March 6, 2000


Excellular Incorporated
Covault Corporation
c/o Larry Bailey, Esq.
Preston Gates & Ellis
701 5th Avenue, Suite 5000
Seattle, Washington  98104-7016

Gentlemen:

     This letter,  when executed by Excellular  Incorporated  ("EXCELLULAR") and
Covault   Corporation   ("COVAULT",   and  collectively  with  Excellular,   the
"COMPANIES"),  will evidence (i) our mutual intent, as set forth in Section I of
this letter, with respect to the (a) proposed acquisition by PalmWorks, Inc., or
a  wholly  owned   subsidiary  of  PalmWorks   (individually   or  collectively,
"PALMWORKS"),  of all of the capital  stock of PDA Data,  a  corporation,  to be
formed in Nevada by the  Companies  ("PDA  DATA");  and (b) the entry of certain
service agreements between the Companies,  PDA Data and PalmWorks (collectively,
the  "TRANSACTIONS");  and (ii)  certain  binding  agreements,  as set  forth in
Section II of this letter, relating to the proposed Transactions.

     The matters set forth in Section I of this letter  constitute an expression
of our mutual intent only and are contingent on the  negotiation,  execution and
delivery  of  definitive   agreements  (the  "DEFINITIVE   AGREEMENTS")  between
PalmWorks  and the  Companies.  This letter does not create any  obligations  of
PalmWorks or the Companies  with respect to those matters set forth in Section I
hereof.  However,  the matters set forth in Section II of this letter constitute
binding agreements between PalmWorks and the Companies.

                                   SECTION I.
                              PROPOSED ACQUISITION

     1. DEFINITIVE  AGREEMENTS.  The Companies and PalmWorks will use their best
efforts to execute and deliver the  Definitive  Agreements  with  respect to the
Transactions  on or before March 31, 2000.  Pursuant to the terms and conditions
of the Definitive Agreements:

     (a) The  Companies  will create PDA Data,  a Nevada  corporation,  as their
wholly  owned  subsidiary,  and  will  capitalize  PDA Data  with the  following
(collectively, the "INITIAL ASSETS").

          (i) $100,000;
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March 6, 2000
Page 7

          (ii) A non-exclusive  license to use Covault's  Revenue Billing System
software (the  "SOFTWARE"),  at no cost,  pursuant to the  underlying  licensing
Agreement between PDA Data and Covault (the "LICENSING AGREEMENT").

          (iii) A copy of the Covault's  internet  website (the  "WEBSITE")  and
non-exclusive license to modify the site for PalmWorks needs.

          (iv) A  maximum  of 500 hours of  customization  of the  Software  and
Website,  including but not limited to design,  development  and  administrative
work  provided by Covault.  Such 500 hours of  customization  will be  completed
within three (3) months after agreement of design specifications provided that:

               (a)  Additional   customization  performed  by  Covault  must  be
approved in writing in advance by PDA Data,  and such  additional  customization
will be billed to and paid by PDA Data at the rate of $250.00 per hour.

               (b)  Additional  customization  performed by outside  contractors
will be paid  directly by PDA Data and subject to such terms and  conditions  as
negotiated by PDA Data.

          (v) A service  agreement with  Excellular  (the "SERVICES  AGREEMENT")
pursuant to which Excellular will provide PDA Data with the following:

               (a) The right to "co-locate"  its internet  servers and computers
in a space not to exceed  fifty (50) square feet within the  premises  currently
owned or leased by Excellular (the  "PREMISES").  PDA Data shall pay the cost of
moving and  setting up said  servers  and  computers  on the  Premises or at any
future location of Excellular and all telecommunication  charges related to said
servers and computers.

               (b) Use of its staff during regular business hours including, but
not  limited to,  customer  service  personnel  for up to 100 hours per month of
customer sales, service and technical support via Excellular's phone system with
the option of purchasing  additional customer support at an agreed upon rate. In
the event PDA Data establishes 800 toll-free lines for service and support,  the
cost of same shall be paid by PDA Data.

               (c) Assistance in setting up the administration,  acquisition and
resale of wholesale CDPD data time purchased from CDPD data providers;

          (vi)  PDA  Data  will  provide  billing  and  collection  services  to
PalmWorks; and

          (vii) PDA Data will pay Excellular  $1.00 per month for each PalmWorks
customer  account  serviced  (for  billing and  associated  customer  accounting
purposes) by PDA Data.
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March 6, 2000
Page 3

          The  Services  Agreement  will have an initial term of three (3) years
from the Closing  Date  (defined  below) and will  automatically  be renewed for
additional one year periods if neither party  provides  written notice of intent
to  terminate  the  Services  Agreement  at least  180 days  prior to the  third
anniversary,  or subsequent anniversaries,  of the Closing Date. That Ron Curtin
of Excellular  will assume the position of Chief  Operating  Officer of PDA Data
for the term of the Services  Agreement.  That Darin Lang of Covault will assume
the  position  of  Chief  Technology  Officer  of PDA  Data  for the term of the
Services Agreement.

