  holders  of its  Common  Stock  for the  purpose  of
entitling  them to  receive a dividend  payable  in, or other  distribution  of,
Additional Shares of Common Stock,

(b)      subdivide its outstanding shares of Common Stock into a larger number
of shares of Common Stock, or

(c)      combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock,

then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the happening of such event,  and (ii) the Current  Warrant Price
shall be adjusted  to equal (A) the  Current  Warrant  Price  multiplied  by the
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  adjustment  divided  by (B) the  number of shares for
which this Warrant is exercisable immediately after such adjustment.

4.2.     Certain  Other  Distributions.  If at any time  Company  shall take a
record of the  holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

(a)      Cash (other than a cash dividend payable out of earnings accumulated
from the date hereof),

(b) any  evidences  of its  indebtedness,  any  shares of its stock or any other
securities or property of any nature  whatsoever  (other than cash,  Convertible
Securities or Additional Shares of Common Stock), or

(c) any warrants or other rights to subscribe  for or purchase any  evidences of
its indebtedness, any shares of its stock or any other securities or property of
any nature  whatsoever  (other than cash,  Convertible  Securities or Additional
Shares of Common Stock),

then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment by a fraction (A) the numerator of which shall be the Current  Market
Price per share of Common  Stock at the date of taking  such  record and (B) the
denominator  of which  shall be such  Current  Market  Price per share of Common
Stock minus the amount  allocable  to one share of Common Stock of any such cash
so distributable and of the fair value (as determined in good faith by the Board
of  Directors  of  Company,  provided  that if such  amount is  disputed  by the
Majority Holders, as determined by an opinion from an investment banking firm of
recognized  national  standing  selected by the Majority Holders) of any and all
such evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights so distributable, and (ii) the
Current  Warrant Price shall be adjusted to equal (A) the Current  Warrant Price
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares for which this Warrant is exercisable  immediately after such adjustment.
A  reclassification  of the Common Stock  (other than a change in par value,  or
from par value to no par value or from no par value to par value) into shares of
Common  Stock  and  shares  of any  other  class  of  stock  shall  be  deemed a
distribution  by Company to the  holders of its Common  Stock of such  shares of
such other  class of stock  within the  meaning of this  Section 4.2 and, if the
outstanding  shares of Common  Stock  shall be changed  into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be  deemed  a  subdivision  or  combination,  as the  case may be,  of the
outstanding shares of Common Stock within the meaning of Section 4.1.

4.3.  Issuance of Additional  Shares of Common Stock. (a) If at any time Company
shall (except as hereinafter  provided)  issue or sell any Additional  Shares of
Common Stock, in exchange for consideration in an amount per Additional Share of
Common  Stock less than the  Current  Warrant  Price at the time the  Additional
Shares of Common Stock are issued,  then (i) the Current Warrant Price as to the
number of shares for which this Warrant is exercisable  prior to such adjustment
shall be reduced to a price  determined  by dividing  (A) an amount equal to the
sum of (x) the number of shares of Common Stock Outstanding immediately prior to
such issue or sale multiplied by the then existing  Current Warrant Price,  plus
(y) the  consideration,  if any, received by Company upon such issue or sale, by
(B) the total number of shares of Common  Stock  Outstanding  immediately  after
such issue or sale; and (ii) the number of shares of Common Stock for which this
Warrant is  exercisable  shall be  adjusted  to equal the  product  obtained  by
multiplying the Current Warrant Price in effect  immediately prior to such issue
or sale by the  number  of shares of Common  Stock  for which  this  Warrant  is
exercisable  immediately  prior to such issue or sale and  dividing  the product
thereof by the Current Warrant Price resulting from the adjustment made pursuant
to clause (i) above.

(b) If at any time Company  shall (except as  hereinafter  provided) at any time
issue or sell any  Additional  Shares of Common  Stock for  consideration  in an
amount per Additional  Share of Common Stock less than the Current Market Price,
then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be adjusted to equal the product  obtained by multiplying the
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately prior to such issue or sale by a fraction (A) the numerator of which
shall be the number of shares of Common Stock Outstanding immediately after such
issue or sale, and (B) the denominator of which shall be the number of shares of
Common Stock Outstanding immediately prior to such issue or sale plus the number
of  shares  which  the  aggregate  offering  price of the  total  number of such
Additional  Shares of Common  Stock would  purchase at the then  Current  Market
Price;  and (ii) the Current  Warrant Price as to the number of shares for which
this  Warrant is  exercisable  prior to such  adjustment  shall be  adjusted  by
multiplying  such Current Warrant Price by a fraction (X) the numerator of which
shall be the number of shares for which this Warrant is exercisable  immediately
prior to such  issue  or sale;  and (Y) the  denominator  of which  shall be the
number of shares of Common  Stock  purchasable  immediately  after such issue or
sale.

