-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HEOodYduM2dl8JA4CXF1iQparGikeqEWemI6jGa0R1u+CCjtwq40N420u7jQ1Y88 rshZdBtrqnbx0fzrKW5kag== 0000950110-00-000531.txt : 20000516 0000950110-00-000531.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950110-00-000531 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20000129 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TODAYS MAN INC CENTRAL INDEX KEY: 0000885546 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 231743137 STATE OF INCORPORATION: PA FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-20234 FILM NUMBER: 635995 BUSINESS ADDRESS: STREET 1: 835 LANCER DR STREET 2: MOORESTOWN WEST CORPORATE CNTR CITY: MOORESTOWN STATE: NJ ZIP: 08057 BUSINESS PHONE: 6092355656 MAIL ADDRESS: STREET 1: 835 LANCER DR STREET 2: MOORESTOWN W CORP CTR CITY: MOORESTOWN STATE: NJ ZIP: 08057 10-K 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended January 29, 2000 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ 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 Identification No.) Incorporation or Organization) 835 Lancer Drive Moorestown, New Jersey 08057 ---------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code (609) 235-5656 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, no par value 27,040,725 - -------------------------- ---------- (Title of Class) (Number of Shares Outstanding as of April 28, 2000) Common Stock Purchase Warrants 5,427,777 - ------------------------------ --------- (Title of Class) (Number of Warrants Outstanding as of April 28, 2000) Indicate by check mark whether the Registrant (i) 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 (or for such shorter period that the Registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS 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 [ ] The aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant is $10,464,566 (1). Documents incorporated by reference are listed in the Exhibit Index. - ------------------------ (1) The aggregate dollar amount of the voting and non-voting common equity set forth equals the number of shares of and warrants for the Company's Common Stock outstanding, reduced by the amount of shares of and warrants for Common Stock held by officers, directors and shareholders owning 10% or more of the Company's Common Stock and Warrants for Common Stock, multiplied by $.5625 and $.125, the last reported sale price for the Company's Common Stock and Warrants on April 19, 2000. The information provided shall in no way be construed as an admission that any officer, director or 10% shareholder in the Company may be deemed an affiliate of the Company or that such person is the beneficial owner of the shares reported as being held by such person, and any such inference is hereby disclaimed. The information provided herein is included solely for recordkeeping purposes of the Securities and Exchange Commission. TABLE OF CONTENTS PAGE ----
PART I Item 1. Business...........................................................................1 Item 2. Properties.........................................................................9 Item 3. Legal Proceedings..................................................................10 Item 4. Submission of Matters to a Vote of Security Holders................................10 Item 4.1 Certain Executive Officers of the Registrant.......................................10 PART II Item 5. Market for Registrant's Common Stock and Related Shareholder Matters............................................................................11 Item 6. Selected Financial Data............................................................12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..............................................................13 Item 7a. Quantitative and Qualitative Disclosures About Market Risk.........................19 Item 8. Financial Statements and Supplementary Data........................................19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............................................................19 PART III Item 10. Directors and Executive Officers of the Registrant.................................19 Item 11. Executive Compensation.............................................................19 Item 12. Security Ownership of Certain Beneficial Owners and Management.....................19 Item 13. Certain Relationships and Related Transactions.....................................19 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................20-22 Signatures.........................................................................23 Index to Consolidated Financial Statements.........................................F-1 --------------
As used in this Report on Form 10-K, "fiscal 1991," "fiscal 1992," "fiscal 1993," "fiscal 1994," "fiscal 1995," "fiscal 1996," "fiscal 1997," "fiscal 1998," "fiscal 1999," "fiscal 2000," and "fiscal 2001," refer to the Company's fiscal years ended or ending February 1, 1992, January 30, 1993, January 29, 1994, January 28, 1995, February 3, 1996, February 1, 1997, January 31, 1998, January 30, 1999, January 29, 2000, February 3, 2001 and February 2, 2002 respectively. Today's Man(R) is a registered trademark of the Company. PART I ITEM 1. BUSINESS. GENERAL Today's Man, Inc. is a leading operator of menswear superstores specializing in tailored clothing, furnishings sportswear and shoes. The Company operates a chain of 29 superstores ranging in size from approximately 18,000 to 34,000 gross square feet in the Greater Philadelphia, Washington, D.C., Baltimore and New York markets. The Company seeks to be the leading menswear retailer in each of its markets by providing a broad and deep assortment of moderate to better, current-season, private label merchandise at everyday low prices which the Company believes represents the greatest value at a given price point. The Company provides these everyday low prices to its customers through economies provided by its large volumes of preplanned inventory purchases. The Company generated net sales of $402 per square foot of selling space in its superstores in fiscal 1999. In May 2000, the Company announced that it plans to close the Center City, Philadelphia, Pennsylvania store, the Manhasset, New York store, and the Norwalk, Connecticut store by the third quarter of fiscal 2000. In March 2000, the Company announced that it had retained investment banker Wasserstein Perella & Co., Inc. to explore opportunities for raising additional capital and enhancing shareholder value. In October and November 1999, the Company opened four new superstores in the Greater Washington D.C. market in Germantown, Maryland, Towson, Maryland, Springfield, Virginia and Sterling, Virginia. In November 1999, the Company announced the launch of Todaysman.com, the Company's online virtual superstore. Messrs. Ira Brind and Randall Lambert resigned as directors in the first quarter of fiscal 2000 and Mr. Bernard J. Korman resigned as a director in the fourth quarter of fiscal 1999. Additionally, Leonard Wasserman, Executive Vice President, Office of the President, retired in January, 2000 but continues to serve on the Board of Directors. In July 1999, Mr. David Mangini, joined the company as Executive Vice President and Chief Merchandising Officer. The Company was incorporated in Pennsylvania in 1971 as Feld & Sons, Inc. and changed its name to Today's Man, Inc. in March 1992. The Company's executive and administrative offices are located at 835 Lancer Drive, Moorestown West Corporate Center, Moorestown, New Jersey 08057 and its telephone number is (856) 235-5656. INVESTMENT CONSIDERATIONS The information contained in this Annual Report on Form 10-K contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934 and regulations thereunder), including without limitation, statements as to trends or management's beliefs, expectations or opinions. Such forward looking statements are subject to risks and uncertainties and may be affected by various factors which may cause actual results to differ materially from those in the forward looking statements. Certain of these risks, uncertainties and other factors are discussed below and elsewhere in this Annual Report on Form 10-K. In addition to the other information contained in this Annual Report on Form 10-K, the following factors should be considered carefully in evaluating an investment in the Company's Common Stock and Warrants. Growth Strategy. The Company opened four stores and its Internet electronic commerce site in 1999. The Company cannot assure you that new stores will generate sales volumes comparable to 1 those of its existing stores. Also, the opening of additional stores in existing markets and the Company's Internet site may have the effect of attracting customers from the Company's existing stores. The Company cannot assure you that the Internet site will be profitable. The Company plans to close three under-performing stores in fiscal 2000 and does not expect to open any new stores in fiscal 2000. The Company's growth over the next several years depends principally on establishing and maintaining profitability in existing sites and the availability of appropriate financing for expansion. Small Store Base; Geographic Concentrations. The Company currently operates a chain of 29 superstores, which are located in the Greater Philadelphia, Washington, D.C., Baltimore and New York markets. Due to the Company's relatively small store base, one or more unsuccessful new stores, or a decline in sales at an existing store, would have a more significant effect on the Company's results of operations than would be the case if the Company had a larger store base. Because the Company's superstores currently are located in only four markets, the effect on the Company of adverse events in any of those markets may be greater than if the Company's stores were more geographically dispersed. Declining Unit Sales of Men's Tailored Clothing. On a national basis, unit sales of men's tailored clothing have been declining over many years. The Company believes that this decline can be attributed to men allocating a lower portion of their disposable income to tailored clothing as a result of less frequent changes in tailored clothing fashions, relaxation of dress codes by many employers and a more casual lifestyle. The Company also believes that this decline has contributed to a consolidation among retailers of men's tailored clothing. There can be no assurance that the Company will continue to be able to maintain or increase its sales volume or attain profitability as further consolidation of the industry occurs as the unit sales of men's tailored clothing continues to decline. Control by Majority Shareholder. Mr. David Feld beneficially owns approximately 36% of the outstanding Common Stock and together with the other directors and executive officers of the Company, collectively beneficially own or owns approximately 40% of the outstanding Common Stock. Accordingly, Mr. David Feld, together with the other directors and executive officers of the Company, will likely be able to effectively control most matters requiring approval by the Company's shareholders, including the election of directors. In addition, Mr. David Feld has pledged 5,439,578 shares of Common Stock to secure loans. In the event of default by Mr. David Feld, the sale of all or a large block of the pledged shares by a lender to one purchaser or a group of purchasers acting in concert would result in such purchaser or group owning a substantial block of the outstanding Common Stock of the Company and being able to significantly affect the outcome of the election of directors and of all votes which require shareholder approval. See Item 12. "Security Ownership of Certain Beneficial Owners and Management." Relationship with Suppliers; Foreign Currency Fluctuations. The Company's business is dependent upon its ability to purchase both brand name and private label merchandise in large quantities and at attractive prices. During fiscal 1999, approximately 45% of the dollar volume of all merchandise purchased by the Company was purchased from ten vendors, and approximately 43% of the dollar volume of all merchandise was purchased from overseas vendors. While the Company believes that alternative sources of supply are available, any disruption in the Company's sources of supply could have a material adverse effect on its business. Moreover, although the Company historically has hedged its exposure to fluctuations in the relationship between the dollar and various foreign currencies, the Company currently is not engaging in hedging transactions and could incur additional expense in the event of currency fluctuations. See "Business--Purchasing." See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." Dependence on Senior Management. The success of the Company's business will continue to be dependent upon David Feld and the other members of senior management. The Company's continued 2 growth also will depend upon its ability to attract and retain additional skilled management personnel and store managers. The Company does not maintain key-man life insurance for Mr. David Feld or any other senior member of management. See Item 4.1 "Certain Executive Officers of the Registrant" and Item 10. "Directors and Executive Officers." Seasonality and General Economic Conditions. The Company's business is affected by the pattern of seasonality common to most apparel retailers. Historically, the Company has generated a significant portion of its net sales and the majority of its profits during its fourth fiscal quarter, which includes the Christmas selling season, and has experienced losses or nominal earnings in its first and third fiscal quarters. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations--Seasonality and Quarterly Results." The Company's operating results may be adversely affected by unfavorable local, regional or national economic conditions, especially those affecting the Mid-Atlantic Region where the Company's 29 stores are currently located. During recessionary periods, consumers can be expected to reduce their spending on discretionary items such as menswear. Competition. The retail menswear business is highly competitive with respect to price, quality and style of merchandise and store location. The Company faces competition for customers and store locations from large national and regional department stores, various menswear chains, a number of off-price specialty retailers as well as local department stores, catalog retailers and local menswear stores. Many of these competitors have significantly greater financial and other resources than the Company. The retailing business is affected by changes in consumer tastes, demographic trends and the type, number and location of competing stores. Restrictions on Cash Dividends. Since its inception as a public company in 1992, the Company has not paid any cash dividends. The Company's loan agreement prohibits the payment of cash dividends. See Item 5. "Market for the Registrant's Common Stock and Related Shareholder Matters." Market for Common Stock and Warrants. The Common Stock and Warrants are traded on the Nasdaq National Market. Numerous factors, including announcements of fluctuations in the Company's or its competitors' operating results, market conditions for stocks in general, or fluctuations in the Company's quarterly operating results, could have a significant impact on the future price of the Common Stock and Warrants. In addition, the stock market in recent years has experienced significant price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of companies. These broad fluctuations may adversely affect the market price of the Common Stock and Warrants. Each Warrant is exercisable for one share of Common Stock at an exercise price of $2.70 per share. Accordingly, the market price of the Warrants is directly affected by the market price of the Common Stock. In the event that the market price of the Common Stock is less than $2.70, the Warrants may have little or no market value. During fiscal 1999, the expiration date of the Warrants was extended to January 2, 2001 and the Warrants will not be exercisable after such time. Shares Eligible for Future Sale. Sales of the Company's Common Stock and Warrants in the public market could adversely affect the market price of the Company's Common Stock and Warrants and could impair the Company's future ability to raise capital through the sale of equity securities. As of April 19, 2000, the Company has 27,040,725 shares of Common Stock and 5,427,777 Warrants outstanding, all of which are available for resale in the public market without restrictions, except for any such shares held by persons who may be deemed to be "affiliates" of the Company. In addition, the Company has registered under the Securities Act all of the 2,450,000 shares authorized for issuance under the Company's Management Stock Option Plan. 3 Anti-Takeover Provisions. The Amended and Restated Articles and Amended and Restated Bylaws contain provisions which may be deemed to be "anti-takeover" in nature in that such provisions may deter, discourage or make more difficult the assumption of control of the Company by another corporation or person through a tender offer, merger, proxy contest or similar transaction. The Amended Articles permit the Board of Directors to establish the rights, preferences, privileges and restrictions of, and to issue, up to 5,000,000 shares of Preferred Stock without shareholder approval. The Amended Bylaws also provide for the staggered election of directors to serve for four-year terms, subject to removal by shareholders only for cause upon the vote of not less than 65% of the shares of Common Stock cast at a shareholders meeting and provide that the vote of at least 60% of the votes entitled to be cast by all shareholders is required to call special meetings of shareholders. Certain provisions of the Amended Articles and Amended Bylaws may not be amended except by a similar 65% vote. For more information, see the Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws of the Company which are filed as Exhibits 2.1 and 2.2, respectively, to the Company's Form 8-A Report, filed with the Commission on December 29, 1997. In addition, the Company is subject to certain anti-takeover provisions of the Pennsylvania Business Corporation Law. CHAPTER 11 PROCEEDINGS. On December 12, 1997, the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") entered an order 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 seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Pursuant to the Plan of Reorganization, the Company paid an aggregate of $51.0 million and issued 9,656,269 shares of Common Stock to its creditors in settlement of $73.3 million of outstanding indebtedness, including post-petition interest. Under the Plan of Reorganization, 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 January 2, 2001. A total of 5,430,503 Warrants were issued to the Company's shareholders of record as of October 14, 1997. MERCHANDISING Today's Man seeks to offer a larger selection and variety of menswear, in terms of styles, sizes and price points, than its competitors. The Company's merchandise assortment consists principally of tailored clothing (suits, sportcoats, slacks, formal wear and outerwear), furnishings and accessories (dress shirts, ties, belts, suspenders, underwear, socks, scarves and gloves) and sportswear (casual pants, sportshirts, sweaters and jackets) and shoes. A 25,000 square foot superstore typically offers 52,000 items, including approximately 4,000 suits in American and European styles, 1,800 sportcoats, 11,000 dress shirts, 7,500 ties, 6,000 pairs of dress and casual pants and 4,000 pairs of shoes. The core of the Company's merchandise offering is primarily Today's Man private label suits (featuring the Company's private labels, Made in Italy and Made in England) at prices typically ranging from $150 to $400. In fiscal 1999, nearly 48% of the Company's net sales were tailored clothing, with approximately 47% divided between furnishings and sportswear and 5% of net sales from licensed shoe department sales. In July 1995, the Company entered into a License Agreement with Shoe Corporation of America ("SCOA"), pursuant to which SCOA installed and operates licensed shoe departments in the 4 Company's stores. Under the terms of the license agreement, SCOA is responsible for the operations of the department including inventory purchases, presentation, staffing and management. The Company remits, on a weekly basis, the net proceeds due to SCOA. SCOA filed for Chapter 11 under the U. S. Bankruptcy Code in June, 1999 and was subsequently acquired by Morse Shoe, Inc. in February, 2000. Today's Man then amended its shoe license agreement with Morse Shoe, Inc. The provisions of the contract generally remain the same. Morse Shoe, Inc. is responsible for the operations of the shoe department including inventory purchases, presentation, staffing and management. Today's Man remits, on a weekly basis, the net proceeds due to Morse Shoe, Inc. This license agreement expires January 31, 2006. The Company recorded sales of $12,642,600, $12,208,100 and $10,357,600 from licensed shoe department sales for fiscal 1997, 1998 and 1999, respectively. The Company has product offerings in all of its merchandise categories under the Company's private labels. Today's Man's private label programs are focused on high volume merchandise classifications and include products which can differentiate the Company from other retailers on the basis of price and quality. MARKETING AND PROMOTION The Company has identified as its core customers men between the ages of 25 and 54 with average household incomes between $40,000 and $75,000 per year who routinely wear a suit to work. The Company seeks to be the first choice among its target customers when they decide to shop for clothes by using local television and radio advertising. In addition, the Company uses direct mail advertising to customers on its mailing list, including holders of Today's Man credit cards. The Company uses newspaper advertising primarily during its bi-annual clearance periods. The Company uses outside agencies as well as its own marketing department to prepare its advertising materials. TODAY'S MAN SUPERSTORES The Company's superstores average approximately 25,000 gross square feet. Approximately three quarters of the area of each store is devoted to selling space, with the remaining portion used for tailoring, check-out, storage and administrative and employee areas. Today's Man superstores are usually located in a shopping center or freestanding building near a major shopping mall. The Company places great emphasis on providing an attractive, brightly lit and well-organized shopping environment. The Company's stores have similar layouts, emphasizing efficient traffic flow, separation of distinct departments, merchandise presentation and ease of merchandise selection. Use of a similar store design facilitates the operational integration of new stores into the Company's centralized merchandising, distribution, management and accounting systems. The Company attempts to arrange its merchandise to provide a logical flow from department to department and regularly monitors its product layouts in an attempt to make shopping easier and to maximize sales per square foot. The Company believes that a courteous and knowledgeable staff and efficient cashiers are important factors in attracting and retaining customers. The Company staffs each store with trained personnel, supported by an efficient check-out system and a full-function tailoring facility. The Company emphasizes to its employees the importance of customer service, courtesy and product knowledge through its training programs. The Company also believes that its typical customer prefers to shop without aggressive sales help and seeks assistance primarily to locate sizes or to coordinate styles and colors. Accordingly, Today's Man sales associates are paid on a salaried rather than a commission basis. In addition, sales associates are eligible to earn incentive payments based on the performance of that associate and the performance of the store relative to the planned performance. 5 Each store is managed by a store manager who is compensated by a base salary and a bonus based on the store's sales performance, shrinkage and other factors. Store managers have an average of 15 years of retail experience. Store managers report to one of four regional managers. All stores have one or more assistant managers, two to three clothing department heads (including the head of the tailoring department) and an average of 24 full-time and 13 part-time associates (including sales associates, tailors and cashiers). Most of the Company's tailored clothing associates have prior retail experience. Additional training is provided on the job by the store's assistant managers and department heads. Full-function tailoring facilities are located at each store and are typically staffed by one fitter, four full-time and one part-time tailors and one presser under the supervision of the head of the tailoring department and an assistant. As part of the Today's Man efficient shopping experience, the Company seeks to provide professional alterations within one week. Because the Company views efficient and competitively priced tailoring as a means of attracting and retaining its core customers, the Company's tailoring services generally are priced at cost. The Company maintains an appropriate level of security in each store based on local conditions. PURCHASING The Company purchases most of its merchandise in large volumes through preplanned buying programs, which allow it to consistently offer a broad and deep selection of current-season, moderate to better private label menswear at substantial savings to its customers. The Company typically does not purchase manufacturers' production overruns and does not seek advertising allowances from its vendors. The Company purchased merchandise from approximately 107 domestic and overseas manufacturers and suppliers during fiscal 1999. During that year, the top ten vendors by dollar volume accounted for approximately 45% of total purchases, but no vendor accounted for more than 10% of the Company's purchases. Of the Company's purchases by dollar volume in fiscal 1999, approximately 43% were from overseas vendors, primarily in U.S. dollars. Moreover, although the Company historically has hedged its exposure to fluctuations in the relationship between the dollar and various foreign currencies, the Company is not engaging in hedging transactions and could incur additional expense in the event of currency fluctuations. Many of the Company's overseas purchases are financed by letters of credit. Understanding the importance of the vendors to the Company's business, management has focused on developing good relationships over the years with many of its vendors. As a result, the Company experienced positive vendor support from its pre-petition supplier base during the Bankruptcy proceedings and was also able to add new key national vendors while in Chapter 11. The Company's vendor base has continued its support since the Company's emergence from Chapter 11. The Company purchased approximately 5.7 million units of merchandise in fiscal 1999. This merchandise is made by manufacturers based upon the Company's quality and size specifications, often using materials that the Company has purchased from other suppliers. The Company uses quality control inspectors to oversee the manufacture of its merchandise to maintain its quality standards. The Company believes that by overseeing the design of its own private label merchandise and by dealing directly with manufacturers, it is able to offer fashionable merchandise at substantial savings to its customers. The Company does not own or operate any manufacturing facilities. DISTRIBUTION The Company's distribution center is adjacent to the Company's executive and administrative offices in an office park in Moorestown, New Jersey. The distribution center is a modern 116,000 square foot facility constructed in 1987 that was expanded by the landlord in fiscal 1992. The 6 expansion doubled the Company's merchandise processing potential to ten million units per year, increasing the number of superstores it is capable of serving using a single shift to approximately 30. The Company believes that the distribution facility is capable of supporting an additional 29 superstores by using two shifts. Merchandise is generally shipped directly by common carriers to the distribution center or to ports or airports for pick up by the Company's trucks. Merchandise from local manufacturers is often picked up by the Company's trucks directly from the manufacturer. At the distribution center, merchandise is received, counted, ticketed with the Company's bar coded labels and sorted for distribution to the Company's stores. Whenever possible, merchandise is preticketed with the Company's bar coded labels by the Company's vendors prior to delivery to reduce processing time and expense. Deliveries are made from the distribution center to each store typically twice a week by the Company's trucks. Merchandise is usually shipped to the stores ready for immediate placement on the selling floor. MANAGEMENT INFORMATION AND CONTROL SYSTEMS The Company has placed substantial emphasis on upgrading and integrating its management information and financial control systems. The Company believes its management information and control systems are an important factor in enabling it to achieve its goal of superior execution of all aspects of the Company's operations. The Company employs a fifteen-person MIS group, including three programmers. Control of the Company's merchandising activities is maintained by a fully integrated point-of-sale (POS) inventory and management information system which permits management to monitor inventory and store operations on a daily basis and to determine weekly operating results by store. Each store communicates with the Company's central IBM RS/6000 computer system via IBM 4680 POS registers. Merchandise sales and inventories are automatically maintained by scanning bar-coded merchandise as customers check-out. In 1999, the Company implemented a new retail information system. This state-of-the-art database system tracks merchandise from order through sale, comparing actual to planned results and highlighting areas requiring management attention. The new system enables the Company to work on improving its management of merchandising inventories, in-store stock replenishment, and financial reporting. The Company also uses ARTHUR, a merchandise planning system which facilitates seasonal planning by department and by store and provides data for financial planning. CUSTOMER CREDIT Today's Man customers may pay for their purchases with the Today's Man proprietary credit card, Visa, MasterCard, American Express, Discover, cash or check. Approximately 80% of all purchases are paid for by credit card. Today's Man credit cards are issued by a national bank, using the bank's credit standards, on a non-recourse basis to the Company. As of January 29, 2000, approximately 459,000 Today's Man credit cards were outstanding. The Company believes that its credit card is a particularly productive tool for targeted marketing and presents an excellent opportunity to analyze and better understand its customers' shopping patterns and needs. COMPETITION The retail menswear business is highly competitive with respect to price, quality and style of merchandise and store location. The Company faces competition for customers and store locations from large national and regional department stores, various full-price menswear chains, a number of 7 off-price specialty retailers as well as local department stores, catalog retailers and local menswear stores. Many of these competitors have significantly greater financial and other resources than the Company. The retailing business is affected by changes in consumer tastes, demographic trends and the type, number and location of competing stores. In the future, the Company may experience increased competition from menswear retailers attempting to imitate the Company's strategy. The Company believes that it generally compares favorably with its competitors with respect to the quality, depth and range of sizes and styles of merchandise, prices for comparable quality merchandise, customer service and store environment. ASSOCIATES Today's Man places great importance on recruiting, training and motivating quality store level associates by such methods as promoting associates from within and offering bonuses for associates who recommend successful job applicants. As of January 29, 2000, the Company had 830 full-time and 550 part-time associates. The Company also employs additional part-time clerks and cashiers during peak periods. None of the Company's associates is represented by a labor union. The Company believes that its relationship with its associates is good. TRADEMARKS The Company owns all rights to the trademarks it believes are necessary to conduct its business as currently operated. The Company believes that no individual trademark or trade name, other than the Today's Man trademark, is material to the Company's competitive position in the industry. 8 ITEM 2. PROPERTIES The Company's executive offices and distribution center are housed in a 140,000 square foot building located in an office park in Moorestown, New Jersey. The Company leases the building and certain adjacent land for expansion from Mr. David Feld, pursuant to a lease expiring in 2010. See Item 13. "Certain Relationships and Related Transactions." The following table provides information regarding the Company's existing and proposed stores under lease:
Approximate Gross Square Year of Store Location Feet Opening - -------------- ----------------------------- GREATER PHILADELPHIA MARKET: Center City Philadelphia, PA (1),(2) 25,600 1980 Broomall, PA 17,800 1984 Deptford, NJ (1) 19,600 1985 Allentown, PA 22,700 1986 Montgomeryville, PA 22,100 1986 Northeast Philadelphia, PA 22,500 1987 King of Prussia, PA 25,000 1988 Langhorne, PA (1) 25,000 1988 Cherry Hill, NJ 25,800 1990 GREATER WASHINGTON, D.C. AND BALTIMORE MARKET: Bailey's Crossroads, VA 26,000 1987 Rockville, MD 26,100 1988 Fairfax, VA 25,900 1992 Greenbelt, MD 21,100 1995 Springfield, VA 17,500 1999 Sterling, VA 17,500 1999 Germantown, MD 18,000 1999 Towson, MD 25,700 1999 GREATER NEW YORK MARKET: Paramus, NJ 30,000 1991 Carle Place, NY 33,500 1991 Wayne, NJ 33,400 1992 Stony Brook, NY 25,900 1992 Huntington, NY 29,300 1993 East Hanover, NJ 30,000 1993 Manhassett, NY (2) 25,000 1993 Woodbridge, NJ 27,100 1993 Manhattan (Sixth Avenue), NY 28,100 1994 Hartsdale, NY 26,600 1994 Manhattan (Fifth Avenue), NY 27,200 1995 Norwalk, CT (2) 24,000 1995
(1) Leased from Mr. David Feld. See Item 13. "Certain Relationships and Related Transactions." (2) To be closed by the third quarter of fiscal 2000. See Note 11. "Subsequent Events." The Company leases all of its stores and anticipates that it will continue to do so. Unexpired lease terms range from one to thirty years assuming the exercise of options to renew in certain cases, and no lease is scheduled to expire prior to fiscal 2001. Approximately one-half of the leases have percentage rent clauses, although none of the leases with Mr. David Feld has a percentage rent clause. 9 ITEM 3. LEGAL PROCEEDINGS The Company is involved in routine legal proceedings incidental to the conduct of its business. Management believes that none of these routine legal proceedings will have a materially adverse effect on the financial condition or results of operations of the Company. The Company maintains general liability insurance coverage in amounts deemed adequate by management. In January 1999 the Company brought suit against NationsBank N.A., The Bank of New York, N.A., and Fleet Financial Corp., (formerly Shawmut Bank, N.A.) seeking unspecified damages resulting from the pre-petition lender group's alleged non-performance under the Amended and Restated Loan and Security Agreement dated November 1995. The Company has alleged that the lender group's actions in January 1996 constituted a breach of contract under the loan agreement. As of January 29, 2000 this suit is pending. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 4.1. CERTAIN EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is certain information concerning the executive officers of the Company who are also not directors.
