SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
May 1, 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 (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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)
Page 1
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ITEM 5. OTHER EVENTS
On May 1, 1996, the Registrant and Heller Financial, Inc. ("Heller")
entered into a Fifth Amendment to the Senior Secured Note Agreement dated as of
June 30, 1993 between the Registrant and Heller, which amendment adjusted
certain financial covenants and modified the amortization schedule so that they
would be more advantageous to Registrant, and provided for Heller to loan to
Aris the amounts necessary to pay scheduled quarterly interest under such note
agreement for the period May 6, 1996 through November 4, 1996 inclusive, with
such additional loan to be repaid February 3, 1997. In addition, on May 1, 1996,
(a) the Registrant and BNY Financial Corporation("BNY") entered into an
amendment whereby scheduled quarterly interest payments under the Series A
Junior Secured Note Agreement dated June 30, 1993 between Registrant and BNY for
the period May 6, 1996 through February 3, 1997 inclusive would not be paid in
cash but instead would be added to principal and (b) the Registrant and AIF-II,
L.P.("AIF-II") entered into an amendment whereby scheduled quarterly interest
payments under the Series B Junior Secured Note Agreement dated June 30, 1993
between Registrant and AIF-II 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.
10.92 Fifth Amendment dated May 1, 1996 to Senior Secured Note Agreement dated
as of June 30, 1993 between Registrant and Heller Financial, Inc.
10.93 Consent dated May 1, 1996 to Series A Junior Secured Note Agreement dated
as of June 30, 1993 between Registrant and BNY Financial Corporation.
10.94 Consent dated May 1, 1996 to Series B Junior Secured Note Agreement dated
as of June 30, 1993 between Registrant and AIF-II, L.P.
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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
-------------------------
Paul Spector
Senior Vice President and
Chief Financial Officer
Date: May 1, 1996
Page 3
FIFTH AMENDMENT TO SENIOR SECURED NOTE AGREEMENT
FIFTH AMENDMENT, dated as of May 1, 1996 (this "Amendment"), to the Note
Agreement referred to below by and between ARIS INDUSTRIES, INC., a New York
corporation ("Borrower"), and HELLER FINANCIAL, INC., a Delaware corporation,
individually as Lender and as Agent for any other Lender ("Heller").
W I T N E S 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 December 12, 1994, June 12,
1995, October 27, 1995 and December 22, 1995, and as the same may be further
amended, supplemented or otherwise modified from time to time, the "Note
Agreement"); and
WHEREAS, Borrower and Heller have agreed to amend the Note Agreement in the
manner, and on the terms and conditions, provided for 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 as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Note Agreement.
2. Amendments To Paraqraph 1.1 of the Note Aqreement. Paraqraph 1.1 of the
Note Agreement is hereby amended as of the Amendment Effective Date (as
hereinafter defined) by (i) inserting the following new definitions in the
appropriate alphabetical order:
'"Fifth Amendment" shall mean the Fifth Amendment to Senior Secured
Note Agreement, dated as of May 1, 1996, between Borrower and Heller
Financial, Inc., individually as Lender and as Agent for any other Lender.
"Tranche D Commitment" shall mean $4,500,000.
"Tranche D Commitment Period" shall mean the period from and including
May 1, 1996 to February 1, 1997.
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"Tranche D Loan" shall have the meaning set forth in Paragraph 2.2(c)
hereof.
"Tranche D Note" shall mean each promissory note of Aris indicated as
such and in substantially the form of Exhibit A to the Fifth Amendment
delivered pursuant to Paragraph 2.2(d) or 6.l(c) hereof."
and (ii) deleting in its entirety the definitions of "Notes" and "Obligations"
contained therein and inserting in lieu thereof the following new definitions to
read as follows:
'"Notes" shall mean, collectively, the Tranche A Note, Tranche B Note,
Tranche C Note and Tranche D Note.
