<PAGE>
As filed with the Securities and Exchange Commission on March 11, 1998
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
Under The Securities Act of 1933
_________________
COYOTE SPORTS, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
88-0326730
(I.R.S. Employer Identification No.)
2291 Arapahoe Avenue
Boulder, CO 80302
(Address of principal executive offices)
COYOTE SPORTS, INC. 1998 STOCK OPTION PLAN
(Full Title of the Plan)
<TABLE>
<S> <C>
Mel Stonebraker, Chief Executive Officer Copy to: Laurie P. Glasscock, Esq.
Coyote Sports, Inc. Chrisman, Bynum & Johnson, P.C.
2291 Arapahoe Avenue 1900 Fifteenth Street
Boulder, CO 80302 Boulder, CO 80302
</TABLE>
(303) 417-0942
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
Proposed Proposed
Title of Securities Amount to be Maximum Maximum Amount of
to be Registered offering price per aggregate offering Registration
registered Share (1) price (1) Fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,000,000 shares $5.44 $5,440,000 $1604.80
($.001
par value) to be
issued pursuant to
the Coyote Sports,
Inc. 1998 Stock
Option Plan
==================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the high and low prices of Coyote Sports, Inc. Common
Stock on March 6, 1998, as reported on the NASDAQ Small Cap Market System.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
- ------------------------------------------------
The following documents, which have been filed by Coyote Sports, Inc.
(the "Company") with the Securities and Exchange Commission, are incorporated by
reference in this Registration Statement , as of their respective dates:
(a) The Company's Registration Statement No. 333-29077, filed on
June 12, 1997 and declared effective on September 18, 1997.
(b) The Company's Form 10-QSB filed for the quarter ended September
30, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to
the date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective dates of filing of such
documents.
Item 4. Description of Securities
- ----------------------------------
Not Applicable.
Item 5. Interest of Named Experts and Counsel
- ----------------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers
- ---------------------------------------------------
Section 78.751 of the Nevada Revised Statutes permits, among other
things, indemnification of persons made or threatened to be made a party to a
proceeding by reason of acts or omissions performed in their official capacity
as an officer, director, employee or agent of the corporation against judgments,
penalties and fines (including attorneys' fees) if such person acted in good
faith and in a manner which he reasonably believed to be in the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. In addition NRS
78.751(3) requires payment by the corporation of reasonable expenses, including
attorneys' fees, actually and reasonably incurred by him in connection with the
defense. A decision as to required indemnification is made by the stockholders;
by a majority vote of a quorum consisting of directors who were not parties to
the act, suit or proceeding; or if such quorum of disinterested directors so
order, by independent legal counsel in a written opinion; or if a quorum of
disinterested directors cannot be obtained, by independent legal counsel in a
written opinion. The Articles of Incorporation, as amended, provide that the
Company shall indemnify, to the fullest extent permitted by law, any person and
the estate and personal representative of any such person, against all liability
and expense (including attorneys' fees) incurred by reason of the fact that the
person is or was a director or officer of the Company or, while serving as a
director or officer, such person is or was serving as a director, officer,
partner, trustee, employee, fiduciary, or agent of, or in any similar managerial
or fiduciary position of, another domestic or foreign corporation or other
individual or entity or of an employee benefit plan. This indemnification may
include indemnification for liabilities arising under the Securities Act of
1933.
Item 7. Exemption from Registration Claimed
- --------------------------------------------
Not Applicable.
Item 8. Exhibits
- ------------------
4 1998 Stock Option Plan of the Company.
5 Opinion of Chrisman, Bynum & Johnson, P.C.
II-2
<PAGE>
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Chrisman, Bynum & Johnson, P.C. (Included in No. 5
above)
Item 9. Undertakings
- ---------------------
A. Post-Effective Amendments
-------------------------
The undersigned issuer hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, that subparagraphs (i) and (ii) above will not apply if the
information required to be included in a post-effective amendment by those
subparagraphs is contained in periodic reports filed by the issuer pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona-
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. Subsequent Documents Incorporated by Reference
----------------------------------------------
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona-fide offering thereof.
C. Claims for Indemnification
--------------------------
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or other controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, hereunto duly
authorized in the City of Boulder, State of Colorado, on the ___ day of March,
1998.
