This AGREEMENT is made and entered into as of __________, 1999, by and
among COYOTE SPORTS, INC., a Nevada corporation (the "Company"), and the
investors named on Schedule I hereto (the "Investors") for the benefit of
themselves and all other Holders of Subject Securities as defined herein.
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person shall mean any other Person who either directly or
indirectly is in control of, is controlled by, or is under common control with
such Person. The term "control" (including the terms "controlling," "controlled
by" and under "common control with") with respect to any Person means
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in the City of New York are
authorized by law, regulation or executive order to close.
"Common Shares" shall mean the common stock, par value $0.001 per share, of
the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Hold-Back Election" shall have the meaning set forth in Section 7(a) hereof.
"Holder" shall mean any Person who is the holder of record, on the date
hereof, of Common Shares or of shares of Common Stock, $.001 par value ("RP
Common Stock"), of Royal Precision, Inc. ("RP") to be converted into a right to
receive Subject Securities pursuant to the merger of Coyote Acquisition Corp.
with and into RP (the "Merger").
"Material Development Election" shall have the meaning set forth in Section
7(b) hereof.
"Person", shall mean an individual, partnership, corporation, limited
liability company, joint venture, trust or unincorporated organization, a
government or agency or political subdivision thereof or any other entity.
"Preferred Shares" shall mean the Series C Preferred Stock, par value $.001
per share, of the Company.
"Prospectus" shall mean the prospectus included in any Registration Statement,
as
amended or supplemented by a prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Subject Securities" shall mean (i) the Common Shares owned of record by the
Investors as of the date hereof; (ii) the Common Shares owned of record by
other Holders as of the date hereof; (iii) the Common Shares issuable upon
conversion or exercise of convertible securities or options or other rights to
acquire Common Shares outstanding as of the date hereof; (iv) the Preferred
Shares issuable to Holders pursuant to the Merger to holders of record of RP
Common Stock as of the date hereof and the Common Shares issuable to such
Holders upon conversion of such Preferred Shares; and (v) any other securities
issued or issuable as a result of or in connection with any stock dividend,
stock split or reverse stock split, combination, recapitalization,
reclassification, merger or consolidation, exchange or distribution in respect
of the securities referred to in clauses (i) through (iv) above; provided,
however, that any Subject Security shall cease to be such after either (x)
[_____, 2009] or (y) such time as such security has been transferred, with or
without consideration, to any Person other than a Holder.
"Registration Statement" shall mean any registration statement under the
Securities Act, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement. Unless the context requires otherwise, "Registration Statement"
refers to a registration statement with respect to Subject Securities under this
Agreement.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act or any
similar successor rule thereto that may be promulgated by the SEC.
"SEC" shall mean the Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended (or any
similar successor federal statute), and the rules and regulations thereunder, as
the same are in effect from time to time.
"Shelf Registration" shall mean the registration of securities for sale on a
continuous or delayed basis pursuant to Rule 415. Unless the context requires
otherwise, "Shelf Registration" refers to a registration of Subject Securities.
"Shelf Registration Statement" shall mean a Registration Statement filed in
connection with a Shelf Registration of Subject Securities.
"Underwritten Offering" shall mean a registered offering in which securities
are sold to one or more underwriters on a firm commitment basis for reoffering
to the public. Unless the context requires otherwise, "Underwritten Offering"
refers to an offering of Common Shares which constitute Subject Securities.
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"Unrestricted Securities" shall mean Common Shares that may be sold pursuant
to Rule 144(k) under the Securities Act, or any similar successor rule thereto
that may be promulgated by the SEC.
SECTION 2. SHELF REGISTRATION.
The Company anticipates filing with the SEC and maintaining in effect a Shelf
Registration Statement with respect to the Common Stock issuable upon conversion
of the Preferred Shares. The Company has agreed, for the benefit of the
Holders, to use its reasonable best efforts to obtain a nationally recognized
underwriter or underwriters for the purpose of underwriting a public offering of
Common Shares constituting Subject Securities hereunder pursuant to such Shelf
Registration Statement (or other Registration Statement, if necessary) to the
extent set forth below. In no event shall the total number of Underwritten
Offerings pursuant to Section 3 exceed one in any one-year period or five in the
aggregate. Subject to Section 7(a), nothing in this Agreement shall in any way
restrict any Holder from selling or otherwise transferring the risk or benefit
of ownership of securities of the Company in any manner not provided in this
Agreement, including any sale of Common Shares in the open market.
