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EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (as the same may be modified,
amended, supplemented and/or restated from time to time, this "Agreement") is
entered into as of March 19, 1998, between COYOTE SPORTS, INC., a Nevada
corporation (the "Company"), PARAGON COYOTE TEXAS LTD., a Texas limited
partnership (the "Shareholder), and each Permitted Transferee (as defined in
Section 1.1(g) hereof) that has joined in this Agreement after the date hereof
pursuant to Section 7.6(b) hereof.
In accordance with that certain Loan Agreement of even date herewith
by and among, inter alia, the Company and the Shareholder (the "Loan Agreement")
and the Other Transaction Documents, the Company has issued and delivered to the
Shareholder the Initial Consideration Shares, the Company has agreed to issue
and deliver to the Shareholder the Contingent Issuance Shares under the
circumstances set forth in the Loan Agreement, Xxxxxxxxxxx has pledged to the
Shareholder the Xxxxxxxxxxx Collateral Shares and Xxxxxx has pledged to the
Shareholder the Xxxxxx Collateral Shares.
ARTICLE I
DEFINITIONS
1.1 Definitions of Certain Terms. For purposes of this Agreement, the
following terms shall have the meanings provided below:
(a) "Demand Registration" means a registration of Registrable
Securities made or to be made by the Company in satisfaction of a Demand Request
(as defined in Section 2.1 hereof).
(b) "Demanding Holders," with respect to any Demand Registration,
means the Demand Requesting Holders who have requested that the Company effect
such Demand Registration and the Remaining Holders (as defined in Section 2.2
hereof) who have requested that the Company include Registrable Securities held
by such Remaining Holders in such Demand Registration.
(c) "Holder" means the Shareholder and any Permitted Transferee who at
the time of determination holds any Registrable Securities.
(d) "Losses" means losses, claims, damages, liabilities, costs and
expenses (including without limitation attorneys' fees).
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(e) "Minimum Demand Number" means 50,000 Lender Shares that are
Registrable Securities.
(f) "Permitted Transfer" means any transfer of Registrable Securities
by the Shareholder in compliance with the Securities Act but not effected
pursuant to an effective Registration Statement (i) of which the Shareholder has
given the Company notice and in connection with which the Shareholder has
assigned the registration rights set forth herein with respect to such
transferred Registrable Securities or (i) that is an involuntary transfer by
operation of law.
(g) "Permitted Transferee" means a transferee of Registrable
Securities pursuant to a Permitted Transfer.
(h) "Piggyback Registration" means a registration of securities of the
Company in which Registrable Securities have been or are to be included in
satisfaction of a Piggyback Request (as defined in Section 3.1 hereof).
(i) "Registrable Securities" means any of the Lender Shares
beneficially owned by the Shareholder or any Permitted Transferee, as such
Lender Shares may be adjusted from time to time for any stock splits, stock
dividends, recapitalizations, reclassifications, mergers, consolidations or like
actions, or any such lesser number of Lender Shares that constitute all
Registrable Securities.
(j) "Registration Period" means the period beginning on the date
hereof and ending on the fifth anniversary of the date hereof, as the same may
be extended pursuant to Sections 2.3(b), 4.1(d) or 4.1(h) hereof.
(k) "Registration Statement" means a registration statement filed or
to be filed by the Company under the Securities Act.
1.2 Definitions of Certain Other Terms. Undefined capitalized terms
used herein shall have the meanings respectively ascribed to them in the Loan
Agreement.
ARTICLE II
DEMAND REGISTRATIONS
2.1 Demand Rights. Subject to the limitations set forth in this
Article II, during the Registration Period Holders of not less than the Minimum
Demand Amount ("Demand Requesting Holders") may deliver a written notice to the
Company (a "Demand Request"), requesting that the Company register Registrable
Securities held by such Demand Requesting Holders. Each Demand
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Request shall state (a) the name or names of the Demand Requesting Holders, (b)
with respect to each Demand Requesting Holder, the number of Registrable
Securities that such Demand Requesting Holder seeks to register pursuant to such
Demand Request and (c) the intended manner of offering of such Registrable
Securities.
2.2 Demand Right Procedures.
(a) Within ten (10) days after the receipt by the Company of a Demand
Request, the Company shall deliver a written notice thereof (a "Demand Request
Notice") to each Holder that is not a Demand Requesting Holder (the "Remaining
Holders"). The Demand Request Notice shall state that the Company has received a
Demand Request pursuant to this Agreement and shall offer to include, in any
Registration Statement filed by the Company in connection with such Demand
Request, all or part of the Registrable Securities held by the Remaining
Holders.