COYOTE SPORTS, INC.
By: /s/ Mel S. Stonebraker
___________________________________________
Mel S. Stonebraker, Chief Executive Officer
Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ Mel S. Stonebraker
_______________________ Chief Executive March 10, 1998
Mel Stonebraker Officer, Secretary and Director
/s/ James M. Probst
_______________________ President and Director March 10, 1998
James M. Probst and Director
/s/ Jeffrey T. Kates
_______________________ Director March 10, 1998
Jeffrey T. Kates
/s/ Don A. Forte
_______________________ Director March 10, 1998
Don A. Forte
/s/ John P. McNeill
_______________________ Chief Financial Officer, March 10, 1998
John P. McNeill Principal Accounting Officer
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
4 1998 Stock Option Plan of the Company
5 Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of KPMG Peat Marwick, LLP
23.2 Consent of Chrisman, Bynum & Johnson, P.C. (Included in Exhibit 5 above)
II-5
<PAGE>
EXHIBIT 4
COYOTE SPORTS, INC.
1998 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
---------------------------------------
1.1 ESTABLISHMENT. The Coyote Sports, Inc. 1998 Stock Option Plan (the
"PLAN") is hereby established effective as of March 10, 1998.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Participating Company Group and its shareholders by providing an
incentive to attract, retain and reward persons performing services for
the Participating Company Group and by motivating such persons to
contribute to the growth and profitability of the Participating Company
Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of
Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the
agreements evidencing Options granted under the Plan have lapsed.
However, all Options shall be granted, if at all, within ten(10) years
from the earlier of the date the Plan is adopted by the Board or the date
the Plan is duly approved by the shareholders of the Company.
2. DEFINITIONS AND CONSTRUCTION.
----------------------------
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the
Plan, "BOARD" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means the Compensation Committee or other committee
of the Board duly appointed to administer the Plan and
1
<PAGE>
having such powers as shall be specified by the Board. Unless the
powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including,
without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations
imposed by law.
(d) "COMPANY" means Coyote Sports, Inc., a Nevada corporation, or any
successor corporation thereto.
(e) "CONSULTANT" means any person, including an advisor, engaged by a
Participating Company to render services other than as an Employee or
a Director.
(f) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(g) "DISABILITY" means the inability of the Optionee, in the opinion
of a qualified physician acceptable to the Company, to perform the
major duties of the Optionee's position with the Participating
Company Group because of the sickness or injury of the Optionee.
(h) "EMPLOYEE" means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the
records of a Participating Company and, with respect to any Incentive
Stock Option granted to such person, who is an employee for purposes
of Section 422 of the Code; provided, however, that neither service
as a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value of a share
of Stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such
determination is expressly allocated to the Company herein, subject
to the following:
(i) If, on such date, there is a public market for the Stock, the
Fair Market Value of a share of Stock shall be
2
<PAGE>
the mean of the closing bid and asked prices of a share of Stock
(or the closing sale price of a share of Stock if the Stock is so
quoted instead) as quoted on the NASDAQ Small-Cap Market, the
NASDAQ National Market or such other national or regional
securities exchange or market system constituting the primary
market for the Stock, as reported in the Wall Street Journal or
-------------------
such other source as the Company deems reliable. If the relevant
date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its sole
discretion.
(ii) If, on such date, there is no public market for the Stock,
the Fair Market Value of a share of Stock shall be as determined
by the Board without regard to any restriction other than a
restriction which, by its terms, will never lapse.
(k) "INCENTIVE STOCK OPTION" means an Option intended to be (as set
forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section422(b) of the Code.
(l) "INSIDER" means an officer or a Director of the Company or any
other person whose transactions in Stock are subject to Section16 of
the Exchange Act.
(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to be
(as set forth in the Option Agreement) or which does not qualify as
an Incentive Stock Option.
(n) "OPTION" means a right to purchase Stock (subject to adjustment
as provided in Section4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.
(o) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee setting forth the terms, conditions and restrictions
of the Option granted to the Optionee and any shares acquired upon
the exercise thereof.
3
<PAGE>
(p) "OPTIONEE" means a person who has been granted one or more
Options.
(q) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section424(e) of the Code.
