PRIME RETAIL INC/BD/
EX-10.55 LETTER AGREEMENT WILLIAM H. CARPENTER
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>ex1055.txt
<DESCRIPTION>EX-10.55 LETTER AGREEMENT WILLIAM H. CARPENTER
<TEXT>
                                    Ex-10.55

                               Prime Retail, Inc.
                               Prime Retail, L.P.
                              100 East Pratt Street
                                   19th Floor
                               Baltimore, MD 21202


                                 April 24, 2001



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

                  Re:      Separation Agreement

Dear Bill:

     Reference is made to that  certain  Separation  Agreement  dated August 24,
2000 by and between Prime Retail,  Inc., Prime Retail, L.P. and you. Capitalized
terms that used herein but are not otherwise defined shall have the meanings set
forth in the Agreement.

     This letter will confirm our understanding  that, in consideration for your
capital contribution of $200,000 in immediately available funds to the Operating
Partnership,  receipt of which is hereby acknowledged, the Operating Partnership
will  specially  allocate  to  you,  as  a  limited  partner  of  the  Operating
Partnership  for each  taxable  year of the  Operating  Partnership  for federal
income tax purposes in which the Operating  Partnership  reports (as is required
by Section 2(c) of the  Agreement,  superceding  any provisions in the Operating
Partnership's  Partnership  Agreement to the  contrary) the payments made to you
under Section 2(a) of the Agreement as "guaranteed  payments" within the meaning
of Section 707(c) of the Internal Revenue Code of 1986, as amended (the "Code"),
the  corresponding  deductions (if any) resulting from such guaranteed  payments
(the "Annual Corresponding Deductions").

     The special  allocation of Annual  Corresponding  Deductions to you for any
Operating  Partnership  taxable  year shall be reduced by the excess (if any) of
(1) the  excess  (if  any) of (a) the  Annual  Corresponding  Deductions  for an
Operating  Partnership  taxable  year  over  (b)  the  portion  of  such  Annual
Corresponding  Deductions  that  otherwise  would be allocated to Prime  Retail,
Inc., absent this letter agreement (and the similar letter agreement for Abraham
Rosenthal),  over (2) the other items of deductible  expense  allocated to Prime
Retail, Inc. for such Operating  Partnership taxable year. However,  that to the
extent the special allocation of Annual Corresponding  Deductions to you for any
such Operating Partnership shall carry forward this shortfall and supplement the
special allocation of Annual  Corresponding  Deductions in subsequent  Operating
Partnership  taxable years with special allocations of other items of deductible
expense that would  otherwise be allocated  to Prime  Retail,  Inc.  (subject to
their being any such allocable items) in order to eliminate this shortfall.

<PAGE>

     You  acknowledge  and agree that neither the Operating  Partnership nor the
Company has any  responsibility  or will have any liability with respect to your
ability to utilize any of these special  allocations  of deductions or any other
tax consequences to you under the Agreement.

     Except as expressly provided herein, the Agreement is otherwise  reaffirmed
in all respects.

     Please acknowledge your agreement to the foregoing by executing this letter
in the space provided.

                                    Very truly yours,

                                    PRIME RETAIL, INC.

                                    By:   C. Alan Schroeder
                                          --------------------------------------
                                    Name:  C. Alan Schroeder
                                          --------------------------------------
                                    Title:  E. V. P.
                                          --------------------------------------

                                    PRIME RETAIL, L.P.

                                    By: Prime Retail, Inc.
                                    Its: General Partner

                                    By:   C. Alan Schroeder
                                          --------------------------------------
                                    Name:  C. Alan Schroeder
                                          --------------------------------------
                                    Title:  E. V. P.
                                          --------------------------------------


Acknowledged this 24th day of April, 2001.


 /s/ William H. Carpenter, Jr.
------------------------------------------
     William H. Carpenter, Jr.

</TEXT>
</DOCUMENT>
