STOCKHOLDER AGREEMENT
AGREEMENT, dated as of February 2, 1999, among Xxxxx X. Xxxxxx, an
individual residing at ______________, Xxx X. Xxxxxxxxxxx, an individual
residing at _____, Paragon Coyote Texas Ltd., a Texas limited partnership
("Paragon") (Messrs. Xxxxxx and Xxxxxxxxxxx and Paragon collectively referred to
as the "Xxxxxx Group"), Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx Charitable
Remainder Trust #3 (Xxxxxxx X. Xxxxxxxx, Trustee) ("Xxxxxxxx" CRT #3"), having
an office at Teton Pines, 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx 00000, Xxxxx X.
Xxxxxxxx, an individual residing at 0000 X. Xxxxxxxx Xxxx, Xxx Xxxxxx, Xxxxxxx
00000, Xxxxxxx X. Xxxxxx, an individual residing at 0000 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxx 00000 (Messrs. Xxxxx X. Xxxxxxxx and Xxxxxx, and Xxxxxxxx CRT #3,
collectively referred to as the "Xxxxxxxx Group") and Xxxxxxxx Xxxxxxx &
Company, L.P., a New York limited partnership having an office at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "BMC Group"), and each member of the
Xxxxxx Group, the Xxxxxxxx Group and the BMC Group individually referred to as a
"Stockholder" and collectively as "Stockholders"), and Coyote Sports, Inc., a
Nevada corporation (the "Company").
WHEREAS, the Company and Royal Precision, Inc., a Delaware corporation
("RPI"), are entering into an Agreement and Plan of Merger dated as of even date
herewith (the "Merger Agreement"), providing for the merger of a wholly-owned
subsidiary of the Company with and into RPI (the "Merger") pursuant to the terms
and conditions of the Merger Agreement, and setting forth certain
representations, warranties and agreements which each of the parties thereto is
making thereby in connection with the Merger; and
WHEREAS, in connection with the Merger, each Stockholder hereto desires
to provide for the voting of the Common Stock, par value $.005 per share, of the
Company (the "Common Stock") and the Preferred Stock, par value $.005 per share,
of the Company (the "Preferred Stock" and, collectively with the Common Stock,
the "Stock"), for directors for the Company Board; and
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Representations of Stockholders. Each Stockholder
represents and warrants:
1.1. Such Stockholder is the sole, true, lawful and beneficial owner of
the number of shares of Stock (the "Shares") listed on the signature page hereof
as being owned by such Stockholder with no restrictions on such Stockholder's
voting rights or rights of disposition pertaining thereto, except those under
the Securities Act of 1933, as amended (the "1933 Act"), and those that would
not in any material way limit or otherwise adversely affect the obligations of
such Stockholder under this Agreement or by the proxy to be delivered by such
Stockholder pursuant hereto. At the Effective Date (as defined in the Merger
Agreement), such Stockholder will have good and valid title to the Shares listed
on the signature page hereof as being owned by such Stockholder free and clear
of any and all claims, liens, charges, encumbrances and security interests. None
of the Shares owned by such Stockholder is subject to any voting trust or other
agreement or arrangement with respect to the voting of such shares that would in
any way limit or otherwise adversely affect the voting rights granted by such
Stockholder under this Agreement. Such Stockholder does not "beneficially own"
(as such term is defined in the Securities Exchange Act of 1934, as amended (the
"1934 Act")), any shares of Stock other than the Shares listed on the signature
page hereof as being beneficially owned by such Stockholder and other than any
shares of Stock which such Stockholder may obtain upon the exercise of the
options described in the Company's proxy statement relating to the Merger.
1.2. The execution, delivery and performance by such Stockholder of
this Agreement does not and will not contravene or constitute a default under or
give rise to a right of termination, cancellation or acceleration of any right
or obligation of such Stockholder or to a loss of any benefit of such
Stockholder under any provision of applicable law or regulation or of any
agreement, judgment, injunction, order, decree, or other instrument binding on
such Stockholder or result in the imposition of any lien on any asset of such
Stockholder.
1.3. This Agreement is the valid and binding Agreement of such
Stockholder. If this Agreement is being executed in a representative or
fiduciary capacity for such Stockholder, the person signing this Agreement for
such Stockholder has full power and authority to enter into and perform such
Agreement for such Stockholder.