SECTION 3. UNDERWRITTEN OFFERINGS.
(a) Request. Upon the written request of a Holder or Holders holding Common
Shares, or Preferred Shares convertible into Common Shares, representing at
least 10% of the Common Shares issued and outstanding (assuming conversion in
full of the Preferred Shares), the Company shall use reasonable best efforts to
facilitate an Underwritten Offering under the Shelf Registration Statement (or
other Registration Statement, if necessary) in accordance with the provisions of
this Agreement.
(b) Notice of Request; Procedures. At least thirty (30) Business Days
prior to the time that any Holder or Holders propose to effect an Underwritten
Offering pursuant to Section 3(a), such Holders shall deliver to the Company a
written notice setting forth the proposed timing of such Underwritten Offering
and the number of Common Shares constituting Subject Securities to be offered.
Thereafter, the Company shall, as soon as reasonably practicable, prepare and
file any post-effective amendment or a supplement to the Prospectus as shall be
necessary in accordance with the rules of the SEC under the Securities Act to
include such Holders as selling shareholders in such Underwriting Offering under
the Shelf Registration Statement, or, if necessary, file a new Registration
Statement for such purpose, and perform any other procedures required to be
performed by the Company under this Agreement or that are reasonably necessary
or advisable to effect the proposed Underwritten Offering.
(c) Road Show. The Company will use its reasonable best efforts to cooperate
in a marketing effort in respect of any Underwritten Offering, including
participation in a "road show" with appropriate senior management, to assist the
Holders in selling Common Shares constituting Subject Securities in such
Underwritten Offering.
(d) Revocation of Request. A Holder or Holders requesting an Underwritten
Offering pursuant to this Section 3 may, at any time prior to the consummation
of such Underwritten Offering, revoke such request by providing written notice
of revocation to the
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Company and such Underwritten Offering shall not be deemed to be an Underwritten
Offering for purposes of Section 2; provided, however, that the Holder or
Holders revoking any request for an Underwritten Offering shall pay all
reasonable expenses (not to exceed $________) of the Company incurred with
respect to such revoked request in accordance with Section 8.
SECTION 4. OTHER DISPOSITIONS. If no underwriter as provided in Section 10
can be obtained or no registration and Underwritten Offering can be completed
on the basis provided in this Agreement, the Company shall use its reasonable
best efforts to otherwise facilitate an orderly and effective disposition of the
Common Shares requested to be included in such Underwritten Offering.
SECTION 5. PARTICIPATION IN OFFERINGS.
(a) Company Piggyback Right. If a Holder or Holders deliver a notice of a
proposed Underwritten Offering in accordance with Section 3(b), the Company may
elect to participate in the sale of Common Shares in such Underwritten Offering.
Such election shall be made by written notice of the Company delivered to the
Holders within ten (10) Business Days of the Company's receipt of the notice of
the Holders in respect of the Underwritten Offering, which notice shall specify
the number of Common Shares that the Company proposes to sell in the
Underwritten Offering. If the Company elects to participate in the Underwritten
Offering, the Company shall promptly file an amendment to the Shelf Registration
Statement or shall file a new Registration Statement, as may be required under
the Securities Act in order to permit the Company to sell Common Shares in the
Underwritten Offering. The Underwritten Offering shall thereafter be consummated
as soon as practicable after the earlier to occur of (x) the time the required
amendment to the Shelf Registration Statement or new Registration Statement
shall become effective under the Securities Act, provided that the Company shall
use its reasonable best efforts to cause such amendment or Registration
Statement to become effective as soon as practicable, and (y) sixty (60)
calendar days from the date of delivery by the Company to the Holders of the
notice of the Company's election to participate in the proposed Underwritten
Offering of the Holders.
