COYOTE NETWORK SYSTEMS INC
8-K, 2000-02-04
TELEPHONE & TELEGRAPH APPARATUS
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                     the Securities and Exchange Act of 1934


                Date of Report (Date of Earliest Event Reported):
                                January 25, 2000



                          COYOTE NETWORK SYSTEMS, INC.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


        Delaware                       1-5486                   36-2448698
- ----------------------------    -----------------------      -------------------
(State or other jurisdiction    (Commission File Number)      (IRS Employer
      of incorporation)                                      Identification No.)



               4360 Park Terrace Drive Westlake Village, CA 91361
               --------------------------------------------------
                     Address of principal executive offices


                                  (818) 735-7600
                         ------------------------------
                         Registrant's Telephone Number,
                               Including area code

================================================================================
<PAGE>


Item 5.   Other Events

     On January 26, 2000, we appointed James R. McCullough as our Chief
Executive Officer to succeed James J. Fiedler. Mr. Fiedler will continue as
Chairman. Mr. McCullough also became a member of the Board of Directors on
February 2, 2000. We entered into a three-year Employment Contract with Mr.
McCullough pursuant to which he will receive a salary of $160,000 per annum and
options to purchase up to 750,000 shares of common stock at $5.00 per share,
vesting over three years, subject to acceleration if certain common stock price
targets are met and sustained.

     Mr. McCullough's principal occupation prior to joining us was as a
co-president of Renwick Corporate Finance, Inc., a consulting company from 1996
to the present. From 1994 to 1997, Mr. McCullough was the general partner of an
investment fund focusing on early stage technology companies.

     On January 25, 2000, we entered into a Financial Services Agreement
with First Venture Leasing LLC ("First Venture"), pursuant to which an LLC was
formed by First Venture to offer certain leasing and credit packages to our
customers. First Venture is an entity in which Mr. McCullough had a 25%
interest, which he relinquished effective upon his becoming a director of the
Company on February 2, 2000. The terms of our agreement with First Venture were
the result of arms' length negotiation in which Mr. McCullough did not
participate. The Agreement with First Venture was approved by our Board of
Directors.

     On January 26, 2000, we also entered into a Remarketing Agreement and two
separate License Agreements with the LLC formed by First Venture, pursuant to
which such LLC shall act as our agent in remarketing equipment leased to third
parties upon the termination of such leases and shall have the right to use
certain trademarks, service marks, trade names and other designations in
connection with the services to be provided by the LLC.

     On January 26, 2000, we also entered into a Consulting Agreement with KRJ,
LLC ("KRJ"). Pursuant to the Consulting Agreement, KRJ provided assistance in
identifying strategic partners and business opportunities, making introductions
to IP Telephony customers, introducing new management, restructuring vendor
finance programs, investor relations, and identifying credit facilities. We
issued to KRJ 2,000,000 shares of unregistered common stock, with no
registration rights. Of such shares, 1,250,000 will be held in escrow to be
released to KRJ in three equal annual installments, subject to acceleration if
certain common stock price targets are met and sustained. In addition, unless
there is a Change of Control of the Company (as defined in the Consulting
Agreement), KRJ has agreed not to sell, pledge, hypothecate or otherwise
transfer any of the 2,000,000 shares for a period 12 months after the respective
dates of delivery of any of such shares. Mr. McCullough has an approximately
one-third interest in KRJ and the balance of KRJ is owned by affiliates of First
Venture. The Consulting Agreement also provides that over the next three years,
KRJ will provide assistance in further identification of additional business
opportunities both in the domestic and international markets. Compensation for
these additional services will be specifically negotiated at a future date. The
Consulting Agreement has been approved by our Board of Directors and the terms
of our agreement with KRJ were the result of arms' length negotiation in which
Mr. McCullough did not participate. In connection with the issuance of the
2,000,000 shares to KRJ, we anticipate recording a one-time, non-cash charge to
earnings of approximately $10 million in the fourth quarter of Fiscal 2000.


<PAGE>


Item 7.   Financials Statements and Exhibits

(c)       Exhibits

10.1      Employment Agreement by and between Coyote Network Systems, Inc. and
          James R. McCullough.

10.2      Consulting Agreement by and between Coyote Network Systems, Inc. and
          KRJ, LLC.

10.3      Financial Services Agreement by and among Coyote Network Systems,
          Inc., Coyote Technologies, LLC, First Venture Leasing, LLC and Coyote
          Leasing, LLC.

10.4      Master Remarketing Agreement by and among Coyote Network Systems,
          Inc., Coyote Technologies, LLC and Coyote Leasing, LLC

10.5      Coyote Technologies License Agreement by and between Coyote
          Technologies, LLC and Coyote Leasing, LLC.

10.6      Coyote License Agreement by and between Coyote Network Systems, Inc.
          and Coyote Leasing, LLC.


<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Dated:  February 4, 2000           COYOTE NETWORK SYSTEMS, INC.


                                   By:   /s/ Brian A. Robson
                                         -------------------------------------
                                         Brian A. Robson
                                         Executive Vice President,
                                         Chief Financial Officer and Secretary




<PAGE>


                                Index to Exhibits

Exhibit No.           Description

10.1      Employment Agreement by and between Coyote Network Systems, Inc. and
          James R. McCullough.

10.2      Consulting Agreement by and between Coyote Network Systems, Inc. and
          KRJ, LLC.

10.3      Financial Services Agreement by and among Coyote Network Systems,
          Inc., Coyote Technologies, LLC, First Venture Leasing, LLC and Coyote
          Leasing, LLC.

10.4      Master Remarketing Agreement by and among Coyote Network Systems,
          Inc., Coyote Technologies, LLC and Coyote Leasing, LLC

10.5      Coyote Technologies License Agreement by and between Coyote
          Technologies, LLC and Coyote Leasing, LLC.

10.6      Coyote License Agreement by and between Coyote Network Systems, Inc.
          and Coyote Leasing, LLC.




                              EMPLOYMENT AGREEMENT


THIS AGREEMENT, made as of this 26th day of January, 2000, is by and between
COYOTE NETWORK SYSTEMS, INC., a Delaware corporation (the "Company"), and JAMES
R. McCULLOUGH (the "Employee").

                                    RECITALS

WHEREAS, the Employee is willing to be employed by the Company upon the terms
and conditions set forth in this Agreement.

NOW, THEREFORE, in order to set forth the terms and conditions of the Employee's
employment with the Company and in consideration of the covenants and agreements
of the parties herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.   EMPLOYMENT SERVICES

     Subject to the terms and conditions hereinafter set forth, the Company
     hereby employees the Employee as Chief Executive Officer commencing on
     January 14, 2000 and ending on the last day of the Term (as defined below).
     The Employee accepts such employment and agrees to perform all duties in a
     conscientious, reasonable and competent manner and to devote his reasonable
     best efforts to perform his duties pursuant to this Agreement and to
     further the business of the Company, as directed by the Board of Directors.
     Without further action of the Company, the Employee may engage in other
     business, consulting, financial and other activities during the employment
     hereunder subject to fulfilling his duties hereunder. The Employee has
     disclosed in Schedule 1 attached hereto the names of his other business
     affiliations as of the date hereof and agrees to promptly notify the
     Company of any additional affiliations.

2.   TERM AND TERMINATION

     2.1  TERM

     Subject to section 2.2 hereof, the employment of the Employee under this
     Agreement will commence on January 14, 2000 (the "Effective Date") and
     continue until the occurrence of the first of the following (the
     "Termination Date"):

          (a)  January 14, 2003 (i.e., a term of three years);

                                       1
<PAGE>

          (b)  The Employee's death; or

          (c)  The Employee's illness, physical or mental disability or other
               incapacity resulting in the Employee's inability to effectively
               perform his duties under this Agreement for an aggregate of
               thirty (30) days during any period of six (6) consecutive months.

               The period beginning on the Effective Date and ending on the
               Termination Date is referred to herein as the "Term."

     2.2  TERMINATION

          The Employee may be terminated prior to the expiration of the Term
          with or without "Cause" at the sole discretion of the Board of
          Directors. "Cause" shall include any of the following occurrences:

          (a)  The Employee's conduct involving fraud or moral turpitude or the
               Employee's dishonesty involving the Company's business;

          (b)  The Employee's chronic absence from work other than by reason of
               illness, injury, vacation or business- related travel, which
               continues after the Employee has received a written notice from
               the Company to halt such chronic absence;

          (c)  Conviction of any felony;

          (d)  The Employee's conviction of any misdemeanor which is
               substantially related to the Employee's services hereunder;

          (e)  The Employee's abuse of alcohol (whether or not on the job) after
               receiving a written notice from the Company to halt such usage or
               the Employee's conviction of a crime involving alcohol;

          (f)  The Employee's use of illegal drugs or other illegal substance
               (whether or not on the job) after receiving a written notice from
               the Company to halt such usage or the Employee's conviction of a
               crime involving illegal drugs or other illegal substance, which
               impairs the Employee's ability to perform his duties under this
               Agreement or has an adverse effect (other than an insignificant
               effect) on the Company, its business or its relationship with any
               customer or supplier of the Company;

                                       2
<PAGE>

          (g)  Conduct either within or outside the scope of the Employee's
               employment which has an adverse effect (other than an
               insignificant effect) on the Company, its business or its
               relationship with any customer or supplier of the Company;

          (h)  A breach by the Employee of his obligations under sections 7, 8
               or 9 hereof; and

          (i)  A material breach of any other provision of this Agreement by the
               Employee, following written notice and failure to cure within a
               reasonable time (which cure period shall be no less than five
               days after Employee's receipt of such notice).

          The Employee may resign and terminate this Agreement on five days
          prior written notice to the Company for no reason or any reason
          ("Voluntary Termination"). In addition, the Employee may terminate
          this Agreement if the Company has materially breached any provision of
          this Agreement and the Company has not cured such breach within a
          reasonable time (but no less than five days) after receipt of written
          notice of such breach ("Termination for Good Cause").

     2.3  EFFECT OF TERMINATION

          If the Employee is terminated for "Cause" as defined above, or the
          Employee effects a Voluntary Termination, then this Agreement shall
          terminate and the Employee shall not be entitled to any unearned
          compensation or benefits under this Agreement as of the date of
          termination and any unvested options as of the date of termination
          granted pursuant to section 3.2 shall be void and cancelled. If the
          Employee is terminated without "Cause" as defined above, or the
          Employee effects a Termination for Good Cause, then this Agreement
          shall terminate and the Employee shall nevertheless be entitled to six
          months of semi-monthly salary installments as set forth in section 3.1
          and the stock options and vesting schedule of section 3.2 shall remain
          in effect. The Employee's obligations in sections 6, 7, 8, 9 and 10
          hereof shall survive the termination of employment hereunder for any
          reason.

                                       3
<PAGE>

     3. COMPENSATION

     3.1 SALARY

          The Company agrees to pay the Employee for each full fiscal year of
          the term of this Agreement an annual salary, payable in 24 equal
          semi-monthly payments, at a rate equal to $160,000 per year.

     3.2  STOCK OPTIONS

          The Employee shall be entitled to receive five-year stock options of
          the Company for 750,000 shares of the Company's common stock at an
          exercise price of $5.00/share (the "Options"), with vesting as set
          forth below:

          Number of Options/Shares Vesting

           300,000  Immediate

           100,000  January 14, 2001, provided, however, such vesting shall
                    be accelerated if the closing price of the Company's common
                    stock on the Nasdaq National Market is equal to or greater
                    than $8.00/share for 20 consecutive trading days

           150,000  January 14, 2002, provided, however, such vesting shall
                    be accelerated if the closing price of the Company's common
                    stock on the Nasdaq National Market is equal to or greater
                    than $12.00/share for 20 consecutive trading days

           200,000  January 14, 2003, provided, however, such vesting shall
                    be accelerated if the closing price of the Company's common
                    stock on the Nasdaq National Market is equal to or greater
                    than $16.00/share for 20 consecutive trading days

          All Options must be exercised on or before the earlier of (i) January
          14, 2006 or (ii) the date which is three (3) years after termination
          of the Employee's employment with the Company for any reason.


                                       4
<PAGE>

          Notwithstanding the foregoing, all stock options granted to the
          Employee above shall immediately vest in the event of any transaction
          in which substantially all of the assets of the Company are acquired
          or 50% or more of the issued and outstanding common stock of the
          Company is acquired by a single person, entity or group of such
          persons or entities.

          The Employee hereby acknowledges that the stock options set forth
          above and the shares underlying such stock options have not been
          registered or qualified for sale under the Securities Act of 1933, as
          amended (the "Act"), or any state securities law and may not be sold,
          hypothecated, pledged, assigned or otherwise transferred, nor will any
          assignee, vendee or other transferee be recognized as having an
          interest in such stock options or shares of stock, unless a
          registration statement under the Act and any applicable state
          securities laws is then in effect with respect to such stock options
          or shares of stock or the availability of an exemption from such
          registration is established to the satisfaction of the Company.

          The Employee further acknowledges that the Company must amend its
          Certificate of Incorporation (the "Charter Amendment") to authorize
          the shares underlying such Options to permit the Employee to exercise
          any such Options. The Company will use all commercially reasonable
          efforts to obtain the approval of its stockholders and take such other
          actions as are necessary to effect the Charter Amendment. Subject to
          the effectiveness of the Charter Amendment, the Company shall at all
          times prior to by which all such options must be exercised reserve and
          keep available, solely for issuance and delivery upon the exercise of
          such Options, a number of authorized shares of common stock equal to
          the number of shares of common stock which may be purchased upon
          exercise of such Options.

     3.3  ADJUSTMENT

          The Company and the Employee hereby agree that at the earlier of six
          (6) months from the date hereof or upon vesting of all of the options
          set forth in section 3.2 above, the Employee will meet with the Audit
          Committee of the Board of Directors for the purpose of increasing or
          adjusting the Employee's compensation hereunder. The focus of such
          meeting shall be an assessment of the granting of additional stock
          options and salary to the Employee.

                                       5
<PAGE>

     3.4  ACKNOWLEDGEMENT

          The Company acknowledges (i) that the Options being granted hereunder
          are granted to the Employee in his individual capacity and not in
          payment of the Employee providing any finder, broker, dealer,
          placement agent or other investment banking or advisory services and
          (ii) the Options as awarded and vested are in no way dependent on the
          Employee introducing or causing any particular person or entity to
          invest in the Company or effect any given transaction with the
          Company.

     4.   REIMBURSEMENT FOR EXPENSES

          The Company agrees to reimburse the Employee for all reasonable
          business expenses incurred by him in connection with the performance
          of his obligations under this Agreement, subject to established
          reimbursement policies of the Company in effect from time-to-time
          regarding expense reimbursement, including, without limitation,
          reasonable travel, entertainment, cell phone, long distance charges
          and other customary expenses the Employee incurs in the performance of
          his duties hereunder, and to further reimburse the Employee for any
          reasonable legal or accounting fees incurred by Employee in connection
          with his entry into this Agreement or the performance of his duties up
          through the date hereof.

     5.   BENEFITS

          The Employee shall be entitled to the following benefits during the
          term of his employment under this Agreement, and shall be offered any
          additional benefits typically offered or provided any other executive
          officers of the Company.

     5.1  VACATION

          The Employee shall be allowed three (3) weeks of vacation per year
          during the term of this Agreement, with full pay and without loss of
          any other compensation of benefits, in accordance with established
          Company policies. The Employee shall coordinate the schedule of his
          vacations with other executives and the personnel of the Company at
          its affiliates so as to provide sufficient managerial and executive
          coverage for the Company's operations.

                                       6
<PAGE>

     5.2  MOVING ALLOWANCE

          The Employee shall be entitled to reimbursement from the Company in an
          aggregate amount of $20,000 for expenses relating to his initial
          relocation to the Company's headquarters.

     5.3  OTHER BENEFITS

          The Employee may receive such other benefits, if any, as the Board of
          Directors may from time-to-time make available to the Employee in the
          Board of Directors' sole discretion; provided, however, the Employee
          shall be eligible for any benefits offered to any other member of the
          Company's senior executive team on terms no less favorable that those
          offered to other members of the senior executive team.

     5.4  PAYMENTS

          All cash payments due to the Employee hereunder shall be paid promptly
          (no later than two business days after the due date) in immediately
          available funds to the account specified by the Employee or by check
          made payable to the order of the Employee.

     6.   DEFINITIONS

          (a)  As used in this Agreement, the following words have the meanings
               specified:

          (b)  "Proprietary Ideas" means ideas, suggestions, inventions and work
               relating in any way to the business and activities of the Company
               which may be subjects of protection under applicable laws,
               including common law, respective patents, copyrights, trade
               secrets, trademarks, service marks or other intellectual property
               rights.

          (c)  "Invention" means inventions, designs, discoveries, improvements
               and ideas, whether or not patentable, including without
               limitation, upon the generality of the foregoing, novel or
               improved products, processes, machines, software, promotional and
               advertising materials, business data processing programs and
               systems, and other manufacturing and sales techniques, which
               either (a) relate to (i) the business of the Company as conducted
               from time-to-time or (ii) the Company's actual or demonstrably


                                       7
<PAGE>

               anticipated research or development, or (b) result from any work
               performed by the Employee for the Company.

          (d)  "Confidential Information" means Proprietary Ideas and also
               information related to the Company's business, whether or not in
               written or printed form, not generally known in the trade or
               industry of which the Employee has or will become informed during
               the period of employment by the Company, which may include but is
               not limited to product specifications, manufacturing procedures,
               methods, equipment, compositions, technology, formulas, trade
               secrets, know-how, research and development programs, sales
               methods, customer lists, mailing lists, customer usage and
               requirements, software and other confidential technical or
               business information and data; provided, however, that
               Confidential Information shall not include any information which
               is in the public domain by means other than disclosure by the
               Employee or which the Employee must disclose by operation of law
               or legal or administrative process.

