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:
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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
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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
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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
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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
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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.
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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] Xxxxx X. Xxxxxxx, Executive Vice President
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GUARANTORS:
BENMOL, INC., a Delaware corporation
[CORPORATE SEAL]
By: ____________________________________
Xxxxx X. Xxxxxxx, President
D&L, INC., a Delaware corporation
By: ____________________________________
Xxxxx X. Xxxxxxx, President
[CORPORATE SEAL]
XXXX & XXXX, INC., a Delaware corporation
By: ____________________________________
Xxxxx X. Xxxxxxx, President
[CORPORATE SEAL]
(SIGNATURES CONTINUED ON NEXT PAGE)
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(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
LENDERS:
MELLON BANK, N.A.
By: ____________________________________
Xxxxxx X. Xxxxxx, Vice President
AGENT:
MELLON BANK, N.A.
By: ____________________________________
Xxxxxx X. Xxxxxx, Vice President
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