-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CxJUNqbLx+Q3P1VlZOmPhueHnnJgSC0nXNXZp/arX1HZBN3S9f6kuyDqhcJMFDBz cBxYOz3ZJ1fSDxJnDwoMgA== 0000950147-01-501581.txt : 20010913 0000950147-01-501581.hdr.sgml : 20010913 ACCESSION NUMBER: 0000950147-01-501581 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010912 GROUP MEMBERS: JAYNE JOHNSTON GROUP MEMBERS: JOHNSTON FAMILY LIVING TRUST GROUP MEMBERS: JOHNSTON FMLYCHR.REM.UNITRST 3 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSTON RICHARD P CENTRAL INDEX KEY: 0001123881 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 210 SOUTH FOURTH AVENUE CITY: PHOENIX STATE: AZ ZIP: 85003 MAIL ADDRESS: STREET 1: 210 SOUTH FOURTH AVENUE CITY: PHOEINIX STATE: AZ ZIP: 85003 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL PRECISION INC CENTRAL INDEX KEY: 0001016395 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 061453896 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-53445 FILM NUMBER: 1735935 BUSINESS ADDRESS: STREET 1: 15170 NORTH HAYDEN ROAD STREET 2: SUITE 1 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6026270200 MAIL ADDRESS: STREET 1: 15170 NORTH HAYDEN ROAD STREET 2: SUITE 1 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: FM PRECISION GOLF CORP DATE OF NAME CHANGE: 19970521 SC 13D/A 1 e-7444.txt AMENDMENT #1 TO SC 13D FOR RICHARD JOHNSTON UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 13D/A (Rule 13d-101) (Amendment No. 1) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULES 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a). ROYAL PRECISION, INC. ------------------------------ (Name of Issuer) Common Stock, par value $.001 per share --------------------------------------- (Title of Class of Securities) 780921-10-2 -------------- (CUSIP Number) Kenneth J. Warren, Esq. 5134 Blazer Parkway, Dublin, OH 43017 (614) 766-1960 -------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 31, 2001 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 2 of 12 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Richard P. Johnston -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] -------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF -------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION United States of America -------------------------------------------------------------------------- 7 SOLE VOTING POWER 26,302 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 1,701,107 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 26,302 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 1,701,107 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,727,409 -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.3% -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 3 of 12 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Jayne Johnston -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] -------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF -------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION United States of America -------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 1,701,107 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING -0- PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 1,701,107 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,727,409 -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.3% -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 4 of 12 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Johnston Family Charitable Remainder Unitrust #3 -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] -------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF -------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION Indiana, United States of America -------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 1,547,859 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING -0- PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 1,547,859 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,547,859 -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 27.2% -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO -------------------------------------------------------------------------- SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 5 of 12 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Johnston Family Living Trust u/a dtd 4/11/94 -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] -------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF -------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION Wyoming, United States of America -------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 153,248 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING -0- PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 153,248 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 153,248 -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.7% -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO -------------------------------------------------------------------------- SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 6 of 12 Pages - --------------------- ------------------ ITEM 1. SECURITY AND ISSUER. Common Stock, par value $.001 per share Royal Precision, Inc. 15170 North Hayden Road, Suite 1 Scottsdale, AZ 85260 ITEM 2. IDENTITY AND BACKGROUND. (1)(a) Richard P. Johnston (b) 4350 Greens Place Wilson, Wyoming 83014 (c) Private investor; Trustee, Johnston Family Foundation 4350 Greens Place Wilson, Wyoming 83014 (d) During the last five years, Mr. Johnston has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, Mr. Johnston has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction . (f) Mr. Johnston is a citizen of the United States of America. (2)(a) Jayne Johnston (b) 4350 Greens Place Wilson, Wyoming 83014 (c) Trustee, Johnston Family Foundation. (d) During the last five years, Mrs. Johnston has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, Mrs. Johnston has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction . (f) Mrs. Johnston is a citizen of the United States of America. (3)(a) Johnston Family Charitable Remainder Unitrust #3 (the "CRT #3") (b) 4350 Greens Place Wilson, Wyoming 83014 (c) The entity is a charitable remainder unitrust. SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 7 of 12 Pages - --------------------- ------------------ (d) During the last five years, the Trustees of the CRT #3 have not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, the CRT #3 has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction. (f) The CRT #3 was organized under the laws of Indiana (4)(a) Johnston Family Living Trust u/a dtd. 4/11/94 (the "Trust") (b) 4350 Greens Place Wilson, Wyoming 83014 (c) This entity is a Living Trust for the benefit of members of the Richard P. Johnston family. (d) During the last five years, the Trustees of the Trust have not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, the Trustees of the Trust have not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction. (f) The Trust was organized under the laws of Wyoming ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. During May, June, July and August, 2001, the CRT #3 acquired an additional 55,050 shares in the open market for a total consideration of $125,786. Those shares and all other shares covered by this report were acquired with the respective parties' own funds. ITEM 4. PURPOSE OF TRANSACTION. The parties hold the shares for investment purposes. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Richard P. Johnston. Richard P. Johnston is a trustee of the CRT #3 and the Trust. In addition to the shares owned by those entities, Mr. Johnston is reporting 26,302 common shares subject to options exercisable within 60 days. Mr. Johnston expressly declares that his filing of this Schedule 13D shall not be construed as an admission that he is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this Schedule 13D except for the 26,302 common shares subject to options which are owned directly by Mr. Johnston. Jayne Johnston. Jayne Johnston is the spouse of Richard P. Johnston and a trustee of the CRT #3 and the Trust. In addition to the shares owned by those entities, Mrs. Johnston is reporting 26,302 common shares which are subject to options exercisable within 60 days which are owned directly by Mr. Johnston. Mrs. Johnston expressly declares that her filing of this Schedule 13D shall not be construed as an admission that she is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this Schedule 13D. CRT #3. The CRT # 3 expressly declares that its filing of this Schedule 13D shall not be construed as an admission that it is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this Schedule 13D except for the 1,637,859 shares owned directly by the CRT #3. SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 8 of 12 Pages - --------------------- ------------------ Trust. The Trust expressly declares that its filing of this Schedule 13D shall not be construed as an admission that it is, for the purposes of Section 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by this Schedule 13D except for the 153,248 shares owned directly by the Trust. Richard P. Johnston: (a) (i) Amount Beneficially Owned: 1,727,409 shares (ii) Percent of Class: 30.3% (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: 26,302 (ii) Shared power to vote or to direct the vote: 1,701,107 (iii) Sole power to dispose or to direct the disposition of: 26,302 (iv) Shared power to dispose or to direct the disposition of: 1,701,107 (c) Not applicable. (d) Not applicable. (e) Not applicable. Jayne Johnston: (a) (i) Amount Beneficially Owned: 1,727,409 shares (ii) Percent of Class: 30.3% (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: -0- (ii) Shared power to vote or to direct the vote: 1,701,107 (iii) Sole power to dispose or to direct the disposition of: -0- (iv) Shared power to dispose or to direct the disposition of: 1,701,107 (c) Not applicable. (d) Not applicable. (e) Not applicable. SCHEDULE 13D/A - --------------------- ------------------ CUSIP NO. 780921-10-2 Page 9 of 12 Pages - --------------------- ------------------ Johnston Family Charitable Remainder Unitrust #3: (a) (i) Amount Beneficially Owned: 1,547,859 shares (ii) Percent of Class: 27.2% (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: -0- (ii) Shared power to vote or to direct the vote: 1,547,859 (iii) Sole power to dispose or to direct the disposition of: -0- (iv) Shared power to dispose or to direct the disposition of: 1,547,859 (c) Not applicable. (d) Not applicable. (e) Not applicable. Johnston Family Living Trust u/a dtd. 4/11/94: (a) (i) Amount Beneficially Owned: 153,248 shares (ii) Percent of Class: 2.7% (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: -0- (ii) Shared power to vote or to direct the vote: 153,248 (iii) Sole power to dispose or to direct the disposition of: -0- (iv) Shared power to dispose or to direct the disposition of: 153,248 (c) Not applicable. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. On July 24, 2001, the CRT #3 granted 7-year options to Kenneth J. Warren, Charles S. Mechem, Jr., and Thomas L. Schneider to purchase 30,000, 30,000 and 50,000 shares, respectively. 20% of each option becomes exercisable July 24, 2002 and on each July 24 of the four subsequent years. On August 31, 2001, Christopher A. Johnston ("CAJ") and the CRT #3 entered into a Put Agreement whereby CRT #3 granted to CAJ the option to require the CRT #3 to purchase up to 200,000 shares of common stock of the Company owned by CAJ in lots of 25,000 shares during a two year period commencing August 31, 2001, at the greater of $2.00 per share or the Market Price (as defined in the Put Agreement) less $.50. SCHEDULE 13D/A - --------------------- ------------------- CUSIP NO. 780921-10-2 Page 10 of 12 Pages - --------------------- ------------------- ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Statement Pursuant to Rule 13d-1(k) 2. Put Agreement between the CRT #3 and Christopher A. Johnston dated August 31, 2001. 3. Option Agreement between the CRT #3 and Kenneth J. Warren dated July 24, 2001. 4. Option Agreement between the CRT #3 and Charles S. Mechem, Jr., dated July 24, 2001. 5. Option Agreement between the CRT #3 and Thomas L. Schneider dated July 24, 2001. SCHEDULE 13D/A - --------------------- ------------------- CUSIP NO. 780921-10-2 Page 11 of 12 Pages - --------------------- ------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. September 3, 2001 ------------------------------------------------ (Date) /s/ Richard P. Johnston ------------------------------------------------ (Signature) Richard P. Johnston ------------------------------------------------ September 3, 2001 ------------------------------------------------ (Date) /s/ Jayne Johnston ------------------------------------------------ (Signature) Jayne Johnston ------------------------------------------------ September 3, 2001 ------------------------------------------------ (Date) Johnston Family Charitable Remainder Unitrust #3 By: /s/ Richard P. Johnston ------------------------------------------------ (Signature) Richard P. Johnston, Trustee ------------------------------------------------ September 3, 2001 ------------------------------------------------ (Date) Johnston Family Living Trust u/a Dtd. 4/11/94 By: /s/ Richard P. Johnston ------------------------------------------------ (Signature) Richard P. Johnston, Trustee ------------------------------------------------ SCHEDULE 13D/A - --------------------- ------------------- CUSIP NO. 780921-10-2 Page 12 of 12 Pages - --------------------- ------------------- EXHIBIT INDEX Exhibit Description - ------- ----------- 1. Statement Pursuant to Rule 13d-1(k) 2. Put Agreement between the CRT #3 and Christopher A. Johnston dated August 31, 2001. 3. Option Agreement between the CRT #3 and Kenneth J. Warren dated July 24, 2001. 4. Option Agreement between the CRT #3 and Charles S. Mechem, Jr., dated July 24, 2001. 5. Option Agreement between the CRT #3 and Thomas L. Schneider dated July 24, 2001. EX-1 3 ex1.txt STATEMENT REQUIRED BY RULE 13D-1(K) Exhibit 1 STATEMENT PURSUANT TO RULE 13d-1(k) The undersigned parties hereto hereby consent and agree to file a joint statement on Schedule 13D under the Securities Exchange Act of 1934, as amended, on behalf of each of them, with respect to shares of common stock of ROYAL PRECISION, INC. beneficially owned by them, together with any or all amendments thereto, when and if appropriate. The parties hereto further consent and agree to file this Statement pursuant to Rule 13d-1(k) as an exhibit to such Schedule 13D, thereby incorporating the same into such Schedule 13D. September 3, 2001 ------------------------------------------------ (Date) /s/ Richard P. Johnston ------------------------------------------------ (Signature) Richard P. Johnston ------------------------------------------------ September 3, 2001 ------------------------------------------------ (Date) /s/ Jayne Johnston ------------------------------------------------ (Signature) Jayne Johnston ------------------------------------------------ September 3, 2001 ------------------------------------------------ (Date) Johnston Family Charitable Remainder Unitrust #3 By: /s/ Richard P. Johnston -------------------------------------------- (Signature) Richard P. Johnston, Trustee -------------------------------------------- September 