          (e)  As used in sections 7, 8, 9 and 10 only, the term "the Company"
               shall include all entities affiliated with the Company.

     7.   DISCLOSURE AND ASSIGNMENT OF INVENTIONS

          The Employee agrees to disclose to the Company, and hereby assigns to
          the Company all of the Employee's rights in and, if requested to do
          so, provide a written description of, any Inventions conceived or
          reduced to practice at any time during the Employee's employment by
          the Company, either solely or jointly with others and whether or not
          developed on the Employee's own time or with the Company's resources.
          The Employee agrees that Inventions first reduced to practice within
          one (1) year after termination of the Employee's employment by the
          Company shall be treated as if conceived during such employment unless
          the Employee can establish specific events giving rise to the
          conception which occurred after such employment. Further, the Employee
          disclaims and will not assert any rights in Inventions as having been
          made, conceived or acquired prior to employment by the Company except
          such as are specifically listed at the conclusion of this Agreement.
          The Employee shall cooperate with the Company and shall execute and
          deliver such documents and do such other acts and things as the
          Company may request, at the Company's expense, to obtain and maintain
          letters patent or registrations covering any Inventions and to vest in


                                       8
<PAGE>

          the Company all rights therein free of all encumbrances and adverse
          claims.

     8.   CONFIDENTIAL INFORMATION

          The Employee shall not disclose to the Company or induce the Company
          to use any secret or confidential information belonging to persons not
          affiliated with the Company, including any former employer of the
          Employee. In addition to all duties of loyalty imposed on the Employee
          by law, the Employee shall maintain Confidential Information in strict
          confidence and secrecy and shall not at any time, during or at any
          time after termination of employment with the Company, directly or
          indirectly, use or disclose to others any Confidential Information, or
          use it for the benefit of any person or entity (including the
          Employee) other than the Company, without the prior written consent of
          any authorized officer of the Company (except for disclosures to
          persons acting on the Company's behalf with a need to know such
          information). The Employee shall carefully preserve any documents,
          records, tangible data relating to Inventions or Confidential
          Information coming into the Employee's possession and shall deliver
          the same and any copies thereof to the Company upon request and, in
          any event, upon termination of the Employee's employment by the
          Company.

     9.   NON-SOLICITATION

          (a)  The Employee agrees that he will not, during the one-year period
               following termination of his employment with the Company, be
               connected in any way with the solicitation of any then current or
               potential (defined as persons or companies with pending quotes to
               or from the Company) customers or suppliers of the Company if
               such solicitation is likely to result in a loss of business for
               the Company.

          (b)  The Employee agrees that he will not, during the one year period
               following termination of his employment with the Company, solicit
               for employment, employ or engage as a consultant any person who
               had been an employee of the Company at any time in the two year
               period prior to the Employee's termination of employment with the
               Company.

          (c)  In the event the covenants set forth in this section 9 are found
               to be unenforceable or invalid by reason of being overly broad,
               the parties hereto intend that such covenants shall be limited to

                                      9
<PAGE>

               such scope, geographic area and duration as shall make such
               covenants valid and enforceable.

     10.  ENFORCEMENT OF SECTION 7, 8 AND 9

          Recognizing that compliance with the provisions of sections 7, 8 and 9
          of this Agreement is necessary to protect the goodwill and other
          proprietary interests of the Company, and that breach of the
          Employee's agreements thereunder will result in irreparable and
          continuing damages to the Company for which there will be no adequate
          remedy at law, the Employee hereby agrees that in the event of any
          breach of such agreements, the Company shall be entitled to seek
          injunctive relief and such other and further relief, including
          damages, as may be proper.

     11.  LAWS, REGULATIONS AND CONTRACTS

          The Employee agrees to comply, and to do all things necessary for the
          Company to comply, with all federal, state, local and foreign laws and
          regulations which may be applicable to the business and operations of
          the Company, and with any contractual obligations, including, without
          limitation, confidentiality obligations, which may be applicable to
          the Company or Executive under any contracts between the Company and
          its customers, suppliers or third parties.

     12.  MISCELLANEOUS

     12.1 AMENDMENT AND MODIFICATION

          The Company (by action of the Board of Directors) and the Employee may
          amend, modify and supplement this Agreement only in such manner as may
          be agreed upon by the Company and the Employee in writing.

     12.2 ENTIRE AGREEMENT

          This instrument embodies the entire agreement between the parties
          hereto with respect to the employment relationship created hereby and
          supersedes and replaces any prior agreements pertaining to employment
          between the Employee and the Company. There have been and are no
          agreements, representations or warranties between the parties other
          than those set forth or provided for herein relating to such
          employment relationship.

                                       10
<PAGE>

     12.3 ASSIGNMENT

          This Agreement shall not be assigned by the Employee without the
          written consent of the Company. Any attempted assignment without such
          written consent shall be null and void and without legal effect;
          provided, however, nothing herein shall prevent the Employee from
          assigning and of his rights to payment hereunder to any third company
          in full compliance with all state and federal laws. This Agreement may
          be assigned by the Company to a successor corporation or a good-faith
          purchaser of the Company's stock or assets only in connection with a
          sale of all or substantially all of the Company's assets or as a
          result of a merger or other business combination involving the Company
          and any such assignment shall not terminate or modify this Agreement,
          except that the employing party to which the Employee shall have been
          transferred shall, for the purposes of this Agreement, be construed as
          standing in the same place and stead as the Company as of the date of
          the assignment.

     12.4 BINDING

          Subject to section 12.3 hereof, this Agreement shall be binding upon
          and insure to the benefit of the respective parties hereto and their
          successors, assigns, heirs, executors, administrators and personal
          representatives. The parties hereto shall be entitled, at their
          option, to the remedy of specific performance to enforce any of the
          provisions of this Agreement.

     12.5 ARBITRATION

          Any dispute, controversy or claim arising out of or relating to this
          Agreement, or the breach hereof, shall be settled by binding
          arbitration in Los Angeles, California administered by the American
          Arbitration Association under its Employment Dispute Resolution, and
          judgment on the award rendered by the arbitrators may be entered in
          any court having jurisdiction thereof.

     12.6 AGREEMENT SEVERABLE; WAIVER

          This is a severable Agreement and in the event that any part of this
          Agreement shall be held to be unenforceable, all other parts of this
          Agreement shall remain valid and fully enforceable as if the
          unenforceable part or parts had not been included herein. No waiver of
          any provision of this Agreement shall be binding unless executed in


                                       11
<PAGE>

          writing by the party to be bound hereby. No waiver of a breach of any
          of the provisions of this Agreement shall be deemed to be or shall
          constitute a waiver of a breach of any other provision of this
          Agreement, whether or not similar, nor shall such waiver constitute a
          continuing waiver of such breach unless otherwise expressly provided.
          No failure or delay in exercising any right, power or remedy hereunder
          shall operate as a waiver thereof, nor shall any single or partial
          exercise of any such right, power or remedy preclude any other or
          further exercise thereof or the exercise of any other right, power or
          remedy.

     12.7 NOTICES

          For purposes of this Agreement, notices and all other communications
          provided for in the Agreement shall be in writing and shall be deemed
          to have been duly given when delivered or mailed by United States
          certified or registered mail, return receipt requested, postage
          prepaid, addressed as follows:

          If to EMPLOYEE, to:      James R. McCullough
                                   69 Liberty Street
                                   Madison, CT  06943

          If to COMPANY, to:       Coyote Network Systems, Inc.
                                   Attn: President
                                   4360 Park Terrace Drive
                                   Westlake Village, CA 91361

          or to such other address as either party may have furnished to the
          other in writing in accordance herewith except that notices of a
          change of address shall be effective only upon receipt.

     12.8 AFFILIATED PARTIES

          The Employee hereby represents to the Company that he has ownership
          interests in the companies or entities listed on Schedule 1 attached
          hereto which may from time to time enter into transactions or other
          business relationships with the Company. The Employee hereby agrees he
          will update Schedule 1 immediately if there are changes. No contract,
          transaction or other business relationship involving the Company and
          any such company or entity affiliated with Employee as of the date of
          such proposed contract, transaction or business relationship may be
          authorized solely by the Employee.

                                       12
<PAGE>

     12.8 GOVERNING LAW

          This Agreement shall be governed and construed under the laws of the
          State of California.

     12.9 INDEMNIFICATION; INSURANCE

          The Company represents and warrants to the Employee that it has and
          will maintain adequate directors and officers' liability insurance
          coverage and that it will indemnify the Employee to the full extent
          permitted by the General Corporation Law of the State of Delaware, as
          provided in the Certificate of Incorporation of the Company.

     12.10 CORPORATE AUTHORITY; ENFORCEABILITY

          The Company represents and warrants to the Employee that it is a
          corporation duly organized and validly existing under the laws of the
          State of Delaware and that the execution and delivery of this
          Agreement, and the performance by the Company of its obligations
          hereunder, have been duly authorized by proper corporate action on the
          part of the Company. This Agreement is a legal, valid and binding
          obligation of the Company, enforceable against the Company in
          accordance with its terms.

     THE EMPLOYEE ACKNOWLEDGES HAVING READ, EXECUTED AND RECEIVED A COPY OF THIS
     AGREEMENT, INCLUDING THE FOLLOWING NOTICE, AND AGREES THAT, WITH RESPECT TO
     THE SUBJECT MATTER HEREOF, IT CONSTITUTES THE EMPLOYEE'S ENTIRE AGREEMENT
     WITH THE COMPANY, SUPERSEDING ANY PREVIOUS ORAL OR WRITTEN COMMUNICATIONS,
     REPRESENTATIONS, UNDERSTANDINGS OR AGREEMENTS WITH THE COMPANY OR ANY OF
     ITS OFFICIALS OR REPRESENTATIVES.

     Notwithstanding anything to the contrary in section 7 hereof, this
     Agreement does not apply to an Invention for which no equipment, supplies,
     facility, or trade secret information of the Company was used and which was
     developed entirely on the Employee's own time, unless (a) the Invention
     relates (i) to the business of the Company as conducted from time-to-time
     or (ii) to the Company's actual or demonstrably anticipated research or
     development, or (b) the Invention results from any work performed by the
     Employee for the Company.

                                       13
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
     as of the day and year first above written.

                            COYOTE NETWORK SYSTEMS, INC.

                            BY:  /s/ James J. Fiedler    /s/ Daniel W. Latham
                                 --------------------    --------------------
                                 James J. Fiedler        Daniel W. Latham
                                 Chairman                President


                            /s/ James R. McCullough
                            -----------------------
                            JAMES R. McCULLOUGH



<PAGE>
                                   SCHEDULE 1

                       AFFILIATIONS OF JAMES R. McCULLOUGH
                           IN OTHER BUSINESS VENTURES


A.   Ownership Interests:

               Name of Business                       Ownership Interest

        Renwick Corporate Finance, Inc.                       50%
             First Venture Leasing                            25%
                   KJR, LLC                                 33-1/3%

B.   Directorships: None.

C.   Officer Positions in other Companies: None other than various positions
     with the entities listed in section A above.


                             CONSULTING AGREEMENT


         THIS  AGREEMENT  is made and entered into as of January 26, 2000 by and
between COYOTE NETWORK  SYSTEMS,  INC., a Delaware  corporation (the "Company"),
and KRJ, LLC, a Delaware limited liability company ("Consultant").

     1. Consultant's Duties.

     (a) Since January 14, 2000 ("the "Effective Date") Consultant has performed
services for the benefit of the Company, specifically being instrumental in
advising and assisting the Company on (i) identifying strategic partners and
business opportunities; (ii) introductions to substantial IP Telephony
customers; (iii) introduction of new management; (iv) restructuring of vendor
finance programs; (v) investor relations; (vi) identifying credit facilities;
and (vii) structuring a recapitalization of the Company; (viii) increasing
foreign and domestic sales development; and (ix) seeking to achieve the
continued viability of the Company and sustained earnings growth and shareholder
value through 2000 and beyond;

     (b) From the date hereof, Consultant's duties under this Agreement will
include continuing participation in the activities listed in subsection (a)
above.

     (c) Consultant's duties hereunder have not to date, and shall not
hereinafter, include introducing the Company to investors, promoting the
Company's stock to third parties or placing (or advising on the placement of)
the Company's equity or debt securities to any party. The Company acknowledges
that all such services shall be performed by a registered broker-dealer.

     (d) Consultant agrees to use its reasonable best efforts to performing the
duties set forth in subsection (b) above.

     2. Term of Agreement. The initial term of this Agreement will commence on
the Effective Date and terminate on third anniversary of the date hereof. The
Company may terminate this Agreement for any reason upon 30 days' written notice
to Consultant or Consultant may terminate this Agreement for any reason on 30
days' written notice to the Company, but Consultant shall nevertheless be
entitled to the compensation set forth in section 3 below.

     3. Compensation. As remuneration for Consultant's services set forth in
section 1(a) above, the Company shall issue 2,000,000 shares of the Company's


                                       1
<PAGE>

Common Stock, par value $1.00 per share (the "Common Stock"), to Consultant and
deliver such shares of the Common Stock to Consultant as follows:

     (a) 750,000 shares of Common Stock within fifteen days of the Effective
Date;

     (b) 1,250,000 shares of Common Stock shall be placed in escrow, to be
automatically delivered to Consultant as follows:

          (i) 416,666 shares of Common Stock within five days after the first
     anniversary of the date of this Agreement provided, however, the escrow
     agent shall accelerate the delivery if the closing price of the Common
     Stock on the Principal Market (as defined below) is equal to or greater
     than $8 per share for 20 consecutive trading days;

          (ii) 416,667 shares of Common Stock within five days after the second
     anniversary of the date of this Agreement provided, however, the escrow
     agent shall accelerate the delivery if the closing price of the Common
     Stock on the Principal Market is equal to or greater than $12 per share for
     20 consecutive trading days;

          (iii) 416,667 shares of Common Stock within five days after the third
     anniversary of the date of this Agreement provided, however, the escrow
     agent shall accelerate the delivery if the closing price of the Common
     Stock on the Principal Market is equal to or greater than $16 per share for
     20 consecutive trading days; or

          (iv) immediately upon any transaction in which substantially all of
     the assets of the Company are acquired or 50% or more of the issued and
     outstanding common stock of the Company is acquired by a single person,
     entity or group of such persons or entities (a "Change in Control").

     Under the terms of the escrow agreement, Consultant shall retain all voting
and dividend rights with respect to the shares of Common Stock held in escrow.
The escrow agent shall comply with the delivery schedule set forth above, absent
an order from a court of competent jurisdiction staying the delivery or
otherwise directing delivery to another person.

     For purposes of this section 3, "Principal Market" means the Nasdaq
National Market, the Nasdaq SmallCap Market, the OTC Bulletin Board, the
American Stock Exchange or the New York Stock Exchange, whichever at the time is
the principal trading exchange or market for the Common Stock. The Company and
Consultant hereby agree that at the earlier of six (6) months from the date
hereof or upon delivery to Consultant of all of the Common Stock as set forth


                                       2
<PAGE>

above, Consultant will meet with the Audit Committee of the Board of Directors
for the purpose of further compensating Consultant for the services provided
from January 26, 2000 to the date of the meeting. The focus of such meeting
shall be an assessment of the granting of additional stock or warrants to
Consultant sufficient to provide Consultant with reasonably equivalent economic
value as set forth on Exhibit A attached hereto.

     4. Trading Restrictions. Notwithstanding any other holding period or
trading restrictions imposed by law, which restrictions Consultant agrees to
follow, Consultant further agrees that it will not sell, pledge, hypothecate or
otherwise transfer any of the shares granted under section 3 until 12 months
from the date of delivery of the Common Stock by the Company or the escrow
agent, as the case may be, to Consultant; provided, however, that in the event
of a Change in Control these trading restrictions shall be lifted.

     5. Status. During the term of this Agreement, the relationship of the
Company and Consultant shall be that of independent contractor. This Agreement
shall not in any way create a relationship of principal and agent or employer
and employee between the Company and Consultant.

     6. Expenses. The Company will reimburse Consultant for any reasonable
business expenses incurred by Consultant in performance of its duties hereunder,
provided that those expenses are approved in advance and in writing by the
Company. The Company agrees to reimburse Consultant for legal and accounting
expenses related to services rendered hereunder, not to exceed $15,000 in the
aggregate. Any additional legal or accounting expenses Consultant incurs in
connection with this Agreement or the performance of its duties hereunder shall
be at Consultant's expense.

     7. Confidential Information. In connection with the performance of its
services under this Agreement, Consultant may receive information concerning the
Company and its affiliates, including, without limitation, descriptive
memoranda, appraisals, financial statements or summaries, correspondence,
records or other specific financial, technical, commercial or other information
regarding their businesses and affairs, whether or not such material is
specifically marked or designated as confidential (the "Confidential
Information"). The parties agree that the Confidential Information has been
acquired, established and maintained at great expense, protected as confidential
information and trade secrets and are of great value and will provide the
Company with a substantial competitive advantage in its business. Therefore,
Consultant agrees that it will not, directly or indirectly, either individually
or as an employee, principal, agent, owner, trustee, beneficiary, distributor,
partner, co-venturer, shareholder, consultant or in any other capacity, use or
disclose, or cause to be used or disclosed, any of the Confidential Information,


                                       3
<PAGE>

whether such information was owned the Company prior to, or developed by the
Company subsequent to, its relationship with Consultant, and regardless of the
fact that Consultant may have participated in the discovery and development of
that information; provided, however, Consultant may disclose such information to
it members, its legal advisors and any other party directly involved in
Consultant rendering its services hereunder so long as Consultant receives from
such individuals or entities (except for Consultant's members, legal advisors
and accountants) and provides to the Company a confidentiality agreement similar
in scope to this Agreement. Nothing contained herein shall be construed as
restricting or creating any liability for the disclosure, communication or use
of the following information:

     (a) information which, at the time of disclosure hereunder, was published
or known publicly or was otherwise in the public domain;

     (b) information which after disclosure hereunder, is published or becomes
publicly known or otherwise in the public domain other than as a result of a
breach of this Agreement;

     (c) information which was disclosed to the recipient in good faith by a
third party who was not, and is not, under any obligation of confidence or
secrecy to the other party hereto at the time of such disclosure; or

     (d) information if for which the disclosure is legally required, in the
opinion of counsel to Consultant, to be made in a judicial, administrative or
governmental proceeding or process. Consultant shall promptly notify the Company
of Consultant being legally required to make such disclosure to allow the
Company to oppose such compelled disclosure.

     8. Consultant's Representations and Warranties. Consultant represents and
warrants to the Company that:

     (a) Consultant is not a registered broker or dealer in securities under any
federal or state securities laws;

     (b) Neither Consultant nor any of its affiliates, agents, officers or
employees is currently subject to disciplinary action of any kind by the U.S.
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., any stock or commodities exchange or any state securities
authority;

     (c) Neither Consultant nor any of its affiliates, agents, officers or
employees has ever been found liable by, or is currently the subject of an
injunction issued by, a court or arbitration board in connection with alleged
securities law violations or improprieties;



                                       4
<PAGE>

     (d) Consultant is acquiring the shares of Common Stock issuable pursuant to
section 3 solely for its own account for investment purposes, and not with a
view to the distribution thereof, and Consultant acknowledges that any
certificate for the Common Stock may contain a legend in the form attached
hereto as Exhibit B;

     (e) Consultant understands that the Common Stock has not been, and will not
be, registered under the Securities Act of 1933, as amended (the "Securities
Act"), or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering;

     (f) Consultant is an accredited investor within the meaning of Rule 501(a)
of Regulation D under the Securities Act;

     (g) Consultant and each natural person who, directly or indirectly, is a
beneficial owner of an ownership interest in Consultant has received certain
information concerning the Common Stock and the Company, including, without
limitation, copies of the Company's filings with the Securities and Exchange
Commission, and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding the
Common Stock;

     (h) Consultant and each natural person who, directly or indirectly, is a
beneficial owner of an ownership interest in Consultant is able to bear the
economic risk and lack of liquidity inherent in holding the Common Stock;

     (i) Consultant and each natural person who, directly or indirectly, is a
beneficial owner of an ownership interest in Consultant acting on his or its own
behalf or in conjunction with his or its duly authorized legal, financial or
other advisors, has such knowledge and experience in financial and business
matters that he or it is capable of evaluating the merits and risks of the
prospective investment in the Shares; and

     (j) Consultant has relied solely upon its own knowledge and experience and
the advice of its own legal, financial or other advisors with regard to the
legal, investment, tax and other considerations involved in deciding to acquire
the Company's Common Stock as compensation for its services.

     9. The Company's Representations and Warranties. The Company represents and
warrants to Consultant that the shares of Common Stock to be issued pursuant to
this Agreement have been duly authorized and, when the shares of Common Stock


                                       5
<PAGE>

delivered as contemplated hereby, will be validly issued, fully paid and
non-assessable and will not be subject to any preemptive or similar rights. The
Company shall at all times during the term of this Agreement reserve and keep
available, solely for issuance and delivery pursuant to this Agreement, a number
of authorized shares of Common Stock equal to the number of shares of Common
Stock which may issued pursuant to section 3. The Company further represents and
warrants to Consultant that it is a corporation duly organized and validly
existing under the laws of the State of Delaware and that the execution and
delivery of this Agreement, and the performance by the Company of its
obligations hereunder, have been duly authorized by proper corporate action on
the part of the Company and that this Agreement is legal, valid and binding
obligation of the Company, enforceable against the Company according to its
terms.

     10. Additional Covenants of Consultant. Consultant covenants to the Company
that (a) the representations and warranties set forth in section 7(a), (b) and
(c) will be true and correct as of the date of this Agreement and the date that
the Common Stock is issued, and (b) the representations and warranties set forth
in section 7(d), (e), (f), (g), (h), (i) and (j) will be true and correct at any
time that the Company issues Common Stock pursuant to section 3.

     11. Specific Performance. Consultant acknowledges and agrees that
irreparable injury to the Company may result in the event Consultant breaches
any covenant and agreement contained in section 6 and that the remedy at law for
the breach of any such covenant will be inadequate. Therefore, if Consultant
engages in any act in violation of the provisions of section 6, Consultant
agrees that the Company shall be entitled, in addition to such other remedies
and damages as may be available to it by law or under this Agreement, to
injunctive relief to enforce the provisions of section 6; provided, however,
nothing herein shall deprive Consultant of the right to contest the granting of
any injunction.

     12. Governing Law; Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (regardless of
such State's conflict of laws principles), and without reference to any rules of
construction regarding the party responsible for the drafting thereof. This
Agreement shall be construed without reference to any rules of construction
regarding the party responsible for drafting thereof.

     13. Waiver. The failure of any party to insist, in any one or more
instances, upon performance of any of the terms or conditions of this Agreement,
shall not be construed as a waiver or a relinquishment of any right granted
hereunder for the future performance of any such term, covenant or condition.

     14. Notice. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given


                                       6
<PAGE>

or made upon receipt, if delivered personally, on the third business day
following deposit in the U.S. mail if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or the next business day following electronic transmission
to the telecopier number specified below with receipt acknowledged:

                 If to the Company:     Coyote Network Systems, Inc.
                                        4360 Park Terrace Drive
                                        Westlake Village, CA 91361
                                        Attn:  President
                         Facsimile:     818-735-7633

                 If to Consultant:      KRJ, LLC
                                        c/o Duval & Stachenfeld LLP
                                        Attn: Harsha Murthy, Esq.
                                        300 East 42nd Street, 3rd Floor
                                        New York, NY 10017
                         Facsimile:     212-883-8883

     15. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions of this
Agreement or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision of this
Agreement is invalid or unenforceable, the parties hereto agree that the court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration or area of the term or provision, to delete
specific words or phrase or to replace any invalid or unenforceable term or
provision with a term or provision that is valid or enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

     16. Miscellaneous.

     (a) This Agreement may be amended only by an agreement in writing signed by
all of the parties hereto.

     (b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns and beneficiaries
in interest. Neither party may assign this Agreement without the prior written


                                       7
<PAGE>

consent of the other party; provided, however, nothing herein shall limit the
ability of Consultant to assign its compensation hereunder to any third party
subject to compliance under all applicable securities laws.

     (c) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but both of which taken together shall constitute one and
the same instrument.

     (d) The Company will indemnify Consultant against any third party claims
that might arise as a result of Consultant's authorized use of any information
provided by the Company in connection herewith.

     IN WITNESS WHEREOF, this Agreement has been entered into as of the day and
year first above written.

                                 COYOTE NETWORK SYSTEMS, INC.

                                 BY  /s/ Daniel W. Latham
                                     ---------------------------
                                     Name  Daniel W. Latham
                                     Its   President

                                 KRJ, LLC

                                 BY  /s/ Kevin O. Kelly
                                     ---------------------------
                                     Name   Kevin O. Kelly
                                     Its    Managing Member



                                       8
<PAGE>
                      ESCROW AND INDEMNIFICATION AGREEMENT


          THIS ESCROW AND INDEMNIFICATION AGREEMENT (the "Agreement") is made as
of January 26, 2000 by and among REINHART, BOERNER, VAN DEUREN, NORRIS &
RIESELBACH, P.C., as escrow agent (the "Escrow Agent"), COYOTE NETWORK SYSTEMS,
INC., a Delaware corporation (the "Company") and KRJ, LLC, a Delaware limited
liability company (the "the Consultant").

                                     RECITAL

          The Company and the Consultant are parties to that certain Consulting
Agreement dated as of January 26, 2000 (the "Consulting Agreement") and,
pursuant thereto, the Company has issued to the Consultant, and the Consultant
has agreed to place into escrow, 1,250,000 shares of the Company's Common Stock,
par value $1.00 per share (the "Shares"), with delivery of the Shares to the
Consultant to occur upon the occurrence of certain events set forth in section
3(b) of the Consulting Agreement.

                                   AGREEMENTS

          In consideration of the Recital and the mutual promises and agreements
set forth herein, the parties hereto agree as follows:

          1. Acknowledgment of Receipt of Consulting Agreement. The Escrow Agent
hereby acknowledges receipt of a copy of the Consulting Agreement but, except
for reference thereto for definitions of certain words or terms not defined
herein, the Escrow Agent is not charged with any duties or responsibilities
thereunder. Capitalized terms used herein without definition shall have the
meanings designated for them in the Consulting Agreement unless the context
requires otherwise. This Agreement shall become effective upon receipt by the
Escrow Agent of the Shares.

          2. Escrow. The Shares shall be deposited into escrow on or before
February 10, 2000, and the Escrow Agent agrees to hold the Shares until such
time as it is required to deliver or return the Shares in accordance herewith.
The Escrow Agent shall release from escrow and deliver, by certified mail within
five days, the Shares in whole or in part to the Consultant or its designee upon
receipt by the Escrow Agent of a direction and/or certification signed by a
manager of the Consultant (with a copy provided to the Company) that the


                                       1
<PAGE>

applicable condition(s) of section 3(b) of the Consulting Agreement have been
satisfied. The Escrow Agent shall be under no duty to determine whether
Consultant's certification is accurate, such duty being solely upon the Company
to timely challenge in writing any such certification. The Escrow Agent shall
return any remaining Shares to the Company or its designee upon receipt by the
Escrow Agent of a direction and/or certification of a manager of the Consultant
and an officer of the Company that such Shares shall be so returned to the
Company or upon order of a court of competent jurisdiction.

          3. Voting Rights and Dividends. The Consultant shall be entitled to
exercise, in the Consultant's sole discretion, the voting power with respect to
the Shares in respect of the election of directors and all other matters and to
receive and retain for its own account any and all payments, proceeds,
dividends, distributions, monies, compensation, property, assets, instruments or
rights, paid, issued or distributed from time to time in respect of the Shares.

          4. Provisions Relating to the Escrow Agent.

          (a) Standard of Care. The Escrow Agent shall have the duty to exercise
reasonable care in the custody and preservation of any Shares in its possession,
which duty shall be fully satisfied if the Escrow Agent maintains safe custody
of such Shares.

          (b) Notification of Consultant. The Escrow Agent shall have no further
obligation to ascertain the occurrence of, or to notify the Consultant with
respect to, any events and shall not be deemed to assume any such further
obligation as a result of the establishment by the Escrow Agent of any internal
procedures with respect to any securities in its possession, nor shall the
Escrow Agent shall be deemed to assume any other responsibility for, or
obligation or duty with respect to, any Shares, or the use of any Shares, of any
nature or kind, or any matter or proceedings arising out of or relating thereto,
including any obligation or duty to take any action to collect, preserve or
protect the Consultant's rights in the Shares, but the same shall be at the
Consultant's sole risk and responsibility at all times.

          (c) Liability. In performing any duties under the Escrow Agreement,
the Escrow Agent shall not be liable to any party for damages, losses, or
expenses, except for gross negligence or willful misconduct on the part of the
Escrow Agent. The Escrow Agent shall not incur any such liability for (i) any
act or failure to act made or omitted in good faith, or (ii) any action taken or
omitted in reliance upon any instrument, including any written statement or
certification provided for in this Agreement that Escrow Agent shall in good
faith believe to be genuine, nor will Escrow Agent be liable or responsible for


                                       2
<PAGE>

forgeries, fraud, impersonations, or determining the scope of any representative
authority. In addition, Escrow Agent may consult with the legal counsel in
connection with Escrow Agent's duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by Escrow Agent in good faith
in accordance with the advice of counsel. Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.

          (d) Controversies. If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, Escrow Agent will not be required to
determine the controversy or to take any action regarding it. Escrow Agent may
hold all documents and funds and may wait for settlement of any such controversy
by final appropriate legal proceedings or other means as, in Escrow Agent's
discretion, Escrow Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, Escrow Agent will not be liable for
interest or damage. Furthermore, Escrow Agent may at its option, file an action
of interpleader requiring the Parties to answer and litigate any claims and
rights among themselves. Escrow Agent is authorized to deposit with the clerk of
the court all documents and funds held in escrow, except all costs, expenses,
charges and reasonable attorney fees incurred by Escrow Agent due to the
interpleader action and which the Parties jointly and severally agree to pay.
Upon initiating such action, Escrow Agent shall be fully released and discharged
of and from all obligations and liability imposed by the terms of this
Agreement.

          (e) Release and Indemnification. The Company and the Consultant hereby
release the Escrow Agent, and its officers, directors, employees and agents,
from any claims, causes of action and demands at any time arising out of or with
respect to this Escrow Agreement, the Shares and/or any actions taken or omitted
to be taken by the Escrow Agent with respect thereto (except, in the case of the
Escrow Agent, such claims, causes of action and demands arising from the gross
negligence or willful misconduct of the Escrow Agent), and the Company and the
Consultant hereby jointly and severally agree to hold the Escrow Agent and its
officers, directors, employees and agents harmless from and with respect to any
and all such claims, causes of action and demands (except such claims, causes of


                                       3
<PAGE>

action and demands arising from the gross negligence or willful misconduct of
the Escrow Agent). The right of the Escrow Agent to indemnification hereunder
shall survive its resignation or removal as Escrow Agent and shall survive the
termination of this Agreement for any reason.

          (f) Resignation. Escrow Agent may resign at any time upon giving at
least thirty (30) days' written notice to the parties; provided, however, that
no such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: the parties shall use their
best efforts to mutually agree on a successor escrow agent within thirty (30)
days after receiving such notice. If the parties fail to agree upon a successor
escrow agent within such time, Escrow Agent shall have the right to appoint a
successor escrow agent. The successor escrow agent shall execute and deliver an
instrument accepting such appointment and it shall, without further acts, be
vested with all the estates, properties, rights, powers, and duties of the
predecessor escrow agent as if originally named as escrow agent. Escrow Agent
shall upon such appointment be discharged from any further duties and liability
under this Agreement.

          5. Fees. The Escrow Agent shall not be entitle to receipt of fees for
the services rendered hereunder; provided, however, all out-of-pocket costs and
expenses (excluding costs of litigation) of the Escrow Agent with respect to the
services rendered hereunder shall be paid by the Company. The Escrow Agent shall
invoice the Company directly for such cost and expenses. In the event that the
Escrow Agent renders any service not provided for this Agreement, or if the
parties request a substantial modification of its terms, or if any controversy
arises, or if the Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorney's fees, including allocated costs of in-house counsel,
and expenses occasioned by such controversy or litigation and the Escrow Agent
shall have the right to retain all documents and/or other things of value at any
time held by the Escrow Agent pursuant to this Agreement until such
compensation, fees, costs, and expenses are paid.

          6. Termination of Escrow. The Shares shall be retained by the Escrow
Agent until distributed to the appropriate party or parties pursuant to the
terms of this Agreement, at which time this Agreement shall be terminated.

          7. Address for Notices. Any notice or other communication required or
permitted to be given to the parties hereunder shall be in writing and shall be
deemed to have been given if delivered in person by commercial courier, or two
business days after mailing by Federal Express or similar express delivery


                                       4
<PAGE>

service, addressed as follows (or at such other address as the addressed party
may have substituted by notice pursuant to this section):

          If to the Company:        Coyote Network Systems, Inc.
                                    4360 Park Terrace Drive
                                    Westlake Village, CA  91361
                                    Attn:  President
                  Facsimile:        818-735-7633

          If to Consultant:         KRJ, LLC
                                    c/o Duval & Stachenfeld LLP
                                    Attn:  Harsha Murthy, Esq.
                                    300 East 42nd Street, 3rd Floor
                                    New York, NY 10017
                  Facsimile:        212-883-8883

          If to the Escrow Agent:
                                    Reinhart, Boerner, Van Deuren,
                                        Norris & Rieselbach, P.C.
                                    Attn:  Timothy G. Atkinson, Esq.
                                    1775 Sherman Street, Suite 2100
                                    Denver, CO 80203
                  Facsimile:        303-831-4805

          8. Successors and Assigns. This Agreement is binding upon and shall
inure to the benefit of the respective parties hereto and their respective
heirs, executors, administrators, successors and assigns; provided, however,
that any heirs, executors, administrators, successors and assigns shall only be
liable for any liabilities hereunder to the extent of the value of the property
or assets received from their respective predecessor in interest.

          9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to
conflicts of laws principles.

          10. Amendments. Any provision of this Agreement may be amended only by
agreement in writing signed by all of the signatories hereto.

          11. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one instrument.

                                       5
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                    COYOTE NETWORK SYSTEMS, INC.

                                    BY  ______________________________
                                        Name _________________________
                                        Its  _________________________


                                    KRJ, LLC

                                    BY  ______________________________
                                        Name _________________________
                                        Its  _________________________


                                    REINHART, BOERNER, VAN DEUREN,
                                        NORRIS & RIESELBACH, P.C.

