Document:

EX-10.21

 

Exhibit 10.21

Jo-Ann Stores, Inc.

November 22, 2005

Mr. David Bolen

Dear Dave:

The purpose of this letter is to set forth the agreement we have reached with respect to the
termination of your employment with Jo-Ann Stores, Inc., as Executive Vice President,
Merchandising and Marketing, and the payments and benefits to be made available to you in
connection with your separation, and various related matters.

For purposes of this agreement the following definitions shall apply:

	 	 	 	 
	 	Transition Period:

	 	The period of time between Sunday, October 2,
2005 and your last day worked
	 	Separation Date:

	 	Your last day worked as determined by the
Company, but no later than December 31, 2005
	 	Salary Continuation Period:

	 	The 30 months succeeding December 31, 2005

We have agreed as follows:

	 	1.	 	Your employment as EVP, Merchandising and Marketing, of Jo-Ann Stores will end no
later than December 31, 2005, and you will cease to be an employee of Jo-Ann Stores as
of the end of the business day on your Separation Date. Until the Separation Date, you
will continue to be an active employee with regard to salary, benefits and expenses.
	 
	 	2.	 	Following your Separation Date, Jo-Ann Stores will make the following payments and
will provide the following benefits to you:

	 	(a)	 	Jo-Ann Stores will pay you an amount equal to your current base
salary of $428,000 for 18 months payable in 39 bi-weekly installments as defined
by your employment agreement dated July 30, 2001.
	 
	 	 	 	In consideration of your acceptance of the terms of this agreement, the Company
further agrees to pay you an additional $214,000 for 12 months payable in 26
biweekly installments commencing on the 19th month following the Separation Date
and ending after the 30th month following the Separation Date.
	 
	 	(b)	 	You will not be eligible to participate in any payout under the
FY2005, FY2006 or FY2007 Management Incentive Plan (MIP). Additionally, you will
not be eligible to receive any incentives that may be awarded during the
Transition Period.
	 
	 	(c)	 	Insurance:

 

 

	 	1.	 	Jo-Ann Stores will provide to you continued
coverage under the Jo-Ann Stores Benefit Plan through the earlier of
(i) 30 months from your Separation Date, and (ii) the date you first
become eligible for health and hospitalization insurance coverage
provided by another employer. To the extent coverage for all Jo-Ann
Stores’ employees is contributory; you agree to contribute to the cost
of coverage on the same terms applicable to continuing employees of
Jo-Ann Stores. The Consolidated Omnibus Budget Reconciliation Act
(COBRA) of 1985 provides you with specific rights concerning the
continuation of your medical coverage; alternative coverage under this
paragraph does not extend the maximum coverage period under that
statute. COBRA will be offered to you at the time of an appropriate
triggering event.
	 
	 	2.	 	Your current group term life insurance coverage
will continue through (i) the earlier of 30 months from your
Separation Date, or (ii) the date on which you first become eligible
for life insurance coverage provided by any other employer. To the
extent coverage for Jo-Ann Stores employees is contributory; you agree
to contribute to the cost of coverage on the same terms applicable to
continuing employees of Jo-Ann Stores.
	 
	 	3.	 	Disability insurance will cease on your
Separation Date. However, you do have the option to continue Long-Term
Disability coverage if you currently have it. Further information will
be sent to you upon request.
	 
	 	4.	 	Your rights under the Supplemental Life
Insurance Program (Split Dollar) will cease as governed under the
provisions of that plan, based on a termination of employment,
effective as of the Separation Date.
	 
	 	5.	 	Your rights under the Supplemental Retirement
Benefit Plan will cease as governed under the provisions of that plan
based on a termination of employment and will be effective as of the
Separation Date.

	 	(d)	 	We will pay all accrued and unused Paid Time Off contemporaneously
with the first pay date after the Separation Date.

	 	3.	 	By special consent of the Board of Directors, you will have 90 days from the
Separation Date to exercise any stock options that were vested as of that Separation
Date. No additional options will vest during this 90-day period. All restricted stock
awards are cancelled as of your Separation Date and certificates must be retuned to the
EVP, Human Resources within 10 days of that date.
	 
