GUARANTY
1. CONTINUING GUARANTY. For good and valuable consideration, Thomas
W. Itin ("Guarantor") absolutely and unconditionally guarantees to United States
National Bank of Oregon ("Bank") and its successors and assigns, the full and
prompt payment and performance of each and every payment obligation of Ajay
Sports, Inc. ("Borrower"), under the promissory note in the amount of $2,340,000
dated as of July 14, 1997 (the "Note"), between Borrower and Bank, and all
liabilities, direct or contingent, joint, several, or independent arising out of
or in conjunction therewith, including interest, reasonable attorney fees, and
other costs and expenses paid or incurred by Bank in enforcing its rights under
the Note (the "Indebtedness"). Notwithstanding anything to the contrary in this
Guaranty, the liability of Guarantor under this Guaranty shall not exceed the
principal sum of $1,000,000, but shall include amounts in excess of such sum for
accrued interest on any such sum due hereunder (calculated at the rate of
interest in effect under the Note at the time in question) after demand and for
expenses due pursuant to Section 9(d) of this Guaranty. Furthermore,
notwithstanding anything in this Guaranty to the contrary, Bank may not proceed
hereunder against Guarantor unless Borrower fails to make a payment required by
the Note, Bank gives Borrower and Guarantor written notice of Borrower's failure
to make such payment, and the payment is not received by Bank within 30 days of
the date of such written notice. Bank agrees that it shall not accelerate
Borrower's obligations under the Note following the first uncured payment
default thereunder, but may do so immediately after any subsequent uncured
payment default. The fact that Bank may accelerate Borrower's obligations under
the Note only in accordance with the preceding sentence does not preclude Bank
from proceeding against Guarantor before accelerating Borrower's obligations
under the Note with respect to any payment or payments that Borrower failed to
make as required by the Note on the terms and conditions set forth in this
Guaranty.
2. NATURE OF GUARANTY. Guarantor's liability under this Guaranty
shall be open and continuous for so long as this Guaranty remains in force.
Guarantor intends to guarantee at all times the performance and prompt payment
when due, whether at maturity or earlier by reason of acceleration, of all
Indebtedness (provided, however, that Guarantor's liability hereunder is subject
to the limitations specified in paragraph 1 of this Guaranty). No payments made
upon the Indebtedness will discharge or diminish the continuing liability of
Guarantor in connection with any remaining portions of the Indebtedness, or any
of the Indebtedness that subsequently arises or is thereafter incurred or
contracted (provided, however, that Guarantor's liability hereunder is subject
to the limitations specified in paragraph 1 of this Guaranty).
3. DURATION OF GUARANTY. This Guaranty will take effect on the date
hereof without the necessity of any acceptance by Bank, or any notice to
Guarantor or to Borrower, and will continue in full force until the earlier of
(a) such time that all Indebtedness shall have been fully and finally paid and
satisfied, or (b) such time that Guarantor shall have paid the maximum
limitation on his obligation hereunder specified in paragraph 1 of this
Guaranty. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty.
4. GUARANTOR'S AUTHORIZATION TO BANK. Guarantor authorizes Bank,
without notice or demand and without lessening Guarantor's liability under this
Guaranty, from time to time: (a) to alter, compromise, renew, extend,
accelerate, or otherwise change the time for payment or other terms of the
Indebtedness or any part of the Indebtedness, including but not limited to
increases and decreases of the rate of interest on the Indebtedness and
extensions that may be repeated and may be for longer than the original loan
term; (b) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, fail or decide not to perfect, and
release any such security, with or without the substitution of new collateral;
(c) to release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any terms or in any
manner Bank may choose; (d) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (e) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement, mortgage or deed of trust, as Bank may determine; (f) to
sell, transfer, assign, or grant participations in all or any part of the
Indebtedness to a bank, a financial institution, an insurance company, an
institutional lender, or an institutional investor; and (g) to assign or
transfer this Guaranty in whole or in part to a bank, a financial institution,
an insurance company, an institutional lender, or an institutional investor.
5. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants that (a) no representations or agreements of any kind have been
made to Guarantor by Bank that would limit or qualify in any way the terms of
this Guaranty; (b) until the Indebtedness is repaid in full, on and after the
date of this Guaranty Guarantor will not, without the prior written consent of
Bank, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose
of all or substantially all of Guarantor's assets; (c) Guarantor will provide to
Bank such financial and credit information as may be requested by Bank, and such
financial information provided will be true and correct in all material respects
and will fairly present the financial condition of Guarantor as of the dates
thereof; and (d) Guarantor has adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances that might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that Bank shall have no obligation to
disclose to Guarantor any information or documents acquired by Bank in the
course of its relationship with Borrower.
