Document:

<PAGE>

                                                            EXHIBIT 10.38

                 [LETTERHEAD OF HORIZON GROUP PROPERTIES, INC.]

                                 April 26, 2001

Mr. Andrew Pelmoter
Horizon Group Properties, Inc.
5000 Hakes Drive
Muskegon, MI 49441

Dear Andrew:

         This letter amends your retention letter dated November 1, 2000.

While we engage in our efforts to maximize the value of our portfolio, we
recognize that the employees could have concerns about their future with the
company. Your efforts on behalf of the company have been important and will
continue to be important as we embark on this new phase. Although I have
discussed various possible scenarios which could have little, if any, impact
on your position with the company (including a portfolio purchaser retaining
our company as its leasing agent and manager, that only some of our
properties are actually sold, and/or that we start another line of business
which requires your expertise), there is no absolute guarantee or promise of
continuing employment that I can give. In light of these circumstances and
the company's desire that you remain fully committed to your efforts on its
behalf, the company intends to both reward you for contributing to a
successful transaction and afford you appropriate protection in the event of
a transaction after which we cannot offer you continued employment.

         Accordingly, this letter sets forth the terms of your continued
         employment with the company:

1.       SALARY AND DISCRETIONARY ANNUAL BONUS. You will continue your current
         salary, subject to discretionary increases according to our current
         company policy.

2.       SUCCESS BONUS ON PORTFOLIO DISPOSITION. Provided that you have not
         resigned prior to the actual closing date of the sale of all or
         substantially all of your portfolio, you will receive a success bonus
         if and when the company sells all or substantially all of our portfolio
         (the "Success Bonus").

         The Success Bonus shall be calculated on the following basis:

<TABLE>
<CAPTION>
         GROSS SALES PROCEEDS FOR THE PORTFOLIO              PERCENTAGE OF
         IN EXCESS OF OUTSTANDING MORTGAGE DEBT*             YOUR ANNUAL SALARY
         ---------------------------------------             ------------------
         <S>                                                 <C>
         Less than $40 Million                               Discretionary
         Between $40 and $50 Million                         50%
         Between $50 and $60 Million                         75%
         Greater than $60 Million                            100%
</TABLE>

         *cumulative based on one or a series of transaction

         The Success Bonus, if any, will be payable to you if you have not
         resigned prior to the final transaction closing date and shall be paid
         within thirty (30) days following the final transaction closing date.

3.       SEVERANCE BENEFITS. In addition to the bonus above, if you are
         terminated by the company, you shall receive a severance payment equal
         to twelve (12) months salary not later than thirty (30) days after your
         termination. Additionally, if you are terminated by the company and if
         you elect COBRA insurance coverage after your termination,
                                       25

<PAGE>

         the company will continue to pay the company's portion of your (and
         your family, if applicable) insurance coverage for twelve (12) months
         after your termination. After said twelve (12) month period, you will
         be solely liable for the payment of any and all COBRA insurance
         overage for as long as you elect to continue COBRA insurance coverage.
         No severance benefits shall be payable to you in the event of your
         resignation.

4.       TERM OF THIS AGREEMENT. This letter agreement shall be valid and
         binding from the date of your execution through September 30, 2001. If
         your Success Bonus, if any, has become vested but has not yet been paid
         on or before September 30, 2001, it will be paid to you within thirty
         (30) days after the final transaction closing date. However, if all or
         substantially all of the portfolio has not been sold prior to October
         1, 2001, no Success Bonus, if any, shall be payable. Further, if you
         are employed by the company on or after October 1, 2001, the severance
         benefits provided for in this letter agreement shall terminate and no
         longer be applicable in the event of a termination unless a change of
         control has occurred as identified in this section.

         Notwithstanding the above, the company may terminate an employee's
employment for cause at any time if the employee (a) commits an act of fraud,
embezzlement or misappropriation of company funds with respect to the
company, (b) is convicted of a felony or (c) commits a material breach of any
of his or her obligations as an employee of the company and the employee
fails to correct such breach within thirty (30) days (or such shorter period
of time as may be reasonable warranted) of receipt by the employee of written
notice from the company specifying in reasonable detail the nature of such
breach. Upon an employee's termination for cause, the company shall have no
further obligation to pay the employee any salary or to provide the employee
with any other employee benefits (including severance benefits) hereunder
except for any salary and other benefits that have fully accrued and vested
but have not been paid as of the effective date of such termination.

         Nothing contained in this letter agreement shall be construed, in
any way, to limit or impair the company's right to terminate your employment
at any time for any reason.

         Your signature on this letter constitutes your agreement to its
terms and conditions. Please sign and retain this original and return one
copy of the executed agreement to me.

Very truly yours,

/s/ Gary J. Skoien

Gary J. Skoien

APPROVED AND ACCEPTED BY:

 /s/ Andrew Pelmoter
------------------------------------        ---------------------------
ANDREW PELMOTER                             DATE

                                       26<PAGE>

                                                              EXHIBIT 10.39

                 [LETTERHEAD OF HORIZON GROUP PROPERTIES, INC.]