	 	4.	 	Jo-Ann Stores will continue to provide your car allowance through the earlier of 30
months from the Separation Date or the date on which you become eligible for a car or
car allowance provided by any other employer.
	 
	 	5.	 	Jo-Ann Stores will provide you with Executive Level outplacement services at the
Company’s expense through Ratliff and Taylor until you obtain subsequent employment.

 

 

	 	6.	 	You agree that beyond your Separation Date, you will have no other demands for
reimbursable expenses or claims of any kind against the Company, and the signing of this
agreement and the terms hereunder satisfy all obligations Jo-Ann Stores has with you.
	 
	 	7.	 	This Agreement, during its first 18 months, shall inure to the benefit of and be
enforceable by you and each of your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If you die while
any amount would still be payable to you hereunder had you continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement, to your Beneficiary. If you have not named a Beneficiary, then such
amounts shall be paid to your devisee, legatee, or other designee, or if there is no such
designee, to you estate. You may designate one or more persons or entities as the primary
and/or contingent Beneficiaries of any benefits owing to you under this Agreement. Such
designation must be in the form of a signed writing acceptable to the Company. You may
make or change such designation at any time.
	 
	 	8.	 	You further agree that in the event of you death after the initial 18 months of
salary continuation, all obligations cease and no further payments on your behalf will be
made to your beneficiaries or estate.
	 
	 	9.	 	Further, you agree that, if you secure employment, during the transition period or
during the salary continuation period, you will immediately contact the EVP, Human
Resources. Upon obtaining employment, the balance of any money that you may be eligible to
receive may be paid in a lump sum amount. All other benefits, other than salary
continuation, described in Item 2, Page 1 of this letter, will discontinue effective your
first day of benefit eligibility with a new employer.
	 
	 	10.	 	You agree not to divulge to persons, other than designated employees of the Company,
any confidential information gathered or learned in the scope of your employment with the
Company. Confidential information includes, but is not limited to, information in oral,
written or recorded form regarding business plans, trade or business secrets, Company
financial records, performance results of stores, product categories or marketing
vehicles, supplier contracts or relationships, contents of this Agreement or any other
information of similar nature, unless to your attorneys, financial planners or family or
in order to enforce the terms hereof. “Confidential Information” shall not include
information which: (i) becomes available broadly to persons outside the Company other than
as a result of disclosure by you; (ii) becomes available to you on a non-confidential
basis from a source other than the Company, provided such source is not in breach of any
confidentiality or similar agreement in disclosing such information to you; (iii) you are
required to disclose pursuant to law, court order, or subpoena, provided you give the
Company advance written notice of the required disclosure; or (iv) was known to you prior
to your employment with the Company.
	 
	 	11.	 	To the extent that you have any doubt, either now or in the future, as to whether
information you possess is confidential or personal, you should contact Alan Rosskamm,
CEO, or his successor for clarification before divulging or using such information. You
understand and agree that such information divulged to third parties or your unauthorized
use of it would cause Jo-Ann Stores serious competitive harm and is a violation of this
agreement.

 

 

	 	12.	 	You agree to return immediately all Company credit cards, Company telephone credit
cards, keys, key cards, discount cards, equipment except your Blackberry and laptop
computer for which ownership shall be transferred to you, and all Jo-Ann Stores related
documents, materials and property that you have in your possession and not to make or
retain any copies thereof without authorization from the EVP, Human Resources.
	 
