JACOBSON STORES INC, DEF 14A, 1998-04-13

JACOBSON STORES INC
DEF 14A, 1998-04-13
DEPARTMENT STORES

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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12

JACOBSON STORES INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

<PAGE>

Jacobson Stores Inc.

3333 Sargent Road, Jackson, Michigan 49201-8847
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
May 28, 1998

TO THE SHAREHOLDERS OF
JACOBSON STORES INC.:

The 1998 Annual Meeting of Shareholders of Jacobson Stores Inc. will
be held at the corporate offices, 3333 Sargent Road, Jackson, Michigan
49201-8847, on Thursday, May 28, 1998, at 11:30 a.m., local time, for the
following purposes:

(1) To elect Kathleen McCree Lewis, Michael T. Monahan, Richard Z.
Rosenfeld and James L. Wolohan as Class III Directors, to serve until
the 2001 Annual Meeting of Shareholders or until their successors are
elected and qualified;

(2) To consider and act on a proposal to amend the Jacobson Stores
Inc. Stock Option Plan of 1994 to increase the aggregate number of
shares of Common Stock that may be issued upon exercise of options
granted under the plan from 900,000 to 1,400,000 shares;

(3) To consider and act on a proposal to appoint Arthur Andersen LLP,
independent public accountants, as auditors for the fiscal year ending
January 30, 1999; and

(4) To transact any other business that may properly come before the
meeting or any adjournments thereof.

Common shareholders of record at the close of business on March 30,
1998 will be entitled to notice of and to vote at the meeting.

Your attention is directed to the proxy statement submitted with this
notice.

By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary

Jackson, Michigan, April 10, 1998.

Shareholders are requested to specify their choice, date, sign and return the
enclosed proxy in the enclosed envelope.

<PAGE>

JACOBSON STORES INC.
PROXY STATEMENT
FOR
1998 ANNUAL MEETING OF SHAREHOLDERS

This proxy statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Jacobson Stores Inc. (the "Company")
for use at its 1998 Annual Meeting of Shareholders, to be held Thursday, May
28, 1998, at 11:30 a.m., local time, at the corporate offices, 3333 Sargent
Road, Jackson, Michigan 49201-8847, and at any adjournments thereof, for the
purposes set forth in the accompanying notice. This proxy statement and the
enclosed form of proxy are first sent or given to security holders on or
about April 10, 1998.

If the enclosed proxy is properly executed and returned to Norwest
Shareowner Services, P.O. Box 64859, St. Paul, MN 55164-0859, all shares
represented will be voted in the manner specified. A proxy may be revoked at
any time before it is exercised.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

As of March 1, 1998, 5,779,021-2/3 shares of the Company's Common
Stock, par value $1 per share, were outstanding and entitled to vote. Common
shareholders of record at the close of business on March 30, 1998 will be
entitled to notice of and to vote at the meeting. Each shareholder is
entitled to one vote for each share of Common Stock held on the record date.
Shares may not be voted cumulatively.

The following table and the explanations on page 3 provide information
as of March 1, 1998 for Dr. Robert Rosenfeld and as of December 31, 1997 for
each of the remaining four persons known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock, which is its only class
of voting securities:

<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
- -----------------------------------------------------------------------------

<S> <C> <C>
Robert L. Rosenfeld, Ph.D 556,131-1/3(1) 9.6
4535 Fourth Road North
Arlington, Virginia 22203-2342

David L. Babson and Company Incorporated 723,500 12.5
One Memorial Drive
Cambridge, Massachusetts 02142-1300

Dimensional Fund Advisors Inc. 392,400(2) 6.8
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401

Franklin Resources, Inc. 385,300 6.7
777 Mariners Island Blvd
San Mateo, California 94404

Comerica Bank 311,186(3) 5.4
One Detroit Center
Detroit, Michigan 48275
<FN>
(1) Includes 7,312 shares held jointly with his wife, 18,418 shares held by
his wife, and 270,766 shares held as co-trustee with Comerica Bank,
with respect to all of which Robert L. Rosenfeld has shared voting and
investment owner. Also includes 2,500 shares that may be acquired on
exercise of options.

(2) Includes 115,750 shares over which it has shared voting power.

(3) Includes 270,766 shares held as co-trustee with Robert L. Rosenfeld,
with respect to which Comerica Bank has shared voting and investment
power and 28,890 shares held as trustee of the Jacobson Pension Plan,
with respect to which Comerica Bank has shared investment power.
</TABLE>

<PAGE>

The following table and explanation provide information as of March 1,
1998 about shares of the Company's Common Stock beneficially owned by each
director, each of the executive officers identified on page 9, and all
directors and executive officers as a group.
<TABLE>
<CAPTION>

Amount and Nature of Percent
Name Beneficial Ownership(1) of Class
- -----------------------------------------------------------------------------
<S> <C> <C>
Herbert S. Amster 15,562 (2) *
Joseph H. Fisher 2,955 (3) *
Paul W. Gilbert 46,087 (4) *
Herman J. Heinle 2,250 (5) *
Herman S. Kohlmeyer, Jr 213,001 (6) 3.7
Theodore R. Kolman 6,750 (7) *
Kathleen McCree Lewis 4,000 (8) *
Patricia Shontz Longe, Ph.D 5,000 (9) *
P. Gerald Mills 201,000(10) 3.4
Robert L. Moles 3,362 *
Michael T. Monahan 3,500(11) *
Philip H. Power 3,800(12) *
James A. Rodefeld 13,667(13) *
Mark K. Rosenfeld 286,249(14) 4.95
Richard Z. Rosenfeld 128,564(15) 2.2
Robert L. Rosenfeld, Ph.D 556,131(16) 9.6
James L. Wolohan 4,000(17) *

All directors and executive officers
(17 persons) 1,495,343(18) 24.7
<FN>
* Less than 1% of the class

<PAGE>
(1) Includes shares the spouse and/or minor children of the named
individual owns or has the right to acquire individually or jointly
with the named individual. Also includes shares that may be acquired on
exercise of options which are exercisable within 60 days after March 1,
1998.

(2) Includes 7,812 shares subject to shared voting and investment
power and 2,500 shares that may be acquired on exercise of options.

(3) Includes 2,643 shares subject to shared voting and investment power.

(4) Includes 17,000 shares subject to shared voting and investment power,
27,250 shares that may be acquired on exercise of options and 1,837
shares that may be acquired on conversion of debentures subject to
shared voting and investment power.

(5) Includes 2,250 shares that may be acquired on exercise of options.

(6) Includes 206,001 shares subject to shared voting and investment power
and 2,500 shares that may be acquired on exercise of options.

(7) Includes 6,750 shares that may be acquired on exercise of options.

(8) Includes 3,000 shares that may be acquired on exercise of options.

(9) Includes 2,500 shares that may be acquired on exercise of options.

(10) Includes 200,000 shares that may be acquired on exercise of options.

(11) Includes 2,500 shares that may be acquired on exercise of options.

(12) Includes 2,500 shares that may be acquired on exercise of options.

(13) Includes 6,667 shares that may be acquired on exercise of options.

(14) Includes 17,293 shares subject to shared voting and investment power,
1,500 shares that may be acquired on exercise of options and 306
shares that may be acquired by Mark K. Rosenfeld or his wife as
custodian on the conversion of debentures.

(15) Includes 40,710 shares subject to shared voting and investment power
and 2,500 shares that may be acquired on exercise of options.

(16) Includes 7,312 shares held jointly with his wife, 18,418 shares held
by his wife, and 270,766 shares held as co-trustee with Comerica Bank,
with respect to all of which Robert L. Rosenfeld has shared voting and
investment power. Also includes 2,500 shares that may be acquired on
exercise of options.

(17) Includes 3,000 shares that may be acquired on exercise of options.

(18) Includes 272,375 shares that may be acquired on exercise of options and
2,143 shares that may be acquired on conversion of debentures.
</TABLE>
2

<PAGE>
Information about beneficial ownership, set forth in the stock
ownership tables, is based on information furnished by the shareholder,
director, or executive officer.

The following additional information is furnished in explanation of
the stock ownership tables:

40,279 shares of Common Stock are held by Richard Z. Rosenfeld as
trustee under a revocable Trust Agreement dated December 14, 1968,
established by Jacques A. Preis. Richard Z. Rosenfeld disclaims any
beneficial interest in the shares, but they are shown as beneficially owned
by him.

As of December 31, 1997, David L. Babson and Company Incorporated, a
registered investment advisor, exercised investment and voting discretion
with respect to 723,500 shares of the Company's Common Stock which were owned
by various investors. The foregoing information is based solely on a Schedule
13G report, dated January 15, 1998, filed by David L. Babson and Company
Incorporated with the Securities and Exchange Commission.

As of December 31, 1997, Dimensional Fund Advisors Inc., a registered
investment advisor, was deemed to have beneficial ownership of 392,400 shares
of the Company's Common Stock, all of which shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and the DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, for all of which
Dimensional Fund Advisors Inc. serves as investment manager. Dimensional Fund
Advisors Inc. disclaims beneficial ownership of all such shares. The
foregoing information is based solely on a Schedule 13G report, dated
February 9, 1998, filed by Dimensional Fund Advisors Inc. with the Securities
and Exchange Commission.

As of December 31, 1997 (i) Franklin Resources, Inc., a parent holding
company, (ii) Charles B. Johnson and Rupert H. Johnson, Jr., principal
shareholders of Franklin Resources, Inc., and (iii) Franklin Advisory
Services, Inc., an investment advisor, were deemed to have sole voting and
investment power over 385,300 shares of the Company's Common Stock. The
address of Franklin Advisory Services, Inc. is One Parker Plaza, Sixteenth
Floor, Ft. Lee, New Jersey 07024. The foregoing information is based solely
on a Schedule 13G report, dated January 30, 1998, filed by Franklin
Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin
Advisory Services, Inc. with the Securities and Exchange Commission.

As of December 31, 1997, Comerica Bank held, as beneficial owner, an
aggregate of 311,186 shares of the Company's Common Stock in various
fiduciary capacities, which includes 28,890 shares as Trustee of the
Company's Pension Plan. Comerica Bank has sole voting power over 40,420
shares, sole dispositive power over 9,400 shares, shared voting power over
270,766 shares and shared investment power over 272,590 shares, including
270,766 shares held in the Marjorie L. Rosenfeld Trust for which Comerica
Bank acts as Co-Trustee with Robert L. Rosenfeld. The foregoing information
is based solely on a Schedule 13G report, dated January 22, 1998, filed by
Comerica Bank with the Securities and Exchange Commission and discussions
with Comerica Bank officers.

The shareholders reported above exclude the beneficial interest of the
executive officers of the Company in 248,171 shares of Common Stock held in
the Company's pension and profit sharing plans.

Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities laws of the United States, the Company's
directors, executive officers, and any persons holding 10% or more of its
Common Stock are required to report their ownership of the Company's Common
Stock and any changes in that ownership to the Securities and Exchange
Commission (the "S.E.C."). The Company is required to report in this proxy
statement any late filings of reports of stock transactions in fiscal 1997,
and any known failure to file a required report. Based on written
representations of its directors, executive officers and 10% shareholders,
and copies of reports that have been filed with the S.E.C. and furnished to
the Company, the Company believes that all such persons complied with the
filing requirements for all transactions in fiscal 1997.

<PAGE>
ELECTION OF DIRECTORS

The Company's Restated Articles of Incorporation provide for a Board
of Directors consisting of not less than three members as determined by the
affirmative vote of at least two-thirds of the entire Board. The directors
are divided into three classes, as nearly equal in number as possible, with
the term of office of one class expiring each year. At each annual meeting of
shareholders, the successors of the class of directors whose term expires at
that meeting are elected for a three-year term. If a quorum is present, the
four nominees receiving the greatest number of votes cast at the meeting or
its adjournment will be elected. Withheld votes and broker non-votes will not
be deemed votes cast, but will be counted for purposes of determining whether
a quorum is present.

The directors whose term of office expires at the 1998 Annual Meeting
of Shareholders are Kathleen McCree Lewis, Michael T. Monahan, Richard Z.
Rosenfeld and James L. Wolohan (Class III Directors). Class II director,
Patricia Shontz Longe, a director since 1973, has informed the Board of
Directors that she intends to resign as a director effective May 28, 1998.
The resignation is not the result of any disagreement with the Company. The
Board of Directors has determined that the number of directors shall be
eleven effective May 28, 1998, and has nominated Kathleen McCree Lewis,
Michael T. Monahan, Richard Z. Rosenfeld and James L. Wolohan, each of whom
is currently a director, as Class III Directors, to serve until the 2001
Annual Meeting of Shareholders and until their successors are elected and
qualified. The terms of office of the Class I and Class II Directors will
expire at the annual meetings of shareholders in 1999 and 2000, respectively.

It is intended that each proxy given pursuant to this solicitation
will be voted in favor of election of each of the four director nominees
named, unless the shareholder withholds authority to vote for any one or more
or all nominees in the manner indicated on the proxy.

Management has no reason to believe that any nominee will be unable to
serve; but if any should be unable to serve, the persons named in the
enclosed proxy will vote for a substitute nominee or nominees, and/or for
fewer nominees, according to their judgment.

Proxies cannot be voted for more than four nominees.

The following information is furnished with respect to the members of
the Board of Directors, whose term of office will continue after the 1998
Annual Meeting of Shareholders, and nominees:
<TABLE>
<CAPTION>

First Current
Principal Occupation and Became Term
Name Positions with the Company Age Director Class Expires
- -------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Herbert S. Amster (2,3) Management consultant 63 1967 I 1999

Paul W. Gilbert (2) Vice Chairman of the Board, 53 1988 II 2000
Jacobson Stores Inc.

