Document:

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                                                                   EXHIBIT 10.11

                               USDATA CORPORATION

                           INVESTORS' RIGHTS AGREEMENT

                                 August 6, 1999

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                                TABLE OF CONTENTS
<TABLE>
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                                                                                                                 Page
<S>      <C>      <C>                                                                                            <C>
1.       Registration Rights......................................................................................  1

         1.1      Definitions.....................................................................................  1
         1.2      Shelf Registration..............................................................................  2
         1.3      Company Registration............................................................................  3
         1.4      Obligations of the Company......................................................................  3
         1.5      Furnish Information.............................................................................  5
         1.6      Expenses of Shelf Registration..................................................................  5
         1.7      Expenses of Company Registration................................................................  5
         1.8      Underwriting Requirements.......................................................................  5
         1.9      Delay of Registration...........................................................................  6
         1.10     Indemnification.................................................................................  6
         1.11     Reports Under Securities Exchange Act of 1934...................................................  8
         1.12     Assignment of Registration Rights...............................................................  8
         1.13     Limitations on Subsequent Registration Rights...................................................  8
         1.14     Request for Registration........................................................................  8

2.       Rights Offering..........................................................................................  9

         2.1      Rights..........................................................................................  9
         2.2      Split........................................................................................... 11
         2.3      Registration Statement.......................................................................... 11
         2.4      Registration Process............................................................................ 11
         2.5      Use of Proceeds................................................................................. 12
         2.6      Registration Services........................................................................... 12
         2.7      Indemnification................................................................................. 13

3.       Directed Shares Offering................................................................................. 15

         3.1      Directed Shares Registration.................................................................... 15
         3.2      Directed Shares Subscription Program............................................................ 16

4.       Miscellaneous............................................................................................ 16

         4.1      Successors and Assigns.......................................................................... 16
         4.2      Governing Law................................................................................... 16
         4.3      Counterparts.................................................................................... 16
         4.4      Titles and Subtitles............................................................................ 16
         4.5      Notices......................................................................................... 16
         4.6      Expenses........................................................................................ 16
         4.7      Amendments and Waivers.......................................................................... 17
         4.8      Severability.................................................................................... 17
         4.9      Aggregation of Stock............................................................................ 17
         4.10     Entire Agreement................................................................................ 17
</TABLE>

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Schedule A     Schedule of Investor

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                           INVESTORS' RIGHTS AGREEMENT

     This Investors' Rights Agreement (this "Agreement") is made as of the 6th
day of August, 1999, by and among USDATA Corporation, a Delaware corporation
(the "Company"), Safeguard Delaware, Inc. (the "Investor"), and (for the limited
purposes of Sections 2, 3 and 4 hereof) Safeguard Scientifics, Inc.
("Safeguard"). This Agreement shall become effective as of the Closing (as
defined therein) of the transactions contemplated by that certain Stock Purchase
Agreement dated as of even date herewith (the "Purchase Agreement") by and among
the Company and the Investor.

                                    RECITALS

     WHEREAS, the Company and the Investor are parties to the Purchase
Agreement;

     WHEREAS, the execution of this Agreement is a condition precedent to the
Closing of the Purchase Agreement.

     WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Investor to invest funds in the Company pursuant to
the Purchase Agreement, the Investor and the Company hereby agree that this
Agreement shall govern the rights of the Investor to cause the Company to
register shares of Common Stock and certain other matters as set forth herein;

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1.  REGISTRATION RIGHTS. The Company covenants and agrees as follows:

     1.1 DEFINITIONS. For purposes of this Section 1:

     (a) the term "Act" means the Securities Act of 1933, as amended;

     (b) the term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 hereof;

     (c) the term "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended;

     (d) the terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;

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     (e) the term "Registrable Securities" means the Common Stock issued and
sold to the Investor pursuant to the Purchase Agreement and the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock issued and
sold to the Investor pursuant to the Purchase Agreement, and any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of such
shares of Common Stock;

     (f) the number of shares of "Registrable Securities then outstanding" shall
be determined by the number of shares of Common Stock outstanding which are, and
the number of shares of Common Stock issuable pursuant to any shares of Series A
Preferred Stock which are, Registrable Securities;

     (g) the term "SEC" shall mean the Securities and Exchange Commission;

     (h) the term "Shelf Registration Period" shall have the meaning set forth
in Section 1.2(b) hereof; and

     (i) the term "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 1.2
hereof which covers all of the Registrable Securities on Form S-3 or on another
appropriate form for an offering to be made on a delayed or continuous basis
pursuant to Rule 415 under the Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case, including the prospectus
contained therein, all exhibits thereto and all documents incorporated or deemed
to be incorporated by reference therein.

     1.2 SHELF REGISTRATION.

     (a) The Company shall prepare and, not later than the first anniversary of
the date hereof, shall file with the SEC a Shelf Registration Statement with
respect to resales of the Registrable Securities from time to time in accordance
with the methods of distribution elected by the Holders of the Registrable
Securities and set forth in such Shelf Registration Statement and thereafter
shall use its best efforts to cause such Shelf Registration Statement to be
declared effective under the Act prior to the first anniversary of the date
hereof. The Company shall supplement or amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the
registration form used by the Company for the Shelf Registration Statement, if
required by the Act, the 1934 Act or the SEC.

     (b) The Company shall keep the Shelf Registration Statement continuously
effective under the Act in order to permit the prospectus forming a part thereof
to be usable by all Holders until the earliest of (i) the fifth anniversary of
the date hereof, (ii) the date as of which all Registrable Securities have been
transferred pursuant to Rule 144 under the Securities Act (or any similar
provision then in force), and (iii) such date as of which all Registrable
Securities have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall: (i) subject to Section 1.2(c), prepare and file with the SEC such
amendments and post-effective amendments to the Shelf

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Registration Statement as may be necessary to keep the Shelf Registration
Statement continuously effective for the Shelf Registration Period; (ii) subject
to Section 1.2(c), cause the related prospectus to be supplemented by any
required supplement, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provisions then in force) under the Act; and (iii) comply in all
material respects with the provisions of the Act with respect to the disposition
of all securities covered by the Shelf Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Shelf Registration Statement as so amended or
such prospectus as so supplemented.

     (c) The Company may suspend the use of the prospectus forming a part of the
Shelf Registration Statement for two periods not to exceed an aggregate of 60
days in any twelve-month period for valid business reasons, to be determined by
the Company in its reasonable judgment (not including avoidance of the Company's
obligations hereunder), including, without limitation, the acquisition or
divestiture of assets, public filings with the SEC, pending corporate
developments and similar events. The Company shall provide written notice to the
Holders of any such suspension.

     1.3 COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any securities under the
Act in connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, a registration on Form S-4 (or its
successor) relating to an offering of shares in connection with any acquisition
of any entity or business, a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities or exercise of warrants which are
also being registered) and the Registrable Securities have not theretofore been
included in a Shelf Registration Statement pursuant to Section 1.2 that remains
effective, the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within 20 days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 1.8, cause to be registered under the Act
all of the Registrable Securities that each such Holder has requested to be
registered. The obligations of the Company under this Section 1.3 with respect
to any particular offering may be waived at any time upon the written consent of
Holders a majority of the outstanding Registrable Securities. The right of any
Holder to request inclusion of Registrable Securities held by it in any
registration pursuant to this Section 1.3 shall terminate if all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder are eligible to be sold under Rule 144 under the Act during any 90-day
period. In any event, such right shall terminate on the fifth anniversary of the
date hereof.

     1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

     (a) prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become

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effective, and in the case of a registration under Section 1.3 or 1.14 hereof,
upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for a period
of up to 120 days or, if earlier, until the distribution contemplated in such
registration statement has been completed; provided, however, that such 120-day
period shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;

     (b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement;

     (c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them;

     (d) use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions in which it is not, at
the time, so qualified or otherwise subject itself to general taxation in any
such states or jurisdictions;

     (e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering, it being understood and
agreed that each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement;

     (f) notify each Holder of Registrable Securities covered by such
registration statement in writing at any time when a prospectus relating thereto
is required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;

     (g) cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;

     (h) provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;

     (i) use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of any such registration statement or the lifting of any
suspension of the

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qualification (or exemption from qualification) of any of the Registrable
Securities for offer or sale in any jurisdiction at the earliest possible time;
and

     (j) cooperate in all necessary respects with (A) counsel in preparation of
the customary legal opinions and (B) accountants in preparation of the customary
comfort letters.

     1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.

     1.6 EXPENSES OF SHELF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and the reasonable fees and
disbursements, which shall not exceed $25,000, of one counsel for the selling
Holders (to be selected by the Holders holding a majority of the Registrable
Securities) shall be borne and paid by the Company.

     1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1.3 for each Holder (which right may be assigned as provided in Section 1.13),
including (without limitation) all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the fees and
disbursements, which shall not exceed $25,000, of one counsel for the selling
Holders (to be selected by the holders of a majority of the Registrable
Securities to be registered), but excluding underwriting discounts and
commissions relating to Registrable Securities.

     1.8 UNDERWRITING REQUIREMENTS. In connection with any offering involving an
underwriting of shares of the Company's capital stock under Section 1.3, the
Company shall not be required to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering. The securities so included shall be apportioned (a)
first to Holders selling Registrable Securities pro rata according to the total
amount of Registrable Securities entitled to be included therein owned by each
selling Holder and (b) second, to the extent determined by the underwriters to
be compatible with the offering, to other stockholders.

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     1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.

     1.10 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under this Section 1:

     (a) to the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to: (x) amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld); (y) any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person; (z) any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon such Holder's or
underwriter's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto;

     (b) to the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or

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action; provided, however, that the indemnity agreement contained in this
subsection 1.10(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection 1.10(b)
exceed the gross proceeds from the offering received by such Holder;

     (c) promptly after receipt by an indemnified party under this Section 1.10
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.10, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.10;

     (d) if the indemnification provided for in this Section 1.10 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission. In no event shall
any contribution by a Holder under this subsection 1.10(d) exceed the gross
proceeds from the offering received by such Holder. In no event shall a person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) be entitled to contribution from any person or entity who was
not guilty of fraudulent misrepresentation;

     (e) notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control; and

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     (f) the obligations of the Company and Holders under this Section 1.10
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.

     1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. The Company shall cause
its Common Stock to continue to be registered under Sections 12(b) or 12(g) of
the 1934 Act, shall comply in all respects with its reporting and filing
obligations under the 1934 Act, and shall not take any action or file any
document (whether or not permitted by the 1934 Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the 1934 Act. The Company shall take all action
necessary to continue the listing or trading of its Common Stock on any national
securities exchange or the Automated Quotation System of the National
Association of Securities Dealers on which Common Stock is listed or traded, and
shall comply in all respects with its reporting, filing and other obligations
under the bylaws or rules of such exchange or association. The Company will
furnish to any Holder, so long as the Holder owns any Registrable Securities,
forthwith upon request (i) a written statement by the Company that it has
complied with the reporting requirements of SEC Rule 144, the Act and the 1934
Act or that it qualifies as a registrant whose securities may be resold pursuant
to Form S-3 under the Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents as are filed by the
Company under the 1934 Act, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.

     1.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned (but
only with all related obligations) by a Holder to (a) any partner or retired
partner of any holder which is a partnership, (b) any family member or trust for
the benefit of any individual holder, or (c) any transferee or assignee who,
after such assignment or transfer, holds at least 15% of the then outstanding
Registrable Securities, provided: (i) the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (ii) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement; and (iii) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act.

     1.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
the Holders of a majority of the outstanding Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder to interfere with or otherwise limit a Holder's registration rights under
this Agreement.

     1.14 REQUEST FOR REGISTRATION.

     (a) If the Company shall at any time during the Shelf Registration Period
be ineligible to use Form S-3 or Form S-3 shall be for any reason unavailable to
register the

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Registrable Securities under the rules and regulation of the SEC, and the
duration of such ineligibility or unavailability exceeds or is expected to
exceed 60 days, the Holders shall have the right by a written request from the
Holders of a majority of the Registrable Securities then outstanding to the
Company, to require the Company to file a registration statement under the Act
covering the resales of at least 25% of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of underwriting discounts and commissions, would exceed $10,000,000). Upon
its receipt of such a written request, the Company shall given written notice of
such request to all Holders within ten days thereof. The Company shall file as
soon as practicable, and in any event within 90 days of the receipt of such
request, a registration statement under the Act covering resales of all
Registrable Securities which Holders request to be registered, subject to the
limitations of subsection 1.14(b).

     (b) If the Holders initiating the registration request hereunder (the
"Initiating Holders") intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to subsection 1.14(a) and the Company shall
include such information in the written notice referred to in subsection
1.14(a). The managing underwriter shall be selected by a majority in interest of
the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company as
provided in subsection 1.4(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.14, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder.

     (c) The Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 1.14(a) after the Company has
effected two registrations pursuant to this Section 1.14(a) and such
registrations have been declared or ordered effective; provided however, that a
registration will not count as a registration pursuant to this Section 1.14(a)
unless the Holders requesting registration are able to register the offering of
and sell at least 50% of the shares of Registrable Securities that they have
requested be included in such registration.

     2.  RIGHTS OFFERING.

     2.1 RIGHTS.

     (a) As used herein, the term "Subsidiary" shall mean, with respect to the
Company, any direct or indirect subsidiary of the Company more than 50% of the
outstanding voting securities of which are owned directly or indirectly by the
Company. The Company shall,

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upon receipt of a Rights Offering Notice (as defined below), cause the
Subsidiary designated as the "Relevant Subsidiary" in connection therewith (the
"Relevant Subsidiary"), to grant to the holders of the common stock of Safeguard
rights (the "Rights") to purchase from such Relevant Subsidiary such number of
shares of such Relevant Subsidiary's common stock as determined by Safeguard up
to a maximum of 40% of the sum of (i) all issued shares of common stock of such
Relevant Subsidiary, and (ii) all shares of common stock of such Relevant
Subsidiary subject to issuance pursuant to options, warrants or other
agreements, plans, instruments or understandings, all as of the effective date
of the registration statement relating to such Rights (the "Rights Registration
Statement"). The Rights shall be issued in an offering (the "Rights Offering")
pursuant to the Rights Registration Statement, shall be exercisable for a period
of no greater than 45 days after the commencement of the Rights Offering and
shall be transferable by the holder thereof during that period. The Company
shall cause the Relevant Subsidiary to engage an investment banking firm
selected by the Company, subject to the reasonable approval of Safeguard, which
firm shall underwrite, on a standby, firm commitment basis, any portion of the
offered common stock of the Relevant Subsidiary not purchased through the
exercise of Rights. The Company shall also engage legal counsel selected by
Safeguard, subject to the reasonable approval of a majority of the Board of
Directors of the Company, which counsel shall represent the Relevant Subsidiary
in connection with the conduct of the Rights Offering. The exercise price of the
Rights shall be determined by negotiation among the Relevant Subsidiary, the
underwriters and the selling stockholders, if any. Prior to the commencement of
the Rights Offering, the Company shall use its best efforts to cause (and shall
cause the Relevant Subsidiary to use its best efforts to cause) any holder of
more than 1% of the Relevant Subsidiary's common stock (or rights to acquire
more than 1% of the Relevant Subsidiary's common stock) and the Relevant
Subsidiary's officers and directors to execute and deliver to the underwriter of
the Rights Offering a market stand-off agreement. Such market stand-off
agreement shall provide that, during the period of duration specified by the
Relevant Subsidiary and the underwriter of common stock or other securities of
the Relevant Subsidiary following the effective date of the Rights Registration
Statement, such persons shall not, to the extent requested by the Relevant
Subsidiary and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Relevant Subsidiary held by
them at any time during such period except common stock included in such Rights
Registration Statement.

