EXHIBIT 38
FIRST AMENDMENT TO
THE PROMISSORY NOTE
THIS FIRST AMENDMENT TO THE PROMISSORY NOTE (the "First Amendment") is entered
into this 19th day of September, 2002 by and between ROYAL ASSOCIATES, INC., an
Ohio corporation (the "Company"), and XXXXXX XXXXXX, an individual living in
Jackson, Wyoming.
WHEREAS, the parties hereto have entered into a Promissory Note dated as of the
3rd day of June, 2002 (the "Note"); and
WHEREAS, the parties desire to amend the Note in certain respects;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. AMENDMENT.
1.1. Section 8 is hereby deleted in its entirety and the following
substituted therefor:
SECTION 8. CONVERSION.
8.1. OPTION. Prior to the first anniversary of the date of this Note,
the unpaid principal and interest hereon can be converted (the "Option") into
1,157.407 shares of common stock of the Borrower (the "Shares"). Exercise of the
Option shall be considered payment by the Borrower and thus cancel the Note. The
Option may be exercised by either (a) the Lender or (b) the Borrower (provided
that as a condition to exercise by either there are simultaneous conversions
pursuant to the Agreement and Plan of Merger among Royal Precision, Inc., the
Borrower and Merger Sub, Inc. (the "Conversions") by the persons named in
Exhibit A of the equity in Royal Precision, Inc. for equity in the Borrower as
set forth in such exhibit) by sending a written notice to the other party
indicating its desire to effectuate the Option (the "Notice"). As soon as
practicable after receipt of the Notice, the Borrower shall issue to the Lender
a certificate for the Shares to which the Lender is entitled.
8.2. ADJUSTMENTS. The Borrower has authorized 1,500 shares of its
common stock. Immediately prior to the time of the Conversions, the Borrower
will amend its certificate of incorporation to increase its number of authorized
shares of common stock to 20,000 and there will occur the Conversions in the
number of shares of Royal Precision, Inc. for shares of common stock of the
Borrower so that on a fully diluted basis, the aggregate number of shares of
common stock of the Borrower issued and outstanding, and issuable pursuant to
then existing convertible securities shall be as listed on Exhibit A.
1.2. Exhibit A is hereby deleted in its entirety and the following
substituted therefor:
EXHIBIT A
NUMBER OF SHARES OF COMMON STOCK
NUMBER OF SHARES OF COMMON STOCK OF ROYAL ASSOCIATES, INC. ISSUED
NAME OF ROYAL PRECISION, INC.. ON CONVERSION
---- ------------------------- -------------
Xxxxxxxx Family Charitable Remainder 1,384,135 800.603
Unitrust #3
Xxxxxxxx Family Living Trust 775,935 448.812
Xxxxxxxx Family Charitable Foundation 5,261,780 3,043.488
Xxxxxxx X. Xxxxxx 344,479 199.252
DWR, Custodian for Xxxxxxx Xxxxxx, 207,862 120.230
Attorney at Law, fbo Xxxxxxx X. Xxxxxx,
VIP Plus Profit Sharing Plan
Xxxxxxxxxxx X. Xxxxxxxx 1,159,803 670.846
Xxxxx X. Xxxxxxxx 198,769 114.971
Xxxxxxx X. Xxxxxx, Xx. 213,062 123.238
Self-Directed XXX for Xxxxxxx X.
Xxxxxx, Xx. 8,200 4.743
Xxxx X. Xxxxxxxx 107,281 62.053
Xxx Xxxxxxxxx 2,000 1.157
L. Xxxx Xxxx and Xxxxxxx X. Xxxx Family 1,000 .578
Trust DTD U/A 01/07/97
Xxxxxx X Xxxx, Xxxxxxx Xxxxxxxx 1,000 .578
Co-Trustees by Xxxxxx X. & Xxxxx Xxxx
Trust U/A DTD 01/01/92
Xxxx X Xxxx 1,000 .578
Davidson X. Xxxx 1,000 .578
Xxxx X. Xxxx 1,000 .578
Xxxxxxx Xxxx Xxxxxxxx & Xxxxx M 1,000 .578
Xxxxxxxx & Xxxx Xxxx Trustees Xxxxx Xxx
Hall Trust U/A DTD 10/06/1995
Xxxxxx Xxxx Xxxx Custodian for Xxxxx 1,000 .578
Xxxxxx Xxxxxxxx AZ Uniform Transfers to
Minors Acct
Xxxx and Xxxx Xxxxxxxxxx Jt Ten 25,000 14.460
Xxxxxx X. Xxxxxxxxx 41,753 24.151
Xxxxxx X. Xxxxx 62,630 36.226
Xxxxx X. Xxxx 131,513 76.069
RIFL Holdings, LLC 622,687 360.171
Xxxxxx X. Xxxxxxxx 125,261 72.453
Xxxxxx Xxxxxx 1,000 .000
Xxxxxxx Xxxx 8,500 4.917
TOTAL
DESCRIPTION OF ROYAL ASSOCIATES,
DESCRIPTION OF ROYAL PRECISION, INC. OPTIONS, WARRANTS ON
NAME INC. OPTIONS, WARRANTS CONVERSION
---- ---------------------------------------- -----------------------------------------
Xxxxxxx X. Xxxxxxxx (a) Option for 25,052 shares at $.24 (a) 14.49 for $414.93 by 3/13/07; (b)
expiring on 3/13/07; (b) option for 2.892 for $5,402.70 by 5/25/10; (c)
5,000 shares at $3.125 expiring on 11.568 for $3,889.95 by 7/24/11; and (d)
5/25/10; (c) option for 20,000 shares at 2.892 for $4,149.28 by 9/25/11
$2.25 expiring on 7/24/11; and (d)
option for 5,000 shares at $2.40
expiring on 9/25/11.
