Second Amendment to Amended and Restated Credit Agreement, dated December 22, 2021, by and among Jo-Ann Stores, LLC, Needle Holdings LLC and Bank of America, N.A
EXHIBIT 10.3
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated as of December 22, 2021 by and among:
JO-ANN STORES, LLC, an Ohio limited liability company (the “Borrower”),
NEEDLE HOLDINGS LLC, a Delaware limited liability company (“Holdings”),
the other Loan Parties party hereto,
the Lenders party hereto, and
BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent;
in consideration of the mutual covenants herein contained and benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Loan Parties, the Lenders, the Administrative Agent and the Collateral Agent, among others, have entered into a certain Amended and Restated Credit Agreement dated as of October 21, 2016, (as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of November 25, 2020, and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the effectiveness of this Amendment, the “Existing Credit Agreement”);
WHEREAS, the Borrower has requested to amend certain provisions of the Existing Credit Agreement, in each case, subject to the terms and conditions hereof; and
WHEREAS, the Lenders and the Administrative Agent have agreed to amend the Existing Credit Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises and agreements herein contained, the parties hereto hereby agree as follows:
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“Adjustment Date” means the first day of each Fiscal Quarter beginning with April 30, 2022.
“Applicable Margin” means a percentage per annum equal to (a) from and after the Second Amendment Effective Date until the first Adjustment Date, the percentages set forth in Level I of the pricing grid below; and (b) thereafter, the following percentages per annum, based upon Average Historical Excess Availability as of the most recent Adjustment Date:
Level | Average Historical Excess Availability | Eurodollar Rate for Loans and | Base Rate | Letter of Credit Fees (Documentary Letters of Credit) |
I | Greater than or equal to 40% of the Maximum Credit | 1.25% | 0.25% | 0.625% |
II | Less than 40% of the Maximum Credit | 1.50% | 0.50% | 0.75% |
The Applicable Margin shall be adjusted quarterly in accordance with the table above on each Adjustment Date for the period beginning on such Adjustment Date based upon the Average Historical Excess Availability as the Administrative Agent shall determine in good faith within ten (10) Business Days after such Adjustment Date. Any increase or decrease in the Applicable Margin resulting from a change in the Average Historical Excess Availability shall become effective as of the first Business Day immediately following the Adjustment Date. If any Borrowing Base Certificates are at any time restated or otherwise revised or if the information set forth in any Borrowing Base Certificates otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand.
“Applicable Unused Commitment Fee Rate” means, for any day, a percentage per annum equal to 0.20% per annum.
“Arrangers” means BofA Securities, Inc. (or any of its designated affiliates), Wells Fargo Bank, National Association, U.S. Bank National Association, and BMO Harris Bank, N.A., each in its capacity as a joint lead arranger and joint bookrunner under this Agreement.
“Co-Syndication Agents” means Wells Fargo Bank, National Association, U.S. Bank National Association, and BMO Harris Bank, N.A., each as a Co‑Syndication Agent under this Agreement.
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“Fee Letter” means, collectively, (x) the Fee Letter dated September 20, 2016, among the Borrower, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Bank of America; (y) the Fee Letter dated as of the First Amendment Effective Date, among the Borrower and Bank of America; and (z) the Fee Letter dated as of the Second Amendment Effective Date, among the Borrower and Bank of America, as each may be amended and in effect from time to time.
“First Lien Term Facility Credit Agreement” means that certain credit agreement dated as of October 21, 2016 among the Borrower, Holdings, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, as amended by that certain Amendment No. 1 dated as of July 21, 2017, as amended by that certain Amendment No. 2 dated as of July 7, 2021, and as further amended, restated, modified, supplemented, extended, renewed, refunded, replaced or refinanced from time to time in one or more agreements (in each case with the same or new lenders, institutional investors or agents), including any agreement extending the maturity thereof or otherwise restructuring all or any portion of the Indebtedness thereunder or increasing the amount loaned or issued thereunder or altering the maturity thereof, in each case as and to the extent permitted by this Agreement and the Intercreditor Agreement.
“LIBOR Floor” means 0% per annum.
“Scheduled Termination Date” means the date that is five (5) years after the Second Amendment Effective Date, as may be extended pursuant to Section 12.1(b) or Section 2.17 hereof, provided that, in each case, if such day is not a Business Day, the Scheduled Termination Date shall be the Business Day immediately preceding such day.
“Specified Payment” means any Investment, incurrence of Indebtedness, Restricted Payment or payment made pursuant to Section 9.11 that in each case is subject to the satisfaction of the Payment Conditions.
“Term Facilities” means the First Lien Term Facilities.
“Term Facility Administrative Agents” means the First Lien Term Facility Administrative Agent.
“Term Facility Credit Agreements” means the First Lien Term Facility Credit Agreement.
“Term Facility Documentation” means the First Lien Term Facility Documentation.
“Term Facility Lenders” means the First Lien Term Facility Lenders.
“ESG” has the meaning specified in Section 2.18.