Name Age Position ---- --- -------- David Mangini 55 Executive Vice President and Chief Merchandising Officer Frank E. Johnson 50 Executive Vice President and Chief Financial Officer Barry S. Pine 45 Vice President, Controller, and Chief Accounting Officer
Mr. Mangini joined the company in July 1999 as Executive Vice President and Chief Merchandising Officer. Prior to joining the Company, Mr. Mangini served as the President of Gadzooks, Inc., a specialty retailer of teen fashions and accessories from August 1998 to April 1999. Prior to that, from 1989 to 1998, Mr. Mangini served as President of the Limited's Structure Division. Mr. Johnson joined the Company in 1986 as Controller and was promoted to Chief Financial Officer in November 1995 and Executive Vice President in April 1997. Prior to joining the Company, Mr. Johnson served as Corporate Controller of Nan Duskin, Inc., a women's apparel retailer, from 1984 to 1986. Mr. Pine joined the Company in 1990 as Assistant Controller and was promoted to Controller in November 1995. In April 1997, Mr. Pine was promoted to Vice President. Prior to joining the Company, Mr. Pine served as Manager of Merchandise Control of Charming Shoppes, Inc., a woman's apparel retailer, from 1987 to 1990. 10 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS. The Company's Common Stock and Warrants are traded on the Nasdaq National Market System under the symbol "TMAN" and "TMANW," respectively. The following table sets forth, for the fiscal quarters indicated, the high and low closing sale prices for the Common Stock, as reported by Nasdaq: HIGH LOW 1998 First Quarter $3.63 $2.88 Second Quarter 3.03 1.69 Third Quarter 1.94 1.13 Fourth Quarter 3.25 1.28 1999 First Quarter $2.03 $1.13 Second Quarter 1.56 1.09 Third Quarter 1.16 0.66 Fourth Quarter 0.94 0.53 2000 First Quarter (through April 28, 2000) $1.31 $0.53 The Warrants were issued on January 2, 1998. The following table sets forth, for the fiscal quarters indicated, the high and low closing sale price for the Warrants, as reported by Nasdaq: 1998 First Quarter $1.69 $1.13 Second Quarter 1.13 0.31 Third Quarter 0.56 0.13 Fourth Quarter 0.97 0.09 1999 First Quarter $0.47 $0.13 Second Quarter 0.28 0.16 Third Quarter 0.22 0.06 Fourth Quarter 0.22 0.03 2000 First Quarter (through April 28, 2000) $0.31 $0.09 As of April 19, 2000, the Company's Common Stock was held by approximately 1,581 holders of record. The Company does not anticipate paying any cash dividends in the foreseeable future because it intends to use or otherwise retain its earnings to finance the operations and expansion of its business and to service its debt. The Company's loan agreement prohibits the payment of cash dividends without prior consent of the lender. 11 ITEM 6. SELECTED FINANCIAL DATA SELECTED FINANCIAL DATA (Dollars in thousands, except per share data and operating data) The following selected financial data have been derived from the Company's consolidated financial statements. The information set forth below should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of the Company and notes thereto beginning on page F-1. - ----------------------------
Fiscal Year ------------------------------------------------------------------- 1995 (7) 1996 1997 1998 1999 --------- --------- --------- --------- --------- STATEMENT OF OPERATIONS DATA: Net sales $ 263,256 $ 204,042 $ 214,148 $ 213,608 $ 194,546 Cost of goods sold 180,928 134,524 138,075 135,784 128,444 --------- --------- --------- --------- --------- Gross profit 82,328 69,518 76,073 77,824 66,102 Selling, general and administrative expenses (1) 100,753 65,982 65,820 66,760 77,831 Restructuring charges 19,249 -- -- -- -- --------- --------- --------- --------- --------- Income (loss) from operations (37,674) 3,536 10,253 11,064 (11,729) Reorganization items, net -- 8,848 6,769 -- -- Interest expense and other income, net 4,211 499 7,786 3,280 1,627 --------- --------- --------- --------- --------- Income (loss) before income taxes and (41,885) (5,811) (4,302) 7,784 (13,356) extraordinary item Income tax provision (benefit) (6,201) -- -- 2,883 -- --------- --------- --------- --------- --------- Income (loss) before extraordinary item (35,684) (5,811) (4,302) 4,901 (13,356) Extraordinary item, net of income tax benefit -- -- -- 658 -- --------- --------- --------- --------- --------- Net income (loss) $ (35,684) $ (5,811) $ (4,302) $ 4,243 (13,356) ========= ========= ========= ========= ========= Earnings (loss) per share: Income (loss) before extraordinary item $ (3.29) $ (0.54) $ (0.39) $ 0.18 $ (0.49) Extraordinary item, net -- -- -- (0.02) -- --------- --------- --------- --------- --------- Earnings (loss) per share (8) $ (3.29) $ (0.54) $ (0.39) $ 0.16 $ (0.49) ========= ========= ========= ========= ========= Weighted average shares outstanding 10,847 10,861 11,063 27,013 27,041 Earnings (loss) per share assuming dilution: Income (loss) before extraordinary item $ (3.29) $ (0.54) $ (0.39) $ 0.18 $ (0.49) Extraordinary item, net -- -- -- (0.02) -- --------- --------- --------- --------- --------- Earnings (loss) per share assuming dilution (8) $ (3.29) $ (0.54) $ (0.39) $ 0.16 $ (0.49) ========= ========= ========= ========= ========= Weighted average shares assuming dilution 10,847 10,861 11,063 27,013 27,041 BALANCE SHEET DATA (AT END OF PERIOD): Working capital $ 44,784 $ 49,528 $ 26,292 $ 31,927 $ 29,714 Total assets 98,203 95,397 87,164 78,974 81,867 Long-term debt and capitalized leases 5,478 3,661 14,432 9,983 22,483 Liabilities subject to settlement 61,887 63,368 8,988 -- -- Shareholders' equity 21,066 15,255 46,800 52,694 39,401 OPERATING DATA: Net sales per square foot of selling space (2) $ 421 $ 421 $ 451 $ 450 $ 402 Increase (decrease) in comparable store sales (3) (1.5)% (7.8)% 7.0% (0.3)% (10.7)% Average sales per store (in thousands) (4) $ 8,110 $ 8,008 $ 8,566 $ 8,544 $ 7,633 NUMBER OF SUPERSTORES (5): Open at beginning of period 28 35 25 25 25 Opened during period 7 -- -- -- 4 Closed during period -- 10 -- -- -- Open at end of period 35 25 25 25 29
- ---------- 12 (1) Includes buying and occupancy expenses. (2) Calculated using net sales generated from superstores open for the entire fiscal year divided by the square feet of selling space of such stores. Selling space does not include tailoring, check-out and administrative areas or stockrooms. (3) Superstores are included in the comparable store sales calculation beginning in their fourteenth full month of operation. Accordingly, the calculation does not include a store's first full month of operation, which typically has an abnormally high volume of sales resulting from the store's grand opening promotion. Stores relocated to a larger facility are not included in the comparable store sales calculation until the beginning of their fourteenth full month of operation at their new locations. (4) Average sales per store include sales from comparable superstores open for the entire year divided by the number of stores open for the entire period. (5) Relocations of older, smaller stores to larger facilities do not constitute new store openings. There were no remodeled stores in the years presented. (6) Does not include an outlet store in Sawgrass Mills, Florida which was opened in April 1995 and closed in the first quarter of 1996. In the first quarter of 1996, the Company also closed a total of ten underperforming stores in the Greater Chicago, New York and Washington, D.C. markets. (7) Fiscal year 1995 included fifty-three weeks. (8) Earnings (loss) per share have been calculated in accordance with FASB Statement No. 128, Earnings per Share for all periods presented. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth for the periods indicated the percentages which the items in the Company's Statements of Operations bear to net sales.
Fiscal Year ----------------------- 1997 1998 1999 ----- ----- ----- Net sales 100.0% 100.0% 100.0% Cost of goods sold 64.5 63.6 66.0 ----- ----- ----- Gross profit 35.5 36.4 34.0 Selling, general and administrative expenses 30.7 31.3 40.0 ----- ----- ----- Income (loss) from operations 4.8 5.1 (6.0) Reorganization items, net 3.2 -- -- Interest expense and other (income) expense, net 3.6 1.5 .8 ----- ----- ----- Income (loss) before income taxes and extraordinary item (2.0) 3.6 (6.8) Income tax provision -- 1.3 -- ----- ----- ----- Income (loss) before extraordinary item (2.0)% 2.3 (6.8)% Extraordinary item, net of income tax benefit -- 0.3 -- ----- ----- ----- Net income (loss) (2.0)% 2.0% (6.8)% ===== ===== =====
13 FISCAL YEARS 1999 AND 1998 Net Sales. Net sales were $194,545,700 in fiscal 1999, a decrease of $19,062,900 or 8.9% from net sales of $213,608,600 in fiscal 1998. The decrease in net sales was a result of the overall decline in foot traffic the Company experienced in fiscal 1999. Additionally, the Company shortened the first quarter fiscal 1999 clearance period as well as delayed the promotion of the semi-annual event in the second quarter of fiscal 1999 in order to emphasize the Today's Man brand and everyday low price philosophy. The Company operated 25 and 29 superstores at January 30, 1999, and January 29, 2000, respectively. Gross Profit. Gross profit as a percentage of net sales decreased to 34.0% in fiscal 1999 from 36.4% in fiscal 1998. As a result of the decline in foot traffic, the Company was forced to take more markdowns in fiscal 1999 as compared to fiscal 1998 in order to cleanse seasonal inventories. These additional markdowns contributed to the decrease in the gross profit percentage in fiscal 1999. Selling, General and Administrative Expenses. Selling, general and administrative expenses which include pre-opening expenses of new stores, increased 16.6% or $11,070,300 from $66,760,300 in fiscal 1998 to $77,830,600 in fiscal 1999. As a percentage of net sales, selling, general and administrative expenses increased from 31.3% in fiscal 1998 to 40.0% in fiscal 1999. The increase in expenses was primarily due to an additional $5,426,000 in planned advertising costs associated with the Company's branding and on-line website campaign and accrued severance of $883,000 related to employee terminations in January 2000. The Company incurred an additional $518,000 in depreciation and amortization expenses in fiscal 1999 related to the increase in capital expenditures for data processing systems. Additionally, the Company incurred $408,600 of new store expenses attributable to the opening of four new stores in the Baltimore, Maryland and Washington D.C. markets. Store payroll, occupancy, and advertising costs increased by $6,795,300 in fiscal 1999 as compared to the same period in fiscal 1998, and represented 24.9% of net sales in fiscal 1999 as compared to 19.5% of net sales in fiscal 1998. Interest Expense, Interest Income and Other (Income) Expense, Net. Interest expense, interest income and other (income) expense, net, decreased by $1,653,600 in fiscal 1999 from fiscal 1998. The decrease in interest expense was attributable to the lower interest rate obtained by the refinancing of the Company's revolving credit facility with Mellon bank on December 4, 1998 which bore interest at prime (8.50% at January 29, 2000). The Mellon Bank facility permitted the Company to have one or more portions of the outstanding balance of its loan accrue interest at LIBOR rate plus applicable margin. On December 2, 1999, the Company elected to have $12,500,000 accrue interest at LIBOR plus applicable margin (8.66%) for a period of 60 days. In fiscal 1998, the Company recognized $1,045,000 in charges for the early termination of its revolving credit facility and term loan with Foothill Capital Corporation, which the Company recorded as an extraordinary item. Income Tax Expense. The Company had a net loss in fiscal 1999 and therefore recorded no tax provision. In fiscal 1998 the Company recorded a provision for income taxes of $2,495,900. This provision was fully offset by the Company's net operating loss carryforwards. Extraordinary Item. In December 1998, the Company refinanced its revolving credit facility and term loan from Foothill Capital with a new revolving credit facility with Mellon Bank, N.A. As a result of this refinancing, the company incurred a prepayment penalty of approximately $720,000 and wrote off approximately $640,000 of unamortized debt issuance costs. These amounts were offset by approximately $315,000 in accrued debt discount and related liabilities and approximately $387,000 in income tax benefits related to this extraordinary item. 14 FISCAL YEARS 1998 AND 1997 Net Sales. Net sales were $213,608,600 in fiscal 1998, a decrease of $539,400 or 0.3% from net sales of $214,148,000 in fiscal 1997. The sales decrease was due in part to a $434,500 decrease in sales from licensed shoe departments. Additionally, the Company reduced its semi-annual clearance event. In fiscal 1998, the Company shortened its fall clearance event by two weeks as compared to fiscal 1997. The Company operated 25 superstores at January 31, 1998, and January 30, 1999, respectively. Gross Profit. Gross profit as a percentage of net sales increased to 36.4% in fiscal 1998 from 35.5% in fiscal 1997. The increase in gross profit was attributable to a reduction in the promotional activities and markdowns from those used in fiscal 1997 related to the marketing of the Today's Man proprietary card. Additionally, the Company moved a significant portion of its inventory to a replenishment program which allows for more timely receipt of merchandise and therefore fewer markdowns. In fiscal 1998, approximately 48% of sales were made through replenishment programs as compared to 35% in fiscal 1997. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 1.4% or $940,500 from $65,819,800 in fiscal 1997 to $66,760,300 in fiscal 1998. As a percentage of net sales, selling, general and administrative expenses increased from 30.7% in fiscal 1997 to 31.3% in fiscal 1998. The increase in expenses was primarily due to an additional $1,100,000 in planned advertising costs associated with the relationship marketing campaign. In addition to the relationship marketing, the cost of administering the Today's Man Rewards Program increased by approximately $450,000 due to increased utilization of the card and a higher number of payouts under the program. Offsetting these increases was a decrease in amortization expense of approximately $500,000 related to the decrease in assets under capital leases and bank issuance costs. Store payroll, occupancy, and advertising costs increased by $847,100 in fiscal 1998 as compared to the same period in fiscal 1997, and represented 19.5% of net sales in fiscal 1998 as compared to 19.1% of net sales in fiscal 1997. Reorganization Items, Net. Reorganization items in fiscal 1997 consisted of legal and accounting fees incurred in the administration of the Chapter 11 proceedings offset by interest income earned during the period. No reorganization items were incurred in fiscal 1998. Interest Expense, Interest Income and Other (Income) Expense, Net. Interest expense, interest income and other (income) expense, net, decreased by $4,505,700 in fiscal 1998 from fiscal 1997. This decrease was a result of the charge taken in the third quarter of fiscal 1997 of $7,264,000 related to the Company's Plan of Reorganization. In fiscal 1998, the Company recognized $1,045,000 in charges for the early termination of its revolving credit facility and term loan with Foothill Capital Corporation, which the Company recorded as an extraordinary item. Income Tax Expense. In fiscal 1998 the Company recorded a provision for income taxes of $2,495,900. This provision was fully offset by the Company's net operating loss carryforwards. The Company had a net loss in fiscal 1997 and therefore recorded no tax provision. Extraordinary Item. In December 1998, the Company refinanced its revolving credit facility and term loan from Foothill Capital with a new revolving credit facility with Mellon Bank, N.A. As a result of this refinancing, the Company incurred a prepayment penalty of approximately $720,000 and wrote off approximately $640,000 of unamortized debt issuance costs. These amounts were offset by approximately $315,000 in accrued debt discount and related liabilities and approximately $387,000 in income tax benefits related to this extraordinary item. 15 LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of working capital are cash flow from operations and borrowings under the revolving credit facility. The Company had working capital of $26,291,900, $31,927,200 and $29,714,300 at the end of fiscal 1997, 1998 and 1999, respectively. The Company measures its inventory turnover by dividing net sales by the retail value of the inventory averaged over 12 months. Inventory turnover was 3.05 times, 2.81 times and 2.52 times in fiscal 1997, 1998 and 1999, respectively. Net cash provided by (used in) operating activities amounted to ($45,080,000), $11,330,300 and ($7,441,200) in fiscal 1997, 1998 and 1999, respectively. These amounts primarily represent net income (loss) plus depreciation, amortization and other changes in operating assets and liabilities. Net cash used in investing activities amounted to $1,326,600, $4,521,400 and $5,909,700 in fiscal 1997, 1998 and 1999, respectively. The increase in fiscal 1999 from 1998 was primarily due to the capital expenditures related to the opening of four new stores and the Company's new merchandising system. Net cash provided by (used in) financing activities amounted to $23,700,100, ($5,847,300) and $12,562,500 in fiscal 1997, 1998 and 1999, respectively, and in fiscal 1999 consisted primarily of additional borrowings, net of repayments, under the Company's revolving credit facility. On December 4, 1998, the Company entered into a Loan and Security Agreement with Mellon Bank, N.A., ("Mellon") individually and as agent. The Loan and Security Agreement provided for a $45.0 million revolving credit facility with a $20.0 million sublimit for letters of credit. The Mellon Loan and Security Agreement contains financial covenants including tangible net worth, indebtedness to tangible net worth and fixed charge coverage ratios, and limitations on new store openings and capital expenditures as well as restrictions on the payment of dividends. The Company granted Mellon a lien on its tangible and intangible assets to secure this revolving credit facility. Proceeds from this loan were used to refinance the Company's previous revolving credit facility and term loan from Foothill Capital