     (b) Safeguard may initiate a Rights Offering with respect to any Subsidiary
by giving written notice to the Company (a "Rights Offering Notice") at any time
during the Rights Exclusivity Period (as hereinafter defined) at such time as
the total market value of such Subsidiary is at least $35,000,000, which
determination shall be made in good faith, upon request by Safeguard from time
to time, by the Board with the assistance and advice of such experts or
consultants as the Board may choose to retain, if any. The obligations of the
Company pursuant to this Section 2.1 shall commence on the date hereof and
expire on August 6, 2004 (such period, the "Rights Exclusivity Period"), unless
a registration statement relating to a Rights Offering has been filed with the
SEC by such date, in which case the Rights covered by such Registration
Statement shall not expire until 150 days after the date such filing was made.

     (c) The Company agrees that it will not (i) sell or otherwise transfer any
of the capital stock of any Subsidiary owned by it, (ii) permit any Subsidiary
to merge or consolidate

                                       10
<PAGE>   14

with any other person or entity other than the Company or another Subsidiary or
sell, lease or otherwise transfer any substantial portion of any Subsidiary's
assets, or (iii) permit any Subsidiary to undertake any registration of any of
its securities under the Act or the 1934 Act other than pursuant to this Section
2.1, in any case, prior to the earlier of the expiration of the Rights
Exclusivity Period or the completion of a Rights Offering with respect to such
Subsidiary, except with the consent of Safeguard.

     (d) Upon closing of a Rights Offering with respect to any Subsidiary,
Safeguard's right to require such Subsidiary to conduct any further Rights
Offerings under this Section 2 and any Directed Shares Offering under Section 3
below shall terminate.

     2.2 SPLIT. After Safeguard has notified the Company of its intention to
commence a Rights Offering, the Company shall, prior to the filing of the Rights
Registration Statement with respect thereto as provided hereinafter (or at such
earlier date as agreed to by the Company and Safeguard), take all such actions
as shall be necessary to cause the Relevant Subsidiary to cause a split of its
authorized common stock in such ratio as Safeguard shall determine. All
references to share amounts in this Agreement other than as specifically noted
shall be deemed to refer to share amounts prior to such split.

     2.3 REGISTRATION STATEMENT. Upon notice by Safeguard to the Company of its
intention to commence a Rights Offering, the Company shall cause the Relevant
Subsidiary to promptly prepare a Rights Registration Statement to register under
the Act, the Rights and the shares of the common stock of the Relevant
Subsidiary to be acquired upon exercise of the Rights (the "Rights Shares"). The
Company covenants that such Rights Registration Statement and the prospectus
included therein shall be in form reasonably satisfactory to Safeguard, shall
comply in all material respects with the Act and the rules and regulations of
the SEC promulgated thereunder, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and shall conform with the provisions of
Section 1.4 hereof.

     2.4 REGISTRATION PROCESS. The Company shall use its best efforts to cause
the Relevant Subsidiary to cause the Rights Registration Statement to be filed
with the SEC and to become effective as promptly as practicable in accordance
with Section 1.4 hereof. The Company shall cause the Relevant Subsidiary to
prepare and file with the SEC, promptly upon Safeguard's request, any amendments
or supplements to the Rights Registration Statement or the related prospectus
that, in Safeguard's opinion, may be necessary or advisable in connection with
the Rights Offering, subject to the reasonable approval of counsel for the
Relevant Subsidiary. The Company shall not permit the Relevant Subsidiary to
file any amendment or supplement to the Rights Registration Statement or the
related prospectus unless (A) it has furnished Safeguard with a copy of such
amendment or supplement a reasonable time prior to filing and (B) Safeguard has
not reasonably objected to such amendment or supplement by notice to the Company
within 10 days of receipt of such copy. The Company shall not issue (and shall
not permit the Relevant Subsidiary to issue) any advertisement, press release,
mailing or other solicitation material of which Safeguard reasonably disapproves
by prompt written notice to the Company after receiving reasonable notice
thereof. The Company shall cause the Relevant Subsidiary to comply with the Act
and the rules and regulations thereunder in connection with

                                       11
<PAGE>   15

the Rights Offering and, until the termination of the Rights Offering, the
Company shall cause the Relevant Subsidiary to use its best efforts to qualify
the Rights Shares under the securities laws of all jurisdictions in which
qualification is required and there are holders of Safeguard common stock and to
continue such qualifications in effect during the exercise period of the Rights.
At the time of mailing the prospectus relating to the Rights Offering and at the
time of the closing of the Rights Offering, Safeguard shall be entitled to
receive (A) from the Company and the Relevant Subsidiary such certificates and
documents evidencing compliance with such representations and warranties of the
Company and the Relevant Subsidiary as Safeguard shall reasonably request of the
Company, and (B) from the counsel and independent accountants of the Company and
the Relevant Subsidiary such opinions and documents as Safeguard may reasonably
request thereof as if it were applicable to the Rights Offering.

     2.5 USE OF PROCEEDS. The Company shall cause the Relevant Subsidiary to
apply all proceeds of the Rights Offering first to the payment of the expenses
of the Rights Offering and thereafter to general working capital purposes or
such other purposes as shall be described in the related prospectus and agreed
to by Safeguard.

     2.6 REGISTRATION SERVICES.

     (a) Services. Safeguard shall diligently and in a timely fashion assist the
Company and the Relevant Subsidiary in structuring the Rights Offering, in
preparing the necessary registration statement and related disclosure
documentation, in clearing the Rights Offering with the SEC and applicable state
securities authorities and shall provide such other services and assistance in
connection with the Rights Offering as the Company or the Relevant Subsidiary
shall reasonably request. Nothing contained herein shall require Safeguard to
provide to the Company or the Relevant Subsidiary any services or assistance
which, if rendered by Safeguard, would require Safeguard to register as a
broker-dealer under Section 15 of the Exchange Act or any state securities laws,
or as an investment adviser under the Investment Advisor Act of 1940, as
amended.

     (b) Working Group. The Company shall cause the counsel, auditors,
employees, officers and consultants of the Company and the Relevant Subsidiary
to render such assistance in consummating the Rights Offering, at the expense of
the Company, as is customary in the consummation by a company of its initial
public offering. In addition, in rendering services under this Section 2.6,
Safeguard may engage special legal counsel, one or more rights, registrar and
transfer agents, and such other consultants as Safeguard may deem necessary or
desirable in connection with the Rights Offering, subject to the reasonable
approval of the Company, the expenses of which shall be paid by the Company and
which are not included in the reimbursement described in Subsection 2.6(c)
below. In addition, Safeguard may require the Relevant Subsidiary to engage a
registered broker-dealer of Safeguard's designation, subject to the reasonable
approval of the Company, to provide such services in connection with the Rights
Offering as Safeguard may deem reasonably necessary or desirable, including
without limitation, to effect or underwrite the offering of the Rights or the
Rights Shares in states in which applicable state laws require that a registered
broker-dealer effect such offering.

     (c) Expenses. The Company shall bear all reasonable costs and expenses of
the Rights Offering, including, but not limited to, the Relevant Subsidiary's
printing, legal and

                                       12
<PAGE>   16

accounting fees and expenses, SEC and NASD filing fees and "Blue Sky" fees and
expenses; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' discounts attributable to the
Rights Shares not being offered and sold by the Relevant Subsidiary, or the fees
and expenses of counsel for the selling holders of Rights Shares in connection
with the registration of the Rights Shares if other than counsel to the Relevant
Subsidiary. The Company shall reimburse Safeguard for its internal expenses
incurred under this Section 2 by payment of $50,000 on a nonaccountable basis,
such payment to be made on the earlier of the closing of the Rights Offering or
90 days after the Registration Statement is filed.

     2.7 INDEMNIFICATION. In connection with the Rights Offering:

     (a) to the extent permitted by law, the Company will indemnify and hold
harmless Safeguard, any underwriter (as defined in the Act) for Safeguard and
each person, if any, who controls Safeguard or underwriter within the meaning of
the Act or the 1934 Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company or the Relevant Subsidiary of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, the 1934 Act
or any state securities law; and the Company will pay to Safeguard and each
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 2.7(a) shall not apply to: (x)
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); (y) any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
Safeguard or the underwriter or controlling person; (z) any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
Safeguard's or the underwriter's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto;

     (b) to the extent permitted by law, Safeguard will indemnify and hold
harmless the Relevant Subsidiary, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who controls the
Relevant Subsidiary within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in

                                       13
<PAGE>   17

reliance upon and in conformity with written information furnished by Safeguard
expressly for use in connection with such registration; and Safeguard will pay,
as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 2.7(b), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 2.7(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of Safeguard, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this subsection 2.7(b)
exceed the gross public offering price of all such securities offered by
Safeguard and sold pursuant to such registration statement;

     (c) promptly after receipt by an indemnified party under this Section
2.7(c) of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.7;

     (d) if the indemnification provided for in this Section 2.7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission. In no event shall
any contribution by Safeguard under this subsection 2.7(d) exceed the gross
public offering price of all such securities offered by Safeguard and sold
pursuant to such registration statement. In no event shall a person or entity
guilty of fraudulent misrepresentation (within the

                                       14
<PAGE>   18

meaning of Section 11(f) of the Act) be entitled to contribution from any person
or entity who was not guilty of fraudulent misrepresentation;

     (e) notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control; and

     (f) the obligations of the Company and Safeguard under this Section 2.7
shall survive the completion of the Rights Offering.

     3. DIRECTED SHARES OFFERING.

     3.1 DIRECTED SHARES REGISTRATION. Safeguard shall have the right to require
the Company to cause any Subsidiary to file a registration statement on Form S-1
for the registration of shares of the Subsidiary's common stock pursuant to this
Section 3 at such time as the total market value of such Subsidiary is at least
$35,000,000 (the "Directed Shares Offering"). Such registration statement shall
register common stock (i) sufficient in number to satisfy the Directed Shares
requirement described below and (ii) with an aggregate offering price, prior to
underwriting discounts and commissions, of at least $10,000,000. In connection
with such Directed Shares Offering, the Company shall cause the applicable
Subsidiary to adjust its authorized shares as requested by Safeguard in order to
facilitate distribution of Directed Shares to its stockholders. The Company
shall cause the applicable Subsidiary to engage (i) an underwriter or
underwriters selected by Safeguard, subject to the reasonable approval of a
majority of the Board of Directors of the Company, and (ii) legal counsel
selected by Safeguard, subject to the reasonable approval of a majority of the
Board of Directors of the Company, which counsel shall represent the applicable
Subsidiary in connection with the conduct of the Directed Shares Offering.

     3.2 DIRECTED SHARES SUBSCRIPTION PROGRAM. In connection with the Directed
Shares Offering, the Company shall cause the applicable Subsidiary to:

     (a) provide in the related underwriting agreement a right for Safeguard to
designate persons (the "Safeguard Designees") who may purchase from the
underwriter(s) shares of the Relevant Subsidiary's common stock (the "Directed
Shares") at the public offering price of such Subsidiary's common stock in the
Directed Shares Offering (the "IPO Price"); and

     (b) use its best efforts to cause such Subsidiary to cause the underwriters
of the Directed Shares Offering to allow the Safeguard Designees to purchase at
the IPO Price that number of Directed Shares equal to the greater of (i) 20% of
the shares of common stock offered by such Subsidiary in such Directed Shares
Offering or (ii) 10% of the number of shares of Safeguard Common Stock
outstanding on the record date set by Safeguard for distribution of Directed
Shares (or subscription rights therefor) to its stockholders. Upon closing of
the Directed Shares Offering with respect to any Subsidiary and sale of the
number of shares set forth in this Section 3.2(b), Safeguard's right to require
the Company to cause such Subsidiary to conduct a Rights Offering pursuant to
Section 2 above shall terminate. The Company shall reimburse Safeguard for its
internal expenses incurred under this Section 3 by payment of

                                       15
<PAGE>   19

$50,000 on a nonaccountable basis, such payment to be made on the earlier of the
closing of the Directed Shares Offering or 90 days after the Registration
Statement is filed.

     4. MISCELLANEOUS.

     4.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

     4.2 GOVERNING LAW. The construction, validity and interpretation of this
Agreement will be governed by the internal laws of the State of Delaware without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

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

     4.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     4.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
overnight courier (with confirmation of receipt) or sent via facsimile (with
confirmation of receipt) (i) if to the Company, at USData Corporation, 2435
North Central Expressway, Richardson, Texas 75080 (fax: (972) 669-9557),
Attention: Robert L. Drury, (ii) if to the Investor, at the address beneath the
Investor's name on Schedule A attached hereto or (iii) if to Safeguard, at
Safeguard Scientifics, Inc., 800 The Safeguard Building, 435 Devon Park Drive,
Wayne, Pennsylvania 19087 (fax: (610) 293-0601).

     Notice given by facsimile shall be confirmed by appropriate answer back and
shall be effective upon actual receipt if received during the recipient's normal
business hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours. All
notices by facsimile shall be confirmed promptly after transmission in writing
by certified mail or personal delivery. Any party may change any address to
which notice is to be given to it by giving notice as provided above of such
change of address.

     4.6 EXPENSES. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.

                                       16
<PAGE>   20

     4.7 AMENDMENTS AND WAIVERS. Any term other than Sections 2 and 3 and the
next sentence of this Agreement may be amended and the observance of any term
other than Sections 2 and 3 and the next sentence of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the shares of Registrable Securities then outstanding. Sections 2
and 3 and this sentence of this Agreement may be amended and the observance of
any term of Sections 2 and 3 and this sentence of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Safeguard.

     4.8 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

     4.9 AGGREGATION OF STOCK. All shares of securities held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.

     4.10 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.

                            [Signature page follows.]

                                       17
<PAGE>   21

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

                                COMPANY:

                                USDATA CORPORATION

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

                                INVESTOR:

                                SAFEGUARD DELAWARE, INC.

