COYOTE NETWORK SYSTEMS INC
AGREEMENT AND PLAN OF MERGER
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>


                                  EXHIBIT 10.1



                          AGREEMENT AND PLAN OF MERGER

                                      Among

                          COYOTE NETWORK SYSTEMS, INC.

                             PRIMARY KNOWLEDGE, INC.

                              DQE ENTERPRISES, INC.

                                 BARBARA CONRAD

                                       and

                                  JERRY CONRAD

                            Dated as of May 10, 2000


<PAGE>

                                Table of Contents

Section                                                                    Page
-------                                                                    ----
ARTICLE 1:  CERTAIN DEFINITIONS                                               1

ARTICLE 2:  THE TRANSACTIONS                                                  9
   2.1 The Merger                                                             9
   2.2 Effective Time                                                         9
   2.3 Closing                                                               10
   2.4 Articles of Incorporation and Bylaws of the Surviving Corporation     10
   2.5 Directors of the Surviving Corporation                                10
   2.6 Officers of the Surviving Corporation                                 10
   2.7 Conversion of Securities                                              10
   2.8 Deliveries at the Closing                                             11

ARTICLE 3:  REPRESENTATIONS AND WARRANTIES OF EMPLOYEE AND THE COMPANY       13
   3.1 Authority                                                             13
   3.2 Capitalization                                                        13
   3.3 Organization and Qualification; Subsidiaries                          14
   3.4 Articles of Incorporation and Bylaws; Records                         14
   3.5 Financial Statements                                                  15
   3.6 Absence of Changes                                                    15
   3.7 Title to Assets; Equipment; Real Property, Leases; Inventory          17
   3.8 Receivables                                                           18
   3.9 Intellectual Property                                                 18
   3.10 Contracts                                                            22
   3.11 Compliance With Legal Requirements                                   25
   3.12 Governmental Authorizations                                          25
   3.13 Tax Matters                                                          26
   3.14 Employee and Labor Matters                                           27
   3.15 Benefit Plans; ERISA                                                 28
   3.16 Environmental Matters                                                30
   3.17 Sale of Products; Performance of Services                            31
   3.18 Insurance                                                            31
   3.19 Related Party Transactions                                           31
   3.20 Proceedings; Orders                                                  32
   3.21 Non-Contravention; Consents                                          32
   3.22 Brokers                                                              34
   3.23 Year 2000 Compliance                                                 34
   3.24 Tax Treatment                                                        34
   3.25 Full Disclosure                                                      34
   3.26 Powers of Attorney                                                   35
   3.27 Voting Arrangements                                                  35
   3.28 Change in Control Payments                                           35

                                       i
<PAGE>
Section                                                                    Page
-------                                                                    ----
   3.29 Board Approval                                                       35
   3.30 Vote Required                                                        35

ARTICLE 4:  REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS               35
   4.1 Authority                                                             35
   4.2 Title to Shares                                                       36
   4.3 Brokers                                                               36
   4.4 Accredited Investor                                                   36

ARTICLE 5:  REPRESENTATIONS AND WARRANTIES OF COYOTE                         36
   5.1 Organization and Qualification; Subsidiaries                          36
   5.2 Capitalization                                                        37
   5.3 Authority                                                             38
   5.4 SEC Filings; Financial Statements                                     38
   5.5 Title to Shares                                                       38
   5.6 Brokers                                                               39
   5.7 Board Approval                                                        39

ARTICLE 6:  COVENANTS                                                        39
   6.1 Conduct of Business of the Company                                    39
   6.2 No Solicitation                                                       41
   6.3 Notification of Certain Matters                                       42
   6.4 Shareholders' Meeting                                                 42
   6.5 Directors of Coyote                                                   42
   6.6. Voting Agreements                                                    43
   6.7 Best Efforts                                                          43
   6.8 Consents.                                                             43
   6.9 Certificate of Designations                                           44
   6.10 Listing of Coyote Common Stock                                       44
   6.11 Enterprises' Investment in the Company                               44
   6.12 Post-Closing Covenants of the Parties                                44
   6.13 Expenses                                                             48

ARTICLE 7:  CONDITIONS TO CLOSING                                            49
   7.1 Conditions Precedent to Obligations of the Company
        and the Shareholders                                                 49
   7.2 Additional Condition Precedent to Obligations of Enterprises          50
   7.3 Conditions Precedent to Obligations of Coyote                         50

ARTICLE 8:  TERMINATION                                                      51
   8.1 Termination                                                           51

                                       ii
<PAGE>
   8.2 Effect of Termination                                                 51

ARTICLE 9:  SURVIVAL; INDEMNIFICATION                                        51
   9.1 Survival                                                              51
   9.2 Indemnification by the Shareholders                                   52
   9.3 Indemnification by Coyote                                             52
   9.4 Notice of Claims                                                      53
   9.5 Third Party Claims                                                    53
   9.6 Limitation on Damages                                                 53
   9.7 No Circular Recovery                                                  54

ARTICLE 10:  MISCELLANEOUS                                                   54
  10.1  Representations                                                      54
  10.2  Dispute Resolution                                                   54
  10.3  Waiver                                                               55
  10.4  Assignment                                                           55
  10.5  Notices                                                              55
  10.6  Further Assurances                                                   56
  10.7  Severability                                                         57
  10.8  Counterparts                                                         57
  10.9  Construction                                                         57
  10.10 Entire Agreement; Amendment                                          57
  10.11 No Third Party                                                       57
  10.12 Public Announcements                                                 57

EXHIBITS

   Annex I    Form of Agreement of Merger                                   I-1
   Annex II   Form of Certificate of Merger                                II-1
   Annex III  Form of Restated Articles of Incorporation                  III-1
   Annex IV   Form of Bylaws                                               IV-1

Schedule of Exceptions

   Exhibit A -    Form of Personal Services Agreement                       A-1
   Exhibit B -    Form of Voting Agreement                                  B-1
   Exhibit C -    Form of Certificate of Designations, Preferences          C-1
                  and Rights of Series C Preferred Stock

   Exhibit D -    Form of Stock Purchase Warrant                            D-1
   Exhibit E -    Form of Opinion of Kirkpatrick and Lockhart LLP           E-1
   Exhibit F -    Form of Opinion of Cassady & Klein                        F-1
   Exhibit G -    Form of Opinion of Morrison & Foerster LLP     `          G-1
   Exhibit H -    Form of Put Agreement                                     H-1



                                      iii
<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (this  "Agreement") is entered into as of
this 10th day of May,  2000  among  Coyote  Network  Systems,  Inc.,  a Delaware
corporation ("Coyote"), Primary Knowledge, Inc., a California corporation in the
process of changing its name to HomeAccess MicroWeb,  Inc. (the "Company"),  DQE
Enterprises,  Inc., a Pennsylvania corporation  ("Enterprises"),  Barbara Conrad
("Conrad") and Jerry Conrad ("Employee"). Enterprises and Conrad are referred to
collectively  herein as the  "Shareholders" and individually as a "Shareholder",
and  the  Shareholders,  the  Company,  Employee  and  Coyote  are  referred  to
collectively herein as the "Parties" and individually as a "Party."

                                   WITNESSETH:

         WHEREAS,  the boards of  directors  of Coyote and the  Company  deem it
advisable  and in the  best  interests  of  their  respective  corporations  and
shareholders that the business of the Company be combined with that of Coyote in
order to achieve the long-term business interests of Coyote and the Company;

         WHEREAS,  the  combination  of the business of the Company with that of
Coyote  will be  effected  pursuant  to the  terms of this  Agreement  through a
transaction in which HomeAccess  Acquisition Corp., a wholly owned subsidiary of
Coyote to be formed  ("Acquisition"),  will merge with and into the Company (the
"Merger"), whereupon the Company will become a wholly owned subsidiary of Coyote
and the Shareholders will become stockholders of Coyote;

         WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of the Company; and

         WHEREAS,  for federal  income tax  purposes,  it is  intended  that the
Merger qualify as a  reorganization  within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").

         NOW,  THEREFORE,  in  consideration  of the  promises and of the mutual
representations,  warranties and covenants herein contained,  and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the Parties hereby agree as follows:

                                    ARTICLE 1

                               CERTAIN DEFINITIONS

     (a)  For purposes of this  Agreement,  the  following  terms shall have the
          following meanings:

                  "Affiliate"  shall mean with respect to any Person,  any other
Person which, directly or indirectly,  controls, is controlled by, or is under a
common  control  with,  such Person.  The term  "control"  (including  the terms
"controlled  by" and  "under  common  control  with")  as used in the  preceding
sentence means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of a Person,  whether through the
ownership of voting securities, by contract, or otherwise.

<PAGE>
                  "Alternative  Transaction"  means any of the following:  (i) a
transaction pursuant to which any Person (or group of Persons) other than Coyote
or its  Affiliates (a "Third  Party") seeks to acquire,  directly or indirectly,
any of the outstanding shares of capital stock of the Company,  whether from the
Company or pursuant to a tender  offer or exchange  offer or  otherwise,  (ii) a
merger or other business combination involving the Company pursuant to which any
Third Party acquires any of the outstanding  equity securities of the Company or
the  entity  surviving  such  merger or  business  combination,  (iii) any other
transaction  pursuant  to which  any  Third  Party  acquires  control  of all or
substantially  all of the assets of the Company  (including for this purpose the
outstanding equity securities of the Company's subsidiaries),  (iv) the adoption
by the  Company  of a plan of  liquidation,  the  declaration  or payment by the
Company of an  extraordinary  dividend on any of its shares of capital  stock or
the  effectuation  by  the  Company  of a  recapitalization  or  other  type  of
transaction  that would  involve  either a change in the  Company's  outstanding
capital  stock or a  distribution  of assets of any kind to the  holders of such
capital stock, (v) the issuance by the Company of shares of capital stock to any
Person,  other than as  contemplated by this Agreement or (vi) the repurchase by
the Company of shares of the Company's capital stock.

                  "Associate" shall mean, with respect to any Person,  any other
Person (i) five  percent or more of the  equity of which is owned,  directly  or
indirectly, by such Person or an Affiliate of such Person, (ii) any Person which
owns,  directly or indirectly,  five percent or more of such Person or (iii) any
Person  five  percent  or more of the  equity  of which is  owned,  directly  or
indirectly, by a Person identified in clause (i) or (ii) of this definition.

                  "Business  Day"  shall  mean any day  other  than a  Saturday,
Sunday or United States federal holiday.

                  "Company  Common  Stock" shall mean the common  stock,  no par
value per share, of the Company.

                  "Company Contract" shall mean any Contract:

               (a) to which the Company is a party;

               (b) by which the  Company  or any of its  assets is or may become
          bound or under  which the Company  has, or may become  subject to, any
          obligation; or

               (c)  under  which the  Company  has or may  acquire  any right or
          interest.

                  "Consent"  shall  mean any  approval,  consent,  ratification,
permission, waiver or authorization (including any Governmental Authorization).

                  "Contract" shall mean, with respect to any Person, any legally
binding  written,  oral,  implied or other agreement,  contract,  understanding,
arrangement,  instrument, note, guaranty, indemnity,  representation,  warranty,
deed, assignment,  power of attorney,  certificate,  purchase order, work order,
insurance policy, benefit plan,  commitment,  covenant,  assurance,  obligation,
promise or undertaking of any nature to which such Person is a party or by which
its  properties  or assets  may be bound or  affected  or under  which it or its
business, properties or assets receive benefits.

                                       2
<PAGE>
                  "Coyote  Common Stock" shall mean the common stock,  par value
$1.00 per share, of Coyote.

                  "Current  Benefit  Plan" shall mean any Employee  Benefit Plan
that is currently in effect and:

               (a) that was  established  or adopted by the Company or any ERISA
          Affiliate or is maintained or sponsored by the Company;

               (b) in which the Company participates;

               (c) with  respect to which the Company or any ERISA  Affiliate is
          or may be required or permitted to make any contribution; or

               (d) with  respect to which the Company or any ERISA  Affiliate is
          or may become subject to any Liability.

                  "Defined  Benefit Plan" shall mean either a plan  described in
Section  3(35) of ERISA or a plan subject to the minimum  funding  standards set
forth in Section 302 of ERISA and Section 412 of the Code.

                  "Employee  Benefit  Plan" shall have the meaning  specified in
Section 3(3) of ERISA.

                  "Encumbrance"  shall  mean any  lien,  pledge,  hypothecation,
charge,  mortgage,  security interest,  encumbrance,  equity,  trust,  equitable
interest,  claim,  preference,  right of possession,  lease,  tenancy,  license,
encroachment, covenant, infringement,  interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment,  exception,  reservation,  limitation,  impairment,  imperfection of
title,  condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset,  any restriction on the receipt of any income derived from any asset, any
restriction  on the use of any  asset  and any  restriction  on the  possession,
exercise or transfer of any other attribute of ownership of any asset).

                  "Entity" shall mean any corporation  (including any non profit
corporation),   general  partnership,  limited  partnership,  limited  liability
partnership,  joint venture, estate, trust,  cooperative,  foundation,  society,
political party,  union,  company  (including any limited  liability  company or
joint stock company),  firm or other  enterprise,  association,  organization or
entity.

                  "Environmental  Laws"  means  any  federal,  state,  local  or
foreign Legal Requirement relating to pollution or protection of human health or
the environment.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974.

                  "ERISA  Affiliate" shall mean any Person that is, was or would
be treated as a single employer with the Company under Section 414 of the Code.

                                       3
<PAGE>
                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.

                  "GAAP" shall mean Generally  Accepted  Accounting  Principles,
applied on a basis  consistent with the basis on which the Financial  Statements
were prepared.

                  "Governmental Authorization" shall mean any:

                  (a)  permit,  license,  certificate,   franchise,  concession,
approval,   consent,   ratification,    permission,   clearance,   confirmation,
endorsement,   waiver,   certification,   designation,   rating,   registration,
qualification or authorization that is issued,  granted, given or otherwise made
available by or under the authority of any Governmental  Body or pursuant to any
Legal Requirement; or

                  (b)  right under any Contract with any Governmental Body.

                  "Governmental Body" shall mean any:

                  (a)  nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;

                  (b)  federal, state, local, municipal, foreign or other
government;

                  (c) governmental or quasi governmental authority of any nature
(including any governmental division,  subdivision,  department, agency, bureau,
branch, office, commission, council, board, instrumentality,  officer, official,
representative,  organization,  unit,  body or  Entity  and any  court  or other
tribunal);

                  (d)  multinational organization or body; or

                  (e)  individual,  Entity or body  exercising,  or  entitled to
exercise,  any executive,  legislative,  judicial,  administrative,  regulatory,
police, military or taxing authority or power of any nature.

                  "Hazardous Material" shall mean any substance, chemical, waste
or other material which is listed, defined or otherwise identified as hazardous,
toxic or dangerous under any applicable law; as well as any petroleum, petroleum
product or by-product,  crude oil, natural gas,  natural gas liquids,  liquefied
natural gas, or synthetic gas useable for fuel, and "source," "special nuclear,"
and "by-product" material as defined in the Atomic Energy Act of 1954, 42 U.S.C.
ss.ss. 2011 et seq.


                                       4
<PAGE>
                  "Investment  Sharing  Agreement" means that certain Investment
Sharing  Agreement  dated February 25, 1999, by and between Prehn,  LP, an Idaho
limited partnership,  Wachtell, LP, an Idaho limited partnership, Conrad and the
Company.

                  "Knowledge"   shall   mean  an   individual   deemed  to  have
"Knowledge" of a particular fact or other matter if:

                  (a)  such individual is actually aware of such fact or other
matter; or

                  (b) a prudent  individual  could be  expected  to  discover or
otherwise  become aware of such fact or other matter in the course of conducting
a reasonably  comprehensive  investigation concerning the existence of such fact
or other matter.

                  A  corporation  shall  be  deemed  to  have  "Knowledge"  of a
particular  fact or matter only if a director,  officer or key  employee of such
corporation  has actual  Knowledge,  or could have had such Knowledge  following
investigation as set forth in clause (b) above, of such fact or matter.

                  "Law"  shall  mean  any  foreign  or  domestic  law,  statute,
ordinance, rule, regulation, order, judgment or decree.

                  "Legal  Requirement"  shall mean any  federal,  state,  local,
municipal, foreign or other law, statute, legislation,  constitution,  principle
of common law, resolution, ordinance, code, edict, decree, proclamation, treaty,
convention,  rule, regulation,  ruling, directive,  pronouncement,  requirement,
specification, determination, decision, opinion or interpretation that is or has
been issued, enacted, adopted, passed, approved,  promulgated, made, implemented
or otherwise put into effect by or under the authority of any Governmental Body.

                  "Liability" shall mean any debt, obligation, duty or liability
of  any  nature  including  any  unknown,  undisclosed,   unmatured,  unaccrued,
unasserted,  contingent, indirect, conditional,  implied, vicarious, derivative,
joint,  several  or  secondary  liability,  regardless  of  whether  such  debt,
obligation,  duty or  liability  would be required to be  disclosed on a balance
sheet and  regardless  of whether  such debt,  obligation,  duty or liability is
immediately due and payable.

                  "Multiemployer  Plan" means a plan  described in Section 3(37)
of ERISA.

                  "Order" shall mean any:

                  (a)  order,  judgment,   injunction,  edict,  decree,  ruling,
pronouncement,  determination,  decision, opinion, verdict, sentence,  subpoena,
writ or award that is issued,  made,  entered,  rendered or  otherwise  put into
effect by or under the  authority of any court,  administrative  agency or other
Governmental Body or any arbitrator or arbitration panel; or

                  (b)  Contract with any Governmental Body that is entered into
in connection with any Proceeding.

                                       5
<PAGE>
                  "Ordinary Course of Business" shall mean an action taken by or
on behalf of the Company shall not be deemed to have been taken in the "Ordinary
Course of Business" unless:

                  (a)  such action is recurring in nature, consistent with the
Company's past practices and taken in the ordinary course of the Company's
normal day to day operations;

                  (b)  such  action  is not  required  to be  authorized  by the
Company's shareholders, the Company's board of directors or any committee of the
Company's  board of directors and does not require any other separate or special
authorization of any nature; and

                  (c) such action is similar in nature and  magnitude to actions
customarily  taken,  without  any  special  or  separate  authorization,  in the
ordinary  course of the normal day to day  operations of other Entities that are
employed in businesses similar to Company's business.

                  "Person"  shall mean any  individual,  Entity or  Governmental
Body.

                  "Proceeding"   shall  mean  any  action,   suit,   litigation,
arbitration,   proceeding  (including  any  civil,   criminal,   administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest,   hearing,  inquiry,  inquest,  audit,  examination  or  investigation,
commenced,  brought, conducted or heard by or before, or otherwise has involved,
any Governmental Body or any arbitrator or arbitration panel.

                  "Related Party" shall mean each of the following:

                  (a) each individual who is, or who has at any time been, an
officer of the Company or a predecessor thereto;

                  (b) each member of the family of each of the individuals
referred to in clause "(a)" above;

                  (c) any Entity  (other  than the  Company) in which any one of
the Persons  referred to in clauses "(a)" or "(b)" above holds (or in which more
than one of such individuals  collectively hold),  beneficially or otherwise,  a
material voting, proprietary or equity interest.

                  "Representatives"  of a specified  party shall mean  officers,
directors,  employees, attorneys,  accountants,  advisors and representatives of
such party. The Related Parties shall be deemed to be  "Representatives"  of the
Company.

                  "SEC" shall mean the United  States  Securities  and  Exchange
Commission.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, and the rules and regulations promulgated thereunder.

                  "Series C Preferred Stock" shall mean the Series C Convertible
Preferred Stock, par value $.01 per share, of Coyote.

                  "Subsidiary" of a specified Person shall mean any corporation,
partnership,  limited liability company,  joint venture or other legal entity of


                                       6
<PAGE>

which the specified Person (either alone and/or through and/or together with any
other  Subsidiary)  owns,  directly or  indirectly,  50% or more of the stock or
other  equity or  partnership  interests  the  holders  of which  are  generally
entitled to vote for the election of the board of  directors or other  governing
body of such  legal  entity  or of  which  the  specified  Person  controls  the
management.

