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SECURITIES AND EXCHANGE COMMISSION

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 27, 2003

NOVATEL WIRELESS, INC.

9360 Towne Centre Drive, Suite 110
San Diego, CA 92121
(Address of principal executive offices)

Registrant’s telephone number, including area code: (858) 320-8800

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ITEM 5. OTHER EVENTS

Private Placement Transaction

General

On March 12, 2003, the Company entered into a series of agreements with a group of investors (the “Investors”) in connection with the private placement of $3.25 million of convertible debt and equity securities for cash, and the issuance of up to $3.505 of equity securities in satisfaction of outstanding third-party obligations. As a result of these agreements, the Company completed, or agreed to complete subject to the stockholder approval to be sought at a special meeting of stockholders to be held on April 30, 2003, the following transactions which are collectively referred to as the “Private Placement Transactions”:

Certain of the principal documents evidencing the Private Placement Transactions are filed as exhibits to this current report on Form 8-K.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

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SIGNATURES

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

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EXHIBIT INDEX

II-1

                                                                     EXHIBIT 4.1


                                    FORM OF

                         SECURITIES PURCHASE AGREEMENT

                                     BETWEEN

                             NOVATEL WIRELESS, INC.

                                       AND

               THE PURCHASERS LISTED ON THE SIGNATURE PAGES HERETO

                                 MARCH 12, 2003



                          SECURITIES PURCHASE AGREEMENT

         This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made as of
March 12, 2003, between NOVATEL WIRELESS, INC. (the "COMPANY"), a corporation
organized under the laws of the State of Delaware, and the purchasers listed on
the signature pages hereto ("PURCHASERS").

         WHEREAS, the Company wishes to sell to Purchasers up to 6,755 shares of
the Company's Series B Convertible Preferred Stock, $0.001 par value (the
"SERIES B PREFERRED STOCK"), together with warrants to purchase shares of common
stock, on the terms and conditions hereinafter provided; and

         WHEREAS, as an inducement to Purchasers to enter into this Agreement,
certain executive officers and directors of the Company (the "PRINCIPAL
STOCKHOLDERS") have entered into agreements with Purchasers (the "VOTING
AGREEMENTS") pursuant to which, among other things, each Principal Stockholder
has agreed to vote all of such Principal Stockholder's shares of the Company's
capital stock in favor of the transactions contemplated hereby and has granted
Horst Pudwill ("PUDWILL") an irrevocable proxy to so vote its shares; and

         WHEREAS, as a further inducement to Purchasers to enter into this
Agreement, certain holders of the Company's Series A Preferred Stock have
entered into agreements with Purchasers (the "SERIES A VOTING AGREEMENTS")
pursuant to which, among other things, each such holder has agreed to vote all
of such holder's of Series A Preferred Stock in favor of certain amendments to
the Certificate of Designation of the Series A Preferred Stock and has granted
Pudwill an irrevocable proxy to so vote its shares;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the Company and Purchasers agree as
follows:

         1.       Purchase and Sale of Securities. On the terms and subject to
the conditions set forth herein:

                  1.1.     The Company agrees to issue and sell to the
Purchasers, and Purchasers agree (severally and not jointly) to purchase from
the Company (in accordance with the allocation set forth under the heading
"Tranche I Amount" on the signature page for each Purchaser) for an aggregate of
$1.2 Million, at the First Closing (as defined below), (i) secured subordinated
convertible promissory notes in the aggregate principal amount of $1.2 Million
in substantially the form of Exhibit A hereto (the "TRANCHE I NOTES"), which
shall be convertible into an aggregate Twelve Hundred (1,200) shares of Series B
Preferred Stock on the terms and conditions set forth therein (the "TRANCHE I
CONVERSION SHARES") and (ii) warrants to purchase an aggregate of 857,143 shares
of the Company's common stock, $0.001 par value ("COMMON STOCK") at a price of
Seventy Cents ($0.70) per share, in substantially the form of Exhibit B hereto
(the "FIRST ISSUANCE WARRANTS"). One half of the First Issuance Warrants shall
be allocated proportionately to the Purchasers in accordance with their
percentage participation indicated on the signatures pages hereto. The remaining
half of the First Issuance Warrants shall be issued to PS Capital LLC.

                                      - 1 -



                  1.2.     The Company understands and acknowledges that,
following the Stockholders Meeting (as defined in Section 5.2), the Purchasers
intend to purchase, from Sanmina-SCI Corporation ("SANMINA") and Sanmina Canada
ULC ("SANMINA ULC") certain of Sanmina's rights (including, without limitation,
the right to receive payments from the Company, but excluding Sanmina's and
Sanmina ULC's warrants to purchase Company stock) under the Settlement Agreement
and Mutual Release, dated January 12, 2002, by and the Company, Sanmina, and
Sanmina ULC (as amended, the "SETTLEMENT AGREEMENT"), together with the Security
Agreement, dated as of January 12, 2002, between the Company and Sanmina (the
"SANMINA SECURITY AGREEMENT"). Such purchase shall be referred to herein as the
"SANMINA PURCHASE." Each Purchaser hereby commits to the other Purchasers to
contribute its allocable share (in accordance with the allocation set forth
under the heading "Sanmina Tranche Percentage" on the signature page for each
Purchaser) toward the Sanmina Purchase. The Company hereby consents to the
Sanmina Purchase and acknowledges and agrees that, upon the consummation of the
Sanmina Purchase, the Company shall no longer have any right to receive any
product or inventory in exchange for such payments, and such payments shall be
due and payable (pursuant to the terms of the Sanmina Notes described below)
unconditionally without any obligation of Sanmina or the Purchasers or any
defense or right of set off. Accordingly, at the Sanmina Closing, the Company
shall (i) execute and deliver to Sanmina a mutual release of all claims; (ii)
execute and deliver to the Purchasers secured promissory notes in the form of
Exhibit C hereto in the aggregate principal amount equal to $3,505,000, with a
note payable to each Purchaser for the principal amount of such Purchaser's
percentage share of the Sanmina Purchase (as shown under the heading "Sanmina
Tranche Percentage" on the signature page for such Purchaser) times $3.505
Million (the "SANMINA NOTES"), together with a Security Agreement in the form of
Exhibit D hereto securing the obligations under the Sanmina Notes; and (iii)
execute and deliver to the Purchasers and Sanmina such other documents as may be
requested by the Purchasers to terminate (subject to Sanmina's concurrence and
execution of required documents, where necessary) all other obligations arising
out the Settlement Agreement other than the payments contemplated by the Sanmina
Notes. Shares of Series B Preferred Stock issued as repayment of any portion of
the Sanmina Notes are herein referred to as the "SANMINA CONVERSION SHARES." At
the Sanmina Closing, Purchaser shall pay to the Company (or, at its election,
cause Sanmina to repay to the Company at such time) cash in an amount equal to
(i) the sum of all payments made by the Company to Sanmina under the Settlement
Agreement between February 14, 2003 and the Sanmina Closing Date and (ii)
amounts paid by the Company under Section 1.9 of the Tranche I Notes to the
extent such amounts were used to pay Sanmina and applied toward or reduced the
Purchasers' aggregate purchase price paid to Sanmina. Each Purchaser
acknowledges and agrees that the Tranche I Notes and the Sanmina Notes shall be
pari passu in seniority (including seniority of liens) notwithstanding any
previous priority or seniority of Sanmina under the Settlement Agreement and
Sanmina Security Agreement. Notwithstanding the foregoing, at the request of the
Purchaser Representative, the Company and each Purchaser shall cooperate in
order to restructure the transactions at the Sanmina Closing, so long as such
restructuring does not cause the Company or any Purchaser to incur any
additional liability or obligation or reduce the benefits to the Company or such
Purchaser of the Sanmina Purchase. Without limiting the foregoing, such
restructuring may include the formation of a partnership or other legal entity
by the Purchasers (with ownership in accordance with the percentages indicated
on the signature pages hereto)

                                      - 2 -



which would consummate the Sanmina Purchase and assume from Sanmina all
obligations of Sanmina under the Settlement Agreement, provided all obligations
and claims of the parties under the Settlement Agreement (other than as set
forth in the Sanmina Notes and the Sanmina Security Agreement) shall then be
immediately cancelled and waived by the parties at the Sanmina Closing.

                  1.3.     The Company agrees to issue and sell to Purchasers,
and Purchasers agree (severally and not jointly) to purchase from the Company
(in accordance with the allocation set forth under the heading "Tranche III
Amount" on the signature page for each Purchaser) for an aggregate of $2.05
Million, at the Third Closing (as defined below), (i) an additional 2,050 shares
of Series B Preferred Stock, at a purchase price of One Thousand Dollars
($1,000) per share (the "THIRD ISSUANCE SHARES," and collectively with the
Tranche I Conversion Shares and the Sanmina Conversion Shares, the "SHARES"),
and (ii) warrants to purchase 1,983,929 shares of Common Stock at an exercise
price of Seventy Cents ($0.70) per share, in substantially the form of Exhibit B
hereto (the "THIRD ISSUANCE WARRANTS"; and, together with the First Issuance
Warrants, the "WARRANTS"). The shares issuable upon exercise of the Warrants are
herein referred to as the "WARRANT SHARES." The Series B Preferred Stock shall
have the terms designated in the Certificate of Designation of Series B
Convertible Preferred Stock attached hereto as Exhibit E hereto (the
"CERTIFICATE OF DESIGNATION").

         2.       Closing; Deliveries.

                  2.1.     First Closing. The closing of the purchase and sale
of the Tranche I Notes and First Issuance Warrants (the "FIRST CLOSING") shall
occur at the offices of Irell & Manella LLP ("I&M"), 1800 Avenue of the Stars,
Suite 900, Los Angeles, California 90067, as soon as practicable (but not more
than five (5) business days) after the satisfaction or waiver of all of the
conditions to the First Closing set forth herein, or at such other place and
time as the Company and Purchasers may agree. At the First Closing, the Company
shall deliver to Purchasers the executed Tranche I Notes, the First Issuance
Warrants and an executed Security Agreement in the form of Exhibit F hereto, and
Purchasers shall deliver to the Company $1.2 Million (less fees to be paid
pursuant to Section 11.2) in immediately available funds. At the First Closing,
the parties hereto will also duly execute and deliver the Registration Rights
Agreement in the form of Exhibit G hereto (the "REGISTRATION RIGHTS AGREEMENT")
and Purchasers shall receive (i) an opinion from Latham & Watkins LLP covering
matters described in Exhibit H; (ii) the Voting Agreements in the form of
Exhibit I hereto from certain officers and directors of the Company; (iii) the
Series A Voting Agreements in the form of Exhibit J hereto from holders of a
majority of the outstanding shares of Series A Preferred Stock and (iv)
resolutions of the Board of Directors of the Company authorizing the
transactions contemplated hereby, certified by the Company's secretary in form
reasonably satisfactory to Purchasers. The date on which the First Closing
occurs is hereinafter referred to as the "FIRST CLOSING DATE."

                  2.2.     Sanmina Closing. The closing of the Sanmina Purchase
(the "SANMINA CLOSING") shall occur at the offices of I&M at a date and time to
be agreed upon between the Purchasers and Sanmina (the "SANMINA CLOSING DATE"),
the which is expected to be one day following the satisfaction or waiver of all
of the conditions to the Sanmina Closing set forth herein. If the Sanmina
Closing is not to occur on the first day

                                      - 3 -



following approval of the Shareholder Proposals the Stockholders Meeting, the
Purchasers shall notify the Company at least two days prior to the anticipated
Sanmina Closing Date to allow the Company to effect delivery of executed
documents. At the Sanmina Closing, the Company shall execute and deliver to
Purchasers and Sanmina the documents described in Section 1.2 above.

                  2.3.     Third Closing. The closing of the purchase and sale
of the Third Issuance Shares and Third Issuance Warrants (the "THIRD CLOSING")
shall occur at the offices of I&M as soon as practicable (but not more than two
(2) business days) after the satisfaction or waiver of all of the conditions to
the Third Closing set forth herein, or at such other place and time as the
Company and Purchasers may agree. At the Third Closing, the Company shall
deliver to Purchasers one or more stock certificates evidencing the Third
Issuance Shares and the executed Third Issuance Warrants, in each case
registered in the name of the applicable Purchaser, and each Purchaser shall pay
to the Company the purchase price for its Third Issuance Shares and Third
Issuance Warrants (less fees to be paid pursuant to Section 11.2) by check or
wire transfer. At the Third Closing, the parties will also duly execute and
deliver the Registration Rights Agreement and Purchasers shall receive (i) an
opinion from Latham & Watkins LLP covering matters described in Exhibit K and
(ii) a certificate from an officer of the Company (in form reasonably
satisfactory to Purchasers) certifying that the resolutions of the Board of
Directors of the Company authorizing the transactions contemplated hereby, as
delivered at the First Closing, have not been amended or modified since the
First Closing Date and that such resolutions are the only resolutions relating
to this Agreement and the transactions contemplated hereby. The date on which
the Third Closing occurs is hereinafter referred to as the "THIRD CLOSING DATE."

         3.       Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchasers as follows (it being agreed that
for purposes of the representations and warranties set forth in this Section 3,
the term the "COMPANY" shall be deemed to refer to the Company and each of its
Subsidiaries on a consolidated basis, except where the context reasonably
indicates otherwise):

                  3.1.     Organization and Qualification. Except as disclosed
on Schedule 3.1, the Company and each of its Subsidiaries (as defined in Section
3.3) is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, has all requisite corporate power
and authority to conduct its business as currently conducted and (assuming
approval by the holders of the Common Stock of the Shareholder Proposals, as
defined in Section 5.2, below, and approval by the holders of the Series A
Preferred Stock of the Certificate Amendments, as defined in Section 5.7, below)
to enter into and to carry out and perform its obligations under the Transaction
Documents. For purposes of this Agreement, "TRANSACTION DOCUMENTS" shall
include: (a) this Agreement, (b) the Registration Rights Agreement, (c) the
Warrants, (d) the Tranche I Notes, (e) the Sanmina Notes, (f) the Security
Agreements delivered at the First Closing and Sanmina Closing, (g) the
Certificate of Designation, and (h) the Certificate Amendments, as defined in
Section 5.7. Except as set forth on Schedule 3.1, the Company and each of its
Subsidiaries is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which the failure to be so qualified or in good standing
could reasonably be expected to have a material adverse effect on the business,
properties, results of operations, financial condition

                                      - 4 -



or prospects of the Company and its Subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT").

                  3.2.     Authorized Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (a) Three Hundred Fifty
Million (350,000,000) shares of Common Stock, $0.001 par value per share; and
(b) Fifteen Million (15,000,000) shares of Preferred Stock, $0.001 par value per
share, Thirty Thousand (30,000) shares of which are designated as Series A
Preferred Stock. As of March 4, 2003, there were 6,984,823 shares of Common
Stock outstanding and 3,675 shares of Series A Preferred Stock outstanding, and
the Company has issued no shares of capital stock since that date other than as
may have been issued pursuant to the exercise of then outstanding warrants and
options and conversion of Series A Preferred Stock. All of the outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. The Company has reserved for issuance 1,400,000
shares of Common Stock upon exercise of options granted under its Amended and
Restated 2000 Stock Incentive Plan and Amended and Restated 1997 Stock Option
Plan (collectively, the "COMPANY OPTION PLANS"). As of March 4, 2003 and the
date hereof, there were not outstanding or existing any options, warrants,
rights (including conversion or preemptive rights, other than those described in
Section 3.6.1) or agreements for the purchase or acquisition from the Company or
any Subsidiary of any shares of its capital stock or any securities exercisable
for or convertible into shares of its capital stock, except for options
described above and warrants described on Schedule 3.2 hereto, which sets forth
for each warrant or group of identical warrants (x) the number of shares subject
to such warrants, (y) the exercise price thereof as of the date hereof without
giving effect to the transactions contemplated under this Agreement and (z) the
exercise price thereof after giving effect to the issuance of all Warrants and
Shares contemplated hereby (for which purpose it shall be assumed that the
Tranche I Notes and the Sanmina Notes are converted in full into Series B
Preferred Stock under the terms thereof). Upon consummation of the Third Closing
(assuming repayment of the Sanmina Notes entirely in Series B Preferred Stock),
Purchasers shall collectively own Series B Preferred Stock convertible into
54.94% of the Fully Diluted Common Shares of the Company. "FULLY DILUTED COMMON
SHARES" shall mean the sum of (i) all shares of Common Stock issued and
outstanding as of March 4, 2003, (ii) all shares of Common Stock issuable upon
conversion of outstanding Series A Preferred Stock (as of March 4, 2003) and
Series B Preferred Stock (making the aforementioned assumptions regarding the
conversion in full of the Tranche I Notes and Sanmina Notes into Series B
Preferred Stock under the terms thereof) and (iii) all shares of common stock
issuable upon exercise of options and warrants outstanding at March 4, 2003
which, after giving effect to all antidilution adjustments arising out of the
transactions contemplated hereby and the issuance of all Shares and Warrants
contemplated to be issued hereunder, will have an exercise price less than or
equal to $1.05 per share. There are no outstanding obligations of the Company or
any Subsidiary to purchase, redeem or otherwise acquire any equity interest
therein.

                  3.3.     Subsidiaries. Except as set forth in Schedule 3.3,
the Company (a) owns no equity securities of any other corporation, limited
partnership or similar entity, directly or through any Subsidiary, beneficially
or of record and (b) is not, directly or through any Subsidiary, a participant
in any joint venture, partnership or similar arrangement. "SUBSIDIARY" means any
corporation, joint venture, limited liability company,

                                      - 5 -



partnership, association or other business entity of which more than 50% of the
total voting power of stock or other equity entitled to vote generally in the
election of directors or managers thereof is owned or controlled, directly or
indirectly, by the Company.

                  3.4.     Due Execution, Delivery and Performance of the
Agreement; No Conflict.

                           3.4.1.   Subject to (A) approval by the requisite
holders of the Common Stock and Series A Preferred Stock, voting together as a
single class of (i) the issuance and sale to Purchasers of the Third Issuance
Shares; (ii) the Certificate of Designation; (iii) the Certificate Amendments;
and (iv) delivery of Series B Preferred Shares upon conversion or payment of the
Tranche I Notes and Sanmina Notes and (B) approval by the requisite holders of
Series A Preferred Stock of the Certificate Amendments, the execution, delivery
and performance of the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Company. The Company's Board of
Directors (the "BOARD") has approved the Certificate of Designation and the
Certificate Amendments. This Agreement has been, and, when executed and
delivered at the First Closing, the Sanmina Closing or the Third Closing (as the
case may be), the other Transaction Documents will be, duly executed and
delivered by the Company and constitute, or when executed and delivered at the
First Closing, the Sanmina Closing or the Third Closing (as the case may be)
will constitute, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except as may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium and other similar laws
and equitable principles relating to or limiting creditors' rights generally and
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, concepts of materiality;
reasonableness, good faith and fair dealing, and the discretion of the court
before which any proceeding therefore may be brought. The Company has delivered
to Purchasers executed Voting Agreements from holders of 1,312,479 shares
(17.91%) of the Common Stock outstanding and a majority of the Series A
Preferred Stock outstanding.

                           3.4.2.   The execution, delivery and, subject to
obtaining the consents and waivers set forth in Schedule 3.4, performance by the
Company of the Transaction Documents and the consummation of the transactions
contemplated thereby will not, (i) modify (except for modifications deemed to
occur by virtue of the waivers and consents given by third parties with respect
to the transactions contemplated hereby), breach or constitute grounds for the
occurrence or declaration of a default under or give rise to a right to
terminate, or accelerate or permit the acceleration of any performance required
by the terms of, any material agreement, license, indenture, undertaking or
other instrument to which the Company or any Subsidiary is a party or by which
they or any of their assets may be bound or affected, (ii) violate any provision
of law or any regulation or any order, judgment, or decree of any court or other
agency of government to which the Company or any Subsidiary is subject, (iii)
violate any provision of the Amended and Restated Certificate of Incorporation
(the "CERTIFICATE OF INCORPORATION") or Bylaws of the Company, or (iv) result in
the creation or imposition of (or the obligation to create or impose) any
material liens, mortgages, pledges, charges, claims or other encumbrances

                                      - 6 -



(collectively, "LIENS") on any of the Company's or any Subsidiary's properties,
other than as may be created as a consequence of the Security Agreement.

                  3.5.     State Takeover Statutes. The Board has approved the
terms of this Agreement and the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby (including without
limitation the sale and issuance to Purchasers of the Shares, Tranche I Notes,
the Sanmina Notes and Warrants pursuant to this Agreement) and such approval
constitutes approval of such transactions by the Board under the provisions of
Section 203 of the Delaware General Corporation Law (the "DGCL"), and
constitutes all actions necessary to ensure that the restrictions contained in
Section 203 of the DGCL will not apply to any Purchaser or its affiliates in
connection with or following such transactions. No other state takeover statute
is applicable to the transactions contemplated by this Agreement and the other
Transaction Documents.

                  3.6.     Issuance, Sale and Delivery of the Shares and
Warrants.

                           3.6.1.   When issued in compliance with all the
provisions of this Agreement (including the delivery of payment therefor), the
Shares will be validly issued, fully paid and nonassessable, and will be free of
any Liens, other than restrictions on transfer under applicable state and/or
federal securities laws and any Liens created or imposed by the Purchasers. The
sale of the Shares and Warrants is not subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with,
except for participation rights granted to the holders of Series A Preferred
Stock in December 2001 and Common Stock issued in September 2002 (which
collectively entitle those holders to purchase securities in an amount up to
6.3% of the total number of securities offered hereby, after giving effect to
any sales to such holders pursuant to such participation rights). Upon the
filing with the Delaware Secretary of State and effectiveness of the Certificate
of Designation, the rights, privileges and preferences of the Series B Preferred
Stock set forth in the Certificate of Designation will constitute the valid and
binding obligations of the Company, enforceable against it in accordance with
their respective terms, except as may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally and (b) the effect of
general principles of equity, whether enforcement is considered in a proceeding
in equity or at law, concepts of materiality; reasonableness, good faith and
fair dealing, and the discretion of the court before which any proceeding
therefore may be brought.

                           3.6.2.   The shares of Common Stock that are issuable
upon conversion of the Series B Preferred Stock or exercise of the Warrants,
when so issued and paid for, will be validly issued, fully paid and
nonassessable, and will be free of any Liens, other than restrictions on
transfer under state and/or federal securities laws and any Liens created or
imposed by the Purchasers. Issuance of such shares of Common Stock is not
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with.

                  3.7.     Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any federal, state, local,
municipal, foreign or other governmental body or authority ("GOVERNMENTAL
AUTHORITY") on the part of the Company or any Subsidiary is required for the
execution and delivery of the Transaction Documents or the

                                      - 7 -



sale of the Shares to Purchasers pursuant to this Agreement, except for the
filing of the Certificate of Designation.

                  3.8.     SEC Reports; Financial Statements.

                           3.8.1.   The Company has filed all forms, reports and
documents required to be filed by it with the SEC since and including the filing
date of the Registration Statement with respect to the Company's initial public
offering (the "SEC REPORTS"). The SEC Reports (x) were prepared in accordance
with the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT") and the Securities and Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), as the case may be, and the rules and regulations thereunder and (y) did
not at the time they were filed, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.

                           3.8.2.   Except as set forth on Schedule 3.8.2
hereto, each of (i) the financial statements (including, in each case, any notes
thereto) of the Company included in the SEC Reports, (ii) the unaudited
consolidated statement of operations for the Company and its Subsidiaries for
the year ended December 31, 2002 attached as Schedule 3.8.2(a) hereto and (iii)
the unaudited consolidated balance sheet of the Company and its Subsidiaries as
of December 31, 2002 attached as Schedule 3.8.2(b) hereto (the "UNAUDITED
BALANCE SHEET"; and items (i), (ii) and (iii) being collectively referred to
herein as the "FINANCIAL STATEMENTS"), was prepared in accordance with GAAP
(subject, in the case of unaudited statements, to the absence of footnotes
thereto and to normal and recurring year-end adjustments which were not and are
not expected to be material in amount) and each fairly presented the financial
position, results of operations and cash flows of the Company as at the
respective dates thereof and for the respective periods indicated therein
(except as may be indicated in the notes thereto) in all material respects.

                           3.8.3.   Except as set forth in Schedule 3.8.3
hereto, as of the date hereof, the Company has no liability or obligation
(whether accrued, absolute, contingent or otherwise and whether or not required
to be reflected on the balance sheet under GAAP) other than (a) liabilities and
obligations reflected on the Unaudited Balance Sheet, and (b) liabilities or
obligations incurred since December 31, 2002 in the ordinary course of business
consistent with past practice, none of which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

                           3.8.4.   The Company has previously furnished to the
Purchaser Representative true, correct and complete copies of all "management"
letters issued by the Company's independent auditors since January 1, 2000, and
all letters from the Company's outside counsel to its auditors delivered since
January 1, 2000 in connection with any audits.

                  3.9.     Proxy Statement. The Proxy Statement described in
Section 5.3, including any amendments or supplements thereto, shall not, at the
time filed with the SEC, as of the date mailed to the Company's stockholders or
at the time of the Stockholders Meeting (as defined in Section 5.2), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the

                                      - 8 -



statements therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information provided by Purchasers specifically
for use in the Proxy Statement. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.

                  3.10.    Absence of Litigation. Except as set forth on
Schedule 3.10 hereto, there is no material claim, action, proceeding or
investigation (or collection of similar or related claims, actions, proceedings
or investigations which in the aggregate would be material) pending, and, to the
knowledge of the Company or its Subsidiaries, there is no material claim,
action, proceeding or investigation threatened, against the Company or any
Subsidiary, or any director or officer of the Company or any Subsidiary or any
property or asset of the Company or any Subsidiary, before any court, arbitrator
or administrative, governmental or regulatory authority or body, domestic or
foreign. Except as set forth on Schedule 3.10 hereto, neither the Company or any
Subsidiary, nor any of their properties or assets, is subject to any order,
writ, judgment, injunction, decree, determination or award.

                  3.11.    Absence of Certain Changes or Events. Except as
disclosed in the Company's Form 10-Q dated September 30, 2002 or in subsequent
SEC Reports or in Schedule 3.11, or as specifically contemplated by this
Agreement, since September 30, 2002, there has not been (i) any transaction,
commitment, dispute or other event or condition (financial or otherwise) of any
character (whether or not in the ordinary course of business) individually or in
the aggregate which has had or could reasonably be expected to have a Material
Adverse Effect; (ii) any damage, destruction or loss, whether or not covered by
insurance; (iii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
capital stock of the Company (for purposes of clarification, other than the
accrual of dividends on the Series A Preferred Stock); (iv) any increases by the
Company or its Subsidiaries in the wages, salaries, compensation, pension or
other fringe benefits or perquisites payable to any executive officer or
director, grants by the Company or any Subsidiary of any severance or
termination pay, execution by the Company or any Subsidiary of any contract to
make or grant any severance or termination pay, or payments by the Company or
any Subsidiary of any bonus, in each case with respect to any such executive
officer or director, other than pursuant to pre-existing agreements or
arrangements; or (v) entry into any commitment or transaction material to the
Company or any Subsidiary (including, without limitation, any material borrowing
or sale of assets).

                  3.12.    Compliance with Laws; Permits. The Company and each
of its Subsidiaries has at all times materially complied, and it is currently in
material compliance, with all material applicable statutes, rules, regulations
and orders of the United States, Canada and all states or provinces in which the
Company or any Subsidiary is engaged in business and has obtained all required
licenses, permits and other approvals of any Governmental Authority (as defined
in Section 3.7).

                  3.13.    Material Contracts. Except as set forth on Schedule
3.13, each of the contracts required to be filed as material contracts as
exhibits to the SEC Reports (the "MATERIAL CONTRACTS") (including all
amendments, modifications and waivers) (a) has been filed with the SEC, (b) to
the knowledge of the Company, has been duly authorized,

                                      - 9 -



executed and delivered by the parties thereto, (c) remains in full force and
effect to the extent of its terms without any amendment, modification or waiver
not reflected in the Material Contracts, (d) to the knowledge of the Company, is
binding on the parties thereto in accordance with and to the extent of its terms
and applicable laws, and (e) is not subject to, and the Company has not received
any written notice threatening or declaring, termination as a result of any
alleged uncured breach or default. The Company and each Subsidiary has performed
all material obligations required to be performed by it to date under each
Material Contract, and neither the Company nor any Subsidiary is in material
breach or default under any Material Contract. To the Company's knowledge,
without a specific review having been conducted by the Company, no other party
to any Material Contract is in material breach or default thereunder or in
material violation thereof, and no condition exists that with notice or lapse of
time or both would constitute a material violation thereof or a material default
thereunder. Without limiting the foregoing, except as set forth on Schedule
3.13, any failure by the Company or any Subsidiary to receive an unqualified
opinion of its auditors in connection with its annual audit will not modify,
breach or constitute grounds for the occurrence or declaration of a default
under or give rise to a right to terminate, or accelerate or permit the
acceleration of any performance required by the terms of, any agreement,
license, indenture, undertaking or other instrument to which the Company or any
Subsidiary is a party or by which it or any of its assets may be bound or
affected.

                  3.14.    Intellectual Property Rights.

                           3.14.1.  The Company and its Subsidiaries own or have
licenses to use registered copyrights, copyright registration and copyright
applications, trademark registrations and applications for registration, patents
and patent applications, trademarks, service marks, trade names, Internet domain
names and other intellectual property rights (collectively, "INTELLECTUAL
PROPERTY RIGHTS") which are sufficient to carry on the business of the Company
and its Subsidiaries as presently conducted, except for Intellectual Property
Rights the failure of which to own or have licenses to use would not reasonably
be expected to result in a Material Adverse Effect.

                           3.14.2.  The operation of the business of the Company
and its Subsidiaries does not, and except as identified on Schedule 3.14,
neither the Company nor any Subsidiary has received any notice from any person
claiming that the business of the Company or any Subsidiary does, infringe or
misappropriate the Intellectual Property Rights of any person, violate any
export control law or regulation, violate the rights of any person (including
rights to privacy or publicity), or constitute unfair competition or trade
practices under any applicable laws.

                           3.14.3.  Except as set forth on Schedule 3.14, to the
knowledge of the Company, no person is infringing or misappropriating any
Intellectual Property Rights owned or licensed by the Company or any Subsidiary
or engaging in other conduct that may diminish or undermine such Intellectual
Property Rights, such as the disclosure of Company or Subsidiary confidential
information.

                           3.14.4.  The Company and its Subsidiaries have taken
all reasonable steps to protect their rights in confidential information and
trade secrets of the Company and its Subsidiaries or provided by any other
person to the Company or a Subsidiary subject to a

                                     - 10 -



duty of confidentiality. Without limiting the foregoing, the Company and its
Subsidiaries have, and enforce, a policy requiring each of its executive
officers and research and development personnel to execute proprietary
information, confidentiality and invention and copyright assignment agreements,
and all such individuals have executed such an agreement.

                  3.15.    Certain Matters Regarding Employees. To the knowledge
of the Company, no officer or key employee of the Company or any Subsidiary is
subject to any contract, agreement, undertaking, commitment or instrument
(including any no hire or non-competition agreements) which would impair his or
her ability to perform the services on behalf of Company or any Subsidiary
contemplated to be performed by such officers or key employee.

                  3.16.    Tax Matters.

                           3.16.1.  The Company and its Subsidiaries (i) have
timely filed all material Tax Returns required to be filed by it as of the date
hereof, and (ii) have timely paid, or have made appropriate provision on their
balance sheets (in accordance with GAAP) for, all Taxes due or (to the Company's
knowledge) claimed to be due from it by any taxing authority with respect to any
liability for Taxes except where such failure, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Company. All Tax Returns described in clause (i) are complete and accurate in
all material respects. With respect to periods commencing on or after December
31, 2002, neither the Company nor any of its Subsidiaries has incurred any
liability for Taxes which could reasonably be expected to have a Material
Adverse Effect other than (i) as reflected on the audited balance sheet of the
Company as of December 31, 2001 contained in the Financial Statements (the
"AUDITED BALANCE SHEET") or the Unaudited Balance Sheet, or (ii) federal and
state income taxes payable on the Company's income after December 31, 2002.
There are no material Liens with respect to Taxes upon any of the Company's or
any Subsidiary's properties or assets, except for current Taxes not yet due.

                           3.16.2.  To the Company's knowledge, none of the Tax
Returns of the Company or its Subsidiaries have been or are currently being
audited or examined by the Internal Revenue Service. Except to the extent
reserved for in the Audited Balance Sheet, no material issue of which the
Company or any of its Subsidiaries has received written notice has been raised
by a taxing authority in any audit or examination which reasonably could be
expected to result in a proposed deficiency, penalty or interest for any other
period, which could reasonably be expected to have a Material Adverse Effect on
the Company.

                           3.16.3.  There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Returns required to be filed by, or which include or are treated as including,
the Company or any of its Subsidiaries.

                           3.16.4.  Neither Company nor any Subsidiary is
involved in or subject to any joint venture, partnership or other arrangement or
contract which is treated as a partnership for federal, state, local or foreign
income tax purposes.

                                     - 11 -



                           3.16.5.  All material elections with respect to Taxes
affecting the Company or any of its Subsidiaries as of the date hereof are set
forth in Schedule 3.16. No consent to the application of section 341(f)(2) of
the Code (as defined below) has been filed with respect to any property or
assets held, acquired, or to be acquired by the Company or any of its
Subsidiaries.

                           3.16.6.  There are no tax sharing agreements or
similar arrangements with respect to or involving the Company or any of its
Subsidiaries.

                           3.16.7.  Neither the Company nor any Subsidiary was
included, nor are any of them includible, in any consolidated or unitary Tax
Return with any corporation other than such a return of which the Company is the
common parent corporation.

                           3.16.8.  Neither the Company nor any Subsidiary has
agreed to, and they are not required to, make any material adjustment under
section 481(a) of the Internal Revenue Code of 1986, as amended (the "CODE").

                           3.16.9.  Neither the Company nor any of its
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any contract, agreement or arrangement covering any current or former
employee or consultant of the Company or its Subsidiaries that under certain
circumstances could require it to make or give rise to any payments that are not
deductible as a result of the provisions set forth in Section 280G of the Code
or the treasury regulations thereunder or would result in an excise tax to the
recipient of any such payment under Section 4999 of the Code, except as set
forth on Schedule 3.16.9.

                           3.16.10. The Company has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.

                           "TAX" or "TAXES", as the context may require,
include: (i) any income, alternative or add-on minimum tax, gross income, gross
receipts, franchise, profits, sales, use, ad valorem, business license,
withholding, payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, value added, custom duty, severance, windfall
profit or license tax, including estimated taxes relating to any of the
foregoing, or other similar tax or other like assessment or charge of similar
kind whatsoever together with any interest and any penalty, addition to tax or
additional amount imposed by any taxing authority responsible for the imposition
of any such Tax; or (ii) any liability of a person for the payment of any taxes,
interest, penalty, addition to tax or like additional amount resulting from the
application of Treas. Reg. Section 1.1502-6 or comparable provisions of any
Governmental Authority (as defined in Section 3.7) in respect of a consolidated
or combined return.

                           "TAX RETURN" means any return (including any
information return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any taxing authority in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law
relating to any Tax.

                                     - 12 -



                  3.17.    Title to Properties; Liens and Encumbrances. The
Company has good and marketable title to all of its material owned properties
and assets and such properties and assets are not subject to any Liens, except
for (a) Liens under the Loan and Security Agreement dated November 29, 2001, as
amended, with Silicon Valley Bank, Commercial Finance Division and Liens under
the Security Agreement dated January 12, 2002 with Sanmina, (b) immaterial Liens
which arise in the ordinary course of business (including without limitation
Liens from current taxes not yet due and payable), and (c) Liens which
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on the Company or its material properties. All material
leases, subleases, conditional sale contracts and other agreements pursuant to
which the Company leases or otherwise uses real or personal property
(collectively, "LEASES") are in good standing and are valid and effective in
accordance with their respective terms. The Company has performed its
obligations in all material respects to date under all such Leases.

                  3.18.    Employee Benefit Plans. Except as listed in Schedule
3.18, neither the Company nor any Subsidiary maintains, sponsors, or contributes
to any plan, program or arrangement (other than a "Foreign Plan" as defined
below) that is (a) an "employee welfare benefit plan," as that term is defined
in Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (b) any other plan, arrangement or policy of the Company
(whether written or oral) providing for insurance coverage (including
self-insured arrangements), disability benefits, supplemental unemployment
benefits, or for deferred compensation, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits, or (c) a "pension plan" within the meaning
of Section 3(2) of ERISA (a "PLAN"). No member (other than the Company) of the
same controlled group of businesses as the Company within the meaning of Section
4001(a)(14) of ERISA now or ever has maintained, sponsored or been obligated to
contribute to any "employee benefit plan" within the meaning of Section 3(3) of
ERISA, other than a Foreign Plan. Each Plan has been operated substantially in
accordance with its terms, ERISA, the Code and other applicable law. Each of the
Plans which is intended to be a qualified plan under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service.
Neither the Company nor any Subsidiary has any knowledge of any circumstances
which reasonably might result in any material liability, tax or penalty,
including, but not limited to, a penalty under Section 502 of ERISA, as a result
of a breach of any fiduciary duty under ERISA. None of the Plans provides or has
provided post-retirement medical or health benefits. None of the Plans is or was
a "welfare benefit fund," as defined in Section 419(e) of the Code, or an
organization described in Sections 501(c)(9) or 501(c)(20) of the Code. Neither
the Company nor any of its Subsidiaries is or ever has been a party to any
collective bargaining agreement. Except as disclosed on Schedule 3.18, neither
the Company nor any of its Subsidiaries has announced or otherwise made any
commitment to create or amend any Plan, and neither the Company nor any of its
Subsidiaries has announced or otherwise made any commitment to begin
contributing to any pension plan subject to Title IV of ERISA, or to any
"multiemployer plan" within the meaning of Section 3(37) of ERISA.. All
contributions required to be made to any Plan under the terms of such Plan or
under ERISA or the Code have been timely made. Each Plan which is required to
comply with the provisions of Sections 4980B and 4980C of the Code, or with the
requirements referred to in Section 4980D(a) of the Code, has complied in all
material respects. Each Plan intended to meet the requirements for tax-

                                     - 13 -



favored treatment under Subchapter B of Chapter 1 of the Code meets such
requirements. Except as disclosed on Schedule 3.18, the execution and
performance of this Agreement will not (i) result in any obligation or liability
(with respect to accrued benefits or otherwise) of the Company to any Plan, or
any present or former employee of the Company, (ii) be a trigger event under any
Plan that will result in any payment (whether of severance pay or otherwise)
becoming due to any present or former employee, officer, director, stockholder,
contractor, or consultant, or any of their dependents, or (iii) except as
otherwise expressly contemplated by this Agreement, accelerate the time of
payment or vesting, or increase the amount, of compensation due to any present
or former employee, officer, director, stockholder, contractor, or consultant of
the Company. Other than routine claims for benefits under the Plans, there are
no pending, or, to the best knowledge of the Company, threatened,
investigations, proceedings, claims, lawsuits, disputes, actions, audits or
controversies involving the Plans, or the fiduciaries, administrators, or
trustees of any of the Plans or the Company or any subsidiary of any as the
employer or sponsor under any Plan, with any of the Internal Revenue Service,
the Department of Labor, the Pension Benefit Guaranty Company, any participant
in or beneficiary of any Plan. The Company knows of no reasonable basis for any
such claim, lawsuit, dispute, action or controversy. With respect to each
employee benefit plan, program, and other arrangement providing compensation or
benefits to any employee or former employee of the Company or any Subsidiary
thereof, which plan, program or arrangement is maintained outside of the United
States primarily for the benefit of persons substantially all of whom are
nonresident aliens (a "FOREIGN PLAN"): (A) the Foreign Plan has been maintained
in all material respects in accordance with applicable law, (B) if intended to
qualify for special tax treatment, the Foreign Plan satisfies the requirements
for such treatment, and (C) the Foreign Plan is funded and/or book reserved to
the extent required by applicable law.

