Exhibit 2.1

                         UNITED STATES BANKRUPTCY COURT
                              DISTRICT OF DELAWARE

In re:                                  )     Chapter 11
                                        )
LOEHMANN'S, INC.,                       )     Case No. 99-1138 (MFW)
                                        )
                  Debtor.               )

               AMENDED PLAN OF REORGANIZATION OF LOEHMANN'S, INC.
                     UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

                    PAUL, WEISS, RIFKIND, WHARTON & GARRISON
                    Alan W. Kornberg
                    Jeffrey D. Saferstein
                    1285 Avenue of the Americas
                    New York, New York  10019-6064
                    (212) 373-3000

                                      -and-

                    YOUNG CONAWAY STARGATT & TAYLOR, LLP
                    James L. Patton, Jr.
                    Pauline K. Morgan
                    1110 N. Market Street
                    P.O. Box 391
                    Rodney Square North, 11th Floor
                    Wilmington, Delaware 19801
                    (302) 571-6600

                    Attorneys for the Debtor

Dated: Wilmington, Delaware
       April 24, 2000
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                                Table of Contents
                                -----------------

                                                                       Page

I.    DEFINITIONS AND CONSTRUCTION OF TERMS...............................1
      A.  Definitions.....................................................1
      B.  Interpretation, Application of Definitions and Rules of
          Construction...................................................11

II.   CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS......................12
      A.  Introduction...................................................12
          1. Unclassified Claims (not entitled to vote on the Plan)......12
          2. Unimpaired Classes of Claims (deemed to have accepted the
             Plan and, therefore, not entitled to vote on the Plan)......12
          3. Impaired Class of Claims (entitled to vote on the Plan).....13
          4. Impaired Class of Equity Interests (deemed to have rejected
             the Plan and, therefore, not entitled to vote on the Plan)..13

III.  TREATMENT OF ADMINISTRATIVE
      EXPENSE CLAIMS AND PRIORITY TAX CLAIMS.............................13
      A.  Administrative Claims..........................................13
      B.  Professional Compensation And Reimbursement Claims.............14
      C.  Priority Tax Claims............................................14

IV.   TREATMENT OF CLAIMS AND
      EQUITY INTERESTS...................................................14
      A.  Class 1 - Other Priority Claims................................14
          1. Distributions...............................................14
          2. Impairment and Voting.......................................15
      B.  Class 2 - Other Secured Claims.................................15
          1. Distributions...............................................15
          2. Impairment and Voting.......................................15
      C.  Class 3 - DIP Financing Claims.................................15
      D.  Class 4 - Convenience Claims...................................16
          1. Distributions...............................................16
          2. Impairment and Voting.......................................16
          3. Election to be Treated as a Convenience Claim...............16
      E.  Class 5 - General Unsecured Creditors..........................16
          1. Distributions...............................................16
          2. Impairment and Voting.......................................17
      F.  Class 6 - Equity Interests.....................................17
          1. Distributions...............................................17
          2. Impairment and Voting.......................................17

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                                                                       Page

V.    PROVISIONS REGARDING CORPORATE
      GOVERNANCE AND MANAGEMENT
      OF THE REORGANIZED DEBTOR..........................................17
      A.  Directors and Officers of Reorganized Loehmann's; Amended
          Certificate of Incorporation and Amended By-Laws...............17
          1. Board of Directors..........................................17
          2. Officers of Reorganized Loehmann's..........................17
          3. Amended Certificate of Incorporation and Amended
             Loehmann's By-Laws..........................................17
      B.  Securities to Be Issued Pursuant to the Plan; New Common Stock.18
      C.  Reorganized Loehmann's Equity Incentive Plan...................18

VI.   MEANS OF IMPLEMENTATION, PROVISIONS REGARDING VOTING AND
      DISTRIBUTIONS UNDER THE PLAN AND TREATMENT OF DISPUTED, CONTINGENT
      AND UNLIQUIDATED ADMINISTRATIVE CLAIMS AND CLAIMS..................18
      A.  Voting of Claims...............................................18
      B.  Distributions..................................................19
          1. Method of Distributions Under the Plan......................19
          2. Disputed General Unsecured Claims...........................22
          3. Objections To And Resolution Of Administrative
             Claims and Claims; Administrative, Priority and Convenience
             Claims Reserve..............................................22
          4. Allowance of Disputed Administrative, Priority and
             Convenience Claims..........................................23
          5. Release of Shares from Disputed Claims Reserve..............23
          6. Allocation of Consideration.................................24
          7. Cancellation and Surrender of Existing Securities and
             Agreements..................................................24
      C.  Estimation.....................................................24
      D.  Administrative Claims of Indenture Trustee.....................25
      E.  Nonconsensual Confirmation.....................................25
      F.  The Amended Certificate of Incorporation, the Amended By-Laws
          and Other Implementation Documents.............................25

VII.  EFFECT OF CONFIRMATION OF THIS PLAN................................25
      A.  Continued Corporate Existence..................................25
      B.  Vesting of Assets..............................................26
      C.  Discharge of the Debtor........................................26
      D.  Injunction.....................................................26
      E.  Extinguishment of Causes of Action Under the Avoiding
          Power Provisions...............................................27
      F.  Votes Solicited in Good Faith..................................27

                                       ii
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                                                                       Page

      G.  Administrative Claims Incurred after the Confirmation Date.....27
      H.  The Debtor's Release...........................................28
      I.  Exculpation, Release and Injunction of Released Parties........28
          1. Exculpation.................................................28
          2. Injunction..................................................28
          3. Limitation of Governmental Releases.........................29
      J.  Term of Bankruptcy Injunction or Stays.........................29
      K.  Preservation of Insurance......................................29
      L.  Officers' and Directors' Indemnification Rights and Insurance..29

VIII. RETENTION OF JURISDICTION..........................................29

IX.   MISCELLANEOUS PROVISIONS...........................................30
      A.  Payment of Statutory Fees......................................30
      B.  Dissolution of Creditors Committee.............................30
      C.  Modification of the Plan.......................................31
      D.  Governing Law..................................................31
      E.  Filing or Execution of Additional Documents....................31
      F.  Withholding and Reporting Requirements.........................31
      G.  Exemption From Transfer Taxes..................................31
      H.  Section 1145 Exemption.........................................32
      I.  Waiver of Federal Rule of Civil Procedure 62(a)................32
      J.  Headings.......................................................32
      K.  Exhibits/Schedules.............................................32
      L.  Notices........................................................32
      M.  Plan Supplement................................................33
      N.  Conflict.......................................................33
      O.  Setoff by the United States....................................33

X.    EXECUTORY CONTRACTS AND UNEXPIRED LEASES...........................33

XI.   BENEFIT PLANS......................................................34

XII.  EFFECTIVENESS OF THE PLAN..........................................34
      A.  Conditions Precedent to Effectiveness..........................34
      B.  Waiver of Conditions...........................................34
      C.  Effect of Failure of Conditions................................35
      D.  Vacatur of Confirmation Order..................................36

Exhibits to the Plan

A     -   Summary of Equity Incentive Plan

                                       iii
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            Loehmann's, Inc. proposes the following amended plan of
reorganization under section 1121(a) of the Bankruptcy Code.

                                       I.

                      DEFINITIONS AND CONSTRUCTION OF TERMS

            A. Definitions. Unless otherwise defined herein, or the context
otherwise requires, the following terms shall have the respective meanings set
forth below:

Administrative Claim               means any right to payment constituting
                                   a cost or expense of administration of the
                                   Chapter 11 Case of a kind specified under
                                   section 503(b) of the Bankruptcy Code and
                                   entitled to priority under section 507(a)(1),
                                   507(b) or 1114(e)(2) of the Bankruptcy Code,
                                   including, without limitation, any actual and
                                   necessary costs and expenses of preserving
                                   the Debtor's estate, any actual and necessary
                                   costs and expenses of operating the Debtor's
                                   business, any indebtedness or obligations
                                   incurred or assumed by the Debtor in
                                   Possession in connection with the conduct of
                                   its business, including, without limitation,
                                   for the acquisition or lease of property or
                                   an interest in property or the rendition of
                                   services, all compensation and reimbursement
                                   of expenses to the extent awarded by the
                                   Court under sections 330, 331 or 503 of the
                                   Bankruptcy Code, and any fees or charges
                                   assessed against the Debtor's estate under
                                   section 1930 of chapter 123 of title 28 of
                                   the United States Code.

Administrative, Priority           and has the meaning assigned to such term in
Convenience Claims Reserve         Section VI.B.3(b)(i) of the Plan.
<PAGE>

Allowed Claim                      means, with reference to any Claim, (a)
                                   any Claim against the Debtor which has been
                                   listed by the Debtor in its Schedules, as
                                   such Schedules may be amended by the Debtor
                                   from time to time in accordance with
                                   Bankruptcy Rule 1009, as liquidated in amount
                                   and not disputed or contingent, and with
                                   respect to which no contrary proof of claim
                                   has been filed, (b) any Claim specifically
                                   allowed under the Plan, (c) any Claim which
                                   is not Disputed or (d) any Claim the amount
                                   or existence of which, if Disputed, (i) has
                                   been determined by a Final Order of a court
                                   of competent jurisdiction other than the
                                   Court, or (ii) has been allowed by Final
                                   Order of the Court; provided, however, that
                                   any Claims allowed solely for the purpose of
                                   voting to accept the Plan pursuant to an
                                   order of the Court shall not be considered
                                   "Allowed Claims" hereunder.

Amended By-Laws                    means the Amended and Restated
                                   By-Laws of Reorganized Loehmann's, which
                                   shall be in substantially the form contained
                                   in the Plan Supplement.

Amended Certificate of             means the amended and restated Certificate of
Incorporation                      Incorporation of Reorganized Loehmann's,
                                   which shall be in substantially the form
                                   contained in the Plan Supplement.

Available Shares                   means all shares of New Common Stock
                                   to be distributed to the holders of Allowed
                                   General Unsecured Claims less the number of
                                   shares of New Common Stock deposited into the
                                   Disputed Claims Reserve.