(b) Holder Piggyback Right. If the Company at any time proposes to file a
registration statement with respect to the Underwritten Offering of Common
Shares, then the Company shall in each case give written notice of such proposed
filing to the Holders at least ten (10) Business Days before the anticipated
filing date of any such registration statement by the Company, and such notice
shall offer to all Holders the opportunity to have any Common Shares
constituting Subject Securities held by such Holders included in such
registration statement or otherwise included in such Unwritten Offering. Each
Holder desiring to have its Subject Securities registered under this Section
5(a)(iii) shall so advise the Company in writing within five (5) Business Days
after the date of receipt of the Company's aforesaid notice (which request shall
set forth the amount of Subject Securities for which registration is requested),
and the Company shall include in such Registration Statement all such Subject
Securities so requested to be included therein. If any such registration is not
a Shelf Registration, such Subject Securities shall be offered in the
Underwritten Offering together with the offering of Common Shares by the Company
with respect to which such Registration Statement has been filed. If any such
registration is a Shelf Registration, such Subject Securities shall be included
in the Registration Statement only for distribution in an Underwritten Offering
together with an Underwritten
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Offering of Common Shares by the Company.
(c) Holder Participation in a Company Underwritten Offering Under Previous
Registration. If the Company at any time proposes to effect an Underwritten
Offering of Common Shares, under a previously effective Registration Statement,
then the Company shall in each case give written notice of such proposed
offering to the Holders at least ten (10) Business Days before the anticipated
date of such Underwritten Offering, and such notice shall offer to all Holders
the opportunity to have any or all of the Common Shares constituting Subject
Securities then held by the Holders included in such Underwritten Offering, to
the extent such Subject Securities have previously been registered either under
the Shelf Registration Statement or a Registration Statement otherwise filed
pursuant to this Agreement. Each Holder desiring to have its Subject Securities
offered under this Section 5(a)(iv) shall so advise the Company in writing
within five (5) Business Days after the date of receipt of the Company's
aforesaid notice (which request shall set forth the amount of Subject Securities
proposed to be offered), and the Company shall cause to be included in such
Underwritten Offering all such Subject Securities so requested to be included
therein.
(d) Cutback. Notwithstanding the foregoing provisions of this Section 5, if
the managing underwriter or underwriters of any Underwritten Offering referred
to in Section 5(a),(b) or (c) have advised the Company in writing that the total
amount of Common Shares of the Holders, the Company and any other Persons
intended to be included in such Underwritten Offering is sufficiently large to
materially adversely affect the success of such offering, then the amount of
Common Shares to be offered in such public offering shall be allocated: (x) in
the case of Section 5(a), first, among the Holders in proportion to the number
of Common Shares proposed to be offered by each of them, and second, to the
Company and any other holders of Common Shares contractually entitled to
inclusion therein, in such proportion as they may determine; and (y) in the case
of Section 5(b) or 5(c), (i), if in connection with an offering for the account
of the Company, then first, to the Company, and second, among the Holders and
any other holders of Common Shares contractually entitled to inclusion therein,
pro rata in proportion to the number of Common Shares proposed to be offered by
each of them, and (ii), if in connection with an offering for the account of a
holder or holders of Common Shares other than a Holder, then first, to such
holder or holders, and second, to the Company and the Holders pro rata in
proportion to the number of Common Shares proposed to be offered by each of
them.
SECTION 6. PROCEDURES.
