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Exhibit 10.12 

LOGICVISION, INC. 

CHANGE OF CONTROL SEVERANCE AGREEMENT

     This Change
of Control Severance Agreement (this “Agreement”), is made and entered into
effective as of November 11, 2008 (the “Effective Date”), by and between Mei
Song (the “Executive”) and LogicVision, Inc., a Delaware corporation (the
“Company”). Certain capitalized terms used in this Agreement are defined in
Section 1 below. 

RECITALS 

     A. It is
expected that the Company from time to time will consider the possibility of a
Change of Control. The Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to the Executive and can
cause the Executive to consider alternative employment opportunities.

     B. The Board
believes that it is in the best interests of the Company and its shareholders to
provide the Executive with an incentive to continue the Executive’s employment
and to maximize the value of the Company upon a Change of Control for the
benefit of its shareholders. 

     C. In
recognition of Executive’s service with the Company during which time
Executive’s leadership has been fundamental to the Company’s development and in
order to provide the Executive with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a
Change of Control, the Board believes that it is imperative to provide the
Executive with certain severance benefits upon the Executive’s termination of
employment in connection with a Change of Control. 

AGREEMENT 

     In
consideration of the mutual covenants herein contained and the continued
employment of the Executive by the Company, the parties agree as follows:

     1. Definition of Terms. The following
terms referred to in this Agreement shall have the following meanings:

          (a) Cause. “Cause” shall mean (i)
commission of a felony, an act involving moral turpitude, or an act constituting
common law fraud, and which has a material adverse effect on the business or
affairs of the Company or its affiliates or stockholders; (ii) intentional or
willful misconduct or refusal to follow the lawful instructions of the Board; or
(iii) intentional breach of Company confidential information obligations which
has an adverse effect on the Company or its affiliates or stockholders. For
these purposes, no act or failure to act shall be considered “intentional or
willful” unless it is done, or omitted to be done, in bad faith without a
reasonable belief that the action or omission is in the best interests of the
Company.  

-1- 

          (b) Change of Control. “Change of Control”
shall mean the occurrence of any of the following events:

               (i) the approval by the shareholders of the Company of a plan of complete
liquidation or dissolution of the Company or the closing of a sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition to a subsidiary of the Company or to an entity,
the voting securities of which are owned by the stockholders of the Company in
substantially the same proportions as their ownership of the Company’s voting
securities immediately prior to such sale or disposition; 

               (ii) a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
directly or indirectly (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or 

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities. 

     Notwithstanding the foregoing, the term “Change of Control” shall not be
deemed to have occurred if the Company files for bankruptcy protection, or if a
petition for involuntary relief is filed against the Company. 

          (c) Involuntary
Termination. “Involuntary Termination” shall
mean: 

               (i) without the Executive’s express written consent, a material reduction in
the Executive’s authority, duties or responsibilities relative to the
Executive’s authority, duties or responsibilities in effect immediately prior to
the Change of Control provided that no such material reduction shall be deemed
to occur solely by reason of the Company becoming a subsidiary or division of an
acquiring entity; 

               (ii) without the Executive’s express written consent, a material reduction by
the Company of the Executive’s base compensation as in effect immediately prior
to the Change of Control; 

               (iii) without the Executive’s express written consent, the relocation of the
Executive’s principal place of employment to a facility or a location more than
fifty (50) miles from the Executive’s current location; 

               (iv) any termination of the Executive by the Company which is not effected for
Cause; or 

               (v) the failure of the Company to obtain the assumption of this Agreement or
any other agreement between the Company and Executive by any successors
contemplated in Section 7 below. 

-2- 

     A
termination shall not be considered an “Involuntary Termination” unless the
Executive provides notice to the Company of the existence of the condition
described in subsections (i), (ii), (iii) or (v) above within ninety (90) days
of the initial existence of such condition, and the Company fails to remedy the
condition within thirty (30) days following the receipt of such
notice.

          (d) Termination Date. “Termination Date”
shall mean the effective date of any notice of termination delivered by one
party to the other hereunder. 

     2. Term of
Agreement. This Agreement shall terminate
upon the date that all obligations of the parties hereto under this Agreement
have been satisfied. 

     3.
At-Will Employment. The Company and the Executive acknowledge that the Executive’s employment is and shall continue to be at-will, as
defined under applicable law. 

     4.
Severance Benefits. 

          (a) Involuntary Termination in Connection with a Change of
Control. If the Executive’s employment with
the Company terminates as a result of an Involuntary Termination on or at any
time within three (3) months before or twelve months (12) months after a Change
of Control, and the Executive signs and does not revoke a standard release of
claims with the Company in a form reasonably acceptable to the Company, then the
Executive shall be entitled to the following severance benefits (it being
understood that no such benefits shall accrue and be payable (or take effect, as
the case may be) unless and until a Change in Control occurs): 

               (i) 100% of the Executive’s annual base salary as in effect as of the
Termination Date, less applicable withholding, payable in a lump sum within
thirty (30) days of the Involuntary Termination or, if later, the Change in
Control; 

