COAST-Registered Trademark-
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWERS: UNIVERSAL INTERNATIONAL, INC.
ONLY DEALS, INC.
UNIVERSAL ASSET-BASED SERVICES, INC.
ADDRESS: 0000 XXXXXXXX XXXXXX XXXXX
XXX XXXX, XXXXXXXXX 00000
DATE: JUNE 6, 1997
This Schedule forms an integral part of the Loan and Security Agreement between
COAST BUSINESS CREDIT, a division of Southern Pacific Thrift & Loan Association,
and the above Borrowers of even date.
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1. CREDIT LIMIT (Section 1.1): Loans in a total amount at any time
outstanding not to exceed FOURTEEN MILLION DOLLARS ($14,000,000) (the "Maximum
Dollar Amount"), consisting of Revolving Loans and the Fixed Asset Term Loan.
A. REVOLVING LOANS. A revolving line of credit ("Revolving Loans")
in a total amount at any time outstanding not to exceed the lesser of
(i) the Maximum Dollar Amount less the aggregate outstanding principal
amount of the Fixed Asset Term Loan, or (ii) the sum of (a) through
(d) below, to be advanced to Universal as provided in subsections (1),
(2), (3) and (4) below:
(a) Loans (the "Receivable Loans") in an amount not to exceed eighty
percent (80%) of the aggregate amount of Borrowers' and ONE's
Eligible Receivables (as defined in Section 8 of this Agreement);
PLUS
(b) Loans (the "Inventory Loans") in an amount not to exceed
sixty percent (60%) of the aggregate Value of the
Eligible Inventory of the Borrowers and ONE provided that
the Borrowers and ONE, on a consolidated basis but with
the exclusion of UAS going-out-of-business merchandise
sales, shall have maintained gross margins in excess of
thirty percent (30%) to be determined quarterly on the
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basis of the average gross margins maintained for the
preceding trailing twelve month period; and in the event
that the Borrowers and ONE do not maintain the thirty
percent (30%) gross margins as provided above, the
advance rate against Eligible Inventory shall be set by
Coast as it determines in its reasonable credit judgment;
MINUS
(c) an amount equal to the product of the then undrawn amounts of the
outstanding Letters of Credit issued to Universal multiplied by
the applicable percentages as provided in Section 1.4 of this
Agreement; MINUS
(d) any Availability Reserves; all of the foregoing subject to the
following:
(1) REVOLVING LOANS BASED UPON UNIVERSAL'S BORROWING
AVAILABILITY. Subject to the terms and conditions set forth
in Section 5.5(g) of this Agreement, and within the overall
limits for Revolving Loans set forth above, Revolving Loans
may be advanced by Coast to Universal to be utilized by
Universal either for its own corporate purposes, or to be
lent by Universal to any of ODI, UAS or ONE, as Universal
shall determine from time to time, and on terms and
conditions acceptable to Coast, to fund Universal's
intercompany loans to ODI, UAS or ONE in excess of the
intercompany loans advanced against the individual borrowing
availabilities of ODI, UAS or ONE, as the case may be,
permitted by Section 5.5(g) and subsections (2), (3) and (4)
below. In no event shall the total of Revolving Loans to
Universal at any time exceed eighty percent (80%) of the
amount of Universal's Eligible Receivables; PLUS sixty
percent (60%) of the Value of Universal's Eligible Inventory
provided that the Borrowers and ONE have maintained gross
margins in excess of thirty percent (30%) determined and
adjusted as described above.
(2) REVOLVING LOANS BASED UPON ODI'S BORROWING AVAILABILITY.
Subject to the terms and conditions set forth in Section
5.5(g) of this Agreement, and within the overall limits for
Revolving Loans set forth above, Revolving Loans based upon
ODI's individual borrowing availability may be advanced by
Coast to Universal to be utilized by Universal solely to
fund intercompany revolving loans by Universal to ODI
subject to the terms and conditions of the ODI Loan
Documents. In no event shall the total of such Revolving
Loans to Universal based on ODI's borrowing availability and
to be further advanced by Universal to ODI at any time
exceed eighty percent (80%) of the amount of ODI's Eligible
Receivables; PLUS sixty percent (60%) of the Value of ODI's
Eligible Inventory provided that the Borrowers and ONE have
maintained gross margins in excess of thirty percent (30%)
determined and adjusted as described above, PLUS ODI's
allocated share of the Fixed Asset Term Loan under Section
1.B below. Coast consents to such intercompany loans by
Universal to ODI, provided that ODI executes and delivers
the ODI Loan
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Documents to Universal and Universal assigns all its
rights, titles and interests in and to the ODI Loan
Documents to Coast pursuant to a Collateral Assignment,
in form and substance satisfactory to Coast.
