-----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, FkJfiAKhhWlm5BDZ5MWFHy2Xq9fY+3gKMQeXn32hCoXwGsSnZ7/KEPcgHRvjoAjT ol2Fq20MK3BUjZatxqkw9g== 0000950147-02-000481.txt : 20020415 0000950147-02-000481.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950147-02-000481 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20020329 GROUP MEMBERS: CHARLES S. MECHEM, JR. GROUP MEMBERS: CHRISTOPHER A. JOHNSTON GROUP MEMBERS: DAVID E. JOHNSTON GROUP MEMBERS: JOHN C. LAUCHNOR GROUP MEMBERS: KENNETH J. WARREN GROUP MEMBERS: ROBERT JAYCOX GROUP MEMBERS: ROYAL ASSOCIATES, INC. FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSTON RICHARD P CENTRAL INDEX KEY: 0001123881 FILING VALUES: FORM TYPE: SC 13D 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 SEC ACT: 1934 Act SEC FILE NUMBER: 005-53445 FILM NUMBER: 02593391 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 1 e-8342.txt SC 13D FOR ROYAL PRECISION, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- SCHEDULE 13D INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULES 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a). Under the Securities Exchange Act of 1934 (Amendment No. _________) 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) March 28, 2002 (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 that 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. [ ] The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 2 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Richard P. Johnston S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 117,602 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 10,696,367 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 117,602 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 10,696,367 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10,813,969(1) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 75.0%(2) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (1) Consists of (a) (i) 1,384,135 shares held by the Johnston Family Charitable Remainder Unitrust #3 ("CRT#3") of which Richard P. Johnston ("RPJ") serves as a Trustee; (ii) 153,248 shares held by the Johnston Family Living Trust (the "Trust") of which RPJ serves as a Trustee; (iii) 147,808 shares held by the Johnston Family Charitable Foundation (the "Foundation") of which RPJ serves as a Trustee; (iv) 26,302 shares subject to employee stock options (the "RPJ Stock Options") held by RPJ that are currently exercisable; (v) 152,192 shares issuable upon exercise of a warrant dated October 26, 2001 held by the Foundation (the "JF Warrant"); (vi) 5,113,972 shares to be issued to the Foundation upon conversion of a subordinated note dated October 26, 2001 (the "JF Note") pursuant to the terms of a Conversion Agreement dated March 11, 2002 between the Foundation and the Issuer (the "Conversion Agreement"); (vii) 36,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by the Trust (the "Trust Warrant 1"); (viii) 59,200 shares covered by the exercisable portion of a warrant dated March 19, 2002 (the "Trust Warrant 2") authorized by the Board of Directors of the Issuer to be issued to the Trust pursuant to the terms of a Guaranty Agreement dated March 19, 2002 (the "Guaranty Agreement") wherein the Trust has agreed to provide a guaranty to the Issuer's financial lender currently being negotiated and certain other guaranties and (b) the following which are not exercisable within the next 60 days: (i) 200,000 shares held by Christopher A. Johnston ("CAJ") which CRT#3 may be required to purchase from CAJ pursuant to a Put Agreement dated August 31, 2001 (the "Put Agreement"), (ii) 28,750 shares subject to RPJ Stock Options, (iii) 600,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by the Trust which is not convertible until the occurrence of a default (the "Trust Note"), (iv) up to 86,000 shares issuable pursuant to Trust Warrant 2 which is not exercisable until the occurrence of certain events, (v) up to 2,420,000 shares which may be issued to the Trust pursuant to the terms of the Guaranty Agreement upon enforcement of guaranties issued by the Trust and conversion of the underlying guarantied debt of $605,000, (vi) 343,812 shares owned by Kenneth J. Warren ("KJW") of which 334,031 shares are pledged to RPJ/JAJ Partners, Ltd., of which RPJ is a partner, and 9,781 shares are pledged to the Trust, to secure certain notes issued by KJW as more fully described in Item 6 and (vii) 62,550 shares subject to employee stock options held by Danny Edwards which, if exercised by Mr. Edwards, could be acquired by RPJ or his nominee pursuant to the terms of a Stock Option Purchase Agreement dated February 28, 2001 between RPJ and Mr. Edwards (the "RPJ-DE Option Agreement"). RPJ disclaims beneficial ownership of all shares of the Issuer except (x) the RPJ Stock Options, (y) any shares owned by the Trust, and (z) any shares owned by CRT#3 in excess of 13.6% of the aggregate shares owned by CRT#3. (2) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 14,414,485 shares to reflect (a) 55,052 shares subject to the RPJ Stock Options, (b) 152,192 shares issuable on exercise of the JF Warrant, (c) 5,113,972 shares issuable pursuant to the Conversion Agreement, (d) 36,000 shares issuable in respect of Trust Warrant 1, (e) 145,200 shares issuable in respect of Trust Warrant 2, (f) 600,000 shares issuable upon the conversion of the Trust Note, (g) 2,420,000 shares issuable pursuant to the Guaranty Agreement and (h) 62,550 shares subject to the RPJ-DE Option Agreement. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 3 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Kenneth J. Warren S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 627,102 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 627,102 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 627,102(3) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.3%(4) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (3) Consists of (a)(i) 344,479 shares held by Kenneth J. Warren ("KJW"); (ii) 12,000 shares currently exercisable pursuant to a warrant dated February 28, 2002 ("the "KJW Warrant") held by DWR, Custodian for Kenneth Warren, Attorney at Law, fbo Kenneth J. Warren, VIP Plus Profit Sharing Plan (the "Profit Sharing Plan"); (iii) 300 shares held by the Profit Sharing Plan; (iv) 20,323 shares subject to employee stock options (the "KJW Options") that are currently exercisable and (b) the following which are not exercisable within the next 60 days: (i) 200,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 (the "KJW Note") held by the Profit Sharing Plan which is not convertible until the occurrence of a default; (ii) 30,000 shares owned by CRT#3 subject to an option dated July 24, 2001 granted by CRT#3 to KJW to purchase such shares from CRT#3 (the "KJW-CRT#3 Option"); and (iii) 20,000 shares subject to the non-exercisable portion of the KJW Options. Does not include any shares held by the Foundation of which KJW is a trustee but as to which he shares no voting or dispositive power. KJW disclaims beneficial ownership of any shares owned by the Foundation. (4) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,081,842 shares to reflect (a) 40,323 shares issuable upon exercise of the KJW Options; (b) 12,000 shares issuable in respect of the KJW Warrant, and (c) 200,000 shares issuable upon the conversion of the KJW Note. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 4 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Christopher A. Johnston S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 2,059,063 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 2,059,063 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,059,063(5) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.8%(6) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (5) Consists of (a)(i) 1,159,803 shares held by CAJ; (ii) 36,000 shares issuable upon exercise of a warrant dated March 8, 2002 held by CAJ (the "CAJ Warrant"); (iii) 121,750 shares held by KJW subject an option dated February 28, 2002 granted by KJW to CAJ to purchase such shares from KJW which is currently exercisable (the "CAJ-KJW Option") and (b) the following which are not exercisable within the next 60 days: (i) 20,000 shares subject to employee stock options held by CAJ (the "CAJ Options"), (ii) 600,000 shares issuable upon conversion of a subordinated note held by CAJ dated March 8, 2002 (the "CAJ Note"), which is not convertible until the occurrence of a default, and (iii) 121,510 shares sold on February 25, 2002 by CAJ for a promissory note secured by a pledge agreement on such shares as described in Item 6. (6) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,485,519 shares to reflect (a) 36,000 shares issuable upon exercise of the CAJ Warrant, (b) 20,000 shares issuable upon exercise of the CAJ Options, and (c) 600,000 shares issuable upon the conversion of the CAJ Note. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 5 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: David E. Johnston S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 234,875 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 234,875 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 234,875(7) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.0%(8) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (7) Consists of (a) 198,769 shares held by David E. Johnston ("DEJ"), (b) 11,106 shares subject to employee stock options held by DEJ (the "DEJ Options") which are currently exercisable and (c) 25,000 shares subject to the DEJ Options which are not exercisable within the next 60 days. Does not include any shares held by the Foundation of which DEJ is President but as to which he shares no voting or dispositive power. DEJ disclaims beneficial ownership of any shares owned by the Foundation. (8) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 5,865,625 shares to reflect 36,106 shares issuable under the DEJ Options. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 6 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Charles S. Mechem, Jr. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 280,700 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 280,700 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 280,700(9) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.6%(10) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (9) Consists of (a)(i) 5,500 shares held by Charles S. Mechem, Jr. ("CSM"), (ii) 8,200 shares held on behalf of CSM in a self-directed IRA; (iii) 10,000 shares subject to employee stock options (the "CSM Options") held by CSM which are currently exercisable; (iv) 12,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by CSM (the "CSM Warrant") and (b) the following which are not exercisable within the next 60 days: (i) 15,000 shares subject to CSM Options; (ii) 200,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by CSM which is not convertible until the occurrence of a default (the "CSM Note"); and (iii) 30,000 shares owned by CRT#3 subject to an option dated July 24, 2001, granted by CRT#3 to CSM to purchase such shares from CRT#3. (10) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,066,519 to reflect (a) 25,000 shares issuable upon exercise of the CSM Options, (b) 12,000 shares issuable in respect of the CSM Warrant, and (c) 200,000 shares issuable upon the conversion of the CSM Note. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 7 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: John C. Lauchnor S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 356,000 NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -3,500- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 356,000 PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -3,500- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 359,500(11) -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.8%(12) -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- (11) Consists of (a)(i) 3,500 shares held by John C. Lauchnor ("JCL") and his wife, (ii) 6,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by JCL (the "JCL Warrant") and (b) the following which are not exercisable within the next 60 days: (i) 100,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by JCL (the "JCL Note") which is not convertible until the occurrence of a default and (ii) 250,000 shares subject to an employee stock option held by JCL (the "JCL Option"). (12) Based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,185,519 shares to reflect (a) 6,000 shares issuable in respect of the JCL Warrant, (b) 250,000 shares issuable upon exercise of the JCL Option and (c) 100,000 shares issuable upon the conversion of the JCL Note. - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 8 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Robert Jaycox S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 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 1,000 OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING -0- PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 1,000 --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,000 -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) less than 1% -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN -------------------------------------------------------------------------- - --------------------- ------------------ CUSIP NO. 780921-10-2 SCHEDULE 13D Page 9 of 26 Pages - --------------------- ------------------ 1 NAMES OF REPORTING PERSON: Royal Associates, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON -------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] -------------------------------------------------------------------------- 3 SEC USE ONLY -------------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A -------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] -------------------------------------------------------------------------- 6 CITZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- NUMBER OF --------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING -0- PERSON --------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- --------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0- -------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] -------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) -0- -------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO -------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. Common Stock, par value $.001 per share Royal Precision, Inc., a Delaware corporation (the "Issuer") 535 Migeon Avenue Torrington, CT 06790 ITEM 2. IDENTITY AND BACKGROUND. (a) This statement is being filed pursuant to Regulation 13D-G of the General Rules and Regulations under the Act, by the following: Richard P. Johnston ("RPJ"); Kenneth J. Warren ("KJW"), Christopher A. Johnston ("CAJ"), David E. Johnston ("DEJ"), Charles S. Mechem, Jr. ("CSM"), John C. Lauchnor ("JCL"), Robert Jaycox ("RJ") and Royal Associates, Inc., a Delaware corporation ("RA"). RPJ, KJW, CAJ, DEJ, CSM, JCL, RJ and RA are sometimes hereinafter collectively referred to as the "Reporting Persons". RPJ, Jayne A Johnston, the Trust, the Foundation and CRT#3 (each of the Trust, the Foundation and CRT#3 identified elsewhere in this Item 2 or Item 5) have previously filed a Report on Schedule 13D dated March 1, 2001, as amended by Amendment No. 1 thereto dated September 12, 2001; Amendment No. 2 thereto dated October 6, 2001, Amendment No. 3 thereto dated March 21, 2002 and Amendment No. 4 thereto dated March 28, 2002 (collectively, the "RPJ Schedule 13D"). The RPJ Schedule 13D is updated and amended by information with respect to RPJ alone herein contained. KJW has previously filed a Report on Schedule 13D dated February 22, 2002 (the "KJW Schedule 13D"). The KJW Schedule 13D is updated and amended by information with respect to KJW herein contained. CAJ has previously filed a Report on Schedule 13D dated September 20, 2000 as amended by Amendment No. 1 thereto dated September 12, 2001 and Amendment No. 2 thereto dated February 22, 2002 (collectively, the "CAJ Schedule 13D"). The CAJ Schedule 13D is updated and amended by information with respect to CAJ herein contained. The Reporting Persons are making this single, joint filing because they may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the Act, although neither the fact of this filing nor anything contained herein shall be deemed to be an admission by the Reporting Persons that a group exists. Each Reporting Person disclaims beneficial ownership of any shares owned by any other Reporting Person except for options to buy, or to require another to buy, shares granted by a Reporting Person to another Reporting Person described elsewhere in this Schedule 13D. (b) - (c) RPJ is Chairman of the Board of Directors and Chief Executive Officer and a director of the Issuer. The business address of RPJ is 4350 Greens Place, Wilson, Wyoming 83014. Mr. Johnston's principal occupation and employment is as Chairman of the Issuer. KJW is an attorney at law and a director and Secretary of the Issuer. The business address of KJW is 5134 Blazer Parkway, Dublin, Ohio 43017. Mr. Warren's principal occupation and employment is as proprietor of the Law Offices of Kenneth J. Warren. CAJ is President of Merbanco, Incorporated, a merchant banking firm, and a director of the Issuer. The business address of CAJ is 3490 Clubhouse Drive, Suite 102, Jackson, Wyoming 83001. CAJ's principal occupation and employment is as President of Merbanco, Incorporated. DEJ is President of the Johnston Family Charitable Foundation ("Foundation") and a director of the Issuer. The business address of DEJ is 1935 Muirhead Loop, Tucson, Arizona 85737. DEJ's principal occupation and employment is as President of the Foundation. CSM is a retired executive and a director of the Issuer. The business address of CSM is 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202. CSM is a retired executive and not currently employed. JCL is President and a director of the Issuer. The business address of JCL is 535 Migeon Avenue, Torrington, Connecticut 06790. JCL's principal occupation and employment is as President of the Issuer. 10 RJ is an owner/operator of McDonald's of Jackson Hole, Inc., 1110 West Broadway, Jackson, Wyoming 83001, a franchised fast food restaurant. RA is a Delaware corporation, engaged in the business of evaluating a corporate development and financing opportunity. The principal business address of RA is 5134 Blazer Parkway, Dublin, Ohio 43017. The capital stock of RA is to be owned by RPJ, KJW, CAJ, DEJ, CSM, RJ and JCL. Pursuant to Instruction C to Schedule 13D of the Act, the only directors, executive officers and controlling persons of RA are as follows: Principal occupation Name and title Address and employment - -------------- ------- -------------- RPJ, Chairman and CEO, Director As stated above As stated above CAJ, President, Director As stated above As stated above KJW, Secretary, Director As stated above As stated above DEJ, Treasurer, Director As stated above As stated above CSM, Director As stated above As stated above RJ, Director As stated above As stated above JCL, Director As stated above As stated above (d)-(e) During the last five years, none of the Reporting Persons or others identified in this Item 2, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) All of the natural persons identified in this Item 2 are citizens of the United States of America. RA is organized under the laws of the State of Delaware. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. All shares covered by this report were acquired with the respective Reporting Persons' own funds or the funds of the respective entities whose ownership may be deemed to be the indirect beneficial ownership of the respective Reporting Persons as reported in this Schedule, except that KJW acquired substantially all of the shares purchased by him in 1996 and 1999 on credit. See Item 6. ITEM 4. PURPOSE OF TRANSACTION. On March 28, 2002, the Reporting Persons entered into a subscription agreement reflecting their agreement to evaluate one or more potential proposals which may result in a merger or other extraordinary transaction and cause the common stock of the Issuer to cease to be quoted in an inter-dealer quotation system of a registered national securities association and become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, and which may result in potential changes in membership or terms of the present board of directors and changes in the Issuer's certificate of incorporation or bylaws. Except as otherwise disclosed in this Schedule 13D, the Reporting Persons have no plans or proposals to engage in any of the transactions referred to in subparagraphs (a) through (j) of Item 4 of Schedule 13D but may consider certain of such types of transactions and reserve the right to develop such plans or proposals in the future. Except for the foregoing, the Reporting Persons acquired and continue to hold the shares of common stock reported herein for investment purposes. Each of the Reporting Persons intends to review continuously his or its equity position in the Issuer. Depending upon future evaluations of the business prospects of the Issuer and upon other developments, including, but not limited to, general economic and business conditions and money market and stock market conditions, each of the Reporting Persons may determine to increase or decrease his equity interest in the Issuer by acquiring additional shares of common stock or warrants therefor (or exercising warrants therefor, or converting promissory notes, for shares of common stock in accordance with the terms and conditions of 11 such Reporting Person's respective warrant agreements or promissory notes) or by disposing of all or a portion of such Reporting Person's holdings, subject to any applicable legal and contractual restrictions on such Reporting Person's ability to do so. In addition, in connection with the Issuer's ongoing needs for additional capital, the Reporting Persons have from time to time engaged in discussions with respect to one or more privately negotiated investments in the Issuer which may be purchases of additional common stock, loans or direct investments in assets of the Issuer, or a combination of all, and which may involve one or more additional accredited individual or institutional investors or lenders. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. RPJ (a) (i) Amount beneficially owned: 10,813,969 consisting of (a) (i) 1,384,135 shares held by the Johnston Family Charitable Remainder Unitrust #3 ("CRT#3") of which RPJ serves as a Trustee, and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (ii) 153,248 shares held by the Johnston Family Living Trust (the "Trust") of which RPJ serves as a Trustee and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (iii) 147,808 shares held by the Foundation and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (iv) 26,302 shares subject to employee stock options (the "RPJ Stock Options") held by RPJ that are currently exercisable; (v) 152,192 shares issuable upon exercise of a warrant dated October 26, 2001 held by the Foundation (the "JF Warrant") and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (vi) 5,113,972 shares to be issued to the Foundation upon conversion of a subordinated note dated October 26, 2001 (the "JF Note") pursuant to the terms of a Conversion Agreement dated March 11, 2002 between the Foundation and the Issuer (the "Conversion Agreement") and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (vii) 36,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by the Trust (the "Trust Warrant 1") and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee; (viii) 59,200 shares covered by the exercisable portion of a warrant dated March 19, 2002 (the "Trust Warrant 2") authorized by the Board of Directors of the Issuer to be issued to the Trust pursuant to the terms of a Guaranty Agreement dated March 19, 2002 (the "Guaranty Agreement") wherein the Trust has agreed to provide a guaranty to the Issuer's financial lender currently being negotiated and certain other guaranties and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee and (b) the following which are not exercisable within the next 60 days: (i) 200,000 shares held by CAJ which CRT#3 may be required to purchase from CAJ pursuant to a Put Agreement dated August 31, 2001 (the "Put Agreement") and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee, (ii) 28,750 shares subject to RPJ Stock Options, (iii) 600,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by the Trust which is not convertible until the occurrence of a default (the "Trust Note") and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee, (iv) up to 86,000 shares issuable pursuant to Trust Warrant 2 which is not exercisable until the occurrence of certain events and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee, (v) up to 2,420,000 shares which may be issued pursuant to the terms of the Guaranty Agreement upon enforcement of guaranties issued by the Trust and conversion of the underlying guarantied debt of $605,000 and which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a trustee (vi) 343,812 shares owned by KJW of which 334,031 shares are pledged to RPJ/JAJ Partners, Ltd., of which RPJ is a partner, and 9,781 shares are pledged to the Trust, to secure certain notes issued by KJW as more fully described in Item 6 and all of which shares referred to in this clause (vi) RPJ may, pursuant to Section 13d-3, be deemed to beneficially own by virtue of his being a partner or trustee and (vii) ) 62,550 shares subject to employee stock options held by Danny Edwards which, if exercised by Mr. Edwards, could be acquired by RPJ or his nominee pursuant to the terms of a Stock Option Purchase Agreement dated February 28, 2001 between RPJ and Mr. Edwards (the "RPJ-DE Option Agreement"), which RPJ may, pursuant to Section 13d-3, be deemed to beneficially own. RPJ disclaims beneficial ownership of all shares of the Issuer except (x) the RPJ Stock Options, (y) any shares owned by the Trust, and (z) any shares owned by CRT#3 in excess of 13.6% of the aggregate shares owned by CRT#3. (ii) Percent of Class:75.0%, based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 14,414,485 shares to reflect (a) 55,052 shares subject to the RPJ Stock Options, (b) 152,192 shares 12 issuable on exercise of the JF Warrant, (c) 5,113,972 shares issuable pursuant to the Conversion Agreement, (d) 36,000 shares issuable in respect of Trust Warrant 1, (e) 145,200 shares issuable in respect of Trust Warrant 2, (f) 600,000 shares issuable upon the conversion of the Trust Note, (g) 2,420,000 shares issuable pursuant to the Guaranty Agreement, and (h) 62,550 shares subject to the RPJ-DE Option Agreement. (b) Number of shares as to which RPJ has: (i) Sole power to vote or to direct the vote: 117,602 (ii) Shared power to vote or to direct the vote: 10,696,367 (iii) Sole power to dispose or to direct the disposition of: 117,602 (iv) Shared power to dispose or to direct the disposition of: 10,696,367 (c) During the last 60 days, CRT #3 purchased an aggregate of 7,500 shares as follows: Date Number of Shares Price Per Share ($) ---- ---------------- ------------------- 1/23/02 500 .998 1/23/02 1,000 1.00 1/24/02 1,500 1.00 1/25/02 1,500 .98 1/28/02 1,500 .99798 1/29/02 1,500 .998 All of said purchases were made in the open market on the Nasdaq National Market System. On February 1, 2002, the Foundation acquired 147,808 shares at a cost of $.25 per share by partially exercising the JF Warrant. On February 28, 2002, in a privately negotiated transaction, the Trust lent to the Issuer the sum of $150,000 and received therefor Trust Warrant 1 providing for the purchase of up to 36,000 shares at a price of $.25 per share and the Trust Note convertible into 600,000 shares at a price of $.25 per share based on its original principal amount (plus additional shares for interest), which is not convertible until the occurrence of a default. The shares issuable upon exercise of Trust Warrant 1 and the Trust Note are included in the shares reported as beneficially owned by RPJ. The Trust has agreed in principle to a subordination arrangement with the Issuer's lender on substantially the same terms as are contained in an existing subordination agreement between the Foundation, the Issuer and the Issuer's lender. In connection with this transaction, the Trust entered into the Registration Rights Agreement disclosed in Item 6. In a privately negotiated transaction, the Issuer has entered into the Conversion Agreement dated March 11, 2002 with the Foundation pursuant to which the Foundation has agreed to convert its principal debt of $5,000,000 represented by the JF Note into equity and, if converted on request of the Issuer's institutional lender, the conversion will be deemed to have occurred on March 11, 2002, subject to a condition subsequent that the Issuer's institutional lender request the Foundation to convert the Issuer's debt to common stock. When converted, the conversion will also cover shares issuable on conversion in respect of interest accruing through March 31, 2002. The shares issuable under the terms of the Conversion Agreement are included in the shares reported as beneficially owned by RPJ. In a privately negotiated transaction, on March 19, 2002, the Issuer entered into the Guaranty Agreement with the Trust, whereby, the Trust agreed to provide a guarantee of the repayment of certain amounts of money the Issuer is obligated to pay to the Issuer's institutional lender and others. If the Trust was required to provide the maximum amount of funds under the Guaranty Agreement, $605,000, and the Trust elected to convert the amount of such debt into shares at the rate of $.25 per share, the Trust would receive 2,420,000 shares, excluding any shares that may be obtainable by converting any additional amounts of interest that may be either paid by the Trust on behalf of debt owed by the Issuer, or owed to the Trust. In exchange for entering into the Guaranty Agreement, the Trust was granted Trust Warrant 2 providing for the purchase of up to 59,200 shares at a price of $.25 per share, and the right to purchase an 13 additional 86,000 shares at the same price upon the occurrence of certain events. The shares issuable under the terms of the Guaranty Agreement and Trust Warrant 2 are included in the shares reported as beneficially owned by RPJ. KJW (a) (i) Amount beneficially owned: 627,102 consisting of (a)(i) 344,479 shares held by KJW, (ii) 12,000 shares currently exercisable pursuant to a warrant dated February 28, 2002 (the "KJW Warrant") held by DWR, Custodian for Kenneth Warren, Attorney at Law, fbo Kenneth J. Warren, VIP Plus Profit Sharing Plan (the "Profit Sharing Plan") which KJW may be deemed pursuant to Rule 13d-3 to beneficially own by virtue of his holding voting and investment power; (iii) 300 shares held by the Profit Sharing Plan which KJW may be deemed pursuant to Rule 13d-3 to beneficially own by virtue of his holding voting and investment power; (iv) 20,323 shares subject to employee stock options (the "KJW Options") that are currently exercisable, and (b) the following which are not exercisable within the next 60 days: (i) 200,000 shares issuable upon conversion of a subordinated note (the "KJW Note") held by the Profit Sharing Plan dated February 28, 2002 which is not convertible until the occurrence of a default; (ii) 30,000 shares owned by CRT#3 subject to an option granted by CRT#3 to KJW to purchase such shares from CRT#3 (the "KJW-CRT#3 Option"); and (iii) 20,000 shares subject to the KJW Options. Does not include any shares held by the Foundation of which KJW is a trustee but as to which he shares no voting or dispositive power. KJW disclaims beneficial ownership of any shares owned by the Foundation. (ii) Percent of Class:10.3%, based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,081,842 shares to reflect (a) 40,323 shares issuable upon exercise of the KJW Options; (b) 12,000 shares issuable in respect of the KJW Warrant, and (c) 200,000 shares issuable upon the conversion of the KJW Note. (b) Number of shares as to which KJW has: (i) Sole power to vote or to direct the vote: 627,102 (ii) Shared power to vote or to direct the vote: -0- (iii) Sole power to dispose or to direct the disposition of: 627,102 (iv) Shared power to dispose or to direct the disposition of: -0- (c) On February 28, 2002, in a privately negotiated transaction, the Profit Sharing Plan lent to the Issuer the sum of $50,000 and received therefor the KJW Warrant to purchase up to 12,000 shares at a price of $.25 per share and the KJW Note convertible into 200,000 shares at a price of $.25 per share based on its original principal amount (plus additional shares for interest), which is not convertible until the occurrence of a default. The shares issuable upon exercise of the KJW Warrant and the KJW Note are included in the shares reported as beneficially owned by KJW. KJW has agreed in principle to a subordination arrangement with the Issuer's lender on substantially the same terms as are contained in an existing subordination agreement between the Foundation, the Issuer and the Issuer's lender. In connection with this transaction, the Profit Sharing Plan entered into the Registration Rights Agreement disclosed in Item 6. On February 28, 2002, in a privately negotiated transaction, KJW granted CAJ an option to purchase up to 121,750 shares at a price of $.25 per share as described in Item 6. CAJ (a) (i) Amount beneficially owned: 2,059,063 consisting of (a)(i) 1,159,803 shares held by CAJ, (ii) 36,000 shares issuable upon exercise of a warrant dated March 8, 2002 held by CAJ (the "CAJ Warrant"); (iii) 121,750 shares held by KJW subject to an option dated February 28, 2002 granted by KJW to CAJ to purchase 14 such shares from KJW which is currently exercisable (the "CAJ-KJW Option") and (b) the following which are not exercisable within the next 60 days: (i) 20,000 shares subject to employee stock options held by CAJ (the "CAJ Options"), (ii) 600,000 shares issuable upon conversion of a subordinated note dated March 8, 2002 held by CAJ (the "CAJ Note"), which is not convertible until the occurrence of a default, and (iii) 121,510 shares sold by CAJ on February 25, 2002 for a promissory note, the repayment of which was secured by a pledge agreement on such shares as described in Item 6. (a) (ii) Percent of Class:31.8%, based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,485,519 shares to reflect the (a) 36,000 shares issuable upon exercise of the CAJ Warrant, (b) 20,000 shares issuable upon exercise of the CAJ Options, and (c) 600,000 shares issuable upon the conversion of the CAJ Note. (b) Number of shares as to which CAJ has: (i) Sole power to vote or to direct the vote: 2,059,063 (ii) Shared power to vote or to direct the vote: -0- (iii) Sole power to dispose or to direct the disposition of: 2,059,063 (iv) Shared power to dispose or to direct the disposition of: -0- (c) On February 25, 2002 in a privately negotiated transaction, CAJ sold 121,510 shares of common stock at $.25 per share to DJDK L.L.C., a Nevada limited liability company ("DJDK"), for a promissory note in the principal amount of $30,377.50, the repayment of which was secured by a pledge of the shares sold. On February 28, 2002, in a privately negotiated transaction, CAJ acquired an option to purchase 121,750 shares of common stock at $.25 per share from KJW as described in Item 6. On March 8, 2002, in a privately negotiated transaction, CAJ lent to the Issuer the sum of $150,000 and received therefor the CAJ Warrant to purchase up to 36,000 shares at a price of $.25 per share and the CAJ Note convertible into 600,000 shares at a price of $.25 per share based on its original principal amount (plus additional shares for interest) which is not convertible within the next 60 days. The shares issuable upon exercise of the CAJ Warrant and the CAJ Note are included in the shares reported as beneficially owned by CAJ. CAJ has agreed in principle to a subordination arrangement with the Issuer's lender on substantially the same terms as are contained in an existing subordination agreement between the Foundation, the Issuer and the Issuer's lender. In connection with this transaction, CAJ entered into the Registration Rights Agreement disclosed in Item 6. DEJ (a) (i) Amount beneficially owned: 234,875 consisting of (a) 198,769 shares held by DEJ, (b) 11,106 shares subject to employee stock options held by DEJ (the "DEJ Options") which are currently exercisable and (c) 25,000 shares subject to DEJ Options which are not exercisable within the next 60 days. Does not include any shares held by the Foundation of which DEJ is President but as to which he shares no voting or dispositive power. DEJ disclaims beneficial ownership of any shares owned by the Foundation. (ii) Percent of Class:4.0%, based on 5,829,519 shares outstanding, as adjusted upward to 5,865,625 shares to reflect 36,106 shares issuable under the DEJ Options. (b) Number of shares as to which DEJ has: (i) Sole power to vote or to direct the vote: 234,875 (ii) Shared power to vote or to direct the vote: -0- 15 (iii) Sole power to dispose or to direct the disposition of: 234,875 (iv) Shared power to dispose or to direct the disposition of: -0- CSM (a) (i) Amount beneficially owned: 280,700 consisting of (a)(i) 5,500 shares held by CSM; (ii) 8,200 shares held on behalf of CSM in a self-directed IRA and which CSM may be deemed, pursuant to 13d-3 to beneficially own by virtue of having voting and dispositive power, (iii) 10,000 shares subject to employee stock options (the "CSM Options") held by CSM which are currently exercisable (iv) 12,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by CSM (the "CSM Warrant"); and (b) the following which are not exercisable within the next 60 days: (i) 15,000 shares subject to CSM Options; (ii) 200,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by CSM which is not convertible until the occurrence of a default (the "CSM Note"); and (iii) 30,000 shares held by CRT#3 subject to an option dated July 24, 2001 granted by CRT#3 to CSM to purchase such shares from CRT#3 (the "CSM- CRT#3 Option"). (ii) Percent of Class:4.6%, based on 5,829,519 shares outstanding, as adjusted upward to 6,066,519 shares to reflect (a) 25,000 shares issuable upon exercise of the CSM Options, (b) 12,000 shares issuable in respect of the CSM Warrant, and (c) 200,000 shares issuable upon the conversion of the CSM Note. (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: 280,700 (ii) Shared power to vote or to direct the vote: -0- (iii) Sole power to dispose or to direct the disposition of: 280,700 (iv) Shared power to dispose or to direct the disposition of: -0- (c) On February 28, 2002, in a privately negotiated transaction, CSM lent to the Issuer the sum of $50,000 and received therefor the CSM Warrant to purchase up to 12,000 shares at a price of $.25 per share and the CSM Note convertible into 200,000 shares at a price of $.25 per share based on its original principal amount (plus additional shares for interest), which is not convertible until the occurrence of a default. The shares issuable upon exercise of the CSM Warrant and the CSM Note are included in the shares reported as beneficially owned by CSM. CSM has agreed in principle to a subordination arrangement with the Issuer's lender on substantially the same terms as are contained in an existing subordination agreement between the Foundation, the Issuer and the Issuer's lender. In connection with this transaction, CSM entered into the Registration Rights Agreement disclosed in Item 6. JCL (a) (i) Amount beneficially owned: 395,500 consisting of (a)(i) 3,500 shares held by JCL and his wife, (b) 6,000 shares issuable upon exercise of a warrant dated February 28, 2002 held by JCL (the "JCL Warrant"), and (b) the following which are not exercisable within the next 60 days: (i) 100,000 shares issuable upon conversion of a subordinated note dated February 28, 2002 held by JCL (the "JCL Note") which is not convertible until the occurrence of a default and (ii) 250,000 shares subject to an employee stock option held by JCL (the "JCL Option"). (ii) Percent of Class:5.8%, based on a total of 5,829,519 shares outstanding on February 28, 2002, as adjusted upward to 6,185,519 shares to reflect (a) 6,000 shares issuable in respect of the JCL Warrant, (b) 250,000 shares issuable upon exercise of the JCL Option and (c) 100,000 shares issuable upon the conversion of the JCL Note. 16 (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: 356,000 (ii) Shared power to vote or to direct the vote: 3,500 (iii) Sole power to dispose or to direct the disposition of: 356,000 (iv) Shared power to dispose or to direct the disposition of: 3,500 (c) On February 28, 2002, in a privately negotiated transaction, JCL lent to the Issuer the sum of $25,000 and received therefor the JCL Warrant to purchase up to 6,000 shares at a price of $.25 per share and the JCL Note convertible into 200,000 shares at a price of $.25 per share based on its original principal amount (plus additional shares for interest), but which is not convertible until the occurrence of a default. The shares issuable upon exercise of the JCL Warrant and the JCL Note are included in the shares reported as beneficially owned by JCL. JCL has agreed in principle to a subordination arrangement with the Issuer's lender on substantially the same terms as are contained in an existing subordination agreement between the Foundation, the Issuer and the Issuer's lender. In connection with this transaction, JCL entered into the Registration Rights Agreement disclosed in Item 6. RA (a) Not applicable (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: -0- (iii) Sole power to dispose or to direct the disposition of: -0- (iv) Shared power to dispose or to direct the disposition of: -0- RJ (a) (i) Includes 1,000 shares held in the name of RA and his wife. RA disclaims beneficial ownership of any shares except the 1,000 shares. (ii) Percent of Class: less than 1.0% (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: 1,000 (iii) Sole power to dispose or to direct the disposition of: -0- (iv) Shared power to dispose or to direct the disposition of: -1,000 (c) Not applicable. 17 All Reporting Persons (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. RPJ (i) On May 29, 1996, the original 80 shares held by KJW in a constituent company prior to a merger in 1999 were pledged by KJW to RPJ/JAJ Partners, Ltd., of which RPJ is a partner, to support the repayment of a promissory note dated May 29, 1996 in the principal amount of $74,326. The maturity of such promissory note has been extended and such note now matures on May 29, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. These 80 shares were converted to 334,031 shares of the Issuer in the merger and remain subject to the pledge agreement. (ii) On September 1, 1999, 3,900 shares were pledged by KJW to the Trust, to enable KJW to purchase on credit shares of the Issuer by delivery of a promissory note to the Trust in the principal amount of $11,688.97. The maturity of such note has been extended and such note now matures on September 1, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. (iii) On October 19, 1999, 5,881 shares were pledged by KJW to the Trust, to enable KJW to purchase on credit shares of the Issuer by delivery of a promissory note to the Trust in the amount of $14,999.52. The maturity of such note has been extended and such note now matures on October 19, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. (iv) On December 7, 2000, CRT#3 lent to the Issuer the sum of $1 million evidenced by the Issuer's Revolving Subordinated Promissory Note (the "Note"). Amendment No. 1 to the Note was executed by the parties as of March 16, 2001. These documents contain a right by CRT#3, upon an event of default under the note, to convert all or any part of the unpaid loans and interest thereon into shares of the Issuer at the rate of one share for each $1.00 of unpaid principal and interest thereon. This note was fully paid at maturity. (v) On February 28, 2001, RPJ entered into the RPJ-DE Option Agreement with Danny Edwards providing for the sale of 41,100 shares to RPJ (or his nominee). These shares were acquired by CRT#3 and are included in CRT#3's stockholdings shown herein. The RPJ-DE Option Agreement further provided to RPJ (or his nominee) the right to acquire from Mr. Edwards any shares that Mr. Edwards acquires upon his exercise of options to purchase shares of the Issuer at the strike price of the options. Mr. Edwards has not exercised any of such options. (vi) On July 24, 2001, CRT#3 granted seven year options to each of KJW and CSM to purchase 30,000 shares owned by CRT#3. 20% of such options become exercisable July 24, 2002 and on each July 24 of the four subsequent years. (vii) On August 31, 2001, CRT#3 granted to CAJ the right to require CRT#3 to purchase up to 200,000 shares from CAJ. (viii) On October 26, 2001, the Foundation acquired the JF Note and the JF Warrant to purchase 300,000 shares of the Issuer. The JF Warrant has been exercised as to 147,808 shares. The Issuer has entered into the Conversion Agreement dated March 11, 2002 with the Foundation pursuant to which the Foundation has agreed to convert its principal debt of $1,250,000 into equity and, if converted on request of the Issuer's institutional lender, the 18 conversion will be deemed to have occurred on March 11, 2002, subject to a condition subsequent that the Issuer's institutional lender request the Foundation to convert the Issuer's debt to common stock. When converted, the conversion will also cover 113,972 shares issuable on conversion in respect of interest accruing through March 31, 2002. In addition, the JF Warrant was only exercisable for up to 25,000 shares without approval of the stockholders of the Issuer. The stockholders, in a special meeting held on January 28, 2002 approved the financing and the JF Warrant is now exercisable in its entirety. (ix) The Trust entered into a Registration Rights Agreement dated as of February 26, 2002 with the Issuer, CAJ, the Profit Sharing Plan, CSM and JCL providing for certain rights with respect to registration of shares obtained upon exercise of warrants and conversion of debt represented by subordinated notes. (x) On February 28, 2002, the Trust lent to the Issuer the sum of $150,000 out of its own funds and received therefor the Trust Note and Trust Warrant 1 to purchase 36,000 shares of the Issuer. (xi) On March 1, 2002, the Issuer entered into an agreement with the Foundation pursuant to which the Foundation is granted the right to designate a nominee for election as a director of the Issuer. DEJ has been appointed as the Foundation's designee to serve as a director of the Issuer. From the date of such agreement, DEJ's services as a director shall be as the director designee of the Foundation. (xii) On March 19, 2002, the Issuer entered into the Guaranty Agreement with the Trust, whereby, the Trust agreed to provide a guarantee of the repayment of certain amounts of money the Issuer is obligated to pay to the Issuer's lender and others. (xiii) On March 19, 2002, pursuant to the Guaranty Agreement, the Issuer granted to the Trust Trust Warrant 2 to purchase (a) up to 59,200 shares of the Issuer at a price of $0.25 per share and (b) an additional 24 shares of the Issuer at a price of $0.25 per share for each $100 or part thereof which becomes subject to the guaranty of the Trust. KJW (i) On May 29, 1996, the original 80 shares held by KJW in a constituent company prior to a merger in 1999 were pledged by KJW to RPJ/JAJ Partners, Ltd., of which RPJ is a partner, to support the repayment of a promissory note dated May 29, 1996 in the principal amount of $74,326. The maturity of such promissory note has been extended and such note now matures on May 29, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. These 80 shares were converted to 334,031 shares of the Issuer in the merger and remain subject to the pledge agreement. (ii) On September 1, 1999, 3,900 shares were pledged by KJW to the Trust, to enable KJW to purchase on credit shares of common stock of the Issuer by delivery of a promissory note to the Trust in the principal amount of $11,688.97. The maturity of such note has been extended and such note now matures on September 1, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. (iii) On October 19, 1999, 5,881 shares were pledged by KJW to the Trust, to enable KJW to purchase on credit shares of common stock of the Issuer by delivery of a promissory note to the Trust in the amount of $14,999.52_. The maturity of such note has been extended and such note now matures on October 19, 2002. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred (iv) On July 24, 2001, CRT#3 granted the KJW-CRT#3 Option to KJW to purchase 30,000 shares. A number of shares equal to 20% of such option become exercisable July 24, 2002 and on each July 24 of the four subsequent years. 19 (v) The Profit Sharing Plan entered into a Registration Rights Agreement dated as of February 26, 2002 with the Issuer, CAJ, the Trust, CSM and JCL providing for certain rights with respect to registration of shares obtained upon exercise of warrants and conversion of debt represented by subordinated notes. (vi) On February 28, 2002, KJW granted to CAJ a one-year option to purchase 121,750 shares at an exercise price of $.25 per share. This option may be extended for four successive one year periods upon receipt of $1,406.49 for each extension. (vii) On February 28, 2002, the Profit Sharing Plan lent to the Issuer the sum of $50,000 out of its own funds and received therefor the KJW Note and KJW Warrant to purchase 12,000 shares of the Issuer. CAJ: (i) On August 31, 2001, CRT#3 granted to CAJ the right to require CRT#3 to purchase up to 200,000 shares from CAJ. (ii) On February 25, 2002, CAJ sold 121,510 shares to DJDK for a promissory note in the principal amount of $30,377.50. The obligation to repay the note is secured by a pledge of the 121,510 shares. Under such pledge agreement, the pledgee will only acquire voting power or dispositive power over the shares upon the occurrence of certain contingencies which have not yet occurred. (iii) CAJ entered into a Registration Rights Agreement dated as of February 26, 2002 with the Issuer, the Profit Sharing Plan, the Trust, CSM and JCL providing for certain rights with respect to registration of shares obtained upon exercise of warrants and conversion of debt represented by subordinated notes. (iv) On February 28, 2002, KJW granted to CAJ a one-year option to purchase 121,750 shares at an exercise price of $0.25 per share. This option may be extended for four successive one year periods upon receipt of $1,406.49 for each extension. (v) On March 8, 2002, CAJ lent to the Issuer the sum of $150,000 out of his own funds and received therefor, the CAJ Note and the CAJ Warrant to purchase 36,000 shares of the Issuer. CSM: (i) On July 24, 2001, CRT#3 granted the CSM-CRT#3 Option to CSM to purchase 30,000 shares. A number of shares equal to 20% of such option become exercisable July 24, 2002 and on each July 24 of the four subsequent years. (ii) On February 28, 2002, CSM lent to the Issuer the sum of $50,000 out of his own funds and received therefor, the CSM Note and the CSM Warrant to purchase 12,000 shares of the Issuer. JCL: On February 28, 2002, JCL lent to the Issuer the sum of $25,000 out of his own funds and received therefor the JCL Note and the JCL Warrant to purchase 6,000 shares of the Issuer. RA: On March 20, 2002, each of the Reporting Persons entered into a subscription agreement reflecting their agreement to evaluate one or more potential proposals relating to the Issuer which may result in taking the Issuer private as described in Item 4. 20 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Statement Pursuant to Rule 13d-1(k). 2. Pledge Agreement dated May 29, 1996 between KJW and RPJ/JAJ Partners, Ltd. (incorporated by reference to Exhibit 4 to Schedule 13D of KJW dated February 22, 2002). 3. Promissory Note dated May 31, 1996 in the principal amount of $74,326 issued by KJW to RPJ/JAJ Partners, Ltd., as amended (incorporated by reference to Exhibit 5 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 4. Pledge Agreement dated September 1, 1999 between KJW and the Trust, as amended (incorporated herein by reference to Exhibit 6 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 5. Promissory Note dated September 1, 1999 in the principal amount of $11,688.97 issued by KJW to the Trust, as amended (incorporated herein by reference to Exhibit 7 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 6. Pledge Agreement dated October 19, 1999, between KJW and the Trust, as amended (incorporated herein by reference to Exhibit 8 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 7. Promissory Note dated October 19, 1999 in the principal amount of $14,999.52 issued by KJW to the Trust, as amended (incorporated herein by reference to Exhibit 9 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 8. Share Purchase Agreement dated February 25, 2002 between CAJ and DJDK. 9. Promissory Note dated February 25, 2002 in the principal amount of $30,377.50 issued by DJDK to CAJ. 10. Pledge Agreement dated February 25, 2002 between DJDK and CAJ. 11. RPJ-DE Option Agreement between RPJ and Danny Edwards dated February 28, 2001 (incorporated by reference to Exhibit 3 to Schedule 13D of RPJ, et al., dated February 28, 2001). 12. KJW-CRT#3 Option dated July 24, 2001 (incorporated by reference to Exhibit 3 to Amendment No. 1 of Schedule 13D of RPJ, et al., dated August 31, 2001). 13. CSM-CRT#3 Option dated July 24, 2001 (incorporated by reference to Exhibit 4 to Amendment No. 1 of Schedule 13D of RPJ, et al., dated August 31, 2001). 14. CAJ-KJW Option dated February 28, 2002. 15. Form of Subordinated Promissory Note of the Issuer issued to several lenders. A schedule setting forth material details in which such documents differ from the form is attached. 16. Form of Warrant issued to various persons. A schedule setting forth material details in which such documents differ from the form is attached. 17. Conversion Agreement between the Foundation and the Issuer dated March 11, 2002 (incorporated by reference to Exhibit 3 to Amendment No. 3 of Schedule 13D of RPJ filed March 22, 2002). 18. Designation Agreement between the Foundation and the Issuer dated March 1, 2002 which entitles the Foundation to appoint a director designee to the Board of Directors of the Issuer (incorporated by reference to Exhibit 2 to Amendment No. 3 of Schedule 13D of RPJ filed March 22, 2002). 19. Subscription Agreement dated March 28, 2002 among the Reporting Persons. 21 20. Guaranty Agreement dated March 19, 2002 between the Issuer and the Trust (incorporated herein by reference to Exhibit 13 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 21. Trust Warrant 2 dated March 19, 2002 (incorporated herein by reference to Exhibit 14 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 22. Put Agreement dated August 31, 2001 between CAJ and CRT#3 (incorporated herein by reference to Exhibit 1 to Amendment No. 1 of Schedule 13D of RPJ dated August 31, 2001). 23. Registration Rights Agreement dated February 26, 2002 among the Trust, CAJ, the Profit Sharing Plan, JCL, CSM and the Issuer. 24. Power of Attorney of each of the Reporting Persons other than RA appointing RPJ and KJW as attorneys in fact with respect to this Schedule 13D and all amendments thereto. 22 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. March 28, 2002 ----------------------------------------- (Date) /s/ Richard P. Johnston ----------------------------------------- (Signature) Richard P. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Kenneth J. Warren ----------------------------------------- Kenneth J. Warren ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Christopher A. Johnston ----------------------------------------- Christopher A. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ David E. Johnston ----------------------------------------- David E. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Charles S. Mechem, Jr. ----------------------------------------- Charles S. Mechem, Jr. ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ John C. Lauchnor ----------------------------------------- John C. Lauchnor ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) 23 /s/ Robert Jaycox ----------------------------------------- Robert Jaycox ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) ROYAL ASSOCIATES, INC. By: /s/ Richard P. Johnston ------------------------------------- Richard P. Johnston, Chairman and CEO 24 EXHIBIT INDEX
Sequential Exhibit Description Page No. - ------- ----------- -------- 1 Statement Pursuant to Rule 13d-1(k). 2 Pledge Agreement dated May 29, 1996 between KJW and RPJ/JAJ Partners, * Ltd. (incorporated by reference to Exhibit 4 to Schedule 13D of KJW dated February 22, 2002). 3 Promissory Note dated May 31, 1996 in the principal amount of $74,326 * issued by KJW to RPJ/JAJ Partners, Ltd., as amended (incorporated by reference to Exhibit 5 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 4 Pledge Agreement dated September 1, 1999 between KJW and the Trust, as * amended (incorporated herein by reference to Exhibit 6 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 5 Promissory Note dated September 1, 1999 in the principal amount of * $11,688.97 issued by KJW to the Trust, as amended (incorporated herein by reference to Exhibit 7 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 6 Pledge Agreement dated October 19, 1999, between KJW and the Trust, as * amended (incorporated herein by reference to Exhibit 8 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 7 Promissory Note dated October 19, 1999 in the principal amount of * $14,999.52 issued by KJW to the Trust, as amended (incorporated herein by reference to Exhibit 9 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 8 Share Purchase Agreement dated February 25, 2002 between CAJ and DJDK. 9 Promissory note dated February 25, 2002 in the principal amount of $30,377.50 issued by DJDK to CAJ. 10 Pledge Agreement dated February 25, 2002 between DJDK and CAJ. 11 RPJ-DE Option Agreement between RPJ and Danny Edwards dated February * 28, 2001 (incorporated by reference to Exhibit 3 to Schedule 13D of RPJ, et al., dated February 28, 2001). 12 KJW-CRT#3 Option dated July 24, 2001 (incorporated by reference to * Exhibit 3 to Amendment No. 1 of Schedule 13D of RPJ, et al., dated August 31, 2001. 13 CSM-CRT#3 Option dated July 24, 2001 (incorporated by reference to * Exhibit 4 to Amendment No. 1 of Schedule 13D of RPJ, et al., dated August 31, 2001). 14 CAJ-KJW Option dated February 28, 2002.
25
15 Form of Subordinated Promissory Note of the Issuer issued to several lenders. A schedule setting forth material details in which such documents differ from the form is attached. 16 Form of Warrant issued to various persons. A schedule setting forth material details in which such documents differ from the form is attached. 17 Conversion Agreement between the Foundation and the Issuer dated March * 11, 2002 (incorporated by reference to Exhibit 3 to Amendment No. 3 of Schedule 13D of RPJ filed March 22, 2002). 18 Designation Agreement between the Foundation and the Issuer dated * March 1, 2002 which entitles the Foundation to appoint a director designee to the Board of Directors of the Issuer (incorporated by reference to Exhibit 2 to Amendment No. 3 of Schedule 13D of RPJ filed March 22, 2002). 19 Subscription Agreement dated March 28, 2002 among the Reporting Persons. 20 Guaranty Agreement dated March 19, 2002 between the Issuer and the * Trust (incorporated herein by reference to Exhibit 13 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 21 Trust Warrant 2 dated March 19, 2002 (incorporated herein by reference * to Exhibit 14 to Amendment No. 4 of Schedule 13D of RPJ dated March 28, 2002). 22 Put Agreement dated August 31, 2001 between CAJ and CRT#3 * (incorporated herein by reference to Exhibit 1 to Amendment No. 1 of Schedule 13D of RPJ dated August 31, 2001). 23 Registration Rights Agreement dated February 26, 2002 among the Trust, CAJ, the Profit Sharing Plan, JCL, CSM and the Issuer. 24 Power of Attorney of each of the Reporting Persons other than RA appointing RPJ and KJW as attorneys in fact with respect to this Schedule 13D and all amendments thereto.
