<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )1
Royal Precision, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
780921-10-2
- --------------------------------------------------------------------------------
(CUSIP Number)
Kenneth J. Warren, Esq.
5920 Cromdale Drive, Suite 1
Dublin, Ohio 43017
(614) 766-1969
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 2, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b)(3) or (4), check the following
box |_|.
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Page 1 of 118 Pages)
(Continued on following pages)
- ---------------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE> 2
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CUSIP No. 780921-10-2 Page 2 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Berenson Minella & Company, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: New York
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ---------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,231,741
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
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CUSIP No. 780921-10-2 Page 3 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Berenson Minella Investment Partnership, L.P.
No. VI
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,231,741
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
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CUSIP No. 780921-10-2 Page 4 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Berenson Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,231,741
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
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CUSIP No. 780921-10-2 Page 5 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Minella Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ---------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,231,741
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
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CUSIP No. 780921-10-2 Page 6 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Raymond J. Minella
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,240,091
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 7
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CUSIP No. 780921-10-2 Page 7 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Jeffrey L. Berenson
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 1,231,741
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,231,741
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,231,741
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 8
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CUSIP No. 780921-10-2 Page 8 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Richard P. Johnston
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 646,309
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 646,309
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
671,361
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 11.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON * : IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 9
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CUSIP No. 780921-10-2 Page 9 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Jayne A. Johnston
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(b)|X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 646,309
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 646,309
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
671,361
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 11.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON * : IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 10
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CUSIP No. 780921-10-2 Page 10 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Richard P. Johnston and Jayne A. Johnston
Charitable Remainder Trust #3
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Wyoming
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 646,309
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 646,309
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 646,309
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES *
|_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 11.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*: OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 11
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CUSIP No. 780921-10-2 Page 11 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Danny Edwards
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 526,502
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 526,502
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
589,052
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 10.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 12
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CUSIP No. 780921-10-2 Page 12 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Kenneth J. Warren
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 334,031
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 334,031
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
349,354
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON * : IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 13
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CUSIP No. 780921-10-2 Page 13 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: David E. Johnston
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 208,769
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 208,769
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
219,875
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 3.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON * : IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 14
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CUSIP No. 780921-10-2 Page 14 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Ronald L. Chalmers
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|X|
(b)|_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES ----------------------------------------------------------
8 SHARED VOTING POWER: 125,261
BENEFICIALLY
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING ----------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 125,261
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
130,814
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 2.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 15
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CUSIP No. 780921-10-2 Page 15 of 118 Pages
- -------------------------- ------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Lawrence Bain
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|X|
(b)|_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*: OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER:
SHARES
8 SHARED VOTING POWER: 12,500
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER: 12,500
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
18,125
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES * |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *: IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 16
ITEM 1. SECURITY AND ISSUER.
The title and class of equity securities to which this statement
relates: common stock, par value $.001 per share of Royal Precision, Inc.
("Common Stock")
The name and address of the principal executive offices of the issuer:
Royal Precision, Inc., 15170 North Hayden Road, Suite 1, Scottsdale, Arizona
85260.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed on behalf of a "group" as such term is
used in Section 13(d)(3) of the Securities and Exchange Act of 1934, as amended
(the "1934 Act"). The members of the group ("Group") are: Berenson Minella &
Company, L.P., Berenson Minella Investment Partnership, L.P. No. VI, Berenson
Corp., Minella Corp., Raymond J. Minella, Jeffrey L. Berenson, Richard P.
Johnston, Jayne A. Johnston, Richard P. Johnston and Jayne A. Johnston
Charitable Remainder Trust #3, Danny Edwards, Kenneth J. Warren, David E.
Johnston, Ronald L. Chalmers and Lawrence Bain.
Berenson Minella & Company, L.P. is the sole general partner of
Berenson Minella Investment Partnership, L.P. No. VI. Pursuant to the Berenson
Minella Investment Partnership L.P. No. VI partnership agreement, the shares of
Common Stock registered in the name of Berenson Minella & Company, L.P. have
been contributed to Berenson Minella Investment Partnership, L.P. No. VI.
Berenson Corp., an S corporation owned by Jeffrey L. Berenson, and
Minella Corp., an S corporation owned by Raymond J. Minella, are the general
partners of Berenson Minella & Company, L.P.
Richard P. Johnston and Jayne A. Johnston are the trustees of the
Richard P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3.
Additional information about the members of the group is provided
below.
Berenson Minella & Company, L.P.
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
State of Organization: Delaware
Berenson Minella Investment Partnership, L.P. No. VI
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
State of Organization: Delaware
Berenson Corp.
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
State of Organization: Delaware
16
<PAGE> 17
Minella Corp.
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
State of Organization: Delaware
Raymond J. Minella
Managing General Partner
Berenson Minella & Company, L.P.
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
Jeffrey L. Berenson
Managing General Partner
Berenson Minella & Company, L.P.
667 Madison Avenue
New York, New York 10021
Principal Business: Investment Banking
Richard P. Johnston
Director; Chairman of the Board
Royal Precision, Inc.
15170 North Hayden Road, Suite 1
Scottsdale, Arizona 85260
Principal Business: Golf equipment manufacturing and sales
Jayne A. Johnston
Trustee
Richard P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3
9651 North Pusch Ridge Place
Tucson, Arizona 85737
Principal Business: Investment
Richard P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3
9651 North Pusch Ridge Place
Tucson, Arizona 85737
Principal Business: Investment
State of Organization: Wyoming
Danny Edwards
Director; Vice Chairman of the Board
Royal Precision, Inc.
15170 North Hayden Road, Suite 1
Scottsdale, Arizona 85260
Principal Business: Golf equipment manufacturing and sales
17
<PAGE> 18
Kenneth J. Warren
Attorney
5920 Cromdale Drive, Suite 1
Dublin, Ohio 43017
David E. Johnston
Vice President
Royal Precision, Inc.
15170 North Hayden Road, Suite 1
Scottsdale, Arizona 85260
Principal Business: Golf equipment manufacturing and sales
Ronald L. Chalmers
Director; Executive Vice President-Administration/Manufacturing
Royal Precision, Inc.
15170 North Hayden Road, Suite 1
Scottsdale, Arizona 85260
Principal Business: Golf equipment manufacturing and sales
Lawrence Bain
Senior Vice President/Managing Director
EVEREN Securities, Inc.
77 W. Wacker Drive
Suite 3100
Chicago, Illinois 60601
Principal Business: Advisory and consulting services
During the last five years, none of the above named persons has either
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding been subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In order to induce Coyote Sports, Inc. ("CSI") to enter into an
Agreement and Plan of Merger (the "Merger Agreement") dated February 2, 1999 by
and among the Company, CSI and RP Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of CSI ("RPAC"), described in more detail in Item 6
hereof, Berenson Minella & Company, L.P., Richard P. Johnston and Jayne A.
Johnston Charitable Remainder Trust #3, Danny Edwards, Kenneth J. Warren, David
E. Johnston, Ronald L. Chalmers and Lawrence Bain each entered into a Voting
Agreement with CSI, described in more detail in Item 4 hereof.
18
<PAGE> 19
ITEM 4. PURPOSE OF TRANSACTION.
The Group was formed by Berenson Minella & Company, L.P., Richard P.
Johnston and Jayne A. Johnston Charitable Remainder Trust #3, Danny Edwards,
Kenneth J. Warren, David E. Johnston, Ronald L. Chalmers and Lawrence Bain, who
collectively have beneficial ownership of 34.3% of the outstanding shares of
Common Stock (each sometimes hereinafter referred to as a "Stockholder" and
collectively as "Stockholders"), each entering into a voting agreement with CSI
dated February 2, 1999 (collectively the "Voting Agreement").
Pursuant to the terms of the Voting Agreement, each Stockholder agreed
to (i) not transfer, sell, exchange, pledge or otherwise dispose of or encumber
any of such Stockholders shares of Common Stock or to make any offer or
agreement relating to such action at any time prior to the earlier of the
completion of the merger ("Merger") between the Company and RPAC contemplated by
the Merger Agreement or the termination of the Merger Agreement, (ii) vote such
Stockholder's shares of Common Stock in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger, (iii)
vote such Stockholders's shares of Common Stock against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other agreement or obligation of the Company under the Merger Agreement, (iv)
vote such Stockholders's shares of Common Stock against any extraordinary
corporate transaction, such a merger, consolidation or any business combination
involving the Company or any of its subsidiaries, (v) vote such Stockholders's
shares of Common Stock against a sale, lease or transfer of a material amount of
assets by the Company or its subsidiaries other than in the ordinary course of
business, (vi) vote such Stockholders's shares of Common Stock against any other
action involving the Company or its subsidiaries which is intended or which
reasonably could be expected to impede, interfere with, delay, postpone or
materially adversely affect the Merger and the transactions contemplated by the
Merger Agreement, (vii) not solicit proxies or to become a participant in a
solicitation or otherwise encourage or assist any party in taking or planning
any action that would compete with, restrain or otherwise serve to interfere
with or inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement, (viii) not initiate a stockholders' vote or
action by consent of Company stockholders with respect to another acquisition
proposal or an alternative transaction, (ix) not become a member of a group (as
such term is defined in Section 13(d) of the Securities Exchange Act of 1934)
with respect to any voting securities of the Company with respect to another
acquisition proposal or alternative transaction, (x) not have discussions with
any third party concerning an alternative transaction, and (xi) not permit any
officer, director, employee, controlled affiliate, investment banker or other
agent of the Stockholder to solicit, engage in discussions or negotiate with any
person or take any other action intended or designed to facilitate the efforts
of any person, other than CSI, relating to an alternative transaction, or to
provide information with respect to the Company or any of the Company's
subsidiaries to any person, other than Coyote, relating to a possible
alternative transaction by any person, other than Coyote, or enter into any
agreement with any person, other than Coyote, providing for an alternative
transaction, or make or authorize any statement, recommendation or solicitation
in support of any possible alternative transaction by any person, other than
CSI.
Pursuant to the Voting Agreement, each Stockholder appointed Jim Probst
and J.P. McNeill or either of them as such Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Stockholder, to vote such Stockholder's shares of Common Stock,
or to grant or not grant a consent or approval in respect of such shares, at any
meeting of Stockholders of the Company or at any adjournment thereof or in any
other circumstances, including, without limitation, a solicitation of
stockholder consents to action without a meeting, upon which the Stockholder's
vote, consent or other approval is sought, in respect of any subject matter.
19
<PAGE> 20
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
Berenson Minella & Company, L.P., Berenson Minella Investment
Partnership, L.P. No. VI, Berenson Corp., Minella Corp., Raymond J. Minella,
Jeffrey L. Berenson, Richard P. Johnston, Jayne A. Johnston, Richard P. Johnston
and Jayne A. Johnston Charitable Remainder Trust #3, Danny Edwards, Kenneth J.
Warren, David E. Johnston, Ronald L. Chalmers and Lawrence Bain as a group.
<TABLE>
<S> <C>
Aggregate number of shares of Common Stock beneficially owned (including
133,559 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 3,218,672
Percentage of class (1): 55.5%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 3,085,113
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 3,085,113
Berenson Minella & Company, L.P.:
Aggregate number of shares of Common Stock beneficially owned: 1,231,741
Percentage of class (1): 21.7%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
Berenson Minella Investment Partnership, L.P. No. VI:
Aggregate number of shares of Common Stock beneficially owned: 1,231,741
Percentage of class (1): 21.7%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Berenson Corp.:
<S> <C>
Aggregate number of shares of Common Stock beneficially owned: 1,231,741
Percentage of class (1): 21.7%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
Minella Corp.:
Aggregate number of shares of Common Stock beneficially owned: 1,231,741
Percentage of class (1): 21.7%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
Raymond J. Minella:
Aggregate number of shares of Common Stock beneficially owned (including
8,350 shares which may be acquired pursuant to stock options within 60 days
of the Group formation): 1,240,091
Percentage of class (1): 21.9%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Jeffrey L. Berenson:
<S> <C>
Aggregate number of shares of Common Stock beneficially owned: 1,231,741
Percentage of class (1): 21.7%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 1,231,741
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 1,231,741
Richard P. Johnston:
Aggregate number of shares of Common Stock beneficially owned (including
25,052 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 671,361
Percentage of class (1): 11.8%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 646,309
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 646,309
Jayne A. Johnston:
Aggregate number of shares of Common Stock beneficially owned (including
25,052 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 671,361
Percentage of class (1): 11.8%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 646,309
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 646,309
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C>
Raymond P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3:
Aggregate number of shares of Common Stock beneficially owned: 646,309
Percentage of class (1): 11.4%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 646,309
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 646,309
Danny Edwards:
Aggregate number of shares of Common Stock beneficially owned (including
62,550 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 589,052
Percentage of class (1): 10.3%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 526,502
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 526,502
Kenneth J. Warren:
Aggregate number of shares of Common Stock beneficially owned (including
15,323 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 349,354
Percentage of class (1): 6.2%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 334,031
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 334,031
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
David E. Johnston:
<S> <C>
Aggregate number of shares of Common Stock beneficially owned (including
11,106 shares which may be acquired pursuant to stock options within 60
days of the Group formation): 219,875
Percentage of class (1): 3.9%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 208,769
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 208,769
Ronald L. Chalmers:
Aggregate number of shares of Common Stock beneficially owned (including
5,553 shares which may be acquired pursuant to stock options within 60 days
of the Group formation): 130,814
Percentage of class (1): 2.3%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 125,261
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 125,261
Lawrence Bain:
Aggregate number of shares of Common Stock beneficially owned (including
5,625 shares which may be acquired pursuant to stock options within 60 days
of the Group formation): 18,125
Percentage of class (1): 0.3%
Number of shares subject to sole voting power: 0
Number of shares subject to shared voting power: 12,500
Number of shares subject to sole dispositive power: 0
Number of shares subject to shared dispositive power 12,500
</TABLE>
(1) Based on 5,667375 outstanding shares of Common Stock. The percent owned
calculations are based on the number of shares of Common Stock outstanding plus,
where appropriate, those shares subject to unexercised options which are
exercisable within 60 days.
24
<PAGE> 25
Except as described in in this Item 5 and in Item 4 and Item 6 hereof,
no member of the Group effected any transactions in Common Stock during the past
60 days.
Danny Edwards had the following stock options: (1) an option to
purchase 2, 357 shares of Common Stock for $5.50 per share which option was 100%
vested and expired on November 15, 2001, (2) an option to purchase 40,193 shares
of Common Stock for $6.06 per share which option was 100% vested and expired on
November 15, 2001, and (3) an option to purchase 20,000 shares of Common Stock
for $6.60 per share which option was 66% vested and expired on April 21, 2001.
On January 28, 1999, in order to induce Mr. Edwards to enter the Voting
Agreement, the Company agreed to cancel Mr. Edwards' stock options and grant new
options for an equal number of shares of Common Stock which options would be
immediately vested, have an exercise price of $3.19 per share and expire on
January 28, 2004.
Lawrence Bain had an option to purchase 5,625 shares of Common Stock
for $13.00 per share which option was 100% vested and expired by January 2000.
On January 28, 1999, in order to induce Mr. Bain to enter the Voting Agreement,
the Company agreed to cancel Mr. Bain's stock option and grant a new option for
an equal number of shares of Common Stock which options would be immediately
vested, have an exercise price of $3.19 per share and expire on January 28,
2004.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Merger Agreement.
Upon the terms and subject to the conditions contained in the Merger
Agreement, on the date on which a Certificate of Merger is filed or at such time
thereafter as is provided in the Certificate of Merger (the "Effective Date"),
RPAC shall be merged with and into the Company which shall be the surviving
corporation in the Merger (the "Surviving Corporation"), the separate existence
of RPAC shall thereupon cease, and the name of the Surviving Corporation shall
by virtue of the Merger remain "Royal Precision, Inc."
The parties intend that the Merger be a tax-free reorganization and
intend to consummate the Merger in accordance with the provisions of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code ("Code"). CSI
intends to continue the Company's historic business or to use a significant
portion of the Company's business assets in a business.
As of the Effective Date, by virtue of the Merger and without any
action on the part of any holder of any shares of Common Stock:
(a) All shares of Common Stock which are held by the
Company or any subsidiary of the Company shall be canceled.
(b) Except with regard to fractional shares, each
remaining outstanding share of Common Stock shall be converted
into that number of fully paid and nonassessable shares of the
Convertible Preferred Stock, $.001 par value, of CSI ("CSI
Preferred Stock"), determined by dividing (i) the number of
shares of CSI's Common Stock, par value $.001 per share ("CSI
Common Stock"), actually issued and outstanding as of the
Effective Date by (ii) the number of shares of Common Stock
actually issued and outstanding as of the Effective Date,
carried to four decimal places (the "Exchange Ratio").
(c) Each issued and outstanding share of common
stock, without par value, of RPAC ("Merger Sub Common Stock")
shall be converted into and become one fully paid and
nonassessable share of common stock, $.001 par value, of the
Surviving Corporation.
25
<PAGE> 26
No dividends or other distributions that are declared or made on CSI
Preferred Stock will be paid to persons entitled to receive certificates
representing CSI Preferred Stock pursuant to the Merger Agreement until such
persons surrender their Certificates representing Common Stock. Upon such
surrender, there shall be paid to the person in whose name the certificates
representing such CSI Preferred Stock shall be issued any dividends or other
distributions which shall have become payable with respect to such CSI Preferred
Stock in respect of a record date after the Effective Date. In no event shall
the person entitled to receive such dividends be entitled to receive interest on
such dividends. If any cash in lieu of fractional shares or any certificate
representing CSI Preferred Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the exchange agent any transfer or
other taxes required by reason of the issuance of certificates for such CSI
Preferred Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the exchange
agent that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the exchange agent nor any party hereto shall be liable to a
holder of shares of Common Stock for any shares of CSI Preferred Stock or
dividends thereon properly delivered to a public official pursuant to any
applicable escheat laws.
No certificates or scrip representing less than one share of CSI
Preferred Stock shall be issued upon the surrender for exchange of Certificates
representing Common Stock. In lieu of any such fractional share, each holder of
Common Stock who would otherwise have been entitled to a fraction of a share of
CSI Preferred Stock upon surrender of Certificates for exchange shall be paid
upon such surrender cash (without interest) in an amount equal to (x) such
fractional interest multiplied by (y) the product of $6.00 multiplied by the
reciprocal of the Exchange Ratio. As soon as practicable after the determination
of the amount of cash to be paid to former stockholders of the Company in lieu
of any fractional interests, CSI shall make available to the exchange agent,
which shall in turn make available in accordance with the Merger Agreement, such
amounts to such former stockholders.
Each option or warrant to purchase Common Stock issued pursuant to the
Royal Precision, Inc. Stock Option Plan and the FM Precision Golf Corp. 1997
Stock Option Plan, or otherwise which is outstanding as of the Effective Date
(individually, an "RP Option" and, collectively, the "RP Options") shall be
assumed by CSI and converted into an option or warrant (or a substitute option
shall be granted) to purchase the number of shares of CSI Common Stock (rounded
to the nearest whole share) equal to the number of shares of CSI Preferred Stock
into which the number of shares of Common Stock subject to such RP Option would
have been converted pursuant to the Merger (that is, the number of shares of
Common Stock subject to such RP Option multiplied by the Exchange Ratio), at an
exercise price per share of CSI Preferred Stock (rounded to the nearest penny)
equal to the former exercise price per share of Common Stock under the RP Option
immediately prior to the Effective Date multiplied by the reciprocal of the
Exchange Ratio; provided, however, that in the case of any RP Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the conversion formula shall be adjusted, if necessary, to comply
with Section 424(a) of the Code and the regulations issued thereunder. Except as
otherwise provided in the applicable plan or agreement granting the RP Options,
the duration, vesting and other terms of each new option to purchase shares of
CSI Common Stock shall be the same as the original RP Option except that all
references in the option agreement to the Company shall be deemed to be
references to CSI. CSI and the Company agree to take such action as may be
necessary to effectuate the foregoing provisions.
As soon as practicable after the Effective Date, CSI shall deliver to
each holder of an option to purchase CSI Common Stock a notice that accurately
reflects the changes to such option contemplated by the Merger Agreement.
Each of the Company and CSI shall take all action reasonably necessary,
in accordance with applicable law and their respective certificate or articles
of incorporation and by-laws, to convene a special meeting of the holders of
Common Stock (the "RP Meeting") and a special meeting of the holders of CSI
Common Stock (the "CSI Meeting") as promptly as practicable for the purpose of
considering and taking action upon the Merger Agreement. Except as provided
otherwise in the Merger Agreement, the board of directors of the Company will
recommend that holders of Common Stock vote to approve the Merger and to adopt
the Merger Agreement at the RP Meeting and the board of
26
<PAGE> 27
directors of CSI will recommend that holders of CSI Common Stock vote to approve
an increase in the number of authorized shares of the CSI Preferred Stock and
the issuance of CSI Preferred Stock pursuant to the Merger at the CSI Meeting.
Each of CSI, RPAC and the Company shall provide all reasonable
assistance to, and shall cooperate with, each other to bring about the
consummation of the Merger as soon as practicable in accordance with the terms
and conditions of the Merger Agreement. CSI shall cause RPAC to perform all of
its obligations in connection with the Merger Agreement.
Options Granted by Mr. Edwards to Mr. Burg.
On December 9, 1997, Danny Edwards, in his individual capacity,
conveyed to Robert G.J. Burg II two stock grant awards, each representing the
equivalent of 50,000 shares of Common Stock. Mr. Burg may exercise his rights
under the first stock grant award at any time prior to December 9, 2007, in
whole or in part, and upon such exercise will be entitled to receive from Mr.
