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EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT
                          -----------------------------

         SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 26,
2003, between P-Com,  Inc., a corporation  organized under the laws of the State
of  Delaware  (the  "Company"),  and  each of the  purchasers  (individually,  a
"Purchaser" and collectively the  "Purchasers") set forth on the execution pages
hereof (the "Execution Pages," and each an "Execution Page").

         WHEREAS:

         A. The Company and each  Purchaser are executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").

         B. The Company desires to issue and sell, and each Purchaser desires to
purchase,  upon  the  terms  and  conditions  stated  in this  Agreement,  (i) a
convertible   promissory  note,  in  the  form  attached  hereto  as  Exhibit  A
(collectively,  the  "Notes"),  in the  principal  face amount set forth on such
Purchaser's  Execution Page, which Notes shall be convertible into shares of the
Company's common stock,  par value $0.0001 per share (the "Common  Stock"),  or,
under certain circumstances, certain other securities of the Corporation, on the
terms set forth therein,  (ii) a warrant, in the form attached hereto as Exhibit
B  (collectively,  the "Series A Warrants"),  to acquire the number of shares of
Common Stock  identified  as the "Series A Warrant  Shares" on such  Purchaser's
Execution  Page,  (iii) a  warrant,  in the form  attached  hereto as  Exhibit C
(collectively,  the "Series A-1  Warrants"),  to acquire the number of shares of
Common Stock  identified  as the "Series A Warrant  Shares" on such  Purchaser's
Execution  Page,  (iv) a  warrant,  in the form  attached  hereto  as  Exhibit D
(collectively,  the  "Series B  Warrants"),  to acquire  the number of shares of
Common Stock  identified  as the "Series B Warrant  Shares" on such  Purchaser's
Execution  Page,  and (v) a warrant,  in the form  attached  hereto as Exhibit E
(collectively,  the  "Series  B-1  Warrants,"  and,  together  with the Series A
Warrants, the Series A-1 Warrants and the Series B Warrants, the "Warrants"), to
acquire the number of shares of Common Stock identified as the "Series B Warrant
Shares" on such Purchaser's  Execution Page. The shares of Common Stock issuable
upon conversion of or otherwise  pursuant to the Notes are referred to herein as
the "Conversion Shares" and the shares of Common Stock issuable upon exercise of
or  otherwise  pursuant to the  Warrants  are referred to herein as the "Warrant
Shares." The Notes, the Warrants,  the Conversion  Shares and the Warrant Shares
are  collectively  referred to herein as the  "Securities"  and each of them are
individually referred to herein as a "Security."

         C. In  connection  with the  Closing  pursuant to this  Agreement,  the
parties hereto are executing and delivering a Registration Rights Agreement,  in
the form attached  hereto as Exhibit F (the  "Registration  Rights  Agreement"),
pursuant to which the Company has agreed to provide certain  registration rights
under the Securities Act and the rules and regulations  promulgated  thereunder,
and applicable state securities laws.

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         D. In connection with the Closing (as defined herein)  pursuant to this
Agreement,  the Company is executing and delivering a Security Agreement, in the
form attached hereto as Exhibit G (together with any other document securing the
Notes and the subordination  agreement relating to the Notes in favor of Silicon
Valley Bank, the "Security  Documents"),  in favor of the  Collateral  Agent (as
defined herein) for the benefit of all of the Purchasers,  pursuant to which the
Company  has agreed to grant a security  interest in all of its  properties  and
assets in order to secure its obligations under the Notes.  This Agreement,  the
Notes,  the  Warrants,  the  Registration  Rights  Agreement  and  the  Security
Documents are collectively referred to herein as the "Transaction Documents."

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which are hereby  acknowledged,  the Company and the  Purchasers
hereby agree as follows:

1.       PURCHASE AND SALE OF SECURITIES.

         (a)  Purchase  and  Sale  of  Securities.  Subject  to  the  terms  and
conditions  hereof,  at the  Closing  (as defined in Section  1(b)  below),  the
Company shall issue and sell to each Purchaser,  and each  Purchaser,  severally
and not jointly,  shall  purchase from the Company,  (i) a Note in the principal
face  amount  set  forth on such  Purchaser's  Execution  Page,  (ii) a Series A
Warrant  to  acquire  the  number of shares of Common  Stock  identified  as the
"Series A Warrant Shares" on such Purchaser's Execution Page, (iii) a Series A-1
Warrant  to  acquire  the  number of shares of Common  Stock  identified  as the
"Series A Warrant  Shares" on such  Purchaser's  Execution Page, (iv) a Series B
Warrant  to  acquire  the  number of shares of Common  Stock  identified  as the
"Series B Warrant Shares" on such  Purchaser's  Execution Page, and (v) a Series
B-1 Warrant to acquire the number of shares of Common  Stock  identified  as the
"Series B Warrant Shares" on such  Purchaser's  Execution Page, in consideration
for the payment by such  Purchaser  of a purchase  price equal to the  principal
face  amount  of such  Purchaser's  Note (as to each  Purchaser,  the  "Purchase
Price").

         (b)  The  Closing.  Subject  to the  satisfaction  (or  waiver)  of the
conditions set forth in Sections 6 and 7 below,  the closing of the transactions
contemplated  hereby (the "Closing")  shall take place at the offices of Drinker
Biddle & Reath LLP at One Logan  Square,  18th & Cherry  Streets,  Philadelphia,
Pennsylvania  19103,  on the date hereof,  or at such other time or place as the
Company and the Purchasers may mutually agree (such date is hereinafter referred
to as the "Closing Date").

2.       PURCHASER'S  REPRESENTATIONS AND WARRANTIES.  Each Purchaser severally,
         but not jointly, represents and warrants to the Company as follows:

         (a) Purchase for Own Account,  Etc..  Such  Purchaser is acquiring  the
Notes and the Warrants for such  Purchaser's  own account and not with a present
view towards the public sale or distribution  thereof,  except pursuant to sales
that are exempt from the registration  requirements of the Securities Act and/or
sales  registered  under the  Securities  Act. Such Purchaser  understands  that
Purchaser must bear the economic risk of this  investment  indefinitely,  unless
the Securities are registered  pursuant to the Securities Act and any applicable
state  securities  or blue sky laws or an exemption  from such  registration  is
available,  and that the Company has no present  intention  of  registering  the
resale of any such Securities  other than as  contemplated  in the  Registration
Rights Agreement. Notwithstanding anything in this Section 2(a) to the contrary,
                                      -2-
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by making the  representations  herein, the Purchaser does not agree to hold the
Securities  for any minimum or other  specific  term and  reserves  the right to
dispose  of the  Securities  at any time in  accordance  with or  pursuant  to a
registration statement or an exemption from the registration  requirements under
the Securities Act.

         (b)  Accredited  Investor  Status.  Such  Purchaser  is an  "Accredited
Investor"  as that term is  defined  in Rule  501(a) of  Regulation  D under the
Securities Act.

         (c)  Reliance  on  Exemptions.  Such  Purchaser  understands  that  the
Securities  are  being  offered  and sold to such  Purchaser  in  reliance  upon
specific exemptions from the registration  requirements of United States federal
and state  securities  laws and that the  Company is relying  upon the truth and
accuracy  of,  and  such  Purchaser's   compliance  with,  the  representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the  availability  of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

         (d)  Information.  Such  Purchaser  or its counsel,  if any,  have been
furnished all materials relating to the business, finances and operations of the
Company and  materials  relating to the offer and sale of the  Securities  which
have been specifically requested by such Purchaser or its counsel.  Neither such
inquiries nor any other investigation conducted by such Purchaser or its counsel
or any of its  representatives  shall modify,  amend or affect such  Purchaser's
right to rely on the  Company's  representations  and  warranties  contained  in
Section 3 below. Such Purchaser understands that such Purchaser's  investment in
the Securities involves a high degree of risk.

         (e)  Governmental  Review.  Such Purchaser  understands  that no United
States federal or state agency or any other  government or  governmental  agency
has passed upon or made any recommendation or endorsement of the Securities.

         (f) Transfer or Resale.  Such Purchaser  understands that (i) except as
provided  in the  Registration  Rights  Agreement,  the  sale or  resale  of the
Securities have not been and are not being  registered  under the Securities Act
or any state securities  laws, and the Securities may not be transferred  unless
(A)  the  transfer  is  made  pursuant  to  and  as set  forth  in an  effective
registration statement under the Securities Act covering the Securities;  or (B)
such Purchaser  shall have delivered to the Company an opinion of counsel (which
opinion shall be in form,  substance and scope customary for opinions of counsel
in  comparable  transactions)  to the effect that the  Securities  to be sold or
transferred  may be sold or  transferred  pursuant  to an  exemption  from  such
registration;  or (C) sold  under and in  compliance  with Rule 144  promulgated
under the  Securities  Act (or a successor  rule) ("Rule  144");  or (D) sold or
transferred in accordance  with  applicable  securities  laws to an affiliate of
such Purchaser who agrees to sell or otherwise  transfer the Securities  only in
accordance  with the  provisions  of this Section 2(f) and who is an  Accredited
Investor;  and (ii)  neither  the  Company  nor any  other  person  is under any
obligation to register such  Securities  under the  Securities  Act or any state
securities  laws (other than  pursuant to the  Registration  Rights  Agreement).
                                      -3-
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Notwithstanding the foregoing or anything else contained herein to the contrary,
the  Securities  may be pledged as  collateral  in  connection  with a bona fide
margin account or other lending arrangement,  provided such pledge is consistent
with applicable laws, rules and regulations.

         (g) Legends.  Such Purchaser  understands that the certificates for the
Warrants and, until such time as the  Conversion  Shares and Warrant Shares have
been  registered  under the Securities Act (including  registration  pursuant to
Rule 416  thereunder)  or  otherwise  may be sold by such  Purchaser  under Rule
144(k), the certificates for the Conversion Shares and Warrant Shares shall bear
a restrictive legend in substantially the following form:

         The securities represented by this certificate have not been registered
         under the Securities Act of 1933, as amended, or the securities laws of
         any  state of the  United  States  or in any  other  jurisdiction.  The
         securities  represented hereby may not be offered,  sold or transferred
         in  the  absence  of  an  effective   registration  statement  for  the
         securities  under  applicable  securities laws unless offered,  sold or
         transferred  pursuant to an available  exemption from the  registration
         requirements of those laws.

