SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): March 3, 2004
Big Dog Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-22963 52-1868665
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
121 Gray Avenue
Santa Barbara, California 93101
(Address of Principal Executive Offices) (Zip Code)
Mr. Anthony J. Wall
Executive Vice President
and General Counsel
121 Gray Avenue
Santa Barbara, California 93101
(Name and Address of Agent For Service)
(805) 963-8727
(Telephone Number, Including Area Code, of Agent for Service)
Item 2. Acquisition or Disposition of Assets
On March 3, 2004, Big Dog Holdings, Inc. (the "Company"), through its
majority-owned subsidiary, TWC Acquisition Corp. ("TWC"), completed the
acquisition (the "Acquisition") of substantially all of the assets of The
Walking Company, a California corporation, and Alan's Shoes, Inc., an Arizona
corporation (together, the "Debtors"), through an asset purchase pursuant to the
Debtors' Second Amended Plan of Reorganization (the "Plan") in Case No. SV
03-15880-GM confirmed by the United States Bankruptcy Court for the Central
District of California (the "Bankruptcy Court") in an order (the "Order")
entered on March 2, 2004. Following the Acquisition, TWC changed its name to
"The Walking Company." The terms of the Acquisition are contained in the Plan
and the Order, which are attached hereto as exhibits and incorporated herein by
reference.
The Walking Company is a leading specialty retailer of high quality,
technically designed comfort walkwear and accessories, featuring quality brands
such as Ecco, Mephisto, Dansko, Birkenstock and Merrell. It sells its products
through more than 70 retail store locations. The Debtors had total annual sales
of approximately $65 million in 2003. The assets of the Debtors acquired by TWC
consist primarily of inventory, equipment, leases and trademarks, all of which
will be used by TWC to continue the business of the Debtors under the name "The
Walking Company."
The Company initiated the Acquisition by making a bid for the Debtors'
assets in an auction held by the Bankruptcy Court on January 26, 2004. The
Bankruptcy Court confirmed that the Company was the winning bidder in a hearing
held on February 2, 2004, and subsequently the Debtors submitted the Plan to the
Bankruptcy Court for confirmation. Prior to the confirmation of the Plan, none
of the Company or any of its affiliates, directors or officers, or any associate
of any such director or officer, had any material relationship with either of
the Debtors.
The total purchase price for the Acquisition was approximately $19
million, subject to adjustment, which included the payment and issuance of cash,
notes and securities by TWC and the Company pursuant to the Plan. This included
that TWC (i) paid the approximately $7.27 million outstanding balance under the
Debtors' Loan and Security Agreement with Wells Fargo Retail Finance II, LLC
("WFRF"), (ii) paid $1.7 million in cash to certain creditors of the Debtors,
(iii) issued $3.3 million in aggregate principal amount of secured promissory
notes to certain creditors of the Debtors, and issued to such creditors a right
to put 50% of the outstanding principal amount of such notes to the Company at a
20% discount, (iv) issued $700,000 in aggregate principal amount of unsecured
promissory notes to certain creditors of the Debtors, and issued a right to put
such unsecured notes to TWC at a 20% discount, (v) assumed a long-term
obligation to pay $572,000 in accrued sales taxes, (vi) paid approximately $2.21
million in certain acquisition-related fees and expenses, (vii) assumed
approximately $2.3 million of accrued expenses and other liabilities, and (viii)
issued to certain creditors of the Debtors 10% of TWC's outstanding common stock
(valued at $645,000), with a right (in the form of warrants) to convert the TWC
shares into shares of common stock of the Company at a price of $4.35 per share
and a right to put such TWC shares to TWC for cash totaling $645,000. In
addition, the Company (i) provided a one-year "sunset" guaranty in regard to
TWC's obligations under certain retail store leases assumed by TWC and (ii) a
guaranty in regard to a potential administrative claim against TWC of up to $2.9
million (which claim is being disputed). The total number of shares of Company
common stock issuable under all of such warrants is 1,067,817. All of the
foregoing warrants and put rights issued by the Company or TWC will expire at
5:00 p.m., p.s.t., on June 30, 2004. In addition, Fred Kayne (the Chairman of
the Board of the Company), and Andrew Feshbach (the CEO of the Company), who
also are the holders of a majority of the outstanding stock of the Company,
agreed (in response to the demands of certain creditors) to provide personal
back-up guaranties to fund (i) the above obligations of the Company and TWC in
regard to the potential administrative claim and (ii) the above obligation of
the Company to make payment on the potential exercise of put rights of the
holders of the secured TWC notes.
The foregoing cash payments by TWC and TWC's initial working capital
were funded by (i) the Company contributing $8.95 million to TWC ($6.45 million
as equity and $2.5 million as subordinated debt) and (ii) TWC refinancing the
$7.27 million required to pay off the Debtors' obligation to WFRF under a new
Loan and Security Agreement between TWC and WFRF dated March 3, 2004. The
Company funded such subordinated debt contribution to TWC by borrowing (i) $1.05
million under its Loan and Security Agreement, dated October 23, 2001, as
amended, with WFRF and (ii) $1.45 million under an unsecured Revolving
Promissory Note facility, dated March 1, 2004, with Israel Discount Bank. The
Company funded the equity portion of its contribution to TWC from available cash
distributed to it from the Company's primary operating subsidiary, Big Dog USA,
Inc.
Item 7. Financial Statements and Exhibits.
(a)(4) Financial statements required by this item will be filed by
amendment not later than 60 days after the date that this initial report must
be filed.
(c) Exhibits.
Exhibit Number Description
2.1 Second Amended Plan of Reorganization of Shoes Liquidation Co.
(formerly The Walking Company) and Alan's Shoes, Inc., confirmed
on March 2, 2004.*
2.2 Order of the United States Bankruptcy Court for the Central
District of California confirming the Second Amended Plan of
Reorganization of Shoes Liquidation Co. (formerly The Walking
Company) and Alan's Shoes, Inc., entered on March 2, 2004.
4.1 Revolving Promissory Note issued by Big Dog Holdings, Inc. in
favor of Israel Discount Bank,dated March 1, 2004.
4.2 Warrant, dated March 3, 2004, to purchase 55,188 shares of the
common stock of Big Dog Holdings, Inc. at an exercise price of
$4.35 per share, exercisable by the tender of common stock of The
Walking Company (formerly TWC Acquisition Corp.), issued to
Retail & Restaurant Growth Capital L.P. Substantially identical
Warrants were issued to a total of 16 additional junior secured
creditors of Shoes Liquidation Co. (formerly The Walking Company)
and Alan's Shoes, Inc., in the names and amounts indicated in the
schedule attached to Exhibit 4.2.
4.3 Warrant, dated March 3, 2004, to purchase up to 286,978 shares of
the common stock of Big Dog Holdings, Inc. at an exercise price
of $4.35 per share, exercisable by the tender of Junior Secured
Creditors Promissory Notes issued by The Walking Company
(formerly TWC Acquisition Corp.), issued to Retail & Restaurant
Growth Capital L.P. Substantially identical Warrants were issued
to a total of 16 additional junior secured creditors of Shoes
Liquidation Co. (formerly The Walking Company) and Alan's Shoes,
Inc., in the names and amounts indicated in the schedule attached
to Exhibit 4.3.
4.4 Warrant, dated March 3, 2004, to purchase up to 164,611 shares of
the common stock of Big Dog Holdings, Inc. at an exercise price
of $4.35 per share, exercisable by the tender of a First
Unsecured Creditors Promissory Note issued by The Walking Company
(formerly TWC Acquisition Corp.), issued to the Post-Confirmation
Committee for the benefit of the unsecured creditors of Shoes
Liquidation Co. (formerly The Walking Company) and Alan's Shoes,
Inc.
4.4 Warrant, dated March 3, 2004, to purchase up to 4,938 shares of
the Common Stock of Big Dog Holdings, Inc. at an exercise price
of $4.35 per share, exercisable by the tender of a Second
Unsecured Creditors Promissory Note issued by The Walking Company
(formerly TWC Acquisition Corp.), issued to the Post-Confirmation
Committee for the benefit of the unsecured creditors of Shoes
Liquidation Co. (formerly The Walking Company) and Alan's Shoes,
Inc.
4.6 Junior Secured Creditors Promissory Notes, dated March 3, 2004,
in the aggregate principal amount of $3,279,000, issued by The
Walking Company (formerly TWC Acquisition Corp.) to the junior
secured creditors of Shoes Liquidation Co. (formerly The Walking
Company) and Alan's Shoes, Inc. (the "Debtors") pursuant to the
Debtors' Second Amended Plan of Reorganization.**
4.7 First Unsecured Creditors Promissory Note, dated March 3, 2004,
in the principal amount of $700,000, issued by The Walking
Company (formerly TWC Acquisition Corp.) to the Post-Confirmation
Committee for the benefit of the unsecured creditors of Shoes
Liquidation Co. (formerly The Walking Company) and Alan's Shoes,
Inc. (the "Debtors") pursuant to the Debtors' Second Amended Plan
of Reorganization.**
4.8 Second Unsecured Creditors Promissory Note, dated March 3, 2004,
in the principal amount of $21,000, issued by The Walking Company
(formerly TWC Acquisition Corp.) to the Post-Confirmation
Committee for the benefit of the unsecured creditors of Shoes
Liquidation Co. (formerly The Walking Company) and Alan's Shoes,
Inc. (the "Debtors") pursuant to the Debtors' Second Amended Plan
of Reorganization**
99.1 Loan and Security Agreement, dated March 3, 2004, among the
lenders signatory thereto, Wells Fargo Retail Finance II, LLC, as
agent, and The Walking Company (formerly TWC Acquisition Corp.),
as borrower.
99.2 Third Amendment to Loan and Security Agreement, dated March 3,
2004, among the lenders signatory thereto, Wells Fargo Retail
Finance II, LLC, as agent, and Big Dog Holdings, Inc., Big Dog
USA, Inc. and CSI Acquisition Corporation, as borrowers.
* The exhibits and schedules to the Plan have been omitted from this filing
pursuant to Item 601(b)(2) of Regulation S-K. Big Dog Holdings, Inc. will
furnish copies of any of such exhibits and schedules to the Securities and
Exchange Commission upon request.
** Not filed as permitted by the provisions of Item 601(b)(4)(iii) of Regulation
S-K. Big Dog Holdings, Inc. agrees to provide a copy of these documents to the
Securities and Exchange Commission upon request.
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 thereunto duly authorized.
BIG DOG HOLDINGS, INC.
Date: March 16 , 2004
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Andrew D. Feshbach
President and Chief Executive Officer