                  "Tax" shall mean any tax (including any income tax,  franchise
tax,  capital gains tax,  estimated  tax,  gross  receipts tax, value added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax,  business tax,  occupation  tax,  inventory  tax,  occupancy  tax,
withholding tax or payroll tax), levy, assessment,  tariff, impost,  imposition,
toll,  duty  (including  any customs  duty),  deficiency or fee, and any related
charge or amount  (including  any  fine,  penalty  or  interest),  (a)  imposed,
assessed or collected by or under the authority of any Governmental Body, or (b)
payable pursuant to any tax sharing agreement or similar Contract.

                  "Tax Return" shall mean any return  (including any information
return),   report,   statement,   declaration,   estimate,   schedule,   notice,
notification,  form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted  to, or required to
be filed with or submitted  to, any  Governmental  Body in  connection  with the
determination,  assessment,  collection  or payment of any Tax or in  connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.

                  "Transaction Documents" shall mean, collectively, the Personal
Services  Agreement,  the Agreement of Merger,  the  Certificate of Merger,  the
Promissory Note and the Warrant.

                  "Transactions"  shall mean (a) the  execution  and delivery of
the  respective  Transaction   Documents,   and  (b)  all  of  the  transactions
contemplated  by  the  respective  Transaction  Documents,   including,  without
limitation,  the Merger,  and the  performance by the Parties to the Transaction
Documents of their respective obligations under the Transaction Documents.

                  (b) Each of the following terms is defined in the Section or
reference set forth opposite such term below:

    Term                                                                Section
    ----                                                                -------
    Acquisition........................................................Recitals
    Additional Securities.......................................Section 6.12(e)
    Agreement..........................................................Preamble
    Agreement of Merger.............................................Section 2.2
    Beneficially Owns...........................................Section 6.12(a)
    Cassady & Klein Opinion......................................Section 2.8(b)
    Certificate of Designation......................................Section 6.9
    Certificate of Merger...........................................Section 2.2
    CGCL............................................................Section 2.1
    Closing.........................................................Section 2.3


                                       7
<PAGE>

    Closing Date....................................................Section 2.3
    Code...............................................................Recitals
    Company............................................................Preamble
    Company Preferred Stock.........................................Section 3.2
    Company Returns.............................................Section 3.13(b)
    Company Technology...........................................Section 3.9(b)
    Conrad.............................................................Preamble
    Coyote.............................................................Preamble
    Coyote Damages...............................................Section 9.2(a)
    Coyote Indemnitees...........................................Section 9.2(a)
    Coyote Preferred Stock..........................................Section 5.2
    Coyote SEC Reports..............................................Section 5.4
    Coyote Shareholder Approval.....................................Section 5.3
    Coyote Subsidiaries.............................................Section 5.1
    Damages.........................................................Section 9.4
    DGCL............................................................Section 2.1
    Disclosure Schedules..............................................Article 3
    Domain Names.................................................Section 3.9(j)
    Effective Time..................................................Section 2.2
    Employee...........................................................Preamble
    Enterprises........................................................Preamble
    Expenses.......................................................Section 6.13
    Financial Statements.........................................Section 3.5(a)
    Incorporated Third Party Technology..........................Section 3.9(k)
    Indemnified Party...............................................Section 9.4
    Indemnifying Party..............................................Section 9.4
    IP Registration..............................................Section 3.9(e)
    IP Rights....................................................Section 3.9(e)
    Leased Premises..............................................Section 3.7(c)
    Marks........................................................Section 3.9(d)
    Material Adverse Effect......................................Section 3.6(a)
    Merger.............................................................Recitals
    Millennial Dates.............................................Section 3.9(k)
    Party..............................................................Preamble
    Personal Services Agreement..................................Section 2.8(b)
    Plans.......................................................Section 3.15(a)
    Pledge Agreement.............................................Section 2.8(e)
    Products.....................................................Section 3.9(b)
    Promissory Note..............................................Section 2.8(b)
    Proxy Statement.................................................Section 6.4
    Put Agreement................................................Section 2.8(b)
    Registrable Securities.........................................Section 6.10
    Shareholder Damages.............................................Section 9.3
    Shareholder Designees.......................................Section 6.12(a)
    Shareholder Indemnitees.........................................Section 9.3
    Shareholders.......................................................Preamble


                                       8
<PAGE>

    Superior Proposal............................................Section 6.2(a)
    Surviving Corporation...........................................Section 2.1
    Technology...................................................Section 3.9(b)
    Technology Related Assets....................................Section 3.9(a)
    Termination Date.............................................Section 8.1(c)
    Third Party Licenses.........................................Section 3.9(c)
    Third Party Technologies.....................................Section 3.9(c)
    Voting Agreement................................................Section 6.6
    Warrant.....................................................Section 6.12(f)
    Year 2000 Compliant..........................................Section 3.9(k)

                                    ARTICLE 2

                                THE TRANSACTIONS

                  2.1 The Merger.  Subject to the terms and conditions set forth
in this Agreement,  at the Effective Time  Acquisition  shall be merged with and
into the Company and the  separate  corporate  existence  of  Acquisition  shall
thereupon  cease.  The  Company,  as the  surviving  corporation  of the  Merger
(sometimes  hereinafter  referred to as the  "Surviving  Corporation"),  will be
governed  by the laws of the State of  California.  The  Merger  shall  have the
effects specified in the California General Corporation Law (the "CGCL") and the
General Corporation Law of the State of Delaware (the "DGCL").  Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
of the properties,  rights, privileges,  powers, franchises, debts, liabilities,
obligations and duties of the Company will continue in the Surviving Corporation
unaffected by the Merger.

                  2.2  Effective  Time.  As soon as  practicable  following  the
satisfaction  of the conditions set forth in Article 7, the Parties will file an
agreement of merger (the  "Agreement  of Merger") in  substantially  the form of
Annex  I with  the  Secretary  of  State  of the  State  of  California  and the
certificate of merger (the "Certificate of Merger") in the form of Annex II with
the Secretary of State of the State of Delaware,  in such form as is required by
and executed in  accordance  with the relevant  provisions of the CGCL and DGCL,
and will make all other filings or recordings  required  under the CGCL and DGCL
to consummate the Merger. The Merger will become effective upon the date and the
time of the filing of the Agreement of Merger with the Secretary of State of the
State of California and the Certificate of Merger with the Secretary of State of
the State of Delaware,  whichever is later, or at such other time as the Parties
hereto  may  agree  and as may be  specified  in the  Agreement  of  Merger  and
Certificate of Merger in accordance  with applicable law. The date and time when
the Merger becomes effective is herein referred to as the "Effective Time."

                  2.3 Closing.  The closing of the Merger (the "Closing")  shall
take place at the offices of Kirkpatrick & Lockhart LLP, Pittsburgh, PA, as soon
as practicable (but in no event more than 5 Business Days) after satisfaction or
waiver of the conditions  set forth in Article 7, unless  another time,  date or
place is agreed to in  writing  by the  Parties.  The date on which the  Closing
occurs shall be referred to herein as the "Closing Date."

                                       9
<PAGE>
                  2.4  Articles  of  Incorporation  and Bylaws of the  Surviving
Corporation.  At the  Effective  Time,  in  accordance  with the  CGCL,  (i) the
Restated Articles of Incorporation,  as amended,  of the Company will be amended
to read in their  entirety as set forth in Annex III, and (ii) the Bylaws of the
Company will be amended to read in their entirety as set forth in Annex IV.

                  2.5 Directors of the Surviving  Corporation.  At the Effective
Time, the directors of  Acquisition  then in office will become the directors of
the Surviving  Corporation  until the earlier of their resignation or removal or
until their  respective  successors are duly elected and qualified,  as the case
may be.

                  2.6 Officers of the  Surviving  Corporation.  At the Effective
Time,  the officers of  Acquisition  will become the  officers of the  Surviving
Corporation  until the  earlier of their  resignation  or removal or until their
respective successors are duly elected and qualified, as the case may be.

                  2.7  Conversion of  Securities.  As of the Effective  Time, by
virtue of the Merger and without any action on the part of the  Shareholders  or
any holders of any shares of capital stock of Acquisition:

                  (a)   Each issued and outstanding share of common stock,  par
value .001 per share,  of  Acquisition  shall be  converted  into and become one
fully  paid and  non-assessable  share of common  stock,  no par  value,  of the
Surviving Corporation.

                  (b) Each share of Company Common Stock outstanding immediately
prior to the Merger shall be converted  into the right to receive that number of
fully  paid and  non-assessable  shares  of  Coyote  Common  Stock  equal to the
quotient  of (x) (i)  $28,350,000  divided by (ii) 90% of the  Trading  Price of
Coyote Common Stock as of the Closing Date (provided that if 90% of such Trading
Price is less than  $7.00,  it shall be  deemed to be $7.00,  and if 90% of such
Trading Price is greater than $9.875,  it shall be deemed to be $9.875)  divided
by (y) the  number of shares of Company  Common  Stock  outstanding  immediately
prior to the Effective  Time. For purposes of this Section,  Trading Price shall
mean the last  reported per share sale price of Coyote  Common Stock or, in case
no such  reported  sale takes  place on such day,  the  average of the  reported
closing bid and asked prices, in either case, as reported by the Nasdaq National
Market or such other United  States  securities  exchange  registered  under the
Exchange Act on which Coyote Common Stock are listed or admitted to trading. The
conversion  ratio as set  forth in this  Section  2.7(b)  shall  be  subject  to
appropriate adjustment upon the occurrence of any stock split, stock dividend or
combination of outstanding  shares of Coyote Common Stock after the date of this
Agreement  and prior to the  Closing  Date.  All such  shares of Company  Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be  canceled  and  retired  and  shall  cease to  exist,  and each  holder  of a
certificate  representing  any such  shares  shall cease to have any rights with
respect  thereto  except the right to  receive  the  foregoing  shares of Coyote
Common Stock.

                  (c)  Each  share  of  Company   Preferred  Stock   outstanding
immediately  prior to the Merger  shall be  converted  into the right to receive
that number of fully paid and non-assessable  shares of Series C Preferred Stock


                                       10
<PAGE>
equal to the  quotient of (x)  1,230,380  divided by (y) the number of shares of
Company Preferred Stock outstanding immediately prior to the Effective Time. The
conversion  ratio as set  forth in this  Section  2.7(c)  shall  be  subject  to
appropriate adjustment upon the occurrence of any stock split, stock dividend or
combination of outstanding  shares of Coyote Common Stock after the date of this
Agreement  and prior to the Closing Date.  All such shares of Company  Preferred
Stock, when so converted, shall no longer be outstanding and shall automatically
be  canceled  and  retired  and  shall  cease to  exist,  and each  holder  of a
certificate  representing  any such  shares  shall cease to have any rights with
respect  thereto  except the right to receive the  foregoing  shares of Series C
Preferred Stock.

     2.8  Deliveries at the Closing.

     (a)  At the Closing, Enterprises shall deliver to Coyote:

          (i) stock certificates representing all of the Company Preferred Stock
     owned by Enterprises;

          (ii) the certificate of an executive  officer of Enterprises  required
     to be delivered to Coyote by Enterprises pursuant to Section 7.3(c) of this
     Agreement; and

          (iii)an opinion of Kirkpatrick and Lockhart LLP  substantially  in the
     form attached hereto as Exhibit E.

     (b) At the Closing, Conrad shall deliver to Coyote:

          (i) stock  certificates  representing  all of the Company Common Stock
     owned by Conrad;

          (ii) the  certificate  required  to be  delivered  to Coyote by Conrad
     pursuant to the Section 7.3(c) of this Agreement;

          (iii) an opinion of Cassady & Klein substantially in the form attached
     hereto as Exhibit F (the "Cassady & Klein Opinion"); and

          (iv) a put  agreement  in the form  attached  hereto as Exhibit H (the
     "Put Agreement"), duly executed by Conrad.

     (c) At the Closing or as otherwise set forth below, Coyote shall deliver or
cause to be delivered:

          (i) to Enterprises,  one or more certificates representing that number
     of shares of Series C Preferred Stock determined in accordance with Section
     2.7(c), issued in the name of Enterprises;

          (ii) to Conrad,  one or more certificates  representing that number of
     shares of Coyote Common Stock determined in accordance with Section 2.7(b),
     rounded to the next whole  share,  issued in the name of Conrad,  less that


                                       11
<PAGE>
     number of shares of Coyote Common Stock required to be pledged to Coyote by
     an  Affiliate  of  Conrad  in  accordance  with  the  terms  of the  Pledge
     Agreement, within three (3) Business Days after the Closing Date;

          (iii) to Employee, Two Million Dollars ($2,000,000) in accordance with
     the terms of the Personal Services Agreement;

          (iv) to Employee, the personal services agreement in the form attached
     hereto as Exhibit A (the "Personal Services  Agreement"),  duly executed by
     Coyote;

          (v) to each  Shareholder,  a copy of the  Certificate of  Designations
     certified by the Secretary of State of the State of Delaware;

          (vi) to each Shareholder,  the Voting Agreements, duly executed by the
     parties thereto;

          (vii) to each Shareholder, the certificate required to be delivered to
     the Shareholders by Coyote pursuant to Section 7.1(c) of this Agreement;

          (viii) an opinion of Morrison & Foerster LLP substantially in the form
     attached hereto as Exhibit G; and

          (ix) the Put Agreement, duly executed by Coyote.

     (d)  At the Closing, the Company shall deliver to Coyote:

          (i) the certificate  required to be delivered to Coyote by the Company
     pursuant to Section 7.3(c) of this Agreement; and

          (ii) the Cassady & Klein Opinion.

     (e) At the  Closing,  Employee  shall  deliver or cause to be  delivered to
Coyote:

          (i) the Personal Services Agreement, duly executed by Employee;

          (ii) a  promissory  note  in the  amount  of  $2,000,000  in the  form
     attached to the Personal Services Agreement (the "Promissory  Note"),  duly
     executed by Employee; and

          (iii) the pledge and security  agreement  in the form  attached to the
     Personal Services Agreement (the "Pledge  Agreement"),  duly executed by an
     executive officer of pledgor.



                                       12
<PAGE>
                                    ARTICLE 3

           REPRESENTATIONS AND WARRANTIES OF EMPLOYEE AND THE COMPANY

                  Except as  specifically  set forth in the disclosure  schedule
delivered by Employee and the Company to Coyote at or prior to the  execution of
this  Agreement  the parts of which are  numbered to  correspond  to the Section
numbers of this Agreement (the "Disclosure Schedules"), Employee and the Company
hereby represent and warrant to Coyote that:

                  3.1  Authority.  The  Company  has  all  necessary  power  and
authority to execute and deliver this Agreement and the Transaction Documents to
which it is or is to become a party,  to perform its  obligations  hereunder and
thereunder and to consummate the Merger and the other transactions  contemplated
hereby and  thereby.  The  execution  and  delivery  of this  Agreement  and the
Transaction  Documents  to which the  Company is or is to become a party and the
consummation by the Company of the transactions  contemplated hereby and thereby
have been duly and validly authorized by all necessary action on the part of the
Company and no other  proceedings  on the part of the Company are  necessary  to
authorize  this  Agreement or any  Transaction  Document or to  consummate  such
transactions.  This  Agreement  has been validly  executed and  delivered by the
Company and  constitutes a legal,  valid and binding  obligation of the Company,
enforceable  against it in accordance with its terms. The Transaction  Documents
to which the Company is or is to become a party,  when executed and delivered by
the  Company  at the  Closing,  will  constitute  the legal,  valid and  binding
obligation of the Company, enforceable against it in accordance with its terms.

                  3.2  Capitalization.  As of the  date of this  Agreement,  the
authorized  capital stock of the Company consists of 1,000,000 shares of Company
Common Stock. As of the date of this Agreement, 500,000 shares of Company Common
Stock  are  issued  and  outstanding,  all of which  are  owned by  Conrad,  and
Enterprises  owns  warrants  to  purchase  an  aggregate  of  214,286  shares of
preferred stock,  $.01 par value per share ("Company  Preferred  Stock"),  to be
designated  Series  A  Convertible  Preferred  Stock.  Immediately  prior to the
Effective  Time, the  outstanding  capital stock of the Company shall consist of
500,000 shares of Company  Common Stock,  all of which shall be owned by Conrad,
and 214,286 shares of Company  Preferred  Stock,  all of which shall be owned by
Enterprises.  Except as set forth in this  Section  3.2,  there are no  options,
warrants,  conversion  rights,  stock  appreciation  rights,  redemption rights,
repurchase  rights or other rights,  agreements,  arrangements or commitments of
any  character  to which the Company is a party or by which the Company is bound
relating to the issued or unissued  capital  stock of the Company or  obligating
the  Company to issue or sell any shares of  capital  stock of, or other  equity
interests  in,  the  Company.  Except  as set  forth in the  Investment  Sharing
Agreement,  all Company  Common Stock and Company  Preferred  Stock are free and
clear of all Encumbrances and have been duly authorized,  validly issued,  fully
paid and  nonassessable,  will not be subject to preemptive rights and have been
issued in full  compliance  with all applicable  securities laws and other Legal
Requirements. There are no outstanding contractual obligations of the Company to
repurchase,  redeem or acquire  any shares of  capital  stock of the  Company or
security convertible into or exchangeable for any of the foregoing.

                                       13
<PAGE>

                  3.3      Organization and Qualification; Subsidiaries.

                           (a)      The Company has been duly organized and is
validly existing and in good standing under the laws of the State of California,
and has the  requisite  power  and  authority  and  all  necessary  governmental
approvals to own,  lease and operate its properties and to carry on its business
as it is now being  conducted.  The Company is duly  qualified or licensed to do
business,  and is in good standing,  in each jurisdiction where the character of
the  properties  owned,  leased or operated by it or the nature of its  business
makes such qualification or licensing necessary,  except where the failure to so
qualify would not have a Material Adverse Effect on the Company. The Company has
no  Subsidiaries  and has never  owned  beneficially  or  otherwise  any  equity
interest in any other Person.

                           (b)      The Company has never conducted any business
under or otherwise used, for any purpose or in any jurisdiction,  any fictitious
name,  assumed  name,  trade  name or name  other than the name set forth in its
articles of incorporation, as amended. The Company is in the process of changing
its name to HomeAccess MicroWeb, Inc.

                  3.4      Articles of Incorporation and Bylaws; Records.

                           (a)      The Company has delivered to Coyote accurate
and complete copies of: (i) the Company's  articles of incorporation and bylaws,
including all  amendments  thereto;  (ii) the stock records of the Company;  and
(iii) the  minutes  and other  records  of the  meetings  and other  proceedings
(including any actions taken by written consent or otherwise  without a meeting)
of the shareholders of the Company,  and any predecessor  thereto, and the board
of directors of the Company,  and any  predecessor  thereto.  There have been no
meetings  or  other  proceedings  of the  shareholders  of the  Company,  or any
predecessor  thereto,  or  the  board  of  directors  of  the  Company,  or  any
predecessor thereto, that are not reflected in such minutes or other records.

                           (b)      There has not been any violation of any of
the provisions of the Company's  articles of  incorporation  or bylaws or of any
resolution  adopted by the  Company's  shareholders  or the  Company's  board of
directors,  and to the  Knowledge of the Company no event has  occurred,  and no
condition or circumstance  exists,  that likely would (with or without notice or
lapse of time) constitute or result directly or indirectly in such a violation.

                           (c)      The books of account, stock records, minute
books and other  records of the Company are  accurate,  up to date and complete,
and  have  been  maintained  in  accordance  with  sound  and  prudent  business
practices.  All of the records of the Company and any predecessor thereto are in
the actual possession and direct control of the Company.

                  3.5      Financial Statements.

                           (a)      The Company has delivered to Coyote the
unaudited balance sheet of the Company as of December 31, 1999 and the unaudited
balance  sheet of the  Company  as of April  30,  2000 (the  "Unaudited  Interim
Balance  Sheet"),   and  the  related  statements  of  operations,   changes  in
shareholders' equity and cash flows of the Company for the period from inception
(January  19,  1999)  through  December  31, 1999 and for the four month  period
ending April 30, 2000,  together with the notes thereto,  if any  (collectively,
the "Financial Statements").

                                       14
<PAGE>
                           (b)      All of the Financial Statements are accurate
and  complete  in  all  material  respects.  The  Financial  Statements  are  in
accordance  with the  books and  records  of the  Company,  present  fairly  the
financial  position of the Company as of the  respective  dates  thereof and the
results of operations and changes in shareholders'  equity and cash flows of the
Company for the respective periods covered thereby.

