Document:

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                                                                   EXHIBIT 10(d)

                          JACOBSON STORES INC., et al.

                     SEVERANCE PAY AND RETENTION BONUS PLAN
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I.    INTRODUCTION

      Jacobson Stores Inc., et al., debtors and debtors in possession (the
      "Company") hereby establishes the Company Severance Pay and Retention
      Bonus Plan (the "Plan") to provide severance benefits and retention
      bonuses to certain Employees of the Company who remain in the employ of
      the Company and continue to provide substantial services to the Company
      (collectively, the "Key Employees"). The benefits under the Plan are
      intended to provide an incentive for the Key Employees to remain with the
      Company and to help alleviate financial hardships which may be experienced
      by certain Employees whose employment is terminated. Nothing in the Plan
      will be construed to give any Employee the right to continue in the
      employment of the Company. The Plan is not intended to be an "employee
      pension benefit plan" or "pension plan" as those terms are defined in
      section 3(2) of ERISA. Rather, the Plan is intended to constitute a
      severance pay plan under ERISA and a bonus plan. This Plan supersedes any
      and all prior plans and agreements concerning severance and retention
      benefits.

II.   DEFINITIONS(1)

      1.    "BASE SALARY" means the base salary (exclusive of bonuses or any
            other extraordinary renumeration) earned by the Employee on a
            weekly, monthly or annual basis (as applicable) for service with the
            Company, including any base salary the payment of which is deferred
            pursuant to a salary reduction or deferral agreement, plan or
            arrangement (including an arrangement described in section 401(k) or
            125 of the Code).

      2.    "BOARD" means the Board of Directors of the Company or its delegate.
            References in the Plan and the Appendices to the "Board" shall mean
            the Board or the person or committee to whom the Board has delegated
            its authority under the Plan.

      3.    "CAUSE" means (i) the Employee's continued failure either to (1)
            devote substantially all of his or her business time to his or her
            employment duties (except because of Employee's illness or
            Disability) or (2) make a good faith effort to perform Employee's
            employment duties; (ii) any other willful act or omission which
            Employee knew, or had reason to know, would materially injure the
            Company; or (iii) Employee's conviction of a felony involving
            dishonesty or fraud.

      4.    "CHANGE OF CONTROL" means (i) any "person" as such term is used in
            Sections 13(d) and 14(d) of the Exchange Act (other than Company,
            any trustee or other fiduciary holding securities under an employee
            benefit plan of the Company, or any company owned directly or
            indirectly, by the share owners of

------------------------
(1) With regard to the members of the Executive Committee, to the extent the
following terms are otherwise defined in the Severance Compensation Agreement,
such terms shall have the meanings ascribed thereto in the Severance
Compensation Agreement.

                                       2
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            the Company in substantially the same proportions as their ownership
            of stock in the Company) is or becomes the "beneficial owner" (as
            defined in Rule 13d-3 under the Exchange Act), directly or
            indirectly (through a plan of reorganization or otherwise), of
            securities of the Company representing 50% or more of the combined
            voting power of the Company's then outstanding securities; (ii) the
            share owners of the Company approve (or, if share owner approval is
            not required, the consummation of ) a merger or consolidation of the
            Company with any other company, other than (1) merger or
            consolidation which would result in the voting securities of the
            Company outstanding immediately prior thereto continuing to
            represent (either by remaining outstanding or by being converted
            into voting securities of the surviving entity) more than 50% of the
            combined voting power of the voting securities of the company or
            such surviving entity outstanding immediately after such merger or
            consolidation, or (2) a merger or consolidation effected to
            implement a recapitalization of the Company (or similar transaction)
            in which no "person" (as defined in (i) above) acquires more than
            50% of the combined voting power of the Company's then outstanding
            securities; or (iii) the share owners of the Company approve (or, if
            share owner approval is not required, the consummation of) a plan of
            liquidation of the Company or a sale or disposition by the Company
            of all or substantially all of the Company's assets.

            5. "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
            of 1985, as amended.

            6. "CODE" means the Internal Revenue Code of 1986, as amended.

            7. "COMPANY" means the Jacobson Stores Inc., et. al.

            8. "COMPARABLE EMPLOYMENT" means, upon a Change of Control,
            employment with a Successor Company in a position (i) with Base
            Salary not less than the Employee's Base Salary in effect
            immediately before the Change of Control, (ii) with a title and/or
            responsibilities similar to that in effect immediately before the
            Change of Control, (iii) with employment benefits similar to those
            benefits received by employees in positions comparable to the
            position offered to the Employee by the Successor Company, and (iv)
            in which the Employee is not required to relocate or required to
            move his or her principal business location more than 30 miles from
            that which was the case immediately preceding the Change of Control.

            9. "DISABILITY" means (i) if the Employee is covered by a
            Company-provided disability insurance policy, the definition of
            disability contained in, and entitling the Employee to benefits
            under, that policy, or (ii) if the Employee is not covered by such a
            policy, the Employee's inability to perform fully the duties and
            responsibilities of the Employee's employment with the Company by
            reason of illness, injury or incapacity for a period of 26
            consecutive weeks, with or without reasonable accommodation.