Xxxxxxxx Family Living Trust (a) Warrant for 36,000 shares at $.25 (a) 20.823 for $432.22 by 2/28/12; (b)
expiring on 2/28/12; (b) warrant for 83.986 for $432.22 4/10/12; and (c)
145,200 shares at $.25 expiring on 474.300 for $432.22 by 4/10/12
4/10/12, and (c) Amended Guaranty
Agreement for 820,000 shares at $.25
expiring by on 4/10/12.
Xxxxxxxx Family Charitable Foundation Warrant for 152,192 shares at $.25 88.080 for $432.22 by 10/26/11
expiring on 10/26/11
Xxxxxxx X. Xxxxxx (a) Option for 15,323 shares at $.24 (a) 8.863 for $414.93 by 3/13/07; (b)
expiring on 3/13/07, (b) option for 2.892 for $3,241.62 by 8/16/04; and (c)
5,000 shares at $1.875 expiring on 11.568 for $3,889.95 by 7/24/11
8/16/04, and (c) option for 20,000
shares at $2.25 expiring on 7/24/11
DWR, Custodian for Xxxxxxx Xxxxxx, Warrant for 12,000 shares at $.25 6.941 for $432.22 by 2/28/12
Attorney at Law, fbo Xxxxxxx X. Xxxxxx, expiring on 2/28/12
VIP Plus Profit Sharing Plan
Xxxxxxxxxxx X. Xxxxxxxx (a) Option for 20,000 shares at $.25 (a) 11.568 for $3,889.95 by 7/24/11 and
expiring on 7/24/11 and (b) warrant for (b) 20.823 for $432.22 by 3/8/12
36,000 shares at $.25 expiring on 3/8/12
Xxxxx X. Xxxxxxxx (a) Option for 11,106 shares at $.24 (a) 6.424 for $414.93 by 3/13/07; (b)
expiring on 3/13/07, (b) option for 11.568 for $3,889.95 by 7/24/11; and (c)
20,000 shares at $2.25 expiring on 2.892 for $4,149.28 by 9/25/11
7/24/11, and (c) option for 5,000 shares
at $2.40 expiring on 9/25/11
Xxxxxxx X. Xxxxxx, Xx. (a) Option for 20,000 shares at $3.00 (a) 11.568 for $5,186.59 by (b) 2.892
expiring on 3/28/10, (b) option for for $4,149.28 by 9/25/11; and (c) 6.941
5,000 shares at $2.40 expiring on for $432.22 by 2/28/12
9/25/11; and (c) 3/28/10; warrant for
12,000 shares at $.25 expiring on
2/28/12
Xxxx X. Xxxxxxxx (a) Option for 250,000 shares at $1.90 (a) 144.604 for $3,284.84 by 9/24/11 and
expiring on 9/24/11 and (b) warrant for (b) 3.47 for $432.22 by 2/28/12
6,000 shares at $.25 expiring on
2/28/12.
Xxxx Xxxxxxxxxx Option for 20,000 shares at $2.625 11.568 for $4,538.27 by 5/1/2005
expiring on 5/1/2005
SECTION 2. CONTINUING VALIDITY. Except as amended hereby, all terms and
provisions of the Note shall remain in full force and effect as though this
First Amendment were a part of the original Note.
SECTION 3. MISCELLANEOUS. This First Amendment shall be governed by the laws of
the State of Delaware and may be executed in counterparts, each of which when
executed by all of the parties hereto shall be deemed an original and all of
which shall be deemed the same Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, hereby
execute and deliver this First Amendment to the Note, effective as of the date
first referenced above.
ROYAL ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: Chairman of the Board
---------------------------------
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