(c) If at any time Company (except as hereinafter  provided) shall issue or sell
any Additional Shares of Common Stock in exchange for consideration in an amount
per  Additional  Share of Common  Stock which is less than the  Current  Warrant
Price and Current  Market  Price (as defined  above) at the time the  Additional
Shares of Common Stock are issued,  the  adjustment  required  under Section 4.3
shall be made in accordance with the formula in paragraph (a) or (b) above which
results in the lower  Current  Warrant  Price  following  such  adjustment.  The
provisions  of  paragraphs  (a) and (b) of  Section  4.3  shall not apply to any
issuance  of  Additional  Shares of Common  Stock  for  which an  adjustment  is
provided  under  Section  4.1 or 4.2. No  adjustment  of the number of shares of
Common Stock for which this  Warrant  shall be  exercisable  shall be made under
paragraph (a) or (b) of Section 4.3 upon the issuance of any  Additional  Shares
of Common  Stock which are issued  pursuant to the  exercise of any  warrants or
other  subscription  or  purchase  rights or  pursuant  to the  exercise  of any
conversion  or  exchange  rights  in any  Convertible  Securities,  if any  such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such  Convertible  Securities  (or upon the
issuance of any  warrant or other  rights  therefor)  pursuant to Section 4.4 or
Section 4.5.

4.4.  Issuance of Warrants or Other Rights.  If at any time Company shall take a
record of the holders of its Common Stock for the purpose of  entitling  them to
receive  a  distribution  of, or shall in any  manner  (whether  directly  or by
assumption in a merger in which Company is the surviving  corporation)  issue or
sell,  any warrants or other rights to subscribe for or purchase any  Additional
Shares of Common Stock or any Convertible Securities,  whether or not the rights
to exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable  upon the exercise of such  warrants or
other rights or upon conversion or exchange of such Convertible Securities shall
be less than the Current  Warrant  Price or the Current  Market  Price in effect
immediately  prior to the time of such issue or sale,  then the number of shares
for which this Warrant is  exercisable  and the Current  Warrant  Price shall be
adjusted as  provided  in Section  4.3 on the basis that the  maximum  number of
Additional  Shares of Common  Stock  issuable  pursuant to all such  warrants or
other  rights or  necessary  to effect the  conversion  or  exchange of all such
Convertible  Securities  shall be deemed to have been issued and outstanding and
Company  shall be  deemed  to have  received  all of the  consideration  payable
therefor,  if any,  as of the date of the  issuance  of such  warrants  or other
rights.  No further  adjustments of the Current Warrant Price shall be made upon
the actual issue of such Common  Stock or of such  Convertible  Securities  upon
exercise  of such  warrants  or other  rights or upon the  actual  issue of such
Common Stock upon such conversion or exchange of such Convertible Securities.

4.5.  Issuance of  Convertible  Securities.  If at any time Company shall take a
record of the holders of its Common Stock for the purpose of  entitling  them to
receive  a  distribution  of, or shall in any  manner  (whether  directly  or by
assumption in a merger in which Company is the surviving  corporation)  issue or
sell,  any  Convertible  Securities,  whether or not the rights to  exchange  or
convert  thereunder  are  immediately  exercisable,  and the price per share for
which Common Stock is issuable upon such  conversion  or exchange  shall be less
than the Current  Warrant  Price or Current  Market Price in effect  immediately
prior to the time of such  issue or sale,  then the  number of Shares  for which
this Warrant is exercisable  and the Current  Warrant Price shall be adjusted as
provided  in Section  4.3 on the basis  that the  maximum  number of  Additional
Shares of Common  Stock  necessary to effect the  conversion  or exchange of all
such Convertible  Securities shall be deemed to have been issued and outstanding
and Company shall have received all of the consideration  payable  therefor,  if
any, as of the date of issuance of such Convertible Securities. No adjustment of
the number of Shares  for which this  Warrant  is  exercisable  and the  Current
Warrant  Price  shall be made under this  Section  4.5 upon the  issuance of any
Convertible Securities which are issued pursuant to the exercise of any warrants
or other subscription or purchase rights therefor,  if any such adjustment shall
previously  have been made upon the  issuance of such  warrants or other  rights
pursuant  to Section  4.4.  No further  adjustments  of the number of Shares for
which this Warrant is  exercisable  and the Current  Warrant Price shall be made
upon the actual issue of such Common Stock upon  conversion  or exchange of such
Convertible  Securities and, if any issue or sale of such Convertible Securities
is made upon  exercise  of any  warrant or other  right to  subscribe  for or to
purchase any such Convertible  Securities for which adjustments of the number of
Shares for which this Warrant is exercisable  and the Current Warrant Price have
been or are to be made  pursuant  to  other  provisions  of this  Section  4, no
further  adjustments  of  the  number  of  Shares  for  which  this  Warrant  is
exercisable  and the Current Warrant Price shall be made by reason of such issue
or sale.

