<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 29, 1994 COMMISSION FILE NUMBER 0-15542
-----------------------------------
LAMONTS APPAREL, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE #75-2076160
(State of Incorporation) (I.R.S.Employer Identification Number)
3650 131ST AVENUE S.E., BELLEVUE, WASHINGTON 98006
(Address of Principal Executive Offices)
(206) 562-8386
(Registrant's Telephone Number, including Area Code)
The purpose of this amendment is to amend the following items of the Lamonts
Apparel, Inc., Annual Report on Form 10-K for the Fiscal Year Ended October 29,
1994:
Part III
Item 10 - Directors and Executive Officers of the Registrant
Item 11 - Executive Compensation
Item 12 - Security Ownership of Certain Beneficial Owners and Management
Item 13 - Certain Relationships and Related Transactions
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE POSITION
Alan R. Schlesinger 52 Director, Chairman of the Board,
President and Chief Executive
Officer
Loren R. Rothschild 56 Director and Vice Chairman of the
Board
Wallace D. Holznagel 61 Executive Vice President
Peter Aaron 45 Executive Vice President
Debbie A. Brownfield 40 Vice President - Finance and Secretary
Mr. Schlesinger joined Lamonts Apparel, Inc., a Delaware corporation (together
with its predecessors, the "Company") as President and Chief Executive Officer
in November 1994. In December 1994, Mr. Schlesinger was appointed Director and
Chairman of the Board. From 1991 to 1994, Mr. Schlesinger was a Senior Vice
President with The May Company Department Stores. Prior to 1991, Mr. Schlesinger
was the Executive Vice President of Merchandise and Marketing and a director of
Ross Stores, Inc., and was a Senior Vice President at Macy's Atlanta (a
subsidiary of R.H. Macy and Company, Inc.).
Mr. Rothschild, a Director of the Company since October 1992, became Vice
Chairman of the Board in December 1994. In addition, Mr. Rothschild has served
as President and director of Sycamore Hill Capital Group since September 1993.
Prior to that time, he served as Vice Chairman and President of American
Protection Industries Inc. ("API"), a privately held company engaged in direct
marketing of collectibles, home decor products, flowers by wire clearing house,
and real estate and agribusiness, and Vice Chairman of The Franklin Mint from
1985 to June 1992. From 1988 to June 1992, Mr. Rothschild also served as
Chairman and Chief Executive Officer of API's Agribusiness division.
Mr. Holznagel joined the Company as Executive Vice President in June 1987.
Mr. Aaron joined the Company as Executive Vice President in November 1983 and
was Acting Secretary of the Company from January 1993 through August 1993.
2
<PAGE>
Ms. Brownfield joined the Company as Vice President of Finance, Secretary, and
Treasurer in September 1985 and served as Acting Chief Financial Officer of the
Company from January 1993 through August 1993.
Effective in November 1994, Leonard M. Snyder resigned as Chief Executive
Officer of the Company. Additionally, in December 1994, Mr. Snyder resigned as
Chairman of the Board and as a Director of the Company. Effective in November
1994, Frank E. Kulp, III, resigned as President, Chief Operating Officer and as
a Director of the Company. In February 1995, Earle J. Spokane ceased to be
employed by the Company. See discussion regarding the severance arrangements
applicable to Messrs. Snyder, Kulp and Spokane in "Item 11 - Executive
Compensation - Employment Agreements." In addition, the following directors of
the Company also resigned during 1994: Arthur H. Bilger, Peter P. Copses,
Luther S. Helms, Norman S. Matthews, Anthony P. Ressler, Mark S. Siegel, John R.
Sloan and Polyvios C. Vintiadis.
Pursuant to the Company's Bylaws, as amended, upon the occurrence of any
vacancies in the Board of Directors resulting from death, removal or
resignation, the number of directors constituting the Board of Directors of the
Company is automatically reduced to the extent of the number of such vacancies.
Accordingly, the number of directors of the Company is currently fixed at two.
