Coyote Network Systems, Inc.
----------------------------
SUBSCRIPTION AGREEMENT
Coyote Network Systems, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Chairman and CEO
Ladies and Gentlemen:
1. Subscription. The undersigned is hereby purchasing from Coyote Network
Systems, Inc., a Delaware corporation (the "Company"), ___________ shares
of preferred stock (the "Shares") convertible into shares of the Company's
common stock, par value $1.00 per share (the "Common Stock"), at a
conversion price of $4.75 per share. The aggregate purchase price for such
Shares is $ ________ (the "Purchase Price"). This Subscription is being
made in connection with the Company's private placement of the Shares
solely to "Accredited Investors" as that term is defined in Section 501(a)
of Regulation D under the Securities Act of 1933 (the "Act")(the
"Offering"). The terms of the Offering are more specifically described on
Annex A hereto.
2. Closing. On the date hereof (the "Closing"), payment of the Purchase Price
is being made by electronic wire transfer in accordance with the following
instructions:
Bank Name:
ABA #:
Credit:
Account #:
Further Credit:
Account #:
Attention:
or by delivery of a bank check or certified check made payable to "Coyote
Network Systems, Inc. Escrow Account," in either case against delivery to the
undersigned of a certificate representing the Shares. All checks should be
delivered, together with an executed copy of this Subscription Agreement, to
Sunrise Securities Corp., the Placement Agent for this Offering as follows:
Sunrise Securities Corp.
000 Xxxx 00xx Xxxxxx
00xx xxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxxx Xxxx, Head of Corporate Finance
3. Representations and Warranties of the Company. To induce the undersigned to
enter into this Agreement and to purchase the Shares, the Company hereby
represents and warrants to the undersigned the following:
(1) Organization Standing, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority
to own or lease its properties and to carry on its business as it is
now being conducted. The Company has the requisite corporate power and
authority to issue the Shares and, upon conversion the underlying
Common Stock (the "Underlying Shares") and to perform its obligations
under this Subscription Agreement.
(2) Valid Issuance. The Shares, when issued and delivered pursuant to
terms of this Subscription Agreement, will be duly authorized, validly
issued and enforceable in accordance with their respective terms and
the terms of this Subscription Agreement and the Underlying Shares,
will upon conversion of the Shares in accordance with their terms, be
duly authorized, validly issued, fully paid and non-assessable.
(3) Corporate Acts and Proceedings. This Subscription Agreement and the
Offering have been duly authorized by all necessary corporate action
on behalf the Company. This Subscription Agreement has been duly
executed and delivered by authorized officers of the Company, is a
valid and binding agreement on the part of the Company and is
enforceable against the Company in accordance with its terms. All
corporate actions necessary to the authorization, creation, issuance
and delivery of the Shares and the conducting of the Offering have
been taken by the Company.
(4) Compliance with Applicable Laws and Other Instruments. Neither the
execution or delivery of, nor the performance of or compliance with
this Subscription Agreement, the issuance of the Shares nor the
consummation of the transactions contemplated hereby and thereby will,
with or without the giving of notice or passage of time, result in any
material breach of, or constitute a material default under, or result
in the imposition of any material lien or encumbrance upon any asset
or property of the Company pursuant to any material agreement or other
instrument to which the Company is a party or by which it or any of
its properties, assets or rights is bound or affected, and will not
violate the Company's Certificate of Incorporation or Bylaws.
(5) Securities Laws. Based in part upon the representations of the
undersigned in Section 5 hereof, no consent, authorization, approval,
permit or order of or filing with any governmental or regulatory
authority is required under current laws and regulations in connection
with the execution and delivery of this Agreement or the offer,
issuance, sale or delivery of the Shares, other than (i) the filing of
a Form D pursuant to Regulation D under the Securities Act of 1933, as
amended (the "Act"); (ii) the filing, if required, of any notice with
any state whose laws require such filing; and (iii) the qualification
thereof, if required, under other applicable state laws, which
qualification has been or will be effected as a condition of the
Offering. Under the circumstances contemplated by this Subscription
Agreement, the offer, issuance, sale and delivery of the Shares will
not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements in the Act.
