EX-10.14 Fifth Amendment to Credit Agreement

EX-10.14 3 l17624aexv10w14.htm EX-10.14 FIFTH AMENDMENT TO CREDIT AGREEMENT EX-10.14

Exhibit 10.14

FIFTH AMENDMENT TO CREDIT AGREEMENT

This Fifth Amendment to Credit Agreement (this “Fifth Amendment”) is made as of this 21st day of February, 2006 by and among

JO-ANN STORES, INC., an Ohio corporation, having a principal place of business at 5555 Darrow Road, Hudson, Ohio 44236, as Lead Borrower for the Borrowers, being

said JO-ANN STORES, INC., and

FCA of Ohio, Inc., an Ohio corporation, having a principal place of business at 5555 Darrow Road, Hudson, Ohio 44236, and

House of Fabrics, Inc., a Delaware corporation, having a principal place of business at 5555 Darrow Road, Hudson, Ohio 44236, and

Jo-Ann Stores Supply Chain Management, Inc., an Ohio corporation, having a principal place of business at 5555 Darrow Road, Hudson, Ohio 44236

each of the Lenders party to the Credit Agreement (defined below) (together with each of their successors and assigns, referred to individually as a “Lender” and collectively as the “Lenders”), and

BANK OF AMERICA, N.A. (f/k/a Fleet National Bank), as Issuing Bank, a national banking association having a place of business at 100 Federal Street, Boston, Massachusetts 02110; and

FLEET RETAIL GROUP, LLC (f/k/a Fleet Retail Finance Inc.), as Administrative Agent and Collateral Agent for the Lenders, a Delaware limited liability company, having its principal place of business at 40 Broad Street, Boston, Massachusetts 02109; and

WACHOVIA BANK, N.A. (f/k/a Congress Financial Corporation), as Documentation Agent; and

GMAC COMMERCIAL FINANCE LLC (f/k/a GMAC Commercial Credit LLC), NATIONAL CITY BUSINESS CREDIT, INC. (f/k/a National City Commercial Finance, Inc.) AND THE CIT GROUP/BUSINESS CREDIT, INC., as Co-Agents

in consideration of the mutual covenants herein contained and benefits to be derived herefrom.

W I T N E S S E T H

A. Reference is made to the Credit Agreement (as amended and in effect, the “Credit Agreement”) dated as of April 24, 2001 by and among the Lead Borrower, the Borrowers, the Lenders, the Issuing Bank, the Agents, the Documentation Agent and the Co-Agents.

B. The parties to the Credit Agreement desire to modify, amend and waive certain provisions of the Credit Agreement, as provided herein.

Accordingly, the parties hereto agree as follows:

1. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.

2. Amendments to Article I of the Credit Agreement. The provisions of Article I of the Credit Agreement are hereby amended as follows:

	a.		The definition of “Appraisal Percentage” is hereby deleted in its entirety and the following substituted in its stead:

			“Appraisal Percentage” means the following percentages for the periods indicated:


Period		Appraisal Percentage
January 1 through September 14 of each year and November 16 through December 31 of each year		85%

September 15 through November 15 of each year		90%

	b.		The definition of “Cash Control Event” is hereby amended by deleting “$50,000,000.00” in the first line thereof and substituting “$40,000,000.00” in its stead.

	c.		The definition of “Consolidated Net Worth” is hereby amended by adding the following to the end thereof:

			“plus (f) the amount of any goodwill charged off during or subsequent to the Loan Parties’ Fiscal Year ending January 31, 2006.”

	d.		The definition of “Inventory Advance Rate” is hereby deleted in its entirety and the following substituted in its stead:


Period		Inventory Advance Rate
January through March of each year		62.5%

April 1 through September 14 of each year and November 16 through December 31 of each year		65%

September 15 through November 15 of each year		74%

	e.		The following new definition is hereby added to Article I to the Credit Agreement in appropriate alphabetical order:

			“Consolidated Net Income” shall mean, with respect to the Loan Parties for any period, the net income (or loss) of the Loan Parties on a consolidated basis for such period taken as a single accounting period determined in accordance with GAAP, plus the amount of any goodwill of the Loan Parties charged off during such period (to the extent any such goodwill is included as an expense in the determination of Consolidated Net Income); provided, however, that there shall be excluded (i) the income (or loss) of a Person in which any Loan Party has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to such Loan Party during such period, (ii) the income (or loss) of a Person accrued prior to the date it becomes a Subsidiary of a Loan Party or any of such Loan Party’s Subsidiaries or is merged into or consolidated with a Loan Party or any of its Subsidiaries or that Person’s assets are acquired by such Loan Party or any of its Subsidiaries, and (iii) the income of any direct or indirect Subsidiary of a Loan Party to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary.

