Exhibit 10.7(b) Amendment One to the Itin Guaranty
AMENDMENT NO. ONE TO GUARANTY
AMENDMENT NO. ONE, dated this 7th day of January, 1998 but effective as of
July 11, 1997, to that certain GUARANTY dated as of October 2, 1995, by and
between Xxxxxx X. Xxxx ("Itin") and Xxxxxxxx Controls, Inc., a Delaware
corporation, and its successors and assigns ("Xxxxxxxx").
A. For its own benefit and that of its operating subsidiaries, Ajay
Sports, Inc. ("Ajay") obtained financing of up to $13.5 million under a
revolving loan agreement dated as of July 25, 1995 between Ajay and United
States National Bank of Oregon ("US Bank"), as amended by a First Amendment
dated as of October 2, 1995 (as amended, the "Ajay/US Bank Loan"). The Ajay/US
Bank Loan was guaranteed by each of Ajay's operating subsidiaries and was
secured by its inventory and accounts then existing or thereafter acquired.
B. On July 11, 1997, Xxxxxxxx and its subsidiaries and Ajay and its
subsidiaries refinanced their bank loans with Xxxxx Fargo Bank, National
Association ("Xxxxx Fargo") through a joint credit facility (the "Xxxxx Fargo
Credit Facility").
C. In connection with the above-described financing, Xxxxxxxx and its
subsidiaries and Ajay and its subsidiaries entered into a Consent, Reaffirmation
and Release Agreement dated July 14, 1997 with US Bank and Ajay issued a
promissory note in the principal amount of $2,340,000 (the "Ajay/US Bank Term
Loans"), payment of which was guaranteed directly by Itin (the "Itin/US Bank
Guaranty") and Xxxxxxxx and its subsidiaries jointly and severally (the
"Xxxxxxxx/US Bank Guaranty").
D. This Amendment supplements and amends the guaranty dated October 2,
1995 which Itin previously delivered to Xxxxxxxx in connection with the Ajay/US
Bank Loan and Xxxxxxxx' guaranty delivered in connection therewith, which Itin
reaffirms as amended hereby.
NOW, THEREFORE, Itin, as Chairman and Chief Executive Officer of each of
Xxxxxxxx and Ajay and as a significant shareholder in both Xxxxxxxx and Xxxx, in
consideration of Xxxxxxxx' guaranty of Ajay's obligations under the Ajay/US Bank
Term Loans, periodic advances to Ajay and for Xxxxxxxx jointly entering into the
Xxxxx Fargo Credit Facility with Ajay, and other good and valuable
consideration, the adequacy and receipt of which hereby is acknowledged, and
intending to be legally bound, the parties hereby amend the October 2, 1995
Guaranty of Itin as follows:
SECTION 1 is deleted in its entirety and is replaced with the following in
its stead:
1. THE GUARANTY. Itin hereby absolutely and unconditionally guarantees
to Xxxxxxxx repayment of the Guaranteed Obligations, as defined below. The
"Guaranteed Obligations" shall include all of the following:
(a) The Market Value (as hereinafter defined) of the 4,111,647 shares of
Ajay common stock owned by Xxxxxxxx (the "Shares") at not less than $1,400,000
on the date, if any, that Itin first becomes obligated to perform under this
Guaranty. For purposes of this Guaranty, "Market Value" shall mean the average
closing bid price per share of the Ajay common stock as reported on the Nasdaq
National Market, the Nasdaq SmallCap Market or the OTC Bulletin Board, or if
none, the National Quotation Bureau's "Pink Sheets."
(b) Any and all amounts Xxxxxxxx or its subsidiaries are required to
pay to US Bank upon performance under the Ajay/US Bank Term Loans.
(c) Any and all amounts Xxxxxxxx has advanced, contemplates advancing
or is required to advance to Ajay or for which Xxxxxxxx otherwise becomes
liable to third parties for the benefit of Ajay in connection with the
termination of Ajay's Revolving Loan Agreement with US Bank dated July 25,
1995, as amended (the "Original Ajay/US Bank Loan") in connection with the
Xxxxx Fargo Credit Facility.
