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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
SEPTEMBER 30, 1996
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Date of Report
(Date of earliest event reported)
ARIS INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK 1-4814 22-1715275
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
475 FIFTH AVENUE, NEW YORK, NEW YORK 10017
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(Address of registrant's principal executive offices)
(212) 686-5050
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DEPOSITION OF ASSETS
Effective September 30, 1996, Aris Industries, Inc. (the "Company")
sold 100% of the stock of a wholly-owned subsidiary, Perry Manufacturing Company
("Perry") for a total consideration of approximately $56,000,000, consisting of
approximately $40,000,000 paid by the purchaser, $12,000,000 in forgiveness of
indebtedness, and assumption of $4,000,000 of Perry debt (the "Perry Sale"). The
proceeds of this sale (including forgiveness of indebtedness), were applied to
reduce the Company's debt obligations to its senior secured lender, Heller
Financial, Inc. ("Heller"), from approximately $53,000,000 of principal and
accrued interest to only $1,000,000.
The purchaser of Perry is Page Holding Company("PHC"), which is
substantially owned and controlled by William K. Woltz, Jr., the President and
Chief Executive Officer of Perry. Certain other executives of Perry have
interests in PHC. Aris had originally purchased Perry from Mr. Woltz and his
affiliates in September, 1987. Heller provided to PHC substantially all of the
financing necessary for PHC to purchase Perry. Neither the Company nor any of
its officers, directors or affiliates have or retain any interest in Perry or
PHC. The Company, Perry and PHC entered into a Stock Purchase Agreement with
respect to the stock of Perry dated as of September 19, 1996, with an effective
and closing date of September 30, 1996.
The Company retains ownership of Europe Craft Imports, Inc.("ECI"), its
sole remaining operating subsidiary.
Effective September 30, 1996, the Company entered into an amendment and
restatement of its Senior Secured Note Agreement with Heller ("Amended Heller
Agreement"), pursuant to which Heller received a note in the principal amount of
$1,000,000 ("New Heller Note"), with a maturity date of November 3, 2001, with
interest at 10% per annum, such interest to accrue and be added to principal, on
a quarterly basis in arrears and to be due and payable November 3, 2001.
Pursuant to the Amended Heller Agreement, Heller forgave all other indebtedness
of the Company to Heller remaining after application of the proceeds of the
Perry Sale, and eliminated all financial covenants. Heller retained a pledge of
the stock (but not the assets) of ECI, the Company's remaining operating
subsidiary. The New Heller Note provides that no principal or interest be paid
on the Company's indebtedness to both of its junior secured lenders, BNY
Financial Corporation ("BNY") and AIF-II, L.P.("AIF-II), until all principal and
interest on the New Heller Note is paid in full.
In connection with the Amended Heller Agreement, Aris granted to Heller
a warrant, exercisable for nominal consideraton until September 30, 2006, to
obtain 584,345 shares
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of Aris Common Stock (equal to 4.9% of Aris' outstanding Common Stock on
September 30, 1996).
The Intercreditor Agreement dated June 30, 1993 between Heller, BNY and
AIF-II remains in effect.
The amendments dated May 1, 1996 between the Company and each of BNY
and AIF-II remain in effect, pursuant to which scheduled quarterly interest
payments to BNY and Apollo, respectively, for the period May 6, 1996 through
February 3, 1997 inclusive would not be paid in cash but instead would be added
to principal.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No.
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10.95. Stock Purchase Agreement dated as of September 19, 1996 between Aris
Industries, Inc., as Seller, Page Holding Company, as Buyer, and Perry
Manufacturing Company, with respect to the stock of Perry Manufacturing
Company.
10.96. Amended and Restated Senior Secured Note Agreement dated September 30,
1996, between Aris Industries, Inc. as Borrower, and Heller Financial,
Inc.
10.97. Interest Note (Principal Amount $1,000,000) dated September 30, 1996
from Aris Industries, Inc. payable to Heller Financial, Inc.
10.98. Amended and Restated Pledge Agreement dated September 30, 1996 between
Aris Industries, Inc., as Pledgor, and Heller Financial, Inc., as
Pledgee.
10.99. Warrant dated September 30, 1996 issued by Aris Industries, Inc. to
Heller Financial, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARIS INDUSTRIES, INC.
By: /s/ PAUL SPECTOR
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Paul Spector
Senior Vice President and
Chief Financial Officer
Date: September 30, 1996
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EXHIBIT INDEX
Exhibit No. Description Page
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10.95. Stock Purchase Agreement dated as of September 19, 1996 between
Aris Industries, Inc., as Seller, Page Holding Company, as Buyer,
and Perry Manufacturing Company, with respect to the stock of
Perry Manufacturing Company.
10.96. Amended and Restated Senior Secured Note Agreement dated
September 30, 1996, between Aris Industries, Inc. as Borrower,
and Heller Financial, Inc.
10.97. Interest Note (Principal Amount $1,000,000) dated September 30,
1996 from Aris Industries, Inc. payable to Heller Financial, Inc.
10.98. Amended and Restated Pledge Agreement dated September 30, 1996
between Aris Industries, Inc., as Pledgor, and Heller Financial,
Inc., as Pledgee.
10.99. Warrant dated September 30, 1996 issued by Aris Industries, Inc.
to Heller Financial, Inc.
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EXHIBIT 10.95
STOCK PURCHASE AGREEMENT
among
PAGE HOLDING COMPANY (Buyer),
ARIS INDUSTRIES, INC. (Seller)
and
PERRY MANUFACTURING COMPANY
with respect to the stock of
PERRY MANUFACTURING COMPANY
As of September 19, 1996
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TABLE OF CONTENTS
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1. Sale and Purchase of Shares........................................... 1
2. Closing; Closing Date................................................. 2
3. Purchase Price and Payment for Shares................................. 2
4. Delivery of Shares.................................................... 2
5. Representations and Warranties of the Seller.......................... 2
5.1 Outstanding Capital Stock.................................... 2
5.2 Options or Other Rights...................................... 3
5.3 Power and Capacity; Organizational Documents................. 3
5.4 Freedom to Contract.......................................... 4
5.5 Disclaimer of Warranties..................................... 5
5.6 Taxes........................................................ 5
5.7 Subsidiaries................................................. 6
5.8 Qualification................................................ 7
5.9 Litigation................................................... 7
5.10 Undisclosed Liabilities...................................... 7
5.11 Disclosure................................................... 7
5.12 Absence of Certain Events.................................... 7
5.13 Affiliate Transactions....................................... 8
5.14 Sale of All or Substantially All of Assets................... 8
5.15 Representations and Warranties on Closing Date............... 8
6. Representations and Warranties of the Buyer........................... 8
6.1 Due Incorporation............................................ 8
6.2 Corporate Power.............................................. 9
6.3 Freedom to Contract.......................................... 9
6.4 Litigation................................................... 10
6.5 Acquisition of Shares for Investment......................... 10
6.6 Representations and Warranties on Closing Date............... 10
7. Certain Covenants of Parties.......................................... 10
7.1 Buyer's Knowledge and Independent Investigation.............. 10
7.2 Books and Records; Post Closing Access....................... 11
7.3 Regulatory and Other Authorizations; Consents................ 11
7.4 Employees.................................................... 12
7.5 Consent to Jurisdiction and Service of Process............... 12
7.6 Expenses..................................................... 12
7.7 Indemnification for Fees of Brokers and Finders.............. 13
7.8 Company Subject to Indebtedness.............................. 13
7.9 Company Assets and Properties Subject to Liens............... 14
7.10 Intercompany Obligations..................................... 14
7.11 Section 338(h)(10) Election.................................. 14
7.12 Post-Closing Board Action.................................... 16
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Page
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8. Conditions Precedent to the Obligation of the Buyer to Close.......... 16
8.1 Representations and Warranties True as of Closing Date....... 16
8.2 Compliance with This Agreement............................... 16
8.3 Certificates................................................. 16
8.4 Corporate Authorization...................................... 16
8.5 Opinion of Counsel to the Company and the Seller............. 16
8.6 Resignations of Directors and Officers....................... 17
8.7 Good Standing................................................ 17
8.8 No Adverse Event............................................. 17
8.9 Litigation................................................... 17
8.10 Delivery of Stock Certificates............................... 17
8.11 Buyer's Financing Arrangements with Heller................... 17
8.12 Consents..................................................... 17
8.13 Releases..................................................... 18
8.14 Release of Liens............................................. 18
8.15 Sale of Aris Stock........................................... 18
8.16 Consent to Sale of Shares.................................... 18
8.17 Proceedings Satisfactory..................................... 18
9. Conditions Precedent to the Obligation of the Seller to Close......... 18
9.1 Representations and Warranties True as of Closing Date....... 18
9.2 Compliance with This Agreement............................... 19
9.3 Officer's Certificate........................................ 19
9.4 Corporate Authorization...................................... 19
9.5 Opinion of Counsel to the Buyer.............................. 19
9.6 Good Standing................................................ 19
9.7 Litigation................................................... 19
9.8 Payment of Purchase Price.................................... 19
9.9 Seller's Debt Restructuring Agreement........................ 20
9.10 Consents..................................................... 20
9.11 Consent to Transaction by Buyer's Affiliates................. 20
9.12 Releases..................................................... 20
9.13 Termination of Stock Options................................. 20
9.14 Sale of Aris Stock........................................... 20
9.15 Proceedings Satisfactory..................................... 21
10. Indemnification....................................................... 21
10.1 Seller's Indemnity........................................... 21
10.2 Limitations.................................................. 22
10.3 Buyer's Indemnity............................................ 22
10.4 Procedure.................................................... 23
10.5 Exclusive Remedy............................................. 25
11. Tax Matters........................................................... 25
11.1 Payment for Taxes............................................ 25
11.2 Section 338 Election Matters................................. 26
11.3 Payments..................................................... 27
11.4 Refunds...................................................... 27
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Page
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11.5 Contests..................................................... 28
11.6 Filing of Tax Returns; Change of Tax Year.................... 29
11.7 Cooperation and Exchange of Information...................... 29
11.8 Conveyance Taxes............................................. 30
11.9 Adjustment to Purchase Price................................. 30
12. Survival of Representations and Warranties............................ 30
13. Miscellaneous......................................................... 30
13.1 Knowledge.................................................... 31
13.2 Cooperation; Further Assurances.............................. 31
13.3 Entire Agreement............................................. 31
13.4 Governing Law................................................ 31
13.5 Headings..................................................... 31
13.6 Notices...................................................... 31
13.7 Separability................................................. 32
13.8 Amendment; Waiver............................................ 33
13.9 Assignment and Binding Effect................................ 33
13.10 No Benefit to Others......................................... 33
13.11 Counterparts................................................. 33
13.12 Interpretation............................................... 33
Sellers Schedules
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Schedule 5.1 -- Liens, etc. on Shares of the Company; Original
Perry Shareholders
Schedule 5.2 -- Options or Other Rights Granted by Seller on
Shares of the Company
Schedule 5.4 -- Seller's Required Consents, Conflicts with
Other Agreements of Seller, etc.
Schedule 5.7 -- Subsidiaries of the Company Authorized by Seller
Schedule 5.8 -- Company Qualifications & Good Standing
Schedule 5.10 -- Contracts and Liabilities of the Company
Created by Seller, etc.
Schedule 5.12 -- Certain Transactions Affecting the Company Due
to Action of Seller Since February 3, 1996
Schedule 5.13 -- Affiliate Transactions
Schedule 7.8 -- Indebtedness Not Accepted by Buyer
Schedule 7.9 -- Liens Not Accepted by Buyer
Schedule 7.10 -- Intercompany Items
Schedule 8.6 -- Director and Officer Resignations
Schedule 9.13 -- List of Holders of Seller's Stock Options to
be Cancelled
Buyers Schedules
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Schedule 6.1 -- Shares of Capital Stock of Buyer
Schedule 6.3 -- Conflicts and Required Consents
Exhibits
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Exhibit A -- Form of Opinion of Seller's Counsel
Exhibit B -- Form of Opinion of Buyer's Counsel
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Exhibit C -- General Release by Seller and its Affiliates
Exhibit D -- Consent of Original Perry Owners
Exhibit E -- Consent of Buyer's Stockholders
Exhibit F -- General Release by William K. Woltz, Jr.
Exhibit G -- General Release by Perry Manufacturing and its Subsidiaries
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of September 19, 1996 (this "AGREEMENT"),
among PAGE HOLDING COMPANY, a Delaware corporation, with its principal executive
office located at 100 Woltz Street, Mount Airy, North Carolina 27030 (the
"BUYER"), ARIS INDUSTRIES, INC., a New York corporation, with its principal
executive office located at 475 Fifth Avenue, New York, New York 10017 (the
"SELLER"), and PERRY MANUFACTURING COMPANY, a North Carolina corporation, with
its principal executive office located at 100 Woltz Street, Mount Airy, North
Carolina 27030 (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Seller is the beneficial and record owner of 1,169,870 (One
Million, One Hundred Sixty Nine Thousand, Eight Hundred Seventy) shares,
constituting all the issued and outstanding shares (the "SHARES") of common
stock, par value $.10 per share, of the Company; and
WHEREAS, Seller and Heller Financial, Inc. ("HELLER") are parties to a
Senior Secured Note Agreement dated June 30, 1993, under which Seller is
indebted to Heller in the principal amount of $53,370,617 (the "HELLER NOTE");
and
WHEREAS, the Seller wishes to sell, and the Buyer wishes to purchase, the
Shares upon the terms and subject to the conditions of this Agreement, pursuant
to which Seller will receive a total consideration of $51,881,909, consisting of
(i) $40,857,500 in cash paid by Buyer as payment in full for the Shares, which
will be used by Seller to pay Heller under the Heller Note and (ii) the
forgiveness at the Closing (as defined herein) by Heller of the remaining
balance of $11,024,409 of the Heller Note.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Sale and Purchase of Shares.
Subject to the terms and conditions of this Agreement, at the closing
provided for in Section 2 hereof, the Seller shall sell, transfer, convey and
assign to the Buyer, and the Buyer shall purchase from Seller, all the Shares
(the aggregate of which Shares shall constitute all the issued and outstanding
capital stock of the Company on the Closing Date (as hereinafter defined)).
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2. Closing; Closing Date.
Subject to the terms and conditions of this Agreement, the closing of the
sale and purchase of the Shares contemplated hereby (the "CLOSING") shall take
place at the offices of Herrick Feinstein, LLP, 2 Park Avenue, New York, New
York 10016 at 10:00 A.M. local time, on September 30, 1996 or such later date as
agreed to by the Buyer and the Seller. The time and date upon which the Closing
shall occur is herein called the "CLOSING DATE".
3. Purchase Price and Payment for Shares.
As consideration for the Shares, the Buyer shall pay to the Seller at the
Closing $40,857,500 (the "PURCHASE PRICE") in immediately available funds by
wire transfer to an account or accounts designated by the Seller. At the
Closing, upon receipt by Heller of the Purchase Price, Heller shall accept the
Purchase Price from Seller in full and final satisfaction of the principal
amount due under the Heller Note and shall forgive the remaining principal
balance of $11,024,409 of the Heller Note, pursuant to the Restructuring
Agreement referred to in Section 9.9.
4. Delivery of Shares.
At the Closing, the Seller shall deliver to the Buyer stock certificates
representing all the Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for transfer.
5. Representations and Warranties of the Seller.
The Seller represents and warrants to the Buyer as follows:
5.1 Outstanding Capital Stock. The Company is authorized to issue
4,000,000 shares of Common Stock, par value $.10 per share, 1,169,870 of
which are issued and outstanding (excluding 59,130 treasury shares), and
200,000 shares of Preferred Stock, par value $1.00 per share, none of which
are issued and outstanding. All the Shares have been duly authorized,
validly issued and are fully paid and nonassessable and were acquired by
the Seller from the persons and entities set forth on Schedule 5.1 on
September 30, 1987 (the "ACQUISITION DATE"). Seller has not granted to any
person or entity any preemptive rights with respect to the Shares or the
capital stock of the Company. Except as set forth in Schedule 5.1, all
right, title and interest in and to the Shares is owned by Seller,
beneficially and of record, free and clear of all liens, claims, charges,
pledges, security interests or other encumbrances of any nature whatsoever,
including without limitation, any options,
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restrictions on voting rights or rights of disposition, and claims, charges
or third party rights of whatever nature ("LIENS"). Delivery of a
certificate or certificates evidencing the Shares at the Closing in the
manner provided in Section 4 will transfer to Buyer good and valid title to
the Shares, free and clear of all Liens, and without any condition or
restrictions on transferability imposed or retained by Seller except
pursuant to Section 6.5 of this Agreement.
5.2 Options or Other Rights. Except pursuant to this Agreement and
as disclosed in Schedule 5.2, (a) Seller has not granted or issued any
right, subscription, warrant, call, preemptive right, option or other right
to purchase or otherwise to receive or acquire from the Company or the
Seller at any time or upon the happening of any stated event any of the
outstanding, authorized but unissued, unauthorized or treasury shares of
the capital stock or any other security of the Company, (b) Seller has not
granted or issued any right, subscription, warrant, call, preemptive right,
option or other right to purchase or otherwise to receive or acquire from
the Company or the Seller any security of any kind convertible into such
capital stock, (c) the Seller has not entered into any trust (voting or
otherwise) or other agreement of any kind granting to any person or entity
any interest or rights with respect to any capital stock, or security of
any kind convertible into such capital stock, of the Company, and (d)
Seller has not granted any proxy to vote, or entered into any agreement,
trust or understanding with respect to the voting of, the capital stock of
the Company.
5.3 Power and Capacity; Organizational Documents.
(a) Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of New York. The Seller has all requisite corporate
power, authority and approval required to execute, deliver and
perform this Agreement and all other documents, agreements and
instruments required to be delivered in connection with the
transactions contemplated by this Agreement (collectively,
together with this Agreement, the "OPERATIVE DOCUMENTS") to which
it is a party, to consummate the transactions contemplated hereby
and thereby and to perform fully the Seller's obligations
hereunder and thereunder. Seller is duly qualified, licensed or
admitted to do business and is in good standing in all
jurisdictions in which the ownership, use or leasing of its assets
and properties, or the conduct or nature of its business, makes
such qualification, licensing or admission necessary and in which
the failure to be so qualified, licensed or admitted and in good
standing could reasonably be expected to have an adverse
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effect on the validity or enforceability of this Agreement or any
of the Operative Agreements to which it is a party or on the
ability of Seller to perform its obligations hereunder or
thereunder. The execution, delivery and performance of the
Operative Documents by the Seller have been, or prior to the
Closing will be, duly and validly authorized by the Board of
Directors of the Seller, and no other corporate action on the part
of the Seller or its shareholders is necessary. The Operative
Documents have been duly and validly executed and delivered by the
Seller and (assuming due authorization, execution and delivery by
the Buyer) constitute the legal, valid and binding obligations of
the Seller enforceable against the Seller in accordance with their
respective terms, subject to bankruptcy, insolvency, and similar
laws affecting creditors' rights generally and to the extent that
equitable principles may limit the availability of specific
performance and other remedies.
(b) The Company. The Company is duly
organized, validly existing and in good standing under
the laws of the State of North Carolina.
(c) Organizational Documents. The Seller has
delivered to Buyer prior to the signing of this Agreement true,
correct and complete copies of (i) the Company's and Seller's
articles of incorporation or certificates of incorporation, as the
case may be, and bylaws and (ii) any other documents, agreements
or instruments relating to the organization of the Company, which
have been created after the Acquisition Date by or at the
direction of Seller in its capacity as sole stockholder of the
Company (the items in clauses (i) and (ii) being referred to
collectively herein as the "ORGANIZATIONAL DOCUMENTS"), in each
case as amended to and in force on the date hereof.
5.4 Freedom to Contract.
(a) Except as set forth on Schedule 5.4, the
execution, delivery and performance of this Agreement and the
other Operative Documents to which Seller is a party does not, and
the performance by Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated
hereby and thereby will not (with or without notice or passage of
time or both), (i) violate or conflict with any provision of the
certificates or articles of incorporation or by-laws of the Seller
or any amendments thereto or restatements thereof, (ii) violate
any of the terms, conditions or provisions of any applicable law,
statute, rule,
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regulation, order, writ, injunction, judgment or decree of any
Governmental Authority (as defined hereinafter) binding upon the
Seller, (iii)(A) conflict with or result in a violation or breach
of, or constitute a default under, (B) give rise to any right of
termination, cancellation or acceleration under, (C) result in or
give to any person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under or
(D) result in the creation or imposition of any Lien upon Seller
or any of its assets and properties under, any of the terms,
conditions or provisions of any material note, bond, indenture,
debenture, security agreement, trust agreement, lien, mortgage,
lease, agreement, license, franchise, permit, guaranty, joint
venture agreement, or any other agreement, arrangement, instrument
or obligation, to which the Seller is a party or by which it is
bound, or (iv) require the Seller to obtain any governmental
authorization, approval, order, license, permit, franchise or
consent, or make any registration, declaration or filing with any
federal, state or local (but not foreign) court, governmental
instrumentality, agency, department, commission, board, bureau or
authority, or other regulatory or administrative agency or
commission ("GOVERNMENTAL AUTHORITY"); provided, however, that no
representation or warranty is made by Seller in clauses (ii) or
(iv) above as to any requirement referred to therein within the
States of North Carolina and Virginia or in any jurisdiction
outside the United States.
(b) Except as set forth in the audited financial
statements of the Company for its most recent fiscal year and
except as previously disclosed in writing to William K. Woltz, Jr.
("WOLTZ"), in the Seller's Annual Report on Form 10-K for the
fiscal year ended February 3, 1996 (the "10-K") or on Schedule
5.10, the Seller has not, on behalf of the Company or any of the
Subsidiaries (as defined below), entered into or authorized any
note, bond, indenture, debenture, security agreement, trust
agreement, lien, mortgage, lease, agreement, license, franchise,
permit, guaranty, joint venture agreement, or any other agreement,
arrangement, instrument or obligation, to which either the Company
or any Subsidiary is a party or by which either the Company or any
Subsidiary is bound.
