FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 26, 1997
Commission file number 0-6319
JACOBSON STORES INC.
(Exact name of registrant as specified in its charter)
Michigan 38-0686330
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
3333 Sargent Road, Jackson, Michigan 49201
(Address of principal executive offices, including zip code)
(517) 764-6400
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Common Stock ($1 Par Value):
5,779,021-2/3 Shares outstanding as of July 26, 1997
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For Quarter Ended July 26, 1997
INDEX
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
. Consolidated Balance Sheets - July 26, 1997 and
January 25, 1997 1
. Consolidated Statements of Earnings -
Thirteen and Twenty-Six Week Periods
Ended July 26, 1997 and July 27, 1996 2
. Consolidated Statements of Cash Flows - Twenty-Six
Week Periods Ended July 26, 1997 and July 27, 1996 3
. Notes to Consolidated Financial Statements 4
Review by Independent Public Accountants 8
Exhibit:
. Report of Independent Public Accountants 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
All items except those set forth above are inapplicable
and have been omitted.
SIGNATURES 17
INDEX OF EXHIBITS
<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 26, January 25,
ASSETS 1997 1997
-------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,114 $ 4,871
Receivables from customers, net 30,503 41,710
Merchandise inventories 74,232 94,875
Prepaid expenses and other assets 2,275 2,923
Refundable income taxes 855 855
Deferred taxes 3,994 3,994
----------- -----------
Total current assets 114,973 149,228
----------- -----------
PROPERTY AND EQUIPMENT, NET 85,978 89,802
----------- -----------
OTHER ASSETS 21,455 21,388
----------- -----------
$ 222,406 $ 260,418
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,546 $ 4,350
Accounts payable 19,491 31,320
Accrued expenses 14,738 17,505
----------- -----------
Total current liabilities 36,775 53,175
----------- -----------
LONG-TERM DEBT 113,890 130,147
----------- -----------
DEFERRED TAXES 3,358 5,297
----------- -----------
OTHER LIABILITIES 4,040 3,812
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 5,966 5,966
Paid-in surplus 7,109 7,109
Retained earnings 51,667 55,311
Treasury stock (399) (399)
----------- -----------
64,343 67,987
----------- -----------
$ 222,406 $ 260,418
=========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share and dividend data)
(unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------ ------------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 95,938 $ 93,990 $ 207,846 $ 200,515
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of merchandise sold, buying and
occupancy expenses 72,381 69,258 144,695 137,518
Selling, general and administrative expenses 30,561 31,586 64,361 66,022
Interest expense, net 2,289 2,272 4,737 4,544
Store closing costs (credit) (340) -- (340) --
---------- ---------- ---------- ----------
Total costs and expenses 104,891 103,116 213,453 208,084
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES (8,953) (9,126) (5,607) (7,569)
PROVISION (CREDIT) FOR INCOME TAXES (3,134) (3,195) (1,963) (2,650)
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) $ (5,819) $ (5,931) $ (3,644) $ (4,919)
========== ========== ========== ==========
EARNINGS (LOSS) PER COMMON SHARE:
Primary and fully diluted $(1.00) $(1.02) $(0.63) $(0.85)
====== ====== ====== ======
CASH DIVIDENDS PER SHARE $ -- $ 0.12-1/2 $ -- $ 0.25
====== ====== ====== ======
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twenty-Six Weeks Ended
------------------------
July 26, July 27,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,644) $ (4,919)
Adjustments to reconcile net loss to cash provided
by operating activities:
Depreciation and amortization 4,685 5,139
Deferred taxes (1,939) --
Other liabilities 228 248
Change in:
Receivables from customers, net 11,207 7,886
Merchandise inventories 20,643 7,451
Prepaid expenses and other assets 648 1,827
Accounts payable and accrued expenses (14,596) (6,670)
Refundable income taxes -- (2,605)
----------- -----------
Net cash provided by operating activities 17,232 8,357
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (861) (4,052)
Other non-current assets (67) (1,506)
----------- -----------
Net cash used in investing activities (928) (5,558)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 49,500 2,800
Reduction of long-term debt (67,561) (2,426)
Cash dividends paid - (1,444)
----------- -----------
Net cash used in financing activities (18,061) (1,070)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,757) 1,729
Cash and cash equivalents, beginning of period 4,871 3,068
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,114 $ 4,797
=========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 26, 1997
The condensed financial statements included herein have been
prepared by the Company without audit and reflect all adjustments
which are, in the opinion of management, necessary to achieve a fair
statement of results for the interim periods. Except as described
under the caption "Store Closing Costs", all adjustments are of a
normal and recurring nature.
Because of the nature of the specialty department store business,
the results for the twenty-six week periods ended July 26, 1997 and
July 27, 1996 (which do not include the Christmas holiday season)
are not indicative of the results for the year as a whole.
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or amended, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes to consolidated financial statements
included in the Company's latest annual report on Form 10-K.
(1) STORE CLOSING COSTS
In March 1997, the Company closed underperforming stores in Jackson,
Kalamazoo and Dearborn, Michigan. The Company incurred a $4,200,000
pre-tax charge in fiscal 1996 to effect the closings and to state
property and equipment at estimated fair value. For the twenty-six
weeks ended July 26, 1997, store closing reserve activity was as
follows:
<TABLE>
<CAPTION>
Reserve at Payments Additional Reserve at
January 25, Against Charges/ July 26,
(in thousands) 1997 Reserve (Credits) 1997
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Severance and related benefits $ 900 $ (700) $ (200) $ --
Reserve to state property and
equipment at estimated fair value 2,350 -- (140) 2,210
Expense to hold closed facilities
pending disposition 950 (280) -- 670
-------- ------- -------- --------
$ 4,200 $ (980) $ (340) $ 2,880
======== ======= ======== ========
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 26, 1997
Additional credits include the write-off of the severance/benefit
reserve balance after all payments were made and the write-down of
the reserve to state property and equipment at estimated fair value
after the sale of a portion of the related property at greater than
the original estimated value.
(2) EARNINGS PER SHARE
Primary earnings per share are computed by dividing net earnings by
the weighted average number of shares of common stock and common
stock equivalents outstanding during the periods. Weighted average
shares outstanding were 5,797,000 and 5,808,000 for the quarters
ended July 26, 1997 and July 27, 1996, respectively, and 5,784,000
and 5,791,000 for the twenty-six week periods ended July 26, 1997
and July 27, 1996, respectively.
Fully diluted earnings per share are computed based on the
additional assumption that the Company's 6-3/4% Convertible
Subordinated Debentures due 2011 were converted to common stock at
the date of issuance with a corresponding increase in net earnings
to reflect a reduction in related interest expense, net of income
taxes. Weighted average shares outstanding used in the computation
of fully diluted earnings per share were 6,783,000 and 6,864,000 for
the quarters ended July 26, 1997 and July 27, 1996, respectively,
and 6,794,000 and 6,862,000 for the twenty-six week periods ended
July 26, 1997 and July 27, 1996, respectively.
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings
per Share, becomes effective for the Company in the fourth quarter
of fiscal year 1997. SFAS No. 128 will require primary earnings per
share (EPS) to be replaced by basic EPS, which is computed by
dividing reported earnings available to common stockholders by
weighted average common shares outstanding. No dilution for any
potentially dilutive securities is included. Fully diluted EPS, to
be called diluted EPS, is still required. This statement is not
expected to have a material effect on the Company's consolidated
financial statements.
- 5 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 26, 1997
(3) CUSTOMER CREDIT AND RECEIVABLES
Receivables from customers were as follows:
<TABLE>
<CAPTION>
July 26, January 25,
(in thousands) 1997 1997
-----------------------------------------------------------------------------
<S> <C> <C>
Receivables from customers $ 31,007 $ 42,460
Less reserve for doubtful accounts 504 750
----------- -----------
$ 30,503 $ 41,710
=========== ===========
</TABLE>
(4) MERCHANDISE INVENTORIES
Merchandise inventories were as follows:
<TABLE>
<CAPTION>
July 26, January 25,
(in thousands) 1997 1997
--------------------------------------------------------------------------
<S> <C> <C>
Inventories at first-in, first out
(FIFO) cost $ 91,923 $ 111,955
Less LIFO reserves 17,691 17,080
----------- -----------
$ 74,232 $ 94,875
=========== ===========
</TABLE>
(5) PROPERTY AND EQUIPMENT
Property and equipment are set forth below:
<TABLE>
<CAPTION>
July 26, January 25,
(in thousands) 1997 1997
--------------------------------------------------------------------------
<S> <C> <C>
Property and equipment $ 171,320 $ 173,080
Less accumulated depreciation
and amortization 85,342 83,278
----------- -----------
$ 85,978 $ 89,802
=========== ===========
</TABLE>
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For Quarter Ended July 26, 1997
(6) STOCK OPTIONS
At their Annual Meeting on May 22, 1997, the Company's shareholders
approved an amendment to the 1994 stock option plan which increased
the available shares under the plan to 900,000 shares. Options to
purchase 200,000 shares at $8.38 per share were granted in 1996
contingent on shareholder approval of the option plan amendment and
have been subsequently issued.