(3) REVOLVING LOANS BASED UPON UAS'S BORROWING AVAILABILITY.
Subject to the terms and conditions set forth in Section
5.5(g) of this Agreement, and within the overall limits for
Revolving Loans set forth above, Revolving Loans based upon
UAS's individual borrowing availability may be advanced by
Coast to Universal to be utilized by Universal solely to
fund intercompany revolving loans to UAS subject to the
terms and conditions of the UAS Loan Documents. In no event
shall the total of such Revolving Loans to Universal based
on UAS's borrowing availability and to be further advanced
by Universal to UAS at any time exceed eighty percent (80%)
of the amount of UAS's Eligible Receivables; PLUS sixty
percent (60%) of the Value of UAS's Eligible Inventory
provided that the Borrowers and ONE have maintained gross
margins in excess of thirty percent (30%) determined and
adjusted as described above, PLUS UAS's allocated share of
the Fixed Asset Term Loan under Section 1.B below. Coast
consents to such intercompany loans by Universal to UAS,
provided that UAS executes and delivers the UAS Loan
Documents to Universal and Universal assigns all its rights,
titles and interests in and to the UAS Loan Documents to
Coast pursuant to a Collateral Assignment, in form and
substance satisfactory to Coast.
(4) REVOLVING LOANS BASED UPON ONE'S IMPUTED BORROWING
AVAILABILITY. Subject to the terms and conditions set forth
in Section 5.5(g) of this Agreement, and within the overall
limits for Revolving Loans set forth above, Revolving Loans
based upon ONE's imputed borrowing availability if a
Borrower hereunder may be advanced by Coast to Universal to
be utilized by Universal solely to fund intercompany
revolving loans to ONE subject to the terms and conditions
of the ONE Loan Documents. In no event shall the total of
such Revolving Loans to Universal based on ONE's imputed
borrowing availability and to further advanced by Universal
to ONE at any time exceed eighty percent (80%) of the amount
of ONE's Eligible Receivables; PLUS sixty percent (60%) of
the Value of ONE's Eligible Inventory provided that the
Borrowers and ONE have maintained gross margins in excess of
thirty percent (30%) determined and adjusted as described
above, PLUS ONE's imputed allocated share of the Fixed Asset
Term Loan under Section 1.B below. Coast consents to such
intercompany loans by Universal to ONE, provided that ONE
executes and delivers the ONE Loan Documents to Universal
and Universal assigns all its rights, titles and interests
in and to the ONE Loan Documents to Coast pursuant to a
Collateral Assignment, in form and substance satisfactory to
Coast.
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B. FIXED ASSET TERM LOAN. A term loan
("Fixed Asset Term Loan"), in an aggregate principal
amount of Two Million Dollars ($2,000,000). The loan
proceeds under the Fixed Asset Term Loan shall be
initially advanced by Coast to Universal, and then either
retained by Universal for its own corporate purposes or
lent by Universal as additional intercompany revolving
loans to ODI, UAS or ONE, respectively, pursuant to the
ODI Loan Documents, the UAS Documents or the ONE Loan
Documents, as the case may be, in the same percentage
thereof as the percentage of the individual assets of
Universal, ODI, UAS or ONE, as the case may be, primarily
securing the Fixed Asset Term Loan, as determined by
Coast, bears to the total of the assets primarily
securing the Fixed Asset Term Loan. The Fixed Asset Term
Loan shall be evidenced by and repayable in accordance
with the terms and conditions of a Promissory Term Note
by Borrowers to the order of Coast, in form and substance
satisfactory to Coast.
C. LETTER OF CREDIT SUB-LIMIT. (Section 1.4): FOUR MILLION
DOLLARS ($4,000,000).
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2. INTEREST.
