<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
JACOBSON STORES INC.
(Name of Registrant as Specified In Its Charter)
JACOBSON STORES INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of
transaction computed pursuant to
Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
JACOBSON STORES INC.
NOTICE
OF
ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE> 3
JACOBSON STORES INC.
3333 SARGENT ROAD, JACKSON, MICHIGAN 49201
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1994
TO THE SHAREHOLDERS OF
JACOBSON STORES INC.:
The 1994 Annual Meeting of Shareholders of Jacobson Stores Inc.
will be held at the corporate offices, 3333 Sargent Road, Jackson, Michigan
49201, on Thursday, May 26, 1994, at 11:30 a.m., local time, for the following
purposes:
(1) To elect Paul W. Gilbert, Patricia Shontz Longe, Philip H.
Power, and Robert L. Rosenfeld as Class II Directors, to serve
until the 1997 Annual Meeting of Shareholders or until their
successors are elected and qualified, and Kathleen McCree Lewis and
James L. Wolohan as Class III Directors, to serve until the 1995
Annual Meeting of Shareholders or until their successors are
elected and qualified;
(2) To consider and act on a proposal to approve the Jacobson
Stock Option Plan of 1994, as set forth in the proxy statement;
(3) To consider and act on a proposal to appoint Arthur
Andersen & Co., independent certified public accountants, as
auditors for the fiscal year ending January 28, 1995; and
(4) To transact any other business that may properly come
before the meeting or any adjournments thereof.
Common shareholders of record at the close of business on March
28, 1994 will be entitled to notice of and to vote at the meeting.
Your attention is directed to the proxy statement submitted with
this notice.
By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary
Jackson, Michigan, April 15, 1994.
Shareholders are requested to specify their choice, date, sign and return the
enclosed proxy in the enclosed envelope.
<PAGE> 4
JACOBSON STORES INC.
PROXY STATEMENT
FOR
1994 ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Jacobson Stores Inc. (the "Company") for
use at its 1994 Annual Meeting of Shareholders, to be held Thursday, May 26,
1994, at 11:30 a.m., local time, at the corporate offices, 3333 Sargent Road,
Jackson, Michigan 49201, and at any adjournments thereof, for the purposes set
forth in the accompanying notice. This proxy statement and the enclosed form
of proxy are first sent or given to security holders on or about April 15,
1994.
If the enclosed proxy is properly executed and returned to the Company,
all shares represented will be voted in the manner specified. A proxy may be
revoked at any time before it is exercised.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 1, 1994, 5,779,021-2/3 shares of the Company's Common Stock,
par value $1 per share, were outstanding and entitled to vote. (References to
outstanding shares exclude treasury shares.) Common shareholders of record at
the close of business on March 28, 1994 will be entitled to notice of and to
vote at the meeting. Each shareholder is entitled to one vote for each Common
share held on the record date. Shares may not be voted cumulatively.
The following table and the explanation on pages 2-3 provide information
as of March 1, 1994 (or, in one case as explained on page 3, December 31, 1993)
about each person known to the Company to be the beneficial owner of more than
5% of the Company's Common Stock, which is its only class of voting securities:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------------------
Name and Address of Sole Voting Shared Voting Percent
Beneficial Owner and/or Investment and/or Investment of Class
- ----------------- ------------------ ----------------- --------
<S> <C> <C> <C>
Mark K. Rosenfeld 1,501 819,720-1/3 14.2
3333 Sargent Road
Jackson, Michigan 49201
</TABLE>
1
<PAGE> 5
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------------------
Name and Address of Sole Voting Shared Voting Percent
Beneficial Owner and/or Investment and/or Investment of Class
- ----------------- ------------------ ----------------- --------
<S> <C> <C> <C>
Robert L. Rosenfeld 18,600 819,720-1/3 14.5
4535 Fourth Road North
Arlington, Virginia 22203-
2342
David A. Rosenfeld 325 819,720-1/3 14.2
875 Battery
San Francisco, California
94111
David L. Babson & Company, Inc. 396,200 41,600 7.6
One Memorial Drive
Cambridge, Massachusetts
02142-1300
Comerica Bank 412,131 1,475 7.2
One Detroit Center
Detroit, Michigan 48275
Dimensional Fund Advisors, Inc. 359,450 --- 6.2
1299 Ocean Avenue, 11th Floor
Santa Monica, California
90401
</TABLE>
The following table and explanation provide information as of March 1,
1994 about shares of the Company's Common Stock beneficially owned by each
director, each of the five most highly compensated executive officers
identified on page 8, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
-----------------------------
Sole Voting Shared Voting Percent
Name and/or Investment and/or Investment(1) of Class
- ----- ------------------- ------------------- ----------
<S> <C> <C> <C>
Herbert S. Amster 4,750 (2) 5,809 *
Frank Couzens, Jr. 14,650 (2) --- *
Nathan Forman 3,000 (3) 11,243 *
James B. Fowler 13,079 (4) 1,187 *
J.R. Fowler 82,586 (5) 81,085 2.8
Paul W. Gilbert 4,250 (4) 16,336 (6) *
Herman S. Kohlmeyer, Jr. 7,000 (2) 210,000-2/3 3.8
Kathleen McCree Lewis 1,000 (7) --- *
Patricia Shontz Longe 5,000 (2) --- *
Robert L. Moles 5,362 (3) --- *
Michael T. Monahan 3,500 (2) --- *
Philip H. Power 3,800 (2) --- *
Mark K. Rosenfeld 1,501 819,720-1/3 (8) 14.2
Richard Z. Rosenfeld 110,354 64,175 3.0
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
-----------------------------
Sole Voting Shared Voting Percent
Name and/or Investment and/or Investment(1) of Class
- ----- ------------------------- ------------------------- -----------
<S> <C> <C> <C>
Robert L. Rosenfeld 18,600 819,720-1/3 (8) 14.5
James L. Wolohan 2,000 (7) --- *
All directors and 289,277 (9) 1,209,566 (10) 25.7
executive officers (20
persons including those
named above)
</TABLE>
* Less than 1% of the class
(1) Includes shares owned by spouse and/or children if the named
individual has or shares voting power and/or investment power.
(2) Includes 2,500 shares that may be acquired on exercise of
options.
(3) Includes 2,000 shares that may be acquired on exercise of
options.
(4) Includes 4,250 shares that may be acquired on exercise of
options.
(5) Includes 1,500 shares that may be acquired on exercise of
options.
(6) Includes 1,836 shares that may be acquired on conversion of
debentures.
(7) Includes 1,000 shares that may be acquired on
exercise of options.
(8) Includes 5,000 shares that may be acquired by Mark K.
Rosenfeld and 2,500 shares that may be acquired by
Robert L. Rosenfeld on exercise of options, and 459 shares
that may be acquired by Mark K. Rosenfeld or his wife as
custodian and by his adult son on the conversion of debentures.
(9) Includes 35,750 shares that may be acquired on exercise of
options.
(10) Includes 7,500 shares that may be acquired on exercise of
options and 2,295 shares that may be acquired on the
conversion of debentures.
All information about beneficial ownership, set forth in the stock
ownership tables, is based on information furnished by the shareholder,
director, or executive officer.
The following additional information is furnished in explanation of the
stock ownership tables:
259,765-1/3 shares of Common Stock registered in the names of
Robert L. Rosenfeld individually and as trustee, and his wife,
254,829 shares in the names of David A. Rosenfeld and his wife, and
296,167 shares in the names of Mark K. Rosenfeld and his wife
individually and as trustee or custodian, and an adult son of Mark
K. Rosenfeld, are subject to a Voting and Transfer Restriction
3
<PAGE> 7
Agreement. Irrevocable proxies have been signed by which any two
of the three brothers may vote all shares subject to the Agreement. The
transfer of the shares is restricted by the terms of the Agreement. The
Agreement continues until December 31, 2000, unless it is terminated earlier
according to its terms. Each party disclaims any beneficial interest in the
shares owned by his brothers and the wife, trusts and issue of his brothers.
All shares subject to the Agreement, as well as 7,959 shares that may be
acquired on exercise of options and conversion of debentures, as referred to in
note (8) above, are shown in the stock ownership tables as beneficially owned
by each of the brothers, but are counted only once in the total for all
directors and executive officers.
23,465 shares of Common Stock are held by Richard Z. Rosenfeld and Betty
Ann Landman as Co-Personal Representatives of the Estate of Henriette S.
Rosenfeld, deceased.
45,279 shares of Common Stock are held by Richard Z. Rosenfeld as
trustee under revocable Trust Agreement dated December 14, 1968, established
by Jacques A. Preis. Richard Z. Rosenfeld disclaims any beneficial interest in
the shares, but they are shown as beneficially owned by him.
As of March 1, 1994, David L. Babson & Company, Inc., a registered
investment adviser, exercised investment discretion with respect to 437,800
shares of the Company's Common Stock which were owned by various investors.
As of March 1, 1994, Comerica Bank held, as beneficial owner, an
aggregate of 413,606 shares of the Company's Common Stock, which includes 8,325
shares which may be acquired on the conversion of debentures, in various
fiduciary capacities, including 182,285 shares as Trustee of the Company's
pension and profit sharing plans.
As of December 31, 1993, Dimensional Fund Advisors, Inc., a registered
investment advisor, was deemed to have beneficial ownership of 359,450 shares
of the Company's Common Stock held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of The DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust and
the DFA Participating Group Trust, investment vehicles for qualified employee
benefit plans, for all of which Dimensional Fund Advisors, Inc. serves as
investment manager. Dimensional Fund Advisors, Inc. disclaims beneficial
ownership of all such shares.
The shareholdings reported above exclude the beneficial interest of the
executive officers of the Company in 182,285 shares of Common Stock held in the
Company's pension and profit sharing plans.
4
<PAGE> 8
STOCK OWNERSHIP REPORTS
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding 10% or more of its Common Stock are
required to report their ownership of the Company's Common Stock and any
changes in that ownership to the Securities and Exchange Commission (the
"S.E.C."). The Company is required to report in this proxy statement any late
filings of reports of stock transactions in fiscal 1993, and any known failure
to file a required report. Based on written representations of its directors
and executive officers and its 10% shareholders, and copies of reports that
have been filed with the S.E.C., the Company believes that all such persons
complied with the filing requirements for all transactions in fiscal 1993.
ELECTION OF DIRECTORS
The Company's by-laws provide for a Board of Directors consisting of not
less than three members as determined by the Board. The directors are divided
into three classes, as nearly equal in number as possible, with the term of
office of one class expiring each year. At each annual meeting of
shareholders, the successors of the class of directors whose term expires at
that meeting are elected for a three-year term. Directors are elected by a
plurality of the votes cast. A proxy which withholds authority from voting for
one or more or all nominees is considered a vote against such nominee or
nominees.
The directors whose term of office expires at the 1994 Annual Meeting of
Shareholders are J. R. Fowler, Paul W. Gilbert, Patricia Shontz Longe, Philip
H. Power, and Robert L. Rosenfeld (Class II Directors), and Kathleen McCree
Lewis and James L. Wolohan (Class III Directors, elected by the Board of
Directors pursuant to the Company's Restated Articles of Incorporation). The
Board of Directors has determined that the number of directors shall be
thirteen, which is one less than the present number, and has nominated Mr.
Gilbert, Dr. Longe, Mr. Power, and Robert L. Rosenfeld, each of whom is
currently a director, as Class II Directors, to serve until the 1997 Annual
Meeting of Shareholders or until their successors are elected and qualified,
and has nominated Ms. Lewis and Mr. Wolohan, each of whom is currently a
director, as Class III Directors, to serve until the 1995 Annual Meeting of
Shareholders or until their successors are elected and qualified. J. R. Fowler
is not eligible for re-election under the Company's retirement policy for
directors. The terms of office of the other Class III Directors and the Class
I Directors will expire at the annual meetings of shareholders in 1995 and
1996, respectively.
It is intended that each proxy given pursuant to this solicitation will
be voted in favor of election of each of the six director nominees named,
unless the shareholder withholds authority
5
<PAGE> 9
to vote for any one or more or all nominees in the manner indicated on the
proxy.
Management has no reason to believe that any nominee will be unable to
serve; but if any should be unable to serve, the persons named in the enclosed
proxy will vote for a substitute nominee or nominees, and/or for fewer
nominees, according to their judgment.
Proxies cannot be voted for more than four nominees as Class II
Directors or for more than two nominees as Class III Directors.
The following information is furnished with respect to the members of
the Board of Directors and nominees:
<TABLE>
<CAPTION>
Principal Occupation First Current
and Positions Became Term
Name with the Company Age Director Class Expires
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Herbert S. Amster (5) Management consultant; 59 1967 I 1996
formerly Chairman of
the Board and Chief
Executive Officer,
Irwin Magnetic Systems,
Inc., computer periph-
eral development and
manufacturing company,
Ann Arbor, Michigan
Frank Couzens, Jr. (5) Interim President, 70 1957 III 1995
Center for Creative
Studies, Detroit, Michigan;
formerly Executive Vice
President, Manufacturers
Bank, N.A., Detroit, Michigan
James B. Fowler (1) President, Jacobson 46 1988 I 1996
Stores Inc.
