Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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LOEHMANN'S, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2341356
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
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2500 Halsey Street
Bronx, New York 10461
(718) 409-2000
(Address of Principal Executive Offices) (Zip Code)
LOEHMANN'S, INC. STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
LOEHMANN'S, INC. DIRECTORS DEFERRED COMPENSATION PLAN
LOEHMANN'S, INC. AMENDED AND RESTATED NEW STOCK INCENTIVE PLAN
(Full title of the plans)
Philip Kaplan
Loehmann's, Inc.
2500 Halsey Street
Bronx, New York 10461
(Name and address of agent for service)
(718) 409-2000
(Telephone number, including area code, of agent for service)
COPIES TO:
Robert B. Schumer, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
212-373-3000
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================== ================== =============== =================== ====================
Proposed Proposed
Title of Maximum Maximum
Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered (1) Per Share (2) Price (2) Registration Fee (2)
- ---------------------- ------------------ --------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01
par value per share 95,000 shares (3) $7 1/16 $ 670,937.50 $ 203.31 (5)
- ---------------------- ------------------ --------------- ------------------- --------------------
Common Stock, $.01 par
value per share 355,000 shares (4) $6 7/16 $2,285,312.50 $ 692.52 (5)
====================== ================== =============== =================== ====================
</TABLE>
(1) Consists of (i) 200,000 shares reserved for issuance under the Loehmann's,
Inc. Stock Option Plan for Non-Employee Directors (the "Directors Stock
Option Plan"), (ii) 50,000 shares reserved for issuance under the
Loehmann's, Inc. Directors Deferred Compensation Plan (the "Directors
Deferred Compensation Plan") and (iii) 200,000 shares reserved for issuance
under the Loehmann's, Inc. Amended and Restated New Stock Incentive Plan
(the "Amended and Restated New Stock Incentive Plan"). This registration
statement also relates to such indeterminate number of additional shares as
may be issuable as a result of stock splits, stock dividends or additional
similar transactions.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) and 457(h)(1) under the Securities Act of 1933,
as amended.
(3) Represents 95,000 shares reserved for issuance pursuant to options having an
exercise price of $7 1/16 per share, granted pursuant to the Directors Stock
Option Plan. The registration fee for such shares was calculated in
accordance with Rule 457(h)(1) under the Securities Act of 1933, as amended,
based on the exercise price of the options.
(4) Consists of (i) 105,000 shares reserved for issuance under the Directors
Stock Option Plan, (ii) 50,000 shares reserved for issuance under the
Directors Deferred Compensation Plan and (iii) 200,000 shares reserved for
issuance under the Amended and Restated New Stock Incentive Plan. The
registration fee for such shares was calculated in accordance with Rule
457(h)(1) under the Securities Act of 1933, as amended, based on the average
of the high and low prices of the shares on July 14, 1997 as reported on the
Nasdaq National Market.
(5) One transfer in the amount of $895.83 has been wired in payment of the total
filing fee.
<PAGE>
PART I
INFORMATION REQUIRED IN
THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION
Not required to be filed in the Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed in the Registration Statement.
PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997, which was filed with the Commission on May 2, 1997;
2. The Company's Registration Statement on Form 8-A, dated May 1, 1996,
filed pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which contains a description of the Common Stock.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this registration
statement and prior to the filing of a post-effective amendment which indicates
that all securities registered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be part hereof from the date of
filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect of any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under such Section 145.
The Company's Restated Certificate of Incorporation provides for
indemnification of the Company's directors and officers to the fullest extent
permitted by law. The Company's Restated Certificate of Incorporation also
permits the Board of Directors to authorize the Company to purchase and maintain
insurance against any liability asserted against any director, officer, employee
or agent of the Company arising out of his capacity as such. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
directors, officers, or controlling persons of the Company pursuant to the
Company's Restated Certificate of Incorporation, its By-laws and the Delaware
General Corporation Law, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in
such Act and is therefore unenforceable.
2-2
<PAGE>
As permitted by the Delaware General Corporation Law, the Company's
Restated Certificate of Incorporation provides that directors of the Company
shall not be personally liable to the Company or its stockholders for monetary
damages for beach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under section 174 of the
Delaware General Corporation Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock or (iv) for any
transaction from which the director derives an improper personal benefit. As a
result of this provision, the Company and its stockholders may be unable to
obtain monetary damages from a director for beach of his or her duty of care.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
4.1 -- Amended and Restated Certificate of Incorporation of the Company
currently in effect.(1)
4.2 -- By-laws of the Company. (Incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-1 (Registration
Statement No. 33-97100), filed with the Commission).
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to the
legality of shares of Common Stock being registered.(1)
23.1 -- Consent of Ernst & Young LLP.(1)
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in
their opinion filed as Exhibit 5.1).(1)
24.1 -- Power of Attorney (included on the signature page hereto).(1)
- ---------------
(1) Filed herewith.
Item 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
2-3
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
2-4
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the registrant's Certificate of
Incorporation or by-laws, by contract, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
2-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on July 21, 1997
LOEHMANN'S, INC.
By:/s/ Philip Kaplan
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Philip Kaplan
President
We, the undersigned officers and directors of Loehmann's, Inc.,
hereby severally constitute Philip Kaplan, Robert Friedman and Robert Glass, and
each of them singly, our true and lawful attorneys-in-fact with full power to
sign for us and in our names in the capacities indicated below, any and all
amendments, including post-effective amendments, to this registration statement,
and generally do all such things in our name and behalf in such capacities to
enable Loehmann's, Inc. to comply with the applicable provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission, and we hereby ratify and confirm our signatures as they may
be signed by our said attorney to any and all such amendments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
Chairman of the Board and Director July __, 1997
- -------------------------
Norman S. Matthews
/s/ Philip Kaplan President and Chief Operating Officer July 21, 1997
- ------------------------- and Director (Principal Executive
Philip Kaplan Officer)
/s/ Robert N. Friedman Chairman and Chief Executive July 21, 1997
- ------------------------- Officer and Director
Robert N. Friedman
2-6
<PAGE>
SIGNATURES TITLE DATE
/s/ Robert Glass Senior Vice President and Chief July 21, 1997
- ------------------------- Financial Officer (Principal Financial
Robert Glass and Accounting Officer)
/s/ Janet A. Hickey Vice President and Director July 21, 1997
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Janet A. Hickey
/s/ Richard E. Kroon Director July 21, 1997
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Richard E. Kroon
/s/ Christina A. Mohr Director July 10, 1997
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Christina A. Mohr
/s/ Cynthia R. Cohen Director July 21, 1997
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Cynthia R. Cohen
Director July __, 1997
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Arthur E. Reiner
2-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBITS NUMBER
<S> <C>
4.1 -- Amended and Restated Certificate of Incorporation of the
Company currently in effect. (1)
4.2 -- By-laws of the Company. (Incorporated by reference to Exhibit
4.2 to the Company's Registration Statement on Form S-1
(Registration Statement No. 33-97100), filed with the
Commission).
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to the
legality of shares of Common Stock being registered. (1)
23.1 -- Consent of Ernst & Young LLP. (1)
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included
in their opinion filed as Exhibit 5.1). (1)
24.1 -- Power of Attorney (included on the signature page hereto). (1)
</TABLE>
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(1) Filed herewith.
EXHIBIT 4.1
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
LOEHMANN'S, INC.
Loehmann's, Inc., a corporation organized under the laws of Delaware
on October 7, 1980 (under the name LH Holdings Inc.), hereby amends, restates
and duly adopts in accordance with Section 245 of the General Corporation Law of
the State of Delaware, its Certificate of Incorporation currently in effect as
follows:
FIRST: NAME. The name of the corporation is LOEHMANN'S, INC. (the
"Corporation").