               (ii) 100% of the Executive’s target bonus plus target commission for the
fiscal year in which the Termination Date occurs, less applicable withholding,
payable in a lump sum within thirty (30) days of the Involuntary Termination or,
if later, the Change in Control; 

               (iii) acceleration of the vesting and exercisability of all of the Executive’s
options to acquire common stock of the Company or its successor, or the parent
of either, to the extent outstanding, or of any deferred compensation into which
the Executive’s stock options were converted upon the Change of Control; and

               (iv) reimbursement by the Company of the group health continuation coverage
premiums for the Executive and the Executive’s eligible dependents under Title X
of the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”) as
in effect through the lesser of (x) twelve (12) months from the date of such
termination, (y) the date upon which the Executive and the Executive’s eligible
dependents become covered under similar plans or (z) the date the Executive no
longer constitutes a “Qualified Beneficiary” (as such term is defined in Section
4980B(g) of the Code); provided, however, that the Executive will be solely
responsible for electing such coverage within the required time period; and
provided further, however, that payment of the reimbursement shall not be made
prior to the Change in Control, but shall be deferred and paid within thirty
(30) days after the Change in Control.

-3- 

          (b) Termination Apart from a Change of Control. If the Executive’s employment with the Company terminates other than as
a result of an Involuntary Termination on or within three (3) months before or
twelve (12) months after a Change of Control then the Executive shall not be
entitled to receive severance or other benefits hereunder. 

          (c) Accrued Wages and Vacation; Expenses.
Without regard to the reason for, or the timing of, the Executive’s termination
of employment: (i) the Company shall pay the Executive any unpaid wages due for
periods prior to the Termination Date; (ii) the Company shall pay the Executive
all of the Executive’s accrued and unused vacation through the Termination Date;
and (iii) following submission of proper expense reports by the Executive, the
Company shall reimburse the Executive for all expenses reasonably and
necessarily incurred by the Executive in connection with the business of the
Company prior to the Termination Date. These payments shall be made promptly
upon termination and within the period of time mandated by law. 

     5. Limitation on Payments. In the event
that the severance and other benefits provided for in this Agreement or
otherwise payable to the Executive (i) constitute “parachute payments” within
the meaning of Section 280G of the Code and (ii) would be subject to the excise
tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Executive’s
benefits under this Agreement shall be either: 

          (a) delivered in full or 

          (b) delivered as to such lesser extent which would result in no portion of
such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the Excise Tax, results in the receipt
by the Executive on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. 

     Unless the
Company and the Executive otherwise agree in writing, any determination required
under this Section 5 shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination shall be conclusive
and binding upon the Executive and the Company for all purposes. For purposes of
making the calculations required by this Section 5, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Executive shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section 5. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 5. Any reduction in benefits
required pursuant to this Section 5 shall occur in the order that provides the
maximum economic benefit to the Executive. 

-4- 

     6. Section
409A; Delayed Commencement of Benefits.
Notwithstanding any provision to the contrary in this Agreement: 

          (a) No cash severance and no Company-paid health care coverage
to which the Executive otherwise becomes entitled under this Agreement shall be
made or provided to the Executive prior to the earlier of (i) the expiration of
the six (6)-month period measured from the date of the Executive’s “separation
from service” with the Company (as such term is defined in Treasury Regulations
issued under Code Section 409A) or (ii) the date of the Executive’s death, if
the Executive is deemed at the time of such separation from service to be a
“specified employee” within the meaning of that term under Code Section 409A and
such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon the expiration of the
applicable Code Section 409A(a)(2) deferral period, all payments and benefits
deferred pursuant to this Section 6 (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral)
shall be paid or reimbursed to the Executive in a lump sum, and any remaining
payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein. The
Executive shall be entitled to interest on the deferred benefits and payments
for the period the commencement of those benefits and payments is delayed by
reason of Code Section 409A(a)(2), with such interest to accrue at the prime
rate in effect from time to time during that period and to be paid in a lump sum
upon the expiration of the deferral period.

          (b) The date of the Executive’s termination of employment for
purposes of determining the date that any payment or benefit which is treated as
nonqualified deferred compensation under Section 409A of the Code is to be paid
or provided (or in determining whether an exemption to such treatment applies),
shall be the date on which the Executive has incurred a “separation from
service” as such term is defined in Treasury Regulations issued under Code
Section 409A. 

          (c) In each case where this Agreement provides for the payment
of an amount that constitutes nonqualified deferred compensation under Section
409A to be made to the Executive within a designated period (e.g., within 30
days after the date of termination ) and such period begins and ends in
different calendar years, the exact payment date within such range shall be
determined by the Company, in its sole discretion, and the Executive shall have
no right to designate the year in which the payment shall be made. 

     7.
Successors.

          (a) Company’s Successors. Any successor to
the Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company’s business and/or assets shall assume the Company’s obligations under
this Agreement and agree expressly to perform the Company’s obligations under
this Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. For all
purposes under this Agreement, the term “Company” shall include any successor to
the Company’s business and/or assets which executes and delivers the assumption
agreement described in this subsection (a) or which becomes bound by the terms
of this Agreement by operation of law. 

