<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
(Rule 14A-101)
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. ___)
Filed by the registrant __X__
Filed by a party other than the registrant ___
Check the appropriate box:
_X_ Preliminary proxy statement
___ Definitive proxy statement
___ Definitive additional materials
___ Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
___ Confidential, for use of the Commission only, as permitted by Rule
14a-6(e)(2)
AJAY SPORTS, INC.
(Name of Registrant as Specified in Its Charter)
AJAY SPORTS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
_X_ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A
___ $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
O-11:
(1) Title of each class of securities to which transaction
applies:________________________
(2) Aggregate number of securities to which transactions
applies:_______________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined:____________________________
(4) Proposed maximum aggregate value of transaction:_________
(5) Total fee paid:_____________________________
___ Check Box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number; or the form or schedule and the
date of its filing.
(1) Amount previously paid:_____________________
(2) Form, Schedule or reg. statement no.:_______
(3) Filing party:_______________________________
(4) Date filed:_________________________________
<PAGE>
AJAY SPORTS, INC.
1501 E. Wisconsin Street
Delavan, WI 53115
***************
Notice of Annual Meeting of Stockholders
to be held on May 24, 1995
***************
The Annual Meeting of Stockholders of Ajay Sports, Inc. (the "Company") will
be held at the offices of Ajay Leisure Products, Inc. at 1501 E. Wisconsin
Street, Delavan, Wisconsin 53115, on May 24, 1995 at 11:00am (CDT), for the
following purposes:
1. To elect 6 directors to hold office until the next annual
meeting of stockholders or until their successors are duly
elected and qualified.
2. To consider and vote upon the amendment to Article 4 of the
Company's Restated Certificate of Incorporation to increase
the authorized capital stock of the Company from 50,000,000
shares of $.01 par value Common Stock to 100,000,000 shares.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders holding shares of Common Stock of record at the close of
business on April 17, 1995 will be entitled to receive notice of and vote at
the meeting.
Stockholders, whether or not they expect to be present at the meeting, are
requested to sign and date the enclosed proxy and return it promptly in the
envelope enclosed for that purpose. Any person giving a proxy has the power
to revoke it at any time by following the instructions provided in the Proxy
Statement.
By Order of the Board of Directors,
Robert R. Hebard
Secretary
April 20, 1995
Delavan, Wisconsin
<PAGE>
Proxy Statement
for 1995 Annual Meeting of Stockholders
General Information
This Proxy Statement is furnished to stockholders of Ajay Sports, Inc.
("Company") in connection with the solicitation of proxies by and on behalf
of the Company's Board of Directors (the "Board") for use at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on May 24,
1995 at the offices of the Company's operating subsidiary, Ajay Leisure
Products, Inc., 1501 E. Wisconsin Street, Delavan, Wisconsin 53115, at the
time and for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. This Proxy Statement, the accompanying proxy card
and the Notice of Annual Meeting will be first sent to stockholders on or
about April 20, 1995.
As of April 17, 1995, the record date for entitlement to notice of and to
vote at the Annual Meeting, the Company had outstanding 22,545,537 shares of
Common Stock, $.01 par value per share (the "Common Stock"). The presence,
in person or by proxy, of holders of one-third of the shares of Common Stock
entitled to vote at the Meeting constitutes a quorum for the transaction of
business at the Meeting.
Each share of Common Stock outstanding on the record date is entitled to one
vote on all matters presented at the Meeting. To be elected as a director,
a nominee must have more shares cast in his favor than shares for which
voting authority is withheld. A majority of the outstanding shares entitled
to vote at the Meeting is required for approval of the amendment to the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 50,000,000 to 100,000,000.
Abstentions are counted only for purposes of determining whether a quorum is
present at the meeting and/or a vote entitled to be cast at the Meeting, and
will have the effect of a vote against the proposal to increase the
authorized shares of the Company to 100,000,000. Broker non-votes will have
the effect of a vote against the proposal to approve the change in the
authorized number of shares but will not be counted for any other purpose.
A stockholder who gives his proxy may revoke it at any time before it is
voted by giving notice of the revocation thereof to the Secretary of the
Company, by filing another proxy with the Secretary or by attending the
Meeting and voting in person. All properly executed and unrevoked proxies
delivered pursuant to this solicitation, if received in time, will be voted
in accordance with the instructions of the beneficial owners contained
thereon.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy materials to the
beneficial owners of the Company's Common Stock for whom they hold shares and
will reimburse them for their reasonable expenses in so doing. The Company's
1994 Annual Report and Form 10-K is being sent to all stockholders with this
Proxy Statement.