(6) Capital Stock. The authorized capital stock of the Company consists of
30,000,000 shares of common stock, par value $1.00 per share (the
"Common Stock") of which 14,919,311 shares are issued and outstanding
as of January 26, 2000, and 5,000,000 shares of preferred stock, par
value $.01 per share (the "Preferred Stock"). There are 434 shares of
Series A Convertible Preferred Stock outstanding. Other than the
Series A Preferred Stock, there are no other shares of Preferred Stock
outstanding. As of January 26, 2000, the Company has reserved for
issuance 8,452,607 shares of Common Stock underlying the Series A
Preferred Stock, options (including options available for grant under
existing stock option plans), warrants and A and B Units of Coyote
Technologies, LLC, and has also reserved 2,250,000 shares for issuance
in connection with the contemplated settlement of certain class action
litigation and 1,250,000 shares for issuance to a consultant pursuant
to a consulting agreement. The issued and outstanding shares of
capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable. Except as described above and in the
Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1999 (as amended by Amendments No. 1 and 2, the "Form 10-K"), the
Quarterly Reports on Form 10-Q for the quarters ended June 30, 1999
and September 30, 1999, the Current Reports on Form 8-K dated as of
October 27, 1999 and November 18, 1999, and the Amendment to Current
Report on Form 8-K dated as of October 27, 1999 (collectively, the
"SEC Filings"), in each case as filed with the Securities and Exchange
Commission (the "Commission"), there are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible
securities or other agreements or arrangements of any character or
nature whatever, other than in connection with the Offering, pursuant
to which the Company is obligated to issue any securities of any kind
representing an ownership interest in the Company. Neither the offer
nor the issuance or sale of the Shares constitutes an event under any
anti-dilution provisions of any securities issued (or issuable
pursuant to outstanding rights, warrants or options) by the Company or
any agreements with respect to the issuance of securities by the
Company, which will either increase the number of securities issuable
pursuant to such provisions or decrease the consideration per share to
be received by the Company pursuant to such provisions. No holder of
any securities of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company in connection with
the Offering.
(7) SEC Filings. The Company has furnished, or made available to the
undersigned through the XXXXX Internet web site of the Commission, to
the undersigned, true and complete copies of the SEC Filings and its
Registration Statement on Form S-3, Registration No. 333-68333 (the
"Form S-3"), including the risk factors ("Risk Factors") contained in
such Form S-3. As of their respective filing dates, the SEC Filings
complied in all material respects with the applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder. None of the SEC
Filings, as of their respective dates, and taken as a whole with the
Risk Factors, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
4. Transfer Restrictions.
(1) The undersigned realizes that the Shares and the Underlying Shares are
not registered under the Act or any foreign or state securities laws.
The undersigned agrees that the Shares and the Underlying Shares will
not be sold, offered for sale, pledged, hypothecated or otherwise
transferred (collectively, "Transfer"), except in compliance with the
Act and applicable foreign and state securities laws. The undersigned
understands that the undersigned can only Transfer the Shares and the
Underlying Shares pursuant to registration under the Act or pursuant
to an exemption therefrom. The undersigned understands that to
Transfer the Shares and the Underlying Shares may require in certain
jurisdictions specific approval by the appropriate governmental agency
or commission in such jurisdiction. The undersigned has been advised
that, except as set forth in Section 6 hereof, the Company has no
obligation, and does not intend to cause the Shares and the Underlying
Shares to be registered under the Act or the securities laws of any
other jurisdiction or to comply with the requirements for any
exemption under the Act, including but not limited to, those provided
by Rule 144 and Rule 144A promulgated under the Act, or under the
securities laws of any other jurisdiction.
(2) To enable the Company to enforce the Transfer restrictions contained
in Section 4(a), hereof, the undersigned hereby consents to the
placing of legends upon the certificates representing the Shares and
the Underlying Shares, and the placing of stop transfer orders with
the transfer agent of the Common Stock with respect to the Shares and
the Underlying Shares.