“ESG Amendment” has the meaning specified in Section 2.18.
“ESG Pricing Provisions” has the meaning specified in Section 2.18.
“KPI’s” has the meaning specified in Section 2.18.
“Rescindable Amount” has the meaning specified in Section 2.13(e).
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“Second Amendment Effective Date” means December 22, 2021.
“Sustainability Coordinator” has the meaning specified in Section 2.18.
“Sustainability Linked Loan Principles” means the Sustainability Linked Loan Principles as most recently published by the Loan Market Association and Loan Syndications & Trading Association.
(A) by deleting each reference to “the Second Lien Term Facility Administrative Agent to secure the obligations under the Second Lien Term Facility,” thereto in its entirety; and
(B) by deleting each reference to “First Amendment Effective Date” in its entirety and substituting “Second Amendment Effective Date” in its stead.
“(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the applicable Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance
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upon such assumption, distribute to the Lenders or the applicable Issuer, as the case may be, the amount due. With respect to any payment that the Administrative Agent makes for the account of the Lenders or any Issuer hereunder as to which the Administrative Agent determines (which determination shall be conclusive absent manifest error) that any of the following applies (such payment referred to as the “Rescindable Amount”): (1) the Borrower has not in fact made such payment; (2) the Administrative Agent has made a payment in excess of the amount so paid by the Borrower (whether or not then owed); or (3) the Administrative Agent has for any reason otherwise erroneously made such payment; then each of the Lenders or the applicable Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount so distributed to such Lender or such Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this clause (e) shall be conclusive, absent manifest error.”
“SECTION 2.18 Sustainability Adjustments.
“After the Second Amendment Effective Date, the Borrower, in consultation with the Administrative Agent (in such capacity, the “Sustainability Coordinator”), shall be entitled to establish specified Key Performance Indicators (“KPI’s”) with respect to certain Environmental, Social and Governance (“ESG”) targets of Holdings and its Subsidiaries. The Sustainability Coordinator, the Requisite Lenders and the Borrower may amend this Agreement (such amendment, the “ESG Amendment”) solely for the purpose of incorporating the KPI’s and other related provisions (the “ESG Pricing Provisions”) into this Agreement. Upon effectiveness of any such ESG Amendment, based on Holdings’ and its Subsidiaries’ performance against the KPI’s, certain adjustments (increase, decrease or no adjustment) to the otherwise applicable Applicable Unused Commitment Fee Rate, Applicable Margin for Base Rate Loans, and Applicable Margin for Eurodollar Rate Loans will be made; provided that the amount of such adjustments shall not exceed (i) a 0.05% increase and/or a 0.05% decrease in the otherwise applicable Applicable Margin for Eurodollar Rate Loans, in each case, determined based upon the applicable rating on the effective date of the ESG Amendment, and the adjustments to the Applicable Margin for Base Rate Loans shall be the same amount, in basis points, as the adjustments to the Applicable Margin for Eurodollar Rate Loans or (ii) a 0.01% increase and/or a 0.01% decrease in the otherwise Applicable Unused Commitment Fee Rate. The pricing adjustments pursuant to the KPI’s will require, among other things, reporting and validation of the measurement of the KPI’s in a manner that is aligned with the Sustainability Linked Loan Principles and is to be agreed between the Borrower and the Sustainability Coordinator (each acting reasonably). Following the effectiveness of the ESG Amendment, any modification to the ESG Pricing Provisions which does not have the effect of reducing the Applicable Unused Commitment Fee Rate, Applicable Margin for Base Rate Loans or Applicable Margin for Eurodollar Rate Loans to a level not otherwise permitted by this paragraph shall be subject only to the consent of the Requisite Lenders. The Sustainability Coordinator will (i) assist the Borrower in determining the ESG Pricing Provisions in connection with the ESG Amendment and (ii) assist the Borrowers in preparing informational materials focused on ESG to be used in connection with the
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ESG Amendment. The provisions of this Section shall supersede any provisions in Section 12.1 to the contrary.”
(A) by deleting the reference to the “First Amendment Effective Date” in clause (b) thereto and substituting “Second Amendment Effective Date” in its stead;
(B) by deleting each reference to “$50,000,000” and “3.50%” in clause (bb) thereto and substituting “$150,000,000” and “6.50%” respectively, in their stead; and
(C) by adding the following paragraph at the end of such section:
“For the avoidance of doubt, all Liens on Current Asset Collateral that secure Indebtedness for borrowed money shall be subordinated to the Liens of the Collateral Agent in a manner consistent with the terms of the Intercreditor Agreement.”
(A) by deleting each reference to “$28,500,000” in clause (c) thereto and substituting “the greater of $81,000,000 and 3.50% of Total Assets” in its stead;
(B) by deleting the reference to the “First Amendment Effective Date” in clause (f) thereto and substituting “Second Amendment Effective Date” in its stead; and
(C) by deleting the reference to “$28,500,000” in clause (m) thereto and substituting “the greater of $160,000,000 and 7.00% of Total Assets” in its stead.