All directors and executive officers are elected for a term of one year and
serve until their successors are duly elected and qualified.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership (Form 3's) and reports of changes in
ownership of such securities (Form 4's and Form 5's). Executive officers,
directors and greater than ten percent beneficial shareholders are required to
furnish the Company with copies of all Section 16(a) forms they file. In
connection with a review of executive officer stock ownership, it was discovered
that, in Fiscal 1994, Mr. Matthews inadvertently failed to timely file a Form 3
upon becoming a director of the Company. In addition, Apollo Retail Partners,
L.P. ("ARP") inadvertently failed to timely file, and Messrs. Bilger, Copses and
Ressler may have inadvertantly failed to timely file, Form 4's pursuant to the
acquisition of additional equity securities of the Company by ARP in connection
with the Infusion (hereinafter defined). All such forms were subsequently filed
during Fiscal 1994. To the best of the Company's knowledge, based solely upon
review of the copies of Section 16(a) forms furnished to the Company during
Fiscal 1994 and written representations of all the directors and executive
officers to the effect that no other reports were required with respect to such
fiscal year, none of the Company's other directors, executive officers and
greater than ten percent beneficial owners failed to file on a timely basis the
reports required by Section 16(a).
3
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation paid
during the 52 weeks ended October 29, 1994 ("Fiscal 1994"), the 52 weeks ended
October 30, 1993 ("Fiscal 1993"), and the 52 weeks ended October 31, 1992
("Fiscal 1992"), to the Company's Chief Executive Officer and the Company's four
other most highly compensated executive officers as of the end of Fiscal 1994
(the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term All Other
Compensation Compensation
Annual Compensation Awards $
-----------------------------------
Name and Securities Supple- Group
Principal Fiscal Salary Underlying TRIP mental Plan
Position Year ($) Bonus ($) Options/SARs Plan (1) Plan(2) (3) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonard M. Snyder, 1994 470,830 50,000 --- 1,500 3,354 3,611 8,465
Director, Chairman 1993 470,830 127,687(4) --- 2,358 3,250 3,593 9,201
of the Board and 1992 437,499 50,000 129,663(5) 2,289 2,791 3,430 8,510
Chief Executive
Officer (6)
Frank E. Kulp, III, 1994 273,336 20,000 --- 1,500 925 2,302 4,727
Director, President 1993 273,336 40,000(4) --- 2,358 746 2,346 5,450
and Chief Operating 1992 260,496 20,000 80,050(5) 2,289 559 2,269 5,117
Officer (6)
Earle J. Spokane, 1994 215,004 --- --- 896 --- 1,791 2,687
Executive Vice 1993 89,585 25,000 (7) --- --- 1,579 1,579
President Chief
Financial Officer,
Treasurer and
Assistant Secretary(6)
Wallace D. Holznagel, 1994 188,664 20,000 --- 950 283 1,758 2,991
Executive Vice 1993 188,664 30,000(4) --- 1,900 --- 1,770 3,670
President 1992 179,502 20,000 30,483(5) 2,112 --- 1,783 3,895
Peter Aaron, 1994 183,836 8,160 --- 1,890 42 1,650 3,582
Executive Vice 1993 183,836 18,160(4) --- 2,020 --- 1,671 3,691
President 1992 175,497 8,160 27,068(5) 1,953 --- 1,700 3,653
- ----------------------
<FN>
(1) Consists of Company contributions to a tax qualified trust under the
Company's Tax Relief Investments Protection Plan, as amended and restated
effective July 19, 1991 (the "TRIP Plan").
(2) Consists of Company contributions to a grantor trust under the Company's
Supplemental (TRIP) Benefit Plan, effective January 1, 1991 (the
"Supplemental Plan").
4
<PAGE>
(3) Consists of premiums paid by the Company pursuant to the Lamonts
Apparel Group Life and Long-term Disability Plan, effective July 7, 1977
(the "Group Plan").