Edwards an amount equal to the reported closing price per share of the Common
Stock on the date next preceding the exercise date multiplied by the number of
equivalent share rights exercised. Mr. Burg may exercise his rights under the
second stock grant award at any time prior to December 9, 2007, in whole or in
part, and upon such exercise will be entitled to receive from Mr. Edwards an
amount equal to the excess of the reported closing price per share of the Common
Stock on the date next preceding the exercise date over $8.00 per share,
multiplied by the number of equivalent shares exercised. The amounts to be paid
to Mr. Burg by Mr. Edwards upon exercise of either award may be paid either in
cash, in shares of Common Stock owned by Mr. Edwards, or in any combination of
cash and Common Stock.
<TABLE>
<CAPTION>
PAGE IN
ITEM 7.MATERIAL TO BE FILED AS EXHIBITS. MANUALLY SIGNED
ORIGINAL
<S> <C> <C>
(1) Statement Pursuant to Rule 13d-1(f) 31
(2) Voting Agreement between Coyote Sports, Inc. and Berenson Minella & Company, 33
L.P. dated February 2, 1999.
(3) Voting Agreement between Coyote Sports, Inc. and Richard P. Johnston and Jayne A. 39
Johnston Charitable Remainder Trust #3 dated February 2, 1999.
(4) Voting Agreement between Coyote Sports, Inc. and Danny Edwards dated February 2, 45
1999.
(5) Voting Agreement between Coyote Sports, Inc. and Kenneth J. Warren dated 51
February 2, 1999.
(6) Voting Agreement between Coyote Sports, Inc. and David E. Johnston dated February 57
2, 1999.
(7) Voting Agreement between Coyote Sports, Inc. and Ronald L. Chalmers dated 62
February 2, 1999.
(8) Voting Agreement between Coyote Sports, Inc. and Lawrence Bain dated February 2, 67
1999.
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
PAGE IN
ITEM 7.MATERIAL TO BE FILED AS EXHIBITS. MANNUALLY SIGNED
ORIGINAL
<S> <C> <C>
(9) Agreement and Plan of Merger dated February 2, 1999 among Coyote Sports, Inc., RP 72
Acquisition Corp. and Royal Precision, Inc.
(10) Stock Grant Award given to Robert G.J. Burg II by Danny Edwards on December 9, 114
1997.
(11) Royal Precision, Inc. letter dated January 28, 1999 to Danny Edwards. 117
</TABLE>
28
<PAGE> 29
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: February 10, 1999
BERENSON MINELLA & COMPANY, L.P.
By:/s/ Gregg Feinstein
-----------------------------------
Print Name:Gregg Feinstein
---------------------------
Title:Partner
--------------------------------
RICHARD P. JOHNSTON AND JAYNE A. JOHNSTON BERENSON MINELLA INVESTMENT
CHARITABLE REMAINDER TRUST #3 PARTNERSHIP, L.P. NO. VI
By:/s/ Richard P. Johnston By:/s/ Gregg Feinstein
----------------------------------- -----------------------------
Print Name:/s/ Richard P. Johnston Print Name:Gregg Feinstein
--------------------------- ---------------------
Title:Trustee Title:Partner of GP
-------------------------------- --------------------------
MINELLA CORP. BERENSON CORP.
By:/s/ Raymond Minella By: /s/ Jeffrey Berenson
----------------------------------- -----------------------------
Print Name:Raymond Minella Print Name:Jeffrey Berenson
--------------------------- ---------------------
Title:Shareholder Title:Shareholder
-------------------------------- --------------------------
/s/ Raymond J. Minella /s/ Jeffrey L. Berenson
- -------------------------------------- --------------------------------
Raymond J. Minella Jeffrey L. Berenson
/s/ Richard P. Johnston /s/ Jayne A. Johnston
- -------------------------------------- --------------------------------
Richard P. Johnston Jayne A. Johnston
29
<PAGE> 30
/s/ Danny Edwards /s/ Kenneth J. Warren
- -------------------------------------- --------------------------------
Danny Edwards Kenneth J. Warren
/s/ David E. Johnston /s/ Ronald L. Chalmers
- -------------------------------------- --------------------------------
David E. Johnston Ronald L. Chalmers
/s/ Lawrence Bain
- --------------------------------------
Lawrence Bain
30
<PAGE> 1
Exhibit 1
STATEMENT PURSUANT TO RULE 13d-1(f)
The undersigned parties hereto, BERENSON MINELLA & COMPANY, L.P.,
BERENSON MINELLA INVESTMENT PARTNERSHIP, L.P. NO. VI, BERENSON CORP., MINELLA
CORP., RAYMOND J. MINELLA, JEFFREY L. BERENSON, RICHARD P. JOHNSTON, JAYNE A.
JOHNSTON, RICHARD P. JOHNSTON AND JAYNE A. JOHNSTON CHARITABLE REMAINDER TRUST
#3, DANNY EDWARDS, KENNETH J. WARREN, DAVID E. JOHNSTON, RONALD L. CHALMERS and
LAWRENCE BAIN, hereby consent and agree to file a joint statement on Schedule
13D under the Securities Exchange Act of 1934, as amended, on behalf of each of
them, with respect to shares of common stock of Royal Precision, Inc.
beneficially owned by them, together with any or all amendments thereto, when
and if appropriate. The parties hereto further consent and agree to file this
Statement pursuant to Rule 13d-1(f) as an exhibit to such Schedule 13D, thereby
incorporating the same into such Schedule 13D.
Dated: February 10, 1999
BERENSON MINELLA & COMPANY, L.P.
By:/s/ Gregg Feinstein
----------------------------
Print Name:Gregg Feinstein
--------------------
Title: Partner
-------------------------
RICHARD P. JOHNSTON AND JAYNE A. JOHNSTON BERENSON MINELLA INVESTMENT
CHARITABLE REMAINDER TRUST #3 PARTNERSHIP, L.P. NO. VI
By:/s/ Richard P. Johnston By:/s/ Gregg Feinstein
---------------------------- ----------------------------
Print Name:Richard P. Johnston Print Name:Gregg Feinstein
-------------------- --------------------
Title:Trustee Title:Partner of GP
------------------------- -------------------------
MINELLA CORP. BERENSON CORP.
By:/s/ Raymond J. Minella By:/s/ Jeffrey Berenson
---------------------------- ----------------------------
Print Name:Raymond J. Minella Print Name:Jeffrey Berenson
-------------------- --------------------
Title:Shareholder Title:Shareholder
------------------------- -------------------------
31
<PAGE> 2
/s/ Raymond J. Minella /s/ Jeffrey L. Berenson
- ----------------------------- -------------------------------
Raymond J. Minella Jeffrey L. Berenson
/s/ Richard P. Johnston /s/ Jayne A. Johnston
- ----------------------------- -------------------------------
Richard P. Johnston Jayne A. Johnston
/s/ Danny Edwards /s/ Kenneth J. Warren
- ----------------------------- -------------------------------
Danny Edwards Kenneth J. Warren
/s/ David E. Johnston /s/ Ronald L. Chalmers
- ----------------------------- -------------------------------
David E. Johnston Ronald L. Chalmers
/s/ Lawrence Bain
- -----------------------------
Lawrence Bain
32
<PAGE> 1
Exhibit 2
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Berenson Minella & Company, L.P. (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
33
<PAGE> 2
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative
34
<PAGE> 3
Transaction. Notwithstanding the above, the Stockholder may take any
actions in the Stockholder's role as a director of Royal permitted
under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
35
<PAGE> 4
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
36
<PAGE> 5
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Berenson Minella & Company, L.P.
667 Madison Avenue, 27th Floor
Mew York, New York 10021
Telecopier No.: (212) 935-1499
Telephone No.: (602) 935-7676
Attn.: Raymond J. Minella
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
37
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By: /s/ James M. Probst
-----------------------------------
Title:President
---------------------------------
BERENSON MINELLA & COMPANY, L.P.
By: /s/ Raymond J. Minella
-----------------------------------
Raymond J. Minella, General Partner
1,231,741 shares of Common Stock
0 shares of Common Stock
subject to options
38
<PAGE> 1
Exhibit 3
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
Februay 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Richard P. Johnston and Jayne A. Johnston Charitable Remainder
Trust #3 (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
39
<PAGE> 2
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative
40
<PAGE> 3
Transaction. Notwithstanding the above, the Stockholder may take any
actions in the Stockholder's role as a director of Royal permitted
under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
41
<PAGE> 4
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
42
<PAGE> 5
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Royal Precision, Inc.
15170 North Hayden Road
Scottsdale, Arizona 89260
Telecopier No.: (602) 627-0206
Telephone No.: (602) 627-0270
Attn.: Richard P. Johnston and
Jayne A. Johnston
Charitable Remainder Trust #3
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
43
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By: /s/ James M. Probst
----------------------------------
Title: President
--------------------------------
RICHARD P. JOHNSTON AND JAYNE A.
JOHNSTON CHARITABLE REMAINDER
TRUST #3
By: /s/ Richard P. Johnston, Trustee
----------------------------------
Richard P. Johnston, Trustee
626,309 shares of Common Stock
0 shares of Common Stock
subject to options
44
<PAGE> 1
Exhibit 4
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Danny Edwards (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
45
<PAGE> 2
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative
46
<PAGE> 3
Transaction. Notwithstanding the above, the Stockholder may take any
actions in the Stockholder's role as a director of Royal permitted
under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
47
<PAGE> 4
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
48
<PAGE> 5
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Royal Precision, Inc.
15170 North Hayden Road
Scottsdale, Arizona 89260
Telecopier No.: (602) 627-0206
Telephone No.: (602) 627-0270
Attn.: Danny Edwards
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
49
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By:/s/ James M. Probst
----------------------------------
Title:President
-------------------------------
DANNY EDWARDS
/s/ Danny Edwards
-------------------------------------
520,752 shares of Common Stock
62,550 shares of Common Stock
subject to options
50
<PAGE> 1
Exhibit 5
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Kenneth J. Warren (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
51
<PAGE> 2
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative
52
<PAGE> 3
Transaction. Notwithstanding the above, the Stockholder may take any
actions in the Stockholder's role as a director of Royal permitted
under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
53
<PAGE> 4
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
54
<PAGE> 5
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Law Offices of Kenneth J. Warren
592 Crondale Drive
Suite 1
Dublin, Ohio 43107
Telecopier No.: (614) 776-1974
Telephone No.: (614) 776-1960
Attn.: Kenneth J. Warren
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
55
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By:/s/ James M. Probst
-------------------------------
Title:President
----------------------------
KENNETH J. WARREN
/s/ Kenneth J. Warren
----------------------------------
334,031 shares of Common Stock
15,323 shares of Common Stock
subject to options
56
<PAGE> 1
Exhibit 6
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and David E. Johnston (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
57
<PAGE> 2
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative Transaction. Notwithstanding the
above, the Stockholder may take any actions in the Stockholder's role
as a director of Royal permitted under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section
58
<PAGE> 3
4 is granted in consideration for the execution and delivery of the
Merger Agreement by Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
59
<PAGE> 4
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Royal Precision, Inc.
15170 North Hayden Road
Scottsdale, Arizona 89260
Telecopier No.: (602) 627-0206
Telephone No.: (602) 627-0270
Attn.: David E. Johnston
60
<PAGE> 5
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By:/s/ James M. Probst
----------------------------------
Title: President
------------------------------
DAVID E. JOHNSTON
/s/ David E. Johnston
-------------------------------------
208,769 shares of Common Stock
11,106 shares of Common Stock
subject to options
61
<PAGE> 1
Exhibit 7
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Ronald L. Chalmers (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
62
<PAGE> 2
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative Transaction. Notwithstanding the
above, the Stockholder may take any actions in the Stockholder's role
as a director of Royal permitted under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section
63
<PAGE> 3
4 is granted in consideration for the execution and delivery of the
Merger Agreement by Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
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<PAGE> 4
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Royal Precision, Inc.
15170 North Hayden Road
Scottsdale, Arizona 89260
Telecopier No.: (602) 627-0206
Telephone No.: (602) 627-0270
Attn.: Ronald L. Chalmers
65
<PAGE> 5
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By:/s/ James M. Probst
-------------------------------------
Title: President
---------------------------------
By: /s/ Ronald L. Chalmers
------------------------------------
Ronald L. Chalmers
125,496 shares of Common Stock
15,542 shares of Common Stock
subject to options
66
<PAGE> 1
Exhibit 8
ROYAL PRECISION, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into as of
February 2, 1999, by and between Coyote Sports, Inc., a Nevada corporation
("Coyote"), and Lawrence Bain (the "Stockholder").
RECITALS
A. Concurrently with the execution of this Agreement, Coyote, RP
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Coyote ("Coyote Sub"), and Royal Precision, Inc., a Delaware corporation
("Royal"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of Coyote Sub with and
into Royal. Pursuant to the Merger, each share of capital stock of Royal will be
converted into the right to receive one share of a new class of Coyote
Convertible Preferred Stock on the basis described in the Merger Agreement.
B. The Stockholder is the record holder and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding capital stock of
Royal as is indicated on the signature page of this Agreement (the "Shares").
C. As an inducement to Coyote to enter into the Merger Agreement, the
Stockholder is willing to enter into and be bound by this Agreement pursuant to
which the Stockholder agrees not to transfer or otherwise dispose of any of the
Shares, or any other shares of capital stock of Royal acquired hereafter and
prior to the Expiration Date (as defined in Section 1.1 below, except as
otherwise permitted hereby), to vote the Shares and any other such shares of
capital stock of Royal so as to facilitate consummation of the Merger and to
grant Coyote a proxy with respect to the Shares upon the terms set forth herein.
D. All terms not otherwise defined herein shall have their respective
meanings set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. The Stockholder agrees not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares
or any New Shares, as defined in Section 1.2 below, or to make any
offer or agreement relating to any such action, at any time prior to
the Expiration Date. As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Merger Agreement and (ii) such date and time as the Merger Agreement
shall be validly terminated pursuant to the terms thereof.
1.2 Additional Purchases. The Stockholder agrees that any
shares of capital stock of Royal (or securities convertible into,
exchangeable for or constituting the right to acquire, capital stock of
Royal) that the Stockholder purchases or with respect to which the
Stockholder otherwise acquires beneficial ownership after the execution
of this Agreement and prior to the Expiration Date (including, without
limitation, in the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital
structure of Royal affecting the Shares, or pursuant to the exercise of
any option) ("New Shares") shall be subject to the terms and conditions
of this Agreement to the same extent as if they constituted Shares.
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<PAGE> 2
2. Agreement to Vote Shares. At every meeting of the stockholders of
Royal called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Royal with respect to any of the following, the Stockholder shall vote
(including any class vote) the Shares: (i) in favor of approval of the Merger
Agreement and the Merger, the terms thereof and each of the transactions
contemplated thereby, and any matter necessary to facilitate the Merger; (ii)
against any action or agreement that would result in a breach of any covenant,
representation or warranty or any other agreement or obligation of Royal under
the Merger Agreement; (iii) against (x) any extraordinary corporate transaction,
such as a merger, consolidation or any other business combination involving
Royal or its subsidiaries, (y) a sale, lease or transfer of a material amount of
assets by Royal or its subsidiaries (other than in the ordinary course of
business) or (z) any reorganization, recapitalization, dissolution or
liquidation of Royal, in each case other than the Merger and the transactions
contemplated by the Merger Agreement); or (iv) any other action involving Royal
or its subsidiaries which is intended or which reasonably could be expected to
impede, interfere with, delay, postpone or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement (each of the
matters referred to in clauses (i) through (iv), a "Subject Matter"). This
Agreement is intended to bind the Stockholder only with respect to the specific
matters set forth herein.
3. Representations, Warranties and Covenants of the Stockholder. The
Stockholder hereby represents, warrants and covenants to Coyote as follows:
3.1 Ownership of Shares. The Stockholder (i) is the record
holder and beneficial owner of the Shares, which at the date hereof and
at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges, voting trusts or agreements, proxies
or other encumbrances; (ii) does not beneficially own any shares of
capital stock of Royal (or securities convertible into, exchangeable
for or constituting the right to acquire, capital stock of Royal),
other than the Shares (and other than options to purchase the number of
shares of the common stock of Royal, if any, indicated on the signature
page of this Agreement); and (iii) has full power and authority to
make, enter into and carry out the terms of this Agreement.
3.2 Stockholder Authority; No Conflict. This Agreement has
been duly authorized (to the extent that the Stockholder is not a
natural person), executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms,
except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in
equity or at law. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval,
or notice under (except for any notice which may be required pursuant
to the Exchange Act), any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to the Stockholder or the
Stockholder's Shares.
3.3 No Proxy Solicitations. The Stockholder will not, and will
not permit any entity under the Stockholder's control to: (i) solicit
proxies or become participants in a solicitation with respect to an RP
Acquisition Proposal or RP Alternative Transaction or otherwise
encourage or assist any party in taking or planning any action that
would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the
terms of the Merger Agreement; (ii) initiate a stockholders' vote or
action by consent of Royal stockholders with respect to an Acquisition
Proposal or Alternative Transaction; or (iii) become members of a
"group" (as such term is used in Section 13(d) of the Exchange Act)
with respect to any voting securities of Royal with respect to an
Acquisition Proposal or Alternative Transaction. Notwithstanding the
above, the Stockholder may take any actions in the Stockholder's role
as a director of Royal permitted under the Merger Agreement.
3.4 Coyote Reliance. The Stockholder understands and
acknowledges that Coyote is entering into, and causing Coyote Sub to
enter into, the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder acknowledges
that the irrevocable proxy set forth in Section
68
<PAGE> 3
4 is granted in consideration for the execution and delivery of the
Merger Agreement by Coyote and Coyote Sub.
3.5 No Solicitation. Upon execution of this Agreement, the
Stockholder shall not have, or shall immediately terminate any
discussions with, any third party concerning an Alternative
Transaction. From and after the date of this Agreement until the
earlier of the Effective Time (as defined in the Merger Agreement) or
the termination of this Agreement in accordance with its terms, the
Stockholder shall not, and shall not permit any officer, director,
employee, controlled Affiliate, investment banker or other agent (in
such agency capacity) of the Stockholder to, directly or indirectly,
(i) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by the
Stockholder or otherwise) or take any other action intended or designed
to facilitate the efforts of any Person, other than Coyote, relating to
an Alternative Transaction, (ii) provide information with respect to
Royal or any of its Subsidiaries to any Person, other than Coyote,
relating to a possible Alternative Transaction by any Person, other
than Coyote, (iii) enter into an agreement with any person, other than
Coyote, providing for a possible Alternative Transaction, or (iv) make
or authorize any statement, recommendation or solicitation in support
of any possible Alternative Transaction by any Person, other than by
Coyote. Notwithstanding the above, the Stockholder may take any actions
in the Stockholder's role as a director of Royal permitted under the
Merger Agreement.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
4.1 The Stockholder hereby irrevocably grants to, and
appoints, each of Jim Probst and J.P. McNeill or either of them, the
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Stockholder,
to vote such Stockholder's Shares, or grant or not grant a consent or
approval in respect of such Shares, at any meeting of shareholders of
Royal or at any adjournment thereof or in any other circumstances,
including, without limitation, a solicitation of stockholder consents
to action without a meeting, upon which the Stockholder's vote, consent
or other approval is sought, in respect of any Subject Matter.
4.2 Revocation of Any Other Proxies. The Stockholder
represents that any proxies heretofore given in respect of the
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
4.3 Proxy Granted to Coyote Irrevocable. The Stockholder
hereby affirms that the irrevocable proxy set forth in this Section 4.1
is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the
duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked, except, that this proxy
shall expire on the Expiration Date. The Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Such irrevocable proxy (expiring on the
Expiration Date) is executed and intended to be irrevocable in
accordance with the provisions of the Delaware General Corporation Law
(the "DGCL").
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's constituent partners or its successors.
6. Additional Documents. The Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Coyote, to carry out the intent of this Agreement.
7. Consent and Waiver. The Stockholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreements to which the Stockholder is a party or pursuant to
any rights the Stockholder may have.
8. Termination. This Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
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<PAGE> 4
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
Stockholder may be assigned by the Stockholder without the prior
written consent of Coyote.
9.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the party against whom
enforcement is sought.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coyote will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Stockholder set forth herein. Therefore,
it is agreed that, in addition to any other remedy or remedies that may
be available to Coyote upon any such violation, Coyote shall have the
right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Coyote at law or
in equity without posting any bond and without proving that monetary
damages would be inadequate.
9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by cable, telegram or telex, or sent by mail
(registered or certified mail, postage prepaid, return receipt
requested) or overnight courier (prepaid) to the respective parties as
follows:
If to Coyote: Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, Colorado 80302
Telecopier No.: (303) 933-6609
Telephone No.: (303) 818-4626
Attn: James Probst
With a copy to: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attn: Peter G. Smith, Esq.
If to the Stockholder: Royal Precision, Inc.
15170 North Hayden Road
Scottsdale, Arizona 89260
Telecopier No.: (602) 627-0206
Telephone No.: (602) 627-0270
Attn.: Lawrence Bain
70
<PAGE> 5
With a copy to:
Telecopier No.:
Telephone No.:
Attn:
or to such other address or person's attention as any party may have
furnished to the other in writing in accordance herewith, except that
notices of change of address shall only be effective upon receipt.
9.6 Governing Law. The laws of the State of New York
(irrespective of its choice of laws, rules or principles) will govern
the validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties
hereto.
9.7 Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
9.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
9.10 Waiver of Jury Trial. COYOTE AND THE STOCKHOLDER EACH
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed on the day and year first above written.
COYOTE SPORTS, INC.
By:/s/ James M. Probst
------------------------------------
Title: President
---------------------------------
LAWRENCE BAIN
/s/ Lawrence D. Bain
---------------------------------------
13,500 shares of Common Stock
0 shares of Common Stock
subject to options
71
<PAGE> 1
Exhibit 9
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
February 2, 1999 among ROYAL PRECISION, INC., a Delaware corporation ("RP"),
COYOTE SPORTS, INC., a Nevada corporation ("CSI") and RP ACQUISITION CORP., a
Delaware corporation and a wholly owned subsidiary of CSI ("Merger Sub"),
evidences that, for and in consideration of the mutual covenants set forth
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
RECITALS
--------
A. The Boards of Directors of CSI and Merger Sub and the Board of Directors
of and RP have approved the merger of Merger Sub into RP upon the terms and
subject to the conditions set forth herein (the "Merger") and have determined
that the Merger is advisable, fair to, and in the best interests of, their
respective shareholders.
B. For U.S. federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
C. Concurrently herewith, certain holders of voting stock of RP and CSI,
respectively, have entered into agreements ("Shareholder Agreements") pursuant
to which they agree to vote such stock beneficially owned by them in favor of
the transactions contemplated by this Agreement.
ARTICLE 1. THE TRANSACTION.
1.1. THE MERGER. Upon the terms and subject to the conditions hereof,
on the Effective Date (as defined in Section 1.2), Merger Sub shall be merged
with and into RP which shall be the surviving corporation in the Merger (the
"Surviving Corporation"), the separate existence of Merger Sub shall thereupon
cease, and the name of the Surviving Corporation shall by virtue of the Merger
remain "Royal Precision, Inc."
1.2. EFFECTIVE DATE OF THE MERGER. The Merger shall become effective
when a properly executed Certificate of Merger is duly filed with the Secretary
of State of the State of Delaware, which filing shall be made concurrently with
the closing of the transaction contemplated by this Agreement in accordance with
Section 1.12. When used in this Agreement, the term "Effective Date" shall mean
the date and time at which such Certificate of Merger is so filed or at such
time thereafter as is provided in such Certificate of Merger.
1.3. TAX-FREE REORGANIZATION. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code. In this regard, CSI represents that it presently intends, and that at the
Effective Date it will intend, to continue RP's historic business or use a
significant portion of RP's business assets in a business.
1.4. CONVERSION OF SECURITIES.
1.4.1. As of the Effective Date, by virtue of the Merger and
without any action on the part of any holder of any shares of RP's
Common Stock, $.001 par value ("RP Shares" or "RP Common Stock"):
(a) All shares of RP Common Stock which are held by
RP or any Subsidiary (as defined in Section 8.13) of RP shall
be canceled.
(b) Subject to Section 1.7, each remaining
outstanding share of RP Common Stock shall be converted into
that number of fully paid and nonassessable shares of the
Convertible Preferred Stock, $.001 par value, of CSI ("CSI
Preferred Stock"), having the rights and preferences set forth
in Exhibit 1.4.1 hereto, determined by dividing (i) the number
of shares of CSI's Common Stock, par value $.001 per share
("CSI Common Stock"), actually issued and outstanding as of
the Effective Date
72
<PAGE> 2
by (ii) the number of shares of RP Common Stock actually
issued and outstanding as of the Effective Date, carried to
four decimal places (the "Exchange Ratio").
(c) Each issued and outstanding share of Common
Stock, without par value, of Merger Sub ("Merger Sub Common
Stock") shall be converted into and become one fully paid and
nonassessable share of Common Stock, $.001 par value, of the
Surviving Corporation.
1.5. TERMS OF EXCHANGE. The manner of exchanging RP Common Stock for CSI
Preferred Stock in the Merger shall be as follows:
1.5.1. On the Effective Date, CSI shall make available to such
United States federally or state chartered commercial bank or trust
company having net capital of not less than $100,000,000 (or a subsidiary
thereof) as may be selected as exchange agent by CSI (the "Exchange
Agent"), for the benefit of each holder of RP Common Stock, a sufficient
number of certificates representing CSI Preferred Stock to effect the
delivery of CSI Preferred Stock required to be issued pursuant to Section
1.4. CSI shall enter into an agreement (the "Exchange Agent Agreement")
with the Exchange Agent pursuant to which the Exchange Agent shall be
obligated to provide the services set forth in Section 1.5.2.
1.5.2. The Exchange Agent Agreement shall provide that promptly
after the Effective Date, the Exchange Agent shall mail to each holder of
record (as shown on the books of RP's transfer agent as of the Effective
Date) of a certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of RP Common Stock
(individually, a "Certificate" and collectively, the "Certificates") (a)
a form of letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and
(b) instructions for use in effecting the surrender of the Certificates
for exchange. Upon surrender of Certificates for cancellation to the
Exchange Agent, together with such letter of transmittal duly executed
and any other required documents, the holder of such Certificates shall
be entitled to receive for each of the shares of RP Common Stock
represented by such Certificates the number of shares of CSI Preferred
Stock into which such shares of RP Common Stock are converted in the
Merger and the Certificates so surrendered shall forthwith be canceled.
Until so surrendered, Certificates shall represent solely the right to
receive the number of shares of CSI Preferred Stock into which such
shares of RP Common Stock are converted in the Merger and any cash in
lieu of fractional shares of CSI Preferred Stock as contemplated by
Section 1.7 with respect to each of the shares of RP Common Stock
represented thereby. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the CSI Preferred Stock
held by it from time to time hereunder, except that it shall receive and
hold all dividends or other distributions paid or distributed with
respect to such CSI Preferred Stock for the account of the persons
entitled thereto.
1.5.3. Certificates surrendered for exchange by any Affiliate (as
defined in Section 5.9.1) shall not be exchanged for certificates
representing shares of CSI Preferred Stock until CSI has received the
written agreements from such Affiliate as provided in Section 5.9.2.
1.6. DIVIDENDS; TRANSFER TAXES. No dividends or other distributions that
are declared or made on CSI Preferred Stock will be paid to persons entitled to
receive certificates representing CSI Preferred Stock pursuant to this Agreement
until such persons surrender their Certificates representing RP Common Stock.
Upon such surrender, there shall be paid to the person in whose name the
certificates representing such CSI Preferred Stock shall be issued any dividends
or other distributions which shall have become payable with respect to such CSI
Preferred Stock in respect of a record date after the Effective Date. In no
event shall the person entitled to receive such dividends be entitled to receive
interest on such dividends. If any cash in lieu of fractional shares or any
certificate representing CSI Preferred Stock is to be paid to or issued in a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of certificates for
such CSI Preferred Stock in a name other than that of the registered holder of
the Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the
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Exchange Agent nor any party hereto shall be liable to a holder of shares of RP
Common Stock for any shares of CSI Preferred Stock or dividends thereon properly
delivered to a public official pursuant to any applicable escheat laws.
1.7. NO FRACTIONAL SHARES. No certificates or scrip representing less
than one share of CSI Preferred Stock shall be issued upon the surrender for
exchange of Certificates representing RP Common Stock pursuant to Section 1.5.2.
In lieu of any such fractional share, each holder of RP Common Stock who would
otherwise have been entitled to a fraction of a share of CSI Preferred Stock
upon surrender of Certificates for exchange pursuant to Section 1.5.2 shall be
paid upon such surrender cash (without interest) in an amount equal to (x) such
fractional interest multiplied by (y) the product of $6.00 multiplied by the
reciprocal of the Exchange Ratio. As soon as practicable after the determination
of the amount of cash to be paid to former stockholders of RP in lieu of any
fractional interests, CSI shall make available to the Exchange Agent, which
shall in turn make available in accordance with this Agreement, such amounts to
such former stockholders.
1.8. STOCK OPTIONS.
1.8.1. Each option or warrant to purchase RP Common Stock issued
pursuant to the Royal Precision, Inc. Stock Option Plan and the FM
Precision Golf Corp. 1997 Stock Option Plan, or otherwise which is (a)
set forth in the RP Disclosure Schedule (as hereinafter defined), and (b)
outstanding as of the Effective Date (individually, an "RP Option" and,
collectively, the "RP Options") shall be assumed by CSI and converted
into an option or warrant (or a substitute option shall be granted) to
purchase the number of shares of CSI Common Stock (rounded to the nearest
whole share) equal to the number of shares of CSI Preferred Stock into
which the number of shares of RP Common Stock subject to such RP Option
would have been converted pursuant to the Merger (that is, the number of
shares of RP Common Stock subject to such RP Option multiplied by the
Exchange Ratio), at an exercise price per share of CSI Preferred Stock
(rounded to the nearest penny) equal to the former exercise price per
share of RP Common Stock under the RP Option immediately prior to the
Effective Date multiplied by the reciprocal of the Exchange Ratio;
provided, however, that in the case of any RP Option to which Section 421
of the Code applies by reason of its qualification under Section 422 of
the Code, the conversion formula shall be adjusted, if necessary, to
comply with Section 424(a) of the Code and the regulations issued
thereunder. Except as otherwise provided in the applicable plan or
agreement granting the RP Options, the duration, vesting and other terms
of each new option to purchase shares of CSI Common Stock shall be the
same as the original RP Option except that all references in the option
agreement to RP shall be deemed to be references to CSI. CSI and RP agree
to take such action as may be necessary to effectuate the foregoing
provisions.
1.8.2. As soon as practicable after the Effective Date, CSI shall
deliver to each holder of an option to purchase CSI Common Stock a notice
that accurately reflects the changes to such option contemplated by this
Section 1.8.
1.9. STOCKHOLDER APPROVAL. Each of RP and CSI shall take all action
reasonably necessary, in accordance with applicable law and their respective
certificate or articles of incorporation and by-laws, to convene a special
meeting of the holders of RP Common Stock (the "RP Meeting") and a special
meeting of the holders of CSI Common Stock (the "CSI Meeting") as promptly as
practicable for the purpose of considering and taking action upon this
Agreement. Subject to Section 5.1, the Board of Directors of RP will recommend
that holders of RP Common Stock vote to approve the Merger and to adopt this
Agreement at the RP Meeting and the Board of Directors of CSI will recommend
that holders of CSI Common Stock vote to approve an increase in the number of
authorized shares of the CSI Preferred Stock and the issuance of CSI Preferred
Stock pursuant to the Merger at the CSI Meeting.
1.10. CLOSING OF RP'S TRANSFER BOOKS. At the Effective Date, the stock
transfer books of RP shall be closed and no transfer of shares of RP Common
Stock shall be made thereafter. In the event that, after the Effective Date,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for CSI Preferred Stock and/or cash as provided in Sections 1.4,
1.5, 1.6 and 1.7.
1.11. ASSISTANCE IN CONSUMMATION OF THE MERGER. Each of CSI, Merger Sub
and RP shall provide all reasonable assistance to, and shall cooperate with,
each other to bring about the consummation of the Merger
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as soon as practicable in accordance with the terms and conditions of this
Agreement. CSI shall cause Merger Sub to perform all of its obligations in
connection with this Agreement.
1.12. CLOSING. The closing of the transaction contemplated by this
Agreement shall take place (a) at the offices of Kramer Levin Naftalis & Frankel
LLP, New York, New York at 10:00 A.M. local time on the day which is not more
than one business day after the day on which the last of the conditions set
forth in Article 6 (other than those requiring an exchange of a certificate,
opinion or other document, or the taking of other action, at the closing) is
fulfilled or waived or (b) at such other time and place as CSI and RP shall
agree in writing.
1.13. ILLUSTRATIVE COMPUTATION. For the avoidance of doubt, if the
Exchange Ratio for purposes of Section 1.4.1(b) were to be determined on the
basis of the number of shares of CSI Common Stock and RP Common Stock stated to
be outstanding in Sections 3.4 and 4.4 hereof, the Exchange Ratio would be
1.0018 (that is, 5,677,692 divided by 5,667,375) and the reciprocal of the
Exchange Ratio would be .9982.
ARTICLE 2. SURVIVING CORPORATION.
2.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of RP
as of the Effective Date shall be the Certificate of Incorporation of the
Surviving Corporation until duly amended by the stockholder of the Surviving
Corporation subsequent to the Effective Date.
2.2. BY-LAWS. The By-Laws of Merger Sub as in effect immediately prior to
the Effective Date shall be the By-Laws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by law.
2.3. OFFICERS; BOARD OF DIRECTORS.
2.3.1. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed or
until their earlier death, resignation or removal, in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
2.3.2. The officers of RP at the Effective Time and such other
persons as may be designated by CSI shall, from and after the Effective
Time, be the officers of the Surviving Corporation until their successors
have been duly elected or appointed or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and By-Laws.
2.4. EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 259 of the Delaware General Corporation Law ("DGCL").
ARTICLE 3. REPRESENTATIONS OF CSI. CSI hereby represents and warrants to
RP that:
3.1. CSI DISCLOSURE SCHEDULE
3.1.1. The CSI Disclosure Schedule sets forth all of the
information concerning CSI, its Subsidiaries and the CSI Shares required
in this Article 3. To the extent any statement in this Article 3 is
untrue, the CSI Disclosure Schedule sets forth the statements necessary
to make the statements in this Article 3 true. All information and
statements set forth in the CSI Disclosure Schedule shall be deemed to
supersede and correct the statements made in this Article 3 and to be
additional representations and warranties of CSI. The CSI Disclosure
Schedule sets forth all of the information and statements required in
numbered sections bearing the number of the Section of this Agreement
calling for such information and in the order of such numbers in this
Agreement.
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3.1.2. CSI has delivered to RP complete and accurate copies of (a)
any written contract or other document referred to in the CSI Disclosure
Schedule or herein and (b) the CSI Reports referred to in Section 3.7 of
this Agreement.
3.2. EXISTENCE AND GOOD STANDING OF CSI. CSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as now being
conducted. CSI is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the character or
location of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not reasonably be expected to
have a material adverse effect on the consolidated business, financial condition
or results of operations of CSI and its Subsidiaries (a "CSI Material Adverse
Effect"). Each of CSI's Subsidiaries is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the state of its incorporation or formation, has the corporate or other power
and corporate or other authority to own its properties and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so licensed or qualified or to be
in good standing would not reasonably be expected to have, individually or in
the aggregate, a CSI Material Adverse Effect. Neither CSI nor any of its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which CSI or any CSI Subsidiary or any of their respective
properties or assets is subject, except where such violation would not have,
individually or in the aggregate, a CSI Material Adverse Effect. CSI and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their business as now conducted, where the failure to obtain any
such items or to take any such action would reasonably be expected to have a CSI
Material Adverse Effect. The copies of the certificate or articles of
incorporation and By-Laws of CSI, Merger Sub and each other CSI Subsidiary
previously delivered to RP are true and correct. Neither CSI nor any of the CSI
Subsidiaries is in violation of any of the provisions of their restated articles
of incorporation or By-Laws.
3.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. Each of CSI and
Merger Sub has the requisite corporate power and corporate authority to execute
and deliver this Agreement and all agreements and documents contemplated hereby
and consummate the transactions contemplated hereby and thereby. Subject only to
the approval of the amendment of CSI's articles of incorporation and the
issuance of the CSI Preferred Stock pursuant to this Agreement and the
transaction contemplated hereby by the holders of a majority of the outstanding
CSI Shares, the consummation by CSI of the transaction contemplated hereby has
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of CSI, enforceable in accordance with their
respective terms subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
3.4. CAPITAL STOCK. CSI has an authorized capitalization consisting of
25,000,000 shares of Common Stock, par value $.001 per share, of which 5,677,692
shares are issued and outstanding, and 4,000,000 shares of preferred stock, par
value $.001 per share, of which 75,000 shares are issued and outstanding. On or
immediately prior to the Effective Date, CSI will have authorized capitalization
as set forth in Exhibit 3.4.1 (including the CSI Preferred Stock to be issued
pursuant to the Merger). Except as set forth in the CSI Disclosure Schedule, CSI
has no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of CSI on any matter.
All such outstanding shares have been and will be duly authorized and validly
issued and are and will be fully paid and non-assessable. Except as set forth in
the CSI Disclosure Schedule, there are, and at the Effective Date, there will be
no outstanding subscriptions, options, warrants, rights, calls, commitments,
conversion rights, convertible securities, rights of exchange, plans or other
agreements providing for the purchase, issuance or sale of any shares of the
capital stock of CSI by or to CSI, other than as contemplated by this Agreement.
3.5. SUBSIDIARIES. Except as set forth in the CSI Disclosure Schedule,
CSI owns each of the outstanding shares of capital stock of each of CSI's
Subsidiaries. Each of the outstanding shares of capital stock of each
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of CSI's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and except as set forth in the CSI Disclosure Schedule, is owned
by CSI free and clear of all liens, pledges, security interests, claims or other
encumbrances. The CSI Disclosure Schedule sets forth with respect to each CSI
Subsidiary (a) its name and jurisdiction of incorporation, (b) its authorized
capital stock, and (c) the number of issued and outstanding shares of capital
stock. Except for interests in the CSI Subsidiaries, neither CSI nor any CSI
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, limited
liability company, business, trust or entity.
3.6. NO VIOLATIONS. The execution and delivery of this Agreement by CSI
and the consummation of the transaction contemplated hereby (a) will not violate
any provision of the articles of incorporation or by-laws of CSI or its
Subsidiaries, (b) will not violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of CSI or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which CSI or any of its
Subsidiaries is a party, or by which CSI or any of its Subsidiaries or any of
their properties is bound or affected, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect; (c) will not violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to CSI or any of
its Subsidiaries or any of their respective properties or assets (assuming
completion of the Regulatory Filings as defined in (d) below), except for
violations which would not reasonably be expected to have, individually or in
the aggregate, a CSI Material Adverse Effect, or (d) other than the filings
provided for in Section 1, filings under the Securities Exchange Act of 1934
(the "Exchange Act"), the Securities Act of 1933, as amended (the "Securities
Act") or applicable state securities and "Blue Sky" laws or filings in
connection with the maintenance of qualification to do business in other
jurisdictions (collectively, the "Regulatory Filings"), will not require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect.
3.7. SEC DOCUMENTS.
3.7.1. CSI has furnished RP with each registration statement,
Quarterly Report on Form 10-QSB, Report on Form 8-KSB, report, proxy
statement or information statement, including all exhibits thereto,
prepared by CSI since September 18, 1997, including, without limitation,
(a) its Annual Report on Form 10- KSB for its fiscal year ended December
31, 1997 (the "CSI Balance Sheet Date") which includes the consolidated
balance sheets of CSI and its Subsidiaries (the "CSI Balance Sheet") as
of such date (the "CSI Balance Sheet Date") and CSI's Quarterly Reports
on Form 10-QSB, and Reports on Form 8-K filed since the filing of such
Annual Report and (b) its proxy statement for its annual meeting of
Stockholders held on May 9, 1998, each of (a) and (b) in the form
(including exhibits and any amendments thereto) filed with the Securities
and Exchange Commission (the "SEC") and the items in (a) and (b), the
"CSI Reports." As of their respective dates, the CSI Reports (including,
without limitation, any financial statement or schedules included or
incorporated by reference therein) (i) were prepared in all material
respects in accordance with the applicable requirements of the Exchange
Act, and the respective rules and regulations thereunder, and (ii) did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. The 1996 and 1997 consolidated financial
statements of CSI included in or incorporated by reference into the CSI
Reports (including the related notes and schedules) present fairly, in
all material respects the consolidated financial position of CSI and its
Subsidiaries as of December 31, 1997 and 1996 and the consolidated
results of their operations and their cash flows for such fiscal periods,
in conformity with generally accepted accounting principles ("GAAP"),
consistently applied during the periods involved. Except as and to the
extent set forth on the CSI Balance Sheet, including all notes thereto,
or as set forth in the CSI Reports or the CSI Disclosure Schedule,
neither CSI nor any of its Subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) whether or not required to be reflected on, or reserved
against in, a consolidated balance sheet of CSI, prepared in accordance
with GAAP, consistently
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applied, except liabilities arising in the ordinary course of business
since such date which would not reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect.
3.8. LITIGATION. There is no action, suit or proceeding pending against
CSI or the CSI Subsidiaries, or, to the knowledge of CSI, overtly threatened
against CSI or its Subsidiaries or any of their respective properties or assets,
at law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality which would reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect, or would
prevent or delay the consummation of the transaction contemplated by this
Agreement. Neither CSI nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have a CSI Material
Adverse Effect or would prevent or delay the consummation of the transaction
contemplated hereby.
3.9. ABSENCE OF CERTAIN CHANGES. Since the CSI Balance Sheet Date, each
of CSI and its Subsidiaries has conducted its business only in the ordinary
course of such business and there has not been (a) any event or changes with
respect to CSI and its Subsidiaries (other than events or changes in general
economic conditions or developments affecting the industry generally) having,
individually or in the aggregate, a CSI Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, (c) any material change in its accounting
principles, practices or methods, (d) any amendments or changes in the Amended
and Restated Articles of Incorporation or By-Laws of CSI, (e) any material
revaluation by CSI of any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business, (f) any sale of a material amount of property of CSI or its
Subsidiaries, except in the ordinary course of business, or (g) any increase in
the compensation or benefits or establishment of any bonus, insurance, severance
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of CSI or
any of the CSI Subsidiaries except in the ordinary course of business consistent
with past practice or except as required by applicable law.
