SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(c)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
COYOTE NETWORK SYSTEMS, INC.
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(Name of Registrant as Specified In its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the tax below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1 Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit prices of other underlying value of transaction
computed pursuant to Exchange Act rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
<PAGE>
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
COYOTE NETWORK SYSTEMS, INC.
4360 Park Terrace Drive
Westlake Village, California 91361
(818) 735-7600
February 20, 1998
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
(the "Meeting") of Coyote Network Systems, Inc. (the "Company") to be held on
March 20, 1998, at 1:00 p.m., local time, at the Radisson Hotel, 30100 Agoura
Road, Agoura Hills, California 91301.
At the Meeting, you will be asked to approve an amendment to the
Company's Restated Certificate of Incorporation (the "Charter") increasing the
number of shares of common stock authorized thereunder from 15,000,000 shares to
30,000,000 shares.
The Board of Directors unanimously recommends that shareholders vote
"FOR" the proposal. The proposed amendment to the Company's Charter must be
approved by shareholders holding a majority of the outstanding shares of the
Company's common stock.
DETAILS ABOUT THE PROPOSAL AND OTHER IMPORTANT INFORMATION ARE SET
FORTH IN THE ACCOMPANYING NOTICE OF SPECIAL MEETING AND PROXY STATEMENT. EVERY
SHAREHOLDER SHOULD CONSIDER THESE DOCUMENTS CAREFULLY.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING AND REGARDLESS OR THE
NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK THAT YOU OWN, I URGE YOU TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU MAY, OF COURSE, ATTEND THE MEETING IN
PERSON, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. PLEASE DO NOT SEND
IN YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD.
Sincerely,
James J. Fiedler
Chairman of the Board
<PAGE>
COYOTE NETWORK SYSTEMS, INC.
4360 Park Terrace Drive
Westlake Village, California 91361
(818) 735-7600
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 20, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of Coyote Network Systems, Inc. (the "Company"), a Delaware
corporation, will be held at the Radisson Hotel, 30100 Agoura Road, Agoura
Hills, California 91301 on March 20, 1998 at 1:00 p.m., local time. The Meeting
will be conducted to consider and vote upon the following proposal, as more
fully described in the accompanying Proxy Statement:
(a) Approval of an amendment to the Restated Certificate of
Incorporation of the Company increasing the number of shares
of common stock authorized thereunder from 15,000,000 shares
to 30,000,000 shares; and
(b) To take action upon any other business as may properly come before
the Meeting and any adjournment thereof.
The record date for shareholders entitled to notice of, and to vote at,
the Meeting is the close of business on February 13, 1998. This Notice, the
accompanying Proxy Statement and the accompanying form of proxy are first being
mailed to shareholders of the Company on or about February 20, 1998.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
You are invited to attend the Meeting, but whether or not you expect to
attend in person, please mark, sign, date and return the enclosed proxy in the
accompanying postage-paid envelope so that your shares will be represented at
the Meeting and any adjournment thereof. PLEASE DO NOT SEND IN YOUR STOCK
CERTIFICATES WITH YOUR PROXY CARD.
By Order of the Board of Directors,
Brian A. Robson
Secretary
February 20, 1998
<PAGE>
PROXY
SPECIAL MEETING OF SHAREHOLDERS OF
COYOTE NETWORK SYSTEMS, INC.
JAMES J. FIEDLER and DANIEL W. LATHAM, and each of them, are hereby appointed
proxies, with full power of substitution, to represent and to vote, as set forth
on the reverse side, all shares of stock the undersigned is entitled to vote at
the Special Meeting of Shareholders of Coyote Network Systems, Inc. (the
"Company"), to be held at the Radisson Hotel, 30100 Agoura Road, Agoura Hills,
California 91301 on March 20, 1998 at 1:00 p.m., local time, and at any
adjournments thereof, hereby revoking any proxy heretofore given.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CHOICE IS INDICATED, WILL BE
VOTED FOR ITEM 1.
[ ] plan to attend the meeting.
1. Increasing the number of authorized shares of common stock of the
Company from 15,000,000 to 30,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion on such other matters as may properly come before
the meeting.
DATED: ______________________, 1998
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Signature
|- -| ---------------------------------------
Signature if held jointly
Please sign exactly as name appears below.
|_ _| When shares are held by joint tenants, both
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY.