(r) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(s) "PARTICIPATING COMPANY GROUP" means, at any point in time, all
corporations collectively which are then Participating Companies.
(t) "RULE 16B-3" means Rule16b-3 under the Exchange Act, as amended
from time to time, or any successor rule or regulation.
(u) "SECTION 162(M)" means Section 162(m) of the Code.
(v) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(w) "SERVICE" means an Optionee's employment or service with the
Participating Company Group, whether in the capacity of an Employee,
a Director or a Consultant. The Optionee's Service shall not be
deemed to have terminated merely because of a change in the capacity
in which the Optionee renders Service to the Participating Company
Group or a change in the Participating Company for which the Optionee
renders such Service, provided that there is no interruption or
termination of the Optionee's Service. Furthermore, an Optionee's
Service with the Participating Company Group shall not be deemed to
have terminated if the Optionee takes any military leave, sick leave,
or other bona fide leave of absence approved by the Company;
provided, however, that if any such leave exceeds ninety (90) days,
on the ninety-first (91st) day of such leave the Optionee's Service
shall be deemed to have terminated unless the Optionee's right to
return to Service with the Participating Company Group is guaranteed
by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of
absence shall not be treated as Service for purposes of determining
vesting under the Optionee's Option Agreement. The Optionee's Service
shall be deemed to have terminated either upon an actual
4
<PAGE>
termination of Service or upon the corporation for which the Optionee
performs Service ceasing to be a Participating Company. Subject to
the foregoing, the Company, in its sole discretion, shall determine
whether the Optionee's Service has terminated and the effective date
of such termination.
(x) "STOCK" means the common stock of the Company, as adjusted from
time to time in accordance with Section4.2.
(y) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section424(f) of the Code.
(z) "TEN PERCENT OWNER OPTIONEE" means an Optionee who, at the time
an Option is granted to the Optionee, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes
of stock of a Participating Company within the meaning of
Section422(b)(6) of the Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of
the Plan. Except when otherwise indicated by the context, the singular shall
include the plural and the plural shall include the singular. Use of the
term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
--------------
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option. Any officer
of a Participating Company shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such
matter, right, obligation, determination or election.
3.2 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to participation
by Insiders in the Plan, at any time that any class of equity security of
the Company is registered pursuant to Section12 of the Exchange Act, the
Plan shall be administered in compliance with the
5
<PAGE>
requirements, if any, of Rule16b-3.
3.3 COMMITTEE COMPLYING WITH SECTION 162(M). If a Participating Company is a
"publicly held corporation" within the meaning of Section 162(m), the Board
may establish a Committee of "outside directors" within the meaning of
Section 162(m) to approve the grant of any Option which might reasonably be
anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income
tax purposes pursuant to Section 162(m).
3.4 POWERS OF THE BOARD. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:
(a) to determine the persons to whom, and the time or times at which,
Options shall be granted and the number of shares of Stock to be subject
to each Option;
(b) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;
(c) to determine the Fair Market Value of shares of Stock or other
property;
(d) to determine the terms, conditions and restrictions applicable to
each Option (which need not be identical) and any shares acquired upon
the exercise thereof, including, without limitation, (i) the exercise
price of the Option, (ii) the method of payment for shares purchased
upon the exercise of the Option, (iii) the method for satisfaction of
any tax withholding obligation arising in connection with the Option or
such shares, including by the withholding or delivery of shares of
stock, (iv) the timing, terms and conditions of the exercisability of
the Option or the vesting of any shares acquired upon the exercise
thereof, (v) the time of the expiration of the Option, (vi) the effect
of the Optionee's termination of Service with the Participating Company
Group on any of the foregoing, and (vii) all other terms, conditions and
restrictions applicable to the Option or such shares not inconsistent
with the terms of the Plan;
(e) to approve one or more forms of Option Agreement;
6
<PAGE>
(f) to amend, modify, extend, cancel, renew, reprice or otherwise adjust
the exercise price of, or grant a new Option in substitution for, any
Option or to waive any restrictions or conditions applicable to any
Option or any shares acquired upon the exercise thereof;
(g) to amend the exercisability of any Option or the vesting of any
shares acquired upon the exercise thereof, including with respect to the
period following an Optionee's termination of Service with the
Participating Company Group;
(h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the
tax policy or custom of, foreign jurisdictions whose citizens may be
granted Options; and
(i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or
any Option as the Board may deem advisable to the extent consistent with
the Plan and applicable law.