(4) Includes a bonus of $50,000, $20,000, $20,000 and $8,160 pursuant to each
of Messrs. Snyder, Kulp, Holznagel and Aaron's employment agreements,
respectively, and a one-time bonus of $40,000, $20,000, $10,000 and $10,000
for Messrs. Snyder, Kulp, Holznagel and Aaron, respectively, based upon the
efforts of such executive officers in connection with the closing of the
comprehensive financial restructuring of the Company consummated on
October 30, 1992 (the "Recapitalization"). Additionally, $37,687 has been
included as part of Mr. Snyder's bonus in Fiscal 1993, pursuant to his
receipt of a grant from the Company of 5,000 shares of the Company's common
stock, par value $.01 per share (the "Common Stock").
(5) Options (the "1992 Options") to acquire shares of Common Stock granted
under the Lamonts Incentive and Nonstatutory Option Plan (the "1992 Option
Plan") concurrently with the Recapitalization.
(6) In November 1994, Messrs. Snyder and Kulp resigned from their positions as
executive officers of the Company. In February 1995, Mr. Spokane ceased to
be employed by the Company. The severance arrangements applicable to
Messrs. Snyder, Kulp and Spokane are described in "Employment Agreements"
below. In November 1994, Alan R. Schlesinger joined the Company as
President and Chief Executive Officer. In December 1994, Loren R.
Rothschild became Vice Chairman of the Board of the Company. See "Item 10
Directors and Executive Officers of the Registrant."
(7) Mr. Spokane was granted 25,000 options upon joining the Company on June 1,
1993.
</TABLE>
5
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OPTION GRANTS DURING FISCAL 1994
There were no options granted to Named Executive Officers during Fiscal 1994.
OPTION VALUES AT 1994 FISCAL YEAR END
The following table provides information related to the number and value of
options held by the Named Executive Officers at the end of Fiscal 1994. None of
the Named Executive Officers exercised any options during Fiscal 1994.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1994 AND FISCAL YEAR END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Fiscal Year End (#) (1) at Fiscal Year End ($) (2)
--------------------------- ----------------------------
Name Exercisable / Unexercisable Exercisable / Unexercisable
- -------------------- ---------------------------- ----------------------------
<S> <C> <C>
Leonard M. Snyder 85,886 / 43,777 52,820 / 26,923
Frank E. Kulp, III 53,110 / 26,940 32,663 / 16,568
Earle J. Spokane 6,250 / 18,750 3,844 / 11,531
Wallace D. Holznagel 20,381 / 10,102 12,534 / 6,213
Peter Aaron 17,639 / 9,429 10,848 / 5,799
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<FN>
(1) Consists of 1992 Options granted to the Named Executive Officers under the
1992 Option Plan.
(2) The closing bid price of the Company's Common Stock, as reported on The
Nasdaq Stock Market's SmallCap Market on October 29, 1994, was $0.625 per
share.
</TABLE>
PENSION PLAN
Under the provisions of the Lamonts Apparel, Inc. Employees Retirement Trust
(the "Lamonts Pension Plan"), which cover substantially all employees, and the
Supplemental Executive Retirement Plan (the "SERP") which covers certain highly
compensated employees, monthly retirement benefits for Named Executive Officers
hired prior to January 1, 1990 are computed at the rate of one percent (1%) of a
participant's highest "average monthly compensation" not in excess of
one-twelfth (1/12) of the Social Security Covered Compensation, multiplied by
the participant's years of service, plus 1.65% of the participant's highest
average monthly compensation in excess of one-twelfth (1/12) of the Social
Security Covered Compensation, multiplied by the participant's years of service,
less the amount, if any, payable under an annuity purchased upon the termination
of the Pay 'n Save Employees Retirement Trust (terminated on December 31, 1985)
(the "PNS Trust"). Monthly retirement benefits for those Named Executive
Officers hired on January 1, 1990 or thereafter are computed at the rate of
0.5% of a participant's highest "average monthly compensation" not in excess of
one-twelfth (1/12) of the Social Security Covered Compensation, multiplied by
the participant's years of service, plus 1.0% of the participant's highest
average monthly compensation in excess of one- twelfth (1/12) of the
6
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Social Security Covered Compensation, multiplied by the participant's
years of service. "Average monthly compensation" means the average monthly
compensation during the five consecutive calendar years during the last 10
calendar years in which the participant's compensation was the highest. Social
Security Covered Compensation is a 35 year average of the taxable wage base.