                           (c)      At the date of the Unaudited Interim Balance
Sheet,  (i) the Company had no Liabilities of any nature  (matured or unmatured,
fixed or  contingent)  required to be  provided  for in such  Unaudited  Interim
Balance  Sheet  which were not  provided  for and (ii) the  Company had no other
material Liabilities of any nature (matured or unmatured, fixed or contingent).

                           (d)      As of the date of this Agreement, the
Company  has  no  Liabilities  in  excess  of  $10,000  individually  or in  the
aggregate,  except for (i) Liabilities  identified as such in the  "liabilities"
column of the Unaudited  Interim  Balance Sheet;  and (ii) accounts  payable and
Liabilities incurred by the Company in the Ordinary Course of Business since the
date of the Unaudited Interim Balance Sheet.

                  3.6      Absence of Changes.  Since April 30, 2000:

                           (a)      there has not been any material adverse
change in the Company's business,  condition,  assets, liabilities,  operations,
financial  performance,  results of operations  or  prospects,  and no event has
occurred that likely would have an adverse  effect on the  business,  condition,
assets, liabilities, operations, financial performance, results of operations or
prospects (a "Material Adverse Effect") of the Company;

                           (b)      there has not been any material loss, damage
or  destruction  to, or any  interruption  in the use of,  any of the  Company's
assets (whether or not covered by insurance);

                           (c)      the Company has not (i) declared, accrued,
set aside or paid any dividend or made any other  distribution in respect of any
shares of capital stock, or (ii) repurchased,  redeemed or otherwise  reacquired
any shares of capital stock or other securities;

                           (d)      the Company has not sold or otherwise issued
any shares of capital stock or any other  securities,  except as contemplated by
this Agreement;

                           (e)      the Company has not amended its articles of
incorporation   or  bylaws  and  has  not  effected  or  been  a  party  to  any
recapitalization,  reclassification of shares,  stock split, reverse stock split
or similar transaction;

                           (f)      the Company has not purchased or otherwise
acquired  any asset from any other  Person,  except for assets  acquired  by the
Company in the Ordinary Course of Business;

                           (g)      the Company has not leased or licensed any
asset from any other Person except for assets leased or licensed in the Ordinary
Course of Business;

                                       15
<PAGE>
                           (h)      the Company has not made any individual
capital expenditure, measured by invoice amount, in excess of $10,000;

                           (i)      the Company has not sold or otherwise
transferred,  and has not  leased or  licensed,  any  asset to any other  Person
except for  products  sold by the Company  from its  inventory  in the  Ordinary
Course of Business;

                           (j)      the Company has not written off as
uncollectible,  or established  any  extraordinary  reserve with respect to, any
account  receivable  or other  indebtedness,  except in the  Ordinary  Course of
Business;

                           (k)      the Company has not pledged or hypothecated
any of its assets or otherwise  permitted any of its assets to become subject to
any Encumbrance, except in the Ordinary Course of Business;

                           (l)      the Company has not made any loan or advance
to any other  Person,  including  without  limitation,  any  shareholder  of the
Company; (m) the Company has not (i) established or adopted any Employee Benefit
Plan or (ii) paid any bonus or made any profit sharing or similar payment to, or
increased the amount of the wages, salary, commissions, fringe benefits or other
compensation  or  remuneration  payable  to, any of its  directors,  officers or
employees  other than increases for  non-officer  employees  consistent with the
Company's  review and  compensation  policies in force prior to the date of this
Agreement;

                           (n)      the Company has not entered into, and
neither  the  Company  nor any of the assets  owned or used by the  Company  has
become bound by, any Contract, except in the Ordinary Course of Business;

                           (o)      no Contract by which the Company or any of
the assets  owned or used by the  Company is or was  bound,  or under  which the
Company  has or had any rights or  interest,  has been  amended  or  terminated,
except in the Ordinary Course of Business;

                           (p)      there has been no borrowing or agreement to
borrow by the Company or change in the contingent  obligations of the Company by
way of guaranty,  endorsement,  indemnity,  warranty or other-wise or grant of a
mortgage or security  interest in any property of the  Company,  and the Company
has not incurred, assumed or otherwise become subject to any Liabilities,  other
than  accounts  payable  incurred  by the  Company  in the  Ordinary  Course  of
Business;

                           (q)      the Company has not discharged any
Encumbrance or discharged or paid any  indebtedness or other  Liability,  except
any that (i) are  reflected  as current  liabilities  in the  Unaudited  Interim
Balance Sheet or have been incurred by the Company since the date thereof in the
Ordinary  Course  of  Business,  and (ii) have  been  discharged  or paid in the
Ordinary Course of Business;

                           (r)      the Company has not forgiven any debt or
otherwise released or waived any right or claim;

                                       16
<PAGE>
                           (s)      the Company has not changed any of its
methods of accounting or accounting practices in any respect;

                           (t)      the Company has not entered into any
transaction or taken any other action  outside the Ordinary  Course of Business;
and

                           (u)      the Company has not agreed or committed
(in writing or otherwise) to take any of the actions  referred to in clauses (c)
through (t) above.

              3.7  Title to Assets; Equipment; Real Property, Leases; Inventory.

                           (a)      The Company owns, and has good, valid and
marketable  title to, all material assets it purports to own,  including (i) all
assets  reflected  on the  Unaudited  Interim  Balance  Sheet;  (ii) all  assets
acquired by the Company since the date of the Unaudited  Interim  Balance Sheet;
and (iii) all other material assets reflected in the Company's books and records
as being owned by the Company.  All of said assets are owned by the Company free
and clear of any  Encumbrances,  except liens for current taxes and  assessments
not delinquent.

                           (b)      To the Knowledge of the Company, each
material  asset of the Company (i) is free of defects  and  deficiencies  and in
good  condition and repair,  consistent  with its age and intended use (ordinary
wear and tear  excepted);  (ii) complies in all respects,  and is being operated
and otherwise used in full compliance,  with all applicable Legal  Requirements;
and (iii) is adequate for the uses to which it is being put.

                           (c)      The Company does not own any real property
or any interest in real property,  except for the  leaseholds  created under the
real property  leases  identified in Section 3.7(c) of the  Disclosure  Schedule
(the "Leased  Premises").  Section 3.7(c) of the Disclosure Schedule provides an
accurate and complete description of the premises covered by said leases and the
facilities located on such premises. The Company enjoys peaceful and undisturbed
possession of such premises. The Company has delivered to Coyote complete copies
of all such  leases.  Coyote  will  obtain a valid  leasehold  interest  in such
leases,  in each  case free and clear of all  title  defects,  Encumbrances  and
restrictions of any kind, except: (i) mechanics',  carriers', workers' and other
similar liens arising in the Ordinary  Course of Business  since the date of the
Unaudited Interim Balance Sheet and (ii) liens for current taxes not yet due and
payable.

                           (d)      All leases pursuant to which the Company
leases real or personal  property  are valid and  effective in  accordance  with
their respective terms and, to the Company's Knowledge,  there exists no default
thereunder or occurrence or condition which could result in a default thereunder
or termination thereof.

                           (e)      The Company's Leased Premises are in a
condition  adequate for the conduct of the  business in the  Ordinary  Course of
Business,  and the Company owns, or has a valid leasehold interest in or license
to, all assets necessary for the conduct of its business as presently conducted.

                           (f)      The Company does not have any inventory.

                                       17
<PAGE>
                  3.8      Receivables.

                           (a)      All existing accounts receivable of the
Company (including those accounts receivable  reflected on the Unaudited Interim
Balance  Sheet that have not yet been  collected and those  accounts  receivable
that have arisen since such date and have not yet been  collected) (i) represent
valid   obligations  of  customers  of  the  Company   arising  from  bona  fide
transactions  entered  into in the  Ordinary  Course of  Business;  and (ii) are
current  and,  in  the  aggregate,  will  be  collected  in  full  (without  any
counterclaim or setoff), net of reserves, on or before the later of 90 days from
the date of invoice or 60 days from the date hereof.

                           (b)      The Company has no oral contracts or
agreements to deliver products or provide services

                  3.9      Intellectual Property.

                           (a)      General.  The Company owns or is licensed
and has all rights in and to the  following  as required to conduct its business
as now  conducted  and as proposed  to be  conducted  in any  written  materials
furnished  by  the  Company:  (a)  all  products,   tools,   computer  programs,
specifications,   source  code,  object  code,  graphics,  devices,  techniques,
algorithms,  methods,  processes,  procedures,  packaging, trade dress, formula,
drawings,  designs,  improvements,   discoveries,   concepts,  user  interfaces,
software,  "look and feel,"  development  and other tools,  content,  inventions
(whether  or not  patentable  or  copyrightable  and  whether or not  reduced to
practice), designs, logos, know-how, concepts and other technology that are now,
or during  the two  years  prior to the date of this  Agreement  have  been,  or
currently are proposed to be, developed, produced, used, marketed or sold by the
Company   (collectively,   the   "Technology-Related   Assets");   and  (b)  all
intellectual  property and other  proprietary  rights in the  Technology-Related
Assets,  including,  without  limitation,  all trade names,  trademarks,  domain
names,  service marks, logos, brand names and other identifiers,  trade secrets,
copyrights  and  domestic and foreign  letters  patent,  and the  registrations,
applications,  renewals,  extensions  and  continuations  (in  whole or in part)
thereof,  all goodwill associated  therewith and all rights and causes of action
for infringement,  misappropriation,  misuse, dilution or unfair trade practices
associated therewith.

                           (b)      Company Technology.  Section 3.9(b) of the
Disclosure  Schedule  sets  forth a list of all  products  and tools  developed,
produced,  used,  marketed or sold by the Company  during the two years prior to
the  date of this  Agreement  and  owned  by the  Company  as of the date of the
Unaudited Interim Balance Sheet, together with all prior versions,  predecessors
or precursors to such products or tools (collectively,  the "Products").  Except
as set forth in Section  3.9(b) of the  Disclosure  Schedule  and except for the
Third Party  Technologies (as defined in Section  3.9(c)),  the Company owns all
right,  title  and  interest  in  and  to  the  following   (collectively,   the
"Technology"),  free and clear of all Encumbrances:  (i) the Products,  together
with any and all codes,  techniques,  software  tools,  formats,  designs,  user
interfaces,  content  and  "look  and feel"  related  thereto;  (ii) any and all
updates, enhancements, corrections, modifications, improvements and new releases
related to the items set forth in clause (i) above; (iii) any and all technology
and work in  progress  related  to the items set forth in  clauses  (i) and (ii)
above; and (iv) all inventions,  discoveries, processes, designs, trade secrets,
know-how and other confidential or proprietary  information related to the items


                                       18
<PAGE>
set forth in clauses (i), (ii), and (iii) above.  The Technology,  excluding the
Third Party  Technologies (as defined below), is sometimes referred to herein as
the "Company Technology."

                           (c)      Third Party Technology.  Section 3.9(c) of
the  Disclosure  Schedule  sets  forth  a list  of all  Technology  used  in the
Company's  business  for which the  Company  does not own all  right,  title and
interest  (collectively,  the  "Third  Party  Technologies"),  and  all  license
agreements or other contracts pursuant to which the Company has the right to use
(in the manner used by the Company,  or intended or  necessary  for use with the
Company  Technology) the Third Party  Technologies (the "Third Party Licenses"),
indicating, with respect to each of the Third Party Technologies listed therein,
the owner thereof and the Third Party License  applicable  thereto.  The Company
has the lawful right to use (free of any material  restriction not expressly set
forth in the Third  Party  Licenses)  (a) all  Third  Party  Technology  that is
incorporated  in or  used  in the  development  or  production  of  the  Company
Technology and (b) all other Third Party Technology necessary for the conduct of
the  Company's  business as now conducted and as proposed to be conducted in any
written materials  furnished by the Company to Coyote.  All Third Party Licenses
are valid,  binding  and in full  force and  effect,  the  Company  and,  to the
Company's  Knowledge,  each other party  thereto have  performed in all material
respects  their  obligations  thereunder,  and neither  the Company  nor, to the
Company's Knowledge,  any other party thereto is in material default thereunder,
nor to the Company's Knowledge has there occurred any event or circumstance that
with  notice or lapse of time or both would  constitute  a  material  default or
event of  material  default  on the part of the  Company  or,  to the  Company's
Knowledge,  any other party thereto or give to any other party thereto the right
to  terminate  or modify any Third Party  License.  The Company has not received
written notice or to the Company's  knowledge any other notice that any party to
any Third  Party  License  intends to cancel,  terminate  or refuse to renew (if
renewable)  such Third Party  License or to exercise or decline to exercise  any
option or right thereunder.

                           (d)      Trademarks. Section 3.9(d) of the Disclosure
Schedule sets forth a list of all trademarks,  trade names, brand names, service
marks,  logos or other  identifiers  for the Products or  otherwise  used by the
Company in its business (the "Marks").  Except as set forth in Section 3.9(d) of
the Disclosure  Schedule,  the Company has full legal and beneficial  ownership,
free and clear of any Encumbrances,  of all rights conferred by use of the Marks
in connection  with the Products or otherwise in the Company's  business and, as
to those  Marks  that have been  registered  in the  United  States  Patent  and
Trademark Office, by federal registration of the Marks.

                           (e)      Intellectual Property Rights. Section 3.9(e)
of  the  Disclosure  Schedule  sets  forth  all  patents,  patent  applications,
copyright  registrations (and applications therefor) and trademark registrations
(and applications therefor)  (collectively,  the "IP Registrations")  associated
with the Company Technology and the Marks. Except as set forth in Section 3.9(e)
of the Disclosure Schedule, the Company owns all right, title and interest, free
and clear of any Encumbrances, in and to the IP Registrations, together with any
other rights in or to any copyrights (registered or unregistered), rights in the
Marks (registered or unregistered),  trade secret rights and other  intellectual
property rights (including, without limitation, rights of enforcement) contained
or embodied  in the  Company  Technology  and the Marks  (collectively,  the "IP
Rights").

                                       19
<PAGE>
                           (f)      Maintenance of Rights.  The Company has not
conducted  its  business,  and has not used or enforced  (or, to its  knowledge,
failed to use or enforce)  the IP Rights,  in a manner that would  result in the
abandonment,  cancellation or  unenforceability  of any item of the IP Rights or
the IP  Registrations,  and the  Company  has not taken (or,  to its  knowledge,
failed to take) any action that would result in the forfeiture or relinquishment
of any IP  Rights or IP  Registrations,  in each case  where  such  abandonment,
cancellation,  unenforceability,  forfeiture or relinquishment  has had or could
reasonably be expected to have,  individually  or in the  aggregate,  a Material
Adverse  Effect on the  Company.  Except as set forth in  Section  3.9(f) of the
Disclosure  Schedule,  the Company has not granted to any third party any rights
or permissions to use any of the Technology or the IP Rights. To the best of the
Company's  Knowledge,  except pursuant to reasonably prudent safeguards,  (a) no
third party has received any confidential information relating to the Technology
or the IP Rights  and (b) the  Company  is not under  any  contractual  or other
obligation to disclose to any third party any Company Technology.

                           (g)      Third Party Claims.  The Company has not
received written notice or to the Company's  Knowledge any other notice or claim
(whether  written,  oral or otherwise)  challenging  the Company's  ownership or
rights in the Company  Technology  or the IP Rights or  claiming  that any other
person or entity has any legal or beneficial ownership with respect thereto. All
the  IP  Rights  are  legally  valid  and   enforceable   without  any  material
qualification,  limitation or  restriction on their use, and the Company has not
received any written notice,  or to the Company's  Knowledge any other notice or
claim  (whether  written,  oral  or  otherwise)   challenging  the  validity  or
enforceability  of any of the IP Rights.  To the Company's  Knowledge,  no other
person or entity is infringing or misappropriating  any part of the IP Rights or
otherwise making any unauthorized use of the Company Technology.

                           (h)      Infringement by the Company.  The use of any
of the  Technology  in the  Company's  business  does not  infringe,  violate or
interfere with or constitute an  appropriation  of any right,  title or interest
(including, without limitation, any patent, copyright, trademark or trade secret
right)  held by any other  person or entity,  and there have been no claims made
with  respect  thereto.  The use of any of the  Marks and other IP Rights in the
Company's business does not infringe, violate or interfere with or constitute an
appropriation of any right, title or interest  (including,  without  limitation,
any patent, copyright, trademark or trade secret right) held by any other person
or entity, and there have been no claims made with respect thereto.  The Company
has not received any written  notice,  or to the  Company's  Knowledge any other
kind of notice or claim  (whether  written,  oral or  otherwise)  regarding  any
infringement,  misappropriation,  misuse,  abuse or other  interference with any
third party  intellectual  property or proprietary  rights  (including,  without
limitation,  infringement  of any patent,  copyright,  trademark or trade secret
right of any third party) by the Company,  the  Technology or the Marks or other
IP Rights,  or claiming that any other entity has any claim of infringement with
respect thereto.

                           (i)      Confidentiality.  The Company has not
disclosed any source code regarding the Technology to any person or entity other
than those  persons or entities  set forth on Section  3.9(i) of the  Disclosure
Schedule,  all of whom have entered into a written nondisclosure  agreement with
the Company.  The Company has at all times  maintained and  diligently  enforced
commercially  reasonable  procedures  to protect  all  confidential  information


                                       20
<PAGE>

relating to the  Technology.  Neither the Company nor any escrow  agent is under
any  contractual  or other  obligation  to disclose the source code or any other
proprietary  information included in or relating to the Technology.  The Company
has not  deposited any source code  relating to the  Technology  into any source
code escrows or similar arrangements.  If, as disclosed in Section 3.9(i) of the
Disclosure Schedule, the Company has deposited any source code to the Technology
into source code escrows or similar arrangements, no event has occurred that has
or could  reasonably  form the basis for a release of such source code from such
escrows or arrangements.

                           (j)      Domain Names.  Section 3.9(j) of the
Disclosure  Schedule sets forth a list of all Internet  domain names used by the
Company in its business (collectively, the "Domain Names"). The Company has, and
upon the Closing the Surviving  Corporation will have, a valid  registration and
all  material  rights (free of any  material  restriction)  in and to the Domain
Names,  including,  without  limitation,  all rights  necessary  to  continue to
conduct the Company's business as it is currently conducted.

                           (k)      Year 2000.  The Company Technology, and to
the Company's  Knowledge the Third Party  Technology  that is incorporated in or
used  in  the   development  or  production  of  the  Company   Technology  (the
"Incorporated  Third Party  Technology") is Year 2000  Compliant.  The Company's
business,  financial  condition and results of operations will not be materially
adversely  affected by Year 2000 Compliance  related issues. The term "Year 2000
Compliant" as used herein means that (i) each item of Company  Technology,  and,
to the Company's knowledge, the Incorporated Third Party Technology, on dates on
and  after  January  1,  2000  (the  "Millennial  Dates"),  will  calculate  any
information dependent on or relating to dates on or after January 1, 2000 in the
same manner, and with the same functionality, data integrity and performance, as
such Company  Technology,  and to the Company's  Knowledge,  Incorporated  Third
Party Technology records,  stores,  processes,  calculates and presents calendar
dates on or before any Millennial  Date, and (ii) the Millennial  Dates will not
adversely affect the operation of such Company Technology,  and to the Company's
Knowledge,   such  Incorporated   Third  Party   Technology,   with  respect  to
date-dependent data or computations, output, or other routines or functions.

                           (l)      Indemnification. Except pursuant to standard
end user  licenses,  (true and  correct  copies of which have been  provided  to
Coyote or its  counsel),  the  Company  has not entered  into any  agreement  or
offered to  indemnify  any Person  against  any  charge of  infringement  by the
Technology  or IP  Rights,  or any other  intellectual  property  or right.  The
Company  has not entered  into any  agreement  granting  any Person the right to
bring any infringement  action with respect to, or otherwise to enforce,  any of
the Technology or IP Rights.

                           (m)      Restrictions on Intellectual Property.  To
the Knowledge of the Company,  none of the  Company's  officers or employees has
entered into any agreement  regarding  know-how,  trade  secrets,  assignment of
rights  in   inventions,   or  prohibition  or  restriction  of  competition  or
solicitation  of  customers,  or any  other  similar  restrictive  agreement  or
covenant, whether written or oral, with any Person other than the Company.