         The Company agrees that it shall,  immediately  prior to a registration
statement  covering the  Securities  being  declared  effective,  deliver to its
transfer  agent an  opinion  letter of  counsel,  opining  that at any time such
registration  statement  is  effective,  the  transfer  agent  shall  issue,  in
connection  with the  issuance  of the  Conversion  Shares and  Warrant  Shares,
certificates  representing such Conversion Shares and Warrant Shares without the
restrictive legend above, provided such Conversion Shares and Warrant Shares are
to be sold pursuant to the prospectus contained in such registration  statement.
Upon receipt of such  opinion,  the Company  shall cause the  transfer  agent to
confirm,  for the benefit of the holders,  that no further opinion of counsel is
required  at the time of transfer  in order to issue such  shares  without  such
restrictive legend.

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if (unless otherwise required by state securities laws) (i) the sale of
such Security is registered  under the Securities  Act  (including  registration
pursuant to Rule 416 thereunder);  (ii) such holder provides the Company with an
opinion of counsel,  in form,  substance  and scope  customary  for  opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without  registration  under the Securities Act; or
(iii) such holder  provides the Company  with  reasonable  assurances  that such
Security  can be sold under Rule 144.  In the event the above  legend is removed
from any Security and thereafter the  effectiveness of a registration  statement
covering such Security is suspended or the Company  determines that a supplement
or  amendment  thereto is  required by  applicable  securities  laws,  then upon
reasonable advance written notice to such Purchaser the Company may require that
the  above  legend  be  placed on any such  Security  that  cannot  then be sold
pursuant  to an  effective  registration  statement  or under  Rule 144 and such
Purchaser shall  cooperate in the replacement of such legend.  Such legend shall
thereafter  be  removed  when such  Security  may again be sold  pursuant  to an
effective registration statement or under Rule 144.

         (h)  Authorization;  Enforcement.  This Agreement and the  Registration
Rights Agreement have been duly and validly  authorized,  executed and delivered
on  behalf  of such  Purchaser  and is a valid  and  binding  agreement  of such
Purchaser enforceable against such Purchaser in accordance with its terms.
                                      -4-
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         (i)  Residency.  Such Purchaser is a resident of the  jurisdiction  set
forth under such  Purchaser's name on the Execution Page hereto executed by such
Purchaser.

         The Purchasers'  representations  and warranties made in this Article 2
are  made  solely  for  the  purpose  of  permitting   the  Company  to  make  a
determination that the transactions  contemplated  hereby comply with applicable
U.S.  federal  and  state  securities  laws and not for any other  purpose.  The
Company  may not  rely on such  representations  and  warranties  for any  other
purpose.

3.  REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY. Except as set forth in the
Company's  Select  SEC  Documents  (as  defined  in  Section 3(f) below) or on a
Disclosure  Schedule  executed and delivered by the Company to the Purchasers at
the  Closing (the "Disclosure Schedule"), the Company represents and warrants to
each  Purchaser  as  follows:

         (a) Organization and Qualification.  The Company and each of its direct
or indirect  subsidiaries  (collectively,  the  "Subsidiaries") is a corporation
duly organized and existing in good standing under the laws of the  jurisdiction
in which it is  incorporated,  and has the requisite  corporate power to own its
properties and to carry on its business as now being conducted.  The Company and
each of its  Subsidiaries  is duly  qualified  as a  foreign  corporation  to do
business and is in good  standing in every  jurisdiction  in which the nature of
the business  conducted by it makes such  qualification  necessary and where the
failure so to qualify has had or could reasonably be expected to have a Material
Adverse Effect.  "Material  Adverse Effect" means any material adverse effect on
(i) the  Securities,  (ii) the ability of the Company to perform its obligations
hereunder  or under  the other  Transaction  Documents  or (iii)  the  business,
operations,  properties, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole.

         (b)  Authorization;  Enforcement.  (i) The  Company  has the  requisite
corporate  power and authority to enter into and perform its  obligations  under
this Agreement and the other Transaction Documents,  to issue and sell the Notes
and Warrants in accordance with the terms hereof, to issue the Conversion Shares
upon conversion of the Notes in accordance with the terms of such Notes (subject
to obtaining the Authorized  Stock Approval  contemplated by Section 4(p) below)
and to issue the Warrant Shares upon exercise of the Warrants in accordance with
the terms of such Warrants; (ii) the execution, delivery and performance of this
Agreement  and  the  other   Transaction   Documents  by  the  Company  and  the
consummation  by  it  of  the  transactions   contemplated  hereby  and  thereby
(including,  without limitation,  the issuance of the Notes and Warrants and the
issuance and  reservation  for  issuance of the  Conversion  Shares  (subject to
obtaining the Authorized Stock Approval  contemplated by Section 4(p) below) and
Warrant  Shares) have been duly  authorized by the Company's  Board of Directors
and no further consent or authorization of the Company,  its Board of Directors,
or any committee of the Board of Directors is required, and (iii) this Agreement
constitutes,  and,  upon  execution  and  delivery  by the  Company of the other
Transaction  Documents,  such  agreements  will  constitute,  valid and  binding
obligations of the Company  enforceable  against the Company in accordance  with
their terms.  Neither the  execution,  delivery or performance by the Company of
this Agreement or the other Transaction  Documents nor the consummation by it of

                                      -5-
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the transactions contemplated hereby or thereby (including,  without limitation,
the  issuance  of the Notes or  Warrants  or the  issuance  or  reservation  for
issuance of the  Conversion  Shares or Warrant  Shares)  requires any consent or
authorization  of the Company's  stockholders,  except for the Authorized  Stock
Approval contemplated by Section 4(p) below.

         (c)  Capitalization.  The  capitalization of the Company as of the date
hereof,  including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities (other than the Notes and Warrants)  exercisable
or  exchangeable  for, or convertible  into, any shares of capital stock and the
number of shares to be reserved for issuance  upon  conversion  of the Notes and
exercise  of the  Warrants  is set  forth  in  Section  3(c)  of the  Disclosure
Schedule.  All of such  outstanding  shares of capital  stock have been, or upon
issuance in accordance with the terms of any such warrants, options or preferred
stock,  will be, validly  issued,  fully paid and  non-assessable.  No shares of
capital stock of the Company  (including the  Conversion  Shares and the Warrant
Shares)  are subject to  preemptive  rights or any other  similar  rights of the
stockholders  of the  Company  or any  liens  or  encumbrances.  Except  for the
Securities  and as set forth in Section 3(c) of the Disclosure  Schedule,  as of
the date of this  Agreement,  (i) there are no  outstanding  options,  warrants,
scrip, rights to subscribe to, calls or commitments of any character  whatsoever
relating  to,  or  securities  or  rights  convertible  into or  exercisable  or
exchangeable  for,  any  shares of  capital  stock of the  Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue  additional  shares of capital stock of the Company
or  any of  its  Subsidiaries,  nor  are  any  such  issuances  or  arrangements
contemplated,  and (ii) there are no agreements or arrangements  under which the
Company or any of its  Subsidiaries  is obligated to register the sale of any of
its or their  securities  under the Securities Act (other than the  Registration
Rights Agreement). Section 3(c) of the Disclosure Schedule sets forth all of the
Company issued  securities or  instruments  containing  antidilution  or similar
provisions that will be triggered by, and all of the resulting  adjustments that
will be made to such  securities and instruments as a result of, the issuance of
the Securities in accordance with the terms of this Agreement,  the Notes or the
Warrants. The Company has furnished to the Purchasers true and correct copies of
the  Company's  Certificate  of  Incorporation  as in effect on the date  hereof
("Certificate of Incorporation"),  the Company's Bylaws as in effect on the date
hereof  (the  "Bylaws"),  and all other  instruments  and  agreements  governing
securities  convertible into or exercisable or exchangeable for capital stock of
the Company.

         (d) Issuance of Shares. The Notes and Warrants are duly authorized and,
upon issuance in accordance  with the terms of this  Agreement,  will be validly
issued  and free from all taxes,  liens,  claims and  encumbrances  (other  than
restrictions  on transfer  contained in this Agreement or the Notes or Warrants)
and will not be subject to preemptive  rights,  rights of first refusal or other
similar  rights of  stockholders  of the  Company  and will not impose  personal
liability on the holders  thereof.  Upon obtaining the Authorized Stock Approval
contemplated  by  Section  4(p)  below,  the  Conversion  Shares  shall  be duly
authorized  and reserved for  issuance,  and,  upon  conversion  of the Notes in
accordance  with the terms  thereof,  will be  validly  issued,  fully  paid and
non-assessable,  and free from all taxes,  liens, claims and encumbrances (other
than  restrictions  on transfer  contained  in this  Agreement)  and will not be
subject to preemptive rights, rights of first refusal or other similar rights of
stockholders  of the Company  and will not impose  personal  liability  upon the
holder  thereof.  The  Warrant  Shares  are duly  authorized  and  reserved  for
issuance,  and,  upon  exercise  of the  Warrants in  accordance  with the terms

                                      -6-
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thereof,  will be validly issued,  fully paid and non-assessable,  and free from
all taxes,  liens,  claims and encumbrances (other than restrictions on transfer
contained  in this  Agreement)  and will not be  subject to  preemptive  rights,
rights of first refusal or other similar rights of  stockholders  of the Company
and will not impose personal liability upon the holder thereof.