5.5 Disclaimer of Warranties. Seller makes no warranty, express or
implied, whether of merchantability, suitability or fitness for a
particular purpose, or quality or adequacy as to the assets or properties
of the Company or the Subsidiaries or any part thereof, or as to the
condition or workmanship thereof, or the absence of any defects therein,
whether latent
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or patent, and Buyer has relied upon its own examination thereof in
deciding to purchase the Shares on the terms and subject to the conditions
of this Agreement and Buyer accepts such assets and properties "AS IS."
5.6 Taxes.
(a) Tax Returns. All U.S. federal income tax returns for
all periods from and after the Acquisition Date and ending on or
before the Closing Date that are or were required to be filed by,
or with respect to, the Company and those of its subsidiaries
incorporated within the United States (the "USA SUBSIDIARIES")
have been or shall be filed on a timely basis (taking into account
extensions of time permitted under applicable law). The Seller
shall timely file (taking into account extensions of time
permitted under applicable law) or cause to be filed all U.S.
federal income tax returns that shall be required to be filed
after the Closing Date by, or with respect to, each of the Company
and the USA Subsidiaries, for all periods ending on or before the
Closing Date, in accordance with applicable law. Such returns
shall properly reflect any election (and the effects thereof)
required under Section 7.11. All such tax returns that have been
or will be filed by the Seller were when filed, and will continue
to be after the date of this Agreement, true, correct and complete
in all material respects.
(b) Payment. Each of the Company and the USA Subsidiaries
has paid or has made provision for the payment of (including, by
accruals, charges, reserves or liabilities reflected on the
audited financial statements thereof as of February 3, 1996 (the
"REFERENCED BALANCE SHEET")), all U.S. federal income taxes that
have or may become due for all periods from and after the
Acquisition Date and ending on or before the date of the
Referenced Balance Sheet, including all such taxes reflected on
the tax returns referred to in this Section 5.6.
(c) Section 341(f)(2). No consent to the application of
Section 341(f)(2) of the Internal Revenue Code of 1986, as amended
(the "CODE"), has been filed with respect to the Company or any
USA Subsidiaries.
5.7 Subsidiaries. Except as set forth on Schedule 5.7, Seller has
not taken any action, or directed the Company to take any action, to (i)
create, invest in or make any payments to any corporation or other entity
of which the Company owns, directly or indirectly, in excess of 5% of the
outstanding capital stock or which is in any way controlled by the Company
or any of its subsidiaries (each, a "SUBSIDIARY", and collectively, the
"SUBSIDIARIES"), (ii) issue or authorize any
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capital stock, or securities convertible into or exchangeable or
exercisable for any shares of capital stock, of any Subsidiary or any
rights to subscribe for or to purchase, or any options for the purchase of,
any shares of capital stock or any securities convertible into or
exchangeable or exercisable for any shares of capital stock of any
Subsidiary or (iii) enter into any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any shares of capital stock or any securities
convertible into or exchangeable or exercisable for any shares of capital
stock of any Subsidiary. All references in this Agreement to Subsidiaries
of the Company shall include those Subsidiaries of the Company set forth in
Schedule 5.7 but shall not include the Perry Manufacturing Company
Political Action Committee.
5.8 Qualification. The Company is qualified to do
business as a foreign corporation and is in good standing in
the jurisdictions specified in Schedule 5.8 hereto.
5.9 Litigation. There is no action, order, suit, inquiry,
litigation, proceeding or investigation by or before any referee, mediator
or arbitrator, or any Governmental Authority pending or, to the knowledge
of the Seller, threatened, against the Seller, which would in any way seek
to prevent, enjoin, alter or delay any transaction contemplated hereby or
by the other Operative Documents. To the knowledge of Seller, there is no
action, order, suit, inquiry, litigation, proceeding or investigation by or
before any referee, mediator or arbitrator, or any Governmental Authority
pending or threatened, against the Company or any Subsidiary, which would
in any way seek to prevent, enjoin, alter or delay any transaction
contemplated hereby.
5.10 Undisclosed Liabilities. Except as set forth in the audited
financial statements of the Company for its most recent fiscal year and
except as previously disclosed in writing to Woltz, in the 10-K or on
Schedule 5.10, Seller has not, on behalf of the Company or any of the
Subsidiaries, created, assumed or incurred any liabilities or obligations,
whether accrued, absolute, contingent or otherwise.
5.11 Disclosure. None of the representations or warranties or
other provisions contained in this Agreement or any other Operative
Document delivered or to be delivered to Buyer, or any written statement,
certificate or other document furnished to Buyer in connection with this
Agreement or any other Operative Document, contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary in
order to make the statements contained therein not misleading.
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5.12 Absence of Certain Events. Except as previously disclosed in
writing to Woltz, in the 10-K or on Schedule 5.12, since February 3, 1996,
the Seller has not, on behalf of the Company or any Subsidiary, taken any
action that would cause (i) the business of the Company and the
Subsidiaries to have been operated other than in the ordinary and normal
course of business or (ii):
(a) except as set forth on Schedule 5.12, any declaration
or payment of any dividend, or any other similar distribution,
directly or indirectly, with respect to the Shares or other
securities of the Company;
(b) the Company to have assumed, guaranteed, endorsed or
otherwise become responsible for the liability or obligation of
any person other than the Subsidiaries (whether absolute, accrued,
contingent or otherwise) or engaged in any other transaction which
might have an adverse effect on the business or condition
(financial or otherwise) of the Company or the Subsidiaries;
(c) any mortgage, pledge or creation of any Lien with
respect to any of the assets or properties of the Company:
(d) any transfer or grant of any right under any
contracts, patents, patent licenses, inventions, trade names,
trademarks, service marks or copyrights, or registrations or
licenses thereof or applications therefor, or with respect to any
know-how or other proprietary or trade rights; or
(e) any termination, discontinuance, closing or disposal
of any plant, facility or business operation of the Company.
5.13 Affiliate Transactions. Except as set forth on Schedule 5.13,
neither the Company nor any Subsidiary, on the one hand, is a party to any
contract for goods or services or any lease with Seller, or any officer,
director, employee or agent of Seller or any affiliate of any such person
(other than Woltz and senior executives of the Company), on the other, nor
are there any loans or advances to any such persons (other than Woltz and
senior executives of the Company) from the Company or the Subsidiaries
which are presently outstanding.
5.14 Sale of All or Substantially All of Assets. The sale of the
Shares contemplated by this Agreement does not and
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will not constitute a sale of all or substantially all of the
assets of Seller.
5.15 Representations and Warranties on Closing Date. The
representations and warranties contained herein shall be true and complete
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date
other than such representations and warranties as are made as of another
date.
6. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
6.1 Due Incorporation. The Buyer is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has all requisite power and lawful authority to own, lease and operate its
assets and properties and to carry on its business as and where such
business is now conducted. Except as set forth on Schedule 6.1, all the
shares of capital stock of Buyer are owned by members of the Woltz family,
senior management of the Company and/or their affiliates.
6.2 Corporate Power. The Buyer has all requisite corporate power,
authority and approval required to execute, deliver and perform this
Agreement and the other Operative Documents to which it is a party, to
consummate the transactions contemplated hereby and thereby and to perform
fully its obligations hereunder and thereunder. The execution, delivery and
performance of the Operative Documents by the Buyer have been, or prior to
the Closing will be, duly and validly authorized by the Board of Directors
of the Buyer, and no other corporate action on the part of the Buyer or its
shareholders is necessary. The Operative Documents have been duly and
validly executed and delivered by the Buyer and (assuming due
authorization, execution and delivery by the Seller) constitute the legal,
valid and binding obligations of the Buyer enforceable against the Buyer in
accordance with their respective terms, subject to bankruptcy, insolvency,
and similar laws affecting creditors' rights generally and to the extent
that equitable principles may limit the availability of specific
performance and other remedies.
6.3 Freedom to Contract. Except as set forth on Schedule 6.3, the
execution, delivery and performance of this Agreement and the other
Operative Documents to which it is a party does not, and the performance by
it of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby will not (with or without
notice or passage of time or both), (a) violate or conflict with any
provision of the certificate or articles of
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incorporation or by-laws of the Buyer or any amendments thereto or
restatements thereof, (b) violate any of the terms, conditions or
provisions of any applicable law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any Governmental Authority binding upon
the Buyer or any of the Buyer's stockholders, (c)(i) conflict with or
result in a violation or breach of, or constitute a default under, (ii)
give rise to any right of termination, cancellation or acceleration under,
(iii) result in or give to any person any additional rights or entitlement
to increased, additional, accelerated or guaranteed payments under or (iv)
result in the creation or imposition of any Lien upon Buyer or any of its
respective assets and properties under, any of the terms, conditions or
provisions of any material note, bond, indenture, debenture, security
agreement, trust agreement, lien, mortgage, lease, agreement, license,
franchise, permit, guaranty, joint venture agreement, or any other
agreement, arrangement, instrument or obligation, to which the Buyer is a
party or by which it is bound, or (d) require the Buyer or any of the
Buyer's stockholders to obtain any authorization, approval, order, license,
permit, franchise or consent, or make any registration, declaration or
filing with any Governmental Authority.
6.4 Litigation. There is no action, order, suit, inquiry,
litigation, proceeding or investigation by or before any referee, mediator
or arbitrator, or any Governmental Authority pending or, to the knowledge
of the Buyer, threatened, against the Buyer, which would in any way seek to
prevent, enjoin, alter or delay any transaction contemplated hereby or by
the other Operative Documents to which Buyer is a party.
6.5 Acquisition of Shares for Investment. Buyer is acquiring the
Shares for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of
distributing or selling the Shares. Buyer agrees and understands that the
Shares have not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of (a) without
registration under the Securities Act, except pursuant to an exemption from
such registration available under the Securities Act, and (b) except in
accordance with applicable provisions of state securities laws.
6.6 Representations and Warranties on Closing Date. The
representations and warranties contained in this Section 6
shall be true and complete on and as of the Closing Date with
the same force and effect as though such representations and
warranties had been made on and as of the Closing Date other
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than such representations and warranties as are made as of
another date.
7. Certain Covenants of Parties.
7.1 Buyer's Knowledge and Independent Investigation. The Buyer
acknowledges and agrees that (a) Woltz has at all times since the
Acquisition Date been the President and Chief Executive Officer of the
Company with control over operational matters of the Company and its
Subsidiaries and has knowledge thereof, (b) the Shares of the Company were
sold to the Seller on the Acquisition Date by Woltz and his affiliates, (c)
Buyer has been furnished with or given adequate access to all information
regarding the Company, the Subsidiaries and their respective businesses
that Seller possesses and that previously has not been disclosed or
provided to Woltz, (d) Buyer has made its own inquiry and investigation
into, and, based thereon, will have formed an independent judgment
concerning, the Shares, the Company, the Subsidiaries and their respective
businesses and (e) Buyer will not assert any claim against the Seller, or
any of its directors, officers, employees, agents, stockholders,
affiliates, consultants or representatives or hold any such persons liable
for any inaccuracies, misstatements or omissions with respect to
information regarding the Company or the Subsidiaries (other than, with
respect to claims against Seller, the representations and warranties of
Seller contained in this Agreement).
7.2 Books and Records; Post Closing Access.
(a) If, in order properly to prepare documents required to
be filed with Governmental Authorities or its financial
statements, it is necessary that any party hereto or any
successors be furnished with additional information relating to
Seller, Buyer, the Company and the Subsidiaries, or their
respective businesses, and such information is in the possession
of any other party hereto, such party agrees to use commercially
reasonable efforts to furnish such information to such requesting
party, at the cost and expense of the party being furnished such
information.
(b) In order to facilitate the resolution of any claims
made by or against or incurred by any party hereto, it is agreed
that the parties shall after the Closing, upon two (2) business
days' advance notice, (i) afford the officers, employees and
authorized agents and representatives of the parties reasonable
access, during normal business hours, to the offices, properties,
books and records of the parties and any of their respective
successors relating to the Company and the Subsidiaries
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and the transactions contemplated by this Agreement, (ii) furnish
to the officers, employees and authorized agents and
representatives of the parties such additional financial and other
information regarding the Company and the Subsidiaries, including
any successors, the assets, properties, goodwill and business of
the Company and the Subsidiaries, and any successors, and their
respective businesses and the transactions contemplated by this
Agreement as the parties may from time to time reasonably request
and (iii) make available to the parties, the employees of the
parties (and in case of the Buyer, the Company and the
Subsidiaries) whose assistance, testimony or presence is necessary
to assist the parties in evaluating any such claims and in
defending such claims, including the presence of such persons as
witnesses in hearings or trials for such purposes.
(c) The Seller and the Buyer agree, and after the Closing,
the Buyer agrees to cause the Company, to preserve and keep all
books and records of or relating to the Company and the
Subsidiaries in their possession for a period of five years from
the Closing Date.
7.3 Regulatory and Other Authorizations; Consents. Each party
hereto will use its commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental
Authorities that may be or become necessary for its execution and delivery
of, and the performance of its obligations pursuant to, this Agreement and
will cooperate fully with the other parties hereto in promptly seeking to
obtain all such authorizations, consents, orders and approvals.
7.4 Employees. To the extent that service of an employee is
relevant for purposes of eligibility, vesting or benefit accrual under any
employee benefit plan, program or arrangement established or maintained by
the Buyer, the Company and the Subsidiaries for the benefit of all of those
persons who, at the discretion of the Buyer, become or remain employed by
the Buyer, the Company or any Subsidiary (collectively, "TRANSFERRED
EMPLOYEES"), such plan, program or arrangement shall credit such employees
for service on or prior to the Closing with the Seller, the Company, or the
Subsidiaries or any affiliate thereof, as the case may be. The Buyer, the
Company and the Subsidiaries, as the case may be, covenant and agree that
they shall be solely and exclusively responsible for any and all
termination, severance, vacation and sick pay, and other amounts payable or
benefits to be provided to the persons who were employed by the Buyer, the
Company or any Subsidiary, as the case may be, immediately prior to the
Closing, whether imposed by law or contract, resulting from, or related to,
the termination of
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employment of any of such persons or the closing or diminution of any the
Company's, or the Subsidiaries' facilities after the Closing. After the
Closing, Buyer agrees that it will not, and will not permit the Company or
any Subsidiary to, take any action with respect to any Transferred Employee
or any former employee of the Company or any of its Subsidiaries that would
result in any liability to Seller with respect to such Transferred Employee
or former employee.
7.5 Consent to Jurisdiction and Service of Process. Any legal
action, suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby shall be instituted in any state or
federal court located in New York, New York, and each party hereto agrees
not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to
the jurisdiction of such court, that the action, suit or proceeding is
brought in an inconvenient forum or that the venue of the action, suit or
proceeding is improper. Each party further irrevocably submits to the
jurisdiction of any such court in any such action, suit or proceeding. Any
and all service of process and any other notice in any such action, suit or
proceeding shall be effective against any party if given personally or by
registered or certified mail, return receipt requested, or by any other
means of mail that requires a signed receipt, postage prepaid, mailed to
such party as herein provided, or by personal service on such party with a
copy of such process mailed to such party by first class mail or registered
or certified mail, return receipt requested, postage prepaid; provided,
however, that nothing herein contained shall be deemed to affect the right
of any party to serve process in any manner permitted by law.
7.6 Expenses. Except as otherwise set forth herein, Seller agrees
to pay, without right of reimbursement from Buyer, the Company or any
Subsidiary, the costs incurred by Seller, and Buyer agrees to pay, without
right of reimbursement from Seller and, prior to the Closing, the Company
or any Subsidiary, the costs incurred by Buyer, incident to the preparation
and execution of this Agreement and the other Operative Documents and the
performance of their respective obligations hereunder and thereunder,
whether or not the transactions contemplated by this Agreement shall be
consummated, including, without limitation, the fees and disbursements of
legal counsel, accountants and consultants employed by the respective
parties in connection with the transactions contemplated by this Agreement;
provided, however, Seller shall not be obligated to pay any fees relating
to any consent or otherwise under any written agreement to which the
Company or any Subsidiary is a party and the material terms and conditions
of which Woltz has knowledge; provided further, however, that in no event
shall
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Seller be obligated to pay any costs incurred by Buyer, the Company or the
Subsidiaries incident to the preparation and execution of that certain
Credit Agreement (the "Page Credit Agreement") between the Buyer and Heller
and the other Loan Documents (as defined in the Page Credit Agreement).
7.7 Indemnification for Fees of Brokers and Finders. The Buyer
represents and warrants to the Seller that no broker, finder, agent or
similar intermediary has acted on behalf of Buyer, the Company or any
Subsidiary in connection with this Agreement or the transactions
contemplated hereby, and that there are no brokerage commissions, finders'
fees or similar fees or commissions payable in connection therewith based
on any agreement, arrangement or understanding with the Buyer, Woltz or any
stockholder of the Buyer or any action taken by the Buyer, other than fees
payable to UBS Securities, Inc. for which the Buyer shall be solely liable.
The Seller represents and warrants to the Buyer that no broker, finder,
agent or similar intermediary has acted on behalf of the Seller or, at the
direction of the Seller, on behalf of the Company or any Subsidiary, in
connection with this Agreement or the transactions contemplated hereby, and
that there are no brokerage commissions, finders' fees or similar fees or
commissions payable in connection therewith based on any agreement,
arrangement or understanding with the Seller, or any action taken by the
Seller. The Buyer and the Seller agree to indemnify and save the other
harmless from any claim or demand for commission or other compensation by
any broker, finder, agent or similar intermediary claiming to have been
employed by or on behalf of the Buyer or the Seller in breach of their
respective representations contained in this Section, and to bear the cost
of legal expenses incurred in defending against any such claim.
7.8 Company Subject to Indebtedness. The Buyer and the Company
acknowledge and agree that the Company and the Subsidiaries shall remain
subject to and obligated on all indebtedness of the Company and the
Subsidiaries, other than indebtedness and obligations (which shall not be
assumed by Buyer and shall remain the sole responsibility of the Seller)
(a) which Seller has caused to be created, incurred or assumed by the
Company or any Subsidiary and that previously have not been disclosed in
writing to Woltz or as set forth in the audited financial statements of the
Company for its most recent fiscal year or in the 10-K or on Schedule 5.10,
(b) arising out of or in connection with any failure by the Seller to file
any U.S. federal income tax returns or pay any U.S. federal income taxes
relating to any period prior to and including the Closing Date, or (c) of
the Seller that is owed to Heller. With respect to the indebtedness to
which the Company and the Subsidiaries shall remain subject under this
Section 7.8, the Buyer and the Company shall have the
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exclusive responsibility for payment of all termination, replacement,
consent and prepayment fees, penalties, premiums or expenses relating to
any such indebtedness which may be incurred as a result of the transactions
contemplated hereby or actions taken by the Buyer or the Company from and
after the Closing Date, and neither Seller nor any affiliate of Seller
shall have any obligation whatsoever to terminate, assume, prepay or
guarantee any such indebtedness.
7.9 Company Assets and Properties Subject to Liens. The Buyer and
the Company acknowledge and agree (a) that notwithstanding the purchase of
the Shares by Buyer from Seller and the consummation of the transactions
contemplated hereby, the assets and properties of the Company and the
Subsidiaries shall remain subject to all Liens that existed immediately
prior to the Closing except those Liens set forth on Schedule 7.9, and (b)
neither the Seller nor any affiliate thereof shall have any obligation
whatsoever to pay off, remove or terminate any Lien described in clause (a)
above other than those Liens set forth on Schedule 7.9 or to pay any costs
or expenses relating thereto; provided, however, the parties acknowledge
and agree that the Buyer shall have no liability for, and Seller shall take
any and all steps necessary in order to hold Buyer, the Company and the
Subsidiaries harmless from and against, any and all Liens respecting any
U.S. federal income taxes that have or may become due for all periods prior
to the Closing Date, and to pay any and all damages, losses, liabilities,
taxes and deficiencies and penalties and interest thereon and costs and
expenses resulting therefrom.
7.10 Intercompany Obligations. Except to the extent set forth on
Schedule 7.10 and except for obligations set forth in this Agreement or in
any document or instrument delivered pursuant to this Agreement, all
intercompany obligations, advances, accounts and indebtedness as between
the Company and the Subsidiaries, or any of them, on the one hand, and the
Seller and its subsidiaries (including without limitation, Europe Craft
Imports, Inc.), on the other hand, shall be terminated and cancelled at
Closing.
7.11 Section 338(h)(10) Election. (a) At Buyer's option, Seller
and Buyer jointly will elect to treat Seller's sale of the Shares to Buyer
as a sale of assets as defined under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code"). At Buyer's option, Seller
and Buyer also shall make an election under Section 338(h)(10) of the Code
for the stock of all USA Subsidiaries transferred pursuant to the sale of
the Shares. The elections in this paragraph are collectively referred to as
the "Election".
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(b) Within 60 days after the Closing Date, Buyer and Seller shall (i)
use their best efforts to agree on the Modified Adjusted Deemed Sales Price
("MADSP") (as defined under Treasury Regulations) computation and the
allocation of the MADSP among the Company's assets as of the Closing Date;
and (ii) provide such other information and otherwise cooperate with the
other party as such other party may reasonably request, in order to enable
the parties to file the Election for the Company and the USA Subsidiaries
and make any similar elections required under any state or local statute.
(c) Within 45 days after Buyer and Seller have agreed upon the MADSP,
Seller shall furnish Buyer Seller's computation of the federal income taxes
to be paid solely as a result of the Election. Seller shall provide Buyer
access to all information used in making this computation and cooperate
with Buyer in determining the appropriate amount of such computation.