The normal form of benefit is a straight life annuity for single participants
and a joint and survivor annuity for a married participant commencing on the
participant's Early or Normal Retirement Date (as defined therein).
The estimated annual benefits payable under the Lamonts Pension Plan and the
SERP upon retirement at normal retirement age for Messrs. Snyder, Kulp, Spokane,
Holznagel and Aaron are $28,522, $28,775, $3,306, $23,545 and $27,708,
respectively, based on years of credited service through the end of Fiscal 1994.
In addition, Mr. Aaron's estimated annual benefit payable under the PNS Trust
upon retirement at normal retirement age is $5,394. As of October 29, 1994,
Messrs. Snyder and Kulp each had eight years of credited service, Mr. Spokane
had one year of credited service, Mr. Holznagel had seven years of credited
service and Mr. Aaron had eleven years of credited service.
COMPENSATION OF DIRECTORS
During Fiscal 1994, the Company paid each director (other than those that are
also officers of the Company or have consulting agreements with the Company)
$20,000 per year for services rendered in such capacity. All directors receive
reimbursement for expense incurred in connection with the performance of
services in their capacity as directors.
Upon joining the Board, Mr. Matthews was retained as a retail consultant for the
period commencing September 1, 1994, for an annual fee of $100,000 (less board
fees payable to Mr. Matthews upon his election to the Board). In addition, upon
his election to the Board, Mr. Matthews was granted options to purchase 200,000
shares of Common Stock at a purchase price of $2.00 per share, which options
terminated upon Mr. Matthew's resignation as a director of the Company.
In connection with the Recapitalization, the Company and The Thompson Company
("Thompson") entered into a consulting agreement which has a three-year term and
provides for fees of $250,000 per year (the "Consulting Agreement"). The rights
and obligations of Thompson under the Consulting Agreement were assigned to J.
Sloan & Co., which is owned by Mr. Sloan, a former director of the Company.
During Fiscal 1994, Mr. Sloan received $250,000 in fees pursuant to the
Consulting Agreement.
EMPLOYMENT AGREEMENTS
On October 16, 1994, Mr. Schlesinger entered into an employment agreement with
the Company that has a term that runs through November 15, 1998, at a base
salary of $450,000, subject to annual review and upward adjustment at the
discretion of the Board. This agreement was subsequently amended on January 5,
1995. Pursuant to Mr. Schlesinger's employment agreement, Mr. Schlesinger
received a signing bonus of $125,000. In addition, Mr. Schlesinger received
$168,000 as compensation for all compensation and benefits forfeited by Mr.
Schlesinger from his previous employer and $47,000 for moving and related
costs. On January 6, 1995, the Company filed a voluntary petition for relief
(the "Filing") under chapter 11 ("Chapter 11") of title 11 of the United States
Code in the United States Bankruptcy Court for the Western District of
Washington at Seattle (the "Bankruptcy Court"), seeking to reorganize under
Chapter 11. In connection with the Filing, it is expected that the Company and
Mr. Schlesinger will enter into a new employment agreement, the terms of which
will be subject to approval by the Bankruptcy Court.
7
<PAGE>
On December 28, 1994, Mr. Rothschild entered into an employment agreement with
the Company that has a term that runs until consummation of a Restructuring (as
defined therein), at a base salary of $240,000. Pursuant to Mr. Rothschild's
employment agreement, Mr. Rothschild received a signing bonus of $125,000. In
connection with the Filing, it is expected that the Company and Mr. Rothschild
will enter into a new employment agreement, the terms of which will be subject
to approval by the Bankruptcy Court.