"Obligations" shall mean all obligations, liabilities and indebtedness
(including fees, costs and expenses) now or hereafter owing to Lender or
Agent by Aris under the Tranche A Note, the Tranche B Note, the Tranche C
Note, the Tranche D Note, this Agreement, the Pledge Agreement or any Other
Agreement or any document entered into pursuant hereto or thereto."
3. Amendments to Paragraph 2.2 of the Note Agreement. Paragraph 2.2 of the
Note Agreement is hereby amended by (i) inserting immediately after the word
"Notes" wherever it appears in subparagraph (a) thereof (other than the first
place it appears therein) the parenthetical "(other than the Tranche D Note)",
(ii) deleting subparagraph (b) thereof in its entirety and inserting in lieu
thereof the following new subparagraph (b) to read as follows:
"(b) Aris shall repay Lender (i) the entire outstanding balance of the
Tranche D Note on February 3, 1997 and (ii) the principal amount of the
Notes (other than the Tranche D Note) on the dates and in the amounts set
forth below opposite such dates as follows:
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Amount of Installment
Payment Date Tranche A Note Tranche B Note Tranche C Note
--------------------------------------------------------------------
11/3/94 $ 1,000,000 $ 0 $ 0
6/3/97 4,000,000 0 0
11/3/97 7,000,000 0 0
11/3/98 10,000,000 0 0
11/3/99 10,000,000 0 0
11/3/00 the balance the balance the balance"
and (iii) inserting the following new subparagraphs (c), (d) and (e) at the end
thereof to read as follows:
"(c) Subject to the terms and conditions hereof, Lender agrees to
make loans ("Tranche D Loans") to Borrower from time to time during
the Tranche D Commitment Period solely for the purpose of paying
interest on the Obligations in accordance with the terms hereof in an
aggregate principal amount at any one time outstanding not to exceed
the amount of the Tranche D Commitment. Once repaid Tranche D Loans
may not be reborrowed.
(d) The Tranche D Loans made by Lender to Borrower shall be
evidenced by the Tranche D Note, payable to the order of Lender and in
a principal amount equal to the lesser of (i) the amount of the
initial Tranche D Commitment of Lender and (ii) the aggregate unpaid
principal amount of all Tranche D Loans made by Lender to Borrower.
Lender is hereby authorized to record the date and amount of each
Tranche D Loan made by Lender to Borrower, and the date and amount of
each payment or prepayment of principal thereof on the books and
records of Lender, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded. The
Tranche D Note shall (x) be dated May 1, 1996, (y) be stated to mature
on February 3, 1997 and (z) provide for the payment of interest in
accordance with Paragraph 2.3.
(e) Borrower may borrow under the Tranche D Commitment during the
Tranche D Commitment Period
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on any Business Day, provided, that Borrower shall give the Agent
irrevocable notice (which notice must be received by the Agent prior
to 10:00 A.M., Chicago Time, (a) one Business Day prior to the
requested date of borrowing, specifying (i) the aggregate amount to be
borrowed and (ii) the requested borrowing date which date absent the
consent of Lender must be a Payment Date. Upon receipt of any such
notice from Borrower, Agent shall promptly notify Lender thereof.
Lender will be deemed to have made the amount of each borrowing
available to Borrower by crediting an amount equal to such borrowing
on the requested borrowing date to then due and payable interest on
the Obligations."
4. Amendment to Paraqraph 2.4(a) of the Note Agreement. Paragraph 2.4(a) of
the Note Agreement is hereby amended by deleting such paragraph in its entirety
and inserting in lieu thereof the following new paragraph to read as follows:
"(a) The Notes may be prepaid in whole or in part without fee upon at
least five days' prior written notice to Agent; provided, however, that any
partial prepayment must be in the amount of at least $250,000 and applied
first to the Tranche C Note until payment in full thereof, second to the
Tranche B Note until payment in full thereof, third to the Tranche A Note,
and fourth to the Tranche D Note, in each case toward payment of the
remaining installments of the principal portions thereof in inverse order
of maturity."
