<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
/X/ AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-18823
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UNIVERSAL INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
MINNESOTA 41-0776502
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5000 WINNETKA AVENUE NORTH, 55428
NEW HOPE, MINNESOTA (Zip Code)
(Address of Principal Executive Office)
(612) 533-1169
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS
-------------------
COMMON STOCK, $0.05 PAR VALUE
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
--- ---
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. YES NO X .
--- ---
As of April 24, 1998, 9,393,328 shares of common stock of the Registrant
were outstanding of which 3,897,236 shares were held by non-affiliates, and the
aggregate market value of the common stock of the Registrant as of that date
(based upon the $2.50 last reported sale price of the common stock at that date
by the NASDAQ National Market System), held by non-affiliates was approximately
$9,743,000.
DOCUMENTS INCORPORATED BY REFERENCE
1. The Registrant's Report on Form 8-K/A dated January 8, 1998 is incorporated
by reference in this Form 10-K/A.
2. The Registrant's Report on Form 8-K dated February 3, 1998 is
incorporated by reference in this Form 10-K/A.
3. The Registrant's Report on Form 10-K dated March 30, 1998 for the fiscal
year ended December 31, 1997 is incorporated by reference in this
Form 10-K/A.
4. The Registrant's Report on Form 8-K dated April 24, 1998 is incorporated by
reference in this Form 10-K/A.
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Universal International, Inc. (the "Company") hereby amends its Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 previously filed with
the Securities and Exchange Commission on March 31, 1998, to include the
information required by Part III of Form 10-K contained in this Amendment No. 1.
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2
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the current
directors and executive officers of the Company as of April 24, 1998:
<TABLE>
<CAPTION>
AGE AT YEAR FIRST
APRIL 24, ELECTED OR APPOINTED
NAME 1998 DIRECTOR/OFFICER PRINCIPAL OCCUPATION
---- ---- ---------------- --------------------
<S> <C> <C> <C>
Richard L. Ennen 45 1997 Chief Executive
Officer; President;
Director
Dennis A. Hill 34 1998 Chief Financial Officer
Robert R. Langer 42 1998 Chief Operating Officer
of Only Deals, Inc.; Director
Jeff Gold 30 1997 Director
Howard Gold 38 1997 Director
Andy Farina 51 1997 Director
</TABLE>
RICHARD L. ENNEN Richard L. Ennen became Chief Executive Officer of the
Company in January 1998 and the President of the Company in August 1997; he
has served as a director of the Company since August 1997. Mr. Ennen joined
the Company in September 1996, as Executive Vice President and General
Merchandising Manager and became President of Only Deals, Inc. ("Only
Deals"), a wholly owned subsidiary of the Company, in October 1996. From
1992 to September 1996, Mr. Ennen was Director of Retail Merchandising and
Retail Operations for Holiday Companies, a large grocery, wholesale and
gasoline company based in Bloomington, Minnesota. Mr. Ennen is also a
director of Odd's-N-End's, Inc. ("Odd's-N-End's") which is 40.5% owned by the
Company and its President as of January 1998.
DENNIS A. HILL
Dennis A. Hill became Chief Financial Officer of the Company in January
1998. Mr. Hill joined the Company in January 1996 as Corporate Controller.
Mr. Hill also became the Chief Financial Officer of both Odd's-N-End's and
Only Deals in January 1998. From January 1994 to January 1996, Mr. Hill was
Manager of Financial Reporting for Damark International, a mail order
retailer. From September 1986 to January 1994, Mr. Hill was employed by
Touche Ross/Deloitte & Touche, an international accounting firm, where he
served as Audit Manager from September 1991.
ROBERT R. LANGER
Robert R. Langer became a director of the Company in January 1998. In
August 1996, Mr. Langer became the Chief Operating Officer of Odd's-N-End's and
has been one of its directors since March 1995. Mr. Langer became Chief
Operating Officer of Only Deals in September 1994; he joined Only Deals in
February 1992 as Vice President-Retail Operations. From June 1989 to January
1992, Mr. Langer was Director of the Retail Division for Lieberman Enterprises,
a major music and video distributor. Mr. Langer is also a director of
Odd's-N-End's.
JEFF GOLD
Jeff Gold became a director of the Company in November 1997 in conjunction
with the acquisition by 99CENTS Only Stores, a California corporation
("99CENTS Only Stores"), of 4.5 million shares of the Company's Common Stock.
Pursuant to a
3
<PAGE>
Shareholders Agreement made as of November 17, 1997, by and among the Company,
99CENTS Only Stores and Mark Ravich (the "Shareholders Agreement"), so long as
99CENTS Only Stores owns at least 20% of the Company's shares, the Company shall
nominate and recommend the election of designees of 99CENTS Only Stores in such
number that at all times 99CENTS Only Stores' designees constitute at least one
member less than a majority of the members of the Company's Board of Directors.
Mr. Gold is currently, and has been since 1991, a director of 99CENTS Only
Stores. He has served in various managerial capacities for 99CENTS Only Stores
since 1989 and is currently its Senior Vice President of Real Estate and
Information Systems. Mr. Gold received his B.A. degree from the University of
California at Berkeley in 1989. Jeff Gold is the brother of Howard Gold.
HOWARD GOLD
Howard Gold became a director of the Company in November 1997 in
conjunction with 99CENTS Only Stores' acquisition of 4.5 million shares of the
Company's Common Stock pursuant to the Shareholders Agreement. Mr. Gold is
currently, and has been since 1991, a director of 99CENTS Only Stores. He has
served in various managerial capacities for 99CENTS Only Stores since 1982 and
is currently its Senior Vice President of Distribution. Mr. Gold received his
B.S. degree from the University of California at Los Angeles in 1984. Howard
Gold is the brother of Jeff Gold.
ANDY FARINA
Andy Farina became a director of the Company in November 1997 in
conjunction with 99CENTS Only Stores' acquisition of 4.5 million shares of
the Company's Common Stock pursuant to the Shareholders Agreement. Mr.
Farina is currently, and has been since September 1996, the Chief Financial
Officer of 99CENTS Only Stores. From April 1993 through August 1996, Mr.