INTEREST RATE A rate equal to the "Prime Rate" plus TWO PERCENT (2%) per
(Section 1.2): annum, calculated on the basis of a 360-day year for the
actual number of days elapsed. The interest rate applicable
to all Loans shall be adjusted monthly as of the first day
of each month, and the interest to be charged for each month
shall be based on the highest "Prime Rate" in effect during
said month, but in no event shall the rate of interest
charged on any Loans in any month be less than nine percent
(9%) per annum. "Prime Rate" means the actual "Reference
Rate" or the substitute therefor of the Bank of America
NT & SA whether or not that rate is the lowest interest rate
charged by said bank. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the
prime rates published in the Wall Street Journal on the
first business day of the month, as the base rate on
corporate loans at large U.S. money center commercial banks.
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3. FEES (Section 1.3):
ORIGINATION FEE: One percent (1%) of the Maximum Dollar Amount, payable
upon the execution of this Agreement.
FACILITY FEE: Twelve Thousand Five Hundred Dollars ($12,500), per
calendar quarter, payable in advance (pro rated for
any partial calendar quarter at the beginning of the
term of this Agreement).
UNUSED LINE FEE: One-half percent (0.5%) per annum calculated upon the
amount by which (i) the Maximum Dollar Amount LESS the
aggregate outstanding principal amount of the Fixed
Asset Term Loan and LESS the then amounts of the
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outstanding Letters of Credit, exceeds (ii) the average
daily principal balance of the outstanding Revolving
Loans during the immediately preceding month while this
Agreement is in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall
be payable on the first Business Day of each calendar
month in arrears.
LETTER OF CREDIT 0.175% per month of the face amount of each documentary
FEES: Letter of Credit outstanding and 0.25% per month of the
face amount of each standby Letter of Credit
outstanding. Such letter of credit fees shall be
deemed to be fully earned upon the issuance of each
Letter of Credit and shall be due and payable on the
first Business Day of each calendar month following
a month during which any Letter of Credit is
outstanding.
4. MATURITY DATE
(Section 6.1): June 30, 1999, subject to automatic renewal as provided
in Section 6.1 of this Agreement, and early
termination as provided in Section 6.2 of this
Agreement.
RENEWAL FEE One-half percent (0.5%) of the Maximum Dollar Amount,
(Section 6.1): payable upon the second anniversary of this Agreement.
EARLY TERMINATION Two percent (2%) of the outstanding balance of the
FEE Obligations, if such early termination occurs during
the first twelve (12) months of the initial
(Section 6.2): of this Agreement; or one percent
(1%) of the outstanding balance of the Obligations,
if such early termination occurs during months
thirteen (13) through twenty-three (23) of the
initial term of this Agreement; and no Early
Termination Fee shall be payable if such early
termination occurs during the twenty-fourth month of
the initial two (2) year term of this Agreement.
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5. REPORTING.
(Section 5.3): Borrowers and ONE shall provide Coast with the following:
1. Weekly, or more frequently as Coast may request: (a) report
of sales of Inventory, indicating gross sales, returns,
allowances and net sales; (b) reports of aggregate Inventory
purchases (including all costs related thereto, such as
freight, duty and taxes) and identifying items of Inventory
in transit to Borrowers or ONE related to applicable
documentary Letters of Credit and/or xxxx of lading number;
(c) reports of amounts of consigned Inventory held by
Borrowers or ONE by category and by consignor; and (d)
reports of the Value of Inventory (net of markdowns).
2. Monthly Receivable agings, aged by invoice date, within
fifteen (15) days after the end of each calendar month,
including outstanding amounts by category, payments,
accruals and returns and other credits.
3. Monthly accounts payable agings, aged by invoice due date,
and outstanding or held check registers within fifteen (15)
days after the end of each calendar month.
4. Upon Coast's request: (i) copies of customer statements and
credit memos, remittance advices and reports, and copies of
deposit slips and bank statements; (ii) copies of shipping
and delivery documents; (iii) copies of purchase orders,
invoices and delivery documents for Inventory and Equipment
acquired by a Borrower or ONE, as the case may be; and (iv)
reports by retail store location of sales and operating
profits for each such retail store location.