<PAGE>
PROXY STATEMENT
COYOTE NETWORK SYSTEMS, INC.
4360 Park Terrace Drive
Westlake Village, California 91361
(818) 735-7600
Special Meeting of Shareholders of Coyote Network Systems, Inc.
to be held on March 20, 1998
This Proxy Statement is being furnished to the shareholders of Coyote
Network Systems, Inc. (the "Company") in connection with the solicitation of
proxies by the Company's Board of Directors from holders of record of the
Company's common stock as of the close of business on the Meeting Record Date
(as hereinafter defined) for use at the Special Meeting of Shareholders (the
"Meeting") to be held on March 20, 1998 at 1:00 p.m. and at any adjournment or
postponement thereof. This Proxy Statement is being first mailed to the
Company's shareholders on or about February 20, 1998.
Date, Place and Time of Meeting:
The Meeting will be held at the Radisson Hotel, 30100 Agoura Road, in the
city of Agoura Hills, California, on March 20, 1998 at 1:00 p.m. local time.
Purpose of Meeting:
The Meeting will be conducted to consider and vote upon the following
proposal (the "Proposal"):
(a) Approval of an amendment to the Restated Certificate of
Incorporation of the Company (the "Charter") increasing the
number of shares of the Company's common stock authorized
thereunder from 15,000,000 shares to 30,000,000 shares; and
(b) To take action upon any other business as may properly come before
the Meeting and any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
<PAGE>
Meeting Record Date:
The Company's Board of Directors has fixed the close of business on
February 13, 1998 as the record date ("Meeting Record Date") for the
determination of the holders of Company common stock entitled to receive notice
of, and to vote at, the Meeting and at any adjournments or postponements
thereof.
Votes Required:
As of the Meeting Record Date, there were 8,157,646 shares of the
Company's common stock outstanding. Each share of Company common stock
outstanding as of the Meeting Record Date is entitled to one vote upon each
matter properly submitted at the Meeting. The proposed amendment to the
Company's Charter must be approved by shareholders holding a majority of the
outstanding shares of Company common stock. Shareholder approval of the proposed
amendment to the Company's Charter is required by the General Corporation Law
(the "DGCL") of the State of Delaware.
The presence in person or by proxy at the Meeting of the holders of a
majority of the outstanding shares of Company common stock is necessary to
constitute a quorum for the transaction of business. Shares of Company common
stock held in the Company's treasury will not be counted as present for purposes
of determining whether a quorum is present and will not be voted at the Meeting.
Abstentions will be counted as present. Since the proposed amendment to the
Company's Charter requires the approval of the holders of a majority of the
outstanding shares of Company common stock, abstentions will have the same
effect as a negative vote for this proposal. Under the DGCL, a broker non-vote
will not be counted as present for purposes of a quorum.
As of the Meeting Record Date, current directors and executive officers
of the Company and their affiliates owned beneficially an aggregate of 901,729
shares of Company common stock (including 673,636 shares which may be acquired
upon exercise of employee stock options and warrants and shares issuable upon
conversion of Coyote Technologies, LLC Class A or B Units into Company common
stock; see "Security Ownership of Certain Beneficial Owners and Management"), or
approximately 10.2 percent of the shares of Company common stock outstanding on
such date (calculated as if shares issuable upon such exercise or conversion had
been issued on such date). Directors and executive officers of the Company have
indicated their intention to vote their shares of Company common stock FOR the
Proposal.
Voting and Revocation of Proxies:
Shares of Company common stock represented by a proxy properly signed
and received at or prior to the Meeting, unless subsequently revoked, will be
voted in accordance with the instructions thereon. If a proxy is signed and
returned without indicating any voting instructions, shares of Company common
stock represented by the proxy will be voted FOR the Proposal. Proxy holders
may, in their discretion, vote shares voted FOR the Proposal to adjourn the
Meeting to solicit additional proxies in favor of the Proposal. Proxy holders
will not vote shares voted AGAINST the Proposal to adjourn the Meeting. Any
proxy given pursuant to this solicitation may be revoked by the person giving it
at any time before the proxy is voted by the filing of an instrument revoking it
or a duly executed proxy bearing a later date with the Secretary of the Company
prior to or at the Meeting, or by voting in person at the Meeting. All written
notices of revocation and other communications with respect to revocation of
proxies should be addressed as follows: Coyote Network Systems, Inc., 4360 Park
Terrace Drive, Westlake Village, California 91361, Attention: Secretary.
