COYOTE NETWORK SYSTEMS INC
FIRST AMENDMENT
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>FIRST AMENDMENT
<TEXT>

                                 EXHIBIT 10.2

                               FIRST AMENDMENT TO

                          AGREEMENT AND PLAN OF MERGER

     THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this  "Amendment") is
entered  into as of this  26th  day of May,  2000 by and  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").

                                   WITNESSETH:

         WHEREAS, Coyote, the Company, Enterprises,  Conrad and Employee entered
into that  certain  Agreement  and Plan of Merger  dated as of May 10, 2000 (the
"Merger Agreement"); and

         WHEREAS,   the  parties  desire  to  amend  the  Merger   Agreement  as
hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual  agreements  and  covenants  contained  herein,  and for  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  and intending to be legally  bound  hereby,  the parties agree as
follows:

1.  Incorporation  of  Recitals;  Definitions.  The recitals set forth above are
incorporated  herein by reference  and are made a part hereof to the same extent
as if such  recitals  were set  forth  herein.  Capitalized  terms  used but not
defined herein shall have the meanings ascribed to them in the Merger Agreement.

2.       Consideration.

     (a) Section  2.7(b) of the Merger  Agreement is hereby amended by replacing
the amount "$28,350,000" by "$31,893,750.00."

     (b) Section  2.7(c) of the Merger  Agreement is hereby amended by replacing
the number "1,230,380" by "1,384,178."

     (c)  Section  2.8(c)(iii)  of the Merger  Agreement  is hereby  amended and
restated in its entirety to read as follows:

     to Employee, Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) in
     accordance with the terms of the Personal Services Agreement.

     (d) Section 6.12(f) of the Merger  Agreement is hereby amended by replacing
the number "3,200,000" by the number "3,600,000".

     (e) The amount of the Loan pursuant to the Personal  Services  Agreement is
hereby increased from $2,000,000 to $2,250,000.

<PAGE>
3.       Operations Pending Closing.  The first paragraph of Section 6.1 of the
Merger  Agreement  is hereby  amended and  restated  in its  entirety to read as
follows:

                  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
          and take into  account  the desire of the  Parties  to  operate  their
          business  independently  if  the  transaction   contemplated  by  this
          Agreement is not consummated:

4.       Options/Warrants.  Section 5.2 of the Merger Agreement is hereby
amended by adding the  following  sentences  after the last  sentence of Section
5.2:

          "Coyote has delivered to the Company and Shareholders a list, which is
          true, correct and complete in all material respects, of each holder of
          any  option,  warrant or other  right to acquire  any shares of Coyote
          Common Stock (or any security  convertible  into or  exchangeable  for
          Coyote Common Stock),  and sets forth with respect to each such holder
          the number of shares of Coyote Common Stock (or securities convertible
          into or exchangeable for Coyote Common Stock)  underlying each option,
          warrant or other right held by that holder, the exercise or conversion
          price of each  such  option,  warrant  or other  right and the date of
          grant or issuance of each such option,  warrant or other right; except
          as set  forth  on such  list,  or as  otherwise  contemplated  by this
          Agreement,  no option, warrant or other right to acquire any shares of
          Coyote Common Stock (or any security  convertible into or exchangeable
          for  Coyote  Common  Stock)  is  issued  and  outstanding  or has been
          authorized for issuance as of the date of this Agreement."

5.       Enterprises Investment. Section 6.11 of the Merger Agreement is hereby
amended by adding the  following  sentence  after the last  sentence  of Section
6.11:

          "Such purchase of securities  may be in the form of a single  purchase
          or multiple  purchases,  and any such purchase or purchases made prior
          to the Closing Date shall be  aggregated  for purposes of  calculating
          the Seven Million Dollar  ($7,000,000)  purchase price provided for in
          this  Section;   provided,   however,  that  in  no  event  shall  the
          purchase(s)  of  securities  prior to the  Closing  exceed Two Million
          Dollars  ($2,000,000)  without  the prior  written  consent of Coyote,
          which consent shall not be unreasonably withheld."

<PAGE>
6.       Associate Transactions.