4.6.     [INTENTIONALLY OMITTED]

4.7.  Other  Provisions  Applicable  to  Adjustments  under  this  Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Current Warrant Price provided for in this Section 4:

(a) Computation of  Consideration.  To the extent that any Additional  Shares of
Common Stock or any  Convertible  Securities  or any warrants or other rights to
subscribe  for  or  purchase  any  Additional  Shares  of  Common  Stock  or any
Convertible Securities shall be issued for cash consideration, the consideration
received by Company therefor shall be the amount of the cash received by Company
therefor,  or,  if  such  Additional  Shares  of  Common  Stock  or  Convertible
Securities are offered by Company for subscription,  the subscription price, or,
if such Additional Shares of Common Stock or Convertible  Securities are sold to
underwriters or dealers for public offering without a subscription offering, the
initial public offering price (in any such case  subtracting any amounts paid or
receivable  for accrued  interest or accrued  dividends and without  taking into
account any compensation,  discounts or expenses paid or incurred by Company for
and in the  underwriting  of, or  otherwise  in  connection  with,  the issuance
thereof).  To the extent that such issuance shall be for a  consideration  other
than cash, then, except as herein otherwise  expressly  provided,  the amount of
such consideration shall be deemed to be the fair value of such consideration at
the time of such  issuance as determined in good faith by the Board of Directors
of  Company,   provided  that  if  the  Majority   Holders  shall  dispute  such
determination, such fair value shall be determined by an investment banking firm
of recognized  standing selected by the Majority Holders. In case any Additional
Shares of Common Stock or any  Convertible  Securities  or any warrants or other
rights to subscribe  for or purchase such  Additional  Shares of Common Stock or
Convertible  Securities  shall be issued in connection  with any merger in which
Company issues any  securities,  the amount of  consideration  therefor shall be
deemed  to be the fair  value,  as  determined  in good  faith  by the  Board of
Directors  of  Company,  of such  portion  of the  assets  and  business  of the
nonsurviving  corporation  as such Board in good  faith  shall  determine  to be
attributable to such Additional Shares of Common Stock,  Convertible Securities,
warrants or other  rights,  as the case may be,  provided  that if the  Majority
Holders shall dispute such determination, such fair value shall be determined by
an  investment  banking  firm of  recognized  standing  selected by the Majority
Holders.  The  consideration  for any Additional Shares of Common Stock issuable
pursuant to any warrants or other  rights to subscribe  for or purchase the same
shall be the  consideration  received by Company for  issuing  such  warrants or
other rights plus the additional  consideration payable to Company upon exercise
of such warrants or other rights. The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Convertible  Securities shall
be the consideration received by Company for issuing warrants or other rights to
subscribe for or purchase such Convertible  Securities,  plus the  consideration
paid or payable to Company in respect of the  subscription  for or  purchase  of
such Convertible Securities, plus the additional consideration,  if any, payable
to Company  upon the  exercise  of the right of  conversion  or exchange in such
Convertible  Securities.  In case of the issuance at any time of any  Additional
Shares of Common Stock or Convertible  Securities in payment or  satisfaction of
any dividends upon any class of stock other than Common Stock,  Company shall be
deemed  to  have  received  for  such  Additional  Shares  of  Common  Stock  or
Convertible  Securities a consideration  equal to the amount of such dividend so
paid or satisfied.

(b) When  Adjustments  to Be Made.  The  adjustments  required by this Section 4
shall  be made  whenever  and as  often  as any  specified  event  requiring  an
adjustment  shall occur,  except that any  adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of Common  Stock,  as provided  for in Section 4.1) up to, but not beyond
the  date  of  exercise  if such  adjustment  either  by  itself  or with  other
adjustments  not previously made adds or subtracts less than 1% of the shares of
Common  Stock for which this  Warrant is  exercisable  immediately  prior to the
making of such  adjustment.  Any  adjustment  representing a change of less than
such minimum  amount (except as aforesaid)  which is postponed  shall be carried
forward and made as soon as such  adjustment,  together  with other  adjustments
required by this Section 4 and not  previously  made,  would result in a minimum
adjustment or on the date of exercise.  For the purpose of any  adjustment,  any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.