(d) Within 30 days after Buyer's receipt of Seller's computation of
the federal income taxes pursuant to paragraph (c) above, at Buyer's
option, Seller and Buyer will make the Election by jointly executing
duplicate originals of IRS Form 8023-A (together with all appropriate
attachments thereto) or in such other manner as may be required by IRS rule
or Treasury Regulation. Both Seller and Buyer also shall jointly execute
and make similar elections in the manner required under any state or local
statute. One original of all forms executed in connection with the Election
(and all such similar forms as may be filed under state or local law) shall
be delivered by Buyer to Seller within 135 days after the Closing Date, and
one original of all such forms shall be delivered by Seller to Buyer within
135 days after the Closing Date. Such forms shall include (i) the
computation of the MADSP and (ii) the allocation of the MADSP among the
assets as of the Closing Date. If Buyer fails to notify Seller of Buyer's
decision to make or not make the Election within the 30 day period provided
in the first sentence hereof, Buyer shall not have any right to make the
Election.
(e) Within 150 days after the Closing Date, Buyer and Seller shall
file all forms relating to the Election for the Company and the USA
Subsidiaries and all such similar forms as may be required under state or
local statute.
(f) Seller shall use such MADSP allocation in the preparation of its
federal and state tax returns and shall, at least 30 days prior to filing,
furnish to Buyer a copy of all federal and state returns which reflect the
Election. Buyer shall have the right to request any modification to such
federal returns to reflect the terms of the Election, and Seller agrees to
make any reasonable modification requested.
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7.12 Post-Closing Board Action. Immediately after the Closing, Buyer
shall cause the Board of Directors of the Company to ratify and approve
this Agreement and the obligations of the Company under this Agreement and
shall deliver to Seller a copy of the related resolutions of the Board of
Directors of the Company, certified by the Secretary of the Company.
8. Conditions Precedent to the Obligation of the Buyer to Close.
The obligation of the Buyer to consummate the transactions contemplated
hereby is subject to the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by the Buyer in its
sole discretion:
8.1 Representations and Warranties True as of Closing Date. The
representations and warranties of the Seller contained in this Agreement
shall be true on and as of the Closing Date in all material respects with
the same force and effect as though made on and as of the Closing Date
other than such representations and warranties as are made as of another
date which shall be true and correct as of such other date.
8.2 Compliance with This Agreement. The Seller shall have performed
and complied in all material respects with all covenants and agreements
required by this Agreement to be performed or complied with by the Seller
on or prior to the Closing Date.
8.3 Certificates. The Seller shall have delivered to the Buyer a
certificate, dated the Closing Date and signed by a duly authorized officer
of the Seller, certifying that the conditions specified in Sections 8.1 and
8.2 have been fulfilled.
8.4 Corporate Authorization. Buyer shall have received from Seller a
copy of the resolutions of the board of directors of Seller, certified as
of the Closing Date by the secretary or assistant secretary thereof, duly
authorizing the execution, delivery and performance by Seller of this
Agreement and each other Operative Document, together with an incumbency
certificate as to the persons authorized to execute and deliver such
documents on its behalf.
8.5 Opinion of Counsel to the Company and the Seller. The Buyer shall
have received the opinion of Herrick, Feinstein LLP, counsel to the Seller,
dated the date of the Closing, addressed to the Buyer, substantially in the
form of Exhibit A hereto.
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8.6 Resignations of Directors and Officers. The Buyer shall have
received the resignation, dated the date of the Closing, of each officer
and director of the Company or any of its Subsidiaries set forth on
Schedule 8.6 hereto.
8.7 Good Standing. Seller shall have delivered to Buyer certificates
issued by appropriate Governmental Authorities evidencing the good standing
of the Seller, the Company and the USA Subsidiaries set forth on Schedule
5.7 as of a date not more than 10 days prior to the Closing Date as a
corporation of the respective jurisdiction in which it was organized.
8.8 No Adverse Event. The business and properties of the Company and
the Subsidiaries shall not be adversely affected or threatened to be
affected in any way as a result of fire, explosion, earthquake, disaster,
accident or other casualty, any action or threatened action by the United
States or any other Governmental Authority, flood, drought, embargo, riot,
civil disturbance, uprising, activity of armed forces, act of God or public
enemy.
8.9 Litigation. No action, order, suit or proceeding shall have been
instituted before any Governmental Authority, or instituted or threatened
by any Governmental Authority, to restrain, modify or prevent or make
illegal the carrying out of the transactions contemplated hereby or by the
Operative Documents, or to seek damages or a discovery order in connection
with such transactions.
8.10 Delivery of Stock Certificates. The Seller shall have delivered
to the Buyer at the Closing stock certificates representing all the Shares
duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer, with requisite stock transfer tax
stamps, if any attached.
8.11 Buyer's Financing Arrangements with Heller. Simultaneously with
the Closing under this Agreement, the closing shall have occurred under the
Page Credit Agreement providing Buyer with financing in an amount not less
than the Purchase Price set forth in Section 3 of this Agreement.
8.12 Consents. The Seller shall have received each consent or approval
required to be given by any third party set forth on Schedule 5.4 in
connection with the consummation of the transactions contemplated hereby,
including, without limitation, required consents and approvals set forth on
Schedule 5.4 of the holders of any indebtedness of the Company and the
Subsidiaries, the lessors of any real or personal property leased by the
Company or the Subsidiaries, and any Governmental Authority.
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8.13 Releases. Seller and the other Releasing Parties (as defined in
Exhibit C hereto) shall have executed and delivered to Buyer and the
Company and the Subsidiaries a general release of Buyer, the Company, the
Subsidiaries and their respective officers, directors and stockholders and
the other Released Parties (as defined in Exhibit C hereto) in the form of
Exhibit C.
8.14 Release of Liens. Seller shall have delivered to the Buyer
instruments or agreements evidencing the release of all liens on the Shares
held by Heller.
8.15 Consent to Sale of Shares. Seller shall have delivered to Buyer
the consent, in form and substance satisfactory to Buyer, of Apollo Aris
Partners, L.P., Robert K. Lifton, Howard L. Weingrow, Charles S. Ramat,
James G. and Alexander M. Goren, David N. Schreiber to the sale of the
Shares to Buyer pursuant to this Agreement.
8.16 Proceedings Satisfactory. All proceedings, corporate or other, to
be taken in connection with the transactions contemplated by this
Agreement, and all other Operative Documents, shall be satisfactory in form
and substance to Buyer.
9. Conditions Precedent to the Obligation of the Seller to Close.
The obligation of the Seller to consummate the transactions contemplated
hereby is subject to the fulfillment on or prior to the Closing Date of the
following conditions, any one or more of which may be waived by the Seller in
its sole discretion:
9.1 Representations and Warranties True as of Closing Date. The
representations and warranties of the Buyer contained in this Agreement
shall be true on and as of the Closing Date in all material respects with
the same force and effect as though made on as of the Closing Date other
than such representations and warranties as are made as of another date
which shall be true and correct as of such other date.
9.2 Compliance with This Agreement. The Buyer shall have performed and
complied in all material respects with all covenants and agreements
required by this Agreement to be performed or complied with by the Buyer on
or prior to the Closing Date.
9.3 Officer's Certificate. The Buyer shall have delivered to the
Seller a certificate, dated as of the Closing Date and signed by a duly
authorized officer of the Buyer, certifying that the conditions specified
in Sections 9.1 and 9.2 have been fulfilled.
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9.4 Corporate Authorization. Seller shall have received from Buyer a
copy of the resolutions of the board of directors of Buyer, certified as of
the Closing Date by the secretary or assistant secretary thereof, duly
authorizing the execution, delivery and performance by Buyer of this
Agreement and each other Operative Document to which Buyer is a party,
together with an incumbency certificate as to the persons authorized to
execute and deliver such documents on its behalf.
9.5 Opinion of Counsel to the Buyer. The Seller shall have received
the opinion of Fennebresque, Clark, Swindell & Hay, counsel to the Buyer,
dated the date of the Closing, addressed to the Seller, substantially in
the from of Exhibit B hereto.
9.6 Good Standing. Buyer shall have delivered to Seller certificates
issued by appropriate Governmental Authorities evidencing the good standing
of the Buyer as of a date not more than 10 days prior to the Closing Date
as a corporation of the jurisdiction in which it was organized.
9.7 Litigation. No action, order, suit or proceeding shall have been
instituted before any Governmental Authority, or instituted or threatened
by any Governmental Authority, to restrain, modify or prevent the carrying
out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions.
9.8 Payment of Purchase Price. The Buyer shall have paid to the Seller
the Purchase Price in immediately available funds in accordance with the
terms and provisions of Section 3 of this Agreement.
9.9 Seller's Debt Restructuring Agreement. Simultaneously with the
Closing under this Agreement, the closing shall have occurred under the
Restructuring Agreement of even date herewith between Seller and Heller
with respect to the Heller Note.
9.10 Consents. The Buyer shall have received each consent or approval
required to be given by any third party set forth on Schedule 6.3 in
connection with the consummation of the transactions contemplated hereby,
including, without limitation, required consents and approvals set forth on
Schedule 6.3 to holders of indebtedness of the Buyer or to any Governmental
Authority.
9.11 Consent to Transaction by Buyer's Affiliates. The persons listed
on Schedule 5.1 hereto and the Buyer's stockholders shall have delivered to
Seller consents with respect to the transactions contemplated by this
Agreement in the form of Exhibit D and Exhibit E, respectively.
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9.12 Releases. Woltz shall have delivered to the Seller and its
subsidiaries and their respective officers, directors and stockholders a
general release in the form of Exhibit F hereto, and the Company and the
Subsidiaries shall have delivered to the Seller and its subsidiaries and
their respective officers, directors and stockholders a general release in
the form of Exhibit G hereto.
9.13 Termination of Stock Options. The persons listed on Schedule 9.13
shall have delivered to Seller consents to the termination of all options
for Seller's Common Stock held by such persons in the form of Exhibit H
hereto.
9.14 Proceedings Satisfactory. All proceedings, corporate or other, to
be taken in connection with the transactions contemplated by this
Agreement, and all other Operative Documents, shall be satisfactory in form
and substance to Seller.
10. Indemnification.
10.1 Seller's Indemnity.
(a) Subject to the provisions of this Section 10, Seller from and
after the Closing Date shall indemnify and hold Buyer and, so long as
Buyer owns the Company, the Company and the Subsidiaries, and their
respective officers, directors, shareholders, agents, employees,
representatives, successors and assigns, harmless from and against any
and all damages, losses, costs, obligations, claims, demands,
assessments, judgments or liability, including taxes, and all expenses
(including interest, penalties and attorneys' and accountants' fees
and disbursements) (collectively "Damages") incurred in connection
with or arising out of any litigation or otherwise, and any
investigation relating thereto, by any of the above-named persons,
directly or indirectly, resulting from or in connection with:
(i) breach of representation or warranty or failure to
perform any covenant or agreement made or undertaken by Seller in
this Agreement or in any other Operative Document;
(ii) all debts, obligations, expenses, liabilities and costs
incurred arising out of or in connection with any indebtedness or
obligations to which the Company and the Subsidiaries will not
remain subject under Section 7.8; and
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(iii) any action, suit, proceeding or claim incident to any
of the foregoing.
(b) Subject to the provisions of this Section 10, Seller from and
after the Closing Date shall indemnify and hold Buyer harmless from
and against any and all Damages incurred by Buyer resulting from
Seller's non-payment of or any other deficiencies, including interest
and penalties, related to any U.S. federal income taxes of the Company
or the Subsidiaries or in respect of its operations prior to the
Closing Date and after the Acquisition Date.
(c) Seller acknowledges and agrees that if Seller makes any claim
or institutes any actions, suits or proceedings with respect to the
validity or applicability of this indemnification provision and does
not prevail in a final judgment by a court of competent jurisdiction,
Seller shall pay all Damages incurred by Buyer, the Company or any
Subsidiary in connection therewith.
10.2 Limitations. Notwithstanding any provision to the contrary contained
in this Agreement, (a) Buyer shall not make any claims against Seller under this
Section 10 until the aggregate dollar amount of all such claims shall exceed
$100,000 (which aggregate amount shall include any breach of representation or
warranty or failure to perform any covenant or agreement whether or not
material), upon which point Seller shall be liable for the amount of all the
Damages in excess of $100,000; and (b) Seller's aggregate liability for any and
all liabilities under this Section 10 shall not exceed $42,000,000. For the
purposes of this Section 10.2, in computing such individual or aggregate amounts
of claims, the ultimate amount of each claim shall be an amount (x) net of any
tax benefit to Buyer, the Company or any Subsidiary, (y) net of any insurance
proceeds and any indemnity, contribution or other similar payment recovered by
Buyer, the Company or any Subsidiary from any third party with respect thereto,
and (z) net of any reserves provided for the item in question as set forth in
Schedule 10.2 or in the audited financial statements of the Company for its most
recent fiscal year; provided, however, Seller shall pay to Buyer any amount due
under this Section 10 (except for amounts reserved under clause (z) above)
promptly as required hereunder, and, provided Seller has so paid, any amounts
recovered by Buyer, the Company or the Subsidiaries under Section 10.2(x), (y)
or (z) shall be delivered to Seller promptly upon receipt. Notwithstanding any
other provision of this Agreement, Seller shall have no liability for any
Damages resulting from any event, condition, occurrence, state of facts or
circumstances or defect relating to the Company, any Subsidiary, their
respective assets or the operation of their respective
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businesses, or the Shares, occurring or existing prior to the Acquisition Date.
Without limiting the generality of the foregoing disclaimer, Seller shall have
no liability for any Lien on, or defect in, title to the Shares existing prior
to the Acquisition Date.
10.3 Buyer's and Company's Indemnities
(a) Buyer shall indemnify and hold Seller and its officers, directors,
shareholders, agents, employees, representatives, successors and assigns
harmless from and against any Damages incurred by any of the above-named persons
in connection with or arising out of (i) Buyer's breach of representation or
warranty or Buyer's or, after the Closing, the Company's failure to perform any
covenant or agreement made or undertaken by Buyer or, after the Closing, by the
Company in this Agreement or in any other Operative Document and any and all
Damages arising from or in connection with any action, suit, proceeding or claim
incident to any of the foregoing, (ii) the operations (other than with respect
to payment of U.S. federal income taxes or filing or failure to file any U.S.
federal income tax return for periods ending on or before the Closing Date or
with respect to the disallowance of any payments made by any of Seller's
subsidiaries to Seller since the Acquisition Date) of the Company and its
Subsidiaries and the Perry Manufacturing Company Political Action Committee and
any discontinued operations of the Company and its Subsidiaries, in each case
under this clause (ii) for the period after the Closing Date and (iii) any taxes
imposed on Seller pursuant to any Election made under Section 7.11. Buyer
acknowledges and agrees that if Buyer or, after the Closing, the Company or any
Subsidiary makes any claim or institutes any actions, suits or proceedings with
respect to the validity or applicability of this indemnification provision and
does not prevail in a final judgment by a court of competent jurisdiction, Buyer
shall pay all Damages incurred by Seller in connection therewith.
(b) From and after the Closing Date, the Company shall indemnify and hold
Seller and its officers, directors, shareholders, agents, employees,
representatives, successors and assigns harmless from and against any Damages
incurred by any of the above-named persons in connection with or arising out of
(i) after the Closing, the Company's failure to perform any covenant or
agreement made or undertaken, after the Closing, by the Company in this
Agreement or in any other Operative Document and any and all Damages arising
from or in connection with any action, suit, proceeding or claim incident to any
of the foregoing and (ii) the operations (other than with respect to payment of
U.S. federal income taxes or filing or failure to file any U.S. federal income
tax return for periods ending on or before the Closing Date or with respect
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to the disallowance of any payments made by any of Seller's subsidiaries to
Seller since the Acquisition Date) of the Company and its Subsidiaries and the
Perry Manufacturing Company Political Action Committee and any discontinued
operations of the Company and its Subsidiaries, in each case under this clause
(ii) for the period after the Closing Date. The Company acknowledges and agrees
that if, after the Closing, the Company or any Subsidiary makes any claim or
institutes any actions, suits or proceedings with respect to the validity or
applicability of this indemnification provision and does not prevail in a final
judgment by a court of competent jurisdiction, the Company shall pay all Damages
incurred by Seller in connection therewith.
10.4 Procedure. All claims for indemnification by a party under this
Section 10 (the party claiming indemnification and the party against whom such
claims are asserted being hereinafter called the "Indemnified Party" and the
"Indemnifying Party," respectively) shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from such Indemnified Party by a third party,
such Indemnified Party shall with reasonable promptness give notice (the
"Claim Notice") to the Indemnifying Party of such claim or demand,
specifying the nature of and specific basis for such claim or demand and
the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim
and demand). The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party under this Agreement with respect to any such claim or
demand if the Indemnified Party fails to notify the Indemnifying Party
thereof in accordance with the provisions of this Agreement, and as a
result of such failure, the Indemnifying Party's ability to defend against
the claim or demand is materially prejudiced. The Indemnifying Party shall
have ten (10) days from the delivery or mailing of the Claim Notice (the
"Notice Period") to notify the Indemnified Party (i) whether or not it
disputes the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such claim or demand, and (ii) whether or not it
desires, at the cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such claim or demand; provided, however, that any
Indemnified Party is hereby authorized,
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but is not obligated, prior to and during the Notice Period, to file any
motion, answer or other pleading that it shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party. If
the Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such claim
or demand, the Indemnifying Party shall have the right, subject to the last
sentence of this paragraph, to direct, through counsel selected by the
Indemnifying Party and reasonably satisfactory to the Indemnified Party,
the defense or settlement of any claim or demand at its own expense. If the
Indemnifying Party fails to respond to the Indemnified Party within the
Notice Period or after electing to defend fails to so defend, then the
Indemnified Party shall have the right, but not the obligation, to
undertake or continue the defense of and to compromise or settle
(exercising reasonable business judgment) the claim or other matter, all on
behalf, for the account and at the risk of the Indemnifying Party. No claim
as to which indemnification is sought under this Agreement may be settled
without the consent of the Indemnifying Party, which consent may not be
unreasonably withheld.
(b) If requested by the Indemnifying Party, the Indemnified Party
agrees, at the Indemnifying Party's expense, to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which
the Indemnifying Party elects to contest, or, if appropriate and related to
the claim in question, in making any counterclaim against the person
asserting the third party claim or demand, or any cross-complaint against
any person.
(c) If any Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to
the Indemnifying Party. If the Indemnifying Party disputes such claim, the
Indemnifying Party and the Indemnified Party shall attempt in good faith to
resolve such dispute. If the Indemnifying Party and the Indemnified Party
are unable to resolve such dispute within twenty business days after
delivery of a Claim Notice (unless such time period
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shall have been extended by mutual agreement of the Indemnifying Party and
the Indemnified Party), such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
(d) In connection with the matters for which indemnification is sought
hereunder, (i) Buyer agrees to give Seller and its representatives
reasonable access during regular business hours and upon five days' prior
written notice to Buyer to the books, records and employees of the Company,
the Subsidiaries and Buyer, to the extent such information is necessary to
the matters set forth in the Claim Notice, and (ii) Seller agrees to give
Buyer and its representatives reasonable access during regular business
hours and upon five days' prior written notice to Seller to the books,
records and employees of Seller relating to the Company and the
Subsidiaries or the transactions contemplated hereby, to the extent such
information is necessary to the matters set forth in the Claim Notice.
10.5 Exclusive Remedy. The remedies expressly provided for in this Section
10 shall be the parties' exclusive remedies with respect to the matters covered
by this Agreement. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of any party hereto, after the consummation of the
purchase and sale of the Shares contemplated hereby, to rescind this Agreement
or any of the transactions contemplated hereby.
11. Tax Matters.
11.1 Payment for Taxes. The Seller agrees to pay to the Buyer, without
regard to any taxes payable in respect of any amounts payable under this Section
11.1, the amount of all U.S. federal income taxes of the Company or the
Subsidiaries with respect to any period or portion thereof that commenced after
the Acquisition Date and ends on or before the Closing Date, in excess of the
amount set forth as a line item in the Referenced Balance Sheet as the "reserve
for taxes" not previously taken into account under Section 11.7.2; provided,
however, that no amount shall be paid under this Section 11.1 for any such taxes
arising in connection with any acts, omissions or elections by Buyer or the
Company on or after the Closing Date. The Buyer and, after the Closing, the
Company shall be responsible for (i) all U.S. federal income taxes of the
Company and the Subsidiaries for any taxable period or portion thereof after the
Closing Date and for any liability
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for any acts, omissions or elections by Buyer or the Company on or after the
Closing Date, (ii) payment to Seller of all U.S. federal income taxes relating
to the Election made under Section 7.11, and (iii) all foreign, federal (except
U.S. federal income tax), state, county, local and other taxes, levies,
assessments and impositions whether characterized as income, franchise, gross
receipts, sales, commercial rent, payroll, employment, real property, personal
property, value added, excise, customs, duties, import fees, license fees or
otherwise, of or imposed on or due from the Company and Subsidiaries or their
assets or properties ("OTHER TAXES"), for all taxable periods and portions
thereof (including periods before and periods after the Closing Date and
including Other Taxes relating to the Election made under Section 7.11).
Notwithstanding the foregoing, Seller agrees to pay Buyer, and Buyer shall not
be responsible for, (i) any Other Taxes that arise from numerical or calculation
errors made by Seller in the transcription of information provided by the
Company, its officers, employees or accountants, in the tax returns prepared by
the Seller and relating to such Other Taxes and (ii) any taxes relating to or
arising out of any disallowance of payments made by any of Seller's subsidiaries
to Seller since the Acquisition Date (the items referred to in the foregoing
clauses (i) and (ii), collectively, "SPECIAL TAXES"). Seller specifically
acknowledges and agrees that Seller will (i) report all items of income or loss
resulting from the sale of the Shares, including the deemed sale of assets
pursuant to the Election, as required in Section 7.11, and (ii) to the extent
that such reporting results in the utilization of or inability to utilize any of
the losses, credits or other items that would otherwise reduce Seller's tax
liability in the current or a later year (collectively, the "TAX ATTRIBUTES"),
be responsible for such loss of Tax Attributes, and will not seek any
reimbursements or indemnification from Buyer or the Company for loss of Tax
Attributes.