         (e) No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement  and  the  other   Transaction   Documents  by  the  Company  and  the
consummation by the Company of the transactions  contemplated hereby and thereby
(including,  without limitation,  the issuance and reservation for issuance,  as
applicable,  of the Notes, Warrants,  Conversion Shares and Warrant Shares) will
not (i) result in a violation of the Certificate of  Incorporation  or Bylaws or
(ii)  conflict  with,  or  constitute a default (or an event that with notice or
lapse of time or both  would  become a  default)  under,  or give to others  any
rights of termination,  amendment (including, without limitation, the triggering
of  any  anti-dilution   provisions),   acceleration  or  cancellation  of,  any
agreement,  indenture  or  instrument  to  which  the  Company  or  any  of  its
Subsidiaries is a party, or result in a violation of any law, rule,  regulation,
order,  judgment or decree (including United States federal and state securities
laws  and   regulations   and  rules  or  regulations  of  any   self-regulatory
organizations  to which  either  the  Company  or its  securities  are  subject)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its  Subsidiaries  is bound or affected  (except,
with  respect  to  clause  (ii),  for such  conflicts,  defaults,  terminations,
amendments,  accelerations,  cancellations  and violations that have not had and
could not reasonably be expected to have,  individually  or in the aggregate,  a
Material Adverse Effect).  Neither the Company nor any of its Subsidiaries is in
violation of its Certificate of  Incorporation,  Bylaws or other  organizational
documents and neither the Company nor any of its Subsidiaries is in default (and
no event has occurred which, with notice or lapse of time or both, would put the
Company or any of its Subsidiaries in default) under, nor has there occurred any
event  giving  others  (with  notice  or lapse of time or both)  any  rights  of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  Subsidiaries  is a
party.  The  businesses  of the  Company  and its  Subsidiaries  are  not  being
conducted,  and shall not be  conducted  so long as a Purchaser  owns any of the
Notes,  in violation of any law,  ordinance or  regulation  of any  governmental
entity,  except for possible violations the sanctions for which either singly or
in the  aggregate  have not had and could not  reasonably  be expected to have a
Material  Adverse  Effect.   The  Company  and  its  Subsidiaries   possess  all
certificates,  authorizations  and permits  issued by the  appropriate  federal,
state or foreign  regulatory  authorities  which are  material  to  conduct  its
business,  and neither the Company nor any of its  Subsidiaries has received any
written notice of any proceeding  relating to the revocation or  modification of
any such  certificate,  authorization  or permit.  The  Company and its board of
directors  have  taken  all  necessary  action,  if  any,  in  order  to  render
inapplicable any control share acquisition,  business  combination,  poison pill
(including  any  distribution   under  a  rights  agreement)  or  other  similar
anti-takeover  provision under its Certificate of  Incorporation  or the laws of
the  state  of its  incorporation  which is or could  become  applicable  to the
Purchasers  as a result  of the  transactions  contemplated  by this  Agreement,
including without  limitation,  the Company's issuance of the Securities and any
and all Purchaser's  ownership of the Securities or the Purchaser's ownership of
the Common Stock.  Except as specifically  contemplated  by this Agreement,  the
Company is not required to obtain any consent, approval,  authorization or order
                                      -7-
<PAGE>
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self regulatory agency in order for it to execute,  deliver or
perform any of its  obligations  under this  Agreement or the other  Transaction
Documents, in each case in accordance with the terms hereof or thereof.

         (f) SEC Documents,  Financial Statements.  Since December 31, 1997, the
Company has timely  filed  (within  applicable  extension  periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange  Act") (all of the foregoing  filed prior to the
date hereof and all  exhibits  included  therein and  financial  statements  and
schedules  thereto  and  documents  incorporated  by  reference  therein,  being
hereinafter  referred  to  herein  as the  "SEC  Documents").  The  Company  has
delivered to each Purchaser true and complete copies of the SEC Documents. As of
their respective dates, the SEC Documents complied in all material respects with
the  requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and  regulations of the SEC promulgated  thereunder  applicable to
the SEC Documents,  and none of the SEC  Documents,  at the time they were filed
with the SEC,  contained  any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  None of the statements made in any such SEC Documents is,
or has been,  required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings made prior
to the date hereof).  As of their respective dates, the financial  statements of
the Company  included in the SEC  Documents  complied as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations  of  the  SEC  applicable  with  respect  thereto.   Such  financial
statements  have  been  prepared  in  accordance  with U.S.  generally  accepted
accounting principles ("GAAP"), consistently applied during the periods involved
(except (i) as may be otherwise  indicated in such  financial  statements or the
notes  thereto,  or (ii) in the case of  unaudited  interim  statements,  to the
extent they may not include footnotes or may be condensed or summary statements)
and fairly present in all material respects the consolidated  financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated  results of their  operations  and cash flows for the periods  then
ended  (subject,  in the case of unaudited  statements,  to immaterial  year-end
audit  adjustments).  Except as set  forth in the  financial  statements  of the
Company included in the Select SEC Documents (as defined below), the Company has
no liabilities,  contingent or otherwise, other than (i) liabilities incurred in
the  ordinary  course  of  business  subsequent  to the  date of such  financial
statements and (ii) obligations under contracts and commitments  incurred in the
ordinary  course of business and not required under GAAP to be reflected in such
financial  statements,  which liabilities and obligations referred to in clauses
(i)  and  (ii),  individually  or in the  aggregate,  are  not  material  to the
financial  condition  or  operating  results  of the  Company.  As  used in this
Agreement,  the term "Select SEC  Documents"  shall mean the Company's (A) Proxy
Statement  for its 2002 Annual  Meeting,  (B) Annual Report on Form 10-K for the
fiscal year ending December 31, 2001, (C) Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 2002, and (D) Current Reports
on Form 8-K filed since December 31, 2001.

         (g) Absence of Certain Changes. Since December 31, 2001, there has been
no material adverse change and no material adverse  development in the business,
properties,  operations, prospects, financial condition or results of operations
                                      -8-
<PAGE>
of the Company and its Subsidiaries, taken as a whole. The Company has not taken
any steps,  and does not currently  expect to take any steps, to seek protection
pursuant to any  bankruptcy or  receivership  law nor does the Company or any of
its  Subsidiaries  have any  knowledge or reason to believe  that its  creditors
intend to  initiate  involuntary  bankruptcy  proceedings  with  respect  to the
Company or any of its Subsidiaries.

         (h) Transactions With Affiliates.  None of the officers,  directors, or
employees  of the  Company  is  presently  a party to any  transaction  with the
Company or any of its  Subsidiaries  (other than for  ordinary  course  services
solely in their  capacity as employees,  officers or  directors),  including any
contract,  agreement  or  other  arrangement  providing  for the  furnishing  of
services to or by, providing for rental of real or personal property to or from,
or  otherwise  requiring  payments  to or from any  such  officer,  director  or
employee or any  corporation,  partnership,  trust or other  entity in which any
such officer, director, or employee has an ownership interest of five percent or
more or is an officer, director, trustee or partner.

         (i)  Absence  of  Litigation.  There is no  action,  suit,  proceeding,
inquiry  or  investigation  before or by any  court,  public  board,  government
agency, self-regulatory organization or body (including, without limitation, the
SEC)  pending or, to the  knowledge  of the Company or any of its  Subsidiaries,
threatened against or affecting the Company, any of its Subsidiaries,  or any of
their respective directors or officers in their capacities as such. There are no
facts which, if known by a potential claimant or governmental  authority,  could
give rise to a claim or proceeding  which, if asserted or conducted with results
unfavorable  to the  Company or any of its  Subsidiaries,  could  reasonably  be
expected to have a Material Adverse Effect.

         (j)  Intellectual  Property.  Each of the Company and its  Subsidiaries
owns or is duly licensed to use all patents,  patent  applications,  trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications, licenses, permits, inventions, discoveries, processes, scientific,
technical,  engineering  and marketing data,  object and source codes,  know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential  information,  systems or procedures)  and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its  business as now being  conducted.  To the best  knowledge  of the  Company,
neither  the  Company  nor any  Subsidiary  of the  Company  infringes  or is in
conflict  with any right of any other  person with  respect to any  Intangibles.
Neither the Company nor any of its  Subsidiaries  has received written notice of
any pending conflict with or infringement upon such third party Intangibles. The
termination  of the  Company's  ownership  of,  or  right  to  use,  any  single
Intangible  could  reasonably  be  expected to have a Material  Adverse  Effect.
Neither  the Company nor any of its  Subsidiaries  has entered  into any consent
agreement, indemnification agreement, forbearance to sue or settlement agreement
with respect to the validity of the Company's or its Subsidiaries'  ownership or
right to use its Intangibles and there is no reasonable basis for any such claim
to be successful.  The Intangibles are valid and enforceable and no registration
relating  thereto has lapsed,  expired or been  abandoned  or canceled or is the
subject of cancellation or other adversarial  proceedings,  and all applications
therefor are pending and in good standing. The Company and its Subsidiaries have
complied,   in  all  material  respects,   with  their  respective   contractual
obligations  relating to the  protection  of the  Intangibles  used  pursuant to
licenses.  No person is infringing on or violating the Intangibles owned or used
by the Company or its Subsidiaries.

                                      -9-
<PAGE>

         (k) Title.  The Company and its  Subsidiaries  have good and marketable
title in fee simple to all real property and good and merchantable  title to all
personal  property owned by them that is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects,  except for (i) a first priority  security interest granted in favor of
Silicon Valley Bank to secure the Company's obligations thereto pursuant to that
certain Loan and  Security  Agreement  dated as of September  20, 2002 among the
Company,  P-Com Network Services,  Inc. and Silicon Valley Bank and that certain
Loan and Security  Agreement (EXIM Program) dated as of September 20, 2002 among
the Company, P-Com Network Services, Inc. and Silicon Valley Bank, and (ii) such
other  liens,  encumbrances  and  defects  as do  not,  individually  or in  the
aggregate,  materially  affect the value of such property and do not  materially
interfere  with the use made and  proposed  to be made of such  property  by the
Company and its Subsidiaries.  Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable  leases  with  such  exceptions  as  are  not  material  and  do not
materially  interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.

         (l)  Environmental  Matters.  There is no  environmental  litigation or
other  environmental  proceeding  pending  or  threatened  by  any  governmental
regulatory  authority  or others  with  respect  to the  current  or any  former
business of the Company or its  Subsidiaries or any partnership or joint venture
currently or at any time  affiliated  with the Company or its  subsidiaries.  No
state of facts exists as to  environmental  matters or Hazardous  Substances (as
defined  below) that involves the  reasonable  likelihood of a material  capital
expenditure  by the Company or its  Subsidiaries  or that may  otherwise  have a
Material Adverse Effect.  No Hazardous  Substances have been treated,  stored or
disposed of, or otherwise deposited,  in or on the properties owned or leased by
the Company or its Subsidiaries or by any partnership or joint venture currently
or at any time affiliated  with the Company or its  Subsidiaries in violation of
any applicable  environmental laws. The environmental compliance programs of the
Company and its Subsidiaries comply in all respects with all environmental laws,
whether federal, state or local, currently in effect. As used herein, "Hazardous
Substances" means any substance, waste, contaminant,  pollutant or material that
has been determined by any governmental authority to be capable of posing a risk
of injury to health, safety, property or the environment.