3. Amendments to Article II. The provisions of Article II of the Credit Agreement are hereby amended as follows:

	a.		The provisions of Section 2.01(a)(i) of the Credit Agreement are hereby amended by deleting the number “$350,000,000” appearing therein and substituting the number “$425,000,000” in its stead.

	b.		The provisions of Section 2.02(a)(vi) are hereby deleted in their entirety and the following substituted in their stead:

(vi) Shrink (an Inventory Reserve): In an amount determined by the Administrative Agent based upon the Loan Parties’ historical Shrink rate.

The provisions of Section 2.05(b) of the Credit Agreement are hereby amended by deleting the number “$350,000,000” appearing therein and substituting the number “$425,000,000” in its stead.

4. Amendment to Schedules. The Schedules to the Credit Agreement are hereby amended as follows:

	a.		Schedule 1.1 is hereby deleted in its entirety and a new Schedule 1.1 in the form annexed hereto substituted in its stead.

	b.		Schedule 6.11 is hereby deleted in its entirety and a new Schedule 6.11 in the form annexed hereto substituted in its stead.

5. Conditions Precedent to Effectiveness. This Fifth Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Administrative Agent:

	a.		This Fifth Amendment shall have been duly executed and delivered by the Borrowers and the Lenders, shall be in full force and effect, and shall be in form and substance satisfactory to the Administrative Agent and the Lenders.

	b.		All action on the part of the Borrowers necessary for the valid execution, delivery and performance by the Borrowers of this Fifth Amendment shall have been duly and effectively taken and evidence thereof satisfactory to the Administrative Agent shall have been provided to the Administrative Agent.

	c.		The Borrowers shall have paid to the Agent, for the pro rata benefit of the Lenders who have increased their Commitments pursuant to this Fifth Amendment, an amendment fee in an amount equal to 0.20% of the amount of the increase in each such Lender’s Commitment. The amendment fee shall be fully earned and paid by the Borrower to the Agent in full on the effective date of this Fifth Amendment. The amendment fee shall not be subject to refund or rebate under any circumstances.

	d.		The Borrowers shall have paid to the Administrative Agent all other amounts due under the Loan Documents as of the effective date of this Fifth Amendment.

	e.		The Borrowers shall have provided such additional instruments and documents to the Administrative Agent as the Administrative Agent and Administrative Agent’s counsel may have reasonably requested.

6. Miscellaneous.

	a.		Except as otherwise expressly provided herein, all provisions of the Credit Agreement and the other Loan Documents remain in full force and effect.

	b.		This Fifth Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument.

	c.		This Fifth Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof.

	d.		Any determination that any provision of this Fifth Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not effect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Fifth Amendment.

	e.		The Borrowers shall pay on demand all costs and expenses of the Agents, including, without limitation, reasonable attorneys’ fees in connection with the preparation, negotiation, execution and delivery of this Fifth Amendment.

	f.		The Borrowers warrant and represent that the Borrowers have consulted with independent legal counsel of the Borrowers’ selection in connection with this Fifth Amendment and are not relying on any representations or warranties of the Agents, the Lenders or their counsel in entering into this Fifth Amendment.

IN WITNESS WHEREOF, the parties have duly executed this Fifth Amendment as of the day and year first above written.


		JO-ANN STORES, INC.
		as Lead Borrower and Borrower

		by				/s/ Donald R. Tomoff

		Name:				Donald R. Tomoff
		Title:				Vice President, Finance and Treasurer

		FCA OF OHIO, INC.
		as Borrower

		by				/s/ Donald R. Tomoff

		Name:				Donald R. Tomoff
		Title:				Treasurer

		HOUSE OF FABRICS, INC.
		as Borrower

		by				/s/ Donald R. Tomoff

		Name:				Donald R. Tomoff
		Title:				Treasurer

		JO-ANN STORES SUPPLY CHAIN MANAGEMENT, INC.
		as Borrower

		by				/s/ Donald R. Tomoff

		Name:				Donald R. Tomoff
		Title:				Treasurer


		FLEET RETAIL GROUP, LLC,
		as Administrative Agent, as Collateral Agent, as Swingline Lender, and as Lender

		By:				/s/ James J. Ward

						James Ward
						Managing Director

		BANK OF AMERICA, N.A.,
		as Issuing Bank

		By:				/s/ James J. Ward

						James Ward
						Managing Director


		WACHOVIA CAPITAL FINANCE CORPORATION (NEW ENGLAND), as Documentation Agent and Lender