5. Amendment to Paraqraph 2.4(e) of the Note Aqreement. Paragraph 2.4(e) of
the Note Agreement is hereby amended by deleting such paragraph in its entirety
and inserting in lieu thereof the following new paragraph to read as follows:
"(e) All mandatory prepayments received by Agent pursuant to Paragraph
2.4(b) or 2.4(c) hereof shall be applied in reduction of the Obligations
first to the Tranche C Note until payment in full thereof, second to the
Tranche B Note until payment in full thereof, third to the Tranche A Note
until payment in full thereof and fourth to the Tranche D Note, in each
case (other than in
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the case of payment of the Tranche D Note) toward payment of the remaining
installments of the principal portions thereof in inverse order of
maturity, and then toward payment of any other Obligations in such order as
Lender may determine."
6. Amendment to Paraqraph 5.7 of the Note Aqreement. Paraqraph 5.7 of the
Note Agreement is hereby amended by deleting such paragraph in its entirety and
inserting in lieu thereof the following new paragraph to read as follows:
"5.7 Financial Covenants. Aris warrants and represents to and
covenants with Lender that, until the Notes are paid in full, Aris, in
accordance with Generally Accepted Accounting Principles, shall:
(a) have Consolidated Working Capital of not less than $25
million as of the end of each Fiscal Year;
(b) have Consolidated EBIT, calculated for purposes of this
subparagraph by taking into account earnings from operations only, of
not less than the amounts set forth below for the preceding four
Fiscal Quarters ending on or closest to the date set forth below:
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Minimum
For Quarter Ended Consolidated EBIT
----------------- -----------------
1/31/96 1,000,000
4/30/96 (635,000)
7/31/96 (426,000)
10/31/96 1,800,000
1/31/97 6,528,000
4/30/97 14,470,000
7/31/97 14,682,000
10/31/97 15,248,000
1/31/98 15,815,000
4/30/98 15,868,000
7/31/98 16,025,000
10/31/98 16,443,000
1/31/99 16,860,000
4/30/99 16,909,000
7/31/99 17,058,000
10/31/99 17,455,000
1/30/00 17,852,000
(c) cause each of Perry and ECI to have EBIT (determined on a
consolidated basis for Perry and its Subsidiary Group and ECI and its
Subsidiary Group), for purposes of this subparagraph by taking into
account earnings from operations only, of not less than the amounts
set forth below for the periods set forth below:
Subsidiary Minimum EBIT Fiscal Year Ending in
---------- ------------ ---------------------
Perry $5,855,000 1996
ECI ($3,000,000) 1996
Perry $5,319,000 1997
ECI $2,805,000 1997
Perry $7,082,000 1998
ECI $8,288,000 1998
Perry $7,372,000 1999
ECI $8,905,000 1999
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Perry $8,021,000 2000
ECI $8,905,000 2000
(d) cause Perry and ECI to have at the end of each Fiscal Year
during the term of this Agreement a Net Worth (determined on a
consolidated basis for Perry and its Subsidiary Group and ECI and its
Subsidiary Group), excluding from the definition of Net Worth for
purposes of this Paraqraph 5.7 (d) any loans from a Significant
Subsidiary to Aris, of not less than the amounts set forth below:
Subsidiary Minimum Net Worth
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Perry $14,024,000
ECI $13,000,000
(e) have Consolidated Net Income of not less than the amounts set
forth below for the periods set forth below:
Minimum Consoli-
dated Net Income Fiscal Year Ending in
---------------- ---------------------
$ (9,000,000) 1996
(1,000,000) 1997
6,864,000 1998
8,672,000 1999
10,828,000 2000
(f) have, as of the end of Fiscal Year end 1996 and Fiscal Year
end 1997 Consolidated Net worth of not less than $(500,000) and
$(1,500,000), respectively, and for each Fiscal Year thereafter set
forth below, Consolidated Net Worth of not less than the sum of (i)
Consolidated Net Worth as of Fiscal Year end 1994 plus (ii) the
amount for such Fiscal Year set forth below:
Amount Fiscal Year End
----------- ---------------
$17,033,000 1998
25,705,000 1999
36,533,000 2000
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(g) maintain on the last day of each Fiscal Year a ratio of
Consolidated Current Assets to Consolidated Current Liabilities of not
less than 1.5 to 1.
