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                                                                    EXHIBIT 10.1

                             NOVATEL WIRELESS, INC.

                              AMENDED AND RESTATED
                        1997 EMPLOYEE STOCK OPTION PLAN

                                    ARTICLE I

                                  GENERAL TERMS

        1.1 PURPOSE OF PLAN; TERM

               (a) ADOPTION. In August 2000, the Board of Directors (the
"Board") of Novatel Wireless, Inc., a Delaware corporation (the "Company"),
adopted this stock option plan to be known as the Amended and Restated Novatel
1997 Employee Stock Option Plan (the "Plan").

               (b) DEFINED TERMS. All initially capitalized terms used in the
Plan shall have the meanings set forth in Article IV hereto.

               (c) GENERAL PROPOSE. The purpose of the Grant Program is to
further the interests of the Company and its stockholders by attracting and
retaining employees of the Company (or Parent or Subsidiary Corporations) and
encouraging employees to acquire shares of the Company's Stock, thereby
acquiring a proprietary interest is its business and an increased personal
interest in its continued success and progress. Such purpose shall be,
accomplished by providing for the granting of options ("Options") to acquire the
Company's Stock.

               (d) CHARACTER OF OPTIONS. Options granted under this Plan to
employees of the Company (or Parent or Subsidiary Corporations) that are
intended to qualify as "incentive stock options" as defined in Code Section 422
("Incentive Stock Options") will be specified in the applicable stock option
agreement. All other Options granted under this Plan will be nonqualified
options.

               (e) RULE 16b-3 PLAN. With respect to persons subject to Section
16 of the Securities Exchange Act of 1934, as amended ("1934 Act"), the Plan is
intended to comply with all applicable conditions of Rule 16b-3 (and all
subsequent revisions thereof) ("Rule 16b-3") promulgated under the 1934 Act. In
such instance, to the extent any provision of the Plan or action by a Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by such Plan Administrator. In
addition, the Board may amend the Plan from time to time as it deems necessary
in order to meet the requirements of any amendments to Rule 16b-3 without the
consent of the stockholders of the Company.

               (f) DURATION OF PLAN. The term of the Plan shall be 10 years
commencing on the date of adoption of the Plan by the Board as specified in
Section 1.l(a) hereof. No Option shall be granted under the Plan unless granted
within 10 years of the adoption of the Plan by the Board, but Options
outstanding on that date shall not be terminated or otherwise affected by virtue
of the Plan's expiration.

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        1.2 STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN

               (a) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The stock
subject to the provisions of the Plan and issuable upon exercise of Options
granted under the Plan is shares of the Company's Common Stock, $.001 par value
pet share (the "Stock"), which may be either unissued or treasury shares, as the
Board may from time to time determine. Subject to adjustment as provided in
Section 3.1 hereof, the aggregate number of shares of Stock covered by the Plan
and issuable hereunder shall be 12,000,000 shares of Stock.

               (b) CALCULATION OF AVAILABLE SHARES. For purposes of calculating
the maximum number of shares of Stock which may be issued under the Plan, the
shares issued (including the shares, if any, withheld for tax withholding
requirements) upon exercise of an Option shall be counted.

               (c) RESTORATION OF UNPURCHASED SHARES. If an Option expires or
terminates for any reason prior to its exercise in full and before the term of
the Plan expires, the shares of Stock subject to, but not issued wader, such
Option shall, without further action by or on behalf of the Company, again be
available under the Plan.

        1.3 APPROVAL; AMENDMENTS

               (a) APPROVAL BY STOCKHOLDERS. The Plan shall be submitted to the
stockholders of the Company for their approval at a regular or special meeting
to be held within 12 months after the adoption of the Plan by the Board.
Stockholder approval shall be evidenced by the affirmative vote at the holders
of a majority of the shares of the Company's Stock present in person or by proxy
and voting at the meeting. The date such stockholder approval has been obtained
shall be referred to herein as the "Effective Date."

               (b) COMMENCEMENT OF PROGRAMS. The Grant Program Shall commence
immediately.

               (c) AMENDMENTS TO PLAN. The Board may, without action on the part
of the Company's stockholders, make such amendments to, changes in and additions
to the Plan as it may, from time to time, deem necessary or appropriate and in
the best interests of the Company; provided, however, that the Board may not,
without the consent of the applicable Optionholder, take any action which
disqualifies any Option previously granted under the Plan for treatment as an
Incentive Stock Option or which adversely affects or impairs the rights of the
Optionholder of any Option outstanding under the Plan, and further provided
that, except as provided in Article III hereof, the Board may not, without the
approval of the Company's stockholders, (i) increase the aggregate number of
shares of Stock subject to the Plan, (ii) reduce the Exercise Price at which
Options may be granted or the Exercise Price at which any outstanding Option may
be exercised, (iii) extend the term of the Plan, (iv) change the class of
persons eligible to receive Options under the Plan, or (v) materially increase
the benefits accruing to participants under the Plan. Notwithstanding the
foregoing, Options may be granted under this Plan to purchase shares of Stock in
excess of the number of shares then available for issuance under the Plan if (A)
an amendment to increase the maximum number of shares issuable under the Plan is
adopted by the Board prior to a initial grant of any such Option and within one
year thereafter

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such amendment is approved by the Company's stockholders, and (B) each such
Option granted is not to become exercisable or vested, in whole or in part, at
any time prior to the obtaining of such stockholder approval.

                                   ARTICLE II

                                  GRANT PROGRAM

        2.1 PARTICIPANTS; ADMINISTRATION

               (a) ELIGIBILITY AND PARTICIPATION. Options may be granted only to
persons ("Eligible Persons") who, at the time of grant, are employees of the
Company (or Parent or Subsidiary Corporations); provided, however, the maximum
number of shares of Stock with respect to which Options may be granted to any
employee during the term of the Plan shall not exceed 50 percent of the shares
of Stock covered by and is issuable under the Plan as specified in Section
1.2(a) hereof. A Plan Administrator shall have full authority to determine which
Eligible Persons in its administered group are to receive Option grants under
the Plan, the number of shares to be covered by each such grant, whether or not
the granted Option is to be an Incentive Stock Option, the time or times at
which each such Option is to become exercisable, and the maximum term for which
the Option is to be outstanding.

               (b) GENERAL ADMINISTRATION. The power to administer the Grant
Program shall be vested with the Board or a committee designated by the Board.
The Board may appoint a Senior Committee ("Senior Committee"), which may, at the
discretion of the Board, be constituted so as to comply wish the applicable
requirements of Rule 16b-3 and Code Section 162(m), and the Board may delegate
to such Senior Committee the power to administer the Grant Program with respect
to Eligible Persons who are Affiliates and/or non-Affiliates. The Board may also
appoint an Employee Committee ("Employee Committee") of two or more persons who
are members of the Board and delegate to such Employee Committee the power to
administer the Grant Program with respect to Eligible Persons that are not
Affiliates for purposes of this Plan, the term "Affiliates" shall mean all
"officers" (as that term is defined in Rule 16a-1(f) promulgated under the 1934
Act), all "covered persons" (as that term is defined in Code Section 162(m)),
directors of the Company, and all persons who own 10 percent or more of the
Company's issued and outstanding equity securities.

               (c) PLAN ADMINISTRATORS. The Board, the Senior Committee, the
Employee Committee, and/or any other committee allowed hereunder, whichever is
applicable, shall be each referred to herein as a "Plan Administrator." Each
Plan Administrator shall have the authority and discretion, with respect to its
administered group, to select which Eligible Persons shall participate in the
Grant Program, to grant Options under the Grant Program, to establish such rules
and regulations as they may deem appropriate with respect to the proper
administration of the Grant Program and to make such determinations under, and
issue such interpretations of, the Grant Program and any outstanding Option as
they may deem necessary or advisable. Unless otherwise required by law or
specified by the Board with respect to any committee, decisions among the
members of a Plan Administrator shall be by majority vote. Decisions of a Plan
Administrator shall be final and binding on all parties who have an interest in
the Grant Program or any outstanding Option. The Senior Committee, the Employee
committee,

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and/or any other committee allowed hereunder, in their respective sole
discretion, may make specific grants of Options conditioned on approval of a
Board.

               The Board may establish an additional committee or committees of
persons who are members of the Board and delegate to such other committee or
committees the power to administer all or a portion of the Grant program with
respect to all or a portion of the Eligible Persons. Members of the Senior
Committee, Employee Committee, or any other committee allowed hereunder shall
serve for such period of time as the Board may determine and shall be subject to
removal by the Board at any time. The Board may, at any time, terminate all or a
portion of the functions of the Senior Committee, the Employee Committee, or any
other committee allowed hereunder and reassume all or a portion of powers and
authority previously delegated to such committee.

               (d) GUIDELINES FOR PARTICIPATION. In designating and selecting
Eligible Persons for participation in the Grant Program, a Plan Administrator
shall consult with and give consideration to the recommendations and criticisms
submitted by appropriate managerial and executive officers of the Company. A
Plan Administrator also shall take into account the duties and responsibilities
of the Eligible Persons, their past, present and potential contributions to the
success of the Company and such other factors as a Plan Administrator shall deem
relevant in connection with accomplishing the purpose of the Plan.

        2.2 TERMS AND CONDITIONS OF OPTIONS

               (a) ALLOTMENT OF SHARES. A Plan Administrator shall determine the
number of shares of Stock to be optioned from time to time and the number of
shares to be optioned to any Eligible Person (the "Optioned Shares"). The grant
of a Option to a person shall neither entitle such person to, nor disqualify
such person from, participation in any other grant of Options under this Plan or
any other stock option plan of the Company.