* Incorporated by reference. 26 EX-1 3 ex1.txt STATEMENT PURSUANT TO 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. March 28, 2002 ----------------------------------------- (Date) /s/ Richard P. Johnston ----------------------------------------- (Signature) Richard P. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Kenneth J. Warren ----------------------------------------- Kenneth J. Warren ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Christopher A. Johnston ----------------------------------------- Christopher A. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ David E. Johnston ----------------------------------------- David E. Johnston ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Charles S. Mechem, Jr. ----------------------------------------- Charles S. Mechem, Jr. ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ John C. Lauchnor ----------------------------------------- John C. Lauchnor ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) /s/ Robert Jaycox ----------------------------------------- Robert Jaycox ----------------------------------------- March 28, 2002 ----------------------------------------- (Date) ROYAL ASSOCIATES, INC. By: /s/ Richard P. Johnston ------------------------------------- Richard P. Johnston, Chairman and CEO EX-8 4 ex8.txt SHARE PURCHASE AGREEMENT DATED 2-25-02 EXHIBIT 8 SHARE PURCHASE AGREEMENT THIS SHARE PURCHASE AGREEMENT (the "Agreement"), dated as of February 25, 2002, is made by and between CHRISTOPHER A. JOHNSTON, an individual residing in Jackson Hole Wyoming ("Seller"), and DJDK L.L.C., a Nevada limited liability company ("Buyer"). WHEREAS, Buyer wishes to buy and Seller wishes to sell 121,510 shares of common stock (the "Shares") of Royal Precision, Inc., a Delaware corporation (the "Company"), on the terms and conditions herein contained; NOW THEREFORE, the parties hereto, intending to be legally bound, agree as follows: SECTION 1. SALE OF SHARES. Seller hereby sells the Shares to Buyer and Buyer hereby buys the Shares from Seller for a purchase price of $30,377.50 (the "Purchase Price"). SECTION 2. DELIVERIES. Simultaneously with the execution of this Agreement: 2.1. BY SELLER. Seller is delivering to Buyer certificates for the Shares duly endorsed for transfer or with accompanying stock power(s), free from any adverse claims. 2.2. BY BUYER. Buyer is delivering to Seller a promissory note representing the Purchase Price, receipt of which by Seller is hereby acknowledged. SECTION 3. INVESTMENT INTENT. 3.1. NO RESALES. Buyer represents and warrants that it is acquiring the Shares for investment, solely for its own account and not with a view to, or for resale in connection with, the distribution or other disposition thereof, except for such distribution and dispositions as are effected in compliance with the Securities Act of 1933 (the "Securities Act") and the rules and regulations thereunder and all applicable state securities or "blue-sky" laws. Buyer agrees and acknowledges that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any part of the Shares, or solicit any offers to purchase, otherwise acquire or take a pledge of any part of its Shares, unless such offer, transfer, sale, assignment, pledge, hypothecation or other disposition or solicitation is either (a) pursuant to an effective registration statement under the Securities Act and registered under any applicable state securities or "blue-sky" laws, or (b) effected only after the Company has been furnished with an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Company, stating that no such registration is required because of the availability of an exemption from registration in effect thereunder and under applicable state securities or "blue-sky" laws. 3.2. RISKS OF INVESTMENT. Buyer represents and warrants that (a) it is aware of the merits and risks of an investment in Seller as contemplated by this Agreement; (b) it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of this investment in Seller as contemplated by this Agreement; (c) it understands that the Shares are a speculative investment that involves a high degree of risk of loss of its investment therein, that there are substantial restrictions on the transferability of the Shares, and accordingly it may not be possible to liquidate its investment in the Company in case of emergency, if at all; and (d) it is familiar with the business of the Company and understands and has evaluated all the risk factors related to an investment in 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 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 Buyer: c/o David J. Lyon 215 South State Street Tel. No. (801) 323-2270 Salt Lake City, Utah 84151 Fax No. (801) 596-2814 If to Seller: P.O. Box 25182 3490 Club House Drive Suite 102 Tel. No. (307) 739-1188 Jackson, Wyoming 83001 Fax No. (307) 739-2288 Notice of change of address will be effective only upon receipt. -2- 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 Delaware applicable to agreements to be performed in the State of Delaware. 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. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. /s/ Christopher A. Johnston ----------------------------------------- Christopher A. Johnston DJDK L.L.C. By: /s/ David J. Lyon ------------------------------------- David J. Lyon, member -3- EX-9 5 ex9.txt PROMISSORY NOTE DATED 2-25-02 EXHIBIT 9 PROMISSORY NOTE - -------------------------------------------------------------------------------- $30,377.50 February 25, 2002 - -------------------------------------------------------------------------------- FOR VALUE RECEIVED, the undersigned, DJDK L.L.C., a Nevada limited liability company (the "Maker"), hereby unconditionally promises to pay to the order of CHRISTOPHER A. JOHNSTON, an individual residing in Jackson Hole, Wyoming (the "Payee"), at the principal office of the Payee or at such other place as the Payee or other holder hereof may from time to time designate in writing, in lawful money of the United States of America, the principal amount of Thirty Thousand Three Hundred Seventy-Seven Dollars and Fifty Cents ($30,377.50), together with interest on the unpaid principal balance hereunder at a rate of interest as hereinafter set forth. The entire unpaid principal balance, together with accrued interest thereon, will be due and payable as hereinafter provided. Section 1. PRINCIPAL AND INTEREST. 1.1. INTEREST RATE. This Note shall bear interest on the unpaid principal balance hereunder from the date hereof until paid in full at an annual rate of interest equal to 4.63% (the "Interest Rate"). In the event that the unpaid principal balance or any part thereof, together with all interest accrued thereon, is not paid on demand when due, then such unpaid principal balance and interest shall bear interest at a rate equal to the Interest Rate plus three percent. 1.2. PAYMENT OF PRINCIPAL. Principal of this Note shall be due and payable on the fifth anniversary date of this Note. 1.3. PAYMENT OF INTEREST. Interest shall be due and payable in yearly installments starting on the first anniversary of this Note, and on each such subsequent yearly anniversary thereafter until this Note is paid in full. Section 2. PREPAYMENTS. The Maker shall have the privilege of prepaying all or any part of this Note at any time without notice or any prepayment penalty. Section 3. OFFSET. 3.1. NO OFFSET BY MAKER. The Maker and all other persons now or hereafter liable for the payment of the principal and interest on this Note hereby waive any and all existing and future claims and offsets against amounts due under this Note and agree to pay in accordance with the terms of this Note all amounts due under this Note regardless of any claim which may be asserted by or on behalf of the Maker or other persons. 3.2. OFFSET BY HOLDER. Any and all moneys now or at any time hereafter owing to the Maker from the holder hereof, are hereby pledged for the security of this and all other indebtedness from the maker to the holder of this Note, and may at any time at the option of the holder hereof be paid and applied hereon whether or not such indebtedness is then due. Section 4. WAIVER. The undersigned and each indorser of this Note hereby waives presentment, demand or notice of demand, protest and dishonor in connection with the enforcement of this Note. Section 5. DEFAULT, ACCELERATION. Upon the failure to make any payment hereunder as and when due, which failure remains uncured for more than 10 days thereafter, or upon the occurrence of an Event of Default as defined in that certain Pledge Agreement of even date herewith between the parties hereto, the Payee shall have the right, without further notice to the Maker, to declare the then outstanding principal balance of this Note, together with all interest accrued thereon, immediately due and payable. Section 6. GOVERNING LAW. This Note shall be governed by and construed in accordance with the laws of the State of Delaware. Section 7. EXPENSES. If this Note is collected by suit, through probate or bankruptcy court, or by any other judicial proceedings, or if this Note is not paid at maturity, howsoever such maturity may be brought about, and is placed in the hands of an attorney for collection, then the undersigned promises to pay all legal fees, paralegal fees, costs and expenses incurred in connection therewith. DJDK L.L.C. By: /s/ DAVID J. LYON ------------------------------------- David J. Lyon, Member -2- EX-10 6 ex10.txt PLEDGE AGREEMENT DATED 2-25-02 EXHIBIT 10 February 25, 2002 Christopher A. Johnston P.O. Box 25182 3490 Club House Drive Suite 102 Jackson Hole, Wyoming RE: PLEDGE AGREEMENT Dear Chris: To secure the payment and performance to you of DJDK L.L.C.'s ("DJDK") obligations under that certain Share Purchase Agreement, dated of even date herewith, between you and DJDK and under its Promissory Note dated of even date herewith, payable to your order in the principal amount of U.S. $30,377.50 (the "Note"), DJDK hereby pledges to you and grants you a security interest in and to: (1) 121,510 shares (the "Shares"), par value $.01 per share of Royal Precision, Inc., a Delaware corporation (the "Corporation"), (2) any securities or other property issued or distributed to DJDK with respect to the Shares as a dividend or as a result of any amendment of the Certificate of Incorporation of the Corporation or other charter documents, merger, consolidation, redesignation, reclassification, purchase or sale of assets, dissolution, or plan of arrangement, compromise or reorganization of the issuer thereof; (3) any rights incidental to the ownership of any of the Shares or the securities described in clauses (2) above, such as voting, conversion and registration rights and rights of recovery for violations of applicable securities laws; and (4) the proceeds of the exercise, redemption, sale or exchange of any of the foregoing or any dividend, interest payment or other distribution of cash or property in respect thereof. All of the foregoing may be referred to herein as the "Collateral." If an Event of Default under the Note occurs, you will be entitled to vote the Shares and any other Collateral held by you under this Agreement, and at all such times DJDK will not be entitled to vote the Collateral. At all other times, DJDK will be entitled to vote the Collateral. Upon payment or performance in full of all obligations secured hereby, you will, at DJDK's request and expense, reassign or transfer the Collateral to DJDK. DJDK hereby warrants to you that: (1) it is the sole owner of the Shares; (2) the Shares are validly issued in DJDK's name, fully paid and non-assessable and, except as described above, are not subject to any encumbrance, claim or right in favor of any party other than you under this Agreement; (3) this Agreement has been duly authorized and constitutes DJDK's legal, valid and binding obligation, enforceable against it in accordance with its terms; (4) no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either for the pledge by DJDK of the Shares pursuant to this Agreement or for the execution, delivery or performance of this Agreement by DJDK, or for your exercise of the rights provided for in this Agreement or the remedies in respect of the Shares pursuant to this Agreement; (5) the pledge of the Shares to you pursuant to this Agreement creates a valid and perfected first priority security interest in your favor in the Shares securing the performance and the payment of the Note; and (6) except as described above, there are no options, warrants, privileges or other rights outstanding pursuant to which the Shares may be acquired. DJDK also agrees that it will not transfer, assign or encumber any of its rights in any of the Collateral except pursuant to this Agreement. It will take such action and execute such additional documents as you may request in connection with this Agreement or to enforce your rights hereunder. If DJDK fails to take any such action or execute any such document, it hereby authorizes you to do so in its name and on its behalf. You and your permitted successors and assigns will have all of the rights, powers and privileges of a secured party under the Uniform Commercial Code, as adopted by the State of Delaware and in force and effect from time to time with respect to the security interest granted by this Agreement. Upon the occurrence of any Event of Default under the Note, you may, without notice, take such action as you deem advisable with respect to the Collateral, including, without limitation, transferring any of the Collateral into your name or the name of your nominee, and selling any of the Collateral at a public or private sale on such terms as you deem appropriate. At any such sale you may be the purchaser. You will not be required to resort to or pursue any of your rights or remedies under or with respect to any other security for, or guaranty of payment of, any of the obligations secured by this Agreement before pursuing any of your rights or remedies under this Agreement. THIS AGREEMENT AND YOUR RIGHTS AND OBLIGATIONS HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. DJDK AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF DELAWARE. For the purpose of any such legal action or proceeding, DJDK hereby submits to the non-exclusive jurisdiction of such courts and agrees not to raise and waive any objection it may have based upon the venue of any such court. DJDK further agrees: (1) not to bring any legal action or proceeding referred in connection with this Agreement in any other court; and (2) to waive any limitation on the time within which an action or proceeding may be brought under or with respect to this Agreement. This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the undersigned. DJDK HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY LOAN DOCUMENT, OR ANY OF ITS OBLIGATIONS, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT, IN TORT OR OTHERWISE. If the foregoing is acceptable to you, please sign the enclosed copy of this letter in the space provided below, whereupon this letter will become an agreement between us as of the date first above written. This letter 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 letter by signing one or more counterparts. Very truly yours, DJDK L.L.C. /s/ David J. Lyon - ------------------------------------ David J. Lyon, Member AGREED AND ACCEPTED: /s/ Christopher A. Johnston - ------------------------------------ Christopher A. Johnston EX-14 7 ex14.txt CAJ-KJW OPTION DATED 2-28-02 EXHIBIT 14 OPTION AGREEMENT THIS OPTION AGREEMENT (the "Agreement"), dated as of February 28, 2002 between CHRISTOPHER A. JOHNSTON, an individual residing in Jackson Hole, Wyoming ("CAJ"), and KENNETH J. WARREN, an individual residing in Dublin, Ohio ("KJW"). WHEREAS, KJW 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 CAJ have an option to acquire 121,750 shares of common stock of the Company previously acquired by KJW 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. KJW hereby grants to CAJ an option (the "Option") to purchase 121,750 shares of common stock of the Company (the "Shares") previously acquired by KJW upon the following terms and conditions: 1.1. LAPSE. This Option will lapse and cease to be exercisable upon the first anniversary of this Agreement (or later date as outlined in Section 1.6). However, CAJ will have the option to renew the Option for another year for a Renewal Fee (as defined in Section 1.2). To effectuate any renewal, written notice to do so and the Renewal Fee must be received by KJW no later than 30 days prior to the expiration of the Option. Any renewal shall not extend the Option beyond February 28, 2007. 1.2. RENEWAL FEE. The renewal fee shall be $1,406.49. 1.3. PRICE. The price to be paid by CAJ to KJW for the Shares (the "Purchase Price") shall be $.25 per Share. 1.4. PROCEDURE. The Option shall be exercised by CAJ sending to KJW a notice (the "Notice") of the intention of CAJ 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 KJW has provided notice to CAJ under the provisions of Section 2, CAJ 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, CAJ shall deliver to KJW a certified or bank check drawn on a bank having an office in Dublin, Ohio for the payment of the Purchase Price against delivery by KJW 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 KJW, 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 CAJ'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. KJW cannot be required to sell shares if such a sale would cause KJW to be subject to the provisions of Section 16(b) of the Exchange Act. If a notice to exercise the Option is given and KJW cannot sell such shares, and the time period is going to expire, then the period shall be extended until five days after receipt of notice from KJW that it is now permissible for KJW 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 adjusted by the ratio between the number of Shares outstanding immediately after such event and the number of Shares outstanding immediately before such event. 1.8. LIENS. KJW agrees to keep available the number of shares subject to this option, free and clear of all liens and encumbrances except the lien in effect in favor of RPJ/JAJ Partner, Ltd and the right of CAJ to purchase any shares to be sold by KJW under an agreement between the two currently in effect. Section 2. INVESTMENT INTENT. 2.1. TRANSFER RESTRICTION. CAJ understands that the grant of the Option and the acquisition of the Shares from KJW by CAJ 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. CAJ 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 CAJ 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. 2.2. REPRESENTATION. CAJ represents that he is an "accredited investor" (as defined in Section 501 of the Securities Act of 1933). CAJ has such knowledge and experience in financial and business matters that he is capable of -2- 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 3. MISCELLANEOUS. 3.1. 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 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. 3.2. 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. 3.3. 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. 3.4. 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. 3.5. 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. 3.6. 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: -3- If to KJW: 5134 Blazer Parkway Tel. No. (614)-766-1960 Dublin, Ohio 43017 Fax No. (614) 766-1974 If to CAJ: P.O. Box 25182 3490 Club House Drive Suite 102 Tel. No. (307) 739-1188 Jackson, Wyoming 83001 Fax No. (307) 739-2288 Notice of change of address will be effective only upon receipt. 3.7. 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. 3.8. 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. 3.9. 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. 3.10. 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. 3.11. GOVERNING LAW. This Agreement shall be governed and construed by the provisions hereof and in accordance with the laws of the State of Delaware applicable to agreements to be performed in the State of Delaware. 3.12. 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. -4- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. /s/ Christopher A. Johnston ----------------------------------------- Christopher A. Johnston /s/ Kenneth J. Warren ----------------------------------------- Kenneth J. Warren EX-15 8 ex15.txt FORM OF SUBORDINATED PROMISSORY NOTE EXHIBIT 15 The following is a schedule setting forth material details in which the documents delivered differ from the form Name Date Note Issued Amount of Note ---- ---------------- -------------- The Trust February 28, 2002 $150,000 CAJ March 8, 2002 $150,000 Profit Sharing Plan February 28, 2002 $50,000 CSM February 28, 2002 $50,000 JCL February 28, 2002 $25,000 THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT BY -------------------- IN FAVOR OF WELLS FARGO BUSINESS CREDIT, INC. DATED AS OF ______________, 2002. THE SALE OR OTHER TRANSFER OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER. SUBORDINATED PROMISSORY NOTE ================================================================================ $XXXX Torrington, Connecticut _________________, 2002 ================================================================================ FOR VALUE RECEIVED, the undersigned, ROYAL PRECISION, INC. (the "Borrower"), hereby promises to pay to the order of ____________ (the "Lender"), the principal amount of $XXXX, together with interest, all as provided herein. SECTION 1. LOAN. The Lender shall provide up to $XXX to the Borrower. SECTION 2. PAYMENT. Payment of $XXXX, together with interest on the unpaid principal balance hereunder at a rate of interest as hereinafter set forth, shall be made at the principal office of the Lender or at such other place as the Lender or other holder hereof ("Holder") may from time to time designate in writing, in immediately available funds. 2.1. PRINCIPAL. The unpaid principal balance shall be payable by the Borrower on October 26, 2002. 2.2. INTEREST. The Borrower shall pay interest on the unpaid principal balance at a rate per annum equal to 13%. Interest on the unpaid principal balance shall be payable on April 26, 2002, July 26, 2002 and at the maturity of the loan. All interest payable under this Note or otherwise payable hereunder shall be computed on the basis of the actual number of days elapsed over a year of 365 days. Interest on the unpaid principal balance shall be payable at the maturity of the loan. Notwithstanding the provisions of the first sentence of this Section 2.2, upon the occurrence and continuance of an Event of Default, all unpaid principal shall bear interest at a rate per annum equal to 17% from the date of such Event of Default until paid in full. 2.3. RATE OF INTEREST. In no event whatsoever shall the interest rate and other charges hereunder exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that a court determines that the Lender has received interest and other charges hereunder in excess of the highest rate applicable hereto, the Lender shall promptly refund such excess amount to the Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate. 2.4. PREPAYMENTS; PAYMENTS. 