Document:

LOAN AGREEMENT

         This Loan Agreement ("Agreement") is between Palm Works, Inc., whose
address is 2525 South Shore Harbor Blvd., suite 309, League City, Texas 77573
("Company") and those shareholders of the Company who sign this Agreement
(individually "Lending Shareholder" and collectively "Lending Shareholders"),
and Northwest Capital Partners, L.L.C., whose address is 10900 NE 8th Street,
Suite 900, Bellevue, Washington 98004, as "Agent"; and

                                  WITNESSETH:

         The Lending Shareholders and Company, in consideration of the mutual
covenants, promises, and conditions set forth herein, do hereby agree as
follows:

1. DEFINITIONS. As used in this Agreement, the following terms will have the
following meanings unless the context requires otherwise:

         AGREEMENT means this agreement as originally executed or hereafter
amended.

         BUSINESS DAY means a day on which state banks in Houston, Texas are
open for business.

         COLLATERAL means all tangible and intangible assets of PalmWorks, Inc.

[DESCRIBE COLLATERAL, IF ANY, SUCH AS ACCOUNTS RECEIVABLE, CONTRACT RIGHTS,
FIXTURES, FURNITURE, EQUIPMENT AND OTHER PERSONAL PROPERTY (EITHER TANGIBLE OR
INTANGIBLE)] owned by Company and located on or used in the business operated by
Company and the proceeds thereof.

         DEFAULT and EVENT OF DEFAULT each mean any event specified in Paragraph
8 of this Agreement, provided that any requirement in connection with such event
for the giving of notice or lapse of time or any other condition has been
satisfied.

         INDEBTEDNESS of any Person means the sum, without any duplication of
(i) all Indebtedness, contingent or otherwise, for borrowed money created,
assumed or guaranteed in any manner, directly or indirectly, by such Person, and
(ii) the undrawn amount of any loan commitments in favor of such Person, (iii)
guaranties, whether direct or indirect, continuing or specific, of Indebtedness
of another Person by such Person, (iv) all rental obligations of such Person
with respect to leases which have a term (including any renewals at the option
of the lessee but excluding delay rentals) of longer than one year, required by
generally accepted accounting principles to be shown as a liability item on the
balance sheet of such Person, (v) all Indebtedness in effect guaranteed by such
Person through an agreement to purchase property, securities or services or to
use facilities (including through-put and take or pay agreements), maintain
working capital or other balance sheet condition, or otherwise, having the
effect of enabling the obligor to satisfy Indebtedness or to assure the owner of
Indebtedness against loss.

         NOTES mean the Revolving Notes and the Term Notes.

         OBLIGATIONS means the outstanding principal amounts of the Notes and
any and all other Indebtedness, liabilities and obligations whatsoever of the
Company to the Lending Shareholders hereunder or under the Note, or otherwise,
whether direct or indirect, absolute or contingent, due or to become due, and
whether now existing or hereafter arising, and howsoever evidenced or acquired,

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whether joint or several; it being contemplated by the parties hereto that the
Company may become indebted to the Lending Shareholders in further sum or sums.

         PERSON means any corporation, partnership, trust, estate, individual,
unincorporated business entity or governmental department, administrative agency
or instrumentality.

         REVOLVING NOTES mean the promissory notes referred to in Paragraph 2(a)
hereof as the same may be renewed, extended, or rearranged at any time.

         SECURITY AGREEMENT means a General Security Agreement in substantially
the form attached hereto as Exhibit "B".

         SECURITY INSTRUMENTS means the Security Agreement, together with all
financing statements and other documents necessary for recordation of the same
or perfection of the liens and security interests granted thereby.

         TERM NOTES mean the promissory notes referred to in Paragraph 2(b)
hereof as the same may be renewed, extended or rearranged at any time.

2. THE LOANS. Subject to, and upon the terms, conditions, covenants and
agreements contained herein:

         (a) REVOLVING LOAN. The Lending Shareholders hereby establish a
Revolving Loan (herein so called) in favor of Company on the terms hereof. The
aggregate outstanding principal amount of the Revolving Loan at any one time
shall not exceed $1,000,000.00 ("Maximum Revolving Loan Amount"). Each Lending
Shareholder shall make that percentage of the Revolving Loan set forth opposite
such Lending Shareholder's signature hereto ("Lending Shareholder's
Commitment").

         Subject to the terms of this Agreement, so long as Company is not in
default hereunder at the time of the Company's request, the Company may borrow
and the Lending Shareholders shall advance, up to the aggregate Maximum
Revolving Loan Amount, their proportionate part of such requested advance that
is equal to the requested amount of the advance multiplied times such Lending
Shareholder's Commitment. This loan shall be a revolving loan, provided, at no
time shall the outstanding principal balances of the Revolving Notes exceed the
Maximum Revolving Loan Amount. As the Company repays advances made by Lending
Shareholders, such amounts may be reborrowed, in whole or in part, until January
15, 2002.

         At the time of each advance under the Revolving Loan, Company shall
execute and deliver a Revolving Note (herein so called) to each Lending
Shareholder, payable to the order of each Lending Shareholder for the amount of
its loan to Company. Each such Revolving Note shall be in the form of Exhibit
"A-1" attached hereto, with blanks suitably filled, shall be dated the date of
the borrowing, and shall mature on or before January 15, 2002. The rate of
interest before maturity shall be at a rate equivalent to the rate described by
Chase Manhattan Bank as its prime rate in effect from time to time (computed on
a 365-day basis) ("Prime Rate").

         All renewals, extensions, modifications and rearrangements of the
Revolving Notes, if any, shall be deemed to be made pursuant to this Agreement,
and accordingly, shall be subject to the terms and provisions hereof and the
Company shall be deemed to have ratified as of such renewal, extension,

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modification or rearrangement date, all of the representations, covenants and
agreements herein set forth.

         (b) RIGHT TO TERMINATE REVOLVING LOAN. Company may at any time
terminate or reduce the Revolving Loan hereby created by giving written notice
to each of Lending Shareholders and by payment of all Revolving Notes
outstanding hereunder in case of termination or the parts thereof exceeding the
Revolving Loan as so reduced, in either case with interest on Revolving Credit
Notes so paid.