(h) not make, or permit any of the Significant Subsidiaries to
make, or commit to make, in any one Fiscal Year, aggregate Capital
Expenditures except Capital Expenditures by Aris and the Significant
Subsidiaries (other than ATB and its Subsidiaries) which do not exceed
$3,000,000 in any Fiscal Year; provided that such Capital Expenditures
in any Fiscal Year may exceed $3,000,000 (i) so long as the average
amount of such Capital Expenditures in each Fiscal Year since the date
of this Agreement does not exceed $3,000,000 and (ii) such Capital
Expenditures do not exceed $5,000,000 in any Fiscal Year; provided
further, that in no event shall Capital Expenditures made in any one
Fiscal Year exceed (x) with respect to ECI and its Subsidiary Group,
$1,500,000 and (y) with respect to Perry and its Subsidiary Group,
$3,500,000. All of the foregoing amounts shall be net of any casualty
insurance proceeds or proceeds of any condemnation, expropriation or
taking by any governmental entity applied to payment of Capital
Expenditures.
(i) have "Fixed Charge Coverage" (defined below) for the twelve
(12) month period ending on the last day of each quarter during the
periods set forth below to be not less than or equal to the amount set
forth below for such period:
Period Amount
-------- -------
1/31/96 .245
4/30/96 .1381
7/31/96 .1426
10/31/96 .3174
1/31/97 .7369
4/30/97 1.00
For purposes of this Paragraph 5.7 (i), 'Fixed Charge Coverage' means,
for any period, (a) EBIDAT
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less (b) the unfinanced portion of Capital Expenditures divided by (c)
Fixed Charges.
'Fixed Charges' means without duplication, for any period, the
following, each calculated for such period: (a) interest expenses;
plus (b) any provisions for (or less any benefit from) income or
franchise taxes included in the determination of Consolidated Net
Income, adjusted for the net change in deferred tax and liability
accounts; plus (c) scheduled payments of principal with respect to all
Indebtedness (including scheduled payments under capital leases) on a
consolidated basis.
'EBIDAT' means, without duplication, for any period, the
following, each calculated for such period: (a) Consolidated Net
Income, plus (b) any provision for (or less any benefit from) income
or franchise taxes included in the determination of Consolidated Net
Income; plus (c) interest expense deducted in the determination of
consolidated Net Income; plus (d) amortization and depreciation
deducted in the detemination of Consolidated Net Income, plus (e)
losses from (or less gains from) asset dispositions or other non-cash
items (excluding sales, expenses or losses related to current assets)
included in the determination of Consolidated Net Income; less (f)
after tax extraordinary gains (or plus after tax extraordinary losses)
in each case as defined under Generally Accepted Accounting
Principles).
For the purposes of this Paraqraph 5.7, (i) EBIT, Consolidated
EBIT, Consolidated Net Worth, Net Worth, Consolidated Net Income,
Consolidated Current Liabilities and Consolidated Liabilities shall be
adjusted to eliminate the effect of (A) any charge to earnings
resulting from any disposition of assets related to any discontinued
business of any Subsidiary of Aris other than a Significant Subsidiary
and to eliminate the effect of any foreign currency translation
adjustment and (B) non-cash extraordinary or non-recurring gains or
losses and non-cash gains or losses on Assets relating to plant
closings, and (ii) all amounts reported for Aris and the Consolidated
Subsidiaries on a consolidated basis shall be
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adjusted to eliminate the effect of ATB and its Subsidiaries.
Compliance with the provisions of this Paraqraph 5.7 for all purposes
of this Agreement (including, without limitation Paraqraph 7.1 hereof)
shall be determined at the time the relevant financial statements are
delivered, or required to be delivered, under Paragraph 5.5 hereof."