Herman S. Kohlmeyer, Jr. (2) Senior Vice President-Investments, 65 1971 I 1999
Prudential Securities, Inc.,
New Orleans, Louisiana

Kathleen McCree Lewis (1) Attorney; member, Dykema Gossett 50 1993 III 1998
PLLC, Detroit, Michigan

P. Gerald Mills (2) Chairman of the Board, President and 69 1996 I 1999
Chief Executive Officer,
Jacobson Stores Inc.

Michael T. Monahan (1,2,3) President, Comerica Bank, 59 1990 III 1998
Detroit, Michigan

Philip H. Power (3) Chairman of the Board, Hometown 59 1985 II 2000
Communications Network, Inc.,
newspaper publisher, Livonia, Michigan

Mark K. Rosenfeld Commercial real estate developer, 52 1976 I 1999
Wilherst Developers Inc.;
former Chairman of the Board
and Chief Executive Officer,
Jacobson Stores Inc.

Richard Z. Rosenfeld (1,2,3) Of Counsel, Rosenfeld, 66 1957 III 1998
Grover & Frang, P.C., Attorneys,
Jackson, Michigan; Secretary,
Jacobson Stores Inc.

Robert L. Rosenfeld, Ph.D. Program Manager, Defense 60 1967 II 2000
Advanced Research Projects Agency,
U.S. Department of Defense,
Arlington, Virginia

James L. Wolohan (1) Chairman of the Board, President 46 1993 III 1998
and Chief Executive Officer, Wolohan
Lumber Co., Saginaw, Michigan

<FN>

(1) Class III Directors, whose current term expires at the 1998 Annual
Meeting; nominated to serve until 2001.
(2) Members of Executive Committee.
(3) See information on page 6 under the caption "Certain Relationships
and Related Transactions".
</TABLE>

Mr. Amster has been an independent management consultant for the past
five years. He is a director of Mechanical Dynamics, Inc. and a director and
Chairman of the Board of the Industrial Technology Institute. He was also a
director of First of America Bank - Michigan, N.A. until July 1997 when the
Bank was merged into the bank's holding company.

Mr. Gilbert was Vice President and Controller of the Company,
1976-1984, Senior Vice President and Chief Financial Officer, 1984-1988,
Executive Vice President and Chief Financial Officer, 1988-1993,
Treasurer, 1991-1993, and has been Vice Chairman of the Board since 1993.

Mr. Kohlmeyer has been Senior Vice President-Investments of Prudential
Securities, Inc., a broker-dealer, since 1988.

Ms. Lewis has been a member of Dykema Gossett PLLC, a law firm, and
its predecessor since 1973.

Mr. Mills was Chairman and Chief Executive Officer of Dayton
Corporation, 1978-1981; was Chairman and Chief Executive Officer, The J. L.
Hudson Company, 1981-1983; was Chairman and Chief Executive Officer, Dayton
Hudson Department Store Company and Executive Vice President, Dayton Hudson
Corporation, 1983-1985; was Chairman and Chief Executive Officer, Millston
Corporation, a specialty store retailer, 1986-1992; and was a business
consultant from 1992 to 1996. He has served as Chairman of the Board and
Chief Executive Officer of the Company since October 31, 1996, and also as
President of the Company since December 20, 1996.

<PAGE>
Mr. Monahan has been President and a director of Comerica Incorporated
since 1993, and President and a director of Comerica Bank since 1992. He is
also a director of Hertz Corporation.

Mr. Power founded Hometown Communications Network, Inc., a publisher of
newspapers, in 1965, and has been its Chairman of the Board since that date.
He is also a director of Daedalus Enterprises, Inc.

Mark K. Rosenfeld has been a commercial real estate developer with
Wilherst Developers Inc., since July 1997. From November 1996 until July 1997
he served as a business consultant. He was Chief Executive Officer of the
Company, 1992-1996, and Chairman of the Board of the Company, 1993-1996. He
is a director of TCF Financial Corporation and the Ramco-Gershenson
Properties Trust.

Richard Z. Rosenfeld was a member of Rosenfeld, Grover & Frang, P.C.,
a law firm, from 1981 until his retirement in 1995, and he continues to serve
of Counsel to the firm. He has been Secretary of Jacobson Stores Inc. since
1964.

Dr. Robert L. Rosenfeld has been Program Manager, Defense Advanced
Research Projects Agency and its predecessor since 1985.

Mr. Wolohan has been President and Chief Executive Officer of Wolohan
Lumber Co. since 1987, and has also been Chairman of the Board since 1995. He
is also a director of Citizens Banking Corporation.

Robert L. and Mark K. Rosenfeld are brothers. Richard Z. Rosenfeld is
their first cousin.

Certain Relationships and Related Transactions

The Company and its subsidiaries have business relationships and
transactions in the ordinary course of business with the following entities,
of which the directors of the Company named below are officers or directors.
The Company considers that the terms of all transactions referred to are
comparable to those which would have been reached with unaffiliated parties.

The Company and its subsidiaries regularly deposit money with and
borrow money from various banks, including Comerica Bank and First of America
Bank-Michigan, N.A. Michael T. Monahan is President and a director of
Comerica Bank, and President and a director of Comerica Incorporated. Herbert
S. Amster was a director of First of America Bank-Michigan, N.A. until July
1997. During its last fiscal year, the Company and its subsidiaries paid
$1,512,000 of interest to First of America Bank-Michigan, N.A. at rates
ranging from 6.44% to 8.08%. At January 31, 1998, the total unpaid principal
balance of all borrowings of the Company and its subsidiaries from that bank
was $18,804,000. Information on the Company's banking relationships with
Comerica Bank in fiscal 1997 is reported on page 14 under the caption
"Compensation Committee Interlocks and Insider Participation."

The Company regularly advertises in various newspapers and other
periodicals, including newspapers published by Hometown Communications
Network, Inc., of which Philip H. Power is Chairman of the Board. During its
last fiscal year, the Company paid newspapers published by Hometown
Communications Network, Inc. $233,000 for advertising space.

The Company retained Rosenfeld, Grover & Frang, P.C. for legal
services in fiscal 1997. Richard Z. Rosenfeld serves of Counsel to that law
firm. Information on the fees paid by the Company to that law firm is
reported on page 14 under the caption "Compensation Committee Interlocks and
Insider Participation".

Compensation of Directors

The Company compensates its directors at the rate of $9,000 per year
($12,000 for committee chair) plus $750 for each Board meeting attended and
each committee meeting attended; except that no director fees are paid to any
director who is a full-time employee of the Company (Mr. Mills and Mr.
Gilbert). Directors are eligible to defer director fees, with interest
thereon, until after termination of service as a director of the Company. The
interest rate used by the Company's Deferred Compensation Plan, which is
currently equal to the one-year Treasury Bill rate plus 125 basis points, or
6.46%, is determined from time to time by the Compensation Committee of the
Board of Directors.

<PAGE>

Under the Company's Stock Option Plan of 1994, non-statutory stock
options were granted in 1997 to the following directors who are not full-time
employees of the Company, at $9-5/8, which was the fair market value on the
date of grant:

Name Options
-----------------------------------------------
<S> <C>
Herbert S. Amster 500 sh.
Herman S. Kohlmeyer, Jr. 500
Kathleen McCree Lewis 500
Patricia Shontz Longe, Ph.D. 500
Michael T. Monahan 500
Philip H. Power 500
Mark K. Rosenfeld 500
Richard Z. Rosenfeld 500
Robert L. Rosenfeld, Ph.D. 500
James L. Wolohan 500
</TABLE>

The term of each director option is five years. No director options
have been exercised.

Committees and Meetings of the Board of Directors

The Company's Board of Directors held five meetings during the year
ended January 31, 1998.

There are four permanent committees of the Board of Directors:
Executive Committee, Audit Committee, Compensation Committee and Directors
Committee.

The Audit Committee consists of Directors Amster (Chair), Lewis,
Power, Mark K. Rosenfeld and Robert L. Rosenfeld. It met three times during
the year. The Audit Committee reviews the Company's accounting policies and
reporting practices, and the adequacy of the system of internal controls;
reviews and evaluates the scope and results of the audits completed by the
Company's internal auditor; recommends to the Board, subject to shareholder
approval, the selection of independent public accountants; reviews the
quality standards maintained in their audit of the Company's financial
statements; and evaluates their independence and professional competence, as
well as the scope and results of their audit.

The Compensation Committee consists of Directors Kohlmeyer (Chair),
Monahan, Richard Z. Rosenfeld and Wolohan. It met four times during the year.
It provides general oversight for the compensation and benefit policies of
the Company, reviews the development of corporate management and succession,
including considering the Chairman of the Board, President and Chief
Executive Officer's recommendations for officer promotions and compensation,
reviews the salaries, bonuses and total compensation levels of Company
officers, reviews the Company's employee benefit plans and policies,
administers the Company's Deferred Compensation Plan, evaluates the
performance and makes recommendations to the Board of Directors as to the
compensation of all of the Company's executive officers, and serves as the
employee option committee under the Company's Stock Option Plan of 1994.

<PAGE>

The Directors Committee consists of Directors Monahan (Chair),
Kohlmeyer, Longe, Mills and Richard Z. Rosenfeld. It met twice during the
year. It considers nominees for directorship in the Company. The Company's
Restated Articles of Incorporation contain procedures to be followed by any
shareholder who intends to nominate a candidate for the Board of Directors. A
written notice should be delivered to the Secretary of the Company not less
than 120 days before the anniversary date of the Company's proxy statement
for the previous year's annual meeting of shareholders. The notice should set
forth the name, age, business address and residence address of each nominee
proposed; the principal occupation or employment of each nominee; the number
of shares of stock of the Company which are beneficially owned by each
nominee; a statement that the nominee is willing to be nominated; and such
other information concerning each nominee as is required under the rules of
the Securities and Exchange Commission in a proxy statement soliciting
proxies for the election of such nominees. Any nomination not made in
accordance with this procedure will be void.

During the year, every director attended at least 75% of the meetings
of the Board and any committees on which the director served.

<PAGE>

EXECUTIVE COMPENSATION

The following table and footnotes summarize the compensation for the
last three fiscal years of (i) the Company's Chief Executive Officer during
fiscal 1997, (ii) the Company's four most highly compensated executive
officers other than the Chief Executive Officer who were serving as executive
officers of the Company at the end of fiscal 1997, and (iii) two additional
individuals who were among the Company's four most highly compensated
executive officers other than the Chief Executive Officer, but was not
serving as executive officers of the Company at the end of fiscal 1997:

Summary Compensation Table
<TABLE>
<CAPTION>

Long-Term
Compensation
-------------
Awards
-------------
Annual Securities
Compensation(1) Underlying
--------------- Options/ All Other
Salary Bonus SARs Compensation(2)
Name and Principal Position Year ($) ($) (#) ($)
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
P. Gerald Mills (3) 1997 221,000 0 0 2,210
Chairman of the Board, 1996 52,700 0 300,000 0
President and Chief Executive
Officer

Paul W. Gilbert 1997 280,289 0 25,000 1,447
Vice Chairman of the Board 1996 246,866 0 40,000 1,444
1995 220,000 0 24,000 1,449

James A. Rodefeld (4) 1997 132,596 0 15,000 625
Executive Vice President 1996 7,212 0 10,000 0
Marketing & Stores

Theodore R. Kolman 1997 142,692 70,000 7,500 1,755
Senior Vice President- 1996 137,443 5,923 0 832
General Merchandise Manager 1995 128,000 366 9,000 719

Herman J. Heinle (5) 1997 101,904 0 2,500 940
Senior Vice President
General Merchandise Manager

Robert L. Moles (6) 1997 89,308 67,500 7,500 79,232
Former Senior Vice President- 1996 132,443 0 0 800
Stores 1995 130,000 0 11,000 786

Joseph H. Fisher 1997 45,769 0 0 100,732
Senior Vice President- 1996 129,770 2,801 0 778
General Merchandise Manager 1995 112,000 2,813 8,500 620
<FN>

(1) The only types of other annual compensation for each of the named
executive officers were in the form of perquisites in amounts less than
the level required for reporting.

(2) The amounts shown as other compensation include for 1997: (a) Company
contributions to the Jacobson's Retirement Savings & Profit Sharing Plan
(401(k) plan) (Mr. Gilbert $900; Mr. Kolman $900; Mr. Heinle $609; Mr.
Moles $900; and Mr. Fisher $372); (b) amounts paid by the Company for
term life insurance (Mr. Mills $2,210; Mr. Gilbert $547; Mr. Rodefeld
$625; Mr. Kolman $855; Mr. Heinle $331; Mr. Moles $447 and Mr. Fisher
$745) and (c) amounts payable in connection with the termination of such
executive officer's employment (Mr. Moles $77,885 and Mr. Fisher
$99,615).

(3) Mr. Mills became Chairman of the Board and Chief Executive Officer
of the Company effective October 31, 1996 and became President effective
December 20, 1996.

(4) Mr. Rodefeld became an executive officer of the Company effective
January 6, 1997.

<PAGE>

(5) Mr. Heinle became an executive officer of the Company effective
May 27, 1997.

(6) Mr. Moles resigned as Senior Vice President - Stores of the Company,
effective September 16, 1997.

(7) Mr. Fisher resigned as Senior Vice President - General Merchandise
Manager of the Company, effective May 25, 1997.
</TABLE>

OPTIONS

The table below reports options granted during the last fiscal year to
each of the executive officers of the Company listed in the Summary
Compensation Table on page 9. The Company has not granted any stock
appreciation rights (SARs).