Ballots                            means each of the ballot forms distributed
                                   with the Disclosure Statement to each holder
                                   of an Impaired Claim (other than to holders
                                   not entitled to vote on the Plan) upon which
                                   is to be indicated, among other things,
                                   acceptance or rejection of the Plan.

Bankruptcy Code                    means title 11 of the United States Code,
                                   11 U.S.C.ss.ss. 101 et seq., as in effect on
                                   the date hereof.

                                        2
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Bankruptcy Rules                   means the Federal Rules of Bankruptcy
                                   Procedure as promulgated by the United States
                                   Supreme Court under section 2075 of title 28
                                   of the United States Code, and local rules of
                                   the Court, as the context may require.

Business Day                       means any day on which commercial banks
                                   are open for business, and not authorized to
                                   close, in the City of New York, New York,
                                   except any day designated as a legal holiday
                                   by Bankruptcy Rule 9006(a).

Cash                               means legal tender of the United States of
                                   America.

Causes of Action                   means all claims, choses in action and causes
                                   of action (including those assertable
                                   derivatively), liabilities, obligations,
                                   suits, debts, sums of money, damages,
                                   demands, judgments, whether known or unknown,
                                   now owned or hereafter acquired by the
                                   Debtor, and the Cash and non-Cash proceeds
                                   thereof, whether arising under the Bankruptcy
                                   Code or other Federal, state or foreign law,
                                   equity or otherwise, including, without
                                   limitation, any causes of action arising
                                   under sections 510, 544, 547, 548, 549, 550,
                                   551 or any other section of the Bankruptcy
                                   Code.

Chapter 11 Case                    means the chapter 11 case commenced by the
                                   Debtor.

Claim                              means any claim against the Debtor as such
                                   term is defined in section 101(5) of the
                                   Bankruptcy Code.

Class                              means a group of Claims or Equity Interests
                                   as classified under the Plan.

Collateral                         means any property or interest in property of
                                   the Debtor's estate subject to a Lien to
                                   secure the payment or performance of a Claim,
                                   which Lien is not subject to avoidance under
                                   the Bankruptcy Code or otherwise invalid
                                   under the Bankruptcy Code or applicable state
                                   law.

                                        3
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Confirmation Date                  means the date on which the Confirmation
                                   Order is entered by the Court.

Confirmation Hearing               means the hearing to consider confirmation of
                                   the Plan pursuant to section 1128 of the
                                   Bankruptcy Code, as it may be adjourned or
                                   continued from time to time.

Confirmation Order                 means the order entered by the Court
                                   confirming the Plan pursuant to section 1129
                                   of the Bankruptcy Code.

Convenience Claims                 means and includes any Claim which would
                                   otherwise be a General Unsecured Claim that
                                   (i) is Allowed in an amount of $2,000 or less
                                   and (ii) is Allowed in the amount of greater
                                   than $2,000 but which is reduced to $2,000 by
                                   the election of the holder thereof pursuant
                                   to the holder's Ballot.

Court                              means, (a) the United States Bankruptcy Court
                                   for the District of Delaware, having
                                   jurisdiction over the Chapter 11 Case; (b) to
                                   the extent there is no reference pursuant to
                                   section 157 of title 28 of the United States
                                   Code, the United States District Court for
                                   the District of Delaware; and (c) any other
                                   court having jurisdiction over the Chapter 11
                                   Case.

Creditors Committee                means the Official Committee of
                                   Unsecured Creditors appointed by the United
                                   States Trustee in the Chapter 11 Case, as
                                   constituted from time to time.

Debtor                             means Loehmann's, Inc.

Debtor in Possession               means the Debtor in its capacity as debtor in
                                   possession in the Chapter 11 Case pursuant to
                                   sections 1107(a) and 1108 of the Bankruptcy
                                   Code.

DIP Credit Facility                means that certain Ratification and Amendment
                                   Agreement dated as of May 19, 1999 between
                                   Loehmann's, Inc. and Congress Financial
                                   Corporation, as amended from time to time.

                                        4
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DIP Financing Claims               means all Claims arising under or relating to
                                   the DIP Credit Facility and all agreements
                                   and instruments relating thereto.

Disclosure Statement               means the written disclosure statement that
                                   relates to this Plan, as approved by the
                                   Court pursuant to section 1125 of the
                                   Bankruptcy Code and Bankruptcy Rule 3017, as
                                   such disclosure statement may be amended,
                                   modified or supplemented from time to time.

Disputed Claim                     means (a) any Claim, proof of which was not
                                   timely or properly filed and which has been
                                   or hereafter is listed on the Schedules as
                                   unliquidated, disputed or contingent, or is
                                   not listed in the Schedules; (b) any Claims
                                   as to which the Debtor, the Creditors
                                   Committee or any other party in interest has
                                   filed an objection or request for estimation
                                   on or before the Effective Date or such other
                                   applicable limitation period fixed by the
                                   Plan, the Bankruptcy Code, the Bankruptcy
                                   Rules or the Bankruptcy Court, except to the
                                   extent that such objection or request for
                                   estimation is withdrawn or determined by a
                                   Final Order in favor of the holder of such
                                   Claim; or (c) any Claim as to which a proof
                                   of claim is timely and properly filed, except
                                   to the extent that the amount asserted in
                                   such proof of claim does not exceed the
                                   liquidated, undisputed and noncontingent
                                   amount set forth in the Schedules with
                                   respect to such Claim. A Claim that is a
                                   Disputed Claim under subsection (b) of this
                                   definition shall cease to be Disputed upon
                                   the withdrawal of such objection or request
                                   for estimation or a determination thereon by
                                   a Final Order in favor of the holder of such
                                   Claim.

Disputed Claims Reserve            means any shares of New Common Stock issued
                                   to the Transfer Agent for distribution on
                                   Subsequent Distribution Dates and the Final
                                   Distribution Date pursuant to Section
                                   VI.B.1(f) of the Plan.

                                        5
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Effective Date                     means the first Business Day on which all of
                                   the conditions specified in Section XII.A of
                                   the Plan have been satisfied or waived in
                                   accordance with Section XII.B. of the Plan;
                                   provided, however, that if a stay of the
                                   Confirmation Order is in effect on such date,
                                   the Effective Date will be the first Business
                                   Day after such stay is no longer in effect.

Equity Incentive Plan              has the meaning assigned to such term in
                                   Section V.C. of the Plan.

Equity Interest or Interest        means any share of preferred stock or common
                                   stock or other instrument evidencing an
                                   ownership interest in the Debtor, whether or
                                   not transferable, and any option, warrant, or
                                   right, contractual or otherwise, to acquire,
                                   sell or subscribe for any such interest.

Final Distribution Date            means the date on which Reorganized
                                   Loehmann's makes a final distribution
                                   pursuant to Section VI.B.1.(e) of this Plan.
                                   The Final Distribution Date shall be a date,
                                   as determined by Reorganized Loehmann's, in
                                   consultation with the Creditors Committee,
                                   after resolution of all Disputed Claims.

Final Order                        means an order or judgment of the Court, or
                                   other court of competent jurisdiction, as
                                   entered on the docket in the Chapter 11 Case,
                                   the operation or effect of which has not been
                                   stayed, reversed, vacated or amended, and as
                                   to which order or judgment (or any revision,
                                   modification, or amendment thereof) the time
                                   to appeal, petition for certiorari, or seek
                                   review or rehearing has expired and as to
                                   which no appeal, petition for certiorari, or
                                   petition for review or rehearing was filed
                                   or, if filed, remains pending.

                                        6
<PAGE>

General Unsecured Claim            means a Claim that is not a Secured Claim,
                                   Administrative Claim, Priority Tax Claim,
                                   Other Priority Claim or Convenience Claim,
                                   and shall include, without limitation, (a)
                                   Claims of trade creditors of Loehmann's, (b)
                                   Claims of customers of Loehmann's that are
                                   not Priority Claims, (c) Claims of employees
                                   of Loehmann's that are not Priority Claims,
                                   (d) Claims arising as a result of the
                                   rejection by Loehmann's of executory
                                   contracts or unexpired leases pursuant to
                                   section 365 of the Bankruptcy Code, (e)
                                   Claims arising as a result of pre-Petition
                                   Date litigation against Loehmann's that are
                                   not subordinated under section 510(b) of the
                                   Bankruptcy Code and (f) Senior Note Claims.

Government                         has the meaning assigned to such term in
                                   Section VII.I.3 of the Plan.

Impaired                           means, when used with reference to a Claim, a
                                   Claim that is impaired within the meaning of
                                   section 1124 of the Bankruptcy Code.

Indenture Trustee                  means, with respect to the Senior Note
                                   Indenture, United States Trust Company of New
                                   York, in its capacity as trustee under such
                                   indenture.

Indenture Trustee Expenses         means any reasonable fees and reasonable
                                   documented out-of-pocket costs and expenses
                                   incurred after the Petition Date and through
                                   and including the Final Distribution Date by
                                   the Indenture Trustee. Such amounts shall
                                   include, without limitation, the reasonable
                                   documented out-of-pocket costs and expenses
                                   and reasonable fees of legal counsel to the
                                   Indenture Trustee (as determined in
                                   accordance with the Indenture).

Initial                            Distribution Date means the Effective Date or
                                   as soon thereafter as practicable.

Lien                               has the meaning set forth in section 101 of
                                   the Bankruptcy Code.

Loehmann's                         means Loehmann's, Inc.

                                        7
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New Common Stock                   means the common stock of Reorganized
                                   Loehmann's, par value $.01 per share, to be
                                   authorized and issued by Reorganized
                                   Loehmann's on the Effective Date pursuant to
                                   the Plan.

Old Common Stock                   means the common and preferred stock, par
                                   value $.01 per share, issued by Loehmann's
                                   and outstanding on the Petition Date.

Other Priority Claim               means Claims entitled to priority pursuant to
                                   section 507(a) of the Bankruptcy Code (other
                                   than Administrative Claims and Priority Tax
                                   Claims), including, without limitation,
                                   certain allowed employee compensation and
                                   benefit claims of the Debtor's employees
                                   incurred within ninety (90) and one hundred
                                   eighty (180) days, respectively, prior to the
                                   Petition Date.