(a) General. In connection with the Company's obligations pursuant to
Section 2 hereof, the Company will:
(i) notify the selling Holders of Subject Securities and the managing
underwriters promptly (1) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any post-
effective amendment, when it has become effective (and with respect to any
Registration Statement other than the Shelf Registration Statement, when such
Registration Statement or any pre-effective amendment has been filed), (2) of
any request by the SEC for amendments or supplements to any Registration
Statement or Prospectus or for additional information, (3) of the issuance by
the SEC of any comments with respect to any filing, (4) of any stop
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order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (5) if at any time the
representations and warranties of the Company contemplated by paragraph (x)
below cease to be true and correct as of any time they are required to be true
and correct, (6) of any suspension of the qualification of the Subject
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose and (7) of the happening of any event which
makes any statement of a material fact made in any Registration Statement,
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in any Registration Statement, Prospectus
or any document incorporated therein by reference in order to make the
statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading; and use reasonable
best efforts to obtain as promptly as practicable the withdrawal of any order
or other action suspending the effectiveness of any Registration Statement or
suspending the qualification or registration (or exemption therefrom) of the
Subject Securities for sale in any jurisdiction;
(ii) if reasonably requested by the managing underwriter or underwriters
or the Holders of Subject Securities being sold in connection with an
Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Holders of the Subject Securities being sold in such Underwritten Offering
agree should be included therein relating to the sale of the Subject
Securities, including, without limitation, information with respect to the
aggregate number of shares of Subject Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the Underwritten Offering of the Subject
Securities to be sold in such offering; and promptly make all required filings
of such Prospectus supplement or post-effective amendment;
(iii) promptly after the filing of any document which is to be
incorporated by reference into a Registration Statement or Prospectus, provide
without charge copies of such document to the Holders of the Subject
Securities covered thereby and the underwriters, if any;
(iv) furnish to the selling Holders of Subject Securities and each managing
underwriter, without charge, at least one manually signed or "edgarized" copy,
and as many conformed copies as may reasonably be requested, of the then
effective Registration Statement and any post-effective amendments thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including those incorporated by
reference);
(v) deliver to the selling Holders and the underwriters, if any, without
charge, as many copies of the then effective Prospectus (including each
prospectus subject to completion) and any amendments or supplements thereto as
such Persons may reasonably request;
(vi) use reasonable best efforts to register or qualify or cooperate with
the selling Holders, the underwriters, if any, and their respective counsel in
connection
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with the registration or qualification of such Subject Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
selling Holder or underwriter reasonably requests in writing and do any and
all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Subject Securities covered by the
then effective Registration Statement; provided, however, that the Company
will not be required to (1) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph (vi) or
(2) subject itself to general taxation in any such jurisdiction;
(vii) cooperate with the selling Holders and the managing underwriters to
facilitate the timely preparation and delivery of certificates representing
Subject Securities to be sold and not bearing any restrictive legends; and
enable such Subject Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two (2) Business
Days prior to any sale of Subject Securities to the underwriters;
(viii) upon the occurrence of any event contemplated by clause (7) of
paragraph (i) above, promptly prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Subject Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading;
(ix) cause all Subject Securities covered by the Registration Statement
to be listed on each securities exchange (or quotation system operated by a
national securities association) on which identical securities issued by the
Company are then listed, and enter into customary agreements including, if
necessary, a listing application and indemnification agreement in customary
form, and provide a transfer agent for such Subject Securities;
(x) in the case of an Underwritten Offering, enter into an underwriting
agreement and take all such other actions in connection therewith in order to
expedite and facilitate the disposition of such Subject Securities, in each
case as the underwriters determine is reasonable and customary in transactions
of this kind, and in connection therewith: (1) make such representations and
warranties to the Holders of such Subject Securities and the underwriters in
form, substance and scope as are customarily made by issuers to underwriters
in secondary underwritten offerings; (2) obtain opinions of counsel to the
Company (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the underwriters and the selling Holders of such
Subject Securities and shall cover the matters customarily covered in opinions
requested in secondary underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters); (3) obtain "cold
comfort" letters from the independent public accountants of the Company
addressed to the selling Holders of such Subject Securities and the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings; and (4) deliver such documents and
certificates as may be
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reasonably requested by the selling Holders and the managing underwriters to
evidence compliance with clause (1) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company in respect of the relevant offering;
(xi) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC relating to such registration and the distribution of
the securities being offered and make generally available to its securities
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 60 days after the end of any 12-month period (or
90 days, if such period is a fiscal year) commencing at the end of any fiscal
quarter in which the Subject Securities are sold in an Underwritten Offering,
which earnings statements shall cover such 12-month periods;
(xii) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.; and
(xiii) make available for inspection by representatives of the Holders of
the Subject Securities covered by such Registration Statement, any
underwriters participating in any disposition pursuant to such registration,
and any attorneys or accountants retained by the selling Holders or the
underwriters, all financial and other records, pertinent corporate documents
and properties of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by, and to cooperate
fully with, any such representative, underwriter, attorney or accountant in
connection with such registration, and otherwise to cooperate fully in
connection with any due diligence investigation, including making available
its officers during ordinary business hours, and permitting discussions with
the independent public accountants who have certified the Company's most
recent annual financial statements, in each case to the extent necessary to
enable any Holder or underwriter to conduct a "reasonable investigation" for
purposes of Section 11(a) of the Securities Act; provided that such
representatives, underwriters, attorneys or accountants enter into a
confidentiality agreement, in customary form and substance reasonably
satisfactory to the Company, prior to the release or disclosure to them of any
such information, records or documents.