(b) During the ten (10) day period next following delivery of a Demand
Request Notice with respect to any Demand Request, each Remaining Holder may
deliver a written notice to the Company (an "Additional Registration Request")
requesting that the Company include, in any Registration Statement filed by the
Company in connection with such Demand Request, Registrable Securities held by
such Remaining Holder. An Additional Registration Request delivered by a
Remaining Holder shall state (i) the name of the Remaining Holder, (ii) the
number of Registrable Securities that such Remaining Holder seeks to register
pursuant to such Additional Registration Request and (iii) the intended manner
of offering of such Registrable Securities.
(c) Subject to the limitations set forth in this Article II, the
Company shall include in any Demand Registration (i) all Registrable Securities
that the Demand Requesting Holders have requested that the Company register in
such Demand Registration, as set forth in the applicable Demand Request, and
(ii) all Registrable Securities that the Remaining Holders have requested that
the Company register in such Demand Registration, as set forth in the applicable
Additional Registration Requests (the aggregate number of such Registrable
Securities being referred to herein as the "Demand Request Number").
2.3 Limitations on Demand Rights.
(a) The Holders of Registrable Securities shall be entitled to a
maximum of two (2) registrations under this Article II; provided, however, that
the Company shall not be required to take any action to effect any Demand
Registration if the Demand Request Number is less than the Minimum Demand Number
or unless a Demand Request with respect to such Demand Registration is made
prior to the expiration of the Registration Period.
(b) Notwithstanding anything to the contrary set forth in this Article
II: (i) the Company shall not be obligated to honor a Demand Request at any time
from and after the date on which it has filed a Registration Statement with the
Commission in connection with a bona fide
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public offering through and until sixty (60) days after such Registration
Statement is declared effective by the Commission or its abandonment, whichever
shall occur first; and (ii) the Company shall have the right to postpone the
filing or effectiveness of any Registration Statement filed or to be filed in
connection with a Demand Registration for a reasonable period of time (not to
exceed sixty (60) days) if at the time the Company receives the Demand Request
with respect to such Demand Registration the Company shall have furnished to the
Demanding Holders a certificate signed by the Chief Executive Officer, President
or chief financial officer of the Company stating either that (A) the Company is
conducting or is about to conduct a primary offering of the Company's securities
and the Company has been advised by its investment banker in writing that such
offering would be adversely affected by such Demand Registration (provided that
the Holders are entitled to include Registrable Securities under Article III
hereof) or (B) the Board of Directors of the Company has determined in good
faith that the offering of Registrable Securities pursuant to such Demand
Registration will interfere with a material financing, merger, acquisition, sale
of assets, recapitalization or other material transaction involving the Company
or any of its subsidiaries. If any Demand Registration is postponed pursuant to
this Section 2.3(b), a majority in interest of the Demand Requesting Holders who
have requested that the Company effect such Demand Registration may withdraw
such request by written notice delivered to the Company, in which case such
Demand Registration shall not count as a Demand Registration and the
Registration Period shall be automatically extended by a period of time equal to
the period of such postponement.
(c) The Company shall not be deemed to have effected a Demand
Registration unless and until the Registration Statement filed with the
Commission in connection with such Demand Registration has been declared
effective under the Securities Act and has remained in effect until the earlier
of (i) the completion of the distribution of all Registrable Securities
registered thereby and (ii) the expiration of the one hundred eighty (180) day
period commencing upon the effective date of such Registration Statement.
(d) The Company shall abandon any Demand Registration prior to the
effectiveness of such Demand Registration if all Demanding Holders registering
Registrable Securities pursuant to such Demand Registration request in writing
that the Company abandon such Demand Registration. Any Demand Registration
abandoned by the Company pursuant to this Section 2.3(d) shall be counted as a
Demand Registration for purposes of this Agreement notwithstanding such
abandonment, unless the Demanding Holders shall have paid all reasonable
expenses actually incurred by the Company in connection with such Demand
Registration and evidenced to the reasonable satisfaction of the Demanding
Holders.