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            10. "EFFECTIVE DATE" of the Plan means March 26, 2002. --

            11. "EMPLOYEE" means any regular full-time employee of the Company,
            excluding any employee who is (1) covered by a collective bargaining
            agreement (unless the bargaining agreement provides for
            participation in the Plan); or (2) regularly scheduled to work less
            than 30 hours per week. For purposes of this Plan, the term
            "Employee" also will not include any individual who is (1) a casual
            or temporary employee (i.e. hired for a specific job of limited
            duration); or (2) characterized as an independent contractor by the
            Company (no matter how such individual is characterized by the
            Internal Revenue Service, other government agency or a court). In
            addition, any change of characterization of an individual's status
            will take effect on the actual date of such change without regard to
            any retroactive recharacterization.

            12. "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an
            individual becomes an Employee. If an Employee terminates employment
            with the Company and is later rehired by the Company, then the
            Employee's Employment Commencement Date means the day on which the
            individual again becomes an Employee after such rehire.

            13. "ERISA" means the Employee Retirement Income Security Act of
            1974, as amended.

            14. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
            amended

            15. "EXECUTIVE COMMITTEE" means Carol Williams, Paul Gilbert and
            James Rodefeld.

            16. "INVOLUNTARY TERMINATION" means a termination from employment
            with the Company that is initiated by the Company for reasons other
            than Cause, death or Disability on or after the Effective Date of
            the Plan.

            17. "PLAN" means this Severance Pay and Retention Bonus Plan, dated
            as of March 26 2002.

            18. "PLAN ADMINISTRATOR" means James Delaney, Vice President of
            Human Resources at the Company or such other entity or person who is
            appointed by the Board to administer the Plan.

            19. "VOLUNTARY RESIGNATION" means a voluntary, permanent separation
            from employment, initiated by the Employee.

            20. "SUCCESSOR COMPANY" means upon a Change of Control, a successor
            to the Company as a result of the acquisition of securities, a
            merger, liquidation, reorganization, consolidation or sale of assets
            of the Company, or otherwise a successor to the Company as a result
            of the Change of Control.

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            21. "YEARS OF SERVICE" shall mean an Employee's total completed
            years of service with the Company (including completed years of
            service with predecessor companies of affiliates) commencing on the
            Employee's Employment Commencement Date and ending on the date the
            Employee's employment with the Company terminates.

III.  SEVERANCE BENEFITS

            A.    A Key Employee shall be entitled to receive severance benefits
                  under the Plan if (i) the Key Employee's employment is
                  terminated by the Company on account of an Involuntary
                  Termination and (ii) the Key Employee executes and does not
                  revoke a written release (as described below) upon such
                  Involuntary Termination. Notwithstanding the foregoing, if a
                  Change of Control occurs, a Key Employee shall not be entitled
                  to receive severance benefits under the Plan if either (i) the
                  Successor Company offers the Key Employee Comparable
                  Employment or (ii) the Key Employee accepts the Successor
                  Company's offer of employment (without regard to the terms of
                  the offer). A Key Employee who meets the requirements of this
                  paragraph (A) and who is identified by the Company as a
                  severance recipient (each a "Severance Recipient") shall
                  receive severance benefits as described in paragraph (B)
                  below.

            B.    The severance benefits for Severance Recipients, other than
                  members of the Executive Committee shall equal: (i) for
                  Officers, one (1) week Base Salary for every year of service,
                  with a minimum of four (4) weeks and a maximum of twenty-six
                  (26) weeks; and (ii) for all other Severance Recipients (other
                  than members of the Executive Committee), one (1) week Base
                  Salary for every year of service, with a minimum of four (4)
                  weeks and a maximum of twelve (12) weeks. Excluding the
                  Executive Committee, there are 118 Severance Recipients.

            C.    Members of the Executive Committee shall receive severance
                  benefits in accordance with the provisions of their executed
                  severance compensation agreements with the Debtors, which
                  agreements will supercede any entitlements to severance or
                  termination benefits under their respective pre-petition
                  employment agreements.

            D.    Key Employees who receive severance benefits under this Plan
                  shall not be entitled to receive severance benefits under any
                  other severance plan, arrangement or agreement of the Company,
                  and this Plan supersedes and replaces any other severance
                  plans, arrangement and agreements for Employees.

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            E.    The release described in paragraph (A) shall be in a form
                  prescribed by the Company and shall release the Company and
                  all related parties of any and all claims against the Company
                  and all related parties with respect to all matters arising
                  out of the Key Employee's employment with the Company and
                  related entities (other than any entitlements under the terms
                  of this Plan or under any other plans or programs of the
                  Company in which the Key Employee participated and accrued a
                  benefit) or the termination thereof, including, but not
                  limited to, any claims or entitlements arising under the
                  Worker Adjustment and Retraining Notification Act, 29 U.S.C.
                  Sections 2101, et seq.