(7) SUPPLEMENTARY CASH FLOW INFORMATION
The Company considers all short-term investments with a maturity at
date of purchase of three months or less to be cash equivalents.
Interest paid (net of interest capitalized) totalled $4,945,000 and
$4,583,000 in the twenty-six week periods ended July 26, 1997 and
July 27, 1996, respectively. The Company received income tax refunds
of $30,000 and $44,000 in the twenty-six week periods ended July 26,
1997 and July 27, 1996, respectively.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, have performed
a limited review of the condensed consolidated financial statements
for the twenty-six week period ended July 26, 1997. Since they did
not perform an audit, they express no opinion on the financial
statements referred to above.
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<PAGE>
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To Jacobson Stores Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
JACOBSON STORES INC. (a Michigan corporation) and subsidiaries as of July 26,
1997 and the related condensed consolidated statements of earnings and cash
flows for the twenty-six week period then ended. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Jacobson Stores Inc. and
subsidiaries as of January 25, 1997, and the related consolidated statements
of earnings, shareholders' equity and cash flows for the year then ended (not
presented herein), and, in our report dated March 24, 1997, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance
sheet as of July 26, 1997, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan
August 8, 1997
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The registrant, Jacobson Stores Inc., a Michigan corporation and successor to
a business founded in 1868, operates fashion specialty stores catering to
discerning customers with preferences for quality merchandise. The Company
emphasizes quality merchandise, fully staffed stores, personalized customer
service and attractive, comfortable shopping surroundings. Each store
features fashion apparel and accessories for the family, and most offer
decorative accents for the home.
The Company owns a substantial portion of the real property used in its
business, primarily through its consolidated, wholly-owned real estate
subsidiary, Jacobson Stores Realty Company ("Jacobson Realty"). The Company
also has a consolidated wholly-owned finance subsidiary, Jacobson Credit
Corp. ("Jacobson Credit"). As used in this report, the terms "registrant",
"Company" and "Jacobson's" refer to Jacobson Stores Inc. and its subsidiaries
unless the context indicates otherwise.
Jacobson's operates in two regions and maintains separate staffs of buyers
for each region in order to better respond to customers' lifestyles and
merchandise preferences. The Company has stores in twenty-four cities in
Michigan, Indiana, Kansas, Kentucky, Ohio and Florida. The principal
merchandising and distribution functions are performed through regional
facilities. Functions common to all stores, such as management coordination,
sales promotion, data processing and accounting, are centralized at the
corporate headquarters in Jackson, Michigan.
a. OPERATING RESULTS: THIRTEEN WEEKS ENDED JULY 26, 1997 COMPARED TO
THIRTEEN WEEKS ENDED JULY 27, 1996
Sales for the quarter ended July 26, 1997, totalled $95,938,000, an
increase of 2.1% from 1996. The overall increase in sales is due to the
opening of a new store in Boca Raton, Florida, in November 1996 and an
increase in comparable store sales, partially offset by the impact of
closed stores. Comparable store sales increased 7.5% for the thirteen
weeks, including a 6.7% increase in the Midwest region, and a 9.4%
increase in Florida.
In 1997, the Company expects the sales volume of the three stores
closed in March 1997 and the Troy, Michigan, clearance center closed in
May 1997, to be largely offset by sales increases in the remaining
stores, including the impact of a full year's sales in the Company's
Leawood, Kansas, and Boca Raton, Florida, stores.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
The Company's gross profit percentage decreased to 24.6% for the
thirteen weeks this year from 26.3% in 1996, due principally to higher
markdowns, including the impact of the transition from a separate
clearance center to taking in-season markdowns in the Company's
remaining stores.
Selling, general and administrative expenses, expressed as a percentage
of sales, decreased to 31.9% in the quarter from 33.6% one year ago.
The decrease is due primarily to Company-wide expense reduction
initiatives and to expense leverage resulting from increased sales,
partially offset by higher sales promotion expense.
Interest expense, expressed as a percentage of sales, totalled 2.4% in
both years.
The Company established a $4,200,000 reserve in fiscal 1996 in
connection with the closing of three underperforming stores in March
1997. In the thirteen weeks ended July 26, 1997, the Company recognized
a $340,000 pre-tax credit based on the write-off of remaining
severance/benefit reserves after all payments were made and the
write-down of the reserve to state property and equipment at estimated
fair value after the sale of a portion of the related property at
greater than the original estimated value.
1997 net loss for the thirteen weeks totalled $5,819,000, or $1.00 per
common share compared to a net loss of $5,931,000, or $1.02 per common
share, last year. As a percent of sales, net loss was 6.1% in 1997
compared to 6.3% in 1996.
b. OPERATING RESULTS: TWENTY-SIX WEEKS ENDED JULY 26, 1997 COMPARED TO
TWENTY-SIX WEEKS ENDED JULY 27, 1996
Sales for the twenty-six weeks ended July 26, 1997, totalled
$207,846,000, an increase of 3.7% from 1996. The overall increase in
sales is due to the opening of new stores in Leawood, Kansas, and Boca
Raton, Florida, in March 1996 and November 1996, respectively, and an
increase in comparable store sales, partially offset by the impact of
closed stores. Comparable store sales increased 3.3% for the twenty-six
weeks, including a 2.5% increase in the Midwest region, and a 4.8%
increase in Florida.
In 1997, the Company expects the sales volume of the three stores
closed in March 1997 and the Troy, Michigan, clearance center closed in
May 1997, to be largely offset by the remaining stores, including the
impact of a full year's sales in the Company's Leawood, Kansas, and
Boca Raton, Florida, stores.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
The Company's gross profit percentage decreased to 30.4% this year from
31.4% in 1996, due primarily to higher markdowns, including the impact
of the transition from a separate clearance center to taking in-season
markdowns in the Company's remaining stores.
Selling, general and administrative expenses, expressed as a percentage
of sales, decreased to 31.0% in the twenty-six weeks from 32.9% one
year ago. The decrease is primarily due to Company-wide expense
reduction initiatives and to expense leverage resulting from increased
sales, partially offset by higher sales promotion expense.
Interest expense, expressed as a percentage of sales, totalled 2.3% in
both years.
The Company established a $4,200,000 reserve in fiscal 1996 in
connection with the closing of three underperforming stores in March
1997. In the twenty-six weeks ended July 26, 1997, the Company
recognized a $340,000 pre-tax credit based on the write-off of
remaining severance/benefit reserves after all payments were made and
the write-down of the reserve to state property and equipment at
estimated fair value after the sale of a portion of the related
property at greater than the original estimated value.
1997 net loss for the twenty-six weeks totalled $3,644,000, or 63 cents
per common share compared to $4,919,000, or 85 cents per common share,
one year ago. As a percent of sales, net loss was 1.8% in 1997 and 2.5%
in 1996.
c. LIQUIDITY AND CAPITAL RESOURCES
At July 26, 1997, the Company's current ratio was 3.13 to 1 and working
capital totalled $78,198,000, including $3,114,000 of cash and cash
equivalents. At January 25, 1997, the current ratio was 2.81 to 1 and
working capital totalled $96,053,000, including $4,871,000 of cash and
cash equivalents.