(c)      Fractional  Interests.  In computing adjustments under this Section 4,
fractional  interests in Common Stock shall be taken into account to the nearest
1/10th of a share.

(d) When Adjustment Not Required.  If Company shall take a record of the holders
of its Common Stock for the purpose of  entitling  them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter and before
the  distribution  to stockholders  thereof,  legally abandon its plan to pay or
deliver such  dividend,  distribution,  subscription  or purchase  rights,  then
thereafter  no  adjustment  shall be  required  by reason of the  taking of such
record  and any such  adjustment  previously  made in respect  thereof  shall be
rescinded and annulled.

(e)  Escrow of  Warrant  Stock.  If after  any  property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and Holder  exercises this Warrant,  any Additional  Shares of Common
Stock  issuable upon exercise by reason of such  adjustment  shall be deemed the
last shares of Common Stock for which this Warrant is exercised (notwithstanding
any other  provision to the contrary  herein) and such shares or other  property
shall be held in escrow for Holder by Company to be issued to Holder upon and to
the extent that the event actually takes place, upon payment of the then Current
Warrant Price.  Notwithstanding  any other provision to the contrary herein,  if
the event for which such record was taken fails to occur or is  rescinded,  then
such  escrowed  shares  shall be  cancelled  by Company  and  escrowed  property
returned.

(f)  Challenge to Good Faith  Determination.  Whenever the Board of Directors of
Company  shall be  required  to make a  determination  in good faith of the fair
value of any item under this Section 4, such  determination may be challenged in
good faith by the  Majority  Holders,  and any  dispute  shall be resolved by an
investment banking firm of recognized national standing selected by the Majority
Holders.

4.8. Reorganization,  Reclassification,  Merger, Consolidation or Disposition of
Assets.  In case Company shall  reorganize  its capital,  reclassify its capital
stock,  consolidate or merge with or into another  corporation (where Company is
not the surviving corporation or where there is a change in or distribution with
respect to the Common Stock of Company),  or sell, transfer or otherwise dispose
of all or  substantially  all  its  property,  assets  or  business  to  another
corporation and, pursuant to the terms of such reorganization, reclassification,
merger,  consolidation  or disposition of assets,  shares of common stock of the
successor  or  acquiring  corporation,  or any  cash,  shares  of stock or other
securities  or property of any nature  whatsoever  (including  warrants or other
subscription  or purchase  rights) in addition to or in lieu of common  stock of
the successor or acquiring corporation ("Other Property"), are to be received by
or distributed to the holders of Common Stock of Company, then each Holder shall
have the right thereafter to receive,  upon exercise of such Warrant, the number
of  shares of common  stock of the  successor  or  acquiring  corporation  or of
Company, if it is the surviving corporation,  and Other Property receivable upon
or as a result of such reorganization,  reclassification,  merger, consolidation
or disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable  immediately  prior to such event.  In case of
any such reorganization,  reclassification, merger, consolidation or disposition
of assets, the successor or acquiring  corporation (if other than Company) shall
expressly  assume the due and punctual  observance  and  performance of each and
every  covenant and  condition  of this Warrant to be performed  and observed by
Company  and all the  obligations  and  liabilities  hereunder,  subject to such
modifications  as may be deemed  appropriate (as determined by resolution of the
Board of Directors  of Company  with the  approval of the  Majority  Holders) in
order to  provide  for  adjustments  of shares of  Common  Stock for which  this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments  provided  for in this  Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring  corporation" shall include stock of
such  corporation  of any class which is not preferred as to dividends or assets
over any other  class of stock of such  corporation  and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other  securities  which are convertible  into or  exchangeable  for any such
stock,  either  immediately  or upon  the  arrival  of a  specified  date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock.  The foregoing  provisions of this Section 4.8 shall
similarly  apply  to  successive  reorganizations,  reclassifications,  mergers,
consolidations or disposition of assets.

4.9. Other Action  Affecting  Common Stock.  In case at any time or from time to
time Company  shall take any action in respect of its Common  Stock,  other than
any action  described  in this  Section 4, then,  the number of shares of Common
Stock or other  stock for which  this  Warrant  is  exercisable  purchase  price
thereof  shall be  adjusted  upward  and the  purchase  price  thereof  shall be
adjusted downward in such manner as may be equitable in the circumstances.