3.10. TAX MATTERS.
Except as set forth in the CSI Disclosure Schedule:
3.10.1. For purposes of this Agreement "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental
charges, including, without limitation, all federal, state, local,
foreign and other income, franchise, profits, capital gains, capital
stock, transfer, sales, use, occupation, property, excise, severance,
windfall profits, stamp, license, payroll, withholding and other taxes,
assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and
whether or not requiring the filing of a Return), and all estimated
taxes, deficiency assessments, additions to tax, penalties and interest
and shall include any liability for such amounts as a result either of
being a member of a combined, consolidated, unitary or affiliated group
or of a contractual obligation to indemnify any person or other entity.
3.10.2. Each of CSI and its Subsidiaries has timely filed or
caused to be timely filed all returns, statements, forms, declarations
and reports for Taxes ("Returns") which are required to be filed by, or
with respect to, any of them on or prior to the Effective Date (taking
into account all applicable extensions). The Returns have accurately
reflected and will accurately reflect all liability for Taxes of CSI and
its Subsidiaries for the periods covered thereby.
3.10.3. All Taxes and Tax liabilities of CSI and its Subsidiaries
for all taxable years or periods that end on or before the Effective Date
and, with respect to any taxable year or period beginning before and
ending after the Effective Date, the portion of such taxable year or
period ending on and including the Effective Date, have been timely paid
or will be timely paid in full on or prior to the Effective Date or
accrued and adequately disclosed and fully provided for on the books and
records of CSI in accordance with GAAP.
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3.10.4. Complete and accurate copies of all CSI federal, state and
local income tax returns have been made available to RP.
3.10.5. Neither CSI nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes by the tax authorities
of any nation, state or locality nor has CSI or any of its Subsidiaries
received any notices from any taxing authority relating to any issue
which could affect the Tax liability of CSI or any of its Subsidiaries.
Neither CSI nor any of its Subsidiaries, as of the Effective Date, (A)
has entered into an agreement or waiver or been requested to enter into
an agreement or waiver extending any statute of limitations relating to
the payment or collection of Taxes of CSI or any of its Subsidiaries or
(B) is presently contesting the Tax liability of CSI or any of its
Subsidiaries before any court, tribunal or agency. Neither CSI nor any of
its Subsidiaries has granted a power-of-attorney relating to Tax matters
to any person. All final adjustments made by the Internal Revenue Service
("IRS") with respect to any federal tax return of CSI or its Subsidiaries
have been reported for state and local income tax purposes to the
relevant state or local taxing authorities.
3.10.6. Neither CSI nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return provided for under
the law of the United States, any foreign jurisdiction or any state or
locality with respect to Taxes for any taxable period for which the
statute of limitations has not expired (other than a Return with respect
to which CSI was the common parent).
3.10.7. All Taxes which CSI or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the proper authorities to the
extent due and payable.
3.10.8. There are no Tax sharing, allocation, indemnification or
similar agreements in effect as between CSI or any predecessor or
affiliate thereof and any other party under which CSI or any of its
Subsidiaries could be liable for any Taxes or other claims of any party
other than of CSI and its Subsidiaries.
3.10.9. No requests for ruling or determination letters relating
to federal, state or local income taxes paid or payable by CSI or any of
its Subsidiaries are pending with any taxing authority.
3.10.10. (a) Neither CSI nor any CSI Subsidiary has agreed to or
is required to make any adjustment pursuant to Section 481 of the Code or
the corresponding tax laws of any nation, state or locality by reason of
a change in accounting method initiated by CSI or its Subsidiaries or
required by law, (b) CSI has no knowledge that the IRS or any other
taxing authority has proposed or purported to require any such adjustment
or change in accounting method and (c) CSI has no knowledge or belief
that any such adjustment under Section 481 of the Code or the
corresponding tax laws of any nation, state or locality will be required
of CSI or its Subsidiaries upon the completion of, or by reason of, the
transaction contemplated by this Agreement.
3.10.11. (a) There are no deferred intercompany transactions
between CSI and any of its Subsidiaries or between its Subsidiaries which
will or may result in the recognition of income upon the consummation of
the transaction contemplated by this Agreement, and (b) there are no
other transactions or facts existing with respect to CSI and/or its
Subsidiaries which by reason of the consummation of the transaction
contemplated by this Agreement will result in CSI and/or its Subsidiaries
recognizing income.
3.10.12. There are no Tax liens on any of the assets or property
of CSI or its Subsidiaries.
3.10.13. There are no contracts, agreements or plans entered into
by CSI or its Subsidiaries covering any person that individually or
collectively would require CSI or any of its Subsidiaries to make any
payments of any amount which would not be deductible by reason of the
provisions of Section 162(m) or Section 280G of the Code.
3.10.14. Neither CSI nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f) of the Code) owned by it.
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3.11. CERTAIN EMPLOYEE PLANS.
3.11.1. (a) "Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), any fringe benefit plan, any equity
compensation plan or arrangement (including without limitation, stock
option, restricted stock and stock purchase plans), any plan, policy or
arrangement for the provision of executive compensation, incentive
benefits, bonuses or severance benefits, any employment contract,
collective bargaining agreement, deferred compensation agreement, Code
section 125 cafeteria plan or split dollar arrangement, any participation
or similar agreement with a multi-employer pension fund, or any other
plan, policy, arrangement or scheme for the provision or funding of
employee benefits with respect to which an CSI or RP Controlled Group
Member in the past or present, directly or indirectly maintained or
maintains, sponsored or sponsors, or had or has any liability or
obligation.
(b) "CSI Controlled Group Member" means CSI and each other person
or entity required to be aggregated with CSI under Code section 414(b),
(c), (m) or (o).
(c) "RP Controlled Group Member" means RP and each other person or
entity required to be aggregated with RP under Code section 414(b), (c),
(m) or (o).
3.11.2. Each Benefit Plan maintained by any CSI Controlled Group
Member (the "CSI Benefit Plans") complies with, and has been administered
in accordance with, in all material respects, all applicable requirements
of law, except for instances of non-compliance that would not reasonably
be expected to have caused, individually or in the aggregate, a CSI
Material Adverse Effect. The CSI Benefit Plans are listed in the CSI
Disclosure Schedule and copies or descriptions of all material Plans have
previously been provided to RP.
3.11.3. With respect to each CSI Benefit Plan intended to qualify
under section 401(a) of the Code, (a) a favorable determination letter
has been issued by or an application is pending with the IRS with respect
to the qualification of each CSI Benefit Plan, and (b) no "reportable
event" or "prohibited transaction" (as such terms are defined in ERISA
and the Code) or termination has occurred under circumstances which
present a risk of material liability by any CSI Controlled Group Member
to any governmental entity or other person, including an CSI Benefit
Plan. Each CSI Benefit Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code has been maintained in
compliance with the minimum funding standards of ERISA and the Code and
no such CSI Benefit Plan has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code and Section 302 of
ERISA), whether or not waived. No CSI Controlled Group Member directly or
indirectly contributes to, has an obligation to contribute to or has, or
could be reasonably expected to have, liability with respect to, and has
not directly or indirectly maintained, sponsored, contributed to or had
an obligation to contribute to at any time within the 10 year period
ending on the date of the Closing, any employee benefit plan which is a
multi-employer plan subject to the requirements of Subtitle E of Title IV
of ERISA.
3.11.4. Except as required by Code section 4980B or 162 or Part 6
of Subtitle B of Title I of ERISA, no CSI Controlled Group Member
provides any health, welfare or life insurance benefits to any of its
former or retired employees, which benefits would be material either
individually or in the aggregate to CSI.
3.12. LABOR MATTERS.
3.12.1. Except as set forth in the CSI Disclosure Schedule,
neither CSI nor any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of CSI, overtly threatened against CSI or its Subsidiaries
relating to their business, except for any such proceeding which would
not reasonably be expected to have, individually or in the aggregate, a
CSI Material Adverse Effect. To the knowledge of CSI, there are no
organizational efforts with respect to the
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formation of a collective bargaining unit presently being made or overtly
threatened involving employees of CSI or any of its Subsidiaries.
3.12.2. CSI has delivered to RP copies of all employment
agreements, consulting agreements, severance agreements, bonus and
incentive plans, profit-sharing plans and other material agreements,
plans or arrangements with respect to compensation of the employees of
CSI and its Subsidiaries (the "CSI Compensation Arrangements"). The
Merger will not accelerate or otherwise give rise to payments pursuant to
the CSI Compensation Arrangements.
3.13. ENVIRONMENTAL LAWS AND REGULATIONS.
3.13.1. CSI and each of its Subsidiaries is in compliance in all
material respects with all applicable federal, state and local laws and
regulations of the United States and national and local laws and
regulations of the United Kingdom relating to pollution, hazardous
substances, or protection of human health or the environment
(collectively, "Environmental Laws") which compliance includes, but is
not limited to, the possession by CSI and its Subsidiaries of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and
conditions thereof. Neither CSI nor any of its Subsidiaries has received
written notice of, or, to the knowledge of CSI, is the subject of, any
action, cause of action, claim, investigation, demand or notice,
including without limitation, non-compliance orders, warning letters, or
notices of violation, by any person or entity alleging liability under or
non-compliance with any Environmental Law (an "CSI Environmental Claim"),
nor to the knowledge of CSI is there any basis for any CSI Environmental
Claim that would reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect. To the knowledge of CSI there
are no circumstances that are reasonably likely to prevent or interfere
with such material compliance or give rise to such liability in the
future.
3.13.2. There are no CSI Environmental Claims, which would
reasonably be expected to have, individually or in the aggregate, a CSI
Material Adverse Effect, that are pending or, to the knowledge of CSI,
overtly threatened against CSI or any of its Subsidiaries or, to the
knowledge of CSI, against any person or entity whose liability for any
CSI Environmental Claim CSI or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
3.13.3. Neither CSI nor any CSI Subsidiary (a) has handled or
discharged, nor has it allowed or arranged for any third party to handle
or discharge, any hazardous substances to, at or upon: (i) any location
other than a site lawfully permitted to receive such hazardous
substances, (ii) any parcel of real property owned or leased by CSI or
any CSI Subsidiary, except in compliance with applicable Environmental
Laws; (iii) any site which, pursuant to CERCLA or any similar state law
or law of the U.K. (x) has been placed on the National Priorities List or
its state or U.K. equivalent, or (y) the Environmental Protection Agency
or any equivalent agency in the U.K. or the relevant state agency has
notified CSI that it has proposed or is proposing to place on the
National Priorities List or its state equivalent or equivalent in the
U.K.; or (b) has any knowledge that there has occurred or is presently
occurring a discharge, or threatened discharge, of any hazardous
substance on, into or beneath the surface of, or adjacent to, any real
property owned or leased by CSI or any CSI Subsidiary.
3.13.4. The CSI Disclosure Schedule identifies (a) all
environmental audits, assessments, or occupational health studies
undertaken by CSI or its agents on its behalf, or, to the knowledge of
CSI, undertaken by any governmental authority, or any third party,
relating to or affecting any real property owned or leased by CSI or any
CSI Subsidiary; (b) the results of any ground, water, soil, air or
asbestos monitoring undertaken by CSI or its agents on its behalf, or, to
the knowledge of CSI, undertaken by any governmental authority or any
third party, relating to or affecting any real property owned or leased
by CSI or any CSI Subsidiary; (c) all material written communications
between CSI and any governmental authority arising under or related to
Environmental Laws; and (d) all outstanding citations issued under OSHA,
or similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings or decrees relating to or affecting any real
property owned or leased by CSI or any CSI Subsidiary.
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3.14. REAL PROPERTY.
3.14.1. CSI has delivered to RP either copies or fair and accurate
summaries (the "CSI Property Documents") of each of its leases,
subleases, deeds, material licenses or other material agreements or
instruments (and any amendments thereto) under which CSI or any of its
Subsidiaries owns, uses or occupies or has the right to use or occupy,
now or in the future, any real property (the "CSI Real Estate
Agreements"). Each CSI Real Estate Agreement is valid, binding and in
full force and effect, all rent and other sums and charges payable by CSI
and its Subsidiaries as tenants thereunder are current, no termination
event or condition or uncured default of a material nature on the part of
CSI or any such Subsidiary or, to the knowledge of CSI, as to a landlord,
exists under any CSI Real Estate Agreement, except for any of the
foregoing matters which would not reasonably be expected to have,
individually or in the aggregate, a CSI Material Adverse Effect. The
information contained in the CSI Property Documents is true and correct
in all material respects.
3.14.2. Except for any of the following matters which would not
reasonably be expected to have, individually or in the aggregate, a CSI
Material Adverse Effect:
(a) CSI has not granted, and to the best of CSI's
knowledge, no other person has granted, any leases, subleases,
licenses or other agreements granting to any person other than CSI
any right to possession, use, occupancy or enjoyment of the
property covered by the CSI Real Estate Agreements, or any portion
thereof, and
(b) CSI is not obligated under any option, right of first
refusal or any contractual right to purchase, acquire, sell or
dispose of any real property covered by the CSI Real Estate
Agreements.
3.14.3. None of the CSI Real Estate Agreements contains continuous
operating covenants, radius restrictions or provisions requiring the
consent of the landlord to the Merger or the assumption of CSI's
obligations under the CSI Real Estate Agreements in the manner
contemplated by this Agreement, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, a CSI Material Adverse Effect.
3.15. LIMITATION ON BUSINESS CONDUCT. Neither CSI nor any of the
CSI Subsidiaries is a party to, or has any obligation under, any contract
or agreement, written or oral, which contains any covenants currently or
prospectively limiting in any material respect the freedom of CSI or any
of the CSI Subsidiaries to engage in any line of business or to compete
with any entity or which would prohibit the business of RP, CSI or any of
their respective Subsidiaries from being conducted in substantially the
same manner as it was conducted prior to the Merger.
3.16. TITLE TO PROPERTY. Each of CSI and each of the CSI
Subsidiaries owns the material properties and assets that it purports to
own free and clear of all liens, security interests, charges or
encumbrances, except for any liens, security interests, charges or
encumbrances which arise in the ordinary course of business (including
mechanics' liens and other similar statutory liens) and do not materially
impair CSI's or any CSI Subsidiary's ownership or use of any such
properties or assets, or liens for taxes not yet due. The rights,
properties and assets presently owned, leased or licensed by CSI include
all rights, properties and assets necessary to permit CSI and the CSI
Subsidiaries to conduct their business in all material respects in the
same manner as their businesses have been conducted prior to the date
hereof.
3.17. INSURANCE. CSI and its Subsidiaries maintain with respect to
their operations and their assets, in full force and effect, policies of
insurance in the ordinary course of business as is usual and customary
for businesses similarly situated to CSI. CSI has provided RP copies of
all insurance policies so maintained and all claims associated with its
operations and the operations of its Subsidiaries for the past 18 months.
3.18. INTELLECTUAL PROPERTY. Every material trade secret
(including know-how, inventions, designs and processes), patent, patent
right, trademark, trademark right, logo, service mark, trade name or
copyright, or application thereof, and licenses and rights with respect
to the foregoing, used in connection with the business of CSI and its
Subsidiaries (the "CSI Intellectual Property"), is protected by CSI in a
manner which, under the circumstances,
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is prudent and commercially reasonable, and owned by CSI or its Subsidiaries
free and clear of any liens, encumbrances, claims or restrictions whatsoever
which would have a CSI Material Adverse Effect, direct or indirect. There are no
valid grounds for any bona fide claims (i) to the effect that the business of
CSI or any of the CSI Subsidiaries infringes on any copyright, patent,
trademark, service mark or trade secret; (ii) against the use by CSI or any of
the CSI Subsidiaries, of any patents, patent rights, trademarks, trademark
rights, logos, trade names, service marks, trade secrets, copyrights,
technology, know-how or computer software programs and applications used in the
business of CSI or any of the CSI Subsidiaries as currently conducted or as
proposed to be conducted; (iii) challenging the ownership, validity or
effectiveness of any of the patents, patent rights, registered and material
unregistered trademarks, logos and service marks, registered copyrights, trade
names and any applications therefor owned by CSI or any of the CSI Subsidiaries
or other trade secret material to CSI or any of the CSI Subsidiaries; or (iv)
challenging the license or legally enforceable right to use of any third-party
patents, patent rights, trademarks, trademark rights, logos, service marks,
trade names and copyrights by CSI or any of the CSI Subsidiaries, except, in
each case, for claims that, if determined adversely to CSI, would not reasonably
be expected to have, individually or in the aggregate, a CSI Material Adverse
Effect. Neither CSI nor any of its Subsidiaries has granted to any other person
the right to use the CSI Intellectual Property, or any part thereof. CSI is not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, patent rights, trademark, trademark rights, logo, service mark,
trade name, trade name rights, copyright or other intangible assets, with
respect to the use thereof or in connection with the conduct of its business or
otherwise.
3.19. CERTAIN CONTRACTS. CSI has delivered copies of each contract
to which CSI or any of its Subsidiaries is a party (i) calling for
payments in excess of $100,000 in the case of any contract or series of
related contracts or (ii) otherwise material to CSI or any of its
Subsidiaries, or by which any of their respective properties or assets
are bound. CSI and its Subsidiaries, and to CSI's knowledge the other
parties thereto, are in compliance in all material respects with all
material terms of such contracts.
3.20. NO BROKERS. Neither CSI nor any CSI Subsidiary has entered
into any contract, arrangement or understanding with any person or firm
which may result in the obligation of CSI or RP or Merger Sub to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transaction contemplated hereby, except that CSI has
retained Lehman Brothers as its financial advisor and to render a
fairness opinion as set forth herein. The arrangements with Lehman
Brothers have been disclosed in writing to RP prior to the date hereof.
3.21. CONFLICTS OF INTEREST. No officer, or director, or, to the
knowledge of CSI, no significant shareholder, employee or consultant of
CSI or any CSI Subsidiary, or any affiliate of such person has any direct
or indirect interest (except a passive investment in less than 5% of the
publicly traded stock of a public company) (a) in any corporation,
partnership, proprietorship, association, or other person or entity which
does business with CSI or any CSI Subsidiary, (b) in any property, asset
or right which is used by CSI or any CSI Subsidiary in the conduct of its
business, or (c) in any contract to which CSI is a party or by which CSI
or any CSI Subsidiary may be bound nor are any amounts owing to any such
person by, or due to any such person from, CSI or any CSI Subsidiary.
3.22. PERSONAL PROPERTY. CSI owns all of its material personal
property, including, without limitation, the material personal property
reflected in the CSI Balance Sheet, except for personal property disposed
of in the ordinary course of business since the CSI Balance Sheet Date,
subject to no mortgage, pledge, lien, charge, security interest,
encumbrance or restriction, except those which are shown and described in
the CSI Balance Sheet or the notes thereto. All personal properties
purported to be leased by CSI are subject to valid and effective leases.
3.23. TAKEOVER STATUTE. The Board of Directors of CSI has taken
all appropriate action so that no former shareholder of RP will be an
"interested stockholder" of CSI subject to Sections 78.438 and 78.439 of
the Nevada General Corporation Law (the "NGCL") by virtue of the
transactions contemplated by this Agreement.
3.24. DISCLOSURE. Neither CSI nor any CSI Subsidiary has knowingly
withheld from RP any material facts relating to CSI's and any CSI
Subsidiary's assets, business, operations, financial conditions, or
prospects. No representation or warranty in this Agreement contains any
untrue statement of a material fact.
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3.25. STATUS AS REORGANIZATION.
3.25.1. CSI has no plan or intent to:
(a) Liquidate RP;
(b) Merge RP with or into another corporation;
(c) Sell or otherwise dispose of the stock of RP except for
transfers of stock to corporations "controlled" (within the
meaning of Section 368(c) of the Code) by CSI;
(d) Reacquire any of its stock issued in connection with
the Merger;
(e) Cause RP to issue additional shares of stock of RP that
would result in CSI losing "control" (within the meaning of
Section 368(c) of the Code) of RP;
(f) Cause RP to sell or otherwise dispose of any of its
assets or any assets of Merger Sub acquired in the Merger except
for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code or
described in Treasury Regulation Section 1.368-2(k)(2); or
(g) Take any other action that might otherwise cause the
Merger not to be treated as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
3.25.2. Except as provided in this Agreement, each of CSI
and its stockholders will pay their respective expenses, if any,
incurred in connection with the Merger.
3.25.3. There is no intercorporate indebtedness existing
between CSI and RP, or between Merger Sub and RP, that was issued,
acquired or will be settled at a discount.
3.25.4. CSI and any of the major stockholders of CSI do not
own, nor have they owned during the past five years, any shares of
stock of RP.
3.25.5. Neither CSI nor Merger Sub is an "investment
company" (within the meaning of Sections 368(a)(2)(F)(iii) and
(iv) of the Code);
3.25.6. Merger Sub is being formed solely for the purpose
of merging with and into RP and, as of the Effective Date, will
not have had any existing operation, assets or liabilities (other
than liabilities for franchise taxes, if applicable, and
liabilities under this Agreement); and
3.25.7. CSI will, as of the Effective Date, own all of the
stock of Merger Sub.
ARTICLE 4. REPRESENTATIONS OF RP. RP hereby represents and warrants to
CSI that:
4.1. RP DISCLOSURE SCHEDULE.
4.1.1. The RP Disclosure Schedule sets forth all of the
information concerning RP and its Subsidiaries and the RP Shares required
in this Article 4. To the extent any statement in this Article 4 is
untrue, the RP Disclosure Schedule sets forth the statements necessary to
make the statements in this Article 4 true. All information and
statements set forth in the RP Disclosure Schedule shall be deemed to
supersede and correct the statements made in this Article 4 and to be
additional representations and warranties of RP. The RP Disclosure
Schedule sets forth all of the information and statements required in
numbered sections bearing the number of the Section of this Agreement
calling for such information and in the order of such numbers in this
Agreement.
