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): August 14, 2007

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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On August 14, 2007, the Compensation Committee of the Board of Directors of Jo-Ann Stores, Inc. (the "Company") approved Split Dollar Insurance Agreements between the Company and each of Mr. Darrell Webb, the Company’s President and Chief Executive Officer (the "Webb Agreement") and Mr. Travis Smith, the Company’s Executive Vice President, Merchandising and Marketing (the "Smith Agreement") (collectively, the "Agreements").

The Agreements provide that the Company shall maintain life insurance policies acquired by the Company on the life of Mr. Webb (the "Webb Policy") and Mr. Smith (the "Smith Policy") (collectively, the "Policies") from insurance companies selected by the Company, shall pay the premiums on the Policies when due, and shall be designated as sole owner of the Policies subject to the payments described below.

Upon the death of Mr. Webb, while the Webb Agreement remains in effect, the proceeds of the Webb Policy shall be paid as follows: i) to Mr. Webb's designat ed beneficiary or beneficiaries, the amount of Seven Hundred Fifty Thousand ($750,000) dollars, and ii) to the Company, an amount equal to the balance, if any, of the proceeds of the Webb Policy, and of any paid-up additional insurance purchased through dividend reinvestment, if any, after payment of the applicable amount to Mr. Webb's designated beneficiary or beneficiaries.

The Smith Agreement provides for similar benefits except that the Smith Policy provides that Mr. Smith's designated beneficiary or beneficiaries shall receive Six Hundred Thousand ($600,000) dollars.

The Agreements will terminate automatically upon the termination of Mr. Webb's or Mr. Smith's employment, as the case may be.

Copies of the Agreements are attached as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K.

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.
August 20, 2007	By:	/s/ David Goldston
		Name: David Goldston
		Title: Senior Vice President, General Counsel and Secretary

Exhibit Index

Exhibit No.	Description
10.1	Split Dollar Insurance Agreement dated August 14, 2007 between Jo-Ann Stores, Inc. and Darrell Webb
10.2	Split Dollar Insurance Agreement dated August 14, 2007 between Jo-Ann Stores, Inc. and Travis Smith

EX-10.1

Exhibit 10.1

SPLIT DOLLAR INSURANCE AGREEMENT

THIS AGREEMENT made this 14^th of August 2007 , by and between JO-ANN STORES, INC., an Ohio corporation (the “Company”) and Darrell Webb (the “Employee”),

W I T N E S S E T H:

WHEREAS, the Employee has performed his duties in a capable and efficient manner and is a valued employee of the Company and has indicated his intention to continue such services, and the Company desires that he do so; and

WHEREAS, in the continuation of such relationship, the parties desire to establish an arrangement in order to provide insurance protection for the benefit of the Employee;

NOW, THEREFORE, in consideration of the services rendered and to be rendered by the Employee and of the mutual covenants contained herein, the parties hereto agree as follows:

1. Purchases of Insurance. The Company shall maintain life insurance policies acquired by the Company on the life of the Employee (the “Policies”) from insurance companies selected by the Company (the “Insurance Companies”), shall pay the premiums on the policies when due, and shall be designated as sole owner of the policies subject to the conditions hereafter set forth.

2. Allocation of Premiums Between Company and Employee. The Company will pay the entirety of the Premiums due on the Policies and shall annually furnish the Employee a statement of the amount of income reportable by the Employee for Federal and State income tax purposes, if any, as a result of its payment of such premiums.

3. Payment of Proceeds. Upon the death of the Employee while this Agreement remains in effect, the proceeds of the Policies shall be paid as follows:

(a) To the Employee’s beneficiary or beneficiaries designated in accordance with paragraph 4 hereof, the amount of Seven Hundred Fifty Thousand ($750,000) Dollars.

(b) To the Company, an amount equal to the balance, if any, of the proceeds of the Policies, and of any paid-up additional insurance purchased through dividend reinvestment, if any, after payment of the applicable amount to the Employee’s beneficiary or beneficiaries pursuant to subparagraph (a) of this paragraph 3.

4. Ownership. The Employee shall have the right to designate the beneficiary or beneficiaries to receive payment of any proceeds of the Policies which might become payable pursuant to the provisions of paragraph 3(a) hereof. Each and every other right of ownership of the Policies shall be reserved to the Company even though the exercise of such right or rights would adversely affect or extinguish the payment of any benefits pursuant to Paragraph 3(a) hereof or the existence thereafter of the right reserved to the Employee pursuant to the first sentence of this paragraph.