Proposal 1 - Election of Directors
At the Meeting six (6) directors will be elected to hold office until the
next annual meeting of stockholders or until their successors are duly
elected and qualified. Unless marked to the contrary, the proxies received
by the Board will be voted for the election of the six nominees named herein,
all of whom are presently members of the Board. Should any of the nominees
for the office of director decline or be unable to serve if elected, it is
intended that the person named in the accompanying form of proxy will vote
for the election of such other person for director as the Board of Directors
recommends. The Board has no reason to believe that any nominee will decline
or be unable to serve if elected.
First Year
Positions and Became
Name Age Offices with Company Director
Anthony B. Cashen 60 Director 1993
Robert R. Hebard 42 Director, Secretary 1989
of the Company
Stanley V. Intihar 60 Director 1994
Thomas W. Itin 60 Chairman, President, 1993
Treasurer and Director
of the Company
Robert D. Newman 53 Director 1994
Clarence H. Yahn 58 Director 1994
Anthony B. Cashen. Mr. Cashen has served as Secretary, Treasurer and
Director of LBO Capital Corp., since inception. He is currently a Managing
Partner in Lamalie Amrop International, a management consulting and executive
recruiting firm located in New York City. Previously, Mr. Cashen had been an
officer and Principal of the investment firms of A.G. Becker, Inc. and
Donaldson, Lufkin & Jenrette, Inc. He serves as Director of PW
Communications and Immucell Corporation, both of which are publicly-held
companies. Mr. Cashen is also President of the Sagamore Institute.
Robert R. Hebard. Mr. Hebard has served as Secretary of the Company since
September of 1990. From June 1986 to January 1992 he was First Vice
President/Director of Product Management for Comerica Bank and from February
1992 to October 1992 was Director of Retail Marketing for the merged
Comerica/Manufacturers Bank. Mr. Hebard is also currently serving as Vice
President of Woodward Partners, Inc., a real estate development company in
suburban Detroit, Michigan. In June 1993, he was named Chairman of the Board
and President of Enercorp, Inc., a publicly traded business development
company under the Investment Company Act of 1940, as amended. In 1993, Mr.
Hebard was also named Chief Executive Officer, Chief Financial Officer, and
Treasurer of CompuSonics Video Corporation, a publicly held company. From
December 1993 to August 1994 Mr. Hebard served as Director of Kimbro Imaging
Systems, Inc.
Stanley V. Intihar. From March 1994 to the present, Mr. Intihar has been
Senior Vice President of Williams Controls, Inc. and has been a Director of
Williams Controls, Inc. since December of 1992. From 1992 to 1994, he was an
independent consultant for Williams. From 1988 to 1991, Mr. Intihar held
various offices with Park Ohio Industries, Inc., including President and
Chief Operating Officer and most recently Chairman of the Board and Chief
Executive Officer. Since 1978 Mr. Intihar has been a Director of Horsburgh
& Scott Co., a private company.
Thomas W. Itin. Mr. Itin was elected Chairman of the Board and President of
the Company in June of 1993. Mr. Itin has served as Chairman of the Board,
Chief Executive Officer and Chief Operating Officer of LBO Capital Corp.
since its inception, and is the Company's largest single stockholder. Mr.
Itin has been Chairman, President and Owner of TWI International, Inc.
("TWI") since he founded the firm in 1967. Mr. Itin also is the Owner and
Principal Officer of Acrodyne Corporation since 1962. Mr. Itin is Chairman,
President, Treasurer, Chief Executive Officer, and Chief Operating Officer of
Williams Controls, Inc., a publicly held corporation from March 1989 to the
present. From August 1989 to February 1991, Mr. Itin was an officer and
Director of MacGregor Sporting Goods Corporation ("MacGregor Corporation"),
formerly MGS Acquisitions, Inc. a privately held company which acquired
substantially all of the assets of MacGregor Sporting Goods, Inc. from a
filing of Chapter 11 Bankruptcy. In February 1991, MacGregor Sports, Inc.,
the wholly-owned operating subsidiary of MacGregor Corporation, filed for
protection under Chapter 11 of the United States Bankruptcy Code. Mr. Itin
was a co-founder of Roadmaster Industries, Inc. in 1987 and served as a
Director thereof from October 1987 until June 1993. From December 1987 until
October 1993, Mr. Itin was an officer and Director of CompuSonics Video
Corporation, a publicly held company.
