EXHIBIT 8.1
May 14, 1999
Coyote Sports, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Royal Precision, Inc.
00000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Re: Agreement and Plan of Merger by and among Coyote Sports, Inc., Royal
Precision, Inc. and RP Acquisition Corp.
Gentlemen:
We have acted as counsel to Royal Precision, Inc., a Delaware corporation
("RP"), in connection with the proposed merger (the "Merger") of RP Acquisition
Corp., a Delaware corporation ("Merger Sub") and wholly-owned subsidiary of
Coyote Sports, Inc. ("Coyote") with and into RP pursuant to the terms of the
Agreement and Plan of Merger dated as of February 2, 1999, as amended and
restated (the "Merger Agreement") by and among Coyote, RP and Merger Sub. The
opinions expressed herein are being rendered at the request of RP for the
benefit of RP, Coyote and the stockholders of RP in connection with consummation
of the transactions contemplated by and set forth in the Merger Agreement, as
more fully described in the Proxy Statement/Prospectus (the "Prospectus") filed
in connection with the Merger. All capitalized terms, unless otherwise
specified, have the meaning assigned to them in the Merger Agreement. The CSI
Preferred Stock, as defined in the Merger Agreement, is herein referred to as
the series C preferred stock.
In connection with these opinions, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Merger Agreement, (ii) the Prospectus, and (iii) such other documents as
we have deemed necessary or appropriate in order to enable us to render the
opinions below. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original
Royal Precision, Inc.
Coyote Sports, Inc.
May 14, 1999
Page 2
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such copies.
In rendering the opinions set forth below, we have relied upon the
representations and warranties of each of the parties as set forth in the Merger
Agreement and representations made by the management of RP and the management of
Coyote.
Based upon and subject to the foregoing, we are of the opinion that the Merger
will, under current law, constitute a reorganization under Section 368 of the
Code, and Coyote, RP and Merger Sub will each be a party to the reorganization
within the meaning of Section 368(b) of the Code. As a reorganization, the
Merger will have the following federal income tax consequences for Coyote, RP
and the stockholders of RP:
1. A RP stockholder will not recognize any income, gain or loss as a
result of the receipt of series C preferred stock in exchange for RP common
stock pursuant to the Merger, except with respect to the cash received in lieu
of a fractional share of series C preferred stock.
2. The aggregate tax basis to a RP stockholder of the series C preferred
stock received in exchange for RP common stock pursuant to the Merger will equal
such RP stockholder's tax basis in the RP common stock surrendered in exchange
therefor reduced by the portion of such basis allocable to cash received in lieu
of a fractional share of series C preferred stock.
3. The holding period of a RP stockholder for the series C preferred stock
received pursuant to the Merger will include the holding period of the RP common
stock surrendered in exchange therefor, provided that such RP common stock was
held as a capital asset at the Effective Date.
4. Neither RP, Coyote nor Merger Sub will recognize gain or loss as a
result of the Merger and the issuance of the Series C Preferred Stock to the RP
stockholders pursuant to the Merger.
5. A RP stockholder who receives cash in lieu of a fractional share
interest in series C preferred stock pursuant to the Merger will be treated as
having received such cash in exchange for such fractional share interest and,
provided that such fractional share is held as a capital asset at the Effective
Date, generally will recognize capital gain or loss
Royal Precision, Inc.
Coyote Sports, Inc.
May 14, 1999
Page 3
on such deemed exchange in an amount equal to the difference between the amount
of cash received and the basis of the RP common stock allocable to such
fractional share.
6. In addition to the above consequences of the Merger, a holder of series
C preferred stock will not recognize gain or loss upon the conversion of series
C preferred stock into Coyote common stock pursuant to the terms of the series C
preferred stock other than with respect to any Coyote common stock that may be
received attributable to accrued but unpaid dividends on the series C preferred
stock, which will be taxable as such. The aggregate tax basis and holding period
of the Coyote common stock received by a former RP stockholder who converts the
series C preferred stock into Coyote common stock will be the same as the
respective aggregate tax basis and holding period of the series C preferred
stock surrendered in any such conversion transaction, provided that such shares
of series C preferred stock converted were held as capital assets on the date of
conversion, except that with respect to any Coyote common stock received
attributable to accrued but unpaid dividends on the series C preferred stock,
the basis of such stock will be its fair market value and the holding period of
such stock will begin on the day following the conversion.
Except as set forth above, we express no opinion as to the consequences to any
party of the Merger or of any transactions related to the Merger or contemplated
by the Merger Agreement.
The opinions expressed herein are being furnished in connection with the Merger
and solely for the benefit of Coyote, RP and the RP stockholders in connection
with the Merger and is intended to be used as an exhibit to the Prospectus and
filings with various state securities authorities in connection with the Merger,
and all such persons and entities may rely upon such opinions as if addressed to
and delivered to them on the date hereof. Except for such use, neither this
opinion nor copies hereof may be relied upon by, delivered to any person or
entity, or quoted in whole or in part without the prior written consent of the
undersigned.
We consent to the reference to our name in the Prospectus and to the use of this
opinion as an exhibit to the Prospectus. In giving these consents, we do not
admit that we come within the category of persons whose consent is required
under the Securities Act of 1933, or the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
Fabian & Xxxxxxxxx