                  3.19.    Existing Indebtedness; Existing Liens; Investments;
Etc.

                  (a) Schedule 3.19 sets forth a true, correct and complete list
or schedule, and describe, as of the date or dates indicated therein, as
applicable:

                           (i) all material indebtedness of the Company and its
Subsidiaries on a consolidated and consolidating basis (collectively, "EXISTING
INDEBTEDNESS") as of the date hereof;

                           (ii) all material Liens as of a recent practicable
date in respect of any assets of the Company or its Subsidiaries (collectively,
"EXISTING LIENS"), showing, as to each such Lien, the name of the grantor and
secured party, the indebtedness secured thereby, the name of the debtor (if
different from the grantor) and the assets or other property covered by such
Lien;

                           (iii) all material investments of the Company and its
Subsidiaries as of the date hereof; and

                           (iv) a payables aging schedule for the Company and
its Subsidiaries as of a recent practicable date.

                                     - 14 -



                  (b) All principal, interest and other amounts owing under the
obligations secured by the liens described in the UCC-1 filings by Cupertino
National Bank, Venture Banking Group has been paid in full, and all such liens
have been cancelled.

                  3.20.    Accounts Receivable. Schedule 3.20 sets forth a
receivables aging schedule for the Company and its Subsidiaries as of a recent
practicable date. All accounts receivable of the Company and its Subsidiaries
(a) to the Company's knowledge, are legal, valid and binding obligations of the
persons shown on the books of the Company or such Subsidiary as the respective
account debtors with respect thereto, except as may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally and
(ii) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, concepts of materiality;
reasonableness, good faith and fair dealing, and the discretion of the court
before which any proceeding therefore may be brought, (b) arose out of bona fide
sales actually made or services actually performed on or prior to such date in
the ordinary course of business, (c) are not subject to any discount, rebate,
offset, return privilege or claim outside of the ordinary course of business
(and are reflected in the reserves established on the books of the Company or
such Subsidiary, as the case may be, in accordance with GAAP) and (d) to the
best knowledge of the Company, are valid and collectible in the ordinary course
of business. Except as set forth on Schedule 3.20, no customer has indicated an
unwillingness or an inability to pay any amount included in the accounts
receivables of the Company or any of its Subsidiaries.

                  3.21.    Customers. Schedule 3.21 lists the names and
addresses of the six (6) most significant customers (by revenue) of the Company
and its Subsidiaries for the year ended December 31, 2002, and the amount and
percentage of total revenues accounted for by each such customer during each
such period. Except for the bankruptcy filing of Metricom, Inc., which is
disclosed in the Company's SEC Reports, neither the Company nor any Subsidiary
has received any notice or otherwise have knowledge that any of such six
significant customers has ceased, or will cease, to use the products or services
of the Company or its Subsidiaries, or has materially reduced, or will
materially reduce, the use of such products or services at any time.

                  3.22.    Suppliers. Schedule 3.22 lists the three (3) largest
suppliers of any products or services to the Company and its Subsidiaries during
the year ended December 31, 2002, and the amount of purchases made by the
Company or any Subsidiary from each supplier during such period. Except for the
arrangements with Sanmina and Sanmina ULC pursuant to the Settlement Agreement
and related Sanmina Security Agreement, no material purchase order, commitment
or other obligation of the Company or any Subsidiary to take delivery is in
excess of normal requirements, nor are prices provided therein in excess of
current market prices for the products or services to be provided thereunder.
Except in connection with the Settlement Agreement and related Sanmina Security
Agreement, neither the Company nor any Subsidiary has any obligation to any
supplier with respect such supplier's work in process or inventory, and no such
obligation would arise as a result of any termination of any contract or
purchase order.

                  3.23.    Business Relationships. There is no threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship

                                     - 15 -



between the Company or its Subsidiaries, on the one hand, and any customer or
group of customers whose purchases, individually or in the aggregate, are
material to the business of the Company or any Subsidiary, or with any material
suppliers, on the other hand, and to the Company's knowledge there exists no
present condition or state of facts or circumstances with respect to any such
business relationship which could materially and adversely affect the Company or
its Subsidiaries or prevent the Company or its Subsidiaries from conducting such
business after the consummation of the transactions contemplated by this
Agreement in substantially the same manner in which it has been heretofore been
conducted.

                  3.24.    Business Plan. The Company has delivered to the
Purchaser Representative a true and correct copy of its business plan for the
year 2003 (the "BUSINESS PLAN"). The information contained in the Business Plan
(including without limitation the projections) has been prepared by Company and
its representatives in good faith based upon assumptions believed by the
management of Company and its Subsidiaries to be reasonable at the time of such
preparation and as of the date hereof (excluding any analysis of the
transactions contemplated hereby, including Purchasers' acquisition of the
obligations owed to Sanmina), which constitute all assumptions reasonably
necessary and prudent in making such projections.

                  3.25.    Employment Agreements. Schedule 3.25 sets forth a
true, correct and complete list of all material employment agreements and golden
parachute agreements to which the Company or any of its Subsidiaries is a party,
both with respect to current employees and officers and (to the extent any
obligations remain outstanding thereunder) former officers and employees. The
Company has previously delivered to the Purchaser Representative (or made
available to FTI Consulting) true, correct and complete copies of all such
agreements, including all amendments thereto. Each such agreement is in writing,
and to the Company's knowledge is a valid and binding agreement enforceable
against the respective parties thereto in accordance with its terms, except as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium and
other similar laws and equitable principles relating to or limiting creditors'
rights generally and (ii) the effect of general principles of equity (whether
enforcement is considered in a proceeding in equity or at law), concepts of
materiality, reasonableness, good faith and fair dealing, and the discretion of
the court before which any proceeding therefore may be brought. To the knowledge
of the Company, no party to any such agreement is in breach of, or in default
with respect to, any of its obligations thereunder, nor is the Company or any of
its Subsidiaries aware of any facts or circumstances which might reasonably be
expected to result in any breach or default thereunder.

                  3.26.    Transactions with Affiliated Persons.

                           3.26.1.  Since December 31, 2001, except as set forth
on Schedule 3.26, neither the Company nor any of its Subsidiaries has at any
time, directly or indirectly, purchased, leased or otherwise acquired any
material property or obtained any material services from, or sold, leased or
otherwise disposed of any material property or furnished any material services
to (except in each case with respect to remuneration for services rendered as a
director, officer, consultant or employee of the Company or any of its
Subsidiaries), in the ordinary course of business or otherwise, any officer,
director, employee, stockholder, any family member of any officer, director,
employee, stockholder

                                     - 16 -



or any other person (other than the Company and its Subsidiaries) that, directly
or indirectly, alone or together with others, controls, is controlled by or is
under common control with the Company, any of its Subsidiaries or any officer,
director, employee, stockholder or any family member of any officer, director,
employee or stockholder (the preceding persons listed in this sentence being
referred to herein collectively as "AFFILIATED PERSONS" and individually as an
"AFFILIATED PERSON").

                           3.26.2.  Except as set forth in Item 13 of the
Company's Form 10-K/A for the year ended December 31, 2001, or in subsequent SEC
Reports, neither the Company nor any of its Subsidiaries is indebted, directly
or indirectly, to any Affiliated Person, in a material amount; and no Affiliated
Person is indebted in a material amount to the Company or any of its
Subsidiaries (except for advances for travel expenses to employees in the
ordinary course of business) or has any direct or indirect ownership interest in
any firm or corporation with which the Company or any of its Subsidiaries is
affiliated or with which the Company or any of its Subsidiaries has a business
relationship. To the Company's knowledge, no such Affiliated Person is, directly
or indirectly, interested in any material contract with the Company or any of
its Subsidiaries (other than bona fide employment agreements).

                  3.27.    Listing of Common Stock. All shares of Common Stock
issuable upon conversion of the Shares or exercise of the Warrants will be
listed for trading on Nasdaq National Market or Nasdaq SmallCap Market,
effective on and as of the Third Closing Date. Except as disclosed in the SEC
Reports, as of the date hereof, the Company is, and as of each of the First
Closing Date and the Third Closing Date will be, in compliance with all
applicable Nasdaq SmallCap Market continued listing standards and requirements,
other than the $1.00 minimum bid requirement.

                  3.28.    Full Disclosure. There is no fact known to the
Company relating to the Company or its Subsidiaries (other than facts related to
general economic conditions) which the Company has not disclosed to the
Purchasers herein, in the SEC Reports, in the Schedules hereto or in the
Financial Statements which the Company in good faith believes either materially
adversely affects, or could reasonably be expected to materially adversely
affect, the properties, business, operations, affairs, earnings, assets,
liabilities or condition (financial or otherwise) of the Company or the ability
of the Company to perform its obligations under this Agreement or any document
contemplated hereby.

                  3.29.    Finders' Fees. There is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of Company or any Affiliated Person who might be entitled to any fee
or commission upon consummation of the transactions contemplated by this
Agreement and each of the other Transaction Documents.

                  3.30.    No General Solicitation or General Advertising. In
the case of each issuance of securities, including, without limitation, the
Shares, Warrants, Tranche I Notes and Sanmina Notes, pursuant to the terms of
this Agreement, no form of general solicitation or general advertising was used
by the Company or its representatives, including without limitation,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any

                                     - 17 -



seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.

         4.       Representations and Warranties of Purchasers. Each of the
Purchasers, individually and not jointly, represents and warrants that:

                  4.1.     Authorization. Such Purchaser has full power and
authority to enter into and to perform its obligations under this Agreement and
to carry out the transactions contemplated by this Agreement. This Agreement has
been duly executed and delivered by such Purchaser and constitutes a valid and
legally binding obligation of such Purchaser.

                  4.2.     Investment Representations. Such Purchaser is
acquiring and will acquire the securities pursuant to this Agreement for such
Purchaser's own account, for investment purposes and not with a view to, or for
sale in connection with, any distribution of such securities or any part thereof
in violation of federal or state securities laws.

                  4.3.     Investment Experience: Access to Information. Such
Purchaser is an "accredited investor" as that term is defined in Rule 501(a)
promulgated under the Securities Act, is a sophisticated investor, is able to
fend for itself in the transactions contemplated by this Agreement, has such
knowledge and experience in financial, business and investment matters as to be
capable of evaluating the merits and risks of this investment, has the ability
to bear the economic risks of this investment, has been furnished with copies of
and has read the SEC Reports, was not organized or reorganized for the specific
purpose of acquiring the securities pursuant to this Agreement; and (b) has been
afforded the opportunity to ask questions of, and to receive answers from, the
Company and to obtain any additional information, to the extent the Company has
or could have acquired such information without unreasonable effort or expense,
all as necessary for such Purchaser to make an informed investment decision with
respect to purchasing the securities pursuant to this Agreement. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in this Agreement or the right of such Purchaser to rely thereon.

                  4.4.     No General Solicitation or General Advertising. In
the case of each issuance of securities, including, without limitation, the
Shares, Warrants, the Tranche I Notes and the Sanmina Notes, pursuant to the
terms of this Agreement, no form of general solicitation or general advertising
was used by any Purchaser or its representatives, including without limitation,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

                  4.5.     Absence of Registration. Such Purchaser understands
that:

                           4.5.1.   The securities to be sold and issued
hereunder (and all securities to be issued on conversion or exercise thereof)
are unregistered and may be required to be held indefinitely unless they are
subsequently registered under the Securities Act, or an exemption from such
registration is available.

                                     - 18 -



                           4.5.2.   Except as provided in the Registration
Rights Agreement, the Company is under no obligation to file a registration
statement with the SEC with respect to the securities acquired pursuant to this
Agreement or the securities to be issued on conversion or exercise thereof.

                  4.6.     Restrictions on Transfer. Such Purchaser agrees that
(a) it will not offer, sell, pledge, hypothecate, or otherwise dispose of the
securities to acquired pursuant to this Agreement other than to its "affiliates"
unless such offer, sale, pledge, hypothecation or other disposition is (i)
registered under the Securities Act, or (ii) to the extent that such offer,
sale, pledge, hypothecation or other disposition thereof does not violate the
Securities Act, and (b) the securities acquired pursuant to this Agreement (and
all securities acquired on the conversion or exercise thereof) shall bear a
legend stating in substance:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
         OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE NOT BEEN
         ACQUIRED WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
         EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
         WITHOUT (A) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
         UNDER THE ACT AND ANY APPLICABLE STATE LAWS OR TO THE EXTENT THAT
         REGISTRATION OR QUALIFICATION IS NOT REQUIRED UNDER SUCH ACT OR UNDER
         APPLICABLE STATE LAWS OR (B) PURSUANT TO AN EXEMPTION THEREFROM UNDER
         SAID ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS WITH
         RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY
         OPINION OF COUNSEL FOR THE PURCHASER THAT SUCH TRANSFER IS EXEMPT FROM
         THE REQUIREMENTS OF THE ACT.

                  4.7.     Proxy Statement. All information included in the
Proxy Statement (as defined in Section 5.3) furnished by such Purchaser will
not, at the date of mailing of the Proxy Statement to the stockholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which made, not misleading.

                  4.8.     Registration Required. Such Purchaser hereby
covenants with the Company not to make any sale of the Shares, Common Stock and
Warrant Shares without complying with the provisions hereof, and without
effectively causing the prospectus delivery requirement under the Securities Act
to be satisfied (unless the Purchaser is selling such Shares, Common Stock or
Warrant Shares in a transaction not subject to the prospectus delivery
requirement). Such Purchaser acknowledges that as set forth in, and subject to
the provisions of, the Registration Rights Agreement, there may occasionally be
times when the Company, based on the advice of its counsel, determines that it
must suspend the use of the any prospectus forming a part of the registration
statement required to be filed pursuant to the terms of the Registration Rights
Agreement until such time as an amendment to the registration statement has been
filed by the Company and declared effective by the SEC or until the Company has
amended or supplemented such prospectus.

                                     - 19 -



                  4.9.     No Tax or Legal Advice. Such Purchaser understands
that nothing in the Agreement, or any other materials presented to the Purchaser
in connection with the purchase and sale of the Shares, Common Stock and Warrant
Shares constitutes legal, tax or investment advice. Such Purchaser has consulted
such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of Shares,
Common Stock and Warrant Shares.

                  4.10.    International Actions. Such Purchaser acknowledges,
represents and agrees that no action has been or will be taken in any
jurisdiction outside the United States by the Company that would permit an
offering of the Shares, Common Stock and Warrant Shares, or possession or
distribution of offering materials in connection with the issuance of the
Shares, Common Stock and Warrant Shares, in any jurisdiction outside the United
States. If such Purchaser is located outside the United States, it has or will
take all actions necessary for any resale of the Shares, Common Stock and
Warrant Shares by such Purchaser to comply with all applicable laws and
regulations in each foreign jurisdiction in which it offers, sells or delivers
Shares, Common Stock and Warrant Shares or distributes any offering material, in
all cases at its own expense.

                  4.11.    Brokers or Finders. The Company has not and will not
incur, directly or indirectly, as a result of any action taken by any Purchaser,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or the transactions
contemplated hereby.

         5.       Covenants of the Company. The Company hereby covenants and
agrees with Purchasers as follows:

                  5.1.     Access; Reports. At all times through the Third
Closing, the Company will permit Purchaser Representative and its authorized
representatives, full access at reasonable times, during normal business hours,
to all of the books, records, personnel and properties of the Company and its
Subsidiaries, wherever located, for the purpose of conducting its due diligence
review of the Company. No investigation will affect or limit the scope of any of
the representations, warranties, covenants and indemnities of the other in this
Agreement or in any Transaction Document or limit liability for any breach of
any of the foregoing. The Company shall (i) at the request of Purchaser
Representative, at reasonable times, meet with and/or report to the Purchaser
Representative regarding material operational matters and financial matters
(including monthly unaudited financial information); (ii) promptly and regularly
notify the Purchaser Representative of any change in the normal course of
operation of its business or its properties and of any material development in
the business, properties, or operations of the Company (including without
limitation any Material Adverse Effect or any governmental or third party
claims, complaints, investigations or hearings, or communications indicating
that the same may be forthcoming or contemplated).

                  5.2.     Stockholders Meeting. The Company shall cause a
meeting of its stockholders to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval of the issuance and sale
to Purchasers of the Third Issuance Shares and Third Issuance Warrants (and the
conversion of the Tranche I Notes in connection therewith and the repayment of
the Sanmina Notes with Series B Preferred Stock) and the

                                     - 20 -



election of directors pursuant to this Agreement (the "STOCKHOLDERS MEETING").
The proxy materials relating to such meeting shall contain the recommendation of
the Board (which shall be a unanimous recommendation of the disinterested
directors) that the stockholders approve (x) the issuance and sale to Purchasers
of the Third Issuance Shares, Third Issuance Warrants and Purchasers'
acquisition of the Tranche I Conversion Shares and Sanmina Conversion Shares on
conversion of the Tranche I Notes and repayment of the Sanmina Notes
(collectively, the "PURCHASER ACQUISITIONS") and (y) the Certificate Amendments
(collectively, the "SHAREHOLDER PROPOSALS").

                  5.3.     Proxy Statement. As promptly as practicable after the
date of this Agreement, the Company shall prepare and cause to be filed with the
SEC a Proxy Statement in connection with the transactions contemplated hereby
(the "PROXY STATEMENT"), and the Company shall respond promptly to any comments
of the SEC or its staff with respect thereto. The Company will afford Purchasers
a reasonable opportunity to review and comment on the proposed form of Proxy
Statement prior to its filing with the SEC. Purchasers shall promptly furnish to
the Company all information concerning Purchasers as may be required or
reasonably requested in connection with any action contemplated by this Section
5.3. The Company shall (a) notify the Purchaser Representative promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and (b) supply the Purchaser Representative with copies
of all correspondence with the SEC or its staff with respect to the Proxy
Statement. Whenever any event occurs that should be set forth in an amendment or
supplement to the Proxy Statement, Purchasers or the Company, as the case may
be, shall promptly inform the other of such occurrence and shall cooperate in
filing with the SEC or its staff, and, if appropriate, mailing to stockholders
of the Company, such amendment or supplement.

                  5.4.     Conduct of Business. From the date hereof through the
Third Closing (or, if the Third Closing does not occur, until all principal and
interest under the Tranche I Notes and Sanmina Notes (if issued) are repaid in
full under their terms), the Company shall and shall cause each of its
Subsidiaries to, except as contemplated by this Agreement, or as consented to by
the Purchaser Representative in writing, operate its businesses in the ordinary
course of business and in accordance with past practice, consistent with the
Business Plan, and not take any action inconsistent with this Agreement. Without
limiting the generality of the foregoing, except as specifically contemplated by
this Agreement, the Business Plan, or as consented to by the Purchaser
Representative in writing, the Company shall not and shall cause each of its
Subsidiaries not to:

                                    (a)      change or amend the Certificate of
         Incorporation or Bylaws of the Company;

                                    (b)      enter into, extend, materially
         modify, terminate or renew any Material Contract, except in the
         ordinary course of business;

                                    (c)      sell, assign, transfer, convey,
         lease, mortgage, pledge or otherwise dispose of or encumber any assets,
         or any interests therein, except in the ordinary course of business;

                                     - 21 -



                                    (d)      make new commitments for capital
         expenditures in excess of either Fifty Thousand Dollars ($50,000) in
         any one quarter or One Hundred Thousand Dollars ($100,000) during 2003;

                                    (e)      take any action with respect to the
         grant of any bonus, severance or termination pay or with respect to any
         increase of benefits payable (including the grant of stock options)
         under its severance or termination pay policies or agreements in effect
         on the date hereof or increase in any manner the compensation or
         benefits of any executive officer except in the ordinary course of
         business consistent with past practice or pay any benefit not required
         by any existing agreement with any employee or former employee or
         employee or by any existing benefit plan or policy;

                                    (f)      take any action with respect to the
         hiring of additional executive officers or the termination or
         replacement existing executive officers;

                                    (g)      subject to Section 5.5, acquire by
         merger or consolidation with, or merge or consolidate with, or purchase
         substantially all of the assets of, or otherwise acquire any material
         assets or business of any corporation, partnership, association or
         other business organization or division thereof;

                                    (h)      declare, set aside, make or pay any
         dividend or other distribution in respect of its capital stock (for
         purposes of clarification, other than the accrual of dividends on the
         Series A Preferred Stock);

                                    (i)      take any action to effect any stock
         dividend, split-up, recapitalization, combination, conversion, exchange
         of shares or other similar change in the corporate or capital structure
         of the Company;

                                    (j)      fail to comply in all material
         respects with all legal requirements applicable to it, its assets and
         its business;

                                    (k)      intentionally do any other act
         which would cause any representation or warranty of the Company in this
         Agreement to be or become untrue in any material respect;

                                    (l)      issue, repurchase or redeem or
         commit to issue, repurchase or redeem, any shares of its capital stock,
         any options or other rights to acquire such stock or any securities
         convertible into or exchangeable for such stock, other than the
         following: (i) issuance of shares in connection with the consummation
         of a Superior Proposal (as defined in Section 5.5.3), (ii) issuance of
         shares to employees, consultants and directors of the Company pursuant
         to stock options existing as of the date hereof, and (iii) repurchases
         of shares from employees or consultants as may be required by existing
         agreements in connection with the termination of their employment or
         consultancy with the Company;

                                    (m)      enter into any transaction or
         arrangement described in Section 3.26;

                                     - 22 -



                                    (n)      fail to use its commercially
         reasonable efforts to (i) retain its key employees and (ii) maintain
         existing relationships with material suppliers, customers and others
         having business dealings with it and (iii) otherwise preserve the
         goodwill of its business so that such relationships and goodwill will
         be preserved on and after the Third Closing Date;

                                    (o)      other than as permitted by the
         current Loan Agreement with Silicon Valley Bank, incur any indebtedness
         for borrowed money or modify the terms of any existing indebtedness;

                                    (p)      Modify the Business Plan in any
         material respect;

                                    (q)      become a guarantor or surety of any
         indebtedness of any other person; or

                                    (r)      enter into any agreement, or
         otherwise become obligated, to do any action prohibited under this
         Section 5.4.

                  5.5.     No Solicitation.

                           5.5.1.   Subject to Section 5.5.3 and the fiduciary
duties to which the Board is subject under Delaware Law, prior to the Third
Closing, the Company shall not, and the Company shall cause its Affiliated
Persons and the respective officers, directors, employees, investment bankers,
attorneys, accountants and other representatives and agents (collectively,
"REPRESENTATIVES") of the Company and its Affiliated Persons not to, directly or
indirectly, initiate, solicit, encourage or participate in negotiations or
discussions relating to, or provide any information to any person concerning, or
take any action to facilitate the making of, any offer or proposal which
constitutes or is reasonably likely to lead to any Transaction Proposal (as
defined below), or any inquiry with respect thereto, or agree to approve or
recommend any Transaction Proposal. The Company shall, and shall cause its
Affiliated Persons and the respective Representatives of the Company and its
Affiliated Persons to, immediately cease and cause to be terminated all existing
activities, discussions and negotiations, if any, with any parties conducted
heretofore with respect to any of the foregoing.

                           5.5.2.   For purposes of this Agreement, "TRANSACTION
PROPOSAL" shall mean any proposal (other than any proposal by Purchasers or
their affiliates) regarding (i) any merger, consolidation, share exchange,
business combination or other similar transaction or series of related
transactions involving the Company or a Subsidiary of the Company; (ii) any
sale, lease, exchange, transfer or other disposition of more than twenty percent
(20%) of the assets of the Company or any Subsidiary of the Company; (iii) any
acquisition of a substantial equity interest in the Company or any equity
interest in any of its Subsidiaries (with "substantial equity interest" meaning
(a) in the case of an institutional investor acquiring such interest for
investment purposes only, equity interests representing at least 20% of the
Company's outstanding capital stock (by voting power or otherwise) prior to such
investment and (b) in any other case, at least 10% of the Company's outstanding
capital stock (by voting power or otherwise) prior to such investment); (iv) any
offer to purchase (whether from the Company or otherwise), tender offer,
exchange offer or similar

                                     - 23 -



transaction involving the capital stock of the Company or any Subsidiary of the
Company; and (v) a liquidation or dissolution of the Company.

                           5.5.3.   Notwithstanding anything to the contrary
contained in this Section 5.5 or elsewhere in this Agreement, the Company may,
in response to an unsolicited bona fide Transaction Proposal from an
unaffiliated third party, participate in discussions or negotiations with or
furnish information to the third party making such Transaction Proposal, if all
of the following events have occurred: (a) such third party has made a written
proposal to the Board of the Company to consummate a Transaction Proposal, which
proposal identifies a price to be paid for the capital stock or assets of the
Company that the Board reasonably has determined, if such transaction is
consummated, would be financially more favorable to the stockholders of the
Company than the transactions contemplated under this Agreement (a "SUPERIOR
PROPOSAL"); (b) the Board reasonably has determined that such third party is
financially capable of consummating such Superior Proposal and that such
Superior Proposal is at least as likely to be consummated, and is not subject to
materially greater conditions, than the transactions contemplated by this
Agreement; (c) the Board shall have reasonably determined, after consultation
with its outside legal counsel, that the failure to participate in discussions
or negotiations with or furnish information to such third party would result in
a substantial risk of liability for a breach of the fiduciary duties of the
members of such Board under applicable Delaware law; and (d) the Purchaser
Representative shall have been notified in writing of such Transaction Proposal,
including its principal financial and other material terms and conditions,
including the identity of the person and its affiliates (if relevant) making
such Transaction Proposal.

         Notwithstanding the foregoing, the Company shall not provide any
non-public information to such third party unless (a) it has prior to the date
thereof provided such information to the Purchaser Representative, and (b) it
has provided such non-public information pursuant to a non-disclosure agreement
with terms which are at least as restrictive as the Nondisclosure Agreement
dated February 3, 2003, heretofore entered into between the Company and PS
Capital LLC. In addition to the foregoing, the Company shall not accept or enter
into any agreement concerning a Superior Proposal nor issue any securities or
agree to pay a termination or break-up fee in connection with a Superior
Proposal for a period of not less than 36 hours after Purchasers' receipt of the
notification in clause (d) of the preceding paragraph, and the Company will
afford Purchasers an opportunity to discuss with the Company what, if any,
response Purchasers may desire to make with to such Transaction Proposal. If the
Company intends to accept such Superior Proposal, the Company shall first offer
to the Purchasers in writing the right to enter into a transaction with the
Company on substantially equivalent terms and conditions, which offer shall
clearly set forth the terms thereof, and Purchasers shall then be entitled to 5
business days to determine whether to accept such offer. Upon the occurrence of
all of the events in the preceding paragraph and this paragraph, and if the
Purchasers have not elected within the required 5 day period to accept the offer
described in the preceding sentence, the Company shall be entitled to (1) change
its recommendations concerning the Purchaser Acquisitions, (2) accept such
Superior Proposal, and (3) enter into an agreement with such third party
concerning a Superior Proposal provided that the Company shall immediately make
payment in full of the expenses provided for in Section 11.2. Company will
promptly communicate to Purchasers the principal terms of any proposal or
inquiry, including the

                                     - 24 -



identity of the person and its affiliates making the same, that it may receive
in respect of any such Transaction Proposal, or of any such information
requested from it or of any such negotiations or discussions being sought to be
initiated with it regarding a Transaction Proposal.

         5.6.     Additional Issuances.

                  5.6.1.   At any time after the Third Closing, in the event the
Company shall issue (an "ADDITIONAL ISSUANCE") any capital stock, including
securities of any type that are, or may become, convertible into or exercisable
or exchangeable for capital stock of the Company (the "ADDITIONAL SECURITIES"),
each Purchaser shall have the right to subscribe for and to purchase that number
of Additional Securities such that such Purchaser holds the same percentage of
the Company's outstanding capital stock immediately prior to and immediately
following the Additional Issuance (the "PRO RATA SHARE"); provided, however,
that this Section 5.6 shall not apply to shares issued:

                                    (a)      to employees, officers or directors
         of, or consultants or advisors to the Company or any Subsidiary,
         pursuant to stock purchase, Company Option Plans, other option plans or
         arrangements approved by the Board;

                                    (b)      pursuant to any options, warrants,
         conversion rights or other rights or agreements outstanding as of the
         date of this Agreement or pursuant to the conversion of the shares of
         Series B Preferred Stock contemplated to be issued pursuant to this
         Agreement;

                                    (c)      in connection with any stock split,
         stock dividend or recapitalization by the Company;

                                    (d)      pursuant to a Superior Proposal if
         this Agreement is terminated in connection therewith; or

                                    (e)      in any Additional Issuance that
         reduces the Purchaser's equity percentage by less than 10% of its
         holdings, so long as at the time of an Additional Issuance which either
         solely or considered together with prior Additional Issuances that
         reduced the Purchaser's equity percentage by less than 10% is an
         Additional Issuance of greater than 10%, the Purchaser has the right to
         purchase common stock in order to retain the percentage ownership it
         had at the time of the first Additional Issuance which did not exceed
         10%.

                  5.6.2.   If the Company proposes an Additional Issuance, the
Company shall, at least fifteen (15) business days prior to the proposed
closing date of such issuance, give written notice to the Purchaser
Representative and offer to sell to each Purchaser its Pro Rata Share of the
Additional Securities at the lowest price per share, and otherwise on the same
terms and conditions (or, if the nature of the transaction involves an exchange
of assets or securities which cannot be delivered by each Purchaser, then for
cash on the same economic terms), offered to other investors. Such notice shall
describe the type of Additional Securities which the Company is offering to
each Purchaser, the price of the Additional Securities and the general terms
upon which the Company will issue same. Each

                                     - 25 -



Purchaser shall have five (5) business days from the date of mailing of any such
notice to agree to purchase its Pro Rata Share of such Additional Securities for
the price and upon the general terms specified in the notice by giving written
notice to the Company and stating therein the quantity of Additional Securities
to be purchased. Sale and issuance of the Additional Securities which Purchaser
has elected to purchase shall be effected concurrently with the closing of the
issuance of securities which gave rise to Purchaser's right to buy such
securities, but only after compliance with all governmental regulations.

                  5.7.     Amendments of Charter Documents. The Company shall
take all necessary action to amend the Certificate of Incorporation so as to
amend and restate the certificate of designation of its Series A Preferred Stock
in the form set forth as Exhibit K (the "CERTIFICATE AMENDMENTS"). The Company
shall use reasonable efforts take all steps reasonably necessary to effect any
other amendment of the Certificate of Incorporation and Bylaws (subject, where
necessary, to obtaining stockholder consent) to implement the rights and
obligations of the parties contained herein to the extent necessary or
appropriate under Delaware law.

                  5.8.     Issuance of Additional Shares of Series B Preferred
Stock. The Company shall not issue any shares of Series B Preferred Stock in
excess of the number of shares to be issued pursuant to this Agreement,
including the shares issuable pursuant to rights of participation disclosed in
Section 3.6.1 hereof, unless the Company obtains the prior written consent of
Purchasers holding a majority of the shares of Common Stock issuable upon
exercise or conversion of the securities. Without limitation of any other
remedies, the Purchasers shall be entitled to injunctive relief to prevent any
issuance prohibited by this Section.

         6.       Additional Covenants of the Parties.

                  6.1.     Conditions to the First Closing, Sanmina Closing and
Third Closing. The Company and each Purchaser, severally and not jointly, agree
to use their respective commercially reasonable best efforts to ensure that the
conditions set forth in Sections 7, 8 and 9 are satisfied, insofar as such
matters are within their respective control. In that regard, each party hereto,
at the request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things (including, but not
limited to, all action reasonably necessary to seek and obtain any and all
consents and approvals of any government or regulatory authority or person
required in connection with the transactions contemplated under this Agreement);
provided, however, that Purchasers shall not be obligated to consent to any
payment by the Company (or any modification of any contract) requested in
connection with the delivery of any consent, and no party shall be obligated to
make a payment of money as a condition to obtaining any such consent or
approval.

                  6.2.     Nominees. The Company shall cause the Board of
Directors of the Company and any nominating committee thereof (subject to its
fiduciary duties) to take such steps as are necessary to nominate for election
at the next two annual meetings of the Company's shareholders individuals to be
designated by the Purchaser Representative (up to a maximum of 4 directors,
subject to a proportionate increase if the size of the Board is

                                     - 26 -



increased above 7 members), provided that such obligation shall expire in the
event this Agreement is terminated prior to the Third Closing.

                  6.3.     Board Observation. In addition to, and without
limiting the generality of, Section 6.2 above, from the date hereof until the
consummation of the Third Closing (or the termination of this Agreement), the
Company shall permit one designee of Purchaser Representative to, attend, but
not vote on any proposals at, all meetings (including in person and telephonic
meetings) of the Company's Board and all committees thereof. The Company shall
provide Purchaser Representative and it's designee with copies of all notices of
such meetings sent to the Company's directors as well as copies of all materials
distributed to the Company's directors in connection with such meetings (which
may be sent via facsimile or e-mail) at the same time such notices and materials
are provided to members of the board.

                  6.4.     Transaction Documents. At each Closing, each party
shall, and shall cause each of its affiliates to, execute and deliver to the
other party the Transaction Documents that are to be delivered at the such
Closing.

                  6.5.     Regulatory Approval. The Company and each Purchaser
shall use commercially reasonable efforts to file, as soon as practicable after
the date of this Agreement, all notices, reports and other documents required to
be filed with any Governmental Authority with respect to the transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Authority. Each of the Company
and each Purchaser shall (A) give the other parties hereto prompt notice of the
commencement of any action, suit, litigation, arbitration, preceding or
investigation ("LEGAL PROCEEDING") by or before any Governmental Authority with
respect to the transactions contemplated by this Agreement and (B) keep the
other party informed as to the status of any such Legal Proceeding.

                  6.6.     Disclosure; Public Announcements. At all times at or
before the Third Closing, no party hereto will issue or make any reports,
statements or releases to the public with respect to this Agreement or the
transactions contemplated hereby without the consent of the other party hereto,
which consent shall not be unreasonably withheld. If either party hereto is
unable to obtain, after reasonable effort, the approval of its public report,
statement or release from the other party hereto and such report, statement or
release is, in the opinion of legal counsel to such party, required by law in
order to discharge such party's disclosure obligations, then such party may make
or issue the legally required report, statement or release and promptly furnish
the other parties with a copy thereof. Each party hereto will also obtain the
prior approval of the other party hereto of any press release to be issued
announcing the consummation of the transactions contemplated by this Agreement;
provided, however, no such press release shall be issued prior to consummation
of the First Closing.

                  6.7.     No General Solicitation or General Advertising. In
the case of each issuance of securities, including, without limitation, the
Shares, Warrants, the Tranche I Notes and the Sanmina Notes, pursuant to the
terms of this Agreement, each Purchaser and the Company, including any of such
Purchaser's or Company's representatives, agree not to use any form of general
solicitation or general advertising, including without limitation,

                                     - 27 -



advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

                  6.8.     Other Sales of Series B Preferred Stock. Except as
contemplated by Section 3.6.1 and within the limits set forth therein, the
Company shall not at any time in the future (whether before or after the Third
Closing), issue, offer to sell, sell or enter into any agreement to issue or
sell any shares of Series B Preferred Stock (other than the Shares contemplated
hereby) to any purchaser without the consent of the Purchaser Representative.
The participation rights described in Section 3.6.1 shall be honored by
increasing (to the extent necessary) the number of securities to be sold
hereunder, and not by reducing any Purchaser's allocation hereunder.

         7.       Conditions to the First Closing

                  7.1.     Conditions to Purchasers' Obligations at the First
Closing. The Purchasers' obligations to purchase the Tranche I Notes and First
Issuance Warrants at the First Closing are subject to the satisfaction (or
waiver by Purchaser Representative), at or prior to the First Closing, of the
following conditions:

                           7.1.1.   Representations and Warranties True. All of
the Company's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
First Closing Date as if then made. Each of the representations and warranties
that contain an express materiality qualification or are qualified by "Material
Adverse Effect" shall have been accurate in all respects as of the date of this
Agreement, and shall be accurate in all respects as of the First Closing Date as
if then made. In either case, any representation or warranty made as of a
specific date shall be true and correct as of such specific date.

                           7.1.2.   Performance of Obligations. The Company
shall have performed in all material respects all covenants and obligations
herein required to be performed or observed by it on or prior to the First
Closing.

                           7.1.3.   Consents, Permits, and Waivers. On or prior
to the First Closing Date, Purchasers and the Company shall have obtained the
consents necessary for consummation of the transactions contemplated by this
Agreement and the other Transaction Documents from Silicon Valley Bank,
Commercial Finance Division and Sanmina. Purchasers shall also have received
reasonable assurances from NASDAQ that it will not object to the submission of
the Shareholder Proposals to the Company's stockholders or to the consummation
of the transactions contemplated hereby.

                           7.1.4.   Absence of Restraint. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by any court or other Governmental Authority and
not rescinded or overturned. No litigation instituted by any governmental body
or other regulatory authority shall be

                                     - 28 -



pending to restrain or invalidate any material part of the transactions
contemplated by this Agreement.

                           7.1.5.   Absence of Material Adverse Change. There
shall not have occurred after the date hereof any material adverse change in the
business, properties, results of operation, financial condition or prospects of
the Company and its Subsidiaries taken as a whole.

                           7.1.6.   Voting Agreements. The Company shall have
delivered to Purchasers Voting Agreements covering 1,312,479 shares (17.91%) of
outstanding Common Stock and a majority of the shares of outstanding Series A
Preferred Stock.

                           7.1.7.   Termination of Agreements. The agreements
set forth on Schedule 7.1.7 shall have been terminated by the parties thereto
and the Company released from all obligations thereunder.

                           7.1.8.   Compliance Certificate. The Company shall
have delivered to Purchasers a Compliance Certificate, executed by the President
and the Chief Financial Officer of the Company, dated as of the First Closing
Date, to the effect that the conditions specified in Sections 7.1.1 through
7.1.7 have been satisfied.

                           7.1.9.   Legal Opinion. Purchasers shall have
received from Latham & Watkins LLP an opinion addressed to it, dated as of the
First Closing date, covering the matters set forth in Exhibit H and otherwise in
form and substance satisfactory to Purchaser Representative.

                  7.2.     Conditions to Obligations of the Company. The
Company's obligation to issue and sell the Tranche I Notes and First Issuance
Warrants at the First Closing is subject to the satisfaction (or waiver by the
Company), on or prior to the First Closing, of the following conditions:

                           7.2.1.   Representations and Warranties True. All of
the Purchaser's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
First Closing Date as if then made. Each of the representations and warranties
that contain an express materiality qualification or are qualified by "Material
Adverse Effect" shall have been accurate in all respects as of the date of this
Agreement, and shall be accurate in all respects as of the First Closing Date as
if then made. In either case, any representation or warranty made as of a
specific date shall be true and correct as of such specific date.

                           7.2.2.   Performance of Obligations. Purchasers shall
have performed in all material respects all covenants and obligations herein
required to be performed or observed by it on or prior to the First Closing.

                           7.2.3.   Consents, Permits, and Waivers. On or prior
to the First Closing Date, the Company shall have obtained the consents
necessary for consummation of

                                     - 29 -



the transactions contemplated by this Agreement and the other Transaction
Documents from Silicon Valley Bank, Commercial Finance Division and Sanmina.

                           7.2.4.   Absence of Restraint. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by any court or other Governmental Authority.

         8.       Conditions to the Sanmina Closing

                  8.1.     Conditions to Purchasers' Obligations at the Sanmina
Closing. Purchasers' obligations to purchase the Sanmina Notes at the Sanmina
Closing is subject to the satisfaction (or waiver by Purchaser Representative),
at or prior to the Sanmina Closing, of the following conditions:

                           8.1.1.   Stockholder Approval. On or prior to the
Sanmina Closing Date, the Shareholder Proposals shall have been approved by the
affirmative vote of the holders a majority of the each class of capital stock of
the Company represented and voting on such matters (the "REQUISITE VOTE").

