TILLY’S, INC. : Entering into a material definitive agreement, terminating a material definitive agreement, creating a direct financial obligation or an obligation under an off-balance sheet arrangement of a registrant, financial statements and supporting documentation (form 8-K)


Section 1.01 Entering into a Material Definitive Agreement

At January 20, 2022 (the “Closing Date”), The world of jeans and tops, a California
company (“WOJT”) and wholly owned subsidiary of Tilly’s, Inc., a Delaware
company (the “Company”), as borrower, has entered into a credit agreement and a revolving credit note (the “Note” and collectively the “Credit Agreement”) with Wells Fargo Bank, National Association, as lender (the “Bank”). The Credit Agreement replaced WOJT’s existing Credit Agreement (the “Previous Credit Agreement”), dated November 9, 2020, as amended, to the Bank, as lender and as administrative agent and collateral agent, under which WOJT had revolving commitments of up to $65.0 million, a sub-limit on letters of credit of $10.0 million and a subcap for swing line credits of $7.5 million. The previous credit agreement was terminated at the same time as the conclusion of the credit agreement. No borrowings were outstanding under the credit agreement prior to the closing date. Capitalized terms used without definition are defined in the Credit Agreement.

General Terms The Credit Agreement provides for a senior secured revolving credit facility (“Revolving Facility”) of up to $25.0 million (“Revolving Commitment”) consisting of revolving loans, letters of credit and line of credit loans made by lenders, with a sub-limit on outstanding letters of credit at any time during
$15.0 million. The revolving facility matures on January 20, 2024. Payment and full performance of the obligations secured under the Revolving Facility are secured by a lien and charge on all assets of WOJT.

Payment and full performance of WOJT’s obligations under the credit agreement are guaranteed by the Company under a continuing guarantee granted by the Company in favor of the Bank and concluded on January 2022
(warranty”). Payment and performance of the Company’s obligations under the Guarantee are secured by a lien and pledge on all WOJT equity interests held by the Company.

As of the closing date, WOJT had no borrowings outstanding under the credit agreement and the only use of the sub-limit letters of credit under the credit agreement was a $2.025 million irrevocable standby letter of credit, which was previously issued under the prior credit agreement and transferred on the closing date of the credit agreement.

Interest Rates and Fees Borrowings under the Revolving Facility bear interest at an annual rate equal to the SOFR simple daily rate plus 0.75%. Amounts that may be drawn under outstanding letters of credit generate fees of an amount equal to 1.00% per year. The unused portion of the renewable commitment is not subject to a commitment fee.


Under the Credit Agreement, WOJT and the Company are subject to a variety of affirmative and negative covenants of the types customary in a cash flow based loan facility, including financial covenants that require the maintenance (1 ) a ratio of the fund’s total debt to earnings before interest, taxes, depreciation, amortization and annual rent expense of not more than 4.00 to 1.00 and (2) a fixed charge coverage ratio of at least 1.25 for 1.00 (the calculation of which takes into account dividends, distributions, redemptions and redemptions of the interests of the Company only if the cash in hand of the Company, net of any amount unpaid under the Contract of credit, is less than $50.0 million taking into account such dividends, distributions, redemptions or redemptions).

Events of Default Events of default under the Credit Agreement include, but are not limited to, failure to pay principal, interest, fees or other amounts; lack of commitment; material inaccuracy of representations and warranties; bankruptcy events involving WOJT or the Company; the actual or claimed invalidity of any of the loan documents; or a change in control of WOJT or the Company.

Additional agreements As part of the conclusion of the Credit Agreement, the January 20, 2022, the Company has entered into certain ancillary agreements, including (i) a guarantee agreement entered into by WOJT in favor of the Bank (the “Guarantee Agreement”) (ii) the Guarantee entered into by the Company, and (iii) a third party pledge agreement entered into by the Company in favor of the Bank (the “Pledge Agreement”). The Security Agreement, the Guarantee and the Pledge Agreement replaced (i) the guarantee by the Company in favor of Wells Fargo Bank, National Association, dated November 9, 2020, (the “Pre-Guarantee”) and (ii) the Warranty Agreement dated November 9, 2020, between WOJT, the Company and
Wells Fargo Bank, National Association (the “Pre-Security Agreement”), all of which were terminated concurrently with the termination of the Prior Credit Agreement.

The foregoing descriptions of the Credit Agreement, Note, Guarantee Agreement, Guarantee and Collateral Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the Agreement. Agreement, Guarantee Agreement, Guarantee and Collateral Agreement, respectively, copies of which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, and incorporated herein by reference.

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Section 1.02 Termination of a Material Definitive Agreement

The information included in Section 1.01 of this Current Report on Form 8-K regarding termination of Prior Credit Agreement, Prior Guarantee and Prior Guarantee Agreement is incorporated by reference in this Section 1.02.

Item 2.03       Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
                Sheet Arrangement of a Registrant

The information included in Section 1.01 of this Current Report on Form 8-K is incorporated by reference into this Section 2.03.

Item 9.01 Financial statements and supporting documents

The following parts are provided herewith.

(d)  Exhibits.

Exhibit No.       Exhibit Title or Description
  10.1              Credit Agreement, dated January 20, 2022, by and among World of Jeans & Tops and
                  Wells Fargo Bank, National Association    .
  10.2              Revolving     Line of Credit Note, dated January 20, 2022, of Tilly's    ,
  10.3              Guaranty, dated January 20, 2022, of Tilly's, Inc.
  10.4              Security Agreement: Business Assets, dated January 20, 2022 of World of Jeans &
  10.5              Third Party Pledge Agreement, dated January 20, 2022 of Tilly's, Inc.
104               Cover Page Interactive Data File (embedded within the Inline XBRL document).

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