         Any reduction of the Revolving Loan shall apply to the Lending
Shareholder Commitments of proportionately, and Company may not terminate one
Lending Shareholder's Commitment without terminating the commitments of each
Lending Shareholder. All payments of principal or interest by Company on the
Revolving Credit Notes or on the Term Notes shall be made ratably on the
Indebtedness owing to each Lending Shareholder.

         (c) PROVISIONS RELATIVE TO THE NOTES, BORROWING AND PAYMENTS. Company
shall give the Agent at least five full business days notice of each proposed
borrowing hereunder, and the Agent shall promptly advise each Lending
Shareholder thereof. Not later than 11 a.m. Houston, Texas time on the day of a
proposed borrowing, each Lending Shareholder shall provide the Agent with
federal funds covering such Lending Shareholder's proportion of the borrowing.

         Each borrowing from Lending Shareholders hereunder shall be made pro
rata according to their respective Lending Shareholder's Commitments and on the
same date. Each payment and prepayment of the Revolving Notes or the Term Notes
shall be made pro rata in accordance with the principal amounts of such notes.

         Each Note shall rank in priority as to the date of its issuance, with
Notes senior in date having priority over Notes dated thereafter. All Notes of
equal date shall rank equally and ratably, without priority over one another.

3. PREPAYMENTS. Each prepayment on the Notes must be paid at the offices of the
Lending Shareholders. The Company shall be entitled to prepay the Notes from
time to time, and at any time, in whole or in part, without notice or penalty.
Any such prepayment shall be applied to the installments of the Notes in the
inverse order of their maturities.

4. COLLATERAL. Payment of the Notes and performance of the Obligations
described herein shall be secured, or guaranteed, directly or indirectly, by a
lien and security interest in and upon the Collateral as evidenced by a Security
Agreement in substantially the form of Exhibit "B" hereto. The Lending
Shareholders hereby appoint the Agent as their respective agent and attorney in
fact hereunder and under the Security Agreement to act on their behalf under the
Security Agreement. If the Agent is in doubt as to any action to take on the
part of the Lending Shareholders, the consent of the holders of more than fifty
percent (50%) of the Lending Shareholder's Commitments ("Majority of Lending
Shareholders") shall be binding on the Agent and on all the Lending
Shareholders. Such consent may be obtained at a meeting attended by a Majority
of the Lending Shareholders or by written consent of such Majority of Lending
Shareholders. The Agent shall have the power and authority to take all actions
as may be necessary or required on behalf of the Lending Shareholders as Agent
or as Secured Parties under the Security Agreement.

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5. USE OF PROCEEDS. The proceeds of the Notes shall be used by the Company for
operating expenses and other purposes as deemed necessary by the Company.

6. AFFIRMATIVE COVENANTS AND AGREEMENTS. Until payment and performance in full
of the Notes and the Obligations hereunder, unless the Company receives prior
written approval of a deviation from the Lending Shareholders, the Company
covenants and agrees to

         (a) FINANCIAL STATEMENTS. Furnish the Lending Shareholders, within one
hundred twenty (120) days after the end of each fiscal year of the Company
during the term hereof, a copy of its annual financial statement, consisting of
at least a balance sheet and related statements of income, retained earnings and
changes in financial condition of the Company, prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year;

         (b) INSURANCE. Maintain insurance with responsible companies in the
amounts and types and against the risks, liabilities and contingencies as is
usually carried by similar businesses in the same general area and of similar
size to the Company;

         (c) PAYMENT OF OBLIGATIONS. Pay and discharge all taxes, assessments
and governmental charges or levies imposed on the Company or on its income or
profits or on any of its property prior to the date on which penalties or liens
attach thereto and become of public record, provided that the Company shall not
be required to pay any such tax, assessment, charge, levy or claim the payment
of which is being contested in good faith and by proper proceedings and against
which the Company has set up adequate reserves in accordance with generally
accepted accounting principles; and

         (d) EXPENSES. Pay reasonable expenses, including reasonable legal
expenses and attorneys' fees, if any, of the collection of the Notes, or for the
enforcement of any of the Company's Obligations hereunder and under any document
executed to secure the payment of the Notes and for the recording and filing and
re-recording and refiling of any such document.

7. REPRESENTATIONS, WARRANTIES AND COVENANTS. In order to induce the Lending
Shareholders to extend the credit and financial accommodations evidenced by the
Notes and this Agreement, the Company represents, warrants and covenants that:

         (a) CORPORATE AUTHORITY AND APPROVAL. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and is duly licensed, qualified to do business and in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such licensing and qualification and has all
powers and all permits, consents and authorizations necessary to own and operate
its properties and carry on its business as presently conducted. The execution,
delivery and performance of this Agreement, the borrowings hereunder and the
execution and delivery of the Notes and the several agreements and instruments
contemplated hereby, (i) have been authorized by proper corporate proceedings,
and (ii) will not contravene, or constitute a default under, any provisions of
applicable law or regulation or of the Articles of Incorporation or Bylaws of
the Company, or of any mortgage, indenture, contract, agreement or other
instrument, or any judgment, order or decree, binding upon the Company. No
consents of the Company's shareholders or any holder of any Indebtedness of the
Company are required as a condition to the validity of this Agreement, the Notes
or the several agreements and instruments contemplated hereby, or else such
consents have been obtained. This Agreement, the Notes and the several
agreements and instruments contemplated hereby, when duly executed and delivered
in

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<PAGE>
accordance with this Agreement will constitute, as to the applicable party,
legal, valid and binding obligations of the Company in accordance with their
respective terms;

         (b) GOVERNMENTAL APPROVAL. No approvals or consents of any governmental
department, administrative agency or instrumentality having jurisdiction over
the Company are necessary to permit the Company to enter into this Agreement,
the Notes or the several agreements and instruments contemplated hereby;

