Shareholders Agreement

EXHIBIT 10.106


SHAREHOLDERS AGREEMENT


SHAREHOLDERS AGREEMENT made as of July 15, 1997 (this "Agreement") by and among DAVCO INDUSTRIES, INC., a New York corporation having its principal office at 350 Fifth Avenue, New York, New York 10118 (hereinafter referred to as, "Davco"), STEVEN ARNOLD, an individual residing at 68 Boulder Ridge Road, Scarsdale, New York 10583 ("SA"), CHRISTOPHER HEALY, an individual residing at 11 Iron Gate Hill, Westport, Connecticut 06880 ("CH") (SA and CH being the owners of all of the outstanding capital stock of Davco and hereinafter collectively referred to as, the "Davco Principals"), ARIS MANAGEMENT CORP., a New York corporation having an address at 475 Fifth Avenue, New York, New York 10017 (hereinafter referred to as "AMC") and ARIS INDUSTRIES, INC., a New York corporation having an address at 475 Fifth Avenue, New York, New York 10017 (hereinafter referred to as "Aris");


WHEREAS, Davco, the Davco Principals, and AMC (an indirect subsidiary of Aris) have entered into an Asset Purchase Agreement dated as of July 15, 1997 (the "Asset Purchase Agreement") providing for the sale by Davco to AMC of the Purchased Assets including the Davco Apparel Business (both as defined in the Asset Purchase Agreement) and the goodwill thereof as a going concern, its corporate and trade names and its trademark licenses, and the closing under the Asset Purchase Agreement has occurred on the date hereof (the "Closing Date");


WHEREAS, the purchase price payable AMC to Davco pursuant to the Asset Purchase Agreement includes THREE MILLION (3,000,000) shares of the Common Stock, par value $.01 per share, of Aris ("Aris Common Stock") delivered on the Closing Date(such shares of Aris Common Stock delivered to Davco pursuant to the Asset Purchase Agreement referred to herein as the "Shares");


WHEREAS, it is a closing condition under the Asset Purchase Agreement that Davco and the Davco Principals enter into this Agreement providing for certain restrictions on the transfer of the Shares; and


WHEREAS, APOLLO ARIS PARTNERS, L.P., a Delaware limited partnership, having an address c/o Apollo Advisors, L.P., Two Manhattanville Road, Purchase, New York 10577 (hereinafter referred to as "Apollo") and CHARLES S. RAMAT, an individual residing at 1185 Park Avenue, New York, New York 10028 ("CSR") are each shareholders of Aris and shall be the beneficiaries of certain provisions of this Agreement;


NOW, THEREFORE, in consideration of the foregoing and of AMC's entering into the Asset Purchase Agreement, the mutual agreements and covenants herein contained, and other good and


valuable consideration the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto HEREBY AGREE AS FOLLOWS:


1. Applicability of Restrictions of this Agreement. The restrictions
and other provisions set forth in this Agreement with respect to the Shares
shall apply to the Shares as held of record and/or beneficially by Davco
and the Davco Principals, and shall continue to apply in full force and
effect notwithstanding any distribution, transfer or assignment of Shares
at any time from Davco to the Davco Principals and notwithstanding the
liquidation, dissolution or winding up of Davco. Davco and the Davco
Principals shall notify Aris in writing at least ten (10) days in advance
of any distribution, transfer or assignment from Davco to any of the Davco
Principals specifying the details of the number of shares being transferred
and the transferee thereof. The restrictions and other provisions set forth
in this Agreement with respect to the Shares shall also apply to all equity
securities of Aris which may be issued, distributed to, or exchanged with
Davco or the Davco Principals, in respect of the Shares, including those
resulting from reclassification, recapitalization, combinations or
exchanges of shares, reorganizations, liquidations, split-ups,
distributions of a dividend payable in stock, changes in par value, or
shares resulting from any merger, consolidation, or sale or exchange of
shares or assets of Aris.


2. Representations, Warranties and Covenants of Davco and Davco
Principals. Davco and the Davco Principals, jointly and severally,
represent and warrant unto and covenant and agree with AMC and Aris, and
such representations, warranties, covenants and agreements are material
inducements to AMC and Aris entering into this Agreement and AMC entering
into the Asset Purchase Agreement:


(a) Davco and the Davco Principals acknowledge and agree that no
assurances or representations are made by AMC or Aris as to the
present or future market value of the Shares of Aris Common Stock
issued to Davco pursuant to the Asset Purchase Agreement. Davco and
the Davco Principals acknowledge their receipt and review of Aris'
Form 10K for the year ended December 31, 1996, its Form 10Q for the
first quarter ended March 31, 1997, and its Form 8K's dated May 5,
1997 and June 18, 1997, all as filed with the Securities and Exchange
Commission ("SEC"). Each of Davco and the Davco Principals, and their
representatives, have been granted the opportunity to ask questions
of, and receive answers from, representatives of Aris concerning the
terms and conditions of the purchase of the Shares and to obtain any
additional information that they deem necessary regarding Aris or the
Shares and each of their knowledge and experience in financial and
business matters is such that he or it is capable of evaluating the
merits and risks