Farina was Vice President of Finance of Crown BBK, Inc., a food brokerage
business. Mr. Farina was employed by a division of Sara Lee from 1976
through 1988, ultimately in the capacity of President. Mr. Farina began his
career with Arthur Andersen LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Executive officers, directors
and greater-than-ten percent stockholders are required by SEC regulations to
furnish the Company with all Section 16(a) forms they file. Based solely on its
review of the copies of the forms received by it and written representations
from certain reporting persons that they have complied with the relevant filing
requirements, the Company believes that, during the fiscal year ended December
31, 1997, Messrs. Richard Ennen, Norman Ravich, Mark Ravich and Robert Langer
did not file Form 4s with respect to options they received during the Company's
last fiscal year and will file such Form 4s late. The Company also believes
that Messrs. Jeff Gold, Howard Gold and Andy Farina did not file Form 3s with
respect to each of them becoming a director of the Company and will file such
Form 3s late.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, as to the Chief Executive Officer, the
other three most highly compensated officers whose compensation exceeded
$100,000 during the last fiscal year and an additional individual for whom
disclosure is made pursuant to Item 402(a)(3)(iii) of Regulation S-K (the "Named
Executive Officers"), information concerning all compensation paid for services
to the Company in all capacities for each of the three fiscal years ended
December 31 indicated below.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- AWARDS
SECURITIES ($)
($) ($) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION(1)
--------------------------- ---- ------ ----- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Richard L. Ennen. . . . . . . 1997 149,132 25,000 175,000 6,000
CEO and President(2) 1996 44,615 20,783 75,000 2,000
1995 0 0 0 0
Norman J. Ravich (3). . . . . 1997 132,693 0 75,000 0
1996 150,000 0 0 4,140
1995 149,808 50,000 75,000 8,775
Mark H. Ravich (4). . . . . . 1997 157,212 0 50,000 9,000
Formerly CEO 1996 157,212 0 0 9,000
1995 149,808 62,000 150,000 (5) 9,000
Robert R. Langer. . . . . . . 1997 134,940 0 10,000 6,000
Chief Operating Officer 1996 115,866 0 8,000 6,000
1995 110,000 24,800 0 6,000
Stevan Buxbaum (6). . . . . . 1997 140,000 0 0 6,000
President of Universal 1996 105,000 18,958 100,000 14,839
Asset-Based Services, Inc. 1995 0 0 0 0
</TABLE>
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(1) Consists of car allowances other than $10,339 to Stevan Buxbaum in 1996 for
reimbursement of moving expenses.
(2) Mr. Ennen became the Company's Chief Executive Officer in January 1998.
(3) Norman Ravich, the Company's founder, served as the Chairman of the Board
until November 1997 and was engaged as a buyer and seller of the Company's
merchandise.
(4) Mark Ravich served as the Company's Chief Executive Officer until January
1998.
(5) Issued upon cancellation of 100,000 options previously issued to Mr.
Ravich.
(6) Stevan Buxbaum served as the President of Universal Asset-Based Services,
Inc. until January 1998 when it was sold by the Company.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding the grant of
stock options made during the fiscal year ended December 31, 1997 to the Named
Executive Officers.
<TABLE>
<CAPTION>
REALIZABLE VALUE
POTENTIAL AT ASSUMED
RATE OF STOCK PRICE
NUMBER OF PERCENT OF APPRECIATION FOR OPTION
SECURITIES TOTAL OPTIONS TERM (4)
UNDERLYING GRANTED TO ($) --------
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION ($) ($)
NAME GRANTED FISCAL YEAR (3) BASE PRICE DATE 5% 10%
---- ------- --------------- ---------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Richard L. Ennen . . . . 75,000 (1) 19.33% 2.50 03/02/02 51,803 114,471
100,000 (1) 25.77% 1.00 08/06/02 27,628 61,051
Norman J. Ravich . . . . 75,000 (2) 19.33% 1.13 10/09/02 23,415 51,741
Mark H. Ravich . . . . . 50,000 (2) 12.89% 1.13 10/09/02 15,610 34,494
Robert R. Langer . . . . 10,000 (1) 2.58% 1.00 10/09/02 2,763 6,105
</TABLE>
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(1) Options indicated vest and become exercisable over a five year period from
the date of grant based upon optionee continuing to be employed by the
Company.
(2) Options indicated vested immediately upon issuance.
(3) The Company granted options to purchase a total of 388,000 shares during
the fiscal year ended December 31, 1997.
(4) The potential realizable value is based on the assumption that the Common
Stock appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration of the option term. These amounts are
calculated pursuant to applicable requirements of the Securities and
Exchange Commission and do not represent a forecast of the future
appreciation of the Common Stock.
STOCK OPTIONS HELD AT FISCAL YEAR END
The following table sets forth, for each of the Named Executive Officers,
the number of shares of Common Stock underlying stock options held at fiscal
year end and the value of options held at fiscal year end based upon the last
reported sales price of the Common Stock on the Nasdaq National Market on
December 31, 1997 ($2.00 per share). No Named Executive Officers exercised
options during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
----------------- --------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Norman Ravich . . . . 150,000 0 $ 65,250 0
Mark Ravich . . . . . 200,000 0 43,500 0
Richard L Ennen . . . 15,000 235,000 0 $100,000
Robert R. Langer. . . 17,000 26,000 0 10,000
Stevan Buxbaum. . . . 0 100,000 0 0
</TABLE>
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(1) Based on the closing sale price of $2.00 for the Common Stock at December
31, 1997, less the option exercise price.
6
<PAGE>
COMPENSATION OF DIRECTORS
The Company no longer compensates any directors for attending regular or
special meetings of the Board of Directors or any committee meetings. Prior
to November 1997, the Company compensated non-employee directors $500 for
attending regular or special meetings of the Board of Directors and $250 for
committee meetings. The Company currently reimburses directors for costs and
expenses in connection with such directors' participation at Board of
Directors meetings. During 1997, the non-employee directors were compensated
an aggregate of $3,750 for attendance at regular, special and committee
meetings. In 1997, non-employee directors did not receive any options to
purchase shares of the Company's Common Stock for the year of service as a
director of the Company. Stock options for 8,750 shares to non-employee
directors vested in 1997.
EMPLOYMENT CONTRACTS
Norman J. Ravich entered into a three year employment agreement in October
1992 which was amended in January 1995 and again on October 9, 1997. Under the
amended employment agreement, Mr. Ravich agreed to serve as the Company's
Chairman for an annual base salary of $60,000 for services rendered from October
4, 1997 through October 4, 1998 and as determined by the Company's Board of
Directors for any time thereafter, but not less than the revised 1997 level.
This agreement further provides that Mr. Ravich shall be entitled to a bonus to
be determined by the Board of Directors at the end of each year. Additionally,
the Company granted Mr. Ravich a five year option to purchase 75,000 shares of
the Company's Common Stock at an exercise price of $1.13 per share, which option
vested upon issuance. The options to purchase 75,000 shares previously granted
to Mr. Ravich were amended to extend their expiration date until March 31, 2001.
Finally, the amended agreement provided for nine months of annual base pay plus
health benefits as severance in the event any investor acquires over 40% of the
Common Stock of the Company and Mr. Ravich was either terminated or left
voluntarily. In April 1998, Mr. Ravich left the Company voluntarily and is
currently being paid pursuant to the severance provision in his employment
contract.
