exv10w3



 





Exhibit 10.3




JO-ANN STORES, INC.




SUPPLEMENTAL RETIREMENT BENEFIT PLAN




(As Amended and Restated)




(formerly known as the FABRI-CENTERS OF AMERICA, INC.

SUPPLEMENTAL RETIREMENT BENEFIT PLAN)




 









 





JO-ANN STORES, INC.

SUPPLEMENTAL RETIREMENT BENEFIT PLAN




     Jo-Ann Stores, Inc. established this supplemental retirement benefit plan effective April 1,
1979 for the purpose of supplementing the retirement benefits of certain officers and other
management employees who are selected to participate in the Plan in accordance with the terms of
this instrument.



     The terms of this Plan as stated herein shall apply to all amounts deferred under the Plan and
shall be interpreted and applied at all times in accordance with Section 409A of the Internal
Revenue Code of 1986, as amended, and guidance issued thereunder. No amounts shall be subject to
“grandfathering” treatment, even if such amounts were deferred and vested under the Plan before
January 1, 2005.



     The Plan is hereby amended and restated as of January 1, 2005 (except as otherwise
specifically set forth herein):



ARTICLE I.

DEFINITIONS




     For the purpose hereof, the following words and phrases shall have the meanings indicated,
unless a different meaning clearly is required by the context:



     1. “Affiliate” shall mean each corporation or other entity with whom the Company would be
considered a single employer under Code Sections 414(b) and 414(c), except that in applying Code
Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations
under Code Section 414(b), the language “at least 50 percent” shall be used instead of “at least 80
percent” 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 under
Code Section 414(c), the language “at least 50 percent” shall be used instead of “at least 80
percent” in each place it appears in Treas. Regs. Sec. 1.414(c)-2.



     2. The “Beneficiary” of a Participant or retired Participant means the person or persons who
shall have been designated by him from time to time in a writing signed by him and delivered to the
Company. In the event the Participant fails to designate a beneficiary or his or her designated
Beneficiary predeceases the Participant, then any benefits hereunder shall be payable to the
following “default” beneficiaries of the Participant (determined at the time of payment) in the
following order of priority: (a) the Participant’s surviving spouse known to the Committee, if any;
(b) the Participant’s living children known to the Committee in equal shares; (c) the Participant’s
living parents known to the Committee in equal shares; (d) the Participant’s surviving siblings
known to the Committee in equal shares; or (e) the beneficiary’s estate for distribution in
accordance with the terms of the beneficiary’s last will and testament or as a court of competent
jurisdiction shall determine.



     3. “Board of Directors” or “Board” shall mean the Board of Directors of the Company or any
committee thereof authorized to act on behalf of the Board.



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     4. “Cause” means the occurrence of any one of the following:




	 	(a)	 	The willful and continued failure by the Participant to
substantially perform his or her normal duties (other than any such failure
resulting from an injury or illness of the Participant resulting in payments
under the Company’s group disability program), after a written demand for
substantial performance is delivered to the Participant that specifically
identifies the manner in which the Committee believes that the Participant has
not substantially performed his or her duties, and the Participant has failed
to remedy the situation within thirty (30) business days of receiving such
notice;
	 
	 	(b)	 	The Participant’s conviction for committing, plea of nolo
contendere regarding, or an admission to the Company of, an act of fraud,
embezzlement, theft, or other criminal act constituting a felony;
	 
	 	(c)	 	The willful engaging by the Participant in gross negligence
materially and demonstrably injurious to the Company; or
	 
	 	(d)	 	The willful engaging by the Participant, in an act of
disloyalty to the Company.




However, no act or failure on the Participant’s part shall be considered “willful” unless done or
omitted to be done by the Participant not in good faith and without reasonable belief that his or
her action or omission was not in or not opposed to the best interests of the Company.




     5. “Change in Control” of the Company shall be deemed to have occurred if:




	 	(a)	 	any one person, or more than one person acting as a group,
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company;
	 
	 	(b)	 	any one person, or more than one person acting as a group,
acquires (or has acquired during a 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of the
Company possessing 30% or more of the total voting power of the stock of the
Company;
	 
	 	(c)	 	a majority of members of the Company’s board of directors is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Company’s board of
directors before the date of the appointment or election; or
	 
	 	(d)	 	any one person, or more than one person acting as a group,
acquires (or has acquired during a 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company




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	 	 	 	that have a total gross fair market value equal to or more than 40% of the
total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions.