         (m) Disclosure.  All information  relating to or concerning the Company
and/or any Subsidiary or Subsidiaries set forth in this Agreement or provided to
any Purchaser  pursuant to Section 2(d) hereof or otherwise in  connection  with
the  transactions  contemplated  hereby  is true  and  correct  in all  material
respects and the Company has not omitted to state any material fact necessary in
order  to  make  the  statements  made  herein  or  therein,  in  light  of  the
circumstances  under  which  they  were  made,  not  misleading.   No  event  or
circumstance  has  occurred  or  exists  with  respect  to  the  Company  or its
Subsidiaries or their respective businesses,  properties,  prospects, operations
or  financial  conditions,  which has not been  publicly  disclosed  but,  under
applicable  law,  rule or  regulation,  would be required to be disclosed by the
Company in a  registration  statement  filed on the date  hereof by the  Company
under the  Securities  Act with respect to a primary  issuance of the  Company's
securities.

         (n) Acknowledgment  Regarding  Purchasers'  Purchase of the Securities.
The Company  acknowledges  and agrees that none of the Purchasers is acting as a
financial  advisor or fiduciary of the Company (or in any similar capacity) with
                                      -10-
<PAGE>
respect  to  this  Agreement  or  the  transactions   contemplated  hereby,  the
relationship  between the Company and the  Purchasers is  "arms-length"  and any
statement  made by any  Purchaser  or any of its  representatives  or  agents in
connection  with this  Agreement  and the  transactions  contemplated  hereby is
merely  incidental to such  Purchaser's  purchase of Securities and has not been
relied upon by the  Company,  its  officers or directors in any way. The Company
further  acknowledges  that the Company's  decision to enter into this Agreement
has been  based  solely on an  independent  evaluation  by the  Company  and its
representatives.

         (o) Form  SB-2  Eligibility.  The  Company  is  currently  eligible  to
register the resale of its Common  Stock on a  registration  statement  filed on
Form SB-2 under the Securities Act.

         (p) No General  Solicitation.  Neither the Company nor any  distributor
participating on the Company's behalf in the  transactions  contemplated  hereby
(if any) nor any person  acting for the Company,  or any such  distributor,  has
conducted any "general  solicitation,"  as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.

         (q)  No  Integrated  Offering.  Neither  the  Company,  nor  any of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any security  under  circumstances  that would require  registration  of the
Securities  being offered hereby under the Securities Act or cause this offering
of  Securities  to be  integrated  with any prior  offering of securities of the
Company for purposes of the Securities Act.

         (r) No Brokers.  The Company has taken no action  which would give rise
to any claim by any person for  brokerage  commissions  or finder's  fees or for
similar payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby.

         (s)  Acknowledgment  Regarding  Securities.  The  number of  Conversion
Shares  issuable upon  conversion of the Notes and the number of Warrant  Shares
issuable  upon  exercise of the Warrants may increase in certain  circumstances.
The Company's executive officers have studied and fully understand the nature of
the  Securities  being  sold  hereunder.   The  Company  acknowledges  that  its
obligation to issue Conversion Shares upon conversion of the Notes in accordance
with the terms of such Notes and to issue  Warrant  Shares upon  exercise of the
Warrants in  accordance  with the terms of such  Warrants  is, other than as set
forth in the Notes or the Warrants,  respectively,  absolute and  unconditional,
regardless  of the  dilution  that  such  issuance  may  have  on the  ownership
interests of other stockholders and the availability of remedies provided for in
the Transaction  Documents  relating to a failure or refusal to issue Conversion
Shares or Warrant Shares. Taking the foregoing into account, the Company's Board
of  Directors  has  determined  in its good  faith  business  judgment  that the
issuance of the Notes and Warrants  hereunder and the  consummation of the other
transactions  contemplated  hereby are in the best  interests of the Company and
its stockholders.  The Company's Board of Directors and executive officers fully
intend to honor their  obligations  hereunder  to issue  Conversion  Shares upon
conversion  of the  Notes and  Warrant  Shares  upon  exercise  of the  Warrants
regardless  of the  dilution  that  such  issuance  may  have  on the  ownership
interests of other stockholders and the availability of remedies provided for in
the  Transaction  Documents  relating  to  their  failure  or  refusal  to issue
Conversion Shares or Warrant Shares.

                                      -11-
<PAGE>
4.       COVENANTS.

         (a) Best Efforts.  The parties  shall use their best efforts  timely to
satisfy each of the conditions described in Sections 6 and 7 of this Agreement.

         (b) Form D: Blue Sky Laws. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a copy
thereof to each Purchaser  promptly after such filing.  The Company shall, on or
before the  Closing  Date,  take such  action as the  Company  shall  reasonably
determine  is  necessary to qualify the  Securities  for sale to each  Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United  States or obtain  exemption  therefrom,  and shall provide
evidence  of any  such  action  so taken  to each  Purchaser  on or prior to the
Closing Date.  Within two (2) trading days after the Closing  Date,  the Company
shall  file  a  Form  8-K  concerning   this  Agreement  and  the   transactions
contemplated hereby, which Form 8-K shall attach this Agreement and its Exhibits
as exhibits to such Form 8-K (the "8-K Filing").  From and after the 8-K Filing,
the Company hereby  acknowledges that no Purchaser shall be in possession of any
material  nonpublic   information   received  from  the  Company,   any  of  its
Subsidiaries or any of its respective officers, directors,  employees or agents,
that is not disclosed in the 8-K Filing.  The Company shall not, and shall cause
each of its  Subsidiaries  and  its  and  each  of  their  respective  officers,
directors,  employees and agents not to, provide any Purchaser with any material
nonpublic  information regarding the Company or any of its Subsidiaries from and
after the 8-K Filing  without the  express  written  consent of such  Purchaser;
provided,  however,  that a Purchaser  which  exercises its rights under Section
4(m) shall be deemed to have given such express written consent. In the event of
a breach of the foregoing covenant by the Company,  any of its Subsidiaries,  or
any of its or their respective  officers,  directors,  employees and agents,  in
addition  to any  other  remedy  provided  herein  or in the  other  Transaction
Documents, a Purchaser shall have the right to make a public disclosure,  in the
form of a press release,  public  advertisement  or otherwise,  of such material
nonpublic   information   without  the  prior  approval  by  the  Company,   its
Subsidiaries, or any of its or their respective officers,  directors,  employees
or  agents.  No  Purchaser  shall  have  any  liability  to  the  Company,   its
Subsidiaries, or any of its or their respective officers, directors,  employees,
shareholders  or  agents  for any such  disclosure.  Subject  to the  foregoing,
neither  the  Company nor any  Purchaser  shall issue any press  releases or any
other public  statements with respect to the transactions  contemplated  hereby;
provided,  however,  that the  Company  shall be  entitled,  without  the  prior
approval of any Purchaser,  to make any press release or other public disclosure
with respect to such  transactions  (i) in substantial  conformity  with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) each Purchaser shall be
consulted  by the  Company in  connection  with any such press  release or other
public disclosure prior to its release).

         (c) Reporting Status. So long as any Purchaser beneficially owns any of
the  Securities,  the Company  shall  timely file (within  applicable  extension
periods) all reports  required to be filed with the SEC pursuant to the Exchange
Act, and the Company  shall not  terminate  its status as an issuer  required to
file  reports  under the  Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.

                                      -12-
<PAGE>
         (d) Use of  Proceeds.  The  Company  shall  use the  proceeds  from the
issuance and sale of the Securities (x) to make loans in an aggregate amount not
exceeding  $400,000 to one or more third parties acceptable to the Purchasers in
their sole and absolute discretion  (provided,  however,  that in the event that
the aggregate  Purchase  Price of all Purchasers is less than  $1,500,000,  such
$400,000  loan  amount  shall be  reduced  to equal that  amount  determined  by
multiplying  $400,000 by a fraction,  the  numerator  of which is the  aggregate
Purchase Price of all Purchasers  and the  denominator of which is  $1,500,000),
and (y) for general corporate purposes and working capital.  Such proceeds shall
not be used to (i) pay  dividends;  (ii)  pay  for  any  increase  in  executive
compensation  or make  any  loan or  other  advance  to any  officer,  employee,
shareholder,  director or other  affiliate of the  Company,  without the express
approval of the Board of  Directors  acting in  accordance  with past  practice;
(iii) purchase debt or equity securities of any entity (including  redeeming the
Company's own securities),  except for (A) the loans  contemplated by clause (x)
of this Section 4(d), (B) evidences of indebtedness  issued or fully  guaranteed
by the United  States of America and having a maturity of not more than one year
from the date of acquisition,  (C) certificates of deposit,  notes,  acceptances
and repurchase  agreements  having a maturity of not more than one year from the
date of  acquisition  issued by a bank  organized  in the United  States  having
capital,  surplus  and  undivided  profits  of at  least  $500,000,000,  (D) the
highest-rated  commercial paper having a maturity of not more than one year from
the date of  acquisition,  and (E) "Money  Market" fund shares,  or money market
accounts  fully  insured  by  the  Federal  Deposit  Insurance  Corporation  and
sponsored  by  banks  and  other  financial  institutions,   provided  that  the
investments consist principally of the types of investments described in clauses
(B), (C), or (D) above; or (iv) make any investment not directly  related to the
current business of the Company.

         (e)  Financial  Information.  The  Company  shall send (via  electronic
transmission  or otherwise) the following  reports to the  Purchasers  until the
Purchasers transfer, assign or sell all of their Securities: (i) within ten (10)
days  after the filing  with the SEC, a copy of its Annual  Report on Form 10-K,
its Quarterly Reports on Form 10-Q, its proxy statements and any Current Reports
on Form 8-K;  and (ii)  within  one (1) day after  release,  copies of all press
releases issued by the Company or any of its Subsidiaries.

         (f)  Reservation  of  Shares.  The  Company  shall  at all  times  have
authorized  and  reserved  for the  purpose of issuance a  sufficient  number of
shares of Common  Stock to provide for the full  conversion  of the  outstanding
Notes and issuance of the Conversion Shares in connection  therewith (subject to
obtaining the Authorized Stock Approval  contemplated by Section 4(p) below) and
the full  exercise of the  Warrants  and the  issuance of the Warrant  Shares in
connection  therewith,  in each case to the extent required by the Notes and the
Warrants.

         (g)  Listing.  The  Company  shall  promptly  secure the listing of the
Conversion Shares and the Warrant Shares upon each national  securities exchange
or automated  quotation system, if any, upon which shares of Common Stock become
listed or quoted  (subject to official notice of issuance upon conversion of the
Notes or  exercise of the  Warrants)  and shall  maintain,  so long as any other
shares  of  Common  Stock  shall be so listed or  quoted,  such  listing  of all
Conversion  Shares  and  Warrant  Shares  from  time to time  issuable  upon the
conversion  of the Notes or the  exercise of the  Warrants.  The  Company  shall
comply in all material respects with the reporting, filing and other obligations
under the bylaws or rules of any such national  securities exchange or automated
quotation  system on which its shares of Common Stock are listed or quoted.  The
                                      -13-
<PAGE>
Company shall promptly provide to each holder of Notes and/or Warrants copies of
any notices it receives regarding the continued  eligibility of the Common Stock
for trading on any national securities exchange or automated quotation system on
which  securities  of the same class or series  issued by the  Company  are then
listed or quoted, if any.

