EXECUTION COPY Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), entered into as of December __, 1997 by
and between [BUYER], c/o First Bermuda Financial
Services Limited, Chevron House, 11 Church Street,
Xxxxxxxx XX NX, Bermuda (the "Buyer"), and COYOTE
NETWORK SYSTEMS, INC., a Delaware corporation with
offices at 0000 Xxxx Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx,
XX 00000, U. S. A. (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to a Convertible Securities
Subscription Agreement, dated as of the date hereof
(the "Subscription Agreement"), by and between the
Company and the Buyer, the Company has agreed to sell
and the Buyer has agreed to purchase U.S. $__________
of the Company's 8% Convertible Notes due December __,
2000 (the "Notes") convertible into shares of the
Company's common stock, $1.00 par value (the "Shares");
WHEREAS, pursuant to the terms of, and in
partial consideration for, the Buyer's agreement to
enter into the Subscription Agreement, the Company has
agreed to provide the Buyer with certain registration
rights with respect to the Shares as set forth in this
Agreement;
NOW, THEREFORE, in consideration of the
mutual promises, representations, warranties, covenants
and conditions set forth in the Agreement and this
Registration Rights Agreement, the Company and the
Buyer agree as follows:
1. Certain Definitions. As used in this
Agreement, the following terms shall have the following
respective meanings:
"Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the
time administering the Securities Act.
"Registrable Securities" shall mean the
Shares issued to Buyer or its designee upon conversion
of the Notes or upon any stock split, stock dividend,
recapitalization or similar event with respect to such
Shares; provided, however, that Registrable Securities
shall cease to be Registrable Securities when they may
be sold pursuant to Rule 144 under the Securities Act.
Registrable Securities shall not include the Notes.
The terms "register", "registered" and
"registration" shall refer to a registration effected
by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules
and regulations thereunder, and the declaration or
ordering of the effectiveness of such registration
statement.
"Registration Expenses" shall mean all
expenses to be incurred by the Company in connection
with Buyer's exercise of its registration rights under
this Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees
and disbursements of
counsel for the Company, blue sky fees and expenses,
reasonable fees and disbursements of one counsel to Holders
participating in the registration for a review of the
Registration Statement and related documents, and the
expense of any special audits incident to or required by
any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in
any event by the Company).
"Selling Expenses" shall mean all
underwriting discounts and selling commissions
applicable to the sale of Registrable Securities and
all fees and disbursements of counsel for Holder not
included with "Registration Expenses".
"Holder" shall include the Buyer and any
permitted transferee of Notes, Shares or Registrable
Securities which have not been sold to the public to
whom the registration rights conferred by this
Agreement have been transferred in compliance with
Section 11 herein.
"Registration Statement" shall have the
meaning set forth in Section 3(a) herein.
"Regulation S" shall mean Regulation S as
promulgated pursuant to the Securities Act, and as
subsequently amended.
"Rule 144" shall mean Rule 144 under the
Securities Act, as such rule may be amended from time
to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities Act" shall mean the United States
Securities Act of 1933, as amended.
2. Conditions to Registration Requirement.
The Company's obligation hereunder to register
Registrable Securities shall arise in the event that
Company receives a written opinion of counsel for the
Holder (which counsel shall be of a law firm
experienced in United States securities matters)
indicating that there has been an amendment or material
change to the Securities Act or Regulation S after the
date hereof, or the promulgation by the Commission of
an interpretative release or other statement after the
date hereof, which prohibits or restricts or otherwise
materially affects the Holder from reselling
Registrable Securities without registration under the
Securities Act (a "Registration Trigger Event").
Notwithstanding the foregoing, it will not be deemed a
"Registration Trigger Event" to the extent that Holder
desires to engage in a distribution of the Registrable
Securities which otherwise requires registration under
the Securities Act or in activity which otherwise deems
Holder to be a statutory underwriter under Section 5 of
the Securities Act. In the event that a Registration
Trigger Event has occurred, then Holder shall be
entitled to require the Company to register all of
Holder's Registrable Securities in accordance with this
Agreement.