                                       21
<PAGE>
                  3.10     Contracts.

                           (a)      Section 3.10 of the Disclosure Schedule
lists each of the following Company Contracts:

                                    (i)     any Company Contract or series of
related  Company  Contracts  requiring in the aggregate  payments after the date
hereof by or to the Company of more than $10,000;

                                    (ii)    any Company Contract with or for the
benefit of any current or former  officer,  director,  shareholder,  employee or
consultant of the Company;

                                    (iii)   any Company Contract with any labor
union or association representing any employee of the Company;

                                    (iv)   any Company Contract for the purchase
or sale of materials, supplies, equipment,  merchandise or services that contain
an  escalation,  renegotiation  or  redetermination  clause or that obligate the
Company to purchase all or substantially all of its requirements of a particular
product  from a supplier,  or for  periodic  minimum  purchases  of a particular
product from a supplier;

                                    (v)     any Company Contract for sale of any
of the assets or properties of the Company other than in the Ordinary  Course of
Business or for the grant to any Person of any options, rights of first refusal,
or preferential or similar rights to purchase any such assets or properties;

                                    (vi)    any agreement of surety, guarantee
or  indemnification,  other than  agreements in the Ordinary  Course of Business
with respect to obligations in an aggregate amount not in excess of $10,000;

                                    (vii)   any Company Contract containing
covenants  of the  Company  not to  compete  in any  line  of  business,  in any
geographic  area or with any  Person or  covenants  of any other  Person  not to
compete with the Company or in any line of business of the Company;

                                    (viii)  any Company Contract granting or
restricting the right of the Company to use any Company Technology,  Marks or IP
Rights;

                                    (ix)    any Company Contract with customers
or suppliers  for the sharing of fees,  the rebating of charges or other similar
arrangements;

                                    (x)     any Company Contract with any holder
of securities of the Company as such (including, without limitation, any Company
Contract  containing an obligation to register any of such securities  under any
federal or state securities laws);

                                    (xi)    any Company Contract obligating the
Company to  deliver  services  or product  enhancements  or  containing  a "most
favored nation" pricing clause;

                                       22
<PAGE>
                                    (xii)   any Company Contract relating to the
acquisition by the Company of any operating business or the capital stock of any
other person;

                                    (xiii)  any Company Contract requiring the
payment to any  Person of a  brokerage  or sales  commission  or a  finder's  or
referral fee (other than  arrangements to pay commission or fees to employees in
the Ordinary Course of Business);

                                    (xiv)  any Company Contract or note relating
to or evidencing outstanding indebtedness for borrowed money;

                                    (xv)    any lease, sublease or other Company
Contract  under  which the  Company is lessor or lessee of any real  property or
equipment or other  tangible  property with respect to  obligations in excess of
$10,000; and

                                    (xvi)   any other material Company Contract
whether or not made in the Ordinary Course of Business.

                           (b)      Each Company Contract is valid and in full
force and  effect,  and is  enforceable  by the Company in  accordance  with its
material terms,  except as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity.

                           (c)      Neither the Company nor any party to a
Company  Contract  is in  default  under  any  Company  Contract.  No event  has
occurred,  and no circumstance or condition  exists,  that likely would (with or
without  notice or lapse of time) (i) result in a violation  or breach of any of
the  provisions  of any  Company  Contract,  (ii) give any  Person  the right to
declare a default or exercise any remedy or hinder any Company  Contract,  (iii)
give any Person the right to  accelerate  the  maturity  or  performance  of any
Company  Contract,  or (iv) give any Person the right to  cancel,  terminate  or
modify any Company Contract.  The Company has not waived any of its rights under
any Company Contract, except in the Ordinary Course of Business.

                           (d)      To the Company's Knowledge, each Person
against  which the  Company  has or may  acquire  any rights  under any  Company
Contract  is solvent  and is able to satisfy  all of such  Person's  current and
future  monetary  obligations  and  other  obligations  and  Liabilities  to the
Company.

                           (e)      (i) The Company has never guaranteed or
otherwise  agreed to cause,  insure or become  liable for, and has never pledged
any of its assets to secure,  the  performance  or payment of any  obligation or
other  Liability of any other Person except in the Ordinary  Course of Business;
and (ii) the Company has never been a party to or bound by (A) any joint venture
agreement,   partnership  agreement,  profit  sharing  agreement,  cost  sharing
agreement,  loss sharing agreement or similar Contract, or (B) any Contract that
creates or grants to any Person,  or provides  for the creation or grant of, any
stock appreciation right, phantom stock right or similar right or interest.

                           (f)      To the Knowledge of the Company, the
performance  of the Company  Contracts  will not result in any  violation  of or
failure to comply with any Legal Requirement.


                                       23
<PAGE>
                           (g)      No Person is materially renegotiating, nor
has the contractual right to materially renegotiate,  any amount paid or payable
to the  Company  under  any  Company  Contract  or any  other  material  term or
provision of any Company Contract.

                           (h)      Schedule 3.10(h) of the Disclosure Schedule
identifies  and  provides an accurate  and brief  description  of each  proposed
Contract as to which any bid,  offer,  written  proposal,  term sheet or similar
document  has been  submitted  or received by the Company  that would commit the
Company to deliver  goods or provide  services with a value in excess of $20,000
and is outstanding.

                           (i)     No party to any Company Contract has notified
the Company or made a claim to the effect that the Company has failed to perform
an obligation thereunder. In addition, to the Knowledge of the Company, there is
no plan,  intention  or  indication  of any  contracting  party  to any  Company
Contract to cause the termination, cancellation or modification of such Contract
or to reduce or  otherwise  change its  activity  thereunder  so as to adversely
affect the benefits derived or expected to be derived therefrom by the Company.

                           (j)      The Contracts identified in Section 3.10 of
the Disclosure Schedule  collectively  constitute all of the Contracts necessary
to enable  the  Company  to  conduct  its  business  in the  manner in which its
business is currently being conducted.

                  3.11     Compliance With Legal Requirements.

                           (a)      The Company is in compliance with each Legal
Requirement  that is  applicable  to it or to the conduct of its business or the
ownership or use of any of its assets.

                           (b)      To the Knowledge of the Company, no event
has occurred,  and no condition or circumstance  exists, that likely would (with
or without notice or lapse of time)  constitute or result directly or indirectly
in a  violation  by the  Company  of, or a failure on the part of the Company to
comply with, any Legal Requirement.

                           (c)      The Company has not received at any time any
notice or other  communication  (in writing or otherwise) from any  Governmental
Body,  or any other  Person,  regarding  (i) any  actual,  alleged,  possible or
potential  violation of, or failure to comply with,  any Legal  Requirement,  or
(ii) any actual,  alleged,  possible or potential  obligation on the part of the
Company to undertake,  or to bear all or any portion of the cost of, any cleanup
or any remedial, corrective or response action of any nature.

                           (d)      To the Knowledge of the Company, no
Governmental  Body has proposed or is considering any Legal  Requirement  (other
than any Legal Requirement that would be applicable generally to the industry in
which the Company competes) that, if adopted or otherwise put into effect, would
specifically  affect  the  Company  and (i) may have an  adverse  effect  on the
Company's  business,  condition,  assets,  liabilities,   operations,  financial
performance, results of operations or prospects or on the ability of the Company
to comply with or perform any covenant or obligation under this Agreement or any
of the other Transaction  Documents,  or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.

                                       24
<PAGE>
                  3.12     Governmental Authorizations.

                           (a)      Section 3.12 of the Disclosure Schedule
identifies (i) each Governmental  Authorization that is held by the Company; and
(ii)  each  other  Governmental  Authorization  that,  to the  Knowledge  of the
Company,  is held by any of the  Company's  employees  and is used in connection
with the Company's  business.  The Company has delivered to Coyote  accurate and
complete copies of all of the Governmental  Authorizations identified in Section
3.12  of the  Disclosure  Schedule,  including  all  renewals  thereof  and  all
amendments thereto. Each Governmental Authorization identified or required to be
identified in Section 3.12 of the Disclosure Schedule is valid and in full force
and effect.

                           (b)      The Governmental Authorizations identified
in Section 3.12 of the Disclosure  Schedule  constitute all of the  Governmental
Authorizations  necessary  (i) to enable the Company to conduct its  business in
the manner in which its business is currently being conducted and (ii) to permit
the Company to own and use its assets in the manner in which they are  currently
owned and used.

                  3.13     Tax Matters.

                           (a)      Each Tax required to have been paid, or
claimed by any Governmental Body to be payable, by the Company (whether pursuant
to any Tax Return or  otherwise)  has been duly paid in full on a timely  basis.
Any Tax required to have been withheld or collected by the Company has been duly
withheld and collected, and (to the extent required) each such Tax has been paid
to the appropriate Governmental Body.

                           (b)      "Company Returns" means all  Tax Returns
required to be filed by or on behalf of the Company with any  Governmental  Body
with  respect to any taxable  period  ending on or before the date  hereof.  All
Company  Returns (i) have been or will be filed when due, and (ii) have been, or
will be when filed,  accurately and completely  prepared in material  compliance
with all applicable Legal Requirements. All amounts shown on the Company Returns
to be due on or before the date  hereof,  and all amounts  otherwise  payable in
connection  with the  Company  Returns on or before the date  hereof,  have been
paid.  The Company has  delivered  to Coyote  accurate  and  complete  copies of
Company Returns filed by the Company.

                           (c)      The Company's liability for unpaid Taxes for
all periods ending on or before the date of the Financial  Statements  does not,
in the aggregate,  exceed the amount of the current liability accruals for Taxes
(excluding  reserves for deferred taxes)  reported in the Financial  Statements.
The Company has established in the Ordinary Course of Business  reserves for the
payment of all Taxes for the period  from the date of the  Financial  Statements
through the date hereof and has  disclosed the dollar amount of such reserves to
the Coyote.

                           (d)      Section 3.13(d) of the Disclosure Schedule
accurately  identifies each  examination or audit of any Company Return that has
been  conducted by any  Governmental  Body.  The Company has delivered to Coyote
accurate and complete copies of all audit reports and similar documents relating
to Company Returns.  No extension or waiver of the limitation  period applicable
to any of the  Company  Returns  has been  granted  (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.

                                       25
<PAGE>
                           (e)      No claim or other Proceeding is pending or
to the  Company's  Knowledge  has been  threatened  against  or with  respect to
Company in respect of any Tax.  There are no unsatisfied  Liabilities  for Taxes
(including liabilities for interest,  additions to tax and penalties thereon and
related  expenses) with respect to any notice of deficiency or similar  document
received by the Company. The Company has not entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. The Company has not
been, and will not be,  required to include any adjustment in taxable income for
any tax period (or portion thereof)  pursuant to Section 481 or 263A of the Code
or any  comparable  provision  under  state or  foreign  Tax laws as a result of
transactions or events occurring,  or accounting methods employed,  prior to the
Closing.  The  Company is in  compliance  with the terms and  conditions  of any
applicable Tax exemptions, Tax agreements or Tax orders of any Governmental Body
to which it may be subject or which it may have  claimed,  and the  transactions
contemplated  by this  Agreement  will  not  have  any  adverse  effect  on such
compliance.

                           (f)      There is no agreement, plan, arrangement or
other  Contract  covering  any  employee  or  independent  contractor  or former
employee  or  independent  contractor  of  the  Company  that,  individually  or
collectively,  could give rise  directly  or  indirectly  to the  payment of any
amount that would not be  deductible  pursuant to Section 280G or Section 162 of
the Code.

                           (g)      Company has no net operating losses or other
tax attributes  presently subject to limitation under Code Sections 382, 383, or
384.

                           (h)      The Company is not liable for Taxes incurred
by any individual,  trust,  corporation,  partnership or other entity other than
Company,  either as a  transferee  or pursuant to Treasury  Regulations  Section
1.1502-6,  or pursuant to any other provision of federal,  state or local law or
regulation.  The Company is not,  and has never been, a party to or bound by any
tax indemnity  agreement,  tax sharing  agreement,  tax allocation  agreement or
similar Contract.

                           (i)      The Company is not a party to any joint
venture,  partnership or other arrangement or contract which could be treated as
a partnership for United States federal income tax purposes.

                           (j)      The Company is not a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
and has not been a United States real property  holding  corporation  within the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

                  3.14     Employee and Labor Matters.

                           (a)      Section 3.14(a) of the Disclosure Schedule
accurately sets forth, with respect to each significant  employee of the Company
(including any significant  employee of the Company who is on a leave of absence
or on layoff status) (i) the name of such employee and the date as of which such
employee was originally hired by the Company;  (ii) such employee's title; (iii)
such employee's annualized  compensation as of the date of this Agreement;  (iv)
each Current Benefit Plan in which such employee  participates or is eligible to


                                       26
<PAGE>

participate;  and  (v)  any  Governmental  Authorization  that  is  held by such
employee and that is used in connection with the Company's business.

                           (b)      Schedule 3.14(b) of the Disclosure Schedule
contains a list of  individuals  who are currently  performing  services for the
Company and are classified as  "consultants" or "independent  contractors,"  and
the  respective   compensation   of  each  such   "consultant"  or  "independent
contractor."

                           (c)      There is no former employee of the Company
who is receiving or is scheduled to receive (or whose spouse or other  dependent
is receiving or is scheduled to receive) any benefits  (whether from the Company
or otherwise) relating to such former employee's employment with the Company.

                           (d)      The Company is not a party to or bound by
any employment agreement or any union contract,  collective bargaining agreement
or similar Contract.

                           (e)      The employment of each of the Company's
employees is  terminable  by the Company at will.  The Company has  delivered to
Coyote  accurate and  complete  copies of all  employee  manuals and  handbooks,
disclosure  materials,  policy  statements,   employment  agreements  and  other
materials relating to the employment of the current employees of the Company.

                           (f)      To the Knowledge of the Company (i) no
significant  employee of the Company  intends to terminate his or her employment
with the Company and the Company does not have a present  intention to terminate
the employment of any significant employee;  (ii) no significant employee of the
Company is currently considering,  an offer to join a business that likely would
be competitive with the Company's business; and (iii) no employee of the Company
is a party  to or is  bound  by any  confidentiality  agreement,  noncompetition
agreement or other  Contract (with any Person) that likely would have an adverse
effect on (A) the  performance  by such  employee of any of his or her duties or
responsibilities as an employee of the Company, or (B) the Company's business or
operations.

                           (g)      The Company is not engaged, and has never
been engaged,  in any unfair labor practice of any nature.  There has never been
any slowdown, work stoppage,  labor dispute or union organizing activity, or any
similar  activity or  dispute,  affecting  the Company or any of its  employees.
There is not now  pending,  and to the  Knowledge  of the  Company no Person has
threatened to commence, any such slowdown, work stoppage, labor dispute or union
organizing  activity  or any  similar  activity  or  dispute,  nor has any event
occurred,  nor does any  condition  or  circumstance  exist,  that likely  would
directly or indirectly  give rise to or provide a basis for the  commencement of
any such slowdown, work stoppage,  labor dispute or union organizing activity or
any similar activity or dispute.

                  3.15     Benefit Plans; ERISA.

                           (a)     Section 3.15 of the Disclosure Schedule lists
(i) all Employee Benefit Plans, (ii) all employment agreements,  including,  but
not limited to, any  individual  benefit  arrangement,  policy or practice  with

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<PAGE>
respect to any  current or former  employee  or  director  of the Company or any
ERISA Affiliate,  and (iii) all other employee benefit, bonus or other incentive
compensation,  stock option, stock purchase, stock appreciation,  severance pay,
lay-off or reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount,  fringe benefit plans,  arrangements,  policies or practices,
whether  legally  binding  or not,  which the  Company  or any  ERISA  Affiliate
maintains,   contributes   to  or  has  any   obligation  to  or  liability  for
(collectively, the "Plans").

                           (b)      None of the Plans is a Defined Benefit Plan,
and neither the Company nor any ERISA Affiliate has ever  sponsored,  maintained
or contributed  to, or ever been  obligated to contribute to, a Defined  Benefit
Plan.

                           (c)      None of the Plans is a Multiemployer Plan,
and neither the Company nor any ERISA Affiliate has ever contributed to, or ever
been obligated to contribute to, a Multiemployer Plan.

                           (d)      The Company does not maintain or contribute
to any welfare  benefit plan that provides  health benefits to an employee after
the employee's  termination of employment or retirement except as required under
Section 4980B of the Code and Sections 601 through 608 of ERISA.

                           (e)      Each Plan that is an Employee Benefit Plan
complies by its terms and in operation with the requirements provided by any and
all statutes,  orders or governmental  rules or regulations  currently in effect
and applicable to the Plan, including but not limited to ERISA and the Code.

                           (f)      All reports, forms and other documents
required  to be filed  with  any  Governmental  Body  with  respect  to any Plan
(including without limitation, summary plan descriptions, Forms 5500 and summary
annual reports) have been timely filed and are accurate.

                           (g)      Each Plan intended to qualify under Section
401(a) of the Code is the subject of a favorable  determination letter issued by
the Internal Revenue Service that provides that it so qualifies through the last
day of the "TRA 86  Remedial  Amendment  Period,"  as such  term is  defined  in
Section 3.02 of Revenue  Procedure 96-55 issued by the Internal  Revenue Service
and that its related  trust is exempt  from  taxation  under  Section 501 of the
Code. To the  Company's  Knowledge,  nothing has occurred  since the date of the
Internal Revenue Service's favorable  determination  letter that could adversely
affect the  qualification  of such Plan or the tax exempt  status of its related
trust.

                           (h)      All contributions for all periods ending
prior to the Closing  (including  periods from the first day of the current plan
year to the  Closing)  have been made  prior to the  Closing  by the  Company in
accordance with past practice and the recommended contribution in any applicable
actuarial report.

                           (i)      All insurance premiums have been paid in
full, subject only to normal  retrospective  adjustments in the ordinary course,
with regard to the Plans for plan years ending on or before the Closing.



                                       28
<PAGE>
                           (j)      With respect to each Plan:

                                    (i)   no prohibited transactions (as defined
in Section 406 or 407 of ERISA or Section  4975 of the Code) have  occurred  for
which a statutory exemption is not available;

                                    (ii)  no action or claims (other than
routine claims for benefits made in the ordinary  course of Plan  administration
for which Plan  administrative  review  procedures  have not been exhausted) are
pending,  threatened  or  imminent  against  or with  respect  to the Plan,  any
employer  who is  participating  (or who has  participated)  in any  Plan or any
fiduciary (as defined in Section 3(21) of ERISA) of the Plan;

                                    (iii)  neither the Company nor any fiduciary
has any  Knowledge  of any facts  which  could  give rise to any such  action or
claim; and

                                    (iv)    it provides that it may be amended
or  terminated  at any time and,  except for benefits  protected  under  Section
411(d) of the Code, all benefits payable to current, terminated employees or any
beneficiary  may be amended or  terminated  by the  Company at any time  without
liability.

                           (k)      Neither the Company nor any ERISA Affiliate
has any liability or is threatened with any liability (whether joint or several)
(i) for any excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the
Code, or (ii) to a fine under Section 502 of ERISA.

                           (l)      All of the Plans listed in the Disclosure
Schedule,  to the extent applicable,  are in compliance with the continuation of
group health  coverage  provisions  contained  in Section  4980B of the Code and
Sections 601 through 608 of ERISA.

                           (m)      True, correct and complete copies of all
documents creating or evidencing any Plan listed in the Disclosure Schedule have
been delivered to Coyote,  and true, correct and complete copies of all reports,
forms and other  documents  required  to be filed with any  governmental  entity
(including,  without  limitation,  summary  plan  descriptions,  Forms  5500 and
summary  annual  reports for all plans subject to ERISA) have been  delivered to
Coyote.  There are no  negotiations,  demands or proposals  which are pending or
have been made which concern matters now covered,  or that would be covered,  by
the type of agreements listed in the Disclosure Schedule.

                           (n)      All expenses and liabilities relating to all
of the Plans  described in the  Disclosure  Schedule have been,  and will on the
Closing be fully and  properly  accrued on the  Company's  books and records and
disclosed in accordance  with generally  accepted  accounting  principles and in
Plan financial statements.