     (a) The Merger  Agreement is hereby  amended by adding the following to the
Merger Agreement as Section 6.14:

                  "6.14 Transactions with Associates. Prior to the Closing, and,
          except as otherwise  provided in this Section 6.14,  Coyote shall not,
          without the prior written consent of the  Shareholders,  which consent
          may be withheld in each Shareholder's  sole discretion,  enter into or
          modify any Contract or engage in any transaction with any Associate of
          Coyote.  Notwithstanding the foregoing, (i) Coyote may compensate KRJ,
          LLC  pursuant  to the  last  two  sentences  of  Section  3(b)  of the
          Consulting  Agreement  between  Coyote and KRJ, LLC, dated January 26,
          2000 and James R. McCullough pursuant to Section 3.3 of the Employment
          Agreement  between Coyote and James R.  McCullough,  dated January 26,
          2000,  provided that the  consideration  paid to KRJ, LLC and James R.
          McCullough  pursuant to such provisions shall not exceed that which is
          set forth in Schedule  6.14 and (ii) 500,000  Coyote  options at $7.00
          per share and 500,000 restricted shares of Common Stock for directors,
          officers  or  key  employees   (other  than  James  R.  McCullough  or
          principals  of KRJ,  LLC) as  directed  by the Board of  Directors  of
          Coyote."

     (b) A new  Schedule  6.14 is hereby  added to the Merger  Agreement  as set
forth in Schedule 6.14 attached to this Amendment.

7.       Lock-up.  The Merger Agreement is hereby amended by adding the
following to the Merger Agreement as Section 6.15:

                   "6.15 Lock-Up Agreement. From and after the date hereof until
          the  first  anniversary  of the  Closing  Date,  none of (i)  James R.
          McCullough,  (ii)  KRJ,  LLC or  (iii)  First  Venture  Leasing  shall
          directly or indirectly sell, dispose of, encumber, pledge, hypothecate
          or otherwise  transfer  any shares of the capital  stock of Coyote (or
          any  securities  convertible  into or  exchangeable  for shares of the
          capital stock of Coyote);  except in  connection  with (A) the sale or
          merger  of  Coyote  in a single  transaction  or a series  of  related
          transactions  (excluding the transaction  contemplated at the Closing)
          or (B) a tender offer pursuant to Regulation 13D-G,  Regulation 14D or
          Regulation 14E of the Exchange Act."

8.       Amendment to Section 7.1 of the Merger Agreement.  Section 7.1 of the
Merger  Agreement is hereby  amended by adding the following  clause (i) to such
Section 7.1:

                  "(i)     Resignation of Chief Executive Officer.  James R.
McCullough shall have resigned as the Chief Executive Officer of Coyote."


9.       Amendment to Section 10.12 of the Merger Agreement.  Section 10.12 of
the Merger  Agreement is hereby  amended by adding the following  sentence after
the last sentence of Section 10.12:

<PAGE>
          "Notwithstanding  the foregoing,  no Party shall (and each Party shall
          cause its Affiliates and Associates to not) issue any press release or
          make any public  statement  that directly or indirectly  refers to (i)
          any  other  Party  or any of its  respective  Affiliates  (by  name or
          otherwise)  without the prior  written  consent of such second  Party,
          which  consent may be withheld in the sole  discretion  of such second
          Party or (ii) the  Company  (by name or  otherwise)  without the prior
          written consent of the Shareholders,  which consent may be withheld in
          the sole discretion of each  Shareholder;  provided,  however,  that a
          Party may,  without the prior written consent  required  above,  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."

10.      Amendment to Article I of the Merger Agreement. Article I of the Merger
Agreement is hereby amended by adding the following new definition:

          "Agreement"  shall mean this Agreement and Plan of Merger among Coyote
     Network Systems,  Inc.,  Primary  Knowledge,  Inc., DQE Enterprises,  Inc.,
     Barbara Conrad and Jerry Conrad,  (including  the Disclosure  Schedules and
     all Exhibits) as it may be amended from time to time.

11.      Miscellaneous.

         (a) Except as  expressly  amended or  modified by this  Amendment,  the
terms and  conditions  of the Merger  Agreement  shall  remain in full force and
effect.

         (b) This Amendment may be executed in one or more counterparts, each of
which shall constitute an original but all of which shall constitute one and the
same instrument.

         (c) This Amendment may be amended only by a writing signed by all of
the parties hereto.

         (d) Coyote hereby  reaffirms the  representations  set forth in Section
5.7 of the Merger Agreement,  as it relates to the Merger Agreement,  as amended
by this Amendment, and the transactions contemplated thereby and hereby.

                               [signature page follows]

<PAGE>

         IN WITNESS WHEREOF,  the undersigned have executed this Amendment as of
the date first above written.

