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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.

      FINANCIAL SERVICES PROVIDER NETWORK, INC.
          CONVERTIBLE PROMISSORY NOTE
December ___, 1999                         $1,000,000.00

FOR VALUE RECEIVED, Financial Services Provider Network, Inc., a
California corporation (the "Company"), hereby promises to pay to the
order of Pacific Softworks, Inc. (the "Holder") the aggregate principal
amount of One Million Dollars ($1,000,000.00) (the "Principal Amount"),
together with interest on the unpaid balance thereof from December ___,
1999 until the Repayment Date at the rate of ten percent (10%) per
annum calculated based on a year of 365 days, for the actual number of
days elapsed (the "Interest").  Unless earlier converted into shares of
capital stock of the Company with the same designation as Company
capital stock issued in the Company's next equity based round of
venture financing (the "Subsequent Equity") as described in Section 1
below, such principal and interest shall be due and payable twelve (12)
months from the date first set forth above (the "Repayment Date"), at
such place as the Holder shall indicate to the Company in writing, and,
except as set forth below, shall be payable in immediately available
funds in lawful money of the United States of America.  If any
payment of principal or interest on this Note shall become due on a
Saturday, Sunday or public holiday, such payment shall be made on the
next succeeding business day.

1. Automatic Conversion Upon Financing.  The Company and the Holder
agree that the Principal Amount and the portion of the Interest as
shall equal the interest accrued on the Principal Amount at the rate of
six percent (6%) per annum calculated based on a year of 365 days, for
the actual number of days elapsed, (the "Debt") shall automatically
convert into Subsequent Equity after the date hereof and before the
Repayment Date upon the Company's sale and issuance of Subsequent
Equity for an aggregate purchase price of at least One Million Dollars
($1,000,000) at one or more closings (the "Closing"), at the same price
per share (the "Conversion Price") at which such shares of Subsequent
Equity are sold to the other participants at the Closing; provided,
however, if the Pre-Money Valuation (as defined below) of the Company
in the sale and issuance of shares of Subsequent Equity shall be
greater than Twenty Million Dollars ($20,000,000.00), then the Debt
shall automatically convert into Subsequent Equity at the price per
share at which the Pre-Money Valuation of the Company would be equal to
Twenty Million Dollars ($20,000,000.00).  For the purposes of this
Note, "Pre-Money Valuation" shall mean the product obtained by
multiplying: (x) the price per share (on an as-if-converted into Common
Stock basis) of the Subsequent Equity, by (y) the aggregate number of
shares (on an as-if-converted into or exercised for Common Stock basis)
of all of the issued and outstanding capital stock of the Company and
options, warrants or other rights to purchase capital stock of the
Company (including only those options, warrants or other rights issued
and outstanding as of immediately prior to the Closing and excluding
those securities into which this Note shall convert) immediately prior
to the Closing.  Upon such conversion: (i) this Note shall be canceled,
and (ii) the Holder shall forfeit the portion of the Interest as shall
exceed the interest accrued on the Principal Amount at the rate of six
percent (6%) per annum calculated based on a year of 365 days, for the
actual number of days elapsed.  The Holder, by acceptance hereof,
agrees to surrender this Note for conversion at the principal office of
the Company at the time of such Closing and agrees to execute all
appropriate documentation necessary to effect such conversion,
including, without limitation, a stock purchase agreement substan-
tially similar to that executed by the other investors in the
Subsequent Equity financing of the Company.  If upon such conversion of
this Note a fraction of a share would result, the Company will pay in
lieu thereof in cash the amount of principal and accrued interest
represented by such fractional share calculated on the basis of the
purchase price per share of Subsequent Equity in such financing.

2. Corporate Transactions.  From and after the date of issuance of this
Note, if at any time prior to the Repayment Date and prior to the date
of the Closing the Company is acquired by another entity by means of
merger, reorganization, consolidation or a transfer of more than 50% of
the voting power of the Company (a "Transaction"), unless the
stockholders of record of the Company prior to such Transaction will,
after such Transaction, hold at least 50% of the voting power of the
surviving entity, then, if the Adjusted Consideration, as defined
below, shall have a value greater than Twenty Million Dollars
($20,000,000), the Holder shall be entitled to receive such portion of
the consideration received in such Transaction after satisfying all
forms of Indebtedness, as defined below, to which the Company is
subject as shall equal a fraction: (x) the numerator of which is equal
to One Million Dollars ($1,000,000) divided by the per-share fair
market value of the most recent designation of Company capital stock
immediately prior to the date of such Transaction (the "Numerator") and
(y) the denominator of which is equal to the Numerator plus the number
of shares of capital stock of the Company (calculated on an as-if-
converted into Common Stock basis) outstanding immediately prior to the
date of such Transaction.  For the purposes of this Section 2,
"Adjusted Consideration" shall mean the aggregate value of the
consideration received, after satisfying all forms of Indebtedness, as
defined below, to which the Company is subject, in a Transaction
divided by the percentage of the voting power of the Company sold in
such Transaction.