SECOND: ADDRESS; REGISTERED AGENT. The address of the Corporation's
registered office is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware; and its registered agent at
such address is The Corporation Trust Company.
THIRD: PURPOSES. The purpose of the Corporation is to engage in,
carry on and conduct any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
FOURTH: NUMBER OF SHARES. The total number of shares of stock that
the Corporation shall have authority to issue is 30,469,237 shares of stock,
which shares consist of 25,000,000 shares of Common Stock, par value $0.01 per
share (the "Common Stock"), 469,237 shares of Class B Common Stock, par value
$0.01 per share (the "Class B Common Stock"), and 1,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock").
<PAGE>
2
Subject to the provisions of this Certificate of Incorporation and
except as otherwise provided by law, the stock of the Corporation, regardless of
class, may be issued for such consideration and for such corporate purposes as
the Board of Directors may from time to time determine.
The designation, relative rights, preferences and limitations of the
shares of the Common Stock and Class B Common Stock are provided in paragraphs
FIFTH and FOURTEENTH below, respectively.
FIFTH: COMMON STOCK. The rights, preferences and limitations
of the shares of Common Stock are as follows:
1. VOTING RIGHTS. Each share of Common Stock shall have one vote,
and, except as otherwise provided in respect of the Class B Common Stock, the
Preferred Stock and any other class or series of stock now or hereafter provided
for, the exclusive voting power for all purposes shall be vested in the holders
of the Common Stock.
2. DIVIDENDS. Subject to the provisions of law and any preferences
of the Preferred Stock and any other class or series of stock now or hereafter
provided for, each outstanding share of Common Stock shall be entitled to share
ratably with each outstanding share of Class B Common Stock in such dividends on
the common equity securities of the Corporation as may be paid at such time and
in such amounts as the Board of Directors of the Corporation may from time to
time determine; PROVIDED, HOWEVER, that no dividend need be declared on the
Class B
<PAGE>
3
Common Stock in the event of a dividend on the Common Stock payable solely in
shares of the capital stock of the Corporation.
3. LIQUIDATION. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
the Common Stock shall be entitled, after payment or provision for payment of
the debts and other liabilities of the Corporation and the amount to which the
holders of the Preferred Stock and any other class or series of stock now or
hereafter provided for having a preference on distributions in the liquidation,
dissolution or winding up of the Corporation shall be entitled, together with
the holders of the Class B Common Stock and any other class or series of stock
now or hereafter provided for not having a preference on distributions in the
liquidation, dissolution or winding up of the Corporation, to share ratably in
the remaining assets of the Corporation.
SIXTH: PREFERRED STOCK. Shares of Preferred Stock may be issued from
time to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Preferred Stock hereinabove
authorized, and with such powers, preferences and rights and qualifications,
limitations or restrictions thereof, and such distinctive serial designations,
all as shall hereafter be stated and expressed in the resolution or resolutions
providing for the issue of such shares of Preferred Stock from time to time
adopted by the Board of Directors pursuant to authority so to do which is hereby
vested in the Board of Directors. Each series of shares of Preferred Stock (a)
may have such voting rights or powers, full or
<PAGE>
4
limited, or may be without voting rights or powers; (b) may be subject to
redemption at such time or times and at such prices; (c) may be entitled to
receive dividends (which may be cumulative or non-cumulative) at such rate or
rates, on such conditions and at such times, and payable in preference to, or in
such relation to, the dividends payable on any other class or classes or series
of stock; (d) may have such rights upon the voluntary or involuntary
liquidation, winding up or dissolution of, or upon any distribution of the
assets of, the Corporation; (e) may be made convertible into or exchangeable
for, shares of any other class or classes or of any other series of the same or
any other class or classes of stock of the Corporation at such price or prices
or at such rates of exchange and with such adjustments; (f) may be entitled to
the benefit of a sinking fund to be applied to the purchase or redemption of
shares of such series in such amount or amounts; (g) may be entitled to the
benefit of conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issue of any additional shares
(including additional shares of such series or of any other series) and upon the
payment of dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Corporation or any subsidiary of, any
outstanding shares of the Corporation and (h) may have such other relative,
participating, optional or other special rights, qualifications, limitations or
restrictions thereof; all as shall be stated in said resolution or resolutions
providing for the issue of such shares of Preferred Stock. Any of the voting
powers, designations, preferences, rights and qualifications, limitations or
restrictions of any such series of Preferred Stock may be made dependent upon
facts
<PAGE>
5
ascertainable outside of the resolution or resolutions providing for the issue
of such Preferred Stock adopted by the Board pursuant to the authority vested in
it by this Paragraph SIXTH, provided that the manner in which such facts shall
operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such series of Preferred Stock is
clearly and expressly set forth in the resolution or resolutions providing for
the issue of such Preferred Stock. The term "facts" as used in the next
preceding sentence shall have the meaning given to it in section 151(a) of the
General Corporation Law. Shares of Preferred Stock of any series that have been
redeemed (whether through the operation of a sinking fund or otherwise) or that,
if convertible or exchangeable, have been converted into or exchanged for shares
of any other class or classes shall have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be reissued as a
part of the series of which they were originally a part or as part of a new
series of shares of Preferred Stock to be created by resolution or resolutions
of the Board of Directors or as part of any other series of shares of Preferred
Stock, all subject to the conditions or restrictions on issuance set forth in
the resolution or resolutions adopted by the Board of Directors providing for
the issue of any series of shares of Preferred Stock.
SEVENTH: ELECTION OF DIRECTORS. Members of the Board of Directors
may be elected either by written ballot or by voice vote.
EIGHTH: COMPROMISE, ARRANGEMENT OR REORGANIZATION. Whenever a
compromise or arrangement is proposed between
<PAGE>
6
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdic tion within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
NINTH: LIMITATION OF LIABILITY. No director of the Corporation shall
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (a) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
<PAGE>
7
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the director
derived any improper personal benefits. If the Delaware General Corporation Law
is hereafter amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
TENTH: INDEMNIFICATION. To the extent not prohibited by law, the
Corporation shall indemnify any person who is or was made, or threatened to be
made, a party to any threatened, pending or completed action, suit or proceeding
(a "Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees
<PAGE>
8
and disbursements). Persons who are not directors or officers of the Corporation
may be similarly indemnified in respect of service to the Corporation or to an
Other Entity at the request of the Corporation to the extent the Board at any
time specifies that such persons are entitled to the benefits of this Article
TENTH. Any director or officer of the Corporation serving in any capacity (i)
another corporation of which a majority of the shares entitled to vote in the
election of its directors is held, directly or indirectly, by the Corporation or
(ii) any employee benefit plan of the Corporation or any corporation referred to
in clause (i) shall be deemed to be doing so at the request of the Corporation.
The Corporation shall, from time to time, reimburse or advance to
any director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
<PAGE>
9
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article TENTH shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or reimbursement or advancement of expenses may have or hereafter be entitled
under any statute, this Certificate of Incorporation, the By-laws of the
Corporation (the "By-laws"), any agreement, any vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article TENTH shall continue
as to a person who has ceased to be a director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
The Corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of an Other Entity, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Article TENTH, the By-laws or under Section 145 of the
Delaware General Corporation Law or any other provision of law.
<PAGE>
10
The provisions of this Article TENTH shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Article TENTH is in effect and any other person
indemnified hereunder, on the other hand, pursuant to which the Corporation and
each such director, officer, or other person intend to be legally bound. No
repeal or modification of this Article TENTH affect any rights or obligations
with respect to any state of facts then or theretofore existing or thereafter
arising or any proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Article TENTH shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel and
its stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
stockholders) that such person is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that such person is not so
<PAGE>
11
entitled. Such a person shall also be indemnified for any expenses incurred in
connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Article TENTH may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
ELEVENTH: This Article is inserted for the management of the
business and for the conduct of the affairs of the Corporation and it is
expressly provided that it is intended to be in furtherance of and not in
limitation or exclusion of the powers conferred by applicable law.