5. Monthly perpetual Inventory reports, which shall be prepared
by product category for Inventory located at one of
Borrowers' or ONE's warehouse facilities, setting forth
aggregate Value and Retail Sales Price of such Inventory and
monthly reports of sales, which shall be prepared by product
category for Inventory located at one of Borrowers' or ONE's
warehouse facilities, or such other inventory reports as are
reasonably requested by Coast, all within fifteen (15) days
after the end of each calendar month.
6. Monthly internally prepared financial statements, as soon as
available, and in any event within thirty (30) days after
the end of each calendar month.
7. Quarterly internally prepared financial statements, as soon
as available, and in any event within forty-five (45) days
after the end of each fiscal quarter of Borrowers.
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8. Quarterly prepared financial statements filed on Form 10Q
with the Securities Exchange Commission pursuant to the
Securities Exchange Act of 1934, within ten (10) days after
the applicable filing due date.
9. Quarterly, customer lists, including customer name, address,
and phone number.
10. Annual consolidated and consolidating audited financial
statements, as soon as available, and in any event within
ninety (90) days following the end of Borrowers' fiscal
year, certified by independent certified public accountants
acceptable to Coast.
11. Annual financial statements filed on Form 10K with the
Securities Exchange Commission pursuant to the Securities
Exchange Act of 1934, as soon as available, and in any event
within ninety (90) days following the end of Borrowers'
fiscal year.
12. As soon as available, and in any event within five (5) days
after receipt by a Borrower or ONE, the monthly statements
received by a Borrower or ONE from any Credit Card Issuers
of Credit Card Processors, together with such additional
information with respect thereto as shall be sufficient to
enable Coast to monitor the transactions pursuant to the
Credit Card Agreements.
13. Monthly reports on sales and use tax collections and
deposits, including monthly sales and use tax accruals, all
within fifteen (15) days after the end of each calendar
month; and monthly reports on sales and use tax payments
within forty (40) days after the end of each calendar month.
14 Annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for the
upcoming fiscal year of the Borrowers and ONE within thirty
(30) days prior to the end of each fiscal year of the
Borrowers and ONE.
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6. BORROWERS INFORMATION:
PRIOR NAMES OF None
BORROWERS AND ONE
(Section 3.2):
PRIOR TRADE NAMES None
OF BORROWERS AND ONE
(Section 3.2):
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EXISTING TRADE NAMES Only Deals
OF BORROWERS AND ONE Only Deals $1 to $10
(Section 3.2):
MATERIAL ADVERSE None
LITIGATION
(Section 3.10):
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7. OTHER PROVISIONS
CONDITIONS PRECEDENT
(Section 5.1):
1. Borrowers and ONE shall have Excess Availability as of the
date hereof, shall not be less than Three Hundred Thousand
Dollars ($300,000) after giving effect to the initial Loans
made or to be made and the face amount of the Letters of
Credit issued or to be issued in connection with the initial
transactions hereunder.
2. Borrowers and ONE shall have no accounts payable outstanding
on which payment has been due for ninety (90) days or more
from the invoice due date.
3. Coast shall have received landlord and mortgagee waivers
from the lessors and mortgagees of all locations where any
Collateral is located, and to the extent Coast has not
received such waivers for any of Borrowers' or ONE's retail
store locations, an Availability Reserve will be established
as set forth in Section 8 of this Agreement.
4. Borrowers or ONE shall have established the Lockbox
Accounts, Blocked Accounts and Concentration Accounts as
required by Section 4.4 of the Agreement and Coast shall
have received, in form and substance satisfactory to Coast,
all agreements with such depository banks as Coast may
require pursuant to Section 4.4 of this Agreement, duly
authorized, executed and delivered by such depository banks,
and by the Borrowers or ONE, as the case may be.
5. Coast shall have received Credit Card Acknowledgements in
each case, duly authorized, executed and delivered by the
Credit Card Issuers and Credit Card Processors.
6. Coast shall have received, in form and substance
satisfactory to Coast, Operating Account Security Interest
Notification Letters executed by the banks at which the
Borrowers or ONE maintain operating accounts
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whereby such banks acknowledge the security interest
of Coast in such funds and operating accounts and
agree to take instructions from Coast with respect
to such operating accounts.