(d) Any and all amounts which Xxxxxxxx, under its joint and several
liability obligations to Xxxxx Fargo, ultimately is required to pay to
Xxxxx Fargo under the Xxxxx Fargo Credit Facility to the extent that such
amounts paid by Xxxxxxxx have not been repaid by Ajay or otherwise
extinguished at the time this Guaranty is being called upon.
(e) Amounts, including, without limitation, principal, interest and
reasonable collection costs directly related to the performance of Itin
hereunder.
SECTION 3 is amended by deleting the reference in the second sentence to
the "Xxxxxxxx Guaranty" and is replaced with "the Ajay/US Bank Term Loans or any
other obligation which constitutes a Guaranteed Obligation hereunder".
SECTION 4 is amended by renumbering subsection (b) as subsection (d) and
adding the following new subsections (b) and (c):
(b) upon notice (given in accordance with Section 6 hereof) by Itin
to Xxxxxxxx terminating the Guaranty, which termination shall have the
effect of ending Itin's obligation to guaranty any obligations incurred by
Xxxxxxxx after the date of termination; PROVIDED, HOWEVER, that a
termination under this subsection shall not terminate Itin's obligations
with respect to any Guaranteed Obligations existing or otherwise
outstanding on the date of termination under this subsection;
(c) automatically upon a change of control in Xxxxxxxx other than a
voluntary change of control by Itin; with "control" (including the terms
controlling, controlled by
-2-
an under common control with) meaning the possession, direct or indirect,
of the power to direct or cause the direction of management and policies
of Xxxxxxxx, whether through the ownership of voting securities, by
contract or otherwise; or
SECTION 5 is amended by deleting the references in subsections (d) and (f)
to the "Xxxxxxxx Guaranty" and inserting "the Ajay/US Bank Term Loans or any
other obligation which constitutes a Guaranteed Obligation hereunder" in lieu
thereof; and by inserting "or any other third party" immediately after "US Bank"
each time that term appears in subsections (d) and (f).
SUBSECTION (i) OF SECTION 6 is amended by deleting the reference to "Xxxx
X. Xxxxxx" and replacing it with "Xxxxxx X. Xxxxxxx" where it appears in
subsection (i), and by changing the area code references in subsection (ii) from
"(810)" to "(248)."
All other provisions of the Guaranty amended hereby shall remain in full
force and effect without revision or amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment No. One to
Guaranty to be signed and delivered as of the date first above written.
"ITIN"
By /s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx, Individually
XXXXXXXX CONTROLS, INC.
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx, Chief
Financial Officer
-3-
GUARANTY
THIS GUARANTY is entered into effective as of October 2, 1995, by and
between Xxxxxx X. Xxxx ("Itin") and Xxxxxxxx Controls, Inc., a Delaware
corporation, and its successors and assigns ("Xxxxxxxx").
A. For its own benefit and that or its operating subsidiaries, Ajay
Sports, Inc. ("Ajay") has obtained financing of up to 513.5 million under a
revolving loan agreement dated as of July 25, 1995 between Ajay and United
States National Bank of Oregon ("US Bank"), as amended by a First Amendment
dated as of October 2, 1995 (as amended, the "Loan Agreement"). The Ajay Loan
Agreement is guaranteed by each of Ajay's operating subsidiaries. Further,
the Ajay Loan Agreement is secured by the inventory and accounts now existing
or after acquired.
X. Xxxxxxxx has guaranteed repayment of the obligations of Ajay to US
Bank under the Loan Agreement (the "Xxxxxxxx Guaranty").
C. Itin previously delivered to Xxxxxxxx his guaranty in connection with
Xxxxxxxx' exercise of stock options to purchase 4,111,647 shares (the
"SHARES") of Ajay common stock for an aggregate purchase price of $1,400,000,
which guaranty is being continued as provided herein.
D. This Guaranty, when delivered, shall supersede, in all respects the
previous guaranty of Itin to Xxxxxxxx and Xxxxxxxx Controls Industries, Inc.
dated as of October 4, 1994.
