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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 1)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ARIS INDUSTRIES, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
040401101
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(Cusip Number)
ROBERT W. FORMAN
SHAPIRO FORMAN & ALLEN LLP
380 MADISON AVENUE
NEW YORK, NEW YORK 10017
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule l3d-l(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /.
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CUSIP NO. 040401101 Page 2 of 6 pages
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1 NAME OF REPORTING PERSON
THE SIMON GROUP LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d)or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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7 SOLE VOTING POWER
NUMBER OF
SHARES 35,574,841
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9,170,204(1)
PERSON ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
35,574,841
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10 SHARED DISPOSITIVE POWER
9,170,204(1)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
44,745,045(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.4%
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14 TYPE OF REPORTING PERSON
CO
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(1) Includes 9,170,204 shares which the Reporting Person sold to unaffiliated
third parties but over which the Reporting Person shares voting and
dispositive authority. The Simon Group LLC disclaims pecuniary interest in
such shares.
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CUSIP No. 040401101 Page 3 of 6 pages
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1
NAME OF REPORTING PERSON
ARNOLD H. SIMON
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d)or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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7 SOLE VOTING POWER
NUMBER OF
SHARES 35,574,841(1)
BENEFICIALLY ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9,170,204(2)
PERSON ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
35,574,841(1)
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10 SHARED DISPOSITIVE POWER
9,170,204(2)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
44,745,045(3)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.4%
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14 TYPE OF REPORTING PERSON
IN
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(1) Represents 35,574,841 shares owned by The Simon Group, LLC, of which Mr.
Simon is the sole managing member.
(2) Represents shares owned by Alpine and Palisades over which the Reporting
Persons have authority to direct the voting and disposition thereof.
(3) Includes 35,574,841 shares owned by The Simon Group, LLC, and 5,882,353
shares and 3,287,851 shares owned by Alpine Peak Partners, LLC ("Alpine")
and Palisades Private Partnership, L.P. ("Palisades"), respectively over
which the Reporting Persons have authority to direct the voting and
disposition thereof. Mr. Simon disclaims pecuniary interest in any of the
foregoing shares except as to his proportionate interest in The Simon
Group, LLC.
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CUSIP No. 040401101 Page 4 of 6 pages
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STATEMENT FOR AMENDED SCHEDULE 13D
This statement amends Items 5, 6 and 7 of the Schedule 13D filed by The
Simon Group, LLC, a New York limited liability company ("SGL"),and Arnold H.
Simon ("Simon" and with SGL the "Reporting Persons"), with respect to the common
stock (the "Common Stock") of Aris Industries, Inc. (the "Issuer"), whose
principal executive office is located at 1411 Broadway, New York, NY.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate percentage of shares of Common Stock owned by the
Reporting Persons is based upon approximately 79,307,234 shares of common stock
and common stock equivalents outstanding as of January 1, 2000. As of the close
of business on January 10, 2000:
SGL directly owns 35,745,045 shares of Common Stock and shares voting and
dispositive power with respect to 9,170,204 shares owned by unaffiliated third
parties, representing, in the aggregate, approximately 56.4% of the shares
outstanding.
(b) By virtue of his position with SGL, Mr. Simon has or shares the power
to vote and dispose of the shares reported in this Schedule 13D.
(c) During the second quarter of 1999, The Simon Group LLC sold 5,882,353
shares and 3,287,851 shares, respectively, to Alpine Peak Partners, LLC
("Alpine") and to Palisades Private Partnership, L.P. ("Palisades"). In
addition, on December 30, 1999, The Simon Group, LLC donated to a charitable
foundation 300,000 shares of the Issuer's common stock allocated to Arnold
Simon.
(d) Not applicable.
(e) Not applicable.
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CUSIP No. 040401101 Page 5 of 6 pages
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Pursuant to the agreements by which SGL sold shares to each of Alpine and
Palisades, SGL retained authority, in certain circumstances, over the voting and
disposition of such shares. See Item 7.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
99.5 Stock Purchase Agreement made as of March 1999 by and
between The Simon Group, LLC and Palisade Private
Partnership, L.P.
99.6 Stock Purchase Agreement made as of the 29th day of
March 1999 by and between The Simon Group, LLC and
Alpine Peak Partners, LLC.
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CUSIP No. 040401101 Page 6 of 6 pages
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: January 10, 2000 THE SIMON GROUP, LLC
By: /s/ ARNOLD H. SIMON
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Arnold H. Simon,
Managing Member
/s/ ARNOLD H. SIMON
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Arnold H. Simon
STOCK PURCHASE AGREEMENT
PURCHASE AGREEMENT, made this ____ day of March, 1999 by and between The
Simon Group, LLC, a New York limited liability company ("Seller") and Palisade
Private Partnership, L.P., a Delaware limited partnership ("Purchaser").
W I T N E S S E T H:
A. Seller owns an aggregate of 45,045,045 shares of common stock, par value
$.01 per Share (the "Common Stock"), and Common Stock Equivalents of Aris
Industries, Inc., a New York corporation (the "Company"), consisting of
24,107,145 shares of Common Stock and 2,093,790 shares of Series A Preferred
Stock, par value $.01 per share (the "Preferred Stock"), which will be
convertible into 20,937,900 shares of Common Stock, for which it paid $20
million pursuant to a Securities Purchase Agreement dated as of February 26,
1999 (the "SPA") by and among Seller, the Company and others named therein.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the SPA.
B. Seller desires to sell 1,759,591 shares of Common Stock and 152,826
shares of Preferred Stock (collectively the "Shares") and Purchaser desires to
purchase the Shares.
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NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, and agreements herein contained, the parties
hereby agrees as follows:
1. Purchase and Sale of the Company Stock.
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, at the Closing (as herein defined), Purchaser shall
purchase, and Seller shall sell the Shares free and clear of all liens,
claims, charges, restrictions, options and encumbrances of any kind or
nature, but subject to the restrictions contained in the Shareholders
Agreement (herein defined) and the other restrictions contained herein.
1.2 Delivery of Certificates; Restrictive Legend. At the Closing,
Seller shall deliver to Purchaser certificates representing the Shares with
stock powers duly endorsed for transfer. The following legend shall be
placed on the certificates representing the Shares:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED WITHOUT
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933 OR
UNDER ANY STATE BLUE SKY OR SECURITIES LAWS IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND BLUE SKY LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION,
OR AN EXEMPTION FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF
SUCH ACTS OR LAWS, OR UNLESS SUCH ACT OR LAWS DO NOT APPLY. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF THE SHAREHOLDERS AGREEMENT, DATED AS OF FEBRUARY 26,
1999, AS AMENDED, INITIALLY AMONG THE ISSUER, THE ORIGINAL HOLDER OF
THIS CERTIFICATE AND THE OTHER SUBJECT SHAREHOLDERS REFERRED TO
THEREIN AND TO A STOCK PURCHASE AGREEMENT DATED MARCH ___, 1999 (THE
"PURCHASE AGREEMENT"). THE SHAREHOLDERS AGREEMENT AND THE PURCHASE
AGREEMENT CONTAIN PROVISIONS RESTRICTING THE TRANSFER OF SECURITIES
EVIDENCED BY THIS CERTIFICATE UNDER CERTAIN CIRCUMSTANCES. SUCH
AGREEMENTS ALSO CONTAIN PROVISIONS REQUIRING THE VOTE
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OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE AS DIRECTED BY OTHER
SHAREHOLDERS.
2. Purchase Price and Payment. The purchase price for the Shares shall be
$2,000,000, which shall be payable at Closing by wire transfer of immediately
available funds to an account designated in writing by Seller.
3. Closing. The Closing of the sale and purchase of the Shares shall take
place at the offices of Shapiro Forman & Allen LLP, 380 Madison Avenue, New
York, New York at 10:00 a.m. on the date that is one business day after Seller
notifies Purchaser that it has certificates representing the Shares for delivery
(the "Closing"). Seller shall use commercially reasonable efforts to obtain such
certificates as promptly as possible.
4. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser as follows:
4.1 Organization, Existence, Qualification and Authority. Seller is a
limited liability company duly organized, validly existing and in good
standing under the laws of New York and has the power and authority to
enter into and perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly and validly authorized by
all requisite company action and this Agreement has been duly executed and
delivered by Seller. Assuming the due execution and delivery by Purchaser,
this Agreement is legal, valid and binding upon Seller in accordance with
its terms subject as to enforcement to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii)
general principles of equity, regardless of whether enforcement is
considered in a proceeding in equity or at law.
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4.2 No Breach or Default. The execution, delivery and performance of
this Agreement by Seller and the consummation of the sale of the Shares
contemplated by this Agreement do not and will not (i) violate Seller's
constitutive documents; (ii) violate any law or regulation applicable to
Seller; or (iii) result in the breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any indenture, mortgage, deed or trust, lease
or sublease, contract or other agreement or instrument to which Seller is a
party or by which it or any of its properties is bound, including, without
limitation, the SPA, the Shareholders Agreement, the Registration Rights
Agreement (herein defined) and any other instruments, documents or
agreements relating to the transactions contemplated thereby.
4.3 Ownership of the Shares. Seller is the sole, true and lawful owner
of the Shares being sold hereby, and holds the Shares free and clear of all
liens, claims, charges, restrictions, options, encumbrances or preemptive
rights of any kind or nature whatsoever and the transfer of the Shares
hereunder at the Closing will vest in Purchaser good and valid title to the
Shares, free and clear of all liens, claims, charges, restrictions,
options, encumbrances or preemptive rights of any kind or nature
whatsoever, but subject to the restrictions contained in the Shareholders
Agreement and the other restrictions contained herein.
4.4 Offering Exemption. Subject to the accuracy of the representations
and warranties of Purchaser set forth under Article 5 of this Agreement,
the offering and sale of the Shares to Purchaser hereunder is exempt from
registration under the Act, pursuant to Section 4(2) thereof, and under
applicable state securities and "blue sky" laws.
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4.5 Transaction Documents. Seller has delivered to Purchaser true and
complete copies of the SPA (including the schedules thereto), the
Shareholders Agreement (the "Shareholders Agreement") and the Equity
Registration Rights Agreement (the "Registration Rights Agreement")
executed and delivered in connection with Seller's investments in the
Company.
5. Representations and Warranties of the Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
5.1 Organization, Existence, Qualification and Authority. Purchaser is
a limited partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and has the power and
authority to enter into and perform its obligations hereunder. The
execution, delivery and performance of this Agreement by Purchaser have
been duly and validly authorized by all requisite company action and this
Agreement has been duly executed and delivered by Purchaser. Assuming the
due execution and delivery by Seller, this Agreement is legal, valid and
binding upon Purchaser in accordance with its terms subject as to
enforcement to (i) bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity,
regardless of whether enforcement is considered in a proceeding in equity
or at law.
5.2 No Breach or Default. The execution, delivery and performance of
this Agreement by Purchaser and the consummation of the purchaser of the
Shares contemplated by this Agreement do not and will not (i) violate
Purchaser's constitutive documents; (ii) violate any law or regulation
applicable to Purchaser; or (iii) result in the breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any indenture,
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mortgage, deed or trust, lease or sublease, contract or other agreement or
instrument to which Purchaser is a party or by which it or any of its
properties is bound.
5.3 Accredited Investor. Purchaser is an "Accredited Investor" as that
term is defined in Section 2(15) of the Act, and Rule 501 of Regulation D
promulgated thereunder. Specifically, Purchaser is an entity in which all
of the equity owners are accredited investors.
5.4 Access to Information. Respecting the Company and its financial
condition and any other matters relating to the Company, Purchaser is not
relying on any information provided to it by Seller or any of its agents,
employees or members including, without limitation, Arnold Simon or David
Fidlon, except as set forth in Section 4.5 hereof.
5.5 Knowledge and Sophistication. (a) Purchaser has such knowledge and
experience in finance, securities, investments and other business matters
so as to be capable of evaluating the merits and risks of the investment
contemplated hereby, and is able to bear the economic risk of such
investment, and, at the present time, is able to afford a complete loss of
such investment.