         (h) Corporate Existence.  So long as a Purchaser  beneficially owns any
Securities, the Company shall maintain its corporate existence, and in the event
of a merger,  consolidation or sale of all or substantially all of the Company's
assets,  the Company shall ensure that the surviving or successor entity in such
transaction (i) assumes the Company's  obligations hereunder and under the other
Transaction Documents and (ii) is a publicly traded corporation.

         (i) No Integrated  Offerings.  The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities  Act or cause this offering of the  Securities to be integrated  with
any other offering of securities by the Company for purposes of any  stockholder
approval provision applicable to the Company or its securities.

         (j) Legal  Compliance.  The Company  shall conduct its business and the
business  of its  subsidiaries  in  compliance  with  all  laws,  ordinances  or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.

         (k)  Redemptions  and  Dividends.  So long as any  Purchaser  holds any
Notes,  the Company shall not,  without first obtaining the written  approval of
the holders of a majority of the  aggregate  principal  amount of the Notes then
outstanding,  repurchase,  redeem  or  declare  or  pay  any  cash  dividend  or
distribution on any shares of capital stock of the Company.

         (l) Information.  So long as any Purchaser holds any Notes, the Company
shall furnish to such Purchaser:

                  (i)  concurrently  with the filing  with the SEC of its annual
         reports on Form 10-K, a certificate of the President,  a Vice President
         or a senior  financial  officer of the Company stating that, based upon
         such  examination or  investigation  and review of this Agreement as in
         the opinion of the signer is  necessary to enable the signer to express
         an informed opinion with respect  thereto,  neither the Company nor any
         of its Subsidiaries is or has during such period been in default in the
         performance or observance of any of the terms,  covenants or conditions
         hereof, or, if the Company or any of its Subsidiaries shall be or shall
         have been in default,  specifying all such defaults, and the nature and
         period of  existence  thereof,  and what  action  the  Company  or such
         Subsidiary  has  taken,  is taking  or  proposes  to take with  respect
         thereto; and

                  (ii) the information the Company must deliver to any holder or
         to any prospective transferee of Securities in order to permit the sale
         or other transfer of such  Securities  pursuant to Rule 144A of the SEC
         or any similar rule then in effect.

The  Company  shall  keep  at its principal executive office a true copy of this
Agreement  (as  at  the  time in effect), and cause the same to be available for
inspection  at  such  office  during  normal  business  hours  by  any holder of
Securities  or  any  prospective transferee of Securities designated by a holder
thereof.

                                      -14-
<PAGE>

         (m) Inspection of Properties and Books.  So long as any Purchaser shall
beneficially  own any  Securities,  such Purchaser and its  representatives  and
agents   (collectively,   the  "Inspectors")  shall  have  the  right,  at  such
Purchaser's  expense,  to visit and inspect any of the properties of the Company
and of its  Subsidiaries,  to examine  the books of account  and  records of the
Company and of its Subsidiaries, to make or be provided with copies and extracts
therefrom,  to discuss the affairs,  finances and accounts of the Company and of
its  Subsidiaries  with,  and to be  advised  as to the same by,  its and  their
officers,  employees and independent  public  accountants (and by this provision
the Company  authorizes such  accountants to discuss such affairs,  finances and
accounts, whether or not a representative of the Company is present) all at such
reasonable  times and intervals and to such reasonable  extent as such Purchaser
may desire; provided,  however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to such Purchaser) of any such information
which the  Company  determines  in good faith to be  confidential,  and of which
determination the Inspectors are so notified,  unless (i) the disclosure of such
information is necessary to avoid or correct a  misstatement  or omission in any
registration  statement  covering  the  Securities,  (ii)  the  release  of such
information  is ordered  pursuant  to a subpoena  or other order from a court or
government body of competent  jurisdiction,  or (iii) such  information has been
made generally  available to the public other than by disclosure in violation of
this or any other agreement.  Each Purchaser agrees that it shall, upon learning
that  disclosure of such  information is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense,  to undertake  appropriate action
to prevent  disclosure of, or to obtain a protective  order for, the information
deemed confidential.

         (n)  Confidential  Agreement.  Except for any  disclosure  required  by
applicable  law or rules of the SEC, the Company and each Purchaser  shall,  and
shall  direct  its  respective   representatives  to,  hold  in  confidence  all
information  concerning this Agreement and the transactions  contemplated hereby
until the earlier of such time as (i) the Company has made a public announcement
concerning the Agreement and the transactions  contemplated  hereby or (ii) this
Agreement is terminated.

         (o)  Expenses.  The  Company  shall pay to SDS Capital  Partners  ("SDS
Capital") at Closing  reimbursement  for the out-of-pocket  expenses  reasonably
incurred by SDS Capital, its affiliates, and its or their advisors in connection
with the negotiation,  preparation, execution and delivery of this Agreement and
the other Transaction Documents,  including,  without limitation, such advisors'
reasonable due diligence and attorneys' fees and expenses (the  "Expenses"),  up
to an aggregate amount not to exceed $27,500. At the Closing, any Expenses to be
reimbursed  pursuant  to this  Section  4(o)  shall be paid by  delivery  by the
Company of a Company check of  immediately  available  funds or wire transfer to
SDS  Capital.  In addition,  from time to time  thereafter,  upon SDS  Capital's
written  request and to the extent  that the Company has not already  reimbursed
SDS Capital for Expenses  aggregating $27,500 pursuant to this Section 4(o), the
Company shall pay to SDS Capital such additional  Expenses,  if any, not covered
by such payment, in each case to the extent reasonably incurred by SDS Capital's
agents in connection  with the  transactions  contemplated by this Agreement and
the other Transaction Documents.

         (p)  Stockholder  Approval.  The  Company  shall  call a meeting of its
stockholders  to be held as promptly as  practicable  (but in any event no later
than 120 days  after the  Closing  Date)  for the  purpose  of  voting  upon and
approving (i) the increase in the number of  authorized  shares of the Company's
Common Stock to a number  sufficient to provide for the conversion of all of the
                                      -15-
<PAGE>

Notes issued by the Company to the Purchasers  pursuant hereto (the  "Authorized
Stock Approval"), and (ii) the anti-dilution and other conversion/exercise price
adjustments  contained in the Notes and the Warrants,  the approval for which is
required  by  Article  VII,  Section  8 of  the  Company's  Bylaws  (the  "Price
Adjustment  Approval" and,  together with the  Authorized  Stock  Approval,  the
"Stockholder  Approval").  The  Company  shall  recommend  to  its  stockholders
approval of such matters. The Company shall use its best efforts to solicit from
its  stockholders  proxies  in favor of such  matters  sufficient  to obtain the
Stockholder  Approval,  and  shall  vote  such  proxies,  and shall use its best
efforts  to cause  all  "affiliates"  (as such  term is  defined  in Rule  12b-2
promulgated  under the Exchange Act) of the Company to vote any shares of Common
Stock beneficially owned by such persons or entities,  in favor of such matters.
In the event and upon obtaining the Authorized Stock Approval, the Company shall
take all such  corporate  action as shall be necessary to reserve the Conversion
Shares for issuance upon  conversion  of the Notes in accordance  with the terms
thereof.  Unless and until such time as the Company obtains the Price Adjustment
Approval,  the Company shall not sell or issue any shares of Common Stock or any
securities  convertible into or exercisable or exchangeable for shares of Common
Stock for  consideration  per share  (which  shall  include the total  amount of
consideration,  if any,  received by the Company for such sale or issuance plus,
in  the  case  of  securities  that  are  convertible  into  or  exercisable  or
exchangeable for shares of Common Stock, the minimum amount of consideration, if
any,  payable to the Company  upon  conversion  into or exercise or exchange for
each share of Common Stock) that is less than the Exercise Price of the Series B
Warrants then in effect.

5.       TRANSFER AGENT INSTRUCTIONS.

         (a) The Company shall instruct its transfer agent to issue certificates
(subject  to the  legend  and other  provisions  hereof and in the Notes and the
Warrants),  registered  in the name of each  Purchaser or its  nominee,  for the
Conversion  Shares and the Warrant Shares in such amounts as specified from time
to time by such  Purchaser  to the  Company  upon  conversion  of the  Notes  or
exercise of the Warrants,  as  applicable.  To the extent and during the periods
provided  in Sections  2(f) and 2(g) of this  Agreement,  all such  certificates
shall bear the restrictive legend specified in Section 2(g) of this Agreement.

         (b)  The  Company   warrants  that  no  instruction   other  than  such
instructions  referred to in this Section 5 and stop  transfer  instructions  to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares or Warrant  Shares prior to  registration  of the  Conversion  Shares and
Warrant Shares under the Securities Act or without an exemption therefrom, shall
be given by the  Company to its  transfer  agent and that the  Securities  shall
otherwise be freely  transferable on the books and records of the Company as and
to the extent provided in this  Agreement.  Nothing in this Section shall affect
in any way each Purchaser's  obligations and agreement set forth in Section 2(g)
hereof to resell the Securities pursuant to an effective  registration statement
or  under  an  exemption  from  the  registration   requirements  of  applicable
securities law.

         (c) If any Purchaser  provides the Company and the transfer  agent with
an opinion of counsel,  which opinion of counsel shall be in form, substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the
                                      -16-
<PAGE>
effect  that  the  Securities  have  been  sold or  transferred  pursuant  to an
exemption  from  registration,  or any  Purchaser  provides  the Company with an
opinion of counsel,  which  opinion of counsel  shall be in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the
effect that such  Securities  may be sold under Rule 144(k),  the Company  shall
permit the  transfer  and,  in the case of the  Conversion  Shares  and  Warrant
Shares,  promptly  instruct its transfer agent to issue one or more certificates
in such name and in such denominations as specified by such Purchaser.

6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company hereunder to issue and sell the Notes and
the Warrants to the  Purchasers  and to otherwise  consummate  the  transactions
contemplated hereby is subject to the satisfaction, at or before the Closing, of
each of the following conditions thereto, provided that these conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole discretion.