Mark H. Ravich entered into a three year employment agreement in October
1992 which was amended in January 1995 and again on October 9, 1997. Under the
amended employment agreement, Mr. Ravich agreed to serve as the Company's Chief
Executive Officer for an annual base salary of $157,500 for services rendered
through December 31, 1997 and as determined by the Company's Board of Directors
for any time thereafter, but not less than the revised 1997 level. This
agreement further provides that Mr. Ravich shall be entitled to a bonus to be
determined by the Board of Directors at the end of each year. Additionally, the
Company granted Mr. Ravich a five year option to purchase 50,000 shares of the
Company's Common Stock at an exercise price of $1.13 per share, which option
vested upon issuance. The options to purchase 150,000 shares previously granted
to Mr. Ravich were amended to extend their expiration date until March 31, 2001.
Finally, the amended agreement provided for nine months of annual base pay plus
health benefits as severance in the event any investor acquires over 40% of the
Common Stock of the Company and Mr. Ravich was either terminated or left
voluntarily. In February 1998, Mr. Ravich left the Company voluntarily and is
currently being paid pursuant to the severance provision in his employment
contract.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
At the beginning of 1997, the Company's Compensation Committee was
comprised of Mark L. Bartholomay, Ernest M. Simon and Stanford A. Weiner. Mr.
Bartholomay resigned as a director of the Company in February 1997, Mr. Simon
resigned as a director in November 1997 and Mr. Weiner resigned as a director in
March 1998. Mr. Bartholomay was the Company's Chief Financial Officer from
February 1992 through April 1993. Since November 1997, the members of the
Compensation Committee have been Andy Farina, Jeff Gold and Howard Gold. Mr.
Farina is the Chief Financial Officer of 99CENTS Only Stores, a position he has
held since September 1996. Jeff Gold and Howard Gold are brothers, each of whom
is a director and officer of 99CENTS Only Stores.
7
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company as well as the compensation plans
and specific compensation levels for executive officers.
EXECUTIVE OFFICERS' COMPENSATION PROGRAM
There are three basic components to the Company's executive compensation
program: base salary, annual incentive bonus, and long-term equity based
incentive compensation in the form of stock options. Various benefits including
medical and retirement savings plans generally available to employees of the
Company are also made available. While base salaries are fixed pursuant to the
employment agreements, the other components of the executive officers'
compensation are established in light of individual and Company performance,
comparable compensation programs, equity among employees, and cost
effectiveness.
BASE SALARY
Base salaries are designed to be competitive, although conservative as
compared to salary levels for equivalent positions at comparable companies. The
1997 base salary was a fixed amount in the Chief Executive Officer's employment
agreement.
BONUS PLAN
The Company had an established bonus plan which provided for the payment of
cash bonuses payable to executive officers and other management personnel. Such
bonuses were determined either by a formula based on pre-tax profits of the
Company or on a discretionary basis and varied in amount from year to year. The
President's bonus for 1997 was discretionary and determined by the Compensation
Committee in January 1998. Presently, the Company's bonus plan is entirely
discretionary as determined by the Compensation Committee.
STOCK OPTIONS
One of the principal factors considered in granting stock options to the
executive officers of the Company is the ability of the executive officers to
influence the Company's long-term growth and profitability. All options are
granted at or above the market price. Since the value of an option bears a
direct relationship to the Company's stock price, the Committee believes that
options motivate executive officers to manage the Company in a manner which will
also benefit stockholders. The Committee therefore views stock option grants as
an important component of its long-term, performance-based compensation
philosophy. In 1997, stock options exercisable for 175,000 shares of Common
Stock were granted to Richard Ennen, the current Chief Executive Officer and
President of the Company. Seventy-five thousand of these options expire on
March 2, 2002 and one-hundred thousand of these options expire on August 6,
2002. All of Mr. Ennen's options vest over a five year period. In October
1997, Norman Ravich, the Company's founder and Chairman of the Board until
November 1997 received options for 75,000 shares of Common Stock. These options
expire on October 9, 2002 and vested immediately upon issuance. In October
1997, Mark Ravich, the Company's Chief Executive Officer until January 1998,
received options for 50,000 shares of Common Stock. These options expire on
October 9, 2002 and vested immediately upon issuance. In August 1997, Robert
Langer, the Chief Operating Officer of Only Deals since September 1994, received
options for 10,000 shares of the Company's Common Stock. These options expire
on October 9, 2002 and vest over five years.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mark Ravich served as a director of the Company from 1979 to 1997 and as
Chief Executive Officer from September 1990 to January 1998. His base salary
was $157,500 in 1996 and was set at $157,500 for 1997. Mr. Ennen, the
Company's current Chief Executive Officer, will receive a base salary of
$157,500 for 1998 and is eligible for a discretionary bonus. The Compensation
Committee determined the level of compensation paid to the Company's former
and current Chief Executive Officer to be appropriate.
Members of the Compensation Committee
Andy Farina
Jeff Gold
Howard Gold
8
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the percentage change in cumulative total
stockholder return of the Company's Common Stock during the five-year period
from December 31, 1992 to December 31, 1997, compared with the cumulative
returns of the Nasdaq Stock Market (US Companies) Index and an index of peer
companies selected by the Company. The comparison assumes $100 was invested
on January 1, 1993 in the Common Stock and in each of the foregoing indices.
The stock price performance on the following graph is not necessarily
indicative of future stock price performance.
COMPARISON OF CUMULATIVE RETURN AMONG
UNIVERSAL INTERNATIONAL, THE NASDAQ STOCK MARKET INDEX AND THE COMPANY'S
PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
UNIV NASDAQ PEER GROUP
------ ------ ----------
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 70.18 114.75 90.33
12/31/94 59.65 111.08 83.62
12/31/95 133.33 155.42 76.91
12/31/96 56.14 190.71 132.61
12/31/97 56.14 240 180.23
</TABLE>
The Company's peer group is comprised of other close-out wholesalers and
retailers. The members of the peer group are as follows: Consolidated Stores
Corporation, Tues Morning Corp., Dolgencorp and Family Dollar, Inc.
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 24, 1998 certain information
relating to the ownership of the Common Stock by (i) each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
shares of the Company's Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Executive Officers, and (iv) all of the Company's
executive officers and directors as a group. Except as may be indicated in the
footnotes to the table and subject to applicable community property laws, each
such person has the sole voting and investment power with respect to the shares
owned. The address of each person listed is in care of the Company unless
otherwise set forth below such person's name.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED %
---------------- ------------------ ---
<S> <C> <C>
99 Cents Only Stores 4,500,000 47.91
4000 Union Pacific Avenue
City of Commerce, CA 90023
Mark H. Ravich (1). . . . . . . . . . . . . 1,085,472 11.31
Norman J. Ravich (2). . . . . . . . . . . . 258,620 2.71
Richard L. Ennen (3). . . . . . . . . . . . 30,000 0.32
Robert R. Langer (4). . . . . . . . . . . . 20,500 0.22
Dennis A. Hill (5). . . . . . . . . . . . . 3,700 *
Jeff Gold . . . . . . . . . . . . . . . . . 0 0
Howard Gold . . . . . . . . . . . . . . . . 0 0
Andy Farina . . . . . . . . . . . . . . . . 0 0
Directors and Executive Officers as a group
(6 persons) (6) . . . . . . . . . . . . . . 54,200 0.57
</TABLE>
- ---------------
* Less than 0.1%
(1) Includes: (a) 372,472 shares of Common Stock held by Mr. Ravich; (b)
265,000 shares held by the Norman and Sally Ravich Family Trust of which
Mr. Ravich is co-trustee; (c) 220,000 shares held by the Norman J. Ravich
Irrevocable Agreement of which Mark Ravich is sole trustee; (d) 28,000
shares held in trust for Mr. Ravich's children of which he is co-trustee;
and (e) options to purchase 200,000 shares of Common Stock.