4.10.    Certain  Limitations.  Notwithstanding anything herein to the contrary,
Company agrees not to enter into any  transaction  which,  by reason of any
adjustment  hereunder,  would cause the Current Warrant Price to be less than
than the par value per share of Common Stock.

5.       NOTICES TO WARRANT HOLDERS

5.1.  Notice of  Adjustments.  Whenever the number of shares of Common Stock for
which this  Warrant is  exercisable,  or whenever  the price at which a share of
such Common  Stock may be  purchased  upon  exercise of the  Warrants,  shall be
adjusted pursuant to Section 4, Company shall forthwith prepare a certificate to
be  executed  by the chief  financial  officer  of  Company  setting  forth,  in
reasonable  detail,  the event  requiring the adjustment and the method by which
such  adjustment was  calculated  (including a description of the basis on which
the Board of Directors of Company  determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or other
subscription  or  purchase  rights  referred  to  in  Section  4.2  or  4.7(a)),
specifying  the  number  of shares of Common  Stock for which  this  Warrant  is
exercisable  and (if such  adjustment  was made  pursuant to Section 4.8 or 4.9)
describing  the number and kind of any other  shares of stock or Other  Property
for which this Warrant is  exercisable,  and any change in the purchase price or
prices thereof,  after giving effect to such adjustment or change. Company shall
promptly cause a signed copy of such  certificate to be delivered to each Holder
in  accordance  with Section  17.2.  Company  shall keep at its office or agency
designated  pursuant to Section 12 copies of all such certificates and cause the
same to be available for inspection at said office during normal  business hours
by any Holder or any prospective  purchaser of a Warrant  designated by a Holder
thereof.

5.2.     Notice of Corporate Action.  If at any time

(a)  Company  shall take a record of the  holders  of its  Common  Stock for the
purpose of entitling  them to receive a dividend or other  distribution,  or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other  securities  or  property,  or to receive any
other right, or

(b) there shall be any capital  reorganization of Company,  any reclassification
or  recapitalization  of the capital  stock of Company or any  consolidation  or
merger of Company with,  or any sale,  transfer or other  disposition  of all or
substantially  all the  property,  assets or  business  of Company  to,  another
corporation, or

(c)      there shall be a voluntary or involuntary dissolution, liquidation or
winding up of Company;

then,  in any one or more of such  cases,  Company  shall  give to Holder (i) at
least 30 days' prior written  notice of the date on which a record date shall be
selected for such dividend,  distribution or right or for determining  rights to
vote  in  respect  of  any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization,  reclassification,  merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, at least 30 days' prior written  notice of the date when the same shall take
place.  Such notice in accordance  with the foregoing  clause also shall specify
(i) the date on which any such  record is to be taken  for the  purpose  of such
dividend,  distribution or right,  the date on which the holders of Common Stock
shall be entitled to any such dividend,  distribution  or right,  and the amount
and  character  thereof,  and (ii) the  date on which  any such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  shares of Common  Stock for  securities  or other
property  deliverable  upon  such  reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up. Each such written notice shall be sufficiently  given if addressed to Holder
at the last address of Holder appearing on the books of Company and delivered in
accordance with Section 17.2.

6.       NO IMPAIRMENT

                  Company   shall  not  by  any   action,   including,   without
limitation,   amending  its   certificate  of   incorporation   or  through  any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  Company  will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant,  (b) take all such action as
may be  necessary or  appropriate  in order that Company may validly and legally
issue fully paid and  nonassessable  shares of Common Stock upon the exercise of
this  Warrant,  and (c) use its best efforts to obtain all such  authorizations,
exemptions  or consents  from any public  regulatory  body  having  jurisdiction
thereof as may be necessary to enable Company to perform its  obligations  under
this Warrant.
                  Upon the  request of Holder,  Company  will at any time during
the  period  this  Warrant  is  outstanding  acknowledge  in  writing,  in  form
satisfactory  to  Holder,  the  continuing  validity  of  this  Warrant  and the
obligations of Company hereunder.

7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
         APPROVAL OF ANY GOVERNMENTAL AUTHORITY

                  From and after  the date  hereof,  Company  shall at all times
reserve and keep  available  for issue upon the exercise of Warrants such number
of its authorized  but unissued  shares of Common Stock as will be sufficient to
permit the exercise in full of all  outstanding  Warrants.  All shares of Common
Stock which shall be so issuable,  when issued upon  exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and
validly issued and fully paid and  nonassessable,  and not subject to preemptive
rights.