         (c) TAX RETURNS. The Company has filed all United States tax returns
and all state and foreign tax returns required to be filed by it and has paid,
or made provisions for the payment of, all taxes which have become due pursuant
to said returns or pursuant to any assessment received by the Company except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with generally accepted
accounting principles, and such returns properly reflect the United States
income, foreign tax and/or state taxes of the Company for the periods covered
thereby; and

         (d) LIENS AND SECURITY INTERESTS. The security interests, mortgages and
liens attaching to the Collateral will at all times constitute valid, perfected
and enforceable first priority security interests, mortgages and liens in favor
of the Lending Shareholders,

8. DEFAULT. The Company shall be in default hereunder if any one of the
following conditions or events ( "Events of Default") shall occur and be
continuing upon expiration of thirty (30) days after receipt by Company of
written notice thereof:

         (a) The payment of the Notes shall not be paid when due and payable;

         (b) Any representation, statement, warranty, or certificate made by the
Company in this Agreement, or in any agreement or instrument executed pursuant
hereto or concurrently herewith, or hereafter furnished to the Lending
Shareholders in connection with any loan or loans hereunder, shall prove to have
been incorrect in any material respect at the time of making or issuance
thereof;

         (c) Default of any of the Company in the performance of any of the
covenants and agreements hereof or in any other agreement or instrument executed
pursuant hereto;

         (d) The Company shall apply for or consent to, or acquiesce in the
appointment of a receiver, trustee, or liquidator of itself or of the
Collateral, or admit in writing its inability to pay its debts as they mature,
or make a general assignment for the benefit of creditors or be adjudicated a
bankrupt or insolvent by any court having competent jurisdiction in the
premises, or file a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, composition, readjustment or arrangement, or similar
relief with creditors, under any present or future statute, law or regulation,
or otherwise, or take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in bankruptcy,
reorganization, or insolvency proceedings, or corporate action shall be taken by
it for the purpose of effecting any of the foregoing, or it shall have a
receiver or trustee or assignee in bankruptcy or insolvency appointed for it or
the Collateral, without its application or consent;

         (e) An event of default as defined in any security agreement or any of
the other several agreements and instruments executed pursuant hereto.

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<PAGE>
         Thereupon, in any such case, the obligation of the Lending Shareholders
to extend credit to the Company pursuant hereto shall immediately terminate, and
the holdesr of the Notes may, at their option, declare the principal of and
interest accrued on the Notes to be forthwith due and payable, whereupon the
same shall become due and payable without further presentment, demand, protest,
notice of protest, or notice of any kind, all of which are hereby expressly
waived.

9. NOTICE. All notices, requests, and demands shall be made or given to the
respective parties at their addresses listed at the beginning or end of this
Agreement, as the case may be. All notices and other communications given to any
party hereto, in accordance with the provisions of this Agreement shall be by
actual hand delivery sent by messenger service or by registered or certified
mail, return receipt requested, or by telegram, charges prepaid, in each case
addressed to the party as provided herein, or in accordance with the latest
unrevoked direction from such party, and shall be deemed received upon the
earlier to occur of actual receipt if by hand or telegram or presentation by the
postal authorities for receipt if by mail.

10. WAIVER. No failure to exercise and no delay in exercising, on the part of
the Lending Shareholders, any right, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
provided by law or in any other agreement.

11. SURVIVAL OF AGREEMENTS. All agreements, representations and warranties
herein made, shall survive the execution and delivery of the Notes and the
security agreements and other agreements and documents executed pursuant hereto
and the making and renewal thereof.

12. SUCCESSORS. This Agreement Shall be binding upon the Company and its
successors, assigns and legal representatives and shall be binding upon the
Lending Shareholders and inure to the benefit of the Lending Shareholders and
their heirs, administrators, agents, employees, legal representatives,
successors, and assigns.

13. SEVERABILITY. In the case any one or more of the provisions contained in
this Agreement, the Notes or any of the several agreements and instruments
executed in connection herewith should be invalid, illegal, or unenforceable, in
any respect, the validity, legality, and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected
thereby.

14. INTEREST. It is the intention of the parties hereto to comply with
applicable usury laws; accordingly, it is agreed that notwithstanding any
provisions to the contrary in this Agreement, the Notes, the security agreements
or in any of the documents or instruments securing payment thereof or otherwise
relating hereto, in no event shall this Agreement, the Notes, the security
agreements or such instruments or documents relating hereto, require the payment
or permit the collection of interest, in excess of the maximum amount permitted
by such laws. If any such excess of interest is contracted for, charged or
received under this Agreement, the Notes, the security agreements or any of the
documents or instruments securing payment thereof or otherwise relating hereto,
or in the event the maturity of the Indebtedness evidenced by the Notes is
accelerated in whole or in part, or in the event that all or part of the
principal or interest of the Notes shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or received under
this Agreement, the Notes, the Security

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Instruments or any of the documents or instruments securing payment thereof or
otherwise relating hereto, on the amount of principal actually outstanding from
time to time under the Notes shall exceed the maximum amount of interest
permitted by applicable usury laws, then in any such event (a) the provisions of
this paragraph shall govern and control, (b) neither the Company nor any other
Person or entity now or hereafter liable for the payment of the Notes shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest permitted to be contracted for by, charged to
or received from the party obligated thereon under the applicable usury laws,
(c) any such excess which may have been collected shall be either applied as a
credit against the then unpaid principal amount on the Notes or refunded to the
Person paying the same, at the holder's option, and (d) the effective rate of
interest shall be automatically reduced to the maximum lawful rate of interest
permitted to be contracted for by, charged to or received from the party
obligated thereon under the applicable usury laws as now or hereafter construed
by the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under this Agreement, the Notes, the Security
Instruments or any of the documents or instruments securing payment thereof or
otherwise relating thereto, for the purpose of determining whether such rate
exceeds the maximum lawful rate of interest, shall be made, to the extent
permitted by the applicable usury laws, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the Notes
all interest at any time contracted for, charged or received from the Company or
otherwise by the holder or holders thereof in connection with the Notes.