The Company utilizes cash flows from operations and revolving credit
line borrowings to fund its seasonal working capital needs. To support
its present and planned working capital requirements, the Company has a
$100,000,000 revolving credit facility under a Revolving Credit
Agreement with a commercial lender. The revolving credit facility
currently provides for borrowings of up to $80,000,000, subject to a
borrowing base limitation and lender reserves. The Company may, at its
option, increase the maximum available borrowings under
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
the revolving credit facility to up to $100,000,000 in the aggregate,
subject to the borrowing base limitation and lender reserves. As of
July 26, 1997, the Company had borrowed $41,677,000 under this facility
and had $34,974,000 of borrowing availability under the borrowing base
calculated as of that date. Year-to-date through July 26, 1997, the
daily weighted average interest rate on borrowings under the Revolving
Credit Agreement was 8.39%.
d. CASH FLOWS
Cash and cash equivalents decreased $1,757,000 in the twenty-six weeks
ended July 26, 1997, compared to an increase of $1,729,000 in the
twenty-six weeks ended July 27, 1996. Cash flows are impacted by
operating, investing and financing activities. In the twenty-six weeks
this year, operating activities provided $17,232,000 of cash, compared
to $8,357,000 of cash provided in 1996. The increase in 1997 versus
1996 reflects primarily cash generated from store closings and a lower
net loss in 1997, and the start-up inventory required in 1996 for a new
store in Leawood, Kansas. These changes were partially offset by
reduced merchandise payables.
Investing activities used cash of $928,000 in the twenty-six weeks this
year compared to $5,558,000 in 1996. Capital expenditures for new
stores or modernization and refixturing of existing stores and support
facilities totalled $861,000 in the first twenty-six weeks of 1997
compared to $4,052,000 last year.
Financing activities used cash of $18,061,000 in the twenty-six weeks
this year compared to $1,070,000 used last year. In March 1997, the
Company borrowed $49,500,000 under its current Revolving Credit
Agreement to repay the then outstanding principal balance under its
former Credit Agreement. Also in the twenty-six weeks this year, the
Company repaid $9,823,000 under its current Revolving Credit Agreement,
prepaid $5,642,000 of principal on its Jackson, Michigan, Central
Office mortgage, purchased and retired $1,530,000 of 6-3/4% Convertible
Subordinated Debentures to satisfy most of its $1,725,000 annual
sinking fund payment due in December, and used $1,066,000 to service
current maturities of long-term debt. In the twenty-six weeks last
year, the Company borrowed $2,800,000 under its former Credit Agreement
and used $2,426,000 to service current maturities of long-term debt.
The Company paid cash dividends of $1,444,000 in the twenty-six week
period in 1996. The Company discontinued its cash dividend, effective
in the fourth quarter of 1996.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART I: FINANCIAL INFORMATION
For Quarter Ended July 26, 1997
The Company believes its cash flows from operations, along with its
borrowing capacity and access to financial markets are adequate to fund
its operations and debt maturities.
e. CORPORATE DEVELOPMENT
The Company opened two new stores in 1996, but has no commitments for
any new store locations at the present time. The Company reviews the
performance of its less profitable existing stores from time to time to
determine whether it would be in the Company's best interest to close
any of these stores. Store closings could have a significant impact on
the Company's sales, expenses and capital requirements and would likely
entail additional significant one-time charges to effect the closing
and to recognize any impairment of assets resulting from the closing
decision. In March 1997, the Company closed under-performing stores in
Jackson, Kalamazoo and Dearborn, Michigan. The Company incurred a
$4,200,000 pre-tax charge in fiscal 1996 to effect the closings and to
state property and equipment at estimated fair value. For the
twenty-six weeks ended July 26, 1997, the Company paid $980,000 in
severance benefits and expenses to hold closed facilities. In the
second quarter, the Company recognized a $340,000 pre-tax credit based
on the write-off of the severance/benefit reserve balance and the
write-down of the reserve to state property and equipment at estimated
fair value after the sale of a portion of the related property at
greater than the original estimated value.
The Company closed its Troy, Michigan clearance center in late May.
Each of the above statements regarding future revenues, expenses or
business plans (including statements regarding the sufficiency of the
Company's capital resources to fund future operations) may be a
"forward looking statement" within the meaning of the Securities
Exchange Act of 1934. Such statements are subject to important factors
and uncertainties that could cause actual results to differ materially
from those in the forward-looking statement, including the continued
support of the Company's trade creditors and factors, the risks
inherent in the level of the Company's long-term debt compared to its
equity, the Company's ability to reduce its operating expenses, general
trends in retail clothing apparel purchasing, especially during the
Christmas season, and the factors set forth in this Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
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<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 26, 1997
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 22,
1997. At the Annual Meeting, P. Gerald Mills was elected as a Director
of the Company to serve until the 1999 Annual Meeting of Shareholders
and until his successor is elected and qualified. Paul W. Gilbert,
Patricia S. Longe, Philip H. Power and Robert L. Rosenfeld were
elected as Directors to serve until the 2000 Annual Meeting of
Shareholders and until their successors are elected and qualified. The
following votes were cast for or were withheld from voting with
respect to the election of each of the following persons:
<TABLE>
<CAPTION>
Votes
----------------------
Authority
Name For Withheld
---- --- --------
<S> <C> <C>
P. Gerald Mills 4,441,343 137,740
Paul W. Gilbert 4,490,196 88,887
Patricia S. Longe 4,421,887 157,196
Philip H. Power 4,427,603 151,480
Robert L. Rosenfeld 4,491,928 87,155
</TABLE>
There were no abstentions or broker non-votes in connection with the
election of the directors at the Annual Meeting.
In addition, at the Annual Meeting, the shareholders voted to amend
the Jacobson Stock Option Plan of 1994 to increase the number of
shares of Common Stock eligible for issuance on exercise of options to
900,000 shares and to limit option grants to any one person in any
fiscal year of the Company to 600,000 shares. The following table
shows the number of votes for and against the proposal and the number
of votes abstaining with respect to the proposal:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- --------
<S> <C> <C>
3,569,706 296,840 37,219
</TABLE>
- 15 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
PART II: OTHER INFORMATION
For Quarter Ended July 26, 1997
There were broker non-votes representing 675,318 common shares in
connection with the amendment of the option plan at the Annual
Meeting.
In addition, at the Annual Meeting, the shareholders voted to appoint
Arthur Andersen LLP, independent certified public accountants, as
auditors for the fiscal year ending January 31, 1998. The following
table shows the number of votes for and against the proposal and the
number of votes abstaining with respect to the proposal:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
4,536,745 23,934 18,404
</TABLE>
There were no broker non-votes in connection with the appointment of
the Company's auditors at the Annual Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(ii) By-Laws, Jacobson Stores Inc., as amended May 22, 1997
10(a) Release and Settlement Agreement effective May 25,
1997, between Jacobson Stores Inc. and Joseph H.
Fisher
10(b) Second Amendment to Jacobson Stock Option Plan of 1994
10(c) 1997 Management Incentive Plan
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during its
fiscal quarter ended July 26, 1997.
All exhibits except as set forth above have been omitted as not applicable or
not required.
- 16 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
For Quarter Ended July 26, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JACOBSON STORES INC.
--------------------
(Registrant)
Date: September 4 , 1997 BY: /s/ P. Gerald Mills
------------ -----------------------
P. GERALD MILLS
Chairman of the Board, President and
Chief Executive Officer
Date: September 4 , 1997 BY: /s/ Paul W. Gilbert
------------ -----------------------
PAUL W. GILBERT
Vice Chairman of the Board
(Principal Financial Officer)
- 17 -
<PAGE>
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
INDEX OF EXHIBITS
3(ii) By-Laws, Jacobson Stores Inc., as amended May 22, 1997
10(a) Release and Settlement Agreement effective May 25,
1997, between Jacobson Stores Inc. and Joseph H.
Fisher
10(b) Second Amendment to Jacobson Stock Option Plan of 1994
10(c) 1997 Management Incentive Plan
11 Computation of Earnings Per Share
15 Letter from Independent Public Accountants
27 Financial Data Schedule
All exhibits except as set forth above have been omitted as not
applicable or not required.
Exhibit 3(ii)
BYLAWS
OF
JACOBSON STORES INC.
(As amended March 21, 1996)
ARTICLE I
OFFICES
The corporation may have offices at such places, both within and
without the State of Michigan, as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Time and Places of Meetings. All meetings of the
shareholders shall be held, except as otherwise provided by statute or these
Bylaws, at such time and place as may be fixed from time to time by the Board
of Directors. Meetings of shareholders may be held within or without the
State of Michigan as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of the shareholders
shall be held on the fourth Thursday of May if not a legal holiday, and if a
legal holiday, then on the next secular day following, at such hour as shall
be stated in the notice of the meeting, at which they shall elect by a
plurality vote the successors of the class of directors whose term expires at
the meeting, together with directors to fill vacancies or newly created
directorships, and transact such other business as may properly be brought
before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting shall be given personally or by mail to each shareholder entitled to
vote thereat at least ten (10) and not more than sixty (60) days before the
date of the meeting. Attendance of a shareholder at a meeting shall
constitute a waiver of notice, except when the shareholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to
transaction of any business because the meeting is not lawfully called or
convened.