Corporation. In accordance with the early termination provisions of the Foothill Capital Corporation loan document, the Company paid an early termination fee of $720,000 to Foothill. The Mellon revolving credit facility bore interest at the option of the Company at prime (8.50% at January 29, 2000) or LIBOR plus a margin ranging from 1.75% to 3.25% depending upon the Company's EBITDA. Availability under the revolver is determined by a formula based on inventory and credit card receivables, less applicable reserves. In April 1999, the Company and Mellon amended the Loan Agreement to allow for the inclusion of participant lenders and to modify certain other provisions including the tangible net worth and fixed charge coverage ratio covenants. During the fourth quarter of fiscal 1999, the Company was projecting a liquidity shortfall in early fiscal 2000 under its revolving credit facility. To address the liquidity shortfall, the Company obtained a temporary over-advance of $4.5 million above its calculated borrowing base from Mellon on February 11, 2000. In addition, the Company and Mellon agreed to recast certain financial covenants to reflect the year-end operating results. On March 15, 2000, the Company and Mellon entered into amendment No. 3 to the Loan and Security Agreement. The revolving credit facility was reduced to $35.0 million with a $15.0 million sublimit for letters of credit. Within the credit facility is an over-advance facility of $4.5 million above the calculated borrowing base which is reduced to $3.4 million on May 16, 2000 and $2.5 million on June 16, 2000 and expires on June 30, 2000. The revolving credit facility expires on March 15, 2002 and bears interest at 0.75% per annum above Mellon Bank's prime rate. The amended Agreement recast all of the Company's financial coverage as of and for the year ended January 29, 2000 and for the remaining term of the loan agreement. The Agreement contains financial covenants related to tangible net worth, indebtedness to tangible net worth, fixed charge coverage ratios, maximum net loss per month, and limitations on new store openings and capital expenditures as well as restrictions on the payments of dividends. Additionally, Mr. David Feld, the Chairman and CEO agreed to provide additional collateral to secure the credit facility. The Company was in compliance with all coverage under the amended Agreement as of January 29, 2000. The amended bank agreement also includes a termination fee of $1.0 million if the Company terminates the facility before March 15, 2001, and $700,000 if termination occurs from March 16, 2001 through March 14, 2002. The Company announced on March 15, 2000 that it had engaged Wasserstein Perella & Co., Inc. an investment-banking firm, to enhance the Company's shareholder value. This may take the form of an equity investment in the Company or debt. 16 On May 1, 2000 the Company and Mellon entered into Amendment 4 to include Todaysman.com, a subsidiary of the Company, into the revolving credit facility. In April 2000, the Company decided to close three under-performing stores, including one store located in a building owned by Mr. David Feld the Company's CEO. The closing of the three stores will result in a charge to operations in the first quarter of fiscal 2000 of approximately $4.0 million for the write-off of furniture and fixtures and lease termination costs. The three stores which generated sales of $13,192,000 in fiscal 1999 are expected to be closed by September 2000. On May 11, 2000, the Company and Mellon entered into Amendment 5 to the revolving credit facility. The agreement amends the credit facility to extend the over-advance facility of $2,500,000 which previously expired on June 30, 2000 to August 15, 2000. The over-advance is reduced to $2,250,000 on August 16, 2000, $1,250,000 on September 16, 2000, $1,000,000 on October 16, 2000 and expires on November 30, 2000. Amendment 5 also revised certain financial covenants to provide a waiver for the $4.0 million charge to operations caused by the store closings discussed above. The amendment also provided for a reduction in the credit facility from $35 million to $30 million effective on November 30, 2000. The termination fee was also increased to $1,050,000 if the facility is terminated on or before March 14, 2002. The Company has been substantially dependent upon borrowings under its credit facility to finance its operations and received an amended credit facility from Mellon in May 2000, which allows the Company additional liquidity through an over-advance facility through November 30, 2000 as discussed above. Additionally, the Company is in the process of implementing a plan to reverse the trend of losses noted above. Management's plans implemented thus far, as well as actions initiated that will continue into fiscal 2000 include, the execution of the amended credit facility, a layoff of non-operating personnel in January 2000, the reduction in advertising spending and focus on their traditional advertising approach, and the closing of three under-performing stores in April 2000. Management believes the cash requirements in 2000 will be generated by operations and borrowings on the Company's credit facility. Management also believes that the actions initiated and its 2000 plans will result in the successful funding of its working capital and cash requirements while enabling them to meet their financial covenants under their credit facility. RECENT ACCOUNTING PRONOUNCEMENTS Included in net sales are gross sales from our licensed shoe department of $12,642,600, $12,208,100, and $10,357,600 for 1997, 1998 and 1999, respectively. In December 1999 the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", which effectively changes previous guidance related to the recording of licensed business revenues for retail companies. In fiscal 2000, the Company will change its method of recording licensed shoe department sales. This change will reduce reported sales and reported expenses, but have no impact on operating or net income. YEAR 2000 In prior years, the Company discussed the nature and progress of its plans to become year 2000 compliant. In late 1999, the Company completed its remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the year 2000 date change. The Company incurred costs of approximately $127,200 during 1999 in connection with remediating its systems, and additional costs of $1,454,900 to replace its existing merchandise and financial accounting systems. The Company is not aware of any material problems resulting from year 2000 issues, either with its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent year 2000 matters that may arise are addressed promptly. QUASI-REORGANIZATION 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 authorized a quasi-reorganization given that the Company had completed its restructuring, obtained long-term financing and successfully emerged from bankruptcy. The Company's retained deficit was related to operations that resulted in the restructuring of the Company and losses incurred during the Chapter 11 proceeding and was not, in management's view, reflective of the Company's financial condition. INFLATION The Company does not believe that inflation has had a material effect on the results of operations during the past three years. However, there can be no assurance that the Company's business will not be affected by inflation in the future. SEASONALITY AND QUARTERLY RESULTS The Company's business, like that of most retailers, is subject to seasonal influences. A significant portion of the Company's net sales and profits are realized during the fourth fiscal quarter (which includes the Christmas selling season) and, to a lesser extent, during the second fiscal quarter. In addition, because the Company's cost of goods sold includes net alteration expense, the Company's gross profit as a percentage of net sales has historically been lower in the first and third fiscal quarters primarily as the result of a lower level of net sales being spread over fixed (primarily payroll) expenses related to tailoring operations. In addition, quarterly results can be affected by the timing of the opening of new stores. Because of the seasonality of the Company's business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. The following table sets forth certain unaudited quarterly results of operations for fiscal 1999 and 1998. 17
Fiscal Quarter Ended ---------------------------------------------- May 1, July 31, October 30, January 29, FISCAL 1999: 1999 1999 1999 2000(2) -------- -------- -------- -------- (In thousands, except per share amounts) Net sales $ 44,884 $ 47,518 $ 42,091 $ 60,053 Cost of goods sold 28,635 31,160 26,178 42,471 -------- -------- -------- -------- Gross profit 16,249 16,358 15,913 17,582 Selling, general and administrative expenses 16,710 17,591 18,080 25,451 -------- -------- -------- -------- Income (loss) from operations (461) (1,233) (2,167) (7,869) Interest expense and other income, net 247 288 364 728 -------- -------- -------- -------- Income (loss) before income taxes (708) (1,521) (2,531) (8,597) Income tax provision (benefit) (204) (559) (937) 1,699 -------- -------- -------- -------- Net income (loss) $ (504) $ (962) $ (1,594) $(10,296) ======== ======== ======== ======== Earnings (loss) per share: $ (0.02) $ (0.04) $ (0.06) $ (0.38) ======== ======== ======== ======== Weighted average shares outstanding 27,015 27,015 27,015 27,041 -------- -------- -------- -------- Earnings (loss) per share assuming dilution $ (0.02) $ (0.04) $ (0.06) $ (0.38) ======== ======== ======== ======== Weighted average shares outstanding assuming dilution 27,015 27,015 27,015 27,041 Fiscal Quarter Ended --------------------------------------------- May 2, August 1, October 31, January 30, FISCAL 1998: 1998 1998 1998 (1) 1999 -------- -------- -------- -------- (In thousands, except per share amounts) Net sales $ 46,253 $ 51,580 $ 48,270 $ 67,505 Cost of goods sold 29,455 33,685 29,335 43,309 -------- -------- -------- -------- Gross profit 16,798 17,895 18,935 24,196 Selling, general and administrative expenses 15,340 16,016 16,293 19,111 -------- -------- -------- -------- Income from operations 1,458 1,879 2,642 5,085 Interest expense and other income, net 757 775 768 980 -------- -------- -------- -------- Income before income taxes and extraordinary item 701 1,104 1,874 4,105 Income tax provision (benefit) 260 409 693 1,521 -------- -------- -------- -------- Income before extraordinary item 441 695 1,181 2,584 Extraordinary item, net of income tax benefit -- -- 658 -- -------- -------- -------- -------- Net income $ 441 $ 695 $ 523 $ 2,584 ======== ======== ======== ======== Earnings per share: Before extraordinary item $ 0.02 $ 0.03 $ 0.04 $ 0.10 Extraordinary item -- -- (0.02) -- -------- -------- -------- -------- Earnings per share $ 0.02 $ 0.03 $ 0.02 $ 0.10 ======== ======== ======== ======== Weighted average shares outstanding 26,911 26,915 26,915 27,014 Earnings per share assuming dilution: Before extraordinary item $ 0.02 $ 0.03 $ 0.04 $ 0.10 Extraordinary item -- -- (0.02) -- -------- -------- -------- -------- Earnings per share assuming dilution $ 0.02 $ 0.03 $ 0.02 $ 0.10 ======== ======== ======== ======== Weighted average shares outstanding assuming dilution 28,169 26,945 26,915 27,014
18 (1) Third quarter 1998 restated to reflect the reclassification of the extraordinary item related to the early termination of the Company's revolving credit facility. (2) Fourth quarter 1999 reflects an income tax adjustment of $1,699 to eliminate the tax benefit recorded in the prior quarters because the Company did not achieve its expected operating results. There is no difference between earnings per share and earnings per share assuming dilution in fiscal 1999 because the impact of common share equivalents is anti-dilutive. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is a retail company doing business within the United States. Its primary market risk is exposure to interest rates fluctuations on its debt instruments. The Company's bank revolving credit facility bears interest at variable rates. The variable interest rate is the rate in effect at the end of fiscal 1999, and it fluctuates with the lending bank's prime rate. The change in fair value of the Company's bank revolving credit facility resulting from a hypothectical 2% increase in interest rates would not be material. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The financial statements and related documents that are filed with this Report are listed in Item 14 (a) of this Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Incorporated by reference from the Company's Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K, except for information concerning certain executive officers of the Company which is set forth in Item 4.1 hereof. ITEM 11. EXECUTIVE COMPENSATION. Incorporated by reference from the Company's Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Incorporated by reference from the Company's Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Incorporated by reference from the Company's Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed pursuant to General Instruction G(3) to Form 10-K. 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. (a) Documents filed as part of this report: 1. List of Consolidated Financial Statements. The following consolidated financial statements and the notes thereto of Today's Man, Inc., which are attached hereto beginning on page F-1, have been incorporated by reference into Item 8 of this Report on Form 10-K. Consolidated Balance Sheets as of January 30, 1999 and January 29, 2000 Consolidated Statements of Operations for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000 Consolidated Statements of Shareholders' Equity for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000 Consolidated Statements of Cash Flows for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000 Notes to Consolidated Financial Statements The Report of Independent Auditors, which covers the Company's consolidated financial statements appears on page F-2 of this Report on Form 10-K. 2. List of Exhibits filed pursuant to Item 601 of Regulation S-K. The following exhibits are incorporated by reference in, or filed with, this Report on Form 10-K. Management contracts and compensatory plans, contracts and arrangements are indicated by "*". 3. No financial statement schedules have been included because there is either no respective financial statement caption or there is full disclosure in the Notes to the Consolidated Financial Statements. EXHIBIT NO. DESCRIPTION - ----------- ----------- 2.1(1) Debtors' Second Amended Joint Plan of Reorganization as modified on December 12, 1997 3.1(2) The Company's Amended and Restated Articles of Incorporation 3.2(2) The Company's Amended and Restated Bylaws 4.2(2) Warrant Agreement, dated as of December 31, 1997, between Today's Man, Inc. and Stocktrans, Inc. as warrant agent 4.3(2) Form of Common Stock Purchase Warrant (incorporated by reference to the form of Common Stock Purchase Warrant attached as exhibit A to the Warrant Agreement filed as Exhibit 4.2) 10.1(3) Lease between Mr. David Feld and the Company relating to the Company's central headquarters and distribution center 10.2(3) Lease, as amended, between Mr. David Feld and the Company relating to the Center City Philadelphia store 20 EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.3(3) Lease between Mr. David Feld and the Company relating to the Deptford store 10.4(3) Lease, as amended, between Mr. David Feld and the Company relating to the Langhorne store 10.5(3) Lease between Mr. David Feld and the Company relating to the lease of a parking lot adjacent to the Montgomeryville store *10.6 Management Stock Option Plan *10.7(3) 401(k) Profit-Sharing Plan, as amended, and related Trust Agreement 10.8(3) Tax Indemnification Agreement between the Company and Mr. David Feld 10.9(5) Amendment No. 1 to Tax Indemnification Agreement between the Company and Mr. David Feld 10.10(6) Amended and Restated License Agreement between the Company and D&L, Inc. *10.11(4) Form of Note and Stock Pledge Agreement for Executive Equity Plan tax loans 10.13(8) Order of the U.S. Bankruptcy Court dated May 22, 1996 approving the Employee Retention Plan. 10.14(8) Order of the U.S. Bankruptcy Court dated July 25, 1996 approving the remaining provisions of the Employee Retention Plan. 10.15(9) Loan and Security Agreement with Foothill Capital Corporation 10.16(10) Loan and Security Agreement with Mellon Bank, N.A. 10.17 First Amendment to Loan and Security Agreement with Mellon Bank, N.A. 10.18 Second Amendment to Loan and Security Agreement with Mellon Bank, N.A. 10.19 Third Amendment to Loan and Security Agreement with Mellon Bank, N.A. 10.20 Fourth Amendment to Loan and Security Agreement with Mellon Bank, N.A. 10.21 Fifth Amendment to Loan and Security Agreement with Mellon Bank, N.A. 10.22 License Agreement between the Company and Morse Shoe, Inc. 21.1(5) Subsidiaries of the Registrant 23.1 Consent of Ernst & Young LLP 27.1 Financial Data Schedule (b) Reports on Form 8-K None - ---------- 21 (1) Incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 1997. (Commission File No. 0-20234). (2) Incorporated by reference to the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on December 29, 1997. (Commission File No. 0-20234). (3) Incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-46755) filed with the Securities and Exchange Commission on March 26, 1992. (4) Incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-60798) filed with the Securities and Exchange Commission on April 9, 1993. (5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended October 31, 1992 (Commission File No. 0-20234). (6) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 29, 1994 (Commission File No. 0-20234). (7) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 28, 1995 (Commission File No. 0-20234). (8) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended February 1, 1997 (Commission File No. 0-20234). (9) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 31, 1998 (Commission File No. 0-20234). (10) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 30, 1999 (Commission File No. 0-20234). 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on May 15, 2000. TODAY'S MAN, INC. By: /s/DAVID FELD ------------------------------------------ David Feld Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the date indicated.
