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Exhibit 10.38

Memo

| |  |       |  |                         
| |  | ----- |  | ------------------------
| |  | To:   |  | Gus Pagonis             
|
| |  | From: |  | Greg Lee                
|
| |  | cc:   |  | Alan Lacy, Paul Liska   
|
| |  | Date: |  | April 9, 2002           
|
| |  | Re:   |  | Resolution of Two Issues
| |  |      

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | I wanted to provide you some closure regarding two issues that we have
discussed recently.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Pension enhancement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | As you are aware, you received a special, non-qualified benefit from January 1,
1997 through December 31, 2001 that supplemented your regular benefit from the
Sears Pension Plan and the Supplemental Retirement Income Plan at the rate of
one additional year of credited service for each completed year of service.                                                                                                                                                                                                     
|
| | I have authorized the extension of this enhanced benefit. The extended
enhancement will also provide one additional year of credited service for each
completed year of service for the time period beginning January 1, 2002 through
your last day worked at Sears, not to extend past your 65th birthday. Attached
is a schedule which estimates the regular and enhanced benefits.                                                                                                                                        
|
| | Relocation after retirement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Regarding your request for a company-paid relocation back to Pittsburgh after
your eventual retirement, we have confirmed with Tony Rucci that a commitment
to this effect was made to you at the time of your hire. Accordingly, Sears
will reimburse you for the normal expenses required to move your household to
Pittsburgh, Pennsylvania upon your retirement. Sears will not provide a moving
allowance in advance of the move nor will you be eligible for the Sears home
purchase program as part of this agreement.
|
| | Please let me know if you have any questions.