J. R. Fowler (1, 3) Retired; consultant 76 1950 II 1994
to, and formerly
Chairman of the Board,
Jacobson Stores Inc.
Paul W. Gilbert (1, 2) Vice Chairman of the 49 1988 II 1994
Board, Jacobson Stores
Inc.
Herman S. Kohlmeyer, Senior Vice President- 61 1971 I 1996
Jr. Investments, Prudential
Securities, Inc.,
New Orleans, Louisiana
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
Principal Occupation First Current
and Positions Became Term
Name with the Company Age Director Class Expires
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kathleen McCree Lewis Attorney; member, 46 1993 III 1994
(4) Dykema Gossett PLLC,
Detroit, Michigan
Patricia Shontz Longe Economist; Senior 60 1973 II 1994
(2, 5) partner, The Longe
Company, economic con-
sulting and investment
company, Naples, Florida
Michael T. Monahan(5) President and Chief 55 1990 III 1995
Operating Officer,
Comerica Bank,
Detroit, Michigan
Philip H. Power (2, 5) Chairman of the Board, 55 1985 II 1994
Suburban Communications
Corporation, newspaper
publisher, Livonia,
Michigan
Mark K. Rosenfeld (1) Chairman of the Board 48 1976 I 1996
and Chief Executive
Officer, Jacobson
Stores Inc.
Richard Z. Rosenfeld Attorney, Rosenfeld, 62 1957 III 1995
(1,5) Grover & Frang, P.C.,
Jackson, Michigan;
Secretary, Jacobson
Stores Inc.
Robert L. Rosenfeld(2) Program Manager, 56 1967 II 1994
Advanced Research
Projects Agency,
U.S. Department of
Defense, Arlington,
Virginia
James L. Wolohan (4) President and Chief 42 1993 III 1994
Executive Officer,
Wolohan Lumber Co.,
Saginaw, Michigan
</TABLE>
(1) Members of Executive Committee.
(2) Class II Directors, whose current term expires at the 1994
Annual Meeting; nominated to serve until 1997.
7
<PAGE> 11
(3) Class II Director, whose current term expires at the 1994 Annual
Meeting; not eligible for re-election.
(4) Class III Directors, whose current term expires at the 1994
Annual Meeting; nominated to serve until 1995.
(5) See information on page 6 under the caption
"Certain Relationships and Related Transactions."
Mr. Amster was formerly a Vice President of the Company. He was
Chairman of the Board and Chief Executive Officer of Irwin Magnetic Systems,
Inc., 1985-1989; Senior Vice President Corporate Development, and a director,
of Cipher Data Products Incorporated, 1989-1990; and Senior Vice President
Corporate Development, Archive Corporation, 1990. He is now an independent
management consultant. He is a director of TriMas Corporation and First of
America Bank- Ann Arbor.
Mr. Couzens was Executive Vice President of Manufacturers Bank, N.A.
(now Comerica Bank) from 1977 until his retirement in 1989. He became Interim
President of the Center for Creative Studies in 1993. He is a director of
Wilson, Kemp & Associates, a subsidiary of Comerica Incorporated.
James B. Fowler has held merchandising positions with the Company since
1972, was Vice President-Divisional Merchandise Manager, 1984-1987, Executive
Vice President-Marketing, 1987-1993, and has been President since 1993.
J. R. Fowler was President of the Company, 1966-1982, Chairman of the
Board and Chief Executive Officer, 1982-1992, and Chairman of the Board until
his retirement in 1993. He is a consultant to the Company, and is a director
of Comerica Bank & Trust, F.S.B. (Florida), Guardsman Products, Inc., and
Tecumseh Products Company.
Mr. Gilbert was Vice President and Controller of the Company, 1976-1984,
Senior Vice President and Chief Financial Officer, 1984- 1988, Executive Vice
President and Chief Financial Officer, 1988- 1993, Treasurer, 1991-1993, and
has been Vice Chairman of the Board since 1993.
Mr. Kohlmeyer was First Vice President of Thomson McKinnon Securities,
Inc., 1981-1987, and has been Senior Vice President-Investments of Prudential
Securities, Inc. since 1988.
Ms. Lewis has been a member of Dykema Gossett PLLC and its predecessor
since 1973.
Dr. Longe was Professor of Business Administration in the Graduate
School of Business Administration of the University of Michigan for more than
five years prior to 1986. She has been senior partner of The Longe Company, an
economic consulting and investment company, of Naples, Florida, since 1981.
She is a director of The Detroit Edison Company, The Kroger Company, Comerica
Incorporated, Comerica Bank & Trust, F.S.B. (Florida), and The Warner-Lambert
Company.
8
<PAGE> 12
Mr. Monahan was an executive officer of Manufacturers Bank, N.A. for
more than five years, and was President and Chief Operating Officer, 1989-1992.
Following the merger of Comerica Incorporated and Manufacturers National
Corporation in 1992, he has been President and Chief Operating Officer, and a
director, of Comerica Bank. In addition, he has been President and a director
of Comerica Incorporated since 1993.
Mr. Power founded Suburban Communications Corporation, a publisher of
newspapers, in 1974, and has been its Chairman of the Board since that date.
He is a director of Daedalus Enterprises, Inc., and a Regent of the University
of Michigan.
Mark K. Rosenfeld has been an executive officer of the Company since
1976, was President, 1982-1993, Chief Operating Officer, 1987-1992, and has
been Chief Executive Officer since 1992 and Chairman of the Board since 1993.
He is a director of Great Lakes Bancorp.
Richard Z. Rosenfeld has been a member of Rosenfeld, Grover & Frang,
P.C. since 1981, and Secretary of Jacobson Stores Inc. since 1964.
Robert L. Rosenfeld held various engineering and administrative
positions with Consumers Power Company, a public utility, from 1970-1984; was
Principal Engineer with Technical Analysis Corporation, technical consultants,
1984-1985; and has been Program Manager, Advanced Research Projects Agency
(formerly Defense Advanced Research Projects Agency) since 1985.
Mr. Wolohan has held executive positions with Wolohan Lumber Co. for
more than ten years. He was Vice President and General Merchandise Manager,
1984-1986, President and Chief Operating Officer, 1986-1987, and has been
President and Chief Executive Officer since 1987.
Robert L. and Mark K. Rosenfeld are brothers. Richard Z. Rosenfeld is
their first cousin.
James B. Fowler is a son of J. R. Fowler.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and its subsidiaries have business relationships and
transactions in the ordinary course of business with the following entities, of
which the directors of the Company named below are officers or directors. The
Company considers that the terms of all transactions referred to are comparable
to those which would have been reached with unaffiliated parties.
The Company and its subsidiaries regularly deposit money with and
borrow money from various banks, including Comerica Bank and First of America
Bank-Ann Arbor. Michael T. Monahan is President
9
<PAGE> 13
and Chief Operating Officer and a director of Comerica Bank, and
President and a director of Comerica Incorporated. Patricia Shontz Longe is a
director of Comerica Incorporated, the holding company which operates Comerica
Bank. Herbert S. Amster is a director of First of America Bank-Ann Arbor.
Information on the Company's banking relationships with Comerica Bank and First
of America Bank-Ann Arbor in fiscal 1993 are reported on pages 10-11 under the
caption "Compensation Committee Interlocks and Insider Participation."
The Company regularly advertises in various newspapers and other
periodicals, including newspapers published by Suburban Communications
Corporation, of which Philip H. Power is Chairman of the Board. Information on
the Company's fiscal 1993 advertising in newspapers published by Suburban
Communications Corporation is reported on page 11 under the caption
"Compensation Committee Interlocks and Insider Participation."
The Company retains Rosenfeld, Grover & Frang, P.C., of which Richard Z.
Rosenfeld is a member, as its primary legal counsel. Information on the fees
paid by the Company to that law firm is set forth immediately below under the
caption "Compensation of Directors."
COMPENSATION OF DIRECTORS
The Company compensates its directors at the rate of $9,000 per year
($12,000 for committee chair) plus $750 for each Board meeting attended and
each directors' committee meeting attended; except that no director fees are
paid to any director who is a full-time employee of the Company (Mark K.
Rosenfeld, Mr. Gilbert, and James B. Fowler) or counsel for the Company
(Richard Z. Rosenfeld). Directors are eligible to defer director fees, with
interest thereon, until after termination of service as a director of the
Company.
Under the Company's Stock Option Plan of 1983, non-statutory stock
options were granted to the following directors of the Company in 1993, at the
following prices, which in each case was the fair market value on the date of
grant:
<TABLE>
<CAPTION>
Exercise Price
Name Options per Share
---- --------- --------------
<S> <C> <C>
Herbert S. Amster 500 sh. $ 12-7/8
Frank Couzens, Jr. 500 12-7/8
James B. Fowler 0 -
J. R. Fowler 1,000 14
500 12-7/8
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
Exercise Price
Name Options per Share
---- --------- --------------
<S> <C> <C>
Paul W. Gilbert 0 -
Herman S. Kohlmeyer, Jr. 500 12-7/8
Kathleen McCree Lewis 1,000 12-1/4
Patricia Shontz Longe 500 12-7/8
Michael T. Monahan 500 12-7/8
Philip H. Power 500 12-7/8
Mark K. Rosenfeld 0 -
Richard Z. Rosenfeld 0 -
Robert L. Rosenfeld 500 12-7/8
James L. Wolohan 1,000 12-1/4
</TABLE>
The term of each director option is five years. No director options
have been exercised.
The Company has agreed to pay J. R. Fowler $137,500 per year from
February 1, 1993 through January 31, 1998, in consideration of his prior
service and his agreement not to compete with the Company. The payments are to
continue in the event of his permanent incapacity or death. Disability benefits
may also be available under insurance maintained by the Company. As long as
Mr. Fowler remains a member of the Board of Directors, he will be entitled to
director fees at the same rates paid by the Company to other directors who are
not employees of or counsel for the Company.
The Company retains Rosenfeld, Grover & Frang, P.C., of which Richard Z.
Rosenfeld is a member, as its primary legal counsel. During the year ended
January 29, 1994, the Company paid that law firm $86,000 for legal services and
reimbursed $3,000 in disbursements.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors held six meetings during the year ended
January 29, 1994.
There are five permanent committees of the Board of Directors:
Executive Committee, Audit Committee, Organization and Compensation Committee,
Nominating Committee, and Retirement Plans Committee.
The Audit Committee consists of Directors Longe (Chair), Amster,
Couzens, J. R. Fowler, Lewis, and Robert L. Rosenfeld. It met twice during the
year. The Audit Committee reviews the Company's accounting policies and
reporting practices, internal controls, and security procedures; reviews and
evaluates the scope and results of the audits completed by the Company's
internal auditor; and recommends to the Board, subject to shareholder approval,
the selection of independent public accountants, reviews the quality standards
maintained in their audit of the Company's financial statements, and evaluates
their independence and
11
<PAGE> 15
professional competence, as well as the scope and
results of their audit.
The Organization and Compensation Committee consists of Directors Amster
(Chair), Couzens, Kohlmeyer, Longe, Monahan, Power, Wolohan, and Mark K.
Rosenfeld (non-voting). It met twice during the year. It reviews the
development of corporate management and succession, reviews salaries and
bonuses of officers and other key managerial employees, reviews the Company's
employee benefit plans and policies, administers the Company's Deferred
Compensation Plan, served as the employee option committee under the Company's
Stock Option Plan of 1983, and is intended to serve as the employee option
committee under the proposed Jacobson Stock Option Plan of 1994, described
below.
The Nominating Committee consists of Directors Couzens (Chair), Monahan,
Power and Mark K. Rosenfeld. It met once during the year. It considers
nominees for directorship in the Company. The Company's Restated Articles of
Incorporation contain procedures to be followed by any shareholder who intends
to nominate a candidate for the Board of Directors. A written notice should be
delivered to the Secretary of the Company not less than 120 days before the
anniversary date of the Company's proxy statement for the previous year's
annual meeting of shareholders. The notice should set forth the name, age,
business address and residence address of each nominee proposed; the principal
occupation or employment of each nominee; the number of shares of stock of the
Company which are beneficially owned by each nominee; a statement that the
nominee is willing to be nominated; and such other information concerning each
nominee as is required under the rules of the Securities and Exchange
Commission in a proxy statement soliciting proxies for the election of such
nominees. Any nomination not made in accordance with this procedure will be
void.
The Retirement Plans Committee consists of Directors Robert L. Rosenfeld
(Chair), Amster, James B. Fowler, J. R. Fowler, and Mark K. Rosenfeld. It met
twice during the year. It expects to meet at least annually with the fund
managers of the Company's funded employee benefit plans, and other consultants
to the plans, to review investment performance and objectives.
During the year, every director except Mr. Wolohan attended at least 75%
of the meetings of the Board and any committees on which the director served.