<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year

Individual Grants Potential
- ----------------------------------------------------------------------------------------- Realizable Value at
Number of % of Total Assumed Annual
Securities Options/SARs Rates of Stock Price
Underlying Granted to Appreciation
Options/SARs Employees Exercise for Option Term
Granted in Fiscal or Base Price Expiration --------------------------
Name (#) Year ($/sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P. Gerald Mills -- -- -- -- -- --
Paul W. Gilbert 25,000 16.4% $ 9.625 May 21, 2007 $ 151,328 $ 383,494
James A. Rodefeld 15,000 9.9 9.625 May 21, 2007 90,797 230,097
Theodore R. Kolman 7,500 4.9 9.625 May 21, 2007 45,398 115,048
Herman J. Heinle 2,500 1.6 9.625 May 21, 2007 15,133 38,349
Robert L. Moles 7,500 4.9 9.625 May 21, 2007 45,398 115,048
Joseph H. Fisher -- -- -- -- -- --
</TABLE>
Each option referred to in the foregoing table is a non-statutory option
and has a term of ten years. The options granted vest at the rate of 25% per
year, commencing on the first anniversary of the date of grant. The exercise
price is not less than the market value of the Company's Common Stock on the
date of grant. Mr. Moles' options expired as a result of his resignation,
effective September 16, 1997.

The table below reports options exercised in the last fiscal year by
each of the executive officers of the Company listed in the Summary
Compensation Table on page 9, and the number and fiscal year-end value of
options held by each such executive officer.

<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values

Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Shares Acquired Value Options/SARs at Fiscal Year-end at Fiscal Year-end (1)
on Exercise Realized (1) (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
P. Gerald Mills 0 0 200,000/100,000 975,000/487,500
Paul W. Gilbert 0 0 24,250/67,750 82,406/205,844
James A. Rodefeld 0 0 6,667/18,333 35,000/71,875
Theodore R. Kolman 0 0 5,626/12,375 16,313/43,500
Herman J. Heinle 0 0 1,813/4,187 5,813/14,875
Robert L. Moles (2) 0 0 0/0 0/0
Joseph H. Fisher (3) 0 0 0/0 0/0
<FN>
(1) Market value of underlying securities at exercise or fiscal year-end,
minus the exercise or base price.

(2) Mr. Moles' options expired as a result of his resignation effective
September 16, 1997.

(3) Mr. Fisher's options expired as a result of his resignation effective
May 25, 1997.
</TABLE>

<PAGE>
LONG-TERM INCENTIVE PLANS

The Company does not have a long-term incentive plan.

PENSION PLAN

The following table summarizes annual benefits under the Company's
pension plan:
<TABLE>
<CAPTION>
Years of Service
Average -----------------------------------------------
Remuneration 15 20 25 30
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$125,000 $ 11,250 $ 15,000 $ 18,750 $ 22,500
150,000 13,500 18,000 22,500 27,000
175,000 15,750 21,000 26,250 31,500
200,000 18,000 24,000 30,000 36,000
225,000 20,250 27,000 33,750 40,500
250,000 22,500 30,000 37,500 45,000
300,000 27,000 36,000 45,000 54,000
350,000 31,500 42,000 52,500 63,000
</TABLE>

The Plan recognizes a maximum of 30 years credited service.

Benefits under the plan are based on an employee's cash compensation,
including contributions to the Company's 401(k) plan, but excluding deferred
compensation and compensation which exceeds the applicable limitation under
the Internal Revenue Code. Benefits under the plan prior to an amendment were
computed on the basis of total compensation for the 30 calendar years during
which an employee's compensation was highest, or the entire period of
employment if less than 30 years. Effective January 1, 1998, the pension plan
of the Company was modified to provide benefits to employees as illustrated
in the above table. Benefits of the amended plan are computed on the basis of
the average yearly compensation for the highest five consecutive years during
the ten years preceding the employee's last day of employment. In accordance
with the plan provisions, all present and former employees as of January 1,
1998 will receive the greater of the benefits as determined under the prior
plan and under the terms of the modified plan. Certain of the executive
officers' minimum annual benefits will be determined as 1% of their total
compensation, subject to the limitations described herein, during their years
of service with the Company, plus $100. Benefits are paid as a monthly
annuity, and are not subject to deduction for social security or other offset
amounts.

For each of the executive officers named in the Summary Compensation
Table, all of their salary reported in the Summary Compensation Table,
including the Company's contributions on their behalf to the 401(k) plan, are
eligible for consideration in computing their benefits under the pension
plan, subject to the applicable limitation under the Internal Revenue Code.
That limitation was $150,000 for 1997, 1996 and 1995.

The years of credited service of the executive officers named in the
Summary Compensation Table are:
<TABLE>
<CAPTION>

Years of Service
----------------
<S> <C>
P. Gerald Mills 1 year
Paul W. Gilbert 23 years
James A. Rodefeld 1 year
Theodore R. Kolman 7 years
Herman J. Heinle 12 years
Robert L. Moles 30 years
Joseph H. Fisher 21 years
</TABLE>

<PAGE>
Executive Officers Employment Agreements

The Company's employment agreement with P. Gerald Mills, as amended
effective April 15, 1998, is for a term ending April 15, 2000 at an annual
salary of $300,000. The Agreement authorizes Mr. Mills to defer payment of
any part of the salary and interest thereon until after his retirement or
death pursuant to the Company's Deferred Compensation Plan. None of Mr.
Mills' salary for the year ended January 31, 1998 was deferred. Pursuant to
the agreement, Mr. Mills is entitled (i) to participate in the Company's
management incentive plan, (ii) to four weeks of vacation a year, and (iii)
to participate in such other plans and fringe benefits as are generally
available to other executives and for which he is eligible. Mr. Mills'
agreement provides an option to purchase 300,000 shares of Common Stock,
which was granted to him on October 31, 1996, and which vests in one-third
cumulative annual installments beginning October 31, 1996.

The agreement provides that, in the event of the termination of Mr.
Mills' employment during the term of the agreement, (i) he will be entitled
to any benefits contained in any wage continuation program, insurance or
other employee benefit plans that are generally applicable to all executive
officers of the Company and that are maintained by the Company at that time,
if such termination is a result of Mr. Mills' death or disability, (ii) he
will be entitled to his accrued salary through the date of termination and a
pro rata bonus, if any, for the year of such termination, based on the actual
number of days worked in that year, and (iii) if such termination is by the
Company without good cause, Mr. Mills' option to purchase 300,000 shares of
Common Stock described above will become 100% vested 30 days before such
termination. His agreement also includes change in control severance
provisions as described below.

The Company's employment agreement with Messrs. Gilbert and Rodefeld
are for a term of three years ending April 15, 2001, which term is
automatically extended one year each April 15 beginning April 15, 1999,
unless either party gives the other notice that such extension will not
occur. Effective April 15, 1998, Mr. Gilbert's and Mr. Rodefeld's salaries
under their agreements are $300,000 and $200,000, respectively. The
agreements authorize the executive to defer payment of any part of the salary
and interest thereon until after the executive's retirement or death pursuant
to the Company's Deferred Compensation Plan. None of the executives' salaries
for the year ended January 31, 1998 was deferred. The agreements also provide
that, in the event of the death of the executive during the term of the
agreement, (i) his salary will continue for two years at the rate in effect
immediately before his death, (ii) he will receive a pro-rata bonus for the
year of death, based on the actual number of days worked in that year, and
(iii) the Company will continue to maintain medical and hospitalization
insurance for his spouse and dependents for five years. The Company may
offset against these payments the proceeds of any increased insurance it
provides on Mr. Gilbert's life after January 31, 1996 and on Mr. Rodefeld's
life after April 15, 1998.

If the executive's employment is terminated as a result of his
disability during the term of the agreement (i) his salary will continue for
two years at the rate in effect immediately before his disability and then at
one-half such rate for one more year, (ii) he will receive a pro-rata bonus
for the year of his termination, based on the actual number of days worked in
that year, and (iii) the Company will continue to maintain medical,
hospitalization and life insurance for the executive and his spouse and
dependents for five years. The Company may offset against these payments (i)
any disability benefits paid under any insurance maintained by the Company,
and (ii) if the executive dies while these payments are being made, the
proceeds of any increased insurance the Company provides on Mr. Gilbert's
life after January 31, 1996, and on Mr. Rodefeld's life after April 15, 1998.

If the Company terminates employment without good cause before the
expiration of the term (i) the executive's salary will continue, at the rate
in effect immediately before termination, and the Company will provide
continued medical and hospitalization insurance, for the balance of the term
or one year, whichever is greater, and (ii) he will receive a pro-rata bonus
for the year of his termination, based on the actual number of days worked in
that year. Commencing one year after termination, the Company's continuing
payment obligation, if any, will be reduced by the amount of any salary,
consulting fees, or other compensation or remuneration for services
thereafter received by him with respect to any remaining part of the period
covered by the Company's obligation, and the Company's continuing medical and
hospitalization insurance obligation shall be reduced by the amount of any
other medical and hospitalization insurance provided to the executive with
respect to any remaining part of such period.
<PAGE>
The Company's employment agreements with Messrs. Mills, Gilbert and
Rodefeld also provide for change in control severance benefits described
below if (i) a change in control of the Company occurs within the period
described below, and (ii) (A) the executive's employment is terminated by the
Company without cause or by the executive for good reason during the period
beginning 90 days before the change in control and ending two years after the
change in control, or (B) the executive terminates his employment with the
Company at any time during the 3rd month after the change in control for any
reason or for no reason. The change in control must occur on or before the
earliest of (A) the expiration of the term of the written employment
agreement between the executive and the Company, and (B) the executive's
death or disability.

<PAGE>

For purposes of the agreement, a change in control generally includes
(i) the acquisition by any person or group (excluding specified persons
affiliated with the Company) of 40% or more of the Company's voting
securities, (ii) various business combinations involving the Company if the
Company's shareholders do not own more than 50% of the surviving entity,
(iii) specified sales of substantially all of the Company's assets, and (iv)
the continuing directors of the Company cease to be a majority of the
Company's directors.

The severance benefits provided by the agreement in the event of a
change in control are (i) a lump-sum cash payment equal to (a) the amount of
the executive's salary for a period of two years after termination of
employment, or through the termination date of his employment agreement with
the Company, whichever is greater (the "Time"), (b) a pro-rata bonus for the
year of termination, equal to the prior year's bonus adjusted for the actual
number of days worked in the year of termination, (c) the executive's prior
year's bonus multiplied by the Time (in years and fractions of a partial
year), and (ii) continued medical, dental, life, disability, hospitalization,
optical and prescription drug coverage, automobile allowances and benefits
during the Time and, if applicable, payments under the Company's Split Dollar
Agreement with Mr. Gilbert, during the Time. Pursuant to the agreement, the
executive has also agreed to non-competition, confidentiality, and
non-solicitation provisions.

In the event that any payments made in connection with the change in
control provisions would be subject to an excise tax imposed under Section
4999 of the Internal Revenue Code, the agreement provides that the Company is
obligated to make the executive whole with respect to any excise tax.

The Company's employment agreements with Messrs. Heinle and Kolman are
for a term of one year ending April 15, 1999, at an annual salary of $150,000
each. The agreements provide that if the Company terminates the executive's
employment without cause or if the executive terminates his employment for
good reason within one year after a change in control of the Company (defined
as described above in connection with the agreements with Messrs. Mills,
Gilbert and Rodefeld) his salary will continue for a period of 24 months
after the change in control occurred. If his employment is terminated because
of any other termination by the Company or the executive, or because of his
death, permanent incapacity or retirement, benefits may continue to the
extent provided in any severance program, wage continuation program,
insurance or other employee benefit plans that are generally applicable to
all employees of the Company and that are maintained by the Company at that
time.

The Company had an employment agreement with Mr. Moles. The Company
and Mr. Moles terminated the employment agreement effective September 16,
1997. Pursuant to a release and waiver agreement dated as of October 7, 1997,
the Company agreed to provide Mr. Moles (i) a severance payment of $67,500;
(ii) continued health and dental coverage through March 16, 1998; (iii)
$5,200 in accrued vacation pay; and (iv) an additional severance payment in
the amount of $33,750 due on March 16, 1998 and continued medical coverage
for three additional months in the event that Mr. Moles has not become
employed in a position offering comparable wages to that of the Company prior
to his termination. The additional severance payment in the amount of $33,750
was paid to Mr. Moles in March 1998, consistent with the agreement.

The Company also had an employment agreement with Mr. Fisher. The
Company and Mr. Fisher terminated the employment agreement effective May 25,
1997. Pursuant to a severance agreement effective as of May 25, 1997, the
Company agreed (i) to continue to compensate Mr. Fisher at an annual rate of
$140,000 a year until April 30, 1998, (ii) to continue his medical and dental
coverage through December 31, 1997, at his normal contribution rates with his
COBRA rights beginning January 1, 1998, and (iii) to pay him one week of
vacation pay.

The Jacobson Stock Option Plan of 1994 provides that all options
granted to employees under that plan shall become immediately exercisable in
full immediately before a change in control of the Company. The definition of
change in control under the Plan is substantially the same as the definition
as described above.

<PAGE>

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Company's Board of Directors has
consisted of Directors Kohlmeyer (Chair), Monahan, Richard Z. Rosenfeld and
Wolohan since May 25, 1995.

During fiscal 1997, Richard Z. Rosenfeld served as Secretary of the
Company. No executive officer of the Company serves as a director or as a
member of the Compensation Committee (or other board committee performing
equivalent functions or, in the absence of such committee, the entire board
of directors) of another entity, one of whose executive officers also serves
as a director of the Company.

