DAVIDS BRIDAL INC, S-1, 1999-02-19

DAVIDS BRIDAL INC
S-1, 1999-02-19

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 1999

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DAVID'S BRIDAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
FLORIDA 5632 65-0214563
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>

44 WEST LANCASTER AVENUE, SUITE 250
ARDMORE, PA 19003
(610) 896-2111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

STEVEN ERLBAUM
CHAIRMAN OF THE BOARD
44 WEST LANCASTER AVENUE, SUITE 250
ARDMORE, PA 19003
(610) 896-2111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:

<TABLE>
<S> <C>
ALAN SINGER SARAH BESHAR
MORGAN, LEWIS & BOCKIUS LLP DAVIS POLK & WARDWELL
1701 MARKET STREET 450 LEXINGTON AVENUE
PHILADELPHIA, PA 19103-2921 NEW YORK, NY 10017
(215) 963-5000 (212) 450-4000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.01 par value...... $160,000,000 $44,480
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</TABLE>

(1) Includes shares which the Underwriters will have the option to purchase to
cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2

SUBJECT TO COMPLETION -- FEBRUARY 19, 1999

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PROSPECTUS

, 1999

DAVID'S BRIDAL, INC.

SHARES OF COMMON STOCK

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DAVID'S BRIDAL, INC.:

- We are the largest and only national retailer of bridal gowns and
bridal-related apparel in the United States.

- David's Bridal, Inc.
44 West Lancaster Avenue, Suite 250
Ardmore, PA 19003
(610) 896-2111

PROPOSED SYMBOL AND MARKET:

- DBR/NYSE
THE OFFERING:

- - - We are offering of the shares and existing shareholders are
offering of the shares.

- - - The underwriters have an option to purchase an additional
shares from the selling shareholders to cover over-allotments.
- - - This is our initial public offering, and no public market currently
exists for our shares.
- - - We plan to use the proceeds from this offering to repay bank debt, to
fund new store growth, for capital expenditures and for general
corporate purposes. We will not receive any proceeds from the shares
sold by the selling shareholders.

- - - Closing: , 1999.

<TABLE>
<CAPTION>
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Per Share Total
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<S> <C> <C>
Public offering price (Estimated): $ - $ $
Underwriting fees:
Proceeds to David's Bridal:
Proceeds to selling shareholders:
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</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 9.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

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DONALDSON, LUFKIN & JENRETTE
MORGAN STANLEY DEAN WITTER
LEGG MASON WOOD WALKER
INCORPORATED

The undersigned is facilitating Internet distribution.

DLJdirect INC.

WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE> 3

[Depicted in the inside front cover page is a map of the store locations of
David's Bridal and photographs of the exterior and interior of one of its
prototypical stores.]

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.............. 3
Risk Factors.................... 9
Forward-Looking Statements...... 15
Use of Proceeds................. 16
Dividend Policy................. 16
Capitalization.................. 17
Dilution........................ 18
Selected Consolidated Historical
Financial and Operating
Data.......................... 19
Management's Discussion and
Analysis of Financial
Conditions and Results of
Operations.................... 21
Business........................ 28
Management...................... 38
</TABLE>

<TABLE>
<CAPTION>
PAGE
<S> <C>
Certain Relationships and
Related Transactions.......... 43
Principal and Selling
Shareholders.................. 44
Description of Capital Stock.... 47
Shares Eligible for Future
Sale.......................... 49
Underwriting.................... 51
Legal Matters................... 53
Experts......................... 53
Available Information........... 53
Reports to Security Holders..... 53
Index to Consolidated Financial
Statements.................... F-1
</TABLE>

<PAGE> 4

PROSPECTUS SUMMARY

The following summarizes information in other sections of our prospectus,
including our consolidated financial statements and the notes to these
statements. Generally, the information in this prospectus: (1) assumes that the
over-allotment option is not exercised; (2) assumes a for
common stock split effected on , 1999; and (3) reflects the conversion
of all outstanding shares of class A, B, C and D preferred stock into an
aggregate of shares of common stock at the closing of this offering.
Generally, references to "THE COMPANY" and "DAVID'S BRIDAL", as well as "WE",
"US", and "OUR" mean David's Bridal, Inc. and our subsidiaries. Our fiscal year
ends on a Saturday near December 31 and is named for the calendar year ending on
that December 31. For example, our fiscal year ended January 2, 1999 is called
"fiscal 1998".

THE COMPANY

OVERVIEW

We are the largest and only national retailer of bridal gowns and
bridal-related apparel and accessories in the United States, operating 77 stores
in 29 states as of January 2, 1999. We have created a distinctive shopping
experience designed to attract a majority of potential bridal customers. We
provide our customers with excellent value by offering a broad, in-stock
assortment of bridal gowns and bridal-related apparel at popular price points,
together with service designed to exceed customers' expectations.

We believe that the breadth and depth of our in-stock assortments in key
product categories far exceeds those of other bridal retailers. Our broad
in-stock assortments enable us to offer the convenience of one-stop shopping for
the bridal party, including brides, bridesmaids, mothers-of-the-bride and -
groom and flowergirls. We also offer a variety of special occasion dresses and
accessories for events such as proms, pageants, homecomings and other formal
affairs. Our in-house staff coordinates the design and, through a Hong
Kong-based joint venture, sources virtually all of our bridal gowns. This
results in lower product costs and reduced order cycles and allows us to
frequently update our product assortment. Our merchandising strategy is to
target customers across a wide range of income levels and offer apparel of
excellent value at everyday prices typically ranging from $99 to $899. We
recognize that the bridal customer expects a higher level of customer service
than the typical retail customer. We seek to exceed our customers' expectations
for service by providing attentive and knowledgeable sales assistance,
convenient store design and extended hours of operation relative to other bridal
retailers.

In mid-1995, we commenced key initiatives which we continue to build upon
to increase profitability and support controlled growth. These initiatives have
included:

- enhancing our management team;

- focusing our merchandising strategy on building and expanding an
assortment of core styles;

- upgrading our management information systems;

- opening a distribution facility to improve inventory management; and

- improving our recruiting and training programs for store personnel.

While the immediate effect of these initiatives was to decrease
profitability in fiscal 1996, we believe that these measures have facilitated
controlled growth and enhanced profitability in fiscal 1997 and fiscal 1998. We
have achieved comparable store sales growth of 13.1% in fiscal 1997 and 18.1% in
fiscal 1998. In addition, our total revenues increased by 36.6% in fiscal 1997
and 44.2% in fiscal 1998 and our operating margin increased from 5.7% in fiscal
1997 to 7.9% in fiscal 1998.

3
<PAGE> 5

INDUSTRY OVERVIEW

We believe the bridal market is highly fragmented, with approximately 7,500
stores nationwide and estimate that less than five percent of bridal retailers
operate more than one store. We estimate the domestic market for the various
apparel and accessories purchased by brides, bridesmaids and other members of
the bridal party to be in excess of $4 billion per year. Historically, no
retailer has been dominant in the bridal retailing industry.

Most bridal retailers are small and do not have significant bargaining
power with the manufacturers of bridal apparel. As a result, the manufacturers
dictate the styles that will be available to the retailers and require retailers
to make a significant investment in samples of those styles during each selling
season. Typically, bridal apparel retailers offer a limited selection of bridal
gowns and bridesmaid dresses and provide samples in only the most common sizes,
8 and 10. In general, customers are not able to purchase bridal gowns or
bridesmaid dresses "off-the-rack." The majority of bridal gown purchases are
made by placing a substantial deposit to order the gown, waiting up to 20 weeks
for delivery, and tailoring the fit of the gown through multiple fittings and
alterations. These factors can make the bridal shopping experience time
consuming, inconvenient and stressful.

KEY COMPETITIVE STRENGTHS

We believe our key strengths and distinguishing characteristics are as
follows:

Largest and Only National Bridal Apparel Retailer. As the largest and only
national bridal apparel retailer, we are able to realize a number of strategic
advantages, including:

- spreading our fixed operating and media expenses over a larger revenue
base;

- maintaining a large in-stock inventory of gowns and dresses;

- supporting and expanding product offerings using rapid fulfillment
through our distribution facility;

- offering bridal party members the convenience and benefit of one-stop
shopping at any of our nationwide locations; and

- advertising on a national basis.

Unique Merchandising Strategy. Our merchandising strategy is to offer the
broadest in-stock selection with an assortment of over 225 core styles in
bridal-related apparel and special occasion dresses ranging in sizes from 2-26.
As a result, our customers are often able to try on, purchase and take their
gowns home on the same day. Our core merchandise is comprised of our best
selling styles that typically endure over time and are supported both by our
advertising and inventory fulfillment programs. We believe these core styles
have less fashion risk and markdown exposure. To meet the needs of additional
customers, we are continuing to expand and refine our core assortment in terms
of number of styles, silhouettes, fabrications, price points and sizes. We also
offer headpieces and accessories, including shoes, handbags, jewelry and gloves,
to outfit the bridal party.

Control of Product Design, Sourcing and Distribution. We control the
production process for a majority of our product offerings from design through
distribution. We have an in-house design staff which interprets industry trends
and develops exclusive designs. We have established relationships with key
manufacturers, and our direct sourcing results in lower product costs and
reduced order cycles. Furthermore, our continuous development cycle enables us
to provide customers with an assortment of new styles throughout the year,
unlike most manufacturers which update their lines only two to three times per
year. By controlling our distribution we are able to:

- reinforce our brand name, David's Bridal, in the eyes of our customers;

- provide a broad in-stock assortment of our products;

- control our pricing and flow of goods; and

- test new products.

4
<PAGE> 6

Superior Customer Service. Our objective is to exceed our customers'
expectations for service. We recognize that purchasing a wedding gown is an
emotional experience, and we devote significant effort to developing an
attentive and knowledgeable sales staff. Moreover, our sales staff is motivated
by our compensation structure, which rewards sales performance and customer
service. Another important element of our commitment to customer service is our
convenient store design. Our current prototype, which exists in over half of our
stores, averages approximately 10,000 square feet. This prototype presents
merchandise in a highly accessible format and enables us to provide personalized
service and to cross merchandise related accessories. As an added convenience
for our customers, all of our stores, except for our two outlets, provide
in-store alterations services. Stores are typically open seven days a week,
including evening hours on all weekdays. Unlike many bridal retailers who
require appointments, we welcome customers to shop with or without an
appointment.

GROWTH STRATEGY

We believe that, as a result of the initiatives undertaken since mid-fiscal
1995, we are well positioned to capitalize on growth opportunities. The
following are the primary elements of our strategy to achieve profitable and
controlled growth:

Open Stores in New and Existing Markets. Our store expansion strategy is
to continue diversifying geographically throughout the United States and to fill
in certain existing markets. We plan to open stores in both new and existing
markets to create greater access and convenience for our customers. This should
also increase the efficiency of our media, distribution and management expenses.
We opened 12 stores in fiscal 1996, 11 stores in fiscal 1997 and 18 stores in
fiscal 1998. We plan to open approximately 18 stores in each of fiscal 1999 and
fiscal 2000. We have already opened one of the stores planned for fiscal 1999.

Increase Sales Productivity of Existing Stores. We employ two
complementary strategies to increase the productivity of our existing stores.
First, we seek to increase the flow of traffic into our stores by increasing
consumer awareness of our brand. Through our multi-tiered marketing strategy and
our continuing geographic expansion, we strive to establish David's Bridal as
the dominant national brand name in bridal retailing. In addition, we believe
the bride typically determines where the bridesmaid dresses are purchased. As a
result, we strive to create a favorable experience for the bride. This enhances
our ability to outfit her bridesmaids as well as other members of the bridal
party, and encourages referrals, a significant factor in generating additional
business.

5
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THE OFFERING

<TABLE>
<S> <C>
Common stock offered by:
David's Bridal....................... shares
The selling shareholders............. shares
--------------
Total........................... shares
Common stock to be outstanding after this
offering................................ shares
Use of Proceeds........................... We intend to use the estimated net proceeds of
million that we will receive from this
offering to repay the outstanding balance under our
revolving credit agreement, to fund new store
growth, for capital expenditures and for general
corporate purposes, including working capital.
We will not receive any proceeds from the shares
sold by the selling shareholders.
Proposed New York Stock Exchange Symbol... DBR
</TABLE>

- - ------------------------------
The table above excludes an aggregate of shares issuable upon exercise
of stock options outstanding at January 2, 1999, plus an additional shares
reserved for issuance in connection with future stock options and other awards
under our stock option plan. See "Management--Stock Option Plan". This table
also reflects the conversion of all outstanding shares of class A, B, C and D
preferred stock into an aggregate of shares of common stock upon completion
of this offering.
------------------------

We are a successor to a bridal retailing business that began in Ft.
Lauderdale, Florida in 1950 and were incorporated in Florida in 1990. Our
principal executive offices are located at 44 West Lancaster Avenue, Suite 250,
Ardmore, Pennsylvania 19003. Our telephone number is (610) 896-2111. Our world
wide web address is http:/www.davidsbridal.com. OUR WEB SITE IS NOT PART OF THIS
PROSPECTUS.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS EXCEPT PER SHARE, NET SALES PER SQUARE FOOT AND
NUMBER OF STORES DATA)

You should read the following summary consolidated financial and operating
data together with Management's Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial statements and related
notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR(A)
----------------------------------------------------
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $27,523 $45,453 $63,158 $85,785 $123,656
Other income(b)....................... 1,331 2,634 4,188 6,228 9,062
Total revenues..................... 28,854 48,087 67,346 92,013 132,718
Gross profit(c)....................... 14,258 21,569 26,457 38,943 58,105
Selling, general and administrative
expenses........................... 11,930 19,114 26,453 33,738 47,581
Income from operations................ 2,328 2,455 4 5,205 10,524
Interest expense, net................. 491 467 586 1,248 1,087
Net income (loss)(d).................. 1,107 700 (415) 2,598 5,819
Net income (loss) per common share
(e)(f):
Basic.............................. $ 0.12 $ 0.08 $ (0.06) $ 0.39 $ 0.88
Diluted(g)......................... $ 0.11 $ 0.06 $ (0.06) $ 0.22 $ 0.47
Weighted average shares outstanding:
Basic.............................. 9,330 8,250 6,929 6,687 6,620
Diluted............................ 9,981 11,399 6,929 11,862 12,474
STORE DATA:
Number of stores, end of period....... 23 36 48 59 77
Total square feet, end of period...... 200 328 455 569 766
Comparable store sales increase(h).... 20.9% 11.3% 1.0% 13.1% 18.1%
Average net sales per store(i)........ $ 1,816 $ 1,769 $ 1,679 $ 1,809 $ 2,022
Net sales per square foot(j).......... $ 193 $ 204 $ 184 $ 191 $ 207
OPERATING DATA:
Gross profit margin(c)................ 49.4% 44.9% 39.3% 42.3% 43.8%
Selling, general and administrative
expense percentage................. 41.3% 39.8% 39.3% 36.6% 35.9%
Operating income margin............... 8.1% 5.1% 0.0% 5.7% 7.9%
Capital expenditures.................. $ 1,109 $ 5,029 $ 4,931 $ 7,470 $ 8,105
Depreciation and amortization(k)...... $ 284 $ 632 $ 1,393 $ 2,022 $ 2,896
</TABLE>

<TABLE>
<CAPTION>
JANUARY 2, 1999
----------------------
PRO FORMA
AS
ACTUAL ADJUSTED(L)
<S> <C> <C>
BALANCE SHEET DATA:
Inventories............................................... $37,458
Working capital........................................... 27,335
Total assets.............................................. 65,562
Long-term debt, excluding current portion(m).............. 19,647
Shareholders' equity...................................... 27,520
</TABLE>

7
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(a) Our fiscal year consists of 52 or 53 weeks, ends on a Saturday near December
31 and is named for the calendar year ending on that December 31. All fiscal
years presented include 52 weeks of operations except for fiscal 1996, which
includes 53 weeks of operations.

(b) Primarily income from alterations plus third party promotional fee income.

(d) Fiscal 1995 reflects a net loss of $550 from early extinguishment of debt,
net of income tax benefit of $323.

(e) Gives retroactive effect to the stock split of . See note 2 to
our consolidated financial statements.

(f) Net income before extraordinary item for fiscal year 1995 was $0.15 per
common share (basic) and $0.11 per common share (diluted).

(g) Diluted earnings per share assumes that preferred stock has been converted
at historical conversion rates. Had diluted earnings per share been
calculated using the preferred stock conversion rates in effect as of the
consummation of this offering, diluted earnings per share would have
increased to $0.50 for fiscal 1998. See note 9 to our consolidated financial
statements.

(h) Includes net sales plus alterations income. Stores that have been relocated
within the same market are considered comparable stores. A store becomes
comparable in the first month following 12 full months of operation.

(i) Includes net sales plus alterations income for stores open for the entire
period indicated.

(j) Calculated by dividing net sales plus alterations income by the total square
footage of stores open for the entire period indicated.

(k) Excludes amortization of debt discount and debt issuance costs.

(l) Represents actual data as adjusted to give effect to (1) the issuance of an
aggregate of shares of common stock upon conversion of all
outstanding shares of preferred stock upon the consummation of this offering
and (2) the sale of shares of common stock offered by us at an
assumed initial public offering price after deducting underwriting discounts
and commissions and estimated offering expenses and the application of the
estimated net proceeds.

(m) Includes capitalized lease obligations.

8
<PAGE> 10

RISK FACTORS

You should carefully consider the following factors and other information
in this prospectus before deciding to invest in shares of our common stock.

Keep these risk factors in mind when you read "forward-looking" statements
elsewhere in this prospectus. These are statements that relate to future events
and time periods or our expectations. Generally, the words "anticipate,"
"expect," "intend" and similar expressions identify forward-looking statements.
Forward-looking statements involve risks and uncertainties, and future events
and circumstances could differ significantly from those anticipated in the
forward looking statements. Before you invest in our common stock, you should be
aware that the occurrence of the events described in these risk factors and
elsewhere in this prospectus could have a material adverse effect on our
business, operating results and financial condition.

RISKS RELATING TO OUR BUSINESS:

WE MAY NOT BE ABLE TO MANAGE OUR GROWTH

Our strategy is designed to enhance profitability by increasing sales in
existing stores and generating sales in new stores. However, we must
successfully manage our growth to realize this strategy. Our growth will be
adversely affected if we are unable to:

- identify suitable markets and sites for new stores;

- negotiate leases on acceptable terms;

- maintain levels of service that are expected by customers;

- provide a diverse inventory of bridal gowns and flowergirl, bridesmaid,
mothers-of-the-bride and -groom and other special occasion dresses,
accessories and other product offerings in attractive styles;

- avoid reducing sales and profitability at existing stores when opening
new stores in the same region or market area;

- offer price points that appeal to a broad range of consumers;

- manage inventory on an effective basis;

- deliver products on a timely basis;

- test new product offerings on an effective basis;

- hire, train and retain competent managers and personnel capable of
providing high levels of customer service;

- improve, upgrade and expand our infrastructure to accommodate our growth;
and

- expand our distribution facility or add additional distribution
facilities, as necessary.

We will be materially adversely affected if we are unable to successfully
manage our growth.

WE DEPEND ON MANAGEMENT INFORMATION SYSTEMS

We depend on management information systems for all major aspects of our
business. We will be materially adversely affected if our management information
systems are disrupted or we are unable to improve, upgrade and expand our
systems on an effective basis. We are expanding our current hardware and network
infrastructure, including the development of a communications infrastructure and
the creation of data warehouses for store, marketing and customer information to
improve controls and enhance sales and operational capabilities. We also intend
to upgrade our systems to accommodate certain aspects of our planned marketing
strategy and inventory management, including the implementation of a new
warehouse management system. We will also seek to expand our store bridal
registry information to enhance communications with customers and target our
promotions. We cannot assure that our planned expansion or upgrades will be
completed on a timely basis and successfully. See "Business--Management
Information Systems."
9
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WE MAY NOT BE ABLE TO ANTICIPATE AND RESPOND TO CONSUMER DEMAND

Our success will depend on our ability to anticipate and respond to
consumer demand. We must identify and respond to changing consumer preferences
with respect to bridal gowns and related bridal wear, accessories and our other
product offerings. Fashion trends can be volatile. This is particularly true for
bridesmaid and special occasion dresses. Our success depends on our ability to
anticipate and effectively respond to these trends. If we do not provide
merchandise that is desired by a sufficient number of customers, we will be
compelled to reduce prices and we may be left with unsaleable inventory. We will
be materially adversely affected if we do not anticipate and effectively respond
to customer demands.

WE DEPEND ON ASIAN MANUFACTURERS

Substantially all of our bridal gowns and flowergirl dresses are
manufactured in Asia. Substantially all of our other product offerings are
currently manufactured domestically. We may in the future seek to manufacture a
portion of this apparel internationally. Our business could be materially
adversely affected by our reliance on international manufacturing. Some of the
risks in manufacturing overseas include:

- changes in laws and regulations;

- tariffs, quotas and other trade barriers;

- work stoppages;

- political and financial instability;

- fluctuations in currency exchange rates; and

- increases in freight costs.

Virtually all of our bridal gowns are manufactured in China. There have
been a number of recent trade disputes between China and the United States
during which the Unites States has threatened to impose punitive tariffs and
duties on products imported from China and to withdraw China's "most favored
nation" trade status. Since a substantial portion of our total revenues is
derived from the sale of bridal gowns, we are particularly vulnerable to the
risk of loss of the most favored nation status for China, changes in the current
tariff or duty structures or the adoption by the United States of other trade
policies or sanctions adverse to China.

In addition, our import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of foreign
countries. These agreements and other applicable treaties impose quotas on the
amounts and types of merchandise which may be imported into the United States
from these countries. These agreements and other applicable treaties also allow
the United States to impose restraints at any time on the importation of
categories of merchandise that, under the terms of the agreements, are not
currently subject to specified limits. We may be materially adversely affected
if the United States or the countries in which our products are produced impose
new quotas, duties, tariffs or other restrictions, or adversely adjust the
prevailing quota, duty or tariff levels.

WE DEPEND ON OUR JOINT VENTURE PARTNER FOR INTERNATIONAL MANUFACTURING

We depend on our Hong Kong based joint venture to handle our relationships
with international manufacturers of our bridal wear. This joint venture is
equally owned by us and one of our shareholders, Addwood Limited. We handle
negotiations with the manufacturers with respect to basic economic terms and
product design. We depend on our joint venture partner to identify suitable
manufacturers and insure that our manufacturers are meeting design
specifications, adhering to shipping requirements and complying with our
business standards. We may be materially adversely affected if our joint venture
partner does not perform its responsibilities on an acceptable basis or
terminates our relationship and we are unable to replace our joint venture
partner on a prompt basis. See note 5 to our consolidated financial statements.

10
<PAGE> 12

MANY OF OUR MANUFACTURERS HAVE LIMITED RESOURCES

Many of the third parties we use to manufacture our apparel have limited
resources, production capabilities and operating histories. These manufacturers
may be unable to support the continued expansion of our business. Our
relationships with our manufacturers are not on a contractual basis and do not
assure adequate supply or quality or acceptable pricing on a long-term basis. A
manufacturer could discontinue selling to us at any time. We may be materially
adversely affected if we are unable to promptly replace a manufacturer who is
unwilling or unable to satisfy our requirements.

OUR COMPARABLE STORE SALES WILL FLUCTUATE

Our comparable store sales have fluctuated significantly in the past.
Comparable store sales will continue to fluctuate. Comparable store sales may be
affected by many factors, including:

- competition and economic conditions;

- fashion trends;

- weather conditions;

- new store openings in existing markets;

- sourcing and management of merchandise inventory;

- customer response to new and existing styles; and

- store relocations.

We are not likely to maintain comparable store sales growth at our current
levels. Our stock price may likely be materially adversely affected by declines
and fluctuations in our comparable store sales.

OUR QUARTERLY FINANCIAL RESULTS WILL FLUCTUATE

Our financial results may substantially fluctuate during any reporting
period due to a number of factors. Historical trends indicate that our sales are
typically highest from January through April and lowest from October through
December. Our financial results may also fluctuate as a result of:

- performance of new and existing stores;

- pre-opening expenditures for new stores;

- the timing of new store openings;

- the timing of holidays;

- competition and economic conditions;

- fashion trends;

- weather conditions;

- sourcing and management of merchandise inventory; and

- customer response to new and existing styles.

Our expenditures for inventory, personnel and other pre-opening items for
new stores may adversely affect period-to-period financial results. New stores
may fail to generate sales as promptly as planned. New stores may also depress
sales in our other stores that are located in the same regions or market areas.

Our financial results may not meet the expectations of analysts and
investors. The market price of our common stock is likely to decline when we do
not meet these expectations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Quarterly Results and
Seasonality."

11
<PAGE> 13

WE MAY NEED ADDITIONAL FINANCING

We believe that our available cash resources, including the net proceeds
from the offering, will be sufficient to meet our working capital requirements
for at least the next 12 months. However, we may need additional financing if we
accelerate our expansion program or our operating results decline. Additional
funds may also be necessary to respond to competitive pressures or unanticipated
requirements. Additional financing may not be available on satisfactory terms or
at all. Any additional equity financing may cause investors to experience
dilution. Any debt financing may result in restrictions on our spending or
payment of dividends. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

WE DEPEND ON OUR PERSONNEL

Steven H. Erlbaum, our Chairman and Chief Executive Officer, will resign
from his position as Chief Executive Officer upon the closing of this offering.
Robert D. Huth, our President and Chief Operating Officer, will also become our
Chief Executive Officer upon the closing of this offering. Although Mr. Huth has
been primarily responsible for running our day-to-day operations since joining
us in 1995, we will be materially adversely affected if Mr. Huth is unable to
assume these added responsibilities on a timely and effective basis.

Our success will depend on the continued employment of our executive
management team after this offering. If one or more members of our management
team do not continue in their present positions, we could be materially
adversely affected.

Our expansion strategy will depend on our ability to hire capable managers
and other store level personnel. The need for such personnel is particularly
important because purchasers of bridal wear typically expect a high level of
service and attentiveness. We will be materially adversely affected if we do not
hire capable store managers and other store level personnel.

WE MAY BE EXPOSED TO YEAR 2000 PROBLEMS

Historically, certain computerized systems have used two digits rather than
four to define the applicable year. Computer equipment and software and devices
with imbedded technology that are time-sensitive may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in system failure
or miscalculations. This problem is generally referred to as the "Year 2000
issue."

As a result of the Year 2000 issue, possible consequences to our business
include the inability to engage in normal business activities resulting from one
or more of the following:

- loss of communications links with certain store locations;

- disruptions in the movement of inventory to and from our distribution
center and between store locations;

- failure of our inventory management systems;

- the inability to process transactions with customers;

- the inability to send purchase orders;

- the inability to fulfill customer orders in a timely fashion;

- failure of our vendors to provide us with suitable products;

- failure of our credit card processors to correctly process customer
transactions; or

- failure of our telecommunications service.

Not all of our information systems are Year 2000 compliant and not all of
the third parties with whom we conduct our business have indicated that their
information systems are Year 2000 compliant. We are in the process of making
changes to, or replacing, our management information systems to make

12
<PAGE> 14

them Year 2000 compliant. We have been notified by our third parties with whom
we conduct our business that they are in the process of becoming Year 2000
compliant. However, if we and these third parties do not complete this work
effectively or on time, we will be materially adversely affected. We discuss the
impact that the Year 2000 issue may have on our business, our expected costs to
address our Year 2000 issues and our contingency plans in the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
section of this prospectus.

RISKS RELATING TO OUR INDUSTRY:

WE ARE DEPENDENT ON ECONOMIC CONDITIONS

Our sales could be materially adversely affected by unfavorable economic
conditions. Purchases of bridal wear and accessories may decline during
recessionary periods. Prices that consumers may be willing to pay for bridal
wear and accessories may be lower during times of economic duress. Our business
will likely be materially adversely affected by a deterioration in general
economic conditions.

WE FACE A HIGH DEGREE OF COMPETITION

The retail bridal wear business is highly competitive. We compete with
local stores, regional chains and bridal warehouses that may have an established
following in a community. We also compete with department stores that may also
sell through catalogs and that have substantially greater financial and other
resources. Specialty stores and a larger number of department stores provide
additional competition in the sale of bridesmaid and special occasion dresses.

Many retailers of other products that follow a growth strategy similar to
ours rely on large selections and comparatively low prices to compete. However,
the purchase of bridal wear is a very personal and emotional decision. We must
provide a high level of service to compete effectively. We will be materially
adversely affected if we do not compete successfully. See
"Business--Competition."

RISKS RELATING TO THIS OFFERING:

THERE IS SIGNIFICANT OWNERSHIP CONCENTRATION OF OUR COMMON STOCK

Upon the consummation of this offering, Steven H. Erlbaum, Michael C.
Erlbaum, Gary E. Erlbaum, Philip Youtie, and Steven J. Sidewater, together with
members of their immediate family, trusts for the benefit of members of their
immediate family, and family partnerships in which members of their immediate
family are partners, will own %, %, %, % and %,
respectively, of our outstanding common stock. The Clipper Group partnership
will own % of our outstanding common stock. These shareholders will own
% in the aggregate. These shareholders will have the power to elect our
board of directors and approve actions requiring the approval of the majority of
our shareholders if they decide to act together. Steven, Michael and Gary
Erlbaum are brothers and directors. The interests of these shareholders could
conflict with the interests of our other shareholders.

OUR COMMON STOCK HAS NEVER BEEN PUBLICLY TRADED

There has not been a public market for our common stock. We cannot predict
the extent to which a trading market will develop or how liquid that market
might become. The initial public offering price will be determined by
negotiations between representatives of the underwriters, the selling
shareholders and us and may not be indicative of prices that will prevail in the
trading market.

ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A SALE OF DAVID'S BRIDAL

We are a Florida corporation. There are anti-takeover provisions of Florida
law that could make it more difficult for a third party to acquire control of
our company, even if such a change in control would be beneficial to our
shareholders. Our articles of incorporation divide our board into three classes
and provide that our board of directors may issue preferred stock without
shareholder approval. The existence

13
<PAGE> 15

of a classified board or issuance of preferred stock could make it more
difficult for a third party to acquire our company.

FUTURE SALES OF OUR SHARES BY OUR CURRENT SHAREHOLDERS MAY ADVERSELY AFFECT
THE PRICE OF OUR COMMON STOCK

If our shareholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options, in the public market
following this offering, then the market price of our common stock could fall.
Restrictions under the securities laws and certain lock-up agreements limit the
number of shares of common stock available for sale in the public market. The
holders of shares of common stock, shares of preferred stock that
will convert to shares of common stock before this offering and
options exercisable into an aggregate of shares of common stock
have agreed not to sell any such securities for 180 days after this offering
without the prior written consent of Donaldson, Lufkin and Jenrette Securities
Corporation.

The holders of preferred stock that will convert to shares
of common stock prior to this offering to purchase shares of
common stock have demand and piggy-back registration rights. The exercise of
such rights could adversely affect the market price of our common stock. We plan
to file a registration statement to register all shares of common stock under
our stock option plan. After such registration statement is effective, shares
issued upon exercise of stock options will be eligible for resale in the public
market without restriction.

THIS OFFERING WILL BENEFIT OUR CURRENT SHAREHOLDERS

Our current shareholders, including members of management, will recognize
significant benefits from this offering. These benefits include the creation of
a public market for our common stock which will allow some of our existing
shareholders to sell shares in this offering and enable our shareholders to
liquidate their investments in the future. The selling shareholders, including
our Chairman and President and several members of our board of directors, will
sell a significant number of shares in this offering. The excess of the initial
public offering price over amounts paid for common stock, including the amounts
payable upon the exercise of stock options, by our executive officers and
directors is approximately $ million, or $ per share based on
an assumed offering price of $ per share.

14
<PAGE> 16

FORWARD-LOOKING STATEMENTS

We have made statements made under the captions "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus that are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
statements about the following:

- the competitiveness of the bridal industry;

- the future availability and prices of certain materials; and

- our business and growth strategies and other statements contained herein
that are not historical facts.

When used in this prospectus, the words "anticipate," "believe," "estimate"
and similar expressions are generally intended to identify forward-looking
statements. There are important factors that could cause actual results to
differ materially from those expressed or implied by such forward-looking
statements, including:

- changes in general economic and business conditions and those in the
bridal industry in particular;

- actions of competitors;

- our ability to recover our costs in the pricing of our products;

- the extent to which we are able to develop new products and expand our
business into new markets;

- our inability to effectively manage our growth;

- the level of demand for our products;

- changes in our business strategies;

- developments in international markets;

- our inability to obtain financing when required; and

- other factors discussed under "Risk Factors."

15
<PAGE> 17

USE OF PROCEEDS

The net proceeds we will receive from the sale of shares in
this offering will be approximately $ million. This is based upon an
assumed initial public offering price of $ per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by us. We will not receive any proceeds from the sale of shares of common stock
by the selling shareholders.

We intend to use a portion of the net proceeds to repay the outstanding
balance under our revolving credit agreement, although the revolving credit
agreement will remain available for future borrowings. The outstanding balance
under our revolving credit agreement was $14.6 million on January 31, 1999.
Borrowings under the revolving credit agreement bear interest at variable rates
which averaged 6.5% at January 31, 1999. The revolving credit agreement is
available through July 31, 2001.

We intend to use any remaining net proceeds to fund new store growth, for
capital expenditures and for general corporate purposes, including working
capital. Pending such uses, we will invest the net proceeds of this offering in
short-term, investment grade securities.

DIVIDEND POLICY

We have not paid cash dividends on our common stock since converting from a
subchapter S-corporation in 1993. We currently intend to retain all future
earnings to fund the development and growth of our business. We do not currently
anticipate paying any cash dividends. Future decisions regarding cash dividends
on our common stock will be made by our board of directors. These decisions will
depend on our results of operations, financial position, capital requirements,
general business conditions and restrictions imposed by any financing
arrangements. Our revolving credit agreement currently prohibits the payment of
dividends. We may also face legal and regulatory restrictions on the payment of
dividends.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth our actual and pro forma as adjusted
capitalization. Our pro forma as adjusted capitalization gives effect to:

- the conversion of all outstanding shares of preferred stock into an
aggregate of shares of common stock upon the consummation of
this offering;

- the sale of the shares of common stock offered by us; and

- the application of the estimated net proceeds based on an assumed initial
public offering price of $ per share.

<TABLE>
<CAPTION>
AS OF JANUARY 2, 1999
----------------------
PRO FORMA,
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 320 $
Short-term debt, including current portion of capitalized
lease obligations......................................... $ 281 $
------- -------
======= =======
Capitalized lease obligations, less current portion......... 281 281
Long-term debt.............................................. 19,366
------- -------
Total long-term debt.............................. 19,647 --
------- -------
Shareholders' equity:
Preferred stock, par value $0.01 per share,
shares authorized; 171,792 shares of class A
preferred stock; 114,104 shares of class B preferred
stock; 114,104 shares of class C preferred stock; and
686,402 shares of class D preferred stock issued and
outstanding actual; no shares issued and outstanding
pro forma, as adjusted................................. 11 --
Common stock, par value $0.01 per share; shares
authorized; shares issued and outstanding
actual; shares issued and outstanding pro
forma as adjusted...................................... 66
Additional paid-in capital................................ 18,313
Retained earnings......................................... 9,130
-------
Total shareholders' equity............................. 27,520
-------
Total capitalization.............................. $47,167 $
======= =======
</TABLE>

The table above excludes an aggregate of shares issuable
upon exercise of stock options outstanding at January 2, 1999, plus an
additional shares reserved for issuance in connection with future
stock options and other awards under our stock option plan. See note 10 to our
consolidated financial statements.

17
<PAGE> 19

DILUTION

Our net tangible book value as of January 2, 1999 was $ million or
$ per share. Our net tangible book value per share is determined by
subtracting the total amount of our liabilities from the total amount of our
tangible assets and dividing the remainder by the number of shares of our common
stock outstanding. The price per share to the public of the shares of common
stock offered by this prospectus exceeds the net tangible book value per share
prior to this offering. Therefore, purchasers of shares of common stock in this
offering will realize immediate and substantial dilution in the net tangible
book value of their shares. The following table, based upon our net tangible
book value as of January 2, 1999, illustrates the dilution to purchasers of our
common stock in this offering, based on an assumed initial public offering price
of $ per share.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Net tangible book value per share as of January 2, 1999... $
Increase in net tangible book value per share attributable
to new investors.......................................
-------
Pro forma net tangible book value per share after this
offering..................................................
-------
Dilution per share purchased in this offering............... $
=======
</TABLE>

The following table presents, on an adjusted basis as of January 2, 1999
and assuming an initial public offering price of $ per share:

- the number of shares of our common stock purchased from us;

- the total cash consideration paid; and

- the average price per share paid by the existing holders of common stock
and by new investors before deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us.

<TABLE>
<CAPTION>
SHARES
PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
Existing shareholders....................... % $ % $
New investors...............................
---- ----- ------- -----
Total............................. % $ %
==== ===== ======= =====
</TABLE>

The tables on this page exclude all outstanding options. See
"Management--Stock Option Plan" and note 10 to our consolidated financial
statements. The exercise of outstanding options having an exercise price less
than the initial public offering price would increase the dilution effect to new
investors that is shown on the tables. Also, the second table on this page does
not give effect to sales of shares by the selling shareholders. Sales by the
selling shareholders in this offering will reduce the number of shares held by
existing shareholders to shares, or % of the shares
outstanding, and will increase the number of shares held by new investors to
shares, or % of the shares outstanding.

18
<PAGE> 20

SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA

The following table sets forth our selected consolidated statement of
operations and store, operating and balance sheet data. Our statement of
operations data for fiscal 1996, 1997 and 1998 and our balance sheet data as of
the end of fiscal 1997 and 1998 have been derived from our consolidated
financial statements, which have been audited by Arthur Andersen LLP,
independent public accountants, and are included elsewhere in this prospectus.
Our statement of operations data for fiscal 1994 and 1995 and the selected
balance sheet data as of the end of fiscal 1994, 1995 and 1996 have been derived
from consolidated financial statements which have been audited by Arthur
Andersen LLP, independent public accountants, and are not included in this
prospectus. You should read the data set forth below together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and notes thereto appearing elsewhere in
this prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR(A)
---------------------------------------------------------------
1994 1995 1996 1997 1998
(IN THOUSANDS EXCEPT PER SHARE, NET SALES PER SQUARE FOOT AND
NUMBER OF STORES DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $27,523 $45,453 $63,158 $85,785 $123,656
Other income(b)........................... 1,331 2,634 4,188 6,228 9,062
------- ------- ------- ------- --------
Total revenues......................... 28,854 48,087 67,346 92,013 132,718
Cost of sales(c).......................... 14,596 26,518 40,889 53,070 74,613
------- ------- ------- ------- --------
Gross profit........................... 14,258 21,569 26,457 38,943 58,105
Selling, general and administrative
expenses............................... 11,930 19,114 26,453 33,738 47,581
------- ------- ------- ------- --------
Income from operations................. 2,328 2,455 4 5,205 10,524
Interest expense, net..................... 491 467 586 1,248 1,087
------- ------- ------- ------- --------
Income (loss) before income taxes...... 1,837 1,988 (582) 3,957 9,437
Income tax provision (benefit)............ 730 738 (167) 1,359 3,618
------- ------- ------- ------- --------
Income (loss) before extraordinary item... 1,107 1,250 (415) 2,598 5,819
Extraordinary item, net of tax(d)......... -- (550) -- -- --
------- ------- ------- ------- --------
Net income (loss)...................... $ 1,107 $ 700 $ (415) $ 2,598 $ 5,819
======= ======= ======= ======= ========
Net income (loss) per common share(e)(f):
Basic.................................. $ 0.12 $ 0.08 $ (0.06) $ 0.39 $ 0.88
Diluted(f)(g).......................... $ 0.11 $ 0.06 $ (0.06) $ 0.22 $ 0.47
Weighted average shares outstanding:
Basic.................................. 9,330 8,250 6,929 6,687 6,620
Diluted................................ 9,981 11,399 6,929 11,862 12,474
STORE DATA:
Number of stores, end of period........... 23 36 48 59 77
Total square feet, end of period.......... 200 328 455 569 766
Comparable store sales increase(h)........ 20.9% 11.3% 1.0% 13.1% 18.1%
Average net sales per store(i)............ $ 1,816 $ 1,769 $ 1,679 $ 1,809 $ 2,022
Net sales per square foot(j).............. $ 193 $ 204 $ 184 $ 191 $ 207
OPERATING DATA:
Gross profit margin....................... 49.4% 44.9% 39.3% 42.3% 43.8%
Selling, general and administrative
expense percentage..................... 41.3% 39.8% 39.3% 36.6% 35.9%
Operating income margin................... 8.1% 5.1% 0.0% 5.7% 7.9%
Capital expenditures...................... $ 1,109 $ 5,029 $ 4,931 $ 7,470 $ 8,105
Depreciation and amortization(k).......... $ 284 $ 632 $ 1,393 $ 2,022 $ 2,896
</TABLE>

19
<PAGE> 21

- - ----------------------------
(a) Our fiscal year consists of 52 or 53 weeks, ends on a Saturday near December
31 and is named for the calendar year ending on that December 31. All fiscal
years presented include 52 weeks of operations except for fiscal 1996, which
includes 53 weeks of operations.

(b) Primarily income from alterations plus third party promotional fee income.

(d) Fiscal 1995 reflects net loss of $550 from early extinguishment of debt, net
of income tax benefit of $323.

(e) Gives retroactive effect to the stock split of . See note 2 to our
consolidated financial statements.

(f) Net income before extraordinary item for fiscal year 1995 was $0.15 per
common share (basic) and $0.11 per common share (diluted).

(i) Includes net sales plus alterations income for stores open for the entire
period indicated.

(j) Calculated by dividing net sales plus alterations income by the total square
footage of stores open for the entire period indicated.

(k) Excludes amortization of debt discount and debt issuance costs.

(l) Includes capitalized lease obligations.

20
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are the largest and only national retailer of bridal gowns and bridal
related apparel in the United States, operating 77 stores in 29 states as of
January 2, 1999. We opened 12 stores in fiscal 1996, 11 stores in fiscal 1997
and 18 stores in fiscal 1998. We plan to open approximately 18 stores in each of
fiscal 1999 and fiscal 2000. We have already opened one of the stores that we
plan to open in fiscal 1999.

We are a successor to a bridal retailing business that began in Ft.
Lauderdale, Florida in 1950. We were incorporated and commenced operations by
opening a store in Hallandale, Florida in 1990. We experienced rapid growth in
fiscal 1994 and fiscal 1995, when the number of stores increased from 14 to 36
over these two fiscal years. This growth placed considerable strain on our
inventory controls, information systems, personnel and capital resources. During
fiscal 1995, we determined that we had accumulated excessive inventories of a
large number of wedding gowns and other apparel. In mid-1995 we commenced key
initiatives which we continue to build upon to increase profitability and
support controlled growth. These initiatives have included:

- enhancing our management team;

- focusing our merchandising strategy on building and expanding an
assortment of core styles;

- upgrading our management information systems;

- opening a distribution facility to improve inventory management; and

- improving our recruiting and training programs for store personnel.

We design and directly source virtually all of our bridal gowns. We
purchase these garments from overseas manufacturers, principally located in
Asia. We do not operate any manufacturing plants. Through our Hong Kong joint
venture, we have established relationships with core manufacturers that enable
us to significantly shorten the time period between order and delivery. This
reduced order cycle facilitates rapid replenishment of merchandise and enables
us to better react to fashion trends. We also avoid dependence on the bridal
manufacturers which can dictate the styles, quantities and order cycles to most
bridal retailers. We have reduced the cost of our gowns and dresses by
eliminating middlemen and dealing directly with factories. For bridesmaid
dresses, we either directly source the products or purchase them from domestic
dress manufacturers. We purchase other special occasion merchandise and
accessories from a variety of domestic vendors.

We opened our distribution center in 1996. This facility is located in
Conshohocken, Pennsylvania. We expanded this facility in 1998 from 30,000 square
feet to 54,000 square feet. More than half of our unit merchandise is shipped
from suppliers to our distribution center, where we inspect, ticket and monitor
shipments to our stores. In early 1998, we completed the initial development of
an inventory replenishment system that is designed to improve service levels and
inventory turnover among various merchandise categories. This system, which is
linked to our distribution center and merchandise systems, was used during
fiscal 1998 to replenish accessory items. We have recently expanded the use of
this system to replenish bridal gowns and expect to further expand this system
to replenish other products that are back-stocked by the distribution center. We
believe the use of our distribution center to rapidly fulfill our merchandise
needs has facilitated the expansion of our assortment of bridal and other dress
categories.

21
<PAGE> 23

We operate on a 52/53-week fiscal year. Our fiscal year ends on a Saturday
near December 31 and is named for the calendar year ending on that December 31.
Fiscal 1996, 1997 and 1998 include 53, 52 and 52 weeks, respectively.

Total revenues principally include merchandise sales, alterations income
and third party promotional fees. Selling, general and administrative expenses
include store expenses, general and administrative expenses and media expense.
Comparable store sales are based on net sales and alterations revenue but
exclude third party promotional fee income. A store becomes comparable in the
first month following 12 full months of operation. Stores that have been
relocated within the same market are considered comparable stores.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, certain items in
the consolidated statements of operations as a percentage of total revenues.

<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
FISCAL YEAR
-----------------------------
1996 1997 1998
<S> <C> <C> <C>
Total revenues.............................................. 100.0% 100.0% 100.0%
Cost of sales(a)............................................ 60.7 57.7 56.2
----- ----- -----
Gross profit.............................................. 39.3 42.3 43.8
Selling, general and administrative expenses................ 39.3 36.6 35.9
----- ----- -----
Income from operations.................................... 0.0 5.7 7.9
Interest expense net........................................ 0.9 1.4 0.8
----- ----- -----
Income (loss) before income taxes......................... (0.9) 4.3 7.1
Income tax provision (benefit).............................. (0.3) 1.5 2.7
----- ----- -----
Net income (loss)......................................... (0.6)% 2.8% 4.4%
===== ===== =====
</TABLE>

- - -----------------------------
(a) Cost of sales includes buying, distribution and store occupancy costs.

FISCAL 1998 VERSUS FISCAL 1997

Total revenues. Total revenues for fiscal 1998 were $132.7 million, an
increase of 44.2% from fiscal 1997. We attribute this increase to an 18.1%
increase in comparable store sales, the impact of new stores opened in fiscal
1998 and the impact of stores opened in fiscal 1997. We opened 18 stores in
fiscal 1998 as compared to 11 stores in fiscal 1997. We operated 77 stores at
the end of fiscal 1998 compared to 59 stores at the end of fiscal 1997.

Gross profit. Gross profit for fiscal 1998 was $58.1 million (43.8% of
total revenues) as compared with $38.9 million (42.3% of total revenues) in
fiscal 1997. We were able to achieve higher gross profit as a percentage of
total revenues due to higher merchandise margins and lower store occupancy costs
as a percentage of total revenues. We achieved higher merchandise margins by
taking fewer markdowns resulting from increased sales of our core assortment,
which generally maintains a higher margin. In addition, our gross margin
improved through our international and domestic direct sourcing efforts, which
have resulted in lower product costs. Our store occupancy costs were lower as a
percentage of total revenues primarily due to higher comparable store sales, the
timing of new store openings and the volume of new store sales.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $47.6 million (35.9% of total revenues) in fiscal
1998 as compared with $33.7 million (36.6% of total revenues) in fiscal 1997.
The decrease in selling, general and administrative expenses as a percentage of
total revenues was primarily achieved through spreading media costs over a
greater total revenue base. The

22
<PAGE> 24

$13.9 million increase in selling, general and administrative expenses reflects
our investment in personnel and infrastructure as well as on increase in
variable store selling expenses to support our continued growth.

Interest expense. Interest expense in fiscal 1998 was $1.1 million, as
compared to $1.2 million in fiscal 1997. The decrease in interest expense was
due to lower interest rates, partially offset by higher debt levels used to fund
our expansion.

Taxes. Our effective tax rate was 38.3% in fiscal 1998 as compared to
34.3% in fiscal 1997. The increase was primarily due to a higher effective state
tax rate.

Net income. As a result of the factors described above, our net income for
fiscal 1998 was $5.8 million, a $3.2 million increase over our fiscal 1997 net
income of $2.6 million.

FISCAL 1997 VERSUS FISCAL 1996

Total revenues. Total revenues for fiscal 1997 were $92.0 million, an
increase of 36.6% from fiscal 1996. We attribute this increase to a 13.1%
increase in comparable store sales, the full year impact of stores we opened in
fiscal 1996 and new stores opened in fiscal 1997. We opened 11 stores in fiscal
1997 as compared to 12 stores in fiscal 1996. We operated 59 stores at the end
of fiscal 1997 compared to 48 stores at the end of fiscal 1996.

Gross profit. Gross profit for fiscal 1997 was $38.9 million (42.3% of
total revenues) as compared with $26.4 million (39.3% of total revenues) in
fiscal 1996. We were able to achieve higher gross profit as a percentage of
total revenues from higher merchandise margins and lower buying expenses as a
percentage of total revenues, which were partially offset by increases in
distribution and store occupancy costs as a percentage of total revenues. We
achieved higher merchandise margins by taking fewer markdowns resulting from
increased sales of our core assortment, which generally maintains a higher
margin. In addition, our gross margin improved through our international and
domestic direct sourcing efforts, which have resulted in lower product costs.
Our buying costs were lower as a percentage of total revenues primarily through
the application of fixed costs over a larger total revenue base. Our
distribution center expenses increased as a percentage of total revenues because
fiscal 1997 was the first full year of operation for our distribution center.
Our store occupancy costs increased as a percentage of total revenues as a
result of the impact of rent and real estate tax expenses associated with new
stores opened in fiscal 1997.

Selling, general and administrative expenses. Selling, general and
administrative expenses were $33.7 million (36.6% of total revenues) in fiscal
1997, as compared with $26.4 million (39.3% of total revenues) in fiscal 1996.
Our selling, general and administrative expenses decreased as a percentage of
total revenues as a result of spreading store and media costs over a greater
total revenue base.

Interest expense. Interest expense was $1.2 million in 1997 as compared to
$586,000 in fiscal 1996. The increase in interest expense was due to higher debt
levels used to fund our store expansion. Interest rates remained relatively
constant in fiscal 1997 as compared to fiscal 1996.

Taxes. Our effective tax rate was 34.3% in fiscal 1997, compared to a
28.8% benefit in fiscal 1996. The fiscal 1997 provision reflects the federal
statutory rate plus certain state taxes. The 1996 federal tax benefit was due to
our operating loss, which was offset by a state tax provision and other
non-deductible items.

Net income. As a result of the factors described above, our net income in
fiscal 1997 was $2.6 million as compared to a net loss of $415,000 in fiscal
1996.

LIQUIDITY AND CAPITAL RESOURCES

We require cash principally to finance capital investment in new stores,
new store inventory and seasonal working capital. We opened 12 stores in fiscal
1996, 11 stores in fiscal 1997 and 18 stores in fiscal 1998. In recent years, we
have financed our operations and new store openings primarily with cash from
operations, borrowings under bank financing agreements and equity financing.
23
<PAGE> 25

Our cash flows provided by our operating activities were $4.2 million in
fiscal 1998 as compared to cash used of $3.8 million in fiscal 1997. This
increase was primarily due to higher net income and a lower increase in
inventory levels in fiscal 1998 as compared to fiscal 1997. Our cash used in
operating activities in fiscal 1997 primarily reflected the increase in
inventory levels related to new store openings and support of sales growth,
partially offset by net income. Cash flows provided by operating activities were
$2.1 million in fiscal 1996.

Our net cash used in investing activities in fiscal 1998 was $7.6 million,
as compared to $7.9 million in fiscal 1997 and $4.9 million in fiscal 1996. Our
cash used in investing activities primarily represents our capital expenditures
in opening new stores. While we opened seven more stores in fiscal 1998 than in
fiscal 1997, we purchased land and one building in fiscal 1997.

Our net cash provided by financing activities in fiscal 1998 was $3.3
million, as compared to $11.7 million in fiscal 1997 and $2.8 million in fiscal
1996. Over the last three years our primary financing activities have involved
continual borrowings and repayments under our revolving credit agreement,
increases in bank overdrafts, periodic issuances of long-term debt and sales of
equity securities. Our cash from financing activities in fiscal 1998 was
primarily derived from $2.2 million of net borrowings under our revolving credit
agreement, $1.4 million from the issuance of long-term debt and an increase of
$1.0 million in bank overdrafts. Bank overdrafts represent checks that have been
written by us that have not been presented to our bank for payment. These
sources of cash in fiscal 1998 were partially offset by repayments of long-term
debt and capital leases of $680,000 and the repurchase of common stock for
$651,000. Our cash from financing activities in fiscal 1997 was primarily
provided by $5.0 million from the sale of class D preferred stock, $3.9 million
of net borrowings under our revolving credit agreement and an increase of $2.7
million of bank overdrafts.

Our revolving credit agreement provides for borrowings of up to $30.0
million, of which up to $25.0 million may be used for letters of credit. Cash
borrowings and letters of credit under our revolving credit agreement are
secured by all of our assets. Our borrowings under this agreement are restricted
to certain percentages of our accounts receivable and inventory. Specifically,
we are not permitted to borrow amounts that are greater than the sum of 80% of
our eligible accounts receivable and 60% of our eligible inventory. The
revolving credit agreement provides some exceptions to these limitations. These
exceptions allow us to exceed these limitations by $3.0 million from December
31, 1998 to March 31, 1999, $3.0 million from October 31, 1999 to March 31, 2000
and $2.0 million from October 1, 2000 to March 31, 2001. The interest rates that
we are charged under our revolving credit agreement are variable. We can choose
to have our interest rate based on (1) the higher of the U.S. federal funds rate
plus 0.50% and our bank's prime rate, or (2) adjusted LIBOR plus an applicable
margin of between 1.25% and 1.75% depending on our financial performance. As of
January 31, 1999, we had made cash borrowings of $14.6 million and were issued
$2.3 million of letters of credit under our revolving credit agreement. We
intend to use a portion of the net proceeds of this offering to repay the
outstanding balance under our revolving credit agreement, although the revolving
credit agreement will remain available for future borrowings. The revolving
credit agreement is available through July 31, 2001.

We currently estimate that our capital expenditures will be approximately
$10.0-11.0 million in fiscal 1999. In addition, we plan to continue investment
in our infrastructure, including approximately $825,000 for the introduction of
a new warehouse management system. Our capital expenditures are incurred to open
new stores, remodel or expand existing stores and to fund capital investment
activities. We believe that our cash flow from operations, the net proceeds from
this offering and amounts available under our revolving credit agreement will be
sufficient to fund anticipated capital expenditures and working capital
requirements for at least the next 12 months.

QUARTERLY RESULTS AND SEASONALITY

Our business is subject to seasonal variations and our revenues and income
historically have been higher from January through April and lower from October
through December. Our working capital requirements tend to fluctuate throughout
the year and increase during the months of November and

24
<PAGE> 26

December. This is because we increase our inventory in these months to support
sales, which tend to be higher from January through April.

The following table presents our unaudited quarterly operating results for
our eight most recent quarterly periods and the number of stores open at the end
of each period.

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-------------------------------------------------------------------------------------------
APRIL 5, JULY 5, OCTOBER 4, JANUARY 3, APRIL 4, JULY 4, OCTOBER 3, JANUARY 2,
1997 1997 1997 1998 1998 1998 1998 1999
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues.............. $25,824 $23,891 $24,621 $17,677 $38,705 $34,619 $34,956 $24,438
Gross Profit(a)............. $11,477 $10,240 $10,393 $ 6,833 $18,114 $15,258 $15,008 $ 9,725
Income (loss) from
operations................ $ 2,753 $ 1,585 $ 1,702 $ (835) $ 5,482 $ 3,254 $ 2,415 $ (627)
Net income (loss)........... $ 1,583 $ 831 $ 902 $ (718) $ 3,161 $ 1,894 $ 1,337 $ (573)
Quarterly total revenues as
a percentage of annual
total revenues............ 28.1% 26.0% 26.7% 19.2% 29.2% 26.1% 26.3% 18.4%
Quarterly operating income
(loss) as a percentage of
annual operating income... 52.9% 30.4% 32.7% (16.0)% 52.1% 30.9% 22.9% (5.9)%
Quarterly operating income
(loss) as a percentage of
quarterly total
revenues.................. 10.7% 6.6% 6.9% (4.7)% 14.2% 9.4% 6.9% (2.6)%
Stores open at end of
period.................... 50 52 54 59 63 69 71 77
</TABLE>

- - -----------------------------
(a) Net of buying, distribution and store occupancy costs.

YEAR 2000 COMPLIANCE

The Year 2000 issue results from the writing of computer programs using two
digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations. In this section we will describe our current
state of readiness for the Year 2000 issue and other information relating to the
Year 2000 issue.

WILL DAVID'S BRIDAL BE READY?

Information Technology Systems--Our core information technology system is
the STS integrated retail system. The system supports our major business
functions, including merchandise planning, finance and accounting, and point of
sale systems. With STS we have completed an analysis of all modules included in
this retail system to insure that they are Year 2000 compliant. Year 2000
remediation has been completed for all STS modules except for point of sale and
decision support. The decision support remediation solution has been issued for
implementation and is scheduled to be completed in the second quarter of 1999.
The point of sale remediation is being tested and is scheduled to be completed
in the third quarter of fiscal 1999.

Our other information technology systems are either internally developed
legacy systems or "off the shelf" applications. The most significant legacy
system is our distribution system, which supports distribution center operations
and inventory transfers among stores. Our new warehouse system, which will
replace our distribution system will be Year 2000 compliant. We have scheduled
this new system to be implemented in the third quarter of fiscal 1999. Other
legacy systems support special order warehouse processing allocation and
replenishment systems. Our assessment of the Year 2000 readiness of these
systems is underway, and remediation is expected to be completed in the third
quarter of fiscal 1999. Our "off the shelf" applications have been inventoried
and assessed for compliance. In all instances the applications are compliant,
scheduled for remediation or not critical to the daily operations or decision
support processes. We do not believe that non-compliance of "off the shelf"
applications would materially adversely affect our operations.

25
<PAGE> 27

Non-Information Technology Systems--Non-information technology systems
include embedded technology such as microcontrollers. Our non-technology systems
include security, faxes, elevators and HVAC systems. Based on our assessment of
these systems at our headquarters, distribution center and store locations, we
have determined that these systems do not raise Year 2000 issues.

Material Third Party Relationships--We have made inquiries of our principal
suppliers and service providers to determine our vulnerability if these third
parties fail to remediate their own Year 2000 issues. We believe that third
party service providers and suppliers whose Year 2000 issues could have a
material impact on us include our credit card processor, telecommunications
providers and key suppliers.

HOW MUCH WILL IT COST TO ADDRESS YEAR 2000 ISSUES?

We have incurred approximately $5,000 in remediation costs associated with
Year 2000 issues. All of these costs relate to upgrades to the STS retail
system. Based on information currently available, we estimate that the total
remaining costs of Year 2000 remediation will be approximately $600,000. This
amount does not include approximately $825,000 for our new warehouse management
system, which we planned to introduce irrespective of Year 2000 issues. We
anticipate that all of the remediation costs will be expensed or capitalized as
incurred through the end of 1999.

WHAT ARE THE POSSIBLE CONSEQUENCES OF YEAR 2000 ISSUES CONFRONTING DAVID'S
BRIDAL?

If STS is unable to remedy non-compliant modules, we will have to process
key business functions with less efficient systems and, in some cases, manual
alternatives. These measures would require additional time and resources,
resulting in additional operating expenses until full functionality of the STS
retail system is restored.

The failure to have the new warehouse management system implemented on a
timely basis could disrupt the movement of inventory into and out of our
distribution center and our ability to transfer gowns from store to store. This
could have an adverse effect on our ability to supply merchandise on a timely
basis, and therefore on our revenues. The remediation of our current
distribution system is part of the new warehouse management system project plan
and we would rely on this remediation if the new warehouse management system is
not completed on schedule. We do not believe that difficulties with regard to
our other legacy systems would materially adversely affect our operations.

If our telecommunications and credit card processing service providers are
not Year 2000 compliant on a timely basis, our operations could be materially
adversely affected. If our telecommunication providers are not compliant, we
would be required to migrate our service to a compliant vendor. If our credit
card processor is not compliant, we would be required to approve and settle
credit requests manually. This may require the imposition of credit limits in
the absence of direct approval by the credit card processor, a highly cumbersome
process when applied to individual sales.

WHAT ARE DAVID'S BRIDAL'S CONTINGENCY PLANS?

We have formulated contingency plans for our distribution, allocation,
replenishment and special order systems. Each plan calls for reliance on certain
STS functions, which would require considerable additional manual effort. We
anticipate that our contingency planning will be substantially completed in the
third quarter of fiscal 1999.

We have not yet established a contingency plan with respect to
non-compliant STS modules or telecommunications service providers. If, by the
end of the third quarter of fiscal 1999, we determine that a contingency plan is
required with regard to non-compliant STS modules or telecommunications service
providers, we will formulate a contingency plan, which we anticipate will be
completed by the end of the fourth quarter of 1999.

26
<PAGE> 28

INFLATION

We do not believe that inflation has had a material effect on our financial
position or results of operations during the past three years. We cannot predict
what effect inflation will have in the future. Our operating results may be
materially adversely affected by future inflation.

CHANGES IN ACCOUNTING POLICIES

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting and disclosure of comprehensive income. In June 1997, the FASB issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This statement establishes standards for reporting of information
about operating segments and requires the reporting of selected information
about operating segments in interim financial statements. We adopted these
standards on January 4, 1998 which had no impact as we have no other
comprehensive income and have operated as a single segment.

27
<PAGE> 29

BUSINESS

OVERVIEW

We believe that the breadth and depth of our in-stock assortments in key
product categories far exceeds those of other bridal retailers. Our broad
in-stock assortments enable us to offer the convenience of one-stop shopping for
the bridal party, including brides, bridesmaids, mothers-of-the-bride and-groom
and flowergirls. We also offer a variety of special occasion dresses and
accessories for events such as proms, pageants, homecomings and other formal
affairs. Our in-house staff coordinates the design and, through a Hong
Kong-based joint venture, sources virtually all of our bridal gowns. This
results in lower product costs and reduced order cycles and allows us to more
frequently update our product assortment. Our merchandising strategy is to
target customers across a wide range of income levels and offer apparel of
excellent value at everyday prices, typically ranging from $99 to $899. We
recognize that the bridal customer expects a higher level of customer service
than the typical retail customer. We seek to exceed our customers' expectations
for service by providing attentive and knowledgeable sales assistance,
convenient store design and extended hours of operation relative to other bridal
retailers.

In mid-1995, we commenced key initiatives which we continue to build upon
to increase profitability and support controlled growth. These initiatives have
included:

- enhancing our management team;

- focusing our merchandising strategy on building and expanding an
assortment of core styles;

- upgrading our management information systems;

- opening a distribution facility to improve inventory management; and

- improving our recruiting and training programs for store personnel.

INDUSTRY

According to the U.S. Department of Health and Human Services, since 1990
there have been an average of approximately 2.3 million marriages per year in
the United States. This number is expected to increase during the next decade,
as the children of the "Baby Boomer" generation reach adulthood. We believe that
a substantial majority of marriages in the United States involve a formal
wedding ceremony.

Demographic surveys indicate that the age of brides is increasing.
According to the U.S. Bureau of the Census, the median age of a bride in the
United States has increased from 21 in 1970 to 27 in 1998. We believe that the
trend towards older brides is continuing and has resulted in an increasing
number of brides paying for some or all of their wedding expenses. As a result,
brides place greater emphasis on value and service.

Based on our research and surveys conducted by two national bridal
magazines, a bride typically will spend approximately $700-800 for her wedding
gown. Brides also usually purchase a headpiece, a slip and other foundation
items, as well as accessories such as shoes and a handbag. The wedding party
normally

28
<PAGE> 30

includes four or five bridesmaids, each of whom usually purchases a dress,
shoes, handbag, jewelry and other accessory items.

We believe the bridal market is highly fragmented, with approximately 7,500
stores nationwide, and estimate that less than five percent of bridal retailers
operate more than one store. We estimate the domestic market for the various
apparel and accessories purchased by brides, bridesmaids and other members of
the bridal party to be in excess of $4 billion per year. Historically, no
retailer has been dominant in the bridal retailing industry.

The manufacture of a bridal gown requires a significant amount of skill and
typically involves more than 100 hours of labor per gown. Due to this high labor
component, most manufacturers contract with independent, locally owned and
operated factories in Asia, predominantly in China, for production of the gown.
The manufacturers sell to bridal retailers which have generally become highly
reliant upon the manufacturers. In order to gain efficiency and reduce costs,
some manufacturers often will not forward orders to the factories until they
have received a minimum number of orders from bridal retailers. This delay in
order placement and the labor intensive nature of bridal gown production
contributes to the lengthy time period often experienced between order and
receipt of a bridal gown.

We believe that most bridal retailers are considerably smaller than most
bridal manufacturers and do not have significant bargaining power with the
manufacturers. Therefore, manufacturers can often exert a considerable amount of
influence on bridal retailers. Typically, the manufacturers dictate the styles
that will be available to the bridal retailers and require retailers to make a
significant investment in samples of those styles during each selling season.

Typically, bridal wear retailers offer a limited selection of bridal gowns
and bridesmaid dresses and provide samples in only the most common sizes,
typically size 8 or 10. In addition, they carry limited inventory, therefore
customers generally cannot purchase bridal gowns and bridesmaid dresses
"off-the-rack." The customer generally places a substantial deposit for her gown
and waits for an extended period of time, often up to 20 weeks, before the gown
arrives from the manufacturer. As a result, the traditional purchasing process
involves a number of drawbacks for the customer, including the inability of most
bridal customers to try on gowns in their sizes, the wait involved in the
delivery process, and uncertainty relating to the appearance and fit of the
final product. These factors can make the bridal shopping experience time
consuming, inconvenient and stressful.

COMPETITION

The high level of service required by bridal customers and the difficulties
of dealing with manufacturers make bridal retailing a challenging business.
Currently, the bridal market can be categorized into four segments:

Bridal Salons--This group includes the largest number of bridal retailers.
Typically, these are single store operations managed by the owner. They offer a
limited number of lines and sizes and generally operate a sample only, special
order business. They may offer a limited selection of off-the-rack merchandise,
primarily comprised of samples. We believe that many of these operators have
limited resources and little influence with manufacturers over style
availability or order delivery times. These stores often have only limited hours
of operation and require appointments.

Bridal Warehouses--This relatively small group of stores sell limited
assortments including old samples, discontinued styles and manufacturer
overruns. They generally do not offer a full line of in-stock bridal apparel,
although they may special order bridal wear. Store hours are typically more
flexible than bridal salons, although service levels are low and these stores
generally do not accept appointments.

Department Stores--Several department stores offer bridal gowns and
bridesmaid dresses in their own or leased departments and through their
catalogs. These locations generally operate a sample-only, special-order
business and tend to offer higher priced couture merchandise. Bridal department
hours of operation are usually based on typical retail department store hours.
Customer appointments are generally required.

29
<PAGE> 31

Multi-Store Chains--There are a small number of bridal retail chains
operating two or more stores in a region. These retailers may offer a selection
of off-the-rack merchandise as well as the traditional sample model retailing
offered by bridal salons and department stores. Store hours are generally
flexible and customers may, in most cases, either walk-in or make an
appointment.

Bridesmaid and other special occasion dresses are available at a large
number of retailers, including department stores and specialty dress retailers.
In addition, because the complexity and customization involved in special
occasion garments are usually far less than in bridal wear, customer service
expectations are somewhat lower. However, retailers must devote care to insure
that bridesmaid dresses are uniform in style and color for the entire bridal
party. Because bridesmaid dresses are often selected by the bride, her overall
satisfaction with the bridal retailer is a large factor in deciding whether to
also purchase the bridesmaid dresses from the same bridal retailer.

BUSINESS STRATEGY

Our principal strategies are as follows:

Offer a Wide Selection of In-Stock Bridal Apparel

Our consumer research reveals that bridal customers value selection more
than any other single attribute in deciding where to shop for their wedding
gowns. As a result, our merchandising strategy is to offer the broadest in-stock
selection with an assortment of over 225 core styles in bridal related apparel
and special occasion dresses ranging in sizes from 2-26. We are continuing to
expand and refine our core assortment of merchandise and may seek to expand our
other product offerings. We exclusively design many of our styles.

We produce our gowns under our own private labels, including Michelangelo,
Lady Eleanor, St. Tropez and Santa Monica, as well as under exclusive licenses
with Gloria Vanderbilt and Oleg Cassini. We maintain a broad in-stock selection
of bridal gowns in many sizes so that customers can often try on, purchase and
take their gowns home on the same day. We believe that this provides us with a
competitive advantage over typical bridal retailers whose bridal customers often
wait up to 20 weeks for delivery of their gowns. Our continuous development
cycle enables us to provide customers with an assortment of new styles
throughout the year, unlike most manufacturers which typically update their
lines only two to three times per year.

We also carry a wide variety of private label and designer brands of
bridesmaid and other special occasion dresses. We believe that we offer a
selection of bridesmaid styles not traditionally found in a single store
environment. These are generally available in sizes 2 - 24 either through
in-store stock or rapid fulfillment through our distribution facility. This
enables members of the bridal party to purchase their bridesmaid dresses at
different stores throughout the country while still ensuring that the dresses
are consistent in style and color.

Offer Excellent Everyday Value

Our pricing strategy is to offer our bridal gowns, flowergirl, bridesmaid,
mothers-of-the-bride and -groom and other special occasion dresses at everyday
prices equal to or below comparable product offerings of our competitors. We
target customers across a wide range of income levels and offer apparel at
prices typically ranging from $99 to $899. The excellent value of our apparel,
coupled with a wide in-stock selection and high level of customer service, are
key elements of our strategy. We are able to support our pricing strategy while
maintaining attractive margins due to our direct sourcing of the majority of our
merchandise.

Control Product Design, Sourcing and Distribution

We design and directly source a majority of our merchandise offerings.
Using our sourcing expertise and in-house design team, we have the ability to
offer our customers a broad assortment of fashionable

30
<PAGE> 32

styles at popular prices, while maintaining high quality and fit standards. We
have established relationships with key manufacturers, and our direct sourcing
through our Hong Kong joint venture partner results in lower product costs and
reduced order cycles. This reduced order cycle facilitates rapid replenishment
of merchandise and enables us to react swiftly to fashion trends. By controlling
our distribution we are able to reinforce our brand name, David's Bridal, in the
eyes of our consumers, provide a broad in-stock assortment of our products,
control our pricing and flow of goods and test new products. We also avoid
dependence on the bridal manufacturers who can dictate the styles, quantities
and order cycles to most bridal retailers. In addition, we have significantly
reduced the cost of our bridal gowns and bridal related apparel by eliminating
the middlemen and dealing directly with the factories that produce the gowns.

Emphasize High Levels of Service

We are committed to providing a high level of customer service. We believe
this often leads to establishing an ongoing relationship with our customers and
results in repeat and/or referral purchases. Key elements of our customer
service include the following:

- Attentive and knowledgeable personnel. We recognize that purchasing a
wedding gown is an emotional experience, and that bridal customers expect
a higher level of attentiveness and product knowledge than is typically
provided by other apparel retailers. We understand that it is critical to
have experienced, highly trained employees in this role. Our recruiting
focus is to attract candidates with experience in the retailing of
products requiring significant interaction with the customer, such as
furniture, jewelry and cosmetics. We also provide initial training for
our personnel as well as training on an ongoing basis. Finally, we
regularly monitor service performance and customer satisfaction, and we
have a compensation structure that rewards store management for sales
performance and customer service.

- Convenient store design and hours. Our store design encourages purchases
in a customer friendly environment. Our current prototype, which exists
in over half of our stores, averages approximately 10,000 square feet and
has approximately 30 conveniently located fitting rooms and a central,
well-lit mirrored platform. This prototype presents merchandise in a
highly accessible format and enables us to provide personalized service
and to cross-merchandise related accessories. Our stores are open during
convenient hours, typically seven days a week, including evening hours on
all weekdays. Unlike many bridal retailers who require appointments, we
welcome customers to shop with or without an appointment.

- In Store Alterations Service. As an added convenience for our customers,
all of our stores, except for two outlet stores, provide an in-store full
service alterations department. This enables us to ensure that gowns and
dresses are well-tailored. The alterations department can also be a
crucial element in the sales process to enhance our relationship with the
customer. We believe that on-site alterations is a significant
competitive advantage because most retailers do not provide this service
on-site.

Open Stores in New and Existing Markets

Our store expansion strategy is to continue our geographic diversification
throughout the United States and to fill in certain existing markets. We believe
this should create greater access and convenience for our customers and increase
the efficiency of our media, distribution and management expenses. We opened 12
stores in fiscal 1996, 11 stores in fiscal 1997 and 18 stores in fiscal 1998. We
plan to open approximately 18 stores in each of fiscal 1999 and fiscal 2000. We
have already opened one of the stores we plan to open in fiscal 1999.

Increase Sales Productivity of Existing Stores

We employ two complementary strategies to increase the productivity of our
existing stores. First, we seek to increase the flow of traffic into our stores
by increasing consumer awareness of our brand. Through our multi-tiered
marketing strategy and our continuing geographic expansion, we strive to
establish David's
31
<PAGE> 33

Bridal as the dominant national brand name in bridal retailing. In addition, the
bride typically determines where the bridesmaid dresses are purchased. As a
result, we strive to create a favorable experience for the bride. This enhances
our ability to outfit her bridesmaids as well as other members of the bridal
party, and encourages referrals, a significant factor in generating additional
business.