5. Representations and Warranties of the Undersigned. To induce the Company to
accept the undersigned's subscription, the undersigned hereby represents
and warrants to the Company that:
(1) the undersigned, if an individual, has reached the age of majority in
the jurisdiction in which the undersigned resides, is a bona fide
resident of the jurisdiction contained in the address set forth on the
signature page of this Subscription Agreement, is legally competent to
execute this Subscription Agreement, and does not intend to change
residence to another jurisdiction;
(2) the undersigned, if an entity, is duly authorized to execute this
Subscription Agreement and this Subscription Agreement, when executed
and delivered by the undersigned, will constitute a legal, valid and
binding obligation enforceable against the undersigned in accordance
with its terms and that the execution, delivery and performance of
this Subscription Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite
corporate or other necessary action on the part of the undersigned;
(3) the Shares subscribed for hereby are being acquired by the undersigned
for investment purposes only, for the account of the undersigned and
not with the view to any resale or distribution thereof, and the
undersigned is not participating, directly or indirectly, in a
distribution of such Shares and will not take, or cause to be taken,
any action that would cause the undersigned to be deemed an
"underwriter" of such Shares as defined in Section 2(l1) of the Act;
(4) the undersigned has had access to all materials, books, records,
documents and information relating to the Company which the
undersigned has requested, including the SEC Filings and has
independently verified the accuracy of the information contained
therein;
(5) the undersigned acknowledges and understands that investment in the
Shares involves a high degree of risk, including without limitation,
the risks set forth in the Form S-3 and other risks, including the
possible reversal or adjustment of certain revenues recognized by the
Company in prior periods, the Company's continued difficulty in
obtaining lease financing in order to consummate equipment sales and
breaches by third parties of equipment sales previously made, the
Company's need for financing, the possible breach by the Company of
certain contracts, including agreements to register securities with
the SEC and failure to pay a promissory note, and the failure of
several previously announced joint ventures, including the Telecom
Alliance, to generate significant benefits, which may lead to their
dissolution.
(6) the undersigned acknowledges that the undersigned has been offered an
opportunity to ask questions of, and receive answers from, officers of
the Company concerning all material aspects of the Company and its
business and the Offering, and that any request, for such information
has been fully complied with to the extent that the Company possesses
such information or can acquire it without unreasonable effort or
expense;
(7) the undersigned has such knowledge and experience in financial and
business matters that the undersigned is capable of evaluating the
merits and risks of an investment in the Company and can afford a
complete loss of his investment in the Company;
(8) the undersigned has, in connection with its decision to purchase the
Shares, relied solely upon the SEC Filings, the Risk Factors, the
information disclosed herein and their own due diligence;
(9) the undersigned represents and warrants to and covenants with the
Company that the undersigned has not engaged and will not engage in
any sales of the Shares prior to the effectiveness of the Resale
Registration Statement (as defined below in Section 6);
(10) the undersigned recognizes that no governmental agency has passed upon
the issuance of the Shares or made any finding or determination as to
the fairness of this Offering;
(11) if the undersigned is purchasing the Shares subscribed for hereby in a
representative or fiduciary capacity, the representations and
warranties contained herein shall be deemed to have been made on
behalf of the person or persons for whom such Shares are being
purchased;
(12) the undersigned has not entered into any agreement to pay commissions
to any persons with respect to the purchase or sale of the Shares,
except commissions for which the undersigned will be responsible;
(13) the undersigned acknowledges that the Company will pay to Sunrise
Securities Corp. ("Sunrise") a commission with respect to the sale of
the Shares by the Company to the undersigned and the undersigned
acknowledges that Sunrise has not engaged in an independent due
diligence investigation of the Company and is relying solely on the
Company's representations.
(14) the undersigned is an "Accredited Investor" as that term is defined in
Section 501(a) of Regulation D promulgated under the Act.
