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,