1. NUMBER, ELECTION, AND TERMS OF OFFICE OF BOARD OF DIRECTORS. The
business of the Corporation shall be managed by a Board of Directors consisting
<PAGE>
12
of not less than six or more than 15 persons. The exact number of directors
within the minimum and maximum limitations specified in the preceding sentence
shall be fixed from time to time by resolution adopted by a majority of the
entire Board of Directors that would be in office, if no vacancy existed,
whether or not present at a meeting. The directors shall be divided into three
classes, each such class to consist as nearly as practicable of one-third of the
members of the Board of Directors. Directors elected to succeed those whose
terms expire shall be elected for a term of office which expires at the third
succeeding annual meeting of stockholders after their election.
2. TENURE. Notwithstanding any provisions to the contrary contained
herein, each director shall hold office until his successor is elected and
qualified, or until his earlier death, resignation or removal.
3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the rights
of the holders of any series of Preferred Stock then outstanding, newly created
directorships resulting from any increase in the authorized number of directors,
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be filled
by a majority vote of the remaining directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which they have
been elected expires or, in each case, until their respective successors are
duly elected and qualified. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any
<PAGE>
13
incumbent director. When any director shall give notice of resignation effective
at a future date, the Board of Directors may fill such vacancy to take effect
when such resignation shall become effective.
4. REMOVAL OF DIRECTORS. Any one or more or all of the directors
may be removed, at any time, but only for cause by the vote at a meeting of the
holders of at least a majority in voting power of the then issued and
outstanding shares of capital stock of the Corporation.
TWELFTH: STOCKHOLDER ACTION; SPECIAL MEETINGS OF STOCKHOLDERS. Any
action required or permitted to be taken by the stockholders of the Corporation
must be effected at a duly called annual or special meeting of such holders and
may not be effected by any consent in writing of such holders. At any annual
meeting or special meeting of stockholders of the Corporation, only such
business shall be conducted as shall have been brought before such meeting in
the manner provided by the By-laws of the Corporation. Special meetings of
stockholders for any purpose may be called at any time by the Board of
Directors, the Chairman of the Board or the President. Special meetings shall be
held at such place or places within or without the State of Delaware as shall
from time to time be designated by the Board of Directors and stated in the
notice of such meeting.
THIRTEENTH: AMENDMENT OF BY-LAWS. The Board of Directors may from
time to time make, alter or repeal the By-laws by a vote of a majority of the
entire Board of Directors that would be in office if no vacancy existed, whether
or not present at a meeting; PROVIDED, HOWEVER, that any By-laws
<PAGE>
14
made, amended or repealed by the Board of Directors may be amended or repealed,
and any By-laws may be made, by the stockholders of the Corporation by vote of a
majority of the holders of shares of stock of the Corporation entitled to vote
in the election of directors of the Corporation.
FOURTEENTH: CLASS B COMMON STOCK. The rights, preferences and
limitations of the shares of Class B Common Stock are as follows:
1. DEFINITIONS. As used in this Article FOURTEENTH, the following
terms shall have the following meanings:
AFFILIATE of any specified Person means any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
when used with respect to any specific Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
CURRENT MARKET VALUE has the meaning set forth in this Article
FOURTEENTH, subparagraph 9(c).
DETERMINATION DATE means February 1, 1994.
DISPOSITION means any sale, transfer or other disposition (other
than pursuant to an Initial Pubic Offering) of Common Stock (or securities
convertible into, or exchangeable for, Common Stock or rights to acquire Common
Stock or such securities) by one or more members of the Sefinco and Sprout Group
if, as a
<PAGE>
15
consequence of such sale, transfer or other disposition, the Sefinco and Sprout
Group no longer beneficially owns, directly or indirectly, in the aggregate a
number of shares of Common Stock equal to at least 60% of the total number of
outstanding shares of Common Stock of Loehmann's Holdings, Inc., a Maryland
corporation ("Holdings-Maryland") (after giving effect to the 1.19-for-1 stock
split of Holdings-Maryland Common Stock approved by the stockholders of
Holdings-Maryland on January 19, 1989 and any subsequent stock splits)
beneficially owned, directly or indirectly, by the Sefinco and Sprout Group as
of September 19, 1988.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
HOLDER means any holder from time to time of the Class B Common
Stock and, unless otherwise provided or indicated herein, any holder from time
to time of the Underlying Common Stock.
INDEPENDENT FINANCIAL EXPERT means a nationally recognized
investment banking firm, ranking among the top ten lead managers (as determined
by the Securities Industry Association, Inc. or a similar securities information
data company) for primary common stock offerings in the year prior to the year
in which it is called upon to give independent financial advice to the
Corporation as described herein and that does not (and whose directors,
officers, employees and Affiliates do not) have a direct or indirect financial
interest in the Corporation or any of its Affiliates, that has not been and, at
the time it is called upon to give independent financial advice to the
Corporation, is not (and none of whose directors, officers, employees or
Affiliates is) a promoter, director or officer of the Corporation or any of its
Affiliates or an under-
<PAGE>
16
writer or placement agent with respect to any of the securities of the
Corporation or any of its Affiliates, and that does not provide any advice or
opinions to the Corporation or any of its Affiliates, except as an Independent
Financial Expert.
INITIAL PUBLIC OFFERING means the initial offering, whether primary
or secondary, of the Corporation's Common Stock (or securities convertible into,
or exchangeable for, Common Stock or rights to acquire Common Stock or such
securities) that is underwritten on a firmly committed basis and is registered
with the SEC under the Securities Act; PROVIDED, HOWEVER, that "Initial Public
Offering" shall not be deemed to include (i) the initial offering by
Holdings-Maryland in 1989 of 2,100,000 shares of its Class B Common Stock or
(ii) a transaction in which a registration statement is filed by the Corporation
on Form S-4 or any successor form thereto relating to a transaction that, if
consummated, would constitute a Surviving Combination.
NON-SURVIVING COMBINATION means any merger, consolidation or other
business combination by the Corporation with one or more Persons (other than a
wholly owned subsidiary of the Corporation) in which the other Person is the
survivor, or a sale of all or substantially all of the assets of the Corporation
to one or more such other Persons, if, in connection with any of the foregoing,
consideration (other than common equity securities of the Corporation) is
distributed to Holders of Common Stock in exchange for all or substantially all
of their equity interests in the Corporation.
<PAGE>
17
PERSON means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
REPURCHASE OFFER means the Corporation's offer to repurchase Class B
Common Stock and Underlying Common Stock at the applicable Repurchase Price in
accordance with this Article FOURTEENTH.
REPURCHASE PRICE has the meaning set forth in this Article
FOURTEENTH, subparagraph 8.4(a).
SEC means the Securities and Exchange Commission.
SECURITIES ACT means the Securities Act of 1933, as amended.
SEFINCO AND SPROUT GROUP means Sefinco Ltd., Sprout Capital V,
Sprout Growth, L.P. Sprout Growth, Ltd., DLJ Venture Capital Fund II, L.P.,
Donaldson, Lufkin & Jenrette, Inc. and any wholly owned subsidiary of Donaldson,
Lufkin & Jenrette, Inc.
SURVIVING COMBINATION means any merger, consolidation or other
business combination by the Corporation with one or more Persons in which the
Corporation is the survivor or a purchase of assets by the Corporation from one
or more other Persons that, in any such case, if, as a result of any of the
foregoing, a class of the Corporation's common equity securities becomes subject
to registration under the Exchange Act.
TRANSFER AGENT means the agent for the registration of transfer of
shares of Class B Common Stock.
<PAGE>
18
TRIGGERING EVENT means any of the following: (i) the date 180 days
after the effective date of a registration statement relating to the
Corporation's Initial Public Offering, (ii) the closing of a Disposition or
(iii) the closing of a Surviving Combination.