7. Amendment to Paragraph 6.1(c) of.the Note Aqreement. Paraqraph 6.1(c) of
the Note Agreement is hereby amended by deleting such paragraph in its entirety
and inserting in lieu thereof the following new paragraph to read as follows:
"(c) Effect of Assignment. Upon receipt by Aris of a notice of
assignment, the Assignee shall, except as otherwise provided in paraqraph
6.1(d) and 6.4(c), have all the rights, duties and obligations of Lender
other than in its capacity as Agent, under this Agreement and the Other
Agreements to the same extent as if it were an original party hereto and
thereto with a share of the applicable Note equal to the share thereof
assigned to such Assignee, whereupon this Agreement shall be deemed amended
to the extent, and only to the extent, necessary to reflect the resulting
adjustment to the share of such Note and the other economic features of
such Note to be made by Lender and such Assignee arising from the
assignment by Lender to such Assignee of all or a portion of the rights and
obligations of Lender under this Agreement and the Other Agreements. Upon
consummation of any transfer to an Assignee pursuant to this Paraqraph 6.1,
and simultaneously with the delivery by Lender to Aris of the applicable
Note or Notes previously held by Lender marked "Superseded," Aris shall
execute and deliver to Lender (i) for delivery to the Assignee, a
promissory note or notes, as the case may be, in the outstanding principal
amount equal to the amount of the Note or Notes, as applicable, to be
assigned to such Assignee, payable to the order of the Assignee and dated
the date such assignment becomes effective, in substantially the form
thereof attached as Exhibit A to this
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Agreement or Exhibit A to the Fifth Amendment, as the case may be, and (ii)
for delivery to Lender and/or Agent, a promissory note in the outstanding
principal amount of each Note to be retained by Lender and/or Agent,
payable to the order of Lender and/or Agent and dated the date such
assignment becomes effective, in substantially the form thereof attached as
Exhibit A to this Agreement or Exhibit A to the Fifth Amendment, as the
case may be."
8. Waivers and Consent. Heller by its signature below hereby (a) waives any
and all Defaults existing under Paraqraphs 5.7(b), (c), (d), (e), (f) and (i) of
the Note Agreement prior to its amendment hereby for any period ending prior to
the date of this Amendment and (b) consents to Aris' incurrence of additional
Indebtedness as a result of interest payments being deferred on and added to
principal of Junior Secured Debt as contemplated by Section 11(c) hereof;
provided, however, that nothing herein shall be deemed to constitute a waiver of
any other Default now existing or hereafter arising under any other provision of
the Note Agreement.
9. Representations and Warranties. Borrower represents and warrants to
Heller that the execution, delivery and performance by Borrower of this
Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action (including, without limitation, any necessary
shareholder approval), have received all necessary approvals and consents of any
governmental entity or other Person (if any shall be required), and do not and
will not contravene or conflict with any provision of law applicable to
Borrower, the Certificate of Incorporation or Bylaws of Borrower, or any order,
judgment or decree of any court or other agency of government or any contractual
obligation binding upon or Indebtedness of Borrower or any Subsidiary thereof;
and the Note Agreement as amended as of the date hereof is the legal, valid and
binding obligation of Borrower enforceable against Borrower in accordance with
its terms.
10. Effectiveness. This Amendment shall become effective as of May 1, 1996
(the "Amendment Effective Date") only upon satisfaction in full in the judgment
of Heller of each of the following conditions on or prior to May 2, 1996:
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(a) Amendment. Heller shall have received two original copies of this
Amendment duly executed and delivered by Heller and Borrower.
(b) Tranche D Note. Borrower shall have executed and delivered to
Heller the Tranche D Note.
(c) Deferred Interest. Heller shall have received a true, complete and
fully executed copy of an amendment and/or waiver to each of the Series A
Junior Secured Note Agreement and the Series B Junior Secured Note
Agreement in each case in form and substance satisfactory to Heller and,
without limiting the foregoing, such amendments and/or waivers shall
provide that all interest on the Junior Secured Debt otherwise due and
payable in arrears with respect to Fiscal Quarters in Fiscal Year 1996 and
the first Fiscal Quarter of Fiscal Year 1997 shall accrue and be due and
payable not earlier than the earlier of (i) November 3, 2002 and (ii) the
first Payment Date (as defined in each of the Series A Junior Secured Note
Agreement and the Series B Junior Secured Note Agreement) occurring after
all the Obligations shall have been indefeasibly paid in full.