                  3.16 Environmental Matters. The Company is and has been at all
times in compliance in all respects with all Environmental Laws. The Company has
now  and at  all  times  has  had  all  the  necessary  permits  required  under
Environmental  Laws for the  operation of its  business,  and is not and has not
been in violation of any of the terms and conditions of any of its permits.  The


                                       29
<PAGE>
Company  has not  received  any  notice or other  communication  (in  writing or
otherwise)  that  alleges  that  the  Company  is not  in  compliance  with  any
Environmental  Law.  The  Company  has not  generated,  manufactured,  produced,
transported,  imported,  used, treated,  refined,  processed,  handled,  stored,
discharged,  released,  or disposed of any Hazardous Materials (whether lawfully
or  unlawfully)  at any of the Leased  Premises  occupied or  controlled  by the
Company on or at any time prior to the date hereof  other than common  household
and office  products in de minimis  quantities.  There are not and have not been
any releases or threatened  releases of any Hazardous  Materials in any quantity
(other than common  household and office products in de minimis  quantities) at,
on, or from the Leased  Premises,  and to the Knowledge of the Company (a) there
are no circumstances that may prevent or interfere with the Company's compliance
with  any  Environmental  Law  and (b) no  former  owner  or user of the  Leased
Premises engaged in any type of manufacturing or commercial activity which might
be reasonably expected to generate,  manufacture,  produce,  transport,  import,
use, treat, refine, process,  handle, store,  discharge,  release, or dispose of
any Hazardous Materials (whether lawfully or unlawfully) on the Leased Premises.

                  3.17 Sale of Products;  Performance  of Services.  The Company
has not made any express warranties or guarantees  relating to its products that
are in  effect as of the date  hereof.  No  customer  or other  Person  has ever
asserted or  threatened  to assert any  material  claim  against the Company (i)
under or based upon any  warranty  provided by or on behalf of the  Company,  or
(ii) under or based upon any other warranty  relating to any product sold by the
Company or any  services  performed  by the  Company.  To the  Knowledge  of the
Company,  no event has occurred,  and no condition or circumstance  exists, that
likely would (with or without  notice or lapse of time)  directly or  indirectly
give  rise to or serve as a basis  for the  assertion  of any  such  claim.  The
Company has received no customer complaints pursuant to which the Company gave a
credit or  accepted a product  return  for a refund in either  case in excess of
$1,000.

                  3.18  Insurance.  The  Company  does  not  currently  have any
insurance policies in place. The Company has not been refused any insurance with
respect to its assets or operations,  nor has any insurance  carrier to which it
has  applied  for any such  insurance  or with  which it has  carried  insurance
limited its coverage.

                  3.19     Related Party Transactions.

                           (a)      No Related Party has, and no Related Party
has at any time since January 1, 1999,  had, any direct or indirect  interest of
any nature in any asset used in or  otherwise  relating  to the  business of the
Company;

                           (b)      no Related Party is, or has been, indebted
to the Company;

                           (c)      no Related Party has entered into, or has
had any direct or indirect financial  interest in, any Contract,  transaction or
business  dealing of any nature  involving  the  Company  and no such  Contract,
transaction  or  business  dealing of any  nature is  necessary  to operate  the
business of the Company as it is currently conducted;

                                       30
<PAGE>
                           (d)      to the Company's Knowledge, no Related Party
is competing,  or has at any time  competed,  directly or  indirectly,  with the
Company in any market served by the Company;

                           (e)      no Related Party has any claim or right
against the Company; and

                           (f)      to the Knowledge of the Company, no event
has occurred,  and no condition or circumstance  exists, that likely would (with
or without notice or lapse of time) directly or indirectly give rise to or serve
as a basis  for any claim or right in favor of any  Related  Party  against  the
Company.

                  3.20     Proceedings; Orders.

                           (a)      There is no pending Proceeding, and to the
Knowledge of the Company,  no Person has  threatened to commence any  Proceeding
(i) that  involves  the  Company or that  otherwise  relates to or likely  would
affect the Company's  business or any of the assets owned or used by the Company
(whether  or not the  Company  is  named  as a  party  thereto);  or  (ii)  that
challenges, or that may have the effect of preventing,  delaying, making illegal
or otherwise interfering with, any of the Transactions.  To the Knowledge of the
Company,  no event has  occurred,  and no claim,  dispute or other  condition or
circumstance  exists,  that likely would directly or indirectly  give rise to or
serve as a basis for the commencement of any such Proceeding.

                           (b)      No Proceeding has ever been commenced by or
against the Company,  and no Proceeding  otherwise  involving or relating to the
Company has been pending or threatened at any time.

                           (c)      The Company has delivered to Coyote accurate
and complete copies of all pleadings, correspondence and other written materials
to which the Company has access that  relate to the  Proceedings  identified  in
Section 3.20 of the Disclosure Schedule.

                           (d)      There is no Order to which the Company, or
any of the assets owned or used by the Company, is subject.

                           (e)      To the Knowledge of the Company, no officer
or employee of the Company is subject to any Order that  prohibits  such officer
or employee  from engaging in or  continuing  any conduct,  activity or practice
relating to the Company's business.

                           (f)      There is no Order that, or to the Knowledge
of the Company,  proposed  Order  (other than any  proposed  Order that would be
applicable  generally  to the data  integration  industry)  that,  if  issued or
otherwise put into effect,  (i) likely would have a material  adverse  effect on
the ability of the Company to comply with or perform any covenant or  obligation
under this Agreement or any of the other Transaction Documents, or (ii) may have
the effect of preventing,  delaying,  making legal or otherwise interfering with
any of the Transactions.



                                       31
<PAGE>
                  3.21  Non-Contravention;  Consents.  Neither the execution and
delivery  of  this  Agreement  or  the  other  Transaction  Documents,  nor  the
consummation  or  performance  of any  of the  Transactions,  will  directly  or
indirectly (with or without notice or lapse of time):

                           (a)      contravene, conflict with or result in a
violation  of  (i)  any  of  the   provisions  of  the  Company's   articles  of
incorporation  or  bylaws,  or (ii)  any  resolution  adopted  by the  Company's
shareholders, the Company's board of directors or any committee of the Company's
board of directors, if any;

                           (b)      to the Knowledge of the Company, contravene,
conflict  with or result in a  violation  of, or give any  Governmental  Body or
other Person the right to challenge any of the  Transactions  or to exercise any
remedy or obtain any relief under,  any Legal  Requirement or any Order to which
the Company, or any of the assets owned or used by the Company, is subject;

                           (c)      cause the Company to become subject to, or
to become liable for the payment of, any Tax;

                           (d)      cause any of the assets owned or used by the
Company  to  be  reassessed  or  revalued  by  any  taxing  authority  or  other
Governmental Body;

                           (e)      to the Knowledge of the Company, contravene,
conflict with or result in a violation of any of the terms or  requirements  of,
or give any Governmental Body the right to revoke,  withdraw,  suspend,  cancel,
terminate or modify, any Governmental  Authorization that is held by the Company
or any of its employees or that otherwise  relates to the Company's  business or
to any of the assets owned or used by the Company;

                           (f)      contravene, conflict with or result in a
violation or breach of, or result in a default under, any material  provision of
any of the Company Contracts;

                           (g)      give any Person the right to (i) declare a
default or exercise any remedy under any Company  Contract,  (ii) accelerate the
maturity or performance of any Company Contract,  or (iii) cancel,  terminate or
modify any Company Contract;

                           (h)      give any Person the right to any payment by
the  Company or give rise to any  acceleration  or change in the  award,  grant,
vesting or determination of options,  warrants,  rights,  severance  payments or
other contingent obligations of any nature whatsoever of the Company in favor of
any Person, in any such case as a result of the change in control of the Company
or otherwise resulting from the Transactions; or

                           (i)      result in the imposition or creation of any
Encumbrance upon or with respect to any asset owned or used by the Company.

Except as set forth in Section 3.21 of the Disclosure Schedule, the Company will
not be  required  to make any  filing  with or give any notice to, or obtain any
Consent from,  any Person in connection  with the execution and delivery of this
Agreement and the other Transaction Documents or the consummation or performance
of any of the Transactions. As of the date hereof, all such filings, notices and


                                       32
<PAGE>
Consents  have been  duly  made,  given or  obtained  and are in full  force and
effect, other than those which by their nature are required to be made, given or
obtained  after the  execution  of this  Agreement,  all of which shall be made,
given or obtained within the time required therefor.

                  3.22 Brokers.  The Company has not agreed or become  obligated
to pay, or taken any action that likely would  result in any Person  claiming to
be  entitled to  receive,  any  brokerage  commission,  finder's  fee or similar
commission or fee in connection with any of the Transactions.

                  3.23  Year  2000  Compliance.  All of the  Company's  products
(including  products currently under  development)  record,  store,  process and
calculate  and  present  calendar  dates  falling on and after  January 1, 2000,
calculate  any  information  dependent  on or relating to such dates in the same
manner and with the same  functionality,  data integrity and  performance as the
products  record,  store,  process,  calculate and present  calendar dates on or
before December 31, 1999, or calculate any information  dependent on or relating
to such dates. All of the Company's material products lose no functionality with
respect to the  introduction  of records  containing  dates  falling on or after
January 1, 2000.  All of the  Company's  internal  computer  systems,  including
without limitation, its accounting systems, are Year 2000 Compliant.

                  3.24  Tax  Treatment.  Neither  the  Company  nor  any  of its
Affiliates has taken any action or knows of any fact,  agreement,  plan or other
circumstance  that could  pose a material  risk to the status of the Merger as a
reorganization under the provisions of Section 368(a) of the Code.

                  3.25     Full Disclosure.

                           (a)      Neither this Agreement (including all
Schedules,  Exhibits and Annexes hereto), nor any of the Transaction  Documents,
contains  any  untrue  statement  of  material  fact or omits to state  any fact
necessary to make any of the representations, warranties or statements contained
therein on behalf of the Company or any of the Shareholders  not misleading.  To
the extent any  representation  or warranty  permits omission of items otherwise
required to be  discussed  because  they are not material or do not or would not
have a Material  Adverse Effect on the Company,  such omissions in the aggregate
will not and do not have a Material Adverse Effect on the Company.

                           (b)      As of the date of this Agreement, the
Company has provided Coyote and Coyote's  Representatives with full and complete
access to all of the Company's records and other documents and data requested by
them.

                           (c)      There is no fact within the Knowledge of
Company (other than publicly  known facts  relating  exclusively to political or
economic matters of general  applicability) that (i) may have a Material Adverse
Effect on the Company's business,  condition,  assets,  liabilities,  operation,
financial  performance,  net  income or  prospects  (in or any aspect or portion
thereof) or on the ability of the Company to comply with or perform any covenant
or obligation under this Agreement or any of the other Transaction Documents, or
(ii) may have the effect of  preventing,  delaying,  making illegal or otherwise
interfering with any of the Transactions.

                                       33
<PAGE>
                           (d)      All of the information set forth in the
Disclosure Schedule,  other information  regarding the Company and its business,
condition, assets, liabilities, operation, financial performance, net income and
prospects that have been furnished to Coyote or any of its Representatives by or
on behalf of Company or any of the Company's Representatives, is accurate in all
material respects.

                  3.26     Powers of Attorney.  The Company has not given a
power of attorney to any Person.

                  3.27     Voting Arrangements.  There are no outstanding
shareholder  agreements,   voting  trusts,  proxies  or  other  arrangements  or
understandings  relating to the voting of any shares of the capital stock of the
Company.

                  3.28 Change in Control Payments. The Company does not have any
plans, programs or agreements to which it is a party, or to which it is subject,
pursuant  to which  payments  (whether  in cash or  property  or the  vesting of
property) may be required upon, or may become payable  directly or indirectly as
a result of, a change of control of the Company.

                  3.29 Board  Approval.  The board of  directors  of the Company
has, as of the date of this  Agreement,  unanimously  (i)  approved,  subject to
shareholder  approval,  this Agreement and the transactions  contemplated hereby
and thereby,  (ii)  determined  that the Merger is in the best  interests of the
shareholders of Company and is on terms that are fair to such  shareholders  and
(iii)  recommended  that the  shareholders of Company approve this Agreement and
the Merger.

                  3.30 Vote Required.  The affirmative vote of a majority of the
votes that  holders of the  outstanding  shares of Company  Common Stock and the
Company  Preferred  Stock are entitled to vote with respect to the Merger is the
only vote of the  holders  of any class or series  of  Company's  capital  stock
necessary to approve this Agreement and the transactions contemplated hereby.

                                    ARTICLE 4

               REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

                  Except as  specifically  set forth in the Disclosure  Schedule
delivered  by the  Shareholders  to Coyote at or prior to the  execution of this
Agreement,  each Shareholder  hereby represents and warrants severally to Coyote
that:

                  4.1 Authority. The Shareholder has all necessary power and, in
the case of Enterprises, other than approval by Enterprises' Board of Directors,
authority to execute and deliver this Agreement and the  Transaction  Documents,
to perform its obligations  under this Agreement and the  Transaction  Documents
and to consummate  the Merger and the other  transactions  contemplated  by this
Agreement  and the  Transaction  Documents.  The  execution and delivery of this
Agreement and the Transaction  Documents and the consummation by the Shareholder
of the transactions  contemplated  hereby and thereby have been duly and validly
authorized  by all  necessary  action  other than,  in the case of  Enterprises,


                                       34
<PAGE>
approval by  Enterprises'  Board of Directors,  and no other  proceedings on the
part of the  Shareholder  are  necessary  to  authorize  this  Agreement  or the
Transaction  Documents or to consummate the transactions  contemplated hereby or
thereby,  other than, in the case of  Enterprises,  the approval of Enterprises'
Board of Directors.  This  Agreement has been validly  executed and delivered by
the  Shareholder  and,  in the  case of  Enterprises,  subject  to  approval  by
Enterprises'  Board  of  Directors,  constitutes  a  legal,  valid  and  binding
obligation of the  Shareholder,  enforceable  against it in accordance  with its
terms. Each of the Transaction  Documents will, when duly executed and delivered
by the  Shareholder  at the  Closing,  constitute  a legal,  valid  and  binding
obligation of the  Shareholder,  enforceable  against it in accordance  with its
terms.

                  4.2  Title  to  Shares.  The  Shareholder  has  legal,  valid,
beneficial and exclusive title to the shares of the capital stock of the Company
owned by it, free and clear of all Encumbrances  other than those imposed by the
Securities Act and except as set forth in the Investment Sharing Agreement.

                  4.3  Brokers.  No  broker,  finder  or  investment  banker  is
entitled to any  brokerage,  finder's or other fee or  commission  in connection
with the  transactions  contemplated by this Agreement  based upon  arrangements
made by or on behalf of the Shareholder.

                  4.4  Accredited  Investor.  The  Shareholder is an "accredited
investor"  within the meaning of Rule 501 of  Regulation D under the  Securities
Act. The  Shareholder  (i) is  purchasing  the Series C Preferred  Stock and the
Coyote  Common  Stock  issuable  pursuant  to the  terms of this  Agreement  for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof, in violation of the Securities Act, (ii) has had
an  opportunity  to ask  questions of the officers and directors of, and has had
access to information  concerning,  Coyote, (iii) has knowledge,  sophistication
and experience in business and financial  matters and risks of such  investment,
(iv) is able to bear the economic  risk of such  investment,  and (v) is able to
afford the complete loss of such investment.

                                    ARTICLE 5

                    REPRESENTATIONS AND WARRANTIES OF COYOTE

                  Except as  specifically  set forth in the Disclosure  Schedule
delivered  by  Coyote to the  Company  and the  Shareholders  at or prior to the
execution  of this  Agreement,  Coyote  hereby  represents  and  warrants to the
Company and to each Shareholder that:

                  5.1 Organization and Qualification;  Subsidiaries.  Coyote and
each Subsidiary of Coyote  (collectively,  the "Coyote  Subsidiaries")  has been
duly  organized and is validly  existing and in good standing  under the laws of
the jurisdiction of its  incorporation or organization,  as the case may be, and
has the requisite power and authority and all necessary  governmental  approvals
to own,  lease and operate its  properties and to carry on its business as it is
now being conducted. Each of Coyote and each Coyote Subsidiary is duly qualified
or licensed to do business,  and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing  necessary,  except where the
failure  to so  qualify  would not have a  Material  Adverse  Effect on  Coyote.


                                       35
<PAGE>
Schedule  5.1  sets  forth a  complete  and  correct  list of all of the  Coyote
Subsidiaries. Neither Coyote nor any Coyote Subsidiary holds any equity interest
in any Person other than the Coyote Subsidiaries so listed.

                  5.2  Capitalization.  As of the  date of this  Agreement,  the
authorized  capital stock of Coyote consists of (i) 30,000,000  shares of Coyote
Common Stock and (ii) 5,000,000  shares of preferred  stock,  par value $.01 per
share  ("Coyote  Preferred  Stock"),  700 shares of which are  designated  as 5%
Series  A  Convertible  Preferred  Stock  and  3,157,895  shares  of  which  are
designated  Series B Preferred Stock. As of the date of this Agreement,  (A) 124
shares of 5% Series A Convertible  Preferred  Stock are issued and  outstanding,
which are convertible  into 206,666 shares of Coyote Common Stock, (B) 3,157,895
shares of  Series B  Preferred  Stock  are  issued  and  outstanding,  which are
convertible into 3,157,895 shares of Coyote Common Stock, (C) 17,418,001  shares
of Coyote Common Stock are issued and outstanding,  (D) 708,692 shares of Coyote
Common Stock are held in the treasury of Coyote,  (E) 5,010,135 shares of Coyote
Common Stock are issuable  upon the exercise of  outstanding  warrants,  and (F)
4,235,000  shares of Coyote  Common  Stock are  issuable  upon the  exercise  of
outstanding  options and options or  restricted  stock that may be granted under
certain  stock  incentive  plans of Coyote.  Except as  described  above in this
Section 5.2, there are no shares of capital stock of Coyote  authorized,  issued
or outstanding. As of the Effective Time, the authorized capital stock of Coyote
shall  consist  of (i)  80,000,000  shares  of  Coyote  Common  Stock  and  (ii)
10,000,000  shares of  Coyote  Preferred  Stock,  700  shares of which  shall be
designated as 5% Series A Convertible Preferred Stock, 3,157,895 shares of which
shall be  designated as Series B Preferred  Stock and 1,230,380  shares of which
shall be designated as Series C Preferred Stock.  Except as set forth in filings
made by Coyote with the SEC under the  Securities Act and the Exchange Act or in
this Section 5.2 and except for warrants and options and other rights granted as
set forth above and certain  commitments  that are contingent upon the amendment
to Coyote's  certificate of  incorporation  that could amount to up to 3,150,000
additional  options  under the plans as amended by  Coyote's  preliminary  proxy
statement, there are no options, warrants, conversion rights, stock appreciation
rights,  redemption  rights,  repurchase  rights  or other  rights,  agreements,
arrangements  or  commitments  of any  character  to which  Coyote or any Coyote
Subsidiary  is a party or by which  Coyote  or any  Coyote  Subsidiary  is bound
relating  to the  issued or  unissued  capital  stock of  Coyote  or any  Coyote
Subsidiary  or obligating  Coyote or any Coyote  Subsidiary to issue or sell any
shares of capital  stock of, or other equity  interests in, Coyote or any Coyote
Subsidiary. All shares of Coyote Common Stock and Series C Preferred Stock, upon
issuance to the  Shareholders at Closing,  and all shares of Coyote Common Stock
issuable upon conversion of the Series C Preferred  Stock or otherwise  pursuant
to this  Agreement  or the Warrant,  when issued,  will be free and clear of all
Encumbrances,  other than those imposed by the Securities  Act, and will be duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to preemptive rights. There are no outstanding contractual obligations of Coyote
or any Coyote  Subsidiary to repurchase,  redeem or acquire any shares of Coyote
Common  Stock,  Coyote  Preferred  Stock  or any  security  convertible  into or
exchangeable for any of the foregoing.  Each outstanding  share of capital stock
of each  Coyote  Subsidiary  is duly  authorized,  validly  issued,  fully paid,
nonassessable  and not subject to preemptive rights and each such share owned by
Coyote or a Coyote Subsidiary is free and clear of all Encumbrances,  other than
those imposed by the Securities Act.