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

                                OTHER PARTY:

                                SAFEGUARD SCIENTIFICS, INC.
                                (solely for the limited purpose of agreeing to
                                Sections 2, 3 and 4 hereof)

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

                [SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE>   22

                                   SCHEDULE A

                                    Investor

Safeguard Delaware, Inc.
c/o Safeguard Scientifics, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, Pennsylvania  19087
Fax: (610) 293-0601<PAGE>   1
                                                                   EXHIBIT 10.41

                            MASTER SERVICES AGREEMENT

                                     BETWEEN

                        ALLTEL INFORMATION SERVICES, INC.

                                       AND

                            BEVERLY ENTERPRISES, INC.

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

                           DATED AS OF: __________1997

<PAGE>   2

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----

<S>                                                                                                            <C>
1. DEFINITIONS....................................................................................................1

   1.1 DEFINITIONS................................................................................................1

2. SERVICES.......................................................................................................2

   2.1 SERVICES...................................................................................................2

   2.2 ATTACHMENT.................................................................................................2

   2.3 PROCESSING SCHEDULE........................................................................................3

3. FEES AND PAYMENT ARRANGEMENTS..................................................................................3

   3.1 SERVICE FEES...............................................................................................3

   3.2 PAYMENTS BY CLIENT.........................................................................................4

4. TERM...........................................................................................................4

   4.1 TERM.......................................................................................................4

   4.2 CLIENT RENEWAL OPTION......................................................................................5

5. EDUCATION......................................................................................................5

   5.1 ALLTEL STANDARD CORPORATE TRAINING.........................................................................5

   5.2 THIRD PARTY APPLICATION TRAINING...........................................................................5

6. DATA PROCESSING, PREMISES AND SECURITY.........................................................................5

   6.1 DATA PROCESSING............................................................................................5

   6.2 CLIENT PROCESSING PREMISES.................................................................................5

   6.2.1 ALLTEL TECHNOLOGY CENTER.................................................................................6

   6.2.2 ALLTEL TECHNOLOGY CENTER RELOCATION......................................................................6

   6.3 SECURITY STANDARDS.........................................................................................6
</TABLE>

                                       i

<PAGE>   3

<TABLE>
<S>                                                                                                              <C>
7. CLIENT RESOURCES...............................................................................................6

   7.1 CLIENT RESOURCES...........................................................................................6

   7.2  REQUIRED CONSENTS.........................................................................................6

8. EQUIPMENT......................................................................................................7

   8.1 HARDWARE...................................................................................................7

   8.2 TERMINALS/WORKSTATIONS/NETWORK EQUIPMENT...................................................................7

   8.3 SUPPLIES AND FORMS.........................................................................................7

   8.4 CONFIDENTIALITY OF CLIENT DATA.............................................................................7

   8.5 DELIVERY...................................................................................................8

9. SOFTWARE.......................................................................................................8

   9.1 CLIENT SOFTWARE............................................................................................8

   9.2  THIRD PARTY SOFTWARE AND MAINTENANCE......................................................................8

   9.3 INSTALLATION OF NEW RELEASES, UPDATES AND ENHANCEMENTS.....................................................9

10. PERSONNEL AND COMMITTEES......................................................................................9

   10.1 ALLTEL ACCOUNT RELATIONSHIP EXECUTIVE.....................................................................9

   10.2  LIAISON MANAGER..........................................................................................9

   10.3 ALLTEL BASE STAFF........................................................................................10

   10.4 TEMPORARY RESOURCE.......................................................................................10

   10.5 MUTUAL PLANNING..........................................................................................10

11. FILES AND PROGRAMS, STORAGE, AND DISASTER RECOVERY...........................................................12

   11.1 FILES AND PROGRAMS.......................................................................................12

   11.2 STORAGE..................................................................................................12

   11.3  DISASTER RECOVERY.......................................................................................12
</TABLE>

                                       ii

<PAGE>   4

<TABLE>
<S>                                                                                                             <C>
12. CHANGE ORDERS................................................................................................13

13. INTELLECTUAL PROPERTY RIGHTS.................................................................................13

   13.1 MODIFICATIONS TO CLIENT SOFTWARE.........................................................................13

   13.2 OWNERSHIP OF ALLTEL SOFTWARE.............................................................................14

   13.3 MODIFICATIONS TO ALLTEL SOFTWARE.........................................................................14

14. AUDITS.......................................................................................................14

   14.1 CLIENT'S REGULATORY AUDIT................................................................................14

   14.2 EXCLUDED MATERIALS.......................................................................................15

15. DISPUTE RESOLUTION...........................................................................................15

   15.1 DISPUTE RESOLUTION PROCEDURES............................................................................15

   15.2 CLAIMS PROCEDURES........................................................................................15

   15.3 ESCALATION PROCEDURES....................................................................................16

16. LIMITATION OF LIABILITY......................................................................................17

17. INDEMNIFICATION..............................................................................................17

   17.1 PERSONAL INJURY AND PROPERTY DAMAGE......................................................................17

   17.2  INFRINGEMENT OF ALLTEL SOFTWARE OR ALLTEL PROVIDED THIRD PARTY SOFTWARE.................................17

   17.3  INFRINGEMENTS OF CLIENT SOFTWARE OR CLIENT PROVIDED THIRD PARTY SOFTWARE................................18

   17.4 PREVIOUS LIABILITIES.....................................................................................19

   17.5 DISPUTE RESOLUTION.......................................................................................19

18. FORCE MAJEURE, TIME OF PERFORMANCE AND INCREASED COSTS AND ERROR CORRECTION..................................19

   18.1 FORCE MAJEURE............................................................................................19

   18.2 TIME OF PERFORMANCE AND INCREASED COSTS..................................................................21

   18.3 ERROR CORRECTION.........................................................................................21
</TABLE>

                                      iii

<PAGE>   5

<TABLE>
<S>                                                                                                             <C>
19. NOTICES......................................................................................................21

   19.1 NOTICES..................................................................................................21

   19.2 CHANGE OF ADDRESS........................................................................................22

20. TERMINATION..................................................................................................22

   20.1 TERMINATION..............................................................................................22

   20.2 TERMINATION UPON ALLTEL'S MATERIAL BREACH................................................................23

   20.3 TERMINATION UPON CLIENT'S MATERIAL BREACH................................................................24

   20.4 OPERATIONS DURING THE TERMINATION PERIOD.................................................................25

   20.5 TRANSITIONAL COOPERATION.................................................................................26

   20.6 SURVIVAL UPON EXPIRATION OR TERMINATION..................................................................26

   20.7 TERMINATION FOR CONVENIENCE..............................................................................26

21. CONFIDENTIALITY..............................................................................................27

   21.1 CONFIDENTIALITY OBLIGATION...............................................................................27

   21.2 NON-DISCLOSURE COVENANT..................................................................................27

   21.3 EXCEPTIONS...............................................................................................27

   21.4 CONFIDENTIALITY OF THIS AGREEMENT; PROTECTIVE ARRANGEMENTS...............................................28

22. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................................28

   22.1 LICENSES AND PERMITS AND COMPLIANCE WITH LAWS............................................................28

   22.2 NO INTERFERENCE WITH CONTRACTUAL RELATIONSHIP............................................................29

   22.3 COVENANT OF GOOD FAITH...................................................................................29

   22.4 NO INFRINGEMENT..........................................................................................29

   22.5 AUTHORIZATION AND EFFECT.................................................................................30

   22.6 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES..............................................................30
</TABLE>

                                       iv
<PAGE>   6

<TABLE>
<S>                                                                                                             <C>
23. MISCELLANEOUS................................................................................................31

   23.1 INDEPENDENT CONTRACTOR...................................................................................31

   23.2 OMNIBUS RECONCILIATION ACT COMPLIANCE....................................................................31

   23.3 ASSIGNMENT...............................................................................................32

   23.4 SEVERABILITY.............................................................................................32

   23.5 THIRD PARTY BENEFICIARIES................................................................................32

   23.6 GOVERNING LAW............................................................................................32

   23.7 EXECUTED IN COUNTERPARTS.................................................................................32

   23.8 CONSTRUCTION.............................................................................................33

   23.9  ENTIRE AGREEMENT........................................................................................33

   23.10 AMENDMENTS AND WAIVERS..................................................................................33

   23.11 REMEDIES CUMULATIVE.....................................................................................33

   23.12 PRESS RELEASES..........................................................................................33

   23.13 TAXES...................................................................................................34
</TABLE>

                                       v

<PAGE>   7

                                    EXHIBITS

Exhibit A         Service Schedules
Exhibit B         Processing Schedule
Exhibit C         Software Lists
Exhibit D         Equipment
Exhibit E         Pricing
Exhibit F         Staff Roles and Responsibilities
Exhibit G         (Intentionally left blank)
Exhibit H         Disaster Recovery
Exhibit I *       Standard Operating Procedures
Exhibit J         Client's Information Technology Environment

*     From time to time, procedures in Exhibit I will be modified and mutually
      agreed upon except for Exhibit I Attachment 2, Exhibit I Attachment 3, and
      Exhibit I Attachment 6, which are proprietary to ALLTEL. Furthermore, it
      is recognized that all exhibits may be more fully developed, or amended,
      from time to time.

                                       vi

<PAGE>   8

                            MASTER SERVICES AGREEMENT

This is an Agreement (the "Agreement"), dated as of the ____day of _______1997
("Effective Date"), by and between ALLTEL INFORMATION SERVICES, INC., a Delaware
corporation, 4001 Rodney Parham Road, Little Rock, Arkansas 72212-2496
("ALLTEL") and BEVERLY ENTERPRISES, INC. located at 1200 South Waldron Road,
Suite 155, Fort Smith, Arkansas 72913-3324 (the "Client").

      NOW, THEREFORE, the parties agree as follows.

1.    DEFINITIONS

      1.1   DEFINITIONS. AS USED IN THIS AGREEMENT:

            (a)   "Affiliate" shall mean any wholly-owned direct or indirect
                  subsidiary of ALLTEL Corporation, and with respect to Client
                  shall mean any wholly owned direct or indirect subsidiary of
                  Client.

            (b)   "ALLTEL Software" shall mean any program as described in
                  Exhibit C, or part of such program as described in Exhibit C,
                  which is owned or developed by ALLTEL or any ALLTEL Affiliate
                  and all modifications, upgrades or enhancements to any such
                  program provided under this Agreement.

            (c)   "Client Resources" shall mean those assets, services, and
                  rights, if any, leased, contracted for, licensed, or owned by
                  Client, including Client Software and Client provided Third
                  Party Software to be made available to ALLTEL by Client to
                  facilitate ALLTEL in providing the Services.

            (d)   "Client Software" shall mean any program or part of a program,
                  (or any modifications, updates or enhancements to such Client
                  Software developed in accordance with the terms of this
                  Agreement) which is owned or developed by Client which is made
                  available by Client to ALLTEL and which is necessary for
                  ALLTEL to provide the Services. Under no circumstances shall
                  the ALLTEL Software and ALLTEL Work constitute Client Software
                  for purposes of the Agreement.

            (e)   "Expiration Date" shall mean the earliest of (i) the later to
                  occur of the five (5) year anniversary of the Start Date or
                  the date to which this Agreement is extended in accordance
                  with Section 4, or (ii) the date this Agreement is terminated
                  in accordance with Section 20.

                                       1

<PAGE>   9

            (f)   "Required Consents" shall mean the consents required to permit
                  the transfer to ALLTEL of the right to use any Client
                  Resources.

            (g)   "Start Date" shall mean, 1997.

            (h)   "Third Party Software" shall mean any program, or part of a
                  program which is licensed or sub-licensed to Client or ALLTEL
                  by a third party that has the right to provide that license or
                  sub-license, including, without limitation, those programs
                  described in Exhibit C.

            (i)   "ALLTEL Network" shall mean that equipment, network components
                  and telephone leased lines between Client's Fort Smith
                  facility and ALLTEL's Technology Center at Little Rock.
                  Specifically included are the channel extenders, DS1 circuits
                  between Client's Fort Smith facility and ALLTEL Technology
                  Center in Little Rock, including CSU's required to support
                  circuits and equipment attached to and including the Front End
                  Processor located at the ALLTEL Technology Center in Little
                  Rock.

            (j)   "Client Network" shall mean all communication equipment,
                  network components, leased and dial data circuits which
                  terminate on Client's premises in Fort Smith. Specifically
                  included are all LAN attached equipment, VSAT equipment, and
                  any remaining 3X74 or 3172 equipment located in Fort Smith.

2.    SERVICES

      2.1   SERVICES. This Agreement sets forth the terms and conditions for the
            provision by ALLTEL to Client of the information systems management
            services, production control, operations services, technical support
            and consulting services during the term hereof, as described in the
            Service Attachment attached hereto as Exhibit A (individually and
            collectively the "Services"). ALLTEL, on behalf of Client, also
            agrees to provide certain specifically identified Services as set
            forth on Exhibit A to Client Affiliates. Client agrees to notify
            ALLTEL of new opportunities to provide similar or related Services
            to Client, including, without limitation, providing new outsourcing
            services, and to include such services within the scope of this
            Agreement, by written amendment to Exhibit A in situations that are
            mutually beneficial to Client and ALLTEL. This section in no way
            obligates Client to select ALLTEL to provide the above described
            additional services.

      2.2   ATTACHMENT. All applicable terms, conditions, responsibilities and
            delivery schedules which apply to a particular Service (as opposed
            to those which apply generally to all Services and which are set
            forth elsewhere in this Agreement and in the other exhibits attached
            hereto) are identified in Exhibit A. The Service-specific terms,
            conditions, responsibilities and delivery schedules shall govern the
            provision of the relevant Service. Any new terms, conditions,
            responsibilities or delivery

                                       2

<PAGE>   10

            schedules which may be specifically applicable to any particular
            Service, as they are negotiated through the course of business,
            shall be set forth in writing and executed by the parties and added
            to this Agreement as an amendment. Such action shall not constitute
            a modification or change of any provision of this Agreement or of
            any other provision of any other Exhibit, unless expressly stated in
            such written agreement. Unless otherwise agreed to by the parties
            hereunder, the Services to be rendered by ALLTEL to Client and the
            Service Beneficiaries are limited to those Services which are
            described in this Agreement and the Exhibits.

      2.3   PROCESSING SCHEDULE. ALLTEL will process and update Client's data in
            accordance with Exhibit B.

3.    FEES AND PAYMENT ARRANGEMENTS

      3.1   SERVICE FEES. Attached hereto as Exhibit E is a schedule of fees
            chargeable by ALLTEL to Client for performing the Services,
            including, without limitation, the monthly base fee (the "Monthly
            Base Fee"), monthly variable fee (the "Monthly Variable Fee"), a
            mechanism for adjusting the Monthly Base Fee for changes in Client's
            volume type or quantity of Services, penalties or incentives
            (annually), a mechanism for changing the Monthly Variable Fee for
            changes in Staff, a mechanism for changing the Monthly Base Fee and
            Monthly Variable Fee for changes in inflation, a mechanism for
            changing the Monthly Base Fee for changes in the cost of hardware
            and software maintenance (collectively, as from time-to-time
            adjusted, the "Service Fees"), as well as certain out-of-pocket
            expenses paid to third parties by ALLTEL (the "Pass-Through
            Expenses"): The Monthly Base Fee set forth in Exhibit E is expressly
            conditioned on Client being and continuing in full compliance with
            ALLTEL's standard operating procedures as further defined in Exhibit
            I(as of and after, 6 months after the Effective Date), including,
            without limitation, weekly maintenance windows, operating system and
            hardware upgrade schedules and problem and change procedures. In the
            event Client fails to so comply, Client shall pay to ALLTEL a
            penalty in the amount of 2% of the Monthly Base Fee retroactive to
            the Start Date until Client comes into compliance with ALLTEL's
            operating procedures as described above. In the event ALLTEL is the
            sole cause of Client's failure to be compliant within 6 months,
            Client shall not pay the 2% penalty and ALLTEL will continue to
            invoice Client at the leveraged rate until Client is compliant.
            Client agrees to make best efforts to become compliant.

                                       3

<PAGE>   11

      3.2   PAYMENTS BY CLIENT

            (a)   INVOICING REQUIREMENTS. Client agrees and acknowledges that
                  depending on the underlying reason for a change in the amount
                  of the Monthly Base Fee or Monthly Variable Fee, in accordance
                  with Exhibit E, ALLTEL shall reflect such change either as a
                  permanent recalculation to the Monthly Base Fee and/or Monthly
                  Variable Fee (after prior notice to Client) or as a separately
                  delineated temporary increase to the Monthly Base Fee and/or
                  Monthly Variable Fee. ALLTEL shall invoice Client monthly by
                  no later than the 15th calendar day of each month for the
                  Service Fees for the upcoming calendar month, as well as for
                  any known Pass-Through Expenses and any other applicable
                  charges for the immediately preceding month and other
                  preceding months. ALLTEL's invoice shall be in such format and
                  contain such detail and supporting backup as may be agreed
                  upon by the parties.

            (b)   PAYMENT TERMS. Client shall pay by method satisfactory to
                  ALLTEL and Client, the monthly invoiced amount in full,
                  including any amounts or portions thereof in dispute, on or
                  prior to the first day of the month immediately following the
                  month in which the invoice is dated. Any amount not received
                  by the 30th day after the date that the payment was due, shall
                  be subject to interest on the balance overdue at a rate equal
                  to 12% per annum prorated to the date of payment. Should
                  Client dispute in good faith all or any portion of the amount
                  due on any invoice or require any adjustment to an invoiced
                  amount, Client shall notify ALLTEL in writing, prior to the
                  due date of that invoice, of the nature and basis of the
                  dispute and/or adjustment as soon as possible using the
                  dispute resolution procedures set forth in Section 15 of this
                  Agreement. The parties each shall use its best efforts to
                  resolve the dispute prior to the payment due date. If the
                  parties, however, are unable to resolve the dispute prior to
                  the payment due date, Client shall nevertheless pay the entire
                  amount to ALLTEL by the due date. If it is ultimately
                  determined that such amount should not have been paid by
                  Client to ALLTEL, ALLTEL shall credit this amount, plus
                  interest, in accordance with Section 15.1 of this Agreement on
                  Client's next invoice.

4.    TERM

      4.1   TERM. The term of this Agreement shall begin on the Effective Date
            and end on the Expiration Date. At least twelve(12) months prior to
            the Expiration Date, ALLTEL shall submit to Client a written
            proposal for renewal of this Agreement for an additional term as
            specified in such proposal. Client shall respond to such proposal
            within one hundred twenty (120) days following receipt thereof.

                                       4

<PAGE>   12

      4.2   CLIENT RENEWAL OPTION. In lieu of responding to ALLTEL's written
            proposal described in Section 4.1, Client shall have the right and
            option, exercisable at any time during the 90 day period immediately
            preceding the date that is six (6) months prior to the Expiration
            Date, to notify ALLTEL that Client elects to extend such initial
            term for a two year extension. Client shall have the further right
            and option, exercisable during the 90 day period immediately
            preceding the date that is six (6) months prior to the expiration of
            the initial two year extension to extend the Agreement for an
            additional two year term. The parties shall agree on any extensions
            to the term of the Agreement beyond the two, two year extensions.

5.    EDUCATION

      5.1   ALLTEL STANDARD CORPORATE TRAINING. In addition to the corporately
            provided ALLTEL classroom education services, ALLTEL will make
            available to Client personnel its standard application software
            training courses, which are generally held in Little Rock, Arkansas,
            in accordance with ALLTEL's Education and Training Department
            schedule, a current copy of which will be provided quarterly to
            Client upon request. Client personnel may attend such courses, and
            any other standard courses generally offered by ALLTEL to its other
            customers, upon payment of ALLTEL's then current published course
            fee, subject to normal space availability requirements and
            compliance with ALLTEL's standard registration and enrollment
            deadlines and procedure. Client will pay all of its travel and
            lodging expenses while attending ALLTEL courses.

      5.2   THIRD PARTY APPLICATION TRAINING. Client will pay for any third
            party end user training associated with the implementation of third
            party application software. ALLTEL will work with Client to
            supplement and customize such training as reasonably practicable in
            light of the ALLTEL resources available.

6.    DATA PROCESSING, PREMISES AND SECURITY.

      6.1   DATA PROCESSING. ALLTEL shall provide the operation of Client's data
            processing systems at ALLTEL's Technology Center defined below.

      6.2   CLIENT PROCESSING PREMISES. Client agrees to provide ALLTEL with
            adequate premises located in Fort Smith, Arkansas, in good repair,
            to perform its responsibilities under this Agreement (hereinafter
            the "Data Center"). Without limiting the generality of the
            foregoing, Client agrees to supply water, sewage, heat, lights,
            telephone lines and equipment, air conditioning, electricity, daily
            janitorial services, cafeteria privileges office equipment and
            furniture, and parking spaces for ALLTEL employees under the same
            conditions provided to employees of Client. ALLTEL is not
            responsible for any injury or damage to property or persons which
            occurs in or around the Data Center unless it is caused by the
            negligence or willful misconduct of ALLTEL. Client will provide
            telephone instruments and telephone service for ALLTEL to
            communicate with the

                                       5

<PAGE>   13

            employees of Client and as required by ALLTEL to operate the Data
            Center. In the event Client desires to move the Data Center after
            the Effective Date, Client shall provide ALLTEL prior notice of such
            move and pay ALLTEL for any costs incurred by ALLTEL because of such
            move.

            6.2.1 ALLTEL TECHNOLOGY CENTER. Throughout the term of this
                  Agreement, ALLTEL will provide sufficient facilities to
                  support the required mainframe equipment and operations
                  (hereinafter the "ALLTEL Technology Center"). Throughout the
                  term of this Agreement, ALLTEL will notify Client of any
                  material changes in the ALLTEL Technology Center operating
                  environment that might affect Client's operations or
                  obligations under this Agreement.

            6.2.2 ALLTEL TECHNOLOGY CENTER RELOCATION. ALLTEL may relocate the
                  ALLTEL Technology Center by providing Client with reasonable
                  notice of such relocation. ALLTEL will bear all costs
                  associated with such relocation and Client shall not incur any
                  additional costs due to such relocation.

      6.3   SECURITY STANDARDS ALLTEL will adhere to such security standards
            with respect to Client's data mutually agreed upon by the parties.
            Client will reimburse ALLTEL for its actual costs incurred as a
            Pass-Through Expense if adherence is above the normal accepted
            industry security processes requested or required by Client
            increases ALLTEL's costs of operation.

7.    CLIENT RESOURCES

      7.1   CLIENT RESOURCES During the term of this Agreement, and except as
            otherwise described in this Agreement, Client will provide for
            ALLTEL's use in providing the Services, the Client Resources as
            described on 1.1.c..

      7.2   REQUIRED CONSENTS

            (a)   COOPERATION. Client shall be required to obtain all Required
                  Consents. Upon Client's request, ALLTEL shall assist Client in
                  obtaining the Required Consents. Once each such Required
                  Consent has been obtained, Client shall provide a copy of it
                  to ALLTEL. Until such time as the Required Consent has been
                  obtained by Client, any right to use the affected Client
                  Resource shall not be deemed to have been transferred to
                  ALLTEL, and the parties shall cooperate with each other in
                  achieving a reasonable alternative arrangement for the use of
                  the affected Client Resources. Client shall provide any and
                  all consents for the use by ALLTEL of the Client provided
                  Third Party Software listed in the Client column of Exhibit
                  C-2.

                                       6

<PAGE>   14

            (b)   COSTS. Any cost incurred by ALLTEL at Client's request in
                  obtaining a Required Consent shall be separately charged by
                  ALLTEL to Client as a Pass-Through Expense.

            (c)   TRAINING. The Base Staff shall provide training to Client's
                  designated training staff located at Ft. Smith on all changes
                  to the host system requiring training of Client's staff.
                  Client shall be responsible for supplying resources for and
                  paying the cost of end-user training.

8.    EQUIPMENT

      8.1   HARDWARE. Client shall pay all costs of purchasing, leasing,
            installing, utilizing and owning all hardware at Client facilities
            as required for the operation of Client's application systems and
            for the testing and training of such systems. A list of Client's
            hardware as of the Effective Date is set forth in Exhibit D. Client
            will also provide, at no cost to ALLTEL, all specialized
            workstations, printers and other hardware and software required by
            ALLTEL to support the Client application systems.

      8.2   TERMINALS/WORKSTATIONS/NETWORK EQUIPMENT. Client will pay all costs
            associated with Client Network, including, without limitation, all
            hardware maintenance fees and software license and maintenance fees,
            of purchasing, leasing, installing, utilizing and owning personal
            computers, terminals, workstations and controllers used by Client's
            personnel, as well as all network equipment, including, without
            limitation, all communication or telephone lines, data service
            units, modems, hubs, routers, and LAN operating system software.

      8.3   SUPPLIES AND FORMS. Client will be responsible for all cost
            associated with the addition of new magnetic tapes and tape
            cartridges above the base capacity outlined in Exhibit E required to
            perform ALLTEL's processing responsibilities during the term of this
            agreement. Client is responsible for furnishing and cost for all
            printer-related consumables. Client will provide all supplies for
            office equipment and personal computers for ALLTEL's Base Staff at
            all client facilities necessary to perform Client related
            activities.

      8.4   CONFIDENTIALITY OF CLIENT DATA. ALLTEL shall make best efforts to
            cause all information concerning Client, its business or customers
            submitted to ALLTEL pursuant to this Agreement to be held in
            confidence by ALLTEL and not be disclosed. No person or entity,
            other than those employees and contractors with a need to know,
            shall be permitted to have access to Client's data without the
            written authorization of Client. All of Client's data shall be
            available for examination by Client, at any time during regular
            business hours, without notice. If ALLTEL receives any legal process
            requiring it to produce Client's data or that of any of its
            customers, ALLTEL shall notify Client promptly, and deliver copies
            of such orders to Client, immediately and prior to compliance with
            such process.

                                       7

<PAGE>   15

      8.5   DELIVERY. Client, or its designee, is responsible for delivery of
            all input and output data to and from the Fort Smith Data Center and
            for all costs of delivery of output from the ALLTEL Technology
            Center.

9.    SOFTWARE.

      9.1   CLIENT SOFTWARE. ALLTEL will use all Client Software for the
            exclusive use by Client and the Service Beneficiaries in connection
            with providing the Services to Client and the Service Beneficiaries.
            Additional use of Client Software by ALLTEL shall require the
            written consent of Client. ALLTEL reserves the right in advance of
            any processing or use of Client Software to assure compatibility
            with equipment and consistency with other processing requirements,
            techniques and standards. ALLTEL's use of any, new or not supported
            by vendor, Client Software may result in an increase to the Service
            Fees.

      9.2   THIRD PARTY SOFTWARE AND MAINTENANCE.

            (a)   THIRD PARTY SOFTWARE. Exhibit C sets forth a list of all
                  Client provided Third Party Software and ALLTEL provided Third
                  Party Software. ALLTEL will use all Client provided Third
                  Party Software for the exclusive use by Client in connection
                  with the Services to Client. For any Client provided Third
                  Party Software that is not listed on Exhibit C, ALLTEL
                  reserves the right in advance of any processing or use of any
                  Client provided Third Party Software to assure compatibility
                  with equipment and consistency with other processing
                  requirement, techniques, and standards including year 2000
                  compliance. Client will procure all consents and pay any
                  reasonable expenses necessary to allow ALLTEL to use any
                  Client provided Third Party Software. If a defect occurs in
                  the Client provided Third Party Software (including
                  noncompliance with year 2000 standards) or if such Client
                  provided Third Party Software does not function in accordance
                  with its specifications during the Term of the Agreement,
                  Client shall cooperate fully with ALLTEL to cause such third
                  party to promptly correct such defect to the extent required
                  under the applicable agreement. To the extent that any Third
                  Party Software or necessary part thereof is not made available
                  to ALLTEL or if a defect in any Third Party Software or
                  necessary part thereof inhibits ALLTEL's provision of the
                  Services, ALLTEL shall be excused from providing such Services
                  until at least the Third Party Software is made available or
                  the defect remedied. ALLTEL agrees to reasonably contact and
                  negotiate with Third Party Software vendors in an effort to
                  accomplish the elimination of any problems. If a defect occurs
                  in any ALLTEL provided Third Party Software or such ALLTEL
                  provided Third Party Software does not function in accordance
                  with its specifications, ALLTEL shall use its best

                                       8

<PAGE>   16

                  efforts to cause such third party to promptly correct such
                  defect to the extent required under the applicable agreement.

            (b)   THIRD PARTY SOFTWARE MAINTENANCE. Client will pay for all
                  Third Party Software maintenance fees for the Client provided
                  Third Party Software listed in Exhibit C. ALLTEL will provide
                  as part of the Monthly Base Fee all third party software
                  maintenance for the ALLTEL provided Third Party Software
                  listed in Exhibit C.

      9.3   INSTALLATION OF NEW RELEASES, UPDATES AND ENHANCEMENTS. All changes
            to the ALLTEL Software and ALLTEL provided Third Party Software,
            being used by Client including the installation of enhancements,
            updates, new releases and replacements of the ALLTEL Software and
            ALLTEL provided Third Party Software, shall be made only with the
            prior written approval of Client, which shall not be unreasonably
            withheld, both parties agree to provide all necessary approvals in
            order to ensure that the version of the ALLTEL Software and ALLTEL
            provided Third Party Software in production with Client shall not be
            more than two major releases behind that version of the ALLTEL
            Software and ALLTEL provided Third Party Software then generally
            available to the public. Similarly, for all Client Software and
            Client provided Third Party Software, Client agrees, upon
            notification by ALLTEL, and unless mutually agreed otherwise, to
            take all necessary steps in order to ensure that the version of the
            Client Software and Client provided Third Party Software in
            production with Client is not more than two major releases behind
            the version of the Client Software or Third Party Software then
            generally available to the public. If Client refuses to approve
            replacements of the ALLTEL Software or ALLTEL provided Third Party
            Software, Client shall pay for any reasonable and actual costs
            incurred by ALLTEL for supporting and maintaining the replaced
            software.