11.2 Section 338 Election Matters.
(a) Payment of State and Local Taxes. Buyer agrees to pay any Other
Taxes due solely as a result of the Election pursuant to Section 7.11 and
to timely file or cause to be filed all state and local tax returns
required to be filed on or after the Closing Date to properly reflect any
Election (and the effects thereof) required under Section 7.11 and to pay
all amounts due thereon and to provide copies of such tax returns to
Seller.
(b) Payment of Federal Taxes. Buyer agrees to pay any U.S. federal
income taxes of Seller due solely as a result of the Election, computed
after application of
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Seller's Tax Attributes. Buyer shall pay Seller by wire transfer or bank
cashier's check in immediately available funds on the date the Buyer
chooses to make the Election pursuant to Section 7.11(d), the amount
determined under Section 7.11(c) of this Agreement (the "BUYER PAYMENT").
Seller shall remit the Buyer Payment to the Internal Revenue Service with
Seller's request for extension of time to file its federal income tax
return. If, upon Seller's preparation of its federal income tax return for
the period which includes the Closing Date, the amount of federal income
taxes to be paid solely as a result of the Election after application of
Seller's Tax Attributes (the "BASE AMOUNT") is determined by Seller to be
(x) greater than the Buyer Payment, Buyer will pay Seller the difference
between the Base Amount and the Buyer Payment by wire transfer or bank
cashier's check in immediately available funds within three days of the
receipt by Buyer of Seller's calculation of the Base Amount or (y) less
than the Buyer Payment, Seller will request a refund from the Internal
Revenue Service of such overpayment and will pay Buyer the difference
between the Base Amount and the Buyer Payment by wire transfer or bank
cashier's check in immediately available funds within three days of the
receipt of such overpayment.
(c) Adjustments to Amounts of Taxes. In the event that any federal
taxing authority shall examine any tax returns reporting the effects of the
Election, Seller shall promptly notify Buyer of any such examination and
shall permit Buyer to participate in the resolution of any tax controversy
relating thereto. Buyer shall pay to Seller any increase in Seller's
federal income tax liability due solely as a result of the Election, which
is imposed as a result of such tax examination, prior to the time when
Seller must remit such payment of additional taxes. Buyer shall pay any
increase in Other Taxes due solely as a result of the Election which is
imposed as a result of any federal, state or local tax examination. Buyer's
indemnity pursuant to Section 10.3 shall include all Damages of Seller
arising from any claim, examination, controversy, audit or proceeding of
any taxing authority relating to any tax lability due to the Election and
any taxes due under Section 11.2(a) and (b).
11.3 Payments. Payment by the Seller of any amounts due under Section 11.1
in respect of U.S. federal income taxes shall be made (i) at least three
calendar days before the due date of the applicable estimated or final U.S.
federal income tax return required to be filed by the Company after the Closing
Date on which is required to be reported income or other amounts for a period
ending on or before the Closing
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Date for which the Seller is responsible under Section 11.1, provided that no
such payment shall be due from the Seller prior to five business days following
receipt of written notice from the Buyer, or (ii) within five business days
following the date of (x) an agreement between the Seller and the Buyer that an
amount is payable pursuant to Section 11.1, (y) an assessment of such tax by the
Internal Revenue Service ("IRS"), or (z) a "determination" as defined in Section
1313(a) of the Code.
11.4 Refunds. Any refunds of taxes received by or credited to the Buyer or
the Company, the Subsidiaries or their successors and relating to taxable
periods or portions thereof ending on or before the Closing Date shall be for
the account of the Seller, and the Buyer shall pay over to the Seller any such
refund together with interest thereon or the amount of any such benefit within
five business days of the earlier of receipt or entitlement thereto. The Buyer
shall, if the Seller so requests and at the Seller's expense, cause the relevant
entity to file for and obtain any refunds or equivalent amounts to which the
Seller is entitled under this Section 11.4. The Buyer shall permit the Seller to
control (at the Seller's expense) the prosecution of any such refund claimed,
and shall cause the relevant entity to authorize by appropriate power of
attorney such persons as the Seller shall designate to represent such entity
with respect to such refund claimed.
11.5 Contests.
11.5.1 After the Closing, the Buyer shall promptly notify the Seller
in writing of the commencement of any tax audit or administrative or
judicial proceeding or of any demand or claim on the Buyer, the Company or
the Subsidiaries which relates to any U.S. federal income taxes or Special
Taxes of the Company or the Subsidiaries for periods ending on or prior to
the Closing Date or which, if determined adversely to the taxpayer or after
the lapse of time, would be grounds for indemnification for such U.S.
federal income taxes or Special Taxes under Section 11.1. Such notice shall
contain factual information (to the extent known to the Buyer, the Company
or the Subsidiaries) describing the asserted tax liability in reasonable
detail and shall include copies of any notice or other document received
from any taxing authority in respect of any such asserted tax liability. If
the Buyer fails to give the Seller prompt notice of an asserted tax
liability as required by this Section 11.5.1, then, (i) if the Seller is
precluded by the failure to give prompt notice from contesting the asserted
tax liability in both the administrative and judicial forums, the Seller
shall not have any obligation
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to indemnify the Buyer for any loss arising out of such asserted tax
liability and (ii) Seller is not so precluded from contesting but such
failure to give prompt notice results in a detriment to the Seller, then
any amount which Seller is otherwise required to pay Buyer pursuant to
Section 11.1 with respect to such liability shall be reduced by the amount
of such detriment.
11.5.2 The Seller may elect to direct, through counsel or accountants
of its own choosing and at its own expense, any audit, assessment, claim
for refund and administrative or judicial proceeding involving any asserted
liability with respect to any U.S. federal income taxes or Special Taxes of
the Company or the Subsidiaries for periods ending on or prior to the
Closing Date or for which indemnity for U.S. federal income taxes or
Special Taxes may be sought under Section 11.1 (any such audit, claim for
refund or proceeding relating to any asserted tax liability is referred to
herein as a "CONTEST"). If the Seller elects to direct the Contest of an
asserted tax liability, it shall within 30 calendar days of receipt of the
notice of asserted tax liability notify the Buyer of its intent to do so,
and the Buyer shall cooperate and shall cause the Company, the Subsidiaries
or their successors to cooperate in each phase of such Contest. If the
Seller elects not to direct the Contest, fails to notify the Buyer of its
election as herein provided or contests its obligation to indemnify under
Section 11.1, the Buyer, the Company or the Subsidiaries may pay,
compromise or contest, at their own expense, such asserted liability.
However, in such case, neither the Buyer, the Company nor the Subsidiaries
may settle or compromise any asserted liability over the objection of the
Seller; provided, however, that consent to settlement or compromise shall
not be unreasonably withheld. In any event, each of the Buyer (or the
Company or the Subsidiaries) and the Seller may participate, at its own
expense, in the Contest. If the Seller chooses to direct the Contest, the
Buyer shall promptly empower and shall cause the Company and the
Subsidiaries and their successors promptly to empower (by power of attorney
and such other documentation as may be appropriate) such representatives of
the Seller as the Seller may designate to represent the Buyer, the Company,
the Subsidiaries or their successors in the Contest insofar as the Contest
involves an asserted tax liability for which the Seller would be liable
under Section 11.1.
11.6 Filing of Tax Returns; Change of Tax Year. The parties hereto
covenant and agree that: (i) the Seller shall prepare and file with the
applicable governmental authorities all U.S. federal income tax returns
relating to the Company
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and the Subsidiaries with respect to any period or portion thereof that
ends on or before the Closing Date and (ii) the Buyer and the Company shall
prepare and file with the applicable governmental authorities all U.S.
federal income tax returns relating to the Company and the Subsidiaries
with respect to any period ending after the Closing Date and all tax
returns for Other Taxes relating to the Company and the Subsidiaries for
all periods, whether ending before or after the Closing Date. The parties
hereto acknowledge and agree that for purposes of filing all U.S. federal
income tax returns, the taxable year of the Company and the Subsidiaries
shall end as of the Closing Date and that a new taxable year shall commence
as of the day following the Closing Date and shall end on the same day as
the Company's fiscal year for filing its federal income tax return.
11.7 Cooperation and Exchange of Information. The Seller and the Buyer
will provide each other with such cooperation and information as either of
them reasonably may request of the other in filing any tax return, amended
return or claim for refund, determining a liability for taxes or a right to
a refund of taxes or participating in or conducting any audit or other
proceeding in respect of taxes. Such cooperation and information shall
include providing copies of relevant tax returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by taxing authorities. Each
party shall make its employees available on a mutually convenient basis to
provide explanations of any documents or information provided hereunder.
Each party will retain all returns, schedules and work papers and all
material records or other documents relating to tax matters of the Company
for its taxable period first ending after the Closing Date and for all
prior taxable periods under the later of (i) the expiration of the statute
of limitations of the taxable periods to which such returns and other
documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the
respective tax periods, or (ii) seven years following the due date (without
extension) for such returns. Any information obtained under this Section
11.7 shall be kept confidential, except as otherwise may be necessary in
connection with the filing of returns or clams for refund or in conducting
an audit or other proceeding.
11.8 Conveyance Taxes. The Seller agrees to assume liability for and to pay
all sales, transfer, stamp, recording, filing, real property transfer or gains
and similar taxes (collectively, the "TRANSFER TAXES") incurred as a result of
the sale of the Shares contemplated hereby; provided, however, that Buyer will
pay all taxes under Section 11.2(a) and (b), and the Transfer Taxes, if any,
imposed by the State of North Carolina and the Commonwealth of Virginia.
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11.9 Adjustment to Purchase Price. The parties agree to treat all payments
made under Section 10 and 11 of this Agreement as adjustments to the Purchase
Price for tax purposes.
12. Survival of Representations and Warranties. The representations and
warranties of Seller and Buyer contained in this Agreement will survive the
Closing (notwithstanding any investigation heretofore or hereafter made by any
of them or on behalf of any of them and shall not be deemed merged into any
instruments or agreements delivered at Closing) (a) indefinitely with respect to
the representations and warranties contained in Sections 5.1, 5.3, 5.6 (but
shall only survive until such time as the applicable tax statute of limitation
ends), 5.7 (but only insofar as it relates to the capital stock of the
Subsidiary), 6.1 and 6.2, and (b) until the completion of the next annual audit
of the Company in the case of each other representation and warranty, except
that any representation or warranty that would otherwise terminate in accordance
with this clause will continue to survive if a Claim Notice shall have been
timely given in good faith based on facts reasonably expected to establish a
valid claim under Section 10 on or prior to such termination date, until the
related claim for indemnification has been satisfied or otherwise resolved as
provided in Section 10.
13. Miscellaneous.
13.1 Knowledge. As used in this Agreement, the term "KNOWLEDGE," with
respect to the (a) Seller, for purposes of Section 5.9 only, shall
encompass all facts and information which are either within the actual
knowledge of any of the officers, directors, employees, agents or other
persons acting on behalf of Seller (including, without limitation, any such
person acting in his capacity as a member of the Board of Directors of the
Company or any of the Subsidiaries) ("SELLER'S AGENTS") or that should have
been known to any Seller's Agents in the exercise of reasonable care and
after due inquiry, and (b) with respect to the Buyer shall encompass all
facts and information which are either within the actual knowledge of any
of the officers, directors, employees or agents of Buyer (including,
without limitation, Woltz) or that should have been known to such persons
in the exercise of reasonable care and after due inquiry.
13.2 Cooperation; Further Assurances. From and after the Closing, the
Seller, on the one hand, and the Buyer, the Company and the Subsidiaries,
on the other hand, agree to execute and deliver such further documents and
instruments and to do such other acts and things any of them, as the case
may be, may reasonably request in order to effectuate the transactions
contemplated by this Agreement.
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13.3 Entire Agreement. This Agreement (together with the Schedules and
Exhibits hereto) contains, and is intended as, a complete statement of all
the terms of the arrangements between the parties with respect to the
matters provided for, and supersedes any previous agreements and
understandings between the parties with respect to those matters. No
representations or warranties are made by any party hereto except as
expressly set forth in this Agreement.
13.4 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of law.
13.5 Headings. The section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
13.6 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, mailed by registered mail, return receipt requested, sent by
recognized overnight delivery service or, to the extent receipt is
confirmed, by telecopy, telefax, or other electronic transmission service
to the parties at the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to
this provision):
If to the Buyer or the Company
to:
Page Holding Company
c/o Perry Manufacturing Company
100 Woltz Street
Mount Airy, North Carolina 27030
Attention: William K. Woltz, Jr., President
Telecopier No. (910) 786-9603
with a copy to:
Fennebresque, Clark, Swindell & Hay
NationsBank Corporate Center
100 North Tryon Street, Suite 2900
Charlotte,North Carolina 28202-4011
Attention: John C. Fennebresque, Esq.
Telecopier No. (704) 347-3838
Page 33
<PAGE>
If to the Seller to:
Aris Industries, Inc.
475 Fifth Avenue
New York, New York 10017
Attention: Charles S. Ramat, President
Telecopier No.: (212) 685-8281
With a copy to:
Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Attention: Lawrence M. Levinson, Esq.
Telecopier No.: (212) 889-7577
13.7 Separability. If at any time any of the covenants or the
provisions contained herein shall be deemed invalid or unenforceable by the
laws of the jurisdiction wherein it is to be enforced, by reason of being
vague or unreasonable as to duration, geographic scope, scope of activities
restricted or for any other reason, such covenants or provisions shall be
considered divisible as to such portion and such covenants or provisions
shall become and be immediately amended and reformed to include only such
covenants or provisions as are enforceable by the court or other body
having jurisdiction of this Agreement; and the parties agree that such
covenants or provisions, as so amended and reformed, shall be valid and
binding as though the invalid or unenforceable portion had not been
included herein.
13.8 Amendment; Waiver. No provision of this Agreement may be amended
or modified except by an instrument or instruments in writing signed by the
parties hereto. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision hereof shall be
construed as a waiver of any other provision. Any waiver must be in
writing.
13.9 Assignment and Binding Effect. None of the parties hereto may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the others. All the terms and
provisions of this Agreement shall be binding on, and shall inure to the
benefit of, the respective successors and permitted assigns of the parties.
13.10 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective successors and assigns and they shall
not be construed as conferring and are not intended to confer any rights on
any other persons.
Page 34
<PAGE>
13.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party
thereto may become a party hereto by executing a counterpart hereof. This
Agreement and any counterpart so executed shall be deemed to be one and the
same instrument.
13.12 Interpretation. Headings to sections and any table of contents
are inserted for convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation hereof. The Schedules
and Exhibits referred to herein shall be construed with and as an integral
part of this Agreement to the same extent as if they were set forth
verbatim herein. The specification of any dollar amount in the
representations and warranties contained in this Agreement or the inclusion
of any specific item in any Schedule hereto is not intended to imply that
such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and no party hereto shall use the fact of
the setting of such amounts or the inclusion of any such item in any
dispute or controversy between the parties as to whether any obligation,
item or matter not described herein or included in a Schedule is or is not
material for purposes hereof. As used herein, "include", "includes" and
"including" are deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import;
"writing", "written" and comparable terms refer to printing, typing,
lithography and other means of reproducing words in a visible form;
references to a person are also to its successors and assigns; except as
the context may otherwise require, "hereof", "herein", "hereunder" and
comparable terms refer to the entirety hereof and not to any particular
section or other subdivision hereof or attachment hereto; references to any
gender include the other; except as the context may otherwise require, the
singular includes the plural and vice versa; references to any agreement or
other document are to such agreement or document as amended and
supplemented from time to time; references to "Section" or another
subdivision or to an "Exhibit" or "Schedule" are to a section or
subdivision hereof or an "Exhibit" or "Schedule" hereto; and references to
"generally accepted accounting principles" shall mean generally accepted
accounting principles in the United States as in effect on the date of this
Agreement.
Page 35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
PAGE HOLDING COMPANY
By /s/ WILLIAM K. WOLTZ, JR.
----------------------------------------
Name: William K. Woltz, Jr.
Title: President
ARIS INDUSTRIES, INC.
By /s/ CHARLES S. RAMAT
---------------------------------------
Name: Charles S. Ramat
Title: President
PERRY MANUFACTURING COMPANY
By /s/ WILLIAM K. WOLTZ, JR.
---------------------------------------
Name: William K. Woltz, Jr.
Title: President
Page 36
EXHIBIT 10.96
AMENDED AND RESTATED SENIOR SECURED NOTE AGREEMENT
AMENDED AND RESTATED SENIOR SECURED NOTE AGREEMENT, dated as of September
30, 1996 (this "Agreement"), by and between ARIS INDUSTRIES, INC., a New York
corporation ("Borrower"), and HELLER FINANCIAL, INC., a Delaware corporation
(together with its successors and assigns, "Heller").
W I T N E S E T H
WHEREAS, Borrower and Heller are parties to that certain Senior Secured
Note Agreement dated as of June 30, 1993 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Existing Note Agreement");
WHEREAS, Borrower and Heller desire to amend and restate the Existing Note
Agreement pursuant to the terms of this Agreement;
WHEREAS, Borrower currently owns all of the outstanding capital stock of
Perry Manufacturing Company, a North Carolina corporation ("Perry");
WHEREAS, it is a condition precedent to the effectiveness of this Agreement
that Borrower sell (the "Perry Sale") all of the capital stock of Perry to Page
Holding Company, a Delaware corporation ("Newco"), pursuant to the Stock
Purchase Agreement dated as of September 19, 1996 between Newco and Borrower
(the "Stock Purchase Agreement");
WHEREAS, Newco, as consideration for such sale, will, among other things,
pay Borrower $40,857,500.00 in immediately available funds;
WHEREAS, all of the cash proceeds of the Perry Sale will be used to repay a
portion of the outstanding indebtedness (the "Borrower Indebtedness") owed by
Borrower to Heller pursuant to the terms of the Existing Note Agreement;
WHEREAS, Heller, subject to the terms and conditions hereof, will accept
such payment as full and final satisfaction of the principal and other Borrower
Indebtedness (other than interest thereof evidenced by the Interest Note, as
hereinafter defined);
WHEREAS, for the period from February 4, 1996 through July 31, 1996
interest in the amount of $2,600,000 (the "Accrued Interest") has accrued with
respect to the Borrower Indebtedness pursuant to the terms of the Existing Note
Agreement;
WHEREAS, in connection with the restructuring of the Borrower Indebtedness
provided for herein (the "Restructuring"),
<PAGE>
Borrower shall issue, execute and deliver to Heller a note in substantially the
form of Exhibit A hereto (the "Interest Note") and in a principal amount equal
to $1,000,000 to evidence the obligation of Borrower to repay to Heller a
portion of the Accrued Interest in accordance with the terms of the Interest
Note;
WHEREAS, the Interest Note will be secured by all of the capital stock of
Europe Crafts Imports, Inc. and Above the Belt, Inc. pursuant to the terms of
that certain amended and restated Primary Pledge Agreement in substantially the
form of Exhibit B hereto (the "Pledge Agreement") between the Borrower and
Heller;
WHEREAS, the Borrower, Heller, AIF-II, L.P. and BNY Financial Corporation
are currently parties to that certain Intercreditor Agreement dated as of June
30, 1993 (as amended, supplemented or otherwise modified from time to time, the
"Intercreditor Agreement");
WHEREAS, it is the intent of the parties that the Intercreditor Agreement
shall remain in full force and effect;
WHEREAS, in connection with, and as a condition precedent to, the
Restructuring, the Borrower will issue its warrant in substantially the form of
Exhibit C hereto (the "Warrant") to purchase an aggregate of 584,345 (subject to
adjustment as therein provided) shares of the common stock of Borrower;
WHEREAS, Borrower and Heller have agreed to the Restructuring in the
manner, and on the terms and conditions, provided for herein; and
WHEREAS, each of the parties hereto is agreeable to amending and restating
the Existing Note Agreement on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, Borrower and Heller hereby agree that, effective on
satisfaction of the conditions set forth in Section 4 hereof, the Existing Note
Agreement is amended and restated in its entirety to read as follows:
1. Defined Terms. In addition to the defined terms appearing in this
Agreement, capitalized terms used in this Agreement and/or the other
Reorganization Documents (as hereinafter defined) shall have the following
respective meanings:
"Collateral" shall mean the "Pledged Shares" and other "Pledged Collateral"
as defined in the Pledge Agreement, in
<PAGE>
which Heller now has or in the future obtains a lien as security for the
Obligations.
"Obligations" shall mean all obligations, liabilities (including, without
limitation under Section 5 of this Agreement) and indebtedness of every nature
of Borrower from time to time owed to Heller under the Interest Note and the
other Reorganization Documents, including the principal amount of all debts,
claims and indebtedness, accrued and unpaid interest and all fees, cash and
expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or payable whether
before or after the filing of a proceeding under Title 11 of the United States
Code entitled "Bankruptcy," as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect and all
rules and regulations promulgated thereunder.
