CROSS RECEIPT AND AGREEMENT
Agreement and cross receipt between JNC Opportunity Fund Ltd. ("JNC") and
Coyote Network Systems, Inc., a Delaware corporation (the "Company"). JNC hereby
acknowledges receipt of $4,000,000 and a warrant (the "Warrant") for 325,000
shares of the Company's common stock and the Company hereby acknowledges receipt
of the certificate for 700 shares of 5% Series A Convertible Preferred Stock
(the "Series A"), of which the Company will retire 100 shares. The Company
hereby agrees to promptly issue to JNC a certificate representing the 600 shares
of Series A remaining after the redemption of the 100 shares referred to above.
1. JNC and the Company hereby agree that, notwithstanding anything to the
contrary contained in the Certificate of Designations as to the Series A:
(a) JNC hereby waives any defaults under the Purchase Agreement and the
Registration Rights Agreement for purposes of Section 5(a)(ii);
(b) Sections 5(a) (iv) and 5(c)(i) of the Certificate of Designations
shall be of no further force or effect, the Conversion Price shall be
$6.00 per share and shall be subject to adjustment only for the events
referred to in Section 5(c)(ii), (iii) and (v) of the Certificate of
Designations (and shall not be subject to any other price adjustments,
including, without limitation, those set forth in Section 5(c)(i),
5(c)(iv) and 5(c)(x)(i)) and the Company shall only be required to
reserve an adequate number of shares for issuance upon conversion
based upon such price, as so adjusted, notwithstanding the
parenthetical in Section 5(d); and
(c) If, an event described in Section 8(b) of the Warrant occurs, JNC
shall have equivalent rights with respect to any subsequent conversion
of the Series A as it has with respect to exercise of the Warrant
under such Section 8(b).
(d) Section 7 of the Certificate of Designations shall be of no further
force and effect.
(e) All references to the Initial Conversion Price shall be deemed
references to $6.00 per share.
2. JNC agrees that it shall not sell, assign, transfer, give away or otherwise
dispose of the Series A, except to a party which expressly agrees in
writing to be bound by the provisions of this Agreement and JNC hereby
agrees to the placement of a legend on the certificate representing the
Series A to the foregoing effect.
3. Capitalized terms not otherwise defined herein shall have their meanings
from the Certificate of Designations.
4. The Company agrees that JNC shall have the same registration rights as to
the shares underlying the Series A as it does for the shares of common
stock underlying the Warrant and that, in connection with any such
registration, JNC shall be entitled to receive and shall give to the
Company, the benefit of the indemnification and contribution provisions
contained in Section 5 of the Registration Rights Agreement referred to
below as if such registration was covered by such agreement.
5. The parties further hereby acknowledge and agree that the Registration
Rights Agreement between JNC and the Company, dated August 31, 1998, is
hereby terminated and of no further force and effect, except as set forth
in Section 4 above.
6. In connection with its receipt of the Warrant, JNC hereby represents and
warrants to the Company as follows:
(a) JNC is acquiring the Warrant for its own account (and not for the
account of others) for investment and not with a view to the
distribution or resale thereof;
(b) By virtue its position, JNC has access to the same kind of
information which would be available in a registration statement
filed under the Securities Act of 1933, as amended (the "Act");
(c) JNC is an "accredited investor" within the meaning of Regulation D
under the Act;
(d) JNC understands that it may not sell or otherwise dispose of the
Series A, the Warrant or the underlying common stock in the absence of
either a registration statement under the Act or an exemption from the
registration provisions of the Act; and
(e) The certificates representing the Series A and the Warrant may contain
a legend to the effect of (d) above.
7. The Company hereby restates to JNC the following representations and
warranties from the Convertible Preferred Stock Purchase Agreement between
JNC and the Company, dated August 31, 1998, as modified as set forth below,
as of the date hereof:
(a) The first sentence of Section 2.1(a);
(b) Sections 2.1(b) and 2.1(e) as if the Warrant and this Agreement were
the "Transaction Documents" referred to therein;
(c) The first and last sentence of Section 2.1(d) as if the "Warrant" and
the "Underlying Shares" referred to therein were the Warrant and the
shares of common stock underlying the Warrant.
IN WITNESS WHEREOF, the parties hereby execute this cross receipt and
agreement as of this 27th day of May 1999.
COYOTE NETWORK SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
______________________________
Xxxxxx X. Xxxxxx
JNC OPPORTUNITY FUND LTD.
By: /s/ Xxxx X. Xxxx
_______________________________
Xxxx Xxxx, Director