In connection with the Recapitalization, Messrs. Holznagel and Aaron entered
into employment agreements with the Company which have a term that runs through
November 30, 1997, at a base salary of $190,000 and $185,000, respectively,
subject to annual increases based on such executives accomplishments during the
prior year. Pursuant to Messrs. Holznagel and Aaron's employment agreements,
Messrs. Holznagel and Aaron will receive a yearly performance bonus, based upon
the achievement by the Company of goals to be set forth in the management
operating profit plan of the Company for each year, not to exceed $80,000 and
$65,000, respectively. Each of Messrs. Holznagel and Aaron is guaranteed a
minimum yearly performance bonus of $20,000 and $8,160, respectively. Messrs.
Holznagel and Aaron's employment agreements provide that if the Company
terminates such executive's employment without "cause" or if the executive
terminates employment for "good reason," such executive will be entitled to
receive, for a period of no less than 12 months nor more than two years, the
base salary and guaranteed minimum bonus that such executive would have received
had such termination not occurred and to continue to participate in all benefit
plans and receive all other benefits to which such executive was entitled at the
time of the termination. Each of Messrs. Holznagel and Aaron may elect to
receive the severance payments payable under their agreements in a single lump
sum payment.
In connection with the Recapitalization, Messrs. Snyder and Kulp entered into
employments agreements with the Company which had terms that ran through
November 30, 1997, at a base salary of $475,000 and $275,000, respectively, plus
a minimum yearly performance bonus, based upon the achievement by the Company
of goals to be set forth in the management operating profit plan of the Company
for each year, of $50,000 and $20,000, respectively.
Effective in November 1994, Mr. Snyder resigned as Chief Executive Officer of
the Company. Additionally, in December 1994, Mr. Snyder resigned as Chairman
of the Board and as a Director of the Company. Effective in November 1994,
Mr. Kulp resigned as President, Chief Operating Officer and as a Director
of the Company. Pursuant to resignation agreements entered into with each
executive, each of Messrs. Snyder and Kulp were to continue to receive certain
benefits under such executive's employment agreements, including base salary,
for a period of one year following such resignation date. Messrs. Snyder and
Kulp received a guaranteed minimum performance bonus of $50,000 and
$20,000, respectively, for Fiscal 1994. The resignation agreements provided
for lump sum payments for Messrs. Snyder and Kulp of $600,000 (plus
approximately $20,000 for accrued but unused vacation) and $324,583 (plus
approximately $20,000 for accrued but unused vacation), respectively. In
addition, under the terms of the resignation agreements, all stock options
held by Messrs. Snyder and Kulp under the 1992 Option
8
<PAGE>
Plan became fully vested and immediately exercisable upon such resignation date.
In connection with the Filing, and pursuant to the Bankruptcy Code, the Company
has rejected Messrs. Snyder's and Kulp's resignation agreements.
On June 17, 1993, Mr. Spokane entered into an employment agreement with the
Company, at a base salary of $215,000, plus a yearly performance bonus, based
upon the achievement by the Company of goals to be set forth in the management
operating profit plan of the Company for each year, not to exceed $85,000. The
agreement provides that if Mr. Spokane is terminated without "cause", or in the
event of a "change in control", Mr. Spokane will be entitled to receive his
base salary for a period of 12 months. In February 1995, Mr. Spokane ceased to
be employed by the Company. No definitive agreement has been reached regarding
Mr. Spokane's severance arrangement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The determination of Fiscal 1994 executive compensation was made by the members
of the Compensation Committee on November 11, 1993. The committee consisted of
Messrs. Snyder, Bilger, Ressler and Vintiadis. Except for Mr. Snyder, who was
the Chairman of the Board and Chief Executive Officer of the Company from
February 1991 through December 1994, no director who participated in the
determination of Fiscal 1994 compensation is a former or current executive
officer or employee of the Company or has any contract or arrangement with the
Company entitling such member to any form of compensation from the Company,
other than reasonable compensation for serving as a member of the Board. No
executive officer of the Company was a member of the Stock Option Committee
during Fiscal 1994.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Section 145 of the General Corporation Law of the State of Delaware, a
Delaware corporation has the power, under specified circumstances, to indemnify
its directors, officers, employees and agents in connection with actions, suits
or proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against liabilities and expenses incurred in any
such action, suit or proceeding. Article XI of the Company's Restated
Certificate of Incorporation provides that the Company shall indemnify its
officers and directors to the fullest extent permitted by Section 145 of the
General Corporation Law of the State of Delaware.