                  Before  taking  any action  which  would  cause an  adjustment
reducing  the Current  Warrant  Price  below the then par value,  if any, of the
shares of Common Stock  issuable upon  exercise of the  Warrants,  Company shall
take any  corporate  action  which may be  necessary  in order that  Company may
validly and legally  issue fully paid and  non-assessable  shares of such Common
Stock at such adjusted Current Warrant Price.

                  Before  taking any action which would result in an  adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Current Warrant Price,  Company shall obtain all such  authorizations  or
exemptions  thereof,  or consents  thereto,  as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

                  If any shares of Common  Stock  required  to be  reserved  for
issuance upon exercise of Warrants require  registration or  qualification  with
any governmental  authority or other  governmental  approval or filing under any
federal or state law  (otherwise  than as  provided  in  Section 9) before  such
shares may be so issued,  Company  will in good  faith and as  expeditiously  as
possible and at its expense endeavor to cause such shares to be duly registered.

8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

                  In the case of all dividends or other distributions by Company
to the  holders of its  Common  Stock with  respect  to which any  provision  of
Section 4 refers to the taking of a record of such holders, Company will in each
such  case  take  such a record  and will  take  such  record as of the close of
business  on a  Business  Day.  Company  will  not  at  any  time,  except  upon
dissolution,  liquidation  or winding up of  Company,  close its stock  transfer
books or Warrant  transfer  books so as to result in  preventing or delaying the
exercise or transfer of any Warrant.

9.       TRANSFERABILITY

9.1.  Registration.  The Company shall at all times maintain such  registrations
and  qualifications  in effect  under the  Securities  Act and under  such other
securities or blue sky laws of such  jurisdictions  within the United States and
Puerto Rico as each holder of (i) Warrant  Stock or (ii) this Warrant in respect
of Warrant  Stock  issuable  upon the  exercise of this  Warrant  shall  request
(provided,  however, that Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is not
then  qualified or to file any general  consent to service or process) such that
the Warrant Stock is freely  transferable under the Securities Act and all other
applicable law.

9.2. Indemnification.  (a) Company shall indemnify and hold harmless each holder
of  Warrant  Stock (and any holder of this  Warrant,  in respect of the  Warrant
Stock issuable upon exercise hereof), each such holder's directors and officers,
and each other Person  (including  each  underwriter)  who  participated  in the
offering of any Warrant Stock and each other  Person,  if any, who controls such
holder or such  participating  Person within the meaning of the Securities  Act,
against any losses, claims,  damages or liabilities,  joint or several, to which
such  holder  or any  such  director  or  officer  or  participating  Person  or
controlling  Person may become  subject  under the  Securities  Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or  actions  in  respect  thereof)  arise out of or are  based  upon any of the
following statements,  omissions or violations (collectively "Violations"):  (i)
any alleged untrue  statement of any material fact  contained,  on the effective
date thereof,  in any  Registration  Statement  under which such securities were
registered  under  the  Securities  Act,  any  preliminary  prospectus  or final
prospectus  contained therein,  or any amendment or supplement  thereto, or (ii)
any alleged  omission  to state  therein a material  fact  required to be stated
therein or necessary to make the statements  therein not  misleading,  and shall
reimburse  such  holder or such  director,  officer or  participating  Person or
controlling  Person for any legal or any other expenses  reasonably  incurred by
such holder or such  director,  officer or  participating  Person or controlling
Person in  connection  with  investigating  or defending  any such loss,  claim,
damage, liability or action;

         (b) Each  holder of Warrant  Stock who  participates  in an offering of
Warrant Stock hereunder  shall indemnify and hold harmless the Company,  each of
its  directors,  each of its  officers  who shall have  signed any  registration
statement  filed in  connection  with such  offering,  each Person,  if any, who
controls the Company within the meaning of the Securities  Act, any other holder
of Warrant  Stock who  participated  in the offering of any Warrant  Stock,  any
controlling Person of any such other holder and each officer, director, partner,
and employee of such other holder of Warrant Stock and such controlling  Person,
against any losses, claims,  damages or liabilities,  joint or several, to which
any of the foregoing  Persons may otherwise  become subject under the Securities
Act, the Exchange  Act or other  federal or state laws,  insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) are determined by
a court of competent jurisdiction by a final non-appealable order to have solely
arisen out of or be based upon a Violation that occurred in reliance upon and in
conformity  with written  information  furnished by such holder of Warrant Stock
expressly for use in connection with such registration;  provided, however, that
(x) the  indemnification  required  by this  Section  9.2(b)  shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or expense
if settlement is effected  without the consent of the relevant holder of Warrant
Stock,  which consent shall not be  unreasonably  withheld,  and (y) in no event
shall the amount of any  indemnity  under  this  Section  9.2(b)  exceed the net
proceeds from the applicable offering received by such holder of Warrant Stock

10.      SUPPLYING INFORMATION

                  Company shall cooperate with each Holder of a Warrant and each
holder of Warrant  Stock in  supplying  such  information  as may be  reasonably
necessary for such holder to complete and file any  information  reporting forms
presently  or  hereafter  required  by  the  Commission  as a  condition  to the
availability of an exemption from the Securities Act for the sale of any Warrant
Stock.

