WARRANT AGREEMENT OF
COYOTE NETWORK SYSTEMS, INC.
2,225,000 Shares
Dated as of June 30, 1999
Common Stock Purchase Warrants
WARRANT AGREEMENT dated as of June 30, 1999, between Coyote Network
Systems, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, as Warrant Agent (the "Warrant Agent"), and for the
benefit of the registered holders from time to time of the Warrants issued
hereunder (collectively, the "Warrant Holders" or "Holders").
Pursuant to the Stipulation of Settlement, executed as of October 6,
1998, between the Company, the plaintiffs and others in connection with In re
The ▇▇▇▇▇ Corporation Securities Litigation, CV-97-3186-R, USDC, CDCA, the
Company proposes to issue Common Stock Purchase Warrants as hereinafter
described (collectively the "Warrants") to purchase an aggregate of 2,225,000
shares of its Common Stock, $1.00 par value per share (the shares of Common
Stock issuable on exercise of the Warrants being referred to herein as the
"Warrant Shares"), in favor of the Warrant Holders. Capitalized terms used
herein, if not otherwise defined, are defined in Section 9 hereof.
The parties hereby agree as follows:
SECTION 1. Transferability; Notice of Corporate Actions; Form of the Warrants.
1.1 Registration. The Warrants shall be numbered and shall be
registered on the books of the Company maintained by the Warrant Agent at its
office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("the Warrant
Register"). The Company and the Warrant Agent shall be entitled to treat the
Holder of any Warrants as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrants on the part of any other Person.
1.2 Transferability. The Warrants are freely transferable, subject to
applicable securities laws restrictions. The new Holder of any Warrants so
transferred shall continue to be bound by this Agreement.
1.3 Transfer General. Subject to the terms hereof, the Warrants shall
be transferable only on the Warrant Register upon delivery thereof duly endorsed
by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be deposited
and remain with the Warrant Agent. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited and to remain with the Warrant Agent in its discretion. Upon any
registration of transfer, the Warrant Agent shall countersign and deliver new
Warrants to the Persons entitled thereto. The Company or the Warrant Agent may
require the payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any such transfer.
1.4 Notices of Corporate Actions. In the event of: (a) any taking by
the Company of a record of the holders of the Common Stock for the purpose of
determining the holders thereof who are entitled to receive any extraordinary
dividend or distribution (other than cash dividends representing a dividend
payment on an annualized basis of not more than 8% of the Company's market
capitalization at the time of such dividend) or any right to subscribe for,
purchase or otherwise acquire any shares of capital stock of any class or any
other securities, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer or other disposition of all or substantially all the assets of the
Company to another Person; or (c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, the Company shall mail to each Warrant
Holder in accordance with the provisions of Section 14 hereof a notice
specifying (i) the date or expected date on which any such record is to be taken
1
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right and (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, disposition, dissolution, liquidation or
winding-up is to take place, the time, if any such time is to be fixed, as of
which the holders of record of Common Stock shall be entitled to exchange their
shares of Common Stock for the securities or Other Property deliverable upon
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, disposition, dissolution, liquidation or winding-up and a description
in reasonable detail of the transaction. Such notice shall be mailed to the
extent practicable at least thirty (30), but not more than ninety (90) days
prior to the date therein specified. No defect in any such notice, or failure to
make such notice, shall affect the validity of any corporate action as
aforesaid.
1.5 Form of the Warrants. The text of the Warrants and of the form of
election to purchase Warrant Shares (the "Purchase Form") shall be substantially
as set forth respectively in Exhibits A and B attached hereto. The price per
Warrant Share (the "Exercise Price") and the number of Warrant Shares issuable
upon exercise of each Warrant are subject to adjustment upon the occurrence of
certain events, all as hereinafter provided. The Warrants shall be executed,
manually or by facsimile, on behalf of the Company by its Chairman of the Board,
its Chief Executive Officer, President or one of its Vice Presidents.
The Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon transfer.
SECTION 2. Term of the Warrants; Exercise of the Warrants; Exercise Price, Etc.
2.1 Term of the Warrants. Subject to the terms of this Agreement, the
Holder shall have the right, which may be exercised from time to time, from and
through the dates set forth in the Warrants, to purchase from the Company the
number of fully paid and nonassessable Warrant Shares which the Holder may at
the time be entitled to purchase on exercise of such Warrant. If the last day
for the exercise of the Warrants shall not be a Business Day, then the Warrant
may be exercised on the next succeeding Business Day.