               (b) EXERCISE PRICE. Upon the grant of my Option, a Plan
Administrator shall specify the price ("Exercise Price") to be paid for each
share of Stock upon the exercise of such Option. The Exercise Price may not be
less than 100 percent of the fair market value per share of the Stock on the
date the Option is granted if the Option (i) is intended to qualify as an
Incentive Stock Option, and/or (ii) is intended to qualify for the
"performance-based compensation" exception to the tax deduction limits of Code
Section 162(m). If the Option is intended to qualify as an Incentive Stock
Option and is granted to a stockholder, who at the time the Option is granted,
owns or is deemed to own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company) (or of any Parent
or Subsidiary Corporation), the Exercise Price shall not be less than 110
percent of the fair market value per share of Stock on the date chat the Option
is granted. The determination of the fair market value of the Stock shall be
made in accordance with the valuation provisions of Section 3.5 hereof.

               (c) INDIVIDUAL STOCK OPTION AGREEMENTS. Options granted under the
Plan shall be evidenced by option agreements in such form and content as a Plan
Administrator from time to time approves, which agreements shall substantially
comply with and be subject to the terms of the Plan, including the terms and
conditions of this Section 2.2. As determined by a Plan Administrator, each
option agreement shall state (i) the total number of shares to which it

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pertains, (ii) the Exercise Price for the shares covered by the Option, (iii)
the time at which the Options vest and become exercisable, and (iv) the Option's
scheduled expiration date. The option agreements may contain such other
provisions or conditions as a Plan Administrator deems necessary or appropriate
to effectuate the sense and purpose of the Plan, including without limitation,
covenants by the Optionholder not to compete and remedies for the Company in the
event of the breach of any such covenant, and a requirement that any partial
exercise of an Option be for no Less than 20% of the total number of shares
originally subject to such Option.

               (d) OPTION PERIOD. No Option granted wader the Plan that is
intended to be an Incentive Stock Option shall be exercisable for a period in
excess of 10 years from the date of its grant (five years if the Option is
granted to a stockholder who at the time the Option is granted owns or is deemed
to own stuck possessing more than 10 percent of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary
Corporation), subject to earlier termination in the event of termination of
employment, retirement or death of the Optionholder. A Option may be exercised
in full or is part at any time or from time to time during the term of the
Option or provide for its exercise in stated installments at stated times during
the Option's term.

               (e) VESTING; LIMITATIONS. The tame at which the Optioned Shares
vest with respect to an Optionholder shall be in the discretion of that
Optionholder's Plan Administrator. Notwithstanding the foregoing, to the extent
a Option is intended to qualify as an Incentive Stock Option, the aggregate fair
market value (determined as of the respective date or dates of grant) of the
Stock for which one or more Options granted to any person under this Plan (or
any other option plan of the Company or any Parent or Subsidiary Corporation)
may for the first time become exercisable as Incentive Stock Options during any
one calendar year shall not exceed the sum of $100,000 (referred to herein as
the "$100,000 Limitation"). To the extent that any person holds two or more
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability as an Incentive Stock Option
shall be applied on the basis of the order in which such Options are granted.

               (f) NO FRACTIONAL SHARES. Options shall be exercisable only for
whole shares: no fractional shares will be issuable upon exercise of any Option
granted under the Plan.

               (g) METHOD OF EXERCISE. In order to exercise a Option with
respect to any vested Optioned Shares, an Optionholder (or in the case of an
exercise after an Optionholder's death, such Optionholder's executor,
administrator, heir or legatee, as the case may be) must take the following
action:

                      (i) execute and deliver to the Company a written notice of
exercise signed in writing by the person exercising the Option specifying the
number of shares of Stock with respect to which the Option is being exercised;

                      (ii) pay the aggregate Exercise Price in one of the
alternate forms as set forth in Section 2.2(h) below; and

                      (iii) furnish appropriate documentation that the person or
persons exercising the Option (if other than the Optionholder) has the right to
exercise such Option.

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As soon as practicable after the Exercise Date, the Company shall mail or
deliver to or on behalf of the Optionholder (or any other person or persons
exercising this Option in accordance herewith) a certificate or certificates
representing the Stock for which the Option has been exercised in accordance
with the provisions of this Plan. In no event may any Option be exercised for
any fractional shares.

               (h) PAYMENT OF EXERCISE PRICE. The aggregate Exercise Price shall
be payable in one of the alternative forms specified below:

                      (i) Full payment in cash or check made payable to the
Company's order; or

                      (ii) To the extent permitted by the Plant Administrator,
in its sole and unrestricted discretion, full payment in shares of Stock held
for the requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as determined in
accordance with Section 3.5 hereof); or

                      (iii) If a cashless exercise program has been implemented
by the Board and to the extent permitted by the Plan Administrator, in its sole
and unrestricted discretion, full payment through a sale and remittance
procedure pursuant to which the Optionholder (A) shall provide irrevocable
written instructions to a designated brokerage firm to effect the immediate sale
of a Optioned Shares to be purchased and remitted to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the Optioned Shares to be purchased, and
(B) shall concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such brokerage
firm in order to complete a sale transaction.

               (i) REPURCHASE RIGHT. The Plan Administrator may, in its sole
discretion, set forth other terms and conditions upon which the Company (or its
assigns) shall have the right to repurchase shares of Stock acquired by as
Optionholder pursuant to an Option. Any repurchase right of the Company shall be
exercisable by the Company (or its assignees) upon such terms and conditions as
the Plan Administrator may specify in the Stock Repurchase Agreement evidencing
such right. The Plan Administrator may, in its discretion, also establish as a
term and condition of one or more Options granted under the Plan that the
Company shall have a right of first refusal with respect to any proposed sale or
other disposition by the Optionholder of any shares of Stock issued upon the
exercise of such Options. Any such right of first refusal shall be exercisable
by the Company (or its assigns) in accordance with the terms and conditions set
forth in the Stock Repurchase Agreement.

               (j) TERMINATION OF INCENTIVE STOCK OPTIONS

                      (i) TERMINATION OF SERVICE. If any Optionholder teas to be
in Service to the Company for a reason other than death, the Optionholder's
vested Incentive Stock Options on the date of termination of such Service shall
remain exercisable for no more than 90 days after the date of termination of
such Service or unfit the stated expiration date of the Optionholder's Option,
whichever occurs first; provided, that (i) if Optionholder is discharged for
Cause, or (ii) if after the Service of the Optionholder is terminated, the
Optionholder commits

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acts detrimental to the Company's interests, then the Incentive Stock Option
shall thereafter be void for all purposes. The Company shall have "Cause" to
discharge the Optionholder for (A) commission of a crime by the Optionholder or
for reasons involving moral turpitude; (B) an act by the Optionholder which
tends to bring the Company into disrepute; or (C) negligent, fraudulent or
willful misconduct by the Optionholder. Notwithstanding the foregoing, if any
Optionholder ceases to be in Service to the Company by reason of permanent
disability within the meaning of Code Section 22(e)(3) (as determined by the
applicable Plan Administrator), the Optionholder shall have up to 180 days after
the dace of termination of Service, but in no event after a stated expiration
date of the Optionholder's Incentive Stock Options, to exercise Incentive Stock
Options that the Optionholder was entitled to exercise on the date the
Optionholder's Service terminal as a result of such disability.

                      (ii) DEATH OF OPTIONHOLDER. If an Optionholder dies while
in the Company's Service, the Optionholder's vested Incentive Stock Options as
of the date of death shall remain exercisable up to one year after the date of
death or until the stated expiration date of the Optionholder's Option,
whichever occurs first, and may be exercised only by the person or persons
("Successors") to whom the Optionholder's rights pass under a will or by the
laws of descent and distribution. The Option may be exercised and payment of the
Exercise Price made in full by the Successors only after written notice to the
Company specifying the number of shares to be purchased. Such notice shall state
that the Exercise Plan is being paid in full in the manner specified in Section
2.2 hereof. As soon as practicable after receipt by the Company of such notice
and payment in full of the Exercise Price, a certificate or certificates
representing the Optioned Shares shall be registered in the name or names
specified by the Successors in the written notice of exercise and shall be
delivered to the Successors.

               (k) TERMINATION OF NONQUALIFIED OPTIONS. Any Options, which are
not Incentive Stock Options and are outstanding at the time an Optionholder dies
while in Service to the Company or otherwise ceases to be in Service to the
Company, shall remain exercisable for such period of time thereafter as
determined by the Plan Administrator at the time of grant and set forth in the
documents evidencing such Options; provided, however, that no Option shall be
exercisable after the Option's stated expiration date, and provided further,
that if the Optionholder is discharged for Cause or, if after the Optionholder's
Service to the Company is terminated, the Optionholder commits acts detrimental
to the Company's interests, then the Option will thereafter be void for all
purposes.

               (l) OTHER PLAN PROVISIONS STILL APPLICABLE. If an Option is
exercised upon the termination of Service or death of an Optionholder under this
Section 2.2, the other provisions of the Plan shall still be applicable to such
exercise, including the requirement that the Optionholder or his or her
Successor may be required to enter into a Stock Repurchase Agreement.

               (m) DEFINITION OF "SERVICE." For purposes of this Plan, unless
otherwise provided in the option agreement with the Optionholder, the
Optionholder shall be deemed to be in "Service" to the Company so long as such
individual renders continuous services on a periodic basis to the Company (or to
any Parent or Subsidiary Corporation) in the capacity of an employee, director,
or an independent consultant or advisor. In the discretion of a Plan
Administrator, an Optionholder shall be considered to be rendering continuous
services to the

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Company even if the type of services change, e.g., from employee to independent
consultant. The Optionholder shall be considered to be an employee for so long
as such individual remains in the employ of the Company or one or more of its
Parent or Subsidiary Corporations.