EXECUTIVE COMPENSATION
The following table and footnotes summarize the compensation for the
last three fiscal years of each of the Company's five most highly compensated
executive officers in fiscal 1993:
12
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
-------------------------- ------------------ -------
Other Long Term
Annual Restricted Securities Incentive All Other
Compensa- Stock Underlying Plan Compen-
Name and Salary Bonus sation (1) Awards(s) Options Payouts sation (2)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- ------ ----- ---------- --------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark K. Rosenfeld 1993 $280,000 $ 0 - $ 0 0 sh $ 0 $ 3,435
Chairman of the Board 1992 265,000 0 - 0 3,500 0 1,581
and Chief Executive 1991 250,000 0 - 0 1,500 0 -
Officer
Paul W. Gilbert 1993 180,000 0 - 0 0 0 1,429
Vice Chairman of the 1992 165,000 0 - 0 3,000 0 1,269
Board 1991 150,000 0 - 0 1,250 0 -
James B. Fowler 1993 180,000 0 - 0 0 0 1,340
President 1992 165,000 0 - 0 3,000 0 1,179
1991 150,000 0 - 0 1,250 0 -
Nathan Forman 1993 142,500 0 - 0 0 0 3,044
Senior Vice President- 1992 142,500 0 - 0 1,500 0 3,634
General Merchandise 1991 140,000(3) 0 - 0 500 0 -
Manager
Robert L. Moles 1993 120,000 0 - 0 0 0 645
Senior Vice President- 1992 108,000 0 - 0 1,500 0 555
Stores 1991 105,000 0 - 0 500 0 -
</TABLE>
(1) The only types of other annual compensation for each of the named
executive officers were in the form of perquisites in amounts less than
the level required for reporting.
(2) In accordance with the transitional provisions applicable to the S.E.C.
rules on executive officer compensation disclosure, amounts of other
compensation are excluded for the Company's 1991 fiscal year. The
amounts shown in this column include, for 1993 and 1992, respectively:
(a) Company contributions to the Jacobson's Retirement Savings & Profit
Sharing Plan (401(k) plan) (Mr. Rosenfeld, $1,472 and $1,314; Mr.
Gilbert, $961 and $841; Mr. Fowler, $963 and $843; Mr. Forman $774 and
$741; and Mr. Moles, $645 and $555); (b) the taxable economic benefit, or
portion of the premium paid by the Company that is attributable to term
life insurance coverage under split-dollar life insurance agreements (Mr.
Rosenfeld, $283 and $267; Mr. Gilbert, $468 and $428; Mr. Fowler, $377
and $336; and Mr. Forman, $504 and $456); and (c) the dollar value of the
benefit of the remainder of premiums paid by the Company for split-dollar
life insurance policies, projected on an actuarial basis (Mr. Rosenfeld,
$1,680 and $0; Mr. Forman, $1,766 and $2,437).
(3) Includes $33,000 deferred compensation for fiscal 1991.
OPTIONS
No stock options were granted in the last fiscal year to any executive
officers of the Company. The Company's Stock Option Plan of 1983 expired on
December 4, 1993.
The table below reports options exercised in the last fiscal year by each
of the five most highly compensated executive officers of the Company, and the
number and fiscal year-end value of options held by each such executive
officer.
13
<PAGE> 17
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Acquired Value Options at Fiscal Year-end at Fiscal Year-end (1)
on Exercise Realized (1) (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------- --------------- ------------ -------------------------- -------------------------
<S> <C> <C> <C> <C>
Mark K. Rosenfeld 0 $ 0 5,000/0 sh. $ 0/0
Paul W. Gilbert 0 0 4,250/0 0/0
James B. Fowler 0 0 4,250/0 0/0
Nathan Forman 0 0 2,000/0 0/0
Robert L. Moles 0 0 2,000/0 0/0
</TABLE>
(1) Market value of underlying securities at exercise or fiscal year-end, minus
the exercise or base price.
LONG-TERM INCENTIVE PLANS
The Company does not have a long-term incentive plan.
PENSION PLAN
The following table summarizes benefits under the Company's pension plan:
<TABLE>
<CAPTION>
Years of Service
Average --------------------------------------
Remuneration 15 20 25 30(1)
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$125,000 $18,850 $25,100 $31,350 $37,600
150,000 22,600 30,100 37,600 45,100
175,000 26,350 35,100 43,850 52,600
200,000 30,100 40,100 50,100 60,100
225,000 33,850 45,100 56,350 67,600
250,000 37,600 50,100 62,600 75,100
300,000 45,100 60,100 75,100 90,100
350,000 52,600 70,100 87,600 105,100
</TABLE>
(1) Plan only recognizes a maximum of 30 years credited service.
Benefits under the plan are based on an employee's cash compensation,
including contributions to the Company's 401(k) plan, but excluding deferred
compensation and compensation which exceeds the applicable limitation under the
Internal Revenue Code. Benefits are computed on the basis of total
compensation for the 30 calendar years during which an employee's compensation
was highest, or the entire period of employment if less than 30 years.
Benefits are paid as a monthly annuity, and are not subject to deduction for
social security or other offset amounts.
14
<PAGE> 18
For each of the five most highly compensated executive officers, all of
their salary reported in the Summary Compensation Table, except Mr. Forman's
deferred compensation, and the Company's contributions on their behalf to the
401(k) plan, are eligible for consideration in computing their benefits under
the pension plan, subject to the applicable limitation under the Internal
Revenue Code. That limitation was $235,840, $228,860, and $222,220 for 1993,
1992 and 1991, respectively.
The years of credited service of the five most highly compensated
executive officers are:
<TABLE>
<CAPTION>
Years of Service
----------------
<S> <C>
Mark K. Rosenfeld 22 years
Paul W. Gilbert 19 years
James B. Fowler 22 years
Nathan Forman 30 years
Robert L. Moles 28 years
</TABLE>
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS
The Company's employment agreement with Mark K. Rosenfeld is for a term
of five years commencing February 1, 1994 at an annual salary of $310,000. The
Agreement authorizes the Board of Directors to defer payment of any part of the
salary and interest thereon until after his retirement or death. None of Mr.
Rosenfeld's salary for the year ended January 1994 was deferred. The agreement
provides that in the event of Mr. Rosenfeld's death or permanent incapacity
during the term of the agreement, his salary will continue until January 31,
1997 at the rate in effect immediately prior to his death or incapacity, and
after January 31, 1997 at one-half such rate for the balance of the term of the
agreement or one year, whichever is greater. Disability benefits may also be
available under insurance maintained by the Company, and medical and
hospitalization insurance is to be continued in effect. If the Company
terminates employment without good cause before the expiration of the term, Mr.
Rosenfeld's salary will continue, at the rate in effect immediately prior to
termination, for the balance of the term or one year, whichever is greater; and
commencing one year after termination the Company's continuing salary
obligation, if any, will be reduced by the amount of any salary, consulting
fees, or other compensation or remuneration for services thereafter received by
him with respect to any remaining part of the period covered by the Company's
obligation. The agreement also provides for not less than two years' salary
continuation in case of termination of employment, substantial change in
responsibilities without his consent, or relocation without his consent, within
two years after a change in control of the Company.
15
<PAGE> 19
The Company's employment agreements with Mr. Gilbert and James B. Fowler
are each for a term of three years commencing February 1, 1994, at an annual
salary of $210,000. Each agreement provides that if employment is terminated
due to death, the Company shall have no obligation to pay salary for the period
after the date of death. Each agreement provides that if employment is
terminated due to permanent incapacity, the Company shall continue to pay
salary until January 31, 1995 at the annual rate in effect immediately prior to
incapacity, and from February 1, 1995 through January 31, 1997, at one-half
such annual rate. Disability benefits may also be available under insurance
maintained by the Company, and medical and hospitalization insurance is to be
continued in effect. Each agreement provides for salary continuation if the
Company terminates employment without good cause before the expiration of the
term, on substantially the same terms as the agreement with Mark K. Rosenfeld;
and also provides for not less than two years' salary continuation in case of
termination of employment, substantial change in responsibilities without
consent, or relocation without consent, within two years after a change in
control of the Company.
The Company's employment agreement with Mr. Forman, at an annual salary
of $142,500, expired February 11, 1994, the effective date of his retirement as
Senior Vice President. He continues in the employ of the Company in a
non-officer capacity. Previous employment agreements with Mr. Forman provided
for deferral of part of his salary and interest thereon until after retirement
or death.
The Company's employment agreement with Mr. Moles is for a term of one
year commencing January 29, 1994, and continuing from month to month, at an
annual salary of $126,000. The agreement provides for two years' salary
continuation if the Company terminates employment within two years after a
change in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Organization and Compensation Committee of the Company's Board of
Directors consists of Directors Amster (Chair), Couzens, Kohlmeyer, Longe,
Monahan, Power, Wolohan, and Mark K. Rosenfeld (non-voting). Mr. Amster was a
Vice President of the Company prior to 1974.
No executive officer of the Company serves as a member of the
compensation committee (or other board committee performing equivalent
functions or, in the absence of such committee, the entire board of directors)
of another entity, one of whose executive officers also serves as a director of
the Company.
16
<PAGE> 20
Mr. Amster is a director of First of America Bank-Ann Arbor. During its
last fiscal year, the company and its subsidiaries paid $117,000 interest to
said bank at 8.45%. At January 29, 1994, the Company and its subsidiaries had
no outstanding borrowings from said Bank.
Mr. Monahan is President and Chief Operating Officer and a director of
Comerica Bank and President and a director of Comerica Incorporated, and Dr.
Longe is a director of Comerica Incorporated, the holding company which
operates Comerica Bank. During its last fiscal year, the Company and its
subsidiaries borrowed $8,486,000 from Comerica Bank, paid $1,972,000 interest
to said Bank at rates ranging from 3.6% to 9.6%, paid $89,000 commitment fees
and $5,000 agent fees to said Bank pursuant to various loan agreements, and
paid $760,000 rent to a subsidiary of said Bank for leased computer equipment
and software. At January 29, 1994, the total unpaid principal balance of all
borrowings of the Company and its subsidiaries from said Bank, and total rental
to be paid under the equipment lease, was $26,177,000.
Comerica Bank is also a depository of funds of the Company and its
subsidiaries; trustee under an indenture relating to indebtedness of one of the
Company's subsidiaries; and trustee of the Company's Pension Plan and its
Retirement Savings and Profit Sharing Plan, which collectively hold 182,285
shares of the Company's Common Stock. The Company paid approximately $346,000
in fees for such services in fiscal 1993.
Mr. Power is Chairman of the Board of Suburban Communications
Corporation, in whose newspapers the Company regularly advertises. During its
last fiscal year, the Company paid newspapers published by Suburban
Communications Corporation $89,000 for advertising space.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors
(the "Committee") provides general oversight for the compensation and benefit
policies of the Company, reviews the total compensation levels of Company
officers, considers the Chairman and Chief Executive Officer's recommendations
for officer promotions and compensation, and evaluates the performance and
makes recommendations to the Board of Directors as to the compensation of all
of the Company's executive officers (including the five most highly
compensated). The Committee also serves as the employee option committee under
the Company's Stock Option Plan.
The Committee uses a number of resources to assist the Committee in
making informed decisions regarding compensation. The Committee utilizes
Company research on industry practices and financial
17
<PAGE> 21
performance, including those of companies included in Company's peer group
index, as support to the Committee in fulfilling its responsibilities. In
addition, the Company and the Committee from time to time consult with
independent compensation consultants.
The Company seeks to provide executive compensation that will support
achievement of the Company's goals while attracting and retaining talented
executives and rewarding superior performance. The Company implements this
policy through salaries, bonuses, stock options, and employment agreements, and
benefit plans which are generally available to all Company employees.
BASE SALARY. The Company's practice is to set base salary levels for the
Company's executive officers which generally are competitive in relation to the
salary levels of executive officers in other companies of comparable size
within the retail industry, taking into consideration the position's
complexity, responsibility, working environment, and need for special
expertise. Increases in base salary are determined by merit as measured by the
executive's individual performance and position in the salary range, and by
developments within the industry and within the Company's evolving strategic
plans.
BONUSES. The Company has a bonus plan to compensate its executive
officers for achieving the Company's earnings target set near the beginning of
each fiscal year and for their individual performance during the year. Bonuses
are intended to make a significant portion of each executive officer's
compensation dependent on the Company's performance and to provide executive
officers with incentives to achieve Company goals, increase shareholder value,
and work as a team. Bonuses are also intended to recognize the executive
officer's individual contributions to the Company.
For the fiscal year ended January 29, 1994, the Jacobson Stores Inc. 1993
Management Incentive Plan (the "1993 Plan") covered all of the executive
officers of the Company, except the Chairman and Chief Executive Officer, the
Vice Chairman, and the President. Pursuant to the 1993 Plan, a bonus pool was
established for each executive officer equal to a maximum of from 20% to 25% of
the executive officer's 1993 base salary if 100% of the earnings target was
reached. The bonus pool was to be reduced prorata for earnings less than the
target and eliminated entirely if a certain minimum earnings threshold was not
met. For purposes of the 1993 Plan, earnings were defined as the Company's
1993 income before income taxes, LIFO provision and unusual items.
The earnings threshold and target were set by the Board of Directors
after consultation with senior management. In 1993, the earnings threshold was
not met and no bonuses were paid.