2. Forgiveness of Principal; Termination of Other Agreements; Release of
Perry Stock; Application of Proceeds. Upon satisfaction of the conditions
precedent set forth in Section 4 hereof on the date hereof, Heller hereby agrees
and acknowledges that all of the principal and other Borrower Indebtedness
(other than interest thereof evidenced by the Interest Note) shall be fully paid
and satisfied and each of Borrower and Heller agrees and acknowledges that the
Existing Note Agreement shall be amended and restated as provided for herein and
the Other Agreements (as defined in the Existing Note Agreement) other than the
Intercreditor Agreement shall be terminated and have no further force or effect
other than provisions thereof (such as indemnities and expense reimbursements
including, without limitation, such types of provisions set forth in the
Existing Note Agreement prior to giving effect to the amendment and restatement
thereof provided for herein) which by their express terms survive the
termination thereof; provided that the foregoing shall in no way be construed to
impair the ongoing effectiveness, validity or enforceability of this Agreement,
the Interest Note (including, without limitation, the obligation of Borrower to
repay the Obligations), the Pledge Agreement, including, without limitation,
with respect to the Collateral granted thereunder, the Warrant, the
Intercreditor Agreement and any other agreement, instrument, document, contract
or certificate for the benefit of Heller now or hereafter entered into in
connection with and/or pursuant to this Agreement or the Interest Note
(collectively, the "Reorganization Documents"). In addition to the foregoing,
Heller, upon satisfaction of the conditions set forth in Section 4 hereof and in
connection with the Perry Sale and the application of the proceeds thereof to
the Primary Debt (as defined in the Intercreditor Agreement) as contemplated by
Section 3.4 of the Intercreditor Agreement, hereby terminates and releases any
security interest or liens on the capital stock of Perry which Borrower has
heretofore granted to Heller whether
<PAGE>
pursuant to the Existing Note Agreement or otherwise and the liens of the
Secondary Collateral Agent, the Secondary Debt Representative and the Holders of
the Secondary Debt (as each such term is defined in the Intercreditor Agreement)
shall be automatically, unconditionally and simultaneously released; provided
that nothing set forth herein shall constitute a termination or release of any
lien or security interest in the capital stock of Perry granted by Newco to
Heller. In addition, Heller agrees to furnish additional lien releases and such
other and further documents and instruments as may reasonably be requested by
the Company in order to effect and evidence more fully the release of the
security interest in the capital stock of Perry.
3. Representations and Warranties. To induce Heller to enter into this
Agreement, Borrower hereby represents and warrants to Heller that:
(a) Borrower: (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and is duly qualified to
do business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification and the failure to so qualify would have a material adverse effect
on the business of Borrower; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease, and to
conduct its business as now, heretofore and proposed to be conducted and to
enter into the Reorganization Documents and the Stock Purchase Agreement; (iii)
has all material licenses, permits, consents or approvals from or by, and has
made all filings with, and has given all notices to, all governmental
authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (iv) is in compliance with its articles or certificate of
incorporation and by-laws; and (v) is in compliance in all material respects
with all applicable provisions of law.
(b) The execution, delivery and performance by Borrower of the
Reorganization Documents and the Stock Purchase Agreement and all other
instruments and documents to be delivered by Borrower hereunder and thereunder,
the issuance of the Interest Note and the Warrant, the creation and/or
continuation of all liens provided for herein and therein and the consummation
of the Perry Sale: (i) are within Borrower's corporate power; (ii) have been
duly authorized by all necessary corporate and shareholder action; (iii) are not
in contravention of any provision of Borrower's articles or certificate of
incorporation or by-laws or other organizational documents; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the breach
or termination of, constitute a
<PAGE>
default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which Borrower
is a party or by which Borrower or any of its property is bound; (vi) will not
result in the creation or imposition of any lien upon any of the property of
Borrower other than those in favor of Heller, all pursuant to the Reorganization
Documents; and (vii) do not require the consent or approval of any governmental
authority or any other person or entity, except those which have been duly
obtained, made or complied with and which are in full force and effect. Each of
the Reorganization Documents and the Stock Purchase Agreement has been duly
executed and delivered for the benefit of or on behalf of Borrower and each
constitutes a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights and to equitable principles of general applicability.
(c) No action, claim or proceeding is now pending or, to the knowledge of
Borrower, threatened against Borrower, at law, in equity or otherwise, before
any court, board, commission, agency or instrumentality of any federal, state,
or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators which challenges Borrower's right, power, or
competence to enter into or perform any of its obligations under the
Reorganization Documents or the Stock Purchase Agreement, or the validity or
enforceability of any Reorganization Document or the Stock Purchase Agreement or
any action taken thereunder.
(d) The representations and warranties of Borrower contained in the Stock
Purchase Agreement are true and correct in all respects on the date hereof, and
Heller shall be entitled to rely on such representations and warranties with the
same force and effect as if they were incorporated in this Agreement and made to
Heller directly; provided, that the representations and warranties made to
Heller shall be subject to the same qualifications, limitations and exceptions
as such representations and warranties made to Newco pursuant to the Stock
Purchase Agreement.
4. Conditions Precedent. This Agreement shall not be effective and neither
Borrower nor Heller shall be obligated to take, fulfill or perform any action
hereunder and, without limiting the foregoing, Section 2 hereof shall have no
force or effect, until the following conditions shall have been fulfilled to the
satisfaction of Heller:
(a) Perry Sale and Proceeds Thereof. The Perry Sale shall have been
consummated on terms and conditions satisfactory to Heller and Borrower
shall have paid to Heller from the proceeds thereof, for application to the
Borrower
<PAGE>
Indebtedness immediately available funds in an aggregate amount at least
equal to $40,857,500.00.
(b) Agreement. Heller shall have received four original copies of this
Agreement duly executed and delivered by Heller and Borrower.
(c) Interest Note. Borrower shall have issued, executed and delivered
to Heller the Interest Note.
(d) Warrant. Borrower shall have issued, executed and delivered to
Heller the Warrant.
(e) Pledge Agreement. Heller shall have received four original copies
of the Pledge Agreement duly executed and delivered by Heller and the
Borrower together with the delivery of:
(i) Certificates or other evidence of ownership representing the
Pledged Shares (as defined therein) and appropriate undated stock
powers (or the equivalent thereof) executed in blank; and
(ii) Evidence that all action necessary or, in the opinion of and
at the request of Heller, desirable to perfect and/or continue to
perfect and protect the security interests created by the Pledge
Agreement has been taken.
(f) Opinion. Heller shall have received an opinion of Herrick,
Feinstein, counsel to Borrower in form and substance satisfactory to
Heller.
(g) Payment of Expenses. Borrower shall have paid to Heller all costs,
fees and expenses owing in connection with the Existing Note Agreement,
this Agreement and the other Reorganization Documents and due to Heller
(including, without limitation, reasonable legal fees and expenses);
provided, that in no event shall Borrower be required to reimburse Heller
for any out-of-pocket costs, fees and expenses directly incurred by Heller
in connection with that certain Credit Agreement (the "Page Credit
Agreement") dated as of September 30, 1996 between Page Holding Company and
Heller and the other Loan Documents (as defined in the Page Credit
Agreement).
(h) Board Resolutions and Incumbency Certificate. A certificate of the
Secretary or an Assistant Secretary of Borrower certifying (i) the
resolutions adopted by the Board of Directors of Borrower approving the
Stock Purchase Agreement, this Agreement and the other Reorganization
Documents and the transactions contemplated hereby and thereby and (ii) the
names and true signatures of the authorized officers of Borrower.
<PAGE>
(i) No Event of Default. No Event of Default under the Interest Note
shall have occurred and be continuing.
(j) Consents. Aris shall have received any consents, approvals or
authorizations of any governmental entity or other Person (including,
without limitation, the consent of AIF-II, L.P.) which are necessary in
order to consummate the transactions contemplated by the Stock Purchase
Agreement, this Agreement and the other Reorganization Documents, and
copies of such consents, approvals or authorizations shall be provided to
Heller and be in form and substance satisfactory to Heller.
(k) Amendment to Shareholders Agreement. Heller shall have received an
Amendment dated as of September 30, 1996 to that certain Shareholders
Agreement dated as of June 30, 1993 among Aris and the Subject Shareholders
(as defined in the Amendment) in form and substance satisfactory to Heller
and duly executed by Heller and each of the Subject Shareholders.
5. Indemnification. Borrower shall (to the fullest extent permitted by
applicable law) indemnify Heller and its directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out of
or by reason of any investigation or litigation or other proceeding (or any
threatened investigation, litigation or proceeding and whether or not Heller is
a party to any such investigation, litigation or other proceeding) relating to
the negotiation, execution, delivery or performance (including, without
limitation, any breach of any representation or warranty by the Borrower
including relating to Borrower's authority to enter into the Stock Purchase
Agreement and consummate the Perry Sale) of the Stock Purchase Agreement, this
Agreement or any other Reorganization Document, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or proceeding (but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the person or entity to be indemnified),
and, if and to the extent that the obligations of Borrower under this sentence
may be unenforceable for any reason, Borrower shall make the maximum
contribution to the payment and satisfaction of each of the losses, liabilities,
claims, damages and expenses referred to above as may be permitted by applicable
law. The obligation of Borrower under this Section 5 shall survive the
termination of this Agreement and the repayment of the obligations owing under
the Interest Note. Any person or entity to be indemnified pursuant to this
Section shall notify Borrower of the commencement of any legal proceeding by any
third person or entity in connection with which indemnification may be sought
provided, however, that the failure to give such notice shall
<PAGE>
not limit or prejudice in any respect Borrower's indemnification
obligations pursuant to this Section.
6. Miscellaneous.
(a) Captions. Section captions used in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
(b) Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
(d) Successors and Assigns. This Agreement shall be binding upon Borrower
and Heller and their respective successors and assigns, and shall inure to the
sole benefit of Borrower and Heller and their respective successors and assigns;
provided, that Borrower shall not assign its rights and obligations under this
Agreement without the prior written consent of Heller.
(e) Waiver of Claims. Borrower hereby waives, releases, remises and forever
discharges Heller from any and all suits, actions, costs, fines, deficiencies,
penalties, proceedings, claims, damages, losses, liabilities and expenses
(including reasonable attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) of any kind
or character, know or unknown, which Borrower ever had, now has or might
hereafter have against Heller which relates, directly or indirectly, to any acts
or omissions of Heller on or prior to the date hereof.
(f) Costs, Expenses and Taxes. Borrower affirms and acknowledges that
notwithstanding anything to the contrary contained herein or in Paragraph 1.12
of the Existing Note Agreement such paragraph applies to this Agreement and the
other Reorganization Documents and the
<PAGE>
transactions and agreements and documents contemplated hereunder and thereunder;
provided, that in no event shall Borrower be required to reimburse Heller for
any out-of-pocket costs, fees and expenses directly incurred by Heller in
connection with the Page Credit Agreement and the other Loan Documents (as
defined in the Page Credit Agreement).
(g) Existing Notes. Upon satisfaction of the conditions precedent set forth
in Section 4 hereof on the date hereof, Heller hereby agrees to mark cancelled
and return to Borrower each of the promissory notes previously delivered by
Borrower to Heller in connection with the Existing Note Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
ARIS INDUSTRIES, INC
By /s/ CHARLES S. RAMAT
-----------------------------------
Name: Charles S. Ramat
Title: President
HELLER FINANCIAL, INC.
By /s/ MICHELLE KOVATCHIS
-----------------------------------
Name: Michelle Kovatchis
Title: Senior Vice President
EXHIBIT 10.97
INTEREST NOTE
New York, New York
September 30, 1996
$1,000,000
FOR VALUE RECEIVED, the undersigned, Aris Industries, Inc., a New York
corporation (the "Borrower"), hereby promises to pay the sum of ($1,000,000),
together with interest as provided herein, in lawful money of the United States
of America and in immediately available funds (the "Loan") in accordance with
the terms hereof to the order of Heller Financial, Inc., a Delaware corporation
with a place of business at 500 West Monroe Street, Chicago, Illinois 60661, or
order (the "Holder") on November 3, 2001. This Note, after giving effect to the
forgiveness of certain indebtedness and the other amendments provided for under
the Note Agreement, amends, restates and consolidates all those certain notes
delivered by the Borrower to the Holder pursuant to the terms of that certain
Senior Secured Note Agreement, as amended, dated as of June 30, 1993 between the
Borrower and the Holder.
SECTION 1. Definitions.
1.1 Defined Terms. Terms which are not otherwise defined in this Note shall
have the meaning set forth in the Note Agreement (as defined below) and the
following additional terms have the following meanings:
"Affiliate": any Person (other than Holder): (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b) directly
or indirectly owning or holding five percent (5%) or more of any equity interest
in Borrower; or (c) five percent (5%) or more of whose voting stock or other
equity interest is directly or indirectly owned or held by Borrower. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.
"ECI": Europe Crafts Imports Inc., a New Jersey corporation.
<PAGE>
"Junior Secured Debt": the indebtedness of the Borrower evidenced by (i)
the promissory note of the Borrower dated June 30, 1993 in the original
principal amount of $7,000,000 issued to BNY Financial Corporation in connection
with that certain Series A Junior Secured Note Agreement dated June 30, 1993
between the Borrower and BNY Financial Corporation and all other indebtedness
and obligations of the Borrower to BNY Financial Corporation (or any successor
or assign thereof) in connection therewith and (ii) the promissory note of the
Borrower dated June 30, 1993 in the original principal amount of $7,500,000
issued to AIF-II, L.P. in connection with that certain Series B Junior Secured
Note Agreement dated June 30, 1993 between the Borrower and AIF-II, L.P. and all
other indebtedness and obligations of the Borrower to AIF-II, L.P. (or any
successor or assign thereof) in connection therewith, as any of such
indebtedness, obligations, notes or agreements may be amended, supplemented,
restated, refunded, refinanced, replaced, increased or otherwise modified from
time to time.
"Note": this Interest Note, as amended, supplemented or otherwise modified
from time to time.
"Note Agreement": the Amended and Restated Senior Secured Note Agreement
dated as of even date herewith between the Borrower and the Holder, which
agreement amends and restates that certain Senior Secured Note Agreement, as
amended, dated as of June 30, 1993 between the Borrower and the Holder, as the
same may be amended, supplemented or otherwise modified from time to time.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Pledge Agreement": the Pledge Agreement dated as of even date herewith
between the Borrower and the Holder, as the same may be amended, supplemented or
otherwise modified from time to time.
"Reorganization Documents": collectively, this Note, the Note Agreement,
the Pledge Agreement, the Intercreditor Agreement, the Warrant and any other
agreement, instrument, document, contract or certificate for the benefit of
Heller now or hereafter entered into in connection with and/or pursuant to this
Note or the Note Agreement, as each of the foregoing may be amended,
supplemented or otherwise modified from time to time.
"Restricted Payment": (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of the Borrower or any
of its Significant Subsidiaries now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that class;
(ii) any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or other
<PAGE>
acquisition for value, direct or indirect, of any shares of any class of stock
of the Borrower or any of its Significant Subsidiaries now or hereafter
outstanding; (iii) any payment or prepayment of principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any indebtedness which is subordinated in
right of payment to the obligations evidenced hereby; (iv) any payment
(scheduled, voluntary or other and including any refinancing or replacement
thereof) of principal of or interest on, or any other amount owing in respect
of, any Junior Secured Debt; (v) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Borrower or any of its Significant
Subsidiaries now or hereafter outstanding; or (vi) any payment, loan,
contribution, or other transfer of funds or other property to any stockholder of
the Borrower or any of its Significant Subsidiaries.
"Significant Subsidiary": shall mean each of ECI and its Subsidiaries.
"Subsidiary": with respect to any Person, any corporation, partnership,
limited liability company, association or other business entity of which more
than fifty percent (50%) of the total voting power of shares of stock (or
equivalent ownership or controlling interest) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
SECTION 2. Interest. Interest on the principal of this Note shall accrue in
arrears from the date of issuance of this Note until this Note shall have been
paid in full at a rate per annum equal to 10% per annum (provided that such rate
shall be 12% per annum at any time during which an Event of Default has occurred
and is continuing), calculated on the basis of a 360- day year and the actual
days elapsed. In no event shall the interest charged hereunder exceed the
highest rate permitted by applicable law. Interest shall accrue in arrears and
be added to the principal amount of this Note on the first day of each calendar
quarter. Upon the payment or prepayment of any principal of this Note, accrued
interest thereon shall be paid.
SECTION 3. Optional and Mandatory Prepayments and Payments.
3.1 Optional and Mandatory Prepayments. The Borrower may at its option, at
any time and from time to time, prepay the principal amount owing hereunder, in
whole or in part, without premium or penalty, upon at least two Business Days'
notice to the Holder specifying the date and amount of prepayment. Such notice
shall be irrevocable and the payment amount specified in such notice shall be
due and payable on the date specified.
<PAGE>
Partial prepayments shall be in a principal amount of $100,000 or an integral
multiple thereof, and any amounts prepaid may not be reborrowed. This Note is
subject to mandatory prepayment in whole or in part as provided for in the
Reorganization Documents.
3.2 Payments. All payments (including prepayments) by the Borrower on
account of this Note shall be made without set-off or counterclaim to the Holder
prior to 12:01 P.M. (Chicago time) on the day when due by federal wire transfer
in immediately available funds to the Holder's account number 20982 at The First
National Bank of Chicago, A.B.A. Number 071000013, referencing Heller Project
Management Organization for the benefit of Aris Industries, Inc., or to such
account or accounts as the Holder may designate in writing to the Borrower. If
any payment hereunder becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day.
SECTION 4. Covenants.
The Borrower covenants and agrees (for itself and each of its Subsidiaries)
that, without the Holder's prior written consent, from and after the date hereof
and until the Loan, together with all interest thereon and all other amounts due
hereunder, are indefeasibly paid in full:
4.1 Sale of Assets. Other than in connection with the Perry Sale to Newco,
the Borrower shall not (and shall not permit any of its Significant Subsidiaries
to) sell, transfer, convey, assign or otherwise dispose of all or a substantial
portion of its assets provided, however, that Significant Subsidiaries (other
than ECI) may be dissolved and liquidated, with their remaining assets
distributed to ECI or another Significant Subsidiary.
4.2 Restricted Payments. The Borrower shall not make any Restricted Payment
to any Person and the Borrower shall not permit any Significant Subsidiary to
make any Restricted Payment except that (i) ECI may make Restricted Payments
with respect to its common stock to the Borrower, (ii) the wholly-owned
Subsidiaries of ECI may make Restricted Payments with respect to their common
stock to ECI, (iii) any Significant Subsidiary may pay management fees to
Borrower, (iv) ECI may pay its obligations owing to Borrower or on behalf of
Borrower under that certain Agreement dated as of June 25, 1991, as amended to
date, by and among Aris, Perry, ECI and Above the Belt, Inc., in accordance with
the terms thereof as in effect on the date hereof, (v) the Borrower may redeem,
retire, purchase or otherwise acquire its stock from employees, former
employees, and the estates, beneficiaries under will and intestate distributees
of former employees in connection with the cessation of employment with the
Borrower or any Subsidiary in an aggregate amount which does not exceed $20,000
in any one fiscal year and $100,000 from the date hereof, (vi) the Borrower
<PAGE>
may redeem, retire, purchase or otherwise acquire its stock in exchange for, or
out of the net proceeds of, the substantially concurrent sale of other shares of
its stock, (vii) Significant Subsidiaries of ECI may make loans or advances to
ECI in the ordinary course of business and consistent with past practice and ECI
may make loans or advances to such Significant Subsidiaries in the ordinary
course of business and consistent with past practice in an aggregate amount at
any one time outstanding not to exceed $250,000 and (viii) any Significant
Subsidiary of Aris may make loans and advances to Aris in the ordinary course of
business and consistent with past practice; provided, that such loans or
advances are expressly subordinated to the payment of this Note.
4.3 ECI. The Borrower shall at all times own all of the
outstanding capital stock of ECI.
SECTION 5. Events of Default.
5.1 Events of Default. If one or more of the following events of default
("Events of Default") shall occur and be continuing:
(a) the Borrower shall default in any payment of principal of or interest
on this Note when due and payable;
(b) any representation or warranty made by the Borrower in this Note or any
other Reorganization Document or which is contained in any certificate or other
statement furnished in connection with the issuance of this Note or the Warrant
or the execution and delivery of the Reorganization Documents shall prove to
have been incorrect in any material respect when made, provided that (i) any
breach of a representation and warranty contained in the Stock Purchase
Agreement and incorporated by reference in the Note Agreement pursuant to the
terms thereof (each, a "Stock Purchase Representation") which (together with all
other breaches of a Stock Purchase Representation) result in damages or a claim
by the Holder against the Borrower of less than $100,000 (as reasonably
determined by the Holder) shall not constitute an Event of Default hereunder and
(ii) prior to a breach of a Stock Purchase Representation constituting an Event
of Default hereunder, the Borrower shall have 135 days from the date the
Borrower became (or should have been) aware of such breach to cure the
underlying circumstances or conditions resulting in such breach if the Borrower
provides reasonable assurances satisfactory to the Holder that such
circumstances or conditions can reasonably be cured within such time period;
(c) the Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 4 of this Note or any other provision of any
Reorganization Document;
(d) any Junior Secured Debt becomes or is declared to be due prior to the
stated maturity date thereof; or
<PAGE>
(e) (i) the Borrower or any Significant Subsidiary thereof shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or such
Significant Subsidiary, as the case may be, shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any Significant Subsidiary thereof any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbound for a period of 45 days; or (iii)
there shall be commenced against the Borrower or any Significant Subsidiary
thereof any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 45 days from the entry thereof; or (iv) the Borrower or
any Significant Subsidiary thereof shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any other acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
Significant Subsidiary thereof shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; then,
and in any such event, (A) if such event is an Event of Default specified in
clause (i), (ii), or (iii) of paragraph (e) above with respect to the Borrower
or any Significant Subsidiary, automatically this Note and all other amounts
owing under this Note shall immediately become due and payable in full and (B)
if such event is any other Event of Default, the Holder may, by notice of
default to the Borrower, accelerate all payments hereunder and declare this Note
and all other amounts owing under this Note to be due and payable forthwith,
whereupon the same shall immediately become due and payable in full. Except as
expressly provided above in this Section 5, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
SECTION 6. Miscellaneous.
6.1 Amendments and Waivers. None of the terms of this Note may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Borrower and the Holder.
<PAGE>
6.2 Notices. All notices, requests and demands to or upon the Borrower or
the Holder to be effective shall be in writing (including by facsimile), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or, in the case of notice by mail, after
being deposited in the mail, postage prepaid, or, in the case of facsimile
notice, when sent, confirmation of receipt received, addressed as follows in the
case of the Borrower and the Holder or to such other address as may be hereafter
notified by the Borrower or the Holder, as the case may be, and any future
holders of this Note:
The Borrower: Aris Industries, Inc.