            F.    This Plan and the provisions of benefits hereunder shall not
                  give Key Employees a right to continued employment with the
                  Company or any rights to continued accrual of retirement plan
                  or other benefits, nor shall the Key Employees accrue vacation
                  days, paid holidays, or any other benefits normally associated
                  with employment for any part of the period during or in
                  respect of which severance benefits are payable. All Key
                  Employees shall remain subject to discharge to the same extent
                  as if this Plan had never been implemented.

            G.    Severance benefits will not be provided under the Plan for any
                  Key Employee (other than members of the Executive Committee)
                  whose employment is terminated due to (1) Voluntary
                  Resignation (with or without notice); (2) death; (3) the
                  expiration of a leave of absence; (4) Disability; (5) a Change
                  of Control where the Key Employee has been offered Comparable
                  Employment with the Successor Company; or (6) a Change of
                  Control where the Key Employee accepts employment with the
                  Successor Company (regardless of the terms of such
                  employment). In addition, benefits will not be provided under
                  the Plan for any Key Employee whose employment is terminated
                  for Cause.

IV.   RETENTION BONUS

            A.    Each Key Employee identified by the Company as a retention
                  recipient (each a "Retention Recipient") shall be entitled to
                  a retention bonus in the amount set forth on Appendix A,
                  identified as a percentage of Base Salary, if the Key Employee
                  is employed by the Company on the date such bonus is earned in
                  accordance with the following schedule(2):

            Date Earned             % of Bonus        Date Payable

            June 1, 2002            20%               August 15, 2002

----------------------------
(2) The schedule will apply to all Retention Recipients other than High
Production Sales Professionals, who will be entitled to retention bonuses of
$8,000 each, payable in quarterly installments ($2,000), so long as the Company
is operating and so long as such Key Employee is still employed by the Company
on the date such bonus is earned.

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            September 1, 2002       30%               10 days after
                                                      Confirmation(3)

            Going Concern Sale(4)   50%               Closing of Going
                                                      Concern Sale

      B.    A Retention Recipient shall be entitled to a pro rata portion of the
            next installment of his/her retention bonus provided for in
            paragraph (A) above if they are terminated by the Company, without
            Cause, after June 1, 2002 but prior to the September 1, 2002.

      C.    In addition to the retention bonuses provided for in paragraph (A)
            above, the Company may, in its sole discretion, pay to any Employee
            a bonus in such amounts as the Company deems appropriate
            ("Discretionary Bonus"); provided however, the aggregate amount of
            such Discretionary Bonuses shall not exceed $625,000 (the
            "Discretionary Pool"); provided however, members of the Executive
            Committee shall not receive Discretionary Bonuses from the
            Discretionary Pool. The Company will utilize a portion of the
            Discretionary Pool in order to provide Retention Recipients who are
            Buyers or Store Managers the opportunity to earn up to 10% of their
            Base Salaries in the form of Discretionary Bonuses provided that
            certain performance targets (which targets shall be agreed to by and
            between the Company and the Official Committee of Unsecured
            Creditors) are met.

      D.    Key Employees who receive retention bonuses and/or Discretionary
            Bonuses under this Plan shall not be entitled to receive retention
            bonuses under any other retention bonus plan or program maintained
            by the Company, and this Plan supersedes and replaces any other
            retention bonus arrangements for such Key Employees.

      E.    The entitlement or receipt of a retention bonus and/or a
            Discretionary Bonus as provided for herein shall in no way effect an
            Key Employee's entitlement to receive compensation in accordance
            with the Company's ordinary course, pre-petition incentive pay
            programs.

------------------------

(3) Confirmation shall mean the date on which the Bankruptcy Court enters an
order confirming a plan of reorganization or liquidation. Provided however, that
in order for the Employee to receive such bonus, he or she be employed by the
Company on the payment date, unless previously terminated by the Company without
Cause.

(4) The last fifty percent (50%) of the of the retention bonus shall be earned
by those Key Employees who are in the Debtor's employ on the date that the
Bankruptcy Court enters an Order either (i) approving the sale of substantially
all of the Debtors' assets as a going concern business ("Going Concern Sale"),
with such amounts being payable to such Key Employees who are entitled thereto
within ten (10) days after the Closing Date of such Going Concern Sale, or (ii)
confirming a plan of reorganization (which plan shall not provide for the
liquidation of all or substantially all of the Debtors' assets other than as a
going concern) with such amounts being payable to such Key Employees who are
entitled thereto within ten (10) days after the entry of the confirmation order.

                                       7
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V.    PAYMENT OF BENEFITS

      A.    Severance benefits will be paid, at the Company's option, either (i)
            in a lump sum within 10 days of termination, or (ii) on a bi-weekly
            basis from available cash flow, commencing with the first payroll
            after such Severance Recipient is terminated and continuing until
            such Severance Recipient's severance entitlement is paid in full;
            provided however, in the event that the Company has insufficient
            cash flow to pay such severance benefits or a portion thereof as
            provided for herein, then such unpaid severance benefits shall be
            entitled to administrative expense status pursuant to Section 503 of
            the Bankruptcy Code.

      B.    All payments made under the Plan shall be subject to withholding of
            applicable federal, state and local taxes.