Mr. Monahan is President and a director of Comerica Bank and President
and a director of Comerica Incorporated. During its last fiscal year, the
Company and its subsidiaries paid $1,797,000 in interest to Comerica Bank at
rates ranging from 6.93% to 8.50%, paid $14,000 in fees to Comerica Bank
pursuant to various loan agreements, and paid $154,000 in rent to a
subsidiary of Comerica Bank for leased computer equipment and software. At
January 31, 1998, the total unpaid principal balance of all borrowings of the
Company and its subsidiaries from Comerica Bank and total rental to be paid
under the equipment lease was $13,149,000.

Comerica Bank is also a depository of funds of the Company and its
subsidiaries and trustee of the Company's Pension Plan, which holds 28,890
shares of the Company's Common Stock. The Company paid approximately $81,000
in fees for such services in fiscal 1997.

Richard Z. Rosenfeld serves of counsel to Rosenfeld, Grover & Frang,
P.C., and the firm provides legal services to the Company. Mr. Rosenfeld is
also Secretary to the Company. During its last fiscal year, the Company paid
Rosenfeld, Grover & Frang, P.C. $20,000 for legal services and $1,000 for
reimbursed expenses.

Compensation Committee Report on Executive Compensation

The Compensation Committee of the Board of Directors (the "Committee")
provides general oversight for the compensation and benefit policies of the
Company, reviews the development of corporate management and succession,
including considering the Chairman of the Board and Chief Executive Officer's
recommendations for officer promotions and compensation, reviews the
salaries, bonuses and total compensation levels of Company officers, reviews
the Company's employee benefit plans and policies, administers the Company's
Deferred Compensation Plan, and evaluates the performance and makes
recommendations to the Board of Directors as to the compensation of all of
the Company's executive officers (including those named in the Summary
Compensation Table on page 9). The Committee also serves as the employee
option committee under the Company's Stock Option Plan of 1994.

The Committee uses a number of resources to assist the Committee in
making informed decisions regarding compensation. In prior years, the
Committee has obtained Company research on industry practices and financial
performance, including those of companies included in the Company's peer
group index, as support to the Committee in fulfilling its responsibilities.
In addition, the Company and the Committee have, in prior years, consulted
with independent compensation consultants.

The Company seeks to provide executive compensation that will support
achievement of the Company's goals while attracting and retaining talented
executives and rewarding superior performance. The Company implements this
policy through salaries, bonuses, stock options, and employment and severance
agreements, and benefit plans which are generally available to all Company
employees.

Base salary. The Company's practice is to set base salary levels for
the Company's executive officers which generally approximate the median
salary levels of executive officers in other companies of comparable size
within the retail industry, taking into consideration the position's
complexity, responsibility, working environment, and need for special
expertise. Increases in base salary are determined by the Committee's
subjective evaluation of the Company's performance and financial condition,
the executive's individual performance and position in the salary range, and
management's recommendations. The salary increases given to selected
executives in 1997 were based primarily on changes in the executives'
responsibilities, management's recommendations and the Committee's judgment
that their salaries, adjusted for inflation, were low relative to executives
at comparable companies.

<PAGE>
Bonuses. The Company has a bonus plan to compensate its executive
officers for achieving the Company's return on sales target set near the
beginning of each fiscal year and for their individual performance during the
year. Bonuses are intended to make a significant portion of each executive
officer's compensation dependent on the Company's performance and to provide
executive officers with incentives to achieve Company goals, increase
shareholder value, and work as a team. Bonuses are also intended to recognize
the executive officer's individual contributions to the Company.

For the fiscal year ended January 31, 1998, the Jacobson Stores Inc.
1997 Management Incentive Plan (the "1997 Plan") covered all the executive
officers of the Company. Pursuant to the 1997 Plan, a bonus pool was
established for each executive officer equal to 15% to 35% of the executive
officer's 1997 base salary if 100% of the corporate and individual
performance targets were reached. The bonus pool was to be reduced pro-rata
for performance less than the target and eliminated entirely if certain
minimum performance thresholds (75% of the targets) were not met, or
increased to a maximum of 22.5% to 52.5% of base salary if 150% of the
targets were achieved. For Messrs. Mills and Gilbert, 75% of their bonuses
under the plan were payable based on the Company's targeted return on sales,
and 25% of their bonuses under the plan were payable at the discretion of the
Board, based on the Committee's recommendations after its subjective
evaluation of the executives' individual contribution to the implementation
of the Company's strategic business plan. For Messrs. Rodefeld, Kolman,
Heinle, Moles, and Fisher, 50% of their bonuses under the plan were payable
based on the Company's targeted return on sales. For Messrs. Kolman, Heinle
and Fisher, 37.5% was based on the gross margin (in dollars) and the
remaining 12.5% was based on the gross margin return on investment of the
merchandise departments supervised by Messrs. Kolman, Heinle and Fisher,
respectively. For Messrs. Rodefeld and Moles, 25% was based on the percentage
comparable stores sales increase and the remaining 25% was based on the
operating profit of stores supervised by the executive officer. Under the
1997 Plan, bonuses would be paid only if the Company achieved or exceeded its
threshold return on sales.

In 1997, no bonuses were paid under the Plan as the threshold return
on sales was not met by the Company.

During 1996, the Committee approved employment agreements with 12
employees of the Company, including three executive officers, that provided
for bonuses equal to 50% of the employees' base salary if (i) the employee's
employment continued through at least July 31, 1997 or the Company terminated
the employee before that date without cause, and (ii) the employee agreed to
relocate if and when requested before July 31, 1997. The Committee
determined, in its judgment, that such agreements were reasonable inducements
to retain the services of these employees during a period of reorganization
and management changes. During 1997 Messrs. Kolman and Moles received bonuses
under this agreement in the amounts of $70,000 and $67,500 respectively. No
other executive officers received a bonus under this agreement.

Stock Options. The Company's practice is to award stock options to the
Company's executive officers in amounts reflecting the Committee's subjective
evaluation of the executive officer's position and ability to influence the
Company's overall performance, previously issued option grants, the amount
necessary to attract new executives, and management's recommendations,
without any specific weight being given to any of these factors. Options are
intended to provide executives with an increased incentive to make
contributions to the long-term performance and growth of the Company, to join
the interests of the executive officers with the interests of the
shareholders of the Company, and to attract and retain qualified employees.
The Company made its 1997 annual key employee option grants in May 1997.

Stock options granted in fiscal 1997 are non-statutory options, have a
term of ten years, and vest at the rate of 25% per year commencing on the
first anniversary of the date of grant to provide a long-term incentive. The
exercise price is not less than the fair market value of the underlying
shares at the date of grant. Such options only provide compensation if the
Company's stock price increases.

Employment Agreements. The Company's practice is to have written
employment agreements with all officers to provide them with specified
periods of employment, salaries and severance benefits, including change in
control severance provisions. The employment agreements with each of the
Company's executive officers named in the Summary Compensation Table are
summarized on pages 12-13 of this proxy statement.

Section 162(m) of the Internal Revenue Code provides that publicly
held corporations may not deduct compensation paid to certain executive
officers in excess of $1 million annually, with certain exemptions. The
Compensation Committee considers this regulation in recommending compensation
for the Company's executives but reserves the right to recommend the payment
of compensation to the Company's executives in amounts it deems appropriate
regardless of whether such compensation is deductible for federal income tax
purposes.

<PAGE>

Bases for Compensation of P. Gerald Mills. Factors used by the
Committee in evaluating Mr. Mills's performance as Chairman of the Board,
President and Chief Executive Officer included the Company's 1997 financial
performance compared to the previous year, strategic planning, organizational
development and reorganization, investor and vendor relations, formulation of
major corporate policies, including corporate governance policies, keeping
the Board fully informed on the condition of the Company, and working with
the directors to effectively use their talents to the best strategic
advantage to the Company. The Committee recommended that the Company enter
into its employment agreement with Mr. Mills, including its terms relating to
salary, participation in future bonus plans (beginning with the 1997 Plan)
and stock options (as described under "Executive Officers Employment
Agreements" above), based on its judgment of what was appropriate in Mr.
Mills' agreement, the terms that were necessary to attract Mr. Mills to the
Company and the terms agreed upon before Mr. Mills' employment with the
Company began. No bonus was approved for Mr. Mills' for fiscal 1997 because
the Company did not meet its threshold return on sales target under the 1997
Plan. Mr. Mills was granted options upon his employment with the Company as
described in the "Summary Compensation Table" on page 9. No additional
options were granted to Mr. Mills during 1997.

COMPENSATION COMMITTEE

Herman S. Kohlmeyer, Jr., Chair
Michael T. Monahan
Richard Z. Rosenfeld
James L. Wolohan

Performance Graph

The following graph compares the Company's cumulative shareholder
return on its Common Stock for the last five fiscal years with the cumulative
total return of retailers in two peer group indexes, and with the cumulative
total return of companies included in the Total Return Index for The Nasdaq
Stock Market (U.S. Companies), a broad equity market index.

Comparison of Five Year Cumulative Total Return*
Among Jacobson Stores Inc., The Nasdaq Stock Market (U.S. Companies),
and Two Peer Group Indexes

[ PERFORMANCE GRAPH ]

(A paper copy of the Performance Graph as contained in the Company's
definitive proxy statement has been submitted to the Securities and Exchange
Commission under separate cover.)

The dollar values for total shareholder return plotted in the graph above
are shown in the table below.

<TABLE>
<CAPTION>
1-30-93 1-29-94 1-28-95 1-27-96 1-25-97 1-31-98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Jacobson's 100 98 84 74 66 114
Nasdaq Market 100 114 110 152 201 240
Peer Group 100 95 90 101 125 184
<FN>
*Assumes $100 invested on January 30, 1993 in Jacobson Common Stock, the
Nasdaq Stock Market (U.S. Companies), and each of two indexes comprised of
Peer Group companies. Total Return assumes reinvestment of dividends.
</TABLE>

<PAGE>
The first peer group included in the graph is comprised of eight
retail companies offering mainly apparel and accessories, four of which are
members of the same buying office as the Company. The members of the peer
group are as follows: Crowley, Milner & Co.; Dayton Hudson Corporation;
Dillard Department Stores, Inc.; Gantos, Inc.; Gottschalks Inc.; The May
Department Stores Company; Nordstrom, Inc.; and Proffitt's, Inc. The
shareholder returns for each of these companies have been weighted according
to each company's stock market capitalization at the beginning of each
period. The second peer group, used in last year's proxy statement, is
comprised of the same eight retail companies, plus Strawbridge & Clothier and
Lamonts Apparel, Inc. Shareholder return information for these two companies
is not available for the fiscal year 1997 as Strawbridge & Clothier was
acquired in 1997 by The May Department Stores Company (included in the
current year peer group index) and Lamonts Apparel, Inc.'s stock was not
publicly-traded as of the end of fiscal 1997. The plot points for two Peer
Group Indexes as shown on the graph above are the same for the four fiscal
years ended January 25, 1997.

AMENDMENT OF JACOBSON STOCK OPTION PLAN OF 1994
General

At the meeting, shareholders will be asked to consider and act upon a
proposal to amend the Jacobson Stores Inc. Stock Option Plan of 1994 (the
"Option Plan") to increase the aggregate number of shares of Common Stock
that may be issued upon exercise of options granted under the plan from
900,000 to 1,400,000 (the "Amendment"). Pursuant to the Option Plan, 900,000
shares of Common Stock, par value $1 per share ("Common Shares"), are
currently reserved for issuance on exercise of options granted pursuant to
the Option Plan to full-time key employees of the Company and its
subsidiaries and to directors of the Company (the "Participants").

Options granted under the Option Plan to employees may be "Incentive
Stock Options" (within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")), or "Nonstatutory Options" (options
that do not qualify as Incentive Stock Options). Directors may only receive
Nonstatutory Options under the Option Plan. The Option Plan contains various
provisions to ensure that Incentive Stock Options comply with Section 422.

The Company's Stock Option Plan of 1983 terminated in 1993, except as
to options granted before that date. As of March 1, 1998, options to purchase
5,000 Common Shares remained outstanding under the Stock Option Plan of 1983.
Also, as of March 1, 1998, options to purchase 615,750 Common Shares were
outstanding under the Option Plan, no options granted under the Option Plan
had been exercised, and 248,250 Common Shares remained available for the
grant of options under the Option Plan. Therefore, the Board of Directors
approved the Amendment on March 26, 1998, to increase the number of Common
Shares available under the Option Plan, subject to shareholder approval.

The Board of Directors believes that it is in the best interests of
the Company and its shareholders to approve the Amendment to allow the
Company to continue to grant options to key employees and directors in
accordance with the terms of the Option Plan. The Option Plan is part of the
Company's overall compensation strategy and is intended enhance the ability
of the Company to retain and attract superior directors, officers and other
key personnel and to provide them an incentive to achieve long-term corporate
objectives through ownership of stock in the Company. The Option Plan,
however, could have an "anti-takeover" effect, especially the provisions
accelerating the vesting of outstanding options upon any change in control of
the Company.

Persons deemed to be affiliates of the Company, (i.e., persons who
directly, or indirectly through one or more intermediaries, control, are
controlled by, or are under common control with, the Company) may only resell
securities acquired under the Option Plan pursuant to a registration
statement under the Securities Act of 1933, as amended, and the rules and
regulations, thereunder (the "Securities Act"), Rule 144 under the Securities
Act or an applicable exemption under the Securities Act.

The Company is the issuer of the securities offered pursuant to the
Option Plan. The Common Shares of the Company issuable upon exercise of stock
options under the Option Plan may be either authorized and unissued or
reacquired Common Shares of the Company. The Option Plan is not subject to
any provisions of the Employee Retirement Income Security Act of 1974 and is
not qualified under Section 401(a) of the Code.