18
<PAGE> 22
Bonuses for the Chairman and Chief Executive Officer, the Vice Chairman,
and the President are determined at the discretion of the Board of Directors
after considering recommendations of the Committee. No bonus awards were made
because the 1993 Company performance objective was not met.
STOCK OPTIONS. The Company's practice is to award stock options to the
Company's executive officers in amounts reflecting the executive officer's
position and ability to influence the Company's overall performance. The
Committee has not considered previously issued option grants in making stock
option grants for executive officers for any particular year. Options are
intended to provide executives with an increased incentive to make
contributions to the long-term performance and growth of the Company, to join
the interests of the executive officers with the interests of the shareholders
of the Company, and to attract and retain qualified employees.
Generally, options have been granted with a term of three to five years
to provide a long-term incentive, and the exercise price is set at not less
than the fair market value of the underlying shares at the date of grant. Such
options only provide compensation if the Company's stock price increases.
No stock options were granted in fiscal 1993. The Company's Stock Option
Plan of 1983 expired in December 1993. At the 1994 Annual Meeting,
shareholders will be asked to approve a new stock option plan, summarized on
pages 13-15 of this proxy statement and printed in full in the appendix.
EMPLOYMENT AGREEMENTS. The Company's practice is to have written
employment agreements with all officers and store general managers, to provide
them with specified minimum positions, periods of employment, salaries, fringe
benefits, and severance benefits. These agreements are intended to permit
executives to focus their attention on performing their duties to the Company,
rather than on the security of their employment. The employment agreements
with each of the Company's five most highly compensated executive officers are
summarized on page 10 of this proxy statement.
PERFORMANCE EVALUATION OF MARK K. ROSENFELD. Factors used by the
Committee in evaluating Mark K. Rosenfeld's performance as Chairman of the
Board and Chief Executive Officer included the Company's 1993 financial
performance, management succession planning, strategic planning, organizational
development, investor relations, formulation of major corporate policies,
keeping the Board fully informed on the condition of the Company, maintaining
sound corporate governance policies and working with the Directors to
effectively use their talents to the best strategic advantage to the Company.
Mr. Rosenfeld's base salary for 1994 was set at $310,000, consistent with the
Company's evolving compensation philosophies, but which is below base salaries
of chief executive officers in retail companies of comparable size. No bonus
award
19
<PAGE> 23
for 1993 was made because the minimum Company performance objective was
not met, and no stock options were granted.
ORGANIZATION AND COMPENSATION COMMITTEE
Herbert S. Amster, Chairman
Frank Couzens, Jr.
Herman S. Kohlmeyer, Jr.
Patricia Shontz Longe
Michael T. Monahan
Philip H. Power
James L. Wolohan
Mark K. Rosenfeld (non-voting)
PERFORMANCE GRAPH
The following graph compares the Company's cumulative shareholder return
on its Common Stock for the last five fiscal years with the cumulative total
return of retailers in a peer group index, and with the cumulative total return
of companies included in the Total Return Index for the NASDAQ Stock Market
(U.S. Companies), a broad equity market index.
Comparison of Five Year Cumulative Total Return* among Jacobson Stores
Inc., NASDAQ Stock Market (U.S. Companies), and the Value of a Peer Index.
(*Assumes $100 invested on January 27, 1989 in Jacobson Common Stock, NASDAQ
Stocks (U.S. Companies), and an Index comprised of Peer Group companies.
Total Return assumes reinvestment of dividends.)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1-28-89 1-27-90 1-26-91 1-25-92 1-30-93 1-29-94
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jacobson's 100 107 66 93 72 69
NASDAQ Market 100 107 104 167 189 215
Peer Group 100 128 131 168 203 197
- ----------------------------------------------------------------------------------------------
</TABLE>
A paper copy of the Performance Graph as contained in the Company's definitive
proxy statement has been submitted to the Securities
and Exchange Commission under separate cover.
20
<PAGE> 24
The peer group comprises ten retail companies offering mainly apparel and
accessories, five of which are members of the same buying office as the
Company. The members of the peer group are as follows: Crowley, Milner & Co.;
Dayton Hudson Corporation; Dillard Department Stores, Inc.; Gantos, Inc.;
Gottschalks Inc.; Lamonts Apparel, Inc.; The May Department Stores Company;
Nordstrom, Inc.; Proffitt's, Inc.; and Strawbridge & Clothier. The shareholder
returns for each of these companies have been weighted according to each
company's stock market capitalization at the beginning of each period.
PROPOSAL TO APPROVE JACOBSON STOCK OPTION PLAN OF 1994
At the 1994 Annual Meeting, shareholders will be asked to approve the
Jacobson Stock Option Plan of 1994 (the "Plan"). The Board of Directors
expects to adopt the Plan on the same date as the Annual Meeting, May 26, 1994.
A copy of the Plan is printed as the appendix to this proxy statement. The
following summary is qualified in its entirety by reference to the printed
exhibit.
SUMMARY OF THE PLAN
The Plan replaces the Jacobson Stock Option Plan of 1983 (the "1983
Plan"), which expired in December 1993. The purpose of the Plan is to enhance
the ability of the Company to retain and attract superior directors, officers
and other key personnel, and to provide them incentive to achieve long-term
corporate objectives through ownership of stock in the Company.
Options to purchase a maximum of 400,000 shares of Common Stock of the
Company, par value $1 per share, may be granted under the Plan, subject to
adjustment on the occurrence of certain types of corporate transactions
referred to in the Plan. The term of the Plan is ten years.
EMPLOYEE OPTIONS
The Plan authorizes the grant of stock options ("employee options") to
full-time salaried officers and other full-time key employees, as determined by
the committee described in the next paragraph. Employee options may be either
incentive stock options under the Internal Revenue Code or nonstatutory stock
options.
The employee option portion of the Plan will be administered by a
committee of the Board of Directors. It is contemplated that the Organization
and Compensation Committee will serve in that capacity, as it did under the
1983 Plan. The current members of that committee are listed on page 7 of this
proxy statement.
21
<PAGE> 25
The committee will have authority to make all determinations with respect
to employee options, including the persons to whom options will be granted, the
number of shares subject to each option, the timing of the grants, any vesting
period, the duration of each option, the option price, and the other terms of
the options and option agreements, subject to certain limitations in the Plan.
With incentive stock options, the option price may not be less than the
fair market value of the Company's Common Stock at the time the option is
granted. The term of the options may not be more than ten years.
Incentive stock options will not be transferable except on death. If an
optionee's employment is terminated for any reason except retirement,
disability or death, all incentive stock options held by the optionee will
automatically expire. In case of retirement on or after the optionee's 65th
birthday, the optionee may exercise any unexpired incentive stock options
within three months after retirement, or until the expiration date stated in
the option agreement, whichever occurs first. In case of permanent and total
disability or death of an optionee while employed by the Company, incentive
stock options may be exercised within one year after the date of disability or
death, or until the expiration date stated in the option agreement, whichever
occurs first.
Nonstatutory employee options may be issued for less than the fair market
value of the Company's Common Stock at the time the option is granted. The
Company has no current plans to issue options for less than the fair market
value of the Common Stock. The term of nonstatutory employee options may not
be more than ten years.
Nonstatutory employee options will not be transferable except on death.
If an optionee's employment is terminated for any reason except retirement,
disability or death, all nonstatutory employee options held by the optionee
will automatically expire. In case of retirement on or after the optionee's
65th birthday, permanent and total disability or death of an optionee while
employed by the Company, nonstatutory employee options may be exercised within
one year after the date of retirement, disability or death, or until the
expiration date stated in the option agreement, whichever occurs first.
It is contemplated that nonstatutory employee options will initially be
granted to 33 persons, that is, all current officers of the Company. It is not
possible to state how many options will be granted to any individual, all
current executive officers as a group, or all employees as a group.
The Summary Compensation Table on page 8 of this proxy statement reports
options granted under the 1983 Plan during each of the last three fiscal years
to the individuals who were the Company's five
22
<PAGE> 26
most highly compensated executive officers in fiscal 1993. The table
on page 9 reports options exercised in fiscal 1993 by each of the five most
highly compensated executive officers, and the number and fiscal year-end value
of options held by each such executive officer.
DIRECTOR OPTIONS
The Plan provides for the issuance of nonstatutory stock options
("director options") to each current director of the Company, and each person
who hereafter becomes a director, except any full-time employee of the Company.
Mark K. Rosenfeld, Paul W. Gilbert, and James B. Fowler will not be eligible to
receive director options.
Under the Plan, each eligible director on May 26, 1994 who received
options under the 1983 Plan will receive options to purchase 500 shares of
Common Stock. This group consists of directors Amster, Couzens, Kohlmeyer,
Lewis, Longe, Monahan, Power, Robert L. Rosenfeld, and Wolohan. Richard Z.
Rosenfeld, who was not eligible to receive options under the 1983 Plan, will,
on May 26, 1994, receive options to purchase 1,000 shares of Common Stock.
Each person who becomes an eligible director after May 26, 1994 will receive,
on the date he or she becomes eligible, options to purchase 1,000 shares of
Common Stock. Immediately after each Annual Meeting of Shareholders,
commencing in 1995, each eligible director will receive options to purchase 500
shares of Common Stock.
Each director option will state a purchase price equal to the fair market
value of the Common Stock at the time the option is granted. Each director
option will have a five-year term.
Director options will not be transferable except on death. If an
optionee's service as a director is terminated for any reason except
retirement, non-election, disability or death, all director options held by
such optionee will automatically expire. In case of retirement pursuant to the
Company's retirement policy for directors, non-election after nomination by the
Board of Directors for re- election, permanent and total disability, or death,
director options may be exercised within one year after the date of such event,
or until the expiration date stated in the option agreement, whichever occurs
first.
Any administration of the Plan relating to director options will be the
responsibility of the members of the Board of Directors who do not have and are
not eligible to receive director options (currently Mark K. Rosenfeld, Paul W.
Gilbert and James B. Fowler).
The table on page 6 of this proxy statement reports director options
granted under the 1983 Plan in fiscal 1993. The footnotes to the stock
ownership table on page 2 report the number of options held by each director.
23
<PAGE> 27
CURRENT FEDERAL INCOME TAX CONSEQUENCES
Under current federal income tax law, the recipient of an incentive stock
option or nonstatutory stock option will not realize any taxable income on the
grant of the option, and the Company will not be entitled to a deduction at
that time.
With incentive stock options, the optionee will not realize any taxable
income on exercise of the option if the exercise occurs during employment or
within three months thereafter; or, in case of permanent and total disability
or death of an optionee while employed by the Company, within one year after
the date of disability or death, or until the expiration date stated in the
option agreement, whichever occurs first. The amount by which the fair market
value of the stock exceeds the option price at the time of exercise of the
option may be treated as an item of tax preference subject to alternative
minimum tax.
If the holder of an incentive stock option does not dispose of the shares
within two years after the option is granted or within one year after the date
the shares are transferred to the optionee, any gain on the sale of the shares
will generally be a long-term capital gain, and the Company will not be
entitled to any corresponding deduction. The holding period requirement does
not apply in case of exercise of an incentive stock option after the death of
the optionee. If an optionee does not satisfy the incentive stock option
holding requirements, the tax consequences to the optionee and the Company will
generally be similar to the consequences on the exercise of nonstatutory stock
options, described in the next paragraph.
With nonstatutory stock options, including director options, optionees
will generally receive ordinary income at the time of exercise of the option,
equal to the difference between the option price and the fair market value of
the stock at the time of exercise. The Company will be entitled to a deduction
at the same time as the optionee is taxed, and for a corresponding amount, if
it is an ordinary and necessary business expense and reasonable compensation.
OTHER INFORMATION
Options may be exercised in whole or in part, only by payment in cash or
by check. At least 50 shares must be purchased on any partial exercise.
The Plan may be amended by the Board of Directors, with certain
exceptions. The Board of Directors may not materially increase the maximum
number of shares that may be issued on the exercise of options under the Plan,
materially increase the benefits to any
24
<PAGE> 28
director or executive officer of the Company, amend any provisions relating to
director options, or extend the term of the Plan, without approval of the
shareholders before or within twelve months after such amendment.
The Plan contains an anti-dilution provision, to provide for automatic
adjustment in the number and/or kind of shares of stock deliverable on the
exercise of options, the option price, or any combination thereof, in the event
of certain types of corporate transactions. The Plan also provides for
automatic acceleration of all unvested and partially vested options in the
event of any liquidation or change in control of the Company.
The closing bid and asked quotations of the Company's Common Stock on
April 4, 1994 (the latest practicable date before the printing of this proxy
statement) was $13-3/4 bid, $14-1/4 asked.
Shareholders are encouraged to review the entire Plan printed in the
appendix. Approval requires the affirmative vote of a majority of the votes
cast.
The Board of Directors recommends a vote FOR the proposal to approve the
Jacobson Stock Option Plan of 1994.