10.   PERSONNEL AND COMMITTEES.

      10.1  ALLTEL ACCOUNT RELATIONSHIP EXECUTIVE. ALLTEL will assign an
            individual (the "ALLTEL Account Relationship Executive") who will
            oversee and manage the Services and serve as ALLTEL's primary point
            of contact with Client with respect to the Services and will be
            located at the Technology Center. Prior to the selection of any
            replacement ALLTEL Account Relationship Executive, ALLTEL shall give
            prior written notice to Client of such change, will provide Client a
            resume of the proposed ALLTEL Account Relationship Executive and
            shall give Client an opportunity to interview such proposed ALLTEL
            Account Relationship Executive.

      10.2  LIAISON MANAGER. Client will assign a mutually agreeable individual
            (the "Liaison Manager") who will serve as Client's primary point of
            contact for all communications with ALLTEL with respect to this
            Agreement. As of the date hereof, Client's Chief Information Officer
            or such officer's designee shall serve as

                                       9

<PAGE>   17

            the initial Liaison Manager. Prior to the selection of the initial
            or any replacement Liaison Manager, Client shall give written notice
            to ALLTEL of such selection or change.

      10.3  ALLTEL BASE STAFF. ALLTEL shall have responsibility for providing
            the human resources as required to provide the Services described in
            Exhibit A. ALLTEL can draw upon its own employees (at the Client's
            facility or elsewhere), as well as the employees of the ALLTEL
            Affiliates and subcontractors in order to bring together the Base
            Staff and to perform the Services. ALLTEL shall have the right to
            transfer or substitute members of the Base Staff as ALLTEL may
            reasonably determine after six (6) months from Start Date.

      10.4  TEMPORARY RESOURCE. Client may request ALLTEL to provide additional
            resources or hours on a temporary basis and ALLTEL will provide such
            resources or hours on an as-available basis at ALLTEL's prices for
            such resources as set forth in Exhibit E. ALLTEL will promptly
            respond with a quotation for such resource. If Client wishes to
            utilize ALLTEL services quoted, Client will notify ALLTEL in
            writing, authorizing ALLTEL to provide such services.

      10.5  MUTUAL PLANNING COMMITTEE.

            (a)   MUTUAL PLANNING COMMITTEE. ALLTEL and Client agree that
                  effective planning and communication are necessary to provide
                  overall direction for the Services and that each will work to
                  promote a free and open exchange of information. To that end,
                  ALLTEL's Account Relationship Executive and Client
                  executives(CIO and senior level or higher employees of Client)
                  will endeavor to meet at least quarterly, but no less than
                  annually, for the duration of this Agreement to discuss
                  matters of mutual importance. Some of the matters to be
                  discussed are:

                  (i)   review and approve the strategic technology plan of
                        Client and all annual updates thereto;

                  (ii)  review and approve systems design, development and
                        implementation project recommendations of ALLTEL
                        concerning the Services, including, without limitation,
                        providing human resources, utilizing available ALLTEL
                        Software, procuring Third Party Software, providing
                        equipment, increasing or decreasing ALLTEL supplied
                        processing to support the Services, and forwarding
                        recommendations for major authorizations to the Client
                        management committee for approval;

                  (iii) review ALLTEL's performance of the Services during the
                        previous calendar quarter, including, without
                        limitation, the milestones that have been completed;

                                       10

<PAGE>   18

              (iv)   review the status of the current Services that ALLTEL is
                     performing;

              (v)    identify any problems relating to the Services and suggest
                     corrective actions to solve such problems, including,
                     without limitation, the cost to Client to correct such
                     problems;

              (vi)   review and approve the Services that are scheduled to be
                     provided by ALLTEL for the upcoming calendar quarter(s),
                     including, without limitation, the scope of the Services
                     and of any applicable performance standards, and
                     deliverables.

              (vii)  review, approve and establish information technology
                     standards, policies and procedures as recommended by
                     ALLTEL, including, without limitation, delegation of
                     certain review and approval authority to specific Client
                     managers and the Mutual Planning Committee;

              (viii) review and approve requests for major system modifications
                     and enhancements that may be submitted by end-users;

              (ix)   prioritize and allocate Staff resources on all systems
                     design, development and implementation projects;

              (x)    review and approve any ALLTEL's bids and related scope of
                     Services and deliverables for new work;

              (xi)   review and approve ALLTEL requests for Staff resources and
                     changes;

              (xii)  periodically review information provided by ALLTEL on new
                     products and services available from ALLTEL and other key
                     third party providers;

              (xiii) review at least annually the composition of the Base Staff
                     and any planned or suggested changes;

              (xiv)  review any other aspect of the information processing and
                     technology requirements or desires of Client.

                     Either party may request that this meeting may be held more
                     or less frequently than quarterly. The Chief Information
                     Officer of Client or his or her designee (who is a senior
                     level or higher employee of Client) shall be the Chairman
                     of the Mutual Planning Committee, and shall be responsible

                                       11

<PAGE>   19

                     for communicating, on behalf of the Mutual Planning
                     Committee, to ALLTEL. All meetings shall have a published
                     agenda issued by the ALLTEL Account Relationship Executive
                     (as approved by the Chairman of the Mutual Planning
                     Committee) at least five business days in advance of the
                     meeting to allow the committee members a reasonable
                     opportunity to prepare for the meeting. Meeting minutes
                     will be issued by the ALLTEL Account Relationship Executive
                     to members of the Mutual Planning Committee within five
                     business days after the meeting. Following review by such
                     members, the ALLTEL Account Relationship Executive will
                     incorporate into final meeting minutes the members'
                     accurate and reasonable comments and revisions, which shall
                     constitute the final meeting minutes.

                     From time to time as requested by Client ALLTEL shall
                     submit to the Mutual Planning Committee in writing a
                     performance report, in a form and with content mutually
                     established by the parties, that documents ALLTEL's
                     performance of the Services. In addition, ALLTEL will
                     provide the Mutual Planning Committee with such
                     documentation and other information as may be reasonably
                     requested by the Mutual Planning Committee.

11.    FILES AND PROGRAMS, STORAGE, AND DISASTER RECOVERY

       11.1   FILES AND PROGRAMS. After such time as the ALLTEL employees
              receive and operate Client's data on appropriate media in
              electronic format, ALLTEL will provide and maintain reasonable
              backup files as required by Client.

       11.2   STORAGE. ALLTEL is not responsible for off-site storage and
              transportation for all backup data files and programs produced at
              Client's facilities.

       11.3   DISASTER RECOVERY. Disaster Recovery shall be provided pursuant to
              the terms and conditions defined in Exhibit H.

                                       12

<PAGE>   20

12.    CHANGE ORDERS.

       Client may, at any time, in writing to ALLTEL, request changes to the
       scope or quantity of Services listed in Exhibits A, B, C, D, F or H. Such
       a request will be considered a "Change Order".. The parties agree and
       acknowledge that Client shall not request a Change Order that has the
       effect of terminating one or more of the Services in violation of the
       term of the Agreement. If any Change Order results in an increase or
       decrease in the cost of or time required for ALLTEL's performance of any
       of the Services, an equitable adjustment to the cost or delivery schedule
       or both shall be negotiated by the parties, and the Agreement and
       appropriate Exhibits shall be deemed amended to reflect such approved
       Change Order. ALLTEL may, but is not obligated to, begin work on the
       Change Order before such time as Client and ALLTEL shall have reached an
       equitable adjustment to the cost and delivery schedule

13.    INTELLECTUAL PROPERTY RIGHTS.

       13.1   MODIFICATIONS TO CLIENT SOFTWARE. Any writing or work of
              authorship, regardless of medium, comprising Client Software or
              Client-provided Third Party Software created by ALLTEL at Client's
              request in the course of performing the Services under this
              Agreement (including but not limited to software, source code,
              blueprints, diagrams, flow charts, specifications or functional
              descriptions, and specifically including any modifications,
              enhancements, interfaces (other than interfaces to the ALLTEL
              Software) (individually, a "Client Work") shall be deemed a "work
              for hire", and the sole and exclusive property of Client (except,
              no such writing or work of authorship relating to the
              Client-provided Third Party Software shall be a Client Work if the
              license agreement governing the Third Party Software prohibits the
              granting of such right by ALLTEL). The term "Client Work" shall
              not include the ALLTEL Software, or any modifications thereto, as
              well as any writing or work of authorship, regardless of medium,
              relating to or evidencing the ALLTEL Software. To the extent any
              Client Work is not deemed a "work for hire" under applicable law,
              ALLTEL hereby irrevocably assigns, transfers and conveys to Client
              all of its right, title and interest in such Client Work,
              including but not limited to, all rights of patent, copyright,
              trade secret, know-how and other proprietary and associated rights
              in such Client Work. ALLTEL agrees to execute such other documents
              or take such other actions as Client may reasonably request to
              perfect Client's ownership of any Client Work of which Client is
              granted ownership under this Section 13.1. The parties acknowledge
              that Client's ownership of any such Client Work shall not preclude
              ALLTEL from developing for other ALLTEL customers any work or
              works which are the same or substantially similar to a Client Work
              or Client Works, in whole or in part if such work or works are
              developed independently from Client Work or Client Works and if
              such work or works do not violate Client's intellectual property
              rights.

                                       13

<PAGE>   21

       13.2   OWNERSHIP OF ALLTEL SOFTWARE. As of the date hereof, and at all
              times hereafter, ALLTEL shall be the sole and exclusive owner of
              all right, title, and interest in and to the ALLTEL Software,
              including, without limitation, all intellectual property and other
              rights with respect to the ALLTEL Software. The parties
              acknowledge that this Agreement in no way limits or restricts
              ALLTEL and the ALLTEL Affiliates from developing or marketing on
              their own or for any third party in the United States or
              internationally the ALLTEL Software as from time to time
              constituted (including, but not limited to, any modification,
              enhancement, interface, upgrade, change and all software, source
              code, blueprints, diagrams, flow charts, specifications,
              functional descriptions or training materials relating thereto)
              without payment of any compensation to Client, or any notice to
              Client.

       13.3   MODIFICATIONS TO ALLTEL SOFTWARE. Any writing or work of
              authorship, regardless of medium, created or developed by ALLTEL
              or Client in the course of performing the Services under this
              Agreement and relating to the ALLTEL Software (including but not
              limited to, any modification, enhancement, interface, upgrade,
              change to the ALLTEL Software or ALLTEL-provided Third Party
              Software and all software, source code, blueprints, diagrams, flow
              charts, specifications, functional descriptions or training
              materials relating thereto) (individually an "ALLTEL Work") shall
              not be deemed a "work for hire" but shall be owned solely and
              exclusively by ALLTEL. To the extent any ALLTEL Work for any
              reason is determined not to be owned by ALLTEL, Client hereby
              irrevocably assigns, transfers and conveys to ALLTEL all of
              Client's right, title, and interest in such ALLTEL Work,
              including, but not limited to, all rights of patent, copyright,
              trade secret, know-how, and or other proprietary and associated
              rights in such ALLTEL Work. Client agrees to execute such
              documents and take such other actions as ALLTEL may reasonably
              request to perfect ALLTEL's ownership of any such ALLTEL Work.

14.    AUDITS

       14.1   CLIENT'S REGULATORY AUDIT. As reasonably requested by Client,
              ALLTEL shall cooperate with Client and its internal or external
              auditors for the purpose of Client's regulatory compliance at
              Client's facilities. Promptly following any such regulatory audit,
              whether conducted by Client's internal or external auditors,
              Client will instruct its auditors to conduct an exit conference
              with ALLTEL and to provide ALLTEL as soon thereafter as reasonably
              possible a copy of each report prepared as a result of such audit
              examination relating to data processing whether in draft or final
              form. In addition, Client will provide and instruct its external
              auditors to provide ALLTEL with a copy of that portion of each
              written report containing comments concerning ALLTEL or the
              Services performed by ALLTEL pursuant to this Agreement. ALLTEL
              shall make reasonable efforts to make changes required or
              recommended by the audit. Client shall reimburse ALLTEL as a
              Pass-Through Expense for any costs incurred by ALLTEL in
              cooperating with Client in connection with Client's audit except
              where ALLTEL's efforts are

                                       14

<PAGE>   22

              necessary to achieve audit compliance for exceptions that are
              considered generally accepted practices of the outsourcing
              industry.

       14.2   EXCLUDED MATERIALS. Nothing in this Section 14 shall be construed
              to require ALLTEL to provide Client with access to any records of
              whatever kind which contain information pertaining to any person
              or entity other than Client. In the event that the records contain
              commingled information relating to Client and a person or entity
              other than Client, ALLTEL shall mask or take other appropriate
              steps to maintain the confidentiality of the information relating
              to such other person or entity.

15.    DISPUTE RESOLUTION.

       15.1   DISPUTE RESOLUTION PROCEDURES. In the event a dispute arises
              between ALLTEL and Client with respect to the terms and conditions
              of this Agreement, or any subject matter governed by this
              Agreement, other than disputes regarding a party's compliance with
              the provisions of Section 21 (Confidentiality), such dispute shall
              be settled as set forth in this Section 15. At such time as the
              dispute is resolved, interest at a rate equal to the lesser of
              prime rate plus two percent per annum as announced from time to
              time by Boatmen's National Bank of Arkansas or five (5) percentage
              points above the federal discount rate as in effect from time to
              time for the period of dispute shall be paid to the party entitled
              to receive the disputed monies to compensate for the lapsed time
              between the date such disputed amount originally was to have been
              paid (or was paid) through the date monies are paid (or credited)
              in settlement of the dispute.

       15.2   CLAIMS PROCEDURES. If any party shall have any dispute with
              respect to the terms and conditions of this Agreement, or any
              subject matter referred to in or governed by this Agreement, that
              party (through the ALLTEL Account Relationship Executive of ALLTEL
              or the Liaison Manager of Client, as the case may be) shall
              provide written notification to the other party (through the
              ALLTEL Account Relationship Executive of ALLTEL or the Liaison
              Manager of Client, as the case may be) in the form of a claim
              identifying the issue or amount disputed and including a detailed
              reason for the claim. The party against whom the claim is made
              shall respond in writing to the claim within 30 days from the date
              of receipt of the claim document. The party filing the claim shall
              have an additional 30 days after the receipt of the response to
              either accept the resolution offered by the other party or request
              implementation of the procedures set forth in Section 15.3 (the
              "Escalation Procedures"). Failure to meet the time limitations set
              forth in this Section may result in the implementation of the
              Escalation Procedures.