3, 2001 ------------------------------------------------ (Date) Johnston Family Living Trust u/a dtd 4/11/94 By: /s/ Richard P. Johnston -------------------------------------------- (Signature) Richard P. Johnston, Trustee -------------------------------------------- EX-2 4 ex2.txt PUT AGREEMENT Exhibit 2 PUT AGREEMENT THIS PUT AGREEMENT (the "Agreement") dated as of August 31, 2001 ("Effective Date") between JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3, dated October 15, 1998 (the "Trust") and CHRISTOPHER A. JOHNSTON, an individual residing in Jackson, Wyoming ("CAJ"). WHEREAS, CAJ owns shares of common stock of Royal Precision, Inc. (the "Company"); and WHEREAS, the Trust wants to reserve the right to purchase a certain number of shares of the Company from CAJ. NOW THEREFORE, the parties hereto, intending to be legally bound and for good and valuable consideration, including, without limitation, the mutual covenants and promises set forth herein, do hereby agree as follows: Section 1. PUT RIGHT. The Trust hereby grants CAJ the option to require the Trust to purchase up to 200,000 shares of common stock of the Company (the "Shares") in lots of 25,000 Shares owned by CAJ (the "Option") on the following terms and conditions: Section 2. WINDOW. CAJ may exercise this Option at any time or from time to time during the period beginning on the Effective Date and ending on the second anniversary of such date by sending a written notice (a "Notice") to the Trust setting forth the number of Shares CAJ is requiring the Trust to purchase. Section 3. CLOSING. On the first day on which banks in the State of Wyoming are open for business (a "Business Day") following the third day of receipt of a Notice, a closing will be held at the offices of Merbanco Incorporated in Jackson Hole, Wyoming at 10:00 a.m. local time at which time CAJ shall deliver to the Trust a certificate representing the number of Shares to be purchased by the Trust and a stock power duly endorsed by CAJ for transfer to the Trust of such Shares with all signatures guaranteed by a medallion signature guarantee, and the Trust shall deliver to CAJ a bank or cashier's check drawn on a bank having an office in Jackson Hole, Wyoming payable to the order of the Trust in an amount equal to the 'Per Share Price' times the number of Shares to be purchased (the "Purchase Price"). Section 4. ADJUSTMENTS. If the Company: (a) pays a dividend or makes a distribution on its Shares in shares of its common stock; (b) subdivides its outstanding shares of common stock into a greater number of shares; (c) combines its outstanding shares of common stock into a smaller number of shares; (d) makes a distribution on its common stock in shares of its capital stock other than common stock; or (e) issues by recapitalization of its common stock any shares of its capital stock, then the Option and the Purchase Price in effect immediately prior to such action shall be adjusted so that the Trust may receive the number of shares of capital stock of the Company which it would have owned immediately following such action if it had purchased the Shares immediately prior to such action. This adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. Section 5. DEFINITIONS. "Per Share Price" shall mean the greater of (a) $2.00 or (b) current Market Price less $.50. "Market Price" shall mean the per Share closing price on the principal national securities exchange or the NASDAQ - National Market System on which the Shares are listed or admitted to trading on the day prior to the date of the Notice or, if no closing price can be determined for the date of determination, the most recent date for which such price can reasonably be ascertained, or if the Shares are not listed or admitted to trading on a national securities exchange or the NASDAQ - National Market System, the mean between the representative bid and asked per Share prices in the over-the-counter market at the closing of the day prior to the date of the Notice or the most recent such bid and asked prices then available, as reported by NASDAQ or if the Shares are not then quoted by NASDAQ, as furnished by any market maker selected from time to time by the Trust for that purpose. Section 6. MISCELLANEOUS. 6.1. NOTICES. Any notice or other communication hereunder must be given in writing and (a) delivered in person, (b) transmitted by telex, facsimile, e-mail or telecommunications mechanism provided that any notice so given is also mailed as provided in clause (c), or (c) mailed postage prepaid, return receipt requested, as follows: IF TO THE TRUST, ADDRESSED TO: Richard P. Johnston, Trustee Phone No. (307) 739-3010 4350 Greens Place Fax No. (520) 575-0320 Wilson, WY 83014 IF TO CAJ, ADDRESSED TO: Christopher A. Johnston Phone No. (307) 739-1188 Merbanco Incorporated Fax No. (307) 739-2288 P.O. Box 25182 3490 Club House Drive Suite 102 Jackson, Wyoming 83001 6.2. GOVERNING LAW, ETC. This Agreement shall be governed by and construed in accordance with the laws of the State of Wyoming and shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement may not be changed or amended in any manner whatsoever except in writing signed by each of the parties hereto. This Agreement may be executed in one or more counterparts, and all executed -2- counterparts shall constitute one and the same Agreement, binding on both parties, whether or not both parties have executed the original or same counterparts. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3 By: /s/ Richard P. Johnston ------------------------------------- Richard P. Johnston, Trustee /s/ Christopher A. Johnston ------------------------------------- Christopher A. Johnston -3- EX-3 5 ex3.txt OPTION AGREEMENT WITH KENNETH J. WARREN Exhibit 3 OPTION AGREEMENT THIS OPTION AGREEMENT (the "Agreement"), dated as of July 24, 2001 between JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3, dated October 15, 1998 ("CRT"), and KENNETH J. WARREN, an individual residing at 5567 Caplestone Lane, Dublin, Ohio 43017 ("KJW"). WHEREAS, CRT has acquired an equity interest in ROYAL PRECISION, INC., a corporation duly incorporated under the laws of the State of Delaware (the "Company"); and WHEREAS, the parties hereto desire that KJW have an option to acquire 30,000 shares of common stock of the Company previously acquired by CRT on the terms and conditions herein set forth. NOW THEREFORE, in consideration of the undertakings hereinafter contained, the parties hereto, intending to be legally bound, do hereby agree as follows: Section 1. OPTION. CRT hereby grants to KJW an option (the "Option") to purchase 30,000 shares of common stock of the Company (the "Shares") previously acquired by CRT in consideration for the services KJW has performed as a Director of the Company, upon the following terms and conditions: 1.1. VESTING. One fifth of the Shares originally subject to this Option will vest and become exercisable on each of the first five anniversaries of this Agreement if KJW has been a Director of the Company continuously from the date of this Agreement through the date when such portion of the Option vests. No portion of this Option shall vest and become exercisable after KJW's directorship with the Company has terminated, unless the reason for such termination is because there is a "Change in Control" in the Company approved by CRT, and as a result, KJW's directorship is terminated because he is asked to resign as a Director or his directorship is otherwise terminated. In either of those cases, the Option shall immediately vest. "Change in Control" means: that any one or more of the following occurs: (a) a merger, consolidation or other corporate reorganization of the Company in which the Company does not survive, (b) any person (defined for the purposes of this Section 1.1 to mean any person within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, or an executive benefit plan created by the Company for the benefit of its executives, or CRT or any group affiliated with CRT, either directly or indirectly through a merger, consolidation or otherwise, acquires beneficial ownership (determined under Rule 13d-3 of the Regulations promulgated by the Securities and Exchange Commission under Section 13(d) of the Exchange Act) of as much as 50% of the outstanding voting stock of the Company, (c) the shareholders of the Company approve a transfer of substantially all of the assets of the Company to another person or (d) as may otherwise be defined by the Company from time to time to include such other circumstances not inconsistent with the foregoing. 