EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT




This Employment Agreement (the “Agreement”) is entered into as of the 16th day of March, 2009
(the “Effective Date”), by and between Darrell Webb (the “Executive”) and Jo-Ann Stores, Inc., an
Ohio corporation (the “Company”).



Recitals




WHEREAS, the Executive presently serves as President and Chief Executive Officer of the
Company pursuant to a letter agreement with the Company effective as of June 27, 2006, as amended
(the “Existing Letter Agreement”);



WHEREAS, the Executive presently serves as the Chairman of the Board of Directors of the
Company (the “Board”);



WHEREAS, the Executive and the Company wish to provide for the continued employment of the
Executive on the terms and conditions set forth herein; and



WHEREAS, effective as of the date hereof, the Executive and the Company intend that the
Existing Letter Agreement shall cease to be of any force or effect.



Agreement




NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein,
the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:



1. Employment. The Company hereby continues to employ the Executive, and the Executive hereby
agrees to continue such employment, effective as of the Effective Date, upon the terms and
conditions set forth herein. This Agreement, along with the Agreement between the Executive and
the Company dated February 19, 2008 (the “Severance Agreement”), sets forth the terms and
conditions of the Executive’s employment by the Company, represents the entire agreement of the
parties with respect to that subject, and supersedes all prior understandings and agreements with
respect to that subject. Without limiting the foregoing sentence, effective as of the Effective
Date, this Agreement supersedes in its entirety the Existing Letter Agreement.



2. Position and Duties.



(a) Duties. Subject to Section 2(e) below, the Executive shall be employed by the
Company as President and Chief Executive Officer, and subject to Section 2(e) below, the Executive
shall continue to serve as Chairman of the Board. The Executive shall be responsible for the
general management of the affairs of the Company and shall perform all duties incidental to such
positions which may be required by law and all such other duties as are properly required by the
Board. The Executive shall report directly to the Board. The Executive also shall serve, without
additional compensation, as an officer and director of each of the other members of the Company’s
affiliated group, as determined by the Board, provided, that such service does not interfere with
the performance of the Executive’s responsibilities as an employee in accordance with this
Agreement.



(b) Engaging in Other Employment. While employed by the Company, the Executive shall
devote his full time and attention to the Company and its affiliates and shall not be employed by
any other person or entity. Subject to Section 14 of the Severance Agreement, the Executive may
reasonably participate as a member in community, civic, or similar organizations and may pursue
personal investments, so long as such activities do not interfere with the performance of the
Executive’s responsibilities as an employee in accordance with this Agreement, provided that the
Executive may serve on corporate boards (other than the Board) with the approval of the Board,
which approval shall not be unreasonably withheld.



(c) Loyal and Conscientious Performance. The Executive shall act at all times in
compliance with the policies, rules and decisions adopted from time to time by the Company, its
Board and any employing affiliates and perform all the duties and obligations required of him by
this Agreement in a loyal and conscientious manner.



(d) Location. The Executive’s principal office shall be at the principal executive
offices of the Company in Hudson, Ohio. Except for required business travel to an extent
substantially consistent with the business travel obligations of other senior Company executives,
the Executive will not be required to relocate to a new principal place of business that is more
than fifty (50) miles (by straight line measurement) from such location.



(e) Chairman Role. During the Term, the Company shall use its best efforts to cause
the Executive to be reelected as Chairman of the Board, unless, at any time during the Term, the
Board adopts a policy that its Chief Executive Officer should not serve as Chairman of the Board,
in which case the Executive shall cease to serve as Chairman of the Board upon the effective date
of such action by the Company.



3. Term of Employment. The term of the Executive’s employment pursuant to this Agreement
shall commence on the Effective Date and end on August 1, 2011, unless terminated earlier pursuant
to the provisions of this Agreement (the “Term”).