All directors and executive officers of the Company have entered into
indemnification agreements with the Company pursuant to which the Company
will indemnify, to the fullest extent permitted by applicable law, such officer
or director against liabilities and expenses incurred by such officer or
director in any proceeding or action because such officer or director is or was
a director, officer, employee or agent of the Company and other certain other
circumstances. The indemnification is in addition to the indemnification
provided in the Company's Restated Certificate of Incorporation. In neither
case will indemnification be provided if prohibited under applicable law.
9
<PAGE>
PART 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 25, 1995 information known to the
management of the Company concerning the beneficial ownership of the Common
Stock by (i) each person who is known by the Company to be the beneficial owner
of more than five percent of the outstanding shares of Common Stock, (ii) each
director and executive officer of the Company and (iii) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
Percentage
Number of of
Shares Outstanding
Owned (1) Shares
--------- ------------
EXECUTIVE OFFICERS AND DIRECTORS
<S> <C> <C>
Peter Aaron (2) 18,924 *
Debbie A. Brownfield (3) 6,063 *
Wallace D. Holznagel (4) 22,187 *
Loren R. Rothschild -- --
Alan R. Schlesinger -- --
All directors and executive
officers as group (5 persons) (5) 47,174 *
5% STOCKHOLDERS
Apollo Retail Partners, L.P. (6) 6,887,133 38.5%
c/o Apollo Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Executive Life Insurance Company 898,406 5.0%
of New York
c/o First Boston Asset
Management
12 E. 49th Street - 30th Floor
New York, New York 10017
Fidelity Management Trust Company (7) 50,508 *
(on behalf of managed accounts)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Summer Street Trust: 307,603 1.7%
Fidelity Capital
& Income Fund (8)
82 Devonshire Street
Boston, Massachusetts 02109
10
<PAGE>
<S> <C> <C>
Fidelity Charles Street Trust: 213,794 1.2%
Fidelity
Asset Manager (8)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Charles Street Trust: 25,828 *
Fidelity
Asset Manager: Growth (8)
82 Devonshire Street
Boston, Massachusetts 02109
Variable Insurance Products Fund 45,916 *
II:
Asset Manager Portfolio (8)
82 Devonshire Street
Boston, Massachusetts 02109
Variable Insurance Products Fund: 35,870 *
High
Income Portfolio (8)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Advisor Series II: 35,870 *
Advisor High Yield Fund (8)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Fixed-Income Trust: 562,103 *
Spartan
High Income Fund (8)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Puritan Trust: Fidelity 50,220 *
Puritan
Fund (8)
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Magellan Fund (8) 143,486 *
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Asset Manager Fund (9) 1,434 *
82 Devonshire Street
Boston, Massachusetts 02109
Fidelity Copernicus Fund, L.P. 511,880 *
(8)
82 Devonshire Street
Boston, Massachusetts 02109
11
<PAGE>
<S> <C> <C>
Merrill Lynch Phoenix Fund, Inc. 1,190,420 6.7%
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Morgens Waterfall Vintiadis & 3,082,906 17.2%
Co., Inc. (10)
610 Fifth Avenue, 7th Floor
New York, New York 10020
- ----------------
<FN>
* Percentage equal to less than 1%
(1) Except for applicable community property laws, with respect to the matters
covered by the Voting Agreement (hereinafter defined) and as otherwise
indicated, each person has the sole power to vote and dispose of all shares
of Common Stock listed opposite his or its name. Under the Voting
Agreement, these beneficial owners and certain other persons, holding
approximately 8,717,000 shares or 48.7% of the outstanding Common Stock,
have the right to vote in concert with respect to the election of
directors. See "Item 13 - Certain Relationships and Related Transactions."