<PAGE>
Solicitation of Proxies:
The Company will bear the costs of the solicitation of proxies.
In addition to solicitation by mail, directors, officers and employees
of the Company, who will not be specifically compensated for such services, may
solicit proxies from the shareholders of the Company, personally or by
telephone, telecopy or telegram or other forms of communication. Also,
ChaseMellon Shareholder Services will solicit proxies at a cost of $4,000.00,
plus reasonable expenses. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed by the Company for their reasonable expenses
incurred in sending proxy materials to beneficial owners.
Appraisal Rights:
Holders of Company common stock will not be entitled to any dissenter
or appraisal rights as a result of the Proposal.
Annual Meeting; Shareholders' Proposals:
The next annual meeting of the Company will be held on or about August
27, 1998. Proposals made by shareholders of the Company intended to be presented
at the next annual meeting must be received by the Company no later than April
2, 1998, in order to be considered for inclusion in the Company's proxy
statement and form of proxy.
Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth certain information as of the Meeting
Record Date with respect to the common stock ownership of each director, the
chief executive officer, the other executive officers of the Company, all
directors and executive officers as a group and each person or group of persons
known by the Company to own beneficially more than 5% of the common stock of the
Company.
<PAGE>
Amount and Nature of Beneficial Ownership(1)(2)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------ -------------------------- ------------------------
Shares Issuable Upon
Exercise of
- ------------------------------------------------------------------ -------------------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
<S> <C> <C> <C> <C> <C>
Shares Issuable Upon
Number of Shares Percent Stock Conversion of Class A
Name of Beneficial Owner of Class Options Warrants or B
(3) (3) Units(4)
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Jack E. Donnelly 20,234 * 12,155 0 0
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
James J. Fiedler 540,000 6.3 0 175,000 175,000
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Daniel W. Latham 125,000 1.5 0 0 125,000
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Sydney B. Lilly 193,995 (5) 2.3 125,231 0 50,000
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Brian A. Robson 0 0 0 0
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Stephen W. Portner 22,500 * 0 11,250 0
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
All Directors and
Executives as a Group 901,729 10.2 137,386 186,250
(6 individuals) 350,000
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Richard L. Haydon
1114 Avenue of the Americas 1,263,000 (6) 14.4 0 625,000 0
New York, NY 10036
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
Ardent Research Partners
200 Park Avenue 450,000 (7) 5.4 0 225,000 0
39th Floor
New York, NY 10066
- ------------------------------------ ----------------- ----------- ------------ ------------- ------------------------
</TABLE>
* The amount shown is less than 1% of the outstanding shares of common stock.
(1) Except as otherwise noted, all persons have sole voting and investment
power over the shares listed.
(2) Includes shares of common stock issuable upon the exercise of stock options
and warrants exercisable within 60 days of the Meeting Record Date; and
shares issuable upon the conversion of Coyote Technologies, LLC Class A or
B Units.
(3) Only includes stock options or warrants exercisable within 60 days of the
Meeting Record Date.
(4) Mr. Fiedler and Mr. Latham own 350 and 250 Class B Units of Coyote
Technologies, LLC ("Technologies"), respectively. Mr. Lily owns 100 Class A
Units of Technologies. Mr. Fiedler's and Mr. Latham's Class B Units are
convertible into 175,000 and 125,000 shares, respectively, of the Company
common stock. Mr. Lilly's Class A Units are convertible into 50,000 shares
of the Company common stock.
(5) Mr. Lily owns 30,000 shares (less than 1%) of the common stock of Entree
Corporation ("Entree"), an 81.25%-owned subsidiary of the Company. All
directors and executive officers as a group beneficially own 30,000 shares
(less than 1%) of Entree common stock.
(6) Based on his Schedule 13D filed July 28, 1997, Mr. Haydon has sole voting
and dispositive power over 1,263,000 shares.
(7) Based on its Schedule 13D filed August 19, 1997, Ardent Research Partners,
L.P. has sole voting and dispositive power over 450,000 shares.
