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
---------- ------ -------- -------------- -------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 45 $ 903 $ 1,806 $ 2,709
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 18 $ 356 $ 713 $ 1,069
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 9 $ 173 $ 346 $ 519
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 142 $ 2,834 $ 5,669 $ 8,503
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 17 $ 331 $ 663 $ 994
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 612 $12,244 $24,488 $36,732
▇▇▇▇▇▇ ▇▇▇▇▇▇ 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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
Address for Notices:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 5134 Blazer Parkway
Wilson, Wyoming 83014 ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇ Telefax: ▇▇▇-▇▇▇-▇▇▇▇
STOCKHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address for Notices:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Address for Notices:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
1800 Firstar Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address for Notices:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address for Notices:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o Merbanco, Incorporated
P.O. Box 25182
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address for Notices:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address for Notices:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Address for Notices:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:
Telefax: