EXHIBIT 10.109
ARIS INDUSTRIES, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 9, 1997
BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxxx Xxxxxxxxx
AIF-II, L.P.
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577
Attention: Xxxxxx Xxxx
Re: Amendment to Series A and Series B Junior Secured Note Agreements
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Gentlemen:
Reference is made to (1) the Series A Junior Secured Note Agreement dated
June 30, 1993 (the "BNY Note Agreement") between BNY Financial Corporation
("BNY") and Aris Industries, Inc. ("Aris," a New York corporation formerly known
as The Marcade Group, Inc.) and the Series A Junior Secured Note issued pursuant
to the BNY Note Agreement by Aris in favor of BNY dated June 30, 1993 in the
original principal amount of $7,000,000 (the "BNY Note"); (2) the Series B
Junior Secured Note Agreement dated June 30, 1993 (the "Apollo Note Agreement";
terms defined therein being used herein as therein defined) between AIF-II, L.P.
("Apollo") and Aris and the Series B Junior Secured Note issued pursuant to the
Apollo Note Agreement by Aris in favor of Apollo dated June 30, 1993 in the
original principal amount of $7,500,000 (the "Apollo Note"), and (3) the Amended
and Restated Senior Secured Note Agreement dated September 30, 1996 as amended
(the "Xxxxxx Note Agreement") between Xxxxxx Financial, Inc.("Xxxxxx") and Aris
and the Interest Note issued pursuant to the Xxxxxx Note Agreement by Aris in
favor of Xxxxxx dated September 30, 1996 in the original principal amount of
$1,000,000(the "Xxxxxx Note"); (4) the Intercreditor Agreement
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dated as of June 30, 1993 among Xxxxxx, Apollo and BNY and other holders and
representatives of the Primary Debt and the Secondary Debt referred to therein
(the "Intercreditor Agreement"), and (5) the Secondary Pledge Agreement entered
into as of June 30, 1993 between Aris and BNY, as collateral agent for BNY and
Apollo (the "Pledge Agreement"); the Apollo Note Agreement, the Apollo Note, the
BNY Note Agreement and the BNY Note, together with the Pledge Agreement and all
related agreements, instruments and documentation, in each case as amended and
supplemented, is referred to herein collectively as the "1993 Junior Loan
Documentation". All initially capitalized terms utilized herein and defined in
any of the 1993 Junior Loan Documentation, but which are not defined herein,
shall have the meaning specified in such 1993 Junior Loan Documentation. In
connection with the items described in this letter, each of the undersigned
hereby confirm the following matters:
1. Repayment of All Xxxxxx Obligations and Primary Debt, including without
limitation, the Xxxxxx Note. Aris hereby additionally covenants under each of
the Junior Secured Note Agreements and in favor of BNY and Apollo that on or
before January 31, 1998 (and the date as of which such repayment in full to
Xxxxxx actually occurs within this period of time, is herein referred to as the
"Xxxxxx Repayment Date"), Aris shall repay in full to Xxxxxx all Xxxxxx
Obligations and Primary Debt, including without limitation, all principal of and
accrued interest on the Xxxxxx Note. Aris hereby further confirms that a breach
of such covenant additionally constitutes an Event of Default under each of said
Junior Secured Note Agreements, without the need for any notice or other
formality and that no cure period shall be applicable thereto. Apollo and BNY
nevertheless agree that the Pledge Agreement and the terms and provisions of the
Intercreditor Agreement among the Holders of Secondary Debt (including without
limitation Section 3.9 thereof), shall not be changed, limited or otherwise
adversely affected by this letter, the Xxxxxx Repayment Date occurring or
otherwise.
2. BNY/Apollo Lien on ECI Stock. Following repayment in full of all Xxxxxx
Obligations and Primary Debt, including without limitation, the Xxxxxx Note, BNY
and Apollo will share a first Lien free and clear of any Liens or claims,
including without limitation of Xxxxxx, on the stock of Europe Craft Imports,
Inc.("ECI"), a wholly-owned subsidiary of Aris, as well as any Lien on any other
assets of Aris to which they would be entitled pursuant to the terms and
conditions of the Pledge Agreement and the Intercreditor Agreement (including
without limitation Section 3.9 thereof), each of which agreements shall remain
in full force and effect among the holders of Secondary Debt following the
Xxxxxx Repayment Date. Apollo and BNY each hereby represent and warrant to the
other, that as of the Xxxxxx Repayment Date, the principal amount of all of the
Apollo Obligations and all of the BNY Obligations which is entitled to
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pari passu/pro rata treatment pursuant to the terms of the 1993 Junior Loan
Documentation applicable thereto is $10,001,653 and $8,027,087 respectively.
3. Payment in Kind of Interest. The scheduled interest accruing under the
BNY Note and the Apollo Note for the period February 1, 1997 through January 31,
1998 will be made by Payment in Kind ("PIK") whereby such payments will not be
made in cash and instead shall be added to the principal of the BNY Note and the
Apollo Note, respectively, on the scheduled Payment Dates. Such interest Paid in
Kind as well as the scheduled interest accrued under the BNY Note and the Apollo
Note for the period February 1, 1996 through January 31, 1997 (and under the
Apollo Note for the period November 1, 1995 through January 31, 1996) which had
been Paid in Kind, shall be due and payable on November 3, 2002 or on any
acceleration of the BNY Note or the Apollo Note, as the case may be, pursuant to
the respective terms and conditions thereof. From and after any Payment Date on
which a PIK of interest is made, the BNY Note and Apollo Note, respectively,
shall then bear interest on the increased principal amount.