2.2 Vesting of the Warrants. The Warrants shall immediately vest and
may be exercised on or after the original issuance date thereof (the "Issuance
Date"), which is scheduled to be on or about _______, 1999, in accordance with
the terms of this Agreement and the Warrant Certificate.
2.3 Exercise of the Warrants. The Warrants may be exercised upon
surrender to the Company, at the office of the Warrant Agent, of the certificate
evidencing the Warrant to be exercised, together with the Purchase Form, in the
form of Exhibit B hereto, on the reverse thereof duly filled in and signed, and
upon payment to the Company, of the Exercise Price (as determined in accordance
with the provisions of Sections 2 and 6 hereof), for the number of Warrant
Shares in respect of which such Warrant is then exercised. Upon partial
exercise, a Warrant Certificate for the unexercised portion shall be delivered
to the Holder. Payment of the aggregate Exercise Price shall be payable in cash
or by certified or official bank check or wire transfer.
Subject to Section 3 hereof, upon such surrender of the Warrants and
payment of the Exercise Price as aforesaid, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrant, together with cash, as provided in Section 10 hereof,
in respect of any fractional Warrant Shares otherwise issuable upon such
exercise. Such certificate or certificates shall be deemed to have been issued
2
and any Person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date of the surrender of
such Warrant and payment of the Exercise Price, as aforesaid; provided, however,
that if, at the date of surrender of such Warrant and payment of such Exercise
Price, the transfer books for the Warrant Shares or other class of stock
purchasable upon the exercise of such Warrant shall be closed, the certificates
for the Warrant Shares in respect of which such Warrant are then exercised shall
be issuable as of the date on which such books shall next be opened (whether
before or after the Expiration Date) and until such date the Company shall be
under no duty to deliver any certificate for such Warrant Shares; provided,
further, that the transfer books of record, unless otherwise required by law,
shall not be closed at any one time for a period longer than 20 calendar days.
2.4 Exercise Price. The Exercise Price shall be: (i) $9.00, if the
Warrant is exercised within one year from the Issuance Date, (ii) $10.00, if the
Warrant is exercised after one year but within two years from the Issuance Date
and (iii) $11.00, if the Warrant is exercised after two years from the Issuance
Date, provided, however, that such Exercise Price shall be subject to adjustment
pursuant to Section 6 hereof.
SECTION 3. Payment of Taxes and Indemnification.
3.1 Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance of Warrants and Warrant Shares upon the
exercise of the Warrants; provided, however, the Company may require the payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer of a Warrant or a Warrant Share, or any issuance
of a Warrant Share to a person who was not the Holder of the Warrant being
exercised.
3.2 Indemnification. Warrant Holder hereby agrees to indemnify and hold
the Company harmless from any and all taxes on the Warrant Holder that may
result from the issuance of the Warrants or any subsequent exercise of the
Warrants and issuance of the Warrant Shares.
SECTION 4. Mutilated or Missing Warrants. In case the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrants,
or in lieu of and substitution for the Warrants lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant certificate and
indemnity or bond, if requested, also reasonably satisfactory to the Company and
the Warrant Agent. An applicant for such substitute Warrant certificate shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
SECTION 5. Reservation of Warrant Shares.
5.1 Reservation of Warrant Shares. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized shares of Common
Stock, a number of shares of Common Stock sufficient to provide for the exercise
of the rights of purchase represented by the outstanding Warrants. The transfer
agent for the Common Stock ("Transfer Agent"), and every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of any of the rights of purchase aforesaid will be and are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized shares as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with the Transfer Agent and with
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Company covenants that all Warrant Shares which may be issued upon
3
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof. The Company will supply such Transfer Agent
and any subsequent transfer agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 10 of this Agreement. The Company will furnish
to such Transfer Agent a copy of all notices of adjustments applicable to the
Warrants. The Warrants surrendered in the exercise of the rights thereby
evidenced shall be canceled by the Warrant Agent and/or the Transfer Agent.
5.2 Cancellation of the Warrants. In the event the Company shall
purchase or otherwise acquire any Warrants, the same shall be canceled and
retired.
SECTION 6. Adjustment of Exercise Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of the Warrants and the
Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.