APPOINTMENT OF AUDITORS
Arthur Andersen & Co., independent certified public accountants, have
been auditors for Jacobson Stores Inc. and its subsidiaries since 1960. One or
more representatives of that firm are expected to be present at the Annual
Meeting, with the opportunity to make a statement if they want to do so, and
will be available to respond to appropriate questions.
The Board of Directors has nominated Arthur Andersen & Co. as the
auditors of Jacobson Stores Inc. and its subsidiary corporations for the fiscal
year ending January 28, 1995. The following resolution will be offered at the
meeting:
"RESOLVED, that Arthur Andersen & Co., independent certified public
accountants, be appointed auditors of Jacobson Stores Inc. and its
subsidiary corporations for the fiscal year ending January 28, 1995."
The Board of Directors recommends a vote FOR the resolution.
OTHER MATTERS
Shareholders will be asked to approve the minutes of the 1993 Annual
Meeting. The approval of minutes is not considered to be approval of the
actions taken at the previous meeting.
25
<PAGE> 29
Management does not know of any other matter to be brought before the
meeting. If any other matters properly come before the meeting, the persons
named in the enclosed proxy will vote according to their judgment.
In all matters other than the election of directors, approval is given
by a majority of the votes cast, and abstentions have no effect. Votes in all
matters will be counted by officers of the Company.
COST OF SOLICITATION
The cost of soliciting proxies will be paid by the Company. In addition
to solicitation by mail, proxies may be solicited personally or by telephone by
a few employees of the Company; and brokers, banks and others known by the
Company to hold Common Stock for other beneficial owners will be requested to
forward proxies and proxy soliciting material to the beneficial owners and will
be reimbursed for their expenses.
PROPOSALS FOR 1995 ANNUAL MEETING
Any shareholder's proposal intended to be presented at the 1995 Annual
Meeting must be in writing, must comply with the requirements of the Securities
and Exchange Commission, should be addressed to Secretary, Jacobson Stores
Inc., 3333 Sargent Road, Jackson, Michigan 49201, and must be received by the
Company at that address no later than December 15, 1994, in order to be
included in the Company's proxy material for that meeting.
By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary
Jackson, Michigan, April 15, 1994.
26
<PAGE> 30
APPENDIX
JACOBSON STOCK OPTION PLAN OF 1994
This Stock Option Plan of Jacobson Stores Inc., a Michigan corporation
(the "Company"), is adopted by the Board of Directors and approved by the
shareholders of the Company on May 26, 1994.
ARTICLE I.
PURPOSE
This Plan is intended to enhance the ability of the Company to retain
and attract superior directors, officers and other key personnel and to provide
them an incentive to achieve long-term corporate objectives through ownership
of stock in the Company.
ARTICLE II.
STOCK AND OPTIONS SUBJECT TO PLAN
SECTION 1. COMMON STOCK. The stock issuable on exercise of Options
pursuant to this Plan shall be shares of the Company's Common Stock, par
value $1 per share ("Common Stock"). Such shares may be either authorized
and unissued shares, or shares held in the treasury of the Company.
SECTION 2. OPTIONS. Options granted pursuant to this Plan to eligible
employees described in Article III, Section 1 ("Employee Options") may be
either incentive stock options ("Incentive Stock Options"), within the meaning
of Section 422 or any amending or superseding section of the Internal Revenue
Code of 1986, as amended (the "Code"), or stock purchase options that do not
qualify as Incentive Stock Options ("Nonstatutory Options"; when granted to
employees, Nonstatutory Options are referred to as "Nonstatutory Employee
Options"). Options granted pursuant to this Plan to Eligible Directors
described in Article IV, Section 1 ("Director Options") shall be Nonstatutory
Options. Incentive Stock Options and Nonstatutory Options are referred to
separately and collectively as "Options".
SECTION 3. AGGREGATE LIMIT. The aggregate number of shares of Common
Stock which may be issued on exercise of Options shall not exceed 400,000
shares, except in the event of any adjustment pursuant to Article V, Section
3. Any shares of Common Stock subject to an Option that expires or terminates
unexercised in whole or in part may be the subject of a new Option or Options.
A-1
<PAGE> 31
ARTICLE III.
EMPLOYEE OPTIONS
SECTION 1. ELIGIBILITY. The persons eligible to receive Employee
Options shall be such full-time salaried officers and other full-time key
employees of the Company or any of its subsidiary corporations (as defined in
Section 424 or any amending or superseding section of the Code), as determined
by the Employee Option Committee described in Section 4.1 of this Article III.
Subject to the limitations in this Plan, Employee Options may be granted on
more than one occasion to the same employee. No member of the Employee Option
Committee, while a member of such committee, shall be eligible to receive any
Employee Options.
SECTION 2. TERMS OF INCENTIVE STOCK OPTIONS. All Incentive Stock
Options shall be evidenced by written agreements ("Incentive Stock Option
Agreements"). The Incentive Stock Options and Incentive Stock Option
Agreements shall contain in substance the terms in Sections 2.1 through 2.8,
and may contain such other terms and conditions not inconsistent with this Plan
as the Employee Option Committee determines.
SECTION 2.1. IDENTIFICATION. Each Incentive Stock Option Agreement
shall clearly identify the Options covered thereby as Incentive Stock
Options.
SECTION 2.2. NUMBER OF SHARES. Each Incentive Stock Option Agreement
shall state the number of shares of Common Stock to which it pertains.
SECTION 2.3. VESTING AND TERM. Each Incentive Stock Option Agreement
shall state the period, if any, before the Option may be exercised, and the
term within which the Option may be exercised; provided, that no Incentive
Stock Option may be exercised after the expiration of ten years from the
date the Option is granted.
SECTION 2.4. OPTION PRICE. Each Incentive Stock Option Agreement
shall state the option price, which shall be not less than the fair market
value of the Common Stock at the time the Option is granted.
SECTION 2.5. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Each
Incentive Stock Option may be exercised only within the term stated in the
Incentive Stock Option Agreement. It shall be exercisable by written notice
identifying the Option and stating the number of shares purchased,
accompanied by payment of the full purchase price for the shares purchased.
Such notice and payment shall be delivered personally or mailed by
certified mail to the Treasurer of the Company. Any Incentive Stock Option
may be exercised in whole or in part; provided,
A-2
<PAGE> 32
that not less than 50 shares may be purchased and no fractional shares may be
purchased on any partial exercise, except on purchase of all remaining shares
covered by the Option.
SECTION 2.6. NON-TRANSFERABILITY. Each Incentive Stock Option
Agreement shall provide that the Option is not transferable by the optionee
otherwise than by will or the laws of descent and distribution, and during the
lifetime of the optionee is exercisable only by the optionee.
SECTION 2.7. TERMINATION OF EMPLOYMENT. Except as stated in
paragraphs (a), (b) and (c) of this Section 2.7, if the employment of the
holder of an Incentive Stock Option, with the Company or a subsidiary,
terminates or is terminated for any reason whatever, whether by the Company,
with or without cause, or by the optionee, all unexercised Incentive Stock
Options held by such optionee shall automatically expire at the same time as
termination of employment.
(a) RETIREMENT. If the holder of an Incentive Stock Option retires on
or after the optionee's 65th birthday, the optionee may exercise any
unexpired Incentive Stock Options held by such optionee within three
months after the date of retirement, or until the expiration date
stated in the Incentive Stock Option Agreement, whichever occurs first.
(b) DISABILITY. If the holder of an Incentive Stock Option is
permanently and totally disabled (within the meaning of Section
22(e)(3) or any amending or superseding section of the Code) while
employed by the Company or a subsidiary, the optionee may exercise any
unexpired Incentive Stock Options held by such optionee within one year
after the date of such permanent and total disability, or until the
expiration date stated in the Incentive Stock Option Agreement,
whichever occurs first.
(c) DEATH. If the holder of an Incentive Stock Option dies while
employed by the Company or a subsidiary, the optionee's personal
representative, executor or administrator, or person who acquires the
right to exercise the Option by bequest or inheritance or by reason of
the optionee's death, may exercise any unexpired Incentive Stock
Options held by such optionee within one year after the date of death,
or until the expiration date stated in the Incentive Stock Option
Agreement, whichever occurs first.
A-3
<PAGE> 33
SECTION 2.8. HOLDING PERIOD; DISQUALIFYING DISPOSITIONS. Each
Incentive Stock Option Agreement shall provide that no disposition
of any shares of Common Stock issuable on exercise of the Option
shall be made by the optionee within two years from the date of the
grant of the Option nor within one year after the transfer of such
shares to the optionee on exercise of the Option. Each optionee
shall agree to inform the Company in writing before making any
sale, transfer, assignment, or other disposition of any of the
shares before the expiration of said holding period.
SECTION 2.9. 10% SHAREHOLDER. No Incentive Stock Option may
be granted to any individual who, at the time the Option is
granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any
subsidiary, unless at the time the Option is granted the option
price is at least 110% of the fair market value of the Common Stock
and the Option by its terms is not exercisable after the expiration
of five years from the date such Option is granted.
SECTION 2.10. CALENDAR YEAR LIMIT. The aggregate fair market
value (determined as of the time the Incentive Stock Option is
granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any individual in any
calendar year (under all plans of the Company and any subsidiaries)
shall not exceed $100,000.
SECTION 3. TERMS OF NONSTATUTORY EMPLOYEE OPTIONS. All Nonstatutory
Employee Options shall be evidenced by written agreements ("Nonstatutory
Employee Option Agreements"). The Nonstatutory Employee Options and
Nonstatutory Employee Option Agreements shall contain in substance the terms in
Sections 3.1 through 3.7, and may contain such other terms and conditions not
inconsistent with this Plan as the Employee Option Committee determines.
SECTION 3.1. IDENTIFICATION. Each Nonstatutory Employee
Option Agreement shall clearly identify the Options covered thereby
as Nonstatutory Employee Options.
SECTION 3.2. NUMBER OF SHARES. Each Nonstatutory Employee
Option Agreement shall state the number of shares of Common Stock
to which it pertains.
SECTION 3.3. VESTING AND TERM. Each Nonstatutory Employee
Option Agreement shall state the period, if any, before the Option
may be exercised, and the term within which the Option may be
exercised; provided, that no Nonstatutory Employee Option may be
exercised after the expiration of ten years from the date the
Option is granted.
A-4
<PAGE> 34
SECTION 3.4. OPTION PRICE. Each Nonstatutory Employee Option
Agreement shall state the option price, which may be less than the fair market
value of the Common Stock at the time the Option is granted.
SECTION 3.5. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Each
Nonstatutory Employee Option may be exercised only within the term stated in
the Nonstatutory Employee Option Agreement. It shall be exercisable by written
notice identifying the Option and stating the number of shares purchased,
accompanied by payment of the full purchase price for the shares purchased.
Such notice and payment shall be delivered personally or mailed by certified
mail to the Treasurer of the Company. Any Nonstatutory Employee Option may be
exercised in whole or in part; provided, that not less than 50 shares may be
purchased and no fractional shares may be purchased on any partial exercise,
except on purchase of all remaining shares covered by the Option.
SECTION 3.6. NON-TRANSFERABILITY. Each Nonstatutory Employee Option
Agreement shall provide that the Option is not transferable by the optionee
otherwise than by will or the laws of descent and distribution, and during the
lifetime of the optionee is exercisable only by the optionee.
SECTION 3.7. TERMINATION OF EMPLOYMENT. Except as stated in
paragraphs (a), (b) and (c) of this Section 3.7, if the employment of the
holder of a Nonstatutory Employee Option, with the Company or a subsidiary,
terminates or is terminated for any reason whatever, whether by the Company,
with or without cause, or by the optionee, all unexercised Nonstatutory
Employee Options held by such optionee shall automatically expire at the same
time as termination of employment.
(A) RETIREMENT. If the holder of a Nonstatutory Employee Option
retires on or after the optionee's 65th birthday, the optionee may
exercise any unexpired Nonstatutory Employee Options held by such optionee
within one year after the date of retirement, or until the expiration date
stated in the Nonstatutory Employee Option Agreement, whichever occurs
first.
(b) DISABILITY. If the holder of a Nonstatutory Employee Option is
permanently and totally disabled (within the meaning of Section 22(e) (3)
or any amending or superseding section of the Code) while employed by the
Company or a subsidiary, the optionee may exercise any unexpired
Nonstatutory Employee Options held by such optionee within one year after
the date of such permanent and total disability, or until the expiration
date stated
A-5
<PAGE> 35
in the Nonstatutory Employee Option Agreement, whichever occurs first.
(C) DEATH. If the holder of a Nonstatutory Employee Option dies while
employed by the Company or a subsidiary, the optionee's personal
representative, executor or administrator, or person who acquires the right
to exercise the Option by bequest or inheritance or by reason of the
optionee's death, may exercise any unexpired Nonstatutory Employee Options
held by such optionee within one year after the date of death, or until the
expiration date stated in the Nonstatutory Employee Option Agreement,
whichever occurs first.
SECTION 4. ADMINISTRATION.