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4.1.2. RP has delivered to CSI complete and accurate copies of (a)
any written contract or other document referred to in the RP Disclosure
Schedule or herein and (b) the RP Reports referred to in Section 4.7 of
this Agreement.
4.2. EXISTENCE AND GOOD STANDING OF RP. RP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as now being
conducted. RP is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the character or
location of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not reasonably be expected to
have a material adverse effect on the consolidated business, financial condition
or results of operations of RP and its Subsidiaries (an "RP Material Adverse
Effect"). Each of RP's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the corporate power and corporate authority to own its properties and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so licensed
or qualified or to be in good standing would not reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect. Neither RP nor
any of its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which RP or any RP Subsidiary or any of their respective
properties or assets is subject, except where such violation would not have,
individually or in the aggregate, an RP Material Adverse Effect. RP and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their business as now conducted, where the failure to obtain any
such items or to take any such action would reasonably be expected to have an RP
Material Adverse Effect. The copies of the articles of incorporation and by-laws
of RP and each other RP Subsidiary previously delivered to CSI are true and
correct. Neither RP nor any of the RP Subsidiaries is in violation of any of the
provisions of its Amended and Restated Certificate of Incorporation or ByLaws.
4.3. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENT. RP has the
requisite corporate power and corporate authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby and consummate
the transactions contemplated hereby and thereby. Subject only to the approval
of this Agreement and the transaction contemplated hereby by the holders of a
majority of the outstanding RP Shares, the consummation by RP of the transaction
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of RP, enforceable in
accordance with their respective terms subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.4. CAPITAL STOCK. The authorized capital stock of RP consists of
50,000,000 shares of common stock and 5,000,000 shares of preferred stock, par
value $.001 per share. As of December 31, 1998, there were 5,667,375 shares of
common stock issued and outstanding none of which is held by RP or any
Subsidiary of RP and no shares of preferred stock issued and outstanding. Since
such date, no additional shares of capital stock of RP have been issued. RP has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of RP on any matter.
All such issued and outstanding RP Shares are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Other than as
contemplated by this Agreement or the RP Option Plans, there are not at the date
of this Agreement any outstanding subscriptions, options, warrants, rights,
calls, commitments, conversion rights, convertible securities, rights of
exchange, plans or other agreements providing for the purchase, issuance or sale
of any of the shares of the capital stock of RP by or to RP. As of December 31,
1998, 602,433 RP Shares were reserved for issuance and are issuable upon or
otherwise deliverable in connection with the exercise of outstanding options;
since that date, no options have been granted under the RP Option Plans or
otherwise and no new option plans have been authorized or adopted.
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4.5. SUBSIDIARIES. Except as set forth in the RP Disclosure Schedules, RP
owns each of the outstanding shares of capital stock of each of RP's
Subsidiaries. All of the outstanding shares of capital stock of the RP
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and are owned by RP free and clear of all liens, pledges, security interests,
claims or other encumbrances. The RP Disclosure Schedule sets forth with respect
to each RP Subsidiary (a) its name and jurisdiction of incorporation, (b) its
authorized capital stock, and (c) the number of issued and outstanding shares of
capital stock. Except for interests in the RP Subsidiaries, neither RP nor any
RP Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, limited
liability company, business, trust or entity.
4.6. NO VIOLATIONS. The execution and delivery of this Agreement by RP
and the consummation of the transaction contemplated hereby (a) will not violate
any provision of the articles of incorporation or by-laws of RP or its
subsidiaries, (b) will not violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of RP or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which RP or any of its
subsidiaries is a party, or by which RP or any of its subsidiaries or any of
their properties is bound or affected, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, an RP Material Adverse Effect; (c) will not violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to RP or any of
its subsidiaries or any of their respective properties or assets (assuming
completion of the Regulatory Filings), except for violations which would not
reasonably be expected to have, individually or in the aggregate, an RP Material
Adverse Effect, or (d) other than the Regulatory Filings, will not require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect.
4.7. SEC DOCUMENTS. RP has furnished CSI each registration statement,
proxy statement or information statement, including all exhibits thereto,
prepared by RP since August 29, 1997, including, without limitation, (a) its
Annual Report on Form 10-K for its fiscal year ended May 31, 1998 (the "RP
Balance Sheet Date"), which includes the consolidated balance sheet for RP as of
such date (the "RP Balance Sheet") and RP's Quarterly Reports on Form 10-Q and
Reports on Form 8-K filed since the filing of such Annual Report and (b) its
proxy statement for its annual meeting of Stockholders held on October 1, 1998,
each of (a) and (b) in the form (including exhibits and any amendments thereto)
filed with the SEC and the items in (a) and (b), the "RP Reports." As of their
respective dates, the RP Reports (including, without limitation, any financial
statements or schedules included or incorporated by reference therein) (i) were
prepared in all material respects in accordance with the applicable requirements
of the Exchange Act, and the respective rules and regulations thereunder, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The 1997 and 1998 consolidated financial statements of RP and its
Subsidiaries included in or incorporated by reference into the RP Reports
(including the related notes and schedules) present fairly, in all material
respects, the consolidated financial position of RP at May 31, 1997 and 1998,
and the consolidated results of their operations and their cash flows such
fiscal years in conformity with GAAP. Except as and to the extent set forth on
the RP Balance Sheet, including all notes thereto, or as set forth in the RP
Reports or the RP Disclosure Schedule, neither RP nor any of its Subsidiaries
has any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) whether or not required to be reflected on,
or reserved against in, a consolidated balance sheet of RP prepared in
accordance with GAAP, except liabilities arising in the ordinary course of
business since such date which would not reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect.
4.8. LITIGATION. There is no action, suit or proceeding pending against
RP or the RP Subsidiaries, or, to the knowledge of RP, overtly threatened
against RP or its Subsidiaries or any of their respective properties or assets,
at law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality which would reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect, or would
prevent or delay the consummation of the transaction contemplated by this
Agreement. Neither RP nor any of its Subsidiaries
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is subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen, individually or in the aggregate, in the future
would have an RP Material Adverse Effect or would prevent or delay the
consummation of the transaction contemplated hereby.
4.9. ABSENCE OF CERTAIN CHANGES. Since the RP Balance Sheet Date, each of
RP and the RP Subsidiaries has conducted its business only in the ordinary
course of such business and there has not been (a) any event or changes with
respect to RP and the RP Subsidiaries (other than events or changes in general
economic conditions or developments affecting the industry generally) having,
individually or in the aggregate, an RP Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, (c) any material change in its accounting
principles, practices or methods, (d) any amendments or changes in the Amended
and Restated Certificate of Incorporation or By-Laws of RP, (e) any material
revaluation by RP of any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business, (f) any sale of a material amount of property of RP or its
Subsidiaries, except in the ordinary course of business, or (g) any increase in
the compensation or benefits or establishment of any bonus, insurance, severance
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of RP or any
of the RP Subsidiaries except in the ordinary course of business consistent with
past practice or except as required by applicable law.
4.10. TAX MATTERS.
Except as set forth in the RP Disclosure Schedule:
4.10.1. Each of RP and its Subsidiaries has timely filed or caused
to be timely filed all Returns which are required to be filed by, or with
respect to, any of them on or prior to the Effective Date (taking into
account all applicable extensions). The Returns have accurately reflected
and will accurately reflect all liability for Taxes of RP and its
Subsidiaries for the periods covered thereby.
4.10.2. All Taxes and Tax liabilities of RP and its Subsidiaries
for all taxable years or periods that end on or before the Effective Date
and, with respect to any taxable year or period beginning before and
ending after the Effective Date, the portion of such taxable year or
period ending on and including the Effective Date, have been timely paid
or will be timely paid in full on or prior to the Effective Date or
accrued and adequately disclosed and fully provided for on the books and
records of RP in accordance with GAAP.
4.10.3. Complete and accurate copies of all RP federal, state and
local income tax returns have been made available to CSI.
4.10.4. Neither RP nor any of its Subsidiaries has been the
subject of an audit or other examination of Taxes by the tax authorities
of any nation, state or locality nor has RP or any of its Subsidiaries
received any notices from any taxing authority relating to any issue
which could affect the Tax liability of RP or any of its Subsidiaries.
Neither RP nor any of its Subsidiaries, as of the Effective Date, (A) has
entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the
payment or collection of Taxes of RP or any of its Subsidiaries or (B) is
presently contesting the Tax liability of RP or any of its Subsidiaries
before any court, tribunal or agency. Neither RP nor any of its
Subsidiaries has granted a power-of-attorney relating to Tax matters to
any person. All final adjustments made by the IRS with respect to any
federal tax return of RP or its Subsidiaries have been reported for state
and local income tax purposes to the relevant state or local taxing
authorities.
4.10.5. Neither RP nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return provided for under
the law of the United States, any foreign jurisdiction or any state or
locality with respect to Taxes for any taxable period for which the
statute of limitations has not expired (other than a Return with respect
to which RP was the common parent).
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4.10.6. All Taxes which RP or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or
collected and have been timely paid over to the proper authorities to the
extent due and payable.
4.10.7. There are no Tax sharing, allocation, indemnification or
similar agreements in effect as between RP or any predecessor or
affiliate thereof and any other party under which RP or any of its
Subsidiaries could be liable for any Taxes or other claims of any party
other than of RP and its Subsidiaries.
4.10.8. No requests for ruling or determination letters relating
to federal, state or local income taxes paid or payable by RP or any of
its Subsidiaries are pending with any taxing authority.
4.10.9. (a) Neither RP nor any RP Subsidiary has agreed to or is
required to make any adjustment pursuant to Section 481 of the Code or
the corresponding tax laws of any nation, state or locality by reason of
a change in accounting method initiated by RP or its Subsidiaries or
required by law, (b) RP has no knowledge that the IRS or any other taxing
authority has proposed or purported to require any such adjustment or
change in accounting method and (c) RP has no knowledge or belief that
any such adjustment under Section 481 of the Code or the corresponding
tax laws of any nation, state or locality will be required of RP or its
Subsidiaries upon the completion of, or by reason of, the transaction
contemplated by this Agreement.
4.10.10. (a) There are no deferred intercompany transactions
between RP and any of its Subsidiaries or between its Subsidiaries which
will or may result in the recognition of income upon the consummation of
the transaction contemplated by this Agreement, and (b) there are no
other transactions or facts existing with respect to RP and/or its
Subsidiaries which by reason of the consummation of the transaction
contemplated by this Agreement will result in RP and/or its Subsidiaries
recognizing income.
4.10.11. There are no Tax liens on any of the assets or property
of RP or its Subsidiaries.
4.10.12. There are no contracts, agreements or plans entered into
by RP or its Subsidiaries covering any person that individually or
collectively would require RP or any of its Subsidiaries to make any
payments of any amount which would not be deductible by reason of the
provisions of Section 162(m) or Section 280G of the Code.
4.10.13. Neither RP nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f) of the Code) owned by it.
4.11. CERTAIN EMPLOYEE PLANS.
4.11.1. Each Benefit Plan maintained by any RP Controlled Group
Member (the "RP Benefit Plans") complies with, and has been administered
in accordance with, in all material respects, all applicable requirements
of law, except for instances of non-compliance that would not reasonably
be expected to have caused, individually or in the aggregate, an RP
Material Adverse Effect. The RP Benefit Plans are listed in the RP
Disclosure Schedule and copies or descriptions of all material Plans have
previously been provided to CSI.
4.11.2. With respect to each RP Benefit Plan intended to qualify
under Section 401(a) of the Code, (a) a favorable determination letter
has been issued by or an application is pending with the IRS with respect
to the qualification of each RP Benefit Plan and (b) no "reportable
event" or "prohibited transaction" (as such terms are defined in ERISA
and the Code) or termination has occurred under circumstances which
present a risk of material liability by any RP Controlled Group Member to
any governmental entity or other person, including an RP Benefit Plan.
Each RP Benefit Plan which is subject to Part 3 of Subtitle B of Title I
of ERISA or Section 412 of the Code has been maintained in compliance
with the minimum funding standards of ERISA and the Code and no such RP
Benefit Plan has incurred any "accumulated funding deficiency" (as
defined in Section 412 of the Code and Section 302 of ERISA), whether or
not waived. No RP Controlled Group Member directly or indirectly
contributes to, has an obligation to contribute to or has or could be
reasonably expected
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to have liability with respect to, and has not directly or indirectly
maintained, sponsored, contributed to or had an obligation to contribute
to at any time within the 10 year period ending on the date of the
Closing, any employee benefit plan which is a multi-employer plan subject
to the requirements of Subtitle E of Title IV of ERISA.
4.11.3. Except as required by Code section 4980B or 162 or Part 6
of Subtitle B of Title I of ERISA, no RP Controlled Group Member provides
any health, welfare or life insurance benefits to any of its former or
retired employees, which benefits would be material either individually
or in the aggregate to RP.
4.12. LABOR MATTERS.
4.12.1. Except as set forth in the RP Disclosure Schedule, neither
RP nor any of its Subsidiary is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of RP, overtly
threatened against RP or its Subsidiaries relating to their business,
except for any such proceeding which would not reasonably be expected to
have, individually or in the aggregate, an RP Material Adverse Effect. To
the knowledge of RP, there are no organizational efforts with respect to
the formation of a collective bargaining unit presently being made or
overtly threatened involving employees of RP or any of its Subsidiaries.
4.12.2. RP has delivered to CSI copies of all employment
agreements, consulting agreements, severance agreements, bonus and
incentive plans, profit-sharing plans and other material agreements,
plans or arrangements with respect to compensation of the employees of RP
and its Subsidiaries (the "RP Compensation Arrangements"). The Merger
will not accelerate or otherwise give rise to payments pursuant to the RP
Compensation Arrangements.
4.13. ENVIRONMENTAL LAWS AND REGULATIONS.
4.13.1. RP and each of its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws which compliance
includes, but is not limited to, the possession by RP and the RP
Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Neither RP nor any of
its Subsidiaries has received written notice of, or, to the knowledge of
RP, is the subject of, any action, cause of action, claim, investigation,
demand or notice, including without limitation, non-compliance orders,
warning letters or notices of violation, by any person or entity alleging
liability under or non-compliance with any Environmental Law (an "RP
Environmental Claim"), nor to the knowledge of RP is there any basis for
any RP Environmental Claim that would reasonably be expected to have,
individually or in the aggregate, an RP Material Adverse Effect. To the
knowledge of RP there are no circumstances that are reasonably likely to
prevent or interfere with such material compliance or give rise to such
liability in the future.
4.13.2. There are no RP Environmental Claims which would
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect that are pending or, to the knowledge of RP,
overtly threatened against RP or any of its Subsidiaries or, to the
knowledge of RP, against any person or entity whose liability for any RP
Environmental Claim RP or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
4.13.3. Neither RP nor any RP Subsidiary (a) has handled or
discharged, nor has it allowed or arranged for any third party to handle
or discharge, any hazardous substances to, at or upon: (i) any location
other than a site lawfully permitted to receive such hazardous
substances, (ii) any parcel of real property owned or leased by RP or any
of its Subsidiaries, except in compliance with applicable Environmental
Laws; (iii) any site which, pursuant to CERCLA or any similar state law
(x) has been placed on the National Priorities List or its state
equivalent, or (y) the Environmental Protection Agency or the relevant
state agency has notified RP that it has proposed or is proposing to
place on the National Priorities List or its state equivalent; or (b) has
any knowledge that there has occurred or is presently occurring a
discharge, or threatened discharge, of any
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hazardous substance on, into or beneath the surface of, or
adjacent to, any real property owned or leased by RP or the
RP Subsidiaries.
4.13.4. The RP Disclosure Schedule identifies (a) all
environmental audits, assessments, or occupational health studies
undertaken by RP or its agents on its behalf, or, to the knowledge of RP,
undertaken by any governmental authority, or any third party, relating to
or affecting any real property owned or leased by RP or any RP
Subsidiary; (b) the results of any ground, water, soil, air or asbestos
monitoring undertaken by RP or its agents on its behalf, or, to the
knowledge of RP, undertaken by any governmental authority or any third
party, relating to or affecting any real property owned or leased by RP
or any RP Subsidiary; (c) all material written communications between RP
and any governmental authority arising under or related to Environmental
Laws; and (d) all outstanding citations issued under OSHA, or similar
state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings or decrees relating to or affecting any real property
owned or leased by RP or the RP Subsidiaries.
4.14. REAL PROPERTY.
4.14.1. RP has delivered to CSI either copies or fair and accurate
summaries (the "RP Property Documents") of each of its leases, subleases,
deeds, material licenses or other material agreements or instruments (and
any amendments thereto) under which RP or any of its Subsidiaries owns,
uses or occupies or has the right to use or occupy, now or in the future,
any real property (the "RP Real Estate Agreements"). Each RP Real Estate
Agreement is valid, binding and in full force and effect, all rent and
other sums and charges payable by RP and its Subsidiaries as tenants
thereunder are current, no termination event or condition or uncured
default of a material nature on the part of RP or any RP Subsidiary or,
to the knowledge of RP, as to a landlord, exists under any RP Real Estate
Agreement, except for any of the foregoing matters which would not
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect. The information contained in the RP Property
Documents is true and correct in all material respects.
4.14.2. Except for any of the following matters which would not
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect:
(a) RP has not granted, and to the best of RP's
knowledge, no other person has granted, any leases, subleases,
licenses or other agreements granting to any person other than
RP any right to possession, use, occupancy or enjoyment of the
property covered by the RP Real Estate Agreements, or any
portion thereof, and
(b) RP is not obligated under any option, right of
first refusal or any contractual right to purchase, acquire,
sell or dispose of any real property covered by the RP Real
Estate Agreements.
4.14.3. None of the RP Real Estate Agreements contains continuous
operating covenants, radius restrictions or provisions requiring the
consent of the landlord to the Merger or the assumption of RP's
obligations under the RP Real Estate Agreements in the manner
contemplated by this Agreement, except for any of the foregoing matters
which would not reasonably be expected to have, individually or in the
aggregate, an RP Material Adverse Effect.
4.15. LIMITATION ON BUSINESS CONDUCT. Neither RP nor any of the RP
Subsidiaries is a party to, or has any obligation under, any contract or
agreement, written or oral, which contains any covenants currently or
prospectively limiting in any material respect the freedom of RP or any
of the RP Subsidiaries to engage in any line of business or to compete
with any entity or which would prohibit the business of RP, CSI or any of
their respective Subsidiaries from being conducted in substantially the
same manner as it was conducted prior to the Merger.
4.16. TITLE TO PROPERTY. Each of RP and each of the RP
Subsidiaries owns the material properties and assets that it purports to
own free and clear of all liens, security interests, charges or
encumbrances, except for any liens, security interests, charges or
encumbrances which arise in the ordinary course of business (including
mechanics' liens and other similar statutory liens) and do not materially
impair RP's or any RP Subsidiary's ownership or use of any
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such properties or assets, or liens for taxes not yet due. The rights,
properties and assets presently owned, leased or licensed by RP include
all rights, properties and assets necessary to permit RP and the RP
Subsidiaries to conduct their business in all material respects in the
same manner as their businesses have been conducted prior to the date
hereof.
4.17. INSURANCE. RP and the RP Subsidiaries maintain with respect
to their operations and their assets, in full force and effect, policies
of insurance in the ordinary course of business as is usual and customary
for businesses similarly situated to RP. RP has provided CSI copies of
all insurance policies so maintained and all claims associated with its
operations and the operations of its Subsidiaries since their
incorporation.
4.18. INTELLECTUAL PROPERTY. Every material trade secret
(including know-how, inventions, designs and processes), patent, patent
right, trademark, trademark right, logo, service mark, trade name or
copyright, or application thereof, and licenses and rights with respect
to the foregoing, used in connection with the business of RP and its
Subsidiaries, (the "RP Intellectual Property"), is protected by RP in a
manner which, under the circumstances, is prudent and commercially
reasonable and owned by RP or its Subsidiaries free and clear of any
liens, encumbrances, claims or restrictions whatsoever which would have
an RP Material Adverse Effect, direct or indirect. There are no valid
grounds for any bona fide claims (i) to the effect that the business of
RP or any of the RP Subsidiaries infringes on any copyright, patent,
trademark, service mark or trade secret; (ii) against the use by RP or
any of the RP Subsidiaries, of any patents, patent rights, trademarks,
trademark rights, logos, trade names, service marks, trade secrets,
copyrights, technology, know-how or computer software programs and
applications used in the business of RP or any of the RP Subsidiaries as
currently conducted or as proposed to be conducted; (iii) challenging the
ownership, validity or effectiveness of any of the patents, patent
rights, registered and material unregistered trademarks, logos and
service marks, registered copyrights, trade names and any applications
therefor owned by RP or any of the RP Subsidiaries or other trade secret
material to RP or any of the RP Subsidiaries; or (iv) challenging the
license or legally enforceable right to use of any third-party patents,
patent rights, trademarks, trademark rights, logos, service marks, trade
names and copyrights by RP or any of the RP Subsidiaries, except, in each
case, for claims that, if determined adversely to RP, would not
reasonably be expected to have, individually or in the aggregate, an RP
Material Adverse Effect. Neither RP nor any of its Subsidiaries has
granted to any other person the right to use the RP Intellectual
Property, or any part thereof. RP is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to
any owner of, licensor of, or other claimant to, any patent, patent
rights, trademark, trademark rights, logo, service mark, trade name,
trade name rights, copyright or other intangible assets, with respect to
the use thereof or in connection with the conduct of its business or
otherwise.