(2) Includes 1,047 shares of Common Stock issuable upon exercise of warrants
that have an exercise price of $4.55 per share and 17,639 shares subject to
immediately exercisable, non-qualified stock options that have an exercise
price of $.01 per share.
(3) Includes 3,963 shares of Common Stock subject to immediately exercisable,
non-qualified stock options that have an exercise price of $.01 per share.
(4) Includes 1,472 shares of Common Stock issuable upon exercise of warrants
that have an exercise price of $4.55 per share and 20,381 shares subject to
immediately exercisable, non-qualified stock options that have an exercise
price of $.01 per share.
(5) Includes 2,519 shares of Common Stock issuable upon the exercise of
warrants that have an exercise price of $4.55 per share and 41,983 shares
of Common Stock subject to immediately exercisable, non-qualified stock
options that have an exercise price of $.01 per share.
(6) The sole general partner of ARP is AIF II, L.P. ("AIF II"); the managing
general partner of AIF II is Apollo Advisors, L.P. ("Apollo Advisors"); and
the general partner of Apollo Advisors is Apollo Capital Management, Inc.
(7) Fidelity Management Trust Company is the trustee or managing agent for
various private investment accounts and is a wholly owned subsidiary of FMR
Corp.
(8) Fidelity Management & Research Company is the investment advisor to various
registered investment companies and is a wholly owned subsidiary of FMR
Corp.
12
<PAGE>
(9) Fidelity Investments Canada Limited ("FICL") is the trustee and manager
tovarious Ontario mutual fund trusts and is a wholly owned subsidiary of
FMR Corp. Fidelity Management & Research Company was appointed by FICL as
the investment advisor to Fidelity Asset Manager Fund.
(10) Morgens Waterfall Vintiadis & Company, Inc. ("Morgens") renders
discretionary investment advisory services to (i) Morgens Waterfall
Vintiadis N.V. which holds 95,450 shares of Common Stock, (ii) the Bond
Fund of the CommonFund for Nonprofit Organizations which holds 211,362
shares of Common Stock and(iii) Betje Partners, which holds 102,264 shares
of Common Stock. Messrs. Morgens and Waterfall are the general partners of
(i) Morgens Waterfall Income Partners which holds 98,260 shares of Common
Stock and (ii) Phoenix Partners which holds 287,089 shares of Common Stock.
Messrs. Morgens and Waterfall are officers, directors and stockholders of
Prime, Inc., which is the corporate general partner of three limited
partnerships, each of which serves as a general Partner of (i) Restart
Partners, L.P., which holds 623,586 shares of Common Stock, (ii) Restart
Partners II, L.P., which holds 1,022,800 shares of Common Stock and (iii)
Restart Partners III, L.P., which holds 642,095 shares of Common Stock.
</TABLE>
13
<PAGE>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Item 11 - Executive Compensation" for information regarding certain
contracts with executive officers of the Company.
In connection with the Recapitalization, certain of the Company's post-
Recapitalization stockholders, representing an aggregate of approximately
8,717,000 shares or 98% of the Common Stock outstanding immediately following
the Recapitalization (currently 48.7%), entered into that certain Voting
Agreement dated as of October 30, 1992 (the "Voting Agreement"). The Voting
Agreement provides, among other things, that (i) ARP may designate six persons
to the Board of Directors and (ii) a majority of certain former holders of the
Company's 13-1/2% Senior Subordinated Notes due February 15, 1995, which notes
were exchanged for Common Stock pursuant to the Recapitalization, may designate
two persons to the Board of Directors. The Voting Agreement will terminate upon
the earlier of (i) October 30, 2002, or (ii) the date upon which at least 25% of
the then outstanding shares of Common Stock are publicly held pursuant to one or
more underwritten registered offerings of primary shares.