Robert D. Newman. Mr. Newman became a Director of the Company in August
1994. Mr. Newman has served as General Manager of Leisure Life, Inc., a
wholly owned subsidiary of the Company since August 1994. Mr. Newman founded
Leisure Life, Inc. in October, 1990 and has served as President since its
inception, until its purchase by the Company in August 1994. Mr. Newman was
President and Chief Executive Officer of Stone Mountain Millworks from 1985
to 1989. Mr. Newman served as Director of Product Development for Gold
Medal, Inc. from 1989 to October 1990.
Clarence H. Yahn. Mr. Yahn became a Director of the Company in September
1994, and has served as Director of Ajay Leisure Products, Inc., a wholly
owned subsidiary of Ajay Sports, Inc. since September 1993 and as Ajay
Leisure's President since January 1994. Mr. Yahn is on the Board of
Directors of Leisure Life, Inc., a subsidiary of the Company. In 1988, Mr.
Yahn joined Gold Medal, Inc. as its President. Prior to joining Ajay Leisure
Products, Mr. Yahn served as Chief Executive Officer of Melnor, Inc. a
consumer durables company from 1992 to 1993.
Robert R. Hebard is the son-in-law of Thomas W. Itin. Other than this
relationship there are no other family relationships between any director or
executive officers.
During the fiscal year ended December 31, 1994, the Board of Directors held
a total of two meetings and, acted by unanimous written consent sixteen
times. There is no standing nominating committee of the Board of Directors.
The Audit Committee consists of Mr. Hebard, Mr. Cashen and Mr. Intihar, and
the Compensation Committee consists of Mr. Cashen and Mr. Intihar.
Committees of the Board. The Audit Committee recommends to the Board the
appointment of independent auditors, reviews with the independent auditors
the scope and results of the audit engagement and any non-audit services to
be performed by the independent auditors, monitors the Company's system of
internal accounting controls and evaluates the independence of the
independent auditors and their fees for services. The Compensation Committee
monitors the Company's compensation policies and reviews and recommends to
the Board the salaries and bonuses of executive officers of the Company and
the remuneration of the directors. The Compensation Committee also
administers the 1994 Stock Option Plan. Neither the Audit Committee nor the
Compensation Committee met in fiscal 1994.
The directors of the Company are not compensated for their services as
directors, but are reimbursed for reasonable costs incurred on behalf of the
Company.
Proposal 2 - Increase in Authorized Capital Stock
The Company's Restated Certificate of Incorporation currently authorizes
50,000,000 shares of $.01 par value Common Stock and 10,000,000 shares of
$.01 par value Preferred Stock. The Company is proposing to increase the
number of shares of its authorized Common Stock to 100,000,000, without
change to authorized shares of Preferred Stock.
The additional shares may be issued by the Board of Directors without further
stockholder approval unless required by applicable law, regulation or rule.
The issuance of large amounts of capital stock would dilute the stock
ownership of the present shareholders and could affect the price of the
Company's Common Stock.
As of the Record Date of April 17, 1995, the Company had 22,545,537 Common
Shares outstanding. The Company also has 12,500 Series B 8% Cumulative
Convertible Preferred Shares (the "Series B Shares") outstanding, along with
various warrants and options to purchase Common Shares held by current
stockholders. Based on the conversion or exercise of the above mentioned
securities into Common Shares, the Company will approach its currently
authorized limit of 50,000,000 Common Shares. The Company is requesting
shareholder approval to increase the authorized Common Shares to 100,000,000
to allow for future needs that the Company may have for stock option and
other plans, as well as using the Company's Common Stock in any future
acquisitions and for other general corporate purposes.
The Board recommends a vote FOR approval to the proposal to amend the
Restated Certificate of Incorporation.
Executive Officers of the Company
The following table sets forth, as of April 1, 1995, the names and ages of
the Company's executive officers including all positions and offices held by
each such person. These officers are elected to hold office for one year or
until their respective successors are duly elected and qualified.
Name Age Position(s)
Thomas W. Itin 60 Chairman of the Board, President, Chief
Executive Officer and Treasurer
Robert R. Hebard 42 Director and Secretary
Clarence H. Yahn 58 President of Ajay Leisure Products,
Inc.(subsidiary)
Duane Stiverson 53 Chief Financial Officer of Ajay Leisure
Products, Inc. and Ajay Sports, Inc.