     6. “Code” means the Internal Revenue Code of 1986, as amended.



     7. “Committee” means the Compensation Committee of the Company’s Board of Directors, or any
other committee appointed by the Company’s Board of Directors to perform functions of the
Compensation Committee.



     8. “Company” means Jo-Ann Stores, Inc., an Ohio Corporation, its corporate successors, the
surviving corporation resulting from any merger or consolidation of Jo-Stores, Inc. with any other
corporation or corporations.



     9. “Early Retirement” means the Participant’s Separation from Service, other than on account
of Retirement, death, Total Disability or for Cause, after he: (a) has been employed by the Company
for at least twenty (20) years; or (b) has been employed by the Company for at least ten (10) years
and has attained age fifty-five (55).



     10. “Employee” means any salaried employee of the Company whose principal responsibilities are
executive or managerial, who may or may not be an officer of the Company or a member of its Board
of Directors.



     11. “Employer” means the Company and any Affiliate.



     12. “Maximum Supplemental Retirement Benefit Amount” for each Participant shall be the amount
determined by the Board of Directors for such Participant upon his or her selection as a
Participant or such greater amount as the Board of Directors may from time to time determine. The
Company shall maintain a Schedule in connection with this Plan on which shall be set forth the name
of each Participant and, opposite his or her name, his or her Maximum Supplemental Retirement
Benefit Amount.



     13. “Participant” means any Employee who is selected from time to time by the Beard of
Directors of the Company to participate in the Plan,



     14. “Plan” means the supplemental retirement benefit plan as set forth herein, together with
all amendments thereto, which Plan shall be called the “Jo-Ann Stores, Inc. Supplemental Retirement
Benefit Plan”.



     15. “Retirement” means the Participant’s Separation from Service, other than on account of
Early Retirement, death, Total Disability or for Cause, on or after the date he or she attains age
sixty-five (65).



     16. “Separation from Service” means the Participant has a termination of employment with the
Employer. Whether a termination of employment has occurred shall be determined based on whether
the facts and circumstances indicate the Participant and the Employer reasonably anticipate that no
further services will be performed by the Participant for the Employer; provided, however, that a
Participant shall be deemed to have a termination of



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employment if the level of services he or she would perform for the Employer after a certain
date permanently decreases to no more than twenty percent (20%) of the average level of bona fide
services performed for the Employer (whether as an employee or independent contractor) over the
immediately preceding thirty-six (36)-month period (or the full period of services to the Employer
if the Participant has been providing services to the Employer for less than thirty-six (36)
months). For this purpose, a Participant is not treated as having a Separation from Service while
he or she is on a military leave, sick leave, or other bona fide leave of absence, if the period of
such leave does not exceed six (6) months, or if longer, so long as the Participant has a right to
reemployment with the Employer under an applicable statute or by contract.



     17. “Specified Employee” means any Participant who is an officer of the Company.



     18. “Total Disability” means the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than twelve (12)
months.



ARTICLE II.

SUPPLEMENTAL NORMAL RETIREMENT BENEFITS




     1. Eligibility. A Participant shall be eligible for a supplemental normal retirement
benefit upon his or her Retirement.



     2. Amount of Payment. The supplemental normal retirement benefit of a Participant who
is eligible therefor under this Article II shall be an amount equal to his or her Maximum
Supplemental Retirement Benefit Amount (reduced by the total of any amounts previously received by
the Participant as supplemental disability retirement benefit payments under Article IV of the
Plan) and shall be payable in one hundred and eighty (180) equal consecutive monthly installments.
Monthly supplemental normal retirement benefits shall be paid to the retired Participant commencing
with the month following the month of his or her Retirement, and shall be payable monthly
thereafter during the remainder of such one hundred and eighty (180)-month term. Notwithstanding
the preceding, in the event the Participant is a Specified Employee upon his or her Retirement, the
first six (6) monthly installments under this Article II shall be paid in a lump sum in the seventh
(7th) month following the month of his or her Retirement (along with the seventh
(7th) monthly installment), and remaining monthly installments shall be payable monthly
thereafter during the remainder of such one hundred and eighty (180)-month term.



ARTICLE III.

SUPPLEMENTAL EARLY RETIREMENT BENEFITS




     1. Eligibility. A Participant shall be eligible for a supplemental early retirement
benefit upon his or her Early Retirement.