Other Secured Claims               means any Claim, other than the DIP Financing
                                   Claims, to the extent reflected in the
                                   Schedules or a proof of claim filed as a
                                   Secured Claim, which is secured by a Lien on
                                   Collateral to the extent of the value of such
                                   Collateral, as determined in accordance with
                                   section 506(a) of the Bankruptcy Code, or, in
                                   the event that such Claim is subject to
                                   setoff under Section 553 of the Bankruptcy
                                   code, to the extent of such setoff.

Petition Date                      means May 18, 1999, the date on which the
                                   Debtor filed its petition for relief
                                   commencing the Chapter 11 Case.

Plan                               means this Plan, as it may be amended or
                                   modified from time to time, together with all
                                   addenda, exhibits, schedules or other
                                   attachments, if any.

Plan Supplement                    means the forms of documents specified in
                                   Section IX.M. of the Plan.

                                        8
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Pro Rata                           means, at any time, the proportion that the
                                   amount of a Claim in a particular Class bears
                                   to the aggregate amount of all Claims
                                   (including Disputed Claims) in such Class,
                                   unless in each case the Plan provides
                                   otherwise.

Priority Tax Claim                 means any unsecured Claim held by a
                                   governmental unit entitled to a priority in
                                   right of payment under section 507(a)(8) of
                                   the Bankruptcy Code.

Quarter                            means the period beginning on the Effective
                                   Date and ending on the immediately succeeding
                                   July 31, October 31, January 31 or April 30,
                                   and each three-month period thereafter, as
                                   the context may require.

Record Date                        means the record date for purposes of making
                                   distributions under the Plan on account of
                                   Allowed Claims which date shall be the
                                   Confirmation Date.

Released Parties                   has the meaning assigned to such term in
                                   Section VII.H. of the Plan.

Reorganized Debtor                 means the Debtor, or any successor thereto by
                                   merger, consolidation, or otherwise, on and
                                   after the Effective Date.

Reorganized Loehmann's             means Loehmann's, or any successor thereto by
                                   merger, consolidation, or otherwise, on and
                                   after the Effective Date.

Schedules                          means the schedules of assets and
                                   liabilities, statements of financial affairs,
                                   and lists of holders of Claims and Equity
                                   Interests filed with the Court by the Debtor,
                                   including any amendments or supplements
                                   thereto.

Scheduled                          means, with respect to any Claim or Equity
                                   Interest, the status and amount, if any, of
                                   such Claim or Equity Interest as set forth in
                                   the Schedules.

                                        9
<PAGE>

Secured Claim                      means a Claim that is secured by a Lien on
                                   property or interests in property, in which
                                   the Debtor has an interest, to the extent of
                                   the value as of the Effective Date, or such
                                   other date as is established by the Court, of
                                   such interest or Lien determined by a Final
                                   Order of the Court pursuant to section 506 of
                                   the Bankruptcy Code or as otherwise agreed
                                   upon in writing by the Debtor and the holder
                                   of such Claim.

Senior Note Claims                 means all Claims directly or indirectly
                                   arising from or under or related in any way
                                   to the Senior Note Indenture, the Senior
                                   Notes, and any of the documents, instruments
                                   and agreements relating thereto, as amended,
                                   supplemented or modified, except Indenture
                                   Trustee Expenses.

Senior Note Indenture              means that certain Indenture, dated as of May
                                   10, 1996 between Loehmann's, as issuer, and
                                   United States Trust Company of New York, as
                                   Trustee, pursuant to which the 117/8% Senior
                                   Notes were issued, together with any
                                   amendments or supplements thereto.

Senior Noteholders                 means the holders of the Senior Notes.

Senior Notes   `                   means the 117/8% Notes, due May 15, 2003, of
                                   Loehmann's issued and outstanding under or
                                   pursuant to the Senior Note Indenture.

Subsequent Distribution            means any distribution of Available Shares
                                   made to the holders of Allowed General
                                   Unsecured Claims on a Subsequent Distribution
                                   Date in accordance with Section VI.B.1(d) of
                                   the Plan.

Subsequent Distribution Date       means any date, as determined by Reorganized
                                   Loehmann's, in consultation with the
                                   Creditors Committee, which is after the
                                   Effective Date and prior to the Final
                                   Distribution Date on which a distribution of
                                   Available Shares is made to holders of
                                   Allowed General Unsecured Claims in
                                   accordance with Section VI.b.1(d) of the
                                   Plan.

                                       10
<PAGE>

Tort Claim                         means a Claim arising from or relating to (i)
                                   the commission or alleged commission of a
                                   tort including, without limitation, personal
                                   injury Claims, or any indemnification Claim
                                   arising from a tort liability, (ii) any
                                   general liability Claim, or (iii) any Claim
                                   predicated upon or arising under Title VII of
                                   the United States Code.

Transfer Agent                     means the transfer agent for the New Common
                                   Stock.

            B. Interpretation, Application of Definitions and Rules of
Construction.

            Wherever from the context it appears appropriate, each term stated
in either the singular or the plural shall include both the singular and plural,
and pronouns stated in the masculine, feminine or neuter gender shall include
the masculine, feminine and neuter, such meanings to be applicable to both the
singular and plural forms of the terms defined. Capitalized terms in the Plan
that are not defined herein shall have the same meaning assigned to such terms
by the Bankruptcy Code or Bankruptcy Rules, as the case may be. The words
"herein," "hereof," and "hereunder" and other words of similar import refer to
the Plan as a whole and not to any particular section or subsection in the Plan
unless expressly provided otherwise. All gender references shall be deemed to
refer to both genders. The words "includes" and "including" are not limiting and
mean that the things specifically identified are set forth for purposes of
illustration, clarity or specificity and do not in any respect qualify,
characterize or limit the generality of the class within which such things are
included. Captions and headings to articles, sections and exhibits are inserted
for convenience of reference only, are not a part of this Plan, and shall not be
used to interpret this Plan. The rules of construction set forth in section 102
of the Bankruptcy Code shall apply to this Plan. In computing any period of time
prescribed or allowed by this Plan, the provisions of Bankruptcy Rule 9006(a)
shall apply.

                                       11
<PAGE>

                                       II.

                  CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS

            A. Introduction.

            All Claims and Equity Interests, except Administrative Claims and
Priority Tax Claims, are placed in the Classes set forth below. In accordance
with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and
Priority Tax Claims, as described below, have not been classified.

            A Claim or Equity Interest is placed in a particular Class only to
the extent that the Claim or Equity Interest falls within the description of
that Class, and is classified in other Classes to the extent that any portion of
the Claim or Equity Interest falls within the description of such other Classes.
A Claim is also placed in a particular Class for the purpose of receiving
distributions pursuant to the Plan only to the extent that such Claim is an
Allowed Claim in that Class and such Claim has not been paid, released, or
otherwise settled prior to the Effective Date.

                  1.    Unclassified Claims (not entitled to vote on the
                        Plan).

                        (a)   Administrative Claims.

                        (b)   Priority Tax Claims.

                  2.    Unimpaired Classes of Claims (deemed to have
                        accepted the Plan and, therefore, not entitled to vote
                        on the Plan).

                        (a)   Class 1: Other Priority Claims.

                        Class 1 consists of all Other Priority Claims.

                        (b)   Class 2: Other Secured Claims.

                        Class 2 consists of all Other Secured Claims.

                        (c)   Class 3: DIP Financing Claims.

                        Class 3 consists of all DIP Financing Claims.

                                       12
<PAGE>

                  3.    Impaired Class of Claims (entitled to vote on the
                        Plan).

                        (a)   Class 4: Convenience Claims.

                        Class 4 consists of all Convenience Claims.

                        (b)   Class 5:  General Unsecured Claims.

                        Class 5 consists of all General Unsecured Claims.

                  4.    Impaired Class of Equity Interests (deemed to have
                        rejected the Plan and, therefore, not entitled to vote
                        on the Plan).

                        (d)   Class 6: Equity Interests.

                        Class 6 consists of all Equity Interests.

                                      III.

                           TREATMENT OF ADMINISTRATIVE
                     EXPENSE CLAIMS AND PRIORITY TAX CLAIMS

            A. Administrative Claims.

            Except to the extent that any entity entitled to payment of any
Allowed Administrative Claim agrees to a different treatment, each holder of an
Allowed Administrative Claim shall receive (a) Cash in an amount equal to such
Allowed Administrative Claim on the later of the Effective Date and the date
such Administrative Claim becomes an Allowed Administrative Claim, or as soon
thereafter as is practicable or (b) such other treatment as the Debtor and such
holder shall have agreed upon in writing, subject to the consent of the
Creditors Committee; provided, however, that Allowed Administrative Claims
representing liabilities incurred in the ordinary course of business by the
Debtor in Possession or liabilities arising under loans or advances to or other
obligations incurred by the Debtor in Possession (to the extent authorized and
approved by the Court if such authorization and approval was required under the
Bankruptcy Code) shall be paid in full and performed by the Reorganized Debtor,
as the case may be, in the ordinary course of business in accordance with the
terms and subject to the conditions of any agreements governing, instruments
evidencing, or other documents relating to, such transactions.

                                       13
<PAGE>

            B. Professional Compensation And Reimbursement Claims.

            All entities seeking an award by the Court of compensation for
services rendered or reimbursement of expenses incurred through and including
the Confirmation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Effective Date by the date that
is 30 days after the Effective Date or such other date as may be fixed by the
Court and (b) if granted, such an award by the Court shall be paid in full in
such amounts as are awarded by the Court (i) on the date such Administrative
Claim becomes an Allowed Administrative Claim, or as soon thereafter as is
practicable or (ii) upon such other terms as may be mutually agreed upon between
such holder of an Administrative Claim and the Debtor in Possession or, on and
after the Effective Date, the Reorganized Debtor.