For information regarding Mr. Hebard, Mr. Yahn, and Mr. Itin, see their
biographies above.
Duane Stiverson has been Chief Financial Officer since July 19, 1994. Prior
to joining the Company, Mr. Stiverson was the Vice President of Operations
for VariQuest Technologies, Inc. and held that position since 1991. From
1987 to 1990, Mr. Stiverson was Vice President of Materials for the Ambrosia
Chocolate Company. From 1978-1987 he was the Vice President of Finance for
Ambrosia, and from 1976-78 was its Controller. Mr. Stiverson held various
controller and corporate finance positions with the Bendix Corporation. Mr.
Stiverson has a Bachelor of Science from the University of Nebraska and was
later awarded a Master of Business Administration from Michigan State
University.
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows, for the years ending December 31, 1994, 1993, and
1992, the cash compensation paid by the Company and its subsidiaries, as well
as certain other compensation paid or accrued for those years, to each of the
executive officers of the Company who received compensation from all
capacities in which they serve (no bonuses were paid to the named executive
officers during the periods indicated):
Summary Compensation Table
Annual Long-Term
Compensation Compensation
Securities
Underlying
Options
Name and Principal Position Year Salary (# shares)
Thomas W. Iten (1)
President, Treasurer and 1994 $ 1 -
Director of the Company, 1993 - -
and Treasurer and Director 1992 - -
of Ajay Leisure Products, Inc.
Clarence H. Yahn 1994 $101,000 350,000
Director of the Company and 1993 - -
President of Ajay Leisure 1992 - -
Products
Duane R. Stiverson 1994 $ 28,000 75,000
CFO of the Company and VP/CFO 1993 - -
of Ajay Leisure Products 1992 - -
(1) On June 21, 1993 Mr. Iten was elected Chairman of the Board, President,
Treasurer and Director of the Company, and Chairman of the Board, Treasurer
and Director of Ajay Leisure Products, Inc. Mr. Itin has a three-year
employment arrangement with the Company, pursuant to which he will receive a
salary of $1 per year for 1994 and 1995.
Employment Contracts
The Company has an employment agreement with Mr. Itin under which he will
serve as the President and Chief Executive Officer of the Company at a salary
of $1 per year for 1994 and 1995. The employment agreement terminates on
December 31, 1996. Mr. Itin's compensation for 1996 is to be determined by
the Board based on Mr. Itin's contribution to the success of the Company in
1994 to 1995. Under this arrangement, the Company may terminate the
employment agreement with Mr. Itin only for cause.
Common Stock Options
As of December 31, 1994, 840,000 options were granted and 131,667 were vested
and became exercisable. The following tables summarize Common Stock Option
grant activity for those named executive officers who received options for
the year ended December 31, 1994.
<TABLE>
<CAPTION>
Potential Realizable
Option Grants in 1994: Value at Assumed
% of Total Annual Rates of
# of Securities Options Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expir. Option Term
Name and Positions Granted Fiscal Year ($/share) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Clarence H. Yahn
President (Ajay) 66,667(a) 7.9% $0.40 12/31/99 $(3,300) $2,000
66,667(b) 7.9 0.40 12/31/99 (3,300) 2,000
66,666(c) 7.9 0.40 12/31/99 (3,300) 2,000
50,000(a) 6.0 0.45 12/31/99 (5,000) (1,000)
50,000(b) 6.0 0.45 12/31/99 (5,000) (1,000)
50,000(c) 6.0 0.45 12/31/99 (5,000) (1,000)
Duane R. Stiverson
VP & CFO 15,000(a) 1.8% $0.40 12/31/96 $ 800 $1,600
15,000(b) 1.8 0.40 12/31/97 1,100 2,400
15,000(c) 1.8 MKT 12/31/98 700 1,600
12/31/96
15,000(d) 1.8 MKT 12/31/99 700 1,800
12/31/97
15,000(e) 1.8 MKT 12/31/00 800 1,900
12/31/98
</TABLE>
(a) Vesting 12/31/94
(b) Vesting 12/31/95
(c) Vesting 12/31/96
(d) Vesting 12/31/97
(e) Vesting 12/31/98
Aggregated Option Exercises in 1994 and
December 31, 1994 Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money options
Shares acqd. Value Options/FY End (#) at FY End ($)
Name on Exercise Realized($) Exerc. Unexerc. Exerc. Unexerc.