Signature Capacity Date --------- -------- ---- /s/ DAVID FELD Chairman of the Board, President and Chief May 15, 2000 - ---------------------------------- Executive Officer (principal executive officer) David Feld /s/ LARRY FELD Vice President, Secretary and Director May 15, 2000 - ---------------------------------- Larry Feld /s/ FRANK E. JOHNSON Executive Vice President, Treasurer and May 15, 2000 - ---------------------------------- Chief Financial Officer Frank E. Johnson /s/ BARRY S. PINE Vice President, Controller and Chief May 15, 2000 - ---------------------------------- Accounting Officer Barry S. Pine /s/ LEONARD WASSERMAN Director May 15, 2000 - ---------------------------------- Leonard Wasserman /s/ VERNA K. GIBSON Director May 15, 2000 - ---------------------------------- Verna K. Gibson
23 TODAY'S MAN, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ---- Report of Independent Auditors...............................................F-2 Consolidated Balance Sheets as of January 30, 1999 and January 29, 2000......F-3 Consolidated Statements of Operations for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000................F-4 Consolidated Statements of Shareholders' Equity for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000................F-5 Consolidated Statements of Cash Flows for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000................F-6 Notes to Consolidated Financial Statements...................................F-7 F-1 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Today's Man, Inc. We have audited the Consolidated Balance Sheets of Today's Man, Inc. as of January 29, 2000 and January 30, 1999, and the related Consolidated Statements of Operations, Shareholders' Equity and Cash Flows for each of the three fiscal years in the period ended January 29, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Today's Man, Inc. at January 29, 2000 and January 30, 1999, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended January 29, 2000, in conformity with accounting principles generally accepted in the United States. /s/ ERNST & YOUNG LLP Philadelphia, Pennsylvania March 16, 2000, except for Notes 5 and 11 as to which the date is May 11, 2000 F-2 TODAY'S MAN, INC. CONSOLIDATED BALANCE SHEETS
January 30, January 29, 1999 2000 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 1,181,100 $ 392,700 Due from credit card companies and other receivables, net of allowance for uncollectible accounts of $61,500 and $27,200 1,535,300 1,692,900 Inventory 34,636,600 39,334,700 Prepaid expenses and other current assets 3,903,800 2,270,700 Prepaid inventory purchases 3,038,600 1,847,900 ------------ ------------ Total current assets 44,295,400 45,538,900 Property and equipment, less accumulated depreciation and amortization 32,664,900 34,235,300 Loans to shareholders 228,400 228,400 Rental deposits and other noncurrent assets 1,785,500 1,864,600 ------------ ------------ $ 78,974,200 $ 81,867,200 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,719,400 9,014,700 Accrued expenses and other current liabilities 5,827,200 6,408,300 Current maturities of capital lease obligations 821,600 401,600 ------------ ------------ Total current liabilities 12,368,200 15,824,600 Capital lease obligations, less current maturities 216,000 936,600 Deferred rent and other 4,750,000 4,559,800 Obligation under revolving credit facility 8,945,700 21,145,100 ------------ ------------ 26,279,900 42,466,100 Shareholders' equity: Preferred stock, no par value, 5,000,000 shares authorized, none issued -- -- Common stock, no par value, 100,000,000 shares authorized, 27,014,485 and 27,040,725 shares issued and outstanding at January 30, 1999 and January 29, 2000 respectively 48,451,200 48,513,700 Retained earnings (accumulated deficit) 4,243,100 (9,112,600) ------------ ------------ Total shareholders' equity 52,694,300 39,401,100 ------------ ------------ $ 78,974,200 $ 81,867,200 ============ ============
See accompanying notes. F-3 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended ----------------------------------------------- January 31, January 30, January 29, 1998 1999 2000 ------------- ------------- ------------- (52 weeks) (52 weeks) (52 weeks) Net sales $ 214,148,000 $ 213,608,600 $ 194,545,700 Cost of goods sold 138,075,100 135,784,100 128,444,200 ------------- ------------- ------------- Gross profit 76,072,900 77,824,500 66,101,500 Selling, general and administrative expenses 65,819,800 66,760,300 77,830,600 ------------- ------------- ------------- Income (loss) from operations 10,253,100 11,064,200 (11,729,100) Reorganization items: Professional fees and other 7,865,000 -- -- Interest income (1,096,000) -- -- ------------- ------------- ------------- Net reorganization items 6,769,000 -- -- Interest expense 7,759,900 3,200,600 1,606,400 Other expense, net 26,000 79,600 20,200 ------------- ------------- ------------- Income (loss) before income taxes and extraordinary item (4,301,800) 7,784,000 (13,355,700) Provision for income taxes -- 2,882,500 -- ------------- ------------- ------------- Income (loss) before extraordinary item (4,301,800) 4,901,500 (13,355,700) Extraordinary item, net of income tax benefit of $386,600 -- 658,400 -- ------------- ------------- ------------- Net income (loss) $ (4,301,800) $ 4,243,100 $ (13,355,700) ============= ============= ============= Basic and diluted earnings per share before extraordinary item $ (0.39) $ 0.18 $ (0.49) Basic and diluted earnings per share from extraordinary item -- (0.02) -- ------------- ------------- ------------- Basic and diluted earnings per share $ (0.39) $ 0.16 $ (0.49) ============= ============= ============= Weighted average shares outstanding 11,063,275 27,013,125 27,040,628
See accompanying notes. F-4 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
COMMON STOCK -------------------------------------------- NUMBER RETAINED OF EARNINGS SHARES AMOUNT (DEFICIT) ------------ ------------ ------------ Balances at February 1, 1997 10,861,005 $ 38,269,100 $(23,014,400) Issuance of shares pursuant to rights offering 8,145,753 16,291,500 -- Issuance of shares in settlement of pre- petition claims 8,257,280 19,524,800 -- Issuance of shares to employees 10,550 30,300 -- Net loss -- -- (4,301,800) Quasi-reorganization as of January 31, 1998 -- (27,316,200) 27,316,200 ------------ ------------ ------------ Balances at January 31, 1998 27,274,588 46,799,500 -- Exercise of stock options 800 1,900 -- Issuance of shares to employees 820 2,400 -- Benefit of net operating loss carryforwards -- 2,495,900 -- Exercise of stock purchase warrants 2,576 7,000 -- Adjustment of shares due to settlement of pre-petition claims (264,299) (855,500) -- Net income -- -- 4,243,100 ------------ ------------ ------------ Balances at January 30, 1999 27,014,485 $ 48,451,200 $ 4,243,100 Exercise of stock purchase warrants 150 400 -- Adjustment of shares due to settlement of pre- petition claims 26,090 62,100 -- Net loss -- -- (13,355,700) ------------ ------------ ------------ Balances at January 29, 2000 27,040,725 $ 48,513,700 $ (9,112,600) ============ ============ ============
See accompanying notes. F-5 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended ----------------------------------------------- January 31, January 30, January 29, 1998 1999 2000 ------------- ------------- ------------- Operating activities: Net income (loss) $ (4,301,800) $ 4,243,100 $ (13,355,700) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation expense 2,215,000 2,548,800 3,537,900 Amortization expense 1,575,400 881,900 949,000 Provision for uncollectible accounts receivable 142,300 183,700 (34,300) Accretion of debt discount 36,500 -- -- Deferred rent and other (91,300) (567,200) (190,200) Extraordinary item -- 1,045,000 -- Charge in lieu of income taxes -- 2,882,500 -- Changes in operating assets and liabilities: Restricted cash (11,005,500) 11,005,500 -- Decrease (increase) in receivables 20,700 417,400 (123,300) Decrease (increase) in inventory (6,015,500) 15,500 (4,698,100) Decrease (increase) in prepaid expenses 230,400 (749,200) 2,823,800 (Decrease) increase in payables, accrued expenses and liabilities subject to settlement 12,085,500 (909,100) 3,876,400 (Increase) decrease in other noncurrent assets (310,000) (431,600) (226,700) Payment of liabilities subject to settlement (42,329,700) (9,236,000) -- Charges due to reorganization activities: Reorganization costs 6,769,000 -- -- Payment of reorganization costs (4,101,000) -- -- ------------- ------------- ------------- Total adjustments (40,778,200) 7,087,200 5,914,500 ------------- ------------- ------------- Net cash provided by (used in) operating activities (45,080,000) 11,330,300 (7,441,200) Investing activities: Capital expenditures (1,306,100) (3,871,600) (5,841,500) Fixtures and equipment in process (20,500) (649,800) (68,200) ------------- ------------- ------------- Net cash used in investing activities (1,326,600) (4,521,400) (5,909,700) Financing activities: Repayment of capital leases (1,396,700) (1,226,200) 300,600 Proceeds from exercise of stock options and common stock purchase warrants -- 11,300 62,500 Proceeds from sale of common stock 12,964,900 -- -- Proceeds from term loan 12,500,000 -- -- Borrowings under revolving credit facility 3,972,000 97,837,100 180,809,800 Repayment of term loan and revolving credit facility (4,340,100) (102,469,500) (168,610,400) ------------- ------------- ------------- Net cash provided by (used in) financing Activities 23,700,100 (5,847,300) 12,562,500 Net increase (decrease) in cash and cash equivalents (22,706,500) 961,600 (788,400) Cash and cash equivalents at beginning of year 22,926,000 219,500 1,181,100 ------------- ------------- ------------- Cash and cash equivalents at end of year $ 219,500 $ 1,181,100 $ 392,700 ============= ============= =============
See accompanying notes. F-6 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 December 12, 1997 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. Pursuant to the Reorganization Plan, the Company paid an aggregate of $51.0 million and issued 9,656,269 shares of Common Stock to its creditors in settlement of $73.3 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 the expiration date of December 31, 1999. During fiscal 1999, the expiration date of the Warrants was extended to January 2, 2001. At January 30, 1999 approximately $1,100,000 remained to be distributed; these amounts were distributed in April 1999. A total of 5,430,503 Warrants were issued to the Company's pre-reorganization shareholders. 2. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS The Company operates menswear superstores specializing in tailored clothing, furnishings and accessories and sportswear. The Company also offers footwear through licensed shoe departments. The superstores are located in the Greater Philadelphia, Washington, D.C., Baltimore and New York Markets. QUASI-REORGANIZATION As of January 30, 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 had completed its restructuring, obtained long-term financing and successfully emerged from bankruptcy. The Company's retained deficit was related to operations that resulted in the restructuring of the Company and losses incurred during the Chapter 11 proceeding and was not, in management's view, reflective of the Company's financial condition. FINANCIAL REPORTING FOR BANKRUPTCY PROCEEDINGS The American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"), provides guidance for financial reporting by entities that have filed petitions with the Bankruptcy Court and expect to reorganize under Chapter 11 of the Bankruptcy Code. F-7 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Under SOP 90-7, the financial statements of an entity in a Chapter 11 reorganization proceeding should distinguish transactions and events that are directly associated with the reorganization from those of the operations of the ongoing business as it evolves. Accordingly, SOP 90-7 requires the following financial reporting/accounting treatments with respect to each of the financial statements. Consolidated Statement of Operations Pursuant to SOP-90-7, revenues and expenses, realized gains and losses, and provisions for losses resulting from the reorganization of the business are reported in the Consolidated Statement of Operations separately as reorganization items. Professional fees are expensed as incurred. Interest expense of $7,264,000, in fiscal 1997, was recorded as part of the settlement negotiated with the Official Committee of the Unsecured Creditors. Consolidated Statement of Cash Flows Reorganization items are reported separately within the operating, investing and financing categories of the Consolidated Statement of Cash Flows. CREDIT CARD RECEIVABLES The Company sells through third-party credit cards and collects related receivables, generally within four days. INVENTORY Inventory consisting of merchandise held for sale is valued at cost, using the retail method, which is not in excess of market. PREPAID INVENTORY PURCHASES Prepaid inventory purchases includes costs associated with merchandise acquired which has not been received as of the Consolidated Balance Sheet date. PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation and amortization is computed using the straight-line method for financial reporting purposes and accelerated methods for tax purposes over the estimated useful lives of the assets, ranging from 3-22 years, or the terms of applicable leases, if shorter and accelerated methods for tax purposes. CASH AND CASH EQUIVALENTS For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The Company held no such investments as of January 30, 1999 and January 29, 2000. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions are eliminated. The Company operates on a 52-53 week with fiscal year end being the Saturday closest to January 31. F-8 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) EARNINGS (LOSS) PER COMMON SHARE Earnings per share is calculated following Financial Accounting Standards Board issued Statement No. 128 Earnings per Share. Statement 128 requires companies to present basic and diluted earnings per share. Basic earnings per share excludes any dilutive effect of outstanding stock options whereas diluted earnings per share include the effect of such items. There is no difference between basic and diluted earnings per share because the effect of the Company's common share equivalents would not be dilutive. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATIONS Certain amounts in prior years have been reclassified to conform with the current year presentation. PREOPENING COSTS Non-capital costs associated with the opening of new locations are expensed in the year of opening. ADVERTISING The Company utilizes both broadcast and print advertising and expenses related costs as incurred. Advertising expense was $11,198,500, $12,246,000 and $17,671,500 for the fiscal years 1997, 1998 and 1999, respectively. REVENUE RECOGNITION The Company recognizes revenue at the point of sale. COMPANY OPERATIONS The Company's financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In fiscal 1999, the Company incurred a net loss of $13,355,700 and its operations required a net use of cash of $7,441,200. The net loss was caused mainly by a significant shortfall in revenues, a decline in gross profit and advertising spending on a branding campaign that was not effective. The Company has been substantially dependent upon borrowings under its credit facility to finance its operations and received an amended credit facility from Mellon in May 2000, which allows the Company additional liquidity through an over-advance facility through November 30, 2000 as further discussed in Note 5. Additionally, the Company is in the process of implementing a plan to reverse the trend of losses noted above. Management's plans implemented thus far, as well as actions initiated that will continue into fiscal 2000 include, the execution of the amended credit facility, a layoff of non-operating personnel in January 2000, the reduction in advertising spending and focus on their traditional advertising approach, and the closing of three under-performing stores in April 2000. Management believes the cash requirements in 2000 will be generated by operations and borrowings on the Company's credit facility. Management also believes that the actions initiated and its 2000 plans will result in the successful funding of its working capital and cash requirements while enabling them to meet their financial covenants under their credit facility. RECENT ACCOUNTING PRONOUNCEMENTS Included in net sales are gross sales from our licensed shoe department of $12,642,600, $12,208,100, and $10,357,600 for 1997, 1998 and 1999, respectively. In December 1999 the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", which effectively changes previous guidance related to the recording of licensed business revenues for retail companies. In fiscal 2000, the Company will change its method of recording licensed shoe department sales. This change will reduce reported sales and reported expenses, but have no impact on operating or net income. 3. PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: January 30, January 29, 1999 2000 ------------ ------------ Furniture, fixtures and signs $ 5,083,400 $ 6,741,900 Leasehold improvements 32,765,500 33,099,600 Data processing equipment 5,048,200 7,934,200 Fixtures and equipment under capital leases 5,963,600 7,119,800 Fixtures and equipment in process 649,800 68,200 ------------ ------------ Gross property and equipment 49,510,500 54,963,700 Accumulated depreciation (13,443,600) (16,525,000) Accumulated amortization of equipment under capital leases (3,402,000) (4,203,400) ------------ ------------ Net property and equipment $ 32,664,900 $ 34,235,300 ============ ============ F-9 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Property and equipment accounts and their associated accumulated depreciation accounts are reduced to "0" when the asset's useful life has expired. Depreciation and amortization expense related to property and equipment was $3,258,500, $3,441,700 and $4,339,400 for fiscal years 1997, 1998 and 1999, respectively. Fixtures and equipment in process includes items for new systems, equipment, and stores which as of the respective financial statement date have not been placed into service. 4. RELATED PARTY TRANSACTIONS Certain of the Company's superstores and its executive offices and distribution center are leased from the Company's Chairman, President and Chief Executive Officer (CEO). Rent expense on these locations was $1,702,400, $1,789,400 and $1,817,300 for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000, respectively. Pursuant to the Company's Plan of Reorganization, the Company's CEO was paid approximately $900,000 in settlement of pre-petition obligations arising from leases with the Company. In addition, the CEO received a $3.3 million credit to be used towards the purchase of stock in the equity offering and 938,190 additional shares of common stock in satisfaction of his $5.0 million subordinated loan and accrued interest. Included in the schedule of operating lease commitments in Note 7 are required payments on leases with the Company's CEO for its principal offices and distribution center as well as certain stores, totaling $1,728,300 for each of the next five years and $10,699,200 thereafter. Certain of the leases require increasing payments based upon changes in the Consumer Price Index. 5. DEBT As more completely described in Note 1, all amounts outstanding under the Company's pre-petition debt facilities were satisfied pursuant to the Company's Plan of Reorganization, including claims for post-petition interest. Upon satisfaction of the obligations, any and all liens were removed by the pre-petition debt holders. On December 31, 1997, the Company entered into a Loan and Security Agreement with Foothill Capital Corporation ("Foothill"), individually and as agent. The Loan and Security Agreement provided for a $12.5 million term loan and a $30.0 million revolving credit facility. The Company 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. On December 4, 1998, the Company entered into a Loan and Security Agreement with Mellon Bank, N.A., ("Mellon") individually and as agent. The Loan and Security Agreement provided for a $45.0 million revolving credit facility with a $20.0 million sublimit for letters of credit. The Mellon Loan and Security Agreement contains financial covenants including tangible net worth, indebtedness to tangible net worth and fixed charge coverage ratios, and limitations on new store openings and capital expenditures as well as restrictions on the payment of dividends. The Company granted Mellon a lien on its tangible and intangible assets to secure this revolving credit facility. F-10 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Proceeds from this loan were used to refinance the Company's previous revolving credit facility and term loan from Foothill Capital Corporation. As a result of this refinancing, the Company incurred a prepayment penalty of approximately $720,000 and wrote off approximately $640,000 of unamortized debt issuance costs. These amounts were offset by approximately $315,000 in accrued debt discount and related liabilities and approximately $387,000 in income tax benefits related to this extraordinary item. The Mellon revolving credit facility bore interest at the option of the Company at prime (8.50% at January 29, 2000) or LIBOR plus a margin ranging from 1.75% to 3.25% depending upon the Company's EBITDA. Availability under the revolver is determined by a formula based on inventory and credit card receivables, less applicable reserves. In April 1999, the Company and Mellon amended the Loan Agreement to allow for the inclusion of participant lenders and to modify certain other provisions including the tangible net work and fixed charge coverage ratio covenant. During the fourth quarter of fiscal 1999, the Company was projecting a liquidity shoftfall in early fiscal 2000 under its revolving credit facility. To address the liquidity shortfall, the Company obtained a temporary over-advance of $4.5 million above its calculated borrowing base from Mellon on February 11, 2000. In addition, the Company and Mellon agreed to recast certain financial covenants to reflect the year-end operating results. On March 15, 2000, the Company and Mellon entered into amendment No. 3 to the Loan and Security Agreement. The revolving credit facility was reduced to $35.0 million with a $15.0 million sublimit for letters of credit. Within the credit facility is an over-advance facility of $4.5 million above the calculated borrowing base which is reduced to $3.4 million on May 15, 2000 and $2.5 million on June 16, 2000 and expires on June 30, 2000. The revolving credit facility expires on March 15, 2002 and bears interest at 0.75% per annum above Mellon Bank's prime rate. The amended Agreement recast all of the Company's financial covenants as of and for the year ended January 29, 2000 and for the remaining term of the loan agreement. The Agreement contains financial covenants related to tangible net worth, indebtedness to tangible net worth, fixed charge coverage ratios, maximum net loss per month, and limitations on new store openings and capital expenditures as well as restrictions on the payments of dividends. Additionally, Mr. David Feld, the Chairman and CEO agreed to provide additional collateral to secure the credit facility. The Company was in compliance with all covenants under the amended Agreement as of January 29, 2000. The amended bank Agreement also includes a termination fee of $1.0 million if the Company terminates the facility before March 15, 2001, and $700,000 if termination occurs from March 16, 2001 through March 14, 2002. On May 1, 2000 the Company and Mellon entered into Amendment 4 to include Todaysman.com, a subsidiary of the Company, into the revolving credit facility. On May 11, 2000, the Company and Mellon entered into Amendment 5 to the revolving credit facility. The agreement amends the credit facility to extend the over-advance facility of $2,500,000 which previously expired on June 30, 2000 to August 15, 2000. The over-advance is reduced to $2,250,000 on August 16, 2000, $1,250,000 on September 16, 2000, $1,000,000 on October 16, 2000 and expires on November 30, 2000. Amendment 5 also revised certain financial covenants to provide a waiver for the $4.0 million charge to operations caused by the store closings dicussed in Note 11. The amendment also provided for a reduction in the credit facility from $35 million to $30 million effective on November 30, 2000. The termination fee was also increased to $1,050,000 if the facility is terminated on or before March 14, 2002. 6. COMMITMENTS AND CONTINGENCIES The Company leases its stores and distribution center under non-cancelable operating leases. Several stores and the Company's distribution center are leased from the Company's Chairman and CEO. (See Note 4) In addition, certain equipment leases are classified as capital leases. The following is a schedule by year of the future minimum lease payments for leases with initial terms in excess of one year at January 29, 2000: Capital Operating Leases Leases ----------- ----------- 2000 $ 540,500 $13,984,400 2001 331,900 13,089,200 2002 330,600 11,967,100 2003 313,200 10,789,800 2004 203,100 8,155,200 Thereafter 100 38,328,600 ----------- ----------- Total minimum lease payments 1,719,400 $96,314,300 =========== Less: Amounts representing interest 381,200 ----------- Present value of net minimum lease payments $ 1,338,200 =========== F-11 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Total rent expense for the fiscal years ended January 31, 1998, January 30, 1999 and January 29, 2000 was, $11,825,000, $12,087,100, and $12,963,600 respectively. The distribution center lease provides for payment of direct operating costs including real estate taxes. Certain store leases provide for increases in rentals when sales exceed specified levels. To date, no such payments have been required. Certain store leases provide for predetermined escalations in future minimum annual rentals. The pro rata portion of future minimum rent escalations, amounting to $3,135,400 and $2,945,200 at January 30, 1999 and January 29, 2000 respectively, has been included in Deferred rent and other in the accompanying Consolidated Balance Sheet. The Company is involved in routine legal proceedings incidental to the conduct of its business. Management believes that none of these routine legal proceedings will have a material adverse effect on the financial condition or results of operations of the Company. The Company maintains general liability insurance coverage in amounts deemed adequate by management. 7. PROFIT SHARING PLAN The Company has a profit sharing plan under Section 401(k) of the Internal Revenue Code. The plan allows all eligible employees to defer up to 6% of their income on a pretax basis through contributions to the plan. Under the provisions of the plan, the Company matches 40% of the employees' contributions subject to a maximum limit. The charge to operations for Company contributions was $279,000, $287,600 and $327,200 for the years ended, January 31, 1998, January 30, 1999 and January 29, 2000, respectively. On the termination of the Company's Executive Equity Plan in fiscal 1991, the Company provided loans to the Plan's participants to fund any federal and state income taxes relating to the issuance of the shares. The loans bear interest at 1% above the prime lending rate as established by the Company's principal lender. All principal and accrued interest was due on April 14, 1996. Loans are collateralized by the participants' shares of Common Stock. At this time, the Company has made no decision relative to the collection of these loans. 8. SUPPLEMENTAL CASH FLOW INFORMATION