6.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(i) take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
additional shares of Common Stock,
(ii) subdivide its shares of Common Stock Outstanding into a
larger number of shares of such Common Stock, or
(iii) combine its shares of Common Stock Outstanding into a
smaller number of shares of such Common Stock,
then the Exercise Price shall be adjusted to equal the product of the Exercise
Price in effect immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common Stock Outstanding
immediately prior to the event requiring such adjustment and the denominator of
which is equal to the number of shares of Common Stock Outstanding immediately
after giving effect to such event.
6.2 Adjustment of Number of Shares Purchasable. Upon any adjustment of
the Exercise Price as provided in Section 6.1 hereof, each Warrant Holder shall
thereafter be entitled to purchase upon the exercise of the Warrants, at the
Exercise Price resulting from such adjustment, the number of shares of Common
Stock (calculated to the nearest 1/100th of a share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares of Common Stock issuable on the exercise thereof immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
6.3 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is any change whatsoever in, or distribution with respect to, the Outstanding
Common Stock of the Company), or sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business to another corporation
4
and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, (i) shares of common stock of the
successor or acquiring corporation or of the Company (if it is the surviving
corporation) or (ii) any cash, shares of stock or other securities or property
of any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property") are to be received by or distributed to the
holders of Common Stock of the Company who are holders immediately prior to such
transaction, then the Warrant Holder shall have the right thereafter to receive,
upon exercise of the Warrants, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which the Warrants are
exercisable immediately prior to such event. In such event, the aggregate
Exercise Price otherwise payable for the shares of Common Stock issuable upon
exercise of the Warrants shall be allocated among the shares of common stock and
Other Property receivable as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets in proportion to the respective
fair market values of such shares of common stock and Other Property as
determined in good faith by the Board of Directors of the Company. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Agreement to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be reasonably deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of any shares of the common stock of such successor or acquiring
corporation for which the Warrants thus become exercisable, which modifications
shall be as equivalent as practicable to the adjustments provided for in this
Section 6. For purposes of this Section 6.3, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class that
is not preferred as to dividends or assets over any other class of stock of such
corporation and that is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities that are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 6.3 shall similarly apply to successive
reorganizations, reclassification, mergers, consolidations or disposition of
assets.
6.4 Other Provisions Applicable to Adjustments Under this Section. The
following provisions shall be applicable to the adjustments provided for
pursuant to this Section 6:
(a) When Adjustments To Be Made. The adjustments required by
this Section 6 shall be made during the period from the date of this Agreement
and until the Expiration Date, whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.
(c) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution to which the provisions of Section 6 would
apply, but shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
5
(d) Certain Limitations. Notwithstanding anything herein to
the contrary, the Company agrees not to enter into any transaction that, by
reason of any adjustment under the foregoing provisions, would cause the
Exercise Price to be less than the par value of the Common Stock, if any, unless
the Company first reduces the par value of the Common Stock to be less than the
Exercise Price that would result from such transaction.
(e) Notice of Adjustments. Whenever the number of shares of
Common Stock for which the Warrants are exercisable or the Exercise Price shall
be adjusted pursuant to this Section 6, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which the Warrants are exercisable and (if such adjustment was
made pursuant to Section 6.3) describing the number and kind of any other shares
of stock or Other Property for which the Warrants are exercisable, and any
related change in the Exercise Price, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate to be
delivered to each Holder in accordance with Section 14. The Company shall keep
at its principal office copies of all such certificates and cause the same to be
available for inspection at said office during normal business hours by any
Holder or any prospective transferee of any Warrants designated by a Holder
thereof.
(f) Independent Application. Except as otherwise provided
herein, all subsections of this Section 6 are intended to operate independently
of one another (but without duplication). If an event occurs that requires the
application of more than one subsection, all applicable subsections shall be
given independent effect without duplication.
SECTION 7. Company Registration. To the extent required by law, the Company
shall register the Warrant Shares under the Securities Act and under applicable
state securities laws for issuance upon exercise of the Warrants.
SECTION 8. Representations, Warranties and Covenants of the Company.
(a) Due Authority. The execution and delivery by the Company
of this Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to the Warrant Holders of the Warrants
representing the right to acquire the Warrant Shares, have been duly authorized
by all necessary corporate action on the part of the Company, and this Warrant
Agreement is not inconsistent with the Company's Charter or Bylaws, does not
contravene any law of governmental rule, regulation or order applicable to it,
does not and will not contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument to which it is a
party or by which it is bound, and this Warrant Agreement constitutes a legal,
valid and binding agreement of the Company, enforceable in accordance with its
terms.