         (a) Each Purchaser shall have executed such Purchaser's  Execution Page
to this Agreement and the  Registration  Rights Agreement and delivered the same
to the Company.

         (b) Each Purchaser shall have delivered the amount of such  Purchaser's
Purchase Price to the Company by wire transfer in accordance  with the Company's
written  wiring  instructions.  (c) The  representations  and warranties of each
Purchaser  shall be true and  correct  as of the  date  when  made and as of the
Closing  Date as  though  made at that  time  (except  for  representations  and
warranties  that  speak  as  of  a  specific  date,  which  representations  and
warranties  shall be true and correct as of such date), and such Purchaser shall
have  performed,  satisfied  and  complied  in all  material  respects  with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Purchaser at or prior to the Closing Date.

         (d) No statute,  rule,  regulation,  executive order, decree, ruling or
injunction  shall have been  enacted,  entered,  promulgated  or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization  having  authority  over  the  matters  contemplated  hereby  which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

7.       CONDITIONS TO EACH PURCHASER'S  OBLIGATION TO PURCHASE.
The  obligation  of  each  Purchaser  hereunder  to  purchase  the Notes and the
Warrants  from  the  Company  and  to  otherwise  consummate  the  transactions
contemplated  hereby  is  subject  to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that such conditions are for
such Purchaser's sole benefit and may be waived by such Purchaser at any time in
such  Purchaser's  sole  discretion:

         (a) The Company shall have executed this  Agreement,  the  Registration
Rights Agreement and the Security  Documents,  and delivered  executed  original
copies of the same to such Purchaser.
                                      -17-
<PAGE>

         (b) The Company shall have  delivered to such  Purchaser  duly executed
Notes and Warrants (each in such denominations as such Purchaser shall request),
registered in such Purchaser's name.

         (c) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the  Closing  Date as though  made at
that time (except for representations and warranties that speak as of a specific
date, which  representations and warranties shall be true and correct as of such
date) and the  Company  shall have  performed,  satisfied  and  complied  in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date.

         (d) No statute,  rule,  regulation,  executive order,  decree,  ruling,
injunction,  action or proceeding shall have been enacted, entered,  promulgated
or endorsed by any court or governmental  authority of competent jurisdiction or
any self-regulatory  organization having authority over the matters contemplated
hereby which questions the validity of, challenges or prohibits the consummation
of, any of the transactions contemplated by this Agreement.

         (e) Each  Purchaser  shall have  received  an opinion of the  Company's
counsel,  dated as of the Closing Date, in form, scope and substance  reasonably
satisfactory  to the  Purchaser  and in  substantially  the  form of  Exhibit  H
attached hereto.

         (f) There shall have been no material  adverse  changes and no material
adverse  developments  in  the  business,  properties,   operations,  prospects,
financial   condition  or  results  of   operations   of  the  Company  and  its
subsidiaries,  taken as a whole, since the date hereof,  and no information,  of
which the Purchasers are not currently aware, shall come to the attention of the
Purchasers that is materially adverse to the Company.

         (g) Each  Purchaser  shall have  received a copy of  resolutions,  duly
adopted by the Board of Directors  of the Company,  which shall be in full force
and effect at the time of the applicable  Closing,  authorizing the consummation
by the  Company  of  the  transactions  contemplated  hereby  and  by the  other
Transaction Documents, certified as such by the Secretary or Assistant Secretary
of the Company.

8.       COLLATERAL AGENCY PROVISIONS.

         (a) Appointment of Collateral  Agent. The Purchasers hereby appoint DMG
Legacy  Institutional  Fund LLC,  to act as  collateral  agent (the  "Collateral
Agent") and DMG Legacy Institutional Fund LLC, agrees to act as Collateral Agent
for the Purchasers, as contemplated herein and in the Security Documents.

         (b) Collateral  Agent  Authorized to Enter into  Collateral  Documents.
Each of the  Purchasers  authorizes  the  Collateral  Agent  to  enter  into the
Security Documents on its behalf.

         (c) Amendment to Security Documents.  The Purchasers holding a majority
of the total outstanding principal balance of the Notes (the "Required Holders")
shall  have the right to direct  the  Collateral  Agent,  from time to time,  to
consent  to any  amendment,  modification  or  supplement  to or  waiver  of any
                                      -18-
<PAGE>
provision of any Security  Document and to release any Collateral (as defined in
the  Security  Documents)  from  any  lien  or  security  interest  held  by the
Collateral Agent;  provided,  however,  that (i) no such direction shall require
the Collateral  Agent to consent to the modification of any provision or portion
thereof  which (in the sole  judgment  of the  Collateral  Agent) is intended to
benefit the Collateral  Agent, (ii) the Collateral Agent shall have the right to
decline to follow any such direction if the Collateral  Agent shall determine in
good  faith  that the  directed  action  is not  permitted  by the  terms of any
Security Document or may not lawfully be taken and (iii) no such direction shall
waive  or  modify  any  provision  of  any  Security   Document  the  waiver  or
modification  of  which  requires  the  consent  of all  Purchasers  unless  all
Purchasers consent thereto.  The Collateral Agent may rely on any such direction
given to it by the  Required  Holders  and shall be fully  protected  in relying
thereon,  and shall under no  circumstances  be liable,  except in circumstances
involving the Collateral Agent's gross negligence or willful misconduct as shall
have been determined in a final  nonappealable  judgment of a court of competent
jurisdiction,  to any  holder  of the Notes or any  other  person or entity  for
taking or  refraining  from taking  action in  accordance  with any direction or
otherwise in accordance with any of the Security Documents.

         (d) Duties of Collateral Agent.

                  (i) Powers.  The Collateral  Agent shall have and may exercise
         such powers under the Security Documents as are specifically  delegated
         to the Collateral Agent by the terms hereof and thereof,  together with
         such powers as are reasonably  incidental thereto. The Collateral Agent
         shall not have any implied duties or any obligations to take any action
         under the Security Documents except any action specifically provided by
         the Security Documents to be taken by the Collateral Agent.

                  (ii)  Reliance  on  Instructions  of  Required  Holders.   The
         Collateral  Agent shall be  required  to act or to refrain  from acting
         (and shall be fully  protected in so acting or refraining  from acting)
         upon  the  written  instructions  of  the  Required  Holders  and  such
         instructions  shall  be  binding  upon  all the  Purchasers;  provided,
         however,  that the  Collateral  Agent shall not be required to take any
         action  which the  Collateral  Agent in good faith  believes  (A) could
         reasonably  be expected to expose it to  personal  liability  or (B) is
         contrary to this Agreement, the Security Documents and applicable law.

                  (iii)  Action  Without  Instructions  After  Event of Default.
         Absent written instructions from the Required Holders at a time when an
         Event of Default shall have occurred and be continuing,  the Collateral
         Agent  may take,  but shall  have no  obligation  to take,  any and all
         actions under the Security  Documents or any of them or otherwise as it
         shall deem to be in the best  interests  of the  Purchasers;  provided,
         however,  that in the absence of written instructions from the Required
         Holders,  the Collateral Agent shall not exercise remedies available to
         it under any Security  Document  with respect to the  Collateral or any
         part thereof  (other than  preserving,  collecting  and  protecting the
         Collateral and the proceeds thereof).

                  (iv)   Independent   Right  of  Each   Purchaser  to  Instruct
         Collateral   Agent.  The  right  of  each  Purchaser  to  instruct  the
         Collateral  Agent  is the  separate  and  individual  property  of such
         Purchaser and may be exercised as such  Purchaser  sees fit in its sole
         discretion  and with no liability to any other such  Purchaser  for the
         exercise or non-exercise thereof.  Without limiting the foregoing,  the
         Required  Holders  shall not be liable under any  circumstances  to any
         other  Purchaser for any action taken or omitted to be taken  hereunder
         by the  Collateral  Agent upon written  instructions  from the Required
         Holders.
                                      -19-
<PAGE>
                  (v) Relationship Between Collateral Agent and Purchasers.  The
         relationship  between the  Collateral  Agent and the  Purchasers is and
         shall be only to the extent  explicitly  provided  for  herein  that of
         agent and principal and nothing herein  contained shall be construed to
         constitute  the  Collateral  Agent a trustee  for any  Purchaser  or to
         impose on the Collateral Agent duties and obligations  other than those
         expressly  provided for herein.  Without limiting the generality of the
         foregoing,  neither  the  Collateral  Agent  nor any of its  directors,
         officers, employees, partners or agents shall:

                           (A) be  responsible  to the other  Purchasers for any
                  recitals,  representations or warranties  contained in, or for
                  the    execution,    validity,    genuineness,     perfection,
                  effectiveness or enforceability of, the Security Documents (it
                  being  expressly  understood  that  any  determination  of the
                  foregoing is the responsibility of each Purchaser),

                           (B) be  responsible  to the other  Purchasers for the
                  validity,     genuineness,     perfection,      effectiveness,
                  enforceability,   existence,   value  or  enforcement  of  any
                  security  interest  in  the  Collateral  (it  being  expressly
                  understood  that any  determination  of the  foregoing  is the
                  responsibility of each Purchaser),

                           (C) be under  any duty to  inquire  into or pass upon
                  any  of  the  foregoing  matters,   or  to  make  any  inquiry
                  concerning  the  performance by any person or entity of its or
                  their  obligations  under  any  Security  Document  (it  being
                  expressly  understood that any  determination of the foregoing
                  is the responsibility of each Purchaser),

                           (D) be deemed to have  knowledge of the occurrence of
                  an Event of Default (as  defined in the Notes),  or any event,
                  condition or circumstance the occurrence of which would,  with
                  the  giving  of  notice  or  the  passage  of  time  or  both,
                  constitute an Event of Default,

                           (E) be  responsible  or liable to the  Purchasers for
                  any shortage, discrepancy,  damage, loss or destruction of any
                  part  of the  Collateral  wherever  the  same  may be  located
                  regardless of the cause  thereof  unless the same shall happen
                  solely through the gross  negligence or willful  misconduct of
                  the Collateral  Agent as shall have been determined in a final
                  nonappealable judgment of a court of competent jurisdiction,

                           (F)  have any  liability  to the  Purchasers  for any
                  error or omission or action or failure to act of any kind made
                  in the  settlement,  collection or payment in connection  with
                  any of the Security  Documents or any of the Collateral or any
                  instrument  received  in  payment  therefor  or for any damage
                  resulting  therefrom  other  than as a sole  result of its own
                  gross  negligence  or  willful  misconduct  as shall have been
                  determined  in a final  nonappealable  judgment  of a court of
                  competent jurisdiction, or

                           (G) in any event, be liable to the Purchasers as such
                  for any action  taken or omitted by it,  absent,  in each case
                  described in this subsection,  its gross negligence or willful
                  misconduct   as  shall  have  been   determined   in  a  final
                  nonappealable judgment of a court of competent jurisdiction.
                                      -20-
<PAGE>

                  (e)  Standard of Care.  Each  Purchaser  agrees with all other
         Purchasers  and the  Collateral  Agent that  nothing  contained in this
         Agreement  shall be construed to give rise to, nor shall such Purchaser
         have, any claims whatsoever  against the Collateral Agent on account of
         any act or omission to act in connection with the exercise of any right
         or  remedy  of the  Collateral  Agent  with  respect  to  the  Security
         Documents  or the  Collateral  in the  absence of gross  negligence  or
         willful   misconduct  of  the  Collateral  Agent  as  shall  have  been
         determined  in a final  nonappealable  judgment of a court of competent
         jurisdiction.