     2. Amount and Payment. The supplemental early retirement benefit of a Participant who
is eligible therefor under this Article III shall be an amount equal to his or her Maximum
Supplemental Retirement Benefit Amount (reduced by the total of any amounts previously received by
the Participant as supplemental disability retirement benefit payments under Article



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IV of the Plan) reduced by five percent (5%) for each full year by which the Participant’s
Early Retirement precedes the date on which the Participant attains age sixty-six (66); provided,
however, that such reduction shall not exceed fifty percent (50%). Payment of a supplemental early
retirement benefit shall be made in the same manner as a supplemental normal retirement benefit
commencing with the month following the month in which the Participant attains age sixty-five (65);
provided, however, that if the Participant is a Specified Employee upon his or her Early
Retirement, in no event shall any payment be made earlier than six (6) months following the
Participant’s Early Retirement. In the event any monthly payment is delayed under the preceding
sentence with respect to a Participant who is a Specified Employee, such payment or payments shall
be paid in a lump sum in the seventh (7th) month following the month of his or her Early
Retirement (along with the normal installment for that month), and remaining monthly installments
shall be payable monthly thereafter during the remainder of such one hundred and eighty (180)-month
term.



ARTICLE IV.

SUPPLEMENTAL DISABILITY RETIREMENT BENEFITS




     1. Eligibility. A Participant shall be eligible for a supplemental disability
retirement benefit upon his or her Total Disability.



     2. Amount and Payment. The supplemental disability retirement benefit of a
Participant who is eligible therefor under this Article IV shall be an amount equal to his or her
Maximum Supplemental Retirement Benefit Amount and shall be payable in two hundred and forty (240)
equal consecutive monthly installments. Monthly supplemental disability retirement benefits shall
be paid to such Participant commencing with the month following the month in which the Total
Disability occurs and shall be payable monthly thereafter until the earlier of: (a) the
Participant’s recovery from the Total Disability prior to age sixty-five (65), or (b) the two
hundred and fortieth (240th) monthly supplemental disability retirement benefit payment
is made.



     3. Proof of Total Disability. The Company may require, to its satisfaction,
certification of a Participant’s Total Disability from a physician acceptable to the Company: (a)
before any supplemental disability retirement benefit payments are made under this Article IV and
(b) from time to time in the event payment of the supplemental disability retirement benefit
commences prior to the Participant’s attainment of age sixty-five (65).



     4. Recovery. In the event a Participant recovers from Total Disability prior to his
or her attainment of age sixty-five (65) and before the two hundred and fortieth (240th)
supplemental monthly disability retirement benefit payment is made, such payments shall cease. If,
following such recovery, the Participant returns to the employ of the Company and subsequently
again becomes Totally Disabled, the monthly supplemental disability retirement benefit payments
shall resume and continue until a total of two hundred and forty (240) such payments have been made
in connection with all periods during which the Participant was Totally Disabled.



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ARTICLE V.

DEATH BENEFITS



In the event the Participant dies after his or her Retirement, Early Retirement or Total Disability
and before his or her benefits under Article II, III or IV, as applicable, have been fully paid,
any remaining amounts shall be paid in a lump sum payment to his or her Beneficiary within thirty
(30) days of the Participant’s death.




ARTICLE VI.

FORFEITURE




     The right of any Participant to a benefit hereunder will be forfeited or, if payment thereof
has begun, all further payments, whether to a Participant or to any person claiming under or
through him, will be discounted and forfeited in the event:



     1. such Participant is discharged for Cause;



     2. such Participant wrongfully discloses any secret process or trade secret of the Company or
any of its subsidiaries;



     3. such Participant engages, either directly or indirectly, as an officer, trustee, employee,
consultant, partner, or substantial shareholder, on his or her own account or in any other
capacity, in a business venture at any time prior to the expiration of ten (10) years following his
or her attainment of age sixty-five (65), which the Company’s Board of Directors reasonably
determines to be competitive with the Company to a degree materially contrary to the Company’s best
interests; or



     4. it is discovered following termination of such Participant’s employment with the Company
that in connection with his or her employment such Participant committed acts constituting grounds
for discharge for Cause.



ARTICLE VII.