Section 4. Shareholder List. The officer or agent who has charge of
the stock ledger of the corporation shall prepare and make before every
meeting of shareholders, a complete list of the shareholders entitled to vote
at the meeting, arranged by class or series in alphabetical order, showing
the address of and the number of shares registered in the name of each
shareholder. Such list shall be open to the examination of any shareholder,
for any purpose germane to the meeting, during the whole time thereof, and
may be inspected by any shareholder who is present.
<PAGE>
Section 5. Adjournment of Annual Meeting. If a quorum be not present
at the annual meeting, the shareholders present in person or by proxy may
adjourn to such future time as shall be agreed upon by them, and notice of
such adjournment shall be mailed, postage prepaid, to each shareholder at
least five (5) days before such adjourned meeting; but if a quorum be
present, they may adjourn from day to day as they see fit and no notice of
such adjournment need be given.
Section 6. Delayed Annual Meeting. If for any reason other than
those enumerated in Section 5 of this Article, the annual meeting of the
shareholders shall not be held on the day hereinbefore designated, such
meeting may be called and held as a special meeting and the same proceedings
may be had thereat as at an annual meeting, PROVIDED, HOWEVER, that the
notice of such meeting shall be mailed to the shareholders at least fifteen
(15) days prior to the date fixed for such delayed annual meeting.
Section 7. Special Meetings. Except as otherwise required by law and
subject to the rights of the holders of Preferred Stock, special meetings of
shareholders of the corporation may be called only by (i) the Board of
Directors pursuant to a resolution approved by a majority of the entire Board
of Directors, (ii) any committee of the Board of Directors designated by a
resolution approved by a majority of the entire Board of Directors, (iii) the
Chief Executive Officer of the corporation, or (iv) any other officer or
officers designated by the Board of Directors by resolution approved by a
majority of the entire Board of Directors.
Section 8. Notice of Special Meetings. Written notice of a special
meeting of shareholders, stating the time, place and object thereof, shall be
given personally or by mail to each shareholder entitled to vote thereat, at
least ten (10) and not more than sixty (60) days before the date fixed for
the meeting.
Section 9. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for the transaction of business at all
meetings of the shareholders, except as otherwise provided by statute or by
the Articles of Incorporation. The shareholders present in person or by proxy
at such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. Whether or not a quorum is present, the meeting may be adjourned by a
vote of the shares present.
Except when the holders of a class or series of shares are entitled
to vote separately on an item of business, shares of all classes and series
entitled to vote shall be combined as a single class and series for the
purpose of determining a quorum. When the holders of a class or series of
shares are entitled to vote separately on an item of business, shares of that
class or series entitled to cast a majority of the votes of that class or
series at a meeting constitute a quorum of that class or series at that
meeting, unless a greater or lesser quorum is provided by statute or the
Articles of Incorporation.
Section 10. Vote Required. When an action, other than the election
of directors, is to be taken by a vote of the shareholders, it shall be
authorized by a majority of the votes cast by the holders of shares entitled
to vote thereon, unless a greater vote is required by the Articles of
Incorporation of this corporation or by the laws of the State of Michigan.
Except as otherwise provided by the Articles of Incorporation, directors
shall be elected by a plurality of the votes cast at any election.
2
<PAGE>
Section 11. Voting Rights. Except as otherwise provided by the
Articles of Incorporation or the resolution or resolutions of the Board of
Directors creating any class of stock, each shareholder shall at every
meeting of shareholders be entitled to one (1) vote in person or by proxy for
each share of the capital stock having voting power held by such shareholder.
A proxy shall be valid only with respect to the particular meeting, or any
adjournment or adjournments thereof, to which it specifically pertains.
Section 12. Conduct of Meetings. Meetings of shareholders generally
shall be governed by the following rules:
(a) The chairman of the meeting shall have absolute
authority over matters of procedure, and there shall be no appeal
from the ruling of the chairman.
(b) If disorder should arise which prevents the
continuation of the legitimate business of the meeting, the chairman
may quit the chair and announce the adjournment of the meeting; and
upon his so doing, the meeting is immediately adjourned.
(c) The chairman may ask or require that anyone not a bona
fide shareholder or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote
only if proposed by a shareholder or a duly authorized proxy and
seconded by an individual who is a shareholder or a duly authorized
proxy other than the individual who proposed the resolution or
motion.
Section 13. Inspectors of Election. The Board of Directors or, if
they shall not have so acted, the Chief Executive Officer may appoint, at or
prior to any meeting of shareholders, one or more persons (who may be
employees of the corporation) to serve as inspectors of election. The
inspectors so appointed shall determine the number of shares outstanding and
the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes or ballots, hear and determine challenges and questions arising in
connection with the right to vote, count and tabulate votes or ballots,
determine the result, and do such other acts as are proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
Section 1. Number and Term of Directors. The number of directors
which shall constitute the whole Board shall be not less than three and shall
be determined from time to time by resolution of the Board of Directors as
set forth in the Articles of Incorporation, as the same may be amended. The
directors, other than those who may be elected by the holders of any class or
series of stock having a preference over Common Stock as to dividends or upon
liquidation, shall be 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 the shareholders, the successors of the class of directors
whose term expires at that meeting shall be elected and hold office for a
term expiring at the annual meeting of shareholders held in the third year
following the year of their election. Directors need not be shareholders.
3
<PAGE>
Section 2. Powers. The business of the corporation shall be managed
by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not, by statute or
by the Articles of Incorporation or these Bylaws, directed or required to be
exercised or done by the shareholders.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled as provided in the Articles of Incorporation.
Section 4. Resignation and Removal. Any director may resign at any
time and such resignation shall take effect upon receipt of written notice
thereof by the corporation, or at such subsequent time as set forth in the
notice of resignation. Any or all of the directors may be removed, but only
for cause, as provided in the Articles of Incorporation.
Section 5. Nominations. Nominations of candidates for election as
directors of the corporation at any meeting of shareholders called for
election of directors may be made by the Board of Directors, the Chairman of
the Board, or a nominating committee appointed by the Board of Directors, or
by any shareholder entitled to vote in the election of directors generally as
set forth in the Articles of Incorporation.
Section 6. Compensation of Directors. Each director who is not a
salaried officer of or legal counsel to the corporation may receive as
compensation for his or her services in that capacity such sums and such
benefits as shall from time to time be determined by the Board of Directors,
plus traveling expenses and other expenses necessary for attendance at
regular or special meetings of the Board of Directors and committees of the
Board. Members of special or standing committees may be allowed like
compensation for attending committee meetings. Nothing herein shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 7. Place of Meetings. The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Michigan.
Section 8. Annual Organizational Meeting. The annual organizational
meeting of the Board of Directors may be held before or after the annual
meeting of shareholders, for the purpose of electing officers and such other
purposes as may come before the meeting. No notice of such meeting shall be
necessary in order legally to constitute the meeting, provided a quorum of
directors then in office shall be present. If such meeting is not held on the
same date and in the same place as the annual meeting of shareholders, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors,
or as shall be specified in a written waiver signed by all of the directors.
Section 9. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
4
<PAGE>
Section 10. Special Meetings. Subject to the provisions of Section
15 of this Article III, special meetings of the Board of Directors may be
called by the Chairman of the Board, President, or Secretary or by any two
(2) Continuing Directors (as defined in the Articles of Incorporation) on two
(2) days' notice to each director.
Section 11. Purpose Need Not be Stated. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the Board
of Directors need be specified in the notice of such meeting.
Section 12. Quorum. At all meetings of the Board of Directors a
majority of the directors shall constitute a quorum for the transaction of
business, and the acts of a majority of the directors present at any meeting
at which there is a quorum shall be acts of the Board of Directors except as
may be otherwise specifically provided by statute or by the Articles of
Incorporation. If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 13. Action Without a Meeting. Unless otherwise restricted by
the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if, before or after the
action, all members of the Board or of such committee, as the case may be,
consent thereto in writing and such written consent is filed with the minutes
or proceedings of the Board or committee.