     (b) On the Closing Date, the owners of PDA Data stock will transfer, convey
and assign all of the issued and outstanding  shares of the capital stock of PDA
Data to  PalmWorks  in  exchange  for  400,000  shares  of the  common  stock of
PalmWorks (the "COMPANY SHARES").  The Company Shares will be issued pursuant to
Rule 144 and will be subject to the rules and  regulations of the Securities and
Exchange  Commission and will have  piggyback  registration  rights  relative to
other shares of PalmWorks. The Definitive Agreements will also include customary
covenants requiring PalmWorks to make and keep public information available,  as
those terms are defined in Rule 144 and file with the  Securities  and  Exchange
Commission in a timely manner all reports and other documents required under the
Securities Act of 1933 and the Exchange Act of 1934.

     (c) On the Closing  Date,  PDA Data will (i) own all of the Initial  Assets
free and clear of all liens,  claims and  encumbrances;  and (ii) have no debts,
obligations  or  liabilities  to any person or entity,  including the Companies.

Upon  consummation  of  the  Transactions,   PalmWorks  will  acquire  good  and
marketable  title  to the  capital  stock  of PDA  Data  free  and  clear of all
mortgages,  liens, security interests and other encumbrances,  and the Companies
will acquire  title to the  Excellular  Shares free and clear of all  mortgages,
liens,  security  interests and other  encumbrances  other than  securities  law
restrictions.  The  Transactions  will  close on or before  March 31,  2000 (the
"CLOSING DATE").

     2.  INDEMNIFICATION.  The Companies  will  indemnify PDA Data and PalmWorks
from and  against  any and all claims,  demands,  actions,  and causes of action
involving indebtedness,  liabilities, or obligations of the Companies,  existing
at anytime  whatsoever and of PDA Data existing as of the Closing Date, and from
any claims relating to the rights of PDA Data and PalmWorks to use the Software.

     3.  REPRESENTATIONS  AND WARRANTIES.  PalmWorks and the Companies will each
make representations and warranties, indemnities and covenants in the Definitive
Agreement that are typical for transactions of similar size and complexity.

     4. CERTAIN CONDITIONS. It is recognized that the proposed Transactions will
be subject to certain  conditions,  including  (i) the  conditions  set forth in
paragraphs (a) through (c),  inclusive,  which are conditions to the obligations
of all parties; and (ii) the conditions set forth in paragraphs (d) through (f),
inclusive, which are conditions to the obligations of PalmWorks.
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March 6, 2000
Page 4

     (a) BOARD AND SHAREHOLDER  APPROVAL.  The proposed  Transactions shall have
been approved by the Boards of Directors of PalmWorks and of the Companies.

     (b) GOVERNMENTAL AND THIRD PARTY APPROVALS.  Favorable orders, consents and
approvals  in  the  form  required  to  consummate  the  proposed  Transactions,
including  but  not  limited  to  those  required  under  the  Hart-Scott-Rodino
Antitrust  Improvements Act of 1976, shall have been received (if required) from
necessary governmental agencies and third parties.

     (c) ABSENCE OF  LITIGATION.  At the Closing Date there shall not be (i) any
effective injunction, writ, or temporary restraining order or any other order of
any nature issued by a court or  governmental  agency of competent  jurisdiction
directing that the proposed Transactions not be consummated; or (ii) any action,
suit, or proceeding pending or threatened by or before any court or governmental
body in  which it is or may be  sought  to  prohibit,  substantially  delay,  or
rescind the proposed  Transactions,  or to limit in any way PalmWorks'  right to
control PDA Data or any aspect of its business, or to obtain an award of damages
in connection with the Transactions.

     (d) ADVERSE CHANGES.  There will have been no changes after January 1, 2000
in the businesses of the Companies or the Software  which,  in the sole judgment
of  PalmWorks,  are in their total effect,  materially  adverse to the terms and
conditions of this transaction.

     (e) DUE DILIGENCE.  The due diligence  conducted by PalmWorks and its legal
counsel  in  connection  with the  proposed  Transactions  will not have  caused
PalmWorks to become aware of any facts  relating to the  business,  liabilities,
financial  condition,  opportunities,  results of operations,  or affairs of the
Companies or the Software  which,  in the sole  judgment of  PalmWorks,  make it
inadvisable for PalmWorks to proceed with the proposed Transactions.