	 	13.	 	During the salary continuation period, you agree as follows:

	 	(a)	 	You will not have any financial or other interests in nor
become involved, directly as a proprietor, partner, shareholder, officer,
employee, consultant, agent or in any other capacity, with any person, firm or
legal entity engaged in any significant extent within the United States in the
business of multi-unit retailing of fabrics and/or crafts. “Multi-unit
retailing” is defined as in excess of five stores and “significant extent” is
defined as any entity where revenues in fabrics and crafts exceed 5% of the
total revenues of the entity. Additionally, you agree that for any entity
where revenues are less than 5% of total revenues, you will not have a role in
that entity that directly impacts the fabric and/or crafts business. The
obligations of this paragraph shall extend to all subsidiaries, related and
affiliated entities, franchises, partnerships, joint ventures and successors
in interest or assigns of the persons, firms or legal entities in multi-unit
retailing of fabrics and/or crafts resulting from a merger, acquisition,
divestiture, change in control, name change or any other reason and shall not
affect or extinguish any of the obligations of this paragraph.
	 
	 	(b)	 	You will not have any financial or other interests in nor
become involved, either directly or indirectly or as a proprietor, partner,
shareholder, officer, employee, consultant, agent or in any other capacity,
with any person, firm or legal entity, in that portion of the entity that is
involved in the sale in the continental United States of products to any of
the persons, firm or legal entities engaged in multi unit retailing (as
defined above) of fabrics and/or crafts without the express written consent
and approval of Alan Rosskamm, CEO or his successor of Jo-Ann Stores, such
consent may be granted or withheld at his sole discretion. The obligations of
this paragraph shall extend to all subsidiaries related and affiliated
entities, franchises, partnerships, joint ventures and successors in interest
or assigns of the persons, firm or legal entities of any multi-unit retailer
of fabrics and/or crafts. Any change in the persons, firms or legal entities
of any multi-unit retailer of fabrics and/or crafts resulting from a merger,
acquisition, divestiture, change in control, name change or any other reason
and shall not affect or extinguish any of the obligations of this paragraph.
	 
	 	(c)	 	Notwithstanding the foregoing, we agree that you 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 securities
exchange or in the over-the-counter market.
	 
	 	(d)	 	You will not recruit or solicit for employment any active
Jo-Ann Stores’ employees or seek to induce any employee of Jo-Ann Stores to
terminate his or her employment with Jo-Ann Stores.

 

 

	 	14.	 	You agree to release and forever discharge the Company, its parent, and all its
affiliated corporations and their directors, officers, agents and associates from any and
all actions and causes of actions with respect to any aspect from your employment by, or
separation of employment from, the Company, including, but not limited to, any claims
under the Age Discrimination in Employment Act, or any other federal, state or local
statute dealing with age, race, sex and other types of discrimination in employment. We
agree that you have not released the Company with respect to claims necessary to enforce
this agreement or claims put forth under the current Directors and Officers Insurance or
indemnifications currently found in the Company’s charter or any rights vested under the
Jo-Ann Stores Stock Option Plan.
	 
	 	15.	 	You agree to cease acting as an associate or agent of the Company as of the
Separation Date and you further agree to indemnify and hold the Company harmless from any
and all claims which arise from any such actions occurring after Separation Date. In
addition, the Company holds you harmless from any and all claims of any kind or nature
except acts of actual fraud, theft or embezzlement resulting from your employment or in
your role as an agent of the Company. The Company agrees to maintain the current coverage
of Directors and Officers insurance and indemnification under its charter for any claims
which may arise from acts during your tenure.
	 
	 	16.	 	The Company’s obligation to make the payments and provide the benefits provided for
herein shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim, recoupment,
defense, or other right which the Company may have against you or anyone else. All amounts
payable by the Company hereunder shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be final, and the Company shall not seek to
recover all or any part of such payment from you or from whomsoever may be entitled
thereto, for any reasons whatsoever, except as provided for in paragraph 20 of this
agreement.
	 
	 	17.	 	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, Failure of the Company to
obtain such assumption and agreement prior to the effective date of any such succession
shall be a breach of this Agreement. All payments under this Agreement shall be made
solely from the general assets of the Company (or from a grantor trust, if any,
established by the Company for purposes of making payment under this Agreement and other
similar agreements), and you shall have the rights of an unsecured general creditor of the
Company with respect thereto.
	 