4. SHARES SUBJECT TO PLAN.
----------------------
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided in
Section4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be one million (1,000,000) and shall consist of
authorized but unissued or reacquired shares of Stock or any combination
thereof. If an outstanding Option for any reason expires or is terminated or
canceled or if shares of Stock are acquired upon the exercise of an Option
subject to a Company repurchase option and are repurchased by the Company at
the Optionee's exercise price, the shares of Stock allocable to the
unexercised portion of such Option or such repurchased shares of Stock shall
again be available for issuance under the Plan. Notwithstanding the
foregoing, at any such time as the offer and sale of securities pursuant to
the Plan is subject to compliance with Section 260.140.45 of Title 10 of the
California Code of Regulations ("SECTION 260.140.45"), the total number of
shares of Stock issuable upon the exercise of all outstanding Options
(together with options outstanding under any other stock option plan of the
Company) and the total number of shares provided for under any stock bonus
or similar plan of the Company
7
<PAGE>
shall not exceed thirty percent (30%) (or such other higher percentage
limitation as may be approved by the shareholders of the Company pursuant to
Section 260.140.45) of the then outstanding shares of the Company as
calculated in accordance with the conditions and exclusions of Section
260.140.45.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, in the Section 162(m)
Grant Limit set forth in Section 5.4 and in the exercise price per share of
any outstanding Options. If a majority of the shares which are of the same
class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section8.1) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the
outstanding Options to provide that such Options are exercisable for New
Shares. In the event of any such amendment, the number of shares subject to,
and the exercise price per share of, the outstanding Options shall be
adjusted in a fair and equitable manner as determined by the Board, in its
sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section4.2 shall be rounded up
or down to the nearest whole number, as determined by the Board, and in no
event may the exercise price of any Option be decreased to an amount less
than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section4.2 shall be
final, binding and conclusive.
5. ELIGIBILITY AND OPTION LIMITATIONS.
----------------------------------
5.1 PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to Employees,
Consultants, and Directors. For purposes of the foregoing sentence,
"EMPLOYEES," "CONSULTANTS" and "DIRECTORS" shall include prospective
Employees, prospective Consultants and prospective Directors to whom Options
are granted in connection with written offers of an employment or other
service relationship with the Participating Company Group. Eligible persons
may be granted more than one (1) Option.
5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on the
effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option. An Incentive Stock Option granted to a
prospective Employee upon the condition that such person
8
<PAGE>
become an Employee shall be deemed granted effective on the date such person
commences Service with a Participating Company, with an exercise price
determined as of such date in accordance with Section6.1.
5.3 FAIR MARKET VALUE LIMITATION. To the extent that options designated as
Incentive Stock Options (granted under all stock option plans of the
Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the
portion of such options which exceeds such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section5.3, options
designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall
be determined as of the time the option with respect to such stock is
granted. If the Code is amended to provide for a different limitation from
that set forth in this Section5.3, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such
Options as required or permitted by such amendment to the Code. If an Option
is treated as an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this Section5.3, the
Optionee may designate which portion of such Option the Optionee is
exercising. In the absence of such designation, the Optionee shall be deemed
to have exercised the Incentive Stock Option portion of the Option first.
Separate certificates representing each such portion shall be issued upon
the exercise of the Option.
5.4 SECTION 162(M) GRANT LIMIT. Subject to adjustment as provided in Section
4.2, at any such time as a Participating Company is a "publicly held
corporation" within the meaning of Section 162(m), no Employee shall be
granted one or more Options within any fiscal year of the Company which in
the aggregate are for the purchase of more than five hundred thousand
(500,000) shares (the "SECTION 162(M) GRANT LIMIT").
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
Options shall be evidenced by Option Agreements specifying the number
of shares of Stock covered thereby, in such form as the Board shall from time to
time establish. No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Option Agreement.