                                    BY  ______________________________
                                        Name _________________________
                                        Its  _________________________




                                       6
<PAGE>

                           FINANCIAL SERVICES AGREEMENT


          This Agreement (this "Agreement") is made as of this 25th day of
January 2000, by and among Coyote Network Systems, Inc., a Delaware corporation
with its principal office located in Westlake Village, California ("CNSI"),
Coyote Technologies, LLC, a California limited liability company with its
principal office located in Westlake Village, California ("CTL"), First Venture
Leasing, LLC, a Delaware limited liability company with its principal office
located in Stamford, Connecticut ("First Venture") and Coyote Leasing, LLC, a
Delaware limited liability company with its principal office located in
Stamford, Connecticut (the "Company").

                                 R E C I T A L S

          WHEREAS, each of CNSI and CTL seeks to arrange financing under credit
programs for their Customers;

          WHEREAS, each of CNSI and CTL seeks to form an alliance with another
company possessing funding capabilities and expertise in the area of systems
management, credit programs, design, licensing and leasing programs to maximize
efficiencies and create economies of scale necessary to create and develop
credit programs for their Customers;

          WHEREAS, First Venture is engaged in the business of designing and
implementing U.S. and foreign vendor leasing and financing programs and desires
to provide financing to CNSI and CTL Customers;

          WHEREAS, First Venture has formed the Company, which will offer
certain leasing and credit programs to CNSI and CTL Customers and create and
develop new financing facilities and programs to be offered to CNSI and CTL
Customers and efficiently manage and operate such financing programs;

          NOW, THEREFORE, in consideration of these premises and the mutual
covenants set forth herein, the parties hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          The following terms shall have the following meanings for all purposes
of this Agreement, and such meanings shall be equally applicable to both the
singular and plural forms of the terms defined:

          "Affiliate" shall, with respect to a given Person, mean any other
Person directly or indirectly controlled by or under direct or indirect common
control with the Person specified.

                                       1
<PAGE>

          "Agreement" shall have the meaning given to such term in the preamble
hereto, as such agreement is amended and supplemented from time to time in
accordance with its terms.

          "Business" shall have the meaning given to such term in Section 5.01
hereof.

          "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in Connecticut or California are
authorized or required by Law to be closed.

          "Coyote Customers" shall mean any Person that is an end user of
Products.

           "Coyote  License  Agreement"  shall  mean the  Coyote  License
Agreement, dated as of the date hereof, among CNSI, CTL and the Company.

           "Finance  Contracts" shall mean the agreements entered into by
the Company in connection with the offering of various types of Services,
including forms of leases, guarantees, financing statements, loan agreements,
security agreements and other documents appropriate for the conducting of the
Company's Business of providing Services.

           "First Venture Entities" shall mean First Venture or any of its
Subsidiaries.

           "Information"  shall  have the  meaning  given to such term in
Section 7.01 hereof.

           "Law"  shall  mean  and  include  (a)  any  statute,   decree,
constitution, regulation, order, judgment or other directive of any Regulatory
Authority; (b) any treaty, pact, compact or other agreement to which any
Regulatory Authority is a party; (c) any judicial or administrative
interpretation or application of any Law described in (a) or (b) above; and (d)
any amendment or revision of any Law described in (a), (b) or (c) above.

           "Operating Agreement" shall mean the Operating Agreement of the
Company.

           "Operative Documents" shall mean this Agreement, the Operating
Agreement, the Coyote License Agreement, the Remarketing Agreement and any other
agreements, documents or certificates executed and delivered in connection with
the transactions contemplated under this Agreement.

           "Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government (and any department
or agency thereof) or other entity.

           "Products"  shall  mean  any  products   (including,   without
limitation, related software licenses, but not including real estate) and
related installation and maintenance services provided, furnished, manufactured,
sold and/or marketed by CNSI, CTL or any of their respective Affiliates which
results in revenues or income to CNSI, CTL or any of their respective
Affiliates, and such additional goods or services of CNSI, CTL or any of their
respective Affiliates as the parties may from time to time agree.



                                       2
<PAGE>

          "Regulatory Authorities" shall mean any national government, or
political subdivision thereof or local jurisdiction therein, (b) any board,
commission, department, division, organ, instrumentality, court, or agency of
any entity described in (a) above, however constituted, and (c) any association,
organization, or institution of which any entity described in (a) or (b) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any of
the preceding in clauses (a) - (c) have jurisdiction over the Products or its
operations.

          "Remarketing Agreement" shall mean the Master Remarketing Agreement,
dated as of the date hereof, among CNSI, CTL and the Company.

          "Services" shall mean the financing or leasing of Products to Coyote
Customers.

          "Subsidiary" shall mean, with respect to any Person, any other Person
Person which is directly or indirectly controlled by such Person. For purposes
of this definition, "control", as applied to any Person, means the possession,
directly or indirectly, of the power to vote a majority of the securities having
voting power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

                                   ARTICLE II

                 REPRESENTATIONS AND WARRANTIES OF FIRST VENTURE

          First Venture represents and warrants to CNSI, CTL and the Company as
follows:

          2.01. Organization. First Venture is a limited liability company,
validly organized and existing under the laws of the jurisdiction of its
organization and has due authority to conduct business in all jurisdictions
where it conducts business.

          2.02. No Conflict. The execution and delivery by First Venture of this
Agreement and the other Operative Documents to which it is a party and the
consummation of the transactions herein and therein contemplated do not violate
or constitute a breach or default under the organizational documents of First
Venture or under the terms and conditions of any documents, agreements or other
writings to which First Venture is a party, or under any law, or any applicable
order, which violation, breach or default could reasonably be expected to have a
material adverse effect on First Venture or prohibit it from entering into,
executing, delivering or performing its obligations under this Agreement.

          2.03. Authority. First Venture has the power and authority to execute
and deliver this Agreement and any Operative Document to which it is a party and
to perform its obligations hereunder and thereunder. Such execution, delivery,
performance and consummation have been duly authorized by all necessary limited
liability company action on its part. This Agreement has been duly executed and
delivered by its duly authorized managing member, and constitutes its valid and
legally binding obligation enforceable against it in accordance with the terms
hereof, except as the same may be limited by (i) applicable bankruptcy,


                                       3
<PAGE>

reorganization, insolvency, moratorium or other similar laws from time to time
in effect affecting creditors' rights generally or (ii) equitable principles of
general application.

          2.04. Regulatory Authorities; Capabilities. First Venture possesses
all licenses and permits and other authorizations by Regulatory Authorities
necessary for the conduct of its respective business and to provide to the
Company the services anticipated under the Operative Documents to which it is a
party, except those the lack of which would not have a material adverse effect
on its respective business or its ability to provide such services. First
Venture has not received notice from any Regulatory Authority indicating that
such Regulatory Authority would oppose or not grant or issue its consent, if
required, with respect to the transactions contemplated by this Agreement and
the other Operative Documents to which it is a party.

          2.05. No Filings Required. No action of, or filing with, or consent
of, any Regulatory Authority or any other third party is required by First
Venture to authorize, or is otherwise required in connection with, the
execution, delivery and performance by First Venture of this Agreement or the
other Operative Documents to which it is a party.

                                   ARTICLE III

            REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

          The Company represents, warrants and covenants to CNSI, CTL and the
First Venture Entities as follows:

          3.01. Organization. The Company is a limited liability company,
validly organized and existing under the laws of the jurisdiction of its
organization and has due authority to conduct business in all jurisdictions
where it conducts business.

          3.02. No Conflict. The execution and delivery by the Company of this
Agreement and the other Operative Documents to which it is a party and the
consummation of the transactions herein and therein contemplated do not violate
or constitute a breach or default under the organizational documents of the
Company or under the terms and conditions of any documents, agreements or other
writings to which the Company is a party, or under any law, or any applicable
order, which violation, breach or default could reasonably be expected to have a
material adverse effect on the Company or prohibit it from entering into,
executing, delivering or performing its obligations under this Agreement.

          3.03. Authority. The Company has the power and authority to execute
and deliver this Agreement and any Operative Document to which it is a party and
to perform its obligations hereunder and thereunder. Such execution, delivery,
performance and consummation have been duly authorized by all necessary limited
liability company action on its part. This Agreement has been duly executed and
delivered by its duly authorized managing member, and constitutes its valid and
legally binding obligation enforceable against it in accordance with the terms
hereof, except as the same may be limited by (i) applicable bankruptcy,


                                       4
<PAGE>

reorganization, insolvency, moratorium or other similar laws from time to time
in effect affecting creditors' rights generally or (ii) equitable principles of
general application.

          3.04. Regulatory Authorities; Capabilities. The Company possesses and
shall obtain and maintain all licenses and permits and other authorizations by
Regulatory Authorities necessary for the conduct of the Business, except those
the lack of which would not have a material adverse effect on its respective
business or its ability to provide such services. The Company has not received
notice from any Regulatory Authority indicating that such Regulatory Authority
would oppose or not grant or issue its consent, if required, with respect to the
transactions contemplated by this Agreement and the other Operative Documents to
which it is a party.

          3.05. No Filings Required. No action of, or filing with, or consent
of, any Regulatory Authority or any other third party is required by the Company
to authorize, or is otherwise required in connection with, the execution,
delivery and performance by the Company of this Agreement or the other Operative
Documents to which it is a party.

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF CNSI AND CTL

          Each of CNSI and CTL represents and warrants to the First Venture
Entities and the Company as follows:

          4.01. Organization. CNSI is a corporation and CTL is a limited
liability company, each validly organized and existing under the laws of the
State of its incorporation or formation, as applicable, with due authority to
conduct business in all jurisdictions where it conducts business.

          4.02. No Conflict. The execution and delivery by each of CNSI and CTL
of this Agreement and the other Operative Documents to which CNSI or CTL is a
party and the consummation of the transactions herein and therein contemplated
do not violate or constitute a breach or default under the organizational
documents of CNSI or CTL or under the terms and conditions of any documents,
agreements or other writings to which CNSI or CTL is a party, or under any Law,
or any applicable order, which violation, breach or default could reasonably be
expected to have a material adverse effect on CNSI or CTL or prohibit it from
entering into, executing or performing its obligations under this Agreement.

          4.03. Authority. Each of CNSI and CTL has the power and authority to
execute and deliver this Agreement and any Operative Document to which it is a
party and to perform its obligations hereunder and thereunder, and such
execution, delivery, performance and consummation have been duly authorized by
all necessary corporate action on its part. This Agreement has been duly
executed and delivered by a duly authorized officer of each of CNSI and CTL, and
constitutes the valid and legally binding obligation of each of CNSI and CTL
enforceable against each in accordance with the terms hereof, except as the same
may be limited by (i) applicable bankruptcy, reorganization, insolvency,


                                       5
<PAGE>

moratorium or other similar Laws from time to time in effect affecting
creditors' rights generally or (ii) equitable principles of general application.

          4.04. Regulatory Authorities. Each of CNSI and CTL possesses all
licenses and permits and other authorizations by Regulatory Authorities
necessary for the conduct of its business and to provide the services
anticipated to be provided by it under the Operative Documents to which it is a
party, except those licenses, permits and authorizations the lack of which would
not have a material adverse effect on its business or its ability to provide
such services. Each of CNSI and CTL has not received notice from any Regulatory
Authority indicating that such Regulatory Authority would oppose or not grant or
issue its consent, if required, with respect to the transactions contemplated by
this Agreement and the other Operative Documents to which it is a party. No
action of, or filing with, or consent of, any Regulatory Authority or any other
third party is required by either CNSI or CTL to authorize, or is otherwise
required by either CNSI or CTL in connection with, the execution, delivery and
performance by either CNSI or CTL of this Agreement or the other Operative
Documents to which either is a party.

          4.05. Litigation. There is no Litigation that is pending, or, to the
knowledge of CNSI or CTL, threatened, in or before any court, commission,
arbitration tribunal, or judicial, governmental or administrative department,
body, agency, administrator or official, grand jury or any other or forum for
the resolution of grievances, against either CNSI or CTL.

                                    ARTICLE V

                    FORMATION OF COMPANY AND RELATED MATTERS

          5.01. Formation of Company. First Venture has formed the Company,
whose purpose shall be to engage in the business of providing Services under
identified credit programs to Coyote Customers in the U.S. and other countries
around the world, to manage such credit programs (collectively, the "Business")
and to engage in any such other legal purpose as agreed to from time to time by
the Company's managing members.

          5.02. Preferred Relationship. In consideration of First Venture having
formed the Company and the Company engaging in the business of providing
Services to Coyote Customers, and First Venture and the Company taking all such
other actions as contemplated by this Agreement and the other Operative
Documents, each of CNSI and CTL agrees that it will view the Company as its
preferred source for providing Services to Coyote Customers. Each of CNSI, CTL
and First Venture will work with the Company to develop the Business by offering
Coyote Customers new credit programs for providing Services. All leasing
opportunities for equipment sold by CNSI and CTL will be presented to the
Company on a first right of refusal basis. The Company will either approve the
financing opportunities presented within 20 days or Coyote will be free to
pursue alternate sources.

          5.03. Delivery and Execution of Certain Operative Documents. The
parties hereto shall deliver or cause to be delivered to the other parties (as
applicable), at or on the date of this Agreement, the Coyote License Agreement
and the Remarketing Agreement.



                                       6
<PAGE>
                                   ARTICLE VI

                  INDEMNIFICATION AND LIMITATIONS ON LIABILITY

          6.01. Indemnity Under This Agreement. From and after the date hereof,
CNSI, CTL, First Venture and the Company shall each indemnify, defend and hold
harmless the other parties to this Agreement and their respective members,
officers, directors, agents, representatives and employees (with respect to any
Claims relating to (i) below) and each of CNSI and CTL shall indemnify, defend
and hold harmless the Company and its respective general partners, members,
officers, agents, representatives and employees (with respect to any Claims
relating to (ii) below; CNSI, CTL, First Venture and the Company are referred to
respectively in this Section 6.01 as the case may be as the "Indemnifying Party"
and the party to whom such indemnification obligation is owed is referred to in
this Section 6.01 as the "Indemnified Party"), from and against any and all
actions, claims, losses, costs, liabilities, and expenses (including reasonable
attorneys' fees) resulting from or arising out of (i) any breach by the
Indemnifying Party of any representation, warranty, or covenant by such
Indemnifying Party in this Agreement or (ii) any third party claims arising from
the manufacture, sale, delivery, maintenance, service or repair by either CNSI
and CTL or any of its Affiliates of any of the Products, or the condition,
possession, return, disposition, use, operation, performance or control of such
Products (collectively, for purposes of this Section 6.01 only, "Claims"), and
will promptly reimburse any Indemnified Party for all Claims as incurred in
connection with the investigation of, preparation for, or defense of any pending
or threatened action or proceeding (collectively, "Proceeding"), whether or not
such Indemnified Party is a formal party to any such Proceeding; provided
however, that any Claims asserted by third parties concerning Company's uses
anywhere throughout the world of the Marks as permitted under the Coyote License
Agreement shall only be brought pursuant to the terms of the Coyote License
Agreement. Notwithstanding the foregoing, the Indemnifying Party shall not be
liable (a) for any amount paid by or on behalf of an Indemnified Party in
settlement of any Claim without the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld), (b) in respect of any losses,
claims, damages, liabilities or expenses that a court of competent jurisdiction
shall have determined by final judgment resulted primarily from the bad faith,
negligence, or willful misconduct of an Indemnified Party or (c) any Claim, to
the extent the same results from a breach by the Indemnified Party of its
representations, warranties or covenants in this Agreement or the Coyote License
Agreement. An Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not be unreasonably withheld),
settle, compromise or consent to the entry of any judgment in any pending or
threatened Proceeding in respect of which indemnification may be sought
hereunder (whether or not the Indemnified Party is an actual or potential party
to such Proceeding), provided, however, that the Indemnified Party may execute
such settlement, compromise or consent to the entry of judgment in any pending
or threatened Proceeding if the same includes an unconditional release of the
Indemnifying Party hereunder from all liability arising out of such Proceeding.

          6.02. Procedure. Promptly after a party to whom an indemnification
obligation is owed hereunder (an "Indemnified Party") receives notice of the
commencement of any Proceeding in respect of which indemnification may be sought


                                       7
<PAGE>

hereunder, the Indemnified Party will notify the party that is obligated to
indemnify hereunder (an "Indemnifying Party"); but the omission to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
hereunder unless, and only to the extent that, such omission results in the
Indemnifying Party's forfeiture of substantive rights or defenses. If any such
Proceeding shall be brought against the Indemnified Party, the Indemnifying
Party shall, upon written notice given reasonably promptly following the
Indemnified Party's notice to the Indemnifying Party of any such Proceeding, be
entitled to assume the defense thereof at its own expense with counsel chosen by
the Indemnifying Party and reasonably satisfactory to the Indemnified Party;
provided; however, that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense.

          6.03. Limitation on Liability. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE TO THE OTHER UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY, OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY LOST PROFITS, EXEMPLARY, PUNITIVE,
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY
EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER ANY PARTY HERETO HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING DOES NOT PRECLUDE ANY PARTY FROM BEING INDEMNIFIED AGAINST THIRD-PARTY
CLAIMS UNDER ANY OF THE FOREGOING THEORIES OR FOR ANY OF THE FOREGOING DAMAGES.

          6.04. Sole Remedies. CNSI, CTL, First Venture and the Company, agree
that from and after the date of this Agreement, their sole remedies for any
breach of any representation, covenant or warranty contained in this Agreement
shall be limited to the right of indemnification as and to the extent set forth
in this Article VI, and in all events subject to all of the limitations herein,
and the parties waive all and each other remedy available at Law or in equity,
provided, however, that this limitation shall not apply in respect of any action
brought for fraud with an actual intent to deceive or any right to remedies
described in Section 9.13 hereof.