      C.    Payments to a terminated Key Employee will cease upon the Company's
            determination that the Key Employee was terminated for Cause,
            regardless of whether this determination occurs before or after the
            Key Employee's termination date.

VI.   AMENDMENT AND TERMINATION OF THE PLAN

The Board reserves the right to amend, suspend or terminate the Plan in whole or
in part, at any time and for any reason, by a written formal action. Any
amendment to, or termination of, the Plan may discontinue any further payments
to a terminated Key Employee, unless the Key Employee has signed a release of
claims against the Company. However, no amendment, suspension, or termination of
the Plan will give the Company the right to recover any amounts already paid to
a terminated Key Employee before the date of such amendment.

VII.  RECORDS, REPORTS AND DISCLOSURE

The Plan Administrator will keep a copy of all individual and group records
relating to Employees and former Employees and all other records necessary for
the proper operation of the Plan. Such records shall be made available to each
Key Employee for examination during regular business hour, except that an Key
Employee may examine only such records as pertain exclusively to the examining
Key Employee and to the Plan. The Plan Administrator will prepare and will file
and/or distribute as required by law or regulation all reports, forms, documents
and other items required by ERISA, the Code, and every other relevant statute,
each as amended, and all regulations thereunder, including all forms relating to
withholding of income or wage taxes, social security taxes, and other amounts
which may be similarly reportable.

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VIII. MISCELLANEOUS INFORMATION

      A.    Nonalienation of Benefits. None of the payments, benefits or rights
            of any Key Employee will be subject to any claim of any creditor of
            the Key Employee and, in particular, to the fullest extent permitted
            by law, all such payment, benefits and rights will be free from
            attachment, garnishment, trustee's process, or any other legal or
            equitable process available to any creditor of such Key Employee. No
            Key Employee will have the right to alienate, anticipate, commute,
            plead, encumber or assign any of the benefits or payments which he
            or she may expect to receive, contingently or otherwise, under the
            Plan.

      B.    No Contract of Employment. Neither the establishment of the Plan,
            nor any modification thereof, nor the creation of any fund, trust or
            account, nor the payment of any benefits will be construed as giving
            any Key Employee, or any person whosoever, the right to be retained
            in the service of the Company, and all Key Employees remain subject
            to discharge to the same extent as if the Plan had never been
            adopted.

      C.    Severability of Provisions. If any provision of this Plan is held
            invalid or unenforceable, such invalidity or unenforceability shall
            not affect any other provisions hereof, and this Plan will be
            construed and enforced as if such provisions had not been included.

      D.    Heirs, Assigns, and Personal Representative. This Plan will be
            binding upon the heirs, executors, administrators, successors and
            assigns of the parties, including each Key Employee; provided,
            however, that no successor to the Company will be considered a Plan
            sponsor, and termination of employment by a Successor Company will
            not entitle Key Employees to benefits under this Plan, unless that
            successor expressly adopts this Plan.

      E.    Headings and Captions. The headings and captions in this Plan are
            provided for reference and convenience only, will not be considered
            part of the Plan, and will not be employed in the construction of
            the Plan.

      F.    Unfunded Plan. Benefits under this Plan will not be prefunded, but
            will be payable by the Company as and when due as provided herein.

      G.    Payments to Incompetent Persons, Beneficiaries, Etc. Any benefit
            payable to or for the benefit of a minor, an incompetent person or
            other person incapable of receipting therefor will be deemed paid
            when paid to such person's guardian or to the party providing for
            the care of such person. Any benefits due to a deceased Key Employee
            will be paid to the Key Employee's estate. In either event, any such
            payment will fully discharge

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            the Company and the Plan Administrator and all other parties with
            respect thereto.

      H.    Lost Payees. A benefit will be deemed forfeited if the Plan
            Administrator is unable to locate a Key Employee to whom a benefit
            is due. Such benefit will be reinstated if application is made by
            the Key Employee for the forfeited benefit while this Plan is in
            operation.

      I.    Controlling Law. This Plan will be construed and enforced according
            to the laws of the State of Michigan, without regard to any conflict
            of laws provisions, to the extent not superseded by federal law.

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<PAGE>
                                   APPENDIX A

<TABLE>
<CAPTION>
Position                      Retention Bonus Amount        No. of Participants
--------                      ----------------------        -------------------
<S>                           <C>                           <C>
Executive Committee           One (1) year Base Salary                   3
Officers                      40% of Base Salary                        21
Buyers                        15% of Base Salary                        38
Exempt Professionals          20% of Base Salary                        35
Key Support                   15% of Base Salary                        11
Store Management              20% of Base Salary                        18
High Production Sales         $8,000                                    59
</TABLE>

                                       11<PAGE>

                                                                   EXHIBIT 10(e)

[Financo, Inc. LOGO]

                                                               February 21, 2002

Jacobson Stores Inc.
3333 Sargent Road
Jackson, MI 49201

                            Re: Jacobson Stores Inc.

Ladies and Gentlemen:

     This will set forth the understanding and agreement regarding the scope and
terms of the retention of Financo, Inc. ("Financo") as investment bankers to
Jacobson Stores Inc., as debtor and debtor-in-possession (the "Company").