                           8.1.2.   Sanmina Deliveries. Sanmina and Sanmina ULC
shall have executed and delivered to the Purchasers an assignment of their
rights to payment and security under the Settlement Agreement and related
Sanmina Security Agreement in form and substance reasonably acceptable to the
Purchasers;

                           8.1.3.   Sanmina Release. Sanmina and Sanmina ULC
shall have executed and delivered to the Purchasers a release of the Purchasers
and the Company from all claims arising out of the Settlement Agreement and
related Sanmina Security Agreement, signed by Sanmina and Sanmina ULC, the form
of which shall be reasonably acceptable to the Purchasers and the Company.

                           8.1.4.   Legal Opinion. Purchasers shall have
received from Latham & Watkins LLP an opinion addressed to it, dated as of the
Sanmina Closing date, covering the matters set forth in Exhibit L and otherwise
in form and substance satisfactory to Purchaser Representative.

                  8.2.     Conditions to the Company's Obligations at the
Sanmina Closing.

                           8.2.1.   Delivery of Release. Sanmina shall have
executed and delivered to the Company a release of the Company from all claims
arising out of the Settlement Agreement and related Sanmina Security Agreement,
signed by Sanmina and Sanmina ULC and in form and substance reasonably
acceptable to the Company.

         9.       Conditions to the Third Closing.

                  9.1.     Conditions to Purchasers' Obligations at the Third
Closing. Purchasers' obligations to purchase the Third Issuance Shares at the
Third Closing are subject to the satisfaction (or waiver by Purchaser
Representative), at or prior to the Third Closing, of the following conditions:

                                     - 30 -



                           9.1.1.   Representations and Warranties True. All of
the Company's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
First Closing Date as if then made. In the reasonable discretion of Purchaser's
based on their ongoing due diligence investigation of the Company, each of the
representations and warranties that contain an express materiality qualification
or are qualified by "Material Adverse Effect" shall have been accurate in all
respects as of the date of this Agreement, and shall be accurate in all respects
as of the First Closing Date as if then made. In either case, any representation
or warranty made as of a specific date shall be true and correct as of such
specific date.

                           9.1.2.   Performance of Obligations. The Company
shall have performed in all material respects all covenants and obligations
herein required to be performed or observed by it on or prior to the Third
Closing.

                           9.1.3.   Consents, Permits, and Waivers. On or prior
to the Third Closing Date, Purchasers and the Company shall have obtained any
and all consents, permits and waivers necessary for consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
(except for such as may be properly obtained subsequent to the Third Closing)
unless the failure to obtain such consents, permits or waivers is a result of a
breach by Purchasers.

                           9.1.4.   Absence of Restraint. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by any court or other Governmental Authority and
not rescinded or overturned. No litigation instituted by any governmental body
or other regulatory authority shall be pending to restrain or invalidate any
material part of the transactions contemplated by this Agreement.

                           9.1.5.   Absence of Material Adverse Change. There
shall not have occurred after the date hereof any material adverse change in the
business, properties, results of operation, financial condition or prospects of
the Company and its Subsidiaries taken as a whole. For purposes of the
foregoing, a mere change in the trading value of the Company's common stock or
change in the Company's listing from Nasdaq NM to Nasdaq SmallCap shall not be
deemed a material adverse change.

                           9.1.6.   Stockholder Approval. On or prior to the
Third Closing Date, the Shareholder Proposals shall have been approved by the
affirmative vote of the holders a majority of the each class of capital stock of
the Company represented and voting on such matters (the "REQUISITE VOTE").

                           9.1.7.   Certificate of Designation. The Certificate
of Designation and the Certificate Amendments shall have been duly filed with
the Secretary of State of the State of Delaware.

                           9.1.8.   Compliance Certificate. The Company shall
have delivered to Purchasers a Compliance Certificate, executed by the President
and the Chief Financial

                                     - 31 -



Officer of the Company, dated as of the Third Closing Date, to the effect that
the conditions specified in Sections 9.1.1 through 9.1.7 have been satisfied.

                           9.1.9.   Sanmina Closing. The Sanmina Closing shall
have occurred as described herein.

                           9.1.10.  Legal Opinion. Purchasers shall have
received from Latham & Watkins LLP an opinion addressed to it, dated as of the
Third Closing Date, covering the matters set forth in Exhibit K and otherwise in
form and substance satisfactory to Purchaser Representative.

                           9.1.11.  Purchaser Comfort. Purchasers shall have
determined, in their reasonable and good faith discretion, that the conditions
set forth in Section 9.1.1 have been fulfilled.

                  9.2.     Conditions to Obligations of the Company. The
Company's obligation to issue and sell the Third Issuance Shares at the Third
Closing is subject to the satisfaction (or waiver by the Company), on or prior
to the Third Closing, of the following conditions:

                           9.2.1.   Representations and Warranties True. All of
the Purchaser's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
First Closing Date as if then made. Each of the representations and warranties
that contain an express materiality qualification or are qualified by "Material
Adverse Effect" shall have been accurate in all respects as of the date of this
Agreement, and shall be accurate in all respects as of the First Closing Date as
if then made. In either case, any representation or warranty made as of a
specific date shall be true and correct as of such specific date.

                           9.2.2.   Performance of Obligations. Purchasers shall
have performed in all material respects all covenants and obligations herein
required to be performed or observed by it on or prior to the Third Closing.

                           9.2.3.   Absence of Restraint. No order to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby shall have been entered by any court or other Governmental Authority.

                           9.2.4.   Stockholder Approval. On or prior to the
Third Closing Date, the Shareholder Proposals shall have been approved by the
Requisite Vote of the Company's stockholders.

         10.      Termination.

                  10.1.    Termination. The obligations of the parties contained
herein relating to the sale and purchase of the Third Issuance Shares (the
"THIRD ISSUANCE AGREEMENTS") may be terminated at any time prior to the Third
Closing Date:

                                     - 32 -



                           10.1.1.  By mutual agreement of the Company and
Purchaser Representative;

                           10.1.2.  By either the Company or Purchaser
Representative if:

                                    (a)      the Third Closing shall not have
         been consummated by July 31, 2003 (such date being referred to as the
         "Expiration Date"); provided, however, that if the Third Closing shall
         not have been consummated by the Expiration Date due primarily to
         delays in receiving clearance of the Proxy Statement from the SEC
         despite the good faith efforts of the Company to file the Proxy
         Statement and amendments thereto on a timely basis and obtain such
         clearance, then the Expiration Date shall be extended to September 30,
         2003, and provided further that no party may terminate this Agreement
         under this Section 10.1.2(a) if the failure to consummate the Third
         Closing is attributable to a failure on the part of the party seeking
         to terminate this Agreement to perform any obligation required to be
         performed by such party at or prior to the Third Closing Date;

                                    (b)      the Requisite Vote of the Company's
         stockholders shall not have been obtained at the Stockholders Meeting
         duly convened and finally adjourned; or

                                    (c)      any Governmental Authority shall
         have issued an injunction, order or decree (a "RESTRAINT") or taken any
         other action permanently enjoining, restraining or otherwise
         prohibiting the consummation of the transactions contemplated by this
         Agreement and such Restraint or other action shall become final and
         non-appealable, provided the party seeking to terminate this Agreement
         shall have used its best efforts to prevent entry of and to remove such
         Restraint.

         Notwithstanding the foregoing, the Expiration Date shall in no event be
         extended beyond the expiration date of that certain letter agreement
         dated as of March 12, 2003, from Sanmina to the Purchasers relating to
         the Sanmina Purchase, unless (and only to the extent) the Purchaser
         Representative specifies to the contrary by written notice to the
         Company.

                           10.1.3.  By Purchaser Representative if:

                                    (a)      the Board (i) shall have failed to
         recommend, or shall have withdrawn, modified or changed in a manner
         adverse to any Purchaser its approval or recommendation, of the
         Transaction Documents, the Purchaser Acquisitions or the other
         transactions contemplated thereby, or the Board or any committee
         thereof shall have resolved to take any of the foregoing actions, (ii)
         shall have submitted or recommended to the stockholders of the Company
         or shall have approved a Transaction Proposal, (iii) shall have
         accepted or recommended to its stockholders a Superior Proposal, or
         (iv) shall have publicly announced its intention to do any of the
         foregoing;

                                    (b)      the Company shall have breached or
         failed to perform in any material respect any of its representations or
         warranties (with respect to

                                     - 33 -



         materiality, in a manner such that the condition in Section 7.1.1 or
         9.1.1 would not be satisfied), or covenants or other agreements
         contained in this Agreement, which breach or failure to perform cannot
         be or has not been cured within five days after the giving of written
         notice to the Company of such breach and which, as a result of such
         breach, considered either individually or in the aggregate, any
         condition to Purchasers' obligations to consummate the First Closing or
         the Third Closing set forth in Section 7.1 or 9.1 would not at that
         time be satisfied (a "COMPANY MATERIAL BREACH") (provided that
         Purchasers are not then in Purchaser Material Breach (as defined below)
         of any representation, warranty, covenant or other agreement contained
         in this Agreement); or

                                    (c)      the Company shall have breached or
         failed to perform in any respect any of its obligations under Section
         5.5; provided the Company shall be deemed to have breached its
         obligations under Section 5.5 if any Affiliated Person of the Company,
         or any Representative of the Company and its Affiliated Persons, shall
         have engaged in any activities prohibited by Section 5.5.

                           10.1.4.  By the Company, if (i) Purchasers shall have
breached or failed to perform in any material respect any of their
representations or warranties (with respect to materiality, in a manner such
that the condition in Section 7.2.1 or 9.2.1 would not be satisfied), or
covenants or other agreements contained in this Agreement, which breach or
failure to perform cannot be or has not been cured within five days after the
giving of written notice to Purchasers of such breach and which, as a result of
such breach, considered either individually or in the aggregate, any condition
to the Company's obligations to consummate the Sanmina Closing, the First
Closing or the Third Closing would not at that time be satisfied (a "PURCHASER
MATERIAL BREACH") (provided that the Company is not then in Company Material
Breach of any representation, warranty, covenant or other agreement contained in
this Agreement), or (ii) the Board shall have withdrawn or modified in a manner
adverse to any Purchaser the Board's approval of the Transaction Documents or
(iii) the Board has accepted a Superior Proposal in accordance with the
provisions of Section 5.5 hereof.

                  10.2.    Effect of Termination. In the event of the
termination of the Third Issuance Agreements pursuant to Section 10.1, the Third
Issuance Agreements shall become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders, except as
set forth in Section 11. Notwithstanding the foregoing, nothing in this Section
10.2 or in Section 11 shall relieve any party to this Agreement of liability for
fraud in connection with this Agreement.

         11.      Fees and Expenses.

                  11.1.    Except as contemplated by Section 10.2, all costs and
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.

                  11.2.    At the First Closing and the Third Closing (or upon
termination of this Agreement by the Company or Purchaser Representative under
Section 10.1.2 or by the Purchaser Representative under Section 10.1.3, other
than a termination by the Company

                                     - 34 -



under 10.1.2(a) if the failure to close by the Expiration Date arises primarily
out of a Purchaser Material Breach), the Company shall pay from the proceeds of
the sale of the Tranche I Notes or the Third Issuance Shares (as applicable) the
reasonable fees and expenses of Irell & Manella LLP as counsel to Purchasers and
of FTI Consulting; provided that the Company's payments under this Section 11.2
combined shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate, of which no more than $125,000 shall be payable at the First Closing,
provided that remaining payments at the Third Closing (or upon the termination
described above) may include any costs incurred prior to the First Closing to
the extent not covered by the first $125,000; provided, the Purchaser
Representative shall provide the Company with copies of statements from Irell &
Manella LLP prior to the Third Closing. Further, the $20,000 paid to FTI
Consulting prior to the date hereof shall apply toward such payments. In
connection with the First Closing and the Third Closing, Purchasers may remit
payment for such fees directly to Irell & Manella LLP and FTI Consulting, and
such remittance shall constitute payment to the Company for purposes of
satisfying such Purchasers' payment obligations to the Company at such Closing.

         12.      Miscellaneous.

                  12.1.    Purchaser Representative. Each Purchaser hereby
irrevocably appoints Henry Sweetbaum as agent and attorney-in-fact (the
"PURCHASER REPRESENTATIVE") for each such Purchaser, for and on behalf of the
Purchasers, to give and receive notices and communications, to object to such
deliveries, to agree to, negotiate, enter into settlements and compromises of
this Agreement, comply with orders of courts and awards of arbitrators with
respect to such any claims under this Agreement, and to take all actions
necessary or appropriate in the judgment of the Purchaser Representative for the
accomplishment of the foregoing. Each of the Purchasers acknowledges and agrees
that this appointment and power of attorney is irrevocable during the term of
this Agreement and is coupled with an interest; provided, however, that such
agency may be changed by the Purchasers from time to time upon not less than
five (5) days prior written notice to Company; provided, further, that the
Purchaser Representative may not be removed unless Purchasers that are allocated
two-thirds of the Shares to be acquired hereunder agree to such removal and to
the identity of the substituted Purchaser Representative. Any vacancy in the
position of Purchaser Representative may be filled by approval of the holders of
a majority in interest of the Shares to be acquired hereunder. No bond shall be
required of the Purchaser Representative, and the Purchaser Representative shall
not receive compensation for his services other than compensation (if any) paid
to Purchaser Representative by the Purchasers which the Purchasers have
separately agreed to provide to Purchaser Representative. Notices or
communications to or from the Purchaser Representative shall constitute notice
to or from each of the Purchasers.

                  12.2.    Survival of Representations, Warranties and
Agreement. Notwithstanding any investigation made by any party to this
Agreement, the representations and warranties made by the Company and Purchaser
in connection with the First Closing and the Third Closing shall survive the
First Closing and Third Closing, respectively, for a period of 18 months (other
than the representations and warranties of the Company set forth in Sections
3.1, 3.2, 3.4.1, 3.4.2(iii), 3.5 and 3.6, which shall survive indefinitely or,
if

                                     - 35 -



applicable, for the period ending 90 days after the expiration of the applicable
statute of limitations), and shall thereafter be of no further force or effect,
except in the case of fraud in connection with this Agreement. All covenants and
agreements contained in this Agreement (except to the extent the Third Issuance
Agreements are terminated pursuant to Section 10) shall survive the First
Closing Date and Third Closing Date in accordance with their terms.

                  12.3.    Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be in writing, shall be
mailed by first-class registered or certified airmail, or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as follows:

                           if to the Company, to:

                                    Novatel Wireless, Inc.
                                    9360 Towne Centre Drive, Suite 110
                                    San Diego, CA  92121
                                    Attention: Patrick Waters, Esq., General
                                               Counsel, and Peter
                                               Leparulo, Chief Executive Officer

                           with a copy so mailed to:

                                    Latham & Watkins LLP
                                    633 West Fifth Street, Suite 4000
                                    Los Angeles, CA 90071-2007
                                    Attention: J. Scott Hodgkins, Esq.

                           if to any Purchaser to the address set forth for such
                                    Purchaser on the signature pages hereto;

                           with a copy so mailed to:

                                    Irell & Manella LLP
                                    1800 Avenue of the Stars, Suite 900
                                    Los Angeles, CA  90067
                                    Attention: Alvin G. Segel, Esq.

                  12.4.    Force Majeure. In addition to the foregoing, no party
shall be deemed to have breached this Agreement solely by reason of delay or
failure in performance resulting from any cause, condition or event beyond the
reasonable control of the Company, including, but not limited to, acts of God,
fire, flood, war (or significant terrorist activity), government action
(including eminent domain), accident, or inability to obtain material,
utilities, equipment or transportation (any such cause, condition or event a
"FORCE MAJEURE EVENT"). The parties agree to cooperate in an attempt to overcome
such Force Majeure Event and consummate the transactions contemplated by this
Agreement, but, if either party reasonably believes that its interests would be
materially and adversely affected by proceeding, such party shall be entitled to
terminate this Agreement.

                                     - 36 -



                  12.5.    Assignability and Enforceability. This Agreement
shall be binding on and enforceable by the parties and their respective
successors and permitted assigns. No party may assign any of its rights,
benefits or obligations under this Agreement to any person without the prior
written consent of the other party (which shall not be unreasonably withheld);
provided, however, that any Purchaser may assign its rights or obligations to
purchase any securities under this Agreement, without the prior consent of the
Company, to any other Purchaser or to any affiliate of any Purchaser (or any
fund or account managed by any Purchaser) that is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act, provided that the
assignee executes an assumption agreement reasonably satisfactory to the Company
pursuant to which it shall make the representations and warranties set forth in
Section 4 hereof. No such assignment shall relieve the Purchasers of their
obligations under this Agreement.

                  12.6.    Amendments and Waivers. No amendment or waiver of any
provision of this Agreement shall be binding on any party unless consented to in
writing by such party. No waiver of any provision of this Agreement shall be
construed as a waiver of any other provision nor shall any waiver constitute a
continuing waiver unless otherwise expressly provided. No provision of this
Agreement shall be deemed waived by a course of conduct including the act of
closing unless such waiver is in writing signed by all parties and stating
specifically that it was intended to modify this Agreement.

                  12.7.    Entire Agreement. This Agreement and the other
Transaction Documents, including the Schedules and Exhibits and any agreements
or documents referred to herein or therein or executed contemporaneously
herewith or therewith, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.

                  12.8.    Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.

                  12.9.    Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

                  12.10.   Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard to the choice of law provisions thereof.

                  12.11.   Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

                                     - 37 -



         13.      Note Agent.

                  13.1.    Appointment. With respect to the Tranche I Notes and
the Sanmina Notes, each Purchaser hereby irrevocably appoints PS Capital LLC as
agent and attorney-in-fact (the "AGENT"), for and on behalf of each such
Purchaser, and Agent is irrevocably authorized and empowered to (i) enter into
the security agreement with respect to the Tranche I Notes ("TRANCHE I SECURITY
AGREEMENT") for the pro rata benefit of holders of the Tranche I Notes ("TRANCHE
I HOLDERS") and enter into the security agreement with respect to the Sanmina
Notes ("SANMINA SECURITY AGREEMENT") for the pro rata benefit of holders of the
Sanmina Notes ("SANMINA HOLDERS"); hold the Collateral as defined in the Tranche
I Security Agreement ("TRANCHE I COLLATERAL") for the pro rata benefit of the
Tranche I Holders, and to hold the Collateral (as defined in the Sanmina
Security Agreement ("SANMINA COLLATERAL")) for the pro rata benefit of the
Sanmina Holders; (ii) exercise such authority, rights, powers, and duties
hereunder as specifically are delegated to and accepted by the Agent hereunder;
and (iii) take such other action in connection with the foregoing as the Tranche
I Holders and the Sanmina Holders, respectively, may from time to time direct in
accordance with the terms and conditions of this Agreement, the Tranche I Notes
and the Tranche I Security Agreement, and the Sanmina Notes and the Sanmina
Security Agreement, respectively. (For purposes of this Section 13: each of the
Tranche I Holders and the Sanmina Holders shall be referred to as a "HOLDER";
each of the Tranche I Collateral and the Sanmina Collateral shall be referred to
as the "COLLATERAL"; each of the Tranche I Notes and the Sanmina Notes shall be
referred to as a "NOTE"; each of the Tranche I Security Agreement and the
Sanmina Security Agreement shall be referred to as a "SECURITY AGREEMENT"; and,
"REQUIRED HOLDERS" shall mean, with respect to either the Tranche I Notes or the
Sanmina Notes, at any time, holders of such Notes having more than 50% of the
outstanding unpaid principal amounts thereunder.) PS Capital LLC hereby accepts
its appointment as Agent with respect to the Notes, the Collateral and the
Security Agreements and agrees to perform the duties of the Agent specified
herein, and therein, respectively and to exercise the powers granted hereby and
thereby, in either case in accordance with the terms hereof or thereof, as the
case may be.

                  13.2.    Fees. Each Holder severally agrees to pay or cause to
be paid the Agent its pro rata share (based on the relative percentage of the
Notes held by such Holder) of all the fees, costs and expenses incurred in good
faith by the Agent (including, without limitation, the fees and disbursements of
its counsel and other advisers as the Agent reasonably elects to retain) (i)
arising in connection with this Agreement, the Notes and the Security
Agreements, in connection with the administration of the Collateral, the sale or
other disposition thereof pursuant to the Security Agreements and the
preservation, protection or defense of the Holders' rights under the Notes and
the Agent's rights under the Security Agreements and in and to the Collateral or
(ii) incurred in good faith by the Agent in connection with the resignation or
removal of the Agent pursuant to Section 13.12.

                  13.3.    Duties, Powers and Rights of the Agent.

                           13.3.1.  Specific Duties of the Agent. The Agent
shall have the following duties:

                                     - 38 -



                                    (a)      upon the receipt by it of
         instructions from the Required Holders (as defined below), execute and
         deliver on behalf of the Holders such documents as the Required Holders
         shall deem necessary or appropriate and provide to the Agent from time
         to time to maintain the perfection of any lien in, to or upon the
         Collateral or any portion thereof, that has been, are or will be
         granted in favor of the Agent pursuant to the Security Agreements;

                                    (b)      accept, on behalf of the Holders,
         any part of the Collateral delivered to it, including, without
         limitation, any certificated securities, instruments and documents, and
         execute and deliver, on behalf of the Holders, such documents or
         instruments as the Required Holders deem necessary or appropriate and
         provide to the Agent to evidence the creation of any lien with respect
         thereto and to perfect such lien;

                                    (c)      upon the receipt by it of written
         instructions executed by the Required Holders, release the Collateral
         or any portion thereof from any liens thereon that were created
         pursuant to the Security Agreements;

                                    (d)      furnish to the Holders, promptly
         upon receipt thereof, duplicates of all reports, notices, requests,
         demands, certificates and other documents received by it under this
         Agreement, the Notes, the Security Agreements or other documents
         provided for herein or therein;

                                    (e)      provide to the Holders a copy of
         all written notices received from the Company with respect to any
         capital stock or securities that constitute Collateral and, upon
         receipt by it of written instructions of the Holders, exercise all
         rights and powers determined by the Required Holders that are
         appurtenant to any such capital stock or securities that become a part
         of the Collateral, including, without limitation, the right to vote
         stock, to receive dividends or other distributions, and to grant or
         refrain from granting any consent or waiver, all in accordance with
         such written instructions;

                                    (f)      inform the Holders in writing of
         the existence of any Default or Event of Default (as defined in the
         Notes) promptly upon learning of the same; provided, however, that the
         Agent shall not be deemed to have any knowledge whatsoever of any
         Default or Event of Default unless the Agent has actually received
         written notice stating that a Default or an Event of Default has
         occurred from any of the Holders or the Company;

                                    (g)      upon receipt by it of written
         instructions of the Required Holders, take those actions determined by
         the Required Holders as necessary to protect and preserve the
         Collateral and realize on and foreclose upon the Collateral, including,
         without limitation, initiating and defending any and all actions or
         proceedings that may be brought affecting any of the Collateral or any
         portion thereof or otherwise pursue any remedies available to any
         Holder or to it in respect of the Collateral or any portion thereof,
         which actions may include, without limitation, initiating and
         conducting any public or private sale or pursuing any other actions or
         remedies relating to the Collateral or any portion thereof; provided,

                                     - 39 -



         however, that the Agent shall be under no obligation to exercise any of
         its rights and powers under this Section 13 unless it shall have
         received security and indemnity satisfactory to it against any loss,
         liability or expense;

                                    (h)      provide, at the written direction
         of the Required Holders, notices required by the Notes (including
         notices of default) or the Security Agreements, or by law, to the
         Company, or any other party entitled thereto, in order to take any
         actions required or authorized to be taken under this Agreement or
         specified in written instructions of the Required Holders;

                                    (i)      receive any and all amounts of any
         kind paid pursuant to the Security Agreements and receive proceeds of
         the Collateral subsequent to an Event of Default and apply such amounts
         or proceeds as specified in Section 13.11;

                                    (j)      at the written direction of the
         Required Holders, (x) deliver notices requiring repayment of all or any
         portion of the principal amount of the Notes or declaring the Notes due
         and payable, (y) commence and prosecute any action against the Company
         in connection with any default pursuant to the Notes or the Security
         Agreements and otherwise enforce the rights of the Holders pursuant to
         the Notes and the Security Agreements, and (z) agree to waivers or
         amendments with respect to the Notes or the Security Agreements; and

                                    (k)      take, or refrain from taking, such
         other actions (but only such actions that are set forth in this
         Agreement) as the Required Holders shall from time to time direct by
         written instruction; provided, however, that the Agent may, in its sole
         discretion, refrain from taking such action (other than an action
         required or necessary to discharge any duty under Section 13.12 below)
         if the taking of such action would expose it to liability, financial or
         otherwise for which it does not receive adequate protection.

                           13.3.2.  Duties Limited.

                                    (a)      The Agent shall be obligated to
         perform such duties and only such duties as specifically set forth in
         this Agreement and no implied covenants or obligations shall be read
         into this Agreement against the Agent, and the Agent shall be obliged
         to take any actions or exercise any rights, powers or remedies which
         are discretionary with the Agent under this Agreement only as may be
         specified in a written notice from the Required Holders; provided,
         however, that the Agent shall not take any actions specified in a
         written notice if the provisions of this Agreement expressly prohibit
         such action. Except as expressly provided herein or in the Notes or the
         Security Agreements, the Agent shall not have any duty or obligation,
         express or implied, to:

             (i)      manage, control, use, maintain, sell, dispose of,
                      purchase, bid for or otherwise deal with the Collateral or
                      any portion thereof, or to otherwise take or refrain from
                      taking any action under, or in connection with this
                      Agreement, the Notes or any Security Agreement, except to
                      the extent required by law;

                                     - 40 -



             (ii)     take any action that relates to, materially affects, or
                      impairs the amounts that the Holders may recover from
                      disposition of the Collateral, including, without
                      limitation, any election or waiver of remedies available
                      under the Security Agreements, or with respect to the
                      Collateral or the manner of foreclosure upon the same;
                      any determination of the order and timing of foreclosure
                      upon any portion of the Collateral or of the amount of
                      any credit bid to be entered at any public or private,
                      judicial, or nonjudicial sale of the Collateral; the
                      pursuit of any remedies against the Company or any of
                      its Subsidiaries following the completion of foreclosure
                      upon the Collateral; the compromise or settlement of any
                      claims against the Company or any of its Subsidiaries,
                      including without limitation the conduct of any
                      negotiations relating to the same or with a view toward
                      the termination of any pending foreclosure proceedings;

             (iii)    obtain or maintain insurance on the Collateral or any
                      other insurance;

             (iv)     pay or discharge any tax, assessment or other governmental
                      charge or any lien or encumbrance of any kind owing with
                      respect to, or assessed or levied against, any part of the
                      Collateral;

             (v)      take any action or omit to take any action provided for in
                      the Security Agreements;

             (vi)     advance any monies for any purpose; or

             (vii)    except at the specific direction of the Required Holders,
                      record or file the Security Agreements, any other document
                      or any other instrument provided to it referred to herein
                      or therein with respect to any lien.

                                    (b)      In addition to and not in
         limitation of the provisions of Section 13.3.2(a), under no
         circumstances shall the Agent have any duty or obligation to take any
         actions hereunder other than those under Section 13.12, even if
         instructed to do so by the Required Holders or if expressly set forth
         herein, if the Agent determines, in its sole and absolute discretion,
         that such actions would subject it to liability or expense for which
         satisfactory indemnity to the Agent has not been provided hereunder or
         otherwise.

                                    (c)      Except as otherwise provided
         herein, the Agent shall have no obligation or liability in respect of
         the recording, rerecording, filing or refiling of any instruments,
         documents, financing statements or continuation statements or to take
         any other action hereunder with respect to the security interests
         created pursuant to the Security Agreements, and the Agent shall have
         no obligation to monitor the status of the security interests as a
         perfected security interest created hereunder or under the Security
         Agreements.

                  13.4.    Specific Powers of the Agent. In addition to all
powers necessary, appropriate, desirable or incidental to the Agent's
performance of the specific duties set forth in Section 13.3.1, the Agent is
hereby empowered and authorized to do, in its sole and

                                     - 41 -



absolute discretion, any and all of the following in connection with its
performance of such duties; provided, however, that in no event shall it have
any obligation to do so:

                           13.4.1.  establish bank accounts in its name with the
right to be the only party authorized to draw from such account or accounts;

                           13.4.2.  employ such persons, firms or professionals
as it shall reasonably deem appropriate or desirable in connection with the
performance of its duties hereunder, including, without limitation, appraisers,
auctioneers, stockbrokers, custodians of securities, fiduciaries, commercial
banks, investment banks, accountants and attorneys; and

                           13.4.3.  execute and deliver, as Agent and on behalf
of the Required Holders, any agreements, escrow instructions, bills of sale,
applications or any other documents related to or in any way connected with any
disposition of the Collateral, or any portion thereof, permitted under this
Agreement or directed by the Required Holders in accordance with the terms
hereof; provided, however, that in the event it is unwilling or unable for any
reason to execute and deliver such documents, then it promptly shall notify the
Holders of such unwillingness or inability and shall request execution and
delivery of such documents by the Holders.

                  13.5.    Written Instructions. Any written request or written
instructions required or permitted to be given hereunder to the Agent with
respect to the Notes or the Security Agreements shall be given exclusively by
the Required Holders with respect to such Notes. In the event that the Agent
receives written instructions from the Required Holders that the Agent
determines, in its sole and absolute discretion, to be ambiguous, inconsistent,
in conflict with other instructions previously received or otherwise
insufficient to direct the actions of the Agent, then the Agent shall have no
obligation whatsoever to take or refrain from taking any action pursuant to such
written instructions, but shall instead do the following:

                           13.5.1.  First, seek additional written instructions
from the Required Holders reasonably satisfactory to it; or

                           13.5.2.  Second, if the Agent is reasonably
dissatisfied with the further instructions or does not receive further
instructions pursuant to Section 13.5.1, resign as Agent in accordance with this
Agreement.

The Agent shall not be liable to any party hereto (or any Person claiming by,
through or under such party) by reason of its actions under this Section 13.5.

                  13.6.    Reliance. In acting with respect to this Agreement,
the Notes or the Security Agreements, the Agent shall be entitled to rely
conclusively:

                           13.6.1.  on any communication reasonably believed by
it to be genuine and to have been made, sent or signed by the Person by whom it
purports to have been made, sent or signed;

                                     - 42 -



                           13.6.2.  as to any matters of fact that might
reasonably be expected to be within the knowledge of the Holders or the Company,
on a certificate signed by or on behalf of any of the Holders or the Company;

                           13.6.3.  on the advice or services of any persons,
firms or professionals employed by it pursuant to Section 13.4.2 and rely upon
the opinions and statements of any professional advisor so employed; and

                           13.6.4.  on any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order, bond or other
paper or document that it reasonably believes to be genuine and to have been
signed or presented by the proper person or, in the case of cables, facsimile
transmissions, telecopies and telexes, to have been sent by the proper person.

         The Agent shall not be liable to any party hereto for any consequence
of any such relying, acting, or refraining to act. Nothing in this Section 13.6
shall impair the right of the Agent in its discretion to take or omit to take
any action that the Agent deems proper to take or omit to take if such action or
omission is not inconsistent with any notice or direction from the Holders;
provided, that the Agent shall not be under any obligation to take any action
that is discretionary with the Agent under this Agreement, the Notes or the
Security Agreements except as may be specified in a written notice from the
Required Holders.

                  13.7.    No Responsibility. The Agent does not assume any
responsibility for:

                           13.7.1.  any failure or delay in performance or
breach by the Company or its Subsidiaries of any of their respective obligations
under this Agreement, the Notes or the Security Agreements;

                           13.7.2.  the truth or accuracy of any representation
or warranty or statement given or made in connection with this Agreement or the
Security Agreements;

                           13.7.3.  the legality, validity, effectiveness,
adequacy or enforceability of this Agreement, the Notes or the Security
Agreements; or

                           13.7.4.  the validity, enforceability or sufficiency
of any agreement or instrument or any depreciation or diminution in the value of
any Collateral or income thereon.

         As to any event or occurrence in which neither the Agent nor any Person
acting on its behalf is a participant, the Agent shall be conclusively presumed
to have no knowledge of such event or occurrence, absent gross negligence or
willful misconduct, except to the extent that Agent shall have received a
written notice from any of the Holders or the Company with respect thereto.

                  13.8.    Agent Protected. The Agent shall be protected fully
in acting or refraining to act upon any certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond or paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Agent may consult with

                                     - 43 -



legal counsel with significant experience in transactions of the type
contemplated by this Agreement, and the advice of such counsel, promptly
confirmed in writing, shall constitute full and complete protection in respect
of any action taken, suffered or omitted by it under this Agreement, the Notes
and the Security Agreements in good faith and in accordance with such advice of
counsel. The Agent may execute any of its powers hereunder or perform any duties
hereunder either directly or through agents, attorneys or custodians, and the
Agent shall not be responsible for any misconduct or negligence on the part of,
or for the supervision of, any agent, attorney or custodian appointed with due
care by it hereunder; provided, however, that as between the other parties
hereto and the Agent, all such powers and duties are those of the Agent as
provided hereunder.

                  13.9.    Limitation on Liability. The Agent may not be
relieved from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct. The Agent shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to this Section 13.

                  13.10.   Liability for Money and Interest. The Agent shall not
be liable for any interest or any money received by it except as the Agent may
agree in writing. Money held in trust by the Agent need not be segregated from
other funds except as required by law.

                  13.11.   Application of Proceeds of Collateral. The receipt of
any amounts on behalf of the Holders under the Notes, the Security Agreements or
otherwise with respect to the Collateral and the proceeds of any sale,
enforcement or other disposition of any of the Collateral or any other
distribution in respect of the Collateral shall be applied by the Holders and
the Agent first, to the payment of all proper costs incurred by the Agent in the
collection thereof (including stamp or other taxes in respect of the transfer or
sale of any Collateral and the reasonable compensation, expenses and the
disbursements of the Agent and its counselors) and then in with the provisions
of the applicable Security Agreement; provided, however, any amounts to be
applied in satisfaction of the principal and interest due pursuant to the Notes
shall be paid pro rata to the Holders thereof based on the proportion of the
aggregate principal amount of such Notes held by each such Holder.

                  13.12.   Resignation Or Removal Of Agent. The Agent may, by
written notice to the Holders, at any time resign its agency under this Section
13. The Required Holders may remove the Agent by written notice to the Agent. No
such resignation or removal shall become effective, unless and until a successor
Agent under this Agreement is appointed and has accepted the appointment, with
such successor Agent to be appointed by the Required Holders; provided, however,
that if no successor Agent shall have been so appointed and shall have accepted
such appointment within thirty (30) days after the retiring Agent's giving
notice of resignation or after notice to the retiring Agent of the retiring
Agent's removal, as the case may be, then the retiring Agent may apply to any
court of competent jurisdiction, at the expense of the Holders, to appoint a
successor Agent to act until such time as a successor shall have been appointed
by the Holders. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from any further duties and
obligations under this Agreement except the duty to execute and deliver any
documents necessary to vest or

                                     - 44 -



confirm the vesting of such rights, powers, privileges, and duties in such
successor Agent and to deliver possession of any Collateral in the possession of
such retiring Agent to such successor Agent. After the retiring Agent's
resignation or removal hereunder as Agent, each reference herein to a place for
giving of notice or deliveries to the Agent shall be deemed to refer to the
principal office of the successor Agent or such other office of the successor
Agent as it may specify to each party hereto.

                  13.13.   Indemnification. The Holders severally agree to pay,
indemnify and hold the Agent and each director, officer, employee, agent, bailee
or other person acting on behalf of the Agent, and each stockholder of any
thereof, harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, the reasonable fees and disbursements of counsel and other
advisers) or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of its
obligations pursuant to this Section 13, including, without limitation, any
amendment hereto, or to the Security Agreements or the Notes, or in connection
with the transactions contemplated by this Agreement, the Security Agreements
and the Notes (including arising from the ordinary negligence of the person
seeking indemnification), unless arising from the gross negligence or willful
misconduct of the person seeking indemnification.

                  13.14.   Amendments and Waivers. Notwithstanding Section 12.6,
any terms of this Section 13 may be amended and the observance of any term
hereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Agent and
the Required Holders; provided, however, no such amendment shall increase the
liability of the Company or impose additional obligations on the Company without
the written consent of the Company.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     - 45 -



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

                                      "COMPANY"
                                      Novatel Wireless, Inc.

                                      By:/s/ Peter V. Leparulo
                                         Peter Leparulo, Chief Executive Officer

                                     - 46 -



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
BAY INVESTMENTS LIMITED                          $ 400,000                 33.33%       $   683,333

                                                                 $       916,667


By:   /s/ H. J. Pudwill
    -------------------------
Name:  H.J. Pudwill

Title: Director

Address: Suite 1806, 18/F Central Plaza
         18 Harbour Road
         WanChai,
         Hong Kong

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
MUTUAL TRUST MANAGEMENT (BERMUDA)

LIMITED AS TRUSTEE OF SOFAER FUNDS/

GLOBAL HEDGE FUND                                $ 400,000                 21.82%       $   447,272

                                                                 $       600,000


By:   /s/ M. Sofaer
    -------------------------
Name:  Michael Sofaer

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser


Address:   Hemisphere House

           9 Church Street

           P.O. Box HM 951

           Hamilton HM DX, Bermuda

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
RIT CAPITAL PARTNERS PLC.                                -                 11.52%       $   236,061

                                                                 $       316,667


By:    /s/ M. Sofaer
    ---------------------------------
Name:  Michael Sofaer

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser


Address:   Spencer House

           27 St James' Place

           London

           SW1A 1NR

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
SOEN YONG LEE                                    $ 100,000                  8.33%       $   170,833

                                                                 $       229,167


By:    /s/ Soen Yong Lee
   --------------------------
        Soen Yong Lee

Address:   # 25 - 8, Sangdo 2 -Dong
           Dongjak - Gu
           Seoul ,Korea  156-03

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
PAN INVEST & TRADE INC.                          $  50,000                  4.17%       $    85,417

                                                                 $       114,583


By:    /s/Bruno Sidler
   --------------------------

Name:     Bruno Sidler

Title:    Director

Address:   10th Floor
           8 Queen's Road Central
           Hong Kong

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
PETER LEPARULO                                   $  10,000                   .83%       $    17,083

                                                                 $        22,917


By:      /s/ Peter V. Leparulo
    ---------------------------------
          Peter Leparulo


Address:   9360 Towne Centre Drive

           Suite 110

           San Diego, CA 92121

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
CORNERSTONE EQUITY INVESTORS, LLC                $ 200,000                 16.67%       $   341,667

                                                                 $       458,333


By:    /s/ Robert H. Getz
   ---------------------------
Name:  Robert H. Getz

Title: Managing Director

Address:   717 Fifth Avenue
           Suite 1100
           New York, NY 10022

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT



"PURCHASER"



                                                                 SANMINA TRANCHE
                                                 TRANCHE I       PERCENTAGE AND         TRANCHE III
PRINTED NAME OF PURCHASER:                        AMOUNT             AMOUNT                AMOUNT
                                                                               
PS CAPITAL LLC                                   $  40,000                  3.33%       $    68,333

                                                                 $        91,667


By:    /s/ Stanley M. Blau
    ------------------------------

Name:  Stanley M. Blau

Title: Managing Director


Address:   880 Fifth Ave, Suite 19A

           New York City

           New York 10021

                          SIGNATURE PAGE TO SECURITIES
                               PURCHASE AGREEMENT

                                                                     EXHIBIT 4.2



THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND NO TRANSFER OF
THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND OF ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM UNDER SAID ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT.

                         FORM OF NOVATEL WIRELESS, INC.