                  5.3 Authority.  Coyote has all necessary  corporate  power and
authority to execute and deliver this Agreement and the Transaction Documents to
which it is or is to become a party,  to perform its  obligations  hereunder and


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<PAGE>
thereunder and to consummate the Merger and the other transactions  contemplated
hereby and  thereby.  The  execution  and  delivery  of this  Agreement  and the
Transaction  Documents  to  which  Coyote  is or is to  become  a party  and the
consummation by Coyote of the transactions  contemplated hereby and thereby have
been duly and validly  authorized by all necessary  corporate  action other than
the approval of Coyote's  stockholders  and an increase in authorized  shares by
Coyote by Coyote's stockholders (the "Coyote Shareholder Approval") and no other
corporate  proceedings  on the part of Coyote are  necessary to  authorize  this
Agreement or any Transaction Document or to consummate such transactions, except
for the Coyote Shareholder Approval. This Agreement has been duly authorized and
validly  executed and  delivered by Coyote and  constitutes  a legal,  valid and
binding  obligation of Coyote,  enforceable  against it in  accordance  with its
terms.  The  Transaction  Documents to which Coyote or  Acquisition  is or is to
become a party,  when  executed and  delivered by Coyote or  Acquisition  at the
Closing,  will  constitute  legal,  valid and binding  obligations  of Coyote or
Acquisition, enforceable against it in accordance with their terms.

                  5.4 SEC Filings; Financial Statements.  Except as set forth in
Section 5.4 of the Disclosure Schedule,  Coyote has filed all forms, reports and
documents  required  to be filed by Coyote  with the SEC since  January  1, 1998
(collectively,  together with any forms,  reports and documents  filed by Coyote
with the SEC after the date hereof until the Closing, the "Coyote SEC Reports").
Each such report, when filed,  complied in all material respects as to form with
the requirements of the Exchange Act and, as of their respective  dates, none of
such reports  contained  any untrue  statement of a material  fact or omitted to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  Each of the consolidated  financial statements  (including,  in
each case, any related notes) contained in the Coyote SEC Reports complied as to
form in all material  respects with the applicable  rules and regulations of the
SEC with respect  thereto,  was prepared in accordance  with generally  accepted
accounting  principles  applied on a  consistent  basis  throughout  the periods
involved (except as may be indicated in the notes to such financial  statements)
and fairly  presented the  consolidated  financial  position of Coyote as at the
respective dates and the  consolidated  results of operations and cash flows for
the  periods  indicated,  except that  unaudited  interim  financial  statements
contained in any quarterly report on Form 10-Q (i) were or are subject to normal
year-end  adjustments  which  were not or are not  expected  to be  material  in
amount, and (ii) do not contain footnote disclosure.

                  5.5 Title to Shares.  At the Effective Time, each  Shareholder
shall  acquire  legal and valid  title to the shares of Coyote  Common  Stock or
Series C Preferred Stock issued to him or it, in each case free and clear of all
Encumbrances,  other than those imposed by the  Securities  Act. Upon  issuance,
each  Shareholder  shall  acquire  legal and valid title to the shares of Coyote
Common Stock  underlying the Series C Preferred Stock and the Warrant and to all
other shares of Coyote Common Stock issued pursuant to this  Agreement,  in each
case  free and  clear of all  Encumbrances,  other  than  those  imposed  by the
Securities Act.

                  5.6 Brokers. Except with respect to fees incurred by Coyote in
connection  with the fairness  opinion to be issued by First Security Van Kasper
(the  payment of which will be the sole  responsibility  of Coyote),  no broker,


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<PAGE>
finder or investment banker is entitled to any brokerage,  finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Coyote.

                  5.7 Board  Approval.  The board of directors of Coyote has, as
of the date of this Agreement,  unanimously (i) approved, subject to stockholder
approval,  this Agreement and the transactions  contemplated hereby and thereby,
(ii) determined that the Merger is in the best interests of the  stockholders of
Coyote and is on terms that are fair to such  stockholders and (iii) recommended
that the stockholders of Coyote approve this Agreement and the Merger.

                                    ARTICLE 6

                                    COVENANTS

                  6.1 Conduct of Business of the Company. Except as contemplated
by this  Agreement or with the prior  written  consent of Coyote,  which consent
shall not be  unreasonably  withheld,  during the  period  from the date of this
Agreement to the Closing,  the Company shall conduct its operations  only in the
ordinary  course of  business  and  shall use its  reasonable  best  efforts  to
preserve intact the business  organization of the Company, to keep available the
services  of the present  officers  and key  employees  of the  Company,  and to
preserve the good will of  customers,  suppliers  and all other  persons  having
business relationships with the Company.  Without limiting the generality of the
foregoing, and except as otherwise contemplated by this Agreement,  prior to the
Closing,  the Company shall not,  without the prior  written  consent of Coyote,
which consent shall not be unreasonably withheld:

                           (a)      amend or otherwise change the Company's
articles of incorporation or bylaws;

                           (b)      except as contemplated by this Agreement,
issue, sell, pledge,  dispose of or encumber,  or authorize the issuance,  sale,
pledge,  disposition or encumbrance  of, any shares of Company  capital stock of
any class, or any options,  warrants,  convertible securities or other rights of
any kind to acquire any shares of Company  capital stock, or any other ownership
interest (including,  without limitation,  any phantom interest) of the Company,
any subsidiary or any of its affiliates;

                           (c)      sell, pledge, dispose of or encumber any
assets or inventory of the Company  (except for (i) sales of assets or inventory
in the Ordinary Course of Business,  (ii)  dispositions of obsolete or worthless
assets,  and (iii)  pledges  of  assets  pursuant  to  existing  agreements,  or
agreements  the  Company  is  permitted  to enter  into in  connection  with the
purchase of assets),  or take any action  that would  reasonably  be expected to
result  in any  damage  to,  destruction  or loss of any  material  asset of the
Company (whether or not covered by insurance);

                           (d)      (i) declare, set aside, make or pay any
dividend  or other  distribution  (whether  in cash,  stock or  property  or any
combination thereof) in respect of any Company Common Stock, (ii) split, combine
or  reclassify  any Company  Common  Stock or issue or  authorize or propose the
issuance of any other  securities  in respect of, in lieu of or in  substitution
for shares of Company Common Stock, (iii) amend the terms of, repurchase, redeem


                                       38
<PAGE>
or  otherwise  acquire  any  of  its  securities,   except  in  accordance  with
preexisting  commitments  as of the date  hereof,  or  propose  to do any of the
foregoing;

                           (e)      (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any Entity or division thereof, or enter into or
amend any Contract to effect any such  acquisition,  (ii) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee (other than
guarantees of bank debt of a subsidiary  entered into in the Ordinary  Course of
Business) or endorse or otherwise as an  accommodation  become  responsible for,
the  obligations  of any Person,  or make any loans or advances,  except in each
case in the Ordinary Course of Business  (including  pursuant to existing credit
lines and lease  facilities);  (iii) provide funds to or make any investment (in
the form of a loan,  capital  contribution  or  otherwise)  in any Entity;  (iv)
except in the Ordinary Course of Business or otherwise  provided or permitted by
this Agreement, enter into or amend any material Contract which provides for the
sale,  license,  or purchase by the Company of assets; (v) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate,  in excess
of  $10,000;  or (vi)  enter  into or amend any  Contract  to effect  any of the
matters prohibited by this Section 6.1(e);

                           (f)      increase the compensation payable or to
become  payable to its officers or employees,  except for increases in salary or
wages of employees of the Company who are not executive  officers of the Company
in the Ordinary Course of Business in accordance  with past practices,  or grant
any severance or  termination  pay to, or enter into any employment or severance
agreement with any director,  officer (except for officers who are terminated on
an involuntary  basis),  or, except as consistent  with past practice and in the
Ordinary  Course  of  Business,  establish,  adopt,  enter  into  or  amend  any
collective  bargaining,  bonus,  profit  sharing,  thrift,  compensation,  stock
option,   restricted  stock,   pension,   retirement,   deferred   compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former  directors,  officers or
employees, except, in each case, as may be required by law;

                           (g)      take any action to change accounting
policies or procedures (including,  without limitation,  procedures with respect
to revenue recognition,  payments of accounts payable and collection of accounts
receivable);

                           (h)      make any material Tax election inconsistent
with past practices or settle or compromise any material federal,  state,  local
or foreign Tax liability or agree to an extension of a statute of limitations;

                           (i)      pay, discharge or satisfy any claims,
Liabilities  or  obligations   (absolute,   accrued,   asserted  or  unasserted,
contingent or otherwise),  other than the payment,  discharge or satisfaction in
the Ordinary Course of Business;

                           (j)      engage in any action or enter into any
transaction  or permit any action to be taken or  transaction to be entered into
that could  reasonably  be expected to delay the  consummation  of, or otherwise
adversely affect, any of the transactions contemplated by this Agreement;



                                       39
<PAGE>
                           (k)      undertake any revaluation of any of the
Company's  assets,  including,  without  limitation,  writing  down the value of
inventory or writing off notes or accounts receivable other than in the Ordinary
Course of Business;

                           (l)      take, or allow to be taken or fail to take
any action which act or omission would jeopardize qualification of the Merger as
a reorganization within the meaning of Section 368(a) of the Code; or

                           (m)      take, or agree in writing or otherwise to
take, any of the actions described in Sections 6.1(a) through (l).

                  6.2      No Solicitation.

                           (a)      The Company shall not, and shall not permit
or authorize its Representatives to initiate, solicit or encourage (including by
way of  furnishing  information  or  assistance)  or take any  other  action  to
facilitate, any inquiries or the making of any proposal relating to, or that may
reasonably be expected to lead to, any  Alternative  Transaction,  or enter into
discussions  (except as to the existence of these  provisions) or negotiate with
any  Person  in  furtherance  of such  inquiries  or to  obtain  an  Alternative
Transaction,  or agree to, or endorse, any Alternative Transaction, or authorize
or permit any of the  Representatives of the Company to take any such action and
the Company  shall  promptly  notify  Coyote of all  relevant  terms of any such
inquiries or proposals received by the Company or its Representative relating to
any of such matters and if such  inquiry or proposal is in writing,  the Company
shall promptly deliver or cause to be delivered to Coyote a copy of such inquiry
or proposal and promptly  update Coyote as to any material  changes with respect
to such inquiry or proposal;  provided,  however, that nothing contained in this
subsection  (a) shall  prohibit  the board of  directors  of the Company and its
Representatives   from  (i)   furnishing   information   to,   entering  into  a
confidentiality  agreement  with, or entering into  discussions or  negotiations
with,  any  Persons in  connection  with an  unsolicited  bona fide  proposal in
writing by such Person  relating to an Alternative  Transaction  if, and only to
the extent that (A) the board of  directors  of the Company  determines  in good
faith,  after  consultation with its outside legal counsel,  that such action is
reasonably  necessary to comply with its fiduciary  duties under California law,
(B) such action is in response to an unsolicited bona fide written proposal made
by a third  party  relating  to an  Alternative  Transaction  on terms which the
Company's  board of directors in good faith believes to be more favorable to the
Company's  shareholders  than the Merger or may reasonably be expected to result
in an Alternative  Transaction on terms that the Company's board of directors in
good faith  believes is more  favorable to the Company's  shareholders  than the
Merger,  and in each case for which financing,  to the extent required,  is then
committed (a "Superior Proposal"),  and (C) prior to furnishing such information
to, or entering into  discussions or negotiations  with, such Person the Company
provides  written  notice  to  Coyote  to  the  effect  that  it  is  furnishing
information to, or entering into discussions or negotiations  with, such Person;
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
an  Alternative  Transaction;  or (iii) in the  event  of a  Superior  Proposal,
entering  into an  agreement  or  understanding  with  respect  to the  Superior
Proposal.

                           (b)      The Company shall immediately cease and
cause to be terminated any existing discussions or negotiations with any parties


                                       40
<PAGE>
(other than Coyote and Acquisition)  conducted heretofore with respect to any of
the  foregoing.  The  Company  agrees  not to release  any third  party from any
confidentiality or standstill agreement to which the Company is a party.

                           (c)      The Company shall ensure that the
Representatives  of the Company are aware of the restrictions  described in this
Section 6.2.

                  6.3 Notification of Certain Matters. Each Party shall promptly
notify the other Parties of (a) the occurrence or  non-occurrence of any fact or
event which could  reasonably  be expected  (i) to cause any  representation  or
warranty  contained in this Agreement to be untrue or inaccurate in any material
respect  at any time from the date  hereof to the  Closing  or (ii) to cause any
covenant,  condition or agreement hereunder not to be complied with or satisfied
in all  material  respects,  (b) any  failure  of such  Party to comply  with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it  hereunder  in  any  material  respect;  provided,   however,  that  no  such
notification shall affect the representations or warranties of such Party or the
conditions to the  obligations of any Party  hereunder,  (c) any notice or other
material  communications  from any  Governmental  Body regarding the business or
operations (past,  present or prospective) of the Company,  Coyote or any Coyote
Subsidiary or in connection with the transactions contemplated by this Agreement
and  (d)  the  commencement  of any  Proceeding  against  Coyote  or any  Coyote
Subsidiary.

                  6.4   Shareholders'   Meeting.   As  promptly  as  practicable
following the date Coyote mails its proxy  statement for the 2000 annual meeting
of  stockholders  (for which a preliminary  proxy  statement on Schedule 14A has
been  submitted  to the SEC) (but in no event more than ten (10)  Business  Days
after such date;  provided that the Company and the  Shareholders  have provided
Coyote all  information  necessary to the  preparation  of the  amendment to the
Proxy Statement), Coyote shall prepare and file with the SEC a preliminary proxy
statement for a special meeting of stockholders  (the "Proxy  Statement")  that,
among other things,  describes the  transactions  contemplated by this Agreement
and seeks the approval of Coyote's  stockholders  to the same.  Coyote shall use
its best  efforts  to cause the Proxy  Statement  to be  approved  by the SEC as
promptly as practicable. Subject to the requirements of the SEC and the Exchange
Act,  Coyote shall,  as promptly as  practicable,  call a special meeting of its
stockholders  and shall cause to be  distributed to its  stockholders  the Proxy
Statement  and  shall  use its best  efforts  to cause  the  Transactions  to be
approved by Coyote's stockholders.  No additional amendment or supplement to the
Proxy  Statement shall be made without the approval of the  Shareholders,  which
approval shall not be unreasonably withheld or delayed.

                  6.5  Directors  of  Coyote.   Coyote  shall  take  all  action
necessary (including,  without limitation,  adoption of an appropriate amendment
to Coyote's by-laws,  if necessary) to ensure that as of the Effective Time, the
Board of Directors  of Coyote shall be composed of 7 directors,  3 of whom shall
be designated by Enterprises and 1 of whom shall be designated by Conrad. One of
the 3 directors to be  designated  by  Enterprises  shall not be an Affiliate of
Coyote, the Company or either  Shareholder and shall be knowledgeable  about the
business  of  Coyote  (as  determined  by  Enterprises).   The  three  directors
designated  by  Enterprises  pursuant  to this  Section 6.5 shall be in separate
classes of Coyote's classified Board of Directors such that the initial terms of
those  directors  shall  expire at the annual  meetings of the  stockholders  of
Coyote to be held in 2001, 2002 and 2003, respectively.  The initial term of the


                                       41
<PAGE>
director  designated by Conrad  pursuant to this Section 6.5 shall expire at the
annual meeting of the stockholders of Coyote to be held in 2003.

                  6.6.  Voting  Agreements.  Each  person who is a  director  of
Coyote as of the  Closing  (other  than the  directors  designated  pursuant  to
Section 6.5),  each person who is an officer (as defined in Rule 16a-1 under the
Exchange Act) of Coyote as of the Closing and each  stockholder  of Coyote as of
the  Closing  in which any  person  specified  above  has a direct  or  indirect
interest,  including, without limitation, KJR, LLC, shall execute and deliver to
the  Shareholders at the Closing a voting  agreement in the form attached hereto
as Exhibit B (each, a "Voting Agreement").

                  6.7 Best Efforts. Subject to the terms and conditions provided
in this  Agreement and to  applicable  legal  requirements,  each of the Parties
agrees to use its best efforts to take, or cause to be taken, all action, and to
do, or cause to be done,  and to assist and cooperate  with the other Parties in
doing, as promptly as  practicable,  all things  necessary,  proper or advisable
under  applicable  Laws to ensure that the conditions set forth in Article 5 are
satisfied and to consummate and make effective the transactions  contemplated by
this Agreement  including,  but not limited to, (a) Coyote,  the Company and the
Shareholders  taking all steps  necessary or desirable to consummate  the Merger
and (b) Coyote using its best efforts to obtain the Coyote Shareholder Approval.

                  6.8 Consents.  Prior to the Closing, each of the Parties shall
use its best  efforts to (i) obtain  from any  Governmental  Body any  consents,
licenses, permits, waivers,  approvals,  authorizations or orders required to be
obtained or made by such Party in connection with the  authorization,  execution
and  delivery  of  this  Agreement  and  the  consummation  of the  transactions
contemplated hereby and (ii) make all necessary filings, and thereafter make any
other submissions  either required or deemed appropriate by each of the Parties,
with respect to this Agreement and the transactions contemplated hereby required
(A) under the Exchange Act and any other applicable  federal or state securities
laws, (B) under any other  applicable  Law, and (C) the rules and regulations of
the Nasdaq  National  Market.  No Party to this  Agreement  shall consent to any
voluntary  extension  of any  statutory  deadline  or  waiting  period or to any
voluntary delay of the consummation of the transactions  contemplated  hereby at
the behest of any  Governmental  Body  without the consent and  agreement of the
other Parties to this  Agreement.  Each Party hereto shall  promptly  inform the
others of any material communication from the SEC, the Nasdaq National Market or
any other  Governmental  Body regarding any of the transactions  contemplated by
this  Agreement.  If any Party or any Affiliate  thereof  receives a request for
additional  information or documentary  material from any such Governmental Body
with respect to the transactions contemplated by this Agreement, then such Party
will  endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable  and after  consultation  with the  other  Parties,  an  appropriate
response in compliance with such request.

                  6.9 Certificate of Designation.  Prior to the Closing,  Coyote
(acting  through  its Board of  Directors)  shall  create the Series C Preferred
Stock by  adopting  and  filing  with  the  Secretary  of State of the  State of
Delaware  the  Certificate  of  Designation  attached  hereto as  Exhibit C (the
"Certificate of Designation").

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<PAGE>
                  6.10 Listing of Coyote Common Stock. Coyote shall, at Coyote's
sole cost and  expense,  cause all  shares of Coyote  Common  Stock  that may be
issued to either  Shareholder  (i) at the Closing,  (ii) upon  conversion of the
Series C Preferred Stock, (iii) upon exercise of the Warrant or (iv) pursuant to
Section 6.12(d) and 6.12(e) of this Agreement  (collectively,  the  "Registrable
Securities")  to be approved for listing on the Nasdaq National Market as of the
Closing Date.

                  6.11 Enterprises'  Investment in the Company.  Notwithstanding
any  restrictions  on the operations of the Company set forth in Section 6.1, at
or prior to the Effective  Time,  Enterprises  shall purchase  securities in the
Company that constitute, or upon conversion or exercise will constitute,  thirty
percent (30%) of the  outstanding  capital stock of the Company for an aggregate
purchase price of Seven Million  Dollars  ($7,000,000) in cash. Such purchase of
securities shall not be deemed an Alternative Transaction restricted pursuant to
Section 6.2 hereof.