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SECTION 2. Composition of the Board.
2.1. The Company Board shall consist of eight members each serving for
a term of one year. The Xxxxxxxx Group shall be entitled, but not required, to
designate three members of the Company Board (the "Xxxxxxxx Directors"), the BMC
Group shall be entitled, but not required, to designate one member of the
Company Board (the "BMC Director") and the Xxxxxx Group shall be entitled, but
not required, to designate four members of the Company Board (the "Xxxxxx
Directors"). At any time that the number of directors constituting the full
Board shall be increased, the director designation ratio of the Xxxxxxxx Group,
the BMC Group and the Xxxxxx Group hereunder shall continue until a Group no
longer owns at least 10% of the outstanding Stock; in which event this Agreement
shall no longer apply to such Group and the members of the Board designated by
such Group, to the extent, if any requested by the remaining members of the
Board. Each of the Xxxxxxxx Group and the BMC Group shall be entitled to
designate one director designated by such Group to serve on the Board to serve
on the Executive Committee, and the Xxxxxx Group shall be entitled to designate
two directors designated by such Group to serve on the Board to serve on the
Executive Committee (one of whom shall be designated as the Chairman of the
Executive Committee). The Xxxxxxxx Group and the BMC Group, acting collectively,
shall be entitled to designate (i) one member of the Company Board to be elected
as Chairman of the Board, and (ii) one member to the Compensation Committee of
the Company Board. The Xxxxxx Group shall be entitled to designate the President
and Chief Executive Officer of the Company. Each Stockholder entitled to vote
for the election of directors to the Company Board agrees that such Stockholder
will vote all of such Stockholder's Shares or execute consents, as the case may
be, and take all other necessary action (including causing the Company to call a
special meeting of stockholders) in order to ensure that the composition of the
Board is as set forth in this Section 2.1.
2.2. Each Stockholder agrees that if, (i) such Stockholder receives a
notice from a Group that such Group requests that a director designated by such
Group be removed, each Stockholder will vote all of such Stockholder's Shares or
execute consents, as the case may be, to call a special meeting of the
stockholders of the Company and to vote for the removal of such director at such
meeting, and (ii) at any time such Stockholder is entitled to vote for the
removal of one or more directors of the Company, except as set forth in (i)
above, such Stockholder will not vote any of such Stockholder's Shares in favor
of the removal of any director who shall have been designated pursuant to
Section 2.1, unless such removal shall be for Cause or the Group entitled to
designate such director shall have consented to such removal in writing. Removal
for "Cause" shall mean removal of a director because of such director's (a)
willful and continued failure to substantially perform his duties as a director
of the Company, (b) willful conduct which is significantly injurious to the
Company, monetarily or otherwise, or (c) conviction for, or a guilty plea to, a
felony.
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2.3. If, as a result of death, disability, retirement, resignation,
removal (with or without cause) or otherwise, there shall exist or occur any
vacancy on the Company's Board:
2.3.1. the Group entitled under Section 2.1 to designate or
nominate such director whose death, disability, retirement, resignation, removal
(with or without cause) or otherwise resulted in such vacancy may designate
another individual (a "Designee") to fill such capacity and serve as a director
of the Company. The selection of a Designee by such Group shall be decided by
the Stockholders of such Group by a majority vote where the number of votes each
Stockholder has is determined by the number of Shares such Stockholder has; and
2.3.2. each Stockholder then entitled to vote for the election of
a Designee as a director of the Company agrees that such Stockholder will vote
all of such Stockholder's Shares or execute a written consent, as the case may
be, in order to ensure that a Designee be elected to the Company Board.
2.4. This Agreement is intended to bind the Stockholders only with
respect to the specific matters set forth herein, and shall not restrict any
Stockholder from taking any other action or failing to take any other action in
his capacity as an officer or director of the Company in accordance with his
fiduciary duties.
SECTION 3. Termination. The provisions of this Agreement shall only be
effective on and after the Effective Date, and shall terminate and be of no
further force and effect five years from and after the Effective Date.
