SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this "AGREEMENT") is made as of the 17th day
of November, 1997 by and among Universal International, Inc., a Minnesota
corporation (the "COMPANY"), 99 Cents Only Stores, a California corporation
(the "INVESTOR") and Xxxx Xxxxxx, an individual.
R E C I T A L S
WHEREAS, the Company has concurrently herewith issued and sold to the
Investor 4,500,000 shares (the "Shares") of common stock, $.001 per share, of
the Company (the "Common Stock").
WHEREAS, Xx. Xxxxxx is the Chief Executive Officer of the Company and owns
beneficially and as of record those shares of the Common Stock as identified on
Exhibit A attached hereto.
WHEREAS, the Company, the Investor and Xx. Xxxxxx desire to enter into
this Shareholders Agreement in order to set forth their agreement with respect
to the nomination of directors to the Company's Board of Directors, the voting
for such directors and the appointment of members to the Compensation and Audit
Committees of the Board of Directors.
NOW, THEREFORE, in consideration of the foregoing recitals and covenants
and agreements contained herein, the parties agree as follows:
A G R E E M E N T
1. BOARD OF DIRECTORS
1.1 So long as the Investor owns at least 20% of the Shares, the Company
shall nominate and recommend to its shareholders that they elect
designees of the Investor to the Board of Directors of the Company in
such number that at all times the Investor's designees constitute at
least one member less than a majority of the members of the Board of
Directors of the Company.
1.2 So long as Xxxx Xxxxxx (a) beneficially owns, as determined pursuant
to the rules and regulations promulgated under the Securities Act, at
least 4% of the outstanding shares of Common Stock, and (b) consents
to and has the capacity to serve on the Board of Directors of the
Company, the Company shall nominate and recommend to its shareholders
that they elect Xxxx Xxxxxx to the Board of Directors of the Company.
1.3 Xxxx Xxxxxx shall vote the shares of Common Stock held by him in
favor of electing the designees of the Investor to the Board of
Directors of the Company so long as the Company is required to so
nominate them as provided in clause 1.1 above.
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1.4 The Investor shall vote its shares of Common Stock in favor of
electing Xxxx Xxxxxx to the Board of Directors of the Company so long
as the Company is required to nominate Xx. Xxxxxx pursuant to
clause 1.2 above.
1.5 Xxxx Xxxxxx shall agree, if requested by the Investor, to serve as a
Director for at least two years following the date hereof so long as
the Company maintains Director and Officer Insurance with policy
limits (and deductibles) at the levels existing at the date hereof.
1.6 Subject to waiver by the Investor in its sole and absolute
discretion, so long as the Investor is entitled to have its designees
nominated to the Board of Directors in accordance with clause 1.1
above, the Compensation Committee of the Board of Directors shall
consist of three directors, at least two of which shall be the
designees of the Investor and the Audit Committee of the Board of
Directors shall consist of three directors, at least one of which
shall be a designee of the Investor.
2. MISCELLANEOUS
2.1 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one
agreement, binding on all of the parties hereto, notwithstanding that
all of the parties are not signatory to the original or the same
counterpart.
2.2 SURVIVAL. This Agreement shall be binding upon, and, as to permitted
or accepted successors, transferees and assigns, inure to the benefit
of the parties hereto and their respective legal representatives,
successors, transferees and assigns, in all cases whether by merger,
reverse merger, consolidation, sale of assets, other sale, operation
of law or otherwise.
2.3 SEVERABILITY. In the event any Section, or any sentence within any
Section, is declared by a court of competent jurisdiction to be void
or unenforceable, such sentence or Section shall be deemed severed
from the remainder of this Agreement and the balance of this
Agreement shall remain in full force and effect.
2.4 NOTIFICATION OR NOTICES. Any notice or other communication required
or permitted hereunder shall be in writing and shall be deemed to
have been given if personally delivered or deposited in the United
States mail, registered or certified, postage prepaid, addressed to
the parties' addresses set forth below. Notices given in the manner
provided for in this Section 2.4 shall be deemed effective on the
third day following deposit in the mail or on the day of delivery if
given by hand. Notices must be addressed to the parties hereto at
the following addresses, unless the same shall have been changed by
notice in accordance herewith:
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If to the Company, at:
Universal International, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Fax No.:
Attn:
with a copy to:
If to Investor, at:
99 Cents Only Stores
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000
Fax No.:
Attn: Xxxxx Xxxx
with a copy to:
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx LLP
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
Attn: C.N. Xxxxxxxx Xxxxxxx III, Esq.
If to Xxxx Xxxxxx, at:
0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxxxxxx 00000
2.5 CONSTRUCTION. The language in all parts of this Agreement shall be
in all cases construed simply according to its fair meaning and not
strictly for or against any of the parties.
2.6 GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of Minnesota, without giving effect to the
principles of conflicts of law thereof.
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2.7 ADDITIONAL DOCUMENTS. Each party, upon the request of another party,
agrees to perform all further acts and execute, acknowledge and
deliver all documents which may be reasonably necessary, appropriate
or desirable to carry out the provisions of this Agreement, including
but not limited to acknowledging before a notary public any signature
heretofore or hereafter made by party.
2.8 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
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IN WITNESS WHEREOF the parties have caused this Agreement to be executed
the day and year first above written.
UNIVERSAL INTERNATIONAL, INC.,
a Minnesota corporation
By: _________________________________
Name: _______________________________
Title: Chief Executive Officer and Chief
Financial Officer
99 CENTS ONLY STORES,
a California corporation
By: _________________________________
Name: Xxxxx Xxxx
Title: President, Chief Executive Officer and
Chairman of the Board
XXXX XXXXXX
_________________________________
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