                                   ARTICLE VII

                       CONFIDENTIAL INFORMATION; PUBLICITY

          7.01. Confidential Information.

               (a) The parties agree that any and all technical, financial,
operations or business information including, but not limited to, customer data,
marketing plans, customer lists, customer information, customer account numbers,
the status of any account, pricing information, computer access codes,
instruction and/or procedural manuals, CNSI's or CTL's current operating
policies and manuals, information prepared for or used in the preparation of any
operating plan or credit, collections and operations manual of the Company, or
financial data of any party ("Information") furnished or disclosed by any party
to another party or obtained by any party as a result of its ownership interest
in the Company shall be deemed the property of the disclosing party or the
Company, as applicable, and when in tangible form, shall be returned by the


                                       8
<PAGE>

receiving party to the disclosing party or the Company upon request along with
any copies as may be authorized herein.

               (b) "Information" shall not include: (i) information previously
known to the receiving party free of any obligation to keep it confidential as
evidenced by written records; (ii) information that has been or subsequently is
made public, through no wrongful act of the receiving party or any third party;
or (iii) information that is received from a third party without restriction and
without breach of this Agreement, other than information provided to such party
in connection with its performance of this Agreement or any other Operative
Document.

               (c) Each party agrees that it shall hold Information in
confidence and shall not make disclosure of Information to anyone except such of
its employees or third party contractors or agents to whom such disclosure is
necessary for the purpose of and as permitted in performance of this Agreement,
except in the following circumstances: (i) to the extent necessary to comply
with a specific applicable Law or the valid final order of a court of competent
jurisdiction in which the party making the disclosure or communication shall
notify the other party in writing and shall seek confidential and proprietary
treatment of the information; (ii) as part of normal reporting or review
procedures of such party's Board of Directors, or managing members, as
applicable, parent company, auditors and attorneys; provided, however, that such
persons or entities agree to be bound by the provisions of this paragraph; (iii)
to enforce its rights legally under this Agreement in a court of competent
jurisdiction; (iv) as is customary in connection with the sale, transfer,
pledge, syndication, assignment and/or securitization of Finance Contracts
(and/or any accounts receivable or collateral in connection therewith), so long
as the party disclosing Information in such circumstances obtains from such
Persons to whom such Information is disclosed, an agreement in the form of this
Section 7.01, not to disclose such Information; or (v) such information as is
part of the public domain through disclosure other than by or through such
party. Each party shall appropriately notify each employee, contractor, or agent
to whom Information is disclosed that any such disclosures are made in
confidence and shall be kept in confidence by such employee, contractor, or
agent, and shall require any third party contractor or agent to sign a written
agreement to maintain the confidentiality of the Information.

               (d) The obligations of the parties hereunder shall survive and be
enforceable by temporary and permanent injunctive relief against the breaching
party and its employees, officers, directors, agents, representatives, and
contractors notwithstanding any termination of this Agreement.

          7.02. Confidentiality of Agreement; Publicity.

               (a) Except as required by Law, in connection with any offering of
securities or otherwise, the parties shall keep confidential and not disclose,
and shall cause their officers, employees, and agents to keep confidential and
not disclose, any of the terms and conditions of this Agreement or any of the
Operative Documents to any third party without the prior written consent of all
other parties.



                                       9
<PAGE>

               (b) The obligations of the parties hereunder shall survive and be
enforceable by temporary and permanent injunctive relief against the breaching
party and its employees, officers, directors, agents, representatives, and
contractors notwithstanding any termination of this Agreement.

               (c) Each party will consult with each of the other parties prior
to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement, and will not issue
any such release or make any such statement over the reasonable objection of any
of the other parties, except as required by Law or the rules and regulations of
any relevant securities exchange or quotation system.

                                  ARTICLE VIII

                              TERM AND TERMINATION

          8.01. Term. This Agreement shall take effect on the date hereof and
remain in effect for a period of twelve (12) months or until terminated pursuant
to Section 8.02 hereof, provided, however, the terms of this Agreement shall
remain in effect, as applicable, in relation to any Finance Contract which
remains in effect after the end of the term of this Agreement pursuant to this
Article VIII.

          8.02. Termination. This Agreement and the transactions contemplated
hereby may be terminated as follows:

               (a) By written consent of each of the parties hereto; or

               (b) The dissolution of the Company.

          8.03. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.02, this Agreement shall become void and have no
effect, except in relation to any Finance Contract which remains in effect after
such termination that the provisions of Articles 6 and 7, and any other
provision necessary to give effect to such surviving provisions, shall survive
any such termination.

                                   ARTICLE IX

                                  MISCELLANEOUS

          9.01 Amendments and Waivers. Except as otherwise expressly provided
herein, this Agreement shall not be amended or modified in any fashion except by
an instrument in writing signed by the parties hereto. Waiver by a party of any
condition, or any breach of this Agreement by any other party, shall not be
effective unless in a writing signed by the waiving party, and no such waiver
shall operate or be construed as the waiver of any conditions other than those
expressly identified in the written waiver or of the same or another breach on a
subsequent occasion.

                                       10
<PAGE>

          9.02. Nonassignability. All terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. This Agreement may not be
assigned by any party; provided, however, that such consent shall not be
required for the assignment by any party of its rights and privileges hereunder
to an Affiliate wholly owned, directly or indirectly, by any of the parties, as
the case may be (it being understood that no such assignment shall relieve the
assigning party of its duties or obligations hereunder).

          9.03. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns. This Agreement is not for the benefit
of any other Person, other than CNSI, CTL, First Venture, the Company and their
respective Subsidiaries, and no other Person, other than CNSI, CTL, First
Venture, the Company and their respective Subsidiaries, shall have any rights
against the parties hereunder.

          9.04 Rules of Construction. The headings in this Agreement are
inserted only as a matter of convenience and in no way affect the terms or
intent of any provision of this Agreement. All defined phrases, pronouns, and
other variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular, or plural, as the actual identity of the organization, person,
or persona may require. No provision of this Agreement shall be construed
against any parties hereto by reason of the extent to which such parties or its
counsel participated in the drafting hereof. All references to dollars shall be
to United States dollars.

          9.05. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS MADE
AND ENTERED INTO UNDER THE LAWS OF THE STATE OF CALIFORNIA, AND THE LAWS OF THAT
STATE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY THEREUNDER
(WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF) SHALL
GOVERN THE VALIDITY AND INTERPRETATION HEREOF AND THE PERFORMANCE BY PARTIES
HERETO OF THEIR RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER. Each party hereby
irrevocably consents that any legal action or proceeding against it or any of
its assets with respect to this Agreement may be brought in any jurisdiction
where it or any of its assets may be found, or in any court of the State of
California or any Federal court of the United States of America located in Los
Angeles, California, or both, as the other party may elect, and by execution and
delivery of this Agreement, each party hereby irrevocably submits to and accepts
with regard to any such action or proceeding, for itself and in respect of its
assets, generally and unconditionally, the jurisdiction of the aforesaid courts.
Each party further agrees that final judgment against such party in any action
or proceeding in connection with this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and the amount of such party's indebtedness.
Each party hereby irrevocably waives, to the fullest extent permitted by Law,
any objection which such party may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
brought in the State of California, and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in the State of
California has been brought in an inconvenient forum.

                                       11
<PAGE>

          9.06. Severability of Provisions. If any provision of this Agreement
shall be contrary to the internal laws of California or any other applicable
Law, at the present time or in the future, such provision shall be deemed null
and void, but shall not affect the legality of the remaining provisions of this
Agreement. This Agreement shall be deemed to be modified and amended so as to be
in compliance with applicable Law and this Agreement shall then be construed in
such a way as will best serve the intention of the parties at the time of the
execution of this Agreement.

          9.07. Counterparts; Delivery. This Agreement may be executed in one or
more counterparts. Each such counterpart shall be considered an original and all
of such counterparts shall constitute a single agreement binding all the parties
as if all had signed a single document. The parties acknowledge that delivery of
executed counterparts of this Agreement may be effected by a facsimile
transmission or other comparable means, with an original document to be
delivered promptly thereafter via overnight courier.

          9.08. Entire Agreement. This Agreement (including any schedules,
exhibits or other attachments hereto), taken together with the other Operative
Documents, constitute the entire agreement among the parties. This Agreement and
the other agreements referred to in the preceding sentence supersede all prior
and contemporaneous agreements, statements, understandings, and representations
of the parties. There are no representations, warranties, agreements,
arrangements, or understandings, oral or written between the parties relating to
the subject matter of this Agreement which are not fully expressed herein or in
the other Operative Documents. The parties agree that the traditional
formulation of the parol evidence rule (whereby extrinsic evidence may not be
used to vary or contradict the unambiguous terms of a document that represents a
final and complete expression of the parties' agreement) shall govern in any
action or proceeding that may ensue concerning this Agreement and/or the other
Operative Documents.

          9.09. Notices. All notices, requests, consents, or other
communications required or permitted to be given under this Agreement shall be
in writing, may be delivered in person by telex or telecopy, by overnight air
courier, or by certified or registered mail (return receipt requested with all
fees prepaid), and shall be deemed to have been duly given and to have become
effective upon the date actually delivered to the parties or their assignees at
the following addresses:

                  If to CNSI or CTL:

                                    Coyote Network Systems, Inc.
                                    4360 Park Terrace Drive
                                    Westlake Village, California  91361
                                    Attention:  President





                                       12
<PAGE>

                  If to First Venture:

                                    First Venture Leasing, LLC
                                    C/O Acorn Roseand & Management
                                    777 Summer Street
                                    Stamford, Connecticut 06901
                                    Attention:  Mr. Robert Loonin

                  If to the Company:

                                    Coyote Leasing, LLC
                                    777 Summer Street
                                    Stamford, Connecticut 06901
                                    Attention:  Mr. Robert Loonin

The persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
section.

          9.10. Waiver of Jury Trial. The parties hereto hereby waive their
respective right to trial by jury of any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding and/or hearing brought by any party
hereto against another party hereto on any matter whatsoever relating to,
resulting from, arising out of, or in any way connected with this Agreement, or
any amendment or breach hereof, including, without limitation, any claim or
injury or damage, or the enforcement of any remedy under any Law, statute, or
regulation, emergency or otherwise, now or hereafter in effect.

          9.11. Expenses. Each party shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and applicable fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel. Notwithstanding the foregoing, any
reasonable expenses incurred by First Venture on behalf of or for the benefit of
the Company as contemplated hereunder shall be paid by the Company.

          9.12. Further Assurances. The parties hereto from time to time after
execution of this Agreement, without further consideration, shall execute and
deliver, as appropriate, such documents and take such actions as may be
reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.

          9.13. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions in
Section 5.02 and Article VII of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of Section 5.02 and Article VII of this Agreement and to enforce
specifically such terms and provisions in any court of the United States or any
state having jurisdiction; provided, however, that the foregoing shall not be
construed as prohibiting any party from pursuing any other rights and remedies
available to it for such breach or threatened breach.

                                       13
<PAGE>

          9.14. Brokers and Finders. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by any party, such party agrees to indemnify and
hold each other party harmless of and from any liability in respect of such
claim.

          9.15. Relationship of Parties. Nothing contained in this Agreement
shall be construed as constituting a partnership or agency relationship between
the parties hereto. As of the date of this Agreement, the relationship of the
parties one to another for all purposes shall be that of independent members of
a limited liability company.










                                       14
<PAGE>

          IN WITNESS WHEREOF the undersigned hereto execute this Agreement.

                                         COYOTE NETWORK SYSTEMS, INC.

                                         By:
                                                -------------------------
                                                Name:
                                                Title:

                                         COYOTE TECHNOLOGIES, LLC

                                         By:
                                                -------------------------
                                                Name:
                                                Title:


                                         FIRST VENTURE LEASING, LLC

                                         By:
                                                -------------------------
                                                Name:
                                                Title:


                                         COYOTE LEASING, LLC

                                         By:
                                                -------------------------
                                                Name:
                                                Title:


<PAGE>

                 FIRST AMENDMENT TO FINANCIAL SERVICES AGREEMENT


     This First Amendment to the parties Financial Services Agreement (the
"Agreement") is made this 2nd day of February 2000, by and among Coyote Network
Systems, Inc., a Delaware corporation with its principal office located in
Westlake Village, California ("CNSI"), Coyote Technologies, LLC, a California
limited liability company with its principal office located in Westlake Village,
California ("CTL"), a First Venture Leasing, LLC, a Delaware limited liability
company with its principal office located in Stamford, Connecticut ("First
Venture") and Coyote Leasing, LLC, a Delaware limited liability company with its
principal office located in Stamford, Connecticut (the "Company").

                                 R E C I T A L S

     WHEREAS, each of CNSI, CTL, First Venture and the Company are parties to a
Financial Services Agreement entered into on January 25, 2000 (the "Agreement");

     WHEREAS, each of CNSI, CTL, First Venture and the Company wish to amend the
Agreement;

     NOW, THEREFORE, in consideration of these premises and the mutual covenants
set forth herein, the parties hereby agree as follows:

     Article V, Section 5.02 of the Agreement is replaced and superseded in its
entirety with:

          5.02. Preferred Relationship. In consideration of First Venture having
formed the Company and the Company engaging in the business of providing
Services to Coyote Customers, and First Venture and the Company taking all such
other actions as contemplated by this Agreement and the other Operative
Documents, each of CNSI and CTL agrees that it will view the Company as a
preferred, but nonexclusive source for providing Services to Coyote Customers.
Each of CNSI, CTL and First Venture will work with the Company to develop the
Business by offering Coyote Customers new credit programs for providing
Services.


<PAGE>

         In all other respects, the Agreement is hereby ratified and affirmed.

                                       COYOTE NETWORK SYSTEMS, INC.

                                       By:
                                             ----------------------------
                                             Name:
                                             Title:

                                       COYOTE TECHNOLOGIES, LLC

                                       By:
                                             ----------------------------
                                             Name:
                                             Title:

                                       FIRST VENTURE LEASING, LLC

                                       By:
                                             ----------------------------
                                             Name:
                                             Title:


                                       COYOTE LEASING, LLC

                                       By:
                                             ----------------------------
                                             Name:
                                             Title:


                          MASTER REMARKETING AGREEMENT


          This Agreement (this "Agreement") is made as of this 26th day of
January, 2000, by and among Coyote Network Systems, Inc., a Delaware corporation
with its principal address located at 4360 Park Terrace Drive, Westlake Village,
California 91361 ("CNSI"), Coyote Technologies, LLC, a California limited
liability company with its principal office located at 4360 Park Terrace Drive,
Westlake Village, California 91361 ("CTL"), and Coyote Leasing, LLC, a Delaware
limited liability company with its principal office located at 777 Summer
Street, Stamford, Connecticut 06901 ("Owner").

          WHEREAS, each of CNSI and CTL has agreed that Owner shall be its
preferred source for providing certain leasing and credit programs to CNSI's and
CTL's customers and create and develop new financing facilities and programs to
be offered to CNSI's and CTL's customers pursuant to that certain Financial
Services Agreement, dated as of the date hereof (the "Financial Services
Agreement"), among CNSI, CTL, Owner and First Venture Leasing, LLC. Capitalized
terms used but not defined herein shall have the meanings specified in the
Financial Services Agreement;

          WHEREAS, Owner may purchase from time to time certain equipment (the
"Equipment") from CNSI or CTL which will initially be leased by Owner to third
parties pursuant to a User Lease (as defined below) and which Owner, CNSI and
CTL desire to have remarketed upon the termination of any such User Lease
pursuant to the terms hereof;

          WHEREAS, Owner desires to engage CNSI and CTL and each of CNSI and CTL
desires to accept such engagement to participate with Owner in remarketing the
Equipment on behalf of Owner under the terms and conditions set forth below;

          NOW, THEREFORE, Owner, CNSI and CTL agree as follows:

          1. Appointment. Owner hereby appoints each of CNSI and CTL as its
agent to remarket the Equipment on behalf of Owner, and each of CNSI and CTL
accepts the appointment and agrees to use its commercially reasonable efforts to
perform certain remarketing services as more fully described in this Agreement.
Remarketing shall include the sale (including, without limitation, any
installment or conditional sale, whether in the form of a lease or otherwise or
any trade-in of Equipment), re-lease or renewal of any existing lease of the
Equipment (such re-leases and existing leases are to be collectively referred to
herein as the "User Leases") to either the person leasing the Equipment
immediately prior to the remarketing or to a new user (collectively, the
"Users"). Owner further appoints each of CNSI and CTL, upon prior written
request by Owner to CNSI or CTL, as applicable, to use its commercially
reasonable efforts to assist Owner to effect a transfer of Owner's right, title
and interest in and to any Equipment which Owner has agreed to sell to a User,
subject to the rights of the CNSI or CTL, as applicable, hereunder (including
the right to be reimbursed for its Actual Costs (as defined below) incurred in
providing such assistance), any prior User or any Senior Lienholder (as defined
below) and each of CNSI and CTL hereby accepts such appointment.

                                       1
<PAGE>

          2. Schedules; Availability of Equipment for Remarketing. Owner will
from time to time, deliver to each of CNSI and CTL Remarketing Schedules (each,
a "Remarketing Schedule") under this Agreement. Each Remarketing Schedule shall
be substantially in the form of Exhibit A hereto, shall be consecutively
numbered and shall set forth the description and location of the Equipment, the
date such Equipment will be available for sale, re-lease or lease renewal (the
"Availability Date"), and such other terms as required. Each Remarketing
Schedule shall identify only Equipment which has been leased pursuant to one
particular User Lease.