1.       As investment bankers to the Company, Financo shall:

         1.1      analyze and perform the necessary due diligence on the
                  Company's financial condition, operations, business plan and
                  prospects, as requested by the Company;

         1.2      assist in valuing the assets of the Company, as requested by
                  the Company;

         1.3      assist in raising new investment capital for purposes of
                  funding a plan of reorganization ("POR"), repaying the
                  Company's obligations under its Debtor in Possession Loan in
                  connection with a POR and Security Agreement and/or funding
                  the Company's working capital needs in connection with a POR,
                  as set forth more particularly in paragraph 2 hereof;

         1.4      assist in the sale or other disposition of the Company and/or
                  the Company's various assets, as set forth more particularly
                  in paragraph 2 hereof; and

         1.5      attend meetings, including with the Official Committee of
                  Unsecured Creditors (the "Committee"), as reasonably
                  requested, and share information with the Committee in
                  accordance with any agreed upon protocol between the Company
                  and the Committee.

2.       It is understood and agreed that Financo's assignment will be to try
         and facilitate (a) a New Investment (as defined in paragraph 3.1
         hereof), and (b) a Sale transaction (as defined in paragraph 3.2
         hereof). A New
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 2

         Investment and a Sale are hereinafter referred to as a "Transaction".
         Unless the Company, through one of its executive officers, otherwise
         directs Financo in writing, during the first 90 days after the date of
         this letter, Financo shall solicit Sale Transactions only for the
         entire Company or all or substantially all of its Assets, and shall not
         solicit Sale Transactions for less than all or substantially all of its
         Assets. Towards these ends, the Company hereby authorizes and engages
         Financo to (a) identify Transaction opportunities and participants; (b)
         negotiate Transaction opportunities, whether or not identified by
         Financo; and (c) assist in closing any and all such Transactions. It is
         understood and agreed that the sole compensation for the services
         provided by Financo under this Agreement, including the services
         described in paragraphs 1 and 2, shall be the compensation provided in
         paragraph 8 and any fee agreed upon by the parties pursuant to
         paragraph 2.5. In connection with such Transactions, Financo shall:

         2.1      assist with the preparation of descriptive information
                  materials concerning the Company and its various assets (each
                  an "Asset" and collectively the "Assets"), which memorandum(s)
                  shall be provided to prospective investors, acquirers or
                  partners of the Company or its Assets; provided that none of
                  such information will be made available to, or used in
                  discussions with, any third parties or potential investors,
                  acquirers or partners until such information has been approved
                  by the Company and the Company approves, in advance, the
                  disclosure of such descriptive data to the particular person
                  or entity to whom it is proposed to be disclosed;

         2.2      develop, update and review with the Company on an ongoing
                  basis a list of parties which might be interested in entering
                  into a Transaction and initiate contact with such parties;

         2.3      consult with and advise the Company concerning Transaction
                  opportunities that have been identified by Financo or others,
                  and participate on the Company's behalf in negotiations in
                  furtherance of each such opportunity;

         2.4      assist in the consummation of a Transaction;

         2.5      if requested to do so by the Company, at a cost to the Company
                  to be determined by agreement of Financo and the Company,
                  provide a fairness opinion to the Board of Directors of the
                  Company in connection with a Transaction and permit the
                  Company to reproduce it in full, to refer to it and to quote
                  fairly
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 3

                  from it in any disclosure document filed by the Company in
                  connection with such Transaction; provided that Financo shall
                  have the right to review and approve any reference to such
                  fairness opinion, which approval shall not unreasonably be
                  withheld or delayed; and

         2.6      if requested to do so by the Company, testify or appear at any
                  judicial or regulatory hearing or deposition or other
                  appearance in connection with any legal process in connection
                  with services provided pursuant to this Agreement, and the
                  Company will reimburse Financo's expenses for doing so
                  pursuant to paragraph 8.5 and, if the testimony or appearance
                  is not in connection with a Transaction for which Financo has
                  or is expected to receive a fee pursuant to paragraph 8.2 or
                  8.3, the Company will pay Financo a fee of $1,000 per person
                  per day for such testimony or appearance.

3.       Definitions

         3.1      For the purposes hereof, a "NEW INVESTMENT" shall mean (a) any
                  new investment in the Company's equity in connection with a
                  POR, including without limitation common equity or preferred
                  stock, and (b) any new debt financing, including subordinated
                  or convertible debt, senior debt, and secured debt, or any
                  combination thereof, for purposes of funding a POR, repaying
                  the Company's obligations under its Debtor in Possession Loan
                  and Security Agreement and funding the Company's working
                  capital needs; provided that "New Investment" shall not
                  include any Transaction that also constitutes a "Sale" or any
                  financing with, or agented by, Fleet Retail Finance Inc., any
                  of the lenders party to the Company's Debtor In Possession
                  Loan and Security Agreement or any of their affiliates.