                  6.12     Post-Closing Covenants of the Parties.

                           (a)      Directors of Coyote.  From and after the
Closing  (i)(A)  so long  as  Enterprises  and/or  its  Affiliates  collectively
beneficially  owns  (within the meaning of Rule 13d-3  under the  Exchange  Act)
("Beneficially  Owns") a number of shares of  Coyote  Common  Stock  equal to or
greater than fifty  percent  (50%) of the number of shares of Series C Preferred
Stock issued to Enterprises  at the Closing  (subject to adjustment in the event
of stock splits, stock dividends and other similar events), Enterprises shall be
entitled to designate for  nomination  by the Board of Directors of Coyote,  and
the Board of  Directors  of Coyote  shall so nominate  for  election by Coyote's
stockholders,   three   directors  (in  accordance  with  Section  6.5  of  this
Agreement),  (B) so long  as  Enterprises  and/or  its  Affiliates  collectively
Beneficially  Own a number of shares of Coyote  Common Stock equal to or greater
than twenty five percent  (25%) but less than fifty  percent (50%) of the number
of shares of Series C  Preferred  Stock  issued to  Enterprises  at the  Closing
(subject to adjustment in the event of stock splits,  stock  dividends and other
similar  events),  Enterprises  shall be entitled to designate for nomination by
the Board of Directors of Coyote,  and the Board of Directors of Coyote shall so
nominate for election by Coyote's stockholders, two directors and (C) so long as
Enterprises  and/or its Affiliates  collectively  Beneficially Own any shares of
Coyote  Common  Stock but less than twenty five  percent  (25%) of the number of
shares of Series C Preferred Stock issued to Enterprises at the Closing (subject
to adjustment in the event of stock  splits,  stock  dividends and other similar
events),  Enterprises shall be entitled to designate for nomination by the Board
of Directors  of Coyote,  and the Board of Directors of Coyote shall so nominate
for election by Coyote's stockholders,  one director, and (ii) so long as Conrad
Beneficially  Owns a number of shares of Coyote Common Stock equal to or greater
than thirty three  percent  (33%) of the number of shares of Coyote Common Stock
issued to Conrad at the  Closing  (subject to  adjustment  in the event of stock
splits,  stock dividends and other similar events),  Conrad shall be entitled to
designate for  nomination by the Board of Directors of Coyote,  and the Board of
Directors of Coyote shall so nominate for election by Coyote's stockholders, one
director.  The rights of each Shareholder  under this Section 6.12(a) are freely
transferable  to any  Person to whom or to which  all of the  shares of Series C
Preferred  Stock  and  Coyote  Common  Stock  then  Beneficially  Owned  by such
Shareholder and its Affiliates are transferred;  provided,  however, that in the


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<PAGE>
case of a transfer of all of the shares of Series C  Preferred  Stock and Coyote
Common Stock Beneficially Owned by a Shareholder and its Affiliates,  the rights
of such Shareholder under this Section 6.12(a) shall not be transferable to such
transferee unless such transferee is first approved by Coyote, such approval not
to be unreasonably withheld, conditioned or delayed; and provided, further, that
a transfer by a  Shareholder  (or any of its  Affiliates)  of shares of Series C
Preferred Stock and Coyote Common Stock and the rights of that Shareholder under
this Section 6.12(a) to the other  Shareholder (or any of its Affiliates)  shall
not require the prior approval of Coyote. Any disputes between a Shareholder and
Coyote  pursuant to the preceding  sentence shall be resolved in accordance with
the provisions of Section 10.2. So long as a Shareholder has rights to designate
a director under this Section  6.12(a),  that  Shareholder  shall be entitled to
designate a successor to the director or  directors  designated  by him or it in
the case of any vacancy resulting from the death, resignation or removal of such
designee  prior to the  expiration  of his or her  term.  For so long as  either
Shareholder  has the right to designate  one or more  directors  for  nomination
pursuant to this Section  6.12(a),  Coyote  shall take all actions  necessary to
maintain  the number of directors at seven (7) and shall not expand the Board of
Directors or otherwise  take any action to increase the number of directors to a
number greater than seven (7), in each case without the prior written consent of
each  Shareholder.  Within thirty (30) days after the date that  Enterprises  or
Conrad  loses the right to designate  for  nomination a director or directors to
the  Board  of  Directors  of  Coyote  as set  forth  in this  Section  6.12(a),
Enterprises or Conrad,  as the case may be, shall cause that number of directors
that it no  longer  has the  right to  designate  to  resign  from the  Board of
Directors of Coyote and the remaining  directors shall appoint a new director or
directors to fill the vacancy created by such resignation(s). From and after the
Closing,  Coyote  shall  indemnify  each  director  designated  pursuant to this
Section  6.12(a)  (collectively,  the  "Shareholder  Designees")  to the fullest
extent  permitted  by  applicable  Law with  respect to any and all  liabilities
arising  from or related to acts or omissions  arising out of such  individuals'
services  as  directors  of  Coyote.  Without  limiting  the  foregoing,  if any
Shareholder  Designee  is or becomes  involved  in any  capacity  in any action,
proceeding  or  investigation  in  connection  with any  matter,  including  the
transactions contemplated by this Agreement,  occurring on or after the Closing,
Coyote shall pay as incurred such  Shareholder  Designee's  reasonable legal and
other  expenses  (including  the  cost  of any  investigation  and  preparation)
incurred in  connection  therewith in the same manner as the directors of Coyote
that are not Shareholder  Designee's.  From and after the Closing,  Coyote shall
maintain in effect directors' and officers'  liability insurance in favor of the
Shareholder Designees.

                           (b)      Voting Agreements.  From and after the
Closing  and for so long as  either  Shareholder  has the right to  designate  a
director pursuant to Section 6.12(a), Coyote shall use its best efforts to cause
each  person  who  becomes a  director  of Coyote  (other  than any  Shareholder
Designee) to execute a Voting Agreement.

                           (c)      Strategic Relationships.  After the Closing
and until the fourth anniversary of the Closing Date,  Enterprises shall use its
best efforts to cause the utilities and  non-regulated  businesses with which it
is  affiliated,  and those with which it is not affiliated but with which it has
relationships,  to participate in the rolling out of the Surviving Corporation's
services as such services exist on the Closing Date.

                           (d)      Contingent Shares. After the Effective Time,
and for a period of four (4)years  from the Closing Date,  Coyote shall issue to
the  Shareholders,  collectively  (and for allocation  between the  Shareholders


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<PAGE>
seventy  percent (70%) to Conrad and thirty percent (30%) to  Enterprises),  two
shares of Coyote  Common  Stock for every  customer  obtained  by the  Surviving
Corporation (or any Affiliate thereof) following the Closing; provided, however,
that each such customer  shall be subject to the prior approval of Coyote (which
approval  shall  not be  unreasonably  withheld,  conditioned  or  delayed)  and
provided,  further,  that each such customer shall purchase  merchandise  and/or
services through the Surviving Corporation's electronic commerce systems with an
aggregate  retail price of $100 or more during any continuous  thirty (30) month
period before shares of Coyote Common Stock shall be issuable under this Section
6.12(d) with  respect to that  customer.  For  purposes of this Section  6.12, a
"customer"  includes,  but is not  limited  to, a  subscriber  to the  Surviving
Corporation's electronic commerce system (whether or not such customer is then a
customer or prospect of the Surviving Corporation, Enterprises or the current or
future  Affiliates of  Enterprises).  Shares of Coyote Common Stock to be issued
pursuant  to this  Section  6.12(d)  shall be  issued to the  Shareholders  on a
quarterly basis, in arrears, and not later than the tenth Business Day after the
end of each calendar quarter.  The number of shares of Coyote Common Stock to be
issued  pursuant to this Section  6.12(d) for each customer  shall be subject to
adjustment in the event of any stock split,  stock  combination or other similar
transaction or  recapitalization.  Notwithstanding  the foregoing,  Coyote shall
have no obligation to issue additional shares of Coyote Common Stock pursuant to
this Section 6.12(d) if such additional  shares would cause the number of shares
of Coyote Common Stock that have been issued pursuant to this Section 6.12(d) to
exceed  thirteen  percent  (13%) of the total number of shares of Coyote  Common
Stock  outstanding  as of the  Closing  Date  (assuming,  for  purposes  of this
calculation,  the issuance of all shares of Coyote Common Stock  issuable at the
Effective Time, the issuance of all shares of Coyote Common Stock underlying the
Series C Preferred  Stock and the  exercise of all  options,  warrants and other
rights to acquire Coyote Common Stock  (whether or not then vested)  outstanding
as of the Closing Date and the  conversion of all  securities  outstanding as of
the Closing Date that are  convertible  (either as of the Closing Date or at any
time  thereafter)  into  shares of Coyote  Common  Stock) (as such number may be
equitably  adjusted  for  stock  splits,  stock  combinations  or other  similar
transactions or recapitalizations).

                           (e)      Registration of Registrable Securities.

                                    (i)     Within 120 days after the Closing
Date, Coyote shall file with the SEC a shelf  registration  statement under Rule
415 of the Securities  Act on Form S-1 (or any successor form thereto)  covering
the sale or other distribution of all of the Registrable  Securities,  and shall
keep  such  shelf  registration   statement   effective  until  all  Registrable
Securities  have been sold.  If such shelf  registration  statement is not filed
within 120 days after the Closing Date, or if such shelf registration  statement
is not declared effective by the SEC before the first anniversary of the Closing
Date,  then Coyote  shall issue to each  Shareholder  on the fifth  Business Day
following  such first  anniversary of the Closing Date such number of additional
shares  of  Coyote  Common  Stock  as is equal to  twelve  percent  (12%) of the
aggregate  number of  Registrable  Securities  held by such  Shareholder on such
first  anniversary  of the Closing Date (the  "Additional  Securities").  Coyote
shall amend the shelf registration statement from time to time at the request of
either  Shareholder  to  include  in  such  registration  statement  Registrable
Securities  issued  to  such  Shareholder   subsequent  to  the  filing  of  the
registration  statement  (or any amendment  thereto) with the SEC.  Coyote shall
notify each Shareholder  promptly (A) when the shelf  registration  statement or
any amendment or supplement thereto has been filed and when the same (as amended
or supplemented,  as the case may be) has become effective,  (B) of the issuance


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<PAGE>
by the SEC or any state  securities  authority of any stop order  suspending the
effectiveness  of  such   registration   statement  or  the  initiation  of  any
proceedings for that purpose,  (C) of the receipt by Coyote of any  notification
with  respect  to  the  suspension  of  the  qualification  of  the  Registrable
Securities for sale in any  jurisdiction or the initiation or threatening of any
proceeding  for  such  purpose  and (D) of the  happening  of any  event  or the
discovery  of any  facts  that  makes  any  statement  made in the  registration
statement,   the  prospectus   constituting  a  part  thereof  or  any  document
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires the making of any changes in the registration statement, the prospectus
constituting a part thereof or any document incorporated therein by reference in
order to make the  statements  therein  not  contain  an untrue  statement  of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements therein not misleading.  Coyote shall make every effort to obtain the
withdrawal  of any  order  suspending  the  effectiveness  of such  registration
statement at the earliest  possible  time.  Coyote shall timely file all reports
required  to be filed by it under  Section 13 or Section  15(d) of the  Exchange
Act.  The issuance of  Additional  Securities  shall not  constitute a waiver of
Shareholders' right to seek specific performance of this Section 6.12(e).

                                    (ii)    The Shareholders agree that no
Shareholder  may  participate  in or have its  shares  of  Coyote  Common  Stock
included  in any such  shelf  registration  statement  unless  such  Shareholder
completes  and executes  all  questionnaires,  powers of attorney,  indemnities,
underwriting  agreements and other documents reasonably required under the terms
of such underwriting  arrangements or to ensure compliance with the requirements
of the Securities Act.

                                    (iii)   In addition to the information
required to be provided in a notice and  questionnaire  by each  Shareholder  to
Coyote, Coyote may require each Shareholder to furnish to Coyote such additional
information regarding each Shareholder and such Shareholder's intended method of
distribution  of the  Coyote  Common  Stock  as  Coyote  may  from  time to time
reasonably  request in writing,  but only to the extent that such information is
required in order to comply with the Securities Act. Each Shareholder  agrees to
notify  Coyote  as  promptly  as  practicable  of any  inaccuracy  or  change in
information  previously  furnished  by  such  Shareholder  to  Coyote  or of the
occurrence  of any  event in either  case as a result  of which  any  prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such Shareholder or such  Shareholder's  intended method
of  disposition  of the Coyote  Common Stock or omits to state any material fact
regarding such Shareholder or such Shareholder's  intended method of disposition
of the Coyote  Common Stock  required to be stated  therein or necessary to make
statements  therein not misleading in light of the circumstances  then existing,
and promptly to furnish to Coyote any additional information required to correct
and  update  any  previously  furnished  information  or  required  so that such
prospectus  shall  not  contain,   with  respect  to  such  Shareholder  or  the
disposition  of the  applicable  Coyote  Common  Stock an untrue  statement of a
material fact or omit to state a material fact required to be stated  therein or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances then existing.

                           (f)      Issuance of Warrant.  Coyote shall issue to
Enterprises a warrant,  exercisable for 3,200,000  shares of Coyote Common Stock
at an  exercise  price of $20.00 per share in  substantially  the form  attached


                                       46
<PAGE>
hereto as Exhibit D (the  "Warrant")  if and when Coyote  and/or its  Affiliates
have  delivered  25,000  screen phones in the aggregate to persons or businesses
that are,  at the time of  delivery to such  person or  business,  customers  of
Enterprises or any of Enterprises'  Associates  (including,  without limitation,
utility and non-utility  Associates),  all as reasonably  determined  jointly by
Enterprises and Coyote. Upon the request of Enterprises, Coyote shall provide to
Enterprises  all   documentation   and  information   reasonably   requested  by
Enterprises,  and upon reasonable prior notice by Enterprises (but not less than
ten (10) days), Coyote shall provide Enterprises access to the books and records
of Coyote and its Affiliates  during normal business hours, so that  Enterprises
can make the  determination  as  aforesaid.  The Warrant shall be issued no more
than ten (10) Business Days following the determination that the above described
condition is met.  The number of shares of Coyote  Common  Stock  issuable  upon
exercise  of the  Warrant,  and the  exercise  price per share of Coyote  Common
Stock,  shall  each be subject to  adjustment  in the event of any stock  split,
stock  dividend,  or other similar event,  or in the event of a merger,  sale of
assets or other transaction,  in the same manner and to the same extent that the
Warrant  would be  adjusted  pursuant to Article 2 of the Warrant if the Warrant
were  issued and  outstanding  at the date of the event (or the record date with
respect thereof,  if applicable) giving rise to such adjustment.  If any dispute
arises  between  Enterprises  and Coyote  pursuant to this Section  6.12(f) such
dispute shall be resolved in accordance with the provisions of Section 10.2.

                  6.13 Expenses.  Whether or not the Merger is consummated,  all
Expenses incurred in connection with this Agreement and the Merger and the other
transactions  contemplated  hereby  shall be paid by the  Party  incurring  such
Expense;  provided,  however, that the expenses incurred by the Company shall be
paid by the Shareholders. For purposes of this Agreement,  "Expenses" consist of
all  out-of-pocket  expenses  (including,  all  reasonable  fees and expenses of
counsel,  accountants,  investment  bankers,  experts and consultants to a Party
hereto and its  Affiliates)  incurred by a Party or on its behalf in  connection
with or related to the authorization,  preparation,  negotiation,  execution and
performance of this Agreement, the preparation,  printing, filing and mailing of
the Proxy Statement, the solicitation of the Coyote Shareholder Approval and the
preparation,  printing,  filing and mailing of documents in connection therewith
and all other matters  related to the closing of the  transactions  contemplated
hereby.

                                    ARTICLE 7

                              CONDITIONS TO CLOSING

                  7.1 Conditions Precedent to Obligations of the Company and the
Shareholders.  The obligation of the Company and each  Shareholder to consummate
the Merger is subject to the fulfillment (or waiver in writing by the Company or
such Shareholder) at or prior to the Closing Date of the following conditions:

                           (a)      Representations and Warranties.  Each of the
representations  and  warranties  of  Coyote  contained  in  Article  5 of  this
Agreement  shall be true and correct in all material  respects as of the Closing
Date  (except  for  such  representations  and  warranties  as are  made as of a
specified date,  which shall be true and correct in all material  respects as of
such specified date);

                                       47
<PAGE>
                           (b)      Covenants.  All the covenants in this
Agreement to be complied  with and  performed by Coyote on or before the Closing
Date shall have been duly complied with and performed in all material respects;

                           (c)      Officer's Certificate.  A certificate in
form  and  substance  acceptable  to the  Shareholders  to the  effect  that the
conditions set forth in Sections  7.1(a) and 7.1(b) have been  fulfilled,  dated
the Closing Date and signed by an authorized  executive officer of Coyote, shall
have been delivered to the Shareholders and to the Company;

                           (d)      No Injunction.  No order shall have been
entered and shall have remained in effect in any action or proceeding before any
Governmental  Body that would prohibit or make illegal the  consummation  of the
Merger;

                           (e)      Nasdaq Listing.  Evidence acceptable to the
Shareholders  that the Registrable  Securities have been approved for listing on
the Nasdaq National Market,  subject to official notice of issuance,  shall have
been delivered to the Shareholders;

                           (f)      Group Long Distance.  The (i) acquisition by
INET Interactive Network System, Inc. of the assets of Group Long Distance, Inc.
and (ii)  merger  of  Coyote-GLD  Acquisition,  Inc.  with and into  Group  Long
Distance,   Inc.,  with  Group  Long  Distance,  Inc.  continuing  as  a  Coyote
Subsidiary, each shall have been consummated;

                           (g)      Regulatory Approvals.  All notices, reports
and other  filings  required  to be made prior to the  Effective  Time by Coyote
with, and all consents,  registrations,  approvals,  permits and  authorizations
required  to be  obtained  prior  to the  Effective  Time by  Coyote  from,  any
Governmental  Body  in  connection  with  the  execution  and  delivery  of this
Agreement and the  consummation  of the Merger shall have been made or obtained,
as the case may be; and

                           (h)      Deliveries.  Coyote and Employee shall have
delivered the documents and other items required to be delivered by each of them
at the Closing pursuant to Section 2.8 of this Agreement.

                  7.2   Additional   Condition   Precedent  to   Obligations  of
Enterprises.  The  obligation of Enterprises to consummate the Merger is further
subject to the condition  precedent  that the Board of Directors of  Enterprises
shall have approved,  in its sole and absolute discretion,  this Agreement,  the
Transaction Documents and the transactions contemplated hereby and thereby.

                  7.3      Conditions Precedent to Obligations of Coyote.  The
obligation of Coyote to consummate the Merger is subject to the  fulfillment (or
waiver in writing by Coyote) at or prior to the  Closing  Date of the  following
conditions:

                           (a)      Representations and Warranties.  Each of
the representations and warranties of the Company and the Shareholders contained
in Articles 3 and 4 of this Agreement  shall be true and correct in all material
respects as of the Closing Date (except for such  representations and warranties
as are made as of a  specified  date,  which  shall be true and  correct  in all
material respects as of such specified date);

                                       48
<PAGE>
                           (b)      Covenants.  All the covenants in this
Agreement to be complied with and performed by the Shareholders on or before the
Closing Date shall have been duly  complied  with and  performed in all material
respects;

                           (c)      Officer's Certificates.  Certificates, each
in form and substance  acceptable to Coyote,  to the effect that the  conditions
set forth in Section 7.2, Section 7.3(a) and Section 7.3(b) have been fulfilled,
dated the  Closing  Date and signed by the  Company,  Conrad  and an  authorized
executive  officer of Enterprises,  as applicable,  shall have been delivered to
Coyote;

                           (d)      Coyote Shareholder Approval.  The Coyote S
hareholder Approval shall have been obtained;

                           (e)      Regulatory Approvals.  All notices, reports
and other filings required to be made prior to the Effective Time by the Company
or either Shareholder with, and all consents, registrations,  approvals, permits
and  authorizations  required to be obtained  prior to the Effective Time by the
Company or either Shareholder from, any Governmental Body in connection with the
execution  and delivery of this  Agreement  and the  consummation  of the Merger
shall have been made or obtained, as the case may be; and

                           (f)      Deliveries.  The Shareholders, the Company
and the Employee  shall have  delivered to Coyote the  documents and other items
required to be delivered by each of them at the Closing  pursuant to Section 2.8
of this Agreement.

                                    ARTICLE 8

                                   TERMINATION

                  8.1      Termination.  This Agreement may be terminated prior
to the Closing and the transactions contemplated hereby abandoned as
follows:

                           (a)      by the mutual written consent of each
Shareholder and Coyote at any time prior to the Closing;

                           (b)      by any Party if a final, non-appealable
order to restrain or  otherwise  prevent the  consummation  of the  transactions
contemplated  hereby  shall  have  been  entered  by any  Governmental  Body  of
competent jurisdiction;

                           (c)      by the Shareholders, acting together, if the
Closing shall not have  occurred on or before August 31, 2000 (the  "Termination
Date");  provided, that the Shareholders shall not be entitled to terminate this
Agreement  pursuant to this Section 8.1(c) if the failure results primarily from
the breach by the  Shareholders of any of their  representations,  warranties or
covenants contained in this Agreement; or

                           (d)      by any Party, if the Coyote Shareholder
Approval is not obtained at the meeting of Coyote's stockholders called pursuant
to Section 6.4, including any adjournment or postponement thereof.