     (f) NON-COMPETITION  AGREEMENT.  PalmWorks recognizes that the shareholders
and  officers of PDA Data are  engaged in other  businesses,  including  Covault
Corporation,  Snydeo  Systems,  Inc.,  and  Excellular  Incorporated,  which may
compete  with  its  current  or  future  business  opportunities.  Said PDA Data
shareholders   and   officers,   and   PalmWorks   will  have   entered  into  a
non-competition  agreement  satisfactory  to  PalmWorks  in  its  sole  judgment
pursuant  to which each of their  shareholders  and  officers  will agree  that,
without the prior written  consent of PalmWorks,  they will not, for a period of
five (5) years after the Closing Date use the information or products  developed
in connection with this agreement in competition with consumer handheld wireless
data business being conducted by PalmWorks or PDA Data.

     5.  CONTINUING  OPERATIONS.  Prior  to the  consummation  of  the  proposed
Transactions,  the Companies will conduct their  businesses  with respect to the
Software in a prudent,  businesslike  manner, use their best efforts to preserve
the goodwill of all persons  dealing with respect to the Software for PalmWorks,
cooperate  fully with PalmWorks so as to arrange for the transfer of PDA Data to
PalmWorks in an orderly fashion, take all actions and make all filings which are
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March 6, 2000
Page 5

reasonably  necessary to lawfully  transfer PDA Data to PalmWorks,  and take all
reasonable  actions  to obtain  consents  to  assign  and  transfer  PDA Data to
PalmWorks.

                                  SECTION II.
                               BINDING AGREEMENTS

     1.  NECESSARY  INFORMATION.  Upon request by PalmWorks,  the Companies will
promptly furnish all information regarding the Companies and the Software which,
in the  reasonable  judgment of PalmWorks,  is necessary to enable  PalmWorks to
conduct its due  diligence  relating to the proposed  Transactions.  Each of the
parties hereto shall furnish to the other all information  concerning such party
(including  financial  statements  and  statistical  information)  required  for
inclusion in any application or statement to be filed or made by the other party
with or to any  governmental  agency  or  third  party  in  connection  with the
proposed Transactions.

     2.  CONFIDENTIALITY.  The Companies  and  PalmWorks  will each maintain the
confidentiality  of, and will not  disclose  to any third  party  (other than to
their  respective  employees,  accountants,   attorneys  and  other  consultants
providing   services  with  respect  to  the  proposed   Transactions)  (i)  any
proprietary or confidential information of any nature whatsoever provided by any
party  hereto  (collectively,  the  "CONFIDENTIAL  INFORMATION");  or  (ii)  the
existence  of  their  negotiations  or  the  terms  or  potential  terms  of any
negotiations or potential  Transactions  without the other party's prior written
consent.  Any party may, however,  disclose any Confidential  Information to the
extent (i) such information is, or becomes part of, the public domain other than
by reason of disclosure  by the receiving  party;  (ii) such  information  is or
becomes  available  from a third party  source  with the right to disclose  such
information;  and/or  (iii)  disclosure  of  such  information  is  required  by
applicable law.

     Each of the parties  acknowledge and agree that (i) the covenants set forth
in this Section II.2 are essential  elements of the  Transactions  and that such
covenants are reasonable  and necessary to protect the  legitimate  interests of
the parties hereto; (ii) no party hereto will have any adequate remedy at law if
another  party  violates  the  terms  hereof  or  fails  to  perform  any of its
obligations hereunder; and (iii) the non-violating party shall have the right to
obtain  preliminary and permanent  injunctive relief from any court of competent
jurisdiction  to restrain  any breach or  threatened  breach of, or to otherwise
specifically enforce any such covenant or any other obligations of the violating
party  under  this  Agreement,  as well as to obtain  damages  and an  equitable
accounting  of all  earnings,  profits  and  other  benefits  arising  from such
violation,  which rights shall be cumulative and in addition to any other rights
or remedies to which the  non-violating  party may be  entitled.  The  violating
party further agrees to pay any costs,  including  attorneys' fees,  incurred by
the  non-violating  party in enforcing  this  provision as awarded by a court of
competent jurisdiction.