                      SECURED CONVERTIBLE SUBORDINATED NOTE

$[_______]                                                        March 12, 2003
                                                           San Diego, California

         FOR VALUE RECEIVED, the undersigned, NOVATEL WIRELESS, INC., a Delaware
corporation (the "Company"), hereby promises to pay to [_______] ("Holder") at
such place as Holder shall hereafter direct by notice in writing to the Company,
the principal sum of [_______] ($[_______]) or such greater or lesser principal
amount as is then currently outstanding, in such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts, plus interest thereon at the rate provided for herein from
the date hereof, with principal and interest payable as herein provided. At
Holder's request, such payment (if required to be in cash under the terms of
this Note) shall be by wire transfer in immediately available funds to an
account to be specified by Holder.

1.       Loan, Interest Rate; Payment Provisions; Increase to Principal.

         1.1      This Note is issued pursuant to the Securities Purchase
Agreement, of even date herewith (the "Purchase Agreement"), among the Company,
the Holder and the other parties thereto. This Note is one of the Tranche I
Notes (as defined in the Purchase Agreement).

         1.2      The principal amount of this Note outstanding from time to
time shall bear interest from the date hereof through the Maturity Date (as
hereinafter defined), at a rate (the "Note Rate") equal to eight percent (8%)
per annum.

         1.3      Interest on this Note shall be computed on the basis of a
360-day year of twelve 30-day months. Unless previously paid or converted
pursuant to the terms of Sections 3.1 or 3.2 herein, all unpaid interest and
principal on this Note shall be paid in full on the Maturity Date.



         1.4      All payments made by the Company on this Note shall be applied
first to the payment of accrued, but unpaid interest on this Note and then to
the reduction of the unpaid principal balance of this Note.

         1.5      Unless converted pursuant to Section 3.2 herein, if payment of
the principal amount of this Note, together with accrued unpaid interest thereon
at the Note Rate, is not paid on the Maturity Date or when otherwise due, or if
any payment of interest is not paid when due, then interest shall accrue on such
unpaid amount at the Note Rate plus four percent (4%) from and after such date
of default to the date of the payment in full of such unpaid amount (including
from and after the date of the entry of judgment in favor of Holder in an action
to collect this Note). Any amount repaid under this Note may not be reborrowed.

         1.6      In no event shall Holder be entitled to receive interest at an
effective rate in excess of the maximum rate permitted by law.

         1.7      In the event the date for the payment of any amount payable
under this Note falls due on a Saturday, Sunday or public holiday under the laws
of the State of California, the time for payment of such amount shall be
extended to the next succeeding business day and interest at the Note Rate shall
continue to accrue on any principal amount so effected until the payment thereof
on such extended due date.

         1.8      Capitalized terms used herein shall, unless otherwise defined
herein, have the meanings assigned thereto in the Purchase Agreement. For
purposes of this Agreement the following terms shall have the following
meanings:

                  1.8.1    "Maturity Date" means the earliest of (i) March 12,
         2005, or (ii) the date on which this Note is otherwise due pursuant to
         Section 3.1 or 5.

                  1.8.2    "Note" means this Secured Convertible Subordinated
         Note.

                  1.8.3    "Tranche I Holders" means the holders of the Tranche
         I Notes, including the Holder.

         1.9      The Tranche I Holders have the right, at their election, to
make payments to Sanmina-SCI Corporation ("Sanmina") in order to continue the
Company's ability to defer payments to Sanmina beyond August 1, 2003 (at a rate
of $150,000 per month of extension), as contemplated by the letter agreement
between certain investors in the Company and Sanmina of even date herewith (the
"Sanmina Extension Payments"), which such Sanmina Extension Payments shall
reduce the Company's aggregate obligation to Sanmina under the Settlement
Agreement and Mutual Release, dated January 12, 2002, as amended. In the event
that Holder makes any Sanmina Extension Payments, the principal balance of this
Note shall be increased by the amount of such payments.

2.       Replacement of Note. In case this Note is mutilated, destroyed, lost or
stolen, the Company shall, at its sole expense, execute and deliver a new Note,
in exchange and substitution for this Note. In the case of destruction, loss or
theft, Holder shall furnish to the Company indemnity reasonably satisfactory to
the Company, and in any such case, and in the case of mutilation, Holder shall
also furnish to the Company evidence to its reasonable

                                      - 2 -



satisfaction of the mutilation, destruction, loss or theft of this Note and of
the ownership thereof. Any replacement Note so issued shall be in the same
outstanding principal amount as this Note and dated the date of this Note.

3.       Repayment, Conversion and Security.

         3.1      The Agent may, at its option, require repayment of all or any
portion of (i) the entire principal amount of, and (ii) all accrued interest on,
this Note and all of the other Tranche I Notes, to the extent then outstanding
and unpaid at any time following the occurrence of any of the following events:

                  3.1.1    in the event that prior to the Third Closing Date,
         the Company receives financing (other than non-convertible debt or as
         proceeds as a consequence of any exercise of common stock purchase
         warrants outstanding as of the date hereof) from any third party, with
         such repayment to occur concurrently with the closing of such
         financing, and from and to the extent of the proceeds of such
         financing; provided, however, the Holder, may, at its option, convert
         all or any portion of the outstanding principal and accrued interest of
         this Note into any equity securities issued in connection with such
         financing, on the same terms as the other investors in such financing,
         instead of requiring repayment of the entire principal amount and all
         accrued interest on the Note;

                  3.1.2    in the event that the Purchase Agreement terminates,
         other than by reason of the Purchasers' material breach, prior to the
         Third Closing Date, with such repayment to occur within sixty (60) days
         of such termination date; or

                  3.1.3    in the event that, for any reason other than the
         Purchasers' material breach, the Third Closing does not occur on or
         before the Expiration Date, with such repayment to occur within sixty
         (60) days of such date.

Such payment shall be made in cash; provided, however, that at Holder's
election, a portion of such payment (in an amount to be designated by Holder)
shall be effected by the issuance to Holder of that number of shares of the
Company's common stock equal to the amount of the accelerated portion of the
remaining balance divided by Seventy Cents ($0.70) (such figure shall be
adjusted appropriately to reflect any stock dividends, stock splits, reverse
stock splits, combinations, reorganizations or similar transactions affecting
the Common Stock); provided, further, that, the total number of shares of Common
Stock issuable to the Tranche I Holders in the aggregate pursuant to Section 3.1
of each of the Tranche I Notes, together with the total number of shares
issuable upon exercise of the warrants granted to Purchasers on the date of this
Note, shall not exceed 1,396,964 shares of Common Stock.

         3.2      Notwithstanding anything to the contrary herein, at the Third
Closing, the Note, to the extent not repaid pursuant to Section 3.1 above, shall
automatically (and without the need for any further action by any party) convert
into a number of shares of Series B Preferred Stock equal to (i) the total
amount of principal outstanding and accrued, unpaid interest under the Note as
of the Third Closing Date divided by (ii) $1,000.

         3.3      This Note shall be secured by a lien on all of the assets and
property of the Company (subordinate to the rights of Silicon Valley Bank and
Sanmina-SCI Corporation

                                      - 3 -



("Sanmina") as set forth in Section 7 below) pursuant to the terms of a Security
Agreement (the "Security Agreement"), dated as the date hereof, between the
Company and the Agent (for the benefit of the Tranche I Holders).

         3.4      Other than as set forth in Section 3.5, this Note shall not be
prepaid.

         3.5      Nothwithstanding Section 3.4, if the Agent submits a written
request to the Company stating that the Holder wishes to make a Sanmina
Extension Payment, then within 5 days of receipt of Agent's request, the Company
shall pre-pay a portion of the balance of this Note, in cash, in an amount
sufficient for the Holder to make such Sanmina Extension Payment.

4.       Covenants of the Company. The Company covenants and agrees that, so
long as this Note remains outstanding and unpaid, in whole or in part:

         4.1      The Company will faithfully and in all material respects
perform all of its covenants and agreements under the Security Agreement and the
Purchase Agreement and the Company will not make any loan to any person who is
or becomes a shareholder of the Company, other than for reasonable advances for
expenses in the ordinary course of business.

         4.2      The Company will promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any of its property, before the same shall become in
default; provided, however, that the Company shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
the Company, shall set aside on its books adequate reserves with respect to any
such tax, assessment, charge, levy or claim so contested.

         4.3      The Company will do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence, rights
and franchises and comply with all laws applicable to the Company as its legal
counsel may advise.

         4.4      The Company will, except for the effects of reasonable wear
and tear in the ordinary course of business, at all times maintain, preserve,
protect and keep its property used or useful in the conduct of its business in
good repair, working order and condition, and from time to time make all needful
and proper repairs, renewals, replacements, betterments and improvements
thereto.

         4.5      The Company will keep adequately insured, by financially sound
reputable insurers, all property of a character usually insured by similar
entities and carry such other insurance as is usually carried by similar
entities.

         4.6      The Company will, promptly following its obtaining knowledge
of the occurrence of an Event of Default or of any condition or event which,
with the giving of notice or the lapse of time or both, would constitute an
Event of Default, furnish a statement of the Company's Chief Financial Officer,
to Agent setting forth the details of such Event of Default or condition or
event and the action which the Company intends to take with respect thereto.

                                      - 4 -



         4.7      The Company will at all times maintain books and records in
which all of its financial transactions are duly recorded in conformity in all
material respects with generally accepted accounting principles.

         4.8      The Company will use the proceeds of the Note solely for the
working capital purposes of the Company and its Subsidiaries, including the
discharge of existing liabilities of the Company and its Subsidiaries.

         4.9      The Company shall not make any distributions to any equity
holders or affiliates of the Company (other than in connection with arm's-length
obligations to equity holders or affiliates who are suppliers or customers). In
addition, the Company shall not make contributions to, or payments on behalf of,
any Subsidiary, except as permitted pursuant to that certain Loan and Security
Agreement, dated as of November 29, 2001, between the Company and Silicon Valley
Bank, Commercial Finance Division, as amended, as in effect on the date hereof.

5.       Events of Default. If any of the following events (each an "Event of
Default") shall occur:

         5.1      The Company shall fail to pay on the due date therefor, the
principal of, or interest on, or any other amount payable under the Note or any
other Tranche I Note and such failure shall continue uncured for a period of
five (5) days from such due date, or

         5.2      The Company shall default in the due observance or performance
of any covenant, condition or agreement on the part of the Company to be
observed or performed pursuant to the terms of this Note or any other Tranche I
Note (other than the other defaults specified in Section 5) or the Company or
any Subsidiary shall default in the due observance or performance of any
covenant, condition or agreement on the part of the Company or such Subsidiary
to be observed or performed pursuant to the terms of the Security Agreement or
the Purchase Agreement and such defaults shall continue uncured for a period of
fifteen (15) days after notice thereof shall have been given to the Company by
Agent; or

         5.3      The dissolution of the Company or any Subsidiary or any vote
in favor thereof by the board of directors and shareholders of the Company or
such Subsidiary, as the case may be; or

         5.4      The Company or any Subsidiary shall resolve (including without
limitation by board action) or otherwise establish any definitive intention in
writing to file a petition seeking relief under any provision of the Federal
Bankruptcy Code or any other federal or state statute now or hereafter in effect
affording relief to debtors, or make an assignment for the benefit of creditors,
or file with a court of competent jurisdiction an application for appointment of
a receiver or similar official with respect to it or any substantial part of its
assets, or there shall be filed against the Company or any such Subsidiary any
such application or petition, which application or petition is not dismissed or
withdrawn within thirty (30) days from the date of filing thereof; or

         5.5      Any default or event of default occurs under the obligations
to Silicon Valley Bank or Sanmina (or any lender which refinances such
obligations) under the respective agreements listed on Schedule I, any of the
Sanmina Notes, if and when issued, or under any

                                      - 5 -



other obligation of the Company or any Subsidiary for borrowed money, which
default is not cured during the applicable cure period or waived in writing by
the lender or obligee; or

         5.6      The Company or any Subsidiary shall sell all or substantially
all of its assets or merge or be consolidated with or into another entity other
than, in the case of any such Subsidiary, the Company or another Subsidiary of
the Company; or

         5.7      The commencement of a proceeding to foreclose a security
interest or lien in any property or assets of the Company or any Subsidiary upon
default in the payment or performance of any debt of the Company or any such
Subsidiary in excess of $25,000 which is secured thereby; or

         5.8      Other than in connection with matters set forth on Schedule
3.10 to the Purchase Agreement, the entry against the Company or any Subsidiary
of a final judgment for the payment of money in excess of $100,000 by a court of
competent jurisdiction, which judgment shall not be discharged (or the discharge
thereof not duly provided for) in accordance with its terms within thirty (30)
days of the date of entry thereof, or a stay of execution thereof procured
within thirty (30) days from the date of entry thereof and, within such period
(or such longer period during which execution of such judgment shall have been
effectively stayed) an appeal therefrom shall not have been prosecuted and the
execution thereof caused to be stayed during such appeal; or

         5.9      An attachment or garnishment shall have been levied against
the assets of the Company or any Subsidiary involving an amount in excess of
$100,000 and such levy is not vacated, bonded or otherwise terminated within
thirty (30) days after the date of the effectiveness of the levy;

then, upon the occurrence of any such Event of Default and at any time
thereafter, the Agent shall have the right to declare the principal of, accrued
unpaid interest on, and all other amounts payable under all of the Tranche I
Notes (including this Note) to be forthwith due and payable, whereupon all such
amounts shall be immediately due and payable to Holder, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived; provided, however, in case of the occurrence of an Event of Default
under Section 5.3 or 5.4, such amounts shall become immediately due and payable
without any such declaration by the Agent.

6.       Suits for Enforcement and Remedies. If any one or more Events of
Default shall occur and be continuing, the Agent may proceed to (i) protect and
enforce Holder's rights either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, condition or agreement
contained in this Note or in any agreement or document referred to herein or in
aid of the exercise of any power granted in this Note or in any agreement or
document referred to herein, (ii) enforce the payment of this Note, or (iii)
enforce any other legal or equitable right of the holder of this Note. No right
or remedy herein or in any other agreement or instrument conferred upon the
holder of this Note is intended to be exclusive of any other right or remedy,
and each and every such right or remedy shall be cumulative and shall be in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.

                                      - 6 -



7.       Seniority. This Note shall be senior in priority to the payment of all
other debts of the Company, whether now existing or hereinafter incurred, other
than the obligations of the Company to Silicon Valley Bank and Sanmina now
existing as shown on the attached Schedule I hereto and trade payables and, if
and when issued, the Sanmina Notes described in the Purchase Agreement (each of
which may be pari passu with the repayment of this Note).

8.       Unconditional Obligation; Fees, Waivers, etc.

         8.1      The obligations to make the payments provided for in this Note
are absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever.

         8.2      If Agent shall seek to enforce the collection of any amount of
principal of and/or interest on this Note, there shall be immediately due and
payable from the Company, in addition to the then unpaid principal of, and
accrued unpaid interest on, this Note, all reasonable costs and expenses
incurred by Agent or the Holder in connection therewith, including, without
limitation, attorneys' fees and disbursements.

         8.3      No forbearance, indulgence, delay or failure to exercise any
right or remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy.

         8.4      Any term, covenant, agreement or condition of this Note may be
amended or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
signed written consent of the Agent and the Company.

         8.5      The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of protest,
bringing of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right, lien, interest or property at any
and all times which Agent had or is existing as security for any amount called
for hereunder, except as specifically provided herein.

9.       Restriction on Transfer. This Note has not been registered under the
securities laws of the United States of America or any state thereof. This Note
has been acquired for investment, accordingly, no interest in this Note may be
offered for sale, sold or transferred in the absence of registration and
qualification of this Note under applicable federal and state securities laws or
an opinion of counsel of Holder reasonably satisfactory to the Company that such
registration and qualification are not required.

10.      Miscellaneous.

         10.1     The headings of the various paragraphs of this Note are for
convenience of reference only and shall in no way modify any of the terms or
provisions of this Note.

                                      - 7 -



         10.2     The provisions of this Note are severable and, if any one
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction.

         10.3     Notices, demands or other communications given or made in
connection with this Note shall be in writing and delivered in accordance with
the provisions of the Purchase Agreement.

         10.4     This Note and the obligations of the Company and the rights of
Holder shall be governed by and construed in accordance with the internal
substantive laws of the State of California without giving effect to the choice
of laws rules thereof.

         10.5     The Company and the Holder (a) agree that any legal suit,
action or proceeding arising out of or relating to this Note will be instituted
exclusively in the courts of the State of California sitting in the County of
Los Angeles, or any Federal court in such State, (b) waive any objection which
such party may have now or hereafter based upon forum non conveniens or to the
venue of any such suit, action or proceeding, and (c) irrevocably consent to the
jurisdiction of the State Courts located in said State in any such suit, action
or proceeding. Each such party further agrees to accept and acknowledge service
of any and all process which may be served in any such suit, action or
proceeding in said courts in said State, and agrees that service of process upon
such party, mailed by certified mail to such party's address, will be deemed in
every respect effective service of process upon such party, in any suit, action
or proceeding. FURTHER, BOTH THE COMPANY AND HOLDER HEREBY WAIVE TRIAL BY JURY
IN ANY ACTION TO ENFORCE THIS NOTE.

         10.6     This Note shall bind the Company and its successors and
assigns.

         10.7     Neither the Agent, the Holder nor the Company shall have any
liability under or in connection with this Note or the Security Agreement for
special, exemplary, punitive, incidental, indirect or consequential damages of
any sort in any action of any type or nature whatsoever in connection with this
Note or the Security Agreement and the parties waive any right that they have to
claim or recover in any such action any special, exemplary, punitive,
incidental, indirect or consequential damages or any sort other than actual
damages.

                                      NOVATEL WIRELESS, INC.,
                                      a Delaware corporation

                                      By    /s/ Peter V. Leparulo
                                         ---------------------------------
                                         Name:  Peter Leparulo
                                         Title: Chief Executive Officer

                                      - 8 -



                                   SCHEDULE I

                                   PRIOR LIENS

1.       Lien in favor of Silicon Valley Bank pursuant to Loan and Security
Agreement dated November 29, 2001.

2.       Lien in favor of Sanmina-SCI Corporation pursuant to Security Agreement
dated January 12, 2002.

                                      - 9 -

                                                                    EXHIBIT 4.3



THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND NO TRANSFER OF
THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND OF ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM UNDER SAID ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT.


                         FORM OF NOVATEL WIRELESS, INC.

                      SECURED CONVERTIBLE SUBORDINATED NOTE

$[_____]                                                     _____________, 2003
                                                           San Diego, California

               FOR VALUE RECEIVED, the undersigned, NOVATEL WIRELESS, INC., a
Delaware corporation (the "Company"), hereby promises to pay to [_____]
("Holder") at such place as Holder shall hereafter direct by notice in writing
to the Company, the principal sum of [_____] ($[_____]) or such lesser principal
amount as is then currently outstanding, in such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts, plus interest thereon at the rate provided for herein from
the date hereof, with principal and interest payable as herein provided. At
Holder's request, such payment (if required to be in cash under the terms of
this Note) shall be by wire transfer in immediately available funds to an
account to be specified by Holder.

1.      Loan, Interest Rate and Payment Provisions.

        1.1 This Note is issued pursuant to the Securities Purchase Agreement,
dated as of March 12, 2003 (the "Purchase Agreement"), among the Company, the
Holder and the other parties thereto. This Note is one of the Sanmina Notes (as
defined in the Purchase Agreement).

        1.2 Except as expressly provided below, this Note shall not bear
interest.

        1.3 If payment of any portion of the principal amount of this Note is
not paid on the Maturity Date thereof, then interest shall accrue on such unpaid
amount at the rate of twelve percent (12%) per annum from and after such date of
default to the date of the payment in full of such unpaid amount (including from
and after the date of the entry of judgment in favor of Holder in an action to
collect this Note). Any amount repaid under this Note may not be reborrowed.

        1.4 Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months.



        1.5 All payments made by the Company on this Note shall be applied first
to the payment of accrued but unpaid interest (if any) on this Note and then to
the reduction of the unpaid principal balance of this Note.

        1.6 In no event shall Holder be entitled to receive interest at an
effective rate in excess of the maximum rate permitted by law.

        1.7 In the event the date for the payment of any amount payable under
this Note falls due on a Saturday, Sunday or public holiday under the laws of
the State of California, the time for payment of such amount shall be extended
to the next succeeding business day and interest (if applicable) shall continue
to accrue on any principal amount so effected until the payment thereof on such
extended due date.

        1.8 Capitalized terms used herein shall, unless otherwise defined
herein, have the meanings assigned thereto in the Purchase Agreement. For
purposes of this Note the following terms shall have the following meanings:

               1.8.1 "Maturity Date" means the date any payment is due under the
        terms of this Note.

               1.8.2 "Note" means this Secured Convertible Subordinated Note.

               1.8.3 "Sanmina Holders" means the holders of the Sanmina Notes,
        including the Holder.

2.      Replacement of Note. In case this Note is mutilated, destroyed, lost or
stolen, the Company shall, at its sole expense, execute and deliver a new Note,
in exchange and substitution for this Note. In the case of destruction, loss or
theft, Holder shall furnish to the Company indemnity reasonably satisfactory to
the Company, and in any such case, and in the case of mutilation, Holder shall
also furnish to the Company evidence to its reasonable satisfaction of the
mutilation, destruction, loss or theft of this Note and of the ownership
thereof. Any replacement Note so issued shall be in the same outstanding
principal amount as this Note and dated the date of this Note.

3.      Repayment, Conversion and Security.

        3.1 The Agent may, at its option, require repayment of the entire
principal amount of this Note and all of the other Sanmina Notes, to the extent
then outstanding and unpaid upon the occurrence of any of the following events:

               3.1.1 in the event that the Purchase Agreement terminates, other
        than by reason of the Purchasers' material breach, prior to the Third
        Closing Date; or

               3.1.2 in the event that, for any reason other than the
        Purchasers' material breach, the Third Closing Date does not occur on or
        before the Expiration Date;

in which case the Note shall be repaid, in cash, as follows:



                                     - 2 -


        (a) On or before the Catch Up Date (as defined below), the Company shall
            make all payments shown on the attached Schedule I with scheduled
            payment dates on or prior to the Catch Up Date; and

        (b) thereafter, the Company shall pay the remaining balance under this
            Note (if any) in accordance with the remainder of Schedule I.

"Catch Up Date" shall mean the 60th day after deliver of the notice of the
Agent's election to require payment under Section 3.1.2 or 3.1.3 above.

        3.2 The Agent may, at its option, require repayment of the entire
principal amount of this Note and all of the other Sanmina Notes, to the extent
then outstanding and unpaid upon any breach by the Company of Section 3 of the
Purchase Agreement that results in, or could reasonably be expected to result
in, a liability of the Company in excess of One Million Dollars ($1,000,000),
whether such breach is discovered before or after the Third Closing Date, with
such repayment to occur in cash within sixty (60) days of the date discovered by
the Company, Agent or Holder; provided, however, that this Section 3.2 shall not
apply with respect to any liability the existence or potential of which has been
disclosed to Holder or Agent in writing with in either the Schedules to the
Purchase Agreement or in the due diligence report delivered to the Purchasers by
FTI Consulting, so long as the nature and amount of such liability is reasonably
apparent from the disclosure.

        3.3 Subject to Sections 5 below, following the Third Closing, the Note,
to the extent not repaid (or required to be repaid) pursuant to Section 3.2
above, shall be repaid as follows:

               3.3.1 An amount equal to (i) the note percentage with respect to
        the Holder set forth on Schedule II hereto ("Note Percentage") times
        (ii) Four Hundred Thousand Dollars ($400,000) on the date three months
        following the Third Closing Date;

               3.3.2 An amount equal to (i) the Note Percentage times (ii) Four
        Hundred Thousand Dollars ($400,000) on the date six months following the
        Third Closing Date;

               3.3.3 An amount equal to (i) the Note Percentage times (ii) Four
        Hundred Thousand Dollars ($400,000) on the date nine months following
        the Third Closing Date; and

               3.3.4 All remaining principal and interest (if any) on the date
        twelve months following the Third Closing Date;

provided, however, that the Holder may, at any time at its option by notice to
the Company on or following the Third Closing Date, convert the entire balance
(including all principal and accrued but unpaid interest) of this Note into
Series B Preferred Stock, with such balance to be converted at the rate of
$1,000 per share.

Payments under this Section 3.3 shall be effected by delivery of Series B
Preferred Stock of the Company, issued in the name of Holder or its designees,
with principal balance



                                     - 3 -


hereunder being repaid at a rate of $1,000 per share (subject to adjustment for
stock splits and similar events). By way of example, the payment under Section
3.3.1 above shall be effected by delivery of a number of shares of Series B
Preferred Stock equal to (i) the Note Percentage, times (ii) Four Hundred (400).
For purposes of clarity, any payment under Section 3.1 or 3.2 above shall be
made solely in cash (whether before or after the Third Closing Date).

        3.4 This Note shall be secured by a lien on all of the assets and
property of the Company (subordinate to the rights of Silicon Valley Bank as set
forth in Section 7 below) pursuant to the terms of a Security Agreement (the
"Security Agreement"), dated as the date hereof, between the Company and Agent
(for the benefit of the Sanmina Holders).

4.      Covenants of the Company. The Company covenants and agrees that, so long
as this Note remains outstanding and unpaid, in whole or in part:

        4.1 The Company will faithfully and in all material respects perform all
of its covenants and agreements under the Security Agreement and the Purchase
Agreement and the Company will not make any loan to any person who is or becomes
a shareholder of the Company, other than for reasonable advances for expenses in
the ordinary course of business.

        4.2 The Company will promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits, or upon any of its property, before the same shall become in
default; provided, however, that the Company shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
the Company, shall set aside on its books adequate reserves with respect to any
such tax, assessment, charge, levy or claim so contested.

        4.3 The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises and comply with all laws applicable to the Company as its legal
counsel may advise.

        4.4 The Company will, except for the effects of reasonable wear and tear
in the ordinary course of business, at all times maintain, preserve, protect and
keep its property used or useful in the conduct of its business in good repair,
working order and condition, and from time to time make all needful and proper
repairs, renewals, replacements, betterments and improvements thereto.

        4.5 The Company will keep adequately insured, by financially sound
reputable insurers, all property of a character usually insured by similar
entities and carry such other insurance as is usually carried by similar
entities.

        4.6 The Company will, promptly following its obtaining knowledge of the
occurrence of an Event of Default or of any condition or event which, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default, furnish a statement of the Company's Chief Financial Officer, to Agent
setting forth the details of such Event of Default or condition or event and the
action which the Company intends to take with respect thereto.



                                     - 4 -


        4.7 The Company will at all times maintain books and records in which
all of its financial transactions are duly recorded in conformity in all
material respects with generally accepted accounting principles.

        4.8 The Company shall not make any distributions to any equity holders
or affiliates of the Company (other than in connection with arm's-length
obligations to equity holders or affiliates who are suppliers or customers). In
addition, the Company shall not make contributions to, or payments on behalf of,
any Subsidiary, except as permitted pursuant to that certain Loan and Security
Agreement, dated as of November 29, 2001, between the Company and Silicon Valley
Bank, Commercial Finance Division, as amended, as in effect on the date hereof.

5.      Events of Default. If any of the following events (each an "Event of
Default") shall occur:

        5.1 The Company shall fail to pay on the due date therefor, the
principal of, or interest on, or any other amount payable under the Note or any
other Sanmina Note and such failure shall continue uncured for a period of five
(5) days from such due date, or

        5.2 The Company shall default in the due observance or performance of
any covenant, condition or agreement on the part of the Company to be observed
or performed pursuant to the terms of this Note or any other Sanmina Note (other
than the other defaults specified in Section 5) or the Company or any Subsidiary
shall default in the due observance or performance of any covenant, condition or
agreement on the part of the Company or such Subsidiary to be observed or
performed pursuant to the terms of the Security Agreement or the Purchase
Agreement and such defaults shall continue uncured for a period of fifteen (15)
days after notice thereof shall have been given to the Company by Agent; or

        5.3 The dissolution of the Company or any Subsidiary or any vote in
favor thereof by the board of directors and shareholders of the Company or such
Subsidiary, as the case may be; or

        5.4 The Company or any Subsidiary shall resolve (including without
limitation by board action) or otherwise establish any intention in writing to
file a petition seeking relief under any provision of the Federal Bankruptcy
Code or any other federal or state statute now or hereafter in effect affording
relief to debtors, or make an assignment for the benefit of creditors, or file
with a court of competent jurisdiction an application for appointment of a
receiver or similar official with respect to it or any substantial part of its
assets, or there shall be filed against the Company or any such Subsidiary any
such application or petition, which application or petition is not dismissed or
withdrawn within thirty (30) days from the date of filing thereof; or

        5.5 Any default or event of default occurs under the obligations to
Silicon Valley Bank (or any lender which refinances such obligations) under the
agreement described on Schedule II, any of the Tranche I Notes or under any
other obligation of the Company or any Subsidiary for borrowed money, which
default is not cured during the applicable cure period or waived in writing by
the lender or obligee; or



                                     - 5 -


        5.6 The Company or any Subsidiary shall sell all or substantially all of
its assets or merge or be consolidated with or into another entity other than,
in the case of any such Subsidiary, the Company or another Subsidiary of the
Company; or

        5.7 The commencement of a proceeding to foreclose a security interest or
lien in any property or assets of the Company or any Subsidiary upon default in
the payment or performance of any debt of the Company or any such Subsidiary in
excess of $25,000 which is secured thereby; or

        5.8 Other than in connection with matters set forth on Schedule 3.10 to
the Purchase Agreement, the entry against the Company or any Subsidiary of a
final judgment for the payment of money in excess of $100,000 by a court of
competent jurisdiction, which judgment shall not be discharged (or the discharge
thereof not duly provided for) in accordance with its terms within thirty (30)
days of the date of entry thereof, or a stay of execution thereof procured
within thirty (30) days from the date of entry thereof and, within such period
(or such longer period during which execution of such judgment shall have been
effectively stayed) an appeal therefrom shall not have been prosecuted and the
execution thereof caused to be stayed during such appeal; or

        5.9 An attachment or garnishment shall have been levied against the
assets of the Company or any Subsidiary involving an amount in excess of
$100,000 and such levy is not vacated, bonded or otherwise terminated within
thirty (30) days after the date of the effectiveness of the levy;

then, upon the occurrence of any such Event of Default and at any time
thereafter, the Agent shall have the right to declare the principal of, accrued
unpaid interest on, and all other amounts payable under all of the Sanmina Notes
(including this Note) to be forthwith due and payable, in cash, whereupon all
such amounts shall be immediately due and payable to Holder, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived; provided, however, in case of the occurrence of an
Event of Default under Section 5.3 or 5.4, such amounts shall become immediately
due and payable without any such declaration by the Agent.

6.      Suits for Enforcement and Remedies. If any one or more Events of Default
shall occur and be continuing, the Agent may proceed to (i) protect and enforce
Holder's rights either by suit in equity or by action at law, or both, whether
for the specific performance of any covenant, condition or agreement contained
in this Note or in any agreement or document referred to herein or in aid of the
exercise of any power granted in this Note or in any agreement or document
referred to herein, (ii) enforce the payment of this Note, or (iii) enforce any
other legal or equitable right of the holder of this Note. No right or remedy
herein or in any other agreement or instrument conferred upon the holder of this
Note is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.

7.      Seniority. This Note shall be senior in priority to the payment of all
other debts of the Company, whether now existing or hereinafter incurred, other
than the obligations of the Company to Silicon Valley Bank now existing as shown
on the attached Schedule II hereto



                                     - 6 -


and trade payables and the obligations under the Tranche I Notes (each of which
may be pari passu with the repayment of this Note).

8.      Unconditional Obligation; Fees, Waivers, etc.

        8.1 The obligations to make the payments provided for in this Note are
absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever.

        8.2 If Holder or the Agent shall seek to enforce the collection of any
amount of principal of and/or interest on this Note, there shall be immediately
due and payable from the Company, in addition to the then unpaid principal of,
and accrued unpaid interest on, this Note, all reasonable costs and expenses
incurred by Holder or the Agent in connection therewith, including, without
limitation, attorneys' fees and disbursements.

        8.3 No forbearance, indulgence, delay or failure to exercise any right
or remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy.

        8.4 Any term, covenant, agreement or condition of this Note may be
amended or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
signed written consent of the Agent and the Company.

        8.5 The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of protest,
bringing of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right, lien, interest or property at any
and all times which Agent or Holder had or is existing as security for any
amount called for hereunder, except as specifically provided herein.

9.      Restriction on Transfer. This Note has not been registered under the
securities laws of the United States of America or any state thereof. This Note
has been acquired for investment, accordingly, no interest in this Note may be
offered for sale, sold or transferred in the absence of registration and
qualification of this Note under applicable federal and state securities laws or
an opinion of counsel of Holder reasonably satisfactory to the Company that such
registration and qualification are not required.

10.     Miscellaneous.

        10.1 The headings of the various paragraphs of this Note are for
convenience of reference only and shall in no way modify any of the terms or
provisions of this Note.

        10.2 The provisions of this Note are severable and, if any one provision
hereof shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction.



                                     - 7 -


        10.3 Notices, demands or other communications given or made in
connection with this Note shall be in writing and delivered in accordance with
the provisions of the Purchase Agreement.

        10.4 This Note and the obligations of the Company and the rights of
Holder shall be governed by and construed in accordance with the internal
substantive laws of the State of California without giving effect to the choice
of laws rules thereof.

        10.5 The Company and the Holder (a) agree that any legal suit, action or
proceeding arising out of or relating to this Note will be instituted
exclusively in the courts of the State of California sitting in the County of
Los Angeles, or any Federal court in such State, (b) waive any objection which
such party may have now or hereafter based upon forum non conveniens or to the
venue of any such suit, action or proceeding, and (c) irrevocably consent to the
jurisdiction of the State Courts located in said State in any such suit, action
or proceeding. Each such party further agrees to accept and acknowledge service
of any and all process which may be served in any such suit, action or
proceeding in said courts in said State, and agrees that service of process upon
such party, mailed by certified mail to such party's address, will be deemed in
every respect effective service of process upon such party, in any suit, action
or proceeding. FURTHER, BOTH THE COMPANY AND HOLDER HEREBY WAIVE TRIAL BY JURY
IN ANY ACTION TO ENFORCE THIS NOTE.

        10.6 This Note shall bind the Company and its successors and assigns.

        10.7 Neither the Holder nor the Company shall have any liability under
or in connection with this Note or the Security Agreement for special,
exemplary, punitive, incidental, indirect or consequential damages of any sort
in any action of any type or nature whatsoever in connection with this Note or
the Security Agreement and the parties waive any right that they have to claim
or recover in any such action any special, exemplary, punitive, incidental,
indirect or consequential damages or any sort other than actual damages.


                                        NOVATEL WIRELESS, INC.,
                                        a Delaware corporation


                                        By
                                           -------------------------------------
                                           Name: Peter Leparulo
                                           Title: Chief Executive Officer



                                     - 8 -

                                   SCHEDULE I
                                PAYMENT SCHEDULE



                                   SCHEDULE II

                    SCHEDULE OF NOTE PERCENTAGES FOR HOLDERS



                   INVESTOR                                   NOTE PERCENTAGE
                   --------                                   ---------------
                                                           
           Bay Investments Limited                                 33.33%

 Mutual Trust Management (Bermuda) Limited as                      21.82%
  trustee of Sofaer Funds/Global Hedge Fund

           RIT Capital Partners plc                                11.52%

                Soen Yong Lee                                      8.33%

           Pan Invest & Trade Inc.                                 4.17%

                Peter Leparulo                                     0.83%

      Cornerstone Equity Investors, LLC                            16.67%

                PS Capital LLC                                     3.33%




                                  SCHEDULE III

                                   PRIOR LIENS

1.      Lien in favor of Silicon Valley Bank pursuant to Loan and Security
Agreement dated November 29, 2001.



SCHEDULE I TO SANMINA NOTE

This Schedule I sets forth the due dates of payments for purposes of Section
3.1.3 of the Note.

Column A set forth below will only apply if the Company raises at least $3.8
million in additional cash equity financing between February 26, 2003 and July
31, 2003. The purchase of the Sanmina obligations by the investors will not be
counted as additional cash equity financing for these purposes.

In addition, in the event that Column A applies, the Company will be required to
pay to the Note holder a prepayment equal to 20% of the amount of additional
cash equity financing raised by the Company between February 26, 2003 and July
31, 2003. This prepayment will be due on the date that that equity financing
closes. The prepayment will reduce the last payments otherwise required by
Column A Column B provides an example of the application of these principles,
assuming a hypothetical cash equity raise by the Company of $4 million on July
31, 2003.

If the Company fails to raise at least $3.8 million in additional cash equity
financing between February 26, 2003 and July 31, 2003, then the payment due
date schedule in Column C will apply. The purchase of the Sanmina obligations
by the investors will not be counted as additional cash equity financing for
these purposes.



                   COLUMN A           COLUMN B           COLUMN C

                    PAYMENT            PAYMENT             PAYMENT
DATE                AMOUNT             AMOUNT              AMOUNT
                                               
24-Feb-03         $  165,000         $  165,000         $  165,000
25-Feb-03             80,000             80,000             80,000
10-Mar-03            165,000            165,000            165,000
24-Mar-03            165,000            165,000            165,000
07-Apr-03            165,000            165,000            165,000
21-Apr-03            165,000            165,000            165,000
05-May-03            165,000            165,000            165,000
19-May-03            165,000            165,000            165,000
02-Jun-03            165,000            165,000            165,000
16-Jun-03            165,000            165,000            165,000
30-Jun-03            165,000            165,000            165,000
14-JUl-03            165,000            165,000            165,000
28-Jul-03            165,000            165,000            165,000
31-Jul-03                               800,000          1,445,000
11-Aug-03            165,000            165,000
25-Aug-03            165,000            165,000
08-Sep-03            165,000            165,000
22-Sep-03            165,000            150,000
06-Oct-03            165,000
20-Oct-03            165,000
03-Nov-03            165,000
17-Nov-03            165,000
01-Dec-03            125,000

TOTAL             $3,505,000         $3,505,000         $3,505,000

                                                                     EXHIBIT 4.4


THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND NO TRANSFER
OF SUCH SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND OF ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM UNDER SAID ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT.

                       FORM OF WARRANT TO PURCHASE STOCK

Corporation:                 Novatel Wireless, Inc.

Number of Shares:            [_______] (subject to increase as provided below)

Class of Stock:              Common Stock, par value $0.001 per share

Initial Exercise Price:      $0.70 (subject to adjustment as provided below)

Issue Date:                  [March 12, 2003][or][INSERT ISSUE DATE FOR WARRANTS
                             ISSUED AFTER FIRST CLOSING]

Expiration Date:             [September 12, 2008][or][INSERT ISSUE DATE PLUS 5.5
                             YEARS FOR WARRANTS ISSUED AFTER FIRST CLOSING]

         THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, [________________] ("Holder"), is
entitled to purchase the number of fully paid and nonassessable shares of Common
Stock (the "Shares") of the corporation (the "Company") at the initial exercise
price per Share (the "Warrant Price") all as set forth above and as adjusted
pursuant to ARTICLE 2 of this Warrant, subject to the provisions and upon the
terms and conditions set forth in this Warrant.

ARTICLE 1.        EXERCISE.

         1.1      Method of Exercise. Commencing [SEPTEMBER 12, 2003][OR][INSERT
                  ISSUE DATE PLUS 6 MONTHS FOR WARRANTS ISSUED AFTER FIRST
                  CLOSING], Holder may exercise this Warrant in whole or in part
                  from time to time by delivering a duly executed Notice of
                  Exercise in substantially the form attached as Appendix 1 to
                  the principal office of the Company. Unless Holder is
                  exercising the conversion right set forth in



                  Section 1.2, Holder shall also deliver to the Company a check
                  for the aggregate Warrant Price for the Shares being
                  purchased.