SECTION 4. No Voting Trusts. Each Stockholder agrees that such
Stockholder will not, and will not permit any entity under any Stockholder's
control to, deposit any of such Stockholder's Shares in a voting trust or
subject any of his Shares to any arrangement or agreement with respect to the
voting of such Shares with respect to the election of directors, other than this
Agreement.
SECTION 5. No Proxy Solicitations. No Stockholder will, nor permit any
entity under such Stockholders' control to, (a) solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation l4A
under the 0000 Xxx) in connection with the election of directors of the Company
(or any election contest with respect thereto), in opposition to the provisions
of Section 2.1; (b) initiate a stockholders' vote or action by consent of the
Company stockholders in connection with the election of directors of the Company
(or any election contest with respect thereto) in opposition to the provisions
of Section 2.1; or (c) become a member of a "group" (as such term is used in
Section 13(d) of the 0000 Xxx) with respect to any voting securities of the
Company which group proposes to take any action with respect to the election of
any director of the Company (or any election contest with respect thereto) with
the purpose or effect of opposing the provisions of Section 2.1.
SECTION 6. Transfer and Encumbrance. Each Stockholder agrees not to
transfer, sell
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or otherwise dispose of any of the Shares beneficially owned by such Stockholder
to an "Affiliate" (as hereinafter defined) for a period of five years, unless
such "Affiliate" agrees to be bound by the terms hereof, and signs an agreement
in the form of Exhibit 6 hereof to such effect. As used in this Agreement,
"Affiliate" means any person, firm or corporation directly or indirectly
controlling, controlled by, or under common control with, such person, firm or
corporation. For purposes of this Agreement, "control" (including, with
correlative meaning, the terms "controlling", "controlled by" and "under common
control with"), as applied to any person, firm or corporation, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, firm or corporation,
whether through the ownership of voting securities, by contract or otherwise.
"Affiliate" includes any spouse, child or parent of a Stockholder. All
certificates representing the Shares or New Shares shall be endorsed on the
reverse side thereof substantially as follows:
BY THE TERMS OF A STOCKHOLDER AGREEMENT, CERTAIN RESTRICTIONS HAVE BEEN
PLACED UPON CERTAIN TRANSFERS OF THE SHARES REPRESENTED BY THIS
CERTIFICATE AND SUCH SHARES ARE SUBJECT TO A VOTING AGREEMENT. THE
COMPANY WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
SECTION 7. Additional Purchases. Each Stockholder agrees that such
Stockholder will not purchase or otherwise acquire beneficial ownership of any
Stock after the execution of this Agreement ("New Shares") nor will such
Stockholder acquire the right to vote or share in the voting of any shares of
Stock, other than the Shares, unless such Stockholder delivers to the Company
promptly after such purchase or acquisition a written notice setting forth the
total number of New Shares. Each Stockholder also agrees that any New Shares
acquired or purchased by such Stockholder shall be subject to the terms of this
Agreement to the same extent as if they constituted Shares.
SECTION 8. Specific Performance. Each party hereto acknowledges that it
will be impossible to measure in money the damage to the other parties if a
party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other parties will not have an adequate remedy at law or in
damages, and accordingly, each party hereto agrees that the issuance of an
injunction or other equitable remedy is the appropriate remedy for any such
failure.
SECTION 9. Entire Agreement. This Agreement supersedes all prior
agreements among the parties hereto with respect to the subject matter hereof
and contains the entire agreement among the parties with respect to the subject
matter hereof. This Agreement may not be amended, supplemented or discharged,
and no provision hereof may be modified or waived, except expressly by an
instrument in writing signed by all the parties hereto. No waiver of any
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provision hereof by any party shall be deemed a waiver by any other party nor
shall any such waiver be deemed a continuing waiver of any matter by such party.
SECTION 10. Effective Date. This Agreement shall become effective on
the Effective Date (as defined in the Merger Agreement).
SECTION 11. Miscellaneous.
