hancock8k050409ex101.htm


    Exhibit 10.1

    


    April 23,
2009

    


    Ms. Susan
Zewicke

    7780
Sunset Court

    Saline,
MI 48176

    


    Dear
Susan,

    


    It is
with our great pleasure and enthusiasm that we offer you the position of Senior
Vice President Store Operations, reporting to Jane Aggers, President and CEO of
Hancock Fabrics, Inc.

    


    With that
in mind, we are pleased to offer you the following compensation
package:

    


    
      	
              ·  

            	
              Your
      Base Salary will be $190,000 per year, paid in bi-weekly
      installments.  The annual review process is completed following
      each fiscal year end and you will be eligible for a base salary increase
      following Fiscal 2009, approximately in April
  2010.

            


    

    


    
      	
              ·  

            	
              Restricted
      stock award of 25,000 shares of Hancock Fabrics’ stock.  It is
      very important to us that you have an opportunity to be a significant
      owner of Hancock Fabrics, Inc. as the stock vests.  These shares
      will be granted to you upon Board approval and will vest 20% annually,
      beginning on the first anniversary of the
grant.

            


    

    


    
      	
              ·  

            	
              Options
      to buy 50,000 shares of stock, pending Board approval.  The
      advantage of stock options is that the price at which you may buy shares
      of stock is locked in at the current price, and the option to buy shares
      at that price is available regardless of how high the stock price might go
      up in the future.  These options may be exercised as follows:
      25% of the shares on or after the first anniversary of the date of grant,
      and the balance may be exercised at the rate of 1/36th of the remaining
      shares on or after the last day of the thirteenth month from the date of
      grant, and on or after the last day each additional month
      thereafter.

            


    

    


    
      	
              ·  

            	
              Long
      Term Incentive Plan:  You are eligible to participate in the
      Company’s 2009 Long Term Stock Plan at the SVP level of 40,000
      shares.  This Plan grants 33% of the options for each year of
      three years where target performance goals are met, and a lesser amount in
      years where minimum goals are
achieved.

            


    

    


    
      	
              ·  

            	
              Short
      Term Incentive Plan:  You are eligible to participate in the
      Company’s 2009 Short Term Incentive Plan at the SVP level on a prorata
      basis, payable approximately March 2010.  If both our Corporate
      and your personal goals are met, payout levels will be 30% (minimum), 40%
      (target) or 80% (maximum) of your base salary, depending on the level of
      achieved goals.

            


    

     

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
              ·  

            	
              Severance
      Agreement, if a change in control of the Company occurs.  At the
      SVP level, the benefit is equal to one and one-half times salary, plus
      prorated bonus.

            


    

    


    
      	
              ·  

            	
              Medical
      and dental insurance is available to all salaried employees immediately
      upon hire, with no waiting period.  Hancock pays approximately
      80% of the total premium, with the employee paying the
      remainder.

            


    

    


    
      	
              ·  

            	
              Vacation
      – three weeks per year, including
2009.

            


    

    


    
      	
              ·  

            	
              You
      will be eligible to participate in the Company sponsored 401(k) plan
      following your one year anniversary with the Company.  The Plan
      calls for a 4% Company match on a 5% employee contribution, however the
      matching contribution has been temporarily suspended as a budgetary
      precaution.

            


    

    


    
      	
              ·  

            	
              We
      will assist in relocation expenses for both the sale of your home in
      Michigan and the purchase of your home in Tupelo, MS area. All covered
      relocation expenses will be grossed-up to offset the tax
      impact.  We will reimburse for the cost of packing/moving,
      normal and reasonable commissions for the sale of the Michigan home, usual
      and customary closing costs for the purchase of a new home in Mississippi,
      and up to three months of temporary housing in
  Tupelo.

            


    

    


    We know
our business challenges are substantial.  We think you will also agree
the challenges represent great opportunities for you, both personally,
professionally and financially.   Susan, we look forward to your
acceptance of this agreement and joining the Hancock Fabrics’ leadership
team.

    


    Upon
acceptance of this agreement, please sign, date and return one copy in the
enclosed envelope.

    


    Sincerely
yours,

     

    
 

    


    
      	 
      	 
      
	
              Jane
      Aggers

            	
              Ms.
      Susan Zewicke

            
	
              President
      and Chief Executive Officer

            	 
      
	 
      	
              Date

            


    

    


    JA:mog

    Enclosure:  Benefits/relocation
packages

        
Return envelope