Option Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:
6.1 EXERCISE PRICE. The exercise price for each Option shall be
9
<PAGE>
established in the sole discretion of the Board; provided, however, that
(a)the exercise price per share for an Incentive Stock Option shall be not
less than the Fair Market Value of a share of Stock on the effective date of
grant of the Option, (b)the exercise price per share for a Nonstatutory
Stock Option shall be not less than eighty-five percent (85%) of the Fair
Market Value of a share of Stock on the effective date of grant of the
Option, (c) the exercise price per share for a Nonstatutory Stock Option
granted to a resident of the United Kingdom shall be not less than the fair
market value of a share of Stock on the effective date of grant of such
Option, and (d)no Option granted to a Ten Percent Owner Optionee shall have
an exercise price per share less than one hundred ten percent (110%) of the
Fair Market Value of a share of Stock on the effective date of grant of the
Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than the minimum exercise price set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a
manner qualifying under the provisions of Section424(a) of the Code.
6.2 EXERCISE PERIOD. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board
and set forth in the Option Agreement evidencing such Option; provided,
however, that (a)no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b)no Incentive
Stock Option granted to a Ten Percent Owner Optionee shall be exercisable
after the expiration of five (5) years after the effective date of grant of
such Option, (c)no Option granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date
on which such person commences Service with a Participating Company, (d) no
Option granted to a resident of the United Kingdom shall be exercisable
after the expiration of seven (7) years after the effective date of grant of
such Option, and (e) with the exception of an Option granted to an officer,
Director or Consultant, no Option shall become exercisable at a rate less
than twenty percent (20%) per year over a period of five (5) years from the
effective date of grant of such Option, subject to the Optionee's continued
Service. Subject to the foregoing, unless otherwise specified by the Board
in the grant of an Option, any Option granted hereunder shall have a term of
ten (10) years from the effective date of grant of the Option.
6.3 PAYMENT OF EXERCISE PRICE.
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(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i)in cash, by
check, or cash equivalent, (ii)by tender to the Company, or attestation
to the ownership, of shares of Stock owned by the Optionee having a Fair
Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for
the Company) not less than the exercise price, (iii)by the assignment of
the proceeds of a sale or loan with respect to some or all of the shares
being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of
RegulationT as promulgated from time to time by the Board of Governors
of the Federal Reserve System) (a "CASHLESS EXERCISE"), (iv) by the
Optionee's promissory note in a form approved by the Company, (v) by
such other consideration as may be approved by the Board from time to
time to the extent permitted by applicable law, or (vi)by any
combination thereof. The Board may at any time or from time to time, by
adoption of or by amendment to the standard forms of Option Agreement
described in Section7, or by other means, grant Options which do not
permit all of the foregoing forms of consideration to be used in payment
of the exercise price or which otherwise restrict one or more forms of
consideration.
(b) LIMITATIONS ON FORMS OF CONSIDERATION.
(i) TENDER OF STOCK. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender, or
attestation to the ownership, of Stock would constitute a violation
of the provisions of any law, regulation or agreement restricting
the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company,
or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6)
months or were not acquired, directly or indirectly, from the
Company.
(ii) CASHLESS EXERCISE. The Company reserves, at any and all times,
the right, in the Company's sole and absolute
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discretion, to establish, decline to approve or terminate any
program or procedures for the exercise of Options by means of a
Cashless Exercise.
(iii) PAYMENT BY PROMISSORY NOTE. No promissory note shall be
permitted if the exercise of an Option using a promissory note would
be a violation of any law. Any permitted promissory note shall be on
such terms as the Board shall determine at the time the Option is
granted. The Board shall have the authority to permit or require the
Optionee to secure any promissory note used to exercise an Option
with the shares of Stock acquired upon the exercise of the Option or
with other collateral acceptable to the Company. Unless otherwise
provided by the Board, if the Company at any time is subject to the
regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the
extension of credit in connection with the Company's securities, any
promissory note shall comply with such applicable regulations, and
the Optionee shall pay the unpaid principal and accrued interest, if
any, to the extent necessary to comply with such applicable
regulations.
6.4 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company,
equal to all or any part of the federal, state, local and foreign taxes, if
any, required by law to be withheld by the Participating Company Group with
respect to such Option or the shares acquired upon the exercise thereof.