                                       15

<PAGE>   23

       15.3   ESCALATION PROCEDURES.

              (a)    Each of the parties agrees to negotiate, in good faith, any
                     claim or dispute that has not been satisfactorily resolved
                     following the claim resolution procedures described in
                     Section 15.2. To this end, each party agrees to escalate
                     any and all unresolved disputes or claims in accordance
                     with Section 15.3(b) and (c) before taking further action.

              (b)    If the negotiations conducted pursuant to Section 15.2 do
                     not lead to resolution of the underlying dispute or claim
                     to the satisfaction of a party involved in such
                     negotiations, then either party may notify the other in
                     writing that he desires to elevate the dispute or claim to
                     the Senior Vice President and General Manager of Technology
                     Center of ALLTEL and the Chief Information Officer of
                     Client for resolution. Upon receipt by the other party of
                     such written notice, the dispute or claim shall be so
                     elevated and the Senior Vice President and General Manager
                     of Technology Center of ALLTEL and the Chief Information
                     Officer of Client shall negotiate in good faith and each
                     use its reasonable best efforts to resolve such dispute or
                     claim. The location, format, frequency, duration and
                     conclusion of these elevated discussions shall be left to
                     the discretion of the representatives involved. Upon
                     agreement, the representatives may utilize other
                     alternative dispute resolution procedures to assist in the
                     negotiations. Discussions and correspondence among the
                     representatives for purposes of these negotiations shall be
                     treated as confidential information developed for purposes
                     of settlement, exempt from discovery and production, which
                     shall not be admissible in subsequent proceedings between
                     the parties. Documents identified in or provided with such
                     communications, which are not prepared for purposes of the
                     negotiations, are not so exempted and may, if otherwise
                     admissible, be admitted in evidence in such subsequent
                     proceeding.

              (c)    If the negotiations conducted pursuant to Section 15.3(b)
                     do not lead to resolution of the underlying dispute or
                     claim to the satisfaction of a party involved in such
                     negotiations, then either party may notify the other in
                     writing that he desires to elevate the dispute or claim to
                     the President of Technology Services of ALLTEL and the
                     Chief Executive Officer of Client for resolution. Upon
                     receipt by the other party of such written notice, the
                     dispute or claim shall be so elevated and the President of
                     Technology Services of ALLTEL and the Chief Executive
                     Officer of Client shall negotiate in good faith and each
                     use its reasonable best efforts to resolve such dispute or
                     claim. The location, format, frequency, duration and
                     conclusion of these elevated discussions shall be left to
                     the discretion of the representatives involved. Upon mutual
                     agreement, the dispute may be mediated before either party
                     may resort to litigation. Upon agreement, the
                     representatives may utilize other alternative dispute
                     resolution procedures to assist in the negotiations.
                     Discussions and correspondence among the representatives
                     for purposes of these negotiations shall be treated as

                                       16
<PAGE>   24

                     confidential information developed for purposes of
                     settlement, exempt from discovery and production, which
                     shall not be admissible in any subsequent proceedings
                     between the parties. Documents identified in or provided
                     with such communications, which are not prepared for
                     purposes of the negotiations, are not so exempted and may,
                     if otherwise admissible, be admitted in evidence in such
                     subsequent proceeding.

16.    LIMITATION OF LIABILITY.

              (a)    Except for liability arising out of Section 17.2 herein,
                     ALLTEL's liability for any claims or causes of action
                     arising out of or related to this Agreement shall be
                     limited to Client's direct damages, actually incurred,
                     which under no circumstances shall exceed, in the
                     aggregate, the amount paid by Client to ALLTEL under this
                     Agreement for the twelve month period immediately
                     preceeding the date of the breach. In no event shall ALLTEL
                     be liable for indirect, special, punitive, incidental or
                     consequential damages of any kind whatsoever including
                     claims arising out of Section 17.2 herein or the claims or
                     demands made by any third parties.

              (b)    ALLTEL shall have no liability, express or implied, whether
                     arising under contract, tort or otherwise which results
                     directly or indirectly from the internal operations and
                     performance of any Client Software and/or Client provided
                     Third Party Software or any enhancement, development or
                     maintenance of any such Client Software and/or Client
                     provided Third Party Software.

17.    INDEMNIFICATION.

       17.1   PERSONAL INJURY AND PROPERTY DAMAGE. Each party agrees to
              indemnify, defend and hold harmless the other and its officers,
              directors, employees, affiliates (including, where applicable, the
              ALLTEL Affiliates and Client Affiliates), and agents from any and
              all liabilities, losses, costs, damages and expenses (including
              reasonable attorneys' fees) arising from or in connection with the
              damage, loss (including theft) or destruction of any real property
              or tangible personal property of the indemnified party resulting
              from the actions of any employee, agent or subcontractor of the
              indemnifying party insofar as such damage arises out of or in the
              course of fulfilling its obligations under this Agreement and to
              the extent such damage is due to any negligence, breach of
              statutory duty, omission or default of the indemnifying party, its
              employees, agents or subcontractors.

       17.2   INFRINGEMENT OF ALLTEL SOFTWARE OR ALLTEL PROVIDED THIRD PARTY
              SOFTWARE. ALLTEL agrees to defend at its own expense, any claim or
              action brought by any third party against Client and its officers,
              directors, employees, Client Affiliates, and agents for actual or
              alleged infringement of any patent, copyright or similar
              intellectual property right (including, but not limited to,

                                       17
<PAGE>   25

              misappropriation of trade secrets) based upon the ALLTEL Software
              or ALLTEL provided Third Party Software furnished hereunder by
              ALLTEL. ALLTEL further agrees to indemnify and hold Client and the
              Client Affiliates harmless from and against any and all
              liabilities, losses, costs, damages, and expenses (including
              reasonable attorneys' fees) associated with any such claim or
              action incurred by Client and the Client Affiliates. ALLTEL shall
              have the sole right to conduct the defense of any such claim or
              action and all negotiations for its settlement or compromise,
              unless otherwise mutually agreed to in writing between the parties
              hereto. ALLTEL agrees to give Client, and Client agrees to give
              ALLTEL, as appropriate, prompt written notice of any written
              threat, warning or notice of any such claim or action against
              ALLTEL or Client, as appropriate, or any other user or any
              supplier of components of the ALLTEL Software or ALLTEL provided
              Third Party Software covered hereunder, which could have an
              adverse impact on Client's use of same, provided ALLTEL or Client,
              as appropriate, knows of such claim or action. If in any such suit
              so defended, all or any part of the ALLTEL Software (or any
              component thereof) or the ALLTEL provided Third Party Software (or
              any component thereof) is held to constitute an infringement or
              violation of any other party's intellectual property rights and is
              enjoined, or if in respect of any claim of infringement, ALLTEL
              deems it advisable to do so, ALLTEL shall at its sole option take
              one or more of the following actions at no additional cost to
              Client: (a) procure the right to continue the use of the same
              without material interruption for Client; (b) replace the same
              with non-infringing software that meets the specifications
              identified in the Service Attachment; (c) modify said ALLTEL
              Software or ALLTEL provided Third Party Software (to the extent
              permitted by such third party) so as to be non-infringing,
              provided that the ALLTEL Software or ALLTEL provided Third Party
              Software as modified meets all of the specifications; or, (d) take
              back the infringing the ALLTEL Software or ALLTEL provided Third
              Party Software and credit Client with an amount equal to its list
              price less straight line depreciation over five (5) years.

       17.3   INFRINGEMENTS OF CLIENT SOFTWARE OR CLIENT PROVIDED THIRD PARTY
              SOFTWARE. Client agrees to defend at its own expense, any claim or
              action brought by any third party against ALLTEL and its officers,
              directors, employees, ALLTEL Affiliates, and agents for actual or
              alleged infringement of any patent, copyright or similar
              intellectual property right (including, but not limited to,
              misappropriation of trade secrets) based upon the Client Software
              or Client provided Third Party Software furnished hereunder by
              Client. Client further agrees to indemnify and hold ALLTEL and the
              ALLTEL Affiliates harmless from and against any and all
              liabilities, losses, costs, damages, and expenses (including
              reasonable attorneys' fees) associated with any such claim or
              action incurred by ALLTEL and the ALLTEL Affiliates. Client shall
              have the sole right to conduct the defense of any such claim or
              action and all negotiations for its settlement or compromise,
              unless otherwise mutually agreed to in writing between the parties
              hereto. Client agrees to give ALLTEL, and ALLTEL agrees to give
              Client, as appropriate, prompt written notice of any written
              threat, warning or notice of any such claim or action

                                       18
<PAGE>   26

              against ALLTEL or Client, as appropriate, or any other user or any
              supplier of components of Client Software or Client provided Third
              Party Software covered hereunder, which could have an adverse
              impact on ALLTEL's use of same, provided ALLTEL or Client, as
              appropriate, knows of such claim or action. If in any such suit so
              defended, all or any part of Client Software (or any component
              thereof) or the Client provided Third Party Software (or any
              component thereof) is held to constitute an infringement or
              violation of any other party's intellectual property rights and is
              enjoined, or if in respect of any claim of infringement, Client
              deems it advisable to do so, Client shall at is sole option take
              one or more of the following actions at no additional cost to
              ALLTEL: (a) procure the right to continue the use of the same
              without material interruption for ALLTEL; (b) replace the same
              with non-infringing software that meets the specifications
              identified in the Service Attachment; (c) modify said Client
              Software or Client provided Third Party Software (to the extent
              permitted by such third party) so as to be non-infringing,
              provided that Client Software as modified meets all of the
              specifications; or (d) relieve ALLTEL of its obligation to use
              such software to perform the applicable Services hereunder.

       17.4   PREVIOUS LIABILITIES. The parties hereto agree to indemnify the
              other and hold the other and its officers, directors, employees,
              affiliates (including, where applicable, the ALLTEL Affiliates and
              Client Affiliates) and agents harmless against any liabilities,
              losses, costs, damages, and expenses (including reasonable
              attorneys' fees) arising out of any claims or lawsuits filed or
              subsequently filed as a result of the acts of the other party
              which occurred prior to the Effective Date of this Agreement.

       17.5   DISPUTE RESOLUTION. The provisions of Section 15 shall apply with
              respect to the submission of any claim for indemnification under
              this Agreement and the resolution of any disputes relating to such
              claim.

18.    FORCE MAJEURE, TIME OF PERFORMANCE AND INCREASED COSTS AND ERROR
       CORRECTION.

       18.1   FORCE MAJEURE. Neither party shall be held liable for any delay or
              failure in performance of all or a portion of the Services of any
              part of this Agreement from any cause beyond its reasonable
              control and without its fault or negligence, including, but not
              limited to, acts of God, acts of civil or military authority,
              government regulations, embargoes, epidemics, war, terrorist acts,
              riots, insurrections, fires, explosions, earthquakes, nuclear
              accidents, floods, power

                                       19
<PAGE>   27

              blackouts affecting facilities other than facilities of a kind
              commonly protected by redundant power systems, unless such
              redundant power systems are also affected by any Force Majeure
              condition, unusually severe weather conditions, inability to
              secure products or services of other persons or transportation
              facilities, or acts or omissions of transportation common carriers
              (the "Affected Performance"). Upon the occurrence of a condition
              described in this Section 18.1, the party whose performance is
              affected shall give written notice to the other party describing
              the Affected Performance, and the parties shall promptly confer,
              in good faith, to agree upon equitable, reasonable action to
              minimize the impact, on both parties, of such condition,
              including, without limitation, implementing the disaster recovery
              services. The parties agree that the party whose performance is
              affected shall use commercially reasonable efforts to minimize the
              delay caused by the force majeure events and recommence the
              Affected Performance. In the event the delay caused by the force
              majeure event lasts for a period of more than 30 days, the parties
              shall negotiate an equitable modification to this Agreement with
              respect to the Affected Performance. If the parties are unable to
              agree upon an equitable modification within 15 days after such 30
              day period has expired, then either party shall be entitled to
              serve 30 days notice of termination on the other party with
              respect to only such Affected Performance. If the force majeure
              event for such Affected Performance is continuing upon the
              expiration of such 30 day notice period the portion of this
              Agreement relating to the Affected Performance shall automatically
              terminate. The remaining portion of the Agreement that does not
              involve the Affected Performance shall continue in full force and
              effect. In such event ALLTEL shall be entitled to be paid for that
              portion of the Affected Performance for which it has completed or
              in the process of completing through the termination date. In the
              event that the affected performance substantially diminishes the
              services provides hereunder and materially affects the business
              operations of Client, Client shall be entitled to serve 30 days
              notice of termination to ALLTEL. If the Force Majeure event for
              such Affected Performance is continuing upon the expiration of
              such 30 day notice period the Agreement shall terminate without
              penalty to Client. In such event, ALLTEL shall be entitled to be
              paid for the Services which it has performed through the
              termination date.

                                       20
<PAGE>   28

       18.2   TIME OF PERFORMANCE AND INCREASED COSTS. ALLTEL's time of
              performance with respect to Services performed under this
              Agreement shall be enlarged, and its obligations under Exhibit A-2
              shall be suspended, if and only to the extent, any of the
              following causes, in whole or in part, the necessity for such
              enlargement or suspension: (a) Client substantially fails to
              submit data or materials in the prescribed form or in accordance
              with the requirements of this Agreement, (b) Client substantially
              fails to perform on a timely basis or provide adequate resources
              to perform the tasks, functions or other responsibilities of
              Client described in this Agreement, (c) there occurs a Force
              Majeure condition described in Section 18.1 hereof which prevents
              timely performance, (d) Client or any governmental agency
              authorized to regulate or supervise Client makes any special
              request which substantially affects ALLTEL's normal performance
              schedule, (e) Client substantially fails to provide Client
              Resources called for by this Agreement, (f) Client substantially
              changes the priorities or decreases the number of the Staff, or
              (g) Client provided Third Party Software or the Client Software
              does not substantially perform in accordance with its
              specifications and, in each case, the same is necessary for
              ALLTEL's performance hereunder. In addition, if any of the above
              events occur, and such event will result in an increased cost to
              ALLTEL for providing the affected Service, ALLTEL shall so advise
              Client and Client may either pay any and all of such increased
              costs to ALLTEL or relieve ALLTEL of its responsibilities
              hereunder.

       18.3   ERROR CORRECTION. Client will carefully review and inspect all
              reports prepared by ALLTEL, to balance promptly to the appropriate
              control totals and within a reasonable time after any error or
              out-of-balance control totals should be detectable. Client agrees
              to notify ALLTEL of any erroneous processing. If Client fails to
              so notify ALLTEL within 60 days after Client's receipt of the
              report containing such erroneous processing, Client shall be
              deemed to have waived its rights in respect of such error and to
              have assumed all risks in respect thereof, provided however, that
              ALLTEL shall not be relieved of its obligations to correct such
              error, once notified, for on-going processing.