               (n) TAX REIMBURSEMENT BONUS. The Plan Administrator may, with the
consent of the Board, cause the Company to pay a cash bonus to an Optionholder
for the purpose of paying ail or a portion of any federal, state or local tax
due with respect to the grant, exercises or disposition of an Option, the
disposition of shares of Stock acquired upon the exercise of as Option, and/or
any payment made under this Section 2.2(n).

                                   ARTICLE III

                                  MISCELLANEOUS

        3.1 CAPITAL ADJUSTMENTS. The aggregate number of shares of Stock subject
to the Plan, the number of shares covered by outstanding Options, and the
Exercise Price stated in such Options shall be proportionately adjusted for any
increase or decrease in the number of outstanding shares of Stock of the Company
resulting from a subdivision or consolidation of shares or any other capital
adjustment or the payment of a stock dividend or any other increase or decrease
in the number of such shares effected without the Company's receipt of
consideration therefor in money, services or property.

        3.2 MERGERS, ETC. If the Company is the surviving corporation in any
merger or consolidation (not including a Corporate Transaction), any Option
granted under the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to the Option would have been
entitled prior to the merger or consolidation. Except as provided in Section 3.3
hereof, a dissolution or liquidation of the Company shall cause every Option
outstanding hereunder to terminate.

        3.3 CORPORATE TRANSACTION. In the event of stockholder approval of a
Corporate Transaction, the Plan Administrator shall have the discretion and
authority, exercisable at any time, to provide for the automatic acceleration of
one or more of the outstanding Options granted by it under the Plan. Upon the
consummation of the Corporate Transaction, all Options shall, to the extent not
previously exercised, terminate and cease to be outstanding.

        3.4 CHANGE IN CONTROL

               (a) GRANT PROGRAM. A Plan Administrator shall have the discretion
and authority, exercisable at any time, whether before or after a Change in
Control, to provide for the automatic acceleration of one or more outstanding
Options granted by it under the Plan in the vent of a Change in Control. A Plan
Administrator may also impose limitations upon the automatic acceleration of
such Options to the extent it deems appropriate. Any Options accelerated upon a
Change in Control shall remain fully exercisable until the expiration or sooner
termination of the Option term.

               (b) INCENTIVE STOCK OPTION LIMITS. The exercisability of any
Options which are intended to qualify as Incentive Stock Options and which are
accelerated by the Plan Administrator in connection with a pending Corporation
Transaction or Change in Control shall,

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except as otherwise provided in the discretion of the Plan Administrator, remain
subject to the $100,000 Limitation and vest as quickly as possible without
violating the $100,000 Limitation.

        3.5 CALCULATION OF FAIR MARKET VALUE OF STOCK. The fair market value of
a share of Stock on any relevant date shall be determined in accordance with the
following provisions:

               (a) If the Stock is not at the time listed or admitted to trading
on any stock exchange but is traded in the over-the-counter market, the fair
market value shall be the mean between the highest bid and lowest asked prices
(or, if such information is available, the closing selling price) per share of
Stock on the date in question in the over-the-counter market, as such prices are
report d by the National Association of Securities Dealers through its Nasdaq
system or any successor system. If there are no reported bid and asked prices
(or closing selling price) for the Stock on the date in question, then the mean
between the highest bid price and lowest asked price (or the closing selling
price) on the last preceding date for which such quotations exist shall be
determinative of fair market value.

               (b) If the Stock is at the time listed or admitted to trading on
any stock exchange, then the fair market value shall be the closing selling
price per share of Stock on the date in question on the stock exchange
determined by the Board to be the primary market for the Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Stock on such exchange on the date in question,
then the fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.

               (c) If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market, then
the fair market value shall be determined by the Board after taking into account
such factors as the Board shall deem appropriate.

        3.6 USE OF PROCEED. The proceeds received by the Company from the sale
of Stock pursuant to the exercise of Options hereunder, if any, shall be used
for general corporate purposes.

        3.7 CANCELLATION OF OPTIONS. Each Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionholder, the cancellation of any or all outstanding Options
granted under the Plan and to grant in substitution therefore new Options under
the Plan covering the same or different numbers of shares of Stock as long as
such new Options have an Exercise Price that is no less than the minimum
Exercise Price as set forth in Section 2.2(b) hereof on the new grant date.

        3.8 REGULATORY APPROVALS. The implementation of the Plan, the granting
of any Option hereunder, and the issuance of Stock upon the exercise of any such
Option shall be subject to the procurement by the Company of all requisite
approvals and permits.

        3.9 INDEMNIFICATION. Each and every member of a Plan Administrator, in
addition to such other available rights of indemnification, shall be indemnified
and held harmless by the Company, to the extent permitted under applicable law,
for, from and against all costs and expenses reasonably incurred in connection
with any action, suit, or other legal proceeding to

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which any member thereof may be a party by reason of any action taken, failure
to act under or in connection with the Plan or any rights granted thereunder and
against all amounts paid by them in settlement thereof or paid by them in
satisfaction of a judgment of any such action, suit or proceeding, except a
judgment based upon a finding of bad faith.

        3.10 PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
means by which the Company may issue options to acquire its Stock. To the extent
permitted by applicable law, other options or awards may be issued by the
Company other than pursuant to this Plan without stockholder approval.

        3.11 COMPANY RIGHTS. The grants of Options shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

        3.12 PRIVILEGE OF STOCK OWNERSHIP. An Optionholder shall not have any of
the rights of a stockholder with respect to Optioned Shares until such
individual shall have exercised the Option and paid the Exercise Price for the
Optioned Shares. No adjustment will be made for dividends or other rights for
which the record date is prior to the date of such exercise and full payment for
such Optioned Shares.

        3.13 ASSIGNMENT. Except as may be specifically allowed by the Plan
Administrator and set forth in the documents evidencing an Option. no Option
granted under the Plan or any of the rights and privileges conferred thereby
shall be assignable or transferable by an Optionholder or grantee other than by
will or the laws of descent and distribution. and such Option shall be
exercisable during the Optionholder's or grantee's lifetime only by the
Optionholder or grantee. Notwithstanding the foregoing, no Incentive Stock
Option granted under the Plan or any of the rights and privileges conferred
thereby shall be assignable or transferable by an Optionholder or grantee other
than by will or the laws of descent and distribution, and such Incentive Stock
Option shall be exercisable during the Optionholder's or grantee's lifetime only
by the Optionholder or grantee. The provisions of the Plan shall inure to the
benefit of, and be binding upon, the Company and its successors or assigns, and
the Optionholders, the legal representatives of their respective estates, their
respective heirs or legatees and their permitted assignees.

        3.14 SECURITIES RESTRICTIONS

               (a) LEGEND ON CERTIFICATES. All certificates representing shares
of Stock issued upon exercise of Options granted under the Plan shall be
endorsed with a legend reading as follows:

               THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE
               BEEN ISSUED TO THE REGISTERED OWNER IN RELIANCE UPON WRITTEN
               REPRESENTATIONS THAT THESE SHARES HAVE BEEN PURCHASED SOLELY FOR
               INVESTMENT. THESE SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
               UNLESS IN THE OPINION OF THE COMPANY AND ITS LEGAL COUNSEL SUCH
               SALE, TRANSFER

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               OR ASSIGNMENT WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
               1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER.

               (b) PRIVATE OFFERING FOR INVESTMENT ONLY. The Options are and
shall be made available only to a limited number of present and future employees
who have knowledge of the Company's financial condition, management and its
affairs. The Plan is not intended to provide additional capital for the Company,
but to encourage ownership of Stock among the Company's employees. By the act of
accepting an Option, each grantee agrees (i) that any shares of Stock acquired
pursuant to any Option will be solely acquired for investment and not with any
intention to resell or redistribute those shares, and (ii) such intention will
be confirmed by an appropriate certificate at the time the Stock is acquired if
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.

               (c) REGISTRATION STATEMENT. If a Registration Statement covering
a shares of Stock issuable upon exercise of Options granted under the Plan is
filed under the Securities Act of 1933, as amended, and is declared effective by
the U.S. Securities Exchange Commission, the provisions of Sections 3.14(a) and
(b) shall terminate during the period of time that such Registration Statement,
as periodically amended, remains effective.

        3.15 TAX WITHHOLDING

               (a) GENERAL. The Company's obligation to deliver Stock upon the
exercise of Options under the Plan shall be subject to the satisfaction of all
applicable United States, Canadian, state, provincial, and local income tax
withholding requirements.

               (b) SHARES TO PAY FOR WITHHOLDING. The Plan Administrator may, in
its discretion and in accordance with the provisions of this Section 3.15(b) and
such supplemental rules as it may from time to time adopt, provide any or all
Optionholders with the right to use shares of Stock in satisfaction of all or
part of the United States, Canadian, state, provincial, and local income tax
liabilities ("Taxes") incurred by such Optionholders in connection with the
exercise of their Options. Such right may be provided to Optionholders in either
or both of the following formats:

                      (i) STOCK WITHHOLDING. The Plan Administrator may, in its
discretion, provide the Optionholder with the election to have the Company
withhold, from the Stock otherwise issuable upon the exercise of an Option, a
portion of those shares of Stock with an aggregate fair market value equal to
the percentage (not to exceed 100 percent) of the applicable Taxes designated by
the Optionholder.