(b) Consents and Approvals. No consent or approval of, giving
of notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the registration of the
Warrant Shares under the Securities Act and any filing required by applicable
state securities law, which filings will be effective by the time required
thereby.
6
SECTION 9. Certain Definitions.
As used in this Warrant Agreement, the following terms shall have the
following respective meanings:
Business Day shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the States of
California or New York.
Commission means the Securities and Exchange Commission.
Common Stock means the Common Stock of the Company, par value $1.00 per
share, as constituted on the date of this Agreement, and any capital
stock into which such Common Stock may thereafter be changed, and
shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of any
Common Stock upon any reclassification thereof which is also not
preferred as to dividends or liquidation over any other class of stock
of the Company and which is not subject to redemption and (ii) shares
of common stock of any successor or acquiring corporation (as defined
in Section 6.3 hereof) received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by
Section 6.3 hereof.
Exercise Price shall mean, in respect of a share of Common Stock at any
date herein specified, the initial Exercise Price set forth in this
Agreement as adjusted from time to time pursuant to Section 6 hereof.
Expiration Date means the third anniversary of the Issuance Date, subject
to the last sentence of Section 2.1.
Issuance Date shall have the meaning provided in Section 2.2.
Other Property shall have the meaning provided in Section 6.3.
Outstanding shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or
for the account of the Company or any subsidiary thereof, and shall
include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common
Stock.
Person shall mean any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
Securities Act means the Securities Act of 1933, as amended, or any
successor act thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the
time.
SECTION 10. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of the Warrants. If any fraction of a
Warrant Share would, except for the provisions of this Section 10, be issuable
7
on the exercise of the Warrants (or specified portion thereof), the Company
shall pay an amount in cash equal to the closing price for one share of the
Common Stock on the trading day immediately preceding the date the Warrants are
presented for exercise, multiplied by such fraction.
SECTION 11. No Rights as Stockholder; Notices to Holder. Nothing contained in
this Agreement or in the Warrants shall be construed as conferring upon any
Holder or any transferees thereof the right to vote or to receive dividends or
to consent to or receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as a stockholder of the Company.
SECTION 12. Inspection of Warrant Agreement. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holder during normal business hours at its principal office.
SECTION 13. Identity of Transfer and Warrant Agent. Forthwith upon the
appointment of any subsequent transfer agent for the Common Stock, or of any
other shares of the Company's capital stock issuable upon the exercise of the
Warrants, or upon the appointment of any successor Warrant Agent, the Company
will notify the Holders of the name and address of such subsequent transfer
agent or successor Warrant Agent.
SECTION 14. Notices. Any notice pursuant to this Agreement by any Holder to the
Company or the Warrant Agent, shall be in writing and shall be mailed first
class, postage prepaid, or delivered to: (i) in the case of notices to the
Company, the Company at its office at 4360 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer and (ii) in the case of notices to the
Warrant Agent, the Warrant Agent at its office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in writing
to the other party. Any notice mailed pursuant to this Agreement by the Company
or the Warrant Agent to the Holders shall be in writing and shall be mailed
first class, postage prepaid, or delivered to each Holder at his address on the
Warrant Register maintained by the Warrant Agent.
SECTION 15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO AGREE TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
SECTION 16. Supplements and Amendments. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interests of the Holders.
SECTION 17. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company, the Warrant Agent or the Holders of the Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
8
SECTION 18. Merger or Consolidation of the Company. So long as the Warrants
remain outstanding, the Company will not merge or consolidate with or into, or
sell, transfer or lease all or substantially all of its property to, any other
corporation unless the successor or purchasing corporation, as the case may be
(if not the Company), shall expressly assume, by supplemental agreement, the due
and punctual performance and observance of each and every covenant and condition
of this Agreement to be performed and observed by the Company.
SECTION 19. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Warrant Agent and
the Holders of the Warrants, any legal or equitable right, remedy or claim under
this Agreement, but this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the Holders.
SECTION 20. Captions. The captions of the Sections of this Agreement have been
inserted for convenience only and shall have no substantive effect.