     3. PUBLIC  ANNOUNCEMENTS.  Neither the parties nor any of their  respective
officers,  directors,  employees or agents shall  disclose to any third party or
publicly announce the proposed Transactions until that time to which the parties
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March 6, 2000
Page 6

agree in the Definitive  Agreements or such other time as the parties  otherwise
agree to make such disclosure or announcement,  unless otherwise required by law
or the rules of any stock exchange on which the shares of PalmWorks  trade.  The
Companies  acknowledge  that  PalmWorks is  authorized  to issue a press release
regarding the agreements contained herein following the execution of this letter
by the Companies and PalmWorks.  Any public announcement concerning the proposed
Transactions shall be approved in advance by both parties.

     4. EXPENSES. Except as otherwise provided in this letter, PalmWorks and the
Companies  shall each pay its own fees and expenses  incurred in connection with
the proposed  Transactions.  PalmWorks and the Companies will split the costs of
any  filings   required  to  obtain   governmental   approval  of  the  proposed
Transactions.

     5. EXCLUSIVE  NEGOTIATIONS.  From the date hereof through the Closing Date,
the  Companies  will not, and will use  reasonable  efforts to insure that their
respective parent, subsidiaries,  affiliates or representatives do not, directly
or indirectly,  solicit any offer from, initiate or engage in any discussions or
negotiations  with,  or provide any  information  to, any  corporation,  limited
liability  company,  partnership,  person,  or other entity or group (other than
PalmWorks and its subsidiaries,  affiliates and representatives)  concerning any
possible  proposal  regarding  a sale of capital  stock of PDA Data or a merger,
consolidation,  liquidation,  business  combination,  sale of  assets,  or other
similar transaction  involving PDA Data or the sale or licensing of the Software
to any competitor.  In addition, the Companies will not, and will use reasonable
efforts to insure that their  respective  parent,  subsidiaries,  affiliates  or
representatives  do not, engage in any  communications  whatsoever,  directly or
indirectly,  with any party that  initiates  discussions  regarding  a potential
transaction  of the  character  described in the preceding  sentence  except for
communications  that are wholly unrelated to such a potential  transaction or to
notify such party that the Companies  will not engage in any  communications  at
such time. The Companies shall promptly advise  PalmWorks  orally and in writing
of any inquiry or proposal by a third party regarding such a transaction.

     6. NO BREAKUP FEE.  Neither the Companies nor PalmWorks  will be subject to
any "breakup" fee.

     7. BROKERS.  None of the parties hereto has employed a broker,  nor for any
reason  will  any  of  them  subject  another  to  the  payment  of a  brokerage
commission,  in connection with the proposed Transactions.  PalmWorks may retain
an investment  banker in  connection  with the proposed  Transactions,  in which
event PalmWorks will be responsible for the payment of its fees and expenses.

     8.  NONBINDING  NATURE OF SECTION I. It is understood by the parties hereto
that  Section I of this letter  merely  constitutes  a  statement  of the mutual
intentions of the parties with respect to the proposed Transactions and does not
contain  all  matters  upon  which  agreement  must be  reached in order for the
proposed  Transactions to be consummated.  A binding  commitment with respect to
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March 6, 2000
Page 7

the proposed  Transactions  will result only from  execution and delivery of the
Definitive Agreements. The provisions of Section II of this letter, however, are
agreed to be fully  binding on the  parties  hereto upon the  execution  of this
letter,  unless and until  such  provisions  are  superseded  by the  Definitive
Agreements.

     9. TERMINATION.  Except for the respective obligations of the parties under
paragraphs  2,  3, 4 and 7 of this  Section  II (and  without  prejudice  to the
nonbinding nature of Section I hereof), this letter shall terminate and be of no
further  force or effect on the Closing Date if a Definitive  Agreement  has not
been executed by that date.

     10. GOVERNING LAW. This letter of intent, and the Definitive Agreement, and
each  document  related  thereto if such is entered  into,  shall be governed by
Texas law.

     If the foregoing  correctly  sets forth the  understanding  between us with
respect to the proposed  Transactions outlined herein, please sign two copies of
this  letter in the space  provided  below and return one  executed  copy to the
undersigned.  This letter shall be withdrawn and shall be of no further force or
effect if not executed by the  Companies  and returned to PalmWorks by 5:00 p.m.
Central Standard Time on March 8, 2000.

                                        Very truly yours,

                                        PALMWORKS, INC.


ACCEPTED AND AGREED TO:                 By: /s/ James T. Voss
                                           -------------------------------------
this 8th day of March, 2000

EXCELLULAR INCORPORATED


By: /s/ Jack E. Nichols
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Name: Jack E. Nichols
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Title: President
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COVAULT Corporation
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By: /s/ Jack E. Nichols
   -----------------------------------------
Name: Jack E. Nichols
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Title:
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