                      (ii) STOCK DELIVERY. The Plan Administrator may, in its
discretion, provide the Optionholder with the election to deliver to the
Company, at the time the Option is exercised, one or more shares of Stock
previously acquired by such individual (other than pursuant to the transaction
triggering Taxes) with an aggregate fair market value equal to the percentage
(not to exceed 100 percent) of the Taxes incurred in connection with such Option
exercise as designated by the Optionholder.

                                      -11-
<PAGE>   12

        3.16 GOVERNING LAW. The Plan shall be governed by and all questions
thereunder shall be determined in accordance with the laws of the State of
Delaware, without regard to its conflicts of laws principles.

                                   ARTICLE IV

                                   DEFINITIONS

               The following capitalized terms used in this Plan shall have the
meaning described below:

               "AFFILIATES" shall have the meaning set forth in Section 2.1(b)
hereof.

               "BOARD" shall mean the Board of Directors of the Company.

               "CAUSE" shall have the meaning set forth in Section 2.2(j)(i)
hereof.

               "CHANGE IN CONTROL" shall mean and include the following
transactions or situations (i) a person or related group of persons, other than
the Company or a person that directly or indirectly controls, is controlled by,
or under common control with the Company, acquires ownership of 40 percent or
more of the Company's outstanding common stock pursuant to a tender or exchange
offer which the Board of Directors recommends that the Company's stockholders
not accept, or (ii) the change in the composition of the Board occurs such that
those individuals who were elected to the Board at the last stockholders'
meeting at which there was not a contested election for Board membership
subsequently ceased to comprise a majority of the Board by reason of a contested
election.

               "CODE" shall mean the United States Internal Revenue Code of
1986, as amended.

               "COMPANY" shall mean Novatel Wireless, Inc. a Delaware
corporation.

               "CORPORATE TRANSACTION" shall mean (a) a merger or consolidation
in which the Company is not the surviving entity, except for a transaction the
principal purposes of which is to change the state in which the Company is
incorporated; (b) the sale, transfer of or other disposition of, all or
substantially all of the assets of the Company and complete liquidation or
dissolution of the Company, or (c) any reverse merger in which the Company is
the surviving entity but in which the securities possessing snore than 50
percent of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who held
such securities immediately prior to such merger.

               "EFFECTIVE DATE" shall mean the date that the Plan has been
approved by the stockholders as set forth in Section 1.3(a) hereof.

               "ELIGIBLE PERSONS" shall have the meaning set forth in Section
2.1(a) hereof.

               "EMPLOYEE COMMITTEE" shall mean that committee appointed by the
Board to administer the Plan with respect to the Non-Affiliates and comprised of
two or more persons who are members of the Board.

                                      -12-
<PAGE>   13

               "EXERCISE DATE" shall be the date on which written notice of the
exercise of an Option is delivered to the Company in accordance with the
requirements of the Plan.

               "EXERCISE PRICE" shall mean the Exercise Price per share as
specified by the Plan Administrator pursuant to Section 2.2(b) hereof.

               "GRANT PROGRAM" shall mean the program described in this Plan
pursuant to which Eligible Persons are granted Options in the discretion of the
Plan Administrator.

               "INCENTIVE STOCK OPTION" shall mean an Option that is intended to
qualify as an "incentive stock option" under Code Section 422.

               "$100,000 LIMITATION" shall mean the limitation pursuant to which
the aggregate fair market value (determined as of the respective date or dates
of grant) of the Stock for which one or more Options granted to any persons
under this Plan (or any other option plan of the Company or any Parent or
Subsidiary Corporation) may for the first time be exercisable as Incentive Stock
Options during any one calendar year shall not exceed the sum of $100,000.

               "OPTIONED SHARES" shall have the meaning set forth in Section
2.2(a) hereof.

               "OPTIONHOLDER" shall mean an Eligible Person to whom Options have
been granted.

               "OPTIONS" shall mean options to acquire Stock granted under the
Plan.

               "PARENT CORPORATION" shall mean any corporation in the unbroken
chain of corporations ending with the employer corporation, where, at each link
of the chain, the corporation and the link above owns at least 50 percent of the
combined total voting power of all classes of the stock in the corporation in
the link below.

               "PLAN" shall mean this stock option plan for Novatel Wireless,
Inc.

               "PLAN ADMINISTRATOR" shall mean (a) either the Board, the Senior
Committee, or any other committee, whichever is applicable, with respect to the
administration of the Grant Program as it relates to Affiliates, and (b) either
the Board, the Senior Committee, the Employee Committee, or any other committee,
whichever is applicable, with respect to the administration of the Grant Program
as it relates to Non-Affiliates.

               "RULE 16b-3" shall have the meaning set forth in Section 1.1(e)
hereof.

               "SENIOR COMMITTEE" shall have the meaning set forth in Section
2.1(b) hereof.

               "SERVICE" shall have the meaning set forth in Section 2.2(m)
hereof.

               "STOCK" shall mean shares of the Company's common stock, $.001
par value per share, which may be unissued or treasury shares, as the Board may
from time to time determine.

                                      -13-
<PAGE>   14

               "SUBSIDIARY CORPORATION" shall mean any corporation in the
unbroken chain of corporations starting with the employer corporation, where, at
each link of the chain, the corporation and the link above owns at least 50
percent of the combined voting power of all classes of stock in the corporation
below.

               "SUCCESSORS" shall have the meaning set forth in Section
2.21(j)(ii) hereof.

               "TAXES" shall have the meaning set forth in Section 3.15(b)
hereof.

               EXECUTED as of the     day of September, 2000.

                                   NOVATEL WIRELESS, INC.

                                   By:
                                      ------------------------------------------
                                       John Major
                                       Chief Executive Officer

ATTESTED BY:

------------------------------
Melvin Flowers
Secretary

                                      -14-<PAGE>   1
                                                                   EXHIBIT 10.2

                             NOVATEL WIRELESS, INC.

                           2000 STOCK INCENTIVE PLAN

<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>         <C>                                                                            <C>
SECTION 1.  INTRODUCTION....................................................................1

SECTION 2.  DEFINITIONS.....................................................................1

               (a)    "Affiliate"...........................................................1

               (b)    "Award"...............................................................1

               (c)    "Board"...............................................................1

               (d)    "Change In Control"...................................................2

               (e)    "Code"................................................................2

               (f)    "Committee"...........................................................2

               (g)    "Common Stock"........................................................2

               (h)    "Company".............................................................3

               (i)    "Consultant"..........................................................3

               (j)    "Director"............................................................3

               (k)    "Disability"..........................................................3

               (l)    "Employee"............................................................3

               (m)    "Exchange Act"........................................................3

               (n)    "Exercise Price"......................................................3

               (o)    "Fair Market Value"...................................................3

               (p)    "Grant"...............................................................4

               (q)    "Incentive Stock Option" or "ISO".....................................4

               (r)    "Key Employee"........................................................4

               (s)    "Non-Employee Director"...............................................4

               (t)    "Nonstatutory Stock Option" or "NSO"..................................4

               (u)    "Option"..............................................................4

               (v)    "Optionee"............................................................4

               (w)    "Parent"..............................................................4

               (x)    "Participant".........................................................4

               (y)    "Plan"................................................................4

               (z)    "Restricted Stock"....................................................4

               (aa)   "Restricted Stock Agreement"..........................................4

               (bb)   "SAR Agreement".......................................................4

               (cc)   "Securities Act"......................................................4

               (dd)   "Service".............................................................4
</TABLE>

                                      -i-
<PAGE>   3

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>         <C>                                                                            <C>
               (ee)   "Share"...............................................................4

               (ff)   "Stock Appreciation Right" or "SAR"...................................4

               (gg)   "Stock Option Agreement"..............................................4

               (hh)   "Stock Unit"..........................................................5

               (ii)   "Stock Unit Agreement"................................................5

               (jj)   "Subsidiary"..........................................................5

               (kk)   "10-Percent Shareholder"..............................................5

SECTION 3.  ADMINISTRATION..................................................................5

               (a)    Committee Composition.................................................5

               (b)    Authority of the Committee............................................6

               (c)    Indemnification.......................................................6

SECTION 4.  ELIGIBILITY.....................................................................6

               (a)    General Rules.........................................................6

               (b)    Incentive Stock Options...............................................6

               (c)    Non-Employee Director Options.........................................6

SECTION 5.  SHARES SUBJECT TO PLAN..........................................................7

               (a)    Basic Limitation......................................................7

               (b)    Annual Addition.......................................................7

               (c)    Additional Shares.....................................................7

               (d)    Dividend Equivalents..................................................8

               (e)    Limits on Options and SARs............................................8

               (f)    Limits on Restricted Stock and Stock Units............................8

SECTION 6.  TERMS AND CONDITIONS OF OPTIONS.................................................8

               (a)    Stock Option Agreement................................................8

               (b)    Number of Shares......................................................8

               (c)    Exercise Price........................................................8

               (d)    Exercisability and Term...............................................8

               (e)    Modifications or Assumption of Options................................9

               (f)    Transferability of Options............................................9

               (g)    No Rights as Stockholder..............................................9

               (h)    Restrictions on Transfer..............................................9
</TABLE>

                                      -ii-

<PAGE>   4

<TABLE>
<CAPTION>
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                                                                                           ----
<S>         <C>                                                                            <C>
SECTION 7.  PAYMENT FOR OPTION SHARES.......................................................9

               (a)    General Rule..........................................................9

               (b)    Surrender of Stock...................................................10

               (c)    Promissory Note......................................................10

               (d)    Other Forms of Payment...............................................10

SECTION 8.  TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK
              AND STOCK UNITS..............................................................10