(b) Holder Information. The Company may require each selling Holder to
furnish to the Company for use in connection with the transactions contemplated
hereby such information regarding such Holder and the distribution of Subject
Securities to be sold by such Holder as the Company may from time to time
reasonably request in writing.
(c) Occurrence of Certain Events. Each Holder of Subject Securities agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 6(a)(i)(4), (6) or (7), such Holder will
forthwith refrain from disposing or discontinue disposition of Subject
Securities pursuant to the then current Prospectus until such Holder is advised
in writing by the Company that the use of the Prospectus may be resumed. The
Company shall use its reasonable best efforts to limit the duration of any
discontinuance with respect to the disposition of Subject Securities pursuant to
this paragraph.
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(d) Additional Procedures. If the Holders become entitled, pursuant to an
event described in clause (iv) of the definition of Subject Securities, to
receive any securities in respect of Subject Securities that were already
included in the Shelf Registration Statement subsequent to the date the Shelf
Registration Statement is declared effective, and the Company is unable under
the securities laws to add such securities to the Shelf Registration Statement,
the Company, as promptly as reasonably practicable, shall file, in accordance
with the procedures more particularly set forth in Section 6(a), an additional
Shelf Registration Statement with respect to any such Subject Securities. The
Company shall use its reasonable best efforts to have any such additional
Registration Statement declared effective as promptly as reasonably practicable
after such filing and to keep such additional Shelf Registration Statement
continuously effective for reasonable time thereafter not to exceed two years.
SECTION 7. HOLDBACK AGREEMENTS.
(a) Hold-Back Election. Subject to Section 7(c) and the final two
sentences of this Section 7(a), in the case of any Underwritten Offering
requested by such Holder, or in which such Holder is participating or is given a
substantial opportunity to participate, each Holder agrees, if and to the extent
requested in writing by the managing underwriter or underwriters administering
such offering as promptly as reasonably practicable prior to the commencement of
the 7-day period referred to below (a "Hold-Back Election"), not to effect any
public sale or distribution of securities of the Company except as part of such
Underwritten Offering, during the period beginning seven (7) days prior to the
closing date of such underwritten offering and during the period ending on the
earlier of (i) ninety (90) days after such closing date and (ii) the date such
sale or distribution is permitted by such managing underwriter or underwriters,
provided that, if and to the extent it is reasonable to do so, the Company will
request of the managing underwriter or underwriters to permit such sale or
distribution prior to the date permitted under clause (i) above.
(b) Material Development Election. Subject to Section 7(c), the Company shall
be entitled, for a period of time not to exceed sixty (60) consecutive days, to
require that the Holders refrain from effecting any distribution of their
Subject Securities pursuant to the Shelf Registration Statement if the chief
executive officer of the Company determines in his reasonable good faith
judgment that, in accordance with his understanding of the disclosure
requirements of applicable securities law, such distribution would require
disclosure of any financing (other than an underwritten secondary offering of
any securities of the Company), acquisition, corporate reorganization or other
transaction or development involving the Company or any subsidiary of the
Company that is or would be material to the Company and that, in the reasonable
good faith business judgment of such chief executive officer, such disclosure
would not at that time be in the best interests of the Company (a "Material
Development Election"). The Company shall, as promptly as practicable, give the
Holders written notice of any such Material Development Election. If the Holders
have been required to refrain from disposing of their Subject Securities as a
result of a Material Development Election, the Company shall, as promptly as
practicable following the determination that the Holders may recommence such
sales, notify such Holders in writing of such determination (but in any event no
later than the end of such 60-day period).
(c) Limitation. In no event shall the restrictions under Section 7(a)
or Section 7(b), pursuant to one or more Hold-Back Elections or Material
Development Elections, remain in
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effect for more than one hundred twenty (120) days in the aggregate in any
calendar year.