MERCHANDISING

We carry an extensive assortment of bridal gowns and other special occasion
dresses, including mother-of-the-bride and -groom, bridesmaid, flowergirl and
other dresses. Our average store carries approximately 2,600 gowns and dresses
including our core assortment plus numerous other styles. Our non-bridal dresses
are often suitable for a variety of occasions. We also carry a broad assortment
of headpieces and other accessories to satisfy the needs of the bride and the
entire bridal party. Our merchandise is classified in the following merchandise
categories:

<TABLE>
<CAPTION>
CATEGORY DESCRIPTION TYPICAL PRICE RANGES
<S> <C> <C>
Bridal Gowns............ Hundreds of styles are available in all stores in $199-$899
sizes 2-26. Gowns represent current fashion trends
as well as traditional looks. Styles range from
simple and elegant to highly embellished.
Fabrications include silk, satin, chiffon, tulle and
organza.
Bridesmaid Dresses...... Through both in-store inventory and rapid $99-$250
fulfillment through our distribution center,
customers can select from over 100 styles that
include a variety of colors and fabrics available in
sizes 2-24. An additional special order program is
available for sizes up to 48.
Other Dresses........... A broad assortment of mothers-of-the-bride and $99-$298
-groom and special occasion dresses is available in
sizes 2-24. Fashion trends are represented in both
traditional and seasonal color palates.
Flowergirl Dresses...... A broad assortment of styles is available in sizes $99-$119
2-12. Fabrications include satin, tulle and organza.
Bridal Headpieces....... A broad selection of headpieces, from informal $69-$185
wreaths to long veils, that compliment bridal gown
styles.
Accessories and Gifts... Undergarments (such as slips and bras), bridal and $7-$79
fashion shoes, costume jewelry, gloves, handbags and
wedding gift items (such as candles, wedding books
and disposable cameras).
</TABLE>

To reduce risk, we test our apparel prior to rolling out new products to
gauge customer appeal. We produce gowns under our own private labels, including
Michelangelo, Lady Eleanor, St. Tropez and Santa Monica, as well as under
exclusive licenses from popular fashion designers, Gloria Vanderbilt and Oleg
Cassini. We believe these brands reinforce the exclusivity of our product
offerings and enhance our store brand recognition.

We believe that a crucial component of our success is our ability to
satisfy the needs and preferences of bridesmaids in a timely fashion. Because a
number of bridesmaid dresses of the same style and color are typically sold to a
wedding party, stores may not carry sufficient quantities of bridesmaid dresses
to permit off-the-rack purchases by the entire wedding party. We utilize rapid
fulfillment from our distribution center to ensure that appropriate quantities
and sizes of bridesmaid dresses in matching styles and dye lots can be made
available within a short period of time. If necessary, we can special order
dresses from manufacturers directly sourced by us. This flexibility helps to
improve merchandise turnover and reduce markdowns.

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<PAGE> 34

PRODUCT DEVELOPMENT AND SOURCING

We design a majority of our bridal gowns and a significant number of our
bridesmaid dresses. Our product development staff, together with our
merchandising group, selects the fabrication, silhouettes, colors and price
ranges for our designs. We have an in-house design staff which interprets
industry trends and develops exclusive designs for our stores. We have
established relationships with key manufacturers, and our direct sourcing
results in lower product costs and reduced order cycles.

Furthermore, our continuous development cycle enables us to provide
customers with an assortment of new styles throughout the year. Our bridal gowns
are manufactured overseas, principally in Asia. We purchase directly from
factories through our joint venture. We do not operate any manufacturing plants.
Our joint venture partner is responsible for sourcing and purchasing all of our
bridal gowns and for ensuring that manufacturers adhere to design and other
business standards. Manufacturers are selected based on their ability to support
our growth, meet defined quality and fit standards and make timely deliveries.

We have implemented a direct sourcing manufacturing system for our
bridesmaid dresses that monitors and controls the production process from the
acquisition of piece goods through final delivery in support of these
activities. Bridesmaid dresses that are not directly sourced are purchased from
traditional domestic dress manufacturers.

We purchase other special occasion merchandise, headpieces and accessories
from a variety of domestic vendors.

STORE DESIGN AND STAFFING

Our store design encourages purchases in a friendly environment. Most of
our stores range in size from 8,000 to 12,000 square feet. Our current
prototype, which exists in over half of our stores, averages approximately
10,000 square feet and has approximately 30 conveniently located fitting rooms
and a central, well-lit mirrored platform. This prototype presents merchandise
in a highly accessible format and enables us to provide personalized service and
to cross merchandise related accessories.

A typical store has 16-18 employees, including:

- a store manager,

- an assistant manager,

- a lead customer service representative,

- an alterations manager,

- bridal consultants,

- seamstresses and

- other support personnel.

We believe that appropriate personnel training is critical to ensure high
levels of customer service expected by purchasers of bridal wear. Accordingly,
we have developed a comprehensive training program for our personnel that is
supported by a training staff located at designated regional training stores.
This training staff focuses on the areas of product knowledge, sales techniques
and key elements of excellent service that we require. Management candidates for
a new store are typically hired approximately three to six months in advance.
During this period, a management candidate is expected to complete our formal
training program. In addition, the candidate is required to spend a considerable
amount of time in a store to gain experience in all facets of operations and
learn selling and management techniques appropriate for our stores. Management
candidates for existing stores must successfully complete a six week training
program before they assume store manager or assistant manager responsibilities.
Supplemental training is provided periodically to managers and assistant
managers.

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<PAGE> 35

CUSTOMER SERVICE

We strive to provide a level of service that exceeds our customers'
expectations. We believe that referrals are a principal source of new customers.
We have found that customers who are pleased with their experience are more
likely to refer others to our stores. They are also more likely to consider our
stores to satisfy their future special occasion needs.

Our principal customer service focus is the relationship between the
customer and her bridal consultant. Our bridal consultants typically have
experience in selling items requiring a high degree of interaction with the
customer and have completed our training program. They are expected to be highly
attentive to each customer's needs and to assist them throughout each stage of
the purchase process, from selecting a style to altering their gown. Since the
purchase decision may involve several visits to the store, bridal consultants
place follow-up telephone calls to customers to maintain contact with them and
thereby increase the likelihood of a return visit. After a purchase, bridal
consultants are expected to continue to contact customers to build an ongoing
relationship and enhance our ability to extend sales to the entire bridal party.

Other aspects of our operations underscore our commitment to customer
service. We also facilitate the availability of credit to our customers by
offering qualified customers a credit card from an independent financial
services company. This independent financial services company makes all credit
decisions, assumes all credit risk, processes all charge and credit slips, mails
statements and maintains account information.

LOCATIONS AND EXPANSION

As of January 2, 1999, we operated 77 stores in 29 states. Presently, we
lease 75 of these sites and own the other sites. In addition, we have entered
into lease agreements for the opening of 12 new stores. Two of our stores in
Texas are outlet stores.

<TABLE>
<S> <C> <C>
Alabama--1 Kentucky--1 North
Carolina--3
Arizona--1 Louisiana--1 Ohio--5
California--1 Maryland--2 Oklahoma--2
Colorado--2 Massachusetts--2 Pennsylvania--7
Connecticut--2 Michigan--3 South
Carolina--1
Delaware--1 Minnesota--2 Tennessee--3
Florida--7 Missouri--1 Texas--5
Georgia--3 Nevada--1 Virginia--3
Illinois--4 New Jersey--5 Wisconsin--1
Kansas--1 New York--6
</TABLE>

In determining store locations, we consider, among other things, the
population in a metropolitan market, marriage rates, household income levels and
the availability of suitable sites. We currently seek locations in high traffic
areas with convenient access to major commercial roads. We typically open stores
in larger strip centers with one or more larger and well-recognized tenants, in
stand-alone locations with high visibility and near regional shopping malls. We
believe that our strategy of selecting highly visible sites enables us to build
additional brand awareness.

Our store expansion strategy is to continue our geographic diversification
throughout the United States in markets that fit our expansion criteria and to
fill in certain existing markets. We plan to open approximately 18 stores in
each of fiscal 1999 and fiscal 2000 and have already opened one store in 1999.

Based upon our prior experience, we estimate that the net cost of opening a
prototype store, averaging approximately 10,000 square feet in size, is
approximately $625,000. This amount includes approximately $270,000 of
inventory, approximately $325,000 for leasehold improvements and fixtures, and
approximately

34
<PAGE> 36

$30,000 for pre-opening expenses. We expense our pre-opening expenses as they
are incurred. Our cost to open new stores will vary in the future. Our costs
will depend on factors such as local construction expenses, changes in store
format and tenant improvement allowances.

We continually evaluate our existing real estate positioning. Based on
demographic trends and shifts in traffic patterns, we may occasionally relocate
certain stores. In addition, as our store design evolves, some of our older,
smaller stores may be relocated and conformed to our new prototype. Three stores
were relocated in fiscal 1998 and we plan to relocate three stores in 1999.

Our headquarters are located in Ardmore, Pennsylvania and consist of
approximately 16,000 square feet. We have leased these offices through June
2000. We may move our headquarters to a larger facility within the next 12
months.

MARKETING

We employ a multi-tiered marketing strategy that uses magazines,
television, radio, newspaper and our internet website. We also actively use our
product catalog, which we make available to walk-in shoppers, mail directly to
potential customers and distribute at bridal fashion shows to reinforce the
breadth of our assortment and to facilitate sales.

Our industry research indicates that many brides-to-be purchase one or more
bridal magazines shortly after becoming engaged. We believe that we are among
the largest advertisers in two of the largest national bridal magazines. Our
extensive advertising in these magazines, which can consist of up to 30 pages
per magazine, enables us to showcase style, variety and value of our
merchandise. We believe that we are the only bridal retailer that advertises on
a national basis in these magazines. We also advertise in regional bridal
magazines in many of our markets. Because of the availability of customer
information and the ease of access to our target market through multi-media, we
are able to deploy our marketing dollars efficiently.

Television and radio advertising supplement our regional efforts. We
generally direct our television advertising to regional markets. In addition,
selected national television advertising is purchased to target audiences of
18-35 year old women. Radio advertising is utilized selectively, particularly in
areas where the cost of television advertising can be very expensive. Our radio
and television advertising further emphasizes our brand and enables us to
advertise special events, grand openings and sales. We believe that this
advertising provides a competitive advantage over most bridal retailers who do
not advertise on radio or television.

We also utilize direct mail to enhance brand awareness and promote select
events. A significant direct mail tool is our product catalog, which is mailed
to targeted lists of recently engaged brides-to-be. We obtain lists of potential
bridal and special occasion customers from our own bridal registry and from
lists that we purchase from regional bridal magazines and other third parties.
We distributed over 500,000 copies of our catalogs in fiscal 1998.

In December 1998, we launched our website, www.davidsbridal.com, which
allows customers to register with us online and subsequently receive information
on upcoming store events. On the website, customers can browse our catalog and
identify our store nearest to them using a state-by-state store locator.

Our public relations efforts are designed to emphasize our leadership role
in the bridal industry. Because we are the only national bridal chain, we are
often called on as an authority on bridal fashion and retailing trends. Our
spokespersons have made many television appearances during which they have
discussed current fashion trends for bridal and special occasion attire.

Additionally, we focus our marketing efforts on community, social,
educational, religious and cultural organizations. We cooperate with these
organizations by participating in local bridal and fashion shows, speaking
engagements on fashion trends and other special events.

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<PAGE> 37

DISTRIBUTION AND INVENTORY MANAGEMENT

In 1996, we opened our distribution center. This facility is located in
Conshohocken, Pennsylvania and was expanded from 30,000 to 54,000 square feet in
1998. More than half of our unit merchandise is shipped to our stores from this
facility. The remaining merchandise purchased by us is shipped directly from
suppliers to our retail stores. Shipments from the distribution center are made
five days a week via third party delivery services.

Our distribution center utilizes a management information system to
inspect, ticket and monitor shipments to our stores. The system facilitates the
timely delivery of store shipments and the accurate accounting and balancing of
inventory among stores. We are typically able to make gowns, dresses and other
products that are not in stock in a particular store available to customers
within 3-5 weeks of purchase, a much shorter time period than the 12-20 weeks
that we estimate is usual in our industry. Once a delivery arrives at a store,
inventory items are inspected, sorted and placed on the selling floor by
in-store personnel. We have been able to reduce the amount of inventory that we
must carry at our stores by using the distribution center to support merchandise
replenishment and our rapid fulfillment program for bridesmaid dresses.

We believe that we will need to continue to increase the use of our rapid
fulfillment program as we expand the breadth of our assortments. Accordingly,
our distribution center will increase in importance as a greater portion of our
sales are fulfilled from inventory in our distribution center. In early 1998, we
completed the development of an inventory replenishment system that is designed
to further improve service levels and turnover in various accessory categories.
This system, which is linked to our distribution center and our merchandise
systems, facilitates the replenishment of merchandise upon sale. During fiscal
1998, this system was used to replenish accessory items. We have recently
expanded the use of this system to replenish our bridal gowns and expect to
further expand the use of this system to replenish other products that are
back-stocked by our distribution center.

We lease our distribution facility under a lease that expires in December
2002. We have the option to renew this lease through December 2005. We believe
that our distribution center, which was expanded in March 1998, will be
sufficient to meet our expected needs for the next two to three years based on
our current expansion plans. However, we may add an additional distribution
center in another geographic region or require additional space in our current
facility.

MANAGEMENT INFORMATION SYSTEMS

We seek to maintain management information systems that provide high
quality information and that enable us to manage and control our business.

Our operational systems are based on an STS fully integrated retail system.
This system operates in a UNIX environment on an IBM RISC 6000 and supports all
major business functions including sales, purchase order management,
distribution, store transfer, inventory control, merchandise planning and
financial systems. At the store level, we utilize a point-of-sale system that
includes bar code scanning capability, price look-up and dial-up credit
authorization, check authorization and financing authorization. This system also
supports a number of non-sales functions including inventory receipt, store
transfer, markdown notification, return to vendor, UPC look up and style locator
function. Our management information system is integrated among all major
aspects of our business, including sales, warehousing, distribution, purchasing,
inventory control, merchandise planning and replenishment and financial systems.
Stores are polled nightly, which supports the analysis of detailed sales and
merchandise information. Our management information systems have also been
supplemented with systems tailored for us such as our special order and an STS
EnVue systems. EnVue provides a merchandise data warehouse that enables us to
better analyze and improve our merchandise performance.

We are expanding our current hardware and network infrastructure, including
the development of an improved inventory management communications
infrastructure and the creation of data warehouses for store, marketing and
customer information to improve controls and enhance sales and operational

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<PAGE> 38

capabilities. We also intend to upgrade our systems to accommodate certain
aspects of our planned marketing strategy and inventory management, including
the implementation of a new warehouse management system. We will also seek to
expand our store bridal registry information to enhance communications with
customers and target our promotions.

EMPLOYEES

We had a total of approximately 1,445 employees as of January 2, 1999.
Approximately 304 were part-time employees. None of our employees are covered by
collective bargaining agreements. We consider our relations with our employees
to be satisfactory.

LEGAL PROCEEDINGS

We are involved in litigation that we believe ordinarily accompanies a
retail business. We do not believe that any of our pending or threatened
litigation will result in an outcome that would materially adversely affect our
business.

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<PAGE> 39

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table provides information regarding our directors and
executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Steven H. Erlbaum......................... 50 Chairman of the Board
Robert D. Huth............................ 53 Chief Executive Officer, President and
Director
Philip Youtie............................. 50 Executive Vice President, Bridal Product
Development/Sourcing
Edward S. Wozniak......................... 53 Senior Vice President and Chief Financial
Officer
Marlene Karp.............................. 48 Senior Vice President, General Merchandise
Manager
Kathy L. Kennedy.......................... 43 Senior Vice President, Sales
Fred A. Postelle.......................... 53 Senior Vice President, Human Resources
Gary E. Erlbaum........................... 54 Secretary, Treasurer and Director
Michael C. Erlbaum........................ 53 Director
Robert B. Calhoun, Jr. ................... 56 Director
Steven J. Sidewater....................... 55 Director
Andrew R. Taussig......................... 46 Director
</TABLE>

Prior to this offering, Steven H. Erlbaum served as our Chairman and Chief
Executive Officer. Upon consummation of this offering, Robert D. Huth, who has
been primarily responsible for running our day-to-day operations and has served
as our President and Chief Operating Officer since joining us in 1995, will
become our Chief Executive Officer and President. Steven H. Erlbaum will
continue as our Chairman of the Board and become a consultant to our business.

Steven, Gary and Michael Erlbaum are brothers. There are no other family
relationships among the directors and executive officers.

Prior to the completion of this offering, we intend to amend our articles
of incorporation to divide our board of directors into three classes, with each
director to serve for a three-year term. Steven J. Sidewater, Michael C. Erlbaum
and Andrew R. Taussig are each expected to serve for a term ending at the annual
meeting of shareholders held in 2000. Robert B. Calhoun, Jr. and Gary E. Erlbaum
are each expected to serve for a term ending at the annual meeting of
shareholders held in 2001. Robert D. Huth and Steven H. Erlbaum are each
expected to serve for a term ending at the annual meeting of shareholders held
in 2002. To the extent there is an increase in the number of directors, we will
distribute the additional directorships so that, as nearly as possible, each
class will consist of an equal number of directors.

Our current directors and executive officers, along with their backgrounds,
are as follows:

Steven H. Erlbaum has been our Chairman of the Board and Chief Executive
Officer since 1990 and is a co-founder of David's Bridal. Mr. Erlbaum is also a
private investor in real estate and other private business ventures and was a
founder of Mr. Goodbuys, a chain of home improvement retail stores.

Robert D. Huth has been our President, Chief Operating Officer and one of
our directors since July 1995. Mr. Huth has been primarily responsible for
running our day-to-day operations since joining us in 1995. Prior to joining us,
from 1987 to 1995, Mr. Huth was the Executive Vice President and Chief Financial
Officer of Melville Corporation, a specialty retailer operating diversified
businesses. Mr. Huth also served on the Melville Board of Directors. From 1971
to 1987, Mr. Huth practiced accounting at KPMG Peat Marwick where he became a
partner in 1981. Mr. Huth also serves on the Board of Directors of Stage Stores,
Inc.

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<PAGE> 40

Philip Youtie has been our Executive Vice President of Bridal Product
Development/Sourcing since 1990. Mr. Youtie was our co-founder in 1990. Prior to
our founding, Mr. Youtie was President of David's by Minerva, a chain of bridal
shops based in Florida. Mr. Youtie was First Vice President and co-founder of
the Bridal Marketing Association of America and has served on the advisory panel
of Modern Bride magazine.

Edward S. Wozniak has been our Senior Vice President and Chief Financial
Officer since April 1998. Mr. Wozniak was Senior Vice President, Chief
Administrative Officer of Things Remembered, Inc., a subsidiary of Cole National
Corporation, from November 1996 through April 1998. Mr. Wozniak served as Vice
President, Chief Financial Officer and Secretary of Egghead, Inc., a computer
software and hardware provider, from May 1996 to November 1996. From 1990
through April 1996, Mr. Wozniak was employed by Thom McAn Shoe Company, a
division of Melville Corporation, most recently as Senior Vice President and
Chief Financial Officer.

Marlene Karp has been our Senior Vice President, General Merchandise
Manager since July 1996. Previously, Ms. Karp served as General Merchandise
Manager for the retail outlet division of Spiegel, Inc. from June 1995 until
July 1996. Ms. Karp was the Divisional Merchandise Manager for Spiegel's retail
outlet division from September 1993 through June 1995. From March 1989 through
April 1992, Ms. Karp was Divisional Merchandise Manager at Mervyn's.

Kathy L. Kennedy has been our Senior Vice President, Sales since January
1996. From 1986 through January 1996, Ms. Kennedy held various positions with
Casual Corner and Group, including Regional Director from 1994 to 1996, Regional
Manager from 1990 to 1994, and District Manager from 1986 to 1990.

Fred A. Postelle has been our Senior Vice President, Human Resources since
July 1998. From September 1995 through July 1998, Mr. Postelle served as a human
resources consultant to us. Prior to joining us, Mr. Postelle served as Senior
Vice President, Human Resources of Woodward & Lothrop/ John Wanamaker in
Washington, D.C. from January 1995 through September 1995. From 1993 to 1995,
Mr. Postelle served as Senior Vice President, Human Resources at Goody's Family
Clothing and from 1990 through 1993, he was Vice President, Corporate Human
Resources at Melville Corporation.

Gary E. Erlbaum has been our Secretary and one of our directors since
August 1992. Since 1983, Mr. Erlbaum has been involved in real estate and other
business ventures. Mr. Erlbaum is also a director and a member of the executive
committee of DBT Online, Inc., an on-line provider of database services. Mr.
Erlbaum also serves as a director of several privately owned companies.

Michael C. Erlbaum has been one of our directors since January 1994. Mr.
Erlbaum has been the President of Floors, USA, a retail floor covering chain,
since 1976. Mr. Erlbaum is also the President of MCE Associates, a real estate
firm.

Robert B. Calhoun, Jr. has been one of our directors since July 1995. Mr.
Calhoun is a founder and has been a Managing Director of Monitor Clipper
Partners, Inc. since its formation in June 1997. Mr. Calhoun also founded The
Clipper Group, L.P. in 1990 and has served as its President since such date.
Prior to forming The Clipper Group, Mr. Calhoun was a Managing Director of
Credit Suisse First Boston Corporation, which he had joined in 1965. Mr. Calhoun
also serves on the boards of directors of Avondale Incorporated, Hvide Marine,
Inc., Interstate Bakeries, Inc. and TravelCenters of America, Inc., as well as
several privately-held companies.

Steven J. Sidewater has been one of our directors since August 1992. Mr.
Sidewater is currently President of RP Management, a real estate holding and
management company, a position he has held since June 1991. Mr. Sidewater served
in various capacities at Charming Shoppes, Inc. for approximately 25 years,
including President, Chief Operating Officer and Vice Chairman of the Board of
Directors from 1988 through 1990.

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<PAGE> 41

Andrew R. Taussig has been one of our directors since July 1995. Since
1987, Mr. Taussig has been a Managing Director of Credit Suisse First Boston
Corporation, a firm that he joined in 1982. Prior to joining the firm, Mr.
Taussig was a corporate attorney at Willkie, Farr & Gallagher.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board of directors has a compensation committee comprised of Steven H.
Erlbaum, Steven J. Sidewater and Robert B. Calhoun, Jr. The compensation
committee is responsible for the administration of all salary and incentive
compensation plans for all of our officers, including bonuses and options
granted under our stock option plan. Within 90 days following the consummation
of this offering, we plan to elect an audit committee consisting of at least two
independent directors. It is anticipated that the audit committee will be
responsible for reviewing with our management our financial controls and
accounting and reporting activities. In addition, the audit committee will
review the qualifications of our independent auditors, make recommendations to
our board of directors regarding the selection of independent auditors, review
the scope, fees and results of any audit and review any non-audit services and
related fees.

DIRECTOR COMPENSATION

We will reimburse our directors for out-of-pocket expenses incurred in
connection with their rendering of services as directors. We also intend to pay
cash fees or grant stock options to non-management directors for attendance at
meetings, in such amounts as may be determined by our board of directors from
time to time. In addition, effective upon the consummation of this offering,
Steven H. Erlbaum will continue as Chairman of the Board and become a consultant
to us for a three year term. He will be paid a consulting fee in each of the
first two years of $425,000. In addition, he will receive a fee of $200,000 for
the third year. Gary E. Erlbaum has assisted us, and will continue to assist us,
in bank financing, real estate matters and as a liaison with legal counsel. He
has received aggregate cash compensation of $60,600 in fiscal 1997 and $68,748
in fiscal 1998. We intend to continue compensating Gary E. Erlbaum for his
services.

EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation paid by
us to our chief executive officer and our four other most highly compensated
executive officers (the "named executive officers") for services rendered to us
during fiscal 1998.

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<PAGE> 42

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ALL OTHER
ANNUAL COMPENSATION COMPENSATION(A)
-------------------------------------------------------------------
OTHER ANNUAL
NAME AND POSITION YEAR SALARY($) BONUS($) COMPENSATION($)
<S> <C> <C> <C> <C> <C>
Steven H. Erlbaum.............. 1998 $425,000 -- $ 924
Chairman of the Board and
Chief Executive Officer
Robert D. Huth................. 1998 400,000 -- 985
President and Chief Operating
Officer
Philip Youtie.................. 1998 183,000 (b) -- 518
Executive V.P. Bridal Product
Development/Sourcing
Marlene Karp................... 1998 177,300 (b) 40,470 1,000
Senior V.P., General
Merchandise Manager
Kathy L. Kennedy............... 1998 153,650 (b) -- 1,000
Senior V.P., Sales
</TABLE>

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

(a) Represents our contributions for the account of the named executive officers
under the David's Bridal 401(k) Plan and Trust.

(b) While we anticipate that we will be paying a bonus to Mr. Youtie, Ms. Karp
and Ms. Kennedy, we have not yet determined the amount of the bonus.

Effective on the date of this prospectus, we expect to grant options to
purchase shares of our common stock to Steven Erlbaum, and options to
purchase shares of our common stock to Robert Huth, each at an exercise
price equal to the price at which shares of our common stock are sold in this
offering.

The following table contains information regarding stock options held at
the end of the last fiscal year end by our Chief Executive Officer and our other
named executive officers, none of whom were granted any stock options in fiscal
1998. The value of unexercised in-the-money options is based upon the offering
price set forth on the cover page of this prospectus.

FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT JANUARY 2, 1999 OPTIONS AT JANUARY 2, 1999
-------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Steven H. Erlbaum................... -- -- -- --
Robert D. Huth...................... 300,000 -- --
Philip Youtie....................... -- -- -- --
Marlene Karp........................ 23,000 12,000 --
Kathy L. Kennedy.................... 35,000 -- --
</TABLE>

STOCK OPTION PLAN

Under our stock option plan, our designated employees or consultants and
non-employee members of our board of directors may receive grants of incentive
stock options and nonqualified stock options. The aggregate number of shares of
our common stock that may be issued under the stock option plan is 1,000,000
shares. As of January 2, 1999, options to purchase 970,000 shares were
outstanding under the stock option plan. Employees may receive incentive stock
options or nonqualified stock options under the stock option plan. Non-employee
directors and consultants may receive nonqualified stock options. If options
terminate or expire, the shares attributable to such grants may again be subject
to grants under the

41
<PAGE> 43

stock option plan. The stock option plan will terminate on September 30, 2005,
unless sooner terminated pursuant to its terms.

The stock option plan is currently administered by the compensation
committee of our board. Grants made by the committee are subject to ratification
by the board of directors and the board may require ratification of other
committee action.

The option price of an option may be equal to, greater than or less than
the fair market value of a share of common stock on the date of grant, provided
that (1) the option price of an incentive stock option may not be less than the
fair market value of a share of common stock on the date of grant and (2) an
incentive stock option that is granted to a person who owns more than 10% of our
stock or a subsidiary must have an option price of not less than 110% of the
fair market of the common stock on the date of grant.

The committee determines the term of each option, which cannot exceed ten
years from the date of grant. However, an incentive stock option granted to a
10% shareholder may not have a term longer than five years from the date of
grant.

Unless the committee determines otherwise, upon a change of control where
we are not the surviving corporation, outstanding options will be assumed by the
surviving corporation and will continue to vest following the change of control.
In other cases, unless the committee determines otherwise, outstanding options
will automatically vest in full in the event of a change of control.
Alternatively, in the event of a change of control, the committee may require
that grantees surrender their outstanding options in exchange for payment by us,
in cash or common stock, of an amount equal to the amount by which the fair
market value of the common stock exceeds the option price.

A change of control will be deemed to occur if (1) any person acquires
securities representing more than 50% of the voting power of our then
outstanding securities or (2) the shareholders approve an agreement providing
for (x) a merger or consolidation where our shareholders immediately before the
transaction will not hold, immediately after the transaction, more than 50% of
the stock of the surviving corporation and where, immediately after the
transaction, persons who were our directors immediately before the transaction
do not constitute a majority of the board of the surviving corporation, (y) a
sale of substantially all of our assets or (z) a liquidation or dissolution of
our company.

EMPLOYMENT AND CONSULTING AGREEMENTS

We have entered into an employment agreement with Philip Youtie. The
principal terms of the employment agreement are as follows:

- Term: Two years from the date of this prospectus.

- Base Salary: $200,000 in the first year, $210,000 in the second year.

- Bonus: eligible for an annual bonus in accordance with our bonus plan.

- Severance: in the event of termination of Mr. Youtie by us without cause,
we will continue to pay Mr. Youtie's salary for the lesser of 12 months
or the remaining term of the employment agreement.

Mr. Youtie has also agreed to certain non-competition and non-solicitation
covenants.

We expect to enter into an employment agreement with Mr. Huth and a
consulting agreement with Mr. Steven Erlbaum prior to the commencement of the
offering.

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<PAGE> 44

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SALES OF CLASS D PREFERRED STOCK

On August 15, 1997, pursuant to the terms of a series of subscription
agreements, we sold an aggregate of 686,402 shares of class D preferred stock
for an aggregate purchase price of $5.0 million or $7.25 per share. These shares
were sold to the certain of our existing shareholders, including 448,651 shares
to The Clipper Group, an aggregate of 69,842 shares that are beneficially owned
by Steven J. Sidewater, 36,371 shares to Michael C. Erlbaum and 24,317 shares
that are beneficially owned by Gary E. Erlbaum. Each outstanding share of class
D preferred stock will automatically convert upon the consummation of this
offering into shares of common stock, or an aggregate of shares of
common stock.

MDR ASSOCIATES

In December 1997, we purchased a one-third interest in MDR Associates LLC
("MDR") for $460,000. We borrowed this amount from Gary E. Erlbaum which loan
was evidenced by a demand note that bore interest at 7.75%, and was repaid in
full in January 1998. MDR owns a one-eighth interest in an aircraft. We made
this investment to facilitate travel between our locations. On November 23,
1998, Steven H. Erlbaum and Gary E. Erlbaum repurchased our interest in MDR and
reimbursed us for all expenses relating to MDR paid by us since December 1997.
After such purchase, each of Steven H. Erlbaum, our Chief Executive Officer and
Chairman of the Board, and Gary E. Erlbaum, a director, individually own a
one-half interest in MDR and each is also responsible for one-half of such
expenses allocated to MDR.

FLOORS USA

During fiscal 1997 and fiscal 1998 we purchased an aggregate of $159,056
and $297,217 in leasehold improvements from Floors USA. Michael C. Erlbaum, is
the controlling shareholder of Floors USA.

RELATED PARTY TRANSACTIONS

Our board of directors has adopted a policy that we will not enter into any
related-party transactions unless they are approved by the disinterested members
of the Board and are on terms that are representative of the terms that are
available from non-affiliated third-parties.

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<PAGE> 45

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock by:

- Our chief executive officer, our four other most highly compensated
executive officers and our directors

- Each selling shareholder

- All directors and executive officers as a group

- Each person known to us to own beneficially more than 5% of our
outstanding shares

A person has beneficial ownership of shares if he has the power to vote or
dispose of the shares. This power can be exclusive or shared, direct or
indirect. In addition, a person beneficially owns shares underlying options that
are presently exercisable or will become exercisable within 60 days of the date
of this prospectus.

As of January 2, 1999, there were 6,612,262 shares of our common stock,
outstanding. To calculate a shareholder's percentage of beneficial ownership, we
must include in the numerator and denominator those shares underlying options
beneficially owned by that shareholder. Options held by other shareholders,
however, are disregarded in this calculation. Therefore, the denominator used in
calculating beneficial ownership among our shareholders may differ.

The table below assumes that the underwriters' have not exercised their
over-allotment option. Beneficial ownership prior to this offering does not give
effect to the for common stock split to be effected on
, 1999. In addition, the symbol "*" means that the percentage is
less than 1.0%.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP NUMBER OF BENEFICIAL OWNERSHIP
PRIOR TO OFFERING SHARES AFTER OFFERING
--------------------- TO BE SOLD ---------------------
NAME SHARES PERCENT* IN THIS OFFERING SHARES PERCENT*
<S> <C> <C> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Steven H. Erlbaum(a).................. 2,198,750 19.46%
Philip Youtie(b)...................... 1,040,733 9.21%
Gary E. Erlbaum(c).................... 1,128,452 9.99%
Michael C. Erlbaum(d)................. 497,899 4.41%
Robert D. Huth(e)..................... 300,000 2.59%
Steven J. Sidewater(f)................ 703,719 6.23%
Andrew R. Taussig(g).................. 150,000 1.31%
Marlene Karp(h)....................... 23,000 *
Kathy L. Kennedy(i)................... 35,000 *
Robert B. Calhoun, Jr.(j)............. -- *
All executive officers and directors
as a group (10 persons)(k).......... 6,077,553 51.48%
FIVE PERCENT HOLDERS
The Clipper Group(l).................. 4,448,651 39.37%
</TABLE>

44
<PAGE> 46

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP NUMBER OF BENEFICIAL OWNERSHIP
PRIOR TO OFFERING SHARES AFTER OFFERING
--------------------- TO BE SOLD ---------------------
NAME SHARES PERCENT* IN THIS OFFERING SHARES PERCENT*
<S> <C> <C> <C> <C> <C>
OTHER SELLING SHAREHOLDERS
The Vederman Family Partnership....... 316,949 2.81%
Jon Erlbaum........................... 31,100 *
Marc Erlbaum.......................... 31,100 *
Daniel Erlbaum(m)..................... 31,100 *
Michael Moore......................... 66,510 *
Shelly Shapiro(n)..................... 133,020 1.18%
Mordechai Kafry(o).................... 93,300 *
First Union Corporation............... 300,000 2.66%
Addwood Limited(p).................... 137,930 1.22%
Eileen Rae Winkler Youtie, Custodian
for Haleigh R. Youtie............... 73,809 *
Eileen Rae Winkler Youtie, Custodian
for Maxwell Evan Youtie............. 89,809 *
</TABLE>

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

(a) Mr. Steven Erlbaum is our Chairman and Chief Executive Officer. His address
is 44 West Lancaster Avenue, Suite 250, Ardmore, Pennsylvania 19003.
Includes 305,799 shares of common stock held by Steven Erlbaum as Trustee
for Adam Erlbaum.

(b) Mr. Youtie is our Executive Vice President, Bridal Product Development
Servicing. His address is 44 West Lancaster Avenue, Suite 250, Ardmore,
Pennsylvania 19003. Includes 9,690 shares of common stock held by Philip
Youtie as custodian for Haleigh Youtie, 1,379 shares of common stock held by
Philip Youtie as custodian for Maxwell Youtie. Excludes 73,809 shares of
common stock held by Eileen Youtie as custodian for Haleigh Youtie and
89,809 shares of common stock held by Eileen Youtie as custodian for Maxwell
Youtie. Mr. Youtie disclaims beneficial ownership of the shares held by
Eileen Youtie as custodian for each of Haleigh Youtie and Maxwell Youtie.

(c) Includes 103,267 shares of common stock, and 24,317 shares of Class D
Preferred Stock held by the Erlbaum Family LP and excludes 93,300 shares
held by Mr. Gary Erlbaum's three children. Mr. Gary Erlbaum is the President
of the general partner of the Erlbaum Family LP. Mr. Gary Erlbaum disclaims
beneficial ownership of the shares held by his children. Includes 131,428
shares of common stock held by Michael Erlbaum and Gary Erlbaum as Trustees
under the Agreement of Trust of S.H. Erlbaum. Mr. Gary Erlbaum's address is
44 West Lancaster Avenue, Suite 250, Ardmore, Pennsylvania 19003. Mr. Gary
Erlbaum is our Secretary and Treasurer and is a member of our board of
directors.

(d) Includes 114,000 shares of common stock held by the MCE Family Limited
Partnership. Mr. Michael Erlbaum is the general partner of the MCE Family
Limited Partnership. Includes 131,428 shares of common stock held by Michael
Erlbaum and Gary Erlbaum as Trustees under the Agreement of Trust of S.H.
Erlbaum. Mr. Michael Erlbaum is a member of our board of directors.

(e) Represents 300,000 shares of common stock underlying presently exercisable
options. Mr. Huth has a .155% interest in the shares of our stock owned by
The Clipper Group, and disclaims beneficial interest in the shares owned by
The Clipper Group other than .155% of these shares. Mr. Huth is our
President and Chief Operating Officer, and is a member of our board of
directors.

(f) Includes (i) 135,845 shares of common stock held by Steven J. Sidewater,
Wendy Sidewater and Peter Sidewater as Trustees of the Grantor Retained
Annuity Trust of Steven J. Sidewater and (ii) 135,845 shares of common stock
held by SPWJ Associates, L.P. Mr. Sidewater is the general partner of SPWJ
Associates, L.P. Includes 22,619 shares of common stock and 2,306 shares of
class D preferred stock held by the Wendy Sidewater Trust Under Deed, 22,619
shares of common stock and 2,306 shares of class D preferred stock held by
the Peter Sidewater Trust Under Deed and 316,949 shares of common stock and
34,922 shares of class D preferred stock held by the Nancy Sidewater Trust
Under Deed. Mr. Sidewater is a member of our board of directors.

(g) Represents 150,000 shares of common stock underlying presently exercisable
options. Mr. Taussig has a .186% interest in the shares of our stock owned
by The Clipper Group, and disclaims beneficial interest in the shares owned
by The Clipper Group other than .186% of these shares.

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<PAGE> 47

(h) Represents 23,000 shares of common stock underlying presently exercisable
options. Ms. Karp is our Senior Vice President, General Merchandise Manager.

(i) Represents 35,000 shares of common stock underlying presently exercisable
options. Ms. Kennedy is our Senior Vice President, Sales.

(j) Excludes 4,448,651 shares of common stock held by The Clipper Group. Mr.
Calhoun is the sole shareholder and a director of the ultimate general
partner of The Clipper Group and is deemed to beneficially own all shares of
common stock beneficially owned by The Clipper Group. Mr. Calhoun is a
member of our board of directors.

(k) Includes 508,000 shares of common stock underlying presently exercisable
options.

(l) Includes shares beneficially owned by Clipper/Merchant Partners, L.P.,
Clipper Equity Partners I, L.P., Clipper/ Merban, L.P., and Clipper Capital
Associates, L.P. Clipper Suisse First Boston Merchant Investment 1995/1996,
L.P. and Clipper/European Re, L.P. The address for each of these entities is
650 Madison Avenue, New York, New York 10022. Clipper Capital Associates,
L.P. is the general partner of all of The Clipper Group partnerships. The
general partner of Clipper Capital Associates, L.P. is Clipper Capital
Associates, Inc. Robert B. Calhoun is the sole shareholder and a director of
Clipper Capital Associates, Inc. As a result, each of Mr. Calhoun, Clipper
Capital Associates, L.P. and Clipper Capital Associates, Inc. is deemed to
beneficially own all shares of common stock beneficially owned by The
Clipper Group.

(m) Mr. Daniel Erlbaum is employed by us.

(n) Mr. Shapiro is employed by us.

(o) Mr. Kafry is a principal owner of Addwood Limited, our Hong Kong joint
venture partner.

(p) Addwood Limited is our Hong Kong joint venture partner.

46
<PAGE> 48

DESCRIPTION OF CAPITAL STOCK

The following summarizes the terms of our common stock you will receive in
this offering. Please read our Articles of Incorporation, which are included as
an exhibit to the Registration Statement of which this prospectus is a part.

OUR AUTHORIZED CAPITAL STOCK

- million shares of common stock, par value $0.01 per share;

- million shares of preferred stock, par value $0.01 per share;

- Immediately after the sale of the shares of common stock in this
offering, we will have shares of common stock outstanding and
no shares of preferred stock outstanding.

COMMON STOCK

Voting:

- One vote for each share held of record on all matters submitted to a vote
of shareholders;

- No cumulative voting rights;

- Election of directors by plurality of votes cast; and

- All other matters by majority of the votes cast.

Dividends:

- Subject to preferential dividend rights of outstanding shares of
preferred stock, common shareholders are entitled to receive ratably
declared dividends; and

- The Board may only declare dividends out of legally available funds.

Additional Rights:

- Subject to the preferential liquidation rights of outstanding shares of
preferred stock, common shareholders are entitled to receive ratably net
assets (available after payment of debts and other liabilities) upon our
liquidation, dissolution or winding up;

- No preemptive rights;

- No subscription rights;

- No redemption rights;

- No sinking fund rights; and

- No conversion rights.

The rights and preferences of common shareholders are subject to the rights of
any class of preferred stock we may issue in the future.

PREFERRED STOCK

By resolution of the Board of Directors, we may, without any further vote
or action by our shareholders, authorize and issue, subject to certain
limitations prescribed by law, an aggregate of 20 million shares of preferred
stock. The preferred stock may be issued in one or more classes or class. With
respect to any classes or class, the Board may determine the designation and the
number of shares, preferences, limitations and special rights, including
dividend rights, conversion rights, voting rights, redemption rights and
liquidation preferences. Because of the rights that may be granted, the issuance
of preferred stock may delay, defer or prevent a change of control.

47
<PAGE> 49

Prior to this offering, we had 171,792 shares of Class A preferred stock,
114,104 shares of Class B preferred stock, 114,104 shares of Class C preferred
stock and 686,402 shares of Class D preferred stock issued and outstanding. Upon
the consummation of this offering, all of our outstanding shares of preferred
stock will convert into an aggregate of shares of common stock.

FLORIDA ANTI-TAKEOVER LAWS AND CERTAIN PROVISIONS OF OUR ARTICLES OF
INCORPORATION

Certain provisions of the Florida Business Corporation Act and our Articles
of Incorporation, which are described below, could make it more difficult for a
third party to acquire control of us, even if such change of control would be
beneficial to the shareholders.

Section 607.0901 of the Florida Business Corporation Act generally requires
that, in merger, consolidation, certain asset sales or other specified
transactions between an "interested shareholder" (or an affiliate of the
interested shareholder) and a Florida public corporation, all of the
shareholders receive an amount equal to the greater of:

1) the highest price per share, including brokerage commissions and
certain other fees, paid by the interested shareholder for any shares
acquired by it (the "Highest Per Share Price") within the two-year period
immediately preceding the date on which it became an interested shareholder
or the announcement date of the transaction, whichever is higher;

2) the fair market value per share on the date on which it became an
interested shareholder or the announcement date of the transaction,
whichever is higher, or

3) the fair market value per share determined under (2) above,
multiplied by the ratio of the Highest Per Share Price within the two year
period immediately preceding the announcement date of the transaction to
the fair market value per share on the date of the interested shareholder's
first share acquisition during such two year period.

An "interested shareholder" is generally defined as a person that owns more than
10 percent of the voting shares of a corporation. The "fair market value" per
share generally means the highest closing sale price during the immediately
preceding 30-day period. The fair price provisions do not apply:

1) to a transaction approved by two-thirds of the shareholders other
than the interested shareholder;

2) to a transaction approved by a majority of the directors who are
not affiliated with the interested shareholder;

3) to a corporation which has not had more than 300 shareholders of
record at any time during the preceding three years;

4) if the interested shareholder has owned at least 80 percent of the
outstanding shares for at least five years; or

5) if the interested shareholder owns at least 90 percent of the
outstanding shares other than shares acquired from the corporation.

Section 607.0902 of the Florida Business Corporation Act generally provides
that, in the event any person acquires a control share, which is defined as 20
percent or more of the outstanding voting shares of a Florida public
corporation, all of the shares acquired by the acquiror within 90 days before
and after the date on which the acquiror reached the 20 percent threshold will
not have voting rights, unless the remaining disinterested shareholders approve
voting rights for such shares by a majority vote at a special meeting called for
that purpose. In addition to the 20 percent threshold, a control share
acquisition also takes place when an acquiror acquires 33 1/3 percent and 50
percent of the voting shares of a corporation. Among other things, the voting
disqualification provisions do not apply to:

1) the acquisition of shares of a corporation which has been approved
in advance by the board of directors of the corporation;

48
<PAGE> 50

2) a merger or share exchange effected in compliance with the Florida
corporate laws; or

3) a corporation with neither 10 percent of its shareholders resident
in Florida, 10 percent of its shares owned by Florida residents nor 1,000
shareholders resident in Florida.

If the control shares are a majority of the outstanding shares and are accorded
full voting rights by the disinterested shareholders, all of the disinterested
shareholders will have dissenters' rights to receive in cash from the
corporation the fair value of their shares. Fair value of the shares cannot be
less than the highest price paid per share by the acquiror in the control share
acquisition.

Our Articles of Incorporation provide that shareholders may call special
meetings of the Board of Directors only if the holders of at least 20 percent of
all votes entitled to be cast on any issue proposed to be considered at the
meeting make a demand. In addition, the Articles of Incorporation provide that
shareholders must act at a meeting and not by written consent. The Articles of
Incorporation also provide for a classified board. See "Management--Executive
Officers and Directors".

REGISTRATION RIGHTS

Holders of shares of common stock, including The Clipper Group,
Steven H. Erlbaum, Gary E. Erlbaum, Philip Youtie, Michael C. Erlbaum and Steven
J. Sidewater, have been granted certain registration rights. These rights are
provided under the terms of the registrable securities and agreements between us
and the holders of such securities. Such agreements and registrable securities
provide, in certain instances, demand registration rights. In particular, the
Clipper Group may demand that we register their shares on not more than three
occasions, in which event the holders of an additional shares of
common stock would have certain rights to participate in the registration. In
addition, pursuant to these agreements, the holders are entitled, subject to
certain limitations, to require us to include their registrable securities in
future registration statements we file under the Securities Act of 1933. The
holders of shares of common stock have certain piggyback registration rights,
subject to reduction in the discretion of an underwriter. Registration of shares
of common stock pursuant to the exercise of demand registration rights or
piggyback registration rights would result in such shares becoming freely
tradable without restriction under the Securities Act of 1933 immediately upon
the effectiveness of such registration and may adversely affect our stock price.

TRANSFER AGENT

The transfer agent for our common stock is Bank of New York.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our common stock in the public market
following this offering could adversely affect the market price of our common
stock and adversely affect our ability to raise capital at a time and on terms
favorable to us.

Of the shares to be outstanding after this offering (assuming
that the underwriters do not exercise their over-allotment option), the
shares of common stock offered hereby and an additional
shares of common stock will be freely tradeable without restriction in the
public market unless such shares are held by "affiliates," as that term is
defined in Rule 144 under the Securities Act of 1933. The remaining shares of
common stock to be outstanding after this offering are "restricted securities"
under the Securities Act of 1933 and may be sold in the public market upon the
expiration of certain holding periods under Rule 144, subject to the volume,
manner of sale and other limitations of Rule 144.

In addition, as of , 1999, there were options to purchase
shares of common stock, of which options were fully vested
and exercisable. An additional shares were reserved for issuance under
our stock option plan. We intend to register the shares of common stock issued,
issuable or reserved for issuance under the plan as soon as practicable
following the date of this prospectus.

49
<PAGE> 51

Holders of shares of common stock and holders of shares
of common stock issuable upon conversion of preferred stock, assuming an initial
public offering price of $ per share, are entitled to registration rights
with respect to such shares for resale under the Securities Act. If such
holders, by exercising their registration rights, cause a large number of shares
to be registered and sold in the public market, will likely cause an adverse
effect on the market price for our common stock. These registration rights may
not be exercised prior to the expiration of 180 days from the date of this
prospectus. See "Description of Capital Stock--Registration Rights."

LOCK-UP ARRANGEMENTS

Along with our officers and directors and all of the holders of the
preferred stock we have agreed not to sell or otherwise dispose of any shares of
common stock for a period of 180 days after the date of this prospectus without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.

After the completion of this offering, we intend to file a Registration
Statement on Form S-8 under the Securities Act to register shares of
common stock reserved for issuance under our stock option plan.

50
<PAGE> 52

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement dated
, 1999 the underwriters named below, who are
represented by Donaldson, Lufkin & Jenrette Securities Corporation, Legg Mason
Wood Walker, Incorporated and Morgan Stanley & Co. Incorporated have severally
agreed to purchase from the selling shareholders the respective number of shares
set forth opposite their names below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Morgan Stanley & Co. Incorporated...........................
Legg Mason Wood Walker, Incorporated........................
TOTAL.............................................
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters by their counsel and
to certain other conditions. The underwriters are obligated to purchase and
accept delivery of all the shares (other than those shares covered by the
over-allotment option described below) if they purchase any of the shares.

The underwriters initially propose to offer some of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to certain dealers at the public offering
price less a concession not in excess of $ per share. The underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per
share on sales to certain other dealers. After the initial offering of the
shares to the public, the representatives may change the public offering price
and such concessions at any time without notice.

The selling shareholders have granted the underwriters an option,
exercisable for 30 days from the date of this prospectus, to purchase, from time
to time, in whole or in part, up to additional shares at the public
offering price less the underwriting fees. The underwriters may exercise such
option solely to cover overallotments, if any, made in connection with this
offering. To the extent that the underwriters exercise such option, each
underwriter will become obligated, subject to certain conditions, to purchase a
number of additional shares approximately proportionate to such underwriter's
initial purchase commitment.

The following table shows the underwriting fees to be paid to the
underwriters by the selling shareholders in connection with this offering. These
amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase additional shares of common stock.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
<S> <C> <C>
Per Share................................................... $ $
Total....................................................... $ $
</TABLE>

We and the selling shareholders have agreed to indemnify the underwriters
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or to contribute to payments that the underwriters may be required
to make in respect of any of those liabilities.

The Underwriters have reserved for sale, at the initial public offering
price, up to shares of the common stock for employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing such shares of common stock in this offering. The number of shares of
common stock available for sale to the general public in this offering will be
reduced to the extent such persons purchase the reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same terms as the other shares offered hereby.

DLJdirect Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation and a member of the selling group, is facilitating the distribution
of the shares sold in this offering over the Internet. The

51
<PAGE> 53

underwriters have agreed to allocate a limited number of shares to DLJdirect
Inc. for sale to brokerage account holders.

We and our executive officers and directors and certain of our shareholders
(including the selling shareholders) have agreed that, for a period of 180 days
from the date of this prospectus, they will not, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation: (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of common stock or any securities convertible into or exercisable or
exchangeable for common stock; or (2) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any common stock (regardless of whether any of the transactions
described in clause (1) or (2) is to be settled by the delivery of common stock,
or such other securities, in cash or otherwise). In addition, during such
period, we have also agreed not to file any registration statement with respect
to, and each of our executive officers and directors and certain of our
shareholders (including the selling shareholders) have agreed not to make any
demand for, or exercise any right with respect to, the registration of any
shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation.

We intend to make application to list our common stock on the New York
Stock Exchange under the symbol "DBR".

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

Other than in the United States, no action has been taken by us, the
selling shareholders or the underwriters that would permit a public offering of
the shares of common stock included in this offering in any jurisdiction where
action for that purpose is required. The shares included in this offering may
not be offered or sold, directly or indirectly, nor may this prospectus or any
other offering material or advertisement in connection with the offer and sale
of any such shares be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
this offering and the distribution of this prospectus. This prospectus is not an
offer to sell or a solicitation of an offer to buy any shares of common stock
included in this offering in any jurisdiction where that would not be permitted
or legal.

In connection with this offering, certain underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of common stock in the open market to cover such syndicate
short position or to stabilize the price of the common stock. These activities
may stabilize or maintain the market price of the common stock above independent
market levels. The underwriters are not required to engage in these activities,
and may end any of these activities at any time.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock was
determined by negotiation among us, the selling shareholders and the
representatives of the underwriters. Among the factors considered in determining
the public offering price were:

- prevailing market conditions;

- our results of operations in recent periods;

- the present stage of our development;

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<PAGE> 54

- the market capitalization and stages of development of other companies
which the representatives of the underwriters believe to be comparable
to us; and

- estimates of our business potential.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for us
by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania and Miami, Florida.
Certain legal matters in connection with this offering will be passed upon for
the Underwriters by Davis Polk & Wardwell, New York, New York.

EXPERTS

Our consolidated financial statements as of January 3, 1998 and January 2,
1999 and for the fiscal years ended January 4, 1997, January 3, 1998 and January
2, 1999, included in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.

AVAILABLE INFORMATION

We file annual, quarterly, and special reports, proxy statements, and other
information with the Securities and Exchange Commission. Such reports, proxy and
other information can be inspected and copied at the Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. Information on our operation can
be obtained from the Public Reference Room by calling 1-800-SEC-0330. The
Commission maintains a Web site that contains all information filed
electronically by us, including reports, proxy and information statements. The
address of the Commission's Web site is (http://www.sec.gov).

We intend to list our common stock on the New York Stock Exchange. Reports,
proxy statements and other information concerning us can be inspected at: the
New York Stock Exchange, Inc., 11 Wall Street, New York, NY 10005.

This prospectus constitutes a part of a registration statement on Form S-1
(herein, together with all amendments and exhibits thereto, referred to as the
"Registration Statement") filed by us with the Commission under the Securities
Act, with respect to the securities offered in this prospectus. This prospectus
does not contain all the information which is in the Registration Statement.
Certain parts of the Registration Statement are omitted as allowed by the rules
and regulations of the Commission. We refer to the Registration Statement and to
the exhibits to such Registration Statement for further information with respect
to us and the securities offered in this prospectus. Copies of the Registration
Statement are on file at the offices of the Commission and may be obtained upon
payment of the prescribed fee or may be examined without charge at the public
reference facilities of the Commission described above. Statements contained in
this prospectus concerning the provisions of documents are necessarily summaries
of the material provisions of such documents, and each statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
Commission.

REPORTS TO SECURITY HOLDERS

We intend to distribute to our shareholders annual reports containing
audited financial statements and will make available copies of our quarterly
reports for the first three quarters of each fiscal year containing unaudited
interim financial information.

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<PAGE> 55

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report Of Independent Public Accountants.................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements Of Operations....................... F-4
Consolidated Statements Of Redeemable Common Stock And
Shareholders' Equity...................................... F-5
Consolidated Statements Of Cash Flows....................... F-6
Notes To Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 56

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To David's Bridal, Inc.:

We have audited the accompanying consolidated balance sheets of David's
Bridal, Inc. (a Florida corporation) and subsidiaries as of January 3, 1998 and
January 2, 1999, and the related consolidated statements of operations,
redeemable common stock and shareholders' equity and cash flows for each of the
three years in the period ended January 2, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of David's Bridal, Inc. and
subsidiaries as of January 3, 1998 and January 2, 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
January 2, 1999 in conformity with generally accepted accounting principles.

/s/ Arthur Andersen LLP

Philadelphia, Pa.
February 10, 1999

F-2
<PAGE> 57

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash...................................................... $ 464 $ 320
Accounts receivable....................................... 1,829 2,844
Inventories............................................... 32,113 37,458
Prepaid expenses and other assets......................... 1,864 2,247
Deferred tax asset........................................ 296 --
---------- ----------
Total current assets.............................. 36,566 42,869
---------- ----------
PROPERTY AND EQUIPMENT, net................................. 15,581 20,650
---------- ----------
DEFERRED TAX ASSET.......................................... 616 1,066
---------- ----------
OTHER ASSETS, net of accumulated amortization of $36 and
$79, respectively......................................... 893 977
---------- ----------
$ 53,656 $ 65,562
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdrafts........................................... $ 3,003 $ 4,033
Current portion of capitalized lease obligations.......... 126 134
Current portion of long-term debt......................... 551 147
Accounts payable.......................................... 4,394 6,070
Accrued expenses.......................................... 3,622 4,417
Income taxes payable...................................... 847 497
Deferred tax liabilities.................................. -- 236
---------- ----------
Total current liabilities......................... 12,543 15,534
---------- ----------
DEFERRED RENT............................................... 2,430 2,861
---------- ----------
CAPITALIZED LEASE OBLIGATIONS, net of current portion....... 415 281
---------- ----------
LONG-TERM DEBT.............................................. 15,916 19,366
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTE 13)
REDEEMABLE COMMON STOCK..................................... 628 --
---------- ----------
SHAREHOLDERS' EQUITY:
Convertible Preferred stock, liquidation value $33,977 at
January 2, 1999........................................ 11 11
Common stock--
Class A, $.01 par value, 16,250,000 shares authorized,
6,686,638 and 6,612,262 shares issued and
outstanding........................................... 67 66
Class B, $.01 par value, 1,500,000 shares authorized,
none issued or outstanding............................ -- --
Class C, $.01 par value, 3,750,000 shares authorized,
none issued or outstanding............................ -- --
Additional paid-in capital................................ 18,335 18,313
Retained earnings......................................... 3,311 9,130
---------- ----------
21,724 27,520
---------- ----------
$ 53,656 $ 65,562
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 58

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C>
REVENUES:
Net sales............................................ $ 63,158 $ 85,785 $ 123,656
Other income......................................... 4,188 6,228 9,062
---------- ----------- -----------
Total revenues............................. 67,346 92,013 132,718
COST OF SALES, including buying, distribution and
occupancy costs.................................... 40,889 53,070 74,613
---------- ----------- -----------
Gross profit.................................... 26,457 38,943 58,105
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES......... 26,453 33,738 47,581
---------- ----------- -----------
INCOME FROM OPERATIONS............................... 4 5,205 10,524
INTEREST EXPENSE, net................................ 586 1,248 1,087
---------- ----------- -----------
Income (loss) before income taxes............... (582) 3,957 9,437
INCOME TAX PROVISION (BENEFIT)....................... (167) 1,359 3,618
---------- ----------- -----------
NET INCOME (LOSS).................................... $ (415) $ 2,598 $ 5,819
========== =========== ===========
Net income (loss) per common share:
Basic.............................................. $ (0.06) $ 0.39 $ 0.88
========== =========== ===========
Diluted............................................ $ (0.06) $ 0.22 $ 0.47
========== =========== ===========
Weighted average shares outstanding:
Basic.............................................. 6,929,235 6,686,638 6,619,823
Diluted............................................ 6,929,235 11,861,604 12,473,995
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 59

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
REDEEM- -------------------------------------------------------------------------
ABLE PREFERRED STOCK COMMON STOCK ADDITIONAL
COMMON ------------------ ------------------ PAID-IN RETAINED
STOCK SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------- --------- ------ --------- ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 30, 1995........ $7,744 400,000 $ 4 7,433,179 $74 $10,743 $1,128 $11,949
Purchase of Redeemable Common
stock......................... (4,500) -- -- (746,541) (7) 7 -- --
Accretion of Common stock
redemption value.............. 363 -- -- -- -- (363) -- (363)
Net loss........................ -- -- -- -- -- -- (415) (415)
------ --------- --- --------- --- ------- ------ -------
BALANCE, JANUARY 4, 1997.......... 3,607 400,000 4 6,686,638 67 10,387 713 11,171
Sale of preferred stock......... -- 686,402 7 -- -- 4,969 -- 4,976
Modification of Common stock
redemption agreement.......... (3,120) -- -- -- -- 3,120 -- 3,120
Accretion of Common stock
redemption value.............. 141 -- -- -- -- (141) -- (141)
Net income...................... -- -- -- -- -- -- 2,598 2,598
------ --------- --- --------- --- ------- ------ -------
BALANCE, JANUARY 3, 1998.......... 628 1,086,402 11 6,686,638 67 18,335 3,311 21,724
Purchase of Redeemable Common
stock......................... (651) -- -- (74,376) (1) 1 -- --
Accretion of Common stock
redemption value.............. 23 -- -- -- -- (23) -- (23)
Net income...................... -- -- -- -- -- -- 5,819 5,819
------ --------- --- --------- --- ------- ------ -------
BALANCE, JANUARY 2, 1999.......... $ -- 1,086,402 $11 6,612,262 $66 $18,313 $9,130 $27,520
====== ========= === ========= === ======= ====== =======
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 60

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $ (415) $ 2,598 $ 5,819
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities--
Depreciation and amortization......................... 1,393 2,022 2,896
Amortization of debt issuance costs................... -- 74 43
Provision for deferred rent........................... 645 782 431
Loss on sale or disposal of property and equipment.... 70 8 144
Equity income in affiliate............................ -- -- (166)
Deferred income taxes................................. (33) (479) 82
Changes in assets and liabilities--
(Increase) decrease in--
Accounts receivable................................. (408) (318) (1,015)
Prepaid expenses and other assets................... (901) 412 (770)
Inventories......................................... 320 (12,017) (5,345)
Increase (decrease) in--
Accounts payable.................................... 1,585 816 1,676
Accrued expenses.................................... (188) 1,466 795
Income taxes payable................................ -- 847 (350)
-------- -------- --------
Net cash provided by (used in) operating
activities....................................... 2,068 (3,789) 4,240
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (4,931) (7,470) (8,105)
(Investment in) distribution from affiliate.............. -- (460) 460
-------- -------- --------
Net cash used in investing activities............... (4,931) (7,930) (7,645)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt................. 1,086 -- 1,400
Repayments of long-term debt and capital leases.......... (40) (203) (680)
Borrowings on revolving credit agreement................. 25,804 42,356 41,500
Repayments on revolving credit agreement................. (20,256) (38,461) (39,300)
Borrowings on short-term debt............................ -- 460 --
(Decrease) increase in bank overdrafts................... (276) 2,732 1,030
Proceeds from subscription receivable.................... 1,000 -- --
Proceeds from sale of Preferred stock.................... -- 4,976 --
Repurchase of Common stock............................... (4,500) -- (651)
Payment of debt issuance costs........................... -- (185) (38)
-------- -------- --------
Net cash provided by financing activities........... 2,818 11,675 3,261
-------- -------- --------
Net decrease in cash................................ (45) (44) (144)
CASH, BEGINNING OF YEAR.................................... 553 508 464
-------- -------- --------
CASH, END OF YEAR.......................................... $ 508 $ 464 $ 320
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for--
Income taxes.......................................... $ 76 $ 330 $ 3,744
======== ======== ========
Interest, net of amounts capitalized.................. $ 555 $ 1,240 $ 1,018
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 61

DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BACKGROUND

David's Bridal, Inc. was organized on August 29, 1990 and is engaged in the
retail sale of bridal gowns and bridal related merchandise. As of January 3,
1998 and January 2, 1999, the Company operated 59 stores in 27 states and 77
stores in 29 states, respectively, throughout the United States.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of David's Bridal, Inc. and
subsidiaries (the Company) include the accounts of David's Bridal, Inc. (a
Florida corporation) and all of its wholly owned subsidiaries. Material
intercompany balances and transactions have been eliminated in consolidation.

FISCAL YEAR-END

The Company operates under a 52/53-week fiscal year ending on a Saturday
near December 31. The accompanying consolidated financial statements for the
years ended January 4, 1997 (fiscal 1996), January 3, 1998 (fiscal 1997) and
January 2, 1999 (fiscal 1998), include 53, 52 and 52 weeks of operations,
respectively.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents for the purpose of
determining cash flows. Checks issued in excess of cash balances are reflected
as bank overdrafts.

INVENTORIES

Merchandise inventories are stated at the lower of cost (first-in,
first-out) or market. Costs associated with certain buying, receiving and
distribution activities are included in inventories.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Additions or improvements are
capitalized, while repairs and maintenance are charged to expense. Gains or
losses on sale or disposal are reflected in net income. Depreciation and
amortization is computed on the straight-line method over the estimated useful
life of the asset. The estimated useful lives are as follows:

<TABLE>
<S> <C>
Land improvements............................ 20 years
Buildings and improvements................... 20 to 30 years
Equipment.................................... 3 to 10 years
Leasehold improvements....................... Lesser of useful life or lease term
Furniture and fixtures....................... 5 to 10 years
</TABLE>

Certain personnel costs and out-of-pocket costs directly associated with
the construction or remodeling of stores are capitalized and amortized over the
lease term.

The Company capitalizes interest in connection with the construction of new
stores which is amortized over the lesser of the assets' estimated useful life
or lease term. During fiscal 1997 and fiscal 1998, $70,000 and $59,000,
respectively, of interest was capitalized.

F-7
<PAGE> 62
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

ACCOUNTING FOR LONG-LIVED ASSETS

The Company follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." Accordingly, in the event that facts and circumstances indicate
that property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the assets is
compared to the assets' carrying amount to determine if a write-down to market
value or discounted cash flow value is necessary. Management believes that there
has been no impairment of the Company's long-lived assets.

DEFERRED RENT

Rent expense on leases is recorded on a straight-line basis over the lease
period. The excess of rent expense over actual cash paid has been recorded as
deferred rent in the accompanying consolidated balance sheets.

REVENUE RECOGNITION

The Company records revenue when an item is sold and delivered to a
customer. Revenue is recognized on special orders when the customer orders the
goods, the goods are owned by the Company and the Company receives 100% payment
for the goods. The Company's policy is not to accept returns of special order
goods. Revenue is recognized on layaway sales when the Company obtains a
significant nonrefundable deposit on layaway merchandise. Alterations revenues
are deferred until the work is completed.

STORE OPENING

Store opening costs incurred at new store locations are charged to expense
as incurred.

ADVERTISING

Advertising costs are expensed the first time the advertising takes place.
For fiscal 1996, 1997 and 1998, advertising expense, net of reimbursements, was
$4,910,000, $6,295,000 and $8,088,000, respectively.

INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred income tax assets and liabilities are determined
based on differences between the financial reporting and income tax basis of
assets and liabilities measured using enacted income tax rates and laws that are
expected to be in effect when the differences reverse.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash, accounts
receivable, accounts payable, accrued expenses and debt instruments. The
carrying value of these assets and liabilities are considered to be
representative of their respective fair values.

BUSINESS AND CREDIT RISK CONCENTRATION

Financial instruments which potentially subject the Company to
concentrations of credit risk are cash and cash equivalents and accounts
receivable. The Company limits its credit risk associated with cash and

F-8
<PAGE> 63
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

cash equivalents by placing its investments in highly liquid funds. Receivables
associated with third party credit cards are processed by financial institutions
which are monitored for financial stability.

The Company utilizes international manufacturers (mainly in China) to
provide all of its bridal gowns and flowergirl dresses. Should there be
significant changes in areas such as quotas, tariffs and fluctuations in
exchange rates, among others, the Company's ability to obtain merchandise at a
reasonable cost and in a timely manner could be significantly impaired.
Management monitors these risks and believes that its relationships are such
that alternative sourcing arrangements would be available.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECENTLY ADOPTED ACCOUNTING PRINCIPLES

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." This statement establishes standards
for reporting and disclosure of comprehensive income. In June 1997, the FASB
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This statement establishes standards for reporting of information
about operating segments and requires the reporting of selected information
about operating segments in interim financial statements. These standards were
adopted by the Company on January 4, 1998 and had no impact as the Company has
no "other comprehensive income" and operated as a single segment.

2. PROPOSED INITIAL PUBLIC OFFERING:

The Company is in the process of filing a registration statement for the
sale of common stock to the public in an initial public offering. If an initial
public offering is completed, it is anticipated that the following transactions
will be consummated immediately prior to the closing of the Offering, (i) a
split of the Common stock and (ii) conversion of all outstanding shares of
Preferred stock for Common stock. These transactions have not been reflected in
the accompanying financial statements as the stock split has not yet been
determined.

3. NET INCOME (LOSS) PER SHARE:

Net income (loss) per share is calculated utilizing the principles of
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share"
(EPS).

Basic EPS excludes dilution and is computed by dividing net income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS is computed assuming the conversion or
exercise of all dilutive securities such as preferred stock, options and
warrants.

F-9
<PAGE> 64
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Under SFAS No. 128, the Company's granting of certain stock options and
convertible preferred stock resulted in potential dilution of basic EPS. The
following table summarizes the differences between basic weighted average shares
outstanding and diluted weighted average shares outstanding used to compute
diluted EPS.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Basic weighted average number of shares
outstanding................................... 6,929,235 6,686,638 6,619,823
Incremental shares from assumed exercise or
conversion of:
Stock options................................. -- -- 258,691
Preferred stock............................... -- 5,174,966 5,595,481
--------- ---------- ----------
Diluted weighted average number of shares
outstanding................................... 6,929,235 11,861,604 12,473,995
========= ========== ==========
</TABLE>

The number of incremental shares from the assumed exercise of stock options
is calculated applying the treasury stock method. Preferred stock convertible
into 4,909,079 weighted average common shares was excluded from the fiscal 1996
calculation as it would be anti-dilutive due to the fiscal 1996 net loss. All
Common stock options outstanding during fiscal 1996 and 1997 were not included
in the computation of diluted EPS because they were antidilutive.

4. PROPERTY AND EQUIPMENT (IN THOUSANDS):

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
Property and equipment consist of:
Land........................................................ $ 1,047 $ 1,047
Land improvements........................................... 149 149
Buildings and improvements.................................. 1,275 2,635
Equipment................................................... 3,198 5,145
Leasehold improvements...................................... 7,622 10,798
Furniture and fixtures...................................... 3,936 5,646
Construction in progress.................................... 2,462 2,062
------- -------
19,689 27,482
Less--Accumulated depreciation and amortization............. (4,108) (6,832)
------- -------
$15,581 $20,650
======= =======
</TABLE>

5. INVESTMENTS IN AFFILIATES:

In December 1997, the Company purchased an equity interest in MDR
Associates LLC (MDR) for $460,000 which owns an interest in an aircraft. Two
shareholders of the Company also hold an indirect equity interest in MDR. The
investment was accounted for under the equity method of accounting and was
included in other assets in fiscal 1997. The equity interest was redeemed in
fiscal 1998 for $460,000.

In August 1995, the Company entered into a joint venture agreement with
Addwood Limited for a 50% ownership in a newly formed Hong Kong corporation,
Fillberg Limited (Fillberg). The Company contributed nominal capital to Fillberg
and loaned $170,000 in a noninterest-bearing loan with no stated maturity. The
loan was repaid subsequent to January 2, 1999. Addwood Limited is indirectly
owned by a shareholder of the Company based in Hong Kong.

F-10
<PAGE> 65
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Under a buying agency agreement, Fillberg will be the exclusive buying
agent of the Company for ready made bridal garments from certain territories, as
defined, and the Company will be the primary client of Fillberg. Under the
agreement, the Company pays Fillberg commissions of 7% for merchandise purchased
by the Company.

The investment is accounted for under the equity method of accounting with
profits eliminated from net income in the application of the equity method to
the extent that the Company has not yet sold the merchandise. As of January 2,
1999, the investment and receivable of $170,000 are included in other assets.
Equity income of $166,000 was recognized in fiscal 1998. Commissions of
$683,000, $1,157,000 and $1,294,000 were recorded for merchandise purchased
during fiscal 1996, 1997 and 1998, respectively, of which $999,000 and
$1,212,000, were included in the cost of inventories on the accompanying
consolidated balance sheets at January 3, 1998 and January 2, 1999,
respectively.

6. ACCRUED EXPENSES AND OTHER (IN THOUSANDS):

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
Payroll and related expenses................................ $1,341 $1,328
Other....................................................... 2,281 3,089
------ ------
$3,622 $4,417
====== ======
</TABLE>

7. DEBT (IN THOUSANDS):

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
Revolving credit agreement.................................. $14,900 $17,100
Mortgages................................................... 769 2,139
Demand note................................................. 460 --
Other....................................................... 338 274
------- -------
16,467 19,513
Less--Current portion....................................... (551) (147)
------- -------
$15,916 $19,366
======= =======
</TABLE>

In April 1994, the Company entered into a revolving credit agreement with a
bank which was amended on March 12, 1996 to provide borrowings up to $17
million. Interest was calculated at prime plus 0% to 1% or LIBOR plus 2.5% to
3.5% based on certain ratios, as defined. This agreement was terminated in
August 1997.

On August 1, 1997, the Company entered into a new revolving credit
agreement with a bank which was amended on December 30, 1998 providing for
borrowings up to $30 million including a sublimit of $25 million for letters of
credit. Borrowings are limited to the sum of 80% of eligible receivables and 60%
of eligible inventory, as defined. The Company may exceed its borrowing base by
$3 million during the months of October through March for the period beginning
December 1998 and October 1999 and by $2 million for the period beginning
October 2000. At the Company's election, interest is calculated at (i) the Base
Rate (higher of U.S. Federal Funds Rate plus .5% or the bank's Prime Rate), or
(ii) the adjusted LIBOR Rate, as defined, plus an applicable margin ranging from
1.25% to 1.75% based on earnings ratios, as defined. Interest will be increased
by 2% for the duration of any events of default. Interest is payable monthly on
Base Rate borrowings and at the end of each elected interest period on each
LIBOR Rate borrowing. The weighted average interest rate on Base Rate loans was
7.75% and the weighted average

F-11
<PAGE> 66
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

interest rate on LIBOR Rate loans was 6.49% at January 2, 1999. Principal is
payable July 31, 2001. An unutilized commitment fee of .25% per annum is due
quarterly.

The revolving credit agreement requires the Company to comply with various
covenants which include, among other things, the maintenance by the Company of
certain fixed charge, leverage and debt ratios at the end of each fiscal
quarter, as defined. The revolving credit agreement is secured by all tangible
and intangible assets of the Company. In the event of termination of the
commitment or an event of default, the Bank may require the Company to deliver
cash or U.S. Treasury Bills in the amount of 105% of the outstanding undrawn
letters of credit.

The highest amount outstanding under these agreements was $11,005,000,
$15,018,000, and $17,600,000 during fiscal 1996, fiscal 1997 and fiscal 1998,
respectively. The average amount outstanding under these agreements was
$6,871,000, $11,740,000 and $13,034,000 and the weighted average interest rate
was 7.81%, 7.75% and 7.21% in fiscal 1996, 1997 and 1998, respectively. The
Company was contingently liable for open letters of credit of $2,840,000 and
$4,145,000 at January 3, 1998 and January 2, 1999, respectively.

In fiscal 1996, the Company entered into a $800,000 mortgage agreement with
a bank which is payable in monthly installments with interest, as defined
through 2011. The interest rate at January 2, 1999 was 8%. The mortgage is
collateralized by the underlying property.

In fiscal 1998, the Company entered into a $1.4 million mortgage note with
a bank which is payable in monthly installments of principal and interest of
$14,000 with a final payment of $1,123,000 due on December 1, 2003. The note
bears interest at 8% and is subject to a prepayment penalty of 2%, as defined,
until December 1, 2000. The note is collateralized by the underlying property.

In December 1997, the Company issued a demand note in connection with its
borrowing of $460,000 from a shareholder. This note bears interest at 7.75% and
was repaid in January 1998.

The Company has agreements with certain landlords whereby the Company
received advances for construction of leasehold improvements which will be
repaid by the Company during the lease periods. Interest ranges from 8%-11% and
the notes are due through 2006. At January 3, 1998 and January 2, 1999, $338,000
and $274,000, respectively, were outstanding under these agreements.

Future long-term debt maturities as of January 2, 1999 are as follows (in
thousands).

<TABLE>
<CAPTION>
FISCAL
<S> <C>
1999............................................. $ 147
2000............................................. 132
2001............................................. 17,222
2002............................................. 131
2003............................................. 1,246
2004 and thereafter.............................. 635
-------
$19,513
=======
</TABLE>

F-12
<PAGE> 67
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. INCOME TAXES:

The income tax provision (benefit) consists of the following components (in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal........................................... $ (49) $1,601 $3,379
State............................................. 21 30 412
----- ------ ------
(28) 1,631 3,791
----- ------ ------
Deferred:
Federal........................................... (139) (272) (173)
State............................................. -- -- --
----- ------ ------
(139) (272) (173)
----- ------ ------
$(167) $1,359 $3,618
===== ====== ======
</TABLE>

The deferred tax effect of temporary differences giving rise to the
Company's deferred tax assets and liabilities consists of the following
components (in thousands):

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
Deferred tax assets--
Deferred rent............................................... $ 826 $ 973
Uniform inventory capitalization............................ 395 148
Benefits payable............................................ 93 --
Other....................................................... 102 143
------ ------
1,416 1,264
------ ------
Deferred tax liabilities--
Depreciation................................................ (211) (83)
Unrealized profit........................................... (159) (223)
Other....................................................... (134) (128)
------ ------
(504) (434)
------ ------
Net deferred tax asset...................................... $ 912 $ 830
====== ======
</TABLE>

The reconciliation of the federal statutory rate to the Company's effective
income tax rate is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Tax at federal statutory rate............................... (34.0)% 34.0% 34.0%
State taxes, net of federal benefit......................... 3.5 0.5 3.1
Other....................................................... 1.7 (0.2) 1.2
----- ---- ----
(28.8)% 34.3% 38.3%
===== ==== ====
</TABLE>

F-13
<PAGE> 68
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY:

In fiscal 1995, the Company entered into redemption agreements with certain
shareholders for the purchase of 1,295,250 shares of common stock for a total of
$7.4 million plus an amount calculated based on the timing of redemption, as
defined. This obligation has been reflected as Redeemable Common stock and has
been reclassified out of equity in the accompanying consolidated financial
statements. In fiscal 1996, the Company redeemed 746,541 shares under the
redemption agreements at a total purchase price of $4.5 million. In fiscal 1997,
in connection with the sale of the Class D Preferred stock, the redemption
agreements with certain shareholders were modified to eliminate any continuing
obligation by the Company to repurchase 474,333 of the shares. The remaining
74,376 shares were redeemed in February 1998 for $651,000.

In fiscal 1997, the Company sold 686,402 shares of Class D Preferred stock
for $7.25 per share under a capital call agreement with existing shareholders.
On August 13, 1997, the Company entered into the Second Amended and Restated
Stockholder's Agreement whereby the Company has the option for a period of three
years to require certain investors to purchase up to $4 million of additional
shares of the Company's Class D Preferred stock.

The components of Preferred stock are as follows:

<TABLE>
<CAPTION>
JANUARY 3, JANUARY 2,
1998 1999
---------- ----------
<S> <C> <C>
Class A, $.01 par value, 175,000 shares authorized, 171,792
shares issued and outstanding, liquidation value of
$12,455,000 at January 2, 1999............................ $1,718 $1,718
Class B, $.01 par value, 125,000 shares authorized, 114,104
shares issued and outstanding, liquidation value of
$8,273,000 at January 2, 1999............................. 1,141 1,141
Class C, $.01 par value, 300,000 shares authorized, 114,104
shares issued and outstanding, liquidation value of
$8,273,000 at January 2, 1999............................. 1,141 1,141
Class D, $.01 par value, 1,250,000 shares authorized,
686,402 shares issued and outstanding, liquidation value
of $4,976,000 at January 2, 1999.......................... 6,864 6,864
</TABLE>

The Class A, B and C Preferred had an initial conversion price of $7.25 per
share. The conversion price is subject to adjustment based on the valuation of
the Company upon a special event. A special event includes liquidating events, a
public offering, a change in control, a merger or consolidation and other
events, as defined. If a special event, as defined, had occurred at January 2,
1999, the conversion price would have been $5.907, or a conversion rate of
12.2727 shares of Common stock for each share of Preferred unless the Preferred
holders had achieved a specified rate of return on their equity investment. If
the specified rate of return is achieved upon a special event, the conversion
price would be $7.25 and the conversion rate would be 10 shares of Common stock
for each share of Preferred. The Class D Preferred is junior to the Class A, B
and C Preferred and has an initial conversion rate of $7.25. The Company may
require conversion of all classes of Preferred if the price per share paid by
the public in a public offering is at least equal to the conversion price per
share. The liquidation value of the Preferred is equal to the greater of the
amount that would be received if all of the Preferred were converted into Common
stock immediately prior to the liquidation or the price originally paid.

The Class A and Class D Preferred have voting rights equal to the number of
Common shares into which they are convertible. The Class B Preferred has voting
rights equal to two votes for each share of Common into which it is convertible
and the Class C Preferred has no voting rights.

The Class A Common has voting rights equal to one vote per share. The Class
B Common has the number of votes equal to the sum of Class B and Class C Common
outstanding divided by Class B outstanding. The Class C Common has no voting
rights.

F-14
<PAGE> 69
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Class A and Class D Preferred is convertible into Class A Common, the
Class B Preferred is convertible into Class B Common and the Class C Preferred
is convertible into Class C Common.

As of January 2, 1999, if converted, the Class A, B, C and D Preferred
stock would convert to 5,595,481 shares of Common stock at the conversion rates
outlined above. Assuming a specified rate of return is achieved upon a special
event, the conversion rate would be $7.25 for all shares if the Company requires
the Preferred to convert resulting in the issuance of 4,686,402 shares of Common
stock.

10. STOCK OPTIONS:

The Company's 1995 Stock Option Plan (the Plan) provides for the grant of
Common Stock and Common Stock options to key employees, members of the Board of
Directors and certain consultants at prices determined by the Board. The Company
has reserved 1,000,000 shares of its Common stock for awards under the Plan. The
Company accounts for the Plan under APB Opinion No. 25, under which no
compensation cost has been recognized since the options were issued at or above
fair value.

Had compensation cost for the options issued to employees or directors been
determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income (loss), basic EPS and diluted EPS would
have been equal to the pro forma amounts indicated below (in thousands except
for per share data):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) As reported $ (415) $2,598 $5,819
Pro forma (669) 2,296 5,423

Basic EPS As reported (0.06) 0.39 0.88
Pro forma (0.10) 0.34 0.82

Diluted EPS As reported (0.06) 0.22 0.47
Pro forma (0.10) 0.19 0.43
</TABLE>

The weighted average fair value of options granted during fiscal 1996, 1997
and 1998 was $1.22, $2.59 and $2.58, respectively. The fair value of each option
grant was estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JANUARY 4, JANUARY 3, JANUARY 2,
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Expected dividend rate.................................. -- -- --
Expected volatility..................................... 55% 55% 55%
Risk-free interest rate................................. 5.965% 6.076% 5.499%
Expected lives (years).................................. 3 3 3
</TABLE>

Because the SFAS No. 123 method of accounting is not required to be applied
to options granted prior to January 1, 1995, the resulting pro forma
compensation charge may not be representative of that to be expected in future
years.

During fiscal 1996, 1997 and through May 1998, the Company granted options
to purchase 90,000 shares of common stock, 70,000 shares of common stock and
329,000 shares of common stock, respectively, under the Plan. These options vest
over a 3-year period and were issued with exercise prices equal to or above fair
market value on the grant date. In addition, in fiscal 1996, the Company granted
to two nonemployees an option to purchase 75,000 shares and 30,000 shares of
common stock at $7.25 and $9.00, per share, respectively. These options vest
through September 1998.

F-15
<PAGE> 70
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Information with respect to options outstanding is as follows:

<TABLE>
<CAPTION>
OPTION PRICE AGGREGATE
SHARES PER SHARE EXERCISE PRICE
------- ------------- --------------
<S> <C> <C> <C>
Options outstanding, December 30, 1995............ 450,000 $ 7.25 $3,262,500
Granted......................................... 195,000 7.25 - 9.00 1,623,750
------- ------------- ----------
Options outstanding, January 4, 1997.............. 645,000 7.25 - 9.00 4,886,250
Granted......................................... 70,000 9.00 630,000
------- ------------- ----------
Options outstanding, January 3, 1998.............. 715,000 7.25 - 9.00 5,516,250
Granted......................................... 329,000 9.00 - 10.00 3,278,500
Cancelled....................................... (74,000) 9.00 - 10.00 (705,000)
------- ------------- ----------
Options outstanding January 2, 1999............... 970,000 $7.25 - 10.00 $8,089,750
======= ============= ==========
</TABLE>

As of January 2, 1999, the weighted average contractual life of options
outstanding was 8.13 years, there were options to purchase 625,500 shares of
common stock vested at a weighted average exercise price of $7.37 and there were
30,000 shares reserved under the Plan which were not granted.

11. BENEFIT PLAN:

On January 1, 1995, the Company adopted a 401(k) plan for its employees
(the 401(k) Plan). The 401(k) Plan allows participants to contribute up to 15%
of their compensation and permits an employer match of up to 6% of participant
compensation, subject to certain limitations, as defined. Employer contributions
vest 20% per year. The expense was $14,000, $14,000 and $18,000 during fiscal
1996, 1997 and 1998, respectively.

12. RELATED PARTY:

The Company purchased leasehold improvements and supplies from a company
owned by a shareholder of the Company totaling $153,000, $159,000 and $297,000
in fiscal 1996, 1997 and 1998.

13. COMMITMENTS AND CONTINGENCIES:

The Company leases its retail stores, administrative offices and
distribution facilities under noncancellable operating leases. Most store leases
have an average initial term of ten years, with two five year renewal options,
and provide for predetermined escalations in future minimum annual rents.
Certain leases provide for additional rent contingent upon store sales levels.
The pro rata portion of scheduled rent escalations has been included in deferred
rent in the accompanying consolidated balance sheets. Rent expense under all
operating leases was $4,995,000, $7,011,000, and $9,817,000 in fiscal 1996, 1997
and 1998, respectively, excluding common area maintenance charges.

On December 27, 1996, the Company entered into a lease for software which
has been accounted for as a capital lease. The capitalized cost of $671,000 and
related accumulated amortization of $268,000 has been included in net property
and equipment at January 2, 1999. The present value of the minimum lease
payments at January 2, 1999, is as follows (in thousands):

<TABLE>
<S> <C>
Total minimum lease payments................................ $451
Less--Amount representing interest.......................... (36)
----
Present value of minimum lease payments..................... $415
====
</TABLE>

F-16
<PAGE> 71
DAVID'S BRIDAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Future minimum lease payments under all of the Company's operating and
capital leases as of January 2, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
FISCAL OPERATING CAPITAL
<S> <C> <C>
1999................................................... $11,632,245 $154
2000................................................... 12,028,147 154
2001................................................... 12,003,683 143
2002................................................... 11,756,842 --
2003................................................... 11,169,314 --
2004 and thereafter.................................... 36,265,185 --
----------- ----
$94,855,416 $451
=========== ====
</TABLE>

From time to time the Company is named as a defendant in legal actions
arising from its normal business activities. Although the amount of any
liability that could arise with respect to currently pending actions of this
nature cannot be accurately predicted, in the opinion of the Company, any such
liability will not have a material adverse effect on the financial position or
results of operations of the Company.

F-17
<PAGE> 72

- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
, 1999

DAVID'S BRIDAL, INC.

SHARES OF COMMON STOCK

------------------------
PROSPECTUS
------------------------

DONALDSON, LUFKIN & JENRETTE
MORGAN STANLEY DEAN WITTER

LEGG MASON WOOD WALKER
INCORPORATED
-----------------------------

DLJdirect INC.

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

We have not authorized any dealer, sales person or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of David's
Bridal have not changed since the date hereof.

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

Until , 1999 (25 days after the date of this prospectus), all
dealers that effect transactions in these shares of common stock may be required
to deliver a prospectus. This is in addition to the dealer's obligation to
deliver a prospectus when acting as an underwriter and with respect to their
unsold allotments or subscriptions.

- - --------------------------------------------------------------------------------
<PAGE> 73

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, in connection with the issuance and
distribution of the shares of common stock being registered, all of which are
being borne by the Company:

<TABLE>
<S> <C>
Registration fee............................................ $44,480
NASD filing fee............................................. 16,500
Transfer agent and registrar fees........................... *
Printing and engraving...................................... *
Legal fees.................................................. *
Blue Sky fees and expenses.................................. 10,000
New York Stock Exchange listing fee.........................
Accounting fees............................................. *
Miscellaneous............................................... *
-------
Total............................................. *
=======
</TABLE>

- - ------------------------------
* To be filed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 607.0850 of the Florida Business Corporation Act empowers a
corporation, subject to certain limitations, to indemnify any person who was or
is a party to any proceeding by reason of the fact that he or she was or is a
director, officer, employee or agent of the corporation, against liability and
expenses actually and reasonably incurred by him or her in connection with such
proceeding, including any appeal thereof, if such party acted in good faith and
in a manner reasonably believed to be in, or not opposed to, the best interests
of the corporation, and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his or her conduct to have been unlawful.

Our bylaws provide a right to indemnification to the full extent permitted
by law for expenses, attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by any of our directors, officers,
employees or agents, who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was our director, officer, employee or agent or that of our parent or any
of our subsidiaries, or was serving at our request, or at the request of our
parent or any of our subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.

Our board of directors by resolution adopted in each specific instance may
similarly indemnify any person other than one of our directors or officers for
liabilities incurred by him in connection with services rendered by him for or
at our request, or at the request of any of our subsidiaries.

These indemnification provisions shall be applicable to all actions, suits
or proceedings commenced after the adoption of our bylaws, whether such arise
out of acts or omissions which occurred prior or subsequent to such adoption and
shall continue as to a person who has ceased to be a director or officer or to
render services for or at our request and shall inure to the benefit of the
heirs, executors and administrators of such a person. The rights of
indemnification provided for in our bylaws shall not be deemed the exclusive
rights to which any of our directors, officers, employees or agents may be
entitled.

Our bylaws provide that we may pay the expenses, including attorney's fees,
incurred by any person entitled to be indemnified by us in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking, by or on behalf of

II-1
<PAGE> 74

such person, to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by us as authorized by law.

We may purchase and maintain insurance on behalf of any person who is or
was our director or officer, employee or agent, or who is or was serving at our
request as a director, officer, employee or agent of another corporation or
other organization, against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or not we
would have the power to indemnify him against such liability under law.

Pursuant to the Underwriting Agreement, the Underwriters have agreed to
indemnify the Company's directors and executive officers who signed the
Registration Statement against certain liabilities, including liabilities under
the Securities Act, under certain delineated circumstances, or to contribute to
payments that the directors and such officers may be required to make in respect
thereof.

The Registrant maintains, on behalf of its directors and officers,
insurance protection against certain liabilities arising out of the discharge of
their duties.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Company has issued and sold the following
unregistered securities:

1. On August 15, 1997, the Company has sold an aggregate of 686,402
shares of class D preferred stock to a number of accredited investors for
an aggregate of $5.0 million.

The Company believes that the transactions described above were exempt from
registration under Section 4(2) of the Securities Act because the subject
securities were sold to a limited group of persons, each of whom was believed to
have been a sophisticated investor, was a shareholder of the Company, and had a
pre-existing business or personal relationship with the Company or its
management and was purchasing for investment without a view to further
distribution. Restrictive legends were placed on stock certificates evidencing
the shares and/or agreements relating to the right to purchase such shares
described above.

II-2
<PAGE> 75

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
<S> <C> <C>
1.1 Form of Underwriting Agreement#
3.1 Articles of Incorporation#
3.2 Bylaws#
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of
shares of common stock being registered#
10.1 Amended and Restated 1995 Stock Option Plan#
10.2@ Joint Venture and Shareholders Agreement dated August 1995
by and among David's Bridal Corporation and Addwood Limited#
10.3 Registration Agreement dated June 9, 1995 among David's
Bridal, Inc. and certain shareholders*
10.4 Amendment No. 1 to Registration Agreement, dated as of
August 15, 1997 by and among David's Bridal, Inc. and
certain shareholders*
10.5 Amended and Restated Credit Agreement dated December 31,
1997 among David's Bridal, Inc. and First Union Corporation*
10.6 Consulting Agreement between David's Bridal, Inc. and Steven
H. Erlbaum#
10.7 Employment Agreement between David's Bridal, Inc. and Robert
D. Huth#
10.8 Employment Agreement between David's Bridal, Inc. and Philip
Youtie#
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Morgan, Lewis & Bockius LLP (included in its
opinion filed as Exhibit 5 hereto)
24.1 Power of Attorney (included on signature page to this
Registration Statement)
27.1 Financial Data Schedule*
</TABLE>

- - ------------------------------
* filed herewith

# to be filed by amendment

@ Confidential treatment to be requested

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance

II-3
<PAGE> 76

upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.

(2) For the purpose of determining any liability the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 77

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Ardmore, Pennsylvania,
on February 19, 1999.

DAVID'S BRIDAL, INC.

By /s/ STEVEN H. ERLBAUM
------------------------------------
Steven H. Erlbaum
Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

EACH PERSON IN SO SIGNING ALSO MAKES, CONSTITUTES AND APPOINTS STEVEN H.
ERLBAUM, ROBERT D. HUTH AND EDWARD S. WOZNIAK AND EACH OF THEM ACTING ALONE, HIS
TRUE AND LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, TO EXECUTE
AND CAUSE TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, ANY AND ALL AMENDMENTS
AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, AND INCLUDING ANY
REGISTRATION STATEMENT FOR THE SAME OFFERING THAT IS TO BE EFFECTIVE UPON FILING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, WITH EXHIBITS THERETO AND
OTHER DOCUMENTS IN CONNECTION THEREWITH, AND HEREBY RATIFIES AND CONFIRMS ALL
THAT SAID ATTORNEY-IN-FACT OR HIS SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.

<TABLE>
<CAPTION>
NAME CAPACITY DATE
<S> <C> <C>

/s/ STEVEN H. ERLBAUM Chairman of the Board (principal February 19, 1999
- - ----------------------------------- executive officer) and Director
Steven H. Erlbaum

/s/ EDWARD S. WOZNIAK Chief Financial Officer (principal February 19, 1999
- - ----------------------------------- financial and accounting officer)
Edward S. Wozniak

/s/ ROBERT D. HUTH Director February 19, 1999
- - -----------------------------------
Robert D. Huth

/s/ GARY E. ERLBAUM Director February 19, 1999
- - -----------------------------------
Gary E. Erlbaum

/s/ MICHAEL C. ERLBAUM Director February 19, 1999
- - -----------------------------------
Michael C. Erlbaum
Director
- - -----------------------------------
Robert B. Calhoun, Jr.

/s/ STEVEN J. SIDEWATER Director February 19, 1999
- - -----------------------------------
Steven J. Sidewater
Director
- - -----------------------------------
Andrew R. Taussig
</TABLE>

II-5
<PAGE> 78

EXHIBIT INDEX

- - ------------------------------
* filed herewith

# to be filed by amendment

@ Confidential treatment requested

<PAGE> 1
Exhibit 10.3

PHILLIE BRIDALS, INC.

REGISTRATION AGREEMENT

THIS AGREEMENT is made as of June 9, 1995, between Phillie
Bridals, Inc., a Florida corporation (the "Company"), the Persons listed on
Exhibit A hereto (the "Other Stockholders") and the Persons listed on Exhibit B
hereto (the "Investors").

The parties to this Agreement are parties to a Purchase
Agreement of even date herewith (the "Purchase Agreement"). In order to induce
the Investors to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the Closing under the Purchase
Agreement. Unless otherwise provided in this Agreement, capitalized terms used
herein shall have the meanings set forth in paragraph 8 hereof.

The parties thereto agree as follows:

1. Demand Registrations.

(a) Requests for Registration. At any time, after the first to
occur of (i) an initial public offering of the Company's Common Stock or (ii)
January 1, 1999, the Purchaser Representative, by giving written notice, may
request the Company to register under the Securities Act all or any portion of
the Clipper Registrable Securities on Form S-1 or any similar long-form
registration ("Long-Form Registrations"), and the Purchaser Representative may
request the Company to register under the Securities Act all or any portion of
the Clipper Registrable Securities on Form S-2 or S-3 or any similar short-form
registration ("Short-Form Registrations") if available. All registrations
requested pursuant to this paragraph 1(a) are referred to herein as "Demand
Registrations". Each written request for a Demand Registration shall specify the
approximate number of Clipper Registrable Securities requested to be registered
and the anticipated per share price range for such offering. Within ten days
after receipt of such request, the Company shall give written notice of such
requested registration to all other holders of Registrable Securities and shall
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice.

<PAGE> 2
(b) Long-Form Registrations. The Purchaser Representative
shall be entitled to request an unlimited number of Long-Form Registrations in
which the Company shall pay all Registration Expenses ("Company-paid Long-Form
Registrations").

(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to paragraph 1(b), the Purchaser Representative
shall be entitled to request an unlimited number of Short-Form Registrations in
which the Company shall pay all Registration Expenses. Demand Registrations
shall be Short-Form Registrations whenever the Company is permitted to use any
applicable short form. After the Company has become subject to the reporting
requirements of the Securities Exchange Act, the Company shall use its best
efforts to make Short-Form Registrations on Form S-3 available for the sale of
Registrable Securities.

(d) Priority on Demand Registrations. The Company shall not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least 75% of
the Registrable Securities included in such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering, exceeds the number of Registrable Securities and
other securities, if any, which can be sold therein without adversely affecting
the marketability of the offering, the Company shall include in such
registration prior to the inclusion of any securities which are not Registrable
Securities the number of Registrable Securities requested to be included which
in the opinion of such underwriters can be sold without adversely affecting the
marketability of the offering, pro rata among the respective holders thereof on
the basis of the amount of Registrable Securities owned by each such holder.

(e) Selection of Underwriters. The Company shall have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the approval of the majority of the holders of Clipper
Registrable Securities, which approval shall not be unreasonably withheld.

(f) Other Registration Rights. Except as provided in (i) this
Agreement, (ii) that certain Warrant issued to Core States Bank, N.A. on April
7, 1994, and (iii) other agreements which would not conflict with, supersede or
prevent the exercise of the rights set forth in Section 1 or Section 2 hereto
and any other rights granted in the Purchase Agreement and herein, the Company
shall not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, without the prior written consent of
the holders of at least 75% of the Registrable Securities.

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<PAGE> 3

2. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice (in any event within three business days after
its receipt of notice of any exercise of demand registration rights other than
under this Agreement) to the Purchaser Representative of its intention to effect
such a registration and shall include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the Company's notice.

(b) Piggyback Expenses. The Registration Expenses of the
holders of the Clipper Registrable Securities shall be paid by the Company in
all Piggyback Registrations.

(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities on the
basis of the number of shares owned by each such holder, and (iii) third, other
securities requested to be included in such registration.

(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested to
be included in such registration.

(e) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the selection of investment banker(s) and
manager(s) for the offering must be approved by the Purchaser's Representative.
Such approval shall not be unreasonably withheld.

-3-

<PAGE> 4

(f) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 180 days has elapsed from the effective date of such
previous registration.

3. Holdback Agreements.

(a) Each holder of Registrable Securities shall not effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90-day
period beginning on the effective date of any underwritten Demand Registration
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree.

(b) The Company (i) shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-8 or
any successor form) , unless the underwriters managing the registered public
offering otherwise agree, and (ii) shall cause each holder of its Common Stock,
or any securities convertible into or exchangeable or exercisable for Common
Stock, purchased from the Company at any time after the date of this Agreement
(other than in a registered public offering) to agree not to effect any public
sale or distribution (including sales pursuant to Rule 144) of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.

4. Registration Procedures. Whenever the Purchaser
Representative has requested that any Registrable Securities be registered
pursuant to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof (including the registration of Clipper
Registrable Securities held by a holder of Registrable Securities requesting
registration as to which the Company has received reasonable assurances that
only Registrable Securities shall be distributed to the public), and pursuant
thereto the Company shall as expeditiously as possible:

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<PAGE> 5

(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall furnish to the counsel
selected by the Purchaser Representative copies of all such documents proposed
to be filed, which documents shall be subject to the review and comment of such
counsel);

(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than [180] days and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;

(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);

(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;

-5-

<PAGE> 6

(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;

(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;

(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Purchaser Representative or the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities
(including effecting a stock split or a combination of shares);

(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and

(k) permit any holder of Registrable Securities which holder,
in its sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included; and

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<PAGE> 7

(l) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order.

(m) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;

(n) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request (provided
that such Registrable Securities constitute at least 10% of the securities
covered by such registration statement).

5. Registration Expenses.

(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, including the Company paying its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on the NASD
automated quotation system.

(b) In connection with each Demand Registration and each
Piggyback Registration, the Company shall reimburse the holders of Clipper
Registrable Securities included in such registration for the reasonable fees and
disbursements of one counsel chosen by the holders of a majority of the Clipper
Registrable Securities included in such registration and for the reasonable fees
and disbursements of each additional counsel retained by any holder of
Registrable Securities for the purpose of rendering a legal opinion on behalf of
such holder in connection with any underwritten Demand Registration or Piggyback
Registration.

-7-

<PAGE> 8

6. Indemnification.

(a) The Company agrees to indemnify, to the extent permitted
by law, each holder of Clipper Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such holder expressly for
use therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.

(b) In connection with any registration statement in which a
holder of Clipper Registrable Securities is participating, each such holder
shall furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder; provided that the obligation
to indemnify shall be individual, not joint and several, for each holder and
shall be limited to the net amount of proceeds received by such holder from the
sale of Registrable Securities pursuant to such registration statement.

(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any Person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party) and (ii) unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any

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<PAGE> 9

liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.

(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
an indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.

7. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangement and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in paragraph 6 hereof.

8. Definitions.

(a) "Clipper Registrable Securities" means (i) any Class A
Preferred issued to the Investors, (ii) any Class B Preferred issued to the
Investors, (iii) any Class C Preferred issued to the Investors, (iv) any Class A
Common issued or issuable to the Investors upon the conversion of the Class A
Preferred, (v) any Class B Common issued or issuable to the Investors upon
conversion of the Class B Preferred, (vi) any Class C Common issued or issuable
to the Investors upon conversion of the Class C Preferred or Class A Common,
(vii) any Class A Common issued or issuable upon conversion of the Class C
Common and (viii) any Stock issued or issuable to the Investors with respect to
securities referred to in clauses (i) - (vii) by way of a stock dividend or
stock split in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization; and

-9-

<PAGE> 10

(b) "Other Stockholder Registrable Securities" means (i) the
Class A Common Stock owned by the Other Stockholders and (ii) any Class A Common
Stock issued or issuable to the Other Stockholders with respect to securities
referred to in clause (i) by way of a stock dividend or stock split in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.

(c) "Purchaser Representative" means Clipper Capital
Associates, L.P. or a Person designated by the holders of a majority of the
Clipper Registrable Securities.

(d) "Registrable Securities" means Clipper Registrable
Securities and Other Stockholder Registrable Securities. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force) or repurchased by the Company or any Subsidiary. For
purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Securities, and the Registrable Securities shall be deemed to be in
existence, whenever such Person has the right to acquire directly or indirectly
such Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected, and such Person shall be entitled to exercise the
rights of a holder of Registrable Securities hereunder.

(e) Unless otherwise stated, other capitalized terms contained
herein have the meanings set forth in the Purchase Agreement.

9. Miscellaneous.

(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Securities in this Agreement.

(b) Adjustments Affecting Registrable Securities. The Company
shall not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).

(c) Remedies. Any Person having rights under any provision of
this Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any

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<PAGE> 11

breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.

(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company, the Purchaser Representative and holders
of at least 67% of the Other Stockholder Registrable Securities.

(e) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.

(f) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

(g) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.

(h) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

(i) Governing Law. The corporate law of the State of Florida
shall govern all issues and questions concerning the relative rights of the
Company and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Pennsylvania. The parties agree that the sole and exclusive jurisdiction over
and

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<PAGE> 12

proper venue relating to, any controversy or claim arising out of or relating to
this Agreement or the breach hereof shall reside in the United District for the
Eastern District of Pennsylvania or in the absence thereof of proper
jurisdiction, the state courts of Commonwealth of Pennsylvania.

(j) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the addresses indicated below:

If to the company:

Phillie Bridals, Inc.
44 West Lancaster Avenue
Suite 250
Ardmore, PA 19003
Telephone: 610/896-2111

If to the Investors, to the Purchaser Representative
at:

The Clipper Group, L.P.
12 East 49th Street, 30th Floor
New York, NY 10017
Telephone: 212/715-5700

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

* * * *

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<PAGE> 13

IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.

PHILLIE BRIDALS, INC.

By: /s/ Steven H. Erlbaum
-----------------------------------
Its: Chairman
-----------------------------------

CLIPPER/MERCHANT PARTNERS, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Bela R. Schwartz
-----------------------------------
Bela R. Schwartz
Its: Treasurer

CLIPPER EQUITY PARTNERS I, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Bela R. Schwartz
-----------------------------------
Bela R. Schwartz
Its: Treasurer

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<PAGE> 14

CLIPPER/MERBAN, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Bela R. Schwartz
____________________________________
Bela R. Schwartz
Its: Treasurer

CLIPPER CAPITAL ASSOCIATES, L.P.

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Bela R. Schwartz
____________________________________
Bela R. Schwartz
Its: Treasurer

CLIPPER/SR, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Bela R. Schwartz
____________________________________
Bela R. Schwartz
Its: Treasurer

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<PAGE> 15

/s/ Steven Erlbaum
----------------------------------
Steven Erlbaum

/s/ Gary Erlbaum
----------------------------------
Gary Erlbaum

/s/ Phil Youtie
----------------------------------
Phil Youtie

/s/ Michael Erlbaum
----------------------------------
Michael Erlbaum

/s/ Steven Sidewater
----------------------------------
Steven Sidewater

/s/ Steven Erlbaum, custodian for
Adam Erlbaum
----------------------------------
Steven Erlbaum, custodian for
Adam Erlbaum

/s/ Jon Erlbaum
----------------------------------
Jon Erlbaum

/s/ Marc Erlbaum
----------------------------------
Marc Erlbaum

/s/ Daniel Erlbaum
----------------------------------
Daniel Erlbaum

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<PAGE> 16

VEDERMAN FAMILY PARTNERSHIP

By: /s/Herbert Vederman
______________________________
Its: General Partner

NANCY SIDEWATER TRUST

By: /s/Steven Sidewater
______________________________
Trustee

WENDY SIDEWATER TRUST

By: /s/Steven Sidewater
______________________________
Trustee

PETER SIDEWATER TRUST

By: /s/Steven Sidewater
______________________________
Trustee

/s/Michael Moore
_____________________________________
Michael Moore

/s/Shelly Shapiro
______________________________________
Shelly Shapiro

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<PAGE> 17
Exhibit A

Other Stockholders

Steven Erlbaum
Gary Erlbaum
Phil Youtie
Michael Erlbaum
Steven Sidewater
Steven Erlbaum, custodian for Adam Erlbaum
Jon Erlbaum
Marc Erlbaum
Daniel Erlbaum
Vederman Family Partnership
Nancy Sidewater Trust
Wendy Sidewater Trust
Peter Sidewater Trust
Michael Moore
Shelly Shapiro

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<PAGE> 18
Exhibit B

Investors

Clipper Capital Associates, L.P.
Clipper/Merchant Partners, L.P.
Clipper Equity Partners I, L.P.
Clipper/Merban, L.P.
Clipper/SR, L.P.

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<PAGE> 1
Exhibit 10.4

AMENDMENT NO. 1 TO REGISTRATION AGREEMENT

THIS AMENDMENT is made as of August 15, 1997, between David's
Bridal, Inc. (formerly known as Phillie Bridals, Inc.), a Florida corporation
(the "Company"), the Persons listed on Exhibit A hereto (the "Other
Stockholders") and the Persons listed on Exhibit B hereto (the "Investors").

WHEREAS, the Company and certain stockholders of the Company
are parties to that certain Registration Agreement dated as of June 9, 1997 (the
"Registration Agreement"); and

WHEREAS, the Company is selling or agreeing to sell in the
future to certain Stockholders shares of Series D Preferred Stock of the Company
("Series D Preferred") and the Company and the Series D Stockholders desire for
the Series D Preferred to be Registrable Securities under the Registration
Agreement.

NOW, THEREFORE, intending to be legally bound, the Management
Agreement is hereby amended as follows:

1. All terms used in this Amendment but not otherwise defined
in this Amendment shall have the meanings set forth for such terms in the
Registration Agreement.

2. The definition of Clipper Registrable Securities in Section
8(a) of the Registration Agreement is hereby amended and restated in its
entirety to read as follows:

(a) "Clipper Registrable Securities" means (i) any
Class A Preferred issued to the Investors, (ii) any
Class B Preferred issued to the Investors, (iii) any
Class C Preferred issued to the Investors, (iv) any
Class D Preferred issued to the Investors, (v) any
Class A Common issued or issuable to the Investors
upon the conversion of the Class A Preferred or Class
D Preferred, (vi) any Class B Common issued or
issuable to the Investors upon conversion of the
Class B Preferred, (vii) any Class C Common issued or
issuable to the Investors upon conversion of the
Class C Preferred or Class A Common, (viii) any Class
A Common issued or issuable upon conversion of the
Class C Common and (ix) any Stock issued or issuable
to the Investors with respect to securities referred
to in clauses (i) - (viii) by way of a stock dividend
or stock split in connection with a combination of
shares, recapitalization, merger, consolidation or
other reorganization.

3. The definition of Other Stockholder Registrable Securities
in Section 8(b) of the Registration Agreement is hereby amended and restated in
its entirety to read as follows:

<PAGE> 2

(b) "Other Stockholder Registrable Securities" means
(i) the Class A Common Stock owned by the Other
Stockholders, (ii) any Class D Preferred issued to
the Other Stockholders and (iii) any Class A Common
Stock issued or issuable to the Other Stockholders
with respect to securities referred to in clauses (i)
or (ii) by way of a stock dividend or stock split in
connection with a combination of shares,
recapitalization, merger, consolidation or other
reorganization.

4. Exhibit A is hereby amended and restated in its entirety to
read as set forth on Exhibit A to this Amendment.

5. Any provision of the Registration Agreement which is
inconsistent with the provisions of this Amendment shall be deemed amended to
effectuate the intention expressed herein. Every other provision of the
Registration Agreement shall remain unchanged and in full force and effect.

6. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of Florida.

- 2 -

<PAGE> 3

IN WITNESS WHEREOF, this Amendment has been executed as of the
day and year first above written.

/s/ Steven Erlbaum
-------------------
Steven Erlbaum

/s/ Gerry Erlbaum
-------------------
Gary Erlbaum

/s/ Philip Youtie
-------------------
Philip Youtie

/s/ Michael Erlbaum
-------------------
Michael Erlbaum

/s/ Steven Sidewater
--------------------
Steven Sidewater

NANCY SIDEWATER TRUST

By: /s/ Steven Sidewater
------------------------
Trustee

VEDERMAN FAMILY PARTNERSHIP

By: /s/ Herbert Vederman
------------------------
General Partner

WENDY SIDEWATER TRUST

By: /s/ Steven Sidewater
------------------------
Trustee

- 3 -

<PAGE> 4

PETER SIDEWATER TRUST

By: /s/ Steven Sidewater
-----------------------------------------
Trustee

/s/ Jon Erlbaum
-----------------------------------------
Jon Erlbaum

/s/ Marc Erlbaum
-----------------------------------------
Marc Erlbaum

/s/ Daniel Erlbaum
-----------------------------------------
Daniel Erlbaum

/s/ Steven Erlbaum, as Custodian
-----------------------------------------
Adam Erlbaum, Steven Erlbaum as Custodian

/s/ Michael Moore
-----------------------------------------
Michael Moore

/s/ Shelly Shapiro
-----------------------------------------
Shelly Shapiro

/s/ Mordechai Kafry
-----------------------------------------
Mordechai Kafry

ADDWOOD LIMITED

By: /s/ Illegible
-----------------------------------------
Its:

Haleigh Youtie, Philip Youtie as Custodian

CORESTATES HOLDINGS, INC.

By: /s/ Illegible
-----------------------------------------
Its:

- 4 -

<PAGE> 5

CLIPPER CAPITAL ASSOCIATES, L.P.

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Eugene P. Lynch
-------------------------------------
Name: Eugene P. Lynch
Title: Treasurer and Secretary

CLIPPER/MERBAN, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Eugene P. Lynch
-------------------------------------
Name: Eugene P. Lynch
Title: Treasurer and Secretary

CLIPPER/MERCHANT PARTNERS, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Eugene P. Lynch
-------------------------------------
Name: Eugene P. Lynch
Title: Treasurer and Secretary

- 5 -

<PAGE> 6
CLIPPER EQUITY PARTNERS I, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Eugene P. Lynch
-----------------------------------
Name: Eugene P. Lynch
Title: Treasurer and Secretary

CLIPPER/SR, L.P.

By: Clipper Capital Associates, L.P.
Its: General Partner

By: Clipper Capital Associates, Inc.
Its: General Partner

By: /s/ Eugene P. Lynch
-----------------------------------
Name: Eugene P. Lynch
Title: Treasurer and Secretary

- 6 -
<PAGE> 7
EXHIBIT A

Other Stockholders

Steven Erlbaum
Gary Erlbaum
Philip Youtie
Michael Erlbaum
Steven Sidewater
Steven Erlbaum, custodian for Adam Erlbaum
Jon Erlbaum
Marc Erlbaum
Daniel Erlbaum
Vederman Family Partnership
Nancy Sidewater Trust
Wendy Sidewater Trust
Peter Sidewater Trust
Michael Moore
Shelly Shapiro
Philip Youtie, custodian for H. Youtie
Mordechai Kafry
Addwood Limited
CoreStates Bank, N.A.

- 7 -

<PAGE> 1
EXHIBIT 10.5

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

AMONG

DAVID'S BRIDAL, INC.
AND ITS SUBSIDIARIES SET FORTH
ON SCHEDULE 1 HERETO
("BORROWERS")

AND

FIRST UNION NATIONAL BANK
("BANK")

AS OF DECEMBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS

Page
----
<S> <C>
SECTION 1 - DEFINITIONS.........................................................................................1

1.1. Definitions......................................................................................1
1.2. Accounting Principles...........................................................................10

SECTION 2 - CREDIT FACILITY....................................................................................10

2.1. The Facility....................................................................................10
2.2. Promissory Note.................................................................................11
2.3. Use of Proceeds.................................................................................11
2.4. Repayment.......................................................................................11
2.5. Interest........................................................................................11
2.6. Advances........................................................................................17
2.7. Reduction and Termination of Commitment.........................................................18
2.8. Prepayment......................................................................................18
2.9. Payments........................................................................................19
2.10. Commitment Fee...................................................................................19
2.11. Closing Fee......................................................................................19
2.12. Regulatory Changes in Capital Requirements.......................................................19

SECTION 2A - LETTERS OF CREDIT.................................................................................20

2A.1. Availability of Credits..........................................................................20
2A.2. Commitment Availability..........................................................................21
2A.3. Approval and Issuance............................................................................21
2A.4. Obligations of the Borrower......................................................................22
2A.5. Collateral Security..............................................................................23
2A.6. General Terms of Credits.........................................................................24

SECTION 3 - REPRESENTATIONS AND WARRANTIES.....................................................................24

3.1. Organization and Good Standing..................................................................24
3.2. Power and Authority; Validity of Agreement......................................................25
3.3. No Violation of Laws or Agreements..............................................................25
3.4. Material Contracts..............................................................................25
3.5. Compliance......................................................................................25
3.6. Litigation......................................................................................26
</TABLE>

-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.7. Title to Assets.................................................................................26
3.8. Accuracy of Information; Full Disclosure........................................................26
3.9. Taxes and Assessments...........................................................................27
3.10. Indebtedness.....................................................................................27
3.11. Management Agreements............................................................................27
3.12. Investments; Capital Structure...................................................................27
3.13. ERISA ..........................................................................................28
3.14. Fees and Commissions.............................................................................28
3.15. No Extension of Credit for Securities............................................................28
3.16. Perfection of Security Interest..................................................................29
3.17. Hazardous Wastes, Substances and Petroleum Products..............................................29
3.18. Solvency.........................................................................................29
3.19. Employee Controversies...........................................................................30
3.20. Status of Subsidiaries that are not Borrowers....................................................30

SECTION 4 - CONDITIONS.........................................................................................30

4.1. Effectiveness...................................................................................30
4.2. Advances........................................................................................32

SECTION 5 - AFFIRMATIVE COVENANTS..............................................................................32

5.1. Existence and Good Standing.....................................................................32
5.2. Interim Financial Statements....................................................................33
5.3. Annual Financial Statements.....................................................................33
5.4. Compliance and Borrowing Base Certificates......................................................33
5.5. Receivables and Inventory Aging Reports. ......................................................33
5.6. Additional Information..........................................................................33
5.7. Books and Records...............................................................................33
5.8. Insurance.......................................................................................34
5.9. Litigation; Event of Default....................................................................34
5.10. Taxes ..........................................................................................34
5.11. Costs and Expenses...............................................................................34
5.12. Compliance; Notification.........................................................................34
5.13. ERISA ..........................................................................................35
5.14. Fixed Charge Coverage Ratio......................................................................35
5.15. Leverage Ratio...................................................................................36
</TABLE>

-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.16. Debt to Cash Flow Ratio..........................................................................36
5.17. Borrowing Base...................................................................................36
5.18. Management Changes...............................................................................36
5.19. Transactions Among Affiliates....................................................................36
5.20. Joinders.........................................................................................37
5.21. Further Assurances...............................................................................37
5.22. Other Information................................................................................37

SECTION 6 - NEGATIVE COVENANTS.................................................................................37

6.1. Indebtedness....................................................................................37
6.2. Guaranties......................................................................................38
6.3. Loans ..........................................................................................38
6.4. Liens and Encumbrances..........................................................................38
6.5. Additional Negative Pledge......................................................................38
6.6. Restricted Payments.............................................................................38
6.7. Transfer of Assets; Liquidation.................................................................39
6.8. Acquisitions and Investments....................................................................39
6.9. Payments to Affiliates..........................................................................39
6.10. Use of Proceeds..................................................................................39
6.11. Funds to Non-Borrower Subsidiaries...............................................................39

SECTION 7 - ADDITIONAL COLLATERAL AND RIGHT OF SET-OFF.........................................................40

7.1. Additional Collateral...........................................................................40
7.2. Right of Set-off................................................................................40

SECTION 8 - DEFAULT............................................................................................40

8.1. Events of Default...............................................................................40
8.2. Remedies........................................................................................42

SECTION 9 - MISCELLANEOUS......................................................................................43

9.1. Indemnification and Release Provisions..........................................................43
9.2. Participations and Assignments..................................................................43
9.3. Binding and Governing Law.......................................................................44
</TABLE>

-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.4. Survival........................................................................................44
9.5. No Waiver; Delay................................................................................44
9.6. Modification....................................................................................44
9.7. Headings........................................................................................44
9.8. Notices.........................................................................................44
9.9. Payment on Non-Business Days....................................................................45
9.10. Time of Day......................................................................................46
9.11. Severability.....................................................................................46
9.12. Counterparts.....................................................................................46
9.13. Consent to Jurisdiction and Service of Process...................................................46
9.14. WAIVER OF JURY TRIAL.............................................................................46
9.15. ACKNOWLEDGMENTS..................................................................................46
</TABLE>

-iv-
<PAGE> 6
LIST OF EXHIBITS

Exhibit A: Advance Request Form

Exhibit B: Form of Note

Exhibit C: Disclosure Pursuant to Representations and Warranties

Exhibit D: Funding Costs and Loss of Earnings Calculation

Exhibit E: Form of Compliance Certificate

Exhibit F: Form of Borrowing Base Certificate

-v-
<PAGE> 7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement") is made as of the 30th day of December, 1998, by and among DAVID'S
BRIDAL, INC., a Florida corporation ("DBI") and the direct and indirect
Subsidiaries of DBI set forth on Schedule 1 attached hereto (each individually a
"Borrower" and individually and collectively, "Borrowers"); and FIRST UNION
NATIONAL BANK (formerly CoreStates Bank, N.A.), a national banking association
("Bank").

W I T N E S S E T H :

WHEREAS, Borrowers and Bank are parties to that certain
Amended and Restated Credit Agreement dated as of December 31, 1997 (the
"Existing Credit Agreement"); and

WHEREAS, Borrowers have requested, and Bank has agreed subject
to the terms and conditions hereof, to amend the Existing Credit Agreement in
certain respects as set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and
the agreements hereinafter set forth, and intending to be legally bound, the
parties hereto hereby amend and restate the Existing Credit Agreement to read in
its entirety as follows:
SECTION 1

DEFINITIONS

1.1. Definitions. When used in this Agreement, the following
terms shall have the respective meanings set forth below.

"Advance" means a borrowing under the Commitment pursuant to
Paragraph 2.6 hereof.

"Advance Request Form" means the certificate in the form
attached hereto as Exhibit A to be delivered by Borrowers to Bank as a condition
of each Advance.

"Affiliate" means as to any party: (i) any person who or
entity which directly or indirectly owns, controls or holds ten percent (10%) or
more of the outstanding beneficial interests in such party; (ii) any entity of
which ten percent (10%) or more of the outstanding beneficial interest is
directly or indirectly owned, controlled, or held by such party; (iii) any
entity which directly or indirectly is under common control with such party;
(iv) any director or general partner of such party or any Affiliate; or (v) any
immediate family member of any person
<PAGE> 8
who is an Affiliate. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract, or otherwise.

"Agreement" means this Credit Agreement and all exhibits
hereto, as each may be amended, modified, extended, consolidated or restated
from time to time.

"Bank" means First Union National Bank, a national banking
association.

"Base Rate" means the higher of (a) the Federal Funds Rate
plus one half of one percent (1/2%) per annum or (b) the Prime Rate.

"Borrower" means individually, and "Borrowers" means
individually and collectively, DBI and the Subsidiaries of DBI listed on
Schedule 1 attached hereto, and any additional Material Subsidiaries of DBI
which may join in this Agreement pursuant to Paragraph 5.20 hereof from time to
time.

"Borrowing Base" means the sum of (i) eighty percent (80%) of
Eligible Accounts, plus (ii) sixty percent (60%) of Eligible Inventory, and
(iii) at any time during the months of October through March, an additional sum
equal to the Permitted Overadvance.

"Borrowing Base Certificate" means a certificate in the form
of Exhibit F attached hereto delivered by Borrowers to Bank pursuant to
Paragraph 5.4 or Paragraph 4.1 hereof.

"Business Day" means any day not a Saturday, Sunday or a day
on which banks are required or permitted to be closed under the laws of the
Commonwealth of Pennsylvania.

"Capital Leases" means capital leases and subleases, as
defined in Statement 13 of the Financial Accounting Standards Board dated
November 1976, as amended and updated from time to time.

"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, as amended from time to time, and all rules and
regulations promulgated in connection therewith.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and regulations with respect thereto in effect from time to
time.

"Collateral" means the collateral security for the Loan,
including under the Security Agreement, the Pledge Agreements, the L/C
Agreements, this Agreement or any other Loan Document.

-2-
<PAGE> 9
"Commitment" means at any time the maximum aggregate principal
amount up to which Bank has agreed to make Advances under Paragraph 2.1 hereof
and/or issue Letters of Credit under Section 2A hereof, being Thirty Million
Dollars ($30,000,000) on the date hereof.

"Compliance Certificate" means a certificate in the form of
Exhibit E attached hereto delivered by Borrowers to Bank pursuant to Paragraph
5.4 or Paragraph 4.1 hereof.

"DBI" means David's Bridal, Inc., a Florida corporation.

"Debt to Cash Flow Ratio" means, as of any date of
determination, the ratio of Total Debt as of such date of determination to
EBITDA for the most recent Rolling Period.

"Default" means an event, condition or circumstance the
occurrence of which would, with the giving of notice or the passage of time or
both, constitute an Event of Default.

"EBITDA" means, for any period, net income for such period as
defined in accordance with GAAP, plus interest expense, taxes, depreciation and
amortization, and non-cash non-operating extraordinary charges for such period,
in each case as defined in accordance with GAAP and to the extent each has been
deducted in determining net income.

"EBITDAR" means, for any period, EBITDA plus real property
rents for such period, as defined in accordance with GAAP and to the extent such
rents have been deducted in determining net income.

"Eligible Accounts" means, as of any date of determination
thereof, the aggregate amount of all trade account receivables of DBI and its
consolidated Subsidiaries, at book value net of reserves and contractual
allowances determined in accordance with GAAP, excluding, without duplication:

(a) any receivable not payable in United States Dollars;

(b) any receivable due from an account debtor located outside
of the United States;

(c) any receivable which by its terms is payable more than
ninety (90) days after the date of determination, or the invoice date for which
is more than sixty (60) days prior to the date of determination;

(d) any receivable due from any Borrower or any Subsidiary or
Affiliate of any Borrower;

-3-
<PAGE> 10
(e) any receivable with respect to all or part of which a
check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been presented for payment and returned uncollected for any
reason;

(f) any receivable as to which Borrowers know that any one or
more of the following events has occurred with respect to the account debtor:
death or judicial declaration of incompetency; the filing by or against such
account debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, or other relief
under the bankruptcy, insolvency, or similar laws of the United States, any
state or territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by such account debtor for the
benefit of creditors; the appointment of a receiver or trustee for such account
debtor or for any of the assets of such account debtor, including, without
limitation, the appointment of or taking possession by a "custodian," as defined
in the Bankruptcy Code; the institution by or against such account debtor of any
other type of insolvency proceeding (under the bankruptcy laws of the United
States or elsewhere) or of any formal or informal proceeding for the dissolution
or liquidation of, settlement of claims against, or winding up of affairs of,
such account debtor; the sale, assignment, or transfer of all or substantially
all of the assets of such account debtor; the inability to pay or the nonpayment
by such account debtor of its debts generally as they become due; the cessation
of the business of such account debtor as a going concern; or, in Bank's sole
reasonable judgment, unsatisfactory general financial performance or credit
standing or likelihood of unsatisfactory general financial performance or credit
standing in the near future;

(g) any receivable as to which there is any unresolved
dispute, defense, offset or counterclaim with or by the account debtor;

(h) any receivable that has not been created in the ordinary
course of business;

(i) any receivable representing an obligation for goods placed
on consignment and not yet sold by the consignee, or for goods on sale or return
or sale on approval;

(j) any receivable payable to a Subsidiary that is not a
Borrower; and

(k) any other class of receivable as Bank shall reasonably
determine based on a lending audit with respect thereto, if any.

"Eligible Inventory" means all finished goods inventory of DBI
and its consolidated Subsidiaries, at book value determined in accordance with
GAAP net of any reserves and allowances required by GAAP, plus the purchase
price of any inventory being purchased under outstanding Letters of Credit,
excluding, without duplication:

-4-
<PAGE> 11
(a) any inventory (other than inventory being purchased under
outstanding Letters of Credit) located at any location other than the stores and
warehouses identified on Exhibit A attached to the Security Agreement or
additional stores or warehouses from time to time as to which (i) Borrowers have
given to Bank thirty (30) days prior written notice thereof, which notice shall
include the address of such location and the identity, address and phone number
of the owner thereof, and (ii) Borrowers have executed and delivered any
documents required by Bank pursuant to Paragraph 5.21 hereof; provided, however,
that inventory being purchased pursuant to an outstanding Letter of Credit for
delivery to any such location shall not be excluded;

(b) any inventory (other than inventory being purchased under
outstanding Letters of Credit) located outside of the United States;

(d) any inventory in the possession of a contract
manufacturer, or in the possession of a third party on consignment or pursuant
to a sale on approval or sale or return, or otherwise located at the place of
business of a third party at which such party deals in goods of that kind or
under other circumstances in which such third party or creditors of such third
party may be able to assert rights in the inventory, other than the rights of a
landlord or mortgagee provided that Borrowers are not in default of any payment
obligation in excess of One Million Dollars ($1,000,000) or any other material
obligation to such landlord or mortgagee;

(e) any inventory (other than inventory being purchased under
outstanding Letters of Credit) represented by warehouse receipts or other
documents of title;

(f) any inventory sold on lay-away or any similar arrangement;
and

(g) any inventory that is damaged, obsolete, defective or
otherwise not salable in the ordinary course of business.

"Environmental Control Statutes" means any federal, state,
county, regional or local laws governing the control, storage, removal, spill,
release or discharge of Hazardous Substances, including without limitation
CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984,
the Federal Water Pollution Control Act, as amended by the Clean Water Act of
1976, the Hazardous Materials Transportation Act, the Emergency Planning and
Community Right to Know Act of 1986, the National Environmental Policy Act of
1975, the Oil Pollution Act of 1990, any similar or implementing state law, and
in each case including all amendments thereto and all rules and regulations
promulgated thereunder and permits issued in connection therewith.

-5-
<PAGE> 12
"EPA" means the United States Environmental Protection Agency,
or any successor thereto.

"ERISA" means the Employee Retirement Income Security Act of
1974, all amendments thereto and all rules and regulations in effect at any time
thereunder.

"ERISA Affiliate" means, when used with respect to any Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any person or entity that is a member of any group or organization within the
meaning of Code Sections 414(b), (c), (m) or (o) of which any Borrower is a
member.

"Event of Default" means an event described in Paragraph 8.1
hereof.

"Federal Funds Rate" means, for any day, the effective rate of
interest for such day, as announced from time to time by the Board of Governors
of the Federal Reserve System as shown in publication H.15 as the "Federal Funds
Rate."

"Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (i) EBITDAR for the most recent Rolling Period, to
(ii) the sum of (A) the current portion of long-term debt as of such date of
determination plus (B) interest expense, capital expenditures and rents for the
most recent Rolling Period (excluding up to Two Million Dollars ($2,000,000) of
capital expenditures consisting of information technology expenditures
associated with register/manager workstation upgrades and reporting systems, to
the extent that such expenditures have been financed by borrowings permitted
pursuant to Paragraph 6.1 hereof), in each case as determined in accordance with
GAAP.

"GAAP" means generally accepted accounting principles set
forth in the Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and in statements of the Financial
Accounting Standards Board, which are applicable in the circumstances as of the
date in question, subject to Paragraph 1.2 hereof; and such principles observed
in a current period shall be comparable in all material respects to those
applied in a preceding period, subject to Paragraph 1.2 hereof.

"Hazardous Substance" means petroleum products and items
defined in the Environmental Control Statutes as "hazardous substances",
"hazardous wastes", "pollutants" or "contaminants" and any other toxic,
reactive, corrosive, carcinogenic, flammable or hazardous substance or other
pollutant.

"Indebtedness" of any person as of any date of determination
means and includes all obligations of such person which, in accordance with
GAAP, shall be classified on a balance sheet of such person as liabilities of
such person and in any event shall include, without duplication, all (i)
obligations of such person for borrowed money or which have been incurred

-6-
<PAGE> 13
in connection with acquisition of property or assets, (ii) obligations secured
by any lien upon property or assets owned by such person, notwithstanding that
such person has not assumed or become liable for the payment of such
obligations, to the extent of the fair market value of such property, (iii)
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, (iv) Capital Leases, (v) guarantees and (vi) letters of
credit and letter of credit reimbursement obligations.

"L/C Agreements" means the Master Letter of Credit Agreement
and the CoreTrade(SM) Electronic Service Agreement executed and delivered by
Borrowers pursuant to the Existing Credit Agreement, and such other documents or
agreements as Bank may reasonably require from time to time in connection with
the issuance of Letters of Credit hereunder, in each case as may be amended,
modified, restated or replaced from time to time.

"Lease" means a lease of real property to which any Borrower
or any Subsidiary is a party.

"Letter of Credit" means individually, and "Letters of Credit"
means individually and collectively, the letter(s) of credit issued from time to
time by Bank pursuant to the terms and conditions of Section 2A hereof.

"Letter of Credit Sublimit" means the portion of the
Commitment up to which Bank has agreed to issue Letters of Credit pursuant to
Section 2A hereof, being Twenty-Five Million Dollars ($25,000,000) on the date
hereof.

"Leverage Ratio" means, as of any date of determination, the
ratio of Total Debt to net worth as of such date, as determined in accordance
with GAAP.

"Loan" means the aggregate outstanding principal balance of
indebtedness advanced and the outstanding amount of all Letters of Credit issued
under the Commitment, and without duplication the amount of all unreimbursed
draws under Letters of Credit, together with interest accrued thereon and fees
and expenses incurred in connection with any of the foregoing.

"Loan Documents" means this Agreement, the Note, the Security
Agreement, the Pledge Agreements, the L/C Agreements and the other documents and
agreements executed and delivered in connection with this Agreement.

"Local Authorities" means individually and collectively the
state and local governmental authorities and administrative agencies which
govern the business, commercial activities or facilities owned or operated by
any Company.

-7-
<PAGE> 14
"Maple Shade Mortgage" means the mortgage loan from PNC Bank,
National Association secured by the real estate associated with Borrowers' store
location at 539 Highway 38 West, Maple Shade, NJ 08052 in a principal amount of
$781,868 as of July 31, 1997, and any refinancing or replacement thereof that
does not increase the principal balance thereof or the collateral security
therefor and which is on terms which include a mortgagee consent and waiver in
favor of Bank in form and substance satisfactory to Bank.

"Material Adverse Effect" means a material adverse effect on
the business, financial condition or prospects of the Borrowers and its
consolidated Subsidiaries taken as a whole.

"Material Subsidiary" means any direct or indirect Subsidiary
of DBI which either (i) comprised five percent (5%) or more of the assets of DBI
and its consolidated Subsidiaries as of the most recent date as of which a
balance sheet has been delivered (or is required to have been delivered)
hereunder, or (ii) was responsible for five percent (5%) or more of EBITDA for
DBI and its consolidated Subsidiaries for the most recent Rolling Period.

"Note" means the second amended and restated promissory note
in the form of Exhibit B attached hereto delivered by Borrowers to Bank, as may
be amended, modified, extended, consolidated or restated from time to time.

"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

"Permitted Investments" means (i) investments in commercial
paper maturing in 180 days or less from the date of issuance which is rated A1
or better by Standard & Poor's Corporation or P1 or better by Moody's Investors
Services, Inc.; (ii) investments in direct obligations of the United States of
America or obligations of any agency thereof which are guaranteed by the United
States of America, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof; (iii) investments in certificates of
deposit maturing within one (1) year from the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $500,000,000 and the long-term deposits of which are rated A1 or better by
Moody's Investors Services, Inc. or equivalent by Standard & Poor's Corporation;
and (iv) investments in money market funds which invest solely in any of the
foregoing.

"Permitted Overadvance" means (i) from the date hereof through
March 31, 1999, Three Million Dollars ($3,000,000); (ii) for the period October
1, 1999 through March 31, 2000, Three Million Dollars ($3,000,000); (iii) for
the period October 1, 2000 through March 31, 2001, Two Million Dollars
($2,000,000), and (iv) at any other time, zero ($0).

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<PAGE> 15
"Plan" means any employee pension benefit or employee welfare
benefit plan as defined in Sections 3(1) or (2) of ERISA maintained or sponsored
by, contributed to, or covering employees of any Borrower or any ERISA
Affiliate.

"Pledge Agreements" means the Pledge Agreements executed and
delivered by DBI pursuant to Paragraph 4.1 hereof, and any additional Pledge
Agreement executed and delivered from time to time pursuant to Paragraph 5.20
hereof, each as may be amended, modified or restated from time to time.

"Prime Rate" means the rate of interest announced by Bank from
time to time as its prime rate.

"Redemption Agreements" means the Amended and Restated Stock
Redemption Agreement dated as of June 9, 1995 among DBI and certain shareholders
of DBI, and the Employment and Stock Redemption Agreement dated as of June 9,
1995 between DBI and Philip Youtie.

"Release" means any spill, leak, emission, discharge or the
pumping, pouring, emptying, disposing, injecting, escaping, leaching or dumping
of a Hazardous Substance.

"Restricted Payments" means redemptions, repurchases, and
distributions of any kind (including redemptions in exchange for real or
personal, tangible or intangible, property) in respect of any equity interests
in DBI, other than distributions of equity securities of DBI.

"Richmond Mortgage" means a mortgage loan in a principal
amount not to exceed $1,900,000 secured by the real estate associated with
Borrowers' store location in Richmond, Virginia on terms which include a
mortgagee consent and waiver in favor of Bank in form and substance satisfactory
to Bank.

"Rolling Period" means a period of four consecutive fiscal
quarters for which income statements have been (or are required to have been)
delivered hereunder.

"Sale of Material Assets" means any transfer, sale or other
disposition of assets of DBI or its consolidated Subsidiaries (including the
stock of any Subsidiary) in one or more related transactions, which represented,
or with respect to which the proceeds from such transaction(s) comprised, either
(i) 5% or more of the assets of DBI and its consolidated Subsidiaries as of the
most recent date for which a balance sheet has been delivered hereunder, or (ii)
5% or more of the EBITDA of DBI and its consolidated Subsidiaries for the most
recent Rolling Period; provided, however, that no such transaction shall
constitute a Sale of Material Assets to the extent that within ninety (90) days
after receipt of the proceeds thereof by DBI or its Subsidiary such proceeds
have been used to acquire assets of a similar character for use in the business
of DBI and its consolidated Subsidiaries.

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<PAGE> 16
"Security Agreement" means the Security Agreement executed by
Borrowers delivered pursuant to Paragraph 4.1 hereof (including as joined in by
any additional Borrowers pursuant to Paragraph 5.20 hereof from time to time),
as may be amended, modified, or restated from time to time.

"Subsidiary" means any corporation, partnership or other legal
entity of which any Borrower, directly or indirectly (including as beneficiary
of a business trust), owns more than fifty percent (50%) of any class or classes
of securities or partnership interests, and any partnership in which a Borrower
is a general partner. Unless otherwise specified, references to "Subsidiaries"
herein shall mean direct and indirect Subsidiaries of DBI.

"Termination Date" means the earlier of (i) July 31, 2001, or
(ii) the date on which the Commitment is terminated pursuant to Paragraph 2.7
hereof.

"Total Debt" means, as of any date of determination, the sum
of total liabilities and the undrawn amount of all Letters of Credit as of such
date, as determined in accordance with GAAP.

1.2. Accounting Principles. Except as otherwise provided
herein, financial and accounting terms used in the foregoing definitions or
elsewhere in this Agreement, shall be defined in accordance with GAAP. If
Borrowers or Bank determine that a change in GAAP from that in effect on the
date hereof has altered the treatment of certain financial data to its detriment
under this Agreement, such party may, by written notice to the other within
thirty (30) days after the effective date of such change in GAAP, require
renegotiation of the financial covenants affected by such change to modify such
covenants as necessary to equitably reflect such change in GAAP. If Borrowers
and Bank have not agreed on revised covenants within thirty (30) days after the
delivery of such notice, then, for purposes of this Agreement, GAAP will mean
generally accepted accounting principles on the date just prior to the date on
which the change occurred that gave rise to the notice.

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<PAGE> 17
SECTION 2

CREDIT FACILITY

2.1. The Facility.

(a) Commitment. From time to time prior to the
Termination Date, subject to the provisions below, Bank agrees to make Advances
to Borrowers, jointly and severally, which Borrowers may repay and reborrow
prior to the Termination Date, for purposes specified in Paragraph 2.3 hereof;
provided, however, that the aggregate outstanding principal amount of such
Advances shall not exceed at any time the lesser of the Commitment or the
Borrowing Base.

(b) Joint and Several Obligation. The obligations of
Borrowers hereunder are and shall be joint and several.

(c) Authority of DBI. Each of the Borrowers hereby
irrevocably authorizes and requests that DBI execute all Advance Request Forms,
make all elections as to interest rates and take any other actions required or
permitted of Borrowers under this Agreement, on its respective behalf, in each
case with the same force and effect as if such Borrower had executed such
Advance Request Form, made such election or taken such other action itself. Any
request, application or other communication by DBI may be relied on by Bank, and
any communication by Bank shall be made to DBI, and shall be binding on each
Borrower, jointly and severally, as fully as if such request, application or
other communication were made directly by or to each such Borrower.

2.2. Promissory Note. The Indebtedness of the Borrowers to
Bank under the Loan will be evidenced by a Note executed by Borrowers in favor
of Bank. The original principal amount of the Note will be in the amount of the
Commitment; provided, however, that notwithstanding the face amount of such
Note, Borrowers' liability thereunder shall be limited at all times to the
actual indebtedness, principal, interest, fees and expenses then outstanding to
Bank under the Loan.

The Note amends and restates the promissory note dated August
1, 1997, as previously amended and restated as of December 31, 1997, and
delivered by Borrowers to Bank in connection with the Existing Credit Agreement
(the "Prior Note"); provided, however, that the Note shall not be deemed to have
extinguished or discharged the indebtedness and obligations of Borrowers under
the Prior Note or the collateral security therefor, all of which shall continue
under and be governed by this Agreement, the Note, and the other Loan Documents,
each as may be confirmed, supplemented, amended or restated in connection
herewith.

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<PAGE> 18
2.3. Use of Proceeds. Funds advanced under the Loan shall be
used solely (i) for Borrowers' working capital needs and general corporate
purposes of Borrowers, and (ii) for reimbursement of draws under Letters of
Credit in accordance with Paragraph 2A.4(b) hereof.

2.4. Repayment. The aggregate outstanding principal balance
under the Loan on the Termination Date, together with all interest, fees and
costs due hereunder, shall be due and payable in full on July 31, 2001.
Notwithstanding the immediately preceding sentence, the aggregate outstanding
balance of the Loan shall be due and payable immediately upon acceleration of
the Loan in accordance with Paragraph 8.2 hereof.

2.5. Interest. Portions of the Loan shall bear interest on the
outstanding principal amount thereof in accordance with the following
provisions:

(a) Definitions. As used in this Paragraph 2.5 and
elsewhere in this Agreement, the following words and terms shall have the
meanings specified below:

"Adjusted Libor Rate" shall mean, for any Interest Period, as
applied to a Portion, the rate per annum (rounded upwards, if necessary to the
next 1/100 of 1%) determined pursuant to the following formula:

Adjusted Libor Rate = Libor Rate
[1 - Reserve Percentage]

For purposes hereof, "Libor Rate" shall mean, as applied to a Portion, the rate
which appears on the Telerate Page 3750 at approximately 9:00 a.m. Philadelphia
time two London Business Days prior to the commencement of such Interest Period
for the offering to leading banks in the London Interbank Market of deposits in
United States dollars ("Eurodollars") or, if such rate does not appear on the
Telerate page 3750, the rate which appears (or, if two or more such rates
appear, the average rounded up to the nearest 1/100 of 1% of the rates which
appear) on the Reuters Screen LIBO Page as of 9:00 a.m. Philadelphia time two
London Business Days prior to the commencement of the Interest Period, in either
case for an amount substantially equal to such Portion as to which Borrowers may
elect the Adjusted Libor Rate to be applicable with a maturity of comparable
duration to the Interest Period selected by Borrowers for such Portion, as may
be adjusted from time to time in accordance with Paragraph 2.5(f) hereof. As of
the date hereof, the Reserve Percentage is zero percent (0%).

"Applicable Margin" means the percentage per annum set forth
in the appropriate column below that corresponds to the ratio of Total Debt to
EBITDA for DBI and its consolidated Subsidiaries for the most recent Rolling
Period (the Applicable Margin being the lowest applicable percentage per annum
as to which the ratio requirement has been attained):

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<PAGE> 19
<TABLE>
<CAPTION>
Applicable Margin
-----------------
Ratio of Total Debt Base Rate Libor
Level to EBITDA Portions Portions
- - ----- --------- -------- --------
<S> <C> <C> <C>
I Greater than 2.75 to 1 0.00% 1.75%

II Less than or equal to 0.00% 1.50%
to 2.75 to 1 but greater
than 2.50 to 1

III Less than or 0.00% 1.25%
equal to 2.50 to 1
</TABLE>

The initial Applicable Margin, which shall remain in effect until delivery of a
Compliance Certificate with respect to the first quarter of 1999, shall be based
on Level II. Thereafter the Applicable Margin shall adjust automatically, as
appropriate, on the day following delivery of a quarterly Compliance Certificate
in accordance with Paragraph 5.4 hereof, commencing with the Compliance
Certificate to be delivered with respect to the first quarter of 1999; provided,
that in the event that a quarterly compliance certificate has not been delivered
on the date required by Paragraph 5.4 then the Applicable Margin shall adjust to
the highest margin provided above as of the date of required delivery; provided
further, however, that the Applicable Margin shall readjust on the day after
delivery of such delinquent Compliance Certificate based on the ratio set forth
in such Compliance Certificate.

"Base Rate Portion" means a Portion as to which Borrowers have
elected the rate of interest based on the Base Rate to be applicable.

"Interest Period" shall mean, with respect to any Libor
Portion, a period of one (1), two (2), three (3) or six (6) months' duration, as
Borrowers may elect, during which the Adjusted Libor Rate is applicable;
provided, however, that (a) if any Interest Period would otherwise end on a day
which shall not be a London Business Day, such Interest Period shall be extended
to the next succeeding London Business Day, unless such London Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding London Business Day, subject to clause (c) below; (b)
interest shall accrue from and including the first day of each Interest Period
to, but excluding, the day on which any Interest Period expires; (c) with
respect to an Interest Period which begins on the last London Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period), the Interest Period
shall end on the last London Business Day of a calendar month; and (d) Borrowers
may not elect an Interest Period that would extend past the Termination Date.

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<PAGE> 20
"Libor Portion" means a Portion as to which Borrowers have
elected the interest rate based on the Adjusted Libor Rate to be applicable.

"London Business Day" shall mean any Business Day on which
banks in London, England are open for business.

"Portion" shall mean a portion of the Loan as to which a
specific interest rate and, in the case of a Libor Portion, an Interest Period,
has been elected by Borrower.

"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, comprising Part 204 of Title 12 Code of
Federal Regulations, as amended, and any successor thereto.

"Reserve" shall mean, for any day, that reserve (expressed as
a decimal) which is in effect (whether or not actually incurred) with respect to
Bank on such day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor or any other banking authority to which Bank is subject
including any board or governmental or administrative agency of the United
States or any other jurisdiction to which Bank is subject for determining the
maximum reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for Eurocurrency liabilities as
defined in Regulation D.

"Reserve Percentage" shall mean, for Bank on any day, that
percentage (expressed as a decimal) prescribed by the Board of Governors of the
Federal Reserve System (or any successor or any other banking authority to which
Bank is subject, including any board or governmental or administrative agency of
the United States or any other jurisdiction to which Bank is subject), for
determining the reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for (i) deposits of United States
Dollars or (ii) Eurocurrency liabilities as defined in Regulation D, in each
case used to fund a Libor Portion. The Adjusted Libor Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.

(b) Interest on Loan.

(i) At the Borrowers' election in accordance with the
provisions of Paragraph 2.5(c) below, in the absence of an Event of Default
hereunder and prior to maturity or judgment, and subject to clause (ii) below,
any Portion of the Loan shall bear interest at either of the following rates:

(A) Base Rate. The Base Rate plus the
Applicable Margin.

(B) Adjusted Libor Rate. The Adjusted Libor
Rate plus the Applicable Margin.

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<PAGE> 21

(ii) Notwithstanding the foregoing, upon the occurrence
and during the continuance of an Event of Default hereunder, including after
maturity and upon judgment, Borrowers hereby agree to pay to Bank interest (A)
on any outstanding Libor Portion at the rate which is two percent (2%) per annum
in excess of the Adjusted Libor Rate plus the Applicable Margin for each such
Portion through the end of the applicable Interest Period, and thereafter, at
the rate of two percent (2%) per annum in excess of the Base Rate plus the
Applicable Margin, and (B) on any Portion bearing interest based on the Base
Rate, at the rate of two percent (2%) per annum in excess of the Base Rate plus
the Applicable Margin.

(i) If Borrowers elect the rate based on the Base Rate to
be applicable to a Portion, Borrowers must notify Bank of such election in
writing prior to eleven o'clock (11:00) a.m. Philadelphia time one (1) Business
Day prior to the proposed application of such rate. If Borrowers elect the rate
based on the Adjusted Libor Rate to be applicable to a Portion, Borrowers must
notify Bank of such election and the Interest Period selected prior to eleven
o'clock (11:00) a.m. Philadelphia time at least two (2) London Business Days
prior to the commencement of the proposed Interest Period. If Borrowers do not
provide notice for the rate based on the Adjusted Libor Rate, then Borrowers
shall be deemed to have requested that the rate based on the Base Rate shall
apply to any Portion as to which the Interest Period is expiring and to any new
Advance of the Loan until Borrowers shall have given proper notice of a change
in or determination of the rate of interest in accordance with this Paragraph
2.5(c).

(ii) Borrowers shall not elect more than five (5)
different Libor Portions to be applicable to the Loan at one time, and any
Portion shall be in an even multiple of One Hundred Thousand Dollars ($100,000).

(d) Payment and Calculation of Interest. With respect to Libor
Portions, interest shall be due and payable on the last day of each Interest
Period for each such Portion, and, in the case of a Libor Portion with an
Interest Period of six (6) months, on the ninetieth (90) day after the
commencement of such Interest Period and on the last day of the Interest Period.
With respect to Base Rate Portions, interest shall be due and payable on the
last Business Day of each month commencing on the first such date after the
first Advance which bears interest at the rate based on the Base Rate. Interest
shall be calculated in accordance with the provisions of Paragraph 2.5(b)
hereof; all interest based on the Adjusted Libor Rate or the Federal Funds Rate
shall be calculated on the basis of the actual number of days elapsed over a
year of three hundred sixty (360) days, and interest based on the Prime Rate
shall be calculated on the basis of the actual number of days elapsed over a
year of three hundred sixty-five (365) or three hundred sixty-six (366) days, as
applicable.

(e) Reserves. If at any time when a Libor Portion is
outstanding, Bank (or a bank Affiliate of Bank) is subject to and incurs a
Reserve, Borrowers hereby agree to pay

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<PAGE> 22
within five (5) Business Days of demand thereof from time to time, as billed by
Bank, such additional amount as is necessary to reimburse Bank for its costs in
maintaining such Reserve to the extent that such costs are not reflected in the
Reserve Percentage used to determine the Adjusted Libor Rate. Such amount shall
be computed by taking into account the cost incurred by Bank in maintaining such
Reserve in an amount equal to the Portion on which such Reserve is incurred,
which computation shall be set forth in any such demand by Bank. The
determination by Bank of such costs incurred and the allocation of such costs
among Borrowers and other customers which have similar arrangements with Bank
shall be prima facie evidence of the correctness of the fact and the amount of
such additional costs, if calculated in a manner consistent with similar charges
made by Bank to its other customers having similar arrangements with Bank. Upon
notification to Borrowers of any payment required pursuant to this Paragraph
2.5(e), Borrowers (A) shall make such payment in accordance with the provisions
hereof and (B) may repay the Portion of the Loan with respect to which such
payment is required, subject to the requirements of Paragraph 2.8 and 2.5(g)
hereof.

(f) Special Provisions Applicable to Adjusted Libor Rate. The
following special provisions shall apply to the Adjusted Libor Rate:

(i) Change of Adjusted Libor Rate. The Adjusted Libor Rate
may be automatically adjusted by Bank on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the
Reserve Percentage and any Reserve which has resulted in a payment pursuant to
subparagraph (e) above, that increase the cost to Bank of funding the Loan or a
portion thereof bearing interest based on the Adjusted Libor Rate. Bank shall
give Borrowers notice of such a determination and adjustment, which
determination shall be prima facie evidence of the correctness of the fact and
the amount of such adjustment. Borrowers may, by notice to Bank, (A) request
Bank to furnish to Borrowers a statement setting forth the basis for adjusting
such Adjusted Libor Rate and the method for determining the amount of such
adjustment; and/or (B) repay the Portion of the Loan with respect to which such
adjustment is made, subject to the requirements of Paragraph 2.8 and 2.5(g)
hereof.

(ii) Unavailability of Eurodollar Funds. In the event that
Borrowers shall have requested the rate based on the Adjusted Libor Rate in
accordance with Paragraph 2.5(c) and Bank shall have reasonably determined that
Eurodollar deposits equal to the amount of the principal of the Portion and for
the Interest Period specified are unavailable, or that the rate based on the
Adjusted Libor Rate will not adequately and fairly reflect the cost of making or
maintaining the principal amount of the Portion specified by Borrowers during
the Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets,

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<PAGE> 23
adequate and reasonable means do not exist for ascertaining the rate based on
the Adjusted Libor Rate applicable to the specified Interest Period, Bank shall
give notice of such determination to Borrowers that the rate based on the
Adjusted Libor Rate is not available. A determination by Bank hereunder shall be
prima facie evidence of the correctness of the fact and amount of such
additional costs or unavailability. Upon such a determination, (i) the
obligation to advance or maintain Libor Portions shall be suspended until Bank
shall have notified Borrowers that such conditions shall have ceased to exist,
and (ii) the rate based on the Base Rate shall be applicable to all Portions.

(iii) Illegality. In the event that it becomes unlawful
for Bank (or Bank's bank Affiliate) to maintain Eurodollar liabilities
sufficient to fund any Portion of the Loan subject to the rate based on the
Adjusted Libor Rate, then Bank shall immediately notify Borrowers thereof and
Bank's obligations hereunder to advance or maintain advances at the rate based
on the Adjusted Libor Rate shall be suspended until such time as Bank (or Bank's
bank Affiliate) may again cause the rate based on the Adjusted Libor Rate to be
applicable to any Portion of the outstanding principal balance of the Loan and
any Portion shall then be subject to the rate based on the Base Rate.

(g) Funding Costs and Loss of Earnings. In the event that
Borrowers shall have requested the Adjusted Libor Rate to be applicable to a
Portion to be Advanced and Borrowers shall revoke the request for such Advance
or shall fail to meet the conditions to such Advance as set forth in Section
Four hereof, and in connection with any prepayment or repayment of a Libor
Portion made on other than the last day of the applicable Interest Period,
whether such prepayment or repayment is voluntary, mandatory, by demand,
acceleration or otherwise, Borrowers shall pay to Bank all reasonable funding
costs and loss of earnings which may arise in connection with such revocation of
request for or failure to meet the conditions to such Advance or such prepayment
or repayment, as calculated by Bank in accordance with Exhibit D hereto.

2.6. Advances.

(a) Advance Request. Borrowers shall give Bank written notice,
not later than eleven o'clock (11:00) a.m. Philadelphia time one (1) Business
Day prior to the proposed Advance in the case of an advance of a Base Rate
Portion, and two (2) Business Days prior to an advance of a Libor Portion, of
each requested Advance under the Commitment specifying the date, amount and
purpose thereof. Such notice shall be in the form of the Advance Request Form
attached hereto as Exhibit A, shall be certified by the chief financial officer
of DBI or other financial officer designated by the president or chief financial
officer of DBI and as to which an incumbency certificate and specimen signature
have been provided to Bank, and shall contain the following information and
representations, which shall be deemed affirmed and true and correct as of and
upon receipt of the date of and upon receipt of the requested Advance:

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<PAGE> 24
(i) the aggregate amount of the requested Advance, which
shall be an even multiple of $100,000;

(ii) confirmation of compliance with Paragraphs 5.14
through 5.17 as of the most recent date for which a Compliance Certificate or
Borrowing Base Certificate, as applicable, has been (or is required to have
been) delivered, and taking into account any Advances, including the requested
Advance, and payments since such date; and

(iii) statements that the representations and warranties
set forth herein and in the other Loan Documents are true and correct in all
material respects as of the date thereof; no Event of Default or Default
hereunder has occurred and is then continuing or will be caused by the requested
Advance; and there has been no Material Adverse Effect since the date of this
Agreement and no event or circumstance (or combination of events or
circumstances) has occurred which is reasonably likely to have a Material
Adverse Effect.

(b) Procedures. Upon receiving a request for an Advance in
accordance with subparagraph (a) above, subject to the satisfaction of the terms
and conditions hereof, Bank shall make the requested Advance available to
Borrowers by crediting such amount to Borrowers' deposit account with Bank not
later than two o'clock (2:00) p.m. on the day of the requested Advance.

(c) Requests Irrevocable. Each request for an Advance pursuant
to this Paragraph 2.6 shall be irrevocable and binding on Borrowers. In the case
of any Advance bearing interest at the rate based upon the Adjusted Libor Rate,
Borrowers shall indemnify Bank against any loss, cost or expense incurred by
Bank as a result of not borrowing such funds on the requested Advance date,
including as a result of any failure to fulfill on or before the date specified
in such request for an Advance the applicable conditions set forth in Section
Four hereof, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or redeployment of deposits or other funds acquired
by Bank to fund the Advance to be made by Bank when such Advance, as a result of
such failure, is not made on such date, as calculated by Bank in accordance with
Exhibit D attached hereto.

2.7. Reduction and Termination of Commitment.

(a) Borrowers. Borrowers shall have the right at any time and
from time to time, upon three (3) Business Days' prior written notice to Bank,
to reduce the Commitment in increments of $1,000,000 or multiples thereof
without penalty or premium, provided that on the effective date of such
reduction Borrowers shall make a prepayment of the Loan in an amount, if any, by
which the aggregate outstanding principal balance of the Loan exceeds the amount
of the Commitment as then so reduced, together with accrued interest on the
amount so prepaid and any amounts due pursuant to Paragraph 2.5(g) hereof.

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<PAGE> 25
(b) Bank. Bank shall have the right to terminate the
Commitment at any time, in its discretion and upon notice to Borrowers, upon the
occurrence of any Event of Default hereunder (except if an Event of Default
described in Paragraph 8.1(i) shall occur with respect to any Borrower, or with
respect to more than two Subsidiaries that are not Borrowers at any one time, in
which case termination of the Commitment shall occur automatically without
notice).

(c) Restoration Only With Consent. Any termination or
reduction of the Commitment pursuant to subparagraphs 2.7(a) and (b) shall be
permanent, and such Commitment cannot thereafter be restored or increased
without the written consent of Bank.

2.8. Prepayment.

(a) Upon one (1) Business Day's prior written notice by
Borrowers to Bank, Borrowers may repay all or any portion of the outstanding
principal balance under the Loan without premium or penalty, provided that any
such payment shall include all accrued interest on the amount prepaid plus any
amounts which may be due pursuant to Paragraph 2.5(g) hereof.

(b) If at any time the aggregate outstanding principal balance
of the Loan plus the undrawn amount of all outstanding Letters of Credit is in
excess of the Borrowing Base, Borrowers shall immediately make a prepayment of
the Loan in accordance with subparagraph (a) above in an amount sufficient to
reduce the balance of the Loan to an amount less than or equal to the Borrowing
Base, together with interest on the amount prepaid through the date or
prepayment and any amounts owed pursuant to Paragraph 2.5(g) hereof.

(c) Upon any Sale of Material Assets, or upon the incurrence
of any Indebtedness for borrowed money (other than normal purchase money
indebtedness and the Richmond Mortgage), Borrowers shall pay to Bank the full
amount of the proceeds thereof, for application to the outstanding principal
balance of the Loan, together with interest on the amount repaid through the
date of repayment and any amounts owed pursuant to Paragraph 2.5(g) hereof.

(d) Payments made prior to the Termination Date shall not
reduce the Commitment and may be reborrowed in accordance with this Agreement.

2.9. Payments. All payments of principal, interest, fees and other
amounts due hereunder, including any prepayments thereof, shall be made by
Borrowers to Bank in immediately available funds before twelve o'clock (12:00)
noon, Philadelphia time, on any Business Day at the office of Bank at 1339
Chestnut Street, Philadelphia, PA 19101. Borrowers hereby authorize Bank to
charge Borrowers' accounts with Bank for all payments of principal, interest and
fees when due hereunder.

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<PAGE> 26
2.10. Commitment Fee. Borrowers shall pay to Bank a non-refundable
commitment fee at the rate of one-quarter of one percent (1/4%) per annum on the
unborrowed portion of the Commitment from the date hereof through the
Termination Date, which fees shall be payable at the offices of Bank quarterly
in arrears on the tenth day of each January, April, July and October and on the
applicable Termination Date. The commitment fee shall be calculated on the basis
of the actual number of days elapsed over a year of three hundred sixty (360)
days.

Borrowers and Bank hereby agree that for purposes of calculating the
commitment fee to be paid from time to time under this Paragraph 2.10, the
unborrowed portion of the Commitment (on which such fee is calculated) shall be
reduced by the amount available to be drawn under outstanding Letters of Credit.

2.11. Closing Fee. On the date of this Agreement, Borrowers shall pay
to Bank a fee in the amount of $25,000.

2.12. Regulatory Changes in Capital Requirements. If Bank shall have
determined that the adoption or the effectiveness after the date hereof of any
law, rule, regulation or guideline regarding capital adequacy, or any change in
any of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by Bank
(or any lending office of Bank) or Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency which is generally
applicable to banks comparable to Bank, has or would have the effect of reducing
the rate of return on Bank's capital or on the capital of Bank's holding
company, as a consequence of this Agreement, the Commitment, Advances, Letters
of Credit or the Loan made by Bank pursuant hereto to a level below that which
Bank or its holding company could have achieved but for such adoption, change or
compliance (taking into consideration Bank's policies and the policies of Bank's
holding company with respect to capital adequacy) by an amount deemed by Bank to
be material, then from time to time Borrowers shall pay to Bank such additional
amount or amounts as will compensate Bank or its holding company for any such
reduction suffered together with interest on each such amount from the date due
until payment in full thereof at the rate provided in Paragraph 2.5(b)(ii)
hereof with respect to amounts not paid when due. Bank will notify Borrowers of
any event occurring after the date of this Agreement that will entitle Bank to
compensation pursuant to this Paragraph 2.12 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, and such
compensation shall not be charged for any period more than three (3) months
prior to the date of such notice.

A certificate of Bank setting forth such amount or amounts as shall be
necessary to compensate Bank or its holding company as specified above and
describing the calculation of such amount shall be delivered to Borrowers and
shall be conclusive absent manifest error, if calculated and charged in a manner
consistent with similar charges made by Bank to its other

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customers having similar arrangements with Bank. Borrowers shall pay Bank the
amount shown as due on any such certificate delivered by Bank within ten (10)
days after its receipt of the same.

Failure on the part of Bank to demand compensation for increased costs
or reduction in amounts received or receivable or reductions in return on
capital with respect to any period shall not constitute a waiver of Bank's right
to demand compensation with respect to any other period except as otherwise
limited by the terms of this Paragraph 2.12.

SECTION 2A

LETTERS OF CREDIT

2A.1. Availability of Credits. Subject to the terms and conditions set
forth herein, Bank shall from time to time prior to the Termination Date issue
Letters of Credit for the account of one or more Borrowers on the following
terms and conditions:

(a) at the time of issuance of the Letter of Credit, the sum
of the amount available to be drawn under such Letter of Credit and all other
Letters of Credit then outstanding hereunder plus any unreimbursed draws under
Letters of Credit, plus the outstanding principal balance of the Loan, shall not
exceed the lesser of the Commitment or the Borrowing Base;

(b) at the time of issuance of the Letter of Credit, the
amount available to be drawn under such Letter of Credit and all other Letters
of Credit then outstanding hereunder plus any unreimbursed draws under Letters
of Credit shall not exceed, in the aggregate, the Letter of Credit Sublimit;

(c) the final expiration date of each Letter of Credit shall
be on or before the earlier of (i) one year, in the case of standby Letters of
Credit, and one hundred eighty (180) days, in the case of documentary Letters of
Credit, from the date of issuance thereof or (ii) the Termination Date;

(d) there shall not exist at the time of issuance of the
Letter of Credit, or as a result thereof, any Default or Event of Default
hereunder; and

(e) each Letter of Credit issued under this Section 2A shall
be utilized by a Borrower for legitimate purposes in the ordinary course of its
business.

2A.2. Commitment Availability. The amount available under the
Commitment as from time to time in effect shall be reduced by the amount
available to be drawn under all outstanding Letters of Credit and unreimbursed
amounts of any draws under Letters of Credit.

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The amount by which the Commitment is so reduced shall not be available for
Advances under Paragraph 2.6 hereof, except Advances thereunder which are made
to reimburse Bank for draws under the Letters of Credit as permitted pursuant to
Paragraph 2A.4(b) hereof.

2A.3. Approval and Issuance.

(a) Whenever a Borrower desires that a Letter of Credit be
issued for its account, or that an outstanding Letter of Credit issued for its
account be amended, such Borrower shall give Bank at least three (3) Business
Days' prior written request therefor in the case of a standby Letter of Credit,
and, in the case of a documentary Letter of Credit, written request therefor (or
by electronic request pursuant to procedures established between Borrowers and
Bank) one (1) Business Day prior to issuance.

(b) Letters of Credit and amendments thereto shall be
requested, processed and issued, and draws thereon shall be negotiated,
processed and paid, in accordance with and subject to the terms and procedures
of the L/C Agreements entered into between Borrowers and Bank.

(c) It shall be a condition to the issuance of any Letter of
Credit that the conditions set forth in Paragraph 2A.1 and 4.2 shall be
satisfied.

2A.4. Obligations of the Borrower.

(a) Borrowers agrees to pay to Bank in connection with each
Letter of Credit issued hereunder:

(i) immediately upon the demand of Bank, the amount paid
by Bank with respect to such Letter of Credit;

(ii) immediately upon demand of Bank, the amount of any
draft presented purporting to be drawn under such Letter of Credit provided that
the draft and accompanying documents conform to the terms of the Letter of
Credit but subject to the terms of Paragraph 2A.7 (whether or not Bank has at
such time honored such draft) and any other amounts paid thereunder (it being
understood that Bank is not required to make demand upon or proceed against any
other party or to resort to any Collateral before obtaining payment from
Borrowers);

(iii) quarterly in arrears on the first day of each June,
September, December and March, a fee calculated on the average outstanding
amount of documentary Letters of Credit for such period at a rate per annum
equal to one-quarter of one percent (1/4%);

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<PAGE> 29
(iv) in advance upon the date of issuance or extension of
any standby Letter of Credit, a fee calculated on the face amount of such
standby Letter of Credit for the term of such Letter of Credit at a rate per
annum equal to one percent (1%), provided, that the fee with respect to an
initial standby Letter of Credit to be issued hereunder in favor of PNC Bank,
N.A. with respect to letters of credit which were issued by PNC Bank, N.A.
pursuant to existing financing and remain outstanding at the date of this
Agreement shall be at a rate per annum equal to one-quarter of one percent
(1/4%); and

(v) interest on any indebtedness outstanding with respect
to such Letter of Credit, whether for funds paid on drafts on such Letter of
Credit or otherwise (but such indebtedness shall not include undrawn balances of
such Letter of Credit issued hereunder) at the rate set forth in Paragraph
2.5(b)(i)(A) hereof from the date of payment by Bank (if not reimbursed by
Borrowers on the same day) to the date one (1) Business Day after notice to
Borrowers of such payment, and thereafter at the rate applicable to Portions
bearing interest based on the Base Rate under Paragraph 2.5(b)(ii) hereof;
interest under this clause (v) shall be paid at the times and in the manner set
forth in Paragraph 2.5 hereof, and shall accrue on amounts paid on a Letter of
Credit (if not reimbursed by Borrowers on the same day) from the date of payment
by Bank, whether or not demand is made, until such amounts are reimbursed by
Borrowers whether before, at or after demand.

(b) On or before the Termination Date, in the absence of a
Default or Event of Default at such time, and subject to the provisions of
Paragraph 2.6 hereof, Bank hereby agrees to advance funds to Borrowers under the
Loan to make the payments required under Paragraphs 2A.4(a)(i) and (ii) hereof.
If any payment by Bank of a draft drawn under a Letter of Credit is for any
reason (including without limitation the occurrence or continuation of a Default
or Event of Default hereunder) not reimbursed prior to or on the date of such
payment, the amount of such payment shall thereupon be deemed for purposes
hereof an advance under Paragraph 2.6 hereof. Such reimbursement obligation
shall be repayable, prepayable, and otherwise subject to all the terms and
conditions thereof as if advanced by Bank pursuant to Paragraph 2.6 hereof (but
without duplication).

2A.5. Collateral Security.

(a) The indebtedness, liabilities and obligations of Borrowers
under this Section 2A, however created or incurred, whether now existing or
hereafter arising, due or to become due, absolute or contingent, direct or
indirect, secured or unsecured, are among the obligations secured by the
security interests, liens and encumbrances created by the Collateral, and Bank
is entitled to the benefit of the Collateral granted thereunder with respect to
such indebtedness.

(b) Notwithstanding the payment in full of the Loan, the
termination of the Commitment or the occurrence of the Termination Date, the
Collateral shall continue to

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<PAGE> 30
secure the indebtedness, liabilities and obligations of Borrowers under this
Section 2A until all Letters of Credit shall have expired and all indebtedness,
liabilities and obligations under this Section 2A shall have been paid in full
or until the cash collateral required by subparagraph (c) below has been
provided.

(c) On the termination of the Commitment or the occurrence of
an Event of Default, Bank may require (and in the case of an Event of Default
occurring under Paragraph 8.1(i) it shall be required automatically) that
Borrowers deliver to Bank cash or U.S. Treasury Bills with maturities of not
more than 90 days from the date of delivery (discounted in accordance with
customary banking practice to present value to determine amount) in an amount
equal at all times to one hundred five percent (105%) of the outstanding undrawn
amount of all Letters of Credit, such cash or U.S. Treasury Bills and all
interest earned thereon to constitute cash collateral for all such Letters of
Credit. At such time as such collateral is required to be and has not been
deposited, Bank shall be entitled to liquidate such of the other collateral for
the Loan (if any) as is necessary or appropriate in its sole judgment so as to
create such cash collateral.

(d) Any cash collateral deposited under subparagraph (c)
above, and all interest earned thereon, shall be held by Bank and invested and
reinvested at the expense and the written direction of Borrowers, in U.S.
Treasury Bills with maturities of no more than ninety (90) days from the date of
investment.

2A.6. General Terms of Credits. The following terms and conditions
apply with respect to each Letter of Credit notwithstanding anything to the
contrary contained herein:

(a) Borrowers assume all risks of the acts or omissions of the
beneficiary of each Letter of Credit with respect to the use of the Letter of
Credit or with respect to the beneficiary's obligations to Borrowers. Neither
Bank nor any of its officers or directors shall be liable or responsible for,
and Borrowers hereby agree to indemnify and hold Bank harmless (except for the
issuer's gross negligence or willful misconduct) with respect to: (i) the use
which may be made of the Letter of Credit or for any acts or omissions of the
beneficiary in connection therewith; (ii) the accuracy, truth, validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should in fact prove to be in any or all respects false,
misleading, inaccurate, invalid, insufficient, fraudulent, or forged; (iii) any
other circumstances whatsoever in making or failing to make payment under a
Letter of Credit; or (iv) any inaccuracy, interruption, error or delay in
transmission or delivery of correspondence or documents by post, telegraph or
otherwise. In furtherance and not in limitation of the foregoing, Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.

(b) Notwithstanding the foregoing, with respect to any Letter
of Credit, Borrowers shall have a claim against Bank, and Bank shall be liable
to Borrowers, to the

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<PAGE> 31
extent, but only to the extent, of any direct, as opposed to indirect or
consequential, damages suffered by Borrowers caused by the Bank's willful
misconduct or gross negligence.

(c) To the extent not inconsistent with this Agreement, the
Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, are hereby made a part of
this Agreement with respect to obligations in connection with each Letter of
Credit.

SECTION 3

REPRESENTATIONS AND WARRANTIES

Borrowers represent and warrant to Bank as follows:

3.1. Organization and Good Standing. Each Borrower and each Subsidiary
is a corporation, partnership or other legal entity as set forth on Exhibit C
attached hereto, duly formed and validly existing under the laws of its state of
formation as set forth on Exhibit C attached hereto, and each has the power and
authority to carry on its business as now conducted and, except as to failures
to qualify which do not, either singly or in the aggregate, have a Material
Adverse Effect, is qualified to do business in all other states in which the
nature of its business or the ownership of its properties requires such
qualification.

3.2. Power and Authority; Validity of Agreement. Each Borrower has the
power and authority under applicable law and under its articles or certificates
of incorporation and bylaws or other organizational documents to enter into and
perform the Loan Documents to the extent that it is a party thereto; and all
actions necessary or appropriate for the execution and performance by such
Borrower of the Loan Documents have been taken, and, upon their execution, the
same will constitute the valid and binding obligations of each Borrower to the
extent it is a party thereto, enforceable in accordance with their terms, except
as such enforceability may be limited by bankruptcy or equitable principles
applicable to the enforcement of creditors' rights generally.

3.3. No Violation of Laws or Agreements. The making and performance of
the Loan Documents by Borrowers will not violate any provisions of any law or
regulation, federal, state or local, or their respective articles or
certificates of incorporation and bylaws or other organizational documents, or
result in any breach or violation of, or constitute a default under, any
material agreement or instruments by which any Borrower or its property may be
bound.

3.4. Material Contracts. There exists no material default under any
contracts material to the businesses of Borrowers and its Subsidiaries. Set
forth on Exhibit C is a complete and accurate list of each Lease, including
location (including street address and county) of the

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<PAGE> 32
leased premises, name, address and telephone number of the lessor, identity of
the lessee, the term of the lease, a description of any extension options, and
the monthly rent thereunder. Each such Lease is in full force and effect and
there are no material defaults by lessee or, to the knowledge of Borrowers,
lessor thereunder.

3.5. Compliance.

(a) Each Borrower and each Subsidiary is in compliance with
all applicable laws and regulations, federal, state and local (including without
limitation those administered by the Local Authorities), except for such failure
to comply as would not, either singly or in the aggregate, have a Material
Adverse Effect;

(b) Borrowers and their Subsidiaries possess all the
franchises, permits, licenses, certificates of compliance and approval and
grants of authority, necessary or required in the conduct of their respective
businesses as of the date hereof; and as of the date hereof all such franchises,
permits, licenses, certificates and grants are valid, binding, enforceable and
subsisting without any defaults thereunder or enforceable adverse limitations
thereon and are not subject to any proceedings or claims opposing the issuance,
development or use thereof or contesting the validity thereof, except to the
extent that the failure to obtain or maintain any of the foregoing would not,
either singly or in the aggregate, have a Material Adverse Effect; and

(c) No authorization, consent, approval, waiver, license or
formal exemptions from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority (federal, state or local) or
non-governmental entity, under the terms of contracts or otherwise, is required
by the Borrowers by reason of or in connection with the Borrowers' execution and
performance of the Loan Documents, except those which have been obtained and UCC
financing statements and Patent and Trademark Office filings as contemplated by
Paragraph 4.1 hereof.

(d) To the best of Borrowers' knowledge, no employee of any
Borrower or any Subsidiary, or any supplier of any of them, has been employed in
violation of Section 6 or Section 7 of the Fair Labor Standards Act (29 U.S.C.
Section201 et seq.) (the "FLSA"), or in violation of any regulation or order of
the Secretary of Labor of the United States under Section 14 of the FLSA.

3.6. Litigation. There are no actions, suits, proceedings or claims
which are pending or, to the best of the Borrowers' knowledge or information,
threatened against any Borrower or any Subsidiary which, if adversely resolved,
would have a Material Adverse Effect.

3.7. Title to Assets. Each Borrower and each Subsidiary has good and
marketable title to all of its properties and assets material to the conduct of
its business, free and clear of any liens and encumbrances except the security
interests granted under the Security

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<PAGE> 33
Agreement, liens and encumbrances permitted pursuant to Paragraph 6.4 hereof and
the liens and security interests identified on Exhibit C attached hereto. All
such assets are materially covered by the insurance required under Paragraph 5.8
hereof.

3.8. Accuracy of Information; Full Disclosure.

(a) All information furnished to Bank concerning the financial
condition of Borrowers and their Subsidiaries, including DBI's annual
consolidated financial statement for the period ending January 4, 1997 (draft)
and interim consolidated financial statements dated April 4, 1997, copies of
which have been furnished to Bank, has been prepared in accordance with GAAP and
fairly presents in all material respects the financial condition of the
Borrowers and their Subsidiaries as of the dates and for the periods covered and
discloses all liabilities of the Borrowers and their Subsidiaries required to be
disclosed in accordance with GAAP, except that interim statements do not have
footnotes and are subject to year-end adjustments, and there has been no
material adverse change in the financial condition or business of the Companies
from the date of such statements to the date hereof; and

(b) All financial statements and other documents furnished by
the Borrowers to Bank pursuant to this Agreement and the other Loan Documents do
not and will not contain any untrue statement of material fact or omit to state
a material fact necessary in order to make the statements contained herein and
therein not misleading. The Borrowers have disclosed to the Bank in writing any
and all facts which materially and adversely affect the Borrowers' ability to
perform their obligations under this Agreement and the other Loan Documents.

3.9. Taxes and Assessments.

(a) Each Borrower and each Subsidiary has duly and timely
filed all information and tax returns and reports with any federal, state, or
local governmental taxing authority, body or agency, and all taxes, including
without limitation income, gross receipts, sales, use, excise, withholding and
any other taxes, and any governmental charges, penalties, interest or fines with
respect thereto, due and payable by any Borrower or any Subsidiary, have been
paid, withheld or reserved for in accordance with GAAP or, to the extent they
relate to periods on or prior to the date of the financial statements referenced
in Paragraphs 5.2 and 5.3 hereof, are reflected as a liability on the financial
statements in accordance with GAAP, except for such failures to file, pay or
reserve for as do not involve amounts in excess of $50,000, including all
penalties, interest and fines with respect thereto.

(b) Each Borrower and each Subsidiary has properly withheld
all amounts required by law to be withheld for income taxes and unemployment
taxes including without limitation, all amounts required with respect to social
security and unemployment

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<PAGE> 34
compensation, relating to its employees, and has remitted such withheld amounts
in a timely manner to the appropriate taxing authority, agency or body.

3.10. Indebtedness. Borrowers and their Subsidiaries have no presently
outstanding Indebtedness or obligations, including contingent obligations and
obligations under leases of property from others, except the Indebtedness and
obligations described in Exhibit C hereto or in Borrowers' financial statements
which have been furnished to Bank prior to the date hereof pursuant to Paragraph
3.8 hereof, and indebtedness permitted pursuant to Paragraph 6.1 hereof.

3.11. Management Agreements. No Borrower or Subsidiary is a party to
any management or consulting agreements for the provision of senior executive
services to such Borrower or Subsidiary.

3.12. Investments; Capital Structure. DBI and each direct and indirect
Subsidiary of DBI is identified on Exhibit C attached hereto, which indicates
the number of shares and classes of the capital stock or partnership interests,
as applicable, of DBI and each such Subsidiary, and the ownership thereof. No
Borrower has any other Subsidiaries or any investments in or loans to any other
individuals or business entities except for loans and investments permitted
pursuant to Paragraphs 6.3 or 6.8 hereof. There are no agreements or obligations
of Borrowers, other than the obligations to Gary Earlbaum, Steven Earlbaum and
Philip Youtie under the Redemption Agreements, requiring redemption or
repurchase of any of the outstanding shares of DBI or otherwise requiring the
making of any Restricted Payment.

3.13. ERISA. Each of the Borrowers and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA and
the regulations promulgated thereunder; and,

(a) No Borrower nor any ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which any Borrower or any ERISA
affiliate could have any withdrawal liability which is reasonably likely to have
a Material Adverse Effect;

(b) No Borrower nor any ERISA Affiliate, sponsors or maintains
any Plan under which there is an accumulated funding deficiency within the
meaning of Section412 of the Code, whether or not waived which is reasonably
likely to have a Material Adverse Effect;

(c) The aggregate liability for accrued benefits and other
ancillary benefits under each defined benefit pension Plan that is sponsored or
maintained by any Borrower or any ERISA Affiliate (determined on the basis of
the actuarial assumptions prescribed for valuing benefits under terminating
single-employer defined benefit plans under Title IV of ERISA) does not exceed
the aggregate fair market value of the assets under each such

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<PAGE> 35
defined benefit pension Plan by an amount which is reasonably likely to have a
Material Adverse Effect;

(d) The aggregate liability of each Borrower, and each ERISA
Affiliate arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code, is not an amount which is reasonably likely to
have a Material Adverse Effect; and

(e) There does not exist any unfunded liability (determined on
the basis of actuarial assumptions utilized by the actuary for the Plan in
preparing the most recent Annual Report) of any Borrower or ERISA Affiliate
under any Plan providing post-retirement life or health benefits which is
reasonably likely to have a Material Adverse Effect.

3.14. Fees and Commissions. Borrowers and their Subsidiaries owe no
brokers' or finders' fees or commissions of any kind, and know of no claim for
any brokers' or finders' fees or commissions, in connection with the Borrowers'
obtaining the Commitment or the Loan or Letters of Credit from Bank, except
those provided herein.

3.15. No Extension of Credit for Securities. Borrowers and their
Subsidiaries are not now, nor at any time have they been engaged principally, or
as one of their respective important activities, in the business of extending or
arranging for the extension of credit, for the purpose of purchasing or carrying
any margin stock or margin securities; nor will the proceeds of the Loan be used
by any Borrower directly or indirectly, for such purposes.

3.16. Perfection of Security Interest. Upon the filing of UCC financing
statements with respect to the collateral covered by the Security Agreement in
the jurisdictions identified by counsel to Borrowers in its opinion delivered
pursuant to this Agreement, no further action, including any filing or recording
of any document, is necessary in order to establish and perfect Bank's security
interests in the collateral covered by the Security Agreement.

3.17. Hazardous Wastes, Substances and Petroleum Products.

(a) Except for such matters as would not have a Material
Adverse Effect, each Borrower and each Subsidiary (i) has received all permits
and filed all notifications required by the Environmental Control Statutes to
carry on its respective business(es); and (ii) is in compliance with all
Environmental Control Statutes.

(b) Each Borrower and each Subsidiary has given any written or
oral notice to the EPA or any state or local agency with regard to any actual or
imminently threatened Release of Hazardous Substances of which DBI has knowledge
on properties owned, leased or operated by such Borrower or Subsidiary or used
in connection with the conduct of its business and operations which is
reasonably likely to have a Material Adverse Effect.

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(c) No Borrower or Subsidiary has received notice that it is
potentially responsible for clean-up, remediation, costs of clean-up or
remediation, fines or penalties with respect to any actual or imminently
threatened Release of Hazardous Substances pursuant to any Environmental Control
Statute which is reasonably likely to have a Material Adverse Effect.

3.18. Solvency. To the best of each Borrower's knowledge, excluding
intercompany indebtedness, each Borrower is and after receipt and application of
the first Advance under this Agreement will be, solvent such that (i) the fair
value of its assets (including without limitation the fair salable value of the
goodwill and other intangible property of such Borrower) is greater than the
total amount of its liabilities, including without limitation, contingent
liabilities, (ii) the present fair salable value of its assets (including
without limitation the fair salable value of the goodwill and other intangible
property of such Borrower) is not less than the amount that will be required to
pay the probable liability on their debts as they become absolute and matured,
and (iii) they are able to realize upon their assets and pay their debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business. No Borrower intends to, nor believes that it
will, incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature, and no Borrower is engaged in a business or transaction, or
about to engage in a business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice and industry in which it is engaged. For purposes of this
Paragraph 3.18, in computing the amount of contingent liabilities at any time,
it is intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents the
amount that reasonably can be expected to become an actual matured liability of
the applicable Borrower.

Each Borrower hereby agrees that to the extent a Borrower shall have
paid more than its proportionate share of any payment made hereunder, such
Borrower shall be entitled to seek and receive contribution from and against any
other Borrower who has not paid its proportionate share of such payment;
provided however such Borrower shall not seek any such contribution from any
other Borrower until the Loans have been paid in full and all Commitments of the
Bank hereunder have been terminated. The provisions of this paragraph shall in
no respect limit the obligations and liabilities of any Borrower to Bank and
each Borrower shall remain liable to Bank for the full amount of its obligations
hereunder and under the other Loan Documents.

3.19. Employee Controversies. There are no material controversies
pending or, to the knowledge of the Borrowers, threatened or anticipated between
any Borrower or any Subsidiary and any of its respective employees, and there
are no labor disputes, grievances, arbitration proceedings or any strikes, work
stoppages or slowdowns pending, or to the Borrowers' knowledge, threatened
between any Borrower or any Subsidiary and its respective employees and
representatives, which in either event could impair the ability of Borrowers to

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perform their obligations under the Loan Documents, or which might reasonably be
expected to have a Material Adverse Effect.

3.20. Status of Subsidiaries that are not Borrowers. No Subsidiary that
is not a Borrower hereunder by reason of execution of this Agreement or
execution of a joinder hereto in accordance with Paragraph 5.20 hereof is a
Material Subsidiary. With respect to each Subsidiary that is not a Borrower
hereunder: (i) such Subsidiary has no right, title or interest in or to any
accounts receivable or inventory, or books and records, documents, general
intangibles, other assets related to accounts receivable or inventory of DBI and
its consolidated Subsidiaries or other Collateral (as defined in the Security
Agreement) except for rights as a lessee under the Leases; (ii) such Subsidiary
has no obligations or Indebtedness except for obligations under Leases; and
(iii) no Borrower has guaranteed any obligations or Indebtedness of such
Subsidiary except as set forth on Exhibit C attached hereto.

SECTION 4

CONDITIONS

4.1. Effectiveness. The effectiveness of this Agreement shall be
subject to Bank's receipt of the following documents and satisfaction of the
following conditions, each in form and substance satisfactory to Bank:

(a) Promissory Note. The Note duly executed by Borrowers.

(b) Authorization Documents. A certificate of the secretary of
each Borrower attaching and certifying as to (i) the certificate or articles of
incorporation and bylaws of such Borrower; (ii) resolutions or other evidence of
authorization by the board of directors of such Borrower authorizing its
execution and full performance of Loan Documents and all other documents and
actions required hereunder; and (iii) incumbency certificates setting forth the
name, title and specimen signature of each officer of such Borrower who is
authorized to execute the Loan Documents, requests or communications hereunder
on behalf of such entity.

(c) Good Standing. Certificates of good standing or the
equivalent for each Borrower in its state of formation and, in the case of DBI,
Pennsylvania.

(d) Opinion of Counsel. An opinion letter from counsel for the
Borrowers, as may be reasonably satisfactory to Bank.

(e) Compliance and Borrowing Base Certificates. A Compliance
Certificate in the form of Exhibit E attached hereto and a Borrowing Base
certificate in the form of Exhibit F attached hereto calculated as of the end of
the most recent month or most recent

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<PAGE> 38
fiscal quarter of Borrowers, as applicable, for which such certificates would be
required hereunder.

(f) Inventory and Receivables Aging Reports. An inventory
aging report and receivables aging report as of the end of the most recent month
for which such reports would be required hereunder.

(g) Fees. Payment of the fee required by Paragraphs 2.11
hereof.

(h) Security Agreement. A Confirmation of the Security
Agreement executed by each of the Borrowers in favor of Bank, granting Bank a
lien on all tangible and intangible assets of Borrowers, together with UCC
financing statements in such jurisdictions as Bank shall reasonably require, all
in form and substance satisfactory to Bank.

(i) Pledge Agreement. A Confirmation of the Pledge Agreement
by DBI pledging all of the outstanding capital stock of all Borrowers and
Subsidiaries other than DBI to Bank, together with the certificates representing
the shares pledged thereby and stock powers executed in blank.

(j) Insurance Certificates. Certificates of insurance and
lender loss payee endorsements with respect to Borrowers' and the Subsidiaries'
property, casualty and liability insurance naming Bank as lender loss payee and
undertaking to furnish Bank with reasonable notice and opportunity to cure any
non-payment of premiums prior to termination of coverage.

(k) Consents. Receipt of all required consents and approvals
under applicable law or contract.

(l) Consent and Waiver of Lessee Subsidiaries. A consent and
waiver executed by each Subsidiary that is not a Borrower.

(m) Landlord Covenants and Waivers. A status report with
respect to landlord consents and waivers, together with copies of any such
consents and waivers as have been obtained.

(n) Other Documents. Such additional documents as Bank
reasonably may request.

4.2. Advances. The obligation of Bank to make Advances under the
Commitment shall be subject to Borrowers' compliance with Paragraph 2.6 hereof
and it shall be a condition to Bank's obligation hereunder to make any such
Advance that (a) the representations and warranties set forth herein and in the
other Loan Documents shall be true and correct in all

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<PAGE> 39
material respects as if made on the date of such Advance, (b) no Event of
Default or Default shall have occurred and not have been waived on the date of
such Advance or be caused by such Advance, (c) all fees required pursuant to
Paragraphs 2.10 and 2.11 hereof have been paid as and when due, and (d) there
shall have been no Material Adverse Effect since the date of this Agreement, and
no event or circumstance (or combination of events or circumstances) shall have
occurred which is reasonably likely to have a Material Adverse Effect.

SECTION 5

AFFIRMATIVE COVENANTS

Borrowers covenant and agree that so long as the Commitment of Bank to
Borrowers or any Indebtedness of Borrowers to Bank is outstanding, each of the
Borrowers will and will cause its respective Subsidiaries (and with respect to
Paragraph 5.13, will cause each ERISA Affiliate) to:

5.1. Existence and Good Standing. Preserve and maintain (a) its
existence as a corporation, partnership or other legal entity, as specified in
Exhibit C attached hereto, and its good standing in all states in which the
nature of its business or assets requires such qualification except for such
lapses in qualification which would not, either singly or in the aggregate, have
a Material Adverse Effect; and (b) the effectiveness and validity of all its
franchises, licenses, permits, certificates of compliance or grants of authority
required in the conduct of its business, except for such instances of
ineffectiveness or invalidity as would not, either singly or in the aggregate,
have a Material Adverse Effect; provided, however, nothing in this paragraph
shall prohibit any mergers or consolidations involving only the Borrowers or
their respective Subsidiaries, subject to Paragraph 5.20 hereof.

5.2. Interim Financial Statements. Furnish to Bank within forty-five
(45) days after the end of each month that is not the end of a fiscal quarter,
and within forty-five (45) days of the end of each of the first three quarterly
periods in each fiscal year of Borrowers, unaudited monthly or quarterly
consolidated financial statements, as applicable, in form and substance as
reasonably required by Bank, including (i) a consolidated balance sheet, (ii) a
consolidated statement of income, and (iii) a statement of cash flows, prepared
in accordance with GAAP consistently applied (except that such interim
statements need not contain footnotes and may be subject to year-end
adjustments).

5.3. Annual Financial Statements. Furnish to Bank within one hundred
twenty (120) days after the close of each fiscal year audited consolidated
annual financial statements, including the information required under Paragraph
5.2 hereof, which financial statements shall be prepared in accordance with GAAP
and shall be certified without qualification (except with respect to changes in
GAAP as to which Borrowers' independent certified public accountants

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<PAGE> 40
have concurred) by any one of the "big six" accounting firms or an independent
certified public accounting firm reasonably satisfactory to Bank; and cause Bank
to be furnished, at the time of the completion of the annual audit, with copies
of any management letters prepared by such accountants and with a certificate
signed by such accountants to the effect that to the best of their knowledge
there exists no Event of Default or Default hereunder.

5.4. Compliance and Borrowing Base Certificates. At the time of
delivery of quarterly and annual financial statements pursuant to Paragraph 5.2
and 5.3 hereof, deliver to Bank, a certificate in the form of Exhibit E attached
hereto executed by the chief financial officer of Borrower, showing the
calculation of the covenants set forth in Paragraph 5.14 through 5.16 hereof.

5.5. Receivables and Inventory Aging Reports. Within fifteen (15) days
after the end of each month or upon request by Bank at any other time, furnish
to Bank (i) a Borrowing Base Certificate in the form of Exhibit F attached
hereto, and (ii) a summary receivables aging report and summary inventory aging
report in form and substance satisfactory to Bank.

5.6. Additional Information. Deliver to Bank promptly upon transmission
thereof copies of all financial statements, proxy statements, notices and
reports sent to shareholders of DBI, and copies of any registration statements,
if any, filed with the Securities and Exchange Commission.

5.7. Books and Records. Keep and maintain adequate books and records of
account in accordance with GAAP and make or cause the same to be made available
to Bank or its agents or nominees at any reasonable time during normal business
hours upon reasonable notice for inspection and to make extracts thereof and
permit bank or its agents or nominees to discuss contents of same with senior
officers of Borrowers and also with outside auditors and accountants of
Borrowers.

5.8. Insurance. Keep and maintain all of their property and assets in
good order and repair and covered by insurance with reputable and financially
sound insurance companies against such hazards and in such amounts as is
customary in the industry, under policies requiring the insurer to furnish
reasonable notice to Bank and opportunity to cure any non-payment of premiums
prior to termination of coverage and naming Bank as loss payee under a standard
lender loss payee endorsement.

5.9. Litigation; Event of Default. Notify Bank in writing immediately
of the institution of any litigation, the commencement of any administrative
proceedings, the happening of any event or the assertion or threat of any claim,
to the extent that any of the foregoing, could have a Material Adverse Effect or
the occurrence of any Event of Default or Default hereunder.

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<PAGE> 41
5.10. Taxes. Pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any material penalty for non-payment or late payment
is incurred, unless the same are currently being contested in good faith by
appropriate proceedings, diligently prosecuted and covered by appropriate
reserves maintained in accordance with GAAP.

5.11. Costs and Expenses. Pay or reimburse Bank for all out-of-pocket
costs and expenses (including but not limited to reasonable attorneys' fees, not
to exceed $7,000, and disbursements) Bank may pay or incur in connection with
the preparation and review of this Agreement and all other documentation related
thereto, and pay or reimburse Bank for all costs, liabilities and expenses
(including but not limited to reasonable attorneys' fees and disbursements)
associated with all waivers, consents and amendments in connection therewith,
the administration, collection or enforcement of the Loan, including without
limitation any fees and disbursements incurred in defense of or to retain
amounts of principal, interest or fees paid or in connection with any audit or
examination of the Borrowers (provided that in the absence of an Event of
Default hereunder, Borrowers shall not be required to pay the expenses of more
than one lending audit in any twelve (12) month period, at a cost not to exceed
$10,000 plus expenses for each such audit). All obligations provided for in this
Paragraph 5.11 shall survive any termination of this Agreement or the Commitment
and the repayment of the Loan.

5.12. Compliance; Notification.

(a) Comply in all material respects with all local, state and
federal laws and regulations applicable to its business (and in all respects
with the Environmental Control Statutes), including without limitation all laws
and regulations of the Local Authorities, and with the provisions and
requirements of all franchises, permits, certificates of compliance, approval
and need issued by regulatory authorities and with other like grants of
authority held by any Borrower; and notify Bank immediately in detail of any
actual or alleged failure to comply with or perform, breach, violation or
default under any such laws or regulations or under the terms of any of such
franchises, licenses or grants of authority, or of the occurrence or existence
of any facts or circumstances which with the passage of time, the giving of
notice or otherwise could create such a breach, violation or default or could
occasion the termination of any of such franchises, licenses or grants of
authority, to the extent that any of the foregoing could have a Material Adverse
Effect.

(b) With respect to the Environmental Control Statutes,
immediately notify Bank when, in connection with the conduct of the Borrowers'
business(es) or operations, any person (including, without limitation, EPA or
any state or local agency) provides oral or written notification to any
Borrower, or any Borrower otherwise becomes aware, of a condition with regard to
an actual or imminently threatened Release of Hazardous Substances which could
reasonably be expected to have a Material Adverse Effect; and notify Bank in
detail immediately upon the receipt by a Borrower of an assertion of liability
under the Environmental Control

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<PAGE> 42
Statutes, of any actual or alleged failure to comply with, failure to perform,
breach, violation or default under any such statutes or regulations which could
reasonably be expected to have a Material Adverse Effect or of the occurrence or
existence of any facts, events or circumstances which with the passage of time,
the giving of notice, or both, could create such a failure to breach, violation
or default.

5.13. ERISA. (a) Comply in all material respects with the
provisions of ERISA to the extent applicable to any Plan maintained for the
employees of any Borrower or any ERISA Affiliate; (b) do or cause to be done all
such acts and things that are required to maintain the qualified status of each
Plan and tax exempt status of each trust forming part of such Plan; (c) not
incur any material accumulated funding deficiency (within the meaning of ERISA
and the regulations promulgated thereunder), or any material liability to the
PBGC (as established by ERISA); (d) not permit any event to occur with respect
to any Plan sponsored by any Company or any ERISA Affiliate (i) as described in
Section 4042 of ERISA or (ii) which may result in the imposition of a lien on
its properties or assets; and (e) notify Bank in writing promptly after it has
come to the attention of senior management of any Borrower of the written
assertion or threat of any event described in Section 4042 of ERISA (relating to
the soundness of a Plan) (including any "reportable event" described in Section
4042(a)(3) of ERISA) or the PBGC's ability to assert a material liability
against it or impose a lien on any Borrower's, or any ERISA Affiliate's
properties or assets; and (f) refrain from engaging in any prohibited
transactions or actions causing possible liability under Section 502 of ERISA.

5.14. Fixed Charge Coverage Ratio. Commencing with the third
quarter of 1998, maintain as of the last day of each fiscal quarter during the
period set forth in the left-hand column below, a Fixed Charge Coverage Ratio
for DBI and its consolidated Subsidiaries of not less than the ratio set forth
in the right-hand column below:

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
3rd Quarter, 1998 through
4th Quarter, 1999 1.00
1st and 2nd Quarter, 2000 1.10
3rd Quarter, 2000 and thereafter 1.20
</TABLE>

5.15. Leverage Ratio. Commencing with the third quarter of
1998, maintain as of the last day of each fiscal quarter ending during the
period set forth in the left-hand column below a Leverage Ratio for DBI and its
consolidated Subsidiaries of not more than the ratio set forth in the right-hand
column below:

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<PAGE> 43
<TABLE>
<CAPTION>
Period Leverage Ratio
------ --------------
<S> <C>
3rd Quarter and 4th Quarter, 1998 1.75
1st Quarter, 1999 and thereafter 1.50
</TABLE>

5.16. Debt to Cash Flow Ratio. Commencing with the third
quarter of 1998, maintain as of the last day of each fiscal quarter ending
during the period set forth in the left-hand column below a Debt to Cash Flow
Ratio of not more than the ratio set forth in the right-hand column below:

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
3rd Quarter and 4th Quarter, 1998 3.15
1st Quarter, 1999 2.85
2nd Quarter, 1999 and thereafter 2.75
</TABLE>

5.17. Borrowing Base. Maintain at all times the outstanding
principal balance of the Loan plus, without duplication, the amount available to
be drawn under all outstanding Letters of Credit and the amount of any
unreimbursed draws for Letter of Credit, in an amount less than or equal to the
Borrowing Base.

5.18. Management Changes. Notify Bank in writing within ten
(10) Business Days after any change of its senior executive management.

5.19. Transactions Among Affiliates. Cause all transactions
between and among it and its Affiliates, other than transactions among the
Borrowers, to be on an arms-length basis and on such terms and conditions as are
customary in the applicable industry between and among unrelated entities.

5.20. Joinders. If any Subsidiary becomes a Material
Subsidiary or any new Material Subsidiary is formed or acquired, cause such
Material Subsidiary to execute a joinder to this Agreement and the Security
Agreement, and a supplement to or additional Pledge Agreements, as applicable,
and deliver such other documents as Bank may reasonably require in connection
therewith, including without limitation UCC-1 financing statements, secretary's
certificates and opinions of counsel.

5.21. Further Assurances.

(a) Within twenty (20) days after the date hereof,
deliver to Bank an acknowledgment and agreement of each shareholder of DBI which
is party to a Redemption Agreement acknowledging and agreeing to the continuing
limitations on Restricted Payments hereunder.

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<PAGE> 44
(b) Use best efforts to obtain landlord and mortgage
consents and waivers executed by the landlord or mortgagor prior to establishing
any additional location at which inventory or books and records of any Borrower
or Subsidiary are located.

(c) Execute, deliver, file and record such additional
documents, instruments or agreements as Bank shall reasonably require from time
to time in order to perfect, maintain, protect or realize upon the Collateral,
including without limitation additional UCC financing statements, landlord or
mortgagee waivers and consents and other documentation as may be required in
connection with the establishment by a Company of additional inventory
locations.

(d) Cause each of the Subsidiaries to comply with the
terms, conditions and covenants of the consent and waiver referred to in
Paragraph 4.1(p) hereof.

5.22. Other Information. Provide Bank with any other documents
and information, financial or otherwise, reasonably requested by Bank from time
to time.

SECTION 6

NEGATIVE COVENANTS

So long as any Commitment or any Indebtedness of Borrowers to
Bank remains outstanding hereunder, Borrowers covenant and agree that without
Bank's prior written consent, each Borrower will not and will cause its
respective Subsidiaries to not:

6.1. Indebtedness. Borrow any monies or create any
Indebtedness except: (i) borrowings from Bank hereunder; (ii) trade Indebtedness
in the normal and ordinary course of business for value received; (iii)
Indebtedness incurred to purchase or lease fixed or capital assets, provided,
that the aggregate original principal amount of such Indebtedness incurred in
any fiscal year shall not exceed in the aggregate Two Million Dollars
($2,000,000); (iv) Indebtedness under the Maple Shade Mortgage and the Richmond
Mortgage; and (v) guaranties permitted pursuant to Paragraph 6.2 hereof.

6.2. Guaranties. Guarantee or assume or agree to become liable
in any way, either directly or indirectly, for any Indebtedness or liability of
others except (i) to endorse checks or drafts in the ordinary course of business
and (ii) any Borrower may guaranty Indebtedness of another Borrower which is
permitted pursuant to Paragraph 6.1 hereof.

6.3. Loans. Make any loans or advances to others, other than
(i) investments and advances permitted by Paragraph 6.8 hereof; (ii) loans to
Fillberg Limited in an aggregate amount which, together with investments in
Fillberg Limited pursuant to Paragraph 6.8(b)

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<PAGE> 45
hereof, does not exceed at any time One Million Dollars ($1,000,000); or (iii)
loans to employees of Borrowers in an aggregate amount not to exceed Five
Hundred Thousand Dollars ($500,000) outstanding at any time.

6.4. Liens and Encumbrances. Create, permit or suffer the
creation of any liens, security interests, or any other encumbrances on
(including any conditional sales arrangement with respect to) any of its
property, real or personal, except the security interests in favor of Bank as
security for the Loan, and except (i) liens arising in favor of sellers or
lessors for indebtedness and obligations incurred to purchase or lease fixed or
capital assets permitted under Paragraph 6.1(iii) hereof, provided, however,
that such liens secure only the indebtedness and obligations created thereunder
and are limited to the assets purchased or leased pursuant thereto and the
proceeds thereof; (ii) mechanic's and workman's liens, liens for taxes,
assessments or other governmental charges, federal, state or local, which are
then being currently contested in good faith by appropriate proceedings and are
covered by appropriate reserves maintained in accordance with GAAP; (iii)
pledges or deposits to secure obligations under workmen's compensation,
unemployment insurance or social security laws or similar legislation; (iv)
deposits to secure surety, appeal or custom bonds required in the ordinary
course of business; (v) deposits to secure Leases; (vi) the Maple Shade Mortgage
and the Richmond Mortgage; and (vii) sales on lay-away or similar arrangements
in the ordinary course of business.

6.5. Additional Negative Pledge. Agree or covenant with or
promise any person or entity other than Bank that it will not pledge its assets
or properties or otherwise grant any liens, security interests or encumbrances
on its property.

6.6. Restricted Payments. Make any Restricted Payments,
provided, that if there is no Default or Event of Default hereunder at such
time, and such payment will not create a Default or Event of Default, on or
after January 1, 1998 and prior to March 31, 1998, DBI may repurchase
outstanding shares of its common stock for an aggregate amount not to exceed
Eight Hundred Thousand Dollars ($800,000) plus accrued interest.

6.7. Transfer of Assets; Liquidation.

(a) Sell, lease, transfer or otherwise dispose of all
or any portion of its assets, real or personal, other than such transactions in
the normal and ordinary course of business for value received and other than a
Sale of Material Assets with respect to which Borrowers have complied with
Paragraph 2.8(c) hereof; or

(b) Discontinue, liquidate, or change in any material
respect any substantial part of its operations or business(es).

6.8. Acquisitions and Investments. Purchase or otherwise
acquire (including without limitation by way of share exchange) any part or
amount of the capital stock, partnership

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<PAGE> 46
interests, or assets of, or make any investments in, any other firm or
corporation; or enter into any new business activities or ventures not directly
related to its present business; or merge or consolidate with or into any other
firm or corporation; or create any Subsidiary; provided, however that in the
absence of a Default or an Event of Default at such time and if such transaction
will not give rise to a Default or an Event of Default, Borrowers may (a) create
additional Subsidiaries provided that (i) all of the outstanding capital stock
of such Subsidiary is owned by a Borrower or wholly-owned Subsidiary, (ii)
Borrowers provide to Bank, with a copy to its counsel, not less than thirty (30)
days prior written notice of the proposed Subsidiary creation, indicating the
purpose thereof and any supplemental disclosure that will be required pursuant
to the representations and warranties set forth herein, (iii) Borrowers complies
with the terms and conditions of Paragraph 5.20 hereof, and (iv) taking into
account any supplement or amendment to Exhibit C hereto which is reasonably
acceptable to Bank, all of the representations and warranties set forth herein
are true and correct in all material respects prior to and following the
creation of such Subsidiary; and (b) make investments in Fillberg Limited in an
aggregate amount which, together with all loans to Fillberg Limited pursuant to
Paragraph 6.3 hereof, does not exceed at any time One Million Dollars
($1,000,000).

6.9. Payments to Affiliates. Pay any salaries, compensation,
management fees, consulting fees, service fees, licensing fees, or other similar
payments to Affiliates of any Borrower (except other Borrowers) other than on an
arms-length basis for value, and on terms and conditions as are customary in the
industry between and among unrelated entities.

6.10. Use of Proceeds. Use any of the proceeds of the Loan,
directly or indirectly, to purchase or carry margin securities within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System;
or engage as its principal business in the extension of credit for purchasing or
carrying such securities.

6.11. Funds to Non-Borrower Subsidiaries. Loan, advance, pay,
contribute, or make available from the Borrowers to a non-Borrower Subsidiary
funds in excess of the amount necessary for each such non-Borrower Subsidiary to
meet: (a) its respective rent obligations under the Leases referred to in
Exhibit C pursuant to Paragraph 3.4 hereof and (b) such other obligations and
related expenses reasonably required to support such Leases.

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<PAGE> 47
SECTION 7

ADDITIONAL COLLATERAL AND RIGHT OF SET-OFF

7.1. Additional Collateral. As additional collateral for the
payment of any and all of Borrowers' indebtedness and obligations to Bank,
whether matured or unmatured, now existing or hereafter incurred or created
hereunder or otherwise, Borrowers hereby grant to Bank a security interest in
and lien upon all funds, balances or other property of any kind of the
Borrowers, or in which the Borrowers have an interest, limited to the interest
of the Borrowers therein, whether now or hereafter in the possession, custody or
control of Bank.

7.2. Right of Set-off. Bank is hereby authorized at any time
and from time to time following the occurrence and during the continuation of an
Event of Default hereunder, to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by Bank to
or for the credit or the account of a Borrower against any and all of the
obligations of a Borrower now or hereafter existing under this Agreement, the
Notes or the Loan Documents, irrespective of whether Bank shall have made any
demand under this Agreement or such Notes or other Loan Document and although
such obligations may be unmatured and irrespective of whether Bank is otherwise
fully secured. Bank agrees promptly to notify the applicable Borrower after any
such set-off and application made by Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of Bank under this Section Seven are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which Bank may have.

SECTION 8

DEFAULT

8.1. Events of Default. Each of the following events shall be
an Event of Default hereunder:

(a) If Borrowers shall fail to pay when due any
installment of principal or any interest, fees, costs, expenses or any other sum
payable to Bank hereunder; or

(b) If any representation or warranty made herein or
in any other Loan Document or in connection herewith or therewith or in any
statement, certificate or other document furnished hereunder or thereunder is
false or misleading in any material respect when made; or

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<PAGE> 48
(c) If any Borrower shall default (after expiration
of any applicable cure or grace periods) in the payment or performance of any
Indebtedness for borrowed money to another either singly or in the aggregate in
excess of One Million Dollars ($1,000,000) whether now or hereafter incurred, or
shall default (after expiration of any applicable cure or grace periods) in the
payment or performance of any other Indebtedness or obligation which is
reasonably likely to result in an obligation in excess of One Million Dollars
($1,000,000); or

(d) If there shall be a default in or failure to
observe the covenants set forth in Paragraphs 5.14 through 5.17 hereof or in
Section 6 hereof; or

(e) If any Borrower shall default in the performance
of any other agreement or covenant contained herein or in any other Loan
Document (other than as provided in subparagraphs (a), (b) or (d) above) or in
any document executed or delivered in connection herewith or therewith,
including without limitation with respect to any Collateral, and such default
shall continue uncured for twenty (20) days after notice thereof to Borrowers
given by Bank; or

(f) If less than sixty-six and two-thirds percent
(66-2/3%) of the outstanding voting capital stock of DBI shall cease to be held
in the aggregate by the owners of the outstanding voting capital stock of DBI as
of the date hereof as set forth on Exhibit C hereto; provided, that it shall not
constitute an Event of Default hereunder if voting capital stock of DBI is
issued in an underwritten public offering; provided further, however, that
notwithstanding the foregoing it shall constitute an Event of Default if in such
public offering or thereafter: (i) any person or group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934
Act") and the rules and regulations promulgated thereunder, other than the
owners of the outstanding voting capital stock of DBI as of the date hereof,
shall have beneficial ownership (within the meaning of Rule 13d-3 of the 1934
Act), directly or indirectly, of securities of DBI (or other securities
convertible into such securities) representing forty percent (40%) of the
combined voting power of all securities of DBI entitled to vote in the election
of directors (hereinafter called a "Controlling Person"); or (ii) a majority of
the Board of Directors of DBI shall cease for any reason to consist of (A)
individuals who on the date hereof were serving as directors of DBI or (B)
individuals who subsequently become members of the Board if such individuals'
nomination for election or election to the board is recommended or approved by a
majority of the Board of Directors of DBI. For purposes of clause (i) above, a
person or group shall not be a Controlling Person if such person or group holds
voting power in good faith and not for the purpose of circumventing this
Paragraph 8.1(f) as an agent, bank, broker, nominee, trustee, or holder of
revocable proxies given in response to a solicitation pursuant to the 1934 Act,
for one or more beneficial owners who do not individually, or, if they are a
group acting in concert, as a group, have the voting power specified in clause
(i) above; or

(g) If DBI ceases to own, directly or indirectly,
100% of the outstanding capital stock of each Borrower; or

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<PAGE> 49
(h) If custody or control of any substantial part of
the property of any Borrower or any Subsidiary shall be assumed by any
governmental agency or any court of competent jurisdiction at the instance of
any governmental agency; if any license or franchise of a Borrower or a
Subsidiary shall be suspended, revoked, not renewed or otherwise terminated the
loss of which would reasonably be expected to have a Material Adverse Effect; or
if any governmental regulatory authority or judicial body shall make any other
final non-appealable determination the effect of which would have Material
Adverse Effect; or

(i) If any Borrower or any Subsidiary (other than
David's Bridal of Brooklyn, NY, Inc.) becomes insolvent, bankrupt or generally
fails to pay its debts as such debts become due; is adjudicated insolvent or
bankrupt; admits in writing its inability to pay its debts; or shall suffer a
custodian, receiver or trustee for it or substantially all of its property to be
appointed and if appointed without its consent, not be discharged within sixty
(60) days; makes a general assignment for the benefit of creditors; or suffers
proceedings under any law related to bankruptcy, insolvency, liquidation or the
reorganization, readjustment or the release of debtors to be instituted against
it and if contested by it not dismissed or stayed within sixty (60) days; if
proceedings under any law related to bankruptcy, insolvency, liquidation, or the
reorganization, readjustment or the release of debtors is instituted or
commenced by any Borrower or any Subsidiary (other than David's Bridal of
Brooklyn, NY, Inc.); if any order for relief is entered relating to any of the
foregoing proceedings; if any Borrower or any Subsidiary (other than David's
Bridal of Brooklyn, NY, Inc.) shall call a meeting of its creditors with a view
to arranging a composition or adjustment of its debts; or if any Borrower or any
Subsidiary (other than David's Bridal of Brooklyn, NY, Inc.) shall by any act or
failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing; or

(j) any event or condition shall occur or exist with
respect to any activity or substance regulated under the Environmental Control
Statutes and as a result of such event or condition, Borrowers have incurred or
in the opinion of Borrowers are reasonably likely to incur liabilities in the
aggregate in excess of One Million Dollars ($1,000,000); or

(k) if any judgment, writ, warrant or attachment or
execution or similar process which calls for payment or presents liability in
excess of One Million Dollars ($1,000,000) shall be rendered, issued or levied
against any Company or its respective property and such process shall not be
paid, waived, stayed, vacated, discharged, settled, satisfied or fully bonded
within sixty (60) days after its issuance or levy unless such judgment is
covered by insurance and the insurer has acknowledged coverage in writing with
respect thereto.

8.2. Remedies. Upon the happening of any Event of Default and
at any time thereafter, and by notice by Bank to Borrowers (except if an Event
of Default described in Paragraph 8.1(i) shall occur with respect to any
Borrower, or with respect to more than two Subsidiaries that are not Borrowers
at any one time, in which case acceleration of the Loan and termination of the
Commitment shall occur automatically without notice), Bank may

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<PAGE> 50
(i) terminate the Commitment, and (ii) declare the entire unpaid balance,
principal, interest, fees, and other amounts of all indebtedness of Borrowers to
Bank, hereunder or otherwise, to be immediately due and payable. Upon such
declaration, Bank shall have the immediate right to enforce or realize on any
Collateral granted therefor in any manner or order it deems expedient without
regard to any equitable principles of marshaling or otherwise. In addition to
any rights granted hereunder or in any of the Loan Documents delivered in
connection herewith, Bank shall have all the rights and remedies granted by any
applicable law, all of which shall be cumulative in nature.

SECTION 9

MISCELLANEOUS

9.1. Indemnification and Release Provisions. Borrowers hereby
agree to defend Bank and its directors, officers, agents, employees and counsel
from, and hold each of them harmless against, any and all losses, liabilities
(including without limitation settlement costs and amounts, transfer taxes,
documentary taxes, or assessments or charges made by any governmental
authority), claims, damages, interest judgments, costs, or expenses, including
without limitation reasonable fees and disbursements of counsel, incurred by any
of them arising out of claims by any third party relating to or in connection
with or by reason of this Agreement, the Commitment, the issuance or negotiation
of any Letters of Credit, the making of the Loan or any Collateral therefor,
other than those resulting primarily from any such party's own wilful misconduct
or gross negligence, including without limitation, any and all losses,
liabilities, claims, damages, interests, judgments, costs or expenses relating
to or arising under any Environmental Control Statute or the application of any
such Statute to any of the Borrowers' properties or assets. Borrowers hereby
release Bank and its directors, officers, agents, employees and counsel from any
and all claims for loss, damages, costs or expenses caused or alleged to be
caused by any act or omission on the part of any of them other than those
resulting primarily from any such party's own wilful misconduct or gross
negligence. All obligations provided for in this Paragraph 10.1 shall survive
any termination of this Agreement or the Commitment and the repayment of the
Loan.

9.2. Participations and Assignments. Borrowers hereby
acknowledge and agree that Bank may at any time: (a) grant participations in all
or any portion the Commitment or the Loan or the Note or of its right, title and
interest therein or in or to this Agreement (collectively, "Participations") to
any other lending office or to any other bank, lending institution or other
entity which has the requisite sophistication to evaluate the merits and risks
of investments in Participations ("Participants"); provided, however, that: (i)
all amounts payable by Borrowers hereunder shall be determined as if Bank had
not granted such Participation; and (ii) any agreement pursuant to which Bank
may grant a Participation: (x) shall provide that Bank shall retain the sole
right and responsibility to enforce the obligations of Borrowers hereunder

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<PAGE> 51
including, without limitation, the right to approve any amendment, modification
or waiver of any provisions of this Agreement; (y) such participation agreement
may provide that Bank will not agree to any modification, amendment or waiver of
this Agreement without the consent of the Participant if such modification,
amendment or waiver would reduce the principal of or rate of interest on the
Loan or postpone the date fixed for any payment of principal of or interest on
the Loan; and (z) shall not relieve Bank from its obligations, which shall
remain absolute, to make Advances hereunder; and (b) assign all or any portion
of its rights under the Loan, provided, however, that in the absence of an Event
of Default hereunder Bank shall not assign more than fifty percent (50%) of the
aggregate Commitment as of the date hereof. Borrowers may not assign or transfer
their rights or obligations hereunder to any other party, including by operation
of law, without the express written consent of Bank.

9.3. Binding and Governing Law. This Agreement and all
documents executed hereunder shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns and,
except as may be required by mandatory provisions of applicable law, shall be
governed as to their validity, interpretation and effect by the laws of the
Commonwealth of Pennsylvania.

9.4. Survival. All agreements, representations, warranties and
covenants of Borrowers contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder, and except for Paragraphs 5.11 and 10.1 which provide otherwise
will continue in full force and effect as long as the Commitment of any Letter
of Credit remains in effect or any indebtedness or other obligation of Borrowers
to Bank remains outstanding.

9.5. No Waiver; Delay. If Bank shall waive any power, right or
remedy arising hereunder or under any applicable law, such waiver shall not be
deemed to be a waiver upon the later occurrence or recurrence of any of said
events with respect to Bank. No delay by Bank in the exercise of any power,
right or remedy shall, under any circumstances, constitute or be deemed to be a
waiver, express or implied, of the same and no course of dealing between the
parties hereto shall constitute a waiver of Bank's powers, rights or remedies.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

9.6. Modification; Waiver. Except as otherwise provided in
this Agreement, no modification or amendment hereof, or waiver or consent
hereunder, shall be effective unless made in a writing signed by appropriate
officers of the parties hereto.

9.7. Headings. The various headings in this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof.

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<PAGE> 52
9.8. Notices. Any notice, request or consent required
hereunder or in connection herewith shall be deemed satisfactorily given if in
writing and delivered by hand, mailed (registered or certified mail) or sent by
facsimile transmission to Bank or to any Borrower at the respective addresses or
telecopier numbers set forth below, or to any party at such other addresses or
telecopier numbers as may be given by any party to the others in writing:

If to any Borrower:

David's Bridal, Inc.
44 West Lancaster Avenue
Ardmore, PA 19003
Attention: Ed Tomechko
Edward S. Wozniak
Telecopier: (610) 896-6588

with a copy to:

Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Michael J. Pedrick, Esq.
Telecopier: (215) 963-5299

if to Bank:

First Union National Bank
1339 Chestnut Street
Philadelphia, PA 19101
Attention: Irene Rosen Marks
Telecopier: (215) 973-7671

with a copy to:

Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, PA 19103
Attention: Lisa D. Kabnick, Esq.
Telecopier: (215) 981-4750

Failure to provide a copy of any notice or other communication to counsel as
provided above shall not affect the validity or effect of such notice or other
communication.

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<PAGE> 53
9.9. Payment on Non-Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day other than a Business Day,
such payment may be made on the next succeeding Business Day, provided however
that such extension of time shall be included in the computation of interest due
in conjunction with such payment or other fees due hereunder, as the case may
be.

9.10. Time of Day. All time of day restrictions imposed herein
shall be calculated using Bank's local time.

9.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.

9.12. Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all the signatures on such
counterparts appeared on one document, and each such counterpart shall be deemed
to be an original.

9.13. Consent to Jurisdiction and Service of Process. Each
Borrower irrevocably appoints each officer of DBI as its attorney upon whom may
be served any notice, process or pleading in any action or proceeding against it
arising out of or in connection with this Agreement, the Notes, the Loan
Documents, any Letter of Credit or any of the Collateral; each Company hereby
consents that any action or proceeding against it be commenced and maintained in
any court within the Commonwealth of Pennsylvania or in the United States
District Court for the Eastern District of Pennsylvania by service of process on
any officer of DBI; and each Borrower agrees that the courts of the Commonwealth
of Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania shall have jurisdiction with respect to the subject matter hereof
and the person of each Borrower and the Collateral. Notwithstanding the
foregoing, Bank, in its absolute discretion may also initiate proceedings in the
courts of any other jurisdiction in which any Borrower may be found or in which
any of its properties or Collateral may be located.

9.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTES OR OTHER LOAN DOCUMENTS OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK'S ENTERING
INTO THIS AGREEMENT.

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<PAGE> 54
9.15. ACKNOWLEDGMENTS. EACH BORROWER ACKNOWLEDGES THAT IT HAS
HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, PARAGRAPH 9.14 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAVE BEEN FULLY EXPLAINED TO
SUCH BORROWER BY SUCH COUNSEL.

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<PAGE> 55
IN WITNESS WHEREOF, the undersigned, by their duly authorized
officers, as applicable, have executed this Agreement the day and year first
above written.

ATTEST: DAVID'S BRIDAL, INC., a Florida
corporation

By: /s/ Edward S. Wozniak By: /s/ Steven H. Erlbaum
-------------------------- ---------------------------
Name: Steven H. Erlbaum
Title: SVP - CFO Title: CEO

KPS MARKETING, INC., a Pennsylvania
corporation

By: /s/ Steven H. Erlbaum
---------------------------------
Name: Steven H. Erlbaum
Title: CEO

MALIBU BRIDAL, INC., a Pennsylvania
corporation

By: /s/ Steven H. Erlbaum
---------------------------------
Name: Steven H. Erlbaum
Title: CEO

DB OF DEL., INC., a Delaware corporation

By: /s/ Steven H. Erlbaum
---------------------------------
Name: Steven H. Erlbaum
Title: CEO

FIRST UNION NATIONAL BANK

By: /s/ Irene Rosen Marks
---------------------------------
Name: Irene Rosen Marks
Title: Vice President

-49-

<PAGE> 1
Exhibit 23.1

As independent public accountants, we hereby consent to the use in this
registration statement of our report dated February 10, 1999 included herein and
to all references to our Firm included in this registration statement.

/s/ Arthur Andersen LLP

February 19, 1999
Philadelphia, Pa
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<CAPTION>
Item Number Item Description Amount
- - ----------- ---------------- ------
<S> <C> <C>
3-02(1) cash and cash items $320,027
5-02(2) marketable securities $0
5-02(3)(a)(1) notes and accounts receivable--trade $2,843,751
5-02(4) allowances for doubtful accounts $0
5-02(6) inventory $37,458,416
5-02(9) total current assets $42,869,168
5-02(13) property, plant and equipment $27,481,797
5-02(14) accumulated depreciation $6,832,106
5-02(18) total assets $65,561,946
5-02(21) total current liabilities $15,533,912
5-02(22) bonds, mortgages and similar debt $19,646,491
5-02(28) preferred stock--mandatory redemption $0
5-02(29) preferred stock--no mandatory redemption $10,864
5-02(30) common stock $66,122
5-02(31) other stockholders' equity $27,442,622
5-02(32) total liabilities and stockholders' equity $65,561,946
5-03(b)1(a) net sales of tangible products $123,656,353
5-03(b)1 total revenues $132,717,716
5-03(b)2(a) cost of tangible goods sold $74,612,433
5-03(b)2 total costs and expenses applicable to sales
and revenues $74,612,433
5-03(b)3 other costs and expenses $47,581,400
5-03(b)5 provision for doubtful accounts and notes $0
5-03(b)(8) interest and amortization of debt discount $1,087,266
5-03(b)(10) income before taxes and other items $9,436,617
5-03(b)(11) income tax expense $3,617,827
5-03(b)(14) income from continuing operations $10,523,883
5-03(b)(15) discontinued operations $0
5-03(b)(17) extraordinary items $0
5-03(b)(18) cumulative effect--changes in accounting
principles $0
5-03(b)(19) net income $5,818,790
5-03(b)(20) earnings per share--primary $0.88
5-03(b)(20) earnings per share--fully diluted $0.47

</TABLE>