            C. Priority Tax Claims.

            Except to the extent that a holder of an Allowed Priority Tax Claim
agrees to a different treatment, each holder of an Allowed Priority Tax Claim
shall receive, at the sole option of the Reorganized Debtor, (a) Cash in an
amount equal to such Allowed Priority Tax Claim on the later of the Effective
Date and the date such Priority Tax Claim becomes an Allowed Priority Tax Claim,
or as soon thereafter as is practicable, or (b) equal annual Cash payments in an
aggregate amount equal to such Allowed Priority Tax Claim, together with
interest (i) with respect to federal taxes, at a fixed annual rate equal to the
federal statutory rate as provided in 26 U.S.C. ss. 6621, over a period through
the sixth anniversary of the date of assessment of such Allowed Priority Tax
Claim; and (ii) with respect to state and city taxes, at the rate applicable
under state or local law.

                                       IV.

                             TREATMENT OF CLAIMS AND
                                EQUITY INTERESTS

            A. Class 1 - Other Priority Claims.

                  1. Distributions. Except to the extent that a holder of an
Allowed Other Priority Claim shall have agreed in writing to a different
treatment, subject to the consent of the Creditors Committee, in full and final
satisfaction of such claim, each holder of an Allowed Other Priority Claim shall
receive payment in an amount equal to such Allowed Claim in full in Cash on the
later of the Effective Date and the date when such Other Priority Claim becomes
an Allowed Claim, or as soon thereafter as practicable.

                                       14
<PAGE>

                  2. Impairment and Voting. Class 1 is unimpaired under the
Plan. Holders of Allowed Claims in Class 1 are presumed to accept the Plan and
are not entitled to vote to accept or reject the Plan.

            B. Class 2 - Other Secured Claims.

                  1. Distributions. Except to the extent that a holder of an
Allowed Secured Claim shall have agreed in writing to a different treatment
subject to the consent of the Creditors Committee at the sole option of the
Debtor, in full and final satisfaction of such claim, (i) each Allowed Other
Secured Claim shall be reinstated and rendered unimpaired in accordance with
section 1124(2) of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law that entitles the holder of an Allowed
Other Secured Claim to demand or receive payment of such Allowed Other Secured
Claim prior to the stated maturity of such Allowed Other Secured Claim from and
after the occurrence of a default, (ii) each holder of an Allowed Other Secured
Claim shall receive Cash in an amount equal to such Allowed Other Secured Claim,
including any interest on such Allowed Other Secured Claim required to be paid
pursuant to section 506(b) of the Bankruptcy Code, on the later of the Effective
Date and the date such Allowed Other Secured Claim becomes an Allowed Other
Secured Claim, or as soon thereafter as is practicable, or (iii) each holder of
an Allowed Other Secured Claim shall receive the Collateral securing its Allowed
Other Secured Claim and any interest on such Allowed Other Secured Claim
required to be paid pursuant to section 506(b) of the Bankruptcy Code, in full
and complete satisfaction of such Allowed Other Secured Claim on the later of
the Effective Date and the date such Allowed Other Secured Claim becomes an
Allowed Other Secured Claim, or as soon thereafter as is practicable.

                  2. Impairment and Voting. Class 2 is unimpaired under the
Plan. The holders of Allowed Claims in Class 2 are presumed to accept the Plan
and are not entitled to vote to accept or reject the Plan.

            C. Class 3 - DIP Financing Claims.

                  1. Distributions. On the Effective Date, or as soon thereafter
as practicable, in full and final satisfaction of such claims, each holder of a
DIP Financing Claim shall receive payment in full in Cash.

                  2. Impairment and Voting. Class 3 shall be unimpaired under
the Plan. The holders of DIP Financing Claims are presumed to accept the Plan
and are not entitled to vote to accept or reject the Plan.

                                       15
<PAGE>

            D. Class 4 - Convenience Claims.

                  1. Distributions. Each holder of an Allowed Convenience Claim
in Class 4 shall receive Cash in an amount equal to fifty percent (50%) of such
Allowed Convenience Claim on the later of (i) the Effective Date, or (ii) 30
days after the date on which such Claim becomes an Allowed Convenience Claim, or
as soon thereafter as is practicable. Any holder of a Claim which would
otherwise be an Allowed Convenience Claim may elect on such holder's Ballot to
have such Allowed Claim treated as an Allowed General Unsecured Claim under
Class 5, in which event the holder of such Allowed Claim shall receive
distributions under Class 5 on account of such Allowed Claim and shall forfeit
its right to distributions under Class 4 on account of such Allowed Claim.

                  2. Impairment and Voting. Class 4 is impaired under the Plan.
The holders of Allowed Convenience Claims in Class 4 are entitled to vote to
accept or reject the Plan.

                  3. Election to be Treated as a Convenience Claim. By checking
the appropriate box on a timely cast Ballot, the holder of an Allowed General
Unsecured Claim in an amount greater than $2,000 may elect to reduce the amount
of such holder's Allowed General Unsecured Claim to $2,000 and to receive a
distribution upon such Allowed Class 4 Convenience Claim in the amount of $1,000
as described above. Such an election shall constitute a waiver of the right to
collect, and a release of, the amount of the Allowed General Unsecured Claim in
excess of $2,000, and the holder of such Allowed Class 4 Convenience Claim shall
be deemed to have released the Debtor and its estate, and its property from any
and all liability for such excess amount. The holder of an Allowed General
Unsecured Claim which timely elects to reduce the amount of its Allowed Claim
shall be deemed to be the holder of an Allowed Class 4 Convenience Claim for
classification, voting and all other purposes under the Plan.

            E. Class 5 - General Unsecured Creditors.

                  1. Distributions. Each holder of an Allowed General Unsecured
Claim in Class 5 shall receive its Pro Rata Share of Available Shares on the
later of (i) the Effective Date, or (ii) 30 days after the date on which such
Claim becomes an Allowed General Unsecured Claim, or as soon thereafter as is
practicable. If, after the Effective Date, any further Available Shares are
available from the release of shares of New Common Stock from the Disputed
Claims Reserve, then each holder of an Allowed General Unsecured Claim will
receive on a Subsequent Distribution Date, if any, and the Final Distribution
Date, its Pro Rata Share of Available Shares on account of its Allowed General
Unsecured Claim in accordance with Sections VI.B.1(d) and (e) of the Plan.
Senior Note Claims will be allowed in the aggregate amount of $100,740,217.29.

                                       16
<PAGE>

                  2. Impairment and Voting. Class 5 is impaired under the Plan.
Each holder of an Allowed Claim in Class 5 is entitled to vote to accept or
reject the Plan.

            F. Class 6 - Equity Interests.

                  1. Distributions. The holders of Class 6 Equity Interests
shall receive no distributions whatsoever on account of such Equity Interests.
All Equity Interests shall be canceled on the Effective Date.

                  2. Impairment and Voting. Class 6 is impaired under the Plan.
As the holders of Equity Interests are receiving no distributions they are
conclusively presumed to have rejected the Plan and are not entitled to vote to
accept or reject the Plan.

                                       V.

                         PROVISIONS REGARDING CORPORATE
                            GOVERNANCE AND MANAGEMENT
                            OF THE REORGANIZED DEBTOR

            A.    Directors and Officers of Reorganized Loehmann's;
                  Amended Certificate of Incorporation and Amended By-
                  Laws.

                  1. Board of Directors. As of the Effective Date, the board of
directors of Reorganized Loehmann's shall initially consist of seven (7)
members, five (5) of whom shall be designated by the Creditors Committee whose
names shall be disclosed on or before the date of the Confirmation Hearing, and
two (2) of whom shall be Robert Friedman and Robert Glass. The Board of
Directors of Reorganized Loehmann's will select a Chairman of the Board of
Directors of Reorganized Loehmann's at its initial meeting.

                  2. Officers of Reorganized Loehmann's. The officers of
Loehmann's immediately prior to the Effective Date shall serve as the initial
officers of Reorganized Loehmann's on and after the Effective Date. Such
officers shall serve in accordance with employment agreements to be negotiated
with Reorganized Loehmann's and applicable nonbankruptcy law.

                  3. Amended Certificate of Incorporation and Amended Loehmann's
By-Laws. The adoption of the Amended Certificate of Incorporation and Amended
By-Laws will be deemed to have occurred and be effective as of the Effective
Date without any further action by the directors or stockholders of the Debtor
or the Reorganized Debtor. On or prior to the Effective Date, Loehmann's will
file with the Secretary of State of the State of Delaware, in accordance with

                                       17
<PAGE>

sections 103 and 303 of the Delaware General Corporation Law, the Amended
Certificate of Incorporation and such certificate shall be the certificate of
incorporation for Reorganized Loehmann's. The Amended Certificate of
Incorporation and Amended Bylaws shall be substantially in the forms contained
in the Plan Supplement.

            B.    Securities to Be Issued Pursuant to the Plan;
                  New Common Stock.

            On the Effective Date, the issuance by Reorganized Loehmann's of
5,000,000 shares of New Common Stock is hereby authorized without further act or
action under applicable law, regulation, rule or order. Each share of New Common
Stock will entitle its holder to one vote, with no cumulative voting rights.
Holders of New Common Stock will have the right to participate proportionately
in any dividends distributed by Reorganized Loehmann's. Reorganized Loehmann's
will use its best efforts to have the New Common Stock listed on a nationally
recognized market or exchange.

            C.    Reorganized Loehmann's Equity Incentive Plan.

            On the Effective Date, Reorganized Loehmann's will adopt a stock
option plan (the "Equity Incentive Plan") which permits Reorganized Loehmann's
to grant to its officers and directors options to acquire shares of New Common
Stock. Such stock option plan shall be on the terms described in Exhibit "A"
hereto and shall be in substantially the form contained in the Plan Supplement.

                                       VI.

                            MEANS OF IMPLEMENTATION,
                           PROVISIONS REGARDING VOTING
                        AND DISTRIBUTIONS UNDER THE PLAN
                    AND TREATMENT OF DISPUTED, CONTINGENT AND
                  UNLIQUIDATED ADMINISTRATIVE CLAIMS AND CLAIMS

            A.    Voting of Claims.

            Each holder of an Allowed Claim in an Impaired Class of Claims shall
be entitled to vote separately to accept or reject the Plan as provided in such
order as may be entered by the Court establishing certain procedures with
respect to the solicitation and tabulation of votes to accept or reject the
Plan, or any other order or orders of the Court.