               (a)    Time, Amount and Form of Awards......................................10

               (b)    Agreements...........................................................10

               (c)    Payment for Restricted Stock or Stock Unit Awards....................10

               (d)    Form and Time of Settlement of Stock Units...........................10

               (e)    Vesting Conditions...................................................11

               (f)    Assignment or Transfer of Restricted Stock or Stock Units............11

               (g)    Death of Stock Units Recipient.......................................11

               (h)    Trusts...............................................................11

               (i)    Voting and Dividend Rights...........................................11

               (j)    Stock Unit Voting and Dividend Rights................................12

               (k)    Creditors' Rights....................................................12

SECTION 9.    TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS............................12

               (a)    SAR Agreement........................................................12

               (b)    Number of Shares.....................................................12

               (c)    Exercise Price.......................................................12

               (d)    Exercisability and Term..............................................12

               (e)    Exercise of SARs.....................................................12

               (f)    Modification or Assumption of SARs...................................13

SECTION 10. PROTECTION AGAINST DILUTION....................................................13

               (a)    Adjustments..........................................................13

               (b)    Participant Rights...................................................13

SECTION 11. EFFECT OF A CHANGE IN CONTROL..................................................13

               (a)    Merger or Reorganization.............................................13

               (b)    Acceleration.........................................................14

SECTION 12. LIMITATIONS ON RIGHTS..........................................................14

               (a)    Retention Rights.....................................................14
</TABLE>

                                     -iii-
<PAGE>   5

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>         <C>                                                                            <C>
               (b)    Stockholders' Rights.................................................14

               (c)    Regulatory Requirements..............................................14

SECTION 13. WITHHOLDING TAXES..............................................................14

               (a)    General..............................................................14

               (b)    Share Withholding....................................................14

SECTION 14. DURATION AND AMENDMENTS........................................................15

               (a)    Term of the Plan.....................................................15

               (b)    Right to Amend or Terminate the Plan.................................15

SECTION 15. EXECUTION......................................................................15
</TABLE>

                                      -iv-
<PAGE>   6

                             NOVATEL WIRELESS, INC.

                            2000 STOCK INCENTIVE PLAN

                     EFFECTIVE AS OF ________________, 2000

SECTION 1. INTRODUCTION.

        The Company's Board of Directors adopted the Novatel Wireless, Inc. 2000
        Stock Incentive Plan on July 24, 2000 (the "Adoption Date"), and the
        Company's stockholders approved the Plan on ___________. 2000. The Plan
        is effective on the date of our initial public offering.

        The purpose of the Plan is to promote the long-term success of the
        Company and the creation of shareholder value by offering Key Employees
        an opportunity to acquire a proprietary interest in the success of the
        Company, or to increase such interest, and to encourage such selected
        persons to continue to provide services to the Company and to attract
        new individuals with outstanding qualifications.

        The Plan seeks to achieve this purpose by providing for Awards in the
        form of Restricted Stock, Stock Units, Stock Appreciation Rights and
        Options (which may be Incentive Stock Options or Nonstatutory Stock
        Options).

        The Plan shall be governed by, and construed in accordance with, the
        laws of the State of Delaware (except its choice-of-law provisions).
        Capitalized terms shall have the meaning provided in Section 2 unless
        otherwise provided in this Plan or the applicable Stock Option
        Agreement, SAR Agreement, Stock Unit Agreement or Restricted Stock
        Agreement.

SECTION 2. DEFINITIONS.

        (a) "AFFILIATE" means any entity other than a Subsidiary, if the Company
        and/or one or more Subsidiaries own not less than 50% of such entity.
        For purposes of determining an individual's "Service," this definition
        shall include any entity other than a Subsidiary, if the Company, a
        Parent and/or one or more Subsidiaries own not less than 50% of such
        entity.

        (b) "AWARD" means any award of an Option, SAR, Stock Unit or Restricted
        Stock under the Plan.

        (c) "BOARD" means the Board of Directors of the Company, as constituted
        from time to time.

<PAGE>   7

        (d) "CHANGE IN CONTROL" except as may otherwise be provided in a Stock
        Option Agreement, SAR Agreement, Stock Unit Agreement or Restricted
        Stock Agreement, means the occurrence of any of the following:

                      (i) The consummation of a merger or consolidation of the
               Company with or into another entity or any other corporate
               reorganization, if more than 50% of the combined voting power of
               the continuing or surviving entity's securities outstanding
               immediately after such merger, consolidation or other
               reorganization is owned by persons who were not stockholders of
               the Company immediately prior to such merger, consolidation or
               other reorganization;

                      (ii) The sale, transfer or other disposition of all or
               substantially all of the Company's assets;

                      (iii) A change in the composition of the Board, as a
               result of which fewer that one-half of the incumbent directors
               are directors who either (i) had been directors of the Company on
               the date 24 months prior to the date of the event that may
               constitute a Change in Control (the "original directors") or (ii)
               were elected, or nominated for election, to the Board with the
               affirmative votes of at least a majority of the aggregate of the
               original directors who were still in office at the time of the
               election or nomination and the directors whose election or
               nomination was previously so approved;

                      (iv) Any transaction as a result of which any person
               becomes the "beneficial owner" (as defined in Rule 13d-3 under
               the Exchange Act), directly or indirectly, of securities of the
               Company representing at least 20% of the total voting power
               represented by the Company's then outstanding voting securities.
               For purposes of this Paragraph (iii), the term "person" shall
               have the same meaning as when used in sections 13(d) and 14(d) of
               the Exchange Act but shall exclude:

                             (A) A trustee or other fiduciary holding securities
                      under an employee benefit plan of the Company or a
                      subsidiary of the Company;

                             (B) A corporation owned directly or indirectly by
                      the stockholders of the Company in substantially the same
                      proportions as their ownership of the common stock of the
                      Company; and

                             (C) The Company; or

                      (v) A complete liquidation or dissolution of the Company.

        (e) "CODE" means the Internal Revenue Code of 1986, as amended.

        (f) "COMMITTEE" means a committee consisting of one or more members of
        the Board that is appointed by the Board (as described in Section 3) to
        administer the Plan.

        (g) "COMMON STOCK" means the Company's common stock.

                                       2
<PAGE>   8

        (h) "COMPANY" means Novatel Wireless, Inc., a Delaware corporation.

        (i) "CONSULTANT" means an individual who performs bona fide services to
        the Company, a Parent, a Subsidiary or an Affiliate other than as an
        Employee or Director or Non-Employee Director.

        (j) "DIRECTOR" means a member of the Board who is also an Employee.

        (k) "DISABILITY" means that the Key Employee is unable to engage in any
        substantial gainful activity by reason of any medically determinable
        physical or mental impairment which can be expected to result in death
        or which has lasted or can be expected to last for a continuous period
        of not less than 12 months.

        (l) "EMPLOYEE" means any individual who is a common-law employee of the
        Company, a Parent, a Subsidiary or an Affiliate.

        (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
        amended.

        (n) "EXERCISE PRICE" means, in the case of an Option, the amount for
        which a Share may be purchased upon exercise of such Option, as
        specified in the applicable Stock Option Agreement. "Exercise Price," in
        the case of a SAR, means an amount, as specified in the applicable SAR
        Agreement, which is subtracted from the Fair Market Value of a Share in
        determining the amount payable upon exercise of such SAR.

        (o) "FAIR MARKET VALUE" means the market price of Shares, determined by
        the Committee as follows:

               (i) If the Shares were traded on a stock exchange on the date in
        question, then the Fair Market Value shall be equal to the last trading
        price reported by the applicable composite transactions report for such
        date;

               (ii) If the Shares were traded over-the-counter on the date in
        question and were classified as a national market issue, then the Fair
        Market Value shall be equal to the last trading price quoted by the
        NASDAQ system for such date;

               (iii) If the Shares were traded over-the-counter on the date in
        question but were not classified as a national market issue, then the
        Fair Market Value shall be equal to the mean between the last reported
        representative bid and asked prices quoted by the NASDAQ system for such
        date; and

               (iv) If none of the foregoing provisions is applicable, then the
        Fair Market Value shall be determined by the Committee in good faith on
        such basis as it deems appropriate.

        Whenever possible, the determination of Fair Market Value by the
        Committee shall be based on the prices reported in the Wall Street
        Journal. Such determination shall be conclusive and binding on all
        persons.

                                       3
<PAGE>   9

        (p) "GRANT" means any grant of an Award under the Plan.

        (q) "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
        described in Code section 422(b).

        (r) "KEY EMPLOYEE" means an Employee, Director, Non-Employee Director or
        Consultant who has been selected by the Committee to receive an Award
        under the Plan.

        (s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
        Employee.

        (t) "NONSTATUTORY STOCK OPTION" or "NSO" means a stock option that is
        not an ISO.

        (u) "OPTION" means an ISO or NSO granted under the Plan entitling the
        Optionee to purchase Shares.

        (v) "OPTIONEE" means an individual, estate or other entity that holds an
        Option.

        (w) "PARENT" means any corporation (other than the Company) in an
        unbroken chain of corporations ending with the Company, if each of the
        corporations other than the Company owns stock possessing fifty percent
        (50%) or more of the total combined voting power of all classes of stock
        in one of the other corporations in such chain. A corporation that
        attains the status of a Parent on a date after the adoption of the Plan
        shall be considered a Parent commencing as of such date.

        (x) "PARTICIPANT" means an individual or estate or other entity that
        holds an Award.