                  (f)  Collateral  In  Possession  of  Collateral   Agent.   The
         Collateral  Agent  shall be at liberty to place any of the  Collateral,
         this  Agreement,  the  Security  Documents  and any other  instruments,
         documents or deeds  delivered to it pursuant to or in  connection  with
         any of such  documents  in any safe  deposit  box,  safe or  receptacle
         selected by it or with any bank,  any company whose  business  includes
         undertaking  the safe  custody of  documents  or any firm of lawyers of
         good repute and the Collateral  Agent shall not be responsible  for any
         loss  thereby  incurred  unless  such loss is solely  the result of the
         Collateral Agent's gross negligence or willful misconduct as shall have
         been  determined  in a  final  nonappealable  judgment  of a  court  of
         competent jurisdiction.  The Collateral Agent's books and records shall
         at all times show that the Collateral is held by the  Collateral  Agent
         subject to the pledge and lien of the Security Documents.

                  (g) Agents,  Officers and Employees of Collateral  Agent.  The
         Collateral  Agent may  execute  any of its  duties  under the  Security
         Documents by or through its agents, officers or employees.  Neither the
         Collateral Agent nor any of its agents,  officers or employees shall be
         liable  for any  action  taken or  omitted to be taken by it or them in
         good faith,  be  responsible  for the  consequence  of any oversight or
         error  of  judgment  or  answerable  for  any  loss  unless  any of the
         foregoing shall happen through its or their gross negligence or willful
         misconduct  as shall  have  been  determined  in a final  nonappealable
         judgment of a court of competent jurisdiction.

                  (h)  Appointment of Co-Agent.  Whenever the  Collateral  Agent
         shall deem it  necessary  or prudent in order  either to conform to any
         law of any  jurisdiction  in which  all or any  part of the  Collateral
         shall be situated  or to make any claim or bring any suit with  respect
         to the Collateral or the Security  Documents,  or in the event that the
         Collateral  Agent shall have been requested to do so by or on behalf of
         the Required Holders,  the Collateral Agent shall execute and deliver a
         supplemental   agreement  and  all  other  instruments  and  agreements
         necessary or proper to  constitute a bank or trust  company,  or one or
         more other persons or entities approved by the Collateral Agent, either
         to act as co-agent or co-agents  with respect to all or any part of the
         Collateral or with respect to the Security Documents,  jointly with the
         Collateral Agent or any successor or successors,  or to act as separate
         agent or agents of any such property, in any such case with such powers
         as may be provided in such supplemental agreement,  and to vest in such
         bank,  trust  company or other  persons or entities as such co-agent or
         separate agent, as the case may be, any property, title, right or power
         of the Collateral  Agent deemed  necessary or advisable by the Required
         Holders or the Collateral Agent.

                  (i) Reliance on Certain Documents.  The Collateral Agent shall
         be  entitled  to  rely on any  communication,  instrument  or  document
         believed  by it to be genuine  and  correct  and to have been signed or
         sent by the  proper  person or  entity,  and with  respect to all legal
         matters  shall be  entitled  to rely on the  advice  of legal  advisors
         selected  by  it  concerning  all  matters  relating  to  the  Security
         Documents and its duties  hereunder and thereunder and otherwise  shall
         rely on such experts as it deems necessary or desirable,  and shall not
         be  liable to any  Purchaser  or any  other  person  or entity  for the
         consequences  of such  reliance in the absence of gross  negligence  or
         willful   misconduct   as  shall  have  been   determined  in  a  final
         nonappealable judgment of a court of competent jurisdiction.


                                      -21-
<PAGE>
                  (j)  Collateral  Agent  May Have  Separate  Relationship  with
         Parties.  The  Collateral  Agent (or any  affiliate  of the  Collateral
         Agent) may,  notwithstanding  the fact that it is the Collateral Agent,
         act as a lender to the Company and lend money to, and generally  engage
         in any kind of  business  with such party in the same manner and to the
         same  effect  as  though  it were not the  Collateral  Agent;  and such
         business  shall  not  constitute  a  breach  of any  obligation  of the
         Collateral Agent to the other Purchasers.

                  (k)   Indemnification   of  Collateral   Agent.  Each  of  the
         Purchasers, ratably on the basis of the respective principal amounts of
         the Notes  outstanding at the time of the occurrence giving rise to the
         below  liabilities,  losses,  etc.,  agrees to indemnify the Collateral
         Agent for any and all liabilities, losses, damages, penalties, actions,
         judgments,  suits,  costs,  expenses or  disbursements  of any kind and
         nature  whatsoever  that may be imposed  on,  incurred  by or  asserted
         against the Collateral  Agent in its capacity as the Collateral  Agent,
         in any way relating to or arising out of the Security  Documents or the
         transactions  contemplated  hereby or thereby or the enforcement of any
         of the terms hereof or thereof,  provided  that neither the Company nor
         any  Purchaser  shall be liable for any of the  foregoing to the extent
         they arise from gross  negligence or willful  misconduct on the part of
         the  Collateral  Agent  as  shall  have  been  determined  in  a  final
         nonappealable  judgment  of a court  of  competent  jurisdiction.  This
         Section 8(k) shall survive the termination of this Agreement.  Prior to
         taking any action  hereunder as Collateral  Agent, the Collateral Agent
         may require each  Purchaser to deposit  with it  sufficient  sums as it
         determines in good faith is necessary to protect the  Collateral  Agent
         for costs and  expenses  associated  with taking such  action,  and the
         Collateral Agent shall have no liability  hereunder for failure to take
         such action unless the Purchasers promptly deposit such sums.

                  (l) Resignation.  The Collateral Agent at any time may resign,
         upon 30 days' prior  written  notice,  by an  instrument  addressed and
         delivered to the  Purchasers  and the Company and may be removed at any
         time with or without  cause upon 30 days' prior written  notice,  by an
         instrument in writing duly executed by duly  authorized  signatories of
         the Required Holders. The Required Holders shall also have the right to
         appoint a successor to the Collateral  Agent upon any such  resignation
         or  removal,   by  instrument  of   substitution   complying  with  the
         requirements  of  applicable  law,  or,  in the  absence  of  any  such
         requirement,   without  any  formality   other  than   appointment  and
         designation in writing,  a copy of which instrument or writing shall be
         sent to each  Purchaser.  Upon  the  making  of  such  appointment  and
         delivery to such successor Collateral Agent of the Collateral then held
         by the retiring Collateral Agent, such successor Collateral Agent shall
         thereupon  succeed to and become  vested with all the  rights,  powers,
         privileges and duties  conferred  hereby and by the Security  Documents
         upon  the  Collateral  Agent  named  herein,   and  one  or  more  such
         appointments  and  designations  shall not exhaust the right to appoint
         and  designate  further  successor  Collateral  Agents  hereunder.  The
         retiring  Collateral  Agent shall not be discharged from its duties and
         obligations hereunder until, and the retiring Collateral Agent shall be
         so discharged when, all the Collateral held by the retiring  Collateral
         Agent has been  delivered to the  successor  Collateral  Agent and such
         successor  Collateral  Agent shall execute,  acknowledge and deliver to
         each  holder of the Notes and to the  Company an  instrument  accepting
         such appointment. If no successor shall be appointed and approved on or
                                      -22-
<PAGE>
         prior to the date of any such  resignation,  the  resigning  Collateral
         Agent may apply to any court of  competent  jurisdiction  to  appoint a
         successor  to act until a successor  shall have been  appointed  by the
         Required Holders as above provided.

         (m) Rights with Respect to Collateral.

                  (i) Each Purchaser  agrees with all other  Purchasers (A) that
         it shall not,  and shall not  attempt  to,  exercise  any  rights  with
         respect to its security interest in the Collateral, whether pursuant to
         any  other  agreement  or  otherwise   (other  than  pursuant  to  this
         Agreement),  or take or  institute  any action  against the  Collateral
         Agent or any of the other  Purchasers  in respect of the  Collateral or
         its rights  hereunder  (other  than any such  action  arising  from the
         breach  of this  Agreement)  and (B) that such  Purchaser  has no other
         rights with respect to the  Collateral  other than as set forth in this
         Agreement and the Security Documents.

                  (ii) Each Purchaser  agrees with all other  Purchasers and the
         Collateral  Agent that  nothing  contained  in this  Section 8 shall be
         construed to give rise to, nor shall such  Purchaser  have,  any claims
         whatsoever  against  any other  Purchaser  or the  Collateral  Agent on
         account of any act or omission to act in  connection  with the exercise
         of any right or remedy of the Collateral  Agent or any other  Purchaser
         with respect to the  Collateral  in the absence of gross  negligence or
         willful  misconduct  of such other  Purchaser or Collateral  Agent,  as
         applicable,  as shall  have been  determined  in a final  nonappealable
         judgment of a court of competent jurisdiction.

9.       GOVERNING LAW; MISCELLANEOUS.

         (a) Governing Law;  Jurisdiction.  This Agreement  shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company and the
Purchasers  irrevocably consent to the jurisdiction of the United States federal
courts  and the state  courts  located in the State of  Delaware  in any suit or
proceeding  based on or arising under this Agreement and irrevocably  agree that
all claims in  respect  of such suit or  proceeding  may be  determined  in such
courts.  The Company  irrevocably waives the defense of an inconvenient forum to
the  maintenance  of such suit or  proceeding.  The Company  further agrees that
service of process  upon the Company  mailed by first class mail shall be deemed
in every respect  effective service of process upon the Company in any such suit
or  proceeding.  Nothing herein shall affect the right of any Purchaser to serve
process in any other manner  permitted  by law. The Company  agrees that a final
non-appealable  judgment in any such suit or proceeding  shall be conclusive and
may be enforced in other  jurisdictions by suit on such judgment or in any other
lawful manner.