NOW, THEREFORE, in consideration of Xxxxxxxx' guaranty of Ajay's
obligations under the Ajay Loan Agreement and other good and valuable
consideration, the adequacy and receipt of which hereby is acknowledged, and
intending to be legally bound, the parties hereby covenant and agree as
follows:
1. THE GUARANTY. Itin hereby absolutely and unconditionally
guarantees to Xxxxxxxx repayment of any amounts Xxxxxxxx is required to pay
to US Bank upon performance under the Xxxxxxxx Guaranty, including, without
limitation, principal, interest and reasonable collection costs, and the
Market Value (as hereinafter defined) of the Shares at not less than
$1,400,000 on the date, if any, that Itin first becomes obligated to perform
under this Guaranty, all of the foregoing being hereinafter referred to as
the "Guaranteed Obligations." For purposes of this Guaranty, "Market Value"
shall mean the average closing bid price per share of the Ajay common stock
as reported on the NASDAQ SmallCap Market or the
OTC Bulletin Board, or if none, the National Quotation Bureau's "Pink
Sheets."
2. APPLICATION OF PAYMENTS. Any payment made by Itin under this
Guaranty shall be effective to reduce or discharge the liability of Itin
hereunder without further notice of any kind.
3. CONTINUING GUARANTY. Except as otherwise provided herein, this
Guaranty shall continue to be in force and be binding upon Itin until
terminated in accordance with the provisions of Section 4 below. If Xxxxxxxx
is required to perform under the Xxxxxxxx Guaranty, Xxxxxxxx shall give Itin
written notice of its performance thereunder and proceed to enforce this
Guaranty.
4. TERMINATION. This Guaranty shall terminate (a) if Xxxxxxxx, without
Itin's consent, amends, modifies or extends the Xxxxxxxx Guaranty, or (b)
when all of the Guaranteed Obligations are paid in full and 95 days has
elapsed since the date of full payment and no bankruptcy, insolvency or
similar filing has occurred with respect to Ajay or Itin. Upon the occurrence
of any such events, Xxxxxxxx will furnish Itin written cancellation of this
Guaranty and will return the original of this Guaranty to Itin.
5. GENERAL PROVISIONS.
(a) No delay on the part of Xxxxxxxx in the exercise of any power
or right shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof or
the exercise of any other power or right.
(b) This Guaranty may not be assigned.
(c) This Guaranty is made under and shall be governed by the laws
of the State of Oregon.
(d) Notwithstanding any provision herein to the contrary, if
Xxxxxxxx is required to perform under the Xxxxxxxx Guaranty, it first will
proceed against Ajay and its assets to satisfy the amounts paid to US Bank by
Xxxxxxxx under the Xxxxxxxx Guaranty.
(e) It is the intention of Xxxxxxxx that Itin will be called upon
to satisfy this Guaranty only as a last resort after Xxxxxxxx has exhausted
all other remedies available to it.
(f) Upon performance of Xxxxxxxx under the Xxxxxxxx Guaranty, and
the assignment to Xxxxxxxx by US Bank of US Bank's rights in any security
interests granted by Ajay and/or its
-2-
subsidiaries under the Ajay Loan Agreement and documents filed to perfect
such security interests, Xxxxxxxx shall assign to Itin a proportionate
interest in the same to the extent Itin pays amounts to Xxxxxxxx to satisfy
the Guaranteed Obligations.
6. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given only if and when (a)
personally delivered, or (b) three business days after mailing, postage
prepaid, by certified mail, or (c) when delivered (and receipted for) by an
overnight delivery service, addressed in each case as follows:
(i) If to Xxxxxxxx to:
Xxxx X. Xxxxxx, Chief Financial Officer
Xxxxxxxx Controls, Inc.
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
FAX NO (000) 000-0000
with a copy to:
Xxxx X. Naikoetter, Esq.
Friedlob Xxxxxxxxx Xxxxxx
Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
FAX NO. (000) 000-0000
(ii) If to Itin, to:
Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000-0000
FAX NO. (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000-0000
FAX NO. (000) 000-0000
Persons entitled to notice hereunder may change the address for the giving of
notices and communications to it or him, and/or copies thereof, by written
notice to the other parties in conformity with the foregoing.
-3-
IN WITNESS WHEREOF, Itin has caused this Guaranty to be executed as of
the date first above written.
"ITIN"
/s/ XXXXXX X. XXXX
----------------------------
Xxxxxx X. Xxxx, Individually
XXXXXXXX CONTROLS, INC.
By /s/ XXXX X. XXXXXX
--------------------------
Xxxx X. Xxxxxx, Chief
Financial Officer
-4-