11.      LOSS OR MUTILATION

                  Upon receipt by Company from any Holder of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood  that  the  written  agreement  of FRIT  PRT  LENDING  LLC  shall  be
sufficient indemnity), and in case of mutilation upon surrender and cancellation
hereof,  Company  will  execute and deliver in lieu hereof a new Warrant of like
tenor to such Holder; provided, in the case of mutilation, no indemnity shall be
required if this  Warrant in  identifiable  form is  surrendered  to Company for
cancellation.

12.      OFFICE OF COMPANY

                  As long as any of the  Warrants  remain  outstanding,  Company
shall maintain an office or agency (which may be the principal executive offices
of Company)  where the Warrants may be presented for exercise,  registration  of
transfer, division or combination as provided in this Warrant.

13.      FINANCIAL AND BUSINESS INFORMATION

13.1. Quarterly Information. During such period, if any, that the Company is not
required to file periodic  reports under the Exchange Act,  Company will deliver
to each Holder,  as soon as practicable after the end of each of the first three
quarters of Company, and in any event within 45 days thereafter,  one copy of an
unaudited  consolidated  balance sheet of Company and its subsidiaries as at the
close of such  quarter,  and the related  unaudited  consolidated  statements of
income and cash flows of Company for such quarter and, in the case of the second
and third quarters, for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year. Such financial statements shall be prepared
by Company in  accordance  with GAAP and  accompanied  by the  certification  of
Company's chief executive officer or chief financial officer that such financial
statements  are  complete  and  correct  and  present  fairly  the  consolidated
financial  position,  results of  operations  and cash flows of Company  and its
subsidiaries as at the end of such quarter and for such year-to-date  period, as
the case may be.

13.2.  Annual  Information.  During such period, if any, that the Company is not
required to file periodic  reports under the Exchange Act,  Company will deliver
to each  Holder  as soon as  practicable  after the end of each  fiscal  year of
Company, and in any event within 90 days thereafter, one copy of:

             (i)      an audited consolidated balance sheet of Company and its
         subsidiaries  as at the end of such year, and

             (ii)     audited consolidated statements of income, retained
         earnings and cash flows of Company and its subsidiaries for such year;

setting forth in each case in comparative form the figures for the corresponding
periods in the previous  fiscal year, all prepared in accordance  with GAAP, and
which  audited  financial  statements  shall be  accompanied  by (i) an  opinion
thereon of the independent  certified public  accountants  regularly retained by
Company,  or any other  firm of  independent  certified  public  accountants  of
recognized  national  standing  selected  by  Company  and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.

13.3.  Filings.  Company will file on or before the required date all regular or
periodic  reports  (pursuant to the Exchange Act) with the  Commission  and will
deliver  to Holder  promptly  upon  their  becoming  available  one copy of each
report, notice or proxy statement sent by Company to its stockholders generally,
and of each regular or periodic  report  (pursuant to the Exchange  Act) and any
Registration   Statement,   prospectus  or  written  communication  (other  than
transmittal letters) (pursuant to the Securities Act), filed by Company with (i)
the Commission or (ii) any  securities  exchange on which shares of Common Stock
are listed.

14.      [INTENTIONALLY OMITTED]

15.      APPRAISAL

                  The  determination  of the Appraised Value per share of Common
Stock  shall be made by an  investment  banking  firm of  nationally  recognized
standing  selected by the  Majority  Holders.  If the  investment  banking  firm
selected by the Majority  Holders is not  acceptable  to the Company and Company
and the  Majority  Holders  cannot  agree on a  mutually  acceptable  investment
banking firm,  then the Majority  Holders and Company shall each choose one such
investment  banking firm and the respective  chosen firms shall agree on another
investment  banking  firm which  shall  make the  determination.  Company  shall
retain,  at its sole cost, such investment  banking firm as may be necessary for
the determination of Appraised Value required by the terms of this Warrant.