3. Issuance of Stock on Conversion.  As soon as practicable after
conversion of this Note into shares of Subsequent Equity as set forth
in Section 1 above, the Company at its expense will cause to be issued
in the name of and delivered to the Holder, a certificate or
certificates for the number of shares of securities to which the Holder
shall be entitled on such conversion (bearing such legends as may be
required by applicable state and federal securities laws in the opinion
of legal counsel for the Company), together with any other securities
and property, if any, to which the Holder is entitled on such
conversion under the terms of this Note.  Such conversion shall be
deemed to have been made upon the Closing under Section 1, regardless
of whether the Note has been surrendered on such date.  Notwithstanding
the foregoing, the Holder agrees to promptly surrender the Note prior
to or upon such conversion.

4. Events of Default.  The occurrence of any of the following shall
constitute an "Event of Default" under this Note:(a) Failure to Pay.
The Company shall fail to pay (i) when due any principal payment on the
due date hereunder or (ii) any interest or other payment required
under the terms of this Note on the date due and such payment shall not
have been made within five (5) days of Company's receipt of the
Holder's written notice to Company of such failure to pay;(b) Voluntary
Bankruptcy or Insolvency Proceedings.  The Company shall (i) apply for
or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property,
(ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or consent
to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of
effecting any of the foregoing;(c) 	Involuntary Bankruptcy or
Insolvency Proceedings.  Proceedings for the appointment of a receiver,
trustee, liquidator or custodian of the Company or of all or a
substantial part of the Company's property, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief
with respect to the Company or the Company's debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
shall be commenced and an order for relief entered or such proceeding
shall not be dismissed or discharged within thirty (30) days of
commencement; or (d) 	Judgments.  A final judgment or order for the
payment of money in excess of One Hundred Thousand Dollars ($100,000)
(exclusive of amounts covered by insurance issued by an insurer) shall
be rendered against the Company and the same shall remain undischarged
for a period of thirty (30) days during which execution shall not be
effectively stayed, or any judgment, writ, assessment, warrant of
attachment, or execution or similar process shall be issued or levied
against a substantial part of the property of the Company and such
judgment, writ, or similar process shall not be released, stayed,
vacated or otherwise dismissed within thirty (30) days after issue or
levy.(e) Other Payment Obligations.  The Company shall fail to make any
payment when due under the terms of any bond, debenture, note or other
evidence of indebtedness to be paid by the Company (excluding this
Note) ("Indebtedness"), provided that such payment exceeds an amount of
One Hundred Thousand Dollars ($100,000), and the failure to make such
payment shall continue for a period exceeding the greater of: (i) the
applicable grace period for such Indebtedness and (ii) thirty (30)
days.

5. Rights of Holder upon Default.  Upon the occurrence or existence of
any Event of Default (other than an Event of Default, referred to in
Sections 4(b) and 4(c)) and at any time thereafter during the
continuance of such Event of Default, the Holder may, by written notice
to the Company, declare all unpaid Debt payable by the Company
hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are
hereby expressly waived.  Upon the occurrence or existence of any Event
of Default described in Sections 4(b) and 4(c), immediately and
without notice, all unpaid Debt payable by the Company hereunder shall
automatically become immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are
hereby expressly waived.  In addition to the foregoing remedies, upon
the occurrence or existence of any Event of Default, the Holder may
exercise any other right power or remedy permitted to it by law, either
by suit in equity or by action at law, or both.

6. Cost of Collection.  In the event of any default under this Note,
the Company shall pay the fees and expenses of one legal counsel for
the Holder incurred in connection with collection of any amounts owed
to Holder by the Company under this Note.

7. Subordination.  The indebtedness represented by this Note is hereby
expressly subordinated in right of payment to the prior payment in full
of all of the Company's indebtedness to banks, insurance companies,
lease financing institutions or other lending institutions (other than
small business investment companies or venture capital firms) regularly
engaged in the business of lending money.