1.2. LAPSE. This Option will lapse and cease to be exercisable upon the earliest of (a) the expiration of seven years from the date of this Agreement or (b) the termination of KJW's directorship with the Company. 1.3. PRICE. The price to be paid by KJW to CRT for the Shares (the "Purchase Price") shall be $2.50 per Share. 1.4. PROCEDURE. The Option shall be exercised by KJW sending to CRT a notice (the "Notice") of the intention of KJW to acquire the Shares, setting forth the number of Shares to be acquired, and a time and date, not less than 30 days from the date of the Notice, for a closing; provided that if CRT has provided notice to KJW under the provisions of Section 2, KJW may cause the closing to occur prior to the time of any event set forth in such notice. 1.5. THE CLOSING. The closing shall occur at a mutually acceptable time and place on the date set forth in the Notice. At the closing, KJW shall deliver to CRT a certified or bank check drawn on a bank having an office in Jackson, Wyoming for the payment of the Purchase Price against delivery by CRT of an assignment of the Shares to be purchased, free and clear of any claim that the transfer of the Shares was or would be wrongful or that any person, other than CRT, is the owner of or has an interest in the Shares, whether by way of lien, contract of sale, restrictions on use or transfer or otherwise other than the following legend (which shall also appear on certificates representing all of KJW's Shares). THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES OR SECURITIES OWNED BY AN AFFILIATE OF THE ISSUER WITHIN THE MEANING OF SECURITIES ACT RULE 144. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER SAID ACT. 1.6. LIMITATION. The Option cannot be exercised at any time that such exercise would breach the provisions of the trust instrument governing CRT. Additionally, CRT cannot be required to sell shares if such a sale would cause CRT to be subject to the provisions of Section 16(b) of the Exchange Act. If a notice to exercise the Option is given and CRT cannot sell such shares, and the time period is going to expire, then the seven year period shall be extended until five days after receipt of notice from CRT that it is now permissible for CRT to sell such shares. 1.7. ADJUSTMENT. If the Shares are split or if a dividend is paid on such Shares, the number of Shares subject to the Option shall be automatically increased by the ratio between the number of Shares outstanding immediately after such event and the number of Shares outstanding immediately before such event. If at any time prior to the first anniversary of the date of this Agreement, there is a transaction which would result in the Company no longer being subject to the Securities Act of 1933 registration requirements and the shares of the Company being held by a small group of former "insiders" which would include CRT or an affiliate of CRT ("Private Transaction") and KJW has not exercised the Option, this Agreement shall terminate. In the event of a Private -2- Transaction prior to the third anniversary of this Agreement and KJW has exercised his Option, then at CRT's sole option, CRT can repurchase the Shares KJW received upon his exercise of the Option which he then continues to own. The purchase price shall be $2.50 per Share plus interest from the date of exercise of the Option to the closing for the repurchase of the Shares. The interest rate shall be at an annual rate of interest equal to the prime rate appearing in the Wall Street Journal on the business day preceding the purchase price. The process for the closing shall follow the same procedures as outlined in Sections 1.4 and 1.5. In the event of any other change in the Shares, through recapitalization, merger, consolidation or exchange of Shares or otherwise, there shall automatically be substituted for each Share subject to the Option, the number and kind of shares or other securities into which each outstanding Share subject to the Option was changed. Section 2. NOTICES. CRT agrees to give KJW reasonable notice in advance of any (a) material change or modification to the Shares of which it has knowledge, or (b) exchange of the Shares for any property other than cash and/or promissory notes of which it has knowledge. CRT agrees to give KJW at least five business days notice of the sale, exchange or other disposition of the Shares for cash and/or promissory notes. Section 3. INVESTMENT INTENT. 3.1. TRANSFER RESTRICTION. KJW understands that the grant of the Option and the acquisition of the Shares from CRT by KJW has not been registered under the Securities Act of 1933 on the ground that the sale of securities provided for in this Agreement is exempt from registration under the Securities Act of 1933 and that in order to obtain such exemption, the transfer of such securities is restricted by the legend required by this Agreement. KJW will not offer for sale, sell or otherwise transfer any of the Shares unless such Shares have been registered under the Securities Act of 1933 and under applicable state securities laws or their offer, sale or transfer are exempt from such registration and the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that their offer, sale or transfer, are so exempt. Any certificates representing the Shares shall continue to bear the legend set forth above until such time as KJW is, in the opinion of counsel to the Company, lawfully able to offer, sell and transfer such Shares without registration under the Securities Act of 1933 or any applicable state securities law and without compliance with Rule 144. 3.2. REPRESENTATION. KJW represents that he is an "accredited investor" (as defined in Section 501 of the Securities Act of 1933). KJW has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of his investment in the Shares as contemplated by this Agreement, and is able to bear the economic risk of such investment for an indefinite period of time. He has been furnished access to such information and documents as he has requested and has been afforded an opportunity to ask questions of and receive answers from representatives of the Company concerning the Company. Section 4. MISCELLANEOUS. 4.1. WAIVER. No purported waiver by either party or any default by the other party of any term or provision contained herein shall be deemed to be a waiver of such term or provision unless the waiver is in writing and signed by -3- the waiving party. No such waiver shall, in any event, be deemed a waiver of any subsequent default under the same or any other term or provision contained herein. 4.2. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding between the parties concerning the subject matter of this Agreement and incorporates all prior negotiations and understandings. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than those set forth herein. No representation or warranty has been made by or on behalf of either party to this Agreement (or any officer, director, employee or agent thereof) to induce the other party to enter into this Agreement or to abide by or consummate any transactions contemplated by any terms of this Agreement, except representations and warranties expressly set forth herein. No alteration, amendment, change or addition to this Agreement shall be binding upon either party unless in writing and signed by the parties to be charged. 4.3. JOINT PREPARATION. This Agreement is to be deemed to have been prepared jointly by the parties hereto and any uncertainty or ambiguity existing herein shall be interpreted according to the application of the rules of interpretation for arms' length agreements. 4.4. NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership. 4.5. SUCCESSORS. Each and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and, except as otherwise specifically provided in this Agreement, their respective successors and permitted assigns; provided, however, that neither this Agreement, nor any rights herein granted may be assigned, transferred or encumbered except as specifically otherwise permitted herein. 4.6. NOTICE PROCEDURE. Any consent, waiver, notice, demand, request or other instrument required or permitted to be given under this Agreement shall be in writing and be deemed to have been properly given only when delivered in person or by telecopy or other facsimile transmission (followed with hard copy sent by prepaid courier service), addressed to the following: If to KJW: 5134 Blazer Parkway Tel. No. (614)-766-1960 Dublin, Ohio 43017 Fax No. (614) 766-1974 If to CRT: 4350 Greens Place Tel. No. (307) 739-3010 Wilson, WY 83014 Fax No. (307) 739-1070 Notice of change of address will be effective only upon receipt. -4- 4.7. CAPTIONS. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of this Agreement. 4.8. PARTIAL INVALIDITY. If any term or provision of this Agreement, or the application thereof to any person, firm, corporation or other entity or circumstance, shall be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, firms, corporations or other entities or circumstances other than those as to which it is held invalid, shall be unaffected thereby and each remaining term or provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 4.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and the parties hereto may execute this Agreement by signing one or more counterparts. 4.10. THIRD PARTIES. Nothing herein express or implied is intended or shall be construed to confer upon or give any person, other than the parties hereto and their respective heirs, successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 4.11. GOVERNING LAW. This Agreement shall be governed and construed by the provisions hereof and in accordance with the laws of the State of Wyoming applicable to agreements to be performed in the State of Wyoming. 4.12. FURTHER ASSURANCES. If, at any time, either of the parties hereto shall consider or be advised that any further documents are necessary or desirable to carry out the provisions hereof, the appropriate party or parties hereto shall execute and deliver, or cause to be executed and delivered, any and all such other documents and do, or cause to be done, all things necessary or proper to fully carry out the provisions hereof. -5- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3 By: /s/ Richard P. Johnston ---------------------------------- Richard P. Johnston, Trustee /s/ Kenneth J. Warren ---------------------------------- Kenneth J. Warren -6- EX-4 6 ex4.txt OPTION AGREEMENT WITH CHARLES S. MECHEM, JR. Exhibit 4 OPTION AGREEMENT THIS OPTION AGREEMENT (the "Agreement"), dated as of July 24, 2001 between JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3, dated October 15, 1998 ("CRT"), and CHARLES S. MECHEM, JR., an individual residing at 6225 Redbird Hollow Lane, Cincinnati, OH 45243 ("CSM"). WHEREAS, CRT has acquired an equity interest in ROYAL PRECISION, INC., a corporation duly incorporated under the laws of the State of Delaware (the "Company"); and WHEREAS, the parties hereto desire that CSM have an option to acquire 30,000 shares of common stock of the Company previously acquired by CRT on the terms and conditions herein set forth. NOW THEREFORE, in consideration of the undertakings hereinafter contained, the parties hereto, intending to be legally bound, do hereby agree as follows: Section 1. OPTION. CRT hereby grants to CSM an option (the "Option") to purchase 30,000 shares of common stock of the Company (the "Shares") previously acquired by CRT in consideration for the services CSM has performed as a Director of the Company, upon the following terms and conditions: 1.1. VESTING. One third of the Shares originally subject to this Option will vest and become exercisable on each of the first three anniversaries of this Agreement if CSM has been a Director of the Company continuously from the date of this Agreement through the date when such portion of the Option vests. No portion of this Option shall vest and become exercisable after CSM's directorship with the Company has terminated, unless the reason for such termination is because there is a "Change in Control" in the Company approved by CRT, and as a result, CSM's directorship is terminated because he is asked to resign as a Director or his directorship is otherwise terminated. In either of those cases, the Option shall immediately vest. "Change in Control" means: that any one or more of the following occurs: (a) a merger, consolidation or other corporate reorganization of the Company in which the Company does not survive, (b) any person (defined for the purposes of this Section 1.1 to mean any person within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, or an executive benefit plan created by the Company for the benefit of its executives, or CRT or any group affiliated with CRT, either directly or indirectly through a merger, consolidation or otherwise, acquires beneficial ownership (determined under Rule 13d-3 of the Regulations promulgated by the Securities and Exchange Commission under Section 13(d) of the Exchange Act) of as much as 50% of the outstanding voting stock of the Company, (c) the shareholders of the Company approve a transfer of substantially all of the assets of the Company to another person or (d) as may otherwise be defined by the Company from time to time to include such other circumstances not inconsistent with the foregoing. 1.2. LAPSE. This Option will lapse and cease to be exercisable upon the earliest of (a) the expiration of seven years from the date of this Agreement or (b) the termination of CSM's directorship with the Company. 1.3. PRICE. The price to be paid by CSM to CRT for the Shares (the "Purchase Price") shall be $2.50 per Share. 1.4. PROCEDURE. The Option shall be exercised by CSM sending to CRT a notice (the "Notice") of the intention of CSM to acquire the Shares, setting forth the number of Shares to be acquired, and a time and date, not less than 30 days from the date of the Notice, for a closing; provided that if CRT has provided notice to CSM under the provisions of Section 2, CSM may cause the closing to occur prior to the time of any event set forth in such notice. 