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<PAGE>
                  8.2 Effect of Termination. Except as provided in Article 9, in
the event of  termination  of this  Agreement  pursuant  to  Section  8.1,  this
Agreement  shall forthwith  become void,  there shall be no liability under this
Agreement on the part of any Party, and all rights and obligations of each Party
hereto shall cease;  provided,  however,  that nothing in this  Agreement  shall
relieve  any  Party  from  liability  for  the  willful  breach  of  any  of its
representations  and  warranties  or the  breach  of any  of  its  covenants  or
agreements set forth in this Agreement.

                                    ARTICLE 9

                            SURVIVAL; INDEMNIFICATION

                  9.1 Survival.  All  representations  and  warranties set forth
herein shall  survive the Closing,  but no claim may be made with respect to any
breach of any  representation  or  warranty  hereunder  after the  twenty-fourth
(24th)  month  anniversary  of the Closing  Date;  provided,  however,  that the
representations and warranties  contained in Sections 3.1, 4.1, 4.2, 5.3 and 5.5
shall survive without limitation as to time. The agreements and covenants of the
Parties  set forth in Section  6.12,  Section  6.13,  Article  8,  Article 9 and
Article 10 of this Agreement shall survive the Closing.

                  9.2      Indemnification by the Shareholders.

                           (a)      By Enterprises.  Subject to Section 9.6
below,  Enterprises shall severally indemnify,  defend, save and hold Coyote and
its officers, directors,  employees, Affiliates and agents (including, after the
Closing,  the  Surviving  Corporation)   (collectively,   "Coyote  Indemnitees")
harmless  from and against  all  demands,  claims,  actions or causes of action,
assessments,  losses, damages,  deficiencies,  liabilities,  costs and expenses,
including reasonable  attorneys' fees (collectively,  "Coyote Damages") asserted
against,   imposed  upon,  resulting  to  or  incurred  by  any  of  the  Coyote
Indemnitees,  directly or indirectly,  in connection with, or arising out of, or
resulting from (i) a breach of any of the representations and warranties made by
Enterprises in this Agreement,  but only if a claim with respect thereto is made
within the time limits, if any,  prescribed by the first sentence of Section 9.1
or (ii) a breach of any of the covenants or agreements made by Enterprises in or
pursuant to this Agreement and in any Transaction  Document to which Enterprises
is a party.

                           (b)      By Conrad and Employee.  Subject to Section
9.6 below,  Employee and Conrad shall jointly and severally  indemnify,  defend,
save and hold the  Coyote  Indemnitees  harmless  from and  against  all  Coyote
Damages asserted against,  imposed upon,  resulting to or incurred by any of the
Coyote Indemnitees,  directly or indirectly,  in connection with, or arising out
of, or resulting from (i) a breach of any of the  representations and warranties
made by the Company,  Employee or Conrad in this Agreement,  but only if a claim
with respect thereto is made within the time limits,  if any,  prescribed by the
first  sentence  of  Section  9.1,  (ii) a  breach  of any of the  covenants  or
agreements  made by the  Company,  Employee  or  Conrad in or  pursuant  to this
Agreement  and in any  Transaction  Document to which the  Company,  Employee or
Conrad is a party,  (iii) the Memorandum of  Understanding  between SMI and PBNV
executed on July 30, 1999, or (iv) a breach of the covenants and  agreements set
forth in the nondisclosure agreements transferred to the Company pursuant to the
terms of the Assignment and Assumption  Agreement  dated May 1, 2000 between the


                                       50
<PAGE>

Company and HomeAccess MicroWeb,  LLC, which occur prior to the Closing Date, or
any other liabilities  incurred by the Coyote  Indemnitees under such agreements
after the Closing Date, which liabilities are not the result of or caused by the
actions or inaction of the Coyote Indemnitees;  provided,  however,  that Conrad
and her Affiliates,  other than Employee, shall not be required to indemnify the
Coyote Indemnitees under the Promissory Note and the Personal Services Agreement
except to the extent set forth in the Pledge Agreement.

                  9.3  Indemnification by Coyote.  Subject to Section 9.6 below,
Coyote  shall  indemnify,  defend,  save and hold  each  Shareholder  and  their
respective officers, directors,  employees, Affiliates and agents (collectively,
"Shareholder  Indemnitees")  harmless  from  and  against  any and all  demands,
claims, actions or causes of action, assessments, losses, damages, deficiencies,
liabilities,   costs  and  expenses,   including   reasonable   attorneys'  fees
(collectively,  "Shareholder Damages") asserted against, imposed upon, resulting
to or incurred by any of the Shareholder Indemnitees, directly or indirectly, in
connection  with, or arising out of, or resulting  from,  (i) a breach of any of
the representations and warranties made by Coyote in this Agreement, but only if
a claim with respect thereto is made within the time limits, if any,  prescribed
by the first sentence of Section 9.1 or (ii) a breach of any of the covenants or
agreements  made  by  Coyote  in or  pursuant  to  this  Agreement  and  in  any
Transaction Document to which Coyote is a party.

                  9.4 Notice of Claims.  If any Coyote Indemnitee or Shareholder
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Coyote Damages or Shareholder  Damages  ("Damages") for
which it is entitled to  indemnification  under this Article 9, or if any legal,
governmental or  administrative  proceeding  which may result in such damages is
threatened  or  asserted,  such  Indemnified  Party shall so notify the party or
parties from whom  indemnification is being claimed (the  "Indemnifying  Party")
with  reasonable  promptness  and  reasonable  particularity  in  light  of  the
circumstances  then  existing.  If any  action  at  law or  suit  in  equity  is
instituted  by or against a third  party with  respect to which any  Indemnified
Party intends to claim any Damages, such Indemnified Party shall promptly notify
the  Indemnifying  Party of such action or suit.  The failure of an  Indemnified
Party to give any notice  required  by this  Section 9.4 shall not affect any of
such  party's  rights  under this  Article  except to the extent such failure is
actually prejudicial to the rights or obligations of the Indemnifying Party.

                  9.5 Third Party  Claims.  In case any legal,  governmental  or
administrative  proceeding  which may  result  in such  Damages  is  instituted,
threatened  or  asserted  by or against a third  party with  respect to which an
Indemnified  Party  intends  to claim  any  Damages  and the  Indemnified  Party
notifies the  Indemnifying  Party of such proceeding as provided in Section 9.4,
the  Indemnifying  Party shall be entitled to  participate  therein  and, to the
extent that it may wish,  jointly with any other  Indemnifying  Party  similarly
notified,  to assume the defense  thereof,  with  counsel  satisfactory  to such
Indemnified  Party  (who may be counsel to the  Indemnifying  Party),  and after
notice from the Indemnifying  Party to such Indemnified Party of its election so
to assume the defense thereof, the Indemnifying Party will not be liable to such
Indemnified  Party  under  this  Article  9 for  any  legal  or  other  expenses
subsequently  incurred by such Indemnified  Party in connection with the defense
thereof.  No Indemnifying Party shall,  without the prior written consent of the
Indemnified Party,  effect any settlement of any pending or threatened action in
respect  of  which  any  Indemnified  Party is or could  have  been a party  and


                                       51
<PAGE>
indemnity could have been sought hereunder by such Indemnified Party unless such
settlement includes an unconditional  release of such Indemnified Party from all
liability on any claims that are the subject matter of such proceeding.

                  9.6 Limitation on Damages. Notwithstanding any provision under
this Article 9 to the contrary, no Party shall have any indemnity liability with
respect to a breach of any of the  representations  and warranties  made by that
Party in this Agreement  until the aggregate  amount of Damages  incurred by the
other Party with respect to such  breaches by the first Party exceeds the sum of
$50,000,   but  if  the  aggregate  amount  of  such  Damages  exceeds  $50,000,
indemnification shall be made to the full extent of Damages; provided,  however,
that, the foregoing  limitations shall not apply to any matter relating to title
to the Company Common Stock, the Company Preferred Stock, the Series C Preferred
Stock or the Coyote Common Stock. In no event shall the liability of Enterprises
under this  Article 9 exceed One  Million  Two  Hundred  Seventy  Five  Thousand
Dollars  ($1,275,000) and in no event shall the liability of Conrad and Employee
under this  Article 9 exceed Two Million  Nine  Hundred  Seventy  Five  Thousand
Dollars ($2,975,000) in the aggregate;  provided,  however, that the limitations
on the liability of any Indemnifying Party set forth in this Article 9 shall not
apply,  and no other  remedy at law or in equity that an  Indemnified  Party may
have  against an  Indemnifying  Party but for the  provisions  of this Article 9
shall be limited or restricted, in the event of such Indemnifying Party's actual
fraud; and provided,  further,  that any claims by Enterprises arising out of or
related to its  purchase of  securities  from the Company  (as  contemplated  by
Section  6.11)  shall be made solely  against  Conrad and  Employee  and not the
Company or Coyote. All Damages payable hereunder shall be paid promptly in cash.
The Parties acknowledge and agree that the provisions of this Article 9 shall be
the sole and  exclusive  remedy  of any Party  for any and all  breaches  of the
representations  and  warranties  of any other Party or the failure of any other
Party to perform any covenant or other  agreement  set forth in this  Agreement;
provided,  however,  that the  foregoing  shall not  constitute  a waiver of any
Party's right to seek specific performance of any provisions of this Agreement.

                  9.7 No Circular  Recovery.  No Shareholder will be entitled to
make any claim for indemnification  against the Surviving  Corporation or any of
its Affiliates by reason of the fact that such  Shareholder  (or any of his, her
or its officers,  directors,  agents or other representatives) was a controlling
person,  director,  officer,  employee,  agent  or other  representative  of the
Company or of any of its Affiliates or was serving as such for another Person at
the request of the Company or any of its  shareholders  or  Affiliates  (whether
such  claim is for losses of any kind or  otherwise  and  whether  such claim is
pursuant to any statute,  charter, by-law,  contractual obligation or otherwise)
with  respect  to any  action  brought  by Coyote or the  Surviving  Corporation
against such Shareholder or the Shareholders  generally  (whether such action is
pursuant to this Agreement, applicable law, or otherwise).

                                   ARTICLE 10

                                  MISCELLANEOUS

                  10.1  Representations.  Each Party agrees that, except for the
representations  and warranties  contained in this Agreement,  no Party has made
any other  representations  and  warranties,  and each Party disclaims any other


                                       52
<PAGE>
representations  and  warranties,  made  by  itself  or  any  of  its  officers,
directors,   employees,   agents,   financial   and  legal   advisors  or  other
representatives  with respect to the execution and delivery of this Agreement or
the transactions contemplated by this Agreement, notwithstanding the delivery of
disclosure   to  any  other  Party  or  any  Party's   representatives   of  any
documentation  or  other  information  with  respect  to any  one or more of the
foregoing.

                  10.2 Dispute Resolution. Any dispute between a Shareholder and
Coyote under Section  6.12(f) or Section 6.12(a) shall be settled by arbitration
in accordance with the Commercial  Arbitration Rules of the American Arbitration
Association in Los Angeles,  California.  The  arbitration  proceeding  shall be
conducted  by  one  arbitrator   selected  in  accordance  with  the  Commercial
Arbitration Rules of the American Arbitration Association. The arbitration shall
be conducted in accordance  with the  following  procedures  and time  schedules
unless otherwise  mutually agreed to by such Shareholder and Coyote:  (i) within
ten (10) days after the  appointment of the  arbitrator,  such  Shareholder  and
Coyote shall provide the arbitrator  with all documents,  records and supporting
information  reasonably  necessary  to resolve the dispute and a hearing on such
dispute  shall be held;  (ii)  within  three  (3) days  after the  hearing,  the
arbitrator  shall render his or her decision;  (iii) such Shareholder and Coyote
shall each be entitled to present the  testimony  of up to two (2)  individuals,
which  testimony  shall not exceed four (4) hours in the aggregate;  and (iv) no
discovery  shall be allowed.  The decision or award of the  arbitrator  shall be
final and  binding  upon such  Shareholder  and Coyote to same extent and to the
same  degree  as if the  matter  had been  adjudicated  by a court of  competent
jurisdiction and shall be enforceable  under the Federal  Arbitrations  Act. The
costs and expenses of the  arbitration  and of the prevailing  party  (including
reasonable attorneys' fees) shall be paid by the non-prevailing party.

                  10.3 Waiver.  Except as expressly  provided in this Agreement,
neither  the failure  nor any delay on the part of any Party in  exercising  any
right,  power or remedy  hereunder shall operate as a waiver thereof,  or of any
other right,  power or remedy;  nor shall any single or partial  exercise of any
right,  power or remedy preclude any further or other exercise  thereof,  or the
exercise  of any other  right,  power or remedy.  Except as  expressly  provided
herein,  no waiver of any of the  provisions  of this  Agreement  shall be valid
unless it is in  writing  and  signed by the Party  against  whom the  waiver is
sought to be enforced.

                  10.4     Assignment. This Agreement (and all rights hereunder)
shall be binding on and inure to the  benefit  of the  Parties  hereto and their
successors and assigns.

                  10.5  Notices.  Any and all  notices  or other  communications
required  or  permitted  under  this  Agreement  shall be given in  writing  and
delivered  in Person or sent by United  States  certified  or  registered  mail,
postage prepaid,  return receipt requested,  or by overnight express mail, or by
telex,  facsimile or telecopy to the address of such party set forth below.  Any
such notice  shall be  effective  upon receipt or three days after placed in the
mail, whichever is earlier.

                                       53
<PAGE>
                 If to Coyote:

                          Coyote Network Systems, Inc.
                          4360 Park Terrace Drive
                          Westlake Village, CA 91316
                          Attention: Timothy G. Atkinson, General Counsel
                          Facsimile No.:

                 With copies to:

                          Morrison & Foerster, LLP
                          370 17th Street, Suite 5200
                          Denver, CO 80202
                          Attention :  Warren L. Troupe, Esq.
                          Facsimile No. : (303) 592-1510

                 If to the Company, Conrad or Employee:

                          Primary Knowledge, Inc.
                          c/o Jerry Conrad
                          9500 Toledo Way
                          Irvine, California 92618-1806

                 With copies to:

                          Cassady & Klein
                          908 Kenfield Avenue
                          Los Angeles, CA 90049
                          Attention :  Raymond M. Klein, Esq.
                          Facsimile No. : (310) 471-3006

                          And:

                          DQE Enterprises, Inc.
                          One Northshore Center
                          Suite 100
                          12 Federal Street
                          Pittsburgh, PA 15212
                          Attention: President
                          Facsimile No.:  (412) 231-2140

                                       54
<PAGE>
                 If to  Enterprises,  to the address set forth  above,
                 with a copy to:

                          Kirkpatrick and Lockhart LLP
                          1500 Oliver Building
                          Pittsburgh, PA 15222
                          Attention :  David J. Lehman, Esq.
                          Facsimile No.:  (412) 355-6501.

                           Any Party  may,  by notice so  delivered,  change its
address for notice purposes hereunder.

                  10.6 Further  Assurances.  After the Closing each Party hereto
at the  reasonable  request of the other  Party  hereto and  without  additional
consideration,  shall  execute and  deliver,  or shall cause to be executed  and
delivered,  from  time  to  time,  such  further  certificates,   agreements  or
instruments of conveyance and transfer,  assumption, release and acquittance and
shall take such other action as the other Party hereto may  reasonably  request,
to consummate or implement the transactions contemplated by this Agreement.

                  10.7  Severability.  If any  provision  of this  Agreement  is
invalid, illegal or unenforceable, the balance of this Agreement shall remain in
full force and effect and this  Agreement  shall be construed in all respects as
if such  invalid,  illegal  or  unenforceable  provision  were  omitted.  If any
provision is inapplicable to any Person or circumstance, it shall, nevertheless,
remain applicable to all other Persons and circumstances.

                  10.8  Counterparts.  This  Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and which together
shall constitute but one and the same instrument.

                  10.9 Construction.  Any section headings in this Agreement are
for  convenience  of  reference  only,  and  shall  be given  no  effect  in the
construction or interpretation of this Agreement or any provisions  thereof.  No
provision of this Agreement  will be  interpreted  in favor of, or against,  any
Party  by  reason  of the  extent  to  which  any  such  Party  or  its  counsel
participated  in the doing  thereof or by reason of the extent to which any such
provision is inconsistent with any prior draft hereof or thereof.

                  10.10  Entire  Agreement;   Amendment.   This  Agreement,  the
exhibits  hereto,  each of which is  deemed to be a part  hereof,  and any other
agreements,  instruments or documents  executed and delivered by the Parties (or
their Subsidiaries) pursuant to the express terms of this Agreement,  constitute
the entire agreement and understanding between the Parties, and it is understood
and agreed that all previous  undertakings,  negotiations and agreements between
the Parties  regarding the subject  matter hereof are merged  herein;  provided,
however, that the confidentiality agreement entered into between the Company and
Coyote  shall  remain  in full  force  and  effect.  Without  limitation  of the
foregoing,  the Letter of Intent  dated April 3, 2000,  as amended by the letter
agreement  dated April 27, 2000,  is hereby  terminated  of no further  force or
effect.  This Agreement may not be modified orally,  but only by an agreement in
writing signed by each of the Parties.


                                       55
<PAGE>
                  10.11 No Third Party Beneficiaries.  Nothing in this Agreement
shall  provide  any benefit to any third party or entitle any third party to any
claim, cause of action,  remedy or right of any kind, it being the intent of the
Parties that this Agreement shall not be construed as a third party  beneficiary
contract.

                  10.12  Public  Announcements.  Coyote  and the  Company  shall
consult  with each other  before  issuing any press  release with respect to the
Merger or this  Agreement and shall not issue any such press release or make any
such public  statement  until the content thereof has been approved by the other
party,  which approval shall not be unreasonably  withheld;  provided,  however,
that a party may, without the prior consent of the other party, issue such press
release  or make such  public  statement  as may upon the  advice of  counsel be
required by law or the Nasdaq National Market if it has used reasonable  efforts
to consult with the other party.  Each of Coyote and the Company  shall make all
necessary  filings with  Governmental  Authority and shall promptly  provide the
other  party with copies of filings  made by such party  between the date hereof
and the Effective Time.








                                       56
<PAGE>
                  IN  WITNESS  WHEREOF,  the  Parties  have  duly  executed  and
delivered this Agreement on the date first written above.

                                           COYOTE NETWORK SYSTEMS, INC.


                                           By /s/James R. McCullough
                                              --------------------------
                                              James R. McCullough
                                              Chief Executive Officer


                                           PRIMARY KNOWLEDGE, INC.


                                           By /s/Jerry Conrad
                                              --------------------------
                                              Jerry Conrad
                                              President


                                           DQE ENTERPRISES, INC.


                                           By /s/Thomas A. Hurkmans
                                              --------------------------
                                              Thomas A. Hurkmans
                                              President

                                           EMPLOYEE

                                              /s/Jerry Conrad
                                              --------------------------
                                              Jerry Conrad

                                           CONRAD

                                              /s/Barbara Conrad
                                              --------------------------
                                              Barbara Conrad


<PAGE>
                                JOINDER AGREEMENT

         For valuable  consideration,  the receipt and  sufficiency of which are
hereby  acknowledged,  and intending to be legally bound, the undersigned hereby
joins in the  Agreement  and Plan of Merger (the "Merger  Agreement")  dated May
___, 2000 among Coyote  Network  Systems,  Inc.,  Primary  Knowledge,  Inc., DQE
Enterprises,  Inc.,  Barbara  Conrad  and  Jerry  Conrad to which  this  Joinder
Agreement  is  attached  solely for the  purpose of  agreeing to be bound by the
provisions  of Section  6.6 of said  Merger  Agreement.  By signing  below,  the
undersigned  agrees that it will execute and deliver the Voting Agreement at the
Closing.

         Capitalized  terms  used  but not  defined  herein  have  the  meanings
ascribed to them in the Merger Agreement.

         The undersigned intends to be legally bound hereby.

                                    [                   ]

                                    ---------------------------------------



Dated:  May ___, 2000


</TEXT>
</DOCUMENT>