Approval of the Option Plan

The approval by a majority of the votes cast at the meeting and
entitled to vote on the action is necessary for shareholder approval of the
Amendment. Abstentions, withheld votes and broker non-votes will not be
deemed votes cast in determining approval of this proposal, but will be
counted in determining the number of Common Shares present or represented by
proxy in determining whether a quorum is present. The Board does not intend
to place the Amendment into effect unless such approval

<PAGE>

is obtained, and such approval is sought pursuant to the terms of the Option
Plan and in order to exempt the granting of options under the Option Plan
from the provisions of Section 162(m) of the Code and in order to comply with
the shareholder approval requirements for securities traded on The Nasdaq
National Market.

A copy of the Amendment is attached as Exhibit A to this Proxy
Statement. The major features of the Option Plan, as proposed to be amended,
are summarized below. As of March 26, 1998, the closing sales price of the
Company's Common Shares was $14.

Administration

All aspects of the Option Plan relating to options granted to eligible
employees ("Employee Options") are administered by a committee of the Board
of Directors of the Company designated by the Board of Directors (the
"Employee Options Committee"). The Employee Options Committee must consist of
not less than two directors, who are appointed by the Board. A person is not
eligible to serve on the Employee Options Committee if during the prior year
he or she was granted or awarded equity securities pursuant to any other plan
of the Company or any of its affiliates, except for Director Options pursuant
to the Option Plan or the Jacobson Stock Option Plan of 1983. Members of the
Employee Options Committee are subject to any additional restrictions
necessary to satisfy the requirements for disinterested administration of the
Option Plan pursuant to Rule 16b-3 under the Securities Exchange Act of 1934
(the "Exchange Act"). The Board of Directors may remove members from or add
members to the Employee Options Committee and fill vacancies on the Employee
Options Committee. The Compensation Committee currently serves as the
Employee Options Committee and the current members of that committee are
Herman S. Kohlmeyer, Jr., Michael T. Monahan, Richard Z. Rosenfeld and James
L. Wolohan.

With respect to options granted under the Option Plan to eligible
directors ("Director Options"), if any aspects of the Option Plan require
administration or interpretation, it is performed by a special committee of
the Board of Directors (the "Director Options Committee"), which consists of
all members of the Board of Directors who do not have and are not eligible to
receive Director Options.

Subject to the provisions of the Option Plan, the Employee Options
Committee has full power and authority to make all determinations necessary
or advisable with respect to the grant of Employee Options, including the
persons to whom Employee Options shall be granted, the number of shares
subject to each Employee Option, the option price, the timing of the grants,
whether the Employee Option will be an Incentive Option or a Nonstatutory
Option, the vesting period, if any, the term of the option and the other
terms and conditions of Employee Options. In making its determinations the
Employee Options Committee must consider senior management's recommendations
and may consider any other information it deems material. The Employee
Options Committee's determinations are not required to be uniform.

The Employee Options Committee has full power and authority to
interpret the Option Plan and Employee Options. All decisions by the Employee
Options Committee and all decisions by the Director Options Committee are
final and conclusive. The Employee Options Committee and the Director Options
Committee (collectively, the "Committee") may adopt such procedures, rules
and regulations as it considers appropriate, may hold meetings at such times
and places as it determines and may act on the affirmative vote of a majority
of its members or by written approval of all of its members.

No member of the Committee is liable to any person pursuant to the
Option Plan for any action or determination in good faith with respect to the
Option Plan or any Employee Options or Director Options (collectively,
"Options"). Each member of the Employee Options Committee is entitled to
indemnification by the Company with respect to all actions as a member of the
Employee Options Committee to the fullest extent permissible under the
Company's bylaws and the laws of Michigan.

Option Plan Participants

The persons eligible to receive Employee Options are the full-time
salaried officers and other full-time key employees of the Company or its
subsidiaries as determined by the Employee Options Committee. Subject to the
limitations of the Option Plan, Employee Options may be granted on more than
one occasion to the same employee. No member of the Employee Options
Committee is eligible to receive an Employee Option. Each current director of
the Company, and each person who becomes a director of the Company in the
future, except any full-time employee of the Company (each an "Eligible
Director") is eligible to receive Director Options. Approximately 53 key
employees and 10 directors are currently eligible to participate in the
Option Plan, all of whom have been granted options under the Option Plan.

<PAGE>

Subject to adjustments as described under "Shares Subject to Grant",
no person may be granted Options to purchase more than 600,000 Common Shares
in the aggregate in any fiscal year. In addition, grants are subject to the
maximum number of shares remaining with respect to which stock options may be
granted at any time under the Option Plan. There are also certain limitations
on the maximum value of Incentive Options which may become first exercisable
by any person in any year. Each grant under the Option Plan must be evidenced
by a written agreement containing the terms described in the Option Plan and,
with respect to Employee Options, such other terms and conditions not
inconsistent with the Option Plan as the Committee determines.

Shares Subject To Grant

The aggregate number of Common Shares which may be issued on exercise
of Options currently may not exceed 900,000 shares. The Amendment increases
that number to 1,400,000 shares. Any Common Shares subject to an Option that
expires or terminates unexercised in whole or in part may be the subject of a
new Option or Options.

In the event of a stock dividend or distribution, split-up or
combination, exchange of shares, recapitalization, merger, consolidation,
corporate acquisition or separation, reorganization or comparable corporate
transactions, appropriate adjustments (determined by the Board of Directors,
the Employee Options Committee or the Director Options Committee) will
automatically be made in the number and/or kind of shares of stock authorized
by the Option Plan deliverable on the exercise of Options, the option price,
or any combination of them, to maintain the proportionate interest of the
optionees and preserve the value of the options so that optionees shall have
the right thereafter to receive on the exercise of Options the kind and
amount of Common Shares or other securities or property which they would have
been entitled to receive if they had exercised the Options immediately before
the effective time of the transaction.

In the event of any dissolution or liquidation of the Company or any
change in control, the vesting period of all unvested and partially vested
Options will automatically be accelerated, and all such Options will be
exercisable in full immediately before the effective time of such
transaction. The Company must give to each holder of Employee Options written
notice of such transaction or proposed transaction at least thirty days
before the effective time of the transaction, or, if thirty days' notice is
not feasible, then such notice as is feasible under the circumstances so that
the holders of such Options will have the opportunity to exercise them before
the effective time of the transaction. For purposes of the Option Plan, a
change in control generally includes (i) the acquisition by any person or
group (excluding specified persons affiliated with the Company) of 40% or
more of the Company's voting securities, (ii) various business combinations
involving the Company if the Company's shareholders immediately prior to the
transaction do not own more than 50% of the surviving entity, (iii) specified
sales of substantially all of the Company's assets, and (iv) the continuing
directors of the Company ceasing to be a majority of the Company's directors.

Amendment or Termination of the Option Plan

The Board of Directors may at any time amend, suspend or discontinue
the Option Plan, or amend any Options at any time; except that, without
approval of the shareholders before or within twelve months after such
amendment, no amendment shall (i) materially increase the maximum number of
shares that may be issued on exercise of Options pursuant to the Option Plan,
except as described under "Shares Subject to Grant", (ii) materially modify
the class of employees eligible to receive Employee Options, (iii) reduce the
option price, except as described under "Shares Subject to Grant", (iv)
materially increase the benefits to any director or officer of the Company or
any subsidiary who is subject to the restrictions of Section 16(b) of the
Securities Exchange Act of 1934, (v) amend any of the provisions of the
Option Plan concerning Director Options or amend any of the Director Options,
or (vi) extend the term of the Option Plan. In addition, the Option Plan may
not be amended in any manner to cause Incentive Stock Options to fail to meet
the applicable requirements under Section 422 of the Code. Also, no amendment
or termination may adversely affect rights of any optionee under any Options
previously granted, without the consent of the optionee.

The provisions of the Option Plan relating to the eligibility of
directors and/or officers of the Company to receive Options, and the amount,
price and timing of grants of Options to directors and/or officers of the
Company, may not be amended more than once every six months, other than to
comport with changes in the Code or the Employee Retirement Income Security
Act.

Unless the Option Plan is sooner terminated by the Board of Directors,
Options may be granted under the Option Plan at any time on or before May 25,
2004, but not thereafter.

<PAGE>

Stock Options

Grant of Stock Options

Both Incentive Options and Nonstatutory Options may be granted under
the Option Plan. Each Employee Option granted under the Option Plan must
identify the Options as Incentive Options or Nonstatutory Options, and must
state the number of Common Shares subject to the Option, the period, if any,
before the Option may be exercised, and the term within which the Option may
be exercised, which may not be more than 10 years from the date of grant.
Each Employee Option must also state the option price. Such price may not be
less than the fair market value of the Common Shares at the time the Option
is granted. In addition, any Incentive Option granted to an individual who,
at the time the Option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company must have
an option price that is at least 110% of the fair market value of the Common
Shares, and the Option may not be exercisable after five years from the date
of grant.

Each Incentive Option must also provide that no disposition of any
Common Shares issuable upon exercise of the Option may be made by the
optionee within two years from the date of the grant of the Option nor within
one year after the transfer of such shares to the optionee on exercise of the
Option. Each optionee must agree to inform the Company in writing before
making any sale, transfer, assignment, or other disposition of any of the
shares before the expiration of such holding periods.

Each person who becomes an Eligible Director while the Option Plan is
in effect receives, on the date such person becomes an Eligible Director, a
Director Option to purchase 1,000 Common Shares. In addition, immediately
after each Annual Meeting of Shareholders as long as the Option Plan is in
effect, each Eligible Director receives a Director Option to purchase 500
Common Shares; provided, that no person may receive the 500 Common Share
Director Option on the same day he or she receives a 1,000 Common Share
Director Option. Each Director Option must be clearly identified as a
Director Option and must state the number of Common Shares subject to the
Option. Each Director Option is exercisable at any time within five years
after the date of grant at an exercise price equal to the fair market value
of the Common Shares on the date of grant.

At the time of the exercise of any Option granted pursuant to the
Option Plan, the exercise notice must be accompanied by payment of the full
purchase price for the shares purchased. Options may be exercised in whole or
in part, but not for less than 50 shares and not for any fractional shares
upon any partial exercise, except on purchase of all remaining shares covered
by the Option.

The aggregate fair market value (determined as of the date the option
is granted) of the underlying stock with respect to which Incentive Options
are exercisable for the first time by such individual during any calendar
year (under all of such plans of the Company and its subsidiaries) cannot
exceed $100,000.

Continuation of Employment

If the employment of the holder of an Employee Option with the Company
or a subsidiary terminates, or if the holder of a Director Option ceases to
be a director of the Company, all unexercised Options held by such optionee
automatically expire at the same time as such termination, except (i) if the
holder of the Option retires on or after his or her 65th birthday, with
respect to Incentive Options and Nonstatutory Options, or pursuant to the
Company's retirement policy for directors, with respect to Director Options,
he or she may exercise any unexpired Option within three months, with respect
to Incentive Options, or one year, with respect to Nonstatutory Options and
Director Options, after the date of retirement, or until the expiration date
stated in the Option, whichever occurs first, (ii) if the holder of the
Option is permanently and totally disabled while employed by the Company or a
subsidiary (or while serving as a director of the Company with respect to
Director Options), he or she may exercise any unexpired Option within one
year after the date of such permanent and total disability, or until the
expiration date stated in the Option, whichever occurs first, (iii) if the
holder of the Option dies while employed by the Company or a subsidiary (or
while serving as a director of the Company with respect to Director Options),
his or her personal representative, executor or administrator, or person who
acquires the right to exercise the Option by bequest or inheritance or by
reason of the optionee's death, may exercise any unexpired Option within one
year after the date of death or until the expiration date stated in the
Option, whichever occurs first, and (iv) if any director is nominated by the
Board of Directors for re-election, but is not re-elected as a director of
the Company, due to any cause except such director's resignation or
declination to serve, the optionee may exercise any unexpired Director
Options held by such optionee within one year after the date of termination
of service as a director, or until the expiration date stated in the Director
Option, whichever occurs first.

<PAGE>

The Employee Options Committee may, in its discretion, as a condition
to the grant of any Employee Option, require that any employee who is the
recipient of such Option to sign an agreement not to compete with the Company
or any subsidiary during employment or after termination of employment with
the Company or any subsidiary, which agreement may contain such terms and
conditions as the Employee Options Committee determines. No Employee Option
and no agreement pertaining thereto confers on the optionee any right with
respect to continuation of employment, nor affects any right of the Company
or any subsidiary to terminate employment.

Transferability of Options

Each Option must provide that it is not transferable by the optionee
otherwise than by will or the laws of descent and distribution, and during the
lifetime of the optionee is exercisable only by the optionee.

Shareholder Rights

No holder of any Option has any rights as a shareholder of the Company
with respect to any shares covered by the Option until the issuance of the
shares upon exercise of the Option.

Non-exclusive Plan

Nothing in the Option Plan limits the authority of the Company to
grant options otherwise than under the Option Plan, or to assume options of
any other entity in connection with any merger, acquisition, or other
corporate transaction. Participation in the Option Plan does not affect an
employee's eligibility to participate in other employee benefit plans of the
Company.

Federal Income Tax Consequences

The rules governing the tax treatment of options and shares acquired
upon the exercise of options are quite technical. Therefore, the description
of federal income tax consequences set forth below is necessarily general in
nature and does not purport to be complete. Moreover, statutory provisions
are subject to change, as are their interpretations, and their application
may vary in individual circumstances. Finally, the tax consequences under
applicable state and local income tax laws may not be the same as under the
federal income tax laws.

Incentive Options

Incentive Options granted pursuant to the Option Plan are intended to
qualify as "Incentive Stock Options" within the meaning of Section 422 of the
Code. If the optionee makes no disposition of the shares acquired pursuant to
exercise of an Incentive Option within one year after the transfer of shares
to such optionee and within two years from grant of the option, such optionee
will realize no taxable income as a result of the grant or exercise of such
option, and any gain or loss that is subsequently realized upon a sale or
other disposition of the shares may be treated as long-term capital gain or
loss, as the case may be. Under these circumstances, the Company will not be
entitled to a deduction for federal income tax purposes with respect to
either the issuance of such Incentive Options or the transfer of shares upon
their exercise.