ADMINISTRATION




     1. General. The Committee is responsible for the administration of the Plan and is
granted the following rights and duties:




	 	(a)	 	The Committee shall have the exclusive duty, authority and
discretion to interpret and construe the provisions of the Plan, to determine
eligibility for and the amount of any benefit payable under the Plan, and to
decide any dispute which may rise regarding the rights of Participants (or
their beneficiaries) under this Plan;
	 
	 	(b)	 	The Committee shall have the authority to adopt, alter, and
repeal such administrative rules, regulations, and practices governing the
operation of the Plan as it shall from time to time deem advisable;




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	 	(c)	 	The Committee may appoint a person or persons to act on behalf
of, or to assist, the Committee in the administration of the Plan,
establishment of forms (including electronic forms) desirable for Plan
operation, and such other matters as the Committee deems necessary or
appropriate;
	 
	 	(d)	 	The decision of the Committee in matters pertaining to this
Plan shall be final, binding, and conclusive upon the Company, any Affiliate,
the Participant, the Participant’s beneficiary, and upon any person affected by
such decision, subject to the claims procedure set forth in Article VIII; and
	 
	 	(e)	 	In any matter relating solely to a Committee member’s
individual rights or benefits under this Plan, such Committee member shall not
participate in any Committee proceeding pertaining to, or vote on, such matter.





     2. Allocation and Delegation of Duties.




	 	(a)	 	The Committee shall have the authority to allocate, from time
to time, by instrument in writing filed in its records, all or any part of its
respective responsibilities under the Plan to one or more of its members as may
be deemed advisable, and in the same manner to revoke such allocation of
responsibilities. In the exercise of such allocated responsibilities, any
action of the member to whom responsibilities are allocated shall have the same
force and effect for all purposes hereunder as if such action had been taken by
the Committee. The Committee shall not be liable for any acts or omissions of
such member. The member to whom responsibilities have been allocated shall
periodically report to the Committee concerning the discharge of the allocated
responsibilities.
	 
	 	(b)	 	The Committee shall have the authority to delegate, from time
to time, by written instrument filed in its records, all or any part of its
responsibilities under the Plan to such person or persons as the Committee may
deem advisable (and may authorize such person to delegate such responsibilities
to such other person or persons as the Committee shall authorize) and in the
same manner to revoke any such delegation of responsibility. Any action of the
delegate in the exercise of such delegated responsibilities shall have the same
force and effect for all purposes hereunder as if such action had been taken by
the Committee. The Committee shall not be liable for any acts or omissions of
any such delegate. The delegate shall periodically report to the Committee
concerning the discharge of the delegated responsibilities.





ARTICLE VIII.

CLAIMS PROCEDURE




     1. General. A Participant or Beneficiary (“claimant”) who believes he or she is
entitled to Plan benefits which have not been paid may file a written claim for benefits with the
Committee within one (1) year of the Participant’s Separation from Service. If any such claim is



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not filed within one (1) year of the Participant’s Separation from Service, neither the Plan
nor the Company or any Affiliate shall have any obligation to pay the disputed benefit and the
claimant shall have no further rights under the Plan. If a timely claim for a Plan benefit is
wholly or partially denied, notice of the decision will be furnished to the claimant by the
Committee within a reasonable period of time, not to exceed sixty (60) days (or forty-five (45)
days in the event of a claim involving a Total Disability determination), after receipt of the
claim by the Committee. The Committee may extend the initial period up to any additional sixty
(60) days (or thirty (30) days, in the case of a claim involving a Total Disability determination),
provided the Committee determines that the extension is necessary due to matters beyond the Plan’s
control and the claimant is notified of the extension before the end of the initial 60-day (or, as
applicable, 45-day) period and the date by which the Committee expects to render a decision. (In
the case of a claim involving a Total Disability determination, the Committee may extend this
period for an additional thirty (30) days if the claimant is notified of the extension before the
end of the initial 30-day extension.) Any claimant who is denied a claim for benefits will be
furnished written notice setting forth:





	 	(a)	 	the specific reason or reasons for the denial;
	 
	 	(b)	 	specific reference to the pertinent Plan provision upon which
the denial is based;
	 
	 	(c)	 	a description of any additional material or information
necessary for the claimant to perfect the claim; and
	 
	 	(d)	 	an explanation of the Plan’s appeals procedure.





     2. Appeals Procedure. To appeal a denial of a claim, a claimant or the claimant’s
duly authorized representative:




	 	(a)	 	may request a review by written application to the Committee
not later than sixty (60) days (or one-hundred eighty (180) days in the case of
a claim involving a Total Disability determination) after receipt by the
claimant of the written notification of denial of a claim;
	 
	 	(b)	 	may review pertinent documents; and
	 
	 	(c)	 	may submit issues and comments in writing.




