**Exhibit 10.25****AGREEMENT**     THIS AGREEMENT (“Agreement”) is made as of the 19th day of February, 2008, betweenJO-ANN STORES, INC., an Ohio corporation (the “Company”), and Darrell Webb (“Executive”).     The Company is entering into this Agreement (in substitution for and in lieu of the employmentagreement entered into by the parties dated July 24, 2006; “Prior Agreement”) in recognition of theimportance of Executive’s services to the continuity of management of the Company and based uponits determination that it will be in the best interests of the Company to encourage Executive’scontinued attention and dedication to Executive’s duties as a general matter and in the potentiallydisruptive circumstances of a possible Change of Control of the Company. (As used in thisAgreement, the term “Change of Control” and certain other capitalized terms have the meaningsascribed to them in Section 17 at the end of this Agreement.)     The Company and Executive agree, effective as of the date first set forth above (the“Effective Date”), as follows:     ***1. Severance Benefits upon Certain Separations from Service Occurring Before a Change of Control***.If, before the occurrence of a Change of Control, Executive has a Separation from Service with theCompany by the Company without Cause, or by Executive for Good Reason, Executive shall be entitledto the following as Severance Benefits:          (a) The Company shall pay Executive an amount equal to two (2) times Executive’s Base Salarypayable in consecutive bi-weekly installments over the twenty-four (24) months following theSeparation from Service at the same times and in the same amounts as if Executive had not incurreda Separation from Service and had continued to earn Executive’s Base Salary over that twenty-four(24) month period. Each such installment shall be a “Payment” for purposes of this Section 1(a).The Payments shall be paid over the following payment periods: (i) First Payment Period. The FirstPayment Period shall begin on the first bi-weekly payroll datefollowing the Separation from Service and shall end on the lastbi-weekly payroll date of the sixth (6th) calendar monthfollowing the calendar month in which the Separation from Serviceoccurs. The Company shall pay a Payment to Executive on each bi-weeklypayroll date during the First Payment Period; provided, however, in noevent shall the aggregate amount paid to Executive during the FirstPayment Period exceed two (2) times the lesser of: (A) the Executive’sannualized compensation based upon the annual rate of pay paid toExecutive for services to the Company for the calendar year precedingthe calendar year in which the Separation from Service occurs (adjustedfor any increase during that year that was expected to continueindefinitely but for the Separation from
 

 
   Service), or (B) the maximum amount that may be taken into accountunder Section 401(a)(17) of the Internal Revenue Code for thecalendar year in which the Separation from Service occurs.     In the event any amount that would have been paid during the First PaymentPeriod cannot be paid because it would exceed the limitation provided in thepreceding paragraph, such excess amount shall be paid in a lump sum on the firstbi-weekly payroll date of the Second Payment Period (in addition to any amount thatwould be paid on such bi-weekly payroll date in the Second Payment Period asprovided in Section 1(a)(ii) below). (ii) Second Payment Period. The SecondPayment Period shall commence on the first bi-weekly payroll datefollowing the end of the First Payment Period and shall end on the lastbi-weekly payroll date preceding the date that is twenty-four (24)months following the Executive’s Separation from Service. The Companyshall pay a Payment to Executive on each bi-weekly payroll date in theSecond Payment Period.          (b) The Company shall continue to provide Executive with group term life insurance for two(2) years following the Termination Date, except that the Company may stop providing group termlife insurance earlier if and when Executive accepts full time employment with a subsequentemployer and that employer provides Executive with group term life insurance coverage. The groupterm life insurance benefits to be provided by the Company pursuant to this paragraph shall beprovided to Executive at the same cost to Executive, and at the same coverage level, as isapplicable to continuing executives in comparable positions from time to time during the period thebenefits are continued.          (c) The initial 100,000 stock options granted to Executive in connection with his initialemployment will become fully exercisable as of the date the Executive’s employment with the Companyis terminated (to the extent that such options remain outstanding as of the termination date), andall restrictions and conditions applicable to the initial 100,000 restricted shares granted toExecutive in connection with his initial employment will be deemed to have been satisfied as of thedate of the Executive’s termination. With respect to all subsequent equity awards, the provisionsof the granting instruments and relevant Company plans shall be applicable.          (d) The Executive shall be entitled to continue his medical and dental insurance in accordancewith the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), provided the Executivetimely elects such coverage and satisfies all other eligibility requirements under COBRA. If theExecutive elects COBRA coverage, the Executive shall pay the full COBRA premium at his own expense.          (e) On the first bi-weekly payroll date during the Second Payment Period, the Companyshall pay Executive the sum of Forty-Three Thousand Two Hundred Dollars ($43,200) inaddition to any other amounts due at that time to Executive pursuant to other provisions ofthis Agreement,