19.    NOTICES.

       19.1   NOTICES. Except as otherwise provided under this Agreement or in
              the Exhibits, all notices, demands or requests which may be given
              by any party to the other party shall be in writing and shall be
              deemed to have been duly given on the date delivered in person, or
              sent via telefax, overnight mail, electronic mail with return
              receipt, or on the date of the third business day after deposit,
              postage prepaid, in the United States Mail via Certified Mail
              return receipt requested, and addressed as set forth below:

                                       21
<PAGE>   29

If to Client, to:

                    Beverly Enterprises Inc.
                    5111 Rogers Avenue, Suite 40-A
                    Fort Smith, AR 72919
                    Attn:  Chief Information Officer

With a copy to:

                    Beverly Enterprises Inc.
                    5111 Rogers Avenue, Suite 40-A
                    Fort Smith, AR 72919
                    Attn:  General Counsel

If to ALLTEL, to:

                    ALLTEL Information Services, Inc.
                    4001 Rodney Parham Road
                    Little Rock, Arkansas  72212-2496
                    Attn.: Vice President and General Manager of Technology
                           Center

With a copy to:

                    ALLTEL Information Services, Inc.
                    4001 Rodney Parham Road
                    Little Rock, Arkansas 72212
                    Attn.:  General Counsel

       19.2   CHANGE OF ADDRESS. The address to which such notices, demands,
              requests, elections or other communications are to be given by
              either party may be changed by written notice given by such party
              to the other party pursuant to this Section.

20.    TERMINATION.

       20.1   TERMINATION. This Agreement, except as otherwise provided herein,
              will continue in effect until the Expiration Date. This Agreement,
              including all Exhibits may be terminated by the permitted party
              giving written notice to the other party in accordance with
              Section 19.1 and the provisions of the following sentence in this
              Section 20.1 or the provisions of Sections 20.2, 20.3 or 20.4
              hereof, as applicable.

                                       22
<PAGE>   30

              The effective date of any such termination shall be the
              Termination Completion Date (as defined and determined in
              accordance with the provisions of Section 20.5, and such date
              shall be the Expiration Date in the event this Agreement is so
              terminated.

       20.2   TERMINATION UPON ALLTEL'S MATERIAL BREACH. In the event of the
              material breach by ALLTEL of any provision of this Agreement,
              Client shall give ALLTEL written notice, and:

              (a)    If such breach is for ALLTEL's breach of its obligations
                     under Section 21 with respect to Client's Proprietary
                     Information, ALLTEL shall cure the breach within 15
                     calendar days after receipt of such notice. If ALLTEL does
                     not cure such breach by such date (or is not working
                     diligently in good faith to cure such breach in cases where
                     a breach cannot reasonably be expected to be cured within
                     15 days), Client may, at its sole option, elect to
                     terminate this Agreement by giving written notice of such
                     election to ALLTEL (the "Client Termination Election
                     Date"). In such case, within 30 days after the Termination
                     Completion Date, ALLTEL shall pay the Client Damages (as
                     such term is defined below) to Client.

              (b)    If such breach is for any failure by ALLTEL to perform in
                     accordance with this Agreement which, in the reasonable
                     judgment of Client, materially adversely affects Client,
                     Client may give notice of the breach and ALLTEL shall cure
                     such breach within 90 days after the date of such notice.
                     If ALLTEL does not cure such breach within such period (or
                     within 150 days after the date of such notice, if ALLTEL is
                     working diligently in good faith to cure such breach in
                     cases where a breach cannot reasonably be expected to be
                     cured within 90 days), then Client may, at its sole option,
                     elect to terminate this Agreement without penalty by giving
                     written notice of such election to ALLTEL which date shall
                     constitute Client Termination Election Date. In such case,
                     within 30 days after the Termination Completion Date,
                     ALLTEL shall pay the Client Damages (as such term is
                     defined below) to Client.

              (c)    For the purpose of this Agreement, Client Damages, subject
                     to Section 16 hereof, shall consist solely of Client's
                     direct out-of-pocket damages actually incurred, for
                     obtaining replacement Services of a substantially similar
                     scope and nature to the Services being provided by ALLTEL
                     hereunder in excess of what Client would have otherwise
                     paid ALLTEL hereunder (the "Client Damages").

              (d)    The failure of Client to exercise any right to elect to
                     terminate this Agreement shall not constitute a waiver of
                     the rights granted herein with respect to any subsequent
                     default.

                                       23
<PAGE>   31

       20.3   TERMINATION UPON CLIENT'S MATERIAL BREACH. In the event of the
              material breach by Client of any provision of this Agreement,
              ALLTEL shall give Client written notice, and:

              (a)    If such breach is for Client's non-payment of amounts due
                     under this Agreement, Client shall cure such breach within
                     45 calendar days after receipt of such notice, or if for
                     Client's breach of its obligations under Section 21 with
                     respect to ALLTEL's Proprietary Information, Client shall
                     cure the breach within 15 calendar days after receipt of
                     such notice. If Client does not cure such breach by such
                     date (or in the case of a breach under Section 21 with
                     respect to ALLTEL's Proprietary Information is not working
                     diligently in good faith to cure such breach in cases where
                     a breach cannot reasonably be expected to be cured within
                     15 days), ALLTEL may, at its sole option, elect to
                     terminate this Agreement by giving written notice of such
                     election to Client (the "ALLTEL Termination Election
                     Date"). In such case, within 30 days after the ALLTEL
                     Termination Election Date, Client shall pay ALLTEL the
                     ALLTEL Damages (as such term is defined below). Client's
                     payment of or agreement to pay interest on any amount past
                     due shall in no way limit or prohibit ALLTEL's right to
                     terminate this Agreement in accordance with this Section
                     20.3(a).

              (b)    If such breach is for any failure by Client to perform in
                     accordance with this Agreement which, in the reasonable
                     judgment of ALLTEL, materially adversely affects ALLTEL,
                     ALLTEL may give notice of the breach and Client shall cure
                     such breach within 90 days after the date of such notice.
                     If Client does not cure such breach within such period (or
                     is not working diligently in good faith to cure such breach
                     in cases where a breach cannot reasonably be expected to be
                     cured within 90 days), then ALLTEL may, at its sole option,
                     elect to terminate this Agreement by giving written notice
                     of such election to Client which date shall constitute the
                     ALLTEL Termination Election Date. In such case, within 30
                     days after the ALLTEL Termination Election Date, Client
                     shall pay ALLTEL the ALLTEL Damages (as such term is
                     defined below).

              (c)    For the purposes of this Agreement, the ALLTEL Damages
                     solely shall consist of the following: (i) all unpaid
                     amounts due and owing to ALLTEL under the Agreement from
                     the date hereof up to and including the ALLTEL Termination
                     Election Date, (ii) a fee equal to the present value (using
                     a discount rate equal to the applicable U.S. Treasury bill
                     or note rate of an equivalent maturity) of fees due under
                     this Agreement from the day immediately following the
                     ALLTEL Termination Election Date through the end of the
                     Term had the termination not occurred multiplied by [.40,]
                     (iii) an amount equal to reasonable travel expenses,
                     relocation and severance expenses (in accordance with
                     ALLTEL's then current policy), and

                                       24
<PAGE>   32

                     incentive payments to provide for the continued services of
                     ALLTEL's staff located at Client's facilities, (iv) an
                     amount equal to the undepreciated equipment and unamortized
                     software used to provide the Services under this Agreement,
                     and (v) an amount equal to any other shut-down expenses,
                     including, without limitation, relating to canceling
                     leases, licenses, and subcontractor agreements
                     (collectively the "ALLTEL Damages".

              (d)    The failure of ALLTEL to exercise any right to elect to
                     terminate this Agreement shall not constitute a waiver of
                     the rights granted herein with respect to any subsequent
                     default.

       20.4   OPERATIONS DURING THE TERMINATION PERIOD. If either party properly
              elects to terminate this Agreement in accordance with Sections
              20.1, 20.2, 20.3 or 20.4 then Client shall have at least six
              months from and after the date of the requisite ALLTEL Termination
              Election Date or Client Termination Election Date to make
              arrangements with respect to the conversion of all of Client's
              data then resident on ALLTEL systems to the non-ALLTEL systems.
              The date when all of Client's data have been substantially
              converted to the non-ALLTEL Systems shall hereinafter be referred
              to as the "Termination Completion Date" and shall be the effective
              date of termination of this Agreement in such events. The
              Termination Completion Date shall occur no sooner than six months,
              and no later than twelve months, after the date of the requisite
              ALLTEL Termination Election Date or Client Termination Election
              Date. Provided that Client is current in all amounts due and owing
              to ALLTEL, at the time of the ALLTEL Termination Election Date or
              Client Termination Election Date, as well as during the period
              between the ALLTEL Termination Election Date or Client Termination
              Election Date (as appropriate) and the Termination Completion
              Date, ALLTEL shall continue to render the Services to Client, with
              such changes as Client and ALLTEL may agree upon, together with
              such additional Services relating to such conversion as Client and
              ALLTEL may agree. Client shall keep ALLTEL reasonably informed of
              Client's decisions and activities with respect to such conversion.
              Client also shall give ALLTEL written notice of Client estimated
              Termination Completion Date promptly after a reasonably definitive
              projected Termination Completion Date is known by Client, and
              shall give written notice to ALLTEL promptly after any change in
              such estimated Termination Completion Date.

                                       25
<PAGE>   33

       20.5   TRANSITIONAL COOPERATION.

              (a)    OFFER OF EMPLOYMENT. Client and ALLTEL agree not to solicit
                     or offer employment, directly or indirectly (including,
                     without limitation, through the use of any third party) to
                     any employee of the other without the prior written consent
                     of the other, except for clerical positions. The sole and
                     exclusive remedy for breach of this provision by either
                     party is for the breaching party to pay the non-breaching
                     party on amount equal to two (2) times the annual salary of
                     the subject employee.

              (d)    TRANSITION. ALLTEL will cooperate with Client to cause an
                     orderly and efficient transition. Without limiting the
                     generality of the foregoing, ALLTEL shall be obligated to
                     provide Client with data reasonably necessary for Client to
                     convert to or implement ALLTEL Systems, procedures, and
                     practices. ALLTEL's obligation shall be limited to: (i) the
                     provision of data or information in the format of, and
                     reasonably available to, ALLTEL; (ii) one test copy of such
                     data and one final conversion copy, and (iii) parallel
                     testing not exceeding one month, including parallel data
                     feeds.

              (c)    RETURN OF MATERIAL. Within 30 days after the Termination
                     Completion Date, ALLTEL, at Client's sole cost and expense,
                     will return all material and property owned by Client and
                     the Client affiliates as well as all material and property
                     of a proprietary nature involving Client and the Client
                     affiliates. In addition, upon Client's request, ALLTEL
                     agrees to provide to Client copies of Client data files,
                     records and programs on magnetic media, or to destroy
                     Client's data files, records and programs in its possession
                     and to certify promptly to Client as to the completed
                     destruction of these materials.

       20.6   SURVIVAL UPON EXPIRATION OR TERMINATION. The provisions of
              Sections 15 (Dispute Resolution), 16 (Limitation of Liability), 17
              (Indemnification), 19 (Notices), 21 (Confidentiality), 23.2
              (Omnibus Reconciliation Act Compliance), 23.6 (Governing Law),
              23.12 (Press Release), and 23.13 (Taxes), shall survive the
              Termination Completion Date of this Agreement, unless otherwise
              agreed to in writing by both parties.

       20.7   TERMINATION FOR CONVENIENCE. Client may terminate this Agreement
              for convenience and without cause effective as of any date after
              the third anniversary of the Start Date provided that Client is
              not in default of any of its obligations under this Agreement by
              (i) giving ALLTEL at least nine (9) months prior written notice
              designating the termination date and (ii) paying ALLTEL an amount
              computed as follows: One hundred eighteen thousand five hundred
              dollars($118,500) multiplied by the number of months remaining
              through 60

                                       26
<PAGE>   34

              months from the Start Date or in the alternative, times any months
              remaining in any extension to the Agreement.

21.    CONFIDENTIALITY.

       21.1   CONFIDENTIALITY OBLIGATION. All information disclosed by Client or
              ALLTEL to the other during the negotiations and the term of this
              Agreement ("Proprietary Information") (i) shall be deemed the
              property of the disclosing party, (ii) shall be used solely for
              the purposes of administering and otherwise implementing the terms
              of this Agreement and (iii) shall be protected by the receiving
              party in accordance with the terms of this Section 21.

       21.2   NON-DISCLOSURE COVENANT. The parties agree that they shall not
              disclose any Proprietary Information of any other party in whole
              or in part, including derivations, to any third party. If the
              parties agree to a specific nondisclosure period for a specific
              document, the disclosing party shall mark the document with that
              nondisclosure period. Proprietary Information shall be held in
              confidence by the receiving party and its employees, contractors
              or agents and shall be disclosed to only those of the receiving
              party's employees, contractors or agents who have a need for it in
              connection with the administration and implementation of this
              Agreement. The receiving party shall cause such contractors and
              agents to execute confidentiality agreements in a form acceptable
              to the disclosing party. The receiving party agrees to give the
              disclosing party copies of any such confidentiality covenants
              promptly upon request by the disclosing party

       21.3   EXCEPTIONS. Proprietary Information shall not be deemed
              proprietary and the receiving party shall have no obligation with
              respect to any such information which:

              (a)    is or becomes publicly known through no wrongful act, fault
                     or negligence of the receiving party;

              (b)    was known by the receiving party prior to disclosure and
                     the receiving party was not under a duty of non-disclosure;

              (c)    was disclosed to the receiving party by a third party who
                     was free of obligations of confidentiality to the party
                     providing the information; (d) is approved for release by
                     written authorization of the disclosing party;

              (e)    is publicly disclosed pursuant to a requirement or request
                     of a governmental agency or disclosure is required by
                     operation of law; or

              (f)    is furnished to a third party by the disclosing party
                     owning the Proprietary Information without a similar
                     restriction on the third party's rights.

                                       27
<PAGE>   35
              The parties acknowledge that without in any way lessening the
              proprietary nature of a party's Proprietary Information, either
              party in accordance with the terms and conditions of this
              Agreement shall be free at any time to develop the same or similar
              Proprietary Information independently of disclosure by the
              transmitting party.