8. Waiver and Amendment.  Any term of this Note may be amended and the
observance of any terms of this Note may be waived (either generally or
in a particular instance and either retroactively or prospectively)
with the written consent of the Company and the Holder.  Any such
amendment or waiver by the  Company and the Holder shall be conclusive
and binding upon the holder of this Note and of any Note issued upon
the transfer hereof or in exchange hereof or in lieu hereof whether or
not
notation of such consent and waiver is made upon this Note.

9. Transfer.  Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered
as the owner and holder of this Note for the purpose of receiving
payment of principal of and interest on this Note and for all other
purposes whatsoever, whether or not this Note shall be overdue, and the
Company shall not be affected by notice to the contrary.

10. Usury Disclosure.  Regardless of any provision contained in this
Note, the Agreement or any other document executed in connection
herewith, it is expressly stipulated and agreed that the intent of the
Holder and the Company is to comply at all times with all usury and
other laws relating to this Note.  If the laws of the State of
California would now or hereafter render usurious, or are revised,
repealed or judicially interpreted so as to render usurious, the
indebtedness evidenced by this Note, or if any prepayment by the
Company  results in the Company's having paid any interest in excess of
that permitted by law, then it is the Holder's and the Company's
express intent that all excess amounts theretofore collected by the
Holder  be credited to the principal balance of this Note (or, if this
Note has been paid in full, refunded to the Company), and the
provisions of this Note immediately be deemed reformed and the amounts
therefor collectible hereunder reduced, without the necessity of
execution of any new document, so as to comply with the then applicable
law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder.

11. Governing Law.  This Note shall be construed and enforced in
accordance with the laws of the State of California.

12. Headings. The headings in this Note are for purposes of convenience
and reference only, and shall not be deemed to constitute a part
hereof.

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first above written.
Financial Services Provider
Network, Inc.
a California corporationVIA FACSIMILE TRANSMISSION

January 13, 2000

Mr. Robert Benedict
RedFlag, Inc.
1523 Cabrillo Avenue
Venice, CA  90291

Dear Robert:

This letter is intended to summarize our recent discussions between
Pacific Softworks, Inc. and RedFlag,
Inc.

1. Pacific Softworks, Inc. ("PSI") is desirous of entering into a
strategic relationship with RedFlag, Inc. ("RedFlag") to jointly
develop certain specific aspects of their respective businesses.

2. Assumptions are that as Red Flag increases its revenues, thereby
proving the corporate concept, it will result in related value
increases.

It is assumed that over the next 18 months RedFlag will have cumulative
revenues of approximately $15 million.  It is also assumed that Robert
Benedict will draw a salary of approximately $1 million in 2000 and
that there will be a pre tax profit of approximately 50%.

3. In addition to the stock exchange between PSI  and Red Flag, PSI is
prepared to assist RedFlag in marketing by a formal introduction to all
of PSI's customers and associates.  There will be an immediate effort
to introduce RedFlag to FSPN, iApplianceNET.com, IBM, Alcatel, and
others.  PSI will also make available its Internet and web technology
to be marketed, where appropriate, to RedFlag's customers.

4. Both parties believe that it is in the best interests of both PSI
and RedFlag to have substantial financial interest in each other's
companies.  Therefore, PSI will purchase up to 12.5% of the outstanding
shares of RedFlag, on a fully diluted basis, for shares of PSI
on the following schedule:

Mr. Robert Benedict
January 13, 2000
Page Two

Red Flag Revenues		% to be acquired		Pacific's Price (1)

$  1,000,000		     10.0%	 $  100,000	1 x Revenues
$  3,000,000		     10.0%	 $  300,000	1 x Revenues
$  9,000,000		     12.5%	$ 2,250,000	2 x Revenues
$15,000,000		      12.5%	  3,750,000	2 x Revenues

          				     45.0%   $6,400,000 (2)

(1) To protect both Red Flag and PSI, a collar will be placed on PSI
stock price which will be divided into the price in dollars that PSI
pays for Red Flag stock.  The collar will be between $12 and $4.

Example:  If PSI stock is selling at $20 per share at the time Red Flag
reaches $15 million in revenue, Red Flag would have the benefit of a
$12 maximum price placed on PSI's stock.  It would receive at least
312,500 shares.  If PSI's stock were selling at $4 or below, Red Flag
would receive 937,500 shares of PSI.