475 Fifth Avenue, 3rd Floor
New York, New York 10017
Attention: President
Telecopy: (212) 685-8281
With a copy to: Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Attention: Lawrence M. Levinson, Esq.
Telecopy: (212) 889-7577
The Holder: Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Project Management
Organization
Telecopy: (312) 441-7236
With a copy to: Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Legal Department
Project Management
Organization
Telecopy: (312) 441-7236
6.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Holder, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
<PAGE>
6.4 Severability. Any provision of this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6.5 Consent to Jurisdiction and Service of Process. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER REORGANIZATION
DOCUMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE HOLDER TO
BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE HOLDER OR ANY AFFILIATE
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY REORGANIZATION DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK.
6.6 Waiver of Jury Trial. THE BORROWER, AND THE HOLDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS NOTE AND THE LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. THE BORROWER AND THE HOLDER ALSO WAIVE
ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER,
BE REQUIRED OF LENDERS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE BORROWER, AND THE HOLDER ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE BORROWER
AND THE HOLDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
<PAGE>
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE REORGANIZATION DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. IN THE EVENT OF LITIGATION, THIS
NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
6.7 GOVERNING LAW. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES.
6.8 Pledge Agreement. This Note is secured by the Pledge Agreement and is
entitled to the benefits thereof.
6.9 Assignment. The provisions of this Note shall be binding upon and shall
inure to the benefit of the successors and assigns of the Holder and the
Borrower; provided, that the Borrower shall not assign its rights and
obligations hereunder without the prior written consent of the other party
hereto.
6.10 Expenses. The Borrower agrees to pay and reimburse the Holder for all
reasonable costs and expenses (including, without limitation, reasonable fees of
counsel) incurred in connection with the negotiation, preparation, execution and
delivery of this Note and the other Loan Documents and the enforcement thereof.
Without limiting the foregoing, should the indebtedness represented by this
Note, or any part thereof, be collected at law or in equity or in bankruptcy,
receivership or other court proceedings, or this Note be placed in the hands of
attorneys for collection after the occurrence and continuance of an Event of
Default, the Borrower agrees to pay, in addition to the principal, interest and
other fees due and payable hereon, attorneys' and collection fees.
Notwithstanding the foregoing, in no event shall the Borrower be required to pay
or reimburse the Holder
<PAGE>
for any costs and expenses directly incurred by the Holder in connection with
the Page Credit Agreement and the other Loan Documents (as defined in the Page
Credit Agreement).
ARIS INDUSTRIES, INC.
By: /s/ CHARLES S. RAMAT
---------------------------
Title: President
ACCEPTED AND AGREED TO:
HELLER FINANCIAL, INC.
By: /s/ MICHELLE KOVATCHIS
-----------------------------
Title: Senior Vice President
EXHIBIT 10.98
PRIMARY PLEDGE AGREEMENT
THIS PRIMARY PLEDGE AGREEMENT made as of this 30th day of
September, 1996 between ARIS INDUSTRIES, INC., a New York corporation, having
its principal office and place of business at 675 Third Avenue, 30th Floor, New
York, New York 10017 ("Pledgor"), and HELLER FINANCIAL, INC., a Delaware
corporation having an office and place of business at 500 West Monroe Street,
Chicago, IL 60661 ("Heller"), amends and restates in its entirety, the Primary
Pledge Agreement, dated as of June 30, 1993 (the "Existing Pledge Agreement"),
between Pledgor and Heller in its capacity both as Agent and a Lender under that
certain Senior Secured Note Agreement dated as of June 30, 1993 (as amended, the
"Original Note Agreement"). The Existing Pledge Agreement, as amended and
restated hereby, and as further amended, modified or supplemented from time to
time, is referred to herein as this "Agreement".
WHEREAS, pursuant to the terms of that certain Amended and
Restated Senior Secured Note Agreement dated as of September 30, 1996 between
the Pledgor and Heller, which agreement amends and restates the Original Note
Agreement (as amended, supplemented, or otherwise modified from time to time,
the "Note Agreement"), the indebtedness of the Pledgor under the Original Note
Agreement is being restructured pursuant to the terms thereof (the
"Restructuring");
WHEREAS, capitalized terms used herein and not defined herein
shall, unless otherwise indicated, have the respective meanings given to them in
the Note Agreement.
WHEREAS, in connection with the Restructuring the obligations of
the Pledgor under the Interest Note and the other Reorganization Documents shall
be secured by a first priority perfected security interest in all of the stock
of Europe Crafts Imports, Inc., a New Jersey corporation ("ECI"), and Above the
Belt, Inc., a Virginia corporation ("ATB");
WHEREAS, pursuant to the terms of the Existing Pledge
Agreement, the Pledgor has granted, among other things, a
<PAGE>
security interest in favor of Heller in all of the stock of ECI and ATB; and
WHEREAS, Pledgor and Heller desire that the Existing Pledge
Agreement be amended and restated in its entirety to provide for the continued
security interest in the stock of ECI and ATB to secure the Obligations (as
hereinafter defined);
NOW, THEREFORE, PURSUANT TO THE RESTRUCTURING AND THE NOTE
AGREEMENT, THE PARTIES HEREBY AGREE THAT THE EXISTING PLEDGE AGREEMENT IS
AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:
1. Security Interest. As security for all obligations, liabilities
(including, without limitation, under Section 5 of the Note Agreement) and
indebtedness of every nature of Pledgor from time to time owed to Heller under
the Interest Note and the other Reorganization Documents, including the
principal amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable whether before or after the filing of a
proceeding under Title 11 of the United States Code entitled "Bankruptcy", as
amended from time to time or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect and all rules and regulations promulgated
thereunder (collectively, the "Obligations"), subject to the terms and
conditions of this Agreement, Pledgor hereby delivers, pledges and assigns to
Heller and grants to Heller a security interest in, all of Pledgor's right,
title and interest in, to and under the following (the "Pledged Collateral"):
(a) all of the issued and outstanding capital stock of ECI
and ATB represented by the stock certificates listed on Exhibit A attached
hereto (the "Pledged Shares") and the certificates representing the Pledged
Shares, and all products and proceeds of any of the Pledged Shares
including, without limitation, all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares; and
(b) all additional shares of stock of, or equity interest
in, ECI or ATB, as the case may be, from time to time acquired by Pledgor
in any manner, and the certificates representing such additional shares
(any such
<PAGE>
additional shares shall constitute part of the Pledged Shares under and as
defined in this Agreement), and all products and proceeds of any of such
additional Pledged Shares, including, without limitation, all dividends,
cash, instruments, subscriptions, warrants and any other rights and options
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
Pledged Shares. The security interest granted hereby to Heller shall be a
first priority security interest.
2. Stock Dividends, Options or Other Adjustment. Until the date on
which this Agreement terminates as provided in Section 12 hereof, Heller shall
receive, as Pledged Collateral, any and all additional shares of stock or any
other property of any kind distributable on or by reason of the Pledged
Collateral, whether in the form of or by way of stock dividends, warrants, total
or partial liquidation, conversion, exchange, prepayments or redemptions (in
whole or in part), or otherwise, with the sole exception of cash dividends or
cash interest payments, as the case may be. If any additional shares of capital
stock, instruments, or other property against which a security interest can only
be perfected by possession by Heller, which are distributable on or by reason of
the Pledged Collateral, shall come into the possession or control of Pledgor,
Pledgor shall hold or control and forthwith deliver the same to Heller subject
to the provisions hereof.
3. Delivery of Share Certificates; Stock Powers. All instruments
and stock certificates representing the Pledged Shares have been or are being
delivered to Heller simultaneously herewith together with stock powers duly
executed in blank by Pledgor. Pledgor shall promptly deliver to Heller or cause
the corporation or other entity issuing the Pledged Shares to deliver directly
to Heller, all instruments and stock certificates or other documents
representing Pledged Collateral acquired or received after the date of execution
of this Agreement with a stock power duly executed in blank by Pledgor. If at
any time Heller notifies Pledgor that additional stock powers duly executed in
blank by Heller with respect to the Pledged Collateral are required, Pledgor
shall promptly execute in blank and deliver such stock powers as Heller may
reasonably request.
4. Power of Attorney. Pledgor hereby constitutes and
irrevocably appoints Heller (or its designee), with full power of substitution
and revocation by Heller (or its designee), as Pledgor's true and lawful
attorney-in-fact, to the full extent
<PAGE>
permitted by law, at any time or times when an Event of Default (as defined in
the Interest Note) has occurred and is continuing, for the purpose of carrying
out the provisions of this Agreement and taking any action and executing any
instrument which Heller reasonably may deem necessary and advisable to
accomplish the purposes of this Agreement, including, without limitation, to
affix to instruments, certificates and documents representing the Pledged
Collateral the stock powers delivered with respect thereto, to transfer or cause
the transfer of the Pledged Collateral, or any part thereof on the books of the
corporation or other entity issuing the same, to the name of Heller or Heller's
nominee and thereafter exercise as to such Pledged Collateral all the rights,
power and remedies of an owner. The power of attorney granted pursuant to this
Agreement and all authority hereby conferred are granted and conferred solely to
protect Heller and Heller's interest in the Pledged Collateral and shall not
impose any duty upon Heller to exercise any power. This power of attorney shall
be irrevocable as one coupled with an interest prior to the payment in full to
Heller of all of the Obligations by Pledgor. At such time as an Event of Default
is cured or waived, any power of attorney or other authorization herein
conferred is suspended, but such suspension shall not affect the validity of
actions previously taken by the attorney-in-fact pursuant thereto.
5. Inducing Representations of Pledgor. Pledgor represents and
warrants to Heller that as of the date hereof:
(a) the Pledged Shares constitute one hundred
percent (100%) of the issued and outstanding capital stock
of each of ECI and ATB;
(b) Pledgor is the sole legal and beneficial owner of, and
has good and marketable title to, the Pledged Collateral, free and clear of
all pledges, liens, security interests and other encumbrances other than
the security interests created by this Agreement and those listed on
Exhibit B hereto, and Pledgor has the necessary right and authority to
execute this Agreement and to pledge the Pledged Collateral to Heller as
provided for herein;
(c) except as set forth on Exhibit B attached hereto,
there are no outstanding options, warrants or other agreements with respect
to the Pledged Shares;
(d) (i) the Pledged Shares have been validly issued and
are fully paid and non-assessable; (ii) the holder or holders of the
Pledged Collateral are not and
<PAGE>
will not be subject to any personal liability as such holder; (iii) the
Pledged Shares are not subject to any charter, bylaw, statutory,
contractual or other restrictions governing the issuance, transfer,
ownership or control of such Pledged Shares, except (A) the offering, sale,
transfer or other disposition of the Pledged Collateral may be limited by
the Securities Act of 1933, as amended (the "Act"), the regulations of the
Securities and Exchange Commission thereunder, the Uniform Commercial Code
or applicable state securities laws or regulations and (B) as provided in
the Interest Note, this Agreement, the Series A Junior Secured Note
Agreement, the Series B Junior Secured Note Agreement (as each such term is
defined in the Original Note Agreement prior to giving effect to the
amendment and restatement thereof pursuant to the Note Agreement), the
Intercreditor Agreement and the Secondary Pledge Agreement dated as of June
30, 1993 made by Pledgor in favor of BNY Financial Corporation, as
collateral agent;
(e) any consent, approval or authorization of, or
designation or filing with, any authority on the part of Pledgor which is
required in connection with the pledge and security interests granted under
this Agreement has been obtained or effected and is in full force and
effect except as may be required with respect to the exercise of the rights
and remedies of Heller by laws affecting the offering and sale of
securities generally;
(f) Pledgor has deposited with Heller the Pledged Shares,
duly endorsed in blank or accompanied by an assignment or assignments
sufficient to transfer title thereto; and
(g) upon the delivery to Heller of the Pledged Collateral
and (as to certain proceeds thereof) the filing of Uniform Commercial Code
financing statements in appropriate locations, the pledge of the Pledged
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest (subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar law) in so much of
the Pledged Collateral as is subject to Article 8 or Article 9 of the
Uniform Commercial Code, securing the payment of the Obligations for the
benefit of Heller, provided the Pledged Collateral is held in the
possession of Heller.
6. Obligations of Pledgor. Pledgor further covenants to
Heller that:
<PAGE>
(a) Pledgor will not sell, transfer or convey any interest
in any of the Pledged Collateral, or suffer or permit any lien or
encumbrance to be created upon or with respect to any of the Pledged
Collateral (other than as created under this Agreement and liens securing
the Junior Secured Debt (as defined in the Original Note Agreement prior to
giving effect to the amendment and restatement thereof pursuant to the Note
Agreement)) during the term of this Agreement; and
(b) Pledgor will, at its own expense, at any time and from
time to time at Heller's reasonable request, do, make, procure, execute and
deliver all acts, things, writings, assurances and other documents as may
be proposed to be necessary or desirable by Heller to further enhance,
preserve, establish, demonstrate or enforce Heller's rights, interests and
remedies created by, provided in or in connection with this Agreement.
7. Rights of Pledgor. So long as no Event of Default
has occurred and is continuing:
(a) Pledgor shall be entitled to receive and retain free
of the pledge and security interest granted hereby, all cash dividends or
cash interest payments paid on the Pledged Collateral; and
(b) Pledgor shall be entitled to vote or consent
with respect to the Pledged Collateral in any manner not inconsistent with this
Agreement, the Interest Note or the other Reorganization Documents.
Pledgor hereby grants to Heller an irrevocable proxy to vote the
Pledged Collateral which proxy shall be effective immediately upon the
occurrence and continuance of an Event of Default. Upon request of Heller,
Pledgor agrees to deliver to Heller such further evidence of such irrevocable
proxy or such further irrevocable proxy to vote the Pledged Collateral as Heller
may reasonably request.
8. Rights of Heller. At any time when an Event of
Default has occurred and is continuing, Heller may, in
addition to any other rights it may have under this Agreement
or under applicable law, without notice:
(a) collect by legal proceedings or otherwise all
dividends, interest, principal payments, capital distributions and other
sums now or hereafter payable on account of the Pledged Collateral, and
hold the same as
<PAGE>
part of the Pledged Collateral, or apply the same to any of
the Obligations in accordance with Section 11 hereof; and
(b) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement, or any other
agreement relating to or affecting the Pledged Collateral, and in connection
therewith deposit or surrender control of such Pledged Collateral thereunder,
and accept other property in exchange therefor and hold and apply such property
or money so received in accordance with the provisions hereof.
9. Registration Under the Securities Act of 1933.
(a) Upon the occurrence and continuance of an Event of
Default, and if in the opinion of counsel for Heller it is necessary to
have the Pledged Collateral or a portion thereof registered under the Act,
in order to sell the Pledged Collateral or such portion thereof in a manner
contemplated by Heller, then at Heller's request, Pledgor shall execute and
deliver, and cause ECI and/or ATB and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary, in the
reasonable opinion of Heller, to register the Pledged Collateral under the
provisions of the Act, and use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for
a period of one year from the date of the first public offering of such
Pledged Collateral or that portion thereof to be sold, and to make all
amendments and supplements thereto and to the related prospectus which, in
the reasonable opinion of Heller, are necessary, all in conformity with the
requirements of the Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto.
(b) All expenses incurred in connection with the
registration and sale of the securities comprising the Pledged Collateral
described in Section 9(a) above, including, without limitation, reasonable
legal, accounting and printing expenses and any reasonable underwriter's fee and
commission, shall be paid by Pledgor.
(c) Pledgor agrees to use its best efforts to
cause each of ECI and ATB to comply with the applicable securities laws and
regulations, including all "blue-sky" laws, of a jurisdiction which Heller shall
designate. Pledgor shall indemnify and hold harmless Heller from and against any
<PAGE>
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement, omission or alleged omission, of a material fact
contained in any registration statement (in the form in which it or any
post-effective amendment thereto becomes effective) under the Act or any
prospectus included therein required to be filed or furnished by reason of this
Section 9, except insofar as such untrue or alleged untrue statement or omission
or alleged omission is based upon information furnished or required to be
furnished in writing to Pledgor by Heller expressly for use therein, which
indemnification shall include each person, if any, who controls Heller within
the meaning of the Act. The obligations and liabilities of Pledgor under this
Section 9(c) shall survive any termination or cancellation of the Interest Note,
this Agreement or any of the other Reorganization Documents.
10. Event of Default; Remedies. Upon the occurrence and continuance of an
Event of Default, Heller shall be entitled to exercise all of its rights and
remedies for the protection and enforcement of its rights in respect of the
Pledged Shares, including the following:
(a) In addition to all the rights and remedies of a
secured party under the Uniform Commercial Code, Heller shall have the
right, and without demand of performance or other demand, advertisement or
notice of any kind, except as specified below, to or upon Pledgor or any
other person or entity (all and each of which demands, advertisements
and/or notices are hereby expressly waived to the extent permitted by law),
to proceed forthwith to collect, receive, appropriate and realize upon the
Pledged Collateral, or any part thereof, and to proceed forthwith to sell,
assign, give an option or options to purchase, contract to sell, or
otherwise dispose of and deliver the Pledged Collateral, or any part
thereof, in one or more parcels at public or private sale or sales at any
stock exchange, broker's board or at any of Heller's offices or elsewhere
at such prices and on such terms (including, without limitation, a
requirement that any purchaser of all or any part of the Pledged Collateral
shall be required to purchase any securities constituting the Pledged
Collateral solely for investment and without any intention to make a
distribution thereof) as Heller deems to be commercially reasonable. If any
notification of intended disposition of the Pledged Collateral is required
by law, such notification shall be deemed reasonable and properly given if
mailed, in accordance with Section 14(b) below, at least ten (10) days
before any such disposition. Any disposition
<PAGE>
of the Pledged Collateral, or any part thereof, may be for cash or on
credit or for future delivery without assumption of any credit risk, with
the right of Heller to purchase all or any part of the Pledged Collateral
so sold at any such sale or sales, public or private, free of any equity or
right of redemption in Pledgor, which right or equity is, to the extent
permitted by applicable law, hereby expressly waived or released by
Pledgor.
(b) All of Heller's rights and remedies,
including but not limited to the foregoing, shall be cumulative and not
exclusive and shall be enforceable alternatively, successively or concurrently
as Heller may deem expedient.
(c) Heller may elect to obtain (at Pledgor's
expense) the advice of any independent nationally known investment banking firm
with respect to the method and manner of sale or other disposition of any of the
Pledged Collateral, the best price reasonably obtainable therefor, the
consideration of cash and/or credit terms, or any other details concerning such
sale or disposition. Heller, in its sole discretion, may elect to sell on such
credit terms which it deems reasonable. The sale of any of the Pledged
Collateral on credit terms shall not relieve Pledgor of its liability for any of
the Obligations until the full purchase price for such Pledged Collateral has
been paid in full.
(d) Pledgor recognizes that Heller may be unable
to effect a public sale of all or a part of the Pledged Collateral by reason of
certain prohibitions contained in the Act, but may be compelled to resort to one
or more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view for the distribution or resale
thereof. Pledgor agrees that private sales so made may be at prices and on other
terms less favorable to the seller than if the Pledged Collateral were sold at
public sale, and that Heller has no obligation to delay the sale of any Pledged
Collateral for the period of time necessary to permit the registration of the
Pledged Collateral for public sale under the Act. Pledgor agrees that a private
sale or sales made under the foregoing circumstances shall be deemed to have
been made in a commercially reasonable manner.
(e) If any consent, approval or authorization of
any state, municipal or other governmental department, agency
or authority shall be necessary to effectuate any sale or
<PAGE>
other disposition of the Pledged Collateral, or any partial disposition of the
Pledged Collateral, Pledgor will execute all such applications and other
instruments as may be required in connection with securing any such consent,
approval or authorization, and will otherwise use its best efforts to secure the
same. Pledgor further agrees to use its best efforts to effect such sale or
other disposition of the Pledged Collateral as Heller may deem necessary
pursuant to the terms of this Agreement.
(f) Upon any sale or other disposition, Heller
shall have the right to deliver, assign and transfer to the purchaser thereof
the Pledged Collateral so sold or disposed of. Each purchaser at any such sale
or other disposition (including Heller) shall hold the Pledged Collateral free
from any claim or right of whatever kind, including any equity or right of
redemption, of Pledgor. Pledgor specifically waives, to the extent permitted by
applicable law, all rights of redemption, stay or appraisal which it had or may
have under any rule of law or statute now existing or hereafter adopted.
(g) Heller shall not be obligated to make any
sale or other disposition, unless the terms thereof shall be satisfactory to it.
Heller may, without notice or publication, adjourn any private or public sale,
and, upon ten (10) days' prior notice to Pledgor, hold such sale at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Pledged Collateral, on credit or future delivery, the Pledged
Collateral so sold may be retained by Heller until the selling price is paid by
the purchaser thereof, but Heller shall incur no liability in case of the
failure of such purchaser to take up and pay for the property so sold and, in
case of any such failure, such property may again be sold as herein provided.
Pledgor shall only receive credit for funds actually received and retained by
Heller.
11. Disposition of Proceeds.
(a) The proceeds of any sale or disposition of all or any
part of the Pledged Collateral shall be applied by Heller in the following
order:
(i) to the payment in full of the costs and
expenses of such sale or sales, collections, and the protection,
declaration and enforcement of any security interest granted
hereunder including the reasonable fees and disbursements of
Heller's agents and attorneys in connection therewith;
<PAGE>
(ii) to the payment of the Obligations in
such order as Heller may elect; and
(iii) to the payment to Pledgor of any
surplus then remaining from such proceeds, subject to the rights
of the holders of the Junior Secured Debt or any other holder
of a lien on the Pledged Collateral of which Heller has actual
notice.
(b) In the event that the proceeds of any sale
or other disposition are insufficient to cover the principal of, and premium, if
any, and interest on, the Obligations plus costs and expenses of the sale or
other disposition, Pledgor shall remain liable for any deficiency.