15. AMENDMENTS. This Agreement may not be amended except in writing signed by
the Company and the Lending Shareholders.

16. GOVERNING LAW. The laws of the State of Texas, and to the extent applicable,
federal law, shall govern the construction and interpretation of this Agreement.

17. CONTROLLING DOCUMENT. In the event of actual conflict in the terms and
provisions of this Agreement and any of the Security Instruments, the terms and
provisions of this Agreement will control.

         EXECUTED to be effective as of the 15th day of January, 2000.

                                        Palm Works, Inc.

                                        By: /s/ James T. Voss
                                            ------------------------------------
                                            James T. Voss, President

                                                     "Company"

                                        Northwest Capital Partners, L.L.C.

                                        By: /s/ Brent Nelson
                                            ------------------------------------
                                            Brent Nelson, President

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<PAGE>
                                        Northwest Capital Partners, L.L.C.
                                        10900 NE 8th Street, Suite 900
                                        Bellevue, Washington 98004

                                                        "Agent"

Lending Shareholder's Commitments:

One hundred percent (100%)              By: /s/ Brent Nelson
                                            ------------------------------------
                                            Brent Nelson, President
                                            Northwest Capital Partners, L.L.C.
                                            10900 NE 8th Street, Suite 900
                                            Bellevue, Washington 98004

                                                 "Lending Shareholders"

<PAGE>
                                 REVOLVING NOTE

$1,000,000.00                                                   January 15, 2000

         FOR VALUE RECEIVED, Palm Works, Inc., a Texas corporation, of Houston,
Harris County, Texas (hereinafter referred to as ("MAKER"), promises to pay to
the order of Northwest Capital Partners, L.L.C. ("PAYEE"), the sum of one
million Dollars ($1,000,000.00) pursuant to the hereinafter described Loan
Agreement. The principal of and any interest on this Note shall be due and
payable in lawful money of the United States of America at the address of Payee
hereinafter set forth, or at such other address as Payee may specify by notice
in writing to Maker from time to time.

         This Revolving Note shall bear interest at the rate described by Chase
Manhattan Bank as its prime rate in effect from time to time (computed on a 365
day basis), with such interest payable quarterly beginning 90 days after initial
draw, with like payments being due on the 15th day of the month after each
calendar quarter until January 15, 2002 (the "Maturity Date") when the entire
unpaid principal balance and all accrued and unpaid interest shall be due and
payable.

         This Revolving Note is given to evidence the obligation of Maker to pay
to Payee amounts advanced by Payee to or for the benefit of Maker pursuant to a
Loan Agreement between Maker and Payee of dated January 15, 2000, reference to
which is made for all purpose ("Loan Agreement").

         This Revolving Note is one of up to ten notes executed and delivered
pursuant to the Loan Agreement, evidencing the Maker's obligation to repay an
aggregate amount up to $1,000,000.00 this day advanced under the Revolving Loan.
Each revolving note executed as the date hereof has the same date, tenor, and
maturity, except with such variations as necessary to express the principal
amount of each such revolving note. Each such revolving note with the same date
as this Revolving Note shall rank equally and ratably, without priority over one
another. This Revolving Note shall be subordinate and inferior to any revolving
note with a date senior to the date of this Revolving Note.

         All past due payments on this Revolving Note not timely paid shall bear
interest from maturity until paid at the lesser of the Maximum Rate (hereinafter
defined) or eighteen percent (18%) per annum ("Default Rate"). Maker may prepay
the principal hereof at any time, in full or in part, without prepayment penalty
or premium. Upon payment in full, this Revolving Note shall be cancelled and
returned to Maker.

         This Revolving Note is secured by the liens and security interest in
the Collateral, as set forth in the Loan Agreement and pursuant to the General
Security Agreement referred to therein.

         Nothing herein or in any instrument, document or other writing now or
hereafter executed in connection with or securing this Revolving Note shall
entitle the Payee to contract for, charge or receive interest hereon in excess
of the maximum lawful rate of interest permitted to be charged by the Payee to
Maker under the laws of the State of Texas or the United States of America
(whichever is higher), and in regard to which Maker would be prevented from
successfully raising the claim or defense of usury under applicable law, and
further limited by the provisions of this

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<PAGE>
Revolving Note hereinafter set forth, which provisions control the calculation
of interest to be charged on the loan evidenced by this Revolving Note ("Maximum
Rate").

         It is agreed that time is of the essence of this Agreement, and the
Maker expressly agrees that the Maker shall be in default hereunder if any one
of the following conditions or events ("Events of Default") shall occur and be
continuing upon expiration of thirty (30) days after receipt by Maker of written
notice thereof:

         a. The default in the punctual payment of any installment of principal
or interest on this Revolving Note when due, or there is or occurs any breach of
or failure punctually and properly to perform any of the terms, covenants, or
provisions set forth in this Revolving Note, the Loan Agreement, in any other
Revolving Note executed pursuant to the Loan Agreement, or in any instrument
securing the same;

a. Any representation, statement, warranty, or certificate made by the Maker in
the Loan Agreement, or in any agreement or instrument executed pursuant thereto
or concurrently therewith, or thereafter furnished to the Holder or any Lending
Shareholder in connection with any loan or loans hereunder, shall prove to have
been incorrect in any material respect at the time of making or issuance
thereof;

         b. Default of the Maker in the performance of any of the covenants and
agreements of the Loan Agreement, or in any other agreement or instrument
executed pursuant thereto;

         c. The Maker shall apply for or consent to, or acquiesce in the
appointment of a receiver, trustee, or liquidator of itself or of the
Collateral, or admit in writing its inability to pay its debts as they mature,
or make a general assignment for the benefit of creditors or be adjudicated a
bankrupt or insolvent by any court having competent jurisdiction in the
premises, or file a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, composition, readjustment or arrangement, or similar
relief with creditors, under any present or future statute, law or regulation,
or otherwise, or take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in bankruptcy,
reorganization, or insolvency proceedings, or corporate action shall be taken by
it for the purpose of effecting any of the foregoing, or it shall have a
receiver or trustee or assignee in bankruptcy or insolvency appointed for it or
the Collateral, without its application or consent;

         d. An event of default as defined in any security agreement, any of the
other several agreements and instruments, or the Security Instruments executed
pursuant to the Loan Agreement.