Section 14. Meeting by Telephone or Similar Equipment. The Board of
Directors or any committee designated by the Board of Directors may
participate in a meeting of such Board or committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 15. Written Notice. Notices to directors shall be in writing
and delivered personally or mailed to the directors at their addresses
appearing on the books of the corporation. Notice by mail shall be deemed to
be given at the time when the same shall be mailed. Notice to directors may
also be given by telegram. Notwithstanding the foregoing, notice shall be
given by telegram if the date of the meeting to which such notice relates is
within three (3) days of the date that such notice is given.
Section 16. Waiver of Notice. Whenever any notice is required to be
given under the provision of the statutes or of the Articles of Incorporation
or of these Bylaws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting has not been lawfully called
or convened.
5
<PAGE>
ARTICLE IV
COMMITTEES OF DIRECTORS
Section 1. Executive Committee. The Board of Directors may appoint
an Executive Committee composed of six or more Directors a majority of whom
shall not be part of the management of this corporation. The Executive
Committee shall have and may exercise the following authority of the Board of
Directors:
(a) The Executive Committee shall have the authority of
the Board of Directors, between meetings of the Board, to take such
actions and adopt such resolutions as may be necessary, appropriate
or convenient in the ordinary course of business of the corporation;
including (without limitation) the authorization of leases of real
or personal property, seasonal borrowings, bank depository
resolutions, and regular quarterly dividends on Preferred Stock of
the corporation.
(b) Whenever and as often as the Board of Directors
designates, the Executive Committee shall have such further
authority as the Board of Directors designates, subject to
prohibitions set forth in the Business Corporation Act of Michigan;
including the full powers and authorities of the Board of Directors,
between meetings of the Board, to take any and all actions and adopt
any and all resolutions that may be necessary, appropriate or
convenient with respect to any matters designated by the Board of
Directors.
The Executive Committee may meet with or without prior notice on
call of any member; provided, that a quorum shall not exist unless a majority
of those present at the meeting are not part of the management of this
corporation.
Section 2. Audit, Compensation and Directors Committees. The Board
of Directors shall appoint an Audit Committee, a Compensation Committee, and
a Directors Committee, each of which shall be composed of three or more
outside directors, who are independent of the management of this corporation,
not employed by the corporation, and free of any relationship that would
interfere with their exercise of independent judgment as a committee member,
except that the Directors Committee shall include the Chairman of the Board
as a member. Each such committee shall have such responsibilities as shall be
set forth in the committee's charter, which shall be reviewed and approved
annually by the Board of Directors.
Section 3. Other Committees. The Board of Directors may establish
and appoint such other committees of the Board of Directors, consisting of
such directors and having such powers and duties, as the Board determines.
Section 4. Membership and Vacancies on Committees. The Board of
Directors may remove members from or add members to any committee of the
Board, and fill vacancies on such committee.
Section 5. Reporting on Committee Actions. All actions taken by any
committee of the Board shall be reported to the Board of Directors at the
next meeting of the Board. However, no delay in reporting any action of any
committee shall affect the validity of such action, or of any actions taken
in the name and on behalf of the corporation pursuant thereto.
6
<PAGE>
ARTICLE V
OFFICERS
Section 1. Election of Officers. All officers of the corporation
shall be elected by the Board of Directors.
Section 2. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the shareholders, and at all meetings of the Board
of Directors, and shall have such other duties and powers as may be imposed
or given by the Board of Directors. He shall not be a member of the Audit
Committee or the Compensation Committee, but shall be a voting member of all
other standing committees of the Board of Directors. In case of the absence
or inability to act of the President or Chief Executive Officer, the Chairman
of the Board shall exercise all of the duties and responsibilities of such
officer until the Board of Directors shall otherwise direct.
Section 3. Vice Chairman of the Board. The Vice Chairman of the
Board, if any, shall be elected from the membership of the Board of
Directors; and in the absence or disability of the Chairman of the Board,
shall have such other duties and powers as may be imposed or given by the
Board of Directors. In case of the absence or inability to act of the
Chairman of the Board, the Vice Chairman of the Board shall exercise all of
the duties and responsibilities of such officer until the Board of Directors
shall otherwise direct. In such event, he shall not be a member of the Audit
Committee or the Compensation Committee, but shall be a voting member of all
other standing committees of the Board of Directors.
Section 4. President. The President shall, subject to the direction
of the Board of Directors or the Chief Executive Officer, if any, see that
all orders and resolutions of the Board of Directors are carried into effect,
and shall perform all other duties necessary or appropriate to the office,
subject, however, to the right of the Chief Executive Officer and of the
directors to delegate any specific powers to any other officer or officers of
the corporation. In case of the absence or inability to act of both the
Chairman of the Board and the Vice Chairman of the Board, or the Chief
Executive Officer, the President shall exercise all of the duties and
responsibilities of such officer until the Board of Directors shall otherwise
direct. In the absence or disability of the Chairman and Vice Chairman of the
Board, the President shall not be a member of the Audit Committee or the
Compensation Committee, but shall be a voting member of all other standing
committees of the Board of Directors.
Section 5. Chief Executive Officer. The Chief Executive Officer, in
addition to the duties as Chairman or Vice Chairman of the Board or
President, as the case may be, shall have final authority, subject to the
control of the Board of Directors, over the general policy and business of
the corporation and shall have the general control and management of the
business and affairs of the corporation. The Chief Executive Officer shall
have the power, subject to the control of the Board of Directors, to appoint,
suspend, or discharge and to prescribe the duties and to fix the compensation
of such agents and employees of the corporation, other than the officers
appointed by the Board, as the Chief Executive officer may deem necessary.
7
<PAGE>
Section 6. Chief Operating Officer. There may be elected a Chief
Operating Officer who shall, if elected, have general charge, control and
supervision over the administration and operations of the corporation and
shall have such other duties and powers as may be imposed or given by the
Board of Directors. If no Chief Operating Officer is elected, the duties and
powers of the Chief Operating Officer shall be performed by the Chief
Executive Officer.
Section 7. Vice Presidents. Any Executive Vice President, any Senior
Vice President, and each Vice President shall have such authority and
responsibilities as designated by the Board of Directors, the Executive
Committee, the Chairman or Vice Chairman of the Board, or the President.
Section 8. Secretary. The Secretary shall attend all meetings of the
shareholders and of the Board of Directors, and of the Executive Committee,
and shall preserve in books of the corporation true minutes of the
proceedings of all such meetings; shall keep the seal of the corporation and
shall have authority to affix the same to all instruments where its use is
required; shall give all notices required by statute, bylaw or resolution;
and shall perform such other duties as may be delegated by the Board of
Directors, the Executive Committee, the Chairman or Vice Chairman of the
Board, or the President.
Section 9. Treasurer. The Treasurer shall have custody of all
corporate funds and securities and shall keep in books belonging to the
corporation full and accurate accounts of all receipts and disbursements;
shall deposit all monies, securities and other valuable effects in the name
of the corporation in such depositaries as may be designated for that purpose
by the Board of Directors; shall disburse the funds of the corporation as may
be ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the Board of Directors, Chairman and Vice Chairman of the
Board, and President, at the regular meetings of the Board, and whenever
requested by them, an account of all transactions as Treasurer and of the
financial condition of the corporation; shall deliver to the Chairman and
Vice Chairman of the Board and the President, and shall keep in force, a bond
in form, amount and with a surety or sureties satisfactory to the Board,
conditioned for faithful performance of the duties of office, by the
Treasurer and any Assistant Treasurers and for restoration to the corporation
in case of death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and property of whatever kind belonging to the
corporation; and shall in addition perform such other duties as may be
delegated by the Board of Directors, the Executive Committee, the Chairman or
Vice Chairman of the Board, or the President.
Section 10. Controller. The Controller shall be responsible for
establishment and maintenance of internal accounting and other control
systems for this corporation and its wholly-owned subsidiaries; liaison with
independent auditors; and such other duties as may be designated by the Board
of Directors, the Executive Committee, the Chairman or Vice Chairman of the
Board, or the President.
Section 11. Assistant Secretary and Assistant Treasurer. Any
Assistant Secretary, in the absence of the Secretary, shall perform the
duties and exercise the powers of the Secretary. Any Assistant Treasurer, in
the absence of or disability of the Treasurer, shall perform the duties and
exercise the power of the Treasurer. If there is more than one Assistant
Secretary and/or Assistant Treasurer, their respective duties and
responsibilities shall be as designated by the Board of Directors, the
Executive Committee, the Chairman or Vice Chairman of the Board, or the
President.