                                  April 3, 2001

Mr. Thomas A. Rumptz
Horizon Group Properties, Inc.
5000 Hakes Drive
Muskegon, MI 49441

Dear Tom:

         This letter amends your retention letter dated November 1, 2000.

         While we engage in our efforts to maximize the value of our
portfolio, we recognize that the employees could have concerns about their
future with the company. Your efforts on behalf of the company have been
important and will continue to be important as we embark on this new phase.
Although I have discussed various possible scenarios which could have little,
if any, impact on your position with the company (including a portfolio
purchaser retaining our company as its leasing agent and manager, that only
some of our properties are actually sold, and/or that we start another line
of business which requires your expertise), there is no absolute guarantee or
promise of continuing employment that I can give. In light of these
circumstances and the company's desire that you remain fully committed to
your efforts on its behalf, the company intends to both reward you for
contributing to a successful transaction and afford you appropriate
protection in the event of a transaction after which we cannot offer you
continued employment.

         Accordingly, this letter sets forth the terms of your continued
employment with the company:

1.       SALARY AND DISCRETIONARY ANNUAL BONUS. You will continue your current
         salary, subject to discretionary increases according to our current
         company policy.

2.       SUCCESS BONUS ON PORTFOLIO DISPOSITION. Provided that you have not
         resigned prior to the actual closing date of the sale of all or
         substantially all of your portfolio, you will receive a success bonus
         if and when the company sells all or substantially all of our portfolio
         (the "Success Bonus"). The Success Bonus shall be calculated on the
         following basis:

<TABLE>
<CAPTION>
         GROSS SALES PROCEEDS FOR THE PORTFOLIO             PERCENTAGE OF
         IN EXCESS OF OUTSTANDING MORTGAGE DEBT*            YOUR ANNUAL SALARY
         --------------------------------------             ------------------
         <S>                                                <C>
         Less than $40 Million                              Discretionary
         Between $40 and $50 Million                        50%
         Between $50 and $60 Million                        75%
         Greater than $60 Million                           100%
</TABLE>

         *cumulative based on one or a series of transaction

         The Success Bonus, if any, will be payable to you if you have not
resigned prior to the final transaction closing date and shall be paid within
thirty (30) days following the final transaction closing date.

3.       SEVERANCE BENEFITS. In addition to the bonus above, if you are
         terminated by the company, you shall receive a severance payment equal
         to twelve (12) months salary not later than thirty (30) days after your
         termination. Additionally, if you are terminated by the company and if
         you elect COBRA insurance coverage after your termination,
                                       27

<PAGE>

         the company will continue to pay the company's portion of your (and
         your family, if applicable) insurance coverage for twelve (12) months
         after your termination. After said twelve (12) month period, you will
         be solely liable for the payment of any and all COBRA insurance
         overage for as long as you elect to continue COBRA insurance coverage.
         No severance benefits shall be payable to you in the event of your
         resignation.

4.       TERM OF THIS AGREEMENT. This letter agreement shall be valid and
         binding from the date of your execution through September 30, 2001. If
         your Success Bonus, if any, has become vested but has not yet been paid
         on or before September 30, 2001, it will be paid to you within thirty
         (30) days after the final transaction closing date. If you have been
         terminated by the company on or before September 30, 2001, you shall
         receive the balance of the severance benefits due to you as set forth
         above. If there is a change of control of the company prior to
         September 30, 2001 this agreement will be extended twelve (12) months
         from the date upon which the change of control takes affect. However,
         if all or substantially all of the portfolio has not been sold prior to
         October 1, 2001, no Success Bonus, if any, shall be payable. Further,
         if you are employed by the company on or after October 1, 2001, the
         severance benefits provided for in this letter agreement shall
         terminate and no longer be applicable in the event of a termination
         unless a change of control has occurred as identified in this section.

         Notwithstanding the above, the company may terminate an employee's
employment for cause at any time if the employee (a) commits an act of fraud,
embezzlement or misappropriation of company funds with respect to the
company, (b) is convicted of a felony or (c) commits a material breach of any
of his or her obligations as an employee of the company and the employee
fails to correct such breach within thirty (30) days (or such shorter period
of time as may be reasonable warranted) of receipt by the employee of written
notice from the company specifying in reasonable detail the nature of such
breach. Upon an employee's termination for cause, the company shall have no
further obligation to pay the employee any salary or to provide the employee
with any other employee benefits (including severance benefits) hereunder
except for any salary and other benefits that have fully accrued and vested
but have not been paid as of the effective date of such termination.

         Nothing contained in this letter agreement shall be construed, in
any way, to limit or impair the company's right to terminate your employment
at any time for any reason.

         Your signature on this letter constitutes your agreement to its
terms and conditions. Please sign and retain this original and return one
copy of the executed agreement to me.

Very truly yours,

/s/ Gary J. Skoien

Gary J. Skoien

APPROVED AND ACCEPTED BY:

/s/ Thomas A. Rumptz
--------------------       -----------------------
Thomas A. Rumptz                    DATE

                                       28

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