3. Request for Registration.
(a) Upon the occurrence of a
Registration Trigger Event, if the Company shall
receive from a Holder (or, in the event there is more
than one Holder as a result of the issuance by the
Company of the Notes, the Company shall receive written
notice from such Holders acting with respect to their
rights under this Agreement according to a vote of a
majority-in-interest of the Holders) a written request
that the Company effect any registration
with respect to any Registrable Securities, the Company
shall use its commercially reasonable efforts to effect such
registration (including, without limitation, the
execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable
state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act)
as may be so requested and as would permit or
facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified
in such request in the states specified in such
request. Notwithstanding the foregoing, the Company
shall not be obligated hereunder to effect such
registration unless the proposed public offering price
of the securities to be included in such registration
shall be at least $250,000 (before deducting
underwriting discounts and commissions). If the
registration request pertains to any Registrable
Securities not yet outstanding because conversion
rights have not been exercised, Company may condition
the registration of such securities on an irrevocable
undertaking to pay all expenses incident to such
registration if such conversion rights are not
exercised prior to the effective date of the
registration statement.
Subject to the previous paragraph, the
Company shall file (i) a registration statement with
the Commission pursuant to Rule 415 under the
Securities Act on Form S-3 under the Securities Act (or
in the event that the Company in ineligible to use such
form, such other form as the Company is eligible to use
under the Securities Act) covering at least __________
of the Registrable Securities so requested to be
registered ("Registration Statement"); (ii) such state
securities filings as shall have been requested by the
Holder; and (iii) any required filings with The Nasdaq
Stock Market, Inc. or exchange where the Shares are
traded, as soon as practicable, after receipt of the
request of the Holder. Thereafter the Company shall
use its commercially reasonable efforts to have such
Registration Statement and other filings declared
effective.
(b) (i) Subject to the conditions
contained in Section 3(a) above, if the Company fails
to file a Registration Statement complying with the
requirements of this Agreement within 45 days from the
date of receipt by the Company of the Holder's written
request (provided, however, that under the
circumstances described in 3(e) below the Company may
have an additional 45 days thereafter to file such
Registration Statement by providing written notice to
the Holders requesting such registration indicating
that the Company is diligently pursuing the filing of
such Registration Statement) or if such Registration
Statement has not become effective within 90 days from
the date of filing thereof, the Holder shall have, in
addition to and without limiting any other rights it
may have at law, in equity or under the Notes, the
Subscription Agreement, or this Agreement (including
the right to specific performance), the right to
receive, as liquidated damages, the payments as
provided in subparagraph (ii) of this section.
(ii) If after ninety (90) days from
the date of filing of the Registration Statement, the
Registration Statement has not been declared effective
by the Commission, then the Company shall pay to the
Buyer an amount equal to 3% of the Initial Principal
Amount (as defined in the Note) in cash, for each 30-
day period after the ninety (90) day period that such
Registration Statement is not effective (which payment
shall be pro rata for any period of less than 30 days).
In addition to the foregoing, if after 180 days from
the date of filing of the Registration Statement, the
Registration Statement has not been declared effective
by the Commission, then at the option of such Holder,
the Company shall be required to redeem all the Notes
held by such Holder at a redemption price equal to 125%
of the Outstanding Principal Amount of the Note plus
accrued interest thereon, together with all other
payments due
under this paragraph and under the Note
and the Agreement.
(iii) The Company acknowledges
that its failure to register the Registrable Securities
in accordance with this Agreement will cause the Holder
to suffer damages in an amount that will be difficult
to ascertain. Accordingly, the parties agree that it
is appropriate to include in this Registration Rights
Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated
damages provisions set forth above represent the
parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not
constitute a penalty.
(iv) In computing the time periods
provided in this paragraph 3(b), any delays arising
from the failure or refusal of any Holder to provide
information which the Company's counsel or the
Commission states in writing is required for inclusion
on the Registration Statement within ten (10) days of a
written request by the Company to provide such
information, shall increase the number of days for the
Company to act by a corresponding number.
(c) If there is more than one Holder,
such Holders shall act with respect to their rights
under this Agreement according to the vote of a
majority-in-interest of the Holders.