(e) Neither the Company nor any other holder of Company securities
(other than Holders) may include shares in a Demand Registration without the
consent of the Holders holding two-thirds of the Registrable Securities sought
to be included in such Demand Registration unless the managing underwriter, if
any, of such offering shall have advised each Holder participating in such
offering in writing that the inclusion of such other securities would not (i)
limit the number
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of Registrable Securities sought to be included by the Holders or (ii) reduce
the offering price thereof.
(f) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be obligated to effect any registration of Registrable
Securities pursuant to this Article II unless at the time of any such
registration the Company is eligible to use Form S-3 (or any successor form or
any similar short-form registration adopted by the Commission for which the
Company may then be eligible that is appropriate for the registration of
Registrable Securities). In such regard, the Company agrees to use its best
efforts to ensure that it is eligible to use Form S-3 (or any successor form or
any similar short-form registration adopted by the Commission for which the
Company may then be eligible that is appropriate for the registration of
Registrable Securities) at the earliest possible time and to maintain such
eligibility at all times thereafter.
2.4 Manner of Offering. All offerings of Registrable Securities
pursuant to a Demand Registration shall be made pursuant to a prescribed plan of
distribution satisfactory to a majority in interest of the Demand Requesting
Holders.
2.5 Priorities. In the event that the managing underwriter or
underwriters of a Demand Registration (or the Holders of a majority of the
Registrable Securities sought to be included in such Demand Registration, in the
case of a Demand Registration that is not being underwritten) shall determine
that the amount of securities of the Company (including Registrable Securities)
to be included in such Demand Registration exceeds the maximum amount of
securities (the "Maximum Demand Amount") that could be included in such
registration without materially adversely affecting the price at which such
securities are to be sold or the marketing of the offering thereof, the Company
shall include in such Demand Registration the Maximum Demand Amount of such
securities in accordance with the following order of priority:
(a) first, the Registrable Securities requested to be registered by
the Demanding Holders, pro rata, to the extent of the Maximum Demand Amount; and
(b) second, to the extent that the number of Registrable Securities
requested to be registered by the Demanding Holders and other securities to
included in such Demand Registration does not exceed the Maximum Demand Amount
and the Company and/or other holders of securities of the Company (other than
Holders) are entitled to so include such other securities under Section 2.3(e),
the remaining securities requested to be registered by the Company and such
holders shall be allocated in such manner as the Company may determine.
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ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Piggyback Rights. If at any time the Company proposes to register
under the Securities Act securities of the Company on a Registration Statement,
whether for its own account or the account of other holders (other than Holders)
of the Company's securities, the Company shall deliver a written notice thereof
(a "Piggyback Notice") to each Holder not less than thirty (30) days prior to
the date when such Registration Statement is to be filed with the Commission.
During the ten (10) day period next following delivery of a Piggyback Notice,
each Holder may deliver a written notice to the Company (a "Piggyback Request")
requesting that the Company include in such Registration Statement Registrable
Securities held by such Holder and stating (i) the name of the requesting
Holder, (ii) the number of Registrable Securities that such Holder seeks to
register pursuant to such Piggyback Request, and (iii) the intended manner of
offering of such Registrable Securities. Subject to the limitations set forth in
this Article III, the Company shall include in any Piggyback Registration all
Registrable Securities that the Holders have requested that the Company register
as set forth in Piggyback Requests delivered by such Holders in connection with
such Piggyback Registration.
3.2 Limitations on Piggyback Rights. (a) No Holder shall have the
right to make a Piggyback Request with respect to any Registration Statement to
be filed by the Company (i) after the Registration Period or (ii) if such
Registration Statement relates solely to Company securities that are to be
issued in an offering (A) solely to directors, officers or employees of the
Company or subsidiaries of the Company pursuant to a bona fide employee stock
option, bonus or other plan or (B) in which such securities are to be sold for
consideration other than cash.
(b) If any Piggyback Registration shall be underwritten in whole or in
part, the Company shall have the right to require that the Registrable
Securities requested for inclusion therein pursuant to this Article III be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.
3.3 Manner of Offering. All offerings of Registrable Securities
pursuant to a Piggyback Registration shall be made pursuant to a prescribed plan
of distribution reasonably satisfactory to the Company.