11.1. The parties, being concerned that either party may
obtain some advantage by having the law of the jurisdiction of such parties
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. EACH OF THE PARTIES AGREES
THAT ANY LEGAL ACTION BETWEEN OR AMONG THE PARTIES RELATING TO THE ENTRY INTO OR
PERFORMANCE OF THIS AGREEMENT, OR THE INTERPRETATION OR ENFORCEMENT OF TERMS
HEREOF, SHALL BE BROUGHT IN A FEDERAL OR STATE COURT LOCATED IN NEW CASTLE
COUNTY, DELAWARE, HAVING JURISDICTION OF THE SUBJECT MATTER THEREOF, AND EACH
PARTY IRREVOCABLY CONSENTS TO PERSONAL JURISDICTION IN ANY SUCH FEDERAL OR STATE
COURT, WAIVES ANY RIGHT TO OBJECT TO SUCH VENUE OR TO ASSERT THE DEFENSE OF
FORUM NON-CONVENIENS, AND AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL ADDRESSED TO SUCH PARTY AT SUCH PARTY'S ADDRESS SET
FORTH IN, OR DETERMINED IN ACCORDANCE WITH, SECTION 11.5 HEREOF.
11.2. If any provision of this Agreement or the application of
any such provision to any person or circumstances shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, including the
remainder of the provision held invalid, or the application of such provision to
persons or circumstances other than those as to which it is held invalid, shall
not be affected.
11.3. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
11.4. All Section headings herein are for convenience of
reference only and are not part of this Agreement and no construction or
inference shall be derived therefrom.
11.5. 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
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mail, return receipt requested, addressed to the party at the address appearing
below the signature of such party, 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
COYOTE SPORTS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx, President
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
STOCKHOLDERS:
Signature of Stockholder: /s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
_________________________
_________________________
Shares owned: _____________________
Signature of Stockholder: /s/ Xxx X. Xxxxxxxxxxx
-------------------------
Xxx X. Xxxxxxxxxxx
_________________________
_________________________
Shares owned: _____________________
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Signature of Stockholder: PARAGON COYOTE TEXAS, LTD.
By: Paragon Management Group, Inc.,
its General Partner
By: /s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
President
Shares owned: _____________________
Signature of Stockholder: By: /s/ Xxxxxxx Xxxxxxxx
------------------------------
Xxxxxxx Xxxxxxxx, Trustee of the
Xxxxxxx Xxxxxxxx Trust dated
April 21, 1989, as amended
Shares owned: _____________________
Signature of Stockholder: By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
Shares owned: _____________________
Signature of Stockholder: XXXXXXX X. XXXXXXXX AND XXXXX X.
XXXXXXXX CHARITABLE
REMAINDER TRUST #3
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
Teton Pines
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Shares owned: ______________________
Signature of Stockholder: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxxx, Xxxxxxx 00000
Shares owned: _____________________
Signature of Stockholder: XXXXXXXX XXXXXXX & COMPANY, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxx, General
Partner
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Shares owned: _________________________
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Signature of Stockholder: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Shares owned: ___________________________
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EXHIBIT 6
FORM OF AGREEMENT TO BE BOUND
m
[DATE]
Coyote Sports, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Sirs:
Reference is made to the Stockholder Agreement dated as of January __,
1999 (the "Agreement"), among Xxxxx X. Xxxxxx, Xxx X. Xxxxxxxxxxx, Paragon
Coyote Texas Ltd., Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx Charitable
Remainder Trust #3, Xxxxx X. Xxxxxxxx, Xxxxxxxx Xxxxxxx & Company, L.P., Xxxxxxx
X. Xxxxxx and Coyote Sports, Inc. (the "Company"). Capitalized terms not defined
herein have the meanings assigned to them in the Agreement.
In consideration of the covenants and agreements contained in the
Agreement and the transfer of the common stock and/or preferred stock of the
Company (the "Shares") to the undersigned by a Stockholder, the undersigned
hereby confirms and agrees to be bound by all of the provisions thereof.
[The undersigned acknowledges that it is a condition to an effective
pledge of the Shares under the Agreement that the pledgee agree, and the
undersigned hereby confirms and agrees, that upon foreclosure of such pledge,
the undersigned will take the Shares subject to all of the restrictions
applicable to the pledgor under the Agreement.]**
This letter shall be construed and enforced in accordance with the laws
of the State of Delaware.
Very truly yours,
____________________________
[Transferee]
** Include in the case of a pledge
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