         1.2      Conversion Right. In lieu of exercising this Warrant as
                  specified in Section 1.1, Holder may from time to time convert
                  this Warrant, in whole or in part, into a number of Shares
                  determined by dividing (a) the aggregate fair market value of
                  the Shares or other securities otherwise issuable upon
                  exercise of this Warrant or portion thereof minus the
                  aggregate Warrant Price of such Shares by (b) the fair market
                  value of one Share; provided, however, the Holder shall not be
                  entitled to exercise this Warrant pursuant to this Section 1.2
                  prior to the first anniversary of the Issue Date of this
                  Warrant. The fair market value of the Shares shall be
                  determined pursuant to Section 1.2.1.

                  1.2.1    Fair Market Value. If the Shares are traded in a
                           public market, the fair market value of the Shares
                           shall be the closing price of the Shares (or the
                           closing price of the Company's stock into which the
                           Shares are convertible) reported for the business day
                           immediately before Holder delivers its Notice of
                           Exercise to the Company. If the Shares are not traded
                           in a public market, the Board of Directors of the
                           Company shall initially determine fair market value
                           in its reasonable good faith judgment. The Company
                           shall provide the Holder with written notice (within
                           10 days after delivery of the Notice of Exercise) of
                           its fair market value determination. If the Holder
                           objects to the determination within 10 days after
                           delivery by the Company of its fair market value
                           determination, the Holder may either (i) rescind its
                           Notice of Exercise in which case no exercise shall be
                           deemed to have occurred, or (ii) request that the
                           fair market value be determined pursuant to the
                           Appraisal Procedure (as defined below), which
                           determination shall be binding on the Holder and the
                           Company.

         1.3      Delivery of Certificate and New Warrant. Promptly after Holder
                  exercises or converts this Warrant, the Company shall deliver
                  to Holder certificates for the Shares acquired and, if this
                  Warrant has not been fully exercised or converted and has not
                  expired, a new Warrant representing the Shares not so
                  acquired.

         1.4      Replacement of Warrants. On receipt of evidence reasonably
                  satisfactory to the Company of the loss, theft, destruction or
                  mutilation of this Warrant and, in the case of loss, theft or
                  destruction, on delivery of an indemnity agreement reasonably
                  satisfactory in form and amount to the Company or, in the case
                  of mutilation, or surrender and cancellation of this Warrant,
                  the Company shall execute and deliver, in lieu of this
                  Warrant, a new warrant of like tenor.

         1.5      Assumption on Sale, Merger, or Consolidation of the Company.

                  1.5.1    "Acquisition". For the purpose of this Warrant,
                           "Acquisition" means any sale, license, or other
                           disposition of all or substantially all of the

                                      - 2 -



                           assets of the Company, or any reorganization,
                           consolidation, or merger of the Company in which the
                           Company shall not be the continuing or surviving
                           entity of such consolidation or merger.

                  1.5.2    Assumption of Warrant. Upon the closing of any
                           Acquisition, the successor entity shall assume the
                           obligations of this Warrant, and this Warrant shall
                           be exercisable for the same securities, cash, and
                           property as would be payable for the Shares issuable
                           upon exercise of the unexercised portion of this
                           Warrant as if such Shares were outstanding on the
                           record date for the Acquisition and subsequent
                           closing.

ARTICLE 2.        ADJUSTMENTS TO THE WARRANT PRICE AND NUMBER OF SHARES.

         2.1      Definitions. As used in this ARTICLE 2, the following terms
                  have the following respective meanings:

                  2.1.1    "Additional Shares of Common Stock" shall mean all
                           shares of Common Stock issued by the Company
                           (including those deemed issued pursuant to Section
                           2.3) after March 12, 2003 for any reason, including
                           without limitation as a result of sales of Common
                           Stock or Options, the issuance of Options, stock
                           dividends, distributions payable in common stock,
                           stock splits, reverse stock splits,
                           recapitalizations, reclassifications, combinations or
                           exchanges of shares, separations, reorganizations,
                           liquidations or other similar event, other than:

                           (i)      securities issued or issuable as a dividend
                                    or distribution on the Series B Preferred
                                    Stock;

                           (ii)     not more than ten (10) shares of capital
                                    stock of the Company on an "as converted to
                                    common stock" basis, the issuance of which
                                    resulted from mathematical or other error or
                                    inadvertence, provided that the transaction
                                    in which such shares were issued was
                                    approved at the time by vote of a majority
                                    of the Board of Directors of the Company;

                           (iii)    the first 500,000 shares of Common Stock
                                    issued or issuable pursuant to Employee
                                    Equity Issuances after March 12, 2003 (it
                                    being understood that the first such 500,000
                                    shares shall not be subject to Section
                                    2.2.2, and any subsequent Employee Equity
                                    Issuances shall be subject to Section 2.2.2;
                                    provided, further, such 500,000 share figure
                                    shall be appropriately adjusted to reflect
                                    transactions described in Sections 2.4 and
                                    2.5);

                                      - 3 -



                           (iv)     securities issued or issuable as a dividend
                                    or distribution on the Series A Preferred
                                    Stock upon the conversion of the Series A
                                    Preferred Stock to Common Stock; and

                           (v)      any securities issued or issuable as a
                                    result of an adjustment of the Warrant Price
                                    made pursuant to Section 2.2.

                  2.1.2    "Convertible Securities" means any evidences of
                           indebtedness, shares of stock, or other securities
                           directly or indirectly convertible into or
                           exchangeable for common stock or the value of which
                           is otherwise derived from or based upon the value of
                           the Common Stock.

                  2.1.3    "Employee Equity Issuances" means the issuance of
                           shares of Common Stock or Options to officers,
                           directors or employees of, or consultants to, the
                           Company pursuant to stock option or stock purchase
                           plans or agreements on terms approved by the Board of
                           Directors.

                  2.1.4    "Option" means any right, option, or warrant to
                           subscribe for, purchase, or otherwise acquire common
                           stock or Convertible Securities.

         2.2      Adjustments for Dilutive Issuances.

                  2.2.1    Issuances Other than Employee Equity Issuances. If
                           the Company shall issue, after March 12, 2003, any
                           Additional Shares of Common Stock (other than
                           issuances pursuant to transactions described in
                           Section 2.4 and Section 2.5 but expressly excluding
                           any new issuances concurrent with such transactions)
                           without consideration or for a consideration per
                           share less than the Warrant Price in effect
                           immediately prior to the issuance of such Additional
                           Shares of Common Stock, the Warrant Price in effect
                           immediately prior to each such issuance shall
                           forthwith be adjusted to be equal to the amount of
                           consideration per share received in connection with
                           such issuance, as determined pursuant to Section 2.6.
                           Notwithstanding the foregoing, the provisions of this
                           Section 2.2.1 shall not apply to Additional Shares of
                           Common Stock issued through an Employee Equity
                           Issuance.

                  2.2.2    Dilutive Issuances due to Employee Equity Issuances.
                           If the Company shall issue, after March 12, 2003, any
                           Additional Shares of Common Stock through an Employee
                           Equity Issuance without consideration or for a
                           consideration per share less than the Warrant Price
                           in effect immediately prior to the issuance of such
                           Additional Shares of Common Stock, the Warrant Price
                           in effect immediately prior to each such issuance
                           shall forthwith be adjusted to be equal to a price
                           determined by multiplying the Warrant Price then in
                           effect by a fraction (which shall in no event be
                           greater than one), the numerator

                                      - 4 -



                           of which shall be the number of shares of Common
                           Stock outstanding immediately prior to such issuance
                           plus the number of shares of Common Stock that the
                           aggregate consideration received by the Company for
                           such issuance would purchase at the Warrant Price;
                           and the denominator of which shall be the number of
                           shares of Common Stock outstanding immediately prior
                           to such issuance plus the number of shares of such
                           Additional Shares of Common Stock. For purposes of
                           the foregoing computation, the number of shares of
                           Common Stock outstanding shall be deemed to include
                           all shares of Common Stock actually outstanding and
                           all shares of Common Stock deemed to be outstanding
                           as a result of the application of the rules set forth
                           in Section 2.3.

         2.3      Deemed Issuance of Additional Shares of Common Stock. In the
                  case of the issuance of Options or Convertible Securities, the
                  following provisions shall apply for all purposes of this
                  ARTICLE 2:

                  2.3.1    The aggregate maximum number of shares of Common
                           Stock deliverable upon exercise (assuming the
                           satisfaction of any conditions to exercisability,
                           including without limitation, the passage of time,
                           but without taking into account potential
                           antidilution adjustments) of such Options (and, in
                           the case of Options to acquire Convertible
                           Securities, the maximum number of shares of Common
                           Stock issuable upon conversion or exchange of such
                           Convertible Securities) shall be deemed to have been
                           issued at the time such Options were issued and for a
                           consideration equal to the consideration (determined
                           in the manner provided in Section 2.6), if any,
                           received by the Company upon the issuance of such
                           Options plus the minimum exercise price provided in
                           such Options (without taking into account potential
                           antidilution adjustments) for the Common Stock
                           covered thereby (plus, in the case of Options to
                           acquire Convertible Securities, the minimum
                           additional consideration, if any, deliverable upon
                           conversion or exchange of such Convertible
                           Securities).

                  2.3.2    The aggregate maximum number of shares of Common
                           Stock deliverable upon conversion of or in exchange
                           (assuming the satisfaction of any conditions to
                           convertibility or exchangeability, including, without
                           limitation, the passage of time, but without taking
                           into account potential antidilution adjustments) for
                           such Convertible Securities or upon the exercise of
                           Options to purchase Convertible Securities and
                           subsequent conversion or exchange thereof shall be
                           deemed to have been issued at the time such
                           Convertible Securities were issued or such Options
                           were issued and for a consideration equal to the
                           consideration, if any, received by the Company for
                           any such Convertible Securities and related Options
                           (excluding any cash received on account of accrued
                           interest or accrued dividends), plus the minimum
                           additional consideration, if any, to be received by
                           the Company (without taking into account potential
                           antidilution

                                      - 5 -



                           adjustments) upon the conversion or exchange of such
                           Convertible Securities or the exercise of any related
                           Options (the consideration in each case to be
                           determined in the manner provided in Section 2.6).

                  2.3.3    If, following the issuance of Options or Convertible
                           Securities and the determination of the impact of
                           such issuance pursuant to Section 2.3.1 or 2.3.2
                           above, there is any change in the maximum number of
                           shares of Common Stock deliverable or in the minimum
                           consideration payable to the Company upon exercise of
                           such Options or upon conversion of or in exchange for
                           such Convertible Securities, including, but not
                           limited to, a change resulting from the antidilution
                           provisions thereof, the Warrant Price shall be
                           recomputed to reflect such change, but no further
                           adjustment shall be made for the actual issuance of
                           Common Stock or any payment of such consideration
                           upon the exercise of any such Options or the
                           conversion or exchange of such Convertible
                           Securities.

                  2.3.4    The number of shares of Common Stock deemed issued
                           and the consideration deemed paid therefor pursuant
                           to sections 2.3.1 and 2.3.2 shall be appropriately
                           adjusted to reflect any change of the type described
                           in subsection 2.3.3. No readjustment of the Warrant
                           Price pursuant to a change described in the preceding
                           sentence shall increase the Warrant Price more than
                           the amount of any decrease made in respect of the
                           corresponding issue of Options or Convertible
                           Securities.

                  2.3.5    For purposes of this ARTICLE 2, Securities (including
                           Options or Convertible Securities) shall be deemed to
                           be issued on the earliest to occur of the grant,
                           issuance, or sale of, or the fixing of a record date
                           with respect to the distribution or issuance of, such
                           securities.

         2.4      Stock Dividends, Splits, Etc. If the Company declares or pays
                  a dividend on its Common Stock payable in Common Stock, or
                  other securities, subdivides the outstanding Common Stock into
                  a greater amount of Common Stock, then upon exercise of this
                  Warrant, for each Share acquired, Holder shall receive,
                  without cost to Holder, the total number and kind of
                  securities to which Holder would have been entitled had Holder
                  owned the Shares of record as of the date the dividend or
                  subdivision occurred. If the outstanding shares are combined
                  or consolidated, by reclassification or otherwise, into a
                  lesser number of shares, the Warrant Price shall be
                  proportionately increased.

         2.5      Reclassification, Exchange, Combinations or Substitution. Upon
                  any reclassification, exchange, substitution, or other event
                  that results in a change of the number and/or class of the
                  securities issuable upon exercise or conversion of this
                  Warrant, Holder shall be entitled to receive, upon exercise or
                  conversion of this Warrant, the number and kind of securities
                  and property that Holder would have received for the Shares if
                  this Warrant had been exercised immediately before such
                  reclassification, exchange, substitution, or

                                      - 6 -



                  other event. The Company or its successor shall promptly issue
                  to Holder a new Warrant for such new securities or other
                  property. The new Warrant shall provide for adjustments which
                  shall be as nearly equivalent as may be practicable to the
                  adjustments provided for in this ARTICLE 2 including, without
                  limitation, adjustments to the Warrant Price and to the number
                  of securities or property issuable upon exercise of the new
                  Warrant. The provisions of this Section 2.5 shall similarly
                  apply to successive reclassifications, exchanges,
                  substitutions, or other events.

         2.6      Computation of Consideration. The consideration received by
                  the Company for the issuance of any Additional Common Shares
                  shall be computed as follows:

                  2.6.1    In the case of the issuance of Additional Shares of
                           Common Stock for cash, the consideration shall be
                           deemed to be the amount of cash paid therefore after
                           deducting any reasonable discounts, commissions or
                           other expenses allowed, paid or incurred by this
                           Company for any underwriting or otherwise in
                           connection with the issuance and sale thereof.

                  2.6.2    In the case of the issuance of Additional Shares of
                           Common Stock for a consideration in whole or in part
                           other than cash, the consideration other than cash
                           shall be deemed to be the fair value thereof as
                           determined in good faith by the Board of Directors.
                           The Company shall provide the Holder with written
                           notice of its fair market value determination
                           pursuant to this Section 2.6.2 within 30 days
                           following such issuance. If the holders of a majority
                           of the outstanding warrants issued pursuant to the
                           Purchase Agreement ("Majority Holders") deliver to
                           the Company, within 30 days following delivery of the
                           Company's written notice, written notice of their
                           objection to such determination the fair market value
                           shall be determined pursuant to the Appraisal
                           Procedure, which determination shall be binding on
                           the Holder and the company.

                  2.6.3    The consideration for Additional Shares of Common
                           Stock issued together with other property of the
                           Company for consideration that covers both shall be
                           determined in good faith by the Board of Directors.
                           The Company shall provide the Holder with written
                           notice of its determination of the consideration
                           provided in connection with an issuance covered by
                           Section 2.6.3 within 30 days following such issuance.
                           If the Majority Holders deliver to the Company,
                           within 30 days following delivery of the Company's
                           written notice, objection to such determination, the
                           consideration provided shall be determined pursuant
                           to the Appraisal Procedure, which determination shall
                           be binding on the Holder and the Company.

         2.7      No Impairment. The Company shall not, by amendment of its
                  Certificate of Incorporation or through a reorganization,
                  transfer of assets, consolidation,

                                      - 7 -



                  merger, dissolution, issue, or sale of securities or any other
                  voluntary action, avoid or seek to avoid the observance or
                  performance of any of the terms to be observed or performed
                  under this Warrant by the Company, but shall at all times in
                  good faith assist in carrying out of all the provisions of
                  this ARTICLE 2 and in taking all such action as may be
                  necessary or appropriate to protect Holder's rights under this
                  Article against impairment.

         2.8      Fractional Shares. No fractional Shares shall be issuable upon
                  exercise or conversion of the Warrant and the number of Shares
                  to be issued shall be rounded down to the nearest whole Share.
                  If a fractional share interest arises upon any exercise or
                  conversion of the Warrant, the Company shall eliminate such
                  fractional share interest by paying Holder the amount computed
                  by multiplying the fractional interest by the fair market
                  value of a full Share.

         2.9      Certificate as to Adjustments. Upon the occurrence of each
                  adjustment or readjustment of the Warrant Price pursuant to
                  this ARTICLE 2, the Company at its expense shall promptly
                  compute such adjustment or readjustment in accordance with the
                  terms hereof and furnish to the Holder a certificate setting
                  forth such adjustment or readjustment and showing in detail
                  the facts upon which such adjustment is based; provided,
                  however, that the Company shall not be required to provide
                  each holder with such a certificate more than one time per
                  calendar quarter. The Company shall, upon the written request
                  at any time of the Holder, furnish or cause to be furnished to
                  the Holder a like certificate setting forth (i) such
                  adjustments and readjustments, (ii) the Warrant Price in
                  effect at the time, and (iii) the number of shares of Common
                  Stock and the amount, if any, of other property which at the
                  time would be received upon exercise of the Warrant.

         2.10     Appraisal Procedure. In the event of a challenge to the fair
                  market value determinations of the board of directors pursuant
                  to Section 1.2.1 or 2.6.2, or the amount of consideration
                  determined pursuant to Section 2.6.3, the Company and the
                  Holder (or in case of Sections 2.6.2 and 2.6.3, the Majority
                  Holders) shall attempt to select an investment banking firm to
                  resolve such dispute. In the event that the Company and the
                  Holder (or Majority Holders) are unable to agree upon an
                  investment banking firm, within 30 days following the delivery
                  of the Holder's (or Majority Holder's) written objections
                  ("Objection Date"), the Company and the Holder (or Majority
                  Holders), within 45 days following the Objection Date, shall
                  each select an investment banking firm with a national
                  reputation and the two firms so selected shall agree upon a
                  third investment banking firm, which shall resolve such
                  dispute. The findings of the investment banking firm so
                  selected shall be binding on the Company and the Holder (or
                  Majority Holders, as the case may be). The fees and costs of
                  the investment banking firm selected shall be borne one-half
                  by the Company and one-half by the Holder (or Majority
                  Holders, as the case may be).

                                      - 8 -



ARTICLE 3.        REPRESENTATIONS AND COVENANTS OF THE COMPANY.

         3.1      Representations and Warranties. The Company represents and
                  warrants to the Holder that all Shares which may be issued
                  upon the exercise of the purchase right represented by this
                  Warrant, shall, upon issuance, be duly authorized, validly
                  issued, fully paid and nonassessable, and free of any liens
                  and encumbrances except for restrictions on transfer provided
                  for herein or under applicable federal and state securities
                  laws.

         3.2      Notice of Certain Events. If the Company proposes at any time
                  (a) to declare any dividend or distribution upon its common
                  stock, whether in cash, property, stock, or other securities
                  and whether or not a regular cash dividend; (b) to offer for
                  subscription pro rata to the holders of any class or series of
                  its stock any additional shares of stock of any class or
                  series or other rights; (c) to effect any reclassification or
                  recapitalization of common stock; (d) to merge or consolidate
                  with or into any other corporation, or sell, lease, license,
                  or convey all or substantially all of its assets, or to
                  liquidate, dissolve or wind up; or (e) offer holders of
                  registration rights the opportunity to participate in an
                  underwritten public offering of the company's securities for
                  cash, then, in connection with each such event, the Company
                  shall give Holder (1) at least 10 days prior written notice of
                  the date on which a record will be taken for such dividend,
                  distribution, or subscription rights (and specifying the date
                  on which the holders of common stock will be entitled thereto)
                  or for determining rights to vote, if any, in respect of the
                  matters referred to in (a), (b), (c) and (d) above; (2) in the
                  case of the matters referred to in (c) and (d) above at least
                  10 days prior written notice of the date when the same will
                  take place (and specifying the date on which the holders of
                  common stock will be entitled to exchange their common stock
                  for securities or other property deliverable upon the
                  occurrence of such event); and (3) in the case of the matter
                  referred to in (e) above, the same notice as is given to the
                  holders of such registration rights.

         3.3      Registration Under Securities Act of 1933, as amended. The
                  Company agrees that the Shares or, if the Shares are
                  convertible into common stock of the Company, such common
                  stock, shall be subject to the registration rights set forth
                  in the Registration Rights Agreement between the Company, the
                  Holder and certain other parties dated as of March 12, 2003,
                  as amended.

ARTICLE 4.        MISCELLANEOUS.

         4.1      Voting Rights. This Warrant shall not entitle the registered
                  holder to any voting rights or other rights as a stockholder
                  of the Company but upon presentation of this Warrant with the
                  Notice of Exercise duly executed and, if exercised pursuant to
                  Section 1.1, the tender of payment of the Warrant Price at the
                  office of the Company pursuant to the provisions of this
                  Warrant, the registered holder shall forthwith be deemed a
                  stockholder of the Company in respect of the Shares so
                  subscribed for.

                                      - 9 -



         4.2      No Change Necessary. The form of this Warrant need not be
                  changed because of any adjustment in the Warrant Price or in
                  the number of Shares issuable upon its exercise. A Warrant
                  issued after any adjustment on any partial exercise or upon
                  replacement may continue to express the same Warrant Price and
                  the same number of Shares (appropriately reduced in the case
                  of partial exercise) as are stated on this Warrant as
                  initially issued, and that Warrant Price and that number of
                  shares shall be considered to have been so changed as of the
                  close of business on the date of adjustment.

         4.3      Term. This Warrant is exercisable in whole or in part at any
                  time and from time to time beginning six months after the date
                  hereof, through and including the Expiration Date.

         4.4      Legends. This Warrant and the Shares (and the securities
                  issuable, directly or indirectly, upon conversion of the
                  Shares, if any) shall be imprinted with a legend in
                  substantially the following form:

         THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS
         AND NO TRANSFER OF SUCH SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO
         AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND THE RULES AND
         REGULATIONS THEREUNDER AND OF ALL APPLICABLE STATE SECURITIES OR "BLUE
         SKY" LAWS, OR (B) PURSUANT TO AN EXEMPTION THEREFROM UNDER SAID ACT AND
         ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS WITH RESPECT TO
         WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A SATISFACTORY OPINION OF
         COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
         REQUIREMENTS OF THE ACT.

         4.5      Compliance with Securities Laws on Transfer. This Warrant and
                  the Shares issuable upon exercise of this Warrant (and the
                  securities issuable, directly or indirectly, upon conversion
                  of the Shares, if any) may not be transferred or assigned in
                  whole or in part without compliance with applicable federal
                  and state securities laws by the transferor and the transferee
                  (including, without limitation, the delivery of investment
                  representation letters and legal opinions reasonably
                  satisfactory to the Company, as reasonably requested by the
                  Company). The Company shall not require Holder to provide an
                  opinion of counsel if the transfer is to an affiliate of
                  Holder or if there is no material question as to the
                  availability of current information as referenced in Rule
                  144(c), Holder represents that it has complied with Rule
                  144(d) and (e) in reasonable detail, the selling broker
                  represents that it has complied with Rule 144(f), and the
                  Company is provided with a copy of Holder's notice of proposed
                  sale.

         4.6      Transfer Procedure. Subject to the provisions of Section 4.5,
                  Holder may transfer all or part of this Warrant or the Shares
                  issuable upon exercise of this

                                     - 10 -



                  Warrant (or the securities issuable, directly or indirectly,
                  upon conversion of the Shares, if any) to any affiliate of
                  Holder at any time without prior notice to Company; provided,
                  however, if Holder transfers this Warrant, Holder will give
                  the Company notice of the portion of the Warrant being
                  transferred with the name, address and taxpayer identification
                  number of the transferee and surrendering this Warrant to the
                  Company for reissuance to the transferee(s) (and Holder if
                  applicable).

         4.7      Notices. All notices and other communications from the Company
                  to the Holder, or vice versa, shall be deemed delivered and
                  effective when given personally or mailed by first-class
                  registered or certified mail, postage prepaid, at such address
                  as may have been furnished to the Company or the Holder, as
                  the case may be, in writing by the Company or such holder from
                  time to time. Notices shall be addressed as follows:

                  If to Holder, to the address set forth on the signature page
                  hereto.

                           With a copy to:

                           Irell & Manella LLP
                           1800 Avenue of the Stars, Suite 900
                           Los Angeles, CA  90067
                           Attn: Alvin G. Segel, Esq.

                  If to Company:

                           Novatel Wireless, Inc.
                           9360 Towne Centre Drive, Suite 110
                           San Diego, California
                           Attn: Peter Leparulo, Chief Executive Officer

                           With a copy to:

                           Latham & Watkins LLP
                           633 West Fifth Street, Suite 4000
                           Los Angeles, CA  90071
                           Attn: J. Scott Hodgkins, Esq.

         4.8      Waiver. This Warrant and any term hereof may be amended,
                  changed, waived, discharged or terminated only by an
                  instrument in writing signed by the Company and the Majority
                  Holders.

         4.9      Remedies. The Company stipulates that the remedies at law of
                  the Holder in the event of any default or threatened default
                  by the Company in the performance of or compliance with any of
                  the terms of this Warrant are not and will not be adequate,
                  and that such terms may be specifically enforced by

                                     - 11 -



                  a decree for the specific performance of any agreement
                  contained herein or by an injunction against a violation of
                  any of the terms hereof or otherwise.

         4.10     Taxes. The Company shall pay any issue or transfer taxes
                  payable in connection with the exercise of the Warrant,
                  provided, however, that the Company shall not be required to
                  pay any tax which may be payable in respect of any transfer to
                  a name other than that of the Holder.

         4.11     Attorney's Fees. In the event of any legal or equitable action
                  between the parties concerning the terms and provisions of
                  this Warrant, the party prevailing in such legal or equitable
                  action shall be entitled to collect from the other party all
                  costs incurred in such dispute, including reasonable
                  attorneys' fees.

         4.12     Automatic Conversion upon Expiration. In the event that, upon
                  the Expiration Date, the fair market value of one Share (or
                  other security issuable upon the exercise hereof) as
                  determined in accordance with Section 1.2.1 above is greater
                  than the Exercise Price in effect on such date, then this
                  Warrant shall automatically be deemed on and as of such date
                  to be converted pursuant to Section 1.2 above as to all Shares
                  (or such other securities) for which it shall not previously
                  have been exercised or converted, and the Company shall
                  deliver a certificate representing the Shares (or such other
                  securities) issued upon such conversion to the Holder.

         4.13     Governing Law. This Warrant shall be governed by and construed
                  in accordance with the laws of the State of California,
                  without giving effect to its principles regarding conflicts of
                  law.

                                   "COMPANY"

                                   Novatel Wireless, Inc.

                                   By: /s/ Peter V. Leparulo
                                       Name: Peter V. Leparulo
                                       Title: Chief Executive Officer

                                   By: /s/ Melvin L. Flowers
                                       Name: Melvin L. Flowers
                                       Title: Sr. V.P. Finance, and CFO

                                     - 12 -



                                            HOLDER'S ADDRESS

                                            [_______________________________]
                                            [_______________________________]
                                            [_______________________________]
                                            [_______________________________]

                                     - 13 -



NOTICE OF EXERCISE

         To: Novatel Wireless, Inc.

         (1)      The undersigned hereby (A) elects to purchase ________ shares
of common stock of Novatel Wireless, Inc., pursuant to the provisions of Section
1.1 of the attached Warrant, and tenders herewith payment of the purchase price
for such shares in full, or (B) elects to exercise this Warrant with respect to
______ shares of common stock issuable upon exercise of the Warrant, pursuant to
the provisions of Section 1.2 of the attached Warrant.

         (2)      Please issue a certificate or certificates representing said
shares of common stock in the name of the undersigned or in such other name as
is specified below:

                                          ______________________________________
                                          (Name)

                                          ______________________________________
                                          (Name)

         (3)      Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:

                                          ______________________________________
                                          (Name)

_______________________________           ______________________________________
(Date)                                    (Signature)
                                          Address of Holder:

                                     - 14 -

                                                                     EXHIBIT 4.5


                           FORM OF SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of March 12, 2003,
is entered into by and between Novatel Wireless, Inc., a Delaware corporation
(the "GRANTOR"), and PS Capital LLC, as collateral agent and representative (in
such capacity, the "AGENT") for the holders ("NOTE HOLDERS") of the Secured
Convertible Subordinated Notes dated as of the date hereof (as amended and in
effect from time to time, the "SECURED NOTES"), issued by the Grantor to the
Note Holders. The Note Holders and the Agent, including their respective
successors and permitted assigns, are collectively referred to herein as the
"SECURED PARTIES."

                                    RECITALS

         WHEREAS, the Grantor and the Note Holders have entered into a
Securities Purchase Agreement (the "PURCHASE AGREEMENT"), pursuant to which,
among other things, the Note Holders have agreed to lend to the Grantor the
aggregate principal sum of $1,200,000 (the "LOAN"), which Loan will be evidenced
by the Secured Notes;

         WHEREAS, in order to induce the Note Holders to make the Loan, the
Grantor has agreed to grant security interests in favor of the Agent, as
collateral agent and representative for the pro rata benefit of the Note
Holders, as more fully set forth herein;

         WHEREAS, it is a condition precedent to the Note Holders entering into
the Purchase Agreement and making the Loan that the Grantor executes and
delivers this Security Agreement; and

         WHEREAS, the Grantor previously granted security interests in favor of
two existing and senior secured parties;

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

                                    AGREEMENT

         Section 1.        Definitions. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement, or, if not
defined therein, shall have the meanings set forth in the Secured Notes. All
terms defined in the Uniform Commercial Code as from time to time enacted and in
effect in the State of California (the "UCC") and used herein without other
definitions shall have the same definitions herein as specified from time to
time therein. In addition, the following terms shall have the respective
meanings set forth below:

                           "OBLIGATIONS" means all indebtedness, obligations and
liabilities of the Grantor to the Secured Parties, in its capacity as such,
under the Secured Notes and this Agreement, including without limitation
principal, interest (whether accruing prior to or after the commencement of any
proceeding under bankruptcy, insolvency, receivership or similar laws), and all
fees, costs and expenses payable in respect thereof (including reasonable legal,
investment banking, accounting, and other professional fees and expenses



and court costs) existing on the date of this Agreement or arising thereafter,
whether direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, arising by contract, operation of law or
otherwise, arising or incurred under this Agreement or the Secured Notes or in
respect of the Loan or any other extensions of credit made under the Secured
Notes or other instruments at any time evidencing any thereof or otherwise made
by the Secured Parties.

                           "PERMITTED LIENS" means (a) liens to secure taxes,
assessments and other government charges in respect of obligations not overdue
or being contested in good faith through appropriate procedures or liens to
secure claims for labor, material or supplies in respect of obligations not
overdue or being contested in good faith through appropriate procedures; (b)
deposits or pledges made in connection with, or to secure payment of, workmen's
compensation, unemployment insurance, old age pensions or other social security
obligations; (c) liens in respect of judgments or awards that otherwise do not
create an Event of Default; (d) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 60 days from the date
of creation thereof in respect of obligations not overdue or being contested in
good faith through appropriate procedures; (e) encumbrances on real estate
consisting of easements, rights of way, zoning restrictions, restrictions on the
use of real property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Grantor is a party; (f)
liens in favor of the Secured Parties; (g) purchase money security interests in
specific items of equipment; (h) liens granted pursuant to the Silicon Valley
Bank Agreement, so long as the aggregate principal amount of the obligations
outstanding with respect to such liens does not exceed the "Credit Limit" as
defined in the Silicon Valley Bank Agreement (as such definition is formulated
as of the date hereof); (i) liens granted pursuant to the Sanmina Agreements
(but only prior to the issuance of the Sanmina Notes); (j) liens granted
pursuant to the Sanmina Notes and related security agreement; and (k) liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by the lien described in clause (h) of this section,
subject to the principal limit set forth in such clause.

         "PERSON" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, trust,
association, organization, or other entity.

         "RIGHTS OF THE SENIOR SECURED LENDERS" shall mean (i) the rights of
Silicon Valley Bank pursuant to the Silicon Valley Bank Agreement (subject to
the provisions of the Subordination Agreement of even date herewith among
Silicon Valley Bank, the Grantor and the Secured Parties), and (ii) prior to the
Sanmina Closing (as defined in the Purchase Agreement), the rights of
Sanmina-SCI Corporation and Sanmina Canada ULC pursuant to the Sanmina
Agreements. After the issuance of the Sanmina Notes, Silicon Valley Bank shall
be the sole lender with a security interest that is senior to the security
interest granted in this Agreement, and the security interest granted hereunder
shall be pari-passu with that security interest granted pursuant to the security
agreement entered into by the Grantor in connection with the Sanmina Notes.

         "SILICON VALLEY BANK AGREEMENT" shall mean that certain Loan and
Security Agreement, dated as of November 29, 2001, between the Company and
Silicon Valley Bank, Commercial Finance Division (as amended, provided that any
such amendment shall

                                      - 2 -



not provide for aggregate obligations in excess of the limit provided in clause
(h) of the "Permitted Liens" definition above).

         "SANMINA AGREEMENTS" shall mean (i) that certain Settlement Agreement
and Mutual General Release, dated as of January 12, 2002, between the Company
and Sanmina-SCI Corporation and Sanmina Canada ULC; and (ii) that certain
Security Agreement, dated as of January 12, 2002, between the Company and
Sanmina-SCI Corporation, in each case as in effect on the date hereof.

         Section 2.        Grant of Security Interest.

                           (a)      The Grantor hereby grants to the Agent, as
collateral agent and representative for the pro rata benefit of the Note
Holders, to secure the timely payment and performance in full of all of the
Obligations, a continuing security interest in and so pledges and assigns to the
Agent (as collateral agent and representative for the pro rata benefit of the
Note Holders) the following properties, assets and rights of the Grantor,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds, products, rents, offspring and profits thereof, accessions thereto,
and supporting obligations relating thereto (all of the same being hereinafter
called the "COLLATERAL"):

                           All personal and fixture property of every kind and
nature including, without limitation, all furniture, fixtures, equipment, raw
materials, inventory, goods, vehicles, accounts, contract rights, payment
intangibles, rights to the payment of money, insurance refund claims,
health-care-insurance receivables and all other insurance claims and proceeds,
tort claims, proceeds of fraudulent transfer, preference, or similar claims,
pension fund overfunded amounts, chattel paper, documents, instruments, letters
of credit, letter-of-credit rights, investment accounts, securities, security
entitlements, securities accounts, securities contracts, commodities contracts,
commodities accounts, financial assets, investment property, and all general
intangibles, tax refund claims, recoveries for preference and fraudulent
conveyance actions, license fees, patents, patent applications, trademarks,
trademark applications, trade names, trade styles, trade dress, logos, other
source of business identifiers, associated product lines, rights to use,
advertise, market and sell all inventions disclosed or claimed in any of the
foregoing, copyrights, copyright applications, mask-works, rights to sue and
recover for past infringement of patents, trademarks, copyrights and mask-works,
renewals, reissues and extensions of all of the foregoing, computer programs,
software, engineering drawings, service marks, customer lists, goodwill, and all
licenses, permits, agreements of any kind or nature pursuant to which the
Grantor possesses, uses or has authority to possess or use property (whether
tangible or intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of the Grantor, and all
recorded data of any kind or nature, regardless of the medium of recording
including, without limitation, all software, writings, plans, specifications and
schematics, and all proceeds, products, rents and profits, of all of the
foregoing, however evidenced; provided, however, that Collateral shall not
include, and the Company shall not be deemed to have granted a security interest
in, (i) any of the Company's rights or interests in any license, contract or
agreement to which the Company is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of a prohibition on assignment (which is otherwise valid and
enforceable) contained in such license, contract or agreement or otherwise; and
(ii) any real property.

                                     - 3 -



         Section 3.        Title to Collateral, etc. The Grantor is the owner of
the Collateral free from any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement and
other Permitted Liens. The Grantor has full power and authority to grant the
security interests granted pursuant to Section 2 hereof and to execute, deliver
and perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person, other than any consent or
approval that has been obtained. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9102(34) or "consumer goods"
as defined in Section 9102(23), of the UCC.

         Section 4.        Continuous Perfection. The Grantor's principal place
of business and jurisdiction of organization are as indicated on Schedule 1
hereto. Until all Obligations have been paid and performed and this Agreement
has been terminated, the Grantor will not change the same, or the name,
identity, corporate structure or jurisdiction of organization of the Grantor in
any manner, without providing at least thirty (30) days' prior written notice to
the Agent.

         Section 5.        No Liens. Except for the security interest herein
granted and other Permitted Liens, the Grantor shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Grantor shall defend the same against all claims and demands of all Persons at
any time claiming the same or any interests therein adverse to the Secured
Parties. The Grantor shall not pledge, mortgage or create, or suffer to exist a
security interest in the Collateral in favor of any Person other than the Agent
(as collateral agent and for the pro rata benefit of the Secured Parties),
except for Permitted Liens.

         Section 6.        No Transfers. The Grantor will not sell or offer to
sell or otherwise transfer the Collateral or any interest therein except for (a)
licenses of general intangibles in the ordinary course of business and (b) sales
or other dispositions in the ordinary course of business.

         Section 7.        Maintenance of Collateral; Compliance with Law. The
Grantor will keep the Collateral in good order and repair (subject to ordinary
wear and tear) and will not use the same in violation of law or any policy of
insurance thereon. The Agent, or its designee, may inspect the Collateral at any
reasonable time and upon reasonable notice, wherever located. The Grantor will
pay promptly when due, or contest in good faith via appropriate procedures, all
taxes, assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of such Collateral or incurred
in connection with this Agreement.

         Section 8.        Collateral Protection Expenses; Preservation of
Collateral.

                           (a)      In its discretion, but subject to Rights of
the Senior Secured Lenders, the Agent may discharge taxes and other encumbrances
at any time levied or placed on any of the Collateral, make repairs thereto and
pay any necessary filing fees. The Grantor agrees to reimburse the Agent on
demand for any and all expenditures so made. The Agent shall have no obligation
to the Grantor to make any such expenditures, nor shall the making thereof
relieve the Grantor of any default.

                                     - 4 -



                           (b)      Anything herein to the contrary
notwithstanding, the Grantor shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the Grantor
thereunder. Neither the Agent nor any Secured Party shall have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Agent or any Secured Party of any payment
relating to any of the Collateral, nor shall the Agent or any Secured Party be
obligated in any manner to perform any of the obligations of the Grantor under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Secured Party in
respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts that may have been assigned to the Agent or to which the Agent may be
entitled at any time or times. The Agent's sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9207 and, with respect to Collateral under the Agent's
control, Section 9208, of the UCC or otherwise, shall be to deal with such
Collateral in the same manner as the Agent deals with similar property for its
own account.

         Section 9.        Securities and Deposits. Subject to the Rights of the
Senior Secured Lenders, the Agent may at any time, at its option, transfer to
itself or any nominee any securities constituting Collateral, receive any income
thereon and hold such income as additional Collateral or apply it on the
Obligations. Whether or not Obligations are due the Agent may (subject to the
Rights of the Senior Secured Lenders) demand, sue for, collect, or make any
settlement or compromise it deems desirable with respect to the Collateral.
Regardless of the adequacy of the Collateral or any other security for the
Obligations, any deposits or other sums at any time credited by or due from any
Secured Party to the Grantor may at any time be applied or set off against any
of the Obligations.

         Section 10.       Notification to Account Debtors and Other Obligors.
Subject to the Rights of the Senior Secured Lenders, the Grantor shall, at any
time upon the request of the Agent, notify account debtors on accounts, chattel
paper and general intangibles of the Grantor and obligors on instruments or
other collateral for which the Grantor is an obligee of the security interest of
the Agent in any account, chattel paper, general intangible or instrument and
that payment thereof is to be made directly to the Agent or the Secured Parties
or to any financial institution designated by the Agent as the Agent's agent
therefor, and the Agent may itself, without notice to or demand upon the
Grantor, so notify account debtors and obligors. After the making of such a
request or the giving of any such notification, the Grantor shall hold any
proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Grantor as trustee for the Agent and the Secured
Parties without commingling the same with other funds of the Grantor and shall
turn the same over to the Agent in the identical form received, together with
any necessary endorsements or assignments. Subject to the Rights of the Senior
Secured Lenders, the Grantor shall apply the proceeds of collection of accounts,
chattel paper, general intangibles, and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.