4.19. CERTAIN CONTRACTS. RP has delivered copies of each contract
to which RP or any of its Subsidiaries is a party (i) calling for
payments in excess of $100,000 in the case of any contract or series of
related contracts or (ii) otherwise material to RP or any of its
Subsidiaries, or by which any of their respective properties or assets
are bound. RP and its Subsidiaries, and to RP's knowledge the other
parties thereto, are in compliance in all material respects with all
material terms of such contracts.
4.20. NO BROKERS. Neither RP nor any RP Subsidiary has entered
into any contract, arrangement or understanding with any person or firm
which may result in the obligation of RP or CSI or Merger Sub to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transaction contemplated hereby, except that RP has
retained NatCity Investments, Inc. and Berenson Minella & Company, L.P.
as its financial advisors and NatCity Investments, Inc. to render a
fairness opinion as set forth herein. The arrangements with NatCity
Investments, Inc. and Berenson Minella & Company, L.P. have been
disclosed in writing to CSI prior to the date hereof.
4.21. CONFLICTS OF INTEREST. No officer, or director, or, to the
knowledge of RP, no significant shareholder, employee or consultant of RP
or any RP Subsidiary, or any affiliate of such person has any direct or
indirect interest (except a passive investment in less than 5% of the
publicly traded stock of a public company) (a) in any corporation,
partnership, proprietorship, association, or other person or entity which
does business with RP or any RP Subsidiary, (b) in any property, asset or
right which is used by RP or any RP Subsidiary in the conduct of its
business, or (c) in any contract to which RP is a party or by which RP
may or any RP Subsidiary be bound, nor are any amounts owing to any such
person by, or due to such person from, RP or any RP Subsidiary.
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4.22. PERSONAL PROPERTY. RP owns all of its material personal
property, including, without limitation, the material personal property
reflected in the RP Balance Sheet, except for personal property disposed
of in the ordinary course of business since the RP Balance Sheet Date,
subject to no mortgage, pledge, lien, charge, security interest,
encumbrance or restriction, except those which are shown and described in
the RP Balance Sheet or the notes thereto. All personal properties
purported to be leased by RP are subject to valid and effective leases.
4.23. TAKEOVER STATUTE. The Board of Directors of RP has taken all
appropriate action so that neither CSI nor Merger Sub will be an
"interested stockholder" of RP within the meaning of or subject to
Section 203 of the DGCL.
4.24. DISCLOSURE. Neither RP nor any RP Subsidiary has knowingly
withheld from CSI any material facts relating to RP's and any RP
Subsidiary's assets, business, operations, financial conditions, or
prospects. No representation or warranty in this Agreement contains any
untrue statement of a material fact.
4.25. ADDITIONAL DISCLOSURE. Prior to and in connection with the
Merger, RP has no intention to redeem any RP Common Stock or make any
extraordinary distributions with respect thereto, and the persons that
are related to RP within the meaning of Temporary Treasury Regulation ss.
1.368-1T(e)(2)(ii) have not and will not acquire any RP Common Stock from
any holder thereof with consideration other than RP Common Stock.
(a) Following the Merger, RP intends to hold at least
90 percent of the fair market value of its net assets and at
least 70 percent of the fair market value of its gross assets
held immediately prior to the Effective Date. For purposes of
this representation, amounts paid by RP to stockholders who
receive cash or other property pursuant to the Merger, amounts
paid by RP to pay reorganization expenses, and all redemptions
and distributions (except for regular, normal dividends) made
by RP immediately preceding the Effective Date, will be
included as assets of RP held immediately prior to the
Effective Date.
(b) RP has no plan or intention to issue additional
shares of its stock (or securities, options, warrants or
instruments giving the holder thereof the right to acquire RP
stock) that would (or if exercised would) result in CSI losing
control of RP within the meaning of Section 368(c) of the
Code.
(c) RP will not assume any liabilities of Merger Sub
(other than those liabilities, if any, incurred by Merger Sub
in the ordinary course of its business) or acquire any assets
of Merger Sub that are subject to liabilities (other than
those liabilities, if any, incurred by Merger Sub in the
ordinary course of its business).
(d) Following the Merger, RP intends to continue its
historic business or use a significant portion of its historic
business assets in a business.
(e) Except as provided in this Agreement, each of RP
and its stockholders will pay their respective expenses, if
any, incurred in connection with the Merger.
(f) There is no intercorporate indebtedness existing
between CSI and RP, or between Merger Sub and RP, that was
issued, acquired or will be settled at a discount.
(g) RP is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(h) On the date of the Merger, the fair market value
of the assets of RP will exceed the sum of its liabilities,
plus the amount of liabilities, if any, to which the assets
are subject.
(i) RP is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
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(j) RP will not take any action that might otherwise
cause the Merger not to be treated as a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code.
ARTICLE 5. COVENANTS.
5.1. NO SOLICITATION BY RP.
(a) RP shall not, directly or indirectly, through
any officer, director, employee, representative or agent of RP
or any of the RP Subsidiaries, solicit or encourage the
initiation of (including by way of furnishing information) any
inquiries or proposals regarding any merger, sale of assets,
sale of shares of capital stock (including without limitation
by way of a tender offer) or similar transactions involving RP
or any of the RP Subsidiaries that if consummated would
constitute an RP Alternative Transaction (as defined in
Section 7.4.2) (any of the foregoing inquiries or proposals
being referred to herein as an "RP Acquisition Proposal"). In
addition, subject to the other provisions of this Section
5.1(a) (including the following sentence), from and after the
date of this Agreement until the earlier of the Effective Time
or termination of this Agreement pursuant to its terms, RP and
its subsidiaries will not, and will instruct their officers,
directors, employees, representatives and agents not to,
directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of, or
commenting positively regarding, any RP Acquisition Proposal
made by any Person or group of Persons (other than the Merger
provided, that nothing in this Section 5.1 shall prevent the
Board of Directors of RP from taking and disclosing to RP's
stockholders a position contemplated by Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act, with respect to any
tender offer or from making such disclosure to RP's
stockholders (not constituting a recommendation or
solicitation), upon the advice of its independent outside
legal counsel, as is necessary to make under applicable law.
Nothing contained in this Agreement shall prevent the Board of
Directors of RP from (i) furnishing information to a third
party which has made a bona fide RP Acquisition Proposal that
the RP Board of Directors reasonably determines in good faith
contains the material terms of an RP Superior Proposal (as
defined below) not solicited in violation of this Agreement,
provided that such third party has executed an agreement with
confidentiality provisions substantially similar to those then
in effect between RP and CSI, or (ii) subject to compliance
with the other terms of this Section 5.1, including Section
5.1(c), (A) considering and negotiating a bona fide RP
Acquisition Proposal that the RP Board of Directors has
reasonably determined in good faith is likely to constitute an
RP Superior Proposal not solicited in violation of this
Agreement, or (B) recommending to its stockholders an RP
Acquisition Proposal that the RP Board of Directors reasonably
determines in good faith is a Superior Proposal and, in
connection therewith, withdrawing or modifying its
recommendation of the Merger and the transactions contemplated
thereby (which action shall entitle CSI to terminate this
Agreement pursuant to Section 7.4.2 and to receive the CSI
Expenses and CSI Fee, if applicable, as defined in Section
5.13.2); provided that, as to each of clauses (i) and (ii),
(x) such actions occur at a time prior to approval of the
Merger and this Agreement at the RP Stockholders Meeting, and
(y) the Board of Directors of RP reasonably determines in good
faith upon the advice of independent counsel that it is
required to do so in order to discharge properly its fiduciary
duties. For purposes of this Agreement, a "RP Superior
Proposal" means any proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash
and/or securities, all or a majority of the equity securities
of RP entitled to vote generally in the election of directors
or all or substantially all the assets of RP, on terms which
the Board of Directors of RP reasonably believes (i) (upon the
advice of an independent financial advisor) to be more
favorable from a financial point of view to its stockholders
than the Merger and the transactions contemplated by this
Agreement taking into account at the time of determination any
changes to the financial terms of this Agreement proposed by
CSI and (ii) to be more favorable to RP than the Merger and
the transactions contemplated by this Agreement after taking
into account all pertinent factors deemed relevant by the
Board of Directors of RP under the laws of the State of
Delaware.
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(b) RP shall immediately notify CSI after receipt of
any RP Acquisition Proposal, or any material modification of
or amendment to any RP Acquisition Proposal, or any request
for nonpublic information relating to RP or any of its
subsidiaries in connection with an RP Acquisition Proposal or
for access to the properties, books or records of RP or any RP
Subsidiary by any person or entity that informs the Board of
Directors of RP or such RP Subsidiary that it is considering
making, or has made, an RP Acquisition Proposal. Such notice
to CSI shall be made as soon as practicable orally and
confirmed in writing, if requested, and shall indicate the
identity of the person making the RP Acquisition Proposal or
intending to make an RP Acquisition Proposal or requesting
non-public information or access to the books and records of
RP, the terms of any such RP Acquisition Proposal or material
modification or amendment to an RP Acquisition Proposal, and
whether RP is providing or intends to provide the person
making the RP Acquisition Proposal with access to information
concerning RP as provided in Section 5.1(a). RP shall also
immediately notify CSI, as soon as practicable orally and
confirmed in writing, if requested, if it enters into
negotiations concerning any RP Acquisition Proposal. In each
case, the notice to CSI required by this clause (b) may be
limited to the extent that the Board of Directors of RP
reasonably determines in good faith upon the advice of
independent counsel that it is prohibited from giving such
notice in order to properly discharge its fiduciary duties.
(c) Unless this Agreement shall have been terminated
in accordance with its terms, neither RP nor the Board of
Directors of RP shall withdraw or modify, or propose to
withdraw or modify, in a manner adverse to CSI, the approval
by such Board of Directors of this Agreement or the Merger.
(d) Without the prior written consent of CSI, RP and
the Board of Directors of RP shall not enter into any
agreement with respect to, or otherwise approve or recommend,
or propose to approve or recommend, any RP Acquisition
Proposal or RP Alternative Transaction, unless the Merger
Agreement is terminated prior to or substantially
simultaneously with such time pursuant to Sections 7.1 or 7.2
or is terminated prior to such time by RP pursuant to Section
7.3.
(e) RP shall immediately cease and cause to be
terminated any existing discussions or negotiations with any
persons (other than CSI and Merger Sub) conducted heretofore
with respect to any of the foregoing. RP agrees not to release
any third party from the confidentiality and standstill
provisions of any agreement to which RP is a party.
(f) RP shall ensure that the officers and directors
of RP and the RP Subsidiaries and any investment banker or
other advisor or representative retained by RP are aware of
the restrictions described in this Section 5.1.
(g) No action by the Board of Directors of RP
expressly permitted by this Section 5.1 shall constitute a
breach or violation of any other provision of this Agreement,
provided that nothing in this Section 5.1 shall narrow the
obligations of RP under Section 5.4.1.
5.2 NO SOLICITATION BY CSI.
(a) CSI shall not, directly or indirectly, through
any officer, director, employee, representative or agent of
CSI or any of the CSI Subsidiaries, solicit or encourage the
initiation of (including by way of furnishing information) any
inquiries or proposals regarding any merger, sale of assets,
sale of shares of capital stock (including without limitation
by way of a tender offer) or similar transactions involving
CSI or any of the CSI Subsidiaries that if consummated would
constitute a CSI Alternative Transaction (as defined in
Section 7.3.2) (any of the foregoing inquiries or proposals
being referred to herein as "CSI Acquisition Proposal"). In
addition, subject to the other provisions of this Section
5.2(a) (including the following sentence), from and after the
date of this Agreement until the earlier of the Effective Time
or termination of this Agreement pursuant to its terms, CSI
and its subsidiaries will not, and will instruct their
officers, directors, employees,
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representatives and agents not to, directly or indirectly,
make or authorize any public statement, recommendation or
solicitation in support of or commenting positively regarding,
any CSI Acquisition Proposal made by any Person or group of
Persons (other than the Merger), provided, that nothing in
this Section 5.2 shall prevent the Board of Directors of CSI
from taking and disclosing to CSI's stockholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under
the Exchange Act with respect to any tender offer or from
making such disclosure to stockholders (not constituting a
recommendation or solicitation) upon the advice of its
independent outside legal counsel, as is necessary to make
under applicable law. Nothing contained in this Agreement
shall prevent the Board of Directors of CSI from (i)
furnishing information to a third party which has made a bona
fide CSI Acquisition Proposal that the CSI Board of Directors
reasonably determines in good faith contains the material
terms of a CSI Superior Proposal (as defined below) not
solicited in violation of this Agreement, provided that such
third party has executed an agreement with confidentiality
provisions substantially similar to those then in effect
between RP and CSI, or (ii) subject to compliance with the
other terms of this Section 5.2 including Section 5.2 (c), (A)
considering and negotiating a bona fide CSI Acquisition
Proposal that the CSI Board of Directors has reasonably
determined in good faith is likely to constitute a CSI
Superior Proposal not solicited in violation of this
Agreement, or (B) or recommending to its stockholders a CSI
Acquisition Proposal that the CSI Board of Directors
reasonably determines in good faith is a Superior Proposal
and, in connection therewith, withdrawing or modifying its
recommendation of the Merger and the transactions contemplated
thereby (which action shall entitle RP to terminate this
Agreement pursuant to Section 7.3.2 and to receive the RP
Expenses and RP Fee, if applicable, as defined in Section
5.13.3); provided that, as to each of clauses (i) and (ii),
(x) such actions occur at a time prior to approval of the
Merger and this Agreement at the CSI Stockholders Meeting, and
(y) the Board of Directors of CSI reasonably determines in
good faith upon the advice of independent counsel that it is
required to do so in order to discharge properly its fiduciary
duties. For purposes of this Agreement, a "CSI Superior
Proposal" means any proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash
and/or securities, all or a majority of, the equity securities
of CSI entitled to vote generally in the election of directors
or all or substantially all the assets of CSI, on terms which
the Board of Directors of CSI reasonably believes (i) (upon
the advice of an independent financial advisor) to be more
favorable from a financial point of view to its stockholders
that the Merger and the transactions contemplated by this
Agreement taking into account at the time of determination any
changes to the financial terms of this Agreement proposed by
CSI and (ii) to be more favorable to CSI than the Merger and
the transactions contemplated by this Agreement after taking
into account all pertinent factors deemed relevant by the
Board of Directors of CSI under the laws of the State of
Nevada.
(b) CSI shall immediately notify RP after receipt of
any CSI Acquisition Proposal, or any material modification of
or amendment to any CSI Acquisition Proposal, or any request
for nonpublic information relating to RP or any of its
subsidiaries in connection with a CSI Acquisition Proposal or
for access to the properties, books or records of CSI or any
CSI Subsidiary by any person or entity that informs the Board
of Directors of CSI or such CSI Subsidiary that it is
considering making, or has made, a CSI Acquisition Proposal.
Such notice to RP shall be made as soon as practicable orally
and confirmed in writing, if requested, and shall indicate the
identity of the person making the CSI Acquisition Proposal or
intending to make a CSI Acquisition Proposal or requesting
non-public information or access to the books and records of
CSI, the terms of any such CSI Acquisition Proposal or
material modification or amendment to an CSI Acquisition
Proposal, and whether CSI is providing or intends to provide
the person making the CSI Acquisition Proposal with access to
information concerning CSI as provided in Section 5.2(a). CSI
shall also immediately notify RP, as soon as practicable
orally and confirmed in writing, if requested, if it enters
into negotiations concerning any CSI Acquisition Proposal. In
each case, the notice to RP required by this clause (b) may be
limited to the extent that the Board of Directors of CSI
reasonably determines in good faith upon the advice of
independent counsel that it is prohibited from giving such
notice in order to properly discharge its fiduciary duties.
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(c) Unless this Agreement shall have been terminated
in accordance with its terms, neither CSI nor the Board of
Directors of CSI shall withdraw or modify, or propose to
withdraw or modify, in a manner adverse to RP, the approval by
such Board of Directors of this Agreement or the Merger.
(d) Without the prior written consent of RP, CSI and
the Board of Directors of CSI shall not enter into any
agreement with respect to, or otherwise approve or recommend,
or propose to approve or recommend, any CSI Acquisition
Proposal or CSI Alternative Transaction, unless the Merger
Agreement is terminated prior to or substantially
simultaneously with such time pursuant to Sections 7.1 or 7.2
or is terminated prior to such time by CSI pursuant to Section
7.4.
(e) CSI shall immediately cease and cause to be
terminated any existing discussions or negotiations with any
persons (other than RP) conducted heretofore with respect to
any of the foregoing. CSI agrees not to release any third
party from the confidentiality and standstill provisions of
any agreement to which CSI is a party.
(f) CSI shall ensure that the officers and directors
of CSI and the CSI Subsidiaries and any investment banker or
other advisor or representative retained by CSI are aware of
the restrictions described in this Section 5.2.
(g) No action by the Board of Directors of CSI
expressly permitted by this Section 5.2 shall constitute a
breach or violation of any other provision of this Agreement,
provided that nothing in this Section 5.2 shall narrow the
obligations of CSI under Section 5.4.2.
5.3 CONDUCT OF BUSINESSES. Prior to the Effective Date, except as set
forth in the CSI Disclosure Schedule, the RP Disclosure Schedule or as
contemplated by any other portion of this Agreement, unless both parties have
consented in writing thereto, which consent will not be unreasonably withheld,
each party:
5.3.1 Shall, and shall cause each of its Subsidiaries to,
conduct its operations according to its usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
5.3.2 Shall use its reasonable efforts, and shall cause each
of its Subsidiaries to use its reasonable efforts, to preserve intact
its business organization and goodwill, keep available the services of
its officers and employees and maintain satisfactory relationships with
those persons having business relationships with it;
5.3.3 Except to the extent, if any, prohibited by applicable
law or binding confidentiality agreements with third parties, shall
confer on a regular basis with one or more representatives of the other
party to report operational matters of materiality and any proposals to
engage in material transactions;
5.3.4 Shall not amend its articles or certificate of
incorporation or by-laws (except to the extent the Articles of
Incorporation of CSI are amended to authorize the CSI Preferred Stock);
5.3.5 Shall promptly notify the other party of (a) any
material emergency or other material change in the condition (financial
or otherwise), of such party's or any Subsidiary's business,
properties, assets, liabilities, prospects or the normal course of its
businesses or in the operation of its properties, (b) any material
litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be
contemplated), or (c) the breach in any material respect of any
representation or warranty or covenant contained herein;
5.3.6 Shall promptly deliver to the other party true and
correct copies of any report, statement or schedule filed by such party
with the SEC subsequent to the date of this Agreement;
5.3.7 Shall not (a) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement,
issue any shares of its
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capital stock, effect any stock split or otherwise change its
capitalization as it exists on the date hereof, (b) grant, confer or
award any option, warrant, conversion right or other right not existing
on the date hereof to acquire any shares of its capital stock, (c)
increase any compensation or enter into or amend any employment
severance, termination or similar agreement with any of its present or
future officers or directors, except for normal increases in
compensation to employees not earning more than $50,000 in annual base
compensation, consistent with past practice, and the payment of cash
bonuses to employees pursuant to and consistent with existing plans or
programs, nor (d) adopt any new employee benefit plan (including any
stock option, stock benefit or stock purchase plan) or amend any
existing employee benefit plan in any material respect, except for
changes which are less favorable to participants in such plans or as
may be required by applicable law;
5.3.8 Shall not (a) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock, (b) except in connection with the use of shares of
capital stock to pay the exercise price or tax withholding in
connection with stock-based RP Benefit Plans or as required or
otherwise contemplated by this Agreement (including any refinancing in
connection therewith), directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or capital stock of
any of its Subsidiaries, or make any commitment for any such action,
nor (c) split, combine or reclassify any of its capital stock;
5.3.9 Shall not, and shall not permit any of its Subsidiaries
to sell, lease or otherwise dispose of any of its assets (including
capital stock of Subsidiaries) which are material, individually or in
the aggregate, except in the ordinary course of business;
5.3.10 Shall not (a) incur or assume any long-term or
short-term debt or issue any debt securities except for borrowings
under existing lines of credit and indebtedness for working capital in
the ordinary course of business and refinancing of existing
indebtedness in the same amount and on substantially the same terms
(and except that either party may incur indebtedness for the payment of
expenses related to the transactions contemplated by this Agreement and
any financing therefor, provided such indebtedness does not include any
material prepayment penalty or equity component), (b) except for
obligations of wholly-owned Subsidiaries; assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, indirectly,
contingently or otherwise) for the obligations of any other person
except in the ordinary course of business consistent with past
practices in an amount not material to such party, taken as a whole,
(c) other than to wholly-owned Subsidiaries, make any loans, advances
or capital contributions to or investments in, any other person, (d)
pledge or otherwise encumber shares of capital stock of such party or
its Subsidiaries, nor (e) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to create any
material mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect to such asset;
5.3.11 Shall not acquire, sell, lease or dispose of any assets
outside the ordinary course of business or any assets which in the
aggregate are material to such party taken as a whole, or enter into
any commitment or transaction outside the ordinary course of business
consistent with past practice which would be material to such party
taken as a whole;
5.3.12 Except as may be required as a result of a change in
law or in GAAP, shall not change any of the accounting principles or
practices used by such party;
5.3.13 Shall not (a) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership, limited
liability company or other business organization or division thereof or
any equity interest therein, (b) enter into any contract or agreement
other than in the ordinary course of business consistent with past
practice which would be material to such party taken as a whole, (c)
authorize any new capital expenditure or expenditures which,
individually, is in excess of $25,000 or, in the aggregate, is in
excess of $150,000; provided, that none of the foregoing shall limit
any capital expenditure within the aggregate amount previously
authorized by such party's Board of Directors for capital expenditures
and written evidence thereof has been previously provided to the other
party, nor (d) enter into or amend any contract, agreement, commitment
or arrangement providing for the taking of any action which would be
prohibited hereunder;
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5.3.14 Shall not (a) make any Tax election with respect to
such party or its Subsidiaries or settle or compromise any Tax
liability material to such party or its Subsidiaries taken as a whole
or (b) file or cause to be filed any amended Return or claims for
refund with respect to such party or its Subsidiaries;
5.3.15 Shall not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction of business liabilities reflected or reserved against in,
and contemplated by, the financial statements (or the notes thereto) of
such party or incurred in the ordinary course of business consistent
with past practice;
5.3.16 Shall not settle or compromise any pending or
threatened suit, action or claim relating to the transaction
contemplated hereby;
5.3.17 Shall not adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or reorganization; or
5.3.18 Shall not take, or agree in writing or otherwise to
take, any of the actions described in Section 5.3.1 through 5.3.17 or
any action that would make any of the representations and warranties of
a party hereto contained in this Agreement untrue or incorrect as of
the date when made.