          3. Remarketing Procedures, Services and Reimbursed Expenses. The
procedure for remarketing the Equipment shall be as follows:

          (a) In the event that any User Lease is terminated prior to the
expiration of its originally scheduled initial term (whether as a result of any
default or event of default by any User thereunder or by such User exercising
any early termination right thereunder, in either event, an "Early
Termination"), upon receipt of a Remarketing Schedule which identifies Equipment
which was subject to such User Lease, each of CNSI and CTL will promote and
market such Equipment as equivalent to Similar Equipment (as defined below) and
shall exert its best efforts to solicit firm offers ("Offers") from Users (which
shall include, without limitation, each of CNSI's and CTL's current customers
both in the U.S. and internationally) for the sale, re-lease or lease renewal of
such Equipment. Each of CNSI and CTL shall assert its best efforts to solicit
Offers for such Equipment. In addition to each of CNSI's and CTL's obligations
in the preceding sentence to promote, market and solicit Offers for Equipment in
priority to any Similar Equipment, in the event that any User Lease is
terminated prior to the expiration of its originally scheduled initial term
(whether as a result of any default or event of default by any User thereunder
or by such User exercising any early termination right thereunder, in either
event, an "Early Termination"), each of CNSI and CTL shall promote and market
any Equipment which was subject to such User Lease as equivalent to Similar
Equipment which is new. Each Offer shall identify the potential User and shall
set out the basic terms and conditions of such Offer, including, without
limitation, the proposed sale price for the sale of the Equipment or the
proposed rent payment amounts and term for any re-lease or lease renewal of the
Equipment. Each of CNSI and CTL will promptly inform Owner of any such Offers it
receives.

          (b) Upon receipt of a Remarketing Schedule which identifies Equipment
which was leased pursuant to a User Lease which was not subject to an Early
Termination, each of CNSI and CTL will exert commercially reasonable efforts to
promote and market such Equipment and solicit Offers for the sale, re-lease or
lease renewal of such Equipment. Each of CNSI and CTL will promptly inform Owner
of any such Offers it receives. In the event that Owner has not received written
notice from either CNSI or CTL that either CNSI or CTL has received an Offer for
such Equipment by the later of (i) 90 days after Owner has delivered to each of
CNSI and CTL a Remarketing Schedule for such Equipment or (ii) 30 days prior to
the Availability Date for such Equipment, Owner shall then have the right to
promote and market such Equipment and solicit Offers directly from any Users
(which shall include, without limitation, each of CNSI's and CTL's current
customers both in the U.S. and internationally), for the sale, re-lease or lease
renewal of such Equipment. The terms of any such marketing activity by Owner
will be subject to the prior review and approval (not to be unreasonably


                                       2
<PAGE>

withheld) of CNSI or CTL, as applicable. Under no circumstances, other than as
provided in this Section 3(b), shall Owner promote or market any Equipment or
solicit Offers directly from Users for the sale, re-lease or lease renewal of
such Equipment.

          (c) In the event that an existing User of Equipment does not renew an
existing User Lease or purchase the Equipment upon the termination of such User
Lease, Owner shall direct such User to ship such Equipment to CTL at such
facility as directed by CTL by written notice to Owner from time to time ("CTL's
Facility"), at such User's expense, in accordance with the terms of the
applicable User Lease. In the event that any User does not comply with Owner's
direction to ship any Equipment to CTL's Facility, Owner shall undertake to
deinstall, insure and transport such Equipment to CTL's Facility at Owner's
Actual Cost. Upon delivery of such equipment to CTL's Facility, CTL shall store,
insure and maintain the Equipment, as required to preserve the value of such
Equipment at CTL's Actual Cost (as defined below). Upon receipt by CTL of a
purchase order from Owner to refurbish the Equipment, CTL shall promptly
refurbish the Equipment (which may include the application of "Skins" decals,
painting, and electronic and software upgrades) and perform any Equipment
modifications (which may include standard board and software changes), so as to
bring the Equipment to the highest release level as Owner and CTL shall agree
will result in the realization of the maximum profit margin for the sale or
re-lease of such Equipment (after accounting for the Actual Costs of any such
refurbishment or modifications). Any of CTL's Actual Costs incurred in
performing such refurbishment or modifications may be reimbursed as an Approved
Expense in accordance with Section 6(a) hereof; provided, however, that in the
event that the amount of Equipment Proceeds (as defined below) available from
the sale, re-lease or lease renewal of Equipment is not sufficient to reimburse
CTL for CTL's Actual Costs incurred in performing such refurbishment or
modifications, Owner shall promptly reimburse CTL for any such shortfall upon
Owner's reasonable determination of such insufficiency of Equipment Proceeds.
"Actual Costs" for the purpose of this Agreement shall mean CNSI's, CTL's or
Owner's, as applicable, actual cost (without mark-up), incurred in performing
any remarketing services pursuant to this Agreement, determined as follows: (i)
if such services are performed by a third party, then the actual cost shall be
the actual charges of such third party paid by CNSI, CTL or Owner, as applicable
(without markups or overhead by CNSI, CTL or Owner, as applicable), and (ii) if
CNSI, CTL or Owner, as applicable, elects to perform such obligation itself,
then the actual cost shall be such party's direct cost for labor and materials.

          (d) Owner, CNSI and CTL shall consider the terms and conditions of any
Offer received by Owner, CNSI or CTL (including, without limitation, any
purchase price, lease payments, lease term and credit worthiness of the proposed
User), and Owner, CNSI and CTL shall mutually agree to the terms of (i) any
Offer (or subsequent counter-offer from User) before accepting such Offer or
(ii) the terms of any counter-offer before making such counter-offer to any
proposed User. In the event that Owner, CNSI or CTL are unable to agree to the
terms of an Offer (or subsequent counter-offer from a User) or with respect to
the terms and conditions of any counter-offer to a User, within ten (10) days of
receipt by Owner, CNSI or CTL of an Offer (or subsequent counter-offer from
User), Owner shall upon notice to CNSI and CTL have the right to sell, re-lease
or enter into a lease renewal for the applicable Equipment, without the
agreement of CNSI or CTL; provided, however, that neither CNSL nor CTL shall be


                                       3
<PAGE>

responsible for the terms of any related Equipment servicing agreement, warranty
or intellectual property rights provided to a User under such circumstances,
other than as may be provided pursuant to Section 4 hereof.

          (e) Upon agreement by Owner and a User for the sale, re-lease or lease
renewal of any Equipment, pursuant to the terms hereof, Owner will promptly
prepare and arrange for the execution of commercially standard documentation for
the sale, re-lease or lease renewal of such Equipment and CTL shall arrange for
the packing, shipping and installation of such Equipment, which shall be
accompanied by new manuals and any appropriate warranty cards and/or
registration information, and all Actual Costs associated with the above may be
reimbursed as an Approved Expense in accordance with Section 6 hereof.

          4. Equipment Servicing; Warranties; Intellectual Property Rights; and
Repurchase or Guarantee Agreements.

          (a) CTL shall offer to any User of Equipment which is subject to any
sale, re-lease or lease renewal hereunder, the option to enter into a service
agreement for such Equipment, upon similar terms and conditions as CTL generally
offers to users of Similar Equipment.

          (b) Each of CNSI and CTL hereby consents to Owner's assignment to any
User of any unexpired portion of any warranty on Equipment which is to be used
by such User pursuant to a sale or re-lease of such Equipment hereunder. Each of
CNSI and CTL shall provide such additional warranties, as required, so that all
Equipment which is sold or re-leased, shall be subject to CNSI's and CTL's basic
warranties for such Equipment for a minimum period of 90 days after the
effective date of such sale or re-lease. In addition to any of the foregoing,
each of CNSI and CTL shall provide such additional warranty coverage to
Equipment which is subject to any Early Termination, which shall be equivalent
to any warranty which each of CNSI and CTL provides for Similar Equipment which
is new. The cost to each of CNSI and CTL of the additional warranties set forth
in the preceding two sentences shall be agreed to by Owner and CNSI or CTL, as
applicable, and shall be reimbursed to CNSI or CTL, as applicable, as an
Approved Expense pursuant to Section 6(a) hereof.

          (c) Each of CNSI and CTL shall grant to any User of Equipment which is
subject to any sale, re-lease or lease renewal hereunder all intellectual
property rights and other rights that are necessary or reasonably appropriate
for the use and operation of any such Equipment and subject to the CNSI's or
CTL's, as applicable, standard terms and conditions for sale of Equipment. Such
grant shall be free of any additional charge or fee to Owner or any User.

          (d) Each of CNSI and CTL shall assign to Owner any rights it has or
may hereafter acquire in any agreement, including, without limitation, any OEM,
distribution or re-seller agreement, relating to (i) any guaranty by any Person
of payment for the lease or purchase of Equipment, or (ii) any obligation by any


                                       4
<PAGE>

Person to purchase Equipment upon the termination of a User Lease.

          5. Administration; Billing and Collecting; Distribution of Equipment
Proceeds. Owner shall: (a) timely invoice (i) Users under a re-lease or lease
renewal of the Equipment for any rental payments and other sums due to be paid
by them to Owner ("Equipment Lease Proceeds") and (ii) Users under a sale of the
Equipment for all sale proceeds and other sums due to be paid to Owner
("Equipment Sale Proceeds," collectively with Equipment Lease Proceeds,
"Equipment Proceeds"); (b) use its best efforts (subject to the rights of any
party holding a lien or security interest in the Equipment and/or Equipment
Proceeds superior to that of Owner (the "Senior Lienholder")) to collect the
Equipment Proceeds; (c) distribute the Equipment Proceeds in accordance with
Section 6 hereof; (d) file and pay, or cause any User to file and pay, all sales
and/or use tax returns arising from a sale, re-lease or lease renewal of
Equipment; and (e) to use reasonable efforts to enforce all remedies (including
lawful repossession) in the event of any default or event of default by User
under any re-lease or lease renewal or sale agreement relating to the Equipment,
subject however, to the rights of a Senior Lienholder, if any.

          6. Payment of Equipment Proceeds. All Equipment Proceeds, upon receipt
of such Equipment Proceeds by Owner, shall be applied as follows (to the extent
Equipment Proceeds are available therefor):

          (a) first, to the payment of or to reimburse CNSI or CTL, as
applicable, for all "Approved Expenses" incurred in connection with the
administration and remarketing of Equipment hereunder. "Approved Expenses" shall
mean, for the purposes of this Agreement, any and all appropriate or necessary
Actual Costs incurred and paid in connection with the performance by each of
CNSI, CTL and Owner of its obligations hereunder, including, but not limited to,
Actual Costs of installation and deinstallation, maintenance and service,
refurbishing, modification, storage, salesmen's commissions paid to CNSI's or
CTL's sales force (in accordance with CNSI's or CTL's standard sales
compensation plan or as otherwise agreed to by Owner and CNSI or CTL, as
applicable) for any sale or re-lease of Equipment to a new User, broker's fees
paid to any third-party brokers (in such amount as mutually agreed to by Owner
and CNSI or CTL, as applicable) for any sale or re-lease of the Equipment to a
new User, legal fees paid to outside counsel, Equipment transportation, drayage
and freight from and to points of installation and for any warranty or
insurance, all of which shall be appropriately documented. Other than as
specifically provided in the previous sentence, Approved Expenses for the
remarketing of any item of Equipment shall not include any general overhead
costs or expenses of CNSI, CTL, Owner, or either of their employees, or any
travel expenses, or salesmen's commissions and brokerage fees not specifically
included as Approved Expenses in the previous sentence, or any advertising,
direct mail or similar costs incurred by CNSI, CTL or Owner in connection with
its remarketing activities, hereunder. Except as specifically provided in
Section 3(c) hereof, Approved Expenses shall be paid or reimbursed to CNSI or
CTL solely from Equipment Proceeds, and notwithstanding anything herein to the
contrary, Owner shall have no direct, personal, out-of-pocket liability for the
payment thereof;

          (b) second, to the payment to Owner of any amounts which have not been
paid by a User having leased the Equipment pursuant to a User Lease and which
are payable pursuant to a User Lease, immediately prior to its remarketing to a


                                       5
<PAGE>

new User hereunder, including, without limitation, (i) all unpaid sums accrued
and due to Owner pursuant to such User Lease (including, without limitation, any
default interest or late charges), as of the date that Owner first receives any
Equipment Proceeds under a sale or lease agreement with such a new User (the
"Initial Payment Date") and (ii) an amount equal to the present value of rental
payments and other sums which were to become due after the Initial Payment Date
during any remaining portion of the initial term of such User Lease which is
subject to Early Termination (which amount shall be discounted to present value
as of the Initial Payment Date at the discount rate as provided in the remedies
section of the applicable User Lease); provided, however, that in the event that
Owner subsequently recovers from such prior User any amounts for which Owner has
received payment pursuant to (i) and (ii) above, such recovered amounts shall be
included as part of the Equipment Proceeds and distributed in accordance with
this Section 6. Owner shall use its commercially reasonable efforts to collect
all amounts which have not been paid by a User having leased the Equipment
pursuant to a User Lease. Owner shall distribute any Equipment Proceeds which it
may receive pursuant to this Section 6(b), in such manner as may be required
pursuant to the terms and conditions, if any, of any then existing agreement
between Owner and CNSI or CTL;

          (c) third, to reimburse Owner for all Approved Expenses incurred in
connection with the administration and remarketing of Equipment hereunder;

          (d) fourth, twenty-five percent (25%) of the remainder thereof (the
"Net Proceeds") shall be paid to the CNSI or CTL, as applicable, as a
remarketing fee (the "Remarketing Fee"), provided that CNSI or CTL, as
applicable, shall not be entitled to such Remarketing Fee if this Agreement has
been terminated in accordance with Section 7 hereof; and

          (e) fifth, the remaining "Net Proceeds" to the Owner.

          7. Termination.

          This Agreement shall terminate upon the mutual agreement of the
parties hereto; provided, however, that Owner shall have the right to earlier
terminate this Agreement prior to such date upon notice in writing to CNSI and
CTL:

          (a) If CNSI or CTL shall have breached in any material respect any of
its covenants, obligations, and agreements hereunder, if such breach shall be
capable of' being cured, such breach shall have continued for thirty (30) days
after CNSI or CTL receives a written notice thereof from Owner specifying the
nature of the breach; or

          (b) If CNSI or CTL shall:

                    (i) admit in writing its inability to pay or fail to pay its
          debts generally as they become due;

                    (ii) file a voluntary petition in bankruptcy or a petition
          to take advantage of any insolvency, reorganization, arrangement,
          composition, readjustment, liquidation, dissolution or similar
          arrangement, under any present or future law, statute or regulation or


                                       6
<PAGE>

          file an answer admitting or failing to deny the material allegations
          of a petition filed against it in any such proceeding;

                    (iii) make an assignment for the benefit of its creditors;

                    (iv) consent to or acquiesce in the appointment of, or
          possession by, a receiver, trustee, liquidator or custodian for itself
          or for the whole or any substantial part of its property;

                    (v) have a petition in bankruptcy or an involuntary petition
          for reorganization, arrangement, composition, readjustment,
          liquidation, dissolution or similar arrangement under any present or
          future law, statute or regulation filed against it, and such
          proceeding or case shall continue undismissed or an order, judgment or
          decree approving or ordering any of the foregoing shall be entered and
          continue unstayed and in effect for a period of sixty (60) or more
          days or an order for relief against such party shall be entered in an
          involuntary case under any law with respect to bankruptcy, insolvency,
          liquidation, moratorium, reorganization or similar laws affecting
          creditors' rights generally; or

                    (vi) cease doing business as a going concern; or

          (c) If a court of competent jurisdiction shall enter an order,
judgment or decree appointing, with or without the consent of CNSI or CTL, a
custodian for such party or the whole or any substantial part of its property,
or approving a petition filed against it seeking reorganization or arrangement
of such party under any bankruptcy or insolvency laws or any other state of
federal law for the relief of debtors, and such order, judgment or decree shall
not be vacated or set aside or stayed within sixty (60) days from the date of
entry thereof; or

          (d) If, under the provisions of any other law for the relief of
debtors, any court of competent jurisdiction or a custodian shall assume custody
or control of CNSI or CTL or the whole or any substantial part of its property,
with or without the consent of such party, and such custody or control shall not
be terminated or stayed within sixty (60) days from the date of assumption of
such custody or control; or

          (e) If any material representation by CNSI or CTL under any Operative
Agreement (as defined in the Financial Services Agreement) or this Agreement
shall have been untrue when made.

          In addition to any right which Owner may have to earlier terminate
this Agreement pursuant to (a) through (e) above, Owner shall have the right to
earlier terminate this Agreement upon notice in writing to CNSI or CTL if CNSI
or CTL shall cease to be actively engaged in the business of remarketing
equipment of the type similar to the Equipment or shall transfer or sell all or
substantially all of its assets and such transferee or purchaser does not assume
CNSI's or CTL's, as applicable, obligations hereunder.

                                       7
<PAGE>

          8. Miscellaneous.

          8.1 Representations and Warranties. Each of the parties hereto
represents and warrants to the other that each has the power and authority to
execute and to carry out the terms of this Agreement, the execution of which has
been duly authorized by all requisite action of such party, and each makes for
the benefit of the other the same representations and warranties as to its
authority with respect to the subject matter hereof and the validity and
enforceability of this Agreement as are made by them in the Financial Services
Agreement.

          8.2 Successors and Assigns. The rights and obligations of the parties
hereunder shall inure to the benefit of, and be binding and enforceable upon,
the respective successors, assigns and transferees of either party; provided,
however, that neither party hereto may assign this Agreement (by operation of
law or otherwise) without prior written consent of the other party which may be
withheld in such party's sole discretion.