(d) The Company shall make available
for inspection by a representative or representatives
of the Holder, and any attorney or accountant retained
by such Holder, all financial and other records
customary for such purposes, pertinent corporate
documents and properties of the Company, and cause the
Company's officers, directors and employees to supply
all information reasonably requested by any such
representative, attorney or accountant in connection
with such Registration Statement. The Holder will
agree to keep all non-public information supplied to it
confidential until such information is included in a
Registration Statement which has been made publicly
available.
(e) The Company shall not be obligated
to keep such Registration Statement continuously
effective for a period of more than two years from the
date it is declared effective by the Commission;
provided, however, that if so requested by the holders
of a majority-in-interest of the Registrable Securities
the Company shall agree to extend the period for which
the Registration Statement remains effective to the
same extent that "suspension periods" are imposed
pursuant to the next paragraph, but only so long as the
then unsold Registrable Securities covered by such
Registration are too numerous to be sold under the
volume limitations of Rule 144 in any applicable three-
month period by any holder.
Following the effectiveness of the
Registration Statement pursuant to this Agreement, the
Company may, at any time, suspend the effectiveness of
such Registration Statement and sales thereunder for up
to twenty (20) business days, as appropriate (a
"Suspension Period"), by giving notice to each holder
(or underwriter, if any) selling thereunder, if the
Board of Directors shall have determined in good faith
that the Company may be required to disclose any
material corporate development which disclosure (i) may
have a material adverse effect on the Company, (ii) may
have a material adverse affect on the transaction or
matter to be disclosed, or (iii) would be detrimental
to the Company or its stockholders. Notwithstanding
the foregoing, no more than two Suspension Periods
(i.e., forty
(40) business days) may occur in any twelve (12) month
period, and the Company shall use its commercially
reasonable efforts to limit the duration and number of
any suspension periods. Holder agrees (and shall require
that any underwriter agree) that, upon receipt of any
notice from the Company of any Suspension Period, Holder
shall forthwith discontinue disposition of shares covered
by the Registration Statement and related prospectus or
other offering materials (the "Prospectus") until such
Holder (i) is advised in writing by the Company that the use
of the applicable Prospectus may be resumed, (ii) has received
copies of a supplemental or omitted Prospectus, if
applicable, and (iii) has received copies of any
additional or supplemental filings which are
incorporated or deemed to be incorporated by reference
in such Prospectus. Holder acknowledges that receipt
of notice of a Suspension Period could, itself, be
considered material nonpublic information and agrees
not to trade on (or tip others with respect to) such
information.
4. Expenses of Registration. All
Registration Expenses incurred in connection with any
registration, qualification or compliance with
registration pursuant to this Agreement shall be borne
by the Company, and all Selling Expenses shall be borne
by the Holder, except for a legal fee not to exceed
$3,500 of Counsel to the Holder for review of the
Registration Statement.
5. Registration on Form S-3. Although the
Company shall use its commercially reasonable efforts
to qualify for registration on Form S-3 or any
comparable or successor form or forms, or in the event
that the Company is ineligible to use such form, such
form as the Company is eligible to use under the
Securities Act, nothing in the Subscription Agreement
or this Agreement is intended to require the Company to
pay dividends in order to use Form S-3.
6. Registration Procedures. In the case of
each registration effected by the Company pursuant to
this Agreement, the Company will keep the Holder
advised in writing as to the initiation of each
registration and as to the completion thereof. At its
expense, the Company will use its commercially
reasonable efforts to:
(a) Keep such Registration Statement
effective for the period ending twenty-four (24) months
after the registration has been declared effective by
the Commission or until the Holder has completed the
distribution described in the Registration Statement
relating thereto, whichever first occurs.
(b) Furnish such number of Prospectuses
and other documents incident thereto as the Holder from
time to time may reasonably request.