2.4.1. The Borrower shall have the right to make prepayments at any time of the principal amount, in whole or in part, without notice. Each prepayment shall be without premium or penalty. Once a prepayment is made, Borrower shall not be able to reborrow such amount. 2.4.2. If any payment of principal or interest on this Note shall become due on a day other than a Business Day, such payment shall be due and payable upon the next succeeding Business Day and such extension of time shall in such case be included in computing interest in connection with such payment. 2.5. PRO-RATA PAYMENT. This Note is one of a set of four notes being issued by the Borrower on the date hereof. Each Holder, by acceptance of this Note, and the Company, agrees that no payment shall be made by the Company on any such note, whether for interest or principal, unless a pro rata payment is made by the Company on all such notes, with each such payment with respect to each note being in the ratio of such aggregate payment that the balance of the note then outstanding bears to the sum of the balance of all notes then outstanding. Each Holder reserves the right to waive the benefits provided to such Holder by this Section 2.5 with or without the approval of the holders of the other notes. SECTION 3. REPRESENTATIONS AND WARRANTIES. The execution of this Note by the Borrower shall be deemed to constitute the Borrower's representation and warranty to the Lender that, at the time of execution: (a) this Note is the legal, valid and binding obligation of the Borrower, enforceable against the -2- Borrower in accordance with its terms; (b) the execution and delivery of this Note by the Borrower does not and will not conflict with, violate or constitute a default under or breach the Borrower's charter documents, any resolutions of the Borrower or any court or administrative order, decree or ruling (including, without limitation, a ruling from the Internal Revenue Service), or any law, statute, ordinance or regulation, or any agreement, indenture, mortgage, deed of trust, guaranty, lease, note or other obligation or instrument binding upon the Borrower or any of its properties or assets; and (c) neither this Note nor any other statement, assignment, agreement, instrument or certificate of the Borrower made or delivered pursuant to or in connection with this Note contains any untrue statement of a material fact or omits to state a material fact required to be stated therein, in light of the circumstances under which they were made, or necessary to make the statements therein not misleading. SECTION 4. COVENANTS. On and after the date hereof and until payment in full of all obligations owed under this Note: 4.1. MAINTENANCE OF BUSINESS. The Borrower shall preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its formation and to qualify and remain qualified as a foreign business entity in each jurisdiction in which such qualification is necessary or desirable in view of its business and operations or for the ownership of its properties. The Borrower shall maintain and preserve in a reasonable manner in good working order and condition, ordinary wear and tear excepted, all of its properties which are necessary or useful in the proper conduct of its business, and to make, from time to time, all necessary and proper repairs, renewals, replacements, additions and improvements to said properties. The Borrower shall keep adequate records and books of account in which complete entries will be made in accordance with generally accepted accounting principles, reflecting all financial transactions. 4.2. COMPLIANCE WITH LAWS. The Borrower shall comply in all material respects with all applicable laws including, without limitation, all environmental laws. SECTION 5. SUBORDINATION. By acceptance of this Note, the Lender agrees as follows: Any and all obligations and liabilities of the Borrower to the Lender for principal and interest under this Note (the "Subordinated Indebtedness"), are subordinated in right of payment to any and all obligations and liabilities of the Borrower and its subsidiaries to Wells Fargo Business Credit, Inc. pursuant to a Subordination Agreement between the Lender and said bank of even date herewith (the "Senior Indebtedness"). SECTION 6. EVENTS OF DEFAULT. The following are Events of Defaults: 6.1. INTEREST. The Borrower fails to make a payment of interest on the Note when and as due and such failure is not remedied within three Business Days after the date such payment is due. -3- 6.2. PRINCIPAL. The Borrower fails to pay any outstanding principal amount under this Note as and when such shall become due and payable and such failure is not remedied within three Business Days after the date such payment is due. 6.3. REPRESENTATIONS. Any representation or warranty made by the Borrower in this Note or any information contained in any financial statement or any material certificate, report, or other document delivered to the Lender by the Borrower contains any untrue statement of a material fact or omits to state a material fact required by this Note or law to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that any Event of Default susceptible of cure which is described in this Section 6.3 can be cured by the presentation, within three Business Days after the Borrower knows or should know of such Event of Default, of a revised financial statement, certificate, report or other document which itself does not cause any Event of Default. 6.4. COVENANTS. The Borrower fails to perform any of its obligations under or fails to comply with any covenant contained in this Note and such failure continues unremedied for a period of 10 Business Days. 6.5. FINANCIAL DISTRESS. The Borrower: 6.5.1. makes an assignment for the benefit of creditors; 6.5.2. enters into any composition, compromise or arrangement with its creditors in general; 6.5.3. generally does not pay its debts as such debts become due; or 6.5.4. conceals, removes, or permits to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them, or makes or suffers a transfer of any of its property, fraudulent under the provisions of any bankruptcy, fraudulent conveyance or similar law, or makes or suffers a transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid. 6.6. CROSS-DEFAULT. There is a default in the payment (either on maturity or acceleration) of any other obligation of the Borrower or any subsidiary of the Borrower, for borrowed money (which excludes trade debt incurred in the ordinary course of business or severance obligations) having a principal amount in excess of $25,000 in the aggregate. 6.7. JUDGMENTS. The rendering of any judgments for the payment of money in excess of $25,000 in the aggregate against the Borrower or any subsidiary of the Borrower, and such judgments shall remain unpaid, unvacated, or unstayed by appeal or otherwise on or before three Business Days prior to the earliest date on which proceedings for the enforcement thereof may be instituted under the applicable rules or statutes of the jurisdiction in which said judgments are rendered. -4- 6.8. INVALIDITY. Any governmental authority asserts that the making of the loan evidenced by this Note is in any way an illegal or improper act of the Holder; provided that no Event of Default shall occur under this Section 6.8 if (a) such assertion is being contested by the Lender in good faith by appropriate means, and (b) under the circumstances of such contest, such repayment does not, in the reasonable opinion of counsel to the Lender, result in any detriment to the Lender. SECTION 7. DEFAULT REMEDIES. 7.1. ACCELERATION. If an Event of Default exists, the outstanding unpaid principal balance of this Note, together with all (a) interest accrued thereon, (b) any unpaid fees or expenses, (c) penalties assessed against the Lender as a result of the making of the loan by the Lender to the Borrower (including, without limitation, penalties assessed by the Internal Revenue Service) or (d) other amounts due to the Lender under this Note, is immediately due and payable, at the Lender's election, without presentment, demand, protest or notice of any kind, all of which are hereby waived. 7.2. REMEDIES CUMULATIVE. No right or remedy conferred upon the Lender by this Note or legally available to the Lender if an Event of Default exists is intended to be exclusive of any other right or remedy, and each such right or remedy is cumulative and in addition to every other such right or remedy. 7.3. OPTION. If all amounts due hereunder are not paid in full, including all interest due thereon, as and when such sums are due and payable, or earlier if there is an Event of Default, then the Lender shall have the option (the "Option") to convert all or any part of the unpaid principal and interest thereon into shares of Common Stock of the Borrower (the "Shares") at the rate of one Share for each $0.25 of unpaid principal and interest thereon as of the date when such sums are due and payable (the "Exercise Price"). Exercise of the Option shall be considered payment by the Borrower and thus reduce any outstanding balance owed by the Borrower by the amount of Shares received by the Lender. 7.3.1. The Option may be exercised at one or more times by the Lender sending a written notice to the Borrower indicating the number of shares to be acquired, which must be in minimum amounts of 25,000 shares, unless it is an exercise of the remaining shares subject to the Option, and the amount of principal and interest thereon being converted. 7.3.2. As soon as practicable after each such exercise, the Borrower shall issue to the Lender a certificate for the number of Shares to which the Lender is entitled. 7.3.3. If, after the date of this Note, the number of outstanding Shares is increased by a share dividend payable in Shares or by a split of Shares or other similar event, then, on the date following the date fixed for the determination of holders of Shares entitled to receive such share dividend or split, the number of Shares issuable on exercise of the Option shall be increased in proportion to such increase in outstanding Shares and the then applicable Exercise Price shall be correspondingly decreased. 7.3.4. If, after the date of this Note, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, after the effective date of such consolidation, combination or reclassification, the number of Shares issuable on exercise of the Option shall be decreased in proportion to such decrease in -5- outstanding Shares and the then applicable Exercise Price shall be correspondingly increased. 7.3.5. If, after the date of this Note, any capital reorganization or reclassification of the Shares, or consolidation or merger of the Borrower with another corporation for a consideration other than cash or the assumption of debt, or the sale of all or substantially all of its assets to another corporation for a consideration other than cash or the assumption of debt or other similar event shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, or sale, lawful and fair provision shall be made whereby the Lender shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in this Note and in lieu of the Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares, securities, or assets as may be issued or payable with respect to or in exchange for a number of outstanding Shares equal to the number of Shares immediately theretofore purchasable and receivable upon the exercise of Option had such reorganization, reclassification, consolidation, merger, or sale not taken place, and in such event appropriate provision shall be made with respect to the rights and interests of the Lender to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of Shares purchasable upon the exercise of the Option) shall thereafter be applicable, as nearly as may be in relation to any share, securities, or assets thereafter deliverable upon the exercise hereof. 7.3.6. Upon the occurrence of any event specified in this Section 7.3, the Borrower shall give written notice of the record date for such dividend, distribution, or subscription rights, or the effective date of such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding up or issuance. Such notice shall also specify the date as of which the holders of Shares of record shall participate in such dividend, distribution, or subscription rights, or shall be entitled to exchange their Shares for shares, securities, or other assets deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding up or issuance. Failure to give such notice, or any defect therein shall not affect the legality or validity of such event. SECTION 8. WARRANT. The Borrower shall cause to be issued to the Lender a warrant to purchase XXXX Shares, which, when issued, shall be fully vested, exercisable for a period of 10 years from the issuance date, and have a strike price equal to $0.25 per share, receipt of which is hereby acknowledged by execution of this Note. -6- SECTION 9. MISCELLANEOUS. 9.1. MODIFICATIONS AND WAIVERS. No modification or waiver of any term or provision contained in this Note and no consent to any departure by the Borrower therefrom shall in any event be effective unless the same is in writing and signed by the waiving party. Such waiver or consent shall be effective only in the specific instance and for the purpose for which it is given. 9.2. NOTICES. Except where specific provisions of this Note provide for some other form of notice or require receipt as a condition of notice, any consent, waiver, notice, demand or other instrument required or permitted to be given under this Note shall be deemed to have been properly received when in writing and delivered in person or sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed, if to the Borrower: P.O. Box 298, 535 Migeon Avenue, Torrington, Connecticut 06790 Attn: President; and if to the Lender: ___________. Either party may change its address for notices by notice in the manner set forth above. 9.3. PARTIAL INVALIDITY. If any term or provision of this Note or the application thereof to any person, firm or corporation or any circumstance, shall be invalid or unenforceable, the remainder of this Note, or the application of such term or provision to any person, firm or corporation or any circumstances, other than those as to which it is held invalid, shall both be unaffected thereby and each term or provision of this Note shall be valid and be enforced to the fullest extent permitted by law. 9.4. NO IMPLIED RIGHTS OR WAIVERS. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in the same, similar or other circumstances. Neither any failure nor any delay on the part of the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of the same or the exercise of any other right, power or privilege. The Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. 9.5. SUCCESSORS AND ASSIGNS. This Note shall be binding upon and inure to the benefit of the respective heirs, successors and assigns of the Lender and the Borrower; provided that the Borrower shall have no right to assign or transfer its rights under this Note voluntarily or by operation of law without first obtaining the written consent of Lender, and any attempted assignment or transfer in the absence of such consent shall be void and of no effect. To the extent that this Note remains unpaid, the Lender may only assign its registration rights (contained in a separate agreement executed simultaneously with this Note) without an assignment of this Note (a) with the consent of the Borrower, which consent will not be unreasonably or untimely withheld, or (b) to any Affiliate of the Lender. An Affiliate of the Lender shall mean ___________, any child of ___________, and any corporation, trust, limited liability company, partnership or company under the direct or indirect control of _______________. -7- 9.6. SURVIVAL OF PROVISIONS. All covenants, agreements, representations, warranties and statements made in this Note or in any certificate, statement, or other instrument given pursuant to this Note shall survive the execution and delivery to the Lender of this Note and the making of the loan and shall continue in full force and effect so long as any obligation of the Borrower under this Note is outstanding and unpaid. 9.7. CAPTIONS. The captions and section numbers appearing in this Note 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 Note. 9.8. GOVERNING LAW. This Note shall be governed and construed by the provisions hereof and in accordance with the laws of the State of Delaware applicable to instruments to be performed in the State of Delaware. 9.9. DEFINITIONS. Terms not otherwise defined herein shall have the definitions set forth below: "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized by law to close. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. 9.10. WAIVER. The Borrower and each endorser of this Note hereby waives presentment for payment, demand, protest and notice of protest and notice of dishonor and nonpayment of this Note and agrees that no obligation hereunder shall be discharged by reason of any extension, indulgence, release, or forbearance granted by any Holder of this Note to any party now or hereafter liable hereon or any present or subsequent owner of any property, real or personal, which is now or hereafter security for this Note. Any transferees of, or endorser, guarantor or surety paying this Note in full shall succeed to all rights of the Holder, and the Holder shall be under no further responsibility for the exercise thereof or the loan evidenced hereby. Nothing herein shall limit any right granted to the Holder by other instrument or by law. 9.11. EXPENSES. The Borrower hereby agrees to pay on demand all reasonable costs and expenses of the Lender in connection with the preparation, execution and delivery of this Note and other documents to be delivered in connection herewith, including, without limitation, the reasonable fees and out of pocket expenses of counsel to the Lender with respect thereto. Lastly, all costs, including attorney fees, incurred by the Holder in revising, protecting, exercising or enforcing any of its rights hereunder and under the other documents delivered hereunder, or otherwise incurred by the Holder in connection with an Event of Default or incurred by the Holder in connection with the enforcement hereof, including by way of description and not limitation, such -8- charges in any court or bankruptcy proceedings or arising out of any claim or action by any person, firm or corporation against the Holder which would not have been asserted were it not for the Holder's relationship with the Borrower, shall also be paid by the Borrower. 9.12. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT. - 9.12.1. This Note shall not be transferable except upon compliance with the provisions of the Securities Act and the state securities and Blue Sky laws. 9.12.2. This Note and the Shares into which it can be converted or any other note issued in replacement of this Note, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws): THE SALE OR OTHER TRANSFER OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER. 9.13. INVESTMENT REPRESENTATIONS. If the exercise of the Option is not covered by a registration statement effective under the Securities Act, by acceptance of this Note, the Lender represents at each time that the Option is exercised that: 9.13.1. The Lender is acquiring the Shares for investment for its own account, not as nominee or agent, and not with a view to the distribution thereof, and the Lender has not signed any agreement or otherwise arranged for the selling, granting any participation in, or otherwise distributing the same; 9.13.2. The Lender has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Lender's investment in the Shares; 9.13.3. The Lender has received all of the information the Lender has requested from the Borrower and considers necessary or appropriate for deciding whether to purchase the Shares; 9.13.4. The Lender has the ability to bear the economic risks of its prospective investment; -9- 9.13.5. The Lender is able, without materially impairing its financial condition, to hold the Shares for an indefinite period of time and to suffer complete loss on its investment; 9.13.6. The Lender understands and agrees that (a) it may be unable to readily liquidate its investment in the Shares and that the Shares must be held indefinitely unless a subsequent disposition thereof is registered or qualified under the Securities Act and applicable state securities or Blue Sky laws or is exempt from such registration or qualification, and that the Borrower, while obligated to register the same, may not be in any position to do so or to take any action or make such an exemption available and (b) the exemption from registration under the Securities Act afforded by Rule 144 promulgated by the SEC ("Rule 144") depends upon the satisfaction of various conditions by the Lender and the Borrower that, if applicable, Rule 144 affords the basis for sales under certain circumstances in limited amount, and that if such exemption is utilized by the Lender, such conditions must be fully complied with by the Lender and the Borrower, as required by Rule 144; 9.13.7. The Lender either (a) is familiar with the definition of and the Lender is an "accredited investor" within the meaning of such term under Rule 501 of Regulation D promulgated under the Securities Act, or (b) is providing representations and warranties reasonably satisfactory to the Borrower and its counsel, to the effect that the sale and issuance of Shares upon exercise of the Option may be made without registration under the Securities Act or any applicable state securities and Blue Sky law; and 9.13.8. The address set forth in Section 9.2 for the Lender is the true and correct address of the Lender's principal office. This Note was executed in Torrington, Connecticut as of the date first written above. ROYAL PRECISION, INC. By: /s/ John C. Lauchnor --------------------------------- Name: John C. Lauchnor Title: President -10- EX-16 9 ex16.txt FORM OF WARRANT EXHIBIT 16 The following is a schedule setting forth material details in which the documents delivered differ from the form: Name Note No. Date Warrant Issued Number of Shares ---- -------- ------------------- ---------------- The Trust 003 February 28, 2002 36,000 CAJ 004 March 8, 2002 36,000 Profit Sharing Plan 005 February 28, 2002 12,000 CSM 006 February 28, 2002 12,000 JCL 007 February 28, 2002 6,000 THE SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER. No. 00 _______________, 2002 WARRANT TO PURCHASE SHARES OF COMMON STOCK OF ROYAL PRECISION, INC. This certifies that ____________ (the "Holder"), is entitled, subject to the adjustment and to the other terms set forth below, to purchase from ROYAL PRECISION, INC., a Delaware corporation (the "Company"), _________ (XXXX) fully paid and nonassessable shares of the Company's $.001 par value Common Stock (the "Stock") at a price of $0.25 per share (the "Stock Purchase Price") at any time or from time to time but not earlier than the Commencement Date (as defined below) or later than 5:00 p.m. (New York Time) on the Expiration Date (as defined below), upon surrender to the Company at its principal office at 535 Migeon Avenue, Torrington, Connecticut 06790, Attention: Chief Financial Officer (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription Agreement attached hereto duly filled in and signed and upon payment in cash or cashier's check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. This Warrant is issued in exchange for the Holder agreeing to lend to the Company up to $XXXX pursuant to the terms of a Subordinated Promissory Note of even date herewith between the Company and the Holder. The Stock Purchase Price and, in some cases, the number of shares of Stock purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant. This Warrant and all rights hereunder, to the extent not exercised in the manner set forth herein shall terminate and become null and void on the Expiration Date. "Commencement Date" shall mean the date of execution of this Warrant. "Expiration Date" shall mean the tenth anniversary of the Commencement Date. This Warrant is subject to the following terms and conditions: -1- 1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. This Warrant is exercisable at the option of Holder at any time or from time to time but not earlier than the Commencement Date or later than 5:00 p.m. (New York Time) on the Expiration Date for all of the shares of Stock which may be purchased hereunder. This Warrant may not be exercised for fewer than 5,000 shares of Stock, or all of the shares of Stock which may be purchased hereunder. The Company agrees that the shares of Stock purchased under this Warrant shall be and are deemed to be issued to Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of Stock so purchased, together with any other securities or property to which Holder is entitled upon such exercise, shall be delivered to Holder by the Company's transfer agent at the Company's expense within a reasonable time after the rights represented by this Warrant have been exercised. Each stock certificate so delivered shall be in such denominations of Stock as may be requested by Holder and shall be registered in the name of Holder or such other name as shall be designated by Holder, subject to the limitations contained in Section 2. 2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees that all shares of Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all pre-emptive rights of any stockholder and free of all taxes, liens, and charges with respect to the issue thereof. The Company covenants that it will reserve and keep available a sufficient number of shares of its authorized but unissued Stock for such exercise. The Company will take all such reasonable action as may be necessary to assure that such shares of Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange or automated quotation system upon which the Stock may be listed. 3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock Purchase Price and, in some cases, the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3. 3.1 SUBDIVISION OR COMBINATION OF STOCK AND STOCK DIVIDEND. In case the Company shall at any time subdivide its outstanding shares of Stock into a greater number of shares or declare a dividend upon its Stock payable solely in shares of Stock, the Stock Purchase Price in effect immediately prior to such subdivision or declaration shall be proportionately reduced, and the number of shares issuable upon exercise of the Warrant shall be proportionately increased. Conversely, in case the outstanding shares of Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased, and the number of shares issuable upon exercise of the Warrant shall be proportionately reduced. 3.2 NOTICE OF ADJUSTMENT. Promptly after adjustment of the Stock Purchase Price or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered -2- holder of this Warrant at the address of such holder as shown on the books of the Company. The notice shall be signed by the Company's chief financial officer and shall state the effective date of the adjustment and the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 3.3 OTHER NOTICES. If at any time: (a) the Company shall declare any cash dividend upon its Stock; (b) the Company shall declare any dividend upon its Stock payable in stock (other than a dividend payable solely in shares of Stock) or make any special dividend or other distribution to the holders of its Stock; (c) there shall be any consolidation or merger of the Company with another corporation, or a sale of all or substantially all of the Company's assets to another corporation; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, in any one or more of said cases, the Company shall give, by certified or registered mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least 30 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such dissolution, liquidation or winding-up; (ii) at least 10 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger or sale, and (iii) in the case of any such reorganization, reclassification, consolidation; merger, sale, dissolution, liquidation or winding-up, at least 30 days' written notice of the date when the same shall take place. Any notice given in accordance with clause (i) above shall also specify, in the case of any such dividend, distribution or option rights, the date on which the holders of Stock shall be entitled thereto. Any notice given in accordance with clause (iii) above shall also specify the date on which the holders of Stock shall be entitled to exchange their Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, as the case may be. If the Holder does not exercise this Warrant prior to the occurrence of an event described above, except as provided in Section 3.1 and 3.4, the Holder shall not be entitled to receive the benefits accruing to existing holders of the Stock in such event. 3.4 CHANGES IN STOCK. In case at any time prior to or following the Commencement Date, the Company shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets or recapitalization of the Stock) in which the previously outstanding Stock shall be changed into or exchanged for different securities of -3- the Company or common stock or other securities of another corporation or interest in a noncorporate entity or other property (including cash) or any combination of any of the foregoing (each such transaction being herein called the "Transaction" and the date of consummation of the Transaction being herein called the "Consummation Date"), then, as a condition of the consummation of the Transaction, lawful and adequate provisions shall be made so that each Holder, upon the exercise hereof at any time on or after the Consummation Date, shall be entitled to receive, and this Warrant shall thereafter represent the right to receive, in lieu of the stock issuable upon such exercise prior to the Consummation Date, the highest amount of securities or other property to which each Holder would actually have been entitled as a stockholder upon the consummation of the Transaction if such Holder had exercised such Warrant immediately prior thereto. The provisions of this Section 3.4 shall similarly apply to successive Transactions. 4. ISSUE TAX. The issuance of certificates for shares of Stock upon the exercise of the Warrant shall be made without charge to the holder of the Warrant for any issue tax in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then holder of the Warrant being exercised. 5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matters or any rights whatsoever as a stockholder of the Company. Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in the event of a dividend on the Stock payable in shares of Stock, no dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Stock, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the Stock Purchase Price or as a stockholder of the Company whether such liability is asserted by the Company or by its creditors. 6. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT. 6.1 RESTRICTIONS ON TRANSFERABILITY. This Warrant and the Stock issuable upon exercise hereof (collectively, the "Securities"), shall not be transferable except upon compliance with the provisions of the Securities Act and the state securities and Blue Sky laws. 6.2 RESTRICTIVE LEGEND. Each certificate representing the Securities or any other securities issued in respect of the Securities upon any stock split, stock dividend, recapitalization, merger consolidation or similar event, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws): -4- THE SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER. 7. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 8. NOTICES. Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the Company shall be delivered or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to the Company at the address indicated therefor in the first paragraph of this Warrant. 9. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware. 10. LOST WARRANTS OR STOCK CERTIFICATES. The Company represents and warrants to Holder that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity and, if requested, bond reasonably satisfactory to the Company, or in the case of any such mutilation, upon surrender and cancellation of such Warrant or stock certificate, the Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 11. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share pay the holder entitled to such fraction a sum in cash equal to the fair market value of any such fractional interest as it shall appear on the public market, or if there is no public market for such shares, then as shall be reasonably determined by the Company. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its President thereunto duly authorized. ROYAL PRECISION, INC. /s/ John C. Lauchnor ------------------------------------ By: John C. Lauchnor Its: President -5- FORM OF SUBSCRIPTION AGREEMENT (To be signed and delivered upon exercise of Warrant) Royal Precision, Inc. Attention: Chief Financial Officer 535 Migeon Avenue Torrington, Connecticut 06790 The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ______ shares of common stock, par value $0.001 per share (the "Stock"), of ROYAL PRECISION, INC. (the "Company") and herewith makes payment of $_______ therefor and requests that the certificates for such shares be issued in the name of, and delivered to, __________________________, whose address is ______________________________________________________________. If the exercise of this Warrant is not covered by a registration statement effective under the Securities Act of 1933, as amended (the "Securities Act"), the undersigned represents that: (i) the undersigned is acquiring such Stock for investment for his/its own account, not as nominee or agent, and not with a view to the distribution thereof, and the undersigned has not signed any agreement or otherwise arranged for the selling, granting any participation in, or otherwise distributing the same; (ii) the undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the undersigned's investment in the Stock; (iii)the undersigned has received all of the information the undersigned has requested from the Company and considers necessary or appropriate for deciding whether to purchase the shares of Stock; (iv) the undersigned has the ability to bear the economic risks of his/its prospective investment; (v) the undersigned is able, without materially impairing his/its financial condition, to hold the shares of Stock for an indefinite period of time and to suffer complete loss on his/its investment; (vi) the undersigned understands and agrees that (A) he/it may be unable to readily liquidate his/its investment in the shares of Stock and that the shares must be held indefinitely unless a subsequent disposition thereof is registered or qualified under the Securities Act and applicable state securities or Blue Sky laws or is exempt from such registration or qualification, and that the Company, while obligated to register the same, may not be in a position to do so or to take any action or make such an exemption available and (B) the exemption from registration under the Securities Act afforded by Rule 144 promulgated by -6- the Securities and Exchange Commission ("Rule 144") depends upon the satisfaction of various conditions by the undersigned and the Company that, if applicable, Rule 144 affords the basis for sales under certain circumstances in limited amount, and that if such exemption is utilized by the undersigned, such conditions must be fully complied with by the undersigned and the Company, as required by Rule 144; (vii) the undersigned either (A) is familiar with the definition of and the undersigned is an "accredited investor" within the meaning of such term under Rule 501 of Regulation D promulgated under the Securities Act, or (B) is providing representations and warranties reasonably satisfactory to the Company and its counsel, to the effect that the sale and issuance of Stock upon exercise of such Warrant may be made without registration under the Securities Act or any applicable state securities and Blue Sky law; and (viii) the address set forth below is the true and correct address of the undersigned's residence. DATED: ____________________ ------------------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant) ------------------------------------- ------------------------------------- (Address) EX-19 10 ex19.txt SUBSCRIPTION AGREEMENT EXHIBIT 19 STOCK SUBSCRIPTION AGREEMENT THIS STOCK SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of March 28, 2002, by and among Royal Associates, Inc., a Delaware corporation (the "COMPANY"), each individual whose signature appears on the signature page of this Agreement (each, a "Stockholder" and collectively the "STOCKHOLDERS"). WHEREAS, each Stockholder wishes to participate in the formation of the Company on the terms herein contained; and WHEREAS, the Company is being formed to evaluate one or more potential proposals which may result in a merger or other extraordinary transaction and cause the common stock of Royal Precision, Inc., a Delaware corporation (the "Issuer") to cease to be quoted in an inter-dealer quotation system of a registered national securities association and become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, and which may result in potential changes in membership or terms of the present board of directors and changes in the Issuer's certificate of incorporation or bylaws; and WHEREAS, each Stockholder wishes to purchase the number of shares of the Company's Common Stock, without par value per share (the "COMMON STOCK"), set forth opposite such Stockholder's name in Section 3.5(a) for an aggregate purchase price set forth in Column E opposite such Stockholder's name in Section 3.5(a) to be paid in cash by the Stockholder. WHEREAS, the Company, in exchange for the payment of the cash consideration referred to above, is willing to issue all of the shares of Common Stock to the Stockholders, in the respective proportions to be purchased by them as set forth, and on the terms and conditions set forth, below. NOW THEREFORE, the parties to this Agreement hereby agree as follows: ss.1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings set forth below: "ACT" See Section 4.1. "COMMON STOCK" See preamble. "COMPANY" See preamble. "DEPOSIT" See Section 2.2. "PERSON" Person shall mean an individual, partnership, corporation, limited liability company, association, trust, joint venture, unincorporated organization, or any government, governmental department or agency or political subdivision thereof. "SHARES" See Section 2.1. "STOCKHOLDER" See preamble. ss.2. ISSUANCE OF STOCK TO THE STOCKHOLDERS. 2.1 SALE AND PURCHASE OF STOCK. Subject to all of the terms and conditions hereof and in reliance on the representations and warranties set forth herein, the Company agrees to issue and sell to the Stockholders and each Stockholder agrees, severally and not jointly, to purchase from the Company on the date hereof, the number of shares of Common Stock (the "SHARES") set forth in Column B opposite the name of such Stockholder in Section 3.5(a) below, for a purchase price set forth in Column E opposite the name of such Stockholder in Section 3.5(a) below, to be paid in cash. 2.2 PAYMENT OF CASH PURCHASE PRICE. Each Stockholder shall pay its portion of the cash purchase price for the Shares to be purchased hereunder by delivery on the date hereof of a check or wire transfer in the amount set forth in Column C opposite the name of such Stockholder ("DEPOSIT"). The amount set forth in Column D opposite the name of such Stockholder shall be delivered on demand by the Company. The Company shall deliver to each Stockholder a certificate or certificates representing the number of Shares set forth in Column B opposite the name of such Stockholder against receipt of the Deposit, each such share certificate to be registered in such Stockholder's name and bearing the legends set forth in Section 4.2 hereof. ss.3. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. In order to induce the Stockholder to enter into this Agreement and to purchase the Shares as described herein, the Company represents and warrants to each Stockholder as follows: 3.1 ORGANIZATION AND GOOD STANDING. The Company is duly organized and existing in good standing in its jurisdiction of incorporation and has the corporate power to own its properties and to carry on its business as now conducted and as proposed to be conducted. 3.2 AUTHORIZATION. The execution, delivery and performance by the Company of this Agreement, and the issuance and sale by the Company of the Shares to the Stockholder hereunder, (a) are within the Company's corporate power and authority, (b) have been duly authorized by all necessary corporate proceedings, and (c) do not conflict with or result in any breach of any provision of or the creation of any lien upon any of the property of the Company or require any consent or approval pursuant to the charter or bylaws of the Company or any law, regulation, order, judgment, writ, injunction, license, permit, agreement or instrument. 