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          (f) If the Separation from Service occurs during a fiscal year in which a bonus wasearned under any Company sponsored bonus plan, the Executive will be entitled to a pro-rataportion of that fiscal year’s bonus based on the attainment of the performance metrics. Thispro-rata bonus will be paid at its normal time at the end of the performance period.     ***2. Change of Control Severance Benefits upon Certain Separations from Service Occurring After aChange of Control***. If, after the occurrence of a Change of Control, Executive has a Separationfrom Service with the Company by the Company without Cause, or by Executive for Good Reason,Executive shall be entitled to the following as Change of Control Severance Benefits:          (a) The Company shall make a lump sum cash payment to Executive, not later than ten (10)business days after the Separation from Service, in an amount equal to three (3) times the sum of(i) Executive’s Base Salary plus (ii) the greater of (A) Executive’s average cash bonus earned overthe three (3) full fiscal years of the Company ended before the Separation from Service, or (B)Executive’s target annual bonus established for the bonus plan year in which the Separation fromService occurs. If Executive has been employed by the Company for fewer than three (3) but atleast one (1) full fiscal year of the Company ended before the Separation from Service, the averageof the bonuses earned in the two (2) full fiscal years of the Company ended before the Separationfrom Service, or the amount of the bonus earned in the one full fiscal year of the Company endedbefore the Separation from Service, as the case may be, shall be substituted for the averagereferred to in (A) above.          (b) If the Separation from Service occurs after the end of a bonus year under any Companysponsored bonus plan and before the bonus with respect to that bonus year has been paid, theCompany shall pay to Executive, not later than ten (10) business days after the Separation fromService, an amount equal to the bonus for that bonus year to which Executive would have beenentitled had the bonus plan for that bonus year remained in effect without any change and hadExecutive remained in the employ of the Company through the date on which bonuses for that bonusyear were paid.          (c) The Company shall make a lump sum cash payment to Executive, not later than ten (10)business days after the Separation from Service, in an amount equal to the greater of (i)Executive’s unpaid targeted annual bonus, established for the bonus year in which the Separationfrom Service occurs, multiplied by a fraction, the numerator of which is the number of daysExecutive was employed by the Company in the bonus year through the Separation from Service, andthe denominator of which is 365, or (ii) the bonus amount specifically guaranteed to Executive forthat bonus year under any other agreement between the Company and Executive.          (d) The Company shall continue to provide Executive with group term life insurance for three(3) years following the Termination Date, except that the Company may stop providing group termlife insurance earlier if and when Executive accepts full time employment with a subsequentemployer and that employer provides Executive with group term life insurance coverage. The groupterm life insurance benefits to be provided by the Company pursuant to this paragraph shall beprovided to Executive at the same cost to Executive, and at the same coverage
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level, as is applicable to continuing executives in comparable positions from time to timeduring the period the benefits are continued.          (e) All stock options granted to Executive then outstanding will become fully exercisable asof the date of the Change of Control, and all restrictions and conditions applicable to restrictedstock granted to Executive will be deemed to have been satisfied as of the date of the Change ofControl.          (f) The Executive shall be entitled to continue his medical and dental insurance in accordancewith COBRA, provided the Executive timely elects such coverage and satisfies all other eligibilityrequirements under COBRA. If the Executive elects COBRA coverage, the Executive shall pay the fullCOBRA premium at his own expense.          (g) On the first bi-weekly payroll date during the Second Payment Period, in addition to anyother amounts due at that time to Executive pursuant to other provisions of this Agreement, theCompany shall pay Executive the sum of Sixty-Four Thousand Seven Hundred and Ninety-Nine Dollars($64,799).     ***3. Earned but Unpaid Base Salary and Accrued Paid Time Off Pay Payable Upon Any Separation fromService; Treatment of Long-Term Incentive Awards***. Upon Executive’s Separation from Service for anyreason and at any time, the Company shall pay to Executive (or, where appropriate, to Executive’sBeneficiary), not later than ten (10) days after the Separation from Service, (a) all earned butunpaid Base Salary through the Separation from Service, and (b) an amount equal to the aggregatedollar value of all paid time off earned but not taken by Executive (“Accrued Paid Time Off Pay”)before the Separation from Service. In addition, upon such Separation from Service, alloutstanding long-term incentive awards shall be subject to the treatment provided under theapplicable long-term incentive plan of the Company except as explicitly provided otherwise in thisAgreement.     ***4. Separation from Service Due to Retirement, Disability, or Death***. If Executive has a Separationfrom Service due to Retirement, Disability, or death while this Agreement remains in effect(whether before or after the occurrence of a Change of Control), neither Executive nor Executive’sBeneficiaries will be entitled to Severance Benefits or Change of Control Severance Benefits undereither of Sections 1 or 2 but Executive or Executive’s Beneficiaries, as appropriate, will beentitled to the payments provided for in Section 3 and to such benefits as may be provided underthe terms of the Company’s disability, retirement, survivor’s benefits, insurance, and otherapplicable plans and programs of the Company then in effect.     ***5. Separation from Service for Cause or by Executive other than for Good Reason***. If Executive hasa Separation from Service by the Company for Cause or by Executive other than for Good Reason whilethis Agreement remains in effect (whether before or after the occurrence of a Change of Control)and Section 6 does not apply, neither Executive nor Executive’s Beneficiaries will be entitled toSeverance Benefits or Change of Control Severance
