JACOBSON STORES INC
ENGAGEMENT AGREEMENT - FINANCO, INC.
<DOCUMENT>
<TYPE>EX-10.(E)
<SEQUENCE>9
<FILENAME>k69213ex10-e.txt
<DESCRIPTION>ENGAGEMENT AGREEMENT - FINANCO, INC.
<TEXT>
<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
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Jacobsen Stores Inc.
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         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
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Jacobsen Stores Inc.
February 21, 2002
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                  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,
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                  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
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Jacobsen Stores Inc.
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                  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.
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         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
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Jacobsen Stores Inc.
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         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
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Jacobsen Stores Inc.
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                  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
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Jacobsen Stores Inc.
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                  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
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         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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