3.4 Priorities. In the event that the managing underwriter or
underwriters of a Piggyback Registration (or the Company, in the case of a
Piggyback Registration that is not being underwritten) shall determine that the
amount of Company securities (including Registrable Securities) to be included
in such Piggyback Registration exceeds the maximum amount of securities (the
"Maximum Piggyback Amount") that could be included in such registration without
materially adversely affecting the price at which such securities could be sold
or otherwise materially adversely affecting the market for such securities, the
Company shall include in such
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Piggyback Registration the Maximum Piggyback Amount of such securities
(including Registrable Securities) in accordance with the following order of
priority:
(a) first, if such offering is made pursuant to the exercise of demand
registration rights (other than those granted to Holders), the securities
requested to be included in such offering by the Persons exercising such demand
registration rights;
(b) second, the securities the Company proposes to sell for its own
account;
(c) third, the Registrable Securities requested to be registered by
the Holders thereof, on (to the extent necessary) a pro rata basis among the
Holders of such Registrable Securities according to the number of Registrable
Securities requested to be included by such Holders; and
(d) fourth, the remaining securities requested to be registered by the
holders thereof, on (to the extent necessary) a pro rata basis among the holders
of such other securities according to the number of such other securities
requested to be included by such holders.
3.5 Delay and Withdrawal of Piggyback Registrations. Notwithstanding
anything in this Article III to the contrary, the Company may, in its reasonable
discretion, delay the effectiveness of or abandon any Piggyback Registration.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Registration Procedures.
(a) Whenever Holders shall request the registration of any Registrable
Securities pursuant to any Demand Registration or Piggyback Registration, the
Company will use its best efforts (subject to Sections 2.3(b), 2.5, 3.4 and 3.5
hereof) to effect the registration of such Registrable Securities in accordance
with the intended method of disposition thereof as quickly as practicable.
(b) In connection with any Demand Registration, the Company as
promptly as possible will prepare and file with the Commission a Registration
Statement with respect to the Registrable Securities to be included in such
Demand Registration on Form S-3 (or any successor form or any similar short-form
registration adopted by the Commission for which the Company may then be
eligible that is appropriate for the registration of Registrable Securities).
(c) Prior to filing any Registration Statement or prospectus or any
amendments or supplements thereto (including any documents incorporated by
reference in any Registration
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Statement after the initial filing of such Registration Statement) in which
Registrable Securities are included pursuant to this Agreement, the Company
shall furnish to counsel for any managing underwriter of any underwritten public
offering of Registrable Securities and, whether or not the Registration
Statement relates to an underwritten public offering, to counsel engaged by the
Holders of a majority in interest of the Registrable Securities included in such
Registration Statement, copies of all such documents proposed to be filed with
the Commission, which documents shall be subject to the reasonable review of
such counsels and, if requested by such counsels, shall include such additional
material that in their judgment should be included therein (subject, however, to
the reasonable approval of counsel to the Company). Notwithstanding the
foregoing, in the case of periodic reports of the Company that are incorporated
by reference into any Registration Statement in which Registrable Securities are
included pursuant to this Agreement after the effective date of such
Registration Statement, the Company shall only be required to furnish such
periodic reports to counsel engaged by the Holders of a majority in interest of
the Registrable Securities included in such Registration Statement, if any,
concurrently with the filing of such periodic reports.
(d) The Company will notify each Holder of the Registrable Securities
included in any Registration Statement pursuant to this Agreement of any stop
order issued or, to the knowledge of the Company, threatened by the Commission
in connection with such Registration Statement and will take all actions
required to prevent the entry of such stop order or to remove it if entered at
the earliest possible time. The Registration Period shall automatically be
extended by a period of time equal to the periods during which any such stop
orders are in effect.
(e) The Company shall prepare and file with the Commission such
amendments and post-effective amendments to any Registration Statement filed
pursuant to a Demand Registration, and amendments and supplements to the
prospectus issued in connection therewith, as may be necessary to keep such
Registration Statement effective for the periods set forth in Section 2.3(c)
hereof and to comply with the requirements of the Securities Act and the rules
and regulations thereunder relating to the sale or other disposition of the
securities covered by such Registration Statement.
(f) The Company shall furnish to the counsel engaged by the Holders of
a majority in interest of the Registrable Securities included in any
Registration Statement pursuant to this Agreement and the underwriter or
underwriters and each Holder of Registrable Securities included in such
Registration Statement such number of copies of the Registration Statement,
including exhibits, and each post-effective amendment thereto, and the
prospectus (including each preliminary prospectus) and any amendments or
supplements thereto, and any documents incorporated by reference in such
Registration Statement, as such counsel, underwriter or Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
being sold and to satisfy the prospectus delivery requirements of the Securities
Act.