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of the investment in the Shares, or he or it has been advised by a
representative possessing such knowledge and experience. Neither Aris
nor AMC nor their professional advisors have provided or offered to
provide any tax, legal or financial advice to Davco or the Davco
Principals in connection with the Asset Purchase Agreement or their
acquisition of the Shares and they are relying solely on their own
advisors for tax, legal and finance advice relating thereto.


(b) All Shares of Aris Common Stock delivered pursuant to the
Asset Purchase Agreement shall be acquired by Davco and the Davco
Principals for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any intention of
distributing or selling such shares of Aris Common Stock; provided
however, that the foregoing shall not preclude Davco or the Davco
Principals from transferring shares of Aris Common Stock in accordance
with Rule 144 Brokers Transactions (as defined herein) subject to the
limitations as to timing and amounts of Shares set forth in this
Agreement.


(c) The Shares of Aris Common Stock obtained by the Seller
pursuant to this Agreement have not been registered under the
Securities Act of 1993, as amended (the "Securities Act"), shall be
"restricted stock", and even if a sale is otherwise permitted by this
Agreement, the Shares may not be resold without an effective
registration statement under the Securities Act or an exemption
therefrom pursuant to Rule 144 or otherwise and shall be so legended.
Any Transfer of Shares otherwise permitted by this Agreement shall be
made only in full compliance with the Securities Act and the rules and
regulations of the Securities and Exchange Commission (the "SEC")
thereunder and applicable state securities law and regulations. Any
Transfer(as defined in Section 3 below) of the shares of Aris Common
Stock obtained pursuant to this Agreement shall require an opinion of
counsel of Aris to the effect that the Transfer is in compliance with
the Securities Act (the cost of which shall be paid by Seller); such
opinion shall not be unreasonably withheld or delayed. Davco and the
Davco Principals undertake to file with the SEC and with Aris all
necessary Forms 144, Forms 3, 4 and 5, Forms 13D and other required
reports and filings, and amendments thereof, in connection with any
Transfer of Shares. Davco and the Davco Principals agree that prior to
making any Transfer of the Shares they will give written notice to
Aris describing the manner of such proposed Transfer and the number of
Shares involved. Davco and the Davco Principals agree to furnish any
additional information reasonably requested by Aris to assure
compliance with applicable federal and state securities laws in
connection with any Transfer of Shares.


(d) Davco and the Davco Principals acknowledge that it and they
are familiar with Rule 144, as amended, under the Act, and that they
have been advised that Rule 144 permits,


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only under certain circumstances, the public resale of restricted
securities such as the Shares.


3. No Transfers Except as Permitted by This Agreement. Neither Davco nor the Davco Principals shall directly or indirectly sell, exchange, transfer, gift, pledge, hypothecate, grant a security interest in, grant a proxy with respect to, devise, assign or in any other way dispose of, encumber or grant a security interest in (hereinafter referred to as a "Transfer"), any of the Shares, or any interest therein or any certificates representing any such Shares, nor shall they or any of them attempt to do so, except as permitted by this Agreement. Any purported Transfer in violation of this Agreement shall be invalid.


4. Transfers Must Comply With Securities Laws. Any Transfer of Shares otherwise permitted by this Agreement shall be made only in full compliance with the Securities Act and applicable and state securities laws and regulations.


5. Legend. So long as this Agreement remains in effect, there shall be noted conspicuously upon each stock certificate representing Shares (and any replacement certificate therefor), the following statement:


"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 as amended ("the Securities
Act") nor under any applicable state securities act and may not be
transferred, offered, sold, pledged or hypothecated except pursuant to (i)
an effective registration statement relating to such stock under the
Securities Act and any applicable state securities act, or (ii) to the
extent applicable, Rule 144 under the Securities Act (or any similar rule
under such act or acts relating to the disposition of securities). An
opinion of counsel satisfactory to the Corporation that Rule 144 is
available and applicable shall be a condition to any proposed transaction
involving such shares.


"The rights to transfer and vote the Shares represented by this
certificate are further restricted by the terms and provisions contained in
a Shareholders Agreement dated July 15, 1997 on file at the offices of the
Corporation."


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6. Additional Transfer Restrictions; Rule 144 Brokers Transactions in Limited Amounts. Davco and the Davco Shareho ...