(2) Includes options to purchase 150,000 shares of Common Stock.
(3) Includes options to purchase 30,000 shares of Common Stock.
(4) Includes options to purchase 19,500 shares of Common Stock.
(5) Includes options to purchase 2,000 shares of Common Stock.
(6) Includes options to purchase 51,500 shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1997, 99CENTS Only Stores acquired approximately 48% of the
outstanding Common Stock of the Company for $4 million in cash and
merchandise. The Company owns approximately 41% of the outstanding common
stock of Odd's-N-End's. In February 1998, 99CENTS Only Stores announced its
intention to acquire the balance of the Company's shares which it does not
own and the balance of the Odd's-N-End's' shares not owned by the Company.
Subject to the terms and conditions set forth in the registration statement
on Form S-4 filed by 99CENTS Only Stores with the SEC, 99CENTS Only Stores is
offering to exchange one share of its common stock for every sixteen shares
of the Company's Common Stock (the "Exchange Offer").
10
<PAGE>
AGREEMENTS RELATING TO EXCHANGE OFFER
THE COOPERATION AGREEMENT
In connection with the Exchange Offer, 99CENTS Only Stores and the Company
entered into a Cooperation Agreement which provides that the Company will
support the Exchange Offer and will provide 99CENTS Only Stores access to the
books and records of the Company, as well as to the Company's officers and
directors for purposes of preparing filings and completing due diligence. In
addition, the Company agreed to file a Schedule 14D-9 with respect to the
Exchange Offer and agreed that it would not oppose the Exchange Offer in the
Schedule 14D-9. The Company also agreed to promptly furnish to 99CENTS Only
Stores mailing labels, security position listings and any other available
listings or computer files containing the names and addresses of the record
holders of Company Common Stock for purposes of mailing Exchange Offer
documents.
Promptly upon the purchase by 99CENTS Only Stores of the Company shares
pursuant to the Exchange Offer (provided that not less than 80% of the
outstanding shares of the Company Common Stock are validly tendered and not
withdrawn (the "Minimum Condition")) and from time to time thereafter, 99CENTS
Only Stores shall be entitled, subject to compliance with Section 14(f) of the
Exchange Act, to designate up to such number of directors, rounded down to the
next whole number (except where such rounding down would cause 99CENTS Only
Stores to not be entitled to designate at least a majority of directors, in
which case, such number will be rounded up) on the Board of Directors of the
Company as will give 99CENTS Only Stores representation on the Board equal to
the product of the number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of shares of Company Common Stock then beneficially owned
by 99CENTS Only Stores and its affiliates following such purchase bears to the
total number of shares of Company Common Stock then outstanding. In the
Cooperation Agreement, the Company has agreed to promptly take all actions
necessary to cause 99CENTS Only Stores' designees to be elected or appointed as
directors of the Company, including increasing the size of the Board or securing
the resignations of incumbent directors or both.
The Company also agreed to assist 99CENTS Only Stores in obtaining the
approval of its shareholders under the Minnesota Control Share Acquisition Act
to provide voting rights to Company Common Stock acquired by 99CENTS Only Stores
in the Exchange Offer. The Company further agreed to take all action necessary
to either (a) amend the Rights Agreement so that the Exchange Offer would not
cause (i) the occurrence of the "Distribution Date" (as such term is defined in
the Rights Agreement) or (ii) the common stock purchase rights issued pursuant
to the Rights Agreement becoming evidenced by, and transferable pursuant to,
certificates separate from the certificates representing Company Common Stock or
(b) redeem the rights before 99CENTS Only Stores becomes an "Acquiring Person"
pursuant to the terms of the Rights Agreement.
STOCKHOLDER SUPPORT AGREEMENTS
On February 24, 1998, 99CENTS Only Stores and each of Mark Ravich, Norman
Ravich and certain trusts for which Mark Ravich is the trustee entered into
separate Stockholder Support Agreements in which each stockholder agreed to vote
its shares of Company Common Stock (i) in favor of the Exchange Offer and (ii)
in favor of any other matter deemed necessary by 99CENTS Only Stores to
effectuate the Exchange Offer or solicited in connection with the Exchange
Offer, and considered and voted upon by the shareholders of the Company. In
addition, each shareholder executing a Stockholder Support Agreement agreed to
tender and sell all of its Company Common Stock to 99CENTS Only Stores pursuant
to the terms of the Exchange Offer.
CONSULTING AGREEMENTS AND OPTION AGREEMENTS
Furthermore, on February 24, 1998, Mark Ravich entered into a Consulting
Agreement with 99CENTS Only Stores whereby Mark Ravich agreed to provide
advisory services to 99CENTS Only Stores in connection with the Exchange Offer
and thereafter to provide sales, management and operations consulting services
in connection with the operation of the business of the Company following
completion of the Exchange Offer. The term of the consulting agreement ends
February 24, 1999. As compensation for the consulting services provided,
99CENTS Only Stores granted to Mark Ravich an option to acquire 9,375 shares of
99CENTS Only Stores Common Stock at $40.00 per share, and an option to acquire
15,000 shares of 99CENTS Only Stores Common Stock at $33.5625 per share pursuant
to separate Option Agreements each dated as of February 26, 1998. Each of the
options terminates
11
<PAGE>
on the earlier to occur of a termination of the Exchange Offer and February 19,
2005. Each of the options becomes fully exercisable on the first business day
following consummation of the Exchange Offer.
On February 26, 1998, Norman Ravich also entered into a Consulting
Agreement with 99CENTS Only Stores whereby Norman Ravich agreed to provide
advisory services to 99CENTS Only Stores in connection with the Exchange Offer
and thereafter to provide sales, management and operation consulting services in
connection with the operation of the business of the Company following
completion of the Exchange Offer. The Consulting Agreement ends on May 27,
1998. As compensation for the consulting services provided, 99CENTS Only Stores
granted to Norman Ravich an option to purchase 4,688 shares of 99CENTS Only
Stores Common Stock at $40.00 per share pursuant to a separate option agreement
dated February 26, 1998. The option terminates on the earlier to occur of a
termination of the Exchange Offer and February 19, 2005. The option becomes
fully exercisable on the first business day following consummation of the
Exchange Offer.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. The Consolidated Financial Statements, notes thereto, and accountants'
reports thereon are included in the Company's Form 10-K which has been
incorporated by reference.