	 	18.	 	You shall not be obligated to seek other employment in mitigation of the amounts
payable or benefits to be provided under any provision of this Agreement, and the
obtaining of any such other employment shall in no event effect any reduction of the
Company’s obligations to make the payments or provide any benefits as required under this
Agreement, except to the limited extent provided above in cases where a subsequent
employer provides medical insurance and/or group term life insurance coverage or an
automobile benefit.

 

 

	 	19.	 	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.
	 
	 	20.	 	It is further agreed that if either party breaks any of the promises made in this
Agreement, it will be considered a breach that could result in the offending party being
responsible for all damages that arise from any such breach. In addition, these damages
could include the return or forfeiture of all Company funds and benefits provided under
this Agreement. Damages could also include all attorneys’ fees and costs incurred by the
non-breaking party because of the breach. In the event either party believes the other has
breached any of the promises in this Agreement, each agrees to provide detailed written
notice of that breach. Once notices are received the breaking party has 30 days to attempt
to cure the breach and/or to respond to comments. We further agree that this Agreement
will not be considered breached until the 30 day time period has passed to respond to
written comments and take my corrective action which the breaking party deems could solve
the alleged breach, if any. Notice(s) under this section should be sent by hand delivery
or certified mail, return receipt requested to the following:

	 	 	 	 
	 	i. If to the Employee:

	 	Mr. David Bolen
	 	 

	 	(Address on file)
	 	 
	 	 
	 	ii. If to the Company:

	 	EVP, Human Resources
	 	 

	 	Jo-Ann Stores, Inc.
	 	 

	 	5555 Darrow Road
	 	 

	 	Hudson, Ohio 44236

	 	21.	 	Unless prohibited by law, the Company shall pay all legal fees, costs of arbitration
and/or litigation, prejudgment interest, and other expenses incurred by you in good faith
as a result of the Company’s refusal to provide the benefits to which you deem yourself to
be entitled under this Agreement, as a result of the Company’s contesting the validity,
enforceability, or interpretation of this Agreement, or as a result of any conflict
between the parties pertaining to this Agreement, provided, however, that the Company
shall be reimbursed by you for all such fees and expenses if, but only if, it is
ultimately determined by a court of competent jurisdiction or by the arbitrators, as the
case may be, that you had no reasonable grounds for the position propounded by you in the
arbitration and/or litigation (which determination need not be made simply because you
fail to succeed in the arbitration and/or litigation).
	 
	 	22.	 	Subject to the following, any dispute or controversy arising under or in connection
with this Agreement shall be settled by mandatory arbitration (in lieu of litigation),
conducted before a panel of thee arbitrators sitting in a location selected by you within
50 miles from Hudson, Ohio, in accordance with the rules of the American Arbitration
Association then in effect. Any dispute which arises with respect to your alleged
violation of the prohibition on competition or any other restriction contained in
Paragraph 13 of this Agreement shall be settled by judicial proceedings (in any court of
competent jurisdiction with respect to such dispute or claim). Except as provided above
for claims or disputes under Paragraph 13 judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction.

 

 

	 	23.	 	Neither party will make any statements, either orally, in writing or otherwise, or in
any way disseminate or cause to be disseminated any information, concerning the other
party or its affiliated persons or entities, or such other party’s business practices,
character or methods of operation, which, in form or substance, harms, disparages, or
otherwise casts an unfavorable light upon such other party’s reputation, standing in the
business community, or standing in the community as a whole.
	 
	 	24.	 	You shall refer any prospective employers or others desiring a reference to the CEO
or EVP, HR who will provide all prospective employers of, or others requesting a reference
regarding, with a positive reference which highlights your progression through the Company
and your tangible accomplishments. The Company shall utilize its best efforts to ensure
that no employees other than the CEO or EVP HR respond to any reference inquiries and that
all such inquiries are directed to the CEO or EVP HR.
	 
	 	25.	 	This Agreement may not be changed orally and contains the entire agreement of the
parties and supersedes all prior understandings oral or written between you and the
Company.