         3.2      For the purposes hereof, a "Sale" shall mean any transaction
                  or series or combination of transactions whereby, directly or
                  indirectly, any amount of the Company's Assets or control of,
                  or a material interest in, the Company is transferred to one
                  or more third parties that were introduced to the Company by
                  Financo, whether by a sale or exchange of capital stock, a
                  sale or exchange of assets, a merger or consolidation, or any
                  similar transaction, but shall not mean

                  1. any transaction in the Company's ordinary course of
                  business,
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 4

                  2. any sale-leaseback or other transaction with respect to the
                  East Grand Rapids, Michigan store with parties contacted by,
                  or who contacted, the Company or its advisors before the date
                  of this letter,

                  3. the closing of any of the Company's stores in Saginaw,
                  Michigan, Columbus or Toledo, Ohio or Clearwater, Osprey or
                  Tampa, Florida and any related sales of assets, including any
                  sales of the related inventory, receivables, real property,
                  furniture, fixtures or equipment,

                  4. any liquidation or other sale of the Company's inventories,
                  furniture, fixtures, equipment or any combination of them at
                  any of its stores pursuant to a "going out of business", store
                  closing or similar theme sale by the Company, through an
                  inventory liquidation agent acting as agent of the Company or
                  otherwise,

                  5. any transaction if Financo breaches its covenant in
                  paragraph 2 that, unless the Company, through one of its
                  executive officers, otherwise directs Financo in writing,
                  during the first 90 days after the date of this letter,
                  Financo shall solicit Sale Transactions only for the entire
                  Company or all or substantially all of its Assets, and shall
                  not solicit Sale Transactions for less than all or
                  substantially all of its Assets, or

                  6. any sale of receivables other than in connection with a
                  transaction involving the sale of all or substantially all of
                  the Company's Assets

                  It is contemplated that a Sale may be effectuated through
                  either (a) a confirmed POR, or (b) a transaction under and
                  pursuant to Section 363 of the United States Bankruptcy Code.
                  The Company acknowledges that, as "Sale" is defined herein,
                  more than one Sale may occur, and Financo shall be due a fee
                  on each Sale transaction as provided for in paragraph 8.3
                  hereof.

         3.3      AGGREGATE VALUE: Financo's compensation in connection with the
                  consummation of a Transaction shall be based on the "Aggregate
                  Value" thereof.

         3.4      GENERAL: The Aggregate Value of a Transaction shall mean the
                  sum of (i) the value of all cash, securities, contractual
                  arrangements and other property (including contingent
                  consideration) paid or payable, directly or indirectly, by an
                  investor
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 5

                  or acquiring party in connection with such Transaction, and
                  (ii) any indebtedness of the Company (or relating to an Asset)
                  for money-borrowed that is "assumed" (as defined below) in
                  connection with such Transaction. For the purposes of
                  paragraph 3.2(a), the Aggregate Value of a Transaction in a
                  POR context shall be calculated based upon the total value
                  contributed to the Company and/or paid directly to the
                  creditors or other stakeholders by the purchaser in the Sale
                  Transaction or the lender or investor in a New Investment
                  Transaction under such POR and the definitive agreement
                  governing the Transaction.

         3.5      DETERMINING THE VALUE OF NON-CASH CONSIDERATION: The value of
                  any non-cash portion of Aggregate Value, such as securities
                  (whether debt or equity) or other property, shall be
                  determined as provided in the definitive agreement governing
                  the Transaction or, in the absence of such an agreement or
                  provision, as follows: (1) the value of securities that are
                  freely tradable in an established public market will be
                  determined on the basis of the last closing price prior to the
                  consummation of such Transaction; and (2) the value of
                  securities that are not freely tradable or have no established
                  public market, or of property other than securities, shall be
                  the fair market value thereof, determined by agreement of the
                  Company and Financo.

         3.6      DEFINITION OF "ASSUMPTION OF INDEBTEDNESS": Indebtedness of
                  the Company shall be deemed to have been "assumed" if (A) such
                  indebtedness is repaid, assumed or otherwise defeased by an
                  acquirer (or a third party other than the Company), or (B) in
                  connection with a Transaction in the form of a "stock"
                  transaction (e.g., sale of stock, merger, consolidation, etc.
                  involving a sale of all or substantially all of the Company's
                  stock), such indebtedness remains an obligation of the Company
                  (or its successor or assignee) upon consummation of such
                  Transaction. For avoidance of doubt, if a Transaction includes
                  as one of its features a payment, purchase or defeasance of
                  indebtedness at a discount, the amount of indebtedness assumed
                  shall be calculated after reduction by such discount. The term
                  "indebtedness for money-borrowed" shall include all
                  interest-bearing and zero coupon debt, as well as proceeds
                  from factored assets.

4.       Information regarding the Company:
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Jacobsen Stores Inc.
February 21, 2002
Page 6

         The Company shall (a) make available to Financo all information in the
         Company's possession concerning the business, assets, operations and
         financial condition of the Company and the Assets that Financo
         reasonably requests in connection with the performance of its duties
         hereunder, and (b) provide Financo with reasonable access to the
         Company's officers, directors, employees, accountants and other
         advisors and agents for the purpose of performing Financo's duties
         hereunder.