         Section 11.       Further Assurances. The Grantor, at its own expense,
shall promptly do, make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Agent may reasonably
request more completely to vest in and assure to

                                     - 5 -



the Agent its rights hereunder or in any of the Collateral (on behalf of, and
for the pro rata benefit of, the Secured Parties), including, without
limitation, (a) executing (if necessary), delivering and, where appropriate,
filing financing statements and continuation statements under the UCC and
documents having comparable functions under other applicable law; (b) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party; (c)
obtaining waivers from mortgagees and landlords; (d) subject to the Rights of
the Senior Secured Lenders, taking all actions required by the UCC, including
obtaining any necessary agreements from securities intermediaries, depository
banks, or, as applicable, letter of credit issuers, to establish and maintain
the Agent's control over all investment property, deposit accounts, chattel
paper, and letter of credit rights; (e) obtaining insurance endorsements,
including (subject to the Rights of the Senior Secured Lenders) loss payee and
additional insured endorsements, as applicable; and (f) promptly notifying the
Agent of any commercial tort claim arising after the date hereof. The Grantor
authorizes the Agent from time to time to file such financing statements or
other documents as the Agent may deem appropriate to perfect the security
interest granted hereunder, or to ensure the continuing perfection, priority and
enforceability thereof. The Grantor acknowledges that any such financing
statements may describe the Collateral as "all assets" of the Grantor or contain
any other description of similar import. Subject to the Rights of the Senior
Secured Lenders, if any amount greater than $50,000, in the aggregate, payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent.

         Section  12.      Power of Attorney.

                           (a)      Subject to the Rights of the Senior Secured
Lenders, the Grantor hereby irrevocably constitutes and appoints the Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorneys-in-fact with full irrevocable power and authority in the place
and stead of the Grantor or in the Agent's own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right, on
behalf of the Grantor, without notice to or assent by the Grantor, to do the
following:

                                    (i)      upon the occurrence and during the
continuance of an Event of Default, generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral in
such manner as is consistent with the UCC and as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to do at the
Grantor's expense, at any time, or from time to time, all acts and things that
the Agent deems necessary to protect, preserve or realize upon the Collateral
and the Agent's security interest therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do, including,
without limitation, (A) the filing and prosecuting of registration and transfer
applications with the appropriate federal or local agencies or authorities with
respect to trademarks, copyrights and patentable inventions and processes, (B)
upon written notice to the Grantor and any other secured lenders, the exercise
of voting rights with respect to voting securities, which rights may be
exercised, if the Agent so elects,

                                     - 6 -



with a view to causing the liquidation in a commercially reasonable manner of
assets of the issuer of any such securities and (C) the execution, delivery and
recording, in connection with any sale or other disposition of any Collateral,
the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and

                                    (ii)     to file such financing statements,
including amendments, assignments, continuation statements and initial financing
statements in lieu of continuation statements, with respect hereto, with or
without the Grantor's signature, or a photocopy of this Agreement in
substitution for a financing statement, in tangible form, electronically or by
any other available means, at such times and with such filing offices as the
Agent may deem appropriate and to execute in the Grantor's name any financing
statements and continuation statements which may for any reason require the
Grantor's signature. Any such financing statements may describe the Collateral
as described herein, may indicate that the Agent has a security interest in all
assets or all personal property of the Grantor, or may otherwise appropriately
describe the Collateral.

                           (b)      To the extent permitted by law, the Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable.

                           (c)      The powers conferred on the Agent hereunder
are solely to protect the interests of the Agent (and the Secured Parties) in
the Collateral and shall not impose any duty upon the Agent to exercise any such
powers. The Agent shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to the Grantor
for any act or failure to act, except for the Agent's own gross negligence or
willful misconduct.

         Section 13.       Remedies. Subject to the Rights of the Senior Secured
Lenders, if an Event of Default shall have occurred and be continuing, the Agent
may, without notice or demand to the Grantor, declare this Agreement to be in
default, and the Agent shall thereafter have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the UCC, including, without
limitation, the right to take possession of the Collateral for the pro rata
benefit of the Secured Parties, and for that purpose the Agent may, so far as
the Grantor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. Subject to the Rights
of the Senior Secured Lenders, the Agent may in its discretion require the
Grantor to assemble all or any part of the Collateral at such location or
locations within the state(s) of the Grantor's principal office(s) or at such
other locations as the Agent may designate. Subject to the Rights of the Senior
Secured Lenders, unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the
Agent shall give to the Grantor at least ten (10) business days' prior written
notice of the time and place of any public sale of Collateral or of the time
after which any private sale or any other intended disposition is to be made.
The Grantor waives any and all rights that it may have to judicial hearing in
advance of the enforcement of any of the Agent's and the Secured Parties' rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and exercise its rights
with respect thereto.

                                     - 7 -



         Section 14.       Waivers; Amendment.

                           (a)      The Grantor waives (to the extent permitted
by applicable law) demand, notice, protest, notice of acceptance of this
Agreement, notice of Loan made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect to both the Obligations and the
Collateral, the Grantor assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or Person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. Neither the Secured Parties
nor the Agent shall have any duty as to the collection or protection of the
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof.

                           (b)      No amendment of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by both parties hereto. The Agent shall not be deemed to have waived
any of its or the Secured Parties' rights upon or under the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Agent. No
delay or omission on the part of the Agent in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent and the Secured Parties with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.

         Section 15.       Marshalling. The Agent shall not be required to
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent and the Secured Parties hereunder in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Grantor hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Agent's or the Secured Parties' rights under this Agreement or under any
other instrument creating or evidencing any of the Obligations or under which
any of the Obligations is outstanding or by which any of the Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, the Grantor hereby irrevocably waives the benefits of all such
laws.

         Section 16.       Proceeds of Dispositions; Expenses. The Grantor shall
pay to the Agent and the Secured Parties on demand any and all reasonable
expenses, including expenses of its counsel, accountants and of any experts,
agents or other professional advisors, incurred or paid by the Agent or the
Secured Parties in protecting, preserving or enforcing the Agent's or the
Secured Parties' rights under or in respect of any of the Obligations or any of
the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied

                                     - 8 -



to the payment of the Obligations in such order or preference as the Agent may
determine, proper allowance being made for any Obligations not then due. Upon
the final payment and satisfaction in full of all of the Obligations and after
making any payments required by Sections 9608 and 9615 of the UCC, any excess
shall be returned to the Grantor. In the event that the proceeds of dispositions
of all Collateral are not sufficient to pay the Obligations in full, the Grantor
shall remain liable for any deficiency.

         Section 17.       Overdue Amounts. Until paid, all amounts due and
payable by the Grantor hereunder shall be a debt secured by the Collateral and
shall bear, whether before or after judgment, interest at the rate of interest
for overdue principal set forth in the Secured Note.

         Section 18.       Continuing Security Interest; Termination. This
Agreement shall create a continuing security interest in all of the Collateral
and the security interest shall survive until, and this Agreement shall remain
in full force and effect and terminate only upon, the payment and performance in
full of all Obligations (including payment in full in cash in immediately
available funds in the case of Obligations consisting of payment obligations).

         Section 19.       Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Company for liquidation or reorganization, should Company become
insolvent or make an assignment for the benefit of any creditor or creditors, or
should a receiver or trustee be appointed for all or any significant part of
Company's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

         Section 20.       Governing Law. THIS AGREEMENT SHALL FOR ALL PURPOSES
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS
OF THE STATE OF CALIFORNIA (EXCEPT TO THE EXTENT THAT THE UNIFORM COMMERCIAL
CODE OF ANOTHER STATE WOULD GOVERN MATTERS PERTAINING TO COLLATERAL PURSUANT TO
THE CHOICE OF LAW RULES SET FORTH IN THE APPLICABLE UNIFORM COMMERCIAL CODE).
The parties hereto (a) agree that any legal suit, action or proceeding arising
out of or relating to this Agreement will be instituted exclusively in the
courts of the State of California sitting in the County of Los Angeles, or any
Federal court in such State, (b) waive any objection which such party may have
now or hereafter based upon forum non conveniens or to the venue of any such
suit, action or proceeding, and (c) irrevocably consent to the jurisdiction of
the State Courts located in said State in any such suit, action or proceeding.
Each such party further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in said
courts in said State, and agrees that service of process upon such party, mailed
by certified mail to such party's address specified in Section 22, will be
deemed in every respect effective service of process upon such party, in any
suit, action or proceeding.

                                     - 9 -



         Section 21.       Waiver of Jury Trial. EACH PARTY HERETO WAIVES THEIR
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by
law, each party waives any right that it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Grantor (a) certifies that neither the Agent y nor any
representative, agent or attorney of the Agent has represented, expressly or
otherwise, that the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that, in making the Loan evidenced by
the Secured Note, the Secured Parties and the Agent are relying upon, among
other things, the waivers and certifications contained in this Section 21.

         Section 22.       Miscellaneous.

                           (a)      The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof.

                           (b)      This Agreement and all rights and
obligations hereunder shall be binding upon the Grantor and its respective
successors and assigns, and shall inure to the benefit of the Agent, the Secured
Parties, and their successors and assigns.

                           (c)      If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein.

                           (d)      This Agreement and the Exhibits and
Schedules, taken together with the Secured Note and the Purchase Agreement and
the other documents contemplated therein and herein represents the final
agreement between the parties hereto with respect to the matters set forth
herein and may supersede any prior oral or written, or any contemporaneous oral
agreements or understandings of the parties hereto.

                           (e)      Notices, demands, consents or other
communications given or made in connection with this Note shall be in writing
and shall be sent via facsimile or mailed by first-class registered or certified
airmail, or nationally recognized overnight express courier postage prepaid, and
deemed given when so mailed to the following addresses:

                                    if to Grantor, to:

                                           Novatel Wireless, Inc.
                                           9360 Towne Centre Drive, Suite 110
                                           San Diego, CA  92121
                                           Attention: Peter Leparulo, Chief
                                                      Executive Officer
                                           Facsimile: (858) 812-3414

                                    with a copy so mailed to:

                                     - 10 -



                                           Latham & Watkins LLP
                                           633 West Fifth Street, Suite 4000
                                           Los Angeles, CA 90071-2007
                                           Attention: J. Scott Hodgkins, Esq.
                                           Facsimile:  (213) 891-8763

                                    if to Agent to:

                                           PS Capital LLC
                                           800 Fifth Avenue, Suite 19a
                                           New York, NY  10002
                                           Attention: Stan Blau
                                           Facsimile: (212) 988-5333

                                    with a copy so mailed to:

                                           Irell & Manella LLP
                                           1800 Avenue of the Stars, Suite 900
                                           Los Angeles, CA  90067
                                           Attention: Alvin G. Segel, Esq.
                                           Facsimile: (310) 203-7199

                           (f)      This Agreement may be executed in two or
more counterparts and/or by facsimile, each of which shall constitute an
original but all of which when taken together shall constitute but one contract.
The Grantor acknowledges receipt of a copy of this Agreement.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                     - 11 -



                     [Signature Page to Security Agreement]

         IN WITNESS WHEREOF, intending to be legally bound, the undersigned
Grantor has caused this Agreement to be duly executed as of the date first above
written.

                                          GRANTOR

                                          Novatel Wireless, Inc.,
                                          a Delaware corporation

                                          By:  /s/ Peter V. Leparulo
                                               Name:  Peter V. Leparulo
                                               Title: Chief Executive Officer

Accepted:

AGENT

PS Capital LLC

/s/Stanley M. Blau
- -------------------------------------
By:  Stanley M. Blau
Its: Managing Director



                                   SCHEDULE 1

     GRANTOR'S PRINCIPAL PLACE OF BUSINESS AND JURISDICTION OF ORGANIZATION

Jurisdiction of Organization:      Delaware
Principal Place of Business:       California

                                                                     EXHIBIT 4.6


                         FORM OF NOVATEL WIRELESS, INC.

                              AMENDED AND RESTATED
                           CERTIFICATE OF DESIGNATION
                      SERIES A CONVERTIBLE PREFERRED STOCK
                         PURSUANT TO SECTION 151 OF THE
                GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

         NOVATEL WIRELESS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), DOES HEREBY CERTIFY THAT, pursuant to Section 151 of the General
Corporation Law of the State of Delaware (the "DGCL"), the following resolution
was duly adopted and approved by a committee of the Board of Directors of the
Corporation, duly designated pursuant to Section 141(c)(2) of the DGCL, at a
meeting duly called and held on March [____], 2003:



                             NOVATEL WIRELESS, INC.

                      SERIES A CONVERTIBLE PREFERRED STOCK

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article IV of the Corporation's Amended and
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created out of the authorized but unissued
shares of the capital stock of the Corporation, such series to be designated
Series A Preferred Stock (the "Series A Preferred Stock"), to consist of 3,700
shares, par value $.001 per share, of which the preferences and relative and
other rights, and the qualifications, limitations or restrictions thereof, shall
be (in addition to those set forth in the Corporation's Amended and Restated
Certificate of Incorporation) as follows:

         SECTION 1. DIVIDENDS. The holders of Series A Preferred Stock shall be
entitled to receive, from funds legally available therefor, a cumulative
dividend at the rate per annum of 6.5% of the purchase price paid per share of
Series A Preferred Stock held by such holder, payable, subject to any applicable
contractual restrictions, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, as described in Section 2, upon any redemption
described in Section 5, or otherwise quarterly in arrears when and as declared
by the Board of Directors each January 1, April 1, July 1 and October 1 of the
applicable year. Notwithstanding the foregoing, no dividends shall be declared,
or paid to the holders of the Series A Preferred Stock (other than in-kind in
connection with the conversion of the Series A Preferred Stock pursuant to
Section 3 hereof) or any series of preferred stock having dividend rights pari
passu with those of the Series A Preferred Stock, unless the holders of Series B
Preferred Stock and any other series of preferred stock created after the date
hereof having preferential dividend and liquidation rights vis-a-vis the Series
A Preferred Stock (such Series B Preferred Stock and any other series of
Preferred Stock with such preferential rights, the "Senior Preferred Stock")
shall have been paid in full all of the dividends to which they are entitled. No
dividends shall be declared, or paid to the holders of common stock, par value
$.001 per share, of the Corporation (the "Common Stock"), unless the holders of
Series A Preferred Stock and any other series of preferred stock having dividend
and liquidation rights pari passu with those of the Series A Preferred Stock
("Pari Passu Preferred Stock") have been paid in full all of the dividends to
which they are entitled. The Series A Preferred Stock shall also participate in
any dividend or distribution, other than a liquidating distribution, declared or
paid on the Common Stock, pro rata, on the basis of the number of shares of
Common Stock (as determined on an as-converted basis for the Series A Preferred
Stock) into which such Series A Preferred Stock is then convertible.

         Subject to this Section 1, dividends may be declared and paid on Common
Stock from funds lawfully available therefor as and when determined by the Board
of Directors of the Corporation.

         SECTION 2. LIQUIDATION RIGHTS.

         (a)      In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders of
each share of Series A Preferred Stock shall be entitled to be paid out of the
assets of the Corporation available for distribution to

                                     - 2 -



holders of the Corporation's capital stock of all classes, after satisfaction of
all preferential liquidation rights of the Senior Preferred Stock, and subject
to the rights of any Pari Passu Preferred Stock, an amount equal to $1,000 per
share of Series A Preferred Stock (the "Liquidation Preference"), plus all
dividends accrued but unpaid thereon, to and including the date full payment
shall be tendered to the holders of the Series A Preferred Stock with respect to
such liquidation, dissolution or winding up. Neither the consolidation or merger
of the Corporation into or with another corporation or corporations, nor the
sale, lease, transfer or conveyance of all or substantially all of the assets of
the Corporation to another corporation or any other entity shall be deemed to be
a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 2(a).

         After payment in full of the Liquidation Preference to which the
holders of the Series A Preferred Stock are entitled, such holders will not be
entitled to any further participation in the distribution of assets of the
Corporation.

         Upon conversion of shares of Series A Preferred Stock into shares of
Common Stock pursuant to Section 3, the holders of such Common Stock shall not
be entitled to any preferential payment or distribution in case of any
liquidation, dissolution or winding up, but shall share ratably in any
distribution of the assets of the Corporation among the holders of Common Stock.

         (b)      Distributions Other than Cash. Whenever the distributions
provided for in this Section 2 shall be payable in property other than cash, the
value of such distributions shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.

         (c)      Notice. Written notice of any proposed liquidation,
dissolution or winding up of the affairs of the Corporation, stating a payment
date, the amount of the Liquidation Preference and the place where such
Liquidation Preference shall be payable, shall be delivered to the holders of
Series A Preferred Stock not less than 45 days prior to the proposed date of
such proposed liquidation, dissolution or winding up.

         SECTION 3. CONVERSION. The holders of Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):

         (a)      Optional Conversion: Series A Conversion Price. Subject to
Section 3(b), each share of Series A Preferred Stock shall be convertible,
without the payment of any additional consideration by the holder thereof and at
the option of the holder thereof, at any time after the date such share was
issued, at the office of the Corporation or any transfer agent for the Series A
Preferred Stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference plus an
amount equal to all accrued and unpaid dividends by the Series A Conversion
Price, determined as hereinafter provided, in effect at the time of conversion.
From and after the date of filing of this Amended and Restated Certificate of
Designation ("Filing Date"), the conversion price at which shares of Common
Stock shall be deliverable upon conversion of Series A Preferred Stock without
the payment of any additional consideration by the holder thereof (the "Series A
Conversion Price") shall initially be $11.55 per share of Common Stock. Such
Series A Conversion Price shall be subject

                                     - 3 -



to further adjustment, in order to adjust the number of shares of Common Stock
into which the Series A Preferred Stock is convertible, as hereinafter provided.

         (b)      Mechanics of Optional Conversion. Before any holder of Series
A Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for Series A Preferred
Stock, shall give written notice to the Corporation at such office that the
holder elects to convert the same and shall state therein the holder's name or
the name or, subject to any legal or contractual restrictions on transfer
thereof, names of the holder's nominees in which the holder wishes the
certificate or certificates for shares of Common Stock to be issued and shall
pay any transfer or similar tax, if required. The date on which the holder
satisfies all these requirements is the "Conversion Date". On the Conversion
Date, all rights with respect to the Series A Preferred Stock so converted shall
terminate, except for any of the rights of the holder thereof, upon surrender of
the holder's certificate or certificates therefor, to receive certificates for
the number of shares of Common Stock into which such Series A Preferred Stock
has been converted. If so required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or by the holder's attorney duly authorized in writing.
No fractional share of Common Stock shall be issued upon the conversion of
Series A Preferred Stock. In lieu of any fractional share to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the applicable Series A Conversion Price then in effect.
Within five business days after the Conversion Date, the Corporation shall issue
and deliver to such holder of Series A Preferred Stock, or, subject to any legal
or contractual restrictions on transfer thereof, to the holder's nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which the holder shall be entitled as aforesaid. The person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date. Notwithstanding anything to the contrary
contained in Sections 3(a) and 3(b), the holder of any shares of Series A
Preferred Stock which are selected for redemption by the Corporation in
accordance with Section 5 shall not be entitled to convert such shares into
Common Stock unless the Conversion Date with respect to such shares is at least
two business days prior to the Redemption Date (as defined below).

         (c)      Adjustments to the Conversion Price.

                  (i)      Special Definition. For purposes of this Section
3(c), the following definition shall apply:

                           (1)      "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued by the Corporation after the Filing Date
by reason of stock dividends, distributions payable in common stock, stock
splits, reverse stock splits, recapitalizations, reclassifications, combinations
or exchanges of shares, separations, reorganizations, liquidations or other
similar event, other than:

                                    (a)      securities issued or issuable as a
dividend or distribution on the Series A Preferred Stock;

                                     - 4 -



                                    (b)      any securities issued or issuable
as a result of an adjustment of the Series A Conversion Price made pursuant to
this Section 3(c);

                                    (c)      any shares of capital stock of the
Corporation, not to exceed one-half of one percent of the total issued and
outstanding capital stock of the Corporation on an "as converted to Common
Stock" basis, the issuance of which is approved by vote of a majority of the
Board of Directors of the Corporation, including the affirmative vote of a
majority of the directors designated for election by the holders of the Series A
Preferred Stock; and

                                    (d)      not more than ten shares of capital
stock of the Corporation on an "as converted to Common Stock" basis, the
issuance of which resulted from mathematical or other error or inadvertence,
provided that the transaction in which such shares were issued was approved at
the time by vote of a majority of the Board of Directors of the Corporation,
including the affirmative vote of a majority of the directors designated for
election by the holders of the Series A Preferred Stock.

                  (ii)     Adjustment of the Series A Conversion Price for
Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common
Stock.

                           (1)      Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall be deemed to have issued
Additional Shares of Common Stock in a stock dividend, stock distribution or
subdivision, the Series A Conversion Price and the number of shares of Common
Stock issuable upon conversion of each share of Series A Preferred Stock in
effect immediately prior to such deemed issuance shall, concurrently with the
effectiveness of such deemed issuance, be proportionately decreased or
increased, as appropriate.

                           (2)      Combinations or Consolidations. In the event
the outstanding shares of Common Stock shall be combined, consolidated or
otherwise changed, by recapitalizations, reclassifications, stock splits,
reverse stock splits, exchanges of shares, separations, reorganizations,
liquidations or otherwise, the Series A Conversion Price and the number of
shares of Common Stock issuable upon conversion of each share of Series A
Preferred Stock in effect immediately prior to any such combination,
consolidation or other event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate.

         (d)      Adjustments for Certain Dividends and Distributions. In the
event that at any time or from time to time after the Filing Date, the
Corporation shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock, then
and in each such event provision shall be made so that the holders of Series A
Preferred Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series A Preferred Stock
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
actual conversion date, retained such securities receivable by them as aforesaid
during such period, giving application during such period to all adjustments
called for herein.

                                     - 5 -



         (e)      Adjustment for Reclassification, Exchange or Substitution. In
the event that at any time or from time to time after the Filing Date, the
Common Stock issuable upon the conversion of Series A Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for in
Section 3(c)(ii) above, or a merger, consolidation, or sale of assets provided
for in Section 3(f) below) then and in each such event the holder of any share
or shares of Series A Preferred Stock shall have the right thereafter to convert
such shares into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by the holder of a number of shares of Series A Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.

         (f)      Adjustment for Merger, Consolidation or Sale of Assets. In the
event that at any time or from time to time after the Filing Date, the
Corporation shall sell all or substantially all of its assets or merge or
consolidate with or into another entity, each share of Series A Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of Series A Preferred Stock
would have been entitled to receive upon such consolidation, merger or sale;
and, in such case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the provisions set forth
in this Section 3 with respect to the rights and interest thereafter of the
holders of Series A Preferred Stock, to the end that the provisions set forth in
this Section 3 (including provisions with respect to changes in and other
adjustments of the Series A Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series A Preferred
Stock.

         (g)      No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, including, without limitation, voluntary bankruptcy
proceedings, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation but shall at all
times in good faith assist in the carrying out of all the provisions of this
Section 3 and in the taking of all such actions as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Preferred Stock under this Section 3 against impairment.

         (h)      Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price pursuant to this
Section 3, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each affected
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment is
based; provided, however, that the Corporation shall not be required to provide
each holder with such a certificate more than one time per calendar quarter. The
Corporation shall, upon the written request at any time of any affected holder
of Series A Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Series A Conversion Price in effect at the time, and (iii) the number of shares
of Common

                                     - 6 -



Stock and the amount, if any, of other property which at the time would be
received upon the conversion of each share of Series A Preferred Stock.

         (i)      Notices of Record Date. In the event of any taking by the
Corporation of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall deliver to each
holder of Series A Preferred Stock at least twenty days prior to such record
date a notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution.

         (j)      Common Stock Reserve. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series A Preferred Stock.

         (k)      Certain Taxes. The Corporation shall pay any issue or transfer
taxes payable in connection with the conversion of Series A Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Series A Preferred Stock.

         (l)      Closing of Books. The Corporation shall at no time close its
transfer books against the transfer of any Series A Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series A Preferred Stock in any manner which interferes with the timely
conversion or permitted transfer of such Series A Preferred Stock or Common
Stock.

         SECTION 4. VOTING RIGHTS.

         (a)      Except as otherwise provided herein or as required by law, the
holders of the Series A Preferred Stock shall be entitled to notice of any
meeting of stockholders and shall vote upon any matter submitted to the
stockholders for a vote as a single class together with the holders of the
Common Stock, Series B Preferred Stock and any other series of preferred stock
entitled to vote generally on matters presented to the stockholders for a vote.
Holders of Series A Preferred Stock shall have that number of votes per share as
is equal to the number of whole shares of Common Stock into which each such
share of Series A Preferred Stock held by such holder could be converted on the
date for determination of stockholders entitled to vote at the meeting or on the
date of any written consent.

         (b)      Notwithstanding any other provision of this Section 4, in the
event that it is determined by Nasdaq (after full process, including any appeal
process available to the Corporation) that the voting provisions set forth in
this Section 4 violate or conflict with Nasdaq Marketplace Rule 4351, the number
of votes to which each share of Series A Preferred Stock is entitled shall be
reduced to the extent required to comply with such rule.

         (c)      Except as required by law, (i) the holders of the Series A
Preferred Stock shall not be entitled to vote as a separate class upon any
matter submitted to the stockholders for a vote, and (ii) the holders of the
Series A Preferred Stock shall have no right to vote with respect to the

                                     - 7 -



creation or issuance of a series of preferred stock having rights, preferences
and priviliges pari passu with, or senior to those of the Series A Preferred
Stock.

         SECTION 5. REDEMPTION.

         (a)      Redemption at Option of the Holder.

                  (i)      On or at any time following a Change of Control (as
defined below), each holder of Series A Preferred Stock may elect to have the
Corporation redeem from it, to the extent the Corporation has funds legally
available for such purpose, and subject to Section 5(a)(iii), any or all shares
of Series A Preferred Stock held by such holder; provided, however, if a Change
of Control occurs as a result of the acquisition by a holder of Series A
Preferred Stock or such holder's "affiliates" (as such term is defined in Rule
405 under the Securities Act of 1933, as amended) of beneficial ownership of
securities of the Corporation representing more than 50% of the voting power of
the Corporation (whether such acquisition is made by such holder or such
holder's affiliates, individually or as a member of a "group" (as described in
Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934)), such
holder shall not be entitled, as a result of such Change of Control, to require
the Corporation to redeem its Series A Preferred Stock pursuant to this Section
5(a). Such election may be made only by delivering to the Corporation (x) a
written notice signed by such holder specifying the number of shares of Series A
Preferred Stock so to be redeemed, and (y) certificates for the shares of the
Series A Preferred Stock so to be redeemed, together with stock powers therefor
duty executed by such holder in blank (such written election, certificates and
stock powers being referred to collectively as "Redemption Notice").

                  (ii)     The Corporation shall redeem from holders of Series A
Preferred Stock from whom the Corporation received a Redemption Notice, within
30 days of its receipt of such Redemption Notice, all the shares of the Series A
Preferred Stock as to which Redemption Notices have been given, to the extent
the Corporation has funds legally available for such purpose, and subject to
Section 5(a)(iii), by paying to the respective holders the amount equal to (x)
the number of shares of Series A Preferred Stock submitted for redemption
multiplied by (y)(i) the Liquidation Preference, plus (ii) all accrued but
unpaid dividends thereon to and including the date of such redemption, whether
or not declared.

                  (iii)    Notwithstanding anything to the contrary in this
Section 5, (x) in no event shall the Corporation redeem any share of Series A
Preferred Stock pursuant to Section 5(a) unless and until (x) a number of shares
of Series B Preferred Stock equal to or greater than 80% of the sum of the total
number of shares of Series B Preferred Stock (1) issued upon conversion of the
Tranche I Notes (as defined in that certain Securities Purchase Agreement, dated
as of March [_], 2003, by and between the Corporation and certain purchasers
("Securities Purchase Agreement")), and (2) issued and, as of the date of such
Change of Control, issuable under the Sanmina Notes (as defined in the
Securities Purchase Agreement), and (3) without duplication, any other shares of
Series B Preferred Stock issued in connection with the Third Closing (as defined
in the Securities Purchase Agreement) and any other shares of Series B Preferred
Stock issued on the Series B Original Issue Date (as defined in the Certificate
of Designation of Series B Convertible Preferred Stock (the "Series B
Certificate")), have been either (1) redeemed, (2) submitted for redemption
pursuant to a redemption notice under Section

                                     - 8 -



5 of the Series B Certificate and/or (3) converted into Common Stock pursuant to
Section 3 of the Series B Certificate, and (y) the Corporation has actually
redeemed all shares of Series B Preferred Stock as to which a redemption notice
has been submitted to the Corporation. In addition, notwithstanding anything to
the contrary in this Section 5, any redemption of the Series A Preferred Stock
pursuant to this Section 5(a) shall be subject to the redemption rights of any
Pari Passu Preferred Stock. In addition, if the funds of the Corporation legally
available for redemption of shares of Series A Preferred Stock are insufficient
to redeem the total number of shares of Series A Preferred Stock submitted for
redemption pursuant to Redemption Notices, those funds which are legally
available will be used to redeem (subject to the rights of any Pari Passu
Preferred Stock) the maximum possible number of whole shares ratably among the
holders of such shares who have submitted Redemption Notices as of such date of
determination. Any shares of Series A Preferred Stock not redeemed as described
in this Section 5(a)(iii) shall remain outstanding and, notwithstanding anything
herein to the contrary, shall remain entitled to all rights and preferences
otherwise provided herein.

         (b)      Redemption at the Option of the Corporation.

                  (i)      The Corporation may redeem at any time, in whole or
in part, the Series A Preferred Stock at a redemption price per share equal to
the Liquidation Preference plus all accrued and unpaid dividends through the
Redemption Date (the "Redemption Price"); provided, however, in no event shall
the Corporation redeem any shares of Series A Preferred Stock while any shares
of Senior Preferred Stock are outstanding. Any redemption effected pursuant to
this Section (5)(b)(i) shall be made on a pro rata basis among the holders of
the Series A Preferred Stock in proportion to the number of shares of Series A
Preferred Stock then held by them.

                  (ii)     The Corporation shall provide written notice (the
"Corporation Notice") by first class mail postage prepaid, to each holder of
record (determined at the close of business on the business day next preceding
the day on which the Corporation Notice is given) of the Series A Preferred
Stock to be redeemed, at the address last shown on the records of this
Corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder,
specifying the date of redemption (the "Redemption Date"), the Redemption Price,
the place at which payment may be obtained and calling upon such holder to
surrender to the Corporation, in the manner and at the place designated, his,
her or its certificate or certificates representing the shares to be redeemed;
provided that the Redemption Date shall be not less than 10 days from the date
of the Corporation Notice. Except as provided in Section (5)(b)(iii), on or
after the Redemption Date, each holder of Series A Preferred Stock to be
redeemed shall surrender to the Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Corporation Notice, and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.

                  (iii)    From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series A

                                     - 9 -



Preferred Stock designated for redemption in the Corporation Notice as holders
of Series A Preferred Stock (except the right to receive the Redemption Price
without interest upon surrender of their certificate or certificates) shall
cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares of Series A Preferred Stock to
be redeemed on such date, those funds which are legally available will be used
to redeem the maximum possible number of such shares ratably among the holders
of such shares to be redeemed based upon their holdings of Series A Preferred
Stock. The shares of Series A Preferred Stock not redeemed shall remain
outstanding and entitled to all the rights and preferences provided herein. At
any time thereafter when additional funds of the Corporation are legally
available for the redemption of shares of Series A Preferred Stock, such funds
will immediately be used to redeem the balance of the shares which the
Corporation has become obliged to redeem on any Redemption Date but which it has
not redeemed.

                  (iv)     "Change of Control" shall mean: (i) the acquisition
by any person or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Securities Exchange Act of 1934), of beneficial ownership of securities of the
Corporation representing more than 50% of the voting power of the Corporation;
or (ii) a merger or consolidation of the Corporation or a sale of all or
substantially all of the assets of the Corporation in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Corporation's securities prior to the first such transaction
continue to hold at least a majority of the voting power of the surviving entity
or acquirer of such assets. Notwithstanding anything to the contrary herein, in
no event shall the transactions consummated pursuant to the Securities Purchase
Agreement (including without limitation, the issuance of secured convertible
notes, the issuance of warrants and the issuance of Series B Preferred Stock and
the subsequent exercise of warrants or conversion of convertible notes or Series
B Preferred Stock) constitute a "Change of Control" for purposes of this Section
5.

         SECTION 6. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under this Amended and Restated Series A
Preferred Stock Certificate of Designation shall be in writing and shall be
deemed to have been duly given, made and received (a) when delivered against
receipt, (b) upon transmitter's confirmation of the receipt of a facsimile
transmission, which shall be followed by an original sent otherwise in
accordance with this Section 6, (c) upon confirmed delivery by a standard
overnight carrier, or (d) if to a U.S. resident, upon expiration of three
business days after the day when deposited in the U.S. mail, first class postage
prepaid, addressed to the Corporation at its principal executive office, or at
such other address of which the Corporation may notify the holders of Series A
Preferred Stock from time to time, or if to a holder of Series A Preferred Stock
or Common Stock, to such holder's address as shown by the records of the
Corporation.

         SECTION 7. STATUS OF REACQUIRED SHARES. Shares of Series A Preferred
Stock which have been issued and converted, redeemed or reacquired in any manner
shall (upon compliance with any applicable provisions of the laws of the State
of Delaware) have the status of authorized and unissued Preferred Stock
undesignated as to series and may be redesignated and reissued.

                                     - 10 -

                                                                     EXHIBIT 4.7

                                    FORM OF
                           CERTIFICATE OF DESIGNATION
                      SERIES B CONVERTIBLE PREFERRED STOCK
                                       OF
                             NOVATEL WIRELESS, INC.

         It is hereby certified that:

         1.       The name of the corporation is Novatel Wireless, Inc. (the
                  "Corporation").

         2.       The Corporation was formed under the laws of the State of
                  Delaware on April 26, 1996.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation this 12th day of March, 2003.

                                                /s/ Peter V. Leparulo___________
                                                Peter Leparulo
                                                Chief Executive Officer



                             NOVATEL WIRELESS, INC.

                      SERIES B CONVERTIBLE PREFERRED STOCK

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article IV of the Corporation's Amended and
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created out of the authorized but unissued
shares of the capital stock of the Corporation, such series to be designated
Series B Preferred Stock (the "Series B Preferred Stock"), to consist of 10,000
shares, par value $.001 per share, of which the preferences and relative and
other rights, and the qualifications, limitations or restrictions thereof, shall
be (in addition to those set forth in the Corporation's Amended and Restated
Certificate of Incorporation) as follows:

         SECTION 1.        DIVIDENDS. The holders of Series B Preferred Stock
shall be entitled to receive, from funds legally available therefor, a
cumulative dividend at the rate per annum of 8% of $1,000 per share of Series B
Preferred Stock (such per share figure, which shall be adjusted to reflect
appropriately any stock splits, combinations of the Series B Preferred Stock,
and similar transactions, the "Initial Purchase Price") held by such holder,
payable, subject to any applicable contractual restrictions, upon any
liquidation, dissolution or winding up of the affairs of the Corporation, as
described in Section 2, upon any redemption described in Section 5, or otherwise
quarterly in arrears when and as declared by the Board of Directors each January
1, April 1, July 1 and October 1 of the applicable year. No dividends shall be
declared, or paid to the holders of common stock, par value $.001 per share, of
the Corporation (the "Common Stock"), to the holders of the Series A Preferred
Stock, par value $0.001 per share, of the Corporation ("Series A Preferred
Stock") or any holders of any series of Preferred Stock having dividend and
liquidation rights junior to the Series B Preferred Stock (such Series A
Preferred Stock and any such other series of junior Preferred Stock, "Junior
Preferred Stock") (except for in-kind distributions in connection with the
conversion of such Junior Preferred Stock into Common Stock), unless the holders
of Series B Preferred Stock have been paid in full all of the dividends to which
they are entitled. The Series B Preferred Stock shall also participate in any
dividend or distribution, other than a liquidating distribution, declared or
paid on the Common Stock, pro rata, on the basis of the number of shares of
Common Stock (as determined on an as-converted basis for the Series B Preferred
Stock) into which such Series B Preferred Stock is then convertible.

         Subject to this Section 1, dividends may be declared and paid on Common
Stock from funds lawfully available therefor as and when determined by the Board
of Directors of the Corporation.

         SECTION  2.       LIQUIDATION RIGHTS.

         (a)      In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, the holders of
each share of Series B Preferred Stock shall be entitled preferentially to be
paid first out of the assets of the Corporation available for distribution to
holders of the Corporation's capital stock of all classes an amount per share of
Series B Preferred Stock equal to 150% times the sum of the Initial Purchase
Price, plus all dividends accrued but unpaid thereon (the "Liquidation



Preference"), to and including the date full payment shall be tendered to the
holders of the Series B Preferred Stock with respect to such liquidation,
dissolution or winding up. Neither the consolidation or merger of the
Corporation into or with another corporation or corporations, nor the sale,
lease, transfer or conveyance of all or substantially all of the assets of the
Corporation to another corporation or any other entity shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Section 2(a).

         After payment in full of the Liquidation Preference to which the
holders of the Series B Preferred Stock are entitled, distributions will be made
to the holders of the Junior Preferred Stock until their respective liquidation
preference has been paid in full.

         After payment in full of the liquidation preference to which the
holders of the Junior Preferred Stock are entitled, distributions will be made
to the holders of the Series B Preferred Stock, any series of Junior Preferred
Stock which participates with the Common Stock upon liquidation and the Common
Stock, in proportion to the number of shares of Common Stock (including shares
of Common Stock issuable upon conversion of the Series B Preferred Stock and, as
applicable, any such shares of Junior Preferred Stock) held by each such holder.

         Upon conversion of shares of Series B Preferred Stock into shares of
Common Stock pursuant to Section 3, the holders of such Common Stock shall not
be entitled to any preferential payment or distribution in case of any
liquidation, dissolution or winding up, but shall share ratably in any
distribution of the assets of the Corporation among the holders of Common Stock.

         (b)      DISTRIBUTIONS OTHER THAN CASH. Whenever the distributions
provided for in this Section 2 shall be payable in property other than cash, the
value of such distributions shall be determined as follows: If the assets
distributed are securities traded in a public market, the fair market value of
such assets shall be the closing price of such securities reported for the
business day immediately before such assets are distributed. If such assets are
not traded in a public market, the Board of Directors of the Corporation shall
initially determine fair market value in its reasonable good faith judgment. At
the time of any such distribution, the Corporation shall provide the holders of
the Series B Preferred Stock with written notice (within 10 days after the date
of such distribution) of its fair market value determination. If the holders of
a majority of the outstanding shares of Series B Preferred Stock ("Majority
Holders") deliver written notice, within 30 days following the delivery of the
Corporation's written notice, objecting to such determination, the fair market
value of the assets distributed shall be determined pursuant to the Appraisal
Procedure (as described in Section 3(c)(iii)(6) below), which determination
shall be binding on the holders of the Series B Preferred Stock and the
Corporation.

         (c)      NOTICE. Written notice of any proposed liquidation,
dissolution or winding up of the affairs of the Corporation, stating a payment
date, the amount of the Liquidation Preference and the place where such
Liquidation Preference shall be payable, shall be delivered to the holders of
Series B Preferred Stock not less than 45 days prior to the proposed date of
such proposed liquidation, dissolution or winding up.

                                      - 2 -



         SECTION  3.       CONVERSION. The holders of Series B Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):

         (a)      OPTIONAL CONVERSION: SERIES B CONVERSION PRICE. Subject to
Section 3(b), each share of Series B Preferred Stock shall be convertible,
without the payment of any additional consideration by the holder thereof and at
the option of the holder thereof, at any time after the date such share was
issued, at the office of the Corporation or any transfer agent for the Series B
Preferred Stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing (i) the Initial Purchase Price plus an
amount equal to all accrued and unpaid dividends by (ii) the Series B Conversion
Price, determined as hereinafter provided, in effect at the time of conversion.
The conversion price at which shares of Common Stock shall be deliverable upon
conversion of Series B Preferred Stock without the payment of any additional
consideration by the holder thereof (the "Series B Conversion Price") shall
initially be $0.70 per share of Common Stock. Such initial Series B Conversion
Price shall be subject to further adjustment, in order to adjust the number of
shares of Common Stock into which the Series B Preferred Stock is convertible,
as hereinafter provided.