         If this Revolving Note is collected by suit, through probate or
bankruptcy court, or by any other judicial proceedings or if this Revolving Note
is not paid at maturity, howsoever such maturity may be brought about, and is
placed in the hands of an attorney for collection, then the Maker promises to
pay, reasonable attorneys' fees in addition to all other amounts owing
hereunder, at the time this Revolving Note is placed in the hands of such
attorney, which additional sum is agreed by Maker to be a reasonable additional
liquidated sum and which shall be immediately due and payable without notice of
such event and which shall be added to the principal of this Revolving Note and
shall bear interest at the Default Rate.

         Except for any notices forth herein or in the Loan Agreement, Maker
does hereby waive grace, demand, notice of demand or presentment for payment,
notice of nonpayment, protest,

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<PAGE>
notice of protest, notice of intention to accelerate maturity, notice of
acceleration and all other notices, filing of suit, any notice of defense on
account of the extension of the time for payments and diligence in collecting
this Revolving Note or enforcing any of the security heretofore described and
agree to any substitution, exchange or release of any such security or the
release of any party primarily or secondarily liable hereon and further agree
that it will not be necessary for any Payee hereof, in order to enforce payment
of this Revolving Note by it to first institute suit or exhaust its remedies
against Maker, or to enforce its rights against any security hereto, and consent
to any extension or postponement of time of payment of this Revolving Note or
any other indulgence with respect hereto, by the Payee, without notice thereof
to any of them.

         Any sums expended by the Payee after the date hereof and applied
against obligations due under this Revolving Note shall be deemed additional
principal hereunder, due on demand, and the same shall accrue interest at the
Default Rate.

         In the event any one or more of the Events of Default specified above
shall have occurred, the Payee may proceed to protect and enforce its rights
either by suit in equity and/or by action at law, or by other appropriate
proceedings.

         No delay on the part of the Payee in the exercise of any power or right
under this Revolving Note or under any other instrument executed pursuant hereto
shall operate as a waiver thereof, nor shall a single or partial exercise of any
other power or right. Enforcement by the Payee or any security for the payment
thereof shall not constitute any election by it of remedies so as to preclude
the exercise of any other remedy available to it.

         The Payee shall not have any recourse for the payment of any part of
the principal or interest on this Revolving Note against any present or future
officer, director, incorporator, shareholder, agent, or employee of the Maker.
The Payee of this Revolving Note, by the acceptance hereof and as a part of the
consideration for this Revolving Note, expressly agrees that the Revolving Notes
are obligations solely of the Maker, and the Payee releases all claims and
waives all liability against all of the foregoing persons in connection the
payment hereof.

         All notices or demands required or permitted hereunder shall be in
writing, and shall be deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt requested, or by full rate,
prepaid telegram, messenger service, or actual hand delivery addressed as
follows:

         If to Maker:    2525 South Shore Harbor Blvd., Suite 309, League City,
                         Texas 77573

         If to Payee:    10900 NE 8th Street, Suite 900, Bellevue, Washington
                         98004

         All notices, requests, and demands shall be made or given to the
respective parties at their addresses set forth above. All notices and other
communications given to any party hereto, in accordance with the provisions of
this Agreement shall be by actual hand delivery, by messenger service, or by
registered or certified mail, return receipt requested, or by telegram, charges
prepaid, in each case addressed to the party as provided herein, or in
accordance with the latest unrevoked direction from such party, and shall be
deemed received upon the earlier to occur of actual receipt if by hand,
messenger service, or telegram or presentation by the postal authorities for
receipt if by mail.

                                                                        Page -3-
<PAGE>
         This Revolving Note has been executed and delivered, and is to be
performed, in the State of Texas, and the laws of such state shall govern the
validity of construction, enforcement, and interpretation of this Revolving
Note. Venue for all purposes shall be proper in Harris County, Texas.

         This Revolving Note may be prepaid in whole or in part at any time
without penalty.

         If any payment of principal or interest on this Revolving Note shall
become due on a Saturday, Sunday, or public holiday under the laws of the State
of Texas on which Payee is not open for business, such payment shall be made on
the next succeeding business day of Payee.

         Any check, draft, money order or other instrument given in payment of
all or any portion hereof may be accepted by the Payee and handled in collection
in the customary manner, but the same shall not constitute payment hereunder or
diminish any rights of the Payee hereof except to the extent that actual cash
proceeds of such instrument are unconditionally received by the Payee and
applied to this indebtedness in the manner elsewhere herein provided.

         No delay by the Payee in the exercise of any power or right hereunder,
or under any other instrument executed in connection herewith shall operate as a
waiver thereof, nor shall a single or partial exercise of any right or remedy
preclude other or further exercise of any other power, right or remedy.

         All of the covenants, stipulations, promises and agreements in this
Revolving Note contained by or on behalf of Maker shall bind its successors and
assigns, whether so expressed or not.

         IN WITNESS WHEREOF, the undersigned has executed this Revolving Note as
of the day and year set forth above.

                                        Palm Works, Inc.

                                        By /s/ James T. Voss
                                           -------------------------------------
                                           James T. Voss, President

                                                       "MAKER"

                                                                        Page -4-
<PAGE>
                           GENERAL SECURITY AGREEMENT

         This GENERAL SECURITY AGREEMENT dated January 15, 2000, is by and
between Palm Works, Inc. (herein called the "Debtor") and those Lending
Shareholders who sign this General Security Agreement pursuant to the Loan
Agreement dated January 15, 2000 between the Lending Shareholders and the
Debtor, reference to which is hereby made for all purposes and which is hereby
incorporated herein (with such Lending Shareholders being herein individually
referred to as "Secured Party" and collectively as the "Secured Parties"), and
Northwest Capital Partners, L.L.C. ("Agent") as Agent for the Secured Parties;

         In consideration of the mutual covenants herein contained, and other
good and valuable consideration, the parties hereto agree as follows:

         The Secured Parties hereby appoint the Agent as their respective agent
and attorney in fact hereunder to act on their behalf under this Security
Agreement. If the Agent is in doubt as to any action to take on the part of the
Secured Parties, the consent of the holders of more than fifty percent (50%) of
the Secured Parties' Commitments as set forth on the signature pages hereof by
such Secured Party's signature ("Majority of Secured Parties") shall be binding
on the Agent and on all the Secured Parties. Such consent may be obtained at a
meeting attended by a Majority of the Secured Parties or by written consent of
such Majority of Secured Parties. The Agent shall have the power and authority
to take all actions as may be necessary or required on behalf of the Secured
Parties as Agent or as Secured Parties under this Security Agreement.