UNDERLYING COMMON STOCK means the shares of Common Stock issuable or
issued upon conversion of the Class B Common Stock.
VALUATION DATE has the meaning set forth in this Article FOURTEENTH,
subparagraph 8.4(e).
2. DIVIDENDS. Subject to the provisions of law and any preferences
of the Preferred Stock and any other class or series of stock now or hereafter
provided for, each outstanding share of Class B Common Stock shall be entitled
to share ratably with each outstanding share of Common Stock in such dividends
on the common equity securities of the Corporation as may be paid at such time
and in such amounts as the Board of Directors of the Corporation may from time
to time deter mine; PROVIDED, HOWEVER, that no dividend need be declared on the
Class B Common Stock in the event of a dividend on the Common Stock payable
solely in shares of the capital stock of the Corporation.
3. LIQUIDATION. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the Holders of
Class B Common Stock shall be entitled, after payment or provision for payment
of the debts and other liabilities of the Corporation and the amount to which
the holders of the Preferred Stock and any other class or series of stock now or
hereafter
<PAGE>
19
provided for having a preference on distributions in the liquidation,
dissolution or winding up of the Corporation shall be entitled, together with
the holders of Common Stock and any other class or series of stock now or
hereafter provided for not having a preference on distributions in the
liquidation, dissolution or winding up of the Corporation, to share ratably in
the remaining assets of the Corporation.
4. VOTING RIGHTS. Except as otherwise required by law, no share of
Class B Common Stock shall be entitled to any vote on any matter submitted to a
vote of stockholders, except that in the event of a proposal to increase the
number of authorized shares of Class B Common Stock, any such proposal must be
approved by the affirmative vote of two-thirds of all the shares of the Common
Stock and two-thirds of all the shares of the Class B Common Stock, each class
voting separately as a single class.
5. CONVERSION. (a) Each share of Class B Common Stock may be
converted into one fully paid and non-assessable share of Common Stock at any
time and from time to time (i) on or after the Determination Date, (ii) on or
after the occurrence of any of the Triggering Events, (iii) in connection with
the Initial Public Offering (which shall be deemed to occur on the effective
date of the registration statement relating to the Initial Public Offering), but
only to the extent that shares of Underlying Common Stock issued upon conversion
of the Class B Common Stock are included in such registration statement and (iv)
at any time after the filing of a voluntary or involuntary petition in a
bankruptcy, insolvency or similar proceeding that remains pending at the time of
conversion, or the approval by the stockholders of
<PAGE>
20
the dissolution, liquidation or winding up of the Corporation; PROVIDED,
HOWEVER, that in the event of the filing of an involuntary petition in a
bankruptcy, insolvency or similar proceeding, such proceeding shall not have
been stayed or dismissed within 30 days from the date of institution thereof;
PROVIDED FURTHER that in any case referred to in clauses (i) through (iv) above,
if the Class B Common Stock is convertible prior to an Initial Public Offering,
the Class B Common Stock will cease to be convertible from the date the Board of
Directors determines to proceed with the Initial Public Offering until 180 days
after the closing of the Initial Public Offering, except to the extent that the
holder's Underlying Common Stock is included in the Initial Public Offering.
(b) In order to convert Class B Common Stock into Common
Stock, the Holder of shares of Class B Common Stock shall (i) surrender during
normal business hours at the principal office of the Corporation or at the
office of the Transfer Agent (or, in the absence of a Transfer Agent other than
the Corporation, at such other office as the Board of Directors of the
Corporation may designate) the certificate representing the shares of Class B
Common Stock to be converted, duly assigned to the Corporation or endorsed in
blank, with signatures guaranteed by a commercial bank or stock brokerage firm
and (ii) deliver written notice to the Corporation at such office that the
Holder elects to convert such shares.
(c) As promptly as practicable after the surrender for
conversion of a certificate representing shares of Class B Common Stock in the
manner provided in subparagraph (b) above and the payment in cash of any amount
<PAGE>
21
required by the provisions of subparagraph (f) below, the Corporation will
deliver or cause to be delivered at the office of the Corporation or at the
office of the Transfer Agent (or, in the absence of a Transfer Agent other than
the Corporation, at such other office as the Board of Directors of the
Corporation may designate) to or upon the written order of the Holder of such
certificate, in such name or names as such Holder may direct, a certificate or
certificates representing the number of full shares of Common Stock issuable
upon such conversion. Such certificate or certificates (and any certificate or
certificates issued in exchange therefor or upon registration of transfer
thereof) shall be identified as having been issued upon the conversion of Class
B Common Stock. The conversion of any shares of Class B Stock shall be deemed to
have been made immediately prior to the close of business on the day of the
surrender of the certificate representing such shares of Class B Common Stock
and all rights of the Holder of such shares shall cease at such time and the
Person or Persons in whose name or names the certificate or certificates
representing the shares of Common Stock are to be issued shall be treated for
all purposes as having become the record holder or holders of such shares of
Common Stock at such time; PROVIDED, HOWEVER, that any such surrender and
payment on any date when the stock transfer books of the Corporation shall be
closed shall constitute the Person or Persons in whose name or names the
certificate or certificates representing shares of Common Stock are to be issued
as the record Holder or Holders thereof for all purposes immediately prior to
the close of business on the next succeeding day on which such stock transfer
books are open.
<PAGE>
22
(d) No adjustments in respect of dividends or other
distributions shall be made upon the conversion of any shares of Class B Common
Stock; PROVIDED, HOWEVER, that if such shares shall be converted subsequent to
the record date for the payment of a dividend or other distribution on shares of
Class B Common Stock but prior to such payment, the registered Holder of such
shares at the close of business on such record date shall be entitled to receive
the dividend or other distribution payable on such shares on the date set for
payment of such dividend or other distribution notwithstanding the conversion
thereof.
(e) The Corporation will at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the outstanding
shares of Common Stock, such number of shares of Class B Common Stock as shall
be issuable upon the conversion of all outstanding shares of Class B Common
Stock; PROVIDED, HOWEVER, that nothing contained herein shall be construed to
preclude the Corporation from satisfying its obligations in respect of the
conversion of the outstanding shares of Class B Common Stock by delivery of
shares of Common Stock that have been acquired by the Corporation and constitute
treasury shares.
(f) The issuance of certificates for shares of Common Stock
upon conversion of shares of Class B Common Stock shall be made without charge
for any stamp or other similar tax in respect of such issuance. However, if any
such certificate is to be issued in a name other than that of the registered
Holder of the shares of Class B Common Stock converted, the Person or Persons
requesting the issuance thereof shall pay to the Corporation the amount of any
tax payable in respect
<PAGE>
23
of any transfer involved in such issuance or shall establish to the satisfaction
of the Corporation that such tax has been paid.
(g) No fractional shares of Common Stock shall be issued upon
conversion of shares of Class B Common Stock. In lieu of fractional shares, the
Corporation shall pay an amount in cash calculated by it to be equal to the then
Current Market Value per share of Common Stock multiplied by the fraction of a
share of Common Stock that would otherwise be issuable, computed to the nearest
whole cent.
6. RIGHTS OF HOLDERS UPON OCCURRENCE OF CERTAIN EVENTS.
6.1 DISPOSITION. (a) In the case of any proposed sale,
transfer or other disposition of securities to any Person (the "Purchaser") that
would constitute a Disposition if closed, the Corporation shall give written
notice thereof to the Holders promptly after an agreement or an agreement in
principle is reached with respect to the Disposition but in no event less than
20 business days prior to the Closing thereof or, if the Corporation is not a
party to the Disposition, the Corporation shall give such notice as soon as
practicable after it receives notice of the Disposition. Such notice shall be
accompanied by an offer by the Corporation, to the extent of funds legally
available therefor, or by the Purchaser to purchase for the consideration and at
the purchase prices specified in the notice on or prior to the date specified in
the notice (the "Purchase Date") all outstanding shares of Class B Common Stock
and Underlying Common Stock properly tendered.
