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%






2









 







	 	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.




	 	c.	 	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:



3









 






	 	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.




4









 






	 	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.




5









 











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






6









 






	 	 	 	 	 	 	 
	 	 	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






7









 






	 	 	 	 	 	 	 
	 	 	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






8









 






	 	 	 	 	 	 	 
	 	 	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






9









 






	 	 	 	 	 	 	 
	 	 	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







10









 








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.