Specifically, the undersigned is (check appropriate item(s)): [ ] (i)
a bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of
the Act, whether acting in its individual or fiduciary capacity; a
broker or dealer registered pursuant to Section 15 of the Exchange
Act; an insurance company as defined in Section 2(13) of the Act; an
investment company registered under the Investment Company Act of 1940
(the "Investment Company Act") or a business development company, as
defined in Section 2(a)(48) of that Act; a small business investment
company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a
plan established and maintained by a state, its political subdivisions
or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; or an employee benefit plan within the
meaning of the Employment Retirement Income Security Act of 1974 if
the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or
if the employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by
persons that are Accredited Investors;
[ ] (ii) a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
[ ] (iii)a corporation, Massachusetts or similar business trust, or
partnership, or an organization described in Section 501(c)(3) of the
Internal Revenue Code, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5,000,000;
[ ] (iv) a director or executive officer of the Company;
[ ] (v) a natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his or her purchase,
exceeds $1,000,000;
[ ] (vi) a natural person who had an individual income (not including his
or her spouse's income) in excess of $200,000 in 1998 and 1999 or
joint income with his or her spouse in excess of $300,000 in each
of those years and has a reasonable expectation of reaching such
income level in 2000;
[ ] (vii) a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares, whose purchase of
the Shares is directed by a person having such knowledge and
experience in financial and business matters that he or she is capable
of evaluating the merits and risks entailed in the purchase of the
Shares; or
[ ] (viii) an entity in which all of the equity owners are Accredited
Investors. (If this alternative is checked, the undersigned must
identify each equity owner and provide statements signed by each;
demonstrating how each is qualified as an Accredited Investor.)
(15) the undersigned understands and acknowledges that the contents of any
discussions with the Company's management and the matters included in
the SEC Filings and the Risk Factors include "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. As such, those statements involve known and
unknown risks and uncertainties, which may cause the actual results in
future periods to be materially different from any future performance
the Company presently anticipates or predicts. The undersigned has
been cautioned not to place undue reliance on any forward looking
statements.
6. Registration of Shares under the Act.
(1) By its acceptance hereof, the Company agrees that it shall, at its
expense, (1) not later than 120 business days after the final closing
of the Offering (the "Filing Deadline") use its best efforts to file a
registration statement or amend an existing effective registration
statement (in either case, the "Resale Registration Statement") with
the Commission to register under the Act the resale by the undersigned
of the Underlying Shares; (ii) use its best efforts to cause the
Resale Registration Statement to become effective under the Act as
soon as possible after it is filed; (iii) after the Resale
Registration Statement is declared effective under the Act, furnish
the undersigned with such number of copies of the final prospectus
included in the Resale Registration Statement (the "Prospectus") as
the undersigned may reasonably request to facilitate the resale of the
Underlying Shares; and (iv) use its best efforts to cause such
Registration Statement to remain effective until such time as the
undersigned becomes eligible to resell the shares pursuant to Rule
144(k) of the Act.
(2) The Company will (i) prepare and file with the Commission such
amendments and Prospectus supplements, including post-effective
amendments to the Resale Registration Statement, as the Company
determines may be necessary or appropriate, and use its best efforts
to have such post-effective amendments declared effective as promptly
as practicable; (ii) cause the Prospectus to be supplemented by any
Prospectus supplement, and as so supplemented, to be filed with the
Commission; and (iii) promptly notify the undersigned when a
Prospectus, and any Prospectus supplement or post-effective amendment
must be filed or has been filed (including any filing in response to a
Sale Notice) and, with respect to any post-effective amendment, when
the same has become effective.
(3) In connection with the Resale Registration Statement, the undersigned
shall furnish the Company such information as the Company shall
reasonably request.
(4) The undersigned shall give the Company two business days prior written
notice of any sale pursuant to the Resale Registration Statement. At
any time the Company may refuse to permit the undersigned to resell
any Underlying Shares pursuant to the Resale Registration Statement;
provided, however, that in order to exercise this right, the Company
must deliver a certificate in writing to the undersigned to the effect
that withdrawal of the Resale Registration Statement is necessary
because a sale pursuant to the Resale Registration Statement in its
then-current form could constitute a violation of the federal
securities laws. In such an event, the Company shall use its best
efforts to amend the Resale Registration Statement if necessary and
take all other actions necessary to allow such sale under the federal
securities laws, and shall notify the undersigned promptly after it
has determined that such sale has become permissible under the federal
securities laws. The undersigned hereby covenants and agrees that it
will not sell any Underlying Shares pursuant to the Resale
Registration Statement during the periods the Resale Registration
Statement is withdrawn as set forth in this Section 6(d).
