8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 10, 2006

Jo-Ann Stores, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Ohio	001-06695	34-0720629
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
5555 Darrow Rd., Hudson, Ohio		44236
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (330) 656-2600

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

The information included in Item 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On July 12, 2006, Jo-Ann Stores, Inc. (the "Company") announced that it has appointed Travis Smith as its new Executive Vice President, Merchandising and Marketing, effective on July 31, 2006.

For the past eight years, Mr. Smith has held positions of increasing responsibility with Fred Meyer, the 128-store super center division of The Kroger Company, a retail grocery chain. Most recently, Mr. Smith was Senior Vice President, General Merchandise of Fred Meyer. Mr. Smith has held a variety of merchandising and marketing positions at Fred Meyer Stores and May Department Stores, including Group Vice President, Home, at Fred Meyer. Mr. Smith is 33 years old.

A copy of the press release announcing Mr. Smith's appointment is attached as Exhibit No. 99.1 to this Current Report on Form 8-K.

Under the terms of an offer letter, dated and accepted by Mr. Smith on July 10, 2006, Mr. Smith will receive an annual base salary of $475,000 and a guaranteed cash bonus, pursuant to the Jo-Ann Stores Mana gement Incentive Plan, of $200,000 for fiscal year 2007 and 25% of his actual earned salary for fiscal year 2008. For fiscal year 2008, Mr. Smith will have the opportunity to earn a cash bonus of up to 50% of his base salary upon achieving financial performance targets to be established by the Board of Directors and will be eligible to participate in the Jo-Ann Stores Incentive Compensation Plan. On the first Friday following his start date, Mr. Smith will be granted 40,000 restricted common shares and 50,000 non-qualified stock options, which grants will vest 25% annually over a four-year period. In addition, Mr. Smith will receive health, life and disability insurance coverage, the reimbursement of relocation expenses and a lump-sum payment of $150,000 to cover any non-reimbursable relocation expenses, and other benefits customarily provided to the Company's executive officers such as a car allowance, a club membership allowance, an annual physical, and tax and financial planning assistance.

The Company and Mr. Smith also entered into an Agreement, effective July 31, 2006 (the "Employment Agreement"). The Employment Agreement shall apply to any termination of Mr. Smith's employment occuring on or before July 31, 2009. Unless the Employment Agreement is earlier terminated pursuant to its terms, on July 31, 2009 and on July 31 of each succeeding year thereafter (a "Renewal Date"), the term of the Employment Agreement shall be automatically extended for an additional one year unless either party has given notice to the other, at least one (1) year in advance of that Renewal Date, that the Employment Agreement shall not apply to any termination of Mr. Smith's employment occuring after that Renewal Date.

The Employment Agreement will become operative only if Mr. Smith's employment is terminated by the Company "without cause" or by the executive for "good reason" (in each case, as defined in the Employment Agreement) or in the event the Employment Agreement is not renewed by the Company as describ ed in the immediately preceding paragraph. If the Employment Agreement becomes operative, Mr. Smith will be entitled to certain severance payments and continuing health and life insurance coverage. The amount of these payments and the length of time that insurance coverage will be continued vary depending upon whether the termination occurs before or after a "Change of Control" of the Company (as defined in the Employment Agreement).

If Mr. Smith becomes entitled to benefits under the Employment Agreement before a Change of Control, he will be entitled to receive (a) continued payments of base salary and continued health and life insurance coverage for eighteen months following the termination date, and (b) a pro rata bonus for that part of the current year that ends on the termination date. In addition, the initial grants of 40,000 restricted shares and 50,000 stock options will become fully vested.

If Mr. Smith becomes entitled to benefits under the Employment Agreement after a Change of Con trol or in the event the Employment Agreement is not renewed by the Company, he will be entitled to prompt payment of (a) a lump sum equal to three times the sum of his base salary plus bonus, (b) any unpaid bonus for any prior year, and (c) a pro rata bonus for that part of the current year that ends on the termination date. In addition, health and life insurance coverage will be continued through the third anniversary of the termination date and all restricted shares and stock options will become fully vested. Whether the termination is before or after a Change of Control, continuing health and life insurance coverage would stop if Mr. Smith becomes eligible for similar benefits with another employer.

The Employment Agreement also provides that if any payments to Mr. Smith in connection with a Change of Control would be subject to the excise tax under Sections 280G or 4999 of the Internal Revenue Code on excess parachute payments, the Company will, in general, "gross up" Mr. Smith's compensation t o offset the excise tax, except that (a) if the aggregate parachute payments that would otherwise be made to Mr. Smith do not exceed 110% of the maximum amount of parachute payments that can be made without triggering the excise tax, the parachute payments to Mr. Smith will be reduced to the extent necessary to avoid the imposition of the excise tax and no "gross up" will be paid, and (b) if the aggregate parachute payments that would otherwise be made to Mr. Smith do exceed 110% of the maximum amount of parachute payments that can be made without triggering the excise tax, the full amount of those parachute payments will be made, Mr. Smith will have to individually bear the excise tax allocable to 10% of the aggregate total of parachute payments, and the Company will "gross up" Mr. Smith's compensation to offset the excise taxes other than that portion that is allocable to 10% of the aggregate total of parachute payments.

Mr. Smith agreed to non-competition, confidentiality and non-solicitation coven ants in the Employment Agreement.

Item 9.01 Financial Statements and Exhibits.

d) Exhibits

Exhibit No. - 99.1 Press Release of Jo-Ann Stores, Inc., dated July 12, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Jo-Ann Stores, Inc.
July 14, 2006	By:	/s/ David Goldston
		Name: David Goldston
		Title: Senior Vice President, General Counsel and Secretary

Exhibit Index

Exhibit No.	Description
99.1	Press Release of Jo-Ann Stores, Inc., dated July 12, 2006.

EX-99.1

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

Investor Contact: Don Tomoff
Jo-Ann Stores, Inc.
330/463-6815
http://www.joann.com

JO-ANN STORES APPOINTS TRAVIS SMITH EXECUTIVE VICE PRESIDENT, MERCHANDISING AND MARKETING

HUDSON, OH – July 12, 2006 – Jo-Ann Stores, Inc. (NYSE:JAS), the nation’s largest fabric and craft retailer, announced today the appointment of Travis Smith, Executive Vice President, Merchandising and Marketing, effective July 31, 2006.

“As the key step in rebuilding our senior leadership team, we are delighted to add to the Jo-Ann team a person with Travis’ breadth of experience in marketing and merchandising, in both softlines and hardlines categories,” said Darrell Webb, recently appointed Chairman, President and Chief Executive Officer of Jo-Ann Stores. “Travis has a keen understanding of how to drive comparable store sales growth, while balancing gross margin performance, for optimal financial results.”

Most recently, Mr. Smith was Senior Vice President, General Merchandise of Fred Meyer, the 128 store super center division of The Kroger Company. In this capacity, Mr. Smith was responsible for the general merchandise product categories, including apparel; home and electronics, as well as product development and merchandise planning and replenishment. Mr. Smith has had a variety of merchandising and marketing responsibilities at Fred Meyer Stores and May Department Stores. Mr. Smith holds a bachelor’s degree in business marketing and communication from the University of Notre Dame.

Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and craft retailer with locations in 47 states, operates 653 Jo-Ann Fabrics and Crafts traditional stores and 164 Jo-Ann superstores.