         (b)      MECHANICS OF OPTIONAL CONVERSION. Before any holder of Series
B Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for Series B Preferred
Stock, shall give written notice to the Corporation at such office that the
holder elects to convert the same and shall state therein the holder's name or
the name or, subject to any legal or contractual restrictions on transfer
thereof, names of the holder's nominees in which the holder wishes the
certificate or certificates for shares of Common Stock to be issued and shall
pay any transfer or similar tax, if required. The date on which the holder
satisfies all these requirements is the "Conversion Date". On the Conversion
Date, all rights with respect to the Series B Preferred Stock so converted shall
terminate, except for any of the rights of the holder thereof, upon surrender of
the holder's certificate or certificates therefor, to receive certificates for
the number of shares of Common Stock into which such Series B Preferred Stock
has been converted. If so required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or by the holder's attorney duly authorized in writing.
No fractional share of Common Stock shall be issued upon the conversion of
Series B Preferred Stock. In lieu of any fractional share to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the applicable Series B Conversion Price then in effect.
Within five business days after the Conversion Date, the Corporation shall issue
and deliver to such holder of Series B Preferred Stock, or, subject to any legal
or contractual restrictions on transfer thereof, to the holder's nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which the holder shall be entitled as aforesaid. The person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.

                                      - 3 -



         (c)      ADJUSTMENTS TO THE CONVERSION PRICE.

                  (i)      SPECIAL PROVISIONS. For purposes of this Section
3(c), the following definitions shall apply:

                           (1)      "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued by the Corporation (including those
deemed to be issued pursuant to Section 3(c)(iii)(7)) after the first date on
which a share of Series B Preferred Stock was issued (the "Series B Original
Issue Date") for any reason, including without limitation as a result of sales
of Common Stock or rights to acquire Common Stock, the issuance of Options,
stock dividends, distributions payable in common stock, stock splits, reverse
stock splits, recapitalizations, reclassifications, combinations or exchanges of
shares, separations, reorganizations, liquidations or other similar event, other
than:

                                    (a)      securities issued or issuable as a
dividend or distribution on the Series B Preferred Stock;

                                    (b)      not more than ten shares of capital
stock of the Corporation on an "as converted to common stock" basis, the
issuance of which resulted from mathematical or other error or inadvertence,
provided that the transaction in which such shares were issued was approved at
the time by vote of a majority of the Board of Directors of the Corporation;

                                    (c)      the first 500,000 shares of Common
Stock issued or issuable pursuant to Employee Equity Issuances after the Series
B Original Issue Date (it being understood that the first such 500,000 shares
shall not be subject to Section 3(c)(iii)(2), and any subsequent Employee Equity
Issuances shall be subject to Section 3(c)(iii)(2); provided, further, such
500,000 share figure shall be appropriately adjusted to reflect transactions
described in Section 3(c)(ii) and Sections 3(d), 3(e) and 3(f));

                                    (d)      securities issued or issuable as a
dividend or distribution on the Series A Preferred Stock upon the conversion of
the Series A Preferred Stock to Common Stock; and

                                    (e)      any securities issued or issuable
as a result of an adjustment of the Series B Conversion Price made pursuant to
this Section 3(c).

                           (2)      "Convertible Securities" means any evidences
of indebtedness, shares of stock, or other securities directly or indirectly
convertible into or exchangeable for Common Stock or the value of which is
otherwise derived from or based upon the value of the Common Stock.

                           (3)      "Employee Equity Issuances" means the
issuance of shares of Common Stock or Options to officers, directors or
employees of, or consultants to, the Corporation pursuant to stock option or
stock purchase plans or agreements on terms approved by the Board of Directors.

                           (4)      "Option" means any right, option, or warrant
to subscribe for, purchase, or otherwise acquire Common Stock or Convertible
Securities.

                                      - 4 -



                  (ii)     ADJUSTMENT OF THE SERIES B CONVERSION PRICE FOR
DIVIDENDS, DISTRIBUTIONS, SUBDIVISIONS, COMBINATIONS OR CONSOLIDATIONS OF COMMON
STOCK.

                           (1)      Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall be deemed to have issued
Additional Shares of Common Stock in a stock dividend, stock distribution or
subdivision, the Series B Conversion Price and the number of shares of Common
Stock issuable upon conversion of each share of Series B Preferred Stock in
effect immediately prior to such deemed issuance shall, concurrently with the
effectiveness of such deemed issuance, be proportionately decreased or
increased, as appropriate.

                           (2)      Combinations or Consolidations. In the event
the outstanding shares of Common Stock shall be combined, consolidated or
otherwise changed, by recapitalizations, reclassifications, stock splits,
reverse stock splits, exchanges of shares, separations, reorganizations,
liquidations or otherwise, the Series B Conversion Price and the number of
shares of Common Stock issuable upon conversion of each share of Series B
Preferred Stock in effect immediately prior to any such combination,
consolidation or other event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate.

                  (iii)    ADJUSTMENT OF SERIES B PRICE CONVERSION PRICE FOR
DILUTIVE ISSUANCES.

                           (1)      Dilutive Issuances (other than due to
Employee Equity Issuances). If the Corporation shall issue, after the Series B
Original Issue Date, any Additional Shares of Common Stock (other than issuances
pursuant to transactions described in Section 3(c)(ii) but expressly excluding
any new issuances concurrent with such transactions) without consideration or
for a consideration per share less than the Series B Conversion Price in effect
immediately prior to the issuance of such Additional Shares of Common Stock, the
Series B Conversion Price in effect immediately prior to each such issuance
shall forthwith be adjusted to be equal to the amount of consideration per share
received in connection with such issuance. Notwithstanding the foregoing, the
provisions of this Section 3(c)(iii)(1) shall not apply to Additional Shares of
Common Stock issued through an Employee Equity Issuance.

                           (2)      Dilutive Issuances due to Employee Equity
Issuances. If the Corporation shall issue, after the Series B Original Issue
Date, any Additional Shares of Common Stock through an Employee Equity Issuance
without consideration or for a consideration per share less than the Series B
Conversion Price in effect immediately prior to the issuance of such Additional
Shares of Common Stock, the Series B Conversion Price in effect immediately
prior to each such issuance shall forthwith be adjusted to be equal to a price
determined by multiplying the Series B Conversion Price then in effect by a
fraction (which shall in no event be greater than one), the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such issuance plus the number of shares of Common Stock that the aggregate
consideration received by the Corporation for such issuance would purchase at
the Series B Conversion Price; and the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance plus
the number of shares of such Additional Shares of Common Stock. For

                                      - 5 -



purposes of the foregoing computation, the number of shares of Common Stock
outstanding shall be deemed to include all shares of Common Stock actually
outstanding and all shares of Common Stock deemed to be outstanding as a result
of the application of the rules set forth in subsection (c)(iii)(7).

                           (3)      In the case of the issuance of Additional
Shares of Common Stock for cash, the consideration shall be deemed to be the
amount of cash paid therefor after deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by this Corporation for
any underwriting or otherwise in connection with the issuance and sale thereof.

                           (4)      In the case of the issuance of Additional
Shares of Common Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall initially be deemed to be the fair value
thereof as determined in good faith by the Board of Directors. The Corporation
shall provide the holders of the Series B Preferred Stock with written notice of
its fair market value determination pursuant to this Section 3(c)(iii)(4) within
30 days following such issuance of the Additional Shares of Common Stock. If the
Majority Holders deliver to the Corporation, within 30 days following delivery
of the Corporation's written notice, written notice of their objection to such
determination, the fair market value shall be determined pursuant to the
Appraisal Procedure set forth in Section 3(c)(iii)(6), which determination shall
be binding on the holders of the Series B Preferred Stock and the Corporation.

                           (5)      The consideration for Additional Shares of
Common Stock issued together with other property of the Corporation for
consideration that covers both shall be determined in good faith by the Board of
Directors. The Corporation shall provide the holders of the Series B Preferred
Stock with written notice of its fair market value determination pursuant to
this Section 3(c)(iii)(5) within 30 days following such issuance of the
Additional Shares of Common Stock. If the Majority Holders deliver to the
Corporation, within 30 days following delivery of the Corporation's written
notice, written notice of their objection to such determination, the fair market
value shall be determined pursuant to the Appraisal Procedure set forth in
Section 3(c)(iii)(6), which determination shall be binding on the holders of the
Series B Preferred Stock and the Corporation.

                           (6)      Appraisal Procedure. In the event of a
challenge to the fair market value determinations of the Board of Directors
pursuant to Section 2(b) or the amount of consideration determined pursuant to
Section 3(c)(iii)(4) or Section 3(c)(iii)(5), the Corporation and the Majority
Holders shall attempt to select an investment banking firm to resolve such
dispute. In the event that the Corporation and the Majority Holders are unable
to agree upon an investment banking firm, within 30 days following the delivery
of the Holder's (or Majority Holders') written objection ("Objection Date"), the
Corporation and the Majority Holders, within 45 days following the Objection
Date, shall each select an investment banking firm with a national reputation
and the two firms so selected shall agree upon a third investment banking firm,
which shall resolve such dispute. The findings of the investment banking firm so
selected shall be binding on the Corporation and the Majority Holders. The fees
and costs of the investment banking firm selected shall be borne one-half by the
Corporation and one-half by the Majority Holders challenging the valuation.

                                      - 6 -



                           (7)      In the case of the issuance of Options or
Convertible Securities, the following provisions shall apply for all purposes of
this Section 3(c)(iii):

                                    (a)      The aggregate maximum number of
shares of Common Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without limitation, the passage of
time, but without taking into account potential antidilution adjustments) of
such Options (and, in the case of Options to acquire Convertible Securities, the
maximum number of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities) shall be deemed to have been issued at the time
such Options were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections (c)(iii)(3), (c)(iii)(4) and
(c)(iii)(5)), if any, received by the Corporation upon the issuance of such
Options plus the minimum exercise price provided in such Options (without taking
into account potential antidilution adjustments) for the Common Stock covered
thereby (plus, in the case of Options to acquire Convertible Securities, the
minimum additional consideration, if any, deliverable upon conversion or
exchange of such Convertible Securities).

                                    (b)      The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange (assuming
the satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for such Convertible Securities
shall be deemed to have been issued at the time such Convertible Securities were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such Convertible Securities (excluding any cash received
on account of accrued interest or accrued dividends), plus the minimum
additional consideration, if any, to be received by the Corporation (without
taking into account potential antidilution adjustments) upon the conversion or
exchange of such Convertible Securities (the consideration in each case to be
determined in the manner provided in subsections (c)(iii)(3), (c)(iii)(4) and
(c)(iii)(5)).

                                    (c)      If, following the issuance of
Options or Convertible Securities and the determination of the impact of such
issuance pursuant to subsection (c)(iii)(7)(a) or (c)(iii)(7)(b) above, there is
any change in the number of shares of Common Stock deliverable or in the
consideration payable to this Corporation upon exercise of such Options or upon
conversion of or in exchange for such Convertible Securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Series B Conversion Price, to the extent in any way affected by or computed
using such Options or Convertible Securities, shall be recomputed to reflect
such change, but no further adjustment shall be made for the actual issuance of
Common Stock or any payment of such consideration upon the exercise of any such
Options or the conversion or exchange of such Convertible Securities.

                                    (d)      The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor pursuant to
subsections (c)(iii)(7)(a) and (c)(iii)(7)(b) shall be appropriately adjusted to
reflect any change of the type described in subsection (c)(iii)(7)(c).

                                      - 7 -



                                    (e)      For purposes of Section 3,
securities (including Options or Convertible Securities) shall be deemed to be
issued on the earliest to occur of the grant, issuance, or sale of, or the
fixing of a record date with respect to the distribution or issuance of, such
securities.

         (d)      ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event that at any time or from time to time after the Series B Original Issue
Date, the Corporation shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of Series B Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation that they would have received had their
Series B Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the actual conversion date, retained such securities receivable by
them as aforesaid during such period, giving application during such period to
all adjustments called for herein.

         (e)      ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. In
the event that at any time or from time to time after the Series B Original
Issue Date, the Common Stock issuable upon the conversion of Series B Preferred
Stock shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization, reclassification,
or otherwise (other than a subdivision or combination of shares or stock
dividend provided for in Section 3(c)(ii) above, or a merger, consolidation, or
sale of assets provided for in Section 3(f) below) then and in each such event
the holder of any share or shares of Series B Preferred Stock shall have the
right thereafter to convert such shares into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by the holder of a number of shares of Series
B Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.

         (f)      ADJUSTMENT FOR MERGER, CONSOLIDATION OR SALE OF ASSETS. In the
event that at any time or from time to time after the Series B Original Issue
Date, the Corporation shall sell all or substantially all of its assets or merge
or consolidate with or into another entity, each share of Series B Preferred
Stock shall thereafter be convertible into the kind and amount of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Corporation deliverable upon conversion of Series B
Preferred Stock would have been entitled to receive upon such consolidation,
merger or sale; and, in such case, appropriate adjustment (as determined in good
faith by the Board of Directors) shall be made in the application of the
provisions set forth in this Section 3 with respect to the rights and interest
thereafter of the holders of Series B Preferred Stock, to the end that the
provisions set forth in this Section 3 (including provisions with respect to
changes in and other adjustments of the Series B Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series B Preferred Stock.

                                      - 8 -



         (g)      NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, including, without limitation, voluntary bankruptcy
proceedings, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation but shall at all
times in good faith assist in the carrying out of all the provisions of this
Section 3 and in the taking of all such actions as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series B Preferred Stock under this Section 3 against impairment.

         (h)      CERTIFICATE AS TO ADJUSTMENT. Upon the occurrence of each
adjustment or readjustment of the Series B Conversion Price pursuant to this
Section 3, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each affected
holder of Series B Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment is
based; provided, however, that the Corporation shall not be required to provide
each holder with such a certificate more than one time per calendar quarter. The
Corporation shall, upon the written request at any time of any affected holder
of Series B Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Series B Conversion Price in effect at the time, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of each share of Series B Preferred Stock.

         (i)      NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall deliver to each
holder of Series B Preferred Stock at least twenty days prior to such record
date a notice specifying the date on which any such record is to be taken for
the purpose of such dividend or distribution.

         (j)      COMMON STOCK RESERVE. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series B Preferred Stock.

         (k)      CERTAIN TAXES. The Corporation shall pay any issue or transfer
taxes payable in connection with the conversion of Series B Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Series B Preferred Stock.

         (l)      CLOSING OF BOOKS. The Corporation shall at no time close its
transfer books against the transfer of any Series B Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series B Preferred Stock in any manner which interferes with the timely
conversion or permitted transfer of such Series B Preferred Stock or Common
Stock.

                                      - 9 -



         SECTION 4.        VOTING RIGHTS.

         (a)      Except as otherwise provided herein or as required by law, the
holders of the Series B Preferred Stock shall be entitled to notice of any
meeting of stockholders and shall vote together with the holders of the Series A
Preferred Stock and Common Stock as a single class upon any matter submitted to
the stockholders for a vote. Holders of Series B Preferred Stock shall have that
number of votes per share as is equal to the number of whole shares of Common
Stock into which each such share of Series B Preferred Stock held by such holder
could be converted on the date for determination of stockholders entitled to
vote at the meeting or on the date of any written consent.

         (b)      Notwithstanding any other provision of this Section 4, in the
event that it is determined by Nasdaq (after full process, including any appeal
process available to the Corporation) that the voting provisions set forth in
this Section 4 violate or conflict with Nasdaq Marketplace Rule 4351, the number
of votes to which each share of Series B Preferred Stock is entitled shall be
reduced to the extent required to comply with such rule.

         SECTION 5.        REDEMPTION.

         (a)      REDEMPTION AT OPTION OF THE HOLDER.

                  (i)      On or at any time following the earliest of:

                           (A)      a Change of Control (as defined below); and

                           (B)      the seventh anniversary of the Series B
                                    Original Issue Date.

then each holder of Series B Preferred Stock may elect to have the Corporation
redeem from it, to the extent the Corporation has funds legally available for
such purpose, and subject to Section 5(a)(iii), any or all shares of Series B
Preferred Stock held by such holder; provided, however, that if a Change of
Control occurs as a result of the acquisition by a holder of Series B Preferred
Stock or such holder's "affiliates" (as such term is defined in Rule 405 under
the Securities Act of 1933, as amended) of beneficial ownership of securities of
the Corporation representing more than 50% of the voting power of the
Corporation (whether such acquisition is made by such holder or such holder's
affiliates, individually or as a member of a "group" (as described in Rule
13d-5(b)(1) promulgated under the Securities Exchange Act of 1934)), such holder
shall not be entitled, as a result of such Change of Control, to require the
Corporation to redeem its or its affiliates Series B Preferred Stock pursuant to
this Section 5(a). Such election may be made only by delivering to the
Corporation (x) a written notice signed by such holder specifying the number of
shares of Series B Preferred Stock so to be redeemed, and (y) certificates for
the shares of the Series B Preferred Stock so to be redeemed, together with
stock powers therefor duty executed by such holder in blank (such written
election, certificates and stock powers being referred to collectively as
"Redemption Notice").

                  (ii)     The Corporation shall redeem from holders of Series B
Preferred Stock from whom the Corporation received a Redemption Notice, within
30 days of its receipt of such Redemption Notice, all the shares of the Series B
Preferred Stock as to which Redemption Notices have been given, to the extent
the Corporation has funds legally

                                     - 10 -



available for such purpose, and subject to Section 5(a)(iii), by paying to the
respective holders the amount equal to (x) the number of shares of Series B
Preferred Stock submitted for redemption multiplied by (y)(i) the Liquidation
Preference, plus (ii) all accrued but unpaid dividends thereon to and including
the date of such redemption, whether or not declared.

                  (iii)    If the funds of the Corporation legally available for
redemption of shares of Series B Preferred Stock are insufficient to redeem the
total number of shares of Series B Preferred Stock submitted for redemption
pursuant to Redemption Notices, those funds which are legally available will be
used to redeem the maximum possible number of whole shares ratably among the
holders of such shares who have submitted Redemption Notices as of such date of
determination. The shares of Series B Preferred Stock not redeemed shall remain
outstanding and, notwithstanding anything herein to the contrary, shall remain
entitled to all rights and preferences otherwise provided herein.

         (b)      REDEMPTION AT THE OPTION OF THE CORPORATION.

                  (i)      On or at any time following the seventh anniversary
of the Series B Issue Date, the Corporation may redeem, in whole or in part, the
Series B Preferred Stock at a redemption price per share equal to the
Liquidation Preference as of the Redemption Date (the "Redemption Price");
provided, that the Corporation may not exercise such right of redemption unless:
(i) the Registration Statement (as defined below) is effective, (ii) the average
of the closing prices of the Common Stock as reported by The Nasdaq Stock Market
over the twenty consecutive trading-day period ending not more than five
business days prior to the date of the Corporation Notice (as defined below) is
greater than or equal to the product of (x) the Series B Conversion Price in
effect on the last day of such twenty consecutive trading-day period and (y)
2.50, and (iii) during the period beginning on the date of the Corporation
Notice (as defined below) and ending on the Redemption Date (as defined below)
(1) the Corporation shall not have received any request from the SEC or any
other federal or state governmental authority for amendments or supplements to
the Registration Statement or related prospectus or for additional information;
(2) no stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose shall have been issued by the
SEC or any other federal or state governmental authority; (3) the Corporation
shall not have received any notification with respect to the suspension of the
qualification or exemption from qualification of the Common Stock for sale in
any jurisdiction or the initiation of any proceeding for such purpose; and (4)
there shall not have occurred any event or circumstance which would necessitate
the making of any changes in the Registration Statement or related prospectus,
or any document incorporated or deemed to be incorporated therein by reference,
so that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the related prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Any
redemption effected pursuant to this Section (5)(b)(i) shall be made on a pro
rata basis among the holders of the Series B Preferred Stock in proportion to
the number of shares of Series B Preferred Stock then held by them.

                                     - 11 -



                  (ii)     The Corporation shall provide written notice (the
"Corporation Notice") by first class mail postage prepaid, to each holder of
record (determined at the close of business on the business day next preceding
the day on which the Corporation Notice is given) of the Series B Preferred
Stock to be redeemed, at the address last shown on the records of this
Corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder,
specifying the date of redemption (the "Redemption Date"), the Redemption Price,
the place at which payment may be obtained and calling upon such holder to
surrender to the Corporation, in the manner and at the place designated, his,
her or its certificate or certificates representing the shares to be redeemed;
provided that the Redemption Date shall be not less than 10 days from the date
of the Corporation Notice. Except as provided in Section (5)(b)(iii), on or
after the Redemption Date, each holder of Series B Preferred Stock to be
redeemed shall surrender to the Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Corporation Notice, and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.

                  (iii)    From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series B Preferred Stock designated for redemption in the
Corporation Notice as holders of Series B Preferred Stock (except the right to
receive the Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever. If the funds of the
Corporation legally available for redemption of shares of Series B Preferred
Stock on any Redemption Date are insufficient to redeem the total number of
shares of Series B Preferred Stock to be redeemed on such date, those funds
which are legally available will be used to redeem the maximum possible number
of such shares ratably among the holders of such shares to be redeemed based
upon their holdings of Series B Preferred Stock. The shares of Series B
Preferred Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of shares of
Series B Preferred Stock, such funds will immediately be used to redeem the
balance of the shares which the Corporation has become obliged to redeem on any
Redemption Date but which it has not redeemed.

         (c)      DEFINITIONS.

                  (i)      "Change of Control" shall mean: (i) the acquisition
by any person or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Securities Exchange Act of 1934), of beneficial ownership of securities of the
Corporation representing more than 50% of the voting power of the Corporation;
or (ii) a merger or consolidation of the Corporation or a sale of all or
substantially all of the assets of the Corporation in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Corporation's securities prior to the first such transaction
continue to hold at least a majority of the voting power of the surviving entity
or acquirer of such assets.

                                     - 12 -



                  (ii)     "Registration Effective Date" shall mean the first
date on which the Registration Statement has been declared effective.

                  (iii)    "Registration Statement" shall mean the Corporation's
registration statement under the Securities Act of 1933, as amended, covering
the registration of (a) the shares of Common Stock issuable upon conversion of
the Series B Preferred Stock and (b) the shares of Common Stock issuable upon
exercise of the Warrants (as defined).

                  (iv)     "Warrants" shall mean, collectively, those Common
Stock Purchase Warrants to purchase shares of Common Stock to be issued pursuant
to the Securities Purchase Agreement by and among the Corporation and the other
parties thereto.

         (d)      NO REDEMPTION OF JUNIOR PREFERRED STOCK. So long as any shares
of Series B Preferred Stock are outstanding, the Corporation shall not redeem
any shares of Junior Preferred Stock or any other shares of Preferred Stock that
have liquidation or dividend rights that are subordinate to those of the Series
B Preferred Stock; provided, however, the foregoing shall not prohibit the
Corporation from redeeming shares of Series A Preferred Stock pursuant to
Section 5(a) of the Certificate of Designation of Series A Convertible Preferred
Stock as in effect on the Series B Original Issue Date (the "Series A
Certificate") if (x) a number of shares of Series B Preferred Stock equal to or
greater than 80% of the sum of the total number of shares of Series B Preferred
Stock (1) issued upon conversion of the Tranche I Notes (as defined in that
certain Securities Purchase Agreement, dated as of March 12, 2003, by and
between the Corporation and certain purchasers ("Securities Purchase
Agreement")), and (2) issued and, as of the date of such Change of Control,
issuable under the Sanmina Notes (as defined in the Securities Purchase
Agreement), and (3) without duplication, any other shares of Series B Preferred
Stock issued in connection with the Third Closing (as defined in the Securities
Purchase Agreement) and any other shares of Series B Preferred Stock issued on
the Series B Original Issue Date, have been either (1) redeemed, (2) submitted
for redemption pursuant to a redemption notice under Section 5 of this
Certificate of Designation and/or (3) converted into Common Stock pursuant to
Section 3 of this Certificate of Designation, and (y) the Corporation has
actually redeemed all shares of Series B Preferred Stock as to which a
redemption notice has been submitted to the Corporation.

         SECTION 6.        NOTICES. All notices, requests, consents, demands and
other communications required or permitted under this Series B Preferred Stock
Certificate of Designation shall be in writing and shall be deemed to have been
duly given, made and received (a) when delivered against receipt, (b) upon
transmitter's confirmation of the receipt of a facsimile transmission, which
shall be followed by an original sent otherwise in accordance with this Section
6, (c) upon confirmed delivery by a standard overnight carrier, or (d) if to a
U.S. resident, upon expiration of three business days after the day when
deposited in the U.S. mail, first class postage prepaid, addressed to the
Corporation at its principal executive office, or at such other address of which
the Corporation may notify the holders of Series B Preferred Stock from time to
time, or if to a holder of Series B Preferred Stock or Common Stock, to such
holder's address as shown by the records of the Corporation.

                                     - 13 -



         SECTION 7.        STATUS OF REACQUIRED SHARES. Shares of Series B
Preferred Stock which have been issued and converted, redeemed or reacquired in
any manner shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued Preferred
Stock undesignated as to Series and may be redesignated and reissued.

         SECTION 8.        ISSUANCE OF ADDITIONAL SHARES OF SERIES B. Except as
required under the Securities Purchase Agreement, the Company may not issue
shares of the Series B Preferred Stock without the consent of a majority of the
shares of Series B Preferred Stock then outstanding.

                                     - 14 -

                                                                     EXHIBIT 4.8

                                    FORM OF

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
this 12th day of March, 2003, by and between NOVATEL WIRELESS, INC., a Delaware
corporation (the "Company"), and the purchasers listed on the signature pages
hereto (the "Purchasers" and, collectively with the Company, the "Parties").

                             PRELIMINARY STATEMENTS

         In connection with the consummation of the transactions contemplated by
that certain Securities Purchase Agreement (the "Purchase Agreement"), dated as
of March 12, 2003, between the Purchasers and the Company, the Company has
agreed to issue and sell to the Purchasers, (i) a secured convertible preferred
promissory note (the "Convertible Note"), convertible into shares of the Series
B Preferred Stock, which Series B Preferred Stock is convertible into shares of
Common Stock; (ii) additional shares of the Company's Series B Preferred Stock;
and (iii) certain warrants to purchase shares of the Company's Common Stock (the
"Warrants").

         The obligations of the Purchasers to purchase the Convertible Note, the
Third Issuance Shares and the Warrants pursuant to the Purchase Agreement are
conditioned upon, among other things, the Parties' execution of this Agreement,
pursuant to which the Purchasers will be entitled to certain registration rights
with respect to the Common Stock issuable upon conversion of the Series B
Preferred Stock and the exercise of the Warrants.

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreement and covenants hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

         1.       Certain Definitions.

                  1.1      Terms Defined in this Section. For purposes of this
Agreement, the following terms have the following meanings:

         "Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banking institutions in New York, New York are required
or authorized by law to remain closed.

         "Company Indemnified Parties" means the Company, its officers,
directors, employees, and agents, and each Person, if any, who controls the
Company within the meaning of either the Securities Act or the Exchange Act, and
the officers, directors, employees, and agents of the foregoing parties.

         "Common Stock" means the Company's common stock, par value $0.001 per
share, and any securities into or for which such securities are converted or
exchanged by the Company.

         "Exchange Act" means the Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.



         "Indemnified Party" means a Person claiming a right to indemnification
pursuant to Section 6 of this Agreement.

         "Indemnifying Party" means a Person required to provide indemnification
pursuant to Section 6 of this Agreement.

         "Losses" means any losses, claims, damages, or liabilities, and any
related legal or other fees and expenses.

         "Person" means any individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, trust,
association, organization, or other entity.

         "Prospectus" means the prospectus included in a Registration Statement
as of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, each as amended, and
each applicable prospectus supplement relating to the offering and sale of any
of the Registrable Securities pursuant to such Registration Statement.

         "Registrable Securities" means:

                  (i)      Common Stock issued or issuable upon the conversion
of the Series B Preferred Stock (including the Series B Preferred Stock issued
upon conversion of the Convertible Note); or

                  (ii)     Common Stock issued or issuable upon the exercise of
the Warrants.

         Securities that are Registrable Securities will cease to be Registrable
Securities:

                  (i)      when a registration statement with respect to the
sale of such securities has become effective under the Securities Act and such
securities have been disposed of in accordance with such registration statement,

                  (ii)     when such securities shall have been sold pursuant to
Rule 144 or Rule 145 (or any successor provisions) under the Securities Act or
in any other transaction in which the applicable purchaser does not receive
"restricted securities" (as that term is defined for purposes of Rule 144 under
the Securities Act), or

                  (iii)    when such securities cease to be outstanding.

         "Registration Statement" means a registration statement (including the
related Prospectus) of the Company under the Securities Act on any form selected
by the Company for which the Company then qualifies and which permits the sale
thereunder of the number and type of Registrable Securities (and any other
securities of the Company) to be included therein in accordance with this
Agreement by the applicable sellers in the manner described therein. The term
"Registration Statement" shall also include all exhibits, financial statements,
and schedules and all documents incorporated by reference in such Registration
Statement when it becomes

                                      - 2 -



effective under the Securities Act, and in the case of the references to the
Registration Statement as of a date subsequent to the effective date, as amended
or supplemented as of such date.

         "SEC" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Exchange Act.

         "Securities Act" means the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the SEC promulgated
thereunder, in each case as amended from time to time.

         "Selling Stockholder" means any Stockholder whose Registrable
Securities are included at the request of such Stockholder in any Registration
Statement pursuant to Section 2 or Section 3.

         "Series B Preferred Stock" means the Company's Series B Convertible
Preferred Stock, par value $0.001 per share.

         "Stockholder" means each Purchaser who has the right to acquire
Registrable Securities and any other Person:

                  (i)      to whom any Registrable Securities or any rights to
acquire any Registrable Securities are transferred by any Person that was,
immediately prior to such transfer, a Stockholder,

                  (ii)     who continues to hold such Registrable Securities or
the right to acquire such Registrable Securities,

                  (iii)    to whom the transferring Stockholder has assigned any
of its rights under this Agreement, in whole or in part, in accordance with the
provisions of Section 8.6 of this Agreement with respect to such Registrable
Securities, and

                  (iv)     who has executed a counterpart hereof in connection
with the transfer of such Registrable Securities.

         "Stockholder Indemnified Parties" means each Selling Stockholder, its
officers, directors, employees, and agents, each Person (if any) who controls
such Selling Stockholder within the meaning of either the Securities Act or the
Exchange Act, and the officers, directors, employees, and agents of the
foregoing parties.

         "Third-Party Demand Stockholder" means any Person having the right to
require that the Company effect a registration under the Securities Act of
securities owned by such Person, other than pursuant to this Agreement.

                  1.2      Terms Defined Elsewhere in this Agreement. For
purposes of this Agreement, the following terms have the meanings set forth in
the sections indicated:



Term                                               Section
- ----                                               -------
                                                
Demand Notice                                      Section 2.2(a)
Demand Registration                                Section 2.1


                                      - 3 -





Term                                               Section
- ----                                               -------
                                                
Demanding Stockholders                             Section 2.2(a)
Incidental Registration                            Section 3.1(a)
Initiating Stockholder                             Section 2.2(a)
Material Event                                     Section 2.6(a)
Minimum Condition                                  Section 2.2(d)
Registration Expenses                              Section 5.1


                  1.3      Terms Generally. The definitions in this Agreement
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding
masculine, feminine, and neuter forms. The words "include," "includes," and
"including" are not limiting. Any reference in this Agreement to a "day" or
number of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day,
and such calendar day is not a Business Day, then such action or notice shall
be deferred until, or may be taken or given on, the next Business Day.

         2.       Demand Registration.

                  2.1      Demand Registration Rights. Each Stockholder shall
have the right to require that the Company register under the Securities Act the
offer or sale of all or a portion of the Registrable Securities held by such
Stockholder on the terms and subject to the conditions and limitations set forth
herein. The registration of Registrable Securities under the Securities Act in
accordance with this Section 2 is referred to in this Agreement as a "Demand
Registration." The Stockholders shall be entitled to four Demand Registrations
in the aggregate.

                  2.2      Procedures for Demand Registrations.

                           (a)      A Stockholder holding Registrable Securities
may elect to initiate a Demand Registration pursuant to this Section 2 by
furnishing the Company with a written notice (the "Demand Notice") specifying
the number of Registrable Securities that such Stockholder desires to have
registered, and such Stockholder's intended method or methods of distribution of
all such Registrable Securities. The Stockholder delivering a notice pursuant to
the preceding sentence is referred to as the "Initiating Stockholder." Within
twenty (20) days of its receipt of the Demand Notice, the Company shall notify
the Stockholders of its receipt of a Demand Notice. Each Stockholder may, within
thirty (30) days of the Company's receipt of the Demand Notice, deliver a
written notice to the Company specifying the number of shares that such
Stockholder (each, together with the Initiating Stockholder, a "Demanding
Stockholder") wishes to have registered, and such Stockholder's intended method
or methods of distribution of such securities. If Stockholders holding
Registrable Securities representing a majority of the outstanding Registrable
Securities provide the Company with written notice that they desire that such
Demand Registration not take place, the Company shall not be required to proceed
with such Demand Registration and, irrespective of whether the Company proceeds
with such registration, such registration shall not be deemed to have been a
Demand Registration for purposes of the limitations on the number of Demand
Registrations set forth in Section 2.1.

                                      - 4 -



                           (b)      If the number of Registrable Securities that
the Demanding Stockholders desire to have registered (as specified in their
notices pursuant to Section 2.2(a)) does not satisfy the Minimum Condition (as
set forth in Section 2.2(d), below), then the Company will have no obligation to
effect a Demand Registration in response to such notices pursuant to Section
2.2(a) (except as otherwise required in Section 2.4), but nothing herein will
limit the rights of the Stockholders to require on a subsequent occasion that
the Company effect a Demand Registration to which the Stockholders are entitled
under Section 2.1.

                           (c)      On the thirty-first (31st) day following its
receipt of a Demand Notice, the Company will notify each Demanding Stockholder
whether the number of Registrable Securities that the Stockholders desire to
have registered (as specified in their notices pursuant to Section 2.2(a))
satisfies the Minimum Condition.

                           (d)      The "Minimum Condition" means that the
number of Registrable Securities that the Stockholders desire to have registered
(as specified in their notices pursuant to Section 2.2(a)) have an aggregate
market value on the date of the delivery of the Initiating Stockholder's notice
pursuant to Section 2.2(a) (before any underwriting or brokerage discounts and
commissions) of not less than seven hundred and fifty thousand dollars
($750,000); or

                           (e)      Following the effectiveness of a
Registration Statement filed in connection with a Demand Registration, the
Company will not be required to file a Registration Statement for a subsequent
Demand Registration within four months after the date on which it received the
Initiating Stockholder's notice pursuant to Section 2.2(a) for the immediately
preceding Demand Registration.

                           (f)      As soon as reasonably practicable after the
Stockholders have notified the Company that they desire to have registered a
number of Registrable Securities that satisfies the Minimum Condition, subject
to Section 2.6(a) and Section 2.6(e), the Company will file with the SEC and use
its reasonable best efforts to cause to become effective as promptly as
practicable thereafter a Registration Statement that covers the Registrable
Securities requested to be registered in the manner set forth above. Subject to
the provisions of Section 2.3 below, each Registration Statement may also
include securities to be sold for the account of the Company, for Stockholders
who do not participate as Demanding Stockholders but who exercise their rights
under Section 3 below, or for any stockholder of the Company not holding
Registrable Securities.

                  2.3      Underwriters. One or more Demanding Stockholders
owning more than 50% of the Registrable Securities to be included in a Demand
Registration shall collectively have the right to select the lead book running
managing underwriter for any underwritten public offering in connection with a
Demand Registration, which lead managing underwriter shall be reasonably
acceptable to the Company. Each Demanding Stockholder electing to participate in
a Demand Registration involving an underwritten public offering shall, as a
condition to the Company's obligation under this Section 2 to include such
Demanding Stockholder's Registrable Securities in the Demand Registration, enter
into and perform its obligations under an underwriting agreement or other
similar arrangement in customary form with the lead underwriter of such
offering.

                                      - 5 -



                  2.4      Shelf Registration. One or more Demanding
Stockholders owning more than 50% of the Registrable Securities may elect to
require that a Demand Registration be effected pursuant to a shelf registration
under Rule 415 of the Securities Act; provided, however, that (a)
notwithstanding any thing to the contrary herein, the Minimum Condition shall
not apply; (b) the Company shall cause a registration statement with respect to
the first such shelf registration to be filed within the (10) days following the
Third Closing, (as defined in the Purchase Agreement); (c) during the time any
such shelf registration is effective, the Company may require from time to time
that the Selling Stockholders refrain from selling pursuant to such registration
under the circumstances, in the manner, and for the time period described in
Section 2.6; and (d) the Company will not be required under this Section 2.4 to
effect more than two Demand Registrations as a shelf registration under Rule 415
of the Securities Act. The Company will use its reasonable best efforts to cause
any Demand Registration effected as a shelf registration under Rule 415 of the
Securities Act to remain effective for a period ending on the earlier of (i) the
date that is a number of days after the effective date of the Registration
Statement equal to 730 plus the number of days that the Selling Stockholders
must refrain from selling pursuant to Section 2.6, and (ii) the date on which
all Registrable Securities covered by the Registration Statement have been sold
pursuant to the Demand Registration.

                  2.5      Limitation on Inclusion of Registrable Securities.

                           (a)      If the book running managing underwriter of
any underwritten public offering in connection with a Demand Registration
determines in good faith that the aggregate number of Registrable Securities to
be offered exceeds the number of shares that could be sold without having an
adverse effect on such offering (including the price at which the Registrable
Securities may be sold), then the number of Registrable Securities to be offered
for the accounts of the Demanding Stockholders in such offering shall be reduced
or limited, on a pro rata basis, based on the respective numbers of Registrable
Securities requested to be included in such offering by all Demanding
Stockholders, to the extent necessary to reduce the total number of shares to be
included in such offering to the amount recommended by the book running managing
underwriter; provided, however, that if such registration includes securities
other than Registrable Securities of the Demanding Stockholders (whether for the
account of the Company or for any stockholder of the Company not exercising
rights under this Section 2), such reduction shall be made:

                           (i)      first, from securities held by Persons who
are not Stockholders and from securities being offered for the account of the
Company, allocated between the Company and such other Persons as the Company may
determine, subject to any agreements between the Company and such other Persons
as in effect as of the date hereof;

                           (ii)     second, from the number of Registrable
Securities requested to be included in such offering by Stockholders pursuant to
their rights under Section 3, on a pro rata basis, based on the number of
Registrable Securities requested to be included in the registration by
Stockholders pursuant to their rights under Section 3; and

                           (iii)    last, from the number of Registrable
Securities requested to be included in such offering by the Demanding
Stockholders, on a pro rata basis, based on the

                                      - 6 -



number of Registrable Securities requested to be included in the registration by
the Demanding Stockholders.

                           (b)      One or more Demanding Stockholders owning
more than 50% of the Registrable Securities to be included in a requested Demand
Registration may elect not to proceed with the registration if less than 75% of
the Registrable Securities requested to be registered by each of the Demanding
Stockholders are included in such registration. If Demanding Stockholders owning
more than 50% of the Registrable Securities to be included in a requested Demand
Registration elect not to proceed with the registration pursuant to this Section
2.5(b), the Registration Statement for such registration shall be promptly
withdrawn, a Demand Registration shall not be deemed to have been effected for
purposes of this Agreement (including the limitations on the number of Demand
Registrations set forth in Section 2.1 above) and the Company shall bear the
Registration Expenses in connection with such Registration Statement.