6. GUARANTOR'S WAIVERS. Except as prohibited by applicable law,
Guarantor waives any right to require Bank (a) to continue lending money or to
extend other credit to Borrower; (b) to make any presentment, protest, demand,
or notice of any kind, including notice of any nonpayment of the Indebtedness
(except as specified in the third sentence of paragraph 1 of this Guaranty) or
of any nonpayment related to any collateral, or notice of any action or
nonaction on the part of Borrower, Bank, or any surety, endorser, or other
guarantor in connection with the Indebtedness, or in connection with the
creation of new or additional loans or obligations; (c) to resort for payment or
to proceed directly or immediately against any person, including Borrower or any
other guarantor; (d) to proceed directly against or exhaust any collateral held
by Bank from Borrower, any other guarantor, or any other person; (e) to
marshall, or otherwise proceed against collateral in any particular order; or
(f) to pursue any other remedy within the power of Bank.
Guarantor also waives any and all rights or defenses arising by
reason of (a) any "one action" or "anti-deficiency" law or any other law that
may prevent Bank from bringing any action, including a claim for deficiency,
against Guarantor, before or after the commencement or completion by Bank of any
foreclosure action, either judicially or by exercise of a power of sale; (b) any
election of remedies by Bank that destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full of the
Indebtedness; (d) any right to claim discharge of the Indebtedness on the basis
of unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Bank
against Guarantor is commenced there is outstanding Indebtedness of Borrower to
Bank that is not barred by any applicable statute of limitations; and (f) any
defenses given to guarantors at law or in equity other than actual payment of
the Indebtedness. If payment is made by Borrower, whether voluntarily or
otherwise, or by any third party, on the Indebtedness and thereafter Bank is
required to (or in good faith agrees to) remit the amount of that payment to
Borrower's trustee in bankruptcy or to any similar person under any federal or
state bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any
time any deductions to the amount guaranteed under this Guaranty for any claim
of setoff, counterclaim, counter demand, recoupment or similar right, whether
such claim, demand, or right may be asserted by Borrower, Guarantor, or both.
7. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor
warrants and agrees that each of the waivers set forth above is made with
Guarantor's full knowledge of its significance and consequences and that, under
the circumstances, the waivers are reasonable and not contrary to public policy
or law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
8. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees
that the Indebtedness, whether now existing or hereafter created, shall be prior
to any claim that Guarantor may now have or hereafter acquire against Borrower,
whether or not Borrower becomes insolvent. Guarantor hereby expressly
subordinates any claim Guarantor may have against Borrower (including, but not
limited to, any claim arising out of or resulting from any payment by Guarantor
to Bank hereunder) to any claim that Bank or Wells Fargo Bank, National
Association may now or hereafter have against Borrower. If Guarantor receives
any money or property from Borrower for application to any claim that Guarantor
has or hereafter may have against Borrower, Guarantor will hold such money or
property in trust for Bank and promptly after receipt thereof shall deliver such
money or property to Bank for application to the Indebtedness. In the event of
insolvency and consequent liquidation of the assets of Borrower, through
bankruptcy, by an assignment for the benefit of creditors, by voluntary
liquidation, or otherwise, the assets of Borrower applicable to the payment of
the claims of both Guarantor and Bank shall be paid to Bank and shall be applied
to the Indebtedness. Guarantor hereby assigns to Bank all claims that Guarantor
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring full payment of the Indebtedness.
9. MISCELLANEOUS. The following miscellaneous provisions are a
part of this Guaranty:
(a) Amendments. This Guaranty constitutes the entire understanding and
agreement of the parties as to the matters set forth herein. No alteration
of or amendment to this Guaranty shall be effective unless it is in
writing and signed by the party or parties sought to be charged or bound
by the alteration or amendment.
(b) Applicable Law. This Guaranty shall be governed by and construed
in accordance with the laws of the state of Oregon, without regard to
principles of conflicts of law.