        (y) "PLAN" means this Novatel Wireless, Inc. 2000 Stock Incentive Plan
        as it may be amended from time to time.

        (z) "RESTRICTED STOCK" means a Share awarded under the Plan.

        (aa) "RESTRICTED STOCK AGREEMENT" means the agreement described in
        Section 8 evidencing each Award of Restricted Stock.

        (bb) "SAR AGREEMENT" means the agreement described in Section 9
        evidencing each Award of a Stock Appreciation Right.

        (cc) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (dd) "SERVICE" means service as an Employee, Director, Non-Employee
        Director or Consultant.

        (ee) "SHARE" means one share of Common Stock.

        (ff) "STOCK APPRECIATION RIGHT" OR "SAR" means a stock appreciation
        right awarded under the Plan.

        (gg) "STOCK OPTION AGREEMENT" means the agreement described in Section 6
        evidencing each Grant of an Option.

                                       4
<PAGE>   10

        (hh) "STOCK UNIT" means a bookkeeping entry representing the equivalent
        of a Share, as awarded under the Plan.

        (ii) "STOCK UNIT AGREEMENT" means the agreement described in Section 8
        evidencing each Award of Stock Units.

        (jj) "SUBSIDIARY" means any corporation (other than the Company) in an
        unbroken chain of corporations beginning with the Company, if each of
        the corporations other than the last corporation in the unbroken chain
        owns stock possessing fifty percent (50%) or more of the total combined
        voting power of all classes of stock in one of the other corporations in
        such chain. A corporation that attains the status of a Subsidiary on a
        date after the adoption of the Plan shall be considered a Subsidiary
        commencing as of such date.

        (kk) "10-PERCENT SHAREHOLDER" means an individual who owns more than ten
        percent (10%) of the total combined voting power of all classes of
        outstanding stock of the Company, its Parent or any of its subsidiaries.
        In determining stock ownership, the attribution rules of section 424(d)
        of the Code shall be applied.

SECTION 3. ADMINISTRATION.

        (a) COMMITTEE COMPOSITION. A Committee appointed by the Board shall
        administer the Plan. The Board shall designate one of the members of the
        Committee as chairperson. If no Committee has been approved, the entire
        Board shall constitute the Committee. Members of the Committee shall
        serve for such period of time as the Board may determine and shall be
        subject to removal by the Board at any time. The Board may also at any
        time terminate the functions of the Committee and reassume all powers
        and authority previously delegated to the Committee.

        With respect to officers or directors subject to Section 16 of the
        Exchange Act, the Committee shall consist of those individuals who shall
        satisfy the requirements of Rule 16b-3 (or its successor) under the
        Exchange Act with respect to Awards granted to persons who are officers
        or directors of the Company under Section 16 of the Exchange Act.
        Notwithstanding the previous sentence, failure of the Committee to
        satisfy the requirements of Rule 16b-3 shall not invalidate any Awards
        granted by such Committee.

        The Board may also appoint one or more separate committees of the Board,
        each composed of one or more directors of the Company who need not
        qualify under Rule 16b-3, who may administer the Plan with respect to
        Key Employees who are not considered officers or directors of the
        Company under Section 16 of the Exchange Act, may grant Awards under the
        Plan to such Key Employees and may determine all terms of such Awards.

        Notwithstanding the foregoing, the Board shall constitute the Committee
        and shall administer the Plan with respect to all Awards granted to
        Non-Employee Directors.

                                       5
<PAGE>   11

        (b) AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
        the Committee shall have full authority and discretion to take any
        actions it deems necessary or advisable for the administration of the
        Plan. Such actions shall include:

               (i)    selecting Key Employees who are to receive Awards under
                      the Plan;

               (ii)   determining the type, number, vesting requirements and
                      other features and conditions of such Awards;

               (iii)  interpreting the Plan; and

               (iv)   making all other decisions relating to the operation of
                      the Plan.

        The Committee may adopt such rules or guidelines, as it deems
        appropriate to implement the Plan. The Committee's determinations under
        the Plan shall be final and binding on all persons.

        (c) INDEMNIFICATION. Each member of the Committee, or of the Board,
        shall be indemnified and held harmless by the Company against and from
        (i) any loss, cost, liability, or expense that may be imposed upon or
        reasonably incurred by him or her in connection with or resulting from
        any claim, action, suit, or proceeding to which he or she may be a party
        or in which he or she may be involved by reason of any action taken or
        failure to act under the Plan or any Stock Option Agreement, SAR
        Agreement, Stock Unit Agreement or Restricted Stock Agreement, and (ii)
        from any and all amounts paid by him or her in settlement thereof, with
        the Company's approval, or paid by him or her in satisfaction of any
        judgment in any such claim, action, suit, or proceeding against him or
        her, provided he or she shall give the Company an opportunity, at its
        own expense, to handle and defend the same before he or she undertakes
        to handle and defend it on his or her own behalf. The foregoing right of
        indemnification shall not be exclusive of any other rights of
        indemnification to which such persons may be entitled under the
        Company's Certificate of Incorporation or Bylaws, by contract, as a
        matter of law, or otherwise, or under any power that the Company may
        have to indemnify them or hold them harmless.

SECTION 4. ELIGIBILITY.

        (a) GENERAL RULES. Only Employees, Directors, Non-Employee Directors and
        Consultants shall be eligible for designation as Key Employees by the
        Committee.

        (b) INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law
        employees of the Company, a Parent or a Subsidiary shall be eligible for
        the grant of ISOs. In addition, a Key Employee who is a 10-Percent
        Shareholder shall not be eligible for the grant of an ISO unless the
        requirements set forth in section 422(c)(5) of the Code are satisfied.

        (c) NON-EMPLOYEE DIRECTOR OPTIONS. Non-Employee Directors shall also be
        eligible to receive Options as described in this Section 4(c) from and
        after the date the Board has determined to implement this provision.

                                       6
<PAGE>   12

               (i) Each eligible Non-Employee Director elected or appointed
        after the effective date of the Company's initial public offering shall
        automatically be granted an NSO to purchase 20,000 Shares (subject to
        adjustment under Section 9) as a result of his or her initial election
        or appointment as a Non-Employee Director. Upon the conclusion of each
        regular annual meeting of the Company's stockholders following his or
        her initial appointment, each eligible Non-Employee Director who will
        continue serving as a member of the Board and who received an initial
        grant thereafter shall receive an NSO to purchase 5,000 Shares (subject
        to adjustment under Section 9). All NSOs granted pursuant to this
        Section 4 shall vest and become exercisable provided the individual is
        serving as a director of the Company as of the vesting date as follows:
        25% one year from the date of grant, then in 36 equal monthly
        installments commencing on the date one month and one year after the
        date of grant.

               (ii) All NSOs granted to Non-Employee Directors under this
        Section 4(c) shall become exercisable in full in the event of Change in
        Control with respect to the Company.

               (iii) The Exercise Price under all NSOs granted to a Non-Employee
        Director under this Section 4(c) shall be equal to one hundred percent
        (100%) of the Fair Market Value of a Share of Common Stock on the date
        of grant, payable in one of the forms described in Section 7.

               (iv) All NSOs granted to a Non-Employee Director under this
        Section 4(c) shall terminate on the earlier of:

                      (1) The 10th anniversary of the date of grant; or

                      (2) The date ninety (90) days after the termination of
        such Non-Employee Director's service for any reason.

SECTION 5.     SHARES SUBJECT TO PLAN.

        (a) BASIC LIMITATION. The stock issuable under the Plan shall be
        authorized but unissued Shares or treasury Shares. The aggregate number
        of Shares reserved for Awards under the Plan shall not exceed
        16,500,000.

        (b) ANNUAL ADDITION. Beginning with the first fiscal year of the Company
        beginning after the Effective Date, on the first day of each fiscal
        year, Shares will be added to the Plan equal to the lesser of (i)
        1,500,000 Shares, (ii) three percent (3%) of the outstanding shares in
        the last day of the prior fiscal year, or (iii) such lesser number of
        Shares as may be determined by the Board in its sole discretion.

        (c) ADDITIONAL SHARES. If Awards are forfeited or terminate for any
        other reason before being exercised, then the Shares underlying such
        Awards shall again become available for Awards under the Plan. If SARs
        are exercised, then only the number of Shares (if any) actually issued
        in settlement of such SARs shall reduce the number

                                       7
<PAGE>   13

        available under Section 5(a) and the balance shall again become
        available for Awards under the Plan.

        (d) DIVIDEND EQUIVALENTS. Any dividend equivalents distributed under the
        Plan shall not be applied against the number of Shares available for
        Awards whether or not such dividend equivalents are converted into Stock
        Units.

        (e) LIMITS ON OPTIONS AND SARS. No Key Employee shall receive Options to
        purchase Shares and/or SARs during any fiscal year covering in excess of
        1,000,000 Shares, or 2,000,000 Shares in the first fiscal year of a Key
        Employee's employment with Company.

        (f) LIMITS ON RESTRICTED STOCK AND STOCK UNITS. No Key Employee shall
        receive Award(s) of Restricted Stock and/or Stock Units during any
        fiscal year covering in excess of 500,000 Shares, or 1,000,000 Shares in
        the first fiscal year of a Key Employee's employment with Company.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

        (a) STOCK OPTION AGREEMENT. Each Grant under the Plan shall be evidenced
        by a Stock Option Agreement between the Optionee and the Company. Such
        Option shall be subject to all applicable terms and conditions of the
        Plan and may be subject to any other terms and conditions that are not
        inconsistent with the Plan and that the Committee deems appropriate for
        inclusion in a Stock Option Agreement. The provisions of the various
        Stock Option Agreements entered into under the Plan need not be
        identical. A Stock Option Agreement may provide that new Options will be
        granted automatically to the Optionee when he or she exercises the prior
        Options. The Stock Option Agreement shall also specify whether the
        Option is an ISO or an NSO.