5. Dividends. The Policies shall provide that the dividends, if any, payable with respect to the Policies may be applied as determined by the Company in its sole discretion.

6. Termination. This Agreement may be terminated by either party hereto, with or without the consent of the other, upon the giving of notice of termination in writing. It shall terminate automatically upon termination of employment of the Employee with the Company for any reason whatsoever, including early retirement. In the event of termination, the Employee agrees, upon request to him by the Company, to join with the Company in executing such documents as may be necessary to designate the Company as sole owner and sole beneficiary of the Policies.

7. Possession of Policy. The Company shall keep possession of the Policies. The Company agrees from time to time to make the Policies available to the Employee or to the Insurance Company for the purpose of endorsing.

8. Borrowing. The Company shall have the right, without the consent of the Employee, to borrow the cash value of the Policies, if any, provided, however, that the Company shall not borrow from the Policies in any more than three of the first seven years and such amount borrowed from any Policy during the first seven years shall not exceed the annual premium of such policy.

9. Plan Administrator. The Company shall be the Plan Administrator of the plan described herein for purposes of the Employee Retirement Income Security Act of 1974. The Company shall maintain records with respect to the Employee’s benefits hereunder, except for individual claim records which shall be maintained by the Insurance Companies. The Insurance Companies shall handle certain aspects in the administration of the plan including, but not limited to, the processing of individual claims, and the remittance of benefit payment. Payments from the plan shall be made to beneficiaries directly by the Insurance Companies in accordance with the terms of the Policies and the terms of this Agreement.

10. Claims Procedure. The Company shall provide a procedure for handling beneficiaries’ claims for benefits. Such procedure shall be in accordance with regulations issued by the Secretary of Labor and shall:

(a) provide adequate notice in writing to any beneficiary whose claim for benefits has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by such beneficiary; and

(b) afford a reasonable opportunity to any beneficiary whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

11. Miscellaneous. The benefits payable under this Agreement shall be independent of, and in addition to, any other employment agreement that may exist from time to time between the parties hereto or any other compensation payable by the Company to an Employee, whether as salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Company to terminate the employment of the Employee at any time.

12. Amendment. This Agreement may be revoked or be amended by a writing signed by the Company and the Employee and attached hereto.

13. Successors. This Agreement shall bind and shall inure to the sole benefit of the parties and their respective successors, assigns and legal representatives.

14. Revocation of Prior Agreement. Upon execution of the Agreement all split dollar insurance agreements entered into by the parties hereto prior to the date hereof, if any, shall be null and void and the rights thereunder shall be extinguished.

IN WITNESS WHEREOF, the parties have hereunto set their hands, the Company by its duly authorized officers on the day and year first above written.

JO-ANN STORES, INC.

By:	/s/ Beryl Raff	/s/ Darrell Webb
	Beryl Raff, Chair, Compensation Committee of the Board of Directors	Employee

By: /s/ David Goldston
David Goldston, Senior Vice President,
General Counsel and Secretary

Exhibit 10.2

SPLIT DOLLAR INSURANCE AGREEMENT

THIS AGREEMENT made this 14^th of August 2007 , by and between JO-ANN STORES, INC., an Ohio corporation (the “Company”) and Travis Smith (the “Employee”),

W I T N E S S E T H:

WHEREAS, the Employee has performed his duties in a capable and efficient manner and is a valued employee of the Company and has indicated his intention to continue such services, and the Company desires that he do so; and

WHEREAS, in the continuation of such relationship, the parties desire to establish an arrangement in order to provide insurance protection for the benefit of the Employee;

NOW, THEREFORE, in consideration of the services rendered and to be rendered by the Employee and of the mutual covenants contained herein, the parties hereto agree as follows:

1. Purchases of Insurance. The Company shall maintain life insurance policies acquired by the Company on the life of the Employee (the “Policies”) from insurance companies selected by the Company (the “Insurance Companies”), shall pay the premiums on the policies when due, and shall be designated as sole owner of the policies subject to the conditions hereafter set forth.