(c) Arbitration. Either Bank or Guarantor may require that all disputes,
claims, counterclaims, and defenses, including those based on or arising
from any alleged tort (collectively referred to below as "Claims")
relating in any way to this Guaranty, or any transaction of which this
Guaranty is a part, be settled by binding arbitration in Portland, Oregon
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and Title 9 of the U.S. Code. Notwithstanding the
reference to the American Arbitration Association rules in the preceding
sentence, the American Arbitration Association shall not be involved in or
administer the arbitration (unless the parties otherwise agree in
writing). Rather, within 30 days of the date of a request or demand for
arbitration of any dispute or Claims hereunder, the parties shall agree
upon a mutually acceptable arbitrator (and, if they are unable or
unwilling to do so, an arbitrator shall be appointed pursuant to 9 USC '
5). All Claims will be subject to the statutes of limitation applicable if
they were litigated. This provision is void if arbitration would
jeopardize Bank's ability to proceed against collateral located outside of
Oregon, or if the effect of the arbitration procedure (as opposed to any
Claims of Guarantor) would be to materially impair Bank's ability to
realize on any collateral securing the Note. One neutral arbitrator will
decide all issues. The arbitrator will be an active Oregon State Bar
member in good standing. All arbitration hearings will be held in
Portland, Oregon. In addition to all other powers, the arbitrator shall
have the exclusive right to determine all issues of arbitrability.
Judgment on any arbitration award may be entered in any court with
jurisdiction. Each party has the right before, during, and after any
arbitration to exercise any number of the following remedies, in any order
or concurrently:
(i) Setoff,
(ii) Self-help repossession,
(iii) Judicial or nonjudicial foreclosure against real or
personal property collateral, or
(iv) Provisional remedies, including injunction, appointment of
receiver, attachment, claim and delivery, and replevin.
This arbitration clause cannot be modified or waived by either party
except in writing, which writing must refer to this arbitration clause and
be signed by both Bank and Guarantor.
(d) Expenses. Guarantor agrees to pay upon demand all costs and expenses
of Bank, including reasonable legal expenses, incurred in connection with
the enforcement of this Guaranty.
(e) Notices. All notices required to be given party to the other under
this Guaranty shall be in writing and, except for revocation notices by
Guarantor, shall be effective when actually delivered or when deposited in
the United States mail, first class postage prepaid, addressed to the
party to whom the notice is to be given at the address shown below or to
such other addresses as either party may designate to the other in
writing:
If to Bank: United States National Bank of Oregon
111 S.W. Fifth Avenue (T-8)
Portland, Oregon 97204
Attention: Betty J. Kinoshita
With copies to: Miller, Nash, Wiener, Hager & Carlsen LLP
3500 U. S. Bancorp Tower
111 S.W. Fifth Avenue
Portland, Oregon 97204-3699
Attention: Louis G. Henry
If to Guarantor: Thomas W. Itin
Suite 424
7001 Orchard Lake Road
Bloomfield, Michigan 48233
With copies to: Friedlob, Sanderson, Raskin,
Paulson & Tourtillott, LLC
1400 Glenarm Place, Suite 300
Denver, Colorado 80202
Attention: Gerald Raskin
(f) Interpretation. The words "Guarantor," "Borrower," and "Bank" include
the respective successors, assigns, and transferees of each of them;
provided, however, that Guarantor may not assign his obligations
hereunder. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of this
Guaranty. If a court of competent jurisdiction finds any provision of this
Guaranty to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as
to any other persons or circumstances, and all provisions of this Guaranty
in all other respects shall remain valid and enforceable.
(g) Waiver. Bank shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Bank. No
delay or omission on the part of Bank in exercising any right shall
operate as a waiver of such right or any other right. No prior waiver by
Bank, nor any course of dealing between Bank and Guarantor, shall
constitute a waiver of any of the rights of Bank or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of Bank is
required under this Guaranty, the granting of such consent in any instance
shall not constitute continuing consent to subsequent instances where such
consent is required.
(h) Statutory Notice. By Oregon statute (ORS 41.580), the following
disclosure is required: UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY LENDERS AFTER OCTOBER 3, 1989, CONCERNING LOANS AND
OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD
PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING,
EXPRESS CONSIDERATION, AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.
DATED this 14th day of July, 1997.
GUARANTOR:
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Thomas W. Itin
Also executed by Bank to document its agreement to the arbitration provisions of
Section 9(c) of this Guaranty.
UNITED STATES NATIONAL BANK OF OREGON
By:
Betty J. Kinoshita
Vice President