8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

_______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event

reported): May 28, 2010

Bakers Footwear Group, Inc.

-------------------------------------------------

(Exact Name of Registrant as Specified in Charter)

Missouri --------------------------- (State or Other Jurisdiction of Incorporation) 000-50563 ------------------- (Commission File Number) 43-0577980 --------------------------- (I.R.S. Employer Identification Number)

2815 Scott Avenue St. Louis, Missouri ---------------------------------------------------- (Address of Principal Executive Offices) 63103 ------------------ (Zip Code)

Registrant’s telephone number, including area code:

(314) 621-0699

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On May 28, 2010, Bakers Footwear Group, Inc. (the “Company”) and Bank of America, N.A. (the “Bank”) entered into a Fifth Amendment to Second Amended and Restated Loan and Security Agreement (the “Amendment”), which amended the terms of the Company’s senior secured revolving credit facility.  Under the terms of the Amendment, the Company and the Bank extended the maturity of the credit facility to May 28, 2013, revised the calculation of the borrowing base, added a new adjusted EBITDA financial covenant, added an obligation for the Company to extend the maturity of its subordinated convertible debentures by May 2012, added an early termination fee, and made other changes to the agreement. 

The Amendment adds a monthly adjusted EBITDA interest coverage ratio covenant.  The covenant requires that the ratio of the Company’s adjusted EBITDA to its interest expense (both as calculated in the Amendment) must be at least 1.0:1.0.  Such ratio will be tested on a monthly basis.  The adjusted EBITDA calculation is substantially similar to the calculation used previously in the Company’s subordinated secured term loan. 

The Amendment requires the Company to, by  May 1, 2012, extend the maturity date of its Subordinated Convertible Debentures, issued by the Company on June 26, 2007 and due on June 30, 2012, to a maturity date which is after the maturity date of the secured term loan, on terms reasonably satisfactory to the Bank. 

The Amendment deleted the requirement for the Company to pay a facility fee of $2,000 per month, but requires the Company to pay an early termination fee equal to $150,000 if the agreement is terminated prior to May 28, 2011, and equal to $75,000 if the agreement is terminated after May 28, 2011 but prior to May 28, 2012.

In connection with the Amendment, the Company incurred approximately $250,000 in fees, expenses and other costs.  The Amendment is attached hereto as Exhibit 10.9 and is incorporated by reference herein.

The Company maintains other relationships with the Bank from time to time, including commercial banking and other financial services.

Summary of Revolving Credit Facility

The Second Amended and Restated Loan and Security Agreement is a $30 million senior secured revolving credit facility with Bank of America, N.A which now expires on May 28, 2013.  The Company had balances under its credit facility of $11.5 million at January 30, 2010.  Amounts borrowed under the facility continue to bear interest at a rate equal to the base rate (as defined in the agreement) plus a margin amount between 3.0% and 3.5%.  Under the agreement, the base rate equals the greater of the Bank’s prime rate, the federal funds rate plus 0.50% or the Libor rate plus 1.0% (all as defined in the agreement).

The revolving credit facility also allows the Company to apply an interest rate based on Libor (as defined in the agreement) plus a margin amount to a designated portion of the outstanding balance as set forth in the agreement. The Libor margin (as defined in the agreement) ranges from 3.5% to 4.0%. Following the occurrence of any event of default, the Bank may increase the rate by an additional two percentage points.

The unused line fee is 0.75% per annum. The unused line fee is payable monthly based on the difference between the revolving credit ceiling and the average loan balance under the agreement. The aggregate amount that the Company may borrow under the agreement at any time is further limited by a formula, which is based substantially on the Company’s inventory level but cannot be greater than the revolving credit ceiling of $30 million.

Amounts borrowed under the credit facility continue to be secured by substantially all of the Company’s assets. If contingencies related to early termination of the revolving credit facility were to occur, or if the Company requests and receives an accommodation from the lender in connection with the facility, the Company may be required to pay additional fees.  The calculation of the new early termination fee under the Amendment is described above.