8
<PAGE>
Section 12. Delegation of Powers. For any reason deemed sufficient
by the Board of Directors, whether occasioned by absence or otherwise, the
Board may delegate all or any of the powers and duties of any officer to any
other officer or Director, but no officer or Director shall execute,
acknowledge or verify any instrument in more than one capacity.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Obligation to Indemnify and Right to Indemnification.
This corporation shall indemnify each of its directors and officers, and each
person who hereafter becomes a director and/or officer of the corporation,
and each such person shall be entitled to such indemnification without
further action on his or her part, against all expense, liability and loss,
arising in any manner by reason of the fact that such person is or was a
director and/or officer of the corporation, or by reason of any acts of such
person, or omissions of such person to act, as a director and/or officer of
the corporation, to the fullest extent permitted by any present or future
provision of law, including without limitation the indemnification and
advancement of expenses provided for in Section 2-12, inclusive, of this
Article VI.
Section 2. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to a
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal,
other than an action by or in the right of the corporation, by reason of the
fact that he or she is or was a director and/or officer of the corporation,
or is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, whether
for profit or not, against expenses, including attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit, or proceeding, if
the person acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation or its
shareholders, and with respect to a criminal action or proceeding, if the
person had no reasonable cause to believe his or her conduct was unlawful.
The termination of an action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interest of the corporation or its shareholders, and,
with respect to a criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 3. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party to or is
threatened to be made a party to a threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he or she is or was a director and/or officer of
the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not, against expenses, including actual and reasonable
attorneys' fees, and amounts paid in settlement incurred by the person in
connection with the action or suit, if the person
9
<PAGE>
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation and its shareholders.
However, indemnification shall not be made for a claim, issue, or matter in
which the person has been found liable to the corporation unless and only to
the extent that the court in which the action or suit was brought has
determinated upon application that, despite the adjudication of liability but
in view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnification for the expenses which the court considers
proper.
Section 4. Successful Defense. To the extent that a director or
officer of the corporation has been successful on the merits or otherwise in
defense of an action, suit, or proceeding referred to in Section 2 or 3 of
this Article VI, or in defense of a claim, issue, or matter in the action,
suit, or proceeding, he or she shall be indemnified against expenses,
including actual and reasonable attorneys' fees, incurred by him or her in
connection with the action, suit, or proceeding brought to enforce the
mandatory indemnification provided for in this section.
Section 5. Determination of Conduct. Subject to any rights under any
contract between the corporation and any director or officer, any
indemnification under Section 2 or 3 of this Article VI, unless ordered by a
court, shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director or officer is
proper in the circumstances because he or she has met the applicable standard
of conduct set forth in Sections 2 and 3. This determination shall be made in
any of the following ways:
(a) By a majority vote of a quorum of the Board consisting
of directors who were not parties to the action, suit or proceeding.
(b) If the quorum described in subdivision (a) is not
obtainable, then by a majority vote of a committee of directors who
are not parties to the action. The committee shall consist of not
less than two (2) disinterested directors.
(c) By independent legal counsel in a written opinion.
(d) By the shareholders.
Section 6. Partial Indemnification. If a person is entitled to
indemnification under Section 2 or 3 of this Article VI for a portion of the
expenses, including attorneys' fees, judgment, penalties, fines, and amounts
paid in settlement, but not for the total amount thereof, the corporation
shall indemnify the person for the portion of the expenses, judgments,
penalties, fines, or amounts paid in settlement for which the person is
entitled to be indemnified.
Section 7. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit, or proceeding described in
Section 2 of 3 of this Article VI shall be paid by the corporation in advance
of the final disposition of the action, suit, or proceeding upon receipt of
an undertaking by or on behalf of the director or officer to repay the
expenses if it is ultimately determined that the person is not entitled to be
indemnified by the corporation. The undertaking shall be by unlimited general
obligation of the person on whose behalf advances are made but need not be
secured.
10
<PAGE>
Section 8. Indemnification Not Exclusive. The indemnification and
advancement of expenses provided for in Sections 2-7, inclusive, of this
Article VI are not exclusive of other rights to which a person seeking
indemnification and advancement of expenses may be entitled under the
Restated Articles of Incorporation, Bylaws, or a contractual agreement.
However, the total amount of expenses advanced and indemnified from all
sources combined shall not exceed the amount of actual expenses incurred by
the person seeking indemnification or advancement of expenses.
Section 9. Contract Right. The right to indemnification conferred in
this Article VI shall be a contract right between the corporation and each
director and officer of the corporation, or individual who is or was serving
at the request of the corporation as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, who serves in such capacity at any time while this Article VI is
in effect. No amendment or repeal of all or any part of this Article VI, nor
the adoption of any provision inconsistent with this Article VI, shall apply
to any acts or omissions occurring prior to such amendment or repeal, or give
rise to or increase any liability of any director or officer with respect to
any acts or omissions occurring prior to such amendment or repeal.
Section 10. Insurance. The corporation may maintain insurance, at
its expense, to protect itself and any directors, officers, employees or
agents of the corporation or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss,
whether or not the corporation would have the power to indemnify such persons
against such expense, liability or loss under any applicable provision of
law.
Section 11. Continuation. The indemnification and advancement of
expenses provided for in this Article VI shall continue as to a person who
ceases to be a director or officer, and shall inure to the benefit of the
heirs, executors, and administrators of the person.
Section 12. Definitions. For purposes of this Article VI:
(a) References to the "corporation" include all
constituent corporations absorbed in a consolidation or merger and
the resulting or surviving corporation, so that a person who is or
was a director, officer, employee or agent of the constituent
corporation or is or was serving at the request of the constituent
corporation as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise whether for profit or not shall
stand in the same position under the provisions of this Article VI
with respect to the resulting or surviving corporation as the person
would if he or she had served the resulting or surviving corporation
in the same capacity.
(b) References to "other enterprises" include employee
benefit plans; references to "fines" include excise taxes assessed
with respect to any employee benefit plan; and references to
"serving at the request of the corporation" include any service
which imposes duties on, or involves services by, such director or
officer with respect to any employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests
of the corporation" as referred to in this Article VI.
11
<PAGE>
Section 13. Savings Clause. If any provision of this Article VI
shall be invalidated on any ground by any court, the corporation shall
nevertheless indemnify each of its directors and offices against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
with respect to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, including third party actions and actions
by or in the right of the corporation, to the fullest extent permitted by any
applicable law.
Section 14. Other Employees and Agents. The corporation may,
pursuant to authorization of the Board of Directors, provide indemnification
and advancement of expenses to employees and agents of the corporation other
than directors and officers, to the same extent as provided for directors and
officers, or otherwise as the Board of Directors determines.
ARTICLE VII
SUBSIDIARIES
Section 1. Subsidiaries. The Board of Directors, the Chairman of the
Board, President, or any other executive officer designated by the Board of
Directors may vote the shares of stock owned by this corporation in any
subsidiary, whether wholly or partly owned by this corporation, in such
manner as they may deem in the best interests of this corporation, including,
without limitation, for the election of directors of any subsidiary
corporation, or for any amendments to the charter or bylaws of any such
subsidiary corporation, or for the liquidation, merger, or sale of assets of
any such subsidiary corporation. The Board of Directors, the Chairman of the
Board, President, or any other executive officer designated by the Board of
Directors may cause to be elected to the Board of Directors of any such
subsidiary corporation such persons as they shall designate, any of whom may,
but need not be, directors, executive officers, or other employees or agents
of this corporation. The Board of Directors, the Chairman of the Board,
President, or any other executive officer designated by the Board of
Directors may instruct the directors of any such subsidiary corporation as to
the manner in which they are to vote upon any issue properly coming before
them as the directors of such subsidiary corporation, and such directors
shall have no liability to this corporation as the result of any action taken
in accordance with such instructions.
Section 2. Subsidiary Officers Not Executive Officers. The officers
of any subsidiary corporation shall not, by virtue of holding such title and
position, be deemed to be executive officers of this corporation, nor shall
any such officer of a subsidiary corporation, unless he or she shall also be
a director or executive officer of this corporation, be entitled to have
access to any files, records or other information relating or pertaining to
this corporation, its business and finances, or to attend or receive the
minutes of any meetings of the Board of Directors or any committee of this
corporation, except as and to the extent expressly authorized and permitted
by the Board of Directors, the Chairman of the Board, or President of this
corporation.
12
<PAGE>
ARTICLE VIII
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate in the name of the corporation, signed by the
Chairman of the Board or the President or a Vice President and the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares of stock in the corporation
owned by such person.