<S> <C> <C> <C> <C> <C> <C>
Clarence H. Yahn
Pres. (Ajay) 0 0 66,667 133,333 $2,666 $5,333
0 0 50,000 100,000 - -
Duane R. Stiverson
VP & CFO 0 0 15,000 60,000 $600 $600
</TABLE>
FURTHER INFORMATION
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth, as of April 17, 1995, the number of shares of
Common Stock beneficially owned by each director and executive officer (named
in the Summary Compensation Table) of the Company individually, all officers
and directors as a group, and all beneficial owners of more than five percent
of the Common Stock. The following stockholders have sole voting and
investment power with respect to their holdings unless otherwise footnoted.
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned of Class (1)
Thomas W. Itin 13,281,225 47.4%
7001 Orchard Lake Road (2)(3)(4)(5)(6)
Suite 424
W. Bloomfield, MI 48322
Williams Controls Industries, Inc. 15,228,520 45.3%
14100 S.W. 72nd Street (11)
Portland, OR 97224
TICO 8,676,540 33.1%
7001 Orchard Lake Road (2)
Suite 424
West Bloomfield, MI 48322
Acrodyne Profit Sharing Trust 2,773,471 11.5%
7001 Orchard Lake Road (3)
Suite 424
West Bloomfield, MI 48322
Enercorp, Inc. 1,764,706 7.8%
7001 Orchard Lake Road (9)
Suite 426
West Bloomfield, MI 483226
LBO Capital Corp. 1,680,000 7.4%
7001 Orchard Lake Road (4)
Suite 424
West Bloomfield, MI 48322
Robert R. Hebard 1,799,706 8.0%
7001 Orchard Lake Road (9)
Suite 426
West Bloomfield, MI 48322
Robert D. Newman 1,426,000 6.3%
215 4th Avenue North (10)
P. O. Box 60
Baxter, TN 38544
Clarence H. Yahn 266,667 0.7%
1501 E. Wisconsin Street (7)
Delavan, WI 53115
Duane Stiverson 35,000 0.2%
1501 E. Wisconsin Street (8)
Delavan, WI 53115
Stanley V. Intihar 20,000 0.1%
2688 Cranlyn Road
Shaker Heights, OH 44122
Anthony B. Cashen -0-
489 Fifth Avenue
14th Floor
New York, NY 10017
All officers and directors
as a group (seven persons) 32,057,118 81.7%
_____________________________
(1) Where persons listed on this table have the right to obtain additional
shares of Common Stock through the exercise of outstanding options or
warrants or the conversion of convertible securities within 60 days from
April 17, 1995, these additional shares are deemed to be outstanding for
the purpose of computing the percentage of Common Stock owned by such
persons, but not deemed to be outstanding for the purpose of computing
the percentage owned by any other person. Percentages are based on
22,545,537 shares outstanding.
(2) TICO, a Michigan co-partnership of which Mr. Itin is the Managing
Partner, owns of record 5,000,040 shares of Common Stock and 12,500
shares (100%) of the Series B Preferred Stock. Each share of Series B
Preferred Stock is convertible at the option of the holder into 294.12
shares of Common Stock. Accordingly, the 3,676,500 shares of Common
Stock into which the 12,500 shares are convertible are included. Mr.
Itin is deemed to be the beneficial owner of the securities owned of
record by TICO.
(3) Mr. Itin is trustee and beneficiary of Acrodyne Profit Sharing Trust,
which owns of record 1,176,471 shares of Common Stock and warrants to
purchase 1,597,000 shares of Common Stock. Mr. Itin is deemed to be the
beneficial owner of the securities owned by record by Acrodyne Profit
Sharing Trust.
(4) LBO Capital Corp., a Colorado corporation of which Mr. Itin is a
shareholder, Chairman of the Board of Directors, and President, owns of
record 1,480,000 shares of Common Stock and warrants to purchase 200,000
shares of Common Stock. Mr. Itin disclaims beneficial ownership of the
securities owned of record by LBO Capital Corp. in excess of his
pecuniary interest.
(5) Includes 151,214 shares owned of record by First Equity Corporation, a
Michigan corporation of which Mr. Itin's wife is a shareholder,
President, and Chairman of the Board of Directors. Mr. Itin disclaims
beneficial ownership of the securities owned of record by First Equity
Corporation in excess of his pecuniary interest.