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(g) The Company shall notify each Holder of Registrable Securities
that are included in any Registration Statement pursuant to this Agreement at
any time when a prospectus relating to such Registrable Securities is required
to be delivered under the Securities Act, of the happening of any event that
causes such prospectus as then in effect to contain an untrue statement of a
material fact or to omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and, if necessary in
the reasonable judgment of counsel for the Company, the Company will promptly
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading.
(h) Upon receipt of any notice of the happening of any event of the
kind described in Section 4.1(g) hereof, each Holder will immediately
discontinue disposition of the Registrable Securities to which the applicable
prospectus relates until such Holder shall have received the copies of the
supplemented or amended prospectus contemplated by Section 4.1(g) hereof or
until the Company shall have advised such Holder in writing that the use of the
prospectus may be resumed and, if so directed by the Company, such Holder will,
or will request the managing underwriter or underwriters (if any) to, deliver to
the Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. Notwithstanding the above, the Registration
Period shall be automatically extended for a period of time equal to the periods
during which any such suspensions are required.
(i) If requested by the managing underwriter or underwriters of any
registration or by any Holder of the Registrable Securities included in any
Registration Statement, the Company shall, subject to the approval of counsel to
the Company in its reasonable judgment, promptly incorporate in a prospectus
supplement or post-effective amendment such information as such managing
underwriter or underwriters or such Holder reasonably shall furnish to the
Company in writing and request to be included therein including, without
limitation, with respect to the number of Registrable Securities being sold by
such Holder to such underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect to any other terms
of the underwritten offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as possible after being notified of the matters
to be incorporated in such prospectus supplement or post-effective amendment.
(j) The Company shall use its best efforts to register or qualify the
Registrable Securities covered by any Registration Statement pursuant to this
Agreement for offer and sale under the securities or blue sky laws of each state
and other jurisdiction of the United States as any Holder of such Registrable
Securities or underwriter shall reasonably request in writing, and to do any and
all other acts or things necessary or advisable to enable the disposition in all
such jurisdictions of the Registrable Securities covered by such Registration
Statement; provided,
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however, that the Company will not be required to qualify generally to do
business (or subject itself to taxation) in any jurisdiction in which it is not
then so qualified (or subject) or to take any action that would subject it to
general service of process in any such jurisdiction in which it is not then so
subject.
(k) The Company shall cooperate with the Holders of the Registrable
Securities covered by any Registration Statement pursuant to this Agreement and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold under such Registration Statement, in such denominations and registered
in such names as the managing underwriter or underwriters, if any, or such
Holders may request.
(l) Prior to the effectiveness of any Registration Statement filed
pursuant to a Demand Registration or with respect to which Holders have
exercised their piggyback registration rights pursuant to Article III hereof,
the Company and the Holders of Registrable Securities covered thereby shall
enter into such customary agreements (including, if such Registration Statement
relates to an underwritten offering, an underwriting agreement as provided in
Section 4.1(n) hereof) and shall take all such other customary actions
(including, without limitation, delivery of customary legal opinions and
officers' certificates) as the Holders of such Registrable Securities being sold
or the underwriters participating in an underwritten public offering, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities.
(m) The Company may require each Holder of Registrable Securities as
to which any registration is being effected pursuant to this Agreement to
furnish to the Company such information regarding such Holder and such Holder's
intended method of distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing. Each such Holder agrees (i)
to notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Holder to the Company or of the
occurrence of any event as a result of which, in either case, any prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such Holder or such Holder's intended method of
distribution of such Registrable Securities or omits or would omit to state any
material fact regarding such Holder or such Holder's intended method of
distribution of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and (ii) promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such Holder or the distribution of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
(n) Each Holder participating in any offering agrees (i) to make any
sales of its Registrable Securities on the basis provided in any underwriting
arrangements (A) approved by
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the Company in its reasonable discretion, in the case of a Piggyback
Registration or (B) approved by the Holders of a majority in interest of such
Registrable Securities, in the case of a Demand Registration, and (ii) to
complete and execute all questionnaires, powers of attorney, custody agreements,
indemnities, underwriting agreements and other documents consistent with the
terms of this Agreement and reasonably required under the terms of such
underwriting arrangements.
4.2 Restrictions on Public Sale.
(a) If and to the extent requested in writing by the managing
underwriter or underwriters for any Demand Registration (or by the Company, in
the case of any such Demand Registration that is not being underwritten), each
Holder agrees not to sell or offer to sell any Registrable Securities during the
seven (7) days prior to, and during the forty-five (45) day period beginning on,
the effective date of such Demand Registration (except as part of such
registration).
(b) In the case of a Demand Registration involving an offering by
Demand Requesting Holders of at least 100,000 Lender Shares that are Registrable
Securities, if and to the extent requested in writing by the managing
underwriter or underwriters (or the Demand Requesting Holders holding at least
75% of the Registrable Securities sought to be included in such Demand
Registration, in the case of any such Demand Registration that is not being
underwritten), the Company agrees not to sell or offer to sell in a registered
public offering any securities of the same class as Registrable Securities
during the seven (7) days prior to, and during the forty-five (45) day period
beginning on, the effective date of such Demand Registration (except as part of
such registration).
ARTICLE V
EXPENSES
5.1 Expenses Borne by the Company. Except as otherwise provided in
Section 5.2 hereof, the Company will bear the following fees, costs and expenses
with respect to any Demand Registration or Piggyback Registration hereunder: (i)
all Commission and National Association of Securities Dealers, Inc. registration
and filing fees and expenses; (ii) all fees, costs and expenses of compliance
with state securities or blue sky laws; (iii) all costs and expenses related to
the preparation, printing, distribution and reproduction of Registration
Statements required to be filed in connection with such Demand Registration or
Piggyback Registration (as the case may be), the prospectuses included therein
or prepared for distribution pursuant thereto and any amendments or supplements
to the foregoing; (iv) all messenger and delivery costs and expenses and
internal costs and expenses, including, without limitation, all salaries and
expenses of the Company's officers and employees performing legal or accounting
duties; (v) the fees and disbursements of counsel and independent certified
public accountants for the Company; (vi) the fees and disbursements of one
counsel and one firm of independent certified public accountants
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for all Holders including Registrable Securities in such registration; (vii) in
the case of a Piggyback Registration initiated by the Company, the fees and
disbursements of counsel to the underwriters; and (viii) all fees, costs and
expenses incurred by the Holders including Registrable Securities in such
registration not expressly listed above or in Section 5.2 hereof.
5.2 Expenses Borne by the Holders. The Holders of Registrable
Securities included in any Demand Registration or Piggyback Registration
hereunder shall bear the following fees, costs and expenses with respect
thereto: (i) all fees and disbursements of separate counsel and accountants for
such Holders to the extent not covered under Section 5.1(vi) hereof; (ii) all
underwriting discounts and commissions attributable to the offer or sale of such
Registrable Securities; and (iii) all transfer taxes relating to such
Registrable Securities.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company. The Company agrees to indemnify,
protect and hold harmless in full each Holder of Registrable Securities to be
included in any registration pursuant to this Agreement, any underwriter and
each Person who "controls" such Holder or underwriter (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act), from and
against any and all Losses to which any of the foregoing Persons may become
subject, under the Securities Act or otherwise, insofar as such Losses arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement under which such
Registrable Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, except to the
extent that any such Losses arises out of or is based upon any information that
any such Holder, underwriter or controlling Person furnished in writing to the
Company expressly for use therein or by the failure of any such Holder,
underwriter or controlling Person to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder, underwriter or controlling Person with a
sufficient number of copies of the same.
6.2 Indemnification by Holders of Registrable Securities. In
connection with any registration pursuant to this Agreement in which a Holder of
Registrable Securities is participating, such Holder agrees, severally and not
jointly, to indemnify, protect and hold harmless in full the Company, its
directors and officers, any underwriter, each other Holder so participating and
each Person who "controls" the Company, such underwriter or other Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), and all other Holders of
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Registrable Securities so participating, from and against any Losses to which
any of the foregoing Persons may become subject, under the Securities Act or
otherwise, insofar as such Losses arise out of or are based upon an untrue or
alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Securities were registered under the
Securities Act, or any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
a prospectus, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished by such Holder to the
Company or any underwriter specifically for inclusion therein; provided,
however, that the obligations of each Holder shall be limited to an amount equal
to the net proceeds received by such Holder upon sale of its Registrable
Securities.
