Exhibit 10.3
AGREEMENT
THIS AGREEMENT is made and entered into this 27th day of March, 1997, by
and between XXXXX X. XXXXXX (hereinafter "Xxxxxx"), XXXX X. XXXXXX (hereinafter
"Xxxxxx") and COYOTE SPORTS, INC., a Nevada corporation (hereinafter referred to
for convenience as "Coyote"), with respect to the following.
RECITALS
A. Because Xxxxxx and Xxxxxx are the sole and only shareholders of Cape
Composites, Inc. (hereinafter "Cape") and Cape has produced, developed and
acquired certain assets in the operation of its business, including but not
limited to all Patents, Copyrights, Trademarks, Trade names, Trade Secrets and
other Proprietary Information, Art, Molds, Drawings, Product Specifications,
Sketches, Graphics, Decals, Screen Printing Materials, Heat Transfer Processes
and Materials, Research and Development Materials, Goodwill, Going Concern
Value, Customer Lists, Credit Files, Vendor Lists, Backlog, Purchase Orders,
Furniture, Fixtures, Equipment, Materials, Inventory, Accounts Receivable,
Instruments, and Cash and the like, more specifically, but without limitation,
set out in Exhibit A hereto;
B. Because Cape is currently unable to itself capitalize its business
adequately to fill its current orders for its products; and
C. Because Coyote is in a position to provide for appropriate
capitalization, management, and business expertise for the management of Cape's
business, but only on certain terms and conditions and in the form and manner
hereinbelow provided for;
AGREEMENT
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Now therefore, the parties agree as follows:
1. Agreement to convey all shares of Cape to an entity to be formed.
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Xxxxxx and Xxxxxx will immediately upon execution of this instrument, convey all
of the shares of Cape to a Limited Liability Company formed pursuant to the laws
of the State of Colorado (hereinafter referred to as "CC LLC" for convenience)
as its capital contribution to CC LLC. Coyote will, as its capital contribution
to CC LLC, arrange for and guaranty, sufficient working capital for Cape to
finance its current operations, and, within 180 days of the date of this
agreement, procure the release of the personal guaranties and obligations of
Xxxx X. Xxxxxx , Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and their families of
approximately $778,088.00 of Cape's current obligations to Xxxxxxx Xxxxx, CCI
Vendor Corporation, Xxxxxxx Xxxxxxxxxx, Xxx Xxxxxxx and Xxxxxx Xxxxxxxx.
Additionally, Coyote will undertake such actions as are necessary to remove Xxxx
X. Xxxxxx and
Xxxxx X. Xxxxxx and their families as guarantors on equipment leases with Refco
Investments, Monarch Capital Corporation, and Toshiba Corporation, and on Cape's
facilities sub-lease with CCI Vendor Corporation. In order to secure Coyote's
performance of its obligations under this Paragraph 1, Coyote hereby grants
Xxxxxx and Xxxxxx, respectively, a security interest in and to the shares of
Cape each of them conveys to CC LLC pursuant to this agreement.
2. Agreement for assumption certain liabilities of Cape. The parties
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agree that upon the formation of CC LLC, and the conveyance of the
aforedescribed assets to it, that it will assume and agree to pay all of the
liabilities of Cape which are identified in Exhibit B (hereinafter referred to
as the "Identified Liabilities" for convenience) and no other liabilities of
Cape whatsoever. Xxxxxx and Xxxxxx, jointly and severally agree to pay any and
all other liabilities of Cape other than the identified liabilities, and hereby
indemnify and save Cape harmless from all liabilities, charges, claims and
demands, whether known or unknown, vested or contingent, xxxxxx or inchoate,
which exist on or before the date of this agreement.
3. Ownership interests in CC LLC. CC LLC shall be formed in substantial
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conformity with the Articles of Organization and Operating Agreement which are
attached hereto as Exhibits C and D respectively, with the Membership Interests
in CC LLC being owned 10% by Xxxxxx, 10% by Xxxxxx and 80% by Coyote. Coyote or
its designee, shall be the Manager of CC LLC, and shall conduct all of its
business and affairs.