2 3.3 ENFORCEABILITY. The execution and delivery by the Company of this Agreement, and the issuance and sale of the Shares to the Stockholder hereunder, will result in legally binding obligations of the Company, enforceable against it in accordance with the terms and provisions hereof. 3.4 GOVERNMENTAL APPROVALS. The execution, delivery and performance by the Company of this Agreement, and issuance and sale by the Company of the Shares to the Stockholder hereunder, do not require the approval or consent of, or any filing with, any governmental authority or agency. 3.5 CAPITALIZATION. (a) CAPITAL STOCK. The authorized capital stock of the Company consists solely of 1,500 shares of Common Stock. On the date hereof, after giving effect to the transactions contemplated hereby and by any other agreements to purchase capital stock of the Company as of the date hereof, the Company will have no outstanding capital stock other than 1,000 shares of Common Stock. The following is a chart showing the names of each of the initial subscribers, the number of shares subscribed for and the amount to be paid for the subscriptions: (A) (B) (C) (D) (E) Number of Amount Amount to be Total Subscriber Shares Paid Now Paid on Demand Consideration ---------- ------ -------- -------------- ------------- Kenneth J. Warren 45 $ 903 $ 1,806 $ 2,709 Charles S. Mechem, Jr. 18 $ 356 $ 713 $ 1,069 John C. Lauchnor 9 $ 173 $ 346 $ 519 Christopher A. Johnston 142 $ 2,834 $ 5,669 $ 8,503 David E. Johnston 17 $ 331 $ 663 $ 994 Richard P. Johnston 612 $12,244 $24,488 $36,732 Robert Jaycox 158 $ 3,158 $ 6,317 $ 9,475 (b) OPTIONS, ETC. The Company has no outstanding rights (either preemptive or other) or options to subscribe for or purchase from the Company and no warrants or other agreements providing for or requiring the issuance by the Company, of any of its capital stock or any securities convertible into or exchangeable for its capital stock. ss.4. THE STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. In order to induce each other Stockholder and the Company to enter into this Agreement and the Company to issue and sell the Shares to each Stockholder as described herein, each Stockholder represents and warrants as follows: 4.1 INVESTMENT REPRESENTATIONS. (a) The Shares are being acquired by him for his own account for investment and not with a view to the distribution thereof. The Stockholder understands that the Shares have not been registered under the Securities Act of 1933, as amended (the "ACT"), on the ground that the offer and sale of the Shares to him are exempt from the registration requirements of the Act under Section 4(2) thereof as a transaction not 3 involving any public offering of the Shares. The Stockholder understands that the Company's reliance on such exemption is predicated in part on the representations of the Stockholder which are contained herein. (b) The Stockholder understands that he must bear the economic risk of his investment in the Shares for an indefinite period of time because the issuance of the Shares has not been registered under the Act and, therefore, cannot be sold unless such sale is subsequently registered under the Act or an exemption from such registration is available. The Stockholder is an "accredited investor" (as defined in Rule 501 promulgated under the Act). The Stockholder agrees that he will not offer to sell or otherwise transfer any of the Shares except as expressly permitted by this Agreement and then only after the Company has received an opinion of its counsel that such offer, sale or transfer is not in violation of the registration requirements of the Act or other applicable law. 4.2 LEGEND. The Stockholder agrees that each certificate representing the Shares shall bear a legend each substantially in the following form: The sale or other transfer of the shares evidenced by this certificate has not been registered under the Securities Act of 1933, as amended. No transfer, sale or other disposition of these shares may be made unless a Registration Statement with respect to these shares has become effective under said Act, or the Company has been furnished with an opinion of counsel satisfactory to the Company that such registration is not required. ss.5 CONFIDENTIALITY. The Stockholders recognize and acknowledge that any information pertaining to the business of the Company, Royal Precision, Inc. ("RPI"), or any other company now existing or in the future affiliated with the Company, RPI, their partners, principals or owners ("Affiliated Companies" and collectively with the Company, RPI or Affiliated Companies, the "Group"), including but not limited to confidential information about customers (including their tastes, requirements and preferences) or suppliers, or lists of the names, addresses and phone numbers of customers or suppliers, employees, prices, methods of doing business, financial condition, operation and trading procedures, distribution or merchandising methods, processing, extruding, manufacturing, printing or assembly methods; trade secrets, inventions, types and identity of machinery used, material used, marketing techniques, proprietary information or other similar confidential items of the Group ("Confidential Information"), as the same may exist from time to time, are valuable, special and unique assets of the business of the members of the Group. The Stockholders shall not, as stockholders, during or after the term of this Agreement, (i) disclose any such Confidential Information, directly or indirectly, to any entity for any reason whatsoever, except in response to a lawful court order which the applicable member of the Group shall have had the opportunity to contest; or (ii) use Confidential Information, directly or indirectly, for his own personal benefit or gain, or for the benefit or gain of any other person or entity. 4 ss.6. MISCELLANEOUS. 6.1 AMENDMENT AND WAIVER. No modification, amendment or waiver of any provision of this Agreement will be effective against the Company or any Stockholder unless such modification, amendment or waiver is approved in writing by the parties hereto. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. 6.2. SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 6.3. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, this Agreement embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and thereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 6.4. SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Stockholders and their heirs, transferees, successors and assigns. 6.5. COUNTERPARTS. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement. 6.6. REMEDIES. Each Stockholder will be entitled to enforce his rights under this Agreement specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in his favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any Stockholder may in his sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violation of the provisions of this Agreement. In the event of any dispute involving the terms of this Agreement, the prevailing party shall be entitled to collect reasonable legal fees and expenses from the other parties to the dispute. 6.7. NOTICES. All notices hereunder shall be sufficient if made in writing and delivered to the mailing and delivery address of the respective parties indicated on the signature pages to this Agreement, or transmitted to the facsimile or telex numbers set forth on the signature pages to this Agreement. 5 All such notices shall be deemed received one Business Day after (a) signed for, or refused, if given by certified mail, (b) delivery if given by express courier service, or (c) transmission, if given by facsimile or telex transmission. 6.8. GOVERNING LAW. All questions concerning the construction, validity and interpretation of this agreement will be governed by the laws of the state of Delaware. 6.9. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 6 IN WITNESS WHEREOF, the parties hereto have executed this Stock Subscription Agreement on the day and year first above written. ROYAL ASSOCIATES, INC. By: /s/ KENNETH J. WARREN ----------------------------------- Kenneth J. Warren, Secretary Address for Notices: Richard P. Johnston copy to: Kenneth J. Warren 4350 Greens Place 5134 Blazer Parkway Wilson, Wyoming 83014 Dublin, Ohio 43017 Telephone: (307) 739-3010 Telephone: 614-766-1960 Telefax: (307) 739-1070 Telefax: 614-766-1974 STOCKHOLDERS /s/ Kenneth J. Warren -------------------------------------- Kenneth J. Warren Address for Notices: Kenneth J. Warren 5134 Blazer Parkway Dublin, Ohio 43017 Telephone: 614-766-1960 Telefax: 614-766-1974 /s/ Charles S. Mechem, Jr. -------------------------------------- Charles S. Mechem, Jr. Address for Notices: Charles S. Mechem, Jr. 1800 Firstar Tower 425 Walnut Street Cincinnati, OH 45202-3957 Telephone: (513) 562-8078 Telefax: (513) 381-0205 /s/ John C. Lauchnor -------------------------------------- John C. Lauchnor Address for Notices: John C. Lauchnor 535 Migeon Avenue Torrington, CT. 06790 Telephone: (860) 618-4106 Telefax: (860) 618-4098 /s/ Christopher A. Johnston -------------------------------------- Christopher A. Johnston Address for Notices: Christopher A. Johnston c/o Merbanco, Incorporated P.O. Box 25182 3490 Club House Drive, Suite 102 Jackson, Wyoming 83001 Telephone: (307) 739-1188 Telefax: (307) 739-2288 /s/ David E. Johnston -------------------------------------- David E. Johnston Address for Notices: David E. Johnston 1935 West Muirhead Loop Oro Valley, AZ 85737 Telephone: (520) 742-9100 Telefax: 520-742-9192 /s/ Richard P. Johnston -------------------------------------- Richard P. Johnston Address for Notices: Richard P. Johnston 4350 Greens Place Wilson, Wyoming 83014 Telephone: (307) 739-3010 Telefax: (307) 739-1070 /s/ Robert Jaycox -------------------------------------- Robert Jaycox Address for Notices: Robert Jaycox Box 1767 Jackson, Wyoming 03001 Telephone: Telefax: EX-23 11 ex23.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 23 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of February 26, 2002 (the "Effective Date"), among Richard P. Johnston and Jayne A Johnston, Trustees of The Johnston Family Living Trust u/a dtd. 4/11/94 ("JFLT"), Christopher A. Johnston, an individual residing at 2784 Teton Pines Drive, Jackson, Wyoming 83001, Dean Witter Reynolds, Custodian f/b/o Kenneth J. Warren VIP Plus Profit-Sharing Account ("KJW"), John C. Lauchnor, an individual having an office in Torrington, Connecticut, and Charles S. Mechem, an individual residing in Cincinnati, Ohio (JFLT, CAJ, KJW, Messrs. Lauchnor and Mechem are individually referred to as a "Stockholder" and collectively as "Stockholders"), and Royal Precision, Inc., a Delaware corporation (the "Company"). ARTICLE I DEFINITIONS Section 1.1. Definitions. (a) The following terms, as used herein, have the following meanings: "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized by law to close. "Common Stock" means the shares of common stock, par value $.001 per share, of the Company. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" means each Person (other than the Company) who shall be a party to this Agreement, whether in connection with the execution and delivery of the Agreement as of the date hereof or otherwise, so long as such Person shall "beneficially own" (as such term is defined in Rule 13D-3 under the Exchange Act) any shares of Stockholder Securities. "Option" means the right to convert all or any part of the unpaid principal and interest thereon, the payment of which is in default, into Common Stock at the rate of one share of Common Stock for each $.25 of unpaid principal and interest thereon, pursuant to the terms of a Subordinated Note from the Company to a Stockholder. "Person" means an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or other department or agency thereof. "Public Offering" means any primary or secondary public offering of equity securities of the Company, or any successor thereto, pursuant to an effective registration statement under the Securities Act other than pursuant to a registration statement on Form S-4 or Form S-8 or any successor or similar form. "Registrable Securities" means: (a) the shares of Common Stock owned of record and beneficially by any Stockholder on the date of this Agreement; (b) any Common Stock which may be acquired by any Stockholder upon (i) exercise of a Warrant or (ii) conversion of debt owed to such Stockholder by the Company pursuant to the terms of an Option; (c) any Common Stock issued as a result of any reorganization, reclassification, merger, consolidation, stock split or dividend with respect to such shares of Common Stock described in (a) and (b); and (d) any capital stock for which such Common Stock described in (a), (b) or (c) is exchanged or into which it is converted; provided that such securities shall cease to be Registrable Securities when (y) a registration statement relating to such securities shall have been declared effective by the SEC, and such securities shall have been disposed of pursuant to such effective registration statement, or (z) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in effect) under the Securities Act are met or such shares of Common Stock may be sold pursuant to Rule 144(k). "Rights Holder" means any Stockholder or any transferee of a Stockholder to whom such Stockholder shall have transferred any of its rights under Article 2. "SEC" means the Securities and Exchange Commission and any successor having similar powers. "Securities Act" means the Securities Act of 1933, as amended. "Selling Holder" means a Rights Holder who proposes to sell Common Stock pursuant to Article II. "Stockholder Action" mean the action taken, where required or permitted pursuant to this Agreement, by the holders of a majority of Stockholder Securities. "Stockholder Representative" shall be a Stockholder selected by the Stockholders owning a majority of the Stockholder Securities with each Stockholder having a number of votes as equals the number of Stockholder Securities owned by such Stockholder on the date that such vote is taken and whose sole function shall be to report to the Company the written instructions of each Stockholder and the results of tabulation of such instructions. Any Stockholder Representative may be removed at the request of those Stockholders owning a majority of the Stockholder Securities outstanding on the date such request is made. The initial Stockholder Representative shall be Richard P. Johnston. "Stockholder Securities" means, as of the date on which any determination is to be made, (a) any Common Stock which may be or has been acquired by any Rights Holder upon (i) exercise of a Warrant or (ii) conversion of debt pursuant -2- to the terms of an Option; (b) any Common Stock issued as a result of any reorganization, reclassification, merger, consolidation, stock split or dividend with respect to such shares of Common Stock described in (a); and (c) any capital stock for which such Common Stock described in (a) or(b) is exchanged or into which it is converted "Subordinated Note" means any subordinated promissory notes issued by the Company on or after the date of this Agreement, one or more of such notes being issued to a Stockholder. "Underwriter" means a securities dealer who purchases any Registrable Securities as a principal in connection with a distribution of such Registrable Securities and not as part of such dealer's market-making activities. "Warrant" means any of the warrants issued by the Company on or after the date of this Agreement, one or more of such warrant being issued to a Stockholder. (b) Each of the following terms is defined in the Section opposite such term: Term Section ---- ------- Demand Notice 2.1.1 Initiating Holder 2.1.1 Maximum Offering Size 2.1.3 NASD 2.4.6 ARTICLE II REGISTRATION RIGHTS SECTION 2.1 DEMAND REGISTRATION. 2.1.1 At any one time commencing after the exercise of any Option until the sixth anniversary of such date, any one or more of the Rights Holders (an "Initiating Holder") may, by written notice (a "Demand Notice") sent to the Company and to each other Rights Holder, demand that the Company register under the Securities Act all or any portion of any of the Registrable Securities held by such Rights Holders for sale in the manner specified in the Demand Notice; PROVIDED, HOWEVER, that a Demand Notice shall require (a) either (i) the registration of at least a majority of the number of Stockholder Securities outstanding at the date of the Demand Notice (as adjusted for stock splits, combinations and similar events), or (ii) that it be signed by the Holders of a majority of the Stockholder Securities outstanding at the date of the Demand Notice, and (b) the registration of at least 250,000 shares of Common Stock (as adjusted for stock splits, combinations and similar events). If any of such other Rights Holders wish to register Common Stock, such Rights Holder shall notify the Company and each other Rights Holder within five Business Days of receipt of the Demand Notice of the number of shares of Registrable Securities such other Rights Holder wishes to have included in such registration. -3- 2.1.2 Following receipt of any Demand Notice under Section 2.1.1 above, the Company shall file a registration statement within 60 days thereafter and shall use its best efforts to have such registration statement declared effective at the earliest practicable time under the Securities Act, for public sale in accordance with the method of disposition specified in the Demand Notice, the number of shares of Common Stock specified in the Demand Notice. If such method of disposition shall be an underwritten public offering, the Stockholder Representative, as directed by a Stockholder Action, may designate the managing underwriter of such offering, subject to the approval of the Company, which approval shall not be unreasonably withheld or delayed. 2.1.3 If a Demand Registration involves an underwritten Public Offering and the managing Underwriter shall advise the Company and the Selling Holders that, in its view, the number of shares of Common Stock requested to be included in such registration exceeds the largest number of shares of Common Stock which can be sold without having an adverse effect on such offering, including the price at which such shares of Common Stock can be sold (the "Maximum Offering Size"), the Company will include in such registration, up to the Maximum Offering Size, all shares of Common Stock requested to be registered by the Selling Holders (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Holders on the basis of the relative number of Stockholder Securities owned by such Selling Holders as of the date of the first filing with the SEC). No shares excluded from the underwriting by reason of the Underwriter's marketing limitation shall be included in such registration. The Company shall be obligated to register shares of Common Stock pursuant to a demand made in accordance with Section 2.1.1 hereof on one occasion only; PROVIDED, HOWEVER, that such obligation shall be deemed satisfied only when (a) a registration statement covering all shares of Common Stock specified in notices received as aforesaid, for sale in accordance with the method of disposition specified in the Demand Notice, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto or (b) the Initiating Holder shall have determined not to proceed with the offering covered by such registration statement after the Company shall have expended a substantial amount of funds in connection therewith (other than as a result of the Company's breach of its obligations hereunder). SECTION 2.2 PIGGY-BACK REGISTRATION. 2.2.1 If at any time commencing after the exercise of an Option until the sixth anniversary of such date, the Company proposes to register any of its equity securities under the Securities Act (other than pursuant to Form S-8, S-4 or comparable registration statement), it will give written notice, at least 30 days prior to the filing of each such registration statement, to the Rights Holders of its intention to do so. If any one or more of such Rights Holders notifies the Company within 20 days after receipt of any such notice of its desire to include any Registrable Securities owned by it in such proposed registration statement, the Company shall, subject to the provisions set forth below, afford each such Rights Holder the opportunity to have any such shares registered under such registration statement. If such registration is an -4- underwritten registration, and the managing Underwriter(s) advise the Company in writing that in its opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting such Underwriters' ability to effect an orderly distribution of such securities, the Company will give the Rights Holders notice of such fact and include in such registration FIRST, the securities proposed to be sold by the Company for its own account and for the account of any stockholder of the Company entitled to demand registration, and SECOND, any other securities of the Company having registration rights, including the Registrable Securities owned by the Rights Holders, on the following pro rata basis: all shares of Common Stock requested to be registered by the Holders (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Rights Holders on the basis of the relative number of Stockholder Securities owned by such Rights Holders as of the date of the first filing with the SEC). 