If shares acquired upon exercise of Incentive Options are disposed of
prior to the expiration of the above time periods, the optionee will
recognize ordinary income in the year in which the disqualifying disposition
occurs, the amount of which will generally be the lesser of (i) the excess of
the market value of the shares on the date of exercise over the option price,
or (ii) the gain recognized on such disposition. Such amount will ordinarily
be deductible by the Company for federal income tax purposes in the same
year, provided that the amount constitutes reasonable compensation and that
the Company satisfies certain federal income tax withholding requirements. In
addition, the excess, if any, of the amount realized on a disqualifying
disposition over the market value of the shares on the date of exercise will
be treated as capital gain.

Nonstatutory Options

An optionee who acquires shares by exercise of a Nonstatutory Option
generally realizes as taxable ordinary income, at the time of exercise, the
difference between the exercise price and the fair market value of the shares
on the date of exercise. Such amount will ordinarily be deductible by the
Company in the same year, provided that the amount constitutes reasonable
compensation and that the Company satisfies certain federal income tax
withholding requirements. Subsequent appreciation or decline in the value of
the shares will generally be treated as capital gain or loss on the sale or
other disposition of the shares.

<PAGE>
Capital Gains Rates

Legislation enacted in 1997 reduces, in certain circumstances, the tax
rate applicable to long-term capital gain. If an optionee recognizes
long-term capital gain upon the sale or other disposition of shares acquired
upon exercise of the options, the tax rate applicable to such gain will
depend on a number factors, including the date the options are granted, the
date the options are exercised, the date the shares are sold or otherwise
disposed of, the length of time the optionee holds the shares, and the
optionee's marginal tax bracket. Optionee's should consult their own tax
advisors concerning the impact of the 1997 legislation regarding long-term
capital gain tax rates, as well as the other tax consequences of
participation in the Option Plan.

Withholding Payments

Whenever the Company issues or transfers Common Shares under the
Option Plan, the Company has the right to require the recipient to remit to
the Company an amount sufficient to satisfy any federal, state or local tax
withholding requirements before the delivery of any certificates for the
shares.

Limitation on Compensation Deduction

Publicly-held corporations are precluded from deducting compensation
paid to certain of their executive officers in excess of $1 million per year.
The employees covered by the $1 million annual limitation on deductibility of
compensation consist of the chief executive officer and those employees whose
annual compensation is required to be reported to the Securities and Exchange
Commission because the employee is one of the company's four highest
compensated employees for the taxable year (other than the chief executive
officer). Ordinary income attributable to stock options generally is included
in an employee's compensation for purposes of the $1 million limitation on
deductibility of compensation.

However, there is an exception to the $1 million deduction limitation
for compensation (including compensation attributable to stock options) paid
pursuant to a qualified performance-based compensation plan. Compensation
attributable to a stock option is deemed to satisfy the qualified
performance-based compensation exception if (i) the grant is made by a
compensation committee comprised of outside directors, (ii) the plan under
which the options may be granted states the maximum number of shares with
respect to which options may be granted during a specified period to any
employee, (iii) under the terms of the option, the amount of compensation the
employee would receive is based solely on an increase in the value of the
shares after the date of the grant (e.g., the option is granted with an
exercise price at least equal to the fair market value as of the date of the
grant), and (iv) the individual eligible to receive grants, the maximum
number of shares for which grants may be made to any employee, the exercise
price of the options and other disclosures required by SEC proxy rules are
disclosed to, and subsequently approved by, shareholders.

If the amount of compensation a covered employee will receive under
the grant is not based solely on an increase in the value of the shares after
the date of the grant (e.g., an option is granted with an exercise price that
is less than the fair market value as of the date of the grant), none of the
compensation attributable to the grant is qualified performance-based
compensation unless the grant is made on account of the attainment of a
performance goal that has been previously established and approved by the
shareholders of the Company and otherwise qualifies under Section 162(m) of
the Code. The Company has not established any performance goals for grants
under the Option Plan that meet the requirements of the performance-based
compensation standard required by Section 162(m) of the Code.

In order to satisfy the shareholder approval requirement applicable to
qualified performance-based compensation plans, there must be a separate
shareholder vote in which a majority of the votes cast on the issue
(including abstentions to the extent abstentions are counted as voting under
applicable state law) are cast in favor of approval. The Option Plan is being
submitted to shareholders at the meeting, in part, to satisfy this
requirement. If the shareholder approval and the other requirements
applicable to qualified performance-based compensation plans are satisfied
(including grant by a committee of outside directors), the $1 million
compensation deduction limitation will not apply to stock options with an
exercise price equal to or greater than the fair market value of the
underlying shares on the date of grant. However, the grant of options by the
Board of Directors or by a committee not meeting the requirements of Section
162(m) and the grant of options with an exercise price less than the fair
market value of the underlying shares on the date of grant under the Option
Plan will not qualify for the performance-based compensation exception to the
$1 million compensation deduction limitation.

<PAGE>

Accounting Treatment

Generally, under current accounting rules applicable to the Company,
neither the grant nor the exercise of an Incentive Option or a Nonstatutory
Option under the Option Plan requires any charge against earnings, if the
exercise price of the option is at least equal to the fair market value of
the shares on the date of grant. Footnote disclosure of the value of such
options, however, is required. If the exercise price is below the fair market
value of the shares on the date of grant, an earnings charge equal to the
difference will be required either at the date of grant or possibly over the
term of the option.

Option Grants Under the Option Plan

The Employee Options that will be granted under the Plan in the future
as a result of the Amendment are not currently determinable. Director Options
will be granted as described under "Stock Options - Grant of Stock Options"
above regardless of whether the Amendment is approved because sufficient
Common Shares remain available for grant under the Option Plan to make those
grants. The following table sets forth, as to P. Gerald Mills, Paul W.
Gilbert, James A. Rodefeld, Theodore R. Kolman, Herman J. Heinle, Robert L.
Moles, Joseph H. Fisher, all current executive officers as a group, all
current directors who are not executive officers as a group, and all
employees, including all current officers who are not executive officers, as
a group, the options granted under the Option Plan during the fiscal year
ended January 31, 1998 and from February 1, 1998 through March 26, 1998.

NEW PLAN BENEFITS
Jacobson Stock Option Plan of 1994

Number of Common Number of Common
Shares Subject to Options Shares Subject to Options
Granted Under the Plans Granted Under the Plans
In the Fiscal Year Ended From February 1, 1998
Name and Position January 31, 1998(1) To March 26, 1998(1)
----------------- ------------------------- -------------------------
<S> <C> <C>
P. Gerald Mills, Chairman of the Board, President
and Chief Executive Officer ..................................... 0 0

Paul W. Gilbert, Vice Chairman of the Board .......................... 25,000 25,000

James A. Rodefeld, Executive Vice President -
Marketing & Stores .............................................. 15,000 20,000

Theodore R. Kolman, Senior Vice President -
General Merchandise Manager ..................................... 7,500 7,500

Herman J. Heinle, Senior Vice President -
General Merchandise Manager ..................................... 2,500 7,500

Robert L. Moles, Former Senior Vice President - Stores ............... 7,500 0

Joseph H. Fisher, former Senior Vice President -
General Merchandise Manager ..................................... 0 0

All current executive officers as a group
(7 persons)(2) .................................................. 57,000 70,000

All current directors who are not executive
officers as a group (10 persons) ................................ 5,000 0

All employees including all current officers who
are not executive officers, as a group .......................... 87,500 83,500

<FN>
- ---------

(1) The dollar values of such options cannot be determined because they
depend on the market value of the underlying shares on the date of
exercise. No associate of any director, nominee or executive officer
has been granted Options under the Option Plan. In addition, no person
not named above has received five percent or more of the options
authorized under the Option Plan, in the aggregate.

(2) Excludes Robert L. Moles and Joseph H. Fisher.

</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.

<PAGE>

APPOINTMENT OF AUDITORS

Arthur Andersen LLP, independent public accountants, have been
auditors for Jacobson Stores Inc. and its subsidiaries since 1960. One or
more representatives of that firm are expected to be present at the 1998
Annual Meeting, with the opportunity to make a statement if they want to do
so, and will be available to respond to appropriate questions.

The Board of Directors has nominated Arthur Andersen LLP as the
auditors of Jacobson Stores Inc. and its subsidiary corporations for the
fiscal year ending January 30, 1999. The following resolution will be offered
at the meeting:

"RESOLVED, that Arthur Andersen LLP, independent public accountants, be
appointed auditors of Jacobson Stores Inc. and its subsidiary
corporations for the fiscal year ending January 30, 1999."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RESOLUTION.

Approval of this proposal is given by a majority of the votes cast.
Broker non-votes and abstentions will not be deemed votes cast, but will be
counted for purposes of determining whether a quorum is present.

OTHER MATTERS

Management does not know of any other matter to be brought before the
meeting. If any other matters properly come before the meeting, the persons
named in the enclosed proxy will vote according to their judgment.

Votes in all matters will be counted by Norwest Shareowner Services
whose address is P.O. Box 64859, St. Paul, MN 55164-0859.

Cost of Solicitation

The cost of soliciting proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited personally or by
telephone by a few employees of the Company; and brokers, banks and others
known by the Company to hold Common Stock for other beneficial owners will be
requested to forward proxies and proxy soliciting material to the beneficial
owners and will be reimbursed for their expenses.

Proposals for 1999 Annual Meeting

Any shareholder's proposal intended to be presented at the 1999 Annual
Meeting must be in writing, must comply with the requirements set forth in
the Company's Restated Articles of Incorporation (summarized on page 8,
above) and with the requirements of the Securities and Exchange Commission,
should be addressed to Secretary, Jacobson Stores Inc., 3333 Sargent Road,
Jackson, Michigan 49201-8847, and must be received by the Company at that
address no later than December 11, 1998, in order to be considered for
inclusion in the Company's proxy material for that meeting.

By order of the Board of Directors,

RICHARD Z. ROSENFELD, Secretary

Jackson, Michigan, April 10, 1998.

<PAGE>
EXHIBIT A

THRID 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 in its entirety
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 1,400,000 shares, except in the event of any
adjustment pursuant to Article V, Section 3. Any shares of Common
Stock subject to an Option that expires or terminates unexercised
in whole or in part may be the subject 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."

<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK

<PAGE>
Jacobson Stores Inc.

NOTICE

ANNUAL MEETING

AND

PROXY STATEMENT

<PAGE>

JACOBSON STOCK OPTION PLAN OF 1994

This Stock Option Plan of Jacobson Stores Inc., a Michigan
corporation (the "Company"), is adopted by the Board of Directors and
approved by the shareholders of the Company on May 26, 1994.

ARTICLE I.
PURPOSE

This Plan is intended to enhance the ability of the Company to
retain and attract superior directors, officers and other key personnel and
to provide them an incentive to achieve long-term corporate objectives
through ownership of stock in the Company.

ARTICLE II.
STOCK AND OPTIONS SUBJECT TO PLAN

Section 1. Common Stock. The stock issuable on exercise of Options
pursuant to this Plan shall be shares of the Company's Common Stock, par
value $1 per share ("Common Stock"). Such shares may be either authorized and
unissued shares, or shares held in the treasury of the Company.

Section 2. Options. Options granted pursuant to this Plan to
eligible employees described in Article III, Section 1 ("Employee Options")
may be either incentive stock options ("Incentive Stock Options"), within the
meaning of Section 422 or any amending or superseding section of the Internal
Revenue Code of 1986, as amended (the "Code"), or stock purchase options that
do not qualify as Incentive Stock Options ("Nonstatutory Options"; when
granted to employees, Nonstatutory Options are referred to as "Nonstatutory
Employee Options"). Options granted pursuant to this Plan to Eligible
Directors described in Article IV, Section 1 ("Director Options") shall be
Nonstatutory Options. Incentive Stock Options and Nonstatutory Options are
referred to separately and collectively as "Options".

Section 3. Aggregate Limit. The aggregate number of shares of Common
Stock which may be issued on exercise of Options shall not exceed 400,000
shares, except in the event of any adjustment pursuant to Article V, Section
3. Any shares of Common Stock subject to an Option that expires or terminates
unexercised in whole or in part may be the subject of a new Option or
Options.

ARTICLE III.
EMPLOYEE OPTIONS

Section 1. Eligibility. The persons eligible to receive Employee
Options shall be such full-time salaried officers and other full-time key
employees of the Company or any of its subsidiary corporations (as defined in
Section 424 or any amending or superseding section of the Code), as
determined by the Employee Option Committee described in Section 4.1 of this
Article

<PAGE>

III. Subject to the limitations in this Plan, Employee Options may be
granted on more than one occasion to the same employee. No member of the
Employee Option Committee, while a member of such committee, shall be
eligible to receive any Employee Options.

Section 2. Terms of Incentive Stock Options. All Incentive Stock
Options shall be evidenced by written agreements ("Incentive Stock Option
Agreements"). The Incentive Stock Options and Incentive Stock Option
Agreements shall contain in substance the terms in Sections 2.1 through 2.8,
and may contain such other terms and conditions not inconsistent with this
Plan as the Employee Option Committee determines.

Section 2.1. Identification. Each Incentive Stock Option
Agreement shall clearly identify the Options covered thereby as
Incentive Stock Options.

Section 2.2. Number of Shares. Each Incentive Stock Option
Agreement shall state the number of shares of Common Stock to which
it pertains.