(b) Purchaser acknowledges that the Shares have not been registered
under the Act and the sale of the Shares is restricted by the Act, the
Shareholders Agreement and the terms hereof.
5.6 Investment Intent. Purchaser is acquiring the Shares for its own
account for investment and not with a view to the sale or distribution
thereof or the granting of any participation therein, and has no present
intention of distributing or selling to others any of such interest or
granting participations therein.
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5.7 Investment Representation Letter. Purchaser has executed the
Investment Representation Letter, attached hereto as Exhibit A.
5.8 Restrictions on Indirect Investments. Purchaser's investment
policies prohibit it from investing in an entity in which a managing member
or general partner receives a "carried interest" (e.g., payments in excess
of pro rata allocations and distributions of profits).
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6. Further Agreements.
6.1 Restrictions on Transfer; Voting; Tag-Along Rights. Under the
terms of the Shareholders Agreement, Seller may not transfer the Shares
unless the transferee grants Seller exclusive dispositive and voting power
with respect to such transferred Shares. In order to comply with such
provisions, Purchaser hereby agrees that it (x) will not transfer any of
the Shares without the prior written consent of the Seller, (y) will sell
the Shares on such terms and conditions as Seller shall direct, provided
that Seller is selling some or all of its Shares simultaneously on the same
terms and conditions, and (z) will vote the Shares on all matters that are
to be voted on, whether or not at an annual or special meeting of
shareholders or by written consent in such manner as Seller shall direct.
To effectuate clause (z), Purchaser shall execute and deliver an
irrevocable proxy in the form attached hereto as Exhibit B in favor of
Seller with respect to the Shares.
6.2 Agreement to be Bound by Shareholders Agreement. Purchaser, as
transferee of the Shares, acknowledges that the transfer of such shares is
restricted by the Shareholders Agreement and hereby (a) acknowledges
receipt of a copy of such Agreement, and (b) agrees to be bound as a
Simon-Affiliated Subject Shareholder by the terms of the Shareholders
Agreement, as the same has been or may be amended from time to time
pursuant to the terms thereof, provided, that, Seller shall not amend,
modify or supplement the Shareholders Agreement in a manner that adversely
affects Purchaser's rights or obligations thereunder without Purchaser's
prior written consent (which consent will not be unreasonably withheld).
Notwithstanding the foregoing, in the event of a Simon Indirect Transfer
involving, or the liquidation of, Purchaser, Purchaser and Seller shall
cooperate with one another and use commercially reasonable efforts to
enable Purchaser to make such Indirect Transfer or Liquidation without
triggering the Non-Simon
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Subject Shareholders' Tag-Along Rights under Section 6.2 of the
Shareholders Agreement, if such rights are applicable, provided however
that such transferees shall be bound by, and receive the benefits of, this
Agreement and the Shareholders Agreement.
6.3 Participation in Seller's Demand Registration Rights; Tag-Along
Rights and Right of First Offer. In the event Seller exercises its demand
registration rights under the Equity Registration Rights Agreement, it
shall afford Purchaser the right to include in any such registration
statement such number of Shares as equal the number of Shares to be
registered multiplied by a fraction ("Purchaser's Pro Rata Share"), the
numerator of which is the number of Shares then owned by Purchaser, and the
denominator of which is the total number of Shares then owned by
Simon-Affiliated Subject Shareholders. In the event Seller proposes to sell
shares of the Company's Common Stock in a transaction that would give rise
to Tag-Along Transfer Rights to Apollo under the Shareholders Agreement,
Purchaser shall have the same Tag-Along Rights as if it were a "Non-Simon
Subject Shareholder" within the meaning of the Shareholders Agreement. In
the event Seller exercises its "Right of First Offer" under the
Shareholders Agreement, Purchaser shall have the right to purchase from
Seller, upon the same terms and conditions on which it purchases the Shares
pursuant to such First Offer Rights, Purchaser's Pro Rata Share of the
number of Shares purchased by Seller.