In connection with the Recapitalization, the parties to the Recapitalization
Agreement (and/or their permitted assignees) entered into an equity registration
rights agreement and a debt registration rights agreement. Under certain
circumstances, the holders of at least 10% of the aggregate principal amount of
the then outstanding Securities (as defined therein) covered by such agreements
may exercise up to two demand registrations with respect to such Securities.
The Company will pay all expenses (other than underwriting discounts and
commissions) in connection with all such registrations. The agreements also
provide for certain piggyback registration rights. The Common Stock held by ARP
and Morgens is covered by the equity registration rights agreement pursuant to
its terms.
Pursuant to the Recapitalization, Executive Life Insurance Company of New York
("ELICNY") received 898,406 shares of the Company's Common Stock and $7.8
million ($6.4 million after adjustment for the Infusion) in principal amount of
the Company's 10-1/4% Senior Subordinated Notes due 1999 (the "10-1/4% Notes").
During Fiscal 1994, the Company paid ELICNY $0.8 million of cash interest on the
10-1/4% Notes. In addition, at October 29, 1994 the Company had accrued $0.4
million of interest on the 10-1/4% Notes, which was subsequently issued to
ELICNY in additional securities of the Company as interest paid in kind.
On December 1, 1993, the Company consummated a capital infusion and debt
reduction plan (the "Infusion"). The Infusion included, among other things, the
following components: (i) the issuance of 4,466,206 shares of the Company's
Series A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock") pursuant to the exercise of transferable subscription rights
and a related standby purchase (the "Standby Purchase") and (ii) the application
of the net proceeds from the sale of the Series A Preferred Stock, together with
cash flow from operations, to repurchase $13.0 million aggregate principal
amount of the 10-1/4% Notes at par, together with accrued interest through the
repurchase date, and the concurrent amendment of the terms of the 10-1/4% Notes
that remain outstanding to, among other things, reduce the interest rate of the
10-1/4% Notes from 11-1/2% to 10-1/4% and to require the Company to pay a
specified premium in order to effect any future redemption thereof prior to
November 1, 1996.
In connection with the Infusion and related Standby Purchase, ARP and Morgens
executed a Standby Purchase Agreement pursuant to which they acquired 1,961,197
and 980,867 shares, respectively, of the Company's Series A Preferred Stock in
December 1993. Each share of the Series A Preferred Stock automatically
converted into two shares of Common Stock on March 14, 1994, concurrent with the
stockholders approval of an increase in the number of authorized shares of
Common Stock of the
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Company from 15.0 million to 40.0 million shares. The Company reimbursed
certain fees and expenses incurred by parties to the Standby Purchase Agreement.
In connection with the Infusion, certain funds managed by Fidelity Management
and Research Company or Fidelity Management Trust Company (the "Fidelity
Funds"), the holders of the remaining 10-1/4% Notes, became the holders of more
than 5% of the Company's Common Stock. Accordingly, the Company has reflected
the entire amount of the 10-1/4% Notes as related party debt at October 29, 1994
and October 30, 1993. During Fiscal 1994, the Company paid the Fidelity Funds
$6.9 million of cash interest on the 10-1/4% Notes. In addition, at October 29,
1994 the Company had accrued $3.6 million of interest on the 10-1/4% Notes,
which was subsequently issued to the Fidelity Funds in additional securities of
the Company as interest paid in kind.
In addition to the above, see "Item 1 - Business-Reorganization-Background" for
a discussion of certain arrangements with the holders of the 10-1/4% Notes.
The Company believes that, to the extent applicable, all of the transactions
described above were, and intends that all transactions with affiliated parties
will continue to be, on terms no less favorable to the Company than those
available from unaffiliated parties offering comparable goods and services.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LAMONTS APPAREL, INC.
By: /S/ LOREN R. ROTHSCHILD
-----------------------
LOREN R. ROTHSCHILD
Vice Chariman of the Board
Date: February 27, 1995
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