<PAGE>
24
(b) Each Holder may, but shall not be obligated to,
accept such offer, by tendering to the Person specified in such notice, on or
prior to the Purchase Date, the certificates for shares of Class B Common Stock
and Underlying Common Stock it desires to have purchased in such Disposition.
(c) This Article FOURTEENTH, subparagraph 6.1
shall not be applicable to any Disposition that is closed after the completion
of the Corporation's Initial Public Offering.
(d) The Purchase Date for a Disposition shall be the
later of (i) the closing of the Disposition, (ii) 20 business days after
delivery of the Corporation's notice or (iii) such later time as may be
necessary to comply with all applicable provisions of federal and state
securities laws including, if applicable, federal and state laws regulating
tender offers.
(e) The purchase price for each share of Class B
Common Stock or Underlying Common Stock tendered shall be an amount equal to the
shares of stock or other securities or other property (including any cash) that
the Holder would have received if such Holder (i) in the event Class B Common
Stock is tendered, had converted such shares of Class B Common Stock immediately
prior to such Disposition, (ii) had been a seller or transferor in such
Disposition and (iii) had received the maximum consideration to be received per
share of Common Stock by any other seller or transferor in such Disposition.
(f) The Corporation represents that it will not
become a party to any transaction that would constitute a Disposition if closed,
unless
<PAGE>
25
either (i) the Purchaser agrees to make an offer to purchase all outstanding
Class B Common Stock and Underlying Common Stock properly tendered as
contemplated by this Article FOURTEENTH, subparagraph 6.1 or (ii) the
Corporation has cash on hand or available to purchase all of the outstanding
Class B Common Stock and Underlying Common Stock and such purchase by the
Corporation would not result in any violation of its charter or by-laws and
would not conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Corporation
under (A) any indenture, mortgage, loan agreement or other agreement or
instrument or (B) any applicable law, rule or regulation.
(g) In the event of a Disposition (whether or not in
violation of subparagraph 6.1(f)) where the Purchaser fails to purchase Class B
Common Stock and Underlying Common Stock as contemplated by this Article
FOURTEENTH, subparagraph 6.1 and the Corporation is prohibited under any of its
indentures, mortgages, loan agreements or other agreements or instruments or by
any applicable law, rule or regulation from effecting a purchase of all
outstanding Class B Common Stock and Underlying Common Stock, as contemplated by
this Article FOURTEENTH, subparagraph 6.1, then the Corporation shall have a
continuing obligation until February 1, 1999 to make such offer to purchase all
outstanding Class B Common Stock and Underlying Common Stock as soon as all
limitations upon its ability to make such purchase shall be removed. In such
event, the date the Corporation is able to make such purchase shall be deemed to
be the closing of the
<PAGE>
26
Disposition for purposes of this Article FOURTEENTH, subparagraph 6.1. The
remedies afforded the Holders by this subparagraph (g) shall not be deemed to be
exclusive of other remedies that may be available to them.
6.2 OTHER EVENTS. The Corporation shall notify each Holder of
Class B Common Stock of the closing of a Surviving Combination as soon as
practicable thereafter. No Holder shall have any rights with respect to any
Surviving Combination that is closed after the completion of the Corporation's
Initial Public Offering.
7. NON-SURVIVING COMBINATIONS. In the event of a Non-Surviving
Combination, each share of Class B Common Stock shall receive the same
consideration it would have received if it had been converted into Common Stock
immediately prior to such event.
8. REPURCHASE OFFERS.
8.1 GENERALLY. (a) In the event of a Non-Surviving
Combination, Disposition or Initial Public Offering shall have closed prior to
the Determination Date, the Corporation shall, subject to Article FOURTEENTH,
sub paragraph 8.8, offer to repurchase for cash all outstanding shares of Class
B Common Stock and Underlying Common Stock in either one or three transactions
pursuant to the provisions of this Article FOURTEENTH, subparagraph 8 (each a
"Repurchase Offer"). The Corporation shall give notice of the first Repurchase
Offer within 90 days after the Determination Date and, if the Corporation elects
to make three Repurchase Offers, it shall give notice of the second and third
Repurchase Offers
<PAGE>
27
within 90 days after the first and second anniversaries of the Determination
Date, respectively. The date on which the Corporation gives any such notice is
referred to as a "Notice Date." Each such notice shall comply with Article
FOURTEENTH, subparagraph 8.5.
(b) Each Repurchase Offer shall commence on the
Notice Date for such Repurchase Offer and shall expire on the date (the
"Expiration Date") 90 days after such Notice Date.
8.2 SINGLE REPURCHASE OFFER. (a) If the Corporation elects to
make a single Repurchase Offer, then it shall offer to purchase for cash at the
Repurchase Price for such Repurchase Offer all Class B Common Stock and Under
lying Common Stock outstanding on the Determination Date that is properly
tendered to the Person specified in the Corporation's notice of such Repurchase
Offer, on or prior to the Expiration Date for such Repurchase Offer.
(b) Each Holder of Class B Common Stock and
Underlying Common Stock may, but shall not be obligated to, accept such
Repurchase Offer by tendering to the Person specified in the Corporation's
notice, on or prior to the Expiration Date for such Repurchase Offer, the
certificates evidencing the shares of Class B Common Stock and Underlying Common
Stock such Holder desires to have repurchased in such Repurchase Offer. A Holder
may withdraw all or any portion of the shares of Class B Common Stock and
Underlying Common Stock tendered at any time prior to the Expiration Date for
the Repurchase Offer.
<PAGE>
28
8.3 THREE REPURCHASE OFFERS. (a) If the Corporation elects to
make three separate Repurchase Offers, then in each such Repurchase Offer it
shall offer to purchase for cash at the Repurchase Price for such Repurchase
Offer up to the following number of outstanding shares of Class B Common Stock
and Underlying Common Stock that are properly tendered to the Person specified
in the Corporation's notice of such Repurchase Offer on or prior to the
Expiration Date for such Repurchase Offer:
(i) In each of the first and second Repurchase
Offers, the Corporation shall offer to purchase one-third of the total number of
shares of Class B Common Stock and Underlying Common Stock outstanding on the
Determination Date.
(ii) In the third Repurchase Offer, the
Corporation shall offer to purchase all of the shares of Class B Common Stock
and Underlying Common Stock outstanding on the Notice Date for the third
Repurchase Offer.
(b) In the first and second Repurchase Offers, the
Corporation shall offer to purchase shares of Class B common Stock and
Underlying Common Stock from the Holders thereof on the date ten days after the
Notice Date for such Repurchase Offer.
(c) Each Holder may, but shall not be obligated to,
accept each such Repurchase Offer, by properly tendering on or prior to the
Expiration Date for such Repurchase Offer, the certificates evidencing the
shares of
<PAGE>
29
Class B Common Stock and Underlying Common Stock such Holder desires to have
repurchased in such Repurchase Offer. A Holder may withdraw all or any portion
of the shares of Class B Common Stock and Underlying Common Stock tendered at
any time prior to the Expiration Date for such Repurchase Offer. If the total
number of shares of Class B Common Stock and Underlying Common Stock
(collectively, the "Tendered Stock") tendered in the first or second Repurchase
Offer exceeds one-third of the total number of shares of Class B Common Stock
and Underlying Common Stock outstanding on the Determination Date (the "Maximum
Number"), then the Corporation shall purchase a number of shares from each
Holder who tendered shares in such Repurchase Offer determined by multiplying
the number of shares tendered by such Holder by a fraction, the numerator of
which is the Maximum Number and the denominator of which is the total number of
shares of Tendered Stock tendered in such Repurchase Offer.