Section 2. Facsimile Signature. When a certificate is signed (1) by
a transfer agent or an assistant transfer agent, or (2) by a transfer clerk
acting on behalf of the corporation, and/or by a registrar, the signature of
any such Chairman, President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be a facsimile. In case any officer,
transfer agent, or registrar who has signed, or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or
the owner's legal representative, to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 4. Transfers of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 5. Fixing of Record Date by Board. For the purpose of
determining the shareholders entitled to notice of or to vote at any meeting
of shareholders, or any adjournment thereof, or to express consent to or
dissent from any corporate action in writing without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any
dividend or the distribution or allotment of any rights or evidences of
interest arising out of any change, conversion or exchange of capital stock,
or for the purpose of any other action, the Board of Directors may fix, in
advance, a date as the record date for any such determination of
shareholders. Such date shall be at least ten (10) and not more than sixty
(60) days before the date of any such meeting, and not more than sixty (60)
days before any other action. Only shareholders of record on a record date so
fixed shall be entitled to notice of, and to vote at, such meeting or to
receive payment of any dividend or the distribution or allotment of any
rights or evidences of interest arising out of any change, conversion or
exchange of capital stock.
13
<PAGE>
Section 6. Provision for Record Date in the Absence of Board Action.
If a record date is not fixed by the Board of Directors: (a) the record date
for determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the close of business on the day next
preceding the day on which notice is given, or, if no notice is given, the
day next preceding the date on which the meeting is held; and (b) the record
date for determining shareholders entitled to express consent to corporate
action in writing, without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the first written consent
is expressed; and (c) the record date for determining shareholders for any
other purpose shall be the close of business on the day on which the
resolution of the Board relating thereto is adopted.
Section 7. Adjournments. When a determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders has been
made as provided in this Article, the determination applies to any
adjournment of the meeting, unless the Board fixes a new record date for the
adjourned meeting.
Section 8. Registered Shareholders. The corporation shall be
entitled to recognize the exclusive rights of a person registered on its
books as the owner of shares to receive dividends, and to vote as such owner,
and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise
provided by the laws of Michigan.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to the provisions of the Articles of
Incorporation.
Section 2. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the corporation. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
14
<PAGE>
ARTICLE X
CONTROL SHARE ACQUISITIONS
The provisions of Chapter 7B of the Michigan Business Corporation
Act (Sections 450.790- 450.799, inclusive, Michigan Compiled Laws, being
Sections 21.200(790) - 21.200(799), inclusive, Michigan Statutes Annotated),
as the same exist or may hereafter be amended, shall not apply to control
share acquisitions of shares of stock of this corporation.
ARTICLE XI
AMENDMENTS
These Bylaws may be altered or repealed at any regular meeting of
the shareholders or of the Board of Directors or at any special meeting of
the shareholders or of the Board of Directors.
15
Exhibit 10(a)
RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE AND SETTLEMENT AGREEMENT (hereinafter the "Agreement")
entered into this 1st day of July, 1997 (effective date 5/25/97), by and
between Jacobson Stores, Inc. (hereinafter referred to as "the Company") and
Joseph H. Fisher (hereinafter referred to as "Fisher");
WITNESSETH:
WHEREAS, the Chairman of the Board of the Company advised Fisher
that Fisher's employment is terminated; and
WHEREAS, Fisher and the Company have negotiated an agreement which
will allow Fisher to resign and receive certain payments to which he would
not be entitled in exchange for a complete release of all claims against the
Company; and
WHEREAS, the Company has denied and continues to deny that it has
violated any law whatsoever and has denied and continues to deny that it has
any liability to Fisher on any basis; and
WHEREAS, Fisher, voluntarily and with full knowledge of his rights
and the provisions herein, having the benefit of the advice of counsel, now
desires to settle, compromise, and dispose of all claims that he has or might
have against the Company upon the terms and conditions hereinafter set forth;
and
WHEREAS, the Company, voluntarily and with full knowledge of its
rights and the provisions herein, having the benefit of the advice of
counsel, and without any admission of liability, misconduct or wrongdoing,
now desires to settle, compromise, and dispose of Fisher's claims upon the
terms and conditions hereinafter set forth;
<PAGE>
NOW THEREFORE, in consideration of the foregoing, and of the
promises and mutual covenants contained herein, and other valuable
consideration, it is hereby covenanted and agreed as follows:
1. Fisher, for himself and his family, heirs, executors,
administrators, personal representatives, agents, employees and legal
representatives, affiliates, successors and assigns, and for any
partnerships, corporations sole proprietorships or other entities owned or
controlled by them, hereby forever and fully remises, releases, acquits, and
discharges the Company and its subsidiaries, parents, affiliates, divisions,
officers, directors, agents, representatives, employees, attorneys, heirs,
successors or assigns, of and from any and all actions, causes of action,
suits, debts, sums of money, accounts, covenants, contracts, agreements,
arrangements, promises, obligations, warranties, trespasses, torts, injuries,
losses, damages, claims, demands or other liability or relief of any nature
whatsoever, whether known or unknown, foreseen or unforeseen, resulting or to
result, whether in law or in equity, or before administrative agencies or
departments, that Fisher ever had, now has or hereafter can, shall or may
have, by reason of or arising out of any matter, cause or event occurring on
or prior to the date this Agreement is signed by Fisher, including, but not
limited to, any and all claims of any nature arising out of or in any way
relating to Fisher's employment, including but not limited to age
discrimination under The Age Discrimination In Employment Act of 1967 (as
amended); and any and all claims under any federal, state or local laws,
regulations, rules or ordinances; and any and all claims alleged, pleaded or
which could have been alleged or pleaded in or otherwise related to the
above-described threatened civil action or which could have been alleged in
any other litigation, administration proceeding or other legal proceeding
between Fisher and the Company. The parties agree that Fisher does not waive:
(1) any
<PAGE>
entitlement under the Company's normal pension plan; and (2) rights
or claims that may arise after the date this Agreement is executed.
2. It is expressly understood and agreed by Fisher that this is a
full and final general release of all matters whatsoever and that this
general release is intended to and does embrace not only all known and
anticipated damages and injury, but also unknown and unanticipated damages,
injury or complications that may later develop or be discovered, including
all effects and consequences thereof.
3. Fisher declares, represents and understands that the injuries and
damages sustained may be permanent, that further complications are possible,
and that in executing this Agreement, it is understood and agreed that Fisher
has not relied upon the representations of any party hereby released or by
that party's representatives concerning any matter, including the nature,
extent, effect and/or duration of Fisher's injury or damages.
4. Fisher declares, represents and understands that this agreement
and general release will forever and for all time bar any action or claim
whatsoever which arose or which might arise in the future from any acts,
omissions, agreements or other occurrences prior to the date hereof including
the incidents described in Paragraph 1 above, and that no lawsuit ever will
be asserted by Fisher against any person or entity hereby released for any
injury or damage, whether known or unknown, sustained or to be sustained, as
a result of the foregoing incidents.
5. Fisher agrees that he will keep strictly confidential and will
not communicate or disclose to any other person, natural or otherwise, except
to Fisher's accountants, if any, or except as required by law or upon the
prior written consent of the Company, the contents of
<PAGE>
any term or provision contained herein or any other aspect of the settlement
and this Agreement between the parties.
6. Fisher agrees that he will not instigate, cause, advise or
encourage any other persons, groups of persons, corporations, partnerships or
any other entity to file litigation against the Company. Fisher further
agrees that he will not assert, claim or allege, through conversation or
otherwise, to any person that the Company committed any wrongful acts against
Fisher.
7. Fisher agrees to refrain from seeking or attempting to seek
employment and/or reinstatement with the Company or any company affiliated
with the Company at any time following execution of the Settlement Agreement.
8. Fisher agrees to immediately return all Company property. The
Company agrees to pay Fisher, or his heirs, his current bi-weekly salary
until April 30, 1998, less all withholdings currently in effect in the same
manner that Fisher's salary was paid immediately prior to his separation from
the Company. Additionally, Fisher's current medical and dental insurance
coverage shall continue in effect until December 31, 1997, at his normal
contribution rates, and Cobra will begin on January 1, 1998. Additionally,
the Company agrees that upon the expiration of the seven (7) day revocation
period, it will immediately pay Fisher one week vacation at Fisher's rate of
pay as of his date of separation from the Company.
