SHOE CARNIVAL INC: Entering a Material Definitive Agreement, Terminating a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under a Registrant’s Off-Balance Sheet Arrangement, Financial Statements and Exhibits supporting documents (Form 8-K)

Item 1.01. Conclusion of a significant definitive agreement.

Shoe Carnival, Inc. (the “Company”) has entered into an Amended and Restated Credit Agreement dated March 23, 2022 (the “Credit Agreement”), with the financial institutions that are parties thereto from time to time as lenders (the “Lenders”) and Wells Fargo Bank, National Association, as Administrative Agent (in this capacity, the “Administrative Agent”), Swingline Lender and Issuing Lender, Sole Lead Manager and Sole Bookrunner. The Credit Agreement replaces the Credit Agreement dated January 20, 2010 within the company, Wells Fargo Bank, National Association (successor by merger of Wachovia Bank, National Association), as administrative agent, and certain other financial institutions parties thereto (as previously amended, the “Advance Credit Agreement”). The credit agreement provides for up to $100 million in the form of loans (including swingline loans) and commercial and standby letters of credit. Loans can be revolving loans from lenders or up to $15 million of Swingline loans from the Swingline lender. The description of the material terms of the Credit Agreement included in Section 2.03 of this Current Report on Form 8-K is incorporated by reference into this section.

Section 1.02. Termination of a Material Definitive Agreement.

As indicated above and below, the Company has entered into the Credit Agreement, which supersedes the Prior Credit Agreement. The previous credit agreement provided for a $100 million credit facility maturing on March 27, 2022. The Company did not incur any early termination or early repayment penalties in connection with the replacement of the Prior Credit Agreement.

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

As indicated above, the Company has entered into an Amended and Restated Credit Agreement, dated March 23, 2022with the Administrative Agent and the Lenders which provides for up to $100 million in the form of loans and commercial and standby letters of credit. In certain circumstances, the credit facility may be increased up to a maximum of one $50 million at the discretion of the Company through an uncommitted accordion function. The credit facility has a maturity date
March 23, 2027. Two of the Company’s wholly-owned subsidiaries, SCLC, Inc. and
SCHC, Inc. (together with the Company, the “Loan Parties”), guarantee the obligations of the Company under the credit facility. The Loan Parties have also granted to the Administrative Agent, for the benefit of the Lenders, a security interest in all inventory of the Loan Parties to secure the obligations under the Credit Facility, pursuant to an Amended Collateral Agreement and updated, dated March 23, 2022between the Parties to the Loan and the Administrative Agent (the “Security Agreement”).

The credit agreement stipulates that the company Net valuedefined as the equity of the Company and its subsidiaries, will not be less than $250,000,000 on the last day of any fiscal quarter. The credit agreement also requires that the Company’s consolidated interest coverage ratio, which is defined as the ratio of consolidated EBIT for the last period of four consecutive quarters to consolidated interest expense for that period, not be not less than 3.00 for 1.00 at each fiscal quarter end during the term of the credit agreement. Under the credit agreement, consolidated EBIT is defined as net income before tax (excluding non-cash expenses, losses or gains), plus interest expense, plus interest options. purchase of shares and any other share-based compensation expense for that period, plus any extraordinary, unusual expense or non-recurring cash expense mutually agreed by the Company and the Administrator, less any extraordinary cash income or gain , unusual or non-recurring, as determined on a consolidated basis in accordance with generally accepted accounting principles.

The credit facility bears interest, at the option of the Company, either (1) at a base rate (as defined in the credit agreement), plus a margin ranging from 0.00% to 1.0%, either (2) at an adjusted forward SOFR (as defined in the credit agreement), which includes a forward SOFR adjustment of 0.10%, plus a margin ranging from 0.90% to 1.90%, based on the company’s achievement of certain pricing levels based on the consolidated total leverage ratio (as defined in the credit agreement) as of the most recently completed fiscal quarter. Both the base rate and the adjusted forward SOFR have a floor of 0%. A commitment fee is also charged on the unused portion of the credit facility at a rate ranging from 0.20% per annum to 0.30% per annum, depending on the Company’s achievement of certain pricing levels. based on the total consolidated leverage ratio for the most recently completed fiscal quarter. Additional charges apply if letters of credit are outstanding under the credit agreement.

In addition to the foregoing, the Credit Agreement contains, among other things, covenants, representations, warranties and events of default customary for credit facilities of similar size. The covenants include limitations on other indebtedness, liens, sales of assets, mergers and acquisitions, distributions, purchases, repurchases and other acquisitions of interests of the loan parties, related party transactions and loans and investments, among others. Under certain conditions, amounts outstanding under the credit agreement may be accelerated. Events of bankruptcy and insolvency of the Company and its subsidiaries will result in an automatic acceleration of indebtedness under the credit agreement. Subject to notice and/or relief periods in certain cases, other events of default under the Credit Agreement will result in acceleration of indebtedness under the Credit Agreement at the option of the Required Lenders, which are defined as Lenders holding at least 66-2/3% of total credit exposure (as long as there are less than five lenders; otherwise, required lenders are defined as lenders holding at least 50% of total credit exposure). These other events of default include failure to pay principal, interest or other amounts when due, breach of covenants, breach of representations or warranties in any material respect, non-payment or acceleration of other material debts, non-payment of certain final judgments, the occurrence of a reportable event relating to one of the Company’s pension plans or the institution of measures to terminate it, a change of control or seizure or similar action made or taken against a material amount of the assets of the Company or any of its subsidiaries.

The foregoing descriptions of the Credit Agreement and the Guarantee Agreement are qualified in their entirety by reference to the text of the agreements, copies of which are filed as Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report on Form 8-K.

The Lenders and their affiliates have provided, and may in the future provide, various commercial banking, investment banking, brokerage, trustee and other financial advisory services in the normal course of Company and its affiliates for which they have received, and will receive, customary fees and commissions.

Item 9.01 Financial statements and supporting documents

(d) Exhibits:

The following items are filed as attachments to this current report on Form 8-K:

Exhibit No. Exhibits

  4.1         Amended and Restated Credit Agreement, dated as of March 23, 2022, by
            and among the Company, the financial institutions from time to time
            party thereto as lenders, and Wells Fargo Bank, National Association, as
            administrative agent, swingline lender and issuing lender, sole lead
            arranger and sole bookrunner

  4.2         Amended and Restated Security Agreement, dated as of March 23, 2022,
            by and between the Company and Wells Fargo Bank, National Association,
            as administrative agent

104         Cover Page Interactive Data File, formatted in Inline Extensible
            Business Reporting Language (iXBRL)

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