(6) Does not include 4,117,647 Common Shares and 11,110,873 warrants owned
by Williams Controls, Inc. Mr. Itin is Chairman of the Board,
President, Chief Executive Officer, Chief Operating Officer, Treasurer
and 26.4% beneficial owner of Williams Controls, Inc. Mr. Itin has
agreed to abstain from participating in voting Company shares owned by
Williams.
(7) Includes 116,667 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(8) Includes 15,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(9) Enercorp, Inc., a Colorado corporation of which Mr. Hebard is Chairman
of the Board of Directors and President, owns of record 1,764,706 shares
of Common Stock.
(10) Includes 400,000 shares of Common Stock being held in escrow pending
release subject to subsequent conditions.
(11) Williams Controls Industries, Inc. has a conditional right to purchase
shares of Common Stock, as a result of a Joint Venture Agreement between
the Company and Williams dated 5/5/94. The agreement was amended on
4/5/95. See "Certain Relationships and Related Transactions."
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and 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 ("SEC"). Officers, directors and greater than ten-percent
stockholders are required by the SEC regulation to furnish the Company with
copies of Section 16(a) forms they file. Based solely on review of the
copies of such forms furnished to the Company, or written representations of
the reporting person, the Company has determined that all required reports
have been timely filed during the year.
Certain Relationships and Related Transactions
The Company was formed in 1988 to acquire certain assets, liabilities and
operations of the sports accessory business of Roadmaster Corporation
("Roadmaster"). The Company was capitalized initially through a private
placement of stock and an initial public offering (approximately $3.1
million), a long-term debt of $4 million owed to Roadmaster for the purchase
of the business, and a revolving credit facility guaranteed by Equitex, Inc.,
an affiliate of Roadmaster. Until March 1994, the Company was controlled, in
part, by Roadmaster and Equitex. TICO, an entity controlled by Thomas W.
Itin, obtained control from Roadmaster and Equitex in March 1994, pursuant to
the terms of an Exchange Agreement.
In the Exchange Agreement, Roadmaster and Equitex agreed to substantially
divest all of their interest in the Company by transferring to TICO all of
the Company's outstanding Common Stock purchase warrants held by them, a
$217,000 principal amount note payable to Roadmaster, 29,500 shares of the
Company's Series A 8% cumulative convertible preferred stock, and all
outstanding accounts receivable due Roadmaster. Additionally, Roadmaster
agreed to transfer to TICO all marketing and distribution rights for golf
products in Canada, all tooling exclusively associated with the manufacture
of hand-pulled golf carts, the "Ajay" name and agreed to grant TICO a ten
year exclusive license for the use of the "Ajay" trademark and trade name.
The Company and TICO agreed to obtain the release and satisfaction in full of
any and all obligations, guarantees, and collateral of Equitex under the
credit facility, including the release of 1,000,000 shares of Roadmaster
common stock owned by Equitex and pledged to a bank as collateral. The
Company's president and TICO further agreed to transfer to Roadmaster all the
Roadmaster common stock purchase warrants held by the Company's president,
along with TICO's payment of $200,000 to Roadmaster.
On April 14, 1994, the Company was advised by BankAmerica that the Second
Amended Restated Loan and Security Agreement ("Credit Agreement") between
BankAmerica and the Company's wholly-owned subsidiary, Ajay, had been
purchased by Roadmaster Industries, Inc. On May 5, 1994, Ajay paid
Roadmaster Industries in full for all outstanding obligations due under its
Credit Agreement and entered into a Loan and Security Agreement ("Loan
Agreement") with Williams Controls Industries, Inc. ("Williams") for a term
loan of up to $7,000,000. The Loan Agreement requires monthly interest only
payments at the prime rate of First Interstate Bank of Oregon plus 2% and was
originally scheduled to expire on November 4, 1994 and was extended to May 5,
1995. Effective with February 1995 the interest rate became prime plus
3.25%. The terms and conditions of the Loan Agreement are substantially the
same as the prior Credit Agreement with BankAmerica, except that the Loan
Agreement is a term loan. The Loan Agreement is secured by a lien on
substantially all of the assets of Ajay and is guaranteed by the Company.
The guaranty is secured by a pledge of all of the outstanding stock of Ajay.