(2) If PSI stock averaged $6 per share, Red Flag would receive
1,066,667 shares of PSI

5. At a  minimum, PSI would expect this investment to be subject to the
following terms and conditions:

A. RedFlag and PSI will endeavor to develop areas of common interest as
they relate to software and hardware requirements.

B. It is understood that PSI will give a limited, revocable, proxy, in
favor of Mr. Robert Benedict, (to the extent that his ownership in
RedFlag should fall below 50%), to vote the shares of RedFlag that will
be held by PSI.  The limiting factors of the proxy will be maintenance
of certain (to be determined) financial ratios.  The proxy will not
be in force as it relates to mergers, acquisitions, or bankruptcy.

C. PSI will have the right to appoint one Director to RedFlag' s Board
of Directors.

D. PSI and RedFlag will negotiate a first right of refusal for embedded
Internet technologies to be provided by PSI for use by RedFlag, or its
partners, in delivering RedFlag products and services.  Said Internet
technologies will include, but will not be limited to, embedded Web
browsers, networking protocol stacks and thin client technologies.

E. The negotiation, execution and delivery of a definitive binding
written agreement and such other documentation as may be necessary or
appropriate, all in form and substance satisfactory to PSI and RedFlag,
and will include customary representations, warranties and

Mr. Robert Benedict
January 13, 2000
Page Three

any determined budgets, forecasts and financial systems and controls
(which may be negotiated as part of a definitive agreement) which shall
survive the closing of the Agreement as well as customary conditions
precedent and indemnification.

F. The completion by PSI and RedFlag and their respective accountants,
counsel and other experts of a customary due diligence investigation
with respect to the business and affairs (including business, financial
and legal matters) of PSI and RedFlag and the resolution, in a manner
satisfactory to the Parties of any and all issues raised as a result of
such investigation.

G. The receipt of all necessary and appropriate corporate stockholder,
and governmental approvals by the Parties to enter into, and consummate
the transactions contemplated by the Agreement.

H. The obtaining of such consents and approvals from third parties as
may be required in order lawfully to consummate a definitive agreement
without violating any contract or rights of third parties.

I. The occurrence prior to the Closing Date (as defined within the
definitive agreement) of no material adverse change in the financial
condition, business or prospects of any of the Parties and no
threatened litigation with respect to the transactions contemplated
hereby or otherwise with respect to any of the Parties.

6. The Parties represent that each has the necessary power and
authority to execute and deliver this Letter.  By executing and
delivering this Letter each of the Parties represents that to their
knowledge none the Parties nor any stockholder of any of the Parties is
in violation of, breach of or default under any material contract,
agreement or understanding, whether oral or written, to which the
Parties or stockholders is a party.

7. This Letter is only an expression of mutual interest by the Parties
concerning some aspects of the proposed transactions described herein,
it being understood that all of the material terms of such proposed
transactions are not yet agreed upon between the Parties and still must
be agreed upon mutual satisfaction of all the Parties.

8. Except as explicitly otherwise set forth in this Letter

- No liabilities or obligations of any kind whatsoever are intended to
	be created hereby between the Parties;
- This Letter is not intended to constitute a legally binding contract
	or to consummate the proposed transactions described herein and
	is not an agreement to enter into a legally binding agreement;

Mr. Robert Benedict
January 13, 2000
Page Four

- Any binding legal obligation of any nature between the Parties shall
	be only set forth in the definitive Agreement;
- No party may claim any legal rights against the other by reason of
	the execution of this Letter or by taking any action in reliance
	thereon; and
- Each Party shall bear its own costs in connection with this Letter
	and the Agreement contemplated thereby.

9. The Parties intend in good faith to use their best efforts to
proceed promptly with the negotiation, execution and the delivery of
the definitive agreement and the closing transactions contemplated by
this Letter.  This Letter shall terminate and, except as set
forth in Item 8, shall be of no further force or effect if the
Agreement has not been approved by PSI's and RedFlag' Boards of
Directors, all required regulatory agencies and, if required, submitted
to the stockholders of PSI and RedFlag for approval by February 29,
2000 or any other date that may be mutually acceptable to the Parties.

If the terms and conditions set forth in this Letter correctly set
forth our understanding, please execute this Letter in duplicate and
return one fully executed copy to me at your convenience.

If this Letter has not been executed and returned to us by January 17,
2000, it shall be deemed null and void.

Very truly yours,

Glenn P. Russell
Chairman of the Board

The foregoing correctly sets forth our understanding:

RedFlag, Inc.

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