(d) Opinion. Heller shall have received an opinion of Herrick,
Feinstein, counsel to Borrower in form and substance satisfactory to
Heller.
(e) Payment of Expenses. Borrower shall have paid to Heller all
costs, fees and expenses owing in connection with this Amendment and the
Other Agreements and due to Heller (including, without limitation,
reasonable legal fees and expenses).
(f) Board Resolutions. A certificate of the Secretary or an Assistant
Secretary of Borrower certifying the resolutions adopted by the Board of
Directors of Borrower approving this Amendment and the transactions
contemplated hereby.
(g) No Default. No Default or Event of Default under the Note
Agreement, as amended hereby, shall have occurred and be continuing.
(h) Warranties and ReDregentations. The warranties and representations
of Borrower contained in this Amendment, the Note Agreement, as amended
hereby, and the Other Agreements, shall be true and correct as of the
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Amendment Effective Date hereof, with the same effect as though made on
such date, except to the extent that such warranties and representations
expressly relate to an earlier date, in which case such warranties and
representations shall have been true and correct as of such earlier date.
In the event that each of the foregoing conditions precedent has not been
satisfied on or prior to May 2, 1996, this Amendment shall become, upon written
notice by Heller to Borrower, null and void and of no force or effect.
11. Miscellaneous.
(a) Captions. Section captions used in this Amendment are for convenience
only, and shall not affect the construction of this Amendment.
(b) Governinq Law. THIS AMENDMENT 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 Amendment shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment 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 Amendment.
(c) Counterparts. This Amendment 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 Amendment 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.
(e) References. Any reference to the Note Agreement contained in any
notice, request, certificate, or other document executed concurrently with or
after the execution and delivery of this
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Amendment shall be deemed to include this Amendment unless the context shall
otherwise require.
(f) Continued Effectiveness. Except as expressly amended herein, the Note
Agreement shall be unmodified and shall continue to be in full force and effect
in accordance with its terms. Notwithstanding anything contained herein, the
terms of this Amendment are not intended to and do not serve to effect a
novation as to the Note Agreement. The parties hereto expressly do not intend to
extinguish the Note Agreement. Instead, it is the express intention of the
parties hereto to reaffirm the Indebtedness created under the Note Agreement
which is evidenced by the Notes and secured by the Collateral. The Note
Agreement as amended hereby and each of the Other Agreements remain in full
force and effect.
(g) Costs, Expenses and Taxes. Borrower affirms and acknowledges that
Paragraph 1.12 of the Note Agreement applies to this Amendment and the
transactions and agreements and documents contemplated hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
ARIS INDUSTRIES, INC
By PAUL SPECTOR
------------------------
Name: Paul Spector
Title: Sr. V.P.
HELLER FINANCIAL, INC., as
Agent and Lender
By DANIEL M. DUFFY
-------------------------
Name: Daniel M. Duffy
Title: Senior Vice President
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EXHIBIT A
to
Fifth Amendment
Senior Secured Note
(Tranche D)
$4,500,000 New York, New York
May 1, 1996
FOR VALUE RECEIVED, the undersigned, ARIS INDUSTRIES, INC., a New York
corporation, ("Borrower"), with its principal executive office at 675 Third
Avenue, New York, New York 10017, promises to pay to the order of HELLER
FINANCIAL, INC., a Delaware corporation ("Lender"), with a place of business
at 500 West Monroe Street, Chicago, Illinois 60661, the principal sum of the
lesser of (a) FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) and (b)
the aggregate unpaid principal amount of all Tranche D Loans made by Lender to
Borrower pursuant to the Note Agreement referred to below, together with
interest thereon, at the times and places and in the manner provided in this
Note and the Note Agreement. All capitalized terms used herein, which are not
defined herein, shall have the meanings ascribed to such terms in the Senior
Secured Note Agreement dated as of June 30, 1993, between Borrower and Lender
(as amended, supplemented or otherwise modified from time to time, the "Note
Agreement").