        (b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
        number of Shares that are subject to the Option and shall provide for
        the adjustment of such number in accordance with Section 9.

        (c) EXERCISE PRICE. An Option's Exercise Price shall be established by
        the Committee and set forth in a Stock Option Agreement. To the extent
        required by applicable law the Exercise Price of an ISO shall not be
        less than 100% of the Fair Market Value (110% for 10-Percent
        Shareholders) of a Share on the date of Grant. In the case of an NSO, a
        Stock Option Agreement may specify an Exercise Price that varies in
        accordance with a predetermined formula while the NSO is outstanding.

        (d) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
        the date when all or any installment of the Option is to become
        exercisable. The Stock Option Agreement shall also specify the term of
        the Option; provided that the term of an ISO shall in no event exceed
        ten (10) years from the date of Grant. An ISO that is granted to a
        10-Percent Shareholder shall have a maximum term of five (5) years. No
        Option can be exercised after the expiration date provided in the
        applicable Stock Option Agreement. A Stock Option Agreement may provide
        for accelerated exercisability in the event of the

                                       8
<PAGE>   14

        Optionee's death, disability or retirement or other events and may
        provide for expiration prior to the end of its term in the event of the
        termination of the Optionee's service. A Stock Option Agreement may
        permit an Optionee to exercise an Option before it is vested, subject to
        the Company's right of repurchase over any Shares acquired under the
        unvested portion of the Option (an "early exercise"), which right of
        repurchase shall lapse at the same rate the Option would have vested had
        there been no early exercise. In no event shall the Company be required
        to issue fractional Shares upon the exercise of an Option.

        (e) MODIFICATIONS OR ASSUMPTION OF OPTIONS. Within the limitations of
        the Plan, the Committee may modify, extend or assume outstanding options
        or may accept the cancellation of outstanding options (whether granted
        by the Company or by another issuer) in return for the grant of new
        Options for the same or a different number of Shares and at the same or
        a different Exercise Price. The foregoing notwithstanding, no
        modification of an Option shall, without the consent of the Optionee,
        alter or impair his or her rights or obligations under such Option.

        (f) TRANSFERABILITY OF OPTIONS. Except as otherwise provided in the
        applicable Stock Option Agreement and then only to the extent permitted
        by applicable law, no Option shall be transferable by the Optionee other
        than by will or by the laws of descent and distribution. Except as
        otherwise provided in the applicable Stock Option Agreement, an Option
        may be exercised during the lifetime of the Optionee only or by the
        guardian or legal representative of the Optionee. No Option or interest
        therein may be assigned, pledged or hypothecated by the Optionee during
        his lifetime, whether by operation of law or otherwise, or be made
        subject to execution, attachment or similar process.

        (g) NO RIGHTS AS STOCKHOLDER. An Optionee, or a transferee of an
        Optionee, shall have no rights as a stockholder with respect to any
        Common Stock covered by an Option until such person becomes entitled to
        receive such Common Stock by filing a notice of exercise and paying the
        Exercise Price pursuant to the terms of such Option.

        (h) RESTRICTIONS ON TRANSFER. Any Shares issued upon exercise of an
        Option shall be subject to such rights of repurchase, rights of first
        refusal and other transfer restrictions as the Committee may determine.
        Such restrictions shall apply in addition to any restrictions that may
        apply to holders of Shares generally and shall also comply to the extent
        necessary with applicable law.

SECTION 7. PAYMENT FOR OPTION SHARES.

        (a) GENERAL RULE. The entire Exercise Price of Shares issued upon
        exercise of Options shall be payable in cash at the time when such
        Shares are purchased, except as follows:

               (i) In the case of an ISO granted under the Plan, payment shall
        be made only pursuant to the express provisions of the applicable Stock
        Option Agreement. The Stock Option Agreement may specify that payment
        may be made in any form(s) described in this Section 7.

                                       9
<PAGE>   15

               (ii) In the case of an NSO granted under the Plan, the Committee
        may in its discretion, at any time accept payment in any form(s)
        described in this Section 7.

        (b) SURRENDER OF STOCK. To the extent that this Section 7(b) is
        applicable, payment for all or any part of the Exercise Price may be
        made with Shares which have already been owned by the Optionee for such
        duration as shall be specified by the Committee. Such Shares shall be
        valued at their Fair Market Value on the date when the new Shares are
        purchased under the Plan.

        (c) PROMISSORY NOTE. To the extent that this Section 7(c) is applicable,
        payment for all or any part of the Exercise Price may be made with a
        full-recourse promissory note.

        (d) OTHER FORMS OF PAYMENT. To the extent that this Section 7(d) is
        applicable, payment may be made in any other form that is consistent
        with applicable laws, regulations and rules.

SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK AND STOCK UNITS.

        (a) TIME, AMOUNT AND FORM OF AWARDS. Awards under this Section 8 may be
        granted in the form of Restricted Stock in the form of Stock Units, or
        in any combination of both. Restricted Stock or Stock Units may also be
        awarded in combination with NSOs or SARs, and such an Award may provide
        that the Restricted Stock or Stock Units will be forfeited in the event
        that the related NSOs or SARs are exercised.

        (b) AGREEMENTS. Each Award of Restricted Stock or Stock Units under the
        Plan shall be evidenced by a Restricted Stock Agreement or Stock Unit
        Agreement between the Participant and the Company. Such Awards shall be
        subject to all applicable terms and conditions of the Plan and may be
        subject to any other terms and conditions that are not inconsistent with
        the Plan and that the Committee deems appropriate for inclusion in the
        applicable Agreement. The provisions of the various Agreements entered
        into under the Plan need not be identical.

        (c) PAYMENT FOR RESTRICTED STOCK OR STOCK UNIT AWARDS. Restricted Stock
        or Stock Units may be issued with or without cash consideration under
        the Plan.

        (d) FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested
        Stock Units may be made in the form of (i) cash, (ii) Shares or (iii)
        any combination of both. The actual number of Stock Units eligible for
        settlement may be larger or smaller than the number included in the
        original Award, based on predetermined performance factors. Methods of
        converting Stock Units into cash may include (without limitation) a
        method based on the average Fair Market Value of Shares over a series of
        trading days. Vested Stock Units may be settled in a lump sum or in
        installments. The distribution may occur or commence when all vesting
        conditions applicable to the Stock Units have been satisfied or have
        lapsed, or it may be deferred to any later date. The amount of a
        deferred distribution may be increased by an interest factor or by
        dividend equivalents. Until an

                                       10
<PAGE>   16

        Award of Stock Units is settled, the number of such Stock Units shall be
        subject to adjustment pursuant to Section 10.

        (e) VESTING CONDITIONS. Each Award of Restricted Stock or Stock Units
        shall become vested, in full or in installments, upon satisfaction of
        the conditions specified in the applicable Agreement. An Agreement may
        provide for accelerated vesting in the event of the Participant's death,
        Disability or retirement or other events.

        (f) ASSIGNMENT OR TRANSFER OF RESTRICTED STOCK OR STOCK UNITS. Except as
        provided in Section 13, or in a Restricted Stock Agreement or Stock Unit
        Agreement, or as required by applicable law, a Restricted Stock or Stock
        Unit Award granted under the Plan shall not be anticipated, assigned,
        attached, garnished, optioned, transferred or made subject to any
        creditor's process, whether voluntarily, involuntarily or by operation
        of law. Any act in violation of this Section 8(f) shall be void.
        However, this Section 8(f) shall not preclude a Participant from
        designating a beneficiary who will receive any outstanding Restricted
        Stock or Stock Unit Awards in the event of the Participant's death, nor
        shall it preclude a transfer of Restricted Stock or Stock Unit Awards by
        will or by the laws of descent and distribution.

        (g) DEATH OF STOCK UNITS RECIPIENT. Any Stock Unit Award that becomes
        payable after the Award recipient's death shall be distributed to the
        recipient's beneficiary or beneficiaries. Each recipient of a Stock Unit
        Award under the Plan shall designate one or more beneficiaries for this
        purpose by filing the prescribed form with the Company. A beneficiary
        designation may be changed by filing the prescribed form with the
        Company at any time before the recipient's death. If no beneficiary was
        designated or if no designated beneficiary survives the recipient, then
        any Stock Unit Award that becomes payable after the recipient's death
        shall be distributed to the recipient's estate.

        (h) TRUSTS. Neither this Section 8 nor any other provision of the Plan
        shall preclude a Participant from transferring or assigning Restricted
        Stock to (a) the trustee of a trust that is revocable by such
        Participant alone, both at the time of the transfer or assignment and at
        all times thereafter prior to such Participant's death, or (b) the
        trustee of any other trust to the extent approved in advance by the
        Committee in writing. A transfer or assignment of Restricted Stock from
        such trustee to any person other than such Participant shall be
        permitted only to the extent approved in advance by the Committee in
        writing, and Restricted Stock held by such trustee shall be subject to
        all of the conditions and restrictions set forth in the Plan and in the
        applicable Restricted Stock Agreement, as if such trustee were a party
        to such Agreement.

        (i) VOTING AND DIVIDEND RIGHTS. The holders of Restricted Stock awarded
        under the Plan shall have the same voting, dividend and other rights as
        the Company's other stockholders. A Restricted Stock Agreement, however,
        may require that the holders of Restricted Stock invest any cash
        dividends received in additional Restricted Stock. Such additional
        Restricted Stock shall be subject to the same conditions and
        restrictions as the Award with respect to which the dividends were paid.
        Such additional Restricted Stock shall not reduce the number of Shares
        available under Section 5.