4. Base Salary. During the Term, the Company shall pay the Executive an annualized base salary
(“Annual Base Salary”) at a rate of $875,000, payable in regular installments in accordance with
the Company’s normal payroll practices. During the Term, the Annual Base Salary shall be reviewed
by the Board or a committee thereof, for increase or decrease, at such time as the salaries of
other senior executives of the Company are reviewed generally. If so adjusted, the Annual Base
Salary shall be adjusted for all purposes of this Agreement.



5. Annual Incentive. For each fiscal year during the Term, the Executive shall be eligible to
participate in an annual incentive plan under terms and conditions no less favorable than other
senior executives of the Company; provided that the Executive’s “target” annual incentive
opportunity shall be 100% of his Annual Base Salary (or such other percentage as determined by the
Board or a committee thereof from time to time) (the “Target Bonus”). The Executive’s payment
under the annual incentive plan shall be based on meeting predetermined performance objectives
established by the Board or a committee thereof. The annual incentive, if earned, will be paid to
the Executive by the Company no later than two and a half months after the later of (i) the end of
the applicable performance period, or (ii) the end of the calendar year in which the performance
period ends. Nothing contained in this Section 5 will guarantee the Executive any specific amount
of annual incentive compensation, or prevent the Board or a committee thereof from establishing
performance goals and compensation targets applicable only to the Executive.



6. Equity Awards. The Company will cause equity awards (the “LTIP Awards”) to be made to the
Executive as provided in this Section 6. Except for the LTIP Awards set forth below, and unless
otherwise determined by the Board or a committee thereof, the Executive shall not be entitled to
any equity awards for the 2010 fiscal year and each other fiscal year commencing during the Term.



(a) Options. On the Effective Date, the Company will grant to the Executive a
nonqualified stock option to purchase the Company’s common stock (an “Option”), which Option shall
have a value (as determined below) equal to $400,000. The exercise price of the Option will be the
closing price of the Company’s common stock on the Effective Date. The normal expiration date of
the Option will be the seventh anniversary of the Effective Date. The Option will become ratably
vested and exercisable on the four successive anniversaries of the Effective Date, subject to the
Executive’s continued employment with the Company and its affiliates until the relevant vesting
dates. The number of shares of the Company’s common stock subject to the Option shall be
determined pursuant to a Black-Scholes option pricing model incorporating the same assumptions used
for determining the number of stock options granted as of the Effective Date to other senior
executives of the Company. Except as specifically provided herein, the terms and conditions of the
Option shall be subject to the terms of the Jo-Ann Stores, Inc. 2008 Incentive Compensation Plan
(“Incentive Compensation Plan”) and the award agreement evidencing the grant of the Option, as
provided to senior executives generally.



(b) Performance Shares. On the Effective Date, the Company will grant to the Executive
a performance share award (a “Performance Share Award”) with respect to a number of shares of the
Company’s common stock with a value (determined pursuant to the same methodology used for such
purpose in respect of performance share grants made as of the Effective Date to other senior
executives of the Company) equal, at target, to $400,000. The Compensation Committee of the Board
shall establish the performance goals and payout schedule (which shall be consistent with the
long-term incentive corporate performance goals and payout schedule established for other senior
executive officers) for the Executive based upon performance during the 2010 fiscal year. The
Performance Share Award will be paid to the Executive in the form of restricted shares of the
Company’s common stock (with each performance share corresponding to one restricted share of the
Company’s common stock), based on the extent to which the performance goals for the 2010 fiscal
year are achieved, as determined by the Compensation Committee of the Board. To the extent the
performance goals for the 2010 fiscal year are not met, the Performance Share Award will be
forfeited and will cease to be outstanding. The restricted shares granted under the Performance
Share Award will vest twenty-five percent (25%) per year over four years, commencing on the date
that the restricted shares are granted, subject to the Executive’s continued employment with the
Company and its affiliates until the relevant vesting dates. Except as specifically provided
herein, the terms and conditions of the Performance Share Award shall be subject to the terms of
the Incentive Compensation Plan and the award agreement evidencing the grant of the Performance
Share Award, as provided to senior executives generally.