The credit facility continues to include financial, reporting and other covenants relating to, among other things, use of funds under the facility in accordance with the Company’s business plan, prohibiting a change of control, including any person or group acquiring beneficial ownership of 40% or more of the Company’s common stock or combined voting power (as defined in the credit facility), maintaining a minimum availability, prohibiting new debt,

restricting dividends and the repurchase of the Company’s stock, and restricting certain acquisitions. In the event that the Company violates any of these covenants, including the monthly adjusted EBITDA interest coverage financial covenant or the obligation to extend the maturity of the Company’s subordinated convertible debentures (both as described above),or if other indebtedness in excess of $1.0 million could be accelerated, or in the event that 10% or more of the Company’s leases could be terminated (other than solely as a result of certain sales of the Company’s common stock), the Bank would have the right to accelerate repayment of all amounts outstanding under the agreement, or to commence foreclosure proceedings on the Company’s assets.

The information set forth above contains forward-looking statements (within the meaning of Section 27(A) of the Securities Act of 1933 and Section 21(E) of the Securities Exchange Act of 1934). The Company has no duty to update such statements. Actual future events and circumstances could differ materially from those set forth in this Current Report, due to various factors.

Factors that could cause these conditions not to be satisfied include inability to remain listed on the Nasdaq Capital Market, material declines in sales trends and liquidity, material changes in capital market conditions or in the Company’s business, prospects, results of operations or financial condition, and other risks and uncertainties, including those detailed in the Company’s most recent Annual Report on Form 10-K, including those discussed in “Risk Factors,” in “Management’s Discussion and Analysis of Financial Position and Results of Operations” and in Note 2 to the Company’s financial statements, and in the Company’s other filings with the Securities and Exchange Commission.

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

The information set forth under Item 1.01 is incorporated herein by reference.

Item 7.01.Regulation FD Disclosure.

The information set forth under Item 1.01 is incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits.

(d)  Exhibits.  See Exhibit Index.

SIGNATURES

                Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BAKERS FOOTWEAR GROUP, INC.
Date: May 28, 2010	By:	/s/ Charles R. Daniel, III
		Charles R. Daniel, III
		Executive Vice President,
		Chief Financial Officer,
		Controller, Treasurer and
		Secretary

EXHIBIT INDEX 

Exhibit No.	Description of Exhibit
10.1	Second Amended and Restated Loan and Security Agreement dated as of August 31, 2006 by and between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 7, 2006 (File No. 000-50563)).
10.2	Amended and Restated Revolving Credit Note dated as of August 31, 2006 by and between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 7, 2006 (File No. 000-50563)).
10.3	Waiver and Consent Agreement dated as of April 18, 2007 by and between Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.14.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2007 filed on April 24, 2007 (File No. 000-50563)).
10.4	First Amendment to Second Amended and Restated Loan and Security Agreement dated as of May 17, 2007 by and between the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on May 18, 2007 (File No. 000-50563)).
10.5	Extension Agreement dated June 26, 2007 between the Company and Bank of America, N.A. (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on July 2, 2007 (File No. 000-50563)).
10.6	Second Amendment to Second Amended and Restated Loan and Security Agreement dated February 1, 2008 by and among the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 4, 2008 (File No. 000-50563)).
10.7	Third Amendment to Second Amended and Restated Loan and Security Agreement dated April 9, 2009 by and among the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 15, 2009 (File No. 000-50563)).
10.8	Fourth Amendment to Second Amended and Restated Loan and Security Agreement dated September 8, 2009 by and among the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended August 1, 2009 filed on September 10, 2009 (File No. 000-50563)).
10.9	Fifth Amendment to Second Amended and Restated Loan and Security Agreement dated May 28, 2010 by and among the Company and Bank of America, N.A.

EX-10

EXHIBIT 10.9

FIFTH AMENDMENT TO SECOND AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

This FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Fifth Amendment”) is made as of this 28th day of May, 2010 by and among

BANK OF AMERICA, N.A. (the “Lender”), a national banking association with offices at 100 Federal Street, Boston, Massachusetts 02110,

and

BAKERS FOOTWEAR GROUP, INC., f/k/a Weiss and Neuman Shoe Co. (the “Borrower”), a Missouri corporation with its principal executive offices at 2815 Scott Avenue, Suite C,  St. Louis, Missouri  63103,

in consideration of the mutual covenants contained herein and benefits to be derived herefrom,

RECITALS:

A.        Reference is made to that certain Second Amended and Restated Loan and Security Agreement (as amended to date, the “Loan Agreement”) dated as of August 31, 2006 between the Borrower and the Lender.

