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
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| Date of Report (Date of Earliest Event Reported): | | July 27, 2006 |
Jo-Ann Stores, Inc.
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(Exact name of registrant as specified in its charter)
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| Ohio | 001-06695 | 34-0720629 |
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(State or other jurisdiction | _____________
(Commission | ______________
(I.R.S. Employer |
| of incorporation) | File Number) | Identification No.) |
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| 5555 Darrow Rd., Hudson, Ohio | | 44236 |
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(Address of principal executive offices) | | ___________
(Zip Code) |
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| Registrant’s telephone number, including area code: | | (330) 656-2600 |
Not Applicable
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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 31, 2006, Jo-Ann Stores, Inc. (the "Company") announced the promotion of James Kerr to Executive Vice President, Chief Financial Officer, effective immediately.
For the past eight years, Mr. Kerr was Vice President, Controller and since February 2006, the Chief Accounting Officer of the Company, managing a financial organization that encompasses accounting, financial and merchandise planning. Mr. Kerr is 44 years old.
A copy of the press release announcing Mr. Kerr'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 July 24, 2006 and accepted by Mr. Kerr on July 27, 2006, Mr. Kerr will receive an annual base salary of $300,000. For fiscal year 2008, Mr. Kerr will have the opportunity to earn a cash bonus, pursuant to the Jo-Ann Stores Management Incentive Plan, 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 par ticipate in the Jo-Ann Stores Incentive Compensation Plan. On the first Friday following the effective date of his new position, Mr. Kerr will be granted 10,000 restricted common shares, which will vest 50% after three years and 50% after four years, and 25,000 non-qualified stock options, which will vest 25% annually over a four-year period. In addition, Mr. Kerr will receive 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. Kerr also entered into an Agreement, effective July 27, 2006 (the "Employment Agreement"). The Employment Agreement shall apply to any termination of Mr. Kerr's employment occurring on or before July 27, 2009. Unless the Employment Agreement is earlier terminated pursuant to its terms, on July 27, 2009 and on July 27 of each succeeding year thereafter (a "Renewal Date"), the term of the Employment Agreement shall be auto matically 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. Kerr's employment occurring after that Renewal Date.
The Employment Agreement will become operative only if Mr. Kerr'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 described in the immediately preceding paragraph. If the Employment Agreement becomes operative, Mr. Kerr 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. Kerr 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.
If Mr. Kerr becomes entitled to benefits under the Employment Agreement after a Change of Control 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 two 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 second anniversary of the termination date and all restricted shares and stock options will become fully vested. Whether the termination is before or af ter a Change of Control, continuing health and life insurance coverage would stop if Mr. Kerr becomes eligible for similar benefits with another employer.
The Employment Agreement also provides that if any payments to Mr. Kerr 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. Kerr's compensation to offset the excise tax, except that (a) if the aggregate parachute payments that would otherwise be made to Mr. Kerr 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. Kerr 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. Kerr 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. Kerr 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. Kerr's compensation to offset the excise taxes other than that portion that is allocable to 10% of the aggregate total of parachute payments.
Mr. Kerr agreed to non-competition, confidentiality and non-solicitation covenants 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 31, 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.
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| | | Jo-Ann Stores, Inc. |
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| August 1, 2006 | | By: | | /s/ David Goldston
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| | | | | Name: David Goldston |
| | | | | Title: Senior Vice President, General Counsel and Secretary |
Exhibit Index
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| Exhibit No. | | Description |
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99.1 | | Press Release of Jo-Ann Stores, Inc., dated July 31, 2006. |