(d) Company Hold-Back. In the case of any Underwritten Offering of
Subject Securities pursuant to Section 3, the Company agrees, if and to the
extent requested in writing by the managing underwriter or underwriters
administering such offering, as promptly as reasonably practicable prior to the
commencement of the 7-day period referred to below, not to effect any public
sale or distribution for its own account (other than sales pursuant to the same
Registration Statement, as permitted under this Agreement and other than any
registration on Form S-8 or S-4 (or any successor or substantially similar form)
or of (A) an employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to any such plan, (B) securities proposed
to be issued in exchange for securities or assets of, or in connection with a
merger, combination or consolidation with, another corporation, or (C) a
dividend reinvestment plan) of any securities of the Company during the period
beginning seven (7) days prior to the closing date of each underwritten offering
of Subject Securities and during the period ending on the earlier of (i) forty-
five (45) days after such closing date and (ii) the date such sale or
distribution is permitted by such managing underwriter or underwriters; provided
that, if and to the extent it is reasonable to do so, the Holders will request
of the managing underwriter or underwriters to permit such sale or distribution
prior to the date permitted under clause (i) above.
SECTION 8. REGISTRATION EXPENSES. (a) General. Except as otherwise
set forth in this section, each of the Company, on the one hand, and the
Holders, on the other, will bear it own costs in connection with this Agreement,
including without limitation, internal expenses (including, without limitation,
all salaries and expenses of its officers and employees), fees and disbursements
of its outside counsel and its independent public accountants and fees and
expenses of any other experts or advisors.
(b) Company Expenses. The Company shall pay all printing expenses (including
expenses of printing and disseminating Prospectuses or any other necessary
documentation). The Company shall also pay all registration and filing fees and
fees and expenses of compliance with state securities or blue sky laws,
including reasonable fees and disbursements of counsel in connection with blue
sky qualifications or registrations (or the obtaining of exemptions therefrom),
except as provided in (c) below.
[(c) Holder Expenses. The Holders shall pay all expenses incurred by
the Company in connection with the participation in any "road show" of members
of the Company's management up to $________, as well as [ ].]
SECTION 9. INDEMNIFICATION.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, but without duplication,
each Holder, its officers, directors, employees, partners, principals, equity
holders, managed or advised accounts, advisors and agents, and each Person who
controls such Holder (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities, expenses, actions and proceedings
(including reasonable costs of investigation and reasonable legal fees and
expenses) that arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in, or any omission or alleged
omission of a material fact required to be contained in, any
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Registration Statement or Prospectus 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 insofar as the same are caused by or contained in
any information furnished in writing to the Company by any Holder or any
underwriters expressly for use therein. The Company will also indemnify
underwriters participating in the distribution, their officers, directors,
employees, partners and agents, and each Person who controls such underwriters
(within the meaning of the Securities Act), to the same extent as provided above
with respect to the indemnification of the Holders of Subject Securities, if so
reasonably requested.
(b) Indemnification by Holders of Subject Securities. In connection
with any Underwritten Offering or Registration Statement in which a Holder of
Subject Securities is participating, each such Holder will furnish to the
Company in writing such information as the Company reasonably requests for use
in connection with any such Underwritten Offering or Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the full extent
permitted by law, but without duplication, the Company, its officers, directors,
shareholders, employees, advisors and agents, and each Person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities, expenses actions and proceedings (including reasonable
costs of investigation and reasonable legal fees and expenses) that arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in, or any omission or alleged omission of a material fact
required to be contained in, the Registration Statement or Prospectus, 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, to the extent,
but only to the extent, that such untrue statement or omission is contained in
any information so furnished in writing by such Holder to the Company
specifically for inclusion therein. The Company and the other persons described
above shall be entitled to receive indemnities from underwriters participating
in the distribution, to the same extent as provided above with respect to
information so furnished in writing by such Persons specifically for inclusion
in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such indemnified Person
unless (A) the indemnifying party has agreed to pay such fees or expenses, (B)
the indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to the indemnified party in a timely
manner or (C) in the reasonable judgment of any such Person, based upon advice
of its counsel, a conflict of interest may exist between such person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person). The indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
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indemnified party of a release from all liability in respect of such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of the claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, as well as one local counsel in
each relevant jurisdiction.
