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Consulting Agreement - Coyote Sports Inc. and Paragon Coyote Texas Ltd.

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                             CONSULTING AGREEMENT

        THIS CONSULTING AGREEMENT is made as of October 7, 1998 by and between 
Coyote Sports, Inc., a Nevada corporation (the "Company"), and Paragon Coyote 
Texas Ltd., a Texas limited partnership (the "Consultant").

                             W I T N E S S E T H:

        WHEREAS, the Company designs, engineers, manufactures, markets and 
distributes brand name sports equipment and recreational products worldwide (the
"Business");

        WHEREAS, during the spring of 1998 the Company identified the need to 
engage the services of a consultant with relevant expertise (financial and 
otherwise) to assist the Company in the operation of the Business to the end of 
maximizing long-term shareholder value;

        WHEREAS, since the spring of 1998 the Consultant has provided such 
consulting services to the Company (the "Past Services");

        WHEREAS, the Company desires that the Consultant continue to provide 
such consulting services on the terms and conditions hereinafter set forth;

        WHEREAS, the Consultant is willing to continue to provide such 
consulting services on such terms and conditions; and

        WHEREAS, the parties desire to memorialize their understanding 
regarding, among other things, the Company's payment of consideration for the 
Past Services.

        NOW, THEREFORE, in consideration of the premises and of other good and 
valuable consideration, the receipt and sufficiency of which the parties hereby 
acknowledge, the Company and the Consultant hereby agree as follows:

        1. Engagement. The Company hereby engages the Consultant to provide 
consulting services with respect to such aspects of the Business as the Company 
reasonably may request from time to time on an "as-needed" basis pursuant to the
terms and conditions of this Agreement (the "Services") and the Consultant 
hereby accepts such engagement.

        2. Term of Agreement. Subject to earlier termination as herein provided,
the term of this Agreement shall be for a period commencing on the date hereof 
and ending on the tenth anniversary of the date hereof (the "Term").

Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
As of October 7, 1998 - Page 1 of 7
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        3.   Performance of Services.  During the Term, the Consultant shall 
devote such time and effort that it reasonably may deem necessary or appropriate
to perform the Services; provided, however, that nothing in this Agreement is 
intended, or shall be construed, to require that the Consultant devote any 
particular level of staffing or time-commitment to perform the Services.

        4.  Compensation. In consideration of the Past Services and of the 
Consultant's willingness to enter into this Agreement and to perform the 
Services, the Company shall pay the Consultant upon the execution and delivery 
hereof a one-time fee in the form of 378,261 shares of the Company's common 
stock, par value $0.001 per share (the "Company Shares").

        5.  Company Representations and Warranties. The Company hereby 
represents and warrants to the Consultant (with each such representation and 
warranty's being conclusively and independently deemed material and relied upon 
by the Consultant irrespective of whether such materiality and/or reliance 
actually exists) as follows:

        (a)  the Company was duly incorporated and is validly existing and in 
             good standing under laws of the State of Nevada;

        (b)  the Company has all necessary corporate power and authority to 
             execute, deliver and perform its obligations under this Agreement;

        (c)  the Company has duly and effectively taken all corporate action on
             the Company's part necessary for the due execution, delivery and
             performance of this Agreement;

        (d)  this Agreement constitutes the Company's valid and binding
             obligation, enforceable against the Company in accordance with its
             terms (except to the extent that enforcement may be subject to any
             applicable bankruptcy, insolvency or similar laws of general
             application affecting the enforcement of creditors' rights);

        (e)  none of the Company's execution, delivery and performance of this
             Agreement violates any provision of the Company articles of
             incorporation or bylaws, or any contract, agreement, instrument or
             governmental requirement to which the Company is a party or by
             which the Company or its assets may be bound or affected;

        (f)  none of the Company's execution, delivery and performance of this
             Agreement requires the consent or approval of any other person,
             entity or governmental authority;

        (g)  all of the Company Shares (i) have been duly authorized and validly
             issued, (ii) are fully-paid and nonassessable, (iii) have been
             issued in compliance with all applicable laws and with all rules
             and regulations of the National Association of

Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
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<PAGE>
 
            Securities Dealers, Inc. and (iv) are free and clear of any and all
            liens, security interests, claims, pledges, restrictions,
            limitations, charges, encumbrances, preemptive rights (whether
            contractual or statutory), rights of first refusal, adverse
            interests, constructive trusts or other trusts, attachments,
            exceptions to or defects in title or other ownership interests of
            any kind (other than any of the above that the Consultant may have
            created); and

        (h) the Company is entitled to register its securities under the
            Securities Act of 1933, as amended (the "Securities Act"), on Form
            S-3.