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Benefits under either of Sections 1 or 2 but Executive or Executive’s Beneficiaries, asappropriate, will be entitled to the payments provided for in Section 3 and the Company shall payto Executive such other amounts to which Executive is entitled under any compensation plans of theCompany, at the time such payments are due. Except as provided in this Section 5, the Companyshall have no further obligations to Executive under this Agreement.     ***6. Special Provision Applicable only if Executive has a Separation from Service both in Advance ofand in Contemplation of a Change of Control***. If Executive has a Separation from Service by theCompany (a) in contemplation of and not more than six (6) full calendar months before theoccurrence of a Change of Control, and (b) under circumstances such that if the Separation fromService had occurred immediately after that Change of Control Executive would have been entitled toChange of Control Severance Benefits under Section 2 above, then the Company shall pay and provideto Executive all of the amounts and benefits specified in Section 2, reduced by such amounts andsuch benefits, if any, that the Company has otherwise paid and provided to Executive pursuant toSection 1 above. The Company shall make any cash payment required pursuant to this Section 6within ten (10) days of the occurrence of the Change of Control.     ***7. Change of Control Ignored if Employment Continues for More than Two Years Thereafter***. IfExecutive’s employment continues for more than two (2) years following the occurrence of any Changeof Control, that particular Change of Control will be deemed never to have occurred for purposes ofthis Agreement.     **8. *****Term of Agreement***This Agreement shall be effective as of the Effective Date (withoutinterruption from the prior Agreement) and shall continue in effect hereafter until a Separationfrom Sevice occurs pursuant to one of Sections 1, 2, 4, or 5, with due consideration of Sections 3,6 and 7 hereof. The parties may, by mutual agreement, at any time and from time to time modify orterminate the term of this Agreement under this Section 8.     ***9. Excise Tax***.     If there is any conflict between the provisions of this Section 9 and any other provision ofthis Agreement regarding payments to be made or benefits to be provided to Executive under thisAgreement following a Change of Control, the provisions of this Section 9 shall govern.          ***9.1. Acknowledgement***. The Company and Executive acknowledge that, following a Change of Control,one or more payments or distributions to be made by the Company to or for the benefit of Executive(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement,under some other plan, agreement, or arrangement, or otherwise, and including, without limitation,any income recognized by Executive upon exercise of an option granted by the Company to acquireCommon Shares issued by the Company) (a “Payment”) may be determined to be an Excess ParachutePayment that is not deductible by the Company for federal income tax purposes and with respect towhich Executive will be subject to an excise tax because of Sections 280G and 4999, respectively,of the Code (hereinafter referred to respectively as “Section 280G” and “Section 4999”).
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          ***9.2. Procedure***. If Executive’s employment is terminated after a Change of Control occurs, theAccounting Firm, which, subject to any inconsistent position asserted by the Internal RevenueService, shall make all determinations required to be made under this Section 9, shall determine(a) the maximum amount of Parachute Payments that Executive may receive without becoming subject tothe excise tax imposed by Section 4999 and without the Company suffering a loss of deduction underSection 280G (this maximum amount being the “280G Limit”) and (b) whether, if all Payments weremade without regard to this Section 9, any Payment would be an Excess Parachute Payment. TheAccounting Firm shall communicate its determination, together with detailed supportingcalculations, to the Company and to Executive within 30 days after the Termination Date or suchearlier time as is requested by the Company. The Company and Executive shall cooperate with eachother and the Accounting Firm and shall provide necessary information so that the Accounting Firmmay make all such determinations. The Company shall pay all of the fees of the Accounting Firm forservices performed by the Accounting Firm as contemplated in this Section 9.          ***9.3. Reduction or Gross Up if Payments Would Constitute Excess Parachute Payments***. If anyPayment would, if made without regard to this Section 9, constitute an Excess Parachute Payment,either (a) the payments to be made to Executive under this Agreement without regard to this Section9 shall be reduced as provided in Section 9.4, or (b) the Company shall make all of the payments tobe made to Executive under all of the provisions of this Agreement other than this Section 9 and,in addition, the Company shall make the Gross Up Payments specified in Section 9.5.          ***9.4. Reduction in Payments if Aggregate Parachute Payments Would Otherwise not Exceed 110% of280G Limit***. If the aggregate value of all Parachute Payments does not exceed 110% of the 280GLimit, the payments to be made to Executive under this Agreement shall be reduced, but not belowzero, by such amount so that the aggregate value of the Parachute Payments actually made toExecutive will be One Dollar ($1.00) less than the 280G Limit.          ***9.5 Gross Up Payment if Aggregate Parachute Payments Exceed 110% of 280G Limit***. If theaggregate value of all Parachute Payments exceeds 110% of the 280G Limit and Executive is thereforesubject to the excise tax under Section 4999 on Excess Parachute Payments received (the “ExciseTax”), the Company shall, in addition to making all other Payments to Executive, make additionalpayments (“Gross Up Payments”) to Executive, from time to time and at the same time as ParachutePayments are made to Executive, in such lump sum amount or amounts as are sufficient, from time totime, to place Executive in the same net after tax position that Executive would have been in if(a) Executive had to bear (without any Gross Up Payment under this Section 9.5) the Excise Tax withrespect to 10% of all Parachute Payments received by Executive, (b) the Excise Tax did nototherwise apply to any Payments, and (c) Executive had not incurred any interest charges orpenalties with respect to the imposition of any portion of the Excise Tax; provided, however, thatsuch Gross Up Payments shall be paid on or before the last day of the calendar year following thecalendar year in which the Executive remits the Excise Tax. For purposes of this Section 9, allpayments received by Executive from the Company (whether under this Agreement or otherwise andincluding all Gross Up Payments received by Executive) shall be deemed to be subject to Federal andstate tax
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at the highest marginal tax rates applicable to Executive in the year in which the Gross Up Paymentis made.          ***9.6 Imposition of Excise Tax Following Reduction of Payments Prescribed by Section 9.4***. If,notwithstanding a reduction of payments to Executive under this Agreement as contemplated bySection 9.4, it is ultimately determined by a court or pursuant to a final determination by theInternal Revenue Service that any payment received by Executive is an Excess Parachute Payment andExecutive is therefore obligated to pay Excise Tax with respect to any Payments, the Company shallmake Gross Up Payments to Executive from time to time, in such lump sum amount or amounts as aresufficient, from time to time, to place Executive in the same net after tax position that Executivewould have been in if no such Payments constituted Excess Parachute Payments subject to the ExciseTax, the reduction of Parachute Payments prescribed by Section 9.4 had been made exactly asintended (i.e., to the extent but only to the extent necessary to avoid the Excise Tax), andExecutive had not incurred any interest charges or penalties with respect to the imposition of anyExcise Tax.          ***9.7 Imposition of Additional Excise Tax Following Payment of Gross Up Prescribed by Section9.5***. If the Internal Revenue Service determines that any Payment gives rise, directly orindirectly, to liability on the part of Executive for the Excise Tax (and/or any penalties and/orinterest with respect to any Excise Tax) in excess of the amount, if any, previously determined bythe Accounting Firm, the Company shall make further additional cash payments to Executive not laterthan the due date of any payment indicated by the Internal Revenue Service with respect to thesematters, in such amounts as are necessary to put Executive in the same position, after payment ofall federal and state taxes (whether income taxes, Excise Taxes, or other taxes) and any and allpenalties and interest with respect to any such taxes, as Executive would have been in if theAccounting Firm had anticipated the later determination by the Internal Revenue Service and theCompany had made appropriate Gross Up Payments to the extent contemplated by Section 9.5 in thefirst instance.          ***9.8 Potential Contest by the Company of Internal Revenue Service Determination***. If theCompany desires to contest any determination by the Internal Revenue Service with respect to theamount of Excise Tax, Executive shall, upon receipt from the Company of an unconditional writtenundertaking to indemnify and hold Executive harmless (on an after tax basis) from any and alladverse consequences that might arise from the contesting of that determination, cooperate with theCompany in that contest at the Company’s sole expense. Nothing in this Section 9.8 shall requireExecutive to incur any expense other than expenses with respect to which the Company has paid toExecutive sufficient sums so that after the payment of the expense by Executive and taking intoaccount the payment by the Company with respect to that expense and any and all taxes that may beimposed upon Executive as a result of Executive’s receipt of that payment, the net effect is nocost to Executive. Nothing in this Section 9.8 shall require Executive to extend the statute oflimitations with respect to any item or issue in Executive’s tax returns other than, exclusively,the Excise Tax. If, as the result of the contest of any assertion by the Internal Revenue Servicewith respect to Excise Tax, Executive receives a refund of Excise Tax previously paid and/or anyinterest with respect thereto, Executive shall promptly pay to the Company such amount as willleave Executive, net of the repayment and all tax effects, in the same position, after all taxesand interest, that he would have been in if the refunded Excise Tax had never been paid.