(d) Contribution. If for any reason the indemnification provided for in
Section 9(a) or Section 9(b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Section 9(a) and Section
9(b), then the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party and the indemnified party, but also the
relative fault of the indemnifying party and the indemnified party, as well as
any other relevant equitable considerations, provided, that no indemnifying
Holder shall be required to contribute an amount greater than the dollar amount
of the net proceeds received by such indemnifying Holder with respect to the
sale of the Subject Securities giving rise to such indemnification obligation.
The relative fault of any indemnifying or of any indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying or
indemnified party or its affiliates or representatives, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 9(d) were
determined by (i) pro rata allocation (even if all Holders or any agents for
the Holders or any underwriters of the Subject Securities, or all of them, were
treated as one entity for such purpose), or (ii) by any other method that does
not take into account the equitable consideration referred to in this Section
9(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or 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 misrepresentations.
SECTION 10. UNDERWRITERS.
(a) Selection of Underwriters. Each underwriter for any Underwritten
Offering under the Shelf Registration Statement or otherwise contemplated by
this Agreement shall be a nationally recognized underwriter selected by the
Company and reasonably satisfactory to the Holders.
(b) Approved Underwriting Arrangements. No Holder may participate in
any Underwritten Offering of Subject Securities hereunder, unless such Holder
(i) agrees to sell such Holder's Subject Securities on the basis provided in any
underwriting arrangements approved by the managing underwriters for the
Underwritten Offering, and (ii) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 10 shall be construed to create any additional rights
regarding the registration of Subject
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Securities in any Person otherwise than as set forth herein.
SECTION 11. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this Section 11, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, without the consent in writing of the Company and the Holders
at least [66 2/3]%, in the aggregate, of the Subject Securities outstanding.
SECTION 12. REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically or to recover
damages or to exercise any other remedy available to it at law or in equity. The
foregoing rights and remedies shall be cumulative and the exercise of any right
or remedy provided herein shall not preclude any Person from exercising any
other right or remedy provided herein. Each of the Company and the Holders agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
SECTION 13. NOTICES; DESIGNATED HOLDERS. (a) Delivery. All notices, documents
and other communications required or permitted to be delivered hereunder shall,
in the case of notices and communications, be in writing and shall be delivered
by hand-delivery, registered first-class mail, telecopier, or air-courier
guaranteeing overnight delivery:
If to the Holders, or any of them, to such Holders at their
respective addresses shown on the records of the Company from time to time,
with a copy to ________________;
If to the Company, _______, with a copy to ____________; or
At such other address as may be designated from time to time by
notice given in accordance with the provisions of this Section 13.
(b) Receipt. All such notices and other communications shall be
deemed to have been delivered and received (x) in the case of personal delivery,
telecopier or telegram, on the date of such delivery, (y) in the case of air
courier, on the Business Day after the date when sent and (z) in the case of
mailing, on the third Business Day following such mailing.
SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties hereto, and all Holders. No party may assign its rights or
obligations under this Agreement to any other Person, except that any Holder may
assign its rights hereunder to any other Holder, or to such Holder's spouse or
child or a trust for the benefit of such Holder or such Holder's spouse or
child. This Agreement may be enforced by any Holder as though such person were
a party hereto.
SECTION 15. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed
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shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 16. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
THE PRINCIPLES OF THE CONFLICT OF LAWS THEREOF.
SECTION 18. JURISDICTION; FORUM. Each party hereto consents and submits to the
exclusive jurisdiction of any state court sitting in the County of New York or
federal court sitting in the Southern District of the State of New York in
connection with any dispute arising out of or relating to this Agreement. Each
party hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment. Each
party hereto agrees that personal service of process may be effected by any of
the means specified in Section 13, addressed to such party. The foregoing shall
not limit the rights of any party to serve process in any other manner permitted
by law.
SECTION 19. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 20. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 21. ATTORNEYS' FEES. In any proceeding brought to enforce any
provision of this Agreement, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COYOTE SPORTS, INC.
By:_________________________________________
Name:
Title:
[Investors]
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APPENDIX I
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