6.3 Conduct of Indemnification Actions.
(a) Any Person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying Person after the receipt by such
indemnified Person of any written notice of the commencement of any action,
suit, proceeding or investigation or threat thereof (an "Action") made in
writing for which such Person may claim indemnification or contribution pursuant
to this Agreement and to permit the indemnifying Person to assume the defense of
such Action with counsel reasonably satisfactory to such indemnified Person;
provided, however, that, if the defendants in any Action include both the
indemnified and indemnifying Persons and one or more indemnified Persons
reasonably shall have concluded that there may be defenses available to it that
are different from or additional to those of the indemnifying Person or if the
indemnifying Person shall not within thirty (30) days following receipt of the
indemnified Person's notice have employed counsel reasonably satisfactory to
such indemnified Person, then the indemnified Person shall have the right to
select separate counsel to participate in the defense of such Action on behalf
of such indemnified Person at the Company's sole cost and expense. After notice
from the indemnifying Person to such indemnified Person of its election so to
assume the defense of an Action, the indemnifying Person shall not be liable to
such indemnified Person pursuant to the provisions of Section 6.1 or 6.2 hereof
for any legal fees or disbursements subsequently incurred by such indemnified
Person in connection with the defense of such Action other than reasonable costs
of investigation, unless (i) the indemnified Person shall have employed counsel
in accordance with the proviso of the immediately preceding sentence, (ii) the
indemnifying Person shall not have employed counsel reasonably satisfactory to
the indemnified Person within a reasonable time after the notice of the
commencement of the Action or (iii) the indemnifying Person has expressly
authorized the employment of counsel for the indemnified Person at the cost and
expense of the indemnifying Person. Notwithstanding the foregoing, however, the
parties hereto understand and agree that the indemnifying Person shall, in
connection with any one Action or separate but substantially similar or related
Actions in the same jurisdiction arising out of the same general
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allegations or circumstances, be liable for the fees and disbursements of only
one separate firm of attorneys (in addition to any local counsel) at any time
for all indemnified Persons not having actual or potential differing interests
with the other parties among themselves.
(b) Whether or not the defense of an Action is assumed by the
indemnifying Person (i) the indemnifying Person will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld or delayed) and (ii) without the consent of the
indemnified Person, no indemnifying Person will consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff of a release of such indemnified
Person from all liability in respect of such claim or litigation.
6.4 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Article VI is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the Holders of Registrable Securities
being registered, as among themselves, shall contribute to the Losses described
herein in such proportions so that the portion thereof for which the selling
Holders shall be responsible shall be limited to the portion determined by a
court or the parties to any settlement to be attributable to an untrue statement
of a material fact or an omission to state a material fact in a Registration
Statement, preliminary, final or summary prospectus, or amendment or supplement
thereto, in specific reliance upon and in conformity with information furnished
to the Company by such Holders for use therein, and the Company shall be
responsible for the balance, excluding any information provided to the Company
by underwriters (subject to any other rights the Company may have against any
other selling security holder not a Holder of Registrable Securities the
securities of which were included in such Registration Statement, preliminary,
final or summary prospectus, amendment or supplement). As among themselves, the
Holders of Registrable Securities selling securities in such offering shall
contribute to amounts payable by other selling holders, if any, in such manner
as shall give effect, to the extent permitted by law, to the provisions of this
Section 6.4. Notwithstanding the provisions of this Section 6.4, however, no
Holder shall be required to contribute any amount in excess of the amount, if
any, by which the net proceeds of the sales of its Registrable Securities
received by such Holder exceeds the aggregate amount of any Losses for which
such Holders otherwise would be responsible in respect of the same or any
substantially similar claim. No Person guilty of "fraudulent misrepresentation"
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
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ARTICLE VII
MISCELLANEOUS
7.1 Rule 144. The Company shall timely file the reports required to be
filed under the Securities Act and the Exchange Act (including without
limitation the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 under the Securities Act adopted by the
Commission ("Rule 144")) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any Holder, make publicly available such information) and will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions therefrom provided by (a) Rule 144 or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
7.2 Other Registration Rights. From and after the date hereof, the
Company shall not grant any registration rights to any holder or prospective
holder of Company securities unless (a) such registration rights are subordinate
to the registration rights granted to the Holders hereunder or (b) the Holders
of at least two-thirds of all Registrable Securities then outstanding shall have
given their prior written consent. The Company represents and warrants to the
Holders that there are no outstanding registration rights with respect to
Company securities as of the date hereof other than the registration rights
granted pursuant to (i) this Agreement and (ii) that certain Representative's
Warrant Agreement dated as of September 18, 1997 by and between the Company and
Cohig & Associates, Inc. (the "Cohig Agreement"). The Company represents and
warrants to the Holders that this Agreement is not inconsistent with the Cohig
Agreement.