2. The Consolidated Financial Statements Schedule are included in the
Company's Form 10-K which has been incorporated by reference.
Other financial statement schedules are omitted because they are not
required or are not applicable.
3. Exhibits
See Exhibit Index immediately following signature page.
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K on December 23, 1997, as amended
January 8, 1998, relating to a change in the Company's independent
auditors. The Company filed a Report on Form 8-K during the quarter
ended December 31, 1997 relating to the issuance of 4.5 million shares
of common stock to 99CENTS Only Stores. The Company filed a Report on
Form 8-K on February 10, 1998 relating to the sale of its 95% owned
interest in Universal Asset-Based Services, Inc. The Company also filed
a Report on Form 8-K on April 24, 1998 relating to the amendment of the
Rights Agreement filed as Exhibit 4.7.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL INTERNATIONAL, INC.
Date: April 29, 1998 By: /s/ Richard L. Ennen
----------------------
Richard L. Ennen
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C> <C> <C>
/s/ Richard L. Ennen Chief Executive Officer, President
------------------------- and Director (principal executive officer) April 29, 1998
Richard L. Ennen
/s/ Dennis A. Hill Chief Financial Officer
------------------------- (principal financial and accounting officer) April 29, 1998
Dennis A. Hill
/s/ Robert R. Langer Chief Operating Officer of Only Deals
-------------------------- and Director April 29, 1998
Robert R. Langer
/s/ Jeff Gold
--------------------------
Jeff Gold Director April 29, 1998
/s/ Howard Gold
--------------------------
Howard Gold Director April 29, 1998
/s/ Andy Farina
-------------------------
Andy Farina Director April 29, 1998
</TABLE>
14
<PAGE>
UNIVERSAL INTERNATIONAL, INC.
EXHIBIT INDEX
FOR
1997 ANNUAL REPORT ON FORM 10-K/A
All exhibits have already been filed with the Commission and are incorporated
herein by reference.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Articles of Incorporation, as amended
3.2 By-laws
4.3 Revolving Credit Agreement with Firstar Bank of Minnesota, N.A. and
First Wisconsin National Bank of Milwaukee dated December 18, 1991
4.3.1 Master Amendment Agreement (Including Amendment No. 2 to Revolving
Credit Agreement)
4.4 Account Financing Agreement among Universal International, Inc., Only
Deals, Inc. and Congress Financial Corporation
4.5 Inventory and Equipment Security Agreement
4.6 Trade Financing Agreement
4.7 Rights Agreement dated as of April 19, 1996 between the Company and
Norwest Bank Minnesota, National Association, as amended as of April
20, 1998
9.2 Shareholders' Agreement and Irrevocable Proxy dated November 12, 1992
by and among the Company and Mark H. Ravich, L. Jack Roth and Gilbert
L. Wachsman
10.1 Lease Agreement between the Company and Hoyt Development Company for
premises located at 5000 Winnetka Avenue North, New Hope, Minnesota,
dated April 21, 1989 as amended August 29, 1990
10.2 Sublease Agreement between the Company and United Hardware
Distributing Co. for premises located at 5005 Nathan Lane, New Hope,
Minnesota dated April 17, 1991 and Consent to Sublease
10.2.1 First Amendment to Sublease Agreement between the Company and United
Hardware Distribution Co. dated April 17, 1991
10.2.2 Second Amendment to Sublease Agreement between the Company and United
Hardware Distribution Co.
10.3 1990 Stock Option Plan, as amended
10.4 Lease Agreement between the Company and Carlson Real Estate Company
for premises located at 13120 County Road 6, Plymouth, Minnesota,
dated September 29, 1995
10.5 Bonus Plan
10.6 Employment Agreement between the Company and L. Jack Roth dated
February 7, 1989
10.7 Employment Agreement between the Company and Norman J. Ravich dated
September 4, 1990
10.7.1 Employment Agreement between the Company and Norman J. Ravich dated
October 26, 1992
10.7.2 First Amendment to Employment Agreement
10.7.3 Second Amendment to Executive Employment Agreement dated October 9,
1997
10.9.1 Employment Agreement between the Company and Mark H. Ravich dated
October 26, 1992
10.9.2 First Amendment to Employment Agreement
10.9.3 Second Amendment to Executive Employment Agreement dated October 9,
1997
10.10 Stock Purchase Agreement dated January 20, 1992
10.10.1 Pension termination ruling regarding the Company's defined benefit
pension plan
10.11 Loan and Security Agreement dated November 21, 1995 among BankAmerica
Business Credit, Inc., Universal International, Inc., and Only
Deals, Inc.
10.11.1 Waiver and First Amendment to Loan and Security Agreement dated
July 30, 1996
10.11.2 Second Amendment to Loan and Security Agreement dated August 20, 1996
10.11.3 Waiver and Second Amendment to Loan and Security Agreement dated
December 10, 1996
10.12 Loan and Security Agreement by and between Universal
International, Inc. and Odd's-N-End's, Inc.
10.12.1 Allonge dated July 30, 1996 to Revolving Note with
Odd's-N-End's, Inc.
15
<PAGE>
10.12.2 Amended and Restated Loan and Security Agreement with
Odd's-N-End's, Inc.
10.13 Employment Agreement between the Company and Wesley J. Laseski dated
February 25, 1993
10.13.1 First Amendment to Employment Agreement
10.14 Loan and Security Agreement between the Company and Coast Business
Credit dated June 6, 1997
10.14.1 Schedule to Loan and Security Agreement dated June 6, 1997
10.14.2 First Amendment to Loan and Security Agreement between the Company
and Coast Business Credit dated September 25, 1997
10.14.3 Waiver of Event of Default dated February 19, 1998
10.14.4 Second Amendment to Loan and Security Agreement between the Company
and Coast Business Credit dated March 31, 1998+
10.15 Cooperation Agreement by and between the Company and 99CENTS Only
Stores made as of March 4, 1998+
11.0 Detail Computation of Income (loss) per share
22.0 Subsidiaries of the Registrant
The Company has two subsidiaries, Only Deals, Inc., a Minnesota
corporation, which is wholly owned, and Odd's-N-End's, Inc., a
Delaware corporation, which is 40.5% owned.
+ Filed herewith.
16
<PAGE>
EXHIBIT 10.14.4
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "AMENDMENT"),
dated as of March 31, 1998, is entered into between COAST BUSINESS CREDIT, a
division of Southern Pacific Thrift & Loan Association, a California corporation
("LENDER"), with a place of business at 12121 Wilshire Boulevard, Suite 1111,
Los Angeles, California 90025, and UNIVERSAL INTERNATIONAL, INC., a Minnesota
corporation ("UNIVERSAL") and ONLY DEALS, INC., a Minnesota corporation ("ODI",
together with Universal, each a "BORROWER" and collectively, "BORROWERS"), each
with its chief executive office located at 5000 Winnetka Avenue North, New Hope,
Minnesota 55428.
RECITAL
A. Borrowers and Lender have previously entered into that certain Loan
and Security Agreement dated as of June 6, 1997, as amended by that certain
First Amendment to Loan and Security Agreement dated as of September 25, 1997
(collectively, the "LOAN AGREEMENT"), and pursuant to which Lender has made
certain loan and financial accomodations available to Borrowers. Terms used
herein without definition shall have the meanings ascribed to them in the Loan
Agreement.
B. Borrowers have requested Lender to (i) consent to the acquisition by
99 Cents Only Stores ("99 CENTS"), of one hundred percent (100%) of the issued
and outstanding capital stock of Universal, (ii) amend the Loan Agreement to
reflect that Universal Asset-Based Services, Inc., a Minnesota corporation
("UAS") is no longer a Borrower under the Loan Agreement, pursuant to that
certain letter agreement from Lender to Borrowers dated January 14, 1998 (the
"LETTER AGREEMENT") and (iii) waive compliance with the financial covenant
pertaining to the Consolidated Tangible Net Worth of Borrowers and ONE during
the period from April 1, 1998 through June 30, 1998.
C. Lender is willing to make such amendment and waiver under the terms
and conditions set forth in this Amendment. Borrowers are entering into this
Amendment with the understanding and agreement that, except as specifically
provided herein, none of Lender's rights or remedies as set forth in the Loan
Agreement is being waived or modified by the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CONSENT TO STOCK ACQUISITION BY 99 CENTS. Except for the Event of
Default explicitly waived by Section 3 of this Amendment, provided that no Event
of Default or no event or condition which, with notice or passage of time or
both, would constitute an Event of Default, has occurred and is continuing, and
subject to the terms and conditions set forth herein, Lender hereby consents to
the acquisition of one hundred percent (100%) of the issued and outstanding
capital stock of Universal by 99 Cents.
<PAGE>
2. AMENDMENT TO LOAN AGREEMENT. Any and all references to "Universal
Asset-Based Services, Inc." and/or "UAS" in the Loan Agreement and any notes,
guarantees, security agreements and other agreements, documents and instruments
executed and/or delivered in connection with the Loan Agreement (collectively
with the Loan Agreement, the "LOAN DOCUMENTS") shall hereby be deleted,
including, without limitation, in its entirety, subparagraph 3 (entitled,
"REVOLVING LOANS BASED UPON UAS' BORROWING AVAILABILITY") set forth in paragraph
d of Section 1(A) of the Schedule to the Loan Agreement. Pursuant to the Letter
Agreement, Borrowers and Lender hereby acknowledge that UAS is no longer a
"Borrower" under the Loan Agreement or a party to the Loan Agreement.
3. WAIVER OF FINANCIAL COVENANT. Borrowers hereby acknowledge that, as
of April 1, 1998, Borrowers were not in compliance with the financial covenant
relating to the Consolidated Tangible Net Worth of Borrowers and ONE set forth
in Paragraph 6 under the heading "Additional Covenants" in Section 7 of the
Schedule to the Loan Agreement and that such non-compliance constitutes an Event
of Default under the Loan Agreement. Lender hereby waives compliance by
Borrowers with such Consolidated Tangible Net Worth covenant for the period
commencing April 1, 1998 and ending June 30, 1998, and shall not exercise its
rights and remedies under the Loan Agreement or applicable law in respect of
such Event of Default; PROVIDED, HOWEVER, that Lender shall be free to exercise
all of its rights and remedies under the Loan Agreement in the event of
Borrowers' violation or breach after June 30, 1998 of the Consolidated Tangible
Net Worth covenant of Borrowers and ONE. The foregoing waiver is not a
continuing waiver, and Lender does not by this waiver amend the terms and
provisions of the Loan Agreement. Upon the occurrence of any Event of Default
after the date hereof, or in the event that Lender learns of any Event of
Default which occurred prior to the date hereof (other than a breach of the
covenant described above in this paragraph), Lender shall be free to exercise
any and all of its various rights and remedies under the Loan Agreement.
4. EFFECTIVENESS OF THIS AMENDMENT. Lender must have received the
following items, in form and content acceptable to Lender, before this Amendment
is effective and before Lender is required to extend any credit to Borrowers as
provided for by this Amendment.
(a) AMENDMENT. This Amendment fully executed in a sufficient number
of counterparts for distribution to Lender and Borrowers.
(b) AUTHORIZATIONS. Evidence that the execution, delivery and
performance by each Borrower and each guarantor or subordinating creditor of
this Amendment and any instrument or agreement required under this Amendment
have been duly authorized.
(c) REPRESENTATION AND WARRANTIES. The representations and
warranties set forth in the Loan Agreement must be true and correct.
(d) CONSENTS. Lender has received counterparts of the Consent
appended hereto (the "CONSENT") executed by ONE (ONE, together with the
Borrowers, each a "LOAN PARTY" and, collectively, the "LOAN PARTIES").
2
<PAGE>
(e) OTHER REQUIRED DOCUMENTATION. All other documents and legal
matters in connection with the transactions contemplated by this Amendment shall
have been delivered or executed or recorded and shall be in form and substance
satisfactory to Lender.
5. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and warrants
as follows:
(a) AUTHORITY. Each Loan Party has the requisite corporate power and
authority to execute and deliver this Amendment or the Consent, as applicable,
and to perform its obligations hereunder and under the Loan Agreement and the
other Loan Documents (as amended or modified hereby) to which it is a party.
The execution, delivery and performance by each Borrower of this Amendment and
by ONE of the Consent, and the performance by each Loan Party of each Loan
Document (as amended or modified hereby) to which it is a party have been duly
approved by all necessary corporate action of such Loan Party and no other
corporate proceedings on the part of such Loan Party are necessary to consummate
such transactions.
(b) ENFORCEABILITY. This Amendment has been duly executed and
delivered by each Borrower. The Consent has been duly executed and delivered by
ONE. This Amendment and each Loan Document (as amended or modified hereby) is
the legal, valid and binding obligation of each Loan Party hereto or thereto,
enforceable against such Loan Party in accordance with its terms, and is in full
force and effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in each Loan Document (other than any such representation
or warranties that, by their terms, are specifically made as of a date other
than the date hereof) are correct on and as of the date hereof as though made on
and as of the date hereof.
(d) NO DEFAULT. No event has occurred and is continuing that
constitutes an Event of Default.
6. CHOICE OF LAW. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Amendment or the Consent by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment or such Consent.
8. Due Execution. The execution, delivery and performance of this
Amendment are within the power of each Borrower, have been duly authorized by
all necessary corporate action,
3
<PAGE>
have received all necessary governmental approval, if any, and do not contravene
any law or any contractual restrictions binding on such Borrower.
9. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder," "hereof" or
words of like import referring to the Loan Agreement, and each reference in the
other Loan Documents to "the Loan Agreement," "thereof" or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Loan Agreement and all
other Loan Documents, are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed and shall constitute the
legal, valid, binding and enforceable obligations of each Borrower to Lender.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of Lender under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
(d) To the extent that any terms and conditions in any of the Loan
Documents shall contradict or be in conflict with any terms or conditions of the
Loan Agreement, after giving effect to this Amendment, such terms and conditions
are hereby deemed modified or amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified or amended hereby.