                                   SECTION ONE

                              THE SECURITY INTEREST

         The Debtor hereby grants to the Secured Parties, on a pari passu basis,
and to the Agent, on behalf of the Secured Parties hereunder, a security
interest in the following personal property: all tangible and intangible assets
of PalmWorks, Inc.

[DESCRIBE COLLATERAL, IF ANY, SUCH AS - ACCOUNTS RECEIVABLE, CONTRACT RIGHTS,
FIXTURES, FURNITURE, EQUIPMENT (AS SUCH TERM IS DEFINED IN SECTION 9.109 OF THE
TEXAS UNIFORM COMMERCIAL CODE - SECURED TRANSACTIONS) AND OTHER PERSONAL
PROPERTY (EITHER TANGIBLE OR INTANGIBLE), INCLUDING BUT NOT LIMITED TO,
MACHINERY, VEHICLES, MANUFACTURING EQUIPMENT, SHOP EQUIPMENT, OFFICE AND RECORD
KEEPING EQUIPMENT, PARTS AND TOOLS; AND OTHER PERSONAL PROPERTY (EITHER TANGIBLE
OR INTANGIBLE); ALL OF DEBTOR'S RIGHTS TO THE PAYMENT OF MONEY, WHETHER SUCH
RIGHT TO PAYMENT ARISES OUT OF A SALE, LEASE, OR OTHER DISPOSITION OF GOODS OR
OTHER PROPERTY BY DEBTOR, OUT OF A RENDERING OF SERVICES BY THE DEBTOR, OUT OF A
LOAN BY THE DEBTOR, OUT OF THE OVERPAYMENT OF TAXES OR OTHER LIABILITIES BY THE
DEBTOR OR OTHERWISE ARISES UNDER ANY CONTRACT OR AGREEMENT, WHETHER SUCH RIGHT
TO PAYMENT IS OR IS NOT ALREADY EARNED BY PERFORMANCE, AND HOWSOEVER SUCH RIGHT
TO PAYMENT MAY BE EVIDENCED, TOGETHER WITH ALL OF THE RIGHTS AND INTEREST
(INCLUDING ALL LIENS AND SECURITY INTEREST) WHICH DEBTOR MAY AT ANY TIME HAVE BY
LAW OR AGREEMENT AGAINST ANY ACCOUNT DEBTOR OTHER OBLIGOR OBLIGATED TO MAKE ANY
SUCH PAYMENT OR AGAINST ANY OF THE PROPERTY OF SUCH ACCOUNT DEBTOR OR OTHER
OBLIGOR; FURTHER INCLUDING ALL PRESENT AND FUTURE DEBT INSTRUMENTS, ACCOUNTS (AS
SUCH TERM IS DEFINED IN SECTION 9.106 OF THE TEXAS UNIFORM COMMERCIAL CODE -
SECURED TRANSACTIONS), LOANS AND OBLIGATIONS RECEIVABLE AND TAX REFUNDS; FURTHER
INCLUDING ALL CONTRACT RIGHTS, ACCOUNTS, ACCOUNTS RECEIVABLE, BILLS AND NOTES
RECEIVABLE, CREDITS, BANK ACCOUNTS, CASH ON HAND,

                                                                        Page -1-
<PAGE>
CLAIMS, DEMANDS, JUDGMENTS, CHOSES IN ACTION, BONDS, NOTES, INSTRUMENTS,
DOCUMENTS, RIGHTS TO PAYMENT IN THE NATURE OF GENERAL INTANGIBLES, CONTRACTS,
SUBCONTRACTS, DEPOSITS, FUNDS, PERMITS, LICENSES, FRANCHISES, CERTIFICATES, AND
OTHER RIGHTS AND PRIVILEGES OF THE DEBTOR, INVENTORY, NOTES, DRAFTS, SECURITIES,
GUARANTIES, DOCUMENTS, CHATTEL PAPER, CONTRACT RIGHTS, ACCEPTANCES, INSTRUMENTS,
GENERAL INTANGIBLES, AND ALL OTHER FORMS OF BENEFITS, ROYALTIES, RIGHTS,
INTERESTS, AND PROPERTY ARISING THEREFROM; TOGETHER WITH ANY AND ALL EXTENSIONS
AND RENEWALS OF, SUBSTITUTIONS AND REPLACEMENTS FOR, AND INCOME AND PROFITS FROM
THE FOREGOING AND ANY AND ALL PROCEEDS AND PRODUCTS OF THE FOREGOING; ALL
CONTRACTS AND SUBCONTRACTS; ANY DEPOSITS, FUNDS, ACCOUNTS, CONTRACT RIGHTS,
INSTRUMENTS, DOCUMENTS, GENERAL INTANGIBLES (INCLUDING TRADEMARKS, TRADE NAMES,
AND SYMBOLS USED IN CONNECTION THEREWITH), NOTES OR CHATTEL PAPER; ALL PERMITS,
LICENSES, FRANCHISES, CERTIFICATES, AND OTHER RIGHTS AND PRIVILEGES RELATED TO
THE DEBTOR'S BUSINESS, TOGETHER WITH ALL OTHER INTEREST OF EVERY KIND AND
CHARACTER WHICH DEBTOR NOW HAS OR AT ANY TIME HEREAFTER ACQUIRES IN AND TO THE
PERSONAL PROPERTY DESCRIBED OR REFERRED TO, INCLUDING BUT NOT LIMITED TO PROCEED
FROM THE CONDEMNATION OR THREATENED CONDEMNATION OF ANY OF THE COLLATERAL AND
THE PROCEEDS OF ANY AND ALL INSURANCE COVERING ANY OF THE COLLATERAL, AND ALL
PROPERTY WHICH IS USED IN CONNECTION WITH THE OPERATION OF THE BUSINESS OF THE
DEBTOR; TOGETHER WITH ALL PROCEEDS ARISING FROM OR BY VIRTUE OF THE SALE, LEASE
OR OTHER DISPOSITION OF ANY OF THE PERSONAL PROPERTY DESCRIBED HEREIN; AND ALL
RENEWALS, REPLACEMENTS, AND SUBSTITUTIONS THEREOF AND ADDITIONS THERETO,
TOGETHER WITH ALL OTHER INTEREST OF EVERY KIND AND CHARACTER WHICH DEBTOR NOW
HAS OR AT ANY TIME HEREAFTER ACQUIRES IN AND TO THE PERSONAL PROPERTY DESCRIBED
OR REFERRED TO IN THE FOREGOING].