(5) If the Resale Registration Statement is not declared effective within
180 days of the final closing of the Offering (the "Deadline"), the
Company shall issue to the undersigned Shares or Common Stock, as
appropriate, in an amount equal to 1% of the number of outstanding
Shares or Underlying Shares held by the undersigned for each 30 day
period or part thereof after the Deadline in which the Resale
Registration Statement is not declared effective and, if such Resale
Registration Statement is not effective within 60 days after the
Deadline, the 1% shall be increased to 2% for each 30 day period or
part thereof after such 60 day period elapses until the Resale
Registration Statement is effective or the Underlying Shares become
saleable pursuant to Rule 144(k).
7. Indemnification.
(1) The undersigned understands the meaning and legal consequences of the
representations and warranties made by the undersigned in this
Subscription Agreement, and agrees to indemnify and hold harmless the
Company and each of the Company's directors, officers, stockholders,
employees, counsel, agents, successors and assignees from and against
any and all losses, damages, liabilities or expenses (including,
without limitation, attorneys' fees), as and when incurred, due to or
arising out of (in such case in whole or in part) any breach of any
representation or warranty made by the undersigned set forth herein or
in any other agreement or other document furnished by the undersigned
to any of the foregoing in connection with the Offering, or any
failure by the undersigned to fulfill any of the covenants or
agreements set forth herein, or arising out of the resale or
distribution by the undersigned of the Underlying Shares or any
portion thereof in violation of the Act or any applicable foreign or
state securities or "blue sky" laws.
(2) The Company understands the meaning and legal consequences of the
representations and warranties made by it in this Subscription
Agreement, and agrees to indemnify and hold harmless the undersigned
and each of the undersigned's directors, officers, stockholders,
employees, counsel, agents, successors and assigns from and against
any and all losses, damages, liabilities or expenses (including,
without imitation, attorneys' fees), as and when incurred, due to or
arising out of (in each case in whole or in part) any breach of any
representation or warranty made by the Company set forth herein, or
any failure by the Company to fulfill any of its covenants or
agreements set forth herein.
(3) To the extent permitted by law, the Company will indemnify and hold
harmless each holder of Underlying Shares included in the Resale
Registration Statement (a "Holder"), the directors, if any, of such
Holder, the officers, if any, of such Holder, and each person, if any,
who controls such Holder within the meaning of the Act or the Exchange
Act, against, any losses, claims, damages, expenses or liabilities to
which any of them may become subject, under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof, arise out of or are based upon any of
the following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement or alleged untrue statement of
a material fact contained in the Resale Registration Statement,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading; or (iii)
any violation or alleged violation by the Company of the Act, the
Exchange Act, any state securities laws or any rule or regulation
promulgated under the Act, the Exchange Act or any state securities
laws. The Company will reimburse the Holders and each such controlling
person, promptly, as such expenses are incurred, for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such losses, claims, damages,
liabilities, actions or proceedings.
(4) To the extent permitted by law, each Holder, severally and not
jointly, will indemnify and hold harmless, to the same extent and in
the same manner set forth in Section 7(c), the Company, each of its
directors and officers who have signed the Resale Registration
Statement, and each person, if any, who controls the Company within
the meaning of the Act or the Exchange Act, against any losses,
claims, damages or liabilities to which any of them may become
subject, under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities, actions or proceedings,
whether commenced or threatened in respect thereof, arise out of or
are based upon any violation or alleged violation by the Company of
the Act, the Exchange Act, any state securities laws or any rule or
regulation promulgated under the Act, the Exchange Act or any state
securities laws, in each case to the extent (and only to the extent)
that such violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in
connection with the Resale Registration Statement or as a result of a
sale made after receipt of a certificate contemplated by Section 6(d).
Such Holder will reimburse such persons for any legal or other
expenses reasonably incurred by any of them in connection with
investigating or defending any such losses claims, damages,
liabilities, actions or proceedings.
(5) With respect to the indemnification set forth in Sections 7(c) or (d)
above, to the extent any indemnification by in indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it
would otherwise be liable under said Sections 7(c) or (d) to the
extent permitted by law, provided that (i) no contribution shall be
made under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in said
Sections 7(c) or (d) and (ii) no party guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Act) shall
be entitled to contribution from any party who was not guilty of such
fraudulent misrepresentation.