8.4 REPURCHASE PRICE AND INDEPENDENT FINANCIAL EXPERT. (a) The
purchase price (the "Repurchase Price") for each share of Class B Common Stock
properly tendered pursuant to a Repurchase Offer shall be equal to the product
of (x) the value on the Valuation Date for such Repurchase Offer of one share of
Common Stock multiplied by (y) the number of shares of Underlying Common Stock
that would be obtained if one share of Class B Common Stock were converted on
the Valuation Date. The Repurchase Price for each share of Underlying Common
Stock shall be equal to the value on the Valuation Date for such Repurchase
Offer of one share of Common Stock.
<PAGE>
30
(b) The value of the Common Stock shall be
determined by an Independent Financial Expert, which shall be selected by the
Board of Directors of the Corporation and retained on customary terms and
conditions, using one or more valuation methods that the Independent Financial
Expert, in its best professional judgment, determines to be most appropriate.
The Corporation shall cause the Independent Financial Expert to deliver to the
Corporation a value report (the "Value Report") stating the methods of valuation
considered or used, containing a statement as to the nature and scope of the
examination or investigation upon which the determination of value was made and
stating the value of the Common Stock as of the Valuation Date. The Corporation
shall furnish a copy of the Value Report to each Holder.
(c) The Independent Financial Expert shall not be
liable to the Corporation or the Holders for the contents of the Value Report if
the Independent Financial Expert has prepared such Value Report in good faith.
(d) The Independent Financial Expert shall be
compensated by the Corporation for the opinions and services it provides as an
Independent Financial Expert.
(e) The "Valuation Date" for a Repurchase Offer
shall mean a date specified by the Independent Financial Expert in its Value
Report, which date shall be within 30 days prior to the Notice Date for such
Repurchase Offer.
<PAGE>
31
8.5 NOTICE OF REPURCHASE OFFER. Each notice of a Repurchase
Offer given by the Corporation pursuant to Article FOURTEENTH, subparagraph 8.1
shall specify (i) whether the Corporation has elected to make one Repurchase
Offer or three Repurchase Offers, (ii) the Expiration Date for such Repurchase
Offer, (iii) in the case of the first or second Repurchase Offer, the record
date for such Repurchase Offer, (iv) the manner in which shares of Class B
Common Stock and Underlying Common Stock may be surrendered for repurchase by
the Corporation, (v) the Repurchase Price at which the shares of Class B Common
Stock and Underlying Common Stock will be repurchased by the Corporation, and
(vi) the name of the Independent Financial Expert whose valuation of the Common
Stock was utilized in connection with determining such Repurchase Price.
8.6 PAYMENT FOR CLASS B COMMON STOCK AND UNDERLYING COMMON
STOCK. All amounts due to a Holder in connection with a Repurchase Offer shall
be paid to such Holder as soon as possible, but in any event within five days
after the Expiration Date for such Repurchase Offer.
8.7 CERTAIN EVENTS FOLLOWING A REPURCHASE OFFER. If an Initial
Public Offering, a Disposition or a Non-Surviving Combination shall occur within
90 days after the Expiration Date for a Repurchase Offer, then the Corporation
shall, to the extent of funds legally available therefor, be obligated to pay to
each Holder whose shares of Class B Common Stock and Underlying Common Stock
were purchased in such Repurchase Offer cash in an amount equal to the number of
shares of Class B Common Stock and Underlying Common Stock purchased multiplied
by
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32
the excess, if any, of (i) either the value of the number of shares of
Underlying Common Stock issuable upon the conversion of one share of Class B
Common Stock or the value of one share of Common Stock, as the case may be, as
determined pursuant to the terms of such transaction, over (ii) the Repurchase
Price paid by the Corporation for each share of Class B Common Stock or
Underlying Common Stock, as the case may be, in such Repurchase Offer.
8.8 INABILITY TO MAKE REPURCHASE OFFER. (a) If the
Corporation's making or consummating a Repurchase Offer would violate the
provisions of any applicable law, rule or regulation or result in a default
under any of its indentures, mortgages, loan agreements, or other agreements or
instruments or the violation or breach of any covenant therein, then the
Corporation need not make such Repurchase Offer or, if such Repurchase Offer has
commenced, the Corporation may terminate such Repurchase Offer prior to its
purchase of any shares of Class B Common Stock or Underlying Common Stock
thereunder; PROVIDED, HOWEVER, that (i) prior to making any Repurchase Offer,
and subject to any of its indentures, mortgages, loan agreements or other
agreements or instruments or any applicable law or regulation, the Corporation
shall be entitled to apply its available cash to pay all amounts due on any
outstanding preferred stock of the Corporation and (ii) if, after taking into
account the foregoing provisions, including the foregoing clause (i), the
Corporation would be permitted to make a Repurchase Offer in part but not in
full, then the Corporation shall only be obligated to make such Repurchase Offer
to the maximum extent permissible; and PROVIDED, FURTHER, that the Corporation
shall not be
<PAGE>
33
required to make a Repurchase Offer in part unless the maximum amount it would
be permitted to pay in such Repurchase Offer would be at least $500,000. In such
event, the Corporation shall promptly notify the Holders of its inability to
effect such Repurchase Offer.
(b) If all limitations upon the Corporation's ability to
repurchase shares of Class B Common Stock and Underlying Common Stock, in whole
or in part, in a Repurchase Offer are removed, prior to February 1, 1999 and at
that time the Corporation has not completed an Initial Public Offering, then the
Corporation's repurchase obligations with respect to such Repurchase Offer
pursuant to this Article Fourth, subparagraph B(8) shall be reinstated.
9. ANTI-DILUTION. (a) Notwithstanding anything to the contrary in
this Article FOURTEENTH, subparagraphs 1 through 8, (w) the number of shares of
Common Stock issuable upon conversion of a share of Class B Common Stock, (x)
the number of votes allocable to each outstanding share of Class B Common Stock,
(y) the dividend payable on each such share and (z) the amount payable in
respect of each such share on account of the liquidation, dissolution or winding
up of the Corporation (the rights referred to in (w), (x), (y) and (z) being
collectively called the "Class B Rights") shall be appropriately adjusted as set
forth below. Any adjustment made pursuant to this Article FOURTEENTH,
subparagraph 9 shall become effective on the respective dates set forth in
subparagraph (b) below.
(b) The Class B Rights shall be adjusted from time to
time as follows:
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34
(i) STOCK DIVIDENDS; STOCK SPLITS; REVERSE
STOCK SPLITS; RECLASSIFICATIONS. If the Corporation (A) pays a dividend or makes
any other distribution with respect to its Common Stock in shares of its capital
stock, (B) subdivides its outstanding Common Stock, (C) combines its outstanding
Common Stock into a smaller number of shares or (D) issues any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other business
combination in which the Corporation is the continuing corporation), then the
Class B Rights shall be adjusted so that after the occurrence of any of the
foregoing events (w) each Holder of shares of Class B Common Stock will be
entitled to receive upon the conversion of each share of Class B Common Stock
the number of shares of Common Stock or other shares of the capital stock of the
Corporation that such Holder would have owned or that such Holder would have
been entitled to receive after the occurrence of any of the events described
above, if such share of Class B Common Stock had been converted immediately
prior to the occurrence of such event (if a Holder becomes entitled only to
shares of Common Stock as a result of the occurrence of any of the events
described above, such number of shares of Common Stock to which such Holder
becomes entitled by reason of the foregoing adjustment divided by the number of
shares of Common Stock it would have received had not such adjustment taken
place is herein in this clause (b)(i) called the "Adjustment Ratio"), (x) the
number of votes allocable to each outstanding share of Class B Common Stock
shall be the number of votes allocable thereto immediately prior to the
occurrence of such event
<PAGE>
35
multiplied by the Adjustment Ratio, (y) the dividend payable on the Class B
Common Stock shall be the dividend payable prior to the occurrence of such event
multiplied by the Adjustment Ratio and (z) the amount payable on account of
liquidation shall be the amount payable prior to the occurrence of such event
multiplied by the Adjustment Ratio; PROVIDED, HOWEVER, that, if shares of
capital stock of the Corporation (other than or in addition to Common Stock) are
issued in connection with any of the foregoing events, the Class B Rights
referred to in the foregoing clauses (x), (y) and (z) shall be appropriately
adjusted to preserve the relative parity of the holders of Common Stock and the
Holders of Class B Common Stock as determined by the Board of Directors in good
faith. An adjustment made pursuant to this clause (b)(i) shall become effective
immediately after the opening of business on the next business day following the
record date in the case of a dividend or other distribution and following the
effective date in the case of a subdivision or combination.