                                       18
<PAGE>

            B.    Distributions.

                  1.    Method of Distributions Under the Plan.

                        (a)  Date and Delivery of Distributions.  Distributions
under the Plan shall be made by the Reorganized Debtor or its designee to the
holders of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed
Other Priority Claims, Allowed DIP Financing Claims, Allowed Other Secured
Claims, Allowed Convenience Claims and Allowed General Unsecured Claims at the
addresses set forth on the Schedules, unless such addresses are superseded by
proofs of claim or transfers of claim filed pursuant to Bankruptcy Rule 3001 (or
at the last known addresses of such holders if the Debtor or the Reorganized
Debtor has been notified in writing of a change of address), except that all
distributions to the holders of Allowed Senior Note Claims shall be made in
accordance with the Senior Note Indenture. Distributions of New Common Stock
shall be made initially to the Transfer Agent who shall make the distributions
to the holders of Allowed General Unsecured Claims or, in the case of holders of
Allowed Senior Note Claims, to the Senior Note Indenture Trustee for further
distribution to individual holders of Senior Note Claims in accordance with the
Senior Note Indenture. Notwithstanding any provisions in the Plan to the
contrary, the Senior Note Indenture will continue in effect to the extent
necessary to allow the Senior Note Indenture Trustee to receive and make
distributions pursuant to the Plan on account of the Senior Note Claims. New
Common Stock (including dividends paid on account thereof) held by the
disbursing agent or the Reorganized Debtor, as applicable, for the benefit of
holders of Disputed Claims shall be held in trust for such claimants and shall
be treated as treasury stock for voting purposes until such time as such shares
are distributed to holders of Allowed Claims.

                        (b)  Distribution of Cash.  Any payment of Cash by
the Reorganized Debtor pursuant to the Plan shall be made at the option and in
the sole discretion of the Reorganized Debtor by (i) a check drawn on, or (ii)
wire transfer from, a domestic bank selected by the Reorganized Debtor.

                        (c) Effective Date Distributions.  On the Effective
Date, or as soon thereafter as practicable, the Reorganized Debtor shall
distribute all Available Shares to the holders of Allowed General Unsecured
Claims.

                        (d)  Distributions on Subsequent Distribution Dates.
Unless otherwise provided in the Plan, to the extent there are Available Shares
subsequent to the Effective Date as a result of the release of shares of New
Common Stock from the Disputed Claims Reserve in accordance with Section VI.B.4.
of the Plan or the return of unclaimed, undeliverable or time-barred
distributions to holders of Allowed General Unsecured Claims pursuant to Section
VI.B.1.(g) of the Plan, the Reorganized Debtor shall, on a Subsequent
Distribution Date, distribute (with the written consent of the Creditors
Committee or Court order on notice to the Creditors Committee) such Available
Shares to the holders of

                                       19
<PAGE>

General Unsecured Claims entitled thereto that were Allowed on the Effective
Date or subsequently have become Allowed on or before the Subsequent
Distribution Date in amounts necessary to cause such holders to have received
aggregate distributions of shares of New Common Stock in respect of such Allowed
General Unsecured Claims equal to the distributions that such holders would have
received in respect of such Allowed General Unsecured Claims on the Effective
Date if (x) such Available Shares had been available for distribution on the
Effective Date, (y) such Allowed General Unsecured Claims had been Allowed on
the Effective Date in the amounts in which they are Allowed on the Subsequent
Distribution Date, and (z) Claims or portions thereof that have become
disallowed subsequent to the Effective Date and on or before the Subsequent
Distribution Date had been disallowed on the Effective Date.

                        (e)  Distributions on the Final Distribution Date.
Unless otherwise provided in this Plan, to the extent there are Available Shares
subsequent to the Effective Date from the release of shares of New Common Stock
from the Disputed Claims Reserve in accordance with Section VI.B.4. of the Plan,
or the return of unclaimed, undeliverable or time-barred distributions to
holders of Allowed General Unsecured Claims pursuant to Section VI.B.1.(g) of
this Plan, the Reorganized Debtor shall, on the Final Distribution Date,
distribute all such Available Shares to the holders of General Unsecured Claims
entitled thereto that were Allowed on the Effective Date, or subsequently have
become Allowed on or before the Final Distribution Date in amounts necessary to
cause such holders to have received aggregate distributions of shares of New
Common Stock in respect of such Allowed Claims equal to the distributions that
such holders would have received in respect of such Allowed General Unsecured
Claims on the Effective Date if (x) such Available Shares had been available for
distribution on the Effective Date, (y) such Allowed General Unsecured Claims
had been Allowed on the Effective Date in the amounts in which they are Allowed
on the Final Distribution Date, and (z) Claims or portions thereof that have
become disallowed subsequent to the Effective Date and on or before the Final
Distribution Date had been disallowed on the Effective Date; provided, however,
that in no event shall the Reorganized Debtor be obligated to make such a
distribution if, in the discretion of the Reorganized Debtor and the Creditors
Committee, there are insufficient Available Shares to make a cost-efficient
distribution, taking into account the size of the distribution to be made and
the number of recipients of such distribution, in which event such shares of New
Common Stock shall become the property of the Reorganized Debtor.

                        (f) Reserve Shares for Disputed Claims.  On the date
on which the Reorganized Debtor makes its initial distribution to holders of
Allowed General Unsecured Claims pursuant to Section VI.B.1 of the Plan, the
Reorganized Debtor shall deposit with the Transfer Agent an aggregate number of
shares of New Common Stock sufficient to distribute to each holder of a Disputed
Claim (i) the number of shares of New Common Stock that such holder would have
been entitled to receive under the Plan if such Claim had been an Allowed
General

                                       20
<PAGE>

Unsecured Claim on the date of such initial distribution, or (ii) such lesser
amount as the Court may estimate pursuant to Section VI.C. of the Plan or may
otherwise order. Shares of New Common Stock withheld and reserved for
distribution to holders of Disputed Claims shall be held by the Transfer Agent
and treated as treasury stock for voting purposes until such time as such shares
are distributed to holders of Allowed Claims.

                        (g) Unclaimed Distributions.  Any distribution of Cash
under the Plan which is unclaimed after the later to occur of (a) two years
after distribution or (b) six months after the date on which such claimant's
Claim is Allowed shall be transferred to the Reorganized Debtor notwithstanding
state or other escheat or similar laws to the contrary. Distributions under the
Plan consisting of New Common Stock that are unclaimed for a period of two years
after distribution shall be canceled and any dividends or interest which has
been paid with respect to such securities shall be transferred to the
Reorganized Debtor and entitlement by the holder of a Claim to such distribution
shall be extinguished and forever barred.

                        (h)  Saturdays, Sundays, or Legal Holidays.  If any
payment or act under the Plan is required to be made or performed on a date that
is not a Business Day, then the making of such payment or the performance of
such act may be completed on the next succeeding Business Day, and shall be
deemed to have been completed as of the required date.

                        (i)  Fractional Shares.  Notwithstanding any other
provision in the Plan to the contrary, no fractional shares of New Common Stock
shall be issued pursuant to the Plan. Whenever any payment of a fraction of a
share of New Common Stock would otherwise be required under the Plan, the actual
distribution made shall reflect a rounding of such faction to the nearest whole
share (up or down), with half shares or less being rounded down and fractions in
excess of a half of a share being rounded up. If two or more holders are
entitled to equal fractional entitlements and the number of holders so entitled
exceeds the number of whole shares, as the case may be, which remain to be
allocated, the Transfer Agent shall allocate the remaining whole shares to such
holders by random lot or such other impartial method as the Transfer Agent deems
fair, in the Transfer Agent's sole discretion. Upon the allocation of all of the
whole shares authorized under the Plan, all remaining fractional portions of the
entitlements shall be canceled and shall be of no further force and effect.

                        (j)  Distributions to Holders as of the Record Date.  As
at the close of business on the Record Date, the claims register shall be
closed, and there shall be no further changes in the record holders of any
Claims. Further, at the close of business on the Record Date, the Senior Note
Indenture Trustee shall close the register for the Senior Notes. The Debtor, the
Reorganized Debtor and the Senior Note Indenture Trustee shall have no
obligation to recognize any transfer of any Claims (including Senior Note
Claims) occurring after the Record Date.

                                       21
<PAGE>

The Debtor, the Reorganized Debtor and the Senior Note Indenture Trustee shall
instead be entitled to recognize and deal for purposes under the Plan (except as
to voting to accept or reject the Plan pursuant to Section VI.A) with only those
record holders stated on the claims register and the register for the Senior
Notes as of the close of business on the Record Date.

                        (k) Senior Note Indenture Trustee's Fees and Expenses.
The Senior Note Indenture Trustee shall be entitled to payment from Reorganized
Loehmann's of Indenture Trustee Expenses incurred in connection with such
Trustee's making distributions under the Plan without further Bankruptcy Court
approval. These payments will be made on terms agreed to with Reorganized
Loehmann's and will not be deducted from distributions to be made pursuant to
the Plan to holders of Allowed Senior Note Claims.

                  2. Disputed General Unsecured Claims. The holder of a Disputed
General Unsecured Claim that becomes an Allowed Claim subsequent to the Initial
Distribution Date shall receive a distribution of New Common Stock as soon
thereafter as is practicable. Such distributions shall be made in accordance
with the Plan based on the distributions that would have been made to such
holder under the Plan if the Disputed General Unsecured Claim had been an
Allowed Claim on or prior to the Effective Date.

                  3. Objections To And Resolution Of Administrative Claims and
                     Claims; Administrative, Priority and Convenience Claims
                     Reserve.