                                       11
<PAGE>   17

        (j) STOCK UNIT VOTING AND DIVIDEND RIGHTS. The holders of Stock Units
        shall have no voting rights. Prior to settlement or forfeiture, any
        Stock Unit awarded under the Plan may, at the Committee's discretion,
        carry with it a right to dividend equivalents. Such right entitles the
        holder to be credited with an amount equal to all cash dividends paid on
        one Share while the Stock Unit is outstanding. Dividend equivalents may
        be converted into additional Stock Units. Settlement of dividend
        equivalents may be made in the form of cash, in the form of Shares, or
        in a combination of both. Prior to distribution, any dividend
        equivalents which are not paid shall be subject to the same conditions
        and restrictions as the Stock Units to which they attach.

        (k) CREDITORS' RIGHTS. A holder of Stock Units shall have no rights
        other than those of a general creditor of the Company. Stock Units
        represent an unfunded and unsecured obligation of the Company, subject
        to the terms and conditions of the applicable Stock Unit Agreement.

SECTION 9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

        (a) SAR AGREEMENT. Each Award of a SAR under the Plan shall be evidenced
        by a SAR Agreement between the Optionee and the Company. Such SAR shall
        be subject to all applicable terms of the Plan and may be subject to any
        other terms that are not inconsistent with the Plan. The provisions of
        the various SAR Agreements entered into under the Plan need not be
        identical. SARs may be granted in consideration of a reduction in the
        Optionee's other compensation.

        (b) NUMBER OF SHARES. Each SAR Agreement shall specify the number of
        Shares to which the SAR pertains and shall provide for the adjustment of
        such number in accordance with Section 10.

        (c) EXERCISE PRICE. Each SAR Agreement shall specify the Exercise Price.
        A SAR Agreement may specify an Exercise Price that varies in accordance
        with a predetermined formula while the SAR is outstanding.

        (d) EXERCISABILITY AND TERM. Each SAR Agreement shall specify the date
        when all or any installment of the SAR is to become exercisable. The SAR
        Agreement shall also specify the term of the SAR. A SAR Agreement may
        provide for accelerated exercisability in the event of the Optionee's
        death, Disability or retirement or other events and may provide for
        expiration prior to the end of its term in the event of the termination
        of the Optionee's Service. SARs may also be awarded in combination with
        Options, Restricted Stock or Stock Units, and such an Award may provide
        that the SARs will not be exercisable unless the related Options,
        Restricted Stock or Stock Units are forfeited. A SAR may be included in
        an ISO only at the time of Grant but may be included in an NSO at the
        time of Grant or at any subsequent time, but not later than six months
        before the expiration of such NSO. A SAR granted under the Plan may
        provide that it will be exercisable only in the event of a Change in
        Control.

        (e) EXERCISE OF SARS. If, on the date when a SAR expires, the Exercise
        Price under such SAR is less than the Fair Market Value on such date but
        any portion of such SAR

                                       12
<PAGE>   18

        has not been exercised or surrendered, then such SAR shall automatically
        be deemed to be exercised as of such date with respect to such portion.
        Upon exercise of a SAR, the Optionee (or any person having the right to
        exercise the SAR after his or her death) shall receive from the Company
        (i) Shares, (ii) cash or (iii) a combination of Shares and cash, as the
        Committee shall determine. The amount of cash and/or the Fair Market
        Value of Shares received upon exercise of SARs shall, in the aggregate,
        be equal to the amount by which the Fair Market Value (on the date of
        surrender) of the Shares subject to the SARs exceeds the Exercise Price.

        (f) MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of the
        Plan, the Committee may modify, extend or assume outstanding SARs or may
        accept the cancellation of outstanding SARs (whether granted by the
        Company or by another issuer) in return for the grant of new SARs for
        the same or a different number of Shares and at the same or a different
        Exercise Price. The foregoing notwithstanding, no modification of a SAR
        shall, without the consent of the Optionee, alter or impair his or her
        rights or obligations under such SAR.

SECTION 10. PROTECTION AGAINST DILUTION.

        (a) ADJUSTMENTS. In the event of a subdivision of the outstanding
        Shares, a declaration of a dividend payable in Shares, a declaration of
        a dividend payable in a form other than Shares in an amount that has a
        material effect on the price of Shares, a combination or consolidation
        of the outstanding Shares (by reclassification or otherwise) into a
        lesser number of Shares, a recapitalization, reorganization, merger,
        liquidation, spin-off or a similar occurrence, the Committee shall make
        such adjustments as it, in its reasonable discretion, deems appropriate
        in order to prevent the dilution or enlargement of rights hereunder in
        one or more of:

               (i) the number of Shares available for future Awards and the per
        person Share limits under Section 5;

               (ii) the number of Shares covered by each outstanding Award; or

               (iii) the Exercise Price under each outstanding SAR or Option.

        (b) PARTICIPANT RIGHTS. Except as provided in this Section 10, a
        Participant shall have no rights by reason of any issue by the Company
        of stock of any class or securities convertible into stock of any class,
        any subdivision or consolidation of shares of stock of any class, the
        payment of any stock dividend or any other increase or decrease in the
        number of shares of stock of any class.

SECTION 11. EFFECT OF A CHANGE IN CONTROL.

        (a) MERGER OR REORGANIZATION. In the event that the Company is a party
        to a merger or other reorganization, outstanding Awards shall be subject
        to the agreement of merger or reorganization. Such agreement may
        provide, without limitation, for the assumption

                                       13
<PAGE>   19

        of outstanding Awards by the surviving corporation or its parent, for
        their continuation by the Company (if the Company is a surviving
        corporation), for accelerated vesting or for their cancellation with or
        without consideration.

        (b) ACCELERATION. The Committee may determine, at the time of granting
        an Award or thereafter, that such Award shall become fully vested as to
        all Shares subject to such Award in the event that a Change in Control
        occurs with respect to the Company.

SECTION 12. LIMITATIONS ON RIGHTS.

        (a) RETENTION RIGHTS. Neither the Plan nor any Award granted under the
        Plan shall be deemed to give any individual a right to remain an
        employee, consultant or director of the Company, a Parent, a Subsidiary
        or an Affiliate. The Company and its Parents and Subsidiaries and
        Affiliates reserve the right to terminate the Service of any person at
        any time, and for any reason, subject to applicable laws, the Company's
        Certificate of Incorporation and Bylaws and a written employment
        agreement (if any).

        (b) STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
        voting rights or other rights as a stockholder with respect to any
        Shares covered by his or her Award prior to the issuance of a stock
        certificate for such Shares. No adjustment shall be made for cash
        dividends or other rights for which the record date is prior to the date
        when such certificate is issued, except as expressly provided in Section
        10.

        (c) REGULATORY REQUIREMENTS. Any other provision of the Plan
        notwithstanding, the obligation of the Company to issue Shares under the
        Plan shall be subject to all applicable laws, rules and regulations and
        such approval by any regulatory body as may be required. The Company
        reserves the right to restrict, in whole or in part, the delivery of
        Shares pursuant to any Award prior to the satisfaction of all legal
        requirements relating to the issuance of such Shares, to their
        registration, qualification or listing or to an exemption from
        registration, qualification or listing.

SECTION 13. WITHHOLDING TAXES.

        (a) GENERAL. A Participant shall make arrangements satisfactory to the
        Company for the satisfaction of any withholding tax obligations that
        arise in connection with his or her Award. The Company shall not be
        required to issue any Shares or make any cash payment under the Plan
        until such obligations are satisfied.

        (b) SHARE WITHHOLDING. If a public market for the Company's Shares
        exists, the Committee may permit a Participant to satisfy all or part of
        his or her withholding or income tax obligations by having the Company
        withhold all or a portion of any Shares that otherwise would be issued
        to him or her or by surrendering all or a portion of any Shares that he
        or she previously acquired. Such Shares shall be valued at their Fair
        Market Value on the date when taxes otherwise would be withheld in cash.
        Any payment of taxes by assigning Shares to the Company may be subject
        to restrictions, including, but

                                       14
<PAGE>   20

        not limited to, any restrictions required by rules of the Securities and
        Exchange Commission.

SECTION 14. DURATION AND AMENDMENTS.

        (a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
        effective on the date of its adoption by the Board, subject to the
        approval of the Company's stockholders. No Options or SARs shall be
        exercisable until such stockholder approval is obtained. In the event
        that the stockholders fail to approve the Plan within twelve (12) months
        after its adoption by the Board, any Awards made shall be null and void
        and no additional Awards shall be made. To the extent required by
        applicable law, the Plan shall terminate on the date that is ten (10)
        years after its adoption by the Board and may be terminated on any
        earlier date pursuant to Section 14(b).

        (b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or
        terminate the Plan at any time and for any reason. The termination of
        the Plan, or any amendment thereof, shall not affect any Award
        previously granted under the Plan. No Awards shall be granted under the
        Plan after the Plan's termination. An amendment of the Plan shall be
        subject to the approval of the Company's stockholders only to the extent
        required by applicable laws, regulations or rules.

SECTION 15. EXECUTION.

        To record the adoption of the Plan by the Board, the Company has caused
        its duly authorized officer to execute this Plan on behalf of the
        Company.

                                       NOVATEL WIRELESS, INC.

                                       By
                                         ---------------------------------------

                                       Title
                                            ------------------------------------

                                       15

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