2.2.2 Notwithstanding the provisions of this Section 2.2, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 2.2 (irrespective of whether a written request for inclusion of any such securities shall have been made) to elect not to file any such proposed registration statement, or to withdraw the same after filing but prior to the effective date thereof. SECTION 2.3 REGISTRATION ON FORM S-3. At any time commencing after the date of exercise of the Option, and in addition to the rights under Sections 2.1 and 2.2 hereof, if at any time a Stockholder makes a written request or requests that the Company to effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Stockholder, the Company will: 2.3.1. as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested as would permit or facilitate the sale and distribution of all or such portion of the Registrable Securities as are specified in such request, PROVIDED, HOWEVER, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.3.1: (a) if Form S-3 is not available for such offering by the Selling Holders; (b) if the Selling Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell shares of Common Stock and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $500,000; (c) if the Company shall furnish to the Stockholder Representative a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 120 days after receipt of the request of the Stockholder Representative, after a Stockholder Action, under this Section 2.3.1 (PROVIDED, HOWEVER, that the Company shall not utilize this right more than once in any 12 month period); (d) if the Company has, within the 12 month period preceding the date of such request, already effected two registrations on Form S-3 for the Rights Holders pursuant to this Section 2.3.1; or (v) if the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. -5- 2.3.2 Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Selling Holders. Registrations effected pursuant to Section 2.3.1 hereof shall not be counted as demands for registration or registrations effected pursuant to Sections 2.1 or 2.2 hereof. SECTION 2.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In connection with any registration of Registrable Securities under Section 2 hereof, the Company covenants and agrees as follows: 2.4.1 The Company shall pay all costs (including the costs of a single firm of counsel designated by the Selling Holders to review the registration statement and all amendments and supplements thereto up to a maximum of $25,000 in respect of each registration under Section 2 hereof, but excluding any underwriting or selling commissions or other charges of any Underwriter or broker-dealer acting on behalf of the Selling Holders), fees and expenses in connection with all registration statements filed pursuant to Section 2 hereof, including, without limitation, the Company's legal and accounting fees, printing expenses, blue sky fees and expenses. The Company will take all necessary action which may be required in qualifying or registering the Registrable Securities included in a registration statement for offering and sale under the securities or blue sky laws of such states as reasonably are requested by the Selling Holders; provided, that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction. If the Selling Holders have sent a Demand Notice and have determined not to sell any Registrable Securities pursuant to a registered offering, the Selling Holders may elect to reimburse the Company for any costs incurred solely with respect to such registration statement or lose the demand registration rights. 2.4.2 The Company shall indemnify each Selling Holder, its trustees and officers, and each person, if any, who controls such Selling Holder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and against, and pay or reimburse them for, all losses, claims, damages, expenses and liabilities (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any such registration statement, including any preliminary prospectus or final prospectus contained therein or any supplement to or amendments thereof, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make a statement therein not misleading, except insofar as such losses, claims, damages, expenses or liabilities arise out of or are based upon any such untrue statement or omission or allegation thereof based upon information furnished in writing to the Company by or on behalf of a Selling Holder expressly for use therein. Each Selling Holder shall indemnify the Company, its officers and directors and each person, if any, who controls the -6- Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and against, and pay or reimburse them for, all losses, claims, damages, expenses and liabilities (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, directly arising from written information furnished by or on behalf of such Selling Holder for specific inclusion in such registration statement. 2.4.3 The Company shall not permit any other registration statement to be filed during the first 60 days of effectiveness of a registration statement filed pursuant to Section 2 hereof (other than a registration statement in connection with a merger or consolidation or pursuant to Form S-8, S-4 or comparable registration statement or a registration filed pursuant to any rights granted to the Johnston Family Foundation pursuant to the terms of that certain Subordinated Promissory Note dated October 26, 2001 issued by the Company), without the prior written consent of the Stockholder Representative, which consent shall not be unreasonably withheld, and shall be provided only after a Stockholder Action. The Company shall not permit the inclusion of any securities other than the Registrable Securities held by any Rights Holder to be included in any registration statement filed pursuant to Sections 2.1 and 2.3 hereof; provided, however, that the Company may include securities being offered by it for its own account and for the account of stockholders of the Company permitted by the Company to include their securities in such registration statement, to the extent that such inclusion does not in any way reduce the number of securities proposed to be included by Selling Holder. 2.4.4 The Company shall use reasonable efforts in good faith to cause to be furnished to each Selling Holder and to each Underwriter, if any, a signed counterpart, addressed to each Selling Holder or such Underwriter, of (a) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), and (b) a "cold comfort" letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company's financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities. 2.4.5 The Company shall as soon as practicable after the effective date of the registration statement, and in any event within 15 months thereafter, make "generally available to its security holders" (within the meaning of Rule 158 under the Securities Act) an earnings statement (which may be unaudited) complying with Section 11(a) of the Securities Act and covering a period of at least 12 consecutive months beginning after the effective date of the registration statement. -7- 2.4.6 The Company shall deliver promptly to each Selling Holder and to the managing Underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and permit each Selling Holder and Underwriter at its own cost and expense to do such investigation, upon reasonable advance notice, and upon entering into a confidentiality agreement, in form and substance reasonably acceptable to the Company, with each Selling Holder and such Underwriter, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of the National Association of Securities Dealers, Inc. (the "NASD") or other national exchange. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as the Lender shall reasonably request as it deems necessary to comply with applicable securities laws or rules of the NASD or other national exchange. 2.4.7 Nothing contained in this Agreement shall be construed as requiring any Stockholder to exercise its Option prior to the effectiveness of any registration statement. SECTION 2.5 UNDERWRITING AGREEMENT. The Company shall enter into an underwriting agreement with the managing Underwriter selected for such underwriting by the Stockholder Representative and reasonably satisfactory to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, the Stockholder Representative and such managing Underwriter, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing Underwriter. Each Selling Holder shall be a party to any underwriting agreement relating to an underwritten sale of its Registrable Securities and may, at its option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such Underwriter shall also be made to and for the benefit of such Selling Holder. No Selling Holder shall be required to make any representations or warranties to or agreements with the Company or the Underwriter except as they may specifically relate to such Selling Holder and its intended method(s) of distribution. ARTICLE III MISCELLANEOUS SECTION 3.1 HEADINGS. The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof. SECTION 3.2 NO INCONSISTENT AGREEMENTS. Except for the Subordinated Promissory Note between the Company and THE JOHNSTON FAMILY CHARITABLE FOUNDATION, dated October 26, 2001, the Company is not a party to any agreement with respect to its securities which is inconsistent with, or otherwise grant rights superior to, the rights granted to the Stockholders under this Agreement. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with, or otherwise grant rights superior to, -8- the rights granted to the Stockholders under this Agreement, provided that such requirement shall terminate at any time the number of Stockholder Securities outstanding, or which may be outstanding after the passage of time or the occurrence of any event, is less than 25,000. SECTION 3.3 ENTIRE AGREEMENT; AMENDMENTS; NO WAIVERS. 3.3.1 This Agreement and the other instruments and agreements referred to herein embody the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior or contemporaneous agreements with respect thereto. This Agreement may be amended but only in a writing signed by the Stockholders who hold a majority of Stockholder Securities and the Company. Any provision hereof may be waived but only in a writing signed by the party against which such waiver is sought to be enforced. 3.3.2 No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 3.4 NOTICES. Any notices or other communications required or permitted by this Agreement shall be in writing and shall be delivered either by personal delivery, by nationally recognized overnight courier service, by facsimile, by first class mail or by registered or certified mail, return receipt requested, addressed to a party at the address set forth below such party's signature, or to such other address as any party shall have previously designated to the others by written notice given in the manner hereinabove set forth. Notices shall be deemed given one day after being sent, if sent by overnight courier; when delivered and receipted for, if hand delivered; when received, if sent by facsimile or other electronic means or by first class mail; or when receipted for (or upon the date of attempted delivery where delivery is refused or unclaimed), if sent by certified or registered mail, return receipt requested. SECTION 3.5 APPLICABLE LAW. The parties, being concerned that either party may obtain some advantage by having the law of the jurisdiction of its principal place of business apply, and agreeing in concept to have this Agreement subject to the laws of a neutral jurisdiction, whose laws are perceived as being fair in general to the business community at large, have determined and agreed as follows: THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. SECTION 3.6 SEVERABILITY. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. -9- SECTION 3.7 SUCCESSORS, ASSIGNS, TRANSFEREES. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, successors and assigns. Neither this Agreement nor any provisions hereof shall be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective heirs, successors and assigns. Each party to this Agreement agrees to provide to each other party to this Agreement the name and address of any person to whom is made any assignment of any rights hereunder. SECTION 3.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any number of counterparts, each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 3.9 FEES AND EXPENSES. All fees and expenses incurred by any party hereto in connection with the preparation of this Agreement and the transactions contemplated hereby and all matters related thereto shall be borne by the Company. Lastly, all costs, including attorney fees, incurred by any Stockholder in revising, protecting, exercising or enforcing any of its rights hereunder and under the other documents delivered hereunder, or otherwise incurred by any Stockholder in connection with the enforcement hereof, including by way of description and not limitation, such charges in any court or bankruptcy proceedings or arising out of any claim or action by any person, firm or corporation against any Stockholder which would not have been asserted were it not for the Stockholder's relationship with the Company, shall also be paid by the Company SECTION 3.10 REMEDIES. The parties hereby acknowledge that money damages would not be adequate compensation for the damages that a party would suffer by reason of a failure of any other party to perform any of the obligations of this Agreement. Therefore, each party hereto agrees that specific performance is the only appropriate remedy under this Agreement and hereby waives the claim or defense that any other party has an adequate remedy at law. SECTION 3.11 RELATIONSHIPS. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of partnership, joint venturer or any other form of relationship. No "group" within the meaning of the Exchange Act is being formed among the Stockholders, or among any one or more of the Stockholders and the Company, as a result of this Agreement. SECTION 3.12 ARBITRATION. ANY CONTROVERSY, CLAIM OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY BREACH, TERMINATION OR VALIDITY THEREOF (INCLUDING WITHOUT LIMITATION THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF THIS AGREEMENT) BUT EXCLUDING ANY CONTROVERSY, CLAIM OR DISPUTE RELATING TO INDEMNITY, SHALL BE SETTLED BY SUBMITTING THE MATTER TO ONE ARBITRATOR PURSUANT TO THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN THE CITY OF TORRINGTON, CONNECTICUT. JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING COMPETENT JURISDICTION. THE PREVAILING PARTY IN ANY SUCH ARBITRATION SHALL BE ENTITLED TO REIMBURSEMENT OF ALL COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES, ADMINISTRATIVE FEES, ARBITRATOR'S FEES AND COURT COSTS) ASSOCIATED WITH ANY SUCH ARBITRATION PROCEEDING. THE ARBITRATOR SHALL HAVE NO POWER TO MODIFY ANY TERMS OF THIS AGREEMENT, OR ISSUE ANY AWARD WHICH BY ITS TERMS MODIFIES ANY TERM OF THIS AGREEMENT. -10- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ROYAL PRECISION, INC. By: /s/ John C. Lauchnor ------------------------------------- John C. Lauchnor, President 535 Migeon Avenue Torrington, CT 06790 Telecopier: (860) 489-5454 STOCKHOLDERS: Signature of Stockholder: The Johnston Family Living Trust u/a dtd. 4/11/94 By: /s/ Richard P. Johnston ------------------------------------- Richard P. Johnston, Trustee and By: /s/ Jayne A. Johnston ------------------------------------- Jayne A Johnston, Trustee c/o Richard P. Johnston 4350 Greens Place Wilson, WY 83014 Telecopier: (520) 579-2568 Signature of Stockholder: /s/ Christopher A. Johnston ------------------------------------- Christopher A. Johnston 2784 Teton Pines Drive Jackson, Wyoming 83001 Telecopier: (307) 739-2288 -11- Signature of Stockholder: Dean Witter Reynolds, Custodian f/b/o Kenneth J. Warren VIP Plus Profit-Sharing Account By: /s/ Kenneth J. Warren ------------------------------------- Kenneth J. Warren, Individually and as Plan Administrator 5567 Caplestone Lane Dublin, Ohio 43017 Telecopier: (614) 766-1974 Signature of Stockholder: /s/ John C. Lauchnor ------------------------------------- John C. Lauchnor 535 Migeon Avenue Torrington, CT 06790 Telecopier: (860) 489-5454 Signature of Stockholder: /s/ Charles S. Mechem, Jr. ------------------------------------- Charles S. Mechem 1800 Firstar Tower 425 Walnut Street Cincinnati, OH 45202-3957 Telecopier: (513) 381-0205 -12- EX-24 12 ex24.txt POWER OF ATTORNEY OF EACH REPORTING PERSON EXHIBIT 24 POWER OF ATTORNEY The undersigned, Richard P. Johnston: Does hereby constitute and appoint Kenneth J. Warren to be his agent and attorney-in-fact; With the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which he shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. The agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ Richard P. Johnston -------------------------------------- POWER OF ATTORNEY The undersigned, Kenneth J. Warren: Does hereby constitute and appoint Richard P. Johnston to be his agent and attorney-in-fact; With the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which he shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. The agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ Kenneth J. Warren -------------------------------------- POWER OF ATTORNEY The undersigned, Christopher A. Johnston: Does hereby constitute and appoint Richard P. Johnston and Kenneth J. Warren to be his agents and attorneys-in-fact; Each with the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ Christopher A. Johnston -------------------------------------- POWER OF ATTORNEY The undersigned, David E. Johnston: Does hereby constitute and appoint Richard P. Johnston and Kenneth J. Warren to be his agents and attorneys-in-fact; Each with the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ David E. Johnston -------------------------------------- POWER OF ATTORNEY The undersigned, Charles S. Mechem, Jr.: Does hereby constitute and appoint Richard P. Johnston and Kenneth J. Warren to be his agents and attorneys-in-fact; Each with the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ Charles S. Mechem, Jr. -------------------------------------- POWER OF ATTORNEY The undersigned, John C. Lauchnor: Does hereby constitute and appoint Richard P. Johnston and Kenneth J. Warren to be his agents and attorneys-in-fact; Each with the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ John C. Lauchnor -------------------------------------- POWER OF ATTORNEY The undersigned, Robert Jaycox: Does hereby constitute and appoint Richard P. Johnston and Kenneth J. Warren to be his agents and attorneys-in-fact; Each with the power to act fully hereunder without the other and with full power of substitution to act in the name and on behalf of the undersigned; To sign and file with the Securities and Exchange Commission a Schedule 13G or other appropriate form and any amendments or supplements to such Schedule or form (the "Filing"); and To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection with the Filing, and generally to act for and in the name of the undersigned with respect to such Filing as fully as could the undersigned if then personally present and acting. Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which, any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which may be executed by him pursuant to this instrument. This Power of Attorney shall not be affected by the disability of the undersigned or the lapse of time. The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Delaware that apply to instruments negotiated, executed, delivered and performed solely within the State of Delaware. This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the original instrument and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, I have executed this Power of Attorney this 28 day of March, 2002. /s/ Robert Jaycox -------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----