		By:				/s/ John Husson

		Name:				John Husson
		Title:				Director

		GMAC COMMERCIAL FINANCE LLC
		as Co-Agent and Lender

		By:				/s/ Steven J. Brown

		Name:				Steven J. Brown
		Title:				Senior Vice President

		NATIONAL CITY BUSINESS CREDIT, INC.
		as Co-Agent and Lender

		By:				/s/ Joseph L. Kwasny

		Name:				Joseph L. Kwasny
		Title:				Director

		THE CIT GROUP/BUSINESS CREDIT, INC.
		as Co-Agent and Lender

		By:				/s/ Manuel Borges

		Name:				Manuel Borges
		Title:				Vice President

		WELLS FARGO FOOTHILL, LLC
		as Lender

		By:				/s/ Donna Arenson

		Name:				Donna Arenson
		Title:				Assistant Vice President


		COMERICA BANK
		as Lender

		By:				/s/ Timothy C. Griffin

		Name:				Timothy C. Griffin
		Title:				Vice President

		GENERAL ELECTRIC CAPITAL CORPORATION
		as Lender

		By:				/s/ Brian P. Schwinn

		Name:				Brian P. Schwinn
		Title:				Duly Authorized Signatory

		SIEMENS FINANCIAL SERVICES, INC.
		as Lender

		By:				/s/ Frank Amodio

		Name:				Frank Amodio
		Title:				Vice President — Credit

		RZB FINANCE, LLC
		as Lender

		By:				/s/ Christoph Hoedl

		Name:				Christoph Hoedl
		Title:				Group Vice President

		By:				/s/ John A. Valiska

		Name:				John A. Valiska
		Title:				First Vice President

		US BANK N.A.
		as Lender

		By:				/s/ Jeffrey A. Kessler

		Name:				Jeffrey A. Kessler
		Title:				Vice President


		KEY BANK NATIONAL ASSOCIATION
		as Lender

		By:				/s/ Nadine M. Eames

		Name:				Nadine M. Eames
		Title:				Vice President

		WEBSTER BUSINESS CREDIT CORPORATION
		as Lender

		By:				/s/ Andrew D. Wierman

		Name:				Andrew D. Wierman
		Title:				Vice President

		LASALLE BUSINESS CREDIT, LLC
		as Lender

		By:				/s/ Andrew Cerussi

		Name:				Andrew Cerussi
		Title:				Vice President

SCHEDULE 1.1
LENDERS AND COMMITMENTS


			Revolving
			Commitment			Commitment
Lender	Revolving Commitment		Percentage			Percentage
Fleet Retail Group, LLC	$	59,500,000		14.000	%		14.000	%
Wachovia Capital Financial Corporation (New England)	$	48,571,430		11.430	%		11.430	%
GMAC Commercial Finance LLC	$	42,500,000		10.000	%		10.000	%
The CIT Group/ Business Credit, Inc.	$	42,500,000		10.000	%		10.000	%
National City Business Credit, Inc.	$	42,500,000		10.000	%		10.000	%
Wells Fargo Foothill, LLC	$	30,357,143		7.143	%		7.143	%
General Electric Capital Corporation	$	30,357,143		7.143	%		7.143	%
Key Bank National Association	$	28,571,428		6.722	%		6.722	%
LaSalle Business Credit, Inc.	$	24,285,714		5.714	%		5.714	%
US Bank N.A.	$	20,000,000		4.706	%		4.706	%
Comerica Bank	$	15,785,714		3.714	%		3.714	%
Siemens Financial Services, Inc.	$	15,785,714		3.714	%		3.714	%
Webster Business Credit Corporation	$	12,142,857		2.857	%		2.857	%
RZB Finance, LLC	$	12,142,857		2.857	%		2.857	%
	$	425,000,000		100	%		100	%

SCHEDULE 6.11
FINANCIAL PERFORMANCE COVENANTS

The Lead Borrower and its Subsidiaries will not permit their Consolidated Net Worth to be less than the following at the end of the Fiscal Periods set forth below:


Fiscal Month Ending	Required Consolidated Net Worth
February, 2006	$	334,253,000	*
March, 2006	$	333,240,000	*
April, 2006	$	331,217,000	*
May, 2006	$	328,060,000	*
June, 2006	$	325,366,000	*
July, 2006	$	319,006,000	*
August, 2006	$	314,602,000	*
September, 2006	$	317,801,000	*
October, 2006	$	321,274,000	*
November, 2006	$	326,841,000	*
December, 2006	$	347,891,000	*
January, 2007	$	345,698,000	*


Fiscal Quarter Ending		Required Consolidated Net Worth
April, 2007 and each Fiscal Quarter ending thereafter		$345,698,000 plus 50% of the quarterly Consolidated Net Income of the Loan Parties earned in Fiscal Quarters ending on or after April 2007 on a cumulative basis (with no reduction for any net loss in any Fiscal Quarter)*


*		plus, in each case, 100% of the net proceeds from any new equity issuances received from and after the Fiscal Month commencing February, 2006.