12. Termination. This Agreement shall continue in full force and
effect until the full and complete payment, satisfaction and termination of all
of the Obligations. Upon full and complete payment, satisfaction and termination
of all of the Obligations, all undertakings, agreements, covenants, warranties
and representations of Pledgor and Heller contained in this Agreement shall
terminate and expire, except to the extent otherwise provided in the
Reorganization Documents, and the security interest of Heller in the Pledged
Collateral shall terminate. Subject to any sale or other disposition or release
by Heller of the Pledged Collateral or any part thereof pursuant to this
Agreement and the rights of the holders of the Junior Secured Debt or any other
holder of a lien otherwise permitted by the Interest Note and granted by Pledgor
of which Heller has actual notice, the Pledged Collateral shall be returned
promptly to Pledgor (without warranty by, or recourse to, Heller) upon full
payment, satisfaction and termination of all of the Obligations. Heller shall
execute and deliver to Pledgor such documents as Pledgor may reasonably request
to evidence such termination of the security interest in the Pledged Collateral.
13. Expenses of Heller. All expenses (including reasonable fees
and disbursements of counsel) incurred by Heller in connection with any actual
or attempted sale, exchange of, or any enforcement, collection, compromise or
settlement respecting, the Pledged Collateral, or any other action taken by
Heller hereunder whether directly or as attorney-in-fact pursuant to a power of
attorney or other authorization herein conferred, for the purpose of
satisfaction of any of the Obligations or any additional amounts owing by
Pledgor to cover Heller's costs of acting against the Pledged Collateral, shall
be deemed to be part of the Obligations and Heller may apply the Pledged
Collateral to
<PAGE>
payment of or reimbursement of itself for such expenses. Heller shall provide to
Pledgor supporting documentation for such expenses as Pledgor may reasonably
request, provided that the provision or receipt of such documentation shall not
be a condition precedent to application of the Pledged Collateral to payment of
or reimbursement of such expenses as provided above, or otherwise affect the
rights of Heller as provided above. The obligations and liabilities of Pledgor
under this Section 13 shall survive any termination or cancellation of the
Interest Note, this Agreement or any of the other Reorganization Documents.
14. General Provisions.
(a) Heller and its assigns shall have no obligation in respect of
the Pledged Collateral, except to use reasonable care in holding the Pledged
Collateral and to hold and dispose of the same in accordance with the terms of
this Agreement and the Intercreditor Agreement.
(b) Any notice or other communication given hereunder (except as
expressly provided to the contrary), shall be in writing and shall be given by
messenger, telecopy transmission or commercial express mail service, and shall
be addressed as follows, or to such other address as the party affected may
hereafter designate in writing to the others in accordance with this Section
14(b):
If to Pledgor: Aris Industries, Inc.
475 Fifth Avenue, 3rd Floor
New York, New York 10017
Attention: President
Facsimile: (212) 686-0500
with a copy to: Herrick Feinstein
Two Park Avenue
New York, New York 10016
Attention: Lawrence M. Levinson, Esq.
Facsimile: (212) 889-7577
If to Heller: Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Project Management
Organization
Facsimile: (312) 441-7236
<PAGE>
with a copy to: Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Legal Department
Project Management
Organization
Facsimile: (312) 441-7236
If given by messenger, telex or telecopy transmission, telegram or
commercial express mail service, any notice or other communication shall be
effective upon receipt.
(c) No failure on the part of Heller to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Heller of any right, power
or remedy hereunder preclude any other or future exercise thereof, or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law or any other
agreement. The representations, covenants and agreements of Pledgor herein
contained shall survive the date hereof. Neither this Agreement nor the
provisions hereof can be changed, waived or terminated orally. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns pursuant to the Interest Note.
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS) AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS EXCEPT PERFECTION, WHICH SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE RELEVANT
JURISDICTION. EACH OF PLEDGOR AND Heller WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREUNDER AS SET FORTH IN THE INTEREST NOTE.
(e) This Agreement may be executed in one or more counterparts,
and by the parties hereto on separate counterparts, each of which shall be
deemed to be an original, and such counterparts, together, shall constitute one
and the same instrument, which shall be sufficiently evidenced by any such
original counterpart.
15. Rescission of Perry Sale. In the event that the Perry Sale (as defined
in the Note Agreement) is rescinded or set aside for any reason, the Pledgor
hereby agrees that its
<PAGE>
pledge of all of the issued and outstanding capital stock of Perry Manufacturing
Company and the certificates representing such shares, and all products and
proceeds of any of such shares, including, without limitation, all dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
in favor of Heller pursuant to the terms of the Existing Pledge Agreement
(collectively, the "Perry Stock") shall be reinstated and continue in full force
and effect without any further action or grant on the part of Pledgor or any
other person or entity, and such pledge as so reinstated shall, together with
the Pledged Collateral, secure the Obligations and the Perry Stock shall
constitute Pledged Collateral for all purposes hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
ARIS INDUSTRIES, INC.
By: /s/ CHARLES S. RAMAT
------------------------------
Name: Charles S. Ramat
Title: President
HELLER FINANCIAL, INC.
By: /s/ MICHELLE KOVATCHIS
------------------------------
Name: Michelle Kovatchis
Title: Senior Vice President
EXHIBIT 10.99
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER THIS WARRANT NOR ANY SUCH SHARES MAY BE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
WARRANT
To Purchase Common Stock of Aris Industries, Inc.
a New York corporation
No. 001 New York, New York
584,345 Shares September 30, 1996
THIS IS TO CERTIFY that Heller Financial, Inc., a Delaware corporation having
its principal place of business at 500 West Monroe Street, Chicago, Illinois
60661, or its registered assigns, is entitled upon the due exercise hereof at
any time during the Exercise Period (as hereinafter defined) to purchase 584,345
shares of Common Stock, $.01 par value, of Aris Industries, Inc., a New York
corporation (the "Company"), at an Exercise Price of $.01 per share and to
exercise the other rights, powers and privileges hereinafter provided, all on
the terms and subject to the conditions set forth herein. The foregoing Exercise
Price and number of shares of Common Stock purchasable hereunder are subject to
adjustment as hereinafter set forth.
ARTICLE I
DEFINITIONS
The terms defined in this Article I, whenever used in this Warrant, shall have
the following respective meanings:
"Adjustment Transaction" shall mean any of (i) the declaration of a dividend
upon, or distribution in respect of, any of the Company's capital stock, payable
in Common Stock, Convertible Securities or Stock Purchase Rights, (ii) the
subdivision or
<PAGE>
combination by the Company of its outstanding Common Stock into a larger or
smaller number of shares of Common Stock, as the case may be, (iii) a Dilutive
Transaction, (iv) any capital reorganization or reclassification of the capital
stock of the Company, (v) the consolidation or merger of the Company with or
into another corporation, (vi) the sale or transfer of the property of the
Company as (or substantially as) an entirety or (vi) any event as to which the
foregoing clauses are not strictly applicable but the failure to make an
adjustment in the Exercise Price hereunder would not fairly protect the purchase
rights, without dilution, represented by this Warrant.
"Affiliate" shall mean, with respect to any Person (i) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the stock or other
evidence of ownership having ordinary voting power in the election of directors
of such Person, (ii) each Person that controls, is controlled by or is under
common control with such Person or any Affiliate of such Person or (iii) each of
such Person's officers, directors, joint ventures and partners. For the purpose
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Closing Date" means September 30, 1996.
"Commission" means the Securities and Exchange Commission or another Federal
agency from time to time administering the Securities Act.
"Common Stock" means the Company's Common Stock, $.01 par value, any stock into
which such stock shall have been changed or any stock resulting from any
reclassification of such stock and any class of capital stock of the Company now
or hereafter authorized having the right to share in distributions either of
earnings or assets of the Company without limit as to amount or percentage.
"Company" has the meaning set forth on the cover page of this Warrant and shall
include any successor corporation.
"Convertible Securities" means evidences of indebtedness, shares of stock (other
than Common Stock) or other securities which are convertible into or
exchangeable for, with or without payment of additional consideration,
additional shares
<PAGE>
of Common Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event.
"Current Market Price" as to any security on any date specified herein means the
average of the daily closing prices for the thirty (30) consecutive trading days
before such date excluding any trades which are not bona fide arm's length
transactions. The closing price for each day shall be (i) the mean between the
closing high bid and low asked quotations of any such security in the
over-the-counter market as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted, as reported by any member firm of the New York Stock Exchange selected
by the Company, (ii) if not quoted as described in clause (i), the mean between
the high bid and low asked quotations for any such security as reported by the
National Quotation Bureau Incorporated or any similar successor organization, as
reported by any member firm of the New York Stock Exchange selected by the
Company, or (iii) if any such security is listed or admitted for trading on any
national securities exchange, the last sale price of any such security, regular
way, or the mean of the closing bid and asked prices thereof if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which any such security is listed. If any such security is quoted on
a national securities or central market system in lieu of a market or quotation
system described above, the closing price shall be determined in the manner set
forth in clause (i) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not, and in the manner set forth in clause
(iii) of the preceding sentence if actual transactions are reported.
"Dilutive Transaction" shall mean any issuance by the Company after the Closing
Date to employees, directors, officers or consultants of the Company or its
subsidiaries, any Affiliate of the foregoing or any Affiliate of the Company of
shares of Common Stock (or Stock Purchase Rights or Convertible Securities that
would permit the purchase of Common Stock but other than Employee Benefit Shares
or Stock Purchase Rights or Convertible Securities to purchase or convert into
Employee Benefit Shares) for a consideration less than the greater of (i) the
Exercise Price per share then in effect or (ii) the then Fair Value per share
then in effect.
"Employee Benefit Shares" mean shares of Common Stock issued to and held by a
person upon exercise of such person's rights, or upon the grant to such person,
(i) under a stock incentive,
<PAGE>
stock option, stock bonus, stock purchase or other benefit plan, program or
contract of the Company for, or (ii) as a component of compensation to,
employees, directors, officers and/or consultants of the Company or its
subsidiaries, which is approved by the Board of Directors of the Company.
"Exercise Period" means the period commencing on the Closing Date and
terminating on the tenth anniversary of the Closing Date.
"Exercise Price" means the price per share of Common Stock set forth on the
cover page of this Warrant, as such price may be adjusted pursuant to Article
IV.
"Fair Value" means the fair value of the appropriate security, property, assets,
business or entity (taking into account the value to such business or entity of
any covenant not to compete in favor thereof) as determined by an opinion of an
independent investment banking firm of national reputation (which may be the
firm regularly retained by the Company) selected by the Company and reasonably
acceptable to the holder(s) of this Warrant or, if Fair Value is being
determined other than for purposes of Article IV, the holders of Issued Warrant
Shares (who, if more than one, shall agree among themselves by a two-thirds
majority). In the case of any event which gives rise to a requirement to
determine "Fair Value" pursuant to this Warrant, the Company shall be
responsible for initiating the process by which Fair Value shall be determined
as promptly as practicable, but in any event within thirty (30) days, following
such event. Such investment banking firm shall determine the fair value of the
security, property, assets, business or entity, as the case may be, in question
and deliver its opinion in writing to the Company and to each such holder. The
determination so made shall be conclusive and binding on the Company and such
holders. The fees and expenses of any such determination made by such investment
banking firm shall be borne by the Company. In determining Fair Value, no
discount shall be imposed by reason of a minority ownership interest or the
illiquidity of the stock interest being valued. The Fair Value of the Warrant
Shares shall be determined without regard to the fact that the Warrant Shares
may constitute a minority ownership interest in a closely held corporation.
Notwithstanding the foregoing, if the Common Stock is traded on a public market,
Fair Value means, with reference to the Warrant Shares, the Current Market Price
of the Common Stock as of any date of determination.
"Initial Holder" means Heller Financial, Inc.
<PAGE>
"Issuable Warrant Shares" means the number of shares of Common Stock issuable
from time to time upon exercise of this Warrant.
"Issued Warrant Shares" means (a) the cumulative total of shares of Common Stock
issued from time to time upon exercise of this Warrant plus (b) any shares of
Common Stock issued as a stock dividend with respect to any shares of the type
described in (a) or as part of a stock split affecting such shares.
"Notice of Exercise" means the form of Notice of Exercise set
forth on Exhibit 1.
"Permitted Payment Methods" means either of (a) wire transfer of immediately
available funds to an account in a bank located in the United States designated
by the payee for such purpose or (b) delivery of a certified or official bank
check.
"Person" means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
public benefit corporation, entity or government (whether federal, state,
country, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Securities Act" means the Securities Act of 1933, as amended, or any successor
Federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time.
"Stock Purchase Rights" means any warrants, options or other rights to subscribe
for, purchase or otherwise acquire any shares of Common Stock or any Convertible
Securities.
"Warrant" means this Warrant dated as of Closing Date issued to the Initial
Holder and all warrants issued upon the partial exercise, transfer or division
of, or in substitution for, any warrant.
"Warrant Shares" means the Issuable Warrant Shares plus the
Issued Warrant Shares.
<PAGE>
The following terms have the meanings given to them in the indicated Sections of
this Warrant:
Term Section
---- -------
"Distribution" 6.1
"Piggy-Back Shares" 5.1
"Rule 144" 5.8
"Rule 144A" 5.8
Whenever used in this Warrant, any noun or pronoun shall be deemed to include
both the singular and plural and to cover all genders, and the words "herein,"
"hereof," and "hereunder" and words of similar import shall refer to this
instrument as a whole, including any amendments hereto. Unless specified
otherwise, all Article, Section and Exhibit references shall be to the Articles,
Sections and Exhibits of or to this Warrant.
ARTICLE II
EXERCISE OF WARRANT
2.1 Right to Exercise. On the terms and subject to the conditions of this
Article II, the holder hereof shall have the right, at its option, to exercise
this Warrant in whole or in part at any time during the Exercise Period.
2.2 Manner of Exercise; Issuance of Common Stock. To exercise this Warrant,
the holder hereof shall deliver to the Company (a) a Notice of Exercise duly
executed by such holder specifying the number of shares of Common Stock to be
purchased, (b) an amount equal to the aggregate Exercise Price for all shares of
Common Stock to be purchased pursuant to this Warrant and (c) this Warrant. At
the option of such holder, payment of the Exercise Price may be made by (A)
either of the Permitted Payment Methods, (B) deduction from the number of shares
delivered upon exercise of the Warrant of a number of shares which has an
aggregate Current Market Price on the date of exercise equal to the aggregate
Exercise Price for all shares to be purchased pursuant to this Warrant (or in
the event that the Current Market Price is not then ascertainable, then at such
price per share as the Company and the holder hereof may mutually agree upon or,
if the Company and the holder hereof are unable so to agree, then at the Fair
Value determined according to the procedures set forth within the definition of
such term) or (C) by any combination of the foregoing methods.
<PAGE>
Upon receipt of the required deliveries, the Company shall, as promptly as
practicable but in any event within five Business Days thereafter, cause to be
issued and delivered to the holder hereof (or its nominee) or, subject to
Article V, the transferee designated in the Notice of Exercise, a certificate or
certificates representing shares of Common Stock equal to the aggregate number
of shares of Common Stock specified in the Notice of Exercise (less any shares
in payment of a cashless exercise pursuant to Section 2.2(B)). Such certificate
or certificates shall be registered in the name of the holder hereof (or its
nominee) or in the name of such transferee, as the case may be. If this Warrant
is exercised in part, the Company shall, at the time of delivery of such
certificate or certificates, unless the Exercise Period has then expired, issue
and deliver to the holder hereof or, subject to Article V, the transferee so
designated in the Notice of Exercise, a new Warrant evidencing the right of the
holder hereof or such transferee to purchase the aggregate number of shares of
Common Stock for which this Warrant shall not have been exercised, and this
Warrant shall be canceled.
2.3 Effectiveness of Exercise. Unless otherwise requested by the holder
hereof, this Warrant shall be deemed to have been exercised and such certificate
or certificates shall be deemed to have been issued, and the holder or
transferee so designated in the Notice of Exercise shall be deemed to have
become the holder of record of such shares for all purposes, as of the close of
business on the date on which each of the Notice of Exercise, payment of the
Exercise Price (unless a cashless exercise is being effected pursuant to Section
2.2(B)) and this Warrant are received by the Company.
2.4 Fractional Shares. The Company shall not issue fractional shares of
Common Stock upon any exercise of this Warrant. As to any fractional share of
Common Stock which the holder hereof would otherwise be entitled to purchase
from the Company, the Company shall purchase from the holder such fractional
share at a price equal to an amount calculated by multiplying such fractional
share (calculated to the nearest .001 of a share) by the Fair Value thereof
calculated as of the date of the Notice of Exercise. Payment of such amount
shall be made at the time of delivery of any certificate or certificates
deliverable upon such exercise in cash or by check payable to the order of the
holder hereof or, subject to Article V, the transferee designated in the Notice
of Exercise, as the case may be.
<PAGE>
2.5 Continued Validity. A holder of shares of Common Stock issued upon the
whole or partial exercise of this Warrant shall continue to be entitled to all
rights to which a holder of this Warrant is entitled pursuant to the provisions
hereof except such rights as by their terms apply solely to the holder of a
Warrant. The Company agrees and acknowledges that each such holder of shares of
Common Stock shall be and is hereby deemed to be a third party beneficiary of
this Warrant.
ARTICLE III
REGISTRATION, TRANSFER AND EXCHANGE
The Company shall keep at its principal office an open register in which it
shall provide for the registration, transfer and exchange of this Warrant. The
holder hereof and the Company shall take such actions as may be necessary from
time to time (or as may be reasonably requested by the other party) to effect
the proper registration of this Warrant or portions hereof and in connection
with any transfer or exchange of this Warrant or portions hereof. All Warrants
issued upon any registration of transfer or exchange of Warrants shall be the
valid obligations of the Company, evidencing the same rights, and entitled to
the same benefits, as the Warrants surrendered upon such registration of
transfer or exchange.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, the Company will execute
and deliver, in lieu thereof, a new Warrant. The Company and any agent of the
Company may treat the Person in whose name this Warrant is registered on the
register kept at the principal office of the Company as the owner and holder
thereof for all purposes.
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 General Statements of Intent; Adjustment of Number of Shares
Purchasable. The Company hereby acknowledges that the initial number of shares
issuable upon exercise of this Warrant was calculated based upon the
representation of the Company that the number of shares of Common Stock
outstanding as of the Closing Date (excluding the Issuable Warrant Shares) was
11,925,416 shares. If for any reason it shall hereafter be determined by the
holder of this Warrant that the actual number of shares of Common Stock
outstanding as of the Closing Date was different from the foregoing, such holder
may notify the Company of such determination and if the Company does not
<PAGE>
dispute the same, the Company shall forthwith reissue this Warrant with
appropriate adjustments in the initial number of shares issuable upon the
exercise hereof. If the Company shall dispute such determination and the parties
cannot otherwise resolve the dispute promptly and in good faith, then the
Company shall appoint a firm of independent public accountants of recognized
national standing (which may be the regular auditors of the Company), which
shall give their opinion as to the adjustment, if any, to be made to the number
of shares issuable upon the exercise hereof. Upon receipt of such opinion, the
Company shall promptly mail a copy thereof to the holder of this Warrant and
shall make the adjustment described therein.
Without limiting the provisions of Section 4.2 hereof, it is the intent of
the parties hereto that after giving effect to any exercise of this Warrant, the
holder hereof and the holder of all Issued Warrant Shares would collectively be
the owner of (or have the right to acquire pursuant hereto) 4.9% (as such amount
may be adjusted in the event of a cashless exercise hereof pursuant to Section
2.2(B)) of the Common Stock outstanding, except as such percentage may be
reduced as a consequence of an issuance of Common Stock not requiring any
adjustment in the Exercise Price in accordance with Section 4.2.
Upon any adjustment of the Exercise Price as provided in Section 4.2, the
holder hereof shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock purchasable hereunder
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the Exercise Price in effect immediately prior to such adjustment and
(B) the denominator of which shall be the Exercise Price resulting from such
adjustment.
4.2 Adjustment of Exercise Price. If any Adjustment Transaction shall
occur, the Exercise Price shall be adjusted by the Company so as to fairly
preserve, without dilution, the purchase rights represented by this Warrant in
accordance with Section 4.1 and otherwise with the essential intent and purposes
hereof. If the holder of this Warrant disputes the adjustment of the Exercise
Price made by the Company and the parties cannot otherwise resolve the dispute
promptly and in good faith, then the Company shall appoint a firm of independent
public accountants of recognized national standing (which may be the regular
auditors of the Company), which shall give their opinion as to the adjustment,
if any, to be
<PAGE>
made to the Exercise Price as the result of the relevant Adjustment Transaction.
Upon receipt of such opinion, the Company shall promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustment described therein. (For
illustrative purposes, but without limiting the requirements set forth above,
there are attached hereto as Exhibit 4.2 the mathematical formulas that would be
used to calculate the adjusted Exercise Price in the case of an issuance of
Common Stock for less than the greater of (i) the Exercise Price per share then
in effect or (ii) the then Fair Value per share.)
Anything herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the Exercise Price in the case of (i) the
issuance of shares of Common Stock upon the exercise in whole or part of this
Warrant or (ii) the issuance of shares of Common Stock pursuant to a rights
offering in which the holder hereof elects to participate as if this Warrant had
been exercised and such holder were, at the time of any such rights offering,
then a holder of that number of shares of Common Stock to which such holder is
then entitled on the exercise hereof.