         (b)  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other party.  This Agreement,  once executed by a party, may be
delivered to the other  parties  hereto by facsimile  transmission  of a copy of
this Agreement  bearing the signature of the party so delivering this Agreement.
In the event any  signature is delivered  by facsimile  transmission,  the party
                                      -23-
<PAGE>

using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof,  provided that the failure to so deliver any manually executed
Execution  Page  shall  not  affect  the  validity  or  enforceability  of  this
Agreement.

         (c) Construction. Whenever the context requires, the gender of any word
used in this Warrant includes the masculine,  feminine or neuter, and the number
of any word  includes  the  singular  or plural.  Unless the  context  otherwise
requires, all references to articles and sections refer to articles and sections
of this  Agreement,  and all  references to schedules are to schedules  attached
hereto,  each of which is made a part hereof for all purposes.  The  descriptive
headings of the several articles and sections of this Agreement are inserted for
purposes of reference  only, and shall not affect the meaning or construction of
any of the provisions hereof.

         (d)  Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

         (e)  Entire  Agreement;   Amendments.  This  Agreement  and  the  other
Transaction  Documents contain the entire  understanding of the Purchasers,  the
Company, their affiliates and persons acting on their behalf with respect to the
matters covered herein and therein and, except as specifically  set forth herein
or therein,  neither the Company  nor any  Purchaser  makes any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement may be waived other than by an  instrument in writing  signed by
the party to be charged with  enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and each
Purchaser.

         (f)  Notices.  Any notices  required or permitted to be given under the
terms of this  Agreement  shall be sent by certified or registered  mail (return
receipt requested) or delivered personally,  by responsible overnight carrier or
by confirmed facsimile,  and shall be effective five (5) days after being placed
in the mail,  if mailed,  or upon  receipt or refusal of receipt,  if  delivered
personally or by responsible  overnight carrier or confirmed facsimile,  in each
case addressed to a party. The initial addresses for such  communications  shall
be as follows,  and each party shall provide  notice to the other parties of any
change in such party's address:

                  (i) If to the Company:

                           P-Com, Inc.
                           3175 South Winchester Blvd.
                           Campbell, CA 95008
                           Telephone: (408) 866-3666
                           Facsimile:  (408) 874-4461
                           Attention:  Chief Executive Officer
                                      -24-
<PAGE>
                           with a copy simultaneously  transmitted by like means
                           to (which  transmittal  shall not  constitute  notice
                           hereunder):

                           Sheppard Mullin Richter & Hampton LLP
                           800 Anacapa Street
                           Santa Barbara, CA  93101
                           Telephone: (805) 879-1812
                           Facsimile:  (805) 568-1955
                           Attention:  Theodore R. Maloney, Esq.

                  (ii) If to any Purchaser, to such address set forth under such
         Purchaser's  name  on  the  Execution  Page  hereto  executed  by  such
         Purchaser.

         (g)  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and assigns.  Except as
provided  herein,  the Company shall not assign this  Agreement or any rights or
obligations  hereunder.  Any  Purchaser  may assign or transfer  the  Securities
pursuant  to the  terms  of the  Notes,  the  Warrants  and this  Agreement,  as
applicable,  or assign such  Purchaser's  rights  hereunder or thereunder to any
other person or entity,  except for direct competitors of the Company or persons
or entities  that have  publicly  announced  plans to compete  directly with the
Company. In addition, and notwithstanding  anything to the contrary contained in
this Agreement or the other Transaction Documents, the Securities may be pledged
and all rights of any Purchaser  under this  Agreement or any other  Transaction
Document may be assigned, without further consent of the Company, to a bona fide
pledgee in connection with such Purchaser's margin or brokerage account.

         (h) Third Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person; provided that Section 4(o) may be enforced by SDS Capital.

         (i) Survival. The representations and warranties of the Company and the
agreements  and  covenants  set forth in Sections 3, 4, 5, 8 and 9 hereof  shall
survive the Closing notwithstanding any due diligence investigation conducted by
or on  behalf  of any  Purchaser.  Moreover,  none  of the  representations  and
warranties  made by the  Company  herein  shall act as a waiver of any rights or
remedies  any  Purchaser  may  have  under  applicable  U.S.  federal  or  state
securities laws.

         (j) Publicity.  The Company and each Purchaser  shall have the right to
approve before  issuance any press  releases,  SEC filings,  or any other public
statements  with  respect to the  transactions  contemplated  hereby;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Purchasers,  to make any press  release  or SEC  filings  with  respect  to such
transactions  as is required by  applicable  law and  regulations  (although the
Purchasers  shall be consulted by the Company in connection  with any such press
release  and  filing  prior to its  release  and shall be  provided  with a copy
thereof).

                                      -25-
<PAGE>
         (k) Further Assurances. Each party shall do and perform, or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.


         (l) Joint  Participation in Drafting.  Each party to this Agreement has
participated  in the  negotiation  and drafting of this  Agreement and the other
Transaction  Documents.  As such,  the language used herein and therein shall be
deemed to be the language  chosen by the parties  hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party to
this Agreement.

         (m) Equitable Relief.  The Company  acknowledges that a breach by it of
its  obligations  hereunder  will cause  irreparable  harm to each  Purchaser by
vitiating  the  intent  and  purpose of the  transactions  contemplated  hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder  (including,  but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees,  in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited  to, its  obligations  pursuant to Section 5 hereof),  that each
Purchaser shall be entitled,  in addition to all other available remedies, to an
injunction  restraining any breach and requiring immediate issuance and transfer
of the  Securities,  without the necessity of showing  economic loss and without
any bond or other security being required.

         (n) Indemnification by Company. From and after the Closing, the Company
shall hold harmless and indemnify each of the Purchasers  from and against,  and
shall  compensate  and  reimburse  each  of  the  Purchasers  for,  any  damages
(including  reasonable attorneys fees) which are directly or indirectly suffered
or  incurred  by any of the  Purchasers  or to which any of the  Purchasers  may
otherwise  become  subject  (regardless of whether or not such damages relate to
any  third-party  claim) and which arise from or as a result of, or are directly
or indirectly connected with any inaccuracy in or breach of any of the Company's
representations,  warranties or covenants set forth herein.  In the event of the
assertion or  commencement  by any person of any claim or legal  proceeding with
respect to which any Purchaser may have indemnification  rights pursuant to this
Section  9(n),  such  Purchaser  shall  promptly  notify the Company  thereof in
writing, but the failure to so notify the Company will not limit any Purchaser's
rights  to  indemnification   hereunder,   except  to  the  extent  the  Company
demonstrates  that the defense of such action is prejudiced by the failure to so
give such notice.

         (o) Additional Acknowledgement. Each Purchaser acknowledges that it has
independently  evaluated  the merits of the  transactions  contemplated  by this
Agreement  and  the  other  Transaction  Documents,  that  it has  independently
determined to enter into the transactions  contemplated hereby and thereby, that
it is not relying on any advice from or evaluation by any other  Purchaser,  and
that it is not acting in concert with any other Purchaser in making its purchase
of securities hereunder. The Purchasers and, to its knowledge, the Company agree
that the Purchasers  have not taken any actions that would deem such  Purchasers
to be members of a "group" for purposes of Section 13(d) of the Exchange Act.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
                                      -26-
<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.


P-COM, INC.


By:      /s/ George Roberts
-----------------------------------
Name:    George Roberts
Title:   Chief Executive Officer

PURCHASER:

DMG LEGACY FUND LLC


By:      /s/ Andrew Wilder
----------------------------------
Name:    Andrew Wilder
Title:   Chief Financial Officer

Residence:        CONNECTICUT

Address: c/ DMG Advisors LLC
                  53 Forest Avenue, Suite 202
                  Old Greenwich, CT  06870
Telephone:        (203) 967-5700
Facsimile:        (203) 967-5701
Attention:        Andrew Wilder


PRINCIPAL NOTE AMOUNT ("PNA"):    $75,000
                                 ----------
SERIES A WARRANT SHARES:          125,000     [= 2,500,000 x PNA/1,500,000]
                                 ----------
SERIES B WARRANT SHARES:          175,000     [= 3,500,000 x PNA/1,500,000]
                                 ----------


<PAGE>
         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.


P-COM, INC.


By:      /s/ George Roberts
---------------------------------
Name:    George Roberts
Title:   Chief Executive Officer

PURCHASER:

DMG LEGACY INSTITUTIONAL FUND LLC


By:      /s/ Andrew Wilder
----------------------------------
Name:    Andrew Wilder
Title:   Chief Financial Officer

Residence:        CONNECTICUT

Address:          c/ DMG Advisors LLC
                  53 Forest Avenue, Suite 202
                  Old Greenwich, CT  06870
Telephone:        (203) 967-5700
Facsimile:        (203) 967-5701
Attention:        Andrew Wilder


PRINCIPAL NOTE AMOUNT ("PNA"):    $697,500
                                ----------
SERIES A WARRANT SHARES:         1,162,500     [= 2,500,000 x PNA/1,500,000]
                                ----------
SERIES B WARRANT SHARES:         1,627,500     [= 3,500,000 x PNA/1,500,000]
                                ----------

<PAGE>
         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.


P-COM, INC.


By:      /s/ George Roberts
-------------------------------
Name:    George Roberts
Title:   Chief Executive Officer

PURCHASER:

DMG LEGACY INTERNATIONAL LTD.


By:      /s/ Andrew Wilder
-------------------------------
Name:    Andrew Wilder
Title:   Chief Financial Officer

Residence:        CONNECTICUT

Address:          c/ DMG Advisors LLC
                  53 Forest Avenue, Suite 202
                  Old Greenwich, CT  06870
Telephone:        (203) 967-5700
Facsimile:        (203) 967-5701
Attention:        Andrew Wilder


PRINCIPAL NOTE AMOUNT ("PNA"):    $727,500
                                 -----------

SERIES A WARRANT SHARES:          1,212,500     [= 2,500,000 x PNA/1,500,000]
                                 -----------

SERIES B WARRANT SHARES:          1,697,500     [= 3,500,000 x PNA/1,500,000]
                                 -----------




<PAGE>