6.4 Right to Participate in Indemnification Claims. In the event Simon
commences, and prevails upon, any claim for indemnification under the SPA,
Purchaser shall be entitled to receive 10% of the amount recovered by Simon
less expenses incurred in seeking such indemnification but not reimbursed
by the Company, provided, however, to be entitled to participate in such
recovery, Purchaser shall have agreed to bear 10% of the expenses incurred
by Seller and not
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reimbursed to pursue its claims under the SPA. Prior to bringing a claim
for indemnification, Seller shall inform Purchaser of the nature or basis
of such claim and provide it such information as it may reasonably request.
7. General Matters.
7.1 Survival of Representations and Warranties. All representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement notwithstanding any investigation at any time
made by or on behalf of any party or parties hereto.
7.2 Notices, etc. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by telecopier (with a confirmed receipt thereof), on the next
business day when sent by overnight courier service or three days after
mailing when sent by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
If to Seller to:
The Simon Group, LLC
1385 Broadway
New York, New York 10018
Attention: Arnold Simon
Facsimile No.: 212-642-4265
With a copy to:
Robert W. Forman, Esq.
Shapiro Forman & Allen LLP
380 Madison Avenue
New York, New York 10017
Facsimile No.: 212-557-1275
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If to Purchaser to:
Mark Hoffman
Palisades Private Partnership, LP
One Bridge Plaza
Fort Lee, New Jersey 07024
Facsimile No.: 201-585-7552
With a copy to:
Stephen J. Gulotta, Jr., Esq.
Squadron Ellenoff Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York, 10176
Facsimile No.: 212-697-6686
7.3 Further Assurances. Subject to the provisions of this Agreement,
the parties will take, or cause to be taken all action, and do, or cause to
be done, all things reasonably necessary or proper to consummate and make
effective the transactions contemplated by this Agreement.
7.4 Modification; Termination. This Agreement may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought.
7.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any other prior instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
7.6 Governing Law; Jurisdiction; Legal Fees. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York, without giving effect to the conflict of laws and provisions thereof.
The parties hereto irrevocably consent to the jurisdiction of the courts of
the State of New York and of any Federal court located in such state in
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connection with any action or proceeding arising out of or relating to this
Agreement, or the transaction contemplated hereby. In any such action or
proceeding, each party hereto waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 7.2. In the event of any dispute, as part of any
judgment, the party substantially prevailing in its claims or defense shall
be entitled to its reasonable attorneys fees, costs, disbursements and
expert witness fees.
7.7 Counterparts. This Agreement may be executed in counterparts, each
of which is an original but all of which shall constitute one instrument.
7.8 Severability. If any provision of this Agreement shall be
prohibited under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE SIMON GROUP, LLC
By: /s/ ARNOLD SIMON
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Arnold Simon
Managing Member
PALISADE PRIVATE PARTNERSHIP, LP
By: /s/
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STOCK PURCHASE AGREEMENT
PURCHASE AGREEMENT, made as of the 29th day of March, 1999 by and between
The Simon Group, LLC, a New York limited liability company ("Seller") and Alpine
Peak Partners, LLC, a California limited liability company ("Purchaser").
W I T N E S S E T H:
A. Seller owns an aggregate of 41,757,194 shares of common stock, par value
$.01 per Share (the "Common Stock"), of Aris Industries, Inc., a New York
corporation (the "Company"), which it purchased pursuant to a Securities
Purchase Agreement dated as of February 26, 1999 (the "SPA") by and among
Seller, the Company and others named therein. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the SPA.
B. Seller desires to sell 5,882,353 shares of Common Stock (the "Shares")
and Purchaser desires to purchase the Shares.
C. Purchaser has previously deposited the Purchase Price with the Seller.
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NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, and agreements herein contained, the parties
hereby agrees as follows:
1. Purchase and Sale of the Company Stock.
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, as of the Closing (as herein defined), Purchaser shall purchase,
and Seller shall sell the Shares free and clear of all liens, claims, charges,
restrictions, options and encumbrances of any kind or nature, but subject to the
restrictions contained in the Shareholders Agreement (herein defined) and the
other restrictions contained herein.