The date and amount of each Tranche D Loan made by Lender to Borrower and
each payment made on the account of the principal thereof shall be recorded by
Lender on its books, provided that the failure of Lender to make any such
recordation or endorsement shall not affect the obligations of Borrower to make
a payment when due of any amount owing under the Note Agreement or this Note in
respect of the Tranche D Loans made by Lender.
Borrower shall have the right to prepay the principal balance of this Note
only in accordance with and subject to the provisions of the Note Agreement. The
principal balance of this Note is subject to mandatory prepayment by Borrower
as provided in the Note Agreement.
The principal balance of this Note shall bear interest from the date of
this Note, payable quarterly in arrears on each Payment Date following the date
of this Note,
<PAGE>
calculated (on a daily basis for the actual number of days elapsed) on the basis
of a 360-day year at a fluctuating rate per annum equal, except as otherwise
provided below, to 2% per annum above the Prime Rate. Each change in such
fluctuating interest rate is to take effect simultaneously with the
corresponding change in the Prime Rate. Notwithstanding the foregoing, after the
occurrence and during the continuance of an Event of Default, the applicable
interest rate under this Note shall equal 3% per annum above the Prime Rate. All
interest due and owing hereunder shall continue to accrue until all payments due
hereunder are fully and finally paid by Borrower.
Notwithstanding the foregoing or any other provision contained in this
Note, the Note Agreement or any other agreement between Lender and Borrower,
nothing herein contained and nothing contained in any such agreement shall
authorize or permit the exaction or payment of interest by Borrower where the
same would be unlawful or prohibited by any applicable law or would violate the
usury law of any applicable jurisdiction. In any such event, this Note shall
automatically be deemed amended to permit interest charges at any amount equal
to, but no greater than, the maximum amount of such interest charges permitted
by law.
All payments of principal and interest shall be payable not later than
12:01 P.M. (Chicago time) on the day when due by federal wire transfer in
immediately available funds to Agent's account number 55-00540 at The First
National Bank of Chicago, A.B.A. Number 071000013, referencing Heller Corporate
Finance Group, for the benefit of Aris Industries, Inc., or to such account or
accounts as Agent may designate in writing to Borrower.
This Note is a Tranche D Note of Borrower referred to in the Note Agreement
and is entitled to the benefit of all provisions and security contained in the
Note Agreement. Upon and during the continuance of an Event of Default, Lender
may declare the entire unpaid principal balance owed to Lender hereunder to be
forthwith due and-payable, whereupon the same shall-be forthwith due and
payable; provided, however, that upon an Event of Default described in Paragraph
?.l(e), (f) (ii) or (g) of the Note Agreement, without declaration or other
notice by Lender, to or demand by Lender of Borrower, the entire unpaid
principal amount owed to Lender hereunder shall be forthwith due and payable.
Should the indebtedness represented by this Note, or any part thereof, be
collected at law or in equity or in
- 2 -
<PAGE>
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, Borrower agrees to pay, in addition to the principal, interest
and other fees due and payable hereon, attorneys' and collection fees.
Borrower and any endorser hereof, and each of them hereby waive, except to
the extent otherwise provided in the Note Agreement or any Other Agreement,
presentment for payment, notice of dishonor, protest andn otice of protest and
other notices of every kind in connection with this Note. No delay on the part
of the holder hereof in exercising any rights hereunder shall operate as a
waiver of such rights.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE GOVERNED
AND CONTROLLED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED THEREIN.
Attest: ARIS INDUSTRIES, INC.
By: PAUL SPECTOR
------------- --------------------
Title: Sr. Vice President
- 3 -
ARIS INDUSTRIES, INC.
475 Fifth Avenue
New York, New York 10017
May 1, 1996
AIF-II, L.P.
