Exhibit 10.7
CHANGE OF CONTROL AGREEMENT
AGREEMENT made as of this 1st day of June, 1997, by and between Coyote Sports,
Inc., a Nevada corporation, with its principal offices located at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxx, XX 00000, (hereinafter the "Company"), and Xxxxx X. Xxxxxx,
residing at 0000 Xxxxx Xxxxx Xxx, Xxxxxxxxx, Xxxxxxxx 00000 (hereinafter the
"Officer").
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings set forth below:
(a) For the purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred if (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, beneficially owns 50% or
more of the Company's voting common stock; or, (b) at any time during
the period of three consecutive years (not including any period prior
to the date hereof), individuals who at the beginning of such period
constitute the Board (and any new director whose election by the Board
or whose nomination for election by the Company's stockholders were
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority thereof; or (c) the
stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation in which both (i) a majority of the directors of the
surviving entity were directors of the Company prior to such
consolidation or merger, and (ii) which would result in the voting
securities of the Company outstanding immediately prior thereto
continue to represent (either by remaining outstanding or by being
changed into voting securities of the surviving entity) at least 51% of
the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation; or
(d) the stockholders approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets.
(b) "Termination Date" shall mean the date following a Change of Control
when the Officer receives written notice that his employment is
terminated without Cause as defined in the Employment Agreement, or, if
later, such other termination date specified in the written notice.
(c) "Terminate" shall mean not only a complete termination of employment by
the Company or its successor but also a significant negative change in
the terms of
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employment with the Company or its successor, including but not limited
to a requirement to relocate or a significant reduction in salary and
benefits.
(d) "Termination Following a Change of Control" shall mean a termination
without Cause by the Company following or in connection with a change
of control or a termination by the Officer for "Good Reason" of the
Officer's employment with the Company within two years following a
"Change of Control" (as defined below).
(e) For purposes of this Agreement, "Good Reason" shall include, but not be
limited to, any of the following (without the Officer's express written
consent):
i) the assignment to the Officer by the Company of duties
inconsistent with or a substantial alteration in the nature or
status of, the Officer's responsibilities as in effect
immediately prior to a Change of Control;
ii) a reduction by the Company in the Officer's compensation or
benefits as in effect immediately prior to the date of a Change
of Control;
iii) a relocation of the Company's principal offices beyond 25 miles
from the present Boulder, Colorado location, or the Officer's
relocation to any place other than the Boulder, Colorado offices
of the Company, except for reasonably required travel by the
Officer on the Company's business;
iv) any material breach by the Company of any provision of this
Agreement if such material breach has not been cured within
thirty (30) days following written notice of such breach by the
Officer to the Company setting forth with specificity the nature
of the breach; or
v) any failure by the Company to obtain the assumption and
performance of the Employment Agreement and this Agreement by
any successor (by merger, consolidation or otherwise) or
assignee of the Company.
2. Severance Benefits. In the event there is a Termination Following a Change
of Control, the Officer shall be entitled to the following severance
benefits for a period of 12 months after the Termination Date:
(a) Continued base salary in regular biweekly payments, or if so elected
by the Officer, a lump sum payable within 30 days of the Officer's
election.
(b) Bonus payable in such amount as would be payable to the Officer had he
been employed by the Company for the full fiscal year during which the
termination occurred, and the Company had achieved Plan performance for
such fiscal year. Such bonus shall be paid in the same manner as
elected by the Officer in (a) above;
(c) Continued medical, dental, life and disability insurance benefits; and
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(d) Continued retirement benefits, including 401(k) plan.
Such benefits shall be identical to the salary, bonus, insurance and
retirement plan benefits to which the Officer was entitled immediately
prior to the Change of Control. During such 12-month period, the Officer
shall continue to be an employee of the Company for purposes of
participation in the plans which provide the benefits described in
subsections (c) and (d) above but shall have no further responsibilities as
an employee and shall not be required or permitted to continue his former
duties. Subject to Section 3, the Officer shall be free to accept other
employment during such period, and there shall be no offset of any
employment compensation earned by Officer in such other employment during
such period against payments due the Officer hereunder, and there shall be
no offset in any compensation or benefits received from such other
employment against the continued salary and benefits set forth above.
3. Stock Option Vesting. In the event of a Termination Following a Change of
Control, all outstanding stock options held by the Officer which are not
then exercisable, shall become exercisable in their entirety as of the date
immediately preceding the Termination Date.
4. Noncompetition Agreement. Officer acknowledges that the Company has trade
secrets and confidential information, that as Chief Operating Officer he
will have access to all such trade secrets and confidential information and
that in performing duties in an executive position for another company he
might necessarily use and divulge such trade secrets and confidential
information. Therefore, in consideration for the severance benefits set
forth above, the Officer agrees that for a period of 12 months subsequent
to the Termination Date, the Officer will not, directly or indirectly:
(a) Call upon any person or entity which was a customer of the Company
immediately prior to the Termination Date for the purpose of diverting,
taking away the business of, or selling products or services
competitive with significant products or services provided by the
Company;
(b) In any manner, misuse or divulge to any person any list of customers,
confidential information or trade secrets of the Company;
(c) Alone or in any capacity solicit or in any manner attempt to solicit or
induce any person or persons employed by the Company within one year
prior to the Termination Date to leave such employment;
(d) Within the United States of America, either as an employee, employer,
consultant, agent, principal, partner, more than 5% stockholder,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is
in competition in any significant manner with any material business
conducted by the Company on the Termination Date.
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5. Termination. This Agreement may be terminated only as follows:
(a) by mutual written agreement of the parties;
(b) upon termination of Officer's employment prior to, and not in
connection with, a Change of Control.
(c) when the Officer attains age 65.
6. Severability. Should a court or other body of competent jurisdiction
determine that any provision of this Agreement is excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather
than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid
and enforceable to the extent possible.
7. Assignment. The parties may assign their economic rights under this
Agreement but shall not assign any personal obligations from this
Agreement.
8. Miscellaneous. This Agreement: (a) contains the entire agreement among the
parties regarding the subject matter hereof and supersedes any prior
agreements on this subject between the parties; (b) may not be amended nor
may any rights hereunder be waived except by an instrument in writing
signed by the party sought to be charged with such amendment or waiver; (c)
shall be construed in accordance with, and governed by, the laws of
Colorado; and (d) shall be binding upon and shall inure to the benefit of
the parties and their respective personal representatives and permitted
assigns, including, without limitation, any successor to the business of
the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
THE OFFICER: THE COMPANY:
Coyote Sports, Inc.
By:
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Xxxxx X. Xxxxxx Xxx X. Xxxxxxxxxxx, President
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