(ii) RIGHTS; OPTIONS; WARRANTS. If the
Corporation shall issue rights, options, warrants or convertible or exchangeable
securities (other than a convertible or exchangeable security subject to clause
(b)(i)) to all holders of its Common Stock, entitling them to subscribe for or
purchase Common Stock at a price per share that is lower (at the record date for
such issuance) than the Current Market Value per share of Common Stock, then, in
each such case, (w) the number of shares of Common Stock thereafter issuable
upon the conversion of all shares of Class B Common Stock then outstanding shall
be determined by multiplying
<PAGE>
36
the number of shares of Common Stock theretofore issuable upon conversion of all
shares of Class B Common Stock then outstanding by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on the date
of issuance of such rights, options or warrants or convertible or exchangeable
securities plus the number of additional shares of Common Stock offered for
subscription or purchase or to be issued upon conversion or exchange of such
convertible or exchangeable securities and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants or convertible or exchangeable securities plus the
number of shares which the aggregate consideration to be received by the
Corporation in connection with such issuance would purchase at the then Current
Market Value per share of Common Stock, such adjustment shall be allocated among
all shares of Class B Common Stock then outstanding on a PRO RATA basis (the
number of shares of Common Stock to which a Holder becomes entitled by reason of
such adjustment divided by the number of shares it would have received had no
such adjustment taken place is herein in this clause (b)(ii) called the
"Adjustment Ratio"), (x) the number of votes allocable to each outstanding share
of Class B Common Stock shall be the number of votes allocable thereto
immediately prior to the issuance of such rights, options, warrants or
convertible or exchangeable securities multiplied by the Adjustment Ratio, (y)
the dividend payable on each outstanding share of Class B Common Stock shall be
the dividend payable prior to such issuance multiplied by the Adjustment Ratio
and (z) the amount payable on each outstanding share of Class B Common Stock on
account of
<PAGE>
37
the liquidation, dissolution or winding up of the Corporation shall be the
amount payable prior to such issuance multiplied by the Adjustment Ratio.
For purposes of this clause (b)(ii), the consideration received by
the Corporation in connection with the issuance of rights, options, warrants or
convertible or exchangeable securities shall be deemed to be the consideration
received by the Corporation for such rights, options warrants or convertible or
exchangeable securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible or exchangeable securities to be paid
for the shares of Common Stock covered thereby. Any adjustment pursuant to this
clause (b)(ii) shall be made whenever any such rights, options or warrants or
convertible or exchangeable securities are issued, but shall also become
effective retroactively in respect of conversions made between the record dates
for the determination of stockholders entitled to receive such rights, options
or warrants or convertible or exchangeable securities and the date such rights,
options or warrants or convertible or exchangeable securities are issued.
(iii) ISSUANCE OF COMMON STOCK AT LOWER
VALUES. If the Corporation shall, in a transaction in which clause (b)(ii) above
is inapplicable, issue or sell shares of Common Stock, or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, at a price per share of Common
Stock (determined in the case of such rights, options, warrants or convertible
or exchangeable securities, by dividing (A) the total amount receivable by the
<PAGE>
38
Corporation in consideration of the sale and issuance of such rights, options,
warrants or convertible or exchangeable securities, plus the total
consideration, if any, payable to the Corporation upon exercise, conversion or
exchange thereof, by (B) the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities) that
(a) in the case of an issuance or sale of Common Stock is less than 90% of the
Current Market Value per share of Common Stock in effect immediately prior to
such sale or issuance or (b) in the case of any other such sale or issuance is
lower than the Current Market Value per share of Common Stock in effect
immediately prior to such sale or issuance, then, in each such case, (w) the
number of shares of Common Stock thereafter issuable upon the conversion of all
shares of Class B Common Stock then outstanding shall be determined by
multiplying the number of shares of Common Stock theretofore issuable upon
conversion of all shares of Class B Common Stock then outstanding by a fraction,
of which the numerator shall be the number of shares of Common Stock outstanding
on the date of issuance of such shares of Common Stock or rights, options or
warrants or convertible or exchangeable securities plus the number of additional
shares of Common Stock offered for subscription or purchase or to be issued upon
conversion or exchange of such convertible or exchangeable securities and of
which the denominator shall be the number of shares of Common Stock outstanding
on the date of issuance of such shares of Common Stock or rights, options or
warrants or convertible or exchangeable securities plus the number of shares
which the aggregate consideration to be received by the Corporation in
<PAGE>
39
connection with such issuance would purchase at the then Current Market Value
per share of Common Stock, such adjustment being allocated among all shares of
Class B Common Stock then outstanding on a PRO RATA basis and the number of
shares of Common Stock to which a Holder becomes entitled by reason of such
adjustment divided by the number of shares it would have received had no such
adjustment taken place is herein in this clause (b)(iii) called the "Adjustment
Ratio," (x) the number of votes allocable to each outstanding share of Class B
Common Stock shall be the number of votes allocable thereto immediately prior to
such sale or issuance multiplied by the Adjustment Ratio, (y) the dividend
payable on each outstanding share of Class B Common Stock shall be the dividend
payable prior to such sale or issuance multiplied by the Adjustment Ratio and
(z) the amount payable on each outstanding share of Class B Common Stock on
account of the liquidation, dissolution or winding up of the Corporation shall
be the amount payable prior to such sale or issuance multiplied by the
Adjustment Ratio. Such adjustment shall be made successively whenever any such
sale or issuance is made.
For purposes of this clause (b)(iii), the consideration received by
the Corporation in connection with the issuance of rights, options, warrants or
convertible or exchangeable securities shall be deemed to be the consideration
received by the Corporation for such rights, options, warrants or convertible or
exchangeable securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible or exchangeable securities to be paid
for the shares of Common Stock covered thereby.
<PAGE>
40
In case the Corporation shall issue and sell shares of Common Stock
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then, in determining the "price per share of Common Stock" and
the "consideration" receivable by or payable to the Corporation for purposes of
the first sentence of this clause (b)(iii), the Board of Directors of the
Corporation shall determine, in good faith, the fair value of such property. In
case the Corporation shall issue and sell rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, together with one or more other securities as
part of a unit at a price per unit, then, in determining the "price per share of
Common Stock" and the "consideration" receivable by or payable to the
Corporation for purposes of the first sentence of this clause (b)(iii), the
Board of Directors of the Corporation shall determine, in good faith, the fair
value of the rights, options, warrants or convertible or exchangeable securities
then being sold as part of such unit.
The provisions of this clause (b)(iii) shall not apply to shares
issued pursuant to an employee stock option plan or similar plan providing for
options or other similar rights to purchase shares of Common Stock (or issuances
pursuant to incentive bonus plans) covering not in excess of 15% of the fully
diluted shares of Common Stock outstanding on the date hereof (assuming the
issuance of all such options or other similar rights on the date hereof).