                        (a)  Objections To And Resolution of Administrative
Claims and Claims. The Debtor, the Reorganized Debtor and the Creditors
Committee shall have the exclusive right to make and file objections to
Administrative Claims and Claims subsequent to the Confirmation Date. All
objections shall be litigated to a Final Order. Unless otherwise ordered by the
Court, the Debtor, the Reorganized Debtor and the Creditors Committee shall file
all objections to Administrative Claims and Claims that are the subject of
proofs of claim or requests for payment filed with the Court (other than
applications for allowances of compensation and reimbursement of expenses) and
serve such objections upon the holders of the Administrative Claim or Claim as
to which the objection is made as soon as is practicable, but in no event later
than 60 days after the Effective Date or such later date as may be approved by
the Court.

                        (b)  Administrative, Priority and Convenience Claims
                             Reserve.

                              (i)  Establishment of Administrative, Priority
      and Convenience Claims Reserve.  On the Effective Date, the Reorganized
      Debtor shall place into reserve an amount of Cash equal to (i) the sum of
      the aggregate amount of all Disputed Administrative Claims, Disputed

                                       22
<PAGE>

      Priority Tax Claims, Disputed Other Priority Claims and Disputed
      Convenience Claims, plus (ii) an amount to be determined by the Court to
      be reserved for any Disputed Administrative Claims, Disputed Priority Tax
      Claims and Disputed Other Priority Claims that are unliquidated (the
      "Administrative, Priority and Convenience Claims Reserve").

                              (ii)  Cash Held in Administrative, Priority and
      Convenience Claims Reserve. Cash held in the Administrative, Priority and
      Convenience Claims Reserve shall be deposited in a segregated bank account
      or accounts in the name of the Reorganized Debtor and designated as held
      in trust for the benefit of holders of Allowed Administrative Claims,
      Allowed Priority Tax Claims, Allowed Other Priority Claims and Allowed
      Convenience Claims. Cash held in the Administrative, Priority and
      Convenience Claims Reserve shall not constitute property of the
      Reorganized Debtor. The Reorganized Debtor shall invest the Cash held in
      the Administrative, Priority and Convenience Claims Reserve in a manner
      consistent with investment guidelines to be included in the Plan
      Supplement. The Reorganized Debtor shall pay, or cause to be paid, out of
      the funds held in the Administrative, Priority and Convenience Claims
      Reserve, any tax imposed on the Administrative, Priority and Convenience
      Claims Reserve by any governmental unit with respect to income generated
      by Cash held in the Administrative, Priority and Convenience Claims
      Reserve. Any Cash held in the Administrative, Priority and Convenience
      Claims Reserve after all Administrative, Priority and Convenience Claims
      have been Allowed or disallowed shall be transferred to and become the
      property of the Reorganized Debtor.

                  4. Allowance of Disputed Administrative, Priority and
Convenience Claims. If, on or after the Effective Date, any Disputed
Administrative, Priority or Convenience Claim becomes an Allowed Claim, the
Reorganized Debtor shall, 30 days after the date on which such Claim becomes an
Allowed Claim, or as soon thereafter as is practicable, distribute from the
Administrative, Priority and Convenience Claims Reserve to the holder of such
Allowed Administrative, Priority or Convenience Claim Cash equal to the amount
that such holder would have been entitled to had such Claim been Allowed on the
Effective Date.

                  5. Release of Shares from Disputed Claims Reserve. If at any
time or from time to time after the Effective Date, there shall be shares of New
Common Stock in the Disputed Claims Reserve in an amount in excess of the amount
which the Reorganized Debtor is required at such time to reserve on account of
Disputed Claims under the Plan or pursuant to any Order of the Court, such
excess shares of New Common Stock shall become available for distribution in
accordance with the Plan.

                                       23
<PAGE>

                  6. Allocation of Consideration. The aggregate consideration to
be distributed to the holders of Allowed Claims in each Class under the Plan
(other than the Claims, if any, of the Internal Revenue Service) shall be
treated as first satisfying an amount equal to the stated principal amount of
the Allowed Claim for such holders and any remaining consideration as satisfying
accrued, but unpaid, interest and costs, if any, and attorneys' fees where
applicable.

                  7. Cancellation and Surrender of Existing Securities and
Agreements. On the Effective Date, the Senior Notes and Equity Interests shall
be deemed canceled and such agreements and securities, including the Senior Note
Indenture (except as provided in Section VI.B.1.(a)), together with all
instruments issued pursuant thereto, shall have no further legal effect other
than as evidence of any right to receive distributions, fees and expenses under
the Plan. In addition, the Indenture Trustee's obligations shall be discharged
(except as contemplated in Section VI.B.).

                  Notwithstanding any other provision of the Plan, as a
condition precedent to receiving any distribution under the Plan, each holder of
a promissory note, share certificate, or other instrument or security evidencing
a Claim must tender such promissory note or other instrument or security to the
Reorganized Debtor or its designee or must execute and deliver an affidavit of
loss and furnish an indemnity or bond in substance and amount reasonably
satisfactory to the Reorganized Debtor and the Indenture Trustee.

                  Any holder of a Claim that fails to surrender such instrument
or to provide the affidavit and indemnity or bond before the later to occur of
(i) the second anniversary of the Effective Date and (ii) six months following
the date such holder's Claim becomes an Allowed Claim shall be deemed to have
forfeited all rights and/or Claims and may not receive or participate in any
distribution under the Plan.

            C.    Estimation.

            The Debtor, the Reorganized Debtor or the Creditors Committee may,
at any time, request that the Court estimate any Disputed Claim pursuant to
section 502(c) of the Bankruptcy Code regardless of whether the Debtor, the
Reorganized Debtor or the Creditors Committee have previously objected to such
Claim. The Court will retain jurisdiction to estimate any Claim at any time,
including during litigation concerning any objection to such Claim. In the event
that the Court estimates any Disputed Claim, that estimated amount may
constitute either the Allowed amount of such Claim, the amount on which a
reserve is to be calculated for purposes of the Disputed Claims Reserve, or a
maximum limitation on such Claim, as determined by the Court. If the estimated
amount constitutes a maximum limitation on such Claim, the Debtor, the
Reorganized Debtor or the Creditors Committee may elect to pursue any
supplemental proceedings to object to

                                       24
<PAGE>

any ultimate payment of such Claim. All of the aforementioned Claims objection,
estimation and resolution procedures are cumulative and not necessarily
exclusive of one another.

            D.   Administrative Claims of Indenture Trustee.

            In addition to any other Administrative Claim that may be filed by
the Indenture Trustee pursuant to the provisions set forth herein, the Indenture
Trustee shall have an Allowed Administrative Claim in an amount equal to the
reasonable and necessary fees and expenses incurred by the Indenture Trustee and
its legal counsel in accordance with and to the extent provided for in the
Senior Note Indenture for the period covering the Petition Date through and
including the Effective Date.

            E.   Nonconsensual Confirmation.

            As the holders of Equity Interests in Class 6 are deemed to reject
the Plan, the Debtor will seek to have the Court confirm the Plan under section
1129(b) of the Bankruptcy Code.

            F.   The Amended Certificate of Incorporation, the Amended
                 By-Laws and Other Implementation Documents.

            On or before the Effective Date, the Reorganized Debtor will execute
the Amended Certificate of Incorporation, the Amended By-Laws and Other
Implementation Documents, and all other documents required and necessary to
implement the Plan, without the requirement of any further corporate action.

                                      VII.

                       EFFECT OF CONFIRMATION OF THIS PLAN

            A.    Continued Corporate Existence.

            The Debtor, as Reorganized Debtor, shall continue to exist after the
Effective Date with all powers of a corporation under the laws of its state of
incorporation and without prejudice to any right to alter or terminate such
existence (whether by merger or otherwise) under such applicable state law; and
the Reorganized Debtor may operate its business free of any restrictions imposed
by the Bankruptcy Code, the Bankruptcy Rules or by the Court, subject only to
the terms and conditions of the Plan.

                                       25
<PAGE>

            B.    Vesting of Assets.

            Except as otherwise expressly provided in the Plan, on the Effective
Date, or as soon as practicable thereafter, the Reorganized Debtor shall form
two (2) subsidiaries. Such subsidiaries shall be vested with all of the property
of the Debtor's estate free and clear of all Claims, Liens, encumbrances,
charges and other interests of creditors and equity security holders. Tangible
assets shall be transferred to one subsidiary and intangible assets shall be
transferred to the other.

            C.    Discharge of the Debtor.

            The rights afforded herein and the treatment of all Claims and
Equity Interests herein shall be in exchange for and in complete satisfaction,
discharge, and release of all Claims and Equity Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the
Petition Date, against the Debtor, the Debtor in Possession, the Reorganized
Debtor or any of its assets or properties, arising prior to the Effective Date.
Except as otherwise expressly specified in the Plan, the Confirmation Order
shall act as of the Effective Date as a discharge of all debts of, Claims
against, Liens on, and Equity Interests in the Debtor, its assets and
properties, arising at any time before the entry of the Confirmation Order,
regardless of whether a proof of Claim or Equity Interest with respect thereto
was filed, whether the Claim or Equity Interest is Allowed, or whether the
holder thereof votes to accept the Plan or is entitled to receive a distribution
hereunder. Except as otherwise expressly specified in the Plan, after the
Effective Date, any holder of such discharged Claim or Equity Interest shall be
precluded from asserting against the Debtor, the Reorganized Debtor, or any of
its assets or properties, any other or further Claim or Equity Interest based on
any document, instrument, act, omission, transaction, or other activity of any
kind or nature that occurred before the entry of the Confirmation Order.

            D.    Injunction.

            Except as otherwise expressly provided in the Plan, the Confirmation
Order, or a separate order of the Court, all entities who have held, hold, or
may hold Claims against or Equity Interests in the Debtor which arose before or
were held as of the Effective Date, are permanently enjoined, on and after the
Effective Date, from (a) commencing or continuing in any manner any action or
other proceeding of any kind against the Debtor, with respect to any such Claim
or Equity Interest, (b) the enforcement, attachment, collection, or recovery by
any manner or means of any judgment, award, decree, or order against the Debtor
on account of any such Claim or Equity Interest, (c) creating, perfecting, or
enforcing any encumbrance of any kind against the Debtor or against the property
or interests in property of the Debtor on account of any such Claim or Equity
Interest and (d) asserting any right of setoff, subrogation, or recoupment of
any kind against any obligation due from the Debtor or against the property or
interests in property of the Debtor on account of any such Claim or Equity
Interest. Such injunction shall

                                       26
<PAGE>

extend to successors of the Debtor (including, without limitation, the
Reorganized Debtor) and its properties and interests in property.