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577
Attention: Robert Katz
Re: Consent Pursuant to Series B Junior Secured Note Aqreement
Gentleman:
Reference is made to the Series B Junior Secured Note Agreement dated June
30, 1993 (the "Note Agreement"; terms defined therein being used herein as
therein defined) between AIF-II, L.P. ("Apollo") and Aris Industries, Inc.
("Aris", formerly known as The Marcade Group, Inc.) and the Series B Junior
Secured Note issued pursuant to the Note Agreement by Aris in favor of Apollo
dated June 30, 1993 in the original principal amount of $7,500,000 (the "Note").
Please indicate the consent of Apollo to the Payment in Kind ("PIK") of the
quarterly interest payments under the Note due for the period through February
3, 1997 whereby such payments will not be made in cash and instead shall be
added to the principal of the Note on the scheduled Payment Dates and shall be
due and payable on November 3, 2002; provided, that, if the Heller Note and all
other obligations owed by Aris to Heller or its successors or assigns pursuant
to the Heller Documents have been indefeasibly paid in full, such additional
principal payments shall be due and payable on the next Payment Date following
such indefeasible payment in full. The Note shall then bear interest on the
increased principal amount. The Note Agreement and the Note are hereby deemed
amended to implement the foregoing.
AGREED AND ACCEPTED: Date: May 3, 1996
AIF-II, L.P.
By: Apollo Advisors, L.P., Very truly yours,
its General Partner
By: Apollo Capital Management, ARIS INDUSTRIES, INC.
Inc., its General Partner
By: ROBERT A. KATZ By: PAUL SPECTOR
---------------------------- -----------------------
Robert A. Katz Paul Spector
Title: Vice President Senior Vice-President
ARIS INDUSTRIES, INC.
475 Fifth Avenue
New York, New York 10017
May 1, 1996
BNY Financial Corporation
1290 Avenue of the Americas
New York, New York 10104
Att: Anthony Marsicano
Re: Consent Pursuant to Series A Junior Secured Note Aqreement
Gentleman:
Reference is made to the Series A Junior Secured Note Agreement dated June
30, 1993 (the "Note Agreement", terms defined therein being used herein as
therein required) between BNY Financial Corporation ("BNY") and Aris
Industries, Inc. ("Aris", formerly known as The Marcade Group, Inc.) and the
Series A Junior Secured Note issued pursuant to the Note Agreement by Aris in
favor of BNY dated June 30, 1993 in the original principal amount of $7,000,000
(the "Note").
Please indicate the consent of BNY to the Payment in Kind ("PIK") of the
quarterly interest payments under the Note due for the period through February
3, 1997 whereby such payments will not be made in cash and instead shall be
added to the principal of the Note on the scheduled Payment Dates of such
quarterly interest and shall be due and payable on the final maturity date of
the Note (November 3, 2002) or any acceleration thereof, provided, that, if the
Heller Note and all other obligations owed by Aris to Heller or its successors
or assigns pursuant to the Heller Documents have been indefeasibly paid in full,
such additional principal amount as was converted from interest to principal
under the Note as provided above, shall be due and payable on the next Payment
Date following such indefeasible payment in full. The Note shall then bear
interest on the increased principal amount. The Note Agreement and the Note are
hereby deemed amended to implement the foregoing, and should BNY so require,
Aris shall execute such allonges to the Note as shall be reasonably required by
BNY to evidence such increase in the principal amount of the Note.
<PAGE>
The foregoing consent of BNY shall be effective upon the execution and
delivery by (1) AIF-II, L.P. of a substantially similar consent and (2) Heller
Financial, Inc. entering into an agreement with Aris to loan Aris the funds
necessary to pay interest due pursuant to the Senior Secured Note Agreement
between Heller and Aris, for the period May 6, 1996 through November 4, 1996
inclusive.
- Very truly yours,
AGREED AND ACCEPTED:
BNY FINANCIAL CORPORATION ARIS INDUSTRIES, INC.
By: DAVID McMULLEN By: PAUL SPECTOR
--------------------- ---------------------
David McMullen Paul Spector
Title: Vice President Senior Vice President
Date: 5/1/96