1.5. THE CLOSING. The closing shall occur at a mutually acceptable time and place on the date set forth in the Notice. At the closing, CSM shall deliver to CRT a certified or bank check drawn on a bank having an office in Jackson, Wyoming for the payment of the Purchase Price against delivery by CRT of an assignment of the Shares to be purchased, free and clear of any claim that the transfer of the Shares was or would be wrongful or that any person, other than CRT, is the owner of or has an interest in the Shares, whether by way of lien, contract of sale, restrictions on use or transfer or otherwise other than the following legend (which shall also appear on certificates representing all of CSM's Shares). THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES OR SECURITIES OWNED BY AN AFFILIATE OF THE ISSUER WITHIN THE MEANING OF SECURITIES ACT RULE 144. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER SAID ACT. 1.6. LIMITATION. The Option cannot be exercised at any time that such exercise would breach the provisions of the trust instrument governing CRT. Additionally, CRT cannot be required to sell shares if such a sale would cause CRT to be subject to the provisions of Section 16(b) of the Exchange Act. If a notice to exercise the Option is given and CRT cannot sell such shares, and the time period is going to expire, then the seven year period shall be extended until five days after receipt of notice from CRT that it is now permissible for CRT to sell such shares. 1.7. ADJUSTMENT. If the Shares are split or if a dividend is paid on such Shares, the number of Shares subject to the Option shall be automatically increased by the ratio between the number of Shares outstanding immediately after such event and the number of Shares outstanding immediately before such event. If at any time prior to the first anniversary of the date of this Agreement, there is a transaction which would result in the Company no longer being subject to the Securities Act of 1933 registration requirements and the shares of the Company being held by a small group of former "insiders" which would include CRT or an affiliate of CRT ("Private Transaction") and CSM has not exercised the Option, this Agreement shall terminate. In the event of a Private -2- Transaction prior to the third anniversary of this Agreement and CSM has exercised his Option, then at CRT's sole option, CRT can repurchase the Shares CSM received upon his exercise of the Option which he then continues to own. The purchase price shall be $2.50 per Share plus interest from the date of exercise of the Option to the closing for the repurchase of the Shares. The interest rate shall be at an annual rate of interest equal to the prime rate appearing in the Wall Street Journal on the business day preceding the purchase price. The process for the closing shall follow the same procedures as outlined in Sections 1.4 and 1.5. In the event of any other change in the Shares, through recapitalization, merger, consolidation or exchange of Shares or otherwise, there shall automatically be substituted for each Share subject to the Option, the number and kind of shares or other securities into which each outstanding Share subject to the Option was changed. Section 2. NOTICES. CRT agrees to give CSM reasonable notice in advance of any (a) material change or modification to the Shares of which it has knowledge, or (b) exchange of the Shares for any property other than cash and/or promissory notes of which it has knowledge. CRT agrees to give CSM at least five business days notice of the sale, exchange or other disposition of the Shares for cash and/or promissory notes. Section 3. INVESTMENT INTENT. 3.1. TRANSFER RESTRICTION. CSM understands that the grant of the Option and the acquisition of the Shares from CRT by CSM has not been registered under the Securities Act of 1933 on the ground that the sale of securities provided for in this Agreement is exempt from registration under the Securities Act of 1933 and that in order to obtain such exemption, the transfer of such securities is restricted by the legend required by this Agreement. CSM will not offer for sale, sell or otherwise transfer any of the Shares unless such Shares have been registered under the Securities Act of 1933 and under applicable state securities laws or their offer, sale or transfer are exempt from such registration and the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that their offer, sale or transfer, are so exempt. Any certificates representing the Shares shall continue to bear the legend set forth above until such time as CSM is, in the opinion of counsel to the Company, lawfully able to offer, sell and transfer such Shares without registration under the Securities Act of 1933 or any applicable state securities law and without compliance with Rule 144. 3.2. REPRESENTATION. CSM represents that he is an "accredited investor" (as defined in Section 501 of the Securities Act of 1933). CSM has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of his investment in the Shares as contemplated by this Agreement, and is able to bear the economic risk of such investment for an indefinite period of time. He has been furnished access to such information and documents as he has requested and has been afforded an opportunity to ask questions of and receive answers from representatives of the Company concerning the Company. Section 4. MISCELLANEOUS. 4.1. WAIVER. No purported waiver by either party or any default by the other party of any term or provision contained herein shall be deemed to be a waiver of such term or provision unless the waiver is in writing and signed by -3- the waiving party. No such waiver shall, in any event, be deemed a waiver of any subsequent default under the same or any other term or provision contained herein. 4.2. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding between the parties concerning the subject matter of this Agreement and incorporates all prior negotiations and understandings. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than those set forth herein. No representation or warranty has been made by or on behalf of either party to this Agreement (or any officer, director, employee or agent thereof) to induce the other party to enter into this Agreement or to abide by or consummate any transactions contemplated by any terms of this Agreement, except representations and warranties expressly set forth herein. No alteration, amendment, change or addition to this Agreement shall be binding upon either party unless in writing and signed by the parties to be charged. 4.3. JOINT PREPARATION. This Agreement is to be deemed to have been prepared jointly by the parties hereto and any uncertainty or ambiguity existing herein shall be interpreted according to the application of the rules of interpretation for arms' length agreements. 4.4. NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership. 4.5. SUCCESSORS. Each and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and, except as otherwise specifically provided in this Agreement, their respective successors and permitted assigns; provided, however, that neither this Agreement, nor any rights herein granted may be assigned, transferred or encumbered except as specifically otherwise permitted herein. 4.6. NOTICE PROCEDURE. Any consent, waiver, notice, demand, request or other instrument required or permitted to be given under this Agreement shall be in writing and be deemed to have been properly given only when delivered in person or by telecopy or other facsimile transmission (followed with hard copy sent by prepaid courier service), addressed to the following: If to CSM: 6225 Redbird Hollow Lane Tel. No. (513) 562-8078 Cincinnati, OH 45243 Fax No. (513) 381-0205 If to CRT: 4350 Greens Place Tel. No. (307) 739-3010 Wilson, WY 83014 Fax No. (307) 739-1070 Notice of change of address will be effective only upon receipt. -4- 4.7. CAPTIONS. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of this Agreement. 