Dave, to make sure you understand the details and terms of this Agreement and that your decision to
enter into this Agreement is voluntary, we advise you to consult with an attorney prior to signing
this document and your signature below acknowledges that you have done so or voluntarily waived
that right. If the details and terms are acceptable to you, please sign the bottom of this
Agreement and return it to me no later than 21 days from the date of receipt of this Agreement.

By law, after you sign this Agreement, you have seven days from that date during which you may
change you mind and revoke it. To revoke this Agreement, you must clearly communicate your decision
to me at our corporate office within the seven-day period.

As discussed, the Company is under no duty or obligation to make this special allowance, and is
doing so solely as consideration for your entering into this Agreement.

	 	 	 	 	 	 	 
	Sincerely,	 	 
	 
	 	 	 	 	 	 
	JO-ANN STORES, INC.	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	/s/ Alan Rosskamm
	 	 
	 	 	 	 	 
	 	 	Alan Rosskamm	 	 
	 	 	Chairman, President and CEO	 	 
	 
	 	 	 	 	 	 
	Dated:

	 	 	 	November 22, 2005	 	 
	 
	 	 	 	 	 	 
	AGREED TO:	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	/s/ David Bolen	 	 
	 	 	 	 	 
	 	 	David Bolen	 	 
	 
	 	 	 	 	 	 
	Dated:

	 	 	 	November 22, 2005EX-10.22

 

Exhibit 10.22

November 23, 2005

Mr. David Holmberg

Dear David:

I very much appreciate the talent, expertise and strength that you have brought to Jo-Ann Stores,
Inc. I am counting on you to help me provide a strong bridge while we rebuild the leadership team.

As we have discussed, I will be hiring a President and CEO. David, you have contributed greatly
since you arrived and we both anticipate and desire a long term relationship. However, I also
understand that these are uncertain times for you and I want to give you peace of mind about your
financial benefits should circumstances change at Jo-Ann Stores.

	 	1.	 	As the Company has decided to hire a President and CEO, we acknowledge that there is a
risk that either you or the Company may conclude that your continued employment may not be
in its best interest. Therefore:

	 	a.	 	Should you decide to terminate your employment at any time between the
sixth and the twelfth month anniversary of the start date of the new President, the
Company agrees to pay your base salary for 24 months, in a lump sum, contingent on
the execution of a complete letter agreement including a non-compete covenant and a
non-solicitation covenant. We would anticipate that you would provide at least 30
days’ notice should you decide to trigger this agreement;
	 
	 	b.	 	You will not be eligible for the stock acceleration or payment of
target incentive as detailed in your current employment agreement;
	 
	 	c.	 	The Company will also provide continuation of benefits (except long
term disability) through the earlier of 24 months or the date you become benefit
eligible with a new employer;
	 
	 	d.	 	The Company agrees to provide continued car allowance through the
earlier of 24 months or your new employment date; and
	 
	 	e.	 	The Company will provide outplacement with a reputable firm.

	 	2.	 	Should the Company decide to terminate your employment at any time between the date of
this letter and 24 months after the hire date of the new President, you will receive the
same salary continuation and benefits as above, provided, however that if such termination
by the Company occurs prior to November 30, 2006, both cash retention payments totaling
$230,000, provided under the retention agreement dated November 18, 2005, will be
guaranteed. Thereafter, your existing employment agreement would be in effect.

David, your continued dedication is important to Jo-Ann’s success. I am happy to provide this
special incentive for you to remain with us through our transition and hopefully beyond.

 

 

	 	 	 	 	 	 	 
	Sincerely,	 	 
	 
	 	 	 	 	 	 
	JO-ANN STORES, INC.	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Alan Rosskamm
	 	 
	 	 	 	 	 
	 	 	Alan Rosskamm

CEO, President, Chairman of the Board	 	 
	 
	 	 	 	 	 	 
	Dated:	 	 November 23, 2005	 	 
	 
	 	 	 	 	 	 
	AGREED

	 	TO:	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ David Holmberg	 	 
	 	 	 	 	 
	 	 	David Holmberg	 	 
	 
	 	 	 	 	 	 
	Dated:	 	 November 23, 2005

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