SECTION 4.1. COMMITTEE. All aspects of the Plan relating to Employee
Options shall be administered by a committee of the Board of Directors of the
Company (the "Employee Option Committee"), designated by the Board of
Directors. The Employee Option Committee shall consist of not less than two
members of the Board of Directors, who shall be appointed for such purpose by
the Board. No person shall be eligible to serve on the Employee Option
Committee who, during the one year prior to such service or during such
service, was granted or awarded equity securities, including any derivative
securities, as defined in Rule 16a-1(c) or any amending or superseding rule
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
pursuant to any other plan of the Company or any of its affiliates; except that
recipients of Director Options pursuant to the Jacobson Stock Option Plan of
1983, as amended (the "1983 Plan"), or pursuant to this Plan, or both, shall be
eligible to serve on the Employee Option Committee. Members of the Employee
Option Committee shall be subject to any additional restrictions necessary to
satisfy the requirements for disinterested administration of the Plan, as set
forth in Rule 16b-3 or any amending or superseding rule under the Exchange Act.
The Board of Directors may remove members from or add members to the Employee
Option Committee, and fill vacancies on the Employee Option Committee.
SECTION 4.2. COMMITTEE DETERMINATIONS. Subject to the provisions of
this Plan, the Employee Option Committee shall have full power and authority to
make all determinations necessary or advisable with respect to the grant of
Employee Options, including without limitation the persons to whom Employee
Options shall be granted, the number of shares subject to each Employee Option,
the option price, the timing of the grants, whether each Employee Option will
be an Incentive Stock Option or Nonstatutory Employee Option, the vesting
period, if any, before an Employee Option may be exercised, the term within
which it may be exercised, and the other terms and conditions of the Employee
Options and the agreements evidencing same. In making its determinations, the
Employee
A-6
<PAGE> 36
Option Committee shall consider recommendations of the senior
management of the Company, and may consider any other information it deems
material. The Employee Option Committee's determinations need not be uniform,
and may be made selectively among persons who receive or are eligible to
receive Employee Options, whether or not such persons are similarly situated.
SECTION 4.3. CONDITIONS OF GRANT. The Employee Option Committee may,
in its discretion, as a condition to the grant of any Employee Options, require
any employee who is the recipient of such Option to sign an agreement not to
compete with the Company or any subsidiary during employment or after
termination of employment with the Company or any subsidiary, which agreement
may contain such terms and conditions as the Employee Option Committee
determines.
SECTION 4.4. INTERPRETATIONS. The Employee Option Committee shall
have full power and authority to interpret and construe this Plan, Employee
Options, and the agreements pertaining thereto, and to resolve any questions
arising in connection therewith. All decisions by the Employee Option
Committee shall be final, conclusive, and binding on all persons, including
without limitation the Company, its shareholders, and all persons who may then
or thereafter hold any Employee Options or have any interest therein.
SECTION 4.5. PROCEDURES. The Employee Option Committee may adopt
such procedures, rules and regulations as it considers appropriate; may hold
meetings at such times and places as it determines; and may act at any meeting
on affirmative vote of a majority of the members of the Employee Option
Committee, or without a meeting on written authorization or approval of all
members of the Employee Option Committee.
SECTION 4.6. NON-LIABILITY; INDEMNIFICATION. No member of the
Employee Option Committee shall be liable to any person for any action or
determination in good faith with respect to the Plan or any Employee Options.
Each member of the Employee Option Committee shall be entitled to
indemnification by the Company with respect to all actions as a member of the
Employee Option Committee, to the fullest extent permissible under the
Company's bylaws and the laws of Michigan.
A-7
<PAGE> 37
ARTICLE IV.
DIRECTOR OPTIONS
SECTION 1. ELIGIBILITY. Each current director of the Company, and
each person who hereafter becomes a director of the Company, except any
full-time employee of the Company, shall be eligible to receive Director
Options as hereinafter set forth, and is referred to as an "Eligible
Director."
SECTION 2. GRANT OF OPTIONS.
(a) Each Eligible Director on May 26, 1994 who received Director
Options pursuant to the 1983 Plan shall receive Director Options
pursuant to this Plan to purchase 500 shares of Common Stock.
(b) Each Eligible Director on May 26, 1994 who did not receive
Director Options pursuant to the 1983 Plan shall receive Director
Options pursuant to this Plan to purchase 1,000 shares of Common Stock.
(c) Each person who becomes an Eligible Director after May 26,
1994 and while this Plan is in effect shall receive, on the date such
person becomes an Eligible Director, Director Options to purchase 1,000
shares of Common Stock.
(d) Immediately after each Annual Meeting of Shareholders,
commencing with the 1995 Annual Meeting and continuing as long as this
Plan is in effect, each Eligible Director shall receive Director Options
to purchase 500 shares of Common Stock; provided, that no person shall
receive Director Options pursuant to this paragraph (d) on the same date
such person receives Director Options pursuant to paragraph (b) or (c)
of this Section 2.
SECTION 3. TERMS OF DIRECTOR OPTIONS. All Director Options shall be
evidenced by written agreements ("Director Option Agreements"). The Director
Options and Director Option Agreements shall contain in substance the terms in
Sections 3.1 through 3.7.
SECTION 3.1. IDENTIFICATION. Each Director Option Agreement shall
clearly identify the Options covered thereby as Director Options.
SECTION 3.2. NUMBER OF SHARES. Each Director Option Agreement
shall state the number of shares of Common Stock to which it pertains.
SECTION 3.3. TERM. Each Director Option may be exercised at any
time within five years after the date the Option is granted.
A-8
<PAGE> 38
SECTION 3.4. OPTION PRICE. Each Director Option Agreement shall
state the option price, which shall be the fair market value of the Common
Stock at the time the Option is granted.
SECTION 3.5. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Each
Director Option may be exercised only within the term stated in the Director
Option Agreement. It shall be exercisable by written notice identifying the
Option and stating the number of shares purchased, accompanied by payment of
the full purchase price for the shares purchased. Such notice and payment
shall be delivered personally or mailed by certified mail to the Treasurer of
the Company. Any Director Option may be exercised in whole or in part;
provided, that not less than 50 shares may be purchased and no fractional
shares may be purchased on any partial exercise, except on purchase of all
remaining shares covered by the Director Option.
SECTION 3.6. NON-TRANSFERABILITY. Each Director Option Agreement
shall provide that the Option is not transferable by the optionee otherwise
than by will or the laws of descent and distribution, and during the lifetime
of the optionee is exercisable only by the optionee.
SECTION 3.7. TERMINATION OF SERVICE. Except as stated in paragraphs
(a) through (d) of this Section 3.7, if the holder of a Director Option ceases
to be a director of the Company for any reason whatever, all unexercised
Director Options held by such director shall automatically expire at the same
time as termination of service as a director.
(A) RETIREMENT. If the holder of a Director Option retires
pursuant to the Company's retirement policy for directors, the
optionee may exercise any unexpired Director Options held by such
optionee within one year after the date of retirement, or until the
expiration date stated in the Director Option Agreement, whichever
occurs first.
(B) NON-ELECTION. If any director is nominated by the Board
of Directors for re-election, but is not re- elected as a director
of the Company, due to any cause except such director's resignation
or declination to serve, the optionee may exercise any unexpired
Director Options held by such optionee within one year after the
date of termination of service as a director, or until the
expiration date stated in the Director Option Agreement, whichever
occurs first.
A-9
<PAGE> 39
(C) DISABILITY. If the holder of a Director Option is
permanently and totally disabled (within the meaning of Section
22(e)(3) or any amending or superseding section of the Code), the
optionee may exercise any unexpired Director Options held by such
optionee within one year after the date of such permanent and total
disability, or until the expiration date stated in the Director
Option Agreement, whichever occurs first.
(D) DEATH. If the holder of a Director Option dies, the
optionee's personal representative, executor or administrator, or
person who acquires the right to exercise the Option by bequest or
inheritance or by reason of the optionee's death, may exercise any
unexpired Director Options held by such optionee within one year
after the date of death, or until the expiration date stated in the
Director Option Agreement, whichever occurs first.
SECTION 4. ADMINISTRATION.
SECTION 4.1. COMMITTEE. If any aspects of the Plan relating to
Director Options require administration or interpretation, such administration
or interpretation shall be performed by a special committee of the Board of
Directors of the Company (the "Director Option Committee"), which shall consist
of all members of the Board of Directors who do not have and are not eligible
to receive Director Options.
SECTION 4.2. DECISIONS. All decisions by the Director Option
Committee shall be final, conclusive and binding on all persons, including
without limitation the Company, its shareholders, and all persons who may then
or thereafter hold any Director Options or have any interest therein.
SECTION 4.3. PROCEDURES. The Director Option Committee may adopt
such procedures, rules and regulations as it considers appropriate; may hold
meetings at such times and places as it determines; and may act at any meeting
on affirmative vote of a majority of the members of the Director Option
Committee, or without a meeting on written authorization or approval of all
members of the Director Option Committee.
SECTION 4.4. NON-LIABILITY; INDEMNIFICATION. No member of
the Director Option Committee shall be liable to any person for any action or
determination in good faith with respect to the Plan or any Director Options.
Each member of the Director Option Committee shall be entitled to
indemnification by the Company with respect to all actions as a member of the
Director Option Committee, to the fullest extent permissible under the
Company's bylaws and the laws of Michigan.
A-10
<PAGE> 40
ARTICLE V.
MISCELLANEOUS PROVISIONS
SECTION 1. RIGHTS AS A SHAREHOLDER. No holder of any Option shall
have any rights as a shareholder of the Company with respect to any shares
covered by the Option until the issuance of the shares on exercise of the
Option.
SECTION 2. OPTIONEE'S EMPLOYMENT. No Employee Option and no agreement
pertaining thereto shall confer on the optionee any right with respect to
continuation of employment, nor affect any right of the Company or any
subsidiary to terminate employment.
SECTION 3. ADJUSTMENTS.
(a) ANTI-DILUTION. In the event of a stock dividend or
distribution, split-up or combination, exchange of shares,
recapitalization, merger, consolidation, corporate acquisition or
separation, reorganization, or comparable corporate transaction,
appropriate adjustments (to be determined by the Board of Directors of
the Company or the Employee Option Committee with respect to Employee
Options, and to be determined by the Director Option Committee with
respect to Director Options) shall automatically be made in the number
and/or kind of shares of stock authorized by this Plan deliverable on
the exercise of Options, the option price, or any combination thereof,
to maintain the proportionate interest of the optionees and preserve
the value of the options, so that optionees shall have the right
thereafter to receive on the exercise of Options the kind and amount
of shares of Common Stock or other securities or property which they
would have been entitled to receive if they had exercised the Options
immediately prior to the effective time of such transaction.
(b) LIQUIDATION OR CHANGE IN CONTROL. In the event of any
dissolution or liquidation of the Company, or any merger,
consolidation, or other corporate transaction, in which the Company is
not the surviving entity, the vesting period of all unvested and
partially vested Options shall automatically be accelerated, and all
such Options shall be exercisable in full immediately prior to the
effective time of such transaction. The Company shall give to each
holder of Employee Options written notice of such transaction or
proposed transaction at least thirty days prior to the effective time
of the transaction, or, if thirty days' prior written notice is not
feasible, then such notice as is feasible under the circumstances, so
that the holders of such Options will have the opportunity to exercise
them prior to the effective time of the transaction.
(c) EXCEPTION. Notwithstanding the provisions of paragraphs
(a) and (b) of this Section 3, no adjustment shall
A-11
<PAGE> 41
be made with respect to Incentive Stock Options that would result in
their disqualification as Incentive Stock Options under the applicable
provisions of the Code and regulations thereunder.
SECTION 4. WITHHOLDING. Whenever the Company issues or transfers
shares of Common Stock under this Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local tax withholding requirements prior to the delivery
of any certificates for the shares.
SECTION 5. AMENDMENTS TO PLAN. The Board of Directors of the Company
at any time may amend, suspend or discontinue this Plan or amend any Options;
except that, without approval of the shareholders before or within twelve
months after such amendment, no amendment shall (i) materially increase the
maximum number of shares that may be issued on exercise of Options pursuant to
this Plan (except pursuant to Section 3 of this Article V, (ii) materially
modify the class of employees eligible to receive Employee Options, (iii)
reduce the option price (except pursuant to Section 3 of this Article V), (iv)
materially increase the benefits to any director or officer of the Company or
any subsidiary who is subject to the restrictions of Section 16(b) of the
Exchange Act, (v) amend any of the provisions of Article IV or amend any
Director Options, or (vi) extend the term of the Plan. This Plan may not be
amended in any manner that will cause Incentive Stock Options to fail to meet
the applicable requirements under Section 422 of the Code and regulations
thereunder. No amendment or termination shall adversely affect rights of any
optionee under any Options previously granted, without the consent of the
optionee. The provisions of this Plan relating to the eligibility of directors
and/or officers of the Company to receive Options, and the amount, price and
timing of grants of Options to directors and/or officers of the Company, shall
not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder.
SECTION 6. NONEXCLUSIVITY. Nothing contained in this Plan shall limit
the authority of the Company to grant options otherwise than under this Plan,
or to assume options of any other entity in connection with any merger,
acquisition, or other corporate transaction. Participation in this Plan shall
not affect an employee's eligibility to participate in other employee benefit
plans of the Company.