4.8. PARTIAL INVALIDITY. If any term or provision of this Agreement, or the application thereof to any person, firm, corporation or other entity or circumstance, shall be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, firms, corporations or other entities or circumstances other than those as to which it is held invalid, shall be unaffected thereby and each remaining term or provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 4.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and the parties hereto may execute this Agreement by signing one or more counterparts. 4.10. THIRD PARTIES. Nothing herein express or implied is intended or shall be construed to confer upon or give any person, other than the parties hereto and their respective heirs, successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 4.11. GOVERNING LAW. This Agreement shall be governed and construed by the provisions hereof and in accordance with the laws of the State of Wyoming applicable to agreements to be performed in the State of Wyoming. 4.12. FURTHER ASSURANCES. If, at any time, either of the parties hereto shall consider or be advised that any further documents are necessary or desirable to carry out the provisions hereof, the appropriate party or parties hereto shall execute and deliver, or cause to be executed and delivered, any and all such other documents and do, or cause to be done, all things necessary or proper to fully carry out the provisions hereof. -5- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3 By: /s/ Richard P. Johnston ------------------------------------ Richard P. Johnston, Trustee /s/ Charles S. Mechem, Jr. ------------------------------------ Charles S. Mechem, Jr. -6- EX-5 7 ex5.txt OPTION AGREEMENT WITH THOMAS A. SCHNEIDER Exhibit 5 OPTION AGREEMENT THIS OPTION AGREEMENT (the "Agreement"), dated as of July 24, 2001 between JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3, dated October 15, 1998 ("CRT"), and THOMAS A. SCHNEIDER, an individual residing at 5363 East Sahuaro Drive, Scottsdale, Arizona 85254 ("TAS"). WHEREAS, CRT has acquired an equity interest in ROYAL PRECISION, INC., a corporation duly incorporated under the laws of the State of Delaware (the "Company"); and WHEREAS, the parties hereto desire that TAS have an option to acquire 50,000 shares of common stock of the Company previously acquired by CRT on the terms and conditions herein set forth. NOW THEREFORE, in consideration of the undertakings hereinafter contained, the parties hereto, intending to be legally bound, do hereby agree as follows: Section 1. OPTION. CRT hereby grants to TAS an option (the "Option") to purchase 50,000 shares of common stock of the Company (the "Shares") previously acquired by CRT in consideration for the services TAS has performed as President and a Director of the Company, upon the following terms and conditions: 1.1. VESTING. One fifth of the Shares originally subject to this Option will vest and become exercisable on each of the first five anniversaries of this Agreement if TAS has been an employee of the Company continuously from the date of this Agreement through the date when such portion of the Option vests. No portion of this Option shall vest and become exercisable after TAS's employment with the Company has terminated, unless the reason for such termination is because there is a "Change in Control" in the Company approved by CRT, and as a result, TAS's employment is terminated either because he is asked to relocate and he refuses, or he is immediately fired without cause. In either of those cases, the Option shall immediately vest. "Change in Control" means: that any one or more of the following occurs: (a) a merger, consolidation or other corporate reorganization of the Company in which the Company does not survive, (b) any person (defined for the purposes of this Section 1.1 to mean any person within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, or an executive benefit plan created by the Company for the benefit of its executives, or CRT or any group affiliated with CRT, either directly or indirectly through a merger, consolidation or otherwise, acquires beneficial ownership (determined under Rule 13d-3 of the Regulations promulgated by the Securities and Exchange Commission under Section 13(d) of the Exchange Act) of as much as 50% of the outstanding voting stock of the Company, (c) the shareholders of the Company approve a transfer of substantially all of the assets of the Company to another person or (d) as may otherwise be defined by the Company from time to time to include such other circumstances not inconsistent with the foregoing. 1.2. LAPSE. This Option will lapse and cease to be exercisable upon the earliest of (a) the expiration of seven years from the date of this Agreement or (b) the termination of TAS's employment with the Company. 1.3. PRICE. The price to be paid by TAS to CRT for the Shares (the "Purchase Price") shall be $2.50 per Share. 1.4. PROCEDURE. The Option shall be exercised by TAS sending to CRT a notice (the "Notice") of the intention of TAS to acquire the Shares, setting forth the number of Shares to be acquired, and a time and date, not less than 30 days from the date of the Notice, for a closing; provided that if CRT has provided notice to TAS under the provisions of Section 2, TAS may cause the closing to occur prior to the time of any event set forth in such notice. 1.5. THE CLOSING. The closing shall occur at a mutually acceptable time and place on the date set forth in the Notice. At the closing, TAS shall deliver to CRT a certified or bank check drawn on a bank having an office in Jackson, Wyoming for the payment of the Purchase Price against delivery by CRT of an assignment of the Shares to be purchased, free and clear of any claim that the transfer of the Shares was or would be wrongful or that any person, other than CRT, is the owner of or has an interest in the Shares, whether by way of lien, contract of sale, restrictions on use or transfer or otherwise other than the following legend (which shall also appear on certificates representing all of TAS's Shares). THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES OR SECURITIES OWNED BY AN AFFILIATE OF THE ISSUER WITHIN THE MEANING OF SECURITIES ACT RULE 144. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER SAID ACT. 1.6. LIMITATION. The Option cannot be exercised at any time that such exercise would breach the provisions of the trust instrument governing CRT. Additionally, CRT cannot be required to sell shares if such a sale would cause CRT to be subject to the provisions of Section 16(b) of the Exchange Act. If a notice to exercise the Option is given and CRT cannot sell such shares, and the time period is going to expire, then the seven year period shall be extended until five days after receipt of notice from CRT that it is now permissible for CRT to sell such shares. 