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     ***10. Outplacement Assistance***. Following a Separation from Service in which Severance Benefits orChange of Control Severance Benefits are payable hereunder, the Company shall provide Executivewith outplacement services obtained by the Company at its cost and commensurate with theoutplacement services typically provided by the Company to Executives who left the employ of theCompany before the Effective Date of this Agreement, until Executive obtains subsequent employmentor self-employment; provided, however, that such outplacement shall not continue beyond the lastday of the second calendar year following the calendar year in which the Executive’s TerminationDate or “Separation from Service” occurs.     ***11. The Company’s Payment Obligation***.          ***11.1 Payment Obligations Absolute***. The Company’s obligation to make the payments and provide thebenefits provided for herein shall be absolute and unconditional, and shall not be affected by anycircumstances, including, without limitation, any offset, counterclaim, recoupment, defense, orother right which the Company may have against Executive or anyone else. All amounts payable bythe Company hereunder shall be paid without notice or demand. Each and every payment madehereunder by the Company shall be final, and the Company shall not seek to recover all or any partof such payment from Executive or from whomsoever may be entitled thereto, for any reasonswhatsoever.          ***11.2 No Mitigation***. Executive shall not be obligated to seek other employment in mitigation of theamounts payable or benefits to be provided under any provision of this Agreement, and the obtainingof any such other employment shall in no event effect any reduction of the Company’s obligations tomake the payments or provide any benefits as required under this Agreement, except to the limitedextent provided above in cases where a subsequent employer provides group term life insurancecoverage.          ***11.3 Source of Payments and Benefits***. All payments under this Agreement shall be made solely fromthe general assets of the Company (or from a grantor trust, if any, established by the Company forpurposes of making payments under this Agreement and other similar agreements), and Executive shallhave the rights of an unsecured general creditor of the Company with respect thereto.     ***12. Legal Remedies.***          ***12.1 Payment of Legal Fees***. Unless prohibited by law, the Company shall pay all legal fees, costsof arbitration and/or litigation, prejudgment interest, and other expenses incurred in good faithby Executive as a result of the Company’s refusal to provide the Severance Benefits or Change ofControl Severance Benefits to which Executive deems Executive to be entitled under this Agreement,as a result of the Company’s contesting the validity, enforceability, or interpretation of thisAgreement, or as a result of any conflict between the parties pertaining to this Agreement,provided, however, that the Company shall be reimbursed by Executive for all such fees and expensesif, but only if, it is ultimately determined by a court of competent jurisdiction or by thearbitrators, as the case may be, that Executive had no reasonable grounds for the positionpropounded by Executive in the arbitration and/or litigation (which determination need not be madesimply because Executive fails to succeed in the arbitration and/or litigation).
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          ***12.2 Arbitration***. Subject to the following sentences, any dispute or controversy arising under orin connection with this Agreement shall be settled by mandatory arbitration (in lieu oflitigation), conducted before a panel of three (3) arbitrators sitting in a location selected byExecutive within fifty (50) miles from Hudson, Ohio, in accordance with the rules of the AmericanArbitration Association then in effect. Any dispute which arises with respect to Executive’salleged violation of the prohibition on competition or any other restriction contained in Section14 of this Agreement shall be settled by judicial proceedings (in any court of competentjurisdiction with respect to such dispute or claim). Except as provided above for claims ordisputes under Section 14, judgment may be entered on the award of the arbitrator in any courthaving proper jurisdiction.     ***13. Withholding***. The Company shall be entitled to withhold from any amounts payable under thisAgreement all taxes as legally shall be required (including, without limitation, any United Statesfederal income, FICA and Medicare taxes, and any other state, city, or local taxes).     ***14. Noncompetition***.          ***14.1 Prohibition on Competition***. Without the prior written consent of the Company, during the termof this Agreement, and, if Severance Benefits are paid hereunder, thereafter during the eighteen(18) month period beginning on the Termination Date or if Change of Control Severance Benefits arepaid hereunder, thereafter through the second (2nd) anniversary of the Termination Date,Executive shall not, as an employee, an officer, or as a director, engage directly or indirectly inany business or enterprise that engages to any significant extent within the United Sates ofAmerica in the sale at retail or direct marketing to consumers of fabric and craft components.Notwithstanding the foregoing, Executive may purchase and hold for investment less than two percent(2%) of the shares of any corporation whose shares are regularly traded on a national securitiesexchange or in the over-the-counter market.          ***14.2 Disclosure of Information***. Executive acknowledges that Executive has and has had access toand knowledge of certain confidential and proprietary information of the Company, which isessential to the performance of Executive’s duties as an employee of the Company. Executive willnot, during or after the term of Executive’s employment by the Company, in whole or in part,disclose such information to any person, firm, corporation, association, or other entity for anyreason or purpose whatsoever, nor shall Executive make use of any such information for his ownpurposes.          ***14.3 Covenants Regarding Other Employees***. During the term of this Agreement and thereafter duringany period during which Executive is subject to the restriction set forth in Section 14.1,Executive shall not attempt to induce any employee of the Company to terminate his or heremployment with the Company or accept employment with any competitor of the Company and Executiveshall not interfere in any similar manner with the business of the Company.     ***15. Successors and Assignment***.          ***15.1 Successors to the Company***. The Company will require any successor (whether direct orindirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of thebusiness and/or assets of the Company to expressly assume and agree to