       21.4   CONFIDENTIALITY OF THIS AGREEMENT; PROTECTIVE ARRANGEMENTS.

              (a)    The parties acknowledge that this Agreement contains
                     confidential information that may be considered proprietary
                     by one or both of the parties, and agree to limit
                     distribution of this Agreement to those individuals in
                     their respective companies with a need to know the contents
                     of this Agreement. In no event may this Agreement be
                     reproduced or copies shown to any third parties by Client
                     or ALLTEL without the prior written consent of the other
                     party, except as may be necessary by reason of legal,
                     accounting or regulatory requirements beyond the reasonable
                     control of Client or ALLTEL as the case may be, in which
                     event Client and ALLTEL agree to exercise diligence in
                     limiting such disclosure to the minimum necessary under the
                     particular circumstances. The parties further agree to seek
                     commercial confidential status for this Agreement with any
                     regulatory commission with which this Agreement must be
                     filed, to the extent such a designation can be secured.

              (b)    In addition, each party agrees to give notice to the other
                     parties of any demands to disclose or provide Proprietary
                     Information received from the other or any third party
                     under lawful process prior to disclosing or furnishing
                     Proprietary Information, and agrees to cooperate in seeking
                     reasonable protective arrangements requested by the other
                     party. In addition, any party may disclose or provide
                     Proprietary Information of the other party requested by a
                     government agency having jurisdiction over the party;
                     provided that the party uses its best efforts to obtain
                     protective arrangements satisfactory to the party owning
                     the Proprietary Information. The party owning the
                     Proprietary Information may not unreasonably withhold
                     approval of protective arrangements.

22.    OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS.

       22.1   LICENSES AND PERMITS AND COMPLIANCE WITH LAWS.

              (a)    LICENSES AND PERMITS. ALLTEL and Client shall each secure
                     and maintain in force all licenses and permits required of
                     it and its employees in the performance of this Agreement,
                     and shall conduct its business in full compliance with all
                     laws, ordinances and regulations applicable to its business
                     or applicable to the other party's business to the extent
                     that the

                                       28
<PAGE>   36

                     other party has notified ALLTEL or Client, as the case may
                     be, of the specific laws, ordinances or regulations with
                     which the other party must comply.

              (b)    COMPLIANCE WITH LAWS. ALLTEL and Client shall each shall
                     comply, at its own expense, with the provisions of all
                     applicable municipal requirements and those state and
                     federal laws which may be applicable to each party in the
                     performance of their respective obligations under this
                     Agreement.

       22.2   NO INTERFERENCE WITH CONTRACTUAL RELATIONSHIP. Each party warrants
              that, as of the date hereof, it is not subject to any contractual
              obligation that would prevent it from entering into this
              Agreement. Client and ALLTEL each further warrant to the other
              that entering into this Agreement shall not cause or induce it to
              breach any of its other contractual obligations.

       22.3   COVENANT OF GOOD FAITH. Each of the parties agree that, in its
              respective dealings with each other party arising out of or
              related to this Agreement, it shall act fairly and in good faith.

       22.4   NO INFRINGEMENT.

              (a)    ALLTEL SOFTWARE. ALLTEL warrants to Client that (i) ALLTEL
                     has the right to furnish the Services provided to Client
                     hereunder free of all liens, claims, encumbrances and other
                     restrictions, and (ii) Client shall quietly and peacefully
                     possess the ALLTEL Software, ALLTEL provided Third Party
                     Software, documentation and other materials provided to
                     Client hereunder, subject to and in accordance with the
                     provisions of this Agreement. Each of ALLTEL warranties set
                     forth above, as well as the patent and trademark indemnity
                     provisions of Section 17.2 hereof, shall apply to the
                     Services and to all enhancements, modifications or changes
                     thereto.

              (b)    CLIENT SOFTWARE. Client warrants to ALLTEL that (i) Client
                     has the right to furnish Client Resources (including,
                     without limitation, Client Software, Client provided Third
                     Party Software, documentation and other materials) provided
                     to ALLTEL hereunder and ALLTEL has the right to use the
                     Client Resources (including, without limitation, Client
                     Software, Client provided Third Party Software,
                     documentation and other materials), in each case, free of
                     all liens, claims, encumbrances and other restrictions,
                     and (ii) ALLTEL shall quietly and peacefully possess Client
                     Software, Client provided Third Party Software,
                     documentation and other materials provided to ALLTEL
                     hereunder, subject to and in accordance with the

                                       29
<PAGE>   37

                     provisions of this Agreement. Each of Client's warranties
                     set forth above, as well as the patent and trademark
                     indemnity provision of Section 17.3 hereof, shall apply to
                     the Services and to all enhancements, modifications or
                     changes thereto.

       22.5   AUTHORIZATION AND EFFECT.

              (a)    The execution and delivery by ALLTEL of its obligations
                     under this Agreement have been duly authorized by all
                     necessary corporate action on the part of ALLTEL. This
                     Agreement has been duly executed and delivered by ALLTEL
                     and, assuming the due execution and delivery of this
                     Agreement by Client, constitutes a valid and binding
                     obligation of ALLTEL, except as the same maybe limited by
                     bankruptcy, insolvency, reorganization, moratorium or
                     similar laws relating to or affecting the enforcement of
                     creditor's rights generally, and subject to the
                     qualification that general equitable principles may limit
                     the enforcement of certain remedies, including the remedy
                     of specific performance.

              (b)    The execution and delivery by Client of this Agreement and
                     the fulfillment of its obligations under this Agreement
                     have been duly authorized by all necessary corporate action
                     on the part of Client. This Agreement has been duly
                     executed and delivered by Client and, assuming the due
                     execution and delivery of this Agreement by ALLTEL,
                     constitutes a valid and binding obligation of Client,
                     except as the same may be limited by bankruptcy,
                     insolvency, reorganization, moratorium or similar laws
                     relating to or affecting the enforcement of creditor's
                     rights generally, and subject to the qualification that
                     general equitable principles may limit the enforcement of
                     certain remedies, including the remedy of specific
                     performance.

       22.6   NO ADDITIONAL REPRESENTATIONS OR WARRANTIES. Except as provided in
              this Agreement, ALLTEL IS MAKING NO representation or warranty of
              any kind, express, implied or statutory, including but not limited
              to the implied warranties of merchantability and fitness for a
              particular purpose, and CLIENT AGREES THAT all such other
              representations and warranties that are not provided in this
              agreement are hereby excluded and disclaimed.

                                       30
<PAGE>   38

23.    MISCELLANEOUS.

       23.1   INDEPENDENT CONTRACTOR. It is agreed that ALLTEL is an independent
              contractor and that:

              (a)    CLIENT SUPERVISOR POWERS. Client has no power to supervise,
                     give directions or otherwise regulate ALLTEL's operations
                     or its employees, except as herein provided for security of
                     Client's data and detection of errors in processing.

              (b)    ALLTEL'S EMPLOYEES. ALLTEL shall be solely responsible for
                     payment of compensation to its personnel and for any injury
                     to them in the course of their employment. ALLTEL shall
                     assume full responsibility for payment of all federal,
                     state and local taxes or contributions imposed or required
                     under unemployment insurance, social security and income
                     tax laws with respect to such persons.

              (c)    RELATIONSHIP. The parties declare and agree that each party
                     is engaged in a business which is independent from that of
                     the other party and each party shall perform its
                     obligations as an independent contractor. Neither party is
                     an agent of the other party and has no authority to
                     represent the other party as to any matters, except as
                     authorized herein.

       23.2   OMNIBUS RECONCILIATION ACT COMPLIANCE. As applicable under the
              Omnibus Reconciliation Act of 1980, until the expiration of 4
              years after the furnishing of Services under this Agreement,
              ALLTEL shall, upon receipt of written request, and if then
              required to make such information available under the
              then-existing law, make available to the Secretary of the United
              States Department of Health and Human Services, the Comptroller
              General, or any of their duly authorized representatives, this
              Agreement, books, documents, and/or records of ALLTEL that are
              necessary to certify the nature and extent of products and
              services delivered under this Agreement and costs associated
              therewith. In addition, if ALLTEL carries out any of the duties of
              this Agreement through a subcontract with a value or cost of
              $10,000.00 or more over a 12 month period, such subcontract will
              contain a clause to the effect that, until the expiration of 4
              years after the furnishing of such services under such
              subcontract, the subcontractor shall, upon receipt of written
              request and if then required to make such information available
              under the then-existing law, make available to the Secretary of
              the United States Department of Health and Human Services,
              Comptroller General, or any of their duly authorized
              representatives, the subcontract, books, documents, and/or records
              of such subcontractor that are necessary to verify the nature and
              extent of such costs.

                                       31
<PAGE>   39

       23.3   ASSIGNMENT. Neither party shall assign, delegate, or otherwise
              convey or transfer (the "Assignment") its rights, interests or
              obligations under this Agreement to any person or entity without
              the prior written consent of the other party which consent shall
              not be unreasonably denied, delayed or limited. All obligations
              and duties of any party under this Agreement shall be binding on
              all successors in interest and permitted assigns of such party. If
              the other party consents to the Assignment, the proposed assignee
              or transferee shall, upon completion of the Assignment,
              automatically succeed to the corresponding rights, interests, and
              obligations of the assigning and transferring party and shall be a
              successor of such party for purposes of this Agreement. ALLTEL
              recognizes that Client anticipates temporarily transferring
              substantially all of its assets to a new entity, New Beverly
              Holding, Inc. then back to Client for the purpose of divesting its
              pharmacy operations. ALLTEL hereby consents to such transfer.

       23.4   SEVERABILITY. In the event that any one or more of the provisions
              contained herein shall for any reason be held to be unenforceable
              in any respect under law, such unenforceability shall not affect
              any other provision of this Agreement, but this Agreement shall be
              construed as if such unenforceable provision or provisions had
              never been contained herein, provided that the removal of such
              offending term or provision does not materially alter the burdens
              or benefits of either of the parties under this Agreement or any
              Service Attachment.

       23.5   THIRD PARTY BENEFICIARIES. The provisions of this Agreement are
              for the benefit of the parties and not for any other person.
              However, should any third party institute proceedings, this
              Agreement shall not provide any such person with any remedy,
              claim, liability, reimbursement, cause of action, or other right.

       23.6   GOVERNING LAW. Except as otherwise expressly provided in this
              Agreement and Exhibits, this Agreement shall be deemed to be a
              contract made under the laws of the State of Arkansas and the
              construction, interpretation, and performance of this Agreement
              and Exhibits and all transactions hereunder shall be governed by
              the substantive law of such State. All judicial proceedings to be
              brought with respect to this Agreement shall be brought in the
              appropriate federal or state court in the state of Arkansas (the
              "Courts") and by execution and delivery of this Agreement, Client
              and ALLTEL each accepts general and unconditionally the exclusive
              jurisdiction of the Courts. Client and ALLTEL also each
              irrevocably waives any objection (including, without limitation,
              any objection of the laying of venue based on the grounds of forum
              non-conveniens) which Client or ALLTEL may now have or hereafter
              may have to the bringing of any new action or proceeding with
              respect to this Agreement in the Courts.

       23.7   EXECUTED IN COUNTERPARTS. This Agreement may be executed in
              counterparts, each of which shall be an original, but such
              counterparts shall together constitute but one and the same
              document.

                                       32
<PAGE>   40

       23.8   CONSTRUCTION. The headings and numbering of sections in this
              Agreement are for convenience only and shall not be construed to
              define or limit any of the terms or affect the scope, meaning or
              interpretation of this Agreement or the particular section to
              which they relate. This Agreement and the provisions contained
              herein shall not be construed or interpreted for or against any
              party because that party drafted or caused its legal
              representative to draft any of its provisions.

       23.9   ENTIRE AGREEMENT. This Agreement, including the Exhibits attached
              hereto and the agreements referenced herein constitute the entire
              Agreement between the parties, and supersedes all prior oral or
              written agreements, representations, statements, negotiations,
              understandings, proposals and undertakings, with respect to the
              services to be provided by ALLTEL to Client.

       23.10  AMENDMENTS AND WAIVERS. This Agreement may be amended only by
              written agreement signed by duly authorized representatives of
              each party. No waiver of any provisions of this Agreement and no
              consent to any default under this Agreement shall be effective
              unless the same shall be in writing and signed by or on behalf of
              the party against whom such waiver or consent is claimed. No
              course of dealing or failure of any party to strictly enforce any
              term, right or condition of this Agreement shall be construed as a
              waiver of such term, right or condition. Waiver by either party of
              any default by the other party shall not be deemed a waiver of any
              other default.

       23.11  REMEDIES CUMULATIVE. Unless otherwise provided for under this
              Agreement, all rights of termination or cancellation, or other
              remedies set forth in this Agreement, are cumulative and are not
              intended to be exclusive of other remedies to which the injured
              party may be entitled by law or equity in case of any breach or
              threatened breach by the other party of any provision in this
              Agreement. Use of one or more remedies shall not bar use of any
              other remedy for the purpose of enforcing any provision of this
              Agreement.

       23.12  PRESS RELEASES. The parties shall consult with each other in
              preparing any press release, public announcement, news media
              response or other form of release of information concerning this
              Agreement or the transactions contemplated hereby that is intended
              to provide such information to the news media or the public (a
              "Press Release"). Neither party shall issue or cause the
              publication of any such Press Release without the prior written
              consent of the other party; except that nothing herein will
              prohibit either party from issuing or causing publication of any
              such Press Release to the extent that such action is required by
              applicable law or the rules of any national stock exchange
              applicable to such party or its affiliates, in which case the
              party wishing to make such disclosure will, if practicable under
              the circumstances, notify the other party of the proposed time of
              issuance of such Press Release and consult with and allow the
              other party reasonable time to comment on such Press Release in
              advance of its issuance.

                                       33
<PAGE>   41

       23.13  TAXES. All charges and fees to be paid by Client are exclusive of
              any applicable sales, use, excise or services tax which may be
              assessed on the provision of the Services. In the event that a
              sales, use, excise or services tax is assessed on the provision of
              any of the Services provided to Client under this Agreement,
              Client will pay directly or reimburse ALLTEL for such taxes. The
              parties will cooperate with each other in determining the extent
              to which any tax is due and owing under the circumstances, and
              shall provide and make available to each other any resale
              certificates, information regarding out-of-state use of materials,
              services or sale, and other exemption certificates or information
              reasonably requested by either party. The parties also agree to
              work together to segregate all payments under this Agreement into
              three payment streams, those for taxable services, those for
              non-taxable services, and those in which ALLTEL functions as a
              payment agent for Client in receiving goods, supplies or services
              (including leasing and licensing arrangements) that otherwise are
              nontaxable or have previously been subject to tax.

IN WITNESS WHEREOF, the parties, acting through their authorized officers, have
caused this Agreement to be duly executed and delivered as of the date first
above written.

ALLTEL INFORMATION                       BEVERLY ENTERPRISES,
SERVICES, INC.                           INC.

By:                                      By:
   --------------------------------         -----------------------------------

Name:                                    Name:
     ------------------------------           ---------------------------------

Title:                                   Title:
      -----------------------------            --------------------------------

Date:                                    Date:
     ------------------------------           ---------------------------------

                                       34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]