1.2 Delivery of Certificates; Restrictive Legend. At the Closing, Seller
shall deliver to Purchaser certificates representing the Shares with stock
powers duly endorsed for transfer. The following legend shall be placed on the
certificates representing the Shares:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY STATE BLUE SKY OR SECURITIES LAWS IN RELIANCE
UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND BLUE SKY LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH ACTS OR LAWS,
OR UNLESS SUCH ACT OR LAWS DO NOT APPLY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF
THE SHAREHOLDERS AGREEMENT, DATED AS OF FEBRUARY 26, 1999, AS
AMENDED, INITIALLY AMONG THE ISSUER, THE ORIGINAL HOLDER OF THIS
CERTIFICATE AND THE OTHER SUBJECT SHAREHOLDERS REFERRED TO
THEREIN AND TO A STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29,
1999 (THE "PURCHASE AGREEMENT"). THE SHAREHOLDERS AGREEMENT AND
PURCHASE AGREEMENT CONTAIN PROVISIONS RESTRICTING THE TRANSFER OF
SECURITIES EVIDENCED BY THIS CERTIFICATE UNDER CERTAIN
CIRCUMSTANCES. SUCH AGREEMENTS ALSO CONTAINS PROVISIONS REQUIRING
THE VOTE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IN FAVOR
OF
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INDIVIDUALS NOMINATED TO THE BOARD OF DIRECTORS OF THE
CORPORATION BY OTHER SUBJECT SHAREHOLDERS REFERRED TO THEREIN
UNDER CERTAIN CIRCUMSTANCES. A COPY OF SUCH SHAREHOLDERS
AGREEMENT MAY BE OBTAINED FROM THE ISSUER WITHOUT CHARGE.
2. Purchase Price and Payment. The purchase price for the Shares shall be
$4,000,000, which has been paid previously.
3. Closing. The Closing of the sale and purchase of the Shares shall take
place at the offices of Shapiro Forman & Allen LLP, 380 Madison Avenue, New
York, New York on the date hereof (the "Closing"). As promptly as practicable
following Closing, Seller shall cause a Certificate for the Shares to be
delivered to Purchaser.
4. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser as follows:
4.1 Organization, Existence, Qualification and Authority. Seller is a
limited liability company duly organized, validly existing and in good standing
under the laws of New York and has the power and authority to enter into and
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all requisite company
action and this Agreement has been duly executed and delivered by Seller.
Assuming the due execution and delivery by Purchaser, this Agreement is legal,
valid and binding upon Seller in accordance with its terms subject as to
enforcement to (i) bankruptcy, insolvency, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or affecting
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creditors' rights generally and (ii) general principles of equity,
regardless of whether enforcement is considered in a proceeding in equity
or at law.
4.2 No Breach or Default. The execution, delivery and performance of
this Agreement by Seller and the consummation of the sale of the Shares
contemplated by this Agreement do not and will not (i) violate Seller's
constitutive documents; (ii) violate any law or regulation applicable to
Seller; or (iii) result in the breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or termination) under, any of the terms,
conditions or provisions of any indenture, mortgage, deed or trust, lease
or sublease, contract or other agreement or instrument to which Seller is a
party or by which it or any of its properties is bound, including, without
limitation, the SPA, the Shareholders Agreement, the Registration Rights
Agreement (herein defined) and any other instruments, documents or
agreements relating to the transactions contemplated thereby.
4.3 Ownership of the Shares. Seller is the sole, true and lawful owner
of the Shares being sold hereby, and holds the Shares free and clear of all
liens, claims, charges, restrictions, options, encumbrances or preemptive
rights of any kind or nature whatsoever and the transfer of the Shares
hereunder at the Closing will vest in Purchaser good and valid title to the
Shares, free and clear of all liens, claims, charges, restrictions,
options, encumbrances or preemptive rights of any kind or nature
whatsoever, but subject to the restrictions contained in the Shareholders
Agreement and the other restrictions contained herein.
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4.4 Offering Exemption. Subject to the accuracy of the representations
and warranties of Purchaser set forth under Article 5 of this Agreement, the
offering and sale of the Shares to Purchaser hereunder is exempt from
registration under the Act, pursuant to Section 4(2) thereof, and under
applicable state securities and "blue sky" laws.