SECTION 7. CONSTRUCTION. This Plan and the Options shall be construed
according to the laws of Michigan. Article and section headings are for
convenience only, and shall not affect the construction of any provision.
SECTION 8. SUCCESSORS AND ASSIGNS. This Plan and the Options and
agreements pertaining thereto shall be binding on and
A-12
<PAGE> 42
enforceable by the Company and each optionee, and their successors in
interest.
SECTION 9. EFFECTIVE DATE AND DURATION. This Plan is effective on
adoption by the Board of Directors and approval by the shareholders of the
Company on May 26, 1994. Options may be granted under this Plan at any time on
or before May 25, 2004, but not thereafter.
A-13
<PAGE> 43
THIS PAGE LEFT INTENTIONALLY BLANK
<PAGE> 44
THIS PAGE LEFT INTENTIONALLY BLANK
<PAGE> 45
PROXY COMMON STOCK
JACOBSON STORES INC.
1994 ANNUAL MEETING OF SHAREHOLDERS - MAY 26, 1994
The undersigned appoint(s) MARK K. ROSENFELD and FRANK COUZENS, JR. as proxies,
each with power of substitution, and authorize(s) them to represent and vote
as indicated below all shares of Common Stock of Jacobson Stores Inc. held of
record by the undersigned on March 28, 1994, at the 1994 Annual Meeting of
Shareholders, to be held May 26, 1994, and at any adjournments thereof.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed
below
Class II Directors, to serve until the 1997 Annual Meeting of
Shareholders:
Paul W. Gilbert, Patricia Shontz Longe, Philip H. Power,
and Robert L. Rosenfeld
Class III Directors, to serve until the 1995 Annual Meeting of
Shareholders:
Kathleen McCree Lewis and James L. Wolohan
(To withhold authority to vote for any nominee(s), write
that person's name(s) in the following space:)
_______________________________
2. APPROVAL OF STOCK OPTION PLAN:
Proposal to approve the Jacobson Stock Option Plan of 1994, as set
forth in the proxy statement. (See proxy statement pages 13-15 and
Appendix.)
FOR AGAINST ABSTAIN
/ / / / / /
(Continued and to be signed on reverse side)
<PAGE> 46
3. APPOINTMENT OF AUDITORS:
Proposal to appoint Arthur Andersen & Co. as auditors for the fiscal year
ending January 28, 1995.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote on any
other matters that may properly come before the meeting or any adjournments
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
PROPERLY EXECUTED PROXIES WILL BE VOTED AS SPECIFIED. IF NO
DIRECTION IS GIVEN, PROXIES WILL BE VOTED FOR ITEMS 1, 2 AND 3, AND ACCORDING
TO THE JUDGMENT OF THE PROXIES ON ALL OTHER MATTERS.
The undersigned acknowledge(s) receipt of the Notice of the 1994 Annual
Meeting of Shareholders, the proxy statement for said meeting, and the Annual
Report of Jacobson Stores Inc. to its shareholders for the year ended January
29, 1994.
Please sign below exactly as name(s) appear(s) at left. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, or on behalf of a corporation or
partnership, please sign in the name of the shareholder, sign your name, and
give your title. Unsigned or improperly signed proxies will not be counted.
________________________________
________________________________
Dated: _______________, 1994
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. THIS PROXY WILL NOT BE USED IF YOU ATTEND THE MEETING IN PERSON AND
SO REQUEST.
<PAGE> 47
Attachment
JACOBSON STOCK OPTION PLAN OF 1994
This Stock Option Plan of Jacobson Stores Inc., a Michigan corporation
(the "Company"), is adopted by the Board of Directors and approved by the
shareholders of the Company on May 26, 1994.
ARTICLE I.
PURPOSE
This Plan is intended to enhance the ability of the Company to retain
and attract superior directors, officers and other key personnel and to provide
them an incentive to achieve long-term corporate objectives through ownership
of stock in the Company.
ARTICLE II.
STOCK AND OPTIONS SUBJECT TO PLAN
SECTION 1. COMMON STOCK. The stock issuable on exercise of
Options pursuant to this Plan shall be shares of the Company's Common Stock,
par value $1 per share ("Common Stock"). Such shares may be either authorized
and unissued shares, or shares held in the treasury of the Company.
SECTION 2. OPTIONS. Options granted pursuant to this Plan to
eligible employees described in Article III, Section 1 ("Employee Options") may
be either incentive stock options ("Incentive Stock Options"), within the
meaning of Section 422 or any amending or superseding section of the Internal
Revenue Code of 1986, as amended (the "Code"), or stock purchase options that
do not qualify as Incentive Stock Options ("Nonstatutory Options"; when granted
to employees, Nonstatutory Options are referred to as "Nonstatutory Employee
Options"). Options granted pursuant to this Plan to Eligible Directors
described in Article IV, Section 1 ("Director Options") shall be Nonstatutory
Options. Incentive Stock Options and Nonstatutory Options are referred to
separately and collectively as "Options".
SECTION 3. AGGREGATE LIMIT. The aggregate number of shares of
Common Stock which may be issued on exercise of Options shall not exceed
400,000 shares, except in the event of any adjustment pursuant to Article V,
Section 3. Any shares of Common Stock subject to an Option that expires or
terminates unexercised in whole or in part may be the subject of a new Option
or Options.
ARTICLE III.
EMPLOYEE OPTIONS
SECTION 1. ELIGIBILITY. The persons eligible to receive Employee
Options shall be such full-time salaried officers and other full-time key
employees of the Company or any of its subsidiary corporations (as defined in
Section 424 or any amending
<PAGE> 48
or superseding section of the Code), as determined by the Employee Option
Committee described in Section 4.1 of this Article III. Subject to the
limitations in this Plan, Employee Options may be granted on more than
one occasion to the same employee. No member of the Employee Option
Committee, while a member of such committee, shall be eligible to receive
any Employee Options.
SECTION 2. TERMS OF INCENTIVE STOCK OPTIONS. All Incentive
Stock Options shall be evidenced by written agreements ("Incentive Stock Option
Agreements"). The Incentive Stock Options and Incentive Stock Option
Agreements shall contain in substance the terms in Sections 2.1 through 2.8,
and may contain such other terms and conditions not inconsistent with this Plan
as the Employee Option Committee determines.
SECTION 2.1. IDENTIFICATION. Each Incentive Stock Option Agreement
shall clearly identify the Options covered thereby as Incentive Stock
Options.
SECTION 2.2. NUMBER OF SHARES. Each Incentive Stock Option Agreement
shall state the number of shares of Common Stock to which it pertains.
SECTION 2.3. VESTING AND TERM. Each Incentive Stock Option Agreement
shall state the period, if any, before the Option may be exercised, and
the term within which the Option may be exercised; provided, that no
Incentive Stock Option may be exercised after the expiration of ten years
from the date the Option is granted.
SECTION 2.4. OPTION PRICE. Each Incentive Stock Option Agreement shall
state the option price, which shall be not less than the fair market value
of the Common Stock at the time the Option is granted.
SECTION 2.5. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Each Incentive
Stock Option may be exercised only within the term stated in the Incentive
Stock Option Agreement. It shall be exercisable by written notice
identifying the Option and stating the number of shares purchased,
accompanied by payment of the full purchase price for the shares purchased.
Such notice and payment shall be delivered personally or mailed by
certified mail to the Treasurer of the Company. Any Incentive Stock Option
may be exercised in whole or in part; provided, that not less than 50
shares may be purchased and no fractional shares may be purchased on any
partial exercise, except on purchase of all remaining shares covered by the
Option.
SECTION 2.6. NON-TRANSFERABILITY. Each Incentive Stock Option
Agreement shall provide that the Option is not transferable by the
optionee otherwise than by will or the
2
<PAGE> 49
laws of descent and distribution, and during the lifetime of the optionee is
exercisable only by the optionee.
SECTION 2.7. TERMINATION OF EMPLOYMENT. Except as stated
in paragraphs (a), (b) and (c) of this Section 2.7, if the employment of the
holder of an Incentive Stock Option, with the Company or a subsidiary,
terminates or is terminated for any reason whatever, whether by the Company,
with or without cause, or by the optionee, all unexercised Incentive Stock
Options held by such optionee shall automatically expire at the same time as
termination of employment.
(a) RETIREMENT. If the holder of an Incentive Stock Option
retires on or after the optionee's 65th birthday, the optionee may
exercise any unexpired Incentive Stock Options held by such optionee
within three months after the date of retirement, or until the
expiration date stated in the Incentive Stock Option Agreement,
whichever occurs first.
(b) DISABILITY. If the holder of an Incentive Stock Option
is permanently and totally disabled (within the meaning of Section
22(e)(3) or any amending or superseding section of the Code) while
employed by the Company or a subsidiary, the optionee may exercise any
unexpired Incentive Stock Options held by such optionee within one year
after the date of such permanent and total disability, or until the
expiration date stated in the Incentive Stock Option Agreement,
whichever occurs first.
(c) DEATH. If the holder of an Incentive Stock Option dies
while employed by the Company or a subsidiary, the optionee's personal
representative, executor or administrator, or person who acquires the
right to exercise the Option by bequest or inheritance or by reason of
the optionee's death, may exercise any unexpired Incentive Stock
Options held by such optionee within one year after the date of death,
or until the expiration date stated in the Incentive Stock Option
Agreement, whichever occurs first.
SECTION 2.8. HOLDING PERIOD; DISQUALIFYING DISPOSITIONS. Each
Incentive Stock Option Agreement shall provide that no disposition of any
shares of Common Stock issuable on exercise of the Option shall be made by the
optionee within two years from the date of the grant of the Option nor within
one year after the transfer of such shares to the optionee on exercise of the
Option. Each optionee shall agree to inform the Company in writing before
making any sale, transfer, assignment, or other disposition of any of the
shares before the expiration of said holding period.
3
<PAGE> 50
SECTION 2.9. 10% SHAREHOLDER. No Incentive Stock Option may
be granted to any individual who, at the time the Option is granted,
owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any subsidiary, unless at the
time the Option is granted the option price is at least 110% of the
fair market value of the Common Stock and the Option by its terms is
not exercisable after the expiration of five years from the date such
Option is granted.
SECTION 2.10. CALENDAR YEAR LIMIT. The aggregate fair market
value (determined as of the time the Incentive Stock Option is granted)
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual in any calendar year
(under all plans of the Company and any subsidiaries) shall not exceed
$100,000.
SECTION 3. TERMS OF NONSTATUTORY EMPLOYEE OPTIONS. All
Nonstatutory Employee Options shall be evidenced by written agreements
("Nonstatutory Employee Option Agreements"). The Nonstatutory Employee Options
and Nonstatutory Employee Option Agreements shall contain in substance the
terms in Sections 3.1 through 3.7, and may contain such other terms and
conditions not inconsistent with this Plan as the Employee Option Committee
determines.
SECTION 3.1. IDENTIFICATION. Each Nonstatutory
Employee Option Agreement shall clearly identify the Options covered
thereby as Nonstatutory Employee Options.
SECTION 3.2. NUMBER OF SHARES. Each Nonstatutory
Employee Option Agreement shall state the number of shares of Common
Stock to which it pertains.
SECTION 3.3. VESTING AND TERM. Each Nonstatutory
Employee Option Agreement shall state the period, if any, before the
Option may be exercised, and the term within which the Option may be
exercised; provided, that no Nonstatutory Employee Option may be
exercised after the expiration of ten years from the date the Option is
granted.
SECTION 3.4. OPTION PRICE. Each Nonstatutory
Employee Option Agreement shall state the option price, which may be
less than the fair market value of the Common Stock at the time the
Option is granted.
SECTION 3.5. EXCERCISE OF OPTIONS AND PAYMENT FOR SHARES.
Each Nonstatutory Employee Option may be exercised only within the term
stated in the Nonstatutory Employee Option Agreement. It shall be
exercisable by written notice identifying the Option and stating the
number of shares purchased, accompanied by payment of the full purchase
price for the shares
4
<PAGE> 51
purchased. Such notice and payment shall be delivered personally or mailed by
certified mail to the Treasurer of the Company. Any Nonstatutory Employee
Option may be exercised in whole or in part; provided, that not less than 50
shares may be purchased and no fractional shares may be purchased on any
partial exercise, except on purchase of all remaining shares covered by the
Option.
SECTION 3.6. NON-TRANSFERABILITY. Each Nonstatutory
Employee Option Agreement shall provide that the Option is not transferable by
the optionee otherwise than by will or the laws of descent and distribution,
and during the lifetime of the optionee is exercisable only by the optionee.
SECTION 3.7. TERMINATION OF EMPLOYMENT. Except as stated in
paragraphs (a), (b) and (c) of this Section 3.7, if the employment of the
holder of a Nonstatutory Employee Option, with the Company or a subsidiary,
terminates or is terminated for any reason whatever, whether by the Company,
with or without cause, or by the optionee, all unexercised Nonstatutory
Employee Options held by such optionee shall automatically expire at the same
time as termination of employment.