4. Warranties and Representations of Xxxxxx and Xxxxxx:
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a. Authority and Title. Xxxxxx and Xxxxxx and each of them warrant
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that they are the true owners of the shares of Cape to be conveyed hereby, and
that collectively their shares represent one hundred (100%) percent of the
issued and outstanding shares of Cape, that said shares of Cape are unencumbered
and free from any and every claim of others, and that Cape is duly organized,
constituted and in good standing under the laws of the State of California.
b. Books and Records. Xxxxxx and Xxxxxx and each of them warrant and
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represent that all of the books and records of Cape adequately and fairly
reflect the business and operations of Cape and that each and all of the orders
contained in the Backlog (which is part of Exhibit A hereto) are true and bona
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fide, and taken by Cape in the ordinary course of its business, and there has
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been no material change regarding any order shown in the Backlog which is not
appearing in the Backlog and further warrant and represent that each and every
customer listed in the Customer List has within the last one (1) year placed an
order with Cape, and Cape has no knowledge that any such customer has terminated
its operations or intends not to do business with Cape in the future.
c. Equipment and Machinery. Xxxxxx and Xxxxxx and each of them
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warrant and represent that all of the equipment and machinery set forth on
Exhibit A is in good working order, ordinary wear and tear excepted.
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d. Inventory. Xxxxxx and Xxxxxx and each of them warrant and
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represent that the inventory set forth on Exhibit A of Cape exists and is in the
current Possession of Cape, and is properly stored and in good condition and
useable for its intended purposes, except for such inventory sold to customers
in the ordinary course of business from the date of such inventory shown on
Exhibit A through the closing hereof.
e. Cash and Accounts. Xxxxxx and Xxxxxx and each of them warrant and
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represent that the accounting and financial records of Cape truly, correctly and
faithfully reflect the current accounts receivable and cash owned by Cape, and
no financial transactions between Cape and any person have occurred in the last
one (1) year which are not properly and clearly reflected in Cape's accounting
and financial records.
f. Brokers and Finder's fees. Xxxxxx and Xxxxxx and each of them
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warrant and represent that no one is entitled to receive any broker's commission
or finder's fee or other commission in connection with the transaction
contemplated by this agreement.
g. Disclosures. Cape has in March, 1997 permitted inspection of its
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assets and liabilities, and provided access to all of Cape's financial records
and other company records, by a representative of Coyote at Cape's offices in
San Diego, California, and Xxxxxx and Xxxxxx and each of them warrant and
represent that during such disclosure, all documents, files, art, records and
information concerning each and all of the assets and -liabilities and business
and operations of Cape were truly and fairly disclosed to said representative,
and nothing material was concealed or not disclosed, and in each of their
respective true and honest opinions, said representative was clearly presented
and saw and understood all material components of each and every asset and
liability of Cape, and was clearly presented and saw and understood the true
operations and condition of Cape.
5. Warranties and Representations of Coyote:
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(a) Coyote is a corporation validly existing and in good standing under
the laws of the State of Nevada and has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement;
(b) The execution, delivery and performance of this Agreement has been
duly and validly authorized and approved by Coyote, and no further corporate
action by Coyote is or shall be required for such execution, delivery and
performance;
(c) This Agreement has been duly executed by and on behalf of Coyote
and constitutes a valid and binding obligation of Coyote; and
(d) The performance of its obligations hereunder by Coyote will not:
(i) conflict with or result in a breach of, or constitute a
default under,
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any of the terms, conditions or provisions of:
(A) the articles of incorporation or bylaws of Coyote,
(B) to the best of Coyote's knowledge, any law, judgment,
order, injunction, decree, regulation or ruling of any court or governmental
authority, domestic or foreign, to which Coyote is subject and of which
disclosure has not otherwise been made, or
(C) any material agreement, lease, commitment or contract to
which Coyote is a party or is subject, or
(ii) give to others any interest or rights, including rights of
termination, cancellation or acceleration, any of which events could adversely
affect the ability of Coyote to perform its obligations hereunder.
6. Arbitration of Disputes. In the event of any dispute hereunder, the
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parties agree that the same shall be submitted to binding arbitration under the
auspices of the American Arbitration Association for determination pursuant to
its Commercial Rules then obtaining, in Denver, Colorado before a single neutral
arbitrator agreed upon by the parties, or in the event the parties are unable to
agree upon an arbitrator within a reasonable time in the opinion of the AAA
Tribunal Administrator, a single arbitrator appointed by the AAA in accordance
with its customary procedures. The arbitrator shall award the prevailing party
in any such arbitration its reasonable costs and attorney's fees.
7. Applicable Law. This agreement shall be interpreted under the laws of
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the State of Colorado, and contains the entire agreement between the parties,
and shall not be modified or modifiable except by writing signed by all of the
parties hereto.
IN WITNESS WHEREOF the parties hereto have set their hands and seals on the
date first written above.
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
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COYOTE SPORTS, INC.
By: /s/ Xxx X. Xxxxxxxxxxx
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Xxx Xxxxxxxxxxx, President
Attest:
[SEAL] /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Secretary
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