         Financo shall treat all information provided to it by the Company or
         any of its advisors or developed by Financo based on such information
         that is not already in the public domain as confidential, and shall not
         disclose the same to anyone except to potential buyers or investors in
         accordance with this Agreement and a signed confidentiality agreement
         or pursuant to an order of the Bankruptcy Court.

5.       Financo understands that the Company has filed a voluntary petition for
         relief under Chapter 11 of the United States Bankruptcy Code with the
         United States Bankruptcy Court for the Eastern District of Michigan,
         Southern Division (the "Bankruptcy Court"). Financo and the Company
         acknowledge that this Agreement and its effectiveness are subject to
         the approval of the Bankruptcy Court, and the Company undertakes and
         agrees as soon as reasonably practicable to take all reasonable actions
         necessary to procure such approval.

6.       In the performance of its services described herein, Financo will
         conduct such financial review of the business and operations of the
         Company as Financo and the Company shall agree. In connection
         therewith, the Company shall make available to Financo all information
         in the Company's possession concerning the business, assets, operations
         and financial condition of the Company that Financo reasonably requests
         in connection with the performance of its duties hereunder. It is
         understood and agreed that the Company makes no representations to
         Financo regarding such information, that such information is being
         provided to Financo "as-is", that Financo cannot and will not make any
         representations to third parties regarding the same, and that Financo
         assumes no responsibility whatsoever regarding the same. It is further
         understood that, in performing under this Agreement, Financo has not
         assumed, and will not assume, any responsibility for independent
         verification of any information, data and material so furnished by the
         Company.

7.       Financo's engagement hereunder shall commence on the date hereof,
         subject to the approval nunc pro tunc of the Bankruptcy Court, and
         shall
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 7

         continue until termination in accordance with the terms hereof. Subject
         to the provisions of paragraphs 8 through 12, which shall survive any
         termination of this Agreement, the Company may terminate Financo's
         engagement hereunder at any time by giving prior written notice.
         Notwithstanding the termination of Financo's retention hereunder,
         Financo shall be entitled to keep and/or receive all the compensation
         provided for in paragraph 8.1 (if this engagement letter is approved by
         the Bankruptcy Court), paragraph 8.2 (if the New Investment closes by
         one year after termination of Financo's retention under this
         Agreement), paragraph 8.3 (if the Sale closes by one year after
         termination of Financo's retention under this Agreement), paragraph 8.4
         (to the extent accrued through the date of termination of Financo's
         retention under this Agreement) and paragraph 8.5 (to the extent such
         expenses are incurred during the term of Financo's engagement under
         this Agreement), except that Financo shall not be entitled to receive
         the compensation set forth under paragraph 8.2 or 8.3 hereof in
         connection with a Transaction with an investor or buyer not identified,
         solicited by, or in negotiations or discussions with Financo prior to
         the effective date of Financo's termination; provided, that Financo
         shall transmit to the Company a list of all potential buyers, lenders
         and investors contacted by Financo within two business days after a
         termination.

8.       As compensation for the services rendered by Financo hereunder, Financo
         shall receive the following (subject to the approval of the Bankruptcy
         Court having jurisdiction over the Company's reorganization case (the
         "Bankruptcy Court")):

         8.1      A one-time retainer fee in the amount of $100,000 (the
                  "Retainer Fee"), which shall be paid to Financo by the Company
                  upon the approval of this engagement letter by the Bankruptcy
                  Court. The Retainer Fee shall be fully earned when received by
                  Financo and shall not be subject to return, forfeiture or
                  credit.

         8.2      Upon the closing and funding of a New Investment, and
                  contingent on such New Investment actually closing and
                  funding, Financo shall receive additional compensation in the
                  amount of (a) six percent (6%) of the Aggregate Value of any
                  new equity capital raised (including common equity, preferred
                  equity, or convertible preferred equity) in a New Investment,
                  (b) one percent (1%) of the Aggregate Value of any new secured
                  debt capital raised in a New Investment, and (c) three percent
                  (3%) of the Aggregate Value of any other new debt capital
                  raised (including subordinated debt, convertible debt or
                  senior debt) in a New Investment, as applicable. Such
                  additional compensation
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 8

                  shall be paid to Financo, in cash, upon the effective date of
                  a POR involving a New Investment.

         8.3      Upon the occurrence of each Sale, and contingent on such Sale
                  actually closing, Financo shall receive additional
                  compensation, payable in cash at the closing of such Sale,
                  equal to one and one-half percent (1.5%) (1.25% if the Sale is
                  to the party that entered into a confidentiality agreement
                  with the Company before the date of this Agreement) of the
                  Aggregate Value involved in each such Sale (each a "Sale
                  Fee"); provided that Financo shall receive its Sale Fee with
                  respect to any deferred or contingent consideration included
                  as part of the Aggregate Value of such Sale when and if such
                  consideration is actually paid.

         8.4      Financo shall receive an additional fee (the "Additional Fee")
                  of up to $200,000. The Additional Fee shall accrue daily
                  during the period (the "Period") beginning on the one-month
                  anniversary of the date of this Agreement and ending on the
                  earlier of (1) the date Financo's engagement under this
                  Agreement is terminated and (2) the day before the four-month
                  anniversary of the date of this Agreement. The amount of the
                  Additional Fee that will accrue on each day during the Period
                  shall equal $200,000 divided by the number of days from and
                  including the one-month anniversary of the date of this
                  Agreement through and including the day before the four-month
                  anniversary of the date of this Agreement. The Company shall
                  pay the Additional Fee to Financo in cash within five business
                  days after the end of the Period. Any Additional Fee actually
                  paid to Financo shall be credited against, and shall reduce,
                  any fee otherwise payable under paragraph 8.2 or 8.3, and any
                  fee actually paid to Financo under paragraph 8.2 or 8.3 shall
                  be credited against, and shall reduce, any Additional Fee
                  otherwise payable under this paragraph.

         8.5      Reimbursement for all reasonable out-of-pocket expenses
                  incurred in connection with this engagement; provided that
                  Financo obtains the Company's prior approval, through one of
                  its executive officers, for any expense in excess of $1,000.
                  Out-of-pocket expenses shall include, without limitation,
                  counsel fees and disbursements (if such counsel was retained
                  with the written approval of the Company), travel and lodging
                  expenses, outside database charges or outside word processing
                  charges, communication charges, courier services and other
                  customary and reasonable expenses.

         8.6      The Company has no obligation to discuss, negotiate, enter
                  into or
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 9

                  close any Transaction and shall have the right to reject any
                  proposed Transaction or to terminate negotiations with respect
                  to any Transaction at any time. If a Transaction does not
                  close or is not consummated, no fee or other compensation
                  under paragraph 8.2 or paragraph 8.3 will be payable to
                  Financo with respect to the Transaction regardless of whether
                  the failure to close or consummate is due to any action or
                  failure to act on the Company's part or on the part of the
                  Company's shareholders or creditors, the bankruptcy trustee,
                  the Bankruptcy Court, or the prospective other party to the
                  Transaction. The Company has the right to enter into, or
                  permit to exist, any agreement or arrangement pursuant to
                  which a third party is entitled to a fee for selling any of
                  its assets.

9.       Except as otherwise provided in this Agreement, no one other than the
         Company is authorized to rely upon this engagement of Financo or any
         statements by or advice or conduct of Financo, except that Financo
         agrees that the Company may make available to the Company's secured
         lenders, the Committee and any other party designated by the Company in
         writing to Financo any work product prepared for the Company (and shall
         make such work product available to the Committee), it being understood
         that Financo is being retained only by the Company and shall not owe
         any obligations or responsibilities to, nor be in privity with, any of
         such other parties. Except as otherwise provided in this Agreement or
         required by applicable law, any advice to be provided by Financo under
         this Agreement shall not be disclosed publicly or made available to
         third parties without the prior written approval of Financo.

10.      Following the completion of its engagement hereunder, Financo shall
         have the right to place advertisements in financial and other
         newspapers and journals, at its own expense, describing its services to
         the Company hereunder, subject to the approval of the Company, which
         approval shall not be unreasonably withheld.

11.      This Agreement shall be deemed to have been made and entered into in
         the State of New York. This Agreement and all controversies arising
         from or relating to performance under this Agreement shall be governed
         by and construed in accordance with the laws of the State of New York,
         without giving effect to such State's rules concerning conflicts of
         laws. The parties hereto hereby agree that all claims or causes of
         action arising out of this Agreement or any of the agreements or
         transactions contemplated hereby shall be heard and determined by the
         Bankruptcy Court. Each of the parties hereto hereby consents to the
         service of process in any such suit, action or proceeding by the
         mailing of copies thereof by registered or
<PAGE>
Jacobsen Stores Inc.
February 21, 2002
Page 10

         certified mail, postage prepaid, to its address set forth above [NEED
         FINANCO ADDRESS ABOVE], such service to become effective ten (10) days
         after mailing. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR
         ACTION ARISING OUT OF THIS AGREEMENT OR CONDUCT IN CONNECTION WITH THIS
         ENGAGEMENT IS HEREBY WAIVED.

12.      This letter shall constitute the entire agreement between the parties
         hereto. This Agreement shall be binding upon and inure to the benefit
         of any successors, assigns, heirs and personal representatives of the
         Company, Financo and any Indemnified Person. This Agreement may be
         executed via facsimile transmission and may be executed in separate
         counterparts, each of which shall be deemed to be an original and all
         of which together shall constitute a single instrument. This Agreement
         may not be amended or modified except in writing. The foregoing
         Agreement shall be in addition to any rights that Financo may have at
         common law or otherwise.

         If the foregoing correctly sets forth the understanding and agreement
between Financo and the Company, please sign in the space indicated below.

                                                FINANCO, INC.

                                                BY:   /s/  William M. Smith
                                                    -------------------------

ACCEPTED AND AGREED TO:

JACOBSON STORES INC.

BY:   /s/  Paul W. Gilbert
    --------------------------------

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