8. Reduction of Shares. The undersigned agrees that the Placement Agent or the
Company may, in its sole and absolute discretion, reduce the undersigned's
subscription to any number of Shares that in the aggregate does not exceed
the number of Shares hereby applied for without any prior notice to or
further consent by the undersigned. The undersigned hereby irrevocably
constitutes and appoints the Placement Agent and each officer of the
Placement Agent, each of the foregoing acting singly, in each case with
full power of substitution, the true and lawful agent and attorney-in-fact
of the undersigned, with full power and authority in the undersigned's
name, place and stead, to amend this Subscription Agreement, including in
each case the undersigned's signature page thereto, to effect any of the
foregoing provisions of this Section.
9. Further Documents. The undersigned agrees that it will execute such other
documents as may be necessary or desirable in connection with the
transactions contemplated hereby.
10. Modification. Neither this Subscription Agreement nor any provisions hereof
shall be waived, modified, discharged or terminated except by an instrument
in writing signed by the party against whom any such waiver, modification,
discharge or termination is sought.
11. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service and delivered against receipt to the
party to whom it is to be given: (i) if to the Company, at the address set
forth on the first page hereof; (ii) if to the undersigned, at its address
set forth on the signature page hereto; or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance
with the provisions of this Section 11. Notice to the estate of any party
shall be sufficient if addressed to the party as provided in Section 11.
Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address, which shall be deemed given at the time of receipt
thereof. Any notice given by other means permitted by this Section 11 shall
be deemed given at the time of receipt thereof.
12. Counterparts. This Subscription Agreement may be executed through the
execution of separate signature pages or in any number of counterparts, and
each such counterpart shall, for all purposes, constitute one agreement
binding on all parties, notwithstanding that all parties are not
signatories to the same counterpart.
13. Entire Agreement. This Subscription Agreement contains the entire agreement
of the parties with respect to the subject matter hereof and there are no
representations, covenants or other agreements except as stated or referred
to herein.
14. Severability. Each provision of this Subscription Agreements is intended to
be severable from every other provision, and the invalidity or illegality
of any portion hereof shall not affect the validity or legality of the
remainder hereof.
15. Assignability. This Subscription Agreement is not transferable or
assignable by the undersigned.
16. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law thereunder.
17. Choice of Jurisdiction. Any action or proceeding arising directly,
indirectly or otherwise, in connection with, out of or from this
Subscription Agreement, any breach hereof or any transaction covered hereby
shall be resolved within New York, New York. Accordingly, the parties
consent and submit to the jurisdiction of the United States federal, and
state courts located within New York, New York.
18. Taxpayer Identification Number. The undersigned verifies under penalties of
perjury that any Taxpayer Identification Number or Social Security Number
shown on the signature page hereto is true, correct and complete.
19. Pronouns. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the
context requires.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this ___ day of _______________, 2000.
Number of Shares Subscribed for: _____________ Shares
INDIVIDUAL SUBSCRIBER: ENTITY SUBSCRIBER:
__________________________________ ___________________________________
(Signature of Subscriber) (Print Name of Subscriber)
__________________________________ By: ____________________________
(Typed or Printed Name) Name: ____________________________
Title: ____________________________
__________________________________ ___________________________________
(Residence Address) (Address)
__________________________________ ___________________________________
(City, State and Zip Code) (City, State and Zip Code)
__________________________________ ___________________________________
(Telephone Number) (Telephone Number)
__________________________________ ___________________________________
(Telecopier Number) (Telecopier Number)
___________________________________ ___________________________________
(Tax I.D. or Social Security Number) (Tax I.D. or Social Security Number)
ACCEPTED:
Coyote Network Systems, Inc. For entities desiring that
certificates for the Shares be
By: ____________________________ delivered to an address other than
Name: ____________________________ set forth above, set for the
Title: ____________________________ delivery address:
Dated: ____________________________ ___________________________________
(Address)
___________________________________
(City, State and Zip Code)
Annex A
- The Offering shall consist of the sale of between $5,000,000 and
$10,000,000, with a $3,000,000 over-allotment option at the Company's
election, of the Company's Series B Preferred Stock (the "Shares") at a
price of $4.75 per share. The Shares shall pay a dividend of 6% per annum,
with dividends accruing 90 days from closing. The Shares shall be
convertible into the Company's common stock at $4.75 per share at the
option of the holder of the Shares. The Company shall have the right to
redeem the Shares if the Company's common stock trades at or above $10 for
twenty consecutive trading days, at which point the holders of Shares may
exercise their conversion rights.