In case the Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common Stock or to make
any other Distribution to the holders of shares of Common Stock, (ii) offer to
the holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options or (iii)
effect any reclassification of the Common Stock (other than a reclassification
involving merely the subdivision or combination of outstanding shares of Common
Stock), or any capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property is to be made
to holders of shares of Common Stock), or any sale, transfer or other
disposition of its property, assets and business as an entirety or substantially
as an entirety, or the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to the holder of this Warrant
notice of such proposed action, which shall specify the date on which the stock
transfer books of the Company shall close, or a record shall be taken, for
determining the holders of Common Stock entitled to receive such stock dividends
or other Distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date as of which it is expected that
holders of Common
<PAGE>
Stock of record shall be entitled to receive securities or other property
deliverable upon such action, if any such date is to be fixed. Such notice shall
be mailed in the case of any action covered by clause (i) or (ii) above at least
ten (10) days prior to the record date for determining holders of Common Stock
for purposes of receiving such payment or offer, or in the case of any action
covered by clause (iii) above at least thirty (30) days prior to the date upon
which such action takes place and twenty (20) days prior to any record date to
determine holders of Common Stock entitled to receive such securities or other
property. Failure to file any certificate or notice or to mail any notice, or
any defect in any certificate or notice pursuant to this Section shall not
affect the legality or validity of the adjustment of the Exercise Price or the
number of shares purchasable upon exercise of this Warrant, or any transaction
giving rise thereto.
ARTICLE V
RESTRICTIONS ON TRANSFER
Neither this Warrant nor any Issuable Warrant Shares shall be transferable
without the prior written consent of the Company except (a) to an Affiliate of
the holder hereof, (b) to a successor corporation to the holder hereof as a
result of a merger or consolidation with, or sale of all or substantially all of
the stock or assets of, the holder hereof, (c) as is or may be required by the
holder hereof to comply with any Federal or state law or any rule or regulation
of any governmental or public body or authority, (d) on thirty (30) days prior
written notice to the Company for a period of ninety (90) days immediately
following the date of such notice, to any other Person who, together with its
Affiliates, shall acquire in such transfer Warrants exercisable as to, or shares
of Common Stock representing, not more than two percent (2%) of the then
outstanding Common Stock or such greater percentage as may then be in accordance
with any applicable policy of the Federal Reserve Board relating to equity
investments by bank holding companies, (e) in a public offering pursuant to an
effective registration statement under the Securities Act or in an offering
constituting an exempt transaction under Rule 144 or Rule 144A, or (f) to any
Person under circumstances that would not result in a violation of the
Securities Act or any state securities laws.
Reference in this Article V to shares of Common Stock issuable upon the
exercise of this Warrant includes shares of Common Stock theretofore issued upon
the exercise of
<PAGE>
the Warrant which are then evidenced by certificates required to bear the legend
set forth in Section 5.6.
5.1 Incidental Registration and Qualification. If the Company proposes to
register any securities of the Company under the Securities Act on any
registration form (otherwise than for the registration of securities to be
offered and sold by the Company pursuant to (a) an employee benefit plan, (b) a
dividend or interest reinvestment plan, (c) other similar plans or (d)
reclassifications of securities, mergers, consolidations and acquisitions of
assets), then not less than forty-five (45) days prior to each such registration
the Company shall give to the holder hereof and the holders of Issued Warrant
Shares bearing the legend required by Section 5.6 written notice of such
proposal which shall describe in detail the proposed registration and
distribution and, upon the written request of the holder hereof or a holder of
Issued Warrant Shares furnished within twenty (20) days after the date of any
such notice, proceed to include in such registration such Warrant Shares
("Piggy-Back Shares") as have been requested by any such holder to be included
in such registration. The Company will in each instance use its best efforts to
cause all such Piggy-Back Shares to be registered under the Securities Act and
qualified under the securities or blue sky laws of any jurisdiction requested by
a prospective seller, all to the extent necessary to permit the sale or other
disposition thereof (in the manner stated in such request) by a prospective
seller of the securities so registered.
If the managing underwriter, who shall be selected by the Person who
initiated such registration, advises the Company in writing that, in its
opinion, the inclusion of the Piggy-Back Shares with the securities being
registered by the Company and other prospective sellers would materially
adversely affect the distribution of all such securities, then (a) first the
Company may sell the shares of its Common Stock that it desires to sell in such
registration and second each prospective seller (including the holders of the
Piggy-Back Shares but other than the Company) may sell that proportion of the
shares of Common Stock to be sold in the proposed distribution which the number
of shares of Common Stock proposed to be sold by such prospective seller
(including the holders of the Piggy-Back Shares but other than the Company)
bears to the aggregate number of shares of Common Stock proposed to be sold by
all such prospective sellers (including the holders of the Piggy-Back Shares) or
(b) a prospective seller (including the holders of the Piggy-Back Shares) may at
<PAGE>
its option delay its offering and sale for a period not to exceed ninety (90)
days after the effective date of such registration as such managing underwriter
shall reasonably request. In the event of such delay, the Company shall use its
best efforts to effect any registration or qualification under the Securities
Act and the securities or blue sky laws of any jurisdiction as may be necessary
to permit such prospective seller to make its proposed offering and sale
following the end of such period of delay and shall pay all expenses related
thereto in accordance with Section 5.4.
The holder hereof and any holder of Issued Warrant Shares who has requested
shares of Common Stock to be included in a registration pursuant to this
Section, by acceptance hereof or thereof, agrees to (a) the selection by the
Company or such other security holder of the underwriter to manage such
registration and (b) execute an underwriting agreement with such underwriter
that is (i) reasonably satisfactory to such holder and (ii) in customary form.
Nothing in this Section shall be deemed to require the Company to proceed with
any registration of its securities after giving the notice as provided herein;
provided, however, that the Company shall pay all expenses incurred pursuant to
such notice in accordance with Section 5.4.
5.2 Registration and Qualification Procedures. Whenever the Company is
required by the provisions of Section 5.1 to effect the registration of any
Warrant Shares under the Securities Act, the Company will, as expeditiously as
is possible, take such steps as are necessary or appropriate (and will consult
in good faith with the relevant holder of Warrant Shares as to what steps may be
included) to prepare for a registration or qualification of its securities,
including without limitation preparing and filing with the Commission a
registration statement, and amendments and supplements thereto, furnishing to
each seller sufficient copies of prospectuses, preparing and filing
registrations under the blue sky laws of applicable jurisdictions, entering into
and performing underwriting agreements, keeping each seller advised as to the
progress of the steps being taken and otherwise taking such actions in
cooperation with each seller as are customarily taken or required in connection
with the public registration and sale of securities. The Company, the holder
hereof and each holder of Issued Warrant Shares shall cooperate with each other
in supplying such information as may be necessary for any of such parties to
complete and file any information reporting forms presently or hereafter
required by the Commission or any commissioner or other authority administering
the blue sky or securities laws of any
<PAGE>
jurisdiction where shares of Common Stock are proposed to be sold pursuant to
this Article V.
5.3 Holdback Agreements. Each of the holder hereof and the Company agrees
not to effect any public sale or distribution of the Company's equity securities
or securities convertible into or exchangeable or exercisable for any of such
securities during the seven (7) days prior to or ninety (90) days after any
underwritten registration pursuant to Section 5.1 has become effective, except
as part of such underwritten registration and except pursuant to registrations
on Form S-8 or S-4 or any successor or similar forms thereto, and the Company
agrees to cause each Person who purchases its equity securities (other than
Employee Benefit Shares) or any securities convertible into or exchangeable or
exercisable for any of such securities at any time after the date of this
Warrant (other than in a public offering) to agree not to effect any such public
sale or distribution of such securities, during such period.
5.4 Allocation of Expenses. If the Company is required by the provisions of
this Article V to use its best efforts to effect the registration or
qualification under the Securities Act or any state securities or blue sky laws
of any of the Warrant Shares, the Company shall pay all professional fees
(including the costs and expenses incurred by such professionals), all expenses
and all registration fees in connection therewith, including, without
limitation, the reasonable legal fees, costs and expenses of counsel to any
holder of this Warrant or Warrant Shares.
5.5 Indemnification. In connection with any registration or qualification
of securities under this Article V, the Company agrees to indemnify the holder
hereof and the holders of any shares of Common Stock issuable upon the exercise
hereof and each underwriter thereof, including each Person, if any, who controls
the holder or such stockholder or underwriter within the meaning of Section 15
of the Securities Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and the costs, fees and
expenses of legal counsel) caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement, preliminary prospectus,
prospectus or notification or offering circular (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or
caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such
<PAGE>
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission based upon
information furnished in writing to the Company by the holder or any such
stockholder or underwriter expressly for use therein. The Company and each
officer, director and controlling Person of the Company shall be indemnified
respectively by the holder of this Warrant and by the holders of any Issued
Warrant Shares for all such losses, claims, damages, liabilities and expenses
(including the costs of reasonable investigation and the costs, fees and
expenses of legal counsel) caused by any such untrue, or alleged untrue,
statement or any such omission or alleged omission, based upon information
furnished in writing to the Company by the holder hereof or any such stockholder
expressly for use therein.
The indemnifying party shall be entitled to participate in and, to the
extent it may wish, jointly with any other indemnifying party, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(a) the indemnifying party agrees to pay the same, (b) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party or (c) the named parties to any such action (including
any impleaded parties) have been advised by such counsel that representation of
such indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party). No indemnifying party shall be
liable for any settlement entered into without its consent, which consent shall
not be withheld unreasonably.
If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or actions in respect thereof referred to
herein, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities, expenses or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the sellers of such Common
<PAGE>
Stock, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, expenses or actions as
well as any other relevant equitable considerations, including the failure to
give the notice required hereunder. The Company and the holder hereof agree that
it would not be just and equitable if contribution pursuant to this Section were
determined by any method of allocation which did not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section, in no event shall the amount contributed by any seller of Common
Stock exceed the net proceeds received by such seller from the sale of Common
Stock to which such contribution claim relates. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
Each holder of this Warrant and each holder of shares of Issued Warrant
Shares bearing the legend required by Section 5.6, by acceptance hereof or
thereof, as the case may be, agrees to the indemnification and contribution
provisions of this Section 5.5.
5.6 Legend on Warrants and Certificates. Each Warrant shall bear a legend
in substantially the following form:
"This Warrant and any shares of Common Stock issuable upon the exercise of
this Warrant have not been registered under the Securities Act of 1933, as
amended, and neither this Warrant nor any such shares may be transferred in the
absence of such registration or an exemption therefrom under such Act."
In case any shares are issued upon the exercise in whole or in part of this
Warrant or are thereafter transferred, in either case under such circumstances
that no registration under the Securities Act is required, each certificate
representing such shares shall bear the following legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be transferred in the
absence of such registration or an exemption therefrom under such Act. In
addition, any transfer of these shares is subject to the conditions specified in
the Warrant dated September 30, 1996, originally issued by Aris Industries, Inc.
(the "Company") to Heller Financial, Inc. to purchase shares of Common Stock,
$.01 par
<PAGE>
value, of the Company. A copy of the form of such Warrant is on file with the
Secretary of the Company at 475 Fifth Avenue, New York, New York 10017 and will
be furnished without charge by the Company to the holder of this certificate
upon written request to the Secretary of the Company at such address."
5.7 Termination of Restrictions. The restrictions imposed under this
Article V upon the transferability of this Warrant, or of Issuable Warrant
Shares or Issued Warrant Shares, shall cease when (a) a registration statement
covering such Issuable Warrant Shares or Issued Warrant Shares becomes effective
under the Securities Act or (b) the Company receives an opinion of counsel for
the holder thereof reasonably acceptable to the Company that such restrictions
are no longer required in order to ensure compliance with the Securities Act.
When such restrictions terminate, the Company shall, or shall instruct its
transfer agent and registrar to, issue new certificates in the name of the
holder not bearing the legends required under Section 5.6.
5.8 Rule 144 and Rule 144A. The Company covenants that it will file all
reports required to be filed by it with the Commission, and that it will take
such further action as a holder may reasonably request, all to the extent
required from time to time to enable such holder to sell Warrant or Warrant
Shares without registration under the Securities Act pursuant to Rule 144 ("Rule
144") (or any similar rule then in effect) promulgated by the Commission under
the Securities Act. Upon the request of a holder, the Company will deliver to
such holder a notice stating whether it has complied with such requirements. The
Company covenants that it will provide to each holder or any prospective
purchaser of such holder's Warrant or Warrant Shares the information required to
be delivered under paragraph (d)(4) of Rule 144A ("Rule 144A") (or any similar
rule then in effect) promulgated by the Commission under the Securities Act in
respect of a transaction qualifying for an exemption under Rule 144A and it will
take such further action as a holder may reasonably request, all to the extent
required from time to time, to enable such holder to sell its Warrant or Warrant
Shares without registration under the Securities Act pursuant to Rule 144A.
<PAGE>
ARTICLE VI
PARTICIPATION IN CORPORATE DISTRIBUTIONS AND OTHER RIGHTS
6.1 Company's Obligation to Make Payments.
(a) Without providing the holder of this Warrant with twenty (20) days
prior written notice, the Company shall not declare, make or pay any dividend or
other distribution, whether in cash, securities or other property, with respect
to its Common Stock (a "Distribution").
(b) The Company shall not repurchase or redeem any of its equity securities
or any securities convertible into or exchangeable for such equity securities or
any warrants or other rights to purchase such equity securities unless it
concurrently makes a cash payment to the holder of this Warrant (which shall not
be required to sell or tender for redemption any securities held by it as a
result) equal to the product of (1) the quotient obtained by dividing (x) the
aggregate amount of cash and the aggregate Fair Value of any property paid out
by the Company in connection with any such repurchase or redemption by (y) the
number of shares of Common Stock outstanding on a fully diluted (excluding
Issuable Warrant Shares) basis immediately after such repurchase or redemption
and (2) the number of shares of Common Stock then issuable upon the exercise of
this Warrant.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Initial Holder and each
subsequent holder of this Warrant that as of the Closing Date:
7.1 Organization and Capitalization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. The authorized capital of the Company consists of
50,000,000 shares of Common Stock, par value $.01 per share, and 10,000,000
shares of preferred stock, par value $.01 per share. As of the date hereof there
are 11,925,416 shares of Common Stock issued and outstanding and zero shares of
preferred stock issued and outstanding, and no shares of the Company's capital
stock are held in its treasury. No unissued shares of Common Stock are reserved
for any purpose other than for issuance upon the exercise of this Warrant and
1,200,000 shares reserved for issuance under the Company's 1993 Stock
<PAGE>
Incentive Plan. The Company has not issued or agreed to issue any Stock Purchase
Rights or Convertible Securities except as set forth on Exhibit 7.1 hereto, and
there are no preemptive rights in effect with respect to the issuance of any
shares of Common Stock. All the outstanding shares of the Company's capital
stock have been validly issued without violation of any preemptive or similar
rights and are fully paid and nonassessable.
7.2 Authority. The Company has full corporate power and authority to
execute and deliver this Warrant and to perform all of its obligations
hereunder, and the execution, delivery and performance hereof have been duly
authorized by all necessary corporate action on its part. This Warrant has been
duly executed on behalf of the Company and constitutes the
legal, valid and binding obligation of the Company enforceable
in accordance with its terms.
7.3 No Legal Bar. Neither the execution, delivery or performance of this
Warrant will (a) conflict with or result in a violation of the articles or
certificate of incorporation or By-Laws of the Company, (b) conflict with or
result in a violation of any law, statute, regulation, order or decree
applicable to the Company or any Affiliate, (c) require any consent or
authorization or filing with, or other act by or in respect of, any governmental
authority, or (d) result in a breach of, constitute a default under or
constitute an event creating rights of acceleration, termination or cancellation
under any mortgage, lease, contract, franchise, instrument or other agreement to
which the Company is a party or by which it is bound.
7.4 Validity of Shares. When issued upon the exercise of this Warrant as
contemplated herein, shares of Common Stock will have been validly issued and
will be fully paid and nonassessable.
ARTICLE VIII
VARIOUS COVENANTS OF THE COMPANY
8.1 No Impairment or Amendment. The Company shall not by any action
including, without limitation, amending its articles or certificate of
incorporation or by-laws, any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant or impair the ability of the holder to realize upon the intended
economic value hereof, but will at all times in good faith assist in
<PAGE>
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate to protect the rights of the holder hereof against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock issuable upon the
exercise of this Warrant above the amount payable therefor upon such exercise,
(b) take all such action as may be necessary or appropriate in order that the
Company may validly issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant and (c) obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
8.2 Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance, sale and delivery upon the exercise of this
Warrant, a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon the exercise of this Warrant. All such shares of
Common Stock shall be duly authorized and, when issued upon exercise of this
Warrant, shall be validly issued and fully paid and non-assessable with no
liability on the part of the holders thereof.
8.3 Listing on Securities Exchange. If the Company shall list any shares of
Common Stock on any securities exchange it will, at its expense, list thereon,
maintain and increase when necessary such listing of, all Issued Warrant Shares
and, to the extent permissible under the applicable securities exchange rules,
all Issuable Warrant Shares, so long as any shares of Common Stock shall be so
listed. The Company will also so list on each securities exchange, and will
maintain such listing of, any other securities which the holder of this Warrant
shall be entitled to receive upon the exercise thereof if at the time any
securities of the same class shall be listed on such securities exchange by the
Company.
8.4 Certain Expenses. Except as specifically provided to the contrary in
Section 5.5, the Company shall pay all expenses in connection with, and all
taxes (other than stock transfer taxes) and other governmental charges that may
be imposed in respect of, the issue, sale and delivery of (a) the Warrant, (b)
the Issuable Warrant Shares and (c) the Issued Warrant Shares.
8.5 Regulatory Compliance Cooperation. Notwithstanding any other provision
of this Warrant, the Company will use its best efforts to insure that the holder
hereof does not have a
<PAGE>
"Regulatory Problem" (as defined below) due to the Company making any
redemption, purchase or other acquisition, whether direct or indirect, or taking
other action with respect to the voting rights of, any shares of any class of
its capital stock or any securities convertible into or exchangeable for any
shares of any class of its capital stock, so as to increase the proportion of
the Company's Voting Stock which this Warrant entitles the holder to purchase or
which the holder of shares of Common Stock issuable hereunder then owns. In
addition, the Company will use its best efforts to insure that such holder does
not have a Regulatory Problem in connection with any merger, consolidation,
recapitalization or other transaction pursuant to which the holder hereof or a
holder of shares of Common Stock issuable hereunder would be required to take
any voting securities, or any securities convertible into
voting securities. Notwithstanding the foregoing, in the event that a Regulatory
Problem exists, the Company agrees in good faith to amend this Warrant
(including, if necessary, to provide that upon exercise hereof such holder shall
receive non-voting shares of Common Stock of the Company or any surviving
entity) upon the request of the holder hereof in such a way so that the
Regulatory Problem no longer exists, provided that, subject to the next
succeeding sentence, the Company shall not be required to agree to any amendment
that would have a materially adverse effect on the Company's rights under this
Warrant. The Company agrees that, so long as the economic terms of this Warrant
remain substantially the same, any such amendment shall not materially adversely
affect the rights of the Company hereunder. Without limiting the foregoing, in
the event of a Regulatory Problem the holder by acceptance of this Warrant
agrees to consent to any amendment to this Warrant requested by the Company to
provide that upon exercise hereof such holder shall receive non-voting shares of
Common Stock of the Company or any surviving entity; provided, that the economic
terms of this Warrant remain substantially the same and such amendment cures the
Regulatory Problem. For purposes of this paragraph, a Person will be deemed to
have a "Regulatory Problem" when such Person or such Person's affiliates would
own, control or have power, directly or indirectly, over a greater quantity of
securities of any kind issued by the Company than is permitted under any
requirement of any governmental authority binding on such Person.
ARTICLE IX
MISCELLANEOUS
9.1 Nonwaiver. No course of dealing or any delay or failure to exercise any
right, power or remedy hereunder on
<PAGE>
the part of the holder hereof shall operate as a waiver of or otherwise
prejudice such holder's rights, powers or remedies.
9.2 Holder Not a Stockholder. Prior to the exercise of this Warrant as
hereinbefore provided, the holder hereof shall not be entitled to any of the
rights of a stockholder of the Company including, without limitation, the right
as a stockholder to (a) vote on or consent to any proposed action of the Company
or (b) receive (i) dividends or any other distributions made to stockholders
(except as provided in Article VI), (ii) notice of or attend any meetings of
stockholders of the Company (except as provided in Article IV) or (iii) notice
of any other proceedings of the Company (except as provided in Article IV).
9.3 Notices. Any notice, demand or delivery to be made pursuant to the
provisions of this Warrant shall be sufficiently given or made if sent by first
class mail, postage prepaid, addressed to (a) the holder of this Warrant or
Issued Warrant Shares at its last known address appearing on the books of the
Company maintained for such purpose or (b) the Company at its principal office
at 475 Fifth Avenue, New York, New York 10017, Attention: Charles S. Ramat,
President. The holder of this Warrant and the Company may each designate a
different address by notice to the other pursuant to this Section 9.3.
9.4 Like Tenor. All Warrants shall at all times be identical, except as to
the Preamble.
9.5 Remedies. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
9.6 Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company, the holder hereof and (to the extent provided herein) the holders
of Issued Warrant Shares, and shall be enforceable by any such holder.
9.7 Modification and Severability. If, in any action before any court or
agency legally empowered to enforce any
<PAGE>
provision contained herein, any provision hereof is found to be unenforceable,
then such provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable as
set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Agreement, but this Agreement
shall be construed as if such unenforceable provision had never been contained
herein.
9.8 Integration. This Warrant replaces all prior agreements, supersedes all
prior negotiations and constitutes the entire agreement of the parties with
respect to the transactions contemplated herein.
9.9 Amendment. This Warrant may not be modified or amended except by
written agreement of the Company and the holder hereof.
9.10 Headings. The headings of the Articles and Sections of this Warrant
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
9.11 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAWS PROVISIONS) OF
THE STATE OF NEW YORK.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, this Warrant has been executed by the Company as of the
Closing Date.
ARIS INDUSTRIES, INC.
By /s/ CHARLES S. RAMAT
----------------------------------
Printed Name: Charles S. Ramat
Title: President
Attest:
/s/ PAUL SPECTOR
----------------------------
Printed Name: Paul Spector,
its Secretary