Section 2.3. Vesting and Term. Each Incentive Stock Option
Agreement shall state the period, if any, before the Option may be
exercised, and the term within which the Option may be exercised;
provided, that no Incentive Stock Option may be exercised after the
expiration of ten years from the date the Option is granted.

Section 2.4. Option Price. Each Incentive Stock Option
Agreement shall state the option price, which shall be not less than
the fair market value of the Common Stock at the time the Option is
granted.

Section 2.5. Exercise of Options and Payment for Shares.
Each Incentive Stock Option may be exercised only within the term
stated in the Incentive Stock Option Agreement. It shall be
exercisable by written notice identifying the Option and stating the
number of shares purchased, accompanied by payment of the full
purchase price for the shares purchased. Such notice and payment
shall be delivered personally or mailed by certified mail to the
Treasurer of the Company. Any Incentive Stock Option may be
exercised in whole or in part; provided, that not less than 50
shares may be purchased and no fractional shares may be purchased on
any partial exercise, except on purchase of all remaining shares
covered by the Option.

Section 2.6. Non-Transferability. Each Incentive Stock
Option Agreement shall provide that the Option is not transferable
by the optionee otherwise than by will or the laws of descent and
distribution, and during the lifetime of the optionee is exercisable
only by the optionee.

Section 2.7. Termination of Employment. Except as stated in
paragraphs (a), (b) and (c) of this Section 2.7, if the employment
of the holder of an Incentive Stock Option, with the Company or a
subsidiary, terminates or is terminated for any reason whatever,
whether by the Company, with or without cause, or by the optionee,
all unexercised Incentive Stock Options held by such optionee shall
automatically expire at the same time as termination of employment.

<PAGE>

(a) Retirement. If the holder of an Incentive Stock
Option retires on or after the optionee's 65th birthday, the
optionee may exercise any unexpired Incentive Stock Options
held by such optionee within three months after the date of
retirement, or until the expiration date stated in the
Incentive Stock Option Agreement, whichever occurs first.

(b) Disability. If the holder of an Incentive Stock
Option is permanently and totally disabled (within the
meaning of Section 22(e)(3) or any amending or superseding
section of the Code) while employed by the Company or a
subsidiary, the optionee may exercise any unexpired
Incentive Stock Options held by such optionee within one
year after the date of such permanent and total disability,
or until the expiration date stated in the Incentive Stock
Option Agreement, whichever occurs first.

(c) Death. If the holder of an Incentive Stock
Option dies while employed by the Company or a subsidiary,
the optionee's personal representative, executor or
administrator, or person who acquires the right to exercise
the Option by bequest or inheritance or by reason of the
optionee's death, may exercise any unexpired Incentive Stock
Options held by such optionee within one year after the date
of death, or until the expiration date stated in the
Incentive Stock Option Agreement, whichever occurs first.

Section 2.8. Holding Period; Disqualifying Dispositions.
Each Incentive Stock Option Agreement shall provide that no
disposition of any shares of Common Stock issuable on exercise of
the Option shall be made by the optionee within two years from the
date of the grant of the Option nor within one year after the
transfer of such shares to the optionee on exercise of the Option.
Each optionee shall agree to inform the Company in writing before
making any sale, transfer, assignment, or other disposition of any
of the shares before the expiration of said holding period.

Section 2.9. 10% Shareholder. No Incentive Stock Option may
be granted to any individual who, at the time the Option is granted,
owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any subsidiary,
unless at the time the Option is granted the option price is at
least 110% of the fair market value of the Common Stock and the
Option by its terms is not exercisable after the expiration of five
years from the date such Option is granted.

Section 2.10. Calendar Year Limit. The aggregate fair market
value (determined as of the time the Incentive Stock Option is
granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any individual in any
calendar year (under all plans of the Company and any subsidiaries)
shall not exceed $100,000.

Section 3. Terms of Nonstatutory Employee Options. All Nonstatutory
Employee Options shall be evidenced by written agreements ("Nonstatutory
Employee Option Agreements"). The Nonstatutory Employee Options and
Nonstatutory Employee Option Agreements shall contain in substance the terms
in Sections 3.1 through 3.7, and may contain such other terms and conditions
not inconsistent with this Plan as the Employee Option Committee determines.

<PAGE>

Section 3.1. Identification. Each Nonstatutory Employee
Option Agreement shall clearly identify the Options covered thereby
as Nonstatutory Employee Options.

Section 3.2. Number of Shares. Each Nonstatutory Employee
Option Agreement shall state the number of shares of Common Stock to
which it pertains.

Section 3.3. Vesting and Term. Each Nonstatutory Employee
Option Agreement shall state the period, if any, before the Option
may be exercised, and the term within which the Option may be
exercised; provided, that no Nonstatutory Employee Option may be
exercised after the expiration of ten years from the date the Option
is granted.

Section 3.4. Option Price. Each Nonstatutory Employee Option
Agreement shall state the option price, which may be less than the
fair market value of the Common Stock at the time the Option is
granted.

Section 3.5. Exercise of Options and Payment for Shares.
Each Nonstatutory Employee Option may be exercised only within the
term stated in the Nonstatutory Employee Option Agreement. It shall
be exercisable by written notice identifying the Option and stating
the number of shares purchased, accompanied by payment of the full
purchase price for the shares purchased. Such notice and payment
shall be delivered personally or mailed by certified mail to the
Treasurer of the Company. Any Nonstatutory Employee Option may be
exercised in whole or in part; provided, that not less than 50
shares may be purchased and no fractional shares may be purchased on
any partial exercise, except on purchase of all remaining shares
covered by the Option.

Section 3.6. Non-Transferability. Each Nonstatutory Employee
Option Agreement shall provide that the Option is not transferable
by the optionee otherwise than by will or the laws of descent and
distribution, and during the lifetime of the optionee is exercisable
only by the optionee.

Section 3.7. Termination of Employment. Except as stated in
paragraphs (a), (b) and (c) of this Section 3.7, if the employment
of the holder of a Nonstatutory Employee Option, with the Company or
a subsidiary, terminates or is terminated for any reason whatever,
whether by the Company, with or without cause, or by the optionee,
all unexercised Nonstatutory Employee Options held by such optionee
shall automatically expire at the same time as termination of
employment.

(a) Retirement. If the holder of a Nonstatutory
Employee Option retires on or after the optionee's 65th
birthday, the optionee may exercise any unexpired
Nonstatutory Employee Options held by such optionee within
one year after the date of retirement, or until the
expiration date stated in the Nonstatutory Employee Option
Agreement, whichever occurs first.

<PAGE>

(b) Disability. If the holder of a Nonstatutory
Employee Option is permanently and totally disabled (within
the meaning of Section 22(e)(3) or any amending or
superseding section of the Code) while employed by the
Company or a subsidiary, the optionee may exercise any
unexpired Nonstatutory Employee Options held by such
optionee within one year after the date of such permanent
and total disability, or until the expiration date stated in
the Nonstatutory Employee Option Agreement, whichever occurs
first.

(c) Death. If the holder of a Nonstatutory Employee
Option dies while employed by the Company or a subsidiary,
the optionee's personal representative, executor or
administrator, or person who acquires the right to exercise
the Option by bequest or inheritance or by reason of the
optionee's death, may exercise any unexpired Nonstatutory
Employee Options held by such optionee within one year after
the date of death, or until the expiration date stated in
the Nonstatutory Employee Option Agreement, whichever occurs
first.

Section 4. Administration.

Section 4.1. Committee. All aspects of the Plan relating to
Employee Options shall be administered by a committee of the Board
of Directors of the Company (the "Employee Option Committee"),
designated by the Board of Directors. The Employee Option Committee
shall consist of not less than two members of the Board of
Directors, who shall be appointed for such purpose by the Board. No
person shall be eligible to serve on the Employee Option Committee
who, during the one year prior to such service or during such
service, was granted or awarded equity securities, including any
derivative securities, as defined in Rule 16a-1(c) or any amending
or superseding rule under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), pursuant to any other plan of the
Company or any of its affiliates; except that recipients of Director
Options pursuant to the Jacobson Stock Option Plan of 1983, as
amended (the "1983 Plan"), or pursuant to this Plan, or both, shall
be eligible to serve on the Employee Option Committee. Members of
the Employee Option Committee shall be subject to any additional
restrictions necessary to satisfy the requirements for disinterested
administration of the Plan, as set forth in Rule 16b-3 or any
amending or superseding rule under the Exchange Act. The Board of
Directors may remove members from or add members to the Employee
Option Committee, and fill vacancies on the Employee Option
Committee.

Section 4.2. Committee Determinations. Subject to the
provisions of this Plan, the Employee Option Committee shall have
full power and authority to make all determinations necessary or
advisable with respect to the grant of Employee Options, including
without limitation the persons to whom Employee Options shall be
granted, the number of shares subject to each Employee Option, the
option price, the timing of the grants, whether each Employee Option
will be an Incentive Stock Option or Nonstatutory Employee Option,
the vesting period, if any, before an Employee Option may be
exercised, the term within which it may be exercised, and the other
terms and conditions of the Employee Options and the agreements
evidencing same. In making its determinations, the Employee Option
Committee shall consider recommendations of the

<PAGE>

senior management of the Company, and may consider any other
information it deems material. The Employee Option Committee's
determinations need not be uniform, and may be made selectively
among persons who receive or are eligible to receive Employee
Options, whether or not such persons are similarly situated.

Section 4.3. Conditions of Grant. The Employee Option
Committee may, in its discretion, as a condition to the grant of any
Employee Options, require any employee who is the recipient of such
Option to sign an agreement not to compete with the Company or any
subsidiary during employment or after termination of employment with
the Company or any subsidiary, which agreement may contain such
terms and conditions as the Employee Option Committee determines.

Section 4.4. Interpretations. The Employee Option Committee
shall have full power and authority to interpret and construe this
Plan, Employee Options, and the agreements pertaining thereto, and
to resolve any questions arising in connection therewith. All
decisions by the Employee Option Committee shall be final,
conclusive, and binding on all persons, including without limitation
the Company, its shareholders, and all persons who may then or
thereafter hold any Employee Options or have any interest therein.

Section 4.5. Procedures. The Employee Option Committee may
adopt such procedures, rules and regulations as it considers
appropriate; may hold meetings at such times and places as it
determines; and may act at any meeting on affirmative vote of a
majority of the members of the Employee Option Committee, or without
a meeting on written authorization or approval of all members of the
Employee Option Committee.

Section 4.6. Non-Liability; Indemnification. No member of
the Employee Option Committee shall be liable to any person for any
action or determination in good faith with respect to the Plan or
any Employee Options. Each member of the Employee Option Committee
shall be entitled to indemnification by the Company with respect to
all actions as a member of the Employee Option Committee, to the
fullest extent permissible under the Company's bylaws and the laws
of Michigan.

ARTICLE IV.
DIRECTOR OPTIONS

Section 1. Eligibility. Each current director of the Company, and
each person who hereafter becomes a director of the Company, except any
full-time employee of the Company, shall be eligible to receive Director
Options as hereinafter set forth, and is referred to as an "Eligible
Director."

Section 2. Grant of Options.

(a) Each Eligible Director on May 26, 1994 who received
Director Options pursuant to the 1983 Plan shall receive Director
Options pursuant to this Plan to purchase

<PAGE>

500 shares of Common Stock.

(b) Each Eligible Director on May 26, 1994 who did not
receive Director Options pursuant to the 1983 Plan shall receive
Director Options pursuant to this Plan to purchase 1,000 shares of
Common Stock.

(c) Each person who becomes an Eligible Director after May
26, 1994 and while this Plan is in effect shall receive, on the date
such person becomes an Eligible Director, Director Options to
purchase 1,000 shares of Common Stock.

(d) Immediately after each Annual Meeting of Shareholders,
commencing with the 1995 Annual Meeting and continuing as long as
this Plan is in effect, each Eligible Director shall receive
Director Options to purchase 500 shares of Common Stock; provided,
that no person shall receive Director Options pursuant to this
paragraph (d) on the same date such person receives Director Options
pursuant to paragraph (b) or (c) of this Section 2.

Section 3. Terms of Director Options. All Director Options shall be
evidenced by written agreements ("Director Option Agreements"). The Director
Options and Director Option Agreements shall contain in substance the terms
in Sections 3.1 through 3.7.

Section 3.1. Identification. Each Director Option Agreement
shall clearly identify the Options covered thereby as Director
Options.

Section 3.2. Number of Shares. Each Director Option
Agreement shall state the number of shares of Common Stock to which
it pertains.

Section 3.3. Term. Each Director Option may be exercised at
any time within five years after the date the Option is granted.

Section 3.4. Option Price. Each Director Option Agreement
shall state the option price, which shall be the fair market value
of the Common Stock at the time the Option is granted.

Section 3.5. Exercise of Options and Payment for Shares.
Each Director Option may be exercised only within the term stated in
the Director Option Agreement. It shall be exercisable by written
notice identifying the Option and stating the number of shares
purchased, accompanied by payment of the full purchase price for the
shares purchased. Such notice and payment shall be delivered
personally or mailed by certified mail to the Treasurer of the
Company. Any Director Option may be exercised in whole or in part;
provided, that not less than 50 shares may be purchased and no
fractional shares may be purchased on any partial exercise, except
on purchase of all remaining shares covered by the Director Option.

Section 3.6. Non-Transferability. Each Director Option
Agreement shall provide that the Option is not transferable by the
optionee otherwise than by will or the laws of descent and
distribution, and during the lifetime of the optionee is exercisable

<PAGE>

only by the optionee.

Section 3.7. Termination of Service. Except as stated in
paragraphs (a) through (d) of this Section 3.7, if the holder of a
Director Option ceases to be a director of the Company for any
reason whatever, all unexercised Director Options held by such
director shall automatically expire at the same time as termination
of service as a director.