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perform the Company’s obligations under this Agreement in the same manner and to the same extentthat the Company would be required to perform them if no such succession had taken place. Failureof the Company to obtain such assumption and agreement prior to the effective date of any suchsuccession shall be a breach of this Agreement and shall entitle Executive to notify the Companythat, unless the failure is remedied within thirty (30) days after delivery of the notice fromExecutive, Executive’s employment will terminate as of the thirty-first (31st) day after thedelivery of the notice. If any such notice is given and the failure is not so remedied, Executivewill be entitled to receive the same payments and benefits from the Company, and on the sameschedule, as if the Company had undergone a Change of Control on the date of the succession andExecutive had thereupon terminated his employment for Good Reason.          ***15.2 Assignment by Executive***. This Agreement shall inure to the benefit of and be enforceable byExecutive and each of Executive’s personal or legal representatives, executors, administrators,successors, heirs, distributes, devisees, and legatees. If Executive dies while any amount wouldstill be payable to Executive hereunder had Executive continued to live, all such amounts, unlessotherwise provided herein, shall be paid in accordance with the terms of this Agreement, toExecutive’s Beneficiary. If Executive has not named a Beneficiary, then such amounts shall be paidto Executive’s devisee, legatee, or other designee, or if there is no such designee, to Executive’sestate.     ***16. Miscellaneous***.          ***16.1 Employment Status***. Except as may be provided under any other agreement between Executive andthe Company, the employment of Executive by the Company is “at will,” and, prior to the effectivedate of a Change of Control, may be terminated by either Executive or the Company at any time,subject to applicable law.          ***16.2 Entire Agreement***. This Agreement sets forth the entire agreement between the parties withrespect to severance benefits to be provided upon any termination of Executive’s employment andsupersedes any and all prior employment, retention, and/or change of control agreements betweenExecutive and the Company, including, without limitation, the Prior Agreement.          ***16.3 Beneficiaries***. Executive may designate one or more persons or entities as the primary and/orcontingent Beneficiaries of any Severance Benefits or Change of Control Severance Benefits owing toExecutive under this Agreement. Such designation must be in the form of a signed writingacceptable to the Committee. Executive may make or change such designation at any time.          ***16.4 Severability***. In the event any provision of this Agreement shall be held illegal or invalidfor any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement,and the Agreement shall be construed and enforced as if the illegal or invalid provision had notbeen included.          ***16.5 Modification***. No provision of this Agreement may be modified, waived, or discharged unlesssuch modification, waiver, or discharge is agreed to in writing and signed by Executive and by anauthorized representative of the Company, or by the respective parties’ legal representatives andsuccessors.
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          ***16.6 Applicable Law***. To the extent not preempted by the laws of the United States, the laws of thestate of Ohio, applicable to contracts made and to be performed wholly within that state, shall bethe controlling law in all matters relating to this Agreement.     ***17. Definitions***. Whenever used in this Agreement, the following capitalized terms shall have themeanings set forth below:          ***17.1 “Accounting Firm”***means the independent auditors of the Company for the Fiscal Year precedingthe year in which the Change of Control occurred and such firm’s successor or successors; provided,however, if such firm is unable or unwilling to serve and perform in the capacity contemplated bythis Agreement, the Company shall select another national accounting firm of recognized standing toserve and perform in that capacity under this Agreement, except that such other accounting firmshall not be the then independent auditors for the Company or any of its affiliates (as defined inRule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended).          ***17.2 “280G Limit”***has the meaning assigned to it in Section 9.2.          ***17.3 “Base Salary”***means an amount equal to Executive’s base annual salary at the highest ratepayable at any time before the date of a Separation from Service. For this purpose, Base Salaryshall not include bonuses, long-term incentive compensation, or any remuneration other than baseannual salary.          ***17.4 “Beneficial Owner”***shall have the meaning ascribed to such term in Rule 13d-3 of the GeneralRules and Regulations under the Exchange Act.          ***17.5 “Beneficiary”***means the persons or entities designated or deemed designated by Executivepursuant to Section 15.2 herein.          ***17.6 “Board”***means the Board of Directors of the Company.          ***17.7 “Cause”***shall mean the occurrence of any one or more of the following:          (a) The willful and continued failure by Executive to substantially perform his normal duties(other than any such failure resulting from Executive Disability), after a written demand forsubstantial performance is delivered to Executive that specifically identifies the manner in whichthe Committee believes that Executive has not substantially performed his duties, and Executive hasfailed to remedy the situation within thirty (30) business days of receiving such notice;          (b) Executive’s conviction for committing an act of fraud, embezzlement, theft, or othercriminal act constituting a felony; or          (c) The willful engaging by Executive in gross negligence materially and demonstrablyinjurious to the Company. However, no act, or failure to act on Executive’s part shall beconsidered “willful” unless done, or omitted to be done, by Executive not in good faith and withoutreasonable belief that his action or omission was not in or not opposed to the best interest of theCompany.