B.         The Borrower and the Lender have agreed to amend the Loan Agreement on the terms and conditions set forth herein.

Accordingly, the Borrower and the Lender agree as follows:

1.Definitions.     Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

2.Amen dments To Loan Agreement.

2.1The provisions of Article I are hereby amended as follows:

2.1.1The definition of “Maturity Date” is hereby deleted in its entirety and the following is substituted in its stead: < /FONT>

“May 28, 2013”

2.1.2The definition of “Borrowing Base” is hereby deleted in its entirety and the following is substituted in its stead:

““Borrowing Base” The aggregate of the following:

(a)        The face amount of Eligible Credit Card Receivables multiplied by the Credit Card Advance Rate;

Plus

(b)        the following:

(i)         From December 16 of each year through September 30 of the immediately succeeding year, the Appraised Inventory Liquidation Value (net of Inventory Reserves) multiplied by 85.0%;

And

(ii)        from October 1 of each year through December 15 of each year, the Appraised Inventory Liquidation Value (net of Inventory Reserves) multiplied by 90.0%.”

2.1.3The definition of “Eligible In-Transit Inventory” is hereby amended by deleting clause (b) thereof, and substituting the following in its stead:

“(b)      The Documents of Title which relate to such shipment name the Borrower, or, at the request of the Lender, the Lender, as consignee of the subject Inventory and the Lender has control over the Documents of Title which evidence ownership of the subject Inventory (currently, as Lender determines to be accomplished by the providing to the Lender of agency agreements with all applicable customs brokers, freight forwarders, and carriers, each in form reasonably satisfactory to the Lender).”

2.1.4The definition of “Eligible L/C Inventory” is hereby amended by deleting clause (b) thereof, and substituting the following in its stead:

“(b)      The Documents of Title supporting such purchase name the Borrower, or, at the request of the Lender, the Lender, as consignee of the subject Inventory and the Lender has control over the Documents of Title which evidence ownership of the subject Inventory (currently, as Lender determines to be accomplished by the providing to the Lender of agency agreements with all applicable customs brokers, freight forwarders, and carriers, each in form reasonably satisfactory to the Lender).”

2.1.5The definition of “Facility Fee” is hereby deleted in its entirety.

2.1.6    &n bsp;   The following new definition is inserted in the appropriate alphabetical order:

““Fifth Amendment Effective Date”. May 28, 2010”

2.1.7The definition of “LIBO Rate” is hereby amended by deleting the phrase "Administrative Agent" ther efrom, and replacing it with "Lender".

2.1.8The definition of “Loan to Collateral Percentage” is hereby deleted in its entirety.

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2.1.9The definition of “Overloan” is hereby deleted in its entirety and the following is substituted in its stead:

““Overloan”. A loan, advance, or providing credit support (such as the issuance of any L/C) to the extent that, at the time it is made, it is in excess of the Borrowing Base less any Availability Reserves.”

2.1.10The following new definition is inserted in the appropriate alphabetical order:

““Subordinated Debentures”. Those certain Subordinated Convertible Debentures issued by the Borrower on June 26, 2007, and due on June 30, 2012, in the aggregate face amount of $4,000,000.”

2.2Section 2.4(a) is hereby deleted in its entirety and the following is substituted in its stead:

“(a)      The Borrowing Base less any Availability Reserves will not be exceeded.”

2.3Section 2.15(a)(i)(A) is hereby deleted in its entirety and the following is substituted in its stead:

“(A)     The Borrower’s failure to pay any amount which is necessary so that the principal balance of the Loan Account does not exceed the Borrowing Base less any Availability Reserves (as required under Section 2.9(b) hereof).”

2.4Section 2.17(b)(iii) is hereby deleted in its entirety and th e following is substituted in its stead:

“(a)      The Borrowing Base less any Availability Reserves will not be exceeded.”

2.5Section 2.12 of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its stead:

“2.12    Reserved& #148;.