4.5 Transaction Documents. Seller has delivered to Purchaser true and
complete copies of the SPA (including the schedules thereto), the Shareholders
Agreement (the "Shareholders Agreement") and the Equity Registration Rights
Agreement (the "Registration Rights Agreement") executed and delivered in
connection with Seller's investments in the Company.
5. Representations and Warranties of the Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
5.1 Organization, Existence, Qualification and Authority. Purchaser is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and has the power and authority to
enter into and perform its obligations hereunder. The execution, delivery and
performance of this Agreement by Purchaser have been duly and validly authorized
by all requisite company action and this Agreement has been duly executed and
delivered by Purchaser. Assuming the due execution and delivery by Seller, this
Agreement is legal, valid and binding upon Purchaser in accordance with its
terms subject as to enforcement to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting creditors= rights generally and (ii) general principles of equity,
regardless of whether enforcement is considered in a proceeding in equity or at
law.
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5.2 No Breach or Default. The execution, delivery and performance of
this Agreement by Purchaser and the consummation of the purchaser of the Shares
contemplated by this Agreement do not and will not (i) violate Purchaser's
constitutive documents; (ii) violate any law or regulation applicable to
Purchaser; or (iii) result in the breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or termination) under, any of the terms, conditions or
provisions of any indenture, mortgage, deed or trust, lease or sublease,
contract or other agreement or instrument to which Purchaser is a party or by
which it or any of its properties is bound.
5.3 Accredited Investor. Purchaser is an "Accredited Investor" as that
term is defined in Section 2(15) of the Act, and Rule 501 of Regulation D
promulgated thereunder. Specifically, Purchaser is an entity in which all of the
equity owners are accredited investors.
5.4 Access to Information. Respecting the Company and its financial
condition and any other matters relating to the Company, Purchaser is not
relying on any information provided to it by Seller or any of its agents,
employees or members including, without limitation, Arnold Simon or David
Fidlon, except as set forth in Section 4.5 hereof.
5.5 Knowledge and Sophistication. (a) Purchaser has such knowledge and
experience in finance, securities, investments and other business matters so as
to be capable of evaluating the merits and risks of the investment contemplated
hereby, and is able to bear the economic risk of such investment, and, at the
present time, is able to afford a complete loss of such investment.
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(b) Purchaser acknowledges that the Shares have not been
registered under the Act and the sale of the Shares is restricted by
the Act, the Shareholders Agreement and the terms hereof.
5.6 Investment Intent. Purchaser is acquiring the Shares for its own
account for investment and not with a view to the sale or distribution thereof
or the granting of any participation therein, and has no present intention of
distributing or selling to others any of such interest or granting
participations therein.
5.7 Restrictions on Indirect Investments. Purchaser's stated investment
policies prohibit it from becoming a member in a limited liability company.
6. Further Agreements.
6.1 Restrictions on Transfer; Voting; Tag-Along Rights. Under the terms
of the Shareholders Agreement, Seller may not transfer the Shares unless the
transferee grants Seller exclusive dispositive and voting power with respect to
such transferred Shares. In order to comply with such provisions, Purchaser
hereby agrees that it (x) will not transfer any of the Shares without the prior
written consent of the Seller, (y) will sell such number of Shares to a third
party purchaser(s) or its Affiliates (which, in each case, is not an affiliate
of Simon or any of Simon's Affiliates either before or after such proposed
transaction) on such terms and conditions as Seller shall direct, provided that
Seller is selling an equal percentage of the Shares owned by it and its
affiliates simultaneously on the same terms and conditions, and (z) will vote
the Shares on all matters that are to be voted on, whether or not at an annual
or special meeting of shareholders or by
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written consent in such manner as Seller shall direct. To effectuate clause (z),
Purchaser shall execute and deliver an irrevocable proxy in the form attached
hereto in favor of Seller with respect to the Shares.
6.2 Agreement to be Bound by Shareholders Agreement. Purchaser, as
transferee of the Shares, acknowledges that the transfer of such shares is
restricted by the Shareholders Agreement and hereby (a) acknowledges receipt of
a copy of such Agreement, and (b) agrees to be bound as a Simon-Affiliated
Subject Shareholder by the terms of the Shareholders Agreement, as the same has
been or may be amended from time to time pursuant to the terms thereof.