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          ***17.8 Change of Control***. A “Change of Control” for purposes of Section 2(e) shall be deemed to haveoccurred if at any time or from time to time while this Agreement is in effect:          (a) Any person (other than the Company, any of its Subsidiaries, any member of either of theFounding Families, any employee benefit plan or employee stock ownership plan of the Company, orany person organized, appointed, or established by the Company for or pursuant to the terms of anysuch plan), alone or together with any of its affiliates, becomes the beneficial owner of fifteenpercent (15%) or more (but less than fifty percent (50%)) of the Voting Shares then outstanding;          (b) Any person (other than the Company, any of its Subsidiaries, any employee benefit plan oremployee stock ownership plan of the Company, or any person organized, appointed, or established bythe Company for or pursuant to the terms of any such plan), alone or together with any of itsaffiliates, becomes the beneficial owner of fifty percent (50%) or more of the Voting Shares thenoutstanding;          (c) Any person commences or publicly announces an intention to commence a tender offer orexchange offer the consummation of which would result in the person becoming the beneficial ownerof fifteen percent (15%) or more of the Voting Shares then outstanding;          (d) At any time during any period of twenty-four (24) consecutive months, individuals who weredirectors at the beginning of the 24-month period no longer constitute a majority of the members ofthe Board of the Company, unless the election, or the nomination for election by the Company’sshareholders, of each director who was not a director at the beginning of the period is approved byat least a majority of the directors who (i) are in office at the time of the election ornomination, and (ii) were directors at the beginning of the period;          (e) A record date is established for determining shareholders entitled to vote upon (i) amerger or consolidation of the Company with another corporation in which those persons who areshareholders of the Company immediately before the merger or consolidation are to receive or retainless than sixty percent (60%) of the stock of the surviving or continuing corporation, (ii) a saleor other disposition of all or substantially all of the assets of the Company, or (iii) thedissolution of the Company;          (f) (i) The Company is merged or consolidated with another corporation and those persons whowere shareholders of the Company immediately before the merger or consolidation receive or retainless than sixty percent (60%) of the stock of the surviving or continuing corporation, (ii) thereoccurs a sale or other disposition of all or substantially all of the assets of the Company, or(iii) the Company is dissolved; or          (g) Any person who proposes to make a “control share acquisition” of the Company, within themeaning of Section 1701.01(Z) of the Ohio General Corporation Law, submits or is required to submitan acquiring person statement to the Company.Notwithstanding anything herein to the contrary, if an event described in clause (b), clause (d),or clause (f) above occurs, the occurrence of that event will constitute an irrevocable Change ofControl. Furthermore, notwithstanding anything herein to the contrary, if an event described in
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clause (c) occurs, and the Board either approves such offer or takes no action with respect to suchoffer, then the occurrence of that event will constitute an irrevocable Change of Control. On theother hand, notwithstanding anything herein to the contrary, if an event described in clause (a),clause (e), or clause (g) above occurs, or if an event described in clause (c) occurs and the Boarddoes not either approve such offer or take no action with respect to such offer as described in thepreceding sentence, and a majority of those members of the Board who were Directors prior to suchevent determine, within the 90-day period beginning on the date such event occurs, that the eventshould not be treated as a Change of Control, then, from and after the date that determination ismade, that event will be treated as not having occurred. If no such determination is made, aChange of Control resulting from any of the events described in the immediately preceding sentencewill constitute an irrevocable Change of Control on the 91st day after the occurrence of the event.     A “Change of Control” for all other purposes of the Agreement shall be deemed to have occurredif at any time or from time to time while this Agreement is in effect: (i) any one person, or more than one person actingas a group, acquires ownership of stock of the Company that, togetherwith stock held by such person or group, constitutes more than fiftypercent (50%) of the total fair market value or total voting power ofthe stock of the Company;  (ii) a majority of members of the Company’s board ofdirectors is replaced during any twelve (12)-month period by directorswhose appointment or election is not endorsed by a majority of themembers of the Company’s board of directors before the date of theappointment or election; or  (iii) any one person, or more than one person actingas a group, acquires (or has acquired during a twelve (12)-month periodending on the date of the most recent acquisition by such person orpersons) assets from the Company that have a total gross fair marketvalue equal to or more than fifty percent (50%) of the total gross fairmarket value of all of the assets of the Company immediately beforesuch acquisition or acquisitions.          ***17.9 “Change of Control Severance Benefits”***means those payments and benefits that may becomepayable pursuant to Section 2 above.          ***17.10 “Code”***means the United States Internal Revenue Code of 1986, as amended.          ***17.11 “Committee”***means the Compensation Committee of the Board, or any other committee appointedby the Board to perform the functions of the Compensation Committee.          ***17.12 “Company”***means Jo-Ann Stores, Inc., an Ohio corporation, and its successors.
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          ***17.13 “Disability”***means permanent and total disability, within the meaning of Code Section22(e)(3), as determined by the Committee in the exercise of good faith and reasonable judgment,upon receipt of and in reliance on sufficient competent medical advice from one (1) or moreindividuals, selected by the Committee, who are qualified to give professional medical advice,provided, however, that Executive must be entitled to disability benefits under the Companysponsored disability plans or programs.          ***17.14 “Employer”***means the Company and each corporation or other entity with whom the Company wouldbe considered a single employer under Code Sections 414(b) and 414(c), except that in applying CodeSections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporationsunder Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80percent” in each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treas.Regs. Sec. 1.414(c)-2 for purposes of determining a controlled group of trades or businesses underCode Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.          ***17.15 “Excess Parachute Payment”***has the meaning assigned to that term in Q/A-3 (note that althoughinitial capital letters are used on this term in this Agreement, the Q/As do not use initial capsfor this term).          ***17.16 “Exchange Act”***means the United States Securities Exchange Act of 1934, as amended.          ***17.17 “Excise Tax”***has the meaning assigned to that term in Section 9.5.          ***17.18 “Founding Families”***means the families consisting of Betty and Martin Rosskamm and Alma andJustine Zimmerman and their respective issue.          ***17.19 “Good Reason”***(after a Change of Control) means, without Executive’s express written consent,the occurrence, after the occurrence of a Change of Control, of any one or more of the following:          (h) Any material reduction in Executive’s base compensation and short-term and long-termincentive compensation opportunities (to the extent such short-term and long-term incentivecompensation opportunities are a regular and substantial part of Executive’s base compensation)below the amount in effect immediately before the Change of Control or, if higher, the amount ineffect before any reduction in Executive’s base compensation and short-term and long-term incentivecompensation opportunities made in contemplation of the Change of Control.          (i) Any material reduction in Executive’s duties, responsibilities, or position with respectto the Company from the duties, responsibilities, or position as in effect immediately before theChange of Control or as in effect immediately before any reduction in any such item made incontemplation of the Change of Control.