10. RATIFICATION. Each Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Loan Agreement, as amended
hereby, and the Loan Documents effective as of the date hereof.
4
<PAGE>
11. ESTOPPEL. To induce Lender to enter into this Amendment and to
continue to make advances to Borrowers under the Loan Agreement, each Borrower
hereby acknowledges and agrees that, after giving effect to this Amendment, as
of the date hereof, there exists no Event of Default and no right of offset,
defense, counterclaim or objection in favor of such Borrower as against Lender
with respect to the Obligations.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.
"BORROWERS"
UNIVERSAL INTERNATIONAL, INC.,
a Minnesota corporation
By:/s/ DENNIS A. HILL
-------------------------------------
Title: CFO
----------------------------------
ONLY DEALS, INC.,
a Minnesota corporation
By:/s/ DENNIS A. HILL
-------------------------------------
Title: CFO
----------------------------------
"LENDER"
COAST BUSINESS CREDIT, a division of
Southern Pacific Thrift & Loan
Association, a California corporation
By: /s/ JOHN D. ANDREWS
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
5
<PAGE>
CONSENT
Dated as of March 31, 1998
The undersigned, as Guarantor under the Limited Recourse Continuing
Guaranty dated as of June 6, 1997 (the "GUARANTY"), hereby consents and agrees
to the said Amendment and hereby confirms and agrees that the Guaranty is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that, upon the effectiveness of, and on and
after the date of said Amendment, each reference int he Guaranty to the "Loan
Agreement," "thereunder," "thereof" or words of like import referring to the
Loan Agreement, shall mean and be a reference to the Loan Agreement as amended
or modified by the said Amendment.
ODD'S-N-END'S, INC.
a Delaware corporation
By:/s/ DENNIS A. HILL
-----------------------
Title: CFO
--------------------
6
<PAGE>
EXHIBIT 10.15
COOPERATION AGREEMENT
This Agreement is made and entered into as of March 4, 1998, by and between
Universal International, Inc., a Minnesota corporation ("UNIVERSAL") and 99CENTS
Only Stores, a California corporation ("99CENTS ONLY") with respect to the
following:
R E C I T A L S
WHEREAS, on November 17, 1997, 99CENTS Only acquired 4,500,000 shares of the
common stock, $0.001 par value per share (the "Common Stock"), of Universal,
representing approximately 48% of the outstanding Common Stock;
WHEREAS, on February 17, 1998, 99CENTS Only publicly announced that it had
made a proposal to the Board of Directors of Universal to acquire 100% of the
outstanding Common Stock of Universal for an exchange ratio of one share of
99CENTS Only for each 16 shares of Universal Common Stock;
WHEREAS, 99CENTS Only has determined to effect the acquisition by an
exchange offer (the "Offer") to all of the Universal stockholders;
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, the
parties to this Agreement hereby agree as follows:
1. AGREEMENT TO SUPPORT TENDER OFFER GENERALLY. Universal agrees to
support the Offer by 99CENTS Only and not to make any statement privately or
publicly opposing the Offer. Universal hereby agrees to cooperate generally with
99CENTS Only in the Offer by providing access during normal business hours to
the books and records of Universal, as well as to Universal's officers and
directors for purposes of providing information to make all appropriate filings
under the applicable federal and state laws. Furthermore, Universal agrees to
assist 99CENTS Only in soliciting proxies in favor of affording voting rights to
the shares of Universal acquired by 99CENTS Only in the Offer.
2. SCHEDULE 14D-9. Universal hereby agrees to file with the Securities and
Exchange Commission ("SEC") in accordance with the provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), its Solicitation
Recommendation Statement on Schedule 14D-9 pertaining to the Offer (together
with any amendments or supplements thereto, the "Schedule 14D-9") and to mail
promptly (but in no event later than as is required by applicable law) the
Schedule 14D-9 to the stockholders of Universal. Universal agrees that in the
Schedule 14D-9 it will not oppose the Offer and will either support the Offer or
take a position neutral to the position of 99CENTS Only. Universal shall provide
to 99CENTS Only and its counsel draft copies of the Schedule 14D-9 as soon as
practicable prior to its filing with the SEC such that 99CENTS Only and its
legal counsel shall have a reasonable opportunity to review and comment on the
Schedule 14D-9. Universal shall provide to 99CENTS Only and its counsel in
writing any comments Universal or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 as soon as practicable after the
receipt thereof. Universal represents and warrants to 99CENTS Only that the
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and the securities laws of the State of
Minnesota. Each of 99CENTS Only and Universal represents and warrants to the
other that the information provided and to be provided by 99CENTS Only and
Universal, as the case may be, by or through their respective representatives
for use in the Schedule 14D-9 shall not, on the date filed with the SEC, on the
dates first published or sent or given to the stockholders of Universal and on
the expiration date of the Offer, contain any untrue statement of a material
fact with respect to such party or omit to state any material fact with respect
to such party required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Universal and 99CENTS Only each agrees to correct promptly any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect, and
Universal further agrees to take all steps
<PAGE>
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to stockholders of Universal to the extent required by
applicable federal securities laws and the Minnesota Business Corporation Act
("Minnesota Laws").
3. STOCKHOLDER LISTS. In connection with the Offer, Universal will
promptly furnish 99CENTS Only with mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
the record holders of Universal Common Stock as of a recent date and shall
furnish 99CENTS Only with such additional information and assistance as 99CENTS
Only or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Universal Common Stock. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer documents, 99CENTS Only and their affiliates, associates,
agents and advisors shall use the information contained in any such labels,
listing and files only in connection with the Offer and, if this Agreement shall
be terminated, will deliver to Universal all copies of such information then in
their possession.
4. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(f). (a) In the event
that immediately following the Offer, 99CENTS Only owns at least a majority of
the Universal Common Stock outstanding, 99CENTS Only shall be entitled to
designate for appointment or election to Universal's Board of Directors and any
committee thereof, upon written notice to Universal, that number of directors
equal to the product of (i) the number of directors on the Universal Board of
Directors or the applicable committee and (ii) the percentage which the number
of shares of Universal Common Stock held by 99CENTS Only after the Offer bears
to the total number of shares of Universal Common Stock outstanding, rounded up
to the next whole number. Prior to consummation of the Offer, the Board of
Directors of Universal will use its best efforts to either adopt an amendment to
Universal's By-Laws to provide in effect that upon the request of 99CENTS Only
following the acquisition by 99CENTS Only of a majority of the shares of
Universal Common Stock outstanding pursuant to the Offer, the number of members
of Universal's Board of Directors and any committee thereof shall be increased
to the extent necessary to provide the persons designated by 99CENTS Only
pursuant to this Section with representation on the Board of Directors and its
committees, or will obtain the resignation of such number of directors as is
necessary to enable such number of 99CENTS Only designees to be so elected.