In addition, concurrent with the establishment of the Loan Agreement with
Williams, the Company and Ajay entered into a Joint Venture Implementation
Agreement with Williams in which the Company granted Williams to option to
purchase up to 51% of the Common Stock of the Company at various option
prices which will be come fully effective on August 1, 1995, as part of an
amendment to the Joint Venture Agreement signed on April 5, 1995. As part
of the original agreement the Company granted Williams the right to purchase
up to 19% of the Company's Common Stock at $.34 per share, exercisable for a
five-year period. On October 3, 1994, Williams exercised its option and
purchased 4,117,647 shares of the Company's Common Stock in exchange for a
reduction in the note payable from Ajay to Williams of $1,400,000. Williams
retains the remaining options granted under the Joint Venture Implementation
Agreement to purchase another 32% of the Company's stock, subject to certain
modifications on April 5, 1995.
Mr. Itin, the Chairman and president of the Company, is, and was at the time
of the Loan Agreement, Chairman, President, Treasurer, Chief Executive
Officer, and Chief Operating Officer of Williams, a publicly-held
corporation.
Based upon completion of the Exchange Agreement and refinancing of debt
obligations, the Board of Directors of the Company approved a plan to convert
the value of instruments transferred to TICO, into preferred stock, which
could be converted to Common Stock of the Company at a price of $.34 per
share. The Board further approved a reduction in the price of the Common
Stock purchase warrants received by TICO under the Exchange Agreement to $.34
per share and to issue warrants in like amount of warrants received at the
date of exchange that had subsequently expired.
On October 3, 1994 the Company created a new class of 8% Series B. Cumulative
Convertible Preferred Stock and allowed for its exchange, on a share-for-
share basis, with the Company's Series A Preferred Stock. On that same day,
TICO notified the Company that it wished to exchange the 29,500 shares of
Series A Preferred stock for 29,500 shares of the newly issued Series B
Preferred Stock, as was permitted under the Certificate of Designations of
Rights and Preferences of the Series B Preferred Stock. On that same day,
TICO notified the Company that it wished to convert 17,000 shares of its
Series B Preferred Stock for 5,000,040 shares of the Common Stock of the
Company, as the Series B Preferred Stock allows for a conversion rate of 1
share of Series B Preferred Stock for 294.12 shares of the Company's Common
Stock.
On October 3, 1994, Enercorp, Inc., a business development company under the
Investment Company Act of 1940, as amended, invested $600,000 and received
1,764,706 shares of the Common Stock of the Company. In addition, on that
same day, Acrodyne Profit Sharing Trust invested $400,000 in the Company and
received 1,176,471 shares of the Company's Common Stock. Robert R. Hebard,
the Secretary and a Director of the Company, is Chairman of the Board of
Directors and President of Enercorp, Inc. Mr. Itin is a principal
shareholder of Enercorp, Inc.
In December 1993, First Equity Corporation established a letter of credit on
behalf of the Company, which was amended during 1994, totaling $271,000.
This letter of credit was used to purchase inventory. In addition, First
Equity Corporation advanced the Company $250,000 during January 1994 and was
repaid in June 1994. First Equity Corporation is a Michigan corporation of
which Mr. Itin's wife is a shareholder, President, and Chairman of the Board
of Directors.
On April 5, 1995, the Company and Williams agreed to modifications of the
terms of the Loan Agreement and the Joint Venture Agreement between the two
companies. The changes include (1) a waiver of Williams' preemptive rights
under certain circumstances, (2) an extension of the loan term until February
1, 1996, (3) a reduction in the maximum loan amount from $7.0 million to $5.6
million as of August 1, 1995, (4) a reduction in the number of $1.00 options
previously granted to Williams , from 1,394,979 to 348,745, (5) a reduction
in the exercise price of the $1.00 options granted to Williams to $.50, (6)
an extension of the expiration date of all options granted to Williams under
the Joint Venture Agreement, and (7) an additional four-year extension of the
manufacturing joint venture at the Company's Mexicali, Mexico facility.
The agreement, with the modifications discussed, currently provides Williams
with the following options to purchase the Company's Common Stock:
Option Expiration
# of Options Exercise Price Date
8,834,866 $ 0.34 8/1/99
3,487,447 0.40 8/1/99
2,906,207 0.50 8/1/99
Independent Public Accountants
The Company's Financial Statements for the fiscal years ended December 31,
1992 and 1993 were audited by Coopers & Lybrand ("Coopers"). Coopers issued
its report thereon dated April 11, 1994. On June 3, 1994, the Company was
informed by Coopers that the client-auditor relationship between the Company
and Coopers had ceased. On July 21, 1994, the Company engaged Hirsch &
Silberstein of Farmington Hills, Michigan, to audit the Company's Financial
Statements for the year ended December 1994. Representatives of Hirsch &
Silberstein will not be present at the Annual Meeting of Stockholders.