         All properties, rights, and interests described or referred to above
are sometimes referred to collectively as the "Collateral" to secure the
repayment of all sums advanced or to be advanced by Secured Parties to Debtor
pursuant to the Loan Agreement of even date herewith (herein called the
"Liabilities") and any and all extensions, renewals, and rearrangements thereof,
plus all liabilities, indebtedness, or obligations of the Debtor to the Secured
Parties, howsoever evidenced, of every kind and description, whether direct or
indirect, absolute or contingent, due or to become due, and whether now or
hereafter arising it being contemplated that Debtor will be indebted to Secured
Parties in the future. Debtor acknowledges that the security interests herein
granted shall secure all future advances as well as any and all other
liabilities, obligations, and indebtedness of Debtor to Secured Parties whether
now in existence or hereafter arising.

                                   SECTION TWO

                          COVENANTS AND REPRESENTATIONS

The Debtor covenants and represents as follows:

         Section 2.1. OWNERSHIP. The Debtor is and shall continue to be the
owner of the Collateral free of any lien or encumbrances (except of the Secured
Parties and except as now in existence) and will defend same against all adverse
claims and demands.

         Section 2.2. POSSESSION. Unless the Agent demands possession or agrees
otherwise, the Debtor shall have possession of the Collateral in trust for the
Secured Parties and shall not sell, lease, encumber or dispose of the
Collateral, except for inventory sold or leased in the ordinary course of the
Debtor's business.

         Section 2.3. MAINTENANCE AND INSURANCE. The Debtor will care for,
protect, and maintain the Collateral; keep proper record thereof, permit the
Agent or any Secured Party to inspect the Collateral;

                                                                        Page -2-
<PAGE>
and inform the Agent of the Collateral's location. The Debtor will keep the
Collateral insured by such companies, in such amounts, and against such risks as
shall be acceptable to the Agent with loss payable clauses in favor of the
Agent, and shall furnish evidence of such insurance satisfactory to the Agent.
The Debtor assigns and directs any insurer to pay to the Agent the proceeds of
all such insurance and any premium refund, and authorizes the Agent to endorse
in the name of the Debtor any instrument for such proceeds and refunds and, at
the option of the Agent, to apply such proceeds and refunds to any unpaid
balance of the Liabilities, whether or not due, and/or to restoration of the
Collateral, returning any excess to the Debtor. The Agent is authorized in the
name of the Secured Parties or otherwise to purchase, adjust, settle claims
under and/or cancel any insurance on the Collateral, and is hereby appointed the
Debtor's attorney-in-fact to make adjustments of all insurance losses, to sign
applications, receipts, releases, and other papers necessary for the purchase of
insurance or the collection of any loss and any returned or unearned premium, to
execute proofs of loss, to make settlements and to endorse and collect any check
or other item payable to the Debtor issued in connection therewith. The power of
attorney hereby created to a power coupled with an interest with full power of
substitution. The Debtor will promptly pay all taxes, fees, liens, encumbrances,
and costs pertaining to the Collateral.

         Section 2.4. FINANCIAL STATEMENTS. The Debtor agrees to deliver to the
Agent, when requested, financial statements in form satisfactory to Agent. The
Debtor also agrees to permit any employee or representative of the Agent to
examine all of the Debtor's books and records at any time during normal business
hours. The Debtor represents and warrants to the Secured Parties that all
financial statements and credit applications furnished to the Secured Parties do
and will accurately reflect the financial condition and operations of the Debtor
at the times and for the periods stated therein.

         Section 2.5. COLLECTION OF ACCOUNTS RECEIVABLE. If Collateral includes
accounts receivable, the Debtor agrees to collect all such accounts receivable
as they become due.

                                  SECTION THREE

                         EVENTS OF DEFAULT AND REMEDIES

         Section 3.1. EVENTS OF DEFAULT. It is agreed that time is of the
essence of this Agreement, and the Debtor expressly agrees that the Debtor shall
be in default hereunder if any one of the following conditions or events (
"Events of Default") shall occur and be continuing upon expiration of thirty
(30) days after receipt by Debtor of written notice thereof:

(a) The default in the punctual payment of any installment of principal or
interest on this Term Note when due, or there is or occurs any breach of or
failure punctually and properly to perform any of the terms, covenants, or
provisions set forth in this Term Note, the Loan Agreement, in any other Term
Note executed pursuant to the Loan Agreement, or in any instrument securing the
same;

(b) Any representation, statement, warranty, or certificate made by any of the
Debtor in the Loan Agreement, or in any agreement or instrument executed
pursuant thereto or concurrently therewith, or thereafter furnished to the
Holder or any Lending Shareholder in connection with any loan or loans
thereunder, shall prove to have been incorrect in any material respect at the
time of making or issuance thereof;