A decision on review of a denied claim will be made by the Committee not later than sixty (60) days
(or forty-five (45) days in the event of a claim involving a Total Disability determination) after
receipt of a request for review, unless special circumstances require an extension of time for
processing, in which case a decision will be rendered within a reasonable period of time, but not
later than one hundred twenty (120) days (or ninety (90) days in the event of a claim involving a
Total Disability determination) after receipt of a request for review. The decision on review will
be in writing and shall include the specific reasons for the denial and the specific references to
the pertinent Plan provisions on which the decision is based.




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ARTICLE IX.

AMENDMENT AND TERMINATION




     The Company reserves the right to amend or terminate the Plan at any time by action of its
Board of Directors; provided, however, that no such action shall adversely affect any individual
who is a Participant under the Plan prior to such amendment or termination or any Participant or
Beneficiary who is receiving supplemental retirement benefit payments hereunder.



     Notwithstanding the preceding, the Company may, by action of its Board of Directors, within
the thirty (30) days preceding or twelve (12) months following a Change in Control, partially
terminate the Plan and distribute benefits to all affected Participants within twelve (12) months
after such action, provided that all plans sponsored by the service recipient immediately after the
Change in Control (which are required to be aggregated with this Plan pursuant to Code Section
409A) are also terminated and liquidated with respect to each affected Participant.



ARTICLE X.

MISCELLANEOUS




     1. Non-Alienation of Rights or Benefits. Neither the Participant nor any Beneficiary
shall encumber or dispose of his or her right to receive any payments hereunder, which payments or
the right thereto are expressly declared to be non-assignable and nontransferable. If a Participant
or Beneficiary without the written consent of the Company attempts to assign, transfer, alienate or
encumber his or her right to receive any payment hereunder or permits the same to be subject to
alienation, garnishment, attachment, execution or levy of any kind, then thereafter during the life
of such Participant or of such Beneficiary, as the case may be, and also during any period in which
any Participant’s Beneficiary is incapable in the judgment of the Company of attending to his or
her financial affairs, any payment which the Company is required to make hereunder may be made, in
the discretion of the Company, directly to such Participant or to such Beneficiary or to any other
person for his or her use or benefit or that of his or her dependents, if any, including any person
furnishing goods or services to or for his or her use or benefit or the use or benefit of his or
her dependents, if any. Each such payment may be made without the intervention of a guardian, the
receipt of the payee shall constitute a complete acquittance to the Company with respect thereto,
and the Company shall have no responsibility for the proper application thereof.



     2. No Death Benefit. No benefits shall be payable under this Plan in the event a
Participant dies prior to his or her Retirement, Early Retirement or Total Disability.



     3. Plan Non-Contractual. Nothing herein contained shall be construed as a commitment
or agreement on the part of any person employed by the Company to continue his or her employment
with the Company, and nothing herein contained shall be construed as a commitment on the part of
the Company to continue the employment or the annual rate of compensation of any such person for
any period, and all participants shall remain subject to discharge to the same extent as if this
Plan has never been put into effect.



     4. Interest of Participant. The obligation of the Company under the Plan to provide
the Participant with a supplemental retirement benefit merely constitutes the unsecured promise



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of the Company to make payments as provided herein, and neither any Participant nor any person
claiming under or through any Participant shall have any interest in, or any lien or prior claim
upon, the property of the Company.



     5. Claims of Other Persons. The provisions of this Plan shall in no event be
construed as giving any person, firm or corporation, any legal or equitable right as against the
Company, its officers, employees, or directors; except any such rights as are specifically provided
for in the Plan or are hereafter treated in accordance with the terms and provisions of the Plan.



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



     7. Governing law. The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Ohio to the extent not preempted by federal law.



     8. Successors and Assigns. This Plan and the obligations created hereunder shall be
binding upon the Company and its successors and assigns:



     EXECUTED this 28th day of November, 2007, but effective as of
January 1, 2005.



	 	 	 	 	 
	 	JO-ANN STORES, INC.

 	 
	 	BY:  	/s/ Darrell Webb
 	 
	 	 	Darrell Webb, Chairman of the Board, 	 
	 	 	President and Chief Executive Officer 	 
	 




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