<PAGE>
Amendment to the Certificate of Incorporation of the Company
The presently authorized capital stock of the Company is 15,000,000
shares of Common Stock, $1.00 par value, and 5,000,000 shares of Preferred
Stock, $0.01 par value. The Board of Directors of the Company has recommended an
amendment to the Company's Charter to increase the number of authorized shares
of common stock from 15,000,000 shares to 30,000,000 shares.
As of the Meeting Record Date, 8,157,646 shares of Common Stock were
issued and outstanding and an additional 4,386,919 shares of Common Stock were
reserved for issuance upon exercise of stock options and warrants, conversion of
Subordinated Notes and conversion of Class A and B Units of Coyote Technologies,
LLC. None of the preferred stock is outstanding.
The proposed increase in the number of shares of authorized Common
Stock will make additional shares available, if needed, for issuance in
connection with future financings, stock splits, stock dividends, acquisitions,
and other corporate purposes. No further action or authorization by the
Company's stockholders would be necessary prior to the issuance of the
additional shares of common stock unless required by applicable law or
regulatory agencies or by the rules of any stock exchange on which the Company's
securities may then be listed. The Board of Directors believes that the
availability of the additional shares without delay or the necessity for a
special shareholders' meeting would be beneficial to the Company. The Company
does not have any immediate plans, arrangements, commitments, or understandings
with respect to the issuance of any of the additional shares of common stock
which would be authorized by the proposed amendment.
Stockholders do not have cumulative voting rights with respect to the
election of directors. The Board of Directors is divided into three classes. One
class of directors is elected each year to serve for a three year term.
Each outstanding share of the Company's common stock carries a stock
purchase right (right) issued pursuant to a dividend distribution declared by
the Company's Board of Directors and distributed to stockholders of record on
September 16, 1996. When exercisable, each right entitles the stockholder to buy
one one-hundredth of a share of participating preferred stock at an exercise
price of $120. The rights will become exercisable following the tenth day after
a person or group announces acquisition of 15% or more of the Company's common
stock or announces commencement of a tender offer, the consummation of which
would result in ownership by the person or group of 15% or more of the Company's
common stock. The Company will be entitled to redeem the rights at $.01 per
right at any time on or before the 10th day following the acquisition by a
person or group of 15% or more of the Company's common stock.
If, prior to redemption of the rights, the Company is acquired in a
merger or other business combination in which the Company is the surviving
corporation, or a person or group acquires 15% or more of the Company's common
stock, each right owned by a holder of less than 15% of the Company's common
stock will entitle its owner to purchase, at the right's then current exercise
price, a number of shares of common stock of the Company having a fair market
value equal to twice the right's exercise price. If the Company sells more than
50% of its assets or earning power or is acquired in a merger or other business
combination in which it is not the surviving corporation, the acquiring person
must assume the obligations under the rights, and the rights will become
exercisable to acquire common stock of the acquiring person at the discounted
price.
The Proposal has been made to facilitate the Company's normal conduct
of its business and not to deter or prevent a change in control of the Company.
If the proposed amendment is adopted, however, the Board of Directors will have
the ability (to the extent consistent with its duty to the Company and its
shareholders) to cause the Company to issue a substantial number of additional
shares of common stock, without further action by the stockholders, for the
purpose of discouraging takeover attempts by diluting the stock ownership and
voting power of persons seeking to obtain control of the Company. There has been
no attempt to take control of the Company in the past, and the Company is not
aware of any current attempt to take it over.
<PAGE>
The holders of any of the additional shares of common stock issued in
the future would have the same rights and privileges as the holders of the
shares of common stock currently authorized and outstanding. Those rights do not
include preemptive rights with respect to the future issuance of any additional
shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE FOREGOING AMENDMENT TO THE COMPANY'S CHARTER.
Other matters:
Management is not aware of any other matters which may be brought
before the Meeting. If other matters not now known come before the Meeting, or
any adjournments thereof, the persons named in the accompanying form of proxy or
their substitutes will vote such proxy in accordance with their best judgment.
By Order of the Board of Directors.
/s/ Brian A. Robson, Secretary
Westlake Village, California
February 20, 1998
YOUR COOPERATION IN SIGNING AND RETURNING
YOUR PROXY WILL BE GREATLY APPRECIATED.