The report of Hirsch and Silberstein on the Company's financial statements
for the fiscal year ended December 31, 1994 was qualified as to uncertainty
concerning the Company's ability to continue as a going concern due to
significant losses during 1993 and 1994.
The report of Coopers on the Company's financial statements for the fiscal
year ended December 31, 1993 was qualified as to uncertainty concerning the
Company's ability to continue as a going concern due to significant losses
during 1993 and the Company not being in compliance with certain debt
covenants under its bank loan. The bank loan was subsequently repaid in full
on May 5, 1994, at which time the Company entered into a new loan agreement
with another company.
In connection with the audit for the years ended December 31, 1992 and 1993,
there have been no disagreements with Coopers on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which if not resolved to the satisfaction of Coopers would have
caused them to make reference to the matter in their report. The same was
true as of June 3, 1994, the date that the client-auditor relationship
between the Company and Coopers had ceased.
Stockholder Proposals
All proposals of stockholders intended to be included in the proxy statement
to be presented at the next annual meeting of stockholders must be received
at the Company's corporate offices at 7001 Orchard Lake Road, Suite 424, West
Bloomfield, Michigan 48322, Attention: Corporate Secretary, on or before
January 15, 1996.
Other Business
Management does not know of any other business to be brought before the
Meeting. If any such matters are brought before the meeting, the proxies
named in the enclosed form of proxy will vote proxies received by them as
they deem best with respect to all such matters.
By Order of the Board of Directors,
Robert R. Hebard
Secretary
April 20, 1995
Delavan, Wisconsin
<PAGE>
________________________________________________________________________
PROXY
________________________________________________________________________
AJAY SPORTS, INC.
1501 E. Wisconsin Street
Delavan, WI 53115
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON May 24, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Ajay Sports, Inc. (the "Company") hereby
constitutes and appoints Thomas W. Itin and Robert R. Hebard as proxies, each
with the power to appoint his substitute, to appear, attend and vote all of
the shares of the Common Stock of the Company standing in the name of the
undersigned at the 1995 Annual Meeting of Stockholders of Ajay Sports, Inc.
to be held at 1501 E. Wisconsin Street, Delavan, Wisconsin, on May 24, 1995,
at 11:00am (CDT), and at any postponements or adjournments thereof, upon the
following matters:
1. ELECTION OF DIRECTORS
FOR all nominees listed below ______ (except as marked to the
contrary below).
WITHHOLD AUTHORITY to vote for all nominee(s) _______.
Instruction: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below:
Anthony B. Cashen Robert R. Hebard Stanley V. Intihar
Thomas W. Itin Robert D. Newman Clarence H. Yahn
2. To consider and vote upon the amendment to Article 4 of the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock, $.01 par value of the Company from 50,000,000 shares
to 100,000,000 shares.
FOR ________ AGAINST ________ ABSTAIN ________
3. To transact such other business as may properly come before the meeting.
This proxy, when properly signed and delivered, will be voted in the
manner directed herein by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR the election of directors and FOR Proposal
2. This proxy will be voted in accordance with the discretion of the proxies
on any other business.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders, the Proxy Statement dated April 20, 1995 and the
Annual Report and Form 10-K of Ajay Sports, Inc. for the year ended December
31, 1994. The undersigned ratifies all of the proxies, or any of them or
their substitutes, may lawfully do or cause to be done by virtue hereof and
revokes all former proxies.
Please mark, date and sign your name exactly as it appears hereon and
return the Proxy in the enclosed envelope as promptly as possible. It is
important to return this Proxy properly signed in order to exercise your
right to vote if you do not attend the meeting and vote in person. When
signing as agent, partner, attorney, administrator, guardian, trustee or in
any other fiduciary or official capacity, please indicate your title. If
stock is held jointly, each joint owner must sign.
Date: __________________, 1995 __________________________
Signature
__________________________
Signature (if jointly held)
Address if different from that on label: _________________________
Street Address
_________________________
City, State and Zip Code
_________________________
Number of Shares
Please check if you intend to be present at the meeting: ________