- The placement fee to the Placement Agent shall be 7% of the gross sales
price of the Shares (the "Placement Fee"). The Company may pay all or a
portion of such placement fee in Shares ("Placement Fee Shares") at $4.75
per share less the 7% Placement Fee. In addition, the Placement Agent will
be entitled to reimbursement of certain expenses.
- The Company shall, at its expense, (i) not later than a date 120 business
days after the final closing of the Offering file a registration statement
(the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") to register under the Securities Act of 1933 (the "Act")
the resale of shares of common stock underlying the Shares by the holders
of the Shares and the shares of common stock underlying the Placement Fee
Shares, if applicable, (ii) use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Act as promptly
as practicable, (iii) after the Registration Statement is declared
effective under the Act, furnish holders with such number of copies of the
prospectus included in the Registration Statement as the holders may
reasonably request to facilitate the resale of the Shares; and (iv) use its
reasonable best efforts to cause such Registration Statement to remain
effective until such time as the holders become eligible to resell the
Shares pursuant to Rule 144(k). In the event that the Company shall fail to
cause the Registration Statement to be declared effective within 180 days
of the final closing of the Offering (the "Effectiveness Deadline"), the
Company shall issue to the holders as compensation therefor Shares equal to
(i) 1% of the Shares for each 30 days or part thereof effectiveness is
delayed until 60 days after the Effectiveness Deadline and (ii) 2% of the
Shares for each 30 days or part thereof effectiveness is delayed beyond 60
days after the Effectiveness Deadline.
Coyote Network Systems, Inc.
ESCROW WIRE INSTRUCTIONS
Credit:
A/C #
Further Credit:
A/C #
Attn:
SUPPLEMENT TO SUBSCRIPTION AGREEMENT
COYOTE NETWORK SYSTEMS, INC.
Reference is made to that certain Subscription Agreement, dated January 28,
2000, pursuant to which the undersigned has subscribed for shares of the
Company's preferred stock, which is convertible into shares of the Company's
Common Stock at a conversion price of $4.75 per share. All capitalized terms not
defined herein shall have the meanings set forth in the Subscription Agreement.
1. The first sentence of the first paragraph of Annex A to the Subscription
Agreement is hereby amended to read as follows:
The Offering shall consist of the sale of between $5,000,000 and
$15,000,000 of shares of the Company's Series B Preferred Stock at a price
of $4.75 per share, for a maximum of 3,157,894 shares of Series B Preferred
Stock.
2. The press release attached hereto as Annex I is hereby incorporated by
reference. Xx. XxXxxxxxxx'x employment agreement provides for a salary of
$160,000 per year and options to purchase 750,000 shares of Common Stock at
$5.00 per share.
3. The following modification is hereby made to Section 3(f) of the
Subscription Agreement:
The 1,250,000 shares of Common Stock that are reserved for issuance to a
consultant pursuant to a consulting agreement, according to Section 3(f) of
the Subscription Agreement have now been issued, bringing the number of
shares issued to such consultant to 2,000,000. Xxxxx XxXxxxxxxx owns
approximately 33% of the consultant (the balance of which is owned by
affiliates of First Venture Leasing, LLC) and approximately 25% of First
Venture Leasing, LLC.
4. Copies of Xx. XxXxxxxxxx'x employment agreement, the financial services
agreement with First Venture Leasing, LLC and the consulting agreement are
available upon request.
By signing below, the undersigned acknowledges that the information contained in
this Supplement amends, supersedes and updates the referenced provisions of the
Subscription Agreement. All other portions of the Subscription Agreement, unless
specifically amended by this Supplement, remain unchanged.
Date: _____________________ __________________________________
Name: ________________________
Title: ________________________
Accepted By:
COYOTE NETWORK SYSTEMS, INC.
____________________________
Name: _____________________
Title: _____________________
ANNEX I