2.6Section 2.14(a) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(a)      In the event that the Termination Date occurs for any reason: (x) prior to May 28, 2011, the Borrower shall pay to the Lender the “Revolving Credit Early Termination Fee” (so referred to herein) equal to 0.50% of the Revolving Credit Ceiling as of the Fifth Amendment Effective Date and such fee shall b e payable on the Termination Date; (y) after May 28, 2011, but prior to May 28, 2012, the Borrower shall pay to the Lender the “Revolving Credit Early Termination Fee” (so referred to herein) equal to 0.25% of the Revolving Credit Ceiling as of the Fifth Amendment Effective Date and such fee shall be payable on the Termination Date; or (z) after May 28, 2012, the Borrower shall not be required to pay to the Lender any “Revolving Credit Early Termination Fee” (so referred to herein).”

2.7Article 4 of the Loan Agreement is hereby amended by inserting the following new Section 4.28:

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“4/28.   Refinancing of Subordinated Debt.    On or before May 1, 2012, the Borrower shall refinance the Subordinated Debentures on terms reasonably satisfactory to the Lender, and, in any event, subject to the following: (i) the result of such refinancing of or replacement shall have a maturity date not less than sixty (60) days after the Maturity Date, (ii) the holders of such refinancing Indebtedness shall not be afforded covenants, defaults, rights or remedies, taken as a whole, which are materially more burdensome to the obligor or obligors than those contained in the Indebtedness being extended, renewed or replaced, (iii) the refinancing or replacement shall be on an unsecured basis, (iv) unless waived by the Lender, the holders shall enter into a subordination agreement with the Lender, which shall be on terms substantially similar to those applicable to the Subordinated Debentures or otherwise reasonably acceptable to the Lender, and, in any event, such subordination and other material provisions of the refinancing Indebtedness shall be no less favorable to the Lender than those terms of the Indebtedness being refinanced, and (v) the refinancing Indebtedness is not exchangeable or convertible into any other Indebtedness which does not comply with clauses (i) through (iv) above.”

2.8< /B>Section 5.9 of the Loan Agreement is hereby amended by deleting clauses (b), (c) and (d) thereof, and substituting the following in their stead:

“(b)      The Borrower, at its own expense, shall cause not less than one (1) physical inventory to be undertaken in each twelve (12) month period during which this Agreement is in effect (the spacing of the scheduling of which inventories shall be subject to the Lender’s discretion) conducted by such inventory takers as are satisfactory to the Lender and following such methodology as may be satisfactory to the Lender.

(c)   ;      The Lender may obtain appraisals of the Collateral, from time to time conducted by such appraisers as are satisfactory to the Lender.  The Lender shall not conduct more than two (2) such appraisals of the Collateral at the Borrower’s expense during any twelve (12) month period during which this Agreement is in effect, unless an Event of Default has occurred and is continuing or an Increased Reporting Event has occurred and not been remedied, in which case the Lender in its discretion, may undertake additional such appraisals at the Borrower’s expense during such period as the Lender shall require.

(d)        The Lender may conduct from time to time commercial finance field examinations of the Borrower’s books and records.  The Lender may conduct two (2) commercial finance field examinations of the Borrower’s books and records at the Borrower’s expense during any twelve (12) month period during which this Agreement is in effect, unless an Event of Default has occurred and is continuing or an Increased Reporting Event has occurred and not been remedied, in which case the Lender in its discretion, may conduct additional commercial finance field examinations (at the Borrower’s expense) during such period as the Lender shall require.”

2.9Section 5.9(f) of the Loan Agreement is hereby deleted in its entirety.

2.10Section 10.3 of the Loan Agreement is hereby amended by inserting the following section reference in the appropriate numerical order:

“4.28                Refinancing of Subordinated Debt”.

2.11Section 13.2 of the Loan Agreement is hereby amended by deleting the following language from the first sentence thereof:

“any then remaining installments of the Facility Fee;”.

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2.12Exhibit 5.11(a) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its stead:

“(i)       The Borrower shall at all times maintain Availability of not less than the greater of (i) $1,500,000, and (ii) ten percent (10%) of the following: Borrowing Base less Availability Reserves.