<PAGE>
41
(c) For the purposes of any computation under this
Article FOURTEENTH, subparagraph 5(g) or this Article FOURTEENTH, subparagraph
9, the Current Market Value per share of Common Stock or of any other equity
security (herein collectively referred to as a "security") at the date herein
specified shall be:
(i) if the security is not registered under the
Exchange Act, the value of the security (A) determined in good faith in the most
recently completed arm's-length transaction between the Corporation and an
unaffiliated third party in which such determination is necessary and the
closing of which has occurred within the six months preceding such date, (B) if
no such transaction has occurred within such six-month period, determined as of
a date within the six months preceding such date by an Independent Financial
Expert in accordance with the criteria for such valuation set out in this
Article FOURTEENTH, subpara graph 9, but giving effect to any discount
attributable to any lack of liquidity of the Common Stock (in the event of more
than one such determination, the determination for the later date shall be used)
or (C) if no such determination shall have been made within such six-month
period, determined as of such date by an Independent Financial Expert in
accordance with the criteria for such valuation set out in this Article
FOURTEENTH, subparagraph 8, but giving effect to any discount attributable to
any lack of liquidity of the Common Stock; PROVIDED, HOWEVER, that in
determining the value of the Common Stock under this Article FOURTEENTH,
subparagraph 5(g), if the foregoing subparagraphs (A) and (B) shall not be
applicable, then the Current
<PAGE>
42
Market Value per share of Common Stock shall be determined in good faith by the
Board of Directors of the Corporation, or
(ii) if the security is registered under the
Exchange Act, deemed to be the average of the daily market prices of the
security for the 10 consecutive trading days immediately preceding the day as of
which "Current Market Value" is being determined or, if the security has been
registered under the Exchange Act for less than 10 consecutive trading days
before such date, then the average of the daily market prices for all of the
trading days before such date for which daily market prices are available. The
market price for each such trading day shall be: (A) in the case of a security
listed or admitted to trading on any securities exchange, the closing price,
regular way, on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) in the case of a security not
then listed or admitted to trading on any securities exchange, the last reported
sale price on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Corporation, (C) in the case of a security
not then listed or admitted to trading on any securities exchange and as to
which no such reported sale price or bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City and State of New York, customarily published on each
business day, designated by the Corporation, or if there shall be no bid and
asked prices on such day, then the average of the high bid
<PAGE>
43
and low asked prices, as so reported, on the most recent day (no more than 10
days prior to the date in question) for which prices have been so reported, and
(D) if there are no bid and asked prices reported during the 10 days prior to
the date in question, then the Current Market Value of the security shall be
determined as if the security were not registered under the Exchange Act.
(d) Except as provided in the foregoing clause (b)(iii)
with reference to adjustments required by such clause (b)(iii), no adjustment of
the Class B Rights shall be required unless such adjustment (plus any
adjustments not previously made by reason of this clause (d)) would require an
increase or decrease of at least 1% in (w) the number of shares of Common Stock
issuable upon conversion of a share of Class B Common Stock, (x) the number of
votes allocable to each outstanding share of Class B Common Stock, (y) the
dividend payable on each outstanding share of Class B Common Stock or (z) the
amount payable on each outstanding share of Class B Common Stock on account of
the liquidation, dissolution or winding up of the Corporation, as the case may
be; PROVIDED, HOWEVER, that any adjustments which by reason of this clause (d)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article FOURTEENTH,
subparagraph 9 shall be made to the nearest 1/1,000 of a share.
(e) Whenever the Class B Rights are adjusted as
herein provided:
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44
(i) the Corporation shall compute the adjusted
Class B Rights and shall cause to be prepared a certificate signed by the
principal financial officer of the Corporation setting forth the adjusted
Class B Rights and a brief statement of the facts requiring such
adjustment and the computation thereof; such certificate shall forthwith
be filed with each Transfer Agent for the Class B Common Stock; and
(ii) a notice stating that the Class B Rights
have been adjusted and setting forth the adjusted Class B Rights shall, as
soon as practicable, be mailed to the Holders of record of outstanding
shares of Class B Common Stock.
(f) The certificate of any independent firm of public
accountants of recognized standing selected by the Board of Directors shall be
presumptive evidence of the correctness of any computation made under this
Article FOURTEENTH, subparagraph 8.
IN WITNESS WHEREOF, this certificate has been signed on
July 21, 1997.
/s/ Philip Kaplan
---------------------------
Philip Kaplan
President
Attest:
/s/ Robert Glass
- ---------------------------
Robert Glass
Assistant Secretary
EXHIBIT 5.1
<PAGE>
July 21, 1997
Loehmann's, Inc.
2500 Halsey Street
Bronx, New York 10461
LOEHMANN'S, INC.
Ladies and Gentlemen:
We are furnishing this opinion at your request in connection with
the registration statement on Form S-8 (the "Registration Statement") being
filed by Loehmann's, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission (the "Commission") on the date hereof,
relating to the registration under the Securities Act of 1933, as amended (the
"Act"), of 450,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), of the Company (collectively, the "Shares") comprised of (i)
200,000 shares of Common Stock (the "Directors Stock Option Plan Shares") to be
offered under the Loehmann's, Inc. Stock Option Plan for Non-
<PAGE>
2
Employee Directors (the "Directors Stock Option Plan"), (ii) 50,000 shares of
Common Stock (the "Directors Deferred Compensation Plan Shares") to be offered
under the Loehmann's, Inc. Directors Deferred Compensation Plan (the "Directors
Deferred Compensation Plan") and (iii) 200,000 shares of Common Stock (the
"Amended and Restated New Stock Incentive Plan Shares") to be offered under the
Company's Amended and Restated New Stock Incentive Plan (the "Amended and
Restated New Stock Incentive Plan").
In connection with this opinion, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of (i) the
Registration Statement, (ii) the Amended and Restated Certificate of
Incorporation of the Company, (iii) the By-laws of the Company, (iv) the
Directors Stock Option Plan, (v) the Directors Deferred Compensation Plan, (vi)
the Amended and Restated New Stock Incentive Plan and (vii) all such corporate
records, agreements and other instruments of the Company, and all such other
documents, as we have considered necessary in order to form a basis for the
opinions expressed herein. As to certain matters of fact, we have relied on
representations, statements or certificates of officers of the Company and of
public authorities.
In our examination of the aforesaid documents, we have assumed,
without independent investigation, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, photostatic,
reproduced or conformed copies of valid existing agreements or other documents,
the authenticity of all of such latter documents and the legal capacity of all
individuals who have executed any of the aforesaid documents.
<PAGE>
3
Based upon the foregoing, and subject to the assumptions, exceptions
and qualifications stated herein, we are of the opinion that (i) when issued and
paid for in accordance with the terms of the Directors Stock Option Plan, the
Directors Stock Option Plan Shares will be duly authorized, validly issued,
fully paid and nonassessable, (ii) when issued in accordance with the terms of
the Directors Deferred Compensation Plan, the Directors Deferred Compensation
Plan Shares will be duly authorized, validly issued, fully paid and
nonassessable and (iii) when issued in accordance with the terms of the Amended
and Restated New Stock Incentive Plan, the Amended and Restated New Stock
Incentive Plan Shares will be duly authorized, validly issued, fully paid and
nonassessable.
Our opinion expressed above is limited to the General Corporation
Law of the State of Delaware. Please be advised that no member of this firm is
admitted to practice in the State of Delaware. Our opinion is rendered only with
respect to the laws and the rules, regulations and orders thereunder, which are
currently in effect.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required by the Act or the
rules promulgated under the Act.
Very truly yours,
/s/ Paul, Weiss, Rifkind, Wharton & Garrison
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement Form
S-8 pertaining to the registration of 450,000 shares of Loehmann's Inc. common
stock of our report dated February 24, 1997, with respect to the consolidated
financial statements of Loehmann's Inc. incorporated by reference in its Annual
Report (Form 10K) for the year ended February 1, 1997.
/s/ Ernst & Young LLP
New York, New York
July 17, 1997