            E.    Extinguishment of Causes of Action Under the Avoiding
                  Power Provisions.

            On the Effective Date, all rights, claims, causes of action,
avoiding powers, suits and proceedings arising under sections 544, 545, 547,
548, 549 and 553 of the Bankruptcy Code shall be extinguished whether or not
then pending. The Reorganized Debtor shall have, retain, reserve and be entitled
to assert all other Claims, Causes of Action, rights of setoff and other legal
or equitable defenses which the Debtor had immediately prior to the Petition
Date as fully as if the Chapter 11 Case had not been commenced; and all of the
Reorganized Debtor's legal and equitable rights respecting any such Claim which
is not specifically waived, extinguished or relinquished by the Plan may be
asserted after the Effective Date to the same extent as if the Chapter 11 Case
had not been commenced.

            F.    Votes Solicited in Good Faith.

            The Debtor and the Creditors Committee have, and upon confirmation
of the Plan shall be deemed to have, solicited acceptances of the Plan in good
faith and in compliance with the applicable provisions of the Bankruptcy Code.
The Debtor and the Creditors Committee (and each of their respective affiliates,
agents, directors, officers, members, employees, advisors, and attorneys) have
participated in good faith and in compliance with the applicable provisions of
the Bankruptcy Code in the offer, issuance, sale, and purchase of the securities
offered and sold under the Plan and therefore have not, and on account of such
offer, issuance, sale, solicitation, and/or purchase will not be, liable at any
time for the violation of any applicable law, rule, or regulation governing the
solicitation of acceptances or rejections of the Plan or the offer, issuance,
sale, or purchase of the securities offered and sold under the Plan.

            G.    Administrative Claims Incurred after the Confirmation Date.

            Administrative Claims incurred by the Reorganized Debtor after the
date and time of the entry of the Confirmation Order, including (without
limitation) Claims for professionals' fees and expenses incurred after such
date, including, without limitation, fees and expenses by the Reorganized
Debtor, the Creditors Committee and the Senior Note Indenture Trustee, shall not
be subject to application and may be paid by the Reorganized Debtor in the
ordinary course of business and without application for or Court approval.

                                       27
<PAGE>

            H.    The Debtor's Release.

            On the Effective Date, the Debtor and the Reorganized Debtor, on
behalf of themselves and their estates, shall be deemed to release
unconditionally all of their respective officers, directors, employees,
advisors, attorneys, financial advisors, accountants, and other professionals,
the Creditors Committee members, counsel to the Creditors Committee, financial
advisors to the Creditors Committee, the Senior Note Indenture Trustee and each
of their representatives and agents (including any professionals retained by
such persons or entities) (the "Released Parties") from any and all claims,
obligations, suits, judgments, damages, rights, Causes of Action and liabilities
whatsoever, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, based in whole or in part upon
actions taken in their respective capacities described above or any omission,
transaction, event or other occurrence taking place on or prior to the Effective
Date in any way relating to the Debtor, the Chapter 11 Case or the Plan, except
that (i) no individual shall be released from any act or omission that
constitutes gross negligence or willful misconduct, and (ii) the Reorganized
Debtor shall not relinquish or waive the right to assert any of the foregoing as
a legal or equitable defense or right of set-off or recoupment against any
Claims of any such persons asserted against the Debtor.

            I.    Exculpation, Release and Injunction of Released Parties.

                  1. Exculpation. The Debtor, the Reorganized Debtor, members of
the Creditors Committee, the Senior Note Indenture Trustee and the other
Released Parties (i) shall have no liability whatsoever to any holder or
purported holder of an Administrative Claim, Claim, or Equity Interest for any
act or omission in connection with, or arising out of, the Plan, the Disclosure
Statement, the negotiation of the Plan, the negotiation of the other documents
included in the Plan Supplement, the pursuit of approval of the Disclosure
Statement or the solicitation of votes for confirmation of the Plan, the Chapter
11 Case, the consummation of the Plan, the administration of the Plan or the
property to be distributed under the Plan, or any transaction contemplated by
the Plan or Disclosure Statement or in furtherance thereof (including, without
limitation, the Equity Plan, employment contracts, programs and arrangements
adopted in connection with the Plan or the Chapter 11 Case), except for willful
misconduct or gross negligence as determined by a Final Order, and (ii) in all
respects, shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan. This exculpation shall be in
addition to, and not in limitation of, all other releases, indemnities,
exculpations and any other applicable law or rules protecting such Released
Parties from liability.

                  2. Injunction. Pursuant to section 105 of the Bankruptcy Code,
no holder or purported holder of an Administrative Claim, Claim or Equity
Interest shall be permitted to commence or continue any action, employment of
process, or any act to collect, offset, or recover any claim against a Released
Party

                                       28
<PAGE>

that accrued on or prior to the Effective Date and has been released or waived
pursuant to Section VII.I.1.

                  3. Limitation of Governmental Releases. Notwithstanding
Sections VII.I.1 and 2. of the Plan, the Plan shall not release, discharge, or
exculpate any non-debtor party from any debt owed to the United States
Government and/or its agencies, including the Pension Benefit Guaranty
Corporation (the "Government"), or from any liability arising under the Internal
Revenue Code, the Employee Retirement Income Security Act of 1974, as amended,
or the environmental laws, securities laws or criminal laws of the United
States. In addition, notwithstanding Sections VII.I.1. and 2. of the Plan, the
Plan shall not enjoin or prevent the Government from collecting any such
liability from any such non-debtor party.

            J.    Term of Bankruptcy Injunction or Stays.

            All injunctions or stays provided for in the Chapter 11 Case under
sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on
the Confirmation Date, shall remain in full force and effect until the Effective
Date.

            K.    Preservation of Insurance.

            The Debtor's discharge and release from all Claims as provided
herein, except as necessary to be consistent with this Plan, shall not diminish
or impair the enforceability of any insurance policy that may cover Claims
against the Debtor, the Reorganized Debtor (including, without limitation, its
officers and directors) or any other person or entity.

            L.    Officers' and Directors' Indemnification Rights and
                  Insurance.

            Notwithstanding any other provisions of the Plan, the obligations of
the Debtor to indemnify its present directors, officers, and employees against
any obligations, liabilities, costs or expenses pursuant to the articles of
incorporation or by-laws of the Debtor, applicable state law, specific
agreement, or any combination of the foregoing, shall survive the Effective
Date.

                                      VIII.

                            RETENTION OF JURISDICTION

            The Court shall have exclusive jurisdiction of all matters arising
out of, and related to, the Chapter 11 Case and the Plan pursuant to, and for
the purposes of, section 105(a) and section 1142 of the Bankruptcy Code and for,
among other things, the following purposes: (1) to hear and determine
applications

                                       29
<PAGE>

for the assumption or rejection of executory contracts or unexpired leases
pending on the Confirmation Date, and the allowance of Claims resulting
therefrom; (2) to determine any other applications, adversary proceedings, and
contested matters pending on the Effective Date; (3) to ensure that
distributions to holders of Allowed Claims and Allowed Equity Interests are
accomplished as provided herein; (4) to resolve disputes as to the ownership of
any Claim or Equity Interest; (5) to hear and determine timely objections to
Administrative Claims, Claims and Equity Interests; (6) to enter and implement
such orders as may be appropriate in the event the Confirmation Order is for any
reason stayed, revoked, modified or vacated; (7) to issue such orders in aid of
execution of the Plan, to the extent authorized by section 1142 of the
Bankruptcy Code; (8) to consider any modifications of the Plan, to cure any
defect or omission, or to reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order; (9) to hear and determine
all applications for compensation and reimbursement of expenses of professionals
under sections 330, 331 and 503(b) of the Bankruptcy Code; (10) to hear and
determine disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan; (11) to hear and determine any issue
for which the Plan requires a Final Order of the Court; (12) to hear and
determine matters concerning state, local, and federal taxes in accordance with
sections 346, 505 and 1146 of the Bankruptcy Code; (13) to hear any other matter
not inconsistent with the Bankruptcy Code; (14) to hear and determine disputes
arising in connection with compensation and reimbursement of expenses of
professionals for services rendered during the period commencing on the
Confirmation Date through and including the Effective Date; and (15) to enter a
final decree closing the Chapter 11 Case.

                                       IX.

                            MISCELLANEOUS PROVISIONS

            A.    Payment of Statutory Fees.

            All fees payable on or before the Effective Date (i) pursuant to
section 1930 of title 28 of the United States Code, as determined by the Court
at the Confirmation Hearing, and (ii) to the United States Trustee, shall be
paid by the Debtor on or before the Effective Date and all such fees payable
after the Effective Date shall be paid by the Reorganized Debtor.

            B.    Dissolution of Creditors Committee.

            The appointment of the Creditors Committee shall terminate on the
Final Distribution Date.

                                       30
<PAGE>

            C.    Modification of the Plan.

            The Debtor reserves the right, in accordance with the Bankruptcy
Code, to amend or to modify the Plan prior to the entry of the Confirmation
Order with the prior consent of the Creditors Committee. After entry of the
Confirmation Order, the Reorganized Debtor or the Debtor may amend or modify the
Plan, or remedy any defect or omission or reconcile any inconsistency in the
Plan in such a manner as may be necessary to carry out the purpose and intent of
the Plan.

            D.    Governing Law.

            Unless a rule of law or procedure is supplied by Federal law
(including the Bankruptcy Code and Bankruptcy Rules) or the Delaware General
Corporation Law, the laws of the State of New York (without reference to the
conflicts of laws provisions thereof) shall govern the construction and
implementation of the Plan and any agreements, documents, and instruments
executed in connection with the Plan.

            E.    Filing or Execution of Additional Documents.

            On or before the Effective Date, the Debtor or the Reorganized
Debtor, shall file with the Court or execute, as appropriate, such agreements
and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan.