          8.3 Notices. Any notice, request or other communication to either
party by the other hereunder shall be given in writing and shall he deemed given
(i) on the date the same is personally delivered, whether by hand delivery,
facsimile transmission or overnight courier with receipt acknowledged or (ii)
three (3) days following the date it is mailed by certified mail, return receipt
requested, postage prepaid and addressed to the party for which it is intended
at the address set forth at the head of this Agreement (or such other address of
which notice has been given pursuant to the provisions of this Section 8.3)
together with a copy thereof to one additional addressee as may be requested by
notice hereunder. The place to which notices or copies of notices are to be
given to either party may changed from time to time by such party by written
notice to the other party.

          8.4 Captions. Captions used herein are inserted for reference purposes
only and shall not affect the interpretation or construction of this Agreement.

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

          8.6 Amendments. This Agreement may be amended or varied only by a
document in writing executed by Owner, CNSI and CTL.

          8.7 Relationship of Parties. By their respective actions in connection
with this Agreement, the parties hereto do not intend to be and shall not be
deemed partners or joint venturers with each other.

          8.8 Indemnification.

          (a) Each of the parties hereto agrees to and hereby does indemnify and
protect, defend and hold the other party and its subsidiaries, affiliates,
successors, assigns, stockholders or partners, or any of its, or their,


                                       8
<PAGE>

directors, officers, agents, employees, stockholders or partners (the
"Indemnitee") harmless from and against any and all claims, actions, suits or
proceedings of any kind and nature whatsoever, including all damages,
liabilities, penalties, costs, expenses and legal fees ("Losses") which such
Indemnitee may incur based on, arising out of, connected with or resulting from
any breach of or failure to fulfill any of the other party's covenants or
agreements set forth in this Agreement.

          (b) In the event any claim for indemnification hereunder arises on
account of a claim or action instituted by a third person against an Indemnitee,
the Indemnitee shall notify the indemnifying party (the "Indemnitor") in writing
promptly after the receipt of notice by the Indemnitee that such claim was made
or that such action was commenced, provided, that failure to so notify the
Indemnitor shall not relieve the Indemnitor of its obligations hereunder except
to the extent such delay or failure resulted in increased Losses otherwise
subject to indemnification under this Section 8.8. The Indemnitor shall be
entitled to participate in or, at its option, assume the defense of any such
claim or action by counsel of its own choosing, and if it assumes such defense,
to control and settle the same. If the Indemnitor proposes to enter into a
settlement of such a claim pursuant to which the Indemnitee will incur no
obligation and will receive a general release of claims from the claimant, the
Indemnitee will take all actions and execute all documents necessary to
accomplish such settlement; such claims shall not be settled otherwise without
the Indemnitee's prior written consent. If the Indemnitor shall only participate
in the defense of any such claim or action, the same shall not be settled
without its prior written consent (which consent shall not be unreasonably
withheld or delayed).



                  [Remainder of page intentionally left blank.]



                                       9
<PAGE>



          8.9 Governing Law and Procedure. This Agreement shall be governed by
the laws of the State of New York without giving effect to the conflicts of law
principles of such state. For purposes of any action or proceeding hereunder,
each of the parties hereto expressly submits to the jurisdiction of the federal
and state courts located in the State of New York and City of New York, and
waives any objection to venue therein, or based on the inconvenience of such
forum.


                                              COYOTE LEASING, LLC
                                              Owner

                                              BY:
                                                   ----------------------
                                              ITS:


                                              COYOTE NETWORK SYSTEMS, INC.

                                              BY
                                                   -----------------------
                                              ITS:


                                              COYOTE TECHNOLOGIES, LLC

                                              BY
                                                   -----------------------
                                              ITS:




<PAGE>

                                    EXHIBIT A

                          REMARKETING SCHEDULE NO. ___
                             Dated __________, ____

Description of Equipment:


                    Equipment     Model/
  Qty.      Mfg.       Type       Feature        Description        Serial No.
- -------  --------   ----------   ---------    ------------------   ------------



Location of Equipment:        ________________________________
                              Name

                              ________________________________
                              Address

                              ________________________________
                              City/State/Zip

                              ________________________________
                              Contact Person/Telephone


                              (Equipment Schedule No. __ dated _______, ___)

Availability Date: __________, ____; or the first day following Termination Date
of the User Lease if (i) an Early Termination Option or any similar option has
been exercised by the User, or (ii) termination of the User Lease by Owner due
to a default or event of default thereunder; in each case, as notified in
writing from time to time by Owner to CNSI and CTL.


          This Remarketing Schedule is issued pursuant to the Master Remarketing
Agreement dated as of January __, 2000 among CNSI, CTL and Owner and
incorporates by reference all of the terms and conditions of that Agreement.

COYOTE NETWORK SYSTEMS, INC.                COYOTE LEASING, LLC

BY:   _______________________               BY:   ___________________________

ITS:  _______________________               ITS:  ___________________________

DATE: _______________________               DATE: ___________________________



COYOTE TECHNOLOGIES, LLC

BY:   _______________________

ITS:  _______________________

DATE: _______________________



                         COYOTE TECHNOLOGIES LICENSE AGREEMENT


          This Coyote Technologies License Agreement (this "Agreement") is made
as of this 26th day of January, 2000 (the "Effective Date"), by and between
Coyote Technologies, LLC, a California limited liability company with its
principal office located at Westlake Village, California ("CTL") and Coyote
Leasing, LLC, a Delaware limited liability company with its principal office
located in Stamford, Connecticut (the "Licensee").


                                 R E C I T A L S

          WHEREAS, CTL, Licensee, Coyote Network Systems, Inc., a Delaware
corporation with its principal office located in Westlake Village, California
("CNSI"), and First Venture Leasing, LLC, a Delaware limited liability company
with its principal office located in Stamford, Connecticut ("First Venture")
have entered into that certain Financial Services Agreement (the "Financial
Services Agreement"), and CNSI, CTL and Licensee have entered into that certain
Master Remarketing Agreement, each dated as of the date hereof (collectively,
the "FVL Agreements");

          WHEREAS, the Licensee will offer certain leasing and credit programs
to CNSI and CTL Customers and create and develop new financing facilities and
programs to be offered to CNSI and CTL Customers;

          WHEREAS, CTL now uses and may hereafter adopt certain trademarks,
service marks, trade names and other designations (collectively, the "Marks") in
connection with its business including without limitation those Marks identified
on Schedule A attached hereto; and

          WHEREAS, CTL desires to grant a license, and Licensee desires to
accept a license, to use the Marks in connection with the Business and the
Products and Services, pursuant to the terms of this Agreement.

          NOW, THEREFORE, in consideration of these premises and the mutual
covenants set forth herein, the parties hereby agree as follows:

          1. Definitions. Capitalized terms used but not defined herein shall
have the meanings specified in the Financial Services Agreement. The following
terms shall have the following meanings herein:

          "Affiliate" means with respect to a given Person, mean any other
Person directly or indirectly controlled by or under direct or indirect common
control with the Person specified.

          "Business" shall mean the business of providing the Services and of
performing all other activities reasonably related thereto including without
limitation leasing the Products, remarketing the Products in accordance with the
Master Remarketing Agreement, and bundling the Products with non-Products.

                                       1
<PAGE>

          "Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government (and any department
or agency thereof) or other entity.

          "Products" shall mean any products (including, without limitation,
related software licenses, but not including real estate) and related
installation and maintenance services provided, furnished, manufactured, sold
and/or marketed by CTL or any of its Affiliates now and in the future, and such
additional goods or services of CTL or any of its Affiliates as the parties may
from time to time agree.

          "Services" means the financing or leasing of Products to CTL
customers.

          2. Grant of License. CTL hereby grants to Licensee an exclusive,
perpetual, sublicensable, worldwide, royalty-free right and license to use the
Marks in connection with the Business and the Products and Services. Licensee
acknowledges that, as between CTL and Licensee, CTL is the owner of the Marks as
used in connection with the Business and the Products and Services.

          3. Term and Termination. This Agreement and the license granted herein
shall commence as of the Effective Date and shall be perpetual. Notwithstanding
the foregoing, this Agreement shall terminate (subject to Section 8 hereof) as
follows:

                    (a) if either party materially breaches any of its
          obligations under this Agreement, the non-defaulting party may
          terminate this Agreement on thirty (30) days' written notice; provided
          that such notice of termination shall be of no further force or effect
          if the default is cured by the defaulting party to the reasonable
          satisfaction of the non-defaulting party within sixty (60) days after
          receipt of such notice;

                    (b) immediately upon the dissolution of Licensee; or

                    (c) immediately upon termination or expiration of the
          Financial Services Agreement.

          4. Representations and Warranties. CTL represents and warrants to
Licensee that (i) CTL exclusively owns or otherwise holds valid rights to the
Marks and has the right to grant the licenses and rights it grants hereunder
upon the terms and conditions provided herein; and (ii) the use of the Marks as
permitted herein does not and will not violate any intellectual property,
proprietary or other right of any Person.

          5. (a) Indemnification. From and after the date hereof, CTL shall
indemnify, defend and hold harmless Licensee and its general partners, members,
officers, agents, representatives, and employees (with respect to any Claims
relating to (i), (ii) or (iii) below, the party to whom such indemnification
obligation is owed is referred to in this Section 5 as the "Indemnified Party"),
from and against any and all actions, claims, losses, costs, liabilities, and
expenses (including reasonable attorneys' fees) resulting from or arising out of
(i) CTL's breach of representations, warranties, covenants or other provisions
contained in this Agreement; (ii) claims asserted by third parties which, if


                                       2
<PAGE>

proven, would place CTL in breach of representations, warranties, covenants or
other provisions contained in this Agreement; or (iii) claims asserted by third
parties concerning Licensee's uses anywhere throughout the world of the Marks as
permitted hereunder (collectively, "Claims") and will promptly reimburse any
Indemnified Party for all Claims as incurred in connection with the
investigation of, preparation for, or defense of any pending or threatened
action or proceeding (collectively, "Proceeding"), whether or not such
Indemnified Party is a formal party to any such Proceeding. An Indemnified Party
shall not, without the prior written consent of CTL (which consent shall not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened Proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Party is
an actual or potential party to such Proceeding), provided, however, that the
Indemnified Party may execute such settlement, compromise or consent to the
entry of judgment in any pending or threatened Proceeding if the same includes
an unconditional release of CTL hereunder from all liability arising out of such
Proceeding.

          (b) Procedure. Promptly after an Indemnified Party receives notice of
the commencement of any Proceeding in respect of which indemnification may be
sought hereunder, the Indemnified Party will notify CTL; but the omission to so
notify CTL shall not relieve CTL from any obligation hereunder unless, and only
to the extent that, such omission results in CTL's forfeiture of substantive
rights or defenses. If any such Proceeding shall be brought against CTL, CTL
shall, upon written notice given reasonably promptly following the Indemnified
Party's notice to CTL of any such Proceeding, be entitled to assume the defense
thereof at its own expense with counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party; provided; however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense.

          6. Quality Control. Licensee agrees that the Products and Services
that it renders in connection with the Marks shall equal or exceed reasonable
standards hereafter identified by CTL to Licensee (provided that Licensee shall
have six (6) months from the time that Licensee receives written notice of such
identified reasonable standards to comply therewith). If CTL believes that the
quality of Products or Services offered by Licensee under the Marks fails to
meet the standard of quality set forth in this Section 6, then CTL shall so
notify Licensee, specifying, in reasonable detail, the reason for such failure.
Licensee will have sixty (60) days to cure the deficiency and, if such
deficiency is not cured with respect to such Products and/or Services to CTL's
reasonable satisfaction, then Licensee will not provide such Products and/or
Services in connection with the Marks until the deficiency is cured to CTL's
reasonable satisfaction.

          7. Infringement.

          (a) Licensee shall promptly notify CTL of any violation of the Marks
by a third party which may come to Licensee's attention. CTL shall have the
initial right to determine whether or not any action shall be taken with respect
to such violation, and the nature of the action to be taken. Licensee agrees to


                                       3
<PAGE>

cooperate in any reasonable manner with CTL in the conduct of such litigation,
at CTL's expense. Any recovery obtained by CTL as a result of any such action
brought under this Section 7 shall belong entirely to CTL.

          (b) In the event that CTL determines that litigation should not be
commenced or otherwise fails, after a reasonable period of time, to take
reasonable action to stop such infringement, Licensee may, upon CTL's written
consent, do so in its own name, and CTL will cooperate in any reasonable manner
with Licensee in the conduct of such litigation, at Licensee's expense. Any
recovery obtained by Licensee as a result of any such action brought under this
paragraph 7(b) shall belong entirely to Licensee.

          8. Effect of Termination. Within six (6) months of the effective date
of termination of this Agreement (the "Phase Out Period"), Licensee shall cease
all uses of the Marks. Notwithstanding the foregoing sentence, Licensee shall be
permitted to use the Marks beyond the Phase Out Period in connection with
transactions consummated by Licensee as part of the Services prior to
termination of this Agreement. Termination of this Agreement for any reason
shall not affect (i) those obligations which have accrued as of the date of
termination or (ii) those obligations which, from the context thereof, are
intended to survive termination of this Agreement (including without limitation
the provisions of Section 5 hereof).

          9. General Provisions.

          (a) Amendments and Waivers. Except as otherwise expressly provided
herein, this Agreement shall not be amended or modified in any fashion except by
an instrument in writing signed by the parties hereto. Waiver by a party of any
condition, or any breach of this Agreement by any other party, shall not be
effective unless in a writing signed by the waiving party, and no such waiver
shall operate or be construed as the waiver of any conditions other than those
expressly identified in the written waiver or of the same or another breach on a
subsequent occasion.

          (b) Successor and Assigns. All terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. This Agreement may be
assigned by either party without the prior written consent of the other party.

          (c) No Third Party Beneficiaries. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns. Except as set forth in Article IX of
the Financial Services Agreement, this Agreement is not for the benefit of any
other Person, other than CTL, the First Venture Entities and their respective
Subsidiaries, and no other Person, other than CTL, the First Venture Entities
and their respective Subsidiaries, shall have any rights against the parties
hereunder.

          (d) Rules of Construction. The headings in this Agreement are inserted
only as a matter of convenience and in no way affect the terms or intent of any
provision of this Agreement. All defined phrases, pronouns, and other variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular,
or plural, as the actual identity of the organization, person, or persona may


                                       4
<PAGE>

require. No provision of this Agreement shall be construed against any parties
hereto by reason of the extent to which such parties or its counsel participated
in the drafting hereof.

          (e) CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS MADE AND
ENTERED INTO UNDER THE LAWS OF THE STATE OF NEW YORK, AND THE LAWS OF THAT STATE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY THEREUNDER (WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF) SHALL GOVERN THE
VALIDITY AND INTERPRETATION HEREOF AND THE PERFORMANCE BY PARTIES HERETO OF
THEIR RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER. Each party hereby irrevocably
consents that any legal action or proceeding against it or any of its assets
with respect to this Agreement may be brought in any jurisdiction where it or
any of its assets may be found, or in any court of the State of New York or any
Federal court of the United States of America located in New York, New York, or
both, as the other party may elect, and by execution and delivery of this
Agreement, each party hereby irrevocably submits to and accepts with regard to
any such action or proceeding, for itself and in respect of its assets,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
party further agrees that final judgment against such party in any action or
proceeding in connection with this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and the amount of such party's indebtedness.
Each party hereby irrevocably waives, to the fullest extent permitted by Law,
any objection which such party may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
brought in the State of New York, and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in the State of New York
has been brought in an inconvenient forum.

          (f) Severability of Provisions. If any provision of this Agreement
shall be contrary to the internal laws of New York or any other applicable Law,
at the present time or in the future, such provision shall be deemed null and
void, but shall not affect the legality of the remaining provisions of this
Agreement. This Agreement shall be deemed to be modified and amended so as to be
in compliance with applicable Law and this Agreement shall then be construed in
such a way as will best serve the intention of the parties at the time of the
execution of this Agreement.

          (g) Counterparts; Delivery. This Agreement may be executed in one or
more counterparts. Each such counterpart shall be considered an original and all
of such counterparts shall constitute a single agreement binding all the parties
as if all had signed a single document. The parties acknowledge that delivery of
executed counterparts of this Agreement may be effected by a facsimile
transmission or other comparable means, with an original document to be
delivered promptly thereafter via overnight courier.

          (h) Entire Agreement. This Agreement (including any schedules,
exhibits or other attachments hereto), taken together with the other Operative
Documents, constitute the entire agreement among the parties. This Agreement and
the other agreements referred to in the preceding sentence supersede all prior


                                       5
<PAGE>

and contemporaneous agreements, statements, understandings, and representations
of the parties. There are no representations, warranties, agreements,
arrangements, or understandings, oral or written between the parties relating to
the subject matter of this Agreement which are not fully expressed herein or in
the other Operative Documents. The parties agree that the traditional
formulation of the parol evidence rule (whereby extrinsic evidence may not be
used to vary or contradict the unambiguous terms of a document that represents a
final and complete expression of the parties' agreement) shall govern in any
action or proceeding that may ensue concerning this Agreement and/or the other
Operative Documents.

          (i) Notices. All notices, requests, consents, or other communications
required or permitted to be given under this Agreement shall be in writing, may
be delivered in person by telex or telecopy, by overnight air courier, or by
certified or registered mail (return receipt requested with all fees prepaid),
and shall be deemed to have been duly given and to have become effective upon
the date actually delivered to the parties or their assignees at the following
addresses:

                  If to CTL:

                                    Coyote Network Systems, Inc.
                                    4360 Park Terrace Drive
                                    Westlake Village, California  91361
                                    Attention:  President

                  If to First Venture:

                                    First Venture Leasing, LLC
                                    C/O Acorn Roseand & Management
                                    777 Summer Street
                                    Stamford, Connecticut 06901
                                    Attention:  Mr. Robert Loonin

          The persons or addresses to which mailings or deliveries shall be made
may be changed from time to time by notice given pursuant to the provisions of
this section.