16.      LIMITATION OF LIABILITY

                  No provision hereof,  in the absence of affirmative  action by
Holder to purchase  shares of Common  Stock,  and no  enumeration  herein of the
rights or privileges of Holder hereof,  shall give rise to any liability of such
Holder  for the  purchase  price  of any  Common  Stock or as a  stockholder  of
Company,  whether  such  liability  is  asserted by Company or by  creditors  of
Company.

17.      MISCELLANEOUS

17.1.  Nonwaiver and  Expenses.  No course of dealing or any delay or failure to
exercise any right  hereunder on the part of Holder shall operate as a waiver of
such right or  otherwise  prejudice  Holder's  rights,  powers or  remedies.  If
Company fails to make, when due, any payments  provided for hereunder,  or fails
to comply with any other provision of this Warrant,  Company shall pay to Holder
such amounts as shall be sufficient  to cover any costs and expenses  including,
but not limited to,  reasonable  attorneys'  fees,  including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

17.2.  Notice  Generally.  Any  notice,  demand,  request,  consent,   approval,
declaration,  delivery or other  communication  hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either  delivered in person with receipt  acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:

(a) If to any  Holder or holder of  Warrant  Stock,  at its last  known  address
appearing on the books of Company maintained for such purpose.

(b)      If to Company at

                           Prime Retail, Inc.
                           100 East Pratt Street
                           Nineteenth Floor
                           Baltimore, MD 21202
                           Attention:  President

or at such  other  address  as may be  substituted  by  notice  given as  herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive such notice.  Every notice,  demand,  request,
consent, approval, declaration,  delivery or other communication hereunder shall
be  deemed to have  been  duly  given or served on the date on which  personally
delivered,  with  receipt  acknowledged,  telecopied  and  confirmed by telecopy
answerback,  or three  Business Days after the same shall have been deposited in
the United  States mail.  Failure or delay in  delivering  copies of any notice,
demand, request, approval,  declaration,  delivery or other communication to the
person  designated  above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval,  declaration,  delivery
or other communication.

17.3. Indemnification. Company agrees to indemnify and hold harmless Holder from
and against any liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon,  incurred by or asserted  against  Holder in
any manner  relating to or arising out of (i) Holder's  exercise of this Warrant
and/or  ownership of any shares of Warrant Stock issued in consequence  thereof,
or (ii) any  litigation  to which  Holder is made a party in its  capacity  as a
stockholder  of Company;  provided,  however,  that  Company  will not be liable
hereunder  to the extent that any  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments, suits, claims, costs, attorneys' fees, expenses
or disbursements are found in a final non-appealable judgment by a court to have
resulted from Holder's gross negligence,  bad faith or willful misconduct in its
capacity as a stockholder or warrantholder of Company.

17.4.  Remedies.  Each holder of Warrant and Warrant Stock, in addition to being
entitled to exercise all rights granted by law,  including  recovery of damages,
will be entitled  to  specific  performance  of its rights  under this  Warrant.
Company agrees that monetary damages would not be adequate  compensation for any
loss incurred by reason of a breach by it of the  provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

17.5.  Successors  and Assigns.  Subject to the provisions of Sections 3.1, this
Warrant  and the rights  evidenced  hereby  shall inure to the benefit of and be
binding upon the successors of Company and the successors and assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant or Warrant Stock,  and shall be enforceable by
any such Holder or holder of Warrant Stock.

17.6. Amendment.  This Warrant and all other Warrants may be modified or amended
or the  provisions  hereof  waived with the  written  consent of Company and the
Majority  Holders,  provided  that no such Warrant may be modified or amended to
reduce  the  number  of  shares  of Common  Stock  for  which  such  Warrant  is
exercisable  or to increase the price at which such shares may be purchased upon
exercise of such Warrant  (before  giving  effect to any  adjustment as provided
therein) without the prior written consent of the Holder thereof.

17.7.  Severability.  Wherever possible, each provision of this Warrant shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Warrant.

17.8.    Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

17.9.    Governing  Law.  This Warrant shall be governed by the laws of the
State of New York, without regard to the provisions thereof relating to conflict
of laws.

                                       [the next page is the signature page]

<PAGE>

                  IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed  and its  corporate  seal to be  impressed  hereon and  attested by its
Secretary or an Assistant Secretary.

Dated:  December 22, 2000

                                               PRIME RETAIL, INC.

                                               By:  /s/ C. Alan Schroeder
                                               ---------------------------------
                                               Name:  C. Alan Schroeder
                                               Title:  Executive Vice President

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