(b) Universal's obligations to cause designees of 99CENTS Only to be elected
or appointed to the Board of Directors of Universal and any committee thereof
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Universal shall promptly take all actions required pursuant to such
Section and Rule in order to fulfill its obligations under this Section and
shall include in the Schedule 14D-9 such information with respect to 99CENTS
Only and its officers and directors as is required under such Section and Rule
in order to fulfill its obligations under this Section. 99CENTS Only will supply
to Universal in writing any information with respect to it and its nominees,
officers, directors and affiliates required by such Section and Rule.
5. APPROVAL OF THE STOCKHOLDERS. Pursuant to the requirements of Section
302A.671 of the Minnesota Laws, the Offer requires (i) the affirmative vote of
the holders of a majority of the voting power of all shares of Common Stock of
Universal entitled to vote, including all shares held by 99CENTS Only, and (ii)
the affirmative vote of the holders of a majority of the voting power of all
shares of Common Stock of Universal entitled to vote, excluding the shares held
by 99CENTS Only, and shares held by officers and employee directors of
Universal. Without the affirmative vote of the stockholders of Universal, the
shares of Universal Common Stock acquired by 99CENTS Only representing over 50%
of the outstanding Common Stock of Universal would be denied voting rights. In
accordance with Section 302A.671, 99CENTS Only and Universal shall cooperate to
prepare and file with the SEC a registration statement on Form S-4 (the
"Registration Statement"), a portion of which shall include a proxy statement
(the "Offer Proxy Statement/Prospectus") with respect to a meeting of
stockholders of Universal to vote on the Offer for purposes of Section 302A.671
of the Minnesota Laws. Each of 99CENTS Only and Universal represents and
warrants to the other that the information provided and to be provided by
99CENTS Only and Universal, as the case may be, by or through their respective
representatives for use in the Registration Statement shall not, and on the date
filed with the SEC, and with respect to the Offer Proxy Statement/ Prospectus,
on the dates first published or sent or given to the holders of Universal Common
Stock,
<PAGE>
contain any untrue statement of a material fact with respect to such party or
omit to state any material fact with respect to such party required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Universal and 99CENTS
Only each agrees to correct promptly any information provided by it for use in
the Offer Proxy Statement/Prospectus if and to the extent that it shall have
become false or misleading in any material respect, and 99CENTS Only further
agrees to take all steps necessary to cause the Registration Statement as so
corrected to be filed with the SEC and for the Offer Proxy Statement/Prospectus
to be disseminated to the holders of shares of Universal Common Stock, in each
case as and to the extent required by applicable federal securities laws and the
Minnesota Laws. Universal agrees to use its best efforts to obtain the approval
of its stockholders pursuant to Section 302A.671 of the Minnesota Laws.
6. TAKEOVER PROVISIONS INAPPLICABLE; AMENDMENT TO RIGHTS
AGREEMENT. Universal agrees to take all necessary action to approve an
amendment of the Rights Agreement, dated as of April 19, 1996 (the "Rights
Agreement"), between Universal and Norwest Bank Minnesota, N.A., as rights agent
Rights Agreement so that (a) none of the execution or delivery of this
Agreement, the making of the Offer, the acceptance for payment or payment for
shares of Universal Common Stock by 99CENTS Only pursuant to the Offer or the
consummation of any other transaction with 99CENTS Only will result in (i) the
occurrence of the "Distribution Date" described under Section 3 of the Rights
Agreement, or (ii) the common stock purchase rights (the "Company Rights")
issued pursuant to the Rights Agreement becoming evidenced by, and transferable
pursuant to, certificates separate from the certificates representing Universal
Common Stock, or (b) the Company Rights will be redeemed prior to 99CENTS Only
becoming an "Acquiring Person" pursuant to the terms of the Rights Agreement.
7. FILINGS. 99CENTS Only and Universal agree to (a) use all reasonable
efforts to cooperate with one another in (i) determining which filings are
required to be made prior to consummation of the Offer, and which consents,
approvals, permits or authorizations are required to be obtained from states and
foreign jurisdictions in connection with the consummation of the Offer and (ii)
timely making such filings and timely seeking all such consents, approvals,
permits or authorizations; and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the Offer.
8. TERMINATION. This Agreement may be terminated (i) by either 99CENTS
Only or Universal if the Offer shall not have been consummated on or before
September 30, 1998 or (ii) by the mutual written consent of Universal and
99CENTS Only authorized by their respective Boards of Directors. If this
Agreement is terminated pursuant to this Section, this Agreement shall become
void and of no effect with no liability on the part of any party hereto.
9. MISCELLANEOUS.
(a) SEVERABILITY. Should any Section or any part of a Section within
this Agreement be rendered void, invalid or unenforceable by any court of
law for any reason, such invalidity or unenforceability shall not void or
render invalid or unenforceable any other Section or part of a Section in
this Agreement.
(b) GOVERNING LAW. Except to the extent that the laws of Minnesota are
mandatorily applicable to the Offer, this Agreement shall be governed by,
and construed in accordance with, the laws of the State of California
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in any U.S. federal court located in the City of Los
Angeles. The parties hereto hereby (i) submit to the exclusive jurisdiction
of any U.S. federal court located in the City of Los Angeles for the purpose
of any action arising out of or based upon this Agreement or the Offer
brought by any party hereto, and (ii) waive, and agree not to assert by way
of motion, as a defense, or otherwise, in any such action, any claim that it
is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the Offer may not be enforced in any or
by any of the above-named courts.
<PAGE>
(c) NO ADVERSE CONSTRUCTION. The rule that a contract is to be
construed against the party drafting the contract is hereby waived, and
shall have no applicability in construing this Agreement or any provisions
hereof.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) COSTS AND ATTORNEYS' FEES. In the event that any action, suit, or
other proceeding is instituted concerning or arising out of this Agreement,
the prevailing party shall recover all of such party's costs, and reasonable
attorneys' fees incurred in each and every such action, suit, or other
proceeding, including any and all appeals or petitions therefrom.
(f) SUCCESSORS AND ASSIGNS. All rights, covenants and agreements of
the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective
successors and assigns.
(g) AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors at any time before or
after approval hereof by the stockholders, but after any such approval, no
amendment shall be made which changes the consideration to be paid to the
stockholders pursuant to the Offer, or which is otherwise not permitted by
the California or Minnesota Laws, without the further approval of the
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(h) BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
<TABLE>
<S> <C> <C>
99CENTS ONLY STORES
A CALIFORNIA CORPORATION
By: /s/ DAVID GOLD
-----------------------------------------
Name: David Gold
Title: President and Chief Executive
Officer
UNIVERSAL INTERNATIONAL, INC.
A MINNESOTA CORPORATION
By: /s/ RICHARD ENNEN
-----------------------------------------
Name: Richard Ennen
Title: President and Chief Executive
Officer
</TABLE>