2. Allocation of Premiums Between Company and Employee. The Company will pay the entirety of the Premiums due on the Policies and shall annually furnish the Employee a statement of the amount of income reportable by the Employee for Federal and State income tax purposes, if any, as a result of its payment of such premiums.

3. Payment of Proceeds. Upon the death of the Employee while this Agreement remains in effect, the proceeds of the Policies shall be paid as follows:

(a) To the Employee’s beneficiary or beneficiaries designated in accordance with paragraph 4 hereof, the amount of Six Hundred Thousand ($600,000) Dollars.

(b) To the Company, an amount equal to the balance, if any, of the proceeds of the Policies, and of any paid-up additional insurance purchased through dividend reinvestment, if any, after payment of the applicable amount to the Employee’s beneficiary or beneficiaries pursuant to subparagraph (a) of this paragraph 3.

4. Ownership. The Employee shall have the right to designate the beneficiary or beneficiaries to receive payment of any proceeds of the Policies which might become payable pursuant to the provisions of paragraph 3(a) hereof. Each and every other right of ownership of the Policies shall be reserved to the Company even though the exercise of such right or rights would adversely affect or extinguish the payment of any benefits pursuant to Paragraph 3(a) hereof or the existence thereafter of the right reserved to the Employee pursuant to the first sentence of this paragraph.

5. Dividends. The Policies shall provide that the dividends, if any, payable with respect to the Policies may be applied as determined by the Company in its sole discretion.

6. Termination. This Agreement may be terminated by either party hereto, with or without the consent of the other, upon the giving of notice of termination in writing. It shall terminate automatically upon termination of employment of the Employee with the Company for any reason whatsoever, including early retirement. In the event of termination, the Employee agrees, upon request to him by the Company, to join with the Company in executing such documents as may be necessary to designate the Company as sole owner and sole beneficiary of the Policies.

7. Possession of Policy. The Company shall keep possession of the Policies. The Company agrees from time to time to make the Policies available to the Employee or to the Insurance Company for the purpose of endorsing.

8. Borrowing. The Company shall have the right, without the consent of the Employee, to borrow the cash value of the Policies, if any, provided, however, that the Company shall not borrow from the Policies in any more than three of the first seven years and such amount borrowed from any Policy during the first seven years shall not exceed the annual premium of such policy.

9. Plan Administrator. The Company shall be the Plan Administrator of the plan described herein for purposes of the Employee Retirement Income Security Act of 1974. The Company shall maintain records with respect to the Employee’s benefits hereunder, except for individual claim records which shall be maintained by the Insurance Companies. The Insurance Companies shall handle certain aspects in the administration of the plan including, but not limited to, the processing of individual claims, and the remittance of benefit payment. Payments from the plan shall be made to beneficiaries directly by the Insurance Companies in accordance with the terms of the Policies and the terms of this Agreement.

10. Claims Procedure. The Company shall provide a procedure for handling beneficiaries’ claims for benefits. Such procedure shall be in accordance with regulations issued by the Secretary of Labor and shall:

(a) provide adequate notice in writing to any beneficiary whose claim for benefits has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by such beneficiary; and

(b) afford a reasonable opportunity to any beneficiary whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

11. Miscellaneous. The benefits payable under this Agreement shall be independent of, and in addition to, any other employment agreement that may exist from time to time between the parties hereto or any other compensation payable by the Company to an Employee, whether as salary, bonus or otherwise. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Company to terminate the employment of the Employee at any time.

12. Amendment. This Agreement may be revoked or be amended by a writing signed by the Company and the Employee and attached hereto.

13. Successors. This Agreement shall bind and shall inure to the sole benefit of the parties and their respective successors, assigns and legal representatives.

14. Revocation of Prior Agreement. Upon execution of the Agreement all split dollar insurance agreements entered into by the parties hereto prior to the date hereof, if any, shall be null and void and the rights thereunder shall be extinguished.

IN WITNESS WHEREOF, the parties have hereunto set their hands, the Company by its duly authorized officers on the day and year first above written.

JO-ANN STORES, INC.

By:	/s/ Darrell Webb	/s/ Travis Smith
	Darrell Webb, Chairman of the Board, President and Chief Executive Officer	Employee

By: /s/ David Goldston
David Goldston, Senior Vice President,
General Counsel and Secretary