9. Fisher agrees that: (a) the consideration set forth in Paragraph
8 above is in excess of anything of value to which Fisher is already
entitled, including, but not limited to, earned wages and/or benefits; and
(b) following the payments described in Paragraph 8 above, no further payment
or consideration of any kind is contemplated or required.
<PAGE>
10. It is agreed that Fisher has 22 years of credited service for
purposes of computing Fisher's rights under the Company's pension plan.
11. It is expressly understood by the parties that this Agreement is
a compromise and settlement of doubtful and disputed claims and that payment
by the Company of the consideration set forth in Paragraph 8 is not, nor is
it to be construed as an admission of liability on the part of the Company.
The Company expressly denies liability and intends merely to avoid litigation
with respect to Fisher's claims.
12. This Release and Settlement Agreement in no way effects, alters
or otherwise changes Fisher's rights or benefits under "Jacobson's Retirement
Savings and Profit Sharing Plan". Fisher is 100% vested in all funds in
"Jacobson's Retirement Savings and Profit Sharing Plan" and this settlement
in no way effects said Plan.
13. Fisher understands and agrees that he has read this Agreement
carefully and understands all of its terms. Fisher further agrees that he has
been given a period of at least twenty-one (21) days (or more) to review and
consider this agreement.
14. Fisher declares and understands that: (a) he has been advised to
consult with an attorney prior to execution of this Agreement; (b) no
promises, inducements or agreements not herein expressed have been made to
him; (c) this Agreement contains the entire agreement among the parties
hereto; (d) the terms of this Agreement are contractual and not merely a
recital; and (e) any modification of this Agreement must be made in writing
and be signed by Fisher and the Company.
15. Fisher understands and agrees that he may revoke this Agreement
for a period of seven (7) calendar days following the execution of this
Agreement. The Agreement is not effective until this revocation period has
expired. Fisher understands that any revocation, to be
<PAGE>
effective, must be in writing and either (a) postmarked within seven (7) days
of execution of this Agreement and addressed to James K. Delaney, Jacobson
Stores, Inc., 3333 Sargent Road, Jackson, Michigan 49201 or (b) hand
delivered within seven (7) days of execution of this Agreement to James K.
Delaney, Jacobson Stores, Inc., 3333 Sargent Road, Jackson, Michigan 49201.
Fisher understands that if revocation is made by mail, mailing by certified
mail, return receipt requested, is recommended to show proof of mailing.
16. Each party hereto agrees that no action will be taken
(including, but not limited to, an appeal or institution of a separate
lawsuit) which seeks to challenge any provision of this Agreement. If Fisher
attempts to revoke this Agreement or challenge any provision herein, he shall
be required to tender back the full settlement amount prior to filing a suit
against the Company. This Paragraph does not apply to any breach of contract
action brought by Fisher against the Company alleging that the Company has
breached this Release and Settlement Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the 1st day of July, 1997 (effective date 5/25/97).
ATTEST:
/s/ Joe M. Fisher /s/ Joseph H. Fisher
- ------------------------------- ------------------------------
WITNESS JOSEPH H. FISHER
/s/ Rebecca Viola
- -------------------------------
WITNESS
JACOBSON STORES INC.
/s/ Laurie Town /s/ James K. Delaney
- ------------------------------- ------------------------------
WITNESS JAMES K. DELANEY
/s/ Susan Price
- -------------------------------
WITNESS
<PAGE>
VOLUNTARY WAIVER OF 21 DAY
REVIEW AND CONSIDERATION PERIOD
I understand that Paragraph 11 of the above Agreement specifically
provides me with a 21 day time period within which to consider this
Agreement. By signing this waiver, I knowingly and voluntarily choose to
waive the 21 day time period, and understand that all other provisions of the
Agreement continue to apply to me.
The decision to sign this waiver was completely voluntary and in so
doing, I have not relied on any oral or written statements or promises by the
Company or its representatives.
/s/ Jay M. Fisher /s/ Joseph H. Fisher
- ------------------------------ ------------------------------
WITNESS JOSEPH H. FISHER
/s/ Rebecca Viola
- ------------------------------
WITNESS
Exhibit 10(b)
SECOND AMENDMENT TO
JACOBSON STOCK OPTION PLAN OF 1994
WHEREAS, JACOBSON STORES INC., a Michigan corporation (the
"Company"), has previously adopted the Jacobson Stock Option Plan of 1994
(the "Plan");
WHEREAS, pursuant to Article V, Section 5 of the Plan, the Company's
Board of Directors may amend the Plan; or any Options; and
WHEREAS, the Company's Board of Directors now desires to amend the
Plan and the Options.
NOW, THEREFORE, IN CONSIDERATION of the premises and by resolution
of the Company's Board of Directors, the Plan and the Options are hereby
amended as follows:
1. Article II, Section 3 is amended to read as follows:
"Section 3. Aggregate Limit. The aggregate number of shares
of Common Stock which may be issued on exercise of Options shall not
exceed 900,000 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 to a new Option or Options. No person may be
granted Options to purchase more than 600,000 shares of Common Stock
in the aggregate in any fiscal year of the Company, subject to
adjustment in the same manner provided in Article V, Section 3."
Exhibit 10(c)
JACOBSON STORES INC.
Management Incentive Plan
Senior management incentives are based on accomplishing the key goals of our
business plan. Incentives are structured to strive for excellence.
The management incentive plan is designed to:
o foster an awareness of the Company's objective of consistent,
profitable operation.
o motivate senior management to meet the shorter term needs of
shareholders without sacrificing long-term profitability.
o encourage senior management to "stretch" for higher levels of
performance in the future.
o establish target incentives for each participant so that each
person is aware of what payout percentages can be expected with
various levels of accomplishment.
o encourage retention of key employees.
The principal features of the plan include:
o participation limited to salaried officers of the Company.
o specific performance criteria and weightings established at the
beginning of the year for each participant. (at the most senior
level, primary emphasis placed on corporate goal achievement; at
the VP-Staff level, primary emphasis placed on individual goal
achievement).
o potential payout as a percent of the base salary of each
participant as follows:
<TABLE>
<CAPTION>
Threshold Target Maximum
% of target 75% 100% 150%
% of target award 0% 100% 150%
-------------------------------------------------------------------
<S> <C> <C> <C>
Chairman/CEO/President 0% 35% 52.2%
Vice Chairman 0 30 45
SVPs 0 25 37.5
VP - Store Group Manager 0 20 30
VP - DMM 0 20 30
VP - Operations 0 20 30
VP - Staff Positions 0 15 22.5
-------------------------------------------------------------------
</TABLE>
o Threshold corporate performance criteria (announced at the
beginning of the year) to be achieved before any payout is made
under the plan.
EXHIBIT 11
JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands)
(unaudited)
Primary earnings per common share, as set forth in the consolidated
statements of earnings, are computed by dividing net earnings by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. Fully diluted earnings per share are computed
based on the additional assumption that the Company's 6-3/4% Convertible
Subordinated Debentures due 2011 were converted to common stock at the date
of issuance with a corresponding increase in net earnings to reflect
reduction in related interest expense, net of income taxes, except if
anti-dilutive.
These computations are set forth below (in thousands except per share data):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
----------------------- --------------------------
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE:
Weighted average number of shares of common
stock and common stock equivalents outstanding -
Primary 5,797 5,808 5,784 5,791
Fully diluted 6,783 6,864 6,794 6,862
======= ======= ======= =======
NET LOSS $(5,819) $(5,931) $(3,644) $(4,919)
======= ======= ======= =======
NET LOSS, adjusted to reflect reduction in interest
expense attributable to convertible debentures,
net of income tax $(5,462) $(5,547) $(2,922) $(4,151)
======= ======= ======= =======
NET LOSS PER SHARE:
Primary and Fully diluted $ (1.00) $ (1.02) $ (0.63) $ (0.85)
======= ======= ======= =======
</TABLE>
EXHIBIT 15
ARTHUR ANDERSEN LLP
To Jacobson Stores Inc.:
We are aware that Jacobson Stores Inc. has incorporated by reference in its
Form S-8 Registration Statements File Nos. 2-88295, 033-53469 and 333-31989
and Form S-2 File No. 33-10532 its Form 10-Q for the quarter ended July 26,
1997, which includes our report dated August 8, 1997, covering the unaudited
interim condensed consolidated financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan
September 4, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES AS
OF, AND FOR THE TWENTY-SIX WEEK PERIOD ENDED, JULY 26, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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0
0
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