5.4 MEETINGS OF STOCKHOLDERS.
5.4.1 RP has received from NatCity Investments, Inc. its
opinion on the fairness to the holders of RP Shares, from a financial
point of view, of the terms of the Merger, pursuant to the terms of an
engagement letter presented to CSI. RP will take all action reasonably
necessary in accordance with applicable law and its Certificate of
Incorporation and By-laws to convene a meeting of its stockholders as
promptly as practicable to consider and vote upon the approval of this
Agreement and the transaction contemplated hereby. The Board of
Directors of RP shall recommend such approval and RP shall take all
reasonable lawful action to solicit such approval, including, without
limitation, timely mailing the Proxy Statement (as defined in Section
5.11); provided, however, that the Board of Directors of RP shall not
be required to make such recommendation if the Board of Directors of RP
reasonably determines in good faith, based as to legal matters on the
advice of outside legal counsel, that such action would violate its
fiduciary duties. CSI shall coordinate and cooperate with RP with
respect to the timing of such meeting and RP shall use its best efforts
to hold such meeting as soon as is practicable.
5.4.2 CSI has received from Lehman Brothers its opinion on the
fairness to the holders of CSI Shares, from a financial point of view,
of the terms of the Merger, pursuant to the terms of an engagement
letter presented to RP. CSI will take all action reasonably necessary
in accordance with applicable law and its Articles of Incorporation and
By-laws to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon the approval of this Agreement
and the transaction contemplated hereby. The Board of Directors of CSI
shall recommend such approval and CSI shall take all reasonable lawful
action to solicit such approval, including, without limitation, timely
mailing the Proxy Statement (as defined in Section 5.11); provided,
however, that the Board of Directors of CSI shall not be required to
make such recommendation if the Board of Directors of CSI reasonably
determines in good faith, based as to legal matters on the advice of
outside legal counsel, that such action would violate its fiduciary
duties. RP shall coordinate and cooperate with CSI with respect to the
timing of such meeting and CSI shall use its best efforts to hold such
meeting as soon as is practicable.
5.4.3 The Board of Directors of either CSI or RP may delay the
meeting of such party's stockholders required by this Section 5.4 for
no more than 30 days to the extent such Board of Directors reasonably
determines in good faith, based on the advice of outside legal counsel,
that it is required by its fiduciary duties to delay such meeting to
consider a bona fide Acquisition Proposal that such Board of Directors
reasonably determines in good faith contains the material terms of a
Superior Proposal received without violation of this Agreement
(provided that in such event the party which has so delayed such
meeting may not
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terminate this Agreement pursuant to Section 7.2(a) until at least 5
days after the date on which such meeting is actually held).
5.5 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, each party shall: (a) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Date with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Date from, governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby, and (ii) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations; and (b) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transaction
contemplated by this Agreement. If, at any time after the Effective Date, any
further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of each party shall take all such
necessary action.
5.6 INSPECTION OF RECORDS; ACCESS. Except to the extent, if any,
prohibited by applicable law or binding confidentiality agreements with third
parties, from the date hereof to the Effective Date, each party shall allow all
designated officers, attorneys, accountants and other representatives of the
other party (the "Other Party's Representatives") access at all reasonable times
to all employees, stores, offices, warehouses, and other facilities and to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs, of such party and its
Subsidiaries; provided, however, the Other Party's Representatives shall use
their reasonable best efforts to avoid interfering with, hindering or otherwise
disrupting the employees of such party in the execution of their employment
duties during any visit to, or inspection of, such party's facilities.
5.7 PUBLICITY. The initial press release relating to this Agreement
shall be a joint press release and thereafter each party shall, subject to its
respective legal obligations (including requirements of stock exchanges and
other similar regulatory bodies), consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing any such
press release or otherwise making public statements with respect to the
transaction contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
with respect thereto.
5.8 REGISTRATION STATEMENT/PROXY STATEMENT.
5.8.1 As promptly as practicable after the execution of this
Agreement, CSI and RP shall prepare and file with the SEC preliminary
proxy materials which shall constitute the preliminary Proxy Statement
(as defined in Section 5.11) and a preliminary prospectus with respect
to the CSI Preferred Stock to be issued in connection with the Merger.
As promptly as practicable after comments are received from the SEC
with respect to the preliminary proxy materials and after the
furnishing by RP and CSI of all information required to be contained
therein, RP shall file with the Commission the definitive Proxy
Statement and CSI shall file with the Commission the definitive Proxy
Statement and Registration Statement (as defined in Section 5.11) and
CSI and RP shall use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable.
5.8.2 CSI and RP shall make all necessary filings with respect
to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder, under applicable Blue Sky or similar
securities laws, and shall use all reasonable efforts to obtain
required approvals and clearances with respect thereto.
5.9 COMPLIANCE WITH THE SECURITIES ACT; RESALE PROSPECTUS
5.9.1 Prior to the Effective Date, RP shall deliver to CSI a
letter setting forth a true and complete list of persons whom the
Company believes may be deemed to be "affiliates" of RP as that term is
used in paragraphs (c) and (d) of Rule 145 under the Securities Act
(the "Affiliates").
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5.9.2 RP shall use its reasonable best efforts to obtain as
promptly as practicable a written agreement from each person who is
identified as an Affiliate in the letter referred to in Section 5.9.1
above, in the form previously approved by the parties, that he or she
will not offer to sell, sell or otherwise dispose of any of the CSI
Preferred Stock (or CSI Common Stock issuable upon conversion thereof)
issued to him or her pursuant to the Merger, except in compliance with
Rule 145 under the Securities Act or another exemption from the
registration requirements of the Securities Act. RP shall deliver all
such written agreements obtained by it to CSI on or prior to the
Effective Date.
5.9.3 CSI shall use its reasonable best efforts to file with
the SEC as promptly as practicable following the Effective Date, and
cause to become effective, a registration statement for the purpose of
permitting the CSI Preferred Stock (or CSI Common Stock issuable upon
conversion thereof) issued to any such Affiliate to be resold by such
Affiliate, and to maintain such registration statement in effect until
such time as such Affiliates may resell such stock pursuant to an
applicable exemption therefrom.
5.10. TAKEOVER PROVISIONS INAPPLICABLE. RP agrees that it will not take
any action to render Section 203 of the DGCL applicable to the Merger and the
other transactions contemplated hereby, and CSI agrees that it will not take any
action to render Sections 78.438 and 78.439 the NGCL applicable to (x) the
acquisition of CSI Preferred Stock pursuant to the Merger or (y) the conversion
of the CSI Preferred Stock into the CSI Common Stock.
5.11. INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENTS,
ETC. Each of CSI, Merger Sub and RP agree that none of the information supplied
by it for inclusion in (a) the Registration Statement to be filed with the SEC
by CSI on Form S-4 under the Securities Act for the purpose of registering
shares of CSI Preferred Stock to be issued in the Merger (the "Registration
Statement") and all other documents required to be filed by CSI with the SEC and
(b) the prospectus/proxy statement of RP and CSI (the "Proxy Statement") to be
mailed to the stockholders of RP and CSI in connection with the Merger will, in
the case of the Proxy Statement or any amendments or supplements thereto, at the
time of mailing of the Proxy Statement or any amendments or supplements thereto,
and at the time of the RP Meeting to be held in connection with the Merger and
the CSI meeting to be held in connection with the Merger, or, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. CSI and Merger Sub agree that the Registration Statement will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated thereunder. RP and CSI agree that the
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder. Each of
CSI and RP agrees to make all reasonable representations and covenants in
connection with the opinions of counsel, if any, required to be attached to the
Registration Statement and Proxy Statement with respect to the correctness of
the discussion therein as to the material federal income tax consequences of the
Merger.
5.12. FURTHER ACTION. Each party hereto shall, subject to the
fulfillment at or before the Effective Date of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
5.13. FEES AND EXPENSES.
5.13.1 Except as provided below in this Section 5.13, if the
Merger is not effected, all costs and expenses incurred in connection
with this Agreement and in the transaction contemplated hereby shall be
paid by the party incurring such expense except that (a) to the extent
that the RP Fee or the CSI Fee (each as defined below) is not payable,
RP and CSI each agree to pay 50% of all printing expenses incurred by
either party in connection with the Registration Statement and the
Proxy Statement and (b) as provided in Section 5.13.2 or 5.13.3, as
applicable, below.
5.13.2 If this Agreement is terminated by RP pursuant to
Section 7.3.3 or this Agreement is terminated by CSI pursuant to
Section 7.4.2, RP shall pay to CSI an amount equal to CSI's and Merger
Sub's actual, reasonable and documented expenses (including without
limitation financing therefor) incurred after
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January 18, 1999 and on or prior to the termination date of this
Agreement relating to the transactions contemplated by this Agreement
(the "CSI Expenses"), provided that RP shall not be responsible for any
CSI Expenses in excess of $1,000,000 in the aggregate. If during the
365 day period immediately following the termination of this Agreement,
RP shall enter into a transaction which would constitute an RP
Alternative Transaction with or involving an RP Third Party who
directly or indirectly initiated or otherwise had any contact with RP
with respect to any such transaction prior to the termination of this
Agreement, RP will pay to CSI, in addition to the CSI Expenses, a fee
equal to $750,000 (the "CSI Fee"), and, if RP enters into such a
transaction following a termination of this Agreement pursuant to
Section 7.2(b), RP shall also then pay to CSI the CSI Expenses to the
extent, if any, that such CSI Expenses were not otherwise due and
payable at the time of such termination.
5.13.3 If this Agreement is terminated by CSI pursuant to
Section 7.4.3 or this Agreement is terminated by RP pursuant to Section
7.3.2, CSI shall pay to RP an amount equal to RP's actual, reasonable
and documented expenses (including without limitation financing
therefor) incurred after January 18, 1999 and on or prior to the
termination date of this Agreement relating to the transactions
contemplated by this Agreement (the "RP Expenses"), provided that CSI
shall not be responsible for any RP Expenses in excess of $1,000,000 in
the aggregate. If during the 365 day period immediately following the
termination of this Agreement, CSI shall enter into a transaction which
would constitute an CSI Alternative Transaction with or involving a CSI
Third Party who directly or indirectly initiated or otherwise had any
contact with CSI with respect to any such transaction prior to the
termination of this Agreement, CSI will pay to RP, in addition to the
RP Expenses, a fee equal to $750,000 (the "RP Fee"), and, if CSI enters
into such a transaction following a termination of this Agreement
pursuant to Section 7.2(c), CSI shall also then pay to RP the RP
Expenses to the extent, if any, that such RP Expenses were not
otherwise due and payable at the time of such termination.
5.13.4 If this Agreement is terminated pursuant to Section
7.2(a) because the condition set forth in Section 6.1.7 has not been satisfied
despite the reasonable best efforts of RP to cooperate in satisfying such
condition, CSI shall pay the RP Expenses to the extent incurred prior to notice
from CSI to RP that such condition will not be, or is not likely to be,
satisfied.
5.13.5 Any CSI or RP Fee and/or CSI or RP Expenses payable
pursuant to Section 5.13.2, 5.13.3 or 5.13.4 as the case may be, shall
be paid in immediately available funds within five business days after
a demand for payment following the first to occur of any of the events
described in Section 5.13.2, 5.13.3 or 5.13.4, as the case may be, and
entitling a party to payment; provided that, in no event shall RP or
CSI, as the case may be, be required to pay such Fee and/or Expenses to
the entities entitled thereto, if, immediately prior to the termination
of this Agreement, the entity entitled to receive such Fee and/or
Expenses was in material breach of its obligations under this Agreement
(and such breach, if curable, was not cured within 30 days after
written notice of such breach is given to such entity by the other
party).
5.14 STOCKHOLDERS' AGREEMENT; VOTING AGREEMENTS.
(a) Simultaneously with the execution of this Agreement CSI is entering into (i)
a Stockholder Agreement with certain stockholders or prospective stockholders of
CSI identified in Exhibit 5.14(a)(i) hereto providing for the election of
directors of CSI and (ii) Voting Agreements pursuant to which certain
stockholders of RP identified in Exhibit 5.14(a)(ii) hereto agree to vote all
shares of RP Common Stock over which they have voting power in favor of the
Merger and the transactions contemplated hereby. (b) Simultaneously with the
execution of this Agreement, RP is entering into Voting Agreements pursuant to
which certain stockholders of CSI identified in Exhibit 5.14(b) hereto agree to
vote all shares of CSI Common Stock over which they have power in favor of the
Merger and the transactions contemplated hereby.
5.15 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. CSI agrees
that at all times after the Effective Date, it will and shall cause the
Surviving Corporation to, for not less than six years, indemnify each person who
is a director or officer of RP on the date hereof (individually an "Indemnified
Party" and collectively the "Indemnified Parties"), with respect to any claim,
liability, loss, damage, judgment, fine, penalty, amount paid in settlement or
compromise, cost or expense, including reasonable fees and expenses of legal
counsel ("Indemnified Liability"), to the extent such Indemnified Party would
have been indemnified pursuant to RP's articles of incorporation
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or by-laws as in effect as of the date hereof, based in whole or in part on, or
arising in whole or in part out of, any matter existing or occurring at or prior
to the Effective Date whether commenced, asserted or claimed before or after the
Effective Date, and shall advance expenses to such Indemnified Party to the
extent such Indemnified Party would have been advanced expenses pursuant to RP's
articles of incorporation or by-laws as in effect as of the date hereof. CSI
shall, and shall cause the Surviving Corporation to, maintain in effect for not
less than six years after the Effective Date, the current policies of directors'
and officers' liability insurance maintained by RP on the date hereof (provided
that CSI may substitute therefor policies having at least the same coverage and
containing terms and conditions which are no less advantageous to the persons
currently covered by such policies as insured) with respect to matters existing
or occurring on or prior to the Effective Date.
5.16 RP STOCK PLANS. CSI agrees to file a registration statement with
respect to any RP stock option plan, to the extent that such filings are
required to enable holders of options granted under Section 1.8.1 to freely
exercise such options and (except for holders who may be deemed to be affiliates
of CSI) to freely sell shares acquired by the exercise of such options (assuming
such shares would be freely salable pursuant to an effective registration
statement covering such plans). Nothing set forth herein shall require CSI to
register such exercises on any form other than Form S-8. On and after the
Effective Date, CSI will assume and discharge all obligations of RP with respect
to registration rights agreements disclosed on the RP Disclosure Schedule.
5.17 REORGANIZATION. The parties hereto intend to adopt this Agreement
and the transactions contemplated hereby as a plan of reorganization under
Section 368(a) of the Code. No party hereto, without the consent of the other
parties hereto, will take any action that could reasonably be expected to cause
the Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code. Each of the parties shall report the Merger for income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
(and any comparable state or local statute).
ARTICLE 6. CONDITIONS.
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of the following conditions:
6.1.1. This Agreement and the transaction contemplated hereby
shall have been approved in the manner required by applicable law or by
applicable regulations of any stock exchange or other regulatory body
and by the holders of the issued and outstanding shares of capital
stock of each of RP and CSI entitled to vote thereon.
6.1.2. None of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction which
prohibits the consummation of the transaction contemplated by this
Agreement or has a material adverse effect on a party hereto (including
the requirement that either party divest any material portion of its
assets). In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any
such injunction lifted.
6.1.3. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or
made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Date and except
where the failure to have obtained or made any such consent
authorization, order, approval, filing or registration would not have a
CSI Material Adverse Effect or an RP Material Adverse Effect following
the Effective Date.
6.1.4. The CSI Common Stock issuable upon conversion of the
CSI Preferred Stock shall have been listed or approved for listing upon
notice of issuance on the NASDAQ National Market System, if qualified,
or otherwise quoted on NASDAQ.
6.1.5. The Registration Statement shall have been declared
effective.
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6.1.6. All applicable Blue Sky laws shall have been complied
with.
6.1.7. CSI shall have received sufficient financing to satisfy
ongoing working capital needs of CSI and RP following the Transaction
and to refinance existing indebtedness of both companies (and their
respective Subsidiaries to the extent applicable) on terms
substantially no less favorable than the terms of the most current
proposals therefor furnished by CSI to RP prior to the date of this
Agreement, or otherwise reviewed and approved by each party in good
faith.
6.2. CONDITIONS TO OBLIGATION OF RP TO EFFECT THE MERGER. The
obligation of RP to effect the Merger shall be subject to the fulfillment at or
prior to the Closing of the following conditions:
6.2.1. CSI shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing and the representations and warranties of CSI
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct in all material respects (or, to the
extent any such representation is qualified by reference to materiality
or to a CSI Material Adverse Effect, is entirely true and correct) as
of the Closing Date, and RP shall have received a certificate of the
President or a Vice President of CSI, dated the Closing Date,
certifying to such effect.
6.2.2. From the date of this Agreement through the Effective
Date, there shall not have occurred any change in the financial
condition, business, operations or prospects of CSI and its
Subsidiaries, taken as a whole, that would reasonably be expected to
have a CSI Material Adverse Effect.
6.2.3 RP shall have received a certificate from the Secretary
of CSI and Merger Sub, in form and substance reasonably satisfactory to
RP certifying the adoption of resolutions by the Board of Directors and
stockholders of CSI in favor of this Agreement, the Merger and the
transactions contemplated by this Agreement.
6.2.4 There shall have been no change of applicable law after
the date hereof as a result of which the Merger will fail to qualify as
a tax-free reorganization within the meaning of Section 368(a) of the
Code.
6.3. CONDITIONS TO OBLIGATION OF CSI TO EFFECT THE MERGER. The
obligations of CSI to effect the Merger shall be subject to the fulfillment at
or prior to the Closing of the following conditions:
6.3.1. RP shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing and the representations and warranties of RP
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct in all material respects (or, to the
extent any such representation is qualified by reference to materiality
or to an RP Material Adverse Effect, is entirely true and correct) as
of the Closing Date, and CSI shall have received a certificate of the
President or a Vice President of RP, dated the Closing Date, certifying
to such effect;
6.3.2. From the date of this Agreement through the Effective
Date, there shall not have occurred any change in the financial
condition, business, operations or prospects of RP and the RP
Subsidiaries, taken as a whole, that would reasonably be likely to have
an RP Material Adverse Effect.
6.3.3 CSI shall have received a certificate from the Secretary
of RP, in form and substance reasonably satisfactory to CSI certifying
the adoption of resolutions by the RP Board of Directors and
stockholders in favor of this Agreement, the Merger and the
transactions contemplated by this Agreement.
6.3.4 RP shall take all actions necessary to amend the FM
Precision Golf Manufacturing Corp 401(k) Plan (the "401(k) Plan") to
restrict eligibility to participate in the 401(k) Plan, effective no
later than the Closing Date, to employees of RP, by replacing the
standardized prototype form of plan with a nonstandardized prototype
form of plan, in form and substance reasonably satisfactory to CSI.
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ARTICLE 7. TERMINATION.
7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Date, before
or after the approval of this Agreement by the stockholders of RP and CSI, by
the mutual consent of the parties hereto.
7.2. TERMINATION BY EITHER RP OR CSI. This Agreement may be terminated
and the Merger may be abandoned by action of the Board of Directors of either RP
or CSI if: (a) the Merger shall not have been consummated on or before 120 days
after the date of this Agreement; (b) RP's stockholders have voted against the
approval required by Section 6.1.1 at a meeting duly convened therefor or at an
adjournment thereof; (c) CSI's shareholders have voted against the approval
required by Section 6.1.1 at a meeting duly convened therefor or at an
adjournment thereof; (d) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement pursuant to this
clause (d) shall have used all reasonable efforts to remove such injunction,
order or decree; and provided, in the case of a termination pursuant to clause
(a) above, that the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure referred to in said
clause.
7.3. TERMINATION BY RP. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Date, before or after the
adoption and approval by the stockholders of RP referred to in Section 6.1.1, by
action of the Board of Directors of RP, if :
7.3.1 (a) There has been a breach by CSI of any representation
or warranty contained in this Agreement which would reasonably be
expected to have a CSI Material Adverse Effect, or (b) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of CSI, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such
breach is given by RP to CSI.