(c) Restricted Stock Award. On the Effective Date, the Company will grant to the
Executive an award of restricted stock (a “Restricted Stock Award”) with respect to a number of
shares of the Company’s common stock with a value (determined pursuant to the same methodology used
for such purpose in respect of restricted stock grants made as of the Effective Date to other
senior executives of the Company) equal to $4,000,000. Two-thirds (2/3) of the shares underlying
the Restricted Stock Award will vest on the second anniversary of the Effective Date and one-third
(1/3) of the shares underlying the Restricted Stock Award will vest on the third anniversary of the
Effective Date, subject to the Executive’s continued employment with the Company and its affiliates
until the relevant vesting dates. Except as specifically provided herein, the terms and conditions
of the Restricted Stock Award shall be subject to the terms of the Incentive Compensation Plan and
the award agreement evidencing the grant of the Restricted Stock Award, as provided to senior
executives generally.



7. Benefits; Expense Reimbursements. During the Term, and except as otherwise provided in
Section 6 of this Agreement, the Executive shall be eligible to participate in all welfare,
perquisites, fringe benefit, qualified or nonqualified deferred compensation and retirement plans,
and other benefit plans, practices, policies and programs, maintained by the Company applicable to
senior executives of the Company generally, in each case as amended from time to time. The
Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses actually
and properly incurred by the Executive during the Term in connection with carrying out his duties
hereunder in accordance with the Company’s policies, as may be in effect from time to time, for its
senior executives generally.



8. Termination.



(a) Notwithstanding anything to the contrary contained herein, the Executive’s employment may
be terminated prior to the end of the Term as follows:



(i) automatically, upon the death or “Disability” (as defined in the Severance Agreement) of
the Executive;



(ii) by the Executive, for any reason or no reason, in which case the date of termination
shall be the date specified in the notice of termination; provided that if the Executive terminates
employment without “Good Reason (before a Change of Control)” (as defined in the Severance
Agreement), then the Executive agrees to provide the Company with at least one year’s advance
written notice prior to such termination (the “Notice Period”); and



(iii) by the Company for any reason or no reason, in which case the date of termination shall
be the date specified in the notice of termination.



(b) The Executive hereby covenants and agrees that if he voluntarily terminates employment
pursuant to Section 8(a)(ii) without “Good Reason (before a Change of Control)” (as defined in the
Severance Agreement) and prior to the expiration of the Notice Period, then for the remainder of
the Notice Period, the Executive shall not, without the prior written consent of the Company, on
the Executive’s own behalf or on the behalf of any person, firm or company, directly or indirectly,
attempt to influence, persuade or induce, or assist any other person in so persuading or inducing,
any of the employees of the Company (or any of its affiliates) to give up his or her employment
with the Company (or any of its affiliates), and the Executive shall not directly or indirectly
solicit or hire employees of the Company (or any of its subsidiaries or affiliates) for employment
with any other employer. The Executive agrees and acknowledges that the promises and obligations
made by the Company in this Agreement (specifically including, but not limited to, the LTIP Awards
provided for under Section 6 hereof) constitute sufficient consideration for the covenants
contained in this Section 8(b).



(c) Notwithstanding any other provision of this Agreement, upon the termination of the
Executive’s employment for any reason, unless otherwise requested by the Board, the Executive shall
immediately resign from all positions that he holds or has ever held with the Company and its
affiliated group (and with any other entities with respect to which the Company or its affiliates
have requested the Executive to perform services), including, without limitation, the Board and all
boards of directors of the Company’s affiliated group. The Executive hereby agrees to execute any
and all documentation to effectuate such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his employment, regardless of
when or whether he executes any such documentation.



9. Effect of Termination.



(a) Except as otherwise provided in this Section 9, upon any termination of employment, the
Executive’s entitlement to severance payments and benefits shall be governed exclusively by the
Severance Agreement, the Incentive Compensation Plan and the terms of the award agreements
evidencing the LTIP Awards.



(b) Notwithstanding the foregoing, and in addition to the benefits and payments provided under
the agreements and plans listed in Section 9(a) hereof, if the Executive’s employment is terminated
by the Company without “Cause” or by the Executive with “Good Reason (before a Change of Control)”
(as those terms are defined in the Severance Agreement), the Executive’s Restricted Stock Award
outstanding at the time of termination (to the extent then not already vested) will vest
immediately.



10. Successors.



(a) This Agreement is personal to the Executive and is not assignable by the Executive. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s legal
representatives. This Agreement shall inure to the benefit of and be binding upon the Company and
its affiliates, and their respective successors and assigns.



(b) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) of all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform the Company’s obligations under this Agreement in
the same manner and to the same extent that the Company would be required to perform them if no
such succession had taken place.



11. Notice. Any notice to be given hereunder by either party to the other must be in writing
and be effectuated either by personal delivery in writing or by mail, registered or certified,
postage prepaid, with return receipt requested. Mailed notices shall be addressed to the parties at
the following addresses:



	 
	If to the Company or any affiliate:

	Chairman, Compensation Committee

Jo-Ann Stores, Inc.

5555 Darrow Road

Hudson, OH 44236

cc: General Counsel

Jo-Ann Stores, Inc.

5555 Darrow Road

Hudson, OH 44236

cc:Derek D. Bork, Esq.

Thompson Hine LLP

3900 Key Center

127 Public Square

Cleveland, OH 44114

If to the Executive:








At the most recent contact information on file in the payroll records of the
Company.



12. Waiver of Breach. The waiver by any party to a breach of any provision in this Agreement
cannot operate or be construed as a waiver of any subsequent breach by a party.



13. Severability. The invalidity or unenforceability of any particular provision in this
Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in
all respects as if the invalid or unenforceable provision were omitted.



14. Withholding. The Company may withhold from any amounts payable under this Agreement such
Federal, state, local, foreign or other taxes as shall be required to be withheld pursuant to any
applicable law or regulation.



15. Employment at Will. The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive and the Company, or
any of its affiliates, the employment of the Executive by the Company or any of its affiliates is
“at will” and the Executive’s employment may be terminated at any time.



16. Amendment. No modifications or amendments of the terms and conditions herein shall be
effective unless in writing and signed by the parties or their respective duly authorized agents.



17. Governing Law; Disputes.



(a) To the extent not preempted by the laws of the United States, the laws of the state of
Ohio, applicable to contracts made and to be performed wholly within that state, shall be the
controlling law in all matters relating to this Agreement.



(b) The parties agree that any dispute or controversy arising under or in connection with this
Agreement shall be settled pursuant to the terms and conditions of Section 12 of the Severance
Agreement. Notwithstanding the foregoing, the Company shall not be required to seek or participate
in arbitration regarding any breach by the Executive of his agreements in Section 8(b) hereof, but
may pursue its remedies for such breach in a court of competent jurisdiction in Cleveland, Ohio.
If, at the time of enforcement of Section 8(b), a court holds that the restrictions stated therein
are unreasonable under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be substituted for the
stated period, scope or area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by law.



(c) The Executive acknowledges and agrees that the Company would be damaged irreparably in the
event the provisions of Section 8(b) hereof were not performed in accordance with their specific
terms or were otherwise breached and that money damages would be an inadequate remedy for any such
non-performance or breach. Therefore, the Executive agrees that that Company shall be entitled, in
addition to other rights and remedies existing in its favor, to an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to enforce such provisions
specifically (without posting a bond or other security).



18. Mitigation. In no event will the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts (including amounts for damages for breach)
payable to the Executive under any of the provisions of this Agreement and those amounts will not
be reduced simply because the Executive obtains other employment.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.



JO-ANN STORES, INC.



	 
	/s/ Beryl Raff
	By: Beryl Raff

	Title: Chairman, Compensation Committee







EXECUTIVE



	 
	/s/ Darrell Webb
	Darrell Webb