(A) RETIREMENT. If the holder of a Nonstatutory Employee Option
retires on or after the optionee's 65th birthday, the optionee may
exercise any unexpired Nonstatutory Employee Options held by such
optionee within one year after the date of retirement, or until the
expiration date stated in the Nonstatutory Employee Option Agreement,
whichever occurs first.
(B) DISABILITY. If the holder of a Nonstatutory Employee Option is
permanently and totally disabled (within the meaning of Section 22(e)(3)
or any amending or superseding section of the Code) while employed by
the Company or a subsidiary, the optionee may exercise any unexpired
Nonstatutory Employee Options held by such optionee within one year
after the date of such permanent and total disability, or until the
expiration date stated in the Nonstatutory Employee Option Agreement,
whichever occurs first.
(C) DEATH. If the holder of a Nonstatutory Employee Option
dies while employed by the Company or a subsidiary, the optionee's
personal representative, executor or administrator, or person who
acquires the right to exercise the Option by bequest or inheritance or
by reason of the optionee's death, may exercise any unexpired
Nonstatutory Employee Options held by such optionee within one year
after the date of death, or until the expiration date stated in the
Nonstatutory
5
<PAGE> 52
Employee Option Agreement, whichever occurs first.
SECTION 4. ADMINISTRATION.
SECTION 4.1. COMMITTEE. All aspects of the Plan relating to
Employee Options shall be administered by a committee of the Board of Directors
of the Company (the "Employee Option Committee"), designated by the Board of
Directors. The Employee Option Committee shall consist of not less than two
members of the Board of Directors, who shall be appointed for such purpose by
the Board. No person shall be eligible to serve on the Employee Option
Committee who, during the one year prior to such service or during such
service, was granted or awarded equity securities, including any derivative
securities, as defined in Rule 16a-1(c) or any amending or superseding rule
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
pursuant to any other plan of the Company or any of its affiliates; except that
recipients of Director Options pursuant to the Jacobson Stock Option Plan of
1983, as amended (the "1983 Plan"), or pursuant to this Plan, or both, shall be
eligible to serve on the Employee Option Committee. Members of the Employee
Option Committee shall be subject to any additional restrictions necessary to
satisfy the requirements for disinterested administration of the Plan, as set
forth in Rule 16b-3 or any amending or superseding rule under the Exchange Act.
The Board of Directors may remove members from or add members to the Employee
Option Committee, and fill vacancies on the Employee Option Committee.
SECTION 4.2. COMMITTEE DETERMINATIONS. Subject to the
provisions of this Plan, the Employee Option Committee shall have full power
and authority to make all determinations necessary or advisable with respect to
the grant of Employee Options, including without limitation the persons to whom
Employee Options shall be granted, the number of shares subject to each
Employee Option, the option price, the timing of the grants, whether each
Employee Option will be an Incentive Stock Option or Nonstatutory Employee
Option, the vesting period, if any, before an Employee Option may be exercised,
the term within which it may be exercised, and the other terms and conditions
of the Employee Options and the agreements evidencing same. In making its
determinations, the Employee Option Committee shall consider recommendations of
the senior management of the Company, and may consider any other information it
deems material. The Employee Option Committee's determinations need not be
uniform, and may be made selectively among persons who receive or are eligible
to receive Employee Options, whether or not such persons are similarly
situated.
SECTION 4.3. CONDITIONS OF GRANT. The Employee Option Committee may,
in its discretion, as a condition to the grant of any Employee Options, require
any employee who is the
6
<PAGE> 53
recipient of such Option to sign an agreement not to compete with the
Company or any subsidiary during employment or after termination of
employment with the Company or any subsidiary, which agreement may contain
such terms and conditions as the Employee Option Committee determines.
SECTION 4.4. INTERPRETATIONS. The Employee Option Committee
shall have full power and authority to interpret and construe this Plan,
Employee Options, and the agreements pertaining thereto, and to resolve any
questions arising in connection therewith. All decisions by the Employee
Option Committee shall be final, conclusive, and binding on all persons,
including without limitation the Company, its shareholders, and all persons
who may then or thereafter hold any Employee Options or have any interest
therein.
SECTION 4.5. PROCEDURES. The Employee Option Committee may adopt
such procedures, rules and regulations as it considers appropriate; may hold
meetings at such times and places as it determines; and may act at any
meeting on affirmative vote of a majority of the members of the Employee
Option Committee, or without a meeting on written authorization or approval
of all members of the Employee Option Committee.
SECTION 4.6. NON-LIABILITY; INDEMNIFICATION. No member of the
Employee Option Committee shall be liable to any person for any action or
determination in good faith with respect to the Plan or any Employee
Options. Each member of the Employee Option Committee shall be entitled to
indemnification by the Company with respect to all actions as a member of
the Employee Option Committee, to the fullest extent permissible under the
Company's bylaws and the laws of Michigan.
ARTICLE IV.
DIRECTOR OPTIONS
SECTION 1. ELIGIBILITY. Each current director of the Company, and
each person who hereafter becomes a director of the Company, except any
full-time employee of the Company, shall be eligible to receive Director
Options as hereinafter set forth, and is referred to as an "Eligible Director."
SECTION 2. GRANT OF OPTIONS.
(a) Each Eligible Director on May 26, 1994 who received Director
Options pursuant to the 1983 Plan shall receive Director Options pursuant
to this Plan to purchase 500 shares of Common Stock.
7
<PAGE> 54
(b) Each Eligible Director on May 26, 1994 who did not receive
Director Options pursuant to the 1983 Plan shall receive Director Options
pursuant to this Plan to purchase 1,000 shares of Common Stock.
(c) Each person who becomes an Eligible Director after May 26,
1994 and while this Plan is in effect shall receive, on the date such
person becomes an Eligible Director, Director Options to purchase 1,000
shares of Common Stock.
(d) Immediately after each Annual Meeting of Shareholders,
commencing with the 1995 Annual Meeting and continuing as long as this
Plan is in effect, each Eligible Director shall receive Director Options
to purchase 500 shares of Common Stock; provided, that no person shall
receive Director Options pursuant to this paragraph (d) on the same date
such person receives Director Options pursuant to paragraph (b) or (c) of
this Section 2.
SECTION 3. TERMS OF DIRECTOR OPTIONS. All Director Options
shall be evidenced by written agreements ("Director Option Agreements"). The
Director Options and Director Option Agreements shall contain in substance the
terms in Sections 3.1 through 3.7.
SECTION 3.1. IDENTIFICATION. Each Director Option Agreement shall
clearly identify the Options covered thereby as Director Options.
SECTION 3.2. NUMBER OF SHARES. Each Director Option Agreement
shall state the number of shares of Common Stock to which it pertains.
SECTION 3.3. TERM. Each Director Option may be exercised at any
time within five years after the date the Option is granted.
SECTION 3.4. OPTION PRICE. Each Director Option Agreement shall
state the option price, which shall be the fair market value of the
Common Stock at the time the Option is granted.
SECTION 3.5. EXERCISE OF OPTIONS AND PAYMENT FOR SHARES. Each
Director Option may be exercised only within the term stated in the
Director Option Agreement. It shall be exercisable by written notice
identifying the Option and stating the number of shares purchased,
accompanied by payment of the full purchase price for the shares
purchased. Such notice and payment shall be delivered personally or
mailed by certified mail to the Treasurer of the Company. Any Director
Option may be exercised in whole or in part; provided, that not less
than 50 shares may be purchased and no fractional shares may be
purchased on any partial exercise, except on
8
<PAGE> 55
purchase of all remaining shares covered by the Director Option.
SECTION 3.6. NON-TRANSFERABILITY. Each Director Option Agreement shall
provide that the Option is not transferable by the optionee otherwise than by
will or the laws of descent and distribution, and during the lifetime of the
optionee is exercisable only by the optionee.
SECTION 3.7. TERMINATION OF SERVICE. Except as stated in paragraphs
(a) through (d) of this Section 3.7, if the holder of a Director Option ceases
to be a director of the Company for any reason whatever, all unexercised
Director Options held by such director shall automatically expire at the same
time as termination of service as a director.
(a) RETIREMENT. If the holder of a Director Option retires
pursuant to the Company's retirement policy for directors, the optionee may
exercise any unexpired Director Options held by such optionee within one
year after the date of retirement, or until the expiration date stated in
the Director Option Agreement, whichever occurs first.
(b) NON-ELECTION. If any director is nominated by the Board of
Directors for re-election, but is not re- elected as a director of the
Company, due to any cause except such director's resignation or declination
to serve, the optionee may exercise any unexpired Director Options held by
such optionee within one year after the date of termination of service as a
director, or until the expiration date stated in the Director Option
Agreement, whichever occurs first.
(c) DISABILITY. If the holder of a Director Option is permanently
and totally disabled (within the meaning of Section 22(e)(3) or any
amending or superseding section of the Code), the optionee may exercise any
unexpired Director Options held by such optionee within one year after the
date of such permanent and total disability, or until the expiration date
stated in the Director Option Agreement, whichever occurs first.
(d) DEATH. If the holder of a Director Option dies, the optionee's
personal representative, executor or administrator, or person who acquires
the right to exercise the Option by bequest or inheritance or by reason of
the optionee's death, may exercise any unexpired Director Options held by
such optionee within one year after the date of death, or until the
expiration date stated in the Director Option Agreement, whichever occurs
first.
9
<PAGE> 56
SECTION 4. ADMINISTRATION.
SECTION 4.1. COMMITTEE. If any aspects of the Plan relating
to Director Options require administration or interpretation, such
administration or interpretation shall be performed by a special committee
of the Board of Directors of the Company (the "Director Option
Committee"), which shall consist of all members of the Board of Directors
who do not have and are not eligible to receive Director Options.
SECTION 4.2. DECISIONS. All decisions by the Director Option
Committee shall be final, conclusive and binding on all persons, including
without limitation the Company, its shareholders, and all persons who may
then or thereafter hold any Director Options or have any interest therein.
SECTION 4.3. PROCEDURES. The Director Option Committee may adopt
such procedures, rules and regulations as it considers appropriate; may
hold meetings at such times and places as it determines; and may act at
any meeting on affirmative vote of a majority of the members of the
Director Option Committee, or without a meeting on written authorization
or approval of all members of the Director Option Committee.
SECTION 4.4. NON-LIABILITY; INDEMNIFICATION. No member of the
Director Option Committee shall be liable to any person for any action or
determination in good faith with respect to the Plan or any Director
Options. Each member of the Director Option Committee shall be entitled to
indemnification by the Company with respect to all actions as a member of
the Director Option Committee, to the fullest extent permissible under the
Company's bylaws and the laws of Michigan.
ARTICLE V.
MISCELLANEOUS PROVISIONS
SECTION 1. RIGHTS AS A SHAREHOLDER. No holder of any Option
shall have any rights as a shareholder of the Company with respect to any
shares covered by the Option until the issuance of the shares on exercise of
the Option.
SECTION 2. OPTIONEE'S EMPLOYMENT. No Employee Option and no
agreement pertaining thereto shall confer on the optionee any right with
respect to continuation of employment, nor affect any right of the Company or
any subsidiary to terminate employment.
10
<PAGE> 57
SECTION 3. ADJUSTMENTS.
(A) ANTI-DILUTION. In the event of a stock dividend or
distribution, split-up or combination, exchange of shares,
recapitalization, merger, consolidation, corporate acquisition or
separation, reorganization, or comparable corporate transaction,
appropriate adjustments (to be determined by the Board of Directors of
the Company or the Employee Option Committee with respect to Employee
Options, and to be determined by the Director Option Committee with
respect to Director Options) shall automatically be made in the number
and/or kind of shares of stock authorized by this Plan deliverable on
the exercise of Options, the option price, or any combination thereof,
to maintain the proportionate interest of the optionees and preserve the
value of the options, so that optionees shall have the right thereafter
to receive on the exercise of Options the kind and amount of shares of
Common Stock or other securities or property which they would have been
entitled to receive if they had exercised the Options immediately prior
to the effective time of such transaction.
(B) LIQUIDATION OR CHANGE IN CONTROL. In the event of any
dissolution or liquidation of the Company, or any merger, consolidation,
or other corporate transaction, in which the Company is not the
surviving entity, the vesting period of all unvested and partially
vested Options shall automatically be accelerated, and all such Options
shall be exercisable in full immediately prior to the effective time of
such transaction. The Company shall give to each holder of Employee
Options written notice of such transaction or proposed transaction at
least thirty days prior to the effective time of the transaction, or, if
thirty days' prior written notice is not feasible, then such notice as
is feasible under the circumstances, so that the holders of such Options
will have the opportunity to exercise them prior to the effective time
of the transaction.
(C) EXCEPTION. Notwithstanding the provisions of paragraphs (a)
and (b) of this Section 3, no adjustment shall be made with respect to
Incentive Stock Options that would result in their disqualification as
Incentive Stock Options under the applicable provisions of the Code and
regulations thereunder.
SECTION 4. WITHHOLDING. Whenever the Company issues or transfers
shares of Common Stock under this Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local tax withholding requirements prior to the delivery
of any certificates for the shares.
11