(ii)        If, at any time, the Borrower’s Availability is less than twenty percent (20%) of the Borrowing Base, then the ratio of the Borrower’s EBITDA to its Interest Expense, each calculated on a trailing twelve month basis, shall be equal to or greater than 1.0:1.0.  Such ratio shall be tested on a monthly basis, beginning with the month immediately preceding the month where Availability fell below twenty percent (20%) of the Borrowing Base, and continuing through and until the Maturity Date.  For purposes of such calculation, “EBITDA” means with respect to any fiscal period, Bor rower’s and its subsidiaries’ (for the portion of such fiscal period during which such entity is a subsidiary of the Borrower) consolidated net income (or loss), minus the sum of the following: (i) interest income, (ii) decreases in the recorded value of outstanding warrants, (iii) extraordinary items, and (iv) gains on sale of property and equipment, plus the sum of the following: (i) interest expense (inclusive of accretion of debt discount), (i i) noncash increases in the recorded value of outstanding warrants, (iii) income tax expense, (iv) depreciation and amortization, (v) noncash impairment of long-lived assets, noncash losses on disposal of property and equipment, and (vi) noncash stock-based compensation expense, in each case, as determined in accordance with GAAP.  For purposes of this ratio, “Interest Expense” means with respect to any fiscal period, interest expense as determined in accordance with GAAP minus noncash accret ion of debt discount included in interest expense.””

3.Additional Acknowledgments And Representations.   As an inducement for the Lender to execute this Fifth Amendment, the Borrower hereby represents and warrants that as of the date hereof no Suspension Event has occurred and is continuing.

4.Ratification Of Loan Documents; No Claims Against Lender.   Except as provided herein, all terms and conditions of the Loan Agreement and of the other Loan Documents remain in full force and effect.  The Borrower hereby ratifies, confirms, and re-affirms all and singular the terms and conditions, including execution and delivery, of the Loan Documents.  There is no basis nor set of facts on which any amount (or any portion thereof) owed by the Borrower to the Lender could be reduced, offset, waived, or forgiven, by rescission or otherwise; nor is there any claim, counterclaim, off set, or defe nse (or other right, remedy, or basis having a similar effect) available to the Borrower with regard to the Liabilities of the Borrower to the Lender; nor is there any basis on which the terms and conditions of any of the Liabilities ­of the Borrower to the Lender could be claimed to be other than as stated on the written instruments which evidence such Liabilities.  To the extent that the Borrower has (or ever had) any such claims against the Lender, it hereby affirmatively WAIVES and RELEASES same.

5.Conditions To Effectiveness.  This Fifth Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Lender:

5.1This Fifth Amendment shall have been duly executed and delivered by the respective parties hereto, shall be in full force and effect and shall be in form and substance satisfactory to the Lender;< /FONT>

            5.2The Borrower’s Availability shall be equal to or greater than $1,000,000 more than that which is required under clause (i) of Exhibit 5.11(a) of the Loan Agreement, as amended pursuant to this Amendment.

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5.3All action on the part of the Borrower necessary for the valid execution, delivery and performance by the Borrower of this Fifth Amendment shall have been duly and effectively taken and evidence thereof satisfactory to the Lender shall have been provided to the Lender;

5.4The Borrower shall have paid to the Lender all fees and expenses then due and owing pursuant to that certain letter agreement between the Borrower and Lender of even date herewith, together with any other fees and expenses of the Lender, including, without limitation, all reasonable attorneys’ fees and any other fees and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Amendment; and

5.5The Borrower shall have pr ovided such additional instruments and documents to the Lender as the Lender and Lender’s counsel may have reasonably requested, each in form and substance satisfactory to the Lender.

6.Miscellaneous.

6.1This Fifth Amendment may be executed in severa l 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.

6.2This 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.

6.3              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 affect 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.

6.4The Borrower shall pay on demand all reasonable costs and expenses of the Lender, including, without limitation, reasonable attorneys’ fees in connection with the preparation, negotiation, execution, and deliver y of this Fifth Amendment.

6.5THIS FIFTH AMENDMENT SHALL BE CONSTRUED, GOVERNED, AND ENFORCED PURSUANT TO THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL TAKE EFFECT AS SEALED INSTRUMENT.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have hereunto caused this Fifth Amendment to be executed and their seals to be hereto affixed as of the date first above written.

BAKERS FOOTWEAR GROUP, INC., as Borrower

By: /s/ Peter Edison__________________

Name: Peter Edison

Title:   Chairman and CEO

BANK OF AMERICA, N.A., as Lender

By: /s/ Christine M. Scott_____________

Name: Christine M. Scott

Title:    SVP - Director

S/1