          (j) Waiver of Jury Trial. The parties hereto hereby waive their
respective right to trial by jury of any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding and/or hearing brought by any party
hereto against another party hereto on any matter whatsoever relating to,
resulting from, arising out of, or in any way connected with this Agreement, or
any amendment or breach hereof, including, without limitation, any claim or
injury or damage, or the enforcement of any remedy under any Law, statute, or
regulation, emergency or otherwise, now or hereafter in effect.

          (k) Further Assurances. The parties hereto from time to time after
execution of this Agreement, without further consideration, shall execute and
deliver, as appropriate, such documents and take such actions as may be
reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.

                                       6
<PAGE>

          (l) Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction; provided, however, that the foregoing
shall not be construed as prohibiting any party from pursuing any other rights
and remedies available to it for such breach or threatened breach.

          (m) Force Majeure. Neither party shall be liable for defaults or
delays due to acts of God or the public enemy, acts or demands of government or
any government agency, strikes, fires, flood, accident, or other unforeseeable
causes beyond its control and not due to its fault or negligence. Any party
desiring to excuse its default or delay for any such reason shall notify the
other party of the cause of such default or delay within five (5) days after the
beginning thereof.

          (n) Relationship of Parties. Nothing contained in this Agreement shall
be construed as constituting a partnership or agency relationship between the
parties hereto. On and after the Effective Date, the relationship of the parties
one to another for all purposes shall be that of independent contractors.






                                       7
<PAGE>

          IN WITNESS WHEREOF the undersigned hereto execute this Agreement.

                                          COYOTE TECHNOLOGIES, LLC

                                          By:
                                                 -----------------------
                                          Name:

                                          Title:


                          CERTIFICATE OF ACKNOWLEDGMENT



STATE OF CALIFORNIA
                                      ss.:
COUNTY OF LOS ANGELES


          On this 26th day of January, 2000, before me, the undersigned,
personally appeared Daniel W. Latham, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his/her signature on the instrument, the individual, or
the person upon behalf of which the individual acted, executed the instrument.



                                  ----------------------------------
                                  [NOTARY SEAL]


                                       8
<PAGE>



                                             COYOTE LEASING, LLC

                                             By:
                                                     --------------------------
                                             Name:

                                             Title:









                                       9
<PAGE>

 COYOTE LICENSE AGREEMENT


     This Coyote License Agreement (this "Agreement") is made as of this 26th
day of January, 2000 (the "Effective Date"), by and between Coyote Network
Systems, Inc., a Delaware corporation with its principal office located in
Westlake Village, California ("CNSI"), and Coyote Leasing, LLC, a Delaware
limited liability company with its principal office located in Stamford,
Connecticut (the "Licensee").


                                 R E C I T A L S

     WHEREAS, CNSI, Licensee, Coyote Technologies, LLC, a California limited
liability company with its principal office located at Westlake Village,
California ("CTL") and First Venture Leasing, LLC, a Delaware limited liability
company with its principal office located in Stamford, Connecticut ("First
Venture") have entered into that certain Financial Services Agreement (the
"Financial Services Agreement"), and CNSI, CTL and Licensee have entered into
that certain Master Remarketing Agreement, each dated as of the date hereof
(collectively, the "FVL Agreements");

     WHEREAS, the Licensee will offer certain leasing and credit programs to
CNSI and CTL Customers and create and develop new financing facilities and
programs to be offered to CNSI and CTL Customers;

     WHEREAS, CNSI now uses and may hereafter adopt certain trademarks, service
marks, trade names and other designations (collectively, the "Marks") in
connection with its business including without limitation those Marks identified
on Schedule A attached hereto; and

     WHEREAS, CNSI desires to grant a license, and Licensee desires to accept a
license, to use the Marks in connection with the Business and the Products and
Services, pursuant to the terms of this Agreement.

     NOW, THEREFORE, in consideration of these premises and the mutual covenants
set forth herein, the parties hereby agree as follows:

     1. Definitions. Capitalized terms used but not defined herein shall have
the meanings specified in the Financial Services Agreement. The following terms
shall have the following meanings herein:

     "Affiliate" means with respect to a given Person, mean any other Person
directly or indirectly controlled by or under direct or indirect common control
with the Person specified.

     "Business" shall mean the business of providing the Services and of
performing all other activities reasonably related thereto including without
limitation leasing the Products, remarketing the Products in accordance with the
Master Remarketing Agreement, and bundling the Products with non-Products.

     "Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government (and any department or agency
thereof) or other entity.

     "Products" shall mean any products (including, without limitation, related
software licenses, but not including real estate) and related installation and
maintenance services provided, furnished, manufactured, sold and/or marketed by
CNSI or any of its Affiliates now and in the future, and such additional goods
or services of CNSI or any of its Affiliates as the parties may from time to
time agree.

     "Services" means the financing or leasing of Products to CNSI customers.

     2. Grant of License. CNSI hereby grants to Licensee an exclusive,
perpetual, sublicensable, worldwide, royalty-free right and license to use the
Marks in connection with the Business and the Products and Services. Licensee
acknowledges that, as between CNSI and Licensee, CNSI is the owner of the Marks
as used in connection with the Business and the Products and Services.

     3. Term and Termination. This Agreement and the license granted herein
shall commence as of the Effective Date and shall be perpetual. Notwithstanding
the foregoing, this Agreement shall terminate (subject to Section 8 hereof) as
follows:

     (a) if either party materially breaches any of its obligations under this
Agreement, the non-defaulting party may terminate this Agreement on thirty (30)
days' written notice; provided that such notice of termination shall be of no
further force or effect if the default is cured by the defaulting party to the
reasonable satisfaction of the non-defaulting party within sixty (60) days after
receipt of such notice;

     (b) immediately upon the dissolution of Licensee; or

     (c) immediately upon termination or expiration of the Financial Services
Agreement.

     4. Representations and Warranties. CNSI represents and warrants to Licensee
that (i) CNSI exclusively owns or otherwise holds valid rights to the Marks and
has the right to grant the licenses and rights it grants hereunder upon the
terms and conditions provided herein; and (ii) the use of the Marks as permitted
herein does not and will not violate any intellectual property, proprietary or
other right of any Person.

     5. (a) Indemnification. From and after the date hereof, CNSI shall
indemnify, defend and hold harmless Licensee and its general partners, members,
officers, agents, representatives, and employees (with respect to any Claims
relating to (i), (ii) or (iii) below, the party to whom such indemnification
obligation is owed is referred to in this Section 5 as the "Indemnified Party"),
from and against any and all actions, claims, losses, costs, liabilities, and
expenses (including reasonable attorneys' fees) resulting from or arising out of
(i) CNSI's breach of representations, warranties, covenants or other provisions
contained in this Agreement; (ii) claims asserted by third parties which, if
proven, would place CNSI in breach of representations, warranties, covenants or
other provisions contained in this Agreement; or (iii) claims asserted by third
parties concerning Licensee's uses anywhere throughout the world of the Marks as
permitted hereunder (collectively, "Claims") and will promptly reimburse any
Indemnified Party for all Claims as incurred in connection with the
investigation of, preparation for, or defense of any pending or threatened
action or proceeding (collectively, "Proceeding"), whether or not such
Indemnified Party is a formal party to any such Proceeding. An Indemnified Party
shall not, without the prior written consent of CNSI (which consent shall not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened Proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Party is
an actual or potential party to such Proceeding), provided, however, that the
Indemnified Party may execute such settlement, compromise or consent to the
entry of judgment in any pending or threatened Proceeding if the same includes
an unconditional release of CNSI hereunder from all liability arising out of
such Proceeding.

     (b) Procedure. Promptly after an Indemnified Party receives notice of the
commencement of any Proceeding in respect of which indemnification may be sought
hereunder, the Indemnified Party will notify CNSI; but the omission to so notify
CNSI shall not relieve CNSI from any obligation hereunder unless, and only to
the extent that, such omission results in CNSI's forfeiture of substantive
rights or defenses. If any such Proceeding shall be brought against CNSI, CNSI
shall, upon written notice given reasonably promptly following the Indemnified
Party's notice to CNSI of any such Proceeding, be entitled to assume the defense
thereof at its own expense with counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party; provided; however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense.

     6. Quality Control. Licensee agrees that the Products and Services that it
renders in connection with the Marks shall equal or exceed reasonable standards
hereafter identified by CNSI to Licensee (provided that Licensee shall have six
(6) months from the time that Licensee receives written notice of such
identified reasonable standards to comply therewith). If CNSI believes that the
quality of Products or Services offered by Licensee under the Marks fails to
meet the standard of quality set forth in this Section 6, then CNSI shall so
notify Licensee, specifying, in reasonable detail, the reason for such failure.
Licensee will have sixty (60) days to cure the deficiency and, if such
deficiency is not cured with respect to such Products and/or Services to CNSI's
reasonable satisfaction, then Licensee will not provide such Products and/or
Services in connection with the Marks until the deficiency is cured to CNSI's
reasonable satisfaction.

     7. Infringement.

     (a) Licensee shall promptly notify CNSI of any violation of the Marks by a
third party which may come to Licensee's attention. CNSI shall have the initial
right to determine whether or not any action shall be taken with respect to such
violation, and the nature of the action to be taken. Licensee agrees to
cooperate in any reasonable manner with CNSI in the conduct of such litigation,
at CNSI's expense. Any recovery obtained by CNSI as a result of any such action
brought under this Section 7 shall belong entirely to CNSI.

     (b) In the event that CNSI determines that litigation should not be
commenced or otherwise fails, after a reasonable period of time, to take
reasonable action to stop such infringement, Licensee may, upon CNSI's written
consent, do so in its own name, and CNSI will cooperate in any reasonable manner
with Licensee in the conduct of such litigation, at Licensee's expense. Any
recovery obtained by Licensee as a result of any such action brought under this
paragraph 7(b) shall belong entirely to Licensee.

     8. Effect of Termination. Within six (6) months of the effective date of
termination of this Agreement (the "Phase Out Period"), Licensee shall cease all
uses of the Marks. Notwithstanding the foregoing sentence, Licensee shall be
permitted to use the Marks beyond the Phase Out Period in connection with
transactions consummated by Licensee as part of the Services prior to
termination of this Agreement. Termination of this Agreement for any reason
shall not affect (i) those obligations which have accrued as of the date of
termination or (ii) those obligations which, from the context thereof, are
intended to survive termination of this Agreement (including without limitation
the provisions of Section 5 hereof).

     9. General Provisions.

     (a) Amendments and Waivers. Except as otherwise expressly provided herein,
this Agreement shall not be amended or modified in any fashion except by an
instrument in writing signed by the parties hereto. Waiver by a party of any
condition, or any breach of this Agreement by any other party, shall not be
effective unless in a writing signed by the waiving party, and no such waiver
shall operate or be construed as the waiver of any conditions other than those
expressly identified in the written waiver or of the same or another breach on a
subsequent occasion.

     (b) Successor and Assigns. All terms and provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may be assigned by
either party without the prior written consent of the other party.

     (c) No Third Party Beneficiaries. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns. Except as set forth in Article IX of
the Financial Services Agreement, this Agreement is not for the benefit of any
other Person, other than CNSI, the First Venture Entities and their respective
Subsidiaries, and no other Person, other than CNSI, the First Venture Entities
and their respective Subsidiaries, shall have any rights against the parties
hereunder.

     (d) Rules of Construction. The headings in this Agreement are inserted only
as a matter of convenience and in no way affect the terms or intent of any
provision of this Agreement. All defined phrases, pronouns, and other variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular,
or plural, as the actual identity of the organization, person, or persona may
require. No provision of this Agreement shall be construed against any parties
hereto by reason of the extent to which such parties or its counsel participated
in the drafting hereof.

     (e) CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS MADE AND
ENTERED INTO UNDER THE LAWS OF THE STATE OF NEW YORK, AND THE LAWS OF THAT STATE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY THEREUNDER (WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF) SHALL GOVERN THE
VALIDITY AND INTERPRETATION HEREOF AND THE PERFORMANCE BY PARTIES HERETO OF
THEIR RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER. Each party hereby irrevocably
consents that any legal action or proceeding against it or any of its assets
with respect to this Agreement may be brought in any jurisdiction where it or
any of its assets may be found, or in any court of the State of New York or any
Federal court of the United States of America located in New York, New York, or
both, as the other party may elect, and by execution and delivery of this
Agreement, each party hereby irrevocably submits to and accepts with regard to
any such action or proceeding, for itself and in respect of its assets,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
party further agrees that final judgment against such party in any action or
proceeding in connection with this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and the amount of such party's indebtedness.
Each party hereby irrevocably waives, to the fullest extent permitted by Law,
any objection which such party may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
brought in the State of New York, and hereby further irrevocably waives any
claim that any such suit, action or proceeding brought in the State of New York
has been brought in an inconvenient forum.

     (f) Severability of Provisions. If any provision of this Agreement shall be
contrary to the internal laws of New York or any other applicable Law, at the
present time or in the future, such provision shall be deemed null and void, but
shall not affect the legality of the remaining provisions of this Agreement.
This Agreement shall be deemed to be modified and amended so as to be in
compliance with applicable Law and this Agreement shall then be construed in
such a way as will best serve the intention of the parties at the time of the
execution of this Agreement.

     (g) Counterparts; Delivery. This Agreement may be executed in one or more
counterparts. Each such counterpart shall be considered an original and all of
such counterparts shall constitute a single agreement binding all the parties as
if all had signed a single document. The parties acknowledge that delivery of
executed counterparts of this Agreement may be effected by a facsimile
transmission or other comparable means, with an original document to be
delivered promptly thereafter via overnight courier.

     (h) Entire Agreement. This Agreement (including any schedules, exhibits or
other attachments hereto), taken together with the other Operative Documents,
constitute the entire agreement among the parties. This Agreement and the other
agreements referred to in the preceding sentence supersede all prior and
contemporaneous agreements, statements, understandings, and representations of
the parties. There are no representations, warranties, agreements, arrangements,
or understandings, oral or written between the parties relating to the subject
matter of this Agreement which are not fully expressed herein or in the other
Operative Documents. The parties agree that the traditional formulation of the
parol evidence rule (whereby extrinsic evidence may not be used to vary or
contradict the unambiguous terms of a document that represents a final and
complete expression of the parties' agreement) shall govern in any action or
proceeding that may ensue concerning this Agreement and/or the other Operative
Documents.

     (i) Notices. All notices, requests, consents, or other communications
required or permitted to be given under this Agreement shall be in writing, may
be delivered in person by telex or telecopy, by overnight air courier, or by
certified or registered mail (return receipt requested with all fees prepaid),
and shall be deemed to have been duly given and to have become effective upon
the date actually delivered to the parties or their assignees at the following
addresses:

                  If to CNSI:

                                    Coyote Network Systems, Inc.
                                    4360 Park Terrace Drive
                                    Westlake Village, California  91361
                                    Attention:  President

                  If to First Venture:

                                    First Venture Leasing, LLC
                                    C/O Acorn Roseand & Management
                                    777 Summer Street
                                    Stamford, Connecticut 06901
                                    Attention:  Mr. Robert Loonin

The persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
section.

     (j) Waiver of Jury Trial. The parties hereto hereby waive their respective
right to trial by jury of any cause of action, claim, counterclaim or
cross-complaint in any action, proceeding and/or hearing brought by any party
hereto against another party hereto on any matter whatsoever relating to,
resulting from, arising out of, or in any way connected with this Agreement, or
any amendment or breach hereof, including, without limitation, any claim or
injury or damage, or the enforcement of any remedy under any Law, statute, or
regulation, emergency or otherwise, now or hereafter in effect.

     (k) Further Assurances. The parties hereto from time to time after
execution of this Agreement, without further consideration, shall execute and
deliver, as appropriate, such documents and take such actions as may be
reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.

     (l) Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction; provided, however, that the foregoing shall not be
construed as prohibiting any party from pursuing any other rights and remedies
available to it for such breach or threatened breach.

     (m) Force Majeure. Neither party shall be liable for defaults or delays due
to acts of God or the public enemy, acts or demands of government or any
government agency, strikes, fires, flood, accident, or other unforeseeable
causes beyond its control and not due to its fault or negligence. Any party
desiring to excuse its default or delay for any such reason shall notify the
other party of the cause of such default or delay within five (5) days after the
beginning thereof.

     (n) Relationship of Parties. Nothing contained in this Agreement shall be
construed as constituting a partnership or agency relationship between the
parties hereto. On and after the Effective Date, the relationship of the parties
one to another for all purposes shall be that of independent contractors.



<PAGE>



     IN WITNESS WHEREOF the undersigned hereto execute this Agreement.

                          COYOTE NETWORK SYSTEMS, INC.

                          By:      /s/ Daniel W. Latham

                          Name:    Daniel W. Latham

                          Title:   President and COO


                          CERTIFICATE OF ACKNOWLEDGMENT



STATE OF CALIFORNIA
                                                     ss.:
COUNTY OF LOS ANGELES


     On this 26th day of January, 2000, before me, the undersigned, personally
appeared Daniel W. Latham, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.



                                  ____________________
                                      [NOTARY SEAL]

<PAGE>





                                  COYOTE LEASING, LLC

                                  By:

                                  Name:

                                  Title:




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