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          (j) Any shift of Executive’s principal place of employment with the Company to a location thatis more than fifty (50) miles (by straight line measurement) from the site of the Company’sheadquarters in Hudson, Ohio at the relevant time.Executive shall have a Separation from Service for Good Reason (after a Change of Control) only if:(i) Executive provides written notice to the Company within ninety (90) days after the initialoccurrence of an above event describing in detail the event and stating that Executive’s employmentwill terminate upon a specified date in such notice (the “Good Reason Termination Date”), whichdate is not earlier than thirty (30) days after the date such notice is provided to the Company(the “Notice Delivery Date”) and not later than ninety (90) days after the Notice Delivery Date,and (ii) the Company does not remedy the event prior to the Good Reason Termination Date.          ***17.20 “Good Reason”***(before a Change of Control) means, without Executive’s express writtenconsent, a material reduction in Executive’s Base Salary other than a reduction that is in the sameproportion as the reduction of the base salaries of every other executive officer of the Company inconnection with an across-the-board reduction of executive base salaries. Executive shall have avoluntary Separation from Service for Good Reason (before a Change of Control) only if: (a)Executive provides written notice to the Company within ninety (90) days after the initialoccurrence of an above event describing in detail the event and stating that Executive’s employmentwill terminate upon a specified date in such notice (the “Good Reason Termination Date”), whichdate is not earlier than thirty (30) days after the date such notice is provided to the Company(the “Notice Delivery Date”) and not later than ninety (90) days after the Notice Delivery Date,and (b) the Company does not remedy the event prior to the Good Reason Termination Date.          ***17.21 “Gross Up Payment”***has the meaning assigned to that term in Section 9.5 above.          ***17.22 “Payment”***has the meaning assigned to that term in Section 9.1 above (except as otherwiseprovided in Section 1(a)).          ***17.23 “Parachute Payment”***has the meaning assigned to that term in Q/A-2 but without reference tosubsection (4) of Q/A-2 (with the effect that a payment otherwise meeting the definition of“Parachute Payment” will be referred to as a Parachute Payment even if the total of all suchParachute Payments is less than three times Executive’s base amount (as defined in Q/A-34) (notethat although initial capital letters are used on this term in this Agreement, the Q/As do not useinitial caps for this term).          ***17.24 “Person”***shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Actand used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).          ***17.25 “Q/As”***means the entire series of Questions and Answers set forth in Section 1.280G-1 of theTreasury Regulations issued under Section 280G of the Code (which
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Section of regulations is presented in Question and Answer format); references to particularQuestion and Answers will be, for example, to “Q/A-1.”          ***17.26 “Retirement”***means a voluntary Separation from Service by the Executive other than for GoodReason after Executive has either (a) attained age fifty-five (55) and has completed at least ten(10) full years of continuous service with the Company, or (b) has attained age sixty-five (65)(without regard to length of service).          ***17.27 “Separation from Service”***means Executive has a termination of employment with the Employer.Whether a termination of employment has occurred shall be determined based on whether the facts andcircumstances indicate the Executive and Employer reasonably anticipate that no further serviceswill be performed by the Executive for Employer; provided, however, that Executive shall be deemedto have a termination of employment if the level of services he would perform for Employer after acertain date permanently decreases to no more than twenty percent (20%) of the average level ofbona fide services performed for Employer (whether as an employee or independent contractor) overthe immediately preceding thirty-six (36)-month period (or the full period of services to Employerif Executive has been providing services to Employer for less than thirty-six (36) months). Forthis purpose, Executive is not treated as having a Separation from Service while he is on amilitary leave, sick leave, or other bona fide leave of absence, if the period of such leave doesnot exceed six (6) months, or if longer, so long as Executive has a right to reemployment withEmployer under an applicable statute or by contract.          ***17.28 “Severance Benefits”***means those payments and benefits that may become payable before theoccurrence of a Change of Control pursuant to Section 1 above.          ***17.29 “Termination Date”***means the date on which any Separation of Service of the Executive becomeseffective.**[REMAINDER OF THIS PAGE INTENTIONAL LEFT BLANK]**
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first writtenabove.      JO-ANN STORES, INC.