7. Coast shall have received, in form and substance
satisfactory to Coast, an agreement by the Armored Car
Company acknowledging the security interests of Coast in the
Collateral, waiving any security interest, lien or other
claim to cash and other items delivered by Borrower to the
Armored Car Company, agreeing to send all such cash and
other items received by it only to the Concentration
Accounts and to otherwise follow the instructions of Coast
with respect thereto upon Coast's request, in each case duly
authorized, executed and delivered by the Armored Car
Company.
8. Coast shall have received true and correct copies of the ODI
Loan Documents, the UAS Loan Documents and the ONE Loan
Documents and the respective Collateral Assignments, in form
and substance satisfactory to Coast, of the ODI Loan
Documents, the UAS Loan Documents and the ONE Loan Documents
by Universal to Coast and consented to and acknowledged by
ODI, UAS or ONE, respectively.
9. Coast shall have received the Limited Liability Continuing
Guaranty of ONE, in form and substance satisfactory to
Coast, whereby ONE guarantees advances to it by Universal
under the Universal Loan Documents initially advanced by
Coast to ONE based upon the imputed borrowing availability
of ONE, such guaranty and the obligations of ONE thereunder
secured by substantially all of the assets of ONE.
ADDITIONAL COVENANTS
(Section 5.1):
1. Upon Coast's request (no more than once in any twelve (12)
month period, but at any time or times as Coast may request
on or after an Event of Default), Borrowers or ONE shall, at
their expense, conduct through either RGIS Inventory
Specialists, Inc. or Washington Inventory Services, Inc. a
physical count of the Inventory in form, scope and
methodology acceptable to Coast the results of which shall
be reported directly by such inventory counting service to
Coast, and Borrowers or ONE shall promptly deliver
confirmation in a form satisfactory to Coast that
appropriate adjustments have been made to the inventory
records of Borrowers or ONE to reconcile the inventory count
to Borrowers' or ONE's inventory records.
2. Borrowers or ONE shall retain a retail inventory monitoring
firm acceptable to Coast to monitor the Inventory on a
monthly basis. The
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expenses in connection with such monthly monitoring of
Inventory shall be shared equally by Borrowers and
Coast.
3. Borrowers or ONE shall at the end of each business day
retain cash in the registers at each of its retail store
locations of no more than One Thousand Five Hundred Dollars
($1,500).
4. Borrowers or ONE shall not permit any modifications or
amendments to the ODI Loan Documents, the UAS Loan Documents
or the ONE Loan Documents without the prior written consent
of Coast.
5. Universal shall, at its own expense, take any and all
actions to perfect, maintain, protect and enforce its first
priority security interest and other rights in all of the
assets of ODI, UAS and ONE pledged to Universal pursuant to
the respective ODI Loan Documents, the UAS Loan Documents or
the ONE Loan Documents and Universal's failure to do so
shall constitute an Event of Default hereunder.
6. Borrowers and ONE shall on the date hereof and at all times
during the term of this Agreement maintain a Consolidated
Tangible Net Worth equal to at least Ten Million Dollars
($10,000,000).
7. Borrowers shall on the date hereof and at all times during
the term of this Agreement maintain a Consolidated Tangible
Net Worth equal to at least One Million Dollars
($1,000,000), but excluding from tangible assets any
indebtedness owing from ONE to any Borrower or any equity
value attributable to the ownership by any Borrower of any
equity interest in ONE.
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BORROWER:
UNIVERSAL INTERNATIONAL, INC.
a Minnesota corporation
By: /s/ Xxxx Xxxxxx
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President or Vice President CEO
By: /s/ Xxxx Xxxxxx
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Secretary or Assistant Secretary
ONLY DEALS, INC.,
a Minnesota corporation
By: /s/ Xxxx Xxxxxx
------------------------------------
President or Vice President Chairman
By: /s/ Xxxx Xxxxxx
------------------------------------
Secretary or Assistant Secretary
UNIVERSAL ASSET-BASED SERVICES, INC.
a Minnesota corporation
By: /s/ Xxxx Xxxxxx
------------------------------------
President or Vice President Chairman
By: /s/ Xxxx Xxxxxx
------------------------------------
Secretary or Assistant Secretary
COAST:
COAST BUSINESS CREDIT, a division of Southern Pacific Thrift & Loan Association,
a California corporation
By: /s/ Xxxxxxx Xxxxxxxx
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Title V.P.
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