Alternatively or in addition, in its sole discretion, the Company shall have
the right to require the Optionee, through payroll withholding, cash payment
or otherwise, including by means of a Cashless Exercise, to make adequate
provision for any such tax withholding obligations of the Participating
Company Group arising in connection with the Option or the shares acquired
upon the exercise thereof. The Company shall have no obligation to deliver
shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Participating Company Group's tax
withholding obligations have been satisfied by the Optionee.
6.5 REPURCHASE RIGHTS. Shares issued under the Plan may be subject to a
right of first refusal, one or more repurchase options, or other
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conditions and restrictions as determined by the Board in its sole
discretion at the time the Option is granted. The Company shall have the
right to assign at any time any repurchase right it may have, whether or not
such right is then exercisable, to one or more persons as may be selected by
the Company. Upon request by the Company, each Optionee shall execute any
agreement evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the Company any and
all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.
7. STANDARD FORMS OF OPTION AGREEMENT.
----------------------------------
7.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided by the Board at the
time the Option is granted, an Option designated as an "INCENTIVE STOCK
OPTION" shall comply with and be subject to the terms and conditions set
forth in the form of Incentive Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.
7.2 NONSTATUTORY STOCK OPTIONS. Unless otherwise provided by the Board at
the time the Option is granted, an Option designated as a "NONSTATUTORY
STOCK OPTION" shall comply with and be subject to the terms and conditions
set forth in the form of Nonstatutory Stock Option Agreement adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.
7.3 AUTHORITY TO VARY TERMS. The Board shall have the authority from time to
time to vary the terms of any of the standard forms of Option Agreement
described in this Section7 either in connection with the grant or amendment
of an individual Option or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Option Agreement
are not inconsistent with the terms of the Plan.
8. CHANGE IN CONTROL.
-----------------
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if any
of the following occurs with respect to the Company:
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(i) the direct or indirect sale or exchange in a single or series of
related transactions by the shareholders of the Company of more than
twenty percent (20%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of
the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately
before the Transaction do not retain immediately after the Transaction,
in substantially the same proportions as their ownership of shares of
the Company's voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than twenty percent (20%) of the
total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the
Company were transferred (the "TRANSFEREE CORPORATION(S)"), as the case
may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting stock of one or more corporations which, as a
result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations. The Board shall have the right to
determine whether multiple sales or exchanges of the voting stock of the
Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive. In addition, a
Change of Control shall also occur if, at any annual or special meeting
of the Company's shareholders following a Contested Election (as defined
below), the Board ceases to be an Authorized Board (as defined below).
(i) "AUTHORIZED BOARD" means a Board of which a number of directors
equal to a majority of the authorized number of directors
constituting the entire Board, including
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vacancies, were either members of the Board on the effective date of
the Company's initial public offering of Stock under the Securities
Act (a "CONSTITUTIONAL MAJORITY"), or were nominated or elected to
the Board by a Constitutional Majority at the date of nomination or
election of an Authorized Board.
(ii) "CONTESTED ELECTION" means an election contest subject to Rule
14a-11 under the Exchange Act.
8.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. For purposes of
this Section8.2, an Option shall be deemed assumed if, following the Change
in Control, the Option confers the right to purchase in accordance with its
terms and conditions, for each share of Stock subject to the Option
immediately prior to the Change in Control, the consideration (whether
stock, cash or other securities or property) to which a holder of a share of
Stock on the effective date of the Change in Control was entitled. Any
Options which are neither assumed or substituted for by the Acquiring
Corporation in connection with the Change in Control nor exercised as of the
date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Change in
Control and any consideration received pursuant to the Change in Control
with respect to such shares shall continue to be subject to all applicable
provisions of the Option Agreement evidencing such Option except as
otherwise provided in such Option Agreement. Furthermore, notwithstanding
the foregoing, if the corporation the stock of which is subject to the
outstanding Options immediately prior to an Ownership Change Event described
in Section8.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event
less than twenty percent (20%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section1504(a) of
the Code without regard to the provisions of Section1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides
in its sole discretion.
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9. PROVISION OF INFORMATION.
------------------------
At least annually, copies of the Company's balance sheet and income
statement for the just completed fiscal year shall be made available to each
Optionee and purchaser of shares of Stock upon the exercise of an Option. The
Company shall not be required to provide such information to persons whose
duties in connection with the Company assure them access to equivalent
information.