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(A) by deleting the reference to the “First Amendment Effective Date” in clause (b) thereto and substituting “Second Amendment Effective Date” in its stead;
(B) by deleting each reference to “$70,000,000” in clause (e) thereto and substituting “$110,000,000” in its stead;
(C) by deleting the references to “$95,000,000” and “35,000,000” in clause (l) thereto and substituting “$150,000,000” and “$58,000,000” respectively in their stead;
(D) by deleting the reference to “$35,000,000” in clause (r) thereto and substituting “$58,000,000” in its stead;
(E) by deleting the reference to “$50,000,000” in clause (u) thereto and substituting “the greater of $81,000,000 and 3.50% of Total Assets” in its stead; and
(F) by amending and restating clause (q) thereto as follows:
“(q) Indebtedness (i) of any Person that becomes a Restricted Subsidiary after the Second Amendment Effective Date, which Indebtedness is existing at the time such Person becomes a Restricted Subsidiary and is not incurred in contemplation of such Person becoming a Restricted Subsidiary that is non-recourse to the Borrower, Holdings or any other Restricted Subsidiary (other than any Subsidiary of such Person that is a Subsidiary on the date such Person becomes a Restricted Subsidiary after the Second Amendment Effective Date and is either (A) unsecured or (B) secured only by the assets of such Restricted Subsidiary by Liens permitted under Section 9.1(p) and, in each case, any Permitted Refinancing thereof, and (ii) of the Borrower or any Restricted Subsidiary incurred or assumed in connection with any Permitted Acquisition that is secured only by Liens permitted under Section 9.1(p) (and any Permitted Refinancing of the foregoing) and so long as the aggregate principal amount of such Indebtedness and all Indebtedness resulting from any Permitted Refinancing thereof at any time outstanding pursuant to this clause (g)(ii) does not exceed (x) $110,000,000 and (y) 4.75% of Total Assets at any time outstanding;”
(A) by deleting clause (i) thereto and substituting “[reserved]” in its stead.
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(B) by amending and restating clause (ii) thereto in its entirety as follows: “so long as the Payment Conditions are satisfied after giving effect thereto, any prepayment, redemption, defeasance or other satisfaction of any Indebtedness that, together with any Restricted Payment made pursuant to Section 9.6(k), do not exceed the greater of $100,000,000 and 4.30% of Total Assets (determined at the time of such Restricted Payment) in the aggregate at any time outstanding;”
“SECTION 11.14 Recovery of Erroneous Payments.
“Without limitation of any other provision in this Agreement, if at any time the Administrative Agent makes a payment hereunder in error to any Lender or any other Secured Party, whether or not in respect of an Obligation due and owing by the Borrower at such time, where such payment is a Rescindable Amount, then in any such event, each Secured Party receiving a Rescindable Amount severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount received by such Secured Party in immediately available funds in the currency so received, with interest thereon, for each day from and including the date such Rescindable Amount is received by it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. Each Secured Party irrevocably waives any and all defenses, including any “discharge for value” (under which a creditor might otherwise claim a right to retain funds mistakenly paid by a third party in respect of a debt owed by another) or similar defense to its obligation to return any Rescindable Amount. The Administrative Agent shall inform each Secured Party promptly upon determining that any payment made to such Secured Party comprised, in whole or in part, a Rescindable Amount.”
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Without limiting the generality of the provisions Section 11.1 of the Amended Credit Agreement, for purposes of determining compliance with the conditions specified in this Section 4, each Lender that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Second Amendment Effective Date specifying its objection thereto.
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[Signature Pages Follow.]
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each of the parties hereto as of the date first above written.
JO-ANN STORES, LLC, as the Borrower
By:______________________________
Name: Matthew Susz
Title: Senior Vice President & Chief Financial Officer
NEEDLE HOLDINGS LLC, as Holdings
By:______________________________
Name: Matthew Susz
Title: Senior Vice President & Chief Financial Officer
JOANN.COM, LLC, as a Guarantor
By:______________________________
Name: Matthew Susz
Title: Vice President
JO-ANN STORES SUPPORT CENTER, INC., as a Guarantor
By:______________________________
Name: Matthew Susz
Title: Vice President
CREATIVEBUG, LLC, as a Guarantor
By:______________________________
Name: Matthew Susz
Title: Vice President
DITTO PRODUCTS LLC, as a Guarantor
By:______________________________
Name: Matthew Susz
Title: Vice President
[Jo-Ann – Signature Page to Second Amendment]
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BANK OF AMERICA, N.A.,
as Administrative Agent, Collateral Agent and as a Lender
By:
Name:
Title:
[Jo-Ann – Signature Page to Second Amendment]
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[______________], as a Lender
By:
Name:
Title:
[Jo-Ann – Signature Page to Second Amendment]
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ANNEX A
Supplemental Schedules to Credit Agreement
[See Attached]
1113394.01A-CHISR02A - MSW
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ANNEX B
Schedule of Ancillary Documents
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