SECTION 21. Counterparts. This Agreement may be executed in any number of
counterparts each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and the Warrant Agent have caused this
Agreement to be duly executed as of the day, month and year first above written.
THE COMPANY:
COYOTE NETWORK SYSTEMS, INC.,
a Delaware corporation
By:
Name:
Title:
THE WARRANT AGENT:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
Name:
Title:
9
EXHIBIT A
Form of Warrant Certificate
No. ___ _______ Shares
COMMON STOCK PURCHASE WARRANT
Void After 5:00 P.M.
at New York, New York on _____________, 2002
THIS CERTIFIES THAT, for value received, _____________, the registered
holder (the "Holder") of this Common Stock Purchase Warrant (the "Warrant") or
registered assigns, is entitled to purchase from Coyote Network Systems, Inc., a
Delaware corporation (the "Company"), at any time until 5:00 p.m. at New York,
New York on _______, 2002 (the "Expiration Date"), at the Exercise Price of
$9.00 per share, if purchased on or prior to _____, 2000, $10.00 per share, if
purchased thereafter and on or prior to ______, 2001, or $11.00 per share, if
purchased thereafter and on or prior to ________, 2002 (the "Exercise Price"),
________________ shares (____ shares) of the Common Stock of the Company (the
"Common Stock"). The number of shares purchasable upon exercise of this Warrant
and the Exercise Price per share shall be subject to adjustment from time to
time as set forth in the Warrant Agreement referred to below.
This Warrant is issued under and in accordance with a Warrant
Agreement, dated as of June 30, 1999, between the Company and the Warrant Agent
and for the benefit of the Warrant Holders and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which the Holder of
this Warrant by acceptance hereof consents. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to the
Company.
This Warrant may be exercised in whole or in part by presentation of
this Warrant with the Purchase Form on the reverse side hereof duly executed and
simultaneous payment of the Exercise Price (subject to adjustment) at the
principal office of American Stock Transfer & Trust Company, as the Warrant
Agent, in New York, New York. Payment of such price shall be payable at the
option of the Holder hereof in cash or by certified or official bank check or
wire transfer. Terms relating to exercise of the Warrant are set forth more
fully in the Warrant Agreement.
This Warrant may be exercised in whole or in part. Upon partial
exercise, a Warrant Certificate for the unexercised portion shall be delivered
to the Holder. No fractional shares will be issued upon the exercise of this
Warrant but the Company shall pay the cash value of any fraction upon the
exercise of the Warrant. This Warrant is transferable as described in the
Warrant Agreement at the office of the Warrant Agent, in the manner and subject
to the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent and
all other Persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby, or
to the transfer hereof on the Warrant Register maintained by the Warrant Agent
for the Company. Any notice to the contrary notwithstanding, and until such
transfer on such Warrant Register, the Company and the Warrant Agent may treat
the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of
a stockholder of the Company.
This Warrant shall not be valid for any purpose until countersigned by
the Warrant Agent by manual signature of one of its authorized officers below.
COYOTE NETWORK SYSTEMS, INC.
By:
Name:
Title:
COUNTERSIGNED AND DATED:
DATED: AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
Authorized Officer
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant (or a portion thereof
corresponding to _________ Warrant Shares) and all rights evidenced thereby are
hereby transferred and assigned to
(Please Print, and include social security or tax ID no.)
whose address is
and the undersigned does hereby irrevocably constitute and appoint
________________________________________________________________ Attorney
to transfer the said Warrant or portion thereof on the books of the within named
Company with full power of substitution in the premises.
Dated:
Holder's Signature:
Holder's Address:
Signature Guaranteed:
NOTE: The signature on this Transfer Notice must correspond with the name as it
appears on the face of the Warrant, without altercation or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
Exhibit B
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
_______________ shares of the stock provided for therein, and tenders herewith
payment of the Exercise Price in full in the form of cash or by cashier's check
in the amount of $______________, or as otherwise provided in the Warrant. (In
the case of any partial exercise of this Warrant, the exercise shall be for a
whole number of Warrant Shares only.)
The undersigned requests that certificates for such shares be issued in
the name of:
==============================================================================
------------------------------------------------------------------------------
(Please Print Name, Address and Social Security No.)
DATED:
Name of Warrant Holder or Permitted Assignee:
------------------------------------------------------------------------------
Address:
==============================================================================
Signature:
Note: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed by: ____________________________________________________