For the Fiscal Years Ended -------------------------------------------------- January 31, January 30, January 29, 1998 1999 2000 ------------- ---------- ---------- Interest paid $ 7,723,400 $3,367,600 $1,741,800 Noncash investing and financing activities: Settlement of pre-petition obligations through issuance of shares of Common stock and Credit for stock rights $ 22,845,900 $ -- $ --
F-12 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 9. INCOME TAXES A reconciliation of the effective tax rate with the statutory federal income tax rate follows: For the Fiscal Years Ended ----------------------------------- January 31, January 30, January 29, 1998 1999 2000 ------ ----- ------ Statutory federal income tax rate 34.0% 34.0% 34.0% State income tax, net of federal income tax effects -- -- -- Effect of permanent differences (18.3) 0.5 (0.3) Income tax valuation allowance (15.7) -- (33.7) Other -- -- -- Quasi reorganization equity accounting -- 2.5 -- ------ ----- ------ --% 37.0% --% ------ ----- ------ The components of the deferred tax assets and liabilities are as follows: January 30, January 29, 1999 2000 ------------ ------------ Deferred tax assets: Accrued liabilities $ 88,100 $ 313,300 Inventory 434,500 486,600 Net operating loss carryforward 9,220,100 13,172,100 AMT credit carryforward 394,300 394,300 Leases 1,273,000 1,180,700 Bad debts 25,000 5,100 Other 49,700 49,700 ------------ ------------ Total deferred tax assets 11,484,700 15,601,800 Less: deferred tax valuation allowance (10,270,100) (14,903,100) ------------ ------------ Net deferred tax assets 1,214,600 698,700 ------------ ------------ Deferred tax liabilities: Property and equipment, including capital leases 678,200 281,500 Other 936,400 817,200 ------------ ------------ 1,614,600 1,098,700 ------------ ------------ Net deferred tax liability $ 400,000 $ 400,000 ============ ============ The valuation allowance against deferred tax assets increased by $4,633,000 in fiscal 1999 due to the increase in net operating loss carryforwards. F-13 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) As a result of the Company's quasi-reorganization (see Note 2), the Company is required to record a charge in lieu of income taxes for federal and state taxes that are eliminated by the utilization of tax benefits existing at the quasi-reorganization date, and result in an increase to contributed capital. At January 29, 2000, there is no charge in lieu of income taxes being reflected due to the post quasi-reorganization loss. As of January 29, 2000, the Company has remaining $10,588,000 of tax attributes that will be credited to additional paid in capital when realized. At January 29, 2000, the Company had available for carryforward net operating losses (for federal tax purposes) of $28,627,600 and a minimum tax credit carryover of $394,000. The NOL carryforwards expire in 2012 through 2019; the minimum tax credits can be carried forward indefinitely. Additionally, at January 29, 2000, the Company had available carryforward losses for state tax purposes in the states in which the Company does business. These deferred tax assets are fully offset by the valuation allowance. 10. STOCK OPTION PLANS Pursuant to the Plan of Reorganization: (i) the existing employee and director stock option plan and all existing options thereunder were canceled and (ii) the Management Stock Option Plan ("Management Plan") was adopted. At January 29, 2000, the Company had outstanding options to purchase an aggregate of 1,911,900 shares of Common Stock under the Management Stock Option Plan. The following tables summarize activity in fiscal 1997, fiscal 1998 and fiscal 1999. MANAGEMENT STOCK OPTION PLAN Number of Shares Under Exercise Price Per Option Share ---------- ------------- Outstanding at February 1, 1997 -- -- Options issued December 31, 1997 2,247,500 $2.38 Exercised -- -- ---------- ------------- Outstanding at January 31, 1998 2,247,500 $2.38 Options issued 44,000 $1.31 - $2.38 Options cancelled (293,200) $2.38 Exercised (800) $2.38 ---------- ------------- Outstanding at January 30, 1999 1,997,500 $1.31 - $2.38 Options issued 362,500 $1.28 - $2.38 Options cancelled (448,100) $2.38 ---------- ------------- Outstanding at January 29, 2000 1,911,900 $1.28 - $2.38 ========== ============= Exercisable at January 29, 2000 1,323,200 $1.28 - $2.38 ========== ============= F-14 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Options to purchase an aggregate of 2,450,000 shares of Common Stock may be granted pursuant to the Management Stock Option Plan. Options are granted at the fair market value at the date of grant. At January 29, 2000, 537,300 shares were available for grant. The unexercisable options issued vest over three years. All options issued expire ten years from the date of grant. The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related interpretations in accounting for its employee stock options. Under APB 25, because the market price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro-forma information regarding net income and earnings per share is required using the alternative fair value accounting provided for under FASB Statement No. 123. The fair value for these options was estimated at the date of the grant using a Black-Scholes option pricing model with the following weighted average assumptions:
1998 1999 ---- ---- Risk-free interest rate 6.0% 6.0% Dividend yield 0% 0% Volatility factor of the expected market price of the Company's common stock 0.702 0.626 Weighted average expected life of the options 5 5
Fair Value of options issued in which the exercise price equals fair value was $1.52, $1.36 and $0.86 as of January 31, 1998 January 30, 1999 and January 29, 2000, respectively. The fair value of options issued in which the exercise price is greater than fair value was $0.23 as of January 29, 2000. For purposes of pro-forma disclosure, the estimated fair value of the options issued as part of the Management Plan is amortized to expense in accordance with the options vesting period. The Company's pro-forma information is as follows: 1998 1999 ---- ---- Pro-Forma net income (loss) $3,672,600 $(13,810,200) Pro-Forma earnings per share: Basic and diluted $0.14 $(0.51) ===== ======= F-15 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11. SUBSEQUENT EVENT In April 2000, the Company decided to close three under-performing stores, including one store located in a building owned by the Company's CEO. The closing of the three stores will result in a charge to operations in the first equarter of fiscal 2000 of approximately $4 million for the write-off of furniture and fixtures and lease termination costs. The three stores which generated sales of $13,192,000 of sales in fiscal 1999 are expected to be closed by September, 2000. F-16 DIRECTORS CORPORATE OFFICES DAVID FELD 835 Lancer Drive Chairman of the Board, President and Chief Executive Officer Moorestown, New Jersey 08057 Today's Man, Inc Telephone: (856) 235-5656 INDEPENDENT AUDITORS LEONARD WASSERMAN Ernst & Young LLP Two Commerce Square LARRY FELD 2001 Market Street Vice President, Store Development and Secretary Philadelphia, Pennsylvania 19103 Today's Man, Inc. COUNSEL VERNA GIBSON Blank Rome Comisky & McCauley LLP Partner, Retail Options, Inc. One Logan Square Philadelphia, Pennsylvania 19103-6998 EXECUTIVE OFFICERS TRANSFER AGENT AND REGISTRAR StockTrans, Inc. DAVID FELD Seven East Lancaster Avenue Chairman of the Board, President and Chief Executive Ardmore, Pennsylvania 19003 Officer FRANK E. JOHNSON Executive Vice President, Chief Financial Officer and Treasurer DAVID MANGINI Executive Vice President, Chief Merchandising Officer LARRY FELD Vice President, Store Development and Secretary BARRY PINE Vice President and Controller
EX-10.18 2 LOAN AND SECURITY AGREEMENT EXHIBIT 10.18 SECOND AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT THIS SECOND AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the "AGREEMENT") is made effective as of October 13, 1999 by and among TODAY'S MAN, INC., a Pennsylvania corporation ("BORROWER"); each of the Subsidiaries of the Borrower identified under the caption "Guarantor" on the signature pages of this Agreement (individually, a "GUARANTOR" and, collectively, the "GUARANTORS"); each of the financial institutions identified under the caption "Lenders" on the signature pages of this Agreement (including without limitation Mellon in such capacity) (individually, a "LENDER" and, collectively, the "LENDERS"); and MELLON BANK, N.A., a national banking association, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "AGENT"). BACKGROUND A. Borrower, Guarantors, Lenders and Agent previously entered into a certain Loan and Security Agreement dated December 4, 1998, as amended by that certain First Amendment and Modification to Loan and Security Agreement dated April 28, 1999 (as amended, the "LOAN AGREEMENT"), pursuant to which, inter alia, Lenders agreed to extend to Borrower a revolving credit facility up to a maximum outstanding principal amount of Forty Five Million Dollars ($45,000,000.00). B. Borrower and Guarantors have requested and Lenders and Agent have agreed to amend the terms of the Loan Agreement in accordance with the terms and conditions hereof. C. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Loan Agreement. D. NOW, THEREFORE, in consideration of foregoing premises and intending to be legally bound hereby, the parties hereto agree as follows: 1. EXPANSION STORE SUBLIMIT. SECTION 3.7 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "3.7 EXPANSION STORE SUBLIMIT . Notwithstanding anything herein or elsewhere to the contrary, Agent may permit Out-of-Formula Advances under the Revolving Credit Facility in an amount up to $500,000.00 outstanding at any time (the "EXPANSION STORE SUBLIMIT"), which Advances may only be used by Borrower to finance the cost of acquiring finished goods inventory to be sold from and at new retail store locations opened by Borrower after the date of this Agreement. No more than five (5) Advances under the Expansion Store Sublimit shall be permitted in any Loan Year. Each Advance under the Expansion Store Sublimit must be in increments of $100,000.00. Each Advance under the Expansion Store Sublimit shall be repaid in twelve (12) equal and consecutive monthly installments on the first day of each calendar month commencing on the first day of the calendar month after such Advance is made. To the extent not previously repaid all of such Advances shall be repaid in full on the expiration date of the Contract Period. Borrower may not prepay such Advances. All payments required to be made by Borrower in connection with Advances under the Expansion Store Sublimit may be made, at Agent's option, by Agent debiting the Borrower's operating account maintained by Borrower with Agent. The Expansion Store Sublimit shall only be available to Borrower at the option of Agent. On or before December 1 of each year Agent will notify Borrower whether the Expansion Store Sublimit will continue to be made available to Borrower for the next twelve-month period. In the absence of such notice, the Expansion Store Sublimit will be available to Borrower for the next twelve-month period. Notwithstanding anything herein or elsewhere to the contrary: (a) the outstanding principal of all Advances under the Revolving Credit Facility, including without limitation Advances under the Expansion Store Sublimit, but excluding Advances to pay interest, fees and Lender Group Expenses, shall not exceed the Maximum Revolving Credit Facility; (b) upon the occurrence of a Default, at the option of Agent, Borrower shall not be entitled to receive any further Advances under the Expansion Store Sublimit; and (c) Borrower may only use Advances under the Expansion Store Sublimit to finance the cost of acquiring finished goods inventory to be sold from and at new retail store locations opened by Borrower after the date of this Agreement." 2. APPLICABLE MARGIN. SECTION 6.4 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "6.4 The "APPLICABLE MARGIN" is equal to the percent per annum in excess of the Base Rate or LIBOR Rate as set forth in the following pricing matrix: 2
REVOLVING CREDIT REVOLVING FACILITY CREDIT FACILITY [NON-EXPANSION EXPANSION STORE [ALL ADVANCES] STORE SUBLIMIT] SUBLIMIT Level Borrower's Annual Base Rate LIBOR Rate LIBOR Rate EBITDA + + + - ----------------------------------------------------------------------------------------------------- Level I < $9,000,000 .50% 3.00% 3.50% Level II > $9,000,000 < $10,000,000 .25% 2.75% 3.25% - Level II > $10,000,000 < $15,000,000 .125% 2.50% 3.00% - Level IV > $15,000,000 < $25,000,000 .00% 2.25% 2.75% - Level V > $25,000,000 < $30,000,000 .00% 2.00% 2.50% - Level VI > $30,000,000 .00% 1.75% 2.25% -
From September 30, 1999 through the date of receipt of the Borrower's fiscal year-end January 31, 2000 audited financial statements, the Applicable Margin for Advances under the Revolving Credit Facility shall be the Applicable Margin set forth on Level II in the above-described pricing matrix. Thereafter, the Applicable Margin will be based upon Borrower's EBITDA on an annual basis as reflected on Borrower's year-end audited financial statements delivered to Agent pursuant to SECTION and absent an Event of Default, provided, however, if the Borrower's year end financial statements are not delivered at the time specified in SECTION below, then the Applicable Margin for any given kind of Loan shall, in the event that such statements are not delivered within two (2) Business Days of receipt of notice from the Agent, be the highest Applicable Margin set forth above for such kind of Loan during any period that the Borrower is delinquent in the delivery of such financial statements, provided further, that if such financial statements are not delivered within thirty (30) days after the original due date, then interest shall accrue, at the option of Agent, at the Default Rate." 3. NEW STORE LOCATIONS. SECTION 12.24 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "12.24 NEW STORE LOCATIONS. (a) Borrower will not open any more than four (4) new stores during its fiscal year ending January 31, 2000. Borrower will not open any more than three (3) new stores during its 3 fiscal year ending January 31, 2001. Borrower will not open any more than six (6) new stores in any fiscal year after its fiscal year ending January 31, 2001 without the consent of Agent. If Borrower opens less than six (6) new stores in any fiscal year after its fiscal year ending January 31, 2001 ("UNOPENED STORES"), the number of new stores which may be opened in the next fiscal year may be increased by the number of such Unopened Stores, provided that, in no event may Borrower open more than eight (8) new stores in any one fiscal year without the consent of Agent. As a condition of opening each new location, Borrower will (i) deliver to Agent at least ninety (90) days prior written notice of its intent to open a new store; (ii) use its best efforts to provide to Agent (for the pro rata benefit of the Lenders) a first priority perfected Mortgage, a Landlord's Consent and a recorded Memorandum of Lease for each new store location in form and content acceptable to Agent; (iii) deliver to Agent any UCC-1 financing statements required by Agent to perfect Agent's first priority Lien in assets of Borrower located on such premises; (iv) deliver to Agent search reports in form and content acceptable to Agent indicating that there are no Liens encumbering Borrower's assets at such new location except the Lien in favor of Agent (for the pro rata benefit of Lenders); and (v) deliver to Agent such legal opinions regarding the Mortgage and related documents as Agent may require. (b) In the event that Borrower receives proceeds as a result of the payment of the exercise price of the existing Warrants currently issued by Borrower (collectively, "WARRANT PROCEEDS"), Borrower may utilize such Warrant Proceeds to open additional new stores in excess of the number permitted under SECTION, provided that (i) Borrower complies with the requirements set forth in subsection SECTION (I) THROUGH (V) for such additional new stores; (ii) the funds paid from the Warrant Proceeds to open such additional new stores must be spent within twenty-four (24) months of the termination date for the exercise of the Warrants; (iii) no more than three (3) additional new stores may be opened in the fiscal year ending January 31, 2001 or in the fiscal year ending January 31, 2002; and (iv) no more than fifteen (15) new stores, including new stores opened pursuant to SECTION and this SECTION, may be opened between February 1, 2000 and January 31, 2002. (C) Notwithstanding anything herein or elsewhere to the contrary, if an Event of Default has occurred, Borrower may 4 not open any new stores thereafter without the prior consent of Agent." 4. TANGIBLE NET WORTH. SECTION 13.1 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "13.1 TANGIBLE NET WORTH. Borrower will maintain Tangible Net Worth of not less than (a) $49,500,000 as of February 1, 1999 and at all times thereafter until January 30, 2000; (b) $55,500,000 as of January 31, 2000; (c) $54,500,000 as of February 1, 2000 and at all times thereafter until January 30, 2001; (d) $61,000,000 as of January 31, 2001 and at all times thereafter until January 30, 2002; and (e) $66,400,000 as of January 31, 2002 and at all times thereafter." 5. CAPITAL EXPENDITURES. SECTION 13.3 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "13.3 CAPITAL EXPENDITURES. Borrower will not cause, suffer or permit Borrower's aggregate annual Capital Expenditures to exceed (a) $4,000,000 for the fiscal year ending January 31, 1999; (b) $6,500,000 for the fiscal year ending January 31, 2000; and (c) $7,500,000 for the fiscal year ending January 31, 2001 and for each fiscal year thereafter. To the extent that the permitted amount of Capital Expenditures are not used in any one fiscal year, the unused portion not to exceed fifty percent (50%) of permitted Capital Expenditures for such year may be utilized in the following fiscal year. The limitations on permitted Capital Expenditures set forth above shall not apply to Capital Expenditures funded with Warrant Proceeds as permitted under SECTION or to Capital Expenditures made by Borrower to repair or replace items damaged by a casualty loss." 6. FIXED CHARGE COVERAGE RATIO. SECTION 13.4 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "13.4 FIXED CHARGE COVERAGE RATIO. Borrower will maintain a Fixed Charge Coverage Ratio tested quarterly on a rolling four (4) quarters basis of not less than (a) 1.1 to 1.0 for the fiscal quarters ending January 31, 1999, April 30, 1999 and July 31, 1999, respectively; (b) .80 to 1.0 for the fiscal quarter ending October 31, 1999; (c) 1.0 to 1.0 for the fiscal quarters ending January 31, 2000, April 30, 2000, July 31, 2000 and October 31, 2000, respectively; and (d) 1.5 to 1.0 for the fiscal 5 quarter ending January 31, 2001 and for each fiscal quarter end thereafter." 7. WARRANTS. Borrower has requested that Bank agree to the amendment of certain outstanding Warrant Agreements issued by Borrower. Notwithstanding SECTION 12.29 of the Loan Agreement. Bank consents to the amendment of the terms of such outstanding Warrants Agreements, provided that, no other material amendments will be made to such Warrant Agreements except for the extension of the termination of the exercise date of such Warrants from December 31, 1999 to a date no later than June 30, 2001. Borrower agrees to deliver to Bank a copy of the amended Warrant Agreement at such time that it is circulated to the Warrant Holders for execution. The copy of the Warrant Agreement attached as EXHIBIT L to the Loan Agreement will be replaced and superceded by such amended copy of the Warrant Agreement. Borrower represents and warrants that such amended Warrant Agreement will be a true and complete copy of the form of amended Warrant Agreement utilized for all outstanding Warrants ("WARRANTS") issued by Borrower and that there will have been no other modifications or amendments thereto. Borrower represents and warrants that Borrower has not entered into any agreements with the holders of any such Warrants modifying or amending the terms thereof, including without limitation, any agreement requiring Borrower to purchase or repurchase any Warrants or stock issued pursuant to such Warrants. 8. AMENDMENT FEE. Borrower shall pay to Bank an amount equal to Fifty Thousand Dollars ($50,000.00) (the "AMENDMENT FEE"), which Amendment Fee is fully earned and shall be due and payable upon the execution of this Agreement. 9. REPRESENTATION WARRANTIES. Borrowers and Guarantors hereby represent and warrant, which representations and warranties shall survive until all Obligations are paid and satisfied in full, as follows: (a) All representations and warranties of Borrower and Guarantors set forth in the Loan Documents are true and complete as of the date hereof. (b) No condition or event exists or has occurred which would constitute an event of default under the Loan Documents or under any other agreement between Borrower, any Guarantor and any other third party (or would, upon the giving of notice or the passage of time, or both constitute an event of default). (c) Borrower has not received any notice of default or event of default from any other lender, trustee or lessor with respect to any other loan, financing or lease agreement. (d) The execution and delivery of this Agreement by Borrower and Guarantors and all documents and agreements to be executed and delivered pursuant to the terms hereof: (i) have been duly authorized by all requisite corporate action 6 by Borrower and by each Guarantor; (ii) will not conflict with or result in the breach of or constitute a default (upon the passage of time, delivery of notice or both) under Borrower's or any Guarantor's Articles of Incorporation, By-Laws or any applicable statute, law, rule, regulation or ordinance or any indenture, mortgage, loan or other document or agreement to which Borrower or any Guarantor is a party or by which any of them is bound or affected; and (iii) will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Borrower or any Guarantor, except liens in favor of the Agent or as permitted hereunder or under the Loan Documents.* 10. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all of the Agent's expenses in connection with the review, preparation, negotiation, documentation and closing of this Agreement and the consummation of the transactions contemplated hereunder, including without limitation, costs and fees and expenses of counsel retained by Agent and all fees related to filings, recording of documents and searches, whether or not the transactions contemplated hereunder are consummated. Nothing contained herein shall limit in any manner whatsoever any Lender's or Agent's right to reimbursement under any of the Loan Documents. 11. COMMUNICATIONS AND NOTICES. All notices, requests and other communications made or given in connection with this Agreement shall be made in accordance with the provisions of the Loan Agreement. 12. TIME OF ESSENCE. Time is of the essence of this Agreement. 13. INCONSISTENCIES. To the extent of any inconsistencies between the terms and conditions of this Agreement and the terms and conditions of the Loan Documents, the terms and conditions of this Agreement shall prevail. All terms and conditions of the Loan Documents not inconsistent herewith shall remain in full force and effect and are hereby ratified and confirmed by Borrower and Guarantors. 14. BINDING EFFECT. This Agreement and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns. 15. SEVERABILITY. The provisions of this Agreement and all other Loan Documents are deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect. 16. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Agreement and the Loan Documents shall not inure to the benefit of any third party. 7 17. MODIFICATIONS. No modifications of this Agreement or any of the Loan Documents shall be binding or enforceable unless in writing and signed by or on behalf of the party against whom enforcement is sought. 18. HOLIDAYS. If the day provided herein for the payment of any amount or the taking of any action falls on a Saturday, Sunday or public holiday at the place for payment or action, then the due date for such payment or action will be the next succeeding Business Day. 19. LAW GOVERNING. This Agreement has been made, executed and delivered in the Commonwealth of Pennsylvania and will be construed in accordance with and governed by the laws of such Commonwealth, without regard to any rules or principles regarding conflicts of law or any rule or canon of construction which interprets agreements against the draftsman. 20. HEADINGS. The headings of the Articles, Sections, paragraphs and clauses of this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Agreement. 21. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. E. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties hereto concerning the subject matter set forth herein and supersedes all prior or contemporaneous oral and/or written agreements and representations not contained herein concerning the subject matter of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. BORROWER: TODAY'S MAN, INC., a Pennsylvania corporation By: ____________________________________ [CORPORATE SEAL] Frank E. Johnson, Executive Vice President 8 GUARANTORS: BENMOL, INC., a Delaware corporation [CORPORATE SEAL] By: ____________________________________ Frank E. Johnson, President D&L, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] FELD & FELD, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] (SIGNATURES CONTINUED ON NEXT PAGE) 9 (SIGNATURES CONTINUED FROM PREVIOUS PAGE) LENDERS: MELLON BANK, N.A. By: ____________________________________ Daniel K. Clancy, Vice President AGENT: MELLON BANK, N.A. By: ____________________________________ Daniel K. Clancy, Vice President 10 EX-10.19 3 LOAN AND SECURITY AGREEMENT EXHIBIT 10.19 THIRD AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT THIS THIRD AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the "AMENDMENT") is made effective as of March 15, 2000 by and among TODAY'S MAN, INC., a Pennsylvania corporation ("BORROWER"); each of the Subsidiaries of the Borrower identified under the caption "Guarantor" on the signature pages of this Amendment (individually, a "GUARANTOR" and, collectively, the "GUARANTORS"); each of the financial institutions identified under the caption "Lenders" on the signature pages of this Amendment (including without limitation Mellon in such capacity) (individually, a "LENDER" and, collectively, the "LENDERS"); and MELLON BANK, N.A., a national banking association, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "AGENT"). BACKGROUND Borrower, Guarantors, Lender and Agent previously entered into a certain Loan and Security Agreement dated December 4, 1998, as amended by (i) that certain First Amendment and Modification to Loan and Security Agreement dated April 28, 1999, and (ii) that certain Second Amendment and Modification to Loan and Security Agreement dated October 13, 1999 (as amended, the "LOAN AGREEMENT"), pursuant to which, inter alia, Lender agreed to extend to Borrower a revolving credit facility up to a maximum outstanding principal amount of Forty-Five Million Dollars ($45,000,000.00). Borrower, Guarantors, Lender and Agent have also entered into certain interim letter agreements pending completion of this Amendment. Borrowers, Guarantors, Lender and Agent are entering into this Amendment to amend certain terms and conditions of the Loan Agreement, including without limitation, the following: Establishing the Contract Period for the Revolving Credit Facility for a full two (2) periods after the date of this Amendment; and Providing for permitted Out-of-Formula Advances for a period of time. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Loan Agreement. NOW, THEREFORE, in consideration of the foregoing premises and intending to be legally bound hereby, the parties hereto agree as follows: CONTRACT PERIOD. The Contract Period is reset for a full two (2) year period commencing on the date of this Agreement and expiring on March 15, 2002. Accordingly, the definition of "Contract Period" in SECTION 1.1 of the Loan Agreement is amended to read in its entirety as follows: "CONTRACT PERIOD means a period of time commencing on the date of this Agreement and expiring on March 15, 2002." MAXIMUM REVOLVING CREDIT FACILITY AMOUNT. The Maximum Revolving Credit Facility Amount is reset at $35,000,000. Accordingly the definition of "Maximum Revolving Credit Facility" in SECTION 1.1 of the Loan Agreement is amended in its entirety to read as follows: "MAXIMUM REVOLVING CREDIT FACILITY AMOUNT means $35,000,000." Borrower agrees to execute and deliver to Agent on or before March 22, 2000 replacement Notes in the aggregate amount of the revised Maximum Revolving Credit Facility Amount, which replacement Notes are given in substitution and replacement for the existing Notes and not in payment or satisfaction of such existing Notes. Such replacement Notes shall be in form and content acceptable to Agent. All references to Notes in the Loan Documents shall be deemed to be references to the replacement Notes. Upon receipt of the original signed replacement Notes by the Lenders, the Lenders will return to Borrower the prior Notes marked "Replaced" or "Substituted". INTEREST RATE. (A) GENERAL. Notwithstanding anything to the contrary contained in the Loan Agreement or the Notes, effective as of the date hereof and at all times hereafter, the "Base Rate plus Applicable Margin" as such term is used in the Loan Agreement shall equal at all times three-quarter percent (3/4%) in excess of the Base Rate in effect from time to time, each change to take effect simultaneously with a corresponding change in the Base Rate without notice to Borrower. Agent and Lender agree that ninety (90) days after Borrower receives New Capital Funds in an amount at least equal to $12,000,000 (net of customary transaction costs) as further described in SECTION 11 below and absent a Default or an Event of Default, the "Base Rate plus Applicable Margin" as such term is used in the Loan Agreement shall equal at all times one-quarter percent (1/4%) in excess of the Base Rate in effect from time to time, each change to take effect simultaneously with a corresponding change in the Base Rate without notice to Borrower. Interest will be charged monthly in arrears and calculated on the basis of a 360 day year. (b) LIBOR RATE OPTION. Notwithstanding anything to the contrary contained in the Loan Agreement, Borrower agrees that Borrower shall have no further right to elect that any sums outstanding under the Notes may accrue interest at the LIBOR Rate plus Applicable Margin. Notwithstanding the foregoing, Agent and Lender agree that ninety (90) days after Borrower receives New Capital Funds in an amount at least equal to $12,000,000 (net of customary transaction costs) and absent a Default or an Event of Default, Borrower shall have the right to elect that sums outstanding under the Notes accrue interest at the LIBOR Rate plus Applicable Margin, provided that the Applicable Margin for such LIBOR Rate Loans shall equal three percent (3%) per annum in excess of the LIBOR Rate. All other limitations and requirements set forth in the Loan Agreement for LIBOR Rate Loans shall continue for any new permitted LIBOR Rate Loans under this Section. 2 (c) BASE RATE DEFINITION. The definition of "Base Rate" in SECTION 1.1 of the Loan Agreement is amended to read in its entirely as follows: "BASE RATE the rate per annum which is the higher of (i) the Agent's Prime Rate, or (ii) the Federal Funds Rate plus 1/2%, in effect from time to time (such interest rate to change immediately upon any change in the Prime Rate or Federal Funds Rate)."LETTERS OF CREDIT. In conjunction with the resetting of the Maximum Revolving Credit Facility Amount, the sublimit for Letters of Credit is reset. Accordingly, SECTION 4.4 of the Loan Agreement is amended to read in its entirety as follows: "SUBLIMITS. Agent shall have no obligation (a) to issue any Letter of Credit, if the aggregate outstanding undrawn amount of all Letters of Credit would exceed $15,000,000.00; (b) to issue any Standby Letters of Credit, if the aggregate outstanding undrawn amount of all Standby Letters of Credit would exceed $2,000,000.00; (c) to issue any Letter of Credit, if a Default or Event of Default has occurred; or (d) to issue any Letter of Credit if the Revolving Credit Facility Usage plus the amount of such new Letter of Credit to be issued exceeds (i) the Borrowing Base plus permitted Out-Of-Formula Advances under SECTION 9 of the Third Amendment and Modification to this Agreement (as reduced by all Reserves), or (ii) the Maximum Revolving Credit Facility Amount." TERMINATION OF REVOLVING CREDIT FACILITY AND TERMINATION FEE. In conjunction with the resetting of the Contract Period and the Maximum Revolving Credit Facility Amount, the early termination fees are reset. Accordingly, SECTION 7.10 of the Loan Agreement is hereby amended to read in its entirety as follows: "7.10 TERMINATION OF REVOLVING CREDIT FACILITY AND TERMINATION FEE . Borrower may terminate the Revolving Credit Facility only upon at least thirty (30) days' prior written notice to Agent and payment to Agent (for the pro rata benefit of the Lenders) of a termination fee as set forth below. Such termination fee shall be payable if the Revolving Credit Facility is terminated regardless of the source of funds used to repay in full the Obligations, including without limitation financing provided by another Person, financing provided by 3 one or more of the Lenders, the proceeds of a debt or equity offering by Borrower, a sale of any of the assets of Borrower or a "securitization" of any assets of Borrower. The following termination fees shall be payable: (i) If the termination occurs on or before March 15, 2001, the termination fee will be equal $1,050,000.00. (ii) If the termination occurs after March 15, 2001, but on or before March 14, 2002, the termination fee will be equal to $700,000.00. In the event the Revolving Credit Facility is terminated as a result of an Event of Default, Agent (for the pro rata benefit of the Lenders) shall be entitled to receive the termination fee required to be paid under the prior paragraphs. In the event that Agent, Requisite Lenders or all Lenders, as required under this Agreement, agree to waive any Event of Default but require as a condition of such waiver that the Contract Period be reduced or the Revolving Credit Facility be terminated within a finite time period after such waiver, Agent (for the pro rata benefit of the Lenders) shall be entitled to receive the termination fee required to be paid under the prior paragraphs. The termination fee shall be presumed to be the amount of damages sustained by Lenders as a result of such early termination and Borrower agrees that it is reasonable under the circumstances currently existing. The early termination fee provided for in this Section shall be deemed included in the Obligations." FINANCIAL COVENANTS. ARTICLE 13 of the Loan Agreement is hereby amended to read in its entirety as follows: "13.1. TANGIBLE NET WORTH. Borrower will maintain Tangible Net Worth of not less than the following amounts for the following periods: Amount Periods ------ ------- $48,809,000.00 as of November 30, 1999 and at all times thereafter until January 28, 2000; $39,340,000.00 as of January 29, 2000 $36,500,000.00 as of January 4 30, 2000 and at all times thereafter until April 28, 2000; $37,000,000.00 as of April 29, 2000 and at all times thereafter until June 30, 2000; $37,500,000.00 as of July 1, 2000 and at all times thereafter until August 25, 2000; $37,000,000.00 as of August 26, 2000 and at all times thereafter until September 29, 2000; $36,500,000.00 as of September 30, 2000 and at all times thereafter until October 27, 2000; $37,250,000.00 as of October 28, 2000 and at all times thereafter until November 24, 2000; $38,000,000.00 as of November 25, 2000 and at all times thereafter until December 29, 2000; and $39,500,000.00 as of December 30, 2000 and at all times thereafter. 13.2. INDEBTEDNESS TO TANGIBLE NET WORTH RATIO. Borrower will maintain a ratio of Indebtedness (excluding any Subordinated Indebtedness) to Tangible Net Worth of not more than the following ratios for the following periods. Maximum Permitted Ratio Periods - ----------------------- ------- 1.08 to 1.0 as of January 29,2000;1.45 to 1.0 as of January 30, 2000 and at all times through February 2, 2001; and 1.15 to 1.0 as of February 3, 2001 and at all times thereafter. 13.3. CAPITAL EXPENDITURES. Borrower will not cause, suffer or permit Borrower's aggregate annual Capital Expenditures to exceed the following amounts for the following periods: Amount Periods ------ ------- $7,000,000.00 for the Fiscal Year ending January, 2000; and $7,500,000.00 for the Fiscal Year ending January, 2001 and for each fiscal year-end thereafter. 5 To the extent that the permitted amount of Capital Expenditures are not used in any one fiscal year, the unused portion not to exceed fifty percent (50%) of permitted Capital Expenditures for such year may be utilized in the following fiscal year. The limitations on permitted Capital Expenditures set forth above shall not apply to Capital Expenditures funded with Warrant Proceeds as permitted under SECTION or to Capital Expenditures made by Borrower to repair or replace items damaged by a casualty loss. 13.4. FIXED CHARGE COVERAGE RATIO. Borrower will maintain a Fixed Charge Coverage Ratio tested quarterly on a rolling four (4) quarters basis of not less than following ratio for the following periods: Ratio Periods ----- ------- 1.10 to 1.0 as of the fiscal quarter ending January 31, 2001 and as of the end of each fiscal quarter end thereafter. 13.5. NET INCOME/NET LOSS. Borrower will maintain a level of Net Income for each fiscal month, commencing with the fiscal month ending March 31, 2000, so that its loss for each such fiscal month is not greater than $1,000,000.00. Compliance with this covenant will be calculated on a month-by-month basis without carrying forward or carrying back any income or loss from any other periods. 13.6. MOST FAVORED LENDER. Borrower agrees promptly to notify Agent of any agreement for borrowed money to which Borrower is a party or under which it is obligated and to provide Agent with a copy of such agreement. If such agreement contains or at any time is amended to contain financial covenants more restrictive than those contained in this SECTION, upon Agent's request, Borrower agrees to amend this Agreement accordingly so that the covenants contained herein are substantially the same as those contained in such other agreements for borrowed money." DELETION OF CERTAIN SECTIONS. SECTIONS 3.7, 6.4 AND 12.24 of the Loan Agreement are hereby deleted and shall be of no further force and effect. NEW STORE LOCATIONS. Borrower agrees that Borrower will not open any new store locations after the date hereof without the prior written consent of Agent which consent may be withheld 6 by Agent at its sole discretion. PERMITTED OUT-OF-FORMULA ADVANCES AND USAGE. Notwithstanding anything contained in the Loan Agreement, the Loan Documents or any other document to the contrary, the Revolving Credit Facility Usage may exceed the formula availability calculated pursuant to SECTIONS 2.1 AND 2.3 of the Loan Agreement by an amount not to exceed (i) $4,500,000.00 for a period commencing on the date hereof and ending on May 15, 2000, (ii) $3,400,000.00 for a period commencing on May 16, 2000 and ending on June 15, 2000, and (iii) $2,500,000.00 for a period commencing on June 16, 2000 and ending on June 30, 2000. On June 30, 2000, all Out-Of-Formula Advances must be repaid in full. In no event shall the outstanding Revolving Credit Facility Usage (including the permitted Out-Of-Formula Advances described above) exceed $35,000,000.00. The provisions in that certain letter agreement among the Borrower, Guarantors, Lender and Agent dated February 11, 2000 regarding permitted Out-Of-Formula Advances is hereby terminated and shall be of no further force or effect. For purposes of this Amendment and the Loan Agreement "Out-Of-Formula Advances" shall be redefined to mean the amount by which the then existing Revolving Credit Facility Usage exceeds the then applicable Borrowing Base. Upon the occurrence of a Default or an Event of Default under the Loan Documents, at the Agent's option, Borrower will repay all Out-Of-Formula Advances. ADDITIONAL GUARANTOR. On or before March 22, 2000 Borrower will comply with and will cause Todaysman.com, Inc., its newly formed Subsidiary to comply with the provisions of SECTION 11.23 of the Loan Agreement regarding the addition of Todaysman.com, Inc. as an additional Guarantor. NEW CAPITAL FUNDS. Borrower has represented to Lender and Agent that Borrower is seeking to raise additional equity funds or subordinated debt financing ("NEW CAPITAL FUNDS") from various sources. Borrower acknowledges and agrees that the issuance of stock in connection with Borrower obtaining new equity, the incurrence of new subordinated indebtedness and matters related to obtaining such New Capital Funds will require the prior written consent of Lender and Agent. Borrower agrees to provide Agent with weekly up-dates regarding its current and future efforts to obtain New Capital Funds and agrees to provide Agent with copies of all material undertakings, commitments or similar proposals or agreements to provide New Capital Funds promptly upon receipt of such items by Borrower, together with a description of how Borrower intends to respond to such proposals, the timetable for such transactions and such information as Agent may reasonably require regarding the source and terms of such New Capital Funds. MORTGAGE. On or before March 22, 2000, Borrower will execute or cause the owner to execute and deliver to Agent for the benefit of the Lenders a mortgage to be recorded by Agent, in form and content acceptable to Agent and Lender, encumbering the premises owned by David Feld located in Moorestown, New Jersey and all improvements thereon and all rents, leases, rights, licenses and approvals related thereto, together with such collateral documents and due diligence 7 items as Agent may require. Such mortgage lien shall be subject only to such prior mortgage liens as may be acceptable to Agent. FINANCIAL PLAN. On or before March 24, 2000, Borrower shall provide to Agent a written financial plan for Borrower's fiscal year 2000, in form and content acceptable to Agent, setting forth the operations, financial condition, balance sheet, cash flows and availability schedules, and any other matter or thing related thereto as requested by Agent. CONSULTANT. Borrower has represented to Lender and Agent that Borrower is in the process of engaging a consultant to assist Borrower in obtaining the New Capital Funds; in preparing, completing and implementing a business plan for fiscal year 2000; and in general business operations. Borrower agrees to provide Agent with weekly updates regarding its efforts to engage such consultant and to provide Agent promptly with background information regarding each proposed consultant. VENDORS AND FACTORS. On or before March 31, 2000, Borrower shall deliver to Agent written evidence, in form and content acceptable to Agent in its sole discretion, that unsecured trade credit lines in amounts and on terms acceptable to Agent in its sole discretion are available to Borrower from its key vendors and factors. FEES. Borrower agrees to pay to Agent (for the benefit of Lender) the fees set forth in that certain fee letter between Borrower and Agent of even date herewith. CONFIRMATION OF COLLATERAL. Nothing contained herein shall be deemed to be a compromise, satisfaction, accord and satisfaction, novation or release of any of the Loan Documents, or any rights or obligations thereunder, or a waiver by Agent or any Lender of any of its rights under the Loan Documents or at law or in equity. All liens, security interest, rights and remedies granted to Agent or Lenders in Loan Documents are hereby ratified, confirmed and continued. CHALLENGE TO ENFORCEMENT. Borrower and Guarantors acknowledge and agree that they do not have any defense, set-off, counterclaim or challenge against the payment of any sums owing under the Loan Documents, or the enforcement of any of the terms or conditions thereof. REPRESENTATION WARRANTIES. Borrower and Guarantors hereby represent and warrant, which representations and warranties shall survive until all Obligations are paid and satisfied in full, as follows: (a) All representations and warranties of Borrower and Guarantors set forth in the Loan Documents are true and complete in all material respects as of the date hereof. Borrower and Guarantors will certify and deliver to Agent revised Schedules to the Loan Documents on or before March 22, 2000 reflecting any new or revised facts or circumstances. Borrower and Guarantors represent and warrant to Lenders that all of such revised facts and circumstances have been previously disclosed to Lenders verbally by Borrower and in no way are 8 likely to result in any Material Adverse Change. (b) Upon the execution of this Amendment, no condition or event exists or has occurred which would constitute an event of default under the Loan Documents or under any other agreement between Borrower, any Guarantor and any other third party (or would, upon the giving of notice or the passage of time, or both constitute an event of default). (c) Borrower has not received any notice of default or event of default from any other lender, trustee or lessor with respect to any other loan, financing or lease agreement. (d) The execution and delivery of this Amendment by Borrower and Guarantors and all documents and agreements to be executed and delivered pursuant to the terms hereof: (1) have been duly authorized by all requisite corporate action by Borrower and by each Guarantor; (2) will not conflict with or result in the breach of or constitute a default (upon the passage of time, delivery of notice or both) under Borrower's or any Guarantor's Articles of Incorporation, By-Laws or any applicable statute, law, rule, regulation or ordinance or any indenture, mortgage, loan or other document or agreement to which Borrower or any Guarantor is a party or by which any of them is bound or affected; and (3) will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Borrower or any Guarantor, except liens in favor of the Agent or as permitted hereunder or under the Loan Documents. (4) DEFAULT. Any default by Borrower or Guarantors of any of the terms, conditions or covenants set forth in this Amendment shall constitute an Event of Default under the Loan Agreement. (5) CONDITIONS. The obligation of Agent and Lender to enter into this Amendment is subject to the following conditions (any of which may be waived by Agent): (6) LOAN DOCUMENTS. Borrower and Guarantors and all other required persons and entities will have executed and 9 delivered to Agent this Amendment and such other documents as Agent may require. (6) REPRESENTATIONS AND WARRANTIES. All representations and warranties of Borrower and Guarantors set forth in the Loan Documents, as amended hereby and as qualified by SECTION 19(A) of this Amendment, will be true at and as of the date hereof. (7) NO DEFAULT. No condition or event shall exist or have occurred which would constitute a Default or an Event of Default hereunder. (8) OTHER DOCUMENTS. Such other documents as may be required to be submitted to Agent by the terms hereof or any of the Loan Documents shall have been delivered by or on behalf of Borrower and Guarantors to Agent. (9) ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Borrower covenants and agrees to execute and deliver to Agent, or to cause to be executed and delivered to Agent contemporaneously herewith, at the sole cost and expense of Borrower, any and all other documents, agreements, statements, resolutions, certificates, consents and information as Agent may require in connection with the matters or actions described herein. Borrower further covenants and agrees to execute and deliver to Agent or to cause to be executed and delivered at the sole cost and expense of Borrower, from time to time, any and all other documents, agreements, statements, certificates and information as Agent shall reasonably request to evidence or effect the terms hereof, the Loan Agreement, as amended, or any of the other Loan Documents, or to enforce or to protect Agent's interest in the Collateral. All such documents, agreements, statements, certificates and information shall be in form and content acceptable to Agent in its sole discretion. (10) CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all of the Agent's expenses in connection with the review, preparation, negotiation, documentation and closing of this Amendment and the consummation of the transactions contemplated hereunder, including without limitation, costs and fees and expenses of counsel retained by Agent and all fees related to filings, recording of documents and searches, whether or not the transactions contemplated hereunder are consummated. Nothing contained herein shall limit in any manner whatsoever any Lender's or Agent's right to reimbursement under any of the Loan Documents. 10 (11) COMMUNICATIONS AND NOTICES. All notices, requests and other communications made or given in connection with this Amendment shall be made in accordance with the provisions of the Loan Agreement. (12) TIME OF ESSENCE. Time is of the essence of this Amendment. (13) NO WAIVER. Except as otherwise provided herein, nothing contained and no actions taken by Agent in connection herewith shall constitute nor shall they be deemed to be a waiver, release or amendment of or to any rights, remedies, or privileges afforded to Agent under the Loan Documents or under the UCC. Nothing herein shall constitute a waiver by Agent of Borrower's or any Guarantor's compliance with the terms of the Loan Documents, nor shall anything contained herein constitute an agreement by Agent to enter into any further amendments with Borrower and Guarantors. (14) INCONSISTENCIES. To the extent of any inconsistencies between the terms and conditions of this Amendment and the terms and conditions of the Loan Documents, the terms and conditions of this Amendment shall prevail. All terms and conditions of the Loan Documents not inconsistent herewith shall remain in full force and effect and are hereby ratified and confirmed by Borrower and Guarantors. (15) BINDING EFFECT. This Amendment and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (16) SEVERABILITY. The provisions of this Amendment and all other Loan Documents are deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect. (17) NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Amendment and the Loan Documents shall not inure to the benefit of any third party. (18) MODIFICATIONS. No modifications of this Amendment or any of the Loan Documents shall be binding or 11 enforceable unless in writing and signed by or on behalf of the party against whom enforcement is sought. (18) HOLIDAYS. If the day provided herein for the payment of any amount or the taking of any action falls on a Saturday, Sunday or public holiday at the place for payment or action, then the due date for such payment or action will be the next succeeding Business Day. (19) LAW GOVERNING. This Amendment has been made, executed and delivered in the Commonwealth of Pennsylvania and will be construed in accordance with and governed by the laws of such Commonwealth, without regard to any rules or principles regarding conflicts of law or any rule or canon of construction which interprets agreements against the draftsman. (20) HEADINGS. The headings of the Articles, Sections, paragraphs and clauses of this Amendment are inserted for convenience only and shall not be deemed to constitute a part of this Amendment. (21) COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in any number of counterparts, all of which taken together constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. Any signature delivered via facsimile shall be deemed an original signature hereto. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending to be legally bound hereby. BORROWER: TODAY'S MAN, INC., a Pennsylvania corporation By: ____________________________________ Frank E. Johnson, Executive Vice President [CORPORATE SEAL] GUARANTORS: BENMOL, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] D & L, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] FELD & FELD, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] TODAYSMAN.COM, INC., a Delaware corporation By: ____________________________________ Frank E. Johnson, President [CORPORATE SEAL] (SIGNATURES CONTINUED ON NEXT PAGE) 13 (SIGNATURES CONTINUED FROM PREVIOUS PAGE) LENDERS: MELLON BANK, N.A. By: ____________________________________ Name/Title: _____________________________ AGENT: MELLON BANK, N.A. By: ____________________________________ Name/Title: _____________________________ 14 EX-10.20 4 FOURTH AMENDMENT AND MODIFICATION FOURTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT THIS FOURTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the "AMENDMENT") is made effective as of May 1, 2000 by and among TODAY'S MAN, INC., a Pennsylvania corporation ("BORROWER"); each of the Subsidiaries of the Borrower identified under the caption "Guarantor" on the signature pages of this Amendment (individually, a "GUARANTOR" and, collectively, the "GUARANTORS"); each of the financial institutions identified under the caption "Lenders" on the signature pages of this Amendment (including without limitation Mellon in such capacity) (individually, a "LENDER" and, collectively, the "LENDERS"); and MELLON BANK, N.A., a national banking association, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "AGENT"). BACKGROUND A. Borrower, Guarantors, Lender and Agent previously entered into a certain Loan and Security Agreement dated December 4, 1998, as amended by (i) that certain First Amendment and Modification to Loan and Security Agreement dated April 28, 1999, (ii) that certain Second Amendment and Modification to Loan and Security Agreement dated October 13, 1999, and (iii) that certain Third Amendment and Modification to Loan and Security Agreement dated March 15, 2000(the "THIRD AMENDMENT") (collectively, the "LOAN AGREEMENT"), pursuant to which, INTER ALIA, Lender agreed to extend to Borrower a revolving credit facility up to a maximum outstanding principal amount of Thirty-Five Million Dollars ($35,000,000.00). B. Borrowers, Guarantors, Lender and Agent are entering into this Amendment to amend certain terms and conditions of the Loan Agreement. C. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Loan Agreement. NOW, THEREFORE, in consideration of the foregoing premises and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. SECTION 1.1 of the Loan Agreement shall be and is hereby amended to add the following additional definition: "TMCI means Todaysman.com Inc., a Delaware corporation." 2. ELIGIBLE LANDED INVENTORY. The term "ELIGIBLE LANDED INVENTORY" as defined in SECTION 1.1 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "ELIGIBLE LANDED INVENTORY means Borrower's and TMCI's inventory consisting of first quality finished goods held for sale in the ordinary course of Borrower's and TMCI's business, that are located at or in-transit between an Eligible Inventory Location, that strictly comply with each and all of the representations and warranties respecting inventory made by Borrower and TMCI in the Loan Documents, and that are and at all times continue to be acceptable to the Agent in all respects; PROVIDED, HOWEVER, that standards of eligibility may be fixed and revised from time to time by Agent on behalf of the Lender Group in its discretion. An item of inventory shall not be included in Eligible Landed Inventory if: (A) it is held by Borrower or TMCI on consignment, is not owned solely by Borrower or TMCI, as applicable, or Borrower or TMCI, as applicable, does not have good, valid, and marketable title thereto; (B) it is not located at an Eligible Inventory Location, or in-transit between two (2) Eligible Inventory Locations; (C) it is not (i) located on property owned or leased by Borrower or TMCI, or (ii) in a contract warehouse, in each case, segregated or otherwise separately identifiable from goods of others, if any, stored on the premises; (D) it is not subject to a valid and perfected first priority security interest in favor of the Agent on behalf of the Lender Group; (E) it consists of damaged goods or goods classified as "return to vendor"; (F) it is obsolete, a restricted or custom item, or constitutes stores, packaging and shipping materials or supplies used or consumed in Borrower's or TMCI's business; (G) it is subject to a Lien in favor of any third Person; (H) it consists of bill-and-hold goods; 2 (I) it consists of goods classified as "seconds," or goods acquired on consignment; (J) it is slow-moving, as determined by Agent based in the reasonable judgment of Agent; (K) it consists of raw materials; (L) it consists of work-in-process; (M) it consists of finished goods which do not meet the specifications of the purchase order for which they were manufactured; (N) it consists of goods produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision in Title 29 U.S.C. Section 215(a); or (O) it consists of goods for which Agent would need a license, permit or consent to sell or dispose of. For the purposes of determining Eligible Landed Inventory, there shall be a reduction for outstanding gift certificates valued at cost and shrinkage and unreconcilable variances, if any, between the general ledger and the monthly inventory ledger. Such reduction shall be separately accounted for by Borrower and TMCI." 3. APPRAISED INVENTORY LIQUIDATION VALUE. The term "APPRAISED INVENTORY LIQUIDATION VALUE" as defined in SECTION 1.1 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "APPRAISED INVENTORY LIQUIDATION VALUE" means the appraised liquidation value of Borrower's or TMCI's inventory, as applicable (based on the most recent appraisal obtained by Agent, such appraisal by appraisers, and performed at the times, specified in SECTION 11.19)." 4. BORROWING BASE. SECTION 2.3 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "2.3. BORROWING BASE. The "BORROWING BASE" as of the applicable date of determination shall be determined based upon the following advance rates and calculations: 3 (I) An advance rate of up to 85% of Borrower's and TMCI's Eligible Credit Card Accounts; PLUS (II) An advance rate of up to the lesser of (i) 65% of the Value of Borrower's Eligible Landed Inventory, or (ii) 85% of the Appraised Inventory Liquidation Value of Borrower's Eligible Landed Inventory; PLUS (III) An advance rate of up to the lesser of (i) 65% of the Value of TMCI's Eligible Landed Inventory, or (ii) 85% of the Appraised Inventory Liquidation Value of TMCI's Eligible Landed Inventory; PLUS (IV) An advance rate of up to 65% of the Value of Borrower's Eligible In-Transit Inventory; PLUS (V) An advance rate of up to 65% of the outstanding, undrawn amount of Merchandise Letters of Credit issued by Agent in connection with the purchase by Borrower of finished goods inventory or cut, make and trim inventory (but not in connection with the purchase of raw materials); MINUS (VI) All Reserves." 5. COLLATERAL. Borrower and Guarantors agree that the term "Collateral" as defined in SECTION 8.5 of the Loan Agreement shall mean the collateral described in SECTION 8.1, 8.2 AND 8.3 of the Loan Agreement and the "Collateral" pledged to Agent by TMCI as defined in that certain Security Agreement from TMCI in favor of Agent dated March 22, 2000 (the "SECURITY AGREEMENT). Borrower and Guarantors agree that any and all references to "Collateral" in the Loan Agreement shall include the "Collateral" as defined in the Security Agreement. 6. COLLECTION OF ACCOUNTS; PROCEEDS OF COLLATERAL. (A) COLLECTION. TMCI will collect its accounts only in the ordinary course of its business. (B) PROCEEDS. TMCI agrees that any proceeds of the Collateral shall be paid, held and/or applied in the same manner and extent as monies received by Borrower which are proceeds of the Collateral in accordance with SECTIONS 8.6(A) THROUGH 8.6(G) of the Loan Agreement. 4 (C) POWER OF ATTORNEY. Agent (and Agent's officers, employees and agents) are granted a power of attorney by TMCI with full power of substitution to execute on behalf of Borrower and in TMCI's name or to endorse TMCI's name on any check, draft, instrument, note or other item of payment or to take any other action or sign any document in order to effectuate the foregoing. Such power of attorney being coupled with an interest is irrevocable. 7. INVENTORY LOCATIONS. SECTION 9.27 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "9.27 INVENTORY LOCATIONS. (A) ALL INVENTORY. All of Borrower's and TMCI's inventory in the United States is currently located at or in transit between one of the locations set forth on SCHEDULE 9.27(A). SCHEDULE 9.27(A) sets forth the street address and the name of the owner/lessor/warehouseman, as applicable, for such location. (B) ELIGIBLE INVENTORY LOCATIONS. SCHEDULE 9.27(B) sets forth all Eligible Inventory Locations of Borrower and TMCI. Each Eligible Inventory Location is and will be owned by Borrower or TMCI, as applicable, or leased by Borrower or TMCI, as applicable, or is or will be a contract public warehouse. (C) ADDITIONS TO ELIGIBLE INVENTORY LOCATIONS. Borrower and TMCI and Agent may modify SCHEDULE 9.27(B) to add new Eligible Inventory Locations by executing a written amendment to this Agreement in form and content acceptable to Agent, PROVIDED THAT Borrower and TMCI comply with all of the following conditions: (I) Borrower or TMCI, as applicable, executes and delivers to Agent such UCC-1 financing statements covering all inventory and related assets of Borrower or TMCI, as applicable, to be located at such new location(s) as may be required by Agent to perfect Agent's Lien in such inventory and related assets. (II) Agent receives written confirmation that such new UCC-1 financing statements have been filed in the appropriate offices required to perfect Agent's Lien (for the pro rata benefit of the Lenders) at such new location(s). 5 (III) Agent receives a search report from a reputable search company confirming that there are no other Liens encumbering any of Borrower's or TMCI's assets at such new location(s), except the Lien in favor of Agent (for the pro rata benefit of the Lenders). (IV) Agent receives a copy of the lease, sub-lease, warehouse agreement or similar agreement entered into by Borrower or TMCI, as applicable, with the owner, lessor or operator of the new location(s). (V) Agent receives evidence satisfactory to Agent that all assets of Borrower or TMCI, as applicable, at such new location(s) are covered by the insurance coverage required under SECTION 11.6(A). (VI) Borrower or TMCI uses its best efforts to provide to Agent (for the pro rata benefit of Lenders) a Mortgage securing the Obligations and encumbering Borrower's of TMCI's leasehold interest in such new location, together with a Landlord's Consent from the owner/lessor, title insurance, evidence of compliance with applicable environmental laws, evidence of insurance coverage, flood zone certifications and such other items as Agent may require, all of which must be in form, content and amount (if applicable) acceptable to Agent. (VII) Agent receives a Collateral Access Agreement from the owner/lessor of the new location in form and content acceptable to Agent." 8. CREDIT CARDS. SECTION 9.32 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "9.32. CREDIT CARDS. SCHEDULE 9.32 sets forth an accurate and complete list of all agreements between Borrower or TMCI and any issuers of credit cards or credit card processors and all amendments and modifications thereto (collectively, the "CREDIT CARD AGREEMENTS"). Borrower and TMCI are not in default of any of their obligations under the Credit Card Agreements." 9. INVENTORY APPRAISALS. SECTION 11.19 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: 6 "11.19. INVENTORY APPRAISALS. Borrower and TMCI, at Borrower's sole cost and expense, will provide to Agent a new current appraisal of Borrower's and TMCI's inventory based upon an appraised liquidation value acceptable to Agent and in form and content acceptable to Agent, on or before March 31, 2000 and annually thereafter on or before March 31st of each calendar year." 10. CREDIT CARD COVENANTS. SECTION 11.25 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "11.25. CREDIT CARDS. Borrower and TMCI will (a) comply in all material respects with the terms and conditions of the Credit Card Agreements, (b) submit all credit card charges resulting from the sale of inventory by Borrower or TMCI to the issuing credit card company or the credit card processor, (c) request that the issuing credit card company or credit card processor remit payment for the credit card charges submitted by Borrower or TMCI by ACH remittance to the Cash Collateral Account as soon as possible under the terms of the Credit Card Agreements after such credit card charges are submitted for processing by Borrower or TMCI, and comply with all requirements and conditions in the Credit Card Agreements to enable such remittances to be made within such time period, and (d) not take any actions which will increase any full recourse or charge back liabilities of Borrower or TMCI under the Credit Card Agreements." 11. BORROWING BASE CERTIFICATIONS AND RELATED DOCUMENTS. SECTION 14.5 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "14.5. BORROWING BASE CERTIFICATIONS AND RELATED DOCUMENTS. At least once every calendar week and otherwise as requested by Agent, a Borrowing Base Certificate in the form of EXHIBIT H attached hereto together with such additional information as may be requested by Agent, certified as to accuracy by the chief financial officer, controller, director of corporate reporting, or president of Borrower and TMCI." 12. INVENTORY BORROWING BASE INFORMATION AND RELATED DOCUMENTS. SECTION 14.7 of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: "14.7. INVENTORY BORROWING BASE INFORMATION AND RELATED DOCUMENTS. At least once every calendar week and otherwise as requested by Agent, an inventory certification in the form of 7 EXHIBIT I attached hereto, together with such additional information and details as may be requested by Agent, including without limitation identification of all Eligible Inventory and identification of ineligible items including gift certificates, shrinkage and unreconcilable variances, all certified as to accuracy by the chief financial officer, controller, director of corporate reporting, or president of Borrower and TMCI." 13. OTHER AGREEMENTS. (A) TMCI agrees to join in and be bound by the grant of a first priority security interest in the assets of TMCI as set forth in SECTION 8.1 of the Loan Agreement. (B) TMCI agrees acknowledges and confirms all representations and warranties made by Guarantor under the Loan Documents, including without limitation, TMCI acknowledges and confirms that the Eligible Inventory Warranties made by Borrower in SECTION 9.19 of the Loan Agreement shall be deemed to be representations and warranties made by TMCI with respect to the Collateral pledged by TMCI to Agent under the Security Agreement. (C) TMCI agrees to join in and be bound by all covenants and agreements applicable to a Guarantor under SECTIONS 11 AND 12 of the Loan Agreement. (D) TMCI agrees to be subject to all remedies exercisable by Agent or any Lender under SECTION 17.2 of the Loan Agreement. (E) TMCI agrees to join in and be bound by all waivers made by Borrower and Guarantors under the Loan Agreement, including without limitation, the waivers set forth in SECTIONS 19.2, 19.3, 24.17 AND 24.18 of the Loan Agreement. (F) TMCI agrees that if Borrower ceases to own directly or indirectly through a Subsidiary who is a Guarantor, 100% of the ownership interests in or assets of TMCI, the occurrence of such event shall constitute an Event of Default under the Loan Agreement and Agent and Lender may exercise any rights or remedies available to Agent or Lender under the Loan Documents, at law or in equity. 14. CONFIRMATION OF COLLATERAL. Nothing contained herein shall be deemed to be a compromise, satisfaction, accord and satisfaction, novation or release of any of the Loan Documents, or any rights or obligations thereunder, or a waiver by Agent or any Lender of any of its rights under the Loan Documents or at law or in equity. All liens, security interest, rights and remedies granted to Agent or Lenders in Loan Documents are hereby ratified, confirmed and continued. Borrowers and Guarantors acknowledge and agree that the term "Loan Documents" as used in the Loan Agreement and any other documents executed in connection therewith shall 8 include, without limitation, this Amendment, the Third Amendment and any and all other documents executed in connection therewith. 15. CHALLENGE TO ENFORCEMENT. Borrower and Guarantors acknowledge and agree that they do not have any defense, set-off, counterclaim or challenge against the payment of any sums owing under the Loan Documents, or the enforcement of any of the terms or conditions thereof. 16. REPRESENTATION WARRANTIES. Borrower and Guarantors (including TMCI) hereby represent and warrant, which representations and warranties shall survive until all Obligations are paid and satisfied in full, as follows: (A) All representations and warranties of Borrower and Guarantors set forth in the Loan Documents are true and complete in all material respects as of the date hereof. Borrower and Guarantors will certify and deliver to Agent revised Schedules to the Loan Documents on or before May 5, 2000 reflecting any new or revised facts or circumstances. Borrower and Guarantors represent and warrant to Lenders that all of such revised facts and circumstances have been previously disclosed to Lenders verbally by Borrower and in no way are likely to result in any Material Adverse Change. (B) Upon the execution of this Amendment, no condition or event exists or has occurred which would constitute an event of default under the Loan Documents or under any other agreement between Borrower, any Guarantor and any other third party (or would, upon the giving of notice or the passage of time, or both constitute an event of default). (C) Borrower has not received any notice of default or event of default from any other lender, trustee or lessor with respect to any other loan, financing or lease agreement. (D) The execution and delivery of this Amendment by Borrower and Guarantors and all documents and agreements to be executed and delivered pursuant to the terms hereof: (I) have been duly authorized by all requisite corporate action by Borrower and by each Guarantor; (II) will not conflict with or result in the breach of or constitute a default (upon the passage of time, delivery of notice or both) under Borrower's or any Guarantor's Articles of Incorporation, By-Laws or any applicable statute, law, rule, regulation or ordinance or any indenture, mortgage, loan or other document or agreement to which Borrower or any Guarantor is a party or by which any of them is bound or affected; and (III) will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Borrower or any 9 Guarantor, except liens in favor of the Agent or as permitted hereunder or under the Loan Documents. 17. CONDITIONS. The obligation of Agent and Lender to enter into this Amendment is subject to the following conditions (any of which may be waived by Agent): (A) LOAN DOCUMENTS. Borrower and Guarantors and all other required persons and entities will have executed and delivered to Agent this Amendment and such other documents as Agent may require. (B) REPRESENTATIONS AND WARRANTIES. All representations and warranties of Borrower and Guarantors set forth in the Loan Documents, as amended hereby and as qualified by SECTION 16(A) of this Amendment, will be true at and as of the date hereof. (C) NO DEFAULT. No condition or event shall exist or have occurred which would constitute a Default or an Event of Default hereunder. (D) OTHER DOCUMENTS. Such other documents as may be required to be submitted to Agent by the terms hereof or any of the Loan Documents shall have been delivered by or on behalf of Borrower and Guarantors to Agent. 18. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Borrower covenants and agrees to execute and deliver to Agent, or to cause to be executed and delivered to Agent contemporaneously herewith, at the sole cost and expense of Borrower, any and all other documents, agreements, statements, resolutions, certificates, consents and information as Agent may require in connection with the matters or actions described herein. Borrower further covenants and agrees to execute and deliver to Agent or to cause to be executed and delivered at the sole cost and expense of Borrower, from time to time, any and all other documents, agreements, statements, certificates and information as Agent shall reasonably request to evidence or effect the terms hereof, the Loan Agreement, as amended, or any of the other Loan Documents, or to enforce or to protect Agent's interest in the Collateral. All such documents, agreements, statements, certificates and information shall be in form and content acceptable to Agent in its sole discretion. 19. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all of the Agent's expenses in connection with the review, preparation, negotiation, documentation and closing of this Amendment and the consummation of the transactions contemplated hereunder, including without limitation, costs and fees and expenses of counsel retained by Agent and all fees related to filings, recording of documents and searches, whether or not the transactions contemplated hereunder are consummated. Nothing contained herein shall limit in any manner whatsoever any Lender's or Agent's right to reimbursement under any of the Loan Documents. 10 20. COMMUNICATIONS AND NOTICES. All notices, requests and other communications made or given in connection with this Amendment shall be made in accordance with the provisions of the Loan Agreement. 21. TIME OF ESSENCE. Time is of the essence of this Amendment. 22. NO WAIVER. Except as otherwise provided herein, nothing contained and no actions taken by Agent in connection herewith shall constitute nor shall they be deemed to be a waiver, release or amendment of or to any rights, remedies, or privileges afforded to Agent under the Loan Documents or under the UCC. Nothing herein shall constitute a waiver by Agent of Borrower's or any Guarantor's compliance with the terms of the Loan Documents, nor shall anything contained herein constitute an agreement by Agent to enter into any further amendments with Borrower and Guarantors. 23. INCONSISTENCIES. To the extent of any inconsistencies between the terms and conditions of this Amendment and the terms and conditions of the Loan Documents, the terms and conditions of this Amendment shall prevail. All terms and conditions of the Loan Documents not inconsistent herewith shall remain in full force and effect and are hereby ratified and confirmed by Borrower and Guarantors. 24. BINDING EFFECT. This Amendment and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns. 25. SEVERABILITY. The provisions of this Amendment and all other Loan Documents are deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect. 26. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Amendment and the Loan Documents shall not inure to the benefit of any third party. 27. MODIFICATIONS. No modifications of this Amendment or any of the Loan Documents shall be binding or enforceable unless in writing and signed by or on behalf of the party against whom enforcement is sought. 28. HOLIDAYS. If the day provided herein for the payment of any amount or the taking of any action falls on a Saturday, Sunday or public holiday at the place for payment or action, then the due date for such payment or action will be the next succeeding Business Day. 29. LAW GOVERNING. This Amendment has been made, executed and delivered in the Commonwealth of Pennsylvania and will be construed in accordance with and governed by the laws of such Commonwealth, without regard to any rules or principles regarding conflicts of law or any rule or canon of construction which interprets agreements against the draftsman. 11 30. HEADINGS. The headings of the Articles, Sections, paragraphs and clauses of this Amendment are inserted for convenience only and shall not be deemed to constitute a part of this Amendment. 31. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in any number of counterparts, all of which taken together constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. Any signature delivered via facsimile shall be deemed an original signature hereto. 32. JOINT AND SEVERAL. The obligations of Borrower and Guarantors under this Amendment shall be joint and several obligations. 33. WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER, GUARANTORS AND THE LENDER GROUP WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AMENDMENT, (B) ARISING UNDER ANY OF THE OTHER LOAN DOCUMENTS OR (C) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER, GUARANTORS OR ANY MEMBER OF THE LENDER GROUP WITH RESPECT TO THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER, GUARANTORS AND THE LENDER GROUP AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER, GUARANTORS AND THE LENDER GROUP TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWER AND GUARANTORS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending to be legally bound hereby. BORROWER: TODAY'S MAN, INC., a Pennsylvania corporation [CORPORATE SEAL] By: ------------------------------------- Frank E. Johnson, Executive Vice President GUARANTORS: BENMOL, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Frank E. Johnson, President D & L, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Frank E. Johnson, President FELD & FELD, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Frank E. Johnson, President TODAYSMAN.COM INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Frank E. Johnson, President (SIGNATURES CONTINUED ON NEXT PAGE) 13 (SIGNATURES CONTINUED FROM PREVIOUS PAGE) LENDERS: MELLON BANK, N.A. By: ------------------------------------- Name/Title: ------------------------------------- AGENT: MELLON BANK, N.A. By: ------------------------------------- Name/Title: ------------------------------------- 14 EX-10.21 5 FIFTH AMENDMENT AND MODIFICATION FIFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT THIS FIFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the "AMENDMENT") is made effective as of May 11, 2000 by and among TODAY'S MAN, INC., a Pennsylvania corporation ("BORROWER"); each of the Subsidiaries of the Borrower identified under the caption "Guarantor" on the signature pages of this Amendment (individually, a "GUARANTOR" and, collectively, the "GUARANTORS"); each of the financial institutions identified under the caption "Lenders" on the signature pages of this Amendment (including without limitation Mellon in such capacity) (individually, a "LENDER" and, collectively, the "LENDERS"); and MELLON BANK, N.A., a national banking association, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "AGENT"). BACKGROUND A. Borrower, Guarantors, Lender and Agent previously entered into a certain Loan and Security Agreement dated December 4, 1998, as amended by (i) that certain First Amendment and Modification to Loan and Security Agreement dated April 28, 1999, (ii) that certain Second Amendment and Modification to Loan and Security Agreement dated October 13, 1999, (iii) that certain Third Amendment and Modification to Loan and Security Agreement dated March 15, 2000 (the "THIRD AMENDMENT"), and (iv) that certain Fourth Amendment and Modification to Loan and Security Agreement dated May 1, 2000 (collectively, the "LOAN AGREEMENT"), pursuant to which, INTER ALIA, Lender agreed to extend to Borrower a revolving credit facility up to a maximum outstanding principal amount of Thirty-Five Million Dollars ($35,000,000.00). B. Borrowers, Guarantors, Lender and Agent are entering into this Amendment to amend certain terms and conditions of the Loan Agreement. C. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Loan Agreement. NOW, THEREFORE, in consideration of the foregoing premises and intending to be legally bound hereby, the parties hereto agree as follows: 1. TANGIBLE NET WORTH. SECTION 13.1 of the Loan Agreement shall be and is hereby amended to read in its entirety as follows: "13.1. TANGIBLE NET WORTH. Borrower will maintain Tangible Net Worth of not less than the following amounts for the following periods: AMOUNT PERIODS ------ ------- $48,809,000.00 as of November 30, 1999 and at all times thereafter until January 28, 2000; $39,340,000.00 as of January 29, 2000; $36,500,000.00 as of January 30, 2000 and at all times thereafter until April 28, 2000; $33,000,000.00 as of April 29, 2000 and at all times thereafter until May 30, 2000; $34,000,000.00 as of May 31, 2000 and at all times thereafter until June 30, 2000; $35,500,000.00 as of July 1, 2000 and at all times thereafter until August 25, 2000; $34,800,000.00 as of August 26, 2000 and at all times thereafter until September 29, 2000; $34,000,000.00 as of September 30, 2000 and at all times thereafter until October 27, 2000; $35,250,000.00 as of October 28, 2000 and at all times thereafter until November 24, 2000; $35,000,000.00 as of November 25, 2000 and at all times thereafter until December 29, 2000; and $38,000,000.00 as of December 30, 2000 and at all times thereafter." 2. NET INCOME/NET LOSS. Agent agrees to waive Borrower's compliance with the Net Income/Net Loss covenant set forth in SECTION 13.5 of the Loan Agreement for the fiscal month ending April 29, 2000. Such waiver shall be limited to Borrower's compliance with the Net Income/Net Loss covenant solely for the fiscal month ending April 29, 2000 and for no other period and such waiver shall not be construed to constitute a waiver of Borrower's or any Guarantor's compliance with any other terms of the Loan Documents or an agreement to enter into any future waivers with Borrower or any Guarantor. 3. EXTENSION OF PERMITTED OUT-OF-FORMULA ADVANCES AND USAGE. Notwithstanding anything to the contrary contained in the Loan Agreement (including the terms of SECTION 9 of the Third Amendment), Borrower may continue to exceed the formula availability calculated pursuant to SECTIONS 2.1 AND 2.3 of the Loan Agreement by an amount not to exceed (i) $2,500,000.00 for a period commencing on June 30, 2000 and ending on August 15, 2000, (ii) $2,250,000.00 for a period commencing on August 16, 2000 and ending on September 15, 2000, (iii) $1,250,000.00 for a period commencing on September 16, 2000 and ending on October 15, 2000, and (iv) $1,000,000.00 for a period commencing on October 16, 2000 and ending on November 30, 2000. On November 30, 2000, all Out-Of-Formula Advances must be repaid in full. In no event shall the outstanding Revolving Credit Facility Usage (including the permitted Out-Of-Formula 2 Advances described above) exceed $35,000,000.00. For purposes of this Amendment and the Loan Agreement "Out-Of-Formula Advances" shall be redefined to mean the amount by which the then existing Revolving Credit Facility Usage exceeds the then applicable Borrowing Base. Upon the occurrence of a Default or an Event of Default under the Loan Documents, at the Agent's option, Borrower will repay all Out-Of-Formula Advances. 4. TERMINATION FEE. Notwithstanding anything to the contrary set forth in SECTION 7.10 of the Loan Agreement, in the event that the Revolving Credit Facility is terminated on or before March 14, 2002 the termination fee payable by Borrower will be to equal $1,050,000. 5. MAXIMUM REVOLVING CREDIT FACILITY AMOUNT. Effective November 30, 2000, the Maximum Revolving Credit Facility Amount will be reduced and reset at $30,000,000. Accordingly, effective on November 30, 2000, the definition of "Maximum Revolving Credit Facility" in SECTION 1.1 of the Loan Agreement is amended in its entirety to read as follows: "MAXIMUM REVOLVING CREDIT FACILITY AMOUNT means $30,000,000." Borrower agrees to execute and deliver to Agent on or before November 30, 2000 replacement Notes in the aggregate amount of the revised Maximum Revolving Credit Facility Amount, which replacement Notes are given in substitution and replacement for the existing Notes and not in payment or satisfaction of such existing Notes. Such replacement Notes shall be in form and content acceptable to Agent. All references to Notes in the Loan Documents shall be deemed to be references to the replacement Notes. Upon receipt of the original signed replacement Notes by the Lenders, the Lenders will return to Borrower the prior Notes marked "Replaced" or "Substituted". 6. MAINTENANCE OF MINIMUM BORROWINGS. At all times, Borrower shall maintain an aggregate outstanding balance under the Revolving Credit Facility of at least Ten Million Dollars ($10,000,000.00). If such balance is not maintained during any month, Borrower will pay to Agent (for the benefit of Lenders) a fee equal to the difference between (a) the interest that would have accrued on the Revolving Credit Facility if the balance had been Ten Million Dollars ($10,000,000.00) at all times during such month, and (b) the interest accrued on the actual balance of the Revolving Credit Facility during such month. 7. NEW CAPITAL FUNDS. Borrower has represented to Lender and Agent that Borrower is seeking to raise additional equity funds or subordinated debt financing ("NEW CAPITAL FUNDS") from various sources. Borrower acknowledges and agrees that the issuance of stock in connection with Borrower obtaining new equity, the incurrence of new subordinated indebtedness and matters related to obtaining such New Capital Funds will require the prior written consent of Lender and Agent. Borrower agrees to provide Agent with weekly up-dates regarding its current and future efforts to obtain New Capital Funds and agrees to provide Agent with copies of all material 3 undertakings, commitments or similar proposals or agreements to provide New Capital Funds promptly upon receipt of such items by Borrower, together with a description of how Borrower intends to respond to such proposals, the timetable for such transactions and such information as Agent may reasonably require regarding the source and terms of such New Capital Funds. 8. BUSINESS PLAN. Borrower has represented to Lender and Agent that Borrower will continue to perform its business and operations consistent with the business plan of Borrower previously delivered to Agent by Borrower. 9. CONSULTANT. Borrower has represented to Lender and Agent that on or before May 31, 2000, Borrower will engage a consultant to assist Borrower in obtaining the New Capital Funds; in preparing, completing and implementing general business strategies; implementing the business plan; and in general business operations. Borrower agrees to provide Agent with weekly updates regarding its efforts to engage such consultant and to provide Agent promptly with background information regarding each proposed consultant. 10. FEES. Borrower agrees to pay to Agent (for the benefit of Lender) the fees set forth in that certain fee letter between Borrower and Agent of even date herewith. 11. CONFIRMATION OF COLLATERAL. Nothing contained herein shall be deemed to be a compromise, satisfaction, accord and satisfaction, novation or release of any of the Loan Documents, or any rights or obligations thereunder, or a waiver by Agent or any Lender of any of its rights under the Loan Documents or at law or in equity. All liens, security interest, rights and remedies granted to Agent or Lenders in Loan Documents are hereby ratified, confirmed and continued. Borrowers and Guarantors acknowledge and agree that the term "Loan Documents" as used in the Loan Agreement and any other documents executed in connection therewith shall include, without limitation, this Amendment and any and all other documents executed in connection herewith. 12. CHALLENGE TO ENFORCEMENT. Borrower and Guarantors acknowledge and agree that they do not have any defense, set-off, counterclaim or challenge against the payment of any sums owing under the Loan Documents, or the enforcement of any of the terms or conditions thereof. 13. REPRESENTATION WARRANTIES. Borrower and Guarantors hereby represent and warrant, which representations and warranties shall survive until all Obligations are paid and satisfied in full, as follows: (A) All representations and warranties of Borrower and Guarantors set forth in the Loan Documents are true and complete in all material respects as of the date hereof. (B) Upon the execution of this Amendment, no condition or event exists or has occurred which would constitute an event of default under the Loan Documents or under any 4 other agreement between Borrower, any Guarantor and any other third party (or would, upon the giving of notice or the passage of time, or both constitute an event of default). (C) Borrower has not received any notice of default or event of default from any other lender, trustee or lessor with respect to any other loan, financing or lease agreement. (D) The execution and delivery of this Amendment by Borrower and Guarantors and all documents and agreements to be executed and delivered pursuant to the terms hereof: (I) have been duly authorized by all requisite corporate action by Borrower and by each Guarantor; (II) will not conflict with or result in the breach of or constitute a default (upon the passage of time, delivery of notice or both) under Borrower's or any Guarantor's Articles of Incorporation, By-Laws or any applicable statute, law, rule, regulation or ordinance or any indenture, mortgage, loan or other document or agreement to which Borrower or any Guarantor is a party or by which any of them is bound or affected; and (III) will not result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Borrower or any Guarantor, except liens in favor of the Agent or as permitted hereunder or under the Loan Documents. 14. CONDITIONS. The obligation of Agent and Lender to enter into this Amendment is subject to the following conditions (any of which may be waived by Agent): (A) LOAN DOCUMENTS. Borrower and Guarantors and all other required persons and entities will have executed and delivered to Agent this Amendment and such other documents as Agent may require. (B) REPRESENTATIONS AND WARRANTIES. All representations and warranties of Borrower and Guarantors set forth in the Loan Documents are true at and as of the date hereof. (C) NO DEFAULT. No condition or event shall exist or have occurred which would constitute a Default or an Event of Default hereunder. (D) FEE LETTER. Borrower will execute and deliver to Agent that certain fee letter dated May 11, 2000. (D) SIDE LETTER. Borrower, Guarantors and David Feld will execute and deliver to Agent that certain side letter between dated May 11, 2000. 5 (E) OTHER DOCUMENTS. Such other documents as may be required to be submitted to Agent by the terms hereof or any of the Loan Documents shall have been delivered by or on behalf of Borrower and Guarantors to Agent. 15. ADDITIONAL DOCUMENTS; FURTHER ASSURANCES. Borrower covenants and agrees to execute and deliver to Agent, or to cause to be executed and delivered to Agent contemporaneously herewith, at the sole cost and expense of Borrower, any and all other documents, agreements, statements, resolutions, certificates, consents and information as Agent may require in connection with the matters or actions described herein. Borrower further covenants and agrees to execute and deliver to Agent or to cause to be executed and delivered at the sole cost and expense of Borrower, from time to time, any and all other documents, agreements, statements, certificates and information as Agent shall reasonably request to evidence or effect the terms hereof, the Loan Agreement, as amended, or any of the other Loan Documents, or to enforce or to protect Agent's interest in the Collateral. All such documents, agreements, statements, certificates and information shall be in form and content acceptable to Agent in its sole discretion. 16. CERTAIN FEES, COSTS, EXPENSES AND EXPENDITURES. Borrower will pay all of the Agent's expenses in connection with the review, preparation, negotiation, documentation and closing of this Amendment and the consummation of the transactions contemplated hereunder, including without limitation, costs and fees and expenses of counsel retained by Agent and all fees related to filings, recording of documents and searches, whether or not the transactions contemplated hereunder are consummated. Nothing contained herein shall limit in any manner whatsoever any Lender's or Agent's right to reimbursement under any of the Loan Documents. 17. COMMUNICATIONS AND NOTICES. All notices, requests and other communications made or given in connection with this Amendment shall be made in accordance with the provisions of the Loan Agreement. 18. TIME OF ESSENCE. Time is of the essence of this Amendment. 19. NO WAIVER. Except as otherwise provided herein, nothing contained and no actions taken by Agent in connection herewith shall constitute nor shall they be deemed to be a waiver, release or amendment of or to any rights, remedies, or privileges afforded to Agent under the Loan Documents or under the UCC. Nothing herein shall constitute a waiver by Agent of Borrower's or any Guarantor's compliance with the terms of the Loan Documents, nor shall anything contained herein constitute an agreement by Agent to enter into any further amendments with Borrower and Guarantors. 20. INCONSISTENCIES. To the extent of any inconsistencies between the terms and conditions of this Amendment and the terms and conditions of the Loan Documents, the terms and conditions of this Amendment shall prevail. All terms and conditions of the Loan Documents not inconsistent herewith shall remain in full force and effect and are hereby ratified and confirmed by Borrower and Guarantors. 6 21. BINDING EFFECT. This Amendment and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns. 22. SEVERABILITY. The provisions of this Amendment and all other Loan Documents are deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force and effect. 23. NO THIRD PARTY BENEFICIARIES. The rights and benefits of this Amendment and the Loan Documents shall not inure to the benefit of any third party. 24. MODIFICATIONS. No modifications of this Amendment or any of the Loan Documents shall be binding or enforceable unless in writing and signed by or on behalf of the party against whom enforcement is sought. 25. HOLIDAYS. If the day provided herein for the payment of any amount or the taking of any action falls on a Saturday, Sunday or public holiday at the place for payment or action, then the due date for such payment or action will be the next succeeding Business Day. 26. LAW GOVERNING. This Amendment has been made, executed and delivered in the Commonwealth of Pennsylvania and will be construed in accordance with and governed by the laws of such Commonwealth, without regard to any rules or principles regarding conflicts of law or any rule or canon of construction which interprets agreements against the draftsman. 27. HEADINGS. The headings of the Articles, Sections, paragraphs and clauses of this Amendment are inserted for convenience only and shall not be deemed to constitute a part of this Amendment. 28. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment may be executed in any number of counterparts, all of which taken together constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. Any signature delivered via facsimile shall be deemed an original signature hereto. 29. JOINT AND SEVERAL. The obligations of Borrower and Guarantors under this Amendment shall be joint and several obligations. 30. WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER, GUARANTORS AND THE LENDER GROUP WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AMENDMENT, (B) ARISING UNDER ANY OF THE OTHER LOAN DOCUMENTS OR (C) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER, GUARANTORS OR ANY MEMBER OF THE LENDER GROUP WITH 7 RESPECT TO THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER, GUARANTORS AND THE LENDER GROUP AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AMENDMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER, GUARANTORS AND THE LENDER GROUP TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWER AND GUARANTORS ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending to be legally bound hereby. BORROWER: TODAY'S MAN, INC., a Pennsylvania corporation [CORPORATE SEAL] By: ------------------------------------- Name/Title: ----------------------------- GUARANTORS: BENMOL, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Name/Title: ----------------------------- D & L, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Name/Title: ----------------------------- FELD & FELD, INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Name/Title: ----------------------------- TODAYSMAN.COM INC., a Delaware corporation By: ------------------------------------- [CORPORATE SEAL] Name/Title: ----------------------------- (SIGNATURES CONTINUED ON NEXT PAGE) 9 (SIGNATURES CONTINUED FROM PREVIOUS PAGE) LENDERS: MELLON BANK, N.A. By: ------------------------------------- Daniel K. Clancy, Vice President AGENT: MELLON BANK, N.A. By: ------------------------------------- Daniel K. Clancy, Vice President 10 EX-10.22 6 1ST AMENDMENT TO LICENSE AGREEMENT FIRST AMENDMENT TO LICENSE AGREEMENT This First Amendment to License Agreement ("Amendment") is entered into as of this 10th day of February, 2000, by and between Today's Man, Inc. a Pennsylvania corporation ("Today's Man") and Morse Shoe, Inc., a Delaware corporation ("Morse"). R E C I T A L S: WHEREAS, Today's Man and Shoe Corporation of America, Inc. ("SCOA"), are parties to a License Agreement dated July 20, 1995 (the "License Agreement") pursuant to which Today's Man granted SCOA the license to operate shoe departments in certain of Today's Man stores; and WHEREAS, pursuant to a voluntary petition filed with the U.S. Bankruptcy Court, Southern District of Ohio (Eastern Division) ("Bankruptcy Court") on June 14, 1999, SCOA and certain affiliates sought protection under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code"); and WHEREAS, pursuant to a certain Asset Purchase Agreement, dated as of February __, 2000 ("Acquisition Agreement"), by and between SCOA, et al., debtors and debtors in possession, as sellers (collectively, "Sellers"), and J. Baker, Inc., individually and/or through one or more "Permitted Designees" (as such term is defined in the Acquisition Agreement) (hereinafter, "Purchaser"), Morse Shoe, Inc. ("Morse"), an affiliate of Purchaser and a Permitted Designee thereof under the terms of the Acquisition Agreement, has agreed to acquire substantially all of the assets and business interests of the Sellers (collectively, the "Acquired Assets"), subject to the terms and conditions contained in the Acquisition Agreement; and WHEREAS, subject to the terms and conditions contained in the Acquisition Agreement, included among the Acquired Assets to be acquired by Purchaser at a closing under the Acquisition Agreement is the License Agreement; and WHEREAS, it is a condition to Purchaser's obligation to close and consummate that transactions contemplated in the Acquisition Agreement that Today's Man and Morse, as a Permitted Designee of Purchaser, enter into, execute and deliver the within amendment, inter alia, amending and modifying the terms and provisions of the License Agreement, with such amendments and modifications becoming effective as of the occurrence of a closing under the Acquisition Agreement and as otherwise provided herein; and WHEREAS, pursuant to a motion dated February __, 2000 ("Sale Motion"), Sellers have sought the issuance and entry of an order of the Bankruptcy Court, inter alia, approving the Acquisition Agreement and the transactions contemplated thereby; and WHEREAS, Morse and Today's Man desire to amend and modify the terms and provisions of the License Agreement upon the terms and conditions contained herein. 1 NOW, THEREFORE, premised upon the terms and provisions stated herein, the parties hereto desiring to be bound hereby, do hereby covenant and agree as follows: 1. The License Agreement shall be amended as follows: (a) Section 1.1 License is hereby deleted in its entirety and the following is hereby substituted in lieu thereof: "1.1 License. Licensor hereby grants to Licensee represented by the exclusive right and privilege described herein for the term herein specified, to operate Shoe Departments for the retail sale of Footwear in Licensor's Stores as follows: (a) all stores currently operated by Licensor under the name "Today's Man" as listed on the attached "Exhibit A" ("Existing Stores") and (b) all stores hereafter opened by Licensor (or any division, subsidiary, parent or any other affiliated entity) operated under the Today's Man name which are hereafter added to Exhibit "A." The stores added to Exhibit "A" pursuant to the preceding clause (b) are hereinafter referred to individually as an "Additional Store" and collectively the "Additional Stores" and shall be included within the definition of "Store" and "Stores" respectively. Licensor may elect to remove any individual Store on Exhibit "A" upon at least 180 days prior written notice in the case of any Store in which Licensor will permanently cease the conduct of business in which event this Agreement will terminate with respect to such Store at the end of such 180 day period. It is the intent of both parties that Licensee shall operate Shoe Departments during the term of this License Agreement in all of Licensor's Today's Man stores, provided that such stores operate in a manner consistent with the Existing Stores. This License Agreement shall apply to all stores identified in this Section 1.1 without the need for amendment or future agreement. The parties shall from time to time amend Exhibit "A" to reflect Additional Stores, and it is agreed that such amendments shall be solely for convenience of reference and confirmation of the rights and obligations of the parties hereto. The absence of such a written amendment shall in no way alter or negate the applicability of this License Agreement to such Additional Stores. In each Existing Store the Shoe Department shall consist of the selling, storage and one half of the contiguous aisle space ("Space") as presently allocated to the Shoe Departments, as set forth on Exhibit "A". The Space allocated to the Shoe Department in Additional Stores shall be approximately 2,000 square feet. In all cases, the Shoe Department shall be contiguous to softlines at the store. The location of the Shoe Departments may, upon sixty (60) days written notice to Licensee be relocated by Licensor, at Licensor's full expense, provided, however, that such relocation is a comparable space in the Store at least equal to the space provided for herein." 2 (b) Section 2 Term is hereby deleted in its entirety and the following is hereby substituted in lieu thereof: "Section 2. TERM. The initial term of this License Agreement shall commence on September 1, 1995, and shall expire, unless earlier terminated as hereinafter provided, on January 31, 2006 (the " Initial Term"). Each fiscal year of Licensor commencing on February 2 and ending on the Saturday closest to January 31 of each year thereafter shall constitute and be referred to herein as an "Annual Period"." (c) Section 3.2 Handling of Cash and Payment shall be amended by deleting the words eighty percent (80%) in (ii) of the second paragraph thereof and inserting the words "ninety percent (90%)" in lieu thereof. (d) Section 8.1 Staffing of Shoe Departments shall be amended by deleting the second sentence thereof in its entirety. (e) Section 25.4 Early Termination is hereby deleted in its entirety and all references thereto elsewhere in the Agreement are of no further force or effect. (f) A new Section 25.4 shall be added as follows: "25.4 Obligations Upon Store Closing. If Licensor closes a Store, or elects to completely liquidate its business and assets and closes all Stores and conducts a store liquidation or going out of business sale (either on its own or through an independent professional liquidator, hereinafter "Store Liquidation"), the Licensee Fee shall be reduced to eight percent (8%) of Net Sales during the period of such Store Liquidation." (g) Section 25.5.1 Obligation to Purchase Fixtures shall be amended by replacing the reference to Section 1.1(y) with "Section 1.1". (h) Section 25.5.2 Option to Purchase Fixtures shall be amended by deleting the parenthetical in (b) thereof. 3 (i) As of the Effective Date (as hereinafter defined), notices to Licensee shall be addressed as follows: Morse Shoe, Inc. 555 Turnpike Street Canton, MA 02021 Attention: Michael Fine President, JBI Footwear With a copy to: General Counsel 555 Turnpike Street Canton, MA 02021 2. Effectiveness of Amendment. This Amendment shall be deemed automatically effective on the date of occurrence of a Closing (as such term is defined in the Acquisition Agreement) under the Acquisition Agreement (the "Effective Date"); provided, however, in the event a Closing does not occur under the Acquisition Agreement, then in such event this Amendment shall be void ab initio and of no further force and effect. 3. Agreement In Full Force and Effect. Except as otherwise modified hereby, the Agreement, and all of the terms and provisions thereof, shall remain in full force and effect. 4. Counterparts. This Amendment may be executed in one or more counterparts which taken together shall constitute one and the same agreement. 5. Binding Effect; Successors and Assigns. This Amendment shall be binding upon the successors and assigns of each of the parties hereto. 6. Governing Law. This Amendment shall be governed by and interpreted in accordance with the laws of the State of Pennsylvania. 7. Modification. This Amendment may only be modified by an agreement in writing executed by each of the parties hereto. IN WITNESS WHEROF, the parties have executed this Amendment as of the date first written above. MORSE SHOE, INC. TODAY'S MAN, INC. As Licensee As Licensor /s/Alan I. Weinstein /s/Frank E. Johnson - ----------------------------------- ---------------------------------- By: Alan I. Weinstein, President By: Frank E. Johnson, EVP & CFO 4 EX-23.1 7 CONSENT OF INDEPENDENT AUDITORS Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-56515) pertaining to the Employees' Saving Plan of Today's Man, Inc. and in the Registration Statement (Form S-3 No. 333-57179) of Today's Man, Inc. and in the related Prospectus of our report dated March 16, 2000, except for Note 5 and Note 11 as to which the date is May 12, 2000, with respect to the consolidated financial statements of Today's Man, Inc. included in its Annual Report (Form 10-K) for the year then ended January 29, 2000. /s/ ERNST & YOUNG LLP --------------------- Ernst & Young LLP Philadelphia, Pennsylvania May 12, 2000 EX-27.1 8 FDS
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheets at January 29, 2000 and the Condensed Consolidated Statements of Operations for the fifty-two weeks ended January 29, 2000 and is qualified in its entirety by reference to such financial statements. 12-MOS JAN-29-2000 JAN-29-2000 392,700 0 1,720,100 (27,200) 39,334,700 45,538,900 54,538,900 (20,728,500) 81,867,200 15,824,600 0 0 0 48,513,700 (9,112,600) 81,867,200 194,545,700 194,545,700 128,444,200 128,444,200 77,830,600 0 1,606,400 (13,355,700) 0 (13,355,700) 0 0 0 (13,355,700) (0.49) (0.49)
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