(c) Default of the Debtor in the performance of any of the covenants and
agreements of the Loan Agreement, or in any other agreement or instrument
executed pursuant thereto;

                                                                        Page -3-
<PAGE>
(d) The Debtor shall apply for or consent to, or acquiesce in the appointment of
a receiver, trustee, or liquidator of itself or of the Collateral, or admit in
writing its inability to pay its debts as they mature, or make a general
assignment for the benefit of creditors or be adjudicated a bankrupt or
insolvent by any court having competent jurisdiction in the premises, or file a
voluntary petition in bankruptcy or a petition or answer seeking reorganization,
composition, readjustment or arrangement, or similar relief with creditors,
under any present or future statute, law or regulation, or otherwise, or take
advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in bankruptcy, reorganization, or
insolvency proceedings, or corporate action shall be taken by it for the purpose
of effecting any of the foregoing, or it shall have a receiver or trustee or
assignee in bankruptcy or insolvency appointed for it or the Collateral, without
its application or consent;

(e) An event of default as defined in any security agreement, any of the other
several agreements and instruments, or the Security Instruments executed
pursuant to the Loan Agreement.

         Section 3.2. RIGHTS AFTER DEFAULT. Upon occurrence of any event of
default, all the Liabilities, at the option of the Agent, and without any notice
or demand, shall become due and payable immediately; and the Agent shall have
all rights and remedies for default provided by law and in this or any other
instrument of the Debtor to the Secured Parties or to which the Debtor and the
Secured Parties are parties. The Agent may require the Debtor to assemble the
Collateral and to make it available to the Agent at any convenient place
designated by the Agent, which the Debtor hereby agrees to do. At any time or
times after the Liabilities become due, the Agent is empowered to collect, sell,
assign, transfer, set over and deliver the whole or any part of the Collateral,
as may be appropriate, at public or private sale, either for cash or on credit
or for future delivery, without assumption or credit risk, without demand,
advertisement, or notice, which are hereby expressly waived, unless prohibited
by law, and at any such sale the Agent may become the purchaser of the whole or
any part of the collateral, discharged from any right of redemption. Upon any
such sale, after deducting all costs and expenses of every kind, the Agent shall
apply the proceeds thereof toward the payment, whether due or not due, of the
accrued interest and unpaid principal on the Liabilities, on a pari passu basis,
according to their respective dates, tenor, and priority, as set forth therein,
returning the surplus, if any, to the Debtor, and the Debtor shall be and remain
liable to the Agent for any and every deficiency after application of such
proceeds as aforesaid. The Agent is authorized to transfer into its own name or
that of its nominee, as Agent for the Secured Parties, at any time and from time
to time, any or all of the Collateral. The Agent shall not be bound to take any
steps to preserve any rights in the Collateral against prior parties which the
Debtor hereby assumes to do and the Agent shall have exercised reasonable care
in the custody and preservation of the Collateral if it takes such action for
that purpose as the Debtor may reasonably request, but no omission to comply
with any such request shall be deemed a failure to exercise reasonable care.

                                  SECTION FOUR

                                  MISCELLANEOUS

         Section 4.1. WAIVER. The Agent shall not be deemed to have waived any
of its rights hereunder or in the collateral (or any part thereof) unless such
waiver is in writing, and no delay or omission by the Agent in exercising any
right shall operate as a waiver thereof or of any other rights. The Agent may
permit the Debtor to remedy any default without waiving the default so remedied
and the Agent

                                                                        Page -4-
<PAGE>
may waive any default without waiving any other subsequent or prior default by
the Debtor.

         Section 4.2. PARTIES BOUND. Each person signing this Agreement, other
than the Agent, is a Debtor, and the Liabilities hereunder of all the Debtors
are joint and several. This Agreement benefits the Secured Parties, its
successors and assigns, and binds the Debtors and their respective heirs,
personal representatives, successors and assigns. The Secured Parties hereby
confirm the appointment of the Agent to act on their behalf as set forth herein
and in the Loan Agreement.

         Section 4.3. NOTICES. Written notice, when required by law, sent to the
address of the Debtor at least 30 calendar days (counting the day of sending)
before the date of a proposed disposition of the Collateral is reasonable
notice.

         Section 4.4. TERM. This Agreement and the security interest in the
collateral created hereby shall terminate when the Liabilities have been paid in
full and all other agreements between the Debtor and the Secured Parties
relating to the Liabilities have terminated, and prior to such payment and
termination, this shall be a continuing agreement.

         Section 4.5. EXECUTION OF DOCUMENTS. The Debtor will execute all
necessary documents to accomplish the purpose hereof, including financing
statements required to perfect and continue the validity of the security
interest of the Secured Parties hereunder.

         Section 4.6. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under and shall be construed in accordance with the laws of the
state of Texas, and shall be performable in Harris County, Texas.

         IN WITNESS WHEREOF, the parties have caused this Security Agreement to
be executed on the day and year first above set forth.

                                        Palm Works, Inc.

                                        By: /s/ James T. Voss
                                            ------------------------------------
                                            James T. Voss, President
                                                        "Debtor"

                                        Northwest Capital Partners, L.L.C.

                                        By: /s/ Brent Nelson
                                            ------------------------------------
                                            Brent Nelson, President
                                            Northwest Capital Partners, L.L.C.
                                            10900 NE 8th Street, Suite 900
                                            Bellevue, Washington 98004
                                                         "Agent"

                                              SECURED PARTIES' COMMITMENTS:

                                                                        Page -5-
<PAGE>
                                        One Hundred percent (100%)

                                        By: /s/ Brent Nelson
                                            ------------------------------------
                                            Northwest Capital Partners, L.L.C.
                                            10900 NE 8th Street, Suite 900
                                            Bellevue, Washington 98004
                                                    "Secured Parties"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;
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
   -----------------------------------------
Name: Jack E. Nichols
     ---------------------------------------
Title: President
      --------------------------------------

COVAULT Corporation
       -------------------------------------

By: /s/ Jack E. Nichols
   -----------------------------------------
Name: Jack E. Nichols
     ---------------------------------------
Title:
      --------------------------------------

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