7. Indemnification.
(a) Company Indemnity. The Company
will indemnify the Holder, each of its officers,
directors and partners, and each person controlling
Holder, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder
with respect to which registration, qualification or
compliance has been effected pursuant to this
Agreement, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any
Prospectus, (including any related Registration
Statement, notification or the like) incident to any
such registration, qualification or compliance, or
based on any omission (or alleged omission) to
state therein a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or any violation by the Company of the
Securities Act or any state securities law or in either
case, any rule or regulation thereunder applicable to
the Company and relating to action or inaction required
of the Company in connection with any such
registration, qualification or compliance, and will
reimburse the Holder, each of its officers, directors
and partners, and each person controlling such Holder,
for any legal and any other expenses reasonably
incurred in connection with investigating and defending
any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any
such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based
on any untrue statement or omission based upon written
information furnished to the Company by Holder and
stated to be specifically for use therein. The
indemnity agreement contained in this Section 7(a)
shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such
settlement is effected without the consent of the
Company (which consent will not be unreasonably
withheld).
(b) Holder Indemnity. The Holder will,
if Registrable Securities held by it are included in
the securities as to which such registration,
qualification or compliance is being effected,
indemnify the Company, each of its directors, officers,
partners, and each underwriter, if any, of the
Company's securities covered by such a registration
statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of
their officers, directors and partners, and each person
controlling such other Holder against all claims,
losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material
fact contained in any such registration statement,
prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a
material fact required to be stated therein or
necessary to make the statement therein not misleading,
and will reimburse the Company and such other holders
and their directors, officers and partners,
underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with
investigating and defending any such claim, loss,
damage, liability or action, in each case to the
extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration
statement, prospectus, offering circular or other
document in reliance upon and in conformity with
written information furnished to the Company by Holder
and stated to be specifically for use therein, and
provided that the maximum amount for which the Holder
shall be liable under this indemnity shall not exceed
the net proceeds received by the Holder from the sale
of the Registrable Securities. The indemnity agreement
contained in this Section 7(b) shall not apply to
amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected
without the consent of Holder (which consent shall not
be unreasonably withheld).
(c) Procedure. Each party entitled to
indemnification under this Section 7 (the "Indemnified
Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party")
promptly after the Indemnified Party has actual
knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to
assume the defense of any such claim in any litigation
resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of
such claim or any litigation resulting therefrom, shall
be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at
such
party's expense, and provided further that the
failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 7 except to
the extent that the Indemnifying Party is materially
and adversely affected by such failure to provide
notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required
in connection with the defense of such claim and
litigation resulting therefrom.
8. Contribution. If the indemnification
provided for in Section 7 herein is unavailable to the
Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein (other than
by reason of the exceptions provided therein), then
each such Indemnifying Party, in lieu of indemnifying
the Indemnified Party, shall contribute to the amount
paid or payable by the Indemnified Party as a result of
such losses, claims, damages or liabilities (i) as
between the Company and the Holder on the one hand and
the underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received
by the Company and the Holder on the one hand or
underwriters, as the case may be, on the other from the
offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the
Company on the one hand and of the Holder or
underwriters, as the case may be, on the other in
connection with the statements or omissions which
resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company on the
one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative
fault of the Company and of the Holder in connection
with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any
other relevant equitable considerations.
The relative benefits received by the Company
on the one hand and the Holder or the underwriters, as
the case may be, on the other shall be deemed to be in
the same proportion as the proceeds from the offering
(net of underwriting discounts and commissions but
before deducting expenses) received by the Company from
the initial sale of the Notes which can be converted
into Registrable Securities by the Company to the
Holder pursuant to the Subscription Agreement which
corresponds to this Agreement bear to the gain realized
by such Holder or the total underwriting discounts and
commissions received by the underwriters as set forth
in the table on the cover page of the prospectus, as
the case may be. The relative fault of the Company on
the one hand and of the Holder or underwriters, as the
case may be, on the other shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to
information supplied by the Company, by the Holder or
by the underwriters.
In no event shall the obligation of any
Indemnifying Party to contribute under this Section 8
exceed the amount that the Indemnifying Party would
have been obligated to pay by way of indemnification if
the indemnification provided for under Section 7(a) or
7(b) hereof had been available under the circumstances.
The Company and the Holder agree that it
would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata
allocation (even if the Holder or the underwriters were
treated as one entity for such purpose) or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an
Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include,
subject to the limitations set forth above, any legal
or other expenses reasonably incurred by the
Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding
the provisions of this Section, no Holder or
underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of the
Holder, the net proceeds received by the Holder from
the sale of Registrable Securities or (ii) in the case
of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed
to the public were offered to the public exceeds, in
any such case, the amount of any damages that the
Holder or underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Survival. The indemnity and
contribution agreements contained in Sections 7 and 8
shall remain operative and in full force and effect
regardless of (i) any termination of the Subscription
Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified
Party or by or on behalf of the Company and (iii) the
consummation of the sale or successive resales of the
Registrable Securities.
10. Information by Holder. The Holder shall
furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as
the Company may reasonably request in writing and as
shall be reasonably required in connection with any
registration, qualification or compliance referred to
in this Agreement.
11. Transfer or Assignment of Registration
Rights. The rights, granted to Buyer by the Company
under this Registration Rights Agreement, to cause the
Company to register Registrable Securities, may be
transferred or assigned to a transferee or assignee of
not less than $250,000 in principal amount of Notes,
provided that the Company is given written notice by
Holder at the time of or within a reasonable time after
said transfer or assignment, stating the name and
address of said transferee or assignee and identifying
the securities with respect to which such registration
rights are being transferred or assigned, and provided
further that the transferee or assignee of such rights
is not deemed by the board of directors of the Company,
in its reasonable judgment, to be a competitor of the
Company; and provided further that the transferee or
assignee of such rights agrees to be bound by this
Agreement.
Buyer is one of a group of holders of
Registrable Securities issued or issuable pursuant to a
total aggregate amount of up to $3,000,000 of Notes
purchased by Buyer and others in a transaction designed
to qualify as an offering pursuant to Regulation S.
Any action to be taken under this Agreement or any term
of this Agreement may be amended or waived only with
written action by the Company and the holders of at
least a majority-in-interest of the total of the
Registrable Securities. Any action, amendment or
waiver effected in accordance with this paragraph shall
be binding upon each of the other holders of
Registrable Securities at the time
then outstanding.
12. Miscellaneous.
(a) Entire Agreement. This Agreement
contains the entire understanding and agreement of the
parties, and may not be modified or terminated except
by a written agreement signed by both parties.
(b) Notices. Any notice or other
communication given or permitted under this Agreement
shall be in writing and shall be deemed to have been
duly given if personally delivered or sent by
registered or certified mail, return receipt requested,
postage prepaid or by air courier, (a) if to Buyer, at
its address hereinabove set forth, (b) if to the
Company, at its address hereinabove set forth, and (c)
if to a holder other than Buyer, at the address thereof
furnished by like notice to the Company, or (d) to any
such addresses at such other address or addresses as
shall be so furnished to the other parties by like
notice.
(c) Gender of Terms. All terms used
herein shall be deemed to include the feminine and the
neuter, and the singular and the plural, as the context
requires.
(d) Governing Law; Consent of
Jurisdiction. This Agreement and the validity and
performance of the terms hereof shall be governed by
and construed in accordance with the laws of the State
of Delaware. The parties hereto hereby consent to, and
waive any objection to the exercise of, personal
jurisdiction in the State of Delaware with respect to
any action or proceeding arising out of this Agreement.
(e) Titles. The titles used in this
Agreement are used for convenience only and are not to
be considered in construing or interpreting this
Agreement.
(f) Prospectus Delivery Requirements.
Holder agrees, on Holder's behalf, and shall require
any transferee or assignee pursuant to Section 11 above
to agree, to comply with all applicable federal and
state securities laws, including without limitation all
prospectus delivery requirements applicable to resales
of the securities pursuant to the Registration
Statement and Regulation M and Rule 10b-5 under the
Securities Exchange Act of 1934, as amended.
(g) Termination. The rights of Holder
to require the Company to request a registration
pursuant to this Agreement shall terminate on the date
which is five (5) years from the date of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the
date first above written.
[BUYER] COYOTE NETWORK SYSTEMS, INC.
a Delaware Corporation
By: By:
Name: Name: Xxxxx X. Xxxxxxx
Title: Authorized Signatory Title: Chairman & Chief
Executive Officer