1.7. ADJUSTMENT. If the Shares are split or if a dividend is paid on such Shares, the number of Shares subject to the Option shall be automatically increased by the ratio between the number of Shares outstanding immediately after such event and the number of Shares outstanding immediately before such event. If at any time prior to the first anniversary of the date of this Agreement, there is a transaction which would result in the Company no longer being subject to the Securities Act of 1933 registration requirements and the shares of the Company being held by a small group of former "insiders" which would include CRT or an affiliate of CRT ("Private Transaction") and TAS has not exercised the Option, this Agreement shall terminate. In the event of a Private -2- Transaction prior to the third anniversary of this Agreement and TAS has exercised his Option, then at CRT's sole option, CRT can repurchase the Shares TAS received upon his exercise of the Option which he then continues to own. The purchase price shall be $2.50 per Share plus interest from the date of exercise of the Option to the closing for the repurchase of the Shares. The interest rate shall be at an annual rate of interest equal to the prime rate appearing in the Wall Street Journal on the business day preceding the purchase price. The process for the closing shall follow the same procedures as outlined in Sections 1.4 and 1.5. In the event of any other change in the Shares, through recapitalization, merger, consolidation or exchange of Shares or otherwise, there shall automatically be substituted for each Share subject to the Option, the number and kind of shares or other securities into which each outstanding Share subject to the Option was changed. Section 2. NOTICES. CRT agrees to give TAS reasonable notice in advance of any (a) material change or modification to the Shares of which it has knowledge, or (b) exchange of the Shares for any property other than cash and/or promissory notes of which it has knowledge. CRT agrees to give TAS at least five business days notice of the sale, exchange or other disposition of the Shares for cash and/or promissory notes. Section 3. INVESTMENT INTENT. 3.1. TRANSFER RESTRICTION. TAS understands that the grant of the Option and the acquisition of the Shares from CRT by TAS has not been registered under the Securities Act of 1933 on the ground that the sale of securities provided for in this Agreement is exempt from registration under the Securities Act of 1933 and that in order to obtain such exemption, the transfer of such securities is restricted by the legend required by this Agreement. TAS will not offer for sale, sell or otherwise transfer any of the Shares unless such Shares have been registered under the Securities Act of 1933 and under applicable state securities laws or their offer, sale or transfer are exempt from such registration and the Company has received an opinion of counsel, in form and substance reasonably satisfactory to the Company, to the effect that their offer, sale or transfer, are so exempt. Any certificates representing the Shares shall continue to bear the legend set forth above until such time as TAS is, in the opinion of counsel to the Company, lawfully able to offer, sell and transfer such Shares without registration under the Securities Act of 1933 or any applicable state securities law and without compliance with Rule 144. 3.2. REPRESENTATION. TAS represents that he is an "accredited investor" (as defined in Section 501 of the Securities Act of 1933). TAS has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of his investment in the Shares as contemplated by this Agreement, and is able to bear the economic risk of such investment for an indefinite period of time. He has been furnished access to such information and documents as he has requested and has been afforded an opportunity to ask questions of and receive answers from representatives of the Company concerning the Company. Section 4. MISCELLANEOUS. 4.1. WAIVER. No purported waiver by either party or any default by the other party of any term or provision contained herein shall be deemed to be a waiver of such term or provision unless the waiver is in writing and signed by -3- the waiving party. No such waiver shall, in any event, be deemed a waiver of any subsequent default under the same or any other term or provision contained herein. 4.2. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding between the parties concerning the subject matter of this Agreement and incorporates all prior negotiations and understandings. There are no covenants, promises, agreements, conditions or understandings, either oral or written, between them relating to the subject matter of this Agreement other than those set forth herein. No representation or warranty has been made by or on behalf of either party to this Agreement (or any officer, director, employee or agent thereof) to induce the other party to enter into this Agreement or to abide by or consummate any transactions contemplated by any terms of this Agreement, except representations and warranties expressly set forth herein. No alteration, amendment, change or addition to this Agreement shall be binding upon either party unless in writing and signed by the parties to be charged. 4.3. JOINT PREPARATION. This Agreement is to be deemed to have been prepared jointly by the parties hereto and any uncertainty or ambiguity existing herein shall be interpreted according to the application of the rules of interpretation for arms' length agreements. 4.4. NO PARTNERSHIP. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership. 4.5. SUCCESSORS. Each and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and, except as otherwise specifically provided in this Agreement, their respective successors and permitted assigns; provided, however, that neither this Agreement, nor any rights herein granted may be assigned, transferred or encumbered except as specifically otherwise permitted herein. 4.6. NOTICE PROCEDURE. Any consent, waiver, notice, demand, request or other instrument required or permitted to be given under this Agreement shall be in writing and be deemed to have been properly given only when delivered in person or by telecopy or other facsimile transmission (followed with hard copy sent by prepaid courier service), addressed to the following: If to TAS: 5363 East Sahuaro Drive Tel. No. (602)-922-5384 Scottsdale, Arizona 85254 Fax No. _____________ If to CRT: 4350 Greens Place Tel. No. (307) 739-3010 Wilson, WY 83014 Fax No. (307) 739-1070 Notice of change of address will be effective only upon receipt. -4- 4.7. CAPTIONS. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of this Agreement. 4.8. PARTIAL INVALIDITY. If any term or provision of this Agreement, or the application thereof to any person, firm, corporation or other entity or circumstance, shall be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, firms, corporations or other entities or circumstances other than those as to which it is held invalid, shall be unaffected thereby and each remaining term or provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 4.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and the parties hereto may execute this Agreement by signing one or more counterparts. 4.10. THIRD PARTIES. Nothing herein express or implied is intended or shall be construed to confer upon or give any person, other than the parties hereto and their respective heirs, successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 4.11. GOVERNING LAW. This Agreement shall be governed and construed by the provisions hereof and in accordance with the laws of the State of Wyoming applicable to agreements to be performed in the State of Wyoming. 4.12. FURTHER ASSURANCES. If, at any time, either of the parties hereto shall consider or be advised that any further documents are necessary or desirable to carry out the provisions hereof, the appropriate party or parties hereto shall execute and deliver, or cause to be executed and delivered, any and all such other documents and do, or cause to be done, all things necessary or proper to fully carry out the provisions hereof. -5- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. JOHNSTON FAMILY CHARITABLE REMAINDER UNITRUST #3 By: /s/ Richard P. Johnston ----------------------------------- Richard P. Johnston, Trustee /s/ Thomas A. Schneider ----------------------------------- Thomas A. Schneider -6- -----END PRIVACY-ENHANCED MESSAGE-----