(a) Retirement. If the holder of a Director Option
retires pursuant to the Company's retirement policy for
directors, the optionee may exercise any unexpired Director
Options held by such optionee within one year after the date
of retirement, or until the expiration date stated in the
Director Option Agreement, whichever occurs first.

(b) Non-Election. If any director is nominated by
the Board of Directors for re-election, but is not
re-elected as a director of the Company, due to any cause
except such director's resignation or declination to serve,
the optionee may exercise any unexpired Director Options
held by such optionee within one year after the date of
termination of service as a director, or until the
expiration date stated in the Director Option Agreement,
whichever occurs first.

(c) Disability. If the holder of a Director Option
is permanently and totally disabled (within the meaning of
Section 22(e)(3) or any amending or superseding section of
the Code), the optionee may exercise any unexpired Director
Options held by such optionee within one year after the date
of such permanent and total disability, or until the
expiration date stated in the Director Option Agreement,
whichever occurs first.

(d) Death. If the holder of a Director Option dies,
the optionee's personal representative, executor or
administrator, or person who acquires the right to exercise
the Option by bequest or inheritance or by reason of the
optionee's death, may exercise any unexpired Director
Options held by such optionee within one year after the date
of death, or until the expiration date stated in the
Director Option Agreement, whichever occurs first.

Section 4. Administration.

Section 4.1. Committee. If any aspects of the Plan relating
to Director Options require administration or interpretation, such
administration or interpretation shall be performed by a special
committee of the Board of Directors of the Company (the "Director
Option Committee"), which shall consist of all members of the Board
of Directors who do not have and are not eligible to receive
Director Options.

Section 4.2. Decisions. All decisions by the Director Option
Committee shall be final, conclusive and binding on all persons,
including without limitation the Company, its shareholders, and all
persons who may then or thereafter hold any Director Options or have
any interest therein.

<PAGE>

Section 4.3. Procedures. The Director Option Committee may
adopt such procedures, rules and regulations as it considers
appropriate; may hold meetings at such times and places as it
determines; and may act at any meeting on affirmative vote of a
majority of the members of the Director Option Committee, or without
a meeting on written authorization or approval of all members of the
Director Option Committee.

Section 4.4. Non-Liability; Indemnification. No member of
the Director Option Committee shall be liable to any person for any
action or determination in good faith with respect to the Plan or
any Director Options. Each member of the Director Option Committee
shall be entitled to indemnification by the Company with respect to
all actions as a member of the Director Option Committee, to the
fullest extent permissible under the Company's bylaws and the laws
of Michigan.

ARTICLE V.
MISCELLANEOUS PROVISIONS

Section 1. Rights as a Shareholder. No holder of any Option shall
have any rights as a shareholder of the Company with respect to any shares
covered by the Option until the issuance of the shares on exercise of the
Option.

Section 2. Optionee's Employment. No Employee Option and no
agreement pertaining thereto shall confer on the optionee any right with
respect to continuation of employment, nor affect any right of the Company or
any subsidiary to terminate employment.

Section 3. Adjustments.

(a) Anti-dilution. In the event of a stock dividend or
distribution, split-up or combination, exchange of shares,
recapitalization, merger, consolidation, corporate acquisition or
separation, reorganization, or comparable corporate transaction,
appropriate adjustments (to be determined by the Board of Directors
of the Company or the Employee Option Committee with respect to
Employee Options, and to be determined by the Director Option
Committee with respect to Director Options) shall automatically be
made in the number and/or kind of shares of stock authorized by this
Plan deliverable on the exercise of Options, the option price, or
any combination thereof, to maintain the proportionate interest of
the optionees and preserve the value of the options, so that
optionees shall have the right thereafter to receive on the exercise
of Options the kind and amount of shares of Common Stock or other
securities or property which they would have been entitled to
receive if they had exercised the Options immediately prior to the
effective time of such transaction.

(b) Liquidation or Change in Control. In the event of any
dissolution or liquidation of the Company, or any merger,
consolidation, or other corporate transaction, in which the Company
is not the surviving entity, the vesting period of all unvested and
partially vested Options shall automatically be accelerated, and all
such Options shall be exercisable in full immediately prior to the
effective time of such transaction. The Company shall give to each
holder of Employee Options written notice of such

<PAGE>

transaction or proposed transaction at least thirty days prior to
the effective time of the transaction, or, if thirty days' prior
written notice is not feasible, then such notice as is feasible
under the circumstances, so that the holders of such Options will
have the opportunity to exercise them prior to the effective time of
the transaction.

(c) Exception. Notwithstanding the provisions of paragraphs
(a) and (b) of this Section 3, no adjustment shall be made with
respect to Incentive Stock Options that would result in their
disqualification as Incentive Stock Options under the applicable
provisions of the Code and regulations thereunder.

Section 4. Withholding. Whenever the Company issues or transfers
shares of Common Stock under this Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local tax withholding requirements prior to the
delivery of any certificates for the shares.

Section 5. Amendments to Plan. The Board of Directors of the Company
at any time may amend, suspend or discontinue this Plan or amend any Options;
except that, without approval of the shareholders before or within twelve
months after such amendment, no amendment shall (i) materially increase the
maximum number of shares that may be issued on exercise of Options pursuant
to this Plan (except pursuant to Section 3 of this Article V, (ii) materially
modify the class of employees eligible to receive Employee Options, (iii)
reduce the option price (except pursuant to Section 3 of this Article V),
(iv) materially increase the benefits to any director or officer of the
Company or any subsidiary who is subject to the restrictions of Section 16(b)
of the Exchange Act, (v) amend any of the provisions of Article IV or amend
any Director Options, or (vi) extend the term of the Plan. This Plan may not
be amended in any manner that will cause Incentive Stock Options to fail to
meet the applicable requirements under Section 422 of the Code and
regulations thereunder. No amendment or termination shall adversely affect
rights of any optionee under any Options previously granted, without the
consent of the optionee. The provisions of this Plan relating to the
eligibility of directors and/or officers of the Company to receive Options,
and the amount, price and timing of grants of Options to directors and/or
officers of the Company, shall not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.

Section 6. Nonexclusivity. Nothing contained in this Plan shall
limit the authority of the Company to grant options otherwise than under this
Plan, or to assume options of any other entity in connection with any merger,
acquisition, or other corporate transaction. Participation in this Plan shall
not affect an employee's eligibility to participate in other employee benefit
plans of the Company.

Section 7. Construction. This Plan and the Options shall be
construed according to the laws of Michigan. Article and section headings are
for convenience only, and shall not affect the construction of any provision.

Section 8. Successors and Assigns. This Plan and the Options and
agreements pertaining thereto shall be binding on and enforceable by the
Company and each optionee, and their successors in interest.

<PAGE>

Section 9. Effective Date and Duration. This Plan is effective on
adoption by the Board of Directors and approval by the shareholders of the
Company on May 26, 1994. Options may be granted under this Plan at any time
on or before May 25, 2004, but not thereafter.

<PAGE>

FIRST 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, except for the Director Options.

NOW, THEREFORE, IN CONSIDERATION of the premises and by resolution
of the Company's Board of Directors, the Plan and the Options, other than the
Director Options, are hereby amended as follows:

1. Article V, Section 3(b) is amended to read as follows:

"(b) Liquidation or Change in Control. In the event of any
dissolution or liquidation of the Company, or any "Change in
Control" (as defined below), the vesting period of all unvested and
partially vested Options shall automatically be accelerated, and all
such Options shall be exercisable in full immediately prior to the
effective time of such transaction. The Company shall give to each
holder of Employee Options written notice of such transaction or
proposed transaction at least thirty days prior to the effective
time of the transaction, or, if thirty days' prior written notice is
not feasible, then such notice as is feasible under the
circumstances, so that the holders of such Options will have the
opportunity to exercise them prior to the effective time of the
transaction."

(i) For purposes of this Plan, a "Change in
Control" occurs on the first day any one or more of the
following occurs:

(A) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")), together with all affiliates and
associates of such person (as such terms are
defined in Rule 12b-2 under the Exchange Act) but
excluding all "Excluded Persons" (as defined in
paragraph (ii)), becomes the direct or indirect
beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the
Company representing (A) 40% or more of the
combined voting power of all of the Company's
outstanding securities entitled to vote generally
in the election of the Company's directors, or (B)
40% or more of the combined shares of the
Company's capital stock then outstanding, all
except in connection with any merger,
consolidation, reorganization or share exchange
involving the Company;

(B) the consummation of any merger,
consolidation, reorganization or share exchange
involving the Company, unless the holders of the
Company's capital stock outstanding immediately
before such transaction own more than 50% of the
combined outstanding shares

<PAGE>

of capital stock and have more than 50% of the
combined voting power in the surviving entity
after such transaction and they own such
securities in substantially the same proportions
(relative to each other) as they owned the
Company's capital stock immediately before such
transaction;

(C) the consummation of any sale or
other disposition (in one transaction or a series
of related transactions) of all, or substantially
all, of the Company's assets to a person whose
acquisition of 40% or more of the combined shares
of the Company's capital stock then outstanding
would have caused a Change in Control under
paragraph (i)(A)); or

(D) the "Continuing Directors" (as
defined in paragraph (iii)) cease to be a majority
of the Company's directors.

(ii) For purposes of this Plan, the "Excluded
Persons" are (i) the Company's Chairman of the Board, Chief
Executive Officer, Vice Chairman of the Board and President
(collectively, the "Executives"), (ii) any "group" (as that
term is used in Section 13(d) of the Exchange Act and the
rules thereunder) that includes any of the Executives or in
which any of the Executives is, or has agreed to become, an
equity participant, (iii) any entity in which any of the
Executives is, or has agreed to become, an equity
participant, (iv) the Company, (v) any subsidiary of the
Company, (vi) any employee benefit plan of the Company or
any subsidiary of the Company or the related trust, (vii)
any entity to the extent it is holding capital stock of the
Company for or pursuant to the terms of any employee
benefit plan of the Company or any subsidiary of the
Company, and (viii) any director, officer or beneficial
owner of at least 10% of the Company's outstanding Common
Stock as of the date of this Agreement. For purposes of
this Agreement, none of the Executives shall be deemed an
"equity participant" in any group or entity (i) in which
such Executive owns for investment purposes only no more
than 5% of the stock of a publicly-traded entity whose
stock is either listed on a national stock exchange or
quoted in The NASDAQ National Market, if such Executive is
not otherwise affiliated with such group or entity, or (ii)
if such Executive's participation is fully-disclosed to,
and approved by, the Company's Board of Directors and the
Continuing Directors before the Change in Control occurs.

(iii) For purposes of this Plan, the "Continuing
Directors" are the directors of the Company as of December
18, 1995, and any person who subsequently becomes a
director if such person is appointed to be a director by a
majority of the Continuing Directors or if such person's
initial nomination for election or initial election as a
director is recommended or approved by a majority of the
Continuing Directors.

Dated: January 24, 1996

<PAGE>

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."

Dated: January 22, 1997

<PAGE>
[ Form of Proxy -- Side 1 ]

PROXY COMMON STOCK

JACOBSON STORES INC.
1998 Annual Meeting of Shareholders -- May 28, 1998

The undersigned appoint(s) P. GERALD MILLS and MICHAEL T. MONAHAN as
proxies, each with power of substitution, and authorize(s) them to represent
and vote as indicated below all shares of Common Stock of Jacobson Stores Inc.
held of record by the undersigned on March 30, 1998, at the 1998 Annual
Meeting of Shareholders, to be held May 28, 1998, and at any adjournments
thereof.

1. ELECTION OF DIRECTORS:

[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below to vote for all nominees
(except as marked listed below
to the contrary
below)

Class III Directors to serve until the 2001 Annual Meeting of
Shareholders:

Kathleen McCree Lewis, Michael T. Monahan,
Richard Z. Rosenfeld and James L. Wolohan.

(To withhold authority to vote for any nominee(s), write that
person's name(s) in the following space:)

_______________________________

2. AMENDMENT OF JACOBSON STOCK OPTION PLAN OF 1994:

Proposal to amend the Jacobson Stock Option Plan of 1994 to
increase the aggregate number of shares of Common Stock that
may be issued upon exercise of options granted under the plan from
900,000 to 1,400,000 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Continued and to be signed on reverse side)

<PAGE>
[ Form of Proxy -- Side 2 ]

(Continued from other side)

3. APPOINTMENT OF AUDITORS:

Proposal to appoint Arthur Andersen LLP as auditors for the
fiscal year ending January 30, 1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. In their discretion, the proxies are authorized to vote on any
other matters that may properly come before the meeting or any
adjournments thereof.

This proxy is solicited on behalf of the Company's Board of Directors.
Properly executed proxies will be voted as specified. If no direction is given
or if no instructions to the contrary are indicated, proxies will be voted FOR
items 1, 2 and 3 and according to the judgment of the proxies on all other
matters.

The undersigned acknowledge(s) receipt of the Notice of the 1998 Annual
Meeting of Shareholders, the proxy statement for said meeting, and the Annual
Report of Jacobson Stores Inc. to its shareholders for the year ended January
31, 1998.

Please sign in the space provided exactly as name(s) appear(s) below. For
joint accounts, each joint owner is requested to sign. When signing as
attorney, executor, administrator, trustee or guardian, or on behalf of a
corporation or partnership, please sign in the name of the shareholder, sign
your name, and give your title. Unsigned or improperly signed proxies will
not be counted. Signed but unmarked proxies will be voted in accordance with
the Board of Director's recommendations

_______________________________
Signature

Dated: ________________, 1998

Please sign, date and return
this proxy promptly in the
enclosed envelope. This proxy
will not be used if you attend
person and so request.