7.3.2 Whether or not permitted to do so by this Agreement, the
Board of Directors of CSI or CSI shall (i) withdraw, modify or change
its approval or recommendation of this Agreement or the Merger in a
manner adverse to RP, (ii) approve or recommend to the stockholders of
CSI a CSI Acquisition Proposal or CSI Alternative Transaction, (iii)
approve or recommend that the stockholders of CSI tender their shares
in any tender or exchange offer that is a CSI Alternative Transaction
or (iv) take any position or make any disclosures to CSI's stockholders
permitted pursuant to Section 5.2 which has the effect of any of the
foregoing. As used herein, "CSI Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of persons)
other than CSI or its affiliates (a "CSI Third Party") acquires or
would acquire beneficial ownership or the right to acquire beneficial
ownership of more than 50% of the outstanding shares of any class of
equity securities of CSI, whether from CSI or pursuant to a tender
offer or exchange offer or otherwise, (ii) a merger or other business
combination involving CSI pursuant to which any CSI Third Party
acquires more than 50% of the outstanding equity securities of CSI or
the entity surviving such merger or business combination (iii) any
transaction pursuant to which any CSI Third Party acquires control of
assets of CSI (including for this purpose the outstanding equity
securities of any of the CSI Subsidiaries and securities of the entity
surviving any merger or business combination to which any of the CSI
Subsidiaries is a party) or any of the CSI Subsidiaries having a fair
market value (as determined by the Board of Directors of CSI in good
faith) equal to more than 20% of the fair market value of all the
assets of CSI and the CSI Subsidiaries, taken as a whole, immediately
prior to such transaction or (iv) any other consolidation, business
combination, recapitalization or similar transaction involving CSI or
any of the CSI Subsidiaries, other than the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that the term CSI Alternative
Transaction shall not include any acquisition of securities by a broker
dealer in connection with a bona fide public offering of such
securities.
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7.3.3 The Board of Directors of RP has received an RP Superior
Proposal and the Board of Directors of RP reasonably determines in good
faith (upon the advice of independent outside counsel) that a failure
to terminate this Agreement and enter into an agreement to effect such
RP Superior Proposal would constitute a breach of its fiduciary duties;
provided that this Agreement shall not be terminated pursuant to this
Section 7.3.3 unless simultaneously with such termination, RP enters
into a definitive acquisition, merger or similar agreement to effect
the RP Superior Proposal.
7.4. TERMINATION BY CSI. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Date by action of the
Board of Directors of CSI, if:
7.4.1. (a) There has been a breach by RP of any representation
or warranty contained in this Agreement which would have or would be
reasonably likely to have an RP Material Adverse Effect, or (b) there
has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of RP, which breach is not curable
or, if curable, is not cured within 30 days after written notice of
such breach is given by CSI to RP
7.4.2. Whether or not permitted to do so by this Agreement,
the Board of Directors of RP or RP shall (i) withdraw, modify or change
its approval or recommendation of this Agreement or the Merger in a
manner adverse to CSI, (ii) approve or recommend to the stockholders of
RP an RP Acquisition Proposal or RP Alternative Transaction, (iii)
approve or recommend that the stockholders of RP tender their shares in
any tender or exchange offer that is an RP Alternative Transaction or
(iv) take any position or make any disclosures to RP's stockholders
permitted pursuant to Section 5.1 which has the effect of any of the
foregoing. As used herein, "RP Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of persons)
other than CSI or its affiliates (an "RP Third Party") acquires or
would acquire beneficial ownership or the right to acquire beneficial
ownership of more than 50% of the outstanding shares of any class of
equity securities of RP, whether from RP or pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business
combination involving RP pursuant to which any RP Third Party acquires
more than 50% of the outstanding equity securities of RP or the entity
surviving such merger or business combination (iii) any transaction
pursuant to which any RP Third Party acquires or would acquire control
of assets of RP (including for this purpose the outstanding equity
securities of any of the RP Subsidiaries and securities of the entity
surviving any merger or business combination to which any of the RP
Subsidiaries is a party) or any of the RP Subsidiaries having a fair
market value (as determined by the Board of Directors of RP in good
faith) equal to more than 20% of the fair market value of all the
assets of RP and the RP Subsidiaries, taken as a whole, immediately
prior to such transaction, or (iv) any other consolidation, business
combination, recapitalization or similar transaction involving RP or
any of the RP Subsidiaries, other than the transactions contemplated by
this Agreement; provided, however, that the term RP Alternative
Transaction shall not include any acquisition of securities by a broker
dealer in connection with a bona fide public offering of such
securities.
7.4.3 The Board of Directors of CSI has received a CSI
Superior Proposal and the Board of Directors of CSI reasonably
determines in good faith (upon the advice of independent outside
counsel) that a failure to terminate this Agreement and enter into an
agreement to effect CSI Superior Proposal would constitute a breach of
its fiduciary duties; provided that this agreement shall not be
terminated pursuant to this Section 7.4.3 unless simultaneously with
such termination CSI enters into a definitive acquisition, merger or
similar agreement to effect the CSI Superior Proposal.
7.5. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article 7,
all obligations of the parties hereto shall terminate, except the obligations of
the parties pursuant to Sections 5.11, 5.13, and this 7.5 and Article 8 and the
Confidentiality Agreement referred to in Section 8.4. Moreover, in the event of
termination of this Agreement pursuant to Section 7.3 or 7.4, nothing herein
shall prejudice the ability of the non-breaching party from seeking damages from
the other party for any breach of this Agreement, including without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity.
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7.6. EXTENSION; WAIVER. At any time prior to the Effective Date, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties made to such party contained herein or in
any document to be delivered pursuant hereto, and (c) waive compliance with any
of the agreements or conditions for the benefit of such party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by or on
behalf of the party granting such extension or waiver.
ARTICLE 8. GENERAL PROVISIONS.
8.1. NONSURVIVAL, REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall be deemed to the extent expressly provided herein to be
conditions to the Merger and shall not survive the Merger.
8.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to RP: If to CSI:
Royal Precision, Inc. Coyote Sports, Inc.
15170 North Hayden Road 2291 Arapahoe Avenue
Scottsdale, Arizona 89260 Boulder, Colorado 80302
Telecopier No.: (602) 627-0206 Telecopier No.: (303) 818-4626
Telephone No.: (602) 627-0270 Telephone No.: (303) 933-6609
Attn: Chairman of the Board Attn: President
or to such other address as any party shall specify by written notice so given
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors, and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4. ENTIRE AGREEMENT. This Agreement, the Exhibits, the CSI Disclosure
Schedule, the RP Disclosure Schedule, the Confidentiality Agreement dated
November 16, 1997, between RP and CSI and any documents delivered by the parties
in connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
During the term of this Agreement, the Confidentiality Agreement may not be
terminated by either party thereto.
8.5. AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the RP Merger by the
stockholders of RP and CSI, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed by or on behalf of each of the
parties hereto.
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8.6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws.
8.7. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies of this
Agreement, each of which may be signed by less than all of the parties hereto,
but together all such copies are signed by all of the parties hereto.
8.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.10. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
giving such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
8.12. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction of
the matter, this being in addition to any other remedy to which they may be
entitled at law or in equity.
8.13. SUBSIDIARIES. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner.
8.14 KNOWLEDGE. When references are made in this Agreement to any
representation or warranty being "to the knowledge" of CSI or RP, or similar
language, "knowledge" shall mean (a) the actual knowledge of any director or
senior executive officer of such party or (b) such knowledge as any director or
senior executive officer of such party could reasonably be expected to have
following a reasonably comprehensive investigation of the matter subject to such
representation or warranty.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
COYOTE SPORTS, INC.
By: /s/ James M. Probst
--------------------------------
Name: James M. Probst
Title: President & CEO
RP ACQUISITION CORP.
By: /s/ James M. Probst
--------------------------------
Name: James M. Probst
Title:
ROYAL PRECISION, INC.
By: /s/ Raymond J. Minella
--------------------------------
Name: Raymond J. Minella
Title: Chairman of the Board
108
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Exhibit 1.4.1
Certificate of Designation
109
<PAGE> 39
Exhibit 3.4.1
Capital Stock of CSI
25,000,000 shares of Common Stock, par value $.001 per share
_________ shares of CSI Preferred Stock, par value $.001 per share*
* Subject to the Exchange Ratio in the Merger.
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Exhibit 5.14(a)(i)
Stockholder Agreement Signatories
James M. Probst
Mel S. Stonebraker
Paragon Coyote Texas, Ltd.
Richard P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3
David E. Johnston
Berenson Minella & Company, L.P.
Kenneth J. Warren
111
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Exhibit 5.14(a)(ii)
RP Voting Agreement Signatories
Kenneth J. Warren
Lawrence Bain
Richard P. Johnston and Jayne A. Johnston Charitable Remainder Trust #3
Berenson Minella & Company, L.P.
David E. Johnston
Danny Edwards
Ronald L. Chambers
112
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Exhibit 5.14(b)
CSI Voting Agreement Signatories
Paragon Coyote Texas, Ltd.
James M. Probst
Mel S. Stonebraker
113
<PAGE> 1
Exhibit 10
STOCK RIGHTS
AWARD AGREEMENT
This Stock Rights Award Agreement is made and entered into between
Danny Edwards ("Mr. Edwards") and Robert G.J. Burg II ("Mr. Burg") as of
December 9, 1997.
WHEREAS, Mr. Edwards was one of the principle shareholders and was the
former chief executive officer of Royal Grip, Inc.
WHEREAS, Mr. Burg was the former President of Royal Grip, Inc.
WHEREAS, on August 29, 1997, the shareholders of Royal Grip, Inc.
approved the merger of Royal Grip, Inc. into Royal Precision, Inc. a subsidiary
of FM Precision Golf Corp. ("FM").
WHEREAS, Mr. Edwards is currently serving as the Vice Chairman of, and
consultant to, FM and Mr. Burg is currently serving as the Vice President of
Royal Precision, Inc.
WHEREAS, in consideration for Mr. Burg's loyal service to both Royal
Grip, Inc. and to Mr. Edwards, Mr. Edwards, in his individual capacity and not
in his capacity as the Vice Chairman of, or consultant to, FM, would like to
grant to Mr. Burg certain stock rights, based on the value of FM stock, all as
described in more detail below.
1. AWARD. Subject to the terms in this Agreement, Mr. Edwards, in his
individual capacity and not in his capacity as the Vice Chairman of, or
consultant to, FM, hereby grants to Mr. Burg the right to exercise the
following:
a. GRANT A. Stock Rights measured by 50,000 shares of the
common stock of FM (the "Stock"); and
b. GRANT B. Stock Rights measured by 50,000 shares of the
Stock.
2. STOCK RIGHTS DEFINES; FAIR MARKET VALUE.
a. GRANT A. The Grant A Stock Rights granted to Mr. Burg
pursuant to this agreement entitle Mr. Burg to receive, upon exercise of such
Stock Rights pursuant to paragraph 4 and subject to the terms of this Agreement,
a payment from Mr. Edwards based on the Fair Market Value of the share of Sock
used to measure the exercise Grant A Stock Rights.
<PAGE> 2
b. GRANT B. The Grant B Stock Rights granted to Mr. Burg
pursuant to this Agreement entitle Mr. Burg to receive, upon exercise of such
Stock Rights pursuant to paragraph 4 and subject to the terms of this Agreement,
a payment from Mr. Edwards based on the increase in the Fair Market Value of the
share of Stock used to measure the exercised Grant B Stock Rights.
As provided in paragraph 5, the payment from Mr. Edwards may
be made in shares of Stock, or at Mr. Edwards election, cash or a combination of
cash and shares of Stock. The number of shares of Stock used to measure the
Grant A and B Stock Rights grantee pursuant to this Agreement is specified in
paragraph 1, and Mr. Burg shall be considered as having a number of Stock Rights
equal to such number of shares. For purposes of this Agreement, the term "Fair
Market Value" means the closing price at which the Stock shall have been sold
regular way on the New York Stock Exchange-Composite Transactions on a specified
date.
3. GRANT PERIOD DEFINED. Mr. Burg may exercise the Grant A and Grant B
Stock Rights, and such Stock Rights shall be and remain in full force and
effect, during the "Grant Period." The Grant Period shall begin on December 9,
1997 and shall end on December 8, 2007.
4. EXERCISE OF AWARD. Mr. Burg may exercise all or any portion of the
either the Grant A or Grant B Stock Rights during the Grant Period specified in
paragraph 3 by delivering to Mr. Edwards a written notice of paragraph 3 by
delivering to Mr. Edwards a written notice of exercise signed by Mr. Burg. In
the notice of exercise, Mr. Burg shall express his intention to exercise all of
a portion of either the Grant A or Grant B Stock Rights granted to him under the
is Agreement and shall specify the number of either the Grant A or Grant B Stock
Rights that he is exercising, and the exact name or names in which any shares of
Stock delivered to Mr. Burg should be registered. IF the Stock Rights are
exercised by a person or persons other than Mr. Burg pursuant to paragraph 6,
the notice shall be signed by such person or persons and shall be accom0panied
by proof acceptable to Mr. Edwards of the legal right of such person or persons
to exercise the Stock Right.
Any Grant A Stock Rights remaining unexercised on the last day
of the Grant Period shall be deemed to be exercised by Mr. Burg, or the person
or persons claiming thro0ugh Mr. Burg pursuant to paragraph 6.
If the Fair Market Value of one share of the Stock on the last
day of the Grant Period exceeds $8.00 (subject to any adjustment as provided in
paragraph 8, any Grant B Stock Rights remaining unexercised on the last day of
the Grant Period shall be deemed to be exercised by Mr. Burg, or the person or
persons claiming through MR. Burg pursuant to paragraph 6. If on the last day of
the Grant Period the Fair Market Value of one share of Stock is $8.00 or less
(subject to any adjustment as provided in paragraph 8), any Grant B Stock Rights
remaining unexerciesd on the last day of the Grant Period shall be canceled
without the payment of any amounts by Mr. Edwards.
-2-
<PAGE> 3
5. PAYMENTS BY MR. EDWARDS.
a. GRANT A. Upon Mr. Burg's exercise of all or a portion of
his Grant A Stock Rights, Mr. Edwards shall pay to Mr. Burg an amount determined
by multiplying (a) the Fair Market Value of one share of Stock as of the trading
day next preceding the date on which the Stock Rights are exercised, by (b) the
number of Grant A Stock Rights being exercised.
b. GRANT B. Upon Mr. Burg's exercise of all or a portion of
his Grant B Stock Rights, Mr. Edwards shall pay to MR. Burg an amount determined
by multiplying (a) the excess of the Fair Market Value of one share of the
trading day next preceding the date on which the Grant B Stock Rights are
exercised over $8.00 (subject to any adjustment as provided in paragraph 8), by
(b) the number of Grant B Stock Rights being exercised.
Mr. Edwards shall make payment by delivering to Mr. Burg shares of
Stock having an aggregate Fair Market Value (determined as of the trading day
next proceeding the date on which the Stock Rights are exercised) equal to the
amount of the payment that is due. Alternatively, Mr. Edwards shall be entitled
to settle his obligation arising out of Mr. Burg's exercise of either the Grant
A or B Stock Rights by paying Mr. Burg cash or a combination of cash and shares
of Stock, the total value of which shall equal the aggregate value of the shares
of Stock he would be obligated to deliver if Mr. Edwards chose to settle his
obligations entirely by delivering shares of Stock.
6. DEATH OF MR. BURG. In the event of Mr. Burg's death during the Grant
Period, the Grant Period shall end on the earlier of (a) the last day of the
Grant Period, or (b) the date 15 months after the date of Mr. Burg's death. The
unexercised Stock Rights granted to Mr. Burg under this Agreement may be
exercised during the remaining Grant Period by Mr. Burg's designated
beneficiary, or if no beneficiary is designated or all designated beneficiaries
predecease Mr. Burg, by Mr. Burg's legal representative.
7. NONTRANSFERABILITY. The Stock Rights granted under this Agreement
shall be exercisable only during the Grant Period specific in paragraph 3 and,
except as provided in paragraph 6 above, only by Mr. Burg during his lifetime.
NO Stock Rights granted by this Agreement shall be transferable by Mr. Burg
other than by will or pursuant to applicable laws of descent and distribution.
This Grant the Stock Rights granted under this Agreement and any rights and
privileges in connection therewith shall not be transferred, assigned, pledged
or hypothecated by Mr. Burg, or by any other person or persons, in any way,
whether by operation of law, or otherwise, and shall not be subject to
execution, attachment, garnishment or similar process.
8. ADJUSTMENTS. In the event a stock dividend is declared upon the
Stock, the number of shares of Stock then used to measure the remaining Stock
Rights and the number of remaining Stock Rights shall be increased
proportionately. In the event the Stock shall be changed into or
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exchanged for a different number or class of shares of stock of FM or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, there shall be
substituted for each such shares of stock then used to measure the remaining
Stock Rights the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged. The number of Stock Rights
shall also be adjusted accordingly.
9. DELIVERY OF SHARES. No shares of Stock shall be delivered upon
exercise of the Stock Rights Until (a) all applicable taxes required to be
withheld, if any have been paid or withheld in full, and (b) approval of any
governmental authority required in connection with the Stock Rights, or the
issuance of shares of Stock thereunder, has been obtained or an exemption from
such approval has been confirmed by counsel to either Mr. Burg or Mr. Edwards.
10. GOVERNING LAW. This Agreement shall be interpreted and administered
under the laws of the State of Arizona.
11. AMENDMENTS. This Agreement may be amended only by a written
agreement signed by Mr. Edwards and Mr. Burg.
Mr. Edwards and Mr. Burg both acknowledge and agree to the terms and
conditions set forth in this Agreement by having signed their names below.
/s/ Danny Edwards
-----------------------------
Danny Edwards
/s/ Robert G.J. Burg Ii
-----------------------------
Robert G.J. Burg II
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<PAGE> 1
Exhibit 11
ROYAL PRECISION, INC.
15170 NORTH HAYDEN ROAD
SUITE 1
PHOENIX, ARIZONA 85260
As of January 28, 1999
Mr. Danny Edwards
6724 North Whispering Hills Road
Paradise Valley, Arizona 85253
Dear Mr. Edwards:
Reference is made to that certain Stockholder Agreement, dated as of
May 12, 1997 (the "Stockholder Agreement"), among you, Drew M. Brown, DMB
Property Ventures Limited Partnership, Mark N. Sklar, and Bennett Dorrance,
Trustee of the Bennett Dorrance Trust dated April 21, 1989, as amended,
Christopher A. Johnston, RPJ/JAJ Partners, Ltd., David E. Johnston, Berenson
Minella & Company, L.P., Kenneth J. Warren, and Royal Precision, Inc. (f/k/a FM
Precision Golf Corp.), a Delaware corporation ("RP"), and to that certain
proposed Amendment No. 1 (the "Amendment") to the Stockholders Agreement by and
among you, Drew M. Brown, DMB Property Ventures Limited Partnership, Mark N.
Sklar, and Bennett Dorrance, Trustee of the Bennett Dorrance Trust dated April
21, 1989, as amended, Christopher A. Johnston, the Richard P. Johnston and Jayne
A. Johnston Charitable Remainder Trust #3, David E. Johnston, Berenson Minella &
Company, L.P., Kenneth J. Warren, and RP.
RP is contemplating entering into an Agreement and Plan of Merger (the
"Merger Agreement") by and among RP, Coyote Sports, Inc. ("CSI") and RP
Acquisition Corp. ("Sub") pursuant to which Sub will be merged with and into RP
(the "Merger") and Sub will become a wholly-owned subsidiary of CSI and each
outstanding share of common stock, par value $.001 per share, of RP ("Common
Stock") will be converted into a number of outstanding shares of CSI Preferred
Stock, as specified in the Merger Agreement. As a condition to entering into the
Merger Agreement, CSI has required that certain stockholders of RP who are
parties to the Stockholders Agreement enter into Voting Agreements (the "Voting
Agreements") pursuant to which such stockholders will agree to vote their shares
of Common Stock in favor of the adoption and approval of the Merger Agreement
and the approval of the Merger and against certain transactions which might
delay, impede or oppose the Merger and, concurrently therewith, grant to CSI a
proxy to vote such shares in favor of the adoption and approval of the Merger
Agreement and the approval of the Merger and against certain transactions which
might delay, impede or oppose the Merger. Section 4 of the Stockholder Agreement
prohibits the parties thereto from entering into certain Voting Agreements. In
order to clarify the rights of the parties to the Stockholder Agreement, the
parties to the Stockholder Agreement have agreed to enter into the Amendment.
You are currently the holder of options to purchase 62,550 shares of Common
Stock, which such options have exercise prices ranging from $5.50 to $6.60 per
share (the "Edwards Options"). In addition, certain parties associated with you
(the "Related Parties") are the holders of the following options to purchase
shares of Common Stock: Everen Securities Inc. (together with its employees,
including but not limited to Lawrence D. Bain): 7,500 shares, at an exercise
price of $13.00 per share; and Robert Burg III: 108,033 shares, at exercise
prices of $5.50 to $6.00 per share (the "Related Party Options" and, together
with the Edwards Options, the "Options"). In order to induce you to enter into
the Amendment, RP hereby agrees that, subject to the cancellation of the
Options, RP will issue to you and your Related Parties an equivalent number of
new options under the Royal Precision, Inc. Stock Option Plan (the "New
Options"), which such New Options will (x) be immediately vested, (y) have an
exercise price of $3.19 per share of Common Stock, (z) expire on the fifth
anniversary of this letter agreement.
This letter shall be governed by, and construed in accordance with, the
laws of the State of New York, applicable to agreements made and to be performed
therein. The parties hereto expressly agree that the Related Parties are made
express third-party beneficiaries hereof and may rely on this letter agreement
as additional signatories thereto.
This letter may be executed in one or more counterparts, each
of which shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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If the foregoing correctly sets forth our mutual agreement,
please so indicate by signing the enclosed copy of this letter and returning it
to us.
ROYAL PRECISION, INC.
By:/s/ Raymond J. Minella
--------------------------------
Name: Raymond J. Minella
Title: Chairman of the Board
Accepted and Agreed this __ day of
January, 1999:
/s/ Danny Edwards
- ------------------
Danny Edwards
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