4. Deferral of 1997 Principal Payment. The principal payment on the BNY
Note of $300,000 otherwise due November 3, 1997 shall be rescheduled and paid in
quarterly installments of $15,000 each on the last day of each calendar quarter,
commencing with a payment on December 31, 1997, with any remaining balance due
on November 3, 2002 or on any acceleration thereof pursuant to the terms and
conditions of the BNY Note Agreement. All other scheduled principal payments
under the BNY Note, as well as scheduled principal payments under the Apollo
Note, will remain unchanged. Should BNY require, Aris agrees to execute and
deliver to BNY such allonge(s) as BNY may reasonably require to evidence
Obligations under the BNY Note as amended and supplemented or should BNY so
require, an Amended and Restated BNY Note Agreement and BNY Note for this
purpose; in such event, Aris shall also execute and deliver to Apollo comparable
allonge(s) or an Amended and Restated Apollo Note Agreement and Apollo Note to
evidence Obligations under the Apollo Note as amended and supplemented.
5. Resumption of Scheduled Interest Payments. Scheduled interest under the
BNY Note and Apollo Note accruing for periods commencing February 1, 1998 will
be made in cash on quarterly Payment Dates commencing May 4, 1998.
6. Xxxxxx Consent and Agreement. By its signature below, Xxxxxx hereby (i)
consents to the amendment to the 1993 Junior Loan Documentation pursuant to this
Amendment; (ii) confirms that upon written request of Apollo or BNY, it will
advise Apollo or BNY, as the case may be, whether the Xxxxxx Repayment Date has
occurred; and (iii) confirms that on the Xxxxxx Repayment Date: (a) the Primary
Pledge Agreement and the
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security interest of Xxxxxx in the Pledged Collateral (as defined therein) shall
terminate pursuant to Section 12 thereof, (b) the Xxxxxx Note Agreement shall
terminate except for the indemnification provisions of Section 5 thereof, (c)
pursuant to Section 3.5(f) of the Intercreditor Agreement, Xxxxxx shall deliver
possession of the Shared Collateral (as defined therein) then in its possession
to the Secondary Collateral Agent or as otherwise ordered by a court, and (d)
Xxxxxx'x rights under the Intercreditor Agreement shall terminate subject to the
reinstatement provisions of Section 2.10 thereof. Nothing set forth in this
paragraph shall be deemed to be an amendment, modification or waiver by Xxxxxx
of any term or provision of the Xxxxxx Note Agreement, the Intercreditor
Agreement, the Xxxxxx Note, the Primary Pledge Agreement, the Warrant or any
other Reorganization Document (as such terms are defined in the Xxxxxx Note
Agreement). By its signature below, Xxxxxx shall be deemed a party to this
Amendment for purposes of this paragraph 6 only; provided that prior to the
Xxxxxx Repayment Date, this Amendment may not be amended or modified in any
respect without the prior written consent of Xxxxxx.
7. The 1993 Junior Loan Documentation is hereby deemed amended to the
extent of the foregoing. Except to the extent herein set forth, no changes to
any of the 1993 Junior Loan Documentation is intended or implied and the 1993
Junior Loan Documentation, modified in accordance with this agreement, is hereby
ratified and affirmed in all respects.
8. Aris confirms the foregoing and also: (a) that the Xxxxxx Repayment Date
shall also constitute the Transfer Date pursuant to Section 4 of the Pledge
Agreement, whereupon the Primary Collateral Agent shall transfer all Shared
Collateral, including without limitation, all instruments and stock certificates
representing the Pledged Collateral, together with stock powers duly executed in
blank by Aris, in its possession to the Secondary Collateral Agent; (b) that
Aris has not granted any Lien(s) or rights upon or with respect to any Shared
Collateral to any person or entity (other than Xxxxxx); and (c) that all of the
Pledged Collateral originally delivered to Xxxxxx by Aris in relation to
Xxxxxx'x Primary Pledge Agreement remain and shall remain in Xxxxxx'x possession
through the Xxxxxx Repayment Date, including without limitation, the shares of
ECI delivered to Xxxxxx upon execution of the Primary Pledge Agreement. Each of
the undersigned (except Xxxxxx) also agree to take such further action and to
execute and deliver such additional agreements, instruments and documents, as
may be necessary or desirable in connection with the implementation of any of
the matters set forth herein.
9. The foregoing amendments shall be effective upon the execution and
delivery of this Amendment by BNY, Apollo and Aris. This Amendment may be
executed in any number of counterparts, each of which shall be an original and
all of
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which shall together constitute one and the same instrument. All signatures need
not be on the same counterpart.
Very truly yours,
AGREED AND ACCEPTED:
ARIS INDUSTRIES, INC.
BNY FINANCIAL CORPORATION
By: /s/ Xxxx Xxxxxxx
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By: /s/ Xxxxxxx X. Xxxxxxxx Xxxx Xxxxxxx
--------------------------- Senior Vice President
Title: Ass't. Vice President
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Dated: September 12, 1997
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Date: September 12, 1997
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AIF-II, L.P.
By: Apollo Advisors, L.P., XXXXXX FINANCIAL, INC.
its General Partner
By: Apollo Capital Management, By: /s/ Xxxxxxxx X. Xxxxx
Inc., its General Partner -----------------------------
Title: Vice President
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By: /s/ Xxxxxx X. Xxxxx
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Date: September 12, 1997
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Title: Vice President
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Date: September 12, 1997
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