6.3 Participation in Seller's Demand Registration Rights; Tag-Along
Rights and Right of First Offer. In the event Seller exercises its demand
registration rights under the Equity Registration Rights Agreement, it shall
afford Purchaser the right to include in any such registration statement such
number of Shares as equal the number of Shares to be registered multiplied by a
fraction ("Purchaser's Pro Rata Share"), the numerator of which is the number of
Shares then owned by Purchaser, and the denominator of which is the total number
of Shares then owned by Simon-Affiliated Subject Shareholders. In the event
Seller proposes to sell shares of the Company's Common Stock in a transaction
that would give rise to Tag-Along Transfer Rights to Apollo under the
Shareholders Agreement, Purchaser shall have the same Tag-Along Rights as if it
were a "Non-Simon Subject Shareholder" within the meaning of the Shareholders
Agreement. In the event Seller exercises its "Right of First Offer" under the
Shareholders Agreement, Purchaser
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shall have the right to purchase from Seller, upon the same terms and conditions
on which it purchases the Shares subject to such First Offer Rights, Purchaser's
Pro Rata Shares of the number of Shares purchased by Seller.
6.4 Right to Participate in Indemnification Claims. In the event Simon
commences, and prevails upon, any claim for indemnification under the SPA,
Purchaser shall be entitled to receive 20% of the net amount recovered by Simon,
after expenses incurred in seeking such indemnification but not reimbursed by
the Company, provided, however, to be entitled to participate in such recovery,
Purchaser shall have agreed to bear 20% of the expenses incurred by Seller and
not reimbursed to pursue its claims under the SPA. Prior to bringing a claim for
indemnification, Seller shall inform Purchaser of the nature or basis of such
claim and provide it such information as it may reasonably request.
7. General Matters.
7.1 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement notwithstanding any investigation at any time made by or on
behalf of any party or parties hereto.
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7.2 Notices, etc. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by telecopier (with a confirmed receipt thereof), on the next business
day when sent by overnight courier service or three days after mailing when sent
by registered or certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Seller to:
The Simon Group, LLC
1411 Broadway
New York, New York 10018
Attention: Arnold Simon
Facsimile No.: 212-642-4265
With a copy to:
Robert W. Forman, Esq.
Shapiro Forman & Allen LLP
380 Madison Avenue
New York, New York 10017
Facsimile No.: 212-557-1275
If to Purchaser to:
Gerard Guez
Alpine Peak Partners, LLC
3151 East Washington Blvd.
Los Angeles, California 90027
Facsimile No.: 323 881-0383
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With copies to:
Richard E. Troop, and Julie Kaufer
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Facsimile No.: 310 728-2201
7.3 Further Assurances. Subject to the provisions of this Agreement, the
parties will take, or cause to be taken all action, do, or cause to be done, all
things reasonably necessary of proper to consummate and make effective the
transactions contemplated by this Agreement.
7.4 Modification; Termination. This Agreement may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
7.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any other prior instruments purporting to be an agreement
of the parties hereto relating to the subject matter hereof.
7.6 Governing Law; Jurisdiction; Legal Fees. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to the conflict of laws and provisions thereof. The
parties hereto irrevocably consent to the jurisdiction of the courts of the
State of New York and of any Federal court located in such state in connection
with any action or proceeding arising out of or relating to this Agreement, or
the
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transaction contemplated hereby. In any such action or proceeding, each party
hereto waives personal service of any summons, complaint or other process and
agrees that service thereof may be made in accordance with Section 7.2. In the
event of any dispute, as part of any judgment, the party substantially
prevailing in its claims or defense shall be entitled to its reasonable
attorneys fees, costs, disbursements and expert witness fees.
7.7 Counterparts. This Agreement may be executed in counterparts, each
of which is an original but all of which shall constitute one instrument.
7.8 Severability. If any provision of this Agreement shall be prohibited
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE SIMON GROUP, LLC
By: /s/ ARNOLD SIMON
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Arnold Simon
Managing Member
ALPINE PEAK PARTNERS, LLC
By: /s/ GERARD GUEZ
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Gerard Guez
Managing Member
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