-5- 

          (b) Executive’s Successors. Without the
written consent of the Company, the Executive shall not assign or transfer this
Agreement or any right or obligation under this Agreement to any other person or
entity. Notwithstanding the foregoing, the terms of this Agreement and all
rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

     8.
Notices.

          (a) General. Notices and all other
communications contemplated by this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by U.S.
registered or certified mail, return receipt requested and postage prepaid. In
the case of the Executive, mailed notices shall be addressed to the Executive at
the home address which the Executive most recently communicated to the Company
in writing. In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary. 

          (b) Notice of Termination. Any termination
by the Company for Cause or by the Executive as a result of an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section 8. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than thirty (30) days after the giving of such
notice). The failure by the Executive to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall not
waive any right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing the Executive’s rights
hereunder, subject to the requirements of Section 1(c). 

     9.
Non-Solicitation and
Non-Competition.

          (a) Non-Solicitation. Until the date that
is twelve (12) months from the date of termination of the Executive’s employment
with the Company, the Executive agrees and acknowledges that the Executive shall
not either directly or indirectly solicit, induce, attempt to hire, recruit,
encourage, take away, hire any employee of the Company or cause an employee to
leave his or her employment either for the Executive or for any other entity or
person. Upon any breach of this Section 9, all severance payments pursuant to
this Agreement shall immediately cease. 

          (b) Non-Competition. Until the date
Executive ceases to provide services to the Company (or any parent or subsidiary
of the Company) or, if later, the date through which severance is payable
pursuant to Section 4, Executive agrees to not, directly or indirectly, engage
in (whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor have any ownership
interest in or participate in the financing, operation, management or control
of, any person, firm, corporation or business that competes with Company (or any
parent or subsidiary of the Company); provided, however, that Executive shall
not be prohibited from owning, solely as an investment, up to 1% of the stock of
a publicly traded corporation or up to 5% of the equity of a non-publicly traded
company.

-6- 

     10.
Arbitration. 

          Any controversy involving the construction or application of
any terms, covenants or conditions of this Agreement, or any claims arising out
of any alleged breach of this Agreement, will be governed by the rules of the
American Arbitration Association and submitted to and settled by final and
binding arbitration in Santa Clara County, California, except that any alleged
breach of the Executive’s confidential information obligations shall not be
submitted to arbitration and instead the Company may seek all legal and
equitable remedies, including without limitation, injunctive relief.

     11.
Miscellaneous Provisions. 

          (a) No Duty to Mitigate. The Executive
shall not be required to mitigate the amount of any payment contemplated by this
Agreement, nor shall any such payment be reduced by any earnings that the
Executive may receive from any other source. 

          (b) Waiver. No provision of this Agreement
may be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Executive and by an
authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

          (c) Integration. This Agreement represents
the entire agreement and understanding between the parties with respect to the
payment of severance or other benefits if the Executive’s employment with the
Company terminates as a result of an Involuntary Termination within three months
before or twelve (12) months following a Change of Control, and supersedes all
prior or contemporaneous agreements, whether written or oral, with respect
thereto; provided, however, that this Agreement does not supersede any agreement
in respect of the payment of severance or other benefits in circumstances
pursuant to which benefits would not be payable hereunder. 

          (d) Choice of Law. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal substantive laws, but not the conflicts of law rules, of the
State of California. 

          (e) Severability. The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision hereof, which shall
remain in full force and effect. 

          (f) Employment Taxes. All payments made
pursuant to this Agreement shall be subject to withholding of applicable income
and employment taxes. 

-7- 

          (g) Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument. 

* * * 

[Remainder of this page intentionally
left blank.]

-8- 

     IN WITNESS
WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer or member of the Board of Directors, as
of the day and year first above written. 

	COMPANY:  	  
      LOGICVISION, INC.  

	By:  	/s/ Gregg Adkin 
	  	Gregg
      Adkin 

	Title:  	Chairman of the Board
  

	Date:  	November 12, 2008

	EXECUTIVE:  	/s/ Mei Song  
	  	Signature  
	  
	  	Mei Song  
	  	Printed Name  
	  
	  	Date:  	November 12,
  2008   

-9-EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

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

Recitals

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

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

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

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

Agreement

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

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

2. Position and Duties.

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

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

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

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

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

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

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

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

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

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

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

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

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

8. Termination.

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

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

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

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

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

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

9. Effect of Termination.

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

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

10. Successors.

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

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

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

	 
	If to the Company or any affiliate:

	Chairman, Compensation Committee

Jo-Ann Stores, Inc.

5555 Darrow Road

Hudson, OH 44236

cc: General Counsel

Jo-Ann Stores, Inc.

5555 Darrow Road

Hudson, OH 44236

cc:Derek D. Bork, Esq.

Thompson Hine LLP

3900 Key Center

127 Public Square

Cleveland, OH 44114

If to the Executive:

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

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

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

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

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

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

17. Governing Law; Disputes.

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

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

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

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

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

JO-ANN STORES, INC.

	 
	/s/ Beryl Raff
	By: Beryl Raff

	Title: Chairman, Compensation Committee

EXECUTIVE

	 
	/s/ Darrell Webb
	Darrell Webb

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