                                  COYOTE NETWORK SYSTEMS, INC.

                                  By: /s/ James R. McCullough
                                      ---------------------------
                                      Name:  James R. McCullough
                                      Title: 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>
                                  Schedule 6.14

         1. Leave the balance of Mr.  McCullough's  options on the same  vesting
schedule and strike price,  and granting  750,000  additional  options,  with an
exercise  price of $7.00 per share and which shall vest as follows:  (A) 250,000
options shall vest once Coyote's common stock trades at a closing sales price of
$12.00 for 20  consecutive  trading  days,  (B) 250,000  options shall vest once
Coyote's  common  stock  trades  at a  closing  sales  price  of  $16.00  for 20
consecutive  trading  days,  and (C) 250,000  options  shall vest once  Coyote's
common stock trades at a closing sales price of $20 for 20  consecutive  trading
days, or (D)  immediately on resignation for cause or  change-of-control  at the
shareholder  level.  His  resignation at the time of Closing would not eliminate
the options nor accelerate the vesting.

         2.  Award  1,500,000  additional  shares  to KRJ on  the  same  vesting
schedule as Mr.  McCullough  (except  resignation  for cause);  award  1,000,000
additional  shares to KRJ that shall vest once Coyote's common stock trades at a
closing  sales  price of  $30.00  for 20  consecutive  trading  days;  and grant
2,400,000  common stock  purchase  warrants with an exercise  price of $7.00 per
share,  vesting  in  tranches  of  800,000,  again on the same  schedule  as Mr.
McCullough;  all shares would be unregistered  and there would be no accelerated
vesting of earlier grants.


<PAGE>

                                     JOINDER

         James R. McCullough,  for good and valuable consideration,  the receipt
and sufficiency of which are hereby acknowledged, intending to be legally bound,
hereby joins (i) the Agreement and Plan of Merger dated as of May 10, 2000 among
Coyote Network Systems, Inc., HomeAccess MicroWeb, Inc., DQE Enterprises,  Inc.,
Jerry  Conrad  and  Barbara  Conrad and (ii) the First  Amendment  to the Merger
Agreement  to  which  this  Joinder  is  attached  (collectively,   the  "Merger
Agreement").  By signing below, the undersigned hereby agrees to (a) be bound by
Section 6.6 of the Merger  Agreement,  (b)  acknowledges and consents to Section
6.15 of the Merger Agreement and (c) 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.


                                                -------------------------------
                                                James R. McCullough
                                                Date:  May    , 2000


<PAGE>

                                     JOINDER

         KRJ,  LLC,  for  good  and  valuable  consideration,  the  receipt  and
sufficiency  of which are hereby  acknowledged,  intending to be legally  bound,
hereby joins (i) the Agreement and Plan of Merger dated as of May 10, 2000 among
Coyote Network Systems, Inc., HomeAccess MicroWeb, Inc., DQE Enterprises,  Inc.,
Jerry  Conrad  and  Barbara  Conrad and (ii) the First  Amendment  to the Merger
Agreement  to  which  this  Joinder  is  attached  (collectively,   the  "Merger
Agreement").  By signing below, the undersigned hereby agrees to (a) be bound by
the  provisions  of Section 6.6 and  Section  6.15 of the Merger  Agreement,  as
amended, and (b) 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, as amended.

                                                KRJ, LLC


                                                -------------------------------
                                                By:
                                                        -----------------------
                                                Name:
                                                        -----------------------
                                                Date:   May    , 2000



<PAGE>


                                     JOINDER

         First Venture Leasing, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, intending to be legally bound,
hereby joins (i) the Agreement and Plan of Merger dated as of May 10, 2000 among
Coyote Network Systems, Inc., HomeAccess MicroWeb, Inc., DQE Enterprises,  Inc.,
Jerry  Conrad  and  Barbara  Conrad and (ii) the First  Amendment  to the Merger
Agreement  to  which  this  Joinder  is  attached  (collectively,   the  "Merger
Agreement").  By signing below, the undersigned hereby agrees to (a) be bound by
the  provisions  of Section 6.6 and  Section  6.15 of the Merger  Agreement,  as
amended, and (b) 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, as amended.


                                                First Venture Leasing


                                                -------------------------------
                                                By:
                                                        -----------------------
                                                Name:
                                                        -----------------------
                                                Date:   May    , 2000


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</DOCUMENT>