            F.    Withholding and Reporting Requirements.

            In connection with the Plan and all instruments issued in connection
therewith and distributions thereon, the Reorganized Debtor shall comply with
all withholding and reporting requirements imposed by any federal, state, local
or foreign taxing authority and all distributions hereunder shall be subject to
any such withholding and reporting requirements.

            G.    Exemption From Transfer Taxes.

            Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer or exchange of New Common Stock under the Plan, the making or
assignment of any lease or sublease or the making or delivery of any other
instrument whatsoever, in furtherance of or in connection with the Plan shall
not be subject to any stamp, real estate transfer, recording or other similar
tax.

                                       31
<PAGE>

            H.    Section 1145 Exemption.

            Pursuant to, in accordance with, and solely to the extent provided
under section 1145 of the Bankruptcy Code, the issuance of the New Common Stock
to the Debtor's creditors under the Plan is exempt from the registration
requirements of Section 5 of the Securities Act, as amended, and any State or
local law requiring registration for offer or sale of a security or registration
or licensing of an issuer of, underwriter of, or broker or dealer in such New
Common Stock and is deemed to be a public offering of New Common Stock.

            I.    Waiver of Federal Rule of Civil Procedure 62(a).

            The Debtor may request that the Confirmation Order include (a) a
finding that Fed. R. Civ. P. 62(a) shall not apply to the Confirmation Order and
(b) authorization for the Debtor to consummate the Plan immediately after entry
of the Confirmation Order.

            J.    Headings.

            Headings used in the Plan are for convenience of reference only and
shall not constitute a part of the Plan for any purpose.

            K.    Exhibits/Schedules.

            All Exhibits and Schedules to the Plan are incorporated into and
constitute a part of the Plan as if set forth herein.

            L.    Notices.

            All notices, requests, and demands hereunder to be effective shall
be in writing and unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when actually delivered or, in the case of notice
by facsimile transmission, when received and telephonically confirmed, addressed
as follows:

            To the Debtor: Loehmann's, Inc., 2500 Halsey Street, Bronx, New York
10461, Attention: Robert N. Friedman, with a copy to Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-6064,
attention: Alan W. Kornberg, Tel.: (212) 373-3000/Fax: (212) 757-3990.

            To the Creditors Committee: Kronish Lieb Weiner & Hellman, LLP 1114
Avenue of the Americas, New York, New York 10036-7798, attention: Lawrence C.
Gottlieb, Tel.: (212) 479-6140/Fax: (212) 479-6275.

                                       32
<PAGE>

            M.    Plan Supplement.

            Forms of the documents relating to the Amended Certificate of
Incorporation, the Amended By-Laws, investment guidelines referred to in Section
V.A.3, and Equity Incentive Plan shall be contained in the Plan Supplement which
will be filed with the Clerk of the Court prior to the Confirmation Hearing. The
Plan Supplement may be inspected in the office of the Clerk of the Court during
normal court hours. Holders of Claims or Equity Interests may obtain a copy of
the Plan Supplement upon written request to the Debtor in accordance with
Section IX.L. of the Plan.

            N.    Conflict.

            The terms of this Plan shall govern in the event of any
inconsistency with the summaries of the Plan set forth in the Disclosure
Statement.

            O.    Setoff by the United States.

            The valid setoff rights, if any, of the United States of America
will be unaffected by this Plan or confirmation thereof.

                                       X.

                    EXECUTORY CONTRACTS AND UNEXPIRED LEASES

            Other than (i) executory contacts or unexpired leases which (x) are
the subject of a motion to reject pending on the Confirmation Date, (y) were
previously assumed or rejected by the Debtor, or (z) have expired or terminated
pursuant to their own terms during the pendency of the Chapter 11 Case, and (ii)
employment agreements, if any, terminated prior to or in connection with the
Plan, all of the executory contracts, unexpired leases and employment agreements
that exist between the Debtor and any person are specifically assumed as of the
Effective Date pursuant to the Plan. All Claims for damages arising from the
rejection of executory contracts or unexpired leases must be filed with the
Court in accordance with the terms of the order authorizing such rejection. Any
Claims not filed within such time will be forever barred from assertion against
the Debtor, its estate and the Reorganized Debtor. All Allowed Claims arising
from the rejection of executory contracts or unexpired leases shall be treated
as Class 4 Claims. The Reorganized Debtor, except as otherwise agreed by the
parties, will cure any and all undisputed defaults within 60 days of the
Effective Date under any executory contract, unexpired lease or employment
agreement assumed pursuant to the Plan in accordance with section 365 of the
Bankruptcy Code. All disputed defaults that are required to be cured shall be
cured either within 30 days of the entry of a Final Order determining the
amount, if any, of the Debtor or the Reorganized Debtor's liability with respect
thereto, or as may otherwise be agreed to by the parties.

                                       33
<PAGE>

                                       XI.

                                  BENEFIT PLANS

            All employment and severance agreements and policies, and all
employee compensation and benefit plans, policies, and programs of the Debtor
applicable generally to its employees, including agreements and programs subject
to section 1114 of the Bankruptcy Code, as in effect on the Effective Date,
including, without limitation, all savings plans, retirement plans, health care
plans, disability plans, severance benefit plans, incentive plans, and life,
accidental death, and dismemberment insurance plans, shall be deemed to be, and
shall be treated as though they are, executory contracts that are assumed under
the Plan, and the Debtor's obligations under such agreements and programs shall
survive the Effective Date of the Plan, without prejudice to the Reorganized
Debtor's rights under applicable non-bankruptcy law to modify, amend, or
terminate the foregoing arrangements, except for (i) such executory contracts or
plans specifically rejected pursuant to the Plan (to the extent such rejection
does not violate section 1114 of the Bankruptcy Code) and (ii) such executory
contracts or plans as have previously been terminated, or rejected, pursuant to
a Final Order, or specifically waived by the beneficiaries of such plans,
contracts, or programs.

                                      XII.

                            EFFECTIVENESS OF THE PLAN

            A.    Conditions Precedent to Effectiveness.

                  The Plan shall not become effective unless and until it has
been confirmed and the following conditions have been satisfied in full or
waived pursuant to Section XII.B.: (1) the Confirmation Order in a form
satisfactory to the Debtor and the Creditors Committee shall have become a Final
Order; (2) the Amended Certificate of Incorporation shall have been properly
filed with the Secretary of State of the State of Delaware; (3) all
authorizations, consents and regulatory approvals required (if any) for the
Plan's effectiveness shall have been obtained; and (4) on the Effective Date,
the Reorganized Debtor has entered into a senior secured credit facility, on
terms acceptable to the Creditors Committee.

            B.    Waiver of Conditions.

                  The Debtor may waive any or all of the conditions set forth in
Section XII.A. above at any time, with the prior consent of the Creditors
Committee, without leave of or order of the Court and without any formal action.

                                       34
<PAGE>

            C.    Effect of Failure of Conditions.

                  In the event that the Effective Date does not occur on or
before one hundred and twenty (120) days after the Confirmation Date, upon
notification submitted by the Debtor to the Court: (a) the Confirmation Order
shall be vacated, (b) no distributions under the Plan shall be made, (c) the
Debtor and all holders of Claims and Equity Interests shall be restored to the
status quo ante as of the day immediately preceding the Confirmation Date as
though the Confirmation Date had never occurred, and (d) the Debtor's
obligations with respect to the Claims and Equity Interests shall remain
unchanged and nothing contained in the Plan shall constitute or be deemed a
waiver or release of any Claims or Equity Interests by or against the Debtor or
any other person or to prejudice in any manner the rights of the Debtor or any
person in any further proceedings involving the Debtor.

                                       35
<PAGE>

            D.    Vacatur of Confirmation Order.

                  If an order denying confirmation of the Plan is entered, then
the Plan shall be null and void in all respects, and nothing contained in the
Plan shall (a) constitute a waiver or release of any Claims against or Equity
Interests in the Debtor; (b) prejudice in any manner the rights of the holder of
any Claim against, or Equity Interest in, the Debtor; (c) prejudice in any
manner any right, remedy or claim of the Debtor; or (d) be deemed an admission
against interest by the Debtor.

Dated:  April 24, 2000

                              LOEHMANN'S, INC.


                              By: /s/ Robert Glass
                              --------------------
                              Name:  Robert Glass
                              Title: President, Chief Operating Officer

                                       36

<PAGE>

                                    EXHIBIT A
<PAGE>

                        Summary of Equity Incentive Plan

            The following are the key terms of Reorganized Loehmann's' Equity
Incentive Plan:


Shares Available:         The number of options that will be available for grant
                          pursuant to the Equity Incentive Plan will be equal to
                          425,000 shares of New Common Stock.

Eligible Participants:    All members of the Board of Directors and certain key
                          senior management executives of Reorganized Loehmann's
                          will be eligible to participate in the Equity
                          Incentive Plan.

Effective Date Grants:    On the Effective Date, Robert Friedman and Robert
                          Glass will each receive options to acquire 131,250
                          shares of New Common Stock for a total of 262,500
                          shares.

Strike Price:             The strike price shall equal (i) $75,000,000, divided
                          by (ii) the number of shares of New Common Stock
                          issued on the Effective Date pursuant to the Plan
                          (5,000,000).

Vesting:                  Options granted under the Equity Incentive Plan will
                          vest in four (4) equal tranches on each of the
                          Effective Date and the first three (3) anniversaries
                          thereafter.

Duration of Options:      Options must be exercised on or before the fifth (5th)
                          anniversary of the grant date.

Change of Control:        In the event a sale of Reorganized Loehmann's (whether
                          stock or substantially all of the assets) occurs, all
                          options that have not vested as of such date shall
                          automatically vest in full.

                                        i
<PAGE>

Termination of Option     If an option holder is terminated from employment by
Holder                    Reorganized Loehmann's or removed as a director of
                          Reorganized Loehmann's (in each case other than for
                          "cause"), such option holder's options that are vested
                          as of such date shall be exercisable for a period of
                          60 days following such date of termination or removal
                          and all unvested options will on such date be
                          forfeited.

                                       ii