Workshop course

ATELIER BUILD-A-BEAR INC: Conclusion of a Material Definitive Agreement, Financial Statements and Documents (Form 8-K)

Article 1.01. The conclusion of an important definitive agreement.

At December 17, 2021, Build-A-Bear Workshop, Inc. (the “Company”), as loan agent; Build-A-Bear Retail Management, Inc., with the Company, as borrowers (collectively, the “Borrowers”); and Atelier Build-A-Bear Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card Services, LLC
and Build-A-Bear Workshop Canada, Ltd. (collectively, the “Guarantors”); has entered into a First Amendment to the Revolving Credit and Guarantee Agreement (the “First Amendment”) with its party lenders (the “Lenders”); and PNC Bank, National Association, as agent of the Lenders (in this capacity, “Agent”). The First Amendment amended the Revolving Credit and Guarantee Agreement (the “Original Credit Agreement” and, as amended by the First Amendment, the “Credit Agreement”), dated 25 Aug 2020 between the Company, the Borrowers, the Guarantors, the Lenders and the Agent. All capitalized terms used in this article 1.01 and not defined otherwise in this article 1.01 will have the meaning given to them in the credit agreement.

Among other things and as described below, the First Amendment (i) extended the maturity date of the credit agreement to December 17, 2026, (ii) eliminated the minimum interest payment requirement, (iii) reduced the facility fees associated with unused availability, (iv) reduced the availability requirement under the financial commitment, (v) provides the Company with additional flexibility to make permitted investments, declare dividends, repay intercompany loans or repurchase its shares, (vi) increased the thresholds for certain events of default and (vii) reduce the required frequency of various information and reporting obligations in certain circumstances.

The credit agreement continues to provide for a senior secured revolving loan in the aggregate principal amount of up to $ 25,000,000 (subject to a basic loan formula), which may be increased with the agreement of the Lenders by an amount not exceeding $ 25,000,000, subject to the terms set out in the Credit Agreement (the “Increase Option”). The borrowing basis under the Credit Agreement continues to be based on specified percentages of qualifying credit card receivables, qualifying inventory and, in certain circumstances, qualifying foreign inventory in transit and, at the discretion of agent, eligible debts. The First Amendment removed some eligibility requirements for eligible foreign stocks in transit and eligible stocks. The credit agreement continues to provide for swingline loans of up to $ 5,000,000 and the issuance of stand-by or commercial letters of credit of up to $ 5,000,000.

Revolving advances under the Credit Agreement will continue to be secured (subject to permitted liens and certain other exceptions) by a first priority lien on substantially all of the personal property of the Company and all of its
we and Canadian subsidiaries, including certain receivables (including receivables on sales inventories and receivables on credit cards but excluding certain franchise receivables), equipment and fixtures, intellectual property, inventories and the interests held by the Borrowers and the Guarantors in their respective national and foreign subsidiaries.

Borrowings under the Credit Agreement continue to bear interest (a) at a base rate determined under the Credit Agreement, or (b) at the option of the Borrower, at a rate based on LIBOR, increased in the two cases of a margin based on average unused availability as determined under the credit agreement, but the First Amendment reduced those rates and the LIBOR floor. A $ 500,000
the minimum interest payment requirement has been eliminated and the facility fee percentage which was previously 0.50% or 0.375% depending on average unused availability has been reduced to 0.25%.

The First Amendment extended the maturity date of the original credit agreement to
December 17, 2026 (unless terminated earlier in accordance with the terms thereof).

                                       2

————————————————– ——————————

The credit agreement continues to require the company to comply with a financial clause. Previously, under the original credit agreement, the Company was required to maintain availability (as determined in accordance with the credit agreement) at all times equal to or greater than the greater of (a) 12.5% ​​of the limit of ready and (b) $ 3,125,000 (subject to increase upon exercise of the Increase Option). The First Amendment revised this clause to require the company to maintain availability (as determined in accordance with the credit agreement) at all times equal to or greater than the greater of (a) 10.0% of the loan limit and B) $ 1,875,000 (subject to increase upon exercise of the Increase Option). The “loan limit” is the lesser of (1) $ 25,000,000 less outstanding loans and letters of credit under the credit agreement and (2) the borrowing base from time to time under the credit agreement. The First Amendment reduced the required frequency of various information and reporting requirements in certain circumstances.

The credit agreement continues to contain customary events of default including, without limitation, events of default based on payment obligations, material misstatements in representations and warranties, breaches of commitments, judgments and final orders, inapplicability of the credit agreement, material ERISA events, a change of control, insolvency proceedings and defaults under certain other obligations and the First Amendment increased the thresholds for certain cases of failure. An Event of Default may increase the interest rate and applicable charges by 2% until such Event of Default has been corrected, canceled or amended.

The credit agreement continues to contain typical negative clauses including, among other things, that the borrower will not go into debt except for authorized debts or make any investments except for authorized investments, declare dividends or redeem its shares. except to the extent permitted, acquire subsidiaries except as part of an authorized acquisition, or merge or consolidate with any other entity or acquire all or substantially all of the assets of any other company outside the ordinary course of business. The First Amendment gives the company additional flexibility to make permitted investments, declare dividends, repay intercompany loans and repurchase its shares.

At the closing date of the First Amendment, the Borrowers had a $ 750,000 letter of credit issued and no outstanding debt under the credit agreement and the Company is currently in compliance with the restrictive covenants of the credit agreement.

Relationship with the PNC

The Company has or may have had a customary banking relationship with PNC based on the provision of a variety of financial services, including loans, commercial banking and other advisory services.

The foregoing description of the First Amendment is only a summary of the important terms and conditions of this document and is qualified in its entirety by reference to the First Amendment, which is filed as Exhibit 10.1 hereof and is incorporated by reference into present. In addition, the Company has already filed the Original Credit Agreement as Exhibit 10.1 of its current report on Form 8-K, filed on August 31, 2020.

3

————————————————– ——————————

Item 9.01      Financial Statements and Exhibits.

(d) Exhibits

Exhibition number Exhibition description

10.1             First Amendment to Revolving Credit and Security Agreement dated as
               of December 17, 2021 among the Company and Build-A-Bear Retail
               Management, Inc., as borrowers; Build-A-Bear Workshop Franchise
               Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card
               Services LLC and Build-A-Bear Workshop Canada, Ltd., as guarantors;
               the lenders party thereto; and PNC Bank, National Association, as
               agent for lenders.

104            Cover Page Interactive Data File (embedded within the Inline XBRL
               document)

© Edgar online, source Previews