                  2.6      Delay of Filing or Sales.

                           (a)      The Company shall have the right,
exercisable by giving notice of the exercise of such right to the applicable
Selling Stockholders, subject to Section 2.6(b), at any time and from time to
time, to delay filing or the declaration of effectiveness of a Registration
Statement or to require the applicable Selling Stockholders not to sell any
Registrable Securities pursuant to an effective Registration Statement for a
period not in excess of 120 days beginning on the date on which such notice is
given, or such shorter period of time as may be specified in such notice or in a
subsequent notice delivered by the Company to such effect prior to or during the
effectiveness of the Registration Statement, if:

                                    (i)      the Company is engaged in
discussions or negotiations with respect to, or there otherwise is pending, any
merger, acquisition, or other form of business combination that is "probable"
(within the meaning of the Securities Act), any divestiture, tender offer,
financing, or other event that, in any such case, is material to the Company
(any such activity or event, a "Material Event"),

                                    (ii)     such Material Event would, in the
judgment of the Company's board of directors (after consultation with counsel),
require disclosure so as to permit the Registrable Securities to be sold in
compliance with law, and

                                    (iii)    disclosure of such Material Event
would, in the judgment of the Company's board of directors (after consultation
with counsel), be adverse to its interests.

                           (b)      the Company may not delay the filing of a
Registration Statement or the sale of any Registrable Securities, whether
pursuant to one or more notices pursuant to Section 2.6(a), for more than an
aggregate of 120 days within any 12-month period.

                           (c)      If the Company postpones its obligations
under this Agreement by reason of a Material Event as described in Section
2.6(a), any Selling Stockholder will have the right to withdraw its Registrable
Securities from the applicable Demand Registration or Incidental Registration,
by giving notice to the Company at any time following delivery of the Company's
notice pursuant to Section 2.6(a).

                                      - 7 -



                           (d)      No Stockholder may deliver a notice pursuant
to the first sentence of Section 2.2(a) during the period of any postponement
pursuant to Section 2.6(a) until the Company notifies all Stockholders of the
end of such Material Event or the expiration of the 120-day period described in
Section 2.6(a).

                           (e)      The Company shall have the right,
exercisable by giving notice of the exercise of such right to the applicable
Selling Stockholders, to delay filing or the declaration of effectiveness of a
Registration Statement during any period in which, as a result of the Company's
failure to satisfy the conditions in Rule 3-01(c) of Regulation S-X, the Company
is required to include in the Registration Statement audited financial
statements of the Company prior to the date on which such audited financial
statements would normally have been prepared in accordance with the Company's
past practices and the SEC's periodic reporting requirements.

                  2.7      Withdrawal.

                           (a)      If (i) a Registration Statement filed
pursuant to this Section 2 does not remain effective under the Securities Act
for the period specified in Section 2.8(a) due to a stop order, injunction, or
other order of the SEC or other governmental agency, and (ii) each of the
Demanding Stockholders has not sold at least two-thirds of its Registrable
Securities registered under such Registration Statement, then the Demanding
Stockholders may elect to withdraw such Registration Statement by written notice
to the Company; and, in such an event, such registration shall not be deemed to
have been a Demand Registration for purposes of the limitations on the number of
Demand Registrations contained in Section 2.1.

                           (b)      Each Selling Stockholder may, no less than
five (5) Business Days before any Registration Statement becomes effective,
withdraw some or all of its Registrable Securities from inclusion in the
Registration Statement. If such withdrawals result in the Minimum Condition not
being satisfied, then the Company may withdraw such Registration Statement
unless the remaining Demanding Stockholders agree to include additional
Registrable Securities in the registration such that the Minimum Condition would
be satisfied or agree to bear the Registration Expenses incurred by the Company
in connection with such registration.

                           (c)      If the Company withdraws a Registration
Statement pursuant to Section 2.7(b), then the requested registration shall be
deemed to have been a Demand Registration for purposes of the limitations on the
number of Demand Registrations contained in Section 2.1 unless

                                    (i)      at the time of a Stockholder's
withdrawal of Registrable Securities pursuant to Section 2.7(b), there has been
a material adverse change in the operating results, financial condition, or
business of the Company that was not publicly known at the time that the Minimum
Condition was originally satisfied; or

                                    (ii)     The Company has postponed its
obligations under this Agreement by reason of a Material Event as described in
Section 2.6(a).

                                      - 8 -



                  2.8      Effectiveness of Registration Statement.

                           (a)      In connection with any Demand Registration
pursuant to this Section 2, subject to Section 2.6, the Company will use its
reasonable best efforts to prepare and file with the SEC any amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith, and to take any other actions, that may be necessary to keep the
Registration Statement and the Prospectus effective, current, and in compliance
with the provisions of the Securities Act, until the sooner to occur of (i) the
sale of all of the Registrable Securities covered by such Registration Statement
in accordance with the intended methods of distribution thereof or (ii) the 90th
day following the effective date of such Registration Statement.

                           (b)      A Demand Registration shall not be deemed to
have been effected for purposes of this Agreement (including the limitations on
the number of Demand Registrations set forth in Section 2.1 above) until the
Registration Statement therefor shall have been declared effective under the
Securities Act by the SEC (and is not then subject to any stop order,
injunction, or other order or requirement of the SEC or other governmental
agency or court for any reason) for the period specified in Section 2.8.

         3.       Incidental Registration.

                  3.1      Notice of Incidental Registration.

                           (a)      Subject to Section 3.1(b) and Section
3.1(c), if the Company at any time proposes to register under the Securities Act
any shares of the same class as any of the Registrable Securities (whether in an
underwritten public offering or otherwise and whether or not for the account of
the Company or for any stockholder of the Company, including Selling
Stockholders registering Registrable Shares in a Demand Registration pursuant to
Section 2), in a manner that would permit the registration under the Securities
Act of Registrable Securities for sale to the public, the Company will give
written notice to each Stockholder of its intention to do so not later than ten
(10) days prior to the anticipated filing date of the applicable Registration
Statement. If the proposed registration is intended to be a Demand Registration,
the Company shall give the notice described in the preceding sentence but only
to the Stockholders that did not previously elect to become Demanding
Stockholders pursuant to Section 2 with respect to such registration. Any
Stockholder may elect to participate in such registration on the same basis as
the planned method of distribution contemplated by the proposed registration by
delivering written notice of its election to the Company within five (5) days
after its receipt of the Company's notice pursuant to this Section 3.1(a). A
Stockholder's election pursuant to this Section 3.1(a) must (i) specify the
amount of Registrable Securities desired to be included in such registration by
such Stockholder and (ii) include any other information that the Company
reasonably requests be included in such registration statement. Upon its receipt
of a Stockholder's election pursuant to this Section 3.1(a), the Company will,
subject to Section 3.2, use its reasonable best efforts to include in such
registration all Registrable Securities requested to be included. Any
registration of Registrable Securities pursuant to this Section 3 is referred to
as an "Incidental Registration."

                                      - 9 -



                           (b)      The Company shall have no obligation under
this Section 3 with respect to any registration effected pursuant to a
registration statement on Form S-4 (or any other registration statement
registering shares issued in a merger, consolidation, acquisition, or similar
transaction) or Form S-8 or any successor or comparable forms, or a registration
statement filed in connection with an exchange offer or any offering of
securities solely to the Company's existing stockholders or otherwise pursuant
to a dividend reinvestment plan, stock purchase plan, or other employee benefit
plan.

                           (c)      The Company shall have no obligation under
this Section 3 with respect to any registration initiated by one or more
Third-Party Demand Stockholders pursuant to one or more registration rights
agreements in existence as of the date hereof under which the rights of all of
such Third-Party Demand Stockholders are pari passu, if:

                                    (i)      the applicable registration rights
agreement between the Company and such Third-Party Demand Stockholders prohibits
the inclusion in such registration of securities other than those offered by
such Third-Party Demand Stockholders and the Company; and

                                    (ii)     no securities other than those
offered by such Third-Party Demand Stockholders are included in such
registration.

                  3.2      Limitation on Inclusion of Registrable Securities;
Priorities. If the proposed method of distribution in connection with an
Incidental Registration is an underwritten public offering and the lead managing
underwriter thereof determines in good faith that the amount of securities to be
included in such offering would adversely affect such offering (including an
adverse effect on the price at which the securities proposed to be registered
may be sold), the amount of securities to be offered may be reduced or limited
to the extent necessary to reduce the total number of securities to be included
in such offering to the amount recommended by the lead managing underwriter as
follows (subject to any existing agreements as in effect on the date hereof):

                           (a)      in connection with an offering initiated by
the Company, if securities are being offered for the account of other Persons
(including any Stockholders) such reduction shall be made:

                                    (i)      first, from the securities intended
to be offered by such other Persons (including any Stockholders), on a pro rata
basis, based on the number of Registrable Securities and other securities that
are requested to be included in such offering; and

                                    (ii)     last, from the number of securities
to be offered for the account of the Company;

                           (b)      in connection with an offering initiated by
a Third-Party Demand Stockholder, such reduction shall be made:

                                    (i)      first, from securities held by
Persons who are not Stockholders, Third-Party Demand Stockholders, or other
stockholders entitled under any agreements between them and the Company to
participate pari passu with the Selling

                                     - 10 -



Stockholders in such Incidental Registration, and from securities being offered
for the account of the Company, allocated between the Company and such other
Persons as the Company may determine, subject to any agreements between the
Company and such other Persons;

                                    (ii)     second, from the number of
Registrable Securities requested to be included in such offering by the Selling
Stockholders and any other stockholders entitled under any agreements between
them and the Company to participate pari passu with the Selling Stockholders in
such Incidental Registration, on a pro rata basis, based on the number of
Registrable Securities and other securities which are requested to be included
in the registration; and

                                    (iii)    last, from securities being offered
by the Third-Party Demand Stockholders.

                  3.3      Delay or Withdrawal of Registration. The Company may,
without the consent of any Stockholder, delay, suspend, abandon, or withdraw any
proposed registration in which any Stockholder has requested inclusion of such
Stockholder's Registrable Securities pursuant to this Section 3.

                  3.4      Withdrawal by Selling Stockholder. Each Selling
Stockholder may, no less than five (5) Business Days before the anticipated
effective date of the applicable Registration Statement for an Incidental
Registration, withdraw some or all of its Registrable Securities from inclusion
in the Registration Statement.

                  3.5      Underwriters; Underwriting Agreement. In connection
with any Incidental Registration involving an underwritten public offering of
securities for the account of the Company or a Third-Party Demand Stockholder,
(a) the managing and lead underwriters shall be selected by the Company, unless
otherwise provided in any agreement between the Company and any Third-Party
Demand Stockholder, and (b) each Selling Stockholder electing to participate in
the Incidental Registration shall, as a condition to the Company's obligation
under this Section 3 to include such Selling Stockholder's Registrable
Securities in such Incidental Registration, enter into and perform its
obligations under an underwriting agreement or other similar arrangement in
customary form with the managing underwriter of such offering.

         4.       Obligations with Respect to Registration.

                  4.1      Obligations of the Company. Whenever the Company is
obligated by the provisions of this Agreement to effect the registration of any
Registrable Securities under the Securities Act, the Company shall:

                           (a)      Subject to the provisions of Section 4.2,
use its reasonable best efforts to cause the applicable Registration Statement
to become effective as promptly as practicable, and to prepare and file with the
SEC any amendments and supplements to the Registration Statement and to the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement and the Prospectus effective, current, and in compliance
with the provisions of the Securities Act, during the periods when the Company
is required by this Agreement to keep the Registration Statement effective and
current.

                                      - 11 -



                           (b)      Within a reasonable time not to exceed ten
(10) Business Days prior to filing a Registration Statement or Prospectus or any
amendment or supplement thereto (other than any amendment or supplement in the
form of a filing that the Company makes pursuant to the Exchange Act), furnish
to each Selling Stockholder and each underwriter, if any, of the Registrable
Securities covered by such Registration Statement copies of such Registration
Statement or Prospectus as proposed to be filed, which documents will be subject
to the reasonable review and comments of the Selling Stockholders (and their
respective counsel) during such period, and the Company will not file any
Registration Statement or any Prospectus or any amendment or supplement thereto
containing any statements with respect to any Selling Stockholder or the
distribution of the Registrable Securities to be included in such Registration
Statement for sale by such Selling Stockholder if such Selling Stockholder
reasonably objects in writing. Thereafter, the Company will furnish to each
Selling Stockholder and each underwriter, if any, such number of copies of such
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such other documents as
such Selling Stockholder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Selling
Stockholder.

                           (c)      After the filing of the Registration
Statement, promptly notify each Selling Stockholder of the effectiveness thereof
and of any stop order issued or threatened by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered and promptly notify each Selling Stockholder of the lifting or
withdrawal of any such order.

                           (d)      Immediately notify each Selling Stockholder
holding Registrable Securities covered by the applicable Registration Statement
at any time when a Prospectus relating thereto is required to be delivered under
the Securities Act, of (i) the determination that a Material Event exists or
(ii) the occurrence of an event requiring the preparation of a supplement or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading and promptly make
available to such Selling Stockholder any such supplement or amendment, and
subject to the provisions of this Agreement regarding the existence of a
Material Event, the Company will promptly prepare and furnish to each such
Selling Stockholder a supplement to or an amendment of such Prospectus so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

                           (e)      Enter into customary agreements (including
an underwriting agreement in customary form including customary indemnification
provisions) and perform its obligations under any such agreements and shall take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities.

                           (f)      Make available for inspection by any Selling
Stockholder covered by such Registration Statement, any underwriter selected by
a Selling Stockholder pursuant to

                                     - 12 -



Section 2.3 participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant, or other professional retained by any
such Selling Stockholder or underwriter, all financial and other records,
pertinent corporate documents, and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility in connection therewith, and cause the Company's officers,
directors, and employees to supply all information reasonably requested by any
of such Persons in connection with such Registration Statement. Information that
the Company determines, in good faith, to be confidential and notifies such
Persons is confidential shall not be disclosed by such Persons unless (i) the
release of such information is ordered pursuant to a subpoena or other order
from a court, or other governmental agency or tribunal, of competent
jurisdiction or (ii) such information becomes public other than through a breach
by such Persons of the confidentiality obligations of such Persons. Each Selling
Stockholder agrees that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any transactions in the securities of the Company or for any other
purpose unless and until such information is made generally available to the
public.

                           (g)      Furnish, in the case of an underwritten
public offering, to each Selling Stockholder and to each underwriter a signed
counterpart of (i) an opinion or opinions of in-house counsel or outside counsel
to the Company addressed to such Selling Stockholder and underwriters (on which
opinion both such Selling Stockholder and each such underwriter shall be
entitled to rely) and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters, as
the case may be, as the holders of a majority of the Registrable Securities
included in such Registration Statement or the managing underwriter therefor
reasonably requests.

                           (h)      Register or qualify the Registrable
Securities covered by a Registration Statement under the securities or blue sky
laws of such United States jurisdictions as the Selling Stockholders shall
reasonably request, and do any and all other acts and things which may be
necessary to enable each Selling Stockholder to consummate the disposition in
such jurisdictions of such Registrable Securities in accordance with the method
of distribution described in such Registration Statement; provided, however,
that the Company shall not be required (i) to qualify to do business as a
foreign corporation in any jurisdiction where it is not otherwise required to be
so qualified, (ii) to conform its capitalization or the composition of its
assets at the time to the securities or blue sky laws of such jurisdiction,
(iii) to execute or file any general consent to service of process under the
laws of any jurisdiction, or (iv) to subject itself to taxation in any
jurisdiction where it has not theretofore done so.

                           (i)      Use its reasonable best efforts to cause
such Registrable Securities covered by a Registration Statement to be listed on
the principal exchange or exchanges or qualified for trading on the principal
over-the-counter market or listed on the automated quotation market on which
securities of the same class and series as the Registrable Securities (or into
which such Registrable Securities will be or have been converted) are then
listed, traded, or quoted upon the sale of such Registrable Securities pursuant
to such Registration Statement.

                           (j)      Make and keep information publicly available
relating to the Company so as to satisfy the requirements of Rule 144 under the
Securities Act (or any successor

                                     - 13 -



or corresponding rule) and file with the SEC all reports and other documents
required of the Company under the Securities Act and the Exchange Act in a
timely manner.

                           (k)      Make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act (provided
that the Company shall not be deemed in violation of this paragraph so long as
it files customary quarterly reports with the SEC for such period), and not file
any amendment or supplement to such Registration Statement or Prospectus to
which any of the Selling Stockholders shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act.

                  4.2      Selling Stockholders' Obligations. The Company's
obligations under this Agreement to a Selling Stockholder shall be conditioned
upon such Selling Stockholder's compliance with the following:

                           (a)      Such Selling Stockholder shall cooperate
with the Company in connection with the preparation of the Registration
Statement, and for so long as the Company is obligated to keep the Registration
Statement effective, such Selling Stockholder will provide to the Company, in
writing, for use in the Registration Statement, all information regarding such
Selling Stockholder, its intended method of disposition of the applicable
Registrable Securities, and such other information as the Company may reasonably
request to prepare the Registration Statement and Prospectus covering the
Registrable Securities and to maintain the currency and effectiveness thereof.

                           (b)      Such Selling Stockholder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4.1(d), such Selling Stockholder will discontinue its
offering and sale of Registrable Securities pursuant to the applicable
Registration Statement until such Selling Stockholder's receipt of either (i)
notice from the Company that a Material Event no longer exists (but for no
longer than the end of the 120-day period described in Section 2.6) or (ii) the
copies of the supplemented or amended Prospectus contemplated by Section 4.1(d),
and, in either case, if so directed by the Company, such Stockholder will
deliver to the Company all copies in its possession of the most recent
Prospectus covering such Registrable Securities at the time of receipt of such
notice.

                  4.3      Underwriting Agreement. Neither the Company nor any
other Person may participate in any underwritten public offering in connection
with a Demand Registration or an Incidental Registration unless such Person (i)
agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Person or Persons selecting the lead managing
underwriters for such offering and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.

                  4.4      Holdback by the Company. The Company agrees not to
engage in any public sale or distribution by it of any securities of the same
class or series as the Registrable Securities or securities convertible into, or
exchangeable or exercisable for, or the value of which relates to or is based
upon, such securities during the ten days prior to, and during the 45-day

                                     - 14 -



period beginning on, the effective date of any Registration Statement filed with
respect to any public offering of Registrable Securities to the extent the lead
book running managing underwriter for such offering advises the Company in
writing that a public sale or distribution during such 45-day period (including
a sale pursuant to Rule 144 under the Securities Act) of Registrable Securities
by the Company other than pursuant to the underwritten public offering
contemplated by such registration statement would materially adversely impact
such underwritten public offering), except as part of such registration;
provided, however, that the limitation set forth in this Section 4.4 shall not
apply: (a) to registrations by the Company on Form S-4 or any other registration
of shares issued in a merger, consolidation, acquisition, or similar transaction
or on Form S-8, or any successor or comparable forms, or a registration
statement filed in connection with an exchange offer of securities of the
Company made solely to the Company's existing stockholders or otherwise pursuant
to a dividend reinvestment plan, stock purchase plan, or other employee benefit
plan; (b) to sales by the Company upon exercise or exchange, by the holder
thereof, of options, warrants or convertible securities; (c) to any employee
benefit plan (if necessary to allow such plan to fulfill its funding obligations
in the ordinary course); or (d) to any Demand Registration effected as a shelf
registration under Rule 415 of the Securities Act. This Section 4.4 shall not
limit any public sale or distribution of any securities of the Company by any
Third-Party Demand Stockholder or any Person having the right to require that
the Company include its securities in any registration initiated by any
Third-Party Demand Stockholder.

                  4.5      Holdback by Stockholders. To the extent not
inconsistent with applicable law, each Stockholder whose securities are included
in a Registration Statement in connection with an underwritten public offering
agrees not to effect any sale or distribution of the issue being registered or a
similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 under the Securities Act, during the ten days prior to, and during the
45-day period beginning on, the effective date of such Registration Statement
(except as part of such registration), if and to the extent requested in writing
by the managing underwriter or Underwriters of such underwritten public
offering.

         5.       Expenses of Registration.

                  5.1      Registration Expenses. Except as provided in Section
5.2, all Registration Expenses incurred in connection with any Demand
Registration or Incidental Registration and the distribution of any Registrable
Securities in connection therewith shall be borne by the Company. For purposes
of this Agreement, the term "Registration Expenses" means all:

                           (a)      registration, application, filing, listing,
transfer, and registrar fees,

                           (b)      NASD fees and fees and expenses of
registration or qualification of Registrable Securities under state securities
or blue sky laws,

                           (c)      printing expenses (or comparable duplication
expenses), delivery charges, and escrow fees,

                           (d)      fees and disbursements of counsel for the
Company,

                                      - 15 -



                           (e)      fees and expenses for independent certified
public accountants retained by the Company (including the expenses of any
comfort letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters),

                           (f)      fees and expenses of any special experts
retained by the Company in connection with such registration;

                           (g)      reasonable fees and disbursements of
underwriters and broker-dealers customarily paid by issuers or sellers of
securities,

                           (h)      fees and expenses of listing the Registrable
Securities on a securities exchange or over-the-counter market; and

                           (i)      all reasonable fees and disbursements of one
(1) counsel for the Selling Stockholders attributable to the distribution of the
Registrable Securities of such Selling Stockholders included in such
registration.

                  5.2      Selling Stockholder Expenses. Each Selling
Stockholder shall pay all:

                           (a)      stock transfer fees or expenses (including
the cost of all transfer tax stamps), if any; and

                           (b)      all underwriting or brokerage discounts and
commissions.

         6.       Indemnification.

                  6.1      By the Company. The Company agrees to indemnify and
hold harmless each Stockholder Indemnified Party from and against any Losses,
joint or several, to which such Stockholder Indemnified Party may become subject
under the Securities Act, the Exchange Act, state securities or blue sky laws,
common law or otherwise, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the applicable Registration Statement or
Prospectus, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
Company will reimburse each such Stockholder Indemnified Party for any
reasonable fees and expenses of outside legal counsel for such Stockholder
Indemnified Parties, or other expenses reasonably incurred by them, as incurred,
in connection with investigating or defending any such claims; provided,
however, that the Company will not indemnify or hold harmless any Stockholder
Indemnified Party from or against any such Losses (including any related
expenses) to the extent such Losses (including any related expenses) result from
an untrue statement, omission or allegation thereof which were (a) made in
reliance upon and in conformity with written information provided by or on
behalf of the applicable Selling Stockholder specifically and expressly for use
or inclusion in the applicable Registration Statement or Prospectus or (b) made
in any Prospectus used after such time as the Company advised such Selling
Stockholder that the filing of a post-effective amendment or supplement thereto
was required, except that this proviso shall not apply if the untrue statement,
omission, or allegation thereof is contained in the Prospectus as so amended or
supplemented. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on

                                     - 16 -



behalf of the Stockholder Indemnified Parties and shall survive the transfer of
such securities by the Selling Stockholders.

                  6.2      By Selling Stockholders. Each Selling Stockholder,
individually and not jointly, agrees to indemnify and hold harmless each Company
Indemnified Party and each other Stockholder Indemnified Party from and against
any Losses, joint or several, to which such Company Indemnified Party or any
other Stockholder Indemnified Party may become subject, insofar as such Losses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
applicable Registration Statement or the Prospectus, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, if the statement or omission was made in
reliance upon and in conformity with written information provided by or on
behalf of such Selling Stockholder or any Person who controls such Selling
Stockholder specifically and expressly for use or inclusion in the applicable
Registration Statement or Prospectus; provided, however, that such Selling
Stockholder will not indemnify or hold harmless any Company Indemnified Party or
other Stockholder Indemnified Party from or against any such Losses (including
any related expenses) (a) to the extent the untrue statement, omission, or
allegation thereof upon which such Losses (including any related expenses) are
based was made in any Prospectus used after such time as such Selling
Stockholder advised the Company that the filing of a post-effective amendment or
supplement thereto was required, except that this proviso shall not apply if the
untrue statement, omission, or allegation thereof is contained in the Prospectus
as so amended or supplemented, or (b) in an amount that exceeds the net proceeds
received by such Selling Stockholder from the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation by or on behalf of Company
Indemnified Parties or the Stockholder Indemnified Parties, and shall survive
the transfer of such securities by the Selling Stockholder.

                  6.3      Procedures. Each Indemnified Party shall give notice
to each Indemnifying Party promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnifying
Party may participate at its own expense in the defense, or if it so elects,
assume the defense of any such claim and any action or proceeding resulting
therefrom, including the employment of counsel and the payment of all expenses.
The failure of any Indemnified Party to give notice as provided in this Section
6.3 shall not relieve the Indemnifying Party from its obligations to indemnify
such Indemnified Party, except to the extent the Indemnified Party's failure to
so notify actually prejudices the Indemnifying Party's ability to defend against
such claim, action, or proceeding. If the Indemnifying Party elects to assume
the defense in any action or proceeding, an Indemnified Party shall have the
right to employ separate counsel in such action or proceeding and to participate
in the defense thereof, but such Indemnified Party shall pay the fees and
expenses of such separate counsel unless (a) the Indemnifying Party has agreed
to pay such fees and expenses or (b) the named parties to any such action or
proceeding (including any impleaded parties) include such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that there is or would be a conflict of interest between such
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such action (in which case, if such Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall

                                     - 17 -



not assume the defense of such action or proceeding on such Indemnified Party's
behalf). No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of the Indemnified Party (which consent will not
be unreasonably withheld), consent to entry of any judgment, or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.

                  6.4      Contribution. If the indemnification provided for
under this Section 6 is unavailable to or insufficient to hold the Indemnified
Party harmless under Section 6.1 or Section 6.2 above in respect of any Losses
referred to therein for any reason other than as specified therein, then the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other, in connection with the
statements or omissions that resulted in such Losses. The relative fault of each
Indemnifying Party or Indemnified Party, as the case may be, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by (or that was failed to be
supplied by) such Indemnifying Party or Indemnified Party, such party's relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission. If contribution based upon the relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand, is not available, then the Indemnifying Party shall contribute to the
amount paid or payable by Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other,
from the subject offering or distribution. The relative benefits received by the
Indemnifying Party, on the one hand, and the Indemnified Party, on the other,
shall be deemed to be in the same proportion as the net proceeds of the offering
or other distribution received by the Indemnifying Party bears to the net
proceeds of the offering or other distribution received by the Indemnified
Party. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.

         7.       Limitation on Other Registration Rights. The Company shall not
grant to any Person any demand registration right, incidental registration
right, or other right that would conflict with any of the rights granted to
Stockholders herein.

         8.       Miscellaneous.

                  8.1      Notices.

                           (a)      All notices, requests, demands, waivers, and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, mailed, certified or
registered mail with postage prepaid, or sent by reliable overnight courier, or
facsimile transmission, to the address or facsimile number specified for the
applicable party on Schedule A attached to this Agreement, or to such other
Person, address, or facsimile number as any party shall specify by notice in
writing to the other Parties.

                                     - 18 -



                           (b)      Any notice or other communication to a party
in accordance with the provisions of this Agreement shall be deemed to have been
given (i) three (3) Business Days after it is sent by certified or registered
mail, postage prepaid, return receipt requested, (ii) upon receipt when
delivered by hand or transmitted by facsimile (confirmation received), or (iii)
one (1) Business Day after it is sent by a reliable overnight courier service,
with acknowledgment of receipt requested. Notwithstanding the preceding
sentence, notice of change of address shall be effective only upon actual
receipt thereof.

                  8.2      Amendment. Any provision of this Agreement may be
amended or modified in whole or in part at any time by an agreement in writing
among the Company and the Stockholder holding a majority of the Registrable
Securities, executed in the same manner as this Agreement. No consent, waiver,
or similar act shall be effective unless in writing.

                  8.3      Entire Agreement. This Agreement constitutes the
entire agreement among the Parties and supersedes all prior agreements and
understandings, oral and written, among the Parties with respect to the subject
matter hereof.

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

                  8.5      Governing Law. This Agreement shall be governed by
and interpreted in accordance with the internal laws of the State of California,
without giving effect to principles of conflicts of laws.

                  8.6      Assignment.

                           (a)      Except as expressly provided in this Section
8.6, the rights of the Parties cannot be transferred or assigned and any
purported assignment or transfer to the contrary shall be void ab initio. So
long as the terms of this Section 8.6 are followed, any Stockholder may transfer
any of its rights under this Agreement, without the consent of the Company, to
any Person to whom such holder transfers any Registrable Securities or any
rights to acquire Registrable Securities, whether such transfer is by sale,
gift, assignment, pledge, or otherwise, so long as:

                                    (i)      such transfer is not made pursuant
to an effective Registration Statement or pursuant to Rule 144 or Rule 145 (or
any successor provisions) under the Securities Act or in any other manner the
effect of which is to cause the transferred securities to be freely transferable
without regard to the volume and manner of sale limitations set forth in Rule
144 (or any successor provision) in the hands of the transferee as of the date
of such transfer; and

                                    (ii)     such transfer is made (A) to
another Stockholder; (B) to any Person that, directly or indirectly, through the
ownership of voting securities, controls, is controlled by, or is commonly
controlled with such Stockholder; (C) to any investment fund formed by an
affiliate of such Stockholder that is commonly controlled with such Stockholder;
(D) to a trust for the benefit of the equity owners of such Stockholder and of
which the trustee or trustees are one or more Persons that either control, or
are commonly controlled with, such

                                     - 19 -



Stockholder or are banks, trust companies, or similar entities; (E) any Person
for which such Stockholder is acting as nominee or any trust controlled by or
under common control with such Person; (F) any Person, so long as such Person
acquires, pursuant to such transfer or series of related transfers, not less
than fifty thousand (50,000) Registrable Securities (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like), or (G) where
the transferring Stockholder is an individual, (i) to the estate, heirs, or
legatees of such Stockholder upon such Stockholder's death; (ii) to or for the
benefit of any member of such Stockholder's family or to any Person controlled
by such Stockholder or one or more members of such Stockholder's family; or
(iii) to any charitable foundation, charitable trust, or similar entity.

                           (b)      In addition to the transfers permitted by
Section 8.6(a), so long as the other terms of this Section 8.6 are followed, any
Stockholder may transfer any of its rights under this Agreement (other than its
rights under Section 2), without the consent of the Company, to any charitable
organization to which Registrable Securities are transferred by any charitable
foundation, charitable trust, or similar entity to which Registrable Securities
were previously transferred in accordance with Section 8.6(a); provided that any
notice under this Agreement that the Company would otherwise be required to
deliver to such charitable organization, as transferee of any of the
transferor's rights under this Agreement, may be given to the transferor of such
Registrable Securities at the address or facsimile number specified by the
transferor in accordance with Section 8.1(a).

                           (c)      Notwithstanding Section 8.6(a) or Section
8.6(b), no Stockholder may assign any of its rights under this Agreement to any
Person to whom such Stockholder transfers any Registrable Securities unless the
transfer of such Registrable Securities did not require registration under the
Securities Act.

                           (d)      The nature and extent of any rights assigned
shall be as agreed to between the assigning party and the assignee. Any assignee
hereunder shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including the provisions of this Section 8.6.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and assigns.

                  8.7      Binding Agreement; No Third Party Beneficiaries. This
Agreement will be binding upon and inure to the benefit of the Parties and their
successors and permitted assigns. This Agreement shall constitute a binding
agreement among the Company and each other Persons executing this Agreement at
such time as it has been executed by the Company and such other Persons, even if
additional Persons whose names appear on the signature page to this Agreement
have not executed and delivered this Agreement and may or may not do so at a
later time. Except as set forth herein and by operation of law, no party to this
Agreement may assign or delegate all or any portion of its rights, obligations,
or liabilities under this Agreement without the prior written consent of each
other party to this Agreement.

                            [Signature page follows.]

                                     - 20 -



                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth herein.

                            NOVATEL WIRELESS, INC.

                            By:  /s/ Peter V. Leparulo
                               ---------------------------------
                                  Name: Peter V. Leparulo
                                  Title: Chief Executive Officer



"PURCHASERS"

BAY INVESTMENTS LIMITED

By:  /s/ H.J. Pudwill
   -----------------------------------------

Name: H.J. Pudwill

Title: Director

MUTUAL TRUST MANAGEMENT (BERMUDA)

LIMITED AS TRUSTEE OF SOFAER FUNDS/

GLOBAL HEDGE FUND

By:  /s/ Michael Sofaer
   -----------------------------------------

Name: Michael Sofaer

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser

RIT CAPITAL PARTNERS PLC.

By:  /s/ Michael Sofaer
  -----------------------------------------

Name: Michael Sofaer

Title: Authorised signatory of Sofaer Capital Inc.

       Authorised Investment Adviser

SOEN YONG LEE

By:  /s/ Soen Yong Lee
   ---------------------------------
     Soen Yong Lee

                         SIGNATURE PAGE TO REGISTRATION
                                RIGHTS AGREEMENT



PETER LEPARULO

By: /s/ Peter V. Leparulo
   ------------------------
        Peter Leparulo

CORNERSTONE EQUITY INVESTORS, LLC

By: /s/ Robert H. Getz
  -----------------------

Name: Robert H. Getz

Title: Managing Director

PS CAPITAL LLC

By:  /s/ Stanley M. Blau
   --------------------------------

Name: Stanley M. Blau

Title: Managing Director

                         SIGNATURE PAGE TO REGISTRATION
                                RIGHTS AGREEMENT



PAN INVEST & TRADE INC.

By: /s/ Bruno Sidler
   --------------------------------

Name: Bruno Sidler

Title: Director

                         SIGNATURE PAGE TO REGISTRATION
                                RIGHTS AGREEMENT



                                   SCHEDULE A

                          Addresses for Notice Purposes

IF TO THE COMPANY:

Novatel Wireless, Inc.
9360 Towne Centre Drive, Suite 110
San Diego, CA 92121
Attention: Peter Leparulo,
Chief Executive Officer
Fax: (858) 812-3414

With a copy to:
       Latham & Watkins LLP
       633 West Fifth Street, Suite 4000
       Los Angeles, CA 90071
       Attention: J. Scott Hodgkins, Esq.
       Fax:  (213) 891-8763



IF TO THE PURCHASERS:

Mutual Trust Management (Bermuda)                     RIT Capital Partners plc.
Limited as Trustee of Sofaer Funds/Global Hedge Fund  Spencer House
Hemisphere House                                      27 St. James' Place
9 Church Street                                       London
P.O. Box HM 951                                       SW1A 1NR
Attention: Michael Sofaer                             Attention: Michael Sofaer

Pan Invest & Trade Inc.                               Bay Investments Limited
10th Floor                                            Suite 1806, 18/F
8 Queen's Road Central                                Central Plaza
Hong Kong                                             18 Harbour Road
Attention: John McLean Arnot                          WanChai
                                                      Hong Kong
                                                      Attention: Horst Pudwill

Soen Yong Lee                                         Peter Leparulo
#25 - 8, Sangdo 2 -Dong                               Novatel Wireless, Inc.
Dongjak - Gu                                          9360 Towne Centre Drive,
Seoul, Korea 156-03                                   Suite 110
                                                      San Diego, CA 92121

Cornerstone Equity Investors, LLC                     PS Capital LLC
717 Fifth Avenue                                      800 Fifth Avenue,
Suite 1100                                            Suite 19a
New York, NY  10022                                   New York, NY  10002
Attention: Robert H. Getz                             Attention: Stan Blau


With a copy to:
       Irell & Manella LLP
       1800 Avenue of the Stars, Suite 900
       Los Angeles, CA  90067
       Attention: Alvin G. Segel, Esq.
       Fax: (310) 203-7199

                         SIGNATURE PAGE TO REGISTRATION
                                RIGHTS AGREEMENT

                                                                    EXHIBIT 99.1



        NEWS RELEASES
================================================================================


                       NOVATEL WIRELESS ANNOUNCES NEW $6.7
                               MILLION FINANCING


        SAN DIEGO, CA - March 13, 2003--Novatel Wireless, Inc. (Nasdaq: NVTL), a
        leading provider of wireless data communications access solutions,
        announced today that it has raised $1.2 million of new capital through
        the private placement of secured subordinated convertible debt and it
        has signed an agreement to raise an additional $2.05 million through the
        private placement of preferred equity. In addition, the Company expects
        to issue approximately $3.505 million of preferred equity in exchange
        for the satisfaction of liabilities. The group of investors includes Bay
        Investments Limited, PS Capital LLC and other investors. Certain aspects
        of the transaction are subject to stockholder approval in accordance
        with Nasdaq listing requirements.

        The financing will be in the form of an initial $1.2 million of secured
        convertible subordinated short-term debt and warrants to purchase common
        stock; $3.505 million of secured subordinated convertible debt which
        will be used to satisfy liabilities that the investor group plans to
        purchase on behalf of the Company; and $2.05 million of Series B
        Convertible Preferred Stock for cash and warrants to purchase common
        stock. The Company expects that this financing will provide it with
        sufficient working capital until the Company achieves break even cash
        flow.

        "This new investment is necessary for us to execute our business plan
        and will allow us to concentrate on building a profitable, leading
        wireless data company," said Peter Leparulo, Chief Executive Officer of
        Novatel Wireless. "With this financing in place, we believe we will see
        a dramatically different Novatel Wireless with a focused sales and
        marketing effort, a concentrated R&D program, and a dramatically reduced
        cost structure. This structure will allow us to turn profitable on a
        much lower revenue base while enabling us to take advantage of projected
        growth in the marketplace as it arises. Moving forward, we will build on
        our growing relationships with leading carriers and technology companies
        such as LG Innotek, Lucent Technologies and our largest customer -
        Sprint."

        Following stockholder approval, the short term debt will be converted
        into shares of the Company's Series B Preferred Stock, and the
        convertible debt will be converted, subject to the satisfaction of
        certain conditions, into shares of the Company's Series B Preferred
        Stock. The Series B Preferred Stock will then be convertible into shares
        of the Company's common stock at a conversion price of $0.70 per share,
        which represents a 10% discount to the five day closing bid average of
        the common stock for the period ended March 10, 2003. When the preferred
        stock is fully converted, the Series B new investors will own
        approximately 54% of the outstanding capital stock of the Company.

        Novatel Wireless will release final fourth quarter and year-end results
        on Wednesday, March 26, 2003.

        ABOUT NOVATEL WIRELESS, INC.

        Novatel Wireless, Inc. is a leading provider of wireless data modems and




        software for use with handheld computing devices and portable personal
        computers. The Company delivers innovative and comprehensive solutions
        that enable businesses and consumers to access personal, corporate and
        public information through email, enterprise networks and the Internet.
        Novatel Wireless also offers wireless data modems and custom engineering
        services for hardware integration projects in a wide range of vertical
        applications. The Novatel Wireless product portfolio includes the
        Merlin(TM) Family of Wireless PC Card Modems, Expedite(TM) Family of
        Wireless Embedded Modems, Minstrel(R) Family of Wireless Handheld
        Modems, Lancer 3W(TM) Family of Ruggedized Modems and Sage(R) Wireless
        Serial Modems. Headquartered in San Diego, California, Novatel Wireless
        is listed on The Nasdaq Stock Market (Nasdaq: NVTL). For more
        information, please visit the Novatel Wireless web site:
        www.novatelwireless.com or call 888-888-9231.

        The Novatel Wireless logo, Minstrel, Merlin, Sage, Lancer 3W and
        Expedite are trademarks of Novatel Wireless, Inc. Minstrel and Sage are
        registered with the U.S. Patent and Trademark Office. All other brands,
        products and company names mentioned herein are trademarks of their
        respective holders.

        This release may contain forward-looking statements, which are made
        pursuant to the safe harbor provisions of the United States Private
        Securities Litigation Reform Act of 1995. These forward-looking
        statements involve risks and uncertainties. A number of important
        factors could cause actual results to differ materially from those in
        the forward-looking statements. These factors include risks relating to
        technological changes, continued acceptance of Novatel Wireless'
        products and dependence on intellectual property rights. These factors,
        as well as other factors that could cause actual results to differ
        materially, are discussed in more detail in Novatel Wireless' filings
        with the United States Securities and Exchange Commission and other
        regulatory agencies.