7.3 Remedies. No remedy conferred upon any party to this Agreement is
intended to be exclusive of any other remedy herein or by law provided or
permitted, but each such remedy shall be cumulative or shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. Each party hereto agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive, in any action for
specific performance, the defense that a remedy at law would be adequate.
7.4 Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers of or consents to departures from the provisions hereof may not be
given, except (a) in writing duly executed on the Company's behalf, in the case
of amendments, modifications, supplements, waivers or consents sought to be
enforced against the Company, or (b) in writing duly signed by the Holders of
two-thirds of the Registrable Securities then outstanding affected by such
amendment,
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modification, supplement, waiver or consent, in the case of amendments,
modifications, supplements, waivers or consents sought to be enforced against
the Holders of Registrable Securities.
7.5 Notices. All notices and other communications that are required or
permitted to be given under this Agreement shall be in writing and shall be
delivered personally or by certified mail (return receipt requested) or
telecopied and addressed as follows:
(a) if to the Company, to:
Coyote Sports, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx XX 00000
Attention: Chief Executive Officer
Telephone: 303/000-0000
Facsimile: 303/417-1700
with a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxx, Xxxxx & Xxxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx XX 00000
Telephone: 303/000-0000
Facsimile: 303/449-5426
(b) if to the Shareholder, to:
Paragon Coyote Texas Ltd.
c/o Xxxx Xxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx XX 00000
Telephone: 817/000-0000
Facsimile: 817/810-0089
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with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx XX 00000
Telephone: 817/000-0000
Facsimile: 817/332-3381
(c) if to any Permitted Transferee, to the address of such
Permitted Transferee as shown in the records of the Company,
or to such other address as any of the above shall have specified by notice
hereunder. Each notice or other communication delivered personally, mailed or
telecopied in the manner described above shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt or the
affidavit of messenger being deemed conclusive, but not exclusive, evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
7.6 Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto; provided, however,
that (i) no Holder shall have the right to assign or otherwise transfer (whether
by operation of law or otherwise) any of the rights granted to such Holder under
this Agreement, except, subject to compliance with the provisions of Section
7.5(b) hereof, for the assignment of any such rights to a Permitted Transferee
of Registrable Securities, and (ii) this Agreement and the respective rights of
the parties to receive performance of any obligations hereunder and to make
claims in respect of breaches of their Agreement may be assigned as security to
any Person or entity directly or indirectly extending credit to such Holder.
(b) Each Permitted Transferee pursuant to a Permitted Transfer who is
not a party to this Agreement prior to such Permitted Transfer shall execute and
deliver, as a condition to such Permitted Transfer, such documentation as the
Company reasonably may request to evidence such Permitted Transferee's joinder
in, acceptance of and agreement with the obligations of Holders of Registrable
Securities under this Agreement.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed to be an original, and all of which shall be taken to be one and
the same instrument with the same effect as if each of the parties hereto had
signed the same signature page. Any signature page of this Agreement may be
detached from any counterpart of this Agreement without impairing the legal
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effect of any signature thereon and may be attached to another counterpart of
this Agreement identical in form hereto and having attached to it one or more
additional signature pages.
7.8 Headings. The section and other headings contained in this
Agreement are for convenience only and shall not be deemed to limit,
characterize or interpret any provisions of this Agreement.
7.9 Governing Law. This Agreement and the rights of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
State of Colorado, without application of the rules regarding conflicts of law.
7.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law but, if any provision of this Agreement shall be unenforceable or
invalid under applicable law, such provision shall be ineffective only to the
extent of such unenforceability or invalidity, and the remaining provisions of
this Agreement shall continue to be binding and in full force and effect so long
as the essential purposes of this Agreement are not impaired.
7.11 Entire Agreement. This Agreement (together with the Loan
Agreement and the Other Transaction Documents) contains the entire agreement,
and supersedes all prior agreements and understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter hereof.
[The remainder of this page has intentionally been left blank]
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IN WITNESS WHEREOF, this Registration Rights Agreement has been signed
by each of the parties hereto as of the date first above written.
COYOTE SPORTS, INC.,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------------
Title: President
-------------------------------------
PARAGON COYOTE TEXAS LTD.,
a Texas limited partnership
By: Paragon Management Group, Inc.,
a Texas corporation, General Partner
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx Xxxxxx, President
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