Real Estate

INDEMNIFICATION AND FEE AGREEMENT

(UBS LOAN)

THIS INDEMNIFICATION AND FEE AGREEMENT (UBS LOAN) (this Agreement) is made and entered into as of the 3rd day of September, 2003, between Horizon Group Properties, Inc., a Maryland corporation (the Company), and Gary J. Skoien, an individual (GJS).

WITNESSETH:

WHEREAS, GJS currently is the Chief Executive Officer of the Company; and

WHEREAS, on the date hereof, 500 Hakes Drive LLC, a Delaware limited liability company and an affiliate of the Company (Borrower), obtained a loan (the Loan) from UBS Real Estate Investments Inc. (Lender), the repayment of which is secured by, among other collateral and security, a mortgage on the office building owned by Borrower and located at 500 Hakes Drive, Norton Shores, Michigan; and

WHEREAS, as a condition to making the Loan to Borrower, Lender has required GJS to execute and deliver to Lender (i) that certain Indemnity and Guaranty Agreement, dated as of the date hereof (the Guaranty Agreement), from GJS in favor of Lender, and (ii) that certain Hazardous Substances Indemnity Agreement, dated as of the date hereof (the Hazardous Substances Indemnity Agreement), from Borrower and GJS in favor of Lender (the Guaranty Agreement and the Hazardous Substance Indemnity Agreement are sometimes referred to herein, together, as the Indemnity Agreements and, individually, as an Indemnity Agreement); and

WHEREAS, as a condition to executing and delivering to Lender the Indemnity Agreements, GJS has required that the Company execute and deliver to GJS this Agreement.

NOW, THEREFORE, in consideration of the GJSs agreement to execute and deliver the Indemnity Agreements so that Borrower can obtain the Loan from Lender and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agrees as follows: