================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended May 2, 1998
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended to
------------------ ---------------------------
--------------------------------------------------------------------
Commission File No. 0-20234
-------
Today's Man, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1743137
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
835 Lancer Drive, Moorestown, NJ 08057
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 609-235-5656
---------------------------------------------------
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO .
----------- -----------
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN A BANKRUPTCY DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO .
----------- -----------
27,278,683 common shares were outstanding as of June 11, 1998.
================================================================================
<PAGE>
TODAY'S MAN INC.
----------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION:
<S> <C>
Item 1. Condensed Consolidated Financial Statements - Unaudited
Consolidated Balance Sheets
May 2, 1998 and January 31, 1998............................................1
Consolidated Statements of Operations
Thirteen weeks ended May 2, 1998 and May 3, 1997............................2
Consolidated Statements of Cash Flows
Thirteen weeks ended May 2, 1998 and May 3, 1997............................3
Notes to Consolidated Financial Statements................................4-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................7-9
Item 3. Quantitative and Qualitative Disclosures about Market Risks.................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................................10
Item 2. Changes in Securities and Use of Proceeds..................................10
Item 3. Defaults Upon Senior Securities............................................10
Item 4. Submission of Matters to a Vote of Security Holders........................10
Item 5. Other Information..........................................................10
Item 6. Exhibits and Reports on Form 8-K...........................................10
Signatures........................................................................11
</TABLE>
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 2, January 31,
------ -----------
1998 1998
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 686,400 $ 219,500
Cash restricted for pre-petition settlements 7,393,000 11,005,500
Due from credit card companies and other receivables, net 1,734,800 2,136,400
Inventory 37,526,000 34,652,100
Prepaid expenses and other current assets 3,493,400 2,753,600
Prepaid inventory purchases 4,314,700 2,611,400
----------- -----------
Total current assets 55,148,300 53,378,500
Property and equipment, less accumulated depreciation and amortization 30,666,800 31,553,600
Loans to shareholders 228,400 228,400
Rental deposits and other noncurrent assets 2,579,100 2,003,500
----------- -----------
$88,622,600 $87,164,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 5,244,700 $ 7,670,800
Accrued expenses and other current liabilities 4,666,100 4,784,900
Current portion of term loan 4,416,700 4,416,700
Liabilities subject to settlement 4,481,300 8,987,600
Obligations under revolving credit facility 8,920,000 --
Current maturities of capital lease obligations 1,226,600 1,226,600
----------- -----------
Total current liabilities 28,955,400 27,086,600
Capital lease obligations, less current maturities 715,900 1,037,200
Deferred rent and other 4,688,100 4,489,000
Term loan, less current maturities 6,752,100 7,751,700
----------- -----------
41,111,500 40,364,500
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized, none issued Common
stock, no par value, 100,000,000 shares authorized, 27,278,433 and 27,274,588
shares issued and outstanding at May 2, 1998
and January 31, 1998 respectively, net of
accumulated retained deficit of $27,316,200 as of January 31, 1998 47,069,300 46,799,500
Retained earnings (from February 1, 1998) 441,800 --
Total shareholders' equity 47,511,100 46,799,500
----------- -----------
$88,622,600 $87,164,000
=========== ===========
</TABLE>
See accompanying notes
1
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THIRTEEN WEEKS ENDED
May 2, 1998 May 3, 1997
------------ ------------
<S> <C> <C>
Net sales $ 46,253,400 $ 43,928,900
Cost of goods sold 29,455,200 27,997,800
------------ ------------
Gross profit 16,798,200 15,931,100
Selling, general and administrative expenses 15,339,700 15,062,100
------------ ------------
Income from operations 1,458,500 869,000
Reorganization items:
Professional fees -- 931,400
Interest income -- (277,800)
------------ ------------
Net reorganization items -- 653,600
Interest expense and other income, net 757,200 56,700
------------ ------------
Income before income taxes 701,300 158,700
Income taxes 259,500 --
------------ ------------
Net income $ 441,800 $ 158,700
============ ============
Earnings per share - basic $ 0.02 $ 0.01
============ ============
Weighted average shares outstanding 27,276,536 10,861,005
Earnings per share, assuming dilution $ 0.02 $ 0.01
============ ============
Weighted average shares outstanding, assuming dilution 28,534,495 10,875,308
</TABLE>
See accompanying notes.
2
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THIRTEEN WEEKS ENDED
May 2, 1998 May 3, 1997
------------ ------------
<S> <C> <C>
Operating activities
Net income $ 441,800 $ 158,700
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 941,000 1,074,300
Accretion of debt discount 104,600 --
Deferred credits 199,100 112,400
Tax benefit of net operating loss carryforward 259,500 --
Changes in operating assets and liabilities:
Decrease (increase) in receivables 401,600 (767,100)
Increase in inventory (2,873,900) (4,463,700)
(Increase) decrease in prepaid expenses and other current assets (2,443,100) 1,209,800
Increase in rental deposits and other non current assets (575,600) (203,900)
Decrease in payables, accrued expenses and liabilities subject to
settlement (7,051,200) (208,900)
Decrease in restricted cash 3,612,500 --
Changes due to reorganization activities:
Reorganization costs -- 653,600
Payment of reorganization costs -- (749,500)
------------ ------------
Total adjustments (7,425,500) (3,343,000)
------------ ------------
Net cash used in operating activities (6,983,700) (3,184,300)
Cash flow used in investing activities:
Capital expenditures (54,200) (157,400)
------------ ------------
Net cash used in investing activities (54,200) (157,400)
Cash flow provided by (used in) financing activities:
Repayment of capital leases (321,300) (476,700)
Borrowings under revolving credit facility 20,095,000 --
Repayment of term loan and revolving credit facility (12,279,200) --
Proceeds from exercise of stock options and common stock purchase
warrants 10,300 --
------------ ------------
Net cash provided by (used in) financing activities 7,504,800 (476,700)
Net increase (decrease) in cash and cash equivalents 466,900 (3,818,400)
Cash and cash equivalents at beginning of period 219,500 22,926,000
------------ ------------
Cash and cash equivalents at end of period $ 686,400 $ 19,107,600
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
TODAY'S MAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Bankruptcy Reorganization
Reorganization Proceedings. On December 12, 1997, the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court")
entered an order dated confirming the Company's Second Amended Joint Plan
of Reorganization (the "Reorganization Plan") proposed by Today's Man,
Inc. ("the Company") and certain of its subsidiaries. On December 31,
1997, the Reorganization Plan became effective and the Company emerged
from bankruptcy reorganization proceedings. Those proceedings had begun
on February 2, 1996 when the Company and certain of its subsidiaries
filed voluntary petitions in seeking to reorganize under Chapter 11 of
the U.S. Bankruptcy Code. The Chapter 11 filing was the result of banking
difficulties, operating losses, deterioration of vendor support, and cash
flow problems. The Company operated as a debtor-in-possession under
supervision of the Bankruptcy Court for the duration of those proceedings
and, as such, was prohibited from paying pre-petition liabilities or
engaging in transactions outside of the ordinary course of business
without the approval of the Bankruptcy Court.
The Reorganization Plan provided for the payment in full of
allowed claims, including the payment of post-petition interest. The
Reorganization Plan was funded by an equity infusion of approximately
$16.3 million raised from an Equity Investment Group led by Mr. David
Feld, Chairman of the Board, President, and Chief Executive Officer of
the Company and a rights offering to existing shareholders, including a
credit of $3.3 million to Mr. David Feld in respect of the cash
distribution portion of his subordinated claim; the proceeds from a $12.5
million term loan and a draw of approximately $4.0 million on a new $30.0
million revolving credit facility from Foothill Capital Corporation; and
approximately $23.7 million in cash on hand.
Pursuant to the Reorganization Plan, the Company paid an aggregate
of $53.3 million and issued 9,920,568 shares of Common Stock to its
creditors in settlement of $76.2 million of outstanding indebtedness,
including post-petition interest. Under the Reorganization Plan, holders
of the Company's Common Stock received for each share of old Common
Stock: (1) one share of new Common Stock and (2) 0.5 of a Common Stock
Purchase Warrant ("Warrant"). Each whole Warrant entitles the holder to
purchase one share of New Common Stock at an exercise price of $2.70 per
share at any time on or before December 31, 1999. The additional shares
issued pursuant to the Reorganization Plan increased the total shares
outstanding to 27,274,588 as of January 31, 1998. A total of 5,430,503
Warrants were issued to the Company's pre-reorganization shareholders.
Professional fees and other costs directly related to the
bankruptcy proceedings were expensed as incurred, and have been reflected
in the Consolidated Statement of Operations as "Reorganization items."
Reorganization items consist primarily of fees paid to legal and
financial advisors of the Company and the Official Committee of Unsecured
Creditors. In addition, these expenses include incentives paid to
employees who remained with the Company during the Bankruptcy
proceedings. Interest income earned by the Company during the Bankruptcy
proceeding has been reported as a reduction of Reorganization items.
As of May 2, 1998, $4,481,300 in claims remained to be
distributed. These distributions are expected to be made upon receipt of
certified tax payer identification numbers and resolution of disputed
claims.
4
<PAGE>
TODAY'S MAN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
2. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements,
which include the accounts of the Company and its wholly owned
subsidiaries, have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. All significant intercompany transactions and accounts have
been eliminated in consolidation. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. Due to the seasonal
nature of the Company's sales, operating results for the interim period
are not necessarily indicative of results that may be expected for the
fiscal year ending January 30, 1999. For further information, refer to
the consolidated financial statements and footnotes thereto which are
included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998.
As of January 31, 1998, the Company effected a
quasi-reorganization through the application of $27,316,200 of its
$74,115,700 Common Stock account to eliminate its retained deficit. The
Company's Board of Directors decided to effect a quasi-reorganization
given that the Company has completed its restructuring, obtained
long-term financing and successfully emerged from bankruptcy. The
Company's retained deficit at January 31, 1998 was related to operations
that resulted in the restructuring of the Company and the losses incurred
during the Chapter 11 proceeding and is not, in management's view,
reflective of the Company's current financial condition.
3. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
4. Income Taxes
As a result of the Company's quasi-reorganization subsequent
recognition of any tax benefits from deductible temporary differences and
net operating loss carryforwards that existed at January 31, 1998 will
result in credits to common stock, rather than a reduction of income tax
expense. At May 2, 1998, the Company recorded a credit to Common Stock of
$259,500 to reflect the tax benefit of the net operating loss
carryforward.
5. Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement
No. 128 Earnings per Share. Statement 128 replaced the calculations of
primary and fully diluted earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic earnings per
share excludes any dilutive effect of outstanding stock options. Earnings
per common share amounts for all periods have been presented in
accordance with Statement 128 requirements.
5
<PAGE>
TODAY'S MAN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, Reporting Comprehensive Income and Statement No. 131,
Disclosures about Segments of an Enterprise and Related Information, both
of which are required to be adopted in fiscal 1998. Statement 130
requires financial statement reporting of all non-owner related changes
in equity for the periods being presented. Statement 131 requires
disclosure of revenue, earnings and other financial information
pertaining to business segments by which a company is managed as well as
factors used by management to determine segments. The Company believes
adoption of both Statements 130 and 131 will not have a material effect
on its financial position or results of operations, however, management
is still assessing the impact of these statements on its financial
statement disclosures.
7. Investment Considerations
In analyzing whether to make, or to continue, an investment in the
Company, investors should consider, among other factors, certain
investment considerations more particularly described in "Item 1:
Business - Investment Considerations" in the Company's Annual Report on
Form 10-K for the year ended January 31, 1998, a copy of which can be
obtained, without charge except for exhibits to the Report, upon written
request to Mr. Frank E. Johnson, Executive Vice President and Chief
Financial Officer, Today's Man, Inc., 835 Lancer Drive, Moorestown, New
Jersey 08057.
8. Safe Harbor Statement under Private Securities Litigation Reform Act of
1995
Certain statements in this Form 10-Q which are not historical
facts, including, without limitation, statements as to the Company's
planned results for 1998, new store openings, estimated costs of new
systems, and the costs to address year 2000 compliance, or as to
management's beliefs, expectations, or opinions, are forward looking
statements that involve risks and uncertainties and are subject to change
at any time. Certain factors, including, without limitation the risk that
the assumptions upon which the forward-looking statements are based
ultimately may prove incorrect and the other risks detailed from time to
time in the Company's filings with the Securities and Exchange
Commission, including, without limitation, its Annual Report on Form
10-K, can cause actual results and developments to be materially
different from those expressed or implied by such forward-looking
statements. See note 7, above, for instructions on how to receive a copy
of the Company's Annual Report.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
The following table sets forth, as a percentage of net sales, certain
items appearing in the consolidated statements of operations for the thirteen
week periods ended May 2, 1998 and May 3, 1997, respectively.
PERCENTAGE OF NET SALES
THIRTEEN WEEKS ENDED
May 2, May 3,
1998 1997
-----------------------
Net sales 100.0% 100.0%
Cost of goods sold 63.7 63.7
-----------------------
Gross profit 36.3 36.3
Selling, general and administrative expenses 33.1 34.3
-----------------------
Income from operations 3.2 2.0
Reorganization items, net -- 1.5
Interest expense and other income, net 1.6 0.1
-----------------------
Income before income taxes 1.6 0.4
Income taxes 0.6 --
-----------------------
Net income 1.0% 0.4%
=======================
THIRTEEN WEEKS ENDED MAY 2, 1998 AND MAY 3, 1997:
- -------------------------------------------------
NET SALES. Net sales increased $2,324,500 or 5.3% in the first quarter of fiscal
1998 compared to the year ago period. Comparative store sales increased 5.3%.
The increase in net sales is a result of the continuing efforts to transition
merchandise from season to season more effectively, maintain appropriate stock
levels through replenishment and continued consumer acceptance of the values
expressed in Today's Man branded merchandise. There were 25 superstores in
operation at May 2, 1998 and May 3, 1997, respectively.
GROSS PROFIT. Gross profit as a percentage of net sales remained constant at
36.3% for the first quarter of fiscal 1998 and 1997, respectively. The relative
stability in the gross profit percentage is a result of fewer markdowns taken
due to the Company's commitment to everyday low prices.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $227,600 or 1.8% in the first quarter of
fiscal 1998, and decreased as a percentage of sales to 33.1% from 34.3% in the
first quarter of fiscal 1997. The increase is due to the costs of operating the
Today's Man Rewards Program, which increased approximately $200,000 over the
year ago period. The Company also incurred additional administrative expenses in
the first quarter of fiscal 1998 related to new store development and
non-capitalizable items related to the new merchandising system. Offsetting
these increases, store payroll, occupancy and advertising costs decreased by
$300,400 or 3.1% in the first quarter of fiscal 1998, and represented 20.0% of
sales compared with 21.8% of sales for the year ago period.
INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and
other expense, net increased by $700,500 from the first quarter of fiscal 1997.
As a result of revolving credit borrowings and the term loan the Company
recorded interest expense of $879,100 during the quarter offset by interest
income of $121,900 earned on the Company's restricted cash. The Company had
average borrowings under its revolving credit facility of $4,900,000 during the
quarter ended May 2, 1998.
7
<PAGE>
REORGANIZATION ITEMS, NET. For the 13 week period ended May 3, 1997,
reorganization items consist of legal and financial advisory services fees
incurred by the Company and the official Creditors' Committee in the
administration of the Chapter 11 proceedings. Also included in this amount was
the charge for the Retention Bonus Plan, as well as interest income earned on
accumulated cash balances. No reorganization items were incurred during the
first quarter of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of working capital are cash flow from
operations and borrowings under the revolving credit facility. At May 2, 1998,
the Company had working capital of $26,192,900 as compared with $26,291,900 at
January 31, 1998.
On December 31, 1997, the Company entered into a Loan and Security
Agreement with Foothill Capital Corporation, individually and as agent. The Loan
and Security Agreement provides for a $12.5 million term loan and a $30.0
million revolving credit facility. The Company has granted Foothill Capital
Corporation a lien on its tangible and intangible assets to secure this term
loan and revolving credit facility. Proceeds from these loans were used to fund
a portion of the Company's Plan of Reorganization.
The term loan bears interest at 11%, matures in three years and requires
monthly principal payments of $368,055, reflecting a $750,000 discount. In
addition to the discount, the term loan contains a provision requiring the
payment of a monthly fee beginning in January 1999 of approximately $42,000.
This monthly fee, which could amount to $1.0 million if paid for 24 months, is
being accrued ratably over the life of the loan as an adjustment to interest
expense using the effective interest method. After giving effect to the
amortization of the discount and the monthly fee, the effective interest rate on
the term loan is 18.99%. In the event the Company is able to refinance the term
loan prior to December 31, 1998, the principal amount owed to Foothill would be
equal to the original principal of $12.5 million plus a $375,000 premium less
any principal payments made on the loan. After December 31, 1998, the term loan
repayment amount increases monthly by the monthly fee of $42,000 and $15,625,
representing the straight-line impact of the remaining discount to the face
amount of $13,250,000. There is no penalty for early termination of the term
loan. In addition to the monthly fees associated with the term loan, the loan
document contains a provision that requires an annual repayment equal to 25% of
the Company's excess cash flow, as defined. Excess cash flow represents the
Company's earnings before interest, taxes, depreciation, and amortization
("EBITDA"), less principal payments on indebtedness, payments for interest,
taxes and capital expenditures. No such repayments were required for the year
ended January 31, 1998.
The revolving credit facility bears interest at prime plus one half of
one percentage point (9.0% at May 2, 1998), and provides that the interest rate
cannot be less than 8.0%. The revolving credit facility has an initial term of
five years, with provisions for annual renewals thereafter. The revolving credit
facility includes a $20.0 million sublimit for letter of credit advances.
Availability under the revolver is based on a formula of inventory and credit
card receivables, less applicable reserves. There were borrowings of $8,920,000
outstanding under the revolving credit facility at May 2, 1998. Additionally,
the Company had approximately $5,493,000 in outstanding letters of credit at May
2, 1998. The revolving credit facility contains a provision that, in the event
the Company elects to refinance the facility, Foothill would be paid an early
termination fee equal to the greater of $250,000 or $15,000 times the number of
months remaining until the Renewal date, December 31, 2002.
The Loan and Security Agreement contains usual and customary financial
covenants including maintenance of minimum monthly inventory levels, tangible
net worth, EBITDA, and capital expenditure limitations as well as restrictions
on the payment of dividends. The Company was in compliance with all covenants as
of and for the quarter ended May 2, 1998.
s 8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (Continued)
- -------------------------------------------
The Loan and Security Agreement was amended in May, 1998 to allow the
Company to reduce its exposure to foreign currency fluctuations by engaging in
forward exchange contracts.
The Company believes that the sources of capital above and internally
generated funds will be adequate to meet the Company's anticipated needs through
fiscal 1998.
Year 2000 Compliance
The Company is conducting a comprehensive review of its information
systems to determine which systems will require modification to enable proper
processing of transactions related to the year 2000 and beyond (year 2000
compliance). The Company estimates that it will spend between $2.2 million and
$3.7 million through the end of the fiscal year ending January 30, 2000 ("Fiscal
1999") to replace its existing merchandise, point-of-sale, and financial
accounting systems. One of the primary requirements imposed by the Company is
certification of year 2000 compliance and compatibility. The costs for new
systems will be capitalized and depreciated, to the extent permitted by
Generally Accepted Accounting Principles, in accordance with the Company's fixed
asset policy.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
- -----------------------------------------------------------
None - not applicable
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None - not applicable
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None - not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
None - not applicable
Item 4. Submission of Matters to a Vote of Shareholders
-----------------------------------------------
None - not applicable
Item 5. Other Information
-----------------
None - not applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits
10.1 Lease, as amended, between Mr. David Feld and the Company relating
to the Company's central headquarters and distribution center.
10.16 Amendment No. 1 to the Loan and Security Agreement with Foothill
Capital Corporation.
Reports on Form 8-K
None - not applicable
10
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TODAY'S MAN, INC.
(Registrant)
Date: June 12, 1998 /s/David Feld
------------------------------------------
David Feld
Chairman of the Board and
Chief Executive Officer
Date: June 12, 1998 /s/Frank E. Johnson
------------------------------------------
Frank E. Johnson
Executive Vice President, Chief Financial
Officer and Treasurer
Principal Financial Officer
Date: June 12, 1998 /s/Barry S. Pine
------------------------------------------
Barry S. Pine
Vice President and Controller
Principal Accounting Officer
11
<PAGE>
LEASE
-----
THIS AGREEMENT OF LEASE made the day of , 1995 by and between DAVID FELD,
an individual resident of the Commonwealth of Pennsylvania (hereinafter referred
to as "Landlord") and TODAY'S MAN, INC., a Pennsylvania corporation (hereinafter
referred to as "Tenant").
W I T N E S S E T H:
--------------------
1. PREMISES
--------
In consideration of the rents, covenants and agreements hereinafter
reserved and contained on the part of each party hereto to be performed and/or
paid, Landlord has agreed to let and does hereby let and demise to Tenant and
Tenant has agreed to take and does hereby take and lease from Landlord certain
premises at 835 Lancer Drive, Moorestown Township, Burlington County, New
Jersey, including the office building and distribution center located thereon
containing approximately 140,800 interior square feet and known as Block 502 -
Lots 6, 7 and 9, and more fully described on Exhibit "A" attached hereto and
made a part hereof ("Demised Premises" or "Property").
2. TERM
----
The "Basic Term" of this Lease shall commence on _____________ , 1995
<PAGE>
("Commencement Date") and shall terminate January 31, 2010, unless sooner
terminated as hereinafter provided. In the event the Landlord is unable to
deliver possession of the Demised Premises on the Commencement Date, then
Landlord shall use his best efforts to deliver possession as soon as possible
thereafter and shall pro rate all sums due under this lease to account for such
partial month.
3. BASE RENTAL.
-----------
Tenant covenants and agrees to pay an annual minimum base rent in twelve
(12) equal monthly installments, in advance and without setoff on the first
(1st) day of each and every calendar month during the Basic Term of this Lease,
in accordance with the following schedule: During each year of the term of this
Lease the annual minimum base rent shall be Seven Hundred Thirty Nine Thousand
Two Hundred ($739,200.00) Dollars (being Five Dollars and Twenty Five Cents
($5.25) per square foot multiplied by the 140,800 square feet contained in the
Demised Premises) payable in twelve (12) equal monthly installments of Sixty One
Thousand Six Hundred ($61,600.00) Dollars each ("Base Rent").
4. REAL ESTATE TAXES.
------------------
As used herein, the term "Taxes" shall mean and include all real estate
-2-
<PAGE>
taxes and assessments against the land, buildings or improvements comprising the
Demised Premises described in Exhibit "A" attached hereto, that are payable to
any lawful authority during the calendar year.
During the Basic Term of this Lease and any extensions and renewals
thereof, Tenant shall pay to Landlord as additional rent all Taxes assessed or
imposed upon the Demised Premises provided, however, if any tax shall be imposed
with respect to a period of time which commences before or ends after the
Commencement Date and expiration date respectively, of this Lease, then Tenant
shall only be required to pay that portion thereof which is equal to the portion
of said period which falls within the Basic Term (and extension thereof, if
applicable). Tenant shall pay to Landlord all Taxes within thirty (30) days
after receipt of a bill therefor, accompanied by a written setting forth the
amount of said Taxes.
5. ADDITIONAL RENT.
---------------
As additional rent, Tenant shall pay to Landlord the Property's
"Operating Cost" (as hereinafter defined). "Operating Cost" shall mean the total
cost and expense incurred by Landlord in connection with the operation, repair,
-3-
<PAGE>
maintenance, protection and management of the Property including:
(a) Wages, salaries, fees and other compensation including all payroll
taxes to or on behalf of any employee of Landlord performing services in
connection with the Property;
(b) Maintenance service including all cleaning costs, window and
sidewalks maintenance, including snow and trash removal;
(c) All utility charges not metered directly to tenants including
electricity, heat, water and sewer;
(d) All insurance costs and charges;
(e) All office accounting and legal expenses (other than lease
negotiation) incurred by Landlord in connection with the ownership and operation
of the Property; and
(f) Normal maintenance and repair expenses incurred by Landlord.
The liability of Tenant for payment of the Property's Operating Cost
shall commence as of the commencement of the Basic Term. Said Operating Costs
shall be paid as additional rent based upon Operating Cost for the previous
fiscal year of Landlord, in monthly installments in advance on the
-4-
<PAGE>
first day of the month at the same time and place stated for the payment of
Basic Rent. The difference between the Operating Cost for the previous fiscal
year and the actual Operating Cost for any applicable fiscal year shall be
accounted for by Landlord within ninety (90) days following the end of
Landlord's fiscal year or following the termination of, or Tenant's default
under the terms of this Lease, and the necessary refund by Landlord or
additional payment by Tenant, in the amount of the difference shall be paid
within fifteen (15) days after being billed therefor by Landlord. Tenant's
obligation to pay for said Operating Costs shall be prorated for any portion of
a month.
6. NET LEASE.
----------
This Lease shall be deemed to be a net lease and Tenant shall pay to
Landlord, throughout the term of this Lease, the rent, additional rent and other
payments due hereunder. Tenant shall be responsible for payment of all utilities
consumed at the Demised Premises. Landlord shall not be required to make any
payment to maintain and carry the Demised Premises except as herein expressly
set forth and except for payments under any mortgage now existing or hereinafter
created by Landlord. Tenant accepts the Demised Premises in the condition in
which it now is, subject to the construction of the New Building in accordance
with the plans and specifications, and Tenant acknowledges that Landlord is
giving no warranties with respect to zoning and/or the use to which the Demised
Premises may be put.
-5-
<PAGE>
7. USE.
----
Tenant may use or occupy the Demised Premises as and for offices and
warehouse distribution center and for no other purpose unless approved by
Landlord in writing.
8. COVENANT TO PAY RENT.
---------------------
Tenant shall well and truly pay to Landlord the Base Rental and
additional rent herein reserved, including all payments required under this
Lease, in lawful money of the United States at the office of Landlord or at such
other place as Landlord may from time to time designate in writing without
demand therefor, on the days and in the manner herein prescribed for the payment
thereof.
9. SUBLETTING AND ASSIGNING.
-------------------------
A. Tenant shall not assign this Lease or sublet all or any portion or
portions of the Demised Premises without first obtaining Landlord's prior
written consent thereto. Landlord agrees that any such consent shall not be
unreasonably withheld or delayed. Such consent, if given, will release Tenant
from its obligations hereunder. Tenant shall not convey, pledge, mortgage,
encumber or otherwise transfer (collectively, "Pledge") (whether voluntarily or
otherwise) this Lease or any interest in or under
it. Any attempt by Tenant to assign or pledge this Lease or sublet the Demised
Premises in contravention of the terms of this Lease shall constitute an Event
of Default hereunder.
-6-
<PAGE>
B. Notwithstanding anything contained in Paragraph 9A above to the
contrary, the following shall not be deemed to be an assignment or sublet of
this lease requiring Landlord's prior written consent:
(1) Change of Tenant's name; or
(2) Merger of Tenant into another entity; or
(3) Acquisition by Tenant of other business; or
(4) Sale by Tenant, in bulk of assets other than in the ordinary
course of business; or
(5) Sale, issuance or transfer of the voting capital stock of Tenant
or of any corporate entity which directly or indirectly controls Tenant or of
any portion thereof; or
(6) In the event that Tenant becomes a corporation whose stock is
traded on a recognized public stock exchange, then the sale, issuance or
transfer of any voting capital stock of Tenant.
10. TENANT'S OBLIGATION TO REPAIR.
------------------------------
Except for repairs to the roof and structural repairs to the New
Building Landlord shall not be liable to make any repair whatsoever to the
Demised Premises. Tenant shall, throughout the Basic Term of the Lease and any
extension thereof, at its sole cost and expense, take good care of the Demised
-7-
<PAGE>
Premises and keep it in good order and condition, whether such repairs be
ordinary or extraordinary, foreseen or unforeseen. Tenant shall, at its sole
cost and expense, keep the Demised Premises sidewalk immediately in front of the
Building, in a clean and orderly condition, free of accumulation of dirt,
rubbish, snow and ice. At all times during the Basic Term or any renewal or
extension thereof, Tenant shall maintain the exterior of the Building in good
and attractive condition.
11. WASTE.
------
Tenant shall not do or permit waste, damage or injury to or upon the
Demised Premises, or permit anything to be done upon the Demised Premises which
would prevent the procurement of any insurance policies which may at any time be
required pursuant to the provisions of this Lease or which may increase the
premium or charges for insurance on any other portion of the Property. Tenant
shall not obstruct or permit the obstruction of any street or sidewalk. Tenant
shall, at its own cost and expense, remove or cause to be removed the trash and
-8-
<PAGE>
other rubbish and refuse from the Demised Premises and keep the Demised Premises
clean and neat. Tenant agrees to keep all accumulated rubbish in covered
containers in the rear of the New Building and to have the same removed
regularly. In the event Tenant fails to do so, in addition to all other rights
and remedies of Landlord, Landlord may cause the same to be done for Tenant and
Tenant agrees to pay the reasonable expenses thereof upon presentation of a bill
therefor.
12. TENANT TO COMPLY WITH LAW.
--------------------------
Tenant shall, at its sole cost and expense, promptly comply with the
requirements of every application statute, law and ordinance and with every
applicable lawful regulation or order made by any federal, state, municipal or
other public department, bureau, officer or authority with respect to the use or
occupation of the Demised Premises, including the making of any alteration of
the Demised Premises.
13. IMPROVEMENTS, CHANGES AND ALTERATIONS.
--------------------------------------
Tenant shall have the right from time to time and at any time during the
Basic Term of this Lease, at its sole cost and expense and without any approval
by Landlord being required (except as set forth below), to make only
non-structural interior alterations and changes, and structural alterations
which do not increase or decrease the floor area of the New Building, any of
which do not decrease the value of the New Building and do not affect the
visible front of the New Building (hereinafter sometimes collectively referred
to as "alterations"), subject, however, in all cases to the following:
-9-
<PAGE>
(a) no alterations shall be undertaken until Tenant shall have procured
and paid for, so far as the same may be required from time to time, all permits
and authorizations of all governmental authorities having jurisdiction; and
(b) all alterations shall be made in good and workmanlike manner and in
compliance with all applicable permits, ordinances, regulations and laws; and
(c) if an alternative will substantially decrease the amount of square
feet of floor area of the New Building, Tenant shall first obtain the prior
written consent of Landlord to such alteration; and
(d) if a permitted structural alteration, Tenant shall submit plans and
specifications therefor to Landlord at least twenty (20) days prior to the
commencement of construction thereof; and
(e) no additional floors may be added to the New Building, and no
alterations may be made which are visible from or affect the exterior of the
Building.
(f) the general contractor performing such alterations shall first
execute and have recorded those documents which effect a mechanic's lien waiver
in favor of Landlord binding both the general contractor and all of his
subcontractors.
-10-
<PAGE>
14. MECHANIC'S LIENS.
-----------------
If, because of any act or omission of Tenant, any mechanic's or other
lien, charge or order for the payment of money shall be filed against the
Demised Premises and/or Property (whether or not such lien, charge or order is
valid or enforceable as such), Tenant, at its sole cost and expense, shall cause
it to be cancelled or discharged of record by bonding or otherwise within sixty
(60) days after the filing thereof, and Tenant shall indemnify Landlord against
and save it harmless from all costs, expense, liabilities, losses, damages,
suits, fines, penalties, claims and demands, including reasonable counsel fees,
resulting therefrom.
15. INSPECTION OF PREMISES BY LANDLORD.
-----------------------------------
Landlord, its agents or designees, shall have the right to enter the
Demised Premises during reasonable business hours for the purpose of:
(a) inspecting the Demised Premises, and
(b) making any repairs and performing any work that may be necessary by
reason of Tenant's default under any of the terms, covenants and conditions of
this Lease continuing beyond the applicable periods of grace, and
-11-
<PAGE>
(c) exhibiting the Demised Premises for the purpose of sale or mortgage.
Nothing in the Lease shall imply or impose any duty on Landlord to do
any work which Tenant is required to perform under this Lease and the
performance thereof by Landlord shall not constitute a waiver of any default by
Tenant respecting such work.
16. OWNERSHIP OF IMPROVEMENTS.
--------------------------
Until the termination of this Lease, title to the equipment, fixtures,
furnishings and all other items installed by Tenant in the Demised Premises or
thereon shall be and remain in Tenant. Upon the termination of this Lease, any
fixtures, equipment or improvements (other than removable "Trade Fixtures" as
the term is commonly applied), and any additions, changes and alterations in, on
or at the Demised Premises shall become the property of Landlord, without
payment or offset and shall be surrendered in accordance with the provisions of
Article 17.
17. SURRENDER OF PREMISES.
----------------------
Upon the termination of this Lease, Tenant shall peaceably and quietly
surrender the Demised Premises in good order, repair and condition, excepting
reasonable wear and tear and any condition permitted by Article 13 hereof.
-12-
<PAGE>
18. INSURANCE.
----------
(a) Tenant, at its sole expense, shall maintain for the mutual benefit
of Landlord and Tenant insurance covering the Demised Premises against loss or
damage by fire and such risks as are customarily included in extended coverage
endorsements attached to fire insurance policies covering property in the
Township of Moorestown, State of New Jersey, in an amount equal to the
replacement cost of the Building of which the Demised Premises is a part.
(b) Tenant, at its sole expense, shall maintain, for the mutual benefit
of Landlord and Tenant, comprehensive general public liability insurance against
claims for bodily injury, death or property damage occurring in, on or about the
Demised Premises and any adjoining sidewalk or curb (including without
limitation, bodily injury, death or property damage resulting directly or
indirectly from the construction of any improvements and any other charge,
alteration, improvement, repair, construction or reconstruction) with minimum
limits of One Million ($1,000,000.00) Dollars for bodily injury or death to any
one person, Five Million ($5,000,000.00) Dollars for bodily injury or death to
any number of persons arising out of one accident, and Five Hundred Thousand
($500,000.00) Dollars for property damage.
(c) Tenant shall not carry any separate insurance of the same character
required under this Article 18 unless Landlord shall be named as an insured with
loss payable as herein provided.
-13-
<PAGE>
(d) if requested, Tenant shall add Landlord's mortgages as additional
insureds to all policies required to be carried under this Article 18.
(e) The insurance required under this Article 18 shall be maintained
under valid and enforceable policies issued by insurance companies of recognized
responsibility doing business in the State of New Jersey. Tenant may carry the
insurance required under this Article 18 under a blanket policy covering the
Demised Premises as well as other properties.
(f) Each policy required under this Article 18 shall contain an
agreement that it will not be cancelled or modified without at least thirty (30)
days prior notice to Landlord and any mortgages of Landlord and that no omission
or negligence of Tenant will result in forfeiture of Landlord's insurance.
(g) Each of the parties hereto hereby releases the other, to the extent
of the releasing party's insurance coverage, from any and all liability for any
loss or damage which may be inflicted upon the property of such party even if
such loss or damage shall be brought about by the fault or negligence of the
-14-
<PAGE>
other party, its agents or employees; provided, however, that this release shall
be effective only with respect to loss or damage occurring during such time as
the appropriate policy of insurance shall contain a clause to the effect that
this release shall not effect said policy or the right of the insured to recover
thereunder. If any policy does not permit such a waiver, and if the party to
benefit therefrom requests that such waiver be obtained, the other party agrees
to obtain an endorsement to its insurance policies permitting such waiver of
subrogation if it is available and if such policies do not provide therefor. If
an additional premium is charged for such waiver, the party benefitting
therefrom, if it desires to have the waiver, agrees to pay to the other the
amount of such additional premium promptly upon being billed therefor.
19. FIRE OR OTHER CASUALTY.
-----------------------
In the event of damage to the Demised Premises by fire or other
casualty, Landlord shall at its expense cause the damage be repaired to a
condition as nearly as practicable to that existing prior to the damage, with
reasonable promptness and diligence. Landlord shall not, however, be obligated
to repair, restore or rebuild any of Tenant's property or any alterations or
additions made by Tenant. To the extent and for the time that the Demised
-15-
<PAGE>
Premises are rendered untenantable by a casualty, the Basic Rent shall
proportionately abate. In the event the damage shall involve the Property
generally and shall be so extensive that Landlord shall decide not to repair or
rebuild the Property, or if available insurance proceeds are insufficient to
repair or rebuild the damage, or if any mortgagee of the Property shall not
permit the application of adequate insurance proceeds for repair or restoration,
or if the casualty shall not be of a type insured against under standard fire
policies with extended type coverage, this Lease shall, at the option of
Landlord, exercisable by written notice to Tenant given within ninety (90) days
after Landlord is notified of the extent of the casualty, be terminated as of
the date specified in such notice (which shall not be more than sixty (60) days
thereafter) and the Basic Rent (taking into account any abatement as aforesaid)
shall be adjusted proportionately as of the termination date and Tenant shall
thereupon promptly vacate the Demised Premises.
20. CONDEMNATION OR EMINENT DOMAIN.
-------------------------------
(a) Total or Partial Taking. In the event of exercise of the power of
eminent domain whereby:
(1) such portion of the Property is taken that access to the Demised
Premises is permanently impaired thereby and reasonable alternate access is not
provided by Landlord within a time period which is reasonable under the
circumstances; or
-16-
<PAGE>
(2) all or substantially all of the Demised Premises or the Property
is taken; or
(3) less than substantially all of the Property is taken but
Landlord, acting in good faith, determines that it is economically unfeasible to
continue to operate the uncondemned portion of the Property as a commercial
facility; or
(4) ten per cent (10%) or more of the actual office building and
distribution center is taken, but Tenant, acting in good faith, determines that
because of such taking it is economically unfeasible to continue to conduct its
business in the uncondemned portion of the Demised Premises, then in the case of
(1) or (2), either party, and in the case of (3), Landlord, and in the case of
(4), Tenant, shall have the right to terminate this Lease as of the date when
possession of that part which was taken is required to be delivered or
surrendered to the condemning authority; and in such case all Basic Rent and
other charges shall be adjusted to the date of termination. A "taking" as such
term is used in this Section 20 shall include a transfer of title or of any
interest in the Property by deed or other instrument in settlement of or in lieu
of transfer by operation of law incident to condemnation proceedings.
-17-
<PAGE>
(b) Temporary Taking. Notwithstanding anything hereinabove provided, in
the event of a taking of only the right to possession of the Demised Premises
for a fixed period of time or for the duration of an emergency or other
temporary condition, then this Lease shall continue in full force and effect
without any abatement of Basic Rent or additional rent, but the amounts payable
by the condemnor with respect to any period of time prior to the expiration or
sooner termination of this Lease shall be paid by the condemnor to Landlord and
the condemnor shall be considered a subtenant of Tenant. If the amounts payable
hereunder by the condemnor are paid in monthly installments, Landlord shall
apply the amount of such installments, or as much thereof as may be necessary
for the purpose, toward the amount of Basic Rent and/or additional rent due from
Tenant for the period, and Tenant shall pay to Landlord any deficiency between
the monthly amount thus paid by the condemnor and the amount due from Tenant.
(c) Tenant's Waiver. Regardless of whether this Lease shall terminate
Tenant shall have no right to participate or share in any condemnation claim,
damage award or settlement in lieu thereof with respect to any taking of any
-18-
<PAGE>
nature; provided, however, that Tenant shall not be precluded from claiming or
receiving payment for Tenant's relocation and moving expenses as may be
permitted under applicable law so long as the amount of same does not reduce the
award which Landlord is entitle to receive.
21. INDEMNIFICATION OF LANDLORD AND RELEASE.
---------------------------------------
(a) Tenant agrees to indemnify and save harmless Landlord from and
against any and all claims by or behalf of any person or persons, firm or firms,
corporation or corporations, and any other entity arising from the occupancy,
conduct, operation or management of the Demised Premises or from any work or
thing whatsoever done or which was not done in and on the Demised Premises, or
arising from any breach or default on the part of Tenant in the performance of
any covenant or agreement on the part of Tenant to be performed pursuant to the
terms of this Lease, or under the law, or arising from any act, neglect or
negligence of Tenant, or any to its agents, contractors, servants, employees, or
licensees, or arising from any accident, injury or damage whatsoever caused to
any person, firm or corporation occurring during the term of this Lease, whether
or not such event results from a condition which existed prior to the execution
of this Lease and whether or not such event results in the termination of this
Lease by reason of damage to or destruction of the Demised Premises, in any
-19-
<PAGE>
portion of the Demised Premises, and from and against all costs, expenses and
liabilities incurred in connection with any such claim or action or proceeding
brought thereon (including without limitation the fees of attorneys,
investigators and experts).
(b) Landlord shall not be held responsible for, and is hereby expressly
relieved from, any and all liability by reason of any injury, loss or damage to
persons or property in or about the Demised Premises or the Property, whether
the same be due to fire, breakage, leakage, water flow, steam, gas, use, misuse,
hatches, openings, defective construction or physical conditions anywhere in the
New Building, failure of water supply, or light or power, defects in electrical
wiring, plumbing or other equipment or mechanism, wind, lightening, storm or any
other cause whatsoever whether the loss, injury or damages be to the person or
property of Tenant or any other person.
22. CURING TENANT'S DEFAULTS.
-------------------------
If Tenant shall be in default in the performance of any of its
obligations under this Lease, Landlord may (but shall not be obligated to do
so), in addition to any other rights it may have under this Lease, in law or
equity, and after written notice to Tenant, except in case of emergency, cure
such default on behalf of Tenant, and Tenant shall reimburse Landlord upon
demand for any sums paid or costs incurred by Landlord in curing such default,
-20-
<PAGE>
including interest at a rate of interest per annum equal to the announced prime
rate of Fidelity Bank for unsecured short term loans (the Default Rate"), from
the respective dates of Landlord's making of the payments and incurring of the
costs, on all sums advanced by Landlord as aforesaid, which sums and costs,
together with interest thereon, shall be deemed additional rent hereunder and
shall be payable upon demand.
23. DEFAULT PROVISIONS.
-------------------
This Lease and the term and estate hereby granted are subject to the
limitation that:
(a) Whenever Tenant shall default in the payment of any installment of
rent or of any other sum payable by Tenant to Landlord and Tenant shall fail to
pay the same within ten (10) days after written notice from Landlord; except
that Landlord shall not be required to give more than four (4) such notices in
any consecutive twelve month period in which event the failure to pay the same
shall be a default without such notice if payment is not made within ten (10)
days after the date upon which the same ought to be paid; or
-21-
<PAGE>
(b) Whenever Tenant shall do, or permit anything to be done, whether by
action or inaction, contrary to any covenant or agreement on the part of Tenant
herein contained or contrary to any of the covenants, agreements, terms or
provisions of this Lease, or shall fail in the keeping or performance of any of
the covenants, agreements, terms or provisions contained in this Lease which on
the part or behalf of Tenant are to be kept or performed and Tenant shall fail
to cure the same within twenty (20) days after Landlord shall have given to
Tenant a written notice specifying the same; provided, if it is of such a nature
that it cannot be cured within such twenty (20) day period, if Tenant shall have
failed to commence the cure within such twenty (20) day period and thereafter to
diligently and continually prosecute the cure until fully corrected; or
(c) Whenever an involuntarily petition shall be filed against Tenant
under any bankruptcy or insolvency law or under the reorganization provisions of
any law or like import, or a receiver of or for Tenant or the property of Tenant
shall be appointed without the acquiescence of Tenant, and such situation under
this paragraph 23(c) shall continue and shall not be remedied by Tenant within
sixty (60) days after the happening of any such event; or
(d) Whenever Tenant shall make an assignment of the property of Tenant
for the benefit of creditors or shall file a voluntary petition under
-22-
<PAGE>
any bankruptcy or insolvency law, or whenever any court of competent
jurisdiction shall approve a petition filed by Tenant under the reorganization
provisions of the United States Bankruptcy Code or under the provisions of any
law of like import, or whenever a petition shall be filed by Tenant under
Chapter 11 of the United States Bankruptcy Code or under the provisions of any
law of like import, or whenever Tenant shall vacate or desert or abandon the
Demised Premises; then, and in addition to any other rights or remedies Landlord
may have under this Lease, at law, or in equity, Landlord shall have the
following rights:
(1) To accelerate the whole or any part of the rent for the entire
unexpired balance of the term of this Lease, as well as all charges, payments,
costs and expenses herein agreed to be paid by Tenant, and any rent or other
charges, payments, costs and expenses if so accelerated shall, in addition to
any and all installments of rent already due and payable and in arrears, and/or
any other charges or payment herein reserved, included or agreed to be treated
or collected as rent and/or any other charges, expense or costs herein agreed to
be paid by Tenant which may be due and payable and in arrears, be deemed due and
payable as if, by the terms and provisions of this Lease, such accelerated rent
and other charges, payments, costs and expenses were on that date payable in
advance.
-23-
<PAGE>
(2) To re-enter the Demised Premises and remove all persons and all
or any property therefrom by summary dispossess proceedings or by any suitable
action or proceeding at law, without being liable to indictment, prosecution or
damages therefor, and repossess and enjoy the Demised Premises, together with
all additions, alterations and improvements. Upon recovering possession of the
Demised Premises by reason of or based upon or arising out of a default on the
part of Tenant, Landlord may, at Landlord's option, either terminate this Lease
or make such alterations and repairs as may be necessary in order to relet the
Demised Premises and relet the Demised Premises or any part or parts thereof,
for a term or terms which may at Landlord's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
Lease and at such rent or rents and upon such other terms and conditions as in
Landlord's sole discretion may seem advisable and to such person or persons as
may in Landlord's discretion seem best; upon each such reletting all rents
received by Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Tenant to Landlord;
second, to the payment of any costs and expenses of such
-24-
<PAGE>
reletting, including brokerage fees and attorney's fees and all costs of such
alterations and repairs; third, to the payment of rent due and unpaid hereunder;
and the residue, if any, shall be held by Landlord and applied in payment of
future rent as it may become due and payable hereunder. If such rentals received
from such reletting during any month shall be less than that to be paid during
that month by Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry
or taking possession of the Demised Premises or the making of alterations and/or
improvements thereto or the reletting thereof shall be construed as an election
on the part of Landlord to terminate this Lease unless written notice of such
intention be given to Tenant. Landlord shall in no event be liable in any way
whatsoever for failure to relet the Demised Premises or, in the event that the
Demised Premises or any part or parts thereof are relet, for failure to collect
the rent thereof under such reletting. Notwithstanding any such reletting
without termination, Landlord may at any time thereafter elect to terminate this
Lease for such previous breach.
-25-
<PAGE>
(3) To terminate this Lease and the term hereby created without any
right on the part of Tenant to waive the forfeiture by payment of any sum due or
by other performance of any condition, term or covenant broken. Whereupon
Landlord shall be entitled to recover, in addition to any and all sums and
damages for violation of Tenant's obligations hereunder in existence at the time
of such termination, damages for Tenant's default in an amount equal to the
amount of the rent reserved for the balance of the term of this Lease, as well
as all other charges, payments, costs and expenses herein agreed to be paid by
Tenant, all discounted at the rate of six (6%) percent per annum to their then
present worth, which amount shall be immediately due and payable from Tenant to
Landlord.
(4) No right or remedy herein conferred upon or reserved to Landlord
is intended to be exclusive of any other right or remedy herein or by law or in
equity provided, but each shall be cumulative and in addition to every other
right or remedy given herein or now or hereafter existing at law or in equity or
by statute.
(5) No waiver by Landlord of any breach by Tenant of any of Tenant's
obligations, agreements or covenants herein shall be a waiver of any subsequent
breach or of any obligation, agreement or covenant, nor shall any forbearance by
Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of
any rights and remedies with respect to such or any subsequent breach.
-26-
<PAGE>
24. DEFINITIONS OF "LANDLORD" AND "TENANT".
---------------------------------------
(a) The term "Landlord", as used in this Lease, so far as Landlord's
covenants and agreements under this Lease are concerned, shall be limited to
mean and include only the owner or owners at the time in question. In the event
of any conveyance of such interest, Landlord herein named and each subsequent
grantor shall be automatically relieved, from and after the date of such
conveyance, of all liability respecting the performance of any Landlord's
covenants and agreements thereafter to be performed, and such grantee shall be
bound by all such covenants and agreements, it being intended that Landlord's
covenants and agreements shall be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of
ownership. In any event, the liability of the Landlord under this Lease, and the
liability of its successors and assigns, shall be limited to its interest in the
Demised Premises, and Tenant shall not attempt to collect or enforce any
indebtedness out of or from any asset of Landlord other than the Demised
Premises and its interest therein. In the event any judgment is entered into
against Landlord by reason of any obligation under this Lease, Tenant shall
cause the restrictions hereinabove stated to be noted in the judgment index.
-27-
<PAGE>
(b) The term "Tenant" as used in this Lease, so far as covenants,
conditions and agreements to be performed on the part of Tenant are concerned,
shall be limited to mean Feld & Sons, Inc. t/a Today's Man, a Pennsylvania
corporation, and any subsequent permitted owner from time to time of the
Tenant's interest in this Lease. In the event of any permitted assignment or
other transfer of this Lease of all of Tenant's interests herein, the said Feld
& Sons, Inc. (and in case of any subsequent permitted assignment or other
transfer, the then assignor or transferor) shall be relieved from liability
hereunder.
25. NOTICES.
--------
Any notice, consent, approval, request or demand required or permitted
to be given in this Lease shall be in writing, sent by postage certified mail,
return receipt requested, addressed, as the case may be, to Landlord and Tenant
at:
835 Lancer Drive
Moorestown, New Jersey 08057
or to such other address as the party to receive notice shall designate for
itself in the matter herein provided. Such notice or demand shall be deemed to
have been given on the date it shall have been mailed, as aforesaid.
-28-
<PAGE>
26. ESTOPPEL CERTIFICATE.
---------------------
Within fifteen (15) days after request by either party, the other part
to this Lease, from time to time and without charge, shall deliver to the
requesting party or to any person, firm or corporation specified by the
requesting party, duly execute and acknowledged instrument, certifying:
(a) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and stating any such modification; and
(b) whether such party knows of any default by the requesting party in
the performance by the requesting party of the terms, covenants and conditions
of this Lease, and specifying the nature of such defaults, if any; and
(c) the dates to which the Basic Rental and additional rental has been
paid.
27. ALL RIGHTS CUMULATIVE.
----------------------
All the rights and remedies of Landlord and Tenant herein mentioned or
referred to or arising hereunder shall be deemed to be distinct, separate and
cumulative, notwithstanding that specific sections of this Lease may not so
provide, and no one or more of them, whether exercised or not, nor any mention
-29-
<PAGE>
of or reference to any one or more of them herein, shall be deemed to be in
exclusion of or a waiver of any of the others or of any rights or remedies which
Landlord or Tenant might have, whether by present or future law or pursuant to
the Lease.
28. SIGNS.
-----
Except for signs which are located wholly within the interior of the
Demised Premises and which are not visible from the exterior of such New
Building, no signs shall be placed, erected, maintained or painted at any place
upon the New Building or Property without the prior written consent of Landlord
as to size, design, color, location, content, illumination, composition or
material, and mobility thereof.
29. SUBORDINATION.
--------------
Tenant agrees that this Lease shall, at the request of Landlord, be
subordinate to any mortgages that are now, or may hereafter be, placed upon the
Demised Premises and to any and all advances to be made thereunder, and to the
interest thereon, and all renewals, replacements and extensions thereof,
provided that the mortgagees named in said mortgages shall agree to recognize
the interest of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default.
-30-
<PAGE>
30. ATTORNMENT.
-----------
If, and so long as, any mortgage on the Property is in effect, then at
the option of the mortgagee:
(a) This Lease and Tenant's tenancy hereunder will continue in full
force and effect notwithstanding
(i) the occurrence of any event of default under such mortgage;
(ii) any failure by Landlord to comply with any provision of this
Lease;
(iii) any defense, counterclaim or setoff to which Tenant might be
entitled against Landlord under this Lease;
(iv) any delay or omission by the mortgagee in exercising, or any
waiver by the mortgagee of, any right or remedy under the Mortgage or the note
which it secures ("Note");
(v) any amendment of or supplement to the Note or the mortgage
which does not affect any rights of Tenant under this Lease;
(vi) any bankruptcy, receivership, insolvency, reorganization,
composition, dissolution, liquidation, or similar proceeding with respect to
Landlord.
(b) If any such mortgagee shall enter into and become possessed of the
Demised Premises or any part thereof through summary or other proceedings,
-31-
<PAGE>
Tenant shall be obligated to pay to such mortgagee the rent payable hereunder as
the same becomes payable and otherwise to comply with the provisions hereof on
the part of Tenant to be complied with; and
(c) If any such mortgagee or any purchaser at any public or private
foreclosure sale resulting from any default under any such mortgage, shall enter
into and become possessed of the Demised Premises or any part thereof through
summary or other proceedings, Tenant, without charge therefore, will attorn to
such mortgagee or purchaser, as the case may be, and recognize such mortgagee or
purchaser as its Landlord under this Lease, in accordance with all of the
provisions hereof, and will promptly execute upon request of such mortgagee or
purchaser an agreement of attornment, in recordable form.
31. QUIET ENJOYMENT.
----------------
Landlord covenants that if and so long as Tenant keeps and performs each
and every covenant, agreement, term, provision and condition in this Lease
contained on the part and on behalf of Tenant to be kept and performed, Tenant
shall quietly enjoy the Demised Premises without hindrance or molestation by
Landlord or anyone claiming any interest directly from Landlord (except for any
entity with which Tenant has executed a non-disturbance agreement), subject to
the covenants, agreements, terms provisions or conditions of this Lease.
-32-
<PAGE>
32. CROSS-BROKERAGE.
----------------
Each part agrees to indemnify the other and hold the other harmless from
and against the claims of any and all brokers and other intermediaries employed
by the indemnifying party and/or who claim to have been employed by the
indemnifying party in connection with the entering into of this Lease.
33. HEADINGS.
---------
The headings of particular paragraphs herein are inserted for the
purpose of reference and convenience only and are in no way to be construed or
deemed to be a part of this Lease or as a limitation on the scope of the
particular paragraph to which they refer.
34. RIGHTS OF SUCCESSORS AND ASSIGNS.
---------------------------------
The covenants and agreements contained in the within Lease shall apply
to, inure to the benefit of, and be binding upon the parties hereto and upon
their respective successors and assigns, except as expressly otherwise provided
herein.
35. NO PARTNERSHIP.
---------------
Nothing contained herein shall be construed to create a partnership or
joint venture between Landlord and Tenant, or render Landlord in any way
responsible for the debt or losses of Tenant.
-33-
<PAGE>
36. NO ORAL MODIFICATION.
---------------------
All understandings and agreements between the parties with respect to
the Demised Premises and Property are merged within this Lease, which alone
fully and completely set forth the understandings of the parties hereto. This
Lease and any and all provisions hereof may not be changed, modified or
discharged except by a written agreement signed by the party against whom
enforcement of any change, modification or discharge is sought. No covenant,
agreement, term, provision or condition of this Lease shall be deemed to have
been waived by either party unless such waiver be in writing and signed by the
waiving party or its duly authorized agent. Consent of either party to any act
or matter must be in writing and shall apply only with respect to the particular
act or matter to which such consent is given and shall not relieve the party
obtaining such consent from the obligations wherever required under this Lease
to obtain the consent of the other party to any other act or matter. Receipt or
acceptance of rent by Landlord shall not be deemed to be a waiver of any default
under the covenants, agreements, terms, provision and conditions of this Lease,
or of any right which Landlord may be entitled to exercise under this Lease.
-34-
<PAGE>
37. CONSTRUCTION, INVALIDITY OR ANY PROVISION.
------------------------------------------
This Lease shall be construed and enforced in accordance with the laws
of the State of New Jersey. If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision or circumstance other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
38. TOXIC WASTE.
------------
Tenant covenants that:
(a) no toxic or hazardous substance, including, without limitation,
asbestos and the group of organic compounds known as polychlorinated biphenyls,
shall be generated, treated, stored or disposed or, or otherwise deposited in or
located on the Property, including without limitation, the surface and
subsurface waters of the Property;
(b) no activity shall be undertaken on the Property which would cause
(i) the Property to become a hazardous waste treatment, storage or
disposal facility within the meaning of, or otherwise bring the subject Property
-35-
<PAGE>
within the ambit of the Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. ss.6901 et seq., or any similar state law or local ordinance;
(ii) a release or threatened release of hazardous waste from the
Property within the meaning of, or otherwise bring the Property within the ambit
of, the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. ss.9601-9657, or any similar state law or local
ordinance or any other Environmental Law, or
(iii) the discharge of pollutants or effluents into any water source
or system, or the discharge into the air of any emissions, which would require a
permit under the Federal Water Pollution Control Act, 33 U.S.C. ss.1251 et seq.,
or the Clear Air Act, 42 U.S.C. ss.7401 et seq., or any similar state law or
local ordinance;
(c) there shall be no substances or conditions in or on the Property
which may support a claim or cause of action under RCRA, CERCLA, or any other
federal, state or local environmental statutes, regulations, ordinances or other
environmental regulatory requirements, and
(d) there shall be no underground storage tanks or underground deposits
located on the Property.
-36-
<PAGE>
39. ISRA.
-----
(a) Notwithstanding anything in this Lease to the contrary, if N.J.S.A.
13:1K-6 et seq. shall be applicable to the Property, and to the extent such
statute requires, Tenant agrees that, at its sole cost and expense, it shall
strictly observe, comply and fulfill and shall take all necessary steps to cause
any and all subtenants, if any, to strictly observe, comply and fulfill all of
the terms and provisions of the Industrial Site Recovery Act, N.J.S.A. 13:1K-6
et seq., as the same may be amended from time to time and all rules,
regulations, ordinances, opinions, orders and directives issued or promulgated
pursuant to or in connection with said Act by the Department of Environmental
Protection and Energy ("DEPE"), or any subdivision or bureau thereof, or any
other governmental or quasi-governmental agency, authority or body having
jurisdiction. (Said Act and all of said rules, regulations, ordinances,
opinions, orders and directives are hereinafter in this Section collectively
referred to as "ISRA").
(b) Tenant agrees that it shall, at its sole cost and expense:
(i) Post or cause to be posted any financial guarantee or other bond
required to secure implementation and completion of any Remedial Action Workplan
(hereinafter "Workplan"), and
(ii) Promptly implement and prosecute to completion or cause to be so
implemented and prosecuted any Workplan, in accordance with the criteria,
procedures and time schedules contained in said Workplan or as may be otherwise
ordered or directed by DEPE or such other agency or body as shall then have
jurisdiction over said Workplan.
(c) Without limiting the foregoing, Tenant agrees,
(i) at its sole cost and expense, to promptly discharge and remove
any lien or other encumbrance against the Property; and
-37-
<PAGE>
(ii) to indemnify and hold Landlord harmless from and against any and
all liability, penalties, losses, expenses, damages, costs, claims, causes of
action, judgments and/or the like of whatever nature, including, but not limited
to, reasonable attorneys' fees, to the extent said lien, encumbrance, liability,
penalty, loss, expense, damage, cost, claim, cause of action, judgment and/or
the like arise from or in connection with Tenant's failure or inability, for any
reason whatsoever, to observe or comply with ISRA and/or the provisions of this
Section.
(d) Without limiting the foregoing, Tenant represents, covenants and
agrees that it has not entered into, and shall not at any time prior to the
-38-
<PAGE>
termination of this Lease, enter into, any sublease, contract, agreement or
other arrangement written or oral, with or without consideration, of whatever
sort and however denominated (hereinafter collectively in this Paragraph
referred to as the "Agreement"), which permits the use and/or occupancy of all
or any part of the Property for the generation, manufacture, refining,
transportation, treatment, storage, handling or disposal of hazardous substances
or wastes (as said terms are defined in ISRA) on site, above ground or below
ground.
Tenant further represents, covenants and agrees that the Property shall
not, without the prior written consent of Landlord having been obtained, at any
time during the term of this Lease contain any underground or above-ground tanks
for the storage of fuel oil, gasoline and/or other petroleum products or
by-products.
40. SPILL COMPENSATION AND CONTROL ACT.
-----------------------------------
(a) Notwithstanding anything in this Lease to the contrary, to the
extent that such statute requires, Tenant agrees that, at its sole cost and
expense, it shall strictly observe, comply and fulfill all of the terms and
provisions of the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et
seq. as the same may be amended from time to time and all rules, regulations,
ordinances, opinions, orders and directives issued or promulgated pursuant to or
-39-
<PAGE>
in connection with said Act by the Department of 0Environmental Protection and
Energy ("DEPE"), any subdivision or bureau thereof, or any other governmental or
quasi-governmental agency or body having jurisdiction. (Said Act and all of said
rules, regulations, ordinances, opinions, orders and directives are hereinafter
in this Section collectively referred to as "Spill Compensation Act.")
(b) Without limiting the foregoing, Tenant represents, covenants and
agrees that:
(i) It has not done or omitted to do; it has not suffered the
commission or omission of; it shall not do or omit to do; and it shall not
suffer the commission or omission of any act the commission or omission of which
is prohibited by, or may result in liability under, the Spill Compensation Act,
including, without limitation, the discharge of petroleum products or other
hazardous substances (as said terms are defined in the Spill Compensation Act);
(ii) From and after the date hereof, whenever the Spill Compensation
Act requires the "owner or operator" to do any, act, Tenant shall do such act on
his own account and for the account of Landlord, it being the intention of the
parties hereto that Landlord shall be free of all expenses and obligations
arising from or in connection with compliance with the Spill Compensation Act;
-40-
<PAGE>
(iii) Tenant has not in the past, and does not now own, operate or
control and shall not during the term of this Lease acquire, own, operate or
control any major facility (as said term is defined in the Spill Compensation
Act) or any hazardous or solid waste disposal facility;
(iv) Tenant has not entered into, and shall not at any time during
the term of this Lease enter into any Agreement for the use and occupancy of, or
otherwise relating to, the Property or any other property, real or personal,
owned, operated or controlled by Tenant and located within the State of New
Jersey, which permits the discharge by any party thereto of petroleum products
and other hazardous substance; and
(v) To the best of Tenant's knowledge, neither Tenant nor any tenant
has in the past, is presently or shall in the future discharge any petroleum
product or other hazardous substances upon any property real or personal, owned,
operated and controlled by Tenant and located within the State of New Jersey.
(c) Without limiting the foregoing, Tenant agrees:
(i) at its own cost and expense, to promptly discharge and remove
any lien or other encumbrance against the Property or any other property owned
or controlled, in whole or in part, by Tenant; and
-41-
<PAGE>
(ii) to indemnify and hold Landlord harmless from and against any and
all liability, penalties, losses, expenses, damages, costs, claims, causes of
action, judgment and/or the like, or whatsoever nature, including, but not
limited to, reasonable attorneys' fees.
41. NOTICE OF VIOLATION.
--------------------
In the event that Tenant shall receive a notice of a violation of ISRA
or the Spill Compensation Act from the applicable governmental authorities
having jurisdiction thereover or a notice of a discharge of any petroleum
product or other hazardous substances upon the Property or upon any other
property owned, operated or controlled by Tenant and located within the State of
New Jersey from any party whatsoever. Tenant shall forthwith deliver to Landlord
a copy of such notice. In the event that Tenant shall fail or neglect to
promptly commence to cure such violation of ISRA or the Spill Compensation Act
or to clean upon such discharge (as the case may be), if required either under
ISRA or the Spill Compensation Act, and to diligently proceed to complete same,
-42-
<PAGE>
Landlord or its agents may, without any obligation to do so, enter the Property
or such other property of Tenant, and cure such violation or clean up discharge
at the cost and expense of Tenant, and in case of Tenant's failure to pay
-43-
<PAGE>
therefore, the said cost and expense shall be added to the unpaid principal
balance.
IN WITNESS WHEREOF, the parties hereto have duly executed or caused to
be executed this Indenture of Lease as of the day and year first above written,
with intent to be legally bound hereby.
LANDLORD:
(SEAL)
- ---------------------- --------------------------------
WITNESS DAVID FELD
TENANT:
TODAY'S MAN, INC.
(Corporate Seal)
BY:
-----------------------------
F:\users\dsm\feld\lease.raf
Attest:
-------------------------
-44-
<PAGE>
EXHIBIT "A"
AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is entered into as of May __, 1998, by and between Foothill Capital Corporation,
a California corporation, individually ("Foothill") and as agent ("Agent"), PNC
Bank, National Association and Mellon Bank, N.A. (collectively with Foothill,
"Lenders") and Today's Man, Inc., a Pennsylvania corporation ("Borrower"), with
reference to the following facts:
A. Lenders, Agent and Borrower heretofore have entered into that
certain Loan and Security Agreement, dated as of December 31,
1997 (as heretofore amended, supplemented, or otherwise
modified, the "Agreement");
B. Borrower has requested that Lenders amend the Agreement to
permit a subfacility for Borrower's Permitted F/X Contracts,
as set forth in this Amendment (the "Amendment");
C. Agent and Lenders are willing to so amend the Agreement in
accordance with the terms and conditions hereof; and
D. All capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Agreement, as
amended hereby.
NOW, THEREFORE, in consideration of the above recitals and the mutual
premises contained herein, Lenders, Agent and Borrower hereby agree as follows:
1. Amendments to the Agreement.
a. Section 1.1 of the Agreement hereby is amended by adding the
following new defined terms in alphabetical order:
"Borrower Indemnity Amount" means the lesser of (x) the FX
Reserve or (y) the aggregate (with respect to all FX Transactions) of
the notional amount of each FX Transaction multiplied by the reserve
percentage established by the FX Bank (which such reserve percentage as
to existing FX Transactions may not be increased by the FX Bank).
<PAGE>
"F/X Bank" means Norwest Bank Minnesota, National Association,
or any successor thereto.
"F/X Bank Parameters Letter" means that certain letter
agreement between F/X Bank and Borrower, a copy of which is attached
hereto as Exhibit F-1, regarding the parameters under which F/X Bank
provides foreign exchange currency services to Borrower as the same may
be amended and supplemented from time to time.
"F/X Reserve" means, as of any date of determination, a
reserve equal to the reserve established from time to time against the
Borrowing Base in connection with Permitted FX Contracts and Permitted
Spot Trades.
"FX Transactions" means Permitted FX Contracts and Permitted
Spot Trades.
"Initial Reserve" As of the date hereof, the amount of the FX
Reserve is $250,000.
"Permitted F/X Contracts" means foreign currency exchange
contracts between F/X Bank and Borrower that: (a) are in respect of
marked-to-market risk on foreign exchange future trades or options; (b)
are entered into by Borrower in the ordinary course of its business;
(c) are entered into in connection with the operational needs of
Borrower's business and not for speculative purposes; (d) do not have a
maturity date in excess of one year or that is after the date five (5)
Business Days prior to the Renewal Date (or any anniversary of the
Renewal Date if the Agreement has been renewed); and (e) are provided
by F/X Bank pursuant to the F/X Bank Parameters Letter.
"Permitted Spot Trades" means foreign currency exchange
transactions between F/X Bank and Borrower that: (a) are in respect of
foreign exchange spot value trades; (b) are entered into by Borrower in
the ordinary course of its business; and (c) are entered into in
connection with the operational needs of Borrower's business and not
for speculative purposes; and (d) are conducted pursuant to the F/X
Bank Parameters Letter.
b. The following definition contained in Section 1.1 of the Agreement
are amended and restated in their entirety to read as follows:
2
<PAGE>
"Revolving Facility Usage", means as of the date of determination, the
aggregate amount of (x) Advances, (y) undrawn or unreimbursed Letters of Credit
outstanding and (z) the FX Reserve.
c. The first sentence of Section 2.1(a) of the Agreement hereby is
amended and restated in its entirety to read as follows:
Subject to the terms and conditions of this Agreement, each Lender
agrees to make advances ("Advances") to Borrower in an amount at any
one time outstanding not to exceed at any one time such Lender's Pro
Rata Share of an amount equal to the lesser of (i) the Maximum
Revolving Amount less the sum of the outstanding balance of all undrawn
or unreimbursed Letters of Credit and the F/X Reserve, or (ii) the
Borrowing Base less (A) the sum of the outstanding balance of all
undrawn or unreimbursed Letters of Credit (other than Inventory Letters
of Credit) and the F/X Reserve less (B) 50% of the aggregate amount of
all undrawn or unreimbursed Inventory Letters of Credit less (C) the
aggregate amount of the Inventory Reserves.
d. The second sentence of Section 2.2(a) of the Agreement hereby is
amended and restated in its entirety to read as follows:
Agent shall have no obligation to issue a Letter of Credit if any of
the following would result:
(i) the sum of 50% of the aggregate amount of all undrawn and
unreimbursed Inventory Letters of Credit plus 100% of the aggregate
amount of all other types of undrawn and unreimbursed Letters of Credit
would exceed the Borrowing Base less the sum of the amount of
outstanding Advances (including any Agent Advances and Agent Loans) and
the F/X Reserve less the aggregate amount of Inventory Reserves and
reserves established under Section 2.1(b), or
(ii) the aggregate amount of all undrawn or unreimbursed
Letters of Credit (including Inventory Letters of Credit would exceed
the lower of (y) the Maximum Revolving Amount less the sum of the
amount of outstanding Advances (including any Agent Advances and Agent
Loans) and the F/X Reserve less the aggregate amount of Inventory
Reserves and reserves established under Section 2.1(b), or (z)
$20,000,000, or
3
<PAGE>
(iii) the outstanding Obligations (other than under the Term
Loans) would exceed the Maximum Revolving Amount.
e. A new Section 2.12 of the Agreement hereby is added and shall read
in its entirety as follows:
2.12 Subfacility for Borrower's Permitted F/X Contracts and Permitted
Spot Trades.
(a) Borrower wants to engage in FX Transactions with the F/X
Bank and Foothill has agreed to provide an indemnity to the F/X Bank
(any such indemnity in effect from time to time, the "Indemnity"). The
Indemnity is solely between Foothill and the FX Bank, which is an
affiliate of Foothill. The maximum amount payable by Foothill pursuant
to the Indemnity is the Borrower Indemnity Amount. At any time Foothill
is obligated to advance funds under the Indemnity as it relates to
Borrower, Borrower shall immediately upon demand therefor reimburse
such amount to Foothill and, in the absence of such reimbursement, the
amount so advanced immediately and automatically shall be deemed to be
an Advance hereunder and, thereafter, shall bear interest at the rate
then applicable to Advances.
(b) If, upon the maturity date of any Permitted F/X Contract
or Permitted Spot Trade, Borrower does not have availability in an
amount sufficient to pay the full amount of Borrower's obligations to
F/X Bank under such contract or at any time upon the occurrence of an
Event of Default, Foothill may, in its sole discretion, instruct F/X
Bank to liquidate such Permitted F/X Contract, at Borrower's sole
expense, and to apply any amounts thereunder that would have been
payable to Borrower against the amounts owed to F/X Bank by Borrower.
(c) Any amounts paid by Foothill to F/X Bank and any other
costs or expenses incurred by Foothill in connection with any such
Permitted F/X Contracts shall constitute Advances, shall be secured by
all of the Collateral, and thereafter shall be payable by Borrower to
Agent together with interest as provided for herein.
(d) Borrower hereby agrees to indemnify, save, defend, and
hold Foothill harmless from any loss, cost, expense, or liability,
including payments made by Foothill, expenses, and reasonable attorneys
fees incurred by Foothill arising out of or in connection with the
Indemnity.
4
<PAGE>
(e) Immediately upon the termination of this Agreement,
Borrower agrees to provide cash collateral to be held by Foothill in an
amount equal to 102% of the maximum amount of Foothill's obligations
under the Indemnity as it relates to the Borrower.
(f) The amount of the F/X Reserve may be reduced from time to
time by Foothill upon the receipt and written acceptance by Foothill of
an F/X Reserve Reduction Certificate, in the form of that attached
hereto as Exhibit F-2, duly executed by both Borrower and F/X Bank, not
less than 2 Business Days prior to the requested effective date of such
reduction.
(g) So long as no Default or Event of Default has occurred and
is continuing or would result therefrom, the amount of the F/X Reserve
may be increased from time to time by Foothill in its sole discretion
upon its receipt and written acceptance by Foothill of an F/X Reserve
Increase Certificate, in the form of that attached hereto as Exhibit
F-3, duly executed by both Borrower and F/X Bank, not less than 2
Business days prior to the requested effective date of such increase.
(h) Notwithstanding anything to the contrary in the Loan
Documents, Permitted Spot Trades shall be permitted by Foothill only
until there has been a failure on the part of Borrower to satisfy its
obligations with respect to any Permitted Spot Trades and thereafter
such Permitted Spot Trades shall be permitted solely at the option of
Foothill.
(i) Participations.
(i) Purchase of Participations. Immediately upon issuance
of any Permitted F/X Contract or Permitted Spot Trade in accordance with this
Section 2.12, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received without recourse or warranty, an
undivided interest and participation in the credit support or enhancement
provided through Foothill to the F/X Bank, equal to such Lender's Pro Rata Share
of the Borrower Indemnity Amount. The FX Reserve may not be increased by
Foothill without the consent of the Lenders, to an amount in excess of
$1,000,000.
(ii) Obligations Irrevocable. The obligations of each
Lender to make payments to Foothill with respect to any Permitted F/X Contract
or Permitted Spot Trade or with respect to any credit support or enhancement
provided through Agent with respect to a Permitted F/X Contract or Permitted
Spot Trade, and the obligations of Borrower to make
5
<PAGE>
payments to Agent, for the account of the Lenders shall be irrevocable, not
subject to any qualification or exception whatsoever, including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan Documents;
or
(C) the occurrence of any Default or Event of Default.
(f) The first sentence of Section 3.5 of the Agreement hereby
is amended and restated in its entirety to read as follows:
On the date of termination of this Agreement, all Obligations
(including contingent reimbursement obligations of Borrower with
respect to any outstanding Letters of Credit or any outstanding
indemnities by Foothill in favor of the FX Bank in connection with the
FX Transactions) immediately shall become due and payable without
notice or demand.
(g) The preamble to Section 5 of the Agreement hereby is
amended and restated in its entirety to read as follows:
In order to induce the Lender Group to enter into this Agreement,
Borrower makes the following representations and warranties which shall
be true, correct, and complete in all respects as of the Closing Date,
and at and as of the date of the making of each Advance or Letter of
Credit or indemnity in connection with the FX Transaction made
thereafter, as though made on and as of the date of such Advance or
Letter of Credit or F/X Transaction indemnity (except to the extent
that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
(h) Section 7.1(a) of the Agreement hereby is amended and
restated in its entirety to read as follows:
(a) Indebtedness evidenced by this Agreement,
together with Indebtedness to issuers of letters of credit
that are the subject of L/C Guarantees and Indebtedness to
6
<PAGE>
F/X Bank under Permitted F/X Contracts or the Permitted Spot
Trades;
(i) A new subsection (n) hereby is added to Section 9.1 of the
Agreement in proper numerical order as follows:
(n) Foothill may, at its option, require Borrower to
deposit with Foothill funds in an amount equal to the F/X
Reserve (if any), and, if Borrower fails to make such deposit
promptly, Foothill may advance such amount as an Advance
(whether or not an Overadvance is created thereby). At such
time (if ever) as all such indemnity obligations have been
paid or terminated, any amounts remaining in such reserve
shall be applied against any outstanding Obligations or, if
all Obligations have been indefeasibly paid in full, returned
to Borrower.
2. Representations and Warranties. Borrower hereby represents
and warrants to Agent that: (a) the execution, delivery, and
performance of this Amendment and of the Agreement, as amended by this
Amendment, are within its corporate powers, have been duly authorized
by all necessary corporate action, and are not in contravention of any
law, rule, or regulation, or any contract or undertaking to which it is
a party or by which any of its properties may be bound or affected (b)
this Amendment and the Agreement, as amended by this Amendment,
constitute Borrower's legal, valid and binding obligation, enforceable
against Borrower in accordance with its terms; and (c) attached hereto
a Exhibit F-1 is a true, correct, and complete copy of the F/X Bank
Parameters Letter.
3. Conditions Precedent to Amendment. The satisfaction of each
of the following, unless otherwise specified below, shall constitute
conditions precedent to the effectiveness of this Amendment:
a. Agent shall have received the reaffirmation and consent
of each of the Obligors (other than Borrower) attached hereto as
Exhibit A, duly executed and delivered by the respective authorized
officials thereof;
b. Agent shall have received a Certificate from the
Secretary of Borrower attesting to the incumbency and signatures of
authorized officers of Borrower and to the resolutions of Borrower's
Board of Directors authorizing its execution and delivery of this
Amendment and the performance of this Amendment and the Agreement as
amended by this Amendment and authorizing specific officers of Borrower
to execute and deliver the same;
7
<PAGE>
c. The representations and warranties in this Amendment, the
Agreement as amended by this Amendment, and the other Loan Documents shall be
true and correct in all respects on and as of the date hereof, as though made on
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
d. No Event of Default or event which with the giving of notice or
passage of time would constitute an Event of Default shall have occurred and be
continuing on the date hereof, nor shall result from the consummation of the
transactions contemplated herein;
e. The Collateral shall not have declined materially in value from
the values set forth in the most recent appraisals or field examinations
previously done by Agent; and
f. All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to Agent
and its counsel.
4. Effect on Agreement. The Agreement, as amended hereby, shall be and
remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects. The execution, delivery, and
performance of this Amendment shall not operate as a waiver of or, except as
expressly set forth herein, as an Amendment, of any right, power, or remedy of
Agent or any Lender under the Agreement, as in effect prior to the date hereof.
5. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Agent, and take all actions as Agent may reasonably request from time to time,
to perfect and maintain the perfection and priority of Agent's security
interests in the Collateral, and to fully consummate the transactions
contemplated under this Amendment and the Agreement, as amended by this
Amendment.
6. Miscellaneous.
a. Upon the effectiveness of this Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Agreement shall mean and refer to the Agreement as amended by
this Amendment.
b. Upon the effectiveness of this Amendment, each reference in the
Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or
words of like import
8
<PAGE>
referring to the Agreement shall mean and refer to the Agreement as amended by
this Amendment.
c. Upon the effectiveness of this Amendment, each reference in the
Agreement and the other loan documents to Exhibit F-1, Exhibit F-2, or Exhibit
F-3 of the Agreement shall mean and refer to Exhibit F-1, Exhibit F-2, or
Exhibit F-3 attached hereto, respectively.
d. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Amendment by signing any such
counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
duly executed as of the date first written above.
TODAY'S MAN, INC., a Pennsylvania
corporation
By: __________________________
Title: _______________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: _________________________
Title: ______________________
PNC BANK, NATIONAL ASSOCIATION
By: _________________________
Title: ______________________
9
<PAGE>
MELLON BANK, N.A.
By: _________________________
Title: ______________________
10
<PAGE>
EXHIBIT A
Reaffirmation and Consent
All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in that certain Amendment No. 1 to Loan
and Security Agreement, dated as of May __, 1998 (the "Amendment"). Each of the
undersigned hereby (a) represents and warrants to Agent that the execution,
delivery, and performance of this Reaffirmation and Consent are within its
corporate powers, have been duly authorized by all necessary corporate action
and are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected; (b) consents to the Amendment of the Agreement by the
Amendment; (c) acknowledges and reaffirms its obligations owing to Agent under
all Loan Documents to which it is party; and (d) agrees that each of the Loan
Documents to which it is a party is and shall remain in full force and effect.
Although each of the undersigned has been informed of the matters set forth
herein and has acknowledged and agreed to same it understands that Agent has no
obligation to inform it of such matters in the future or to seek its
acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty.
BENMOL, INC.
By: _____________________
Title: __________________
FELD & FELD, INC.
By: _____________________
Title: __________________
F & S INTERNATIONAL, INC.
By: _____________________
Title: __________________
11
<PAGE>
D&L, INC.,
By: _____________________
Title: __________________
12
<PAGE>
EXHIBIT F-1
[FORM OF PARAMETERS LETTER]
_______________, 1998
[Customer Name and Address]
Re: Foreign Exchange Currency Contracts
Dear [insert]:
We are pleased to provide foreign exchange currency services to you.
Per our discussions, the following are the parameters under which Norwest will
provide such services:
The Foreign Exchange Department of Norwest Bank Minnesota, National
Association will transact foreign currency exchange contracts, as described in
your loan documentation (the "Loan Documents") with our affiliate, Foothill
Capital Corporation ("Foothill").
As of the date hereof, we have established a __% reserve (USD
equivalent) on the notional value of all outstanding forward contracts having a
maturity of no more than ___ months. Norwest will assess a ____% reserve of the
notional amount on all spot contracts for the applicable delivery time frame.
Norwest reserves the right to increase the amount of the reserve
percentage on future trades should the maturity of the foreign currency future
contract(s) exceed ____ months and/or we deem the particular currency to be
unstable. Norwest will notify you of such increase in the reserve percentage
substantially contemporaneously with such increase.
Norwest will provide such services so long as the total of the reserves
does not exceed the Borrower Indemnity Amount (as defined in the Loan
Documents).
13
<PAGE>
Should you fail to settle any future contracts within the specified
period for settlement, such failure to settle will be deemed, at the option of
Norwest, to be a default and failure to settle on all outstanding foreign
currency contracts.
Please confirm your understanding by signing below and returning a copy
of this letter to me.
Thank you and welcome
-------------------------
Senior Vice President
Manager Foreign Exchange
CONFIRMATION:
TODAY'S MAN, INC.
By: _______________________
14
<PAGE>
Exhibit F-2
F/X RESERVE REDUCTION CERTIFICATE
Today's date: _______________
(1) FROM TODAY'S MAN TO: NORWEST BANK MINNESOTA
ATTENTION: Kelly Elkin/Ann Johnson
FACSIMILE: (612) 667-0513
(2) FROM NORWEST TO: FOOTHILL CAPITAL CORPORATION
ATTENTION: Bruce Rivers
FACSIMILE: (617) 523-1697
(3) FROM Agent TO TODAY'S MAN AND NORWEST:
Reference hereby is made to that certain Loan and Security Agreement, dated as
of December 31, 1997 (as amended, supplemented, and modified, the "Loan
Agreement"), between Foothill Capital Corporation (individually and as agent
("Agent"), PNC Bank, National Association and Mellon Bank, N.A.(collectively
with Foothill, "Lenders") and Today's Man ("Borrower"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Loan Agreement.
Pursuant to Section 2.12(e) of the Agreement, Borrower hereby requests a
reduction in the F/X Reserve from the current amount of $_____________ to the
new amount of $_________________, such reduction to become effective on
___________________.
TODAY'S MAN, INC. FACSIMILE:
ATTENTION: Joseph Manion
By: ______________________
Its: _____________________
NORWEST BANK MINNESOTA, N.A.
By: ______________________
Its: _____________________
FOOTHILL CAPITAL CORPORATION
By: ______________________
Its: _____________________
15
<PAGE>
Exhibit F-3
F/X RESERVE INCREASE CERTIFICATE
Today's date: _______________
(1) FROM TODAY'S MAN TO: FOOTHILL CAPITAL CORPORATION
ATTENTION: Bruce Rivers
FACSIMILE: (617) 523-1697
(2) FROM Agent TO: NORWEST BANK MINNESOTA
ATTENTION: Kelly Elkin/Ann Johnson
FACSIMILE: (612) 667-0513
(3) FROM NORWEST TO TODAY'S MAN AND Agent:
Reference hereby is made to that certain Loan and Security Agreement, dated as
of December 31, 1997 (as amended, supplemented, and modified, the "Loan
Agreement"), between Agent Capital Corporation ("Agent") and Today's Man
("Borrower"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement.
Pursuant to Section 2.12(f) of the Agreement, Borrower hereby requests a
increase in the F/X Reserve from the current amount of $_____________ to the new
amount of $_________________, such reduction to become effective on
___________________.
TODAY'S MAN, INC. FACSIMILE:
ATTENTION: Joseph Manion, Jr.
By: ______________________
Its: _____________________
NORWEST BANK MINNESOTA, N.A.
By: ______________________
Its: _____________________
FOOTHILL CAPITAL CORPORATION
By: ______________________
Its: _____________________
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheets at May 2, 1998 and the Condensed
Consolidated Statements of Operations for the thirteen weeks ended May 2, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 686,400
<SECURITIES> 0
<RECEIVABLES> 1,783,600
<ALLOWANCES> 48,800
<INVENTORY> 37,526,000
<CURRENT-ASSETS> 55,148,300
<PP&E> 46,680,100
<DEPRECIATION> (16,013,300)
<TOTAL-ASSETS> 88,622,600
<CURRENT-LIABILITIES> 28,955,400
<BONDS> 0
0
0
<COMMON> 47,069,300
<OTHER-SE> 441,800
<TOTAL-LIABILITY-AND-EQUITY> 88,622,600
<SALES> 46,253,400
<TOTAL-REVENUES> 46,253,400
<CGS> 29,455,200
<TOTAL-COSTS> 29,455,200
<OTHER-EXPENSES> 15,339,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 757,200
<INCOME-PRETAX> 701,300
<INCOME-TAX> 259,500
<INCOME-CONTINUING> 441,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 441,800
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