10. NONTRANSFERABILITY OF OPTIONS.
-----------------------------
During the lifetime of the Optionee, an Option shall be exercisable only by
the Optionee or the Optionee's guardian or legal representative. No Option shall
be assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.
11. COMPLIANCE WITH SECURITIES LAW.
------------------------------
The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities. Options may not
be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. In addition, no Option may be exercised
unless (a)a registration statement under the Securities Act shall at the time of
exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b)in the opinion of legal counsel to the Company, the
shares issuable upon exercise of the Option may be issued in accordance with the
terms of an applicable exemption from the registration requirements of the
Securities Act. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company's legal counsel
to be necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of any Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
12. INDEMNIFICATION.
---------------
In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Participating Company
Group, members of the Board and any officers or employees of the Participating
Company Group to whom authority to act for the Board or the Company is delegated
shall be
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indemnified by the Company against all reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
13. TERMINATION OR AMENDMENT OF PLAN.
--------------------------------
The Board may terminate or amend the Plan at any time. However, subject to
changes in applicable law, regulations or rules that would permit otherwise,
without the approval of the Company's shareholders, there shall be (a)no
increase in the maximum aggregate number of shares of Stock that may be issued
under the Plan (except by operation of the provisions of Section4.2), (b)no
change in the class of persons eligible to receive Incentive Stock Options, and
(c)no other amendment of the Plan that would require approval of the Company's
shareholders under any applicable law, regulation or rule. In any event, no
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an Option designated
as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law, regulation or rule.
14. SHAREHOLDER APPROVAL.
--------------------
The Plan or any increase in the maximum number of shares of Stock issuable
thereunder as provided in Section4.1 (the "MAXIMUM SHARES") shall be approved by
the shareholders of the Company within twelve (12) months of the date of
adoption thereof by the Board. Options granted prior to shareholder approval of
the Plan or in excess of the Maximum Shares previously approved by the
shareholders shall become exercisable no earlier than the date of shareholder
approval of the Plan or such increase in the Maximum Shares, as the case may be.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Coyote Sports, Inc. 1998 Stock Option Plan was duly adopted by the
Board on March 10, 1998.
/s/ Mel S. Stonebraker
____________________________
Secretary
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EXHIBIT 5
[CHRISMAN BYNUM & JOHNSON LETTERHEAD APPEARS HERE]
March 10, 1998
Board of Directors
Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, CO 80302
Re: Registration Statement on Form S-8
1998 Stock Option Plan
Gentlemen:
We are counsel for Coyote Sports, Inc., a Nevada corporation (the "Company"),
in connection with a Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the United States Securities and Exchange
Commission, pursuant to the Securities Act of 1933, as amended. The Registration
Statement covers a proposed offering of 1,000,000 shares of the Company's Common
Stock to be issued pursuant to the Coyote Sports, Inc. 1998 Stock Option Plan.
In connection with our representation of the Company, we are of the opinion
that:
1. The Company has been duly incorporated under Nevada law, and is validly
existing as a corporation in good standing under the laws of that state.
2. The 1,000,000 shares of Common Stock proposed to be sold pursuant to this
offering will, upon the purchase, receipt of full payment, issuance and delivery
of such shares in accordance with the terms of the offering described in the
Registration Statement, be duly and validly authorized, legally issued, fully
paid and non-assessable.
<PAGE>
Coyote Sports, Inc.
March 10, 1998
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Laurie P. Glasscock
- -------------------------
Laurie P. Glasscock, Esq.
LPG/rdm
cc: Mr. Mel Stonebraker, Coyote Sports, Inc.
Mr. Jarold B. Mittleider, KPMG Peat Marwick LLP
NASDAQ
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
The Board of Directors
Coyote Sports, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of Coyote Sports, Inc. of our report dated May 19, 1997 except for Note 8
and Note 14, which are as of June 11, 1997 and August 11, 1997, respectively,
relating to the consolidated balance sheets of Coyote Sports, Inc. and
subsidiaries as of December 31, 1995 and 1996, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended, which report appears in Form SB-2 No. 333-29077 of Coyote
Sports, Inc.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Boulder, Colorado
March 9, 1998