        6.  Company Covenants. The Company hereby covenants to the Consultant
(with each such covenant's being conclusively and independently deemed material
and relied upon by the Consultant irrespective of whether such materiality
and/or reliance actually exists) as follows:

        (a) the Company's representations and warranties set forth in Section 5
            hereof shall at all times from and after the date hereof remain true
            and correct;

        (b) the Company shall effect the registration of the Company Shares
            under the Securities Act on Form S-3, on terms and conditions
            satisfactory to the Consultant (acting in its reasonable
            discretion), within ninety (90) days after the date hereof so that
            the Consultant shall be able to sell the Company Shares without
            further restriction from and after the date of the effectiveness of
            such registration statement; and

        (c) the Company shall ensure that the Company Shares are listed on the 
            NASDAQ Small Cap market system at the earliest possible time.

        7.  Early Termination.

        (a) This Agreement (i) may be terminated by the Company prior to the
            tenth anniversary of the date hereof either for Cause or without
            Cause upon no more than sixty (60) and no less than thirty (30)
            days' prior written notice to the Consultant, and (ii) shall
            terminate automatically and without the necessity of further action
            in the event that either James Probst or Mel Stonebraker shall cease
            to be an executive officer of the Company with duties,
            responsibilities and authority substantially similar to those in
            effect on the date hereof.

        (b) As used herein, (i) the term "Early Termination" shall mean any
            termination of this Agreement pursuant to the provisions of
            subsection (a) above, and (ii) the term "Cause" shall mean only the
            material and continuing failure of the Consultant to fulfill its
            obligations hereunder for at least thirty (30) days following the
            Consultant's receipt of notice from the Company specifying such
            default in

Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
As of October 7, 1998 - Page 3 of 7


<PAGE>
 
             reasonable detail.

        (c)  In the event that either (i) the Company effects Early Termination
             of this Agreement without Cause or (ii) this Agreement terminates
             automatically pursuant to the provisions of subsection (a)(ii)
             above, the Consultant shall have no further liability hereunder.
 
        (d)  In the event that the Company effects Early Termination with Cause,
             the Company shall have such rights and remedies as may be accorded
             by law subject, however, in all cases to the provisions of Section
             8 hereof.

        8.   Confirmation of Ownership of Company Shares. The parties expressly 
understand and agree that in no event (including but not limited to any Early
Termination of, or any dispute in connection with, this Agreement) shall the
Company be entitled to cancel, or to effect the return of, the Company Shares or
to take any action that would have the effect of (a) rendering any of the
Company's representations or warranties made in Section 5 hereof untrue in any,
(b) constituting a breach of any of the Company's covenants set forth in Section
6 hereof or (c) otherwise impairing in any way the Consultant's ownership
interest in the Company Shares or the Consultant's ability to exercise in full
any and all rights appurtenant to its ownership interest in the Company Shares.

        9.   Consultant Exculpation and Company Indemnity. Notwithstanding 
anything in this Agreement to the contrary, in no event shall the Consultant or 
any or its partners or any of their respective directors, officers, employees, 
partners, affiliates (as such term is defined in Rule 12b-2 promulgated under 
the Securities Exchange Act of 1934, as amended), members, controlling persons, 
representatives or agents (collectively the "Exculpated Parties") be liable or 
responsible in any manner for, or with respect to or in connection with, any 
liabilities, obligations, claims, causes of action, debts, damages (including, 
without limitation, consequential damages), losses, penalties, fines, disputes, 
agreements, understandings, costs or expenses (including, without limitation, 
attorneys' fees, court costs and costs of investigation) of any kind whatsoever,
whether absolute or contingent, known or unknown, at any time, directly or 
indirectly arising from, based upon, relating to or in connection with this 
Agreement, the Services or the performance (or lack or alleged lack of
performance) of the Services (each a "Claim"), even if such Claim is due, in
whole or in part, to the negligence of any Exculpated Party. THE COMPANY SHALL
INDEMNIFY, HOLD HARMLESS AND DEFEND, TO THE FULLEST EXTENT ALLOWED BY LAW, EACH
EXCULPATED PARTY FROM AND AGAINST ANY AND ALL CLAIMS, EVEN IF ANY SUCH CLAIM IS
DUE, IN WHOLE OR IN PART, TO THE NEGLIGENCE OF AN EXCULPATED PARTY. THE
INDEMNIFICATION OBLIGATION SET FORTH IN THE IMMEDIATELY-PRECEDING SENTENCE SHALL
NOT APPLY TO THE EXTENT THAT A CLAIM IS DUE TO THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF AN EXCULPATED PARTY.

Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
As of October 7, 1998 - Page 4 of 7

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        10. Assignment. Neither party may assign its rights or obligations under
this Agreement without the written consent of the other party, which consent 
shall not unreasonably be withheld or delayed.

        11. Relationship between the Parties. The Company and the Consultant 
hereby expressly acknowledge and agree that this Agreement constitutes only a 
consulting agreement and that, with respect to the relationship between the 
parties created by this Agreement, (a) the parties are not, and shall not be 
deemed, joint venturers or partners, (b) the Consultant is not, and shall not be
deemed, an agent of the Company and (c) the Consultant constitutes an 
independent contractor.

        12. Notices. Any notice required or permitted to be given under or in 
connection with this Agreement shall be in writing and shall be delivered (a) by
certified mail, return receipt requested, (b) by reputable overnight delivery 
service, (c) by facsimile transmission, confirmed telephonically or (d) 
personally to an executive officer of the receiving party. All such 
communications shall be mailed, sent or delivered as follows:

        If to the Company:

                Coyote Sports, Inc.
                2291 Arapahoe Avenue
                Boulder, CO 80302
                Attention: Chief Executive Officer
                Telephone:  303/416-0942
                Facsimile:  303/417-1700

        If to the Consultant:
                
                Paragon Coyote Texas Ltd.
                307 West Seventh Street, Suite 1210
                Fort Worth, TX 76102
                Attention: Mr. Mark Pappas
                Telephone:  817/810-0014
                Facsimile:  817/810-0089

Any communication delivered in accordance with this Section shall be deemed 
received (a), if delivered by certified mail, return receipt requested, on the 
date of delivery indicated on the return receipt, (b), if delivered by overnight
delivery service, on the following business day, (c), if delivered by facsimile 
transmission, on the date that the transmission is confirmed telephonically or 
(d), if personally to an executive officer of the receiving party, on the date 
of such delivery.
                

Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
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<PAGE>
 
        13. Amendments and Waivers. This Agreement may not be modified, amended 
or terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party hereto sought to be charged 
with such waiver or consent. No waiver of any term or provision hereof shall be 
construed as a further or continuing waiver of such term or provision or any 
other term or provision.

        14. Severability. If any provision of this Agreement or the application 
thereof to any person or circumstance shall be invalid or unenforceable to any 
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be 
enforced to the greatest extent permitted by law as long as the economic or 
legal substance of the transactions contemplated hereby is not affected in any 
manner materially adverse to any party.

        15. Survival. All of the Company's representations, warranties and 
covenants set forth in this Agreement shall survive the termination of this 
Agreement and shall  never terminate.

        16. Governing Law. This Agreement is a contract made under, and shall be
construed in accordance with and governed by, the laws of the State of Nevada 
(other than any such laws that would result in the application of the laws of 
any jurisdiction other than the State of Nevada).

        17. Entire Agreement. This Agreement embodies the entire agreement and 
understanding between the Company and the Consultant with respect to the subject
matter hereof and supersedes all prior agreements and understandings between 
them in such regard.

        18. Counterparts; Facsimile Signatures. This Agreement may be executed 
in one or more counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same instrument. Signatures 
exchanged by facsimile transmission shall be deemed to constitute original, 
manually-executed signatures and shall be fully binding.

        19. Headings. Headings of the Sections of this Agreement are for the 
convenience of the parties only and shall be given no substantive or 
interpretive effect whatsoever.

        [The remainder of this page has intentionally been left blank.]






Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
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<PAGE>
 
        IN WITNESS WHEREOF, the parties have executed this Consulting Agreement 
as of the date first above written.

                                        COYOTE SPORTS, INC.,
                                         a Nevada corporation


                                        By: [signature appears here]
                                            --------------------------------
                                        Title: Chairman


                                        PARAGON COYOTE TEXAS LTD.,
                                         a Texas limited partnership

                                        By: Paragon Management Group, Inc.,
                                             a Texas corporation, 
                                             General Partner


                                             By: 
                                                 ---------------------------
                                                 Mark A. Pappas, President
                                                



Consulting Agreement between Coyote Sports, Inc. and Paragon Texas Coyote Ltd.
As of October 7, 1998 - Page 7 of 7